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01-08-2018 - Examine Cost of Special Events & Allocating Genera - Item No. 1 (2).pdfAGENDA ITEMNO. 1 DATE: TO: FROM: AGENDA STAFF REPORT City of West Covina I Office of the City Manager January 8, 2018 Mayor and City Council Chris Freeland City Manager --- SUBJECT: EXAMINE COST OF SPECIAL EVENTS & ALLOCATING GENERAL FUNDS TO REINSTATE CITY SPONSORED EVENTS RECOMMENDATION: It is recommended that the City Council provide City staff direction. BACKGROUND: At the October 17, 2017 City Council Meeting, Councilman Tony Wu requested this item be agendized and the City Council provided support. Over the years, the City of West Covina has organized or co-sponsored many annual community events for residents to enjoy. The City has hosted the MLK Jr. event on Martin Luther King Jr. Day in January, which recognizes the achievements of Martin Luther King Jr. and the importance of African American heritage. This event is in partnership with the San Gabriel Valley National Association for the Advancement of Colored People (NAACP). In the spring, the City partners with the East San Gabriel Valley Japanese Community Center (ESGVJCC) to host the Cherry Blossom event at the South Hills Plaza. This event celebrates Asian American culture, showcases Japanese performances, food, and music. The ESGVJCC has been a strong partner of the City's through the Sister City Student Exchange Program with our Sister City, Ohtawara. One of the City's biggest events is the annual Egg Celebration which has been hosted at Cameron and Shadow Oak Park around Easter time. Bunny Brian welcomes children and families for an egg hunt, music and fun. Community Service Day draws people for a day of selfless service. In April, in recognition of National Volunteer Month, the City organizes hundreds of volunteers throughout the community doing park cleanup, housing beautification, planting, painting, etc. This day includes a sponsored welcome breakfast, promotes volunteerism in the community and includes a thank you lunch at the West Covina Senior Center. Memorial Examine Cost of Special Events and Allocating General Funds to Reinstate City Sponsored Events Page 2 of 4 -January 8, 2018 Day is held in the Civic Center Comtyard adjacent to the Veterans Memorial. This event recognizes those military personnel who paid the ultimate sacrifice in service to our country. To kick off the summer, the City had previously hosted Movies in the Park with sponsorship by the Fire Fighters Association for licensing and the movie equipment. In recent years, the funding has been residual monies available from the Athens donation or miscellaneous donations to the West Covina Community Services Foundation (Foundation). Summer Concerts has been made possible over the years by the funding from Athens Services as well as the Los Angeles County Aits Grant. In the past, the City has both organized the Summer Conceits with City staff and contracted conceit management to the Greater West Covina Business Association (GWC). The annual Independence Day Celebration (4111 of July), has been made possible through the Athens donation as well as the general fund budget. Revenues from gate proceeds and vendor booths help offset the total cost of the event. In the fall , the City hosts the Pumpkin Run at Coitez Park which is an event that up until recently has been completely organized by the West Covina Christian Church. Proceeds from the race have gone toward the West Covina Senior Center facility, programs and services. The last two years, City staff has organized the Health & Fitness Expo as an amenity to the event and from that has generated revenue from vendor booths and sponsors. All revenue continues to go to the West Covina Christian Church which in turn donates proceeds to the City. The Red Ribbon Rally is a joint effoit by the West Covina Sunrise Rotary, the West Covina Unified School District and the City of West Covina. Red Ribbon Week for the school district begins with a rally which is held on the last Saturday in October. The event includes public safety personnel, demonstrations, vendors and music. Traditionally, the City has provided staffing from the Police Depaitment, Fire Depaitment, and Community Services provides the stage and personnel for an informational booth. The Fire personnel are on duty and therefore there is no added staffing costs from the Fire Department for this event. The Ghoster Park event is one of the City's larger events and has historically been held at Galster Park and is a partnership with the volunteers from the Nature Center. The event includes a haunted maze, crafts, a scarecrow or pumpkin decorating contest, and a Halloween costume contest. The Dog Spooktacular event has been held at the Del Noite Dog Park and is a Halloween costume contest for residents' furry friends. There is a dog parade for the judges along with vendors and Halloween music. Veterans Day is an annual event held in the Civic Center Comtyard adjacent to the Veterans Memorial. This event recognizes those men and women who have served and are currently serving in the military. Traditionally, a unique Veterans Day commemorative pin is given to veterans in attendance. The winter activity hosted by the City is Breakfast with Santa. This event is held at Cameron Community Center and includes a pancake breakfast, performances and a photo with Santa. Tickets are sold which helps offset the cost of the event. DISCUSSION: During the Fiscal Year (FY) 201 7-18 budget adoption process, the City Council chose to allocate the Athens funds into the General Fund to help balance the budget. Additional General Fund dollars that had been previously budgeted to supplement the cost of special events was also de- budgeted, and therefore special events directly organized or co-sponsored (supp01ted with City funds or City staff) by the City of West Covina were cut. At the October 3, 2017 City Council Examine Cost of Special Events and Allocating General Funds to Reinstate City Sponsored Events Page 3 of 4 -January 8, 2018 Meeting, staff presented the Foundation Annual Report along with events for funding consideration. At that time, Council approved funding from the Foundation for Veterans Day and for Memorial Day but took no further action on other special events. Special events that were continued in FY 2017-18 due to previous funding available in the West Covina Community Services Foundation (Foundation) or City costs being paid by paitners include: Movies in the Park, Conceits in the Park, West Covina Pumpkin SK Run/Walk and Health & Fitness Expo benefiting the senior center, Red Ribbon Rally (funds for staffing paid by West Covina Sunrise Rotary), Veterans Day, NAACP Maitin Luther King Jr. Day (stage rental fee paid by NAACP), and Memorial Day. The cost to add special events back into the budget at the current mid-year status would be approximately $100,000. Special events that would be included are: Cheny Blossom, Egg Celebration, Community Service Day, Memorial Day, Movies in the Park, Summer Conceits, and 4111 of July. It should be noted that the City already contacted community partners who co-host events such as the NAACP for MLK Jr. Day and the East San Gabriel Valley Japanese Community Center for Cherry Blossom. The NAACP is still planning on moving forward with the MLK Jr. Day and is paying for the cost to rent the stage which covers staff time. The City has not heard about the Che1Ty Blossom event and whether that will move forward independently of the City's involvement. The total cost to do all special events within a given fiscal year is approximately $130,000. In Attachment No. 1, all special event expenditures and any associated revenue are detailed. Due to operational expenditures and personnel costs outpacing revenue, staff does not recommend making a mid-year adjustment at this time to allocate funding for special events as the City is trending to be overbudget. OPTIONS: 1) Re-allocate General Fund monies for special events; or 2) Revisit adding special events into the budget during the FY 2018-19 budget adoption process; or 3) Provide alternative direction. FISCAL IMP ACT: The fiscal impact will depend upon the direction given by City Council. Prepared by: ~~CfAAA_. Nikole Bresciani Assistant City Manager/ Community Services Director Examine Cost of Special Events and Allocating General Funds to Reinstate City Sponsored Events Page 4 of 4 -January 8, 2018 ATTACHMENT: Attachment No. 1 -Special Event Expenditures & Revenues Special Event Expenditures and Revenues ATTACHMENT NO. 1 Special Events MLKJrDay Staff Cost # Hours Days Total Hours Rate Total Site Coordinator 2 8 1 16 X $14.41 $230.56 Personnel Total: $230.56 Supply Cost $300.00 Total: I $530.56 Cherry Blossom Staff Cost # Hours Days Total Hours Rate Total Site Coordinator 1 10 1 10 X $14.41 $144.10 Rec. Leader 4 10 1 40 X $12.16 $486.40 Maintenance Worker 6 8 1 48 X $20.96 $1,006.08 Personnel Total: $1,636.58 Supply Cost $500.00 Total: I $2,136.58 Egg Celebration Staff Cost # Hours Days Total Hours Rate Total Site Coordinator 1 7 1 7 X $14.41 $100.87 Rec. Leader 8 7 1 56 X $12.16 $680.96 Personnel Total: $781.83 Supply Cost $4,500.00 Total: I $5,281.83 Community Service Day Staff Cost *Full-time Staffing used, so no staffing costs allocated. Supply Cost $10,000.00 Total: I $10,000.00 :-------·-----~-----------------_--~-~~-----------I Staff Cost Site Coordinator Rec. Leader Supply Cost # 0 5 Hours 7 5 Days 1 1 Total Hours 0 X 25 X Rate $14.41 $12.16 Personnel Total: Total: I Total $0.00 $304.00 $304.00 $500.00 $804.00 ----------~~ I ' ' ----I Staff Cost # Hours Weeks Total Hours Rate Total Site Coordinator 1 4 6 24 X $14.41 $345.84 Rec. Leader 2 4 6 48 X $12.16 $583.68 Personnel Total: $929.52 Supply Cost Licensing $ 3,300.00 Total: I $4,229.52 Summer Concerts Staff Cost # Hours Weeks Total Hours Rate Total Site Coordinator 1 4 6 24 X $14.41 $345.84 Rec. Leader 2 4 6 48 X $12.16 $583.68 Personnel Total: $929.52 Supply Cost Cost of bands, port-a-lets, sound, etc. $ 19,000.00 Revenue from Vendors and LA County Arts Grant ($2,975} Total: $16,954.52 4th of July Staff Cost Total Community Services $3,420.45 Public Safety $12,107.48 Public Works $3,602.01 Personnel Total: $19,129.94 Supply Cost $41,219.59 Subtotal: $60,349.53 Revenue ($9,267.69) Total: I $51,081.84 Pumpkin Run/Health Fitness Expo Staff Cost # Hours Days Total Hours Rate Total Site Coordinator 3 8 1 24 X $14.41 $345.84 Rec. Leader 6 8 1 48 X $12.16 $583.68 Personnel Total: $929.52 Supply Cost $1,500.00 Total: I $2,429.52 Special Event Expenditures Revenues 2 !~---·····--------·· -----------~-~~~----·-····-··-··-. . l Staff Cost # Hours Days Total Hours Rate Total Site Coordinator 1 8 1 8 X $14.41 $115.28 Rec. Leader 4 8 1 32 X $12.16 $389.12 Police Personnel 8 $4,253.63 Personnel Total: $4,758.03 Sueely Cost $300.00 Total: I $5,058.03 Ghoster Park Staff Cost # Hours Days Total Hours Rate Total Site Coordinator 1 15 1 15 X $14.41 $216.15 Rec. Leader 12 10 1 120 X $12.16 $1 ,459.20 Police Personnel 8 -1 47.5 X $89.55 $4,253.63 Personnel Total: $5,928.98 Sueely Cost $5,000.00 Total: I $10,928.98 Dog Spooktacular Staff Cost # Hours Days Total Hours Rate Total Site Coordinator 1 4 1 4 X $14.41 $57.64 Rec. Leader 4 4 1 16 X $12.16 $194.56 Personnel Total: $252.20 Sueely Cost $500.00 Total: I $752.20 -.~ -----------1 I ----I Staff Cost # Hours Days Total Hours Rate Total Site Coordinator 0 5 1 0 X $14.41 $0.00 Rec. Leader 5 5 1 25 X $12.16 $304.00 Personnel Total: $304.00 Sueely Cost $500.00 Total: r $804.00 I _ ---·· -·--------------_ _ _. _· ___ --· _____ .. -·-----------__ ·1 Staff Cost # Hours Days Total Hours Rate Total Site Coordinator 1 10 1 10 X $14.41 $144.10 Rec. Leader 8 10 1 80 X $12.16 $972.80 Kitchen Worker 2 10 1 20 X $24.71 $494.20 Personnel Total: $1 ,611 .10 sueely Cost $3,000.00 Subtotal: $4,611.10 Revenue ($1 ,200.00) Total: r $3,411.10 Special Event Expenditures Revenues 3 Staff Cost Total: $39,627.92 Supply Cost Total: $90,119.59 Event Cost Subtotal: $129,747.51 Revenue Total: ($13,442.69) Event Cost Subtotal: $116,304.82 Special Event Expenditures Revenues 4 ATTACHMENT NO. 1 RESOLUTION NO. 2018-01 A RESOLUTION OF THE CITY COUNCIL OF WEST COVINA, CALIFORNIA, APPROVING THE EXECUTION AND DELIVERY OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018 (T.R.I.P. -TOTAL ROAD IMPROVEMENT PROGRAM) PURSUANT TO A TRUST AGREEMENT, AUTHORIZING THE EXECUTION AND DELIVERY OF A TRUST AGREEMENT, CERTIFICATE PURCHASE AGREEMENT AND AN INSTALLMENT SALE AGREEMENT, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH CERTIFICATES, AND AUTHORIZING THE FILING OF A VALIDATION ACTION AND OTHER MATTERS RELATING THERETO WHEREAS, the California Statewide Communities Development Authority (the "Authority") is empowered to assist the City of West Covina (the "City") in financing ce1iain public capital improvements pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act") and pursuant to that ce1iain Amended and Restated Joint Exercise of Powers Agreement among a number of California cities, counties and special districts, including the City, dated June 1, 1988; WHEREAS, the City Council of the City of West Covina (the "City Council") has dete1mined that the design, acquisition and constrnction of ce1iain roadway improvements and street resurfacing, (as more fully described in the herein defined Installment Sale Agreement, the "Project") is necessary and proper for, and for the common benefit of, the City, and under the te1ms of applicable law, the payment for such Project may be made from Revenues, as defined in the hereinafter defined Installment Sale Agreement; WHEREAS, a Mitigated Negative Declaration of Environmental Impact was prepared and was ce1iified by Resolution 2017-99 on October 17, 2017 for the Project, pursuant to the requirements of the California Environmental Quality Act of 1970, as amended, and mitigation measures were included in said Negative Declaration in support of the finding that there will not be a significant effect on the enviromnent as a result of the Project. WHEREAS, in order to achieve a lower net interest cost and lower costs of issuance in c01mection with financing the acquisition of the Project, the City has determined to participate with ce1iain other local agencies which are also members of the Authority ( collectively, the "Local Agencies") in the California Statewide Communities Development Authority Total Road Improvement Program (TRIP) (the "Program") established by the Authority to finance street improvement projects, such as the Project; WHEREAS, pursuant to the Program the Authority will acquire and construct the Project for, and sell the Project to, the City, pursuant to an Installment Sale Agreement by and between the City and the Authority, in the form presented to this meeting (with such changes, insertions and omissions as are made pursuant to this Resolution, being refe1Ted to herein as the "Installment Sale Agreement"); WHEREAS, the City desires to authorize the execution and delivery of additional Contracts, as defined in the Installment Sale Agreement, in the future from time to time for the purpose of financing the design, acquisition and construction of additional roadway improvements and street resurfacing, which are necessary and proper for, and for the common benefit of, the City, the payment for which may be made from Revenues; WHEREAS, installment sale payments payable in connection with the installment sale agreement of each Local Agency participating in the Program will be combined, and Wilmington Trust, National Association, as trustee (the "Trustee"), pursuant to a Trust Agreement, among the Authority, the Trustee and the Local Agencies (such Trust Agreement, in the fmm presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Trust Agreement"), will execute and deliver California Statewide Communities Development Authority Transpmtation Revenue (Installment Sale) Ce1tificates of Participation, Series 2018 (or such other subseries to be designated) (T.R.I.P. -Total Road Improvement Program) (the "Ce1tificates"), which evidence and represent proportionate and undivided interests in such combined installment sale payments; WHEREAS, the Authority may dete1mine that securing the timely payment of the principal and interest evidenced by the Ce1tificates by obtaining a bond insurance policy (a "Ce1tificate Insurance Policy") with respect thereto issued by a municipal bond insurer (a "Ce1tificate Insurer") could be economically advantageous to the Local Agencies; WHEREAS, Stifel, Nicolaus & Company, Incorporated, or such other investment banking firrn as may be selected in the sole discretion of the Authority (the "Underwriter"), has submitted to the Local Agencies and the Authority a proposed fo1m of an agreement to purchase the Certificates in the form of a Ce1tificate Purchase Agreement (the "Certificate Purchase Agreement"); WHEREAS, a form of the Preliminary Official Statement (the "Preliminary Official Statement") to be distributed in connection with the public offering of the Certificates has been prepared; WHEREAS, the City is a member of the Authority and the Project is to be located within the boundaries of the City; WHEREAS, the improvement and reconstrnction of the Project will provide additional life to, and more efficient fuel consumption on, the streets resulting in significant public benefit; WHEREAS, the City hereby finds that the financing of such public capital improvements within the City will result in significant public benefits in the form of a safe and reliable transpmtation network, demonstrable savings in effective interest rates, and the more efficient delivery of City services to residential and commercial development; WHEREAS, Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California Legislature) ("SB 450") requires that the City Council obtain from an underwriter, municipal advisor or private lender and disclose, prior to authorization of the issuance of bonds, including debt instruments such as the Certificates, with a term of greater than 13 months, good faith estimates of the following infmmation in a meeting open to the public: (a) the true interest cost of the Certificates, (b) the sum of all fees and charges paid to third parties with respect to the Certificates, (c) the amount of proceeds of the Certificates expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Ce1iificates, and ( d) the sum total of all debt service payments on the Certificates calculated to the final maturity of the Certificates plus the fees and charges paid to third paiiies not paid with the proceeds of the Ce1iificates; WHEREAS, in compliance with SB 450, the City Council has obtained from Urban Futures, as the City's municipal advisor, and the Underwriter, the required good faith estimates and such estimates are disclosed and set fo1ih on Exhibit A attached hereto; WHEREAS, on this date, the City held a public heai·ing on the financing of such public capital improvements within the City in accordance with Section 6586.5 of the Act; WHEREAS, in accordance with Section 6586.5 of the Act, notice of such hearing was published once at least five days prior to the heai-ing in a newspaper of general circulation in the City; and WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been perfonned precedent to and in connection with the consummation of such financing authorized hereby do exist, have happened and have been performed in regulm and due time, fonn and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WEST COVINA, as follows: The foregoing recitals herein contained me true and correct and the City Council so finds. Section 1. The Project is hereby approved. Any of the Authorized Officers designated in Section 11 hereof (the "Authorized Officers") are authorized to implement the Project in accordance with the provisions of the Installment Sale Agreement and this Resolution. Section 2. The form of the Installment Sale Agreement, on file with the City Clerk, is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the naine and on behalf of the City, to execute and deliver the Installment Sale Agreement in substantially said fonn, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the aggregate aJ11ount of the principal components of the City's installment sale payments shall not exceed $13,000,000, the true yield on the City's installment sale payments evidenced by the Ce1iificates applicable to the interest components of such installment payments shall not exceed 4.50% and the final principal installment due on the Installment Sale Agreement shall be no later than June 1, 2036. Pursuant to the terms of the Installment Sale Agreement, the City Council further authorizes the execution and delivery of additional Contracts in the future from time to time for the purpose of financing the design, acquisition and construction of additional roadway improvements and street resurfacing, which are necessary and proper for, and for the common benefit of, the City, the payment for which may be made from motor vehicle fuel tax revenues received by the City from the State of California, and deposited into the Gas Tax Fund, and/or Measure R Revenues and/or Measure M Revenues and/or Proposition C Revenues, as those terms are defined in the Installment Sale Agreement. Section 3. The form of Trust Agreement, on file with the City Clerk, is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Trust Agreement in substantially said form, with such changes, inse1iions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. The execution and delivery of the Certificates, on the tenns and conditions set fmih in, and subject to the limitations specified in, the Trust Agreement and the Installment Sale Agreement, is hereby authorized and approved. The Ce1iificates shall be dated, shall bear interest at the rates, shall mature on the dates, shall be subject to call and redemption, shall be executed and delivered in the form and shall be as otherwise provided in the Trust Agreement, as the same shall be completed. Section 4. The fonn of Certificate Purchase Agreement, on file with the City Clerk, including the form of the Pricing Confirmation set forth as an exhibit thereto (the "Pricing Confirmation") is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Ce1iificate Purchase Agreement in substantially said fmm, with such changes therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the underwriter's discount for the sale of the Ce1iificates shall not exceed 1.00% of the aggregate principal amount of the principal components of the installment sale payments payable under the Installment Sale Agreement. Delivery of an executed copy of the Pricing Confirmation by fax or telecopy shall be deemed effective execution and delivery for all purposes. Section 5. The fo1m of Preliminary Official Statement, on file with the City Clerk, with such changes, inse1iions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Ce1iificates is hereby authorized and approved. Any one of the Authorized Officers is hereby authorized and directed to provide the Underwriter with such infmmation relating to the City as they shall reasonably request for inclusion in the Preliminary Official Statement and Official Statement. Upon inclusion of the information relating to the City therein, the Preliminary Official Statement is, except for certain omissions pe1mitted by Rule 15c2-12 of the Securities Exchange Act of 1934, as amended (the "Rule"), hereby deemed final within the meaning of the Rule; provided that no representation is made as to the information contained in the Preliminary Official Statement relating to the other Local Agencies or any Certificate Insurer or Ce1iificate Insurance Policy. If, at any time prior to the end of the underwriting period, as defined in the Rule, any event occurs as a result of which the information contained in the Preliminary Official Statement relating to the City might include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the City shall promptly notify the Underwriter. The Authority is hereby authorized and directed, at or after the time of the sale of the Certificates, for and in the name and on behalf of the City, to execute a final Official Statement in substantially the form of the Preliminary Official Statement presented to this meeting, with such additions thereto or changes therein as the Authority may approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 6. The fom1 of Continuing Disclosure Ce1tificate, on file with the City Clerk, is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Continuing Disclosure Certificate in substantially the form presented at this meeting with such changes therein as the Authorized Officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 7. In accordance with SB 450, good faith estimates of the following have been obtained from the Municipal Advisor and the Underwriter and are set forth on Exhibit A attached hereto: (a) the true interest cost of the Ce1tificates, (b) the sum of all fees and charges paid to third pmties with respect to the Certificates, ( c) the amount of proceeds of the Ce1tificates expected to be received net of the fees and charges paid to third pmties and any reserves or capitalized interest paid or funded with proceeds of the Ce1tificates, and ( d) the sum total of all debt service payments on the Certificates calculated to the final maturity of the Certificates plus the fees and charges paid to third patties not paid with the proceeds of the Ce1tificates. Section 8. The Authority is hereby authorized to apply for a Ce1tificate Insurance Policy for the Certificates and to obtain such insurance if the present value cost of such insurance is less than the present value of the estimated interest savings with respect to the Ce1tificates. Section 9. The appointment of Stifel, Nicolaus & Company, Incorporated as the Underwriter of the Ce1tificates, Urban Futures Inc. as municipal advisor to the City and Orrick, Henington & Sutcliffe LLP as special counsel is hereby approved. Section 10. The Authorized Officers are, a11d each of them is, authorized a11d directed, for and in the name of the City, to instruct Orrick, Herrington & Sutcliffe LLP, as special counsel to the Progra111 to bring a validation action under Section 860 of the Califomia Code of Civil Procedure to determine the legality and validity of the Instalhnent Sale Agreement, the Trust Agreement, the Ce1tificates and the other documents and proceedings authorized pursuant to this Resolution and to execute a11d return the fee agreement for such services on file with the Clerk. Section 11. The Authorized Officer designated below and a11y and all other officers, agents a11d employees of the City are hereby authorized a11d directed to take any a11d all actions a11d execute and deliver any and all documents necessary or convenient to accomplish the purposes of this Resolution. Authorized Officers: TITLE (1) [Mayor] (2) [City Manager] (3) [Fina11ce Director] Section 12. All actions heretofore taken by the officers, employees and agents of the City with respect to the transactions set forth above are hereby approved, confirmed and ratified. Section 13. This Resolution shall be in full force and effect upon its adoption. APPROVED AND ADOPTED on this 3th day of January 2018. ATTEST: Nickolas S. Lewis City Clerk Mike Spence Mayor I NICKOLAS S. LEWIS, CITY CLERK of the City of West Covina, California, do hereby certify that the foregoing resolution was duly adopted by the City Council of the City of West Covina, California, at a regular meeting thereof held on the 8111 day of January 2018, by the following vote of the City Council: AYES: NOES: ABSENT: ABSTAIN: APPROVED AS TO FORM: Kimberly Hall Barlow City Attorney Nickolas S. Lewis City Clerk EXHIBIT A GOOD FAITH ESTIMATES The following information was obtained from the City's Municipal Advisor and the Underwriter, and is provided in compliance with Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California Legislature) with respect to the City's installment sale payments evidenced by the Certificates: I. True Interest Cost of the City's Installment Sale Payments Evidenced by the Certificates. Assmning the maximum aggregate principal amount of the City's installment sale payments evidenced by the Certificates authorized to be executed and delivered ($13,000,000) is sold, and based on market interest rates prevailing at the time of preparation of this infmmation, a good faith estimate of the true interest cost of the City's installment sale payments evidenced by the Certificates, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the City's installment sale payments evidenced by the Certificates, is 3 .60%. 2. Finance Charge of the Certificates. Assuming the maximun1 aggregate principal amount of the City's installment sale payments evidenced by the Certificates authorized to be executed and delivered ($13,000,000) is sold, and based on market interest rates prevailing at the time of preparation of this info1mation, a good faith estimate of the City's propmiionate share of the finance charge of the Ce1iificates, which means the sum of all fees and charges paid to third paiiies ( or costs associated with the Ce1iificates) not allocable to other Local Agencies, is $340,000. 3. Amount of Proceeds to be Received. Assuming the maximum aggregate principal an10unt of the City's installment sale payments evidenced by the Certificates authorized to be executed and delivered ($13,000,000) is sold, and based on mai-lcet interest rates prevailing at the time of prepai·ation of this information, a good faith estimate of the amount of proceeds expected to be received by the City for sale of the Ce1tificates less the finance charge of the Certificates described in paragraph 2 above and ai1y reserves or capitalized interest paid or funded with proceeds of the Certificates, is $12,000,000. 4. Total Payment Amount. Assuming the maximum aggregate principal amount of the City's installment sale payments evidenced by the Certificates authorized to be executed and delivered ($13,000,000) is sold, and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the total payment amount, which means the sum total of all payments the City will make to pay debt service on the City's installment sale payments evidenced by the Certificates plus the City's propmiionate share of the finance charge of the Ce1tificates described in paragraph 2 above not paid with the proceeds of the Ce1tificates or allocable to other Local Agencies, calculated to the final maturity of the City's installment sale payments evidenced by the Ce1tificates, is $17,500,000. Attention is directed to the fact that the foregoing infmmation constitutes good faith estimates only. The actual interest cost, finance charges, amount of proceeds ai1d total payment amount may vary from those presently estimated due to variations from these estimates in the timing of the sale of the Ce1tificates, the actual principal amount of Certificates sold, the amortization of the Certificates sold and market interest rates at the time of sale. The date of sale and the amount of Certificates sold will be detennined by the City based on need for improvement funds and other factors. The actual interest rates at which the Certificates will be sold will depend on the bond market at the time of sale. The actual amortization of the Certificates will also depend, in part, on market interest rates at the time of sale. Market interest rates are affected by economic and other factors beyond the City's control. The City Council has approved the execution and delivery of the City's Installment Sale Agreement including the installment sale payments evidenced by the Certificates with a maximum true interest cost of 4.50%. ATTACHMENT NO. 2 OHSUSA:767615434.2 2018 INSTALLMENT SALE AGREEMENT by and between the CITY OF WEST COVINA as Purchaser and the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, as Seller for the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) Dated as of _______ 1, 2018 TABLE OF CONTENTS Page -i- OHSUSA:767615434.2 ARTICLE I DEFINITIONS ................................................................................................. 2 Section 1.01 Definitions........................................................................................................ 2 Section 1.02 Terms defined in the Trust Agreement .......................................................... 12 ARTICLE II THE PROJECT .............................................................................................. 12 Section 2.01 Design, Acquisition, Construction and Sale of the Project ............................ 12 ARTICLE III 2018 INSTALLMENT SALE PAYMENTS; ADMINISTRATION FEE ................................................................................................................ 13 Section 3.01 Purchase Price and Administration Fee ......................................................... 13 Section 3.02 Payment of 2018 Installment Sale Payments and Administration Fee .......... 13 Section 3.03 Prepayment of 2018 Installment Sale Payments ............................................ 17 ARTICLE IV ADDITIONAL CONTRACTS ...................................................................... 18 Section 4.01 Additional Contracts ...................................................................................... 18 ARTICLE V REPRESENTATIONS AND COVENANTS OF THE LOCAL AGENCY AND THE AUTHORITY ............................................................ 18 Section 5.01 Authority; Compliance with 2018 Installment Sale Agreement and Trust Agreement ............................................................................................ 18 Section 5.02 Use of Proceeds of Certificates ...................................................................... 19 Section 5.03 Against Encumbrances................................................................................... 19 Section 5.04 Maintenance of Revenues .............................................................................. 19 Section 5.05 Tax Covenants ............................................................................................... 20 Section 5.06 Prompt Acquisition and Construction of the Project ..................................... 20 Section 5.07 Accounting Records and Financial Statements.............................................. 20 Section 5.08 Protection of Security and Rights of the Authority and the Trustee .............. 20 Section 5.09 Further Assurances......................................................................................... 21 Section 5.10 Continuing Disclosure ................................................................................... 21 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES ................................................ 21 Section 6.01 Events of Default and Acceleration of Principal ........................................... 21 Section 6.02 Application of Revenues Upon Acceleration ................................................ 22 Section 6.03 Other Remedies .............................................................................................. 23 Section 6.04 Non-Waiver.................................................................................................... 23 Section 6.05 Remedies Not Exclusive ................................................................................ 23 ARTICLE VII DISCHARGE OF OBLIGATIONS ............................................................... 24 Section 7.01 Discharge of Obligations ............................................................................... 24 ARTICLE VIII MISCELLANEOUS ...................................................................................... 25 Section 8.01 Liability of Local Agency Limited to Revenues ............................................ 25 Section 8.02 Benefits of 2018 Installment Sale Agreement ............................................... 25 Section 8.03 Successor Is Deemed Included in all References to Predecessor .................. 25 TABLE OF CONTENTS (continued) Page -ii- OHSUSA:767615434.2 Section 8.04 Waiver of Personal Liability .......................................................................... 25 Section 8.05 Article and Section Headings, Gender and References ................................. 25 Section 8.06 Partial Invalidity............................................................................................. 26 Section 8.07 Assignment .................................................................................................... 26 Section 8.08 Net Contract ................................................................................................... 26 Section 8.09 California Law ............................................................................................... 26 Section 8.10 Indemnification .............................................................................................. 26 Section 8.11 Funds .............................................................................................................. 26 Section 8.12 Notices; Authorized Local Agency Representative ....................................... 27 Section 8.13 Notices to Insurer; Miscellaneous Insurer Provisions ................................... 27 Section 8.14 Agreement Represents Complete Agreement; Amendments ........................ 29 Section 8.15 Effective Date ................................................................................................ 29 Section 8.16 Execution in Counterparts.............................................................................. 29 EXHIBIT A 2018 INSTALLMENT SALE PAYMENTS SCHEDULE ......................... A-1 EXHIBIT B DESCRIPTION OF PROJECT.................................................................... B-1 OHSUSA:767615434.2 2018 INSTALLMENT SALE AGREEMENT This 2018 INSTALLMENT SALE AGREEMENT (the “2018 Installment Sale Agreement”), dated as of _______ 1, 2018, by and between the CITY OF WEST COVINA, a municipal corporation organized and existing under the Constitution of the State of California (the “Local Agency”), and the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, a joint exercise of powers authority duly organized and existing under and by virtue of the laws of the State of California (the “Authority”), W I T N E S S E T H: WHEREAS, the Authority is a joint exercise of powers authority duly organized and operating pursuant to Article 1 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California; WHEREAS, Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California authorizes and empowers the Authority to cause certificates of participation to be executed and delivered to assist local agencies in financing projects and programs consisting of certain public improvements or working capital or liability and other insurance needs whenever a local agency determines that there are significant public benefits from so doing; WHEREAS, the Local Agency has determined that the design, acquisition and construction of certain roadway improvements and street resurfacing, as hereinafter described (the “Project”) is necessary and proper for Local Agency purposes and uses, and under the terms of applicable law, the payment for such Project may be made from Revenues, as such term is hereinafter defined, and is for the common benefit of the Local Agency as a whole; WHEREAS, in order to achieve a lower net interest cost and lower costs of issuance in connection with financing the Project, the Local Agency has determined to participate with certain other local agencies in the California Statewide Communities Development Authority T.R.I.P. – Total Road Improvement Program (the “Program”) established by the Authority to finance projects, such as the Project; WHEREAS, pursuant to the Program the Authority has determined to acquire and construct the Project for, and sell the Project to, the Local Agency; WHEREAS, the Local Agency has determined to make installment sale payments as hereinafter described to the Authority for the repayment of the costs of the design, acquisition and construction of the Project and the incidental costs and expenses related thereto paid by the Authority; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of the 2018 Installment Sale Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into the 2018 Installment Sale Agreement; 2 OHSUSA:767615434.2 NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS: ARTICLE I DEFINITIONS Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any opinion or report or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein: Accountant’s Report “Accountant’s Report” means a report signed by an Independent Certified Public Accountant. Accreted Value “Accreted Value” means, with respect to any Capital Appreciation Certificates, as of the date of calculation, the initial amount thereof plus the interest accrued thereon to such date of calculation, compounded from the date of initial delivery at the approximate interest rate thereof on each June 1 and December 1, as determined in accordance with the table of accreted values for any Capital Appreciation Certificates prepared at the time of sale thereof, assuming in any year that such Accreted Value increases in equal daily amounts on the basis of a year of three hundred sixty (360) days composed of twelve (12) months of thirty (30) days each. Acquisition Fund “Acquisition Fund” means the fund by that name established pursuant to Section 2.11 of the Trust Agreement. Administration Fee “Administration Fee” means an amount equal to the sum of the Authority Fee, the Trustee Fee, the Rebate Analyst Fee and any other similar fee payable in connection with the administration of the Program, payable on the 15th day of the month preceding each June 1, commencing June 1, [2018], for the administrative costs of the Project and the Program. The Administration Fee shall be allocated on a pro rata basis (related to the Purchase Price payable by each Local Agency) among each Local Agency. Authority “Authority” means the California Statewide Communities Development Authority, a joint exercise of powers authority duly organized and existing under and by virtue of the laws of the 3 OHSUSA:767615434.2 State of California and an Amended and Restated Joint Exercise of Powers Agreement, dated as of June 1, 1988, among a number of California cities, counties and special districts, including the Local Agency, as amended. Authority Fee “Authority Fee” means the annual administration fee of the Authority payable, in advance, on __________, 2018 and thereafter on each June 1, commencing June 1, [2018], equal to .015% of the outstanding amount of the principal components of the 2018 Installment Sale Payments. Authorized Authority Representative “Authorized Authority Representative” means any member of the Commission of the Authority and any other person as may be designated and authorized to sign on behalf of the Authority pursuant to a resolution adopted thereby. Authorized Local Agency Representative “Authorized Local Agency Representative” means the person or persons designated in Section 8.12 hereof or any other person at the time designated to act on behalf of such Local Agency by written certificate furnished to the Trustee, containing the specimen signature of such person and signed on behalf of such Local Agency by an Authorized Local Agency Representative. Business Day “Business Day” means any day on which the Trustee is open for business at its corporate trust office in Costa Mesa, California. Capital Appreciation Certificates “Capital Appreciation Certificates” means any certificates of participation in 2018 Installment Sale Payments described as such when executed and delivered. Certificates “Certificates” means the California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program), executed and delivered in accordance with the Trust Agreement. Code “Code” means the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder. 4 OHSUSA:767615434.2 Continuing Disclosure Agreement “Continuing Disclosure Agreement” means the Continuing Disclosure Agreement, dated __________, 2018, by and between the Local Agency and Urban Futures Inc. as Dissemination Agent, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. Contracts “Contracts” means all installment sale contracts, capital leases or similar obligations of the Local Agency authorized and executed by the Local Agency under and pursuant to applicable law, the interest and principal and prepayment premium, if any, payments under and pursuant to which are payable from Revenues on a parity with the payment of the 2018 Installment Sale Payments. Debt Service “Debt Service” means, for any Fiscal Year, the sum of that portion of the Installment Sale Payments required to be made at the times provided in the Contracts that would have accrued during such Fiscal Year if such Installment Sale Payments were deemed to accrue daily in equal amounts from, in each case, the next preceding Installment Sale Payment Date of interest or principal or the date of the pertinent Contract, as the case may be; provided, that (a) if any of the Installment Sale Payments due under any of such Contracts are evidenced by Capital Appreciation Certificates, then the Accreted Value payment shall be deemed a principal payment and interest that is compounded and paid as Accreted Value shall be deemed due on the scheduled redemption or payment date of such Capital Appreciation Certificate; (b) if any of the Installment Sale Payments due under any such Contracts bear interest payable pursuant to a variable interest rate formula, the interest rate on such Contracts for periods when the actual interest rate cannot yet be determined, shall be assumed to be equal to the greater of (i) the actual rate on the date of calculation, or if such Contracts are not yet outstanding, the initial rate (if then established and binding), (ii) if the Contracts have been outstanding for at least twelve months, the average rate over the twelve months immediately preceding the date of calculation, and (iii)(1) if interest on such Contracts is excludable from gross income under the applicable provisions of the Code, the most recently published “Bond Buyer 25 Bond Revenue Index” (or comparable index if no longer published), or (2) if interest is not so excludable, the interest rate on direct U.S. Treasury obligations with comparable maturities; (c) if any of the Contracts is secured by an irrevocable letter of credit issued by a bank having a combined capital and surplus of at least $75,000,000, the principal payments or deposits with respect to such Contracts nominally due in the last Fiscal Year in which such Contracts mature may, at the option of the Local Agency, be treated as if they were due as specified in any loan agreement or reimbursement agreement issued in connection with such letter of credit or pursuant to the repayment provisions of such letter of credit and interest on such Contracts after such Fiscal Year shall be assumed to be payable pursuant to the terms of such loan agreement or reimbursement agreement or repayment provisions and (d) if any of such Contracts is not secured by a letter of credit as described in clause (c) of this definition and 20% or more of the original principal of the Installment Sale Payments due under such Contracts is not due until the final stated maturity of the Installment Sale Payments due under such Contracts, such principal 5 OHSUSA:767615434.2 may, at the option of the Local Agency, be treated as if it were due based upon a level amortization of such principal over the term of such Installment Sale Payments or 30 years, whichever is greater. Event of Default “Event of Default” means an event described in Section 6.01. 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 and interest strips of the Resolution Funding Corporation for which separation of principal and interest is maintained in book-entry form. Fiscal Year “Fiscal Year” means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other annual accounting period hereafter selected and designated by the governing body of the Local Agency as the Fiscal Year of the Local Agency. Gas Tax Account “Gas Tax Account” means the account established pursuant to State law by ordinance adopted by the governing body of the Local Agency and pursuant to section 3.02 hereof. Gas Tax Revenues “Gas Tax Revenues” means all amounts received by the Local Agency from the State in accordance with Streets and Highways Code Sections 2103, 2104(d), (e) and (f), 2105, 2106 and 2107, as such provisions may be amended, and all other revenues (except revenues received by the Local Agency in accordance with Streets and Highways Code Section 2107.5), if any, received by the Local Agency from taxes imposed on the purchase of motor vehicle fuels and any payments, subventions or reimbursements received by the Local Agency from the State in lieu of such revenues. Independent Certified Public Accountant “Independent Certified Public Accountant” means any firm of certified public accountants appointed by the Local Agency which is independent pursuant to the Statement on Auditing Standards No. 1 of the American Institute of Certified Public Accountants. Installment Sale Payments; 2018 Installment Sale Payments “Installment Sale Payments” means the installment sale, rental or other periodic payments scheduled to be paid by the Local Agency under and pursuant to the Contracts. 6 OHSUSA:767615434.2 “2018 Installment Sale Payments” means the Installment Sale Payments scheduled to be paid by the Local Agency under and pursuant to this 2018 Installment Sale Agreement. Installment Sale Payment Date; 2018 Installment Sale Payment Date “Installment Sale Payment Date” means any date on which Installment Sale Payments are scheduled to be paid by the Local Agency under and pursuant to any Contract. “2018 Installment Sale Payment Date” means any date on which 2018 Installment Sale Payments are scheduled to be paid by the Local Agency under and pursuant to this 2018 Installment Sale Agreement. Insurance Agreement “Insurance Agreement” means the debt service reserve agreement, dated __________, 2018, by and between the Local Agency and the Insurer. Insurer “Insurer” means ________________________, a ________ mutual insurance corporation, or any successor thereto or assignee thereof. Interest Payment Date “Interest Payment Date” means a date on which interest evidenced and represented by the Certificates is due and payable, being June 1 and December 1 of each year, commencing [June 1, 2018]. Local Agency; Local Agencies “Local Agency” means the City of West Covina, a municipal corporation organized and existing under the Constitution of the State of California. The plural term “Local Agencies” refers to the Local Agencies listed in Schedule I to the Trust Agreement. Maximum Annual Debt Service “Maximum Annual Debt Service” means the greatest total Debt Service payable in any Fiscal Year during the period commencing with the then current Fiscal Year and terminating with the Fiscal Year in which payments are due under the last Contract. Measure M Ordinance “Measure M Ordinance” means Ordinance No. 16-01, the Los Angeles County Traffic Improvement Plan, adopted by the Los Angeles County Metropolitan Transportation Authority on June 23, 2016, and approved by at least two-thirds of electors voting on such proposition in the November 8, 2016 election, as supplemented and amended. 7 OHSUSA:767615434.2 Measure M Project “Measure M Project” means a capital project for which Measure M Receipts may be expended, including the related Administration Fee. Measure M Receipts “Measure M Receipts” means Measure M Revenues allocated by the Los Angeles County Metropolitan Transportation Authority to the Local Agency pursuant to the Measure M Ordinance from the Local Return Subfund established under the Measure M Ordinance, to the extent the Project constitutes a Measure M Project, in an amount not greater than the Installment Sale Payments related to such Measure M Project. Measure M Receipts Account “Measure M Receipts Account” means the account by that name established pursuant to Section 3.02 hereof. Measure M Receipts Coverage Amount “Measure M Receipts Coverage Amount” means an amount in any Fiscal Year equal to Measure M Revenues allocated to the Local Agency in excess of Measure M Receipts but not more than 50% of Measure M Receipts for such Fiscal Year. Measure M Revenues “Measure M Revenues” means revenues of the Los Angeles County Metropolitan Transportation Authority pursuant to the Measure M Ordinance derived from a retail transactions and use tax imposed in the County of Los Angeles pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, Division 12 (Section 130350 et seq.) of the Public Utilities Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, and the Measure M Ordinance. Collection of the Measure M Revenues commenced on July 1, 2017 and does not terminate. Measure R Ordinance “Measure R Ordinance” means Ordinance No. 08-01, the Traffic Relief and Rail Expansion Ordinance, adopted by the Los Angeles County Metropolitan Transportation Authority on July 24, 2008, and approved by at least two-thirds of electors voting on such proposition in the November 4, 2008 election, as supplemented and amended. Measure R Project “Measure R Project” means a capital project for which Measure R Receipts may be expended, including the related Administration Fee. 8 OHSUSA:767615434.2 Measure R Receipts “Measure R Receipts” means Measure R Revenues allocated by the Los Angeles County Metropolitan Transportation Authority to the Local Agency pursuant to the Measure R Ordinance from the Local Return Subfund established under the Measure R Ordinance, to the extent the Project constitutes a Measure R Project, in an amount not greater than the Installment Sale Payments related to such Measure R Project. Measure R Receipts Account “Measure R Receipts Account” means the account by that name established pursuant to Section 3.02 hereof. Measure R Receipts Coverage Amount “Measure R Receipts Coverage Amount” means an amount in any Fiscal Year equal to Measure R Revenues allocated to the Local Agency in excess of Measure R Receipts but not more than 50% of Measure R Receipts for such Fiscal Year. Measure R Revenues “Measure R Revenues” means revenues of the Los Angeles County Metropolitan Transportation Authority pursuant to the Measure R Ordinance derived from a retail transactions and use tax imposed in the County of Los Angeles pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, Division 12 (Section 130350 et seq.) of the Public Utilities Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, and the Measure R Ordinance. Collection of the Measure R Revenues commenced on July 1, 2009 and terminates on June 30, 2039. Opinion of Counsel “Opinion of Counsel” means a written opinion of counsel of national reputation generally recognized to be well qualified in the field of law relating to municipal obligations such as the Certificates, retained by the Local Agency and satisfactory to the Trustee (who shall be under no liability by reason of such approval). Other Available Revenues “Other Available Revenues” means revenues, other than Revenues as herein defined, legally available to the Local Agency to make Installment Sale Payments, if any. Policy Costs “Policy Costs” has the meaning set forth in the Insurance Agreement. 9 OHSUSA:767615434.2 Proceeds Subaccount “Proceeds Subaccount” means the Proceeds Subaccount of the Acquisition Fund established pursuant to Section 2.11 of the Trust Agreement. Pro Rata Share of Principal “Pro Rata Share of Principal” means, during any month, an amount of principal becoming due and payable hereunder on the next succeeding Certificate Payment Date that would have accrued if such principal were deemed to accrue monthly in equal amounts from the preceding Certificate Payment Date. Project “Project” means the design, engineering, permitting and construction by the Authority, for sale to the Local Agency, of certain street and roadway improvements and resurfacing, all as described more particularly in Exhibit B, attached hereto and incorporated herein. Proposition C Ordinance “Proposition C Ordinance” means Ordinance No. 49 adopted by the Los Angeles County Transportation Commission, predecessor to the Los Angeles County Metropolitan Transportation Authority, on August 8, 1990, and approved by at least two-thirds of electors voting on such proposition in the November 6, 1990 election, as supplemented and amended. Proposition C Project “Proposition C Project” means a capital project for which Proposition C Receipts may be expended. Proposition C Receipts “Proposition C Receipts” means Proposition C Revenues allocated by the Los Angeles County Metropolitan Transportation Authority to the Local Agency pursuant to the Proposition C Ordinance, to the extent the Project constitutes a Proposition C Project, in an amount not greater than the Installment Sale Payments related to such Proposition C Project. Proposition C Receipts Account “Proposition C Receipts Account” means the account by that name established pursuant to Section 3.02 hereof. Proposition C Receipts Coverage Amount “Proposition C Receipts Coverage Amount” means an amount in any Fiscal Year equal to Proposition C Revenues allocated to the Local Agency in excess of Proposition C Receipts but not more than 50% of Proposition C Receipts for such Fiscal Year. 10 OHSUSA:767615434.2 Proposition C Revenues “Proposition C Revenues” means revenues of the Los Angeles County Metropolitan Transportation Authority pursuant to the Proposition C Ordinance derived from a retail transactions and use tax imposed in the County of Los Angeles pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, Division 12 (Section 130350 et seq.) of the Public Utilities Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, and the Proposition C Ordinance. Collection of the Proposition C Revenues commenced on April 1, 1991 and does not terminate. Purchase Price “Purchase Price” means the total of all 2018 Installment Sale Payments owed by the Local Agency to the Authority under the conditions and terms hereof for the repayment of the costs of the design, acquisition and construction of the Project and the incidental costs and expenses related thereto paid by the Authority (including amounts owed to the Insurer in connection with the Insurance Policy and the Reserve Policy). Rebate Amount “Rebate Amount” means, for any given period, the amount determined by the Rebate Analyst as required to be rebated or paid as a yield reduction payment to the United States of America with respect to the Certificates. Rebate Analyst “Rebate Analyst” means BLX Group. Rebate Analyst’s Fee “Rebate Analyst’s Fee” means the fee payable to the Rebate Analyst, payable annually on each Certificate Payment Date in the amount of $650 (if the Local Agency elects to have a 5- year calculation of the Rebate Amount performed) and $1,500 (if the local Agency elects to have an annual calculation of the Rebate Amount performed). Rebate Fund “Rebate Fund” means the fund by that name established in Section 4.04 of the Trust Agreement. Reserve Fund “Reserve Fund” means the fund by that name established pursuant to Section 3.03 of the Trust Agreement. 11 OHSUSA:767615434.2 Reserve Fund Requirement “Reserve Fund Requirement” means, as of any date of calculation, an amount equal to the least of (i) 10% of the initial stated principal amount (within the meaning of Section 148 of the Code) of the 2018 Installment Sale Payments; (ii) 125% of the average annual 2018 Installment Sale Payments, or (iii) the Maximum Annual Debt Service. Reserve Policy “Reserve Policy” means the Municipal Bond Debt Service Reserve Insurance Policy issued by the Insurer, dated __________, 2018, and credited to the Local Agency’s Reserve Subaccount. Reserve Subaccount “Reserve Subaccount” means the subaccount by that name established pursuant to Section 3.03 of the Trust Agreement. Revenues “Revenues” means all Gas Tax Revenues, Measure R Receipts, Measure M Receipts; and Proposition C Receipts; provided that: (a) Revenues which are not by the terms of the relevant Ordinance or its related implementation plan or expenditure plan eligible for expenditure equally on each subset of eligible costs listed as a component of the defined “Project” shall be proven, by certification provided by the Local Agency to be sufficient to produce a sum equal to at least 150% of the Maximum Annual Debt Service allocable to such related components of the Project; (b) Revenues shall not include Gas Tax Revenues with respect to the 2018 Installment Sale Payments, and Gas Tax Revenues are not pledged to the payment of the 2018 Installment Sale Payments; and (c) If Gas Tax Revenues are pledged and payable as Revenues in connection with any Additional Contract on a parity with the payment by the Local Agency of the 2018 Installment Sale Payments, as provided in Section 4.01 hereof, then such Gas Tax Revenues will constitute Revenues and will be pledged to the payment of the 2018 Installment Sale Payments. Tax Certificate “Tax Certificate” means the Tax Certificate dated the date of initial execution and delivery of the Certificates and executed and delivered by the Local Agency. Trust Agreement “Trust Agreement” means that certain Trust Agreement dated as of _______ 1, 2018, by and among the Trustee, the Local Agencies and the Authority, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. 12 OHSUSA:767615434.2 Trustee “Trustee” means Wilmington Trust, National Association, or any successor thereto appointed pursuant to this Trust Agreement. Trustee Fee “Trustee’s Fee” means the annual administration fee of the Trustee, in the amount of $1,500.00 payable in advance on __________, 2018 and thereafter on each June 1, commencing June 1, [2018]. 2018 Installment Sale Agreement “2018 Installment Sale Agreement” means this installment sale agreement by and between the Local Agency and the Authority, dated as of _______ 1, 2018, as originally executed and as it may from time to time be amended or supplemented in accordance herewith and with the terms of the Trust Agreement. Section 1.02 Terms defined in the Trust Agreement. Capitalized terms not otherwise defined herein have the meanings set forth in the Trust Agreement. ARTICLE II THE PROJECT Section 2.01 Design, Acquisition, Construction and Sale of the Project. The Authority hereby agrees to cause the design, acquisition and construction of the Project for, and to sell the Project to, the Local Agency; and the Local Agency agrees to transfer whatever real or personal property interest it may possess which may be required in order for the Authority to cause such design, acquisition and construction of the Project. In order to implement this provision, the Authority hereby appoints the Local Agency as its agent for the purpose of such design, acquisition and construction, and the Local Agency hereby agrees to enter into such engineering, design and construction contracts and purchase orders as may be necessary, as agent for the Authority, to provide for the complete design, acquisition and construction of the Project. The Local Agency hereby agrees that as such agent it will cause the acquisition and construction of the Project to be diligently completed after the deposit of funds in the Proceeds Subaccount of the Acquisition Fund for such purpose pursuant to Section 2.11 of the Trust Agreement, and that it will use its best efforts to cause the design, acquisition and construction of the Project to be completed by ________ 20__, except for unforeseeable delays beyond the reasonable control of the Local Agency. The Authority hereby agrees to sell, and hereby sells, the Project to the Local Agency. The Local Agency hereby agrees to purchase, and hereby purchases, the Project from the Authority. Notwithstanding the foregoing, it is hereby expressly understood and agreed that the Authority shall be under no liability of any kind or character whatsoever for the payment of any costs or expenses incurred by the Local Agency (whether as agent for the Authority or otherwise) for the acquisition and construction of the Project and that all such costs and expenses shall be paid by the Local Agency, regardless of whether the funds deposited in the Proceeds Subaccount of the Acquisition Fund are sufficient to cover all such costs. 13 OHSUSA:767615434.2 ARTICLE III 2018 INSTALLMENT SALE PAYMENTS; ADMINISTRATION FEE Section 3.01 Purchase Price and Administration Fee. (a) The Purchase Price to be paid by the Local Agency to the Authority hereunder is the sum of the principal amount of the Local Agency’s obligation hereunder plus the interest to accrue on the unpaid balance of such principal amount from the date hereof over the term hereof, subject to prepayment as provided in Section 3.03. (b) The principal amount of the Purchase Price to be paid by the Local Agency to the Authority hereunder is $[PAR AMOUNT]. (c) The interest to accrue on the unpaid balance of such principal amount shall be paid by the Local Agency as and shall constitute interest paid on the principal amount of the Local Agency’s Purchase Price obligation hereunder. (d) Interest on the unpaid balance of the principal amount of the Purchase Price shall accrue, from the date of the initial execution and delivery of the Certificates, on the principal component of each 2018 Installment Sale Payment at the following rates calculated on the basis of a 360-day year comprised of twelve 30-day months: Principal Component Due Date (June 1) Principal Amount Interest Rate 2019 $ % 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 (e) In addition, the Local Agency shall pay the Administration Fee for the administrative cost of the Project and the Program. 14 OHSUSA:767615434.2 Section 3.02 Payment of 2018 Installment Sale Payments and Administration Fee. The Local Agency shall, subject to prepayment as provided in Section 3.03, pay the Authority or the Trustee, as appropriate, the Purchase Price, without offset or deduction of any kind, by paying (i) the principal installments of the 2018 Installment Sale Payments, which principal installments shall be due annually on each Certificate Payment Date, (ii) the interest installments of the 2018 Installment Sale Payments, which interest installments shall be due semiannually on each Interest Payment Date and (iii) the Administration Fee which shall be due annually on each Certificate Payment Date. The 2018 Installment Sale Payments Schedule is set forth in Exhibit A attached hereto. Each 2018 Installment Sale Payment and the Administration Fee shall be payable on and shall be required to be deposited with the Trustee on or before the fifteenth day of the calendar month immediately preceding its due date. The obligation of the Local Agency to pay the Purchase Price by paying the 2018 Installment Sale Payments including the Administration Fee is, subject to Section 8.01, absolute and unconditional, and until such time as the 2018 Installment Sale Payments shall have been paid in full (or provision for the payment thereof shall have been made pursuant to Section 7.01), the Local Agency will not discontinue or suspend any 2018 Installment Sale Payments or Administration Fee required to be paid by it under this Section when due, whether or not the Project or any part thereof is complete, or its use is suspended, interfered with, reduced, curtailed or terminated in whole or in part, and such payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party to any agreement for any cause whatsoever. The Local Agency shall pay or reimburse the Insurer any and all charges, fees, costs and expenses that the Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in the Trust Agreement or this Installment Sale Agreement (each a “Related Document”); (ii) the pursuit of any remedies under the any Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to any Related Document whether or not executed or completed, or (iv) any litigation or other dispute in connection with any other Related Document or the transactions contemplated thereby, other than costs resulting from the failure of the Insurer to honor its obligations under the Insurance Policy. The Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of any Related Document. In order to carry out and effectuate the obligation of the Local Agency contained herein to pay the Purchase Price by paying the 2018 Installment Sale Payments and the Administration Fee, the Local Agency established the “City of West Covina Pledged Tax Fund” (the “Pledged Tax Fund” and within the Pledged Tax Fund, the “Measure R Receipts Account,” the “Measure M Receipts Account,” and the “Proposition C Receipts Account” and, if at some later date Gas Tax Revenues are included as Revenues, the “Gas Tax Account”), which fund and accounts therein the Local Agency agrees and covenants to maintain so long as any 2018 Installment Sale Payments remain unpaid, and all money on deposit therein shall be applied and used only as provided herein. The Local Agency agrees and covenants that (i) all Gas Tax Revenues received by it shall be deposited when and as received in the Local Agency’s Gas Tax Account, (ii) all Measure R Receipts received by it shall be deposited when and as received in the Measure R Receipts Account, (iii) all Measure M Receipts received by it shall be deposited when and as 15 OHSUSA:767615434.2 received in the Measure M Receipts Account, and (iv) all Proposition C Receipts received by it shall be deposited when and as received in the Proposition C Receipts Account. The Local Agency covenants and agrees to apply Measure R Revenues constituting Measure R Receipts, and Measure M Revenues constituting Measure M Receipts, and Proposition C Revenues constituting Proposition C Receipts (subject to the limitations contained in the defined term “Revenues”) as received on an annual basis to the payment of 2018 Installment Payments prior to any other expenditure of such funds, subject to the release for expenditure as provided in this section below and only in an amount not exceeding the Measure R Receipts and Measure M Receipts. The Local Agency covenants and agrees to include all Insurer Reimbursement Amounts (as more fully described in the Trust Agreement) and Policy Costs (as more fully described in the Trust Agreement and the Insurance Agreement) in its calculation of Installment Sale Payments and shall pay all such payments from the Revenues. All of the Revenues and all money in the Pledged Tax Fund and in the funds or accounts so specified and provided for in this 2018 Installment Sale Agreement, are hereby irrevocably pledged to the punctual payment of the 2018 Installment Sale Payments and the Administration Fee, and the Revenues shall not be used for any other purpose while any of the 2018 Installment Sale Payments remain outstanding; subject to the provisions of this 2018 Installment Sale Agreement permitting application thereof for the purposes and on the terms and conditions set forth herein. This pledge shall constitute a first lien on the Revenues for the payment of the 2018 Installment Sale Payments and the Administration Fee in accordance with the terms thereof. Notwithstanding the foregoing, the Local Agency may satisfy its obligation to deposit 2018 Installment Sale Payments with the Trustee by depositing Other Available Revenues with the Trustee, and if and when so deposited, shall be irrevocably pledged to the payment of 2018 Installment Sale Payments. All Revenues on deposit in the Pledged Tax Fund shall be set aside and deposited by the Local Agency in the various funds and accounts within the Revenue Fund at the following times in the following order of priority: (a) Interest and Principal Fund Deposits. On or before the 15th day preceding each Interest Payment Date, the Local Agency shall, from the Revenues in the Pledged Tax Fund, transfer to the Trustee for deposit in the Local Agency’s Interest Payment Account in the Interest Fund within the Revenue Fund established under the Trust Agreement (the “Interest Payment Account”), a sum equal to the interest becoming due and payable hereunder on the next succeeding Interest Payment Date, except that no such deposit need be made if the Trustee then holds money in the Interest Payment Account equal to the amount of interest becoming due and payable hereunder on the next succeeding Interest Payment Date; and on or before the 15th day preceding each Certificate Payment Date, the Local Agency shall, from the Revenues in the Pledged Tax Fund, transfer to the Trustee for deposit in the Principal Payment Account in the Principal Fund within the Revenue Fund established under the Trust Agreement (the “Principal Payment Account”), a sum equal to the principal becoming due and payable 16 OHSUSA:767615434.2 hereunder on the next succeeding 2018 Installment Sale Payment Date, except that no such deposit need be made if the Trustee then holds money in the Principal Payment Account equal to the amount of Principal becoming due and payable hereunder on the next succeeding 2018 Installment Sale Payment Date; and all money on deposit in the Interest Payment Account and the Principal Payment Account shall be used to make and satisfy the 2018 Installment Sale Payments due on each date and such payments shall be deposited by the Trustee to the Interest Account or the Principal Account, as the case may be, as defined in, created under and in accordance with the terms of, the Trust Agreement. (b) Reserve Fund Deposit. On or before the 15th day of each month, the Local Agency shall, from the Revenues in the Pledged Tax Fund, transfer to the Trustee for deposit in the Local Agency’s Subaccount in the Reserve Fund (the “Reserve Subaccount”) within the Revenue Fund that sum, if any, necessary to restore the Reserve Subaccount to an amount equal to the Reserve Fund Requirement, all in accordance with and subject to the terms and conditions of Section 3.03 of the Trust Agreement. All money in the Reserve Subaccount shall be used and withdrawn by the Trustee for the purposes specified in Section 3.03 of the Trust Agreement. The Local Agency further agrees to pay to the Insurer all amounts owed to it under the Insurance Agreement in connection with any draw on the Reserve Policy, and all related reasonable expenses incurred by the Insurer and shall pay interest thereon from the date of payment by the Insurer at the Late Payment Rate, in each case solely from available Revenues and subject to the first pledge of and lien upon the Revenues for the payment of the Certificates. “Late Payment Rate” means the lesser of (x) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate (“Prime Rate”) (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus [3]%, and (ii) the then applicable highest rate of interest on the Certificates and (y) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such national bank as the Insurer shall specify. If the interest provisions of this subparagraph shall result in an effective rate of interest which, for any period, exceeds the limit of the usury or any other laws applicable to the indebtedness created herein, then all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice between or by any party hereto, be applied as additional interest for any later periods of time when amounts are outstanding hereunder to the extent that interest otherwise due hereunder for such periods plus such additional interest would not exceed the limit of the usury or such other laws, and any excess shall be applied upon principal immediately upon receipt of such moneys by the Insurer, with the same force and effect as if the Local Agency had specifically designated such extra sums to be so applied and the Insurer had agreed to accept such extra payment(s) as additional interest for such later periods. In no event shall any agreed-to or actual exaction as consideration for the indebtedness created herein 17 OHSUSA:767615434.2 exceed the limits imposed or provided by the law applicable to this transaction for the use or detention of money or for forbearance in seeking its collection. Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, “Policy Costs”) shall commence in the first month following each draw, and each such monthly payment shall be in an amount at least equal to 1/12 of the aggregate of Policy Costs related to such draw. Amounts in respect of Policy Costs paid to the Insurer shall be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to the Insurer on account of principal due, the coverage under the Reserve Policy will be increased by a like amount, subject to the terms of the Reserve Policy. If the Local Agency shall fail to pay any Policy Costs in accordance with the requirements above, the Insurer shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under the Trust Agreement and this 2018 Installment Purchase Agreement other than (i) acceleration of the maturity of the Certificates or (ii) remedies which would adversely affect owners of the Certificates. Neither the Trust Agreement nor this 2018 Installment Sale Agreement shall be discharged until all Policy Costs owing to the Insurer and attributable to the Local Agency shall have been paid in full. The Local Agency’s obligation to pay such amounts shall expressly survive payment in full of the Certificates. (c) Administration Fund Deposit. On or before the 15th day preceding each Certificate Payment Date, the Local Agency shall, from the remaining Revenues on deposit in the Pledged Tax Fund, transfer to the Trustee for deposit in the Local Agency’s Administration Subaccount in the Administration Fund within the Revenue Fund established under the Trust Agreement (the “Administration Subaccount”), a sum equal to the Administration Fee becoming due and payable hereunder on the next Certificate Payment Date, and all money on deposit in the Administration Subaccount shall be used to pay the Administration Fee due on such Certificate Payment Date, in accordance with the terms of the Trust Agreement. Notwithstanding the foregoing, provided all transfers required by subparagraphs (b) and (c) above have been made, on any Business Day moneys on deposit in the Pledged Tax Fund in excess of the sum of (i) interest becoming due and payable hereunder on the next succeeding Interest Payment Date (less amounts then held by the Trustee in the Interest Payment Account) and (ii) the Pro Rata Share of Principal (less amounts then held by the Trustee in the Principal Payment Account) may be expended by the Local Agency at any time for any purpose permitted by law. Section 3.03 Prepayment of 2018 Installment Sale Payments. The Local Agency may prepay from any source of available funds as a whole or in part on any date, on or after June 1, 2026, all or any part of the principal amount of the unpaid 2018 Installment Sale 18 OHSUSA:767615434.2 Payments becoming due on or after June 1, 2027, in such order of prepayment as the Local Agency may determine upon written direction to the Authority and the Trustee (or, if the Local Agency fails to designate the order of prepayment, on a proportionate basis among the 2018 Installment Sale Payments and by lot within an Installment Payment Date), at a Prepayment Price equal to the principal amount prepaid, plus accrued interest to the date of prepayment. Before making any prepayment pursuant to this section, the Local Agency shall give written notice to the Authority and the Trustee describing such event and specifying the date on which the prepayment will be paid and the order thereof, which date shall be not less than thirty (30) days nor more than sixty (60) days from the date such notice is given. ARTICLE IV ADDITIONAL CONTRACTS Section 4.01 Additional Contracts. So long as the Local Agency is not in default hereunder, the Local Agency may at any time execute any Contract, the Installment Sale Payments under and pursuant to which, as the case may be, are payable from the Revenues on a parity with the payment by the Local Agency of the 2018 Installment Sale Payments as provided herein; provided, that the audited Revenues, plus the Measure R Receipts Coverage Amount, plus the Measure M Receipts Coverage Amount, plus the Proposition C Receipts Coverage Amount, but only if Proposition C Receipts are pledged to any Contract, for the Fiscal Year next preceding the date of the adoption by the governing body of the Local Agency of the resolution authorizing the execution of such Contract, as evidenced by both a calculation prepared by the Local Agency and a special report prepared by an Independent Certified Public Accountant on such calculation on file with the Local Agency shall have produced a sum equal to at least 150% of the Maximum Annual Debt Service on all Contracts outstanding after the execution of such amendment or Contract. Policy Costs due and owing to the Insurer shall be included in the Maximum Annual Debt Service requirement for purposes of the foregoing calculation and the calculation of Maintenance of Revenues in Section 5.04 of this Agreement. Notwithstanding the foregoing provisions, there shall be no limitations on the ability of the Local Agency to execute any Contract at any time to refund any outstanding Contract. ARTICLE V REPRESENTATIONS AND COVENANTS OF THE LOCAL AGENCY AND THE AUTHORITY Section 5.01 Authority; Compliance with 2018 Installment Sale Agreement and Trust Agreement. The Local Agency is a municipal corporation organized and existing under the Constitution of the State of California, with full legal right, power and authority to execute, deliver and perform its obligations under this 2018 Installment Sale Agreement, and compliance with the provision hereof will not materially conflict with or constitute a material breach of or default under any applicable provision of law, or any applicable regulation or agreement to which the Local Agency is a party or may be subject. 19 OHSUSA:767615434.2 The Local Agency will punctually pay the 2018 Installment Sale Payments in strict conformity with the terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, and will not terminate the 2018 Installment Sale Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision of either or any failure of the Authority to observe or perform any agreement, condition, covenant or term contained herein required to be observed and performed by it, whether express or implied, or any duty, liability or obligation arising out of or connected herewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Authority or any force majeure, including Acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lockouts, lack of transportation facilities, fire, explosion, or acts or regulations of governmental authorities. The Authority will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Trust Agreement required to be observed and performed by it, and it is expressly understood and agreed by and among the parties to the 2018 Installment Sale Agreement and the Trust Agreement that each of the agreements, conditions, covenants and terms contained in each such agreement is an essential and material term of the obligation of the Local Agency to repay the costs of the acquisition and construction of the Project and the costs and expenses incidental thereto paid by the Authority pursuant to, and in accordance with, and as authorized under law and the 2018 Installment Sale Agreement. Section 5.02 Use of Proceeds of Certificates. The Authority and the Local Agency agree that the proceeds of the Certificates deposited in the Local Agency’s Proceeds Subaccount of the Acquisition Fund will be used by the Local Agency, as agent for the Authority, to pay the costs of the acquisition and construction of the Project and to pay the incidental costs and expenses related thereto as provided herein and in the Trust Agreement. Section 5.03 Against Encumbrances. The Local Agency will pay or cause to be paid when due all sums of money that may become due or purporting to be due for any labor, services, materials, supplies or equipment furnished, or alleged to have been furnished, to or for the Local Agency payable from the Revenues or which may impair the security for the 2018 Installment Sale Payments and will keep the Revenues free of any and all liens against any portion of the Revenues. In the event any such lien attaches to or is filed against any portion of the Revenues, the Local Agency will cause each such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due, except that if the Local Agency desires to contest any such lien it may do so. If any such lien shall be reduced to final judgment and such judgment or any process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter expires, the Local Agency will forthwith pay or cause to be paid and discharged such judgment. The Local Agency will, to the maximum extent permitted by law, indemnify and hold the Authority and the Trustee harmless from, and defend each of them against, any claim, demand, loss, damage, liability or expense (including attorneys’ fees) as a result of any such lien or claim of lien against any portion of the Revenues. 20 OHSUSA:767615434.2 The Local Agency may pledge, encumber or otherwise secure its obligations with the Revenues, provided, that except as permitted by Section 4.01 hereof, in all instances any such pledge, lien or security is wholly subordinate and junior to the obligations of the Local Agency contained herein. Section 5.04 Maintenance of Revenues. The Local Agency will use its best efforts to comply with all provisions of law and any regulations issued thereunder relating to the Revenues, including, but not limited to, the Measure R Ordinance, the Measure M Ordinance, the Proposition C Ordinance, Sections 2119 and 2151 through 2155 of the California Streets and Highways Code and Sections 65089.3 and 65089.4 of the California Government Code relating to conformance with the congestion management program relating to the Local Agency, and will take any and all reasonable actions required in order to maintain the Local Agency’s ability to receive the Revenues and apply the same as provided herein; provided, that nothing herein shall require the Local Agency to take any action or expend any Local Agency funds to comply with any such requirements deemed unreasonable in the sole discretion of the Local Agency, so long as failure to take such action or expend such funds will not cause the amount of estimated Revenues to be received by the Local Agency in the next Fiscal Year to be less than 150% of the Maximum Annual Debt Service as of the date of calculation. Section 5.05 Tax Covenants. The Local Agency will not directly or indirectly use or permit the use of the proceeds of the obligation provided herein or any other funds of the Local Agency or take or omit to take any action which would cause such obligation to be an “arbitrage bond” within the meaning of Section 148 of the Code, or a “federally-guaranteed obligation” under Section 149(b) of the Code, or a “private activity bond” as described in Section 141 of the Code. To that end, so long as any 2018 Installment Sale Payments are unpaid, the Local Agency will comply with all requirements of such sections of the Code to the extent applicable to the obligation provided herein and with the provisions of the Tax Certificate. Upon calculation by the Rebate Analyst of a Rebate Amount, the Local Agency shall, from any source of available funds, immediately transfer an amount of money equal to the Rebate Amount to the Trustee for deposit in the Rebate Fund established pursuant to Section 4.04 of the Trust Agreement. The Authority and the Local Agency will at all times do and perform all acts and things permitted by law which are necessary or desirable in order to assure that the interest evidenced and represented by the Certificates will not be included in the gross income of the owners of such certificates for federal income tax purposes under the Code and will take no action that would result in such interest being so included. Section 5.06 Prompt Acquisition and Construction of the Project. The Local Agency will take all necessary and appropriate steps to acquire and construct the Project, as agent of the Authority, with all practicable dispatch and in an expeditious manner and in conformity with law so as to complete the same as soon as possible. Section 5.07 Accounting Records and Financial Statements. (a) The Local Agency will keep appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the Revenues and the Project, 21 OHSUSA:767615434.2 which records shall be available for inspection by the Authority and the Trustee at reasonable hours and under reasonable conditions. (b) The Local Agency will prepare and file with the Trustee annually within six months after the close of each Fiscal Year or, if not then available, as soon thereafter as possible, audited financial statements of the Local Agency for the preceding Fiscal Year. Section 5.08 Protection of Security and Rights of the Authority and the Trustee. The Local Agency will preserve and protect the security hereof and the rights of the Authority and the Trustee to the 2018 Installment Sale Payments hereunder and will warrant and defend such rights against all claims and demands of all persons. Section 5.09 Further Assurances. The Local Agency will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Authority of the rights and benefits provided to it herein. Section 5.10 Continuing Disclosure. The Local Agency hereby covenants and agrees that it will enter into and comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this 2018 Installment Sale Agreement, failure of the Local Agency to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default hereunder; however, the Trustee shall at the written request of any Participating Underwriter (as defined in the Continuing Disclosure Agreement) or the Owner of at least 25% aggregate principal amount in Outstanding Certificates, or any Owner or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Local Agency to comply with its obligations under this Section. For purposes of this Section, “Beneficial Owner” means any person which has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries). ARTICLE VI EVENTS OF DEFAULT AND REMEDIES Section 6.01 Events of Default and Acceleration of Principal. If one or more of the following “Events of Default” shall happen, that is to say -- (1) if default shall be made in the due and punctual payment of any 2018 Installment Sale Payment when and as the same shall become due and payable; (2) if default shall be made by the Local Agency in the performance of any of the agreements or covenants contained herein required to be performed by it, and such default shall have continued for a period of 30 days after the Local Agency shall have been given notice in writing of such default by the Authority or the Trustee; or (3) if the Local Agency shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the 22 OHSUSA:767615434.2 United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the Local Agency seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the Local Agency or of the whole or any substantial part of its property; then and in each and every such case during the continuance of such Event of Default specified in clause (1) above, the Trustee shall, and for any other such Event of Default the Trustee may (with the prior written consent of the Insurer), by notice in writing to the Local Agency and the Insurer, declare the entire principal amount of the unpaid 2018 Installment Sale Payments and the accrued interest thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything contained herein to the contrary notwithstanding. This subsection is subject to the condition, however, that if at any time after the entire principal amount of the unpaid 2018 Installment Sale Payments and the accrued interest thereon shall have been so declared due and payable and before any judgment or decree for the payment of the money due shall have been obtained or entered the Local Agency shall deposit with the Trustee a sum sufficient to pay the unpaid principal amount of the 2018 Installment Sale Payments due and payable prior to such declaration and the accrued interest thereon, with interest on such overdue installments at the rate or rates applicable to such unpaid principal amounts of the 2018 Installment Sale Payments if paid in accordance with their terms, and the reasonable expenses of the Trustee, and any and all other defaults known to the Trustee (other than in the payment of the entire principal amount of the unpaid 2018 Installment Sale Payments and the accrued interest thereon due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then and in every such case the Trustee, by written notice to the Local Agency, may rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default or shall impair or exhaust any right or power consequent thereon. Section 6.02 Application of Revenues Upon Acceleration. All Revenues upon the date of the declaration of acceleration by the Trustee as provided in Section 6.01 and all Revenues thereafter received shall be applied in the following order -- First, to the payment of the costs and expenses of the Trustee and the Authority, if any, in carrying out the provisions of this article, including reasonable compensation to its agents, accountants and counsel and including any indemnification expenses; Second, to the payment of the interest then due and payable on the entire principal amount of the unpaid 2018 Installment Sale Payments, and, if the amount available shall not be sufficient to pay in full all such interest then due and payable, then to the payment thereof ratably, according to the amounts due thereon without any discrimination or preference; Third, to the payment of the unpaid principal amount of the 2018 Installment Sale Payments which has become due and payable, whether on the original due date or upon acceleration, with interest on the overdue principal and interest amounts of the unpaid 2018 23 OHSUSA:767615434.2 Installment Sale Payments at the rate or rates of interest then applicable to such 2018 Installment Sale Payments if paid in accordance with their terms, and, if the amount available shall not be sufficient to pay in full all the amounts due with respect to the 2018 Installment Sale Payments on any date, together with such interest, then to the payment thereof ratably, according to the principal amount due on such date, without any discrimination or preference; and Fourth, to the payment of amounts due to the Insurer not paid pursuant to Second and Third above. Section 6.03 Other Remedies. The Trustee shall have the right -- (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Local Agency or any councilmember, officer or employee thereof, and to compel the Local Agency or any such councilmember, officer or employee to perform and carry out its or his duties under law and the agreements and covenants required to be performed by it or him contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Authority or the Trustee; or (c) by suit in equity upon the happening of an Event of Default to require the Local Agency and its council members, officers and employees to account as the trustee of an express trust. Section 6.04 Non-Waiver. Nothing in this article or in any other provision hereof shall affect or impair the obligation of the Local Agency, which is absolute and unconditional, to pay the 2018 Installment Sale Payments from the Revenues to the Trustee at the respective due dates or upon prepayment, or shall affect or impair the right of the Trustee, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein. A waiver of any default or breach of duty or contract by the Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee by law or by this Article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Trustee, the Authority and the Local Agency and the Trustee shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 6.05 Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter 24 OHSUSA:767615434.2 existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by law. The exercise of remedies hereunder shall be subject to the provisions of the Trust Agreement, including Articles VII and IX thereof. ARTICLE VII DISCHARGE OF OBLIGATIONS Section 7.01 Discharge of Obligations. (a) If the Local Agency shall pay or cause to be paid all the 2018 Installment Sale Payments at the times and in the manner provided herein, and all amounts owed the Insurer shall have been paid in full, the right, title and interest of the Authority herein and the obligations of the Local Agency hereunder shall thereupon cease, terminate, become void and be completely discharged and satisfied. (b) Any unpaid principal installment of the 2018 Installment Sale Payments shall on its payment date or date of prepayment be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if the Local Agency makes payment of such 2018 Installment Sale Payments and the prepayment premium, if applicable, in the manner provided herein. (c) All or any portion of unpaid principal installments of the 2018 Installment Sale Payments shall, prior to their payment dates or dates of prepayment, be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if (i) notice is provided by the Local Agency to the Trustee as required by the Trust Agreement, (ii) there shall have been deposited with the Trustee either money in an amount which shall be sufficient, or Defeasance Obligations (as that term is defined in the Trust Agreement) which, together with money, if any, deposited with the Trustee, shall be sufficient, in the opinion of an Independent Certified Public Accountant, to pay when due the interest to become due with respect to the principal installments of such 2018 Installment Sale Payments and the principal installments of such 2018 Installment Sale Payments or such portions thereof on and prior to their payment dates or their dates of prepayment, as the case may be, and the prepayment premiums, if any, applicable thereto and (iii) an opinion of nationally recognized bond counsel is filed with the Trustee to the effect that the action taken pursuant to this subsection will not cause the interest evidenced and represented by the Certificates to be includable in gross income under the Code for federal income tax purposes. (d) After the payment of all 2018 Installment Sale Payments and prepayment premiums, if any, as provided in this section, and payment of all fees and expenses of the Trustee, the Trustee, upon request of the Local Agency, shall cause an accounting for such period or periods as may be requested by the Local Agency to be prepared and filed with the Local Agency and the Authority and shall execute and deliver to the Local Agency and the Authority all such instruments as may be necessary or desirable to evidence such total discharge and satisfaction of the 2018 Installment Sale Agreement, and the Trustee shall pay over and deliver to the Local Agency, as an overpayment of 2018 Installment Sale Payments, all such money or investments held by it pursuant hereto other than such money and such investments as 25 OHSUSA:767615434.2 are required for the payment or prepayment of the 2018 Installment Sale Payments, which money and investments shall continue to be held uninvested by the Trustee in trust for the payment of the 2018 Installment Sale Payments and shall be applied by the Trustee pursuant to the Trust Agreement. ARTICLE VIII MISCELLANEOUS Section 8.01 Liability of Local Agency Limited to Revenues. Notwithstanding anything contained herein, the Local Agency shall not be required to advance any moneys derived from any source of income other than the Revenues for the payment of the 2018 Installment Sale Payments or for the performance of any agreements or covenants required to be performed by it contained herein. The obligation of the Local Agency to make the 2018 Installment Sale Payments is a special obligation of the Local Agency payable solely from the Revenues as provided herein, and does not constitute a debt of the Local Agency or of the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limitation or restriction. Section 8.02 Benefits of 2018 Installment Sale Agreement. Nothing contained herein, expressed or implied, is intended to give to any person other than the Authority, the Local Agency, the Insurer or the Trustee any right, remedy or claim under or pursuant hereto, and any agreement or covenant required herein to be performed by or on behalf of the Authority, the Local Agency or the Trustee shall be for the sole and exclusive benefit of the other parties. The Insurer is a third party beneficiary of this 2018 Installment Sale Agreement. Section 8.03 Successor Is Deemed Included in all References to Predecessor. Whenever either the Authority or the Local Agency or the Trustee is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority or the Local Agency or the Trustee, and all agreements and covenants required hereby to be performed by or on behalf of the Authority or the Local Agency or the Trustee shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 8.04 Waiver of Personal Liability. No councilmember, officer or employee of the Local Agency shall be individually or personally liable for the payment of the 2018 Installment Sale Payment, but nothing contained herein shall relieve any councilmember, officer or employee of the Local Agency from the performance of any official duty provided by any applicable provisions of law or hereby. Section 8.05 Article and Section Headings, Gender and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders. All references herein to “Articles,” “Sections,” “Exhibits” and other subdivisions or clauses are to 26 OHSUSA:767615434.2 the corresponding articles, sections, exhibits, subdivisions or clauses hereof; and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith” and other words of similar import refer to the 2018 Installment Sale Agreement as a whole and not to any particular article, section, exhibit, subdivision or clause hereof. Section 8.06 Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the Authority or the Local Agency shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof. The Authority and the Local Agency hereby declare that they would have executed the 2018 Installment Sale Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 8.07 Assignment. The 2018 Installment Sale Agreement and any rights hereunder shall be assigned by the Authority to the Trustee as provided in the Trust Agreement; to which assignment the Local Agency hereby expressly acknowledges and consents. Any other assignment without the consent of the Trustee and the Insurer shall be void. Section 8.08 Net Contract. The 2018 Installment Sale Agreement shall be deemed and construed to be a net contract, and the Local Agency shall pay absolutely net during the term hereof the 2018 Installment Sale Payments and all other payments required hereunder, free of any deductions and without abatement, diminution or set-off whatsoever. Section 8.09 California Law. The 2018 Installment Sale Agreement shall be construed and governed in accordance with the laws of the State of California. Section 8.10 Indemnification. The Local Agency shall, to the full extent then permitted by law, indemnify, protect, hold harmless, save and keep harmless the Authority and its directors, officers and employees and the Trustee and its directors, officers and employees from and against any and all liability, obligations, losses, claims and damages whatsoever, regardless of the cause thereof, and expenses in connection therewith, including, without limitation, reasonable counsel fees and expenses, penalties and interest arising out of or as the result of the acquisition, construction, installation and use of the Project and each portion thereof or any accident in connection with the operation, use, condition or possession of the Project or any portion thereof resulting in damage to property or injury to or death to any person including, without limitation, any claim alleging latent and other defects, whether or not discoverable by the Local Agency or the Authority; any claim for patent, trademark or copyright infringement; and any claim arising out of strict liability in tort. The indemnification arising under this Section shall continue in full force and effect notwithstanding the full payment of all obligations hereunder or the termination hereof for any reason. The Local Agency agrees not to withhold or abate any portion of the payments required pursuant hereto by reason of any defects, malfunctions, breakdowns or infirmities of the Project. The Local Agency and the Authority mutually agree to promptly give notice to each other of any claim or liability hereby indemnified against following either’s learning thereof. 27 OHSUSA:767615434.2 Section 8.11 Funds. Any fund required to be established and maintained herein by the Local Agency may be established and maintained in the accounting records of the Local Agency either as an account or a fund, and may, for the purpose of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund; but all such records with respect to any such fund shall at all times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Certificates and the rights of the owners of such Certificates. Section 8.12 Notices; Authorized Local Agency Representative. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other party in writing from time to time, namely: If to the Local Agency: City of West Covina 1444 West Garvey Avenue South West Covina, California 91790 Attention: [City Manager] If to the Authority: California Statewide Communities Development Authority 1700 North Broadway, Suite 405 Walnut Creek, California 94596 Attention: Managing Director [If to the Insurer: Local Agency Authorized Representatives: TITLE (1) [Mayor] (2) [City Manager] (3) [Finance Director] Section 8.13 Notices to Insurer; Miscellaneous Insurer Provisions. The Insurer shall be provided with the following information by the Local Agency: (a) Annual audited financial statements within 180 days after the end of the Local Agency’s fiscal year (together with a certification of the Local Agency that it is not aware of any default or Event of Default under the Installment Sale Agreement), and the Local Agency’s 28 OHSUSA:767615434.2 annual budget within 30 days after the approval thereof together with such other information, data or reports as the Insurer shall reasonably request from time to time; (b) All [Measure R Receipts, Measure M Receipts and Proposition C Receipts] received for each fiscal year; (c) Notice of the adoption of the annual resolution approving the five year plan for the expenditure of [Measure R Receipts, Measure M Receipts and Proposition C Receipts]; (d) Notice of the commencement of any proceeding by or against the Local Agency commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an “Insolvency Proceeding”); (e) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal or interest evidenced and represented by the Certificates; (f) All reports, notices and correspondence to be delivered to Owners under the terms of the Related Documents. (g) All information furnished pursuant to the Continuing Disclosure Agreement entered into in connection with the Certificates shall also be provided to the Insurer, simultaneously with the furnishing of such information. The Insurer shall have the right to receive such additional information as it may reasonably request. The Local Agency will permit the Insurer to discuss the affairs, finances and accounts of the Local Agency or any information the Insurer may reasonably request regarding the security for the Certificates with appropriate officers of the Local Agency and will use commercially reasonable efforts to enable the Insurer to have access to the facilities, books and records of the Local Agency on any Business Day upon reasonable prior notice. Any interest rate exchange agreement (“Swap Agreement”) entered into by the Local Agency secured by and payable from Revenues shall meet the following conditions: (i) the Swap Agreement must be entered into to manage interest costs related to, or a hedge against (a) assets then held, or (b) debt then outstanding, or (iii) debt reasonably expected to be issued within the next twelve (12) months, and (ii) the Swap Agreement shall not contain any leverage element or multiplier component greater than 1.0x unless there is a matching hedge arrangement which effectively off-sets the exposure from any such element or component. Unless otherwise consented to in writing by the Insurer, any uninsured net settlement, breakage or other termination amount then in effect shall be subordinate to payment by the Local Agency of the 2018 Installment Payments and on any debt on parity with such payments. The Local Agency shall not terminate a Swap Agreement unless it demonstrates to the satisfaction of the Insurer prior to the payment of any such termination amount that such payment will not cause the Local Agency to be in default under the Related Documents, including but not limited to, any monetary obligations thereunder. All counterparties or guarantors to any Swap Agreement must have a rating of at least “A-” and “A3” by Standard & Poor’s (‘S&P”) and Moody’s Investors Service 29 OHSUSA:767615434.2 (“Moody’s”). If the counterparty or guarantor’s rating falls below “A-” or “A3” by either S&P or Moody’s, the counterparty or guarantor shall execute a credit support annex to the Swap Agreement, which credit support annex shall be acceptable to the Insurer. If the counterparty or the guarantor’s long term unsecured rating falls below “Baa1” or “BBB+” by either Moody’s or S&P, a replacement counterparty or guarantor, acceptable to the Insurer, shall be required. Section 8.14 Agreement Represents Complete Agreement; Amendments. This 2018 Installment Sale Agreement (together with the Trust Agreement) represents the entire contract between the parties. This 2018 Installment Sale Agreement may not be effectively amended, changed, modified, altered or terminated except by the written agreement of the Local Agency and the Authority, given in accordance with the provisions of the Trust Agreement. Any amendment, supplement, modification to, or waiver of, this 2018 Installment Sale Agreement that requires the consent of holders of the Certificates or adversely affects the rights and interests of the Insurer shall be subject to the prior written consent of the Insurer. Section 8.15 Effective Date. The 2018 Installment Sale Agreement shall become effective upon its execution and delivery, and shall terminate when the Purchase Price shall have been fully paid (or provision for the payment thereof shall have been made pursuant to Article VII). Section 8.16 Execution in Counterparts. The 2018 Installment Sale Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. OHSUSA:767615434.2 IN WITNESS WHEREOF, the parties hereto have executed and attested the 2018 Installment Sale Agreement by their officers thereunto duly authorized as of the day and year first written above. CITY OF WEST COVINA By: __________________________________ Mayor CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: __________________________________ Authorized Signatory A-1 OHSUSA:767615434.2 EXHIBIT A 2018 INSTALLMENT SALE PAYMENTS SCHEDULE Payment Date Interest Installment Principal Installment Total 06/01/2018 $ $ % 12/01/2018 06/01/2019 12/01/2019 06/01/2020 12/01/2020 06/01/2021 12/01/2021 06/01/2022 12/01/2022 06/01/2023 12/01/2023 06/01/2024 12/01/2024 06/01/2025 12/01/2025 06/01/2026 12/01/2026 06/01/2027 12/01/2027 06/01/2028 12/01/2028 06/01/2029 12/01/2029 06/01/2030 12/01/2030 06/01/2031 12/01/2031 06/01/2032 12/01/2032 06/01/2033 12/01/2033 06/01/2034 12/01/2034 06/01/2035 12/01/2035 06/01/2036 B-1 OHSUSA:767615434.2 EXHIBIT B DESCRIPTION OF PROJECT [The construction of streets and roadways within the corporate limits of the City of West Covina, which improvements are eligible costs payable from Revenues pursuant to (i) the terms of Article XIX of the California Constitution and related provisions of the California Streets and Highways Code, (ii) Measure R Receipts, (iii) Measure M Receipts, or (iv) Proposition C Receipts, including engineering, inspection, contract administration and other incidental costs. The designation of which particular streets and roadways to be improved shall be made by the City Manager of the Local Agency.] ATTACHMENT NO. 3 OHSUSA:767615425.2 TRUST AGREEMENT Among CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee and CERTAIN LOCAL AGENCIES NAMED HEREIN Dated as of _______ 1, 2018 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) TABLE OF CONTENTS Page i OHSUSA:767615425.2 ARTICLE I DEFINITIONS; EQUAL SECURITY ............................................................ 3 Section 1.01. Definitions............................................................................................ 3 Section 1.02. Equal Security .................................................................................... 12 ARTICLE II EXECUTION AND DELIVERY OF CERTIFICATES ............................... 13 Section 2.01. Preparation and Purpose of Certificates ............................................. 13 Section 2.02. Terms of the Certificates .................................................................... 13 Section 2.03. Prepayment of Certificates ................................................................. 15 Section 2.04. Form of Certificates ........................................................................... 18 Section 2.05. Execution of Certificates.................................................................... 18 Section 2.06. Transfer and Payment of Certificates ................................................ 18 Section 2.07. Exchange of Certificates .................................................................... 19 Section 2.08. Certificate Registration Books ........................................................... 19 Section 2.09. Mutilated, Destroyed, Stolen or Lost Certificates ............................. 19 Section 2.10. Temporary Certificates ...................................................................... 19 Section 2.11. Procedure for the Execution and Delivery of Certificates; Establishment of Funds and Accounts; Deposit of Proceeds............. 20 Section 2.12. Validity of Certificates ....................................................................... 21 Section 2.13. Special Covenants as to Book-Entry Only System for Certificates ......................................................................................... 21 ARTICLE III REVENUES ................................................................................................... 24 Section 3.01. Pledge of Revenues; Assignment....................................................... 24 Section 3.02. Receipt and Deposit of Revenues in the Revenue Fund .................... 24 Section 3.03. Establishment and Maintenance of Accounts for Use of Money in the Revenue Fund .......................................................................... 24 Section 3.04. Deposit and Investments of Money in Accounts and Funds ............. 27 Section 3.05. Reserve Policy Payment and Reimbursement Provisions ................. 27 ARTICLE IV COVENANTS ............................................................................................... 30 Section 4.01. Compliance with Trust Agreement .................................................... 30 Section 4.02. Amendment of Agreements ............................................................... 30 Section 4.03. Against Encumbrances....................................................................... 30 Section 4.04. Tax Covenants: Rebate Fund ............................................................. 30 ii Section 4.05. Accounting Records and Reports....................................................... 31 Section 4.06. Observance of Laws and Regulations ................................................ 31 Section 4.07. Further Assurances............................................................................. 31 Section 4.08. Recordation and Filing ....................................................................... 31 Section 4.09. Acquisition of the Projects ................................................................. 32 ARTICLE V THE TRUSTEE ............................................................................................. 33 Section 5.01. The Trustee ........................................................................................ 33 Section 5.02. Liability of Trustee ............................................................................ 34 ARTICLE VI AMENDMENT OF THE TRUST AGREEMENT ....................................... 37 Section 6.01. Amendment of the Trust Agreement ................................................. 37 Section 6.02. Disqualified Certificates .................................................................... 37 Section 6.03. Endorsement or Replacement of Certificates After Amendment ...... 38 Section 6.04. Amendment by Mutual Consent ........................................................ 38 Section 6.05. Information to Rating Agency ........................................................... 38 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF OWNERS ........................ 39 Section 7.01. Events of Default ............................................................................... 39 Section 7.02. Application of Funds Upon Acceleration of Agreement ................... 39 Section 7.03. Other Remedies of the Trustee .......................................................... 40 Section 7.04. Non-Waiver........................................................................................ 40 Section 7.05. Actions by Trustee as Attorney-in-Fact ............................................. 40 Section 7.06. Remedies Not Exclusive .................................................................... 40 Section 7.07. Limitation on Owners’ Right to Sue .................................................. 41 Section 7.08. Limited Liability of the Local Agencies ............................................ 41 Section 7.09. Limited Liability of the Authority ..................................................... 41 ARTICLE VIII DEFEASANCE.............................................................................................. 43 Section 8.01. Discharge of Certificates.................................................................... 43 Section 8.02. Unclaimed Money .............................................................................. 44 ARTICLE IX PROVISIONS RELATED TO THE INSURER AND THE INSURANCE POLICY ................................................................................. 45 Section 9.01. General Provisions ............................................................................. 45 ARTICLE X MISCELLANEOUS ...................................................................................... 46 Section 10.01. Liability of Authority Limited to Revenues ....................................... 46 Section 10.02. Benefits of the Trust Agreement Limited to Parties .......................... 46 TABLE OF CONTENTS (continued) Page iii OHSUSA:767615425.2 Section 10.03. Successor Is Deemed Included In All References To Predecessor ........................................................................................ 46 Section 10.04. Execution of Documents by Owners ................................................. 46 Section 10.05. Waiver of Personal Liability; No Liability of Authority Members ............................................................................................ 47 Section 10.06. Acquisition of Certificates by Authority............................................ 47 Section 10.07. Destruction of Canceled Certificates ................................................. 47 Section 10.08. Content of Certificates; Post-Issuance Legal Opinions ..................... 47 Section 10.09. Publication for Successive Weeks ..................................................... 48 Section 10.10. Accounts and Funds; Business Days ................................................. 48 Section 10.11. Article and Section Headings and References ................................... 48 Section 10.12. Partial Invalidity................................................................................. 48 Section 10.13. Execution in Several Counterparts..................................................... 48 Section 10.14. Governing Law .................................................................................. 49 Section 10.15. Notices ............................................................................................... 49 EXHIBIT A FORM OF CERTIFICATE.......................................................................... A-1 EXHIBIT B FORM REQUISITION FROM PROCEEDS SUBACCOUNT OF THE ACQUISITION FUND ....................................................................... B-1 EXHIBIT C [PAYMENTS UNDER THE INSURANCE POLICY; OTHER PROVISIONS CONCERNING THE INSURER ........................................ C-1 SCHEDULE I PARTICIPATING LOCAL AGENCY ..................................................... S-I-1 SCHEDULE II INITIAL DEPOSIT TO PROCEEDS SUBACCOUNT ATTRIBUTABLE TO EACH LOCAL AGENCY .................................. S-II-1 OHSUSA:767615425.2 TRUST AGREEMENT THIS TRUST AGREEMENT, made and entered into as of _______ 1, 2018 (the “Trust Agreement”) among WILMINGTON TRUST, NATIONAL ASSOCIATION (the “Trustee”), a national banking association duly organized and existing under and by virtue of the laws of the United States of America, the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (the “Authority”) and the Local Agencies named in Schedule I hereto (the “Local Agencies”); W I T N E S S E T H: WHEREAS, the Authority is a joint exercise of powers authority duly organized and operating pursuant to Article 1 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California; WHEREAS, Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California authorizes and empowers the Authority to cause certificates of participation to be executed and delivered to assist local agencies in financing projects and programs consisting of certain public improvements or working capital or liability and other insurance needs whenever a local agency determines that there are significant public benefits from so doing; WHEREAS, each Local Agency has determined that the consummation of the transactions contemplated in its respective Agreement (as hereinafter defined) to which it is a party and this Trust Agreement will result in significant public benefits, and accordingly, has determined to participate in the California Statewide Communities Development Authority T.R.I.P. – Total Road Improvement Program (the “Program”) established by the Authority; WHEREAS, each Local Agency is a participant in the Program and a member of the Authority; WHEREAS, each Local Agency participating in the Program desires to have the 2018 Installment Sale Payments (as hereinafter defined) payable in connection with its respective Agreement combined with similar payments made pursuant to the Agreements executed by the other Local Agencies participating in the Program in order to achieve a lower net interest cost and lower costs of issuance associated with executing and delivering the Certificates (described herein); WHEREAS, each Local Agency has designated the Trustee to act as its trustee with respect to the funds received by the Local Agencies in connection with the sale of the Certificates and with respect to the moneys paid by each Local Agency as its respective 2018 Installment Sale Payments; WHEREAS, each Local Agency participating in the Program has executed a pricing confirmation, confirming the sale to Stifel, Nicolaus & Company, Incorporated (the “Purchaser”) of the Certificates which evidence and represent proportionate and undivided interests in the 2018 Installment Sale Payments payable in connection with its respective Agreement combined 2 with similar payments made pursuant to the Agreements executed by the other local agencies participating in the Program and constituting part of the same series of Certificates; WHEREAS, each Local Agency participating in the Program has authorized and directed the Trustee to execute and deliver on its behalf pursuant to the terms of the Trust Agreement, the Certificates in an amount equal to the aggregate principal amount of the principal installments payable by the Local Agencies pursuant to the Agreements; WHEREAS, the Authority is empowered pursuant to the Agreements and the aforementioned Article 4 to cause the acquisition of the Projects (as hereinafter defined) and to finance the Projects through the execution and delivery of the Certificates; WHEREAS, in order to provide for the execution and delivery of the Certificates (as hereinafter defined), to establish and declare the terms and conditions upon which the Certificates are to be executed, delivered and secured and to secure the payment of the principal thereof and interest thereon, the Authority has authorized the execution and delivery of this Trust Agreement; and WHEREAS, the execution of the Agreements and the approval of the execution and delivery of this Trust Agreement and the Certificates have been in all respects duly and validly authorized by the governing board of the Local Agencies pursuant to resolutions duly adopted (collectively, the “Local Agency Resolutions”); WHEREAS, the Certificates and the form of assignment to be endorsed thereon are to be substantially in the form set forth in Exhibit A, with necessary or appropriate variations, omissions and insertions, as permitted or required hereby; WHEREAS, the Trustee has accepted the trust created by this Trust Agreement and in evidence thereof has joined in the execution hereof; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of the Trust Agreement and delivery of the Certificates do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into the Trust Agreement; NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS: 3 OHSUSA:767615425.2 ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this section shall for all purposes hereof and of any Supplemental Trust Agreement and of any certificate, opinion, request or other document herein or therein mentioned have the meanings herein specified: “Acquisition Fund” means the fund by that name established and maintained pursuant to Section 2.11. “Act” means the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of Title 1 of the California Government Code, as amended) and all laws amendatory thereof or supplemental thereto. “Administration Fee” means, for each Local Agency, an amount equal to the sum of the Authority Fee, the Trustee Fee, the Rebate Analyst Fee and any other similar fee payable in connection with the administration of the Program, payable by each Local Agency, in accordance with such Local Agency’s Agreement, on the 15th day of the month preceding each June 1, commencing June 1, [2018], for the administrative costs of the Project and the Program. The Administration Fee shall be allocated on a pro rata basis (related to the Purchase Price payable by each Local Agency) among each Local Agency. “Administration Fund” means the fund by that name established and maintained pursuant to Section 3.03. “Agreement” or “Agreements” means each 2018 Installment Sale Agreement, dated as of _______ 1, 2018, each between the Authority and a Local Agency as originally executed and as each may from time to time be amended or supplemented pursuant to the provisions hereof and thereof. “Authority” means the California Statewide Communities Development Authority, a joint exercise of powers authority duly organized and existing under and by virtue of the laws of the State of California and an Amended and Restated Joint Exercise of Powers Agreement, dated as of June 1, 1988, among a number of California cities, counties and special districts, including the Local Agencies, as amended. “Authority Fee” means, for each Local Agency, the annual administration fee of the Authority payable by each Local Agency in accordance with such Local Agency’s Agreement. “Authorized Authority Representative” means any member of the Commission of the Authority and any other person as may be designated and authorized to sign on behalf of the Authority pursuant to a resolution adopted thereby. “Authorized Local Agency Representative” means the person or persons designated in Section 8.12 of each Agreement or any other person at the time designated to act on behalf of such respective Local Agency by written certificate furnished to the Trustee, containing the 4 specimen signature of such person and signed on behalf of such Local Agency by an Authorized Local Agency Representative. “Business Day” means any day on which the Trustee is open for business at its corporate trust office in Costa Mesa, California. “Cash Flow Report” means a report prepared by the Cash Flow Consultant identifying Certificates to be prepaid as a result of any prepayment pursuant to Section 2.03 hereof. In the case of any optional prepayment pursuant to section 2.03(a) hereof, such report shall demonstrate that Revenues expected to be received following such prepayment shall be sufficient to pay the regularly scheduled principal and interest represented by the Certificates as such amounts become due and payable. In the case of a mandatory prepayment pursuant to section 2.03(b) hereof, such report shall identify maturities of principal evidenced by the Certificates to be prepaid in a manner consistent with Section 7.02 hereof and Section 6.02 of the related Local Agency Agreement relating to the application of Revenues upon acceleration. “Cash Flow Consultant” means Stifel, Nicolaus & Company, Incorporated, or any successor thereto appointed by the Authority. “Certificates” means the California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program). The term “Serial Certificates” means Certificates for which no sinking fund payments are provided. The term “Term Certificates” means Certificates which are payable on or before their specified payment dates from sinking fund payments established for that purpose and calculated to prepay such Certificates on or before their specified payment dates. “Certificate Payment Date” means a date on which principal evidenced and represented by the Certificates is due and payable, being June 1 of each year commencing June 1, 20__. “Code” means the Internal Revenue Code of 1986, as amended and the regulations issued thereunder. “Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to a Local Agency, or the Local Agencies, as applicable, or the Authority and related to the authorization, execution and delivery of the Certificates, including, but not limited to costs of preparation and reproduction and delivery of documents, filing and recording fees, fees and charges of the Trustee and its counsel, legal fees and charges, fees and disbursements of consultants and professionals, fees of rating agencies, fees and charges for preparation, execution and safekeeping of the Certificates and any other costs, charges or fees in connection with the original execution, delivery, marketing and sale of the Certificates. “Costs of Issuance Fund” means the fund by that name established and maintained pursuant to Section 2.11. “Defeasance Obligations” means the following: (1) cash, (2) non callable direct obligations of the United States of America (“Treasuries”), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or 5 OHSUSA:767615425.2 trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (4) subject to the prior written consent of the Insurer, pre-refunded municipal obligations rated “AAA” and “Aaa” by S&P and Moody’s, respectively, or (5) subject to the prior written consent of the Insurer, securities eligible for “AAA” defeasance under then existing criteria of S&P or any combination thereof, which shall be used to effect defeasance of the Certificates. “Independent Certified Public Accountant” means any firm of certified public accountants appointed by the respective Local Agency and/or the Authority which is independent pursuant to the Statement on Auditing Standards No. 1 of the American Institute of Certified Public Accountants. “Insurance Agreement” means, as applicable, the respective debt service reserve agreement, dated __________, 2018, each between a Local Agency and the Insurer as originally executed and as each may from time to time be amended or supplemented pursuant to the provisions thereof. “Insurance Policy” means the insurance policy issued by the Insurer guaranteeing the scheduled payment of principal of and interest evidenced and represented by the Certificates when due. “Insurer” means _______________________________________, a New York mutual insurance corporation, or any successor thereto or assignee thereof. “Interest Fund” means the fund by that name established pursuant to Section 3.03. “Interest Payment Account” means the account within the Interest Fund by that name established for each Local Agency pursuant to Section 3.03. “Interest Payment Date” means a date on which interest evidenced and represented by the Certificates is due and payable, being June 1 and December 1 of each year, commencing [June 1, 2018]. “Local Agency” or “Local Agencies” means, as applicable, the respective local agency or local agencies listed in Schedule I hereto, each a duly organized and existing political subdivision of the State of California. “Moody’s” means Moody’s Investor Services, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Local Agencies pursuant to the Agreements. “Office of the Trustee” means the corporate trust office of the Trustee in Costa Mesa, California. 6 “Opinion of Counsel” means a written opinion of counsel of recognized national standing in the field of law relating to municipal obligations, appointed and paid by the Authority and satisfactory to and approved by the Trustee (who shall be under no liability by reason of such approval). “Outstanding,” when used as of any particular time with reference to Certificates, means (subject to the provisions of Section 6.02) all Certificates except (1) Certificates theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (2) Certificates paid or deemed to have been paid within the meaning of Section 8.01; and (3) Certificates in lieu of or in substitution for which other Certificates shall have been executed and delivered by the Trustee pursuant hereto. “Owner” means any person who shall be the registered owner of any Outstanding Certificate. “Permitted Investments” means any of the following to the extent permitted by the laws of the State and the applicable Local Agency’s Investment Policy: A. Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership 2. Federal Housing Administration Debentures (FHA) 3. General Services Administration Participation certificates 4. Government National Mortgage Association (GNMA or “Ginnie Mae”) GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations (not acceptable for certain cash-flow sensitive issues.) 5. U.S. Maritime Administration Guaranteed Title XI financing 7 OHSUSA:767615425.2 6. U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): 1. Federal Home Loan Bank System Senior debt obligations 2. Federal Home Loan Mortgage Corporation (FHLMC or “Freddie Mac”) Participation Certificates Senior debt obligations 3. Federal National Mortgage Association (FNMA or “Fannie Mae”) Mortgage-backed securities and senior debt obligations 4. Resolution Funding Corp. (REFCORP) obligations 5. Farm Credit System Consolidated systemwide bonds and notes D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G; AAA-m; or AA-m and if rated by Moody’s rated Aaa, Aa1 or Aa2 including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee provide investment advisory or other management services. E. Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks which may include the Trustee and its affiliates. The collateral must be held by a third party and the Owners must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF which may include the Trustee and its affiliates. G. Investment Agreements, including GIC’s, Forward Purchase Agreements and Reserve Fund Put Agreements (Investment Agreement criteria is available upon request). 8 H. Commercial paper rated, at the time of purchase, “Prime - 1” by Moody’s and “A- 1” or better by S&P. I. Bonds or notes issued by any state or municipality which are rated by Moody’s and S&P in one of the two highest rating categories assigned by such agencies. J. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of “Prime - 1” or “A3” or better by Moody’s and “A-1” or “A” or better by S&P which may include the Trustee and its affiliates. K. The Local Agency Investment Fund (LAIF) administered by the State of California. L. Repurchase Agreements for 30 days or less must follow the following criteria. Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date. 1. Repos must be between the municipal entity and a dealer bank or securities firm a. Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by S&P and Moody’s, or b. Banks rated “A” or above by S&P and Moody’s. 2. The written repo contract must include the following: a. Securities which are acceptable for transfer are: (l) Direct U.S. governments, or (2) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC) b. The term of the repo may be up to 30 days c. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities). 9 OHSUSA:767615425.2 d. Valuation of Collateral (1) The securities must be valued weekly, marked-to-market at current market price plus accrued interest. (2) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by municipality, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%. 3. Legal opinion which must be delivered to the municipal entity: a. Repo meets guidelines under state law for legal investment of public funds. “Prepayment Price” means, with respect to any Certificate (or portion thereof) the principal amount with respect to such Certificate (or portion), plus the applicable premium, if any, payable upon prepayment thereof pursuant to the provisions of such Certificate and the Trust Agreement. “Pricing Confirmation Supplement” means that certain Pricing Confirmation Supplement attached to each Purchase Agreement as agreed and accepted by each of the respective Local Agencies. “Principal Fund” means the account by that name established and maintained pursuant to Section 3.03. “Principal Payment Account” means the account within the Principal Fund by that name established for each Local Agency pursuant to Section 3.03. “Project(s)” has the meaning ascribed to such term in each Agreement. “Project Costs” means all costs of payment of, or reimbursement for, the engineering, design, acquisition, installation, provision and financing of the Projects, including but not limited to, engineering and installation management costs, administrative costs and capital expenditures relating to financing payments, costs of accounting, feasibility, environmental and other reports, interest during the period of acquisition and installation of the Projects, insurance costs, inspection costs, permit fees, filing and recording costs, printing costs, reproduction and binding costs, initial fees and charges of the Authority and the Trustee, escrow fees, financing discounts, legal fees and charges, financial and other professional consultant fees and charges in connection with the foregoing. 10 “Program” means the California Statewide Communities Development Authority T.R.I.P. – Total Road Improvement Program pursuant to which the Certificates are executed and delivered to assist local agencies in financing Projects. “Purchase Agreement” means that certain Purchase Agreement by and between each of the respective Local Agencies and the Purchaser relating to the Agreements and the Certificates. “Purchaser” means Stifel, Nicolaus & Company, Incorporated, as Purchaser of the Certificates. “Purchase Price” means with respect to any Certificate (or portion thereof) the principal amount with respect to such Certificate (or portion), plus the applicable premium, if any, payable upon purchase thereof pursuant to the provisions of such Certificate and the Trust Agreement. “Qualified Reserve Instrument” means an insurance policy meeting the requirements of Section 3.03(3). “Rating Agency” means S&P or, in the event that S&P no longer maintains a rating on the Certificates, any other nationally recognized bond rating agency then maintaining a rating on the Certificates, but, in each instance, only so long as S&P, or other nationally recognized rating agency then maintains a rating on the Certificates. “Rebate Amount” means, for any given period, the amount determined by the Rebate Analyst as required to be rebated or paid as a yield reduction payment to the United States of America with respect to the Certificates. “Rebate Analyst” means BLX Group. “Rebate Analyst’s Fee” means, for each Local Agency, the fee payable to the Rebate Analyst, payable by each Local Agency in accordance with such Local Agency’s Agreement. “Rebate Fund” means the fund by that name established and maintained pursuant to Section 4.04. “Record Date” means the 15th day of the month next preceding each Interest Payment Date, whether or not such day is a Business Day. “Request” or “Certificate” with respect to a Local Agency means an instrument in writing signed on behalf of such Local Agency by the related Authorized Local Agency Representative, and with respect to the Authority means an instrument in writing signed on behalf of the Authority by an Authorized Authority Representative or other person at the time designated to act on behalf of the Authority by written certificate furnished to the Trustee. “Reserve Fund” means the fund by that name established and maintained pursuant to Section 3.03. “Reserve Fund Requirement” means, as of any date of calculation, separately with respect to each Agreement, an amount equal to the least of (i) 10% of the initial stated principal 11 OHSUSA:767615425.2 amount (within the meaning of Section 148 of the Code) of the 2018 Installment Sale Payments under the Agreement; (ii) 125% of the average annual 2018 Installment Sale Payments under the Agreement; or (iii) the Maximum Annual Debt Service, as defined in each Agreement calculated only with respect to the 2018 Installment Sale Payments. “Reserve Policy” means the municipal bond debt service reserve fund insurance policy issued by the Insurer and credited to the Local Agency’s Reserve Subaccount. The Reserve Policy is a Qualified Reserve Instrument. “Reserve Subaccount” means the Subaccount within the Reserve Fund by that name established for each Local Agency pursuant to Section 3.03. “Revenues” means all 2018 Installment Sale Payments and other payments paid by the Local Agencies and received by the Authority pursuant to the Agreements and all interest or other income from any investment of any money in any fund or account (other than the Rebate Fund) pursuant to Section 3.04. “Revenue Fund” means the fund by that name established and maintained pursuant to Section 3.02. “S&P” means S&P Global Ratings, a division of The McGraw-Hill Companies, Inc., a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Local Agencies pursuant to the Agreements. “Securities Depositories” means: The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax-(516) 227-4039 or 4190; or such other addresses and/or such other securities depositories as the Authority may designate to the Trustee in writing. “State” means the State of California. “Supplemental Trust Agreement” means any trust agreement then in full force and effect which has been duly executed and delivered by the Authority and the Trustee amendatory hereof or supplemental hereto; but only if and to the extent that such Supplemental Trust Agreement is specifically authorized hereunder. “Surplus Account” means the account by that name established and maintained pursuant to Section 3.03. “2018 Installment Sale Payments” means the periodic payments scheduled to be paid by each Local Agency under and pursuant to its respective Agreement. “Tax Certificate” means each Tax Certificate dated the date of initial delivery of the Certificates and executed and delivered by the Authority and each Local Agency. 12 “Trust Agreement” means this Trust Agreement, dated as of _______ 1, 2018, among the Authority, the Trustee and the Local Agencies, as originally executed and as it may from time to time be amended or supplemented by all Supplemental Trust Agreements executed pursuant to the provisions hereof. “Trustee” means Wilmington Trust, National Association, or any successor thereto appointed pursuant to this Trust Agreement. “Trustee’s Fee” means, for each Local Agency, the annual administration fee of the Trustee, in the amount of $1,500.00 payable in advance on __________, 2018 and thereafter on each Certificate Payment Date. Section 1.02. Equal Security. In consideration of the acceptance of the Certificates by the Owners, the Trust Agreement shall be deemed to be and shall constitute a contract among the Trustee, the Local Agencies, and the Owners to secure the full and final payment of the interest and principal evidenced and represented by the Certificates, subject to the agreements, conditions, covenants and terms contained herein; and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the Trustee shall be for the equal and proportionate benefit, protection and security of all Owners without distinction, preference or priority as to benefit, protection or security of any Certificates over any other Certificates by reason of the number or date thereof or the time of execution or delivery thereof or otherwise for any cause whatsoever, except as expressly provided herein or therein. 13 OHSUSA:767615425.2 ARTICLE II EXECUTION AND DELIVERY OF CERTIFICATES Section 2.01. Preparation and Purpose of Certificates. The Authority has reviewed all proceedings heretofore taken relative to the authorization of the Certificates 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 have happened and to have been performed precedent to and in the execution and delivery of the Certificates do exist, have happened and have been performed in due time, form and manner as required by law, and that the Authority is now duly authorized, pursuant to each and every requirement of the Act, to cause the Certificates to be executed and delivered in the form and manner provided herein for the purpose of providing funds to pay for and construct the Projects, and that the Certificates shall be entitled to the benefit, protection and security of the provisions hereof. The Trustee is hereby authorized and directed to prepare the Certificates in the initial aggregate principal amount of ___________________________ dollars ($[PAR AMOUNT]), evidencing and representing the aggregate principal components of the 2018 Installment Sale Payments and each evidencing and representing a proportionate, undivided interest in the 2018 Installment Sale Payments. The Local Agencies hereby authorize the Authority to execute on their behalf, a letter of representations to be delivered to DTC in connection with the delivery of the Certificates (the “Representation Letter”). Each Local Agency participating in the Program is a Local Agency required to make the 2018 Installment Sale Payments with respect to its Agreement which, when combined with the 2018 Installment Sale Payments to be made with respect to the Agreements of other Local Agencies participating in the Program and the same series, shall be evidenced by the Certificates which evidence and represent a proportionate and undivided interest in the 2018 Installment Sale Payments of each Local Agency, such that each Local Agency participating in the Program is severally, and not jointly, liable on each such Certificates in the proportion that the principal component of such Local Agency’s Installment Sale Payments bears to the total aggregate principal component of the Installment Sale Payments to be made by all Local Agencies participating in the Program and the same series. Each Local Agency participating in the Program has, pursuant to its Local Agency Resolution, authorized and directed the Trustee on behalf of that Local Agency to prepare and execute the Certificates and to deliver the Certificates to the Purchaser upon payment of the purchase price thereof, pursuant to the terms of the Trust Agreement. Section 2.02. Terms of the Certificates. The Certificates shall be designated “California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program).” This designation is an intended revision of the nomenclature for the Certificates originally included in the materials filed in connection with the proceedings for validation of the Certificates in the interest of clarity in marketing the Certificates. The Certificates shall be dated __________, 2018, shall be executed and delivered only in fully registered form in denominations of five thousand dollars ($5,000) or any integral multiple of five thousand dollars ($5,000) (not exceeding the principal amount of Certificates payable at any one time), and shall be payable on the Certificate Payment Dates and in the principal amounts 14 and evidence and represent interest at the rates (based on a 360 day year comprised of 12 30 day months) as set forth in the following schedule: Certificate Payment Date (June 1) Principal Amount Interest Rate 2019 $ % 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 The principal evidenced and represented by the Certificates shall be payable in lawful money of the United States of America by check upon presentation thereof at maturity or on prepayment prior to maturity at the Office of the Trustee. The Certificates shall evidence and represent interest at the rates set forth above, payable on Interest Payment Date. The Certificates shall evidence and represent interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is an Interest Payment Date, in which event they shall evidence and represent interest from such date, or unless such date of registration is prior to the first Interest Payment Date, in which event they shall evidence and represent interest from __________, 2018; provided, however, that if at the time of registration of any Certificate interest is then in default on the Outstanding Certificates, such Certificate shall evidence and represent interest from the Interest Payment Date to which interest has previously been paid or made available for payment on the Outstanding Certificates. Payment of interest evidenced and represented by the Certificates due on or before the maturity or prior prepayment thereof shall be made to the person whose name appears in the Certificates registration records maintained by the Trustee pursuant to Section 2.08 as the registered owner thereof as of the close of business on the Record Date preceding each Interest Payment Date, whether or not such day is a Business Day, such interest to be paid by check mailed on such Interest Payment Date (or the next Business Day if such Interest Payment Date is not a Business Day) to such registered owner at the address as it appears in such books or at such other address as may have been filed with the Trustee for that purpose. 15 OHSUSA:767615425.2 Payment of the principal evidenced and represented by the Certificates shall be made by check upon the surrender thereof at maturity or on prepayment prior to maturity at the Office of the Trustee. The Owner of $1,000,000 or more in aggregate principal amount evidenced by the Certificates may request in writing that the Trustee pay the interest evidenced by such Certificates by wire transfer and the Trustee shall comply with such request for all Interest Payment Dates following the fifteenth (15th) day after receipt of such request until such request is rescinded. Section 2.03. Prepayment of Certificates. (a) Optional Prepayment. The Certificates maturing on or after June 1, 20[28], shall be subject to optional prepayment prior to maturity, at the option of the Authority upon direction of the respective Local Agency or Local Agencies, on or after June 1, 20[27] in whole or in part (by lot within any maturity), on any date, at a Prepayment Price equal to the principal amount to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. The respective Local Agency or Local Agencies shall provide notice to the Authority and the Trustee at least forty-five (45) days prior to the prepayment date (or such lesser period of time acceptable to the Trustee in its sole discretion) specifying the principal amount evidenced by and maturities of the 2018 Installment Sale Payments to be prepaid. (b) Mandatory Prepayment. The Certificates shall be subject to mandatory prepayment prior to maturity, in whole or in part (by lot among Certificates with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate), on any date, from amounts received upon the acceleration of 2018 Installment Sale Payments upon the occurrence of an event of default under any Agreement, at a Prepayment Price equal to the principal amount to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. (c) Mandatory Sinking Fund Prepayment. The Certificates maturing on June 1, 20__, are subject to mandatory prepayment on June 1 of each year commencing June 1, 20__, in part, from mandatory sinking fund payments, on each June 1 specified below, at a Prepayment Price equal to the principal evidenced thereby, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. The principal evidenced by such Certificates to be so prepaid and the dates therefor shall be as follows: Mandatory Prepayment Date (June 1) Principal Amount $ * ___________ * Maturity date The amount of each such prepayment shall be reduced in the event and to the extent that 2018 Installment Sale Payments payable on the corresponding 2018 16 Installment Sale Payment Date are optionally prepaid pursuant to any Agreement or Agreements and applied to the prepayment of Certificates maturing on June 1, 20__. In such event, the Local Agencies shall provide the Trustee with a revised sinking fund prepayment schedule. (d) Selection of Certificates. Whenever provision is made in this Trust Agreement for the prepayment or purchase of less than all of the Certificates or any given portion thereof, the Trustee shall, subject to the following sentence, select the Certificates to be prepaid or purchased, from all Certificates subject to prepayment or purchase or such given portion thereof equal to a multiple of $5,000 or any integral multiple thereof not previously called for prepayment or purchase. Upon notice of any prepayment pursuant to Section 2.03(a) hereof or receipt of moneys resulting in a prepayment pursuant to Section 2.03(b) hereof, the Trustee shall request the Cash Flow Consultant to prepare a Cash Flow Report identifying the principal amount and maturities of the Certificates to be prepaid. The Trustee shall promptly notify the Authority in writing of any prepayment or purchase of Certificates and of the Certificates or portions thereof so selected for prepayment or purchase. (e) Purchase in Lieu of Prepayment. In lieu of prepayment of any Certificates, amounts on deposit in the Revenue Fund or in any sinking account therein may also be used and withdrawn by the Trustee at any time, upon the Request of the Authority, upon direction of the respective Local Agency, for the purchase of such Certificates at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as the Authority, upon direction of the respective Local Agency, may in its discretion determine, but not in excess of the principal amount thereof plus accrued interest to the purchase date. The principal amount of any Certificates so purchased by the Trustee in any twelve-month period ending 60 days prior to any Certificate Payment Date in any year shall be credited towards and shall reduce the principal amount of such Term Certificates, if any, required to be prepaid on such Certificate Payment Date in such year. (f) Notice or Prepayment or Purchase. Notice of prepayment or purchase shall be mailed by first-class mail by the Trustee, upon direction of the respective Local Agency, not less than thirty (30) nor more than sixty (60) days prior to the prepayment or purchase date, to (i) the respective Owners of any Certificates designated for prepayment or purchase at their addresses appearing on the registration books of the Trustee, and (ii) if the Certificates are no longer held by the Depository, to the Securities Depositories and the Municipal Securities Rulemaking Board through its Electronic Municipal Marketplace Access (EMMA) System. Notice of prepayment shall be given by telecopy, certified, registered, or overnight mail to the Securities Depositories and the Municipal Securities Rulemaking Board through its Electronic Municipal Marketplace Access (EMMA) System. Each notice of prepayment or purchase shall state the date of such notice, the date of initial execution and delivery of the Certificates, the prepayment or purchase date, the Prepayment Price or Purchase Price, the place or places of prepayment or purchase (including the name and appropriate address or addresses of the Trustee), the CUSIP number (if any) of the Certificates of each Certificate Payment Date or Dates, 17 OHSUSA:767615425.2 and, if less than all of the Certificates of any such Certificate Payment Date, the distinctive certificate numbers of the Certificates with such Certificate Payment Date, to be prepaid or purchased and, in the case of Certificates to be prepaid or purchased in part only, the respective portions of the principal amount thereof to be prepaid or purchased. Each such notice shall also state that on said date there will become due and payable on each of said Certificates the Prepayment Price or Purchase Price represented thereby or of said specified portion of the principal amount thereof in the case of a Certificate to be prepaid or purchased in part only, together with interest accrued with respect thereto to the prepayment or purchase date, and that from and after such prepayment or purchase date, interest thereon shall cease to accrue, and shall require that such Certificates be then surrendered at the address or addresses of the Trustee specified in the prepayment or purchase notice. If any of the Certificates are prepaid pursuant to an advance refunding, notice of such advance refunding and prepayment shall be given in the same manner as above provided, and also within the same time period with respect to the actual prepayment date. Notice of prepayment or purchase of Certificates shall be given by the Trustee (upon direction of the respective Local Agency), at the expense of the Authority. Conditional notice of prepayment may be given at the direction of the Authority and shall be given if funds sufficient to prepay the Certificates are not then on deposit with the Trustee. If at the time of mailing of notice, funds are not then on deposit with the Trustee, such notice shall state that it is conditional upon the deposit of the funds not later than the opening of business on the date of prepayment of the Certificates, and such notice shall be of no effect unless such moneys are so deposited. Failure by the Trustee to give notice pursuant to this Section 2.03 to the Municipal Securities Rulemaking Board through its Electronic Municipal Marketplace Access (EMMA) System or Securities Depositories shall not affect the sufficiency of the proceedings for prepayment or purchase. Failure by the Trustee to mail notice of prepayment or purchase pursuant to this Section 2.03 to any one or more of the respective Owners of any Certificates designated for prepayment or purchase shall not affect the sufficiency of the proceedings for prepayment with respect to the Owner or Owners to whom such notice was mailed. (g) Partial Prepayment of Purchase of Certificates. Upon surrender of any Certificate to be prepaid or purchased in part only, the Trustee shall execute and deliver to the registered owner thereof, at the expense of the Authority, a new Certificate or Certificates of authorized denominations, and having the same Certificate Payment Date, equal in aggregate principal amount to the unprepaid or unpurchased portion of the Certificate surrendered. (h) Effect of Prepayment. Notice of prepayment having been duly given as aforesaid, and moneys for payment of the Prepayment Price of, together with interest accrued to the prepayment date with respect to, the Certificates (or portions thereof) so called for prepayment being held by the Trustee, on the prepayment date designated in 18 such notice, the Certificates (or portions thereof) so called for prepayment shall become due and payable at the Prepayment Price specified in such notice and interest accrued with respect thereto to the prepayment date, interest with respect to the Certificates so called for prepayment shall cease to accrue, said Certificates (or portions thereof) shall cease to be entitled to any benefit or security under this Trust Agreement, and the Owners of said Certificates shall have no rights in respect thereof except to receive payment of said Prepayment Price and accrued interest. All Certificates prepaid pursuant to the provisions of this Section shall be cancelled upon surrender thereof by the Trustee. All Certificates purchased pursuant to the provisions of this Section shall be registered in the name of the Authority and delivered to, or as directed in writing by, the Authority. Section 2.04. Form of Certificates. The Certificates and the registration endorsement and assignment to appear thereon shall be substantially in the forms set forth in Exhibit A hereto attached and by this reference herein incorporated (provided that on the face of each Certificates, at the place where the portion of the form set forth below appears on the reverse side of such Certificate, there shall be inserted the following sentence: REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS CERTIFICATE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL, FOR ALL PURPOSES, HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE). Section 2.05. Execution of Certificates. The Certificates shall be executed by the Trustee by the manual signature of an authorized signatory of the Trustee. Only those Certificates executed manually and dated by the Trustee, shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such execution by the Trustee shall be conclusive evidence that the Certificates so executed and registered have been duly authorized, executed and delivered hereunder and are entitled to the benefit, protection and security hereof. Section 2.06. Transfer and Payment of Certificates. Any Certificates may, in accordance with its terms, be transferred in the records maintained pursuant to the provisions of Section 2.08 by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Certificates for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Trustee. Whenever any Certificates shall be surrendered for transfer, the Trustee shall execute and deliver to the transferee a new Certificate or Certificates of the same series and maturity for a like aggregate principal amount. The Trustee shall require the payment by the Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer as a condition precedent to the exercise of such privilege. The Authority and the Trustee may deem and treat the registered owner of any Certificates as the absolute owner of such Certificates for the purpose of receiving payment thereof and for all other purposes, whether such Certificates shall be overdue or not, and neither the Authority nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest and principal and prepayment premium, if any, evidenced and represented by such Certificates shall be made only to such registered owner, which payments 19 OHSUSA:767615425.2 shall be valid and effectual to satisfy and discharge liability on such Certificates to the extent of the sum or sums so paid. The Trustee shall not be required to execute, register the transfer of or exchange any Certificates during the fifteen (15) days preceding each Interest Payment Date or the date of selection by the Trustee of Certificates for prepayment, or to register the transfer of or exchange any Certificates which have been selected for prepayment in whole or in part. Section 2.07. Exchange of Certificates. Certificates may be exchanged at the office of the Trustee for a like aggregate principal amount of Certificates of the same series and payment date of other authorized denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange as a condition precedent to the exercise of such privilege. Section 2.08. Certificate Registration Books. The Trustee will keep at its office sufficient books for the registration and transfer of the Certificates which shall at all times be open to inspection by the Local Agencies or any Owner on reasonable notice during regular business hours on any Business Day, and upon presentation for such purpose the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the Certificates in such books as hereinabove provided. Section 2.09. Mutilated, Destroyed, Stolen or Lost Certificates. If any Certificate shall become mutilated the Trustee at the expense of the Owner shall thereupon execute and deliver, a new Certificate of like tenor and number in exchange and substitution for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall be canceled. If any Certificate shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory to the Trustee and the Authority and indemnity satisfactory to the Trustee and the Authority shall be given, the Trustee, at the expense of the Owner, shall thereupon execute and deliver, a new Certificate of like tenor and number in lieu of and in substitution for the Certificate so lost, destroyed or stolen. The Trustee may require payment of a reasonable sum for each new Certificate executed and delivered under this Section 2.09 and of the expenses which may be incurred by the Authority and the Trustee in the premises. Any Certificate executed and delivered under the provisions of this Section in lieu of any Certificate alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this Trust Agreement with all other Certificates of the same series secured by this Trust Agreement. Neither the Authority nor the Trustee shall be required to treat both the original Certificate and any duplicate Certificate as being Outstanding for the purpose of determining the principal amount of Certificates which may be executed and delivered hereunder or for the purpose of determining any percentage of Certificates Outstanding hereunder, but both the original and duplicate Certificate shall be treated as one and the same. Section 2.10. Temporary Certificates. The Certificates executed and delivered under this Trust Agreement may be initially executed and delivered in temporary form exchangeable 20 for definitive Certificates when ready for delivery. The temporary Certificates may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Trustee, shall be in fully registered form and may contain such reference to any of the provisions of this Trust Agreement as may be appropriate. Every temporary Certificate shall be executed and delivered by the Trustee upon the same conditions and terms and in substantially the same manner as definitive Certificates. If the Trustee executes and delivers temporary Certificates it will execute and furnish definitive Certificates without delay and thereupon the temporary Certificates may be surrendered, for cancellation, in exchange therefor at the Office of the Trustee, and the Trustee shall deliver in exchange for such temporary Certificates an equal aggregate principal amount of definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Trust Agreement as definitive Certificates delivered hereunder. Section 2.11. Procedure for the Execution and Delivery of Certificates; Establishment of Funds and Accounts; Deposit of Proceeds. At any time after the sale of the Certificates, the Trustee shall execute the Certificates for delivery hereunder, and thereupon the Certificates shall be delivered by the Trustee to the purchaser thereof upon the Request of the Authority and upon receipt of payment therefor from the purchaser thereof. Upon receipt of payment for the Certificates from the purchaser thereof, the Trustee shall set aside and deposit the proceeds received from such sale in the following respective accounts or funds or with the following respective persons, in the following order of priority: (a) The Trustee shall credit [each Reserve Policy] to each Reserve Subaccount for each Local Agency as established within the Reserve Fund pursuant to Section 3.03 hereof. The initial maximum amount available under [each Reserve Policy] is equal [in the aggregate] to the Reserve Fund Requirement for each Local Agency in accordance with its Agreement calculated only with respect to its 2018 Installment Sale Payments. (b) The “Costs of Issuance Fund” is hereby established as a separate trust fund with the Trustee. The Trustee shall deposit the sum of $_________, which is equal to the amount set forth in such Request of the Authority in the Costs of Issuance Fund. The moneys in the Costs of Issuance Fund shall be disbursed, upon the Request of the Authority, to pay Costs of Issuance. Upon the earlier of payment in full of the Costs of Issuance or the making of adequate provision for the payment thereof, evidenced by a Certificate of the Authority to the Trustee, on _________ 1, 2018, any balance remaining in such Fund shall be transferred to the Proceeds Subaccounts of the Acquisition Fund in proportion to the amounts initially deposited in the Costs of Issuance Fund attributable to each Local Agency, and pending such transfer and application, the moneys in such Fund may be invested as permitted by Section 3.04 hereof; provided, however, that investment income resulting from any such investment shall be retained in the Costs of Issuance Fund. Any residual earnings received after the transfer referenced above will, as and when convenient, be transferred to the Proceeds Subaccounts of the Acquisition Fund in proportion to the amounts initially deposited in the Costs of Issuance Fund attributable to each Local Agency. (c) There shall be further created a special trust fund to be held by the Trustee called the “Acquisition Fund.” Within the Acquisition Fund the Trustee shall create 21 OHSUSA:767615425.2 Proceeds Subaccounts (the “Proceeds Subaccounts”) to account separately for funds in the Acquisition Fund attributable to each Local Agency. The Trustee shall deposit the sum of $__________, which is equal to the amount set forth in such Request of the Authority in the Acquisition Fund, and such moneys shall be credited to each of the Local Agencies in the amounts set forth in Schedule II, which is attached hereto and made a part hereof. Moneys in the Proceeds Subaccounts shall be disbursed to each Local Agency in the amounts set forth in Schedule II relating to such Local Agency pursuant to a Requisition in the form attached hereto as Exhibit B. Such Requisition shall be in the form of a sequentially numbered requisition and shall set forth the name and address of the person or persons to whom said amounts are to be disbursed and state the amounts to be disbursed are for Project Costs properly chargeable to the Proceeds Subaccount and have not been the subject of any previous requisition. The Trustee shall have no duty to confirm the accuracy of the Requisition submitted. Upon delivery to the Trustee of a Request of a Local Agency, any Certificate proceeds remaining in such Local Agency’s Proceeds Subaccount upon completion of its Project (which completion shall be evidenced by such Request of the Local Agency) shall be applied by the Trustee to offset scheduled 2018 Installment Sale Payments required to be paid by the Local Agency under its Agreement or in such other manner as may be directed in such Request of the Local Agency. When no amounts remain on deposit in the Acquisition Fund, the Acquisition Fund shall be closed. Upon the occurrence and continuance of an Event of Default or an event which with notice or lapse of time would constitute an Event of Default, amounts on deposit in the Acquisition Fund shall not be disbursed, but shall instead be applied to the payment of the scheduled principal and interest represented by the Certificates as such amounts become due and payable or the Prepayment Price of the Certificates. Section 2.12. Validity of Certificates. The validity of the Certificates shall not be dependent on or affected in any way by the proceedings taken by the Authority or the Trustee for the financing of the Projects or by any contracts made by the Authority or its agents in connection therewith, and shall not be dependent upon the completion of any of the Projects or upon the performance by any person, firm or corporation of his or its obligation with respect thereto. The recital contained in the Certificates that the same are executed and delivered pursuant hereto shall be conclusive evidence of their validity and of the regularity of their execution and delivery, and all Certificates shall be incontestable from and after their execution and delivery. The Certificates shall be deemed to be executed and delivered, within the meaning hereof, whenever the definitive Certificates (or any temporary Certificates exchangeable therefor) shall have been delivered to the purchaser thereof and the proceeds of sale thereof received. Section 2.13. Special Covenants as to Book-Entry Only System for Certificates. (a) Except as otherwise provided in subsections (b) and (c) of this Section 2.13, all of the Certificates initially executed and delivered shall be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”), or such other nominee as DTC shall request pursuant to the Representation Letter. Payment of the interest evidenced and represented by any Certificate registered in the name of Cede & Co. shall be made on each Interest Payment Date for such Certificates to the account, in the manner and at the address indicated in or pursuant to the Representation Letter. 22 (b) The Certificates initially shall be executed and delivered in the form of a single fully registered certificate for each stated payment date of such Certificates, representing the aggregate principal amount evidenced and represented by the Certificates payable on such payment date. Upon initial execution and delivery, the ownership of all such Certificates shall be registered in the registration records maintained by the Trustee pursuant to Section 2.08 hereof in the name of Cede & Co., as nominee of DTC, or such other nominee as DTC shall request pursuant to the Representation Letter. The Trustee, the Local Agencies, the Authority and any paying agent may treat DTC (or its nominee) as the sole and exclusive owner of the Certificates registered in its name or the name of its nominee for the purposes of payment of the principal or Prepayment Price and interest evidenced and represented by such Certificates, selecting the Certificates or portions thereof to be prepaid, giving any notice permitted or required to be given to Owners hereunder, registering the transfer of Certificates, obtaining any consent or other action to be taken by Owners of the Certificates and for all other purposes whatsoever; and neither the Trustee or the Authority or any paying agent shall be affected by any notice to the contrary. Neither the Trustee, the Local Agencies nor the Authority or any paying agent shall have any responsibility or obligation to any Participant (which shall mean, for purposes of this Section 2.13, securities brokers and dealers, banks, trust companies, clearing corporations and other entities, some of whom directly or indirectly own DTC), any person claiming a beneficial ownership interest in the Certificates under or through DTC or any Participant, or any other person which is not shown on the registration records as being an Owner, with respect to (i) the accuracy of any records maintained by DTC or any Participant, (ii) the payment by DTC or any Participant of any amount in respect of the principal, Prepayment Price or interest evidenced and represented by the Certificates, (iii) any notice which is permitted or required to be given to Owners of Certificates hereunder, (iv) the selection by DTC or any Participant of any person to receive payment in the event of a partial prepayment of the Certificates, or (v) any consent given or other action taken by DTC as Owner of Certificates. The Trustee shall pay all principal, premium, if any, and interest evidenced and represented by the Certificates only at the times, to the accounts, at the addresses and otherwise in accordance with the Representation Letter, and all such payments shall be valid and effective to satisfy fully and discharge the obligations with respect to the principal, premium, if any, and interest evidenced and represented by the Certificates to the extent of the sum or sums so paid. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of its then existing nominee, the Certificates will be transferable to such new nominee in accordance with subsection (e) of this Section 2.13. (c) In the event that the Authority determines that it is in the best interests of the Local Agencies or the beneficial owners of the Certificates that they be able to obtain certificates, the Trustee shall, upon the written instruction of the Authority, so notify DTC, whereupon DTC shall notify the Participants of the availability through DTC of such certificates. In such event, the Certificates will be transferable in accordance with subsection (e) of this Section 2.13. DTC may determine to discontinue providing its services with respect to the Certificates at any time by giving written notice of such discontinuance to the Authority, the Local Agencies and the Trustee and discharging its responsibilities with respect thereto under applicable law. In such event, the Certificates will be transferable in accordance with subsection (e) of this Section 2.13. Whenever DTC requests the Authority, the Local Agencies and the Trustee to do so, the Trustee, the Local Agencies and the Authority will cooperate with DTC in taking appropriate action after reasonable notice to arrange for another securities depository to 23 OHSUSA:767615425.2 maintain custody of all certificates evidencing the Certificates then Outstanding. In such event, the Certificates will be transferable to such securities depository in accordance with subsection (e) of this Section 2.13, and thereafter, all references in this Trust Agreement to DTC or its nominee shall be deemed to refer to such successor securities depository and its nominee, as appropriate. (d) Notwithstanding any other provision of this Trust Agreement to the contrary, so long as all Certificates Outstanding are registered in the name of any nominee of DTC, all payments with respect to the principal, premium, if any, and interest evidenced and represented by each such Certificate and all notices with respect to each such Certificate shall be made and given, respectively, to DTC as provided in the Representation Letter. (e) In the event that any transfer or exchange of Certificates is authorized under subsection (b) or (c) of this Section 2.13, such transfer or exchange shall be accomplished upon receipt by the Trustee from the registered Owner thereof of the Certificates to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee, all in accordance with the applicable provisions of Sections 2.06 and 2.07 hereof. In the event Certificates are delivered to Owners other than Cede & Co., its successor as nominee for DTC as Owner of all the Certificates, another securities depository as Owner of all the Certificates, or the nominee of such successor securities depository, the provisions of Sections 2.06 and 2.07 hereof shall also apply to, among other things, the registration, exchange and transfer of the Certificates and the method of payment of principal, premium, if any, and interest evidenced and represented by the Certificates. 24 ARTICLE III REVENUES Section 3.01. Pledge of Revenues; Assignment. All Revenues and any other amounts (including proceeds of the sale of the Certificates) held by the Trustee in any fund or account established hereunder (other than amounts on deposit in the Acquisition Fund created pursuant to Section 2.11 and the Rebate Fund created pursuant to Section 4.04) are hereby irrevocably pledged to the payment of the principal, interest and premium, if any, evidenced and represented by the Certificates as provided herein, and the Revenues shall not be used for any other purpose while any of the Certificates remain Outstanding; provided, however, that out of the Revenues and other moneys there may be applied such sums for such purposes as are permitted hereunder. This pledge shall constitute a first pledge of and charge and lien upon the Revenues and all other moneys on deposit in the funds and accounts established hereunder (other than amounts on deposit in the Acquisition Fund created pursuant to Section 2.11 and the Rebate Fund created pursuant to Section 4.04) for the payment of the interest and principal evidenced and represented by the Certificates in accordance with the terms hereof and thereof. The Authority hereby assigns to the Trustee all of the Authority’s rights and remedies under the Agreements, including, but not limited to, the Authority’s security interest in and lien upon the Revenues. Section 3.02. Receipt and Deposit of Revenues in the Revenue Fund. In order to carry out and effectuate the pledge, charge and lien contained herein, the Authority agrees and covenants that all Revenues when and as received shall be received by the Authority in trust hereunder for the benefit of the Owners and shall be deposited when and as received by the Authority in the Revenue Fund which fund is hereby created and which fund the Authority hereby agrees and covenants to maintain with the Trustee so long as any Certificates shall be Outstanding under the Trust Agreement. All Revenues shall be accounted for separately for each Local Agency and held in trust in the Revenue Fund. All Revenues, whether received by the Authority in trust or deposited with the Trustee as herein provided, shall nevertheless be allocated, applied and disbursed solely for the purposes and uses hereinafter in this Article set forth, and shall be accounted for separately and apart from all other accounts, funds, money or other resources of the Authority, and the Authority shall have no beneficial right or interest in any of the Revenues except only as herein provided. Section 3.03. Establishment and Maintenance of Accounts for Use of Money in the Revenue Fund. Subject to Section 4.04, all money in the Revenue Fund shall be set aside by the Trustee in the following respective special funds and accounts within the Revenue Fund in the following order of priority: (1) Interest Fund, and within the Interest Fund, an Interest Payment Account for each Local Agency; (2) Principal Fund, and within the Principal Fund, a Principal Payment Account for each Local Agency; 25 OHSUSA:767615425.2 (3) Reserve Fund, and within the Reserve Fund, a Reserve Subaccount for each Local Agency; (4) Administration Fund, and within the Administration Fund, an Administration Subaccount for each Local Agency; and (5) Surplus Account. All money in each of such accounts shall be held in trust by the Trustee and shall be applied, used and withdrawn only for the purposes hereinafter authorized in this section. Notwithstanding the foregoing, the Trustee need not create separate accounts within the Interest Fund, the Principal Fund, the Reserve Fund and the Administration Fund, but shall keep sufficient records to account separately for the deposits attributable to each Local Agency. (1) Interest Fund. On or before the Business Day immediately preceding each Interest Payment Date, the Trustee shall set aside from amounts deposited by each Local Agency in the Revenue Fund and deposit in each Local Agency Interest Payment Account that amount of money which is equal to the amount of interest becoming due and payable with respect to such Local Agency’s Agreement on the next succeeding Interest Payment Date. No such deposit need be made if the amount contained in a Local Agency Interest Payment Account is at least equal to the aggregate amount of interest becoming due and payable in connection with such Local Agency’s Agreement on such Interest Payment Date. All money in the Interest Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the interest evidenced and represented by the Certificates as it shall become due and payable (including accrued interest evidenced and represented by any Certificates purchased or prepaid prior to the payment dates thereof). (2) Principal Fund. On or before the Business Day immediately preceding each Certificate Payment Date the Trustee shall set aside from amounts deposited by each Local Agency in the Revenue Fund and deposit in each Local Agency Principal Payment Account an amount of money equal to the amount of principal becoming due and payable with respect to such Local Agency’s Agreement on the next succeeding Certificate Payment Date. No such deposit need be made if the amount contained in a Local Agency Principal Payment Account is at least equal to the aggregate amount of principal becoming due and payable in connection with such Local Agency’s Agreement on such Certificate Payment Date. All money in the Principal Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal evidenced and represented by the Certificates as it shall become due and payable, whether on their respective Certificate Payment Dates or prepayment, except that any money in any sinking fund account shall be used and withdrawn by the Trustee only to purchase or to prepay or to pay Term Certificates for which such sinking fund account was created. (3) Reserve Fund. The Trustee shall set aside from amounts deposited by each Local Agency in the Revenue Fund and deposit in each Local Agency’s Reserve Subaccount that amount of money (or other authorized deposit of security) which shall be required to maintain the Reserve Subaccount in the full amount of the Reserve Fund Requirement. No deposit need be made in any Reserve Subaccount so long as there shall be on deposit therein a sum equal to the related Local Agency Reserve Fund Requirement. All money in each Reserve Subaccount 26 (including all amounts which may be obtained from any insurance policy on deposit in the Reserve Subaccount) shall be used and withdrawn by the Trustee solely for the purpose of replenishing the related Local Agency Interest Payment Account or the related Local Agency Principal Payment Account, in that order, in the event of any deficiency at any time in either of such Accounts, but solely for the purpose of paying the interest or principal payable in connection with the related Local Agency Agreement, except that any cash amounts in the Reserve Subaccounts in excess of the amount required to be on deposit therein shall be withdrawn from the Reserve Subaccounts on each Interest Payment Date and deposited in the related Local Agency Interest Payment Account. In lieu of making a Local Agency Reserve Fund Requirement deposit or in replacement of moneys then on deposit in any Reserve Subaccount (which shall be transferred by the Trustee to the related Local Agency upon delivery of an insurance policy satisfying the requirements stated below), a Local Agency may also deliver to the Trustee an insurance policy (a “Qualified Reserve Instrument”) securing an amount, together with moneys or Permitted Investments on deposit in the Reserve Subaccount, no less than such Local Agency Reserve Fund Requirement, issued by an insurance company licensed to issue insurance policies guaranteeing the timely payment of the principal and interest components of the related Local Agency Agreement and whose unsecured debt obligations (or for which obligations secured by such insurance company’s insurance policies) are rated in one of the two highest rating categories (without respect to any modifier) of the Rating Agency. Notwithstanding anything to the contrary set forth in the Trust Agreement, amounts on deposit in the Reserve Fund shall be applied solely to the payment of debt service due on the Certificates. Each Local Agency has provided [a Reserve Policy] to be credited to the Local Agency’s Reserve Subaccount, and the Trustee shall make claims under the Reserve Policy in accordance with the terms of the Reserve Policy and the respective Insurance Agreement. Each Reserve Policy is a Qualified Reserve Instrument. (4) Administration Fund. On or before the Business Day immediately preceding each Certificate Payment Date, the Trustee shall set aside from amounts deposited by each Local Agency in the Revenue Fund and deposit in each Local Agency’s Administration Subaccount an amount equal to such Local Agency’s Administration Fee. All money in each Administration Subaccount shall be used and withdrawn by the Trustee solely for the purpose of paying the fees of the Authority, the Trustee and the Rebate Analyst, payable with respect to the related Local Agency Agreement, except that any cash amounts in the Administration Subaccounts in excess of the amount required to be on deposit therein shall be withdrawn from the Administration Subaccounts on each Interest Payment Date and deposited in the related Local Agency Interest Payment Account. (5) Surplus Account. On the Business Day immediately following each Interest Payment Date the Trustee shall deposit in the Surplus Account all money remaining in the Revenue Fund after the deposits required by Section 4.04 and by paragraphs (1), (2), (3) and (4) of this section have been made. On June 30 of each year, beginning on June 30, 20__, the Trustee shall disburse the money in the Surplus Account to each Local Agency to the extent each such Local Agency’s deposit of moneys, together with investment earnings thereon, if any, exceeded the deposits required by paragraphs (1), (2), (3) and (4) of this section. 27 OHSUSA:767615425.2 Section 3.04. Deposit and Investments of Money in Accounts and Funds. Subject to Section 4.04, all money held by the Trustee in any of the accounts or funds established pursuant hereto shall be invested and reinvested in Permitted Investments at the Request of the Local Agency received not less than two (2) Business Days prior to the date of making such investment. The Trustee shall notify the Local Agency no less than two (2) Business Days prior to the date moneys held hereunder will be available for investment, requesting that the Local Agency deliver to the Trustee a Request of the Local Agency specifying the Permitted Investments to be acquired by the Trustee with such moneys. All money held in the Reserve Fund shall be invested and reinvested in Permitted Investments with a term to maturity not exceeding five years or on the final maturity date of the Certificates, whichever date is earlier; provided, however, that if an obligation may be prepaid at par on the Business Day prior to each Interest Payment Date during which such obligation is outstanding, such obligation may have any maturity. If no such Request of the Local Agency is received, the Trustee shall hold such moneys uninvested. All such Permitted Investments shall be valued by the Trustee not less frequently than semi-annually on each Interest Payment Date at the lower of the cost or market value thereof. Subject to Section 4.04, all interest or profits received prior to the completion of each Project (as certified in writing by the related Authorized Local Agency Representative) on any money so invested shall be deposited in the related Proceeds Subaccount of the Acquisition Fund, and all interest or profits received subsequent thereto on any money so invested shall be deposited in the related Local Agency Interest Payment Account. The Trustee may act as a principal or agent in making or disposing of any investment, and all investments may be made through the Trustee’s investment department or that of its affiliates. The Trustee or its affiliates may act as sponsor, agent manager or depository with regard to any Permitted Investment. The Trustee shall not incur any liability for losses arising from any investments made pursuant to this Section. The Trustee shall sell in a commercially reasonably manner, or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and the Trustee shall not be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith. [Notwithstanding the foregoing, in the event there is only one participating Local Agency identified in Schedule I, notifications from the Trustee of the availability of funds for investment shall be provided to the Local Agency and instructions for the investment of funds will be at the Request of the Local Agency.] Section 3.05. Reserve Policy Payment and Reimbursement Provisions. The following provisions shall govern in the event of a conflict with any contrary provision of the Trust Agreement. (a) Each Local Agency shall repay any draws under the Reserve Policy allocable to such Local Agency and pay all related reasonable expenses incurred by the Insurer in accordance with this Section 3.05 and its Agreement and Insurance Agreement. Interest shall accrue and be payable on such draws and expenses from the date of payment by the Insurer at the Late Payment Rate. “Late Payment Rate” means the lesser of (A) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate (“Prime Rate”) (any change in such Prime Rate to be effective on the date such changes are announced by JPMorgan Chase 28 Bank) plus [3]%, and (ii) the then applicable highest rate of interest on the Certificates, and (B) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such bank, banking association or trust company bank as the Insurer in its sole and absolute discretion shall specify. Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, the “Policy Costs”) shall commence in the first month following each draw, and each such monthly payment shall be in an amount at least equal to 1/12 of the aggregate of Policy Costs related to such draw. As to each Local Agency and its Reserve Subaccount, amounts in respect of Policy Costs paid to the Insurer shall be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to the Insurer on account of principal due, the coverage under the Reserve Policy will be increased by a like amount, subject to the terms of the Reserve Policy. All cash and investments in a Local Agency’s Reserve Subaccount of the Reserve Fund established for the Certificates shall be transferred to the Interest Fund and the Principal Fund, as applicable, for payment of the debt service on the Certificates before any drawing may be made on the Reserve Policy or any other Qualified Reserve Instrument in lieu of cash. As to each Local Agency and its Reserve Subaccount, payment of any Policy Cost shall be made prior to replenishment of any cash amounts. Draws on all Qualified Reserve Instruments (including the Reserve Policy) on which there is available coverage shall be made on a pro-rata basis (calculated by reference to the coverage then available thereunder) after applying all available cash and investments in in a Local Agency’s Reserve Subaccount of the Reserve Fund established for the Certificates. Payment of Policy Costs and reimbursement of amounts with respect to other Qualified Reserve Instruments shall be made on a pro-rata basis prior to replenishment of any cash drawn from the Reserve Fund. For the avoidance of doubt, “available coverage” means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw. (b) Draws under the Reserve Policy may only be used to make payments on Certificates. (c) If a Local Agency shall fail to pay duly allocable Policy Costs in accordance with the requirements of paragraph (a) above, the Insurer shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under this Trust Agreement, and the subject Local Agency’s Agreement and Insurance Agreement other than (i) acceleration of the maturity of the Certificates, or (ii) remedies which would adversely affect owners of the Certificates. (d) This Trust Agreement shall not be discharged until all Policy Costs owing to the 29 OHSUSA:767615425.2 Insurer shall have been paid in full. Each Local Agency’s obligation to pay such amount, if any is allocable to such Local Agency, shall expressly survive payment in full of the Certificates. (e) The Trustee shall ascertain the necessity for a claim upon the Reserve Policy in accordance with the provisions of paragraph (a) hereof and provide notice to the Insurer at least three business days prior to each date upon which interest or principal is due on the Certificates. (f) The Reserve Policy shall expire on the earlier of the date the Certificates are no longer outstanding and the final maturity date of the Certificates. 30 ARTICLE IV COVENANTS Section 4.01. Compliance with Trust Agreement. The Trustee will not execute or deliver any Certificates in any manner other than in accordance with the provisions hereof; and the Local Agencies will not suffer or permit any default to occur hereunder, but will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by them. Section 4.02. Amendment of Agreements. The Local Agencies and the Authority will not amend or permit the amendment of the Agreements without (a)(1) a determination that such amendment does not materially adversely affect the interest of the Owners or the Insurer or (2) the written consents of the Insurer and the Owners of a majority in aggregate principal amount of the Certificates then Outstanding, and (b) an Opinion of Counsel to the effect that such amendment is authorized and permitted by this Trust Agreement, is enforceable against the Authority and will not cause interest payable with respect to the Agreements to be included in gross income for federal income tax purposes; provided that no such supplement, amendment, modification or termination shall reduce the amount of 2018 Installment Sale Payments to be made to the Authority or the Trustee by any Local Agency pursuant to an Agreement, or extend the time for making such payments, or permit the creation of any lien prior to or on a parity with the lien created by such Agreement on Revenues (except as expressly provided in such Agreement), in each case without the written consent of all of the Owners of the Certificates then Outstanding. Section 4.03. Against Encumbrances. The Authority will not make any pledge of or place any charge or lien upon the Revenues except as provided herein, and will not issue any bonds, notes or obligations payable from the Revenues or secured by a pledge of or charge or lien upon the Revenues except the Certificates. Section 4.04. Tax Covenants: Rebate Fund. (a) In addition to the accounts created pursuant to Section 3.03, the Trustee shall establish and maintain a fund separate from any other fund or account established and maintained hereunder designated as the Rebate Fund. There shall be deposited in the Rebate Fund such amounts, including the Rebate Amount, as are required to be deposited therein pursuant to each of the Tax Certificates. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement (as defined in each Tax Certificate), for payment to the United States of America. Notwithstanding the provisions of Sections 3.01, 3.02, 3.04, 7.02 and 10.01 relating to the pledge of Revenues, the allocation of money in the Revenue Fund, the investments of money in any fund or account, the application of funds upon acceleration and the defeasance of Outstanding Certificates, all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section 4.04 and by each Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Authority, and shall have no liability or responsibility to 31 OHSUSA:767615425.2 enforce compliance by the Authority and the Local Agencies with the terms of the Tax Certificates. (b) Any funds remaining in the Rebate Fund after prepayment and payment with respect to all of the Certificates or provision made therefor satisfactory to the Trustee, including accrued interest and payment of any applicable fees to the Trustee and satisfaction of the Rebate Requirement (as defined in the Tax Certificates), shall be withdrawn by the Trustee and remitted to or upon the written direction of the Authority. Section 4.05. Accounting Records and Reports. The Trustee shall keep proper books of record and account in accordance with industry standards in which complete and correct entries shall be made of all transactions made by the Trustee relating to the receipt, investment, disbursement, allocation and application of all funds received by the Trustee hereunder. Such records shall specify the account or fund to which each investment (or portion thereof) held by the Trustee is to be allocated and shall set forth, in the case of each investment: (a) its purchase price; (b) identifying information, including par amount, coupon rate, and payment dates; (c) the amount received at maturity or its sale price, as the case may be; (d) the amounts and dates of any payments made with respect thereto; and (e) such documentation as is required to be obtained as evidence to establish that all investments have been purchased in arms’ length transactions with no amounts paid to reduce the yield on the investments. Such records shall be open to inspection by the Authority and any Local Agency at any reasonable time during regular business hours on reasonable notice. Section 4.06. Observance of Laws and Regulations. The Local Agencies will faithfully observe and perform all lawful and valid obligations or regulations now or hereafter imposed on them by contract, or prescribed by any state or national law, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by them, including their right to exist and carry on their respective businesses, to the end that such observance or performance is material to the transactions contemplated hereby. Section 4.07. Further Assurances. Whenever and so often as reasonably requested to do so by the Trustee or any Owner, the Local Agencies will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments, and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Trustee and the Owners all rights, interests, powers, benefits, privileges and advantages conferred or intended to be conferred upon them hereby. Section 4.08. Recordation and Filing. Each Local Agency will file, record, register, renew, refile and rerecord all such documents, including financing statements (or continuation statements in connection therewith), as may be required by law in order to maintain at all times a security interest in the Agreements under and pursuant to the Trust Agreement, all in such manner, at such times and in such places as may be required in order to fully perfect, preserve and protect the benefit, protection and security of the Owners and the Insurer, and the rights of the Trustee hereunder, and the Local Agencies will do whatever else may be necessary or be 32 reasonably required in order to perfect and continue the pledge of and lien on the Agreements as provided herein. Section 4.09. Acquisition of the Projects. Subject to and as provided in each Agreement, the Authority will cause to be acquired and constructed the Projects with all practicable dispatch and such acquisition will be made in an expeditious manner and in conformity with the law so as to complete the same as soon as possible. 33 OHSUSA:767615425.2 ARTICLE V THE TRUSTEE Section 5.01. The Trustee. Wilmington Trust, National Association shall serve as the Trustee for the Certificates for the purpose of receiving all money which the Authority and the Local Agencies are required to deposit with the Trustee hereunder and for the purpose of allocating, applying and using such money as provided herein and for the purpose of paying the interest, principal and prepayment premiums, if any, evidenced and represented by the Certificates presented for payment in Costa Mesa, California, with the rights and obligations provided herein. The Authority agrees that it will at all times maintain a Trustee having a designated office in San Francisco or Los Angeles, California. The Authority may at any time, unless there exists any event of default as defined in Section 7.01, remove the Trustee initially appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided that any such successor shall (i) be a bank or trust company doing business and having a principal office in San Francisco or Los Angeles, California, (ii) have (or in the case of a bank or trust company which is part of a bank holding company system, the related bank holding company shall have) a combined capital (exclusive of borrowed capital) and surplus of at least seventy-five million dollars ($75,000,000) and (iii) be subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Authority and by mailing to the Owners notice of such resignation. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing. Any removal or resignation of a Trustee and appointment of a successor Trustee shall become effective only upon the acceptance of appointment by the successor Trustee. If, within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee shall have been appointed and shall have accepted such appointment, the removed or resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Trustee having the qualifications required hereby. The Trustee is hereby authorized to prepay the Certificates when duly presented for payment on their respective Certificate Payment Dates or on prior prepayment. The Trustee shall cancel all Certificates upon payment thereof or upon the surrender thereof by the Authority and shall destroy such Certificates it has received in accordance with its retention policy then in effect. The Trustee shall keep accurate records of all Certificates paid and discharged and canceled by it. The Authority, solely from amounts held in the Costs of Issuance Fund or paid by the Local Agencies specifically for such purpose, shall from time to time, subject to any agreement between the Authority and the Trustee then in force, pay to the Trustee compensation 34 for its services, reimburse the Trustee for all its advances and expenditures including but not limited to advances to and fees and expenses of independent accountants and in-house and other counsel or other experts employed by it and reasonably required in the exercise and performance of its rights and obligations hereunder, and, to the extent permitted by law, indemnify and hold the Trustee and its officers, directors, employees and agents harmless against any claim, loss, liability, damages, expenses (including legal fees and expenses) or advances not arising from the Trustee’s own active or passive negligence, willful misconduct or breach of fiduciary duty, which the Trustee may incur in the exercise and performance of its rights and obligations hereunder. The obligations of the Authority under this paragraph to compensate, indemnify, reimburse and hold the Trustee harmless shall constitute additional indebtedness hereunder, and such indebtedness shall have priority over the Certificates in respect of all property and funds held or collected by the Trustee as such, except funds held in trust by the Trustee for the benefit of the Owners of particular Certificates, including, without limitation, funds held by the Trustee in trust to prepay all or a portion of Outstanding Certificates prior to their respective Certificate Payment Dates for which a notice of prepayment has been sent as provided herein. Section 5.02. Liability of Trustee. The recitals of facts, agreements and covenants herein and in the Certificates shall be taken as recitals of facts, agreements and covenants of the Authority, and the Trustee assumes no responsibility for the use of any proceeds of the Certificates, the correctness of the same, the collection of the Revenues or makes any representation as to the sufficiency or validity hereof, of the Certificates or any security therefor or any offering material distributed in connection with the Certificates and shall not incur any responsibility in respect thereof other than in connection with the rights or obligations assigned to or imposed upon it herein, in the Certificates or in law or equity. The Trustee shall not be liable in connection with the performance of its duties hereunder except for its own negligence, willful misconduct or breach of fiduciary duty. The Trustee shall not be bound to recognize any person as the Owner of a Certificate unless and until such Certificate is submitted for inspection, if required, and such Certificate is registered in such person’s name. Whenever the Trustee shall deem it necessary or desirable that a factual or legal matter be established or proved prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and established by a certificate conforming to the requirements herein or an opinion of counsel, which certificate or opinion shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may in lieu thereof accept other evidence of such matter or may require such additional evidence as it may deem reasonable. In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity and all persons, including without limitation the Owners, the Authority and the Local Agencies, having any claim against the Trustee arising from this Trust Agreement not attributable to the Trustee’s negligence or willful misconduct shall look only to the funds and accounts held by the Trustee hereunder for payment except as otherwise provided herein. The duties and obligations of the Trustee shall be determined solely by the express provisions of this Trust Agreement, the Trustee shall not be liable except for the performance of 35 OHSUSA:767615425.2 such duties and obligations as are specifically set forth in this Trust Agreement, and no implied covenants or obligations (fiduciary or otherwise) shall be read into this Trust Agreement against the Trustee. The Trustee shall not be liable with respect to any action taken or not taken hereunder in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Certificates at the time Outstanding. The Trustee shall, during the existence of any event of default (which has not been cured), exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise of use under the circumstances in the conduct of its own affairs. The permissive right of the Trustee to do things enumerated in this Trust Agreement shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents and such immunities and exceptions and its right to payment of its fees and expenses shall survive its resignation or removal and the final payment and defeasance of the Certificates. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Certificates. The Trustee, in its individual or any other capacity, may become the Owner of any Certificates or other obligations of any party hereto with the same rights which it would have if not the Trustee. At any and all reasonable times, the Trustee, and its agents shall have the right to fully inspect the Projects, including all books, papers and records of the Local Agencies pertaining to the Projects and the Certificates, and to take such memoranda therefrom and with regard thereto and make photocopies thereof as may be desired. The Trustee shall not be required to give any bond or surety in respect of the execution of said trusts and powers or otherwise in respect of the premises. Before taking or refraining from any action hereunder at the request or direction of the Owners, the Trustee may require that an indemnity bond satisfactory to the Trustee be furnished to it and be in full force and effect. None of the provisions contained herein or in the Agreements shall require the Trustee to expend or risk its own funds or continue to do so or otherwise incur individual financial liability in the performance of any of its duties or in the exercise of any of its rights or powers if it shall reasonably believe that repayment of such funds or adequate indemnity against such risk or liability is not assured to it. The Trustee may rely and shall be protected in acting or failing to act upon any paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder except failure by the Local Agencies to make any payment of principal or interest under the Agreements when due, unless the Trustee shall be specifically notified in writing at its corporate trust office of such default by the Owners of not less than 25% of the aggregate principal amount of Certificates then Outstanding. Notwithstanding any other provision hereof, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or official action or evidence thereof, required as a condition of such action deemed by the Trustee to be desirable for the purpose of establishing the rights of the Trustee with respect to the authentication of any Certificates, the withdrawal of any cash, the release of any property or the taking of any other action by the Trustee. The Trustee agrees to accept and act upon instructions or directions pursuant hereto sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods; provided, however, that the Trustee shall have received an incumbency certificate from each 36 Local Agency listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. Each Local Agency agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of interception and misuse by third party. The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include but not be limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences. 37 OHSUSA:767615425.2 ARTICLE VI AMENDMENT OF THE TRUST AGREEMENT Section 6.01. Amendment of the Trust Agreement. The Trust Agreement and the rights and obligations of the Authority, the Local Agencies, the Trustee and the Owners may be amended at any time by a Supplemental Trust Agreement which shall become binding when the written consents of the Insurer and the Owners of a majority in aggregate principal amount evidenced and represented by the Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 6.02, are filed with the Trustee. No such amendment shall (1) extend the Certificate Payment Date of or reduce the interest rate on or amount of interest or principal or prepayment premium, if any, evidenced and represented by any Certificate without the express written consent of the Insurer and the Owner of such Certificate, or (2) permit the creation by the Authority of any pledge of or charge or lien upon the Revenues as provided herein superior to or on a parity with the pledge, charge and lien created hereby for the benefit of the Certificates, or (3) reduce the percentage of Certificates required for the written consent to any such amendment or any amendment of an Agreement pursuant to Section 4.02 hereof, or (4) modify any rights or obligations of the Trustee, the Authority or the Local Agencies without their prior written assent thereto, respectively. The Trust Agreement and the rights and obligations of the Authority, the Local Agencies and of the Owners may also be amended at any time by a Supplemental Trust Agreement which shall become binding upon adoption without the consent of any Owners, but only to the extent permitted by law and after receipt of an approving Opinion of Counsel, for any purpose that will not in the judgment of the Authority or as set forth in an opinion of bond counsel materially adversely affect the interests of the Owners, including (without limitation) for any one or more of the following purposes - (a) to add to the agreements and covenants required herein to be performed by the Authority other agreements and covenants thereafter to be performed by the Authority or the Local Agencies, or to surrender any right or power reserved herein to or conferred herein on the Authority or the Local Agencies; (b) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the Authority or the Local Agencies may deem desirable or necessary and not inconsistent herewith; (c) to add to the agreements and covenants required herein, such agreements and covenants as may be necessary to qualify the Trust Agreement under the Trust Indenture Act of 1939; or (d) for any other purpose that does not materially adversely affect the interests of the Owners or the Insurer. Section 6.02. Disqualified Certificates. Certificates owned or held by or for the account of the Authority or the Local Agencies shall not be deemed Outstanding for the purpose 38 of any consent or other action or any calculation of Outstanding Certificates provided in this article, and shall not be entitled to consent to or take any other action provided in this article. Section 6.03. Endorsement or Replacement of Certificates After Amendment. After the effective date of any action taken as hereinabove provided, the Authority may determine that the Certificates may bear a notation by endorsement in form approved by the Authority as to such action, and in that case upon demand of the Owner of any Outstanding Certificates and presentation of his Certificate for such purpose at the office of the Trustee a suitable notation as to such action shall be made on such Certificate. If the Authority shall so determine, new Certificates so modified as, in the opinion of the Authority, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Owner of any Outstanding Certificate a new Certificate or Certificates shall be exchanged at the office of the Trustee without cost to each Owner for its Certificate or Certificates then Outstanding upon surrender of such Outstanding Certificates. Section 6.04. Amendment by Mutual Consent. The provisions of this article shall not prevent any Owner from accepting any amendment as to the particular Certificates held by him, provided that due notation thereof is made on such Certificates. Section 6.05. Information to Rating Agency. The Authority shall provide any Rating Agency rating the Certificates a copy of each amendment to the Trust Agreement or to the Agreement promptly following the execution or adoption of such amendment. 39 OHSUSA:767615425.2 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF OWNERS Section 7.01. Events of Default. If any default in the payment of 2018 Installment Sale Payments or any other “Event of Default” defined in an Agreement shall occur and be continuing, or if any default shall be made by a Local Agency in the performance or observance of any other of the covenants, agreements or conditions on its part herein contained and such default shall have continued for a period of thirty (30) days after written notice thereof shall have been given to such Local Agency by the Trustee or the Owners of not less than a majority in aggregate principal amount evidenced and represented by the Certificates at the time Outstanding, then such default shall constitute an “Event of Default” hereunder, and in each and every such case during the continuance of such Event of Default the Trustee or the Owners of not less than a majority in aggregate principal amount evidenced and represented by the Certificates at the time Outstanding shall be entitled, upon notice in writing to such defaulting Local Agency, but subject to the provisions of Section 7.06, to exercise the remedies provided under the Agreement then in default which are necessary or desirable to collect such Local Agency’s 2018 Installment Sale Payments. No grace period shall be permitted for payment defaults. The Owners of Certificates, for purposes of the Trust Agreement and the Agreement of each Local Agency, to the extent of their interest, shall be entitled to all rights and security of the Authority pursuant to each Agreement and the Trust Agreement. Each Local Agency recognizes the rights of the Owners of the Certificates, acting directly or through the Trustee, to enforce the obligations and covenants contained in the Agreements and the Trust Agreement; provided that in no event shall a Local Agency be liable for any obligations, covenants or damages except those which arise out of the Agreements, and, in particular, no Local Agency shall be liable for any obligations, liabilities, acts or omissions of any other Local Agency. Section 7.02. Application of Funds Upon Acceleration of Agreement. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article VII shall be deposited into a segregated payment account of the Revenue Fund relating to each, if any, defaulting Local Agency’s Agreement and be applied by the Trustee in the following order; provided that the Trustee shall obtain and follow the instructions contained in an Opinion of Counsel and rebate or set aside for rebate from the specified funds held hereunder, any amount pursuant to such instructions required to be paid to the United States of America under the Code: First, to the payment of the costs and expenses of the Trustee, if any, in carrying out the provisions of this article, including reasonable compensation to its agents, accountants and counsel and including any indemnification expenses; Second, to the payment of the principal and interest payable with respect to the Certificates, in connection with a mandatory prepayment of Certificates pursuant to Section 2.03(b) hereof and the delivery of a Cash Flow Report; and 40 Third, to the payment of amounts owed to the Insurer not paid pursuant to First and Second above. Section 7.03. Other Remedies of the Trustee. The Trustee shall have the right (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights hereunder against any Local Agency or any supervisor, council member, board member, trustee, member, officer or employee thereof, and to compel such Local Agency or any such supervisor, council member, board member, trustee, member, officer or employee thereof to observe or perform its or his or her duties under applicable law and the agreements, conditions, covenants and terms contained herein, or in the applicable Agreement, required to be observed or performed by it or him or her; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee or the Owners; or (c) by suit in equity upon the happening of any default hereunder to require any Local Agency and any supervisor, council member, board member, trustee, member, officer and employee to account as the trustee of any express trust. Section 7.04. Non-Waiver. A waiver by the Trustee of any default hereunder or breach of any obligation hereunder shall not affect any subsequent default hereunder or any subsequent breach of an obligation hereunder or impair any rights or remedies on any such subsequent default hereunder or on any such subsequent breach of an obligation hereunder. No delay or omission by the Trustee to exercise any right or remedy accruing upon any default hereunder shall impair any such right or remedy or shall be construed to be a waiver of any such default hereunder or an acquiescence therein, and every right or remedy conferred upon the Trustee by applicable law or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee. If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or the Local Agencies, the Trustee and the Local Agencies shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 7.05. Actions by Trustee as Attorney-in-Fact. Any action, proceeding or suit which any Owner shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners, whether or not the Trustee is an Owner, and the Trustee is hereby appointed (and the successive Owners, by taking and holding the Certificates executed and delivered hereunder, shall be conclusively deemed to have so appointed it) the true and lawful attorney-in-fact of the Owners for the purpose of bringing any such action, proceeding or suit and for the purpose of doing and performing any and all acts and things for and on behalf of the Owners as a class or classes as may be advisable or necessary in the opinion of the Trustee as such attorney-in-fact. Section 7.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter 41 OHSUSA:767615425.2 existing at law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law. If any remedial action hereunder is discontinued or abandoned, the Trustee and the Owners shall be restored to their former positions. Section 7.07. Limitation on Owners’ Right to Sue. No Owner of any Certificate executed and delivered hereunder shall have the right to institute any suit, action or proceeding at law or equity, for any remedy under or upon this Trust Agreement, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an event of default as defined in Section 7.01 hereunder; (b) the Owners of at least a majority in aggregate principal amount of all the Certificates then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) said Owners shall have tendered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such request and consent shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, consent, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any owner of Certificates of any remedy hereunder; it being understood and intended that no one or more owners of Certificates shall have any right in any manner whatever by his or their action to enforce any right under this Trust Agreement, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of the Trust Agreement shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates. Section 7.08. Limited Liability of the Local Agencies. Except as expressly provided in the Agreements, the Local Agencies shall not have any obligation or liability to the Authority, the Trustee or the Owners, with respect to the Trust Agreement or the preparation, execution, delivery, transfer, exchange or cancellation of the Certificates or the receipt, deposit or disbursement of the principal and interest payable with respect to the Agreements by the Trustee, or with respect to the performance by the Trustee of any obligation contained herein required to be performed by it. Notwithstanding anything to the contrary herein or in any Agreement, no Local Agency shall incur any obligation on account of any default, action or omission of any other Local Agency. Section 7.09. Limited Liability of the Authority. Except as expressly provided herein, the Authority shall not have any obligation or liability to the Trustee or the Owners, with respect to the payment when due of the 2018 Installment Sale Payments by the Local Agencies, or with respect to the observance or performance by the Local Agencies of the other agreements, conditions, covenants and terms contained in the Agreements, or with respect to the performance by the Trustee of any obligation contained herein required to be performed by it. Notwithstanding anything to the contrary contained in the Certificates, the Trust Agreement or any other document related thereto, the Authority shall not have any liability hereunder or by 42 reason hereof or in connection with any of the transactions contemplated hereby except to the extent payable from moneys received from or with respect to the Agreements and available thereof in accordance with the Trust Agreement. 43 OHSUSA:767615425.2 ARTICLE VIII DEFEASANCE Section 8.01. Discharge of Certificates. (a) If the Local Agencies shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Certificates the interest, principal and prepayment premiums, if any, evidenced and represented thereby at the times and in the manner stipulated herein and therein, and the Insurer shall have been paid all amounts owed to the Insurer under the Insurance Policy and the Reserve Policy, then the Owners of such Certificates shall cease to be entitled to the pledge of and charge and lien upon the Revenues as provided herein, and all agreements, covenants and other obligations of the Authority and the Local Agencies to the Owners of such Certificates hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction and the Trustee shall pay over or deliver to the Authority all money or securities held by it pursuant hereto which are not required for the payment of the interest and principal and prepayment premiums, if any, evidenced and represented by such Certificates. (b) Any Outstanding Certificates shall prior to the maturity date or prepayment date thereof be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if (1) in case any of such Certificates are to be prepaid on any date prior to their respective Certificate Payment Dates, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to provide notice in accordance with Section 2.03, (2) there shall have been deposited with the Trustee either (A) money in an amount which shall be sufficient or (B) Defeasance Obligations, in each case the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with the Trustee at the same time, shall be sufficient, in the opinion of an Independent Certified Public Accountant, to pay when due the interest to become due with respect to such Certificates on and prior to the Certificate Payment Date or prepayment date thereof, as the case may be, and the principal and prepayment premiums, if any, evidenced and represented by such Certificates, and (2) in the event such Certificates are not by their terms subject to prepayment within the next succeeding sixty (60) days, the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the Owners of such Certificates that the deposit required by clause (2) above has been made with the Trustee and that such Certificates are deemed to have been paid in accordance with this section and stating the Certificate Payment Date or prepayment date upon which money is to be available for the payment of the principal and prepayment premiums, if any, with respect to such Certificates. In addition, the Authority shall cause to be delivered to the Insurer (i) a report of an Independent Certified Public Accountant or such other accountant as shall be acceptable to the Insurer verifying the sufficiency of the escrow established to pay the Certificates in full on the maturity or prepayment date (“Verification”), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and substance to the Insurer), (iii) an opinion of nationally recognized bond counsel to the effect that the Certificates are no longer “Outstanding” under the Trust Agreement, and (iv) a certificate of discharge of the Trustee with respect to the Certificates; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the Authority and the Trustee. The Insurer shall be provided with final drafts of the 44 above-referenced documentation not less than five Business Days prior to the funding of the escrow. Certificates shall be deemed “Outstanding” under the Trust Agreement unless and until they are in fact paid and retired or the above criteria are met. Section 8.02. Unclaimed Money. Anything contained herein to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Certificates which remains unclaimed for two (2) years after the date when such Certificates have become due and payable, either at their stated Certificate Payment Dates or by call for prepayment prior to such dates, if such money was held by the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when such Certificates have become due and payable, shall be repaid by the Trustee to the Authority as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall not look to the Trustee for the payment of such Certificates. Any moneys held by the Trustee in trust for the payment and discharge of any Certificates shall not bear interest or be otherwise invested from and after such Certificate Payment Date or prepayment date. 45 OHSUSA:767615425.2 ARTICLE IX PROVISIONS RELATED TO THE INSURER AND THE INSURANCE POLICY Section 9.01. General Provisions. Exhibit C attached hereto relating to the Insurer and the Policy is incorporated by reference into this Trust Agreement. Notwithstanding anything to the contrary, the provisions of Exhibit C shall control and supersede any conflicting or inconsistent provisions in this Trust Agreement. 46 ARTICLE X MISCELLANEOUS Section 10.01. Liability of Authority Limited to Revenues. The Certificates are limited obligations of the Authority and are payable, as to interest, principal and any premiums upon the prepayment of any thereof, solely from the Revenues as provided herein, and the Authority is not obligated to pay them except from the Revenues. All the Certificates are equally secured by a pledge of and charge and lien upon the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest, principal and prepayment premiums, if any, with respect to the Certificates as provided herein. The Certificates are not a debt of the Authority, the Local Agencies, the State of California or any of its political subdivisions, and neither the Authority, the Local Agencies, said State nor any of its political subdivisions is liable thereon, nor in any event shall the Certificates be payable out of any funds or properties other than those of the Authority as provided herein. The Certificates do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction. Section 10.02. Benefits of the Trust Agreement Limited to Parties. Nothing contained herein, expressed or implied, is intended to give to any person other than the Local Agencies, the Authority, the Trustee, the Insurer and the Owners any right, remedy or claim under or by reason hereof. Any agreement or covenant required herein to be performed by or on behalf of the Local Agencies or the Authority shall be for the sole and exclusive benefit of the Trustee, the Authority, the Insurer and the Owners. Section 10.03. Successor Is Deemed Included In All References To Predecessor. Whenever either the Local Agencies, the Authority, or the Trustee or any officer thereof is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Local Agencies, the Authority or the Trustee or such officer, and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the Local Agencies, the Authority or the Trustee or any officer thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 10.04. Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to make acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. The ownership of any Certificates and the amount, maturity, number and date of holding the same may be proved by the registration books relating to the Certificates at the office of the Trustee. 47 OHSUSA:767615425.2 Any declaration, request or other instrument or writing of the Owner of any Certificate shall bind all future Owners of such Certificate with respect to anything done or suffered to be done by the Local Agencies, the Authority or the Trustee in good faith and in accordance therewith. Section 10.05. Waiver of Personal Liability; No Liability of Authority Members. No member, officer or employee of the Authority or any Local Agencies shall be individually or personally liable for the payment of the interest, principal or prepayment premiums, if any, with respect to the Certificates by reason of their execution and delivery, but nothing herein contained shall relieve any such member, officer or employee from the performance of any official duty provided by any applicable provisions of law, the Agreements or hereby. Notwithstanding anything to the contrary herein or in any other document, no entity that is a program participant of the Authority, its supervisors, councilmembers, trustees, officers, directors, employees, and agents, shall have any liability of any kind hereunder or by reason of or in connection with any of the transactions contemplated hereby, other than with respect to a program participant of the Authority in its capacity as a Local Agency hereunder. Section 10.06. Acquisition of Certificates by Authority. All Certificates acquired by the Authority, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. Section 10.07. Destruction of Canceled Certificates. Whenever provision is made herein for the cancellation of any Certificates, the Trustee shall destroy such Certificates in accordance with its retention policy then in effect. Section 10.08. Content of Certificates; Post-Issuance Legal Opinions. Every Certificate of the Authority or any Local Agency with respect to compliance with any agreement, condition, covenant or term contained herein shall include: (a) a statement that the person or persons executing such certificate have read such agreement, condition, covenant or term and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements contained in such certificate are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not the applicable Local Agency or Local Agencies or the Authority has complied with such agreement, condition, covenant or term; and (d) a statement as to whether, in the opinion of the signers, the applicable Local Agency or Local Agencies or the Authority has complied with such agreement, condition, covenant or term. Any Certificate of the Authority or any Local Agency may be based, insofar as it relates to legal matters, upon an Opinion of Counsel unless the person or persons executing such certificate know that the Opinion of Counsel with respect to the matters upon which his or their certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters and information with respect to which is in the possession of the applicable Local Agency or the Authority, upon a representation by an officer or officers of the applicable Local Agency or the Authority unless the counsel executing such Opinion of Counsel 48 knows that the representation with respect to the matters upon which his opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Section 10.09. Publication for Successive Weeks. Any publication required to be made hereunder for successive weeks in a financial newspaper may be made in each instance upon any Business Day of the first week and need not be made on the same Business Day of any succeeding week or in the same financial newspaper for any subsequent publication, but may be made on different Business Days or in different financial newspapers, as the case may be. Section 10.10. Accounts and Funds; Business Days. Any account or fund required herein to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund; but all such records with respect to all such accounts and funds shall at all times be maintained in accordance with the Tax Certificates and sound accounting practice and with due regard for the protection of the security of the Certificates and the rights of the Owners. Any action required to occur hereunder on a day which is not a Business Day shall be required to occur on the next succeeding Business Day. Section 10.11. Article and Section Headings and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to “Articles,” “Sections” and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof; and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith,” “hereunder” and other words of similar import refer to the Trust Agreement as a whole and not to any particular article, section, subdivision or clause hereof. Section 10.12. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the Local Agencies, the Authority or the Trustee shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof or of the Certificates, and the Owners shall retain all the benefit, protection and security afforded to them under the Act or any other applicable provisions of law. The Local Agencies, the Authority and the Trustee hereby declare that they would have executed and delivered the Trust Agreement and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Certificates pursuant hereto irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 10.13. Execution in Several Counterparts. This Trust Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Local Agencies, 49 OHSUSA:767615425.2 the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. Section 10.14. Governing Law. This Trust Agreement shall be governed, in all respects including validity, interpretation and effect by, and shall be enforceable in accordance with, the laws of the United States of America and of the State of California. Section 10.15. Notices. Except as otherwise provided herein, for the purposes hereof, any notice, consent, request, requisition, direction, certificate or demand or other communication may be served or presented, and such notice or demand may be made and shall be deemed to have been sufficiently given or served for all purposes by being deposited, first-class postage prepaid, in a post office letter box, addressed, as the case may be, to the parties as follows: If to the Authority: California Statewide Communities Development Authority 1700 North Broadway, Suite 405 Walnut Creek, California 94596 Attention: Secretary If to the Trustee: Wilmington Trust, National Association 650 Town Center Drive, Suite 600 Costa Mesa, California 92626 Attention: Corporate Trust Department If to the Local Agencies: To the individual addressees as set forth in Exhibit A to the Purchase Agreement If to the Purchaser: Stifel, Nicolaus & Company, Incorporated 515 South Figueroa Street, Suite 1800 Los Angeles, California 90071 Attention: John Kim [If to the Insurer: Any such communication may also be sent by telecopy at the telecopy numbers given above. Any party may change its address by notice to each other party. 50 IN WITNESS WHEREOF, the Authority and the Local Agencies named in Schedule I hereto have caused this Trust Agreement to be signed in their respective names by such person as has been designated by their respective governing boards, and the Trustee, to evidence its acceptance of the trust hereby created, has caused the Trust Agreement to be signed in the name of the Trustee by an authorized officer of the Trustee, all as of the day and year first above written. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee By: ______________________________________ Authorized Signatory CITY OF WEST COVINA By: ______________________________________ Mayor [LOCAL AGENCY] By: ______________________________________ [Mayor] [LOCAL AGENCY] By: ______________________________________ [Mayor] [LOCAL AGENCY] By: ______________________________________ [Mayor] A-1 OHSUSA:767615425.2 EXHIBIT A FORM OF CERTIFICATE No. __________ $_______________ CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATE OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) Interest Rate Certificate Payment Date Dated as of CUSIP No. % June 1, ____ __________, 2018 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: THIS IS TO CERTIFY that the registered owner named above, as the registered owner of this California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificate of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program) (the “Certificates”), is the owner of a proportionate undivided interest in the rights to receive certain 2018 Installment Sale Payments (as that term is defined in the Trust Agreement hereinafter mentioned) under and pursuant to certain Installment Sale Agreements (the “Agreements”) by and between various Local Agencies named therein (the “Local Agencies”), each a duly organized and existing political subdivision of the State of California, and the California Statewide Communities Development Authority (the “Authority”), a joint powers authority duly organized and existing under and by virtue of the laws of the State of California, all of which rights to receive such 2018 Installment Sale Payments having been assigned without recourse by the Authority to Wilmington Trust, National Association, as trustee (the “Trustee”), a trust company duly organized and existing under and by virtue of the laws of the United States and having a corporate trust office in Costa Mesa, California. The registered owner of this Certificate is entitled to receive, subject to the terms of the Agreements on the certificate payment date set forth above (the “Certificate Payment Date”), upon surrender of this Certificate on the Certificate Payment Date at the corporate trust office of the Trustee, the principal sum specified above representing the registered owner’s fractional undivided share of the 2018 Installment Sale Payments designated as principal components coming due on the Certificate Payment Date, and on each June 1 and December 1, commencing [June 1, 2018] (each an “Interest Payment Date”). The Certificates shall evidence and represent interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is an Interest Payment Date, in which event they shall evidence and represent interest from such date, or unless such date of registration is prior to the first Interest Payment Date, in which event they shall evidence and represent interest from __________, 2018; provided, however, that if at the time of registration of any Certificate 2 interest is then in default on the Outstanding Certificates, such Certificate shall evidence and represent interest from the Interest Payment Date to which interest has previously been paid or made available for payment on the Outstanding Certificates. Payment of interest evidenced and represented by the Certificates due on or before the maturity or prior prepayment thereof shall be made to the person whose name appears in the Certificates registration records maintained by the Trustee pursuant to the Trust Agreement as the registered owner thereof as of the close of business on the Record Date preceding each Interest Payment Date, whether or not such day is a Business Day, such interest to be paid by check mailed on such Interest Payment Date (or the next Business Day if such Interest Payment Date is not a Business Day) to such registered owner at the address as it appears in such books or at such other address as may have been filed with the Trustee for that purpose. The Owner of $1,000,000 or more in aggregate principal amount evidenced by the Certificates may request in writing that the Trustee pay the interest evidenced by such Certificates by wire transfer and the Trustee shall comply with such request for all Interest Payment Dates following the fifteenth (15th) day after receipt of such request until such request is rescinded. All such amounts are payable in lawful money of the United States of America. This Certificate is one of the duly authorized Certificates of the series set forth above, which have been executed by the Trustee pursuant to the terms of a Trust Agreement (together with any supplements or amendments thereto, the “Trust Agreement”), by and among the Trustee, the Local Agencies and the Authority, dated as of _______ 1, 2018. Copies of the Trust Agreement are on file at the corporate trust office of the Trustee, and reference is hereby made to the Trust Agreement and to any and all amendments thereof and supplements thereto for a description of the agreements, conditions, covenants and terms securing the Certificates, for the nature, extent and manner of enforcement of such agreements, conditions, covenants and terms, for the rights and remedies of the registered owners of the Certificates with respect thereto and for the other agreements, conditions, covenants and terms upon which the Certificates are executed and delivered thereunder, to which agreements, conditions, covenants and terms the owner hereof, by acceptance hereof, hereby consents. To the extent and in the manner permitted by the terms of the Trust Agreement and the Agreements, the provisions of the Trust Agreement may be amended or supplemented by the parties thereto. This Certificate is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at the corporate trust office of the Trustee but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement, and upon surrender of this Certificate for cancellation accompanied by delivery of a duly executed written instrument of transfer in the form appearing hereon. Upon such transfer, a new Certificate or Certificates of the same series and Certificate Payment Date representing the same principal amount will be executed and delivered to the transferee in exchange herefor. The Certificates are exchangeable at the corporate trust office of the Trustee for a like aggregate principal amount of Certificates of authorized denominations of the same series and Certificate Payment Date, in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement. A-3 OHSUSA:767615425.2 The Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, whether or not this Certificate shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the interest and principal represented by this Certificate shall be made only to such registered owner, which payments shall be valid and effectual to satisfy and discharge liability represented by this Certificate to the extent of the sum or sums so paid. The Certificates are authorized to be executed and delivered in the form of fully registered Certificates in denominations of five thousand dollars ($5,000) each or any integral multiple thereof so long as no Certificate shall represent principal becoming payable on more than one Certificate Payment Date. The Certificates are subject to optional and mandatory prepayment prior to their respective Certificate Payment Dates, as provided in the Trust Agreement. The Certificates each evidence and represent a fractional undivided interest in the 2018 Installment Sale Payments in an amount equal to the aggregate principal amount of Certificates originally executed and delivered by the Trustee pursuant to the Trust Agreement and enjoy the benefits of a security interest in the moneys held in the funds established pursuant to the Trust Agreement, subject to the provisions of the Trust Agreement permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth therein. The obligations of the Local Agencies to make the 2018 Installment Sale Payments are special obligations of the Local Agencies payable from Revenues, and do not constitute debts of the Local Agencies or of the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limitation or restriction. The Trustee has no obligation or liability to the Certificate owners for the payment of the interest or principal represented by the Certificates, but rather the Trustee’s sole obligations are to administer, for the benefit of the Local Agencies and the Authority and the Certificate owners, the various funds established under the Trust Agreement and the Agreements. The Authority has no obligation or liability whatsoever to the Certificate owners. The Owner hereby has a proportionate undivided ownership interest in the 2018 Installment Sale Payments payable pursuant to the Agreements, as set forth in Schedule I to the Trust Agreement. Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to Trustee or its agent for the registration of transfer, exchange, or payment, and any certificate executed and delivered is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein The Authority has certified to the Trustee that all acts, conditions and things required by the statutes of the State of California and the Trust Agreement to exist, to have happened and to 4 have been performed precedent to and in connection with the execution and delivery of this Certificate do exist, have happened and have been performed in regular and due time, form and manner as required by law, and that the Trustee is duly authorized to execute and deliver this Certificate. This is to further certify that the amount of this Certificate, together with all other Certificates executed and delivered under the Trust Agreement, is not in excess of the amount of Certificates authorized to be executed and delivered thereunder. IN WITNESS WHEREOF, this Certificate has been dated as of the date set forth above and has been executed by the manual signature of an authorized signatory of the Trustee. Date of Execution: __________, 2018 WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee By: Authorized Signatory A-5 OHSUSA:767615425.2 STATEMENT OF INSURANCE _______________________________________, New York, New York, has delivered its municipal bond insurance policy (the “Policy”) with respect to the scheduled payments of principal and interest evidenced and represented by this Certificate to Wilmington Trust, National Association, Costa Mesa, California, or its successor, as trustee for the Certificates (the “Trustee”). Said Policy is on file and available for inspection at the principal office of the Trustee and a copy thereof may be obtained from _______________________________________ or the Trustee. All payments required to be made under the Policy shall be made in accordance with the provisions thereof. The owner of this Certificate acknowledges and consents to the subrogation rights of _______________________________________ as more fully set forth in the Policy. 6 FORM OF ASSIGNMENT For value received, the undersigned do(es) hereby sell, assign and transfer unto ___________, whose address is _______________________ and whose social security or Taxpayer Identification No. is ______________, the within Certificate and do(es) hereby irrevocably constitute and appoint ___________________________________ attorney to transfer such Certificate on the Certificate register of the Trustee, with full power of substitution in the premises. Dated: ___________ ____________________________________ Note: The signature(s) to this Assignment must correspond with the name(s) as written on the face of the within Certificate in every particular, without alteration or enlargement or any change whatsoever. ___________________________________ Signature must be guaranteed by an eligible guarantor institution. B-1 OHSUSA:767615425.2 EXHIBIT B FORM REQUISITION FROM PROCEEDS SUBACCOUNT OF THE ACQUISITION FUND To: Wilmington Trust, National Association, as Trustee From: [Local Agency] Dated Date: Re: California Statewide Communities Development Authority T.R.I.P. – Total Road Improvement Program (the “Program”) Series 2018A Requisition No. ___ The undersigned, on behalf of the [Local Agency] (the “Local Agency”), acting as agent of the Authority pursuant to the Agreement, hereby requests payment, from the Proceeds Subaccount established for the Local Agency pursuant to the Program, the amount of $__________ [by wire/check/ACH (circle one)] for purposes for which the Local Agency is authorized to expend moneys. If the payment is by wire or ACH, please fill in the following information: Name, Address and Phone Number of Bank: ___________________________________ ___________________________________ ___________________________________ ABA#: Account No.: The undersigned hereby certifies as follows: The amount requisitioned hereby is for a Project Cost incurred in connection with its Project, is properly chargeable to the Proceeds Subaccount and has not been the subject of any previous requisition. The name and address of the person or persons to whom said amounts are to be disbursed and the amounts to be disbursed are as follows: ____________________________________ ____________________________________ ____________________________________ 2 2. As of the date hereof, no event has occurred and is continuing which constitutes an Event of Default under the Agreement would constitute an Event of Default but for the requirement that notice be given, or time elapse, or both. 3. The information contained herein is true and correct as of the date of this Requisition. 4. Capitalized terms will herein have the meanings assigned to such terms in the Trust Agreement, dated as of _______ 1, 2018, among the California Statewide Communities Development Authority, Wilmington Trust, National Association and the Local Agencies named therein. ___________________________________ Authorized Local Agency Representative C-1 OHSUSA:767615425.2 EXHIBIT C [PAYMENTS UNDER THE INSURANCE POLICY; OTHER PROVISIONS CONCERNING THE INSURER] 1) Notice and Other Information to be given to the Insurer. Each Local Agency will provide the Insurer with all notices and other information each is obligated to provide (i) under its Continuing Disclosure Agreement and (ii) to the holders of the Certificates or the Trustee under the Security Documents. The notice address of the Insurer is: Build America Mutual Assurance Company, 200 Liberty Street, 27th Floor, New York, NY 10281, Attention: Surveillance, Re: Policy No. 2018_____, Telephone: (212) 235-2500, Telecopier: (212) 235-1542, Email: notices@buildamerica.com. In each case in which notice or other communication refers to an event of default or a claim on the Policy, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel at the same address and at claims@buildamerica.com or at Telecopier: (212) 235-5214 and shall be marked to indicate “URGENT MATERIAL ENCLOSED.” 2) Defeasance. The investments in the defeasance escrow relating to the Certificates shall be limited to non-callable, direct obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America, or as otherwise maybe authorized under State law and approved by the Insurer. At least (three) 3 Business Days prior to any defeasance with respect to the Certificates, the Authority shall deliver to the Insurer draft copies of an escrow agreement, an opinion of bond counsel regarding the validity and enforceability of the escrow agreement and the defeasance of the Certificates, a verification report (a “Verification Report”) prepared by a nationally recognized independent financial analyst or firm of certified public accountants regarding the sufficiency of the escrow fund. Such opinion and Verification Report shall be addressed to the Insurer and shall be in form and substance satisfactory to the Insurer. In addition, the escrow agreement shall provide that: a) Any substitution of securities following the execution and delivery of the escrow agreement shall require the delivery of a Verification Report, an opinion of bond counsel that such substitution will not adversely affect the exclusion (if interest on the Certificates is excludable) from gross income of the holders of the Certificates of the interest on the Certificates for federal income tax purposes and the prior written consent of the Insurer, which consent will not be unreasonably withheld. b) No Local Agency will exercise any prior optional prepayment of Certificates secured by the escrow agreement or any other prepayment other than mandatory sinking fund prepayments unless (i) the right to make any such prepayment has been expressly reserved in the escrow agreement and such reservation has been disclosed in detail in the official statement for the refunding bonds, and (ii) as a condition to any such prepayment there shall be provided to the Insurer a Verification Report as to the sufficiency of escrow 2 receipts without reinvestment to meet the escrow requirements remaining following any such prepayment. c) Neither the Authority nor any Local Agency shall amend the escrow agreement or enter into a forward purchase agreement or other agreement with respect to rights in the escrow without the prior written consent of the Insurer. 3) Trustee. The Insurer shall receive prior written notice of any name change of the Trustee or the resignation or removal of the Trustee. No removal, resignation or termination of the Trustee shall take effect until a successor, acceptable to the Insurer, shall be qualified and appointed. 4) Amendments, Supplements and Consents. The Insurer’s prior written consent is required for all amendments and supplements to the Security Documents, with the exceptions noted below. Each Local Agency shall send copies of any such amendments or supplements to the Insurer and the rating agencies which have assigned a rating to the Certificates. a) Consent of the Insurer. Any amendments or supplements to the Security Documents shall require the prior written consent of the Insurer with the exception of amendments or supplements: i. To cure any ambiguity or formal defect or omissions or to correct any inconsistent provisions in the transaction documents or in any supplement thereto, or ii. To grant or confer upon the holders of the Certificates any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the holders of the Certificates, or iii. To add to the conditions, limitations and restrictions on the issuance of bonds or other obligations under the provisions of the Security Documents other conditions, limitations and restrictions thereafter to be observed, or iv. To add to the covenants and agreements of the Local Agencies in the Security Documents other covenants and agreements thereafter to be observed by the Local Agencies or to surrender any right or power therein reserved to or conferred upon the Local Agencies. v. To issue additional parity debt in accordance with the requirements set forth in the Security Documents. b) Consent of the Insurer in Addition to Bondholder Consent. Any amendment, supplement, modification to, or waiver of, any of the Security Documents that requires the consent of holders of the Certificates or adversely affects the rights or interests of the Insurer shall be subject to the prior written consent of the Insurer. c) Insolvency. Any reorganization or liquidation plan with respect to any Local Agency must be acceptable to the Insurer. The Trustee and each owner of the Certificates hereby appoint the Insurer as their agent and attorney-in-fact with respect to the Certificates and C-3 OHSUSA:767615425.2 agree that the Insurer may at any time during the continuation of any proceeding by or against the Authority or such Local Agency under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an “Insolvency Proceeding”) direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim or enforcement proceeding in connection with an Insolvency Proceeding (a “Claim”), (B) the direction of any appeal of any order relating to any Claim, (C) the posting of any surety, supersedeas or performance bond pending any such appeal, and (D) the right to vote to accept or reject any plan of adjustment. In addition, the Trustee and each owner of the Certificates delegate and assign to the Insurer, to the fullest extent permitted by law, the rights of the Trustee and each owner of the Certificates with respect to the Certificates in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding. d) Control by the Insurer Upon Default. Anything in the Security Documents to the contrary notwithstanding, upon the occurrence and continuance of a default or an event of default, the Insurer shall be entitled to control and direct the enforcement of all rights and remedies granted to the holders of the Certificates or the Trustee for the benefit of the holders of the Certificates under any Security Document. No default or event of default may be waived without the Insurer’s written consent. e) The Insurer as Owner. Upon the occurrence and continuance of a default or an event of default, the Insurer shall be deemed to be the sole owner of the Certificates for all purposes under the Security Documents, including, without limitations, for purposes of exercising remedies and approving amendments. f) Consent of the Insurer for Acceleration. The Insurer’s prior written consent is required as a condition precedent to and in all instances of acceleration. g) Grace Period for Payment Defaults. No grace period shall be permitted for payment defaults on the Certificates. No grace period for a covenant default shall exceed 30 days without the prior written consent of the Insurer. h) Special Provisions for the Insurer Default. If an Insurer Default shall occur and be continuing, then, notwithstanding anything in paragraphs 4(a)-(e) above to the contrary, (1) if at any time prior to or following an Insurer Default, the Insurer has made payment under the Policy, to the extent of such payment the Insurer shall be treated like any other holder of the Certificates for all purposes, including giving of consents, and (2) if the Insurer has not made any payment under the Policy, the Insurer shall have no further consent rights until the particular Insurer Default is no longer continuing or the Insurer makes a payment under the Policy, in which event, the foregoing clause (1) shall control. For purposes of this paragraph, “Insurer Default” means: (A) the Insurer has failed to make any payment under the Policy when due and owing in accordance with its terms; or (B) the Insurer shall (i) voluntarily commence any proceeding or file any petition seeking relief under the United States Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency or similar law, (ii) consent to the institution of or fail to 4 controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator or similar official for such party or for a substantial part of its property, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, or (vi) take action for the purpose of effecting any of the foregoing; or (C) any state or federal agency or instrumentality shall order the suspension of payments on the Policy or shall obtain an order or grant approval for the rehabilitation, liquidation, conservation or dissolution of the Insurer (including without limitation under the New York Insurance Law). 5) Installment Sale Agreement. a) The security for the Certificates shall include a pledge and assignment of each Agreement and a default under any Agreement shall constitute an Event of Default under the Security Documents relating to the defaulting Local Agency but shall not result in any cross default as to any other Local Agency and its Agreement and Insurance Agreement. In accordance with the foregoing, any such Agreement is hereby pledged and assigned to the Trustee for the benefit of the holders of the Certificates. b) Any payments by a Local Agency under its Agreement that will be applied to the payment of debt service on the Certificates shall be made directly to the Trustee at least fifteen (15) days prior to each debt service payment date for the Certificates. 6) Insurer As Third Party Beneficiary. The Insurer is recognized as and shall be deemed to be a third party beneficiary of the Security Documents and may enforce the provisions of the Security Documents as if it were a party thereto. 7) Payment Procedure Under the Policy. In the event that principal and/or interest due on the Certificates shall be paid by the Insurer pursuant to the Policy, the Certificates shall remain outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid, the assignment and pledge of the trust estate and all covenants, agreements and other obligations of the Local Agencies and the Authority to the registered owners shall continue to exist and shall run to the benefit of the Insurer, in accordance with their respective terms, and the Insurer shall be subrogated to the rights of such registered owners. In the event that on the second (2nd) business day prior to any payment date on the Certificates, the Trustee has not received sufficient moneys to pay all principal of and interest on the Certificates due on such payment date, the Trustee shall immediately notify the Insurer or its designee on the same business day by telephone or electronic mail, of the amount of the deficiency. If any deficiency is made up in whole or in part prior to or on the payment date, the Trustee shall so notify the Insurer or its designee. In addition, if the Trustee has notice that any holder of the Certificates has been required to disgorge payments of principal of or interest on the Certificates pursuant to a final, non- appealable order by a court of competent jurisdiction that such payment constitutes an C-5 OHSUSA:767615425.2 avoidable preference to such holder within the meaning of any applicable bankruptcy law, then the Trustee shall notify the Insurer or its designee of such fact by telephone or electronic mail, or by overnight or other delivery service as to which a delivery receipt is signed by a person authorized to accept delivery on behalf of the Insurer. The Trustee shall irrevocably be designated, appointed, directed and authorized to act as attorney-in-fact for holders of the Certificates as follows: a) If there is a deficiency in amounts required to pay interest and/or principal on the Certificates, the Trustee shall (i) execute and deliver to the Insurer, in form satisfactory to the Insurer, an instrument appointing the Insurer as agent and attorney-in-fact for such holders of the Certificates in any legal proceeding related to the payment and assignment to the Insurer of the claims for interest on the Certificates, (ii) receive as designee of the respective holders (and not as Trustee) in accordance with the tenor of the Policy payment from the Insurer with respect to the claims for interest so assigned, (iii) segregate all such payments in a separate account (the “Insurer Policy Payment Account”) to only be used to make scheduled payments of principal of and interest on the Certificates, and (iv) disburse the same to such respective holders; and b) If there is a deficiency in amounts required to pay principal of the Certificates, the Trustee shall (i) execute and deliver to the Insurer, in form satisfactory to the Insurer, an instrument appointing the Insurer as agent and attorney-in-fact for such holder of the Certificates in any legal proceeding related to the payment of such principal and an assignment to the Insurer of the Certificates surrendered to the Insurer, (ii) receive as designee of the respective holders (and not as Trustee) in accordance with the tenor of the Policy payment therefore from the Insurer, (iii) segregate all such payments in the Insurer Policy Payment Account to only be used to make scheduled payments of principal of and interest on the Certificate, and (iv) disburse the same to such holders. The Trustee shall designate any portion of payment of principal on Certificates paid by the Insurer, whether by virtue of mandatory sinking fund prepayment, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Certificates registered to the then current holder, whether DTC or its nominee or otherwise, and shall issue a replacement Certificate to the Insurer, registered in the name directed by the Insurer, in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Trustee's failure to so designate any payment or issue any replacement Certificate shall have no effect on the amount of principal or interest payable by any Local Agency and the Authority on any Certificate or the subrogation or assignment rights of the Insurer. Payments with respect to claims for interest on and principal of Certificates disbursed by the Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the applicable Local Agency with respect to such Certificates, and the Insurer shall become the owner of such unpaid Certificates and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of the preceding paragraphs or otherwise. The Security Documents shall not be discharged or terminated unless all amounts due or to become due to the Insurer have been paid in full or duly provided for. 6 Irrespective of whether any such assignment is executed and delivered, the Authority, the Local Agencies and the Trustee agree for the benefit of the Insurer that: a) They recognize that to the extent the Insurer makes payments directly or indirectly (e.g., by paying through the Trustee), on account of principal of or interest on the Certificates, the Insurer will be subrogated to the rights of such holders to receive the amount of such principal and interest from the applicable Local Agency and the Authority, with interest thereon, as provided and solely from the sources stated in the Security Documents and the Certificates; and b) They will accordingly pay to the Insurer the amount of such principal and interest, with interest thereon as provided in the transaction documents and the Certificates, but only from the sources and in the manner provided therein for the payment of principal of and interest on the Certificates to holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. 8) Additional Payments. Each Local Agency agrees unconditionally that it will pay or reimburse the Insurer, from the same Revenues (as defined in the related Local Agency Agreement) pledged to the payment of the 2018 Installment Sale Payments, on demand any and all reasonable charges, fees, costs, losses, liabilities and expenses that the Insurer may pay or incur, including, but not limited to, fees and expenses of the Insurer’s agents, attorneys, accountants, consultants, appraisers and auditors and reasonable costs of investigations, in connection with the administration (including waivers and consents, if any), enforcement, defense, exercise or preservation of any rights and remedies in respect of the Security Documents (“Administrative Costs”). For purposes of the foregoing, costs and expenses shall include a reasonable allocation of compensation and overhead attributable to the time of employees of the Insurer spent in connection with the actions described in the preceding sentence. Each Local Agency agrees that failure to pay any Administrative Costs on a timely basis will result in the accrual of interest on the unpaid amount at the Late Payment Rate, compounded semi-annually, from the date that payment is first due to the Insurer until the date the Insurer is paid in full. Notwithstanding anything herein to the contrary, each Local Agency agrees to pay to the Insurer, from the same Revenues (as defined in the related Local Agency Agreement) pledged to the payment of the 2018 Installment Sale Payments, (i) a sum equal to the total of all amounts paid by the Insurer under the Policy (“Insurer Policy Payment”); and (ii) interest on such Insurer Policy Payments from the date paid by the Insurer until payment thereof in full by such Local Agency payable to the Insurer at the Late Payment Rate per annum (collectively, “Insurer Reimbursement Amounts”) compounded semi-annually. Notwithstanding anything to the contrary, including without limitation the post default application of revenue provisions, Insurer Reimbursement Amounts shall be, and each Local Agency hereby covenants and agrees that the Insurer Reimbursement Amounts are, payable from and secured by a lien on and pledge of the same revenues and other collateral pledged to the Certificates as and to the extent of its respective liability to the Insurer on a parity with debt service due on the Certificates. 9) Reserve Fund. The prior written consent of the Insurer shall be a condition precedent to the C-7 OHSUSA:767615425.2 deposit of any credit instrument provided in lieu of a cash deposit into the Reserve Fund, if any. Amounts on deposit in the Reserve Fund shall be applied solely to the payment of debt service due on the Certificates. 10) Exercise of Rights by the Insurer. The rights granted to the Insurer under the Security Documents to request, consent to or direct any action are rights granted to the Insurer in consideration of its issuance of the Policy. Any exercise by the Insurer of such rights is merely an exercise of the Insurer’s contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf, of the holders of the Certificates and such action does not evidence any position of the Insurer, affirmative or negative, as to whether the consent of the holders of the Certificates or any other person is required in addition to the consent of the Insurer. 11) The Insurer shall be entitled to pay principal or interest on the Certificates that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Local Agency (as such terms are defined in the Policy) and any amounts due on the Certificates as a result of acceleration of the maturity thereof in accordance with the Security Documents, whether or not the Insurer has received a claim upon the Policy. 12) No contract shall be entered into or any action taken by which the rights of the Insurer or security for or source of payment of the Certificates may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the Insurer. 13) If an event of default occurs under any agreement pursuant to which any Obligation of a defaulting Local Agency has been incurred or issued and that permits the holder of such Obligation or trustee to accelerate the Obligation or otherwise exercise rights or remedies that are adverse to the interest of the holders of the Certificates or the Insurer, as the Insurer may determine in its sole discretion, then an event of default shall be deemed to have occurred under this Trust Agreement and the related Security Documents for which the Insurer or the Trustee, at the direction of the Insurer, shall be entitle to exercise all available remedies under the Security Documents, at law and in equity. For purposes of the foregoing "Obligation" shall mean any bonds, loans, certificates, installment or lease payments or similar obligations that are payable and/or secured on a parity or subordinate basis to the Certificates. 14) Definitions. “Late Payment Rate” means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank, N.A., at its principal office in The City of New York, New York, as its prime or base lending rate (“Prime Rate”) (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank, N.A.) plus [3]%, and (ii) the then applicable highest rate of interest on the Certificates and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. In the event JPMorgan Chase Bank, N.A., ceases to announce its Prime Rate, the Prime Rate shall be the prime or base lending rate of such other bank, banking association or trust company as the Insurer, in its sole and absolute discretion, shall designate. Interest at the Late Payment Rate on any amount owing to the Insurer shall be 8 computed on the basis of the actual number of days elapsed in a year of 360 days. “Security Documents” means the [Agreements], the Trust Agreement, and any resolution, trust agreement, indenture, ordinance, loan agreement, lease agreement, bond, note, certificate and/or any additional or supplemental document executed in connection with the Certificates. S-I-1 OHSUSA:767615425.2 SCHEDULE I PARTICIPATING LOCAL AGENCY Local Agency Principal Amount Total Principal Amount $[PAR AMOUNT] S-II-1 SCHEDULE II INITIAL DEPOSIT TO PROCEEDS SUBACCOUNT ATTRIBUTABLE TO EACH LOCAL AGENCY Local Agency Amount Deposited in the Proceeds Subaccount $ Total Proceeds $[PROCEEDS] ATTACHMENT NO. 4 PRELIMINARY OFFICIAL STATEMENT DATED MARCH __, 2018 NEW ISSUE—BOOK-ENTRY ONLY INSURED RATING: S&P: “__” UNDERLYING RATING: S&P: “__” See the caption “RATINGS.” [TO BE CONFIRMED BY BOND COUNSEL] In the opinion of Orrick, Herrington & Sutcliffe LLP, Special Counsel to the Local Agencies, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Installment Sale Payments paid by each Local Agency under the applicable 2018 Installment Sale Agreement and received by the owners of the Certificates is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Special Counsel, such interest is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Special Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Special Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual, or receipt of interest on, the Installment Sale Payments. See “TAX MATTERS.” $__________* CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) Evidencing Proportionate and Undivided Interests of the Owners Thereof in Installment Sale Payments to be Made by Participating Local Agencies Pursuant to Certain 2018 Installment Sale Agreements Dated: Date of Delivery Due: June 1, as shown on inside cover THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THE CERTIFICATES. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program) (the “Certificates”), are being executed and delivered in the aggregate principal amount of $__________* by Wilmington Trust, National Association, as trustee (the “Trustee”), pursuant to the provisions of a Trust Agreement, dated as of April 1, 2018 (the “Trust Agreement”), by and among the California Statewide Communities Development Authority (the “Authority”), the Trustee and the local agencies named therein (each, a “Local Agency” and, collectively, the “Local Agencies”). The Local Agencies are the City of Claremont and the City of West Covina. Capitalized terms used on this cover page and not otherwise defined have the meanings ascribed to them elsewhere in this Official Statement. See in particular Appendix A under the caption “DEFINITIONS.” The proceeds from the sale of the Certificates will be used: (i) to finance the design, acquisition, and construction of certain local roadway and street improvement projects within the jurisdiction of each Local Agency, as applicable (each, a “Project” and collectively, the “Projects”); (ii) to obtain two debt service reserve policies that constitute Qualified Reserve Instruments (as such term is defined herein) in lieu of the required deposit to the reserve subaccounts for the two Local Agencies within the reserve fund for the Certificates; and (iii) to pay costs incurred in connection with the execution, sale, and delivery of the Certificates, including but not limited to the premium for a municipal bond insurance policy (the “Policy”) to be issued by the Insurer insuring the payment of principal and interest with respect to the Certificates. The Authority will sell each Project to the applicable Local Agency pursuant to a 2018 Installment Sale Agreement, each dated as of April 1, 2018 (each, a the “2018 Installment Sale Agreement” and, collectively, the “2018 Installment Sale Agreements”), by and between the Authority and the applicable Local Agency. See the captions “ESTIMATED SOURCES AND USES OF CERTIFICATE PROCEEDS,” “THE LOCAL AGENCIES AND THE PROJECTS,” and “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES—Reserve Fund.” Each Local Agency is required under its 2018 Installment Sale Agreement to make installment sale payments (collectively, the “Installment Sale Payments”) to the Authority, which Installment Sale Payments are payable from a first lien on: (i) with respect to the City of West Covina, (a) all Measure R Receipts (as such term is defined herein), which generally consist of certain amounts received by the City of West Covina from a 0.5% retail transactions and use tax that is collected in the County of Los Angeles, California (the “County”), for a thirty-year period ending on June 30, 2039, to the extent that the applicable Project constitutes a Measure R Project (as such term is defined herein), (b) all Measure M Receipts (as such term is defined herein), which generally consist of certain amounts received by the City of West Covina from a 0.5% retail transactions and use tax that is collected by the County, and is not limited in duration, to the extent that the applicable Project constitutes a Measure M Project (as such term is defined herein), and (c) all Proposition C Receipts (as such term is defined herein), which generally consist of certain amounts received by the City of West Covina from a 0.5% retail transactions and use tax that is collected by the County, and is not limited in duration, to the extent that the applicable Project constitutes a Proposition C Project (as such term is defined herein); and (ii) with respect to the City of Claremont, all Measure M Receipts, which generally consist of certain amounts received by the City of Claremont from a 0.5% retail transactions and use tax that is collected by the County, and is not limited in duration, to the extent that the applicable Project constitutes a Measure M Project; for deposit in the Pledged Tax Fund in accordance with the applicable 2018 Installment Sale Agreement. Installment Sale Payments are payable in an amount that is sufficient to pay, when due, the annual principal and interest with respect to the Certificates. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES,” “MEASURE R REVENUES; MEASURE R RECEIPTS,” “MEASURE M REVENUES; MEASURE M RECEIPTS,” “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS,” and “RISK FACTORS.” The Measure R Receipts, the Measure M Receipts and the Proposition C Receipts are the only sources of payment of the Installment Sale Payments. Neither the general fund of either Local Agency nor any other moneys of either Local Agency are available to pay or secure the Installment Sale Payments or the Certificates. The obligation of each Local Agency to pay its Installment Sale Payments is not subject to abatement. Each Local Agency is solely responsible for the payment of the Installment Sale Payments attributable to such Local Agency, and neither Local Agency is responsible for the payment of any Installment Sale Payments attributable to the other Local Agency. The Certificates will be executed and delivered in fully registered form without coupons and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Certificates. Individual purchases of Certificates may be made in book-entry form only, in the principal amount of $5,000 or integral multiples thereof for each maturity. Purchasers will not receive certificates representing their interest in the Certificates purchased. See the caption “THE CERTIFICATES—Book-Entry Only System.” Payments of principal and interest with respect to the Certificates will be made by the Trustee to DTC, which will in turn remit such principal and interest to its participants for subsequent dispersal to Beneficial Owners of the Certificates as described herein. Interest with respect to the Certificates is payable on [June 1, 2018] and each June 1 and December 1 thereafter, until the maturity or the earlier prepayment thereof. Principal with respect to the Certificates will be paid on each June 1, commencing June 1, 20__, upon surrender of such Certificate at the principal corporate office of the Trustee upon maturity or the earlier prepayment thereof. The Certificates are subject to optional, mandatory and mandatory sinking fund prepayment prior to their stated principal payment dates as described herein. [The scheduled payment of principal and interest with respect to the Certificates when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Certificates by ________________.] [INSURER LOGO] THE OBLIGATION OF EACH LOCAL AGENCY TO MAKE INSTALLMENT SALE PAYMENTS UNDER ITS 2018 INSTALLMENT SALE AGREEMENT IS A SPECIAL OBLIGATION OF SUCH LOCAL AGENCY PAYABLE SOLELY FROM THE APPLICABLE REVENUES PLEDGED THEREUNDER, DOES NOT CONSTITUTE A DEBT OF SUCH LOCAL AGENCY, ANY OTHER LOCAL AGENCY, THE AUTHORITY, THE STATE OF CALIFORNIA (THE “STATE”) OR ANY POLITICAL SUBDIVISION OF THE STATE WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE LOCAL AGENCY, ANY OTHER LOCAL AGENCY, THE STATE OR ANY POLITICAL SUBDIVISION OF THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE LOCAL AGENCY, THE STATE OR ANY POLITICAL SUBDIVISION OF THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO TAXING POWER. ____________________________________ MATURITY SCHEDULE – See Inside Front Cover Page * Preliminary, subject to change. This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. ___________________________________ The Certificates are offered when, as, and if executed and delivered to and received by the Underwriter, subject to the approval of legality by Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Special Counsel to the Local Agency. Certain legal matters will be passed upon for the Authority by Orrick, Herrington & Sutcliffe LLP, Los Angeles, for the City of Claremont by Best Best & Krieger LLP, Irvine, California, its City Attorney, for the City of West Covina by Jones & Mayer, Fullerton, California, its City Attorney, for the Underwriter by Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California, as Underwriter’s Counsel, for the Trustee by its counsel and for the Insurer by its counsel. It is anticipated that the Certificates in book-entry form will be available for delivery through the facilities of DTC in New York, New York, on or about April __, 2018. Dated: March __, 2018 $__________* CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) Evidencing Proportionate and Undivided Interests of the Owners Thereof in Installment Sale Payments to be Made by Participating Local Agencies Pursuant to the 2018 Installment Sale Agreements MATURITY SCHEDULE (Base CUSIP† _____) Maturity Date (June 1) Principal Amount Interest Rate Yield Price CUSIP† $ % % $_____ _____% Term Certificates due June 1, 20__; Yield: _____%; Price: _____; CUSIP† _____ * Preliminary, subject to change. † CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright © 2017 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by Standard & Poor’s CUSIP Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service Bureau. CUSIP® numbers are provided for convenience of reference only. None of the Local Agencies, the Authority or the Underwriter take any responsibility for the accuracy of such numbers. PARTICIPATING LOCAL AGENCIES City of Claremont Larry Schroeder, Mayor Opanyi Nasiali, Mayor Pro-Tem Corey Calaycay, Council Member Joe Lyons, Council Member Sam Pedroza, Council Member Tony Ramos, City Manager Adam Pirrie, Finance Director/City Treasurer Shelley Desautels, City Clerk City of West Covina Mike Spence, Mayor Lloyd Johnson, Mayor Pro-Tem James Toma, Council Member Corey Warshaw, Council Member Tony Wu, Council Member Chris Freeland, City Manager Colleen B. Rozatti, City Treasurer Nicole Lugotoff, Finance Director Nick Lewis, City Clerk PROFESSIONAL SERVICES Special Counsel Orrick, Herrington & Sutcliffe LLP Los Angeles, California Trustee Wilmington Trust, National Association Costa Mesa, California Municipal Advisor Urban Futures, Inc. Orange, California No dealer, broker, salesperson, or other person has been authorized by the Local Agencies, the Authority, or Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy the Certificates, nor shall there be any sale of the Certificates, by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation, or sale. This Official Statement is not to be construed to be a contract with the purchasers of the Certificates. Statements contained in this Official Statement that involve estimates, forecasts, or matters of opinion, whether or not expressly described as such herein, are intended solely as such and are not to be construed as representations of fact. The information set forth in this Official Statement has been obtained from the Local Agencies, the Authority and other sources that are believed to be reliable, but it is not guaranteed as to accuracy or completeness and it is not to be construed as a representation by the Local Agencies or the Authority. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the affairs of any Local Agency or the Authority since the date of this Official Statement. Each Local Agency maintains an Internet website. However, the information contained on or within such websites has not been reviewed by the Authority or either Local Agency and is not incorporated in this Official Statement by such reference. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. This Official Statement is submitted in connection with the sale of the Certificates referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. THE CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE CERTIFICATES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE CERTIFICATES TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. [____________________ (“___”) makes no representation regarding the Certificates or the advisability of investing in the Certificates. In addition, ___ has not independently verified, makes no representation regarding and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding ___, supplied by ___ and presented under the caption “CERTIFICATE INSURANCE” and in Appendix G—“SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”] i TABLE OF CONTENTS Page INTRODUCTION ................................................................................................................................................ 1 Description of the Certificates .......................................................................................................................... 1 Authorization .................................................................................................................................................... 2 Judicial Validation ............................................................................................................................................ 2 Use of Certificate Proceeds............................................................................................................................... 2 Payment of Principal and Interest ..................................................................................................................... 3 Prepayment of Certificates................................................................................................................................ 3 Security and Sources of Payment for the Certificates....................................................................................... 3 Special, Limited Obligation of the Local Agencies .......................................................................................... 5 Continuing Disclosure ...................................................................................................................................... 5 Forward-Looking Statements ........................................................................................................................... 6 ESTIMATED SOURCES AND USES OF CERTIFICATE PROCEEDS ........................................................... 6 THE CERTIFICATES .......................................................................................................................................... 6 Authorization and Registration of Certificates ................................................................................................. 6 Judicial Validation of Certificates .................................................................................................................... 6 Payment of Certificates ..................................................................................................................................... 7 Prepayment of Certificates................................................................................................................................ 8 Purchase of Certificates in Lieu of Prepayment ............................................................................................... 9 Selection of Certificates for Prepayment .......................................................................................................... 9 Notice of Prepayment; Effect of Notice ............................................................................................................ 9 Partial Prepayment or Purchase of Certificates .............................................................................................. 10 Effect of Prepayment ...................................................................................................................................... 10 Book-Entry Only System ................................................................................................................................ 10 Debt Service.................................................................................................................................................... 12 SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES .................................................... 13 Installment Sale Payments .............................................................................................................................. 13 Pledge of Measure R Receipts, Measure M Receipts and Proposition C Receipts ......................................... 13 Revenue Fund; Pledged Tax Fund .................................................................................................................. 14 Deposit of Other Available Revenues............................................................................................................. 16 Additional Contracts ....................................................................................................................................... 16 Reserve Fund .................................................................................................................................................. 17 Reserve Policies .............................................................................................................................................. 18 THE LOCAL AGENCIES AND THE PROJECTS ........................................................................................... 19 Participating Local Agencies .......................................................................................................................... 19 The Projects .................................................................................................................................................... 19 MEASURE R REVENUES; MEASURE R RECEIPTS .................................................................................... 20 Pledge of Measure R Receipts ........................................................................................................................ 20 The Measure R Sales Tax ............................................................................................................................... 20 Collection and Allocation of Measure R Revenues ........................................................................................ 21 Historical Measure R Revenues ...................................................................................................................... 22 MEASURE M REVENUES; MEASURE M RECEIPTS .................................................................................. 23 Pledge of Measure M Receipts ....................................................................................................................... 23 The Measure M Sales Tax .............................................................................................................................. 23 Collection and Allocation of Measure M Revenues ....................................................................................... 24 Projected Measure M Revenues ..................................................................................................................... 25 PROPOSITION C REVENUES; PROPOSITION C RECEIPTS ...................................................................... 26 ii Pledge of Proposition C Receipts ................................................................................................................... 26 The Proposition C Sales Tax .......................................................................................................................... 27 Collection and Allocation of Proposition C Revenues ................................................................................... 28 Historical Proposition C Revenues ................................................................................................................. 28 MAXIMUM ANNUAL DEBT SERVICE COVERAGE .................................................................................. 30 LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY ................................... 31 CERTIFICATE INSURANCE ........................................................................................................................... 32 RISK FACTORS ................................................................................................................................................ 32 Installment Sale Payments Constitute Limited Obligations ........................................................................... 32 Measure M Receipts ....................................................................................................................................... 32 Passive Revenue Source ................................................................................................................................. 32 Increased Internet Use May Reduce Sales Tax Revenues .............................................................................. 33 Allocation of Measure R Revenues, Measure M Revenues and Proposition C Revenues to the Local Agencies ......................................................................................................................................................... 33 Limitations on Use of Measure R Revenues, Measure M Revenues and Proposition C Revenues ................ 34 Project Eligibility ............................................................................................................................................ 34 Additional Contracts ....................................................................................................................................... 34 Loss of Tax Exemption ................................................................................................................................... 34 Limitations on Remedies; Bankruptcy............................................................................................................ 35 Constitutional Limitations on Appropriations ................................................................................................ 35 State Legislature or Electorate May Change Items Subject to Measure R Sales Tax, Measure M Sales Tax or Proposition C Sales Tax ............................................................................................................. 35 Increases in Sales Tax Rate May Cause Declines in Measure R Revenues, Measure M Revenues and Proposition C Revenues ........................................................................................................................... 36 No Liability of Authority to Owners .............................................................................................................. 36 Economic, Political, Social and Environmental Conditions ........................................................................... 36 Natural Disasters ............................................................................................................................................. 36 Secondary Market ........................................................................................................................................... 36 Risks Associated with Bond Insurance ........................................................................................................... 37 CONSTITUTIONAL PROVISIONS AFFECTING LOCAL AGENCY REVENUES AND APPROPRIATIONS ........................................................................................................................................... 37 Article XIIIB of the California Constitution – Limitations on Appropriations .............................................. 37 Articles XIIIC and XIIID of the California Constitution – The Right to Vote on Taxes ............................... 38 Future Initiatives ............................................................................................................................................. 39 THE AUTHORITY ............................................................................................................................................ 40 TAX MATTERS................................................................................................................................................. 40 RATINGS ........................................................................................................................................................... 42 CONTINUING DISCLOSURE .......................................................................................................................... 42 MUNICIPAL ADVISOR ................................................................................................................................... 43 UNDERWRITING ............................................................................................................................................. 43 NO LITIGATION ............................................................................................................................................... 44 The Authority.................................................................................................................................................. 44 The Local Agencies ........................................................................................................................................ 44 CERTAIN LEGAL MATTERS ......................................................................................................................... 44 MISCELLANEOUS ........................................................................................................................................... 44 iii APPENDIX A SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ....................................................... A-1 APPENDIX B GENERAL INFORMATION REGARDING THE PARTICIPATING LOCAL AGENCIES ........................................................................................................................... B-1 APPENDIX C PROPOSED FORMS OF SPECIAL COUNSEL OPINIONS .............................................. C-1 APPENDIX D FORM OF LOCAL AGENCY CONTINUING DISCLOSURE AGREEMENT ................. D-1 APPENDIX E CITY OF CLAREMONT COMPREHENSIVE AUDITED FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 ............................................................ E-1 APPENDIX F CITY OF WEST COVINA COMPREHENSIVE AUDITED FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 .............................................................F-1 APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY ................................................. G-1 1 OFFICIAL STATEMENT $__________* CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) Evidencing Proportionate and Undivided Interests of the Owners Thereof in Installment Sale Payments to be Made by Participating Local Agencies Pursuant to Certain 2018 Installment Sale Agreements INTRODUCTION This Official Statement, which includes the front cover page, the inside front cover page, the table of contents and the appendices (the “Official Statement”), provides certain information concerning the execution and delivery of the California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) (the “Certificates”), in an aggregate principal amount of $__________.* Descriptions and summaries of various documents set forth in this Official Statement do not purport to be comprehensive or definitive, and reference is made to each such document for complete details of all of the terms and conditions therein. All statements in this Official Statement are qualified in their entirety by reference to the applicable documents. This Introduction is subject in all respects to the more complete information contained elsewhere in this Official Statement, and the offering of the Certificates to potential investors is made only by means of the entire Official Statement. Capitalized terms used and not otherwise defined herein have the meanings ascribed to them in Appendix A under the caption “DEFINITIONS.” Description of the Certificates The Certificates will be dated the date of their initial delivery and will mature on the dates and in the principal amounts set forth on the inside front cover page of this Official Statement. The Certificates will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Certificates. The Certificates evidence proportionate and undivided interests of the registered owners thereof (the “Owners”) in installment payments (the “Installment Sale Payments”) to be made by each Local Agency (as such term is defined herein) to the California Statewide Communities Development Authority (the “Authority”), as the purchase price for certain local roadway and street improvement projects throughout the geographic boundaries of each Local Agency (each, a “Project” and, collectively, the “Projects”), pursuant to certain 2018 Installment Sale Agreements, each dated as of April 1, 2018 (each, a “2018 Installment Sale Agreement” and, collectively, the “2018 Installment Sale Agreement”), each by and between the Authority and the applicable Local Agency. The “Local Agencies” consist of the City of Claremont, California (the “City of Claremont”), and the City of West Covina, California (the “City of West Covina”). See the captions “THE CERTIFICATES,” “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES” and “THE LOCAL AGENCIES AND THE PROJECTS.” * Preliminary, subject to change. 2 Authorization The Certificates are being executed and delivered by Wilmington Trust, National Association, as trustee (the “Trustee”), pursuant to: (i) a Trust Agreement, dated as of April 1, 2018 (the “Trust Agreement”), by and among the Authority, the Trustee, and the Local Agencies; and (ii) a resolution adopted by the City of Claremont on [December 12, 2017], a resolution adopted by the City of West Covina on [December 12, 2017], and a resolution adopted by the Authority [February 15, 2018] (collectively, the “Resolutions”). See the captions “THE CERTIFICATES—Authorization and Registration of Certificates” and Appendix A. Judicial Validation City of Claremont Validation. The City of Claremont filed a complaint (the “Claremont Validation Action”) in the Superior Court of the State of California for the County of Los Angeles (the “Los Angeles County Superior Court”) pursuant to California Government Code Section 53510 et seq. and California Code of Civil Procedure Section 860 et seq. (collectively, the “Validation Law”) seeking to validate certain issues raised by the proposed execution and delivery of the Certificates. See the caption “THE CERTIFICATES— Judicial Validation of Certificates—Matters Subject to Validation.” The City of Claremont filed the Claremont Validation Action on [December __, 2017]. There was no answering party in the action and, on [February __], 2018, the City of Claremont obtained a judgment in its favor that enjoins the institution of any action or proceeding raising any issue as to which such judgment is binding and conclusive. An appeal of such judgment could only be filed with the Los Angeles County Superior Court within 30 days after the entry of such judgment (i.e., by no later than [March __], 2018) and, because there was no answering party in the action, only issues related to the jurisdiction of the Los Angeles County Superior Court to enter a judgment in the action could be raised during such period. The appeal period for such action expired on [March __], 2018 without the filing of any appeal. City of West Covina Validation. The City of West Covina filed a complaint (the “West Covina Validation Action”) in the Superior Court of the State of California for the County of Los Angeles (the “Los Angeles County Superior Court”) pursuant to California Government Code Section 53510 et seq. and California Code of Civil Procedure Section 860 et seq. (collectively, the “Validation Law”) seeking to validate certain issues raised by the proposed execution and delivery of the Certificates. See the caption “THE CERTIFICATES—Judicial Validation of Certificates—Matters Subject to Validation.” The City of West Covina filed the West Covina Validation Action on [December __, 2017]. There was no answering party in the action and, on [February __], 2018, the City of West Covina obtained a judgment in its favor that enjoins the institution of any action or proceeding raising any issue as to which such judgment is binding and conclusive. An appeal of such judgment could only be filed with the Los Angeles County Superior Court within 30 days after the entry of such judgment (i.e., by no later than [March __], 2018) and, because there was no answering party in the action, only issues related to the jurisdiction of the Los Angeles County Superior Court to enter a judgment in the action could be raised during such period. The appeal period for such action expired on [March __], 2018 without the filing of any appeal. See the caption “THE CERTIFICATES—Judicial Validation of Certificates.” Use of Certificate Proceeds The proceeds from the sale of the Certificates will be used: (i) to finance the design, acquisition, and construction of the Projects; (ii) to obtain two debt service reserve insurance policies that constitute Qualified Reserve Instruments (as such term is defined herein) in lieu of the required deposit to the two reserve subaccounts (the “Reserve Subaccounts” and each, a “Reserve Subaccount”) within the reserve fund for the Certificates (the “Reserve Fund”); and (iii) to pay costs incurred in connection with the execution, sale, and delivery of the Certificates, including, but not limited to the premium for a municipal bond insurance policy (the “Policy”) to be issued by the Insurer insuring the payment of principal and interest with respect to the Certificates. See the captions “ESTIMATED SOURCES AND USES OF CERTIFICATE PROCEEDS,” “THE LOCAL AGENCIES 3 AND THE PROJECTS,” “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES— Reserve Fund” and “CERTIFICATE INSURANCE.” Payment of Principal and Interest Interest with respect to the Certificates is payable semiannually on [June 1, 2018] and each June 1 and December 1 thereafter (each, an “Interest Payment Date”), and is payable by check mailed on the date that such interest is due to the Owner at such Owner’s address as it appears on the registration books maintained by the Trustee; provided, however, that an Owner of $1,000,000 or more in aggregate principal amount evidenced by the Certificates may request in writing that the Trustee pay the interest evidenced by such Certificates by wire transfer, and the Trustee will comply with such request for all Interest Payment Dates following the fifteenth day after receipt of such request until such request is rescinded. Principal with respect to the Certificates is payable on June 1 of each year, commencing June 1, 20__ (each, a “Certificate Payment Date”), through the facilities of DTC upon the maturity or earlier prepayment thereof. See the caption “THE CERTIFICATES.” Prepayment of Certificates The Certificates are subject to optional, mandatory and mandatory sinking fund prepayment under certain circumstances. See the caption “THE CERTIFICATES—Prepayment of Certificates.” Security and Sources of Payment for the Certificates Installment Sale Payments. Pursuant to the 2018 Installment Sale Agreements: (i) the City of Claremont is required to pay to the Trustee, only from Measure M Receipts (as such term is defined herein), the Installment Sale Payments attributable to the City of Claremont; and (ii) the City of West Covina is required to pay to the Trustee, from Measure R Receipts (as such term is defined herein), Measure M Receipts and Proposition C Receipts (as such term is defined herein), the Installment Sale Payments attributable to the City of West Covina; which Installment Sale Payments, when added to the Installment Sale Payments received from the other Local Agency, are designed to be sufficient, in both time and amount, to pay, when due, the principal and interest evidenced and represented by the Certificates. Each Local Agency is solely responsible for the payment of the Installment Sale Payments attributable to such Local Agency, and neither Local Agency is responsible for the payment of any Installment Sale Payments attributable to the other Local Agency. The term “Measure R Receipts” is defined in the 2018 Installment Sale Agreements to mean Measure R Revenues allocated by the Los Angeles County Metropolitan Transportation Authority (the “MTA”) to the applicable Local Agency pursuant to the Measure R Ordinance from the Local Return Subfund established under the Measure R Ordinance, to the extent that the applicable Project constitutes a Measure R Project, in an amount not greater than the Installment Sale Payments related to such Measure R Project. The term “Measure R Revenues” is defined in the 2018 Installment Sale Agreements to mean revenues of the MTA pursuant to the Measure R Ordinance derived from a retail transactions and use tax imposed in the County of Los Angeles (the “County”) pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, Division 12 (Section 130350 et seq.) of the Public Utilities Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, and the Measure R Ordinance. Collection of the Measure R Revenues commenced on July 1, 2009 and terminates on June 30, 2039. The term “Measure R Ordinance” is defined in the 2018 Installment Sale Agreements to mean Ordinance No. 08-01, the Traffic Relief and Rail Expansion Ordinance, adopted by the MTA on July 24, 2008, and approved by at least two-thirds of electors voting on such proposition in the November 4, 2008 election, as supplemented and amended. 4 The term “Measure R Project” is defined in the 2018 Installment Sale Agreements to mean a capital project for which Measure R Receipts may be expended, including the related Administration Fee (as such term is defined in Appendix A under the caption “DEFINITIONS”). [None of the City of Claremont’s Project constitutes a Measure R Project and all or a portion of the City of West Covina’s Project constitutes a Measure R Project.] See the caption “THE LOCAL AGENCIES AND THE PROJECTS—The Projects.” The term “Measure M Receipts” is defined in the 2018 Installment Sale Agreements to mean Measure M Revenues allocated by the MTA to the applicable Local Agency pursuant to the Measure M Ordinance from the Local Return Subfund established under the Measure M Ordinance, to the extent that the applicable Project constitutes a Measure M Project, in an amount not greater than the Installment Sale Payments related to such Measure M Project. The term “Measure M Revenues” is defined in the 2018 Installment Sale Agreements to mean revenues of the MTA pursuant to the Measure M Ordinance derived from a retail transactions and use tax imposed in the County pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, Division 12 (Section 130350 et seq.) of the Public Utilities Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, and the Measure R Ordinance. Collection of the Measure R Revenues commenced on July 1, 2017 and does not terminate. The term “Measure M Ordinance” is defined in the 2018 Installment Sale Agreements to mean Ordinance No. 16-01, the Los Angeles County Traffic Improvement Plan, adopted by the MTA on June 23, 2016, and approved by at least two-thirds of electors voting on such proposition in the November 8, 2016 election, as supplemented and amended. The term “Measure M Project” is defined in the 2018 Installment Sale Agreements to mean a capital project for which Measure M Receipts may be expended, including the related Administration Fee (as such term is defined in Appendix A under the caption “DEFINITIONS”). [All of the City of Claremont’s Project constitutes a Measure M Project and all or a portion of the City of West Covina’s Project constitutes a Measure M Project.] See the caption “THE LOCAL AGENCIES AND THE PROJECTS—The Projects.” The term “Proposition C Receipts” is defined in the 2018 Installment Sale Agreements to mean Proposition C Revenues allocated by the MTA to the applicable Local Agency pursuant to the Proposition C Ordinance, to the extent the applicable Project constitutes a Proposition C Project, in an amount not greater than the Installment Sale Payments related to such Proposition C Project. The term “Proposition C Revenues” is defined in the 2018 Installment Sale Agreements to mean revenues of the MTA pursuant to the Proposition C Ordinance derived from a retail transactions and use tax imposed in the County pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, Division 12 (Section 130350 et seq.) of the Public Utilities Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, and the Proposition C Ordinance. Collection of the Proposition C Revenues commenced on April 1, 1991 and does not terminate. The term “Proposition C Ordinance” is defined in the 2018 Installment Sale Agreements to mean Ordinance No. 49 adopted by the Los Angeles County Transportation Commission (the “Commission”), predecessor to the MTA, on August 8, 1990, and approved by at least two-thirds of electors voting on such proposition in the November 6, 1990 election, as supplemented and amended. The term “Proposition C Project” is defined in the 2018 Installment Sale Agreements to mean a capital project for which Proposition C Receipts may be expended. [None of the City of Claremont’s Project constitutes a Proposition C Project and all or a portion of the City of West Covina’s Project constitutes a Proposition C Project.] See the caption “THE LOCAL AGENCIES AND THE PROJECTS—The Projects.” 5 Only the portion of the Measure M Revenues that are allocated by MTA to the City of Claremont and only the portion of the Measure R Revenues, the Measure M Revenues and the Proposition C Revenues that are allocated by MTA to the City of West Covina may be applied to pay the Installment Sale Payments attributable to such Local Agency. See the caption “RISK FACTORS—Limitations on Use of Measure R Revenues, Measure M Revenues and Proposition C Revenues.” Pursuant to the Trust Agreement, the Authority has assigned to the Trustee all of the Authority’s rights and remedies under the 2018 Installment Sale Agreements, including, but not limited to, the Authority’s security interest in and lien upon the Measure R Receipts, the Measure M Receipts and the Proposition C Receipts. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES,” “MEASURE R REVENUES; MEASURE R RECEIPTS,” “MEASURE M REVENUES; MEASURE M RECEIPTS,” “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS” and Appendix A. Reserve Fund and Reserve Subaccounts. A Reserve Subaccount of the Reserve Fund for each Local Agency for the Certificates has been established pursuant to the Trust Agreement. The Insurer has committed to issue, concurrently with the execution and delivery of the Certificates, the Reserve Policies (as such term is defined herein) for the benefit of the Certificates in the initial principal amounts of $_____, which constitutes the Reserve Fund Requirement attributable to the City of Claremont, and $_____, which constitutes the Reserve Fund Requirement attributable to the City of West Covina. The Reserve Policies will be deposited in the applicable Reserve Subaccount of the Reserve Fund for each Local Agency. The Reserve Policies secure only the Certificates and are not available for the benefit of any applicable parity Contracts of either Local Agency. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES—Reserve Fund” and Appendix A. Certificate Insurance. Concurrently with the execution and delivery of the Certificates, the Insurer will issue the Policy. The Policy guarantees the scheduled payment of principal and interest with respect to the Certificates when due as set forth in the form of the Policy included as Appendix G to this Official Statement. See the caption “CERTIFICATE INSURANCE.” Special, Limited Obligation of the Local Agencies THE OBLIGATION OF EACH LOCAL AGENCY TO MAKE INSTALLMENT SALE PAYMENTS UNDER ITS 2018 INSTALLMENT SALE AGREEMENT IS A SPECIAL OBLIGATION OF SUCH LOCAL AGENCY PAYABLE SOLELY FROM MEASURE M RECEIPTS WITH RESPECT TO THE CITY OF CLAREMONT AND SOLELY FROM MEASURE R RECEIPTS, MEASURE M RECEIPTS AND PROPOSITION C RECEIPTS WITH RESPECT TO THE CITY OF WEST COVINA, DOES NOT CONSTITUTE A DEBT OF SUCH LOCAL AGENCY, ANY OTHER LOCAL AGENCY, THE AUTHORITY, THE STATE OF CALIFORNIA (THE “STATE”) OR ANY POLITICAL SUBDIVISION OF THE STATE WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH SUCH LOCAL AGENCY, ANY OTHER LOCAL AGENCY, THE STATE OR ANY POLITICAL SUBDIVISION OF THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH SUCH LOCAL AGENCY, ANY OTHER LOCAL AGENCY, THE STATE OR ANY POLITICAL SUBDIVISION OF THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO TAXING POWER. Continuing Disclosure In connection with the execution and delivery of the Certificates, each Local Agency will covenant in a separate continuing disclosure agreement (each, a “Continuing Disclosure Agreement” and, collectively, the “Continuing Disclosure Agreements”) executed for the benefit of Owners to provide certain financial information and operating data and notices of certain events. See the caption “CONTINUING DISCLOSURE” and Appendix D. 6 Forward-Looking Statements Certain statements included or incorporated by reference in this Official Statement constitute “forward- looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “intend,” “expect,” “propose,” “estimate,” “project,” “budget,” “anticipate” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involves known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements that are described in this Official Statement to be materially different from any future results, performance or achievements that are expressed or implied by such forward-looking statements. No updates or revisions to these forward-looking statements will be issued if or when the expectations, events, conditions, or circumstances on which such statements are based change. The forward-looking statements in this Official Statement are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by such forward-looking statements. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. ESTIMATED SOURCES AND USES OF CERTIFICATE PROCEEDS The following table details the estimated sources and uses of Certificate proceeds. Estimated Sources(1): Principal Amount Represented by Certificates $ Plus: Net Original Issue Premium Less: Underwriter’s Discount Total Sources $ Estimated Uses(1): Costs of Issuance(2) $ Deposit into the Proceeds Subaccount of the Acquisition Fund for the City of Claremont Deposit into the Proceeds Subaccount of the Acquisition Fund for the City of West Covina Total Uses $ (1) Rounded to nearest dollar. Totals may not add due to rounding. (2) Includes fees and expenses of Special Counsel, the Trustee, the Municipal Advisor and the rating agency, printing and other miscellaneous costs and premium for the Policy and the Reserve Policies. THE CERTIFICATES Authorization and Registration of Certificates The Certificates are being executed and delivered by the Trustee pursuant to the Trust Agreement and the Resolutions. The Certificates will be dated the date of their initial delivery and will mature on the dates and in the principal amounts set forth on the inside front cover page of this Official Statement. The Certificates will be initially registered in the name of Cede & Co., as nominee for DTC, which will act as securities depository for the Certificates. See the captions “THE CERTIFICATES—Book-Entry Only System” and Appendix A. Judicial Validation of Certificates City of Claremont Validation. The City of Claremont filed a complaint (the “Claremont Validation Action”) in the Superior Court of the State of California for the County of Los Angeles (the “Los Angeles County Superior Court”) pursuant to California Government Code Section 53510 et seq. and California Code 7 of Civil Procedure Section 860 et seq. (collectively, the “Validation Law”) seeking to validate certain issues raised by the proposed execution and delivery of the Certificates. See the caption “THE CERTIFICATES— Judicial Validation of Certificates—Matters Subject to Validation.” The City of Claremont filed the Claremont Validation Action on [December __, 2017]. There was no answering party in the action and, on [February __], 2018, the City of Claremont obtained a judgment in its favor that enjoins the institution of any action or proceeding raising any issue as to which such judgment is binding and conclusive. An appeal of such judgment could only be filed with the Los Angeles County Superior Court within 30 days after the entry of such judgment (i.e., by no later than [March __], 2018) and, because there was no answering party in the action, only issues related to the jurisdiction of the Los Angeles County Superior Court to enter a judgment in the action could be raised during such period. The appeal period for such action expired on [March __], 2018 without the filing of any appeal. City of West Covina Validation. The City of West Covina filed a complaint (the “West Covina Validation Action”) in the Superior Court of the State of California for the County of Los Angeles (the “Los Angeles County Superior Court”) pursuant to California Government Code Section 53510 et seq. and California Code of Civil Procedure Section 860 et seq. (collectively, the “Validation Law”) seeking to validate certain issues raised by the proposed execution and delivery of the Certificates. See the caption “THE CERTIFICATES—Judicial Validation of Certificates—Matters Subject to Validation.” The City of West Covina filed the West Covina Validation Action on [December __, 2017]. There was no answering party in the action and, on [February __], 2018, the City of West Covina obtained a judgment in its favor that enjoins the institution of any action or proceeding raising any issue as to which such judgment is binding and conclusive. An appeal of such judgment could only be filed with the Los Angeles County Superior Court within 30 days after the entry of such judgment (i.e., by no later than [March __], 2018) and, because there was no answering party in the action, only issues related to the jurisdiction of the Los Angeles County Superior Court to enter a judgment in the action could be raised during such period. The appeal period for such action expired on [March __], 2018 without the filing of any appeal. Matters Subject to Validation. In each case, the applicable Local Agency obtained the judgment of the Los Angeles County Superior Court that such Local Agency has the authority under the State Constitution and State law: (i) to execute and deliver the Trust Agreement, the respective 2018 Installment Sale Agreement, the purchase agreement by and among the Authority, the Local Agency and the Underwriter relating to the Underwriter’s purchase of the Certificates and any respective related contracts or agreements, including additional Contracts, each of which will upon their execution and delivery by the applicable Local Agency be valid, legal and binding obligations in accordance with their terms; (ii) to cause the execution and delivery of the Certificates; (iii) to apply the proceeds of the Certificates to the financing of each respective Project; and (iv) commit and apply the Measure R Receipts, the Measure M Receipts and the Proposition C Receipts to the payment of the Installment Sale Payments pursuant to the 2018 Installment Sale Agreement and the Trust Agreement. Payment of Certificates The Certificates will be executed and delivered in fully registered form without coupons and, when delivered, will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository for the Certificates. Individual purchases of Certificates may be made in book-entry form only, in the principal amount of $5,000 or integral multiples thereof for each maturity. Purchasers will not receive certificates representing their interest in the Certificates purchased. Payments of principal and interest with respect to the Certificates will be made by the Trustee to DTC, which will in turn remit such principal and interest to its participants for subsequent dispersal to Beneficial Owners of the Certificates as described in this Official Statement. Interest with respect to the Certificates is payable on December 1, 2017 and each Interest Payment Date thereafter until the maturity or the earlier prepayment thereof. Payment of interest evidenced and represented by the Certificates due on or before the maturity or prior prepayment thereof will be made to the person whose name appears in the Certificate registration records maintained by the Trustee pursuant to the Trust Agreement as the registered owner thereof as of the close of business on the Record Date preceding each Interest 8 Payment Date, whether or not such day is a Business Day, such interest to be paid by check mailed on such Interest Payment Date (or the next Business Day if such Interest Payment Date is not a Business Day) to such registered owner at the address as it appears in such books or at such other address as may have been filed with the Trustee for that purpose. The term “Record Date” means the 15th day of the month next preceding each Interest Payment Date, whether or not such day is a Business Day. Principal with respect to each Certificate will be paid on each Certificate Payment Date upon surrender of such Certificate at the principal corporate office of the Trustee upon maturity or the earlier prepayment thereof. See the caption “—Book-Entry Only System.” Prepayment of Certificates Optional Prepayment of Certificates. The Certificates maturing on or after June 1, 20__, will be subject to optional prepayment prior to maturity, at the option of the Authority upon direction of the Local Agency, on or after June 1, 20__ in whole or in part (by lot within any maturity), on any date, at a Prepayment Price equal to the principal amount to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. The Local Agency will provide notice to the Authority and the Trustee at least 45 days prior to the prepayment date (or such lesser period of time acceptable to the Trustee in its sole discretion) specifying the principal amount evidenced by and maturities of the Installment Sale Payments to be prepaid. Only the principal amount of Certificates allocable to the portion of the Installment Sale Payments being prepaid by the applicable Local Agency shall be prepaid, and such prepayment shall have no effect on the Installment Sale Payments payable by any other Local Agency that is no prepaying the Installment Sale Payments attributable to such other Local Agency. Mandatory Prepayment of Certificates Upon Acceleration. The Certificates will be subject to mandatory prepayment prior to maturity, in whole or in part (by lot among Certificates with the same maturity in any manner which the Trustee in its sole discretion deems appropriate), on any date, from amounts received upon the acceleration of Installment Sale Payments upon the occurrence of an event of default under any 2018 Installment Sale Agreement, at a Prepayment Price equal to the principal amount to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. Only the principal amount of Certificates allocable to the portion of the Installment Sale Payments being accelerated upon the occurrence of an event of default under the applicable 2018 Installment Sale Agreement shall be prepaid, and such prepayment shall have no effect on the Installment Sale Payments payable by any other Local Agency that is not in default under its applicable 2018 Installment Sale Agreement. Mandatory Sinking Fund Prepayment. The Certificates maturing on June 1, 20__, are subject to mandatory prepayment on June 1 of each year commencing June 1, 20__, in part, from mandatory sinking fund payments, on each June 1 specified below, at a prepayment price equal to the principal evidenced thereby, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. The principal evidenced by such Certificates to be so prepaid and the dates therefor will be as follows: Mandatory Prepayment Date (June 1) Principal Amount 20__ $ 20__ 20__ (Maturity) The amount of each such prepayment will be reduced in the event and to the extent that Installment Sale Payments payable on the corresponding Certificate Payment Date are optionally prepaid by a Local Agency pursuant to its respective 2018 Installment Sale Agreement and applied to the prepayment of Certificates maturing on June 1, 20__. [In such event, the applicable Local Agency will provide the Trustee with a revised sinking fund prepayment schedule.] 9 Purchase of Certificates in Lieu of Prepayment In lieu of prepayment of any Certificates, amounts on deposit in the Revenue Fund or in any sinking account created therein may also be used and withdrawn by the Trustee at any time, upon the Request of the Authority, upon direction of the applicable Local Agency, for the purchase of such Certificates at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as the Authority, upon direction of the respective Local Agency, may in its discretion determine, but not in excess of the principal amount thereof plus accrued interest to the purchase date. Selection of Certificates for Prepayment Whenever provision is made in the Trust Agreement for the prepayment or purchase of less than all of the Certificates or any given portion thereof, the Trustee will, subject to the following sentence, select the Certificates to be prepaid or purchased, from all Certificates subject to prepayment or purchase or such given portion thereof equal to a multiple of $5,000 or any integral multiple thereof not previously called for prepayment or purchase. Upon notice of any optional prepayment of the Certificates or receipt of moneys resulting in a mandatory prepayment of the Certificates, the Trustee will request the Cash Flow Consultant to prepare a Cash Flow Report identifying the principal amount and maturities of the Certificates to be prepaid. The Trustee will promptly notify the Authority in writing of any prepayment or purchase of Certificates and of the Certificates or portions thereof so selected for prepayment or purchase. Notice of Prepayment; Effect of Notice Notice of prepayment or purchase will be mailed by first-class mail by the Trustee, upon direction of a Local Agency, not less than 30 nor more than 60 days prior to the prepayment or purchase date, to (i) the respective Owners of any Certificates designated for prepayment or purchase at their addresses appearing on the registration books of the Trustee, and (ii) if the Certificates are no longer held by DTC, to the Securities Depositories and the Municipal Securities Rulemaking Board through its Electronic Municipal Marketplace Access (EMMA) System (“EMMA”). Notice of prepayment will be given by telecopy, certified, registered, or overnight mail to the Securities Depositories and EMMA. Each notice of prepayment or purchase will state the date of such notice, the date of initial execution and delivery of the Certificates, the prepayment or purchase date, the Prepayment Price or Purchase Price, the place or places of prepayment or purchase (including the name and appropriate address or addresses of the Trustee), the CUSIP number (if any) of the Certificates of each Certificate Payment Date or Dates, and, if less than all of the Certificates of any such Certificate Payment Date, the distinctive certificate numbers of the Certificates with such Certificate Payment Date, to be prepaid or purchased and, in the case of Certificates to be prepaid or purchased in part only, the respective portions of the principal amount thereof to be prepaid or purchased. Each such notice will also state that on said date there will become due and payable on each of said Certificates the Prepayment Price or Purchase Price represented thereby or of said specified portion of the principal amount thereof in the case of a Certificate to be prepaid or purchased in part only, together with interest accrued with respect thereto to the prepayment or purchase date, and that from and after such prepayment or purchase date, interest thereon will cease to accrue, and will require that such Certificates be then surrendered at the address or addresses of the Trustee specified in the prepayment or purchase notice. If any of the Certificates are prepaid pursuant to an advance refunding, notice of such advance refunding and prepayment will be given in the same manner as described above, and also within the same time period with respect to the actual prepayment date. Notice of prepayment or purchase of Certificates will be given by the Trustee (upon request of the applicable Local Agency) at the expense of the Authority. Conditional notice of prepayment may be given at the direction of the Authority and will be given if funds sufficient to prepay the Certificates are not then on deposit with the Trustee. If at the time of mailing of notice, funds are not then on deposit with the Trustee, such 10 notice will state that it is conditional upon the deposit of the funds not later than the opening of business on the date of prepayment of the Certificates, and such notice will be of no effect unless such moneys are so deposited. Failure by the Trustee to give notice pursuant to the Trust Agreement to EMMA or the Securities Depositories will not affect the sufficiency of the proceedings for prepayment or purchase. Failure by the Trustee to mail notice of prepayment or purchase pursuant to the Trust Agreement to any one or more of the respective Owners of any Certificates designated for prepayment or purchase will not affect the sufficiency of the proceedings for prepayment with respect to the Owner or Owners to whom such notice was mailed. Partial Prepayment or Purchase of Certificates Upon surrender of any Certificate to be prepaid or purchased in part only, the Trustee will execute and deliver to the registered owner thereof, at the expense of the Authority, a new Certificate or Certificates of authorized denominations, and having the same Certificate Payment Date, equal in aggregate principal amount to the unprepaid or unpurchased portion of the Certificate surrendered. Effect of Prepayment Notice of prepayment having been duly given as aforesaid, and moneys for payment of the Prepayment Price of, together with interest accrued to the prepayment date with respect to, the Certificates (or portions thereof) so called for prepayment being held by the Trustee, on the prepayment date designated in such notice, the Certificates (or portions thereof) so called for prepayment will become due and payable at the Prepayment Price specified in such notice and interest accrued with respect thereto to the prepayment date, interest with respect to the Certificates so called for prepayment will cease to accrue, said Certificates (or portions thereof) will cease to be entitled to any benefit or security under the Trust Agreement, and the Owners of said Certificates will have no rights in respect thereof except to receive payment of said Prepayment Price and accrued interest. All Certificates prepaid pursuant to the provisions of the Trust Agreement will be cancelled upon surrender thereof by the Trustee. All Certificates purchased pursuant to the provisions of the Trust Agreement will be registered in the name of the Authority and delivered to, or as directed in writing by, the Authority. Book-Entry Only System The information in this caption concerning DTC and DTC’s book-entry only system has been obtained from sources that the Local Agencies, the Authority and the Underwriter believe to be reliable, but none of the Local Agencies, the Authority or the Underwriter takes any responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Certificates, payment of principal, premium, if any, accreted value, if any, and interest with respect to the Certificates to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Certificates and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. DTC will act as securities depository for the Certificates. The Certificates will be executed and delivered as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Certificates, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. 11 equity issues, corporate, and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the SEC. More information about DTC can be found at www.dtcc.com. The foregoing reference to an internet website is made for reference and convenience only; the information contained within the website has not been reviewed by the Authority or either Local Agency and is not incorporated in this Official Statement by reference. Purchases of Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Certificates on DTC’s records. The ownership interest of each actual purchaser of each Certificate (the “Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Certificates are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Certificates except in the event that use of the book-entry system for the Certificates is discontinued. To facilitate subsequent transfers, all Certificates deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Certificates with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners, will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Certificates may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Certificates, such as prepayments, tenders, defaults, and proposed amendments to the 2018 Installment Sale Agreements or Trust Agreement. For example, Beneficial Owners of Certificates may wish to ascertain that the nominee holding the Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners or, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Prepayment notices will be sent to DTC. If less than all of the Certificates within an issue are being prepaid, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be prepaid. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Certificates unless authorized by a Direct Participant in accordance with DTC’s MMI procedures. Under its 12 usual procedures, DTC mails an Omnibus Proxy to the Authority 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 Certificates are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments, prepayment proceeds, distributions and dividend payments with respect to the Certificates will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Trustee, on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Certificates at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Certificates are required to be printed and delivered in accordance with the terms of the Trust Agreement. The Authority may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Certificates will be printed and delivered to DTC in accordance with the terms of the Trust Agreement. THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE CERTIFICATES, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE PREPAYMENT OF THE CERTIFICATES CALLED FOR PREPAYMENT OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. THE INFORMATION IN THIS SECTION CONCERNING DTC AND DTC’S BOOK-ENTRY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE LOCAL AGENCIES AND THE AUTHORITY BELIEVE TO BE RELIABLE, BUT NEITHER THE LOCAL AGENCIES NOR THE AUTHORITY TAKES ANY RESPONSIBILITY FOR THE ACCURACY THEREOF. THE LOCAL AGENCIES AND THE AUTHORITY GIVE NO ASSURANCES THAT DTC WILL DISTRIBUTE PAYMENTS TO DTC PARTICIPANTS OR THAT PARTICIPANTS OR OTHERS WILL DISTRIBUTE PAYMENTS WITH RESPECT TO THE CERTIFICATES RECEIVED BY DTC OR ITS NOMINEES AS THE REGISTERED OWNER, ANY PREPAYMENT NOTICES, OR OTHER NOTICES TO THE BENEFICIAL OWNERS, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. Debt Service The table below presents the annual debt service with respect to the Certificates, assuming that there are no optional prepayments, for the year ending on June 1 in the years shown below: 13 Debt Service Schedule Date (June 1) Principal Interest Total 2019 $ $ $ 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 $ $ $ Source: Underwriter. SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES Installment Sale Payments The Certificates evidence proportionate and undivided interests of the Owners thereof in the Installment Sale Payments to be made by the Local Agencies pursuant to the 2018 Installment Sale Agreements. Pursuant to the 2018 Installment Sale Agreements, each Local Agency is required to pay to the Trustee, from a lien on Measure R Receipts, Measure M Receipts and/or Proposition C Receipts, as applicable, such Local Agency’s Installment Sale Payments, which are designed to be sufficient in both time and amount, to pay, when due, the principal and interest evidenced and represented by the Certificates. See the caption “—Pledge of Measure R Receipts, Measure M Receipts and Proposition C Receipts.” Pursuant to the Trust Agreement, the Authority has assigned to the Trustee, for the benefit of the Owners, its rights under the 2018 Installment Sale Agreements, including, but not limited to, the Authority’s security interest in and lien upon Measure R Receipts, Measure M Receipts and Proposition C Receipts. See Appendix A. Pledge of Measure R Receipts, Measure M Receipts and Proposition C Receipts All Measure R Receipts, Measure M Receipts, Proposition C Receipts and any other amounts held by the Trustee in any fund or account established under the Trust Agreement (other than amounts on deposit in the Acquisition Fund and the Rebate Fund established under the Trust Agreement) have been irrevocably pledged to the payment of the principal, interest and premium, if any, evidenced and represented by the Certificates as provided in the Trust Agreement, and the Measure R Receipts, the Measure M Receipts and the Proposition C Receipts will not be used for any other purpose while any of the Certificates remain outstanding; provided, however, that out of the Measure R Receipts, the Measure M Receipts, the Proposition C Receipts and other moneys there may be applied such sums for such purposes as are permitted under the Trust Agreement. Such pledge will constitute a first pledge of and charge and lien upon the Measure R Receipts, the Measure M Receipts, 14 the Proposition C Receipts and all other moneys on deposit in the funds and accounts established under the Trust Agreement (other than amounts on deposit in the Acquisition Fund and the Rebate Fund) for the payment of the interest and principal with respect to the Certificates in accordance with the terms of the Trust Agreement. Pursuant to the Trust Agreement, the Authority will assign to the Trustee all of the Authority’s rights and remedies under the 2018 Installment Sale Agreements, including, but not limited to, the Authority’s security interest in and lien upon the Measure R Receipts, the Measure M Receipts and the Proposition C Receipts. Each Local Agency has covenanted and agreed in the 2018 Installment Sale Agreement to apply Measure R Receipts, Measure M Receipts and/or Proposition C Receipts, as applicable, to the payment of annual Installment Sale Payments prior to any other expenditure of such funds, subject to the terms for release for expenditure as provided in each 2018 Installment Sale Agreement and only in an amount not exceeding the Measure R Receipts, the Measure M Receipts and/or the Proposition C Receipts. For more information regarding the portion of Measure R Revenues, Measure M Revenues and Proposition C Revenues historically or projected to be allocated, as applicable, by MTA to each Local Agency, see the captions “MEASURE R REVENUES; MEASURE R RECEIPTS,” “MEASURE M REVENUES; MEASURE M RECEIPTS” and “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS.” See also “RISK FACTORS.” Revenue Fund; Pledged Tax Fund In order to carry out and effectuate the pledge, charge, and lien contained in the Trust Agreement, the Authority has covenanted that all Installment Sale Payments when and as received will be received by the Authority in trust for the benefit of the Owners and will be deposited when and as received by the Authority in the Revenue Fund created and maintained by the Trustee under the Trust Agreement. All Installment Sale Payments will be held in trust in the Revenue Fund. See the caption “INTRODUCTION—Security and Sources of Payment for the Certificates—Installment Sale Payments.” The following funds and accounts will be established within the Revenue Fund: (i) the Interest Fund; (ii) the Principal Fund; (iii) the Reserve Fund; (iv) the Administration Fund; and (v) the Surplus Account. In order to carry out and effectuate the obligation of each Local Agency contained in its 2018 Installment Sale Agreement to pay the Installment Sale Payments and the Administration Fee, each Local Agency has agreed and covenanted in its 2018 Installment Sale Agreement to establish a Pledged Tax Fund (each, a “Pledged Tax Fund”) and within the City of Claremont’s Pledged Tax Fund, a “Measure M Receipts Account,” and within the City of West Covina’s Pledged Tax Fund, a “Measure R Receipts Account,” a “Measure M Receipts Account” and a “Proposition C Receipts Account,” which fund and account or account, as applicable, therein the applicable Local Agency has agreed and covenanted to maintain so long as any Installment Sale Payments remain unpaid, and all money on deposit therein will be applied and used only as provided in the applicable 2018 Installment Sale Agreement. The City of Claremont has agreed and covenanted that all Measure M Receipts received by it will be deposited when and as received in its Measure M Receipts Account. The City of West Covina has agreed and covenanted that all Measure R Receipts, Measure M Receipts and Proposition C Receipts received by it will be deposited when and as received in its Measure R Receipts Account, Measure M Receipts Account and Proposition C Receipts Account, respectively. All of the Revenues (which term is defined in the City of Claremont’s 2018 Installment Sale Agreements to mean all Measure M Receipts, and in the City of West Covina’s 2018 Installment Sale Agreements to mean all Measure R Receipts, Measure M Receipts and Proposition C Receipts) and all money in the applicable Pledged Tax Fund and in the funds or accounts so specified and provided for the 2018 Installment Sale Agreements have been irrevocably pledged to the punctual payment of the applicable Installment Sale Payments and the Administration Fee, and the Revenues will not be used for any other purpose while any of such Installment Sale Payments remain outstanding; subject to the provisions of the 2018 Installment Sale Agreements permitting application thereof for the purposes and on the terms and conditions set forth therein. Such pledge constitutes a first lien on the Revenues for the payment of the Installment Sale Payments and the Administration Fee in accordance with the terms of the 2018 Installment 15 Sale Agreements. See the caption “THE LOCAL AGENCIES AND THE PROJECTS—The Projects.” See also the definition of “Revenues” in Appendix A under the caption “DEFINITIONS.” Pursuant to the 2018 Installment Sale Agreements, all Revenues on deposit in the applicable Pledged Tax Fund will be set aside and deposited by the applicable Local Agency in the various funds and accounts within the Revenue Fund at the following times in the following order of priority: Interest Fund and Principal Fund Deposits. On or before the fifteenth day preceding each Interest Payment Date, each Local Agency will, from the Revenues in the applicable Pledged Tax Fund, transfer to the Trustee for deposit in such Local Agency’s Interest Payment Account the Interest Fund within the Revenue Fund, a sum equal to the interest becoming due and payable on the next succeeding Interest Payment Date, except that no such deposit need be made if the Trustee then holds money in such Interest Payment Account equal to the amount of interest becoming due and payable with respect to such Local Agency on the next succeeding Interest Payment Date; and on or before the fifteenth day preceding each Certificate Payment Date, such Local Agency will, from the Revenues in the applicable Pledged Tax Fund, transfer to the Trustee for deposit in such Local Agency’s Principal Payment Account in the Principal Fund within the Revenue Fund, a sum equal to the principal becoming due and payable on the next succeeding 2017 Installment Sale Payment Date, except that no such deposit need be made if the Trustee then holds money in such Principal Payment Account equal to the amount of principal becoming due and payable with respect to such Local Agency on the next succeeding 2017 Installment Sale Payment Date. Reserve Fund Deposit. On or before the fifteenth day of each month, each Local Agency will, from the Revenues in the applicable Pledged Tax Fund, transfer to the Trustee for deposit in such Local Agency’s Reserve Subaccount in the Reserve Fund within the Revenue Fund that sum, if any, necessary to restore such Reserve Subaccount to an amount equal to the Reserve Fund Requirement, all in accordance with and subject to the terms and conditions of the Trust Agreement. No deposit need be made in the applicable Reserve Subaccount so long as there is on deposit therein a sum equal to the applicable Reserve Fund Requirement, including as evidenced by a Qualified Reserve Instrument. All money in the applicable Reserve Subaccount (including all amounts which may be obtained from a related Qualified Reserve Instrument) will be used and withdrawn by the Trustee solely for the purpose of replenishing the Interest Payment Account or the Principal Payment Account, in that order, in the event of any deficiency at any time in either of such accounts. All money in the Reserve Fund will be used and withdrawn by the Trustee for the purposes specified in the Trust Agreement. See the caption “—Reserve Fund.” Each Local Agency has further agreed to pay to the Insurer all amounts owed to it in connection with any draw on the Reserve Policy, and all related reasonable expenses incurred by the Insurer and will pay interest thereon from the date of payment by the Insurer at the Late Payment Rate, in each case solely from available Revenues and subject to the first pledge of and lien upon the Revenues for the payment of the Certificates. See the caption “—Reserve Policies.” Administration Fund Deposit. On or before the fifteenth day preceding each Certificate Payment Date, each Local Agency will, from the remaining Revenues on deposit in the applicable Pledged Tax Fund, transfer to the Trustee for deposit in such Local Agency’s Administration Subaccount in the Administration Fund within the Revenue Fund, a sum equal to the Administration Fee becoming due and payable under the Trust Agreement on the next Certificate Payment Date, and all money on deposit in the Administration Subaccount will be used to pay the Administration Fee due on such Certificate Payment Date, in accordance with the terms of the Trust Agreement. The term “Administration Fee” is defined in the 2018 Installment Sale Agreements to mean an amount equal to the sum of the respective annual administration fees charged by the Authority, the Trustee, the Rebate Analyst and any other similar fee payable in connection with administration of the Certificates, payable on the fifteenth day of the month preceding each June 1, commencing June 1, 20__, for the administrative costs of each respective Project and the financing. [The Administration Fee shall be allocated on a pro rata basis (related to the purchase price payable by each Local Agency) among each Local Agency.] 16 Notwithstanding the foregoing, provided that all transfers described above under the captions “— Reserve Fund Deposit” and “—Administration Fund Deposit” have been made, on any Business Day moneys on deposit in the Pledged Tax Fund in excess of the sum of: (i) interest becoming due and payable under a Local Agency’s 2018 Installment Sale Agreement on the next succeeding Interest Payment Date (less amounts then held by the Trustee in the applicable Interest Payment Account); and (ii) the Pro Rata Share of Principal (less amounts then held by the Trustee in the applicable Principal Payment Account) may be expended by such Local Agency at any time for any purpose permitted by law. The term “Pro Rata Share of Principal” is defined in each 2018 Installment Sale Agreement to mean, during any month, an amount of principal becoming due and payable thereunder on the next succeeding Certificate Payment Date that would have accrued if such principal were deemed to accrue monthly in equal amounts from the preceding Certificate Payment Date. Deposit of Other Available Revenues Notwithstanding the pledge of Measure R Receipts, Measure M Receipts and Proposition C Receipts as described above, as applicable, each Local Agency may satisfy its obligation to deposit Installment Sale Payments with the Trustee by depositing Other Available Revenues with the Trustee and, if and when so deposited, such Other Available Revenues will be irrevocably pledged to the payment of Installment Sale Payments. Unless and until deposited with the Trustee, such Other Available Revenues are not pledged to the payment of Installment Sale Payments. The term “Other Available Revenues” is defined in the applicable 2018 Installment Sale Agreement to mean revenues, other than Measure R Receipts, Measure M Receipts or Proposition C Receipts, as applicable, legally available to such Local Agency to make Installment Sale Payments, if any. Additional Contracts So long as a Local Agency is not in default under its 2018 Installment Sale Agreement, such Local Agency may at any time execute any installment sale contracts, capital leases or similar obligations of such Local Agency (each, a “Contract”), authorized and executed by such Local Agency under and pursuant to applicable law, the interest and principal and prepayment premium, if any, payments under and pursuant to which are payable from Revenues (as such term is defined in Appendix A under the caption “DEFINITIONS”) on a parity with the payment of the Installment Sale Payments under such 2018 Installment Sale Agreement, without the consent of Owners of the Certificates; provided that the audited Revenues, plus the Measure M Receipts Coverage Amount, plus (in the case of a Contract to be executed by the City of West Covina only) the Measure R Receipts Coverage Amount and the Proposition C Receipts Coverage Amount, for the Fiscal Year next preceding the date of the adoption by the governing body of the respective Local Agency of the resolution authorizing the execution of such Contract, as evidenced by both a calculation prepared by the respective Local Agency and a special report prepared by an Independent Certified Public Accountant on such calculation on file with the respective Local Agency, produce a sum equal to at least 150% of the Maximum Annual Debt Service on all Contracts outstanding after the execution of such amendment or Contract. Policy Costs due and owing to the Insurer will be included in the Maximum Annual Debt Service requirement for purposes of the foregoing calculation and the calculation of “Maintenance of Revenues” in the 2018 Installment Sale Agreements. See Appendix A. Notwithstanding the foregoing provisions, there will be no limitations on the ability of the Local Agencies to execute any Contract at any time to refund any outstanding Contract. The term “Measure R Receipts Coverage Amount” is defined in the City of West Covina’s 2018 Installment Sale Agreement to mean an amount in any Fiscal Year equal to Measure R Revenues allocated to the City of West Covina in excess of Measure R Receipts but not more than 50% of Measure R Receipts for such Fiscal Year. 17 The term “Measure M Receipts Coverage Amount” is defined in the 2018 Installment Sale Agreements to mean an amount in any Fiscal Year equal to Measure M Revenues allocated to the Local Agency in excess of Measure M Receipts but not more than 50% of Measure M Receipts for such Fiscal Year. The term “Proposition C Receipts Coverage Amount” is defined in the City of West Covina’s 2018 Installment Sale Agreements to mean an amount in any Fiscal Year equal to Proposition C Revenues allocated to the City of West Covina in excess of Proposition C Receipts but not more than 50% of Proposition C Receipts for such Fiscal Year. To the extent that other Contracts are executed by a Local Agency, the funds available to pay the applicable Installment Sale Payments may be decreased. Reserve Fund The Trustee will set aside from amounts deposited by each Local Agency in the Revenue Fund and deposit in each Local Agency’s Reserve Subaccount that amount of money (or other authorized deposit of security) that is required to maintain such Local Agency’s Reserve Subaccount in the full amount of each Local Agency’s Reserve Fund Requirement. No deposit need be made in the Reserve Subaccount so long as there is on deposit therein a sum equal to the applicable Reserve Fund Requirement. All money in each Reserve Subaccount (including all amounts that may be obtained from any insurance policy on deposit in the Reserve Subaccount) will be used and withdrawn by the Trustee solely for the purpose of replenishing such Local Agency’s Interest Payment Account or the Principal Payment Account, in that order, in the event of any deficiency at any time in either of such accounts, but solely for the purpose of paying the interest or principal payable in connection with the applicable 2018 Installment Sale Agreement, except that any cash amounts in any Reserve Subaccount in excess of the amount required to be on deposit therein will be withdrawn from the Reserve Subaccount on each Interest Payment Date and deposited in such Local Agency’s Interest Payment Account. In lieu of making a Reserve Fund Requirement deposit or in replacement of moneys then on deposit in any Reserve Subaccount (which will be transferred by the Trustee to the applicable Local Agency upon delivery of an insurance policy satisfying the requirements stated below), a Local Agency may also deliver to the Trustee an insurance policy (a “Qualified Reserve Instrument”) securing an amount, together with moneys or Permitted Investments on deposit in the applicable Reserve Subaccount, no less than the applicable Reserve Fund Requirement, issued by an insurance company licensed to issue insurance policies guaranteeing the timely payment of the principal and interest components of the related 2018 Installment Sale Agreement and whose unsecured debt obligations (or for which obligations secured by such insurance company’s insurance policies) are rated in one of the two highest rating categories (without respect to any modifier) of the Rating Agency. Notwithstanding anything to the contrary set forth in the Trust Agreement, amounts on deposit in the Reserve Subaccounts will be applied solely to the payment of debt service due on the Certificates. Each Local Agency has provided a Reserve Policy that has been credited to its Reserve Subaccount, and the Trustee will make claims under each Reserve Policy in accordance with the terms of such Local Agency’s Reserve Policy and its applicable Insurance Agreement. Each Reserve Policy is a Qualified Reserve Instrument. The term “Reserve Fund Requirement” is defined in the Trust Agreement to mean, as of any date of calculation, separately with respect to each 2018 Installment Sale Agreement, an amount equal to the least of: (i) 10% of the initial stated principal amount (within the meaning of Section 148 of the Code) of the Installment Sale Payments under such 2018 Installment Sale Agreement; (ii) 125% of the average annual Installment Sale Payments under such 2018 Installment Sale Agreement; or (iii) the Maximum Annual Debt Service. See Appendix A. 18 Reserve Policies The Insurer will issue two Municipal Bond Debt Service Reserve Insurance Policies (the “Reserve Policies” and each, a “Reserve Policy”) for the purpose of funding each of the reserve subaccounts for the two Local Agencies with the Reserve Fund for the Certificates. The Reserve Policies will be issued by the Insurer in an aggregate amount equal to the Reserve Fund Requirement applicable to the Certificates. Each Reserve Policy is a Qualified Reserve Instrument. The premium for the Reserve Policies is to be fully paid at or prior to the execution and delivery of the Certificates. As long as each Reserve Policy is in full force and effect, the applicable Local Agency and the Trustee, as appropriate, will comply with the following provisions: [TO BE UPDATED] (a) The Local Agency will repay any draws under the Reserve Policy and pay all related reasonable expenses incurred by the Insurer. Interest will accrue and be payable on such draws and expenses from the date of payment by the Insurer at the Late Payment Rate. “Late Payment Rate” means the lesser of: (A) the greater of: (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate (“Prime Rate”) (any change in such Prime Rate to be effective on the date such changes are announced by JPMorgan Chase Bank) plus 3%; and (ii) the then applicable highest rate of interest on the Certificates; and (B) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate will be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event that JPMorgan Chase Bank ceases to announce its Prime Rate publicly, the Prime Rate will be the publicly announced prime or base lending rate of such bank, banking association or trust company bank as the Insurer in its sole and absolute discretion specifies. Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, the “Policy Costs”) will commence in the first month following each draw, and each such monthly payment shall be in an amount at least equal to 1/12th of the aggregate of Policy Costs related to such draw. Amounts in respect of Policy Costs paid to the Insurer will be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to the Insurer on account of principal due, the coverage under the Reserve Policy will be increased by a like amount, subject to the terms of the Reserve Policy. All cash and investments in the Reserve Fund established for the Certificates will be transferred to the Interest Fund and the Principal Fund, as applicable, for payment of the debt service on the Certificates before any drawing may be made on a respective Reserve Policy or any other Qualified Reserve Instrument credited to a Reserve Subaccount in lieu of cash. Payment of Policy Costs attributable to a Local Agency will be made prior to replenishment of any such cash amounts. To the extent of a claim on amounts on deposit in or credited to a Reserve Subaccount due to nonpayment of Installment Payments by a Local Agency, draws on all Qualified Reserve Instruments (including the Reserve Policies) attributable to such Local Agency, on which there is available coverage will be made on a pro-rata basis (calculated by reference to the coverage then available thereunder) after applying all available cash and investments in the related Reserve Subaccount. Payment of Policy Costs attributable to a Local Agency and reimbursement of amounts with respect to other Qualified Reserve Instruments will be made on a pro-rata basis prior to replenishment of any cash drawn from a respective Reserve Subaccount. For the avoidance of doubt, “available coverage” means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw. (b) Draws under the Reserve Policies may only be used to make payments on Certificates. 19 (c) If a Local Agency fails to pay any Policy Costs in accordance with the requirements of paragraph (a) above, the Insurer will be entitled to exercise any and all legal and equitable remedies available to it as against such Local Agency, including those provided under the Trust Agreement other than: (i) acceleration of the maturity of the Certificates; or (ii) remedies which would adversely affect owners of the Certificates. (d) The Trust Agreement may not be discharged until all Policy Costs attributable to the related Local Agency owing to the Insurer have been paid in full. Each Local Agency’s obligation to pay such amount will expressly survive payment in full of the Certificates. (e) The Trustee will ascertain the necessity for a claim upon a respective Reserve Policy in accordance with the provisions of paragraph (a) above and provide notice to the Insurer at least three business days prior to each date upon which interest or principal is due on the Certificates. (f) Each Reserve Policy will expire on the earlier of the date the Certificates are no longer outstanding and the final maturity date of the Certificates. See the caption “—Additional Contracts” and Appendix A under the caption “INSTALLMENT SALE AGREEMENT—REPRESENTATIONS AND COVENANTS OF THE LOCAL AGENCIES AND THE AUTHORITY—Maintenance of Revenues.” THE LOCAL AGENCIES AND THE PROJECTS Participating Local Agencies The following local agencies will execute the Trust Agreement: (1) the City of Claremont; and (2) the City of West Covina. Certain economic and demographic information regarding each participating Local Agency is included in Appendix B. See the caption “MEASURE M REVENUES; MEASURE M RECEIPTS” for a discussion of the portions of Measure M Revenues that are projected to be allocated by MTA to the City of Claremont. See the captions “MEASURE R REVENUES; MEASURE R RECEIPTS,” “MEASURE M REVENUES; MEASURE M RECEIPTS” and “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS” for discussions of the portions of Measure R Revenues, Measure M Revenues and Proposition C Revenues that have historically been or are projected to be allocated, as applicable, by MTA to the City of West Covina. The Projects Each Local Agency is undertaking its Project as part of such Local Agency’s ongoing effort to accelerate street system improvements within its jurisdiction. The Project are expected to include the components described below. City of Claremont Project. [CITY TO CONFIRM/REVISE][The City of Claremont’s Project is expected to include the construction of improvements to arterial streets and collector and residential roadways within the corporate limits of the City of Claremont, which improvements are eligible costs payable from Measure M Revenues, including engineering, inspection, contract administration, testing and other incidental costs. The designation of the particular streets and roadways to be improved will be made by the City Manager of the City of Claremont.] City of West Covina Project. [CITY TO CONFIRM/REVISE][The City of West Covina’s Project is expected to include the following roadway improvements: mobilization; earthwork; demolition; sitework; drainage and stormwater quality improvements; relocation and adjustment of utilities; the addition of concrete pavers, sidewalks and hardscape; trellis, bollards and entry monument; street furnishings; landscaping and irrigation; traffic, signing and striping improvements; and lighting and electrical; all within the corporate limits of the City of West Covina, which improvements are eligible costs payable from Measure R Revenues, Measure M Revenues and Proposition C Revenues, as applicable, including engineering, inspection, contract 20 administration, testing and other incidental costs. The designation of the particular streets and roadways to be improved will be made by the City Manager of the City of West Covina.] MEASURE R REVENUES; MEASURE R RECEIPTS Pledge of Measure R Receipts Pursuant to the City of West Covina’s 2018 Installment Sale Agreement, the City of West Covina will pledge its Measure R Receipts for the payment of the Installment Sale Payments. The City of Claremont is not pledging any of its local return allocations pursuant to Measure R to the payment of the Installment Sale Payments under the City of Claremont’s 2018 Installment Sale Agreement. In an election on November 4, 2008, more than two-thirds of the voters in the County approved the Measure R Ordinance, thereby imposing a 0.5% retail transactions and use tax on the gross receipts of retailers from the sale of tangible personal property sold in the County and a use tax at the same rate upon the storage, use, or other consumption in the County of such property purchased from any retailer for storage, use, or other consumption in the County, subject to certain limited exceptions described below (the “Measure R Sales Tax”). The Measure R Sales Tax commenced on July 1, 2009, is administered by MTA and will be collected for a thirty-year period ending on June 30, 2039. Measure R provides for the collection and allocation of revenues as follows: (i) 2% for MTA rail capital improvements; (ii) 3% for Metrolink capital improvements; (iii) 5% for rail operations for new transit projects; (iv) 15% for local return; (v) 20% for bus operations allocated using MTA’s formula allocation procedure (based on vehicle service miles and fare revenue); (vi) 20% for highway capital projects; and (vii) 35% for specific transit capital projects. The Measure R Receipts constitute the local return portion of such Measure R Revenues allocable to the City of West Covina (as described in clause (iv) in the previous sentence). The Measure R Sales Tax The Measure R Sales Tax imposed in the County for transportation purposes and administered by MTA is in addition to the sales or use tax levied Statewide by the State. On November 6, 2012, State voters approved Proposition 30, which, among other things, increased the Statewide tax rate by one quarter of one percent, increasing the Statewide tax rate from 7.25% to 7.50% for four years, effective January 1, 2013, through December 31, 2016. The current Statewide tax rate is ___%. The Measure R Sales Tax is also in addition to: (i) a 0.5% Measure M Sales Tax described under the caption “MEASURE M REVENUES; MEASURE M RECEIPTS;” (ii) a 0.5% Proposition C Sales Tax described under the caption “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS;” (iii) a 0.5% sales tax imposed by the Commission beginning in 1980 and currently imposed by MTA pursuant to Ordinance No. 16 of the Commission known as the “Proposition A Sales Tax;” and (iv) sales taxes that apply only within certain cities within the County. In general, the State Sales Tax (as such term is defined below) applies to the gross receipts of retailers from the sale of tangible personal property. The State use tax is imposed on the storage, use, or other consumption in the State of property purchased from a retailer for such storage, use, or other consumption. Because the use tax does not apply to cases where the sale of the property is subject to the sales tax, the application of the use tax generally is to purchases made outside of the State for use within the State. The Measure R Sales Tax is generally imposed upon the same transactions and items that are subject to the sales and use tax levied by the State (the “State Sales Tax”), with generally the same exceptions. Many categories of transactions are exempt from the State Sales Tax and the Measure R Sales Tax. The most important of these exemptions are sales of food products for home consumption, prescription medicine, edible livestock and their feed, seed and fertilizer used in raising food for human consumption, and gas, electricity, and water when delivered to consumers through mains, lines and pipes. In addition, Occasional Sales (i.e., sales of property not held or used by a seller in the course of activities for which he or she is required to hold a seller’s permit) 21 are generally exempt from both the State Sales Tax and the Measure R Sales Tax; however, the Occasional Sales exemption does not apply to the sale of an entire business and other sales of machinery and equipment used in a business. Sales of property to be used outside the County that are shipped to a point outside the County, pursuant to the contract of sale, by delivery to such point by the retailer, or by delivery by the retailer to a carrier for shipment to a consignee, at such point, are exempt both from the State Sales Tax and the Measure R Sales Tax. Action by the State Legislature or by voter initiative could change the transactions and items upon which the State Sales Tax and the Measure R Sales Tax are imposed. Such changes or amendments could have either an adverse or beneficial effect on Measure R Revenues. Neither the Authority nor the City of West Covina is currently aware of any proposed legislative change that would have a material adverse effect on Measure R Revenues. For information related to MTA, see the caption “LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY.” Collection and Allocation of Measure R Revenues Collection of the Measure R Sales Tax began on July 1, 2009, and is administered by the State Board of Equalization (the “Board of Equalization”), which imposes a charge for administration. Such charge is based on the actual costs incurred by the State Board of Equalization in connection with the administration of the collection of the Measure R Sales Tax. In accordance with the Measure R Ordinance, MTA is required to allocate the proceeds of the Measure R Sales Tax as follows: ALLOCATION OF MEASURE R SALES TAX BY MTA Uses Percentage of Allocation New Rail and/or Bus Rapid Transit Capital Projects 35% Metrolink Capital Improvement Projects within the County (operations, maintenance, and expansion) 3 Metro Rail Capital - System Improvements, Rail Yards and Rail Cars 2 Carpool Lanes, Highways, Goods Movement, Grade Separations and Soundwalls 20 Rail Operations (new transit project operations and maintenance) 5 Bus Operations (County-wide bus service operations and maintenance) 20 Measure R Local Return(1) 15 Total 100% _______________ (1) 15% of the Measure R Sales Tax is allocated to incorporated cities within the County (including the Local Agencies) and to the County of Los Angeles for the unincorporated areas thereof on a per capita basis for major street resurfacing, rehabilitation, and reconstruction; pothole repair; left turn signals; bikeways; pedestrian improvements; streetscapes; signal synchronization; and transit. Source: MTA. The Measure R Ordinance specifies that 15% of the Measure R Sales Tax (the “Measure R Local Return”) be allocated to incorporated cities within the County (including the City of West Covina) and to the County for the unincorporated areas each on a per capita basis. The State Board of Equalization, after deducting the costs of administering the Measure R Sales Tax, has agreed to remit all Measure R Sales Tax revenues to the trustee for the MTA’s outstanding bond issues that are secured by Measure R Sales Tax revenues (collectively, the “MTA Measure R Bonds”). Such trustee will thereafter immediately disburse the Measure R Local Return to the MTA. The Measure R Local Return does not serve as security for any of the MTA Measure R Bonds. Currently, apportionments of the Measure R Local Return are being made to 87 cities and the County for the unincorporated areas (each, a “Jurisdiction” and, collectively, the “Jurisdictions”). The Measure R Local Return allocations to the Jurisdictions are based on the population shares from the projected populations as derived from annual estimates made by the California State Department of Finance. The projected populations are revised annually in the formula allocation procedure established by the MTA Board. Before any Jurisdiction can receive any allocations of the Measure R Local Return, such Jurisdiction must sign an assurances and 22 understanding agreement with MTA. Measure R Local Return funds are then automatically allocated monthly on a per capita basis to such Jurisdiction. In addition, to continue receiving Measure R Local Return funds, the governing body of each Jurisdiction must annually adopt a resolution approving such Jurisdiction’s five year plan regarding the expenditure of its Measure R Revenues and demonstrate its compliance with the required uses of its Measure R Revenues pursuant to an annual audit. Historical Measure R Revenues Historical Measure R Revenues. The following table sets forth the portion of the Measure R Revenues that have been allocated by MTA to the City of West Covina for the previous five Fiscal Years. CITY OF WEST COVINA MEASURE R REVENUE ALLOCATION Fiscal Year Portion of Measure R Revenues Allocated Percent Change from Prior Fiscal Year 2012-13 $1,083,917 N/A% 2013-14 1,126,753 3.95 2014-15 1,180,222 4.74 2015-16 1,211,550 2.65 2016-17 1,230,841 1.59 Source: City of West Covina. The Local Agency is unable to predict whether annual Measure R Revenues will increase or decrease or what portion, if any, of such Measure R Revenues it will receive. For a summary of historical taxable retail sales within the City of West Covina, see the table entitled “City of West Covina Taxable Sales” in Appendix B. Measure R Fund Financial Statements. The following tables present the Balance Sheet and the Schedule of Revenues, Expenditures and Changes in Fund Balances relating to the City of West Covina’s Measure R Fund for the past five Fiscal Years. CITY OF WEST COVINA MEASURE R FUND BALANCE SHEET Fiscal Year 2012-13 Fiscal Year 2013-14 Fiscal Year 2014-15 Fiscal Year 2015-16 Fiscal Year 2016-17 Assets Cash and Investments $ 864,063 $ 536,833 $ 799,135 $ 922,540 $ 1,543,091 Receivables, net: Taxes 103,692 -- -- -- -- Interest 480 171 299 567 334 Total Assets $ 968,235 $ 537,004 $ 799,434 $ 923,107 $ 1,543,425 Liabilities, Deferred Inflows of Resources and Fund Balances Accounts payable $ 35,934 $ 51,623 $ 79,052 $ 66,340 $ 44,424 Other accrued liabilities 1,154 1,017 2,673 940 695 Total Liabilities $ 37,088 $ 52,640 $ 81,725 $ 67,280 $ 45,119 Fund Balances Restricted: Public Works $ 931,147 $ 484,364 $ 717,709 $ 855,827 $ 1,498,306 Unassigned -- -- -- -- -- Total Fund Balances $ 931,147 $ 484,364 $ 717,709 $ 855,827 $ 1,498,306 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 968,235 $ 537,004 $ 799,434 $ 923,107 $ 1,543,425 23 Source: City of West Covina. CITY OF WEST COVINA MEASURE R FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES Fiscal Year 2012-13 Fiscal Year 2013-14 Fiscal Year 2014-15 Fiscal Year 2015-16 Fiscal Year 2016-17 Revenues Taxes $ 1,083,917 $ 1,126,753 $ 1,180,222 $ 1,211,550 $ 1,230,841 Investment Income 2,095 1,044 1,486 6,062 7,994 Other Revenues -- 2,400 -- -- -- Total Revenues $ 1,086,012 $ 1,130,197 $ 1,181,708 $ 1,217,612 $ 1,238,835 Expenditures Current: Public Works $ 687,245 $ 1,576,980 $ 948,363 $ 489,648 $ 147,015 Community Services -- -- -- 589,846 449,341 Total Expenditures $ 687,245 $ 1,576,980 $ 948,363 $ 1,079,494 $ 596,356 Excess of Revenues Over (Under) Expenditures $ 398,767 $ (446,783) $ 233,345 $ 138,118 $ 642,479 Fund Balances - Beginning of Year $ 532,380 $ 931,147 $ 484,364 $ 717,709 $ 855,827 Fund Balances - End of Year $ 931,147 $ 484,364 $ 717,709 $ 855,827 $ 1,498,306 Source: City of West Covina. MEASURE M REVENUES; MEASURE M RECEIPTS Pledge of Measure M Receipts Pursuant to the 2018 Installment Sale Agreements, each Local Agency will pledge its Measure M Receipts for the payment of the Installment Sale Payments. The City of Claremont is solely pledging its Measure M Receipts to the payment of Installment Sale Payments under the City of Claremont’s 2018 Installment Sale Agreement. In an election on November 8, 2016, more than two-thirds of the voters in the County approved the Measure M Ordinance, thereby imposing a 0.5% retail transactions and use tax on the gross receipts of retailers from the sale of tangible personal property sold in the County and a use tax at the same rate upon the storage, use, or other consumption in the County of such property purchased from any retailer for storage, use, or other consumption in the County, subject to certain limited exceptions described below (the “Measure M Sales Tax”). The Measure M Sales Tax commenced on July 1, 2017, is administered by MTA and is not limited in duration. Measure M provides for the collection and allocation of revenues as follows: (i) 1% for regional rail; (ii) 2% for Metro State of Good Repair; (iii) 2% for Americans with Disabilities Act (“ADA”) Paratransit for Disabled and MTA discounts for seniors and students; (iv) 2% for Metro Active Transportation Program; (v) 5% for MTA rail operations; (vi) 17% for highway construction; (vii) 17% for local return; (viii) 20% for transit operations; and (ix) 35% for transit construction. The Measure M Receipts constitute the local return portion of such Measure M Revenues allocable to each Local Agency (as described in clause (vii) in the previous sentence). The Measure M Sales Tax The Measure M Sales Tax imposed in the County for transportation purposes and administered by MTA is in addition to the sales or use tax levied Statewide by the State. On November 6, 2012, State voters approved Proposition 30, which, among other things, increased the Statewide tax rate by one quarter of one percent, increasing the Statewide tax rate from 7.25% to 7.50% for four years, effective January 1, 2013, through December 31, 2016. The current Statewide tax rate is ___%. The Measure M Sales Tax is also in addition to: (i) a 0.5% Measure R Sales Tax described under the caption “MEASURE R REVENUES; MEASURE R 24 RECEIPTS;” (ii) a 0.5% Proposition C Sales Tax described under the caption “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS;” (iii) a 0.5% sales tax imposed by the Commission beginning in 1980 and currently imposed by MTA pursuant to Ordinance No. 16 of the Commission known as the “Proposition A Sales Tax;” and (iv) sales taxes that apply only within certain cities within the County. In general, the State Sales Tax applies to the gross receipts of retailers from the sale of tangible personal property. The State use tax is imposed on the storage, use, or other consumption in the State of property purchased from a retailer for such storage, use, or other consumption. Because the use tax does not apply to cases where the sale of the property is subject to the sales tax, the application of the use tax generally is to purchases made outside of the State for use within the State. The Measure M Sales Tax is generally imposed upon the same transactions and items that are subject to the State Sales Tax, with generally the same exceptions. Many categories of transactions are exempt from the State Sales Tax and the Measure M Sales Tax. The most important of these exemptions are sales of food products for home consumption, prescription medicine, edible livestock and their feed, seed and fertilizer used in raising food for human consumption, and gas, electricity, and water when delivered to consumers through mains, lines and pipes. In addition, Occasional Sales (i.e., sales of property not held or used by a seller in the course of activities for which he or she is required to hold a seller’s permit) are generally exempt from both the State Sales Tax and the Measure M Sales Tax; however, the Occasional Sales exemption does not apply to the sale of an entire business and other sales of machinery and equipment used in a business. Sales of property to be used outside the County that are shipped to a point outside the County, pursuant to the contract of sale, by delivery to such point by the retailer, or by delivery by the retailer to a carrier for shipment to a consignee, at such point, are exempt both from the State Sales Tax and the Measure M Sales Tax. Action by the State Legislature or by voter initiative could change the transactions and items upon which the State Sales Tax and the Measure M Sales Tax are imposed. Such changes or amendments could have either an adverse or beneficial effect on Measure M Revenues. Neither the Authority, the City of Claremont nor the City of West Covina is currently aware of any proposed legislative change that would have a material adverse effect on Measure M Revenues. For information related to MTA, see the caption “LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY.” Collection and Allocation of Measure M Revenues Collection of the Measure M Sales Tax began on July 1, 2017, and is administered by the State Board of Equalization, which imposes a charge for administration. Such charge is based on the actual costs incurred by the State Board of Equalization in connection with the administration of the collection of the Measure M Sales Tax. In accordance with the Measure M Ordinance, MTA is required to allocate the proceeds of the Measure M Sales Tax as follows: 25 ALLOCATION OF MEASURE M SALES TAX BY MTA Uses Percentage of Allocation(2) Metro Rail Operations (including Metro Rail State of Good Repair) 5% Transit Operations (Metro and Municipal Providers) 20 ADA Paratransit for Disabled; Metro discounts for seniors and students 2 Transit Construction (includes system connectivity projects – airports, Union Station, and Countywide BRT) 35 Metro State of Good Repair 2 Highway Construction (includes system connectivity projects – ports, highway congestion, good movement) 17 Metro Active Transportation Program (bicycle, pedestrian, complete streets) 2 Regional Rail 1 Measure M Local Return(1) 17 Total 100% _______________ (1) 1% Administration supplements the Measure M Local Return, increasing the Measure M Local Return from 16% to 17% of net revenues, which amount will increase to 20% on July 1, 2039. 17% of the Measure R Sales Tax is allocated to incorporated cities within the County (including the Local Agencies) and to the County of Los Angeles for the unincorporated areas thereof on a per capita basis for streets and roads improvements; a comprehensive, integrated transportation network with infrastructure and design that allows safe and convenient travel along and across streets for all users, including pedestrians, users and operators of public transit, bicyclist, persons with disabilities, seniors, children, motorists, users of green modes, and movers of commercial goods, and commonly referred to as “Complete Streets”; urban transportation rights‐of‐way integrated with stormwater treatment techniques that use natural processes and landscaping and quantitatively demonstrate that they capture and treat stormwater runoff from their tributary watershed through infiltration or other means and are included within respective Enhanced Watershed Management Plans, and commonly referred to as “Green Streets”; storm drains; traffic control measures; active transportation; public transit services and capital, transit oriented community investments; transit marketing; congestion management program (planning, engineering and/or study); transportation administration; or as matching funds for other federal, state or local sources used to fund transportation projects. (2) Does not sum due to inclusion of 1% Administration to supplement Measure M Local Return. See Footnote (1) above. The Measure M Ordinance specifies that 17% of the Measure M Sales Tax, which includes a 1% Administration supplement (the “Measure M Local Return”) be allocated to incorporated cities within the County (including each Local Agency) and to the County for the unincorporated areas each on a per capita basis, which amount will increase to 20% on July 1, 2039. The State Board of Equalization, after deducting the costs of administering the Measure M Sales Tax, has agreed to remit all Measure M Sales Tax revenues to the trustee for the MTA’s outstanding bond issues that are secured by Measure M Sales Tax revenues (collectively, the “MTA Measure M Bonds”). Such trustee will thereafter immediately disburse the Measure M Local Return to the MTA. The Measure M Local Return does not serve as security for any of the MTA Measure M Bonds. Currently, apportionments of the Measure M Local Return are being made to 88 cities and the County for the unincorporated Jurisdictions. The Measure M Local Return allocations to the Jurisdictions are based on the population shares from the projected populations as derived from annual estimates made by the California State Department of Finance. The projected populations are revised annually in the formula allocation procedure established by the MTA Board. Before any Jurisdiction can receive any allocations of the Measure M Local Return, such Jurisdiction must sign an assurances and understanding agreement with MTA. Measure M Local Return funds are then automatically allocated monthly on a per capita basis to such Jurisdiction. In addition, to continue receiving Measure M Local Return funds, the governing body of each Jurisdiction must annually adopt a resolution approving such Jurisdiction’s five year plan regarding the expenditure of its Measure M Revenues and demonstrate its compliance with the required uses of its Measure M Revenues pursuant to an annual audit. Projected Measure M Revenues Projected Measure M Revenues – City of Claremont. The following table sets forth the projected portion of the Measure M Revenues that will be allocated by MTA to the City of Claremont for Fiscal Year 2017-18, which is the first year in which Measure M Revenues have been allocated by MTA to the City of Claremont. 26 [CITY OF CLAREMONT TO PROVIDE PROJECTED MEASURE M REVENUE ALLOCATION] CITY OF CLAREMONT MEASURE M REVENUE ALLOCATION Fiscal Year Portion of Measure M Revenues Allocated 2017-18(1) $[_______] (1) [Based on actual allocations for the period July 1, 2017 through _____, 20__ and thereafter on _____________.] Source: City of Claremont. The City of Claremont is unable to predict whether annual Measure M Revenues will increase or decrease or what portion, if any, of such Measure M Revenues it will receive. For a summary of historical taxable retail sales within the City of Claremont, see the table entitled “City of Claremont Taxable Sales” in Appendix B. Projected Measure M Revenues – City of West Covina. The following table sets forth the projected portion of the Measure M Revenues that will be allocated by MTA to the City of West Covina for Fiscal Year 2017-18, which is the first year in which Measure M Revenues have been allocated by MTA to the City of West Covina. [CITY OF WEST COVINA TO PROVIDE PROJECTED MEASURE M REVENUE ALLOCATION] CITY OF WEST COVINA MEASURE M REVENUE ALLOCATION Fiscal Year Portion of Measure M Revenues Allocated 2017-18(1) $[1,343,814] (1) [Based on actual allocations for the period July 1, 2017 through _____, 20__ and thereafter on _____________.] Source: City of West Covina. The City of West Covina is unable to predict whether annual Measure M Revenues will increase or decrease or what portion, if any, of such Measure M Revenues it will receive. For a summary of historical taxable retail sales within the City of West Covina, see the table entitled “City of West Covina Taxable Sales” in Appendix B. PROPOSITION C REVENUES; PROPOSITION C RECEIPTS Pledge of Proposition C Receipts Pursuant to the City of West Covina’s 2018 Installment Sale Agreement, the City of West Covina will pledge its Proposition C Receipts for the payment of the Installment Sale Payments. The City of Claremont is not pledging any of its local return allocations pursuant to Proposition C to the payment of the Installment Sale Payments under the City of Claremont’s 2018 Installment Sale Agreement. In an election on November 6, 1990, more than two-thirds of the voters in the County approved the Proposition C Ordinance, thereby imposing a 0.5% retail transactions and use tax on the gross receipts of retailers from the sale of tangible personal property sold in the County and a use tax at the same rate upon the storage, use, or other consumption in the County of such property purchased from any retailer for storage, use, or other consumption in the County, subject to certain limited exceptions described below (the “Proposition C Sales 27 Tax”). The Proposition C Sales Tax commenced on April 1, 1991, is administered by MTA and is not limited in duration. Proposition C provides for the collection and allocation of revenues as follows: (i) 40% for construction and operation of the but transit and rail system; (ii) 5% for expanded rail and bus security; (iii) 20% for local return; (iv) 10% for commuter rail, construction of transit centers, park and ride lots and freeway bus stops; and (v) 25% for transit-related improvements to freeways and state highways. The Proposition C Receipts constitute the local return portion of such Proposition C Revenues allocable to the City of West Covina (as described in clause (iii) in the previous sentence). The Proposition C Sales Tax The Proposition C Sales Tax imposed in the County for transportation purposes and administered by MTA is in addition to the sales or use tax levied Statewide by the State. On November 6, 2012, State voters approved Proposition 30, which, among other things, increased the Statewide tax rate by one quarter of one percent, increasing the Statewide tax rate from 7.25% to 7.50% for four years, effective January 1, 2013, through December 31, 2016. The current Statewide tax rate is ___%. The Proposition C Sales Tax is also in addition to: (i) a 0.5% Measure R Sales Tax described under the caption “MEASURE R REVENUES; MEASURE R RECEIPTS;” (ii) a 0.5% Measure M Sales Tax described under the caption “MEASURE M REVENUES; MEASURE M RECEIPTS;” (iii) a 0.5% sales tax imposed by the Commission beginning in 1980 and currently imposed by MTA pursuant to Ordinance No. 16 of the Commission known as the “Proposition A Sales Tax;” and (iv) sales taxes that apply only within certain cities within the County. In general, the State Sales Tax applies to the gross receipts of retailers from the sale of tangible personal property. The State use tax is imposed on the storage, use, or other consumption in the State of property purchased from a retailer for such storage, use, or other consumption. Because the use tax does not apply to cases where the sale of the property is subject to the sales tax, the application of the use tax generally is to purchases made outside of the State for use within the State. The Proposition C Sales Tax is generally imposed upon the same transactions and items that are subject to the State Sales Tax, with generally the same exceptions. Many categories of transactions are exempt from the State Sales Tax and the Proposition C Sales Tax. The most important of these exemptions are sales of food products for home consumption, prescription medicine, edible livestock and their feed, seed and fertilizer used in raising food for human consumption, and gas, electricity, and water when delivered to consumers through mains, lines and pipes. In addition, Occasional Sales (i.e., sales of property not held or used by a seller in the course of activities for which he or she is required to hold a seller’s permit) are generally exempt from both the State Sales Tax and the Proposition C Sales Tax; however, the Occasional Sales exemption does not apply to the sale of an entire business and other sales of machinery and equipment used in a business. Sales of property to be used outside the County that are shipped to a point outside the County, pursuant to the contract of sale, by delivery to such point by the retailer, or by delivery by the retailer to a carrier for shipment to a consignee, at such point, are exempt both from the State Sales Tax and the Proposition C Sales Tax. Action by the State Legislature or by voter initiative could change the transactions and items upon which the State Sales Tax and the Proposition C Sales Tax are imposed. Such changes or amendments could have either an adverse or beneficial effect on Proposition C Revenues. Neither the Authority nor the City of West Covina is currently aware of any proposed legislative change that would have a material adverse effect on Proposition C Revenues. For information related to MTA, see the caption “LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY.” 28 Collection and Allocation of Proposition C Revenues Collection of the Proposition C Sales Tax began on April 1, 1991, and is administered by the Board of Equalization, which imposes a charge for administration. Such charge is based on the actual costs incurred by the State Board of Equalization in connection with the administration of the collection of the Proposition C Sales Tax. In accordance with the Proposition C Ordinance, MTA is required to allocate the proceeds of the Proposition C Sales Tax as follows: ALLOCATION OF PROPOSITION C SALES TAX BY MTA Uses Percentage of Allocation Construction and operation of the bus transit and rail system(1) 40% Expand rail and bus security 5 Commuter rail, construction of transit centers, park and ride lots and freeway bus stops 10 Transit related improvements to freeways and state highways 25 Proposition C Local Return(2) 20 Total 100% _______________ (1) Pursuant to the Metropolitan Transportation Authority Reform and Accountability Act of 1998, MTA is prohibited from spending Proposition C Sales Tax revenues on the costs of planning, design, construction or operation of any rail line which is a tunnel below the grade level of the earth’s surface (including any extension or operating segment thereof), except for Segment 1, Segment 2 and Segment 3 (North Hollywood) of the Red Line, including debt service on bond, notes or other evidences of indebtedness issued for such purposes after March 30, 1998. (2) 20% of the Proposition C Sales Tax is allocated to incorporated cities within the County (including the City of West Covina) and to the County of Los Angeles for the unincorporated areas thereof on a per capita basis for public transit, paratransit and related services. Source: MTA. The Proposition C Ordinance specifies that 20% of the Proposition C Sales Tax (the “Proposition C Local Return”) be allocated to incorporated cities within the County (including the City of West Covina) and to the County for the unincorporated areas each on a per capita basis. The State Board of Equalization, after deducting the costs of administering the Proposition C Sales Tax, has agreed to remit all Proposition C Sales Tax revenues to the trustee for the MTA’s outstanding bond issues that are secured by Proposition C Sales Tax revenues (collectively, the “MTA Proposition C Bonds” and, collectively with the MTA Measure R Bonds and the MTA Measure M Bonds, the “MTA Bonds”). Such trustee will thereafter immediately disburse the Proposition C Local Return to the MTA. The Proposition C Local Return does not serve as security for any of the MTA Proposition C Bonds. Currently, apportionments of the Proposition C Local Return are being made to 88 cities and the County for the unincorporated areas. The Proposition C Local Return allocations to the Jurisdictions are based on the population shares from the projected populations as derived from annual estimates made by the California State Department of Finance. The projected populations are revised annually in the formula allocation procedure established by the MTA Board. Before any Jurisdiction can receive any allocations of the Proposition C Local Return, such Jurisdiction must sign an assurances and understanding agreement with MTA. Proposition C Local Return funds are then automatically allocated monthly on a per capita basis to such Jurisdiction. In addition, to continue receiving Proposition C Local Return funds, the governing body of each Jurisdiction must annually adopt a resolution approving such Jurisdiction’s five year plan regarding the expenditure of its Proposition C Revenues and demonstrate its compliance with the required uses of its Proposition C Revenues pursuant to an annual audit. Historical Proposition C Revenues Historical Proposition C Revenues. The following table sets forth the portion of the Proposition C Revenues that have been allocated by MTA to the City of West Covina for the previous five Fiscal Years. 29 CITY OF WEST COVINA PROPOSITION C REVENUE ALLOCATION Fiscal Year Portion of Proposition C Revenues Allocated Percent Change from Prior Fiscal Year 2012-13 $1,449,734 N/A% 2013-14 1,512,971 4.36 2014-15 1,576,738 4.21 2015-16 1,617,352 2.57 2016-17 1,644,472 1.67 Source: City of West Covina. The City of West Covina is unable to predict whether annual Proposition C Revenues will increase or decrease or what portion, if any, of such Proposition C Revenues it will receive. For a summary of historical taxable retail sales within the City of West Covina, see the table entitled “City of West Covina Taxable Sales” in Appendix B. Proposition C Fund Financial Statements. The following tables present the Balance Sheet and the Schedule of Revenues, Expenditures and Changes in Fund Balances relating to the City of West Covina’s Proposition C Fund for the past five Fiscal Years. CITY OF WEST COVINA PROPOSITION C FUND BALANCE SHEET Fiscal Year 2012-13 Fiscal Year 2013-14 Fiscal Year 2014-15 Fiscal Year 2015-16 Fiscal Year 2016-17 Assets Cash and Investments $ 1,232,892 $ 809,073 $ 839,545 $ 1,184,422 $ 1,451,899 Receivables, net: Taxes 137,051 -- -- -- -- Interest 653 316 225 727 322 Total Assets $ 1,370,596 $ 809,389 $ 839,770 $ 1,185,149 $ 1,452,221 Liabilities, Deferred Inflows of Resources and Fund Balances Accounts payable $ 92,385 $ 50,016 $ 150,102 $ 139,838 $ 157,862 Other accrued liabilities 4,295 5,322 8,921 5,526 5,028 Total Liabilities $ 96,680 $ 55,338 $ 159,023 $ 145,364 $ 162,890 Fund Balances Restricted: Community Services $ 1,273,916 $ 754,051 $ 680,747 $ 1,039,785 $ 1,289,331 Unassigned -- -- -- -- -- Total Fund Balances $ 1,273,916 $ 754,051 $ 680,747 $ 1,039,785 $ 1,289,331 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 1,370,596 $ 809,389 $ 839,770 $ 1,185,149 $ 1,452,221 Source: City of West Covina. 30 CITY OF WEST COVINA PROPOSITION C FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES Fiscal Year 2012-13 Fiscal Year 2013-14 Fiscal Year 2014-15 Fiscal Year 2015-16 Fiscal Year 2016-17 Revenues Taxes $ 1,449,734 $ 1,512,971 $ 1,576,738 $ 1,617,352 $ 1,644,472 Investment Income 2,984 2,171 1,810 6,156 7,989 Other Revenues -- -- -- -- 408 Total Revenues $ 1,452,718 $ 1,515,142 $ 1,578,548 $ 1,623,508 $ 1,652,869 Expenditures Current: General Government $ -- $ -- $ -- $ -- $ 1,071 Public Works 251,589 1,032,928 542,676 275,593 547,594 Community Services 765,436 889,518 960,182 854,722 845,928 Community Development 84,200 112,561 148,994 135,355 8,730 Total Expenditures $ 1,101,225 $ 2,035,007 $ 1,651,852 $ 1,265,670 $ 1,403,323 Excess of Revenues Over (Under) Expenditures $ 351,493 $ (519,865) $ (73,304) $ 357,838 $ 249,546 Other Financing Sources (Uses) Transfers in $ -- $ -- $ -- $ 1,200 $ -- Fund Balances - Beginning of Year $ 922,423 $ 1,273,916 $ 754,051 $ 680,747 $ 1,039,785 Fund Balances - End of Year $ 1,273,916 $ 754,051 $ 680,747 $ 1,039,785 $ 1,289,331 Source: City of West Covina. MAXIMUM ANNUAL DEBT SERVICE COVERAGE The following tables set forth the maximum annual debt service coverage allocated to each Local Agency with respect to the Certificates. The maximum annual debt service coverage is based upon Measure R Revenues, Measure M Revenues and Proposition C Revenues, as applicable, projected to be allocated to each Local Agency for Fiscal Year 2017-18. See the captions “MEASURE R REVENUES; MEASURE R RECEIPTS,” “MEASURE M REVENUES; MEASURE M RECEIPTS” and “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS.” Measure R Receipts constitute the portion of the Measure R Revenues allocated by MTA to the City of West Covina pursuant to the Measure R Ordinance, to the extent that a Project constitutes a Measure R Project, for deposit in the Pledged Tax Fund in accordance with the City of West Covina’s 2018 Installment Sale Agreement. Measure M Receipts constitute the portion of the Measure M Revenues allocated by MTA to each Local Agency pursuant to the Measure M Ordinance, to the extent that a Project constitutes a Measure M Project, for deposit in the Pledged Tax Fund in accordance with the 2018 Installment Sale Agreements. Proposition C Receipts constitute the portion of the Proposition C Revenues allocated by MTA to the City of West Covina pursuant to the Proposition C Ordinance, to the extent that a Project constitutes a Proposition C Project, for deposit in the Pledged Tax Fund in accordance with the City of West Covina’s 2018 Installment Sale Agreement. The City of Claremont’s Project constitutes a Measure M Project. The City of 31 West Covina’s Project constitutes Measure R Projects, Measure M Projects and Proposition C Projects. See the caption “THE LOCAL AGENCIES AND THE PROJECTS.” MAXIMUM ANNUAL DEBT SERVICE COVERAGE BASED UPON FISCAL YEAR 2017-18 MEASURE M REVENUES ALLOCATED TO THE CITY OF CLAREMONT Fiscal Year 2017-18 Measure M Revenues(1) Maximum Annual Installment Sale Payments(2)* Debt Service Coverage(2)* $[_________] $[_________] [____]x (1) Source: City of Claremont. (2) Source: Underwriter. MAXIMUM ANNUAL DEBT SERVICE COVERAGE BASED UPON FISCAL YEAR 2017-18 MEASURE R REVENUES, MEASURE M REVENUES AND PROPOSITION C REVENUES ALLOCATED TO THE CITY OF WEST COVINA Fiscal Year 2017-18 Measure R Revenues(1) Fiscal Year 2017-18 Measure M Revenues(1) Fiscal Year 2017-18 Proposition C Revenues(1) Total Revenues Maximum Annual Installment Sale Payments(2)* Debt Service Coverage(2)* $[_________] $[_________] $[_________] $[_________] $[_________] [____]x (1) Source: City of West Covina. (2) Source: Underwriter. LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY MTA was established in 1993 pursuant to the provisions of Section 130050.2 et seq. of the California Public Utilities Code. MTA is the consolidated successor entity to both the Southern California Rapid Transit District (the “District”) and the Commission. As the consolidated successor entity, MTA succeeded to all powers, duties, rights, obligations, liabilities, indebtedness (bonded or otherwise), immunities, and exemptions of the Commission and the District, including the Commission’s responsibility for planning, engineering, and constructing a county-wide rail transit system. The Commission was authorized, subject to approval by the electorate of the County, to adopt a retail transactions and use tax ordinance, with the revenues of such tax to be used for public transit purposes. MTA is governed by a 14-member Board of Directors (the “MTA Board”). The MTA Board is composed of the five members of the County of Los Angeles Board of Supervisors, the Mayor of the City of Los Angeles, two public members, and one member of the City Council of the City of Los Angeles, four members who are either a mayor or a member of a city council of a city in the County (other than the City of Los Angeles) and who have been appointed by the Los Angeles County City Selection Committee, and a nonvoting member appointed by the Governor. The MTA Board exclusively exercises and discharges the following powers and responsibilities: (i) establishment of overall goals and objectives; (ii) adoption of the aggregate budget for all of its organizational units; (iii) designation of additional municipal bus operators under criteria enumerated in the California Public Utilities Code; (iv) approval of all final rail corridor selections; (v) final approval of labor contracts covering * Preliminary, subject to change. 32 employees of MTA and its organizational units; (vi) establishment of MTA’s organizational structure; (vii) conducting hearings and setting fares for the operating organizational units; (viii) approval of transportation zones; (ix) approval of any debt instrument with a maturity date exceeding the end of the fiscal year in which it is issued; (x) approval of benefit assessment districts and assessment rates; and (xi) approval of contracts for construction and transit equipment acquisition which exceed $5,000,000 and making findings in connection with certain procurement decisions. CERTIFICATE INSURANCE The information under this caption has been prepared by the Insurer for inclusion in this Official Statement. None of the Authority, the City of Claremont, the City of West Covina or the Underwriter has reviewed this information, nor do the Authority, the City of Claremont, the City of West Covina or the Underwriter make any representation with respect to the accuracy or completeness thereof. The following information is not a complete summary of the terms of the Policy and reference is made to Appendix G for a specimen of the Policy. [TO COME] RISK FACTORS The following information should be considered by prospective investors in evaluating the Certificates. However, the following does not purport to be an exhaustive listing of risks and other considerations may be relevant to making an investment decisions with respect to the Certificates. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. Installment Sale Payments Constitute Limited Obligations The obligation of each Local Agency to make Installment Sale Payments under the applicable 2018 Installment Sale Agreement is a special obligation of such Local Agency, payable solely from the Measure R Receipts, the Measure M Receipts and the Proposition C Receipts, as applicable, does not constitute a debt of such Local Agency, any other local agency, the Authority, the State or any political subdivision of the State within the meaning of any constitutional or statutory debt limitation or restriction, and does not constitute an obligation for which such Local Agency, any other local agency, the State or any political subdivision of the State is obligated to levy or pledge any form of taxation or for which such Local Agency, any other local agency, the State, or any political subdivision of the State has levied or pledged any form of taxation. The Authority has no taxing power. Measure M Receipts As described under the caption “MEASURE M REVENUES; MEASURE M RECEIPTS,” the Measure M Sales Tax commenced on July 1, 2017 and there is no history of collection or history of allocation of the Measure M Local Return, which constitutes Measure M Receipts allocable to each Local Agency for the payment of Installment Sale Payments under the 2018 Installment Sale Agreements. In addition, the City of Claremont is solely pledging its Measure M Receipts to the payment of Installment Sale Payments under the City of Claremont’s 2018 Installment Sale Agreement. No assurances can be made as to the sufficiency of Measure M Receipts to pay the Installment Sale Payments under the 2018 Installment Sale Agreements. Passive Revenue Source The payment of principal and interest with respect to the Certificates is secured solely by a pledge of Installment Sale Payments, which in turn are secured by a pledge by each Local Agency of such Local Agency’s Measure R Receipts, the Measure M Receipts and Proposition C Receipts, as applicable, and certain funds held under the Trust Agreement. The Local Agencies do not have any control over the amount of Measure R Receipts, 33 Measure M Receipts and Proposition C Receipts, as applicable, to be received by any such Local Agency because: (i) Measure R Revenues, Measure M Revenues and Proposition C Revenues constitute revenues of MTA derived from a retail transactions and use tax imposed in the County of Los Angeles pursuant to the Measure R Sales Tax Act and the Measure R Ordinance and the Measure M Sale Tax Act and the Measure M Ordinance, respectively, the number of transactions and revenues generated under which tax a Local Agency has no ability to control; and (ii) the Local Agencies do not have any control over the collection or distribution procedures related to any State taxes or local retail transactions and use taxes. There can be no assurance that Measure R Receipts, Measure M Receipts and Proposition C Receipts will be available in the amounts estimated in this Official Statement. A decrease in Measure R Revenues, Measure M Revenues or Proposition C Revenues would adversely affect the amount and/or availability of Measure R Receipts or Measure M Revenues, respectively. As described above under the caption “MEASURE M REVENUES; MEASURE M RECEIPTS,” the City of Claremont’s Measure M Receipts constitute the sole security for the payment of the Installment Sale Payments under the City of Claremont’s 2018 Installment Sale Agreement. In addition, each Local Agency must continuously meet certain requirements set forth in the Measure R Ordinance, the Measure M Ordinance and the Proposition C Ordinance, as applicable, in order to be eligible to receive Measure R Revenues, Measure M Revenues and Proposition C Revenues, respectively, from MTA and apply Measure R Receipts, Measure M Receipts and Proposition C Receipts to pay the applicable Installment Sale Payments. Such requirements include the annual adoption by each Local Agency of a resolution approving such Local Agency’s Five-Year Capital Improvement Plan and compliance by such Local Agency with a maintenance of effort requirement. See the captions “MEASURE R REVENUES; MEASURE R RECEIPTS,” “MEASURE M REVENUES; MEASURE M RECEIPTS” and “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS.” Increased Internet Use May Reduce Sales Tax Revenues The increasing use of the Internet to conduct electronic commerce may affect the levels of Measure R Revenues, Measure M Revenues and Proposition C Revenues. Internet sales of physical products by businesses that are located in the State, and Internet sales of physical products delivered to the State by businesses that are located outside of the State, are generally subject to sales taxes. However, the Local Agencies believe that many of these transactions may avoid taxation either through error or deliberate non-reporting, which potentially reduces the amount of Measure R Revenues, Measure M Revenues and Proposition C Revenues. As a result, the more that the Internet is used to conduct electronic commerce, along with the failure to collect sales taxes on such Internet purchases, the more that the Local Agencies may experience reductions in Measure R Revenues, Measure M Revenues and Proposition C Revenues, as applicable. On September 23, 2011, Governor Jerry Brown signed into law a settlement with Amazon.com Inc., one of the largest internet retailers in the State. As a result, beginning in September 2012, Amazon.com began collecting taxes from its Internet sales in the State to remit to the Board of Equalization. Allocation of Measure R Revenues, Measure M Revenues and Proposition C Revenues to the Local Agencies The Board of Equalization administers collection of the Measure R Sales Tax, the Measure M Sales Tax and the Proposition C Sales Tax. The Board of Equalization, after deducting the costs of administering the Measure R Sales Tax, the Measure M Sales Tax and the Proposition C Sales Tax, has agreed to remit all Measure R Sales Tax, Measure M Sale Tax and Proposition Sales Tax revenues to the trustee for the MTA Bonds. Such trustee will thereafter immediately disburse the Measure R Local Return, the Measure M Local Return and the Proposition C Local Return, as applicable, to the MTA. The Measure R Local Return, the Measure M Local Return and the Proposition C Local Return do not serve as security for any of the MTA Bonds. Amounts constituting the Measure R Local Return, the Measure M Local Return and the Proposition C Local Return are transferred to the MTA for allocation of the respective Measure R Revenues, Measure M Revenues and Proposition C Revenues to the Local Agency as described herein. The trustee for the MTA Bonds will thereafter disburse moneys designated for local agencies to MTA, which allocates such Measure R Revenues, Measure M 34 Revenues and Proposition C Revenues to the Local Agencies as described herein. See the captions “MEASURE R REVENUES; MEASURE R RECEIPTS—Collection and Allocation of Measure R Revenues,” “MEASURE M REVENUES; MEASURE M RECEIPTS—Collection and Allocation of Measure M Revenues” and “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS—Collection and Allocation of Proposition C Revenues.” There can be no assurance that changes in the foregoing procedures or other actions undertaken or not undertaken by the Board of Equalization, the trustee for the MTA Bonds or MTA will not adversely affect the Local Agency’s receipt of the Measure R Revenues, Measure M Revenues or Proposition C Revenues. Limitations on Use of Measure R Revenues, Measure M Revenues and Proposition C Revenues Not all of the Measure R Revenues, Measure M Revenues and Proposition C Revenues allocated by MTA to the Local Agencies, as applicable, may be applied to pay the Installment Sale Payments. Only the Measure R Receipts, Measure M Receipts and Proposition C Receipts, as applicable, may be so applied. See the caption “INTRODUCTION—Security and Sources of Payment for the Certificates—Installment Sale Payments” for detailed definitions of such terms. Project Eligibility The projects to be constructed by each Local Agency must be designated by MTA as qualified projects for purposes of the local streets and roads program established under the Measure R Ordinance, the Measure M Ordinance and the Proposition C Ordinance, as applicable. Only such Measure R Projects, Measure M Project and Proposition C Projects are eligible to be financed from Measure R Receipts, Measure M Receipts and Proposition C Receipts, respectively. Although the City of West Covina believes that all of its Projects constitutes Measure R Projects, Measure M Projects and/or Proposition C Projects, and although the City of Claremont believes that all of its Projects constitutes Measure M Projects, there can be no assurance as to the continuing eligibility of such Projects for MTA’s local streets and roads program. See the captions “MEASURE R REVENUES; MEASURE R RECEIPTS—Collection and Allocation of Measure R Revenues,” “MEASURE M REVENUES; MEASURE M RECEIPTS—Collection and Allocation of Measure M Revenues” and “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS—Collection and Allocation of Proposition C Revenues.” Additional Contracts Subject to certain restrictions, each Local Agency is permitted to enter into other Contracts that constitute additional charges against its Measure R Receipts, Measure M Receipts and Proposition C Receipts, as applicable, without the consent of Owners of the Certificates. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES—Additional Contracts.” To the extent that other Contracts are executed by a Local Agency, the funds available to pay the applicable Installment Sale Payments may be decreased. In addition, there is no limitation on the ability of either Local Agency to execute any Contract at any time to refund any outstanding Contract. Loss of Tax Exemption As discussed under the caption “TAX MATTERS,” certain acts or omissions of a Local Agency in violation of its covenants in the Trust Agreement and the applicable 2018 Installment Sale Agreement could result in the interest represented by the Certificates being includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the Certificates. Should such an event of taxability occur, the Certificates would not be subject to a special prepayment or an increase in interest rates and would remain outstanding. 35 Limitations on Remedies; Bankruptcy The rights of the Owners of the Certificates are subject to the limitations on legal remedies against municipalities in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Additionally, enforceability of the rights and remedies of the Owners of the Certificates, and enforcement of each Local Agency’s obligations under its 2018 Installment Sale Agreement, may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or later in effect, equity principles that may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the federal Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against cities in the State. Bankruptcy proceedings under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs the bankruptcy proceedings for public agencies such as the applicable Local Agency and MTA, or the exercise of powers by the federal or State government, if initiated, could subject the owners of the Certificates to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation, or modification of their rights. Special Counsel has limited its opinion as to the validity and enforceability of the 2018 Installment Sale Agreements and the Trust Agreement to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of creditor’s rights, by equitable principles and by the exercise of judicial discretion. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation, or modification of the rights of the Owners. Constitutional Limitations on Appropriations State law imposes various taxing, revenue and appropriations limitations on public agencies such as the Local Agencies. See the caption “CONSTITUTIONAL PROVISIONS AFFECTING LOCAL AGENCY REVENUES AND APPROPRIATIONS” for a discussion of these limitations. State Legislature or Electorate May Change Items Subject to Measure R Sales Tax, Measure M Sales Tax or Proposition C Sales Tax With limited exceptions, the Measure R Sales Tax, the Measure M Sales Tax and the Proposition C Sales Tax will be imposed upon the same transactions and items that are subject to the sales tax levied Statewide by the State. In the past, the State Legislature and the State electorate have made changes to the transactions and items that are subject to the State’s general sales tax and, therefore, to the Measure R Sales Tax, the Measure M Sales Tax and the Proposition C Sales Tax. In 1991, the State Legislature enacted legislation that expanded the transactions and items that are subject to the general Statewide sales tax to include fuel for aviation and shipping, bottled water, rental equipment and newspapers and magazines. In 1992, the State electorate approved an initiative that eliminated candy, gum, bottled water and confectionery items as items that are subject to the State’s general sales tax. The State Legislature or the voters within the State, through the initiative process, could change or limit the transactions and items upon which the Statewide sales tax, the Measure R Sales Tax, the Measure M Sales Tax and the Proposition C Sales Tax are imposed. Any such change or limitation could have an adverse impact on the Measure R Revenues, the Measure M Revenues and the Proposition C Revenues collected and the portion of such Measure R Revenues, Measure M Revenues and Proposition C Revenues, and, correspondingly, the portion of Measure R Receipts, Measure M Receipts and Proposition C Receipts, allocated by MTA to the Local Agencies, as applicable. For a further description of the Measure R Sales Tax, the Measure M Sales Tax and the Proposition C Sales Tax, see the captions “MEASURE R REVENUES; MEASURE R RECEIPTS,” 36 “MEASURE M REVENUES; MEASURE M RECEIPTS” and “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS.” Increases in Sales Tax Rate May Cause Declines in Measure R Revenues, Measure M Revenues and Proposition C Revenues The 0.5% Measure R Sales Tax, the 0.5% Measure M Sales Tax and the 0.5% Proposition C Sales Tax imposed in the County for transportation purposes and administered by MTA is in addition to the sales or use tax levied Statewide by the State. On November 6, 2012, State voters approved Proposition 30, which, among other things, increased the Statewide tax rate by one quarter of one percent (increasing the Statewide rate from 7.25% to 7.50%) for four years, effective January 1, 2013, through December 31, 2016, and the total County of Los Angeles tax to 8%. The current Statewide tax rate is ___%. Additional future increases, if any, in the State sales tax or the sales tax levied in the County could have an adverse effect on consumer spending decisions and consumption, resulting in a reduction of Measure R Revenues, Measure M Revenues and Proposition C Revenues. No Liability of Authority to Owners Subject to any provisions in the Trust Agreement to the contrary, the Authority has no obligation or liability to the Owners of the Certificates with respect to the payment when due of the Installment Sale Payments by either Local Agency or with respect to the performance by either Local Agency of other agreements and covenants required to be performed by such Local Agency under the applicable 2018 Installment Sale Agreement or the Trust Agreement, or with respect to the performance by the Trustee of any of the Trustee’s rights or obligations under the Trust Agreement. Economic, Political, Social and Environmental Conditions The collection of Measure R Sales Tax, Measure M Sales Tax and Proposition C Sales Tax revenues depends on the level of taxable sales transactions within the County, which, in turn, depends on the level of general economic activity in the County and the State generally. Prospective investors are encouraged to evaluate current and prospective economic, political, social and environmental conditions as part of an informed investment decision. Changes in economic, political, social or environmental conditions on a local, State, federal or international level may adversely affect investment risk generally. Such conditional changes may include (but are not limited to) the reduction or elimination of previously available State or federal revenues, fluctuations in business production, consumer prices or financial markets, unemployment rates, technological advancements, shortages or surpluses in natural resources or energy supplies, changes in law, social unrest, fluctuations in the crime rate, political conflict, acts of war or terrorism environmental damage and natural disasters. See the caption “—Natural Disasters.” Natural Disasters The occurrence of any natural disaster in or near the boundaries of the Local Agency, including, without limitation, fire, earthquake, landslide, high winds, drought or flood, could have an adverse material impact on the economy within the Local Agencies and the generation of sales and use taxes that constitute Measure R Revenues, Measure M Revenues and/or Proposition C Revenues, as applicable. Portions of each Local Agency may be at risk of damage or destruction from wildfires or subject to unpredictable seismic activity. Secondary Market There can be no guarantee that there will be a secondary market for the Certificates or, if a secondary market exists, that the Certificates can be sold for any particular price. Occasionally, because of general market conditions, adverse history or economic prospects connected with a particular issue, secondary marketing practices are suspended or terminated. Additionally, prices of issues for which a market is being made will 37 depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. Risks Associated with Bond Insurance In the event that a Local Agency defaults in the payment of principal or interest with respect to Certificates when due, the Owners of the Certificates will have a claim under the Policy for such payments. See the caption “CERTIFICATE INSURANCE.” In the event that the Insurer becomes obligated to make payments with respect to the Certificates, no assurance can be given that such event will not adversely affect the market for the Certificates. In the event that the Insurer is unable to make payments of principal or interest with respect to the Certificates when due under the Policy, the Certificates will be payable solely from Measure R Receipts, Measure M Receipts and Proposition C Receipts and amounts held in certain funds and accounts established under the Trust Agreement, as described under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES.” The insured long-term rating on the Certificates is dependent in part on the financial strength of the Insurer and its claims-paying ability. The Insurer’s financial strength and claims-paying ability are predicated upon a number of factors which could change over time. If the long-term ratings of the Insurer are lowered, such event could adversely affect the market for the Certificates. See the caption “RATINGS.” None of the City of Claremont, the City of West Covina, the Authority or the Underwriter has made an independent investigation of the claims-paying ability of the Insurer, and no assurance or representation regarding the financial strength or projected financial strength of the Insurer is being made by the City of Claremont, the City of West Covina, the Authority or the Underwriter in this Official Statement. Therefore, when making an investment decision with respect to the Certificates, potential investors should carefully consider the ability of the Authority to pay principal and interest with respect to the Certificates, assuming that the Policy is not available for that purpose, and the claims-paying ability of the Insurer through final maturity of the Certificates. So long as the Policy remains in effect and the Insurer is not in default of its obligations thereunder, the Insurer has certain notice, consent and other rights under the Trust Agreement and will have the right to control all remedies in the event of a default under the Trust Agreement. The Insurer is not required to obtain the consent of the Owners of the Certificates with respect to the exercise of remedies. See Appendix A. CONSTITUTIONAL PROVISIONS AFFECTING LOCAL AGENCY REVENUES AND APPROPRIATIONS Article XIIIB of the California Constitution – Limitations on Appropriations On November 6, 1979, State voters approved Proposition 4, the so-called Gann Initiative, which added Article XIIIB to the State Constitution (“Article XIIIB”). In June 1990, Article XIIIB was amended by the voters through their approval of Proposition 111. Article XIIIB limits the annual appropriations of the State and of any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted annually for changes in the cost of living, population and cost of services rendered by the governmental entity. The “base year” for establishing such appropriation limit is State fiscal year 1978-79 and the limit is to be adjusted annually to reflect changes in population and consumer prices. Adjustments in the appropriations limit of an entity may also be made if: (i) the financial responsibility for a service is transferred to another public entity or to a private entity; (ii) the financial source for the provision of services is transferred from taxes to other revenues; or (iii) the voters of the entity approve a change in the limit for a period of time not to exceed four years. Appropriations of an entity of local government that are subject to Article XIIIB include generally any authorization to expend during the fiscal year the proceeds of taxes levied by the State or other entity of local 38 government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds. Appropriations that are subject to limitation pursuant to Article XIIIB do not include debt service on indebtedness existing or legally authorized as of January 1, 1979 or on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for such purpose, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects and appropriations by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to any entity of government from: (i) regulatory licenses, user charges, and user fees to the extent such proceeds exceed the cost of providing the service or regulation; (ii) the investment of tax revenues; and (iii) certain State subventions received by local governments. Article XIIIB includes a requirement that if an entity’s revenues in any year exceed the amount permitted to be spent, the excess must be returned by revising tax rates or fee schedules over the subsequent two fiscal years. Article XIIIB allows voters to approve a temporary waiver of a government’s Article XIIIB limit. Such a waiver is often referred to as a “Gann limit waiver.” The length of any such waiver is limited to four years. The Gann limit waiver does not provide any additional revenues to a local government or allow a local government to finance additional services. Installment Sale Payments are subject to the Article XIIIB appropriations limitations. [CITIES OF CLAREMONT AND WEST COVINA TO CONFIRM][The City of Claremont and the City of West Covina report that they never made appropriations that exceeded the limitation on appropriations under Article XIIIB.] The impact of the appropriations limit on the financial needs of each Local Agency in the future is unknown. Articles XIIIC and XIIID of the California Constitution – The Right to Vote on Taxes On November 5, 1996, State voters approved Proposition 218, entitled the “Right to Vote on Taxes Act” (“Proposition 218”). Proposition 218 added Article XIIIC (“Article XIIIC”) and Article XIIID (“Article XIIID”) to the State Constitution, which Articles contain a number of provisions affecting the ability of local governments to levy and collect both existing and future taxes, assessments, fees and charges. The interpretation and application of certain provisions of Proposition 218 will ultimately be determined by the courts with respect to some of the matters discussed below. It is not possible at this time to predict with certainty the future impact of such interpretations. The provisions of Proposition 218, as so interpreted and applied, may affect the ability of a Local Agency to meet certain obligations. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes, even if deposited in a general fund, require a two-thirds vote. Article XIIIC further provides that any general purpose tax that is imposed, extended or increased without voter approval after December 31, 1994, may continue to be imposed only if approved by a majority vote in an election, which must be held within two years of November 5, 1996. The Local Agencies report that they have not imposed, extended or increased any such taxes that are currently in effect without voter approval. Article XIIIC also expressly extends the initiative power to give voters the power to reduce or repeal local taxes, assessments, fees and charges, regardless of the date that such taxes, assessments, fees and charges were imposed. Article XIIIC expands the initiative power to include reducing or repealing assessments, fees and charges, which had previously been considered administrative rather than legislative matters and therefore beyond the initiative power. This extension of the initiative power is not limited by the terms of Article XIIIC to fees imposed after November 6, 1996, and absent other legal authority could result in the retroactive reduction in any existing taxes, assessments, fees, or charges. No assurance can be given that the voters within the jurisdiction of the Local Agency will not, in the future, approve initiatives that reduce, repeal or prohibit the future imposition or increase of, local taxes, assessments, fees or charges that currently comprise a substantial part of the Local Agency’s general fund. The terms “local tax,” “assessments,” “fees” and “charges” are not 39 defined in Article XIIIC, and it is unclear whether these terms are intended to have the same meanings for purposes of Article XIIIC as for Article XIIID described below. If not, the scope of the initiative power under Article XIIIC potentially could include any general fund local tax, assessment, or fee that is not received from or imposed by the federal or State government or derived from investment income. Neither of the Local Agencies believes that it currently levies any property related “fees” or “charges” that it considers to be subject to challenge under Article XIIIC. The voter approval requirements of Proposition 218 reduce the flexibility of a local government to raise revenues for its general fund, and no assurance can be given that a Local Agency will be able to impose, extend, or increase taxes in the future to meet increased expenditure needs. Article XIIID also added several new provisions relating to how local governments may levy and maintain “assessments” for municipal services and programs. These provisions include, among other things: (i) a prohibition against assessments that exceed the reasonable cost of the proportional special benefit conferred on a parcel; (ii) a requirement that the assessment must confer a “special benefit,” as defined in Article XIIID, over and above any general benefits conferred; and (iii) a majority protest procedure that involves the mailing of a notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party. The term “Assessment” in Article XIIID is defined to mean any levy or charge upon real property for a special benefit conferred upon the real property and applies to landscape and maintenance assessments for open space areas, street medians, street lights, and parks. In addition, Article XIIID added several provisions affecting “fees” and “charges,” defined for purposes of Article XIIID to mean “any levy other than an ad valorem tax, a special tax, or an assessment, imposed by [a local government] upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service.” All new and existing property related fees and charges must conform to requirements prohibiting, among other things, fees and charges that: (i) generate revenues exceeding the funds required to provide the property related service; (ii) are used for any purpose other than those for which the fees and charges are imposed; (iii) are for a service not actually used by, or immediately available to, the owner of the property in question; or (iv) are used for general governmental services, including police, fire, ambulance or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Depending on the interpretation of what constitutes a “property related fee” under Article XIIID, there could be future restrictions on the ability of a Local Agency to charge its respective enterprise funds for various services provided. Further, before any property related fee or charge may be imposed or increased, written notice must be given to the record owner of each parcel of land affected by such fee or charge. The Local Agencies must then hold a hearing upon the proposed imposition or increase and, if written protests against the proposal are presented by a majority of the owners of the identified parcels, a Local Agency may not impose or increase the fee or charge. Neither the City of Claremont nor the City of West Covina believes that the provisions of Article XIIIC or Article XIIID will directly impact the Measure R Receipts, the Measure M Receipts or the Proposition C Receipts available to such Local Agency, as applicable, to make its Installment Sale Payments required pursuant to the applicable 2018 Installment Sale Agreement. Future Initiatives Article XIIIB, Article XIIIC and Article XIIID were each adopted as measures that qualified for the ballot pursuant to the State’s Constitutional initiative process. From time to time other initiative measures could be adopted that affect the ability of each Local Agency to increase or apply revenues and to make or increase appropriations or the ability of MTA to levy, collect or allocate the Measure R Sales Tax, the Measure M Sales Tax and the Proposition C Sales Tax, all of which could adversely impact the amount of Measure R Revenues, Measure M Revenues and/or Proposition C Revenues received by such Local Agency. 40 THE AUTHORITY The Authority is a joint powers agency organized pursuant to a Joint Powers Agreement among a number of California counties, cities, and special districts entered into pursuant to the provisions relating to the joint exercise of powers contained in Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code. Since its formation in 1988, the Authority has issued more than $50 billion in tax-exempt financings. Any obligation, other than the obligations represented by the Certificates, previously or to be issued or otherwise incurred by the Authority will be secured by instruments separate and apart from the Trust Agreement and the 2018 Installment Sale Agreements. The holders of such other obligations of the Authority will have no claim on the security for the Certificates and the Owners will have no claim on the security of such other obligations issued by the Authority. The Authority is governed by a seven-member commission and is currently comprised of three members from the California State Association of Counties, two members from the League of California Cities, one member from the City of Sacramento, and one member from the County of Sacramento (collectively, the “Commissioners”). Neither the Authority nor its Commissioners or officers have any obligations or liability to the Owners of the Certificates with respect to the payment of Installment Sale Payments by either Local Agency under its 2018 Installment Sale Agreement, or with respect to the performance of either Local Agency of other covenants made by such Local Agency in the applicable 2018 Installment Sale Agreement. TAX MATTERS [TO BE CONFIRMED BY BOND COUNSEL] In the opinion of Orrick, Herrington & Sutcliffe LLP (“Special Counsel”), Special Counsel to each Local Agency, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Installment Sale Payments paid by the applicable Local Agency under the applicable 2018 Installment Sale Agreement and received by the owners of the Certificates is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from State of California personal income taxes. Special Counsel is of the further opinion that such interest is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Special Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Complete copies of the proposed forms of opinions of Special Counsel are set forth in Appendix C hereto. To the extent the issue price of any maturity of the Certificates is less than the amount to be paid at maturity of such Certificates (excluding amounts stated to be interest and payable at least annually over the term of such Certificates), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each Owner thereof, is treated as interest on the Installment Sale Payments, which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Certificates is the first price at which a substantial amount of such maturity of the Certificates is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers). The original issue discount with respect to any maturity of the Certificates accrues daily over the term to maturity of such Certificates on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Certificates to determine taxable gain or loss upon disposition (including sale, prepayment, or payment on maturity) of such Certificates. Owners of the Certificates should consult their own tax advisors with respect to the tax consequences of ownership of Certificates with original issue discount, including the treatment of Owners who do not purchase such Certificates in the original offering to the public at the first price at which a substantial amount of such Certificates is sold to the public. 41 Certificates purchased, whether at original execution and delivery or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier prepayment date) (“Premium Certificates”) will be treated as having amortizable premium. No deduction is allowable for the amortizable premium in the case of obligations, like the Premium Certificates, the interest on the Installment Sale Payments of which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and an Owner’s basis in a Premium Certificate, will be reduced by the amount of amortizable premium properly allocable to such Owner. Owners of Premium Certificates should consult their own tax advisors with respect to the proper treatment of amortizable premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on the Installment Sale Payments. The Authority and each Local Agency has made certain representations and covenanted to comply with certain restrictions, conditions, and requirements designed to ensure that interest on the Installment Sale Payments will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Installment Sale Payments being included in gross income for federal income tax purposes, possibly from the date of original delivery of the Certificates. The opinion of Special Counsel assumes the accuracy of these representations and compliance with these covenants. Special Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Special Counsel’s attention after the date of delivery of the Certificates may adversely affect the value of, or the tax status of interest on, the Installment Sale Payments. Accordingly, the opinion of Special Counsel is not intended to, and may not, be relied upon in connection with any such actions, events, or matters. Although Special Counsel is of the opinion that interest on the Installment Sale Payments is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on the Installment Sale Payments may otherwise affect an Owner’s federal, state, or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Owner or the Owner’s other items of income or deduction. Special Counsel expresses no opinion regarding any such other tax consequences. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Installment Sale Payments to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Certificates. Prospective purchasers of the Certificates should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Special Counsel is expected to express no opinion. The opinion of Special Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Special Counsel’s judgment as to the proper treatment of the Certificates for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts. Furthermore, Special Counsel cannot give and has not given any opinion or assurance about the future activities of the Authority or either Local Agency, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof, or the enforcement thereof by the IRS. The Authority and the Local Agencies have covenanted, however, to comply with the requirements of the Code, although the Authority’s obligation to comply with the requirements of the Code is dependent in part upon actions of each Local Agency and is contingent upon indemnification of the Authority’s expenses therefor. Special Counsel’s engagement with respect to the Certificates ends with the delivery of the Certificates and, unless separately engaged, Special Counsel is not obligated to defend the Authority, the Local Agencies, or the Owners regarding the tax-exempt status of the Certificates in the event of an audit examination by the IRS. In addition, successful defense of an audit examination by the IRS will require participation by the Authority, and the Authority is not obligated to incur expenses to defend an audit examination unless its expenses are paid 42 or reimbursed by the Local Agency. Under current procedures, parties other than the Authority, the Local Agencies, and their appointed counsel, including the Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt obligations is difficult, obtaining an independent review of IRS positions with which the Authority or the Local Agencies legitimately disagree may not be practicable. Any action of the IRS, including but not limited to selection of the Certificates for audit, or the course or result of such audit, or an audit of obligations presenting similar tax issues may affect the market price for, or the marketability of, the Certificates, and may cause the Authority, the Local Agencies, or the Owners to incur significant expense. RATINGS S&P is expected to assign the Certificates the rating of “__” based upon the delivery of the Policy by the Insurer at the time of execution and delivery of the Certificates. S&P is also expected to assign the Certificates the underlying rating of “__” notwithstanding the delivery of the Policy. There is no assurance that any credit rating given to the Certificates will be maintained for any period of time or that a rating may not be lowered or withdrawn entirely by S&P if, in the judgment of S&P, circumstances so warrant. Any downward revision or withdrawal of such rating may have an adverse effect on the market price of the Certificates. The ratings reflect only the views of S&P, and an explanation of the significance of such ratings may be obtained from S&P. Generally, rating agencies base their ratings on information and materials furnished to them (which may include information and material from the Local Agency that is not included in this Official Statement) and on investigations, studies and assumptions by the rating agencies. In providing a rating on the Certificates, S&P may have performed independent calculations of coverage ratios using its own internal formulas and methodology, which may not reflect the provisions of the Trust Agreement or the 2018 Installment Sale Agreement. Neither the City of Claremont, the City of West Covina nor the Authority makes any representations as to any such calculations, and such calculations should not be construed as a representation by either Local Agency or the Authority as to past or future compliance with any financial covenants, the availability of particular revenues for the payment of debt service or for any other purpose. None of the City of Claremont, the City of West Covina, the Authority or the Underwriter makes any representation as to the Insurer’s creditworthiness and no representation that the Insurer’s credit rating will be maintained in the future. The rating agencies have previously taken action to downgrade the ratings of certain municipal bond insurers and have published various releases outlining the processes that they intend to follow in evaluating the ratings of financial guarantors. For some financial guarantors, the result of such evaluations could be a rating affirmation, a change in rating outlook, a review for downgrade or a downgrade. Potential investors are directed to the rating agencies for additional information on the applicable rating agencies’ evaluations of the financial guaranty industry and individual financial guarantors, including the Insurer. See the caption “CERTIFICATE INSURANCE” for further information relating to the Insurer. CONTINUING DISCLOSURE In connection with the execution and delivery of the Certificates, each Local Agency will enter into a Continuing Disclosure Agreement. The Continuing Disclosure Agreements are executed for the benefit of the Owners and obligations each Local Agency to provide certain financial information and operating data by not later than April 1 following the end of each Local Agency’s Fiscal Year (currently each Local Agency’s Fiscal Year ends on June 30) (the “Annual Report”), commencing April 1, 2019 with the report for Fiscal Year ending June 30, 2018, and to provide notice of the occurrence certain events. The Annual Report and the notices of enumerated events will be filed by each Local Agency or the Dissemination Agent with EMMA. The specific nature of the information to be contained in the Annual Report and the notices of enumerated events is set forth 43 in Appendix D. These covenants have been made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12 adopted by the Securities and Exchange Commission. Although each Local Agency has covenanted in a Continuing Disclosure Agreement to provide notice of rating changes with respect to the Certificates, information relating to rating changes may be publicly available from the rating agencies prior to such information being provided to the Local Agencies and prior to the date by which each Local Agency is obligated to file a notice of rating change. Owners of the Certificates are directed to the rating agencies and official media outlets for the most current rating information with respect to the Certificates. [DISCLOSURE RE PAST CITY OF CLAREMONT COMPLIANCE AND REMEDIAL MEASURES, IF ANY, TO COME] [Except as disclosed in the prior paragraph, the City of Claremont has not in the past five years failed to comply with any previous continuing disclosure undertaking in any material respect.] [DISCLOSURE RE PAST CITY OF WEST COVINA COMPLIANCE AND REMEDIAL MEASURES, IF ANY, TO COME] [Except as disclosed in the prior paragraph, the City of West Covina has not in the past five years failed to comply with any previous continuing disclosure undertaking in any material respect.] MUNICIPAL ADVISOR Each Local Agency has retained Urban Futures, Inc., Orange, California, as municipal advisor (the “Municipal Advisor”) in connection with the execution and delivery of the Certificates. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities. UNDERWRITING The Certificates will be purchased by Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) pursuant to a Certificate Purchase Agreement, dated the date of this Official Statement (the “Purchase Contract”), by and among the Authority, each Local Agency and the Underwriter. Under the Purchase Contract, the Underwriter has agreed to purchase all, but not less than all, of the Certificates for an aggregate purchase price of $______ (representing the principal amount of the Certificates, less an Underwriter’s discount of $______, plus/less a net original issue premium/discount of $______). The Purchase Contract provides that the Underwriter will purchase all of the Certificates if any are purchased, the obligation to make such a purchase being subject to certain terms and conditions set forth in the Purchase Contract, the approval of certain legal matters by counsel and certain other conditions. The initial public offering prices stated on the inside cover page of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Certificates to certain dealers (including dealers depositing Certificates into investment trusts), dealer banks, banks acting as agents and others at prices lower than said public offering prices. 44 NO LITIGATION The Authority To the knowledge of the Authority, 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 Authority seeking to restrain or enjoin the execution, delivery or sale of the Certificates, or in any way contesting or affecting any proceedings of the Authority taken concerning the sale thereof, the pledge or application of any moneys or security provided for the payment of the Certificates, the validity or enforceability of the documents executed by the Authority in connection with the Certificates, the completeness or accuracy of this Official Statement, or the existence or powers of the Authority relating to the sale of the Certificates. The Local Agencies The City of Claremont will certify that, to the best of its knowledge, and except for its Claremont Validation Action, 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 of which the City of Claremont has received service of process or threatened against the City of Claremont, seeking to restrain or enjoin the execution or delivery of the Certificates, the Trust Agreement or the applicable 2018 Installment Sale Agreement, or in any way contesting or affecting the validity of the foregoing or any proceeding of the City of Claremont taken with respect to any of the foregoing or that will materially affect the ability of the City of Claremont to pay its Installment Sale Payments when due. The City of West Covina will certify that, to the best of its knowledge, and except for its West Covina Validation Action, 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 of which the City of West Covina has received service of process or threatened against the City of West Covina, seeking to restrain or enjoin the execution or delivery of the Certificates, the Trust Agreement or the applicable 2018 Installment Sale Agreement, or in any way contesting or affecting the validity of the foregoing or any proceeding of the City of West Covina taken with respect to any of the foregoing or that will materially affect the ability of the City of West Covina to pay its Installment Sale Payments when due. CERTAIN LEGAL MATTERS The validity and enforceability of the 2018 Installment Sale Agreements and the Trust Agreement and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Special Counsel to the Local Agencies. Complete copies of the proposed forms of Special Counsel opinions are set forth in Appendix C. Special Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the Authority by Orrick, Herrington & Sutcliffe LLP, Los Angeles, for the City of Claremont by Best Best & Krieger LLP, Irvine, California, its City Attorney, for the City of West Covina by Jones & Mayer, Fullerton, California, its City Attorney, for the Underwriter by Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California, as Underwriter’s Counsel, for the Trustee by its counsel and for the Insurer by its counsel. MISCELLANEOUS The purpose of this Official Statement is to supply information to prospective buyers of the Certificates. Quotations from and summaries and explanations of the Certificates and other documents contained herein do not purport to be complete, and reference is made to said documents for full and complete statements of their provisions. 45 This Official Statement and its distribution have been duly authorized and approved by the Authority and each Local Agency. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, as agent for and on behalf of each Local Agency By: Authorized Signatory A-1 APPENDIX A SUMMARY OF PRINCIPAL LEGAL DOCUMENTS [TO COME FROM BOND COUNSEL] B-1 APPENDIX B GENERAL INFORMATION REGARDING PARTICIPATING LOCAL AGENCIES The following information is presented as general background data. The Certificates are payable solely from the Revenues as described in the Official Statement. The taxing power of the Local Agencies, the County of Los Angeles, the State or any political subdivision thereof is not pledged to the payment of the Certificates. THE CITY OF CLAREMONT General The City of Claremont (the “City of Claremont”) is located in the County of Los Angeles (the “County”) approximately 30 miles east of downtown Los Angeles in the eastern San Gabriel Valley. The City of Claremont was incorporated as a general law city in 1907. The City of Claremont has an area of approximately thirteen square miles [and is virtually completely built out]. The City of Claremont provides a wide range of municipal services, including police, fire and emergency medical; construction and maintenance of streets, traffic signalization and other infrastructure; planning and building safety; and social, recreational and cultural activities and events. In addition to general municipal activities, the City of Claremont provides a broad range of services including: police protection, solid waste collection, maintenance of streets and infrastructure, planning and zoning activities, recreational activities, and general administrative services. Government The City of Claremont operates under a Council/Manager form of government. Councilmembers are elected at large to four year staggered terms. The Mayor and Mayor Pro Tem are selected by the Councilmembers and the City Manager is appointed by the Councilmembers. The population of the City of Claremont is estimated to be approximately 36,218. The City Council members and the expiration dates of their respective terms are as follows: Name Office Term Expires Larry Schroeder Mayor November 2020 Opanyi Nasiali Mayor Pro Tem November 2018 Sam Pedroza Council Member November 2018 Corey Calaycay Council Member November 2020 Joe Lyons Council Member November 2018 B-2 Retail Sales The table below present taxable sales for the years 2007 through 2015 for the City of Claremont. CITY OF CLAREMONT TAXABLE SALES (DOLLARS IN THOUSANDS) Year Permits Taxable Transactions 2007 873 $401,725 2008 907 305,999 2009 779 238,390 2010 792 233,141 2011 788 266,938 2012 814 301,708 2013 905 308,489 2014 933 328,678 2015 1,038 331,142 Source: California State Board of Equalization, Research and Statistics Division. See the caption “THE COUNTY OF LOS ANGELES—Retail Sales” for taxable sales information for the County as a whole. THE CITY OF WEST COVINA General The City of West Covina (the “City of West Covina”) is located in the County of Los Angeles (the “County”) approximately 20 miles east of downtown Los Angeles in the San Gabriel Valley. The City of West Covina was incorporated as a general law city in 1923. The City of West Covina has an area of approximately sixteen square miles and is virtually completely built out. The City of West Covina provides a wide range of municipal services, including police, fire and emergency medical; construction and maintenance of streets, traffic signalization and other infrastructure; planning and building safety; and social, recreational and cultural activities and events. The City of West Covina offers sixteen parks, four community centers, a sports complex and a county operated library. In addition to general municipal activities, the City of West Covina provides water via contracts with various providers, sewer and refuse via contracts with the Sanitation Districts of Los Angeles County, and recycling collection services via a contract with Athens Services. Government The City of West Covina operates under a Council/Manager form of government. Councilmembers are elected at large to four year alternating terms. The Mayor and Mayor Pro Tem are selected by the Councilmembers and the City Manager is appointed by the Councilmembers. The population of the City of West Covina is estimated to be approximately 107,847. B-3 The City Council members and the expiration dates of their respective terms are as follows: Name Office Term Expires Mike Spence Mayor November 2018 Lloyd Johnson Mayor Pro Tem November 2018 James Toma Council Member November 2018 Corey Warshaw Council Member November 2020 Tony Wu Council Member November 2020 Retail Sales The table below present taxable sales for the years 2007 through 2015 for the City of West Covina. CITY OF WEST COVINA TAXABLE SALES (DOLLARS IN THOUSANDS) Year Permits Taxable Transactions 2007 1,841 $1,353,441 2008 1,813 1,251,547 2009 1,631 1,081,262 2010 1,679 1,088,803 2011 1,683 1,156,370 2012 1,755 1,260,366 2013 1,705 1,334,588 2014 1,783 1,441,450 2015 2,100 1,522,812 Source: California State Board of Equalization, Research and Statistics Division. See the caption “THE COUNTY OF LOS ANGELES—Retail Sales” for taxable sales information for the County as a whole. THE COUNTY OF LOS ANGELES Population Historic population information for the City of Claremont, the City of West Covina, the County and the State of California is set forth below. B-4 CITY OF CLAREMONT, CITY OF WEST COVINA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA POPULATION Calendar Year Area 2013 2014 2015 2016 2017 City of Claremont 35,742 35,839 36,109 36,165 36,225 City of West Covina 106,985 107,275 107,489 107,819 107,813 County of Los Angeles 10,021,318 10,089,847 10,150,617 10,182,961 10,241,278 State of California 38,238,492 38,572,211 38,915,880 39,189,035 39,523,613 Source: State of California, Department of Finance E-4 Population Estimates for Cities, Counties and State, 2011-2017, with 2010 Benchmark, Sacramento, California, May 2017. Employment Residents of the Local Agency find employment throughout the Los Angeles-Long Beach-Glendale Metropolitan Division (the “Metropolitan Division”). The following tables set forth certain employment data for the Metropolitan Division. B-5 The following table represents the Annual Average Labor Force and Industry Employment for the Metropolitan Division for the years 201[2][3] through 201[6][7]. [TO BE UPDATED UPON AVAILABILITY OF 2017 DATA] LOS ANGELES-LONG BEACH-GLENDALE METROPOLITAN DIVISION INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE Category 2012 2013 2014 2015 2016 2017 Civilian Labor Force 4,915,300 4,967,000 5,006,800 5,000,600 5,043,300 [______] Civilian Employment 4,378,400 4,482,100 4,593,900 4,668,200 4,778,800 [______] Civilian Unemployment 536,900 485,000 412,900 332,400 264,500 [______] Civilian Unemployment Rate 10.9% 9.8% 8.2% 6.6% 5.2% [__]% Total Farm 5,400 5,500 5,200 5,000 5,300 [______] Total Nonfarm 4,034,900 4,111,700 4,188,700 4,281,500 4,390,400 [______] Total Private 3,478,100 3,560,500 3,632,500 3,713,000 3,814,200 [______] Goods Producing 485,200 493,500 492,700 496,800 497,100 [______] Natural Resources and Mining 4,300 4,500 4,300 3,900 3,600 [______] Construction 107,600 114,600 118,500 126,200 133,100 [______] Manufacturing 373,300 374,400 370,000 366,800 360,400 [______] Durable Goods 210,300 210,600 208,700 208,100 203,600 [______] Nondurable Goods 163,100 163,800 161,300 158,700 156,900 [______] Service Providing 3,549,700 3,618,200 3,696,000 3,784,700 3,893,300 [______] Private Service Providing 2,992,900 3,067,000 3,139,800 3,216,200 3,317,100 [______] Trade, Transportation and Utilities 767,400 781,800 798,800 816,400 829,900 [______] Wholesale Trade 211,900 218,700 222,500 225,700 227,000 [______] Retail Trade 400,900 405,600 413,000 419,200 422,300 [______] Transportation, Warehousing and Utilities 154,500 157,500 163,400 171,500 180,600 [______] Information 192,100 197,000 198,800 207,500 230,900 [______] Financial Activities 212,400 213,000 211,200 215,500 219,800 [______] Professional and Business Services 564,100 586,900 593,300 595,500 605,200 [______] Educational and Health Services 699,500 702,100 720,700 741,100 767,400 [______] Leisure and Hospitality 415,800 440,500 466,600 489,100 510,500 [______] Other Services 141,700 145,700 150,500 151,000 153,400 [______] Government 556,800 551,200 556,200 568,500 576,300 [______] Total, All Industries 4,040,300 4,117,200 4,193,900 4,286,500 4,395,700 [______] Note: The “Total, All Industries” data is not directly comparable to the employment data found herein. Source: State of California, Employment Development Department, Labor Market Information Division, Los Angeles-Long Beach-Glendale Metropolitan Division, Industry Employment & Labor Force - by Annual Average, March 2016 Benchmark. B-6 The following table summarizes the labor force, employment and unemployment figures for the years 2013 through 2017 for the City of Claremont, the City of West Covina, the County, the State and the nation as a whole. THE CITY OF CLAREMONT, THE CITY OF WEST COVINA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA AND UNITED STATES AVERAGE ANNUAL CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT Year and Area Labor Force(1) Employment(2) Unemployment(3) Unemployment Rate 2013 Claremont 16,600 15,000 1,500 9.3% West Covina 53,400 47,000 6,300 11.9 Los Angeles County 4,967,000 4,482,100 485,000 9.8 California 18,624,300 16,958,700 1,665,600 8.9 United States 155,389,000 143,929,000 11,460,000 7.4 2014 Claremont 16,700 15,400 1,300 7.8% West Covina 53,600 48,200 5,400 10.1 Los Angeles County 5,006,800 4,593,900 412,900 8.2 California 18,755,000 17,348,600 1,406,400 7.5 United States 155,922,000 146,305,000 9,617,000 6.2 2015 Claremont 16,700 15,700 1,100 6.3% West Covina 53,000 49,000 4,300 8.1 Los Angeles County 5,000,600 4,668,200 332,400 6.6 California 18,893,200 17,723,300 1,169,900 6.2 United States 157,130,000 148,834,000 8,296,000 5.3 2016 Claremont 16,900 16,000 800 5.0% West Covina 53,600 50,200 3,500 6.4 Los Angeles County 5,043,300 4,778,800 264,500 5.2 California 19,102,700 18,065,000 1,037,700 5.4 United States 159,187,000 151,436,000 7,751,000 4.9 2017(4) Claremont 17,400 16,600 800 4.6% West Covina 55,200 51,900 3,300 5.9 Los Angeles County 5,197,400 4,945,900 251,600 4.8 California 19,450,400 18,533,100 917,300 4.7 United States 160,381,000 153,861,000 6,520,000 4.1 (1) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table. (4) Not strictly comparable with data for prior years. Source: California Employment Development Department, March 2016 Benchmark and U.S. Department of Labor, Bureau of Labor Statistics. B-7 Largest Employers [TO BE UPDATED UPON RECEIPT OF COUNTY FINANCIAL REPORT FOR FISCAL YEAR 2017] The following table show the largest industries located in the County as of June 30, 2016. COUNTY OF LOS ANGELES LARGEST INDUSTRIES(1) Rank Industry Employees 1. Trade, Transportation and Utilities 825,000 2. Educational & Health Services 769,800 3. Professional & Business Services 616,100 4. Government 572,500 5. Leisure & Hospitality 514,600 6. Manufacturing 356,400 7. Financial Activities 220,400 8. Information 209,300 9. Other Services 154,200 10. Construction 131,400 (1) Employment by industry presented because County has been unable to obtain employment numbers for individual employers. Source: County of Los Angeles Comprehensive Annual Financial Report for the year ending June 30, 2016. Personal Income Personal income is the income that is received by all persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance. The personal income of an area is the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by the place of residence of the income recipients. B-8 Total personal income in the County increased by approximately 78% between 2002 and 2015. The following tables summarize personal income for the County for the years 2002 through 2015. LOS ANGELES COUNTY PERSONAL INCOME (DOLLARS IN THOUSANDS) Year Personal Income Annual Percent Change 2002 $304,515,072 -- 2003 320,691,933 5.3% 2004 344,353,101 7.4 2005 366,739,021 6.5 2006 397,307,110 8.3 2007 412,257,372 3.8 2008 425,573,170 3.2 2009 411,495,352 (3.3) 2010 424,813,015 3.2 2011 454,935,533 7.1 2012 486,733,508 7.0 2013 483,578,594 (0.6) 2014 512,846,779 6.1 2015 544,324,900 6.1 Source: U.S. Department of Commerce, Bureau of Economic Analysis. The following table summarizes per capita personal income for the County, the State of California and the United States for the years 2001 through 2015. This measure of income is calculated as the personal income of the residents of the area divided by the resident population of the area. LOS ANGELES COUNTY, STATE OF CALIFORNIA AND THE UNITED STATES PER CAPITA PERSONAL INCOME Year Los Angeles County California United States 2001 $30,729 $33,671 $31,540 2002 31,374 33,901 31,815 2003 32,834 35,234 32,692 2004 35,162 37,551 34,316 2005 37,474 39,521 35,904 2006 40,800 42,334 38,144 2007 42,499 43,692 39,821 2008 43,715 44,162 41,082 2009 42,043 42,224 39,376 2010 43,234 43,315 40,277 2011 45,969 45,820 42,453 2012 48,818 48,312 44,267 2013 48,140 48,471 44,462 2014 50,730 50,988 46,414 2015 53,521 53,741 48,112 Source: U.S. Department of Commerce, Bureau of Economic Analysis. B-9 Retail Sales The table below present taxable sales for the years 2007 through 2015 for the County. COUNTY OF LOS ANGELES TAXABLE SALES (DOLLARS IN THOUSANDS) Year Permits Taxable Transactions 2007 290,344 $137,820,418 2008 289,802 131,881,744 2009 264,928 112,744,727 2010 271,293 116,942,334 2011 266,868 126,440,737 2012 266,414 135,295,582 2013 263,792 140,079,708 2014 272,733 147,446,927 2015 310,063 151,033,781 Source: California State Board of Equalization, Research and Statistics Division. C-1 APPENDIX C PROPOSED FORMS OF SPECIAL COUNSEL OPINIONS Upon execution and delivery of the Certificates, Orrick, Herrington & Sutcliffe LLP, Special Counsel to the Local Agencies, proposes to render their final approving opinions with respect thereto in substantially the following forms: [TO BE CONFIRMED BY BOND COUNSEL] [Date of Delivery] City of Claremont Claremont, California California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program) (Final Opinion) Ladies and Gentlemen: We have acted as special counsel to the City of Claremont, California (the “Local Agency”) in connection with the execution and delivery of California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program), evidencing principal in the aggregate amount of $________ (the “Certificates”). In such connection, we have reviewed the Installment Sale Agreement, dated as of __________ 1, 2018 (the “Installment Sale Agreement”), between the Local Agency and the California Statewide Communities Development Authority (the “Authority”), the Trust Agreement, dated as of __________ 1, 2018 (the “Trust Agreement”), among the Authority, the Local Agency and Wilmington Trust, National Association, as trustee (the “Trustee”), the Tax Certificate, dated the date hereof (the “Tax Certificate”), opinions of counsel to the Local Agency, the Authority, the Trustee and others, certificates of the Local Agency, the Authority, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Installment Sale Agreement and the Trust Agreement. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions[, including a default judgment rendered on _______ __, 20__, by the Superior Court of the State of California for the County of Los Angeles in the action entitled City of Claremont v. All Persons Interested in the Matter, etc., Case No. ________,] and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Certificates has concluded with their execution and delivery, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and C-2 delivery thereof by, and validity against, any parties other than the Local Agency. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the first paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Installment Sale Agreement, the Trust Agreement and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Installment Sale Payments evidenced by the Certificates to be included in gross income for federal income tax purposes. In addition, we call attention to the fact that the rights and obligations under the Certificates, the Installment Sale Agreement, the Trust Agreement and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitations on legal remedies against public entities such as cities in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the real or personal property described in the Installment Sale Agreement or the accuracy or sufficiency of the description contained therein of any such property. Our services did not include financial or other non-legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Certificates and express no opinion with respect thereto. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The Installment Sale Agreement and the Trust Agreement have been duly executed and delivered by, and constitute the valid and binding obligations of, the Local Agency. 2. The obligation of the Local Agency to pay the Installment Sale Payments, and the interest thereon, and other payments required to be made by it under the Installment Sale Agreement is a special obligation of said Local Agency payable, in the manner provided in the Installment Sale Agreement, solely from Revenues and other funds provided for in the Installment Sale Agreement lawfully available therefor. 3. Assuming due authorization, execution and delivery of the Trust Agreement and the Certificates by the Trustee, the Certificates are entitled to the benefits of the Trust Agreement. 4. Interest on the Installment Sale Payments paid by the Local Agency under the Installment Sale Agreement and received by the registered owners of the Certificates is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Such interest is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although we observe that it is included in adjusted current earnings when calculating corporate alternative minimum taxable income. We express no opinion regarding other tax consequences related to the amount, accrual or receipt of such interest or the ownership or disposition of the Certificates. Faithfully yours, C-3 [TO BE CONFIRMED BY BOND COUNSEL] [Date of Delivery] City of West Covina West Covina, California California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program) (Final Opinion) Ladies and Gentlemen: We have acted as special counsel to the City of West Covina, California (the “Local Agency”) in connection with the execution and delivery of California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program), evidencing principal in the aggregate amount of $________ (the “Certificates”). In such connection, we have reviewed the Installment Sale Agreement, dated as of __________ 1, 2018 (the “Installment Sale Agreement”), between the Local Agency and the California Statewide Communities Development Authority (the “Authority”), the Trust Agreement, dated as of __________ 1, 2018 (the “Trust Agreement”), among the Authority, the Local Agency and Wilmington Trust, National Association, as trustee (the “Trustee”), the Tax Certificate, dated the date hereof (the “Tax Certificate”), opinions of counsel to the Local Agency, the Authority, the Trustee and others, certificates of the Local Agency, the Authority, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Installment Sale Agreement and the Trust Agreement. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions[, including a default judgment rendered on _______ __, 20__, by the Superior Court of the State of California for the County of Los Angeles in the action entitled City of West Covina v. All Persons Interested in the Matter, etc., Case No. ________,] and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Certificates has concluded with their execution and delivery, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Local Agency. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the first paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Installment Sale Agreement, the Trust Agreement and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Installment Sale Payments evidenced by the Certificates to be included in gross income for federal income tax purposes. In addition, we call attention to the fact that the rights and obligations under the Certificates, the Installment Sale Agreement, the Trust Agreement and the Tax Certificate and their enforceability may be subject C-4 to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitations on legal remedies against public entities such as cities in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the real or personal property described in the Installment Sale Agreement or the accuracy or sufficiency of the description contained therein of any such property. Our services did not include financial or other non-legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Certificates and express no opinion with respect thereto. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The Installment Sale Agreement and the Trust Agreement have been duly executed and delivered by, and constitute the valid and binding obligations of, the Local Agency. 2. The obligation of the Local Agency to pay the Installment Sale Payments, and the interest thereon, and other payments required to be made by it under the Installment Sale Agreement is a special obligation of said Local Agency payable, in the manner provided in the Installment Sale Agreement, solely from Revenues and other funds provided for in the Installment Sale Agreement lawfully available therefor. 3. Assuming due authorization, execution and delivery of the Trust Agreement and the Certificates by the Trustee, the Certificates are entitled to the benefits of the Trust Agreement. 4. Interest on the Installment Sale Payments paid by the Local Agency under the Installment Sale Agreement and received by the registered owners of the Certificates is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Such interest is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although we observe that it is included in adjusted current earnings when calculating corporate alternative minimum taxable income. We express no opinion regarding other tax consequences related to the amount, accrual or receipt of such interest or the ownership or disposition of the Certificates. Faithfully yours, D-1 APPENDIX D FORM OF LOCAL AGENCY CONTINUING DISCLOSURE AGREEMENT Upon execution and delivery of the Certificates, the Local Agency proposes to enter into a Continuing Disclosure Agreement in substantially the following form: This Continuing Disclosure Agreement (the “Disclosure Agreement”) is executed and delivered by and between the City of ____________ (the “Reporting Local Agency”) and _______________, in its capacity as dissemination agent (the “Dissemination Agent”), in connection with the execution and delivery of the California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program), in an aggregate principal amount of $________ (the “Certificates”). The Certificates are being executed and delivered by Wilmington Trust, National Association, as trustee (the “Trustee”), pursuant to the provisions of that certain Trust Agreement, dated as of April 1, 2018 (the “Trust Agreement”), by and among the California Statewide Communities Development Authority (the “Authority”), the Trustee, and the Reporting Local Agency, in order to provide funds to finance the acquisition, construction and improvement of certain public improvements within the jurisdiction of the Reporting Local Agency. The Reporting Local Agency and the Dissemination Agent hereby certify, covenant and agree as follows: Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the parties hereto for the benefit of the holders and Beneficial Owners of the Certificates and in order to assist the Participating Underwriter in complying with the Rule. Section 2. Definitions. In addition to the definitions set forth in the Trust Agreement and in the 2018 Installment Sale Agreement, dated as of April 1, 2018 (the “2018 Installment Sale Agreement”), by and between the Authority and the Reporting Local Agency, which apply to any capitalized terms used in this Disclosure Agreement, unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: “Annual Report” shall mean any Annual Report provided by the Reporting Local Agency pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. “Annual Report Date” shall mean each April 1 after the end of the Reporting Local Agency’s fiscal year, the end of which, as of the date of this Disclosure Agreement, is June 30. “Beneficial Owner” shall mean any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Certificates for federal income tax purposes. “Insurer” shall mean _______________, or any successor thereto or assignee thereof. “Dissemination Agent” shall mean, initially, _______________, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent that is so designated in writing by the Reporting Local Agency and has filed with the then-current Dissemination Agent a written acceptance of such designation. “Listed Events” shall mean any of the events listed in Sections 5(a) and (b) of this Disclosure Agreement. “MSRB” shall mean the Municipal Securities Rulemaking Board. D-2 “Official Statement” means the Official Statement dated March __, 2018, relating to the Certificates. “Participating Underwriter” shall mean Stifel, Nicolaus & Company, Incorporated, the original underwriter of the Certificates required to comply with the Rule in connection with offering of the Certificates. “Rule” shall mean Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. “SEC” shall mean the Securities and Exchange Commission. Section 3. Provision of Annual Reports. (a) The Reporting Local Agency shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 1, 2019 with the Annual Report for fiscal year 2017-18, provide to the MSRB an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Agreement. Not later than 15 calendar days prior to such date, the Reporting Local Agency shall provide its Annual Report to the Dissemination Agent, if such Dissemination Agent is a different entity than the Reporting Local Agency. The Annual Report must be submitted in an electronic format as prescribed by MSRB, accompanied by such identifying information as is prescribed by MSRB, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that any audited financial statements of the Reporting Local Agency may be submitted separately from the balance of the Annual Report, and not later than the date required above for the filings of the Annual Report. If the Reporting Local Agency’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(a). The Reporting Local Agency shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished hereunder. The Dissemination Agent may conclusively rely upon such certification of the Reporting Local Agency and shall have no duty or obligation to review such Annual Report. (b) If the Reporting Local Agency is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the Reporting Local Agency in a timely manner shall send to the MSRB a notice in substantially the form attached as Exhibit A. Such notice must be submitted in an electronic format as prescribed by the MSRB, accompanied by such identifying information as prescribed by the MSRB. (c) The Dissemination Agent shall: 1. provide any Annual Report received by it to the MSRB by the date required in subsection (a); 2. file a report with the Reporting Local Agency and the Trustee (if the Dissemination Agent is other than the Trustee) certifying that the Annual Report has been provided to the MSRB pursuant to this Disclosure Agreement and stating the date it was provided; and 3. take any other actions as are mutually agreed upon between the Dissemination Agent and the Reporting Local Agency. Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements of the Reporting Local Agency, which include information regarding the funds and accounts of the Reporting Local Agency, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If such audited financial statements are not available at the time D-3 the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The following information with respect to the Reporting Local Agency and the Certificates for the fiscal year to which the Annual Report relates, which information may be provided by its inclusion in the audited financial statements of the Reporting Local Agency for such fiscal year described in subsection (a) above: 1. Principal amount of the Certificates outstanding (including principal amount and years of maturity of Certificates, if any, called for prepayment in advance of maturity) and any bonds or certificates of participation issued or executed and delivered, as applicable, to refund the same. 2. Balance in the funds and accounts established under the Trust Agreement and the 2018 Installment Sale Agreement. 3. If the amount on deposit in the Reserve Fund is not equal to the Reserve Subaccount Requirement, the amount of the delinquency or surplus, as applicable. 4. A description of the status of construction of the Reporting Local Agency’s Project, including: (i) a description of any land use entitlements acquired or amended with respect to any portion of the Project during the period covered by the Annual Report; and (ii) any previously undisclosed legislative, administrative or judicial challenges to the development of the Project, if material. 5. Updated information set forth in the tables of the Official Statement entitled [“CITY OF CLAREMONT MEASURE M REVENUE ALLOCATION”][“CITY OF WEST COVINA MEASURE R REVENUE ALLOCATION,” “CITY OF WEST COVINA MEASURE M REVENUE ALLOCATION” and “CITY OF WEST COVINA PROPOSITION C REVENUE ALLOCATION.”] 6. Any material changes to the Reporting Local Agency’s allocation of [Measure M Receipts][Measure R Receipts, Measure M Receipts or Proposition C Receipts] or with respect to its expectations with regard to the anticipated or projected [Measure M Receipts][Measure R Receipts, Measure M Receipts or Proposition C Receipts]. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Reporting Local Agency or related public entities, that are available to the public on the MSRB’s Internet website or filed with the SEC. If the document included by reference is a final official statement, it must be available from the MSRB. The Reporting Local Agency shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Reporting Local Agency shall give, or shall cause the Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the Certificates in a timely manner not more than ten (10) Business Days after the event: 1. Principal and interest payment delinquencies. 2. Unscheduled draws on debt service reserves reflecting financial difficulties. D-4 3. Unscheduled draws on credit enhancements reflecting financial difficulties. 4. Substitution of credit or liquidity providers, or their failure to perform. 5. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability or Notices of Proposed Issue (IRS Form 5701 TEB). 6. Tender offers. 7. Defeasances. 8. Rating changes. 9. Bankruptcy, insolvency, receivership or similar proceedings. Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) Pursuant to the provisions of this Section 5, the Reporting Local Agency shall give, or shall cause the Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the Certificates, if material, in a timely manner not more than ten (10) Business Days after occurrence: 1. Unless described in Section 5(a)(5), other notices or determinations by the Internal Revenue Service with respect to the tax status of the Certificates or other events affecting the tax status of the Certificates. 2. Modifications to the rights of Certificateholders. 3. Optional, unscheduled or contingent Certificate calls. 4. Release, substitution or sale of property securing repayment of the Certificates. 5. Non-payment related defaults. 6. The consummation of a merger, consolidation or acquisition involving the Reporting Local Agency or the sale of all or substantially all of the assets of the Reporting Local Agency, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms. 7. Appointment of a successor or additional trustee or the change of the name of a trustee. (c) If the Reporting Local Agency determines that knowledge of the occurrence of a Listed Event under subsection (b) would be material under applicable federal securities laws, and if the Dissemination Agent is other than the Reporting Local Agency, the Reporting Local Agency shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to file a notice of such occurrence with the D-5 MSRB in an electronic format as prescribed by the MSRB in a timely manner not more than ten (10) Business Days after the event. (d) If the Reporting Local Agency determines that a Listed Event under subsection (b) would not be material under applicable federal securities laws and if the Dissemination Agent is other than the Reporting Local Agency, the Reporting Local Agency shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence. (e) The Reporting Local Agency hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the Reporting Local Agency and, if the Dissemination Agent is other than the Reporting Local Agency, the Dissemination Agent shall not be responsible for determining whether the Reporting Local Agency’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule. Section 6. Termination of Reporting Obligation. The obligations of the Reporting Local Agency and the Dissemination Agent specified in this Disclosure Agreement shall terminate upon the legal defeasance, prior prepayment or payment in full of all of the Certificates. If such termination occurs prior to the final maturity of the Certificates, the Reporting Local Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(a). Section 7. Dissemination Agent. The Reporting Local Agency may from time to time appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Reporting Local Agency shall act as Dissemination Agent. The initial Dissemination Agent shall be Urban Futures, Inc. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Reporting Local Agency may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to annual or event information to be provided hereunder, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the Reporting Local Agency or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel have complied with the requirements of the Rule at the time of the primary offering of the Certificates, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver: (i) is approved by holders of the Certificates in the manner provided in the Trust Agreement for amendments to the Trust Agreement with the consent of holders; or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interest of Certificate owners. The Reporting Local Agency shall describe any amendment to this Disclosure Agreement in the next Annual Report filed after such amendment takes effect. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the annual financial information containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. D-6 If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the Reporting Local Agency to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the MSRB. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Reporting Local Agency from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Reporting Local Agency chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Reporting Local Agency shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Reporting Local Agency to comply with any provisions of this Disclosure Agreement, the Insurer any Participating Underwriter or any holder or Beneficial Owner of the Certificates, or the Trustee on behalf of the holders of the Certificates, may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Reporting Local Agency to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed to be a default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the Reporting Local Agency to comply with this Disclosure Agreement shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Reporting Local Agency agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities that it may incur arising out of or in the exercise or performance of its duties as described hereunder, if any, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the Reporting Local Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Certificates. The Dissemination Agent shall not be responsible in any manner for the format or content of any notice or Annual Report prepared by the Reporting Local Agency pursuant to this Disclosure Agreement. The Reporting Local Agency shall pay the reasonable fees and expenses of the Dissemination Agent for its duties as described hereunder. Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given to the Dissemination Agent (if other than the Reporting Local Agency) and to the Reporting Local Agency as follows: Reporting Local Agency: [_______________] Dissemination Agent: [_______________] Insurer: [TO COME] Section 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Reporting Local Agency, the Insurer, the Dissemination Agent, the Trustee, the Participating Underwriter and D-7 holders and Beneficial Owners from time to time of the Certificates, and shall create no rights in any other person or entity. Section 14. Counterparts. This Disclosure Agreement may be executed in multiple counterparts, all of which shall constitute one and the same instrument, and each of which shall be deemed to be an original. Date: April __, 2018 CITY OF _______________ By: Authorized Signatory _______________, as Dissemination Agent By: Authorized Signatory D-8 EXHIBIT A TO CONTINUING DISCLOSURE AGREEMENT NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Obligor: City of _______________ Name of Certificates: California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program) Date of Execution and Delivery: April __, 2018 NOTICE IS HEREBY GIVEN that the City of _______________, California (the “Reporting Local Agency”) has not provided an Annual Report with respect to the above-named Certificates as required by the Continuing Disclosure Agreement, dated April __, 2018. The Reporting Local Agency anticipates that the Annual Report will be filed by __________________. Dated: CITY OF _______________ By: Authorized Signatory E-1 APPENDIX E CITY OF CLAREMONT COMPREHENSIVE AUDITED FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 F-1 APPENDIX F CITY OF WEST COVINA COMPREHENSIVE AUDITED FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 F-1 APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY ATTACHMENT NO. 5 $____________ CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) March __, 2018 CERTIFICATE PURCHASE AGREEMENT California Local Agencies As listed in Exhibit A hereto California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, California 95814 Ladies and Gentlemen: Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), offers to enter into this Certificate Purchase Agreement (this “Purchase Contract”) with the local agencies identified in Exhibit A hereto (severally and not jointly) (each, a “Local Agency” and, collectively, the “Local Agencies”) and the California Statewide Communities Development Authority (the “Authority”) with regard to the execution and delivery of its California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program) (the “Certificates”), which Purchase Contract, upon the acceptance hereof by the Local Agencies and the Authority, will be binding upon the Authority, the Local Agencies and the Underwriter. This offer is made subject to the written acceptance of this Purchase Contract by the Authority and the Local Agencies and the delivery of such acceptance to the Underwriter at or prior to 11:59 p.m., California time, on the date hereof, and, if it is not so accepted, such offer may be withdrawn by the Underwriter upon written notice to the Local Agencies and the Authority by the Underwriter at any time before its acceptance. The Authority is acting as sponsor of the California Statewide Communities Development Authority’s T.R.I.P. – Total Road Improvement Program (the “Program”) and, pursuant to the 2018 Installment Sale Agreements (as such term is defined herein), will appoint the Local Agencies as its agent with respect to certain aspects of the Local Agencies’ participation in the Program. For all purposes under this Purchase Contract, each Local Agency shall be, and shall be deemed to be, acting severally and not jointly with any other Local Agency. 1. Upon the terms and conditions and upon the basis of the representations, warranties, and agreements hereinafter set forth, the Underwriter hereby agrees to purchase, and the Local Agencies and the Authority hereby agree to sell to the Underwriter for such purpose, all (but not less than all) of the $____________ aggregate principal amount of the Certificates, which evidence and represent a proportionate and undivided interest in the payments (the “Installment Sale Payments”) made by each of the Local Agencies pursuant to its respective 2018 Installment Sale Agreement, dated as of April 1, 2018 (each, a “2018 Installment Sale Agreement” and, collectively, the “2018 Installment Sale Agreements”), by and between the applicable Local Agency and the Authority. The 2 purchase price of the Certificates shall be $_________ (representing the par amount of the Certificates, [plus][less] a [net] original issue [premium][discount] of $_________, less and Underwriter’s discount of $__________); it being acknowledged by the Local Agencies and the Authority that the Underwriter will on the Closing Date (as such term is defined herein), on behalf of the Local Agencies, wire a portion of the purchase price in the amounts of: (a) $__________, as the aggregate premium for the Certificate Insurance Policy (as such term is defined herein); and (b) $__________, as the aggregate premium for the Reserve Policy (as such term is defined herein), directly to the Certificate Insurer (as such term is defined herein). The Preliminary Official Statement with respect to the Certificates, dated March __, 2018 (the “Preliminary Official Statement”), as amended to conform to the terms of this Purchase Contract, and dated the date hereof, and with such changes and amendments as are mutually agreed to by the Authority, the Local Agency, and the Underwriter, including the cover page, the appendices, and all information incorporated therein by reference, is herein collectively referred to as the “Official Statement.” The Authority represents that it has deemed the sections of the Preliminary Official Statement entitled “THE AUTHORITY” and “NO LITIGATION—The Authority” to be final as of the date of Preliminary Official Statement, pursuant to Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”), and has delivered, or will deliver, a certificate to the Underwriter substantially in the form of Exhibit C-1. Each Local Agency represents that it has deemed the Preliminary Official Statement to be final as of its date, except for: (i) information regarding the Authority, any other Local Agency, the Certificate Insurer, the Certificate Insurance Policy and the Reserve Policy (as such terms are defined herein); (ii) the omission of the offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, dates and amounts of mandatory sinking fund payments, delivery dates, ratings and any other terms of the Certificates relating to such matters and any other information permitted to be omitted by the Rule, and has delivered, or will deliver, a certificate to the Underwriter substantially in the form of Exhibit C-2. 2. The Certificates shall mature on the dates and in the amounts, and shall evidence interest payable at the rates, set forth in Exhibit B and as further described in the Official Statement and shall be executed and delivered under and pursuant to the Trust Agreement, dated as of April 1, 2018 (the “Trust Agreement”), by and among the Authority, the Local Agencies, and Wilmington Trust, National Association (the “Trustee”). Concurrently with the execution and delivery of the Certificates, ____________________ (the “Certificate Insurer”) has agreed to deliver to the Trustee a municipal bond insurance policy (the “Certificate Insurance Policy”) and one or more municipal bond debt service reserve insurance policies (the “Reserve Policy”) for the benefit of the Certificates. The Certificate Insurance Policy will guaranty the scheduled payments when due of the principal and interest with respect to the Certificates. The Reserve Policy will be issued pursuant to the terms of a Debt Service Reserve Agreement, dated the Closing Date (the “Insurance Agreement”), by and between the applicable Local Agency and the Certificate Insurer. The Reserve Policy constitutes a Qualified Reserve Instrument under and as defined in the Trust Agreement, and will be issued by the Certificate Insurer in an amount equal to the Reserve Fund Requirement. Capitalized terms used herein without definition shall have the meanings given to such terms in the Trust Agreement. 3. The Underwriter agrees to make an initial bona fide public offering of all of the Certificates, at not in excess of the initial public offering yields or prices set forth on Exhibit B. 3 Following the initial public offering of the Certificates, the offering prices may be changed from time to time by the Underwriter. The Local Agencies and the Authority acknowledge and agree that: (a) the purchase and sale of the Certificates pursuant to this Purchase Contract is an arm’s-length commercial transaction among the Local Agencies, the Authority, and the Underwriter, and the only obligations that the Underwriter has to the Local Agencies and the Authority with respect to the transaction contemplated hereby expressly are set forth in this Purchase Contract; (b) in connection therewith and with the discussions, undertakings, and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as a Municipal Advisor (as such term is defined in Section 15B of The Securities Exchange Act of 1934, as amended) to the Local Agencies or the Authority; (c) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Local Agencies or the Authority with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Local Agencies or the Authority on other matters); (d) the Underwriter has financial and other interests that may differ from and be adverse to those of the Local Agencies or the Authority; and (e) the Local Agencies and the Authority have consulted their own legal, financial, accounting, tax and other advisors to the extent that they have deemed appropriate. 4. The Authority and each of the Local Agencies hereby authorize, or have previously authorized, the use by the Underwriter of: (a) the Trust Agreement; (b) each respective 2018 Installment Sale Agreement; (c) each respective Continuing Disclosure Agreement, dated as of the Closing Date (each, a “Local Agency Continuing Disclosure Agreement” and, collectively, the “Local Agency Continuing Disclosure Agreements”), by and between the applicable Local Agency and _____________, as dissemination agent (the “Dissemination Agent”); and (d) each of the Preliminary Official Statement and the Official Statement, and any supplements or amendments thereto, and the information contained in each of such documents, in connection with the public offering and sale of the Certificates. The Authority will deliver to the Underwriter, within seven (7) business days after the date of this Purchase Contract and in sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, copies of the Official Statement in final form (including all documents incorporated by reference therein) and any amendment or supplement thereto in such quantities as the Underwriter may reasonably request in order to comply with the obligations of the Underwriter pursuant to the Rule and the rules of the Municipal Securities Rulemaking Board. As soon as practicable following receipt thereof from the Authority, the Underwriter shall deliver the Official Statement to the Municipal Securities Rulemaking Board. 5. At 8:00 a.m., California time, on April __, 2018, or at such other time or on such other business day as shall have been mutually agreed upon by the Authority, the Local Agencies and the Underwriter (the “Closing Date”), the Authority will cause the Trustee to execute and deliver to the Underwriter at the office of or otherwise in care of The Depository Trust Company (“DTC”) in New York, New York, or at such other place as the Authority and the Underwriter may mutually agree upon, the Certificates in fully-registered book-entry form, duly executed and registered in the name of Cede & Co., as nominee of DTC, and subject to the terms and conditions hereof, the Underwriter will accept such delivery and pay the purchase price of the Certificates by wire transfer payable in immediately available funds to or upon the order of the Authority at such place in Los Angeles, California, or New York, New York, as shall have been mutually agreed upon by the Authority and the Underwriter. Such delivery of and payment for the Certificates is referred to herein as the “Closing.” The Certificates shall be made available for inspection by DTC at least one business day before the Closing. 4 6. The Authority represents, warrants, and covenants to the Underwriter that: The Authority is a joint powers authority under Article 1 of Chapter 5 of Division 7 of Title 1 of the California Government Code duly organized and validly existing under and by virtue of the Constitution and the laws of the State of California (the “State”). The Authority has the legal right and power to execute and deliver, and to perform its obligations under, the Trust Agreement, the 2018 Installment Sale Agreements and this Purchase Contract (collectively, the “Authority Documents”). The Authority has duly authorized the execution and delivery of the Certificates and the execution and delivery of, and performance of its obligations under, the Authority Documents and, as of the date hereof, such authorizations are in full force and effect and have not been amended, modified, or rescinded. When executed and delivered by the respective other parties thereto, the Authority Documents will constitute legal, valid and binding obligations of the Authority in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws, the application of equitable principles relating to or affecting creditors’ rights generally, and limitations on remedies against public entities in the State. The Authority has complied, and will at the Closing be in compliance in all respects, with its obligations under the Authority Documents. The Certificates will be paid from Installment Sale Payments pursuant to the respective 2018 Installment Sale Agreements, which payments have been duly and validly authorized pursuant to applicable law. The Certificates will be executed and delivered in accordance with the Trust Agreement and will conform in all material respects to the descriptions thereof contained in the Official Statement. The Trust Agreement creates a valid pledge of, first lien upon and security interest in the pledged Installment Sale Payments. The information in the Official Statement under the captions “THE AUTHORITY” and “NO LITIGATION—The Authority” is true and correct in all material respects, and such information does not contain any misstatement of any material fact or omit any statement necessary to make the statements, in the light of the circumstances in which such statements were made, not misleading. The Authority covenants with the Underwriter that for twenty-five (25) days following the “end of the underwriting period” (as such term is defined in the Rule) (the “Delivery Period”), if any event occurs that might or would cause 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 necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Authority shall notify the Underwriter thereof, and if in the opinion of the Underwriter such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will cooperate with the Underwriter in the preparation of an amendment or supplement to the Official Statement, at the expense of the Local Agencies, in a form and in a manner approved by the Underwriter. The Authority will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter. The Authority will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or 5 otherwise affecting the use of the Official Statement in connection with the offering, sale, or distribution of the Certificates. If the Official Statement is supplemented or amended, the Official Statement, as so supplemented or amended, as of the date of such supplement or amendment, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Authority is not in breach of or in default under any applicable constitutional provision, law, or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, consent, or other agreement to which the Authority is a party, and no event has occurred and is continuing that, with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any of the foregoing. The authorization, execution, and delivery by the Authority of the Authority Documents, and compliance by the Authority with the provisions thereof, do not and will not conflict with or constitute a breach of or default by the Authority under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, consent, or other agreement to which it is bound or by which its properties may be affected, 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 Authority under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Authority Documents. No authorization, consent, or approval of, or filing or registration with, any Governmental Authority (as such term is defined below) or court is, or under existing requirements of law will be, necessary for the valid execution and delivery of, or performance by the Authority of its obligations under, the Authority Documents, other than any authorization, consent, approval, filing, or registration as may be required under the Blue Sky or securities laws of any state in connection with the offering, sale, execution, or delivery of the Certificates. All authorizations, consents, or approvals of, or filings or registrations with, any Governmental Authority or court that are necessary for the valid execution and delivery of, and performance by the Authority of its obligations with respect to, the Certificates will have been duly obtained or made prior to the execution and delivery of the Certificates (and disclosed to the Underwriter). As used herein, the term “Governmental Authority” refers to any legislative body or governmental official, department, commission, board, bureau, agency, instrumentality, body, or public benefit corporation. The Authority shall furnish such information, execute such instruments, and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request at the expense of the Underwriter and/or the Local Agencies in order: (i) to qualify the Certificates 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 Certificates for investment under the laws of such states and other jurisdictions, and shall use its best efforts to continue such qualifications in effect so long as required for the distribution of the Certificates; provided, however, that the Authority shall not be required to execute a general consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction. 6 There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, or public board or body, pending or, to the knowledge of the Authority, threatened: (i) in any way questioning the existence of the Authority or the titles of the officers of the Authority to their respective offices; (ii) affecting, contesting, or seeking to prohibit, restrain or enjoin the execution and delivery of the Certificates or the execution or delivery of any of the Authority Documents, or the payment or collection of any amounts pledged or to be pledged to pay the principal and interest with respect to the Certificates, or in any way contesting or affecting the validity of the Certificates or the Authority Documents or the consummation of the transactions contemplated thereby or any proceeding of the Authority taken with respect to any of the foregoing, or contesting the exclusion of the portion of the Installment Sale Payments designated as and comprising interest and received by the Owners of the Certificates from taxation or contesting the powers of the Authority and its authority to pledge the Installment Sale Payments; (iii) that may result in any material adverse change relating to the Authority that will materially adversely affect the Authority’s ability to apply Installment Sale Payments to pay the Certificates when due; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Other than in the ordinary course of its business or as contemplated by the Official Statement, between the date of this Purchase Contract and the Closing Date, the Authority will not, without the prior written consent of the Underwriter, offer or issue any certificates, bonds, notes, or other obligations for borrowed money or incur any material liabilities, direct or contingent, payable from or secured by a pledge of the Installment Sale Payments. Any certificate signed by any official or other representative of the Authority and delivered to the Underwriter pursuant to this Purchase Contract shall be deemed a representation and warranty by the Authority to the Underwriter as to the truth of the statements therein made. 7. Each Local Agency represents, warrants, and covenants to the Underwriter and the Authority, solely for itself and not on behalf of any other Local Agency, that: The Local Agency is a municipal corporation of the State duly organized and validly existing under and by virtue of the Constitution and laws of the State. The Local Agency has the legal right and power to execute and deliver, and to perform its obligations under, the Trust Agreement, its applicable 2018 Installment Sale Agreement, its applicable Continuing Disclosure Agreement, its applicable Insurance Agreement, and this Purchase Contract (collectively, with respect to such Local Agency, the “Local Agency Documents”). The Local Agency has duly authorized the execution and delivery of, and the performance of its obligations under, the Local Agency Documents and as of the date hereof such authorizations are in full force and effect and have not been amended, modified, or rescinded. When executed and delivered by the respective other parties thereto, the Local Agency Documents will constitute legal, valid and binding obligations of the Local Agency in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws, the application of equitable principles relating to or affecting creditors’ rights and limitations on remedies against public entities in the State. The Local Agency has complied, and will at the Closing be in compliance in all respects, with its obligations under the Local Agency Documents. 7 The Installment Sale Payments payable under its applicable 2018 Installment Sale Agreement have been duly and validly authorized pursuant to applicable law. The Certificates will be executed and delivered in accordance with the Trust Agreement and will conform in all material respects to the descriptions thereof contained in the Official Statement. Its applicable 2018 Installment Sale Agreement creates a valid pledge of, first lien upon, and security interest in, the Measure R Receipts, Measure M Receipts and/or Proposition C Receipts (as such terms are defined in the applicable 2018 Installment Sale Agreements), as applicable. The information in the Preliminary Official Statement (excluding any information with respect to the Authority, DTC, the book-entry only system, the Certificate Insurer, the Certificate Insurance Policy, the Reserve Policy and any Local Agency other than such Local Agency) is true and correct in all material respects, and such information does not contain any misstatement of any material fact or omit any statement necessary to make the statements, in the light of the circumstances in which such statements were made, not misleading. The Local Agency covenants with the Underwriter that, during the Delivery Period, if any event occurs that might or would cause 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 necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Local Agency shall notify the Underwriter thereof, and if in the reasonable opinion of the Underwriter such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Local Agency will cooperate with the Underwriter and the Authority in the preparation of an amendment or supplement to the Official Statement, at the expense of the Local Agency or Local Agencies, as applicable, in a form and in a manner approved by the Underwriter. The Local Agency will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent shall not be unreasonably withheld. The Local Agency will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale, or distribution of the Certificates. If the Official Statement is supplemented or amended, the Official Statement as so supplemented or amended, as of the date of such supplement or amendment, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Local Agency is not in any material respect in breach of or in default under any applicable constitutional provision, law, ordinance or administrative rule or regulation of the State, the Los Angeles County Metropolitan Transportation Authority (the “MTA”), any other state or local governmental agency or the United States, or any applicable judgment, decree, consent, or other agreement to which the Local Agency is a party, and no event has occurred and is continuing that, with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any of the foregoing and the consequence of which could be a material and adverse effect on the performance by the Local Agency of its obligations under the Local Agency Documents. The authorization, execution and delivery by the Local Agency of the Local Agency Documents, and compliance by the Local Agency with the provisions thereof, do not and will 8 not in any material respect conflict with or constitute a breach of or default by the Local Agency under any applicable constitutional provision, law, ordinance or administrative rule or regulation of the State, the MTA, any other local governmental agency or the United States, or any applicable judgment, decree, consent or other agreement to which it is bound or by which its properties may be affected. To the best of the Local Agency’s knowledge, no authorization, consent or approval of, or filing or registration with, any Governmental Authority or court is, or under existing requirements of law will be, necessary for the valid execution and delivery of, or performance by the Local Agency of its obligations under, the Local Agency Documents, including but not limited to the pledge of the Measure R Receipts, Measure M Receipts and/or Proposition C Receipts, as applicable, other than any authorization, consent, approval, filing, or registration that has been previously obtained or as may be required under the Blue Sky or securities laws of any state in connection with the offering, sale, execution, or delivery of the Certificates. The Local Agency 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 Certificates 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 Certificates for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Certificates; provided, however, that the Local Agency shall not be required to execute a general consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction. Except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, regulatory agency, or public board or body, pending of which the Local Agency has received service of process or, to the best knowledge of the Local Agency, threatened against the Local Agency: (i) in any way questioning the existence of the Local Agency or the titles of the officers of the Local Agency to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the execution and delivery of the Certificates or the execution or delivery of any of the Local Agency Documents, or the payment or collection of any amounts pledged or to be pledged to pay the principal and interest with respect to the Certificates, or in any way contesting or affecting the validity of the Certificates or the Local Agency Documents or the consummation of the transactions contemplated thereby or any proceeding of the Local Agency taken with respect to any of the foregoing, including, without limitation, the Local Agency’s validation proceedings with respect to the Certificates and the Local Agency Documents, or contesting the exclusion of the portion of the Installment Sale Payments designated as and comprising interest and received by the Owners of the Certificates from taxation or contesting the powers of the Local Agency and its authority to pledge the Installment Sale Payments; (iii) that may result in any material adverse change relating to the Local Agency that will materially adversely affect the Local Agency’s ability to pay Installment Sale Payments when due; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Other than in the ordinary course of its business or as contemplated by the Official Statement, between the date of this Purchase Contract and the Closing Date, the Local Agency 9 will not, without the prior written consent of the Underwriter, offer or issue any certificates, bonds, notes, or other obligations for borrowed money or incur any material liabilities, direct or contingent, payable from or secured by a pledge of the Measure R Receipts, Measure M Receipts and/or Proposition C Receipts, as applicable. The financial information regarding the Local Agency contained in the Official Statement fairly presents the financial position and results of the operations of the Local Agency as of the dates and for the periods therein set forth, and, to the best of the Local Agency’s knowledge, the Local Agency’s audited financial statements have been prepared in accordance with generally accepted accounting principles consistently applied. Any certificate signed by any official or other representative of the Local Agency and delivered to the Underwriter pursuant to this Purchase Contract shall be deemed a representation and warranty by the Local Agency to the Underwriter as to the truth of the statements therein made. Except as otherwise disclosed in the Official Statement, the Local Agency has not failed during the previous five (5) years to comply in all material respects with any previous undertakings in a written continuing disclosure contract or agreement under the Rule. To the extent permitted by law, the Local Agency agrees to indemnify and hold harmless the Authority and its officers, directors, agents, and employees against any and all losses, claims, damages, liabilities, and expenses arising out of any statement or information in the Preliminary Official Statement or in the Official Statement (other than statements or information specifically related to the Authority, the Program, DTC, the book-entry only system, the Certificate Insurer, the Certificate Insurance Policy, the Reserve Policy and any Local Agency other than such Local Agency) that is untrue or incorrect in any material respect or that omits to state any material fact that is necessary to make such statement or information therein not misleading in any material respect. 8. The Underwriter has entered into this Purchase Contract in reliance upon the representations, warranties, and covenants of the Authority and each of the Local Agencies contained herein and in the Authority Documents and the Local Agency Documents to which each of the Authority or each of the Local Agencies, as applicable, is a party, and the performance by the Authority and by each of the Local Agencies of their respective obligations hereunder, both as of the date hereof and as of the Closing Date. The Underwriter’s obligations under this Purchase Contract are and shall be subject to the following further conditions: The representations and warranties of the Authority and the Local Agencies contained herein shall be true, complete, and correct in all material respects on the date hereof and at and as of the Closing, as if made at and as of the Closing, and the statements made in all certificates and other documents delivered to the Underwriter at the Closing pursuant hereto shall be true, complete, and correct in all material respects at the Closing; the Authority and each of the Local Agencies shall be in compliance with each of the agreements made by it in this Purchase Contract (unless such agreements are waived by the Underwriter); there shall not have occurred an adverse change in the financial position, results of operations or financial condition of any of the Local Agencies that materially adversely affects the ability of any of the Local Agencies to pay Installment Sale Payments when due or otherwise perform any of its obligations under the Local Agency Documents; and there shall not have occurred an adverse change in the financial position of the Authority that materially adversely affects the ability of the Authority to make payments of principal 10 and interest with respect to the Certificates when due or otherwise perform any of its obligations under the Authority Documents. At the time of the Closing, the Authority Documents and the Local Agency Documents shall be in full force and effect, and shall not have been amended, modified, or supplemented (except as may be agreed to in writing by the Underwriter); all actions that, in the opinion of Orrick, Herrington & Sutcliffe LLP, Special Counsel to the Local Agencies (“Special Counsel”), shall be necessary in connection with the transactions contemplated hereby shall have been duly taken and shall be in full force and effect; and each Local Agency shall perform or shall have performed its obligations required under or specified in the Local Agency Documents to be performed at or prior to the Closing and the Authority shall perform or shall have performed its obligations required under or specified in the Authority Documents to be performed at or prior to the Closing. At the time of the Closing, the Official Statement (as amended and supplemented) shall be true and correct in all material respects, and shall not omit any statement or information necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Except as disclosed in the Official Statement or in a schedule delivered to the Underwriter at the Closing, no decision, ruling, or finding shall have been entered by any court or Governmental Authority since the date of this Purchase Contract (and not reversed on appeal or otherwise set aside) that has any of the effects described in Section 8(F). (i) No default by any Local Agency or the Authority shall have occurred and be continuing in the payment of the principal of or premium, if any, or interest on any bond, note or other evidence of indebtedness issued by any Local Agency or the Authority, respectively; and (ii) no bankruptcy, insolvency, or other similar proceeding in respect of any Local Agency or the Authority shall be pending or, to the knowledge of each such Local Agency or the Authority, contemplated. The Underwriter may terminate this Purchase Contract by written notification to the Authority and the Local Agencies if at any time after the date hereof and prior to the Closing: (1) legislation shall have been enacted by the United States or the State or shall have been reported out of committee or be pending in committee, or a decision shall have been rendered by a court of the United States or the Tax Court of the United States, or statement shall have been made by the President of the United States of America by press release or otherwise, or a ruling shall have been made or a regulation, proposed regulation, or a temporary regulation shall have been published in the Federal Register or any other release or announcement shall have been made by the Treasury Department of the United States or the Internal Revenue Service, with respect to federal or State taxation upon revenues or other income or payments of the general character of the Certificates, which, in the reasonable opinion of the Underwriter, materially adversely affects the market for the Certificates; or (2) the United States shall have become engaged in hostilities that have resulted in a declaration of war or a national emergency or the President of the United States of America shall have committed the armed forces of the United States of America to combat so as to adversely affect the financial markets in the United States of America and that, in the reasonable opinion of the Underwriter, materially adversely affects the market for the Certificates; or 11 (3) there shall have occurred a general suspension of trading on the New York Stock Exchange, or a general banking moratorium shall have been declared by federal, State, or State of New York authorities having jurisdiction and being in force; or (4) there shall have occurred an adverse change in the financial position, results of operations or financial condition of any Local Agency that, in the reasonable opinion of the Underwriter, materially adversely affects the market for the Certificates; or (5) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by, any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction within the State or any court of the United States shall be rendered that, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Certificates; or (6) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Certificates, or the execution, delivery, offering or sale of the Certificates, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Certificates, or the Certificates, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Trust Agreement needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or (7) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange, which restrictions materially adversely affect the ability of underwriters to trade obligations of the general character of the Certificates; or (8) any rating of the Certificates or the Certificate Insurer shall have been downgraded, suspended or withdrawn by a national rating service, which, in the Underwriter’s reasonable opinion, materially adversely affects the marketability or market price of the Certificates; or (9) the commencement of any action, suit or proceeding described in Sections 6(M) or 7(M) that, in the judgment of the Underwriter, materially adversely affects the market price of the Certificates; or (10) any event occurring, or information becoming known, that, in the reasonable judgment of the Underwriter, makes any statement or information contained in the Preliminary Official Statement, as of its date, untrue in any material adverse respect, or has the effect that the Preliminary Official Statement, as of its date, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 12 At or prior to the Closing, the Underwriter shall receive the following documents: (1) the opinions of Special Counsel, dated the Closing Date, in substantially the form appended to the Official Statement, addressed to the Local Agencies (and accompanied by reliance letters to the Authority, the Underwriter, the Trustee and the Certificate Insurer); (2) a supplemental opinion of Special Counsel, in form and substance satisfactory to the Underwriter, dated the Closing Date, addressed to the Underwriter, substantially to the effect that: (i) the Certificates are not subject to registration requirements of the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; provided that no opinion shall be expressed with respect to the Certificate Insurance Policy or the Reserve Policy; (ii) this Purchase Contract has been duly executed and delivered by each Local Agency and the Authority and is a valid and binding agreement of each Local Agency and the Authority; (iii) the Reserve Policy is a Qualified Reserve Instrument (as such term is defined in the Trust Agreement) and the repayment obligations owed to the Certificate Insurer in connection with the Reserve Policy are secured by a valid lien on Measure R Receipts, Measure M Receipts and/or Proposition C Receipts, as applicable, subject to the first pledge of and lien upon the Measure R Receipts, Measure M Receipts and/or Proposition C Receipts, as applicable, for the payment of the Installment Sale Payments; and (iv) the statements contained in the Official Statement under the captions “THE CERTIFICATES” (except the subcaption “—Book-Entry Only System”), “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES,” “MEASURE R REVENUES; MEASURE R RECEIPTS,” “MEASURE M REVENUES; MEASURE M RECEIPTS,” “PROPOSITION C REVENUES; PROPOSITION C RECEIPTS” and “TAX MATTERS,” and in Appendices A and C, excluding any material that may be treated as included under such captions and Appendices by reference to other documents, insofar as such statements expressly summarize certain provisions of the Trust Agreement, the 2018 Installment Sale Agreements, the Certificates and the opinion of Special Counsel concerning certain federal tax matters relating to the Certificates, are accurate in all material respects; (3) an opinion of counsel to each Local Agency, in form and substance satisfactory to the Underwriter, dated the Closing Date, addressed to the Authority, the Underwriter and the Certificate Insurer, substantially to the effect that: (i) the Local Agency is a municipal corporation duly organized and validly existing under and by virtue of the laws of the State; (ii) the Local Agency has full legal power and lawful authority to enter into the Local Agency Documents; 13 (iii) the resolution of the Local Agency approving and authorizing the execution and delivery of the Local Agency Documents and approving the Official Statement (the “Local Agency Resolution”) was duly adopted at a meeting of the city council or other governing body of the Local Agency that was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Local Agency Resolution is in full force and effect and has not been modified, amended, or rescinded as of the Closing Date; (iv) the Local Agency Documents have been duly authorized, executed, and delivered by the Local Agency and, assuming due authorization, execution, and delivery by the other parties thereto, such documents constitute the legal, valid, and binding agreements of the Local Agency enforceable in accordance with their 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; (v) the execution and delivery by the Local Agency of the Local Agency Documents, and compliance by the Local Agency with the provisions thereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute a breach of or default under any law, administrative regulation, court decree, resolution, or agreement to which the Local Agency is subject to or by which it is bound; (vi) the Reserve Policy, as defined in the Insurance Agreement, is a Qualified Reserve Instrument, as defined in the Trust Agreement, and the repayment obligations owed to the Certificate Insurer in connection with the Reserve Policy are secured by a valid lien on Measure R Receipts, Measure M Receipts and/or Proposition C Receipts, as applicable, subject to the first pledge of and lien upon the Measure R Receipts, Measure M Receipts and/or Proposition C Receipts, as applicable, for the payment of the Certificates; (vii) nothing has come to such counsel’s attention that would lead such counsel to believe that the Official Statement (excluding therefrom financial information and other statistical data included in the Official Statement, and any information with respect to any Local Agencies other than such Local Agency, the Authority, the Program, DTC, the book-entry only system, the Certificate Insurer, the Reserve Policy, or the Certificate Insurance Policy, as to which no view need be expressed) contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (viii) except as otherwise disclosed in the Official Statement, there is no action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, regulatory agency, or public board or body, pending or, to the best knowledge of such counsel, threatened against the Local Agency (a) in any way questioning the existence of the Local Agency or the titles of the officers of the Local Agency to their respective offices; (b) affecting, contesting, or seeking to prohibit, restrain, or enjoin the execution and delivery of the Certificates or any of the Local Agency Documents, or the payment or collection of any amounts pledged or to be pledged to pay the Installment Sale Payments or the principal and interest with respect to the Certificates, or in any way contesting or affecting the validity of the Certificates or the Local Agency Documents or the consummation of the transactions contemplated thereby or any proceeding of the Local Agency taken with respect to any of the foregoing, or contesting the exclusion of the interest payable with respect to the Certificates from taxation or contesting the powers of the Local Agency and its authority to pledge the Installment Sale Payments; (c) that may result in any material adverse change relating to the Local 14 Agency that will materially adversely affect the Local Agency’s ability to pay the Installment Sale Payments when due; or (d) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (ix) no additional authorization, approval, consent, waiver, or any other action by any person, board, or body, public or private, not previously obtained is required as of the Closing Date for the Local Agency to enter into the Local Agency Documents, or to perform its obligations thereunder; (4) an opinion of Special Counsel, as counsel to the Authority, in form and substance satisfactory to the Underwriter, dated the Closing Date, addressed to the Underwriter, to the effect that: (i) the Authority is a joint powers agency organized and existing under the laws of the State of California; and (ii) the resolution of the Authority approving and authorizing the execution and delivery of the Authority Documents and approving the Official Statement (the “Authority Resolution”) was duly adopted at a meeting of the governing body of the Authority. The Authority Resolution is in full force and effect and has not been amended, modified or rescinded; (5) a letter from Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, counsel to the Underwriter (“Underwriter’s Counsel”), dated the Closing Date, addressed to the Underwriter, to the effect that, based upon its participation in the preparation of the Official Statement as Underwriter’s Counsel and without having undertaken to determine independently the fairness, accuracy, or completeness of the statements contained in the Official Statement, such counsel has no reason to believe that, as of the Closing Date, the Official Statement (excluding therefrom the reports, financial and statistical data and forecasts therein, information with respect to DTC and the book-entry system, information with respect to the Certificate Insurer, the Certificate Insurance Policy and the Reserve Policy and the information included in the appendices thereto, as to which no view need be expressed) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (6) a certificate of each Local Agency, in form and substance satisfactory to the Underwriter, dated the Closing Date, to the effect that: (i) the representations, warranties, and covenants of the Local Agency contained in this Purchase Contract are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the Local Agency has complied in all material respects with all of the terms and conditions of the Purchase Contract required to be complied with by the Local Agency at or prior to the Closing Date; (ii) the Local Agency has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied at or prior to the Closing Date pursuant to the Purchase Contract with respect to the execution and delivery of the Certificates; 15 (iii) to the best knowledge of the Local Agency, there is no action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, government agency, public board or body, pending of which the Local Agency has received service of process or threatened against the Local Agency, affecting the existence of the Local Agency or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Certificates or contesting or affecting, as to the Local Agency, the validity or enforceability of the Certificates, the Local Agency Documents or contesting the tax-exempt status of interest represented by the Certificates, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the Local Agency or any authority for the execution and delivery of the Certificates, or in any way contesting or challenging the consummation of the transactions contemplated under the Local Agency Documents, or, except as disclosed in the Official Statement, that might result in a material adverse change in the financial condition of the Local Agency or materially adversely affect the Local Agency’s rights to receive and expend revenues allocated to the Local Agency by the MTA that are derived from a retail transactions and use tax imposed in the County of Los Angeles, California pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code of the State, as now in effect and as it may from time to time hereafter be amended or supplemented, Division 12 (Section 130350 et seq.) of the Public Utilities Code of the State) and, as applicable: (a) with respect to Measure R Receipts, Ordinance No. 08-01 (the Traffic Relief and Rail Expansion Ordinance) adopted by the MTA on July 24, 2008, and approved by at least two-thirds of electors voting on such proposition in the November 4, 2008 election, as supplemented and amended; (b) with respect to Measure M Receipts, Ordinance No. 16-01 (the Los Angeles County Traffic Improvement Plan) adopted by the MTA on June 23, 2016, and approved by at least two-thirds of electors voting on such proposition in the November 8, 2016 election, as supplemented and amended; and/or (c) with respect to Proposition C Receipts, Ordinance No. 49 adopted by the Los Angeles County Transportation Commission, predecessor to the MTA, on August 8, 1990, and approved by at least two-thirds of electors voting on such proposition in the November 6, 1990 election, as supplemented and amended; nor is there any basis known to the Local Agency for any such action, suit, proceeding, inquiry, or investigation, wherein an unfavorable decision, ruling, or finding would materially adversely affect the authorization, execution, delivery, or performance by the Local Agency of the Local Agency Documents or the execution by the Trustee of the Certificates; (iv) to the best knowledge of the Local Agency, no event affecting the Local Agency has occurred since the date of the Official Statement that has not been disclosed therein or in any supplement or amendment thereto, which event should be in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) between the date of the Purchase Contract and the Closing Date, the Local Agency has not offered or issued any bonds, notes, or other obligations for borrowed money, or incurred any material liabilities, other than with the written consent of the Underwriter, nor has there been any adverse change of a material nature in the financial position, results of operations or condition, financial or otherwise, of the Local Agency; (7) a certificate of the Authority, in form and substance satisfactory to the Underwriter, dated the Closing Date, to the effect that: (i) the representations and warranties of the Authority contained in this 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; and 16 (ii) there has been no material adverse change in the financial condition or results of operations of the Authority from the date of the Official Statement to the Closing Date; (8) a certificate, dated the date of the Preliminary Official Statement, from each Local Agency addressed to the Underwriter, in the respective forms set forth in Exhibit D-1 and Exhibit D-2; (9) an opinion of counsel to the Trustee, dated the Closing Date, addressed to the Underwriter, the Authority, each Local Agency and the Certificate Insurer, to the effect that: (i) the Trustee is a national banking association and is validly existing, duly qualified to do business and in good standing under the laws of each jurisdiction in which the performance of its duties under the Trust Agreement would require such qualification, and the Trustee has the requisite power and authority to execute, deliver and perform its obligations under the Trust Agreement; (ii) the Trustee is duly eligible and qualified to act as Trustee under the Trust Agreement; (iii) the Trustee has all requisite power, authority and legal right to execute and deliver the Trust Agreement and to perform its obligations thereunder, and has taken all necessary corporate action to authorize the execution and delivery of and the performance of its obligations thereunder; (iv) the Trustee has duly executed and delivered the Trust Agreement. Assuming the due authorization, execution and delivery thereof by the other parties thereto, the Trust Agreement is the legal, valid and binding agreement of the Trustee enforceable against the Trustee in accordance with its terms, except to the extent enforceability thereof may be subject to: (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights and remedies heretofore or hereafter enacted; and (b) the application of equitable principles and the exercise of judicial discretion in appropriate cases; (v) the Certificates have been duly executed and delivered by the Trustee; (vi) the execution, delivery and performance of the Trust Agreement by the Trustee and the consummation of the transactions contemplated thereby do not and will not: (a) to the knowledge of such counsel, conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Trustee is a party or by which the Trustee is bound, or to which any of the property or assets of the Trustee or any of its subsidiaries is subject; (b) result in any violation of the provisions of the charter, articles of association, by-laws, or applicable resolutions of the Trustee; or (c) to the knowledge of such counsel, result in any violation of any statute or any order, rule or regulation of any court or government agency or body having jurisdiction over the Trustee or any of its properties or assets; and (vii) to the knowledge of such counsel, there are no actions, proceedings or investigations pending or threatened against the Trustee before any court, 17 administrative agency or tribunal: (a) asserting the invalidity of the Trust Agreement; (b) seeking to prevent the consummation of any of the transactions contemplated thereby; or (c) that might materially and adversely affect the performance by the Trustee of its obligations under, or the validity or enforceability of the Trust Agreement; (10) a certificate, dated the Closing Date, signed by a duly authorized officer of the Trustee, to the effect that: (i) the Trustee is a national banking association organized and existing under and by virtue of the laws of the United States of America, having the necessary power to enter into, accept, and administer the trusts created under the Trust Agreement and to execute and deliver the Certificates to the Underwriter; (ii) the Trust Agreement has been duly authorized, executed, and delivered by a duly authorized officer of the Trustee, and the execution, delivery, and performance of the Trust Agreement has been duly authorized by all necessary action of the Trustee; (iii) the Trust Agreement constitutes the legal, valid, and binding obligation of the Trustee enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles, if equitable remedies are sought; (iv) the Certificates have been duly executed and delivered by a duly authorized officer of the Trustee; (v) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the execution and delivery of the Trust Agreement or the performance by the Trustee of its duties and obligations under the Trust Agreement; (vi) the execution and delivery by the Trustee of the Trust Agreement and compliance with the terms thereof will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties (except that no representation, warranty, or agreement need be made with respect to any federal or State securities or blue sky laws or regulations); (vii) the Trustee’s action in executing and delivering the Trust Agreement will not contravene the articles or bylaws of the Trustee and is in full compliance with, and does not conflict with, any applicable law or governmental regulation currently in effect, and such action does not conflict with or violate any contract to which the Trustee is a party or any administrative or judicial decision by which the Trustee is bound; and (viii) there is no action, suit, proceeding, or investigation, at law or in equity, before or by any court or governmental agency, public board, or body that has been served on the Trustee, or to the best knowledge of the Trustee, threatened against the Trustee which in the reasonable judgment of the Trustee would affect the existence of the Trustee or in any way contest or 18 affect the validity or enforceability of the Trust Agreement or the powers of the Trustee or its authority to enter into and perform its obligations thereunder; (11) [a certificate, dated the Closing Date, signed by a duly authorized officer of the Dissemination Agent, to the effect that: (i) the Dissemination Agent is a corporation validly existing and in good standing under the laws of the State of California and has full corporate power and authority to enter into and perform its obligations under the Local Agency Continuing Disclosure Agreements; (ii) each Local Agency Continuing Disclosure Agreement has been duly authorized, executed and delivered by a duly authorized officer of the Dissemination Agent, and the execution, delivery and performance of such Local Agency Continuing Disclosure Agreement has been duly authorized by all necessary action of the Dissemination Agent; (iii) each Local Agency Continuing Disclosure Agreement constitutes the legal, valid and binding obligation of the Dissemination Agent enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles, if equitable remedies are sought; (iv) no consent, approval, authorization, or other action by any governmental or regulatory authority having jurisdiction over the Dissemination Agent that has not been obtained is or will be required for the execution and delivery of either Local Agency Continuing Disclosure Agreement or the performance by the Dissemination Agent of its duties and obligations under such Local Agency Continuing Disclosure Agreement; (v) the execution and delivery by the Dissemination Agent of each of the Local Agency Continuing Disclosure Agreements and compliance with the terms thereof will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Dissemination Agent is a party or by which it is bound, or any law, rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Dissemination Agent or any of its activities or properties (except that no representation, warranty, or agreement need be made with respect to any federal or State securities or Blue Sky laws or regulations); (vi) the Dissemination Agent’s action in executing and delivering each Local Agency Continuing Disclosure Agreement will not contravene the articles or bylaws of the Dissemination Agent and is in full compliance with, and does not conflict with, any applicable law or governmental regulation currently in effect, and such action does not conflict with or violate any contract to which the Dissemination Agent is a party or any administrative or judicial decision by which the Dissemination Agent is bound; and (vii) there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body that has been served on the Dissemination Agent, or, to the best knowledge of the Dissemination Agent, is threatened against the Dissemination Agent that in the reasonable judgment of the Dissemination Agent would affect the existence of the Dissemination Agent or in any way contest or affect the validity or enforceability of 19 either Local Agency Continuing Disclosure Agreement or the powers of the Dissemination Agent or its authority to enter into and perform its obligations thereunder;] (12) certified copies of each Local Agency Resolution, the Authority Resolution and an incumbency resolution of the Trustee; (13) copies each of the Authority Documents, the Local Agency Documents and the Official Statement, duly executed and delivered by the respective parties thereto; (14) tax certificates of the Authority and of each Local Agency, each in form satisfactory to Special Counsel, signed by an appropriate officer of each of the Authority and each Local Agency; (15) evidence satisfactory to the Underwriter of the issuance of the Certificate Insurance Policy by the Certificate Insurer; (16) evidence satisfactory to the Underwriter that the Trustee shall have received the Reserve Policy from the Certificate Insurer, which Reserve Policy constitutes a Qualified Reserve Instrument under and as defined in the Trust Agreement; (17) an opinion of counsel to the Certificate Insurer, in form and substance satisfactory to the Underwriter, Special Counsel and Underwriter’s Counsel, with respect to, among other matters, the Certificate Insurance Policy and the Reserve Policy, and disclosures relating thereto and to the Certificate Insurer in the Official Statement; (18) a certificate of the Certificate Insurer, in form and substance satisfactory to the Underwriter, Special Counsel, and Underwriter’s Counsel, with respect to, among other matters, the Certificate Insurance Policy and the Reserve Policy; (19) a no-default certificate of the Certificate Insurer, in form and substance satisfactory to the Underwriter, Special Counsel and Underwriter’s Counsel; (20) evidence that the underlying and insured ratings of the Certificates as set forth in the Official Statement are in full force and effect on the Closing Date; (21) copies of the statements with respect to the sale of the Certificates required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 8855 of the California Government Code; (22) a copy of the default judgment rendered on __________ 20__, by the Superior Court of the State of California for the County of Los Angeles in the action entitled City of Claremont v. All Persons Interested in the Matter, etc.; (23) a copy of the default judgment rendered on __________ 20__, by the Superior Court of the State of California for the County of Los Angeles in the action entitled City of West Covina v. All Persons Interested in the Matter, etc.; (24) evidence that the federal tax information form 8038-G for the Authority or for each Local Agency, as applicable, has been prepared by Special Counsel for filing; 20 (25) specimen Certificates, duly executed by the Trustee; (26) a report of Lumesis as to compliance by each Local Agency and related entities with their respective continuing disclosure undertakings; (27) a copy of the executed Blanket Issuer Letter of Representations by and between the Authority and DTC relating to the book-entry system; (28) a copy of each Local Agency’s debt management policy which complies with California Government Code § 8855; and (29) such additional legal opinions, certificates, proceedings, instruments, and other documents as the Underwriter, Special Counsel or Underwriter’s Counsel may reasonably request to evidence compliance by the Local Agencies and the Authority with legal requirements, the accuracy, as of the time of Closing, of the Authority and the Local Agencies’ representations herein contained, and the due performance or satisfaction by the Local Agencies and the Authority at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Local Agencies and the Authority. If any of the Local Agencies or the Authority 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 by this Purchase Contract, this Purchase Contract shall terminate and none of the Local Agencies, the Authority or the Underwriter shall have any further obligation hereunder. 9. The performance by each of the Authority and the Local Agencies of its respective obligations is conditioned upon: (i) the performance by the Underwriter of its obligations hereunder; and (ii) receipt by the Authority, the Local Agencies and the Underwriter of opinions and certificates being delivered at the Closing by persons and entities other than the Authority and the Local Agencies. 10. (A) The Underwriter shall be under no obligation to pay, and the Local Agencies shall pay, the following expenses incident to the performance of the Authority’s and the Local Agencies’ obligations hereunder: (1) the fees and disbursements of Special Counsel; (2) the cost of printing and delivering the Certificates, the Preliminary Official Statement and the Official Statement (and any amendment or supplement prepared pursuant to Section 4 of this Purchase Contract); (3) the fees and disbursements of the Trustee, accountants, financial advisors, legal counsel and any other experts or consultants retained by the Authority (in its reasonable judgment) or the Local Agencies, rating agency fees and costs, fees, and expenses pertaining to the provision of the Certificate Insurance Policy and the Reserve Policy; (4) expenses (included in the expense component of the spread), if any, reasonably incurred by the Underwriter with the prior approval of the Local Agencies on behalf of the respective Local Agency’s employees that are incidental to implementing this Purchase Contract and the rating presentation, including, but not limited to, meals, transportation and lodging of such 21 employees and reimbursement to the Underwriter for any meals and travel for Authority or respective Local Agency employees or officers that were paid for by the Underwriter in implementing this Purchase Contract; and (5) any other expenses and costs of the Authority and the Local Agencies incident to the performance of their respective obligations in connection with the authorization, execution, delivery, and sale of the Certificates, including out-of-pocket expenses and regulatory expenses and any other expenses agreed to by the parties. The Underwriter shall pay from the expense component of the Underwriter’s spread (and neither the Authority nor the Local Agencies shall be under any obligation to pay) all expenses incurred by it in connection with the public offering and distribution of the Certificates including, without limitation: (1) all advertising expenses in connection with the offering of the Certificates; and (2) all out-of-pocket disbursements and expenses incurred by the Underwriter in connection with the offering and distribution of the Certificates (including the fees and expenses of its counsel) including, without limitation, CUSIP Bureau, DTC, MSRB and California Debt and Investment Advisory Commission fees, if any, and the cost of preparation of any Blue Sky and Legal Investment memoranda and all Blue Sky filing fees in connection with the public offering of the Certificates, except as provided in subsection (A) above or as otherwise agreed to by the Underwriter, the Authority and the Local Agencies. 11. Any notice or other communication to be given to the Authority under this Purchase Contract may be given by delivering the same in writing to the Authority at the address set forth above; any notice or other communication to be given to any Local Agency under this Purchase Contract may be given by delivering the same in writing to the addresses set forth in Exhibit A and to such person as the applicable Local Agency may designate in writing; and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, 515 South Figueroa Street, Suite 1800, Los Angeles, California 90071, Attention: John W. Kim. The approval of the Underwriter when required hereunder or the determination of its satisfaction as to any document referred to herein shall be in writing signed by the Underwriter and delivered to the Authority. 12. For all purposes of this Purchase Contract, a default shall not be deemed to be continuing if it has been cured, waived, or otherwise remedied. This Purchase Contract shall be governed by and construed in accordance with the laws of the State applicable to contracts made and performed within the State. 13. The Underwriter agrees to assist the Authority in establishing the issue price of the Certificates and shall execute and deliver to the Authority at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit E, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Orrick, Herrington & Sutcliffe LLP, as bond counsel to the Authority), to accurately reflect, as applicable, the sales price or prices or the initial 22 offering price or prices to the public of the Certificates. All actions to be taken by the Authority under this section to establish the issue price of the Certificates may be taken on behalf of the Authority by the Local Agencies’ municipal advisor, Urban Futures, Inc. (the “Municipal Advisor”) and any notice or report to be provided to the Local Agencies and the Authority may be provided to the Municipal Advisor. Except as otherwise set forth in Exhibit B attached hereto, the Local Agencies and the Authority will treat the first price at which 10% of each maturity of the Certificates (the “10% test”), identified under the column “10% Test Used” in Exhibit B, is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Purchase Contract, the Underwriter shall report to the Local Agencies and the Authority the price or prices at which it has sold to the public each maturity of Certificates. If at that time the 10% test has not been satisfied as to any maturity of the Certificates, the Underwriter agrees to promptly report to the Local Agencies and the Authority the prices at which it sells the unsold Certificates of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Certificates of that maturity or until all Certificates of that maturity have been sold to the public. The Underwriter confirms that it has offered the Certificates to the public on or before the date of this Purchase Contract at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit B attached hereto, except as otherwise set forth therein. Exhibit B also sets forth, identified under the column “Hold the Offering Price Rule Used,” as of the date of this Purchase Contract, the maturities, if any, of the Certificates for which the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Certificates, the Underwriter will neither offer nor sell unsold Certificates of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the Underwriter has sold at least 10% of that maturity of the Certificates to the public at a price that is no higher than the initial offering price to the public. The Underwriter shall promptly advise the Authority when it has sold 10% of that maturity of the Certificates to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. The Underwriter confirms that any selling group agreement and any retail distribution agreement relating to the initial sale of the Certificates to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such retail distribution agreement, as applicable, to: (i) report the prices at which it sells to the public the unsold Certificates of each maturity allotted to it until it is notified by the Underwriter that either the 10% test has been satisfied as to the Certificates of that maturity or all Certificates of that maturity have been sold to the public; and (ii) comply with 23 the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Underwriter. The Authority acknowledges that, in making the representation set forth in this subsection, the Underwriter will rely on: (1) in the event a selling group has been created in connection with the initial sale of the Certificates to the public, the agreement of each dealer who is a member of the selling group to comply with the hold-the-offering-price rule, if applicable, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a retail distribution agreement was employed in connection with the initial sale of the Certificates to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold-the-offering-price rule, if applicable, as set forth in the retail distribution agreement and the related pricing wires. The Authority further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail distribution agreement, to comply with its corresponding agreement regarding the hold-the-offering-price rule as applicable to the Certificates. The Underwriter acknowledges that sales of any Certificates to any person that is a related party to the Underwriter shall not constitute sales to the public for purposes of this section. Further, for purposes of this section: (i) “public” means any person other than an underwriter or a related party; (ii) “underwriter” means: (1) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Certificates to the public; and (2) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (1) to participate in the initial sale of the Certificates to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Certificates to the public); (iii) a purchaser of any of the Certificates is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to: (1) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another); (2) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another); or (3) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and (iv) “sale date” means the date of execution of this Purchase Contract by all parties. 14. This Purchase Contract may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] [Signature Page to Certificate Purchase Agreement] 15. This Purchase Contract when accepted by the Authority and the Local Agencies in writing shall constitute the entire agreement by and among the Local Agencies, the Authority and the Underwriter and is made solely for the benefit of the Local Agencies, the Authority and the Underwriter (including the successors or assigns of the Underwriter). No other person shall acquire or have any right hereunder or by virtue hereof. Very truly yours, STIFEL, NICOLAUS & COMPANY, INCORPORATED By: Its: The foregoing is hereby agreed to and accepted as of the date first above written: CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory Time of Execution: ________________________ LOCAL AGENCIES LISTED ON EXHIBIT A HERETO [Authorized Officers of each Local Agency shall execute this Purchase Contract by signing the applicable Pricing Confirmation Supplement in Exhibit D-1 and Exhibit D-2 hereto.] A-1 EXHIBIT A $____________ CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) LOCAL AGENCIES CITY OF CLAREMONT 207 Harvard Avenue Claremont, CA 91711 CITY OF WEST COVINA 1444 West Garvey Avenue South West Covina, CA 91790 B-1 EXHIBIT B $____________ CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) MATURITY SCHEDULE Maturity Date (June 1) Principal Amount Interest Rate Yield Initial Offering Price 10% Test Used Hold-the- Offering- Price Rule Used Serial Certificates: $ % % Term Certificates: Total $ _______ C Priced to the first optional prepayment date of _____ 1, 20__ at par. C-1-1 EXHIBIT C-1 FORM OF 15c2-12 CERTIFICATE CERTIFICATE OF AUTHORITY AS TO FINALITY OF PRELIMINARY OFFICIAL STATEMENT I hereby certify that I am a member of the board of the California Statewide Communities Development Authority (the “Authority”) or an authorized administrative delegatee thereof (“Authorized Signatory”), and as such I am authorized to execute this certificate on behalf of the Authority. I understand that there has been delivered to Stifel, Nicolaus & Company, Incorporated, as underwriter of the California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program) (the “Certificates”), a Preliminary Official Statement relating to the Certificates, dated the date hereof (including the cover page, the introduction and all appendices thereto, the “Preliminary Official Statement”), which Preliminary Official Statement, as to only the sections thereof entitled “THE AUTHORITY” and “NO LITIGATION – The Authority,” the Authority deems to be final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”), except for information permitted to be omitted therefrom by Rule 15c2-12. Dated: March __, 2018 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Authorized Signatory C-2-1 EXHIBIT C-2 “DEEMED FINAL CERTIFICATE” FOR PRELIMINARY OFFICIAL STATEMENT March __, 2018 Stifel, Nicolaus & Company, Incorporated 515 South Figueroa St, Suite 1800 Los Angeles, California 90071 Attention: John W. Kim Re: California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program) Ladies and Gentlemen: With respect to the proposed sale of the California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program) (the “Certificates”), the California Statewide Communities Development Authority (the “Authority”) has delivered to you a Preliminary Official Statement, dated the date hereof (the “Preliminary Official Statement”). The [NAME OF LOCAL AGENCY], for purposes of compliance with Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”), deems the Preliminary Official Statement to be final as of its date, except for: (a) information regarding the Authority, the Certificate Insurer, the Reserve Policy, and the Certificate Insurance Policy (each as defined in the Preliminary Official Statement); (b) information relating to any other Local Agencies (as defined in the Preliminary Official Statement); and (c) the omission of the offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, dates and amounts of mandatory sinking fund payments, delivery dates, ratings and any other terms of the Certificates relating to such matters and any other information permitted to be omitted by the Rule. [NAME OF LOCAL AGENCY] By: Name: Title: D–1-1 EXHIBIT D-1 $____________ CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) FORM OF PRICING CONFIRMATION SUPPLEMENT CITY OF CLAREMONT PRICING INFORMATION Purchase Price Calculation Proportionate Principal Amount of Certificates: [Plus/Less]: Net Original Issue [Premium/Discount]: Less: Underwriter’s Discount: Total Purchase Price Use of Proceeds Costs of Issuance: [Certificate Insurance Policy:] [Reserve Policy:] Net Proceeds: Total Use of Proceeds IMPORTANT DATES Resolution Date of Local Agency: ____________, 2017 Purchase Date: ____________, 2018 Closing Date: ____________, 2018 Certificate Payment Dates: June 1 of each year, commencing June 1, 20__ Interest Payment Dates: June 1 and December 1 of each year, commencing _______ 1, 20__ Final Maturity Date: June 1, 20__ D–1-2 IN WITNESS WHEREOF, the Purchase Contract is agreed to, and this Pricing Confirmation Supplement appearing as Exhibit D-1 thereto is accepted, all on the Purchase Date set forth above. CITY OF CLAREMONT By: Name: Title: Time of Execution: ________________________ D-2-1 EXHIBIT D-2 $____________ CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) FORM OF PRICING CONFIRMATION SUPPLEMENT CITY OF WEST COVINA PRICING INFORMATION Purchase Price Calculation Proportionate Principal Amount of Certificates: [Plus/Less]: Net Original Issue [Premium/Discount]: Less: Underwriter’s Discount: Total Purchase Price Use of Proceeds Costs of Issuance: [Certificate Insurance Policy:] [Reserve Policy:] Net Proceeds: Total Use of Proceeds IMPORTANT DATES Resolution Date of Local Agency: ____________, 2017 Purchase Date: ____________, 2018 Closing Date: ____________, 2018 Certificate Payment Dates: June 1 of each year, commencing June 1, 20__ Interest Payment Dates: June 1 and December 1 of each year, commencing _______ 1, 20__ Final Maturity Date: June 1, 20__ D-2-2 IN WITNESS WHEREOF, the Purchase Contract is agreed to, and this Pricing Confirmation Supplement appearing as Exhibit D-2 thereto is accepted, all on the Purchase Date set forth above. CITY OF WEST COVINA By: Name: Title: Time of Execution: ________________________ E-1 EXHIBIT E $____________ CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM) FORM OF ISSUE PRICE CERTIFICATE The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (“Stifel”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Certificates”). 1. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A. 2. [Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) Stifel offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Certificates is attached to this certificate as Schedule B. (b) As set forth in the Certificate Purchase Agreement, dated March __, 2018, by and among Stifel, the local agencies identified in Exhibit A thereto and the Issuer, Stifel has agreed in writing that: (i) for each Maturity of the Hold-the-Offering-Price Maturities, it would neither offer nor sell any of the Certificates of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering- price rule”); and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering- price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold-the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Certificates during the Holding Period.] 3. Defined Terms. (a) General Rule Maturities means those Maturities of the Certificates listed in Schedule A hereto as the “General Rule Maturities.” (b) [Hold-the-Offering-Price Maturities means those Maturities of the Certificates listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (c) Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of: (i) the close of the fifth business day after the Sale Date (March __, 2018); or (ii) the date on which Stifel has sold at least 10% of such Hold-the- E-2 Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.] (d) Issuer means the California Statewide Communities Development Authority. (e) Maturity means Certificates with the same credit and payment terms. Certificates with different maturity dates, or Certificates with the same maturity date but different stated interest rates, are treated as separate maturities. (f) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) [Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Certificates. The Sale Date of the Certificates is March __, 2018. (h) Underwriter means: (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Certificates to the Public; and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Certificates to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Certificates to the Public).] The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Stifel’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Certificates, and by Orrick, Herrington & Sutcliffe LLP in connection with rendering its opinion that the interest with respect to the Certificates is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Certificates. April __, 2018 STIFEL, NICOLAUS & COMPANY, INCORPORATED By: Name: STIFEL, NICOLAUS & COMPANY, INCORPORATED By: Name: SCHEDULE A SALE PRICES OF THE GENERAL RULE MATURITIES [AND INITIAL OFFERING PRICES OF THE HOLD-THE-OFFERING-PRICE MATURITIES] (Attached) SCHEDULE B PRICING WIRE OR EQUIVALENT COMMUNICATION (Attached) ATTACHMENT NO. 6 A-1 LOCAL AGENCY CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the “Disclosure Agreement”) is executed and delivered by and between the City of West Covina (the “Reporting Local Agency”) and _______________, in its capacity as dissemination agent (the “Dissemination Agent”), in connection with the execution and delivery of the California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program), in an aggregate principal amount of $________ (the “Certificates”). The Certificates are being executed and delivered by Wilmington Trust, National Association, as trustee (the “Trustee”), pursuant to the provisions of that certain Trust Agreement, dated as of April 1, 2018 (the “Trust Agreement”), by and among the California Statewide Communities Development Authority (the “Authority”), the Trustee, and the Reporting Local Agency, in order to provide funds to finance the acquisition, construction and improvement of certain public improvements within the jurisdiction of the Reporting Local Agency. The Reporting Local Agency and the Dissemination Agent hereby certify, covenant and agree as follows: Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the parties hereto for the benefit of the holders and Beneficial Owners of the Certificates and in order to assist the Participating Underwriter in complying with the Rule. Section 2. Definitions. In addition to the definitions set forth in the Trust Agreement and in the 2018 Installment Sale Agreement, dated as of April 1, 2018 (the “2018 Installment Sale Agreement”), by and between the Authority and the Reporting Local Agency, which apply to any capitalized terms used in this Disclosure Agreement, unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: “Annual Report” shall mean any Annual Report provided by the Reporting Local Agency pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. “Annual Report Date” shall mean each April 1 after the end of the Reporting Local Agency’s fiscal year, the end of which, as of the date of this Disclosure Agreement, is June 30. “Beneficial Owner” shall mean any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Certificates for federal income tax purposes. “Insurer” shall mean _______________, or any successor thereto or assignee thereof. “Dissemination Agent” shall mean, initially, _______________, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent that is so designated in writing by the Reporting Local Agency and has filed with the then-current Dissemination Agent a written acceptance of such designation. “Listed Events” shall mean any of the events listed in Sections 5(a) and (b) of this Disclosure Agreement. “MSRB” shall mean the Municipal Securities Rulemaking Board. 2 “Official Statement” means the Official Statement dated March __, 2018, relating to the Certificates. “Participating Underwriter” shall mean Stifel, Nicolaus & Company, Incorporated, the original underwriter of the Certificates required to comply with the Rule in connection with offering of the Certificates. “Rule” shall mean Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. “SEC” shall mean the Securities and Exchange Commission. Section 3. Provision of Annual Reports. (a) The Reporting Local Agency shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 1, 2019 with the Annual Report for fiscal year 2017- 18, provide to the MSRB an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Agreement. Not later than 15 calendar days prior to such date, the Reporting Local Agency shall provide its Annual Report to the Dissemination Agent, if such Dissemination Agent is a different entity than the Reporting Local Agency. The Annual Report must be submitted in an electronic format as prescribed by MSRB, accompanied by such identifying information as is prescribed by MSRB, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that any audited financial statements of the Reporting Local Agency may be submitted separately from the balance of the Annual Report, and not later than the date required above for the filings of the Annual Report. If the Reporting Local Agency’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(a). The Reporting Local Agency shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished hereunder. The Dissemination Agent may conclusively rely upon such certification of the Reporting Local Agency and shall have no duty or obligation to review such Annual Report. (b) If the Reporting Local Agency is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the Reporting Local Agency in a timely manner shall send to the MSRB a notice in substantially the form attached as Exhibit A. Such notice must be submitted in an electronic format as prescribed by the MSRB, accompanied by such identifying information as prescribed by the MSRB. (c) The Dissemination Agent shall: 1. provide any Annual Report received by it to the MSRB by the date required in subsection (a); 2. file a report with the Reporting Local Agency and the Trustee (if the Dissemination Agent is other than the Trustee) certifying that the Annual Report has been provided to the MSRB pursuant to this Disclosure Agreement and stating the date it was provided; and 3. take any other actions as are mutually agreed upon between the Dissemination Agent and the Reporting Local Agency. 3 Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements of the Reporting Local Agency, which include information regarding the funds and accounts of the Reporting Local Agency, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If such audited financial statements are not available at the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The following information with respect to the Reporting Local Agency and the Certificates for the fiscal year to which the Annual Report relates, which information may be provided by its inclusion in the audited financial statements of the Reporting Local Agency for such fiscal year described in subsection (a) above: 1. Principal amount of the Certificates outstanding (including principal amount and years of maturity of Certificates, if any, called for prepayment in advance of maturity) and any bonds or certificates of participation issued or executed and delivered, as applicable, to refund the same. 2. Balance in the funds and accounts established under the Trust Agreement and the 2018 Installment Sale Agreement. 3. If the amount on deposit in the Reserve Fund is not equal to the Reserve Subaccount Requirement, the amount of the delinquency or surplus, as applicable. 4. A description of the status of construction of the Reporting Local Agency’s Project, including: (i) a description of any land use entitlements acquired or amended with respect to any portion of the Project during the period covered by the Annual Report; and (ii) any previously undisclosed legislative, administrative or judicial challenges to the development of the Project, if material. 5. Updated information set forth in the tables of the Official Statement entitled “CITY OF WEST COVINA MEASURE R REVENUE ALLOCATION,” “CITY OF WEST COVINA MEASURE M REVENUE ALLOCATION” and “CITY OF WEST COVINA PROPOSITION C REVENUE ALLOCATION.” 6. Any material changes to the Reporting Local Agency’s allocation of Measure R Receipts, Measure M Receipts or Proposition C Receipts or with respect to its expectations with regard to the anticipated or projected Measure R Receipts, Measure M Receipts or Proposition C Receipts. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Reporting Local Agency or related public entities, that are available to the public on the MSRB’s Internet website or filed with the SEC. If the document 4 included by reference is a final official statement, it must be available from the MSRB. The Reporting Local Agency shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Reporting Local Agency shall give, or shall cause the Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the Certificates in a timely manner not more than ten (10) Business Days after the event: 1. Principal and interest payment delinquencies. 2. Unscheduled draws on debt service reserves reflecting financial difficulties. 3. Unscheduled draws on credit enhancements reflecting financial difficulties. 4. Substitution of credit or liquidity providers, or their failure to perform. 5. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability or Notices of Proposed Issue (IRS Form 5701 TEB). 6. Tender offers. 7. Defeasances. 8. Rating changes. 9. Bankruptcy, insolvency, receivership or similar proceedings. Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) Pursuant to the provisions of this Section 5, the Reporting Local Agency shall give, or shall cause the Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the Certificates, if material, in a timely manner not more than ten (10) Business Days after occurrence: 1. Unless described in Section 5(a)(5), other notices or determinations by the Internal Revenue Service with respect to the tax status of the Certificates or other events affecting the tax status of the Certificates. 2. Modifications to the rights of Certificateholders. 5 3. Optional, unscheduled or contingent Certificate calls. 4. Release, substitution or sale of property securing repayment of the Certificates. 5. Non-payment related defaults. 6. The consummation of a merger, consolidation or acquisition involving the Reporting Local Agency or the sale of all or substantially all of the assets of the Reporting Local Agency, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms. 7. Appointment of a successor or additional trustee or the change of the name of a trustee. (c) If the Reporting Local Agency determines that knowledge of the occurrence of a Listed Event under subsection (b) would be material under applicable federal securities laws, and if the Dissemination Agent is other than the Reporting Local Agency, the Reporting Local Agency shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to file a notice of such occurrence with the MSRB in an electronic format as prescribed by the MSRB in a timely manner not more than ten (10) Business Days after the event. (d) If the Reporting Local Agency determines that a Listed Event under subsection (b) would not be material under applicable federal securities laws and if the Dissemination Agent is other than the Reporting Local Agency, the Reporting Local Agency shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence. (e) The Reporting Local Agency hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the Reporting Local Agency and, if the Dissemination Agent is other than the Reporting Local Agency, the Dissemination Agent shall not be responsible for determining whether the Reporting Local Agency’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule. Section 6. Termination of Reporting Obligation. The obligations of the Reporting Local Agency and the Dissemination Agent specified in this Disclosure Agreement shall terminate upon the legal defeasance, prior prepayment or payment in full of all of the Certificates. If such termination occurs prior to the final maturity of the Certificates, the Reporting Local Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(a). Section 7. Dissemination Agent. The Reporting Local Agency may from time to time appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Reporting Local Agency shall act as Dissemination Agent. The initial Dissemination Agent shall be Urban Futures, Inc. 6 Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Reporting Local Agency may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to annual or event information to be provided hereunder, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the Reporting Local Agency or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel have complied with the requirements of the Rule at the time of the primary offering of the Certificates, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver: (i) is approved by holders of the Certificates in the manner provided in the Trust Agreement for amendments to the Trust Agreement with the consent of holders; or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interest of Certificate owners. The Reporting Local Agency shall describe any amendment to this Disclosure Agreement in the next Annual Report filed after such amendment takes effect. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the annual financial information containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the Reporting Local Agency to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the MSRB. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Reporting Local Agency from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Reporting Local Agency chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Reporting Local Agency shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Reporting Local Agency to comply with any provisions of this Disclosure Agreement, the Insurer any Participating Underwriter or any 7 holder or Beneficial Owner of the Certificates, or the Trustee on behalf of the holders of the Certificates, may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Reporting Local Agency to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed to be a default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the Reporting Local Agency to comply with this Disclosure Agreement shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Reporting Local Agency agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities that it may incur arising out of or in the exercise or performance of its duties as described hereunder, if any, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the Reporting Local Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Certificates. The Dissemination Agent shall not be responsible in any manner for the format or content of any notice or Annual Report prepared by the Reporting Local Agency pursuant to this Disclosure Agreement. The Reporting Local Agency shall pay the reasonable fees and expenses of the Dissemination Agent for its duties as described hereunder. Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given to the Dissemination Agent (if other than the Reporting Local Agency) and to the Reporting Local Agency as follows: Reporting Local Agency: City of West Covina 1444 West Garvey Avenue South West Covina, CA 91790 Dissemination Agent: [_______________] Insurer: [TO COME] Section 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Reporting Local Agency, the Insurer, the Dissemination Agent, the Trustee, the Participating Underwriter and holders and Beneficial Owners from time to time of the Certificates, and shall create no rights in any other person or entity. Section 14. Counterparts. This Disclosure Agreement may be executed in multiple counterparts, all of which shall constitute one and the same instrument, and each of which shall be deemed to be an original. Date: April __, 2018 CITY OF WEST COVINA By: Authorized Signatory 8 _______________, as Dissemination Agent By: Authorized Signatory A-1 EXHIBIT A TO CONTINUING DISCLOSURE AGREEMENT NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Obligor: City of West Covina Name of Certificates: California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program) Date of Execution and Delivery: April __, 2018 NOTICE IS HEREBY GIVEN that the City of West Covina, California (the “Reporting Local Agency”) has not provided an Annual Report with respect to the above-named Certificates as required by the Continuing Disclosure Agreement, dated April __, 2018. The Reporting Local Agency anticipates that the Annual Report will be filed by __________________. Dated: CITY OF WEST COVINA By: Authorized Signatory ATTACHMENT NO. 7 OHSUSA:767615485.1 RESOLUTION NO. 18NP-__ CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY A RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY BY THE AUTHORITY OF ONE OR MORE INSTALLMENT SALE AGREEMENTS, TRUST AGREEMENTS, AND CERTIFICATE PURCHASE AGREEMENTS IN CONNECTION WITH THE EXECUTION AND DELIVERY OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. – TOTAL ROAD IMPROVEMENT PROGRAM), AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH CERTIFICATES, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH CERTIFICATES AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND CERTIFICATES AND RELATED ACTIONS WHEREAS, the California Statewide Communities Development Authority (the “Authority”) is a joint exercise of powers authority duly organized and operating pursuant to Article 1 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California; WHEREAS, Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California authorizes and empowers the Authority to cause certificates of participation to be executed and delivered to assist local agencies in financing projects and programs consisting of certain public improvements or working capital or liability and other insurance needs whenever a local agency determines that there are significant public benefits from so doing; WHEREAS, the Local Agencies named in Schedule I hereto (referred to herein as the “Local Agencies”) have determined that the consummation of the transactions contemplated in the respective Installment Sale Agreement to which they are party, between the Local Agency and the Authority (the “Agreement”) and a Trust Agreement, among the Authority, some or all of such Local Agencies and Wilmington Trust, N.A., as trustee (the “Trustee”) will result in significant public benefits, and accordingly, have determined to participate in the California Statewide Communities Development Authority T.R.I.P.—Total Road Improvement Program (the “Program”) established by the Authority; WHEREAS, each Local Agency is a participant in the Program and a member of the Authority; WHEREAS, each Local Agency participating in the Program desires to have the installment sale payments payable in connection with its Agreement combined in one or more series or pools with similar payments made pursuant to the Agreements executed by some or all of the other Local Agencies participating in the Program in order to achieve a lower net interest 2 OHSUSA:767615485.1 cost and lower costs of issuance associated with executing and delivering each such series of Certificates; WHEREAS, the Certificates shall be designated “California Statewide Communities Development Authority Transportation Revenue (Installment Sale) Certificates of Participation, Series 2018A (T.R.I.P. – Total Road Improvement Program)” (herein the “Certificates”), and the aggregate principal amount for such series and any subseries shall not exceed $_________; WHEREAS, the Authority and the Local Agencies may determine that securing the timely payment of the principal and interest evidenced by the Certificates by obtaining a Certificate insurance policy with respect thereto could be economically advantageous; WHEREAS, Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), has submitted to the Local Agencies and the Authority a proposed form of Certificate Purchase Agreement (the “Certificate Purchase Agreement”) to purchase each series of the Certificates; WHEREAS, a form of the Preliminary Official Statement (the “Preliminary Official Statement”) to be distributed in connection with the public offering of the Certificates has been prepared; WHEREAS, the public improvements to be financed by each Local Agency are to be located within the respective boundaries of each Local Agency; WHEREAS, the Program will result in significant public benefits in the form of demonstrable efficiencies, economies of scale, savings in effective interest rates and other cost savings for the participating Local Agencies; WHEREAS, the Commission has been presented with the form of each document referred to herein relating to the financing contemplated hereby, and the Commission has examined and approved each document and desires to authorize and direct the execution of such documents and the consummation of such financing; and WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of such financing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the Authority is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, as follows: Section 1. All of the recitals herein contained are true and correct and the Commission so finds. 3 OHSUSA:767615485.1 Section 2. The form of Agreement with each Local Agency, each to be dated as of the first day of the month preceding the initial execution and delivery of the Certificates (the “Document Date”), as made available to the Commissioners, is hereby approved, and any member of the Commission of the Authority or their administrative delegatees duly authorized pursuant to Resolution No. [15R-53] of the Authority, adopted on [October 22, 2015] (each, an “Authorized Signatory”) is hereby authorized and directed to execute and deliver the Agreements in substantially such form, with any changes, additions and completions thereto as such Authorized Signatory may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 3. The form of Trust Agreement pertaining to each series of Certificates (to be revised as appropriate), each to be dated the Document Date, among the Local Agencies participating in the related series of Certificates, the Authority and the Trustee, as made available to the Commissioners, is hereby approved, and any Authorized Signatory is hereby authorized and directed to execute and deliver the Trust Agreements in substantially such form, with any changes, additions and completions thereto as such Authorized Signatory may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the aggregate amount of all series of the Certificates shall not exceed $_________, the final maturity date of the Certificates shall be no later than June 1, 20__ and the true interest cost applicable to the interest components of the installment payments shall not exceed ____% per annum and, provided, further, that such changes, insertions and omissions shall be consistent with the terms of the Certificates established by the Certificate Purchase Agreement as finally executed. Section 4. The execution and delivery of the Certificates, in the principal amounts, bearing interest at the rates and maturing on the dates as specified in the Trust Agreements as finally executed, is hereby authorized and approved. Section 5. The form of Certificate Purchase Agreement pertaining to each series of Certificates (to be revised as appropriate), as made available to the Commissioners, is hereby approved, and any Authorized Signatory is hereby authorized and directed to execute the Certificate Purchase Agreements in substantially such form, with any changes, additions and completions thereto as such Authorized Signatory may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the underwriter’s discount for the sale of the Certificates shall not exceed 2.50% of the aggregate principal amount of such Certificates. Section 6. The form of Preliminary Official Statement relating to the Certificates, as made available to the Commissioners, is hereby approved on behalf of the Local Agencies. Any Authorized Signatory is hereby authorized and directed, at or after the time of the sale of the Certificates, on behalf of the Local Agencies, to execute a final Official Statement in substantially the form of the Preliminary Official Statement presented to this meeting, with such additions thereto or changes therein as such Authorized Signatory may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. The Underwriter is hereby authorized and directed to distribute copies of the Preliminary Official Statement to potential purchasers of the Certificates and the Official Statement, as finally executed, to the purchasers of the Certificates. Any Authorized Signatory is hereby authorized to certify on 4 OHSUSA:767615485.1 behalf of the Authority that the Preliminary Official Statement is deemed final as of its date, within the meaning of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (except for the omission of certain final pricing, rating and related information as permitted by such Rule). Section 7. The officers and agents of the Authority are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, including, without limitation, negotiating the terms of an insurance policy and/or a reserve surety bond to the extent such insurance and surety bond is determined to be economically advantageous. Section 8. All actions heretofore taken by the officers and agents of the Authority with respect to the transactions set forth above are hereby approved, confirmed and ratified. Section 9. This Resolution shall take effect from and after its adoption. PASSED AND ADOPTED by the California Statewide Communities Development Authority this ____________, 2018. 5 OHSUSA:767615485.1 I, the undersigned, an Authorized Signatory of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of the Authority at a duly called meeting of the Commission of the Authority held in accordance with law on ____________, 2018. By: ________________________________ Authorized Signatory California Statewide Communities Development Authority ATTACHMENT NO. 7 I-1 OHSUSA:767615485.1 SCHEDULE I LOCAL AGENCIES City of West Covina City of West Covina, California CSCDA TRIP Certificates of Participation Preliminary Amortization Schedule 1 Prelirninary Average Interest Rate: 3.3% Years Date Princi~al Interest 6/1/2018 $ $ 72,811 1 6/1/2019 455,000 524,238 2 6/1/2020 470,000 506,038 3 6/1/2021 495,000 482,538 4 6/1/2022 520,000 457,788 5 6/1/2023 545,000 431,788 6 6/1/2024 575,000 404,538 7 6/1/2025 600,000 375,788 8 6/1/2026 635,000 345,788 9 6i1/2027 665,000 314,038 10 6/1/2028 700,000 280,788 11 6/1/2029 730,000 245,788 12 6/1/2030 770,000 209,288 13 6/1/2031 805,000 170,788 14 6/1/2032 835,000 144,625 15 6/1/2033 860,000 117,488 16 6/1/2034 890,000 89,538 17 6/1/2035 920,000 60,613 18 6/1/2036 945,000 30,713 TOTALS $ 12,415,000 $ 5,264,973 ATTACHMENT NO. 8 Debt Service Par Balance $ 72,811 $ 12,415,000 979,238 12,415,000 976,038 11,960,000 977,538 11,490,000 977,788 10,995,000 976,788 10,475,000 979,538 9,930,000 975,788 9,355,000 980,788 8,755,000 979,038 8,120,000 980,788 7,455,000 975,788 6,755,000 979,288 6,025,000 975,788 5,255,000 979,625 4,450,000 977,488 3,615,000 979,538 2,755,000 980,613 1,865,000 975,713 945,000 $ 17,679,973 1AII Numbers are Preliminary and are Subject to Prevailing Market Cohditions at the Time of Sale . AGENDA ITEMNO. 2 AGENDA STAFF REPORT City of West Covina I Office of the City Manager DATE: January 8, 2018 TO: FROM: Mayor and City Council Chris Freeland City Manager SUBJECT: PUBLIC HEARING -ISSUANCE OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018A (T.R.I.P. -TOTAL ROAD IMPROVEMENT PROGRAM) BONDS FOR GLENDORA AVENUE REVITALIZATION RECOMMENDATION: It is recommended that the City Council take the following actions: 1. Adopt the following resolution: RESOLUTION NO. 2018-01 -A RESOLUTION OF THE CITY COUNCIL OF WEST COVINA, CALIFORNIA, APPROVING THE EXECUTION AND DELIVERY OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TRANSPORTATION REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2018 (T.R.I.P. TOTAL ROAD IMPROVEMENT PROGRAM) PURSUANT TO A TRUST AGREEMENT, AUTHORIZING THE EXECUTION AND DELIVERY OF A TRUST AGREEMENT, CERTIFICATE PURCHASE AGREEMENT AND AN INSTALLMENT SALE AGREEMENT, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH CERTIFICATES, AND AUTHORIZING THE FILING OF A VALIDATION ACTION AND OTHER MATTERS RELATING THERETO 2. Approve the bond team as outlined in the report; Glendora Avenue Revitalization Bond Issuance Page 2 of 9 -January 8, 2018 3. Approve the form of the resolution that the California Statewide Communities Development Authority is to adopt in order to issue bonds on the City of West Covina' s behalf; 4. Authorize the City Manager to execute a professional services agreement with Urban Futures, Inc., to complete the required ongoing continuing disclosure services for the duration of the bonds, for an amount not to exceed $1,025 per year; and 5. Authorize the Mayor, City Manager and City Attorney to execute all necessary documents related to the issuance of the Glendora Avenue Revitalization Bonds. BACKGROUND: This item was heard on December 19, 2017. It has been requested to have this item re-agendized for City Council discussion. The revitalization of Glendora A venue and the Lakes Entertainment Center has been the desire of the community for over 20 years, as the City of West Covina does not have a dedicated downtown area like other cities, and has historically lacked a central gathering place for the community. The Vision 20/20 Plan, a strategic plan developed and completed in 2002, included community outreach efforts that established the community's desire for a downtown or central gathering place for the residents. In 2014, the City completed its General Plan Update, where the community reiterated its desire for a central gathering place, and developed the idea to redesign Glendora A venue into a "ramblas" style street, modeled after Las Ramblas in Barcelona, Spain. Following numerous community and stakeholder meetings, the "ramblas" idea to develop a pedestrian-friendly boulevard with one-way traffic on either side of open space along Glendora A venue was conceived. On May 17, 2016, the City Council retained Kreuzer Consulting Group (KCG) to develop the final design and other documents for the Glendora Avenue Revitalization Project. As part of the design process, the City hosted two community workshops in August and October of 2016. During the workshops, KCG outlined the following overall design objectives as identified in the General Plan Update: • Create an interconnected, walkable and vibrant downtown; • Provide, maintain and enhance public features such as parks, streetscapes and open spaces; and • Efficiently manage supply and demand for downtown parking to accommodate visitor, commuter and residential parking needs. KCG presented potential enhancements that included an entry monument sign, streetscape theming, usable greenbelts, "Great Lawn" area, concrete pavers, thematic street lights and traffic signal poles, and street furnishings. Glendora Avenue Revitaliz.ation Bond Issuance Page 3 of9 -January 8, 2018 On December 6, 2016, the City Council approved the 35 percent level plans and "Great Lawn" alignment for Glendora A venue and directed KCG to proceed with final design. At that meeting, the City Council also directed staff to proceed with development of the "Urban Eclectic" thematic concept for the Glendora A venue downtown area. On September 20, 2017, City Staff conducted an open house attended by approximately 50 residents, property owners and merchants at the West Covina Historical Society Museum on Glendora A venue. KCG provided photo boards and renderings related to construction phasing and traffic control, parking and impacts, and overall project layout and design features. The stakeholders were given an opportunity to ask questions and obtain more information regarding how their prope11ies and businesses will be impacted during and after construction. The attendees were supportive of developing a central downtown meeting place and the proposed improvements on Glendora A venue. The proposed Glendora A venue Revitalization Project will reconfigure the existing City right-of- way and adjacent City-owned parking lot between West Covina Parkway and Garvey A venue South. The area, approximately 165-feet wide by 2,500-feet long, will be redesigned as a new street modeling the "ramblas" concept, with a central gathering place with one-way travel lanes and parallel and/or angled parking on both sides. The central gathering areas will allow for flexible uses such as festive gatherings, farmer's market, summer concerts and other events while allowing traffic circulation on the one-way streets bordering it. The streets could also be closed for activities or events to create a pedestrian-only gathering place allowing use of streets, central landscaped and parkway areas. The current development of Glendora A venue has approximately 165 feet of street and parking in between the retailers on the east side and the users on the west side, which does not make this area pedestrian-friendly. The redesign of Glendora Avenue will revitalize the corridor and serve as a catalyst for new development interest in the newly created downtown area. In addition to creating a central gathering place for residents to enjoy, the revitalization of Glendora Avenue will help increase foot traffic and customers to the local businesses along Glendora Avenue and promote economic activity. The proposed programming (festivals and similar events, farmer's market, summer concerts, etc.) in the central gathering areas will make this space more enticing for businesses and residents, including the new residents at The Colony at the Lakes apartment complex. The investment the City proposes to make in the public infrastructure demonstrates to developers, and the real estate industry, the City's dedication to creating a downtown for the community and its commitment to realizing that vision. Furthermore, City staff has been actively marketing the revitalization project and the downtown district to prospective developers resulting in positive feedback and interest.in investing. These efforts have resulted in new businesses moving or relocating to Glendora A venue in anticipation of the revitalization project. This area will also be desirable for new development opportunities, including, but not limited to, fine dining, micro-breweries, performing arts, and much more. For the past few years, Staff has been meeting with Glendora A venue business and prope11y owners, residents and other stakeholders to discuss the project concept and design. The "Old Glendora Avenue Revitalization Bond Issuance Page 4 of9 -January 8, 2018 Center-Lakes Enhancement Committee" was formed in 2014, by local property and business owners on Glendora A venue, along with community members. This was in response to The Colony at the Lakes development and to focus efforts to make plans to upgrade Glendora A venue. Since the Committee was formed, it has been an active participant in the development of the proposed street redesign and has pledged its support for this project. Staff has also met with key stakeholders (property owners for The Colony at the Lakes, Edwards Stadium 18 Theater, Lakes Entertainment Center, Lakes Office buildings, among others) impacted by the proposed project; these stakeholders are excited for the revitalization of Glendora A venue and are anxious for the City to move forward with the proposed improvements. Several stakeholders are ah'eady in the process of making improvements to their properties, including upgrades to their buildings, improvements to the interior of their properties, and landscaping. At the October 17, 2017 City Council Meeting, the City Council approved the final design for the Glendora A venue Revitalization Project and authorized the City Manager to initiate the process of securing bond financing through the California Statewide Communities Development Authority (CSCDA) in the total amount of$12 million in bond proceeds for the construction, administration, construction management, and inspection of the Glendora Avenue Revitalization Project. DISCUSSION: CSCDA is a joint powers authority that was co-founded by the League of California Cities and California State Association of Counties to provide California local governments and private entities access to low-cost, tax-exempt financing programs. In 2008, CSCDA implemented a street financing pool program known as the Total Road Improvement Program ("TRIP") to assist cities and counties in their efforts to finance larger scale street improvement projects. Participating in TRIP Program is beneficial for a variety of reasons, including: • Program does not require the City to utilize collateral (i.e. City Hall or other City facilities) for bond issuance; • Does not require the City to pledge any General Funds. Bond issuance will utilize revenues from existing Los Angeles County transpo1iation tax measures. No additional cost or burden on residents or businesses; • Bond team and standardized documentation has been provided by CSCDA; which reduces cost and time to the City; • Ability to paiiner with other cities on a bond issuance, which provides opportunities to share costs and to seek more favorable interest rates for the bonds. The City of Claremont will be participating in the same bond issuance, and other communities may also. Under TRIP, CSCDA would cause the execution and delivery of all Certificates of Participation (COP), or funding, on behalf of the City of West Covina and any other local participants. Currently, the City of Claremont is anticipated to participate in the program concurrent with the City of West Covina. Each local agency participant (Claremont, West Covina, and any other potential participant) would be responsible for installment payments relating to their pro-rata portion of the Glendora Avenue Revitaliz.ation Bond Issuance Page 5 of 9 -January 8, 2018 COPs. Local agency payments are made under individual Installment Sale Agreements. No agency is responsible for any other agency's obligations under the Program. The Glendora A venue improvements will be designated eligible costs payable from Los Angeles County Measure R, Proposition C and Measure M Revenues, to provide the engineering, construction, inspection, contract administration, and other incidental costs for the project. Staff is proposing the execution and delivery of the Transportation Revenue COPs in an amount not to exceed $13.0 million. This includes the estimated $12 million for improvements and a recommended $1 million by the Bond Team for costs associated with the bond issuance and cash flow reserves. The COPs will be secured by Proposition C, Measure R, and Measure M revenues the City receives from Los Angeles County. Proposition C is a Yz cent sales tax measure passed by Los Angeles County voters in 1990 to fund rail, bus, and transit related street projects. Measure R is a Yz cent sales tax measure passed by Los Angeles County voters in November 2008 to finance new transpo1iation projects and programs. As an expansion to the Measure R, Measure M was passed by the voters of Los Angeles County in November 2016. Measure M provides additional funding for local transportation projects such as traditional street, traffic control, and pedestrian wayfinding improvements. It is an additional Yz cent sales tax measure that expands to a full cent following the sunset of the Measure R sales tax in 2039. Securing the COPs with multiple funding sources will provide the City of West Covina with flexibility to utilize various funding sources in repayment of the bonds. Documents to be Approved: To issue the COPs, approval of the attached Resolution (Attachment No. 1) will accomplish the following: • Approves the form of the following documents: o Installment Sale Agreement (Attachment No. 2) o Trust Agreement (Attachment No. 3) o Preliminary Official Statement (Attachment No. 4) o Certificate Purchase Agreement (Attachment No. 5) o Continuing Disclosure Agreement (Attachment No. 6) • Approves the sale of the COPs in an amount not to exceed $13.0 million. • Authorizes the Mayor, City Clerk, City Manager, and Finance Director as applicable, to execute all of the above documents, and such other documents and certifications that may be necessary to consummate the transaction. • Approves the sale of the COPs to the underwriter, Stifel, Inc. on a pooled or stand-alone basis at a blended interest rate of not more than 4.5% and an underwriter's discount of not more than 1.0% of the par amount. • Authorizes the commencement and completion of proceedings required for the judicial validation, court approval, of the validity of the foregoing documents and the pledge of Proposition C, Measure R, and Measure M revenues to the payment of Installment Glendora Avenue Revitalization Bond Issuance Page 6 of9-January 8, 2018 Payments (as defined below). The documents presented for approval pursuant to the attached resolution are as follows: Installment Sale Agreement. The Installment Sale Agreement between the City and CSCDA to transfer the Project to the City, in consideration of which the City will obligate itself to make installment payments for the Project for CSCDA in the amounts and on the dates set forth in the Installment Sale Agreement (Installment Payments). Trust Agreement. The Trust Agreement defines the terms and conditions of the COPs, the rights and obligations of the City, CSCDA, the municipal bond insurer, if any, the trustee (Wilmington Trust, N.A.), and the certificate holders. Preliminary Official Statement. The Preliminary Official Statement provides disclosure on CSCDA, the COPs, the City and other pe1tinent information to potential investors needed prior to making an investment decision. The Preliminary Official Statement will also provide disclosure on other paiticipants which may become part of the offering of the Series 2018 Transportation Revenue COPs. Certificate Purchase Agreement. The Certificate Purchase Agreement among CSCDA, Stifel, Nicolaus & Co. and the City defines the terms and conditions under which the COPs will be purchased by the underwriter. Continuing Disclosure Agreement. The Continuing Disclosure Agreement between the City and the Dissemination Agent and the City executed for the benefit of investors to provide certain financial information and operating data and notices of certain events. In addition, the CSCDA will be adopting a resolution, similar to the City of West Covina's resolution, to issue bonds on the City of West Covina's behalf (Attachment No. 7). Process for Issuance of Bonds Below is a summary of the process the City will follow in order to issue the bonds for the project. This occurs the week following the City Council's approval. 1. Validation Complaint will be filed with the Los Angeles Superior Court to approve the use of the funds and project to provide assurances to investors and the City on the proper use of the funds (December 2017/January 2018). 2. Posting of bond issuance in a publication of general circulation to allow interested parties to seek answers to questions on the bond issuance. This is also part of public disclosure of the bond issuance (January 2018). 3. Approval from Los Angeles Metro on use ofrevenue sources for project to be bonded. 4. CSCDA Board approves the issuance of the bonds (February 2018). 5. Conference call with Standards & Poor to verify City's credit rating (March 2018). 6. Once all approvals have been completed, the bonds will be issued and funds will be distributed to the City for the project (April 2018). Glendora Avenue Revitalization Bond Issuance Page 7 of9 -January 8, 2018 Bond Team Normally a City would conduct multiple Request for Proposals (RFPs) in order to assemble the various consultants to the bond team. Under the CSCDA program, it has already conducted the RFPs and has pre-approved the bond team the City will utilize for the issuance of the bonds. The fees for the consultants are paid from the bond issuance, referred to as the Cost of Issuance, and are contingent upon the successful sale of the proposed bonds. The bond team for this bond issuance is as follows: • Municipal Advisor (Urban Futures, Inc.) -A Municipal Advisor is a person or firm who advises municipalities on bond offerings. A Municipal Advisor must be registered with the Securities and Exchange Commission (SEC) and will be subject to fiduciary duties and other regulations. The Municipal Advisor works in the best interest of the City. • Underwriter (Stifel) -Municipal bond underwriting is the process of raising funds for a municipality by creating a new security to be sold to investors. Through this process, the issuing municipality receives the needed funds at the time of the bond sale by selling new municipal bonds that will be repaid sometime in the future. For this transaction, Stifel has been engaged to solicit investors to fund the City's project. • Disclosure Counsel (Stradling, Y occa, Carlson & Rauth) -An attorney or law firm retained by the issuer to provide advice on issuer disclosure obligations and to prepare the official statement and/or continuing disclosure agreement. • Bond Counsel (Orrick, Herrington & Sutcliffe LLP) -An attorney or law firm retained to give the traditional bond counsel opinion. Such opinion customarily opines that the bonds have been validly issued and, if tax exemption is intended, that the bonds are tax-exempt bonds. The opinion also may address related matters, such as state or local tax exemption and the enforceability of certain security provisions. Typically, bond counsel may prepare, or review and advise the issuer regarding, authorizing resolutions, bond contracts, validation proceedings and litigation. • Trustee (Wilmington Trust, N.A.) -A financial institution with trust powers, designated by the issuer or borrower, that acts, pursuant to a bond contract, in a fiduciary capacity for the benefit of the bondholders in enforcing the terms of the bond contract. In many cases, the trustee also acts as custodian, paying agent, registrar and/or transfer agent for the bonds. • Trustee Counsel (Taboada Rochlin Govier) -An attorney or law firm retained by the Trustee to develop and review indentures and trust agreements, provides an opinion on compliance with state and federal bank laws and trust agreement guidelines, reviews procedures such as redemption provisions and amendments to the indenture, definitions of default and acceptable remedies and all matters relating to the management of funds generated by the bond offering. Glendora Avenue Revitalization Bond Issuance Page 8 of9 -January 8, 2018 FISCAL IMPACT: Based on current market conditions, the par amount of the 2018 TRIP COPs is estimated to be $12,415,000. While not expected to increase significantly, the estimated par amount will be subject to prevailing market conditions at the time of sale. Therefore, a not-to-exceed par amount of $13,000,000 is being requested to provide a reasonable cushion above the expected par amount should interest rates fluctuate and/or the structure of the bonds change (based on investor preference) at the time of sale. All costs associated with the TRIP financing will be paid out of proceeds from the issuance of the COPs (assuming the validation proceedings are successful). Average annual installment payments will be approximately $982,000 and be paid over 18 years (through 2036). Installment payments are expected to be paid solely from transportation revenues (e.g., a portion of West Covina's share of Proposition C, Measure R, and Measure M revenues). Payments over the 18-year period will total an estimated $17. 7 million (Principal and Interest). A Draft Debt Service Schedule is attached (Attachment No. 8). The source and use of the funds is as follows: Sources of Funds Par Amount Net Premium Total Sources Uses of Funds Net Proceeds Debt Service Reserve Fund Costs of Issuance Underwriter's Discount Bond Insurance Total Uses $12,415,000 $1,091,725 $13,506,725 $12,000,000 $1,004,606 $201,908 $124,150 $176,061 $13,506,725 These numbers are preliminary and are subject to change, depending on the prevailing market conditions at time of sale. Funding for the Glendora A venue Revitalization Project is expected to be available in April 2018. Funding for the Bond Team will be paid from the bond proceeds. In future years, Urban Futures, Inc. will be compensated to complete the required bond disclosure statements for the term of the bonds, not to exceed $1,025 per year. With the recent implementation of Measure Mand SB 1 Transportation Funds, West Covina will experience an increase in transpo1tation funds of $3,647,136 in just over one year. Even with the proposed debt service payment of $975,000 a year, West Covina will receive $2,672,136 in new transpo1tation funds, plus annual escalations, greater than in Fiscal Year 2016-2017. There is Glendora Avenue Revitalization Bond Issuance Page 9 of 9 -January 8, 2018 sufficient special funding to pay for the Glendora A venue Revitalization bonds, as well as current street projects, and new transportation projects. W tC es ovma T ransoor a 10n un s t f F d 2015-2016 2016-2017 2017-2018 2018-2019 (Est.) Proposition A $2,051,360 $2.086.155 $2.106.292 $ 2,106,292 Proposition C $1,624,707 $1,647,463 $1,664,167 $ 1,664.167 Measure R $1,217,612 $1,235,506 $1,248,150 $ 1.248.150 Measure M $ -$ -$1.343,814 $ 1.540.020 Gas Tax $2,079.597 $2.225.369 $2.385.838 $ 2.430.000 SB 1 $ -$ -$ 622.000 $ 1.853,000 Total $6,973,276 $7,194,493 $9,370,261 $ 10,841,629 There is no impact to the General Fund, even in the event that Proposition C, Measure R, or Measure M funding is eliminated or dive11ed from the City. The bonds are not backed by the City's General Fund, and as such, the City cannot be required to pay for the bond payments from any other fund, even if the other funding sources are eliminated. The contract for the Glendora Avenue design is $435,450. Prepared by: ~~~ Nicole Lugotoff Interim Finance Director ATTACHMENTS: Attachment No. 1 -Resolution No. 2018-01 Attachment No. 2-Installment Sale Agreement Attachment No. 3 -Trust Agreement Chris Freeland City Manager Attachment No. 4 -Preliminary Official Statement Attachment No. 5 -Ce11ificate Purchase Agreement Attachment No. 6 -Continuing Disclosure Agreement Attachment No. 7 -CSCDA Resolution Attachment No. 8 -Draft Debt Service Schedule City of West Covina Coyote Management Plan www.westcovina.org/coyote Coyote Management Plan Page 2 of 21 Table of Contents Executive Summary ............................................................................................................. 3 Coyote Management Plan ....................................................................................................... 4 Background ..................................................................................................................... 4 Difficulties Managing Wildlife ......................................................................................... 4 What Role do Coyotes Play in the Environment? ........................................................... 5 How do Humans Perceive Coyotes? ............................................................................... 5 Have Coyote Numbers Increased in West Covina? .............................................................. 6 Monitoring and Collecting Data…………………………………………………….……………………..…….6 Public Education and Outreach ...................................................................................... 7 Coyote Attractants .......................................................................................................... 7 Hazing and Behavioral Change ..................................................................................... 10 Enforcement ................................................................................................................. 11 Response Plan ............................................................................................................... 12 Threat Level Tiered Response ....................................................................................... 12 Appendix A - Definitions of Encounters with Coyotes ...................................................... 13 Appendix B - Coyote Behavior, Behavior Classification and Recommended Response ... 15 Appendix C – General Considerations .............................................................................. 17 Neighborhood Wildlife Watch Training Program ......................................................... 18 Summary of Hazing ....................................................................................................... 19 Appendix D - Coyote Yard Audit Checklist .........................................................................21 Coyote Management Plan Page 3 of 21 EXECUTIVE SUMMARY The intent of this plan is to provide guidance for City staff in dealing with coyotes in West Covina. Guidelines and provisions of this plan do not supersede federal, state or county regulations and policies. Management Strategy City strategy for managing coyotes is based on balancing respect and protection for wildlife and their habitats without compromising public safety. The main strategy is comprised of a three-pronged approach consisting of: 1) Public education designed around coexistence with coyotes. 2) Enforcement of laws and regulations prohibiting the feeding of wildlife. 3) Ensuring public safety by implementing appropriate tiered responses to coyote and human interactions. This plan requires active participation on the part of the entire community including residents, homeowners associations, businesses and City staff alike. Education Education is the key to having residents make appropriate decisions regarding their safety, managing their property and protecting their pets. Education will involve written materials through mailings, handouts available at City facilities and online materials. Educational tools may also include signage that will warn pet owners of the presence of coyotes. The goal of education is to decrease attractants, increase pet safety, reshape coyote behavior and create reasonable expectations by the community regarding normal coyote behavior. It should be noted that the United States National Park Service has been conducting research on coyotes for over 20 years. Research in 2015, identified that not all coyotes travel from open spaces into urban areas. Instead, scientists are discovering that urban coyotes may now be living within urban settings and adjusting their behavior around urban activities. Enforcement Feeding wildlife is known to lead to an increase in wildlife activity. Feeding can attract coyotes and their prey to an area leading to an increased likelihood of creating a habituated coyote(s) resulting in increased coyote and human interaction. California law prohibits feeding wildlife. Los Angeles County Department of Animal Care and Control Officers will strictly enforce the State law(s) and Chapter 6 of the City of West Covina Municipal Code, pertaining to wildlife. Coyote Management Plan Page 4 of 21 Response Plan A detailed tiered response plan has been developed to provide a mechanism for identifying and classifying different levels of human and coyote interactions. Definitions of coyote encounters are listed in Appendix A. Appendix B provides a chart detailing coyote behavior, behavior classification and recommended responses. COYOTE MANAGEMENT PLAN The City of West Covina does not own or have any control of wild animals found within its boundaries, nor is the City responsible for the actions or damage caused by them. These animals are a common and important integral part of our ecosystem. Los Angeles County Animal Control Officers do not respond to service calls for normal coyote behavior, such as sightings. However, they will respond to calls which involve a sick or injured coyote(s) or if there is a public safety issue, such as a coyote threatening people or resting in an area frequented by people, such as a yard, park, playground, school, etc. Background In 2015, municipalities in Southern California began to experience an increase in the amount of coyote encounters. These encounters included numerous attacks on pets by coyotes that were off leash and in residential backyards, and an upsurge in sightings in areas populated by people, including during the day. These encounters have caused residents to have a general sense of fear and a desire to manage the increased coyote activity in neighborhoods. Historically, coyotes have existed in and around West Covina, finding safe haven in areas including South Hills, Walnut Creek Wash, Galster Park, Heritage Park, Shadow Oak Park, and surrounding neighborhoods. Any areas where dense brush is prevalent, such as hillsides, also create an environment where coyotes can build dens and reproduce. It is also believed that the prolonged drought has limited potential food and water sources which draws coyotes to residential neighborhoods in search of these resources to survive. Difficulties Managing Wildlife The City of West Covina places a high value on its wildlife. The City promotes policies supporting prevention and implementation of remedial measures that do not harm the wildlife or their habitats. However, some individual animals have adapted to urban environments and have the potential to cause problems and/or conflicts in specific situations. Coyote Management Plan Page 5 of 21 A wildlife problem is defined as any situation that causes a health or safety issue to its residents. In cases where problems with wildlife are associated with human behavior (i.e. leaving garbage exposed or intentional wildlife feeding), ordinances and enforcement may be enacted to minimize conflict. In some cases, traditional management tools are ineffective. For example, relocation of animals is not ecologically sound and is not allowed in California without permission from the California Department of Fish and Wildlife (CDFW). Generally, relocated animals do not survive the transfer, and if they do, they rarely stay in the relocation area. They tend to disperse to other locations where they may cause problems to humans, be involved in territorial disputes or introduce disease. In some instances, the trans-located coyote will go to great lengths to return to its previous territory. For these reasons, the CDFW rarely allows relocation of wildlife. As a last resort, lethal control measures, when employed, are controversial and selective, meaning they target the alpha coyote or problem coyote. If these methods are used, they must be humane and in compliance with federal and state laws. It is not economically, ecologically or in any other way justified to attempt to remove all coyotes from the urban ecosystem as a means of addressing conflicts between humans and coyotes. Attempts made by local, state and federal agencies as well as private organizations over the past century to eradicate coyotes have proven to be ineffective. Moreover, during the past century coyotes have expanded their territories to include every state except Hawaii. What Role do Coyotes Play in the Environment? Coyotes play an important role in the urban ecosystem, particularly as a top-predator. They eat a broad range of small animals, including squirrels, mice, rabbits, rats and gophers. Rodents make up a majority of their diet. In the process, coyotes control the population sizes of these animals, many of which are considered pests to humans. They also prey on “mesopredators,” such as raccoons and opossums. Without a top predator like the coyote to keep them in check, mesopredators can dramatically reduce bird populations by eating their eggs. Coyotes also disperse seeds of native plant species and recycle nutrients. How do Humans Perceive Coyotes? People respond to coyotes in various ways. Some observe them with enjoyment, others with indifference and some with fear or concern. Personal experiences with coyotes may influence perceptions. Experiences range from animal sightings without incident to stalking, killing of pets or, and even attacks on humans. Although coyote attacks on humans are very infrequent, such incidents generate significant media coverage. Such attacks remain a very rare event and has not happened in the City of West Covina. Because wild animals conjure up fear in some people, actual sightings and perceptions Coyote Management Plan Page 6 of 21 may become exaggerated or misconstrued (see Appendix A for coyote description of encounters). The wide range in perceptions of urban coyotes from West Covina residents supports the need for strong and consistent educational messages to clarify management techniques. Have Coyote Numbers Increased in West Covina? Without tracking and updated inventories, it is difficult to know if the number of coyotes has increased in West Covina. What is known is that coyotes can become habituated to humans if they are intentionally or unintentionally fed, which can lead to loss of fear of people and bolder behavior. In general, coyotes regularly roam an area of about two to five square miles to obtain enough food for the pack members. Normally, each pack is a territorial family group made up of three to ten coyotes. A portion of the area the pack inhabits is the pack’s territory, which they will defend against other coyotes. The number of mature coyotes in the pack is often related to the amount of food resources in the territory. A coyote pack usually has only one breeding (or alpha) female. This female often produces more pups than can be supported by the pack. Young coyotes may leave the pack at about nine to eleven months of age, but dispersal patterns are highly variable. These juvenile coyotes become transients. Other types of transients include older individuals that can no longer defend their role as upper level pack members and are pushed out of the pack. Transients move all over in narrow undefended zones that exist between pack territories searching for an open habitat to occupy or group to join. They often die before they succeed (many are hit by cars). It is largely because of the constant influx of transients that coyote eradication programs fail. Removing a group of territorial coyotes will create an undefended area into which the transient coyotes will flow. At all times of the year, numbers of transients are immediately available to replenish any voids created by killing the resident coyotes. Furthermore, if either the alpha male or alpha female in a pack is killed, ovulation in other breeding-age females is often triggered and a corresponding increase in the number of litters and/or number of pups per litter is observed. Monitoring and Collecting Data Monitoring and data collection are critical components of an effective Coyote Management Plan. This is best accomplished with input from both residents and City officials. Coyote sightings or incidents can be made by calling the Community Services Department at (626) 919-6966 or by going online at www.westcovina.org/coyote to enter location and information which will aide in creating a map of activity. Concerns can also be reported by downloading the City of West Covina Mobile Application. Emergency Coyote Management Plan Page 7 of 21 animal control related incidents should be directed to the Los Angeles County Department of Animal Control at (626) 962-3577. The purpose of monitoring human-coyote interactions is to document where coyotes are frequently seen and to identify human-coyote conflict hotspots, if they exist. Gathering specific data on incidents will allow for targeting of educational campaigns and conflict mitigation efforts, as well as the ability to measure success in reducing conflicts over time. Public Education and Outreach Education is the key to having residents make appropriate decisions regarding their safety or managing their property and pets. This involves decreasing attractants, increasing pet safety and creating reasonable expectations of normal coyote behavior. Learning how to respond to a coyote encounter empowers residents and can help reduce undesired coyote behaviors. The public should understand what normal coyote behavior is when living in close proximity with coyotes. For example, vocalization is normal acceptable behavior and does not indicate aggression. Education and outreach efforts by the City should focus on:  Understanding human safety, pet safety, coyote attractants, deterrents to coyotes on private property, including appropriate fencing, exclusion techniques, “what to do” tips, and information on appropriate hazing techniques.  Developing a common language and awareness of normal versus abnormal behavior when discussing encounters with coyotes (see definitions in Appendix A)  Disseminating information to residents, businesses and schools through the City’s website, cable television corkboard, social media, traditional media, fliers/handouts, mailers, etc.  Consulting with land managers, non-profit organizations like the Humane Society of the United States and agencies like the California Department of Fish and Wildlife and the Los Angeles County Department of Agricultural Weights and Measures that provide public education materials, programs and expertise. Coyote Attractants Coyotes are drawn to urban and suburban areas for the following reasons: 1. Food. Urban areas often support large numbers of rodents, including mice and rats. However, coyotes can be further attracted into suburban neighborhoods by human-associated food such as pet food, unsecured compost or trash and fallen fruit in yards. Intentional and unintentional feeding can lead coyotes to associate humans with sources of food, which can result in negative interactions between people and pets. To reduce food attractants in urban and suburban areas:  Never hand-feed or otherwise deliberately feed a coyote. Coyote Management Plan Page 8 of 21  Avoid feeding pets outside. Remove sources of pet food and water that a coyote could easily obtain. If feeding pets outside is necessary, remove the bowl and any leftover food promptly.  Never include meat or dairy in compost.  Maintain good housekeeping, such as regularly raking areas around bird feeders.  Remove fallen fruit from the ground.  Keep trash in high-quality containers with tight-fitting lids. Only place the cans curbside the morning of collection. If you leave out overnight, trash cans are more likely to be tipped over and explored.  Bag especially attractive food wastes, such as meat scraps or leftover pet food, before discarding 2. Water. Urban areas provide a year-round supply of water in the form of storm water impoundments and channels, artificial lakes, irrigation, pet water dishes, etc., which support both coyotes and their prey.  During drought or otherwise dry conditions, water can be as alluring as food, so remove water bowls set outside for pets and make watering cans unavailable. 3. Access to shelter. Parks, greenbelts, open spaces, golf courses, buildings, sheds, decks and crawl spaces, etc., increase the amount and variability of cover for coyotes. They allow coyotes to safely and easily remain close to people, pets, homes and businesses without detection.  In the spring, when coyotes give birth and begin to raise young, they concentrate their activities around dens or burrows in which their young are sheltered. Coyotes may take advantage of available spaces under sheds or decks for use as a den, bringing them into close contact with people and pets. 4. Unattended Pets. Pets are a normal part of an urban landscape. However, we must remember that we are living in their territory and coyotes may consider pets potential prey or competitors.  Free-roaming pets, especially cats and sometimes small dogs, may attract coyotes into neighborhoods. The best way to minimize risk to pets is not to leave them outside unattended.  Cats. Coyotes primarily eat small mammals such as mice and rats, but will also prey on slightly larger mammals such as rabbits and groundhogs. Approximately the same size as a groundhog or rabbit, free-roaming outdoor cats may also be seen as eligible prey by coyotes. It is important to note that attacks on cats are normal coyote behavior and do not indicate a danger for people. The best way to protect cats from coyotes (and the other dangers of outside life, such as cars, disease, dogs and other wildlife) Coyote Management Plan Page 9 of 21 is to keep cats primarily indoors and only let them outside in a secure enclosure when accompanied by a person and under the control of a leash and harness.  Feral cats. People who feed feral cats are often concerned that coyotes might prey on the cats. These concerns are well founded because coyotes can be attracted to the outdoor pet food. Although there is no sure way to protect feral cats from coyotes, the following tips can be helpful: o Do not feed feral cats. Doing so can have other unintentional consequences, including ecological damage. o If you are going to feed feral cats, provide an escape route. o Haze coyotes seen on the property (see Appendix C). Making them feel uncomfortable will encourage them to stay out of the area.  Dogs. Dogs are also vulnerable to coyote confrontations. Incidents generally involve coyotes who are accustomed or habituated to people (usually from feeding), or coyotes who are protecting their territory and pups (usually during breeding season). o Small, unattended dogs may be seen by coyotes as potential prey. It is important, therefore, to keep dogs on a six-foot long or shorter leash when outdoors or stay within six feet of them when on your property. Coyotes may view a dog on a leash longer than six feet as an unattended pet and state law requires dogs be on a leash no longer than six feet. This precaution is especially important if you are in or near nature preserves or open-space areas. Attacks on unattended, small dogs are normal coyote behavior and do not indicate a danger to people. o Although attacks on larger dogs are rarer, coyotes will sometimes go after a large dog when they feel that their territory is threatened. This generally occurs during the coyote breeding season, which takes place from January through March. During this time, it is especially important not to let dogs outside unattended and to keep them on leashes (six feet long or less) when in public areas. o Do not allow dogs off leash, when not on your property. It is against the law and unsafe for your dog. Other domestic animals kept outside, such as rabbits, may also be viewed as prey by coyotes. Protect outdoor animals from coyotes (and other predators) with protective fencing and/or confine them in sturdy cages each evening. Residents are encouraged to use the Yard Audit Checklist (Appendix D) as a tool to help recognize and remove attractants in their yards and neighborhoods. Coyote Management Plan Page 10 of 21 While human attacks are very rare, urban landscape development, habituation through intentional and unintentional feeding, pet related incidents and media attention have led some urban residents to fear coyotes. Steps must be taken to address safety concerns, misconceptions, and provide information on appropriate responses to potential threats to human safety. It is important to keep in mind that coyotes have been in and around West Covina and the San Gabriel Valley for a very long time, and they will continue to coexist with us through the unforeseen future. Hazing and Behavioral Change Some coyotes have become too comfortable living in close proximity of humans. For coyotes to safely coexist with people, they need to fear and avoid contact with humans. Hazing—also known as “fear conditioning”—is the process that facilitates change in coyote behavior and is by necessity a community response to negative encounters with coyotes. The more often an individual animal is “hazed”, the more effective hazing is in changing coyote behavior (see Appendix C for coyote hazing overview). Goals of Hazing The goals of hazing are to: 1) Reshape coyote behavior to avoid human contact in an urban setting. 2) Give residents tools to actively engage in reshaping coyote behavior which will help support them to feel safe in their parks and neighborhoods. 3) Model appropriate and effective hazing behavior and share accurate information about coyotes with other residents, friends and family. Hazing Process Human behavior can shape animal behavior, in either a negative or positive manner. People living in close proximity to coyotes can remove coyote attractants, identify potentially dangerous situations for their pets and themselves, and respond in a manner designed to change coyote behavior. Overview of Hazing Hazing is a process whereby a person or a number of individuals encountering a coyote respond in like manner to make coyotes afraid and choose to leave a situation where their presence is unwanted. Basic hazing consists of standing your ground, never ignoring or turning your back to a coyote(s), and yelling and/or making unpleasant and frightening noises until the animal(s) choose to leave. If the coyote does not leave, more aggressive tactics are in order. Coyote Management Plan Page 11 of 21 More aggressive hazing consists of approaching an animal more quickly and aggressively, throwing projectiles like stones near, but not at, the animal, spraying with a hose or water gun, and creating a more heightened fear of contact so the animal flees. For more options, see Appendix C on hazing. Hazing must continue once it begins until the animal leaves. Otherwise, the coyote will learn to “wait” until the person gives up. Not following through with hazing will actually create an animal more resistant to hazing instead of reinforcing the image that “people are scary”. Hazing never involves injury to the animal, only the threat of injury. An injured animal becomes less predictable than a normal, healthy one. Purposefully injuring an animal (domestic or wild) also constitutes animal cruelty which is against State and Federal law. A common concern with hazing involves potential danger to the hazer. A coyote’s basic nature is very skittish and this nature is what makes the technique useful. A normal, healthy coyote is very unlikely to escalate a situation with a person who is aggressively hazing. It is important that the hazer provides the coyote a clear escape route to flee and not corner the animal. A cornered animal may decide that attacking the hazer is the only option. Elements that promote effective hazing include: 1. Pet owners protecting their pets. Off-leash and unattended dogs and unattended outside cats attract coyotes (as does pet food). 2. Residents educating themselves on hazing effectiveness and techniques. 3. Hazing needs to be active for a sustained period of time to achieve the desired change in behavior. 4. Hazing requires monitoring to assess its effectiveness and to determine if further action or more aggressive hazing is needed. Enforcement The act of feeding wildlife is known to lead to an increase in wildlife activity. Both intentional and unintentional feeding can attract coyotes and their prey to an area leading to an increased likelihood of creating a habituated coyote(s). This results in increased coyote and human interactions. California law prohibits feeding wildlife. Los Angeles County Animal Control Officers will strictly enforce the State law(s) and Chapter 6 of the City of West Covina Municipal Code, pertaining to this activity. CALIFORNIA CODE OF REGULATIONS TITLE 14 §251.1. Harassment of Animals Except as otherwise authorized in these regulations or in the Fish & Game Code, no person shall harass, herd or drive any game or nongame bird or mammal or furbearing mammal. For the purposes of this section, harass is defined as an Coyote Management Plan Page 12 of 21 intentional act which disrupts an animal's normal behavior patterns, which includes, but is not limited to, breeding, feeding or sheltering. Response Plan A detailed tiered response plan has been developed to provide a mechanism for identifying and classifying different levels of human and coyote interactions. Definitions of coyote encounters are listed in Appendix A. Appendix B provides a chart detailing coyote behavior, behavior classification and recommended responses. Threat Level Tiered Response Level Green Behavior: A coyote is seen or heard in an area. Sighting may be during the day or night. Coyote may be seen moving through the area. Response: Education and hazing needed. Level Yellow Behavior: A coyote appears to frequently associate with humans or human- related food sources, and exhibits little wariness of human presence. Coyote is seen during the day resting or continuously moving through an area frequented by people. Response: Education and repeated hazing needed. Level Orange Behavior: A coyote is involved in an incident(s) where there is an attended domestic animal loss. Several level orange incidents in the same general area may indicate the presence of a habituated coyote(s). Response: Education and aggressive hazing needed, and public awareness of incident(s) and circumstances discussed. If multiple level orange incidents have occurred in the same vicinity within a short amount of time, removal/euthanasia may be recommended. Level Red Behavior: A coyote that has been involved in an investigated and documented provoked or unprovoked close encounter or attack on humans. Response: Public awareness of incident(s) and circumstances discussed. City staff in cooperation with Los Angeles County Department of Agricultural Weights and Measures may work to remove/euthanize the responsible coyote(s) after a thorough investigation of the incident(s). Coyote Management Plan Page 13 of 21 Appendix A - Definitions of Encounters with Coyotes Active Coexistence: Humans and coyotes coexist together. Humans take an active role in keeping coyotes wild by learning about coyote ecology and behavior, removing attractants, taking responsibility for pet safety, and hazing coyotes in neighborhood or community spaces (except for predetermined coyote-appropriate areas). Hazing is not appropriate in a designated nature reserve or similar open space, unless the coyote exhibits threatening behavior to persons or leashed pets. Human Attack – A human is injured or killed by a coyote. Provoked - A human-provoked attack or incident where the human involved encourages the coyote to engage. Examples may include domestic pets off-leash in an on-leash area, dog on leash longer than 6’ in length, or a human intentionally corners, injures, tries to injure, attempts to capture or feeds the coyote. Unprovoked - An unprovoked attack or incident where the human involved does not encourage the coyote to engage. Pet Attack – A pet is injured or killed by a coyote. Attended animal loss or injury - When a person is within 6’ of the pet, the pet is on leash, is attacked, and injured or killed by a coyote. Domestic animal loss or injury - A coyote injures or kills a pet who is off leash or on a leash that is greater than 6’ in length. Off leash also pertains to a domestic animal in a yard, but unattended, or more than 6’ from its owner. Also includes “depredation”—predation on domestic pets. Unattended animal loss or injury is considered the result of normal coyote behavior. Suspected Pet Attack: A coyote is an opportunistic feeder and may feed on recently dead or dying animals, especially cats that were hit or killed by cars or other means. Partially consumed remains may be found and suggest the animal was attacked by a coyote. In cases where Animal Control Officers respond to these calls, without knowledge of an actual attack, the incident may be recorded as a suspected attack. Encounter: An unexpected, direct meeting between a human and a coyote that is without incident. Feeding: Intentional feeding - When a person, or persons, actively and intentionally feeds coyotes or provides food for animals in the coyote food chain. Coyote Management Plan Page 14 of 21 Unintentional feeding - When a person or persons are unintentionally providing access to food. Some examples are accessible compost, fallen fruit from trees, open sheds and doors, and pet food left outdoors. Unintentional feeding: bird feeders – When a person or place of business with bird feeders provides food for coyotes, e.g. birds, bird food, rodents, and squirrels. Bird feeders must be kept high enough from the ground so a coyote is unable to reach the feeding animals. The area under the bird feeder must be kept clean and free of residual bird food. Hazing: A training method that employs immediate use of deterrents to move an animal out of an area or discourage an undesirable behavior or activity. Hazing techniques include loud noises, spraying water, bright lights, throwing objects near but not at the animal and shouting. Hazing can help maintain a coyote’s fear of humans and deter them from neighborhood spaces, such as backyards and play spaces. Hazing does not and should not damage animals, humans or property. Threat Incident: A conflict between a human and a coyote where the coyote approaches a human and growls, bares teeth or lunges; injures or kills an attended domestic animal. A human is not injured. Stalking Incident: A conflict between a human and a coyote where the coyote follows a person with or without an attended pet on leash. A human is not injured Observation: The act of noticing or taking note of tracks, scat or vocalizations. Sighting: A visual observation of a coyote(s). A sighting may occur at any time of the day or night. Unsecured Trash: Trash that is accessible to wildlife, e.g. individual garbage cans, uncovered or open dumpsters, trash cans over flowing, or where scattered trash is outside the receptacle. Coyote Management Plan Page 15 of 21 Appendix B - Coyote Behavior, Behavior Classification & Recommended Response Coyote Action Classification Response Coyote heard Unobserved Level Green Provide educational materials and info on normal coyote behavior Coyote observed moving in area Sighting Level Green Provide education materials and info on normal coyote behavior Coyote observed resting in area Sighting Level Green Educate on hazing techniques, what to do tips Coyote observed resting in area with people present Sighting Level Yellow If area is frequented by people, educate on normal behavior and haze to encourage animal to leave. Look for and eliminate attractants. Coyote entering a yard without pets Sighting Level Yellow Educate on coyote attractants, yard audit, provide hazing info Coyote entering a yard with pets Encounter Level Yellow Educate on coyote attractants, yard audit, hazing info, pet safety Coyote entering yard and injuring or killing pet w/o people present Pet Attack Level Orange Gather info on specific animals involved, report circumstances, educate on coyote attractants, yard/neighborhood audits, hazing, pet safety Coyote biting or injuring unattended pet/pet on leash longer than 6’ with people present Pet Attack Level Orange Gather info on specific animals involved, report circumstances, educate on coyote attractants, yard/neighborhood audits, hazing, pet safety Coyote following or approaching a person w/o pet (Stalking) Encounter Level Red Educate on hazing techniques and what to do tips. Removal/euthanasia considered if there is no response from the coyote to aggressive hazing, and there is evidence of recurrence. Coyote following or approaching a person & pet (Stalking) Encounter Level Red Educate on hazing techniques and what to do tips and pet safety. Removal/euthanasia considered if there is no response from the coyote to aggressive hazing, and there is evidence of recurrence. Coyote Management Plan Page 16 of 21 Appendix B - Coyote Behavior, Behavior Classification & Recommended Response cont. Coyote entering yard or home with people & pets, no injury occurring Encounter Level Red Gather info on specific animals involved, document circumstances, educate on coyote attractants, yard/neighborhood audits, hazing, pet safety. Removal/ euthanasia considered depending on specific circumstances. Coyote biting or injuring attended pet/pet on leash 6' or less Pet Attack Level Red Gather info on specific animals involved, document circumstances, educate on coyote attractants, yard/ neighborhood audits, hazing, pet safety. City staff will inform the Los Angeles County Department of Agricultural Weights and Measures. Removal/ euthanasia recommended. Coyote aggressive, showing teeth, back fur raised, lunging, nipping w/o contact Threat Level Red Gather info on specific animals involved, report circumstances, educate on coyote attractants, yard/ neighborhood audits, aggressive hazing, pet safety. City staff will inform the Los Angeles County Department of Agricultural Weights and Measures. Removal/euthanasia recommended. Coyote biting or injuring person Attack Level Red Identify and gather information on specific animal involved, report circumstances, educate on coyote attractants, yard/ neighborhood audits, hazing, and pet safety. City staff will inform the Los Angeles County Department of Agricultural Weights and Measures. Removal/euthanasia recommended. Coyote Management Plan Page 17 of 21 Appendix C – General Considerations 1. Levels of hazing need to be appropriately relevant to coyote activity. a) Coyotes live in open spaces and the best practice is to leave them alone and educate the public on personal safety. b) Coyotes are often out late at night when few people are present. This is normal, acceptable behavior. Hazing may not be necessary. c) Exceptions: In early stages of hazing, programs should still engage the animal. Coyotes that associate danger in the presence of people under all circumstances will be reinforced to avoid contact. 2. Hazing must be more exaggerated, aggressive and consistent when first beginning a program of hazing. As coyotes “learn” appropriate responses to hazing, it will take less effort from hazers. Early in the process, it is extremely common for coyotes not to respond to hazing techniques. Without a history of hazing, they do not have the relevant context to respond in the desired outcome (to leave). 3. Techniques and tools can be used in the same manner for one or multiple animals. Usually, there is a dominant animal in a group who will respond—others will follow its lead. 4. The more often an individual coyote is hazed by a variety of tools, techniques and a variety of people, the more effective hazing will be in changing that animal’s future behavior. 5. Hazing must be directly associated with the person involved in the hazing actions. The coyote must be aware of where the potential threat is coming from and identify the person. 6. Coyotes can and do recognize individual people and animals in their territories. They can learn to avoid or harass specific individuals in response to behavior of the person and/or pet. 7. Coyotes can be routine in habit. Identifying their normal habits can help target which habits to change. For example, the coyote patrols the same bike path at the same time in the morning three to five days a week. Hazers should concentrate on that time and place to encourage the animal to adapt its routine to decrease contact with people. 8. Certain levels of hazing must always be maintained so that future generations of coyotes do not learn or return to unacceptable behavior related to habituation with people. 9. Human behavior must change to support hazing and continued identification and, when necessary, removal of possible attractants. 10. Education about exclusion techniques including how to identify and remove attractants, personal responsibility in pet safety and having reasonable expectations are critical parts of a coyote hazing plan. Coyote Management Plan Page 18 of 21 11. Coyotes are skittish by nature. Habituated behavior is learned and reinforced by human behavior. Coyotes as a rule DO NOT act aggressively toward aggressive People. The one exception is a sick or injured animal. Engaging a sick or injured animal can result in unpredictable behavior. If this is suspected, people should not engage and should remove themselves from the situation, and then immediately contact Los Angeles County Department of Animal Control at (626) 962-3577. 12. Individuals involved in hazing need to be trained in explaining hazing to residents who witness the process. They also need to explain the difference between hazing and harassment of wildlife and goals of appropriate behavior for coexistence. Neighborhood Wildlife Watch Training Program Because coexisting with wildlife involves the community, initiating the hazing training programs and hazing activities with community members must be supervised by experts. Without this support, the programs will ultimately fail. Information should include basic training on background, coyote ecology information, and an overview of hazing with examples of techniques. Materials should be provided such as handouts, contact information and resources when questions, comments and concerns come up relating to coyotes. Hazing requires community involvement, understanding and support. Residents are best equipped to respond consistently and at the most opportune times in their own neighborhoods, parks and open spaces not identified as nature reserves. 1. Locations of trainings offered should be based on where human-coyote conflicts are most often reported in specific neighborhoods, parks or open space or proactively when requested by neighborhood community or volunteer groups. 2. Trainings are free to the public. 3. Topics to be covered include, but are not limited to:  Basic coyote information, including natural history and ecology;  The role of coyotes in ecosystems and their rights to coexist;  Discussion on why coyotes are in the City;  Normal and abnormal coyote behavior;  Seasonal behavior changes: breeding season, pups, denning behavior;  Reality of dangers towards people vs. danger towards pets;  Children and coyotes; Coyote Management Plan Page 19 of 21  How human behavior influences coyote behavior;  Attractants;  Tips on deterring animals from entering private property;  Appropriate response when encountering a coyote;  What is hazing: goals and how to engage;  Appropriate hazing techniques and tools;  Pet safety tips. 4. Updates, additional coyote information, electronic flyers and handouts distributed to participants. Information is encouraged to be passed on to others. 5. Participants shall be notified of “hot spots” and encouraged to haze in the area. 6. Ask for feedback on hazing training and use of hazing techniques. Summary of Hazing Hazing is a process whereby individuals and volunteers respond in like manner to make a coyote uncomfortable and choose to leave a situation where their presence is unwanted. Basic hazing consists of standing your ground, never ignoring or turning your back to a coyote(s), yelling, and making unpleasant and frightening noises until the animal(s) choose to leave. More aggressive hazing consists of approaching an animal quickly and aggressively, throwing projectiles near the animal, spraying with a hose or water gun containing water or white vinegar, or creating fear of contact so the animal leaves the situation. Note: Many projectiles are not legal, including but not limited to slingshots, paintballs, guns and pepper balls. Hazing must continue once it begins until the animal leaves. Otherwise, the coyote will learn to “wait” until the person gives up. The ineffective hazing will create an animal more resistance to hazing instead of reinforcing the image that “people are scary”. Hazing should never injure the animal. An injured animal becomes less predictable versus a normal, healthy one who responds in a consistent and predictable manner to hazing. It is also illegal to willfully injure an animal, domestic or wild, unless protecting yourself or your pet(s) against physical harm. Coyote Management Plan Page 20 of 21 Hazing should be conducted in a manner that allows the coyote to return to its normal habitat in a direction that would minimize harm to the animal. Hazing the animal in the direction of other houses and busy streets should be avoided. Hazing uses a variety of different tools, which is critical because coyotes can get used to individual items and sounds: 1. Noisemaker: voice, whistles, air horns, bells, “shaker” cans, pots, pie pans; 2. Projectiles: sticks, small rocks, cans, tennis balls, rubber balls; 3. Deterrents: hoses, spray bottles with vinegar, pepper spray, bear repellant, walking sticks. Note: Additional Hazing Tips can be found on the City’s website at www.westcovina.org/coyote. Coyote Management Plan Page 21 of 21 Appendix D - Coyote Yard Audit Checklist OK FIX Ways to Mitigate FOOD NEVER hand-feed or intentionally feed a coyote! Pet Food Never feed pets outdoors; store all pet food securely indoors. Water Sources Remove water attractants (such as pet water bowls and leaky irrigation) in dry climates. Bird Feeders Remove bird feeders or clean fallen seed to reduce the presence of small mammals that coyotes prefer to eat. Fallen Fruit Clean up fallen fruit around trees. Compost Do not include meat or dairy among compost contents unless fully enclosed. BBQ Grills Clean up food around barbeque grills after each use. Trash Secure all trash containers with locking lids and place curbside the morning of trash pickup. Periodically clean cans to reduce residual odors. LANDSCAPING Trim vegetation to reduce hiding places and potential denning sites. Structures/Outbuildings Restrict access under decks and sheds, around woodpiles, or any other structure that can provide cover or denning sites for coyotes or their prey. *FENCING Enclose property with an *8-foot fence (or a 6-foot fence with an additional extension or roller-top) to deter coyotes. Ensure that there are no gaps and that the bottom of the fence extends underground 6 inches or is fitted with a mesh apron to deter coyotes from digging underneath. *Must comply with West Covina Codes PETS Never leave pets unattended outside. Never allow pets to “play” with coyotes. Fully enclose outdoor pet kennels. Walk pets on a leash no longer than 6 feet in length. We encourage you to take steps to eliminate attractants on your property in order to minimize conflicts with coyotes. We also urge you to share this information with friends and neighbors because minimizing conflicts is most effective when the entire neighborhood works together. AGENDA ITEM NO. 3 AGENDA STAFF REPORT City of West Covina I Office of the City Manager DATE: January 8, 2018 TO: FROM: Mayor and City Council Chris Freeland City Manager SUBJECT: COYOTE MANAGEMENT PLAN RECOMMENDATION: It is recommended that the City Council approve the Coyote Management Plan. BACKGROUND: On October 23, 2017, the City of West Covina held a community meeting at City Hall to meet with residents and stakeholders regarding the development of the Coyote Management Plan. Staff from the United States (U.S.) Fish and Wildlife, the Los Angeles County Department of Agricultural Commissioner/Weights and Measures, and the City of West Covina gave presentations on coyotes. Information was provided to residents pertaining to coexisting with coyotes and remedies that can be taken to minimize conflicts between humans and coyotes specifically including yard safety tips, and safety for children and pets. There were approximately 20 people present for the presentation, including City Councilmembers, Commissioners, residents and non-residents, local animal control officers, City and County staff, and volunteers from the U.S. Fish and Wildlife. DISCUSSION: The Coyote Management Plan (The Plan) is intended to be a guide for City Council, City staff, residents and stakeholders on coexisting with coyotes. Coyotes were in West Covina long before the City was incorporated in 1923, and as development has encroached their habitats, they have become a part of our urban environment. Coyotes play an important role in the ecosystem and as such an understanding about how to respect their existence and providing education to residents is essential. Years ago, it was an acceptable practice to trap and relocate coyotes; however, it is now illegal to do so unless there is an extenuating circumstance approved by U.S. Fish and Wildlife. Relocating a coyote often has negative consequences including death to the coyote, an interrupted Coyote Management Plan Page 2 of 3 -January 8, 2018 eco-system with the newly introduced coyote, and often the coyote returns to its original habitat creating a continued cycle of nuisance complaints. The Plan provides the City with a management strategy in dealing with coyotes that is based on balancing respect and protection for wildlife without compromising public safety. It is a three pronged approach which includes: public education, enforcement of laws and regulations prohibiting the feeding of wildlife, and implementation of a tiered response to coyote and human interactions. The Plan includes tools and tips for residents to be proactive in addressing safety of humans, pets and yards to prevent nuisance issues with coyotes. For additional information or to see the interactive map to track coyote activity, residents can visit www.westcovina.org/coyote. The Plan helps provide education to residents and stakeholders with regard to what the City considers an escalating coyote nuisance and how those nuisances can be abated. In the coyote behavior classification/response matrix (Attachment No. 1, Appendix B), coyote behavior is characterized by "green, yellow, orange and red" categories. The Plan lays out progressive education, abatement and enforcement depending on the encounter with a coyote or coyotes. For example, simply observing a coyote in the street near your home is considered "green". This is not cause for concern, as the coyote is not being aggressive in the observation. A "yellow" or more cautionary classification includes observing a coyote entering a resident's yard. Someone may visibly be concerned by the coyote's actions in this scenario, but this might be an example of the coyote being curious and no harm occurred. An "orange" classification includes a pet being attacked on or off leash. Residents will be more alarmed at this type of situation so it warrants more concern and involvement by the City and Animal Control. A "red" level encounter includes attacks by a coyote, injured pets, aggressive behavior, etc. At all levels of classification, the City engages residents who experience coyote interactions with a variety of tools including education, yard checklists, and hazing techniques. At the point of a red classification, the City involves the County and potentially U.S. Fish and Wildlife, because at this stage there may be a need for trapping and euthanasia of the coyote(s) to protect public safety. The Plan is not a guarantee by the City, the County or U.S. Fish and Wildlife to trap, euthanize or relocate coyotes in West Covina based on community feedback or hearsay. When City, County and/or Federal officials determine that specific coyote(s) cannot be deterred from nuisance and/or aggressive behavior, and education and abatement efforts have failed to remedy the situation, then and only then may a decision be made to humanely euthanize coyote(s). The decision to trap coyote(s) should not be taken lightly, and the City should always work with local enforcement agencies to ensure the balance of public safety and the coexistence of coyotes as wildlife that is impo1iant to our ecosystem. OPTIONS: The City Council has the following options: I. Approve staff's recommendation; or 2. Provide alternative direction. Coyote Management Plan Page 3 of 3 -January 8, 2018 FISCAL IMP ACT: The fiscal impact is dependent upon usage of the County of Los Angeles Department of Agricultural Commissioner/Weights and Measures resources. The City of West Covina currently has a General Services Agreement in the amount of $2,500 with the County to provide assistance with coyote nuisance abatement. If the City needs to trap a coyote, there is an additional fee for the County trapper to set the trap and provide follow up with the trap. The Plan, as written, does not require any additional fiscal impact allocation by Council. The Plan is primarily an educational document with guiding principles for staff, stakeholders, and residents. Prepared•by: _ ~ flxtoetMU . Nikole Bresciani Assistant City Manager/ Community Services Director ATTACHMENT: Attachment No. 1 -Draft Coyote Management Plan DATE: TO: FROM: AGENDA ITEM NO. _____,_4_ AGENDA STAFF REPORT City of West Covina I Office of the City Manager Januaiy 8, 2018 Mayor and City Council Chris Freeland City Manager SUBJECT: SENATE BILL (SB) 649 AND MARKETING AGREEMENT FOR WIRELESS TELECOMMUNICATIONS FACILITIES RECOMMENDATION: It is recommended that the City Council direct staff to continue working with XG COMMUNITIES, LLC (doing business as 5 BARS) to implement the Marketing Agreement executed at the August 15, 2017 City Council Meeting. DISCUSSION: This item was continued from the December 5, 2017 City Council Meeting at the request of the City Council. On October 15, 2017, Senate Bill (SB) 649 (Hueso) was vetoed by Governor Jeny Brown. The bill would have taken neai·ly all discretionaiy reviews away from Cities and allowed telecommunications companies to install small cell wireless transmitters in the public right-of- way, as well as at City buildings and facilities. The bill would have allowed 21 cubic feet of equipment on poles and up to 35 cubic feet of ground equipment. It would have also capped the income received by Cities from the telecommunications companies at $250 per installation per year. Cunently, the mai·ket rate is about $2,000 a year for each installation. Small cell transmitters are a new technology being deployed by the wireless industry to help roll in the next generation of cell phones and other telecommunications devices. The transmitters are being installed on telephone poles, traffic signal poles, and streetlights in the public right-of-way and City buildings and facilities and use relatively low-power frequencies. The transmitters are about the size of a shoebox and the supporting equipment could be as large as a refrigerator. If Governor Brown had signed the bill, wireless companies would be free to put transmitters on any telephone and utility poles, traffic signal poles, and street lights in the public right-of-way and City buildings and facilities. However, because SB 649 did not pass, Cities still have control where these transmitters and associated equipment can be installed and how these installations would look like. SB649 and Marketing Agreement for Wireless Telecommunication Facilities Page 2 of 3 -January 8, 2018 On August 15, 2017, the City Council directed staff to execute a Marketing Agreement with 5 BARS to provide wireless telecommunications facilities consulting services. The scope of services by 5 BARS includes: conducting a Radio Frequency (RF) benchmark assessment; compiling available City assets in GIS platform; providing available City pre-approved sites; conducting annual comprehensive radio frequency and feasibility analyses; developing pricing and fee recommendations; developing design and installation standards; technology advancement and updates. In addition, 5 BARS will provide services relating to planning, marketing, sublicensing, development, maintenance and/or operation of wireless telecommunications facility sites; streamlining the pe1mit processing for all carriers including on-site supervision, coordination and inspection during construction. To protect the City and maximize the opportunities to improve wireless services to the community, 5 BARS will provide a quarterly written update summarizing investments, technology charges, gross receipts, financial gains and provider plans. A kick-off meeting was held on October 17, 2017, to discuss the marketing plan, provide information on City assets and determine the next steps with 5 BARS. 5 BARS will coordinate with carriers on behalf of the City for the planning, permitting, installation and on-going maintenance of a seamless municipal wireless telecommunications system. 5 BARS will be the initial point of contact for small cell site applications, which should help in streamlining the permiting process for all carriers. 5 BARS will function as the City's expert technical resource for managing small cell wireless services and the City will have final approval of sites, pricing, permits and guidelines. Additionally, 5 BARS will provide on-site supervision and coordination during construction. By developing and implementing City design and installation standards for wireless telecommunications facilities, this will reduce visual blight and pole clutter and improve wireless coverage throughout the City while generating revenue with City-owned assets. 5 BARS will recover their investment and program costs solely through revenue sharing generated from wireless caiTiers. 5 BARS will receive 35 percent of revenues for all new licenses and 25 percent for licenses on existing towers that they implement on the City's behalf. The executed contract is for an initial five (5) year· period with four (4) five-year renewals for a potential total contract term of 25 years. City Staff is recommending that the City continue to work with 5 BARS in order to complete the various services under the scope of work and to market availability of sites within West Covina. OPTIONS: The City Council has the following options: 1) Approve staffs reconnnendation; or 2) Provide alternative direction. SB649 and Marketing Agreement for Wireless Telecommunication Facilities Page 3 of 3 -January 8, 2018 FISCAL IMP ACT: The cost for 5 BARS professional services will be funded through a revenue sharing structure generated from wireless carriers. 5 BARS receives 35 percent of revenues for all new licenses and the City receives 65 percent; 5 BARS receives 25 percent for licenses and the City receives 7 5 percent of the revenue on existing towers that require installation of additional equipment. There is no impact on City agreements on cell towers already negotiated by the City. Revenues will be placed into the City's General Fund. Prepared by: Monica Heredia, P.E. Assistant City Engineer ATTACHMENT: Reviewed and Approved by: ~ Delfino "Chino" Consunji, P.E. Public Works Director Attachment No. 1 August 15, 2017 Staff Report and Executed Contract with 5 BARS DATE: TO: FROM: ATTACHMENT NO. 1 AGENDA ITEMNO. 17 AGENDA STAFF REPORT City of West Covina I Office of the City Manager August 15, 2017 Mayor and City Council Chris Freeland City Manager SUBJECT: APPROVAL OF MARKETING AGREEMENT WITH XG COMMUNITIES, LLC, dba S BARS COMMUNITIES FOR WIRELESS TELECOMMUNICATIONS FACILITIES CONSULTING SERVICES IN THE PUBLIC RIGHT-OF-WAY AND CITY-OWNED BUILDINGS AND FACILITIES RECOMMENDATION: It is recommended that the City Council take the following actions: 1) Waive formal contract procedures, in accordance with Municipal Code Chapter 2, Article VII, Division 2, Sec. 2-333 (i)(2), which states that when successful bidder for a contract with another county, city, special district or other local agency makes the same written bid to the city, and the purchasing officer finds that the other local agency originally obtained the bid pursuant to formal contract procedures at least as rigorous as those of the city, that the formal contract procedures may be waived; 2) Authorize the City Manager, subject to City Attorney approval, to execute a Marketing Agreement with XG COMMUNITIES, LLC (doing business as 5 BARS) for an initial term of five years (with four renewals of five-years each term for a potential of 25 years) to provide wireless telecommunications facilities consulting services in the public right- of-way and City-owned buildings and facilities; and 3) Direct staff to begin working with 5 BARS to implement the Marketing Agreement and identify appropriate City Assets to include in a License Agreement as soon as practical. Approval of Marketing Agreement with "5 BARS" Page 2 of 4-August 15, 2017 DISCUSSION: At its July 18, 2017 City Council Meeting, the City Council continued this item for further review and discussion. Senate Bill (SB) 649 (Hueso) would limit local control over small wireless telecommunications facilities or cell sites. This legislation, if approved, would directly limit a City's ability to control its public infrastructure, specifically street lights and traffic signal lights unless the City reserves such facilities for itself. SB 649 would grant telecommunication companies the right to install "small cell" wireless telecommunications facilities on public "vertical infrastructure" in the right of way and limits a City's ability to regulate such installations. SB 649 will also establish a monetary limit on how much local agencies can charge telecommunication companies, which is lower than the prices a City would charge otherwise. Additionally, on April 18, 2017, the City Council voted to oppose SB 649. SB 649 passed in the Senate (32-1) on May 31, 2017. SB 649 was introduced in the Assembly on June 1, 2017, and amended on June 20, 2017, July 3, 2017 and July 18, 2017. It is likely that SB 649 will be signed into law in September 2017, to become effective January 1, 2018. SB 649 includes language stating that existing agreements for leasing or licensing of telecommunications facilities entered into before the effective date of SB 649 would remain in effect. Therefore, if State Law is interpreted to apply to agreements such as those with 5 Bars, the City would retain local control of telecommunications facilities if an agreement is in place prior to the effective date of SB 649. Otherwise, it is clear that State Law would supersede much of the City's local control with respect to small cell wireless facilities. In February 2016, prior to the introduction of SB 649, the City of Sacramento, through a Request for Qualifications (RFQ), invited interested parties to demonstrate their knowledge and expertise in the development of the City's wireless telecommunication infrastructure. A review committee invited responders who met the requirements specified in the RFQ to participate in an oral interview. 5 BARS was chosen as the most qualified responder bringing extensive industry lmowledge and technical expe1iise to this process. The agreement between the City of Sacramento and 5 BARS includes a cooperative pmchasing section that allows other public agencies to piggyback and enter into a similar agreement with 5 BARS (Attachment No. 2). Additionally, 5 BARS has been awarded a national cooperative contract by the National Intergovernmental Pmchasing Alliance (IP A). The National IP A is a cooperative pmchasing organization dedicated to the public sector assisting .agencies and institutions to streamline the tedious, expensive Request For Proposal (RFP) process while satisfying requirements for tr·ansparency by offering a comprehensive po1ifolio of awarded contracts. The scope of services to be provided by 5 BARS includes: conducting a Radio Frequency (RF) benchmark assessment; compiling available City assets in GIS platform; providing available pre- approved sites after coordination with the City; and assisting with batch permitting applications. By entering into an agreement with 5 BARS, the City will have in place a third patty to help market available assets. 5 BARS will coordinate with catTiers on behalf of the City for the planning, pennitting, installation and ongoing maintenance of a seamless municipal wireless system. 5 BARS will be the initial point of contact for small cell site applications, and this should Approval of Marketing Agreement with "5 BARS" Page 3 of4-August 15, 2017 help in streamlining the permit process for all carriers. 5 BARS will function as the City's expert technical resource for managing small cell wireless services and the City will have final approval of sites, pricing, permits and guidelines. Additionally, 5 BARS will provide onsite supervision and coordination. This process will reduce visual blight and pole clutter and improve wireless coverage throughout the City while generating revenue with City-owned assets. 5 BARS will recover their investment and program costs solely tlu·ough revenue sharing generated from wireless carriers. 5 BARS will receive 35 percent of revenues for all new licenses and 25 percent for licenses on existing towers that they implement on the City's behalf. The contract is for an initial five (5) year period with fom (4) five-year renewals for a potential total contract term of 25 years. 5 BARS has the knowledge, expertise and resources to create livable and sustainable smart cities by evaluating carrier priorities, policy requirements, and pelTilitting. In addition to the City of Sacramento, 5 BARS has existing agreements with the Cities of Fresno, Irvine, Berkeley, Placentia, Industry, Lathrop, Palm Springs, and Twentynine Palms. 5 BARS is also providing services to the San Joaquin Hills Transportation Corridor. The City Attorneys' Office has negotiated with 5 BARS to provide a revised form of the Marketing Agreement to better suit the City's needs. On an annual basis, 5 BARS will provide a comprehensive radio frequency and feasibility analysis, pricing and fee recommendations, form factor and aesthetic policy development, technology advancement and updates in addition to continual planning, marketing, sublicensing, development, maintenance and/or operation of wireless telecommunications facility sites; streamlined pe1mit processing for all carriers including on-site supervision and coordination. To protect the City and maximize on opportunities to improve wireless services to the community, 5 BARS will provide a quarterly written update stunmarizing investments, technology charges, gross receipts, fmancial gains and provider plans. OPTIONS: The City Council has the following options: 1) Approve staffs recommendation; 2) Direct staff to send out an RFP for wireless telecommunications facilities consulting services. This option is not recommended because once SB 649 is effective, the City will have to comply with this regulation unless an existing agreement is in place; or 3) Provide alternative direction. Approval of Marketing Agreement with "5 BARS" Page 4 of4-Augnst 15, 2017 FISCAL IMPACT: The cost for 5 BARS professional services will be funded through a revenue sharing structure generated from wireless carriers. 5 BARS receives 3 5 percent of revenues for all new licenses and the City receives 65 percent; 5 BARS receives 25 percent for licenses on existing towers and the City receives 75 percent of the revenue. There is no impact on City agreements on cell towers already negotiated by the City. Revenues will be placed into the City's General Funds. Prepared by: Monica Heredia, P .E. Assistant City Engineer ATTACHMENTS: Reviewed and Approved by: Attachment No. 1 -Draft Marketing Agreement with 5 BARS, LLC Attachment No. 2 -Executed City of Sacramento Agreement with 5 BARS, LLC ATTACHMENT N0.1 WIRELESS MARKETING AGREEMENT BETWEEN THE CITY OF WEST COVINA AND XG COMMUNITIES, LLC, dba 5 BARS COMMUNITIES This Wireless Marketing Agreement (''AGREEMENT') is made and entered into on August 15, 2017 (the "Effective Date') between the City of West Covina ("CITY'') and XG Communities, LLC Delaware limited liability company doing business as 5 Bars Communities ("5 BARS') (each a "PARTY'' and collectively the "PARTIES''), with reference to the following facts and intentions, which the PARTIES agree are true and conect to the best of their knowledge and belief: BACKGROUND A. CITY is a municipal corporation fonned under the laws of the State of California, operating under the general laws of the State of California. B. 5 BARS is a limited liability company formed under the laws of Delaware. C. 5 BARS offers master planning services and tools that merge technical expertise on coverage needs with surveys of existing and forecasted wireless coverage conditions. 5 BARS evaluates that information to identify existing municipal assets that can meet wireless coverage needs. D. 5 BARS provides planning tools so that subscribing municipal corporations may access the information and identify intelligent options and solutions for the processing of applications for wireless telecommunications facilities on a real time basis. E. Subject to the terms of this Agreement, CITY desires to engage 5 BARS to provide wireless consulting, management and development services related to the use of specified CITY assets for the purpose of plarming and implementing a marketing plan for Wireless Telecommunications Facilities (as that term is defined in Section 2, below), as further described herein. F. Subject to the tenns of this Agreement, CITY desires to engage 5 BARS to proactively market CITY- owned underutilized assets on terms that maximize revenue and minimize planning impacts and visual blight. AGREEMENT NOW, THEREFORE, in consideration of the foregoing background, which is incorporated into the operative provisions of this Agreement by this reference, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the PARTIES AGREE as follows: 1. Term. This Agreement shall be effective on the date it is executed by all PARTIES and shall be in effect for an initial tenn of five (5) years, with four (4) five year renewals subject to the written mutual consent of the PARTIES. The full potential term of the Agreement is twenty five (25) years ("Agl'eemeut Term"). 2. Scope and Nature of Services. 5 BARS shall provide the services described in this section ("Sel'vices') for the purposes of 5 BARS's planning, marketing, sublicensing, development, maintenance, and/or operation of certain tower(s), pole(s), building(s), fiber, conduit(s), data room(s), street furniture, and related assets ("City Asset(s)"), which 5 BARS proposes to locate or cause to be located on property within the City Right of Way controlled by the CITY ("City Property") for the purposes of promoting, transmitting or facilitating wireless communication of telephone or data or any other means via Small Cell or Micro- Wireless facilities. "Small cell"means a wireless telecommunications facility, as defined in paragraph (2) of -1- subdivision (d) of Government Code Section 65850.6 ("Wireless Telecommunications Facility"), or a wireless facility that uses licensed or unlicensed spectrnm and that meets the following qualifications: (i) The small cell antennas on the strncture, excluding the associated equipment, total no more than six cubic feet in volume, whether an rurny or separate. (ii) Any individual piece of associated equipment on pole strnctures does not exceed nine cubic feet. (iii) The cumulative total of associated equipment on pole strnctures does not exceed 21 cubic feet. (iv) The cumulative total of any ground-mounted equipment along with the associated equipment on any pole or nonpole strncture does not exceed 35 cubic feet. (v) The following types of associated ancillary equipment are not included in the calculation of equipment volume: I. Electric meters and any required pedestal. 2. Concealment elements. 3. Any telecommunications demarcation box. 4. Grounding equipment. 5. Power transfer switch. 6. Cutoff switch. 7. Vertical cable. rnns for the connection of power and other services. 8. Equipment concealed within an existing building or structure. "Small cell" includes a micro wireless facility, but does not include the following: (i) Wireline backhaul facility, which is defined to mean a facility used for the transport of communications data by wire from wireless facilities to a network. (ii) Coaxial or fiber optic cables that are not immediately adjacent to or directly associated with a particular antenna or collocation. (iii) Wireless facilities placed in any historic district listed in the National Park Service Certified State or Local Historic Districts or in any historical district listed on the California Register of Historical Resources or placed in coastal zones subject to the jurisdiction of the California Coastal Commission. (iv) The underlying vertical infrastructure. The definitition of "Small cell"may be runended hereafter as provided in State Law. "Micro wireless facility" means a small cell that is no larger than 24 inches long, 15 inches in width, 12 inches in height, and that has an exterior antenna, if any, no longer than 11 inches. "Right of Way" means any city controlled right of way and any city controlled public utility easement. Small Cells, including Micro wireless facilities will hereafter be referred to as "Small Wireless Telecommunications Facilities". CITY in its sole discretion shall identify a list of City Assets which 5 BARS may sublicense to Wireless Service Providers or otherwise cause the installation of Small Wireless Telecommunications Facilities ("Asset Lisf'); 5 BARS may not sublicense to Wireless Service Providers or othenvise cause the installation of any Wireless Telecommunications Facilities on City Assets which are not on the Asset List. At any time CITY may add or remove any asset from the Asset List upon notification to 5 BARS in writing. a. Consulting Services. Within 180 days of the effective date of this Agreement, and every year thereafter, 5 BARS shall provide CITY the following consulting services at no cost to CITY: a comprehensive radio frequency ("RF') analysis, which will, among other things, (i) describe, using state- of-the-art metrics, the current state of wireless coverage within CITY's jurisdiction for each major wireless telecommunications carrier, (ii) identify key areas of multiple wireless broadband service provider coverage needs ("Coverage Needs"), (iii) identify potentially available City Assets (whether identified on the Asset List or not) that would satisfy or partially satisfy Coverage Needs, and (iv) provide RF modeling to show how the selection of additional sites for Wireless Telecommunications Facilities will address Coverage Needs. The items refeJTed to in clauses (i), (ii), and (iii) from the preceding sentence are hereinafterreferred to as the "Master Plan," while the items referred to in clauses (i), (ii), (iii), and (iv) in the preceding sentence are hereinafter referred to as the "Consulting Services". -')_ The Master Plan shall also include an RF benchmark survey, capacity and density analysis. This work includes preparing interference studies, te1rnin profile data and preparation of a base map. Wireless Marketing proposals must be tailored to meet the unique needs of individual carriers. Wireless Master plan documents and data must be provided to the City in its native electronic file fonnat. As pait of the Consulting Services, 5 BARS shall create and maintain a wireless asset inventory, upload all City owned asset inventory into City's GIS database. 5 BARS will prepare marketing proposals for individual carriers which the City must review and pre-approve before solicitation to carriers. 5 BARS will act as the main point of contact with carriers through the marketing process and into the sublicensing and long-term maintenance and repair of the Small Wireless Telecommunication Facilities. 5 BARS will respond to resident questions and concems regarding Small Wireless Telecommunication Facilities and will ensure the maintenance and proper repair for each site. To ensure CITY is capitalizing on opportunities to improve wireless broadband service to the community, for the duration of the Agreement Term, 5 BARS shall also provide, on a quarterly basis, a written update summarizing investments, technology changes, gross receipts, financial gains and provider plans, and on an annual basis, ongoing RF analysis with repmts, feasibility analysis, pricing and fee recommendations, form factor and aesthetic policy development, technology refresh and advancement updates, and other consultation specific to wireless broadband service providers, unless 5 BARS and CITY mutually and expressly agree to waive the annual ongoing study. The Consulting Services may be used by CITY for the enhancement and evolution of the Master Plan. b. Marketing Services. At no cost to CITY, 5 BARS shall market the Master Plan to wireless carriers, cable companies, internet service providers (ISPs), street light providers, and Internet of Things (IoT) companies, ("Wireless Services Providers'J to obtain their feedback and interest in locating and/or collocating Small Wireless Telecommunications Facilities on any existing and/or proposed site(s) included in the Master Plan. CITY grants 5 BARS the exclusive right to market, license and sublicense, and construct upon, at 5 BAR's sole cost and expense, those City Assets which are on the Asset List (the "Listed Assets") for the development of Small Wireless Telecommunications Facilities. 5 BARS shall market the Master Plan to all Wireless Services Providers equally, and without any discrimination and/or favoritism between Wireless Services Providers, with a goal of ensuring that residents, visitors, and businesses within CITY's jurisdiction receive the maximum benefit of all available services from all existing wireless services providers. c. Management Services. During the Agreement Term, 5 BARS may at any time request in writing that CITY add City Assets to the Asset List. City may approve or deny such request for any reason or no reason and CITY shall notify 5 BARS of such detennination in writing. If the City agrees to add items to the Asset list, the PARTIES shall enter into a license Agreement as to the City Assets to be added to the Asset List in a form that is substantially consistent with the fo1m set forth in Exhibit "A" to this Agreement. d. Installation Upon Wireless Facilities. For the pmpose of sublicensing Small Wireless Telecommunications Facilities, 5 BARS or an affiliate of 5 BARS, at no cost to CITY, shall construct or cause the construction of Small Wireless Telecommunications Facilities on the properties subject to a License Agreement ("Licensed Properties"), and sub license the Licensed Properties ( either as improved with Small Wireless Teleco1mnunications Facilities, or subject to improvement with Small Wireless Telecommunications Facilities) in accordance with the tenns of this Agreement and a license agreement to be executed for each Listed Asset (provided, however, that a single license agreement may be utilized for multiple or all sites that are the subject of this Agreement). 5 BARS understands and acknowledges that CITY shall have total discretion on whether to approve any license or sublicense and its terms. 5 BARS further understands and acknowledges that it must comply (or caus_e compliance) with and receive (or cause receipt of) all necessary entitlements and permits from CITY, including but not limited to complying (or causing compliance) with CITY's ordinance governing Wireless Telecommunications Facilities, all applicable building codes and public works requirements (:including obtaining any necessary encroachment pe1mits or permits to block traffic), as well as complying ( or causing compliance) with and receiving ( or causing receipt of) all necessary and applicable permits from any other regulatory agency, before 5 BARS undertakes ( or causes the undertaking of) any construction on a City Asset. e. Exclusions. Notwithstanding anything in this Agreement to the contrary, this Agreement does not do any of the following: i. Require or allow 5 BARS to market, license, sublicense, and/or construct Wireless Telecommunications Facilities on City Assets that are not Listed Assets. ii. Grant any rights to 5 BARS regarding macro-cell site development, or deployment of anything other than Small Wireless Telecommunication Facilities. iii. Grant any rights to 5 BARS regarding Small Cell Wireless Facilities agreements between the CITY and Wireless Service Providers which exist at the time of execution of this Marketing Agreement. 1v. Require or allow the provision of Services by 5 BARS for facilities licensed to any municipal, county, district, agency, state or Federal govermnent for stations in the Private Land Mobile Radio Services, Maritime Radio Services, Aviation Radio Services, other stations desiguated for Homeland Security or Law Enforcement communications or the circuits necessary to support such facilities ("Excluded Sel'vices"). This Agreement shall not limit, control, or govern the provision of the Excluded Services. 3. Telecommunications Ordinance Revision. The parties acknowledge that within one hundred eighty (180) days after the Effective Date, 5 BARS will provide CITY with recommended revisions to its telecommunications ordinance, and will attend any related Planning Conumn:iss:ion or City Council meetings as requested by City staff, and assist in preparing related staff reports. City Staff w:ill consider in good faith whether 5 BARS' recommendations should be taken to the City Council for its consideration. 4. Right of Entry Agreement. If the PARTIES enter into a License Agreement that substantially conforms to the form attached as Exhibit "A" with respect to the Licensed Properties, CITY and 5 BARS shall enter into a mututally agreeable Right of Entry Agreement to allow 5 BARS and its employees, agents, contractors, engineers, and surveyors to enter the Licensed Properties. The Agreement shall authorize 5 BARS to detennine, at its own cost, the physical condition of the Licensed Property, the environmental histmy of the Licensed Property, and the feasibility or suitability of the designated Licensed Property for 5 BARS' use ("Due Diligence Investigution"). Activities conducted in connection with 5 BARS' Due Diligence Investigation shall be at the sole expense and cost of 5 BARS. The Parties may also enter into a Right ofEnl!y Agreement for any Listed Asset prior to approval of a License Agreement. The proposed form of Right of Entry Agreement is attached hereto and incorporated by reference herein as Exhibit "B". 5. CITY-Owned Wireless Telecommunications Facilities and CITY Licenses. CITY shall retain ownership of all CITY leases, licenses, and other agreements in existence as of the Effective Date with wireless providers. CITY shall retain ownership of any Wireless Telecmnmunications Facilities CITY subsequently develops ( or allows to be developed) on City Property for CITY's own non-commercial use, and any facility on property not on the Asset List. 5 BARS and/or its sublicensees shall own the Small Wireless Teleconununications Facilities developed on Listed Assets pursuant to this Agreement, except to the extent that such facilities or supportive structures become fixtnres or are granted to and accepted by CITY, and except to the extent that the Small Wireless Telecommunictions Facilities cannot be removed from City Assets without causing irreparable damage to such City Assets. CITY leases, licenses, and other agreements in existence as of the Effective Date and any CITY owned/developed Wireless Telecommunications Facilities in existence as of the Effective Date shall not be subject to this Agreement and/or any accompanying agreements between CITY and 5 BARS, unless specifically designated otherwise in writing. 6. Compensation. a. 65% (CITY) I 35% 5 BARS Revenue Shares. For Licensed Assets which do not have any pre-existing Wireless Telecommunications Facilities on the effective date of this Agreement, and which are marketed by 5 BARS consistent with this Agreement, CITY shall be entitled to sixty five percent (65%) ofrevenue received pursuant to this Agreement. b. 75% (CITY) / 25% 5 BARS Revenue Shares. For Licensed Assets which have at least one pre-existing Wireless Telecommunications Facility on the effective date of this Agreement, and which are marketed by 5 BARS consistent with this Agreement, CITY shall be entitled to seventy five percent (7 5%) of revenue received pursuant to this Agreement which is a result of the addition of one or more Wireless Telecommunications Facilities to the site of a CITY-owned Wireless Telecommunications Facility. c. Reports. 5 BARS shall annually provide reports reflecting all revenue generated within the CITY, and all payments made to City and to 5 BARS. 7. Construction, Engineering, and Other Costs: CITY shall have no financial responsibility for planning, construction, and engineering costs associated with the implementation of this Agreement. 5 BARS may recover from Wireless Service Providers reasonable actual construction costs, installation costs, utilities, or other reasonable actual expenses incurred by 5 BARS, to the extent said reimbursement does not reduce the rent or other payments to be paid by Wireless Service Providers, and such recovered sums shall not be included in the computation of Compensation hereunder. 5 BARS shall include a record of all such payments, in its annual report to CITY, and shall include all detail support to the reasonable satisfaction of the CITY. 8. Default. If there is a default by either PARTY to this Agreement (notice of which, if from the CITY, may be issued by the City Manager or the City Manager's designee), the PARTY claiming a default of any term or condition of this Agreement shall provide the defaulting PARTY with wtitten notice of the default pursuant to the provisions contained in Paragraph l 6(h) of this Agreement. After receipt of such notice, the defaulting PARTY shall have thirty (30) days in which to cure the default. If a non-monetary default reasonably requires more than a thirty (30) day cure petiod, the defaulting PARTY shall have such extended petiod provided that the defaulting PARTY commences the cure within the thirty (30) day petiod and thereafter continuously and diligently pursues the cure to completion, except that in no event shall the cure period exceed 90 days. Subject to and without limiting the foregoing, the PARTIES agree that a failure by 5 BARS to diligently market the Master Plan in accordance with Paragraph 2(b ), above, shall constitute a default under this Paragraph 8; provided, however, that 5 BARS shall have the tight to appeal a determination of default for failure to comply with Paragraph 8 to the CITY's City Council, in which case (i) the appeal shall be heard within sixty ( 60) days of the filing of the appeal, and (ii) the determination of default and the obligation to cure shall be stayed while the appeal is pending. 9. Right to Audit. Duling the Term of this Agreement 5 BARS shall maintain otiginals, or when otiginals are not available copies, of all records, books, papers and documents relating to this Agreement and all accompanying License Agreements between the PARTIES. At all reasonable times, the PARTIES shall allow each other to have access to examine, copy, and audit such records to the extent that -5- they exist. Additionally CITY may at any time access and/or examine, copy and audit records, books, papers and documents relating to or evidencing 5 BARS' eff01ts to obtain sublicenses as such records, books, papers aud documents may or may not exist in the normal course of 5 BARS' business. Even after termination of this Agreement, 5 BARS shall continue to maintain any documents which are deemed to be subject to the Public Records Act, for the minimum period required by law. 10. Indemnification. 5 BARS shall indemnify, defend, and hold harmless CITY, its elected and appointed officials, officers, employees, agents, and contractors, from and against liability, claims, demands, losses, damages, fmes, charges, penalties, administrative and judicial proceedings and orders, judgments, and the costs and expenses incurred in connection therewith, including reasonable attorneys' fees and costs of defense, to the extent directly or proximately resulting from 5 BARS' activities undertaken pursuant to this Agreement, except to the extent arising from or caused by the negligence or willful misconduct of CITY, its elected and appointed officials, officers, employees, agents, or contractors. CITY shall promptly notify 5 BARS of any claim, action or proceeding covered by this Section I 0. This duty to indemnify, defend, and hold harmless CITY, its elected and appointed officials, officers, employees, agents, and contractors applies to, among other things, situations where it is alleged that prevailing wages were required to be but were not properly paid. Notwithstanding anything in this Agreement to the contrary, these responsibilities shall be solely the responsibility of 5 BARS, and not the responsibility of the CITY. 11. Insurance, At the time 5 BARS signs and delivers this Agreement to CITY, as well as at all times during the Agreement Term, 5 BARS shall maintain, at a minimum, the required insurance as set forth in the attached Exhibit "C" to this Agreement. CITY shall be entitled to coverage at the maximum policy limits for the required insurance maintained by 5 BARS, which shall at no time be less than the amounts required set forth in the attached Exhibit "C" to this Agreement. This Agreement's insurance provisions shall be separate and independent from the indenmification and defense provisions of Section 10 of this Agreement and shall not in any way limit the applicability, scope or obligations of the indemnification defense provisions in Section 10. 12. Compliance With Local Ordinances. 5 BARS shall comply with all CITY ordinances pertaining to Wireless Telec01mnunications Facilities as they may be amended from time to time, and all such additional CITY regulations that are consistent with such ordinances (such ordinances and regulations are collectively referred to hereinafter as the "Ordinance"). 13. Intellectual Property. a. Ownership of Services. 5 BARS retains all right, title, and interest in any of its underlying software, subject to the limitations set forth in this Agreement. b. License. 5 BARS hereby grants to CITY a limited, non-exclusive, non-transferable, non-sublicensable license to use the Services for the purposes of offering, promoting, managing, tracking, the development and use of Wireless Telecommunications Facilities. This license shall continue beyond the Agreement Term to the extent and for the time necessaty to allow CITY to fully comply with the Public Records Act and the CITY's adopted records retention policy. c. Exclusivity. During the Agreement Term, 5 BARS will be the sole and exclusive provider of Services as defined in this Agreement, subject to the CITY's right to withhold the marketing of assets not on Asset List. CITY expressly understands and agrees that the exclusivity set faith in this Agreement is consideration in exchange for the pricing and other benefits being provided to CITY hereunder. d. Additional CITY Commitments. CITY acknowledges that 5 BARS will provide CITY with licensed software containing proprietary and intellectnal property. CITY shall: (i) not unlawfully copy, modify, transfer, display, share, or use any portion of the licensed software; (ii) not contest or do or aid others in contesting or doing anything which impairs the validity of any proprietmy or intellectnal property rights, title, or interest of 5 BARS in and to any software 5 BARS provides to CITY; (iii) not engage in any activity that unlawfully interferes with or disrupts 5 BARS' provision of the Services; and (iv) use the Services exclusively for authorized and legal purposes. 14. Governing Law. This Agreement shall be governed by the laws of the State of California. 15. Termination. In addition to any rights either party may have for termination for cause, CITY may terminate this Agreement without cause on 30 days' prior notice to 5 BARS of its intent to terminate. If CITY exercises this right to terminate without cause, 5 BARS will continue to receive revenue pursuant to section 6 of this Agreement to the extent it would otherwise be entitled to receive compensation, up to the end of the then existing Term as if no tennination had occull'ed, but not thereafter. If any sub license agreement or similar agreement is entered into in the ninety (90) days prior to the issuance of the notice of termination, 5 BARS will not receive compensation pursuant to section 6 unless 5 BARS establishes that such sublicense agreement was made in good faith and was issued in the ordinary course of business. 16. General Provisions. a. Independent Contractor. 5 BARS shall, during the Agreement Term, be construed as an independent contractor and not an employee of CITY. This Agreement is not intended to nor shall it be construed to create an employer-employee relationship, a joint ventnre relationship, or to allow CITY to exercise discretion or control over the professional marmer in which 5 BARS performs the services which are the subject matter of this Agreement; however, the services to be provided by 5 BARS shall be provided in a marmer consistent with all applicable standards and regulations governing such services. 5 BARS shall pay all salaries and wages, workers compensation, unemployment insurance, employer's social secmity taxes, and all taxes relating to employees and shall be responsible for all applicable withholding taxes. b. Authorizations. All individuals executing this Agreement on behalf of the respective PARTIES certify and wall'ant that they have the capacity, and have been duly authorized to so execute this Agreement on behalf of the entity so indicated. c. Counterpmts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitnte one and the s81Ile instrument. d. Entire Agreement and Amendment. This Agreement captnres all tetms, agreements, and understandings of the PARTIES and supersedes any prior promises, representations, agreements, warranties or undertakings by any of the PARTIES, either oral or written, of any character or natme binding except as stated herein. This Agreement may be modified, altered or amended only by an instrument in writing, executed by the PARTIES to this Agreement, and by no other means. Each PARTY waives its right to claim, contest or assert that this Agreement was modified, canceled, superseded or changed by any oral agreement, course of conduct, waiver or estoppel. e. Good Faith. The PARTIES agree to exercise their reasonable best efforts and utmost good faith to effectnate all the tenns and conditions of this Agreement, and to execute such further instruments and documents as m·e necessary or approptiate to effectnate all of the tenns and conditions of this Agreement. f. Assignment. 5 BARS may assign this Agreement to a person or entity with demonstrated capacity to carry out 5 BARS' obligations under this Agreement only after receiving wtitten CITY consent. -7- 5 BARS shall provide any infmmation requested or necessary for CITY to detennine whether the proposed assignee has the capacity to fulfil 5 BARS obligations under this Agreement. After CITY consents in writing to any proposed assignment, 5 BARS shall provide at least 30 days' prior written notice of such assignment to CITY. g. Discrimination. 5 BARS shall not discriminate because ofrace, color, creed, religion, sex, marital status, pregnancy, sexual orientation, gender identity, gender expressesion, age, national origin, ancestry, or disability, as defmed and prohibited by applicable law, in the recruitment, selection, training, utilization, promotion, tennination or other employment related activities. 5 BARS affmns that it is an equal opportunity employer and shall comply with all applicable federal, state and local laws and regulations. h. Notices. All notices, approvals, acceptances, demands and other communication required or permitted under this Agreement, to be effective, shall be in writing and, unless otherwise provided herein, shall be deemed validly given on the date either: (I) personally delivered to the address indicated below; or (2) on the third business day following deposit, postage prepaid, using certified mail, return receipt requested, in any U.S. Postal mailbox or at any U.S. Post Office; or (3) one business day after the dispatch date by overnight delivery service; or (4) on the date of transmission by facsimile to the number provided below. All notices, demands, or requests shall be addressed to the following: CITY: 5 BARS: City of West Coviua Attn: City Manager 1444 West Garvey Avenue South West Covina, CA 91790 Phone: 626-939-8400 Fax: 626-939-8406 With a copy to: Jones & Mayer West Covina City Attorney 3777 N. Harbor Blvd. Fullerton CA 92835 Phone: 714-446-1400 Fax: 714-446-1448 Kevin Muldoon, VP & General Counsel 5 Bars Communities 19200 Von Karman Ave, Suite 100 Irvine, CA 92612 Phone: 949-514-4617 Fax: 949-266-9160 With a copy to: Rutan & Tucker, LLP 611 Anton Blvd., I4'hF1oor Costa Mesa, CA 92626 Phone: 714-641-5100 Fax: 714-546-9035 0 ',, Any PARTY may change its address by giving the other PARTIES written notice of its new address as provided above. i. Successors. This Agreement shall be binding on and shall inure to the benefit of the PARTIES and their respective successors. 17. Waiver. No waiver of any provision of this Agreement, or consent to any action, shall constitute a waiver of any other provision of this Agreement, or consent to any other action. No waiver or consent shall constitute a continuing waiver or consent or commit a PARTY to provide a waiver or consent in the future except to the extent specifically stated in writing. No waiver shall be binding unless executed in writing by the PARTY making the waiver, based on a full and complete disclosure of all material facts relevant to the waiver requested. "CITY" The City of West Covina Chris Freeland, City Manager VEDAS TO FORM: ~~ arlow, City Attorney <?J. r>. 11 Date: __ t __ J _____ _ () (\ EXHIBIT A LICENSE AGREEMENT TIDS LICENSE AGREEMENT is made as of the date of the final signature below, by and between the City of_West Covina, a municipal corporation, having a mailing address of 1444 West Garvey Avenue South, West Covina, CA 91790 ("Licensor") and XG Communities, LLC, a Delaware limited liability company, dba 5 Bars Communities, with an address at 19200 Von Ka1man Ave, Suite 100, Irvine, CA 92612 ("Licensee") (each a "PARTY' and collectively the "PARTIES"). I. Definitions. "Agl'eemenf' means this License Agreement. "Appl'ovals" means all certificates, permits, licenses and other approvals that Licensee must obtain as required by law in order for Licensee or its agents or sublicensees to use the Licensed Properties for the purpose intended by this Agreement. "Company Facilities" means any and all Small Wireless Telecommunications Facilities to be developed by Licensee on the Licensed Properties. "Defaulting Pm'ty" means the party to this Agreement that has defaulted as provided for in Section 26 of this Agreement. "Harmful Interference" means Interference that endangers the functioning of a radio navigation service or of other safety service or seriously degrades, obstructs, or repeatedly interrupts a radio communication service operating in accordance with both International Telecommunications Union Radio Regulations and the regulations of the Federal Communications Commission. "Hazal'dous Materiaf' means any substance which is (i) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant or contaminant under any Environmental Law, as currently in effect or as hereafter amended or enacted, (ii) a petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v) asbestos, (vi) flammable explosives, (vii) infectious materials, or (vii) radioactive materials. "Environmental Law(s)" means tbe Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., tbe Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., tbe Hazardous Materials Transportation Act, 49 U.S.C. Section 5101 et seq., and the Clean Water Act, 33 U.S.C. Section 1251 et seq., as said laws have been supplemented or amended to date, the regulations promulgated pursuant to said laws and any otber federal, state or local law, statute, rule, regulation or ordinance that regulates or proscribes the use, storage, disposal, presence, clean-up, transportation or release or threatened release into the environment of Hazardous Material. "Impl'ovements" means a Small Wireless Telecommunications Facility(ies) installed or caused to be installed by Licensee. "Jnte1ference" means the effect of unwanted energy due to one or a combination of emissions, radiations, or inductions upon reception in a radio communication system, manifested by any performance degradation, misinterpretation, or loss of information. EXIDBITA -1- "License Term" means the term of this Agreement, inclusive of exercised option terms, if any. "Licensed Properties" means those portions of Licensor's Property described in the sketches, maps, photographs, or other descriptive documents attached hereto as Exhibit "A", which are subject to this License Agreement. "Licensee" means 5 Bars Communities a dba of XG Communitites, LLC, a Delaware limited liability company. "Licensee's Notice Address" means 19200 Von Karman Ave, Suite 100, Irvine CA 92612. "Licenso1"' means City of West Covina, a municipal corporation. "Licensor's Notice Address" means City of West Covina; Attn: City Manager; 1444 West Garvey Avenue South; West Covina, CA 91790. "Licensor's Properties" means those properties owned by the City. "Marketing Agreement" means that Wireless Marketing Agreement Between the City of West Covina and XG Communities, LLC, dba 5 BARS Communities entered into between the parties to this Agreement on August 15, 2017. "Micro wireless facility" shall have the meaning established in the Marketing Agreement, as the meaning may be amended from time to time by State law. "Non-Defaulting Party" means the party to this Agreement that has not defaulted as provided for in Section 26 of this Agreement. "Rent' means the Compensation which Licensor is entitled to pursuant to Section 6 of the Marketing Agreement. "Small cell" shall have the meaning established in the Marketing Agreement, as the meaning may be amended from time to time by State law. "Small Wireless Telecommunications Facilities" shall mean small cells and nucro wireless facilities as set forth in the Marketing Agreement. "Sublicense Revenue" means the total amount of revenue received from any party utilizing the Licensed Properties pursuant to the Marketing Agreement. "Sublicensee" means a third party to which Licensee has granted the right to use and occupancy of one or more of the Licensed Properties, subject to the terms and conditions contained herein. "Wireless Telecommunications Facilities" means the equipment and associated structures needed to transmit and/or receive electr·omaguetic signals, as defined in paragraph (2) of subdivision ( d) of Government Code Section 65850.6. A wireless telecommunication facility typically includes antennas, supporting structures, enclosures and/or cabinets housing associated equipment, cable, access roads and other accessory development. 2. Licensor's Cooperation. During the License Term, Licensor shall cooperate with Licensee in its efforts to obtain all of the Approvals. If Licensor elects to replace infrastructure on the Licensed Premises that EXHIBIT A -2- is unrelated to the delivery of Wireless Telecommunications services, then such replacement shall be accomplished in a manner calculated to minimize interference with the Wireless Telecommunications Facilities on the Licensed Properties. Additionally, Licensor authorizes Licensee and its employees, representatives, agents and consultants to prepare, and submit, file and present on behalf of Licensor, building, permitting, zoning or land-use applications with the appropriate local, state and/or federal agencies necessary to obtain land use changes, special exceptions, zoning variances, conditional use permits, special use permits, administrative permits, construction permits, operation permits and/or building permits. Licensor understands that any such application and/or the satisfaction of any requirements thereof may require Licensor's reasonable cooperation, which Licensor hereby agrees to provide. Licensor shall not lmowingly unreasonably interfere with any Approvals pertaining to the authorized Improvements or Licensed Properties or cause them to be in nonconformance with applicable local, state or federal laws. Licensor agrees to execute such documents as may be necessary to obtain and thereafter maintain the Approvals, and agrees to be named as the applicant for said Approvals. The provisions of this Section shall not apply in the event of any dispute between and/or involving Licensor and Licensee. Nothing in this Agreement shall be construed to interfere with Licensor's legislative authority, its ability to act as regulator, or Licensor's police powers. 3. Reserved. 4. Term. The term of this Agreement shall commence on August 15, 2017 ("Commencement Date"). The term of this Agreement and shall continue for a period of five (5) years with four (4) five (5) year options, each of which is subject to the written mutual consent of the Licensor and Licensee, prior to the expiration of the existing term. At the termination of this Agreement, 5 BARS will cause the removal of all Improvements unless mutually agreed upon by both Parties. 5. Rent. a. Rent. From and after the Commencement Date and effective upon Licensee's receipt of Sub license Revenue, Licensee shall pay Rent for the each of the Licensed Properties. b. Sublicenses. Licensee shall exercise discretion as to whether, and on what terms, to sublicense, license or otherwise allow occupancy of the Licensed Properties, subject to the following: i. Licensee shall make every reasonable effort to ensure that each proposed Small Wireless Telecommunications Facility will not affect, detract, or impact the operation of existing Licensor facilities. Licensee shall not allow interference with signal control or street lighting devices. ii. Licensee shall ensure that each proposed Small Wireless Telecommunications Facility is not dependent on the resources dedicated to Licensor facilities. For example, no Wireless Telecommunication Facility may draw power from Licensor's facilities. iii. Licensee shall propose new locations for Wireless Telecommunications Facilities to Licensor, and Licensor shall have the final authority to approve or reject said locations. iv. In the event of damage, Licensor shall not be obligated to repair or restore the Improvements to normal operating conditions unless Licensor is the primary and direct cause of such damage. For these purposes, "damage" excludes any requirement that such facilities be moved to an alternate location for any legitimate governmental purpose, such as street realigmnent or widening. As between Licensee and Licensor, Licensee shall bear all other costs incurred to repair, restore, or remove Wireless Telecommunications Facilities. EXHIBIT A -3- v. Licensee shall make every reasonable effort to restore Licensor facilities in a safe and efficient manner, and in no event shall Licensor fail to repair or restore facilities so as to threaten public safety. v1. Licensee shall give Licensor fourteen (14) days' notice, or reasonable notice (whichever amount is greater) prior to impacting Licensor facilities in a manner that is beyond the routine maintenance and operation of Wireless Teleco=unications Facilities. Licensee shall coordinate the work consistent with direction from the City in an effort to limit the negative impacts of such activities. v11. Any sublicense agreement shall include the requirement that the Sublicensee must comply with the terms and conditions of this Agreement. v111. Any sublicense agreement shall include a provision substantially consistent with the following, relating to inte1ference with city facilities and co=unications systems: Notwithstanding any other provisions this Sublicense Agreement, Sublicensee agrees to operate any and all of its Wireless Telecommunications Facilities in fit!! compliance with the technical standards set forth in the Rules and Regulations of the Federal Communications Commission ("FCC'J as codified in 47 C.F.R. and upon notice of non-compliance agree to promptly take all steps necessary to bring its operation into fit!/ compliance. Licensee and Sublicensee both recognize and stipulate that City's public safety communications systems are vital to the life, health, and safety of the public safety personnel and of members of the general public, and agree that protecting such systems against harmful inteiference is an integral responsibility of this agreement. Licensee and Sublicensee agree to meet and confer with each other and the City on a case-by-case basis to resolve City's concerns regarding interference or other issues. Sublicensee fitrther agree, and at the request of any Party and/or the City, in the event that additions or changes to Wireless Telecommunications Facilities on the property cause incompatibilities with public safety or City installed communications system(s), or with pre-existing Wireless Telecommunications Facilities located on City's property, such interference shall immediately be stopped. Licensee and Sublicensee agree that in the event of harmfitl interference or degradation public safety radio operations, City may require on a case-by-case basis that the use of the interfering Wireless Telecommunications Facility be suspended pending resolution of the cause and cure of such interference or degradation. The findings of the City's communications engineering representative shall be determinant in declaring harmfitl interference caused by such non-compliance, and in the event of a dispute the burden of see/dng a determination of compliance fiwn the Federal Communications Commissions shall be on the Sublicensee. These provisions shall be binding on Licensee, Sublicensee, and any successor, assignee, or service provider designated by Licensee and/or Sublicensee. EXHIBIT A -4- ; ' 1x. Licensee may not enter into any sublicense or similar agreement unless Licensor agrees to the terms of such agreement. Licensor may withhold such approval for any reason or no reason, so long as there is no unlawful discriniination as between Wireless Teleco=unications Providers. For example, Licensor may deny a sublicense if Licensor determines the Licensor will not receive sufficient compensation. Licensor may also deny such sublicense if Licensor objects to the design of a proposed facility. c. Accounting/ Adjustments. The parties agree that Licensee may base Rent on Sublicensee agreements, and later make adjustments if overpayments or underpayments occur. In addition to the ammal report of revenue required by the Marketing Agreement, at any time, Licensor may request that Licensee provide an accounting of the Sub licensee Revenue and Rent in such form and content as Licensor may reasonably request. 6. Construction, Engineering, and Other Costs a. Licensor shall have no financial responsibility for planning, construction, and engineering costs associated with the implementation of this License Agreement. b. Licensee or any sublicensees shall obtain, and pay for, all required permits or other govermnental approvals. For example, Licensee or any sublicensees shall obtain and pay for any required encroachment, excavation, or building permits. c. Licensee may recover from sublicensees reasonable actual construction costs, installation costs, utilities, or other reasonable actual expenses incurred by Licensee, to the extent said reimbursement does not reduce the rent or other payments to be paid by sublicensees, and such recovered sums shall not be included in the computation of compensation hereunder. Licensee shall include a record of all such payments, in its annual report to Licensor, and shall include all detail support to the reasonable satisfaction of the Licensor. 7. Licensed Properties; Survey. Prior to any sublicensing being effective, Licensee shall provide Licensor with a copy of an "as-built" survey for each Licensed Property, which survey shall depict and identify the boundaries of each Licensed Property and any easements of record. If accepted by the CITY, the survey shall appear as Exhibit "A" to this Agreement and shall control in the event of any discrepancies between what is listed on the Asset List and Exhibit "A" hereto. 8. Access. Conditioned upon and subject to co=encement of the License Term, Licensor grants to Licensee and Licensee's employees, agents, contractors, sublicensees, licensees and their employees, agents and contractors access to land located within Licensor's Property to Licensee, for the purpose of constructing, repairing, maintaining, replacing, demolishing and removing the Improvements upon each Licensed Property as necessary to obtain or comply with any Approvals, provided, however, that access to areas of Licensor's Property which are not included within the Licensed Properties, shall be limited in scope and time so as not to unreasonably interfere with the City's or the public's use of such Licensed Property. 9. Use of Property. The Licensed Properties shall be used for the purpose of constructing, maintaining and operating the Improvements and for uses incidental thereto. All Improvements shall be constructed at no expense to Licensor. All Improvements, inclusive of security fences, shall comply with the requirements of the West Covina Municipal Code and all other laws and regulations applicable thereto, and Licensee shall obtain all required and necessary govermnental agency Approvals and permits, including any necessary encroachment permits. Licensee will maintain the Licensed Properties in a safe condition. It is the intent of the parties that Licensee's Improvements shall not constitute a fixture unless otherwise agreed by the parties in writing. EXHIBIT A -5- 10. Removal of Obstructions. Licensee may request in writing the right to remove obstructions from Licensor's Property, as approved by the Licensor, which approval shall be requested in writing by Licensee and such approval shall not be unreasonably withheld, conditioned or delayed by Licensor; notwithstanding the foregoing the City has unfettered discretion to prevent or regulate the trimming or removal of trees or of pre- existing Wireless Telecommunications Facilities, regulatory signs and signals. Potential obstructions include but are not limited to vegetation, which may encroach upon, interfere with or present a hazard to Licensee's use of the Licensed Properties. Licensee shall dispose of any materials removed. If vegetation is removed, similarly sized vegetation shall be planted in a manner reasonably agreeable to Licensor; Licensor may require that replacement vegetation be drought tolerant. To the extent that there is loss of screening as a result of any such removal, Licensor may require commensurate actions to mitigate the loss of screening. 11. Hazardous Materials. a. Licensee's Obligation and Indemnity. Licensee shall not ( either with or without negligence) cause or permit the escape, disposal or release of any Hazardous Materials on or from the Licensed Properties in any manner prohibited by law. Licensee shall indemnify and hold Licensor harmless from and against any and all claims, damages, fines,judgments, penalties, costs, liabilities or losses (including, without limitation, any and all sums paid for settlement of claims, attorneys' fees, and consultants' and experts' fees) from the release of any Hazardous Materials on the Licensed Properties if caused by Licensee, its officers, employees, agents, assigns, or by a sublicensee or any party acting under color of a sublicense or contract approved by Licensee. b. Licensor's Obligation and Indemnity. Licensor shall not, with gross negligence or intentional misconduct, cause the escape, disposal or release of any Hazardous Materials on or from Licensor's Property or Licensed Premises in any manner prohibited by law. Licensor shall indemnify and hold Licensee harmless from and against any and all claims, damages, fines, judgments, penalties, costs, liabilities or losses (including, without limitation, any and all sums paid for settlement of claims, attorneys' fees, and consultants' and experts' fees) from the presence or release of any Hazardous Materials on Licensor's Property or Licensed Properties unless caused by Licensee, its officers, employees agents or assigns, or by a sublicensee or any party acting under color of a sublicense or contract approved by Licensee. 12. Real Estate Taxes. To the extent that a possessory interest is deemed created, Licensee acknowledges that notice is and was hereby given to Licensee pursuant to California Revenue and Taxation Code Section 107.6 that use or occupancy of any public property may subject the Licensee to possessory interest taxes or other taxes levied against Licensee's right to possession, occupancy or use of any public property and Licensee shall pay all applicable (federal, state, county, city, local) excise, sales, consumer use, possessory interest, or other similar taxes required by law. Licensee agrees to reimburse Licensor for any documented increase in real estate or personal property taxes levied against Licensor's Property that are attributable to the Improvements. Licensee reserves the right to challenge any such assessment, and Licensor agrees to reasonably cooperate with Licensee in connection with any such challenge. 13. Insurance. At all times dming the performance of its Due Diligence Investigation and during the License Term, Licensee, at its sole expense, shall obtain and keep in force the required insurance as set forth in the attached Exhibit "C". Licensor shall be entitled to coverage at the maximum policy limits carried by Licensee for the required insurance, which shall at no time be less than the required amounts set forth in the attached Exhibit "C" to this Agreement. The iosurance provisions shall be separate and independent from the indemnification and defense provisions between the Licensee and Licensor and shall not in any way limit the applicability, scope or obligations of the indemnification defense provisions in Section 14. EXHIBIT A -6- 14. Indemnification. a. Licensee shall indemnify, defend, and hold harmless Licensor, its elected and appointed officials, officers, employees, agents, and contractors, from and against liability, claims, demands, losses, damages, fines, charges, penalties, administrative and judicial proceedings and orders, judgments, and the costs and expenses incurred in connection therewith, including reasonable attorneys' fees and costs of defense, to the extent directly or proximately resulting from the activities undertaken pursuant to this Agreement, except to the extent arising from or caused by the gross negligence or willful misconduct of Licensor, its elected and appointed officials, officers, employees, agents, or contractors. Licensor shall promptly notify Licensee of any claim, action or proceeding covered by this Section 14(a). This duty to indemnify, defend, and hold harmless Licensor, its elected and appointed officials, officers, employees, agents, and contractors applies to, among other things, situations where it is alleged that prevailing wages were required to be but were not properly paid. Notwithstanding anything in this Agreement to the contrary, these responsibilities shall be solely the responsibility of Licensee, and not the responsibility of the Licensor. b. Right to Audit. During the term of this Agreement, Licensee shall maintain originals, or when originals are not available copies, of all records, books, papers and documents relating to this Agreement and all accompanying agreements between Licensee and Sublicensees. At all reasonable times, Licensee shall allow Licensor to have access to, examine, copy, and audit such records, to the extent they exist. Additionally, Licensor may at any time access and/or examine, copy and audit records, books, papers and documents relating to or evidencing Licensee's efforts to obtain sublicenses as such records, books, papers and documents may or may not exist in the normal course of Licensee's business, including but not limited to access to and audit of information pertaining to the identities of the Sublicensees whom Licensee has attempted to sublicense the Licensed Properties. City shall not disclose documents which Licensee has expressly marked as proprietary, confidential or a trade secret, except as required by the California Public Records Act, court order, or other applicable law. If City receives a public records request for such documents, Licensor shall provide Licensee five (5) days' prior notice of the City's intent to disclose such documents. Licensee may petition a court to prevent said disclosure, and City will not object to such petition. 15. Waiver of Claims and Rights of Subrogation. All policies of property insurance carried by either Party for the Improvements, Licensor's Property or the Licensed Properties shall include a clause or endorsement denying to the insurer rights by way of subrogation against the other Party to the extent rights have been waived by the insured before the occurrence of injury or loss. Nothing in this section shall require Licensor to obtain property insurance policies on any property, including the Improvements. Licensor's self-insurance fund shall not be treated as a policy of insurance under this Agreement. 16. Eminent Domain. If Licensor receives notice of a proposed taking by eminent domain of any part of the Licensed Properties, Licensor will notify Licensee of the proposed taking within twenty one (21) business days of receiving said notice. If eminent domain is exercised as to any particular Licensed Property, portion thereof, Improvement or facility, either Party may: (i) declare this Agreement terminated as to that Licensed Property, portion thereof, Improvement or facility and thereafter neither Party will have any liability or obligation hereunder other than payment of Rent for so long as Licensee remains in physical possession of the Licensed Property(ies ); or (ii) remain in possession of that portion of the Licensed Premises that will not be taken, in which event there shall be an equitable adjustment in Rent if the taking of a portion of the Licensed Property(ies) results in removal or inoperability oflmprovement(s). 17. Reserved. EXHIBIT A -7- 18. Sale of Property. If during the License Term, Licensor sells all or part of Licensor's Property, of which some or all of the Licensed Properties is a part, and such sale is not subject to this Agreement, then Licensee shall be entitled to move the Improvements to a feasible alternate location at Licensor's sole and reasonable cost, with execution of a new License Agreement for the alternate location. 19. Surrender of Property. Upon expiration or termination of this Agreement, Licensee shall, within a reasonable time, remove all above and below ground Improvements and all related equipment and/or infrastructure not owned or accepted by Licensor and restore the Licensed Premises to its original condition, without, however, being required to replace any trees or other plants lawfully removed, or alter the then existing grading. 20. Recording. Licensee shall have the right to record a memorandum of the Agreement with the County Recorder's Office. Licensor shall execute and deliver each such memorand1un, for no additional consideration, promptly upon Licensee's request. 21. Licensor's Covenant of Title. Licensor covenants that Licensor holds the legal right to Licensor's Property and each of the Licensed Properties (which may include easements) and has full authority to enter into and execute this Agreement. 22. Interference with Licensee's Business. Licensee shall have the exclusive right to construct, install and operate Small Wireless Telecommunications Facilities on the Licensed Properties, except to the extent that Licensor elects to construct, install and operate such facilities for its own use, and except for any pre-existing Wireless Telecommunications Facilities on the Licensed Premises. Except as herein provided, Licensor agrees that it will not permit the construction, installation or operation on the Licensed Properties of (i) any additional Small Wireless Telecommunications Facilities or (ii) any equipment or device that unreasonably interferes with Licensee's use of the Licensed Properties for a Small Wireless Telecommunications Facility; provided, however, that installations or collocations that are permitted by law without Licensor's approval shall not be deemed a violation of this section or this Agreement. Each of the covenants made by Licensor in this Section is a covenant nmning with the land for the benefit of the Licensed Properties. 23. Quiet Enjoyment. Licensor covenants that Licensee, on paying Rent and performing the covenants of this Agreement, shall peaceably and quietly have, hold and enjoy the Licensed Properties, subject to City's right to upgrade its own facilities, to widen and repair its streets, to engage in street realignment, and similar conduct as deemed necessary by its Public Works Director, City Manager or City Council. In the event that any such public works project is deemed necessary, Licensor shall provide reasonable notice to Licensee to allow Licensee or its sublicensee to remove and preserve any Improvement. At such time as the Public Works Director deems appropriate, the Improvement may be reinstalled within the Licensed Property affected by the public works project, or to a feasible alternate location agreed upon by the Parties. In connection with removal and reinstallment of Improvements as a result of a public works project, Licensee shall bear all costs incurred to repair, restore, remove or reinstall Improvements. Licensee is aware that infrastructure in the public right of way is subject to being damaged by motor vehicles, bicycles, pedestrians, vandals, taggers, graffiti, earthquakes, storms, winds, other weather events, criminal activity, and Acts of God. Licensor shall not be responsible for any damage to, destruction of, or loss of use of any Improvements as a result of any of the enumerated causes or any other cause beyond Licensor's control. 24. Reserved. 25. Title Insurance. Licensee, at Licensee's option, may obtain title insurance on each of the Licensed Properties at Licensee's sole cost and expense. Licensor shall cooperate with Licensee's efforts to obtain EXHIBIT A -8- title insurance by executing documents or obtaining requested documentation as required by the title insurance company. 26. Default. a. Notice of Default; Cure Period. If there is a default by Licensor or Licensee (the "Defaulting Party") with respect to any of the provisions ofthis Agreement or Licensor's or Licensee's obligations under this Agreement, the other party (the "Non-Defaulting Party") shall give the Defaulting Party written notice of such default. After receipt of such written notice, the Defaulting Party shall have thirty (30) days in which to cure any monetary default and sixty ( 60) days in which to cure any non-monetary default, provided however, that any default by Licensee which impairs the City's public safety communications or otherwise threatens public safety shall be cured immediately, or if it cannot be cured, the conduct causing the impairment or threat shall be immediately ceased. The Defaulting Party shall have such extended periods as may be required beyond the sixty (60) day cure period to cure any non-monetary default if the nature of the cure is such that it reasonably requires more than sixty (60) days to cure, and the Defaulting Party commences the cure within the sixty (60) day period and thereafter continuously and diligently pursues the cure to completion. The Non-Defaulting Party may not maintain any action or effect any remedies for default against the Defaulting Party unless and until the Defaulting Party has failed to cure the same within the time periods provided in this Section. b. Consequences of Licensee's Default. If Licensee is in default beyond the applicable periods set forth above in Section 26(a), Licensor may, at its option, upon written notice: (i) terminate the License, require Licensee to promptly vacate the Licensed Properties and be relieved from all further obligations under this Agreement; (ii) require the Rent to be paid up to the date of complete removal and (iii) take any actions that are consistent with Licensor's rights, up to and including assuming some or all of the sublicenses; and (iv) sue for injunctive relief; (v) require payment amount reasonably expended by Licensor as a result of such default. In no event shall Licensee be liable to Licensor for indirect or speculative damages in connection with or arising out of any default. c. Consequences of Licensor's Default. If Licensor is in default beyond the applicable periods set forth above in Section 26(a), Licensee may, at its option, upon written notice: (i) terminate the License, vacate the Licensed Properties and be relieved from all further obligations under this Agreement; (ii) take any actions that are consistent with Licensee's rights; (iii) sue for injunctive relief, and/or (iv) set-off from Rent any amount reasonably expended by Licensee as a result of such default. In no event shall Licensor be liable to Licensee for indirect or speculative damages in connection with or arising out of any default. 27. Force Majeure. If an event or condition constituting a "force majeure"-including, but not limited to, an act of God, labor dispute, civil unrest, epidemic, or natural disaster-prevents or delays either Party from performing or fulfilling an obligation under this Agreement, said Party is not in Default, under Section 26 of this Agreement, of the obligation. A delay beyond a Party's control automatically extends the time, in an amount equal to the period of the delay, for the Party to perform the obligation under this Agreement. The Licensor and Licensee shall prepare and sign an appropriate document acknowledging any extension of time under this Section. 28. Applicable Law. This Agreement and the performance thereof shall be governed, interpreted, construed and regulated by the laws of the State of California. The parties agree that the venue for any litigation regarding this Agreement shall be in the state and county where the Licensed Properties are located. 29. Assignment, Sublisence, Licensing and Encumbrance. With Lessor's prior written approval, Licensee may assign this license to a person or entity with demonstrated capacity to carry out Licensee's obligations under this Agreement. Licensee shall provide 30 days' prior written notice of such assigrnnent to EXHIBIT A -9- Licensor. Licensee may enter into sublicenses or other authorizations ("Sub-Authol'izations") to allow a third party to utilize and operate from the Licensed Properties, so long as such third party is a provider of services that utilizes Small Wireless Telecommunications Facilities and Licensee receives Rent for such use of such facilities. Sub-Authorizations shall require the consent of Licensor to the terms of the Sublicense or Sub-Authorization. 30. Miscellaneous. a. Entire Agreement. Licensor and Licensee agree that this Agreement, together with the Marketing Agreement [and executed right of entry], contain all of the agreements, promises and understandings between Licensor and Licensee with regard to the Licensed Properties. No oral agreements, promises or understandings shall be binding upon either Licensor or Licensee in any dispute, controversy or proceeding at law. Any addition, variation or modification to this Agreement shall be void and ineffective unless made in writing and signed by the parties hereto. b. Captions. The captions preceding the Sections of this Agreement are intended only for convenience of reference and in no way define, limit or describe the scope of this Agreement or the intent of any provision hereof. c. Construction of Document. Licensor and Licensee acknowledge that this document shall not be construed in favor of or against the drafter by virtue of said party being the drafter and that this Agreement shall not be construed as a binding offer until signed by Licensee. d. Notices. All notices hereunder shall be in writing and shall be given by (i) established national courier service which maintains delivery records, (ii) hand delivery, or (iii) certified or registered mail, postage prepaid, return receipt requested. Notices are effective upon receipt, or upon attempted delivery if delivery is refused or if delivery is impossible because of failure to provide reasonable means for accomplishing delivery. The notices shall be sent to Licensor at Licensor's Notice Address and to Licensee at Licensee's Notice Address. e. Partial Invalidity. If any term of this Agreement is found to be void or invalid, then such invalidity shall not affect the remaining tenns of this Agreement, which shall continue in full force and effect. f. IRS Form W-9. If necessary, Licensor agrees to provide Licensee with a completed IRS Form W- 9, or its equivalent, upon execution of this Agreement and at such other times as may be reasonably requested by Licensee. In the event the Property is transferred, the succeeding Licensor shall have a duty at the time of such transfer to provide Licensee with a completed IRS Form W-9, or its equivalent, and other related paperwork to effect a transfer in Rent to the new Licensor. Licensor's failure to provide the IRS Form W-9 within thirty (30) days after Licensee's request shall be considered a default and Licensee may take auy reasonable action necessary to comply with IRS regulations including, but not limited to, withholding applicable taxes from Rent payments. IN WITNESS WHEREOF, Licensor and Licensee having read the foregoing and intending to be legally bound hereby, have executed this Agreement as of the day and year this Agreement is fully executed. [SIGNATURES CONTINUE ON FOLLOWING PAGE] EXHIBIT A -10- Date: ------- ATTEST: APPROVED AS TO FORM: Date: ______ _ APPROVED AS TO FORM: "LICENSOR" CITY OF WEST COVINA By: ___________ _ Title: ___________ _ "LICENSEE" XG COMMUNITIES, LLC, dba 5 BARS COMMUNITIES By: ___________ _ Title: ------------ EXIDBITA -11- EXHIBITB RIGHT OF ENTRY AGREEMENT This Right of Entry Agreement (this "Agreemenf') is made as of the date of the final signature below, by and between the City of West Covina, a municipal corporation, having a mailing address of 1444 West Garvey Avenue South, West Covina, CA 91790 ("Grantor") and XG Communities, LLC, a Delaware limited liability company, dba 5 Bars Communities with an address at 19200 Von Karman Ave, Suite 100, Irvine, CA 92612 ("Grantee"). Grantor and Grantee are sometimes collectively referred to as "Parties" or individually as "Party." RECITALS A. Grantor has property rights to that certain real property (the "Property"). B. Grantor and Grantee have entered into that certain "Wireless Marketing Agreement Between the City of West Covina and 5 Bars Communities" dated August 15, 2017 ("Marketing Agreement") pursuant to which Grantee has agreed to provide certain consulting, marketing, and management services relating to the placement of Wireless Telecommunications Facilities on some or all of the Property. C. Pursuant to the Marketing Agreement, Grantor and Grantee have agreed to enter into this Agreeement to that Grantee may enter upon the Property, upon 24 hour written notice to Grantor, to inspect, conduct, perform and examine soil borings, drainage testing, material sampling, surveys and other geological or engineering tests or studies of the Property, to apply for and obtain all licenses and permits required for Grantee's use of the designated Property from all applicable govermnental or regulatory entities, and to do those things on or off the designated Property that, in the sole opinion of Grantee, are necessary to determine the physical condition of the designated Prope1iy, the environmental history of the designated Property, and the feasibility or suitability of the designated Property for Grantee's use ("Due Diligence Investigation"). NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by each of the Parties, the Parties agree as follows: AGREEMENT 1. Right of Entry. Grantor hereby grants to Grantee and its agents, employees, contractors, subcontractors, and volunteers non-exclusive permission to enter over and across, as well as to use the Property as is reasonable and necessary, for the express purpose of conducting, at Grantee's sole expense, the Due Diligence Investigation. (The above-described activities are collectively referred to hereafter as the "Work"). 2. Term. The Right of Entry granted pursuant to Section 1, above, shall be for a limited term, commencing as of the date of this Agreement and expiring upon the expiration or earlier termination of the Marketing Agreement. 3. Entry at Own Risk; No Duty to Warn. Grantee and its agents, employees, contractors, subcontractors, and volunteers shall access, enter and use the Property at their own risk and peril. Grantor shall have no duty to inspect the Property ( or any portion thereof) and no duty to warn of any latent or patent defect, condition or risk which may exist on the Property. 4. Liens. Grantee shall not permit to be placed against the Property, or any part thereof, any mechanics', materiahnen's, contractors' or other liens (collectively, the "Liens") arising out of the acts or omissions of the Grantee or its agents, employees, contractors, subcontractors, or volunteers hereunder. Grantee hereby EXHIBITB -12- indemnifies and agrees to hold the Grantor and the Prope1ty free and harmless from all liability for any and all such Liens, together with all costs and expenses, including, but not lintited to, attorneys' fees and court costs reasonably incurred by Grantor in connection therewith. 5. Hazardous Substances. Grantee and its agents, employees, contractors, subcontractors, and volunteers shall not use, store or transport or allow the use, storage or transportation of any hazardous substances on or onto the Property. 6. Restoration of the Property. Except to the extent otherwise contemplated by this Agreement, Grantee shall, at its own cost and expense, restore the Property to the same condition in which it was prior to Grantee's entry. 7. Indemnification by Grantee. Except to the extent otherwise provided below, Grantee agrees to defend, hold harmless and indemnify Grantor from and against any and all, claims, demands, actions, and causes of action for injury or death of any person, or damages to property, arising out of or resulting from the use or access of the Property by the Grantee or its agents, employees, contractors, subcontractors, and volunteers pursuant to this Agreement. Notwithstanding the foregoing, the Grantee shall have no obligation to indemnify Grantor from a pre-existing condition at the Property where Grantee timely notified Grantor of the pre-existing condition after Grantee learns of the condition, or from the gross negligence or willful misconduct of Grantor. 8. Authority to Execute. Grantor warrants and represents to Grantee that it has legal rights to use the Property and may execute and approve this Agreement and no permission or consent of any other person is required to approve this Agreement. 9. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns. I 0. Entire Agreement. Grantor and Grantee agree that this Agreement, together with the Marketing Agreement and the License Agreement dated August 15, 2017, contain all of the agreements, promises and understandings between Licensor and Licensee with regard to the Licensed Properties. No oral agreements, promises or understandings shall be binding upon either Licensor or Licensee in any dispute, controversy or proceeding at law. Any addition, variation or modification to this Agreement shall be void and ineffective unless made in writing and signed by the parties hereto. 11. Severability. If any provision of this instrument, or the application thereof to any person or circumstances, is found to be invalid, the remainder of the provisions of this instrument, or the application of such provision to persons or circumstances other than those as to which it is found to be invalid, as the case may be, shall not be affected thereby. 12. Permits. Prior to beginning any work, Licensee, at its sole expense, shall obtain all necessary permits ( e.g. encroachment, traffic conh·ol, excavation) to use the Licensed Prope1ties as permitted under this Agreement. 13. All Expenses To Be Borne by Licensee. Licensee shall bear any and all costs and expenses associated with the rights granted to Licensee to use the Licensed Properties, or any unforeseen costs or expenses incurred by the City relating to Licensee's use of the Licensed Properties in the performance of this Agreement. 14 Hours of Operation. The hours of operation that Licensee shall be permitted to conduct its project shall comply with the Municipal Code. 15. Governing Law. This Agreement shall be governed in accordance with the laws of the State of California. EXHIBITB -13- 16. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and which together shall constitute a single agreement. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first set forth above. Date: _______ _ ATTEST: APPROVED AS TO FORM: Date: _______ _ APPROVED AS TO FORM: "GRANTOR" City of West Covina By: ___________ ~ Title: -------------- "GRANTEE" XG COMMUNITIES, LLC, dba 5 BARS COMMUNITIES By: ___________ ~ Title: -------------- EXHIBITB -14- EXHIBITC INSURANCE REQUIREMENTS Without limiting 5 BARS' indemnification obligations, 5 BARS shall procure and maintain and shall cause all contractors, subcontractors and sublicensees to procure and maintain (5 BARS, contractors and/or sublicensees shall be referred to hereinafter, as the context dictates, as "Contractor"), prior to any activities on City Property in connection with the Agreement for the duration of the Agreement and any applicable sub license entered into under and/or pursuant to the Agreement, insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the 5 BARS, a Contractor, and/or any of its agents, representatives, or employees. Minimum Limits of Insurance The policies and amounts of insurance required of Contractor shall be no less than the following: 1. Comprehensive General Liability Insurance which affords coverage at least as broad as Insurance Services office "occurrent" form CG 00 01 including completed operations and contractual liability, with limits of liability of not less than $1,000,000 per occurrence and $2,000,000 annual aggregate for liability arising out of Contractor's performance of this Agreement. The limits shall be provided by either a single primary policy or combination of policies. If limits are provided with excess and/or umbrella coverage the limits combined with the primary will equal the minimum limits set forth above. If written with an aggregate, the aggregate shall be double the each occurrence limit. Such insurance shall be endorsed to: (1) name the City and employees, representatives, officers and agents as additional insured for claims arising out of Contractor's performance of this Agreement; and (b) provide that the insurance is primary and non-contributing with any other valid and collectible insurance or selfinsurance available to City. A statement on an insurance certificate will not be accepted in lieu of the actual endorsement. 2. Automobile Liability Insurance with a limit ofliability of not less than $1,000,000 each occurrence and $1,000,000 annual aggregate. The limits shall be provided by either a single primary policy or combination of policies. If limits are provided with excess and/or umbrella coverage the limits combined with the primary will equal the minimum limits set above. Such insurance shall include coverage for all "owned," "hired" and "non-owned" vehicles or coverage for "any auto." Such insurance shall be endorsed to: (a) name the City and employees, representatives, officers and agents as additional insured for claims arising out of Contractor's performance of this Agreement; and (b) provide that the insurance is primary and non-contributing with any other valid and collectible insurance or self-insurance available to City. A statement on an insurance certificate will not be accepted in lieu of the actual endorsement. 3. Workers Compensation Insurance in accordance with the Labor Code of California (including Labor Code section 3 700 and 3 800) and covering all employees of Contractor providing any service in the performance of this Agreement. Such insurance shall be endorsed to waive the insurer's right of subrogation against the City and employees, representatives, officers and agents. A statement on an insurance certificate will not be accepted in lieu of the actual endorsement, unless the insurance carrier is the State of California Insurance Fund ("SCIF") and the endorsement numbers 2570 and 2065 are referenced on the certificate of insurance. The City, its officers and employees shall not be responsible for any claims in law or equity occasioned by failure of the Contt·actor to comply with this section. 4. Professional Liability Insurance with minimum limits of $1,000,000 each claim. Covered professional services shall include all work performed under this Agreement and delete any exclusion that may potentially affect the work to be performed. Contractor shall provide to Licensor and to the City a EXHIBITC -1- Certificate(s) of Insurance evidencing such coverage together with copies of the required policy endorsements no later than five ( 5) business days prior to commencement of any work to be pe1formed under this Sublicense and at least fifteen (15) business days prior to the expiration of any policy. Coverage shall not be suspended, voided, cancelled, reduced in coverage or in limits, non-renewed, or materially changed for any reason, without thirty (30) days prior written notice thereof given by the insurer to the City by U.S. mail, or by personal delivery, except for nonpayment of premiums, in which case ten (10) days prior notice shall be provided. Deductibles and Self-Insured Retentions Any deductibles or self-insured retentions must be declared to and approved by the City. At the option of the City, either: the insurer shall reduce or elintinate such deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the Contractor shall procure a bond guaranteeing payment of losses and related investigations, claims administration and defense expenses. Other Insurance Provisions The general liability and automobile liability policies are to contain, or be endorsed to contain, the following provisions: 1. The City, its officers, officials, employees and volunteers are to be covered as additional insureds as respects: liability arising out of activities performed by or on behalf of the Contractor; products and completed operations of the Contractor; premises owned, occupied or used by the Contractor; or automobiles owned, leased or borrowed by the Contractor. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees or volunteers. 2. For any claims related to this project, the Contractor's insurance coverage shall be primary insurance as respects the City, its officers, employees and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees or volunteers shall be excess of the Contractor's insurance and shall not contribute with it. 3. Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees or volunteers. 4. The Contractor's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. 5. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to the City. 6. A statement on an insurance certificate will not be accepted in lieu of the actual endorsement. Insmance policies shall not be in compliance if they include any limiting provision or endorsement that has not been submitted to the City for approval. Further, all additional insmed endorsements shall not: (1) be limited to "ongoing operations"; (2) exclude "contractual liability"; (3) restrict coverage to "sole" liability of Sublicensee; ( 4) contain any other exclusion contrary to this Sublicense. Acceptability for Insurers EXHIBITC -2- i\ I\ Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII, authorized to do business in the State of California, or otherwise allowed to place insurance through surplus lines brokers under applicable provisions of the California Insurance or any federal law, unless otherwise acceptable to the City. Verification of Coverage Contractor shall furnish the City with original endorsements effecting coverage required by this clause. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. The endorsements are to be on fo1ms provided by the City. All endorsements are to be received and approved by the City before work commences. As an alternative to the City's forms, the Contractor's insurer may provide complete, certified copies of all required insurance policies, including endorsements effecting the coverage required by these specifications. Subcontractors 5 BARS shall be responsible for causing ·any and all contractors and subcontractors in connection with this Agreement to maintain the same types and limits of coverage in compliance with this Agreement, including naniing the City as an additional insured to the contractor's or subcontractor's policies. Contractor shall include all subcontractors as insured under its policies or shall furnish separate certificates and endorsements for each subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated herein. EXHIBITC -3- ATTACHMENT NO. 2 Tax ID # if applicable: , City of Sacramento Requires Council Approval: DNo [:gj YES Meeting: 6/14/16 , IZJ Other Party Signature Needed D Recording Requested General Information Type: Professional Services PO Type: Attachment: .Original No.: Formal Bid·· -.. Original Doc Number: $ Not to Exceed: $ ~ Other Party: 5 Bars LLC Certified Copies of Document:: 0 Project Name: Wireless Marketing Plan Deed: [8]None D Included Oseparate Project Number: Bid Transaction #: I E/SBE-DBE-M/WBE: Department Information Department: Information Technology Project Mgr: Supeivisor: Contract Seivices: Cassy Vaioleti-Matu Phone Number: 808-8047 Date: Org Number: Comment: Review and Signature Routing Department Signature or Initial Date Project Mgr: -------t------- A cc o u n ting: Contract Services: .t.,",'---".--"-~---1-------'.,_...L.-'=-- S up er visor: ------~t----~-- D ivisi on Man ager: ~~L.c...----,.~-.,--,.-:-1--(.,-1::-'-:-+--- City Attorney Si D Authorization . Signature or lniJial Date Choose Director /L 1 ·;; / Department Director: ·--·~ &(YI ( I G, City Mgr: yes D No ~ -------'------ Contract Cover/Routing Form: Must Accompany_ A,l.L Contracts; however, is not part of the contract. . ·. · ,.(91-01-09) Division: Division Mgr: Ignacio Estevez For City Clerk Processing Fi_n_alized: i ,. 1 Initial:_.~. •· I ::1 c.., -C: 0 . ! ~;:;- I "' :::r a, .... b Dotis~~ I t;~ Imaged: I $ iil 1ni~: ···· I i~ ~Cji1fv \ \ ' Received: ; jCJty Clerk Stamp Here) I ____ ._ -----·---r. OZ:£ d SZ Nill' qJOl ·.' ' WIRELESS MARKETING AGREEMENT BETWEEN THE CITY OF SACRAMENTO AND 5 BARS, LLC This Wil'eless Marketing Agreement ("AGREEMENT") is made and entered into on June 9, 2016 (the "Effective Date'') between the City of Sacramento ("CITY'') and 5 Bars, LLC a Delawa!'e limited liability company ("5 BARS") (each a "PARTY'' and coHectively the "PARTIES"), with reference to the following facts and intentions, which the PARTIES agree are true and correct to the best of their knowledge and belief: BACKGROUND A. CITY is a municipal corporation formed under the laws of the State of California, operating under its charter. B. 5 BARS is a limited liability company formed under the laws of Delaware. C. 5 BARS offers master planning services and tools that merge technical expertise on coverage needs with smveys of existing and forecasted wireless coverage conditions. 5 BARS evaluates that information to identify existing municipal assets that can meet wireless coverage needs. D. 5 BARS prnvides planning tools so that subscribing municipal corporations may access the information and identify intelligent options and solutions for the processing of applications for wireless telecommunications facilities on a real time basis. E. In June 2015, CITY pa,tnered with 5 BARS to provide the CITY with ·infonnation that included a radio frequency ("RF") benchmark survey, a technical survey of existing infrastructure, and projections of wireless requirements. F. In February 2016, CITY invited interested parties to demonstrate their knowledge and expe,tise in the development of a Wireless Marketing Plan. A review committee invited respondern who met the requirements specified in the RFQ to pa1ticipate in an oral interview. 5 BARS was chosen as the most qualified responder. G. CITY desires to engage 5 BARS to provide wireless consulting, management and development services related to the use of CITY assets for the purpose of planning and implementing a marketing plan for Wireless Telecommunications Facilities (as that term is defined in Section 21 below), as further described herein. H. CITY desires to engage 5 BARS to proactively market CITY-owned underntilized assets on terms that maximize revenue and minimize planning impacts and visual blight. AGREEMENT NOW, THEREFORE, in consideration of the foregoing background, which is incorporated into the operative provisions of this Agreement by this reference, and for good and valuable consideration, the . receipt and sufficiency of which is hereby acknowledged, the PARTIES AGREE as follows: l. Tel'm. This Agreement shall be effective on the date it is executed by all PARTIES and shall be in effect for an initial term of five (5) years, with four (4) five year renewals subject to the written mutual consent of the PARTIES. The fitll potential term of the Agreement is twenty five (25) years 2016-0801 With: 5 Bars LLC Title: Wireless Marketing Plan ('~greeme11I Term11). 2. Scope ancl Nature of Services. 5 BARS shall provide the services described in this section ("Services") for the purposes of 5 BARS's planning, marketing, sublicensing, development, maintenance, and/or operation of certain tower(s), pole(s), building(s), fiber, conduit(s), data room(s), street furniture, and any slructure(s) or object(s) of any kind or character not particularly mentioned herein ("City Asset(s)"), which 5 BARS proposes to locate or cause to be located on City Property and within City Right of Way for the purposes of promoting, transmitting or facilitating wireless communication of telephone or data or any ·other means ("Wireless Te/eco1111111111icatio11s Facilities"). CITY in its sole discretion shall identify a list ("Asset Lisi") of City Assets to be included in services provided by 5 BARS. CITY shall elect to add or remove one or more assets from the Asset Lisi at anytime and notify 5 BARS in writing. a. Consulting Services. 5 BARS shall provide CITY the following consulting services at no cost to CITY: a comprehensive radio frequency ("RF') analysis, which will, among other things, (i) describe, using state-of-the-art metrics, the current stale of wireless coverage within CITY's jurisdiction for each major wireless telecommunications carrier, (ii) identify key areas of multiple wireless broadband se1vice provider coverage needs ("Coverage Needs"), (iii) identify available City Assets that would satisfy or partially satisfy Coverage Needs, and (iv) provide RF modeling to show how the selection of additional sites for Wireless Telecommunications Facilities will address Coverage Needs. The items referred to in clauses (i), (ii), and (iii) from the preceding sentence are hereinafter referred to as the "Master Plan," while the items referred to in clauses (i), (ii), (iii), and (iv) in the preceding sentence are hereinafter referred to as the "Co11sulti11g Services". For the duration of the Agreement Term, 5 BARS shall also provide, on a quarterly basis, a written update summarizing investments, technology changes, financial gains and provider plans, and on an annual basis, ongoing RF analysis with repo11s, feasibility analysis, pricing and fee recommendations, form factor and aesthetic policy development, technology refresh and advancement updates, and other consultation specific to wireless broadband service providers, unless 5 BARS and CITY mutually waive the annual ongoing study, to ensure CITY is capitalizing on opportunities to improve wireless broadband service to the community. The Consulting Services may be used by CITY.for1he enhancement and evolution of the Maste1· Plan. b. Marketing Services. At no cost to CITY, 5 BARS shall market the Master Plan to wireless carders, cable companies, internet service providers (ISPs), street light providers, and Internet of Things (]oT) companies, ("Wireless Se~vices Providers") to obtain their feedback and interest in locating and/or collocating on a11y existing and/or proposed site(s) included in the Master Plan. CITY grants 5 BARS the exclusive 1·ight to market, license, sublicense, and construct upon, at 5 BAR's sole cost and expense, City Assets for the development of Wire.less Telecommunications Facilities. 5 BARS shall market the Master Plan to all Wireless Services Providers equally, and without any discrimination and/or favoritism between Wireless Services Providers, with a goal of ensuring that residents, visitors, and businesses within CITY's jul'isdiction receive the maximum benefit of all available services from all existing wireless services providers. c. Management Se1vices. During the Agreement Term, 5 BARS may at any time request in writing that CITY make City Assets available for the development of Wireless Teleconununications Facilities. Upon a dete1minalion of approval, CITY shall notify 5 BARS of such determination in writing, and shall offer to enter into a license with 5 BARS, which license shall be in a form that is substantially consistent with the form set fo11h in Exhibit "A" t~ this Agreement. Thereafter 5 BARS or an affiliate of 5 BARS, al no cost to CITY, shall constrnct or cause the construction of the Wireless Telecommunications Facilities, and sublicense the City Assets (either as improved with Wireless Telecommunications Facilities, or subject to improvement with Wireless Telecommunications Facilities) in accordance with the terms of this Agreement and a license agreement to be executed for each designated City Asset (provided, however, that a single license agreement may be utilized for multiple or all sites that are the subject of this Agreement). 5 BARS understands and acknowledges that CITY shall have the final determination as to whether to move forward with the execution of a license and/or other agreement of substantially equivalent purpose (or an amendment to any such license and/or other agreement) for any existing structure (e.g., rooftop, existing CITY owned tower, etc.). 5 BARS further understands and acknowledges that it must comply (or cause compliance) with and receive (or cause receipt of) all necessary entitlements and pem1its from CITY, including but not limited to complying (or causing compliance) with CITY's ordinance governing Wireless Telecommunications Facilities, all applicable building codes and public works requirements, as well as comply (or cause compliance) with and receive ( or cause receipt of) all necessary and applicable permits from any other regulatory agency, before 5 BARS undertakes (or causes the undertaking of) any construction on a City Asset. d. Exclusions. 1. This Agreement shall not require or allow 5 BARS to market, license, sublicense, and/or construct Wireless Telecommunications Facilities on City Assets that are not on the Asset List, ii. City Assets intended for direct-marketing by the City for macro-cell site development are identified in writing by the City ("City Marketed Assets"). City Marketed Assets shall be marketed, if at all, directly by 1he City only; marketing rights for such assets shall not be granted, delegated, or contracted to any third party. iii. This Agreement shall not require or allow the provision of Services by 5 BARS for facilities licensed to any municipal, county, district, agency, state or Federal government for stations in the Private Land Mobile Radio Services, Maritime Radio Services, Aviation Radio s·ervices, other stations designated for Homeland Security or Law Enforcement communications or the circuits necessary to s11ppo1i such facilities ("Excltu/ed Services''). This Agreement shall not limit, control, or govern the provision of1he Excluded Services by CITY. 3. Telecommunications Ordinance Revision. Within one hundred eighty (180) days after the Effective Date, CITY shall reasonably consider revisions to its telecommunications ordinance to specify that the CITY's review of Wireless Telecommunications Facilities that are (i) on City Assets, and (ii) subject to a license agreement that substantially conforms to the form attached as Exhibit "A", will be accomplished exclusively through the Iiceiising process described in this Agreement. 4. Right of Enhy Agreement. 5 BARS shall have the right to analyze the suitability of the City Prope,ty designated by CITY for 5 BARS' intended use. CITY and 5 BARS shall enter into a Right of Entry Agreement for 5 BARS and its employees, agents, contractors, engineers, and surveyors to have the right to enter upon City Property, upon reasonable written notice to CITY, to inspect, conduct, perform and examine soil borings, drainage testing, material sampling, surveys and other geological or engineering tests or studies of City Property, to apply for all licenses and permits required for 5 BARS' use of the designated City Property from ali' applicable govermnental or regulatory entities, and to do those things on or off the designated City Property that, in the sole opinion of 5 BARS, are necessary to determine the physical condition of designated City Property, the environmental history of the designated City Property, and the feasibility or suitability of the designated City Property for 5 BARS' use ("Due Diligence Iuvestiga//011"). Activities conducted in connection with 5 BARS' Due Diligence Investigation shall be at the sole expense and cost of 5 BARS. The Right of Entry Agreement shall grant 5 BARS access to the designated City Property fo,· a defined and specific period of time as set forth in the Right of Entry Agreement. The proposed form of Right of Entry Agreement is attached hereto and incorporated by reference herein as Exhibit "B". 5. CITY-Owned Wireless Telecommunications Facilities and CITY Licenses. CITY shall retain ownership of all CITY leases, licenses, and other agreements in existence as of the Effective Date with wireless providers located within CITY's jurisdictional boundaries. CITY shall retain ownership of any Wireless Telecommunications Facilities CITY subsequently develops on property owned or leased by CITY for CITY's own non-commercial use. 5 BARS and/or its sublicensees shall own the Wireless Telecommunications Facilities developed on City Assets pursuant to this Agreement. CITY leases, licenses, and other agreements in existence as of the Effective Date and any CITY owned/developed Wireless Telecommunications Facilities in existence as of the Effective Date shall not be subject to this Agreement and/or any accompanying ag,·eements between CITY and 5 BARS, unless specifically designated otherwise in writing. 6. Compensation. a. 65% (CITY) 135% 5 BARS Revenue Shares. CITY shall be entitled to sixty five percent (65%) ofrecurring gross payments that are: b. 1 Received by 5 BARS from sublicensees on new Wireless Telecommunications Facilities that are on City Assets licensed to 5 BARS pursuant to this Agreement. 75% (CITY) / 25% 5 BARS Revenue Shares. CITY shall be entitled to seventy five percent (75%) of recurring grnss payments that are: i, Received by either 5 BARS as a result of the addition of one or more Wireless Telecommunications Facilities to the site of a CITY-owned Wireless Telecommunications Facility that was constructed prior to the Effective Date of this Agreement. c. Reports. Annual reports reflecting the revenue generated to CITY will be provided by 5 BARS. 7. Construction, Engineering, and Other Costs: CITY shall have no financial responsibility for planning, construction, and engineering costs associated with the implementation of this Agreement. 5 BARS may recover from Wireless Se,·vice Providers construction costs, installation costs, utilities, or other expenses incurred by 5 BARS, to the extent said reimbmsement does not reduce the rent to be paid by Wireless Service Providers, and such recovered sums shall not be included in the computation of compensation hereunder. 8, Default. If there is a default by either PARTY to this Agreement, the PARTY claiming a default of any term or condition of this Agreement shall provide the defaulting PARTY with written notice of the default pursuant to the provisions contained in Paragraph 14(i) of this Agreement. After receipt of such notice, the defaulting PARTY shall have thirty (30) days in which to cure any monetary default and sixty (60) days in which to cure a non-monetary default. If a non-monetary default reasonably requires more than a sixty (60) day cure period, the defaulting PARTY shall have such extended period provided that the defaulting PARTY commences the cure within the sixty (60) day period and thereafter continuously and diligently pursues the cure to completion. 9. Right to Audit. Dming the Term of this Agreement the PARTIES shall maintain originals, or when originals are not available copies, of all records, books, papers and documents relating to this Agreement and aJl accompanying License Agreements between the PARTIES. At a][ reasonable times, the PARTIES shall allow each other to have access to examine, copy, and audit such records. Additionally, 5 BARS shall allow CITY, and CITY shall have the right, at any time, to have access to and examine, copy and audit records, books, papers and documents relating to or evidencing 5 BARS' efforts to obtain sublicenses as such records, books, papers and documents may or may not exist in the normal course of 5 BARS' business. 10. Indemnification. 5 BARS shall indemnify, defend, and hold harmless CJTY, its elected and appointed officials, officers, employees, agents, and contractors, from and against liability, claims, demands, losses, damages, fines, charges, penalties, administrative and judicial proceedings and orders, judgments, and the costs and expenses incurred in connection therewith, including reasonable attorneys' fees and costs of defense, to the extent directly or proximately resulting from 5 BARS' activities undertaken pursuant to this Agreement, except to the extent arising from or caused by the negligence or willful misconduct of CITY, its elected and appointed officials, officers, employees, agents, or contractors. CJTY shall promptly notify 5 BARS of any claim, action or proceeding covered by this Section 9. 11. Insurance, At the time 5 BARS signs and delivers this Agreement to CITY, as well as at all times during the Agreement Term, 5 BARS shall maintain, at a minimum, the required insurance as set forth in the attached Exhibit "C"' to this Agreement. CITY shall be entitled to coverage at the maximum policy limits for the required insurance maintained by 5 BARS, which shall at no time be less than the amounts required set forth in the attached Exhibit "C" to this Agreement. This Agreement's insurance provisions shall be separate and independent from the indemnification and defense provisions of Section 9 of this Agreement and shall not in any way limit the applicability, scope or obligations of the indemnification defense provisions in Section 9. 12, Compliance Witlt Local Ordinances. Subject to Section 3 above, 5 BARS shall comply with all CITY ordinances pe1faining to Wireless Telecommunications Facilities, and all such additional CITY regulations that are consistent with such ordinances (such ordinances and regulations are collectively referred to hereinafter as the "Ordlmmce"). 13. Intellectual Property. a. Ownership of Services, 5 BARS retains all right, title, and interest in any underlying software subject to the limitations set forth in this Agreement. b. License. 5 BARS hereby grants to CITY a limited, non-exclusive, non- transferable, non-sublicensable license during the term of this Agreement to use the Services for the purposes of offering, promoting, managing, tracking, the development and use of Wireless Telecommunications Facilities c, Exclusivity. During the term of this Agreement, 5 BARS will be the sole and exclusive provider of services as defined as Services in this Agreement, subject to the City's right to directly market City Marketed Assets. CITY expressly understands and agrees that the exclusivity set forth in this Agreement is consideration in exchange for the pricing and other benefits being provided to CITY hereunder. d. Additional CITY Commitments. CITY acknowledges that it is using licensed software containing propriety and intellectual property and shall: (i) not copy, modify, transfer, ,display, share, or use any portion of the licensed software except as expressly authorized in this · Agreement or in the applicable documentation; (ii) not contest or do or aid others in contes1ing or doing anything which impairs the validity of any proprietary or intellectual property rights, title, or interest of 5 BARS in and to any software; (iii) not engage in any activity that interferes with 01· disrupts 5 BARS' provision of the Services; and (iv) use the Services exclusively for authorized and legal purposes, consistent with all applicable laws, regulations, and the rights of others. 14. 15. Governing Law. This Agreement shall be governed by the Jaws of the State of California. General P1·ovisious. a. Independent Contractor. 5 BARS shall, during the Agreement Term, be constmed as an independent contrnctor and not an employee of CITY. This Agreement is not intended nor shall it be construed to create an employer-employee relationship, a joint venture relationship, or to allow CITY to exercise discretion or control over the professional manner in which 5 BARS performs the services which are the subject matter of this Agreement; however, the services to be provided by 5 BARS shall be provided in a manner consistent with all applicable standards and regulations governing such services. 5 BARS shall pay all salaries and wages, employer's social security taxes, unemployment insurance and similar taxes relating to employees and shall be responsible for all applicable withholding taxes. b. Authorizations. All individuals executing this Agreement on behalf of the respective PARTIES certify and warrant that they have the capacity, and have been duly authorized to so execute this Agreement on behalf of the entity so indicated. c. Cooperative Purchasing. CITY acknowledges and agrees that it has followed all applicable purchasing and procurement procedures in entering into this Agreement, and that 5 BARS shall have the right and ability to offer this Agreement as a template for cooperative or piggybacking purchasing agreements with other public agencies which, to the extent allowed by Califomia or applicable State law and the ordinances and regulations of those other public agencies, may serve as a basis to forego competitive procurement processes for such future agreement(s). As used in this article, "public agency" includes, but is not limited to, the federal government or any federal department or agency, this state, another state or any state department or agency, a county; county board of education, county superintendent of schools, city, public corporation, public district, regional transpo11ation commission of this state or another state, or any joint powers authority formed pursuant to this article by any of these agencies. In furtherance of the foregoing, 5 BARS agrees other public agencies may purchase additional items on the same terms as are set fo11h in this Agreement. To the extent 5 BARS enters into such subsequent agreement(s), this Agreement shall be construed to contain an express "Assignment" clause that provides for the assignment of all or part of the specified deliverables and/or provided, however, that CITY shall not be a signatory, obligee, beneficiary, or third party beneficiary under such future agreements with other public agencies. 5 BARS shall remit monthly to CITY a 2% revenue share of all gross revenues received from subsequent agreements executed with public agencieswho benefit from this Agreement. d. Counterpa11s. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. e. Entire Agreement and Amendment. This Agreement captures all tenns, agreements, and understandings of the PARTIES and supersedes any prior promises, representations, agreements, warranties or undei1akings by any of tlie PARTIES, either oral or written, of any character or nature binding except as stated herein. This Agreement may be modified, altered or amended only by an instrument in writing, executed by the PARTIES to this Agreement, and by no other means. Each PARTY waives its right to claim, contest or asse1t that this Agreement was modified, canceled, superseded or changed by any oral agreement, course of conduct, waiver or estoppel. f. Good Faitb. The PARTIES agree to exercise their reasonable best efforts and utmost good faith to effectuate all the terms and conditions of this Agreement, and to execute such furthel' instrnments and documents as are necess.ary Ol' appropt'iate to effectuate all of the terms and conditions of this Agreement. g. Assignment. 5 BARS may assign this Agreement to a person or entity with demonstrated capacity to carry out 5 BARS' obligations under this Agt'eement after receiving Wl'itten CITY consent. 5 BARS shall provide any information requested or necessa,y for CITY to determine whether the proposed assignee has the capacity to fulfil 5 BARS obligations under this Agreement. 5 BARS shall provide 30 days prior written notice of such assignment to CITY. h. Discrimination. 5 BARS shall not discriminate because of race, color, creed, religion, sex1 marital status, sexual orientation, age, national origin, ancestry, or disability, as defined and prohibited by applicable law, in the recruitment, selection, training, utilization, promotion, termination or other employment related activities. 5 BARS affirms that it is an equal oppo1iunity employer and shall comply with all applicable federal, staie and local laws and regulations. i. Notices. All notices, approvals, acceptances, demands and other communication required or permitted under this Agreement, to be effective, shall be in writing and, unless otherwise provided herein, shall be deemed validly given on the date either: (I) personally delivered to the address indicated below; or (2) on the third business day following deposit, postage prepaid, using certified mail, return receipt requested, in any U.S. Postal mailbox or at any U.S. Post Office; or (3) one business day after the dispatch date by overnight de!ivety service; or (4) on the date of transmission by facsimile to the m.unber provided below. All notices, demands, or requests shall be addressed to the following: CITY: 5 BARS: V)u1ri0 Nl "'0i• n ~1-. I Ch\e{ J:r>fonvy;t+,tt<'\ °,'f'{e.., Phone:fji,) KQ)(:-1?'0'-r l Fax: _____ _ With a copy to: Phone: ____ _ Fax: _____ _ Kevin Muldoon, VP & General Counsel 5 Barn, LLC 19200 Von Karman Ave, Suite 100 Irvine, CA 92612 Phone: 949-514-46 l 7 Fax: 949-266-9160 With a copy to: Rutan & Tucker, LLP 611 Anton Blvd., 141" Floor Costa Mesa, CA 92626 Phone: 714-641-5100 Fax: 714-546-9035 Any PARTY may change its address by giving the other PARTIES written notice of its new address as provided above. j. Successors. This Agreement shall be binding on and shall inure to the benefit of the PAR TIES and their respective successors. 16. Waive,·. No waiver of any provision of this Agreement, 01· consent to any action, shall constitute a waiver of any other provision of this Agreement, or consent to any other action. No waiver or · consent shall constitute a continuing waiver or consent or commit a PARTY to provide a waiver or consent in the future except to the extent specifically stated in writing. No waiver shall be binding unless executed in writing by the PARTY making the waiver, based on a full and complete disclosuJ'e of all material facts relevant to the waiver requested. "CITY" The City of Sacrament Date: _______ _ By, fv1 v1 e Gu 11 ,~ti Title: ct,,·, eI lh-fuv-M a,.-/vn cf6r11.y ATT~ "5 BARS" 5 BARS, LLC Date: .$-· 2 " .. I .t APPROVED AS TO FORM: EXHIBIT A LICENSE AGREEMENT THIS LICENSE AGREEMENT is made as of the date of the final signatme below, by and between the City of Sacramento, a municipal corporation, having a mailing address of 915 I Street, Sacramento, CA 95 864 ("Licensor"·) and 5 Bars, LLC, a Delaware limited liability company, with an address at 19200 Von Kannan Ave, S,1ite 100, Irvine, CA 92612 ("Lice11see"). 1. Definitions. "Agreement' means this License Agreement. ''Appl'ol'als" means all certificates, pe1mits, licenses and other approvals that Licensee must obtain as required by law in order for Licensee or its agents or sublicensees to use the Licensed Premises for the purpose intended by this Agreement. "Company Facilities" means any and all Wireless Telecommunications Facilities to be developed by Licensee on the Licei1sed Premises . . "City Facilities" means any and all existing facilities, inclusive of but not limited to all buildings and improvements owned by and under the possession and control of Licensor, including but not limited to utility poles, lamp posts, other utility facilities, fences, gates, and all roof tops of all such buildings, facilities and/or improvements. "Defa11lt/11g Party" means the party to this Agreement that has defaulted as provided for in Section 26 of this Agreement. "Easement' and "UtilityEase111e11f' have the meanings set forth in Section 7 of this Agreement. "Hm•11if11l I11te1fel'e11ce" means Interference that endangers the functioning of a radio navigation service or of other safety services or seriously degrades, obstrncts, or repeatedly interrupts a radio communication service operating in accordance with both International Telecommunications Union Radio Regulations and the regulations of the Federal Communications Commission. "Hazardous Matel'iaF' means any substance which is (i) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant or contaminant under any Environmental Law, as cmrently in effect or as hereafter amended or enacted, (ii) a petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v) asbestos, (vi) flannnable explosives, (vii) infectious materials, or (Yii) radioactive materials. "E11viro11111e11tal Lmv(s)" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601 el seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 el seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., tl1e Hazardous Materials Transpmtation Act, 49 U.S.C. Section 5101 el seq., and the Clean Water Act, 33 U.S.C. Section 1251 el seq., as said laws have been supplemented or amended to date, the regulations promulgated pursuant to said Jaws and any other federal, state or local law, statute, rule, regulation or ordinance that regulates or proscribes the use, storage, disposal, presence, clean-up, transportation or release or threatened release into the environment ofHazat·dous Material. "Imp1·ove111e11/s" means a Wireless Telecomnnmications Facility(ies). EXHIBIT A -1- "I11lerfere11ce" means the effect of unwanted energy due to one or a combination of emissions, radiations, or inductions upon reception in a radio con1111unication system, manifested by any pe1formance degradation, misinterpretation, or loss of information. "Licensed Premises" means those portions of Licensor's Property described in the sketches attached hereto as Exl1ibit "A" · "Licensee" means 5 Bars, LLC, a Delaware limited liability company. "Licensee's Notice Address" means 19200 Von Karman Ave, Suite 100, Irvine CA 92612. "Licensor" means City of Sacramento, a municipal corporation. "Licensor's Notice Ai/dress" means 9 LS I Street, Sacramento, CA 9,5864. "Lice11sor's Properties" means those prope1iies (each of which is a subject of this License Agreement), "No11-Defaulti11g Party" means the party to this Agreement that has not defaulted as provided for in Section 26 of this Agreement. "Rent" means percent L%) of recmring Sublicense Revenue received by Licensee from Sub!icensees on new Wireless Telecomnrnnications Facilities constructed on Licensed Premises under or pursuant to this Agreement. "Subllcense Revenue" means the total amount of rent (excluding any reimbursement from Sublicensee(s) of taxes, constrnction costs, installation costs, utilities, or other expenses incurred by Licensee to the extent said reimbmsement is not an offset of rent to be paid by s.,blicensee(s)) paid to Licensee by all Sublicensee(s) using each of the Licensed Premises, whether pursuant to a license or other similar agreement, as modified, renewed, Ol' assigned. "S11blice11see" means a third party to which Licensee has granted the right to use and occ11pancy of one or more of the Licensed Premises, subject to the terms and conditions contained herein. "S11bsCl'iptio11 Agree111e11f' means the Wireless Marketing Agreement Regarding Licenses and Sublicenses of Publicly-Owned Properties Pertaining To Wireless Telecommunications Facilities, between Licensor and Licensee, dated June 9, 2016. "Wireless Teleco111111111iicatio11s Facilities" means the equipment and associated structures needed to transmit and/or receive electromagnetic signals. A wireless teleco1mmmication facility typically includes antennas, supporting structures, enclosures and/or cabinets housing associated equipment, cable, access roads and other accessory development. 2. Licensor's Cooperation. During the Lease Tenn, Licensor shall: (i) cooperate with Licensee in its efforts to obtain all of the Approvals and (ii) take no action that would adversely affect any of the Licensee! Premises; provided, however, that if Licensor elects to replace infrastrncture on the Licensed Premises that is unrelated to the delivery of Wireless Telecommunications services, then such replacement shall be accomplished in a manner calculated to minimize interference with the Wireless Telecommunications infrasctructure on the Licensed Premises. Licensor acknowledges that Licensee's ability to use each of the Licensed Premises is contingent upon Licensee obtaining and maintaining the Approvals. Additionally, EXHIBIT A -2- Licensor authorizes Licensee and its employees, representatives, agents and consultants to prepare, and submit, file and present on behalf of Licensor building, permitting, zoning or land-use applications with the apprnpriate local, state and/or federal agencies necessaiy to obtain land use changes, special exceptions, zoning variances, conditional use permits, special use permits, administrative permits, construction permits, operation pennits and/or building permits. Licensor understands that any such application and/or the satisfaction of any requirements thereof may require Licensor's cooperation, which Licensor hereby agrees to provide. Licensor shall not knowingly do or permit anything that will interfere with or negate any Approvals pertaining to the Improvements or Licensed Premises or cause them to be in nonconformance with applicable local, state or federal laws. Licensor agrees to execute such documents as may be necessaiy to obtain and thereafter maintain the Approvals, and agrees to be named as the applicant for said Approvals. The provisions of this Section shal! not apply in the event of any dispute between and/or involving Licensor and Licensee. 3. Subdivision. In the event that a subdivision of Licensor's Property is legally required to license the any of the Licensed Premises to Licensee, Licensor agrees to seek subdivision· approval at Licensee's expense. 4. Term. The Term of this Agreement shall continue commence on , 20_ ("Com111e11ce111e11t Dnte") and the license for each Licensed Premise listed in Exhibit "B" has expired. The term of each License listed in Exhibit "B" shall begin on the commencement date listed for such Licensed Premises on Exhibit "B", and shall continue for a period of ten (10) years with tlu·ee five (5) year options subject to the written mutual consent of the Licensor and Licensee. At the _end of term of the lease agreement 5 BARS will hand over the administration of the lease to the CITY unless mutually agreed upon by both patties. 5. Rent. a. Rent. From and after the Commencement Date and effective upon Licensee's receipt of Sublicense Revenue, Licensee shall pay Rent for the each of the Licensed Premises. b. Sublicenses. Licensee shall exercise discretion as to whether, and on what tenns, to sublicense, license or otherwise allow occupancy of the Licensed Premises, subject to the following: i. Licensee shall make eve1y reasonable effort to ensure that each proposed Wireless Telecommunications Facility will not affect, detract, or impact the operation of existing Licensor facilities, particularly traffic signal control and street lighting devices. ii. Licensee shall ensure that the proposed Wireless Telecommunications Facility is not dependent on the resources dedicated to Licensor facilities. iii. Licensee shall propose new locations for Wireless Telecommunications Facilities to Licensor, and Licensor shall have the final authority lo approve or reject said locations. iv. In the event of damage, Licensor shall not be obligated to repair or restore the Wireless Telecornnnmications Facility to normal operating conditions unless Licens01· is the primary and direct cause of such damage. As between Licensee and Licensor, Licensee shall bear all other costs incurred to repair or restore Wireless Telecommunications Facilities; provided, however, the Licensee may allocate its responsibility under this sentence to a third party, including a Sublicensee. v. Licensee shall make eve1y reasonable effort to restore Licensor facilities in a safe and efficient 111am1er. Licensor shall not be held responsible for lack of revenue during the down time. EXHIBIT A -3- vi. Licensee shall give Licensor reasonable notice (or no less than fourteen (14) days) prior to impacting Licensor facilities in a manner that is beyond the routine maintenance and operation of Wireless Telecommunications Facilities. vii. Any sublicense agreement shall include the requirement that the Sublicensee must comply with the terms and conditions of this Agreement. viii. AJ.iy sub!icense agreement shall include a provision substantially consistent with the following, relating to interference with city facilities and conununications systems: Notwithstanding any other provisions this Sublicense Agreement, Sublicensee agrees to operate any and all of its Wireless Teleco11111111nica/ions Faciliites on the Property infi//1 co111plic111ce with the technical standards set forth in the Rules and Regulations of the Federal Co11111111nications Commission ("FCC'? as cod/fied in 47 C.F.R. and upon notice of non-compliance agree to take all steps necessary to bring its operation into fi1/l compliance. Licensee and Sublicensee both recognize and stipulate that City's public sqfety communications systems are vital to the life, health, and safety of the public sqfety personnel and of members of the general public, and agree that protecting such i,ystems against ham?fiil inte1:ference is an integral responsibility of this agreement. Licensee and Sublicensee agree to 111eet and co1?fer with the City on a case-by- case basis, and at the request of any Party and/or the City, in the event that additions or changes to Wireless Telecommunications Facilities on the property cause incompatibilities with the City's installed co111111u11ications system(s). Licensee and Sublicemee agree that in the event of ham1/id inte,:ference or degradation to City'.y public sqfety radio operations, City may require on a case- by-case basis that the use of the inte1fering Wireless Teleco111111unicafions Facility be suspended upon reasonable notice by the City to Licensee and the applicable Sublicensee pendi11g resolution of the cm,Ye and cure of such inte1ference or degradation. The .findings of the City's co11111111nications engineering representative shall be determinant in declaring ham?fiil i11te1ference caused by such 11011-compliance, and in the event of a dispute the burden of seeking a deter111inatio11 of compliance fi-0111 the Federal Communications Commissions shall be on the Sublicensee. This procedure shal/ 11ot be invoked unless absolutely necesswy. These provisions shall be binding on Licensee, Sublicensee, and any successor, assignee, or service provider designated by Licensee and/or Sub/icensee . .i&. Except as specified in this Section 5(b), Licensor shall not unreasonably interfere with Licensee's discretion relating to the terms of snblicenses, licenses or the grants of occupancy of the Licensed Premises. c. Accounting/ Adjustments. The parties hereto acknowledge that all information needed to calculate Rent may, from time to time, not be readily available. Accordingly, the parties agree that Licensee EXffiBITA -4- may base Rent on Sublicensee agreements, and later make adjustments if overpayments or un:derpayments occur. At any time, Licensor may request that Licensee pmvide an accounting of the Rent in such form and content as Licensor may reasonably request. 6. Construction, Engineering, aud Other Costs a. Licensor shall have no financial responsibility for planning, constrnction, and engineering costs associated with the implementation of this License Agreement. b. Licensee may recover from Sublicensees's taxes, constrnction costs, installation costs, utilities, or other expenses incurred by Licensee, to the extent said reimbursement is not an offset of rent to be paid by Sublicensee(s), and such recovered sums shall not be included in the computation of Rent. 7. Licensed Premises; Survey. Licensee has provided Licensor with a copy of an "as-built" survey for each Licensed Premises, which shall depict and identify the boundaries of each Licensed Premises and the Easements. The description of the each Licensed Premises set forth in Exhibit "A" shall contml in tire event of any discrepancies. 8. Access. Conditioned upon and subject to commencement of the License Term, Licensor grants to Licensee and Licensee's employees, agents, contractors, sublicensees, licensees and their employees, agents and contractors access to land located within Licensor's Property to Licensee, for the purpose of constrncting, repairing, maintaining, replacing, demolishing and removing the facility to be located upon each Licensed Premises as necessary to obtain or comply with any Approvals (the "Access License"). Licensee may request and Licensor shall not unreasonably deny or withhold the granting of an alternate Utility License either to Licensee or directly to the public utility at no cost and in a location acceptable to Licensee and the public utility. The Access Licenses and Utility Licenses (collectively, the "Access/Utility Licenses") shall be utilized for the purposes pmvided during the License Term and thereafter for a reasonable period of time necessary for Licensee to remove the Improvements. 9. Use of Property. The Licensed Premises and the Access/Utility Licenses shall be used for the pmpose of constructing, maintaining and operating the Improvements and for uses incidental thereto. All Improvements shall be constructed at no expense to Licensor. All Improvements, inclusive of security fences, shall comply with the requirements of the Sacramento City Code and all other laws and regulations applicable thereto, and Licensee shall obtain all required and necessaiy governmental agency Approvals and permits. Licensee will maintain the Licensed Premises in a safe condition. It is the intent of the parties that Licensee's Improvements shall not constitute a fixture. 1 O. Removal of Obstructions. Licensee has the right to remove obstructions from Licensor's Pmperty, as approved by the Licensor, which approval shall be requested in writing by Licensee and shall not be unreasonably withl1eld, conditioned or delayed by Licensor. Potential obstrnctions include but are not limited to vegetation, which may encroach upon, interfere with or present a hazard to ticensee's use of the Licensed Premises or the Access/Utility Licenses. Licensee shall dispose of any materials removed. 11. Hazardous Materials. a. Licensee's Obligation and Indemnity. Licensee shall not (either with or without negligence) cause or permit the escape, disposal or release of any Hazardous Materials on or from the Licensed Premises in any manner pmhibited by Jaw. Licensee shall indemnify and hold Licensor harmless from and against any and all claims, damages, fines, judgments, penalties, costs, liabilities or losses (including, without limitation, any EXHIBIT A -5- and all sums paid for settlement of claims, attorneys' fees, and consultants' and experts' fees) from the release of any Hazardous Materials on the Licensed Premises if caused by Licensee or persons acting under Licensee. b. Licensor's Obligation and Indemnity. Licensor shall not (either with or without negligence) cause or permit the escape, disposal or release of any Hazardous Materials on or from Licensor's Property or Licensed Premises ia any manner prohibited by law. Licensor shall indemnify and hold Licensee harmless from and against any and all claims, damages, fines, judgments, penalties, costs, liabilities or losses (including, without limitation, any and all srnns paid for settlement of claims, attorneys' fees, and consultants' and expe1ts' fees) from the presence or release of any Hazardous Materials on Licensor's Property or Licensed Premises unless caused by Licensee or persons acting under Licensee. 12. Real Estate Taxes. To the extent that a possess01y interest is deemed created, Licensee acknowledges that notice is and was hereby given to Licensee pursuant to California Revenue and Taxation Code Section 107.6 that use or occupancy of any public prope1ty may subject the Licensee to possessmy interest taxes or other taxes levied against Licensee's right to possession, occupancy or use of any public property. Licensee shall pay all applicable (federal, state, county, city, local) excise, sales, consumer use, possessmy interest, or other similar taxes required by law that are levied upon this Agreement or upon Licensee's services under this Agreement. Licensee agrees to reimburse Licensor for any documented increase in real estate or personal properly taxes levied against Licensor's Property that are directly attributable to the Improvements. Licensor agrees to provide Licensee any documentation evidencing the increase and how such increase is attributable to Licensee's use. Licensee reserves the right to challenge any such assessment, and Licensor agrees to cooperate with Licensee in connection with any such challenge. 13. Insurance. At all times during the performance of its Due Diligence Investigation and during the License Tetm, Licensee, at its sole expense, shall obtain and keep in force the required insurance as set forth in the attached Exltibit "C". Licensor shall be entitled to coverage at the maximum policy limits carried by Licensee for the required insurance, which shall at no time be less than the required amounts set forth in the attached Exhibit "C" to this Agreement. The insurance provisions shall be separate and independent from the indemnification and defense provisions between the Licensee and Licensor and shall not in any way limit the applicability, scope or obligations of the indemnification defense provisions in Section 14. 14. Indemnification. a. Licensee shall indemnify, defend, and hold hannless Licensor, its elected and appointed officials, officers, employees, agents, and contractors, from and against liability, claims, demands, losses, damages, fines, charges, penalties, administrative and judicial proceedings and orders, judgments, and the costs and expenses incurred in connection therewith, including reasonable attorneys' fees and costs of defense, to the extent directly or proximately resulting from Licensee's activities unde1iaken pmsuant to this Agreement, except to the extent arising from or caused by the negligence or willful misconduct of Licensor, its elected and appointed officials, officers, employees, agents, or contractors. Licenso1· shall promptly notify Licensee· of m1y claim, action or proceeding covered by this Section 14(a). b .. Right to Audit. During the term of this Agreement, Licensee shall maintain originals, or when originals are not available copies, of all records, books, papers and documents relating to this Agreement and all accompanying agreements between Licensee and Sublicensees (subject to Licensee's right to reasonably redact such records, books, papers and documents to the extent they are proprietary, represent confidential information, or constitute trade secrets). At all reasonable times, Licensee shall allow Licensor to have access to, examine, copy, mid audit such records, including but not limited to access to and audit of information pertaining to the identities of the Sublicensees whom Licensee has attempted to sublicense the Licensed Premises. EXHIBIT A -6- 15. Waiver of Claims and Rights of Subrogation. The parties hereby waive any and all rights of action for negligence against the other on account of damage to the Improvements, Licensor's Properly or to the Licensed Premises resulting from any fire or other casualty of the kind covered by property insurance policies with extended coverage, regardless of whether or not, or in what amount, such insurance is carried by the parties. All policies of property insurance carried by either party for the Improvements, Licensor's Prope11y or the Licensed Premises shall include a clause or endorsement denying to the insmer rights by way of subrogation against the other party to the extent rights have been waived by the insured before the occunence of injury or loss. 16. Eminent Domain. If Licensor receives notice of a proposed taking by eminent domain of any part of the Licensed Premises or the Access/Uti.lity Licenses, Licensor will notify Licensee of the proposed taking within five (5) days of receiving said notice and Licensee will have the option to: (i) declare this Agreement null and void and thereafter neither party will have any liability or obligation hereunder other than payment of Rent for so long as Licensee remains in physical possession of the Licensed Premises; or (ii) remain in possession of that portion of the Licensed Premises and Access/Utility Licenses that will not be taken, in which event there shall be an equitable adjustment in Rent on account of the portion of the Licensed Premises and Access/Utility Licenses so taken. 17. Right of First Refusal. If, during the License term, Licensor receives an offer to purchase, make a loan, or give any consideration in exchange for any of the following interests in all or a portion of any of the Licensed Premises_: (i) fee title, (ii) a perpetual or other easement, (iii) a lease, (iv) any present or future possessory .interest, (v) any or all p01iions of Licensor's interest in this Agreement including rent, or (vi) an option to acquire any of the foregoing, Licensor shall provide written notice to Licensee of said offer ("Licensor's Notice"). Licensor's Notice shall include the prospective buyer's name, the purchase price being offered, any other consideration being offered, the other terms and conditions of the offer, the due diligence period, the proposed closing date and, if a portion of Licensor's Property is to be sold, a description of said portion. Licensee shall have a right of first refusal to purchase, at its election and on the terms and conditions as in Licensor's Notice, a fee simple interest in Licensor's Property or the Licensed Premises or a perpetual easement for the Licensed Premises. If the Licensor's Notice is for more than the Licensed Premises, Licensee shall have the option of pmchasing the property subject to Licensor's Notice in its entirety, or in the alternative, negotiating with the proposed purchaser to acquire a perpetual easement in only the Licensed Premises. If Licensee does not exercise its right of first refusal by written notice to Licensor given within thirty (30) days, Licensor may sell the propeiiy described in the Licensor's Notice. If Licensee declines to exercise its right of first refusal, then this Agreement shall continue in full force and effect and Licensee's right of first refusal shall survive any such conveyance. 18. Sale of Property. If during the Lease Term, Licensor sells all or part of Licensor's Property, of which the Licensed Premises is a part, then such sale shall be subject to this Agreement. 19. Surrender of Property. Upon expiration or termination of this Agreement, Licensee shall, within a reasonable time, remove all above and below ground Improvements and restore the Licensed Premises to its original condition, without, however, being required to replace any trees or other plants removed, or alter the then existing grading. 20. Recording. Licensee shall have the right to record a memorandum of the Agreement with the Sacramento County Recorder's Office. Licensor shall execute and deliver each such memorandum, for no additional consideration, promptly upon Licensee's request. 21. Licensor's Covenant of Title. Licensor covenants that Licensor holds good and marketable fee simple title to Licensor's Property and each of the Licensed Premises and has full authority to enter into and EXHIBIT A -7- execute this Agreement. Licensor further covenants that there are no encumbrances or other impediments of title that might interfere with or be adverse to Licensee. 22. Interference with Licensee's Business. Licensee shall have the exclusive right to construct, install and operate Wireless Teleconummications Facilities that emit radio frequencies on Licensor's Property. Licensor agrees that it will not permit the construction, installation or operation on Licensor's Property of (i) any additional wireless telecommunications facilities or (ii) any equipment or device that interferes with Licensee's use of the Licensed Premises for a Wireless Telecommunications Facility, Each of the covenants made by Licensor in this Section is a covenant running with the land for the benefit of the Licensed Premises. 23. Quiet Enjoyment. Licensor covenants that Licensee, on paying Rent and performing the covenants of this Agreement, shall peaceably and quietly have, hold and enjoy the Licensed Premises and Access/Utility Licenses. 24. Mortgages. This Agreement, Licensee's interest in the Licensed Premises and the Access/Utility Licenses shall be subordinate to any mortgage given by Licensor which currently encumbers the Licensed Premises, provided that any mortgagee shall recognize the validity of this Agreement in the event of foreclosure. -In the event that the Licensed Premises is or shall be encumbered by such a mortgage, Licensor shall obtain and furnish to Licensee a mutually agrned upon non-disturbance agreement for each such mo1tgage, in recordable form. If Licensor fails to cooperate in providing any Licensee requested non- disturbance agreement, Licensee may withhold and accrue, without interest, the Rent until such time as Licensee receives all such documentation. 25. Title Insurance. Licensee, at Licensee's option, may obtain title insurance on each of the Licensed Premises and Access/Utility Licenses at Licensee's sole cost and expense. Licensor shall cooperate with Licensee's efforts to obtain title insurance by executing documents or obtaining requested documentation as required by the title insurance company. If Licensor fails to provide the requested documentation reasonably necessary to Licensee for Licensee to obtain title insurance within thirty (30) days of Licensee's request, Licensee, at Licensee's option, may withhold and accrue, without interest, the Rent lmtil such time as Licensee receives all such documentation. 26. Default. a, Notice of Default; Cure Period. If there is a default by Licensor or Licensee (the "Defaulli11g Party") with respect to any of the prnvisions of this Agreement or Licensor's or Licensee's obligations under this Agreement, the other party (the "No11-Defn11lti11g Party") shall give the Defaulting Paliy written notice of such default. After receipt of such written notice, the Defaulting Party shall have thirty (30) days in which to cure any monetary default and sixty (60) days in which to cure any non-monetary default. The Defaulting Patty shall have such extended periods as may be required beyond 1he sixty (60) day cure period to cure any non- monetary default if the nature of the cure is such that it reasonably requires more than sixty (60) days to cure, and the Defm1lting Party commences the cure within the sixty (60) day period and thereafter continuously and diligently pursues the cme to completion. The Non-Defaulting Party may not maintain any action or effect any remedies for default against the Defaulting Party unless and lmtil the Defaulting Party has failed to cure the same within the time periods provided in this Section. b. Consequences of Licensee's Default. Licensor acknowledges that under the terms of this Agreement, Licensee has the right to terminate this Agreement at any time upon one hundred eighty (180) days' written notice to Licensor. Accordingly, in the event that Licensor maintains any action or effects any remedies for default against Licensee resulting in Licensee's dispossession or removal, (i) the Rent shall be paid up to the date of such physical dispossession or removal and (ii) Licensor shall be entitled to recover from Licensee, in EXHIBIT A -8- lieu of any other damages, as liquidated, furn] damages, a smn equal to six months' Rent which shall be calculated at the highest value of the Rent which is in effect on the date of default and for the six month period thereafter. In no event shall Licensee be liable to Licensor for indirect or speculative damages in connection with or arising out of any default. c. Consequences of Licensor's Default. If Licensor is in default beyond the applicable periods set forth above in Section 26(a), Licensee may, at its option, upon written notice: (i) terminate the Lease, vacate the Licensed Premises and be relieved from all further obligatioiis under this Agreement; (ii) perform the obligation(s) of Licensor specified in such notice, in which case any expenditmes reasonably made by Licensee in so doing shall be deemed paid for the account of Licensor and Licensor agrees to reimbmse Licensee for said expenditures upon demand; (iii) take any actions that are consistent with Licensee's rights; (iv) sue for injunctive relief, and/or (v) set-off from Rent any amount reaso1iably expended by Licensee as a result of such default. 27. Force Majcure. If an event or condition constituting a "force majeure"-including, but not limited to, an act of God, labor dispute, civil unrest, epidemic, or natmal disaste1~prevents or delays either the Licensor or the Licensee ("P(lrfy") from performing or fulfilling an obligation under this Agreement, said Party is not in Default, under Section 26 of this Agreement, of the obligation. A delay beyond a Party's control automatically extends the time, in an ammmt equal to the period of the delay, for the Party to pe1form the obligation under this Agreement. The Licensor and Licensee shall prepare and sign an appropriate document acknowledging any extension of time under this Section. 28. Applicable Law. This Agreement and the performance thereof shall be governed, interpreted, construed and regulated by the laws of the State where the Licensed Premises is located. The paities agree that the venue for any litigation regarding this Agreement shall be the state where the Licensed Premises is located. 29. Assignment, Sublease, Licensing and Encumbrance. Lessee may assign this Agreement to a person or entity with demonstrated capacity to carry out Lessee's obligations under this Agreement. Lessee shall provide 30 days prior written notice of such assignment to Lessor. Lessee may enter into subleases, licenses, or other authorizations ("S11b-Authoriz11tio11s") to allow a third party to utilize and operate from the Leased Premises, so long as such third party is a provider of services that utilize Wireless Telecommunications Facilities. Sub-Authorizations shall not require the consent of Lessor. 30. Miscellaneous. a. Entire Agreement. Licensor and Licensee agree that this Agreement, together with that certain Consulting Services Agreement Regarding Wireless Master Planning and Memorandum of Understanding and Agreement Regarding Licenses and Sublicenses of Publicly-Owned Properties Pertaining To Wireless Telecommunications Facilities between Licensor and Licensee, contain all of the agreements, promises and understandings between Licensor and Licensee with regard to the Licensed Premises. No oral agreements, promises or understandings shall be binding upon either Licensor or Licensee in any dispute, controversy or proceeding at law. Any addition, variation or modification .to this Agreement shall be void and ineffective unless made in writing and signed by the parties hereto. b. Captions. The captions preceding the Sections of this Agreement are intended only for convenience of reference and in no way define, limit or describe the scope of this Agreement or the intent of any provision hereof. · c. Construction of Document. Licensor and Licensee acknowledge that this document shall not be constrned in favor of or against the drafter by virtue of said party being the drafter and that this Agreement shall not be construed as a binding offer until signed by Licensee. EXHIBIT A -9- d. Notices. All notices hereunder shall be in writing and shall be given by (i) established national courier service which maintains delivery records, (ii) hand delivery, or (iii) ce1tified or registered mail, postage prepaid, return receipt requested. Notices are effective upon 1·eceipt, or upon attempted delive1y if delivery is refused or if delivery is impossible because of failure to provide reasonable means for accomplishing delivery. The notices shall be sent to Licensor at Licensor's Notice Address and to Licensee at Licensee's Notice Address. e. Partial Invalidity. ff any term of this Agreement is found to be void or invalid, then such invalidity shall not affect the remaining terms of this Agreement, which shall continue in full force and·effect. f. IRS Form W-9. Licensor agrees to provide Licensee with a completed IRS Form W-9, or its equivalent, upon execution of this Agreement and at such other times as may be reasonably requested by Licensee. In the event the Property is transferred, the succeeding Licensor shall have a duty at the time of such transfer to provide Licensee with a completed IRS Form W-9, 01· its equivalent, and other related paper work to effect a transfer in Rent to the new Licensor. Licensor's failure to provide the IRS Form W-9 within thirty (30) days after Licensee's request shall be considered a default and Licensee may take any reasonable action necessary to comply with IRS regulations including, but not limited to, withholding applicable taxes from Rent payments. IN WITNESS WHEREOF, Licensor and Licensee having read the foregoing and intending to be legally bound hereby, have executed this Agreement as of the day and year this Agrnement is fully executed. [SIGNATURES CONTINUE ON FOLLOWING PAGE] EXHIBIT A -10- Date: ------- A'ITEST: APPROVED AS TO FORM: Date: ------- APPROVED AS TO FORM: "LICENSOR" City of Sacramento By: ------------ Tit 1 e: ------------ "LICENSEE" 5BARS,LLC By: ___________ _ Title: ------------ EXHIBIT A -11- EXHIBITB RIGHT OF ENTRY AGREEMENT This Right of Ent1y Agreement (this "Agreement") is made as of the date of the final signatme below, by and between the City of Sacramento, a municipal corporation, having a mailing address of 915 I Street, Sacramento, CA 95864 ("Grantor") and 5 Bars, LLC, a Delaware limited liability company, with an address at 19200 Von Karman Ave, Suite 100, Irvine, CA 92612 ("Gl'(/ntee"). Grantor and Grantee are sonietimes collectively referred to.as "Parties" or individually as "Party." RECITALS A. Grantor is the fee owner ofrecord of that certain real property (the "Property"). B. Grantor and Grantee have entered into that certain Subscription Agreement Regarding Wireless Master Planning ("Subscription Agree111e11f') pursuant to which Grantee has agreed to provide certain consulting, marketing, and management services relating to the placement of Wireless Teleconummications Facilities on some or all of the Property. C. Pursuant to the Subscription Agreement, Grantor and Grantee liave agreed to enter into this Agreeement to that Grantee may enter upon the Property, upon 24 hour written notice to Grantor, to inspect, conduct, perform and examine soil borings, drainage testing, material sampling, surveys and other geological or engineering tests or studies of the Prope1ty, to apply for and obtain all licenses and permits required for Grantee's use of the designated Prope11y from all applicable governmental or regulato1y entities, and to do those things on or off the designated Property that, in the sole opinion of Grantee, are necessary to determine the ph.ystcal condition of designated Prope1ty, lhe environmental history of the designated Properly, and the feasibility or suitability of the designated Property for Grantee's use ("Due Dllige11ce I11ves//g11//011"). NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by each of the Patties, the Parties agree as follows: AGREEMENT I. Right of Entry. Gran tor hereby grants to Grantee and its agents, employees, contractors, subcontractors, and volunteers non-exclusive permission to enter over and across, as well as to use the Property as is reasonable and necessary, for the express purpose of conducting, at Grantee's sole expense, the Due Diligence Investigation. (the above-described activities are collectively referred to hereafter as the "Wor/1"). 2. Term. The Right of Entry granted pursuant to Section 1, above, shall be for a limited term, commencing as of the date of this Agreement and expiring upon the expiration or earlier termination of the Subscription Agreement. 3. Entry at Own Risk; No Duty to Warn. Grantee and its agents, employees, contractors, subcontractors, and volunteers shall access, enter and use the Property at their own risk and peril, Grantor shall have no duty to inspect the Property (or any portion thereof) and no duty to warn of m1y latent or patent defect, condition or risk which may exist on the Property. 4. Liens. Grantee shall not permit to be placed against the Property, or any part thereof, any mechanics', materialmen's, contractors' or other liens (collectively, the "Liens") arising out of the acts or omissions of the Grantee or its agents, employees, contractors, subcontractors, or volunteers hereunder. Grantee hereby indemnifies and agrees to hold the Grantor and the Property free and harmless from all liability for any and all EXHIBITB -1- such Liens, together with all costs and expenses, including, but not limited to, attorneys' fees and court costs reasonably incmred by Grantor in connection therewith. 5. Hazardous Substances. Grantee and its agents, employees, contractors, subcontractors, and volunteers shall not use, store or transport or· allow the use, storage or transportation of any hazardous substances on or onto the Property. 6. Restoration of the Propei·ty. Except to the extent otherwise contemplated by this Agreement, Grantee shall, at its own cost and expense, restore the Property to the same condition in which it was prior to Grantee's entry. 7. Indemnification by Grnutee. Except to the extent otherwise provided below, Grantee agrees to hold harmless and indemnify Grantor from and against any and all, claims, demands, actions, and causes of action for injmy or death of any person,· or damages to property, arising out of or resulting from the i1se or access of the Property by the Grantee or its agents, employees, contractors, subcontractors, and volunteers pursuant to this Agreement. Notwithstanding the foregoing, the Grantee shall have no obligation to indemnify Grantor from a pre-existing condition at the Property, any encroachments of the wall on any other property or for claims related to the gross 1iegligence or willful misconduct of Grantor. 8. Authority to Execute. Grantor(s) warrants and represents to Grantee that he/she/it/they is/are the sole owner(s) of the Property and may execute and approve this Agreement and no permission or consent of any other person is required to approve this Agreement. 9. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors attd assigns. 10. Entire Agreement. No representations or covenants of any kind other than those expressly contained herein have been made by either party hereto. This Agreement may only be modified or amended by an agreement in writing duly executed and delivered by each of the patties hereto. 11. Severability. If any provision of this instrument, or the application thereof to any person or circumstances, is found to be invalid, the remainder of the provisions of this instrument, or the application of such provision to persons or circumstances other than those as to which it is found to be invalid, as the case may be, shall not be affected thereby. 12. Pe,·mits. Prior to beginning any work, Licensee, at its sole expense, shall obtait1 all necessary permits to use the Premises as permitted under this Agreement. 13. All Expenses To Be Borne by Licensee. Licensee shall bear any and all costs and expenses associated with the rights granted to Licensee to use the Premises, or any unforeseen costs or expenses incmred by the City relating to Licensee's use of the Premises in the performance of this Agreement. 14 Hours of Operation. The hours of operation that Licensee shall be permitted to conduct its project shall be between 7 am and 5 pm, Monday through Friday. No weekend work shall be permitted. 15. Governing Law. This Agreement shall be govemed in accordance with the laws of the State of California. 16. Counterparts. This Agreement may be executed it1 counterparts, each of which shall be deemed an original and which together shall constitute a single agreement. EXHIBITB -2- IN WITNESS WHEREOF, the parties have executed this Agreement on the date first set forth above . . "GRANTOR" ·Ilate: _______ _ ATTEST: APPROVED AS TO FORM: Ilate: _______ _ APPROVED AS TO FORM: City of Sacramento By:------------- Title: ------------- "GRANTEE" 5BARS,LLC By: _____________ _ Title: ------------- EXHIBITB -3- EXIDBITC INSURANCE REQUIREMENTS 5 BARS shall procure and maintain or shall cause a sublicensee to procure and maintain (5 BARS and/or sublicensees shall be referred to hereinafter, as the context dictates, as "Contractor"), for the duration of the the Agreeemnt and any applicable sublicense entered into under and/or pursuant to the Agreement, insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the 5 BARS, a sublicensee, its agents, representatives, or employees. Minimum Scope of Insurance Coverage shall be at least as broad as: 1. Insurance Services Office Conunercial General Liability coverage (occurrence for c·G 0001) Minimum Limits oflnsurance Contractor shall maintain limits no less than: 1. General Liability: $1,000,000 per occurrence for bodily injmy, personal htjury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. Deductibles and Self-Insured Retentions Any deductibles or self-insured retentions must be declared to and approved by the City. At the option of the City, either: the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the Contractor shall procure a bond guaranteeing payment of losses and related investigations, clahns administration and defense expenses. Other Insurance Provisions The general liability and automobile liability policies are to contain, or be endorsed to contain, the followh1g provisions: l. The City, its officers, employees and volunteers are to be covered as additional insureds as respects: liability arising out of activities performed by or on behalf of the Contractor; products and completed operations of the Contractor; premises owned, occupied or used by the Contractor; or automobiles owned, leased or borrowed by the Contractor. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees or volunteers. 2. For any claims related to this project, the Contractor's insurance coverage shall be primary"insurance as respects the City, its officers, employees and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees or volunteers shall be excess of the Contractor's insurance and shall not contribute with it. 3. Any failme to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees or volunteers. EXHIBITC -1- 4. The Contractor's insurance shall apply separately to each insured against whom claim is made 01· suit is brought, except with respect to the limits of the insurer's liability. 5. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thil'ty (30) days prior written notice by certified mail, return receipt requested, has been given to the City. Acceptability for Insmers Insurance is to be placed with insurers with a current A.M. Best's rating ofno less than A:VII, unless otherwise acceptable to the City. Verification of Coveraru,. Contractor shall fi.unish the City with original endorsements effecting coverage required by this clause. The Endorsements are to be signed by a person authorized by that insmer to bind coverage on its behalf. The endorsements are to be on forms provided by the City. All endorsements are to be received and approved by the City before work commences. As an alternative to the City's forms, the Contractor's insurer may provide complete, certified copies of all required insurance policies, including endorsements effecting the coverage required by these specifications. Subconti•actors Contractor shall include all subcontractors as insured under its policies or shall furnish separate certificates and endorsements for each subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated herein. EXHIBITC -2- \ -~·· ' ' --,. . -_fp~":!~f~~f-~IJ;-'~~~-\ .:·-';. 01!/1 :i/201 G 06J'1;iJi!o1 e ,0011\<JllJui\:1".1~,;,.....i . • ,' ·· .. ' ' ' . ·,_.·_._·_ ' . • ' -~-u~ltjt~~-HotclJR -- B--excu_:s-U'9 . · __ i:LAIMS.J\MOE I X0BW$9_7Q !&-<lii585t8$ ,,.,, I I liET<JIT'""· · '' ' ·. O(t~4/~,i; !)BI04120ff ii1..iX:cii,c~"'"' ·.... ; • · · too~,oru ~Lti1:3~.aa::.l!·,.;-1;"JttoV·" ·t_ ... ,_ --_: .1..000iMI 1 ,-• ~L.Jll~i:.PDL1CVLiMrr" ii ' 11000,00( ... oe1191201J 011/1$12010 1500~ R'~t. ··· ' 3.000.001 OG/1312016 osifanoit GOO D~d 2$,00i "-'~~:~ ~o~;Q~_J.~~,tl1¢~.i_:~~rn~1.t'i ·c~ri-~oJU> _to~ ... ~. 'J~~ ~~~,.~.~~Ii(·~ ,r'~~-~..;j!~. ~~~;;' . - 'l'!Ql . i::nil' ;pr • SJi.ciwaim:o / r:s ·• ·orirxcajs, Zlll'~o ms, ·~ VQWNTZ!!JtS' ·~ ·. mMED !Al>D•'.":i:O>l,µ. :INStll111C: PBR 1l.TrACmJ> ca20370413 " ca201007P4 'J,lNP01!llEFmlfl$. · ' ' .' : .. ·, . ,· " ' ' · .. · ' .. . . Ci!rmF!OATl!!Hot:Dl!R " ''•.i{oANCi!LLATION ' . · ·· '' '· · .. ' ' · . · · ·· · ·' ·· · ······· . · • · · @10l~O;tilA!:/OIJ'gi0Bf~1fN· All ilgh!J rturvod, . ~.\,"~!)25(2010/(\ij) ThoAQORDn~mO ~~dlpqo~1~yogl1tuerlri,\fr~'ilo~ · · ·. · .. ·· .. •· · . . , . . · .. ~!2~!20 I$. 8:00AM C < ~~'!y'.~hb a.umnies~rvlq~•OTo~~?:~~30 of 31 e.ago 1 of2 ·. ·•· .s12~12015 a:6oAM ~-a•,c •• :··-.u· ! I I I • FARMERS' WORKERS' CO PENSATION AND EMPLOYERS' LIABIL TY INSURANCE POLICY Named • 5 BARS LLC Insured • 19200VONKARMAN AVE# 100 • mVlNE CA 92612 Effective • • Dato 08/04115 Agonl 97 61 32K B09473365 Poficy Nllll!ber of tho Company we ss oe20 2015 Policy Ytar WAIVER OF OUR RIGHT TO REC , VER FROM OTHERS ENDORSEMENT-SPECIFIC We .have the right to recover our payments fr m anyone liable for an injury covered by this policy. We will not enforce our right against the person or org ization named in the Schedule. (This agreement applies only to the extent that you perform work under a 'ttcn contract that requires you to obtain this agreement from ns.} You must maintain payroll records accurately egregating the remuneration of your employees while engaged in the work described in the Schedule. The additional premium for this endorsement hall be ..l,% of the Workers' Compensation premium othenvbe due such remuneration, subject to a minimum harge of S250. Person or Organization CITY OF SACRAMENTO C/0£BIXRCS PO BOX2S7 PORTLAND MI 48875-0257 Schedule Job Description CONSULTING This endorsement is part of your policy. It su ersedes and controls anything to the contrary. It is otherwbe subject to all the terms of the policy. Countersigned ___ ..,....,.....,..,,,-----,--+-- . Auth()rized Rcpr~sentative 93-03701" EDITION 10-0S J6Jl0101 PA Go t OF 1 Page 31 of 31 8/26/2015 8;00AM AGENDA STAFF REPORT City of West Covina | Office of the City Manager DATE: January 8, 2018 TO: Mayor and City Council FROM: Chris Freeland City Manager SUBJECT: ORDINANCE ESTABLISHING LOCAL REGULATIONS REGARDING USE AND OPERATION OF UNMANNED AERIAL DEVICES WITHIN THE CITY OF WEST COVINA LIMITS RECOMMENDATION: It is recommended that the City Council read by title only, waive further reading and introduce the following ordinance for first reading: ORDINANCE NO. 2331 - AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, ADDING CHAPTER 15, ARTICLE I, SECTION 15-20 OF THE WEST COVINA MUNICIPAL CODE TO ESTABLISH COMMUNITY-BASED SAFETY REQUIREMENTS ON THE OPERATION OF MODEL AIRCRAFT AND TO IMPOSE RESTRICTIONS CONSISTENT WITH CERTAIN FEDERAL AVIATION RULES ON THE OPERATION OF BOTH MODEL AIRCRAFT AND CIVIL UNMANNED AIRCRAFT SYSTEMS (UAS), COMMONLY KNOWN AS DRONES. BACKGROUND: Unmanned Aircraft Systems (UAS) encompass a variety of devices which are designed to fly under power without a human pilot on board. While once limited to military applications, UASs have garnered favor in film production, aerial photography, and with recreational users. UASs are often commonly referred to as “drones.” Many UASs are equipped with a camera or recording device which can record and/or relay imagery back to the operator in real-time. Despite their many positive features, UASs have the potential to be used improperly. These improper uses create both public safety and privacy concerns that generally cannot be addressed with current state or federal law. AGENDA ITEM NO. 5 Unmanned Aircraft Systems Ordinance Page 2 of 3 – January 8, 2018 DISCUSSION: The availability and ease of operation of UASs makes them highly desirable for many legitimate groups. Members of the public use UASs for recreational purposes, to film activities, take photos, and for sporting events, etc. Film production companies regularly use UASs as an alternative to traditional aircraft due to the reduced operating costs and decreased risks. There are many other constructive and positive uses for this technology. Despite the well-intended uses and applications, there have been allegations of UASs being the source of disputes between neighbors, a form of harassment among people, having been used to peer into private locations, and being flown over areas of concern such as parks, schools and other locations. California Law is relatively silent on the use of these devices, only exempting public safety from liability for the destruction of a UAS at an emergency scene, and offering a civil tort remedy against a person who uses a UAS to invade the privacy of another person. Federal Law offers limited regulation on the safe operation of UASs. This lack of federal or state governance obligates local communities to be proactive. The proposed ordinance adds Section 15-20 to the West Covina Municipal Code. The provisions of the new ordinance establish new regulations that encompass the following concepts: 1) Aviation Safety. UASs may not interfere with and must give way to manned aircraft. UAS operators must comply with Federal Aviation Administration (FAA) aeronautical regulations, and may not violate any Temporary Flight Restrictions (TFR) imposed by the FAA. 2) Public Safety. Limits are placed on UAS use which include flights over 400 feet above ground level, flights during darkness, and the requirement that the operator fly safely while maintaining visual sight of the UAS. 3) Privacy. Limits are placed on the use of a UAS to transmit or record images of another person, or private real property when a reasonable expectation of privacy exists. 4) Critical Infrastructure. Limits are placed on flights over specified sites within the city limits, including all schools (during school hours), City Hall, Fire Stations, and public safety radio sites. The proposed ordinance (Attachment No. 1) provides reasonable local governance that protects the interests of West Covina residents. The proposed ordinance places reasonable restrictions on UAS operators that protects public safety and resident privacy, while still giving hobbyists wide latitude to pursue their interests. There are reasonable exceptions to many of the provisions of the proposed ordinance that still permit users to accomplish legitimate objectives. Unmanned Aircraft Systems Ordinance Page 3 of 3 – January 8, 2018 COUNCIL GOALS & OBJECTIVES: This item supports the 2016-2017 City Council Goal of Identify Resources and Opportunities to Provide Better Public Safety (Police and Fire) Services to the Community. LEGAL REVIEW: The City Attorney's office prepared the final version of the ordinance that is attached to this report. The City Council has the following options: 1) Approve staff’s recommendation as outlined above; or 2) Take no action; or 3) Provide alternative direction. FISCAL IMPACT: None. Prepared by: Reviewed and Approved by: Doug Murray Marc Taylor Police Captain Chief of Police Approved Via Email Kimberly Hall Barlow City Attorney ATTACHMENT: Attachment No. 1 – Draft Ordinance No. 2331 ATTACHMENT NO. 1 ORDINANCE NO. 2331 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, ADDING CHAPTER 15, ARTICLE I, SECTION 15-20 OF THE WEST COVINA MUNICIPAL CODE TO ESTABLISH COMMUNITY-BASED SAFETY REQUIREMENTS ON THE OPERATION OF MODEL AIRCRAFT AND TO IMPOSE RESTRICTIONS CONSISTENT WITH CERTAIN FEDERAL AVIATION RULES ON THE OPERATION OF BOTH MODEL AIRCRAFT AND CIVIL UNMANNED AIRCRAFT SYSTEMS (UAS), COMMONLY KNOWN AS DRONES. WHEREAS, the City of West Covina (“City”) currently has no regulations regarding Unmanned Aircraft Systems (UASs); and WHEREAS, the City Council recognizes that the federal government has explicitly authorized local government regulation of UASs to protect areas traditionally within the control of local governments; and WHEREAS, the operation of Unmanned Aircraft such as Model Aircraft and Civil UASs can at times affect law enforcement operations, land use, privacy, and may pose a hazard to full- scale aircraft in flight and to persons and property on the ground; and WHEREAS, imposing community-based restrictions on the operation of Model Aircraft and imposing restrictions on the operation of both Model Aircraft and Civil UASs consistent with Federal Aviation Rules is necessary to mitigate such risks and to protect the public from the hazards other negative impacts associated with the operation of Unmanned Aircraft. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. A new Section 15-20 is added to Article I of Chapter 15 of the West Covina Municipal Code to read as follows: SEC. 15-20. UNMANNED AIRCRAFT SYSTEMS. (a) For purposes of this section: 1. “Unmanned Aircraft” shall mean an aircraft, including, but not limited to, an aircraft commonly known as a drone, that is operated without the possibility of direct human intervention from within or on the aircraft at an elevation below 400 feet. 2. “Unmanned Aircraft System” shall mean an Unmanned Aircraft and associated elements, including, but not limited to, any communication links and components that control the Unmanned Aircraft. 3. “Person” shall have the same meaning as set forth in Section 1-19 of this Code. 4. “Model Aircraft” shall mean an Unmanned Aircraft or Unmanned Aircraft System operated by any Person strictly for hobby or recreational purposes. 5. “Civil UAS” shall mean an Unmanned Aircraft or Unmanned Aircraft System operated by any Person for any purposes other than strictly hobby or recreational purposes, including, but not limited to, commercial purposes or in furtherance of, or incidental to, any business or media service or agency. 6. “Public UAS” shall mean an Unmanned Aircraft or Unmanned Aircraft System operated by any public agency for government related purposes. (b) The following shall apply to the operation of any Model Aircraft within the City of West Covina: 1. No Person shall operate any Model Aircraft within the City of West Covina in a manner that interferes with manned aircraft, and shall always give way to any manned aircraft. 2. No Person shall operate any Model Aircraft within the City of West Covina beyond the visual line of sight of the person operating the Model Aircraft. The operator must use his or her own natural vision (which includes vision corrected by standard eyeglasses or contact lenses) to observe the Model Aircraft. People other than the operator may not be used in lieu of the operator for maintaining visual line of sight. Visual line of sight means that the operator has an unobstructed view of the Model Aircraft. The use of vision-enhancing devices, such as binoculars, night vision goggles, powered vision magnifying devices, and goggles or other devices designed to provide a “first-person view” from the model, do not constitute the visual line of sight of the person operating the Model Aircraft. 3. No Person shall operate any Model Aircraft within the City of West Covina other than during daylight hours defined as between official sunrise and official sunset for local time. 4. No Person shall operate any Model Aircraft within the City of West Covina more than 400 feet above the earth’s surface. 5. Excluding takeoff and landing, no Person shall operate any Model Aircraft within the City of West Covina closer than 25 feet to any individual, except the operator or the operator’s helper(s). (c) The following shall apply to the operation of any Model Aircraft or Civil UAS within the City of West Covina at an elevation below 400 feet: 1. No Person shall operate any Model Aircraft or Civil UAS within the City of West Covina in a manner that is prohibited by any federal statute or regulation governing aeronautics. 2. No Person shall operate any Model Aircraft or Civil UAS within the City of West Covina in violation of any temporary flight restriction (TFR) or notice to airmen (NOTAM) issued by the Federal Aviation Administration. 3. No Person shall operate any Model Aircraft or Civil UAS within the City of West Covina in a careless or reckless manner so as to endanger the life or property of another. The standard for what constitutes careless and reckless operation under this section shall be the same as the standard set forth in any federal statutes or regulations governing aeronautics including but not limited to Federal Aviation Rule 91.13. (d) 1. No Person shall use an Unmanned Aircraft to record or transmit any visual image or audio recording of any other Person or private real property located in the City of West Covina under circumstances in which the subject Person or occupant of the subject real property has a reasonable expectation of privacy (including, but not limited to, inside a private residence or office, and inside an enclosed yard). 2. This subsection shall not prohibit the use of any model aircraft, which is flown in compliance with section 336 of the FAA modernization and reform act of 2012 and which does not transmit or record visual images or audio recordings of any Person or real property located in the City. (e) No Person shall operate an Unmanned Aircraft in the following places in the City of West Covina: 1. Any public or private school, including pre-schools, during school hours; 2. The West Covina Civic Center; 3. Any West Covina fire station; 4. Within 100 feet of any public safety radio sites; 5. Over a publicly advertised City-sponsored event on City property without the advance approval in writing of the Police Chief or his authorized delegate. (f) This section shall not prohibit the use of any Public UAS: 1. If a warrant is issued authorizing the use of an Unmanned Aircraft; or 2. For the purpose of providing emergency management, fire, or police protection services in response to a life threatening emergency, or for surveying the condition of persons or property during a duly declared state of emergency; or 3. Under circumstances where a warrant would not otherwise be required by law. SECTION 2. The City Council hereby finds that it can be seen with certainty that there is no possibility that the adoption and implementation of this ordinance may have a significant effect on the environment. The ordinance is therefore exempt from the environmental review requirements of the California Environmental Quality Act pursuant to Section 15061(b)(3) of Title 14 of the California Code of Regulations. SECTION 3. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this ordinance, or its application to any person or circumstance, is for any reason held to be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases of this ordinance, or its application to any other person or circumstances. The City Council declares that it would have adopted each section, subsection, subdivision, paragraph, sentence, clause or phrase hereof, irrespective of the fact that any one or more other sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or unenforceable. SECTION 4. This ordinance shall take effect thirty (30) days after its final passage, and within fifteen (15) days after its passage, the City Clerk of the City of West Covina shall certify to the passage and adoption of this ordinance and to its approval by the Mayor and City Council and shall cause the same to be published in a newspaper in the manner required by law. Mike Spence Mayor ATTEST: Nickolas S. Lewis City Clerk APPROVED AS TO FORM: Kimberly Hall Barlow City Attorney I, NICKOLAS S. LEWIS, CITY CLERK of the City of West Covina, California, do hereby certify that the foregoing Ordinance was regularly introduced and placed upon its first reading at a regular meeting of the City Council on the ____ day of ____, 2018. That therefore said Ordinance was duly adopted and passed at a regular meeting of the City Council on the ____ day of _____, 2018 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Nickolas S. Lewis City Clerk AGENDA ITEMNO. 6 AGENDA STAFF REPORT City of West Covina I Office of the City Manager DATE: January 8, 2018 TO: FROM: Mayor and City Council Chris Freeland City Manager SUBJECT: ADOPTION OF CITY COUNCIL GOALS & OBJECTIVES FOR FISCAL YEAR2017-18 RECOMMENDATION: It is recommended that the City Council discuss and adopt the City Council Goals & Objectives for Fiscal Year 2017-2018, as outlined in this staffrepmi. BACKGROUND: This item was carried over from the December 5, 2017, City Council Meeting. In 2014 and 2016, the City of West Covina retained the services of Patchett & Associates to facilitate and support the development of City Council Goals & Objectives. The City Council Goals & Objectives were selected through a SMART Goal Process, defined as .S.pecific, Measurable, Achievable, _Results Oriented, and Iime Bound, where Councilmembers met one-on- one with the consultant and provided insight on various subjects that were of significance to them individually. The City Council then met as a group to discuss those goals to approve them. Once approved, Staff developed various objectives (projects and programs) to meet the goals. Setting goals is a strategic planning practice for the City Council to review any existing goals, set new goals to ensure that the City's efforts are responsive to the desires and needs of the citizemy and that good progress is being made toward the Council's desired quality oflife in West Covina. Goal setting by the City Council has the following benefits: • Formally adopted City Council Goals provide staff official direction to plan and organize resources to ensure their completion. • A better understanding by citizens and City staff of the City Council's plans as a single governing body for the future of the City of West Covina. City Council Goals & Objectives 2 of3 -January 8, 2018 • Priority projects will be completed successfully and timely. • City staff is more focused and effective in addressing City Council priorities. • City staff is more accountable to the City Council for achieving City Council Goals. • City Council and staff are less inclined to be side-tracked by less important activities or projects. DISCUSSION: This year the City Manager met one-on-one with each City Councilmember to review the Goals & Objectives from Fiscal Year 2016-17, and to develop the proposed list of Goals & Objectives for Fiscal Year 2017-18. A listing of the Goals & Objectives for Fiscal Year 2016-17 is attached (Attachment No. 1). This listing also includes a status of those Goals & Objectives. Items not completed in Fiscal Year 2016-17, were carried over for Fiscal Year 2017-18. Based on meetings with the City Council, Staff is presenting the following fifteen Council Goals & Objectives for discussion and consideration. CITY COUNCIL GOALS FOR FISCAL YEAR 2017-2018 I. Build Financial Health and Economic Stability for the City* 2. Identify Resources and Oppo1iunities to Provide Better Public Safety (Police and Fire) Services to the Community* 3. Complete Enhanced Infrastructure Finance District 4. Optimize Developable Land for the Brownfields (BKK) Land* 5. Update the City's Municipal Code* 6. Seek Opportunities to Add Park and Recreational Space in the Community* 7. Develop an Active Transportation Plan* 8. Evaluate Future Uses for the Equestrian Center* 9. Complete the Glendora Avenue Specific Plan and Street Re-Design* 10. Update City's IT Infrastructure* 11. Work with Plaza West Covina and Foothill Transit on a Transit Center* 12. Complete Improvements to Lower Plateau of Shadow Oak Park 13. Identify Resources and Programs for Homeless Solutions 14. Complete Districting Process 15. Address NPDES Issues in the Community 16. Sustainability *Goals from Fiscal Year 2016-2017 that are being carried over for Fiscal Year 2017-2018 In order to intplement the goals set by the City Council, City staff has identified detailed objectives for each of the above mentioned goals (Attachment No. 2). If adopted, Staff will provide the City Council with an estintated time line for completion of each of the objectives. City staff is seeking the City Council's discussion and adoption of the City Council Goals & Objectives for Fiscal Year 2017-2018. It is appropriate for the City Council to incorporate any additional objectives that the City Council wishes to be included at this tinte. City Council Goals & Objectives 3 of3 -January 8, 2018 FISCAL IMPACT: There is no fiscal impact in approving the City Council Goals & Objectives. Fiscal impacts for the various projects will be addressed when each item is presented to the City Council in the future. Prepared by: Chris Freeland City Manager ATTACHMENTS: Attachment No. 1 -City Council Goals & Objectives for Fiscal Year 2016-17 Attachment No. 2 -City Council Goals & Objectives for Fiscal Year 2017-18 City Council Goals and Objectives {Adopted -September 6, 2016) Responsible 1 Build Financial Health and Economic Stability for the City Department(s) Complete Fee & Charge Study Finance Audit all City Businesses for Business License Compliance Finance Prepare a Five-Year Vehicle Replacement Plan Finance and Public Works Pay Down City Issued Debt Finance Amend City Annual Surplus Policy Finance Conduct an Actuarial Analysis of City's OPEB Liability Finance Address City's OPEB Liability Finance Develop City Branding Campaign City Manager's Office Analyze a Transportation Impact Fee Public Works and Planning Analyze former RDA Loans for Repayment Finance and City Manager's Office -Pending means project has not begun -In Progress means project currently being worked on by staff Attachment No. 1 Estimated Status Completion Date COMPLETED COMPLETED Pending Jan-18 COMPLETED COMPLETED COMPLETED COMPLETED Pending May-18 COMPLETED COMPLETED Identify Resources and Opportunities to Provide Better Public Responsible Estimated 2 Status Completion Safety (Police and Fire) Services to the Community Department(s) Date Hire Additional Police Officers Police In Progress Ongoing Develop New Staffing Model for Fire Department Fire In Progress Dec-17 Take Possession and Put Into Service three (3) New Fire Fire COMPLETED Apparatus Restructure Fire Prevention Bureau Fire Pending Feb-18 Analyze Ambulance Transport Service Fire and Finance In Progress Feb-18 Evaluate Ambulance Subscription Program Fire and Finance COMPLETED Replace Mobile Data Units in Police Vehicles Police COMPLETED Add In-Camera Video System for Police Vehicles Police COMPLETED Upgrade Police Department and City Hall with Key Card Security Police and Finance In Progress Feb-18 System Select New Vendor for Processing of Citations Police and Finance COMPLETED Promote West Covina Service Group Police In Progress Ongoing Rewrite CAD/RMS Software Police In Progress Jun-19 . Responsible Estimated 3 Complete General Plan Update Status Completion Department(s) Date Complete CEQA Analysis of General .Plan Planning COMPLETED Adopt General Plan Planning COMPLETED -Pending means project has not begun -In Progress means project currently being worked on by staff Responsible Estimated 4 Optimize Developable Land for the Brownfields (BKK) Land Status Completion Department(s) Date Sell Water Tank Properties City Manager's Office In Progress May-18 Sell AAA Pad City Manager's Office In Progress Jan-18 Promote Development of Grand Hotel and Resort with Golf City Manager's Office In Progress Ongoing Course or Alternate Development Develop Park Space on Landfill with County of Los Angeles City Manager's Office and Pending Jun-19 Community Services Responsible Estimated 5 Update the City's Municipal Code Status Completion Department(s) Date I Comprehensive Zoning Code Update Planning Pending Jun-21 Seek Opportunities to Add Park and Recreational Space in the Responsible Estimated 6 Status Completion Community Department(s) Date Sell Sunset Field City Manager's Office and In Progress Dec-18 Community Services Utilize Funds to Purchase New Park Land and Provide New City Manager's Office and Amenities Community Services In Progress Ongoing -Pending means project has not begun -In Progress means project currently being worked on by staff Responsible Estimated 7 Develop a Bike Master Plan Status Completion Department(s) Date Issue an RFP to complete a Bike Master Plan Planning and Public Works COMPLETED Complete Bike Master Plan Planning and Public Works In Progress Feb-18 8 Evaluate Future Uses for the Equestrian Center Responsible Status Completion Department(s) Date Host community meeting on potential uses for property Community Services COMPLETED Issue RFP to redesign Equestrian Center Community Services Pending 9 Complete the Glendora Avenue Specific Plan and Street Re-Design Responsible Status Completion Department{s) Date Conduct Community Meetings with Residents and Businesses Planning and City COMPLETED Manager's Office Award of Bid for Architectural Consultant for Downtown Plan Planning COMPLETED Complete Downtown Plan Planning COMPLETED Complete the Design of Glendora Avenue Planning and Public Works COMPLETED Work With Business and Property Owners on Formation of a BID Planning and City Pending Jul-18 Manager's Office Seek funding for construction and improvements Public Works In Progress Dec-17 -Pending means project has not begun -ln Progress means project currently being worked on by staff Responsible Estimated 10 Provide Top Quality Customer Service Status Completion Department(s) Date Provide Training to City Staff on Customer Service Human Resources and City COMPLETED Manager's Office Identify New Software Applications to Allow Residents/Businesses to Conduct Business When City Hall is All Departments In Progress Dec-19 Closed Implement New Agenda Software Program City Clerk Pending Jun-18 Implement Campaign, Form 700, and Contracts Access Online City Clerk Pending Jul-18 Responsible Estimated 11 Enhance Community Participation in Local Government Status Completion Department(s) Date Host Citizen Police Academy Police COMPLETED Conduct Quarterly Town Hall Meetings in Community City Manager's Office COMPLETED Open a new Police Contact Station at the Plaza West Covina Police COMPLETED Conduct Community Budget Survey City Manager's Office and Finance COMPLETED Conduct a local Business Survey City Manager's Office COMPLETED Host additional Business Development Meetings with SCORE City Manager's Office COMPLETED -Pending means project has not begun -In Progress means project currently being worked on by staff Explore a Partnership with Local School Districts on After School Responsible Estimated 12 Status Completion Programs Department(s) Date Promote Development of Afterschool Programs with School City Manager's Office and COMPLETED District Community Services Promote Shop West Covina Program on City website, social City Manager's Office COMPLETED media, etc. Responsible Estimated 13 Complete the Soccer Complex at Orangewood Park Status Completion Department(s) Date Under Construction. Grand Opening in April/May 2017. Public Works and Community Services COMPLETED Work with Plaza West Covina and Foothill Transit on a Transit Responsible Estimated 14 Status Completion Center Department(s) Date Complete Discussions with Starwood (Plaza West Covina) on City Manager's Office In Progress Jan-17 Possible Transit Center Locations Responsible Estimated 15 Develop a Conceptual Plan for a New Aquatics Center Status Completion Department(s) Date -Pending means project has not begun -In Progress means project currently being worked on by staff Discuss partnership with West Covina Unified School District City Manager's Office and COMPLETED Community Services -Pending means project has not begun -In Progress means project currently being worked on by staff 1 2 City Council Goals and Objectives (Adoption -January 8, 2018) Responsible Build Financial Health and Economic Stability for the City Department(s) Attachment No. 2 Estimated Status Completion Date Prepare a Five-Year Vehicle Replacement Plan Finance and Public Works Complete Financial Polices Recommended in State Audit Finance Implement a Pension Section 115 Trust Finance Conduct an Actuarial Analysis of City's OPEB Liability Finance Reform Employee MOUs and Implement TIN Human Resources Develop City Branding Campaign City Manager's Office Sell BKK Properties to Pay'off Golf Course Bonds City Manager's Office Address DOF's Rejection of Sales Tax Reimbursement City Manager's Office Agreement Identify Resources and Opportunities to Provide Better Public Responsible Estimated Status Completion Safety {Police and Fire) Services to the Community Department(s) Date Hire Additional Police Officers Police Identify New Partnerships/Funding for Additional Officers Police Identify New Roles for Police Volunteers (Code Enforcement) Police Promote Taking Back Our Community (Effects of AB 109, etc.) Police Develop New Staffing Model for Fire Department Fire Restructure Fire Prevention Bureau Fire Analyze Ambulance Transport Service Fire and Finance Upgrade Police Department and City Hall with Key Card Security Police and Finance System Promote West Covina Service Group Police Rewrite CAD/RMS Software Police Responsible Estimated 3 Complete Enhanced Infrastructure Finance District (EIFD} Status Completion Department(s) Date Develop EIFD Plan for each District City Manager's Office Obtain County Support of EIFD City Manager's Office Responsible Estimated 4 Optimize Developable Land for the Brownfields (BKK) Land Status Completion Department(s) Date Sell Water Tank Properties City Manager's Office Sell AAA Pad City Manager's Office Promote Development of Grand Hotel and Resort with Golf City Manager's Office Course or Alternate Development Develop Park Space on Landfill with County of Los Angel~s City Manager's Office and Community Services Responsible Estimated 5 Update the City's Municipal Code Status Completion Department(s) Date I Comprehensive Zoning Code Update Planning Seek Opportunities to Add Park and Recreational Space in the Responsible Estimated 6 Status Completion Community Department(s) Date Sell Sunset Field City Manager's Office and Community Services Seek Funding Opportunities for Greenway Network City Manager's Office and Community Services Utilize Funds to Purchase New Park Land and Provide New City Manager's Office and Amenities Community Services Responsible Estimated 7 Develop an Active Transportaion Plan (ATP} Status Completion Department(s) Date Complete ATP Planning and Public Works 8 Evaluate Future Uses for the Equestrian Center Responsible Status Completion Department(s) Date Host community meeting on potential uses for property Community Services Issue RFP to redesign Equestrian Center Community Services 9 Complete the Glendora Avenue Specific Plan and Street Re-Design Responsible Status Completion Department(s) Date Complete the Design of Glendora Avenue Planning and Public Works Work With Business and Property Owners on Formation of a Planning and City BID Manager's Office Seek funding for construction and improvements Public Works Responsible Estimated 10 Update City's IT Infrastructure Status Completion Department(s) Date Identify New Software Applications to Allow Residents/Businesses to Conduct Business When City Hall is All Departments Closed Implement New Agenda Software Program City Clerk Implement Campaign, Form 700, and Contracts Access Online City Clerk Work with Plaza West Covina and Foothill Transit on a Transit Responsible Estimated 11 Status Completion Center Department(s) Date Complete Discussions with Starwood (Plaza West Covina) on City Manager's Office Possible Transit Center Locations 12 Complete Improvements to Lower Plateau of Shadow Oak Park Responsible Status Completion Department(s) Date Complete the Design of SOP Public Works Seek funding for the project (Prop. P Funds) City Manager's Office Dedicate Improvements Community Services 13 Identify Resources and Programs for Homeless Solutions Responsible Status Completion Department(s) Date Update City's Website Promoting Homeless Solutions Community Services Provide Business Community with Information to Address Homeless on their Property Police Apply for Homeless Planning Grant from County Community Services Identify Funding for Part-Time or Full-Time Staffing (Caseworker Community Services and/or Coordinator) 14 Complete Districting Process Responsible Status Completion Department(s) Date Conduct Public Hearings City Manager's Office Approve Final Map City Manager's Office Implement District Changes for 2018 Election City Manager's Office 15 Address NPDES Issue in Community Responsible Status Completion Department(s) Date Install Full Capture Trash Devices in Catch Basins at Various Public Works Locations Submit Annual Report to Regional Board Public Works Review NPDES MS4 Permit Public Works 16 Sustainability Responsible Status Completion Department(s) Date Promote Use of Solar for Public and Private Developments Public Works/Economic Development Increase Electric Vehicle Charging Stations throught the City Public Works Purchase Electric and/or Alternative Fuel Vehicles for City Fleet Public Works Encourage Use of Drought Tolerant Landscaping throughout City and in Residential Projects Public Works/Planning/ Economic Development