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RES-2008-030RESOLUTION NO. 2008-030 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM APPROVING AMENDMENTS TO THE STATEMENT OF INVESTMENT POLICY WHEREAS, the City of Anaheim (the "City has entered into that certain Lease Agreement (as amended and supplemented, the "Refunding Lease dated as of January 1, 1993, with the Anaheim Public Improvement Corporation (the "Corporation pursuant to which the City has leased certain real property from the Corporation and has agreed to make certain rental payments (the "Refunding Lease Payments and WHEREAS, pursuant to the Assignment Agreement, dated as of January 1, 1993 between the Corporation and U.S. Bank, N.A., as successor trustee (the "Refunding Lease Trustee the Corporation has assigned certain of its rights under the Refunding Lease, including its rights to the Refunding Lease Payments, to the Refunding Lease Trustee; and WHEREAS, pursuant to the Trust Agreement (as amended and supplemented the "Refunding Trust Agreement dated as of January 1, 1993, among the Refunding Lease Trustee, the Corporation and the City, the Refunding Lease Trustee has executed and delivered Certificates of Participation (1993 Refunding Projects) evidencing direct, undivided fractional interests of the owners thereof in the Refunding Lease Payments (the "Refunding Certificates and WHEREAS, the Refunding Certificates are outstanding in the principal amount of $56,700,000 as variable rate securities insured by AMBAC Indemnity Corporation (now AMBAC Assurance Corporation "AMBAC and secured as to purchase price upon the optional or mandatory tender of the Refunding Certificates for purchase by a Standby Certificate Purchase Agreement between the City and Bayerische Landesbank Girozentrale, acting through its New York Branch; and WHEREAS, the City has entered into that certain Lease Agreement (as amended and supplemented, the "Police Facilities Lease dated as of June 1, 1993, with the Corporation pursuant to which the City has leased certain real property from the Corporation and has agreed to make certain rental payments (the "Police Facilities Lease Payments and WHEREAS, pursuant to the Assignment Agreement, dated as of June 1, 1993 between the Corporation and U.S. Bank, N.A., as successor trustee (the "Police Facilities Lease Trustee the Corporation has assigned certain of its rights under the Police Facilities Lease, including its rights to the Police Facilities Lease Payments, to the Police Facilities Lease Trustee; and WHEREAS, pursuant to the Trust Agreement (as amended and supplemented the "Police Facilities Trust Agreement dated as of June 1, 1993, among the Police Facilities Lease Trustee, the Corporation and the City, the Police Facilities Lease Trustee has executed and delivered Certificates of Participation (1993 Police Facilities Refinancing Project) evidencing direct, undivided fractional interests of the owners thereof in the Police Facilities Lease Payments (the "Police Facilities Certificates and OHS West2604I2354.2 41993 -24 EJC/EJC WHEREAS, the Police Facilities Certificates are outstanding in the principal amount of $2,250,000 as variable rate securities insured by AMBAC Indemnity Corporation (now AMBAC Assurance Corporation) and secured as to purchase price upon the optional or mandatory tender of the Police Facilities Certificates for purchase by a Standby Certificate Purchase Agreement between the City and Bayerische Landesbank Girozentrale, acting through its New York Branch; and WHEREAS, due primarily to adverse rating actions with respect to municipal bond insurers, including AMBAC, there has been major disruptions in the market for variable rate municipal securities insured by such municipal bond insurers, including securities such as the Refunding Certificates and the Police Facilities Certificates; and WHEREAS, these market disruptions have caused federal agencies such as the Securities and Exchange Commission and the Internal Revenue Service to publish positions permitting issuers of certain municipal securities to purchase their variable rate securities, hold such securities as necessary to permit reintroduction of such securities into the public capital markets when adverse market circumstances relating to municipal bond insurers have subsided; and WHEREAS, in reaction to these market disruptions, SB 344 has recently been enacted and approved as emergency legislation to permit California issuers of municipal securities to purchase and hold their securities and then sell such securities in secondary market transactions; and WHEREAS, the rating of AMBAC has been reduced by one rating agency and is on a negative credit watch by two rating agencies; and WHEREAS, adverse rating action with respect to AMBAC may have an adverse effect on the City's financial position by, among other things, adversely affecting the payments to be received by the City under the interest rate swap agreements that the City has entered into with AIG Financial Products Inc. in connection with the Refunding Certificates and the Police Facilities Certificates; and WHEREAS, the City has determined that it is in the public interest and furthers the public purpose and that there are significant public benefits to be derived from positioning the City to take advantage of the opportunity to protect its financial position by purchasing all or a portion of the Refunding Certificates and the Police Facilities Certificates as authorized by the positions announced by federal agencies and SB 344 described above; and WHEREAS, the City has approved a Statement of Investment Policy with respect to the investment of City moneys which Statement of Investment Policy became effective on January 1, 2008 (the "Investment Policy and WHEREAS, the City desires to insure that the Investment Policy provides for use of City funds to purchase Refunding Certificates and Police Facilities Certificates under the circumstances provided in this resolution; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ANAHEIM DOES HEREBY RESOLVE: Section 1. The foregoing Recitals are true and correct and are hereby adopted by the City Council as findings and determinations. Section 2. The City Council hereby approves the addition to the Investment Policy of a new Section 19.0 to read as follows: "19.0 Investment in Certain City Securities Notwithstanding anything to the contrary contained in this Policy, the Treasurer may invest City funds by purchasing Refunding Certificates and Police Facilities Certificates, holding such securities as investments and offering such securities for resale subject to any federal and California laws and regulations applicable to such purchase, holding and resale, including regulations with respect to the exemption of interest on the Refunding Certificates and Police Facilities Certificates from gross income for federal income tax purposes. No investment of City funds in Refunding Certificates or Police Facilities Certificates may be made pursuant to this Section unless the Treasurer, the Mayor or the City Manager certifies in writing that such investment is in the best interests of the City by protecting the City's financial position under or in connection with any agreement entered into by the City in connection with the Refunding Certificates or the Police Facilities Certificates. Section 3. The City Council hereby approves the addition to the Investment Policy of new definitions to the Glossary of the Investment Policy to read as follows: Police Facilities Certificates: Certificates of Participation (1993 Police Facilities Refinancing Project) evidencing direct, undivided fractional interests of the owners thereof in lease payments to be made by the City of Anaheim, California as the rental for certain property pursuant to a Lease Agreement with the Anaheim Public Improvement Corporation Refunding Certificates: Certificates of Participation (1993 Refunding Projects) evidencing direct, undivided fractional interests of the owners thereof in lease payments to be made by the City of Anaheim, California as the rental for certain property pursuant to a Lease Agreement with the Anaheim Public Improvement Corporation. Section 4. The Mayor, the City Manager and the Assistant City Manager (each an "Authorized Officer severally, is hereby authorized and empowered to execute and deliver in the name of and on behalf of the City any amendment to any document entered into by the City in connection with the Refunding Certificates and /or the Police Facilities Certificates which are: (i) necessary or advisable in connection with the purchase by the City of Refunding Certificates and /or the Police Facilities Certificates; and (ii) approved as to form by the City Attorney. The City Clerk is hereby authorized and directed to attest to the Authorized Officer's signature to any such amendments. Section 5. The Authorized Officers and each other officer of the City are hereby authorized and directed, severally, to do any and all things and to execute and deliver any and all documents, certificates and other instruments which they may deem necessary or advisable in order to consummate the transactions contemplated in this resolution, and otherwise to carry out, give effect to, and comply with the terms and intent of this resolution and the documents herein approved and authorized to be executed. Section 6. This resolution shall take effect immediately upon its adoption. OHS West260412354.2 41993 -24 EJC /EJC 3 THE FOREGOING RESOLUTION is approved and adopted by the City Council of the City of Anaheim this 8th day of April, 2008, by the following roll call vote: AYES: Mayor Pringle, Council Members Hernandez, Sidhu, Galloway, Kring NOES: NONE ABSENT: NONE ABSTAIN: NONE ATTEST: By CI Y CLERK OF THE CITY OF ANAHEIM OHS West:260412354.2 41993 -24 EJC/EJC 4 CITY OF AN IM MAYOR OF THE CITY AN EIM