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87-179RESOLUTION NO. 87R- t79 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM PROVIDING FOR THE BORROWING OF FUNDS FOR FISCAL YEAR 1987/1988 AND THE ISSUANCE AND SALE OF 1987 TAX AND REVENUE ANTICIPATION NOTES THEREFOR AND APPOINTING BOND COUNSEL WHEREAS, pursuant to Sections 53850 et seq. of the Government Code of the State of California, this City Council (the "Council") has found and determined that moneys are needed for the requirements of the City of Anaheim (the "City"), a municipal corporation and charter city duly organized and existing under the laws of the State of California, to satisfy obligations payable from the General Fund of the City (the "General Fund"), and that it is necessary that said sum be borrowed for such purpose at this time by the issuance of temporary notes therefor in anticipation of the receipt of taxes, revenue and other moneys to be received by the City for the General Fund during or allocable to the fiscal year of the City beginning July 1, 1987 and ending June 30, 1988 ("Fiscal Year 1987/1988"); NOW, THEREFORE, the City Council of the City of Anaheim hereby finds, determines, declares and resolves as follows: Section 1. Definitions. All capitalized terms used, but not otherwise defined herein, shall have the following meanings: (;;ode. The term "Code" means the Internal Revenue Code of 1986, as amended. Debt Service. The term "Debt Service" means the scheduled amount of interest and principal payable on the Notes during the period of computation. Earnings Account. The term "Earnings Account" means the account by that name created by, and held by the City pursuant to, Section 13 hereof. Excess Investment Earnings. The term "Excess Investment Earnings" means an amount equal to the sum of: (i) the excess of (A) the aggregate amount earned from the date of delivery of the Notes on all Nonpurpose Obligations in which Gross Proceeds of the Notes are invested (other than amounts attributable to an excess described in this paragraph (i)), over (B) the amount that would have been earned if the Yield on such Nonpurpose Obligations (other than amounts attributable to an excess described in this paragraph (i)) had been equal to the Yield on the Notes, plus (ii) any income attributable to the excess described in paragraph (i). Gr ss Pro eeds. The term "Gross Proceeds" means the sum of the following amounts: (i) original proceeds, namely, net amounts (after payment of all expenses of issuing the Notes) received by or for the City as a result of the sale of the Notes, excluding original proceeds which become transferred proceeds (determined in accordance with applicable Regulations) of obligations issued to refund in whole or in part the Notes; (ii) investment proceeds, namely, amounts received at any time by or for the City, such as interest and dividends, resulting from the investment of any original proceeds (as referenced in clause (i) above) or investment proceeds (as referenced in this clause (ii)) in Nonpurpose Obligations, increased by any profits and decreased (if necessary, below zero) by any losses on such investments; (iii) sinking fund proceeds, namely, amounts, other than original proceeds, investment proceeds, which are held in the Repayment Fund and any other fund to the extent that the City reasonably expects to use such other fund to pay Debt Service on the Notes; (iv) Investment Property pledged as security for payment of Debt Service on the Notes by an ultimate obligor or a related person or by the City; (vi) amounts, other than as specified in this definition, used to pay Debt Service on the Notes; and (vii) amounts received as a result of investing amounts described in this definition. Investment Property. The term "investment property" means any security (as said term is defined in section 165(g)(2)(A) or (B) of the Code), obligation, annuity or investment-type property, excluding, however, obligations the interest on which is exempt from income tax under section 103 of the Code. N n ur o e Obli a ion. The term "Nonpurpose Obligation" means any Investment Property which is acquired with the Gross Proceeds of the Notes and is not acquired in order to carry out the governmental purpose of the Notes. Note Year. The term "Note Year" means the twelve month period beginning on July 1, 1987 and ending on June 30, 1988. Purchase Price. The term "Purchase Price," for the purpose of computation of the Yield of the Notes, has the same meaning as the term "issue price" in sections 1273(b) and 1274 of the Code, and, in general, means the initial offering price to the public (not including bond houses and brokers, or similar persons or organizations acting in the -2- capacity of underwriters or wholesalers) at which price a substantial amount of the Notes are sold or, if the Notes are privately placed, the price paid by the first buyer of the Notes or the acquisition cost of the first buyer. The term "Purchase Price," for the purpose of computation of the Yield of Nonpurpose Obligations, means the fair market value of the Nonpurpose Obligations on the date of use of Gross Proceeds of the Notes for acquisition thereot, or if later, on the date that Investment Property constituting a Nonpurpose Obligation becomes a Nonpurpose Obligation of the Notes. Reb~. The term "Rebate Account Account" means the account by that name created by, and held by the City pursuant to, Section 13 hereot. Reclulations. The term "Regulations" means temporary and permanent regulations promulgated under section 148 of the Code. ~. The term "Safe Harbor Rules" means the rules set forth in Section 148(f)(4)(B)(iii) of the Code. Yield. The term "Yield" means that yield which, when used in computing the present worth of all payments of principal and interest (or other payments in the case of Nonpurpose Obligations which require payments in a form not characterized as principal and interest) on a Nonpurpose Obligation or on the Notes produces an amount equal to the Purchase Price of such Nonpurpose Obligation or the Notes, all computed as prescribed in applicable Regulations. ctS. Limitation on Maximum Amount. The principal amount of notes issued pursuant hereto, when added to the interest payable thereon, shall not exceed eighty-five percent (85%) of the estimated amount of the uncollected taxes, revenue and other moneys of the City for the General Fund attributable to Fiscal Year 1987-1988, and available for the payment of said notes and the interest thereon (as hereinafter provided). Section $. Issuance and Terms of Notes Solely for the purpose of anticipating taxes, revenue and other moneys to be received by the City for the General Fund during or allocable to Fiscal Year 1987/1988, and not pursuant to any common plan of financing, the City hereby determines to and shall borrow the principal amount of thirteen million dollars ($13,000,000) by the issuance of temporary notes under Sections 53850 et seq. of the Government Code of the State of California, designated "City of Anaheim (Orange County, California) 1987 Tax and Revenue Anticipation Notes" (the "Notes"). The Notes shall be numbered from 1 consecutively upward in order of issuance, shall be in the denomination of $25,000 each or any integral multiple thereot, shall be dated July 1, 1987, shall mature (without option of prior redemption) on June 30, 1988, and shall bear interest, payable at maturity and computed on a 30-day month/360-day year basis, at the rate determined in accordance with the bid of the successful bidder or bidders for the Notes approved by the resolution of the Council. Both the principal of and interest on the Notes shall be payable, only upon surrender thereof, in law/ul money of the United States of America, at the office of the City Treasurer, 200 South Anaheim Boulevard, Anaheim, California. Section 4. Form of Notes. The Notes shall be issued in bearer form, without coupons, and shall be substantially in the form and substance set forth in Exhibit A attached hereto and by reference incorporated herein, the blanks in said form to be filled in with appropriate words and figures. -3- Section 5. ~. The moneys so borrowed shall be deposited in the General Fund and used and expended by the City for any purpose for which it is authorized to expend funds from the General Fund. Section 6. Security. The principal amount of the Notes, together with the interest thereon, shall be payable from taxes, revenue and other moneys which are received by the City for the General Fund for Fiscal Year 1987/1988. As security for the payment of the principal of and interest on the Notes the City hereby pledges the first "unrestricted moneys" (as hereinafter defined) to be received by the City in the amount of $4,500,000 in the months of December, 1987, and March, 1988, and the first "unrestricted moneys" to be received by the City in the amount of $4,000,000 in the month of June, 1988, plus an amount sufficient to pay interest on the Notes at their maturity (such pledged amounts being hereinafter called the "Pledged Revenues"). The principal of the Notes and the interest thereon shall constitute a first lien and charge thereon and shall be payable from the Pledged Revenues. To the extent not so paid from the Pledged Revenues, the Notes shall be paid from any other moneys of the City lawfully available therefor. In the event that there are insufficient "unrestricted moneys" received by the City to permit the deposit into the Repayment Account (as hereinafter defined) of the full amount of the Pledged Revenues to be deposited in any month by the last business day of such month, then the amount of any deficiency shall be satisfied and made up from any other moneys of the City lawfully available for the repayment of the Notes and interest thereon. The term "unrestricted moneys" shall mean taxes, income, revenue, cash receipts, and other moneys intended as receipts for the General Fund for Fiscal Year 1987/1988 and which are generally available for the payment of current expenses and other obligations of the City. Section 7. Payina Agent. The City Treasurer is hereby appointed to act as the Paying Agent and depository of the City for the purpose of receiving the payments of principal and interest made by the City on the Notes at maturity, to hold, allocate, use and apply said payments and to perform such other duties and powers of the Paying Agent as are prescribed in this Resolution. Section IL Re a m n Ac unt. There is hereby created, within the General Fund, a special account to be designated the "1987 Tax and Revenue Anticipation Note Repayment Account" (the "Repayment Account") and applied as directed in this Resolution. Any money placed in the Repayment Account shall be for the benefit of the holders of the Notes and, until the Notes and all interest thereon are paid or until provision has been made for the payment of the Notes at maturity with interest to maturity, the moneys in the Repayment Account shall be applied solely for the purposes for which the Repayment Account is created; provided, however, that, subject to the provisions of Section 13, any interest earned on amounts deposited in the Repayment Account shall periodically be transferred to the General Fund. During the months of December, 1987, March, 1988, and June, 1988, the City shall deposit all Pledged Revenues in the Repayment Account. On June 30, 1988, the City shall transfer to the Paying Agent the moneys in the Repayment Account necessary to pay the principal and interest on the Notes at maturity and to the extent said moneys are insufficient therefor an amount of moneys from the General Fund which will enable payment of the full principal and interest on the Notes at maturity. Any moneys remaining in the Repayment Account after the Notes and the interest thereon have been paid, or -4- provision for such payment has been made, shall be transferred to the City for deposit in the General Fund. Section 9. Deposit and Investment Qf Repayment Account. All moneys held by the City in the Repayment Account, if not invested, shall be held in time or demand deposits as public funds and shall be secured at all times by bonds or other obligations which are authorized by law as security for public deposits, of a market value at least equal to the amount required by law. Moneys in the Repayment Account shall, to the greatest extent possible, be invested by the City Treasurer directly, or through an investment agreement, in investments as permitted by the laws of the State of California as now in effect and as hereafter amended, and the proceeds of any such investments shall be deposited in the Repayment Account. Section 10. Execution of Notes. The Mayor of the City is hereby authorized to execute the Notes by manual or facsimile signature, and the City Clerk of the City is hereby authorized to countersign the same by manual or facsimile signature (provided that at least one of such signatures shall be manual) and to affix the seal of the City thereto by facsimile impression thereof, and said officers are hereby authorized to cause the blank spaces thereof to be filled in as may be appropriate. Section 11. Covenants and Warranties It is hereby covenanted and warranted by the City that all representations and recitals contained in this Resolution are true and correct, and that the City and its appropriate officials have duly taken all proceedings necessary to be taken by them, and will take any additional proceedings necessary to be taken by them, for the prompt collection and enforcement of the taxes, revenue, cash receipts and other moneys pledged hereunder in accordance with law and for carrying out the provisions of this Resolution. Section 12. Arbitrage Covenant. The City shall not take, or permit or suffer to be taken by the Paying Agent or otherwise, any action with respect to the proceeds of the Notes which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of delivery of the Notes, would have caused the Notes to be "arbitrage bonds" within the meaning of section 148(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the the regulations promulgated thereunder. Section 13. Rebate of Excess Investment Earninas to United States; InaDplicabilib¢¢ of Rebate Under Cedain Circumstances (a) Cr ation f Acc unts. There are hereby created, to be held by the City as separate accounts distinct from the Repayment Account held by the City under this Resolution, the Earnings Account and the Rebate Account. All interest earnings and profits on amounts in all funds and accounts established under this Resolution, other than interest earnings on the Repayment Fund if such earnings in the Note Year are less than $100,000, shall, upon receipt by the City, be deposited in the Earnings Account. In addition, all interest earning.s and profits on Gross Proceeds in funds held by the City shall, upon receipt, be deposited in the Earnings Account. If the City has not complied with the Safe Harbor Rules, the City shall, on June 30, 1988, transfer from the Earnings -5- Account to the Rebate Account for purposes of ultimate rebate to the United States an amount equal to Excess Investment Earnings, all as more particularly described in this Section 13. Following the transfer referenced in the preceding sentence, the City shall transfer all amounts remaining in the Earnings Account to the Repayment Fund to be used for the payment of Debt Service on the Notes at maturity and, for such purpose, Debt Service due from the City on such date shall be credited by an amount equal to the amount so transferred. (b) Duties of the City in General. The City shall calculate Excess Investment Earnings in accordance with subsection (c) and shall assure payment of an amount equal to Excess Investment Earnings to the United States in accordance with subsections (d) and (e). (c) Calculation of Excess Investment Earnings. Prior to the last day of the Note Year, the City shall calculate the Excess Investment Earnings referenced in paragraph (i) of definition thereof. Thereafter, prior to the last day of each Note Year and on the date of the retiremeht of the Notes, the City shall calculate Excess Investment Earnings. Said calculations shall be made or caused to be made by the City in accordance with the following: (1) Except as provided in (2), in determining the amount described in paragraph (i)(A) of subsection (b), the aggregate amount earned on Nonpurpose Obligations shall include (i) all income realized under federal income tax accounting principles (whether or not the person earning such income is subject to federal income tax) with respect to such Nonpurpose Obligations and with respect to the reinvestment of investment receipts from such Nonpurpose Obligations (without regard to the transaction costs incurred in acquiring, carrying, selling or redeeming such Nonpurpose Obligations), including, but not limited to, gain or loss realized on the disposition of such Nonpurpose Obligations (without regard to when such gains are taken into account under Section 453 of the Code relating to taxable year of inclusion of gross income), and income under Section 1272 of the Code (relating to original issue discount) and (ii) any unrealized gain or loss as of the date of retirement of the Notes in the event that any Nonpurpose Obligation is retained after such date. (2) In determining the amount described in paragraph (i) of the definition of Excess Investment Earnings, Investment Property shall be treated as acquired for its fair market value at the time it becomes a Nonpurpose Obligation, so that gain or loss on the disposition of such Investment Property shall be computed with reference to such fair market value as its adjusted basis. (3) In determining the amount described in paragraph (i)(B) of the definition of Excess Investment Earnings, the Yield on the Notes shall be determined based on the actual Yield of the Notes during the period between the date of issuance of the Notes and the date the computation is made (with adjustments for discount or premium). -6- (4) In determining the amount described in paragraph (ii)of the definition of Excess Investment Earnings, all income attributable to the excess described in paragraph (i) of said definition must be taken into account, whether or not that income exceeds the Yield on the Notes, and no amount may be treated as "negative arbitrage". (5) In determining the amount of Excess Investment Earnings, there shall be excluded any amount earned on any fund or account which is used primarily to achieve a proper matching of revenues and Debt Service within each Note Year and which is depleted at least once a year except for a reasonable carryover amount not in excess of the greater of one year's earnings on such fund or account or one-twelfth of annual Debt Service as well as amounts earned on said earnings if the gross earnings on all such funds and accounts for the Note Year is less than $100,000. (d) Payment to United States. Not later than sixty (60) days after the retirement of the Notes, the City shall pay from the Rebate Account to the United States 100 percent of the Excess Investment Earnings. In the event that there are any amounts remaining in the Rebate Account following the payment required by the preceding sentence, said amounts may be used for any lawful purpose of the City. The City shall remit payments to the United States at the address prescribed by the Regulations as the same may be in time to time in eftect with such reports and statements as may be prescribed by such Regulations. In the event that, for any reason, amounts in the Rebate Account are insufficient to make the payments to the United States which are required by this subsection (d), the City shall assure that such payments are made to the United States, on a timely basis, from any funds lawfully available therefor. (e) Further Obli(~ation of City. The City shall assure that Excess Investment Earnings are not paid or disbursed except as required in this Section 13. To that end, the City shall assure that investment transactions are on an arm's length basis and that Nonpurpose Obligations are acquired at their fair market value. In the event that Nonpurpose Obligations consist of certificates of deposit or investment contracts, investment in such Nonpurpose Obligations shall be made in accordance with the procedures described in applicable Regulations as from time to time in effect. (f) Maintenance of Records. The City shall keep, and retain for a period of six (6) years following the retirement of the Notes, records of the determinations made pursuant to this Section 13. (g) Independent Consultants. In order to provide for the administration of this Section 13, the City may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the City may deem appropriate. (h) Inapolicabili_ty of Rebate Under Certain Circumstances. Anything herein to the contrary notwithstanding, the City shall not be obligated to rebate Excess Investment Earnings to the United States if the City shall comply with the Safe Harbor Rules, and the City may, upon compliance with the Safe Harbor Rules, transfer all amounts then on hand in the Earnings Account to the General Fund and the Earnings Account and Rebate Account may thereupon be closed. -7- Section 14. Sale of Notes The Notes are hereby ordered to be sold to the successful bidder or bidders therefor approved by the Council by resolution. Section 15. Preparation of Notes: Official Action. Jones Hall Hill & White, A Professional Law Corporation, as Bond Counsel, is d~rected to cause suitable Notes' to be prepared showing on their face that the same bear interest at the rate specified in the offer submitted by the successful bidder or bidders, and to cause the blank Spaces therein to be filled in to comply with the provisions of this Resolution, and to procure their execution by the proper officers, and to cause the Notes to be delivered when so executed to the purchaser or purchasers thereof. The Mayor, Director of Finance, Assistant Director of Finance, City Treasurer and City Clerk, or any of them, are further authorized and directed to make, execute and deliver such certificates, agreements and other closing documents as are necessary to consummate the transactions contemplated by this Resolution. PASSED AND ADOPTED by the City Council of the City of Anaheim, California, this 12th day of May. 1987. IS E A L] Attest: City Clerk Mayor -8- CLEP. K STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. CITY OF ANAHEIM ) I, LEONORA N. SOHL, City Clerk of the City of Anaheim, do hereby certify that the foregoing Resolution No. 87R-t79 was introduced and adopted at a regular meeting provided by law, of the City Council of the City of Anaheim held on the 12th day of May, 1987, by the following vote of the members thereof: AYES: COUNCIL MEMBERS: Pickler, Hunter, Kaywood and Bay NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: None VACANCY: COUNCIL MEMBERS: One AND I FURTHER certify that the Mayor of the City of Anaheim signed said Resolution No. 87R-179 on the 12th day of May, 1987. IN WITNESS W]{EREOF, I have hereunto set my hand and affixed the seal of the City of Anaheim this 12th day of May, 1987. CITY CLERK OF T~HE' CITY OF ANAHEIM (SEAL) I, LEONORA N. SOHL, City Clerk of the City of Anaheim, do hereby certify that the foregoing is the original of Resolution No. 87R-179 duly passed and adopted by the Anaheim City Council on May 12, 1987. CITY CLERK OF THE CITY OF ANAHEIM [Form of Note] CITY OF ANAHEIM (ORANGE COUNTY, CALIFORNIA) 1987 TAX AND REVENUE ANTICIPATION NOTE NO. Date: July 1, 1987 FOR VALUE RECEIVED, the City of Anaheim (the "City"), State of California, acknowledges itself indebted to and promises to pay to the bearer hereof, at the office of the City Treasurer, 200 South Anaheim Boulevard, Anaheim, California, the principal sum of DOLLARS ($_ ) lawful money of the United States of America, on June 30, 1988, together with interest thereon at the rate of percent ( %) per annum in like lawful money from the date hereof until payment in full of said principal sum. Both the principal of and interest on this Note shall be payable only upon surrender of this Note as the same shall fall due; provided, however, no interest shall be payable for any period after maturity during which the holder hereof fails properly to present this Note for payment. It is hereby certified, recited and declared that this Note is one of an authorized issue of Notes in the aggregate principal amount of thirteen million dollars ($13,000,000), all of like tenor, issued pursuant to the provisions of Resolution No. 87R~ of the City Council of the City duly passed and adopted on May 12, 1987, and pursuant to Article 7.6 (commencing with Section 53850) of Chapter 4, Part 1, Division 2, Title 5, of the California Government Code, and that all things, conditions and acts required to exist, happened and been performed in regular and due time, form and manner as required by law, and that this Note, together with all other indebtedness and obligations of the City, does not exceed any limit prescribed by the Constitution or statutes of the State of California. The principal amount of the Notes, together with the interest thereon, shall be payable from taxes, revenue and other moneys which are received by the City for the General Fund for Fiscal Year 1987/1988. As security for the payment of the principal of and interest on the Notes the City has pledged the first "unrestricted moneys" (as hereinafter defined) to be received by the City in the amount of $4,500,000 in the months of December, 1987, and March, 1988, and the first "unrestricted moneys" to be received by the City in the amount of $4,000,000 in June, 1988, plus an amount sufficient to pay interest on the Notes at their maturity (such pledged amounts being hereinafter called the "Pledged Revenues"). The principal of the Notes and the interest thereon shall constitute a first lien and charge thereon and shall be payable from the Pledged Revenues. To the extent not so paid from the Pledged Revenues, the Notes shall be paid from any other moneys of the City lawfully available therefor. In the event that there are insufficient Exhibit A Page 1 "unrestricted moneys" received by the City to permit the deposit into the Repayment Account (as hereinafter defined) of the full amount of the Pledged Revenues to be deposited in any month by the last business day of such month, then the amount of any deficiency shall be satisfied and made up from any other moneys of the City lawfully available for the repayment of the Notes and interest thereon. The term "unrestricted moneys" shall mean taxes, income, revenue, cash receipts, and other moneys intended as receipts for the General Fund for Fiscal Year 1987/1988 and which are generally available for the payment of current expenses and other obligations of the City. IN WITNESS WHEREOF, the City of Anaheim has caused this Note to be executed by the Mayor of the City and countersigned by the City Clerk of the City, and caused its official seal to be affixed hereto all as of this 1st day of July, 1987. CITY OF ANAHEIM [S E A L] Countersigned: By_ Mayor City Clerk Exhibit A Page 2