HomeMy WebLinkAboutJPFA Authorization to Issue Bonds
____________________________________________________________________________________
FOR CITY CLERK ONLY
File No.: FA-6 (New)
Council Meeting: 3/05/2018
Disposition: JPFA 2018-01
Agenda Item No: 1.a
Meeting Date: March 5, 2018
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
Department: Finance
Prepared by: Mark Moses,
Treasurer
Executive Director Approval: ____________
TOPIC: AUTHORIZATION TO ISSUE BONDS
SUBJECT: RESOLUTION OF THE SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
AUTHORIZING THE ISSUANCE OF LEASE REVENUE BONDS IN AN INITIAL
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $55,000,000 IN
CONNECTION WITH FINANCING CERTAIN PUBLIC CAPITAL IMPROVEMENTS
CONSISTING OF PUBLIC SAFETY FACILITIES, AUTHORIZING AND DIRECTING
EXECUTION OF AN INDENTURE OF TRUST, A LEASE AGREEMENT, A SITE
LEASE AND CERTAIN OTHER DOCUMENTS, AUTHORIZING THE NEGOTIATION
FOR THE SALE OF BONDS PURSUANT TO A BOND PURCHASE AGREEMENT,
APPROVING AN OFFICIAL STATEMENT, AND AUTHORIZING OTHER RELATED
ACTIONS
RECOMMENDATION: ADOPT RESOLUTION
BACKGROUND: Since the San Rafael City Council approved the Essential Public Safety Facilities
Strategic Plan on July 20, 2015, the three phase one projects (Public Safety Center, Fire Station 52 and
Fire Station 57) have been funded from a portion of the three-quarter percent Measure E Transactions
and Use Tax, of which one-third (1/4 percent of the 3/4 percent) of the proceeds have been, and
continue to be, dedicated to these and other essential facilities capital projects. Under a mutual
agreement, the County of Marin also provides a share of the funding for Fire Station 57. With the
construction of the Public Safety Center now underway, it is important to secure the remainder of the
funding for these projects through the issuance of debt.
The California Municipal Financing Authority, which replaced the former San Rafael Redevelopment
Agency as the other member of the San Rafael Joint Powers Financing Authority (SRJPFA), has
indicated that it will give the required administrative approval with respect to this transaction at closing.
The approval of the City Council is anticipated at its regular meeting of March 5, 2018.
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY REPORT / Page: 2
The content of this report was reviewed and discussed at the Special Joint Meeting of the Finance
Committee and City Council held on February 12, 2018, at which time staff was directed to bring this
item forward to the Board of the SRJPFA, as well as to conduct an accompanying public hearing item
on the agenda of the meeting of the San Rafael City Council.
ANALYSIS:
Financing Structure.
The projects will be financed through the issuance of lease revenue bonds by the Authority. The bonds
will be secured through a lease/leaseback structure, under which the City will lease real property and
improvements, consisting of the Public Safety Center site and improvements (when completed), to the
Authority in return for a one-time site lease payment equal to the proceeds of the bonds received on the
closing date from the bond underwriter, Raymond James & Associates, Inc.
Simultaneously, the Authority will lease the Public Safety Center site and improvements back to the
City in return for semi-annual lease payments, which the Authority will assign to the bond trustee,
MUFG Union Bank, for the payment of debt service on the bonds.
The documents presented for approval by the Board under the Resolution are as follows:
• Site Lease (Exhibit I), between the City, as lessor, and the Authority, as lessee, under which the City
will lease the Public Safety Center to the Authority in return for the upfront site lease payment.
• Lease Agreement (Exhibit II), between the Authority, as lessor, and the City, as lessee, under which
the City will lease the Public Safety Center back from the Authority in return for semi-annual lease
payments. Key provisions of the Lease Agreement include the obligation of the City to maintain
casualty insurance and rental interruption insurance on the leased property during the term of the
Lease Agreement. Rental interruption insurance is required to be maintained in an amount equal to 24
months of debt service.
• Indenture of Trust (Exhibit III), between the Authority and the bond trustee, which sets forth the
obligations of the Authority with respect to payment of the debt service on the bonds, the terms of the
bonds, the rights of the bondholders, and the duties of the bond trustee. Under the Indenture, the bond
trustee will hold the net bond proceeds and disburse them to pay the costs of issuing the bonds and the
costs of constructing the projects.
• Assignment Agreement (Exhibit IV), between the Authority and the bond trustee, under which the
Authority assigns to the trustee all of the Authority’s rights to the semi-annual lease payments to be
made by the City under the Lease Agreement, which the bond trustee will use to pay debt service on
the bonds.
• Preliminary Official Statement (Exhibit V), which is the disclosure document prepared by the financing
team and City staff for purposes of satisfying the federal securities laws for the public offering of the
bonds (those laws are described in more detail below). The Preliminary Official Statement contains a
description of the City, the City’s general fund finances, the three projects being financed, a description
of the leased property (the Public Safety Center site and future improvements), and the terms of the
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY REPORT / Page: 3
bonds (sources of security, redemption terms, etc.). The Official Statement will be used by the bond
underwriter to provide information about the bonds to prospective and actual investors.
• Bond Purchase Agreement (Exhibit VI), among the City, the Authority and the bond underwriter,
Raymond James, which obligates the bond underwriter to purchase all of the bonds on the closing
date. This agreement also contains certain representations of the City and the Authority, and specifies
the conditions for closing.
Disclosure information pursuant to Government Code Section 5852.1 is provided in Appendix A of the
Resolution. This information includes good faith estimates of the true interest cost of the bonds, 3.5%,
sum of all fees paid to third parties, $400,000, net proceeds to be received, $53,600,000, and total
payment amount through maturity $73,200,000.
The City is approving its respective documents as a companion item.
Securities Law Responsibilities. The Preliminary Official Statement has been reviewed and approved
for transmittal to the Board by the City’s financing team. The distribution of the Preliminary Official
Statement and the final Official Statement is subject to the federal securities laws, including the
Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require the Preliminary
Official Statement to include all facts that would be material to an investor in the bonds. Material
information exists where there is a substantial likelihood that the information would have actual
significance in the deliberations of the reasonable investor when deciding whether to buy or sell the
bonds. If the Board concludes that the Preliminary Official Statement includes all facts that would be
material to an investor, it may adopt the attached Resolution which, among other things, authorizes
staff to execute a certificate to the effect that the Preliminary Official Statement has been “deemed
final.”
The Securities and Exchange Commission (SEC), the agency with regulatory authority over compliance
with the federal securities laws, has indicated that if a member of a legislative body, like the Board, has
knowledge of any facts or circumstances that an investor would want to know prior to investing in
securities such as the bonds, whether relating to the financial condition of the City and its ability to
repay the bonds, undisclosed conflicts of interest with interested parties, material disputes involving the
City, or otherwise, he or she should endeavor to discover whether such facts are adequately disclosed
in the Preliminary Official Statement. The steps that a member of the Board could take to fulfill this
obligation include becoming familiar with the preliminary Official Statement and questioning City staff
and other members of the financing team about the disclosure of such facts.
Terms
The proposed bond financing is expected to yield $48.5 million in proceeds that will be available to the
Essential Public Safety Facilities projects. The total cost of issuance, including underwriter’s discount is
estimated to be $400,000. The issuance of the proposed bonds creates an obligation of the City’s
General Fund, and will be paid back over a period of approximately 16 years. Based on current market
estimates as of February 8, 2018, debt service on the bonds from Fiscal Year 2019-34 is expected to
range between $2,325,000 and $5,505,000 annually, with interest only payable during the construction
periods for the respective projects and the debt service thereafter escalating slightly to reflect the
expectation of growth in the Measure E tax revenue over time. Debt service payments commence on
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY REPORT / Page: 4
June 1, 2018 and end on June 1, 2034.The actual interest rates on the bonds will be determined at the
time of the bond pricing. To be conservative and create flexibility, the Resolution sets a true interest
cost on the bonds as not to exceed 5.0%.
FISCAL IMPACT: The SRJPFA is the issuer of the bonds and, by assigning its rights to the semi-
annual lease payments (to be made by the City) to the bond trustee, incurs no fiscal impact from its role
in this transaction.
RECOMMENDED ACTION: Adopt Resolution authorizing execution of documents and other actions
required to issue 2018 lease revenue bonds issued by the San Rafael Joint Powers Financing
Authority.
ATTACHMENT(S):
Resolution with Appendix
Exhibits I - VI
41390-03 SM:SRF:REL 01/18/2018
02/09/2018
RESOLUTION NO. FA 2018-01
RESOLUTION OF THE SAN RAFAEL JOINT POWERS FINANCING
AUTHORITY AUTHORIZING THE ISSUANCE OF LEASE REVENUE BONDS
IN AN INITIAL AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
$55,000,000 IN CONNECTION WITH FINANCING CERTAIN PUBLIC CAPITAL
IMPROVEMENTS CONSISTING OF PUBLIC SAFETY FACILITIES,
AUTHORIZING AND DIRECTING EXECUTION OF AN INDENTURE OF
TRUST, A LEASE AGREEMENT, A SITE LEASE AND CERTAIN OTHER
DOCUMENTS, AUTHORIZING THE NEGOTIATION FOR THE SALE OF
BONDS PURSUANT TO A BOND PURCHASE AGREEMENT, APPROVING
AN OFFICIAL STATEMENT, AND AUTHORIZING OTHER RELATED
ACTIONS
WHEREAS, the City of San Rafael (the "City") and the California Municipal Finance
Authority have entered into an Amended and Restated Joint Exercise of Powers Agreement
continuing the existence of the San Rafael Joint Powers Financing Authority (the "Authority") for
the purpose, among others, of having the Authority issue its bonds to be used to finance the
acquisition, construction and improvement of certain public capital improvements; and
WHEREAS, the City has proposed to finance certain public capital improvements of the
City, consisting generally of a new public safety center and two replacement fire stations (the
“Project”), and
WHEREAS, to that end, the City has proposed to lease to the Authority certain real
property and improvements (the “Leased Property”) under a Site Lease (the “Site Lease”), in
consideration of the payment by the Authority of an upfront rental payment (the “Site Lease
Payment”) that is sufficient to provide funds for the acquisition and construction of the Project;
and
WHEREAS, in order to raise funds equal to the Site Lease Payment, the Authority
proposes to authorize the issuance of its Lease Revenue Bonds, Series 2018 (the "Bonds")
under Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the
Government Code of the State of California (the "Bond Law"); and
WHEREAS, in order to secure the payments of principal of and interest on the Bonds,
the Authority proposes to lease the Leased Property back to the City under a Lease Agreement
(the “Lease Agreement”), under which the City is obligated to pay semiannual lease payments
as rental for the Leased Property, and the Authority will assign substantially all of its rights under
the Lease Agreement to MUFG Union Bank, N.A. (the “Trustee”), as trustee for the Bonds,
under an Assignment Agreement by and between the Authority and the Trustee; and
WHEREAS, the Authority desires to prepare and make available to potential investors
an official statement relating to the Bonds containing information to be used in connection with
the sale of Bonds; and
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WHEREAS, the Bonds will be sold to Raymond James & Associates, Inc., as
underwriter of the Bonds (the “Underwriter”), under a bond purchase agreement (the “Bond
Purchase Agreement”) among the Authority, the City and the Underwriter; and
WHEREAS, the Governing Board (the "Board") of the Authority has duly considered
such transactions and wishes at this time to approve said transactions in the public interests of
the Authority, and make certain findings regarding significant public benefits to the City with
respect to these transactions; and
WHEREAS, in accordance with Government Code Section 5852.1, the Board has
obtained and disclosed the information set forth in Appendix A hereto; and
NOW, THEREFORE, BE IT RESOLVED, by the Governing Board of the San Rafael
Joint Powers Financing Authority as follows:
Section 1. Findings and Determinations. Pursuant to the Act, the Board hereby finds
and determines that the issuance of the Bonds and the transactions related thereto will result in
significant public benefits to the City within the contemplation of Section 6586 of the Bond Law.
Section 2. Issuance of Bonds. The Board hereby authorizes the issuance of the
Bonds in an original principal amount not to exceed $55,000,000. The Bonds shall be issued in
accordance with the Bond Law and the Indenture of Trust approved below.
Section 3. Approval of Related Financing Agreements. The Authority hereby
approves each of the following agreements required for the issuance and sale of the Bonds and
the financing of the Project, in substantially the respective forms on file with the Secretary
together with any changes therein or additions thereto deemed advisable by the Chair, the
Executive Director and the Treasurer and Controller, or the designee of any of them (the
“Designated Officers”) and the Authority’s general counsel. Execution of the agreements by a
Designated Officer shall be conclusive evidence of the approval of any such changes or
additions. Each Designated Officer is hereby authorized and directed for and on behalf of the
Authority to execute, and the Secretary is hereby authorized and directed to attest, the final form
of each such agreement, as follows:
• Indenture of Trust, between the Authority and the Trustee, setting forth
the terms and provisions relating to the Bonds.
• Site Lease, between the City as lessor and the Authority as lessee, under
which the City leases the Leased Property to the Authority in consideration of the
payment of the Site Lease Payment.
• Lease Agreement, between the Authority as lessor and the City as
lessee, under which the Authority leases the Leased Property back to the City and the
City agrees to pay semiannual lease payments which are sufficient to provide revenues
with which to pay principal of and interest on the Bonds when due.
• Assignment Agreement, between the Authority and the Trustee, whereby
the Authority assigns certain of its rights under the Lease Agreement to the Trustee for
the benefit of the Bond owners.
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The Board hereby authorizes the performance by the Authority of its obligations under
each such agreement.
Section 4. Bond Purchase Agreement. The Authority hereby approves the form of
the Bond Purchase Agreement on file with the Secretary, with such additions thereto and
changes therein as the Designated Officers and the Authority’s general counsel may deem
necessary, desirable or appropriate upon consultation with bond counsel, the execution of which
by the Authority shall be conclusive evidence of the approval of any such additions or changes,
provided that no such addition or change shall increase the original principal amount of Bonds
to be in excess of $55,000,000, or shall provide for a true interest cost with respect to the Bonds
in excess of 5.00% or an underwriter's discount (exclusive of any original issue discount) of
greater than 0.50%. The Designated Officers, each acting alone, are hereby authorized and
directed to execute the Bond Purchase Agreement and to take all actions necessary to fulfill the
Authority’s obligations thereunder.
Section 5. Official Statement. The Board hereby approves the form of Preliminary
Official Statement relating to the Bonds (the "Preliminary Official Statement") on file with the
Secretary, together with such changes or additions thereto as the Designated Officers and the
Authority’s general counsel may deem necessary, desirable or appropriate upon consultation
with bond and disclosure counsel, and authorizes the Designated Officers, each acting alone, to
deem the Preliminary Official Statement final within the meaning of Rule 15c2-12 of the
Securities Exchange Act of 1934 except for omissions permitted therein. Distribution of the
Preliminary Official Statement by the Underwriter is hereby approved. The Designated Officers,
each acting alone, are hereby authorized to execute the final form of the Official Statement with
such changes or additions as the Designated Officers may deem necessary, desirable or
appropriate upon consultation with bond and disclosure counsel, and the execution of the final
Official Statement by the Authority shall be conclusive evidence of the approval of any such
additions and changes. The Board hereby authorizes the distribution of the final Official
Statement.
Section 6. Official Actions. The Designated Officers, the Secretary and any and all
other officers of the Authority are hereby authorized and directed, for and in the name of and on
behalf of the Authority, to do any and all things and take any and all actions, including execution
and delivery of any and all documents, assignments, certificates, requisitions, agreements,
notices, consents, instruments of conveyance, warrants and documents, which they, or any of
them, may deem necessary, advisable, or appropriate upon consultation with bond and
disclosure counsel, in order to consummate the lawful issuance and sale of the Bonds and the
consummation of the transactions as described herein, including without limitation, such
documents, assignments, certificates and agreements as may be required by the Indenture, the
Lease Agreement, the Site Lease and any and all other documents and agreement approved
hereunder. Any action previously taken by the Designated Officers in furtherance of the
foregoing are hereby ratified and approved.
Section 7. Effective Date. This Resolution shall take effect immediately upon its
passage and adoption.
I, LINDSAY LARA, Secretary of the San Rafael Joint Powers Financing Authority,
hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a
regular meeting of the San Rafael Joint Powers Financing Authority held on the 5th day of
March, 2018, by the following vote, to wit:
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AYES: BOARD MEMBERS: Bushey, Colin, Gamblin, McCullough & Chairman Phillips
NOES: BOARD MEMBERS: None
ABSENT: BOARD MEMBERS: None
___________________________________
LINDSAY LARA, Secretary
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APPENDIX A
Government Code Section 5852.1 Disclosure
The following information consists of estimates that have been provided by the
Underwriter of the Bonds and Municipal Advisor to the Authority, which have been represented
by them to have been provided in good faith:
(A) True Interest Cost of the Bonds: 3.50%
(B) Finance Charge of the Bonds (Sum of all fees/charges paid to third parties):
$400,000
(C) Net Proceeds to be received (net of finance charges, reserves and capitalized
interest, if any): $53,600,000
(D) Total Payment Amount Through Maturity: $73,200,000
2018-0010781
RECORDING REQUESTED BY:
Stewart Title Guaranty Company - Commercial
Services
WHEN RECORDED MAIL TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Scott R. Ferguson, Esq.
ORDER NO.01180-292882
ESCROW NO.18000300026
APN:
Recorded
Official Records
County of
Marin
RICHARD N. BENSON
Assessor -Recorder
County Clerk
REC FEE
AO
11:09AM 27 -Mar -2018 Page 1 of 10
0.00
SPACE ABOVE THIS LINE FOR RECORDERS USE
TITLE(S)
SITE LEASE
Title Order No.: 01180-292882 Escrow No.: 18000300026 Parcel No.:
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX UNDER SECTION SECTION
11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING
FEES UNDER SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.
File No.: 18000300026
CA Cover Page Non Conforming Doc COM Page 1 of 1
41390-03 SM:SRF:REL FINAL
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall
A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Scott R. Ferguson, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER
TAX UNDER SECTION 11929 OF THE REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
SITE LEASE
This SITE LEASE (this “Site Lease”), dated for convenience as of March 1, 2018, is
between the CITY OF SAN RAFAEL, a charter city and municipal corporation duly organized
and existing under the Constitution and laws of the State of California, as lessor (the
“City”), and the SAN RAFAEL JOINT POWERS FINANCING AUTHORITY, a joint powers authority
duly organized and existing under the laws of the State of California, as lessee (the
“Authority”).
BACKGROUND:
1. The City of San Rafael (the “City”) wishes to finance the acquisition and
construction of certain public safety improvements consisting generally of a new public
safety center and two replacement fire stations (collectively, the “Project”).
2. To that end, the City has proposed to lease to the Authority certain real
property and improvements, initially consisting of the City’s new public safety facility, the
City’s Fire Station 52, and the City’s Fire Station 57, including land and improvements
thereon, as more particularly described in Appendix A attached hereto and by this
reference incorporated herein (the “Leased Property”), under this Site Lease, in
consideration of the payment by the Authority of an upfront rental payment (the “Site
Lease Payment”) sufficient to provide funds for the acquisition and construction of the
Project.
3. The Authority has authorized the issuance of its San Rafael Joint Powers
Financing Authority Lease Revenue Bonds, Series 2018 (Public Safety Facilities Project)
in the aggregate principal amount of $45,485,000 (the “Bonds”) under an Indenture of
Trust dated as of March 1, 2018 (the “Indenture”), between the Authority and MUFG
Union Bank, N.A., as trustee (the “Trustee”), for the purpose of providing the funds to
enable the Authority to pay the Site Lease Payment to the City in accordance with this Site
Lease.
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4. In order to provide revenues which are sufficient to enable the Authority to
pay debt service on the Bonds, the Authority has agreed to lease the Leased Property
back to the City under a Lease Agreement dated as of the date hereof (the “Lease”), a
memorandum of which has been recorded concurrently herewith, under which the City
has agreed to pay semiannual Lease Payments as the rental for the Leased Property
thereunder.
5. The lease payments made by the City under the Lease have been assigned
by the Authority to the Trustee for the security of the Bonds under an Assignment
Agreement dated as of the date hereof between the Authority as assignor and the Trustee
as assignee, which has been recorded concurrently herewith.
AGREEMENT:
In consideration of the above recitals and of the mutual covenants contained
herein, and for other valuable consideration, the parties hereto do hereby agree as follows:
SECTION 1. Lease of Property to Authority. The City hereby leases the Leased
Property to the Authority and the Authority hereby leases the Leased Property from the
City, on the terms and conditions hereinafter set forth.
SECTION 2. Term; Possession. The term of this Site Lease commences on the
date of recordation of this Site Lease and ends on the date on which the Indenture is
discharged in accordance with Section 10.03 thereof, but under any circumstances not
later than June 1, 2044. The provisions of this Section 2 are subject in all respects to any
other provisions of this Site Lease relating to the termination hereof.
SECTION 3. Rental. The Authority shall pay to the City as and for rental of the
Leased Property hereunder, the Site Lease Payment equal to $45,485,000. The Site
Lease Payment is due and payable upon the issuance of the Bonds and the execution
and delivery hereof, and will be paid from the proceeds of the Bonds. The Authority and
the City hereby find and determine that the total amount of the Site Lease Payment does
not exceed the fair market value of the leasehold interest in the Leased Property which is
conveyed hereunder by the City to the Authority. No other amount of rental is due and
payable by the Authority for the use and occupancy of the Leased Property under this Site
Lease.
As provided in the Indenture, a portion of the proceeds of the Bonds will be applied
to make the Site Lease Payment by depositing the full amount thereof with the Trustee to
be held, invested and administered in accordance with the Indenture for the purpose of
financing the acquisition and construction of the Project.
SECTION 4. Leaseback to City. The Authority shall lease the Leased Property back
to the City under the Lease.
SECTION 5. Assignments and Subleases. Unless the City is in default under the
Lease, the Authority may not assign its rights under this Site Lease or sublet all or any
portion of the Leased Property, except as provided in the Assignment Agreement and in
the Lease, without the prior written consent of the City.
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SECTION 6. Substitution or Release of Property. If the City exercises its option
under Section 3.2 of the Lease to substitute property for the Leased Property in whole or
in part, such substitution shall also operate to substitute property for the Leased Property
which is leased hereunder. If the City exercises its option under Section 3.3 of the Lease
to release a portion of the Leased Property from the Lease, such substitution shall also
operate to release such portion of the Leased Property hereunder. The description of the
Leased Property which is leased under the Lease shall conform at all times to the
description of the Leased Property which is leased hereunder.
SECTION 7. Right of Entry. The City reserves the right for any of its duly authorized
representatives to enter upon the Leased Property, or any portion thereof, at any
reasonable time to inspect the same or to make any repairs, improvements or changes
necessary for the preservation thereof.
SECTION 8. Termination. The Authority agrees, upon the termination of this Site
Lease, to quit and surrender the Leased Property in the same good order and condition
as the Leased Property was in at the time of commencement of the term hereof,
reasonable wear and tear excepted, and agrees that all buildings, improvements and
structures then existing upon the Leased Property shall remain thereon and title thereto
shall vest thereupon in the City for no additional consideration.
SECTION 9. Default. If the Authority defaults in the performance of any obligation
on its part to be performed under the terms of this Site Lease, which default continues for
30 days following notice and demand for correction thereof to the Authority, the City may
exercise any and all remedies granted by law, except that no merger of this Site Lease
and of the Lease shall be deemed to occur as a result thereof and no such remedy may
include termination hereof; provided, however, that so long as the Lease remains in effect,
the Lease Payments payable by the City under the Lease shall continue to be paid to the
Trustee.
SECTION 10. Quiet Enjoyment. The Authority at all times during the term of this
Site Lease shall peaceably and quietly have, hold and enjoy all of the Leased Property,
subject to the provisions of the Lease and subject only to Permitted Encumbrances (as
that term is defined in the Lease).
SECTION 11. Waiver of Personal Liability. All liabilities under this Site Lease on
the part of the Authority are solely corporate liabilities of the Authority as a public entity,
and the City hereby releases each and every member and officer of the Authority of and
from any personal or individual liability under this Site Lease. No member or officer of the
Authority or its governing board shall at any time or under any circumstances be
individually or personally liable under this Site Lease for anything done or omitted to be
done by the Authority hereunder.
SECTION 12. Taxes. The City covenants and agrees to pay any and all
assessments of any kind or character and also all taxes, including possessory interest
taxes, levied or assessed upon the Leased Property and any improvements thereon.
SECTION 13. Eminent Domain. If the whole or any part of the Leased Property or
any improvements thereon is taken by eminent domain proceedings, the interest of the
Authority shall be recognized and is hereby determined to be the amount of the then
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unpaid Lease Payments payable under the Lease and the balance of the award, if any,
shall be paid to the City.
SECTION 14. Partial Invalidity. If any one or more of the terms, provisions,
covenants or conditions of this Site Lease shall to any extent be declared invalid,
unenforceable, void or voidable for any reason whatsoever by a court of competent
jurisdiction, the finding or order or decree of which becomes final, none of the remaining
terms, provisions, covenants and conditions of this Site Lease shall be affected thereby,
and each provision of this Site Lease shall be valid and enforceable to the fullest extent
permitted by law.
SECTION 15. Notices. Any notice, request, complaint, demand or other
communication under this Site Lease shall be given by first class mail or personal delivery
to the party entitled thereto at its address set forth below, or by telecopy, telex or other
form of telecommunication, at its number set forth below. Notice shall be effective either
(a) upon transmission by telecopy, telex or other form of telecommunication, (b) 48 hours
after deposit in the United States mail, postage prepaid, or (c) in the case of personal
delivery to any person, upon actual receipt. The City, the Authority and the Trustee may,
by written notice to the other parties, from time to time modify the address or number to
which communications are to be given hereunder.
If to the Authority City of San Rafael
or the City: 1400 Fifth Avenue
San Rafael, CA 94901
Attention: City Manager
Email: finance@cityofsanrafael.org
If to the Trustee: MUFG Union Bank, N.A.
350 California Street, 17th Floor
San Francisco, California 94104
Attention: Corporate Trust Department
Email:AccountAdministration-
Corporate.Trust@unionbank.com
SECTION 16. Amendment of this Site Lease. The Authority and the City may at
any time amend or modify any of the provisions of this Site Lease, but only (a) with the
prior written consent of the Owners of a majority in aggregate principal amount of the
Outstanding Bonds; or (b) without the consent of any of the Bond Owners, but only if such
amendment or modification is for any one or more of the following purposes:
(i) to make clear any ambiguity, or to cure, correct or supplement any
defective provision contained herein, or in any other respect
whatsoever as the Authority and the City may deem necessary or
desirable, provided that, in the opinion of Bond Counsel, such
modifications or amendments do not materially adversely affect the
interests of the Owners of the Bonds;
(ii) to amend any provision hereof relating to the Tax Code, to any extent
whatsoever but only if and to the extent such amendment will not
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adversely affect the exclusion from gross income of interest on the
Bonds under the Tax Code, in the opinion of Bond Counsel;
(iii) to conform to any amendment of the Indenture which is made thereto
in accordance with Section 9.01 of the Indenture; or
(iv) for the purpose of effectuating any substitution or release of property
under Section 6.
SECTION 17. Governing Law. This Site Lease shall be construed in accordance
with and governed by the Constitution and laws of the State of California.
SECTION 18. Third-Party Beneficiary. The Trustee is hereby made a third-party
beneficiary under this Site Lease with all rights of a third-party beneficiary.
SECTION 19. Binding Effect. This Site Lease inures to the benefit of and is binding
upon the Authority, the City and their respective successors and assigns, subject,
however, to the limitations contained herein.
SECTION 20. Section Headings. All section headings contained herein are for
convenience of reference only and are not intended to define or limit the scope of any
provision of this Site Lease.
SECTION 21. Execution in Counterparts. This Site Lease may be executed in any
number of counterparts, each of which shall be deemed to be an original but all together
shall constitute but one and the same lease. It is also agreed that separate counterparts
of this Site Lease may be separately executed by the Authority and the City, all with the
same force and effect as though the same counterpart had been executed by both the
Authority and the City.
SECTION 22. Defined Terms. All capitalized terms used herein and not otherwise
defined have the respective meanings given those terms in the Indenture.
:
24
WITNESS WHEREOF, the City and the Authority have caused this Site Lease
to be executed by their respective officers thereunto duly authorized, all as of the day and
year first above written.
CITY OF SAN RAFAEL, as lessor
11 1
I.
17
'
.444
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
County of Marin
On
personally appeared
before me,Lindsay Faye Lara, Notary Pubiic
(insert name and title of the officer)
who proved to me on the basis of satisfactory evidence to be the person(s)whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
his/her/their authorized capacity(ies), and that by his/her/their signature(s)on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
LINDSAY FAME LARA
COMM. 02182818 z
Notary Public California g
Marin County
ftComm. Eykes Fab. 10 20211
A-1
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property referred to herein is situated in the State of California, County
of Marin, City of San Rafael and described as follows:
Parcel One:
Beginning at the corner formed by the intersection of the West line of "C" Street with the
South line of Fifth Street; Running thence Westerly along the South line of Fifth Street
(now called Fifth Avenue), 100 feet; Running thence at right angles Southerly seventy-
seven and one-half (771/2) feet to old fence running thence at right angles Easterly
parallel with Fifth Street one hundred (100) feet to the West line of "C" Street; Running
thence Northerly along the West line of "C" Street seventy-seven and one-half (771/2)
feet to the place of beginning.
Parcel Two:
Parcel A:
Beginning at a point on the Southerly line of Fifth Avenue, in the City of San Rafael,
distant thereon Westerly 100 feet from its intersection with the Westerly line of “C”
Street,. and running thence along the said Avenue line Westerly 51 feet, thence at right
angles Southerly 140 feet, thence at right angle Easterly 48 feet, thence at right angles,
Northerly 62.5 feet, thence at right angle Easterly 3 feet, thence at right angle Northerly
77.5 feet to the point of beginning.
Parcel B:
Map of the Townsite of San Rafael Tract of Land beginning at point Westerly 100 feet
along Southerly line 5th Avenue and at right angles Southerly 77.5 feet from intersection
of Westerly line “C” Street with Southerly line of 5th Avenue, running thence Westerly
parallel with Southerly. line 5th Avenue 3 feet, Southerly at right angles 62.5 feet,
Southeasterly parallel with Southerly line 5th Avenue, 3 feet thence Northerly to
beginning.
Being portion Block13.
Parcel Three:
Beginning at a point on the Southerly line of 5th. Street, said point being the Northeast
corner of the property described in the deed from William Vaning, et ux., to the City of
San Rafael, dated June 9, 1897 and recorded June 9, 1987 in Book 45, Page 315, Marin
County Records; running thence along said Southerly line of 5th. Street, South 83° 15'
East, 155 feet; thence leaving said line South 6° 45' West 140 feet to the Northerly line
of the property described in the Deed from Timothy J. Nahon to Robert Magnes, dated
September 15, 1897 and recorded September 15, 1897 in Book 47, of Deeds, at Page
108; thence along said line North 83° 15' West 159.9 feet to the Southeast corner of the
property described in the above mentioned deed to the City of San Rafael; thence along
the Easterly line thereof, 140 feet to the point of beginning.
APN: 011-205-04 as to Parcel One
APN: 011-205-17 as to Parcel(s) Two, Parcel A and Two, Parcel Three
APN: 011-205-01 as to Parcel Four
(End of Legal Description)
$45,485,000
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, Series 2018
(Public Safety Facilities Project)
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the Site Lease, dated as of
March 1, 2018, by and between the City of San Rafael, as lessor, and the San Rafael Joint Powers
Financing Authority (the "Authority"), as lessee, is hereby accepted by the undersigned officer on
behalf of the Authority pursuant to authority conferred by resolution of the Board of Directors of
the Authority adopted on March 5, 2018, and the Authority consents to recordation thereof by its
duly authorized officer.
Dated as of March 1, 2018 SAN RAFAEL JOINT POWERS
FINANCING AUTHORITY
1
41390-03 SM:SRF:REL FINAL
LEASE AGREEMENT
Dated as of March 1, 2018
between the
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY,
as lessor
and the
CITY OF SAN RAFAEL,
as lessee
Relating to
$45,485,000
San Rafael Joint Powers Financing Authority
Lease Revenue Bonds, Series 2018
(Public Safety Facilities Project)
-i-
TABLE OF CONTENTS
ARTICLE I
Definitions; Rules of Interpretation
SECTION 1.1. Definitions ..................................................................................................2
SECTION 1.2. Interpretation .............................................................................................2
ARTICLE II
Covenants, Representations and Warranties
SECTION 2.1. Covenants, Representations and Warranties of the City .............................2
SECTION 2.2. Covenants, Representations and Warranties of the Authority .....................4
ARTICLE III
Deposit and Application of Funds; Substitution and
Release of Property
SECTION 3.1. Deposit of Moneys .....................................................................................5
SECTION 3.2. Substitution of Property ..............................................................................5
SECTION 3.3. Release of Property ...................................................................................6
ARTICLE IV
Lease of Leased Property; Term of This Lease; Lease
Payments:
SECTION 4.1. Lease of Leased Property ..........................................................................7
SECTION 4.2. Term..........................................................................................................7
SECTION 4.3. Lease Payments ........................................................................................7
SECTION 4.4. Source of Payments; Covenant to Budget and Appropriate ........................8
SECTION 4.5. Additional Rental Payments .......................................................................9
SECTION 4.6. Quiet Enjoyment ........................................................................................9
SECTION 4.7. Title ...........................................................................................................9
ARTICLE V
Maintenance; Taxes; Insurance; and Other Matters
SECTION 5.1. Maintenance, Utilities, Taxes and Assessments ....................................... 10
SECTION 5.2. Modification of Leased Property ............................................................... 10
SECTION 5.3. Liability and Property Damage Insurance ................................................. 11
SECTION 5.4. Casualty Insurance .................................................................................. 11
SECTION 5.5. Rental Interruption Insurance ................................................................... 11
SECTION 5.6. Recordation Hereof; Title Insurance ......................................................... 12
SECTION 5.7. Insurance Net Proceeds; Form of Policies ................................................ 12
SECTION 5.8. Installation of City’s Personal Property ..................................................... 12
SECTION 5.9. Liens........................................................................................................ 13
SECTION 5.10. Advances ............................................................................................... 13
ARTICLE VI
Damage, Destruction and Eminent Domain; Use of Net
Proceeds
SECTION 6.1. Application of Net Proceeds ..................................................................... 13
SECTION 6.2. Termination or Abatement Due to Eminent Domain .................................. 13
SECTION 6.3. Abatement Due to Damage or Destruction ............................................... 14
ARTICLE VII
Other Covenants of the City
SECTION 7.1. Disclaimer of Warranties .......................................................................... 14
SECTION 7.2. Access to the Leased Property................................................................. 14
SECTION 7.3. Release and Indemnification Covenants .................................................. 14
SECTION 7.4. Assignment and Subleasing by the City ................................................... 15
SECTION 7.5. Amendment Hereof .................................................................................. 15
SECTION 7.6. Tax Covenants ........................................................................................ 16
SECTION 7.7. Continuing Disclosure .............................................................................. 17
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ARTICLE VIII
Events of Default and Remedies
SECTION 8.1. Events of Default Defined ........................................................................ 18
SECTION 8.2. Remedies on Default ............................................................................... 18
SECTION 8.3. No Remedy Exclusive .............................................................................. 20
SECTION 8.4. Agreement to Pay Attorneys' Fees and Expenses .................................... 20
SECTION 8.5. No Additional Waiver Implied by One Waiver ........................................... 20
SECTION 8.6. Application of Proceeds ........................................................................... 20
SECTION 8.7. Trustee and Bond Owners to Exercise Rights .......................................... 20
ARTICLE IX
Prepayment of Lease Payments
SECTION 9.1. Security Deposit....................................................................................... 21
SECTION 9.2. Optional Prepayment ............................................................................... 21
SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent
Domain ................................................................................................ 21
SECTION 9.4. Credit for Amounts on Deposit ................................................................. 22
ARTICLE X
Miscellaneous
SECTION 10.1. Notices .................................................................................................. 22
SECTION 10.2. Binding Effect ........................................................................................ 22
SECTION 10.3. Severability ............................................................................................ 22
SECTION 10.4. Net-net-net Lease .................................................................................. 22
SECTION 10.5. Third Party Beneficiary ........................................................................... 23
SECTION 10.6. Further Assurances and Corrective Instruments ..................................... 23
SECTION 10.7. Execution in Counterparts. ..................................................................... 23
SECTION 10.8. Applicable Law....................................................................................... 23
SECTION 10.9. Authority and City Representatives ........................................................ 23
SECTION 10.10. Captions .............................................................................................. 23
APPENDIX A DESCRIPTION OF THE LEASED PROPERTY
APPENDIX B SCHEDULE OF LEASE PAYMENTS
LEASE AGREEMENT
This LEASE AGREEMENT (this “Lease”), dated for convenience as of March 1, 2018,
is between the SAN RAFAEL JOINT POWERS FINANCING AUTHORITY, a joint powers authority
duly organized and existing under the laws of the State of California, as lessor (the
“Authority”), and the CITY OF SAN RAFAEL, a charter city and municipal corporation duly
organized and existing under the Constitution and laws of the State of California, as lessee
(the “City”).
BACKGROUND:
1. The City of San Rafael (the “City”) wishes to finance the acquisition and
construction of certain public safety improvements consisting generally of a new public
safety center and two replacement fire stations (collectively, the “Project”).
2. To that end, the City has proposed to lease to the Authority certain real
property and improvements, initially consisting of the City’s new public safety facility, the
City’s Fire Station 52, and the City’s Fire Station 57, including land and improvements
thereon, as more particularly described in Appendix A attached hereto and by this
reference incorporated herein (the “Leased Property”), under a Site Lease, dated the
date hereof (the “Site Lease”), in consideration of the payment by the Authority of an
upfront rental payment (the “Site Lease Payment”) sufficient to provide funds for the
acquisition and construction of the Project. The Site Lease is being recorded concurrently
with a memorandum of this Lease.
3. The Authority has authorized the issuance of its San Rafael Joint Powers
Financing Authority Lease Revenue Bonds, Series 2018 (Public Safety Facilities Project)
in the aggregate principal amount of $45,485,000 (the “Bonds”) under an Indenture of
Trust dated as of March 1, 2018 (the “Indenture”), between the Authority and MUFG
Union Bank, N.A., as trustee (the “Trustee”), for the purpose of providing the funds to
enable the Authority to pay the Site Lease Payment to the City in accordance with the Site
Lease.
4. In order to provide revenues that are sufficient to enable the Authority to pay
debt service on the Bonds, the Authority has agreed to lease the Leased Property back to
the City under this Lease, under which the City agrees to pay semiannual Lease Payments
as the rental for the Leased Property.
5. The lease payments made by the City under this Lease have been assigned
by the Authority to the Trustee for the security of the Bonds under an Assignment
Agreement dated as of the date hereof, between the Authority as assignor and the Trustee
as assignee, which has been recorded concurrently herewith.
6. The City and the Authority have found and determined that all acts and
proceedings required by law necessary to make this Lease, when executed by the City
and the Authority, the valid, binding and legal obligations of the City and the Authority, and
to constitute this Lease a valid and binding agreement for the uses and purposes herein
set forth in accordance with its terms, have been done and taken, and the execution and
delivery of this Lease have been in all respects duly authorized.
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AGREEMENT:
In consideration of the above recitals and of the mutual covenants contained
herein, and for other valuable consideration, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
SECTION 1.1. Definitions. Unless the context clearly otherwise requires or unless
otherwise defined herein, the capitalized terms in this Lease have the respective meanings
given them in the Indenture.
SECTION 1.2. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular
includes the plural and vice versa and the use of the neuter, masculine, or feminine gender
is for convenience only and includes the neuter, masculine or feminine gender, as
appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are
solely for convenience of reference, do not constitute a part hereof and do not affect the
meaning, construction or effect hereof.
(c) All references herein to “Articles,” “Sections” and other subdivisions are to
the corresponding Articles, Sections or subdivisions of this Lease; the words “herein,”
“hereof,” “hereby,” “hereunder” and other words of similar import refer to this Lease as a
whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Covenants, Representations and Warranties of the City. The City
makes the following covenants, representations and warranties to the Authority, the
Trustee as of the date of the execution and delivery of this Lease:
(a) Due Organization and Existence. The City is a charter city and
municipal corporation duly organized and validly existing under the
Constitution and laws of the State of California, has full legal right,
power and authority under the laws of the State of California to enter
into the Site Lease and this Lease and to carry out and consummate
all transactions contemplated hereby, and by proper action the City
has duly authorized the execution and delivery of the Site Lease and
this Lease.
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(b) Due Execution. The representatives of the City executing the Site
Lease and this Lease have been fully authorized to execute the same
under a resolution and ordinance duly adopted by the City Council of
the City.
(c) Valid, Binding and Enforceable Obligations. The Site Lease and this
Lease have been duly authorized, executed and delivered by the City
and constitute the legal, valid and binding obligations of the City
enforceable against the City in accordance with their respective
terms.
(d) No Conflicts. The execution and delivery of the Site Lease and this
Lease, the consummation of the transactions therein and herein
contemplated and the fulfillment of or compliance with the terms and
conditions thereof and hereof, do not and will not conflict with or
constitute a violation or breach of or default (with due notice or the
passage of time or both) under any applicable law or administrative
rule or regulation, or any applicable court or administrative decree or
order, or any indenture, mortgage, deed of trust, lease, contract or
other agreement or instrument to which the City is a party or by which
it or its properties are otherwise subject or bound, or result in the
creation or imposition of any prohibited lien, charge or encumbrance
of any nature whatsoever upon any of the property or assets of the
City, which conflict, violation, breach, default, lien, charge or
encumbrance would have consequences that would materially and
adversely affect the consummation of the transactions contemplated
by the Site Lease and this Lease or the financial condition, assets,
properties or operations of the City.
(e) Consents and Approvals. No consent or approval of any trustee or
holder of any indebtedness of the City or of the voters of the City, and
no consent, permission, authorization, order or license of, or filing or
registration with, any governmental authority is necessary in
connection with the execution and delivery of the Site Lease and this
Lease, or the consummation of any transaction therein and herein
contemplated, except as have been obtained or made and as are in
full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or
other governmental authority pending or, to the knowledge of the City
after reasonable investigation, threatened against or affecting the
City or the assets, properties or operations of the City which, if
determined adversely to the City or its interests, would have a
material and adverse effect upon the consummation of the
transactions contemplated by or the validity of the Site Lease and this
Lease, or upon the financial condition, assets, properties or
operations of the City, and the City is not in default with respect to
any order or decree of any court or any order, regulation or demand
of any federal, state, municipal or other governmental authority, which
default might have consequences that would materially and adversely
-4-
affect the consummation of the transactions contemplated by the Site
Lease and this Lease or the financial conditions, assets, properties
or operations of the City.
SECTION 2.2. Covenants, Representations and Warranties of the Authority. The
Authority makes the following covenants, representations and warranties to the City, the
Trustee as of the date of the execution and delivery of this Lease:
(a) Due Organization and Existence. The Authority is a joint exercise of
powers authority duly organized and existing under a joint powers
agreement and the laws of the State of California; has power to enter
into this Lease, the Site Lease, the Assignment Agreement and the
Indenture; is possessed of full power to own and hold, improve and
equip real and personal property, and to lease the same; and has
duly authorized the execution and delivery of each of the aforesaid
agreements and such agreements constitute the legal, valid and
binding obligations of the Authority, enforceable against the Authority
in accordance with their respective terms.
(b) Due Execution. The representatives of the Authority executing this
Lease, the Site Lease, the Assignment Agreement and the Indenture
are fully authorized to execute the same pursuant to official action
taken by the governing body of the Authority.
(c) Valid, Binding and Enforceable Obligations. This Lease, the Site
Lease, the Assignment Agreement and the Indenture have been duly
authorized, executed and delivered by the Authority and constitute
the legal, valid and binding agreements of the Authority, enforceable
against the Authority in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of this Lease, the Site
Lease, the Assignment Agreement and the Indenture, the
consummation of the transactions herein and therein contemplated
and the fulfillment of or compliance with the terms and conditions
hereof, do not and will not conflict with or constitute a violation or
breach of or default (with due notice or the passage of time or both)
under any applicable law or administrative rule or regulation, or any
applicable court or administrative decree or order, or any indenture,
mortgage, deed of trust, lease, contract or other agreement or
instrument to which the Authority is a party or by which it or its
properties are otherwise subject or bound, or result in the creation or
imposition of any prohibited lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of the Authority,
which conflict, violation, breach, default, lien, charge or encumbrance
would have consequences that would materially and adversely affect
the consummation of the transactions contemplated by this Lease,
the Site Lease, the Assignment Agreement and the Indenture or the
financial condition, assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or
holder of any indebtedness of the Authority, and no consent,
-5-
permission, authorization, order or license of, or filing or registration
with, any governmental authority is necessary in connection with the
execution and delivery of this Lease, the Site Lease, the Assignment
Agreement or the Indenture, or the consummation of any transaction
herein or therein contemplated, except as have been obtained or
made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or
other governmental authority pending or, to the knowledge of the
Authority after reasonable investigation, threatened against or
affecting the Authority or the assets, properties or operations of the
Authority which, if determined adversely to the Authority or its
interests, would have a material and adverse effect upon the
consummation of the transactions contemplated by or the validity of
this Lease, the Site Lease, the Assignment Agreement or the
Indenture, or upon the financial condition, assets, properties or
operations of the Authority, and the Authority is not in default with
respect to any order or decree of any court or any order, regulation
or demand of any federal, state, municipal or other governmental
authority, which default might have consequences that would
materially and adversely affect the consummation of the transactions
contemplated by this Lease, the Site Lease, the Assignment
Agreement or the Indenture or the financial conditions, assets,
properties or operations of the Authority.
ARTICLE III
DEPOSIT AND APPLICATION OF FUNDS; SUBSTITUTION
AND RELEASE OF PROPERTY
SECTION 3.1. Deposit of Moneys. On the Closing Date, the Authority will cause
the proceeds of sale of the Bonds to be deposited with the Trustee. The Trustee shall
deposit such proceeds in accordance with Section 3.02 of the Indenture.
SECTION 3.2. Substitution of Property. The City has the option at any time and
from time to time, to substitute other real property (the “Substitute Property”) for the
Leased Property or any portion thereof (the “Former Property”), upon satisfaction of all
of the following requirements which are hereby declared to be conditions precedent to
such substitution:
(a) No Event of Default has occurred and is continuing, as certified in
writing by the City.
(b) The City has filed with the Authority and the Trustee, and caused to
be recorded in the office of the Marin County Recorder sufficient
memorialization of an amendment hereof that adds the legal
description of the Substitute Property to Appendix A and deletes
therefrom the legal description of the Former Property, and has filed
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and caused to be recorded corresponding amendments to the Site
Lease and Assignment Agreement.
(c) The City has obtained a CLTA policy of title insurance insuring the
City’s leasehold estate hereunder in the Substitute Property, subject
only to Permitted Encumbrances, in an amount at least equal to the
estimated value thereof.
(d) The City has certified in writing to the Authority and the Trustee that
the Substitute Property serves the municipal purposes of the City and
constitutes property which the City is permitted to lease under the
laws of the State of California, and has been determined to be
essential to the proper, efficient and economic operation of the City
and to serve an essential governmental function of the City.
(e) The Substitute Property does not cause the City to violate any of its
covenants, representations and warranties made herein, as certified
in writing by the City.
(g) The City has filed with the Authority and the Trustee a written
certificate of the City or other written evidence stating that the useful
life of the Substitute Property at least extends to June 1, 2034, that
the estimated value of the Leased Property, after substitution of the
Substitute Property and release of the Former Property, is at least
equal to the aggregate Outstanding principal amount of the Bonds,
and the fair rental value of the Leased Property, after substitution of
the Substitute Property and release of the Former Property, is at least
equal to the Lease Payments thereafter coming due and payable
hereunder.
(h) The City has mailed written notice of such substitution to each rating
agency which then maintains a rating on the Bonds.
Upon the satisfaction of all such conditions precedent, the Term of this Lease will
thereupon end as to the Former Property and commence as to the Substitute Property,
and all references to the Former Property will apply with full force and effect to the
Substitute Property. The City is not entitled to any reduction, diminution, extension or
other modification of the Lease Payments whatsoever as a result of any substitution of
property under this Section. The Authority and the City will execute, deliver and cause to
be recorded all documents required to discharge the Site Lease, this Lease and the
Assignment Agreement of record against the Former Property and to cause the Substitute
Property to become subject to all of the terms and conditions of the Site Lease, this Lease
and the Assignment Agreement.
SECTION 3.3. Release of Property. The City has the option at any time and from
time to time to release any portion of the Leased Property from this Lease (the “Released
Property”) provided that the City has satisfied all of the following requirements which are
hereby declared to be conditions precedent to such release:
(a) No Event of Default has occurred and is continuing, as certified in
writing by the City.
-7-
(b) The City has filed with the Authority and the Trustee, and caused to
be recorded in the office of the Marin County Recorder sufficient
memorialization of an amendment hereof, the Site Lease and the
Assignment Agreement which removes the Released Property from
the Site Lease, the Assignment Agreement and this Lease.
(c) The City has certified in writing to the Authority and the Trustee that
the value of the property which remains subject to this Lease
following such release is at least equal to the aggregate Outstanding
principal amount of the Bonds, and the fair rental value of the property
which remains subject to this Lease following such release is at least
equal to the Lease Payments thereafter coming due and payable
hereunder.
(d) The City has mailed written notice of such release to each rating
agency which then maintains a rating on the Bonds.
Upon the satisfaction of all such conditions precedent, the Term of this Lease will
thereupon end as to the Released Property. The City is not entitled to any reduction,
diminution, extension or other modification of the Lease Payments whatsoever as a result
of such release. The Authority and the City shall execute, deliver and cause to be
recorded all documents required to discharge the Site Lease, this Lease and the
Assignment Agreement of record against the Released Property.
ARTICLE IV
LEASE OF LEASED PROPERTY; TERM OF THIS LEASE;
LEASE PAYMENTS
SECTION 4.1. Lease of Leased Property. The Authority hereby leases the Leased
Property to the City and the City hereby leases the Leased Property from the Authority,
upon the terms and conditions set forth in this Lease.
SECTION 4.2. Term. The Term of this Lease commences on the Closing Date and
ends on the date on which the Indenture is discharged in accordance with Section 10.03
thereof, but under any circumstances not later than June 1, 2044. The provisions of this
Section are subject to the provisions of Sections 6.2 and 6.3 relating to the taking in
eminent domain, damage and destruction of the Leased Property in whole or in part.
SECTION 4.3. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Sections 6.2 and 6.3 and the
provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns,
the Lease Payments in the respective amounts specified in Appendix B attached to this
Lease, to be due and payable in immediately available funds on the Interest Payment
Dates immediately following each of the respective Lease Payment Dates specified in
Appendix B, and to be deposited by the City with the Trustee on each of the Lease
Payment Dates specified in Appendix B. Any amount held in the Bond Fund, the Interest
-8-
Account and the Principal Account on any Lease Payment Date (other than amounts
resulting from the prepayment of the Lease Payments in part but not in whole under Article
IX, and amounts required for payment of past due principal or interest on any Bonds not
presented for payment) will be credited towards the Lease Payment then required to be
paid hereunder. The City is not required to deposit any Lease Payment with the Trustee
on any Lease Payment Date if the amounts then held in the Bond Fund, the Interest
Account and the Principal Account are at least equal to the Lease Payment then required
to be deposited with the Trustee. The Lease Payments payable in any Rental Period are
for the use of the Leased Property during that Rental Period.
(b) Effect of Prepayment. If the City prepays all Lease Payments in full under
Sections 9.2 or 9.3, the City’s obligations under this Section will thereupon cease and
terminate. If the City prepays the Lease Payments in part but not in whole under Sections
9.2 or 9.3, the principal components of the remaining Lease Payments will be reduced in
integral multiples of $5,000 among Lease Payment Dates on a basis which corresponds
to the principal maturities of the Bonds which are redeemed thereby; and the interest
component of each remaining Lease Payment will be reduced by the aggregate
corresponding amount of interest which would otherwise be payable with respect to the
Bonds thereby redeemed under Section 4.01 of the Indenture.
(c) Rate on Overdue Payments. If the City fails to make any of the payments
required in this Section, the payment in default will continue as an obligation of the City
until the amount in default has been fully paid, and the City agrees to pay the same with
interest thereon, from the date of default to the date of payment at the highest rate of
interest on any Outstanding Bond.
(d) Fair Rental Value. The aggregate amount of the Lease Payments and
Additional Rental Payments coming due and payable during each Rental Period constitute
the total rental for the Leased Property for such Rental Period, and are payable by the City
in each Rental Period for and in consideration of the right of the use and occupancy of,
and the continued quiet use and enjoyment of the Leased Property during each Rental
Period. The parties hereto have agreed and determined that the total Lease Payments
do not exceed the fair rental value of the Leased Property. In making that determination,
consideration has been given to the estimated value of the Leased Property, other
obligations of the City and the Authority under this Lease, the uses and purposes which
may be served by the Leased Property and the benefits therefrom which will accrue to the
City and the general public.
(e) Assignment. The City understands and agrees that all Lease Payments have
been assigned by the Authority to the Trustee in trust, under the Assignment Agreement,
for the benefit of the Owners of the Bonds, and the City hereby assents to such
assignment. The Authority hereby directs the City, and the City hereby agrees to pay to
the Trustee at its Office, all payments payable by the City under this Section and all
amounts payable by the City under Article IX.
SECTION 4.4. Source of Payments; Covenant to Budget and Appropriate. The
Lease Payments are payable from any source of available funds of the City, subject to the
provisions of Section 6.3. The City covenants to take all actions required to include the
Lease Payments in each of its budgets during the Term of this Lease and to make the
necessary appropriations for all Lease Payments and Additional Rental Payments. The
foregoing covenant of the City contained constitutes a duty imposed by law and each and
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every public official of the City is required to take all actions required by law in the
performance of the official duty of such officials to enable the City to carry out and perform
the covenants and agreements in this Lease agreed to be carried out and performed by
the City.
SECTION 4.5. Additional Rental Payments. In addition to the Lease Payments, the
City shall pay when due the following amounts of Additional Rental Payments in
consideration of the lease of the Leased Property by the City from the Authority hereunder:
(a) all fees and expenses incurred by the Authority in connection with or
by reason of its leasehold estate in the Leased Property, when due,
(b) all compensation to the Trustee for all services rendered under the
Indenture and for all expenses, charges, costs, liabilities, legal fees
and other disbursements incurred in and about the performance of its
powers and duties under the Indenture in accordance with Section
8.07 of the Indenture,
(c) the reasonable fees and expenses of such accountants, consultants,
attorneys and other experts as may be engaged by the Authority or
the Trustee to prepare audits, financial statements, reports, opinions
or provide such other services required under this Lease or the
Indenture,
(d) amounts coming due and payable as Excess Investment Earnings in
accordance with Section 7.6(e), and
(e) the reasonable out-of-pocket expenses of the Authority in connection
with the execution and delivery of this Lease or the Indenture, or in
connection with the issuance of the Bonds, including but not limited
to any and all expenses incurred in connection with the authorization,
sale and delivery of the Bonds, or incurred by the Authority in
connection with any litigation which may at any time be instituted
involving this Lease, the Bonds, the Indenture or any of the other
documents contemplated hereby or thereby, or otherwise incurred in
connection with the administration of this Lease.
SECTION 4.6. Quiet Enjoyment. Throughout the Term of this Lease, the Authority
shall provide the City with quiet use and enjoyment of the Leased Property and the City
will peaceably and quietly have and hold and enjoy the Leased Property, without suit,
trouble or hindrance from the Authority, except as expressly set forth in this Lease. The
Authority will, at the request of the City and at the City’s cost, join in any legal action in
which the City asserts its right to such possession and enjoyment to the extent the
Authority may lawfully do so. Notwithstanding the foregoing, the Authority has the right to
inspect the Leased Property as provided in Section 7.2.
SECTION 4.7. Title. Upon the termination of this Lease (other than under Section
8.2(b) hereof), all right, title and interest of the Authority in and to the Leased Property
transfers to and vests in the City. The Authority shall take any and all steps and execute
and record any and all documents reasonably required by the City to consummate any
such transfer of title.
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ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS
SECTION 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the
Term of this Lease, as part of the consideration for the rental of the Leased Property, all
improvement, repair and maintenance of the Leased Property are the responsibility of the
City, and the City will pay for or otherwise arrange for the payment of all utility services
supplied to the Leased Property, which may include, without limitation, janitor service,
security, power, gas, telephone, light, heating, water and all other utility services, and will
pay for or otherwise arrange for the payment of the cost of the repair and replacement of
the Leased Property resulting from ordinary wear and tear or want of care on the part of
the City or any assignee or sublessee thereof. In exchange for the Lease Payments herein
provided, the Authority agrees to provide only the Leased Property. The City waives the
benefits of subsections 1 and 2 of Section 1932, Section 1933(4) and Sections 1941 and
1942 of the California Civil Code, but such waiver does not limit any of the rights of the
City under the terms of this Lease.
The City shall also pay or cause to be paid all taxes and assessments of any type
or nature, if any, charged to the Authority or the City affecting the Leased Property or the
respective interests or estates therein; provided that with respect to special assessments
or other governmental charges that may lawfully be paid in installments over a period of
years, the City shall pay only such installments as are required to be paid during the Term
of this Lease as and when the same become due.
The City may, at its expense and in its name, in good faith contest any such taxes,
assessments, utility and other charges and, in the event of any such contest, may permit
the taxes, assessments or other charges so contested to remain unpaid during the period
of such contest and any appeal therefrom unless the Authority notifies the City that, in its
reasonable opinion, by nonpayment of any such items the interest of the Authority in the
Leased Property will be materially endangered or the Leased Property or any part thereof
will be subject to loss or forfeiture, in which event the City shall promptly pay such taxes,
assessments or charges or provide the Authority with full security against any loss which
may result from nonpayment, in form satisfactory to the Authority and the Trustee.
SECTION 5.2. Modification of Leased Property. The City has the right, at its own
expense, to make additions, modifications and improvements to the Leased Property or
any portion thereof. All additions, modifications and improvements to the Leased Property
will thereafter comprise part of the Leased Property and become subject to the provisions
of this Lease. Such additions, modifications and improvements may not in any way
damage the Leased Property, or cause the Leased Property to be used for purposes other
than those authorized under the provisions of state and federal law; and the Leased
Property, upon completion of any additions, modifications and improvements made
thereto under this Section, must be of a value which is not substantially less than the value
thereof immediately prior to the making of such additions, modifications and
improvements.
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The City will not permit any mechanic’s or other lien to be established or remain
against the Leased Property for labor or materials furnished in connection with any
remodeling, additions, modifications, improvements, repairs, renewals or replacements
made by the City under this Section; except that if any such lien is established and the
City first notifies or causes to be notified the Authority of the City’s intention to do so, the
City may in good faith contest any lien filed or established against the Leased Property,
and in such event may permit the items so contested to remain undischarged and
unsatisfied during the period of such contest and any appeal therefrom and shall provide
the Authority with full security against any loss or forfeiture which might arise from the
nonpayment of any such item, in form satisfactory to the Authority. The Authority will
cooperate fully in any such contest, upon the request and at the expense of the City.
SECTION 5.3. Liability and Property Damage Insurance. The City shall maintain or
cause to be maintained throughout the Term of this Lease, a standard commercial general
liability insurance policy or policies in protection of the Authority, the City, and their
respective members, officers, agents, employees and assigns. Said policy or policies
shall provide for indemnification of said parties against direct or contingent loss or liability
for damages for bodily and personal injury, death or property damage occasioned by
reason of the operation of the Leased Property. Such policy or policies shall provide
coverage in such liability limits and be subject to such deductibles as the City deems
adequate and prudent. Such insurance may be maintained as part of or in conjunction
with any other insurance coverage carried by the City, and may be maintained in whole or
in part in the form of self-insurance by the City, subject to the provisions of Section 5.7, or
in the form of the participation by the City in a joint powers agency or other program
providing pooled insurance. The proceeds of such liability insurance must be applied
toward extinguishment or satisfaction of the liability with respect to which paid.
SECTION 5.4. Casualty Insurance. The City shall procure and maintain, or cause
to be procured and maintained, throughout the Term of this Lease, casualty insurance
against loss or damage to all buildings situated on the Leased Property, in an amount at
least equal to the lesser of (a) 100% of the replacement value of the insured buildings, or
(b) 100% of the aggregate principal amount of the Outstanding Bonds. Such insurance
must, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft,
vehicle damage, smoke and such other hazards as are normally covered by such
insurance. Such insurance may, at the sole discretion of the City, include earthquake
insurance if available at reasonable cost from reputable insurers in the judgment of the
City. Such insurance may be subject to such deductibles as the City deems adequate
and prudent. Such insurance may be maintained as part of or in conjunction with any
other insurance coverage carried by the City, and may be maintained in whole or in part
in the form of the participation by the City in a joint powers agency or other program
providing pooled insurance; provided that such insurance may not be maintained by the
City in the form of self-insurance. The Net Proceeds of such insurance must be applied
as provided in Section 6.1.
SECTION 5.5. Rental Interruption Insurance. The City shall procure and maintain,
or cause to be procured and maintained, throughout the Term of this Lease, rental
interruption or use and occupancy insurance to cover loss, total or partial, of the use of
any portion of the Leased Property constituting buildings or other improvements as a result
of any of the hazards covered in the insurance required by Section 5.4, in an amount at
least equal to the maximum such Lease Payments coming due and payable during any
consecutive two Fiscal Years. Such insurance may be maintained as part of or in
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conjunction with any other insurance coverage carried by the City, and may be maintained
in whole or in part in the form of the participation by the City in a joint powers agency or
other program providing pooled insurance; provided that such insurance may not be
maintained by the City in the form of self-insurance. The Net Proceeds of such insurance,
if any, must be paid to the Trustee and deposited in the Bond Fund, to be applied as a
credit towards the payment of the Lease Payments allocable to the insured improvements
as the same become due and payable.
SECTION 5.6. Recordation Hereof; Title Insurance. On or before the Closing Date
the City shall, at its expense, (a) cause the Site Lease, the Assignment Agreement and
this Lease, or a memorandum hereof or thereof in form and substance approved by Bond
Counsel, to be recorded in the office of the Marin County Recorder, and (b) obtain a CLTA
title insurance policy insuring the City’s leasehold estate hereunder in the Leased
Property, subject only to Permitted Encumbrances, in an amount at least equal to the
aggregate principal amount of the Bonds. All Net Proceeds received under any such title
insurance policy must be deposited with the Trustee in the Bond Fund to be credited
towards the prepayment of the remaining Lease Payments under Section 9.3.
SECTION 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance
maintained under Sections 5.4, 5.5 and 5.6 must name the Trustee as loss payee so as
to provide that all proceeds thereunder are payable to the Trustee. The City shall pay or
cause to be paid when due the premiums for all insurance policies required by this Lease.
All such policies shall provide that the Trustee is given 30 days’ notice of each expiration,
any intended cancellation thereof or reduction of the coverage provided thereby. The City
must file with the Trustee annually, within 90 days following the close of each Fiscal Year,
a certificate of the City stating that all policies of insurance required hereunder are then in
full force and effect. The Trustee has no responsibility for the sufficiency, adequacy or
amount of any insurance or self-insurance herein required and is fully protected in
accepting payment on account of such insurance or any adjustment, compromise or
settlement of any loss.
If any insurance maintained under Section 5.3 is provided in the form of self-
insurance, the City must file with the Trustee annually, within 90 days following the close
of each Fiscal Year, a statement of the risk manager of the City or an independent
insurance adviser engaged by the City identifying the extent of such self-insurance and
stating the determination that the City maintains sufficient reserves with respect thereto.
If any such insurance is provided in the form of self-insurance by the City, the City has no
obligation to make any payment with respect to any insured event except from those
reserves.
SECTION 5.8. Installation of City’s Personal Property. The City may at any time
and from time to time, in its sole discretion and at its own expense, install or permit to be
installed other items of equipment or other personal property in or upon the Leased
Property. All such items shall remain the sole property of the City, in which neither the
Authority nor the Trustee has any interest, and may be modified or removed by the City at
any time, provided that the City must repair all damage to the Leased Property resulting
from the installation, modification or removal of any such items. Nothing in this Lease
prevents the City from purchasing or leasing items to be installed under this Section under
a lease or conditional sale agreement, or subject to a vendor’s lien or security agreement,
as security for the unpaid portion of the purchase price thereof, so long as no such lien or
security interest attaches to any part of the Leased Property.
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SECTION 5.9. Liens. The City may not, directly or indirectly, create, incur, assume
or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with
respect to the Leased Property, other than as herein contemplated and except for such
encumbrances as the City certifies in writing to the Trustee do not materially and adversely
affect the leasehold estate of the City in the Leased Property hereunder. If any such
mortgage, pledge, lien, charge, encumbrance or claim does materially and adversely
affect the leasehold estate of the City in the Leased Property hereunder, the City will
promptly, at its own expense, take such action as may be necessary to duly discharge or
remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is
responsible; provided that the City is not required to do so prior to the time when such
mortgage, pledge, lien, charge, encumbrance or claim actually causes such material
adverse effect. The City will reimburse the Authority for any expense incurred by it in
order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or
claim.
SECTION 5.10. Advances. If the City fails to perform any of its obligations under
this Article V, the Authority may (but is not required to) take such action as it deems
necessary to cure such failure, including the advancement of money, and the City shall
repay all such advances as Additional Rental Payments hereunder, with interest at the
rate set forth in Section 4.3(c).
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET
PROCEEDS
SECTION 6.1. Application of Net Proceeds. The Trustee, as assignee of the
Authority under the Assignment Agreement, has the right to receive all Net Proceeds. As
provided in the Indenture, the Trustee will deposit all Net Proceeds in the Insurance and
Condemnation Fund to be applied as set forth in Section 5.07 of the Indenture.
SECTION 6.2. Termination or Abatement Due to Eminent Domain. If the Leased
Property is taken permanently under the power of eminent domain or sold to a government
threatening to exercise the power of eminent domain, the Term of this Lease thereupon
ceases as of the day possession is taken. If less than all of the Leased Property is taken
permanently, or if the Leased Property is taken temporarily, under the power of eminent
domain, then:
(a) this Lease shall continue in full force and effect with respect thereto
and does not terminate by virtue of such taking, and the parties waive
the benefit of any law to the contrary; and
(b) the Lease Payments are subject to abatement in an amount
determined by the City such that the resulting Lease Payments
represent fair consideration for the use and occupancy of the
remaining usable portions of the Leased Property.
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SECTION 6.3. Abatement Due to Damage or Destruction. The Lease Payments
are subject to abatement during any period in which by reason of damage or destruction
(other than by eminent domain which is hereinbefore provided for) there is substantial
interference with the use and occupancy by the City of the Leased Property or any portion
thereof. The Lease Payments are subject to abatement in an amount determined by the
City such that the resulting Lease Payments represent fair consideration for the use and
occupancy of the remaining usable portions of the Leased Property not damaged or
destroyed. Such abatement will continue for the period commencing with such damage
or destruction and ending with the substantial completion of the work of repair or
reconstruction. In the event of any such damage or destruction, this Lease continues in
full force and effect and the City waives any right to terminate this Lease by virtue of any
such damage and destruction.
ARTICLE VII
OTHER COVENANTS OF THE CITY
SECTION 7.1. Disclaimer of Warranties. THE AUTHORITY AND THE TRUSTEE
MAKE NO AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE
CONTEMPLATED BY THE CITY OF THE LEASED PROPERTY OR ANY PORTION
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO
THE LEASED PROPERTY OR ANY PORTION THEREOF. THE CITY
ACKNOWLEDGES THAT THE AUTHORITY IS NOT A MANUFACTURER OF ANY
PORTION OF THE LEASED PROPERTY OR A DEALER THEREIN, THAT THE CITY
LEASES THE LEASED PROPERTY AS-IS, IT BEING AGREED THAT ALL OF THE
AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. The Authority has no
liability for incidental, indirect, special or consequential damages, in connection with or
arising out of this Lease for the existence, furnishing, functioning or use of the Leased
Property by the City.
SECTION 7.2. Access to the Leased Property. The City agrees that the Authority
and any Authorized Representative of the Authority, and the Authority’s successors or
assigns, have the right at all reasonable times to enter upon and to examine and inspect
the Leased Property or any part thereof. The City further agrees that the Authority, any
Authority Representative and the Authority’s successors or assigns may have such rights
of access to the Leased Property or any component thereof as reasonably necessary to
cause the proper maintenance of the Leased Property if the City fails to perform its
obligations hereunder; provided, however, that neither the Authority nor any of its assigns
has any obligation to cause such proper maintenance.
SECTION 7.3. Release and Indemnification Covenants. The City agrees to
indemnify the Authority, the Trustee and their respective officers, agents, successors and
assigns, against all claims, losses and damages, including legal fees and expenses,
arising out of any of the following:
(a) the use, maintenance, condition or management of, or from any work
or thing done on the Leased Property by the City,
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(b) any breach or default on the part of the City in the performance of any
of its obligations under this Lease,
(c) any negligence or willful misconduct of the City or of any of its agents,
contractors, servants, employees or licensees with respect to the
Leased Property,
(d) any intentional misconduct or negligence of any sublessee of the City
with respect to the Leased Property,
(e) the acquisition, construction, improvement and equipping of the
Leased Property, or the authorization of payment of the costs thereof,
or
(f) the acceptance and performance of the duties of the Trustee under
the Indenture, the Assignment Agreement and under this Lease.
No indemnification is made under this Section or elsewhere in this Lease for willful
misconduct or negligence under this Lease by the Authority, the Trustee or their respective
officers, agents, employees, successors or assigns.
SECTION 7.4. Assignment and Subleasing by the City. The City may sublease the
Leased Property, or any portion thereof, subject to all of the following conditions:
(a) this Lease and the obligation of the City to make Lease Payments
hereunder must remain obligations of the City, as certified in writing
by the City;
(b) the City must, within 30 days after the delivery thereof, furnish or
cause to be furnished to the Authority and the Trustee a true and
complete copy of such sublease;
(c) no such sublease by the City may cause the Leased Property to be
used for a purpose which is not authorized under the provisions of
the laws of the State of California, as certified in writing by the City;
and
(d) the City must furnish to the Authority and the Trustee a written opinion
of Bond Counsel stating that such sublease does not cause the
interest on the Bonds to become included in gross income for
purposes of federal income taxation or to become subject to personal
income taxation by the State of California.
SECTION 7.5. Amendment Hereof. The Authority and the City may at any time
amend or modify any of the provisions of this Lease, but only: (a) with the prior written
consents of the Owners of a majority in aggregate principal amount of the Outstanding
Bonds; or (b) without the consent of the Trustee or any of the Bond Owners, but only if
such amendment or modification is for any one or more of the following purposes:
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(i) to add to the covenants and agreements of the City contained in this
Lease, other covenants and agreements thereafter to be observed,
or to limit or surrender any rights or power herein reserved to or
conferred upon the City;
(ii) to make such provisions for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective provision
contained herein, to conform to the original intention of the City and
the Authority;
(iii) to modify, amend or supplement this Lease in such manner as to
assure that the interest on the Bonds remains excluded from gross
income under the Tax Code;
(iv) to amend the description of the Leased Property to reflect accurately
the property originally intended to be included therein, or in
connection with any substitution or release of property under Sections
3.2 or 3.3;
(v) to obligate the City to pay additional amounts of rental for the use and
occupancy of the Leased Property, but only if (A) such additional
amounts of rental are pledged or assigned for the payment of any
bonds, notes, leases or other obligations the proceeds of which are
applied to finance or refinance the acquisition or construction of any
real or personal property for which the City is authorized to expend
funds subject to its control, (B) the City has obtained and filed with
the Trustee an appraisal showing that the appraised value of the
Leased Property is at least equal to the aggregate principal amount
of the Outstanding Bonds and all such other bonds, notes, leases or
other obligations, and (C) the City has filed with the Trustee written
evidence that the amendments made under this clause (v) will not of
themselves cause a reduction or withdrawal of any rating then
assigned to the Bonds; or
(vi) in any other respect whatsoever as the Authority and the City deem
necessary or desirable, if in the opinion of Bond Counsel such
modifications or amendments do not materially adversely affect the
interests of the Owners of the Bonds.
No such modification or amendment may (a) extend or have the effect of extending
any Lease Payment Date or reducing any Lease Payment or any premium payable upon
the prepayment thereof, without the express consent of the Owners of the affected Bonds,
or (b) modify any of the rights or obligations of the Trustee without its written assent
thereto. If the Trustee’s consent to such modification or amendment is required, the
Trustee shall be entitled to the same documents as it would be entitled to under Article IX
of the Indenture for such type of modification or amendment.
SECTION 7.6. Tax Covenants.
(a) Private Business Use Limitation. The City shall assure that the proceeds of
the Bonds are not used in a manner which would cause the Bonds to satisfy the private
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business tests of Section 141(b) of the Tax Code or the private loan financing test of
Section 141(c) of the Tax Code.
(b) Federal Guarantee Prohibition. The City may not take any action or permit
or suffer any action to be taken if the result of the same would be to cause the Bonds to
be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code.
(c) No Arbitrage. The City may not take, or permit or suffer to be taken by the
Trustee or otherwise, any action with respect to the proceeds of the Bonds or of any other
obligations which, if such action had been reasonably expected to have been taken, or
had been deliberately and intentionally taken, on the Closing Date, would have caused
the Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Tax Code.
(d) Maintenance of Tax Exemption. The City shall take all actions necessary to
assure the exclusion of interest on the Bonds from the gross income of the Owners of the
Bonds to the same extent as such interest is permitted to be excluded from gross income
under the Tax Code as in effect on the Closing Date.
(e) Rebate of Excess Investment Earnings to United States. The City shall
calculate or cause to be calculated the Excess Investment Earnings in all respects at the
times and in the manner required under the Tax Code. The City shall pay the full amount
of Excess Investment Earnings to the United States of America in such amounts, at such
times and in such manner as may be required under the Tax Code. Such payments shall
be made by the City from any source of legally available funds of the City, and shall
constitute Additional Rental Payments hereunder.
The City shall keep or cause to be kept, and retain or cause to be retained for a
period of six years following the retirement of the Bonds, records of the determinations
made under this subsection (e). In order to provide for the administration of this subsection
(e), the City may provide for the employment of independent attorneys, accountants and
consultants compensated on such reasonable basis as the City may deem appropriate.
The Trustee has no duty or obligation to monitor or enforce compliance by the City of any
of the requirements under this subsection (e).
SECTION 7.7. Continuing Disclosure. The City shall comply with and carry out all
of the provisions of the Continuing Disclosure Certificate executed by the City as of the
Closing Date, as originally executed and as it may be amended from time to time in
accordance with its terms. Notwithstanding any other provision of this Lease, failure of
the City to comply with such Continuing Disclosure Certificate will not constitute an Event
of Default, although any Participating Underwriter (as that term is defined in such
Continuing Disclosure Certificate) or any Owner or beneficial owner of the Bonds may take
such actions as may be necessary and appropriate to compel performance by the City of
its obligations under this Section, including seeking mandate or specific performance by
court order.
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1. Events of Default Defined. Any one or more of the following events
constitute an Event of Default hereunder:
(a) Failure by the City to pay any Lease Payment or other payment
required to be paid hereunder at the time specified herein.
(b) Failure by the City to observe and perform any covenant, condition or
agreement on its part to be observed or performed, other than as
referred to in the preceding subsection (a), for a period of 30 days
after written notice specifying such failure and requesting that it be
remedied has been given to the City by the Authority or the Trustee.
If in the reasonable opinion of the City the failure stated in the notice
can be corrected, but not within such 30-day period, the failure will
not constitute an Event of Default if the City commences to cure the
failure within such 30-day period and thereafter diligently and in good
faith cures the failure in a reasonable period of time, such period of
time not to be longer than 180 days after the delivery of such default
notice.
(c) The filing by the City of a voluntary petition in bankruptcy, or failure
by the City promptly to lift any execution, garnishment or attachment,
or adjudication of the City as a bankrupt, or assignment by the City
for the benefit of creditors, or the entry by the City into an agreement
of composition with creditors, or the approval by a court of competent
jurisdiction of a petition applicable to the City in any proceedings
instituted under the provisions of the Federal Bankruptcy Code, as
amended, or under any similar acts which may hereafter be enacted.
SECTION 8.2. Remedies on Default. Whenever any Event of Default has happened
and is continuing, the Authority may exercise any and all remedies available under law or
granted under this Lease. Notwithstanding anything herein or in the Indenture to the
contrary, neither the Authority nor the Trustee may accelerate the Lease Payments or
otherwise declare any Lease Payments not then in default to be immediately due and
payable. Each covenant hereof to be kept and performed by the City is expressly made
a condition and upon the breach thereof the Authority may exercise any and all rights
granted hereunder; except that no termination of this Lease may be effected either by
operation of law or acts of the parties hereto, except only in the manner herein expressly
provided. Upon the occurrence and during the continuance of any Event of Default, the
Authority may exercise each and every one of the following remedies, subject in all
respects to the limitations set forth in Section 8.3.
(a) Enforcement of Payments Without Termination. If the Authority does
not elect to terminate this Lease in the manner hereinafter provided
for in subparagraph (b) hereof, the City agrees to and shall remain
liable for the payment of all Lease Payments and the performance of
all conditions herein contained and shall reimburse the Authority for
any deficiency arising out of the re-leasing of the Leased Property,
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or, if the Authority is unable to re-lease the Leased Property, then for
the full amount of all Lease Payments to the end of the Term of this
Lease, but said Lease Payments and/or deficiency shall be payable
only at the same time and in the same manner as hereinabove
provided for the payment of Lease Payments hereunder,
notwithstanding such entry or re-entry by the Authority or any suit in
unlawful detainer, or otherwise, brought by the Authority for the
purpose of effecting such re-entry or obtaining possession of the
Leased Property or the exercise of any other remedy by the Authority.
The City hereby irrevocably appoints the Authority as the agent and
attorney-in-fact of the City to enter upon and re-lease the Leased
Property upon the occurrence and continuation of an Event of Default
and to remove all personal property whatsoever situated upon the
Leased Property, to place the Leased Property in storage or other
suitable place in the County of Marin for the account of and at the
expense of the City, and the City hereby exempts and agrees to save
harmless the Authority from any costs, loss or damage whatsoever
arising or occasioned by any such entry upon and re-leasing of the
Leased Property and the removal and storage of the Leased Property
by the Authority or its duly authorized agents in accordance with the
provisions herein contained. The City agrees that the terms of this
Lease constitute full and sufficient notice of the right of the Authority
to re-lease the Leased Property in the event of such re-entry without
effecting a surrender of this Lease, and further agrees that no acts of
the Authority in effecting such re-leasing shall constitute a surrender
or termination of this Lease irrespective of the term for which such re-
leasing is made or the terms and conditions of such re-leasing, or
otherwise, but that, on the contrary, in the event of such default by
the City the right to terminate this Lease shall vest in the Authority to
be effected in the sole and exclusive manner hereinafter provided for
in subparagraph (b) hereof. The City agrees to surrender and quit
possession of the Leased Property upon demand of the Authority for
the purpose of enabling the Leased Property to be re-let under this
paragraph, and the City further waives the right to any rental obtained
by the Authority in excess of the Lease Payments and hereby
conveys and releases such excess to the Authority as compensation
to the Authority for its services in re-leasing the Leased Property.
(b) Termination of Lease. If an Event of Default occurs and is continuing
hereunder, the Authority at its option may terminate this Lease and
re-lease all or any portion of the Leased Property. If the Authority
terminates this Lease at its option and in the manner hereinafter
provided on account of default by the City (and notwithstanding any
re-entry upon the Leased Property by the Authority in any manner
whatsoever or the re-leasing of the Leased Property), the City
nevertheless agrees to pay to the Authority all costs, loss or damages
howsoever arising or occurring payable at the same time and in the
same manner as is herein provided in the case of payment of Lease
Payments and Additional Rental Payments. Any surplus received by
the Authority from such re-leasing shall be deposited in the Bond
Fund. Neither notice to pay rent or to deliver up possession of the
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premises given under law nor any proceeding in unlawful detainer
taken by the Authority shall of itself operate to terminate this Lease,
and no termination of this Lease on account of default by the City
shall be or become effective by operation of law, or otherwise, unless
and until the Authority shall have given written notice to the City of
the election on the part of the Authority to terminate this Lease. The
City covenants and agrees that no surrender of the Leased Property,
or of the remainder of the Term hereof or any termination of this
Lease shall be valid in any manner or for any purpose whatsoever
unless stated or accepted by the Authority by such written notice.
(c) Proceedings at Law or In Equity. If an Event of Default occurs and
continues hereunder, the Authority may take whatever action at law
or in equity may appear necessary or desirable to collect the amounts
then due and thereafter to become due hereunder or to enforce any
other of its rights hereunder.
SECTION 8.3. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Authority is intended to be exclusive and every such remedy is cumulative
and in addition to every other remedy given under this Lease or now or hereafter existing
at law or in equity. No delay or omission to exercise any right or power accruing upon the
occurrence of any Event of Default impairs any such right or power or operates as a waiver
thereof, but any such right and power may be exercised from time to time and as often as
may be deemed expedient. In order to entitle the Authority to exercise any remedy
reserved to it in this Article VIII it is not necessary to give any notice, other than as
expressly required in this Article VIII or by law.
SECTION 8.4. Agreement to Pay Attorneys’ Fees and Expenses. If the Authority
or the City defaults under any of the provisions of this Lease and the nondefaulting party
employs attorneys or incurs other expenses for the collection of moneys or the
enforcement or performance or observance of any obligation or agreement on the part of
the defaulting party herein contained, the defaulting party will on demand therefor pay to
the nondefaulting party the reasonable fees of such attorneys and such other expenses
so incurred by the nondefaulting party; provided, however, that the Trustee shall not be
required to expend its own funds for any payment described in this Section.
SECTION 8.5. No Additional Waiver Implied by One Waiver. If the Authority or the
City breaches any agreement in this Lease and thereafter the other party waives the
breach, such waiver is limited to the particular breach so waived and does not operate to
waive any other breach hereunder.
SECTION 8.6. Application of Proceeds. All net proceeds received from the re-lease
of the Leased Property under this Article VIII, and all other amounts derived by the
Authority or the Trustee as a result of the occurrence of an Event of Default, must be paid
to and applied by the Trustee in accordance with Section 7.03 of the Indenture.
SECTION 8.7. Trustee and Bond Owners to Exercise Rights. Such rights and
remedies as are given to the Authority under this Article VIII have been assigned by the
Authority to the Trustee under the Assignment Agreement for the benefit of the Bond
Owners, to which assignment the City hereby consents. The Trustee and the Bond
Owners shall exercise such rights and remedies in accordance with the Indenture.
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ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
SECTION 9.1. Security Deposit. Notwithstanding any other provision of this Lease,
the City may on any date secure the payment of the Lease Payments allocable to the
Leased Property in whole or in part by depositing with the Trustee an amount of cash
which, together with other available amounts on deposit in the funds and accounts
established under the Indenture, is either:
(a) sufficient to pay such Lease Payments, including the principal and
interest components thereof, in accordance with the Lease Payment
schedule set forth in Appendix B, or
(b) invested in whole or in part in non-callable Federal Securities in such
amount as will, in the opinion of an independent certified public
accountant, (which opinion must be addressed and delivered to the
Trustee), together with interest to accrue thereon and together with
any cash which is so deposited, be fully sufficient to pay such Lease
Payments when due under Section 4.3(a), as the City instructs at the
time of said deposit.
If the City makes a security deposit under this Section with respect to all unpaid
Lease Payments, and notwithstanding the provisions of Section 4.2, (a) the Term of this
Lease will continue, (b) all obligations of the City under this Lease, and all security
provided by this Lease for said Lease Payments, will thereupon cease and terminate,
excepting only the obligation of the City to make, or cause to be made all of said Lease
Payments from such security deposit, and (c) under Section 4.7, title to the Leased
Property will vest in the City on the date of said deposit automatically and without further
action by the City or the Authority. Said security deposit constitutes a special fund for the
payment of Lease Payments in accordance with the provisions of this Lease.
SECTION 9.2. Optional Prepayment. The City has the option to prepay the principal
components of the Lease Payments in whole, or in part in any integral multiple of $5,000,
from any source of legally available funds, on any date on or after June 1, 2028, at a
prepayment price equal to the aggregate principal components of the Lease Payments to
be prepaid, together with the interest component of the Lease Payment required to be
paid on such Interest Payment Date, and together with a prepayment premium equal to
the premium (if any) required to be paid on the resulting redemption of Bonds under
Section 4.01(a) of the Indenture. Such prepayment price shall be deposited by the Trustee
in the Redemption Fund to be applied to the redemption of Bonds under Section 4.01(a)
of the Indenture. The City shall give 10 days’ written notice to the Trustee of its intention
to prepay the Lease Payments under this Section.
SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent
Domain. The City shall prepay the principal components of the Lease Payments allocable
to the Leased Property in whole or in part on any date, from and to the extent of any Net
Proceeds of insurance award or eminent domain award with respect to the Leased
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Property theretofore deposited in the Redemption Fund for that purpose under Article VI
hereof and Section 5.07 of the Indenture. Such Net Proceeds, to the extent remaining
after payment of any delinquent Lease Payments, will be credited towards the City’s
obligations under this Section and applied to the corresponding redemption of Bonds
under Section 4.01(b) of the Indenture.
SECTION 9.4. Credit for Amounts on Deposit. If the principal components of the
Lease Payments are prepaid in full under this Article IX, such that the Indenture is
discharged by its terms as a result of such prepayment, at the written election of the City
filed with the Trustee any or all amounts then on deposit in the Bond Fund (and the
accounts therein) will be credited towards the amounts then required to be so prepaid.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Notices. Any notice, request, complaint, demand or other
communication under this Lease shall be given by first class mail or personal delivery to
the party entitled thereto at its address set forth below, or by facsimile transmission or
other form of telecommunication, at its number set forth below. Notice shall be effective
either (a) upon transmission by facsimile transmission or other form of telecommunication,
(b) 48 hours after deposit in the United States of America first class mail, postage prepaid,
or (c) in the case of personal delivery to any person, upon actual receipt. The Authority,
the City or the Trustee may, by written notice to the other parties, from time to time modify
the address or number to which communications are to be given hereunder.
If to the Authority City of San Rafael
or the City: 1400 Fifth Avenue
San Rafael, CA 94901
Attention: City Manager
Email: finance@cityofsanrafael.org
If to the Trustee: MUFG Union Bank, N.A.
350 California Street, 17th Floor
San Francisco, California 94104
Attention: Corporate Trust Department
Email:AccountAdministration-
Corporate.Trust@unionbank.com
SECTION 10.2. Binding Effect. This Lease inures to the benefit of and binds the
Authority, the City and their respective successors and assigns.
SECTION 10.3. Severability. If any provision of this Lease is held invalid or
unenforceable by any court of competent jurisdiction, such holding will not invalidate or
render unenforceable any other provision hereof.
SECTION 10.4. Net-net-net Lease. This Lease is deemed and construed to be a
“net-net-net lease” and the City hereby agrees that the Lease Payments are an absolute
net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.
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SECTION 10.5. Third-Party Beneficiary. The Trustee is hereby made a third-party
beneficiary hereunder with all rights of a third party beneficiary.
SECTION 10.6. Further Assurances and Corrective Instruments. The Authority and
the City shall, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements hereto and such further
instruments as may reasonably be required for correcting any inadequate or incorrect
description of the Leased Property hereby leased or intended so to be or for carrying out
the expressed intention of this Lease.
SECTION 10.7. Execution in Counterparts. This Lease may be executed in several
counterparts, each of which is an original and all of which constitute but one and the same
instrument.
SECTION 10.8. Applicable Law. This Lease is governed by and construed in
accordance with the laws of the State of California.
SECTION 10.9. Authority and City Representatives. Whenever under the
provisions of this Lease the approval of the Authority or the City is required, or the Authority
or the City is required to take some action at the request of the other, such approval or
such request shall be given for the Authority and for the City by an Authorized
Representative thereof, and any party hereto may conclusively rely upon any such
approval or request.
SECTION 10.10. Captions. The captions or headings in this Lease are for
convenience only and in no way define, limit or describe the scope or intent of any
provisions or Section of this Lease.
ffir Yirrna WELNU11:,I lawiroulm. al" tw 'PM% 414.11 FINE 'E'lm INT -Er r umr Elms Ina IM ifruiL
4J;
IN WITNESS WHEREOF, the Authority and the City have caused this Lease to be
executed in their respective names by their duly authorized officers, all as of the date first
above written.
SAN RAFAEL JOINT POWERS FINANCING
AUTHORITY, as lessor
v
er,e,,
A-1
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property referred to herein is situated in the State of California, County of Marin,
City of San Rafael and described as follows:
Parcel One:
Beginning at the corner formed by the intersection of the West line of "C" Street with the South
line of Fifth Street; Running thence Westerly along the South line of Fifth Street (now called
Fifth Avenue), 100 feet; Running thence at right angles Southerly seventy-seven and one-half
(771/2) feet to old fence running thence at right angles Easterly parallel with Fifth Street one
hundred (100) feet to the West line of "C" Street; Running thence Northerly along the West
line of "C" Street seventy-seven and one-half (771/2) feet to the place of beginning.
Parcel Two:
Parcel A:
Beginning at a point on the Southerly line of Fifth Avenue, in the City of San Rafael, distant
thereon Westerly 100 feet from its intersection with the Westerly line of “C” Street,. and
running thence along the said Avenue line Westerly 51 feet, thence at right angles Southerly
140 feet, thence at right angle Easterly 48 feet, thence at right angles, Northerly 62.5 feet,
thence at right angle Easterly 3 feet, thence at right angle Northerly 77.5 feet to the point of
beginning.
Parcel B:
Map of the Townsite of San Rafael Tract of Land beginning at point Westerly 100 feet along
Southerly line 5th Avenue and at right angles Southerly 77.5 feet from intersection of Westerly
line “C” Street with Southerly line of 5th Avenue, running thence Westerly parallel with
Southerly. line 5th Avenue 3 feet, Southerly at right angles 62.5 feet, Southeasterly parallel
with Southerly line 5th Avenue, 3 feet thence Northerly to beginning.
Being portion Block13.
Parcel Three:
Beginning at a point on the Southerly line of 5th. Street, said point being the Northeast corner
of the property described in the deed from William Vaning, et ux., to the City of San Rafael,
dated June 9, 1897 and recorded June 9, 1987 in Book 45, Page 315, Marin County Records;
running thence along said Southerly line of 5th. Street, South 83° 15' East, 155 feet; thence
leaving said line South 6° 45' West 140 feet to the Northerly line of the property described in
the Deed from Timothy J. Nahon to Robert Magnes, dated September 15, 1897 and recorded
September 15, 1897 in Book 47, of Deeds, at Page 108; thence along said line North 83° 15'
West 159.9 feet to the Southeast corner of the property described in the above mentioned
deed to the City of San Rafael; thence along the Easterly line thereof, 140 feet to the point of
beginning.
APN: 011-205-04 as to Parcel One
APN: 011-205-17 as to Parcel(s) Two, Parcel A and Two, Parcel Three
APN: 011-205-01 as to Parcel Four
(End of Legal Description)
A-2
B-1
APPENDIX B
SCHEDULE OF LEASE PAYMENTS
Lease
Payment Date*
Principal
Component
Interest
Component
Aggregate
Lease Payment
6/1/2018 -- $391,028.75 $391,028.75
12/1/2018 -- 1,117,225.00 1,117,225.00
6/1/2019 -- 1,117,225.00 1,117,225.00
12/1/2019 -- 1,117,225.00 1,117,225.00
6/1/2020 -- 1,117,225.00 1,117,225.00
12/1/2020 -- 1,117,225.00 1,117,225.00
6/1/2021 $1,910,000.00 1,117,225.00 3,027,225.00
12/1/2021 -- 1,079,025.00 1,079,025.00
6/1/2022 2,070,000.00 1,079,025.00 3,149,025.00
12/1/2022 -- 1,037,625.00 1,037,625.00
6/1/2023 2,240,000.00 1,037,625.00 3,277,625.00
12/1/2023 -- 981,625.00 981,625.00
6/1/2024 2,435,000.00 981,625.00 3,416,625.00
12/1/2024 -- 920,750.00 920,750.00
6/1/2025 2,645,000.00 920,750.00 3,565,750.00
12/1/2025 -- 854,625.00 854,625.00
6/1/2026 2,870,000.00 854,625.00 3,724,625.00
12/1/2026 -- 782,875.00 782,875.00
6/1/2027 3,105,000.00 782,875.00 3,887,875.00
12/1/2027 -- 705,250.00 705,250.00
6/1/2028 3,355,000.00 705,250.00 4,060,250.00
12/1/2028 -- 621,375.00 621,375.00
6/1/2029 3,615,000.00 621,375.00 4,236,375.00
12/1/2029 -- 531,000.00 531,000.00
6/1/2030 3,895,000.00 531,000.00 4,426,000.00
12/1/2030 -- 433,625.00 433,625.00
6/1/2031 4,190,000.00 433,625.00 4,623,625.00
12/1/2031 -- 328,875.00 328,875.00
6/1/2032 4,500,000.00 328,875.00 4,828,875.00
12/1/2032 -- 216,375.00 216,375.00
6/1/2033 4,825,000.00 216,375.00 5,041,375.00
12/1/2033 -- 95,750.00 95,750.00
6/1/2034 3,830,000.00 95,750.00 3,925,750.00
Total $45,485,000.00 $24,271,928.75 $69,756,928.75
* Lease Payment Dates are the Business Day immediately preceding each date listed in the
schedule
41390-03 SM:SRF:REL FINAL
INDENTURE OF TRUST
Dated as of March 1, 2018
between
MUFG UNION BANK, N.A.,
as Trustee
and the
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
Authorizing the Issuance of
$45,485,000
San Rafael Joint Powers Financing Authority
Lease Revenue Bonds, Series 2018
(Public Safety Facilities Project)
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01. Definitions........................................................................................................... 2
SECTION 1.02. Authorization ...................................................................................................... 2
SECTION 1.03. Interpretation ...................................................................................................... 2
ARTICLE II
The Bonds
SECTION 2.01. Authorization of Bonds ........................................................................................ 3
SECTION 2.02. Terms of the Bonds ............................................................................................ 3
SECTION 2.03. Transfer and Exchange of Bonds ....................................................................... 5
SECTION 2.04. Book-Entry System ............................................................................................. 5
SECTION 2.05. Registration Books ............................................................................................. 7
SECTION 2.06. Form and Execution of Bonds............................................................................. 7
SECTION 2.07. Bonds Mutilated, Lost, Destroyed or Stolen ........................................................ 8
ARTICLE III
Issuance of Bonds; Application of Proceeds
SECTION 3.01. Issuance of the Bonds ........................................................................................ 9
SECTION 3.02. Application of Proceeds of Sale of Bonds; Transfer of Prior Funds ..................... 9
SECTION 3.03. Establishment and Application of Costs of Issuance Fund .................................. 9
SECTION 3.04. Establishment and Application of Project Fund ................................................. 10
SECTION 3.05. Validity of Bonds ............................................................................................... 10
ARTICLE IV
Redemption of Bonds
SECTION 4.01. Terms of Redemption ....................................................................................... 10
SECTION 4.02. Selection of Bonds for Redemption .................................................................. 11
SECTION 4.03. Notice of Redemption; Rescission .................................................................... 11
SECTION 4.04. Conditional Redemption; Rescission of Redemption ........................................ 11
SECTION 4.05. Partial Redemption of Bonds ............................................................................ 11
SECTION 4.06. Effect of Redemption ........................................................................................ 12
ARTICLE V
Revenues; Funds and Accounts; Payment of Principal and
Interest
SECTION 5.01. Security for the Bonds; Bond Fund ................................................................... 12
SECTION 5.02. Allocation of Revenues ..................................................................................... 13
SECTION 5.03. Application of Interest Account ......................................................................... 13
SECTION 5.04. Application of Principal Account ........................................................................ 14
SECTION 5.05. Reserved .......................................................................................................... 14
SECTION 5.06. Application of Redemption Fund ....................................................................... 14
SECTION 5.07. Insurance and Condemnation Fund .................................................................. 14
SECTION 5.08. Investments ...................................................................................................... 15
SECTION 5.09. Valuation and Disposition of Investments ......................................................... 17
ARTICLE VI
Covenants of the Authority
SECTION 6.01. Punctual Payment ............................................................................................ 17
SECTION 6.02. Extension of Payment of Bonds ........................................................................ 17
SECTION 6.03. Against Encumbrances ..................................................................................... 17
SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment ................................ 17
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SECTION 6.05. Accounting Records ......................................................................................... 18
SECTION 6.06. Limitation on Additional Obligations .................................................................. 18
SECTION 6.07. Tax Covenants ................................................................................................. 18
SECTION 6.08. Enforcement of Lease ...................................................................................... 19
SECTION 6.09. Waiver of Laws ................................................................................................. 19
SECTION 6.10. Further Assurances .......................................................................................... 19
ARTICLE VII
Events of Default and Remedies
SECTION 7.01. Events of Default .............................................................................................. 19
SECTION 7.02. Remedies Upon Event of Default ...................................................................... 20
SECTION 7.03. Application of Revenues and Other Funds After Default ................................... 20
SECTION 7.04. Trustee to Represent Bond Owners.................................................................. 21
SECTION 7.05. Limitation on Bond Owners' Right to Sue .......................................................... 21
SECTION 7.06. Absolute Obligation of Authority ........................................................................ 22
SECTION 7.07. Termination of Proceedings .............................................................................. 22
SECTION 7.08. Remedies Not Exclusive ................................................................................... 22
SECTION 7.09. No Waiver of Default ........................................................................................ 22
SECTION 7.10. Notice to Bond Owners of Default ..................................................................... 22
ARTICLE VIII
The Trustee
SECTION 8.01. Appointment of Trustee..................................................................................... 23
SECTION 8.02. Acceptance of Trusts; Removal and Resignation of Trustee ............................. 23
SECTION 8.03. Merger or Consolidation ................................................................................... 25
SECTION 8.04. Liability of Trustee ............................................................................................ 25
SECTION 8.05. Right to Rely on Documents ............................................................................. 28
SECTION 8.06. Preservation and Inspection of Documents....................................................... 28
SECTION 8.07. Compensation and Indemnification ................................................................... 29
ARTICLE IX
Modification or Amendment Hereof
SECTION 9.01. Amendments Permitted .................................................................................... 30
SECTION 9.02. Effect of Supplemental Indenture ...................................................................... 31
SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds .......................................... 31
SECTION 9.04. Amendment of Particular Bonds ....................................................................... 32
ARTICLE X
Defeasance
SECTION 10.01. Discharge of Indenture ................................................................................... 32
SECTION 10.02. Discharge of Liability on Bonds ....................................................................... 32
SECTION 10.03. Deposit of Money or Securities with Trustee ................................................... 33
SECTION 10.04. Unclaimed Funds ............................................................................................ 33
ARTICLE XI
Miscellaneous
SECTION 11.01. Liability of Authority Limited to Revenues ....................................................... 34
SECTION 11.02. Limitation of Rights to Parties and Bond Owners ............................................ 34
SECTION 11.03. Funds and Accounts ....................................................................................... 34
SECTION 11.04. Waiver of Notice; Requirement of Mailed Notice ............................................. 34
SECTION 11.05. Destruction of Bonds ...................................................................................... 35
SECTION 11.06. Severability of Invalid Provisions .................................................................... 35
SECTION 11.07. Notices ........................................................................................................... 35
SECTION 11.08. Evidence of Rights of Bond Owners ............................................................... 35
SECTION 11.09. Disqualified Bonds .......................................................................................... 36
SECTION 11.10. Money Held for Particular Bonds .................................................................... 36
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SECTION 11.11. Waiver of Personal Liability ............................................................................ 36
SECTION 11.12. Successor Is Deemed Included in All References to Predecessor .................. 36
SECTION 11.13. Execution in Several Counterparts.................................................................. 37
SECTION 11.14. Payment on Non-Business Day ...................................................................... 37
SECTION 11.15. Governing Law ............................................................................................... 37
APPENDIX A DEFINITIONS
APPENDIX B FORM OF BOND
INDENTURE OF TRUST
This INDENTURE OF TRUST (this “Indenture”), dated for convenience as of March 1,
2018, is between the SAN RAFAEL JOINT POWERS FINANCING AUTHORITY, a joint powers
authority duly organized and existing under the laws of the State of California (the
“Authority”), and MUFG UNION BANK, N.A., a national banking association organized and
existing under the laws of the United States of America, with a corporate trust office in San
Francisco, California, being qualified to accept and administer the trusts hereby created
(the “Trustee”).
BACKGROUND:
1. The City of San Rafael (the “City”) wishes to finance the acquisition and
construction of certain public safety improvements consisting generally of a new public
safety center and two replacement fire stations (collectively, the “Project”).
2. To that end, the City has proposed to lease to the Authority certain real
property and improvements, initially consisting of the City’s new public safety facility, the
City’s Fire Station 52, and the City’s Fire Station 57, including land and improvements
thereon, as more particularly described in Appendix A attached to the Site Lease (defined
below) (the “Leased Property”), under a Site Lease, dated as of the date hereof, by and
between the City as lessor and the Authority as lessee (the “Site Lease”), in consideration
of the payment by the Authority of an upfront rental payment (the “Site Lease Payment”)
sufficient to provide funds for the acquisition and construction of the Project.
3. The Authority wishes to issue its San Rafael Joint Powers Financing
Authority Lease Revenue Bonds, Series 2018 (Public Safety Facilities Project) in the
aggregate principal amount of $45,485,000 (the “Bonds”) under this Indenture for the
purpose of providing the funds to enable the Authority to pay the Site Lease Payment to
the City in accordance with the Site Lease.
4. In order to provide revenues which are sufficient to enable the Authority to
pay debt service on the Bonds, the Authority has leased the Leased Property back to the
City under a Lease Agreement dated the date hereof, by and between the City as lessee
and the Authority as lessor (the “Lease”), under which the City has agreed to pay
semiannual Lease Payments as the rental for the Leased Property thereunder.
5. The lease payments made by the City under the Lease have been assigned
by the Authority to the Trustee for the security of the Bonds under an Assignment
Agreement, dated the date hereof, between the Authority as assignor and the Trustee as
assignee.
6. In order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued
and to secure the payment of the principal thereof, premium (if any) and interest thereon,
the Authority has authorized the execution and delivery of this Indenture.
7. The Authority has found and determined, and hereby affirms, that all acts
and proceedings required by law necessary to make the Bonds, when executed by the
Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding
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and legal special obligations of the Authority, and to constitute this Indenture a valid and
binding agreement for the uses and purposes herein set forth in accordance with its terms,
have been done and taken, and the execution and delivery of this Indenture have been in
all respects duly authorized.
AGREEMENT:
In order to secure the payment of the principal of and the interest and redemption
premium (if any) on all the Outstanding Bonds under this Indenture according to their
tenor, and to secure the performance and observance of all the covenants and conditions
therein and herein set forth, and to declare the terms and conditions upon and subject to
which the Bonds are to be issued and received, and in consideration of the premises and
of the mutual covenants herein contained and of the purchase and acceptance of the
Bonds by the Owners thereof, and for other valuable considerations, the receipt of which
is hereby acknowledged, the Authority and the Trustee do hereby covenant and agree
with one another, for the benefit of the respective Owners from time to time of the Bonds,
as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01. Definitions. Unless the context clearly otherwise requires or unless
otherwise defined herein, the capitalized terms defined in Appendix A attached to this
Indenture have the respective meanings specified in that Appendix when used in this
Indenture.
SECTION 1.02. Authorization. Each of the parties hereby represents and warrants
that it has full legal authority and is duly empowered to enter into this Indenture, and has
taken all actions necessary to authorize the execution hereof by the officers and persons
signing it.
SECTION 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall
include the plural and vice versa and the use of the neuter, masculine, or feminine gender
is for convenience only and shall be deemed to include the neuter, masculine or feminine
gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are
solely for convenience of reference, do not constitute a part hereof and shall not affect the
meaning, construction or effect hereof.
(c) All references herein to “Articles,” “Sections” and other subdivisions are to
the corresponding Articles, Sections or subdivisions of this Indenture; the words “herein,”
“hereof,” “hereby,” “hereunder” and other words of similar import refer to this Indenture as
a whole and not to any particular Article, Section or subdivision hereof.
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ARTICLE II
THE BONDS
SECTION 2.01. Authorization of Bonds. The Authority has reviewed all proceedings
heretofore taken and has found, as a result of such review, and hereby finds and
determines that all things, conditions and acts required by law to exist, happen or be
performed precedent to and in connection with the issuance of the Bonds do exist, have
happened and have been performed in due time, form and manner as required by law,
and the Authority is now duly empowered, under each and every requirement of law, to
issue the Bonds in the manner and form provided in this Indenture.
The Authority hereby authorizes the issuance of Bonds in the aggregate principal
amount of $45,485,000 under the Bond Law for the purposes of providing funds to pay
the Site Lease Payment to the City and thereby provide funds to pay the costs of the
Project. The Bonds are authorized and issued under, and are subject to the terms of, this
Indenture and the Bond Law. The Bonds are designated the “San Rafael Joint Powers
Financing Authority Lease Revenue Bonds, Series 2018 (Public Safety Facilities Project).”
SECTION 2.02. Terms of the Bonds.
(a) Payment Provisions. The Bonds shall be issued in fully registered form
without coupons in denominations of $5,000 or any integral multiple thereof, so long as no
Bond has more than one maturity date. The Bonds shall mature on June 1 in each of the
years and in the amounts, and bear interest (calculated on the basis of a 360-day year of
twelve 30-day months) at the rates, as follows:
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Maturity Date
(June 1)
Principal
Amount
Interest
Rate
2021 $1,910,000 4.000%
2022 2,070,000 4.000
2023 2,240,000 5.000
2024 2,435,000 5.000
2025 2,645,000 5.000
2026 2,870,000 5.000
2027 3,105,000 5.000
2028 3,355,000 5.000
2029 3,615,000 5.000
2030 3,895,000 5.000
2031 4,190,000 5.000
2032 4,500,000 5.000
2033 4,825,000 5.000
2034 3,830,000 5.000
Interest on the Bonds is payable from the Interest Payment Date next preceding
the date of authentication thereof unless:
(a) a Bond is authenticated on or before an Interest Payment Date and
after the close of business on the preceding Record Date, in which
event it will bear interest from such Interest Payment Date,
(b) a Bond is authenticated on or before the first Record Date, in which
event interest thereon will be payable from the Closing Date, or
(c) interest on any Bond is in default as of the date of authentication
thereof, in which event interest thereon will be payable from the
date to which interest has been paid in full, payable on each Interest
Payment Date.
Interest is payable on each Interest Payment Date to the persons in whose names
the ownership of the Bonds is registered on the Registration Books at the close of business
on the immediately preceding Record Date, except as provided below. Interest on any
Bond which is not punctually paid or duly provided for on any Interest Payment Date is
payable to the person in whose name the ownership of such Bond is registered on the
Registration Books at the close of business on a special record date for the payment of
such defaulted interest to be fixed by the Trustee, notice of which is given to such Owner
by first-class mail not less than 10 days prior to such special record date.
The Trustee will pay interest on the Bonds by check of the Trustee mailed by first
class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds
at their respective addresses shown on the Registration Books as of the close of business
on the preceding Record Date. At the written request of the Owner of Bonds in an
aggregate principal amount of at least $1,000,000, which written request is on file with the
Trustee as of any Record Date, the Trustee will pay interest on such Bonds on each
succeeding Interest Payment Date by wire transfer in immediately available funds to such
account of a financial institution within the United States of America as specified in such
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written request, which written request will remain in effect until rescinded in writing by the
Owner. The Trustee will pay principal of the Bonds in lawful money of the United States
of America by check of the Trustee or by wire upon presentation and surrender thereof at
the Office of the Trustee.
SECTION 2.03. Transfer and Exchange of Bonds.
(a) Transfer. Any Bond may, in accordance with its terms, be transferred, upon
the Registration Books, by the person in whose name it is registered, in person or by a
duly authorized attorney of such person, upon surrender of such Bond to the Trustee at
its Office for cancellation, accompanied by delivery of a written instrument of transfer in a
form acceptable to the Trustee, duly executed. The Trustee shall require the Owner
requesting such transfer to pay any tax or other governmental charge required to be paid
with respect to such transfer. Whenever any Bond is or Bonds are surrendered for
transfer, the Authority shall execute and the Trustee shall authenticate and deliver to the
transferee a new Bond or Bonds of like series, interest rate, maturity and aggregate
principal amount. The Authority shall pay the cost of printing Bonds and any services
rendered or expenses incurred by the Trustee in connection with any transfer of Bonds.
(b) Exchange. The Bonds may be exchanged at the Office of the Trustee for a
like aggregate principal amount of Bonds of other authorized denominations and of the
same series, interest rate and maturity. The Trustee shall require the Owner requesting
such exchange to pay any tax or other governmental charge required to be paid with
respect to such exchange. The Authority shall pay the cost of printing Bonds and any
services rendered or expenses incurred by the Trustee in connection with any exchange
of Bonds.
(c) Limitations. The Trustee may refuse to transfer or exchange, under the
provisions of this Section 2.03, any Bonds selected by the Trustee for redemption under
Article IV, or any Bonds during the period established by the Trustee for the selection of
Bonds for redemption.
SECTION 2.04. Book-Entry System.
(a) Original Delivery. The Bonds will be initially delivered in the form of a
separate single fully registered bond (which may be typewritten) for each maturity of the
Bonds. Upon initial delivery, the Trustee shall register the ownership of each Bond on the
Registration Books in the name of the Nominee. Except as provided in subsection (c), the
ownership of all of the Outstanding Bonds shall be registered in the name of the Nominee
on the Registration Books.
With respect to Bonds the ownership of which is registered in the name of the
Nominee, the Authority and the Trustee have no responsibility or obligation to any
Depository System Participant or to any person on behalf of which the Nominee holds an
interest in the Bonds.
Without limiting the generality of the immediately preceding sentence, the Authority
and the Trustee have no responsibility or obligation with respect to (i) the accuracy of the
records of the Depository, the Nominee or any Depository System Participant with respect
to any ownership interest in the Bonds, (ii) the delivery to any Depository System
Participant or any other person, other than a Bond Owner as shown in the Registration
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Books, of any notice with respect to the Bonds, including any notice of redemption, (iii) the
selection by the Depository of the beneficial interests in the Bonds to be redeemed if the
Authority elects to redeem the Bonds in part, (iv) the payment to any Depository System
Participant or any other person, other than a Bond Owner as shown in the Registration
Books, of any amount with respect to principal, premium, if any, or interest on the Bonds
or (v) any consent given or other action taken by the Depository as Owner of the Bonds.
The Authority and the Trustee may treat and consider the person in whose name
each Bond is registered as the absolute owner of such Bond for the purpose of payment
of principal of and premium, if any, and interest on such Bond, for the purpose of giving
notices of redemption and other matters with respect to such Bond, for the purpose of
registering transfers of ownership of such Bond, and for all other purposes whatsoever.
The Trustee shall pay the principal of and the interest and premium, if any, on the
Bonds only to the respective Owners or their respective attorneys duly authorized in
writing, and all such payments shall be valid and effective to fully satisfy and discharge all
obligations with respect to payment of principal of and interest and premium, if any, on the
Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner
shall receive a Bond evidencing the obligation of the Authority to make payments of
principal, interest and premium, if any, under this Indenture. Upon delivery by the
Depository to the Authority of written notice to the effect that the Depository has
determined to substitute a new Nominee in its place, and subject to the provisions herein
with respect to Record Dates, such new nominee shall become the Nominee hereunder
for all purposes; and upon receipt of such a notice the Authority shall promptly deliver a
copy of the same to the Trustee.
(b) Representation Letter. In order to qualify the Bonds for the Depository’s
book-entry system, the Authority shall execute and deliver to such Depository a letter in
which the Authority will agree to the Depository’s operational arrangements. To the extent
required to do so by the Depository, the Trustee shall also execute such representation
letter and agree to the Depository’s operational arrangements. The execution and delivery
of such letter shall not in any way limit the provisions of subsection (a) above or in any
other way impose upon the Authority or the Trustee any obligation whatsoever with
respect to persons having interests in the Bonds other than the Bond Owners. In addition
to the execution and delivery of such letter, the Authority may take any other actions, not
inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry
program.
(c) Transfers Outside Book-Entry System. If either (i) the Depository determines
not to continue to act as Depository for the Bonds, or (ii) the Authority determines to
terminate the Depository as such, then the Authority shall thereupon discontinue the book-
entry system with such Depository. In such event, the Depository shall cooperate with the
Authority and the Trustee in the issuance of replacement Bonds by providing the Trustee
with a list showing the interests of the Depository System Participants in the Bonds, and
by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or
before the date such replacement Bonds are to be issued. The Depository, by accepting
delivery of the Bonds, agrees to be bound by the provisions of this subsection (c). If, prior
to the termination of the Depository acting as such, the Authority fails to identify another
Securities Depository to replace the Depository, then the Bonds shall no longer be
required to be registered in the Registration Books in the name of the Nominee, and, upon
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transfer or exchange, shall be registered in whatever name or names the Owners
transferring or exchanging Bonds designate, in accordance with the provisions hereof.
If the Authority determines that it is in the best interests of the beneficial owners of
the Bonds that they be able to obtain certificated Bonds, the Authority may notify the
Depository System Participants of the availability of such certificated Bonds through the
Depository. In such event, the Trustee will issue, transfer and exchange Bonds as
required by the Depository and others in appropriate amounts; and whenever the
Depository requests, the Trustee and the Authority shall cooperate with the Depository in
taking appropriate action to make available one or more separate certificates evidencing
the Bonds to any Depository System Participant having Bonds credited to its account with
the Depository, or to arrange for another Securities Depository to maintain custody of a
single certificate evidencing such Bonds, all at the Authority’s expense.
(d) Payments to the Nominee. Notwithstanding any other provision of this
Indenture to the contrary, so long as any Bond is registered in the name of the Nominee,
all payments with respect to principal of and interest and premium, if any, on such Bond
and all notices with respect to such Bond shall be made and given, respectively, as
provided in the letter described in subsection (b) of this Section or as otherwise instructed
by the Depository.
SECTION 2.05. Registration Books. The Trustee will keep or cause to be kept, at
the Office of the Trustee, sufficient records for the registration and transfer of ownership
of the Bonds, which shall upon reasonable notice as agreed to by the Trustee, be open to
inspection during regular business hours by the Authority; and, upon presentation for such
purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register
or transfer or cause to be registered or transferred, on such records, the ownership of the
Bonds as hereinbefore provided.
SECTION 2.06. Form and Execution of Bonds. The Bonds, the form of Trustee’s
certificate of authentication, and the form of assignment to appear thereon, are set forth
in Appendix B attached hereto and by this reference incorporated herein, with necessary
or appropriate variations, omissions and insertions, as permitted or required by this
Indenture.
The Executive Director of the Authority shall execute, and the Secretary of the
Authority shall attest, each Bond. Either or both of such signatures may be made manually
or may be affixed by facsimile thereof. If any officer whose signature appears on any
Bond ceases to be such officer before the Closing Date, such signature will nevertheless
be as effective as if the officer had remained in office until the Closing Date. Any Bond
may be signed and attested on behalf of the Authority by such persons as at the actual
date of the execution of such Bond are the proper officers of the Authority, duly authorized
to execute debt instruments on behalf of the Authority, although on the date of such Bond
any such person was not an officer of the Authority.
Only those Bonds bearing a certificate of authentication in the form set forth in
Appendix B, manually executed and dated by the Trustee, are valid or obligatory for any
purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee is
conclusive evidence that such Bonds have been duly authenticated and delivered
hereunder and are entitled to the benefits of this Indenture.
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SECTION 2.07. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond is
mutilated, the Authority, at the expense of the Owner of such Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange
and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the
Bond so mutilated. The Trustee shall cancel every mutilated Bond surrendered to it and
deliver such mutilated Bond to, or upon the order of, the Authority.
If any Bond is lost, destroyed or stolen, evidence of such loss, destruction or theft
may be submitted to the Trustee and, if such evidence is satisfactory and if indemnity
satisfactory to the Trustee and the Authority is given, the Authority, at the expense of the
Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new
Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen.
The Trustee may require payment of a sum not exceeding the actual cost of
preparing each new Bond issued under this Section and of the expenses which may be
incurred by the Trustee in connection therewith. Any Bond issued under the provisions of
this Section in lieu of any Bond alleged to be lost, destroyed or stolen will constitute an
original additional contractual obligation on the part of the Authority whether or not the
Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and
shall be equally and proportionately entitled to the benefits of this Indenture with all other
Bonds issued under this Indenture.
Notwithstanding any other provision of this Section, in lieu of delivering a new Bond
for which principal has become due for a Bond which has been mutilated, lost, destroyed
or stolen, the Trustee may make payment of such Bond in accordance with its terms upon
receipt of indemnity satisfactory to the Trustee.
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ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF
PROCEEDS
SECTION 3.01. Issuance of the Bonds. At any time after the execution of this
Indenture, the Authority may execute and the Trustee shall authenticate and, upon the
Written Request of the Authority, deliver the Bonds to the Original Purchaser.
SECTION 3.02. Application of Proceeds of Sale of Bonds; Transfer of Prior Funds.
On the Closing Date, the Original Purchaser will pay a purchase price for the Bonds in the
amount of $53,598,799.33, which is equal to the original principal amount of the Bonds
($45,485,000.00), plus an original issue premium of $8,248,396.60, less an underwriter’s
discount of $134,597.27. On the Closing Date, the Original Purchaser will wire the
purchase price for the Bonds to the Trustee, and the Trustee shall deposit such purchase
price on the Closing Date into a temporary account called the Proceeds Fund, which the
Trustee shall establish, maintain and hold in trust, and which shall be disbursed in full on
the Closing Date (whereupon the Proceeds Fund shall be closed) as follows:
(a) the Trustee will deposit $48,500,000.00 into the Project Fund,
(b) the Trustee will deposit $4,859,928.75 into the Capitalized Interest
Subaccount of the Interest Account of the Bond Fund, and
(c) the Trustee will deposit the remaining amount, equal to $238,870.58, into
the Costs of Issuance Fund.
The Trustee may establish a temporary fund or account in its records to facilitate
such deposits or transfers. The deposits described in paragraphs (a) and (b) represent
the full amount of the Site Lease Payments under Section 3 of the Site Lease.
SECTION 3.03. Establishment and Application of Costs of Issuance Fund. The
Trustee shall establish, maintain and hold in trust a separate fund designated as the
“Costs of Issuance Fund” into which the Trustee shall deposit a portion of the proceeds of
sale of the Bonds under Section 3.02(b). The Trustee shall disburse amounts in the Costs
of Issuance Fund from time to time to pay the Costs of Issuance upon submission of a
Written Requisition of the Authority stating the person to whom payment is to be made,
the amount to be paid, the purpose for which the obligation was incurred and that such
payment is a proper charge against said fund.
Each such Written Requisition of the Authority shall be sufficient evidence to the
Trustee of the facts stated therein and the Trustee shall have no duty to confirm the
accuracy of such facts. The Trustee may conclusively rely on such Written Requisitions
and shall be fully protected in relying thereon. On June 1, 2018, or upon the earlier Written
Request of the Authority, the Trustee shall transfer all amounts remaining in the Costs of
Issuance Fund to the Interest Account and shall thereupon close the Costs of Issuance
Fund.
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SECTION 3.04. Establishment and Application of Project Fund. The Trustee shall
establish, maintain and hold in trust a separate fund designated as the “Project Fund” into
which the Trustee shall deposit a portion of the proceeds of sale of the Bonds under
Section 3.02(a).
Except as otherwise provided herein, moneys in the Project Fund will be used
solely for the payment of the Project Costs. Upon receipt of a requisition signed by the
City, substantially in the form of Appendix C hereto, detailing the purposes for which any
amounts requisitioned from the Project Fund will be used, the Trustee will disburse
moneys in the Project Fund to the City in the amount requested. The Trustee has no
responsibility for payments made in accordance with this Section. The City shall maintain
copies of any Certificates of the City requisitioning moneys from the Project Fund and
accurate records showing the purposes for which moneys requisitioned from the Project
Fund were used.
Upon the written notice by the City to the Trustee that no further amounts are
intended to be requisitioned from the Project Fund, the Trustee shall thereupon close the
Project Fund and transfer all remaining amounts to the Interest Account and shall
thereupon close the Project Fund.
SECTION 3.05. Validity of Bonds. The recital contained in the Bonds that the same
are issued under the Constitution and laws of the State of California shall be conclusive
evidence of their validity and of compliance with the provisions of law in their issuance.
ARTICLE IV
REDEMPTION OF BONDS
SECTION 4.01. Terms of Redemption.
(a) Optional Redemption. The Bonds maturing on or before June 1, 2028, are
not subject to optional redemption prior to their stated maturity.
The Bonds maturing on or after June 1, 2029, are subject to redemption, as a
whole or in part at the election of the Authority among maturities on such basis as
designated by the Authority and by lot within a maturity, at the option of the Authority, on
June 1, 2028, and on any date thereafter, at a redemption price equal to 100% of the
principal amount of Bonds to be redeemed, together with accrued interest thereon to the
date fixed for redemption, without premium.
The Authority must give the Trustee written notice of its intention to redeem Bonds
under this subsection (a), and the manner of selecting such Bonds for redemption from
among the maturities thereof, in sufficient time for the Trustee to give notice of such
redemption in accordance with Section, and in any event at least 10 days before the notice
of redemption must be given under Section 4.03 below.
(b) Special Mandatory Redemption From Insurance or Condemnation Proceeds.
The Bonds are subject to redemption as a whole, or in part on a pro rata basis among
maturities, on any date, from any Net Proceeds required to be used for such purpose as
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provided in Section 5.07, at a redemption price equal to 100% of the principal amount
thereof plus interest accrued thereon to the date fixed for redemption, without premium.
SECTION 4.02. Selection of Bonds for Redemption. Whenever provision is made
in this Indenture for the redemption of less than all of the Bonds of a single maturity, the
Trustee shall select the Bonds of that maturity to be redeemed by lot in any manner which
the Trustee in its sole discretion deems appropriate. For purposes of such selection, the
Trustee shall treat each Bond as consisting of separate $5,000 portions and each such
portion shall be subject to redemption as if such portion were a separate Bond.
SECTION 4.03. Notice of Redemption; Rescission. The Trustee shall mail notice
of redemption of the Bonds by first class mail, postage prepaid, not less than 30 nor more
than 60 days before any redemption date, to the respective Owners of any Bonds
designated for redemption at their addresses appearing on the Registration Books and to
one or more Securities Depositories, and shall file such notice electronically with the
Municipal Securities Rulemaking Board.
Each notice of redemption shall state the date of the notice, the redemption date,
the place or places of redemption, whether less than all of the Bonds (or all Bonds of a
single maturity) are to be redeemed, the CUSIP numbers and (in the event that not all
Bonds within a maturity are called for redemption) Bond numbers of the Bonds to be
redeemed and the maturity or maturities of the Bonds to be redeemed, and in the case of
Bonds to be redeemed in part only, the respective portions of the principal amount thereof
to be redeemed. Each such notice shall also state that on the redemption date there will
become due and payable on each of said Bonds the redemption price thereof, and that
from and after such redemption date interest thereon shall cease to accrue, and shall
require that such Bonds be then surrendered to the Trustee.
Neither the failure to receive any notice nor any defect therein shall affect the
sufficiency of the proceedings for such redemption or the cessation of accrual of interest
from and after the redemption date. Notice of redemption of Bonds shall be given by the
Trustee, at the expense of the Authority, for and on behalf of the Authority.
SECTION 4.04. Conditional Redemption; Rescission of Redemption. Redemption
notices may be conditional. The Authority has the right to rescind any notice of the
redemption of Bonds under Section 4.01(a) or Section 4.01(b) by written notice to the
Trustee on or prior to the dated fixed for redemption.
Any notice of redemption shall be cancelled and annulled if for any reason funds
will not be or are not available on the date fixed for redemption for the payment in full of
the Bonds then called for redemption, and such cancellation shall not constitute an Event
of Default.
The Authority and the Trustee have no liability to the Bond Owners or any other
party related to or arising from such rescission of redemption. The Trustee shall mail
notice of such rescission of redemption in the same manner as the original notice of
redemption was sent under this Section.
SECTION 4.05. Partial Redemption of Bonds. Upon surrender of any Bonds
redeemed in part only, the Authority shall execute and the Trustee shall authenticate and
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deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of
authorized denominations equal in aggregate principal amount to the unredeemed portion
of the Bonds surrendered.
SECTION 4.06. Effect of Redemption. Notice of redemption having been duly given
as set forth above, and moneys for payment of the redemption price of, together with
interest accrued to the date fixed for redemption on, including any applicable premium,
the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the
redemption date designated in such notice, the Bonds (or portions thereof) so called for
redemption shall become due and payable, interest on the Bonds so called for redemption
shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled to any
benefit or security under this Indenture, and the Owners of said Bonds shall have no rights
in respect thereof except to receive payment of the redemption price thereof.
All Bonds redeemed under the provisions of this Article shall be canceled by the
Trustee upon surrender thereof and destroyed in accordance with the retention policy of
the Trustee then in effect.
ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF
PRINCIPAL AND INTEREST
SECTION 5.01. Security for the Bonds; Bond Fund.
(a) Pledge of Revenues and Other Amounts. Subject only to the provisions of
this Indenture permitting the application thereof for the purposes and on the terms and
conditions set forth herein, all of the Revenues and all amounts (including proceeds of the
sale of the Bonds) held in any fund or account established under this Indenture are hereby
pledged to secure the payment of the principal of and interest and premium (if any) on the
Bonds in accordance with their terms and the provisions of this Indenture. Said pledge
constitutes a lien on and security interest in the Revenues and such amounts and shall
attach, be perfected and be valid and binding from and after the Closing Date, without the
need for any physical delivery thereof or further act.
(b) Assignment to Trustee. Under the Assignment Agreement, the Authority has
transferred to the Trustee all of the rights of the Authority in the Lease (other than the
rights of the Authority under Sections 4.5, 5.10, 7.3 and 8.4 thereof and its rights to give
approvals and consents thereunder). The Trustee is entitled to collect and receive all of
the Revenues, and any Revenues collected or received by the Authority shall be deemed
to be held, and to have been collected or received, by the Authority as the agent of the
Trustee and shall forthwith be paid by the Authority to the Trustee. The Trustee is also
entitled to and may, subject to the provisions of Article VIII, take all steps, actions and
proceedings which the Trustee determines to be reasonably necessary in its judgment to
enforce, either jointly with the Authority or separately, all of the rights of the Authority and
all of the obligations of the City under the Lease.
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(c) Deposit of Revenues in Bond Fund. All Revenues shall be promptly
deposited by the Trustee upon receipt thereof in a special fund designated as the “Bond
Fund” which the Trustee shall establish, maintain and hold in trust; except that all moneys
received by the Trustee and required hereunder or under the Lease to be deposited in the
Redemption Fund or the Insurance and Condemnation Fund shall be promptly deposited
in such funds. All Revenues deposited with the Trustee shall be held, disbursed, allocated
and applied by the Trustee only as provided in this Indenture. Any surplus remaining in
the Bond Fund, after payment in full of the principal of and interest on the Bonds (or
provision having been made therefore under Article X), and payment in full of any
applicable fees and expenses owed to the Trustee, shall be withdrawn by the Trustee and
remitted to the City.
SECTION 5.02. Allocation of Revenues. On or before each Interest Payment Date,
the Trustee shall transfer from the Bond Fund and deposit into the following respective
accounts and subaccounts (each of which the Trustee shall establish and maintain within
the Bond Fund), the following amounts in the following order of priority:
(a) Deposit to Interest Account. The Trustee shall deposit in the Interest
Account an amount required to cause the aggregate amount on
deposit in the Interest Account to be at least equal to the amount of
interest becoming due and payable on such Interest Payment Date
on all Bonds then Outstanding.
(b) Deposit to Principal Account. The Trustee shall deposit in the
Principal Account an amount required to cause the aggregate amount
on deposit in the Principal Account to equal the principal amount of
the Bonds coming due and payable on such Interest Payment Date,
SECTION 5.03. Application of Interest Account. All amounts in the Interest Account
shall be used and withdrawn by the Trustee solely for the purpose of paying interest on
the Bonds as it comes due and payable (including accrued interest on any Bonds
purchased or redeemed prior to maturity).
There is also hereby created in the Interest Account of the Bond Fund a temporary
account held by the Trustee and designated as the “Capitalized Interest Subaccount,” to
the credit of which deposits from the proceeds of the Bonds shall be made as provided in
Section 3.02(b) and deposits from investment earnings shall be made as provided in
Section 5.08. The Trustee shall withdraw from the Capitalized Interest Subaccount and
transfer to the Interest Account the following amounts on the following dates for the
purpose of paying interest then due on the Bonds:
June 1, 2018: $391,028.75
December 1, 2018: $1,117,225.00
June 1, 2019: $1,117,225.00
December 1, 2019: $1,117,225.00
June 1, 2020: $1,117,225.00
On December 1, 2020, the Trustee shall transfer all remaining amounts in the
Capitalized Interest Subaccount to the Interest Account, and the Trustee shall close the
Capitalized Interest Subaccount.
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SECTION 5.04. Application of Principal Account. All amounts in the Principal
Account shall be used and withdrawn by the Trustee solely to pay the principal amount of
the Bonds on their respective maturity dates.
SECTION 5.05. Reserved.
SECTION 5.06. Application of Redemption Fund. The Trustee shall establish and
maintain the Redemption Fund, into which the Trustee shall deposit a portion of the
Revenues received, in accordance with a Written Request of the Authority, amounts in
which shall be used and withdrawn by the Trustee solely for the purpose of paying the
principal of and interest and premium (if any) on the Bonds to be redeemed under Section
4.01(a) or 4.01(b); provided, however, that at any time prior to the selection of Bonds for
redemption, the Trustee may apply such amounts to the purchase of Bonds at public or
private sale, when and at such prices (including brokerage and other charges, but
excluding accrued interest, which is payable from the Interest Account) as shall be
directed under a Written Request of the Authority, except that the purchase price
(exclusive of accrued interest) may not exceed the redemption price then applicable to the
Bonds. The Trustee shall be entitled to conclusively rely on any Written Request of the
Authority received under this Section 5.06, and shall be fully protected in relying thereon.
SECTION 5.07. Insurance and Condemnation Fund.
(a) Establishment of Fund. Upon the receipt of proceeds of insurance or eminent
domain with respect to the Leased Property, the Trustee shall establish and maintain an
Insurance and Condemnation Fund, to be held and applied as hereinafter set forth in this
Section 5.07.
(b) Application of Insurance Proceeds. Any Net Proceeds of insurance against
accident to or destruction of the Leased Property collected by the City or the Authority in
the event of any such accident or destruction shall be paid to the Trustee under Section
6.3 of the Lease and deposited by the Trustee promptly upon receipt thereof in the
Insurance and Condemnation Fund. If the City fails to determine and notify the Trustee in
writing of its determination, within 90 days following the date of such deposit, to replace,
repair, restore, modify or improve the Leased Property which has been damaged or
destroyed, then such Net Proceeds shall be promptly transferred by the Trustee to the
Redemption Fund and applied to the redemption of Bonds under Section 4.01(b).
Notwithstanding the foregoing sentence, however, if the Leased Property is damaged or
destroyed in full, the Net Proceeds of such insurance shall be used by the City to rebuild
or replace the Leased Property if such proceeds are not sufficient to redeem Outstanding
Bonds equal in aggregate principal amount to the unpaid Lease Payments allocable to the
Leased Property.
All proceeds deposited in the Insurance and Condemnation Fund and not so
transferred to the Redemption Fund shall be applied to the prompt replacement, repair,
restoration, modification or improvement of the damaged or destroyed portions of the
Leased Property by the City, upon receipt of a Written Request of the City which:
(i) states with respect to each payment to be made (A) the requisition number,
(B) the name and address of the person to whom payment is due, (C) the
amount to be paid and (D) that each obligation mentioned therein has been
properly incurred, is a proper charge against the Insurance and
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Condemnation Fund and has not been the basis of any previous
withdrawal; and
(ii) specifies in reasonable detail the nature of the obligation.
Any balance of the proceeds remaining after such work has been completed as
certified by the City under a Written Certificate to the Trustee shall be paid to the City. The
Trustee shall be entitled to conclusively rely on any Written Request or Written Certificate
received under this subsection (b) of this Section 5.07 and in each case, shall be fully
protected in relying thereon.
(c) Application of Eminent Domain Proceeds. If all or any part of the Leased
Property is taken by eminent domain proceedings (or sold to a government threatening to
exercise the power of eminent domain) the Authority shall deposit or cause to be deposited
with the Trustee the Net Proceeds therefrom, which the Trustee shall deposit in the
Insurance and Condemnation Fund under Section 6.2(b) of the Lease and which shall be
applied and disbursed by the Trustee as follows:
(i) If the City has not given written notice to the Trustee, within 90 days
following the date on which such Net Proceeds are deposited with the
Trustee, of its determination that such Net Proceeds are needed for
the replacement of the Leased Property or such portion thereof, the
Trustee shall transfer such Net Proceeds to the Redemption Fund to
be applied toward the redemption of the Bonds under Section 4.01(b).
(ii) If the City has given written notice to the Trustee, within 90 days
following the date on which such Net Proceeds are deposited with the
Trustee, of its determination that such Net Proceeds are needed for
replacement of the Leased Property or such portion thereof, the
Trustee shall pay to the City, or to its order, from said proceeds such
amounts as the City may expend for such replacement, upon the filing
of Written Requisitions of the City as agent for the Authority.
In each case, the Trustee may conclusively rely upon any notice
received under this subsection (c)(ii) of this Section and is protected
in relying thereon.
(d) Reliance on Independent Advice. In making any such determination whether
to repair, replace or rehabilitate the Leased Property under this Section 5.07, the City may
obtain, but is not required to obtain, at its expense, the report of an independent engineer
or other independent professional consultant, a copy of which must be filed with the
Trustee. The Trustee shall have no duty to review or examine such report. Any such
determination by the City is final.
SECTION 5.08. Investments. All moneys in any of the funds or accounts
established with the Trustee under this Indenture shall be invested by the Trustee solely
in Permitted Investments. Such investments shall be directed by the Authority or an Agent
of the Authority in a Written Request of the Authority filed with the Trustee at least 2
Business Days in advance of the making of such investments. In the absence of any such
directions from the Authority, the Trustee shall invest any such moneys in Permitted
Investments which constitute money market funds; provided, however, that any such
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investment shall be made by the Trustee only if, prior to the date on which such investment
is to be made, the Trustee shall have received a Written Request of the Authority
specifying a specific money market fund and, if no such Written Request of the Authority
is so received, the Trustee shall hold such moneys uninvested. Permitted Investments
purchased as an investment of moneys in any fund shall be deemed to be part of such
fund or account. To the extent Permitted Investments are registrable, such Permitted
Investments must be registered in the name of the Trustee.
Interest earnings and profits resulting from the investment of amounts in the
Project Fund shall be (a) transferred to the Capitalized Interest Subaccount of the Interest
Account of the Bond Fund until the earlier of the date that the total amount deposited in
the Capitalized Interest Subaccount (including the initial deposit under Section 3.02(b))
equals $5,418,541.25 or November 30, 2020, and thereafter, (b) retained in the Project
Fund and used for the purposes thereof. Interest earnings and profits resulting from the
investment of amounts in the Capitalized Interest Subaccount of the Interest Account of
the Bond Fund shall be retained in the Capit alized Interest Subaccount and used for the
purposes thereof. All interest or gain derived from the investment of amounts in the other
funds or accounts established hereunder shall be deposited in the Bond Fund.
For purposes of acquiring any investments hereunder, the Trustee may commingle
funds held by it hereunder. The Trustee or any of its affiliates may act as principal or
agent in the acquisition or disposition of any investment and may impose its customary
charges therefor. The Trustee shall incur no liability for losses arising from any
investments made under this Section 5.08.
Subject to applicable law, the Trustee may make any investments hereunder
through its own bond or investment department or trust investment department, or those
of its parent or any affiliate. The Trustee or any of its affiliates may act as sponsor, advisor
or manager to the investment provider in connection with any investments made by the
Trustee hereunder. The Trustee is hereby authorized, in making or disposing of any
investment permitted by this Section, to deal with itself (in its individual capacity) or with
any one or more of its affiliates, whether it or such affiliate is acting as an agent of the
Trustee or for any third person or is dealing as a principal for its own account. The Trustee
may, from time to time, provide the City and the Authority with a list of investments that
are available on the Trustee’s investment platform, but the Trustee will not give investment
advice to the City or the Authority, and the City or the Authority may direct the Trustee to
purchase investments that are not included on the list provided by the Trustee. The
Trustee shall be entitled to rely conclusively on the Authority’s investment direction as to
the suitability and legality of the directed investments.
The Trustee shall furnish the Authority periodic cash transaction statements which
include detail for all investment transactions effected by the Trustee or brokers selected
by the Authority. Upon the Authority’s election, such statements will be delivered via the
Trustee’s Online Trust and Custody service and upon electing such service, paper
statements will be provided only upon request. The Authority waives the right to receive
brokerage confirmations of security transactions effected by the Trustee as they occur, to
the extent permitted by law. The Authority further understands that trade confirmations for
securities transactions effected by the Trustee will be available upon request and at no
additional cost and other trade confirmations may be obtained from the applicable broker.
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SECTION 5.09. Valuation and Disposition of Investments.
(a) Except as otherwise provided in subsection (b) of this Section, the Authority
covenants that all investments of amounts deposited in any fund or account created by or
under this Indenture, or otherwise containing gross proceeds of the Bonds (within the
meaning of Section 148 of the Tax Code) shall be acquired, disposed of and valued at
Fair Market Value.
The Trustee shall have no duty in connection with the determination of Fair Market
Value other than to follow the investment directions of the Authority in any Written Request
of the Authority.
(b) The investments in certain funds or accounts (or portions thereof) that are
subject to a yield restriction under applicable provisions of the Tax Code will be valued at
their present value (within the meaning of section 148 of the Tax Code).
ARTICLE VI
COVENANTS OF THE AUTHORITY
SECTION 6.01. Punctual Payment. The Authority shall punctually pay or cause to
be paid the principal of and interest and premium (if any) on all the Bonds in strict
conformity with the terms of the Bonds and of this Indenture, according to the true intent
and meaning thereof, but only out of the Revenues and other amounts pledged for such
payment as provided in this Indenture.
SECTION 6.02. Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time
of payment of any claims for interest by the purchase of such Bonds or by any other
arrangement, and in case the maturity of any of the Bonds or the time of payment of any
such claims for interest shall be extended, such Bonds or claims for interest shall not be
entitled, in case of any default hereunder, to the benefits of this Indenture, except subject
to the prior payment in full of the principal of all of the Bonds then Outstanding and of all
claims for interest thereon which have not been so extended. Nothing in this Section 6.02
limits the right of the Authority to issue Bonds for the purpose of refunding any Outstanding
Bonds, and such issuance does not constitute an extension of maturity of the Bonds.
SECTION 6.03. Against Encumbrances. The Authority shall not create, or permit
the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and
other assets pledged or assigned under this Indenture while any of the Bonds are
Outstanding, except the pledge and assignment created by this Indenture. Subject to this
limitation, the Authority expressly reserves the right to enter into one or more other
indentures for any of its corporate purposes, and reserves the right to issue other
obligations for such purposes.
SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment. The
Authority is duly authorized under law to issue the Bonds and to enter into this Indenture
and to pledge and assign the Revenues and other amounts purported to be pledged and
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assigned, respectively, under this Indenture and under the Assignment Agreement in the
manner and to the extent provided in this Indenture and the Assignment Agreement. The
Bonds and the provisions of this Indenture are and will be the legal, valid and binding
special obligations of the Authority in accordance with their terms, and the Authority and
the Trustee shall at all times, subject to the provisions of Article VIII and to the extent
permitted by law, defend, preserve and protect said pledge and assignment of Revenues
and other assets and all the rights of the Bond Owners under this Indenture against all
claims and demands of all persons whomsoever.
SECTION 6.05. Accounting Records. The Trustee shall at all times keep, or cause
to be kept, proper books of record and account, prepared in accordance with corporate
industry standards, in which complete and accurate entries shall be made of all
transactions made by it relating to the proceeds of Bonds and all funds and accounts
established under this Indenture. The Trustee shall make such books of record and
account available for inspection by the Authority and the City, during business hours, upon
reasonable notice, and under reasonable circumstances.
SECTION 6.06. Limitation on Additional Obligations. The Authority covenants that
no additional bonds, notes or other indebtedness shall be issued or incurred which are
payable out of the Revenues in whole or in part.
SECTION 6.07. Tax Covenants.
(a) Private Business Use Limitation. The Authority shall assure that the
proceeds of the Bonds are not used in a manner which would cause the Bonds to satisfy
the private business tests of Section 141(b) of the Tax Code or the private loan financing
test of Section 141(c) of the Tax Code.
(b) Federal Guarantee Prohibition. The Authority may not take any action or
permit or suffer any action to be taken if the result of the same would be to cause the
Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code.
(c) No Arbitrage. The Authority may not take, or permit or suffer to be taken by
the Trustee or otherwise, any action with respect to the proceeds of the Bonds or of any
other obligations which, if such action had been reasonably expected to have been taken,
or had been deliberately and intentionally taken, on the Closing Date, would have caused
the Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Tax Code.
(d) Maintenance of Tax Exemption. The Authority shall take all actions
necessary to assure the exclusion of interest on the Bonds from the gross income of the
Owners of the Bonds to the same extent as such interest is permitted to be excluded from
gross income under the Tax Code as in effect on the Closing Date.
(e) Rebate of Excess Investment Earnings to United States. The Authority shall
calculate or cause to be calculated all amounts of excess investment earnings with respect
to the Bonds which are required to be rebated to the United States of America under
Section 148(f) of the Tax Code, at the times and in the manner required under the Tax
Code. The Authority shall pay when due an amount equal to excess investment earnings
to the United States of America in such amounts, at such times and in such manner as
may be required under the Tax Code, such payments to be made from amounts paid by
the City for that purpose under Section 4.5(d) of the Lease. The Authority shall keep or
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cause to be kept, and retain or cause to be retained for a period of six years following the
retirement of the Bonds, records of the determinations made under this subsection (e).
SECTION 6.08. Enforcement of Lease. The Trustee shall promptly collect all
amounts (to the extent any such amounts are available for collection) due from the City
under the Lease. Subject to the provisions of Article VIII, the Trustee may enforce, and
take all steps, actions and proceedings which are determined to be reasonably necessary
for the enforcement of all of its rights thereunder as assignee of the Authority and for the
enforcement of all of the obligations of the City under the Lease.
SECTION 6.09. Waiver of Laws. The Authority shall not at any time insist upon or
plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or
extension law now or at any time hereafter in force that may affect the covenants and
agreements contained in this Indenture or in the Bonds, and all benefit or advantage of
any such law or laws is hereby expressly waived by the Authority to the extent permitted
by law.
SECTION 6.10. Further Assurances. The Authority will make, execute and deliver
any and all such further indentures, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this
Indenture and for the better assuring and confirming unto the Owners of the Bonds of the
rights and benefits provided in this Indenture.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. Events of Default. The following events constitute Events of Default
hereunder:
(a) Failure to pay any installment of the principal of any Bonds when due,
whether at maturity as therein expressed, by proceedings for
redemption, by acceleration, or otherwise.
(b) Failure to pay any installment of interest on the Bonds when due.
(c) Failure by the Authority to observe and perform any of the other
covenants, agreements or conditions on its part contained in this
Indenture or in the Bonds, if such failure has continued for a period of
30 days after written notice thereof, specifying such failure and
requiring the same to be remedied, has been given to the Authority
by the Trustee; provided, however, if in the reasonable opinion of the
Authority the failure stated in the notice can be corrected, but not
within such 30-day period, such failure shall not constitute an Event
of Default if the Authority institutes corrective action within such 30-
day period and thereafter diligently and in good faith cures the failure
in a reasonable period of time, which period shall end 180 days after
the delivery of such default notice.
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(d) The commencement by the Authority of a voluntary case under Title
11 of the United States Code or any substitute or successor statute.
(e) The occurrence and continuation of an event of default under and as
defined in the Lease.
SECTION 7.02. Remedies Upon Event of Default. If any Event of Default occurs,
then, and in each and every such case during the continuance of such Event of Default,
the Trustee may, and at the written direction of the Owners of a majority in aggregate
principal amount of the Bonds at the time Outstanding shall, in each case, upon receipt of
indemnification satisfactory to Trustee against the costs, expenses and liabilities to be
incurred in connection with such action, upon notice in writing to the Authority, declare the
principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due
and payable immediately, and upon any such declaration the same shall become and shall
be immediately due and payable, anything in this Indenture or in the Bonds contained to
the contrary notwithstanding.
Any such declaration is subject to the condition that if, at any time after such
declaration and before any judgment or decree for the payment of the moneys due shall
have been obtained or entered, the Authority deposits with the Trustee a sum sufficient to
pay all the principal of and installments of interest on the Bonds payment of which is
overdue, with interest on such overdue principal at the rate borne by the respective Bonds
to the extent permitted by law, and the reasonable fees, charges and expenses (including
those of its legal counsel, including the allocated costs of internal attorneys) of the Trustee,
and any and all other Events of Default actually known to the Trustee (other than in the
payment of principal of and interest on the Bonds due and payable solely by reason of
such declaration) have been made good or cured to the satisfaction of the Trustee or
provision deemed by the Trustee to be adequate has been made therefor, then, and in
every such case, the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding, by written notice to the Authority, the City and the Trustee, may, on
behalf of the Owners of all of the Bonds, rescind and annul such declaration and its
consequences and waive such Event of Default; but no such rescission and annulment
shall extend to or shall affect any subsequent Event of Default, or shall impair or exhaust
any right or power consequent thereon.
Nothing herein shall be deemed to authorize the Trustee to authorize or consent
to or accept or adopt on behalf of any Bondholder any plan of reorganization,
arrangement, adjustment, or composition affecting the Bonds or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any Bondholder in
any such proceeding without the approval of the Bondholders so affected.
SECTION 7.03. Application of Revenues and Other Funds After Default. If an Event
of Default occurs and is continuing, all Revenues and any other funds then held or
thereafter received by the Trustee under any of the provisions of this Indenture shall be
applied by the Trustee in the following order of priority:
(a) To the payment of reasonable fees, charges and expenses of the
Trustee (including reasonable fees and disbursements of its legal
counsel including outside counsel and the allocated costs of internal
attorneys) incurred in and about the performance of its powers and
duties under this Indenture;
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(b) To the payment of the principal of and interest then due on the Bonds
(upon presentation of the Bonds to be paid, and stamping or
otherwise noting thereon of the payment if only partially paid, or
surrender thereof if fully paid) in accordance with the provisions of
this Indenture, as follows:
First: To the payment to the persons entitled thereto of all installments
of interest then due in the order of the maturity of such
installments, and, if the amount available shall not be sufficient
to pay in full any installment or installments maturing on the
same date, then to the payment thereof ratably, according to the
amounts due thereon, to the persons entitled thereto, without
any discrimination or preference;
Second: To the payment to the persons entitled thereto of the unpaid
principal of any Bonds which shall have become due, whether
at maturity or by acceleration or redemption, with interest on the
overdue principal at the rate borne by the respective Bonds (to
the extent permitted by law), and, if the amount available shall
not be sufficient to pay in full all the Bonds, together with such
interest, then to the payment thereof ratably, according to the
amounts of principal due on such date to the persons entitled
thereto, without any discrimination or preference; and
SECTION 7.04. Trustee to Represent Bond Owners. The Trustee is hereby
irrevocably appointed (and the successive respective Owners of the Bonds, by taking and
holding the same, shall be conclusively deemed to have so appointed the Trustee) as
trustee and true and lawful attorney-in-fact of the Owners of the Bonds for the purpose of
exercising and prosecuting on their behalf such rights and remedies as may be available
to such Owners under the provisions of the Bonds, this Indenture and applicable
provisions of any law. All rights of action under this Indenture or the Bonds may be
prosecuted and enforced by the Trustee without the possession of any of the Bonds or
the production thereof in any proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in the name of the Trustee for the
benefit and protection of all the Owners of such Bonds, subject to the provisions of this
Indenture.
SECTION 7.05. Limitation on Bond Owners’ Right to Sue. Notwithstanding any
other provision hereof, no Owner of any Bonds has the right to institute any suit, action or
proceeding at law or in equity, for the protection or enforcement of any right or remedy
under this Indenture, the Lease or any other applicable law with respect to such Bonds,
unless (a) such Owner has given to the Trustee written notice of the occurrence of an
Event of Default; (b) the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding have requested the Trustee in writing to exercise the powers
hereinbefore granted or to institute such suit, action or proceeding in its own name; (c)
such Owner or Owners have tendered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request; (d) the
Trustee has failed to comply with such request for a period of 60 days after such written
request has been received by, and said tender of indemnity has been made to, the
Trustee; and (e) no direction inconsistent with such written request has been given to the
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Trustee during such 60 day period by the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds
of any remedy hereunder or under law; it being understood and intended that no one or
more Owners of Bonds shall have any right in any manner whatever by his or their action
to affect, disturb or prejudice the security of this Indenture or the rights of any other Owners
of Bonds, or to enforce any right under the Bonds, this Indenture, the Lease or other
applicable law with respect to the Bonds, except in the manner herein provided, and that
all proceedings at law or in equity to enforce any such right shall be instituted, had and
maintained in the manner herein provided and for the benefit and protection of all Owners
of the Outstanding Bonds, subject to the provisions of this Indenture.
SECTION 7.06. Absolute Obligation of Authority. Nothing herein or in the Bonds
contained affects or impairs the obligation of the Authority, which is absolute and
unconditional, to pay the principal of and interest and premium (if any) on the Bonds to
the respective Owners of the Bonds at their respective dates of maturity, or upon
acceleration or call for redemption, as herein provided, but only out of the Revenues and
other assets herein pledged therefor, or affect or impair the right of such Owners, which
is also absolute and unconditional, to enforce such payment by virtue of the contract
embodied in the Bonds.
SECTION 7.07. Termination of Proceedings. In case any proceedings taken by the
Trustee or by any one or more Bond Owners on account of any Event of Default have
been discontinued or abandoned for any reason or have been determined adversely to
the Trustee or the Bond Owners, then in every such case the Authority, the Trustee and
the Bond Owners, subject to any determination in such proceedings, shall be restored to
their former positions and rights hereunder, severally and respectively, and all rights,
remedies, powers and duties of the Authority, the Trustee and the Bond Owners shall
continue as though no such proceedings had been taken.
SECTION 7.08. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee, to the Owners of the Bonds is intended to be exclusive of any
other remedy or remedies, and each and every such remedy, to the extent permitted by
law, shall be cumulative and in addition to any other remedy given hereunder or now or
hereafter existing at law or in equity or otherwise.
SECTION 7.09. No Waiver of Default. No delay or omission of the Trustee or any
Owner of the Bonds to exercise any right or power arising upon the occurrence of any
default or Event of Default shall impair any such right or power or shall be construed to be
a waiver of any such default or Event of Default or an acquiescence therein; and every
power and remedy given by this Indenture to the Trustee or to the Owners of the Bonds
may be exercised from time to time and as often as may be deemed expedient by the
Trustee or the Bond Owners.
SECTION 7.10. Notice to Bond Owners of Default. Immediately upon obtaining
actual knowledge of the occurrence of an Event of Default, but in no event later than five
Business Days after the Trustee obtains actual knowledge of such occurrence, the Trustee
shall promptly give written notice thereof by first class mail, postage prepaid, to the Owner
of each Outstanding Bond, unless such Event of Default has been cured before the giving
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of such notice; provided, however that except in the case of an Event of Default described
in Sections 7.01(a) or 7.01(b), the Trustee may elect not to give such notice to the Bond
Owners if and so long as the Trustee in good faith determines that it is in the best interests
of the Bond Owners not to give such notice.
ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Appointment of Trustee. MUFG Union Bank, N.A. is hereby
appointed Trustee by the Authority for the purpose of receiving all moneys required to be
deposited with the Trustee hereunder and to allocate, use and apply the same as provided
in this Indenture. The Authority will maintain a Trustee which is qualified under the
provisions of the foregoing provisions of this Article VIII, so long as any Bonds are
Outstanding.
SECTION 8.02. Acceptance of Trusts; Removal and Resignation of Trustee. The
Trustee hereby accepts the express trusts imposed upon it by this Indenture, and agrees
to perform said trusts, but only upon and subject to the following express terms and
conditions:
(a) The Trustee shall, prior to an Event of Default, and after the curing or
waiver of all Events of Default which may have occurred, perform
such duties and only such duties as are expressly and specifically set
forth in this Indenture and no implied duties or covenants shall be
read into this Indenture against the Trustee. If an Event of Default
has occurred (which has not been cured), the Trustee shall exercise
such of the rights and powers vested in it by hereunder, and use the
same degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his
own affairs.
(b) The Authority may remove the Trustee upon 30 days’ prior notice,
unless an Event of Default has occurred and is then continuing, and
shall remove the Trustee (a) if at any time requested to do so by the
Owners of a majority in aggregate principal amount of the Bonds then
Outstanding (or their attorneys duly authorized in writing) or (b) if at
any time the Trustee ceases to be eligible in accordance with Section
8.02, or becomes incapable of acting, or is adjudged a bankrupt or
insolvent, or a receiver of the Trustee or its property is appointed, or
any public officer takes control or charge of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation.
(c) The Trustee may at any time resign by giving written notice of such
resignation to the Authority and the City, and by giving the Bond
Owners notice of such resignation by mail at the addresses shown
on the Registration Books.
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(d) Any removal or resignation of the Trustee and appointment of a
successor Trustee shall become effective upon acceptance of
appointment by the successor Trustee. In the event of the removal
or resignation of the Trustee under subsections (b) or (c),
respectively, the Authority shall promptly appoint a successor
Trustee.
If no successor Trustee has been appointed and accepted
appointment within 45 days of giving notice of removal or notice of
resignation as aforesaid, the retiring Trustee may petition any court
of competent jurisdiction for the appointment of a successor Trustee,
and such court may thereupon, after such notice (if any) as it may
deem proper, appoint such successor Trustee. Any successor
Trustee appointed under this Indenture, must signify its acceptance
of such appointment by executing and delivering to the Authority, to
its predecessor Trustee a written acceptance thereof, and after
payment by the Authority of all unpaid fees and expenses of the
predecessor Trustee, and thereupon such successor Trustee,
without any further act, deed or conveyance, shall become vested
with all the moneys, estates, properties, rights, powers, trusts, duties
and obligations of such predecessor Trustee, with like effect as if
originally named Trustee herein; but, nevertheless at the Written
Request of the Authority or the request of the successor Trustee,
such predecessor Trustee shall execute and deliver any and all
instruments of conveyance or further assurance and do such other
things as may reasonably be required for more fully and certainly
vesting in and confirming to such successor Trustee all the right, title
and interest of such predecessor Trustee in and to the Leased
Property held by such predecessor Trustee under this Indenture and
shall pay over, transfer, assign and deliver to the successor Trustee
any money or other property subject to the trusts and conditions
herein set forth. Upon request of the successor Trustee, the Authority
shall execute and deliver any and all instruments as may be
reasonably required for more fully and certainly vesting in and
confirming to such successor Trustee all such moneys, estates,
properties, rights, powers, trusts, duties and obligations. Upon
acceptance of appointment by a successor Trustee as provided in
this subsection, the Authority shall promptly mail or cause the
successor trustee to mail a notice of the succession of such Trustee
to the trusts hereunder to each rating agency which is then rating the
Bonds and to the Bond Owners at the addresses shown on the
Registration Books. If the Authority fails to mail such notice within 15
days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the
expense of the Authority.
(e) Any Trustee appointed under this Indenture shall be a corporation or
association organized and doing business under the laws of any state
or the United States of America or the District of Columbia, shall be
authorized under such laws to exercise corporate trust powers, shall
have (or, in the case of a corporation or association that is a member
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of a bank holding company system, the related bank holding
company has) a combined capital and surplus of at least
$50,000,000, and shall be subject to supervision or examination by a
federal or state agency, so long as any Bonds are Outstanding. If
such corporation or association publishes a report of condition at
least annually under law or to the requirements of any supervising or
examining agency above referred to, then for the purpose of this
subsection (e), the combined capital and surplus of such corporation
or association shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published. If the
Trustee at any time ceases to be eligible in accordance with the
provisions of this subsection (e), the Trustee shall resign immediately
in the manner and with the effect specified in this Section.
SECTION 8.03. Merger or Consolidation. Any bank, national banking association,
federal savings association, or trust company into which the Trustee may be merged or
converted or with which it may be consolidated or any bank, national banking association,
federal savings association, or trust company resulting from any merger, conversion or
consolidation to which it shall be a party or any bank, national banking association, federal
savings association, or trust company to which the Trustee may sell or transfer all or
substantially all of its corporate trust business, provided such bank, national banking
association, federal savings association, or trust company shall be eligible under
subsection (e) of Section 8.02 shall be the successor to such Trustee, without the
execution or filing of any paper or any further act, anything herein to the contrary
notwithstanding.
SECTION 8.04. Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall be taken as
statements of the Authority, and the Trustee shall not assume responsibility for the
correctness of the same, or make any representations as to the validity or sufficiency of
this Indenture, the Bonds or the Lease (including any right to receive moneys thereunder
or the value of or title to the premises upon which the Leased Property is located), nor
shall the Trustee incur any responsibility in respect thereof, other than as expressly stated
herein in connection with the respective duties or obligations of Trustee herein or in the
Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its
representations contained in its certificate of authentication on the Bonds. The Trustee
shall not be liable in connection with the performance of its duties hereunder, except for
its own negligence or willful misconduct. The Trustee may become the Owner of Bonds
with the same rights it would have if it were not Trustee, and, to the extent permitted by
law, may act as depository for and permit any of its officers or directors to act as a member
of, or in any other capacity with respect to, any committee formed to protect the rights of
Bond Owners, whether or not such committee shall represent the Owners of a majority in
principal amount of the Bonds then Outstanding.
(b) The Trustee is not liable for any error of judgment made by a responsible
officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts.
(c) The Trustee is not liable with respect to any action taken or omitted to be
taken by it in accordance with the direction of the Owners of a majority in aggregate
principal amount of the Bonds at the time Outstanding relating to the time, method and
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place of conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture or assigned to it under
the Assignment Agreement.
(d) The Trustee is not liable for any action taken by it and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by this Indenture.
(e) The Trustee shall not be deemed to have knowledge of any Event of Default
hereunder, or any other event which, with the passage of time, the giving of notice, or
both, would constitute an Event of Default hereunder unless and until it shall have actual
knowledge thereof, or a corporate trust officer shall have received written notice thereof
at its Office from the City, the Authority or the Owners of at least 25% in aggregate principal
amount of the Outstanding Bonds. Except as otherwise expressly provided herein, the
Trustee shall not be bound to ascertain or inquire as to the performance or observance by
the Authority or the City of any of the terms, conditions, covenants or agreements herein,
under the Lease or the Bonds or of any of the documents executed in connection with the
Bonds, or as to the existence of a default or an Event of Default or an event which would,
with the giving of notice, the passage of time, or both, constitute an Event of Default. The
Trustee is not responsible for the validity, effectiveness or priority of any collateral given
to or held by it. Without limiting the generality of the foregoing, the Trustee shall not be
required to ascertain or inquire as to the performance or observance by the City or the
Authority of the terms, conditions, covenants or agreements set forth in the Lease, other
than the covenants of the City to make Lease Payments to the Trustee when due and to
file with the Trustee when due, such reports and certifications as the City is required to file
with the Trustee thereunder.
(f) No provision of this Indenture requires the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers.
(g) The Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or through agents, receivers or attorneys and the
Trustee shall not be responsible for any misconduct or negligence on the part of any agent,
receiver or attorney appointed with due care by it hereunder.
(h) The Trustee has no obligation to exercise any of the rights or powers vested
in it by this Indenture at the request or direction of the Bond Owners under this Indenture,
unless such Owners have offered to the Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities (including but not limited to fees and expenses
of its attorneys), including, without limitations, any liability arising under federal, state or
local environmental laws which might be incurred by it in compliance with such request or
direction. No permissive power, right or remedy conferred upon the Trustee hereunder
shall be construed to impose a duty to exercise such power, right or remedy.
(i) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording protection to the
Trustee is subject to the provisions of Section 8.02(a), this Section 8.04 and Section 8.05,
and shall be applicable to the assignment of any rights under the Lease to the Trustee
under the Assignment Agreement.
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(j) The Trustee is not accountable to anyone for the subsequent use or
application of any moneys (including the proceeds of the Bonds) which are released or
withdrawn in accordance with the provisions hereof.
(k) The Trustee makes no representation or warranty, expressed or implied as
to the title, value, design, compliance with specifications or legal requirements, quality,
durability, operation, condition, merchantability or fitness for any particular purpose for the
use contemplated by the Authority or the City of the Leased Property. In no event shall
the Trustee be liable for incidental, indirect, special or consequential damages in
connection with or arising from the Lease or this Indenture for the existence, furnishing or
use of the Leased Property.
(l) The Trustee has no responsibility with respect to any information, statement,
or recital in any official statement, offering memorandum or any other disclosure material
prepared or distributed with respect to the Bonds.
(m) The Trustee is authorized and directed to execute the Assignment
Agreement in its capacity as Trustee hereunder.
(n) The Trustee shall have the right to accept and act upon instructions, including
funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered
using Electronic Means ("Electronic Means" shall mean the following communications
methods: e-mail, facsimile transmission, secure electronic transmission containing
applicable authorization codes, passwords and/or authentication keys issued by the
Trustee, or another method or system specified by the Trustee as available for use in
connection with its services hereunder); provided, however, that the Authority and/or City
shall provide to the Trustee an incumbency certificate listing officers with the authority to
provide such Instructions (“Authorized Officers”) and containing specimen signatures of
such Authorized Officers, which incumbency certificate shall be amended by the Authority
and/or the City whenever a person is to be added or deleted from the listing. If the
Authority and/or City elects to give the Trustee Instructions using Electronic Means and
the Trustee in its discretion elects to act upon such Instructions, the Trustee’s reasonable
understanding of such Instructions shall be deemed controlling. The Authority and City
understand and agree that the Trustee cannot determine the identity of the actual sender
of such Instructions and that the Trustee shall conclusively presume that directions that
purport to have been sent by an Authorized Officer listed on the incumbency certificate
provided to the Trustee have been sent by such Authorized Officer. The Authority and
City shall be responsible for ensuring that only Authorized Officers transmit such
Instructions to the Trustee and that the Authority, City and all Authorized Officers are solely
responsible to safeguard the use and confidentiality of applicable user and authorization
codes, passwords and/or authentication keys upon receipt by the Authority and/or
City. 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 directions conflict or are inconsistent with a subsequent written
instruction. The Authority and City agree: (i) to assume all risks arising out of the use of
Electronic Means to submit Instructions to the Trustee, including without limitation the risk
of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse
by third parties; (ii) that it is fully informed of the protections and risks associated with the
various methods of transmitting Instructions to the Trustee and that there may be more
secure methods of transmitting Instructions than the method(s) selected by the Authority
and City; (iii) that the security procedures (if any) to be followed in connection with its
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transmission of Instructions provide to it a commercially reasonable degree of protection
in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately
upon learning of any compromise or unauthorized use of the security procedures.
(o) In acting or omitting to act pursuant to the Assignment Agreement, the Lease
or the Site Lease, the Trustee shall be entitled to all of the rights, immunities and
indemnities accorded to it under this Indenture, including, but not limited to, this Article
VIII. Notwithstanding the effective date of this Indenture or anything to the contrary in this
Indenture, the Trustee shall have no liability or responsibility for any act or event relating
to this Indenture which occurs prior to the date the Trustee formally executes this Indenture
and commences acting as Trustee hereunder.
(p) 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.
SECTION 8.05. Right to Rely on Documents. The Trustee shall be protected and
shall incur no liability in acting or refraining from acting in reliance upon any notice,
resolution, request, consent, order, certificate, report, opinion, bonds or other paper or
document believed by them to be genuine and to have been signed or presented by the
proper party or parties. The Trustee is under no duty to make any investigation or inquiry
as to any statements contained or matter referred to in any paper or document but may
accept and conclusively rely upon the same as conclusive evidence of the truth and
accuracy of any such statement or matter and shall be fully protected in relying thereon.
The Trustee may consult with counsel, who may be counsel of or to the Authority, with
regard to legal questions, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by it hereunder in
good faith and in accordance therewith.
The Trustee may treat the Owners of the Bonds appearing in the Registration
Books as the absolute owners of the Bonds for all purposes and the Trustee shall not be
affected by any notice to the contrary.
Whenever in the administration of the trusts imposed upon it by this Indenture the
Trustee deems it necessary or desirable that a matter be proved or established prior to
taking or suffering any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively proved and
established by a Written Certificate, Written Request or Written Requisition of the Authority
or the City, and such Written Certificate, Written Request or Written Requisition shall be
full warrant to the Trustee for any action taken or suffered under the provisions of this
Indenture in reliance upon such Written Certificate, Written Request or Written Requisition,
and the Trustee shall be fully protected in relying thereon, but in its discretion the Trustee
may, in lieu thereof, accept other evidence of such matter or may require such additional
evidence as to it may deem reasonable.
SECTION 8.06. Preservation and Inspection of Documents. All documents
received by the Trustee under the provisions of this Indenture shall be retained in its
respective possession and in accordance with its retention policy then in effect and shall,
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upon reasonable notice to Trustee, be subject to the inspection of the Authority, the City
and any Bond Owner, and their agents and representatives duly authorized in writing,
during business hours and under reasonable conditions as agreed to by the Trustee.
SECTION 8.07. Compensation and Indemnification. The Authority shall pay to the
Trustee from time to time, on demand, the compensation for all services rendered under
this Indenture and also all reasonable expenses, advances (including any interest on
advances), charges, legal (including outside counsel and the allocated costs of internal
attorneys) and consulting fees and other disbursements, incurred in and about the
performance of its powers and duties under this Indenture.
The Authority shall indemnify the Trustee, its officers, directors, employees and
agents against any cost, loss, liability, suit, claim, damages, judgment or expense
whatsoever (including but not limited to fees and expenses of its attorneys) incurred
without negligence or willful misconduct on its part, arising out of or in connection with the
acceptance or administration of this trust and this Indenture, the Assignment Agreement,
the Site Lease and the Lease, including costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of its powers
hereunder or under the Assignment Agreement or the Lease. As security for the
performance of the obligations of the Authority under this Section 8.07 and the obligation
of the Authority to make Additional Rental Payments to the Trustee, the Trustee shall have
a lien prior to the lien of the Bonds upon all property and funds held or collected by the
Trustee as such. The rights of the Trustee and the obligations of the Authority under this
Section 8.07 shall survive the resignation or removal of the Trustee or the discharge of the
Bonds and this Indenture and the Lease. When the Trustee incurs expenses or renders
services after the occurrence of an Event of Default, such expenses and the compensation
for such services are intended to constitute expenses of administration under any federal
or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor
relief law.
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ARTICLE IX
MODIFICATION OR AMENDMENT HEREOF
SECTION 9.01. Amendments Permitted.
(a) Amendments With Bond Owner Consent. This Indenture and the rights and
obligations of the Authority and of the Owners of the Bonds and of the Trustee may be
modified or amended from time to time and at any time by Supplemental Indenture, which
the Authority and the Trustee may enter into when the written consents of the Owners of
a majority in aggregate principal amount of all Bonds then Outstanding are filed with the
Trustee. No such modification or amendment may (i) extend the fixed maturity of any
Bonds, or reduce the amount of principal thereof or extend the time of payment, or change
the method of computing the rate of interest thereon, or extend the time of payment of
interest thereon, without the consent of the Owner of each Bond so affected, or (ii) reduce
the aforesaid percentage of Bonds the consent of the Owners of which is required to effect
any such modification or amendment, or permit the creation of any lien on the Revenues
and other assets pledged under this Indenture prior to or on a parity with the lien created
by this Indenture except as permitted herein, or deprive the Owners of the Bonds of the
lien created by this Indenture on such Revenues and other assets (except as expressly
provided in this Indenture), without the consent of the Owners of all of the Bonds then
Outstanding. It is not necessary for the consent of the Bond Owners to approve the
particular form of any Supplemental Indenture, but it is sufficient if such consent approves
the substance thereof.
(b) Amendments Without Owner Consent. This Indenture and the rights and
obligations of the Authority, of the Trustee and the Owners of the Bonds may also be
modified or amended from time to time and at any time by a Supplemental Indenture,
which the Authority and the Trustee may enter into without the consent of any Bond
Owners, if the Trustee has been furnished an opinion of counsel that the provisions of
such Supplemental Indenture shall not materially adversely affect the interests of the
Owners of the Bonds, including, without limitation, for any one or more of the following
purposes:
(i) to add to the covenants and agreements of the Authority in this
Indenture contained, other covenants and agreements thereafter to
be observed, to pledge or assign additional security for the Bonds (or
any portion thereof), or to surrender any right or power herein
reserved to or conferred upon the Authority;
(ii) to cure any ambiguity, inconsistency or omission, or to cure or correct
any defective provision, contained in this Indenture, or in regard to
matters or questions arising under this Indenture, as the Authority
deems necessary or desirable, provided that such modification or
amendment does not materially adversely affect the interests of the
Bond Owners, in the opinion of Bond Counsel filed with the Trustee;
(iii) to modify, amend or supplement this Indenture in such manner as to
permit the qualification hereof under the Trust Indenture Act of 1939,
as amended, or any similar federal statute hereafter in effect, and to
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add such other terms, conditions and provisions as may be permitted
by said act or similar federal statute;
(iv) to modify, amend or supplement this Indenture in such manner as to
assure that the interest on the Bonds remains excluded from gross
income under the Tax Code; or
(v) to facilitate the issuance of additional obligations of the City under the
Lease Agreement as provided in Section 7.5(b)(5) thereof.
(c) Limitation. The Trustee is not obligated to enter into any Supplemental
Indenture authorized by subsections (a) or (b) of this Section 9.01 which materially
adversely affects the Trustee’s own rights, duties or immunities under this Indenture or
otherwise.
(d) Bond Counsel Opinion Requirement. Prior to the Trustee entering into any
Supplemental Indenture hereunder, the Authority shall deliver to the Trustee an opinion of
Bond Counsel stating, in substance, that such Supplemental Indenture has been adopted
in compliance with the requirements of this Indenture and that the adoption of such
Supplemental Indenture will not, in and of itself, adversely affect the exclusion from gross
income for purposes of federal income taxes of interest on the Bonds.
(e) Notice of Amendments. The Authority shall deliver or cause to be delivered
a draft of any Supplemental Indenture to each rating agency which then maintains a rating
on the Bonds, at least 10 days prior to the effective date of such Supplemental Indenture
under this Section 9.01.
SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any
Supplemental Indenture under this Article IX, this Indenture shall be deemed to be
modified and amended in accordance therewith, and the respective rights, duties and
obligations under this Indenture of the Authority, the Trustee and all Owners of Bonds
Outstanding shall thereafter be determined, exercised and enforced hereunder subject in
all respects to such modification and amendment, and all the terms and conditions of any
such Supplemental Indenture shall be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds
delivered after the execution of any Supplemental Indenture under this Article may, and if
the Authority so determines shall, bear a notation by endorsement or otherwise in form
approved by the Authority as to any modification or amendment provided for in such
Supplemental Indenture, and, in that case, upon demand on the Owner of any Bonds
Outstanding at the time of such execution and presentation of his Bonds for the purpose
at the Office of the Trustee or at such additional offices as the Trustee may select and
designate for that purpose, a suitable notation shall be made on such Bonds. If the
Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the
opinion of the Authority, to any modification or amendment contained in such
Supplemental Indenture, shall be prepared and executed by the Authority and
authenticated by the Trustee, and upon demand on the Owners of any Bonds then
Outstanding shall be exchanged at the Office of the Trustee, without cost to any Bond
Owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in
equal aggregate principal amount of the same maturity.
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SECTION 9.04. Amendment of Particular Bonds. The provisions of this Article IX
do not prevent any Bond Owner from accepting any amendment as to the particular Bonds
held by such Owner.
ARTICLE X
DEFEASANCE
SECTION 10.01. Discharge of Indenture. Any or all of the Outstanding Bonds may
be paid by the Authority in any of the following ways, provided that the Authority also pays
or causes to be paid any other sums payable hereunder by the Authority:
(a) by paying or causing to be paid the principal of and interest and
premium (if any) on such Bonds, as and when the same become due
and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money
or non-callable Defeasance Securities in the necessary amount (as
provided in Section 10.03) to pay or redeem such Bonds; or
(c) by delivering all of such Bonds to the Trustee for cancellation.
If the Authority also pays or causes to be paid all other sums payable hereunder
by the Authority, then and in that case, at the election of the Authority (evidenced by a
Written Certificate of the Authority, filed with the Trustee, signifying the intention of the
Authority to discharge all such indebtedness and this Indenture), and notwithstanding that
any of such Bonds shall not have been surrendered for payment, this Indenture and the
pledge of Revenues and other assets made under this Indenture with respect to such
Bonds and all covenants, agreements and other obligations of the Authority under this
Indenture with respect to such Bonds shall cease, terminate, become void and be
completely discharged and satisfied, subject to Section 10.02, and except for Section 8.07
hereof, which shall survive. In such event, upon the Written Request of the Authority, 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, transfer, assign or deliver to the City all moneys or securities or other property
held by it under this Indenture which are not required for the payment or redemption of
any of such Bonds not theretofore surrendered for such payment or redemption. The
Trustee is entitled to conclusively rely on any such Written Certificate or Written Request
and, in each case, is fully protected in relying thereon.
SECTION 10.02. Discharge of Liability on Bonds. Upon the deposit with the
Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as
provided in Section 10.03) to pay or redeem any Outstanding Bonds (whether upon or
prior to the maturity or the redemption date of such Bonds), provided that, if such Bonds
are to be redeemed prior to maturity, notice of such redemption shall have been given as
provided in Article IV or provision satisfactory to the Trustee shall have been made for the
giving of such notice, then all liability of the Authority in respect of such Bonds shall cease,
terminate and be completely discharged, and the Owners thereof shall thereafter be
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entitled only to payment out of such money or securities deposited with the Trustee as
aforesaid for their payment, subject, however, to the provisions of Section 10.04.
The Authority may at any time surrender to the Trustee, for cancellation by the
Trustee, any Bonds previously issued and delivered, which the Authority may have
acquired in any manner whatsoever, and such Bonds, upon such surrender and
cancellation, shall be deemed to be paid and retired.
SECTION 10.03. Deposit of Money or Securities with Trustee. Whenever in this
Indenture it is provided or permitted that there be deposited with or held in trust by the
Trustee money or securities in the necessary amount to pay or redeem any Bonds, the
money or securities so to be deposited or held may include money or securities held by
the Trustee in the funds and accounts established under this Indenture and shall be:
(a) lawful money of the United States of America in an amount equal to
the principal amount of such Bonds and all unpaid interest thereon to
maturity, except that, in the case of Bonds which are to be redeemed
prior to maturity and in respect of which notice of such redemption
shall have been given as provided in Article IV or provision
satisfactory to the Trustee shall have been made for the giving of such
notice, the amount to be deposited or held shall be the principal
amount of such Bonds, premium, if any, and all unpaid interest
thereon to the redemption date; or
(b) non-callable Defeasance Securities, the principal of and interest on
which when due will, in the written opinion of an Independent
Accountant filed with the City, the Authority and the Trustee, provide
money sufficient to pay the principal of and interest and premium (if
any) on the Bonds to be paid or redeemed, as such principal, interest
and premium become due, provided that in the case of Bonds which
are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as provided in Article IV or
provision satisfactory to the Trustee has been made for the giving of
such notice;
provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the
terms of this Indenture or by Written Request of the Authority) to apply such money to the
payment of such principal, interest and premium (if any) with respect to such Bonds, and
(ii) the Authority shall have delivered to the Trustee an opinion of Bond Counsel to the
effect that such Bonds have been discharged in accordance with this Indenture (which
opinion may rely upon and assume the accuracy of the Independent Accountant’s opinion
referred to above). The Trustee shall be entitled to conclusively rely on such Written
Request or opinion and shall be fully protected, in each case, in relying thereon.
SECTION 10.04. Unclaimed Funds. Notwithstanding any provisions of this
Indenture, any moneys held by the Trustee in trust for the payment of the principal of, or
interest on, any Bonds and remaining unclaimed for 2 years after the principal of all of the
Bonds has become due and payable (whether at maturity or upon call for redemption or
by acceleration as provided in this Indenture), if such moneys were so held at such date,
or 2 years after the date of deposit of such moneys if deposited after said date when all of
the Bonds became due and payable, shall be repaid (without liability for interest) to the
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Authority free from the trusts created by this Indenture, and all liability of the Trustee with
respect to such moneys shall thereupon cease; provided, however, that before the
repayment of such moneys to the Authority as aforesaid, the Trustee shall (at the cost of
the Authority) first mail to the Owners of Bonds which have not yet been paid, at the
addresses shown on the Registration Books, a notice, in such form as may be deemed
appropriate by the Trustee with respect to the Bonds so payable and not presented and
with respect to the provisions relating to the repayment to the Authority of the moneys held
for the payment thereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Liability of Authority Limited to Revenues. Notwithstanding
anything in this Indenture or in the Bonds contained, the Authority is not required to
advance any moneys derived from any source other than the Revenues, the Additional
Rental Payments and other assets pledged under this Indenture for any of the purposes
in this Indenture mentioned, whether for the payment of the principal of or interest on the
Bonds or for any other purpose of this Indenture. Nevertheless, the Authority may, but is
not required to, advance for any of the purposes hereof any funds of the Authority which
may be made available to it for such purposes.
SECTION 11.02. Limitation of Rights to Parties and Bond Owners. Nothing in this
Indenture or in the Bonds expressed or implied is intended or shall be construed to give
to any person other than the Authority, the Trustee, the City and the Owners of the Bonds,
any legal or equitable right, remedy or claim under or in respect of this Indenture or any
covenant, condition or provision therein or herein contained; and all such covenants,
conditions and provisions are and shall be held to be for the sole and exclusive benefit of
the Authority, the Trustee, the City and the Owners of the Bonds.
SECTION 11.03. Funds and Accounts. Any fund or account required by this
Indenture to be established and maintained by the Trustee may be established and
maintained in the accounting records of the Trustee, either as a fund or an account, and
may, for the purposes of such records, any audits thereof and any reports or statements
with respect thereto, be treated either as a fund or as an account; but all such records with
respect to all such funds and accounts shall at all times be maintained in accordance with
corporate industry standards to the extent practicable, and with due regard for the
requirements of Section 6.05 and for the protection of the security of the Bonds and the
rights of every Owner thereof. The Trustee may establish such funds and accounts as it
deems necessary or appropriate to perform its obligations under this Indenture.
SECTION 11.04. Waiver of Notice; Requirement of Mailed Notice. Whenever in
this Indenture the giving of notice by mail or otherwise is required, the giving of such notice
may be waived in writing by the person entitled to receive such notice and in any such
case the giving or receipt of such notice shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver. Whenever in this Indenture any notice
is required to be given by mail, such requirement may be satisfied by the deposit of such
notice in the United States mail, postage prepaid, by first class mail.
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SECTION 11.05. Destruction of Bonds. Whenever in this Indenture provision is
made for the cancellation by the Trustee, and the delivery to the Authority, of any Bonds,
the Trustee shall destroy such Bonds as may be allowed by law and, deliver a certificate
of such destruction to the Authority.
SECTION 11.06. Severability of Invalid Provisions. If any one or more of the
provisions contained in this Indenture or in the Bonds shall for any reason be held to be
invalid, illegal or unenforceable in any respect, then such provision or provisions shall be
deemed severable from the remaining provisions contained in this Indenture and such
invalidity, illegality or unenforceability shall not affect any other provision of this Indenture,
and this Indenture shall be construed as if such invalid or illegal or unenforceable provision
had never been contained herein. The Authority hereby declares that it would have
entered into this Indenture and each and every other Section, paragraph, sentence, clause
or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective
of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of
this Indenture may be held illegal, invalid or unenforceable.
SECTION 11.07. Notices. All notices or communications to be given under this
Indenture shall be given by first class mail or personal delivery to the party entitled thereto
at its address set forth below, or at such address as the party may provide to the other
party in writing from time to time. Notice shall be effective either (a) upon transmission by
facsimile transmission or other form of telecommunication, confirmed by telephone, (b) 48
hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal
delivery to any person, upon actual receipt. The Authority, the City or the Trustee may,
by written notice to the other parties, from time to time modify the address or number to
which communications are to be given hereunder.
If to the Authority City of San Rafael
or the City: 1400 Fifth Avenue
San Rafael, CA 94901
Attention: City Manager
Email: finance@cityofsanrafael.org
If to the Trustee: MUFG Union Bank, N.A.
350 California Street, 17th Floor
San Francisco, California 94104
Attention: Corporate Trust Department
Email:AccountAdministration-
Corporate.Trust@unionbank.com
SECTION 11.08. Evidence of Rights of Bond Owners. Any request, consent or
other instrument required or permitted by this Indenture to be signed and executed by
Bond Owners may be in any number of concurrent instruments of substantially similar
tenor and shall be signed or executed by such Bond Owners in person or by an agent or
agents duly appointed in writing. Proof of the execution of any such request, consent or
other instrument or of a writing appointing any such agent, or of the holding by any person
of Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and
shall be conclusive in favor of the Trustee and the Authority if made in the manner provided
in this Section 11.08.
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The fact and date of the execution by any person of any such request, consent or
other instrument or writing may be proved by the certificate of any notary public or other
officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of
deeds, certifying that the person signing such request, consent or other instrument
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 Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond shall
bind every future Owner of the same Bond and the Owner of every Bond issued in
exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by
the Trustee or the Authority in accordance therewith or reliance thereon.
SECTION 11.09. Disqualified Bonds. In determining whether the Owners of the
requisite aggregate principal amount of Bonds have concurred in any demand, request,
direction, consent or waiver under this Indenture, Bonds which are actually known by the
Trustee to be owned or held by or for the account of the Authority or the City, or by any
other obligor on the Bonds, or by any person directly or indirectly controlling or controlled
by, or under direct or indirect common control with, the Authority or the City or any other
obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination unless all Bonds are so owned or held, in which case
such Bonds shall be considered Outstanding for the purpose of such determination..
Bonds so owned which have been pledged in good faith may be regarded as Outstanding
for the purposes of this Section if the pledgee shall establish to the satisfaction of the
Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a person directly
or indirectly controlling or controlled by, or under direct or indirect common control with,
the Authority or the City or any other obligor on the Bonds. In case of a dispute as to such
right, the Trustee shall be entitled to rely upon the advice of counsel in any decision by
Trustee and shall be fully protected in relying thereon.
Upon request, the Authority shall certify to the Trustee those Bonds disqualified
under this Section 11.09, and the Trustee may conclusively rely on such certifications.
SECTION 11.10. Money Held for Particular Bonds. The money held by the Trustee
for the payment of the interest, premium, if any, or principal due on any date with respect
to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall,
on and after such date and pending such payment, be set aside on its books and held in
trust by it for the Owners of the Bonds entitled thereto, subject, however, to the provisions
of Section 10.04 but without any liability for interest thereon.
SECTION 11.11. Waiver of Personal Liability. No member, officer, agent or
employee of the Authority shall be individually or personally liable for the payment of the
principal of or interest or premium (if any) on the Bonds or be subject to any personal
liability or accountability by reason of the issuance thereof; but nothing herein contained
shall relieve any such member, officer, agent or employee from the performance of any
official duty provided by law or by this Indenture.
SECTION 11.12. Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture either the Authority, the City or the Trustee is named or
referred to, such reference shall be deemed to include the successors or assigns thereof,
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and all the covenants and agreements in this Indenture contained by or on behalf of the
Authority, the City or the Trustee shall bind and inure to the benefit of the respective
successors and assigns thereof whether so expressed or not.
SECTION 11.13. Execution in Several Counterparts. This Indenture 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 Authority and the Trustee shall preserve undestroyed, shall together constitute but one
and the same instrument.
SECTION 11.14. Payment on Non-Business Day. In the event any payment is
required to be made hereunder on a day which is not a Business Day, such payment shall
be made on the next succeeding Business Day and with the same effect as if made on
such preceding non-Business Day.
SECTION 11.15. Governing Law. This Indenture shall be governed by and
construed in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
has caused this Indenture to be signed in its name by its Executive Director and attested
to by its Secretary, and MUFG UNION BANK, N.A., in token of its acceptance of the trusts
created hereunder, has caused this Indenture to be signed in its corporate name by its
officer thereunto duly authorized, all as of the day and year first above written.
SAN RAFAEL JOINT POWERS FINANCING
AUTHORITY
By
Executive Director
Attest:
Secretary
MUFG UNION BANK, N.A.,
as Trustee
By
Authorized Officer
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APPENDIX A
DEFINITIONS
“Additional Rental Payments” means the amounts of additional rental which are
payable by the City under Section 4.5 of the Lease or which are otherwise identified as
Additional Rental Payments under the Lease.
“Assignment Agreement” means the Assignment Agreement dated as of March 1,
2018, between the Authority as assignor and the Trustee as assignee, as originally
executed or as thereafter amended.
“Authority” means the San Rafael Joint Powers Financing Authority, a joint
exercise of powers authority duly organized and existing under the laws of the State of
California.
“Authorized Representative” means: (a) with respect to the Authority, its Chair,
Executive Director, General Counsel or any other person designated as an Authorized
Representative of the Authority by a Written Certificate of the Authority signed by its
Executive Director and filed with the City and the Trustee; and (b) with respect to the City,
its Mayor, Vice Mayor, City Manager, Assistant City Manager, City Attorney or any other
person designated as an Authorized Representative of the City by a Written Certificate of
the City signed by its City Manager and filed with the Authority and the Trustee.
“Bond Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any
other attorney or firm of attorneys appointed by or acceptable to the Authority of nationally-
recognized experience in the issuance of obligations the interest on which is excludable
from gross income for federal income tax purposes under the Tax Code.
“Bond Fund” means the fund by that name established and held by the Trustee
under Section 5.01.
“Bond Law” means Article 4 of Chapter 5, Division 7, Title 1 (commencing with
Section 6584) of the California Government Code.
“Bond Year” means each twelve-month period extending from June 2 in one
calendar year to June 1 of the succeeding calendar year, both dates inclusive; except that
the first Bond Year commences on the Closing Date and extends to and including June 1,
2018.
“Bonds” means the $45,485,000 aggregate principal amount of San Rafael Joint
Powers Financing Authority Lease Revenue Bonds, Series 2018 (Public Safety Facilities
Project) authorized by and at any time Outstanding under this Indenture.
“Business Day” means a day (other than a Saturday or a Sunday) on which banks
are not required or authorized to remain closed in the city in which the Office of the Trustee
is located.
“Capitalized Interest Subaccount” means the account by that name within the
Interest Account of the Bond Fund established under Section 5.02.
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“City” means the City of San Rafael, a charter city and municipal corporation
organized and existing under the Constitution and laws of the State of California.
“Closing Date” means March 28_, 2018, the date of delivery of the Bonds to the
Original Purchaser.
“Costs of Issuance” means all items of expense directly or indirectly payable by or
reimbursable to the City relating to the authorization, issuance, sale and delivery of the
Bonds, including but not limited to: printing expenses; rating agency fees; filing and
recording fees; initial fees, expenses and charges of the Trustee and their respective
counsel, including the Trustee’s first annual administrative fee; fees, charges and
disbursements of attorneys, municipal advisors, accounting firms, consultants and other
professionals; fees and charges for preparation, execution and safekeeping of the Bonds;
and any other cost, charge or fee in connection with the original issuance of the Bonds.
“Costs of Issuance Fund” means the fund by that name established and held by
the Trustee under Section 3.03.
“Defeasance Securities” means securities described in clause (o) of the definition
of Permitted Investments.
“Depository” means (a) initially, DTC, and (b) any other Securities Depositories
acting as Depository under Section 2.04.
“Depository System Participant” means any participant in the Depository’s book-
entry system.
“DTC” means The Depository Trust Company, New York, New York, and its
successors and assigns.
“Event of Default” means any of the events specified in Section 7.01.
“Excess Investment Earnings” means an amount required to be rebated to the
United States of America under Section 148(f) of the Tax Code due to investment of gross
proceeds of the Bonds at a yield in excess of the yield on the Bonds.
"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of
the date the contract to purchase or sell the investment becomes binding) if the investment
is traded on an established securities market (within the meaning of section 1273 of the
Tax Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a
bona fide arm's length transaction (as referenced above) if
(a) the investment is a certificate of deposit that is acquired in accordance with
applicable regulations under the Tax Code,
(b) the investment is an agreement with specifically negotiated withdrawal or
reinvestment provisions and a specifically negotiated interest rate (for
example, a guaranteed investment contract, a forward supply contract or
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other investment agreement) that is acquired in accordance with applicable
regulations under the Tax Code,
(c) the investment is a United States Treasury Security--State and Local
Government Series that is acquired in accordance with applicable
regulations of the United States Bureau of Public Debt, or
(d) any commingled investment fund in which the Authority and related parties
do not own more than a 10% beneficial interest therein if the return paid by
the fund is without regard to the source of the investment.
To the extent required by the applicable regulations under the Code, the term
“investment” will include a hedge.
“Fiscal Year” means any twelve-month period extending from July 1 in one
calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any
other twelve-month period selected and designated by the Authority as its official fiscal
year period.
“Indenture” means this Indenture of Trust, as originally executed or as it may from
time to time be supplemented, modified or amended by any Supplemental Indenture under
the provisions hereof.
“Independent Accountant” means any certified public accountant or firm of certified
public accountants appointed and paid by the Authority or the City, and who, or each of
whom (a) is in fact independent and not under domination of the Authority or the City; (b)
does not have any substantial interest, direct or indirect, in the Authority or the City; and
(c) is not connected with the Authority or the City as an officer or employee of the Authority
or the City but who may be regularly retained to make annual or other audits of the books
of or reports to the Authority or the City.
“Insurance and Condemnation Fund” means the fund by that name established
and held by the Trustee under Section 5.07.
“Interest Account” means the account by that name established and held by the
Trustee in the Bond Fund under Section 5.02.
“Interest Payment Date” means each June 1 and December 1, commencing June
1, 2018, so long as any Bonds remain unpaid.
“Lease” means the Lease Agreement dated as of March 1, 2018, between the
Authority as lessor and the City as lessee of the Leased Property, as originally executed
and as it may from time to time be supplemented, modified or amended in accordance
with the terms thereof and of this Indenture.
“Lease Payment Date” means, with respect to any Interest Payment Date, the
Business Day immediately preceding such Interest Payment Date.
“Lease Payments” means the amounts payable by the City under Section 4.3(a)
of the Lease, including any prepayment thereof and including any amounts payable upon
a delinquency in the payment thereof.
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“Leased Property” means the real property described in Appendix A to the Lease,
together with all improvements and facilities at any time situated thereon.
“Net Proceeds” means amounts derived from any policy of casualty insurance or
title insurance with respect to the Leased Property, or the proceeds of any taking of the
Leased Property or any portion thereof in eminent domain proceedings (including sale
under threat of such proceedings), to the extent remaining after payment therefrom of all
expenses incurred in the collection and administration thereof.
“Nominee” means (a) initially, Cede & Co. as nominee of DTC, and (b) any other
nominee of the Depository designated under Section 2.04(a).
“Office” means the corporate trust office of the Trustee in San Francisco,
California, or such other or additional offices as the Trustee may designate in writing to
the Authority from time to time as the corporate trust office for purposes of the Indenture;
except that with respect to presentation of Bonds for payment or for registration of transfer
and exchange such term means the office or agency of the Trustee at which, at any
particular time, its corporate trust agency business is conducted.
“Original Purchaser” means Raymond James & Associates, Inc., as original
purchaser of the Bonds upon their delivery by the Trustee on the Closing Date.
“Outstanding”, when used as of any particular time with reference to Bonds, means
all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee
under this Indenture except: (a) Bonds theretofore canceled by the Trustee or surrendered
to the Trustee for cancellation; (b) Bonds with respect to which all liability of the Authority
shall have been discharged in accordance with Section 10.02, including Bonds (or portions
thereof) described in Section 11.09; and (c) Bonds for the transfer or exchange of or in
lieu of or in substitution for which other Bonds shall have been authenticated and delivered
by the Trustee under this Indenture.
“Owner”, whenever used herein with respect to a Bond, means the person in
whose name the ownership of such Bond is registered on the Registration Books.
“Permitted Encumbrances” means, as of any time: (a) liens for general ad valorem
taxes and assessments, if any, not then delinquent, or which the City may permit to remain
unpaid under Article V of the Lease; (b) the Site Lease, the Lease and the Assignment
Agreement; (c) any right or claim of any mechanic, laborer, material man, supplier or
vendor not filed or perfected in the manner prescribed by law; (d) the exceptions disclosed
in the title insurance policy with respect to the Leased Property issued as of the Closing
Date by Stewart Title Guaranty Company; and (e) easements, rights of way, mineral rights,
drilling rights and other rights, reservations, covenants, conditions or restrictions which
exist of record and which the City certifies in writing will not materially impair the use of
the Leased Property for its intended purposes.
“Permitted Investments” means any of the following:
(a) U.S. Treasury obligations, and obligations the principal and interest
of which are backed or guaranteed by the full faith and credit of the
U.S. Government.
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(b) Debt obligations, participations or other instruments issued or fully
guaranteed by any U.S. Federal agency, instrumentality, corporation,
or government-sponsored enterprise (GSE).
(c) U.S. dollar denominated debt obligations of a multilateral organization
of governments for which the United States government is a
participant, shareholder, and/or voting member with minimum ratings
of AA-/Aa3 (or the equivalent) or A-1/P-1 (or the equivalent) by any
one rating agency, including but not limited to: the Inter-American
Development Bank, International Bank for Reconstruction &
Development, African Development Bank, Asian Development Bank,
and the International Finance Corporation.
(d) Interest-bearing deposit accounts (including certificates of deposit
placed by a third party pursuant to a separate agreement between
the Authority and the Trustee), time deposits, bank deposit products,
trust funds, trust accounts, interest bearing deposits, overnight bank
deposits or interest bearing money market accounts in federal or
State chartered savings and loan associations or in federal or State
of California banks (including the Trustee or any of its affiliates),
provided that: (i) the unsecured obligations of such commercial bank
or savings and loan association are rated A or better by S&P; or (ii)
such deposits are fully insured by the Federal Deposit Insurance
Corporation or secured at all times by collateral described in (a) or (b)
above.
(e) Negotiable bank certificates of deposit, deposit notes or other deposit
obligations issued by a nationally or state chartered bank, credit union
or savings association, or by a federally or state-licensed branch of a
foreign bank or financial institution with minimum ratings of A-/A3 (or
the equivalent) or A-1/P-1 (or the equivalent) by any one rating
agency.
(f) U.S. dollar denominated commercial paper rated “A-1+” or better by
S&P.
(g) Federal funds or bankers acceptances with a maximum term of one
year of any bank which an unsecured, uninsured and unguaranteed
obligation rating of “A-1+” or better by S&P.
(h) Money market mutual 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 at least
AAAm-G, AAAm or AAm, which funds may include funds for which
the Trustee, its affiliates, parent or subsidiaries provide investment
advisory, custodial, transfer agency or other management services,
and for which they receive and retain a fee for such services. Money
market funds permitted under this paragraph shall not include funds
with a floating net asset value.
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(i) Obligations the interest on which is excludable from gross income
pursuant to Section 103 of the Tax Code and which are either (a)
rated A or better by S&P, or (b) fully secured as to the payment of
principal and interest by Permitted Investments described in clauses
(a) or (b).
(j) Obligations issued by any corporation organized and operating within
the United States of America, which obligations are rated A or better
by S&P.
(k) Bonds or notes issued by any state or municipality which are rated A
or better by S&P.
(l) Any investment agreement with, or guaranteed by, a financial
institution the long-term unsecured obligations or the claims paying
ability of which are rated A or better by S&P at the time of initial
investment, by the terms of which all amounts invested thereunder
are required to be withdrawn and paid to the Trustee in the event
either of such ratings at any time falls below A.
(m) The Local Agency Investment Fund of the State of California, created
pursuant to Section 16429.1 of the California Government Code, to
the extent the Trustee is authorized to register such investment in its
name.
(n) The California Asset Management Program.
(o) Defeasance securities include (i) U.S. Treasury obligations and
obligations guaranteed by the U.S. Government, including but not
limited to: Treasury bills, bonds, notes, and STRIPS; Resolution
Funding Corporation (“REFCORP”) Interest STRIPS; and United
States Agency for International Development (“US AID”) guaranteed
notes (including stripped securities) provided that any US AID
security shall mature at least 5 business days prior to any cash flow
or escrow requirement and (ii) non-callable senior debt obligations,
participations, or other instruments issued or fully guaranteed by any
U.S. Federal agency, instrumentality, corporation, or government-
sponsored enterprise, including but not limited to: Fannie Mae,
Freddie Mac, the Federal Home Loan Banks, the Federal Farm Credit
System, Tennessee Valley Authority, and Resolution Funding
Corporation. Interest and principal strips are eligible investments
provided that the securities are stripped from non-callable senior debt
obligations, participations, or other instruments as described above
in this clause (o).
“Principal Account” means the account by that name established and held by the
Trustee in the Bond Fund under Section 5.02.
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“Project” means the acquisition and construction of certain public safety
improvements consisting generally of a new public safety center and two replacement fire
stations.
“Project Fund” means the fund by that name established and held by the Trustee
under Section 3.04.
“Record Date” means, with respect to any Interest Payment Date, the 15th calendar
day of the month preceding such Interest Payment Date, whether or not such day is a
Business Day.
“Redemption Fund” means the fund by that name established and held by the
Trustee under Section 5.06.
“Registration Books” means the records maintained by the Trustee under Section
2.05 for the registration and transfer of ownership of the Bonds.
“Revenues” means: (a) all amounts received by the Authority or the Trustee under
or with respect to the Lease, including, without limiting the generality of the foregoing, all
of the Lease Payments (including both timely and delinquent payments, any late charges,
and whether paid from any source), but excluding (i) any amounts described in Section
7.5(b)(v) of the Lease, and (ii) any Additional Rental Payments; and (b) all interest, profits
or other income derived from the investment of amounts in any fund or account established
under this Indenture.
“Securities Depositories” means DTC; and, in accordance with then current
guidelines of the Securities and Exchange Commission, such other securities depositories
as the Authority designates in written notice filed with the Trustee.
“Site Lease” means the Site Lease dated as of March 1, 2018, between the City
as lessor and the Authority as lessee, as amended from time to time in accordance with
its terms.
“Site Lease Payment” means the amount of $45,485,000.00, which is payable by
the Authority to the City on the Closing Date under Section 3 of the Site Lease.
“S&P” means S&P Global Ratings, a business unit of Standard & Poor’s Financial
Services LLC business, its successors and assigns.
“Supplemental Indenture” means any indenture hereafter duly authorized and
entered into between the Authority and the Trustee, supplementing, modifying or
amending this Indenture; but only if and to the extent that such Supplemental Indenture is
specifically authorized hereunder.
“Tax Code” means the Internal Revenue Code of 1986 as in effect on the Closing
Date or (except as otherwise referenced herein) as it may be amended to apply to
obligations issued on the Closing Date, together with applicable temporary and final
regulations promulgated, and applicable official public guidance published, under said
Code.
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“Term” means, with reference to the Lease, the time during which the Lease is in
effect, as provided in Section 4.2 thereof.
“Trustee” means MUFG Union Bank, N.A., a national banking association
organized and existing under the laws of United States of America, or its successor or
successors, as Trustee hereunder as provided in Article VIII.
“Written Certificate,” “Written Request” and “Written Requisition” of the Authority
or the City mean, respectively, a written certificate, request or requisition signed in the
name of the Authority or the City by its Authorized Representative. Any such instrument
and supporting opinions or representations, if any, may, but need not, be combined in a
single instrument with any other instrument, opinion or representation, and the two or more
so combined shall be read and construed as a single instrument.
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APPENDIX B
BOND FORM
NO. R- ***$ ***
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2018
(PUBLIC SAFETY FACILITIES PROJECT)
INTEREST RATE: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:
______% June 1, ____ March 28, 2018 _______
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: *** ***
The SAN RAFAEL JOINT POWERS FINANCING AUTHORITY, a public body
corporate and politic duly organized and existing under the laws of the State of California
(the “Authority”), for value received, hereby promises to pay to the Registered Owner
specified above or registered assigns (the “Registered Owner”), on the Maturity Date
specified above (subject to any right of prior redemption hereinafter provided for), the
Principal Amount specified above, in lawful money of the United States of America, and
to pay interest thereon in like lawful money from the Interest Payment Date (as hereinafter
defined) next preceding the date of authentication of this Bond unless (i) this Bond is
authenticated on or before an Interest Payment Date and after the close of business on
the 15th day of the month preceding such interest payment date, in which event it shall
bear interest from such Interest Payment Date, or (ii) this Bond is authenticated on or
before May 15, 2018, in which event it shall bear interest from the Original Issue Date
specified above; provided, however, that if at the time of authentication of this Bond,
interest is in default on this Bond, this Bond shall bear interest from the Interest Payment
Date to which interest has previously been paid or made available for payment on this
Bond, at the Interest Rate per annum specified above, payable semiannually on
December 1 and June 1 in each year, commencing June 1, 2018 (the “Interest Payment
Dates”), calculated on the basis of a 360-day year composed of twelve 30-day months.
Principal hereof and premium, if any, upon early redemption hereof are payable
upon presentation and surrender hereof at the designated corporate trust office of MUFG
Union Bank, N.A. (the “Trust Office”), as trustee (the “Trustee”). Interest hereon is payable
by check of the Trustee mailed to the Registered Owner hereof at the Registered Owner’s
address as it appears on the registration books of the Trustee as of the close of business
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on the fifteenth day of the month preceding each Interest Payment Date (a “Record Date”),
or, upon written request filed with the Trustee as of such Record Date by a registered
owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in
immediately available funds to an account in the United States designated by such
registered owner in such written request.
This Bond is not a debt of the City of San Rafael (the “City”), the County of Marin,
the State of California, or any of its political subdivisions, and neither the City, said County,
said State, nor any of its political subdivisions, is liable hereon nor in any event shall this
Bond be payable out of any funds or properties of the Authority other than the Revenues.
This Bond is one of a duly authorized issue of bonds of the Authority designated
as the “San Rafael Public Financing Authority Lease Revenue Bonds, Series 2018 (Public
Safety Facilities Project)” (the “Bonds”), in an aggregate principal amount of $45,485,000,
all of like tenor and date (except for such variation, if any, as may be required to designate
varying numbers, maturities, interest rates or redemption provisions) and all issued under
the provisions of Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the
State of California, commencing with Section 6584 of said Code, and under an Indenture
of Trust dated as of March 1, 2018, between the Authority and the Trustee (the “Indenture”)
and a resolution of the Authority adopted on March 5, 2018, authorizing the issuance of
the Bonds. Reference is hereby made to the Indenture (copies of which are on file at the
office of the Authority) and all supplements thereto for a description of the terms on which
the Bonds are issued, the provisions with regard to the nature and extent of the Revenues,
and the rights thereunder of the owners of the Bonds and the rights, duties and immunities
of the Trustee and the rights and obligations of the Authority thereunder, to all of the
provisions of which the Registered Owner of this Bond, by acceptance hereof, assents
and agrees.
The Bonds have been issued by the Authority to refinance certain outstanding
certificates of participation of the City. This Bond and the interest and premium, if any,
hereon are special obligations of the Authority, payable from the Revenues, and secured
by a charge and lien on the Revenues as defined in the Indenture, consisting principally
of lease payments made by the City under a Lease Agreement dated as of March 1, 2018,
between the Authority as lessor and the City as lessee (the “Lease”). As and to the extent
set forth in the Indenture, all of the Revenues are exclusively and irrevocably pledged in
accordance with the terms hereof and the provisions of the Indenture, to the payment of
the principal of and interest and premium (if any) on the Bonds.
The rights and obligations of the Authority and the owners of the Bonds may be
modified or amended at any time in the manner, to the extent and upon the terms provided
in the Indenture, but no such modification or amendment shall extend the fixed maturity of
any Bonds, or reduce the amount of principal thereof or premium (if any) thereon, or
extend the time of payment, or change the method of computing the rate of interest
thereon, or extend the time of payment of interest thereon, without the consent of the
owner of each Bond so affected.
The Bonds maturing on or before June 1, 2028, are not subject to optional
redemption prior to their stated maturity. The Bonds maturing on or after June 1, 2029,
are subject to redemption, as a whole or in part at the election of the Authority among
maturities on such basis as designated by the Authority and by lot within a maturity, at the
option of the Authority, on June 1, 2028, and on any date thereafter, at a redemption price
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equal to 100% of the principal amount of Bonds to be redeemed, together with accrued
interest thereon to the date fixed for redemption, without premium.
The Bonds are subject to redemption as a whole, or in part by lot, on any date, to
the extent of any net proceeds of hazard or title insurance with respect to the property
which has been leased under the Lease (the “Leased Property”) or any portion thereof
which are not used to repair or replace the Leased Property pursuant to the Lease, or to
the extent of any net proceeds arising from the disposition of the Leased Property or any
portion thereof in eminent domain proceedings which the City elects to be used for such
purpose pursuant to the Lease, at a redemption price equal to the principal amount thereof
plus interest accrued thereon to the date fixed for redemption, without premium.
As provided in the Indenture, notice of redemption will be mailed by the Trustee by
first class mail not less than 30 nor more than 60 days prior to the redemption date to the
respective owners of any Bonds designated for redemption at their addresses appearing
on the registration books of the Trustee, but neither failure to receive such notice nor any
defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption
or the cessation of accrual of interest thereon from and after the date fixed for redemption.
Notice of any optional redemption of the Bonds may be rescinded under the circumstances
set forth in the Indenture, upon notice to the owners of such Bonds.
If this Bond is called for redemption and payment is duly provided therefor as
specified in the Indenture, interest shall cease to accrue hereon from and after the date
fixed for redemption.
This Bond is transferable by the Registered Owner hereof, in person or by his
attorney duly authorized in writing, at the Trust Office, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Indenture, and upon
surrender and cancellation of this Bond. Upon registration of such transfer, a new Bond
or Bonds, of authorized denomination or denominations, for the same aggregate principal
amount and of the same maturity will be issued to the transferee in exchange herefor.
This Bond may be exchanged at the Trust Office for Bonds of the same tenor, aggregate
principal amount, interest rate and maturity, of other authorized denominations.
The Authority and the Trustee may treat the Registered Owner hereof as the
absolute owner hereof for all purposes, and the Authority and the Trustee shall not be
affected by any notice to the contrary.
Unless this Bond is presented by an authorized representative of The Depository
Trust Company to the Authority or the Trustee for registration of transfer, exchange or
payment, and any Bond issued is registered in the name of Cede & Co. or such other
name as requested by an authorized representative of The Depository Trust Company
and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.
It is hereby certified by the Authority that all of the things, conditions and acts
required to exist, to have happened or to have been performed precedent to and in the
issuance of this Bond do exist, have happened or have been performed in due and regular
time, form and manner as required by the Ordinance and the laws of the State of California
and that the amount of this Bond, together with all other indebtedness of the Authority,
B-4
does not exceed any limit prescribed by the Ordinance or any laws of the State of
California, and is not in excess of the amount of Bonds permitted to be issued under the
Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid
or obligatory for any purpose until the certificate of authentication hereon endorsed shall
have been manually signed by the Trustee.
IN WITNESS WHEREOF, the SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
has caused this Indenture to be signed in its name by its Executive Director and attested
to by its Secretary, and MUFG UNION BANK, N.A., in token of its acceptance of the trusts
created hereunder, has caused this Indenture to be signed in its corporate name by its
officer thereunto duly authorized, all as of the day and year first above written.
SAN RAFAEL JOINT POWERS FINANCING
AUTHORITY
7;
IN WITNESS WHEREOF, the SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
has caused this Indenture to be signed in its name by its Executive Director and attested
to by its Secretary, and MUFG UNION BANK, N.A., in token of its acceptance of the trusts
created hereunder, has caused this Indenture to be signed in its corporate name by its
officer thereunto duly authorized, all as of the day and year first above written.
SAN RAFAEL JOINT POWERS FINANCING
AUTHORITY
B-6
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
__________________________________ whose address and social security or other tax
identifying number is ____________________, the within-mentioned Bond and hereby
irrevocably constitute(s) and appoint(s)
________________________________________ attorney, to transfer the same on the
registration books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor institution.
Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the face of the
within Bond in every particular without alteration or
enlargement or any change whatsoever.
B-1
APPENDIX C
FORM OF
PROJECT FUND DISBURSEMENT REQUEST
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2018
(PUBLIC SAFETY FACILITIES PROJECT)
DISBURSEMENT REQUEST NO.: _______
MUFG Union Bank, N.A.
350 California Street, 17th Floor
San Francisco, California 94104
Attention: Corporate Trust Department
Under Section 3.04 of the Indenture of Trust dated as of March 1, 2018, by and
between MUFG Union Bank, N.A., and the San Rafael Joint Powers Financing Authority
(the “Indenture”), you are hereby authorized and requested to make immediate
disbursement of funds held by you in the Project Fund for costs of acquiring, construction
and equipping the Project (as defined in the Indenture).
You are hereby requested to pay from the Project Fund established by the
Indenture, to the persons or entities designated on Schedule A attached hereto, in
payment of all or a portion of the costs of constructing and equipping the Improvements,
as described on Schedule A.
The undersigned hereby certifies that (i) no part of the amount requested herein
has been included in any other request previously filed with you; (ii) to the knowledge of
the undersigned, there has not been filed with or served upon the City any notice of any
lien or attachment upon or claim (except for any preliminary notice of lien as may be filed
in accordance with law) affecting the right of the person, corporation or other entity stated
below to receive payment of the amount stated below, which lien has not been released
or will not be released simultaneously with the payment requested hereunder; and (iii) the
labor, services and/or materials covered hereby have been performed upon or furnished
to the Improvements and the payment requested herein is due and payable under a
purchase order, contract or other authorization;
Dated: __________, 20__.
CITY OF SAN RAFAEL
By
Its
B-2
SCHEDULE A
Payee Description
(include address) of Costs Amount
2018-0010783
RECORDING REQUESTED BY:
Stewart Title Guaranty Company - Commercial
Services
WHEN RECORDED MAIL TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Scott R. Ferguson, Esq.
ORDER NO.01180-292882
ESCROW NO.18000300026
APN:
Recorded
Official Records
County of
Marin
RICHARD N. BENSON
Assessor -Recorder
County Clerk
REC FEE
AO
11:09AM 27 -Mar -2018 Page 1 of 9
0.00
SPACE ABOVE THIS LINE FOR RECORDERS USE
TITLE(S)
ASSIGNMENT AGREEMENT
Title Order No.: 01180-292882 Escrow No.: 18000300026 Parcel No.:
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE CALIFORNIA
GOVERNMENT CODE.
File No.: 18000300026
CA Cover Page Non Conforming Doc COM Page 1 of 1
41390-03 SM:SRF:REL FINAL
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Scott R. Ferguson, Esq.
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this “Agreement”), dated for convenience as of
March 1, 2018, is between the SAN RAFAEL JOINT POWERS FINANCING AUTHORITY, a joint
powers authority duly organized and existing under the laws of the State of California (the
“Authority”), and MUFG Union Bank, N.A., a national banking association organized and
existing under the laws of the United States of America, as trustee (the “Trustee”).
BACKGROUND:
1. The City of San Rafael (the “City”) wishes to finance the acquisition and
construction of certain public safety improvements consisting generally of a new public
safety center and two replacement fire stations (collectively, the “Project”).
2. To that end, the City has proposed to lease to the Authority certain real
property and improvements, initially consisting of the City’s new public safety facility, the
City’s Fire Station 52, and the City’s Fire Station 57, including land and improvements
thereon, as more particularly described in Appendix A attached hereto and by this
reference incorporated herein (the “Leased Property”), under a Site Lease, dated the
date hereof (the “Site Lease”), in consideration of the payment by the Authority of an
upfront rental payment (the “Site Lease Payment”) sufficient to provide funds for the
acquisition and construction of the Project. The Site Lease is being recorded concurrently
herewith.
3. The Authority has authorized the issuance of its San Rafael Joint Powers
Financing Authority Lease Revenue Bonds, Series 2018 (Public Safety Facilities Project)
in the aggregate principal amount of $45,485,000 (the “Bonds”) under an Indenture of
Trust dated as of March 1, 2018 (the “Indenture”), between the Authority and the Trustee,
for the purpose of providing the funds to enable the Authority to pay the Site Lease
Payment to the City in accordance with the Site Lease.
-2-
4. In order to provide revenues that are sufficient to enable the Authority to pay
debt service on the Bonds, the Authority has agreed to lease the Leased Property back to
the City under a Lease Agreement dated as of the date hereof (the “Lease Agreement”),
a memorandum of which has been recorded concurrently herewith, under which the City
has agreed to pay semiannual Lease Payments as the rental for the Leased Property
thereunder.
5. The Authority has requested the Trustee to enter into this Agreement for the
purpose of assigning certain of its rights under the Lease Agreement to the Trustee for
the benefit of the Bond owners.
AGREEMENT:
In consideration of the material covenants contained in this Agreement, the parties
hereto hereby formally covenant, agree and bind themselves as follows:
SECTION 1. Defined Terms. All capitalized terms not otherwise defined herein
have the respective meanings given those terms in the Indenture.
SECTION 2. Assignment. The Authority hereby assigns to the Trustee, for the
benefit of the Owners of all Bonds which are issued and Outstanding under the Indenture,
all of the Authority’s rights under the Lease Agreement (excepting only the Authority’s
rights under Sections 4.5, 5.10, 7.3 and 8.4 of the Lease Agreement and its rights to give
consents and approvals under the Lease Agreement), including but not limited to:
(a) the right to receive and collect all of the Lease Payments from the
City under the Lease Agreement;
(b) the right to receive and collect any proceeds of any insurance
maintained thereunder with respect to the Leased Property, or any
eminent domain award (or proceeds of sale under threat of eminent
domain) paid with respect to the Leased Property; and
(c) the right to exercise such rights and remedies conferred on the
Authority under the Lease Agreement as may be necessary or
convenient (i) to enforce payment of the Lease Payments and any
amounts required to be deposited in the Insurance and
Condemnation Fund established under Section 5.07 of the Indenture,
or (ii) otherwise to protect the interests of the Bond Owners in the
event of a default by the City under the Lease Agreement.
The Trustee shall administer all of the rights assigned to it by the Authority under
this Agreement in accordance with the provisions of the Indenture, for the benefit of the
Owners of Bonds. The assignment made under this Section 2 is absolute and irrevocable,
and without recourse to the Authority.
SECTION 3. Acceptance. The Trustee hereby accepts the assignments made
herein for the purpose of securing the payments due under the Lease Agreement and
Indenture to, and the rights under the Lease Agreement and Indenture of, the Owners of
the Bonds, all subject to the provisions of the Indenture. The recitals contained herein are
-3-
those of the Authority and not of the Trustee, and the Trustee assumes no responsibility
for the correctness thereof.
SECTION 4. Conditions. This Agreement confers no rights and imposes no duties
upon the Trustee beyond those expressly provided in the Indenture. The assignment
hereunder to the Trustee is solely in its capacity as Trustee under the Indenture, and the
Trustee shall have the same rights, protections, immunities and indemnities hereunder as
afforded to it under the Indenture.
SECTION 5. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which is an original and all together constitute one and
the same agreement. Separate counterparts of this Agreement may be separately
executed by the Trustee and the Authority, both with the same force and effect as though
the same counterpart had been executed by the Trustee and the Authority.
SECTION 6. Binding Effect. This Agreement inures to the benefit of and binds the
Authority and the Trustee, and their respective successors and assigns, subject, however,
to the limitations contained herein.
SECTION 7. Governing Law. This Agreement is governed by the Constitution and
laws of the State of California.
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IN WITNESS WHEREOF, the parties have executed this Agreement by their
authorized officers as of the day and year first written above.
SAN RAFAEL JOINT POWERS FINANCING
AUTHORITY
$Ne,
IN WITNESS WHEREOF, the SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
has caused this Indenture to be signed in its name by its Executive Director and attested
to by its Secretary, and MUFG UNION BANK, N.A., in token of its acceptance of the trusts
created hereunder, has caused this Indenture to be signed in its corporate name by its
officer thereunto duly authorized, all as of the day and year first above written.
SAN RAFAEL JOINT POWERS FINANCING
AUTHORITY
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
County of Mann )
On before me,Lindsay Faye Lara, Notary Public
(insert name and title of the officer)
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
leis/her/their authorized capacity(ies), and that by his/her:their signature(s)on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
ACKNOWLEDGMENT
UNDSAY FAYE LARA
COMM. *2182818 z
Notary Public California g
Marin County -i-
ll/ Comm. Eyires Feb. 10, 2021
ACKNOWLEDGMENT
paragraph is true and correct.
WITNESS my hand and official seal.
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validi of that document.
State of California
County of
On before me,
(insert name and title of the officer)
personally appeared
who proved to me on the basis of satisfactory evidenm to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of th th o e of
ri
z
PAUL K. LIU
Commission # 2075952
Notary Public - California E
San Francisco County aZ
My Comm. Expires Aug 23, 2018
111"9"7°7"g"c5"2"sP17*
Signature (Seal)
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4
A-1
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property referred to herein is situated in the State of California, County
of Marin, City of San Rafael and described as follows:
Parcel One:
Beginning at the corner formed by the intersection of the West line of "C" Street with the
South line of Fifth Street; Running thence Westerly along the South line of Fifth Street
(now called Fifth Avenue), 100 feet; Running thence at right angles Southerly seventy-
seven and one-half (771/2) feet to old fence running thence at right angles Easterly parallel
with Fifth Street one hundred (100) feet to the West line of "C" Street; Running thence
Northerly along the West line of "C" Street seventy-seven and one-half (771/2) feet to the
place of beginning.
Parcel Two:
Parcel A:
Beginning at a point on the Southerly line of Fifth Avenue, in the City of San Rafael, distant
thereon Westerly 100 feet from its intersection with the Westerly line of “C” Street,. and
running thence along the said Avenue line Westerly 51 feet, thence at right angles
Southerly 140 feet, thence at right angle Easterly 48 feet, thence at right angles, Northerly
62.5 feet, thence at right angle Easterly 3 feet, thence at right angle Northerly 77.5 feet to
the point of beginning.
Parcel B:
Map of the Townsite of San Rafael Tract of Land beginning at point Westerly 100 feet
along Southerly line 5th Avenue and at right angles Southerly 77.5 feet from intersection
of Westerly line “C” Street with Southerly line of 5th Avenue, running thence Westerly
parallel with Southerly. line 5th Avenue 3 feet, Southerly at right angles 62.5 feet,
Southeasterly parallel with Southerly line 5th Avenue, 3 feet thence Northerly to beginning.
Being portion Block13.
Parcel Three:
Beginning at a point on the Southerly line of 5th. Street, said point being the Northeast
corner of the property described in the deed from William Vaning, et ux., to the City of San
Rafael, dated June 9, 1897 and recorded June 9, 1987 in Book 45, Page 315, Marin
County Records; running thence along said Southerly line of 5th. Street, South 83° 15'
East, 155 feet; thence leaving said line South 6° 45' West 140 feet to the Northerly line of
the property described in the Deed from Timothy J. Nahon to Robert Magnes, dated
September 15, 1897 and recorded September 15, 1897 in Book 47, of Deeds, at Page
108; thence along said line North 83° 15' West 159.9 feet to the Southeast corner of the
property described in the above mentioned deed to the City of San Rafael; thence along
the Easterly line thereof, 140 feet to the point of beginning.
APN: 011-205-04 as to Parcel One
APN: 011-205-17 as to Parcel(s) Two, Parcel A and Two, Parcel Three
APN: 011-205-01 as to Parcel Four
(End of Legal Description)
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 be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances will this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor will there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful. PRELIMINARY OFFICIAL STATEMENT DATED MARCH 6, 2018
NEW ISSUE - FULL BOOK-ENTRY RATING: Standard & Poor’s: “AA”
See “RATING” herein.
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain
qualifications described herein, under existing law, the interest on the 2018 Bonds is excluded from gross income for federal income tax
purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax, although, in the case of tax
years beginning prior to January 1, 2018, for the purpose of computing the alternative minimum tax imposed on certain corporations, such
interest earned by a corporation prior to the end of its tax year in 2018 is taken into account in determining certain income and earnings. In
the further opinion of Bond Counsel, interest on the 2018 Bonds is exempt from California personal income taxes. See “TAX MATTERS.”
$46,300,000*
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, Series 2018
(Public Safety Facilities Project)
(Green Bonds)
Dated: Date of Delivery Due: June 1, as shown on inside cover
Authority for Issuance. The bonds captioned above (the “2018 Bonds”) are being issued by the San Rafael Joint Powers Financing
Authority (the “Authority”) under a resolution adopted by the Board of Directors of the Authority on March 5, 2018, and an Indenture of Trust
dated as of March 1, 2018 (the “Indenture”) by and between the Authority and MUFG Union Bank, N.A. as trustee (the “Trustee”). See “THE
2018 BONDS – Authority for Issuance.”
Purpose. The 2018 Bonds are being issued primarily to finance the acquisition and construction of certain public safety improvements
consisting generally of a new public safety center and two replacement fire stations (collectively, the “Project”). In addition, the proceeds of
the 2018 Bonds will be used to (a) fund capitalized interest on the 2018 Bonds through September 2020, and (b) pay the costs of issuing the
2018 Bonds. See “FINANCING PLAN.”
Security. Under the Indenture, the 2018 Bonds are payable from and secured by a first pledge of and lien on “Revenues” (as defined in
this Official Statement) received by the Authority under the Lease Agreement, dated as of March 1, 2018, by and between the Authority, as
lessor, and the City, as lessee (the “Lease”), consisting primarily of lease payments (the “Lease Payments”) made by the City under the
Lease with respect to the lease of certain real property, as further described in this Official Statement. The 2018 Bonds are also secured by
certain funds on deposit under the Indenture. Neither the Authority nor the City is establishing a reserve fund for the 2018 Bonds. See
“SECURITY FOR THE 2018 BONDS.”
Book-Entry Only. The 2018 Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of
Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”). The 2018 Bonds are issuable as fully registered
securities in denominations of $5,000 or any integral multiple of $5,000. Purchasers of the 2018 Bonds (the “Beneficial Owners”) will not
receive physical certificates representing their interest in the 2018 Bonds. See “THE 2018 BONDS” and “APPENDIX F - DTC AND THE
BOOK-ENTRY ONLY SYSTEM.”
Payments. Interest on the 2018 Bonds accrues from the date of delivery and is payable semiannually on June 1 and December 1 of
each year, commencing June 1, 2018. Payments of principal and interest on the 2018 Bonds will be paid by the Trustee to DTC for
subsequent disbursement to DTC Participants, which will remit such payments to the Beneficial Owners of the 2018 Bonds. See “THE 2018
BONDS - General Provisions.”
Redemption. The 2018 Bonds are subject to optional redemption, mandatory sinking fund payment redemption and special mandatory
redemption from insurance or condemnation proceeds prior to maturity. See “THE 2018 BONDS – Redemption.”
NEITHER THE 2018 BONDS, NOR THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL OF OR INTEREST THEREON,
NOR THE OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS, CONSTITUTE A DEBT OR A LIABILITY OF THE AUTHORITY,
THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE 2018
BONDS ARE SECURED SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE 2018
BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY.
MATURITY SCHEDULE
(see inside cover)
Cover Page. This cover page contains certain information for general reference only. It is not a summary of all the provisions of the
2018 Bonds. Prospective investors must read the entire Official Statement to obtain information essential to making an informed investment
decision.
The 2018 Bonds are offered when, as and if issued and received by the Underwriter and subject to the approval as to their legality by
Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Certain legal matters will also be passed upon for the
Authority and the City by Jones Hall, A Professional Law Corporation, as Disclosure Counsel. Quint & Thimmig LLP, Larkspur, California, is
acting as Underwriter’s counsel. Certain legal matters will be passed upon for the City and the Authority by the City Attorney. It is anticipated
that the 2018 Bonds will be delivered in book-entry form through the facilities of DTC on or about March 28, 2018.
The date of this Official Statement is: _________, 2018
* Preliminary; subject to change.
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, Series 2018
(Public Safety Facilities Project)
MATURITY SCHEDULE*
(Base CUSIP†: 799317)
$__________ Serial Bonds
Maturity Date Principal Interest
(June 1) Amount Rate Yield Price CUSIP†
$__________ ___% Term Bond Due June 1, 2034, Yield ___%, Price: ____, CUSIP†: 799317 ___
* Preliminary; subject to change.
† CUSIP Copyright 2017, CUSIP Global Services, and a registered trademark of American Bankers Association. CUSIP data herein
is provided by CUSIP Global Services, which is managed on behalf of American Bankers Association by S&P Capital IQ. Neither the
City nor the Underwriter takes any responsibility for the accuracy of the CUSIP data.
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
CITY OF SAN RAFAEL
(MARIN COUNTY, CALIFORNIA)
CITY COUNCIL
Gary Phillips, Mayor
John Gamblin, Vice Mayor
Maribeth Bushey, Council Member
Kate Colin, Council Member
Andrew Cuyugan McCullough, Council Member
CITY OFFICIALS AND STAFF
Jim Schutz, City Manager
Cristine Alilovich, Assistant City Manager
Mark Moses, Finance Director
Lindsay Lara, City Clerk
PROFESSIONAL SERVICES
BOND AND DISCLOSURE COUNSEL
Jones Hall, A Professional Law Corporation
San Francisco, California
MUNICIPAL ADVISOR
PFM Financial Advisors LLC
San Francisco, California
Trustee
MUFG Union Bank, N.A.
San Francisco, California
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the sale of the 2018
Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This
Official Statement is not a contract between any bond owner and the Authority, the City or the Underwriter.
No Offering Except by This Official Statement. No dealer, broker, salesperson or other person has been
authorized by the Authority or 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 representation must
not be relied upon as having been authorized by the Authority, the City or the Underwriter.
No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the
solicitation of an offer to buy nor may there be any sale of the 2018 Bonds by a person in any jurisdiction in which
it is unlawful for such person to make such an offer, solicitation or sale.
Information in Official Statement. The information set forth in this Official Statement has been furnished
by the Authority, the City and other sources which are believed to be reliable, but it is not guaranteed as to
accuracy or completeness.
Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the
City or the Authority in any press release and in any oral statement made with the approval of an authorized
officer of the City or the Authority or any other entity described or referenced herein, the words or phrases “will
likely result,” “are expected to”, “will continue”, “is anticipated”, “estimate”, “project”, “forecast”, “expect”, “intend”
and similar expressions identify “forward looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual
results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject
to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and
unanticipated events and circumstances may occur. Therefore, there are likely to be differences between
forecasts and actual results, and those differences may be material. 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 shall, under any circumstances, give rise to any implication that there has been no change in the
affairs of the City, the Authority or any other entity described or referenced herein since the date hereof.
Involvement of Underwriter. The following statement has been included in this Official Statement on behalf
of the Underwriter of the 2018 Bonds: The Underwriter has reviewed the information in this Official Statement in
accordance with, and as a 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.
Stabilization of and Changes to Offering Prices. The Underwriter may overallot or take other steps that
stabilize or maintain the market prices of the 2018 Bonds at levels above that which might otherwise prevail in
the open market. If commenced, the Underwriter may discontinue such market stabilization at any time. The
Underwriter may offer and sell the 2018 Bonds to certain securities dealers, dealer banks and banks acting as
agent at prices lower than the public offering prices stated on the inside cover page of this Official Statement,
and those public offering prices may be changed from time to time by the Underwriter.
Document Summaries. All summaries of the Indenture, the Lease or other documents referred to in this
Official Statement are made subject to the provisions of such documents and qualified in their entirety to
reference to such documents, and do not purport to be complete statements of any or all of such provisions.
No Securities Laws Registration. The 2018 Bonds have not been registered under the Securities Act of
1933, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities. The
2018 Bonds have not been registered or qualified under the securities laws of any state.
Effective Date. This Official Statement speaks only as of its date, and the information and expressions of
opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this
Official Statement nor any sale of the 2018 Bonds will, under any circumstances, give rise to any implication that
there has been no change in the affairs of the City, the Authority, the other parties described in this Official
Statement, or the condition of the property within the City since the date of this Official Statement.
Website. The City maintains a website. However, the information presented on the website is not a part of
this Official Statement and should not be relied upon in making an investment decision with respect to the 2018
Bonds.
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TABLE OF CONTENTS
INTRODUCTION .............................................. 1
FINANCING PLAN ........................................... 4
The Project ................................................... 4
Estimated Sources and Uses of Funds ......... 7
Issuance as Green Bonds ............................. 7
Future Capital Projects ................................. 7
THE LEASED PROPERTY ............................... 8
Description and Location .............................. 8
Modification of Leased Property .................... 8
Substitution .................................................. 8
Release of Leased Property .......................... 9
THE 2018 BONDS ......................................... 10
Authority for Issuance ................................. 10
General Provisions ..................................... 10
Redemption ................................................ 11
Book-Entry Only System ............................. 13
Transfer, Registration and Exchange .......... 13
DEBT SERVICE SCHEDULE ......................... 15
SECURITY FOR THE 2018 BONDS ............... 16
Revenues; Pledge of Revenues .................. 16
Allocation of Revenues by Trustee;
Application of Funds ............................... 17
Lease Payments; Covenant to Appropriate . 17
Limited Obligation ....................................... 18
Abatement .................................................. 18
No Reserve Fund ....................................... 19
Property Insurance ..................................... 19
Remedies on Default .................................. 20
CITY FINANCIAL INFORMATION .................. 22
General ...................................................... 22
Accounting Policies and Financial
Reporting................................................ 22
General Fund Financial Summary ............... 24
Recent Budgets .......................................... 26
Comparison of Budget to Actual
Performance ........................................... 27
General Fund Reserves .............................. 28
Other Reserves - Internal Service Funds .... 28
General Fund Revenues by Source ............ 28
Sales Taxes................................................ 29
Property Taxes ........................................... 32
Teeter Plan ................................................. 33
Other Taxes................................................ 36
Retirement System ..................................... 37
Other Post Employment Benefits (“OPEB”) . 40
Outstanding General Fund Debt and
Lease Obligations .................................. 41
Jointly Governed Organizations .................. 42
Direct and Overlapping Debt ...................... 42
Investment of City Funds ............................ 43
Employee Relations and Collective
Bargaining.............................................. 45
CONSTITUTIONAL AND STATUTORY
LIMITATIONS ON TAXES AND
APPROPRIATIONS ................................... 46
Article XIIIA of the State Constitution .......... 46
Article XIIIB of the State Constitution .......... 47
Articles XIIIC and XIIID of the State
Constitution ............................................ 47
Proposition 62 ............................................ 48
Proposition 1A; Proposition 22 ................... 49
Possible Future Initiatives........................... 49
BOND OWNERS’ RISKS ............................... 50
No Pledge of Taxes .................................... 50
Limitations on Taxes and Fees ................... 50
Additional Obligations of the City ................ 50
Default ....................................................... 51
Abatement ................................................. 51
No Debt Service Reserve Fund .................. 52
Property Taxes ........................................... 52
Sales Taxes ............................................... 53
Limitations on Remedies Available to Bond
Owners .................................................. 53
Loss of Tax-Exemption ............................... 54
Tax Cuts and Jobs Act ............................... 54
Secondary Market for Bonds ...................... 55
Natural Calamities ...................................... 55
Sea Level Rise and Flooding ...................... 56
TAX MATTERS.............................................. 59
CERTAIN LEGAL MATTERS ......................... 60
LITIGATION ................................................... 61
RATING ......................................................... 61
CONTINUING DISCLOSURE ........................ 61
MUNICIPAL ADVISOR .................................. 62
UNDERWRITING .......................................... 62
PROFESSIONAL SERVICES ........................ 63
EXECUTION .................................................. 63
APPENDIX A - GENERAL INFORMATION ABOUT THE CITY OF SAN RAFAEL
AND MARIN COUNTY
APPENDIX B - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
APPENDIX C - FISCAL YEAR 2016-17 COMPREHENSIVE ANNUAL FINANCIAL REPORT
APPENDIX D - PROPOSED FORM OF OPINION OF BOND COUNSEL
APPENDIX E - FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX F - DTC AND THE BOOK-ENTRY ONLY SYSTEM
APPENDIX G- FORM OF GREEN BOND PROJECT REPORT
[THIS PAGE INTENTIONALLY LEFT BLANK]
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__________________________________
OFFICIAL STATEMENT
__________________________________
$46,300,000*
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, Series 2018
(Public Safety Facilities Project)
(Green Bonds)
The purpose of this Official Statement, which includes the cover page, inside cover page
and attached appendices, is to set forth certain information concerning the sale and delivery of
the bonds captioned above (the “2018 Bonds”) by the San Rafael Joint Powers Financing
Authority (the “Authority”). All capitalized terms used in this Official Statement, unless noted
otherwise, have the meanings set forth in the Indenture (as defined below).
INTRODUCTION
This introduction is not a summary of this Official Statement. It is only a brief description
of and guide to, and is qualified by, more complete and detailed information contained in the entire
Official Statement and the documents summarized or described herein. A full review should be
made of the entire Official Statement. The offering of the 2018 Bonds to potential investors is
made only by means of the entire Official Statement.
Authority for Issuance. The Authority is issuing the 2018 Bonds under the following:
(a) Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government
Code, as amended, commencing with Section 6584 (the “Law”),
(b) resolutions adopted by the Board of Directors (the “Board”) of the Authority
on March 5, 2018 (the “Authority Resolution”), and by the City Council (the “City
Council”) of the City of San Rafael (the “City”) on March 5, 2018 (the “City Resolution”),
and
(c) an Indenture of Trust (the “Indenture”) dated as of March 1, 2018, by and
between the Authority and MUFG Union Bank, N.A., as trustee (the “Trustee”).
The Authority. The Authority is a joint powers authority between the City and the
California Municipal Finance Authority pursuant to an Amended and Restated Joint Exercise of
Powers Agreement dated as of March 15, 2013, entered into under Articles 1 through 4
(commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the California Government
Code, as amended, for the purpose, among others, of having the Authority provide financing and
refinancing for certain projects of the City by entering into, among other arrangements,
lease/leasebacks with the City.
* Preliminary; subject to change.
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The City. The City is located 17 miles north of San Francisco in Marin County (the
“County”) and is the County seat. The City was incorporated in 1874 and became a charter city
in 1913. The City currently has a land area of approximately 17 square miles and an estimated
January 1, 2017 population of approximately 60,842. The City’s budgeted General Fund
expenditures for fiscal year 2017-18 are $72,885,270. For demographic and financial information
regarding the City and County, see “APPENDIX A – GENERAL INFORMATION ABOUT THE
CITY OF SAN RAFAEL AND MARIN COUNTY,” and “APPENDIX C – FISCAL YEAR 2016-17
COMPREHENSIVE ANNUAL FINANCIAL REPORT.”
Purpose of the 2018 Bonds. The 2018 Bonds are being issued to finance the acquisition
and construction of certain public safety improvements consisting generally of a new public safety
center and two replacement fire stations (collectively, the “Project”), to fund capitalized interest
on the 2018 Bonds through September 2020, and to pay the costs of issuing the 2018 Bonds.
See “FINANCING PLAN.”
Security for the 2018 Bonds and Pledge of Revenues. Under the Indenture, the 2018
Bonds are payable from and secured by a first pledge of and lien on “Revenues” (as defined in
this Official Statement) received by the Authority under the Lease Agreement dated as of March
1, 2018, between the Authority, as lessor, and the City, as lessee (the “Lease”), consisting
primarily of lease payments (the “Lease Payments”) made by the City under the Lease. The
2018 Bonds are also secured by certain funds on deposit under the Indenture, but no reserve
fund will be established for the 2018 Bonds. See “SECURITY FOR THE 2018 BONDS.”
The City and the Authority will enter into a Site Lease dated as of March 1, 2018 (the “Site
Lease”). Under the Site Lease, the City will lease certain real property to the Authority, consisting
of the site for the City’s proposed Public Safety Center and, when completed, the improvements
thereon (as described herein, the “Leased Property”). Concurrently, the City and the Authority
will enter into the Lease, under which the Authority will lease the Leased Property back to the City
for the purpose of financing the Project. See “THE LEASED PROPERTY.”
Form of Bonds; Book-Entry Only. The 2018 Bonds will be issued in fully registered
form, registered in the name of The Depository Trust Company, New York, New York (“DTC”), or
its nominee, which will act as securities depository for the 2018 Bonds. Purchasers of the 2018
Bonds will not receive certificates representing the 2018 Bonds that are purchased. See “THE
2018 BONDS - Book-Entry Only System” and “APPENDIX F – DTC AND THE BOOK-ENTRY
ONLY SYSTEM.”
Redemption. The 2018 Bonds are subject to optional redemption, mandatory redemption
from sinking fund payments, and special mandatory redemption from the proceeds of insurance
or condemnation proceeds prior to their stated maturity dates. See “THE 2018 BONDS –
Redemption.”
Abatement. The Lease Payments are subject to complete or partial abatement in the
event and to the extent that there is substantial interference with the City’s use and possession
of the Leased Property or any portion thereof. If the Lease Payments are abated under the Lease,
the Bond Owners would receive less than the full amount of principal of and interest on the 2018
Bonds. To the extent proceeds of rental interruption insurance are available (as described below),
Lease Payments (or a portion thereof) may be made from those proceeds during periods of
abatement. See “SECURITY FOR THE 2018 BONDS – Abatement” and “BOND OWNERS’
RISKS.”
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Legal Opinion. Upon delivery of the 2018 Bonds, Jones Hall, A Professional Law
Corporation, San Francisco, California, Bond Counsel (“Bond Counsel”) will release its final
approving legal opinion with respect to the 2018 Bonds, regarding the validity and tax-exempt
status of the 2018 Bonds, in the form attached hereto as APPENDIX D.
Risks of Investment. Debt service on the 2018 Bonds is payable only from Lease
Payments and other amounts payable by the City to the Authority under the Lease. For a
discussion of some of the risks associated with the purchase of the 2018 Bonds, see “BOND
OWNERS’ RISKS.”
NEITHER THE 2018 BONDS, THE OBLIGATION OF THE AUTHORITY TO PAY
PRINCIPAL OF OR INTEREST THEREON, NOR THE OBLIGATION OF THE CITY TO MAKE
THE LEASE PAYMENTS, CONSTITUTE A DEBT OR A LIABILITY OF THE AUTHORITY, THE
CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF
ANY CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL
FAITH AND CREDIT OF THE CITY. THE 2018 BONDS ARE SECURED SOLELY BY THE
PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE 2018
BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY. THE
AUTHORITY HAS NO TAXING POWER.
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FINANCING PLAN
The 2018 Bonds are being issued to provide funds to finance the Project and pay the costs
of issuing the 2018 Bonds.
The Project
The Project anticipated to be financed with proceeds of the 2018 Bonds includes certain
public capital improvements of the City, consisting generally of a new public safety center and
two replacement fire stations.
Replacement Fire Stations. In April 2017, the City entered into a construction contract
for $19,940,000 for the major construction and renovation of two fire stations, Fire Station 57 and
Fire Station 52. The contract amount was reduced shortly thereafter to its current sum of
$19,098,834. These two projects are further described below.
Replacement of Fire Station 57, located at 3530 Civic Center Drive. The new
9,855-square foot, two-story fire station will remain located at 3530 Civic Center Drive in
the City, and will house five on-duty fire fighters/paramedics. The new station is designed
to accommodate six on-duty personnel should additional staffing be required to better
serve the community.
The core elements of the new station will include three drive-through apparatus
bays, apparatus support spaces, public lobby, accessible restroom, office, kitchen, dining,
dayroom, laundry room, private sleeping quarters, unisex restrooms, mechanical,
electrical, communications rooms and staff parking. Other notable site or adjacent
improvements will include access aprons and sidewalk replacement along Civic Center
Drive, modification of median(s) in front of the station on Civic Center Drive to align with
the new apparatus bay location, and striping of a “keep clear” zone in front of the apparatus
bay apron on Civic Center Drive.
Construction has commenced, and the City expects to complete this new station
in or about January 2019.
Replacement of Fire Station 52, located 210 3rd Street. The new 10,973 square
foot, two-story fire station will remain located at 210 Third Street in the City, and will house
five on-duty fire fighters in a 24-hour shift. The new station is designed to accommodate
six on-duty personnel should additional staffing be required to better serve the community.
The core elements of the new station will include three drive-through apparatus
bays, apparatus support spaces, public lobby, accessible restroom, office, kitchen, dining,
dayroom, laundry room, private sleeping quarters, unisex restrooms, mechanical,
electrical, communications rooms and staff parking. Other notable site/adjacent
improvements will include a second new structure that will be a four-story training tower.
The new 3,322 square foot, 46’ high, pre-engineered building will be located at the
south/east corner of the site and will provide a variety of training scenario opportunities,
not only for the City’s Fire Department, but also for other neighboring fire departments.
Finally, a third new building on the site will be a 1,297-square foot, 24-person, training
classroom. The facility will serve as a training academy by day and will be utilized in the
evening for certification training/meetings, CPR classes, and other fire prevention
functions.
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Construction has commenced, and the City expects to complete this new station
in or about August 2018.
Construction of Public Safety Center – 5th Avenue between C Street and D Street.
The proposed project is a new, 43,500-square-foot facility, with three levels including a 17,000-
square-foot basement to remain at 1375 5th Avenue, San Rafael, California. The facility will house
four fire fighters and the Battalion Chief. It will provide fire department administrative division
which includes the office of the Fire Chief, the fire prevention bureau and administrative staff. It
will also provide services for the administration and the Office of the Chief, patrol operations,
investigations, dispatch, evidence and property and professional standards. The core elements
of the new facility include conference rooms, an emergency operations center /training room,
break rooms, sleeping rooms, fitness room, lobby and public restrooms, men's and women's staff
toilets, and all infrastructure support areas including computer rooms, electrical rooms, etc. The
basement and subterranean garage will be for on-site parking for marked patrol vehicles and
specialty Police Department (PD) units, the PD holding facility, evidence storage and processing
functions and storage areas for the motorcycle and bicycle patrol units. The first level, which
includes the main lobby, shared conference and support facilities and the apparatus bay, will be
situated midway between the basement level and the first level. Lastly, the second level contains
PD locker rooms, dispatch and other PD support areas to the north of the lobby. To the south of
the lobby are the living quarters for Fire Station 51 Engine Company and the emergency
operations center. This community asset will provide a productive and safe work environment for
its employees while being open and available to the public to conduct Police and Fire Department
business.
The estimated construction cost of the new public safety center is approximately $47.6
million, and the estimated land value of the underlying site is approximately $4.5 million. The
public safety center is the only facility that is subject to the Lease Agreement. The fire stations
described above will not be subject to the Lease Agreement. See “THE LEASED PROPERTY.”
There is no deed of trust or mortgage on the public safety center to secure the Bonds. See “BOND
OWNERS’ RISKS - Limitations on Remedies Available to Bond Owners.”
The notice to proceed for this project was issued in February 2018, and the City expects
to take occupancy of the new facility in or about March 2020.
Green Project Features. The new public safety center and the two new fire stations are
each certified as LEED gold projects. Building elements for each project include natural
daylighting and ventilation; robust building envelopes with insulated, low-e glazing; highly efficient
mechanical systems with controls to moderate energy use; solar power to reduce electrical
demand from the grid; exterior material color selection to reduce heat gain; high recycled content
of building materials; and masonry, concrete and steel construction for building longevity. Site
elements for each project include storage and filtration of rain water to reduce run-off; and native
vegetation with drip irrigation or non-potable irrigation water where available.
S'
Fire Station 57
Fire Station 52
Public Safety Center
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Estimated Sources and Uses of Funds
The estimated sources and uses of funds relating to the 2018 Bonds are as follows:
Sources of Funds:
Principal Amount of 2018 Bonds $
Plus: Net Original Issue Premium
TOTAL SOURCES $
Uses of Funds:
Deposit to Costs of Issuance Fund (1) $
Underwriter’s Discount
Deposit to Interest Account (2)
Deposit to Project Fund
TOTAL USES $
(1) Represents funds to be used to pay Costs of Issuance, which include legal fees, printing costs, rating
agency fees and other costs of issuing the 2018 Bonds.
(2) Represents capitalized interest through September 2020.
Issuance as Green Bonds
The City is issuing the Bonds as ''Green Bonds" due to the intended use of the proceeds.
The designation of the Bonds as Green Bonds is intended to allow investors the opportunity to
invest directly in bonds that finance environmentally beneficial projects. The term ''Green Bonds"
is not defined in the Indenture, and its use in this Official Statement is for identification purposes
only and is not intended to provide or imply that the holders of the Bonds are entitled to any
additional terms or security in addition to those provided in the Indenture.
Use of the proceeds of the Bonds will be tracked by the City. The City will post updates
regarding the use of proceeds of the Bonds with the Municipal Securities Rulemaking Board's
Electronic Municipal Market Access (EMMA) system, currently located at www.emma.msrb.org
(which website is not incorporated into this Official Statement by reference), annually, and will
post a final list of projects funded once all proceeds of the Bonds have been spent. A form of this
report is attached as APPENDIX G.
The City currently expects the final component of the Project to be completed by March
2020. Once all proceeds of the Bonds have been spent, no further updates regarding the projects
will be provided or filed.
Future Capital Projects
The City has adopted a strategic plan to fund certain proposed capital projects from
proceeds of the 0.75% Measure E Transactions and Use Tax, including the Project. After
completion of the Project, approximately $8.5 million in capital projects in the strategic plan will
remain uncompleted (the “Future Projects”). The Future Projects may be funded from Measure E
Tax revenues or other General Fund monies on a pay-go basis; from proceeds of the 2018 Bonds
(if Project cost savings are achieved and 2018 Bond proceeds are available for such purpose);
from proceeds of future indebtedness; or from some combination thereof. The City has not made
any binding determinations as to the funding sources for the Future Projects.
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THE LEASED PROPERTY
Description and Location
Lease Payments will be made by the City under the Lease for the use and occupancy of
the Leased Property, which consists of the proposed public safety center described above under
the heading “FINANCING PLAN - The Project.”
Modification of Leased Property
Under the Lease, the City has the right, at its own expense, to make additions,
modifications and improvements to the Leased Property or any portion thereof. All additions,
modifications and improvements to the Leased Property will thereafter comprise part of the
Leased Property and become subject to the provisions of the Lease.
Such additions, modifications and improvements may not in any way damage the Leased
Property, or cause the Leased Property to be used for purposes other than those authorized under
the provisions of state and federal law; and the Leased Property, upon completion of any
additions, modifications and improvements made thereto under this provision of the Lease, must
be of a value which is not substantially less than the value thereof immediately prior to the making
of such additions, modifications and improvements.
The City will not permit any mechanic’s or other lien to be established or remain against
the Leased Property for labor or materials furnished in connection with any remodeling, additions,
modifications, improvements, repairs, renewals or replacements made by the City under this
provision of the Lease; except that if any such lien is established and the City first notifies or
causes to be notified the Authority of the City’s intention to do so, the City may in good faith
contest any lien filed or established against the Leased Property, and in such event may permit
the items so contested to remain undischarged and unsatisfied during the period of such contest
and any appeal therefrom and will provide the Authority with full security against any loss or
forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the
Authority. The Authority will cooperate fully in any such contest, upon the request and at the
expense of the City.
Substitution
Under the Lease, the City has the option at any time and from time to time, to substitute
other real property (the “Substitute Property”) for the Leased Property or any portion thereof (the
“Former Property”), upon satisfaction of all of the requirements set forth in the Lease, which
includes (among others) the following:
• The City has filed with the Authority and the Trustee, and caused to be recorded
in the office of the County Recorder, sufficient memorialization of an amendment
of the Lease, the Site Lease and the Assignment Agreement that adds the legal
description of the Substitute Property and deletes therefrom the legal description
of the Former Property, and has filed and caused to be recorded corresponding
amendments to the Site Lease and Assignment Agreement.
• The City has obtained a CLTA policy of title insurance insuring the City’s leasehold
estate under the Lease in the Substitute Property, subject only to Permitted
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Encumbrances (as defined in the Lease), in an amount at least equal to the
estimated value thereof.
• The City has certified in writing to the Authority and the Trustee that the Substitute
Property serves the municipal purposes of the City and constitutes property which
the City is permitted to lease under the laws of the State of California, and has
been determined to be essential to the proper, efficient and economic operation of
the City and to serve an essential governmental function of the City.
• The City has filed with the Authority and the Trustee a written certificate of the City
or other written evidence stating that the useful life of the Substitute Property at
least extends to the final maturity date of the 2018 Bonds, that the estimated value
of the Leased Property, after substitution of the Substitute Property and release of
the Former Property, is at least equal to the aggregate Outstanding principal
amount of the 2018 Bonds, and the fair rental value of the Leased Property, after
substitution of the Substitute Property and release of the Former Property, is at
least equal to the Lease Payments thereafter coming due and payable under the
Lease.
See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”
Upon the satisfaction of all such conditions precedent, the Term of the Lease will
thereupon end as to the Former Property and commence as to the Substitute Property, and all
references to the Former Property will apply with full force and effect to the Substitute Property.
The City is not entitled to any reduction, diminution, extension or other modification of the Lease
Payments whatsoever as a result of any substitution of property under this provision of the Lease.
Release of Leased Property
Under the Lease, the City has the option at any time and from time to time to release any
portion of the Leased Property from the Lease (the “Released Property”) provided that the City
has satisfied all of the requirements under the Lease that are conditions precedent to such
release, which include (among others) the following:
• The City has filed with the Authority and the Trustee, and caused to be recorded
in the office of the County Recorder sufficient memorialization of an amendment
of the Lease, the Site Lease and the Assignment Agreement which removes the
Released Property from the Lease, the Site Lease and the Assignment Agreement.
• The City has certified in writing to the Authority and the Trustee that the value of
the property which remains subject to the Lease following such release is at least
equal to the aggregate Outstanding principal amount of the 2018 Bonds, and the
fair rental value of the property which remains subject to the Lease following such
release is at least equal to the Lease Payments thereafter coming due and payable
thereunder.
See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”
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THE 2018 BONDS
This section provides summaries of the 2018 Bonds and certain provisions of the
Indenture. See APPENDIX B for a more complete summary of the Indenture. Capitalized terms
used but not defined in this section have the meanings given in APPENDIX B.
Authority for Issuance
The 2018 Bonds are being issued under the Law, the Authority Resolution (which was
adopted by the Board of the Authority on March 5, 2018), the City Resolution (which was adopted
by the City Council on March 5, 2018), and the Indenture.
General Provisions
Bond Terms. The 2018 Bonds will be dated their date of delivery and issued in fully
registered form without coupons in integral multiples of $5,000, so long as no Bond has more than
one maturity date.
Interest on the 2018 Bonds will be payable on June 1 and December 1 in each year,
commencing June 1, 2018 (each an “Interest Payment Date”). The 2018 Bonds will mature in
the amounts and on the dates, and bear interest at the annual rates, set forth on the inside cover
page of this Official Statement.
Calculation of Interest. Interest on the 2018 Bonds is payable from the Interest Payment
Date next preceding the date of authentication thereof unless:
(a) a 2018 Bond is authenticated on or before an Interest Payment Date and
after the close of business on the preceding Record Date, in which event it will bear
interest from such Interest Payment Date,
(b) a 2018 Bond is authenticated on or before the first Record Date, in which
event interest thereon will be payable from the Closing Date, or
(c) interest on any 2018 Bond is in default as of the date of authentication
thereof, in which event interest thereon will be payable from the date to which interest has
been paid in full, payable on each Interest Payment Date.
Interest with respect to the 2018 Bonds will be computed on the basis of a 360-day year
composed of 12 months of 30 days each.
Record Date. Under the Indenture, “Record Date” means, with respect to any Interest
Payment Date, the 15th calendar day of the month preceding such Interest Payment Date,
whether or not such day is a Business Day.
Payments of Principal and Interest. Interest is payable on each Interest Payment Date
to the persons in whose names the ownership of the 2018 Bonds is registered on the Registration
Books at the close of business on the immediately preceding Record Date, except as provided
below. Interest on any 2018 Bond which is not punctually paid or duly provided for on any Interest
Payment Date is payable to the person in whose name the ownership of such 2018 Bond is
registered on the Registration Books at the close of business on a special record date for the
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payment of such defaulted interest to be fixed by the Trustee, notice of which is given to such
Owner by first-class mail not less than 10 days prior to such special record date.
The Trustee will pay interest on the 2018 Bonds by check of the Trustee mailed by first
class mail, postage prepaid, on each Interest Payment Date to the Owners of the 2018 Bonds at
their respective addresses shown on the Registration Books as of the close of business on the
preceding Record Date. At the written request of the Owner of 2018 Bonds in an aggregate
principal amount of at least $1,000,000, which written request is on file with the Trustee as of any
Record Date, the Trustee will pay interest on such 2018 Bonds on each succeeding Interest
Payment Date by wire transfer in immediately available funds to such account of a financial
institution within the United States of America as specified in such written request, which will
remain in effect until rescinded in writing by the Owner.
The Trustee will pay principal of the 2018 Bonds in lawful money of the United States of
America by check of the Trustee upon presentation and surrender thereof at the Office of the
Trustee.
While the 2018 Bonds are subject to the book-entry system, the principal, interest and any
redemption premium with respect to the 2018 Bonds will be paid by the Trustee to DTC for
subsequent disbursement to beneficial owners of the 2018 Bonds. See “– Book-Entry Only
System” below.
Redemption*
Optional Redemption. The 2018 Bonds maturing on or before June 1, 20___ are not
subject to optional redemption prior to their stated maturity. The 2018 Bonds maturing on or after
June 1, 20___ are subject to redemption, as a whole or in part at the election of the Authority
among maturities on such basis as designated by the Authority and by lot within a maturity, at the
option of the Authority, on June 1, 20___ and on any date thereafter, at a redemption price equal
to 100% of the principal amount of 2018 Bonds to be redeemed, together with accrued interest
thereon to the date fixed for redemption, without premium.
Special Mandatory Redemption From Insurance or Condemnation Proceeds. The
2018 Bonds are subject to redemption as a whole, or in part on a pro rata basis among maturities,
on any date, from any Net Proceeds required to be used for such purpose as provided in the
Indenture, at a redemption price equal to 100% of the principal amount thereof plus interest
accrued thereon to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption. The 2018 Bonds maturing on June 1, 20__ (the
“20__ Term Bonds”), are subject to mandatory sinking payment redemption in part on June 1,
20__, and on each June 1 thereafter to maturity, by lot, at a redemption price equal to the principal
amount thereof to be redeemed, together with accrued interest to the date fixed for redemption,
without premium, from sinking payments as follows.
* Preliminary; subject to change.
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Mandatory Sinking Fund Redemption of
Term Bonds Maturing June 1, 20__
Sinking Fund
Redemption Date
(June 1)
Principal Amount
To Be Redeemed
Mandatory Sinking Fund Redemption of
Term Bonds Maturing June 1, 20__
Sinking Fund
Redemption Date
(June 1)
Principal Amount
To Be Redeemed
The amounts in the foregoing tables shall be reduced pro rata as a result of any prior
partial option redemption or partial mandatory redemption from insurance or condemnation
proceeds, as described above, as specified by the Authority to the Trustee.
Selection of Bonds for Redemption. Whenever provision is made in the Indenture for
the redemption of less than all of the 2018 Bonds of a single maturity, the Trustee will select the
2018 Bonds of that maturity to be redeemed from all 2018 Bonds of that maturity to be redeemed
by lot in any manner which the Trustee in its sole discretion deems appropriate. For purposes of
such selection, the Trustee shall treat each 2018 Bond as consisting of separate $5,000 portions
and each such portion shall be subject to redemption as if such portion were a separate 2018
Bond.
Notice of Redemption. The Trustee shall mail notice of redemption of the 2018 Bonds
by first class mail, postage prepaid, not less than 30 nor more than 60 days before any redemption
date, to the respective Owners of any 2018 Bonds designated for redemption at their addresses
appearing on the Registration Books and to one or more Securities Depositories and shall file
such notice electronically with the Municipal Securities Rulemaking Board.
Neither the failure to receive any notice nor any defect therein will affect the sufficiency of
the proceedings for such redemption or the cessation of accrual of interest from and after the
redemption date.
Rescission of Redemption. Redemption notices may be conditional. The Authority has
the right to rescind any notice of optional redemption of the 2018 Bonds by written notice to the
Trustee on or prior to the date fixed for redemption.
Any notice of redemption will be cancelled and annulled if for any reason funds will not be
or are not available on the date fixed for redemption for the payment in full of the 2018 Bonds
then called for redemption, and such cancellation will not constitute an Event of Default under the
Indenture.
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The Authority and the Trustee have no liability to the Bond Owners or any other party
related to or arising from such rescission of redemption. The Trustee will mail notice of such
rescission of redemption in the same manner as the original notice of redemption was sent under
the Indenture.
Effect of Redemption. If notice of redemption has been duly given as provided in the
Indenture, and moneys for payment of the redemption price of, together with interest accrued to
the date fixed for redemption on, including any applicable premium, the 2018 Bonds (or portions
thereof) so called for redemption being held by the Trustee, on the redemption date designated
in such notice, the 2018 Bonds (or portions thereof) so called for redemption will become due and
payable, interest on the 2018 Bonds so called for redemption will cease to accrue, said 2018
Bonds (or portions thereof) will cease to be entitled to any benefit or security under the Indenture,
and the Owners of said 2018 Bonds will have no rights in respect thereof except to receive
payment of the redemption price thereof.
Book-Entry Only System
The 2018 Bonds will be issued as fully registered bonds in book-entry only form, registered
in the name of Cede & Co. as nominee of DTC, and will be available to ultimate purchasers in the
denomination of $5,000 or any integral multiple of $5,000, under the book-entry system
maintained by DTC. While the 2018 Bonds are subject to the book-entry system, the principal,
interest and any redemption premium with respect to a 2018 Bond will be paid by the Trustee to
DTC, which in turn is obligated to remit such payment to its DTC Participants for subsequent
disbursement to Beneficial Owners of the 2018 Bonds. Purchasers of the 2018 Bonds will not
receive certificates representing their interests therein, which will be held at DTC.
See “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM” for further
information regarding DTC and the book-entry system.
Transfer, Registration and Exchange
The following provisions regarding the exchange and transfer of the 2018 Bonds apply
only during any period in which the 2018 Bonds are not subject to DTC’s book-entry system.
While the 2018 Bonds are subject to DTC’s book-entry system, their exchange and transfer will
be effected through DTC and the Participants and will be subject to the procedures, rules and
requirements established by DTC. See “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY
SYSTEM.”
Bond Register. The Trustee will keep or cause to be kept, at the Office of the Trustee,
sufficient records for the registration and transfer of ownership of the 2018 Bonds, which shall
upon reasonable notice as agreed to by the Trustee, be open to inspection during regular
business hours by the Authority; and, upon presentation for such purpose, the Trustee shall,
under such reasonable regulations as it may prescribe, register or transfer or cause to be
registered or transferred, on such records, the ownership of the 2018 Bonds as provided in the
Indenture.
Transfer of Bonds. Any 2018 Bond may, in accordance with its terms, be transferred,
upon the Registration Books, by the person in whose name it is registered, in person or by a duly
authorized attorney of such person, upon surrender of such 2018 Bond to the Trustee at its Office
for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable
to the Trustee, duly executed. The Trustee will require the Owner requesting such transfer to pay
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any tax or other governmental charge required to be paid with respect to such transfer. Whenever
any 2018 Bond is or 2018 Bonds are surrendered for transfer, the Authority will execute and the
Trustee will authenticate and deliver to the transferee a new 2018 Bond or 2018 Bonds of like
series, interest rate, maturity and aggregate principal amount. The Authority will pay the cost of
printing 2018 Bonds and any services rendered or expenses incurred by the Trustee in connection
with any transfer of 2018 Bonds.
Exchange of Bonds. The 2018 Bonds may be exchanged at the Office of the Trustee
for a like aggregate principal amount of 2018 Bonds of other authorized denominations and of the
same series, interest rate and maturity. The Trustee will require the Owner requesting such
exchange to pay any tax or other governmental charge required to be paid with respect to such
exchange. The Authority will pay the cost of printing 2018 Bonds and any services rendered or
expenses incurred by the Trustee in connection with any exchange of 2018 Bonds.
Limitations on Transfer and Exchange. The Trustee may refuse to transfer or
exchange, under these provisions of the Indenture, any 2018 Bonds selected by the Trustee for
redemption under the Indenture, or any 2018 Bonds during the period established by the Trustee
for the selection of 2018 Bonds for redemption.
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DEBT SERVICE SCHEDULE
The table below shows the semiannual and bond year debt service payments on the 2018
Bonds.
Date
Principal
Interest
Bond Year
Debt Service
June 1, 2018 $ $
December 1, 2018 $
June 1, 2019
December 1, 2019
June 1, 2020
December 1, 2020
June 1, 2021
December 1, 2021
June 1, 2022
December 1, 2022
June 1, 2023
December 1, 2023
June 1, 2024
December 1, 2024
June 1, 2025
December 1, 2025
June 1, 2026
December 1, 2026
June 1, 2027
December 1, 2027
June 1, 2028
December 1, 2028
June 1, 2029
December 1, 2029
June 1, 2030
December 1, 2030
June 1, 2031
December 1, 2031
June 1, 2032
December 1, 2032
June 1, 2033
September 1, 2033
June 1, 2034
Total:
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SECURITY FOR THE 2018 BONDS
The principal of and interest on the 2018 Bonds are not a debt of the Authority or the City,
nor a legal or equitable pledge, charge, lien or encumbrance, upon any of their respective
property, or upon any of their income, receipts, or revenues except the Revenues and other
amounts pledged under the Indenture.
This section provides summaries of the security for the 2018 Bonds and certain provisions
of the Indenture, the Lease and the Site Lease. See “APPENDIX B – SUMMARY OF PRINCIPAL
LEGAL DOCUMENTS” for a more complete summary of the Indenture, the Lease and the Site
Lease. Capitalized terms used but not defined in this section have the meanings given in
APPENDIX B.
Revenues; Pledge of Revenues
Pledge of Revenues and Other Amounts. Subject only to the provisions of the Indenture
permitting the application thereof for the purposes and on the terms and conditions set forth
therein, all of the Revenues and all amounts (including proceeds of the sale of the 2018 Bonds)
held in any fund or account established under the Indenture are pledged to secure the payment
of the principal of and interest and premium (if any) on the 2018 Bonds in accordance with their
terms and the provisions of the Indenture. Said pledge constitutes a lien on and security interest
in the Revenues and such amounts and will attach, be perfected and be valid and binding from
and after the Closing Date, without the need for any physical delivery thereof or further act.
Definition of Revenues. “Revenues” are defined in the Indenture as follows:
(a) all amounts received by the Authority or the Trustee under or with respect
to the Lease, including, without limiting the generality of the foregoing, all of the Lease
Payments (including both timely and delinquent payments, any late charges, and whether
paid from any source), but excluding (i) any amounts described in the provisions of the
Lease relating to permitted amendments that provide for additional rental to be pledged
or assigned for the payment of bonds issued to finance or refinance projects for which the
City is authorized to expend its funds, and (ii) any Additional Rental Payments (consisting
of certain administrative costs due to the Authority and the Trustee under the Lease), and
(b) all interest, profits or other income derived from the investment of amounts
in any fund or account established under the Indenture.
Assignment to Trustee. Under the Assignment Agreement, the Authority has transferred
to the Trustee all of the rights of the Authority in the Lease (other than the rights of the Authority
under the provisions of the Lease regarding Additional Rental Payments, advances, release and
indemnification covenants, and agreement to pay attorneys’ fees, and its rights to give approvals
and consents thereunder).
The Trustee is entitled to collect and receive all of the Revenues, and any Revenues
collected or received by the Authority will be deemed to be held, and to have been collected or
received, by the Authority as the agent of the Trustee and will forthwith be paid by the Authority
to the Trustee.
The Trustee is also entitled to and may, subject to the provisions of the Indenture regarding
rights of the Trustee, take all steps, actions and proceedings which the Trustee determines to be
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reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all
of the rights of the Authority and all of the obligations of the City under the Lease.
Allocation of Revenues by Trustee; Application of Funds
Deposit of Revenues in Bond Fund. All Revenues will be promptly deposited by the
Trustee upon receipt thereof in a special fund designated as the “Bond Fund” which the Trustee
will establish, maintain and hold in trust; except that all moneys received by the Trustee and
required under the Indenture or under the Lease to be deposited in the Redemption Fund or the
Insurance and Condemnation Fund will be promptly deposited in such funds.
All Revenues deposited with the Trustee will be held, disbursed, allocated and applied by
the Trustee only as provided in the Indenture. Any surplus remaining in the Bond Fund, after
payment in full of the principal of and interest on the 2018 Bonds (or provision having been made
therefor under the Indenture), and payment in full of any applicable fees and expenses owed to
the Trustee, will be withdrawn by the Trustee and remitted to the City.
Allocation of Revenues. On or before each Interest Payment Date, the Trustee will
transfer from the Bond Fund and deposit into the following respective accounts (each of which
the Trustee will establish and maintain within the Bond Fund), the following amounts in the
following order of priority:
(a) Deposit to Interest Account. The Trustee will deposit in the Interest
Account an amount required to cause the aggregate amount on deposit in the Interest
Account to be at least equal to the amount of interest becoming due and payable on such
Interest Payment Date on all 2018 Bonds then Outstanding.
(b) Deposit to Principal Account. The Trustee will deposit in the Principal
Account an amount required to cause the aggregate amount on deposit in the Principal
Account to equal the principal amount of the 2018 Bonds coming due and payable on such
Interest Payment Date, including principal of any Term Bonds payable as a result of
mandatory sinking fund redemption, including the amount of the Term Bonds payable
through mandatory sinking fund redemption on such Interest Payment Date.
Lease Payments; Covenant to Appropriate
Obligation to Pay. Under the Lease, subject to the provisions of Lease regarding
abatement and prepayment, the City agrees to pay to the Authority, its successors and assigns,
the Lease Payments in the respective amounts specified in the Lease, to be due and payable in
immediately available funds on the Interest Payment Dates immediately following each of the
respective Lease Payment Dates specified in the Lease, and to be deposited by the City with the
Trustee on each of the Lease Payment Dates specified in the Lease. Each Lease Payment Date
is one Business Day prior to the corresponding Interest Payment Date.
Any amount held in the Bond Fund, the Interest Account and the Principal Account on any
Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments
in part but not in whole under the Lease, and amounts required for payment of past due principal
or interest on any 2018 Bonds not presented for payment) will be credited towards the Lease
Payment then required to be paid under the Lease. The City is not required to deposit any Lease
Payment with the Trustee on any Lease Payment Date if the amounts then held in the Bond Fund,
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the Interest Account and the Principal Account are at least equal to the Lease Payment then
required to be deposited with the Trustee.
The Lease Payments payable in any Rental Period are for the use of the Leased Property
during that Rental Period.
Fair Rental Value. The aggregate amount of the Lease Payments and Additional Rental
Payments coming due and payable during each Rental Period constitute the total rental for the
Leased Property for such Rental Period, and are payable by the City in each Rental Period for
and in consideration of the right of the use and occupancy of, and the continued quiet use and
enjoyment of the Leased Property during each Rental Period.
The City and the Authority have agreed and determined that the total Lease Payments do
not exceed the fair rental value of the Leased Property. In making that determination,
consideration has been given to the estimated value of the Leased Property, other obligations of
the City and the Authority under this Lease, the uses and purposes which may be served by the
Leased Property and the benefits therefrom which will accrue to the City and the general public.
Source of Payments; Covenant to Budget and Appropriate. Under the Lease, the
Lease Payments are payable from any source of available funds of the City, subject to the
provisions of the Lease regarding abatement. See “ – Abatement” below.
The City covenants in the Lease to take all actions required to include the Lease Payments
in each of its budgets during the Term of the Lease and to make the necessary appropriations for
all Lease Payments and Additional Rental Payments. This covenant of the City constitutes a duty
imposed by law and each and every public official of the City is required to take all actions required
by law in the performance of the official duty of such officials to enable the City to carry out and
perform the covenants and agreements agreed to be carried out and performed by the City under
the Lease.
Limited Obligation
THE OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS DOES NOT
CONSTITUTE A DEBT OF THE CITY, THE AUTHORITY OR THE STATE OR OF ANY
POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR
STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT CONSTITUTE AN
OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF
TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF
TAXATION.
Abatement
Termination or Abatement Due to Eminent Domain. Under the Lease, if the Leased
Property is taken permanently under the power of eminent domain or sold to a government
threatening to exercise the power of eminent domain, the Term of the Lease thereupon ceases
as of the day possession is taken. If less than all of the Leased Property is taken permanently,
or if the Leased Property is taken temporarily, under the power of eminent domain, then:
(a) the Lease will continue in full force and effect with respect thereto and does
not terminate by virtue of such taking, and the parties waive the benefit of any law to the
contrary; and
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(b) the Lease Payments are subject to abatement in an amount determined by
the City such that the resulting Lease Payments represent fair consideration for the use
and occupancy of the remaining usable portions of the Leased Property.
Abatement Due to Damage or Destruction. Under the Lease, the Lease Payments are
subject to abatement during any period in which by reason of damage or destruction (other than
by eminent domain as described above) there is substantial interference with the use and
occupancy by the City of the Leased Property or any portion thereof.
The Lease Payments are subject to abatement in an amount determined by the City such
that the resulting Lease Payments represent fair consideration for the use and occupancy of the
remaining usable portions of the Leased Property not damaged or destroyed. Such abatement
will continue for the period commencing with such damage or destruction and ending with the
substantial completion of the work of repair or reconstruction.
In the event of any such damage or destruction, this Lease continues in full force and
effect and the City waives any right to terminate this Lease by virtue of any such damage and
destruction.
No Reserve Fund
No debt service reserve fund has been established with respect to the 2018 Bonds. See
“BOND OWNERS’ RISKS – No Debt Service Reserve Fund.”
Property Insurance
Liability and Property Damage Insurance. Under the Lease, the City is required to
maintain or cause to be maintained throughout the Term of the Lease, a standard commercial
general liability insurance policy or policies in protection of the Authority, the City, and their
respective members, officers, agents, employees and assigns. Said policy or policies shall
provide for indemnification of said parties against direct or contingent loss or liability for damages
for bodily and personal injury, death or property damage occasioned by reason of the operation
of the Leased Property.
Such policy or policies shall provide coverage in such liability limits and be subject to such
deductibles as the City deems adequate and prudent. Such insurance may be maintained as part
of or in conjunction with any other insurance coverage carried by the City, and may be maintained
in whole or in part in the form of self-insurance by the City, subject to the provisions of the Lease,
or in the form of the participation by the City in a joint powers agency or other program providing
pooled insurance.
The proceeds of such liability insurance must be applied toward extinguishment or
satisfaction of the liability with respect to which paid.
Casualty Insurance. Under the Lease, the City is required to procure and maintain, or
cause to be procured and maintained, throughout the Term of the Lease, casualty insurance
against loss or damage to all buildings situated on the Leased Property, in an amount at least
equal to the lesser of (a) 100% of the replacement value of the insured buildings, or (b) 100% of
the aggregate principal amount of the Outstanding 2018 Bonds.
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Such insurance must, as nearly as practicable, cover loss or damage by explosion,
windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered
by such insurance. Such insurance may, at the sole discretion of the City, include earthquake
insurance if available at reasonable cost from reputable insurers in the judgment of the City.
Such insurance may be subject to such deductibles as the City deems adequate and
prudent. Such insurance may be maintained as part of or in conjunction with any other insurance
coverage carried by the City, and may be maintained in whole or in part in the form of the
participation by the City in a joint powers agency or other program providing pooled insurance;
provided that such insurance may not be maintained by the City in the form of self-insurance. The
Net Proceeds of such insurance must be applied as provided in the Lease and described below.
Rental Interruption Insurance. Under the Lease, the City is required to procure and
maintain, or cause to be procured and maintained, throughout the Term of the Lease, rental
interruption or use and occupancy insurance to cover loss, total or partial, of the use of any portion
of the Leased Property constituting buildings or other improvements as a result of any of the
hazards covered in the casualty insurance described above, in an amount at least equal to the
maximum such Lease Payments coming due and payable during any consecutive two Fiscal
Years.
Such insurance may be maintained as part of or in conjunction with any other insurance
coverage carried by the City, and may be maintained in whole or in part in the form of the
participation by the City in a joint powers agency or other program providing pooled insurance;
provided that such insurance may not be maintained by the City in the form of self-insurance.
The Net Proceeds of such insurance, if any, must be paid to the Trustee and deposited in
the Bond Fund, to be applied as a credit towards the payment of the Lease Payments allocable
to the insured improvements as the same become due and payable.
Application of Net Proceeds. The Trustee, as assignee of the Authority under the
Assignment Agreement, has the right to receive all Net Proceeds. As provided in the Indenture,
the Trustee will deposit all Net Proceeds in the Insurance and Condemnation Fund to be applied
to the redemption of 2018 Bonds as set forth in the Indenture.
Remedies on Default
Upon the occurrence and continuance of any Event of Default, the Authority has the right
to terminate the Lease Agreement or, with or without such termination, re-enter, take possession
of and re-let the Leased Property. When the Authority does not elect to terminate the Lease
Agreement, the City remains liable to pay all Lease Payments as they come due and liable for
damages resulting from such Event of Default. Any amounts collected by the Authority from the
reletting of the Leased Property will be credited towards the unpaid Lease Payments. Any net
proceeds of re-leasing or other disposition of the Leased Property are required to be applied as
set forth in the Indenture. Under the Assignment Agreement, the Authority assigns all of its rights
with respect to remedies in an Event of Default to the Trustee, so that all such remedies will be
exercised by the Trustee and the Bond Owners as provided in the Indenture.
The Trustee has no right to accelerate Lease Payments and, due to the governmental
nature of the Leased Property, it is uncertain whether a court would permit the exercise of the
remedies of re-entry, repossession or re-letting.
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See also “BOND OWNERS’ RISKS - Default” and “- Limitations on Remedies Available to
Bond Owners.”
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CITY FINANCIAL INFORMATION
General
The City is located 17 miles north of San Francisco in the County. The City is the County
seat and largest city within the County. The City currently has a land area of 22 square miles
which includes 17 square miles of land and five of water and tidelands, and a population estimated
at 60,842 as of January 1, 2017. Cultural, park and recreational resources are available within
the City, and nearby attractions include Muir Woods, five State parks, the San Francisco area,
Oakland and the wine country.
The City provides municipal services required by statute or charter, namely: Fire, Police,
Community Development (encompassing Building, Planning and Code Enforcement), Public
Works, Community Services (both Recreational and Child Care Programs), Redevelopment,
Library and General Administrative Services. For certain general and demographic information
regarding the City, see “APPENDIX B - City of San Rafael General Information.”
The City was incorporated in 1874 and became a charter city in 1913. It has a council/city
manager form of government, with the County's only elected mayor and four elected city council
members who serve four-year terms.
Accounting Policies and Financial Reporting
The accounts of the City are organized on the basis of funds and account groups, each of
which is considered a separate entity. The operations of each fund are accounted for with a
separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues,
and expenditures or expenses, as appropriate. Government resources are allocated to and
accounted for in individual funds based upon the purposes for which they are to be spent and the
means by which the spending activities are controlled. The basis of accounting for all funds is
more fully explained in the “Notes to Financial Statements” contained in Appendix C.
The City actively maintains a number of policies that support ongoing financial decision-
making. At the City Council level, policies are maintained for General Fund Reserves,
Investments, Debt (covering capital project financing and debt issuance considerations), Pension
Funding, and Other Post-Employment Benefit (OPEB) Funding. See - “CITY FINANCIAL
INFORMATION - General Fund Reserves” and “- Investment of City Funds - Investment Policy.”
The City Manager and Finance Director report to the City Council annually on the status of
Pension and OPEB funding as well as on the condition of City reserves. See - “CITY FINANCIAL
INFORMATION - Retirement System - Funding Policy” and “- Other Post-Employment Benefits
(“OPEB”) - Funding Policy.”
The City Council employs, at the beginning of each fiscal year, an independent certified
public accountant who, at such time or times as specified by the City Council, at least annually,
and at such other times as he or she shall determine, examines the combined financial statements
of the City in accordance with generally accepted auditing standards, including such tests of the
accounting records and such other auditing procedures as such accountant considers necessary.
As soon as practicable after the end of the fiscal year, a final audit and report is submitted by such
accountant to the City Council and a copy of the financial statements as of the close of the fiscal
year is published. The City’s Independent Auditor’s Report for fiscal year 2016-17 was prepared
by Maze & Associates Accountancy Corporation, Pleasant Hill, California.
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The City’s financial statements comply with Governmental Accounting Standards Board
(“GASB”) Statement No. 34. See “APPENDIX C – Audited Annual Statements of the City for the
Fiscal Year Ended June 30, 2017 – Audited Financial Statement – Note 1” for a description of the
significant accounting policies of the City. See “FINANCIAL STATEMENTS OF THE CITY” below.
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General Fund Financial Summary
The audited information contained in the following tables of revenues, expenditures and
changes in fund balances, and assets, liabilities and fund equity has been derived from the City’s
audited financial statements for fiscal years 2013-14 through 2016-17.
Table 1
CITY OF SAN RAFAEL
General Fund - Audited Revenues, Expenditures and Fund Balances
For Fiscal Years 2013-14 through 2016-17
Audited
Fiscal Year
2013-14
Audited
Fiscal Year
2014-15
Audited
Fiscal Year
2015-16
Audited
Fiscal Year
2016-17
Revenues:
Taxes and special assessments $51,510,233 $56,541,604 $60,217,831 $64,242,440
Licenses and permits 1,934,755 2,456,820 2,588,411 2,559,841
Fines and forfeitures 669,553 505,029 435,829 400,283
Use of money and property 265,034 290,103 221,832 229,791
Intergovernmental 6,703,119 7,846,436 8,078,040 2,767,092
Charges for services 2,124,933 2,660,869 2,772,446 2,459,680
Other revenues 1,075,311 446,272 441,761 706,657
Total Revenues 64,282,938 70,747,133 74,756,150 73,365,784
Expenditures:
Current operating:
General government 8,546,690 9,530,931 10,501,341 10,190,580
Public safety 35,138,757 36,564,699 39,230,483 40,844,246
Public works and parks 9,793,235 10,392,192 10,468,421 11,201,655
Community development/redevelopment 3,296,375 3,416,859 3,670,108 3,659,564
Cultural and recreation 2,545,446 2,801,488 2,963,125 3,077,435
Capital Outlay 42,016 -- -- --
Capital improvement/special projects 17,288 30,676 12,389 --
Debt service: principal 39,642 75,172 75,172 175,172
Interest and fiscal charges 279,605 284,288 277,263 271,263
Total Expenditures 59,699,054 63,096,305 67,198,302 69,519,915
Excess (deficiency) of revenues over
expenditures
4,583,884
7,650,828
7,557,848
3,845,869
Other financing sources (uses):
Proceeds from PG&E Loans 568,481 -- -- --
Operating transfers in 1,225,080 1,039,150 1,110,809 1,382,303
Operating transfers out (2,498,336) (1,697,664) (2,491,249) (1,796,089)
Capital transfers out
Total other financing sources (uses)
--
(704,775)
--
(658,514)
(1,849,406)
(3,229,846)
(5,417,454)
(5,831,240)
Net change in Fund Balance 3,879,109 6,992,314 4,382,002 (1,985,371)
Fund balance, July 1 3,490,378 7,369,487 14,361,801 18,689,803
Fund balance, June 30 $7,369,487 $14,361,801 $18,689,803 $16,704,432
Source: City of San Rafael; Comprehensive Annual Financial Reports.
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Table 2
CITY OF SAN RAFAEL
General Fund Balance Sheet
As of June 30 for Fiscal Years 2013-14 through 2016-17
Fiscal Year
2013-14
Fiscal Year
2014-15
Fiscal Year
2015-16
Fiscal Year
2016-17
ASSETS:
Cash and investments for operations $4,422,768 $11,912,244 $11,761,730 $13,434,032
Restricted cash and investments -- -- -- --
Receivables:
Accounts 2,014,927 1,212,870 1,280,029 1,257,061
Taxes 5,756,649 5,906,885 10,349,225 7,109,197
Grants -- 7,940 35,206 --
Interest 64,615 88,654 118,226 167,018
Loans 398,546 350,282 294,529 230,973
Long-term receivable from the Successor
Agency
1,779,324
1,533,103
1286,882
761,773
Prepaid expenses 104,792 49,017 181,787 277,473
TOTAL ASSETS 14,541,621 21,060,995 25,307,614 23,237,538
LIABILITIES AND FUND BALANCE:
Liabilities:
Accounts payable 3,064,081 3,531,630 3,800,802 4,144,408
Deposits payable 62,710 86,477 65,457 79,411
Developer bonds payable 402,190 455,913 376,567 387,085
Due to other funds -- -- -- --
Deferred revenue -- -- -- --
Compensated absences -- -- -- 64,189
Unearned revenue -- -- -- --
TOTAL LIABILITIES 3,528,981 4,074,020 4,242,826 4,675,093
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - SB90
reimbursement receivable
1,863,829
1,092,071
1,088,103
1,096,240
Unavailable revenue - long-term
receivable from Successor Agency
1,779,324
1,533,103
1,286,882
761,773
Fund Balance:
Nonspendable 503,338 399,299 476,316 508,446
Restricted -- -- -- --
Committed -- -- -- --
Assigned 6,866,149 12,374,002 16,440,910 14,900,945
Unassigned -- 1,588,500 1,772,577 1,295,041
Total fund balance 7,369,487 14,361,801 18,689,803 16,704,432
Total liabilities and fund balance $14,541,621 $21,060,995 $25,307,614 $23,237,538
Source: City of San Rafael; Basic Financial Statements.
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Recent Budgets
Fiscal Year 2016-17. The City adopted a fiscal year 2016-17 budget on June 6, 2016.
The total proposed fiscal year 2016-17 budget for the City was $106,673,115. This sum reflected
all funds and operations for the City, inclusive of $4,807,372 in new appropriations for capital
projects. These appropriations were supported by fiscal year 2016-17 revenue and other sources
then projected at $105,031,599 as well as by funds retained from previous periods for capital
projects.
The General Fund portion of the City budget was balanced in that fiscal year 2016-17
expenditures and operating transfers out, totaling $72,321,799, were fully supported by fiscal year
2016-17 General Fund revenues and operating transfers in, then projected at $75,499,303.
The 2016-17 budget also provided for capital transfers for major construction and
improvements to public safety facilities known as the San Rafael Essential Facilities project. At
the City Council’s direction, this project’s chief funding source was allocations from Measure E
Transactions and Use Tax revenues (“Measure E”) (see “- Other Taxes” below) that had been
set aside in previous years.
Fiscal Year 2017-18. On June 5, 2017, the City Council adopted the City’s budget for
fiscal year 2017-18. The total proposed fiscal year 2017-18 budget for the City is $111,578,822.
The Capital Improvement Program has new planned expenditures of $9,302,302 for the year.
Appropriations are supported by fiscal year 2017-18 revenue and other sources projected at
$108,639,679 as well as funds retained from previous periods for capital projects.
The General Fund portion of the City budget is balanced in that fiscal year 2017-18
expenditures and operating transfers out, totaling $75,235,270, are fully supported by fiscal year
2017-18 General Fund revenues and transfers in, projected at $78,489,437. The budget also
provides for capital transfers of $4,025,000 for continued funding of the San Rafael Essential
Facilities project. As was the case in the prior year, this project’s chief funding source is allocations
from Measure E revenues (“Measure E”) (see “-Other Taxes” below).
The General Fund operating-related appropriations for fiscal year 2017-18 also provide
for an allocation of $210,000 to maintain the emergency and cashflow reserve at its target level,
as well as authorization to use $1,271,000 of previously unallocated and unassigned funds for
limited-term operating needs.
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Comparison of Budget to Actual Performance
For purposes of comparison, the following table summarizes the City’s adopted budgets
for fiscal years 2015-16 and 2016-17 and sets forth audited revenues and expenditures for fiscal
years 2015-16 and 2016-17; it also includes the City’s budgeted figures for fiscal year 2017-18.
Table 3
CITY OF SAN RAFAEL
General Fund - Comparison of Budgeted and Actual
Revenues, Expenditures and Fund Balances
For Fiscal Years 2015-16 through 2017-18
Budgeted
Fiscal Year
2015-16
Audited
Fiscal Year
2015-16
Budgeted
Fiscal Year
2016-17
Audited
Fiscal Year
2016-17
Budgeted
Fiscal Year
2017-18
Revenues:
Taxes and special assessments $59,537,000 $60,217,831 $64,563,000 $64,242,440 66,848,000
Licenses and permits 2,545,000 2,588,411 2,511,000 2,559,841 2,782,000
Fines and forfeitures 473,000 435,829 448,000 400,283 457,000
Use of money and property 278,100 221,832 288,000 229,791 238,200
Intergovernmental 7,533,767 8,078,040 3,042,000 2,767,092 3,323,000
Charges for services 2,739,287 2,772,446 2,869,000 2,459,680 2,980,450
Other revenues 457,000 411,761 396,000 706,657 504,443
Total Revenues 73,563,154 74,756,150 74,117,000 73,365,784 77,133,093
Expenditures:
General government 10,093,917 10,501,341 10,941,401 10,190,580 9,633,850
Public safety 38,943,504 39,230,483 40,958,109 40,844,246 43,270,574
Public works and parks 10,999,225 10,468,421 10,943,588 11,201,655 11,512,560
Community development 3,914,771 3,670,108 4,154,885 3,759,564 4,570,439
Culture and recreation 3,005,021 2,963,125 3,076,042 3,077,435 3,255,722
Capital Outlay 145,457 -- -- -- 90,690
Capital improvement/ special projects 15,922 12,389 -- -- --
Debt service: principal 75,172 75,172 175,172 175,172 280,172
Interest and fiscal charges 276,513 277,263 276,513 271,263 271,263
Total Expenditures 67,469,572 67,198,302 70,525,710 69,519,915 72,885,270
Excess (Deficiency) of Revenues
Over (under) Expenditures
6,093,582
7,557,848
3,591,290
3,845,869
4,247,823
Other financing sources (uses):
Operating transfers in 1,110,810 1,110,809 1,382,303 1,382,303 1,356,344
Operating transfers out (2,491,249) (2,491,249) (1,796,089) (1,796,089) (2,350,000)
Capital transfers out (1,849,406) (1,849,406) (5,417,454) (5,417,454) (4,025,000)
Total other financing sources (uses) (3,229,845) (3,229,846) (5,831,240) (5,831,240) (5,018,656)
Net change in Fund Balance $2,863,737 4,328,002 ($2,239,950) (1,985,371) (770,833)
Fund balances, beginning of year 14,361,801 18,689,803 16,704,432
Fund balances, end of year $18,689,803 $16,704,432 15,933,599
Source: City of San Rafael.
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General Fund Reserves
The City Council has adopted a financial management policy requiring that emergency
and cash flow reserves be maintained at 10% of General Fund expenditures. In fiscal year 2015-
16, the reserves were funded at 10.2%. During fiscal year 2016-17, reserves we re funded at
10.4% of General Fund expenditures, and are projected to remain at that level through fiscal year
2017-18 reflecting the City’s commitment to maintain a minimum reserve of 10%. As part of the
City’s long-term budget and the City Council’s desire for a contingency reserve for emergencies,
the City plans to increase reserves as resources become available.
Other Reserves - Internal Service Funds
The City maintains internal services funds that are available to the General Fund. The
funds include reserves for Employee Benefits, General Liability, Workers’ Compensation, and
Equipment Replacement. In fiscal year 2015-16, these reserves represented 12.6% of General
Fund expenditures, 13.3% in fiscal year 2016-17, and, in fiscal year 2017-18, these reserves are
projected to remain at a comparable level.
General Fund Revenues by Source
Revenues received by the City include sales taxes, property taxes, transaction/use taxes
(Measure E), business license taxes, property transfer taxes, occupancy taxes, franchise taxes,
business license taxes and other miscellaneous taxes.
The following table sets forth General Fund revenues received by the City for fiscal years
2013-14 through 2016-17, by source, as well as the percentage of total fiscal year 2016-17
revenues that each revenue source contributes.
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Table 4
CITY OF SAN RAFAEL
General Fund Revenues by Source
For Fiscal Years 2013-14 through 2016-17
Source:
2013-14
2014-15
2015-16
2016-17
Percent of Total
2016-17
Revenues
Taxes:
Property(1) $18,439,619 $19,039,443 $19,998,567 $21,532,626 29.35%
Sales:
Sales and Use $19,283,904 $20,634,478 $22,342,619 $19,818,323 27.01%
Measure E three-quarter cent sales
tax(2)
2,672,002 11,201,000 11,544,000 11,534,888 15.72
Measure S 5,444,446 12,433 28,144 28,878 0.04
Total, Sales Taxes $27,400,352 $31,847,911 $33,914,763 $31,382,089 42.77%
Property Transfer Tax $1,708,976 $1,513,524 $1,707,694 $1,810,514 2.47%
Transient occupancy 2,332,277 2,661,878 3,063,263 2,984,758 4.07
Franchise 3,260,958 3,272,390 3,418,277 3,610,824 4.92
Business license 2,588,728 2,670,071 2,824,664 2,774,803 3.78
Other Taxes(3) 211,828 199,282 210,607 216,922 0.30
Licenses and Permits 1,934,755 2,456,820 2,588,411 2,559,841 3.49
Fines and Forfeitures 669,553 505,030 435,829 400,283 0.55
Use of Money and Property 265,034 290,103 221,832 229,791 0.31
Intergovernmental 2,270,614 3,183,540 3,158,036 2,696,996 3.68
Charges for Services 2,124,933 2,660,869 2,772,446 2,459,680 3.35
Other revenue 1,075,311 446,272 441,761 706,657 0.96
Total $64,282,938 $70,747,133 $74,756,150 $73,365,784 100.00%
(1) Property tax revenue includes secured, unsecured, supplemental, educational relief augmentation fund, homeowner’s
exemption and VLF property tax backfill property tax revenue along with penalties and interest.
(2) Measure “E” Transaction and Use Tax. See “Other Taxes” below.
(3) Other taxes include Unitary tax.
Source: City of San Rafael.
Sales Taxes
General. Sales tax represented the largest source of revenue to the City in fiscal year
2015-16 and is projected by an independent third-party consultant to be the largest source of
revenue in fiscal years 2016-17 and 2017-18. This section describes the current system for
levying, collecting and distributing sales and use tax revenues in the State.
Sales Tax Rates. The sales tax is governed by the Bradley-Burns Uniform Local Sales
and Use Tax (the “Sales Tax Law”). A sales tax is imposed on retail sales or consumption of
personal property. The tax rate is established by the State Legislature. The statewide sales tax
rate is 7.25%, of which the City’s share is 1.00%.
After peaking above 10% during fiscal year 2014-15, sales tax growth has plateaued
during the past two years. Recurring sales tax revenues are estimated to increase by 3.0% to
$21.1 million in fiscal year 2017-18. Sales taxes account for 28% of General Fund revenues. All
proceeds of the tax are required to be deposited into the City’s General Fund to be used for all
general municipal governmental purposes at the City’s discretion.
An additional 0.75% is collected in Marin County for transportation purposes and 0.25%
is collected for open space purposes.
Transactional/Use Tax (Measure E). The City receives revenue from the 0.75% Measure
E Transactions and Use Tax, approved by the City’s voters in November 2013. The Measure E
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Transactions and Use Tax is effective through March 31, 2034, and supplanted a 0.50%
transactions and use tax approved under Measure S by voters in 2005. The City currently plans,
for budgeting purposes only, to allocate a portion of its Measure E tax revenues for public safety
purposes, including to pay the Lease Payments supporting the 2018 Bonds. However, the City
is not legally required to use any of its Measure E tax revenues for such purposes, and the City
will not pledge or grant a security interest in the Measure E tax revenues to secure such Lease
Payments. The Measure E tax is a general tax and the revenues from such tax are available for
any purpose legally permitted.
The following table presents the sales tax rates currently applicable to taxable transactions
in San Rafael. The State collects, administers and distributes the tax. The portions dedicated to
the City of San Rafael are highlighted in bold.
Table 5
CITY OF SAN RAFAEL
Sales Tax Rates
State (General Fund) 5.00%
Local General Fund (Bradley-Burns) 1.00
Countywide Transportation Fund 0.25
County Mental Health/Welfare Districts 0.50
Public Safety Augmentation Fund 0.50
Total State-wide Tax 7.25%
Sonoma-Marin Train (SMART) 0.25%
Transportation Authority of Marin 0.50
Marin Parks, Open space and Farmland Preservation 0.25
San Rafael Transactions and Use Tax (Measure E) 0.75
Local Tax Subtotal 1.75%
Total Sales and Use Tax 9.00%
Sales and use taxes are complementary taxes; when one applies, the other does not. In
general, the statewide sales tax applies to gross receipts of retailers from the sale of tangible
personal property in the State. The use tax is imposed on the purchase, for storage, use or other
consumption in the State of tangible personal property from any retailer. The use tax generally
applies to purchases of personal property from a retailer outside the State where the use will
occur within the State. The sales tax is imposed upon the same transactions and items as the
statewide sales tax and the statewide use tax.
Certain transactions are exempt from the State sales tax, including sales of the following
products:
• food products for home consumption;
• prescription medicine;
• newspapers and periodicals;
• 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.
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This is not an exhaustive list of exempt transactions. A comprehensive list can be found
in the State Board of Equalization’s Publication No. 61 entitled “Sales and Use Taxes: Exemptions
and Exclusions,” which can be found on the State Board of Equalization’s website at
http://www.boe.ca.gov/. The reference to this Internet website is provided for reference and
convenience only. The information contained within the website may not be current, has not been
reviewed by the City and is not incorporated in this Official Statement by reference.
Sales Tax Collection Procedures. Collection of the sales and use tax is administered
by the California Department of Tax and Fee Administration (CDTFA), which took over this
function from the State Board of Equalization in July 2017. According to the CDTFA, it distributes
quarterly tax revenues to cities, counties and special districts using the following method:
Using the prior year’s like quarterly tax allocation as a starting point, the CDTFA first
eliminates nonrecurring transactions such as fund transfers, audit payments and refunds, and
then adjusts for growth, in order to establish the estimated base amount. The CDTFA disburses
90% of the estimated base amount for each quarter to each local jurisdiction in three monthly
installments (advances) prior to the final computation of the quarter’s actual receipts. Ten percent
is withheld as a reserve against unexpected occurrences that can affect tax collections (such as
earthquakes, fire or other natural disaster) or distributions of revenue such as unusually large
refunds or negative fund transfers. The first and second advances each represent 30% of the
90% distribution, while the third advance represents 40%. One advance payment is made each
month, and the quarterly reconciliation payment (the fourth, clean-up payment) is distributed in
conjunction with the first advance for the subsequent quarter. CDTFA provides to the City
statements showing total collections, administrative costs, prior advances and the current
advance with each quarterly clean-up payment.
The CDTFA receives an administrative fee based on the cost of services provided by the
Board to the City in administering the City’s sales tax, which is deducted from revenue generated
by the sales and use tax before it is distributed to the City.
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History of Taxable Transactions. A summary of historic taxable sales within the City
during the past five years for which data is available is shown in the following table. Total taxable
sales during calendar year 2015 in the City were reported to be $1,777,942,000, a 1.50% increase
over the total taxable sales of $1,751,753,000 reported during calendar year 2014.
Table 6
CITY OF SAN RAFAEL
Taxable Transactions by Type of Business
For Calendar Years 2011 through 2015
(Dollars in thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2012 1,696 $1,234,514 2,805 $1,532,832
2013 1,793 1,336,922 2,920 1,660,492
2014 1,765 1,407,601 2,884 1,751,753
2015(1) 1,744 1,426,578 3,079 1,777,942
2016(2) 1,755 1,055,162 3,104 1,311,866
(1) Permit figures for calendar year 2015 are not comparable to that of prior years due to outlet counts in
these reports including the number of outlets that were active during the reporting period. Retailers that
operate part-time are now tabulated with store retailers.
(2) Only three quarters available for 2016.
Source: State Department of Tax and Fee Administration. Taxable Sales in California (Sales & Use Tax).
Property Taxes
Property taxes represented the second largest source of General Fund revenue in fiscal
year 2015-16 and the largest source in fiscal year 2016-17, and is projected by an independent
third-party consultant to be the second largest source of General Fund revenue for fiscal year
2017-18. This section describes property tax levy and collection procedures and certain
information regarding historical assessed values and major property tax payers in the City.
ERAF Shift Legislation. Certain property taxes have been shifted from local government
agencies to schools by the State Legislature for deposit in the Education Revenue Augmentation
Fund (“ERAF”), a shift that has resulted in diversion of City property taxes since fiscal year 1992-
93. There can be no assurance that the State will not undertake future ERAF shifts, but the
State’s legal authority to do so is limited by Prop. 22. See “CONSTITUTIONAL AND
STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS - Proposition 1A; Proposition
22.”
Levy and Collection. Property taxes are levied for each fiscal year on taxable real and
personal property as of the preceding January 1. For assessment and collection purposes,
property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts
of the assessment roll. The “secured roll” is that part of the assessment roll containing State-
assessed public utilities property and real property the taxes on which are a lien sufficient, in the
opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on
the “unsecured roll.”
Property taxes on the secured roll are due in two installments, on November 1 and
February 1 of each fiscal year, and become delinquent on December 10 and April 10, respectively.
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A penalty of 10% attaches immediately to all delinquent payments. Property on the secured roll
with respect to which taxes are delinquent become tax defaulted on or about June 30 of the fiscal
year. Such property may thereafter be redeemed by payment of a penalty of 1% per month to
the time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five
years or more, the property is deeded to the State of California and may be sold at public auction.
Property taxes on the unsecured roll are due as of the January 1 lien dates and become
delinquent on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured
taxes are unpaid at 5:00 p.m. on October 31, an additional penalty of 1% attaches to them on the
first day of each month until paid. The County has four ways of collecting delinquent unsecured
personal property taxes: (1) a civil action against the taxpayer; (2) filing a judgment in the office
of the County Clerk specifying certain facts in order to obtain a lien on certain property of the
taxpayer; (3) filing a certificate of delinquency for record in the County Recorder’s office in order
to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property,
improvements or possessory interests belonging or assessed to the assessee.
Teeter Plan
Property taxes are recorded by the City as revenue when received in the fiscal year of
levy because of the adoption of the “alternate method of property tax distribution,” known as the
Teeter Plan, by the City and the County of Marin. The Teeter Plan authorized the auditor-controller
of the County of Marin to allocate 100% of the secured property taxes billed, but not yet paid. The
County of Marin remits property tax revenues to the City in three installments, as follows: (1) 55%
remitted on December 15; (2) 40% remitted on April 15; and (3) 5% remitted on June 15.
Under the provisions of the Teeter Plan, each county operating under the Teeter Plan
establishes a delinquency reserve and assumes responsibility for all secured delinquencies,
assuming that certain conditions are met.
Because of this method of tax collection, participating local agencies located in counties
operating under the Teeter Plan and participating in the Teeter Plan are assured of 100%
collection of their secured tax levies if the conditions established under the applicable county’s
Teeter Plan are met. However, such local agencies are no longer entitled to share in any penalties
due on delinquent payments or in the interest which accrues on delinquent payments. The Teeter
Plan is to remain in effect unless the Board of Supervisors of the County of Marin orders its
discontinuance or unless, prior to the commencement of any fiscal year of the County (which
commences on July 1), the Board of Supervisors has received a petition for its discontinuance
joined in by resolutions adopted by two thirds of the participating local agencies in the County, in
which event the Board of Supervisors is required to order discontinuance of the Teeter Plan
effective at the commencement of the subsequent fiscal year.
The Board of Supervisors may, by resolution adopted not later than July 15 of the fiscal
year for which it is to apply after holding a public hearing on the matter, discontinue the procedures
under the Teeter Plan with respect to any tax levying agency or assessment levying agency in
the County if the rate of secured tax delinquency in that agency in any year exceeds 3% of the
total of all taxes and assessments levied on the secured rolls for that agency. In the event that
the Teeter Plan was terminated, the amount of the levy of ad valorem taxes in the City would
depend upon the collections of the ad valorem property taxes and delinquency rates experienced
with respect to the parcels within the City. The City is not aware of any plans by the County to
discontinue the Teeter Plan.
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So long as the Teeter Plan remains in effect with respect to the City, the City's receipt of
revenues with respect to the levy of ad valorem property taxes on secured property will not be
dependent upon actual collections of the ad valorem property taxes by the County.
Beginning in 1978-79, Proposition 13 and its implementing legislation shifted the function
of property tax allocation to the counties, except for levies to support prior voted debt, and
prescribed how levies on countywide property values are to be shared with local taxing entities
within each county.
Assessed Valuation Information. Set forth below is a listing of the City’s assessed
valuations for the past five fiscal years.
Table 7
CITY OF SAN RAFAEL
Assessed Valuation
For Fiscal Year 2013-14 through 2017-18
Local Secured Utility Unsecured Total % Change
2013-14 $9,939,469,670 $5,246,402 $402,261,887 $10,346,977,959 --
2014-15 10,471,724,630 5,246,402 414,275,471 10,891,246,503 5.3%
2015-16 11,100,791,102 5,246,402 398,759,673 11,504,797,177 5.6
2016-17 11,790,357,580 26,867,933(1) 423,305,303 12,240,530,816 6.4
2017-18 12,432,691,490 26,867,933 416,634,339 12,876,193,762 5.2
(1) The increase in utility value from fiscal year 2015-16 to 2016-17 is attributable to improvements owned by
Pacific Gas & Electric.
Source: California Municipal Statistics, Inc. and Marin County Dept. of Finance.
Proposition 13 and Proposition 8 Property Value Adjustments. Proposition 13,
passed in 1978, established the base year value concept for property tax assessments. Under
Proposition 13, the 1975-76 fiscal year serves as the original base year used in determining the
assessment for real property. Thereafter, annual increases to the base year value are limited to
the inflation rate, as measured by the California Consumer Price Index, or 2%, whichever is less.
A new base year value, however, is established whenever a property, or portion thereof, has had
a change in ownership or has been newly constructed.
Proposition 8, enacted in 1978, allows for a temporary reduction in assessed value when
a property suffers a “decline-in-value.” As of the January 1st (lien date) each year, the Assessor
must enroll either a property’s Proposition 13 value (adjusted annually for inflation by no more
than 2%) or its current market value, whichever is less. When the current market value replaces
the higher Proposition 13 value, the lower value is commonly referred to as a “Proposition 8
Value.” “Proposition 8 values” are temporary and, once enrolled, must be reviewed annually by
the assessor until the Proposition 13 adjusted base year value is enrolled.
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Historical Tax Rates. The following table shows historical tax rates in a typical tax rate
area of the City (Tax Rate Area 8-000) for the past five fiscal years.
Table 8
CITY OF SAN RAFAEL
Typical Tax Rate per $100 Assessed Value (TRA 8-000)
Fiscal Years 2013-14 through 2017-18
2013-14 2014-15 2015-16 2016-17 2017-18
General Tax Rate $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
San Rafael School District 0.0551 0.0474 0.0463 0.0535 .0201
San Rafael High School District 0.0294 0.0273 0.0266 0.0710 .0706
Marin Community College District 0.0204 0.0180 0.0165 0.0142 .0365
Marin Healthcare District N/A N/A 0.0235 0.0093 .0338
Total Tax Rate $1.1049 $1.0927 $1.1128 $1.1480 $1.1610
Source: California Municipal Statistics, Inc.
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Major Property Taxpayers. The following table lists the top 20 local secured taxpayers
in the City of San Rafael for fiscal year 2017-18.
Table 9
CITY OF SAN RAFAEL
Top 10 Local Secured Taxpayers
Fiscal Year 2017-18
2017-18 % of
Property Owner Primary Land Use Assessed Valuation Total (1)
1. California Corporate Center Acquisition Commercial $ 261,000,911 2.10%
2. Northgate Mall Associates Commercial 140,729,805 1.13
3. BRE Properties Inc. Apartments 62,385,259 0.50
4. South Valley Apartments LLC Commercial 53,045,451 0.43
5. BRE Piper MF 33 North CA LLC Residential Development 46,565,701 0.37
6. Northbay Properties II Apartments 45,976,145 0.37
7. Bay Apartment Communities Inc. Apartments 43,612,049 0.35
8. Barbara Fasken 1995 Trust Commercial 43,324,046 0.35
9. Marin Sanitary Service Commercial 41,511,018 0.33
10. Target Corporation Commercial 37,656,772 0.30
11. San Rafael Manor Inc. Apartments 36,886,454 0.30
12. Mach II 4040 LLC Commercial 36,140,694 0.29
13. Marin Hotel Owner LLC Commercial 33,655,375 0.27
14. Sutter Health Commercial 33,150,000 0.27
15. SFF MEC LLC Commercial 32,743,437 0.26
16. Marin Newco LLC Apartments 30,462,414 0.25
17. Civic Center Marin LLC Commercial 28,574,064 0.23
18. Bel Albert Holdings LLC Apartments 28,471,437 0.23
19. Francisco Boulevard Investors LLC Commercial 27,670,669 0.22
20. Regency Center II Associates LP Commercial 26,864,000 0.22
$1,090,425,701 8.77%
(1) 2017-18 Local Secured Assessed Valuation: $12,432,691,490.
Source: California Municipal Statistics, Inc.
Other Taxes
Franchise Tax. The City’s Franchise Tax (which is expected to generate $3,720,000, or
4.8% of General Fund revenues in fiscal year 2017-18) is imposed on the distribution and sales
of public utility services. City Charter Article XIV provides regulations concerning franchised
agencies and businesses. Currently, the City charges PG&E a franchise fee of 1% for gas and
0.50% for electricity. The local cable provider, Comcast, pays a 5% franchise fee on a quarterly
basis to Marin Telecommunications Authority (“MTA”). Under a formation agreement, MTA
deducts its budget cost from the received franchise fees and remits the net to each agency based
on relative cable TV subscribers. Marin Sanitary Service collects and remits a 10% refuse fee for
the privilege of being the sole waste hauler for the City. Under Article XIIIC of the California
Constitution, franchise fees can only be increased by a vote of the City residents.
Business License Tax. The Business License Tax is expected to generate $2,859,000,
approximately 3.7% of the City’s fiscal year 2017-18 General Fund revenues. A Business License
Tax is imposed on all business for the privilege of conducting business within the City. Most retail,
wholesale, professional and service industries pay this tax on a gross receipts basis. A small
portion of businesses pay a tax rate based upon the number of employees. Apartments pay a tax
based upon the number of rental units. The Business License Tax rates are identified in Municipal
Code Section 10.04, subject to indexing for inflation.
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Transient Occupancy Tax. The City’s Transient Occupancy Tax is expected to contribute
$3,122,000, approximately 4.1% of the City’s fiscal year 2017-18 General Fund revenues. A
Transient Occupancy Tax is imposed on occupants of hotels, inns, motels and other lodging
facilities unless such occupancy is for a period of 30 or more days. The tax is applied to the
customer‘s lodging bill. Taxes are remitted to the City either monthly or quarterly for all approved
lodging operations. The current Transient Occupancy tax rate is 10%. It was last modified in 1988.
Property Transfer Tax. The Property Transfer Tax (which is expected to generate 2.7%
of General Fund revenues in fiscal year 2017-18) is imposed on any conveyance of real property
when a change in deed is filed with the County. The City’s Property Transfer Tax regulations are
set forth in Municipal Code Section 3.22. The tax is imposed at the rate of $2 for each $1,000 or
fractional part of $1,000 of value. Any increase in property transfer tax rates would require voter
approval pursuant to Proposition 218.
State Budget and its Impact on the City
General. Information about the fiscal year 2017-18 State budget and other State budgets
is regularly available at various State-maintained websites. An impartial analysis of the budget is
posted by the Legislative Analyst Office at www.lao.ca.gov. In addition, various State official
statements, many of which contain a summary of the current and past State budgets, may be
found at the website of the State Treasurer, www.treasurer.ca.gov. The information referred to in
this paragraph is prepared by the respective State agency maintaining each website and not by
the City or Underwriter, and the City and Underwriter take no responsibility for the continued
accuracy of the Internet addresses or for the accuracy or timeliness of information posted there,
and such information is not incorporated in this Official Statement by these references.
See “RISK FACTORS – Impact of State Budget on City Revenues.”
Proposition 30 and Proposition 55. Approved in 2012, Proposition 30 (“Proposition
30”) enacted temporary increases on high-income earners, raising income taxes by up to three
percent on the wealthiest Californians for seven years and increased the state sales tax by
$0.0025 for four years. The temporary personal income tax increases under Proposition 30 were
scheduled to expire at the end of 2018; however, the voters approved Proposition 55 in the
November 2016 statewide election, which extended these increases through 2030. The
temporary increase in the state sales tax under Proposition 30 has expired.
Future State Budgets. The City cannot predict what actions will be taken in future years
by the State Legislature and the Governor to address the State’s current or future budget deficits.
Future State budgets will be affected by national and state economic conditions and other factors
over which the City has no control. To the extent that the State budget process results in reduced
revenues to the City, the City will be required to make adjustments to its budget. Decreases in
such revenues may have an adverse impact on the City’s ability to pay the 2018 Bonds.
Retirement System
Marin County Employees’ Retirement Fund. The City’s defined benefit retirement plan
is administered by the Marin County Employees’ Retirement Association (“MCERA”). MCERA
operates as a cost-sharing multiple employer defined benefit plan for the City and eight other
participating employers: County of Marin, Local Agency Formation Commission (LAFCO), Marin
City Community Services District, Marin County Superior Court, Marin/Sonoma Mosquito and
Vector Control District, Novato Fire Protection District, Southern Marin Fire Protection District,
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and Tamalpais Community Services District. Separate actuarial valuations are performed for
these other agencies and districts, and the responsibility for funding their plans rest with those
entities. Post-retirement benefits are administered by MCERA to qualified retirees.
MCERA’s service retirement benefits are based on the years of credited service, final
average compensation, and age at retirement, according to the applicable statutory formula.
Members who qualify for service retirement are entitled to receive monthly retirement benefits for
life.
Funding Policy. The funding policy of MCERA provides for actuarially determined
periodic contributions by the City at rates such that sufficient assets will be available to pay plan
benefits when due. The employer rates for normal cost are determined using the Entry Age
Normal Actuarial Cost Method, which takes into account those benefits that are expected to be
earned in the future as well as those already accrued.
The City has its own funding policy, adopted on June 17, 2013 and revised on September
8, 2015. Under that policy, the City is to use the actuarially determined periodic contribution
determined by MCERA as the basis for its pension contributions. Under the policy, if the City is
unable to fund the full amount of the ADC in a given year with current resources (i.e. without
borrowing or using reserves), the City Manager and the Finance Director of the City are to identify
a reasonable period to return to full funding. Under the policy, the City Manager is to ensure that
any recommended changes to the defined benefit pension plan are fully consistent with all
applicable federal and state regulations.
The City’s contribution rates for the year ended June 30, 2017 were as follows:
Employer
Contribution
Rate
Employee
Contribution
Rate
Benefit
Basis
City of San Rafael Misc Tier 1 50.40% 0.00-16.82% 2.7% @ 55 Highest Year
City of San Rafael Misc Tier 2 46.81 7.89-12.57% 2.0% @ 55 Average of Three Highest Years
City of San Rafael Fire Tier 1 75.67 0.00-19.79% 3.0% @ 55 Highest Year
City of San Rafael Fire Tier 2 72.59 11.34-17.69% 3.0% @ 55 Average Three Highest Years
City of San Rafael Safety Police Tier 1 74.79 00.00-19.79% 3.0% @ 55 Highest Year
City of San Rafael Safety Police Tier 2 75.53 11.34-17.69% 3.0% @ 55 Average Three Highest Years
PEPRA1 Misc 42.11 9.18-10.18% 2.0% @ 62 Average Three Highest Years
PEPRA Safety 64.88 14.53% 2.7% @ 57 Average Three Highest Years
1 Public Employees’ Pension Reform Act
Source: City of San Rafael Basic Financial Statements for the Year Ended June 30, 2017.
These rates were determined by MCERA, based on the actuarial valuation dated June 30,
2015. The actual rate of return on investments during that year was 4.99% on a market value
basis net of investment expenses, as compared to the 7.25% assumption.
The City uses the actuarially determined percentages of payroll to calculate and pay
contributions to MCERA. Contributions to the plan from the City were $20,003,002 for the year
ended June 30, 2017, based on a total payroll of $41,553,242, of which $32,885,135 represented
the basis for the plan contributions. Of the total payroll subject to plan contributions, $1,305,530
is attributable to the San Rafael Sanitation District (“SRSD”), a component unit of the City.
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Effective with the June 30, 2013 valuation, the Unfunded Actuarial Liability (“UAL”) as of
June 30, 2013 is being amortized over a closed 17-year period (15 years remaining as of June
30, 2015), except for the additional UAL attributable to the outstanding unfunded actuarial loss
from 2009, which is being amortized over a separate closed period (currently 23 years).
Under Governmental Accounting Standards Board Statement Number 68 “Accounting and
Financial Reporting for Pensions,” the City’s funding progress is expressed as the ratio of net
position (market value of assets) to total pension liability. Information for the past three years is
shown in the following table.
Table 10
City's Share of Net Pension Liability
Defined Benefit Pension Plan (Fire, Police, Miscellaneous)
(Dollars in thousands)
6/30/2015 6/30/2016 6/30/2017
Total Pension Liability $677,754 $907,195 $900,629
Fiduciary Net Position (Assets) 603,500 764,872 733,574
Net Pension Liability $74,254 $142,323 $167,055
Plan fiduciary net position as a
percentage of the total pension liability
89.04% 84.31% 81.45%
Covered employee payroll $31,429 $31,106 $31,126
Net Pension liability as a percentage of
covered employee payroll 236.26% 457.54% 519.99%
Source: City Financial Statements for the Year Ended June 30, 2017. The fiscal year ended June 30, 2015 was the first year of
implementation, therefore only three years are available.
In November 2017, MCERA voted to lower the investment return assumption used to
determine its pension funding contributions from 7.25% to 7.00%. The new investment return
assumption will begin to impact contribution rates in the 2018-19 fiscal year. MCERA has advised
the City that, based on MCERA’s estimates, the new investment return assumption will result in
contribution rate increases of approximately 1% of covered payroll in fiscal year 2018-19.
While the City does not maintain a pension stabilization trust fund, it currently maintains
approximately $2 million in an internal service fund for employee benefits. See “CITY FINANCIAL
INFORMATION - Other Reserves - Internal Service Funds.”
Public Agency Retirement System. The City also contributes to the Public Agency
Retirement system (“PARS”), a defined contribution retirement plan, which provides retirement
benefits in return for services rendered, provides an individual account for each participant, and
specifies how contributions to the individual’s accounts are determined (instead of specifying the
amount of benefits the individual is to receive).
All eligible non-represented employees of the City will become participants in PARS from
the date they were hired. An eligible employee is any employee who, at any time during which
the City maintains this plan, is not accruing a benefit under MCERA discussed above. As
determined by PARS, each participating employee must contribute 3.75% of gross earnings to
PARS. The City contributes an additional 3.75% of the employee’s gross earnings.
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During the fiscal year 2016-17, the City and employees each contributed $98,186. The
total covered payroll of employees participating in PARS for the year ended June 30, 2017, was
$2,618,290. The total payroll for the year was $41,553,242.
401(a) Tax Qualified Plan. In addition, the City participates in a 401(a) tax qualified plan
for eligible executive management and mid-management employees, and elected officials. Under
this plan, which was terminated effective August 3, 2015, the percent amount of contribution
ranged from 3% to 4.6% of base salary of participating employees. During fiscal year 2015-16,
and prior to the plan’s termination, the City contributed $3,770 on behalf of these employees.
Other Post Employment Benefits (“OPEB”)
Description of Postretirement Healthcare Benefits. The City provides certain health
care benefits for retired employees and their spouses under a cost sharing defined benefit plan.
Employees who meet the vesting criteria become eligible for these benefits if they receive a
retirement benefit from the Marin County Employees’ Retirement Association within 120 days of
retirement from City employment. At June 30, 2017, 684 retirees and surviving spouses received
post-employment health care benefits.
The City’s Comprehensive Annual Financial Report for the fiscal year ended June 30,
2017, and in particular Note 11 thereto, includes information about the City’s postemployment
healthcare liabilities and funding.
Actuarial Required Contribution and Assumptions. The City’s annual required
contribution (“ARC”) with respect to the OPEB Plan was determined as part of a June 30, 2015
actuarial valuation, using the entry-age normal cost method. This is a projected benefit cost
method, which takes into account those benefits that are expected to be earned in the future as
well as those already accrued. The actuarial assumptions included (a) 4.50% investment rate of
return and (b) 2.75% of general inflation increase, and (c) a healthcare trend of declining annual
increases ranging from 6.70% in 2015 to 4.50% for the years starting 2021. In addition, the fixed
dollar benefit amounts are assumed to be held flat in the future and the premium related benefits
are assumed to increase with the healthcare trend rate.
Projections of benefits for financial reporting purposes are based on the substantive plan
(the plan as understood by the employer and the plan members) and include the types of benefits
provided at the time of each valuation and the historical pattern of sharing of benefit costs between
the employer and the plan members at that point. The actuarial methods and assumptions used
include techniques that are designed to reduce the effects of short-term volatility in actuarial
accrued liabilities and the actuarial value of assets consistent with the long -term perspective of
the calculations.
Since 2013, the City has maintained an irrevocable trust under the California Employers’
Retiree Benefit Trust Fund (CERBT) for the purpose of funding post-retirement healthcare
benefits. For the past five years, the City has fully funded its actuarially required contribution. As
of June 30, 2017, the amount in the CERBT trust was $17,872,938.
Funding Policy. On September 18, 2017, the City Council adopted a policy for funding
the City’s OPEB obligations. Under that policy, the City’s stated goal is to fully fund the amount
of the actuarially determined contribution (“ADC”) each year. (Under GASB 75, the term of art
has changed from “actuarially required contribution” to “actuarially determined contribution.”) In
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the event the City is unable to fund the full amount of the ADC in a given year without borrowing,
the Finance Director and City Manager will identify a timeframe under which to return to full
funding. Under the policy, a Pension-OPEB Subcommittee is to review the ADC each fiscal year,
and recommend the level of funding to be considered by the City Council for adoption in the
budget.
Reporting of OPEB Liability and Funded Status. Effective with the fiscal year ended
June 30, 2017, the City implemented Governmental Accounting Board Statement Number 75 –
“Accounting and Financial Reporting for Postemployment Benefits Other than Pensions” (GASB
75). Under GASB 75, the City’s funding progress is expressed as the ratio of net position (market
value of assets) to total OPEB liability. Because this was the first year of implementation,
comparable historical information is unavailable.
Table 11
City's Net OPEB Liability
(Dollars in thousands)
6/30/20171
Total OPEB Liability $49,543
Fiduciary Net OPEB Position 15,758
Net OPEB Liability $33,785
Plan fiduciary net position as a
percentage of the total OPEB liability
31.81%
Covered employee payroll $31,106
Net OPEB Liability as a percentage of
covered employee payroll 108.61%
1 Under GASB 75, the June 30, 2017 accounting information presented here represents a June 30, 2016 measurement date.
Source: City Financial Statements for the Year Ended June 30, 2017.
Outstanding General Fund Debt and Lease Obligations
The City currently has outstanding General Fund debt and lease obligations described
below. The City has never defaulted on the payment of principal of or interest on any of its
indebtedness. The City has complied with all significant bond covenants relating to reserve and
sinking fund requirements, proofs of insurance, and budgeted revenues and maintenance costs.
2010 Taxable Pension Obligation Bonds. On July 1, 2010, the City issued 2010
Taxable Pension Obligation Bonds in the amount of $4,490,000 bearing interest at rates from
6.00% to 6.25%. The bonds mature on July 1, 2025. As of June 30, 2017, the outstanding
principal amount was $4,390,000.
2012 Authority Lease Revenue Refunding Bonds. On August 7, 2012, the San Rafael
Joint Powers Financing Authority issued 2012 Authority Lease Revenue Refunding Bonds in the
amount of $6,750,000 bearing interest at rates from 2.00% to 4.00%. The bonds mature on April
1, 2033. As of June 30, 2017, the outstanding principal amount was $5,445,000.
2013 Pacific Gas and Electric Note Payable. On September 30, 2013, the City executed
a note payable agreement with Pacific Gas and Electric (“PG&E”) in the amount of $634,861,
bearing no interest. Repayment of the loan commenced in December 2013, and is due monthly
until paid in full in 2023. As of June 30, 2017, the outstanding principal amount was $303,323.
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2018 Pacific Gas and Electric Note Payable. On or about September 5, 2017, the City
executed a note payable agreement with PG&E in the amount of $1,178,813, bearing interest at
1% annually. Disbursement of the loan is expected in July 2019. Repayment of the loan is
expected to commence in December 2020, and is due semiannually until paid in full in December
2027.
Jointly Governed Organizations
The City is a member of a number of joint powers authorities with respect to which the City
is obligated to make annual payments, including debt service payments. See Note 12 to the City’s
June 30, 2017 audited financial statement, which is attached as Appendix C.
Direct and Overlapping Debt
Contained within the City are overlapping local agencies providing public services which
have issued general obligation Certificates and other types of indebtedness. Direct and
overlapping bonded indebtedness is shown in the following table.
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Table 12
CITY OF SAN RAFAEL
Statement of Direct and Overlapping Debt as of February 1, 2018
2017-18 Assessed Valuation: $12,876,193,762
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 2/1/18
Marin Community College District 17.302% $ 53,647,446
San Rafael High School District 78.363 49,588,353
Tamalpais Union High School District 0.080 87,748
Dixie School District 66.114 10,922,568
Ross School District 1.528 281,137
Ross Valley School District 0.012 5,232
San Rafael School District 83.700 53,337,120
Marin Healthcare District 20.813 78,827,156
Marin Emergency Radio Authority Parcel Tax Obligations 17.277 5,701,410
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $252,398,170
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Marin County Certificates of Participation 17.277% $15,184,674
Marin County Pension Obligation Bonds 17.277 15,640,868
Marin County Transit District General Fund Obligations 17.277 15,708
Marin Municipal Water District General Fund Obligations 22.022 16,289
Marin Community College District Certificates of Participation 17.302 418,853
San Rafael School District Certificates of Participation 83.700 2,741,175
City of San Rafael General Fund Obligations 100.000 6,747,916(1)(2)
City of San Rafael Pension Obligation Bonds 100.000 4,185,000
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $44,950,483
Less: City of San Rafael obligations supported by enterprise revenues 5,445,000
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $39,505,483
OVERLAPPING TAX INCREMENT DEBT (Successor Agency): 100.000 % $11,344,004
GROSS COMBINED TOTAL DEBT $308,692,657(3)
NET COMBINED TOTAL DEBT $303,247,657
Ratios to 2017-18 Assessed Valuation:
Total Overlapping Tax and Assessment Debt ....................... 1.96%
Total Gross Direct Debt ($10,932,916) ............................. 0.08%
Total Net Direct Debt ($5,487,916) .................................... 0.04%
Gross Combined Total Debt ................................................ 2.40%
Net Combined Total Debt .................................................... 2.36%
Ratios to Redevelopment Successor Agency Incremental Valuation ($2,831,146,323):
Total Overlapping Tax Increment Debt ................................. 0.40%
(1) Excludes issue to be sold.
(2) Includes city’s share of Marin Emergency Radio Authority refunding revenue bonds.
(3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Source: California Municipal Statistics, Inc.
Investment of City Funds
The City may invest moneys not immediately required for operations in a manner
consistent with the City’s Statement of Investment Policy (the “Investment Policy”).
The Investment Policy. The Investment Policy, adopted by the City Council on August 7,
2017, covers all short-term operating funds and investment activities of the City. These funds are
accounted for in the City’s annual audit report and include the General Fund, Special Revenue
Funds, Debt Service Funds, Capital Project Funds, Enterprise Funds, Internal Funds and
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Fiduciary Funds. The Investment Policy is adopted by resolution of the City Council annually. The
management responsibility for the City’s investment program is delegated annually by the City
Council to the Treasurer pursuant to California Government Code Section 53607. The Treasurer
may delegate the authority to conduct investment transactions and to manage the operation of
the investment portfolio to other specifically authorized staff members.
The Investment Policy establishes five objectives for City investment:
1. Preservation of capital and protection of investment principal.
2. Maintenance of sufficient liquidity to meet anticipated cash flows.
3. Attainment of a market value rate of return.
4. Diversification to avoid incurring unreasonable market risks.
Specific Investment Restrictions. The City is governed by Sections 16429.1, 53600-
53609 and 53630-53686 et seq. of the California Government Code, except that, pursuant to
California Government Code Section 5903(e), proceeds of bonds and any moneys set aside or
pledged to secure payment of bonds may be invested in securities or obligations described in the
ordinance, resolution, indenture, agreement or other instrument providing for the issuance of the
bonds. The City has further restricted the eligible types of securities and transactions to the
following instruments (with further specific restrictions specified in the Investment Policy).
Recent Monthly Report. As of December 31, 2017, the City has invested funds as set
forth in the table below.
Table 13
CITY OF SAN RAFAEL
Investment Portfolio as of December 31, 2017
Portfolio Assets Percentage Return
LAIF $24,343,203 49.8% 1.18%
Cash 95,875 0.2 0.00
Treasury Securities 4,465,904 9.1 1.33
Agency Securities 14,476,033 29.6 1.28
Corporate Notes 4,040,998 8.3 1.34
Municipal 1,455,700 3.0 5.25
Total $ 48,877,714
Weighted Average Yield 1.36%
Source: City of San Rafael.
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Employee Relations and Collective Bargaining
The employee associations that represent City employees are shown below. Pursuant to
the City’s Employee Relations Ordinance and the Meyers-Millias-Brown-Act, the City and the
employee associations negotiate wages, hours and conditions of employment.
Table 14
City of San Rafael
Collective Bargaining Units
Employee Group
Employees
Contract
Expiration Date
Service Employees International Union (SEIU) 134 6/30/2018
San Rafael Police Association (SRPA) (Police) 89 6/30/2018
Police Mid-Management 6 6/30/2018
Firefighters’ Association 65 6/30/2018
Fire Chief Officers’ Association 4 6/30/2018
SEIU – Childcare 46 10/31/2019
Association of Professional Employees (WCE) 10 6/30/2018
Local One – Confidential 9 6/30/2018
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CONSTITUTIONAL AND STATUTORY
LIMITATIONS ON TAXES AND APPROPRIATIONS
The constitutional and statutory provisions discussed in this section have the potential to
affect the ability of the City to levy taxes and spend tax proceeds for operating and other purposes.
Article XIIIA of the State Constitution
Basic Property Tax Levy. On June 6, 1978, California voters approved Proposition 13
("Proposition 13"), which added Article XIIIA to the State Constitution ("Article XIIIA"). Article
XIIIA limits the amount of any ad valorem tax on real property to 1% of the full cash value thereof,
except that additional ad valorem taxes may be levied to pay debt service on (i) indebtedness
approved by the voters prior to July 1, 1978, (ii) (as a result of an amendment to Article XIIIA
approved by State voters on June 3, 1986) on bonded indebtedness for the acquisition or
improvement of real property which has been approved on or after July 1, 1978 by two-thirds of
the voters on such indebtedness (which provided the authority for the issuance of the 2010 Note),
and (iii) (as a result of an amendment to Article XIIIA approved by State voters on November 7,
2000) bonded indebtedness incurred by a school district or community college district for the
construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or
lease of real property for school facilities, approved by 55% of the voters of the district, but only if
certain accountability measures are included in the proposition. Article XIIIA defines full cash
value to mean "the county assessor’s valuation of real property as shown on the 1975-76 tax bill
under full cash value, or thereafter, the appraised value of real property when purchased, newly
constructed, or a change in ownership have occurred after the 1975 assessment". This full cash
value may be increased at a rate not to exceed 2% per year to account for inflation.
Article XIIIA has subsequently been amended to permit reduction of the "full cash value"
base in the event of declining property values caused by damage, destruction or other factors, to
provide that there would be no increase in the "full cash value" base in the event of reconstruction
of property damaged or destroyed in a disaster and in other minor or technical ways.
Legislation Implementing Article XIIIA. Legislation has been enacted and amended a
number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no
longer permitted to levy directly any property tax (except to pay voter-approved indebtedness).
The 1% property tax is automatically levied by the county and distributed according to a formula
among taxing agencies. The formula apportions the tax roughly in proportion to the relative
shares of taxes levied prior to 1979.
Increases of assessed valuation resulting from reappraisals of property due to new
construction, change in ownership or from the annual adjustment not to exceed 2% are allocated
among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such
allocation made to a local agency continues as part of its allocation in future years.
Inflationary Adjustment of Assessed Valuation. As described above, the assessed
value of a property may be increased at a rate not to exceed 2% per year to account for inflation.
On December 27, 2001, the Fresno County Superior Court, in County of Orange v. Fresno County
Assessment Appeals Board No. 3, held that where a home’s taxable value did not increase for
two years, due to a flat real estate market, the Fresno County assessor violated the 2% inflation
adjustment provision of Article XIIIA, when the assessor tried to "recapture" the tax value of the
property by increasing its assessed value by 4% in a single year. The assessors in most California
counties, including the County, use a similar methodology in raising the taxable values of property
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beyond 2% in a single year. The State Board of Equalization has approved this methodology for
increasing assessed values. On appeal, the Appellate Court held that the trial court erred in ruling
that assessments are always limited to no more than 2% of the previous year’s assessment. On
May 10, 2004 a petition for review was filed with the California Supreme Court. The petition has
been denied by the California Supreme Court. As a result of this litigation, the “recapture”
provision described above may continue to be employed in determining the full cash value of
property for property tax purposes.
Article XIIIB of the State Constitution
In addition to the limits Article XIIIA imposes on property taxes that may be collected by
local governments, certain other revenues of the State and most local governments are subject
to an annual “appropriations limit” imposed by Article XIIIB which effectively limits the amount of
such revenues those entities are permitted to spend. Article XIIIB, approved by the voters in June
1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each
government entity applies to “proceeds of taxes,” which consist of tax revenues, State
subventions and certain other funds, including proceeds from regulatory licenses, user charges
or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity
in providing the regulation, product or service.” “Proceeds of taxes” excludes tax refunds and
some benefit payments such as unemployment insurance. No limit is imposed on the
appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or
fees, and certain other non-tax funds. Article XIIIB also does not limit appropriation of local
revenues to pay debt service on Bonds existing or authorized by January 1, 1979, or subsequently
authorized by the voters, appropriations required to comply with mandates of courts or the federal
government, appropriations for qualified capital outlay projects, and appropriation by the State of
revenues derived from any increase in gasoline taxes and motor vehicle weight fees above
January 1, 1990, levels. The appropriations limit may also be exceeded in case of emergency;
however, the appropriations limit for the next three years following such emergency appropriation
must be reduced to the extent by which it was exceeded, unless the emergency arises from civil
disturbance or natural disaster declared by the Governor, and the expenditure is approved by
two-thirds of the legislative body of the local government.
The State and each local government entity has its own appropriations limit. Each year,
the limit is adjusted to allow for changes, if any, in the cost of living, the population of the
jurisdiction, and any transfer to or from another government entity of financial responsibility for
providing services. Proposition 111 requires that each agency’s actual appropriations be tested
against its limit every two years.
If the aggregate “proceeds of taxes” for the preceding two-year period exceeds the
aggregate limit, the excess must be returned to the agency’s taxpayers through tax rate or fee
reductions over the following two years.
The City has never exceeded its appropriations limit.
Articles XIIIC and XIIID of the State Constitution
General. On November 5, 1996, the voters of the State approved Proposition 218, known
as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the California
Constitution and contains a number of interrelated provisions affecting the ability of the City to
levy and collect both existing and future taxes, assessments, fees and charges.
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On November 2, 2010, California voters approved Proposition 26, entitled the
“Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that
Proposition 26 is intended to limit the ability of the State Legislature and local government to
circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as
“fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The
amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as
defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to Article
XIIIC define “taxes” that are subject to voter approval as “any levy, charge, or exaction of any kind
imposed by a local government,” with certain exceptions.
Taxes. Article XIIIC requires that all new local taxes be submitted to the electorate before
they become effective. Taxes for general governmental purposes of the City (“general taxes”)
require a majority vote; taxes for specific purposes (“special taxes”), even if deposited in the City’s
General Fund, require a two-thirds vote.
Property-Related Fees and Charges. Article XIIID also adds several provisions making
it generally more difficult for local agencies to levy and maintain property-related fees, charges,
and assessments for municipal services and programs.
Reduction or Repeal of Taxes, Assessments, Fees and Charges. Article XIIIC also
removes limitations on the initiative power in matters of reducing or repealing local taxes,
assessments, fees or charges. No assurance can be given that the voters of the City will not, in
the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments,
fees or charges currently comprising a substantial part of the City’s General Fund. If such repeal
or reduction occurs, the City’s ability to pay debt service on the 2018 Bonds could be adversely
affected.
Burden of Proof. Article XIIIC provides that local government “bears the burden of
proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax,
that the amount is no more than necessary to cover the reasonable costs of the governmental
activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable
relationship to the payor’s burdens on, or benefits received from, the governmental activity.”
Similarly, Article XIIID provides that in “any legal action contesting the validity of a fee or charge,
the burden shall be on the agency to demonstrate compliance” with Article XIIID.
Judicial Interpretation of Proposition 218. The interpretation and application of Articles
XIIIC and XIIID will ultimately be determined by the courts, and it is not possible at this time to
predict with certainty the outcome of such determination.
Impact on City’s General Fund. The City does not believe that any material source of
General Fund revenue is subject to challenge under Proposition 218 or Proposition 26.
The approval requirements of Articles XIIIC and XIIID reduce the flexibility of the City to
raise revenues for the General Fund, and no assurance can be given that the City will be able to
impose, extend or increase the taxes, fees, charges or taxes in the future that it may need to meet
increased expenditure needs.
Proposition 62
Proposition 62 was adopted by the voters at the November 4, 1986, general election and
(a) requires that any new or higher taxes for general governmental purposes imposed by local
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governmental entities such as the City be approved by a two-thirds vote of the governmental
entity’s legislative body and by a majority vote of the voters of the governmental entity voting in
an election on the tax, (b) requires that any special tax (defined as taxes levied for other than
general governmental purposes) imposed by a local governmental entity be approved by a two-
thirds vote of the voters of the governmental entity voting in an election on the tax, (c) restricts
the use of revenues from a special tax to the purposes or for the service for which the special tax
was imposed, (d) prohibits the imposition of ad valorem taxes on real property by local
governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of
transaction taxes and sales taxes on the sale of real property by local governmental entities, and
(f) requires that any tax imposed by a local governmental entity on or after August 1, 1985, be
ratified by a majority vote of the voters voting in an election on the tax within two years of the
adoption of the initiative or be terminated by November 15, 1988.
California appellate court cases have overturned the provisions of Proposition 62
pertaining to the imposition of taxes for general government purposes. However, the California
Supreme Court upheld Proposition 62 in its decision on August 28, 1995, in Fresno County
Transportation Authority v. Guardino. This decision reaffirmed the constitutionality of
Proposition 62. Certain matters regarding Proposition 62 were not addressed in the Supreme
Court’s decision, such as what remedies exist for taxpayers subject to a tax not in compliance
with Proposition 62, and whether the decision applies to charter cities. The City has not
experienced any substantive adverse financial impact as a result of the passage of this initiative.
Proposition 1A; Proposition 22
Proposition 1A. Proposition 1A, proposed by the Legislature in connection with the
State’s Fiscal Year 2004-05 Budget, approved by the voters in November 2004 and generally
effective in Fiscal Year 2006-07, provided that the State may not reduce any local sales tax rate,
limit existing local government authority to levy a sales tax rate or change the allocation of local
sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibited the State
from shifting to schools or community colleges any share of property tax revenues allocated to
local governments for any Fiscal Year, as set forth under the laws in effect as of November 3,
2004. Any change in the allocation of property tax revenues among local governments within a
county had to be approved by two-thirds of both houses of the Legislature.
Proposition 22. Proposition 22, entitled “The Local Taxpayer, Public Safety and
Transportation Protection Act,” was approved by the voters of the State in November 2010.
Proposition 22 eliminates or reduces the State’s authority to (i) temporarily shift property taxes
from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to
reimburse local governments for State-mandated costs (the State will have to use other revenues
to reimburse local governments), (iii) redirect property tax increment from redevelopment
agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on
State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues.
Possible Future Initiatives
Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 62, 111, 218 and 1A were each
adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From
time to time other initiative measures could be adopted, further affecting revenues of the City or
the City’s ability to expend revenues. The nature and impact of these measures cannot be
anticipated by the City.
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BOND OWNERS’ RISKS
The following describes certain special considerations and risk factors affecting the
payment of and security for the 2018 Bonds. The following discussion is not meant to be an
exhaustive list of the risks associated with the purchase of any 2018 Bonds and does not
necessarily reflect the relative importance of the various risks. Potential investors in the 2018
Bonds are advised to consider the following special factors along with all other information in this
Official Statement in evaluating the 2018 Bonds. There can be no assurance that other
considerations will not materialize in the future.
No Pledge of Taxes
General. The obligation of the City to pay the Lease Payments and Additional Rental
does not constitute an obligation of the City for which the City is obligated to levy or pledge any
form of taxation or for which the City has levied or pledged any form of taxation. The obligation
of the City to pay Lease Payments and Additional Rental does not constitute a debt or
indebtedness of the Authority, the City, the State of California or any of its political subdivisions
within the meaning of any constitutional or statutory debt limitation or restriction.
The City is currently liable on other obligations payable from general revenues, which are
described above under “CITY FINANCIAL INFORMATION – Long-Term General Fund
Obligations.”
Limitations on Taxes and Fees
Limitations on Taxes and Fees. Certain taxes, assessments, fees and charges
presently imposed by the City could be subject to the voter approval requirements of Article XIIIC
and Article XIIID of the State Constitution. Based upon the outcome of an election by the voters,
such fees, charges, assessments and taxes might no longer be permitted to be imposed, or may
be reduced or eliminated and new taxes, assessments fees and charges may not be approved.
The City has assessed the potential impact on its financial condition of the provisions of Article
XIIIC and Article XIIID of the State Constitution respecting the imposition and increase of taxes,
fees, charges and assessments and does not believe that an election by the voters to reduce or
eliminate the imposition of certain existing fees, charges, assessments and taxes would
substantially affect its financial condition. However, the City believes that if the initiative power
was exercised so that all local taxes, assessments, fees and charges that may be subject to
Article XIIIC and Article XIIID of the State Constitution are eliminated or substantially reduced, the
financial condition of the City, including its General Fund, could be materially adversely affected.
Although the City does not currently anticipate that the provisions of Article XIIIC and
Article XIIID of the State Constitution would adversely affect its ability to pay Lease Payments and
its other obligations payable from the General Fund, no assurance can be given regarding the
ultimate interpretation or effect of Article XIIIC and Article XIIID of the State Constitution on the
City’s finances. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND
APPROPRIATIONS.”
Additional Obligations of the City
The City has existing obligations payable from its General Fund. See “CITY FINANCIAL
INFORMATION – Long-Term General Fund Obligations.” The City is permitted to enter into other
obligations which constitute additional charges against its revenues without the consent of
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Owners of the 2018 Bonds. To the extent that additional obligations are incurred by the City, the
funds available to pay Lease Payments may be decreased.
The Lease Payments and other payments due under the Lease (including payment of
costs of repair and maintenance of the Leased Property, taxes and other governmental charges
levied against the Leased Property) are payable from funds lawfully available to the City. If the
amounts that the City is obligated to pay in a fiscal year exceed the City’s revenues for such year,
the City may choose to make some payments rather than making other payments, including
Lease Payments and Additional Rental, based on the perceived needs of the City. The same
result could occur if, because of California Constitutional limits on expenditures, the City is not
permitted to appropriate and spend all of its available revenues or is required to expend available
revenues to preserve the public health, safety and welfare.
Default
Whenever any event of default referred to in the Lease happens and continues, the
Authority is authorized under the terms of the Lease to exercise any and all remedies available
under law or granted under the Lease. See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL
DOCUMENTS” for a detailed description of available remedies in the case of a default under the
Lease.
If a default occurs, there is no remedy of acceleration of the total Lease Payments due
over the term of the Lease. The Trustee is not empowered to sell the Leased Property and use
the proceeds of such sale to prepay the 2018 Bonds or pay debt service on the 2018 Bonds.
The City will be liable only for Lease Payments on an annual basis and, in the event of a
default, the Trustee would be required to seek a separate judgment each year for that year’s
defaulted Lease Payments. Any such suit for money damages would be subject to limitations on
legal remedies against municipalities in the State, including a limitation on enforcement of
judgments against funds of a fiscal year other than the fiscal year in which the Lease Payments
were due and against funds needed to serve the public welfare and interest.
Abatement
Under certain circumstances related to damage, destruction, condemnation or title defects
which cause a substantial interference with the use and possession of the Leased Property, the
City’s obligation to make Lease Payments will be subject to full or partial abatement and could
result in the Trustee having inadequate funds to pay the principal and interest on the 2018 Bonds
as and when due. See “SECURITY FOR THE 2018 BONDS – Abatement” and “APPENDIX B –
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”
Although the City is required under the Lease to maintain property and liability insurance
with respect to the Leased Property, the required insurance coverage is subject to certain
conditions and restrictions. See “SECURITY FOR THE 2018 BONDS – Property Insurance.”
In addition, the Authority is required to use the proceeds of rental interruption insurance
maintained under the Lease to make debt service payments on the 2018 Bonds during any period
of abatement. See “SECURITY FOR THE 2018 BONDS – Property Insurance.” However, there
is no assurance that the Authority will receive proceeds of rental interruption insurance in time to
make debt service payments on the 2018 Bonds when due.
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No Debt Service Reserve Fund
The Authority will not fund a debt service reserve fund for the 2018 Bonds. If Revenues
are insufficient for the Authority to pay debt service on the 2018 Bonds when due, no debt service
reserve will be available under the Indenture for the Authority to make such payments.
Property Taxes
Levy and Collection. The City does not have any independent power to levy and collect
property taxes. Any reduction in the tax rate or the implementation of any constitutional or
legislative property tax decrease could reduce the City’s property tax revenues, and accordingly,
could have an adverse impact on the ability of the City to make Lease Payments. Likewise, if the
Teeter Plan were to be discontinued for the City, delinquencies in the payment of property taxes
could have an adverse effect on the City’s ability to pay principal of and interest on the 2018
Bonds when due.
Reduction in Inflationary Rate. Article XIIIA of the California Constitution provides that
the full cash value base of real property used in determining assessed value may be adjusted
from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year,
or may be reduced to reflect a reduction in the consumer price index or comparable local data.
See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND
APPROPRIATIONS.” Such measure is computed on a calendar year basis. Because Article
XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or
2%, there have been years in which the assessed values were adjusted by actual inflationary
rates, which were less than 2%. Since Article XIIIA was approved, the annual adjustment for
inflation has fallen below the 2% limitation a limited number of times.
The City is unable to predict if any adjustments to the full cash value base of real property
within the City, whether an increase or a reduction, will be realized in the future.
Appeals of Assessed Values. There are two types of appeals of assessed values that
could adversely impact property tax revenues:
Proposition 8 Appeals. Most of the appeals that might be filed in the City would be
based on Section 51 of the Revenue and Taxation Code, which requires that for each lien
date the value of real property must be the lesser of its base year value annually adjusted
by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash
value, taking into account reductions in value due to damage, destruction, depreciation,
obsolescence, removal of property or other factors causing a decline in value.
Under California law, property owners may apply for a reduction of their property
tax assessment by filing a written application, in form prescribed by the State Board of
Equalization, with the appropriate county board of equalization or assessment appeals
board. In most cases, the appeal is filed because the applicant believes that present
market conditions (such as residential home prices) cause the property to be worth less
than its current assessed value. These market-driven appeals are known as Proposition
8 appeals.
Any reduction in the assessment ultimately granted as a Proposition 8 appeal
applies to the year for which application is made and during which the written application
was filed. These reductions are often temporary and are adjusted back to their original
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values when market conditions improve. Once the property has regained its prior value,
adjusted for inflation, it once again is subject to the annual inflationary factor growth rate
allowed under Article XIIIA.
Base Year Appeals. A second type of assessment appeal is called a base year
appeal, where the property owners challenge the original (basis) value of their property.
Appeals for reduction in the “base year” value of an assessment, if successful, reduce the
assessment for the year in which the appeal is taken and prospectively thereafter. The
base year is determined by the completion date of new construction or the date of change
of ownership. Any base year appeal must be made within four years of the change of
ownership or new construction date.
No assurance can be given that property tax appeals in the future will not significantly
reduce the City’s property tax revenues.
Sales Taxes
The Measure E sales and use tax 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;
the tax increase was extended by 12 years on November 8, 2016, when State voter approved
Proposition 55. Voters of the City or the County could also vote to increase sales tax rates. Future
increases, if any, on sales tax rates could have an adverse effect on consumer spending decisions
and consumption, resulting in a reduction of Measure E sales and use tax revenues.
With limited exceptions, the Measure E sales and use tax is imposed upon the same
transactions and items subject to the sales tax levied statewide by the State. 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 and the Measure E sales and use tax are imposed.
In particular, future legislation could limit the type of internet-based transactions subject to the
Measure E sales and use tax. Any such change or limitation could have an adverse impact on
the revenues collected pursuant to the Measure E sales and use tax. In addition, the State could
change its collection procedures and therefore affect the City’s receipt of Measure E sales and
use tax revenues. For a further description of the Measure E sales and use tax, see “CITY
FINANCIAL INFORMATION - Sales Taxes.”
The increasing use of the Internet to conduct electronic commerce may affect the levels
of Measure E sales and use tax receipts. Internet sales of physical products by businesses
located in the State, and Internet sales of physical products delivered to the State by businesses
located outside of the State, are generally subject to the Measure E sales and use tax. It is
possible, however, that some of these transactions may avoid taxation either through error or
deliberate non-reporting, which could potentially reduce the amount of Measure E sales and use
tax revenues.
Limitations on Remedies Available to Bond Owners
The ability of the City to comply with its covenants under the Lease may be adversely
affected by actions and events outside of the control of the City, and may be adversely affected
by actions taken (or not taken) by voters, property owners, taxpayers or payers of assessments,
fees and charges. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND
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APPROPRIATIONS” above. Furthermore, any remedies available to the owners of the 2018
Bonds upon the occurrence of an event of default under the Lease or the Indenture are in many
respects dependent upon judicial actions, which are often subject to discretion and delay and
could prove both expensive and time consuming to obtain.
In addition to the limitations on Bondowner remedies contained in the Lease and the
Indenture, the rights and obligations under the 2018 Bonds, the Lease and the Indenture may be
subject to the following: the United States Bankruptcy Code and applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of
creditors’ rights generally, now or hereafter in effect; equity principles which 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; and the reasonable and necessary
exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the
State and its governmental bodies in the interest of serving a significant and legitimate public
purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government,
if initiated, could subject the Owners of the 2018 Bonds 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.
The opinion to be delivered by Bond Counsel, concurrently with the issuance of the 2018
Bonds, will include a qualification that the rights of the owners of the 2018 Bonds and the
enforceability of the 2018 Bonds and the Indenture, the Lease and the Site Lease may be subject
to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors'
rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion
in accordance with principles of equity or otherwise in appropriate cases. See “APPENDIX D —
PROPOSED FORM OF OPINION OF BOND COUNSEL.”
There is no deed of trust or mortgage securing the 2018 Bonds.
Loss of Tax-Exemption
As discussed under the caption “TAX MATTERS,” interest on the 2018 Bonds could
become includable in gross income for purposes of federal income taxation retroactive to the date
the 2018 Bonds were issued, as a result of future acts or omissions of the Authority or the City in
violation of their respective covenants in the Lease and the Indenture. Should such an event of
taxability occur, the 2018 Bonds are not subject to special redemption and will remain Outstanding
until maturity or until redeemed under other provisions set forth in the Indenture.
Tax Cuts and Jobs Act
H.R. 1 of the 115th U.S. Congress, known as the “Tax Cuts and Jobs Act,” was enacted
into law on December 22, 2017 (Pub. L. No. 115-97, 131 Stat. 2054 (2017)) (the “Tax Act”). The
Tax Act makes significant changes to many aspects of the Code. For example, the Tax Act
reduces the amount of mortgage interest expense and state and local income tax and property
tax expense that individuals may deduct from their gross income for federal income tax purposes,
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which could adversely affect the assessed values of residences in the City. However, the City
cannot predict the effect that the Tax Act may have on its finances.
Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the 2018 Bonds or,
if a secondary market exists, that any 2018 Bonds can be sold for any particular price.
Occasionally, because of general market conditions or because of adverse history or economic
prospects connected with a particular issue, secondary marketing practices in connection with a
particular issue are suspended or terminated. Additionally, prices of issues for which a market is
being made will depend upon then-prevailing circumstances. Such prices could be substantially
different from the original purchase price.
Natural Calamities
General. From time to time, the City has been and could be subject to natural calamities,
including, but not limited to, earthquake, flood or wildfire, that may adversely affect economic
activity in the City, and which could have a negative impact on City finances. There can be no
assurance that the occurrence of any natural calamity would not cause substantial interference
to the Leased Property, or that the City would have insurance or other resources available to
make repairs to the Leased Property in order to make the Lease Payments under the Lease. See
“- Abatement” above.
Seismic. Like most regions in California, the City is in an area of significant seismic
activity. There are numerous earthquake faults near the City, including particularly the San
Andreas and Hayward faults. The San Andreas fault runs along the Marin and Sonoma Coast
through the Santa Cruz Mountains. The Hayward fault covers the hills on the east side of the San
Francisco Bay and into San Pablo Bay, directly north and east of the City. Both can cause
damaging earthquakes. Numerous other faults are capable of producing damaging earthquakes
similar in magnitude to the 1989 Loma Prieta earthquake. Soils in lowland areas away from major
faults may also be unable to support buildings during major earthquakes. Landslides are likely on
hillsides during major earthquakes. Coastal areas are also at risk of tsunamis, generated from
earthquakes on local faults or across the Pacific.
If there were to be an occurrence of severe seismic activity in the City, there could be
substantial damage to and interference with the City’s right to use and occupy all or a portion of
the Leased Property, which could result in Lease Payments being subject to abatement. See “-
Abatement” above. Damage resulting from such an event could have a material adverse effect
on the City’s financial condition as well, through unexpected recovery costs and reduced tax and
other revenues.
The City is not required to obtain earthquake insurance for the Facility. See “SECURITY
FOR THE 2018 BONDS - Property Insurance” above. Also see “THE LEASED PROPERTY” for
information about the construction of the Leased Property.
Flood. Like most of California, the City is subject to unpredictable seasonal rainfall, with
periods of intense and sustained precipitation occurring every few years. The extent of possible
flooding in the City has been analyzed through Federal Emergency Management Agency
(“FEMA”) flood insurance studies. These studies show that inundation due to a 100-year flood (a
flood that has a one percent probability of being equaled or exceeded in any given year) can occur
in the Central San Rafael Basin (southern portions of Downtown San Rafael extending from the
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San Rafael Canal/Creek westward to E Street, south including portions of Gerstle Park; Woodland
Avenue area extending into portions of the Bret Harte neighborhood); Southeast San Rafael (the
Canal neighborhood and greater East San Rafael residential and commercial areas including
Spinnaker Point, Kerner Boulevard, Andersen Drive), San Pedro Peninsula (low-lying residential
neighborhoods north of the San Rafael Canal including Summit Avenue/Marina Vista and Mooring
Road, Loch Lomond Marina and low-lying areas of Peacock Gap); and the Gallinas Creek Basin
(east of U.S. Highway 101). The Leased Property is not located in the 100-year floodplain.
There are numerous water storage tanks in or near the City the failure of which in an
earthquake or other calamity could cause inundation of portions of the City.
Sea Level Rise and Flooding
With frontage on San Francisco Bay, parts of the City are also vulnerable to inundation as
a result in a rise in sea levels. Inundation, and the threat thereof, could have material impacts on
the financial condition of the City. For example, the capital expense to the City of preventing
flooding or adapting to rising sea levels, and even the assessment and study of, and planning and
preparation for, rising sea levels, could run into the many millions of dollars. Inundation due to
rising sea levels could also have a negative impact on the economy of the City generally. The
City could experience the loss of material amounts of property tax, sales tax, transient occupancy
tax and other sources of revenues.
The predictions for sea level rises vary. A report released by the San Francisco Bay
Conservation Development Commission (“BCDC”) in 2011 predicts sea levels in the Bay to rise
16 inches by 2050 and 55 inches by 2100. The State of California’s Fourth Climate Change
Assessment, released in 2017, estimates sea level rise or the year 2100 in the range of 14 inches
to 94 inches (36 cm to 239 cm) with an additional very low probability, worst-case estimate that
exceeds 108 inches (274 cm).
As part of the National Flood Insurance Program (“NFIP”), a federal program that enables
property owners, businesses, and residents in participating communities to purchase flood
insurance backed by the federal government, FEMA has recently revised Flood Insurance Rate
Maps (“FIRMs”) for San Francisco Bay Area communities. FIRMs identify areas that are subject
to inundation during a flood having a 1% chance of occurrence in a given year (also known as a
“base flood” or “100-year flood”). FEMA refers to an area that is at risk from a flood of this
magnitude as a special flood hazard area (“SFHA”). FIRMs also identify areas that are subject
to inundation during a flood having a 0.2% chance of occurrence in a given yea. FEMA refers to
an area that is at risk from a flood of this magnitude as other areas of flood hazard (“OAFH”). The
City participates in the NFIP. On March 24, 2014, FEMA issued a Preliminary FIRM for the City
(the “Preliminary FIRM”). Portions of the City are identified as a SFHA, and other portions of the
City as OAFH. The Preliminary FIRM is available through FEMA’s website at
https://hazards.fema.gov/femaportal/prelimdownload/. FEMA maps coastal flood hazards based
on existing shoreline characteristics, and wave and storm climatology at the time of the flood
study. In accordance with current federal regulations, FEMA does not map flood hazards based
on anticipated future sea levels or climate change.
The portions of the City within the two FEMA flood zones are near or border waterways
and are typically, low-lying, former diked baylands and marshlands. The larger, more significant
flood prone areas include: the Central San Rafael Basin (southern portions of Downtown San
Rafael extending from the San Rafael Canal/Creek westward to E Street, south including portions
of Gerstle Park; Woodland Avenue area extending into portions of the Bret Harte neighborhood);
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Southeast San Rafael (the Canal neighborhood and greater East San Rafael residential and
commercial areas including Spinnaker Point, Kerner Boulevard, Andersen Drive), San Pedro
Peninsula (low-lying residential neighborhoods north of the San Rafael Canal including Summit
Avenue/Marina Vista and Mooring Road, Loch Lomond Marina and low-lying areas of Peacock
Gap); and the Gallinas Creek Basin (east of U.S. Highway 101).
In January 2014, the Department of Community Development of the City released an
informational white paper entitled “Climate Adaptation - Sea Level Rise” (the “White Paper”),
which identifies a number of challenges and proposes possible actions to address the threat to
the City of rising sea levels. The challenges include:
1. Assessment and long-term strategy planning for sea level adaptation cannot be
done in isolation or be “piecemeal” in its approach. Yet there are no jurisdictional boundaries to
the impacts of or planning for sea level rise in the San Francisco Bay.
2. Assessment and planning requires the involvement of multiple agencies. Given the
complexity of this issue assessing and planning requires the participation, coordination and
resources of a number of agencies. Other participating agencies would include, among others,
County of Marin, BCDC, the State Regional Water Quality Control Board, FEMA, and US Army
Corps of Engineers.
3. The number of stakeholders involved and effected is substantial. In the Central
San Rafael Basin alone, there are thousands of property owners and business owners that are
impacted by projected sea level rise, as well as the cost and implications of potential adaptation
solutions. Public outreach and participation is critical.
4. Information on sea level rise continues to evolve which could impact long-range
planning. For example, in the short-term, the long-awaited update of the FEMA FIRM maps will
present new flood zone mapping information that may have broader area impacts and will likely
result in higher insurance costs to effected property owners.
5. San Rafael has diverse shoreline and levee conditions that vary by neighborhood
and area. So, a “one-size-fits-all” approach to long-term adaptation strategies is impossible. While
an area-wide assessment is critical, the assessment must carefully look at and consider localized
conditions and solutions.
6. City resources and funding are limited. At this time, there are no Public Works
Department staff resources, nor is there an earmarked City budget to initiate the preparation of a
vulnerability assessment.
7. Long-term adaptation strategies will require trade -offs. Some of the adaptation
strategies would have environmental implications that may be at-odds with current policies and
priorities. For example, the retreat strategy that converts upland or seasonal marsh to tidal marsh
could significantly impact private property rights, private view loss, and biological resources.
Assessing the trade-offs will require the cooperation of and coordination with the appropriate
stakeholders.
8. Long-term adaptation strategies will be costly. The cost of strategies such as
“barriers” could be staggering. Even the raising of an earthen levee is extremely costly unless fill
material is locally available. Planning the appropriate strategy for an area will need to consider
cost in addition to effectiveness. While federal, state and other agency sources may be available
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to partially fund these strategies, the formation of assessment districts or other taxing measure
will likely be necessary.
The White Paper suggests the following actions to consider and pursue:
1. Prioritize Preparation of a Vulnerability Assessment. The City may choose to
investigate and determine Public Works Department staff resources needed to pursue next steps.
2. Investigate and Pursue Funding Sources for Staffing, Studies and Adaptation. The
City may choose to monitor and pursue funding opportunities such as federal grants.
3. Engage in Countywide and Regional Efforts. The City may choose to identify
County, State, and regional agencies with Bay and shoreline oversight; participate in coordinating
a collective effort, partnership and/or assistance in preparation of a vulnerability assessment.
4. Identify Stakeholders and Initiate Outreach.
5. Continue to Monitor and Participate in Studies and Efforts Underway. These
efforts include monitoring updates to FEMA FIRM Maps; participating in County of Marin Public
Works Department Gallinas Creek Watershed Project; and monitoring and participating in BCDC
Pilot Project for Priority Development Areas (PDA), among others.
6. Complete Tasks to Stay Current on Data and to be Eligible for Funding
Opportunities.
7. Pursue Preparation of a Vulnerability Assessment. Assessment should include
Identify long-term adaptation strategies, and identify tools for planning and localized
implementation including adoption of a Bayfront Corridor zoning overlay or land use designation,
and continued Canal dredging.
8. Commit to Long-Term Implementation and Programming. The City should identify
tools for funding strategy implementation (e.g., including assessment districts or other taxing
measures)
Despite the multiple studies, initiatives and construction described above, it remains
possible that sea-level rise or other impacts of climate change or flooding from a major storm will
affect the City. The City is unable to predict with certainty to what extent they will occur, when
they may occur, and, if any such events occur, whether they will have a material adverse effect
on the financial condition of the City.
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TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San
Francisco, California, Bond Counsel, subject, however, to the qualifications set forth below, under
existing law, the interest on the 2018 Bonds is excluded from gross income for federal income tax
purposes and such interest is not an item of tax preference for purposes of the federal alternative
minimum tax, although, in the case of tax years beginning prior to January 1, 2018, for the purpose
of computing the alternative minimum tax imposed on certain corporations, such interest earned
by a corporation prior to the end of its tax year in 2018 is taken into account in determining certain
income and earnings.
The opinions set forth in the preceding paragraph are subject to the condition that the
Authority and the City comply with all requirements of the Internal Revenue Code of 1986, as
amended (the “Tax Code”) relating to the exclusion from gross income for federal income tax
purposes of interest on obligations such as the 2018 Bonds. The Authority and the City have
made certain representations and covenants in order to comply with each such requirement.
Inaccuracy of those representations, or failure to comply with certain of those covenants, may
cause the inclusion of such interest in gross income for federal income tax purposes, which may
be retroactive to the date of issuance of the 2018 Bonds.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to
the public (excluding bond houses and brokers) at which a 2018 Bond is sold is less than the
amount payable at maturity thereof, then such difference constitutes “original issue discount” for
purposes of federal income taxes and State of California personal income taxes. If the initial
offering price to the public (excluding bond houses and brokers) at which a 2018 Bond is sold is
greater than the amount payable at maturity thereof, then such difference constitutes “original
issue premium” for purposes of federal income taxes and State of California personal income
taxes. De minimis original issue discount and original issue premium are disregarded.
Under the Tax Code, original issue discount is treated as interest excluded from federal
gross income and exempt from State of California personal income taxes to the extent properly
allocable to each owner thereof subject to the limitations described in the first paragraph of this
section. The original issue discount accrues over the term to maturity of the 2018 Bond on the
basis of a constant interest rate compounded on each interest or principal payment date (with
straight-line interpolations between compounding dates). The amount of original issue discount
accruing during each period is added to the adjusted basis of such 2018 Bonds to determine
taxable gain upon disposition (including sale, redemption, or payment on maturity) of such 2018
Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount
in the case of purchasers of the 2018 Bonds who purchase the 2018 Bonds after the initial offering
of a substantial amount of such maturity. Owners of such 2018 Bonds should consult their own
tax advisors with respect to the tax consequences of ownership of 2018 Bonds with original issue
discount, including the treatment of purchasers who do not purchase in the original offering, the
allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued
original issue discount on such 2018 Bonds under the federal individual alternative minimum tax.
Under the Tax Code, original issue premium is amortized on an annual basis over the
term of the 2018 Bond (said term being the shorter of the 2018 Bond’s maturity date or its call
date). The amount of original issue premium amortized each year reduces the adjusted basis of
the owner of the 2018 Bond for purposes of determining taxable gain or loss upon disposition.
The amount of original issue premium on a 2018 Bond is amortized each year over the term to
maturity of the 2018 Bond on the basis of a constant interest rate compounded on each interest
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or principal payment date (with straight-line interpolations between compounding dates).
Amortized 2018 Bond premium is not deductible for federal income tax purposes. Owners of
premium 2018 Bonds, including purchasers who do not purchase in the original offering, should
consult their own tax advisors with respect to State of California personal income tax and federal
income tax consequences of owning such 2018 Bonds.
California Tax Status. In the further opinion of Bond Counsel, interest on the 2018 Bonds
is exempt from California personal income taxes.
Other Tax Considerations. Current and future legislative proposals, if enacted into law,
clarification of the Tax Code or court decisions may cause interest on the Bonds to be subject,
directly or indirectly, to federal income taxation or to be subject to or exempted from state income
taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax
status of such interest. The introduction or enactment of any such legislative proposals,
clarification of the Tax Code or court decisions may also affect the market price for, or
marketability of, the Bonds. It cannot be predicted whether or in what form any such proposal
might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to
enactment.
The opinions expressed by Bond Counsel are based upon existing legislation and
regulations as interpreted by relevant judicial and regulatory authorities as of the date of such
opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or
as to the tax treatment of interest on the Bonds, or as to the consequences of owning or receiving
interest on the Bonds, as of any future date. Prospective purchasers of the Bonds should consult
their own tax advisors regarding any pending or proposed federal or state tax legislation,
regulations or litigation, as to which Bond Counsel expresses no opinion.
Owners of the 2018 Bonds should also be aware that the ownership or disposition of, or
the accrual or receipt of interest on, the 2018 Bonds may have federal or state tax consequences
other than as described above. Other than as expressly described above, Bond Counsel
expresses no opinion regarding other federal or state tax consequences arising with respect to
the 2018 Bonds, the ownership or disposition of the 2018 Bonds, or the amount, accrual or receipt
of interest on, the 2018 Bonds.
CERTAIN LEGAL MATTERS
Jones Hall, A Professional Law Corporation, Bond Counsel, will render an opinion with
respect to the validity of the 2018 Bonds, the form of which is set forth in APPENDIX D.” Certain
legal matters will also be passed upon for the City and the Authority by Jones Hall, as Disclosure
Counsel. Certain legal matters will be passed upon for the City and the Authority by the City
Attorney.
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LITIGATION
To the best knowledge of the City, there is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or other governmental authority
pending and notice of which has been served on and received by the City or, to the knowledge of
the City, threatened against or affecting the City or the assets, properties or operations of the City
which, if determined adversely to the City or its interests, would have a material and adverse
effect upon the consummation of the transactions contemplated by or the validity of the Lease,
the Site Lease or the Indenture, or upon the financial condition, assets, properties or operations
of the City, and the City is not in default with respect to any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or other governmental authority,
which default might have consequences that would materially adversely affect the consummation
of the transactions contemplated by the Lease, the Site Lease or the Indenture, or the financial
conditions, assets, properties or operations of the City, including but not limited to the payment
and performance of the City’s obligations under the Lease.
RATING
S&P Global Ratings, a business unit of Standard & Poor's Financial Services LLC (“S&P”),
has assigned its municipal bond rating of “AA” to the 2018 Bonds.
This rating reflects only the views of S&P, and an explanation of the significance of this
rating, and any outlook assigned to or associated with this rating, should be obtained from S&P.
Generally, a rating agency bases its rating on the information and materials furnished to it
and on investigations, studies and assumptions of its own. The City has provided certain
additional information and materials to the rating agency (some of which does not appear in this
Official Statement).
There is no assurance that this rating will continue for any given period of time or that this
rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment
of the rating agency, circumstances so warrant. Any such downward revision or withdrawal of
any rating on the 2018 Bonds may have an adverse effect on the market price or marketability of
the 2018 Bonds.
CONTINUING DISCLOSURE
The City (on behalf of the Authority and itself) will covenant for the benefit of owners of
the 2018 Bonds to provide certain financial information and operating data relating to the City (the
“Annual Report”), by not later than nine months after the end of the City's fiscal year (presently
June 30) and commencing April 1, 2018 with the report for the fiscal year ending June 30, 2017,
and to provide notices of the occurrence of certain listed events.
These covenants have been made in order to assist the purchaser of the 2018 Bonds in
complying with Securities Exchange Commission Rule 15c2-12(b)(5), as amended (the “Rule”).
The specific nature of the information to be contained in the Annual Report or the notices of listed
events is set forth in “APPENDIX E — FORM OF CONTINUING DISCLOSURE CERTIFICATE.”
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The City and certain related entities, previously entered into certain disclosure
undertakings under the Rule in connection with the issuance of long-term obligations. In
connection with the preparation of this Official Statement, the City caused a review of filings
available on the EMMA internet site maintained by the Municipal Securities Rulemaking Board
covering the prior five years to be performed. Based on such review, the City believes that neither
it nor its related entities have failed to comply in any material respect during the past five years
with their prior continuing disclosure undertakings under the Rule. However, on January 17, 2018,
Moody’s Investors Service announced the downgrade of the insured financial strength rating of
National Public Finance Guarantee Corporation (“NPFGC”) to Baa2 from A3. The City, as the
successor agency to the San Rafael Redevelopment Agency, has undertaken to provide notices
of certain material events, including rating changes, promptly upon obtaining knowledge thereof,
in connection with its Central San Rafael Redevelopment Project Tax Allocation Refunding
Bonds, Series 2002, insured by NPFGC. The City learned of such downgrade on February 13,
2018, and filed a notice thereof on the same date.
Willdan Financial Services will serve as the initial dissemination agent with respect to the
City’s undertaking pursuant to the Rule with respect to the 2018 Bonds.
In addition, in connection with the designation of the Bonds as “Green Bonds,” the City
has agreed to file periodic updates regarding the expenditure of Bond proceeds on capital projects
with the EMMA system. See APPENDIX G. These filings may, but need not, be included in the
City’s Annual Report.
MUNICIPAL ADVISOR
The City and the Authority have retained PFM Financial Advisors LLC, San Francisco,
California, as municipal advisor (the “Municipal Advisor”) in connection with the offering of the
2018 Bonds and the preparation of this Official Statement. The Municipal Advisor assisted in the
preparation and review of this Official Statement. All financial and other information presented in
this Official Statement has been provided by the City and the Authority from their records, except
for information expressly attributed to other sources. The Municipal Advisor takes no
responsibility for the accuracy or completeness of the data provided by the City, the Authority or
others and has not undertaken to make an independent verification or does not assume
responsibility for the accuracy, completeness, or fairness of the information contained in this
Official Statement.
UNDERWRITING
Raymond James & Associates, Inc. (the “Underwriter”), has entered into a bond purchase
agreement with the Authority and City under which the Underwriter will purchase the 2018 Bonds
at a price of $_________ (equal to the par amount of the 2017 Bonds, plus/less a [net] original
issue [premium/discount] of $___________, and less an Underwriter’s discount of
$___________).
The Underwriter will be obligated to take and pay for all of the 2018 Bonds if any are taken.
The Underwriter intends to offer the 2018 Bonds to the public at the offering prices set forth on
the inside cover page of this Official Statement. After the initial public offering, the public offering
price may be varied from time to time by the Underwriter.
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PROFESSIONAL SERVICES
In connection with the issuance of the 2018 Bonds, fees payable to the following
professionals involved in the offering are contingent upon the issuance and delivery of the 2018
Bonds: Jones Hall, A Professional Law Corporation, as Bond Counsel and Disclosure Counsel;
Quint & Thimmig LLP, Larkspur, California, as Underwriter’s counsel; PFM Financial Advisors
LLC, as municipal advisor to the Authority and the City; and MUFG Union Bank, N.A., as Trustee.
EXECUTION
The execution of this Official Statement and its delivery have been authorized by the Board
of the Authority and the City Council of the City.
SAN RAFAEL JOINT POWERS FINANCING
AUTHORITY
By:
Executive Director
CITY OF SAN RAFAEL
By:
City Manager
[THIS PAGE INTENTIONALLY LEFT BLANK]
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APPENDIX A
GENERAL INFORMATION ABOUT THE CITY OF SAN RAFAEL
AND THE COUNTY OF MARIN
The following information concerning the City of San Rafael (the “City”) and the County
of Marin (the “County”) is included only for the purpose of supplying general information
regarding the region. The 2018 Bonds are not a debt of the City, the County, the State of California
(the “State”) or any of its political subdivisions (other than the Authority), and none of the City, the
County, the State or any of its political subdivisions (other than the Authority) is liable therefor.
General
The City. The City is located 17 miles north of San Francisco in Marin County. Located
along the shores of the San Francisco Bay, the City enjoys a mild climate year-round. As the
County seat, the City is considered the trade, financial and industrial leader of the County. The
City currently has an area of 22 square miles which includes 17 square miles of land and five
square miles of water and tide lands. In addition to the City’s cultural, park and recreational
resources, there are other nearby attractions including Muir Woods, five State parks, San
Francisco and its surrounding areas, Oakland and the Napa Valley wine country.
The County. The County was one of the original counties of California, created in 1850
at the time of statehood. The County has a total area of 828 miles and, as of January 1, 2017, a
population of approximately 263,604. Geographically, the County forms a large, southward-facing
peninsula, with the Pacific Ocean to the west, San Pablo Bay and San Francisco Bay to the east
and, across the Golden Gate, the city of San Francisco to the south. Marin County’s northern
border is with Sonoma County. Most of the County’s population resides on the eastern side, with
a string of communities running along the Bay, from Sausalito to Tiburon to San Rafael to Corte
Madera. The interior contains large areas of agricultural and open space; West Marin, through
which California State Route 1 runs alongside the California coast, contains many small
unincorporated communities dependent on agriculture and tourism for their economies.
A-2
Population
The following table lists population estimates for the City and County for the last five
calendar years, as of January 1.
MARIN COUNTY
Population Estimates
Calendar Years 2013 through 2017
2013 2014 2015 2016 2017
Belvedere 2,120 2,141 2,157 2,173 2,172
Corte Madera 9,306 9,397 9,434 9,480 9,486
Fairfax 7,438 7,496 7,525 7,560 7,571
Larkspur 12,123 12,258 12,426 12,551 12,572
Mill Valley 14,474 14,677 14,796 14,887 14,910
Novato 53,341 54,037 54,365 54,466 54,522
Ross 2,480 2,508 2,526 2,541 2,543
San Anselmo 12,625 12,776 12,862 12,929 12,937
San Rafael 59,329 60,058 60,442 60,692 60,842
Sausalito 7,118 7,202 7,274 7,314 7,327
Tiburon 9,260 9,381 9,453 9,497 9,508
Balance of County 67,806 68,623 69,045 69,060 69,214
Marin County Total 257,420 260,554 262,305 263,150 263,604
Source: State of California, Department of Finance, Demographic Research.
Employment
The City’s major employers are set forth below:
CITY OF SAN RAFAEL
Major Employers
(As of June 30, 2017)
Employer Employees
Kaiser Permanente 2,061
BioMarin 773
Autodesk Inc. 719
San Rafael City Schools 700
Dominican University of California 456
City of San Rafael 454
Wells Fargo Bank 310
Bradley Real Estate 280
Community Action Marin 255
Buckelew Programs 240
Total 5,475
Source: City of Ran Rafael.
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The County’s major employers are set forth below in alphabetized order.
COUNTY OF MARIN
Major Employers
(As of January 2018)
Employer Name Location Industry
Autodesk Inc San Rafael Computer Programming Services
Bio Marin Pharmaceutical San Rafael Laboratories-Research & Development
Bradley Real Estate Belvedere Tibrn Real Estate
Cagwin & Dorward Landscape Novato Landscape Contractors
California Alpine Club Mill Valley Clubs
College of Marin Kentfield Schools-Universities & Colleges Academic
Community Action Marin San Rafael Non-Profit Organizations
Corrections Dept San Quentin Government Offices-State
Extreme Pizza San Rafael Restaurant Management
Glassdoor Inc Mill Valley Website Hosting
Kaiser Foundation Hospital Novato Hospitals
Kaiser Permanente Sn Rafael MD San Rafael Hospitals
Kreines & Kreines Inc Belvedere Tibrn Environmental & Ecological Services
Macy's Corte Madera Department Stores
Managed Health Network Inc San Rafael Mental Health Services
Marin General Hospital Greenbrae Hospitals
Marin Independent Journal San Rafael Newspapers (Publishers/Mfrs)
Nordstrom Corte Madera Department Stores
Nordstrom Restaurant Corte Madera Restaurants-Cyber Cafes
Rh Corte Madera Furniture-Dealers-Retail
San Rafael Human Resources San Rafael Government Offices-City, Village & Twp
Sutter Care At Home Novato Hospices
Township Building Svc Inc Novato Janitor Service
University of Ca Co-Op Ext Novato Schools-Universities & Colleges Academic
Westamerica Bancorporation San Rafael Holding Companies (Bank)
Source: California Employment Development Department, extracted from The America’s Labor Market Information
System (ALMIS) Employer Database, 2018 1st Edition.
A-4
The unemployment rate in the County was 2.3% in December 2017, up from a revised
2.2% in November 2017, and below the year-ago estimate of 2.9%. This compares with an
unadjusted unemployment rate of 4.2% for California and 3.9% for the nation during the same
period.
The following table shows civilian labor force data and wage and salary employment data
for Marin County for the years 2012 through 2016.
SAN RAFAEL METROPOLITAN DIVISION
(Marin County)
Annual Average Civilian Labor Force, Employment and Unemployment,
Employment by Industry
(March 2016 Benchmark)
2012 2013 2014 2015 2016
Civilian Labor Force (1) 136,900 138,400 139,100 139,500 141,100
Employment 128,300 131,200 133,100 134,600 136,500
Unemployment 8,600 7,100 5,900 4,900 4,600
Unemployment Rate 6.3% 5.2% 4.3% 3.5% 3.2%
Wage and Salary Employment: (2)
Agriculture 400 400 400 300 300
Mining and Logging 100 0 0 0 0
Construction 5,200 5,700 6,100 6,500 6,700
Manufacturing 2,400 2,900 3,500 4,000 4,500
Wholesale Trade 2,600 2,700 2,800 3,000 3,000
Retail Trade 13,600 13,900 14,300 14,200 14,400
Trans., Warehousing, Utilities 1,100 1,200 1,300 1,200 1,200
Information 2,800 2,800 2,600 2,600 2,600
Financial Activities 7,200 7,300 6,800 6,400 6,300
Professional and Business Services 18,600 18,700 18,200 18,300 18,500
Educational and Health Services 18,500 19,400 19,700 20,100 20,600
Leisure and Hospitality 13,200 14,400 15,100 15,400 16,000
Other Services 5,000 5,200 5,200 5,200 5,400
Federal Government 800 800 700 700 700
State Government 2,000 1,900 1,800 1,900 2,000
Local Government 12,700 12,700 12,900 12,800 12,900
Total All Industries (3) 106,200 110,000 111,300 112,600 115,100
(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic
workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic
workers, and workers on strike.
(3) Totals may not add due to rounding.
Source: State of California Employment Development Department.
A-5
Construction Activity
Provided below are the building permits and valuations for the City and the County for
calendar years 2012 through 2016.
CITY OF SAN RAFAEL
Total Building Permit Valuations
Calendar Years 2012 through 2016
(dollars in thousands)
2012 2013 2014 2015 2016
Permit Valuation
New Single-family $195.0 $2,640.7 $767.2 $20,904.6 $6,838.8
New Multi-family 0.0 0.0 3,612.8 0.0 5,890.7
Res. Alterations/Additions 12,469.7 23,587.5 34,216.4 30,875.9 26,167.0
Total Residential 12,664.7 26,228.2 38,596.4 51,780.5 38,896.5
New Commercial 25,264.0 814.8 53,946.5 417.5 2,120.7
New Industrial 0.0 0.0 0.0 0.0 0.0
New Other 0.0 152.4 81.7 366.0 15,891.0
Com. Alterations/Additions 11,762.2 32,361.1 39,257.1 51,772.4 19,382.7
Total Nonresidential 37,026.2 33,328.3 93,285.3 52,555.9 37,394.4
New Dwelling Units
Single Family 2 4 1 38 9
Multiple Family 0 0 45 0 15
TOTAL 2 4 46 38 24
Source: Construction Industry Research Board, Building Permit Summary
MARIN COUNTY
Total Building Permit Valuations
Calendar Years 2012 through 2016
(dollars in thousands)
2012 2013 2014 2015 2016
Permit Valuation
New Single-family $36,152.7 $59,423.2 $71,460.1 $75,834.5 $62,804.2
New Multi-family 4,927.5 33,397.4 14,069.1 2,426.4 7,869.8
Res. Alterations/Additions 132,762.3 152,065.1 203,375.3 203,754.7 194,743.0
Total Residential 173,842.5 244,885.7 288,904.5 282,015.6
New Commercial 26,262.6 76,204.6 10,439.6 17,564.0
New Industrial 2,124.0 154.9 0.0 0.0 0.0
New Other 11,275.0 15,072.2 24,104.2 42,614.2 54,015.5
Com. Alterations/Additions 243,054.4 93,745.8 85,972.9 497,343.6 69,437.8
Total Nonresidential 304,555.9 135,235.5 186,281.7 550,397.4 141,017.3
New Dwelling Units
Single Family 67 90 112 121 89
Multiple Family 50 212 76 20 17
TOTAL 117 302 188 141 106
Source: Construction Industry Research Board, Building Permit Summary
A-6
Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax
payments, a number often referred to as “disposable” or “after-tax” income. Personal income is
the aggregate of wages and salaries, other labor-related income (such as employer contributions
to private pension funds), proprietor’s income, rental income (which includes imputed rental
income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest
income from all sources, and transfer payments (such as pensions and welfare assistance).
Deducted from this total are personal taxes (federal, state and local), nontax payments (fines,
fees, penalties, etc.) and personal contributions to social insurance. According to U.S.
government definitions, the resultant figure is commonly known as “disposable personal income.”
The following table summarizes the total effective buying income for the City, the County,
the State and the United States for the period 2012 through 2016:
CITY OF SAN RAFAEL
Effective Buying Income
2012 through 2016
Year
Area
Total Effective
Buying Income
(000’s Omitted)
Median
Household
Effective Buying
Income
2012 City of San Rafael $2,060,978 $57,110
Marin County 11,615,363 69,129
California 864,088,828 47,307
United States 6,737,867,730 41,358
2013 City of San Rafael $1,789,048 $48,994
Marin County 10,035,970 61,675
California 858,676,636 48,340
United States 6,982,757,379 43,715
2014 City of San Rafael $2,219,178 $63,367
Marin County 11,636,360 74,420
California 901,189,699 50,072
United States 7,357,153,421 45,448
2015 City of San Rafael $2,412,075 $67,267
Marin County 12,751,873 80,192
California 981,231,666 53,589
United States 7,757,960,399 46,738
2016 City of San Rafael $2,519,848 $67,355
Marin County 13,506,516 80,608
California 1,036,142,723 55,681
United States 8,132,748,136 48,043
Source: The Nielsen Company (US), Inc.
A-7
Commercial Activity
Summaries of historic taxable sales within the City and the County during the past five years
in which data is available are shown in the following tables. Annual figures are not yet available for
calendar year 2016 or 2017.
Total taxable sales during the first three quarters of calendar year 2016 in the City were
reported to be $1.311 billion, a 0.22% decrease over the total taxable sales of $1.314 billion
reported during the first three quarters of calendar year 2015.
CITY OF SAN RAFAEL
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2011 1,584 $1,151,941 2,713 $1,431,727
2012 1,696 1,234,514 2,805 1,532,832
2013 1,793 1,336,922 2,920 1,660,492
2014 1,765 1,407,601 2,884 1,751,753
2015(1) 1,744 1,426,578 3,079 1,777,942
(1) Permit figures for calendar year 2015 are not comparable to that of prior years due to outlet counts in these reports
including the number of outlets that were active during the reporting period. Retailers that operate part-time are now
tabulated with store retailers.
Source: California Department of Tax and Fee Administration, Taxable Sales in California (Sales & Use Tax).
Total taxable sales reported during the first three quarters of calendar year 2016 in the
County were $3.714 billion, a 0.85% increase over the total taxable sales of $3.683 billion reported
during the first three quarters of calendar year 2015.
COUNTY OF MARIN
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2011 5,993 $3,134,270 9,906 $4,049,869
2012 6,207 3,357,884 10,057 4,333,600
2013 6,550 3,605,108 10,414 4,664,920
2014 6,457 3,745,315 10,272 4,861,801
2015(1) 4,836 3,836,153 10,958 5,046,316
(1) Permit figures for calendar year 2015 are not comparable to that of prior years due to outlet counts in these reports
including the number of outlets that were active during the reporting period. Retailers that operate part-time are now
tabulated with store retailers.
Source: California Department of Tax and Fee Administration, Taxable Sales in California (Sales & Use Tax).
A-8
Transportation
The County's transportation facilities are excellent, with U.S. Highway 101 and U.S.
Interstate Highway 580 providing easy access to the rest of California. Buses provide commuter
service to San Francisco and other Bay Area cities, and commuter ferries embark for San
Francisco from the communities of Sausalito, Tiburon, and Larkspur. The San Francisco
International Airport, located 30 miles from the City, provides air passenger service to points
worldwide. Sonoma-Marin Area Transit (SMART), which is a new passenger rail service in
Sonoma and Marin Counties, officially opened on August 25, 2017.
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APPENDIX B
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
The following is a brief summary of the provisions of the Site Lease, Lease Agreement
and the Indenture of Trust relating to the Bonds. Such summary is not intended to be definitive,
and reference is made to the complete documents for the complete terms thereof.
DEFINITIONS
Except as otherwise defined in this summary, the terms previously defined in this Official
Statement have the respective meanings previously given. In addition, the following terms have
the following meanings when used in this summary:
“Additional Rental Payments” means the amounts of additional rental which are payable
by the City under the Lease Agreement.
“Bond Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any other
attorney or firm of attorneys appointed by or acceptable to the Authority of nationally-recognized
experience in the issuance of obligations the interest on which is excludable from gross income
for federal income tax purposes under the Tax Code.
“Bond Fund” means the fund by that name established and held by the Trustee under
the Indenture.
“Bond Year” means each twelve-month period extending from June 2 in one calendar
year to June 1 of the succeeding calendar year, both dates inclusive; except that the first Bond
Year commences on the Closing Date and extends to and including June 1, 2018.
“Closing Date” means the date of original issuance of the Bonds.
“Defeasance Securities” means securities described in clause (o) of the definition of
Permitted Investments.
“Fiscal Year” means any twelve-month period extending from July 1 in one calendar
year to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-
month period selected and designated by the Authority as its official fiscal year period.
“Lease Payment Date” means, with respect to any Interest Payment Date, the Business
Day immediately preceding such Interest Payment Date.
“Lease Payments” means the amounts payable by the City under the Lease Agreement
as rental for the Leased Property, including any prepayment thereof and including any amounts
payable upon a delinquency in the payment thereof, but excluding Additional Rental Payments.
“Leased Property” means the real property described in Appendix A to the Lease,
together with all improvements and facilities at any time situated thereon.
B-2
“Net Proceeds” means amounts derived from any policy of casualty insurance or title
insurance with respect to the Leased Property, or the proceeds of any taking of the Leased
Property or portion thereof in eminent domain proceedings (including sale under threat of such
proceedings), to the extent remaining after payment therefrom of all expenses incurred in the
collection and administration thereof.
“Owner”, when used with respect to any Bond, means the person in whose name the
ownership of such Bond is registered on the Bond registration books of the Trustee.
“Permitted Encumbrances” means, as of any time: (a) liens for general ad valorem taxes
and assessments, if any, not then delinquent, or which the City may permit to remain unpaid
under Article V of the Lease; (b) the Site Lease, the Lease and the Assignment Agreement; (c)
any right or claim of any mechanic, laborer, material man, supplier or vendor not filed or
perfected in the manner prescribed by law; (d) the exceptions disclosed in the title insurance
policy with respect to the Leased Property issued as of the Closing Date by Stewart Title
Guaranty Company; and (e) easements, rights of way, mineral rights, drilling rights and other
rights, reservations, covenants, conditions or restrictions which exist of record and which the
City certifies in writing will not materially impair the use of the Leased Property for its intended
purposes.
“Permitted Investments” means any of the following:
(a) U.S. Treasury obligations, and obligations the principal and interest of
which are backed or guaranteed by the full faith and credit of the U.S.
Government.
(b) Debt obligations, participations or other instruments issued or fully
guaranteed by any U.S. Federal agency, instrumentality, corporation, or
government-sponsored enterprise (GSE).
(c) U.S. dollar denominated debt obligations of a multilateral organization of
governments for which the United States government is a participant,
shareholder, and/or voting member with minimum ratings of AA-/Aa3 (or
the equivalent) or A-1/P-1 (or the equivalent) by any one rating agency,
including but not limited to: the Inter-American Development Bank,
International Bank for Reconstruction & Development, African Development
Bank, Asian Development Bank, and the International Finance Corporation.
(d) Interest-bearing deposit accounts (including certificates of deposit placed
by a third party pursuant to a separate agreement between the Authority
and the Trustee), time deposits, bank deposit products, trust funds, trust
accounts, interest bearing deposits, overnight bank deposits or interest
bearing money market accounts in federal or State chartered savings and
loan associations or in federal or State of California banks (including the
Trustee or any of its affiliates), provided that: (i) the unsecured obligations
of such commercial bank or savings and loan association are rated A or
better by S&P; or (ii) such deposits are fully insured by the Federal Deposit
Insurance Corporation or secured at all times by collateral described in (a)
or (b) above.
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(e) Negotiable bank certificates of deposit, deposit notes or other deposit
obligations issued by a nationally or state chartered bank, credit union or
savings association, or by a federally or state-licensed branch of a foreign
bank or financial institution with minimum ratings of A-/A3 (or the
equivalent) or A-1/P-1 (or the equivalent) by any one rating agency.
(f) U.S. dollar denominated commercial paper rated “A-1+” or better by S&P.
(g) Federal funds or bankers acceptances with a maximum term of one year of
any bank which an unsecured, uninsured and unguaranteed obligation
rating of “A-1+” or better by S&P.
(h) Money market mutual 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 at least AAAm-G,
AAAm or AAm, which funds may include funds for which the Trustee, its
affiliates, parent or subsidiaries provide investment advisory, custodial,
transfer agency or other management services, and for which they receive
and retain a fee for such services. Money market funds permitted under this
paragraph shall not include funds with a floating net asset value.
(i) Obligations the interest on which is excludable from gross income pursuant
to Section 103 of the Tax Code and which are either (a) rated A or better by
S&P, or (b) fully secured as to the payment of principal and interest by
Permitted Investments described in clauses (a) or (b).
(j) Obligations issued by any corporation organized and operating within the
United States of America, which obligations are rated A or better by S&P.
(k) Bonds or notes issued by any state or municipality which are rated A or
better by S&P.
(l) Any investment agreement with, or guaranteed by, a financial institution the
long-term unsecured obligations or the claims paying ability of which are
rated A or better by S&P at the time of initial investment, by the terms of
which all amounts invested thereunder are required to be withdrawn and
paid to the Trustee in the event either of such ratings at any time falls below
A.
(m) The Local Agency Investment Fund of the State of California, created
pursuant to Section 16429.1 of the California Government Code, to the
extent the Trustee is authorized to register such investment in its name.
(n) The California Asset Management Program.
(o) Defeasance securities include (i) U.S. Treasury obligations and obligations
guaranteed by the U.S. Government, including but not limited to: Treasury
bills, bonds, notes, and STRIPS; Resolution Funding Corporation
(“REFCORP”) Interest STRIPS; and United States Agency for International
Development (“US AID”) guaranteed notes (including stripped securities)
provided that any US AID security shall mature at least 5 business days
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prior to any cash flow or escrow requirement and (ii) non-callable senior
debt obligations, participations, or other instruments issued or fully
guaranteed by any U.S. Federal agency, instrumentality, corporation, or
government-sponsored enterprise, including but not limited to: Fannie Mae,
Freddie Mac, the Federal Home Loan Banks, the Federal Farm Credit
System, Tennessee Valley Authority, and Resolution Funding Corporation.
Interest and principal strips are eligible investments provided that the
securities are stripped from non-callable senior debt obligations,
participations, or other instruments as described above in this section (b).
“Project” means the acquisition and construction of certain public safety improvements
consisting generally of a new public safety center and two replacement fire stations.
“Record Date” means, with respect to any Interest Payment Date, the 15th calendar day
of the month preceding such Interest Payment Date, whether or not such day is a Business
Day.
“Revenues” means: (a) all amounts received by the Authority or the Trustee under or
with respect to the Lease Agreement, including, without limiting the generality of the foregoing,
all of the Lease Payments (including both timely and delinquent payments, any late charges,
and whether paid from any source), but excluding (i) any amounts payable by the City under the
Lease Agreement in respect of additional debt, and (ii) any Additional Rental Payments; and (b)
all interest, profits or other income derived from the investment of amounts in any fund or
account established under the Indenture.
“Site Lease Payment” means the amount of up-front rent which is payable under the Site
Lease in consideration of the lease of the Leased Property by the City to the Authority
thereunder.
“S&P” means S&P Global Ratings, a business unit of Standard & Poor’s Financial
Services LLC business, its successors and assigns.
“Tax Code” means the Internal Revenue Code of 1986 as in effect on the Closing Date
or as it may be amended to apply to obligations issued on the Closing Date, together with
applicable temporary and final regulations promulgated, and applicable official public guidance
published, under said Code.
“Trustee” means MUFG Union Bank, N.A., a national banking association organized and
existing under the laws of United States of America, or its successor or successors, as Trustee
under the Indenture as provided the Indenture.
SITE LEASE
Under the Site Lease, the City agrees to lease the Leased Property to the Authority in
consideration of the payment by the Authority of the Site Lease Payment on the Closing Date.
The Authority agrees to cause the full amount of the Site Lease Payment to be raised from the
proceeds of the Bonds, and to cause the Site Lease Payment to be deposited with the Trustee
in accordance with the Indenture for the purpose of financing the acquisition and construction of
the Project. No further rent payment is due by the Authority for the lease of the Leased Property
under the Site Lease. The Site Lease is for a term commencing on the Closing Date and
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extending to the date on which no Bonds remain outstanding under the Indenture, but not later
than ten years following the final stated maturity date of the Bonds. In the event of any release
or substitution of property under the Lease Agreement as described below, the description of
the property leased under the Site Lease will be modified accordingly.
LEASE AGREEMENT
Lease of Leased Property; Term
Under the Lease Agreement, the Authority leases the Leased Property back to the City.
The Lease Agreement is for a term commencing on the Closing Date and extending to the date
on which no Bonds remain outstanding under the Indenture, but not later than ten years
following the final stated maturity date of the Bonds.
Lease Payments
The City agrees to pay semiannual Lease Payments, subject to abatement as described
below, as the rental for the use and occupancy of the Leased Property. On each Lease
Payment Date, the City is obligated to deposit with the Trustee the full amount of the Lease
Payments coming due and payable on the next Interest Payment Date, to the extent required to
be paid by the City under the Lease Agreement. Any amount held in the Bond Fund, the
Interest Account or the Principal Account on any Lease Payment Date (other than amounts
specifically required to be credited to the prepayment of Lease Payments), will be credited
towards the Lease Payment then coming due and payable.
Source of Payments
The Lease Payments are payable from any source of available funds of the City, subject
to the provisions of the Lease Agreement relating to abatement.
Budget and Appropriation
The City covenants to take all actions required to include the Lease Payments in each of
its budgets during the Term of the Lease Agreement and to make the necessary appropriations
for all Lease Payments and Additional Rental Payments. Such covenant constitutes a duty
imposed by law and each and every public official of the City is required to take all actions
required by law in the performance of the official duty of such officials to enable the City to carry
out and perform the covenants and agreements in the Lease Agreement agreed to be carried
out and performed by the City.
Abatement of Lease Payments
The Lease Payments will be abated under the Lease Agreement during any period in
which there is substantial interference with the City’s use and occupancy of all or any portion of
the Leased Property, including interference due to: (a) damage or destruction of the Leased
Property in whole or in part or (b) eminent domain proceedings with respect to the Leased
Property or any portion thereof.
The amount of such abatement is required to be an amount determined by the City, such
that the resulting Lease Payments represent fair consideration for the use and occupancy of the
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remaining usable portions of the Leased Property. In the event of such abatement, the City will
have no obligation to pay abated Lease Payments and there is no remedy available to the
Trustee or the Bond Owners arising from such abatement. Notwithstanding the foregoing, there
will be no abatement of Lease Payments to the extent that Net Proceeds are available to pay
Lease Payments which would otherwise be abated under the Lease, such proceeds being
constituted a special fund for the payment of the Lease Payments.
Option to Prepay
The City has the option to prepay the principal components of the Lease Payments in
whole, or in part in any integral multiple of $5,000, from any source of legally available funds, on
any Interest Payment Date on which the Bonds are subject to optional redemption, at a
prepayment price equal to the aggregate principal components of the Lease Payments to be
prepaid, together with the interest component of the Lease Payment required to be paid on such
Interest Payment Date, and together with a prepayment premium equal to the premium (if any)
required to be paid on the resulting redemption of Bonds under the Indenture.
Security Deposit
Notwithstanding any other provision of the Lease, the City may on any date secure the
payment of the Lease Payments allocable to the Leased Property in whole or in part by
depositing with the Trustee an amount of cash which, together with other available amounts on
deposit in the funds and accounts established under the Indenture, is either:
(a) sufficient to pay such Lease Payments, including the principal and interest
components thereof, in accordance with the Lease Payment schedule set
forth in the Lease Agreement, or
(b) invested in whole or in part in non-callable Federal Securities in such
amount as will, in the opinion of an independent certified public accountant,
(which opinion must be addressed and delivered to the Trustee), together
with interest to accrue thereon and together with any cash which is so
deposited, be fully sufficient to pay such Lease Payments when due under
the Lease Agreement, as the City instructs at the time of said deposit.
If the City makes a security deposit under the Lease Agreement with respect to all
unpaid Lease Payments, and notwithstanding the provisions of the Lease Agreement, (a) the
Term of the Lease will continue, (b) all obligations of the City under the Lease, and all security
provided by the Lease for said Lease Payments, will thereupon cease and terminate, excepting
only the obligation of the City to make, or cause to be made all of said Lease Payments from
such security deposit, and (c) under the Lease Agreement, title to the Leased Property will vest
in the City on the date of said deposit automatically and without further action by the City or the
Authority. Said security deposit constitutes a special fund for the payment of Lease Payments
in accordance with the provisions of the Lease.
Substitution of Property
The City has the option at any time and from time to time during the term of the Lease
Agreement to substitute other land, facilities or improvements (the “Substitute Property”) for the
Leased Property or portion thereof (the “Former Property”) provided that the City must satisfy all
of the requirements set forth in the Lease Agreement, including the following:
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(a) No Event of Default has occurred and is continuing.
(b) The City has filed with the Authority and the Trustee, and caused to be
recorded in the office of the Marin County Recorder sufficient
memorialization of, an amendment to the Lease Agreement which that the
legal description of the Substitute Property to the Lease Agreement and
deletes therefrom the legal description of the Former Property, and has
filed and caused to be recorded corresponding amendments to the Site
Lease and Assignment Agreement.
(c) The City has obtained a CLTA policy of title insurance insuring the City’s
leasehold estate in the Substitute Property, subject only to Permitted
Encumbrances, in an amount at least equal to the estimated value thereof.
(d) The City has certified in writing to the Authority and the Trustee that the
Substitute Property serves the municipal purposes of the City and
constitutes property which the City is permitted to lease under the laws of
the State of California, and has been determined to be essential to the
proper, efficient and economic operation of the City and to serve an
essential governmental function of the City.
(e) The Substitute Property does not cause the City to violate any of its
covenants, representations and warranties made in the Lease Agreement.
(f) The City has filed with the Authority and the Trustee a written certificate of
the City or other written evidencing stating that the useful life of the
Substitute Property at least extends to the final maturity date of the Bonds,
that the estimated value of the Leased Property, after substitution of the
Substitute Property and release of the Former Property, is at least equal to
the aggregate Outstanding principal amount of the Bonds, and the fair
rental value of the Leased Property, after substitution of the Substitute
Property and release of the Former Property, is at least equal to the Lease
Payments thereafter coming due and payable under the Lease Agreement.
(g) The City has mailed written notice of such substitution to each rating
agency which then maintains a rating on the Bonds.
Following the date on which all of the foregoing conditions precedent to such substitution
are satisfied, the term of the Lease Agreement ceases with respect to the Former Property and
continues with respect to the Substitute Property, and all references to the Former Property will
apply with full force and effect to the Substitute Property. The City will not be entitled to any
reduction, diminution, extension or other modification of the Lease Payments whatsoever as a
result of such substitution.
Release of Property
The City has the option at any time and from time to time during the term of the Lease
Agreement to release any portion of the Leased Property from the Lease Agreement (the
“Released Property”) provided that the City must satisfy all of the requirements set forth in the
Lease Agreement, including the following:
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(a) No Event of Default has occurred and is continuing.
(b) The City has filed with the Authority and the Trustee, and caused to be
recorded in the office of the Marin County Recorder sufficient
memorialization of an amendment of the Site Lease and the Assignment
Agreement which removes the Released Property from the Site Lease, the
Assignment Agreement and the Lease.
(c) The City has certified in writing to the Authority and the Trustee that the
value of the property which remains subject to the Lease Agreement
following such release is at least equal to the aggregate Outstanding
principal amount of the Bonds, and the fair rental value of the property
which remains subject to the Lease Agreement following such release is at
least equal to the Lease Payments thereafter coming due and payable
under the Lease Agreement.
(d) The City has mailed written notice of such release to each rating agency
which then maintains a rating on the Bonds.
Upon the satisfaction of all such conditions precedent, the Term of the Lease Agreement
will thereupon end as to the Released Property. The City is not entitled to any reduction,
diminution, extension or other modification of the Lease Payments whatsoever as a result of
such release. The Authority and the City will execute, deliver and cause to be recorded all
documents required to discharge the Site Lease, the Lease Agreement and the Assignment
Agreement of record against the Released Property.
Maintenance, Utilities, Taxes and Modifications
The City, at its own expense, has agreed to maintain or cause to be maintained the
Leased Property in good repair; the Authority has no responsibility for such maintenance. The
City is also obligated to pay all taxes and assessments charged to the Leased Property. The
City has the right under the Lease Agreement to remodel the Leased Property and to make
additions, modifications and improvements to the Leased Property, provided that any such
additions, modifications and improvements to the Leased Property are of a value which is not
substantially less than such value of the Leased Property immediately prior to making such
additions, modifications and improvements. The City will not permit any mechanic’s or other
lien to be established or to remain against the Leased Property, except that the City has the
right in good faith to contest any such lien.
Insurance
The Lease Agreement requires the City to maintain or cause to be maintained the
following insurance against risk of physical damage to the Leased Property and other risks for
the protection of the Bond Owners, the Authority and the Trustee:
Liability and Property Damage Insurance. The City shall maintain or cause to be
maintained throughout the Term of the Lease, a standard commercial general liability insurance
policy or policies in protection of the Authority, the City, and their respective members, officers,
agents, employees and assigns. Said policy or policies shall provide for indemnification of said
parties against direct or contingent loss or liability for damages for bodily and personal injury,
death or property damage occasioned by reason of the operation of the Leased Property. Such
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policy or policies shall provide coverage in such liability limits and be subject to such deductibles
as the City deems adequate and prudent. Such insurance may be maintained as part of or in
conjunction with any other insurance coverage carried by the City, and may be maintained in
whole or in part in the form of self-insurance by the City, or in the form of the participation by the
City in a joint powers agency or other program providing pooled insurance. The proceeds of
such liability insurance must be applied toward extinguishment or satisfaction of the liability with
respect to which paid.
If any insurance required pursuant to this provision is provided in the form of self-
insurance, the City must file with the Trustee annually, within 90 days following the close of
each Fiscal Year, a statement of the risk manager of the City or an independent insurance
adviser engaged by the City identifying the extent of such self-insurance and stating the
determination that the City maintains sufficient reserves with respect thereto. If any such
insurance is provided in the form of self-insurance by the City, the City has no obligation to
make any payment with respect to any insured event except from those reserves.
Casualty Insurance. The City shall procure and maintain, or cause to be procured and
maintained, throughout the Term of the Lease, casualty insurance against loss or damage to all
buildings situated on the Leased Property, in an amount at least equal to the lesser of (a) 100%
of the replacement value of the insured buildings, or (b) 100% of the aggregate principal amount
of the Outstanding Bonds. Such insurance must, as nearly as practicable, cover loss or
damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards
as are normally covered by such insurance. Such insurance may, at the sole discretion of the
City, include earthquake insurance if available at reasonable cost from reputable insurers in the
judgment of the City. Such insurance may be subject to such deductibles as the City deems
adequate and prudent. Such insurance may be maintained as part of or in conjunction with any
other insurance coverage carried by the City, and may be maintained in whole or in part in the
form of the participation by the City in a joint powers agency or other program providing pooled
insurance; provided that such insurance may not be maintained by the City in the form of self-
insurance. The Trustee, as assignee of the Authority under the Assignment Agreement, has
the right to receive all Net Proceeds. As provided in the Indenture, the Trustee will deposit all
Net Proceeds in the Insurance and Condemnation Fund to be applied as set forth in “Damage,
Destruction and Eminent Domain” below.
Rental Interruption Insurance. The City shall procure and maintain, or cause to be
procured and maintained, throughout the Term of the Lease, rental interruption or use and
occupancy insurance to cover loss, total or partial, of the use of any portion of the Leased
Property constituting buildings or other improvements as a result of any of the hazards covered
in the insurance required by the casualty insurance described above in an amount at least equal
to the maximum such Lease Payments coming due and payable during any consecutive two
Fiscal Years. Such insurance may be maintained as part of or in conjunction with any other
insurance coverage carried by the City, and may be maintained in whole or in part in the form of
the participation by the City in a joint powers agency or other program providing pooled
insurance; provided that such insurance may not be maintained by the City in the form of self-
insurance. The Net Proceeds of such insurance, if any, must be paid to the Trustee and
deposited in the Bond Fund, to be applied as a credit towards the payment of the Lease
Payments allocable to the insured improvements as the same become due and payable.
Recordation and Title Insurance. On or before the Closing Date the City shall, at its
expense, (a) cause the Site Lease, the Assignment Agreement and the Lease, or a
memorandum thereof or thereof in form and substance approved by Bond Counsel, to be
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recorded in the office of the Marin County Recorder, and (b) obtain a CLTA title insurance policy
insuring the City’s leasehold estate in the Leased Property, subject only to Permitted
Encumbrances, in an amount at least equal to the aggregate principal amount of the Bonds. All
Net Proceeds received under any such title insurance policy must be deposited with the Trustee
in the Bond Fund to be credited towards the prepayment of the remaining Lease Payments
under the Lease.
Damage, Destruction and Eminent Domain
Application of Net Proceeds. The Trustee, as assignee of the Authority under the
Assignment Agreement, has the right to receive all Net Proceeds. As provided in the Indenture,
the Trustee will deposit all Net Proceeds in the Insurance and Condemnation Fund to be applied
as set forth in the Indenture.
Termination or Abatement Due to Eminent Domain If all or any part of the Leased
Property is taken by eminent domain proceedings (or sold to a government threatening to
exercise the power of eminent domain) the Authority shall deposit or cause to be deposited with
the Trustee the Net Proceeds therefrom, which the Trustee shall deposit in the Insurance and
Condemnation Fund and which shall be applied and disbursed by the Trustee as follows:
(a) If the City has not given written notice to the Trustee, within 90 days
following the date on which such Net Proceeds are deposited with the
Trustee, of its determination that such Net Proceeds are needed for the
replacement of the Leased Property or such portion thereof, the Trustee
shall transfer such Net Proceeds to the Redemption Fund to be applied
towards the redemption of the Bonds.
(bi) If the City has given written notice to the Trustee, within 90 days following
the date on which such Net Proceeds are deposited with the Trustee, of its
determination that such Net Proceeds are needed for replacement of the
Leased Property or such portion thereof, the Trustee shall pay to the City,
or to its order, from said proceeds such amounts as the City may expend
for such replacement, upon the filing of Written Requisitions of the City as
agent for the Authority.
Abatement Due to Damage or Destruction. The Lease Payments are subject to
abatement during any period in which by reason of damage or destruction (other than by
eminent domain which is addressed above) there is substantial interference with the use and
occupancy by the City of the Leased Property or any portion thereof. The Lease Payments are
subject to abatement in an amount determined by the City such that the resulting Lease
Payments represent fair consideration for the use and occupancy of the remaining usable
portions of the Leased Property not damaged or destroyed. The abatement will continue for the
period commencing with such damage or destruction and ending with the substantial completion
of the work of repair or reconstruction. In the event of any such damage or destruction, the
Lease continues in full force and effect and the City waives any right to terminate the Lease by
virtue of any such damage and destruction.
Any Net Proceeds of insurance against accident to or destruction of the Leased Property
collected by the City or the Authority in the event of any such accident or destruction shall be
paid to the Trustee and deposited by the Trustee promptly upon receipt thereof in the Insurance
and Condemnation Fund. If the City fails to determine and notify the Trustee in writing of its
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determination, within 90 days following the date of such deposit, to replace, repair, restore,
modify or improve the Leased Property which has been damaged or destroyed, then such Net
Proceeds shall be promptly transferred by the Trustee to the Redemption Fund and applied to
the redemption of Bonds. Notwithstanding the foregoing sentence, however, if the Leased
Property is damaged or destroyed in full, the Net Proceeds of such insurance shall be used by
the City to rebuild or replace the Leased Property if such proceeds are not sufficient to redeem
Outstanding Bonds equal in aggregate principal amount to the unpaid Lease Payments
allocable to the Leased Property. All proceeds deposited in the Insurance and Condemnation
Fund and not so transferred to the Redemption Fund shall be applied to the prompt
replacement, repair, restoration, modification or improvement of the damaged or destroyed
portions of the Leased Property by the City. Any balance of the proceeds remaining after such
work has been completed as certified by the City under a Written Certificate to the Trustee shall
be paid to the City.
Assignment; Subleases
The Authority has assigned certain of its rights under the Lease Agreement to the
Trustee under the Assignment Agreement. The City may not assign any of its rights in the
Lease Agreement. The City may sublease all or a portion of the Leased Property, but only
under the conditions contained in the Lease Agreement, including the condition that such
sublease not cause the interest component of the Lease Payments to become subject to federal
or State of California personal income taxes.
Amendment of Lease Agreement
The Authority and the City may at any time amend or modify any of the provisions of the
Lease Agreement, but only: (a) with the prior written consents of the Owners of a majority in
aggregate principal amount of the outstanding Bonds; or (b) without the consent of any of the
Bond Owners, but only if such amendment or modification is for any one or more of the
following purposes:
• to add to the covenants and agreements of the City contained in the Lease,
other covenants and agreements thereafter to be observed, or to limit or
surrender any rights or power therein reserved to or conferred upon the City;
• to make such provisions for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained therein, to
conform to the original intention of the City and the Authority;
• to modify, amend or supplement the Lease Agreement in such manner as to
assure that the interest on the Bonds remains excluded from gross income
under the Tax Code;
• to amend the description of the Leased Property to reflect accurately the
property originally intended to be included therein;
• to obligate the City to pay additional amounts of rental for the use and
occupancy of the Leased Property, but only if (A) such additional amounts of
rental are pledged or assigned for the payment of any bonds, notes, leases or
other obligations the proceeds of which are applied to finance or refinance
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the acquisition or construction of any real or personal property for which the
City is authorized to expend funds subject to its control, (B) the City has
obtained and filed with the Trustee an appraisal showing that the appraised
value of the Leased Property is at least equal to the aggregate principal
amount of the outstanding Bonds and all such other bonds, notes, leases or
other obligations, and (C) the City has filed with the Trustee written evidence
that the amendments made under this clause will not of themselves cause a
reduction or withdrawal of any rating then assigned to the Bonds;
• in any other respect whatsoever as the Authority and the City may deem
necessary or desirable, provided that, in the opinion of Bond Counsel, such
modifications or amendments do not materially adversely affect the interests
of the Owners of the Bonds.
Events of Default
Each of the following constitutes an Event of Default under and as defined in the Lease
Agreement:
• Failure by the City to pay any Lease Payment or other payment required to
be paid under the Lease Agreement at the time specified therein.
• Failure by the City to observe and perform any covenant, condition or
agreement on its part to be observed or performed under the Lease
Agreement, other than as referred to in the preceding paragraph, for a period
of 30 days after written notice specifying such failure and requesting that it be
remedied has been given to the City by the Authority or the Trustee;
provided, however, that if in the reasonable opinion of the City the failure
stated in the notice can be corrected, but not within such 30-day period, such
failure will not constitute an Event of Default if the City commences to cure
such failure within such 30-day period and thereafter diligently and in good
faith cures such failure in a reasonable period of time.
• Certain events relating to the insolvency or bankruptcy of the City.
Remedies on Default
Upon the occurrence and continuance of any Event of Default, the Authority has the right
to terminate the Lease Agreement or, with or without such termination, re-enter, take
possession of and re-let the Leased Property. When the Authority does not elect to terminate
the Lease Agreement, the City remains liable to pay all Lease Payments as they come due and
liable for damages resulting from such Event of Default. Any amounts collected by the Authority
from the reletting of the Leased Property will be credited towards the unpaid Lease Payments.
Any net proceeds of re-leasing or other disposition of the Leased Property are required to be
applied as set forth in the Indenture. Under the Assignment Agreement, the Authority assigns
all of its rights with respect to remedies in an Event of Default to the Trustee, so that all such
remedies will be exercised by the Trustee and the Bond Owners as provided in the Indenture.
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The Trustee has no right to accelerate Lease Payments and, due to the governmental
nature of the Leased Property, it is uncertain whether a court would permit the exercise of the
remedies of re-entry, repossession or re-letting.
INDENTURE OF TRUST
Establishment of Funds and Accounts; Flow of Funds
Costs of Issuance Fund. A portion of the proceeds of the Bonds will be deposited by the
Trustee in the Costs of Issuance Fund on the Closing Date. The moneys in the Costs of
Issuance Fund will be disbursed to pay costs of issuing the Bonds and other related financing
costs from time to time upon receipt of written requests of the Authority. On June 1, 2018, or at
the earlier written request of the Authority, all amounts remaining in the Costs of Issuance Fund
will be transferred by the Trustee to the Interest Account and the Trustee will thereupon close
the Costs of Issuance Fund.
Establishment and Application of Project Fund. The Trustee will establish, maintain and
hold in trust a separate fund designated as the “Project Fund” into which the Trustee will deposit
a portion of the proceeds of sale of the Bonds. Except as otherwise provided in the Indenture,
moneys in the Project Fund will be used solely for the payment of the Project Costs.
Site Lease Payment. Proceeds representing the Site Lease Payment will be transferred
to the Trustee for application pursuant to the Indenture, to be applied for the purpose of
financing the acquisition and construction of the Project.
Bond Fund; Deposit and Transfer of Amounts Therein. All Revenues will be deposited
by the Trustee in the Bond Fund promptly upon receipt. On or before each Interest Payment
Date, the Trustee shall transfer from the Bond Fund and deposit into the following respective
accounts (each of which the Trustee will establish and maintain within the Bond Fund), the
following amounts in the following order of priority:
(a) Interest Account. The Trustee will deposit in the Interest Account an
amount required to cause the aggregate amount on deposit in the Interest
Account to equal the amount of interest coming due and payable on such
date on all outstanding Bonds. All moneys in the Interest Account will be
used and withdrawn by the Trustee solely for the purpose of paying the
interest on the Bonds as it comes due and payable, including accrued
interest on any Bonds redeemed prior to maturity.
(b) Principal Account. The Trustee will deposit in the Principal Account an
amount required to cause the aggregate amount on deposit therein to equal
the principal amount of the Bonds maturing on such date. All moneys in
the Principal Account will be used and withdrawn by the Trustee solely for
the purpose of paying the principal of the Bonds at the maturity thereof,
including principal of any Term Bonds payable as a result of mandatory
sinking fund redemption.
Redemption Fund. The Trustee will establish and maintain a Redemption Fund,
amounts in which will be used and withdrawn by the Trustee solely for the purpose of paying the
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principal of on the Bonds to be redeemed, except principal of any Term Bonds payable as a
result of mandatory sinking fund redemption. At any time prior to giving notice of redemption of
any such Bonds, the Trustee may apply such amounts to the purchase of Bonds 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 Account) as the Authority directs,
except that the purchase price (exclusive of accrued interest) may not exceed the redemption
price then applicable to the Bonds.
Investment of Funds; Determination of Value of Investments
All moneys in any of the funds or accounts held by the Trustee under the Indenture will
be invested by the Trustee solely in Permitted Investments as directed by the Authority or an
Agent of the Authority in advance of the making of such investments. In the absence of any
such direction of the Authority, the Trustee will invest any such moneys in Permitted
Investments consisting of money market funds. Obligations purchased as an investment of
moneys in any fund will be deemed to be part of such fund or account.
All interest or gain derived from the investment of amounts in any of the funds or
accounts established under the Indenture will be deposited in the Bond Fund. For the purpose
of determining the amount in any fund or account established under the Indenture, the value of
investments credited to such fund will be calculated at the market value thereof, in accordance
with the procedures specified in the Indenture.
Covenants of the Authority
Payment of Bonds. The Authority will punctually pay or cause to be paid the principal of
and interest and premium (if any) on the Bonds, in strict conformity with the terms of the Bonds
and of the Indenture, but only out of the Revenues and other assets pledged for such payment
as provided in the Indenture. The Authority will not create, or permit the creation of, any pledge,
lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned
under the Indenture while any of the Bonds are outstanding, except the pledge and assignment
created by the Indenture.
Accounting Records and Financial Statements. The Trustee will at all times keep, or
cause to be kept, proper books of record and account, prepared in accordance with industry
standards, in which complete and accurate entries will be made of all transactions relating to the
proceeds of the Bonds, and all funds and accounts established pursuant to the Indenture. Such
books of record and account will be available for inspection by the Authority and the City, during
regular business hours and upon reasonable prior notice.
No Additional Obligations. The Authority covenants that no additional bonds, notes or
other indebtedness will be issued or incurred which are payable out of the Revenues in whole or
in part.
Tax Covenants. The Authority will not take, nor permit nor suffer to be taken by the
Trustee or otherwise, any action with respect to the proceeds of any of the Bonds which would
cause any of the Bonds to be “arbitrage bonds” or “private activity bonds” within the meaning of
the Tax Code. The Authority will cause to be calculated annually all excess investment
earnings which are required to be rebated to the United States of America under the Tax Code,
and will cause all required amounts to be rebated from payments made by the City for such
purpose under the Lease Agreement.
B-15
Lease Agreement. The Trustee will promptly collect all amounts due from the City
pursuant to the Lease Agreement. Subject to the provisions of the Indenture governing the
enforcement of remedies upon the occurrence of an Event of Default, the Trustee is required to
enforce, and take all steps, actions and proceedings which the Trustee determines to be
reasonably necessary for the enforcement of all of its rights thereunder as assignee of the
Authority and for the enforcement of all of the obligations of the City under the Lease
Agreement.
Amendment of Indenture
The Indenture may be modified or amended at any time by a supplemental indenture
with the prior written consents of the Owners of a majority in aggregate principal amount of the
Bonds then outstanding. No such modification or amendment may (a) extend the maturity of or
reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Authority
to pay the principal, interest or redemption premiums (if any) at the time and place and at the
rate and in the currency provided therein of any Bond without the express written consent of the
Owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any
such amendment or modification, or (c) without its written consent thereto, modify any of the
rights or obligations of the Trustee.
The Indenture may also be modified or amended at any time by a supplemental
indenture, without the consent of any Bond Owners, to the extent permitted by law, but only for
any one or more of the following purposes:
• To add to the covenants and agreements of the Authority contained in the
Indenture, other covenants and agreements thereafter to be observed, to
pledge or assign additional security for the Bonds (or any portion thereof), or
to surrender any right or power therein reserved to or conferred upon the
Authority.
• To cure any ambiguity, inconsistency or omission in the Indenture, or correct
any defective provision in the Indenture, or in any other respect whatsoever
as the Authority may deem necessary or desirable, so long as such
modification or amendment does not materially adversely affect the interests
of the Bond Owners in the opinion of Bond Counsel filed with the Trustee.
• To modify, amend or supplement the Indenture in such manner as to permit
the qualification of the Indenture under the Trust Indenture Act of 1939 or any
similar federal statute at any time in effect.
• To modify, amend or supplement the Indenture so as to cause interest on the
Bonds to remain excludable from gross income under the Tax Code.
• to facilitate the issuance of additional obligations of the City under the Lease
Agreement. See “LEASE AGREEMENT – Amendment of Lease Agreement”
above.
B-16
Events of Default
Events of Default Defined. The following events constitute events of default under the
Indenture:
• Failure to pay any installment of the principal of any Bonds when due,
whether at maturity as therein expressed, by proceedings for redemption, by
acceleration, or otherwise.
• Failure to pay any installment of interest on the Bonds when due.
• Failure by the Authority to observe and perform any of the other covenants,
agreements or conditions on its part contained in this Indenture or in the
Bonds, if such failure has continued for a period of 30 days after written
notice thereof, specifying such failure and requiring the same to be remedied,
has been given to the Authority by the Trustee; provided, however, if in the
reasonable opinion of the Authority the failure stated in the notice can be
corrected, but not within such 30-day period, such failure shall not constitute
an Event of Default if the Authority institutes corrective action within such 30-
day period and thereafter diligently and in good faith cures the failure in a
reasonable period of time.
• The commencement by the Authority of a voluntary case under Title 11 of the
United States Code or any substitute or successor statute.
• The occurrence and continuation of any Event of Default under and as
defined in the Lease Agreement. See “LEASE AGREEMENT - Events of
Default” above.
Remedies. Upon the occurrence and during the continuance of any Event of Default,
the Trustee may, and at the written direction of the Owners of a majority in aggregate principal
amount of the Bonds at the time outstanding the Trustee shall:
• upon notice in writing to the Authority and the City, and subject to receipt of
satisfactory indemnity, declare the principal of all of the Bonds then
outstanding, and the interest accrued thereon, to be due and payable
immediately (provided that no such acceleration will have the effect of
accelerating the City’s obligations under the Lease Agreement, as more fully
described above), or
• enforce any rights of the Trustee under or with respect to the Indenture.
The Trustee is irrevocably appointed (and the successive respective Owners of the
Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the
Trustee) as trustee and true and lawful attorney-in-fact of the Owners of the Bonds for the
purpose of exercising and prosecuting on their behalf such rights and remedies as may be
available to such Owners under the provisions of the Bonds, the Indenture and applicable
provisions of any law.
B-17
Application of Revenues and Other Funds After Default. If an Event of Default has
occurred and is continuing, all Revenues and any other funds then held or thereafter received
by the Trustee under any of the provisions of the Indenture will be applied by the Trustee as
follows and in the following order:
(1) To the payment of reasonable fees, charges and expenses of the Trustee
(including reasonable fees and disbursements of its counsel) incurred in
and about the performance of its powers and duties under the Indenture;
(2) To the payment of the principal of and interest then due on the Bonds
(upon presentation of the Bonds to be paid, and stamping or otherwise
noting thereon of the payment if only partially paid, or surrender thereof if
fully paid) in accordance with the provisions of the Indenture, as follows:
First: To the payment to the persons entitled thereto of all installments of
interest then due in the order of the maturity of such installments, and,
if the amount available is not sufficient to pay in full any installment or
installments maturing on the same date, then to the payment thereof
ratably, according to the amounts due thereon, to the persons entitled
thereto, without any discrimination or preference; and
Second: To the payment to the persons entitled thereto of the unpaid
principal of any Bonds which have become due, whether at maturity
or by acceleration or redemption, with interest on the overdue
principal at the rate borne by the respective Bonds (to the extent
permitted by law), and, if the available amount is not sufficient to pay
in full all the Bonds, together with such interest, then to the payment
thereof ratably, according to the amounts of principal due on such
date to the persons entitled thereto, without any discrimination or
preference.
Limitation on Bond Owners’ Right to Sue. No Owner of any Bond has the right to
institute any suit, action or proceeding at law or in equity, for any remedy under the Indenture,
unless:
• such Owner has previously given to the Trustee written notice of the
occurrence of an Event of Default;
• the Owners of a majority in aggregate principal amount of all the Bonds then
outstanding have requested the Trustee in writing to exercise its powers
under the Indenture;
• said Owners have tendered to the Trustee indemnity reasonably acceptable
to the Trustee against the costs, expenses and liabilities to be incurred in
compliance with such request;
• the Trustee has refused or failed to comply with such request for a period of
60 days after such written request has been received by the Trustee and said
tender of indemnity is made to the Trustee; and
B-18
• no direction inconsistent with such written request has been given to the
Trustee during such 60-day period by the Owners of a majority in aggregate
principal amount of the Bonds then outstanding.
Discharge of Indenture
The Authority may pay and discharge the indebtedness on any or all of the outstanding
Bonds in any one or more of the following ways:
• by paying or causing to be paid the principal of and interest on the Bonds, as
and when the same become due and payable;
• by irrevocably depositing with the Trustee, in trust, at or before maturity, cash
and/or non-callable Defeasance Securities which, together with the
investment earnings to be received thereon, have been verified by an
independent accountant to be sufficient to pay or redeem such Bonds when
and as the same become due and payable; or
• by delivering to the Trustee, for cancellation by it, all of such Bonds.
Upon such payment or delivery, and notwithstanding that any Bonds have not been
surrendered for payment, the pledge of the Revenues and other funds provided for in the
Indenture with respect to such Bonds, and all other obligations of the Authority under the
Indenture with respect to such Bonds, will cease and terminate, except only the obligation of the
Authority to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid
all sums due thereon from amounts set aside for such purpose. Any funds thereafter held by
the Trustee, which are not required for said purposes, will be paid over to the Authority.
C-1
APPENDIX C
FISCAL YEAR 2016-17 COMPREHENSIVE ANNUAL FINANCIAL REPORT
[THIS PAGE INTENTIONALLY LEFT BLANK]
/THE CITY WITH A MISSION
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDING JUNE 30, 2017
San Xafaef Corporate Center
IT'il
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
For the Fiscal Year Ended
June 30, 2017
City of San Rafael, California
1400 Fifth Avenue
San Rafael, California 94901
Prepared by the Finance Department of the City of San Rafael
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INTRODUCTORY
SECTION
:
CITY OF SAN RAFAEL, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended June 30, 2017
Table of Contents
INTRODUCTORY SECTION
TABLE OF CONTENTS
Letter of Transmittal
Mission Statement and Vision Statement xii
City Council and Staff xiii
Location Map xiv
Organizational Chart xv
Certificate of Achievement for Excellence in Financial Reporting xvi
FINANCIAL SECTION
Independent Auditor's Report 1
Management's Discussion and Analysis 5
Basic Financial Statements:
Government -wide Financial Statements:
Statement of Net Position 23
Statement of Activities 24
Fund Financial Statements:
Major Governmental Funds:
Balance Sheet 28
Balance Sheet - Reconciliation of Governmental Fund Balances to
Net Position of Governmental Activities 30
Statement of Revenues, Expenditures, and Changes in Fund Balances 31
Reconciliation of the Net Change in Fund Balances - Total Governmental
Funds with the Statement of Activities 32
Proprietary Funds:
Statement of Net Position 35
Statement of Revenues, Expenses, and Changes in Fund Net Position 36
Statement of Cash Flows 37
CITY OF SAN RAFAEL, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended June 30, 2017
Table of Contents
FINANCIAL SECTION (Continued)
Fiduciary Funds:
Statement of Fiduciary Net Position 41
Statement of Changes in Fiduciary Net Position 42
Notes to Basic Financial Statements 43
Required Supplementary Information:
Schedule of the City's Proportionate Share of the Net Pension Liability 99
Schedule of Contributions - Pension 100
Schedule of Changes in Net OPEB Liability and Related Ratio 103
Schedule of Contributions - OPEB 104
Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual -
Budgetary Basis
General Fund 106
Traffic and Housing Mitigation Special Revenue Fund 107
Gas Tax Special Revenue Fund 108
Supplementary Information:
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Budgetary Basis
Essential Facilities Capital Projects Fund 110
Non -major Governmental Funds:
Combining Balance Sheets 114
Combining Statements of Revenues, Expenditures, and Changes
in Fund Balance 120
Budgeted Non -major Governmental Funds:
Combining Schedules of Revenues, Expenditures, and Changes
in Fund Balances - Budget and Actual 126
ii
CITY OF SAN RAFAEL, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended June 30, 2017
Table of Contents
FINANCIAL SECTION (Continued)
Internal Service Funds:
Combining Statements of Net Position 136
Combining Statements of Revenues, Expenses and Changes in Fund Net Position 138
Combining Statements of Cash Flows 140
Agency Funds:
Combining Statements of Changes in Assets and Liabilities 144
STATISTICAL SECTION
Financial Trends:
Net Position by Component - Last Ten Fiscal Years 148
Changes in Net Position - Last Ten Fiscal Years 150
Fund Balances of Governmental Funds - Last Ten Fiscal Years 154
Changes in Fund Balance of Governmental Funds - Last Ten Fiscal Years 156
Revenue Capacity:
Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 158
Property Tax Rates - All Overlapping Governments- Last Ten Fiscal Years 159
Principal Property Tax Payers - Current Year and Nine Years Ago 160
Property Tax Levies and Collections - Last Ten Fiscal Years 161
Debt Capacity:
Ratio of Outstanding Debt by Type - Last Ten Fiscal Years 162
Computation of Direct and Overlapping Debt 163
Computation of Legal Bonded Debt Margin 164
Revenue Bond Coverage Parking Facility - Last Ten Fiscal Years 165
iii
CITY OF SAN RAFAEL, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended June 30, 2017
Table of Contents
STATISTICAL SECTION (Continued)
Demographic and Economic Information:
Demographic and Economic Statistics - Last Ten Fiscal Years 166
Principal Employers - Last Nine Calendar Years 167
Operating Information:
Full -Time Equivalent City Government Employees by Function
- Last Ten Fiscal Years 168
Operating Indicators by Function/Program - Last Ten Fiscal Years 170
Capital Asset Statistics by Function/Program - Last Ten Fiscal Years 172
iv
October 12, 2017
Honorable Mayor, Members of the City Council and Residents of San Rafael:
The Comprehensive Annual Financial Report ("CAFR") of the City of San Rafael ("City")
for the year ended June 30, 2017, is hereby submitted as required by local ordinances, state
statutes and bond covenants. This financial report has been prepared in conformance with
Generally Accepted Accounting Principles as promulgated by the Governmental
Accounting Standards Board and includes the report of the independent certified public
accounting firm, Maze and Associates Accountancy Corporation, which has issued an
unqualified, or "clean" opinion on the City's financial statements for the fiscal year ended
June 30, 2017.
The independent audit of the financial statements is part of a broader, federally mandated
examination known as a "Single Audit", which is designed to meet the needs of federal
grantor agencies. The standards governing Single Audits require the independent auditor to
report on the audited agency's internal controls and compliance with legal requirements,
with special emphasis on such controls and requirements involving the administration of
federal funding. These reports will be available in the City's separately issued Single Audit
Report.
City Management is responsible for both the data accuracy, and the completeness and
fairness of the presentation of this report. To the best of our knowledge and belief, the data
presented is accurate in all material respects and is reported in a manner that presents fairly
the financial position and results of operations of the various funds and component units of
the City. Further, the CAFR is prepared in accordance with procedures and policies set by
the Government Finance Officers Association. The analysis of the financial condition and
the result of operations can be found in the financial section of the Management's
Discussion and Analysis document. The CAFR is organized into three sections:
1.Introductory section, which is unaudited, includes this letter of transmittal, an
organizational chart and a list of the City's elected and appointed officials.
2.Financial section, includes the general-purpose financial statements, related footnote
disclosures, and the combining and individual fund and account group financial
statements and schedules, as well as the independent auditors' report.
3.Statistical section, which is unaudited, includes selected financial and demographic
information, presented on a multi -year basis. Generally, ten-year data is presented for
expenditures, revenues, assessed valuation for local properties and construction
activity.
Gary 0. Phillips, Mayor Maribeth Bushey, Vice Mayor Kate Colin, Councilmember John Gamblin, Councilmember Andrew Cuyugan McCullough, Councilmember
V
REPORTING ENTITY - PROFILE OF THE GOVERNMENT
The City of San Rafael is located 17 miles north of San Francisco in Marin County.
Protected by its Mediterranean like setting along the shores of the San Francisco Bay, the
City enjoys a mild climate year round. As the County seat, San Rafael is considered the
commercial, financial, cultural and civic hub of Marin County. Abundant recreational
facilities are available in and around the City. The City's park and recreational resources
include 19 city parks, 393 acres of developed parkland, city and county open space, and
China Camp State Park. San Rafael is close to other attractions, including the Golden Gate
Bridge, Muir Woods, Point Reyes National Seashore, Mount Tamalpais, multiple state
parks, San Francisco, Oakland and the Sonoma and Napa wine country.
In 1874, the City of San Rafael became the first incorporated city in the county, later
becoming a charter city in 1913 by vote of City residents. The City Council comprises five
members; four are elected at -large to four-year terms while the mayor is elected separately
to a four-year term. The City's land area is 22 square miles, including seventeen square
miles of land and 5 of water and tidelands. San Rafael's population on January 1, 2017 was
61,187, an increase of 0.1% from the January 1, 2016 population of 60,582 .
Downtown San Rafael is the location of many community events, including the Thursday
night Farmers Market Festivals six months out of the year, Second Friday Art Walks, the
Twilight Criterium Bike Race, Mill Valley Film Festival, Winter Wonderland/Parade of
Lights, and now one of 14 state Cultural Arts Districts. San Rafael is also the heart of the
County's cultural activities with venues such as the Marin Center, which presents
numerous ballets, concerts, speaking engagements as well as the award winning Marin
County Fair; the Falkirk Cultural Center, providing art exhibits and children's
programming; theChristopher B. Smith Film Center, and a host of other diverse dining and
entertainment venues. The City is also home to the distinguished Dominican University of
California.
The City of San Rafael provides a full range of municipal services required by statute or
charter, namely: police and fire protection, construction and maintenance of streets, parks,
storm drains and other infrastructure, recreation, childcare, permits, planning, code
enforcement, and a library system serving two locations. The City performed certain
infrastructure construction and economic development activities through a separate
Redevelopment Agency until its dissolution on February 1, 2012. The City of San Rafael
accepted the role of Successor Agency to the Redevelopment Agency per Council action
on January 3, 2012, and now conducts its economic development activities with funding
from its General Fund.
The City and California Municipal Finance Authority compose the San Rafael Joint
Powers Financing Authority, originally established by the City and former Redevelopment
Gary 0. Phillips, Mayor Maribeth Bushey, Vice Mayor Kate Colin, Councilmember John Gamblin, Councilmember Andrew Cuyugan McCullough, Councilmember
Vi
Agency for the purpose of financing redevelopment and other projects. The San Rafael
Sanitation District is a discretely presented component unit of the City of San Rafael and is
presented independent of City financial information. For a further explanation of these
entities, refer to Note 1 - Summary of Significant Accounting Policies in the Financial
Section of the CAFR.
The City participates in various organizations through formally organized and separate
entities established under the Joint Exercise of Powers Act of the State of California. As
separate legal entities, these agencies exercise full powers and authorities within the
scope of the related Joint Powers Agreement including the preparation of annual
budgets, accountability for all funds, and the power to make and execute contracts.
Obligations and liabilities of the separate entities are not those of the City. For a further
explanation of these separate entities, refer to Note 12 - Jointly Governed Organizations in
the CAFR.
Fiscal year 2016-2017 marks the first year of implementation of Governmental Accounting
Standards Board Statement No. 75 (GASB 75), Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions (OPEB). The purpose of this reporting
requirement is to improve the decision -making usefulness of information in financial
reports and enhance its value for assessing accountability and inter -period equity by
requiring recognition of the entire net OPEB liability and a more comprehensive measure
of OPEB expense, much as GASB 68 provided a similar approach for defined benefit
pension obligations. The net OPEB liability of $33.8 million reported as of June 30, 2017,
is based on the most recent actuarial valuation as of June 30, 2015. The City's
implementation of this new requirement is one year early, in order to increase transparency
and achieve parity with the reporting methodology used for defined benefit pensions.
The City's net pension liability under GASB 68 reported as of June 30, 2017 is based on
the latest available GASB 67/68 report prepared by the Marin County Employees
Retirement Association (MCERA), which was prepared as of June 30, 2016. The next
annual report is anticipated to be completed within the upcoming 30 days. The City is
aware of factors that may have an impact on the future measurement of the net pension
liability. For example, the investment returns of 11.73% for the fiscal year ended
June 30, 2017 well exceeded the target of 7.25%. In addition, the MCERA Board is
scheduled to consider a reduction in the discount rate in the preparation of its next actuarial
valuation, as of June 30, 2017. The City does not expect these factors to result in a net
material difference in the measurement of its net pension obligation of $167.1 million
reported in this year's financial reports.
During fiscal year 2016-2017, the City made significant progress towards improving our
essential facilities. Building from over a decade of community efforts to address San
Rafael's aging essential public safety facilities, the Essential Facilities project includes a
total of seven projects recommended for either replacement or renovation, including a new
Gary 0. Phillips, Mayor . Maribeth Bushey, Vice Mayor Kate Colin, Councilmember John Gamblin, Councilmember Andrew Cuyugan McCullough, Councilmember
Vii
public safety center across the street from City Hall. These new buildings will be
seismically -safe and provide modern facilities for our firefighters, police officers,
paramedics and dispatchers. They will include an upgraded dispatch and communications
center, and a new classroom and training tower for emergency preparedness. Construction
for both Fire Station 57, located at 3530 Civic Center Drive, and Fire Station 52, located at
210 3rd Street, began in June 2017 and are expected to be completed in the summer of
2018. The Public Safety Center demolition work is underway, and construction of the
building will begin within the next few months.
ECONOMIC FACTORS
The City has a diversified economic base, which includes an assortment of high-tech,
financial, service -based, entertainment and industrial businesses. Downtown San Rafael
provides a mix of restaurants, retail shops and financial institutions. The City's varied
economic base is reflected in its property tax base, which is 71% residential, 19%
commercial, 4% institutional, 6% unsecured and others. The top 50 sales tax producers
provide 72% of overall sales tax revenues.
The California economy continues to recover from the recession. Although the 4.9%
unemployment rate remains above the national average of 4.4%, it continues on a path
towards convergence with the national average. Personal income has rebounded over the
past few years, and the State continues to prosper from the flow of capital into the
technology companies who are attracted to California. Over the past year, State revenues
have lagged behind expectations. The recent surge in the stock market has breathed new
life into the revenue forecast; however, capital gains are the State's most volatile and
unpredictable revenue source.
Notwithstanding the State's $10.1 billion in projected reserves, the Governor's revised
budget for the upcoming year includes a $400 million deficit and major challenges
persist. The "wall of debt", which when pension and retiree medical liabilities are
considered, reaches into the hundreds of billions of dollars.
Locally, the 3.0% Marin County unemployment rate is among the lowest in the State.
According to the Marin Economic Forum, the County added 4,000 payroll jobs and
gained approximately 250 payroll businesses in 2016. Real personal income is projected
to grow at an average rate of 2.5% over the next few years after inflation, and Marin
County's taxable sales per capita are the third highest in the State. Marin County median
home prices are over $1.3 million and continue to rise, while the recovery of commercial
real estate has led to average rents increasing to $2.80 per square foot.
Gary 0. Phillips, Mayor . Maribeth Bushey, Vice Mayor . Kate Cohn, Counclimember John Gamblin, Councilmember Andrew Cuyugan McCullough, Councilmember
Viii
Demographic Data
The following is a sample of demographic and economic attributes that make San Rafael an
exceptional place to live and work.
E l Economic development organizations in San Rafael include the San Rafael Chamber of
Commerce, Downtown Business Improvement District, and the Marin Economic
Forum.
CI Marin County's top 10 employers include Kaiser Permanente, Marin General Hospital,
BioMarin Pharmaceutical, Autodesk, Dominican University of California, Bradley
Real Estate, Novato Community Hospital, Wells Fargo, FICO, and W Bradley Electric.
E l Major shopping areas, as measured in available retail square footage, include the
Downtown corridor (938,000 aggregate), Northgate Mall (725,000), Montecito Center
(130,000) and Northgate One (113,900).
E l The top three sales tax categories in 2016 for San Rafael were: 1. Autos and
Transportation (33.1%), 2. General Consumer Goods (20%), and 3. Building and
Construction (18.8%).
E l Several hotels and motels support tourism activity, led by a combined 235 rooms in the
Embassy Suites and Four Points Sheraton. Citywide, the total number of hotel rooms
is 787.
E Establishing and maintaining affordable residential housing for sale and lease continues
to be a challenge both in San Rafael and throughout Marin County. Rents for one -
bedroom apartments range from $2,300 to $2,700, while two bedroom apartments go
for $3,000 to $3,600. The median home value in San Rafael is $955,000.
Recent growth and economic vibrancy:
San Rafael ranked No. 3 on Milken Institute Best -Performing Cities Index. This
index provides an objective benchmark for examining the underlying factors and
identifying unique characteristics of economic growth in metropolitan areas. The
index uses metrics such as job creation, wage gains, and technology developments
to evaluate the relative growth of metropolitan areas. California secured six of the
Top 25 spots among large metros, led by four metros in the San Francisco Bay
Area. Additionally, two Bay Area metros were in the Top 10 of small metros. San
Rafael ranks fourth in one-year high-tech GDP growth and concentration and has
maintained the fastest five-year high-tech growth. Five-year high-tech GDP growth
was 67 percent greater than the national average. Key strengths highlighted
included our educated workforce and cluster of biotech employers.
San Rafael ranked No. 3 on the SMU National Center for Arts Research Vibrancy
Index the overall index is composed of three dimensions: supply, demand, and
government support. Supply is assessed by the total number of arts providers in the
community, including the number of arts and culture organizations and employees,
independent artists, and entertainment firms. Demand is gauged by the total
Gary 0. Phillips, Mayor Maribeth Bushey, Vice Mayor . Kate Colin, Councilmember John Gamblin, Councilmember Andrew Cuyugan McCullough, Councilmember
ix
nonprofit arts dollars in the community, including program revenue, contributed
revenue, total expenses, and total compensation. Lastly, the level of government
support is based on state and federal arts dollars and grants.
San Rafael served as the host city and basecamp for production of the Netflix
Paramount Television Series 13 Reasons Why bringing in over $130,000 in
transient occupancy tax dollars and permitting fees.
San Rafael welcomed Sonoma Marin Area Rail Transit Service in August 2017 and
San Rafael is the most population destination on the commuter rail service line.
Construction of the Larkspur extension which will complete the southern end of the
commuter rail line is set to commence in Fall 2017.
Vacancy rates are maintaining all-time lows for retail and office space and
industrial space in San Rafael. Asking rents have increased throughout all market
types.
Andy's Market relocated to the new Loch Lomond Marina Village Development.
FINANCIAL INFORMATION
The City's management is responsible for establishing and maintaining internal controls to
ensure that the City's assets are adequately protected from loss, theft or misuse. In addition,
management controls ensure 'that proper accounting data is collected so as to prepare
reports in conformance with generally accepted accounting principles.
Internal accounting controls are designed to provide reasonable, but not absolute, assurance
regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition;
and (2) the reliability of financial records for preparing financial statements and
maintaining accountability for assets. The concept of reasonable assurance recognizes that
the cost of a control should not exceed the benefits likely to be derived. All internal control
evaluations occur within the above framework. It is management's belief that the City's
internal accounting controls adequately safeguard assets and provide reasonable assurance
that financial transactions are properly recorded.
The City develops a budget based upon City Council priorities and department objectives.
The Finance Department maintains a traditional line item budget by major function. Budget
control is accomplished at the functional or division level within each fund. This budget
creates a comprehensive management and fiscal system aimed at achieving the objectives
of each operating level consistent with those that have been set for the community by the
City Council. Each department director is responsible for accomplishing goals within his or
her functional area and monitoring the use of her or his budget allocations consistent with
policies set by the City Council and monitored by the City Manager.
Gary 0. Phillips, Mayor Maribeth Bushey, Vice Mayor Kate Colin, Councilmember John Gamblin, Councilmember Andrew Cuyugan McCullough, Councilmember
ACKNOWLEDGMENTS
The preparation of this City-wide document would not have been possible without the
assistance of each of the City's departments. In addition, Finance support staff Helena
Murioz, Karen Landesman and Whitney Fry, led by Accounting Manager Van Bach were
key to the timely issuance of this report. We believe this document meets the Government
Finance Officers Association's (GFOA) Certificate of Achievement for Excellence in
Financial Reporting requirements, and will be submitting it to the GFOA to determine its
eligibility. If accepted, this will mark the sixth consecutive year for which the City received
the award.
Lastly, we appreciate the ongoing leadership and support from the Mayor, City
Councilmembers and the City Council Finance Committee. Their strong commitment to
financial accountability and stewardship provide inspiration to the organization and
motivate a high level of achievement.
Respectfully submitted,
Jim S huff
City Manager
Mark Moses
Finance Director
Gary 0, Phillips, Mayor Maribeth Bushey, Vice Mayor Kate Colin, Councilmember John Gamblin, Councilmember Andrew Cuyugan McCullough, Councilmember
xi
THE CITY WITH A MISSION
MISSION STATEMENT
The Mission of the City of San Rafael is to enhance the quality of
life and to provide for a safe, healthy, prosperous and livable
environment in partnership with the community.
VISION STATEMENT
Our vision for San Rafael is to be a vibrant economic and cultural
center reflective of our diversity,with unique and distinct
neighborhoods in a beautiful natural environment, sustained by
active and informed residents and a responsible innovative local
government.
January 1996
xii
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THE CITY WITH A MISSION
City Council and Staff
City Council
Gary 0. Phillips, Mayor
Maribeth Bushey, Vice Mayor
Andrew McCullough, Councilmember
Kate Colin, Councilmember
John Gamblin, Councilmember
Elected Officials
Rob Epstein, City Attorney
Esther Beirne, City Clerk
Executive Team
Jim Schutz, City Manager
Cristine Alilovich, Assistant City Manager
Diana Bishop, Chief of Police
Stacey Peterson, Human Resources Director
Chris Gray, Fire Chief
Sarah Houghton, Library Director
Paul Jensen, Community Development Director
Bill Guerin, Public Works Director
Deborah Younkin, Interim Community Services Director
Mark Moses, Finance Director
Doris Toy, District Manager/Engineer-SRSD
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Organizational Chart
Assistant City
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Information
Technology
Parking
Services
Finance
City Attorney
Mayor
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City Clerk
City Manager
Human
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Volunteer &
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of San Rafael
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2016
Executive Director/CEO
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FINANCIA SI:CTION
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INDEPENDENT AUDITOR'S REPORT
To the Honorable Mayor and Members of the City Council
City of San Rafael, California
Report on Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business -type
activities, each major fund, and the aggregate remaining fund information of the City of San Rafael (City),
California, as of and for the year ended June 30, 2017, and the related notes to the financial statements,
which collectively comprise the City's basic financial statements as listed in the Table of Contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation
of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not audit
the component unit financial statements of the San Rafael Sanitation District, which represents 19%, 35%,
and 15%, respective, of the assets, net position, and revenues of the entity -wide reporting entity. These
component unit financial statements were audited by other auditors, whose report thereon has been
furnished to us and our opinion, insofar as it relates to the amounts included for the San Rafael Sanitation
District, is based solely on the report of these auditors. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the City's preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
1
Opinions
In our opinions, based on our audit and the report of other auditors, the financial statements referred to
above present fairly, in all material respects, the respective financial position of the governmental
activities, the business -type activities, each major fund, the aggregate remaining fund information and the
discretely presented component unit of the City as of June 30, 2017, and the respective changes in
financial position and, where applicable, cash flows thereof for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
Emphasis of Matters
Management adopted the provisions of the following Governmental Accounting Standards Board
Statement during the year ended June 30, 2017 that had material effects on the financial statements, as
discussed in Note 1 to the financial statements:
Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions.
The emphasis of this matter does not constitute a modification to our opinion.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that Management's
Discussion and Analysis and required supplementary information, as listed in the Table of Contents, be
presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who considers it to be
an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United States
of America, which consisted of inquiries of management about the methods of preparing the information
and comparing the information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited procedures
do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City's basic financial statements. The Introductory Section, Supplementary Information,
and Statistical Section as listed in the Table of Contents are presented for purposes of additional analysis
and are not required parts of the basic financial statements.
2
The Supplementary Information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements.
The information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or to
the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America.In our opinion, the Supplementary
Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
The Introductory and Statistical Sections have not been subjected to the auditing procedures applied in the
audit of the basic financial statements and, accordingly, we do not express an opinion or provide any
assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September 28,
2017 on our consideration of the City's internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on internal control
over financial reporting or on compliance.That report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City's internal control over financial
reporting and compliance.
Pleasant Hill, California
September 28, 2017
3
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11Ia:11:A I
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
This analysis of the City of San Rafael's (City) financial performance provides an overview of the City's financial
activities for the fiscal year ended June 30, 2017. Please read it in conjunction with the basic financial statements
and the accompanying notes to those basic financial statements.
FINANCIAL HIGHLIGHTS
Government -wide:
In the fiscal year ended June 30, 2017, the City of San Rafael implemented Governmental Accounting
Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Oher
Than Pensions. The implementation of this pronouncement required a prior period adjustment and reduced
the City's net position as of July 1, 2016, by $20.6 million, of which $20.3 million was for governmental
activities and $0.3 million was for business -type activities.
Net Position - The assets of the City exceeded its liabilities as of June 30, 2017 by $125.6 million.
Activities - During the fiscal year the City's total revenues of $102.7 were greater than expenses of
$98.0 million for governmental and business -type activities.
Changes in Net Position - The City's total net position increased by $4.7 million in fiscal year 2016-2017
as compared to the adjusted net position of the previous year. Net position of governmental activities
increased by $4.1 million, while net position of the business -type activities increase by $556 thousand.
Fund Level:
Governmental Funds - As of the close of fiscal year 2016-2017, the City's governmental funds reported
combined ending fund balances of $46.1 million, a decrease of $4.1 million from fund balance of the prior
year. Of this total amount, $0.5 million is nonspendable, $25.8 million is restricted, $3.5 million is
committed, $15.0 million is assigned, and $1.3 million is unassigned.
Governmental fund revenues were $97.8 million, a decrease of $2.8 million from the previous fiscal year.
The decrease is attributable to a number of one-time revenues that occurred during the previous year
coupled with a slowdown in sales tax -related revenues and third party emergency transport services
billings. Aside from these items, the City experienced modest to moderate growth in revenues.
Governmental fund expenditures increased by $4.2 million to $102.7 million, from $98.5 million in the
prior year, due primarily to public safety infrastructure and other capital improvement program
expenditures.
Enterprise fund operating revenue grew slightly by $57 thousand to $5.3 million. Enterprise operating
expenditures totaled $3.8 million, a decrease of $0.8 million over the previous year. The expenditure
decrease was attributable primarily to the pension -related accounting adjustments in the parking fund.
OVERVIEW OF FINANCIAL STATEMENTS
The Comprehensive Annual Financial Report is composed of the following:
1.Introductory section, which includes the Transmittal Letter and general information
2.Management's Discussion and Analysis (this part)
3.Basic Financial Statements, which include the Government -wide and the Fund financial statements
along with the Notes to these financial statements
4.Combining statements for Non -Major Governmental Funds, Internal Services Funds, and Fiduciary
Funds
5.Statistical Information
5
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
This discussion and analysis is intended to serve as an introduction to the City's basic financial statements, which
have three components: 1) Government -wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to
the Basic Financial Statements.
The basic financial statements include the City (primary government) and all legally separate entities (component
units) for which the government is financially accountable. This report also contains other supplementary
information in addition to the basic financial statements for further information and analysis.
Government -wide Financial Statements
The government -wide financial statements present the financial picture of the City and provide readers with a broad
view of the City's finances.These statements present governmental activities and business -type activities
separately and include all assets of the City (including infrastructure) as well as all liabilities (including long-term
debt).Additionally, certain interfund receivables, payables, and other interfund activity have been eliminated as
prescribed by Governmental Accounting Standards Board (GASB) Statement No. 34.
The Statement of Net Position and the Statement of Activities and Changes in Net Position report information about
the City as a whole.These statements include all assets and liabilities of the City using the accrual basis of
accounting, which is similar to the accounting used by most private -sector companies. All of the current year's
revenues and expenses are taken into account, regardless of when cash is received or paid.
The Statement of Net Position presents information on all of the City's assets and liabilities, with the difference
between the two reported as net position. Over time, increases in net position may serve as a useful indicator of
whether the financial position of the City is improving or deteriorating.
The Statement of Activities and Changes in Net Position presents information showing how the City's net position
changed during the year. All changes in net position are reported as soon as the underlying event giving rise to the
change occurs, regardless of timing of related cash flows.
In the Statement of Net Position and the Statement of Activities and Changes in Net Position, City activities are
separated as follows:
Governmental Activities - Most of the City's basic services are reported in this category, including Public Safety,
Public Works and Parks, Community Development, Cultural and Recreation, and Government Administration
(finance, human resources, legal, City Clerk and City Manager operations). Property tax, sales and use taxes, user
fees, interest income, franchise fees, hotel taxes, business licenses, and property transfer taxes, plus state and
federal grants finance these activities.
Business -type Activities - The City charges fees to customers to cover the full costs of certain services it provides.
The City's Parking Services program is the City's sole business -type activity.
Discretely Presented Component Units - The government-wide financial statements include not only the City itself
(the primary government), but also the San Rafael Sanitation District, a legally separate entity for which the City is
financially accountable. Financial information for the San Rafael Sanitation District is reported separately from the
financial infounation presented for the primary government.
The government -wide financial statements can be found on pages 23 through 25 of this report.
6
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
Fund Financial Statements and Major Component Unit Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated
for specific activities or objectives.The City, like other state and local governments, uses fund accounting to
ensure and demonstrate compliance with finance -related legal requirements.All of the funds of the City are
divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
The fund financial statements provide detailed information about each of the City's most significant funds called
major funds. The concept of major funds and the determination of the major funds were established in the
Governmental Accounting Standards Board Statement No. 34. Each major fund is presented individually with all
non -major funds summarized and presented in a single column. Further detail on the non -major funds is presented
on pages 114 through 144 of this report.
Governmental Funds - Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government -wide financial statements.However, unlike the government -wide
financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable
resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information
may be useful in evaluating a government's near -term financial capacity.
Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is
useful to compare the information presented for government funds with similar information presented for
governmental activities in the government -wide financial statements. By doing so, readers may better understand
the long-term impact of the government's near -term financing decisions.Both the governmental fund balance
sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a
reconciliation to facilitate this comparison between governmental funds and governmental activities.These
reconciliations are presented on the page immediately following each governmental fund financial statement.
The City has twenty-nine governmental funds, of which four are considered major funds for presentation purposes.
Each major fund is presented separately in the governmental fund balance sheet and in the governmental fund
statement of revenues, expenditures, and changes in fund balances. The City's four major funds are: the General
Fund, Traffic and Housing Mitigation, Gas Tax and Essential Facilities Capital Projects.Data from the other
twenty-five governmental funds are combined into a single, aggregated presentation. The basic governmental fund
financial statements can be found on pages 28 through 32 of this report. Individual fund data for each of these non -
major governmental funds is provided in the form of combining statements on pages 114 through 133 of this report.
Proprietary Funds - The City maintains two different types of proprietary funds - enterprise funds and internal
service funds. Enterprise funds are used to report the same functions presented as business -type activities in the
government -wide financial statements. The City uses an enterprise fund to account for its Parking Services program
and reports it as a major fund. Internal service funds are used to accumulate and allocate costs internally among the
City's various functions. The City uses internal service funds to account for its building maintenance; vehicle,
equipment and computer replacement; workers' compensation; general liability; self -insured dental program; other
employee and retiree benefits programs. Because these services predominantly benefit governmental rather than
business -type functions, they have been included within governmental activities in the government -wide financial
statements.
7
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
Proprietary funds provide the same type of information as the government -wide financial statements, only in more
detail. Like the government -wide financial statements, proprietary fund financial statements use the accrual basis
of accounting. There is no reconciliation needed between the government -wide financial statements for business -
type activities and the proprietary fund financial statements.
The basic proprietary fund financial statements can be found on pages 35 through 37 of this report.
Fiduciary Funds - Fiduciary funds are used to account for resources held for the benefit of parties outside the
government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of
those funds are not available to support the City's own programs. The City acts as an agent on behalf of others,
holding amounts collected, and disbursing them as directed or required. The City's fiduciary activities are reported
in the separate Statements of Fiduciary Net Position and the Agency Funds Statement of Changes in Assets and
Liabilities. The City's fiduciary funds include a private purpose trust fund to account for activities of the City of
San Rafael Successor Agency and an agency fund that accounts for resources held by the City in a custodial
capacity for the Pt. San Pedro Road Assessment District. Information for the fiduciary funds can be found on pages
41 through 42 of this report.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the
government -wide and fund financial statements.The notes to the financial statements can be found on pages
43 through 95 of this report.
Required Supplementary Information
In addition to the basic financial statements and accompanying notes, this report also presents certain required
supplementary information. One section includes budgetary comparison statements for the major funds (general,
gas tax, traffic and housing mitigation, and essential facilities capital projects). The other section is a schedule of
funding progress for the Marin County Employees' Retirement System. All budgeted positions that are filled by
either full-time or permanent part-time employees (working seventy-five percent of full-time equivalent) are
eligible to participate in this system. Required supplementary infoimation can be found on pages 99 through 108 of
this report.
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Statement of Net Position
Net position is one measurement of the City's financial position. During this fiscal year, the net position of the
City was $115.5 million from Governmental Activities and $10.1 million from Business -type Activities, for a total
of $125.6 million. This represents an increase of $4.7 million from the prior year net position.
8
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
The following is the condensed Statement of Net Position for the fiscal years ended June 30, 2017 and 2016:
Summary of Net Position
(in thousands)
Governmental Activities Increase
(Decrease)
Business -Type Activities Increase
(Decrease)2017 2016 2017 2016
Current and other assets 583,145 586,543 (S3,398)$3:267 53,050 $217
Capital assets 199,506 194,086 5, 120 16,444 16,699 (255)
Total assets 282,651 230,629 2:022 19,711 19,749 (38)
Deferred outflows (Nc _es 9 and 11)76,869 57:287 19,582 2394 1,939 455
Current and other liabilities 12,923 1L843 L080 432 500 (68)
Noncurrent liabilities 209,678 16L643 48,035 10,882 10,259 623
Total liabilities 222,601 173,486 49.115 1.1,314 10.759 555
Deferred inflows (Notes 9 and 11)21:403 32,710 (11,307)693 1,107 (414)
Net Position:
Net investment in capital assets 199,203 193,707 5,496 10,969 10:958 11
Restricted 29,225 3 L287 (2,062)0 0 0
Unrestricted (112,913)(93,274)(19,639)(872)(L136)264
Change due to implementation of (20340)20,340 (280)280
GASB 75 (See Note 1Q)
Total net position $115:515 S111380 $4,135 510,097 59,542 S555
Current Governmental assets decreased by $3.4 million, primarily due to the use of funds set aside for public safety
facility construction and improvements. The $5.4 million increase in Capital assets reflects this use of resources.
Current and other liabilities increased by approximately $1.1 million, primarily due to an increase in accounts
payable due to a higher level of construction activity. Noncurrent governmental liabilities increased by $48.0
million, mostly attributable to the increase in net pension and OPEB liabilities (Notes 9 and 11). Of this amount,
$20.3 million is attributable to prior year OPEB liabilities. These liabilities are incorporated into the restated net
position of the previous year.
The net position in business -type activities reflects the fiscal activity of the Parking Services program and increased
by $555 thousand from the previous year. The $623 thousand increase in noncurrent liabilities is driven by the
increase in net pension and OPEB liabilities, although this is partially offset by the $280 thousand restatement of
net position prompted by the first year implementation of GASB 75. Increases to deferred outflows and decreases
to deferred inflows under the reporting requirements of GASB 68 and GASB 75 offset the liability increase, thus
contributing to the positive impact on net position.
9
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
At June 30, 2017, the largest portion of net position in the amount of $210.2 million consisted of the City's
investment in capital assets net of related debt. This component represents the total amount of funds required to
acquire capital assets less any related debt used for such acquisition that is still outstanding. The City uses these
assets to provide services to residents. The capital assets of the City are not sources of income for repayment of
debt as most assets are not revenue generating and generally are not liquidated to repay debt.Therefore, debt
service payments are funded from other sources available to the City.
A portion of the City's net position, $29.2 million, is subject to external restrictions, and their use is determined by
those restrictions whether legal or by covenant. The remaining portion, unrestricted negative $113.8 million,
represents the extent to which the net investment in capital assets and restricted net position exceed total assets.
Net Position as of 6/30/2017
Total = $ 125,612 (in thousands)
Invested in Capital Assets (net)$210:172
Restricted 29,225
Unrestricted (113,785)
Total Net Position $125,612
10
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
Statement of Activities - Governmental
The following is the condensed Statement of Activities and Changes in Net Position for the fiscal years ended
June 30, 2017 and 2016:
REVENUES
Program revenues:
Summary of Changes in Net
(in thousands)
Governmental Activities
Position
Increase
(Decrease)2017 2016
Charges for services $17282 $21310 ($4..028)
Operating grants and contributions 3..965 4,678 (713)
Capital grants and contributions 1703 1471 232
Total program revenues 22..950 27A59 (4.509)
General revenues:
Property taxes 23,343 19..999 3,344
Sales taxes 31,819 34,348 (2..529)
Paramedic tax 5,486 4226 1260
Transient occupancy tax 2..985 3..063 (79)
Franchise tax 3..611 3A18 193
Business license tax 2..880 2,825 35
Other taxes 1..739 3..465 (1726)
Investment earnings 211 300 (89)
Miscellaneous 2..449 1387 1062
Total general revenues 74..503 73..031 1..472
TOTAL REVENUES 97..453 100..490 (3..037)
EXPENSES
General government 10..996 12..953 (1..957)
Public safety 44..367 55A00 (11033)
Public works and parks 19..846 22..929 (3..083)
Community/economic development 4243 4,307 (64)
Culture and recreation 14,131 15..027 (896)
Interest on long-term debt 271 277 (6)
TOTAL EXPENSES 93,854 110,893 (17..039)
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENSES 3.599 (10.403)14..002
Transfers in 536 443 87
Net Change in Net Position 4,135 (9..954)14..089
Beginning Net Position 111,380 141,674 (30294)
Change due to implementation of
GASB 75 [See Note 1O)(20,340)20..340
Ending Net Position, June 30 $115..515 $111380 $4,135
11
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
The City's governmental activities net position increased by $4.1 million during fiscal year 2016-2017. Charges for
services were approximately $4.1 million lower than those of the previous year. Most of this decrease, $2.6 million,
stems from a change in the reporting of reimbursements to the City from SRSD. (In the previous year, the
reimbursements were reported as a charge for services. Going forward, these charges are eliminated because their
source is a component unit of the City.) The City also experienced a decline in third -party billings for emergency
medical transport services.
Approximately half of the $3.3 million increase in property tax revenues results from a reporting change in which
property transfer tax revenues are now being accounted for within the property tax category. In the prior year, it
was reported under "Other taxes." The remainder of the growth reflects economic growth (approximately five
percent) coupled with some one-time distributions from prior year activity. The year -over -year $2.5 million
decrease in sales taxes is attributable to a leveling off in sales tax -related growth in the current year combined with
a $1.2 million one-time sales tax revenue in the previous year.
Other taxes dropped from $3.5 million to $1.7 million in the current year because of the change in reporting of the
property transfer tax, as described previously. Finally, Miscellaneous revenues increased by just under
$1.1 million, with most of the increase attributable to County of Marin payments toward the Fire Station 57
construction, one of the active Essential Facilities Capital projects.
The fiscal year 2016-2017 governmental expenses were $17.0 million less than those of the previous fiscal year.
This decrease is driven by $26.7 million of pension expense adjustments recorded under GASB 68. The remaining
year -over -year increase is attributable to other operating costs, which increased by approximately $9.7 million.
The following graph shows governmental revenues by source:
$71,843
Revenues by Source
Governmental Activities
Totar - $97,453
(in thousands)
z_$17,282
12
^$3,965
Charges for services
Operating grants and
contributions
Capital grants and
contributions
Taxes
Investment earnings
Miscellaneous
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
$50
Z1,$45
1-$40
$35
$30
$25
$20
$15
$10
$5
$0
Expenses and Program Revenues
Governmental Activities
/C
sc,
:"Feces
C
2'e .Pg
eccP°QP '°44 as
A .
ce
0-4:tv Program Revenues Expenses
Total expenses for governmental activities were $93.6 million (excluding interest on long-term debt of $271
thousand). Program revenues offset total expenditures as follows:
Those who directly benefited from programs contributed $17.3 million in charges for services.
A total of $5.7 million in operating and capital projects were funded by outside agencies through operating,
capital grants, and contributions.
As a result, total expenses that were funded by tax revenues, investment income, other general revenues and fund
balance were $70.6 million.
Functional expenses for the year ended June 30, 2017 were as follows:
Expenses by Funztion
(in iousands)
Function Amount Percent of Total
General governmen"$10,996 11.6%
Public safety -1,367 47.3%
Public works and parks 19,846 2L0%
Community development 4,243 4.5%
Culture and recreaion 14;131 15.1%
Interest on debt 271 0.3%
Total expenses $.93,85;100%
13
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
Statement of Activities - Business -type
Summary of Changes in Net position
or he periods ender: June 30.Din thouL ads)
-Revenues
Program revenues:
Business -T-:;,! Activities Increase
(Decrease)2017 2016
Charges for services $5,268 $5,212 $56
Taa' program revenues 5,268 5,212 56
General reve: ales:
2+;.'scer meows 11 15
Total general revenues 11 15
TOTAL REVEI;TIES 5,279 52)7 52
Expenses
General uvernment 4,188 4,763 (.575
TOTAL EXPENSES 4,188 763 (575
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENSES 1,091 627
OTHER FINANCING SOURCES (USES)
Transfers out (536)(448)(88)
Total 0 her Financing sources (uses)
Net Clsange In Net Position 555 16 539
Fund Balance, Beginning as of ]/l.,'16 9,5 [2 9;806 (26 .1
Change due to implementation of
GASB 75 (See Note 1Q)(230)280
Net Pos!...;on, Ending as of 6/30/17 $10,097 $9,542 $555
The net position for business -type activities was increased by $555 thousand in fiscal year 2016-2017 from the
prior fiscal year.
Parking services is the City's only business -type activity with income derived from program revenues of
$5.3 million.Program revenues include parking meter coin income of $1.9 million and parking garage
hourly and monthly parking income of $1.3 million. Revenues also include parking and non -vehicle code
fines totaling $2.1 million. Total expenses for parking services were $4.2 million and transfers out to
general fund and non -major governmental fund for support totaled $536 thousand during the fiscal year
2016-2017. The year -over -year decrease in expenditures was driven by routine pension -related accounting
adjustments in the parking fund.
14
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
FINANCIAL ANALYSIS OF INDIVIDUAL FUNDS
Governmental Funds
Fund Balance Classifications
In February 2009, the Governmental Accounting Standards Board issued Statement No. 54 (GASB 54), Fund
Balance Reporting and Governmental Fund Type Definitions. The objective of GASB 54 was to enhance the
usefulness of fund balance information by providing clearer fund balance classifications that can be applied. Under
GASB 54, fund balances are classified in five categories: nonspendable, restricted, committed, assigned, and
unassigned based on hierarchy of constraint. Further details on fund balance classifications can be found in
Note 8B.
The focus of the City's governmental funds is to provide information on near -term inflows, outflows, and balances
of spendable resources.Such information is useful in assessing the City's financial capacity. In particular,
unassigned fund balance may serve as a useful measure of a government's net resources available for spending at
the end of the fiscal year.
As of June 30, 2017, the City reported a combined ending fund balance of $46.1 million of all its governmental
funds (a decrease of 4.0 million from the prior year): $0.5 million is non -spendable, $25.8 million is restricted,
$3.5 million is committed, $15.0 million is assigned and $1.3 million is unassigned.
General Fund - The General Fund is the primary operating fund of the City.
General Fund - The fund balance of the General Fund as of June 30, 2017 was $16.7 million (a decrease of
$2.0 million from the prior year balance): $0.5 million is non -spendable, $14.9 million is assigned, and $1.3 million
is unassigned. The assigned portion of the balance includes $7.2 million for emergency and cash flow needs.
General Fund Budgetary Highlights:
The original adopted General Fund budget projected total revenue of $74.9 million and transfers -in of $1.2 million
for total resources of $76.1 million. This budget appropriated expenditures of $69.9 million and transfers -out of
$6.0 million for total appropriations of $75.9 million. Transfers -out were later increased to $7.2 million in order to
accommodate the funding of the San Rafael Essential Facilities project from Measure E Transactions and Use Tax
(TUT), based on actual project expenditures.
Actual revenues, at $73.4 million, were lower than the original budgeted revenues by $1.5 million. This negative
performance was primarily due to a decline in sales tax revenues. Actual expenditures of $69.5 million were less
than the original budgeted expenditures by $0.4 million, primarily due to staffing vacancies.
Fiscal year 2016-2017 General Fund revenues and transfers of $74.8 million exceeded expenditures and operating
transfers out of $71.3 million by $3.5 million. Capital transfers to the Essential Facilities Capital Projects fund
reduced the net results by $5.4 million. Net operating results were sufficient to ensure that the General Fund
Emergency and Cash Flow Reserve maintained its target level of 10 percent of actual expenditures.
15
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
Summary of General Fund Budget and Actual
For the fiscal year ended June 30, 2017 (in thousands)
Adopted Budget Revised Budget Actual
Revenues $74,942 $74,117 $73,366
Transfers in 1,213 1,382 1,382
Total resources 76,155 75,499 74,748
Expenditures 69,901 $70,526 69,520
Transfers out (operating)1,936 1,796 1,796
Total uses 71,837 72,322 71,316
Net Operating Results $4,318 $3,177 $3,432
Transfers out (capital)4,040 5,417 5,417
Net Results after capital transfers $278 ($2,240)($1,985)
Traffic and Housing Mitigation Fund - The City uses this fund to collect developer contributions to be used for
major street improvement and housing infrastructure projects. During the year, the fund balance decreased from
$10.4 million to $9.1 million. Revenues totaled $0.2 million, while $1.8 million was charged against this fund to
support the maintenance of the City-wide traffic model, including the Tamalpais Avenue queue cutter and Freitas-
Las Gallinas Intersection Improvement. The balance in the fund is being held in anticipation of major street
projects identified in the General Plan 2020 and other qualifying expenditures.
Gas Tax Fund - The City uses this fund to manage its allocation of State gasoline taxes and local funding for street
maintenance projects.Gas tax revenues exceeded expenditures and net transfers by $70 thousand in fiscal year
2016-2017 leaving the ending fund balance effectively unchanged at $6.7 million.
Expenditures during fiscal year 2016-2017 totaled $4.6 million. In addition to routine street -related maintenance,
expenditures include $703 thousand for Downtown Rail Readiness, $1.6 million for miscellaneous street
resurfacing, $580 thousand for Grand Avenue Pathway Connector, $232 thousand for Brookdale Avenue Retaining
Wall Repair and $146 thousand for Emergency Slide Repair and Road Repair.
The largest sources of revenues were $1.1 million in development impact fees, $1.2 million from State gasoline
taxes, $635 thousand in local Measure A and $492 thousand in Measure B funding.
Essential Facilities Capital Projects Fund - The City uses this fund to account for major capital improvements to
public safety facilities. The currently active construction projects are Fire Station 57, Fire Station 52 and the Public
Safety Center. Expenditures during fiscal year 2016-2017 totaled $6.1 million, of which $5.4 million was
transferred from the General Fund from an allocation of Measure E Transaction and Use Tax, and the remainder
from reimbursements from the County of Marin for its share of Fire Station 57 costs.
Non -major Governmental Funds - The City's non -major funds are presented in the basic financial statements in
the aggregate. At June 30, 2017, non -major funds had a total fund balance of $13.6 million, a $0.8 million decrease
from the previous year. While the Childcare and Grants funds reported increases of $216 thousand and $139
thousand, respectively; the Stormwater Fund spent down $772 thousand as it completed major work on the Rossi
Pump Station, and the State Lands Fund (reported under Development Services) expended a net $318 thousand in
support of a right-of-way purchase.
16
FAEI
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
Of the ending total non -major fund balances of $13.6 million: $10.0 million (74%) is legally restricted for specific
purposes by external funding source providers, $3.5 million (25%) is committed for special purposes by the City
Council, and $ 0.1 million (1%) is assigned. Additional information about these aggregated non -major funds is
presented in the combining statements which immediately follow the required supplementary information.
Proprietary Funds
The City's proprietary funds are presented in the basic financial statements in a manner similar to that found in the
government -wide financial statements, but in more detail. As noted in the Summary of Changes in Net Position -
Business -type Activities at page 36, the City's proprietary fund net position was increased by $764 thousand
during the fiscal year. The Parking Services Fund is the City's sole business -type (Enterprise) activity.
The proprietary fund operating revenue was increased by $57 thousand in fiscal year 2016-2017 to $5.269 million.
The Enterprise fund operating expenses were $3.8 million in fiscal year 2016-2017, a decrease of $0.8 million over
the prior fiscal year.
The City's Internal Service Funds are also reported in this Proprietary Fund classification.In
fiscal year 2016-2017,the Internal Services Funds were comprised of:Building Maintenance, Vehicle
Replacement, Equipment Replacement, Employee Benefits, Liability Insurance, Workers' Compensation, Dental
Insurance, Employee Retirement, OPEB/Retiree Medical, Radio Replacement, Telephone Replacement and Sewer
Maintenance. The net position of the Internal Service Funds increased by $2.2 million, $1.9 million of which was
in the building maintenance fund reflecting the growth in depreciable City infrastructure -related assets. The other
Internal Service Funds reported small -to -moderate changes to their respective net positions.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The City's investment in capital assets for its governmental and business -type activities as of June 30, 2017
amounts to $216.0 million, net of accumulated depreciation of $167.9 million. This investment in capital assets
includes land, buildings, improvements, machinery and equipment, infrastructure and construction in progress.
Infrastructure assets are items that are normally immovable and of value only to the City such as roads, bridges,
streets and sidewalks, drainage systems, lighting systems, and similar items.The net addition to the City's
investment in capital assets for the current fiscal year was $12.0 million, offset by accumulated depreciation of
$6.9 million.
Additions to capital assets during fiscal year 2016-2017 included:
Building and structures
Terra Linda Recreation Center Pool House
Infrastructure: $9.8 million
Downtown Rail Readiness - $3.8 million
Tamalpais Avenue Queue Cutter Improvement - $1.9 million
Rossi Pump - $1.7 million
H Street Drainage Improvement - $2.4 million
17
CI'T'E
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
The City's Capital Assets for the fiscal years ending June 30, 2017 and 2016 were as follows:
Summary of Capital Assets
(in thousands)
Governmental Activities
2.017 2016
Land $83,662 $83,261
Construction in progress 11,847 11,520
Land improvements 9,020 9,020
Buildings and structures 42,896 41,667
Machinery and equipment 18,841 18,477
Infrastructure 197,025 187,213
Less accumulated depreciation (163,785)(157,072)
Subtotal Governmental Activities 199,506 194,086
Business -type Activities
L and 8,621 8,621
Buildings and structures 10.314 10,714
Machinery and equipment 1,212 1_267
Less accumulated depredation (4,103)(3,02)
Subtotal Business -type Activities 16,414 16.700
Total Capital Assets $215,950 $210,786
Additional information on the City's capital assets can be found in Note 5 on pages 63 through 64 of this report.
Debt Administration
The City's debt obligations were stable year -over year, and reflect payments of principal made during the year. The
debt of the former Redevelopment Agency is reported under the Successor Agency, which is presented as Private -
Purpose Trust Fund on the Statement of Fiduciary Net Position. (See Note 6 of the financial statements for
additional information on the debt obligations of the City and Note 15 for additional information on the Successor
Agency.) The City's long-term obligations for the fiscal years ending June 30, 2017 and 2016 were as follows:
Summary of Long -Term Debt
(in thousands)
Governmental Activity Debt:
2017 2016
2010 Taxable Pension Obligation Bonds $4,390 $4,490
PG & E City Hall HVAC. Retrofit Note Payable 21.3 246
PG & E Street Light Retrofit Note Payable 91 133
Subtotal Governmental Activity Debt 4,694 4,869
Business -type Debt:
PG & E Parking Lot Lighting Retrofit Note Payable 41 48
2012 Authority Lease Revenue refunding Bonds, as adjusted 5,434 5,693
Subtotal Business -type Debt 5,475 5,741
Total Long -Term Obligations $10,169 $10610
18
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
ECONOMIC CLIMATE AND NEXT YEAR'S BUDGET
Seven years after the official end of the Great Recession, the City's revenues have firmly established themselves above
the former peak set at the end of the last decade, although sales tax revenues have experienced a leveling off. As the City
looks ahead to fiscal year 2017-2018, management is encouraged by indicators that the local economy will remain
vibrant. However, relatively strong growth in the regional economy continues to be tempered by uncertainty at the state,
national and international levels.
The nation continues to bounce back slowly, fueled by a resurgent housing market and consistent job growth. While
elements of the national economy are on the mend, there are many longer -term issues the nation must address, including
funding changes to the national healthcare system, long-term underemployment and unemployment, and resolving
underfunded federal entitlements and state and local pensions.
The California economy continues to rebound from the recession. Although the 4.9% unemployment rate remains above
the national average of 4.4%, it continues to fall and remains on a convergent track with the national average. Personal
income has rebounded over the past few years, and the State continues to prosper from the flow of capital into the
technology companies who are attracted to California. Although the State has been able to slowly build back its reserves
and post budget surpluses, there are concerns that budget shortfalls could return within the next few years. In addition, the
"wall of debt" which, when pension and retiree medical liabilities are considered, reaches into the hundreds of billions of
dollars and managing the impact of the severe drought most of the 58 counties are likely to burden the State for several
years.
Locally, the 3.0% Marin County unemployment rate is the second lowest in the State. According to the Marin Economic
Forum, the County added 4,000 payroll jobs and gained approximately 250 payroll businesses in 2016. Real personal
income is projected to grow at an average rate of just over 2.5% over the next year, and Marin County's taxable sales per
capita are the third highest in the State. Marin County median home prices now exceed $1.3 million and continue to rise,
while the recovery of commercial real estate has led to stable rents increasing to an average of $2.80 per square foot.
The City's general fund is fueled by the momentum of five consecutive years of strong operating results. Service levels
have increased moderately over the past few years, with additional resources being allocated to homeless issues,
massage ordinance enforcement, open space management and deferred maintenance. At the same time, the City is fully
funding its actuarially -determined, required contributions for both pension and retiree medical (OPEB) obligations.
The City enters fiscal year 2017-2018 with approximately $4.8 million accumulated from a dedicated portion of its
Measure E Transaction Use Tax (TUT) for public safety facilities construction and improvements. One-third of this
twenty-year San Rafael three-quarter percent TUT, which became effective April 1, 2014, has been set aside by City
Council direction for this purpose.
Reductions in staffmg and service levels, coupled with deferred maintenance of City facilities as method of coping with
past economic downturns means that, although the City is able to maintain and, in some cases, improve on its level of
services and make come strategic investments for the City's future, there will still be critical, unfunded capital and
maintenance needs.
The trends for sales tax and transactions and use tax (Measure E), which combined represent the City's largest tax
revenue generators, suggested continued, but moderate growth. For fiscal year 2017-2018, these taxes are projected to
increase by approximately three percent.
The City's second largest tax generator is property tax. The City is expecting the fiscal year 2016-2017 tax roll to increase
by approximately five percent over the previous year. Other tax and non -tax revenues are expected to grow moderately, in
the range of two to four percent.
19
CITY OF SAN RAFAEL
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2017
The City's largest expenditure relates to personnel costs.Salaries and benefits are tied to the labor agreements with
each bargaining group. With the exception of SEIU-Childcare, which has a three-year contract terminating on
October 31, 2019, the City's labor units are all operating under two-year contracts that expire on June 30, 2018.
Negotiated compensation increases in effect through June 30, 2018 range between 3.0% and 4.0% for the fiscal year.
In the bond markets, the San Rafael name is recognized as a high credit municipal entity given both the City's financial
strength and solid fmancial management. Because the City's bonds are highly sought by investors and are fairly
competitive in the marketplace, the City can borrow funds at reasonably attractive rates. The City maintains an AA- issuer
credit rating with Standard & Poor's Ratings Services.
The City anticipates spending down most of its funds accumulated for the San Rafael Essential Facilities capital
improvements project. This project, which includes a new public safety administrative building and major safety and
operational improvements to fire stations, is being funded from a dedicated portion of the Measure E TUT. Other General
Fund balances are expected to remain stable for the year.
REQUEST FOR INFORMATION
This financial report is designed to provide our residents, businesses, customers, and investors and creditors with a
general overview of the City's finances and to demonstrate the City's accountability for providing high quality
services within the limits of our fiscal resources.If you have questions about this report or need additional
financial information, contact the City of San Rafael - Finance Department at 1400 Fifth Avenue, Room 204, San
Rafael, California 94901.
20
CITY OF SAN RAFAEL
STATEMENT OF NET POSITION AND
STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire City's financial
activities and financial position. They are also referred to as Government -wide financial statements.
The Statement of Net Position reports the difference between the City's total assets and the City's total
liabilities, including all the City's capital assets and all its long-term debt. The Statement of Net Position
focuses the reader on the composition of the City's net position, by subtracting total liabilities from total
assets.
The Statement of Net Position summarizes the financial position of all of the City's Governmental Activities
in a single column, and the financial position of all the City's Business -type Activities in a single column;
these columns are followed by a total column which presents the financial position of the entire City.
The City's Governmental Activities include the activities of its General Fund, along with all its Special
Revenue, Capital Projects and Debt Service Funds. Since the City's Internal Service Funds service these
Funds, their activities are consolidated with Governmental Activities,after eliminating inter -fund
transactions and balances. The City's Business -type Activities include all its Enterprise Fund activities.
The Statement of Activities reports increases and decreases in the City's net position. It is also prepared on
the full accrual basis, which means it includes all the City's revenues and all its expenses, regardless of
when cash changes hands. This differs from the "modified accrual" basis used in the Fund financial
statements, which reflect only current assets, current liabilities,available revenues and measurable
expenditures.
The Statement of Activities presents the City's expenses first, listed by program, and follows these with
the expenses of its business -type activities.Program revenues - that is, revenues which are generated
directly by these programs - are then deducted from program expenses to arrive at the net expense of each
governmental and Business -type program. The City's general revenues are then listed in the
Governmental Activities or Business -type Activities column, as appropriate, and the Change in Net
Position is computed and reconciled with the Statement of Net Position.
Both these Statements include the financial activities of the City and the San Rafael Joint Powers
Financing Authority which are legally separate but are considered to be component units of the City
because they are controlled by the City, which is financially accountable for their activities. The balances
and the activities of the San Rafael Sanitation District, a discretely presented component unit, are
included in these statements in a separate column.
21
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CITY OF SAN RAFAEL
STATEMENT OF NET POSITION
JUNE 30, 2017
ASSETS
Primary Government
Component
Unit
San Rafael
Sanitation
District
Governmental
Activities
Business -type
Activities Total
Cash and investments available for operations (Note 2)$64,866,135 $3,217,411 $68,083,546 $24,536,913
Restricted cash and investments (Note 2)702,161 702,161
Receivables:
Accounts 2,333,440 50,543 2,383,983 48,157
Taxes 7,481,603 7,481,603
Grants 123,581 6,507 130,088
Interest 169,010 169,010
Loans (Note 4)654,612 654,612
Long-term receivable from the Successor Agency (Note 15D)761,773 761,773
Long-term receivable from San Rafael Sanitation District (Note 4G)4,527,836 4,527,836
Internal balances (Note 3B)162,051 (162,051)
Prepaid expenses and others 1,362,605 154,835 1,517,440 54,842
Capital assets (Note 5):
Nondepreciable 95,509,234 8,620,853 104,130,087 387,361
Depreciable, net 103,996,931 7,822,754 111,819,685 48,004,957
Total Assets 282,650,972 19,710,852 302,361,824 73,032,230
DEFERRED OUTFLOWS
Deferred outflows related to pension (Note 9)72,653,722 2,353,734 75,007,456
Deferred outflows related to OPEB (Note 11)4,214,824 40,176 4,255,000
Total Deferred Outflows 76,868,546 2,393,910 79,262,456
LIABILITIES
Accounts payable 8,416,779 90,048 8,506,827 620,794
Deposits payable 101,146 101,146
Interest payable 46,547 46,547
Developer deposits payable 547,699 547,699
Unearned revenue 367,589 367,589
Claims payable (Note 13):
Due in one year 2,653,288 2,653,288
Due in more than one year 6,094,050 6,094,050
Compensated absences (Note 1K):
Due in one year 556,116 17,703 573,819
Due in more than one year 3,892,816 123,922 4,016,738
Long-term debt (Note 6):
Due in one year 280,172 276,816 556,988
Due in more than one year 4,413,151 5,198,149 9,611,300
Long-term payable to the City of San Rafael (Note 4G)4,527,836
Net OPEB liability (Note 11)33,466,002 318,998 33,785,000
Net pension liability (Note 9)161,812,669 5,242,181 167,054,850
Total Liabilities 222,601,477 11,314,364 233,915,841 5,148,630
DEFERRED INFLOWS
Deferred inflows related to pension (Note 9)21,402,737 693,376 22,096,113
Total Deferred Inflows 21,402,737 693,376 22,096,113
NET POSITION (Note 8):
Net investment in capital assets 199,202,842 10,968,642 210,171,484 48,392,318
Restricted for:
Special revenue projects:
Housing and street improvements 16,575,903 16,575,903
Stormwater 189,087 189,087
Emergency medical services 1,744,530 1,744,530
Other 6,564,442 6,564,442
Capital projects 3,984,436 3,984,436
Debt service 167,245 167,245
Total Restricted Net Position 29,225,643 29,225,643
Unrestricted (112,913,181)(871,620)(113,784,801)19,491,282
Total Net Position $115,515,304 $10,097,022 $125,612,326 $67,883,600
See accompanying notes to financial statements
23
CITY OF SAN RAFAEL
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2017
Functions/Programs Expenses
Program Revenues
Charges for
Services
Operating
Grants and
Contributions
Capital
Grants and
Contributions
Primary Government
Governmental Activities:
General government $10,996,269 $421,393 $168,782
Public safety 44,366,734 4,264,939 996,507
Public works and parks 19,845,719 1,804,698 2,452,581 $1,702,993
Community development 4,242,743 3,850,107
Culture and recreation 14,131,000 6,941,013 347,481
Interest on long-term debt and fiscal charges 271,263
Total Governmental Activities 93,853,728 17,282,150 3,965,351 1,702,993
Business -type Activities
Parking services 4,188,152 5,268,991
Total Business -type Activities 4,188,152 5,268,991
Total Primary Government $98,041,880 $22,551,141 $3,965,351 $1,702,993
Component Unit
San Rafael Sanitation District $11,255,194 $16,014,016 $36,945 $79,245
General revenues:
Taxes:
Property
Sales:
Sales and Use
Measure E half -cents sales tax
Measure E quarter -cents sales tax
Measure S
Paramedic
Transient occupancy
Franchise
Business license
Other
Investment earnings
Miscellaneous
Transfers (Note 3A)
Total general revenues and transfers
Change in Net Position
Net Position, beginning of year, as adjusted (Note 1Q)
Net Position, end of year
See accompanying notes to financial statements
24
Net (Expenses) Revenues and Changes in Net Position
Primary Government
Governmental Business -type
Activities Activities Total
Component
Unit
San Rafael
Sanitation
District
($10,406,094)($10,406,094)
(39,105,288)(39,105,288)
(13,885,447)(13,885,447)
(392,636)(392,636)
(6,842,506)(6,842,506)
(271,263)(271,263)
(70,903,234)(70,903,234)
$1,080,839 1,080,839
1,080,839 1,080,839
(70,903,234)1,080,839 (69,822,395)
$4,875,012
23,343,140 23,343,140 1,528,047
20,255,493 20,255,493
7,689,925 7,689,925
3,844,963 3,844,963
28,878 28,878
5,485,637 5,485,637
2,984,758 2,984,758
3,610,824 3,610,824
2,774,803 2,774,803
1,824,830 1,824,830
210,628 10,810 221,438 97,090
2,448,604 2,448,604
536,000 (536,000)
75,038,483 (525,190)74,513,293 1,625,137
4,135,249 555,649 4,690,898 6,500,149
111,380,055 9,541,373 120,921,428 61,383,451
$115,515,304 $10,097,022 $125,612,326 $67,883,600
25
ITH
FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year. Only
individual major funds are presented in the Fund Financial Statements, while non -major funds are combined
in a single column. Individual non -major funds may be found in the Supplemental Section.
The funds described below were determined to be major funds by the City in fiscal year 2016-2017:
GENERAL FUND
Established to account for all financial resources necessary to carry out basic governmental activities of
the City which are not accounted for in another fund. The General Fund supports essential City services
such as police and fire protection, building and street maintenance, libraries, recreation, parks and open
space maintenance.
TRAFFIC AND HOUSING MITIGATION SPECIAL REVENUE FUND
Established to maintain long-term developer contributions for major housing and street improvement
projects.
GAS TAX SPECIAL REVENUE FUND
Established to receive and expend the City's allocation of the State gasoline taxes.
ESSENTIAL FACILITIES CAPITAL PROJECTS FUND
Established to account for major capital improvements to public safety facilities.
27
CITY OF SAN RAFAEL
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2017
ASSETS
General
Special Revenue Funds
Essential
Facilities Capital
Projects Fund
Traffic and
Housing
Mitigation Gas Tax
Cash and investments available for operations (Note 2)$13,434,043 $9,227,743 $7,009,256 $1,950,002
Restricted cash and investments (Note 2)
Receivables:
Accounts 1,257,061 46,441 183,106
Taxes 7,109,197 109,688
Grants
Interest 167,018
Loans (Note 4)230,973 193,573
Long-term receivable from the
Successor Agency (Note 15D)761,773
Prepaids 277,473
Total Assets $23,237,538 $9,421,316 $7,165,385 $2,133,108
LIABILITIES
Accounts payable $4,144,408 $270,227 $441,689 $2,133,108
Deposits payable 79,411 15,659
Developer deposits payable 387,085
Unearned revenue
Compensated absences 64,189
Total Liabilities 4,675,093 285,886 441,689 2,133,108
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - SB90 reimbursement receivable 1,096,240
Unavailable revenue - long-term receivable from Successor Agency 761,773
Total Deferred Inflows of Resources 1,858,013
Fund Balances (Note 8):
Nonspendable 508,446
Restricted 9,135,430 6,723,696
Committed
Assigned 14,900,945
Unassigned 1,295,041
Total Fund Balances 16,704,432 9,135,430 6,723,696
Total Liabilities, Deferred Inflows of Resources
and Fund Balances $23,237,538 $9,421,316 $7,165,385 $2,133,108
See accompanying notes to basic financial statements
Other Total
Governmental Governmental
Funds Funds
$12,734,480 $44,355,524
702,161 702,161
846,832 2,333,440
262,718 7,481,603
123,581 123,581
1,992 169,010
230,066 654,612
761,773
4,574 282,047
$14,906,404 $56,863,751
$812,035
6,076
160,614
367,589
$7,801,467
101,146
547,699
367,589
64,189
1,346,314 8,882,090
9,953,279
3,491,708
115,103
1,096,240
761,773
1,858,013
508,446
25,812,405
3,491,708
15,016,048
1,295,041
13,560,090 46,123,648
$14,906,404 $56,863,751
29
CITY OF SAN RAFAEL
GOVERNMENTAL FUNDS
BALANCE SHEET - RECONCILIATION OF GOVERNMENTAL
FUND BALANCES TO NET POSITION OF GOVERNMENTAL ACTIVITIES
JUNE 30, 2017
Total fund balances reported on the governmental funds balance sheet $46,123,648
Amounts reported for Governmental Activities in the Statement of Net Position are
different from those reported in the Governmental Funds because of the following:
Capital assets used in Governmental Activities are not financial resources and,
therefore, are not reported in the Governmental Funds.190,678,334
Internal service funds are used by management to charge the cost of management of
building, workers' compensation, employee benefits, insurance, and post -retirement healthcare benefits
to individual funds. The assets and liabilities are included in Governmental Activities in the Statement
of Net Position.
Long-term liabilities, including bonds payable, are not due and payable in the current
period and, therefore, are not reported in the Governmental Funds.
Compensated absences
Unavailable revenue
Long-term receivables from San Rafael Sanitation District
Deferred outflow related to pension
Net pension liability
Deferred inflow related to pension
Deferred outflow related to OPEB
Net OPEB liability
Net position of governmental activities
See accompanying notes to financial statements
21,218,401
(4,693,323)
(4,384,743)
1,858,013
4,527,836
72,653,722
(161,812,669)
(21,402,737)
4,214,824
(33,466,002)
$115,515,304
30
CITY OF SAN RAFAEL
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2017
REVENUES
General
Special Revenue Funds
Essential
Facilities Capital
Projects Fund
Other
Governmental
Funds
Total
Governmental
Funds
Traffic and
Housing
Mitigation Gas Tax
Taxes and special assessments $64,242,440 $6,924,451 $71,166,891
Licenses and permits 2,559,841 2,559,841
Fines and forfeitures 400,283 400,283
Use of money and properties 229,791 $31,267 $24,527 63,764 349,349
Intergovernmental 2,767,092 3,728,982 1,567,082 8,063,156
Charges for services 2,459,680 204,210 1,149,022 9,612,249 13,425,161
Other revenue 706,657 62,314 $635,387 437,695 1,842,053
Total Revenues 73,365,784 235,477 4,964,845 635,387 18,605,241 97,806,734
EXPENDITURES
Current:
General government 10,190,580 22,450 344,386 10,557,416
Public safety 40,844,246 8,173,907 49,018,153
Public works and parks 11,201,655 1,745,154 2,643,991 1,162,161 16,752,961
Community development 3,759,564 3,759,564
Culture and recreation 3,077,435 9,569,293 12,646,728
Capital outlay 1,641,317 459,609 2,100,926
Capital improvement / special projects 305,704 6,052,841 1,044,704 7,403,249
Debt service:
Principal 175,172 175,172
Interest and fiscal charges 271,263 271,263
Total Expenditures 69,519,915 1,767,604 4,591,012 6,052,841 20,754,060 102,685,432
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 3,845,869 (1,532,127)373,833 (5,417,454)(2,148,819)(4,878,698)
OTHER FINANCING SOURCES (USES)
Transfers in (Note 3A)1,382,303 228,400 325,000 5,417,454 1,933,850 9,287,007
Transfers out (Note 3A)(7,213,543)(628,400)(612,819)(8,454,762)
Total Other Financing Sources (Uses)(5,831,240)228,400 (303,400)5,417,454 1,321,031 832,245
Net Change in Fund Balances (1,985,371)(1,303,727)70,433 (827,788)(4,046,453)
FUND BALANCES, BEGINNING OF YEAR 18,689,803 10,439,157 6,653,263 14,387,878 50,170,101
FUND BALANCES, END OF YEAR $16,704,432 $9,135,430 $6,723,696 $13,560,090 $46,123,648
See accompanying notes to financial statements
31
CITY OF SAN RAFAEL
Reconciliation of the
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2017
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS ($4,046,453)
Amounts reported for Governmental Activities in the Statement of Activities are
different because of the following:
Capital Assets Transactions
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of
those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense.
Capital outlay and improvement expenditures are therefore added back to fund balance
Non -capitalized capital outlay expenditures were reclassified to various governmental activities
Loss on disposal of capital assets is deducted from fund balance
Transfer of capital assets to Internal Service Funds is deducted from fund balance
Depreciation expense is deducted from fund balance
Long -Term Debt Proceeds and Payments
9,504,175
2,003,366
(207,188)
(1,228,402)
(6,222,352)
Repayments on long-term debt principal are expenditures in the governmental
funds, but in the Statement of Net Position the repayments reduce long-term liabilities.175,172
Accrual of Non -Current Items
The amount below included in the Statement of Activities does not require the use of current financial resources
and therefore is not reported as revenue or expenditures in governmental funds (net change):
Compensated absences
Unavailable revenue
Long-term receivable from San Rafael Sanitary District
Net Pension Liability Transactions
Governmental funds record pension expense as it is paid. However,
in the Statement of Activities those costs are reversed as deferred outflows/(inflows)
and an increase/(decrease) in net pension liability.
Net OPEB Liability Transactions
Governmental funds record OPEB expense as it is paid. However,
in the Statement of Activities those costs are reversed as deferred outflows/(inflows)
and an increase/(decrease) in net OPEB liability.
Allocation of Internal Service Fund Activities
(126,623)
(516,972)
(331,171)
2,524,957
190,187
Internal service funds are used by management to charge the costs of certain activities to
individual funds. The net revenue of the internal service fund is reported with governmental activities.2,416,553
Change in Net Position of Governmental Activities $4,135,249
See accompanying notes to financial statements
32
PROPRIETARY FUND FINANCIAL STATEMENTS
Proprietary funds account for City operations financed and operated in a manner similar to a private business
enterprise.The intent of the City is that the cost of providing goods and services be financed primarily
through user charges, whether external or internal.
The City reports its only enterprise fund, as a major fund.
PARKING SERVICES FUND
Established to maintain parking garages, lots and spaces in the Downtown Parking District, and to pay for
parking enforcement and meter collection.
INTERNAL SERVICE FUNDS
Established to account for department services and financing performed for other departments within the
same governmental jurisdiction.Funding comes from charges assessed to the departments benefiting
from the service.
33
4
4'
CITY OF SAN RAFAEL
PROPRIETARY FUNDS
STATEMENT OF NET POSITION
JUNE 30, 2017
Business -type
Activities -Governmental
Enterprise Funds Activities
Parking Internal
Services Service Funds
ASSETS
Current Assets:
Cash and investments available for operations (Note 2)$3,217,411 $20,510,611
Receivable:
Accounts 50,543
Grants 6,507
Prepaids 154,835 1,080,558
Total Current Assets 3,429,296 21,591,169
Noncurrent Assets:
Capital assets (Note 5):
Nondepreciable 8,620,853 530,301
Depreciable, net 7,822,754 8,297,530
Total Noncurrent Assets 16,443,607 8,827,831
Total Assets 19,872,903 30,419,000
DEFERRED OUTFLOWS
Deferred outflows related to pension (Note 9)2,353,734
Deferred outflows related to OPEB (Note 11)40,176
Total Deferred Outflows 2,393,910
LIABILITIES
Current Liabilities:
Accounts payable 90,048 615,312
Interest payable 46,547
Compensated absences, due in one year (Note 1K)17,703
Claims payable, due in one year (Note 13)2,653,288
Long-term debt, due in one year (Note 6)276,816
Total Current Liabilities 431,114 3,268,600
Noncurrent Liabilities:
Compensated absences (Note 1K)123,922
Claims payable (Note 13)6,094,050
Long-term debt (Note 6)5,198,149
Net OPEB liability (Note 11)318,998
Net Pension Liability (Note 9)5,242,181
Total Noncurrent Liabilities 10,883,250 6,094,050
Total Liabilities 11,314,364 9,362,650
DEFERRED INFLOWS
Deferred inflows related to pension (Note 9)693,376
Total Deferred Inflows 693,376
NET POSITION (Note 8):
Net investment in capital assets 10,968,642 8,827,831
Unrestricted (709,569)12,228,519
Total Net Position 10,259,073 $21,056,350
Some amounts reported for business -type activities in the
Statement of Net Position are different because certain internal
service fund assets and liabilities are included with business -type
activities.(162,051)
Net position business -type activities $10,097,022
See accompanying notes to financial statements
35
CITY OF SAN RAFAEL
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2017
Business -type
Activities -Governmental
Enterprise Funds Activities
Parking Internal
Services Service Funds
OPERATING REVENUES
Charges for current services $3,103,420 $15,206,988
Other operating revenues 2,165,571 962,296
Total Operating Revenues 5,268,991 16,169,284
OPERATING EXPENSES
Personnel 2,097,898 2,775,670
Insurance premiums and claims 6,614,379
Maintenance and repairs 71,875 288,700
Depreciation (Note 5)255,508 1,067,900
General and administrative 1,362,350 4,289,993
Total Operating Expenses 3,787,631 15,036,642
Operating Income 1,481,360 1,132,642
NONOPERATING REVENUES (EXPENSES)
Investment income 10,810 68,951
Interest expense (192,038)
Miscellaneous income 94,264
Loss on sale of capital assets (19,944)
Total Nonoperating Revenues (Expenses)(181,228)143,271
Income Before Transfers 1,300,132 1,275,913
CAPITAL CONTRIBUTIONS 1,228,402
TRANSFERS IN (Note 3A)80,275
TRANSFERS OUT (Note 3A)(536,000)(376,520)
Change in Net Position 764,132 2,208,070
NET POSITION, BEGINNING OF YEAR, AS ADJUSTED (Note 1Q)9,494,941 18,848,280
NET POSITION, END OF YEAR $10,259,073 $21,056,350
* Reconciliation of the Change in Net Position with the Statement of Activities
Change in Net Position $764,132
Some amounts reported for business -type activities in the Statement
of Activities are different because the portion of the net income of certain
internal service funds is reported with the business -type activities which
those funds serviced.(208,483)
Change in Net Position of Business -type Activities $555,649
See accompanying notes to fmancial statements
36
CITY OF SAN RAFAEL
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2017
Business -type
Activities -Governmental
Enterprise Funds Activities
Parking Internal
Services Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers/other funds $3,103,420 $15,307,819
Cash payments to suppliers for goods and services (1,665,543)(13,509,146)
Cash payments to employees for salaries and benefits (2,346,766)(164,292)
Other operating revenues 2,269,878 962,010
Cash Flows from Operating Activities 1,360,989 2,596,391
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Interfund receipts 80,275
Interfund payments (536,000)(376,520)
Cash Flows from Noncapital
Financing Activities (536,000)(296,245)
CASH FLOWS FROM CAPITAL
AND RELATED FINANCING ACTIVITIES
Principal payments on revenue bonds and note payable (266,817)
Interest expenses and fiscal charges (193,263)
Acquisition of capital assets (1,222,005)
Proceeds from sale of property 94,264
Cash Flows from Capital and
Related Financing Activities (460,080)(1,127,741)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 10,810 68,951
Cash Flows from Investing Activities 10,810 68,951
NET INCREASE IN CASH AND CASH EQUIVALENTS 375,719 1,241,356
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 2,841,692 19,269,255
CASH AND CASH EQUIVALENTS, END OF YEAR $3,217,411 $20,510,611
Reconciliation of operating income to net cash
provided by operating activities:
Operating income $1,481,360 $1,132,642
Adjustments to reconcile operating income
to cash flows from operating activities:
Depreciation 255,508 1,067,900
Net change in assets and liabilities:
Accounts receivable 104,307 89,607
Loans receivable 10,938
Prepaids and deposits (154,835)2,478
Increase (decrease) in due to OPEB system (1,813)
Accounts payable (76,483)134,054
Compensated absence obligations (1,100)
(Decrease) in due to retirement system (245,955)
Claims payable 158,772
Net Cash Provided by Operating Activities $1,360,989 $2,596,391
NON -CASH TRANSACTIONS:
Amortization of bond discount $725
Contributions of capital assets $1,228,402
See accompanying notes to basic financial statements
37
WI'
FIDUCIARY FUND FINANCIAL STATEMENTS
Fiduciary funds are used to account for assets held by the City as an agent or custodian for other entities.
The financial activities of such funds are excluded from the Government -wide financial statements and
presented in fund statements that consist of a Statement of Net Position.
SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY - PRIVATE PURPOSE
TRUST FUND
Established to account for the activities of the Successor Agency to the San Rafael Redevelopment
Agency.
PT. SAN PEDRO ROAD ASSESSMENT DISTRICT AGENCY FUND
Established to accumulate funds for payment of principal and interest for Pt. San Pedro Road Median
Landscaping Assessment District bonds.
39
II.
' T '
CITY OF SAN RAFAEL
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2017
Successor Agency
to the
Redevelopment
Agency
Private -Purpose Agency
Trust Fund Funds
ASSETS
Cash and investments (Note 2)$87,344
Restricted cash and investments (Note 2)$289,768
Receivable:
Taxes 3,360,513 951
Total Assets $3,447,857 $290,719
LIABILITIES
Accounts payable $1,697
Interest payable 46,747 $26,614
Other long-term obligations (Note 15D)761,773
Due to bondholders 264,105
Long-term debt (Note 15C):
Due within one year 3,080,000
Due more than one year 15,852,670
Total Liabilities 19,742,887 $290,719
NET POSITION (DEFICIT)
Held in trust for private purpose ($16,295,030)
See accompanying notes to financial statements
41
CITY OF SAN RAFAEL
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED JUNE 30, 2017
ADDITIONS
Property taxes
Successor Agency
to the
Redevelopment Agency
Private -Purpose
Trust Fund
$4,137,246
Total Additions 4,137,246
DEDUCTIONS
General government
Interest expense
261,850
886,612
Total Deductions 1,148,462
SPECIAL ITEM
OPEB liability adjustment (Note 15D)
Total Special Item
278,888
278,888
Change in Net Position 3,267,672
NET POSITION FIELD IN TRUST FUND
FOR OTHER PURPOSES
Beginning of year (19,562,702)
End of year ($16,295,030)
See accompanying notes to financial statements
42
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A.Description of the Financial Reporting Entity
As required by generally accepted accounting principles, the financial statements present the City of
San Rafael (the City) as the Primary Government, with its component units for which the City is
considered financially accountable. The component units discussed below are included in the City's
reporting entity because of the significance of their operational and financial relationships with the
City.
B.Description of Blended Component Units
The accompanying basic financial statements include all funds and boards and commissions that
are controlled by the City Council. The basic financial statements include the City's blended
component units, entities for which the City is considered to be financially accountable. A
blended component unit, although a legally separate entity, is in substance, part of the City's
operations and so data from this entity is combined with the City. The City's blended component
units are described below.
San Rafael Joint Powers Financing Authority - The San Rafael Joint Powers Financing
Authority (Authority) was formed by the City of San Rafael and the former San Rafael
Redevelopment Agency (Agency) pursuant to Articles 1 and 2 of Chapter 5 of Division 7 of Title
1 of the Government Code of the State of California for the purpose of assisting in the financing
and refmancing of certain assessment district and redevelopment -related activities in the City. On
March 18, 2013, the Agency was replaced by the California Municipal Finance Authority
(CMFA) in order that the life of the Authority would extend beyond that of the Agency. The
Authority is administered by a governing board whose members are the City Council of the City
of San Rafael.
Activities of the Authority are reported in the Parking Services Enterprise Funds.Separate
financial statements are not prepared for the Authority.
C.Description of Discretely Presented Component Unit
San Rafael Sanitation District - The San Rafael Sanitation District (District) was formed in
1947 under Section 4700 of the California Health and Safety Code to provide wastewater
transmission over the southern two-thirds of the City and adjacent unincorporated areas.
The District is governed by a three -member Board of Directors who are appointed to four-year
terms. The City Council of the City appoints two out of the three board members and has the
ability to remove the two board members at will.
The City contracts with the District to maintain the collection systems in the City and surrounding
unincorporated areas. These employees are paid through the City's payroll department and
participate in the City's cost -sharing multiple -employer defined benefit pension plan administered
by the Marin County Employees' Retirement Association. The employees also participate in the
City's healthcare benefits plan which includes a provision for postemployment benefits. These
costs are the obligation of the District and not the City. As discussed in Note 4G, a receivable
from the District has been established.
43
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 1- SUIVEVIARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The District's activities are reported as a discretely presented component unit in a separate
column in the basic financial statements which includes the District's assets, liabilities, revenues,
expenses, results of operations and cash flows. The District's fiscal year ends on June 30 and its
separately issued component unit financial statements can be obtained at the San Rafael
Sanitation District, 111 Morphew Street, San Rafael, California 94901.
D.Basis of Presentation
Government -wide Statements - The Statement of Net Position and the Statement of Activities
display information about the primary government (the City) and its component units. These
statements include the financial activities of the overall City government, except for fiduciary
activities. Interfund transfers and amounts owed between funds within the primary government
have been eliminated from the statements. Amounts representing interfund services and uses
remain in the statements. These statements distinguish between the governmental and business -
type activities of the City. Governmental activities generally are financed through taxes,
intergovernmental revenues, and other nonexchange transactions. Business -type activities are
financed in whole or in part by fees charged to external parties.
The Statement of Activities presents a comparison between direct expenses and program revenues
for each segment of the business -type activities of the City and for each function of the City's
governmental activities. Direct expenses are those that are specifically associated with a program
or function. Program revenues include (a) charges paid by the recipients of goods or services
offered by the programs, (b) grants and contributions that are restricted to meeting the operational
needs of a particular program and (c) fees, grants and contributions that are restricted to financing
the acquisition or construction of capital assets. Revenues that are not classified as program
revenues, including all taxes, are presented as general revenues.
Fund Financial Statements - The fund financial statements provide information about the City's
funds, including fiduciary funds and blended component units. Separate statements for each fund
category - governmental, proprietary, and fiduciary - are presented. The emphasis of fund
financial statements is on major individual governmental and enterprise funds, each of which is
displayed in a separate column. All remaining governmental and enterprise funds are aggregated
and reported as non -major funds.
Proprietary fund operating revenues, such as charges for services, result from exchange
transactions associated with the principal activity of the fund. Exchange transactions are those in
which each party receives and gives up essentially equal values. Nonoperating revenues, such as
subsidies and investment earnings, result from nonexchange transactions or ancillary activities.
E.Major Funds and Other Reported Funds
Major funds are defined as funds that have either assets,liabilities,revenues or
expenditures/expenses equal to ten percent of their fund -type total and five percent of the grand
total. The General Fund is always a major fund. The City may also select other funds it believes
should be presented as major funds.
44
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 1- SUMIVIARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The City reported the following major governmental funds in the accompanying financial
statements:
General Fund - Established to account for all financial resources necessary to carry out basic
governmental activities of the City which are not accounted for in another fund.
Traffic and Housing Mitigation Special Revenue Fund - Established to maintain long-term
developer contributions for major housing and street improvement projects.
Gas Tax Special Revenue Fund - Established to receive and expend the City's allocation of the
State gasoline taxes.
Essential Facilities Capital Projects Fund - Established to account for major capital
improvements to public safety facilities.
The City reported its only enterprise fund as a major fund in the accompanying financial
statements. The enterprise fund is:
Parking Services Fund - Established to maintain parking garages, lots and spaces in the
Downtown Parking District, and to pay for parking enforcement, meter collection, and downtown
enforcement services.
The City also reports the following fund types:
Internal Service Funds - These funds account for: building maintenance; vehicle, equipment
computer, radio, and telephone replacement; employee benefits; liability insurance; workers'
compensation; dental insurance; employee retirement; and retiree medical (OPEB); and sewer
maintenance.
Fiduciary Fund - These funds include: Successor Agency to the Redevelopment Agency Private -
Purpose Trust Fund - which accounts for the accumulation of resources held by the Successor
Agency to the Redevelopment Agency to be used for payments at appropriate amounts and times
in the future; Pt. San Pedro Road Assessment District Agency Fund - which accumulates funds
for the payment of principal and interest for Pt. San Pedro Road Median Landscaping District
bonds. The financial activities of these funds are excluded from the government -wide financial
statements, but are presented in the separate Fiduciary Fund financial statements.
F.Basis of Accounting
The government -wide, proprietary, fiduciary and discretely presented component unit financial
statements are reported using the economic resources measurement focus and the full accrual
basis of accounting. Revenues are recorded when earned and expenses are recorded at the time
liabilities are incurred, regardless of when the related cash flows take place. Agency funds are
custodial in nature (assets equal liabilities) and do not involve measurement of results of
operations.
45
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Governmental funds are reported using the current financial resources measurement focus and
the modified accrual basis of accounting. Under this method, revenues are recognized when
measurable and available. The City considers all revenues reported in the governmental funds to
be available if the revenues are collected within sixty days after year-end with the exception of
sales and use tax revenues which are reported as available if collected within ninety days of year-
end. Expenditures are recorded when the related fund liability is incurred, except for principal
and interest on long-term debt, claims and judgments, and compensated absences, which are
recognized as expenditures to the extent they have matured. General capital asset acquisitions are
reported as expenditures in governmental funds. Proceeds from long-term debt and acquisitions
under capital leases are reported as other financing sources.
Those revenues susceptible to accrual are property and sales taxes, certain intergovernmental
revenues, interest revenue, charges for services, fines and forfeitures. Other receipts and taxes are
recognized as revenue when the cash is received.
Non -exchange transactions, in which the City gives or receives value without directly, receiving
or giving equal value in exchange, include taxes, grants, entitlements, and donations. On the
accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or
assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in
which all eligibility requirements have been satisfied. Under the terms of grant agreements, the
City may fund certain programs with a combination of cost -reimbursement grants, categorical
block grants, and general revenue.Thus, both restricted and unrestricted net position may be
made available to finance program expenditures. The City's policy is to first apply restricted
grant resources to such programs, followed by general revenues if necessary.
The City considers restricted shared state revenues such as gasoline taxes and public safety sales
taxes, restricted locally imposed transportation sales taxes, fines, forfeitures, licenses, permits,
charges for services, and program grants as program revenues.
Certain indirect costs are included in program expenses reported for individual functions and
activities.
G.Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position or balance sheet will sometimes report a
separate section for deferred outflows of resources.This separate financial statement element,
deferred outflows of resources, represents a consumption of net position that applies to a future
period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until
then.
46
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In addition to liabilities, the statement of financial position or balance sheet will sometimes report
a separate section for deferred inflows of resources. This separate financial statement element,
deferred inflows of resources, represents an acquisition of net position or fund balance that
applies to a future period(s) and so will not be recognized as an inflow of resources (revenue)
until that time.Unavailable revenue, a type of defen-ed inflow of resources, is reported in the
governmental funds balance sheet.The governmental funds report unavailable revenues from
three sources: taxes receivable, interest on interfund advances and loans receivable.These
amounts are deferred and recognized as an inflow of resources in the period that the amounts
become available.
H.Budgets, Budgetary Accounting, and Encumbrances
The City adopts an annual budget which is effective July 1 for the ensuing fiscal year. The budget
reflects estimated revenues and expenditures, except for the capital projects funds and the Peacock
Gap Assessment District Debt Service Fund.Appropriations and spending authorizations for
projects in the capital projects funds and some special revenue funds are approved by the City
Council on a multi -year basis.From the effective date of the budget, which is adopted at the
depai intent level, the amounts stated therein as proposed expenditures become appropriations to the
various City departments. The City Council may amend the budget by resolution during the fiscal
year in order to respond to emerging needs, changes in resources, or shifting priorities.
Expenditures may not exceed appropriations at the fund level, which is the legal level of control.
The City Manager is authorized to transfer budgeted amounts between accounts, depai intents or
funds; the Council must approve any increase in the City's operating expenditures as well as any
appropriations for capital projects.
Budgets are adopted on a basis consistent with Generally Accepted Accounting Principles for the
General Fund and Special Revenue Funds.
Encumbrance accounting, under which purchase orders for expenditures are recorded in order to
reserve that portion of the applicable appropriation, is employed as an extension of the budgetary
process. All unencumbered appropriations lapse at year end.
L Cash Equivalents
For purposes of the statement of cash flows, the City considers all highly liquid investments
(including all restricted assets) with maturity of three months or less when purchased to be cash
equivalents. The City maintains a cash and investment pool that is available for use by all funds.
As the proprietary funds' share of this pool is readily available when needed, such share is also
considered to be cash equivalent. Deposit assets in the proprietary funds are related to insurance
and benefits and are not considered cash equivalents for purposes of the statement of cash flows.
47
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
J.Capital Assets
g_q
Contributed capital assets are valued at their estimated fair market value on the date contributed.
Donated capital assets, donated works of art and similar items, and capital assets received in a
service concession arrangement are recorded at acquisition value. All other capital assets are
valued at historical cost or estimated historical cost if actual historical cost is not available.
The City has included the value of all infrastructure capital assets into its Basic Financial
Statements using the Basic Approach for infrastructure reporting.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase is reflected in the capitalized value of the asset
constructed, net of interest earned on the invested proceeds over the same period.
Capital assets, excluding infrastructure, are recorded if acquisition or construction costs exceed
$25,000. The similar threshold for infrastructure is $25,000.
Depreciation is provided using the straight-line method which means the cost of the asset is divided
by its expected useful life in years and the result is charged to expense each year until the asset is
fully depreciated.The purpose of depreciation is to spread the cost of capital assets equitably
among all users over the life of these assets. The amount charged to depreciation expense each year
represents that year's pro rata share of the cost of capital assets.
The City has assigned the useful lives listed below to capital assets:
Buildings, improvements, and structures 20 - 50 years
Machinery and equipment 4 - 20 years
Infrastructure 15 - 50 years
District
Collection systems and facilities purchased or constructed are stated at cost.Assets contributed
have been recorded at the fair market value at the date received.Interest is capitalized for assets
constructed when applicable. The costs of normal repairs and maintenance that do not add to the
value of an asset or materially extend asset lives are not capitalized. Improvements are capitalized
and depreciated over the remaining useful lives of the related capital assets, as applicable.
Applicable capital assets must be capitalized for amounts $1,000 or above and may be capitalized
for amounts from $500 to $1,000 if determined to be sensitive. Depreciation is provided by the
straight-line method over the estimated useful lives of capital assets as follows:
Subsurface lines 50-80 years
Sewer collection facilities 5-50 years
General plant & administrative 3-15 years
facilities
48
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 1- SIEVEVIARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
K.Compensated Absences
Compensated absences are accrued as earned. Upon termination, employees are paid for all unused
vacation at their current hourly rates. Unused sick leave may be compensable up to 600 hours,
depending upon the provisions of the MOUs, which vary by bargaining unit.
The long-term portion of the liability for compensated absences for governmental fund type
operations is recorded as compensated absences in the government -wide financial statements.
Compensated absences are liquidated by the fund that has recorded the liability. Proprietary fund
liabilities are recorded within their respective funds. The long-term portion of governmental
activities compensated absences is liquidated primarily by the General Fund.
The changes of the compensated absences were as follows:
Governmental
Activities
Business -Type
Activities Total
Beginning Balance $4,258,120 $142,725 $4,400,845
Additions 4,436,330 113,870 4,550,200
Payments (4,245,518)(114,970)(4,360,488)
Ending Balance $4,448,932 $141,625 $4,590,557
Current Portion $556,116 $17,703 $573,819
49
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
L.Property Tax Levy, Collection and Maximum Rates
Lin
State of California Constitution Article XIII A provides that the combined maximum property tax
rate on any given property may not exceed 1% of its assessed value unless an additional amount for
general obligation debt has been approved by voters. Assessed value is calculated at 100% of market
value as defined by Article XIII A and may be adjusted by no more than 2% per year unless the
property is sold, transferred, or substantially improved. The State Legislature has determined the
method of distribution of receipts from a 1% tax levy among the counties, cities, school districts and
other districts. Marin County assesses properties, bills for and collects property taxes on the schedule
that follows:
Valuation/lien dates
Levy dates
Due dates (delinquent as of)
Secured Unsecured
January 1 January 1
July 1 July 1
50% on November 1 (December 10)July 1 (August 31)
50% on February 1 (April 10)
The term "unsecured" refers to taxes on personal property other than land and buildings. These taxes
are secured by liens on the property being taxed.
Property taxes are levied and recorded as revenue when received in the fiscal year of levy because of
the adoption of the "alternate method of property tax distribution," known as the Teeter Plan, by the
City and the County of Marin. The Teeter Plan authorized the auditor -controller of the County of
Marin to allocate 100% of the secured property taxes billed, but not yet paid. The County of Marin
remits tax monies to the City in three installments, as follows:
55% remitted on December 15
40% remitted on April 15
5% remitted on June 15
District
The County of Marin levies taxes and places liens on real property as of January 1 on behalf of the
District. Unsecured property taxes are levied throughout the year.
M.Sewer Charges
Sewer charges are billed and collected on behalf of the District by the County of Marin as a
special assessment on annual property tax billings. Property taxes are levied on January 1 and are
due in two equal installments on November 1 and February 1.In accordance with the Teeter
Plan, the County remits to the District all charges which are assessed and the county retains
responsibility for collecting past due amounts.
50
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Teeter Plan provides that the County advance the District its share of the annual gross levy of
secured property taxes and special assessments. In consideration, the District gives the County of
Marin its rights to penalties and interest on delinquent secured property tax receivables and actual
proceeds collected.
N.Connection Fees
Connection fees represent a one-time contribution of resources to the District imposed on
contractors and developers for the purpose of financing capital improvements. Connection fees
are recognized after non -operating revenues (expenses) in the statement of revenues, expenses
and changes in net position. The District utilizes connection fees received on a first -in -first -out
basis to finance current year capital projects. Accordingly, if there is a balance of connection fees
available at year-end, it is classified as restricted net position.
0.Use of Estimates
The preparation of fmancial statements in conformity with generally accepted accounting principles
(GAAP) requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent asset and liabilities at the dates of the fmancial
statements and the reported amounts of revenues and expenditures/expenses during the reporting
periods. Actual results could differ from those estimates.
P.Implementation of Accounting Standards
Q.
Significant Accounting Standards Adopted in the Current Year
GASB Statement No. 75 -In June 2015, GASB issued Statement No. 75, Accounting and
Financial Reporting for Postemployment Benefits other than Pensions. The objective of this
Statement is to improve accounting and fmancial reporting by state and local governments for
postemployment benefits other than pensions (OPEB). The Statement replaces the requirements of
Statements No. 45 Accounting and Financial Reporting for Postemployment Benefits Other than
Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple -
Employer Plans, for OPEB. The Statement is effective for periods beginning after June 15, 2017;
however, the City has elected to implement effective July 1, 2016.
Prior Period Adjustments
The early implementation of GASB Statement No. 75 required the City to make prior period
adjustments. As a result, the beginning net positions of the Governmental Activities and Business -
Type Activities were reduced by $20,340,365 and $280,365, respectively. The beginning net position
of the Parking Services Fund was also reduced by $280,365 and the OPEB/Retiree Medical Fund
increased by $9,101,000 as part of this implementation. See Note 11 for additional information.
51
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
R.Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. The City
categorizes its fair value measurements within the fair value hierarchy established by generally
accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation
techniques used to measure fair value into three levels based on the extent to which inputs used in
measuring fair value are observable in the market.
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2 inputs are inputs - other than quoted prices included within level 1 - that are
observable for an asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for an asset or liability.
If the fair value of an asset or liability is measured using inputs from more than one level of the fair
value hierarchy, the measurement is considered to be based on the lowest priority level input that is
significant to the entire measurement.
NOTE 2 - CASH AND INVESTMENTS
A.Policies
The City maintains an investment policy that emphasizes safety, liquidity and reasonable market
yield. This policy is reviewed and approved by the City Council annually.
The City invests in individual investments and in investment pools.Individual investments are
evidenced by specific identifiable securities instruments, or by an electronic entry registering the
owner in the records of the institution issuing the security, called the book entry system. In order to
increase security, the City employs the trust department of a bank as the custodian of certain City
managed investments, regardless of their form.
California Law requires banks and savings and loan institutions to pledge government securities
with a market value of 110% of the City's cash on deposit, or first trust deed mortgage notes with a
market value of 150% of the deposit, as collateral for these deposits. Under California Law this
collateral is held in a separate investment pool by another institution in the City's name and places
the City ahead of general creditors of the institution.
The City's investments are carried at fair value, as required by generally accepted accounting
principles. The City adjusts the carrying value of its investments to reflect their fair value at each
fiscal year end, and it includes the effects of these adjustments in income for that fiscal year.
52
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 2 - CASH AND INVESTMENTS (Continued)
B.Classification
Cash and investments as of June 30, 2017, are classified in the financial statements as shown below,
based on whether or not their use is restricted under the terms of City debt instruments or agency
agreements.
Statement ofNet Position:
City of S an Rafael:
Cash and investments available for operations $68,083,546
Restricted cash and investments 702,161
Total Primary Government Cash and Investments 68,785,707
San Rafael Sanitation District (Component Unit)
Cash and investments available for operations 24,536,913
Total San Rafael Sanitation District Cash and Investments 24,536,913
Statement of Fiduciary Net Position (separate statement):
Successor Agency to the Redevelopment Agency:
Cash and investments available for operations 87,344
Restricted cash and investments 0
Total Successor Agency Cash and Investments 87,344
Pt. San Pedro Road As s es s ment District Agency Fund 289,768
Total Fiduciary Cash and Investments 377,112
Total Cash and Investments $93,699,732
The City does not normally allocate investments by fund. Each proprietary fund's portion of Cash
and Investments Available for Operations is in substance a demand deposit available to finance
operations, and is considered a cash equivalent in preparing the statement of cash flows.
53
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 2 - CASH AND INVESTMENTS (Continued)
C.Investments Authorized by the California Government Code and the City's Investment Policy
The City's investment policy and the California Government Code allow the City to invest in the
following provided the credit ratings of the issuers are acceptable to the City, and approved
percentages and maturities are not exceeded. The table below also identifies certain provisions of
the California Government Code, or the City's Investment Policy where it is more restrictive:
Minimum Maximum Maximum
Maximum Credit Percentage
of Investment in
Authorized Investment Type Maturity Quality Portfolio One Issuer
U.S. Government Obligation 5 years N/A No limit No limit
U.S. Agency Securities and Instruments 5 years AAA No limit No limit
Repurchase Agreements 1 year A-1 No limit No limit
Prime Commercial Paper 270 days A-1 25%10% of total outstanding
commercial paper
Bankers' Acceptances 180 days A-1 40%$2,000,000
Medium -Term Corporate Notes 5 years A 30%5% of portfolio
Negotiable Certificates of Deposit 5 years A-1 30%5% of portfolio
Non-negotiable Certificates of Deposit 5 years N/A 30%5% of portfolio
Local Agency Investment Fund N/A N/A N/A N/A
Money Market Mutual Funds N/A AAA 10%N/A
30 years N/A N/A N/ALimited Obligation Improvement Bonds related to
Special Assessment Districts and Special Tax Districts
The San Rafael Sanitation District maintains all of its cash in the County of Marin pooled
investment fund for the purpose of increasing interest earnings through pooled investment
activities.
The County Pool includes both voluntary and involuntary participation from external entities.
The District is a voluntary participant. The State of California statutes require certain special
districts and other governmental entities to maintain their cash surplus with the County Treasurer.
The District has approved by resolution, the investment policy of the County of Marin which
complies with the California Government Code.
54
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 2 - CASH AND INVESTMENTS (Continued)
D.Investments Authorized by Debt Agreements
The City must maintain required amounts of cash and investments with trustees or fiscal agents
under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as
reserves to be used if there are insufficient resources to meet debt repayment obligations.The
California Government Code requires these funds to be invested in accordance with City ordinance
bond indentures or State statute. The table below identifies the investment types that are authorized
for investments held by fiscal agents. The table also identifies certain provisions of these debt
agreements:
Maximum
Maximum Percentage of
Authorized Investment Type Maturity Minimum Credit Quality Portfolio
U.S. Treasury Obligations 5 years to no
maximum
N/A No Limit
U.S. Agency Securities 3 - 5 years N/A No Limit
U.S. Agency Instruments 5 years AAA No Limit
Repurchase Agreements 1 year A-1 No Limit
Bankers' Acceptances 360 days Highest Category Rating No Limit
Money Market Funds N/A Highest Cate gory Rating No Limit
Prime Commercial Paper 270 days Highest Category Rating No Limit
Guaranteed Investment Contracts (fully
collateralized) (A)N/A Highest Category Rating No Limit
Municipal Obligations N/A Two Highest Category Ratings No Limit
Medium -Term Corporate Notes 5 Years A No Limit
Non -Negotiable Certificates of Deposit 180 Days N/A No Limit
Negotiable Certificates of Deposit 5 Years N/A No Limit
Local Agency Investment Fund N/A N/A N/A
(A) Guaranteed Investment Contracts must be fully collateralized with U.S.
Treasury Obligations or U.S. Agency Obligations.
E.GASB 72 Fair Value Hierarchy
The City categorizes its fair value measurements within the fair value hierarchy established by
Generally Accepted Accounting Principles (GAAP). The hierarchy is based on the valuation
inputs used to measure fair value of the assets.Level 1 inputs are quoted prices in an active
market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3
inputs are significant unobservable inputs.
55
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 2 - CASH AND INVESTMENTS (Continued)
The following is a summary of the fair value hierarchy of the fair value of investments of the
City as of June 30, 2017:
(a)
Level 1
(b)
Level 2
(c)
Level 3 Total
City:
Money Market Mutual Funds $70,094 $70,094
U.S. Treasury Notes $4,389,785 4,389,785
U.S. Agency Securities and Instruments 14,565,516 14,565,516
Medium -Term Corporate Notes 4,054,295 4,054,295
Investment in Pt. San Pedro Bonds $1,520,800 (d)1,520,800
Total Investments $4,389,785 $18,689,905 $1,520,800 24,600,490
Local Agency Investment Fund 34,171,960
County Investment Pool 77,038
Cash in banks and on hand 9,936,219
Total City and Investments 68,785,707
Fiduciary:
Total Investments 0 0
Cash in banks and on hand 377,112
Total Fiduciary Cash and Investments 377,112
Total City and Fiduciary Cash and Investments 69,162,819
San Rafael Sanitary District:
County Investment Pool 24,536,913
Total District's Cash and Investments 24,536,913
Total Cash and Investments $93,699,732
Source: The above GASB 72 classifications into the different Input Levels are provided by the US Bank Institutional Trust & Custody.
(a)Level 1 inputs are quoted prices in active market for identical assets. These are quoted prices in active markets for identical assets at the
measurement date. An active market for the asset is a market in which transactions for the asset occur with sufficient frequency and volume
to provide pricing information on an ongoing basis.
(b)Level 2 inputs are significant other observable inputs. These inputs include: a) Quoted prices for similar assets in active markets; b) Quoted
prices for identical or similar assets in markets that are not active; and c) Inputs other than quoted prices that are observable for an asset.
(c)Level 3 inputs are significant unobservable inputs. These inputs shall be used to measure fair value to the extent that observable inputs
are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date,
unobservable inputs shall reflect the assumptions that market participants would use in pricing the asset including assumptions about risk.
(d)This pertains to the City -owned bonds of its investments in Pt. San Pedro that has no trading market and is thus listed under Level 3.
This bond is valued using discounted cash flow techniques.
56
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 2 - CASH AND INVESTMENTS (Continued)
F.Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of
an investment. Noi wally, the longer the maturity of an investment, the greater the sensitivity of its
fair value to changes in market interest rates. The City also manages its interest rate risk by holding
most investments to maturity, thus reversing unrealized market gains and losses.
Infoiination about the sensitivity of the fair values of the City's investments (including investments
held by bond trustee) to market interest rate fluctuations is provided by the following table that
shows the distribution of the City's investments by maturity or earliest call date:
Type of Investment
12 Months
or Less
More than
12 Months Total
City:
Money Market Mutual Funds $70,094 $70,094
Local Agency Investment Fund 34,171,960 34,171,960
County Investment Pool 77,038 77,038
U.S. Treasury Notes 2,495,880 $1,893,905 4,389,785
U.S. Agency Securities and Instruments 5,998,990 8,566,526 14,565,516
Medium -Term Corporate Notes 1,502,835 2,551,460 4,054,295
Investment in Pt. San Pedro Bonds 1,520,800 1,520,800
Total Investments $44,316,797 $14,532,691 58,849,488
Cash in banks and on hand 9,936,219
Total City and Investments 68,785,707
Fiduciary:
Total Investments 0 0
Cash in banks and on hand 377,112
Total Fiduciary Cash and Investments 377,112
Total City and Fiduciary Cash and Investments 69,162,819
San Rafael Sanitary District:
County Investment Pool 24,536,913
Total District's Cash and Investments 24,536,913
Total Cash and Investments $93,699,732
57
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 2 - CASH AND INVESTMENTS (Continued)
The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California
Government Code Section 16429 under the oversight of the Treasurer of the State of California. The
City reports its investment in LAIF at the fair value amount provided by LAW, which is the same as
the value of the pool share. The balance is available for withdrawal on demand, and is based on the
accounting records maintained by LAIF, which are recorded on an amortized cost basis.
Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage -backed
securities, other asset -backed securities, loans to certain state funds, and floating rate securities issued
by federal agencies, government -sponsored enterprises, United States Treasury Notes and Bills, and
corporations. At June 30, 2017, these investments matured in an average of 194 days.
Money Market Mutual Funds are available for withdrawal on demand. The investment portfolio of
the Money Market Mutual Fund had an average maturity of 42 days at June 30, 2017.
The County's investment pool is not registered with the Securities and Exchange Commission as an
investment company. The pool has a credit rating of "AAA/V1." Investments made by the Treasurer
are regulated by the California Government Code and by the County's investment policy.The
objectives of the policy are in order of priority, safety, liquidity, yield, and public trust. The County
has established a treasury oversight committee to monitor and review the management of public
funds maintained in the investment pool in accordance with Article 6 Section 27131 of the California
Government Code. The oversight committee and the Board of Supervisors review and approve the
investment policy annually.The County Treasurer prepares and submits a comprehensive
investment report to the members of the oversight committee and the investment pool participants
every month. The report covers the types of investments in the pool, maturity dates, par value, actual
costs and fair value.
58
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 2 - CASH AND INVESTMENTS (Continued)
G.Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the
investment.This is measured by the assignment of a rating by a nationally recognized statistical
rating organization. Presented below is the actual rating as of June 30, 2017, for each of the Primary
Government's investment types as provided by Standard and Poor's or Moody's investment rating
systems, except as noted:
Type of Investment A A+AA-AA AA+Aaa/AAA Al/P1 Total
City (except Fiduciary Funds):
Money Market Mutual Funds $70,094 $70,094
County Investment Pool 77,038 77,038
U.S. Treasury Notes $4,389,785 4,389,785
U.S. Agency Securities and Instruments 14,565,516 14,565,516
Medium -Term Corporate Notes $495,895 $2,061,665 $500,340 $498,205 498,190 4,054,295
Total rated investments $495,895 $2,061,665 $500,340 $498,205 $19,453,491 $147,132 $0 23,156,728
Not rated:
Local Agency Investment Fund 34,171,960
Investment in Pt. San Pedro Bonds 1,520,800
Cash in banks and on hand 9,936,219
Total City Cash and Investments 68,785,707
Fiduciary:
Money Market Mutual Funds $0
Total rated investments $0 0
Not rated:
Local Agency Investment Fund
Cash in banks and on hand 377,112
Total Fiduciary Cash and Investments 377,112
Total City and Fiduciary Cash and Investments 69,162,819
AAA/V1
Component Unit
San Rafael Sanitary District:
Investment in County Pool (Rated AAAN1)24,536,913 24,536,913
Total District's Cash and Investments $24,536,913 24,536,913
Total Cash and Investments $93,699,732
H.Concentration Risk
Included in the table at Note G above are the following significant investments in any one issuer
other than U. S. Treasury securities, mutual funds, and external investment pools.
Reporting Unit Issuer Investment Type Amount
Entity -wide Federal Home Loan Bank Federal Agencies Obligation $5,748,348
Federal Farm Credit Bank Federal Agencies Obligation 3,726,430
59
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 3 - INTER -FUND TRANSACTIONS
A.Transfers
Resources may be transferred from one City fund to another. Transfers routinely fund capital
projects or capital outlays, lease or debt service payments, and operating expenses.
Transfers between funds during the fiscal year ended June 30, 2017, were as follows:
From Fund
General Fund
General Fund
Gas Tax Fund
To Fund Amount
Non -Major Governmental Funds $1,796,089 (A)
Essential Facilities Capital Projects Fund 5,417,454 (B)
General Fund
Traffic and Housing Mitigation Fund
400,000 (C)
228,400 (D)
Parking Services Enterprise Fund General Fund 436,000 (C)
Non -Major Governmental Funds 100,000 (A)
Internal Service Fund
Non -Major Governmental Funds
General Fund 376,520 (C)
General Fund 169,783 (E)
Non -Major Governmental Funds 37,761 (F)
Building Maintenance Internal Service Fund 80,275 (F)
Gas Tax Fund 325,000 (G)
$9,367,282
(A) Transfer to the non -Major Governmental Funds were for administrative costs, grant matching, recreation and other program
support.
(B) Transfer to the Essential Facilities Capital Projects Fund were for the Fire Station 52 and 57, and Public Safety Center projects.
(C) Transfers to the General Fund were for street maintenance support, administrative costs and pension obligation bond debt
service principal and interest payment.
(D) Transfer to Traffic Mitigation for Freitas-Las Gallinas Intersection Improvement.
(E) Transfer residual funds in programs now reported in General Fund.
(F) Transfer Measure A Open Space to Victor Jones Park Improvements and Albert Park Improvements.
(G) Transfer from State Land Fund to Gas Tax Fund for right of way purchase.
B.Internal Balances
GASB 34 requires internal balances to be presented in the Government -wide financial statements
only. They represent the net interfund receivables and payables remaining after the elimination of
all such balances within governmental and business -type activities.
60
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 4 - LOANS RECEIVABLE
A.Summary of Loans Receivable
The City has identified the portion of fund balance represented by these loans as nonspendable or
restricted as discussed in Note 8. At June 30, 2017, these loans totaled:
Employee Loans $6,350
Centertown Associates 230,066
One "H" Street Associates 48,573
Fire Chief Loan 224,623
Marin Housing Authority 145,000
Total $654,612
B.Employee Loans
The City administers a computer loan program that supports the use of technology by employees.
Employees are permitted to borrow up to $1,500 for the purchase of computer hardware and
software. The loans are interest -free, have maximum terms of one year, and are repaid through
automatic payroll deductions. As of June 30, 2017, the balance of the employee loans receivable
was $6,350.
C.Centertown Associates Loan
On August 20, 1990, the former Redevelopment Agency loaned Centertown Associates, Ltd,
$303,000 at 3% interest due semiannually. The loan was made for the construction of a 60 -unit
affordable Centertown apartment complex and is fully secured by a deed of trust. The final payment
is due on July 31, 2065. With the dissolution of the Redevelopment Agency effective February 1,
2012, the assets of the Agency's Low and Moderate Income Housing fund, including the
Centertown Associates loan, were assumed by the City's Low and Moderate Income Housing
Special Revenue Fund. As of June 30, 2017, the balance of the loan including principal and accrued
interest was $230,066.
D.One "H" Street Associates Loan
On January 18, 1994, the City loaned One "H" Street Associates $100,000 at zero percent interest
with annual payments of $2,857 and with a final payment due January 18, 2034. As of June 30,
2017, the balance of this loan was $48,573.
61
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 4 - LOANS RECEIVABLE (Continued)
E.Fire Chief Loan
On September 17, 2007, the City Council approved a Home Loan Agreement to provide the Fire
Chief with housing assistance. Under the Agreement, which was executed on October 3, 2007, the
City loaned the Fire Chief $600,000 to assist in the purchase of his primary residence. The loan is
secured by a recorded deed of trust.The initial interest rate to be charged was 5.25% through
August 31, 2008. On September 1, 2008, and on each September 1 following, until the loan is paid
off, the interest rate of the loan will be adjusted based upon the then reported quarter -to -date Local
Agency Investment Fund rate on the City's investment portfolio. As of June 30, 2017, the balance
of the loan was $224,623.
F.Marin Housing Authority Loans
On April 19, 2016, the City made a loan to the Marin Housing Authority for a low and moderate
income unit, in the amount of $145,000. As with other loans made under this program, this loan is
due upon the sale of the unit. As of June 30, 2017, the balance of this loan was $145,000.
G.Other Receivables
The City provides staffing to San Rafael Sanitation District (District) under a contractual
arrangement originated in 1987 that requires the District to pay all related employee costs incurred
by the City on its behalf Accordingly, the cost of providing pension and post -employment health
benefits incurred by the City for the District staff but not yet funded are reflected by the District as
an obligation, and by the City as a noncurrent receivable. The obligation as of June 30, 2017 is
$4,527,836, and is composed of the following:
Long-term receivable from San Rafael Sanitation District:
Defined benefit pension liability allocation (GA SB 68)
Other post -employment benefit liability allocation (GA SB 75)
$3,623,716
904,120
Total long-term receivable from San Rafael Sanitation District $4,527,836
62
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 5 - CAPITAL ASSETS
Changes in capital assets during the fiscal year consisted of:
Governmental Activities
Capital assets not being depreciated:
Balance
June 30, 2016 Additions Retirements Transfers
Balance
June 30, 2017
Land $83,261,168 $401,191 $83,662,359
Construction in progress 11,519,721 11,574,687 ($207,189)($11,040,344)11,846,875
Total capital assets not being depreciated 94,780,889 11,975,878 (207,189)(11,040,344)95,509,234
Capital assets being depreciated:
Land improvements 9,020,097 9,020,097
Buildings and structures 41,667,102 1,228,402 42,895,504
Machinery and equipment 18,476,428 961,998 (597,431)18,840,995
Infrastructure 187,212,938 9,811,942 197,024,880
Total capital assets being depreciated 256,376,565 961,998 (597,431)11,040,344 267,781,476
Less accumulated depreciation for:
Land improvements (5,800,084)(270,055)(6,070,139)
Buildings and structures (17,086,815)(1,203,468)(18,290,283)
Machinery and equipment (12,126,787)(1,142,308)577,488 (12,691,607)
Infrastructure (122,058,098)(4,674,418)(126,732,516)
Total accumulated depreciation (157,071,784)(7,290,249)577,488 11,040,344 (163,784,545)
Total net capital assets being depreciated 99,304,781 (6,328,251)(19,943)11,040,344 103,996,931
Total governmental activity capital assets $194,085,670 $5,647,627 ($227,132)$199,506,165
Business -type Activities
Capital assets not being depreciated:
Balance
June 30, 2016 Additions Retirements Transfers
Balance
June 30, 2017
Land $8,620,853 $8,620,853
Total capital assets not being depreciated 8,620,853 8,620,853
Capital assets being depreciated:
Buildings and structures 10,713,814 10,713,814
Machinery and equipment 1,266,865 ($54,795)1,212,070
Total capital assets being depreciated 11,980,679 (54,795)11,925,884
Less accumulated depreciation for:
Buildings and structures (2,894,596)($205,363)(3,099,959)
Machinery and equipment (1,007,821)(50,145)54,795 (1,003,171)
Total accumulated depreciation (3,902,417)(255,508)54,795 (4,103,130)
Total net capital assets being depreciated 8,078,262 (255,508)7,822,754
Total business -type activity capital assets $16,699,115 ($255,508)$16,443,607
63
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
Balance
June 30, 2016 Additions Retirements
Transfers &
Adjustments
Balance
June 30, 2017
NOTE 5 - CAPITAL ASSETS (Continued)
San Rafael Sanitation District
Capital assets not being depreciated:
Land and easements $115,329 $115,329
Construction in progress 3,204,067 $6,393,082 ($9,325,117)272,032
Total capital assets not being depreciated 3,319,396 6,393,082 (9,325,117)387,361
Capital assets being depreciated:
Subsurface lines 28,364,238 70,932 6,745,103 35,180,273
Sewage collection facilities 39,499,143 49,533 2,580,013 42,128,689
General plant and administration 1,649,897 3,213 1,653,110
Total capital assets being depreciated 69,513,278 123,678 9,325,116 78,962,072
Less accumulated depreciation for:
Subsurface lines (10,812,495)(485,276)(11,297,771)
Sewage collection facilities (17,631,349)(931,117)(18,562,466)
General plant and administration (963,773)(133,105)(1,096,878)
Total accumulated depreciation (29,407,617)(1,549,498)(30,957,115)
Total net capital assets being depreciated 40,105,661 (1,425,820)9,325,116 48,004,957
Total District's capital assets $43,425,057 $4,967,262 ($1)$48,392,318
Capital Asset Contributions - Some capital assets may have been acquired using Federal and State
grant funds, or were contributed by developers or other governments.These contributions are
accounted for as revenues at the time the capital assets are contributed.
Depreciation Allocation - Depreciation expense is charged to functions and programs based on
their usage of the related assets. The amounts allocated to each function or program are as
follows:
Governmental Activities
General government $141,713
Public safety 857,493
Public works and parks 5,480,853
Community development/redevelopment 53,342
Culture and recreation 756,848
Total Governmental Activities $7,290,249
Business -type Activities
Parking services $255,508
Total Business -type Activities $255,508
64
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 6 - LONG TERM DEBT
The City generally incurs long-term debt to finance projects or purchase assets which will have
useful lives equal to or greater than the related debt.
A summary of governmental and business -type activities transactions for the fiscal year ended
June 30, 2017, are as follows:
Governmental Activities:
2010 Taxable Pension Obligation Bonds
Authorized
and Issued
Balance
June 30, 2016 Additions Retirements
Balance
June 30, 2017
Current
Portion
6.00%-6.25%, due 7/1/2025 $4,490,000 $4,490,000 $100,000 $4,390,000 $205,000
Total Pension Obligation Bonds 4,490,000 100,000 4,390,000 205,000
PG & E City Hall HVAC Retrofit Note Payable
0.00%, due 11/30/2023 334,585 245,838 33,280 212,558 $33,280
PG & E Street Light Retrofit Note Payable
0.00%, due 8/31/2019 233,896 132,657 41,892 90,765 41,892
Total Governmental Long-term Debt $4,868,495 $175,172 $4,693,323 $280,172
Business -type Activities
PG & E Parking Lot Lighting Retrofit Note Payable
0.00%, due 11/30/2023 $66,380 $48,204 $6,816 $41,388 $6,816
2012 Authority Lease Revenue Refunding Bonds
2.00-4.00%, due 4/1/2033 6,750,000 5,705,000 260,001 5,444,999 270,000
Less: unamortized bond discount (12,147)(725)(11,422)
Total Enterprise Fund Debt $5,741,057 $266,092 $5,474,965 $276,816
A.2010 Taxable Pension Obligation Bonds
On July 1, 2010, the City issued 2010 Taxable Pension Obligation Bonds in the amount of
$4,490,000 bearing interest at rates from 6.00% to 6.25%. Principal payments are due annually on
July 1 and interest is payable semiannually on January 1 and July 1. The Bonds were issued to
prefund a portion of the obligations of the City to the Marin County Employees' Retirement
Association. Payment of the principal and interest on the Bonds is not limited to any special
source of funds and is payable from any legally available moneys of the City. The City is not
empowered or obligated to levy or pledge taxes to make payments on the Bonds.
B.Pacific Gas and Electric Note Payable
On September 30, 2013, the City executed a note payable agreement with Pacific Gas and
Electric (PG&E) in the amount of $634,861, bearing no interest. The debt was assumed as a
means to finance energy -efficient retrofit projects which include updating existing heating,
ventilation and air conditioning (HVAC) unit in City Hall and converting the street and parking
lot light to light emitting diode (LED). $334,585 of the loan is for the HVAC projects and
$300,276 of the loan is for the LED projects. Repayment of the loan commenced in December
2013, and is due monthly until paid in full in 2023.
65
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 6 - LONG-TERM DEBT (Continued)
C.2012 Authority Lease Revenue Refunding Bonds
On August 7, 2012, the Authority issued 2012 Authority Lease Revenue Refunding Bonds in the
amount of $6,750,000 bearing interest at rates from 2.00% to 4.00%. The proceeds of the Series
2012 Bonds were used to repay the Authority's 2003 Authority Lease Revenue Bonds that
financed the construction of the 3rd and C Street parking structure and achieved lower interest
rates and lower annual debt service payments. The refunding resulted in a net present value
savings to the City in debt service of $670,496. In addition, the requisition price exceeded the net
carrying amount of the old debt by $295,278. The Series 2012 Bonds are payable from lease
payments made by the City to the Authority for leasing the City facilities. The rights to these
lease payments have been irrevocably transferred by the Authority to the Trustee.Activities
related to the Series 2012 Bonds are reported in the Parking Services Enterprise Fund. Principal
payments are due annually on April 1 and interest is payable semiannually on October 1 and
April 1. The Bonds maturing on or prior to April 1, 2022 are not subject to optional redemption
prior to their maturity. The Bonds maturing on or after April 1, 2023 are subject to optional
redemption as a whole or in part on any date after April 1, 2022 at the option of the Authority, at
a redemption price equal to the principal amount of the Bonds subject to redemption, plus accrued
interest to the date fixed for redemption, without premium.
D.Future Debt Service
Future debt service requirements, including interest, at June 30, 2017, are as follows:
For the Year Governmental Activities Business -type Activities
Ended June 30 Principal Interest Principal Interest
2018 $280,172 $264,362 $276,816 $186,188
2019 495,172 245,612 281,816 178,088
2020 485,261 219,662 291,816 169,838
2021 508,280 192,062 296,816 161,288
2022 538,280 162,031 306,816 152,588
2023 - 2027 2,386,158 303,443 1,652,307 617,982
2028 - 2032 1,945,000 314,412
2033 435,000 17,400
Totals $4,693,323 $1,387,172 5,486,387 $1,797,784
Reconciliation of Long-term debt:
Less: unamortized discount (11,422)
$5,474,965
66
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 7 - DEBT WITHOUT CITY COMMITMENT
The City has sponsored the issuance of the following debt, for which the City is not liable for
repayment but acts as an agent for the property owners and bondholders:
San Rafael Redevelopment Agency
Multifamily Housing Revenue Bonds -2000A
California Statewide Communities
Development Authority Revenue Bonds -2002
Project Original Outstanding
Description Amount June 30, 2017
162-175 Belvedere
Apartments $3,590,529 $1,084,330
St. Marks School 5,605,000 3,695,000
San Rafael Redevelopment Agency
Variable Rate Demand Multifamily 55 Fairfax
Housing Revenue Bonds -2001A Apartments 3,000,000 2,200,000
San Rafael Redevelopment Agency San Rafael Commons
Multifamily Housing Revenue Bonds -2001 Apartments 6,100,000 4,880,000
San Rafael Redevelopment Agency Martinelli House
Multifamily Housing Revenue Bonds -2007 Series A Project 6,000,000 1,944,047
Multifamily Housing Revenue Bonds -2007 Series B Martinelli House 1,000,000 205,575
Pt. San Pedro Road Median Landscaping
Assessment District Limited Obligation Bonds -2012
NOTE 8 - NET POSITION AND FUND BALANCE
A.Net Position
Pt. San Pedro Road 1,750,000 1,520,800
Median Landscaping
Net Position is the excess of all the City's assets and deferred outflow over all its liabilities, and
deferred inflows regardless of fund. Net Position is divided into three captions. These captions
apply only to Net Position, which is determined only at the Government -wide level and business
type activity and are described below:
Net Investment in Capital Assets describes the portion of Net Position which is represented by the
current net book value of the City's capital assets, less the outstanding balance of any debt issued
to finance these assets.
Restricted describes the portion of Net Position which is restricted to use by the terms and
conditions of agreements with outside parties, governmental regulations, laws, or other restrictions
which the City cannot unilaterally alter.
Unrestricted describes the portion of Net Position which is not restricted to use.
67
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 8 - NET POSITION AND FUND BALANCE (Continued)
B.Fund Balance
In the fund financial statements, fund balances represent the net current assets of each fund. Net
current assets generally represent a fund's cash and receivables, less its liabilities.The City's
fund balances are classified in accordance with Governmental Accounting Standards Board
Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type
Definitions, which requires the City to classify its fund balances based on spending constraints
imposed on the use of resources.For programs with multiple funding sources, the City
prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and
Unassigned.Each category in the following hierarchy is ranked according to the degree of
spending constraint:
Nonspendable represents balances set aside that do not represent available, spendable resources
even though they are a component of assets. Fund balances required to be maintained intact, such
as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes
receivable, and land held for redevelopment are included. However, if proceeds realized from the
sale or collection of nonspendable assets are restricted,committed or assigned,then
Nonspendable amounts are required to be presented as a component of the applicable category.
Restricted fund balances have external restrictions imposed by creditors, grantors, contributors,
laws, regulations, or enabling legislation which requires the resources to be used only for a
specific purpose. Nonspendable amounts subject to restrictions are included along with spendable
resources.
Committed fund balances have constraints imposed by resolution of the City Council which may
be altered only by resolution of the City Council. Nonspendable amounts subject to council
commitments are included along with spendable resources.
Assigned fund balances are amounts constrained by the City's intent that they be used for a
specific purpose, but are neither restricted nor committed. Intent is expressed by the City
Manager as designated by the City Council and may be changed at the discretion of the City
Council or City Manager.This authorization is given through Resolution No. 13173 which
adopts the City's Fund Balance Policy.This category includes nonspendables, when it is the
City's intent to use proceeds or collections for a specific purpose; and residual fund balances, if
any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted
or committed.
Unassigned fund balance represents residual amounts that have not been restricted, committed, or
assigned. This includes the residual General Fund balance and residual fund deficits, if any, of
other governmental funds
68
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 8 - NET POSITION AND FUND BALANCE (Continued)
Detailed classifications of the City's fund balances, as of June 30, 2017, are below:
Fund balances:
Nonspendable:
General Fund
Special Revenue Funds
Other
Governmental
Funds Total
Traffic and
Housing
Mitigation
Essential Facilities
Capital Projects
Gas Tax Fund
Loans receivable $230,973 $230,973
Prepaids 277,473 277,473
Total Nonspendable 508,446 508,446
Restricted for:
Assessment District capital projects $300,780 300,780
Baypoint Lagoons Assessment District 238,326 238,326
Bedroom tax capital projects 76,845 76,845
Childcare 1,370,144 1,370,144
Development services 683,286 683,286
Emergency medical services 1,744,530 1,744,530
1997 financing authority revenue bonds debt service 147,797 147,797
Gas tax $6,723,696 6,723,696
Grants 753,121 753,121
Household hazmat facility 313,365 313,365
Library 632,065 632,065
Library assessment 667,572 667,572
Loch Lomond Assessment District 660,266 660,266
Low and Moderate Income Housing 910,350 910,350
Mariposa Assessment District debt service 16,573 16,573
Measure A Open Space 369,235 369,235
Parkland dedication 449,188 449,188
Peacock Gap Assessment District debt service 2,875 2,875
Public safety 158,500 158,500
Pt. San Pedro - Maintenance Portion 151,283 151,283
Recreation revolving 118,091 118,091
Storm water 189,087 189,087
Traffic and housing mitigation $9,135,430 9,135,430
Total Restricted 9,135,430 6,723,696 9,953,279 25,812,405
(Continued)
69
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 8 - NET POSITION AND FUND BALANCE (Continued)
Special Revenue Funds
Committed to:
General Fund
Traffic and
Housing
Mitigation
Essential Facilities
Capital Projects
Gas Tax Fund
Other
Governmental
Funds Total
Capital improvement capital projects $3,463,772 $3,463,772
Park capital projects 27,936 27,936
Total Committed 3,491,708 3,491,708
Assigned to:
Contractual commitments $50,581 50,581
MOU - One time payment 500,000 500,000
Emergency and cash flow 7,200,000 7,200,000
Infrastructure reserve 600,000 600,000
General plan / long range planning 1,786,478 1,786,478
Measure E - Public Safety Facility 4,763,886 4,763,886
Open space capital projects 115,103 115,103
Total Assigned 14,900,945 115,103 15,016,048
Unassigned to:
General Fund 1,295,041 1,295,041
1,295,041 1,295,041
Total Fund Balances $16,704,432 $9,135,430 $6,723,696 $13,560,090 $46,123,648
NOTE 9 - PENSION PLANS
A.Plan Description
The City's defined benefit retirement plan is administered by the Marin County Employees'
Retirement Association (MCERA), a retirement system established in July 1950 and governed by
the California Constitution; the County Employees Retirement Law of 1937 (CERL or 1937 Act,
California government Code Section 31450 et seq.); the Public Employees' Pension Reform Act
of 2013 (PEPRA, Government Code Section 7522); the provisions of California Government
Code Section 7500 et seq; and the bylaws, procedures, and policies adopted by MCERA's Board
of Retirement. The Marin County Board of Supervisors may also adopt resolutions, as permitted
by the CERL and PEPRA, which may affect the benefits of MCERA members.
MCERA operates as a cost -sharing multiple employer defined benefit plan for the City and eight
other participating employers: County of Marin, Local Agency Formation Commission
(LAFCO),Marin City Community Services District,Marin County Superior Court,
Marin/Sonoma Mosquito and Vector Control District, Novato Fire Protection District, Southern
Mariri Fire Protection District, and Tamalpais Community Services District. Separate actuarial
valuations are performed for these other agencies and districts, and the responsibility for funding
their plans rest with those entities. Post -retirement benefits are administered by MCERA to
qualified retirees.
Copies of MCERA's annual financial reports, which include required supplementary information
(RSI) for each plan may be obtained from their office at One McInnis Parkway, Suite 100, San
Rafael, CA 94903 or online at www.mcera.org.
70
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 9 - PENSION PLANS (Continued)
B.Benefit Provisions
Service Retirement: MCERA's service retirement benefits are based on the years of credited
service, final average compensation, and age at retirement, according to the applicable statutory
formula. Members who qualify for service retirement are entitled to receive monthly retirement
benefits for life.
General members hired prior to January 1, 2013 are eligible to retire once they attain the age of
50 (except Misc Tier 2, whereby the minimum age is 55) and have acquired 10 or more years of
retirement service credit. A member with 30 years of service is eligible to retire regardless of age.
A member who is age 70 or older is eligible to retire regardless of service credit. General
members who are first hired on or after January 1, 2013 are eligible to retire once they have
attained the age of 52, and have acquired 5 years of retirement service credit, or age 70,
regardless of service.
Safety members hired prior to January 1, 2013 are eligible to retire once they attain the age of 50
and have acquired 10 or more years of retirement service credit. A member with 20 years of
service is eligible to retire regardless of age. A member who is age 70 or older is eligible to retire
regardless of service. Safety members who are first hired on or after January 1, 2013 are eligible
to retire once they have attained the age of 50, and have acquired 5 years of retirement service
credit, or age 70, regardless of service.
Disability Retirement: A member with five years of service, regardless of age, who becomes
permanently incapacitated for the performance of duty is eligible to apply for a non -service
connected disability retirement. Any member who becomes permanently incapacitated for the
performance of duty as a result of injury or disease arising out of and in the course of
employment is eligible to apply for a service -connected disability retirement, regardless of
service length or age.
Death Benefits: MCERA provides specified death benefits to beneficiaries and members'
survivors. The death benefits provided depend on whether the member is active or retired. The
basic active member death benefit consists of a members' retirement contributions plus interest
plus one month's pay for each full year of service (up to a maximum of six month's pay).
Retiring members may choose from five retirement benefit payment options. Most retirees elect
to receive the unmodified allowance which provides the maximum benefit to the retiree and
continuance of 60% of the retiree's allowance to the surviving spouse or registered domestic
partner after the retiree's death. Other death benefits may be available based on the years of
service, marital status, and whether the member has minor children.
Cost of Living Adjustment:Retirement allowances are indexed for inflation. Most retirees
receive automatic basic cost of living adjustments (COLA's) based upon the Urban Consumer
Price Index (UCPI) for the San Francisco Bay Area. These adjustments go into effect on April 1
of each year. Annual COLA increases are statutorily capped at 2%, 3%, or 4% depending upon
the member's retirement tier. When the UCPI exceeds the maximum statutory COLA for the
member's tier, the difference is accumulated for use in future years when the UCPI is less than
the maximum statutory COLA. The accumulated percentage carryover is known as the COLA
Bank.
71
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 9 - PENSION PLANS (Continued)
C.Funding Policy
The funding policy of MCERA provides for actuarially determined periodic contributions by the
City at rates such that sufficient assets will be available to pay plan benefits when due. The
employer rates for normal cost are determined using the Entry Age Normal Actuarial Cost
Method, which takes into account those benefits that are expected to be earned in the future as
well as those already accrued.
The City contribution rates for the year ended June 30, 2017 were as follows:
Employer
Contribution Rate
Employee
Contribution Rate Benefit Basis
City of San Rafael Misc Tier 1 50.40%0.00% - 16.82%2.7% @ 55 Highest year
City of San Rafael 1vlisc Tier 2 46.81%7.89% - 12.57%2.0% @ 55 Average three highest years
City of San Rafael Fire Tier 1 75.67%0.00% - 19.79%3.0% @ 55 Highest year
City of San Rafael Fire Tier 2 72.59%11.34% - 17.69%3.0% @ 55 Average three highest years
City of San Rafael Safety Police Tier 74.79%00.00% - 19.79%3,0% @ 55 Highest year
City of San Rafael Safety Police Tier :75.53%11.34% - 17.69%3.0% @ 55 Average three highest years
PEPRA Misc 42.11%9.18%- 10.18%2.0% @ 62 Average three highest years
PEPRA Safety 64.88%14.53%2.7% @ 57 Average three highest years
These rates were determined by MCERA, based on the actuarial valuation dated June 30, 2015.
The actual rate of return on investments during that year was 4.99% on a market value basis net
of investment expenses, as compared to the 7.25% assumption.
The City uses the actuarially determined percentages of payroll to calculate and pay contributions
to MCERA. Contributions to the plan from the City were $20,003,002 for the year ended June 30,
2017, based on a total payroll of $41,553,242, of which $32,885,135 represented the basis for the
plan contributions. Of the total payroll subject to plan contributions, $1,305,530 is attributable to
the San Rafael Sanitation District (SRSD), a component unit of the City.
Effective with the June 30, 2013 valuation, the Unfunded Actuarial Liability (UAL) as of June
30, 2013 is being amortized over a closed 17 -year period (15 years remaining as of June 30,
2015), except for the additional UAL attributable to the outstanding unfunded actuarial loss from
2009, which is being amortized over a separate closed period (currently 23 years).
Effective with the June 30, 2014 valuation, any new sources of UAL due to actuarial gains and
losses or method changes are amortized over a closed 24 -year period (23 years remaining as of
June 30, 2015, with a 5 -year ramp up period at the beginning of the period, a 4 -year ramp down at
the end of the period, and 15 years of level payments as a percentage of payroll between the
ramping periods. This new amortization method for gains and losses is similar to a 20 -year
amortization period with level payments as a percentage of payroll, in conjunction with a
traditional 5 -year asset smoothing.
Assumption changes are amortized over a closed 22 -year period, with a 3 -year ramp up period, 2 -
year ramp down period, and 17 years of level payments as a percentage of payroll.
72
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 9 - PENSION PLANS (Continued)
D.Pension Liability and Pension Expense
The City's net pension liability (NPL) has been determined for the fmancial reporting period
ended June 30, 2017 based on the following methodology: The City's NPL as of June 30, 2015
was updated to the measurement date of June 30, 2016, using the actual City's plan assets as of
June 30, 2016 and estimating the change in the City's liabilities between July 1, 2015 and June
30, 2016. This estimate is based on a projection of the City's long term contributions to the
pension plan relative to the projected contributions of all participating employers.
The resulting NPL for the City under this calculation is $167,054,850, or 34.9538% of the total
MCERA NPL of $477,930,440 (reference MCERA's GASB 67/68 report as of June 30, 2016).
This compares to the previous year's NPL of $142,323,127, or 36.7394% of the total MCERA
NPL of $387,385,550 (reference MCERA's GASB 67/68 report as of June 30, 2015).
In addition to the reporting of the NPL as of June 30, 2017, the City reported deferred inflows of
$22,096,113 and deferred outflows of $55,004,455 as of the measurement date June 30, 2016.
The City reported post -measurement date outflows of $20,003,001 from actual fiscal year 2016-
2017 pension contributions. Deferred inflows include deferred investment gains and adjustments
to assumptions based on actual positive results. Deferred inflows have a positive impact on net
assets (offsetting the NPL) and will be recognized in future reporting periods. Deferred outflows
include deferred investment losses, adjustments to assumptions based on actual negative results,
and contributions made after the measurement date. Deferred outflows have a negative impact on
net assets (similar to the NPL) and will be recognized in future reporting periods. The net impact
of these pension liability related entries on the City's Statement of Net Position before allocations
to the San Rafael Sanitation District is $114,143,507. After allocations to the San Rafael
Sanitation District, the net impact on the City's Statement of Net Position is $110,519,791.
Under GASB 68, the City's pension expense is based on the Plan's pension expense, adjusted for
the City's actual contributions and net pension liability. MCERA reported the Plan's pension
expense to be $85,290,611, of which $30,799,273, or 34.9538%, is the City's annual pension
expense for the reporting year.
Three components are used to calculate pension expense: (1) changes in the net pension liability;
(2) changes in benefit terms (if any): and (3) changes in actuarial assumptions and experience.
Pension expense is calculated using a different methodology than that used to derive the
actuarially determined annual contribution to the Plan. Actual pension contributions during the
reporting year were $20,003,001. Because pension expense is affected by annual changes in the
net pension liability, volatility is to be expected. For the current measurement period, investment
returns below the assumed rate were responsible for the increase in net pension liability and had a
corresponding impact on pension expense.
73
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 9 - PENSION PLANS (Continued)
The table below provides a summary of the key results during the reporting period:
Summary of Results
Measurement Date Measurement Date
Description 6/30/2016 6/30/2015
Net Pension Liability $167,054,850 $142,323,127
Deferred Inflows 22,096,113 33,817,086
Deferred Outflows (55,004,455)(39,886,216)
Impact on Net Position before Deferred Outflows from Contributions 134,146,508 136,253,997
Additional Deferred Outflows - Contributions Subsequent to Measurement Date (20,003,001)(19,339,577)
Impact on Statement of Net Position before Allocations 114,143,507 116,914,420
Allocation of NPL to SRSD 5,320,236 4,695,240
Allocation of Deferred Inflows (measurement date) to SRSD 703,700 1,115,626
Allocation of Deferred Outflows (measurement date) to SRSD (1,751,740)(1,315,846)
Impact on Net Position before Allocation of Deferred Outflows
from Contributions to SRSD 4,272,196 4,495,020
Allocation of Additional Deferred Outflows (Contributions) to SRSD (648,480)(638,013)
Long -Term Receivable from SRSD, due to pension obligations (see Note 4H)3,623,716 3,857,007
Impact on Statement of Net Position, net of receivable from SRSD 110,519,791 113,057,413
Pension Expense ($ Amount)30,799,273 19,107,673
Projection of Total Pension Liability and Net Pension Liability
Total Pension Liability (TPL) is the actuarial present value of projected benefit payments
attributed to past periods of employee service. For the purposes of Governmental Accounting
Standards Board Statement No. 68 (GASB 68), MCERA and the City have adopted a
measurement date of June 30, 2016. The beginning of year measurement of TPL is based on the
actuarial valuation as of June 30, 2015. The TPL at the end of the measurement year, June 30,
2016, is also measured as of the valuation date of June 30, 2015, and projected to June 30, 2016.
The Plan Fiduciary Net Position (FNP) is the fair or market value of assets. The FNP at the
beginning of the year is based on the actuarial valuation as of June 30, 2015. The FNP at the end
of the measurement year, June 30, 2016, is also measured as of the valuation date of June 30,
2015, and projected to June 30, 2016.
The Net Pension Liability (NPL) is the City liability for benefits provided through its defined
benefit plan administered by MCERA. It is calculated by reducing the TPL by the FNP.
74
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
LLNIOTE 9 - PENSION PLANS (Continued)
Actuarial assumptions:
The total pension liability as of June 30, 2016 was determined by an actuarial valuation as of June
30, 2015, using the following actuarial assumptions applied to all prior periods included in the
measurement. The key assumptions in the valuation were:
Actuarial assumptions:
Expected Return on Assets 7.25 percent per year, net of investment expenses
Discount Rate 7.25 percent per year
Price Inflation 2.75% per year
Salary Increases 3% per year plus merit component based on employee classification
and years of service.
Administrative Expenses
Post -Retirement COLA
Mortality Rates for
Healthy Members
and Inactiv es
Administrative expenses in the actuarial valuation are assumed to be
$4.635 million for FY 2015-16, to be split between employees and
employers based on their share of the overall contributions.
Administrative expenses shown in this report are based on the actual
FY 2015-16 amounts.
Post -retirement COLAs are assumed at a rate of 2.7% for members
with a 4% COLA cap, 2.6% for members with a 3% COLA cap, and
1.9% for members with a 2% COLA cap.
Rates of mortality for active members are specified by Ca1PERS 2014
Pre -Retirement Non -Industrial Death Rates (plus Duty -Related Death
rates for Safety members), with the 20 -year static projection used by
Ca1PERS replaced by generational improvements from a base year of
2009 using Scale MP -2014.
These assumptions constitute a slight change from those used in prior actuarial valuations: The
investment rate of return assumption of 7.25% coupled with an inflation assumption of 3.00%.
75
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 9 - PENSION PLANS (Continued)
Asset Allocation Policy and Expected Long-term Rate of Return by Asset Class
The Board of Retirement has adopted an Investment Policy Statement (IPS), which provides the
framework for the management of MCERA's investments. The IPS establishes MCERA's
investment objectives and defines the principal duties of the Retirement Board, the custodian bank,
and the investment managers. The asset allocation plan is an integral part of the IPS and is designed
to provide an optimum and diversified mix of asset classes with return expectations to satisfy
expected liabilities while minimizing risk exposure. MCERA currently employs external investment
managers to manage its assets subject to the provisions of the policy. Plan assets are managed on a
total return basis with a long term objective of achieving and maintaining a fully funded status for
the benefits provided through the Plan. The following was the Retirement Board's adopted asset
allocation policy as of June 30, 2016:
Long -Term
Expected Rate
Target Long -Term Expected of Return
Ass et Class Allocation Re al Rate of Re turn (with the effect of inflation)
Domestic Equity 32%5.10%7.35%
International Equity 22%5.30%7.55%
Fixed Income 23%0.75%3.00%
Real Estate 8%3.75%6.00%
Real Assets 7%3.55%5.80%
Private Equity 8%5.90%8.15%
Total 100%
The Long -Term returns are calculated using a 10 -year geometric return derived from arithmetic
returns and the associated risk (standard deviation).
Determination of Discount Rate
The discount rate used to measure the Total Pension Liability was 7.25%. Related to the discount
rate is the funding assumption that employees will continue to contribute to the plan at the required
rates and employers will continue the historical and legally required practice of contributing to the
plan based on an actuarially determined contribution, reflecting a payment equal to annual normal
cost,a portion of the expected administrative expenses, an amortization payment for the
extraordinary losses from 2009 amortized over a closed period (23 years remaining as of the June
30, 2015 actuarial valuation) and an amount necessary to amortize the remaining Unfunded
Actuarial Liability as a level percentage of payroll over a closed period (15 years remaining as of
the June 30, 2015 actuarial valuation).
A change in the discount rate would affect the measurement of the TPL. A lower discount rate
results in a higher TPL and higher discount rates results in a lower TPL. Because the discount rate
does not affect the measurement of assets, the percentage change in the NPL can be very significant
for a relatively small change in the discount rate. A one percent decrease in the discount rate
increases the TPL by approximately 13% and increases the NPL by approximately 71%. A one
percent increase in the discount rate decreases the TPL by approximately 11% and decreases the
NPL by approximately 59%.
76
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 9 - PENSION PLANS (Continued)
The table below shows the sensitivity of the NPL to a one percent decrease and a one percent
increase in the discount rate:
Sensitivity of Net Pension Liability to Changes in Discount Rate
1%
Decrease
Discount
Rate
1%
Increase
Description 6.25%7.25%8.25%
Total Pension Liability $1,019,941,989 $900,629,287 $802,536,748
Fiduciary Net Position 733,574,437 733,574,437 733,574,437
Net Pension Liability $286,367,552 $167,054,850 $68,962,311
Fiduciary Net Position as a Percentage of the Total Pension Liability 71.9%81.5%91.4%
Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Pension
Resources
The impact of experience gains or losses and assumption changes on the Total Pension Liability
(TPL) are recognized in the proportionate share of the pension expense over the average expected
remaining service life of all active and inactive members of the plan. As of the measurement date,
this recognition period was 4 years.
The following tables show the current balance and sources of deferred outflows and inflows related
to the City's defined benefit retirement plan, and the scheduled recognition of these deferred
amounts:
Description
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual experience $5,483,071
Changes in assumptions $25,298,450
Change in proportion 14,629,279 4,966,639
Changes in proportion and difference between City
contributions and proportionate share of contributions 11,646,403
Actual FY 16-17 contributions (post measurement date)20,003,001
Net difference between projected and actual earnings
on pension plan investments 15,076,726
Deferred Inflows and Outflows Before Allocations $75,007,456 $22,096,113
Allocation to SRSD
Allocation of Deferred Inflows (measurement date)$703,700 $1,751,740
Allocation of Deferred Outflows (measurement date)648,480
Net Deferred Inflows and Outflows $74,303,756 $19,695,893
77
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 9 - PENSION PLANS (Continued)
The $20,003,001 reported as deferred outflows of resources related to contributions subsequent to
the measurement date will be recognized as a reduction of the net pension liability in the year ended
June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to pensions will be recognized as pension expense as follows:
Year ended June 30
2018
2019
2020
2021
Thereafter
Amortization
Amount
$9,222,804
8,905,878
7,294,038
7,485,622
$32,908,342
NOTE 10 -PUBLIC AGENCY RETIREMENT SYSTEM (DEFINED CONTRIBUTION
RETIREMENT PLANS)
The City contributes to the Public Agency Retirement System (PARS), which administers a defined
contribution retirement plan. A defined contribution retirement plan provides retirement benefits in
return for services rendered, provides an individual account for each participant, and specifies how
contributions to the individual's accounts are determined instead of specifying the amount of
benefits the individual is to receive. The benefits a participant will receive depend on the amount
contributed to the participant's account, and the returns earned on investments on those
contributions. The Plan's trust administrator is Phase II, P.O. Box 12919, Newport Beach,
California 92658.
As established by the plan, all eligible part-time and temporary employees of the City become
participants in the plan from the date that they are hired. An eligible employee is any employee
who, at any time during which the employer maintains this plan, is not accruing a benefit under the
Marin County Employees' Retirement Fund.
As determined by the plan, each employee must contribute 3.75% of gross earnings to the plan.
The City contributes an additional 3.75% of the employee's gross earnings. Contributions made by
an employee and the employer vest immediately. No forfeitures were noted during the current
period.
During the year, the City and employees each contributed $98,186. The total covered payroll of
employees participating in the plan for the year ended June 30, 2017, was $2,618,290. The total
payroll for the year was $41,553,242.
78
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS
At June 30, 2017, net OPEB liability and related deferred outflows of resources and deferred
inflows of resources are as follows:
Governmental
Activities
Business -Type
Activities Total
Deferred outflows of resources:
Net difference between projected and
actual earnings on plan investments $772,668 $7,332 $780,000
Employer contributions made subsequent
to the measurement date 3,442,156 32,844 3,475,000
Total deferred outflows of resources $4,214,824 $40,176 $4,255,000
Net OPEB liabilities:$33,466,002 $318,998 $33,785,000
Total net OPEB liabilities $33,466,002 $318,998 $33,785,000
Plan Description
The City provides certain health care benefits for retired employees and their spouses under a cost
sharing defined benefit plan.The benefit provisions were established under the authority of the
1937 Act, Section 31450, et. seq. of the Government Code.Employees who meet the vesting
criteria become eligible for these benefits if they receive a retirement benefit from the Marin County
Employees' Retirement Association within 120 days of retirement from City employment. At June
30, 2017, 684 retirees and surviving spouses received post -employment health care benefits.
The provisions and benefits of the City's Other Post Employment Benefit Plan, in effect at June 30,
2017, are summarized as follows:
Elected Officials, Mid -Management, &
Unrepresented Management All other Bargaining Units
Eligibility Retire directly from the City:
- Age 50 (age 55 if hired > 7/1/11) with 10 years services (Including reciprocity) OR
- 30 years service (Miscellaneous), 20 years service (Safety) OR
- Age 70
- Disability Retirement
Benefit Hired < 1/1/09 Full premium/cap
Hired > 1/1/09 PEMHCA Min
Hired < 1/1/10 Up to cap
Hired > 1/1/10 PEMHCA Min
Surviving Spouse Benefit Continuation to surviving spouse
Medicare Part B Hired < 4/1/07 Full reimbursement
Hired > 4/1/07 None
None
Other No Dental, Vision, or Life Benefits
79
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (Continued)
Membership in the plan consisted of the following at June 30, 2017, the date of the latest actuarial
valuation:
Active plan members 336
Inactive employees or beneficiaries currently
receiving benefit payments 0
Inactive employees entitled to but not yet
receiving benefit payments 348
Total 684
Funding Policy and Actuarial Assumptions
During the fiscal year ended June 30, 2017, the City elected to early implement GASB 75,
"Accounting and Financial Reporting For Postemployment Benefits Other Than Pensions". This
Statement replaces the requirements of Statement No. 45 and establishes new accounting and
financial reporting requirements for OPEB plans. As a result, the funding policy and actuarial
assumptions presented include elements of both the historical approach and the revised approach
under GASB 75.
Under GASB 45, the City's funding policy requires a minimum annual contribution equivalent to
the annual required contribution (ARC). Under GASB 75, this changes to an actuarial determined
contribution which is made up of additional components including deferred outflows of resources
and deferred inflows of resources.
The ARC was determined as part of a June 30, 2015 actuarial valuation using the entry age normal
actuarial cost method. This is a projected benefit cost method, which takes into account those
benefits that are expected to be earned in the future as well as those already accrued. The actuarial
assumptions included (a) 4.5% investment rate of return and (b) 2.75% of general inflation increase,
and (c) a healthcare trend of declining annual increases ranging from 6.7% in 2015 to 4.5% for the
years starting 2021. In addition, the fixed dollar benefit amounts are assumed to be held flat in the
future and the premium related benefits are assumed to increase with the healthcare trend rate.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the City and the plan members) and include the types of benefits provided at the time
of each valuation and the historical pattern of sharing benefit costs between the City and plan
members at that point. The actuarial methods and assumptions used include techniques that smooth
the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets.
Actuarial calculations reflect a long-term perspective and actuarial valuations involve estimates of
the value of reported amounts and assumptions about the probability of events far into the future.
Actuarially determined amounts are subject to revision at least biennially as results are compared to
past expectations and new estimates are made about the future. The City's OPEB unfunded
actuarial accrued liability is being amortized as a level percentage of projected payroll using a 19 -
year fixed (closed) period for June 30, 2016 in its June 30, 2015 actuarial valuation.
80
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (Continued)
The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an
actuarial experience study for the period July 1, 2014 through June 30, 2015.
The long-term expected rate of return on OPEB plan investments was determined using a building-
block method in which best -estimate ranges of expected future real rates of return (expected returns,
net of OPEB plan investment expense and inflation) are developed for each major asset class. These
ranges are combined to produce the long-term expected rate of return by weighing the expected
future real rates of return by the target asset allocation percentage and by adding expected inflation.
The target allocation and best estimates of arithmetic real rates of return for each major asset class
are summarized in the following table:
Long -Term
Expected
Long -Term Rate of Return
Target Expected (with the effect
Asset Class Allocation Real Rate of Return of inflation)
Public Equity 57%5.96%8.71%
Fixed Income 27%2.65%5.40%
TIPS 5%2.50%5.25%
Commodities 3%5.20%7.95%
REITs 8%8.13%10.88%
Total 100%
Assumed Long -Term Rate of Inflation 2.75%
Assumed Long -Term Investment Expenses n/a
Expected Long -Term Net Rate of Return 7.28%
Discount Rate 7.25%
The Expected Long -Term Rate of Return is provided by Ca1PERS' Strategic Asset Allocation
Overview in August 2011 - Strategy 1.
Discount Rate
The discount rate used to measure the total OPEB liability was 7.25 percent. The projection of cash
flows used to determine the discount rate assumed that City contributions will be made at rates
equal to the actuarially determined contribution rates. Based on these assumptions, the OPEB plan's
fiduciary net position was projected to be sufficient to make projected benefit payments and the
plan assets are expected to be invested using the strategy to achieve the expected return.
81
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (Continued)
Change in Net OPEB Liability
Increase (Decrease)
Total OPEB
Liability
(a)
Plan Fiduciary Net
Position
(b)
Net OPEB
Liability/(As set)
(c) = (a) - (b)
Balance at June 30, 2015 (Valuation Date)$48,226,000 $15,608,000 $32,618,000
Changes Recognized for the Measurement Period:
Service Cost 766,000 766,000
Interest on the total OPEB liability 3,447,000 3,447,000
Changes in benefit terms
Difference between expected and actual experience
Changes of assumptions
Contributions from the employer 2,896,000 (2,896,000)
Net investment income 157,000 (157,000)
Administrative expenses (7,000)7,000
Benefit payments and refunds (2,896,000)(2,896,000)
Net Changes during July 1, 2015 to June 30, 2016 1,317,000 150,000 1,167,000
Balance at June 30, 2016 (Measurement Date)$49,543,000 $15,758,000 $33,785,000
The benefit payments and refunds includes implied subsidy benefit payments in the amount of
$702,000.
Sensitivity of the net OPEB liability to changes in the discount rate
The following presents the net OPEB liability of the City, as well as what the City's net OPEB
liability would be if it were calculated using a discount rate that is 1 -percentage -point lower
(6.25 percent) or 1 -percentage -point higher (8.25 percent) than the current discount rate:
Plan's Net OPEB Liability/(Ass e t)
Discount Rate -1%
(6.25%)
$39,500,000
Current Discount Discount Rate +1%
Rate (7.25%)(8.25%)
$33,785,000 $28,996,000
Sensitivity of the net OPEB liability to changes in the health care cost trend rates
Plan's Net OPEB Liability/(As s e t)
Discount Rate -1%
$30,786,000
Healthcare Cost
Trend Rates
Discount Rate +1%
$33,785,000 $37,160,000
Detailed information about the OPEB plan's fiduciary net position is available in the separately
issued plan financial report.
82
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (Continued)
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
related to OPEB
Components of OPEB Expense for fiscal year 2016-2017 were as follows:
Service Cost $766,000
Interest on Total OPEB Liability 3,447,000
Projected earning on investments (1,132,000)
Employee contributions
Administrative expense 7,000
Change in benefits
Recognition of deferred outflows/inflows:
Experience
Assumptions
Asset Returns 195,000
OPEB Expense $3,283,000
Components of deferred outflows of resources and deferred inflows of resources related to OPEB at
June 30, 2017 were as follows:
Deferred Outflows Deferred Inflows
of Resources of Resources
Net difference between projected and actual earnings on
OPEB plan investments $780,000
Employer contributions made subsequent to the measurement date 3,475,000
Total $4,255,000
The difference between projected OPEB plan investment earnings and actual earnings is amortized
over a five year period. The remaining gains and losses are amortized over the expected average
remaining service life. The expected average remaining service life for the 2015-16 measurement
period is 4.0 years.
$3,475,000 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the OPEB liability in the year ended June 30,
2018. Amounts reported as deferred outflows of resources and deferred inflows of resources related
to OPEB will be recognized as future OPEB expense as follows:
Measurement Period Deferred Outflows Deferred Inflows
Ended June 30 of Resources of Resources
2018 $195,000
2019 195,000
2020 195,000
2021 195,000
Thereafter
$780,000
83
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (Continued)
The table below provides a summary of the key results during this reporting period.
Summary of Results
Measurement Date Measurement Date
Description June 30, 2016 June 30, 2015
Net OPEB Liability $33,785,000 $32,618,000
Deferred Inflows -
Deferred Outflows (780,000)-
Impact on Net Position before deferred contributions 33,005,000 32,618,000
Additional Deferred Outflows - Contributions subsequent to measurement date (3,475,000)-
Impact on Statement of Net Position before Allocations 29,530,000 32,618,000
Allocation of NOL to SRSD 1,034,395 1,002,000
Allocation of Deferred Inflows (measurement date) to SRSD -
Allocation of Deferred Outflows (measurement date) to SRSD (23,881)-
Impact on Net Position before deferred contributions to SRSD 1,010,514 1,002,000
Allocation of Additional Deferred Outflows (contributions) to SRSD (106,394)-
Long -Term Receivable from SRSD, due to OPEB obligations (see Note 4H)904,120 1,002,000
Impact on Statement of Net Positions, net of receivable from SRSD 28,625,880 31,616,000
OPEB Expense ($ Amount)3,283,000 2,148,000
Covered Payroll ($ Amount)31,106,000 32,906,000
Actuarial data is comprised from a variety of complex inputs. It is therefore subject to change
between measurement dates. As a result, the Net OPEB Liability used to calculate the SRSD
allocation percentage in fiscal year ended June 30, 2016 ($32,727,000) varies slightly from the
figure reported in the actuarial report dated June 30, 2017 ($32,618,000) by $109,000.
NOTE 12 - JOINTLY GOVERNED ORGANIZATIONS
The City participates in the jointly governed organizations discussed below through formally
organized and separate entities established under the Joint Exercise of Powers Act of the State of
California. As separate legal entities, these entities exercise full powers and authorities within the
scope of the related Joint Powers Agreements including the preparation of annual budgets,
accountability for all funds, the power to make and execute contracts and the right to sue and be
sued. Each joint organization is governed by a board consisting of representatives from member
municipalities. Each board controls the operations of the respective joint organization, including
selection of management and approval of operating budgets, independent of any influence by
member municipalities beyond their representation on that board. Obligations and liabilities of this
joint organization are not the City's responsibility and the City does not have an equity interest in
the assets of each joint organization except upon dissolution of the joint organization.
84
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 12 - JOINTLY GOVERNED ORGANIZATIONS (Continued)
A.The Marin County Integrated On -Line Library System (System)
The MARINet Library Consortium was formed to provide for the procurement, ownership,
operation, maintenance, and governance of shared library services among the libraries, public and
academic, in Marin County. Current services shared and paid for on a consortial level through
annual membership dues include an integrated library system including patron database,
cataloging system, and online catalog of materials; delivery of items between libraries in Marin, a
statewide library delivery service called Link+, numerous online resources, and more. The
Governing Board of the System consists of the library director or designated alternate of each
participant in the System. In accordance with the cost sharing formula developed by the library
directors of the participants, the City's share of annual operating costs is 16.44% or $221,318 for
the year ended June 30, 2017. Financial statements of the System can be obtained from the
County Librarian, Marin County Free Library, Marin County Civic Center, 3501 Civic Center
Drive, San Rafael, California 94903.
B.The Marin General Services Authority (MGSA)
The MGSA was formed by the County of Marin and twelve local agencies to acquire street light
facilities, operate the facilities during an eminent domain action against PG&E, and coordinate
the subsequent transfer of the facilities to the individual local agencies. Each of the local agency's
share of contributions was based on the number of street lights to be acquired in the local
agency's individual jurisdiction in relation to the total number of street lights to be acquired by
the MSLAJPA. MGSA services now include street light maintenance, abandoned vehicle
abatement, taxicab regulation and administrative responsibility for MarinMap. The City's
contribution to MGSA was $3,134 for the year ended June 30, 2017. Financial statements of the
MGSA can be obtained at 555 Northgate Drive, Suite 230, San Rafael, California 94903.
C.The Marin Emergency Radio Authority (MERA)
MERA was formed on February 28, 1998, by the County of Marin and 25 local agencies within
the County to plan, finance, implement, manage, own, and operate a County -wide public safety
and emergency radio system.The Governing Board consists of one representative from each
member. On February 1, 1999, the Authority issued the 1999 Revenue Bonds in the amount of
$26,940,000 with interest rates ranging from 4.75% to 5.01%, maturing on August 15, 2016, to
finance the acquisition and installation of the system. The costs of maintenance, operation, and
debt service are divided on a pro rata share based on an agreed -upon formula established by a
majority of the Governing Board. The members entered into a Project Operating Agreement on
February 1, 1999.
Under the Operating Agreement, members are obligated to contribute service payments to cover
the Authority's operation and debt service. The City's portion of the obligation is 16.913%. The
first operating service payment was in July 1999. The first debt service payment was in August
2002. The City contributed $314,161 of the Authority's operation and debt service for the fiscal
year ended June 30, 2017. The City has established a reserve in its internal service funds to pay
future service payments. Financial statements of the MERA can be obtained at 95 Rowland Way,
Novato, California 94945.
85
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 12 - JOINTLY GOVERNED ORGANIZATIONS (Continued)
D.The Countywide Planning Agency
The Agency was established on October 16, 1990, by the County of Marin and the cities of
Belvedere, Corte Madera, Fairfax, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael,
Sausalito, and Tiburon to implement countywide performance standards for traffic, housing, water
and sewer facilities, and environmental protection to ensure that residential and commercial growth
does not exceed local water, sewer and transportation capacities.The Governing Board of the
Countrywide Planning Agency consists of one member of the County Board of Supervisors and one
member of the City Council of each participating city. Financial statements of the Agency can be
obtained at 3501 Civic Center Drive, San Rafael, California 94903.
E.The Marin Telecommunications Agency
The Agency was established to regulate the rates for cable television service and equipment and
to advise the participants of their license authority.The Governing Board of the Marin
Telecommunications Agency consists of one member from each of the eleven participating
agencies. The City's contribution to the Agency was $32,134 for the year ended June 30, 2017.
Financial statements of the Agency can be obtained at 555 Northgate Drive, Suite 230, San
Rafael, California 94903.
F.The Marin County Hazardous and Solid Waste Joint Powers Authority
The Authority was established by the County, local cities, and waste franchising districts to
finance, prepare and implement source reduction and recycling elements on a county -wide
integrated waste management plan as required by State Assembly Bill 939.The City's
contribution to the Authority was $17,849 for the year ended June 30, 2017. Financial statements
of the Authority can be obtained at 3501 Civic Center Drive, San Rafael, California 94903.
G.Central Marin Sanitation Agency (CMSA)
In October 1979, the District entered into a joint powers agreement with three neighboring
sanitation agencies in central Marin County forming the Central Marin Sanitation Agency
(CMSA). CMSA serves as a regional wastewater treatment plant for its four member agencies
and San Quentin Prison (SQ) and is governed by a six -member Board of Commissioners, two
appointed by the Board of Directors of the San Rafael Sanitation District (SRSD), two appointed
by the Board of Directors of the San Rafael Sanitation District No. 1 (SD 1), one appointed by the
governing board of Sanitary District No. 2 (SD 2), and one appointed by the City Council of the
City of Larkspur (Larkspur).
Total project costs for the joint venture were funded from federal (75%) and state (12.5%) clean
water grants and from local shares (12.% total) allocated among the member agencies and SQ
based upon the weighted average of the strength and volume of sewage flows per member at
inception of the project.Final individual local shares of total project costs were approximately
$7.6 million for SRSD, $6.3 million for SD 1, $1.6 million for SD 2, $1 million for Larkspur, and
$1.4 million for SQ. CMSA derives its annual funding for its operations and capital programs
almost exclusively from service charges to member agencies. The joint powers agreement does
not provide an explicit measurable right as required to establish an equity interest for any of the
joint venture participants, and in addition to, stipulates that all excess capital funds, if any, and all
excess administration, operations and maintenance funds from whatever source, if any, are the
property of CMSA.
86
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 12 - JOINTLY GOVERNED ORGANIZATIONS (Continued)
The financial statements of the Agency are available at the CMSA office. Condensed financial
information for the Agency is presented below for June 30, 2016 and 2015, the most recent
information available.
2016 2015
Total assets $106,391,299 $109,050,874
Deferred outflows of resources 2,092,186 936,613
Total liabilities (60,370,523)(62,387,928)
Deferred inlows of resources (2,487,504)(2,254,404)
Net position $45,625,458 $45,345,155
Total revenues $16,952,527 $17,873,113
Total expenses (16,834,929)(16,220,247)
Total contributions and adjustments 162,705 415,845
Prior period adjustment - GASB 68 (7,278,030)
Change in net position $280,303 (5,209,319)
NOTE 13 - RISK MANAGEMENT
A.City
The City is exposed to various exposures related to torts; theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters. The City established the
Risk Management Internal Service Fund, to account for and finance its uninsured risks of loss.
The City manages risk by participating in a public entity risk pool (described below), purchasing
insurance and by retaining certain risks.
Risk Coverage
Liability Coverage
The City is a member of the California Joint Powers Risk Management Authority (CJPRMA)
which covers general liability claims up to $40,000,000. The purpose of CJPRMA is to spread the
adverse effects of general liability losses among the member agencies. The City also purchases
commercial insurance for property damage claims with an insured amount of $119,773,465. The
City is self -insured up to $500,000 for each general liability claim and $25,000 for each property
damage claim. Once the self -insured retention is met CJPRMA becomes responsible for payment
of all liability claims up to the limit. During the fiscal year ended June 30, 2017, the City
contributed $278,096 for coverage during the current year and received a refund of $49,910 of
prior year excess contributions. Five years after settlement of all claims for a program year,
CJPRMA retroactively adjusts premium deposits for any excess or deficiency in deposits related
to paid claims and reserves. Financial statements for the risk pools may be obtained from
CJPRMA at 3201 Doolan Road, Suite 285, Livermore, California 94551.
Workers' Compensation Coverage
The City purchases insurance for workers' compehsation through Safety National Casualty
Corporation Excess Workers' Compensation and Employers Liability Insurance with coverage up
to statutory limits. The City is self -insured up to $1,000,000 for each worker's compensation
claim.
87
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 13 - RISK MANAGEMENT (Continued)
Insurance Internal Service Funds and Financial Reporting
The City records estimated liabilities for claims filed up to the amounts for which it retains risk in
the General Liability and Workers Compensation Internal Service Funds. Charges to the General
Fund and other funds are based on relative general liability and workers compensation risk
associated with the activities of each fund. Charges are recorded in the funds as expenditures or
expenses and as revenues in the respective internal service funds.
The Governmental Accounting Standards Board (GASB) requires municipalities to record their
liability for uninsured claims and to reflect the current portion of this liability as an expenditure in
their financial statements. As discussed above, the City has coverage for such claims, but it has
retained the risk for the deductible or uninsured portion of these claims.
The City's liability for uninsured general liability claims and workers' compensation claims,
including claims incurred but not reported, are reported in the Statements of Net Position.
General
Liability *
Workers'Totals, as of June 30
Compensation **2017 2016
Balance, beginning of year $2,543,655 $6,044,911 $8,588,566 $7,319,418
Current year claims and changes
in estimates 696,685 1,181,591 1,878,276 3,111,209
Claims paid (658,811)(1,060,693)(1,719,504)(1,842,061)
Balance, end of year $2,581,529 $6,165,809 $8,747,338 $8,588,566
Due in one year $1,226,194 $1,427,094 $2,653,288 $2,129,125
Due in more than one year 1,355,335 4,738,715 6,094,050 6,459,441
Total claim liabilities $2,581,529 $6,165,809 $8,747,338 $8,588,566
* Liability based on an actuarial valuation as of December 31, 2015, extrapolated to June 30, 2016
** Liability based on an actuarial valuation as of February 29, 2016, extrapolated to June 30, 2016
The claims settlements have not exceeded insurance coverage for the past three years.
B.District
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction
of assets; errors and omissions; injuries to employees and natural disaster.The District
participates in a joint powers agreement with other entities forming the California Sanitation Risk
Management Authority (CSRMA), a public entity risk pool operating as a common risk
management and insurance program for 60 member entities. CSRMA is governed by a Board of
Directors composed of one representative from each member agency and meets three times per
year in conjunction with conferences of the California Association of Sanitation Agencies. The
Board controls the operations of CSRMA including selection of management and approval of
operating budgets, independent of any influence by member entities.
88
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 13 - RISK MANAGEMENT (Continued)
The District pays annual premiums to CSRMA for its primary insurance and property insurance
programs.Primary and property insurance programs are fully insured wherein CSRMA
purchases insurance as a group thereby reducing its costs. CSMRA provides both fully insured
and pooled insurance programs for its participating member entities. Because all employees of
the District are contracted employees from the City of San Rafael, workers' compensation
insurance is not carried by the District but is provided through the City.
The District's primary and property insurance programs transfer risk to commercial insurance
policies for claims above deductibles, while the District retains risk for claims to the extent of
deductibles.Settled claims for CSRMA have not exceeded coverage in any of the past three
fiscal years.
The following summarizes active insurance policies as of June 30, 2017 together with coverage
limits for each insured event:
Insurance Program Limits Coverage Description
CSRMA - Allied World Ins.$3,000,000 Gen/Mgt liability - aggregate
CSRMA - Allied World Ins.$1,000,000 Gen/Mgt liability - occurrence
CSRMA - Allied World Ins.$1,000,000 Auto liability - accident
CSRMA - Allied World Ins.$4,000,000 Excess liability
CSRMA - Public Entity Property
Insurance Program (P.E.P.I.P.)$12,157,866 Special form property
CSRMA - Illinois Union Ins.$25,000,000 Pollution liability - tier 1
CSRMA - Illinois Union Ins.$2,000,000 Pollution liability - tier 2
CSRMA - Lloyds of London $2,000,000 Cyber liability - third party
CSRMA - Lloyds of London $2,000,000 Cyber liability - third party
CSRMA - Travelers Ins.$25,000 Identity theft
The financial statements of CSRMA are available at their office:100 Pine Street, 11th Floor, San
Francisco, CA 94111. Condensed financial information for CSRMA is presented below for the years
ended June 30, 2016 and 2015 (latest information available).
2016 2015
Assets $28,336,567 $27,418,098
Liabilities (16,735,609)(16,714,638)
Net assets $11,600,958 $10,703,460
Revenues $11,843,583 $10,895,632
Expenses (10,946,085)(11,157,866)
Increase (decrease) in net assets $897,498 ($262,234)
89
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 14 - COMMITMENTS AND CONTINGENCIES
A.City
Litigation
The City is subject to litigation arising in the normal course of business. In the opinion of the City
Attorney there is no pending litigation which is likely to have a material adverse effect on the
financial position of the City as of June 30, 2017.
Major Contracts
In April 2017, the City entered into a construction contract for $19,940,000 for the major
construction and renovation of two fire stations. The contract amount was reduced shortly
thereafter to its current sum of $19,098,834. The funding for this project comes from a
combination of funds set aside in the General Fund and future General Fund revenues attributable
to the Measure E Transactions and Use Tax. It is highly likely that some form of debt financing
will be required during fiscal year 2017-2018 to meet the cashflow requirements of this project.
B.District
As of June 30, 2017, SRSD had several contracts for sewer improvement projects with remaining
obligations of approximately $1,300,000, with the majority expected to be completed within the
2017/18 fiscal year.
NOTE 15 - SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE -PURPOSE
TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES
A.Redevelopment Dissolution
In an effort to mitigate its budget deficit, the State of California adopted ABx1 26 on June 28,
2011, amended by AB1484 on June 27, 2012, which suspended all new redevelopment activities
except for limited specified activities as of that date and dissolved redevelopment agencies on
January 31, 2012.
The suspension provisions prohibited all redevelopment agencies from a wide range of activities,
including incurring new indebtedness or obligations, entering into or modifying agreements or
contracts,acquiring or disposing of real property,taking actions to adopt or amend
redevelopment plans and other similar actions, except actions required by law or to carry out
existing enforceable obligations, as defined in ABx1 26.
In addition, ABx1 26 and AB1484 directed the State Controller to review the activities of all
redevelopment agencies and successor agencies to determine whether an asset transfer between
an agency and any public agency occurred on or after January 1, 2011. If an asset transfer did
occur and the public agency that received the asset is not contractually committed to a third party
for the expenditure or encumbrance of the asset, the legislation requires the State Controller to
order the asset returned to the redevelopment agency. This review was performed in May 2013,
and a report issued on July 29, 2013 (see section B of this footnote).
90
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 15 - SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE -PURPOSE
TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES (Continued)
The City elected to become the Successor Agency to the Redevelopment Agency, and on
February 1, 2012, the Redevelopment Agency's remaining net assets were distributed to the
Successor Agency. ABx1 26 requires the establishment of an Oversight Board to oversee the
activities of the Successor Agency and one was established on April 2, 2012. The activities of the
Successor Agency are subject to review and approval of the Oversight Board, which is comprised
of seven members.
The activities of the Successor Agency are reported in the Successor Agency to the
Redevelopment Agency Private -Purpose Trust Fund as the activities are under the control of the
Oversight Board. The City provides administrative services to the Successor Agency to wind
down the affairs of the former Redevelopment Agency.
Pursuant to the dissolution of the City of San Rafael Redevelopment Agency, certain assets of the
Redevelopment Agency were distributed to the Housing Successor and all remaining
Redevelopment Agency assets and liabilities were distributed to the Successor Agency.
The City elected to become the Housing Successor and on February 1, 2012. Assets and
Liabilities relating to the Housing Successor are reported in the City's Low and Moderate Income
Housing Special Revenue Fund.
B.Redevelopment Property Tax Trust Fund (RPTTF)
The Successor Agency's primary source of revenue comes from the RPTTF allocation distributed
by the County. Property tax revenues for each Project Area are deposited into the RPTTF, which
redistributes each Project Area's tax increment under specified formulas. The County Auditor
administers the RPTTF and disburses twice annually from this fund pass -through payments to
affected taxing entities, an amount equal to the total of obligation payments that are required to be
paid from tax increment as denoted on the Recognized Obligation Payment Schedule ("ROPS").
The disbursements are established in the treasury of the Successor Agencies, and various allowed
administrative fees and allowances. Any remaining balance is then distributed by the County
Auditor back to affected taxing entities under a prescribed method that accounts for pass -through
payments. The County Auditor is also responsible for the distributing other monies received from
the Successor Agency (from sale of assets, etc.) to the affected taxing entities. Successor agencies
in turn will use the amounts deposited into their respective funds for making payments on the
principal and interest on loans, and monies advanced to or indebtedness incurred by the dissolved
redevelopment agencies.
C.Long -Term Debt
1999 Tax Allocation Bonds and Capital Appreciation Bonds
On June 16, 1999, the former Agency issued Tax Allocation Bonds in the amount of $23,504,004.
The bonds were issued as Current Interest Bonds in the aggregate principal amount of
$21,115,000 and as Capital Appreciation Bonds in the original amount of $2,389,004.The
proceeds of the bonds were used to finance certain redevelopment activities of benefit to the
former Agency's Central San Rafael Redevelopment Project Area.
91
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 15 - SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE -PURPOSE
TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES (Continued)
In December, 2009 of the former Agency exercised the redemption option of the Current Interest
Bonds. The outstanding balance of the Bonds was refunded, on a current basis, through the
issuance of the 2009 Tax Allocation Refunding Bonds as discussed below.
The Capital Appreciation Bonds mature annually after December 1 from 2018 to 2022, in
amounts ranging from $1,440,000 to $2,070,000 and bear interest at rates from 5.58% to 5.60%.
Interest on the Capital Appreciation Bonds will compound on each interest premium date and will
be payable solely at maturity. The bonds are secured, on parity with the 1992 and 1995 bonds
(refunded in 2002), by a pledge and a lien on tax revenues and amounts on deposit in certain
funds and accounts held by the fiscal agent.
2002 Tax Allocation Refunding Bonds
On October 9, 2002, the former Agency issued Tax Allocation Refunding Bonds in the amount of
$25,020,000. The proceeds of the bonds were used to refund the 1992 Tax Allocation Refunding
Bonds and the 1995 Tax Allocation Bonds. The Bonds mature annually each December 1 from
2002 to 2022, in amounts ranging from $540,000 to $1,920,000 and bear interest at rates ranging
from 2.00% to 5.25%. Interest is payable semiannually on June 1 and December 1. The Bonds
maturing on or after December 1, 2013, are subject to optional redemption prior to maturity, in
whole or in part, and by lot within any one maturity, prior to their respective maturity dates, on
any date on or after December 1, 2012, at a price equal to the principal amount, plus accrued
interest on the redemption date. The bonds are payable from tax revenues to be derived from the
redevelopment activities of the former Agency related to the Central San Rafael Redevelopment
Project Area.
2009 Tax Allocation Refunding Bonds
On December 14, 2009, the former Agency issued 2009 Tax Allocation Refunding Bonds in the
amount of $14,660,000 bearing interest at rates from 3.00% to 5.00%. The proceeds of the Series
2009 Bonds were used to refund the former Agency's 1999 Tax Allocation Current Interest
Bonds, to advance funds to the City to finance street and parking improvements for the benefit of
the Agency's Central San Rafael Redevelopment Project. Principal payments are due annually on
December 30 and interest payable semiannually on June 30 and December 30.
The Series 2009 Bonds maturing on or before December 1, 2019, are not subject to optional
redemption prior to their respective stated maturities. The Series 2009 Bonds maturing on or
after December 1, 2020, are subject to optional redemption as a whole or in part either on a pro
rata basis among maturities or in inverse order of maturity, and by lot within any one maturity,
prior to their respective maturity dates, at the option of the Agency, on any date on or after
December 1, 2019, at a price equal to the principal amount of such Series 2009 Bonds called for
redemption, together with interest accrued on the date fixed for redemption, without premium.
The former Agency pledged all future tax increment revenues for the repayment of the 1999
Capital Appreciation Bonds, and the 2002 and 2009 Tax Allocation Refunding Bonds.The
pledge of all future tax increment revenues ends upon repayment of $18.9 million in remaining
debt service on the Bonds, which is scheduled to occur in 2023. For fiscal year June 30, 2017,
tax increment revenues amounted to $4.2 million which was used to make the debt service
payments of $3.6 million.
92
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 15 - SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE -PURPOSE
TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES (Continued)
The following table summarizes the activity for the fiscal year ended June 30, 2017:
Authorized Balance Balance Current
and Issued June 30, 2016 Additions Retirements June 30, 2017 Portion
San Rafael Redevelopment Agency
1999 Tax Allocation Bonds
Capital Appreciation Bonds
5.58%-5.6%, due 12/1/2022 $2,389,004
2002 Tax Allocation Refunding Bonds
$6,074,097 $344,411 $6,418,508
2.00%-5.25%, due 12/1/2021 25,020,000 6,060,000 $1,830,000 4,230,000 $1,920,000
2009 Tax Allocation Refunding Bonds
3.00%-5.00%, due 12/1/2022 14,660,000 8,905,000 1,100,000 7,805,000 1,160,000
Add: deferred bond premium costs 559,023 79,861 479,162
Total Successor Agency Long-term Debt $21,598,120 $344,411 $3,009,861 $18,932,670 $3,080,000
Debt Service Requirements
Annual debt service requirements are shown below:
For the Year
Ended June 30
Governmental Activities
Principal Interest
2018 $3,080,000 $484,026
2019 3,229,081 370,676
2020 3,309,082 297,019
2021 3,389,231 214,175
2022 3,404,749 120,819
2023 3,586,374 36,500
Totals $19,998,517 $1,523,215
Reconciliation of long-term debt:
Less unaccreted discount ($1,545,009)
Add deferred bond premium costs 479,162
$18,932,670
93
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 15 - SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE -PURPOSE
TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES (Continued)
D.Other Long -Term Obligations
During the fiscal year ending June 30, 2013, the San Rafael Successor Agency Oversight Board
approved two personnel -related obligations of the former Redevelopment Agency. On August 30,
2012, the Oversight Board approved the inclusion of $1,904,431, representing the unfunded pension
liability attributable to former Redevelopment Agency employees; the repayment is being made in
ten equal, annual installments. On February 26, 2013, the Oversight Board approved the inclusion
of $502,000, representing the unfunded OPEB (retiree medical) liability attributable to former
Redevelopment Agency employees; the repayment is being made in nine equal, annual installments.
On March 27, 2017, the California State Department of Finance notified the Successor Agency of its
determination that Other Post Employment Benefit Obligations (OPEB) would not be allowed. The
last approved payment of $55,778, which was received in June 2017, brought the remaining balance
to $298,888. This amount was removed from the schedule of obligations of the Successor Agency as
of June 30, 2017.
The following table summarizes the activity for the fiscal year ended June 30, 2017:
Approved
Amount
Balance
June 30, 2016 Additions Retirements
Debt
Cancelled
Balance
June 30, 2017
Unfunded Pension Liability $1,904,431 $952,216 $190,443 $761,773
Unfunded OPEB Obligation 502,000 354,666 55,778 $298,888
Total Long -Term Obligations $1,306,882 $246,221 $298,888 $761,773
Annual repayment requirements are shown below:
For the Year
Ended June 30 Principal
2018 $190,443
2019 190,443
2020 190,443
2021 190,444
Totals $761,773
E.Commitment and Contingencies
State Approval of Enforceable Obligation
The Successor Agency prepares a Recognized Obligation Payment Schedule (ROPS) semi-
annually that contains all proposed expenditures for the subsequent six-month period. The ROPS
is subject to the review and approval of the Oversight Board as well as the State Department of
Finance. As of June 30, 2017, the Successor Agency had prepared ten ROPS, all of which have
been approved by the Oversight Board and the California Department of Finance.The
Department of Finance has stated that all items on a future ROPS are subject to a subsequent
review. The amount, if any, of current obligations that may be denied by the Department of
Finance cannot be determined at this time. The City expects such amounts, if any, to be
immaterial.
94
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2017
NOTE 16 - SUBSEQUENT EVENT
Energy Efficiency Loan and Master Service Agreement
On September 5, 2017, the City Council authorized a loan agreement with the California Energy
Commission for various energy efficient system upgrades to City facilities and street lights. At the
same time, the City Council approved a master services agreement with Pacific Gas and Electric
Company to perform these system upgrades in a total amount not to exceed $1,178,813. The loan
terms provide for annual interest of 1% on the outstanding balance. Disbursement of the loan is
expected in July 2019, with semi-annual repayment beginning in December 2020 and terminating in
December 2027. The planned source of repayment will be energy cost savings that result from the
improvements.
95
WITH ix
( di". )
04111141
REQUIRED SUPPLEMENTARY INFORMATION
,
Gi.
1,
CITY OF SAN RAFAEL
REQUIRED SUPPLEMENTARY INFORMATION
For the Year Ended June 30, 2017
Schedule of the City's Proportionate Share of the Net Pension Liability
Last 10 years*
6/30/2015 6/30/2016 6/30/2017
City's proportionate share 30.0453%36.7394%34.9538%
Proportionate share of total pension liability $677,753,565 $907,195,058 $900,629,287
Proportionate share of fiduciary net position 603,499,779 764,871,931 733,574,437
Proportionate share of the net pension liability $74,253,786 $142,323,127 $167,054,850
Plan fiduciary net position as a percentage of the total pension liability 89.04%84.31%81.45%
Covered payroll $31,429,178 $31,106,414 $32,126,272
Net pension liability as a percentage of covered payroll 236.26%457.54%519.99%
* - The fiscal year ended June 30, 2015 was the first year of implementation, therefore only three years are shown
99
CITY OF SAN RAFAEL
REQUIRED SUPPLEMENTARY INFORMATION
For the Year Ended June 30, 2017
Schedule of Contributions
Defined Benefit Pension
Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015)
2015
Contractually required contribution 17,802,358
Contributions in Relation to the
Contractually required contribution 17,802,358
Contribution Deficiency/ (Excess)
Covered payroll 31,106,414
Contributions as a percentage of
covered payroll 57.23%
Notes to Schedule
Valuation Date / Timing 6/30/2013 (for contributions made in FY2014-2015)
Key Methods and Assumptions Used to Determine Contribution Rates (for FY2014-15):
Actuarial cost method Entry Age Normal Cost Method
Amortization method Level percentage of payroll with separate period for Extraordinary Actuarial Loss from 2009
Remaining Amortization period Unfunded liability - 17 years / Extraordinary Actuarial Loss - 25 years
Asset valuation method 5 -year smoothed market, 80% /120% corridor around market
Inflation 3.25%
Salary increases 3.25% plus merit component based on employee classification and years of service
Investment Rate of Return 7.50%
Retirement Age Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62
Healthy Mortality
Disabled Mortality
Sex distinct RP -2000 Combined Mortality projected to 2010 using Scale AA
with ages set back one year for male members / two years for female members
Sex distinct RP -2000 Combined Mortality projected to 2010 using Scale AA
with ages set forward three years for all members
100
CITY OF SAN RAFAEL
REQUIRED SUPPLEMENTARY INFORMATION
For the Year Ended June 30, 2017
Schedule of Contributions
Defined Benefit Pension
Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015)
(Continued)
2016
Contractually required contribution $19,339,577
Contributions in Relation to the
Contractually required contribution 19,339,577
Contribution Deficiency/ (Excess)$
Covered payroll $32,126,272
Contributions as a percentage of
covered payroll 60.20%
Notes to Schedule
Valuation Date / Timing 6/30/2014 (for contributions made in FY2015-2016)
Key Methods and Assumptions Used to Determine Contribution Rates (for FY2015-16):
Actuarial cost method Entry Age Normal Cost Method
Amortization method Level percentage of payroll with separate period for Extraordinary Actuarial Loss from 2009
Remaining Amortization period Unfunded liability - 16 years / Extraordinary Actuarial Loss - 24 years
Asset valuation method 5 -year smoothed market, 80% /120% corridor around market
Inflation 3.25%
Salary increases 3.25% plus merit component based on employee classification and years of service
Investment Rate of Return 7.25%
Retirement Age Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62
Healthy Mortality
Disabled Mortality
ralPERS 2014 Pre -Retirement Non -Industrial Death rates (plus Duty -Related Death rates for
Safety Members), with the 20 -year static projection used by CaIPERS replaced by
generational improvements from a base year of 2009 using Scale MP -2014
CalPERS 2014 Disability Mortality rates (Non -Industrial rates for Miscellaneous members
and Industrial Disability rates for Safety members), adjusted by 90% for Males and Females
(Miscellaneous and Safety) with the 20 -year static projection used by CaIPERS replaced by
generational improvements from a base year of 2009 using Scale MP -2014
101
CITY OF SAN RAFAEL
REQUIRED SUPPLEMENTARY INFORMATION
For the Year Ended June 30, 2017
Schedule of Contributions
Defined Benefit Pension
Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015)
(Continued)
Contractually required contribution
Contributions in Relation to the
Contractually required contribution
Contribution Deficiency/ (Excess)
Covered payroll
Contributions as a percentage of
covered payroll
Notes to Schedule
Valuation Date / Timing
2017
$20,003,001
20,003,001
$32,885,135
60.83%
6/30/2015 (for contributions made in FY2016-2017)
Key Methods and Assumptions Used to Determine Contribution Rates (for FY2016-17):
Actuarial cost method
Amortization method
Remaining Amortization period
Asset valuation method
Inflation
Salary increases
Investment Rate of Return
Retirement Age
Healthy Mortality
Disabled Mortality
Entry Age Normal Cost Method
Level percentage of payroll with separate period for Extraordinary Gains or Losses
(24 years remaining as of 6/30/14), the remaining UAL as of June 30, 2013
(16 years as of 6/30/14), and additional layers for unexpected changes in UAL after
6/30/13 (24 years for gains and losses with a 5 -year phase-in/out and 22 years for
assumption changes with a 3 -year phase-in/out).
19 years remaining as of June 30, 2016
Market Value
2.75% per year
3.00% plus merit component based on employee classification and years of service
7.25%
Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62
Sex distinct RP -2000 combined mortality projected to 2010 using Scale AA with ages
set back one year for male members/two years for female members
Sex distinct RP -2000 combined mortality projected to 2010 using Scale AA with ages
set forward three years for all members
102
CITY OF SAN RAFAEL
REQUIRED SUPPLEMENTARY INFORMATION
For the Year Ended June 30, 2017
SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years
Other Post -Employment Benefits (OPEB)
Measurement period
Total OPEB liability
Service cost
Interest
2015-16
766,000
3,447,000
Differences between expected and actual experience
Assumption changes
Benefit payments, including refunds of employee contributions (2,896,000)
Net change in total OPEB liability 1,317,000
Total OPEB liability - beginning 48,226,000
Total OPEB liability - ending (a)49,543,000
OPEB fiduciary net position
Contributions - employer 2,896,000
Net investment income 157,000
Benefit payments, including refunds of employee contributions (2,896,000)
Administrative expense (7,0001
Net change in plan fiduciary net position 150,000
Plan fiduciary net position - be ginning 15,608,000
Plan fiduciary net position - ending (b)15,758,000
Plan net OPEB liability - ending (a) - (b)33,785,000
Plan fiduciary net position as a percentage
of the total OPEB liability 31.81%
Covered -employee payroll 31,106,000
Plan net OPEB liability as a percentage of covered -employee payroll 108.61%
Historical information is required only for the measurement periods for which GASB 75 is applicable.
103
CITY OF SAN RAFAEL
REQUIRED SUPPLEMENTARY INFORMATION
For the Year Ended June 30, 2017
SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years
Other Post -Employment Benefits (OPEB)
2016-17
Actuarially determined contribution $3,450,000
Contributions in relation to
the actuarially determined contribution
Contribution deficiency (excess)
(3,475,000)
$(25,000)
Covered -employee payroll $32,885,000
Contributions as a percentage of
covered -employee payroll 10.49%
GASB 75 requires this information for plans funding with OPEB trusts be reported in the employer's Required Supplementary
Information for 10 years or as many years as are available upon implementation.
The June 30, 2017 actuarial valuation provided the Actuarially Determined Contributions for fiscal years ending 06/30/17.
Notes to Schedule:
Actuarially determined contribution rates are calculated as of June 30, two years prior to the end of the fiscal year in
which contributions are reported.
Methods and assumptions used to determine contribution rates:
Valuation Date June 30, 2015
Actuarial Cost Method Entry Age Normal, Level Percentage of Payroll
Amortization Method Level dollar amount, over approximate 10 -year period
Remaining Amortization 19 years remaining as of June 30, 2016
Asset Valuation Method Investment gains and losses spread over 5 -year rolling period
Discount Rate 7.25%
Contribution Policy City contributes full ADC
General Inflation 2.75% per annum
Mortality, Retirement, Disability, Termination Same as June 30, 2015 actuarial valuation
Mortality Improvement Mortality projected fully generational with Scale MP -14, modified
to converge to ultimate improvement rates in 2022
Expected Long -Term Rate of Return on Investments Same as discount rate - expected City contributions projected to
keep sufficient plan assets to pay all benefits from trust
Salary Increases Aggregate - 3%
Merit - 6/30/14 MCERA assumptions
Medical Trend Non -Medicare - 6.5% for 2017, decreasing 0.5% per year to an ultin
rate of 4.50% for 2021 and Medicare - 6.7% for 2017, decreasing to
ultimate rate of 4.5% for 2021 and later years
Healthcare participation for future retirees Capped benefit: 100% currently covered, 80% currently waived
PEMHCA minimum - 60%
Cap Increases None
104
GENERAL FUND AND MAJOR SPECIAL REVENUE FUND
BUDGET -TO -ACTUAL STATEMENTS
GASB Statement No. 34 dictates that budget -to -actual information in the basic financial statements should
be limited to the General Fund and major Special Revenue Funds.This section is provided for the
presentation of Budget -to -Actual Statements for the General Fund, Traffic and Housing Mitigation, and the
Gas Tax Special Revenue Funds.
Budgets are adopted on a basis consistent with Generally Accepted Accounting Principles for the General
Fund and Special Revenue Funds.
105
CITY OF SAN RAFAEL
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2017
REVENUES
Budgeted Amounts Actual
Amounts
Variance with
Final Budget
Positive
(Negative)Original Final
Taxes and special assessments $65,690,000 $64,563,000 $64,242,440 ($320,560)
Licenses and permits 2,361,000 2,511,000 2,559,841 48,841
Fines and forfeitures 483,000 448,000 400,283 (47,717)
Use of money and properties 288,000 288,000 229,791 (58,209)
Intergovernmental 3,104,005 3,042,000 2,767,092 (274,908)
Charges for services 2,550,000 2,869,000 2,459,680 (409,320)
Other revenue 466,000 396,000 706,657 310,657
Total Revenues 74,942,005 74,117,000 73,365,784 (751,216)
EXPENDITURES
Current:
General government 9,512,718 10,941,401 10,190,580 750,821
Public safety 41,610,680 40,958,109 40,844,246 113,863
Public works and parks 11,144,863 10,943,588 11,201,655 (258,067)
Community development 4,013,962 4,154,885 3,759,564 395,321
Culture and recreation 3,076,042 3,076,042 3,077,435 (1,393)
Capital outlay 90,690
Debt service:
Principal 175,172 175,172 175,172
Interest and fiscal charges 276,513 276,513 271,263 5,250
Total Expenditures 69,900,640 70,525,710 69,519,915 1,005,795
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 5,041,365 3,591,290 3,845,869 254,579
OTHER FINANCING SOURCES (USES)
Transfers in 1,212,520 1,382,303 1,382,303
Transfers out (5,976,091)(7,213,543)(7,213,543)
Total Other Financing Sources (Uses)(4,763,571)(5,831,240)(5,831,240)
Net Change in Fund Balances $277,794 ($2,239,950)(1,985,371)$254,579
FUND BALANCES, BEGINNING OF YEAR 18,689,803
FUND BALANCES, END OF YEAR $16,704,432
106
CITY OF SAN RAFAEL
TRAFFIC AND HOUSING MITIGATION SPECIAL REVENUE FLTND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2017
REVENUES
Budgeted Amounts Actual
Amounts
Variance with
Final Budget
Positive
(Negative)Original Final
Use of money and properties $36,400 $36,400 $31,267 ($5,133)
Charges for services 600,000 715,000 204,210 (510,790)
Total Revenues 636,400 751,400 235,477 (515,923)
EXPENDITURES
Current:
General government 80,000 80,000 22,450 57,550
Capital improvement/special projects 4,570,733 1,745,154 2,825,579
Total Expenditures 80,000 4,650,733 1,767,604 2,883,129
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 556,400 (3,899,333)(1,532,127)2,367,206
OTHER FINANCING SOURCES (USES)
Transfers In 228,400 228,400
Total Other Financing Sources (Uses)228,400 228,400
Net Change in Fund Balances $556,400 ($3,670,933)(1,303,727)$2,367,206
FUND BALANCES, BEGINNING OF YEAR 10,439,157
FUND BALANCES, END OF YEAR $9,135,430
107
CITY OF SAN RAFAEL
GAS TAX SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2017
REVENUES
Budgeted Amounts Actual
Amounts
Variance with
Final Budget
Positive
(Negative)Original Final
Use of money and properties $23,000 $23,000 $24,527 $1,527
Intergovernmental 1,903,385 4,028,385 3,728,982 (299,403)
Charges for services 1,043,600 1,043,600 1,149,022 105,422
Other revenue 62,314 62,314
Total Revenues 2,969,985 5,094,985 4,964,845 (130,140)
EXPENDITURES
Current:
General government 43,676 43,676 43,676
Public works and parks 3,109,442 3,781,238 2,643,991 1,137,247
Capital outlay 5,508,565 1,641,317 3,867,248
Capital improvement/special projects 309,102 481,702 305,704 175,998
Total Expenditures 3,462,220 9,815,181 4,591,012 5,224,169
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (492,235)(4,720,196)373,833 5,094,029
OTHER FINANCING SOURCES (USES)
Transfers in 325,000 325,000
Transfers out (400,000)(628,400)(628,400)
Total Other Financing Sources (Uses)(400,000)(303,400)(303,400)
Net Change in Fund Balances ($892,235)($5,023,596)70,433 $5,094,029
FUND BALANCES, BEGINNING OF YEAR 6,653,263
FUND BALANCES, END OF YEAR $6,723,696
108
SUPPLEMENTARY INFORMATION
CITY OF SAN RAFAEL
ESSENTIAL FACILITIES CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2017
REVENUES
Budgeted Amounts Actual
Amounts
Variance with
Final Budget
Positive
(Negative)Original Final
Other revenue $635,387 $635,387
Total Revenues 635,387 635,387
EXPENDITURES
Capital improvement/special projects $4,040,000 $6,052,841 6,052,841
Total Expenditures 4,040,000 6,052,841 6,052,841
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (4,040,000)(6,052,841)(5,417,454)635,387
OTHER FINANCING SOURCES (USES)
Transfers in 4,040,000 5,417,454 5,417,454
Total Other Financing Sources (Uses)4,040,000 5,417,454 5,417,454
Net Change in Fund Balances ($635,387)$635,387
FUND BALANCES, BEGINNING OF YEAR
FLTND BALANCES, END OF YEAR
1 1 0
NON -MAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Recreation Revolving Fund - Established to administer the Community Services Department's
program and facility rental charge and accounts for the Recreation Memorial Fund.
Baypoint Lagoons Assessment District Fund - The Baypoint Lagoons Lighting and Landscape
District was formed to protect and enhance wildlife habitat and water quality in Baypoint (Spinnaker)
Lagoon and the adjacent diked salt marsh.
Household Hazmat Facility Fund - Established to account for State mandated hazardous materials
information, collection, and reporting. Expenditures include inspection of businesses for compliance
with regulations. This fund also serves as the depository for countywide Household Hazardous Waste
Program.
Childcare Fund - Established to administer and account for childcare programs at ten sites
throughout the City.
Loch Lomond Assessment District Fund - Established to provide maintenance for stormwater and
geotechnical mitigation facilities. A Mello Roos District was formed to fund this maintenance.
Library Fund - Established to account for restricted library activities that are intended to be self -
funding.
Library Assessment Fund - Established to account for a special parcel tax dedicated to public
library services and facilities, equipment, and technology improvements.
Public Safety Fund - Established for special police services, which are intended to be self -funding.
Stormwater Fund - Established to provide for self -funding storm drain maintenance program plus
separate programs through the County and Bay Area to educate residents about urban runoff
pollution.
Development Services Fund - Established to account for development activities that are supported
by external sources of funds.This fund does not account for the operating costs of building,
planning, and engineering, which are located in the General Fund.
Grants Fund - Established to account for grants for the Library, Childcare, Police and Falkirk
Cultural Center.
Parkland Dedication Fund - Established to account for long-term developer deposits used to
enhance and maintain the park structure within City limits.
Emergency Medical Services Fund - Established to account for the Emergency Medical Services
and Transportation program that provides services to all segments of the community.
Business Improvement Fund - Established to account for activities held in Downtown San Rafael.
Pt. San Pedro Maintenance Portion Special Revenue Fund - Established to account for ongoing
maintenance needs within the Pt. San Pedro assessment district.
111
NON -MAJOR GOVERNMENTAL FUNDS (Continued)
Low and Moderate Income Housing Special Revenue Fund - Established to account for the
activities related to the assets assumed by the City as Housing Successor to the San Rafael
Redevelopment Agency for the housing activities of the former Redevelopment Agency.
Measure A Open Space Special Revenue Fund - Established to account for the use of proceeds
distributed by the County of Marin from Measure A, as well as other supplementary matching or
City -funding for the operation or maintenance of open space, park or recreation lands.
DEBT SERVICE FUNDS
Peacock Gap Assessment District Fund - Established to accumulate funds for the payment of
principal and interest for the 1993 Bonds which matured in 2005. The proceeds were used to refund
the 1984 Bonds, which provided for the construction of public improvements in the project area.
Financing is to be provided by property tax increments generated within the specific geographic
region described by the bond assessment district.
Mariposa Assessment District Fund - Established to accumulate funds for the payment of principal
and interest for the 1993 Bond, which matured in 2008.The proceeds were used to finance the
grading and paving of Mariposa Road.
1997 Financing Authority Revenue Bonds Fund - Established to accumulate funds for the payment
of principal and interest for the 1997 Revenue Bonds which matured in 2011. The proceeds were
used to purchase the previously issued special assessment bonds.Financing is to be provided by
property tax increments generated within the specific geographic region described by the bond
assessment district.
CAPITAL PROJECTS FUNDS
Capital Improvement Fund - Established for the costs associated with major capital improvement
projects not tied to specific funds elsewhere.Improvements could include medians, parkways,
sidewalks, and other public assets.
Bedroom Tax Fund - Established to collect funds from multiple -unit housing used to pay for
maintaining and developing parks within local neighborhoods.
Assessment Districts Fund - Established to account for ongoing construction and improvement
needs within the following assessment districts: Peacock Gap, Kerner Boulevard, Sun Valley/Lucas
Valley Open Space, East San Rafael Drainage Assessment District 1.
Park Capital Projects Fund - Established to account for capital improvements for all City owned
parks, whether paid for by City funds, grants, donations, or partnership with the community.
Open Space Fund - Established for the acquisition of open space.
112
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CITY OF SAN RAFAEL
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
FOR THE YEAR ENDED JUNE 30, 2017
SPECIAL REVENUE FUNDS
ASSETS
Recreation
Revolving
Baypoint
Lagoons
Assessment
District
Household
Hazmat
Facility Childcare
Loch Lomond
Assessment
District
Cash and investments $556,856 $238,169 $294,058 $1,374,316 $701,449
Restricted cash and investments
Receivables:
Accounts 169,289 296,864
Taxes 157 97
Grants 40,594
Interest
Loans
Prepaids 472 3,670
Total Assets $726,617 $238,326 $590,922 $1,418,580 $701,546
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $240,937 $118,443 $48,436 $41,280
Deposits payable
Developer deposits payable 159,114
Deferred revenue 367,589
Total Liabilities 608,526 277,557 48,436 41,280
Fund Balances:
Restricted 118,091 $238,326 313,365 1,370,144 660,266
Committed
Assigned
Total Fund Balances 118,091 238,326 313,365 1,370,144 660,266
Total Liabilities and Fund Balances $726,617 $238,326 $590,922 $1,418,580 $701,546
114
SPECIAL REVENUE FUNDS
Library
Library
Assessment
Public
Safety Stormwater
Development
Services Grants
Parkland
Dedication
$641,059 $687,806 $138,261 $212,794 $703,392 $702,855 $457,538
21,000
17,829
53,152
432
$641,491 $687,806 $159,261 $230,623 $703,392 $756,007 $457,538
$9,426 $20,234 $761 $41,536 $12,530 $2,886 $8,350
6,076
1,500
9,426 20,234 761 41,536 20,106 2,886 8,350
632,065 667,572 $158,500 189,087 683,286 753,121 449,188
632,065 667,572 158,500 189,087 683,286 753,121 449,188
$641,491 $687,806 $159,261 $230,623 $703,392 $756,007 $457,538
(Continued)
115
CITY OF SAN RAFAEL
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
FOR THE YEAR ENDED JUNE 30, 2017
SPECIAL REVENUE FUNDS
ASSETS
Emergency
Medical
Services
Business
Improvement
Pt. San Pedro
Maintenance
Portion
Low and
Moderate
Income
Housing
Measure A
Open Space
Cash and investments $1,494,455 $22,958 $153,108 $679,950 $199,727
Restricted cash and investments
Receivables:
Accounts 359,679
Taxes 25,903 459 218,273
Grants
Interest 334
Loans 230,066
Prepaids
Total Assets $1,880,037 $22,958 $153,567 $910,350 $418,000
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $135,507 $22,958 $2,284 $48,765
Deposits payable
Developer deposits payable
Deferred revenue
Total Liabilities 135,507 22,958 2,284 48,765
Fund Balances:
Restricted 1,744,530 151,283 910,350 369,235
Committed
Assigned
Total Fund Balances 1,744,530 151,283 910,350 369,235
Total Liabilities and Fund Balances $1,880,037 $22,958 $153,567 $910,350 $418,000
116
DEBT SERVICE FUNDS CAPITAL PROJECTS FUNDS
1997
Peacock Gap Mariposa Financing
Assessment Assessment Authority
District District Revenue Bonds
$2,875 $16,573 $147,797
$2,875 $16,573 $147,797
$2,875 $16,573 $147,797
2,875 16,573 147,797
$2,875 $16,573 $147,797
Capital
Improvement
Bedroom
Tax
Assessment
Districts
Park
Capital
Projects
$2,864,858 $76,845 $223,742 $27,936
625,123 77,038
29,835
1,658
$3,521,474 $76,845 $300,780 $27,936
$57,702
57,702
$76,845 $300,780
3,463,772 $27,936
3,463,772 76,845 300,780 27,936
$3,521,474 $76,845 $300,780 $27,936
(Continued)
117
CITY OF SAN RAFAEL
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
FOR THE YEAR ENDED JUNE 30, 2017
CAPITAL
PROJECTS
FUNDS
ASSETS
Open
Space
Total
Non -Major
Governmental
Funds
Cash and investments $115,103 $12,734,480
Restricted cash and investments 702,161
Receivables:
Accounts 846,832
Taxes 262,718
Grants 123,581
Interest 1,992
Loans 230,066
Prepaids 4,574
Total Assets $115,103 $14,906,404
LIABILITIES AND FLTND BALANCES
Liabilities:
Accounts payable $812,035
Deposits payable 6,076
Developer deposits payable 160,614
Deferred revenue 367,589
Total Liabilities 1,346,314
Fund Balances:
Restricted 9,953,279
Committed 3,491,708
Assigned $115,103 115,103
Total Fund Balances 115,103 13,560,090
Total Liabilities and Fund Balances $115,103 $14,906,404
J,WITS
CITY OF SAN RAFAEL
COMBINING STATEMENTS OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2017
SPECIAL REVENUE FUNDS
REVENUES
Recreation
Revolving
Baypoint
Lagoons
Assessment
District
Household
Hazmat
Facility Childcare
Loch Lomond
Assessment
District
Taxes and special assessments $25,368 $15,606
Use of money and properties $1,477 760 $180 $4,177 2,334
Intergovernmental 10,097 329,232
Charges for services 3,129,356 156,434 3,724,353
Other revenue 16,149 1,125 11,939
Total Revenues 3,157,079 26,128 157,739 4,069,701 17,940
EXPENDITURES
Current:
General government
Public safety 93,013
Public works and parks 5,722 48,618
Culture and recreation 4,798,373 3,853,401
Capital outlay
Capital improvement/special projects 16,994
Total Expenditures 4,815,367 5,722 93,013 3,853,401 48,618
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,658,288)20,406 64,726 216,300 (30,678)
OTHER FINANCING SOURCES (USES)
Transfers in 1,750,000
Transfers out
Total Other Financing Sources (Uses)1,750,000
Net Change in Fund Balances 91,712 20,406 64,726 216,300 (30,678)
Fund Balance, Beginning 26,379 217,920 248,639 1,153,844 690,944
Fund Balance, Ending $118,091 $238,326 $313,365 $1,370,144 $660,266
120
SPECIAL REVENUE FUNDS
Library
Library
Assessment
Public
Safety Stormwater
Development
Services Grants
Parkland
Dedication
$868,481
$2,135 2,302 $130 $548 $33,615 $1,592 $1,620
1,000 89,053 1,002,826
7,067 1,860 903,910 39,360
3,020 74,762 20,228 23,106 1,500
13,222 870,783 165,805 924,686 33,615 1,027,524 42,480
5,997 26,606 182,778
276,387 582,235
782,590 30,072
10,049 907,470
6,996 4,936 908,171 92,704
17,045 907,470 281,323 1,696,758 26,606 765,013 122,776
(3,823)(36,687)(115,518)(772,072)7,009 262,511 (80,296)
100,000 46,089 37,761
(325,000)(169,783)
100,000 (325,000)(123,694)37,761
(3,823)(36,687)(15,518)(772,072)(317,991)138,817 (42,535)
635,888 704,259 174,018 961,159 1,001,277 614,304 491,723
$632,065 $667,572 $158,500 $189,087 $683,286 $753,121 $449,188
(Continued)
121
CITY OF SAN RAFAEL
COMBINING STATEMENTS OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2017
SPECIAL REVENUE FUNDS
REVENUES
Emergency
Medical Business
Services Improvement
Pt. San Pedro -
Maintenance
Portion
Low and
Moderate
Income
Housing
Measure A
Open Space
Taxes and special assessments $5,485,637 $74,084 $437,170
Use of money and properties 7,729 508 $2,445 973
Intergovernmental 121,517
Charges for services 1,506,437
Other revenue 220,984 59,375
Total Revenues 7,342,304 74,592 61,820 438,143
EXPENDITURES
Current:
General government 47,978 81,027
Public safety 7,114,323 107,949
Public works and parks
Culture and recreation
Capital outlay
Capital improvement/special projects
Total Expenditures 7,162,301 89,980 81,027 313,128
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 180,003 (15,388)(19,207)125,015
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out (118,036)
Total Other Financing Sources (Uses)(118,036)
Net Change in Fund Balances 180,003 (15,388)(19,207)6,979
Fund Balance, Beginning 1,564,527 166,671 929,557 362,256
Fund Balance, Ending $1,744,530 $151,283 $910,350 $369,235
122
DEBT SERVICE FUNDS CAPITAL PROJECTS FUNDS
1997
Peacock Gap Mariposa Financing
Assessment Assessment Authority
District District Revenue Bonds
$493
493
493
493
$2,875 $16,573 147,304
$2,875 $16,573 $147,797
Capital
Improvement
Bedroom
Tax
Assessment
Districts
Park
Capital
Projects
$13,357
143,472
$18,105
$363
$5,507
156,829 18,105 363 5,507
459,609
10,440
459,609 10,440
(302,780)18,105 363 (4,933)
(302,780)
3,766,552
18,105
58,740
363
300,417
(4,933)
32,869
$3,463,772 $76,845 $300,780 $27,936
(Continued)
123
CITY OF SAN RAFAEL
COMBINING STATEMENTS OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2017
CAPITAL
PROJECTS
FLTND S
REVENUES
Open
Space
Total
Non -Major
Governmental
Funds
Taxes and special assessments $6,924,451
Use of money and properties $383 63,764
Intergovernmental 1,567,082
Charges for services 9,612,249
Other revenue 437,695
Total Revenues 383 18,605,241
EXPENDITURES
Current:
General government 344,386
Public safety 8,173,907
Public works and parks 1,162,161
Culture and recreation 9,569,293
Capital outlay 459,609
Capital improvement/special projects 4,463 1,044,704
Total Expenditures 4,463 20,754,060
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (4,080)(2,148,819)
OTHER FINANCING SOURCES (USES)
Transfers in 1,933,850
Transfers out (612,819)
Total Other Financing Sources (Uses)1,321,031
Net Change in Fund Balances (4,080)(827,788)
Fund Balance, Beginning 119,183 14,387,878
Fund Balance, Ending $115,103 $13,560,090
ill ,
[411116 1
...cor.
..,..-0)
CITY OF SAN RAFAEL
BUDGETED NONMAJOR GOVERNMENTAL FUNDS
COMBINING SCHEDULES OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2017
SPECIAL REVENUE FUNDS
REVENUES
Recreation Revolving Baypoint Lagoons Assessment District
Final
Budget Actual
Variance
Positive
(Negative)
Variance
Final Positive
Budget Actual (Negative)
Taxes and special assessments $25,500 $25,368 ($132)
Use of money and properties $26,309 $1,477 ($24,832)700 760 60
Intergovernmental 10,000 10,097 97
Charges for services 2,962,330 3,129,356 167,026
Other revenue 2,750 16,149 13,399
Total Revenues 3,001,389 3,157,079 155,690 26,200 26,128 (72)
EXPENDITURES
Current:
General government
Public safety
Public works and parks 6,000 5,722 278
Culture and recreation 4,809,085 4,798,373 10,712
Capital outlay
Capital improvement/special projects 10,000 16,994 (6,994)
Total Expenditures 4,819,085 4,815,367 3,718 6,000 5,722 278
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,817,696)(1,658,288)159,408 20,200 20,406 206
OTHER FINANCING SOURCES (USES)
Transfers in 1,750,000 1,750,000
Transfers out
Total Other Financing Sources (Uses)1,750,000 1,750,000
FUND BALANCES, BEGINNING OF YEAR
AND OTHER SOURCES AND USES OVER
(UNDER) EXPENDITURES ($67,696)91,712 $159,408 $20,200 20,406 $206
FUND BALANCES, BEGINNING OF YEAR 26,379 217,920
FUND BALANCES, END OF YEAR $118,091 $238,326
126
SPECIAL REVENUE FUNDS
Household Hazmat Facility Childcare Loch Lomond Assessment District
Final
Budget Actual
Variance
Positive
(Negative)
Final
Budget Actual
Variance
Positive
(Negative)
Final
Budget Actual
Variance
Positive
(Negative)
$15,610 $15,606 ($4)
$550 $180 ($370)$2,000 $4,177 $2,177 2,000 2,334 334
312,200 329,232 17,032
156,515 156,434 (81)3,775,000 3,724,353 (50,647)
1,125 1,125 11,939 11,939
157,065 157,739 674 4,089,200 4,069,701 (19,499)17,610 17,940 330
169,361 93,013 76,348
50,054 48,618 1,436
4,099,128 3,853,401 245,727
169,361 93,013 76,348 4,099,128 3,853,401 245,727 50,054 48,618 1,436
(12,296)64,726 77,022 (9,928)216,300 226,228 (32,444)(30,678)1,766
($12,296)64,726 $77,022 ($9,928)216,300 $226,228 ($32,444)(30,678)$1,766
248,639 1,153,844 690,944
$313,365 $1,370,144 $660,266
(Continued)
,
127
CITY OF SAN RAFAEL
BUDGETED NONMAJOR GOVERNMENTAL FUNDS
COMBINING SCHEDULES OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2017
SPECIAL REVENUE FUNDS
REVENUES
Taxes and special assessments
Library Library Assessment
Final
Budget Actual
Variance
Positive
(Negative)
Final
Budget Actual
Variance
Positive
(Negative)
$875,000 $868,481 ($6,519)
Use of money and properties $600 $2,135 $1,535 1,800 2,302 502
Intergovernmental 1,000 1,000
Charges for services 6,000 7,067 1,067
Other revenue 1,000 3,020 2,020
Total Revenues 7,600 13,222 5,622 876,800 870,783 (6,017)
EXPENDITURES
Current:
General government
Public safety
Public works and parks
Culture and recreation 10,000 10,049 (49)995,819 907,470 88,349
Capital outlay
Capital improvement/special projects 15,000 6,996 8,004
Total Expenditures 25,000 17,045 7,955 995,819 907,470 88,349
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (17,400)(3,823)13,577 (119,019)(36,687)82,332
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total Other Financing Sources (Uses)
EXCESS (DEFICIENCY) OF REVENUES
AND OTHER SOURCES AND USES OVER
(UNDER) EXPENDITURES ($17,400)(3,823)$13,577 ($119,019)(36,687)$82,332
FUND BALANCES, BEGINNING OF YEAR 635,888 704,259
FUND BALANCES, END OF YEAR $632,065 $667,572
128
SPECIAL REVENUE FUNDS
Public Safety Stormwater Development Services
Variance Variance Variance
Final Positive Final Positive Final Positive
Budget Actual (Negative)Budget Actual (Negative)Budget Actual (Negative)
$240 $130 ($110)$5,000 $548 ($4,452)$33,000 $33,615 $615
70,000 89,053 19,053
1,500 1,860 360 772,800 903,910 131,110
75,000 74,762 (238)5,000 20,228 15,228
146,740 165,805 19,065 782,800 924,686 141,886 33,000 33,615 615
10,412 5,997 4,415 117,000 26,606 90,394
276,322 276,387 (65)
734,711 782,590 (47,879)
340,000 340,000
5,000 4,936 64 1,525,867 908,171 617,696
281,322 281,323 (1)2,270,990 1,696,758 574,232 457,000 26,606 430,394
(134,582)(115,518)19,064 (1,488,190)(772,072)716,118 (424,000)7,009 431,009
100,000 100,000
(325,000)(325,000)
100,000 100,000 (325,000)(325,000)
($34,582)(15,518)$19,064 ($1,488,190)(772,072)$716,118 ($749,000)(317,991)$431,009
174,018 961,159 1,001,277
$158,500 $189,087 $683,286
(Continued)
129
CITY OF SAN RAFAEL
BLTDGETED NONMAJOR GOVERNMENTAL FUNDS
COMBINING SCHEDULES OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2017
SPECIAL REVENUE FUNDS
REVENUES
Taxes and special assessments
Grants Parkland Dedication
Final
Budget Actual
Variance
Positive
(Negative)
Final
Budget Actual
Variance
Positive
(Negative)
Use of money and properties $2,800 $1,592 ($1,208)$4,000 $1,620 ($2,380)
Intergovernmental 369,250 1,002,826 633,576
Charges for services 39,360 39,360
Other revenue 23,106 23,106 1,500 1,500
Total Revenues 372,050 1,027,524 655,474 4,000 42,480 38,480
EXPENDITURES
Current:
General government 235,961 182,778 53,183
Public safety 563,091 582,235 (19,144)
Public works and parks 37,301 30,072 7,229
Culture and recreation
Capital outlay 330,000 92,704 237,296
Capital improvement/special projects
Total Expenditures 799,052 765,013 34,039 367,301 122,776 244,525
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (427,002)262,511 689,513 (363,301)(80,296)283,005
OTHER FINANCING SOURCES (USES)
Transfers in 46,089 46,089 37,761 37,761
Transfers out (169,783)(169,783)
Total Other Financing Sources (Uses)(123,694)(123,694)37,761 37,761
EXCESS (DEFICIENCY) OF REVENUES
AND OTHER SOURCES AND USES OVER
(UNDER) EXPENDITURES ($550,696)138,817 $689,513 ($325,540)(42,535)$283,005
FUND BALANCES, BEGINNING OF YEAR 614,304 491,723
FUND BALANCES, END OF YEAR $753,121 $449,188
130
SPECIAL REVENUE FUNDS
Emergency Medical Services Business Improvement Pt. San Pedro -Maintenance Portion
Final
Budget Actual
Variance Variance
Positive Final Positive
(Negative)Budget Actual (Negative)
Final
Budget Actual
Variance
Positive
(Negative)
$5,216,424 $5,485,637 $269,213 $80,000 $74,084 ($5,916)
2,000 7,729 5,729 500 508 8
125,000 121,517 (3,483)
2,598,000 1,506,437 (1,091,563)
247,819 220,984 (26,835)
8,189,243 7,342,304 (846,939)80,500 74,592 (5,908)
83,288 47,978 35,310
7,178,379 7,114,323 64,056
90,250 89,980 270
7,261,667 7,162,301 99,366 90,250 89,980 270
927,576 180,003 (747,573)(9,750)(15,388)(5,638)
$927,576 180,003 ($747,573)($9,750)(15,388)($5,638)
1,564,527 166,671
$1,744,530 $151,283
(Continued)
131
CITY OF SAN RAFAEL
BUDGETED NONMAJOR GOVERNMENTAL FUNDS
COMBINING SCHEDULES OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2017
SPECIAL REVENUE FUNDS
REVENUES
Low and Moderate Income Housing Measure A Open Space
Final
Budget Actual
Variance
Positive
(Negative)
Final
Budget Actual
Variance
Positive
(Negative)
Taxes and special assessments $430,300 $437,170 $6,870
Use of money and properties $8,300 $2,445 ($5,855)600 973 373
Intergovernmental
Charges for services
Other revenue 70,000 59,375 (10,625)
Total Revenues 78,300 61,820 (16,480)430,900 438,143 7,243
EXPENDITURES
Current:
General government 210,000 81,027 128,973
Public safety 199,123 107,949 91,174
Public works and parks 155,000 205,179 (50,179)
Culture and recreation 460,000 460,000
Capital outlay
Capital improvement/special projects
Total Expenditures 210,000 81,027 128,973 814,123 313,128 500,995
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (131,700)(19,207)112,493 (383,223)125,015 508,238
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out (118,036)(118,036)
Total Other Financing Sources (Uses)(118,036)(118,036)
EXCESS (DEFICIENCY) OF REVENUES
AND OTHER SOURCES AND USES OVER
(UNDER) EXPENDITURES ($131,700)(19,207)$112,493 ($501,259)6,979 $508,238
FUND BALANCES, BEGINNING OF YEAR 929,557 362,256
FUND BALANCES, END OF YEAR $910,350 $369,235
132
DEBT SERVICE FUNDS
Mariposa Assessment District 1997 Financing Authority Revenue Bonds
Variance Variance
Final Positive Final Positive
Budget Actual (Negative)Budget Actual (Negative)
$16,573
$430 $493 $63
430 493 63
430 493 63
$430 493
147,304
$16,573 $147,797
$63
.
>.fk WITH
,.'.
INTERNAL SERVICE FUNDS
Internal service funds account for department services and financing performed for other departments
within the same governmental jurisdiction.Funding comes from charges assessed to the departments
benefiting from the service.
Building Maintenance Fund - Established to account for construction projects and cyclical large
dollar maintenance tasks (roof, painting) completed on City owned buildings.
Vehicle Replacement Fund - Established to provide for the replacement of vehicles.
Equipment Replacement Fund - Established to provide for the replacement of computers and
equipment.
Employee Benefits Fund - This fund is utilized for the payment of retiree benefits, unemployment
insurance, accumulated leave requirements and other negotiated benefits not tied to a specific
department.
Liability Insurance Fund - Established to maintain sufficient reserves for outstanding claims.All
costs associated with liability premiums are paid from this fund.
Workers' Compensation Fund - Established to maintain sufficient reserves for injury claims.All
costs associated with workers compensation, including safety training, wellness programs, claim
expenses and insurance premiums are paid from this fund.
Dental Insurance Fund - Set up to maintain sufficient reserves for dental claims. All costs associated
with dental claims and administrations are paid from this fund.
Employee Retirement Fund - Established to maintain sufficient reserves to fund debt service
payments on the 2010 Taxable Pension Obligation Bonds and other pension related obligations.
OPEB/Retiree Medical Fund - Established to account for activities related to the funding,
administration and procurement of retiree medical benefits.
Radio Replacement Fund - Established to meet radio system operating costs, capital acquisition and
replacement, and operating lease obligations for the Public Works, Fire, Community Development and
Police Departments. The Marin Emergency Radio Authority (MERA) is a countywide JPA that has
taken the roll in procurement and installation of a new digital radio system. This fund supports San
Rafael's portion of the MERA efforts and related contractual obligations.
Telephone Replacement Fund - Established to provide ongoing support services for telephone
equipment and usage throughout the organization.
Sewer Maintenance Fund - Established to record both the cost of providing services to the San
Rafael Sanitation District and the charges for those services.
135
CITY OF SAN RAFAEL
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF NET POSITION
JUNE 30, 2017
ASSETS
Current Assets:
Building
Maintenance
Vehicle
Replacement
Equipment
Replacement
Employee
Benefits
Liability
Insurance
Cash and investments $1,617,858 $1,673,326 $2,845,878 $810,716 $2,967,749
Accounts receivable
Loans receivable
Prepaids 1,080,558
Capital assets:
Nondepreciable assets 530,301
Depreciable assets, net 2,615,538 5,044,661 637,331
Total Assets 4,763,697 7,798,545 3,483,209 810,716 2,967,749
LIABILITIES
Current Liabilities:
Accounts payable 129,423 208,333 196,005 501
Claims payable - due in one year 1,226,194
Non -current Liabilities:
Claims payable - due in more than one year 1,355,335
Total Liabilities 129,423 208,333 196,005 501 2,581,529
NET POSITION:
Net investment in capital assets 3,145,839 5,044,661 637,331
Unrestricted 1,488,435 2,545,551 2,649,873 810,215 386,220
Total Net Position $4,634,274 $7,590,212 $3,287,204 $810,215 $386,220
136
Workers'
Compensation
Dental
Insurance
Employee
Retirement
OPEB/
Retiree
Medical
Radio
Replacement
Telephone
Replacement
Sewer
Maintenance Total
$6,663,771 $152,927 $2,281,906 $711,122 $358,889 $398,256 $28,213 $20,510,611
1,080,558
530,301
8,297,530
6,663,771 152,927 2,281,906 711,122 358,889 398,256 28,213 30,419,000
304 3,624 16,487 32,422 28,213 615,312
1,427,094 2,653,288
4,738,715 6,094,050
6,166,113 3,624 16,487 32,422 28,213 9,362,650
8,827,831
497,658 149,303 2,281,906 694,635 358,889 365,834 12,228,519
$497,658 $149,303 $2,281,906 $694,635 $358,889 $365,834 $21,056,350
137
CITY OF SAN RAFAEL
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2017
OPERATING REVENUES
Building
Maintenance
Vehicle
Replacement
Equipment
Replacement
Employee
Benefits
Liability
Insurance
Charges for current services $800,000 $1,213,282 $1,910,808 $551,519 $1,552,880
Other operating revenues 10,000 286 606 49,910
Total Operating Revenues 810,000 1,213,282 1,911,094 552,125 1,602,790
OPERATING EXPENSES
Personnel 161,876 2,416
Insurance premiums and claims 1,063,453
Maintenance and repairs 201,103 87,597
General and administrative 18,243 1,952,354 796,874 184,656
Depreciation expense 38,921 922,755 106,224
Total Operating Expenses 258,267 1,010,352 2,220,454 799,290 1,248,109
Operating Income (Loss)551,733 202,930 (309,360)(247,165)354,681
NONOPERATING REVENUES (EXPENSES)
Investment income 5,317 5,099 9,304 8,635 8,962
Miscellaneous Income 94,264
Loss on sale of capital assets (19,944)
Total Nonoperating
Revenues (Expenses)5,317 79,419 9,304 8,635 8,962
Net income (loss) before transfers 557,050 282,349 (300,056)(238,530)363,643
CAPITAL CONTRIBUTIONS 1,228,402
TRANSFERS IN 80,275
TRANSFERS OUT
Change in Net Position 1,865,727 282,349 (300,056)(238,530)363,643
NET POSITION, BEGINNING OF YEAR, AS ADJUSTED 2,768,547 7,307,863 3,587,260 1,048,745 22,577
NET POSITION, END OF YEAR $4,634,274 $7,590,212 $3,287,204 $810,215 $386,220
138
Workers'
Compensation
Dental
Insurance
Employee
Retirement
OPEB/
Retiree
Medical
Radio
Replacement
Telephone
Replacement
Sewer
Maintenance Total
$1,974,595 $399,028 $200,000 $2,775,000 $648,660 $571,223 $2,609,993 $15,206,988
7,910 892,199 1,385 962,296
1,974,595 406,938 200,000 3,667,199 648,660 571,223 2,611,378 16,169,284
2,611,378 2,775,670
1,487,865 388,506 3,674,555 6,614,379
288,700
116,474 3,342 673,499 544,551 4,289,993
1,067,900
1,604,339 388,506 3,342 3,674,555 673,499 544,551 2,611,378 15,036,642
370,256 18,432 196,658 (7,356)(24,839)26,672 1,132,642
21,819 663 7,392 522 1,238 68,951
94,264
(19,944)
21,819 663 7,392 522 1,238 143,271
392,075 19,095 204,050 (7,356)(24,317)27,910 1,275,913
1,228,402
80,275
(376,520)(376,520)
392,075 19,095 (172,470)(7,356)(24,317)27,910 2,208,070
105,583 130,208 2,454,376 701,991 383,206 337,924 18,848,280
$497,658 $149,303 $2,281,906 $694,635 $358,889 $365,834 $21,056,350
139
CITY OF SAN RAFAEL
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers/other funds
Cash payments to suppliers for goods and services
Cash payments to employees for salaries and benefits
Other operating revenues
Cash Flows from Operating Activities
Building
Maintenance
Vehicle
Replacement
Equipment
Replacement
Employee
Benefits
Liability
Insurance
$800,000
(126,737)
10,000
$1,224,360
(85,119)
$1,911,094
(1,898,044)
(161,876)
$551,519
(836,813)
(2,416)
606
$1,552,880
(1,211,360)
49,910
683,263 1,139,241 (148,826)(287,104)391,430
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Interfund receipts 80,275
Interfund payments
Cash Flows from Noncapital
Financing Activities 80,275
'CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Acquisition and construction of capital assets (468,338)(753,667)
Proceeds from sale of property 94,264
Cash Flows from Investing Activities (468,338)(659,403)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 5,317 5,099 9,304 8,635 8,962
Cash Flows from Investing Activities 5,317 5,099 9,304 8,635 8,962
Net increase (decrease) in cash and cash equivalents 300,517 484,937 (139,522)(278,469)400,392
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,317,341 1,188,389 2,985,400 1,089,185 2,567,357
CASH AND CASH EQUIVALENTS, END OF YEAR $1,617,858 $1,673,326 $2,845,878 $810,716 $2,967,749
Reconciliation of operating income (loss) to net cash
provided by operating activities:
Operating income (loss)$551,733 $202,930 ($309,360)($247,165)$354,681
Adjustments to reconcile operating income
to cash flows from operating activities:
Depreciation 38,921 922,755 106,224
Net change in assets and liabilities:
Accounts receivable 140
Loans receivable 10,938
Prepaids and deposits 2,478
Accounts payable 92,609 54,310 (39,939)(1,125)
Claims payable 37,874
Net Cash Provided by (Used in) Operating Activities $683,263 $1,139,241 ($148,826)($287,104)$391,430
NON -CASH TRANSACTIONS:
Contributions of capital assets $1,228,402
140
Workers'
Compensation
Dental
Insurance
Employee
Retirement
OPEB/
Employee
Retirement
Radio
Replacement
Telephone
Replacement
Sewer
Maintenance Total
$1,974,595 $399,028 $200,000 $2,850,980 $648,660 $571,223 $2,623,480 $15,307,819
(1,490,587)(388,587)(3,342)(3,661,843)(673,499)(533,604)(2,599,611)(13,509,146)
(164,292)
7,910 892,199 1,385 962,010
484,008 18,351 196,658 81,336 (24,839)37,619 25,254 2,596,391
80,275
(376,520)(376,520)
(376,520)(296,245)
(1,222,005)
94,264
(1,127,741)
21,819 663 7,392 522 1,238 68,951
21,819 663 7,392 522 1,238 68,951
505,827 19,014 (172,470)81,336 (24,317)38,857 25,254 1,241,356
6,157,944 133,913 2,454,376 629,786 383,206 359,399 2,959 19,269,255
$6,663,771 $152,927 $2,281,906 $711,122 $358,889 $398,256 $28,213 $20,510,611
$370,256 $18,432 $196,658 ($7,356)($24,839)$26,672 $1,132,642
1,067,900
75,980 $13,487 89,607
10,938
2,478
(7,146)(81)12,712 10,947 11,767 134,054
120,898 158,772
$484,008 $18,351 $196,658 $81,336 ($24,839)$37,619 $25,254 $2,596,391
$1,228,402
141
AGENCY FUNDS
Agency Funds account of assets held by the City as agent for individuals, governmental entities, and non-public
organizations.
Pt. San Pedro Road Assessment District Fund - Established to accumulate funds for payment of principal and
interest for Pt. San Pedro Road Median Landscaping Assessment District bonds.
143
CITY OF SAN RAFAEL
AGENCY FUNDS
COMBINING STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES
FOR THE YEAR ENDED JUNE 30, 2017
Balance Balance
June 30, 2016 Additions Deductions June 30, 2017
Pt. San Pedro Road Assessment District
Assets
Restricted cash and investments $291,111 $206,708 $208,051 $289,768
Taxes receivable 1,134 951 1,134 951
Total Assets $292,245 $207,659 $209,185 $290,719
Liabilities
Interest payable $27,697 $26,614 $27,697 $26,614
Due to bondholders 264,548 181,045 181,488 264,105
Total Liabilities $292,245 $207,659 $209,185 $290,719
Balance Balance
June 30, 2016 Additions Deductions June 30, 2017
Total Agency Fund
Assets
Restricted cash and investments $291,111 $206,708 $208,051 $289,768
Taxes receivable 1,134 951 1,134 951
Total Assets $292,245 $207,659 $209,185 $290,719
Liabilities
Interest payable $27,697 $26,614 $27,697 $26,614
Due to bondholders 264,548 181,045 181,488 264,105
Total Liabilities $292,245 $207,659 $209,185 $290,719
144
'Sigey
14011
-,1**
.
'
514c Wears (Beach Park
STATISTICAL SECTION
,
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STATISTICAL SECTION
This part of the City's Comprehensive Annual Financial Report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary information
says about the City's overall financial health. In contrast to the financial section, the statistical section information is not
subject to independent audit.
Financial Trends
These schedules contain trend information to help the reader understand how the City's financial performance and well-
being have changed over time:
1.Net Position by Component
2.Changes in Net Position
3.Fund Balances of Governmental Funds
4.Changes in Fund Balance of Governmental Funds
Revenue Capacity
These schedules contain information to help the reader assess the City's most significant local revenue source, the
property tax:
1.Assessed and Estimated Actual Value of Taxable Property
2.Property Tax Rates, All Overlapping Governments
3.Principal Property Taxpayers
4.Property Tax Levies and Collections
Debt Capacity
These schedules present information to help the reader assess the affordability of the City's current levels of outstanding
debt and the City's ability to issue additional debt in the future:
1.Ratio of Outstanding Debt by Type
2.Computation of Direct and Overlapping Debt
3.Computation of Legal Bonded Debt Margin
4.Revenue Bond Coverage Parking Facility
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which
the City's financial activities take place:
1.Demographic and Economic Statistics
2.Principal Employers
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the City's
financial report relates to the services the City provides and the activities it performs:
1.Full -Time Equivalent City Government Employees by Function
2.Operating Indicators by Function/Program
3.Capital Asset Statistics by Function/Program
Sources
Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Reports
for the relevant year.
147
V
II
11 Pi.1614.1
$270,000 -
$220,000 -
$170,000 -
$120,000 -
$70,000 -
$20,000 -
($30,000) -
($80,000) -
($130,000)
CITY OF SAN RAFAEL
NET POSITION BY COMPONENT
Last Ten Fiscal Years
(accrual basis of accounting)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Governmental activities
Net investment in capital assets
Restricted
Unrestricted
Total governmental activities net position
Business -type activities
Net investment in capital assets
Unrestricted
Total business -type activities net position
Primary government
Net investments in capital assets
Restricted
Unrestricted
Total primary government net position
ElNet of Related Debt Restricted (Unrestricted
2008 2009 2010 2011
$176,724,820 $178,744,119 $173,536,144 $174,281,922
26,848,900 25,721,231 26,150,254 21,322,937
4,273,937 (700,985)(4,63 ,276)(8,170,324)
$207,847,657 $203,764,365 $195,055,122 $187,434,535
$10,130,329 $11,243,637 $10,950,825 $10,793,592
2,471,117 1,936,958 2,017,354 1,948,447
$12,601,446 $13,180,595 $12,968,179 $12,742,039
$186,855,149 $189,987,756 $184,486,969 $185,075,514
26,848,900 25,721,231 26,150,254 21,322,937
6,745,054 1,235,973 (2,613,922)(6,221,877)
$220,449,103 $216,944,960 $208,023,301 $200,176,574
(a) The City adjusted certain beginning balances during fiscal years 2013-2014, 2014-2015 and 2016-2017. Financial data
shown for proceeding years were not adjusted for the presentation.
148
2012 2013 2014 2015 2016 2017
$192,361,245 $193,222,791 $190,286,275 $190,621,085 $193,707,175 $199,202,842
24,693,205 35,780,412 37,339,141 33,389,224 31,286,725 29,225,643
10,652,263 11,151,318 (196,824)(82,336,534)(93,273,480)(112,913,181)
$227,706,713 $240,154,521 $227,428,592 $141,673,775 $131,720,420 $115,515,304
$10,650,558 $10,670,190 $10,786,591 $10,744,952 $10,958,058 $10,968,642
2,495,889 2,501,498 2,049,957 (938,519)(1,136,050)(871,620)
$13,146,447 $13,171,688 $12,836,548 $9,806,433 $9,822,008 $10,097,022
$203,011,803 $203,892,981 $201,072,866 $201,366,037 $204,665,233 $210,171,484
24,693,205 35,780,412 37,339,141 33,389,224 31,286,725 29,225,643
13,148,152 13,652,816 1,853,133 (83,275,053)(94,409,530)(113,784,801)
$240,853,160 $253,326,209 $240,265,140 $151,480,208 $141,542,428 $125,612,326
149
CITY OF SAN RAFAEL
CHANGES IN NET POSITION
Last Ten Fiscal Years
(Accrual Basis of Accounting)
Expenses
Governmental Activities:
2008 2009 2010 2011
General government $8,621,079 $8,075,344 $8,396,759 $8,269,846
Public safety 40,845,347 42,708,538 42,752,033 44,735,486
Public works and parks 22,105,367 23,036,676 17,401,923 17,408,038
Community development 5,811,866 5,759,171 6,738,873 7,804,650
Culture and recreation 10,300,230 11,505,896 11,139,225 11,487,999
Interest on long-term debt and fiscal charges 1,989,620 1,907,229 2,200,024 1,621,605
Total Governmental Activities Expenses 89,673,509 92,992,854 88,628,837 91,327,624
Business -Type Activities:
Parking services 3,282,235 3,563,235 4,016,198 3,785,751
Total Business -Type Activities Expenses 3,282,235 3,563,235 4,016,198 3,785,751
Total Primary Government Expenses $92,955,744 $96,556,089 $92,645,035 $95,113,375
Component Unit:
San Rafael Sanitation District $8,090,636 $9,143,977 $9,087,354 $9,677,630
Program Revenues
Governmental Activities:
Charges for services:
General government $1,494,784 $1,738,685 $1,665,460 $1,636,542
Public safety 5,562,072 5,906,445 6,308,912 6,167,925
Public works and parks 4,983,288 4,753,817 3,916,874 4,141,103
Community development 3,247,024 2,915,872 2,830,179 2,676,663
Culture and recreation 4,870,884 5,253,683 5,280,458 5,362,497
Operating grants and contributions 3,463,616 3,544,248 3,721,055 3,651,902
Capital grants and contributions 3,239,509 7,311,173 2,116,906 1,857,670
Total Government Activities Program Revenues 26,861,177 31,423,923 25,839,844 25,494,302
Business -Type Activities:
Charges for services:
Parking services 4,161,936 4,454,490 4,244,404 4,011,333
Total Business -Type Activities Program Revenues 4,161,936 4,454,490 4,244,404 4,011,333
Total Primary Government Program Revenues $31,023,113 $35,878,413 $30,084,248 $29,505,635
Component Unit:
San Rafael Sanitation District
Charges for service $9,366,305 $10,567,647 $11,559,549 $12,223,779
Operating grants and contributions
Capital grants and contributions
Total Component Unit Program Revenues $9,366,305 $10,567,647 $11,559,549 $12,223,779
Net (Expense)/Revenue
Governmental Activities ($62,812,332)($61,568,931)($62,788,993)($65,833,322)
Business -Type Activities 879,701 891,255 228,206 225,582
Total Primary Government Net Expense ($61,932,631)($60,677,676)($62,560,787)($65,607,740)
Component Unit Activities $1,275,669 $1,423,670 $2,472,195 $2,546,149
150
2012 2013 2014 2015 2016 2017
$10,171,332 $10,202,530 $9,085,672 $9,099,858 $12,952,983 $10,996,269
39,876,910 41,966,065 43,800,158 39,968,631 55,399,798 44,366,734
17,423,033 17,695,164 22,125,336 16,893,164 22,929,289 19,845,719
4,587,557 3,403,158 3,451,244 3,128,373 4,307,269 4,242,743
11,020,663 11,330,058 11,846,818 11,198,151 15,026,680 14,131,000
1,224,991 283,805 327,350 284,288 277,263 271,263
84,304,486 84,880,780 90,636,578 80,572,465 110,893,282 93,853,728
3,446,482 3,545,387 4,125,476 4,249,597 4,762,851 4,188,152
3,446,482 3,545,387 4,125,476 4,249,597 4,762,851 4,188,152
$87,750,968 $88,426,167 $94,762,054 $84,822,062 $115,656,133 $98,041,880
$10,185,779 $10,169,082 $11,378,055 $11,375,239 $11,654,767 $11,255,194
$1,986,791 $2,655,749 $2,838,940 $1,379,523 $526,495 $421,393
7,122,396 6,478,321 6,014,034 4,966,251 4,939,658 4,264,939
5,214,267 7,837,472 6,101,460 3,078,267 5,157,289 1,804,698
3,255,367 3,984,204 3,279,251 3,796,684 4,004,178 3,850,107
5,873,147 6,075,129 6,417,003 6,537,646 6,683,059 6,941,013
3,158,281 4,085,073 4,698,142 4,185,450 4,678,338 3,965,351
2,705,696 5,876,993 762,719 1,308,027 1,470,953 1,702,993
29,315,945 36,992,941 30,111,549 25,251,848 27,459,970 22,950,494
3,901,175 3,990,706 4,485,394 5,173,557 5,212,181 5,268,991
3,901,175 3,990,706 4,485,394 5,173,557 5,212,181 5,268,991
$33,217,120 $40,983,647 $34,596,943 $30,425,405 $32,672,151 $28,219,485
$12,368,889 $12,413,123 $13,732,496 $14,629,758 $15,414,530 $16,014,016
36,945
79,245
$12,368,889 $12,413,123 $13,732,496 $14,629,758 $15,414,530 $16,130,206
($54,988,541)($47,887,839)($60,525,029)($55,320,617)($83,433,312)($70,903,234)
454,693 445,319 359,918 923,960 449,330 1,080,839
($54,533,848)($47,442,520)($60,165,111)($54,396,657)($82,983,982)($69,822,395)
$2,183,110 $2,244,041 $2,354,441 $3,254,519 $3,862,215 $4,875,012
151
CITY OF SAN RAFAEL
CHANGES IN NET POSITION
(continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
General Revenues and Other Changes in Net Position
Governmental Activities:
Taxes:
Fiscal Year Ended June 30,
2008 2009 2010 2011
Property $22,195,606 $21,978,859 $21,684,131 $21,632,733
Sales 25,764,457 21,970,262 19,055,124 21,623,445
Special assessments 3,503,555
Paramedic 3,210,317 3,489,494 3,661,064
Motor vehicles 257,320 197,989 171,518 297,425
Transient occupancy 1,678,912 1,558,243 1,644,262
Franchise 2,941,149 2,868,332 2,990,539
Business license 2,405,934 2,317,664 2,296,460
Other 9,242,241 1,561,835 1,411,583 1,930,531
Investment earnings 1,583,056 717,968 302,180 176,502
Gain (Loss) on disposal of assets 221,791
Miscellaneous 296,454 461,224 541,390 1,496,174
Special item - Court fines repayment
Transfers 344,080 361,190 458,300 463,600
Total Government Activities 63,186,769 57,485,639 54,079,750 58,212,735
Business -Type Activities:
Investment earnings 121,486 49,084 17,678 11,878
Aid from other government agencies
Transfers (344,080)(361,190)(458,300)(463,600)
Total Business -Type Activities (222,594)(312,106)(440,622)(451,722)
Total Primary Government $62,964,175 $57,173,533 $53,639,128 $57,761,013
Component Unit:
San Rafael Sanitation District
Property Taxes $803,071 $855,511 $823,187 $1,214,519
Investment earnings 341,032 206,752 93,274 59,265
Miscellaneous 3,546 3,540
Aid from other governmental agencies 577,860 381,144 415,391 6,499
Total Component Unit $1,725,509 $1,446,947 $1,331,852 $1,280,283
Special Item
Governmental Activities
Component Unit Activities
Change in Net Position
Governmental Activities $374,437 ($4,083,292)($8,709,243)($7,620,587)
Business -Type Activities 657,107 579,149 (212,416)(226,140)
Total Primary Government $1,031,544 ($3,504,143)($8,921,659)($7,846,727)
Change in Net Position
Component Unit Activities $3,001,178 $2,870,617 $3,804,047 $3,826,432
152
2012 2013 2014 2015 2016 2017
$20,107,637 $17,317,772 $18,439,619 $19,039,443 $19,998,567 $23,343,140
22,355,749 24,262,282 27,758,971 32,269,915 34,348,089 31,819,259
3,807,545 3,804,985 3,816,070 3,820,240 4,226,020 5,485,637
1,866,575 2,185,287 2,332,277 2,661,878 3,063,263 2,984,758
3,076,094 3,331,160 3,260,958 3,272,390 3,418,277 3,610,824
2,332,146 2,507,785 2,588,728 2,670,071 2,824,664 2,774,803
3,574,918 2,929,915 3,452,171 3,295,751 3,465,193 1,824,830
205,413 991,762 184,171 216,066 300,091 210,628
542,816 2,580,882 1,140,743 2,254,901 1,387,315 2,448,604
57,960 423,817 449,917 432,630 448,478 536,000
57,926,853 60,335,647 63,423,625 69,933,285 73,479,957 75,038,483
7,675 3,739 4,375 7,008 14,723 10,810
(57,960)(423,817)(449,917)(432,630)(448,478)(536,000)
(50,285)(420,078)(445,542)(425,622)(433,755)(525,190)
$57,876,568 $59,915,569 $62,978,083 $69,507,663 $73,046,202 $74,513,293
$1,192,566 $1,177,469 $1,345,018 $1,319,852 $1,367,172 $1,528,047
38,191 25,591 151,729 171,804 46,225 97,090
9,613 56,589 22,125 35,090
$1,240,370 $1,259,649 $1,518,872 $1,526,746 $1,413,397 $1,625,137
$4,462,815
($4,462,815)
$2,938,312 $12,447,808 $2,898,596 $19,075,483 ($9,953,355)$4,135,249
404,408 25,241 (85,624)498,338 15,575 555,649
$3,342,720 $12,473,049 $2,812,972 $19,573,821 ($9,937,780)$4,690,898
$3,423,480 $3,503,690 $3,873,313 $318,450 $5,275,612 $6,500,149
153
$55,000
$45,000
$35,000
$25,000
$15,000
$5,000
($5,000)
CITY SAN RAFAEL
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
General Fund
Pre-GASB 54 Presentation:
Reserved
Unreserved
GASB 54 Presentation:
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total General Fund
All Other Governmental Funds
Pre-GASB 54 Presentation:
Reserved
Unreserved, reported in:
Special Revenue Funds
Capital Project Funds
Debt Service Funds
Expendable Trust Fund
GASB 54 Presentation:
Nonspendable
Restricted
Committed
Assigned
Total all other governmental funds
Total Fund Balance
2008 2009 2010 2011
$2,196,153
4,022,612
$2,225,775
1,670,455
$1,763,622
5,038,173
$589,833
200,238
555,561
5,439,879
$6,218,765 $3,896,230 $6,801,795 $6,785,511
$17,599,142 $16,680,568 $15,352,723
7,413,808 8,641,239 8,778,027
35,430 (1,030,293)4,527,627
3,315,764 3,360,540
$377,180
19,289,367
3,864,322
4,124,029
$28,364,144 $27,652,054 $28,658,377 $27,654,898
(a) The change in total fund balance for the General Fund and other governmental funds
is explained in Management's Discussion and Analysis.
(b) The City adjusted certain beginning balances during fiscal years 2013-2014, 2014-2015 and 2015-2016.
Financial data shown for preceding years were not adjusted for the presentation.
154
2012 2013 2014 2015 2016 2017 (a)
$527,509 $527,235 $503,338 $399,299 $476,316 $508,446
76,188
651,121 800,876
1,516,644 2,476,676 6,866,149 12,374,002 16,440,910 14,900,945
1,588,500 1,772,577 1,295,041
$2,771,462 $3,804,787 $7,369,487 $14,361,801 $18,689,803 $16,704,432
$788,031 $51,521 $8,719 $2,359 $9,449
16,856,959 20,769,546 30,185,064 31,742,184 27,552,245 25,812,405
5,135,257 8,447,495 2,185,825 931,871 3,799,421 3,491,708
5,283,559 6,511,850 4,959,533 712,810 119,183 115,103
$28,063,806 $35,780,412 $37,339,141 $33,389,224 $31,480,298 $29,419,216
155
CITY OF SAN RAFAEL
CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
Revenues
Fiscal Year Ended June 30,
2008 2009 2010 2011
Taxes and special assessments $56,129,195 $51,019,143 $47,678,541 $51,448,130
Licenses and permits 1,489,748 1,472,913 1,518,819 1,416,772
Fines and forfeitures 797,081 660,338 787,411 862,820
Use of money and properties 1,584,508 847,120 433,874 380,720
Intergovernmental 12,081,968 17,518,670 13,001,703 11,864,127
Charges for services 15,607,460 16,384,265 15,787,325 15,888,750
Other revenue 815,704 759,320 716,760 1,026,845
Total Revenues 88,505,664 88,661,769 79,924,433 82,888,164
Expenditures
Current:
General government 8,288,170 8,059,526 7,997,067 6,863,142
Public safety 40,299,862 41,209,972 39,574,091 40,967,352
Public works and parks 13,641,665 12,926,646 10,731,669 10,666,176
Community development 5,786,661 5,572,079 4,398,594 4,527,351
Culture and recreation 9,820,365 10,233,361 9,605,684 10,067,822
Capital outlay 6,243,517 5,048,044 1,890,559 1,745,483
Capital improvement / special projects 5,124,091 6,606,857 3,436,608 6,240,861
Debt service:
Capitalized lease obligation
Principal 2,504,370 2,714,358 2,804,258 2,530,338
Interest and fiscal charges 1,776,354 1,683,240 1,979,372 1,448,910
Total Expenditures 93,485,055 94,054,083 82,417,902 85,057,435
Excess (deficiency) of revenues over
(under) expenditures (4,979,391)(5,392,314)(2,493,469)(2,169,271)
Other Financing Sources (Uses)
Issuance of debt 14,660,000
Payment to refunded bonds (14,315,000)
Bond premiums 1,038,185
Capital lease for equipment acquisition
Proceeds from PG&E loans
Proceeds from sale of capital asset 221,791
Transfers in 6,353,216 8,972,495 7,494,560 5,806,834
Transfers (out)(6,329,136)(6,614,806)(6,411,150)(4,657,326)
Total other financing sources (uses)24,080 2,357,689 2,688,386 1,149,508
Extraordinary Item
Transfer to Successor Agency
Net Change in fund balances ($4,955,311)($3,034,625)$194,917 ($1,019,763)
Debt service as a percentage of
noncapital expenditures 5.2%5.3%6.2%5.2%
156
2012 2013 2014 2015 2016 2017
$51,395,116 $51,549,306 $56,686,142 $61,804,228 $65,866,218 $71,166,891
1,648,890 1,929,387 1,934,755 2,456,820 2,588,411 2,559,841
801,758 734,005 669,553 556,076 435,829 400,283
315,561 325,043 363,089 444,757 460,206 349,349
10,537,396 11,869,889 11,953,308 13,233,503 13,685,003 8,063,156
19,649,433 23,575,374 19,949,333 15,346,794 14,366,744 13,425,161
870,957 4,092,411 2,045,407 1,777,003 3,208,749 1,842,053
85,219,111 94,075,415 93,601,587 95,619,181 100,611,160 97,806,734
8,783,873 10,529,480 8,678,833 10,203,687 11,349,079 10,557,416
39,311,551 41,377,062 41,900,762 43,954,515 47,071,166 49,018,153
11,518,822 12,002,448 13,697,957 12,758,643 14,390,699 16,752,961
3,755,504 2,961,275 3,296,375 3,416,859 3,670,108 3,759,564
10,345,673 10,591,057 11,106,367 11,616,777 12,048,104 12,646,728
1,312,383 4,009,454 2,154,900 4,498,924 4,813,757 2,100,926
3,604,171 5,284,720 7,168,776 2,186,986 4,826,576 7,403,249
2,518,320 208,642 75,172 75,172 175,172
735,221 283,805 327,350 284,288 277,263 271,263
81,885,518 87,039,301 88,539,962 88,995,851 98,521,924 102,685,432
3,333,593 7,036,114 5,061,625 6,623,330 2,089,236 (4,878,698)
568,481
4,539,646 8,425,474 3,655,302 4,348,149 7,533,364 9,287,007
(4,864,293)(6,711,657)(3,053,865)(3,051,499)(6,582,555)(8,454,762)
(324,647)1,713,817 1,169,918 1,296,650 950,809 832,245
(2,352,584)
$3,008,946 $6,397,347 $6,231,543 $7,919,980 $3,040,045 ($4,046,453)
4.2%0.4%0.7%0.4%0.4%0.5%
157
CITY OF SAN RAFAEL
ASSESSED AND ESTIMATED ACTUAL
VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
$14,000
$12,000 -
$10,000 -
$8,000 -
$6,000 -
$4,000 -
$2,000 -
$0
2008 2009 2010 2011 2012 2013 2014
Unsecured Property Secured Property
2015 2016 2017
Fiscal
Year
Real Property Total Real
Secured
Property
Unsecured
Property
Total
Assessed (a)
Estimated
Full Market (a)
Total
Direct
Tax Rate (b)
Residential
Property
Commercial
Property
Industrial
Property Other
2008 $ 7,024,610,641 $1,824,656,505 $214,341,528 $105,409,028 $9,169,017,702 $ 362,727,209 $ 9,531,744,911 $ 9,531,744,911 0.17718%
2009 7,357,121,277 1,941,927,620 234,669,841 129,177,656 9,662,896,394 374,976,613 10,037,873,007 10,037,873,007 0.17951%
2010 7,335,863,721 2,052,276,292 244,857,019 130,177,994 9,763,175,026 401,201,906 10,164,376,932 10,164,376,932 0.19215%
2011 7,215,965,203 2,056,985,417 247,409,955 124,426,487 9,644,787,062 383,414,952 10,028,202,014 10,028,202,014 0.17851%
2012 7,317,280,602 2,036,262,351 247,485,238 118,579,648 9,719,607,839 384,950,872 10,104,558,711 10,104,558,711 0.17827%
2013 7,265,617,525 1,987,170,644 245,917,096 115,453,836 9,614,159,101 384,534,108 9,998,693,209 9,998,693,209 0.17456%
2014 7,558,708,224 2,009,718,415 245,674,195 130,594,237 9,944,695,071 402,261,887 10,346,956,958 10,346,956,958 0.11985%
2015 7,991,224,952 2,120,065,908 249,864,918 115,675,852 10,476,831,630 417,217,272 10,894,048,902 10,894,048,902 0.11657%
2016 8,511,358,216 2,221,843,976 263,830,302 108,982,883 11,106,015,377 400,942,059 11,506,957,436 11,506,957,436 0.11672%
2017 9,025,896,811 2,390,814,514 267,468,956 135,689,202 11,819,869,483 423,545,667 12,243,415,150 12,243,415,150 0.11693%
(a) The State Constitution requires property to be assessed at one hundred percent of the most recent purchase price, plus an increment of no more than two percent annually, plus any local
over -rides. These values are considered to be fill market values.
(b) California cities do not set their own direct tax rate. The state constitution establishes the rate at 1% and allocates a portion of that amount, by an annual calculation, to all the taxing entities
within a tax rate area.
Data Source: Marin County Assessor 2007/08 - 2016/17 Combined Tax Rolls
158
CITY OF SAN RAFAEL
PROPERTY TAX RATES
ALL OVERLAPPING GOVERNMENTS
LAST TEN FISCAL YEARS
Fiscal
Year City County (1)
School
Districts
Misc. Special
Districts Total
2008 0.154 0.295 0.7225 0.0461 1.2172
2009 0.154 0.295 0.7192 0.0461 1.2139
2010 0.154 0.295 0.7402 0.0461 1.2349
2011 0.154 0.295 0.7542 0.0461 1.2489
2012 0.154 0.295 0.7831 0.0461 1.2779
2013 0.154 0.295 0.7743 0.0461 1.2691
2014 0.154 0.295 0.7890 0.0461 1.2838
2015 0.154 0.295 0.7651 0.0461 1.2599
2016 0.154 0.295 0.7846 0.0695 1.3028
2017 0.154 0.295 0.7988 0.0553 1.3028
Notes:
(1)Like other cities, San Rafael includes several property tax rate areas with different rates. A mean average is indicated.
Data Source: Marin County Assessors Office 2007/08 - 2016/17 Tax Rate Tables
159
CITY OF SAN RAFAEL
PRINCIPAL PROPERTY TAX PAYERS
CURRENT FY 2016/17 AND FY 2007/08
Taxpayer
FY 2016-2017 FY 2007-2008
Taxable
Assessed
Value
Percentage
of Total City
Taxable
Assessed
Value
Taxable
Assessed
Value
Percentage
of Total City
Taxable
Assessed
Value
California Corporate Center ACQ LLC $235,592,917 1.92%
MGP XI Northgate LLC 141,854,871 1.16%
Professional Financial Investors Inc 52,469,836 0.43%
South Valley Apartments LLC 51,976,039 0.42%
Kaiser 47,890,626 0.39%
BRE Piper MF 33 North CA LLC 45,652,854 0.37%
Regency Center II Assoc 45,430,182 0.37%$40,116,943 0.42%
Northbay Properties II 44,976,649 0.37%33,229,690 0.35%
Bay Apartment Communities Inc 42,857,370 0.35%33,826,191 0.35%
Barbara Fasken 1995 Trust ETAL 42,474,774 0.35%
Northgate Mall Associates 119,980,919 1.26%
Hines San Rafael LLC 78,065,660 0.82%
San Rafael Associates NF 63,225,500 0.66%
Marin Sanitary Service 39,405,212 0.41%
4040 Civic Center LLC 36,206,743 0.38%
Rafael Town Center Investors LLC 32,696,979 0.34%
Bit Holdings Forty -Five Inc 31,243,240 0.33%
Subtotal $751,176,118 6.14%$507,997,077 5.33%
Total Net Assessed Valuation:
Fiscal Year 2016-2017 $12,243,415,150
Fiscal Year 2007-2008 $9,531,744,911
160
CITY OF SAN RAFAEL
PROPERTY TAX LEVIES AND COLLECTIONS (1)
LAST TEN FISCAL YEARS
$28
$25
$22
$19
$16
$12
$9
$6
Allocations
Apportionments
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Fiscal
Year Rate Levies Allocations Collections Apportionments Delinquencies
Delinquent taxes
as a Percent of
Allocations
2008 1.00 (2)$22,195,606 (2)$22,195,606 (2)0.0%
2009 1.00 (2)21,978,859 (2)21,978,859 (2)0.0%
2010 1.00 (2)21,702,536 (2)21,702,536 (2)0.0%
2011 1.00 (2)21,632,731 (2)21,632,731 (2)0.0%
2012 1.00 (2)20,704,368 (2)20,704,368 (2)0.0%
2013 1.00 (2)20,883,041 (2)20,883,041 (2)0.0%
2014 1.00 (2)22,001,357 (2)22,001,357 (2)0.0%
2015 1.00 (2)22,376,457 (2)22,376,457 (2)0.0%
2016 1.00 (2)23,636,093 (2)23,636,093 (2)0.0%
2017 1.00 (2)25,173,651 (2)25,173,651 (2)0.0%
Notes:
(1)Includes deductions for County property tax administration.
(2)Information not applicable. All general purpose property taxes are levied by the county and allocated
to other governmental entities.
161
CITY OF SAN RAFAEL
RATIO OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
$45 -
$40
$35
$30
$25
O
$20
$15
2008 2009 2010
0 Total Governmental
-total Business
2011 2012 2013
Governmental Activities
2014 2015 2016 2017
Fiscal
Year
RDA Tax
Allocation
Bonds
Financing
Authority
Revenue Bonds
Note
Payable
Court Fine
Promissory
Note
Capitalized
Lease
Obligations
Pension
Obligation
Bonds Total
2008 $37,537,161 $780,000 $169,000 816,119 $401,155 $39,703,435
2009 35,793,692 455,000 169,000 594,100 198,816 37,210,608
2010 35,355,988 169,000 363,328 135,330 36,023,646
2011 33,298,499 169,000 124,222 69,098 $4,490,000 38,150,819
2012 169,000 4,490,000 4,659,000
2013 169,000 4,490,000 4,659,000
2014 528,839 4,490,000 5,018,839
2015 453,667 4,490,000 4,943,667
2016 378,495 4,490,000 4,868,495
2017 303,323 4,390,000 4,693,323
Business -Type Activities
Fiscal
Year
Parking
Services
Bonds
Note
Payable Total
Total
Primary
Government
Percentage
of Personal
Income (a)
Per
Capita (a)
2008 $7,140,000 $7,140,000 $46,843,435 1.73%804.39
2009 6,975,000 6,975,000 44,185,608 1.67%757.08
2010 6,805,000 6,805,000 42,828,646 1.85%728.11
2011 6,630,000 6,630,000 44,780,819 1.87%770.28
2012 6,445,000 6,445,000 11,104,000 0.46%190.45
2013 6,445,000 6,445,000 11,104,000 0.44%190.85
2014 6,186,403 $61,836 6,248,239 11,267,078 0.43%192.38
2015 5,942,128 55,020 5,997,148 10,940,815 0.41%184.77
2016 5,692,853 48,204 5,741,057 10,609,552 0.38%175.13
2017 5,433,577 41,388 5,474,965 10,168,288 n/a 167.13
Notes :Debt amounts exclude any premiums, discounts, or other amortization amounts.
In August 2012, the series 2003 parking services bonds were refunded with series 2012 refunding bonds.
Data Sources: City of San Rafael
State of California, Department of Finance (population)
U.S. Department of commerce, Bureau of the Census (income)
(a) See Schedule of Demographic and Economic Statistics for personal income and population data.
162
CITY OF SAN RAFAEL
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
June 30, 2017
2016-17 Assessed Valuation:$ 12,243,415,150
Total Debt City's Share of
OVERLAPPING TAX AND ASSESSMENT DEBT:6/30/2017 % Applicable (1)Debt 6/30/2017
MarM Community College District $313,510,000 17.315%$54,284,257
San Rafael High School District 71,215,315 78.283%55,749,485
Tamalpais Union High School District 117,095,000 0.081%94,847
Dixie School District 18,065,810 65.888%11,903,201
Ross School District 18,894,143 1.554%293,615
Ross Valley School District 44,891,171 0.013%5,836
San Rafael School District 69,670,289 83.694%58,309,852
MarM Healthcare District 157,385,000 20.831%32,784,869
Marin Emergency Radio Authority Parcel Tax Obligations 33,000,000 17.289%5,705,370
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $219,131,331
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Marin County Certificates of Participation $90,392,081 17.289%$15,627,887
Marin County Pension Obligation Bonds 95,475,000 17.289%16,506,673
MarM County Transit District General Fund Obligations 111,628 17.289%19,299
Marin Municipal Water District General Fund Obligations 90,816 22.038%20,014
Marin Community College District Certification of Participation 2,420,834 17.315%419,167
San Rafael School District Certificates of Participation 3,405,000 83.694%2,849,781
City of San Rafael General Fund Obligations 7,377,975 100.000%7,377,975 (2)
City of San Rafael Pension Obligations 4,390,000 100.000%4,390,000
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT 47,210,796
Less: City of San Rafael lease revenue bonds supported by parking revenues 5,474,966
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $41,735,830
OVERLAPPING TAX INCREMENT DEBT (Successor Agency) $14,424,004 100.000%$14,424,004
TOTAL GROSS DIRECT DEBT 11,767,975
TOTAL NET DIRECT DEBT 6,293,009
TOTAL OVERLAPPING DEBT 268,998,157
GROSS COMBINED TOTAL DEBT 280,766,132 (3)
NET COMBINED TOTAL DEBT 275,291,166
(1) Percentage of overlapping agency's assessed valuation located within boundaries of the city.
(2) Include city's share of Marin Emergency Radio Authority refunding revenue bonds and $344,711 PG&E notes.
(3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded
capital lease obligations.
Ratios to 2016-17 Assessed Valuation:
Total Overlapping Tax and Assessment Debt 1.79%
Total Gross Direct Debt ($11,767,975)0.10%
Total Net Direct Debt ($6,293,009)0.05%
Gross Combined Total Debt 2.29%
Net Combined Total Debt 2.25%
Ratios to Redevelopment Incremental Valuation ($2,703,250,021
Total Overlapping Tax Increment Debt
Data Source: MuniServices
0.53%
163
NOTE: (a)
CITY OF SAN RAFAEL
COMPUTATION OF LEGAL BONDED DEBT MARGIN
June 30, 2017
ASSESSED VALUATION:$12,243,415,150
BONDED DEBT LIMIT (3.75% OF ASSESSED VALUE) (a)459,128,068.13
LESS AMOUNT OF DEBT SUBJECT TO LIMIT:4,693,323.00
LEGAL BONDED DEBT MARGIN $454,434,745
Fiscal
Year
Debt
Limit
Total Net Debt
Applicable to
Limit
Legal
Debt
Margin
Total net debt
applicable to the limit
as a percentage
of debt limit
2008 $357,440,434 $39,703,435 $ 317,736,999 12.50%
2009 376,420,238 37,210,608 339,209,630 10.97%
2010 381,164,135 36,023,646 345,140,489 10.44%
2011 376,057,576 38,150,819 337,906,757 11.29%
2012 378,920,952 4,659,000 374,261,952 1.24%
2013 374,950,995 4,659,000 370,291,995 1.26%
2014 388,010,886 5,018,839 382,992,047 1.31%
2015 408,526,834 4,943,667 403,583,167 1.22%
2016 431,510,904 4,868,495 426,642,409 1.14%
2017 459,128,068 4,693,323 454,434,745 1.03%
California Government Code, Section 43605 sets the debt limit at 15%. The Code section was enacted prior to the change in
basing assessed value to full market value when it was previously 25% of market value. Thus, the limit shown as 3.75% is
one-fourth
Source: City of San Rafael's Finance Department
164
CITY OF SAN RAFAEL
REVENUE BOND COVERAGE
PARKING FACILITY
LAST TEN FISCAL YEARS
7.00
6.00
5.00 -
4.00
3.00 -
2.00 -
1.00 -
0.00
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
- Coverage
Fiscal
Year
Gross
Revenue (1)
Operating
Expenses (2)
Net Revenue
Available for
Debt Service
Debt Service Requirements
CoveragePrincipalInterestTotal
2008 $4,089,112 $2,692,086 $1,397,026 $160,000 $335,216 $495,216 2.82
2009 4,425,813 2,980,083 1,445,730 165,000 330,379 495,379 2.92
2010 4,262,082 3,343,680 918,402 170,000 325,285 495,285 1.!,
2011 4,023,211 3,101,411 921,800 175,000 319,391 494,391 1.86
2012 3,908,664 2,870,718 1,037,946 185,000 312,291 497,291 2.09
2013 3,994,446 3,121,964 872,481 310,000 240,012 550,012 1.59
2014 4,489,769 3,716,552 773,217 245,000 210,063 455,063 1.70
2015 5,180,554 4,031,161 1,149,393 245,000 205,163 450,163 2.55
2016 5,226,904 3,739,321 1,487,583 250,000 199,613 449,613 J.31
2017 5,279,801 2,425,281 2,854,520 260,000 192,038 452,038 6.31
Notes:On March 26, 2003, the City Financing Authority issued lease revenue bonds for the design and construction of a new parking facility.
On August 12,2012 ,the City Financing Authority refunded the series 2003 lease revenue bonds with series 2012 lease
revenue refunding bonds to take advantage of lower interest rates.
(1) Includes all Parking Facility Operating Revenues and Non -operating Interest Revenue
(2) Includes all Parking Facility Operating Expenses less Depreciation and Interest
Data Source: San Rafael Finance Department Revenue and Expenditure Status Reports
165
23.50%
23.00%
22.50%
22.00%
$50
$45 -
$40 -
$35 -
$30
CITY OF SAN RAFAEL
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
.ti
City Population
as a % of County
Population
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
oe)\.°\.`)
- Per Capita Personal Income (2)
$3,000,000
$2,500,000 -
$2,000,000 -
$1,500,000 -
$1,000,000
$500,000
$0
ti ,1\\
I Personal Income (2) (in thousands)
10.00%
7.50%
5.00%
2.50%
0.00%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Unemployment Rate (%)
Fiscal
Year
City
Population (1)
Personal
Income (2)
(in thousands)
Per Capita
Personal
Income (2)
Average
Unemployment
Rate (3)
Marin
County
Population
City
Population
% of County
2008 $58,235 $2,703,213 $46,557 5.60%$257,406 22.62%
2009 58,363 2,642,978 45,288 9.30%258,618 22.57%
2010 58,822 2,317,704 39,402 9.80%260,651 22.57%
2011 58,136 2,389,222 40,978 8.80%254,692 22.83%
2012 58,305 2,438,291 41,908 5.50%254,790 22.88%
2013 58,182 2,538,895 43,351 4.70%254,007 22.91%
2014 58,566 2,621,228 44,531 4.50%255,846 22.89%
2015 59,214 2,699,436 44,558 3.70%258,972 22.87%
2016 60,582 2,817,497 46,308 3.40%262,274 23.10%
2017 60,842 n/a n/a n/a 263,604 23.08%
Source: (1)State of California, Department of Finance - Demographic Research Unit. The data represents the City's population as of
January 1, of each year.
(2)2007-2009 Income Data --Demographic Estimates are based on the last available census. Projections are developed
by incorporating all of the prior census data released to date.
2010 and later- Income - US Census Bureau, most recent American Community Survey
Unemployment Data: California Employment Development Department(3)
166
1111111111
CITY OF SAN RAFAEL
PRINCIPAL EMPLOYERS
FISCAL YEAR 2016-2017
LAST NINE CALENDAR YEARS
2017*2016*2015*2014*2013*2012*2011*2010*2009*
Employer #(A)#(A)#(A)#(A)#(A)#(A)#(A)#(A)#(A)
Autodesk, Inc.719 228%748 2.28%763 2.33%1,095 3.52%1,000 3.27%878 3.25%928 3.44%1,028 3.83%1,200 4.32%
Kaiser Pennanente 2061 6.52%662 2.02%1,575 4.82%1,637 5.26%1,756 5.74%1,803 6.68%1,330 4.93%1,311 4.88%2,267 8.15%
San Rafael Elementary/High Schools Dist(!700 2.22%650 1.98%650 1.99%600 1.93%600 1.96%600 2.22%600 2.22%600 2.23%575 2.07%
City of San Rafael 454 1.44%577 1.76%581 1.78%666 2.14%643 2.10%521 1.93%592 2.19%630 2.34%633 2.28%
MHN 350 1.14%350 1.30%350 1.30%350 1.30%
Dominican University of California 456 1.44%485 1.48%422 1.29%354 1.14%347 1.13%346 1.28%336 1.24%370 1.38%508 1.83%
Bradley Real Estate 280 0.89%435 1.33%418 1.28%385 1.24%369 1.21%376 1.39%350 1.30%
Macy's 0 380 1.16%380 1.22%380 1.24%380 1.41%450 1.67%445 1.66%
Wells Fargo Bank 310 0.98%326 0.99%306 0.94%308 0.99%334 1.09%
FICO o 300 0.91%
Fair lssac Corp 300 0.92%300 0.96%350 1.26%
Community Action Marin 255 0.81%220 0.67%225 0.69%300 0.96%300 0.98%
Safeway 841 3.11%452 1.67%452 1.68%
Comcast 620 2.30%619 2.29%619 2.30%
Guide Dogs for the Blind 203 0.64%225 0.69%287 1.07%
Bernard Osher Marin JCC o 200 0.61%
Buckelew Programs 240 0.76%186 0.57%
Ghilotti Bros.175 0.33%150 0.46%240 0.86%
Golden Gate Bridge Highway & Transp. Dist.o 828 2.98%
YMCA 348 1.25%
San Rafael City High School District 250 0.90%
Urban Painting, Inc.150 0.46%
Totals 5,853 18.52%5,314 16.20%5,620 17.19%6,025 19.37%6,079 19.87%6,715 24.87%6,007 22.25%6,092 22.67%7,199 25.90%
# Number of FTE employees in Marin locations
(A) Percentage of total employment
Note: From the EDD website, it shows that the Total 2017 Employment in the City of San Rafael was 31,600 of which it is used as the denominator for the 2017 percentages are calculated.
*The number or total employment for the City is available for the last nine fiscal yea. only.
Data Sources: State of California, Employment Development Department, Labor Market Information Division & North Bay Business Journal (Annual Book of Lists)
167
!Hi III
[Hit
CITY OF SAN RAFAEL
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
rf
If
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
General Government
ri Public Works and Parks
. Culture and Recreation
'1 Public Safety
it Community Development
450.00
400.00
350.00
300.00
250.00
200.00
150.00
100.00
50.00
0.00
Function
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
General Government 59.88 58.88 56.88 54.35 55.23 53.23 55.11 58.11 60.61 62.11
Public Safety 186.00 183.00 165.00 166.00 162.00 163.00 168.00 171.75 175.75 176.55
Public Works and Parks 78.80 78.80 60.80 62.80 62.00 60.00 61.00 62.00 62.00 63.00
Community Development 34.50 34.50 26.75 26.75 18.25 18.25 17.80 17.80 19.80 20.00
Culture and Recreation 85.90 85.90 83.49 89.82 81.56 80.76 83.66 84.23 84.25 84.35
Total 445.08 441.08 392.92 399.72 379.04 375.24 385.57 393.89 402.41 406.01
Data Source: City of San Rafael's Finance Department
168
P*4.
CITY OF SAN RAFAEL
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
2008 2009 2010 2011
Function/Program
Public safety:
Fire:
Inspection permit issued 217 196 307 294
Police:
Police calls for service 43,488 42,227 42,227 39,512
Law violations:
Part I crimes 2,314 2,352 2,352 2,180
Physical arrests (adult and juvenile)4,182 4,487 4,487 3,102
Traffic violations 9,241 5,777 5,777 8,190
Parking violations 42,481 44,913 42,806 34,590
Public works
Street resurfacing (miles) (Eng Div)4.95 2.77 2.77 7.40
Potholes repaired (square miles)N/A N/A N/A N/A
Asphalt used for street repairs (tons)N/A N/A N/A 10,809
Culture and recreation:
Recreation class participants 8,000 8,000 9,524 9,000
Items in collection (thousands)
Library:
Items in collection (thousands)N/A 124.40 151.88 158.30
Total items borrowed (thousands)N/A N/A 371.12 435.66
Note: N/A denotes information not available.
170
2012 2013 2014 2015 2016 2017
282 307 261 282 198 233
39,537 42,707 51,261 55,805 57,026 53,567
2,101 2,523 2,289 2,533 2,523 2,392
2,981 2,951 3,227 3,450 3,453 2,526
4,048 3,448 4,498 4,168 3,252 3,341
32,492 30,881 38,814 36,398 34,803 36,169
N/A
N/A
2.70
N/A
9.00
N/A
6.40
N/A
6.76
N/A
2.32
N/A
178.9 7,500 10,700 11,000 7,195 5,800
12,075 7,082 9,857 10,023 12,725 13,493
159.18 125.92 168.62 127.76 227.89 117,354
366.46 392.23 478.96 443.64 469.79 327,297
CITY OF SAN RAFAEL
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Function/Program
Public safety:
2008 2009 2010 2011
Fire stations 6 6 6 6
Police stations 1 1 1 1
Police Fleet
Public works
Miles of streets 173 173 173 173
Street lights 4,435 4,435 4,435 4,435
Parking District lights
Traffic Signals 89 89 89 89
Culture and recreation:
Community services:
City parks 20 20 20 20
City parks acreage 42 42 42 42
Playgrounds 14 14 14 14
City trails 20 20 20 20
Community gardens 1 1 1 1
Community centers 4 4 4 4
Senior centers 0 0 0 0
Sports centers 0 0 0 0
Perfoiiiiing arts centers 0 0 0 0
Swimming pools 1 1 1 1
Tennis courts 10 10 10 10
Basketball Courts 5 5 5 5
Baseball/softball diamonds 5 5 5 5
Soccer/football fields 2 2 2 2
Library:
City Libraries 1 2 2 2
Wastewater:
Miles of sanitary sewers 179 179 179 179
Data Source: City of San Rafael's Finance Department
2012 2013 2014 2015 2016 2017
6 6 6 6 6 6
1 1 1 1 1 1
173 173 173 173 173 173
4,435 4,435 4,435 4,435 4,435 4,435
89 89 89 89 89 89
20 20 20 20 20 20
42 42 42 42 42 42
14 14 14 14 14 14
20 20 20 20 20 20
1 1 1 1 1 1
4 4 4 4 4 4
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
1 1 1 1 1 1
10 10 10 10 10 10
5 5 5 5 5 5
5 5 5 5 5 5
2 2 2 2 2 2
2 2 2 2 2 2
179 179 145 145 145 145
173
f .
W T
APPENDIX D
PROPOSED FORM OF OPINION OF BOND COUNSEL
[Dated Date]
San Rafael Joint Powers Financing Authority
c/o City of San Rafael
1400 Fifth Avenue
San Rafael, CA 94901
OPINION: $______________ San Rafael Joint Powers Financing Authority Lease Revenue
Bonds, Series 2018 (Public Safety Facilities Project)
Members of the Board:
We have acted as bond counsel to the San Rafael Joint Powers Financing Authority (the
“Authority”) in connection with the issuance by the Authority of the lease revenue bonds captioned
above, dated __________, 2018 (the "Bonds"). In such capacity, we have examined such law
and such certified proceedings, certifications and other documents as we have deemed
necessary to render this opinion.
The Bonds are issued pursuant to Article 4 of Chapter 5, Division 7, Title 1 of the
Government Code of the State of California (the "Bond Law"), the Indenture of Trust dated as of
March 1, 2018 (the “Indenture”), by and between the Authority and MUFG Union Bank, N.A., as
trustee (the "Trustee "), and a resolution (the "Resolution") of the Board of Directors of the
Authority adopted on March 5, 2018.
Under the Indenture, the Authority has pledged certain revenues (the “Revenues”) for the
payment of principal, premium (if any), and interest on the Bonds when due, including lease
payments made by the City of San Rafael (the “City”) under a Lease Agreement dated as of March
1, 2018 (the “Lease Agreement”) between the Authority and the City.
Regarding questions of fact material to our opinion, we have relied on representations of
the Authority contained in the Indenture and the City contained in the Lease Agreement, and in
the certified proceedings and other certifications of public officials furnished to us, without
undertaking to verify the same by independent investigation.
Based on the foregoing, we are of the opinion that, under existing law:
1. The Authority is a duly created and validly existing joint exercise of powers
authority with the power to adopt the Resolution, enter into the Indenture and the Lease
Agreement, perform the agreements on its part contained therein, and issue the Bonds.
2. The City is a duly created and validly existing municipal corporation and charter
city with the power to enter into the Lease Agreement and perform the agreements on its part
contained therein.
D-1
3. The Indenture has been duly authorized, executed and delivered by the Authority,
and constitutes a valid and binding obligation of the Authority, enforceable against the Authority.
4. The Lease Agreement has been duly authorized, executed and delivered by the
Authority and the City, and constitutes a valid and binding obligation of the Authority and the City,
enforceable against the Authority and the City.
5. The Indenture creates a valid lien on the Revenues and other funds pledged by
the Indenture for the security of the Bonds on a parity basis with other bonds (if any) issued or to
be issued in accordance with the Indenture.
6. The Bonds have been duly authorized and executed by the Authority, and are valid
and binding limited obligations of the Authority, payable solely from the Revenues and other funds
provided therefor in the Indenture.
7. The interest on the Bonds is excluded from gross income for federal income tax
purposes and is not an item of tax preference for purposes of the federal alternative minimum tax,
although, in the case of tax years beginning prior to January 1, 2018, for the purpose of computing
the alternative minimum tax imposed on certain corporations, such interest earned by a
corporation prior to the end of its tax year in 2018 is taken into account in determining certain
income and earnings. The opinions set forth in the preceding sentence are subject to the
condition that the Authority and the City comply with all requirements of the Internal Revenue
Code of 1986, as amended, relating to the exclusion from gross income for federal income tax
purposes of interest on obligations such as the Bonds. The Authority and the City have made
certain representations and covenants in order to comply with each such requirement. Inaccuracy
of those representations, or failure to comply with certain of those covenants, may cause the
inclusion of such interest in gross income for federal income tax purposes, which may be
retroactive to the date of issuance of the Bonds.
8. The interest on the Bonds is exempt from personal income taxation imposed by
the State of California.
We express no opinion regarding any other tax consequences arising with respect to the
ownership, sale or disposition of, or the amount, accrual or receipt of interest on, the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds and the
Indenture are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally, and by equitable principles, whether considered at law or in
equity.
This opinion is given as of the date hereof, and we assume no obligation to revise or
supplement this opinion to reflect any facts or circumstances that may hereafter come to our
attention, or any changes in law that may hereafter occur. Our engagement with respect to this
matter has terminated as of the date hereof.
Respectfully submitted,
A Professional Law Corporation
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$____________
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, Series 2018
(Public Safety Facilities Project)
(Green Bonds)
This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and
delivered by the City of San Rafael (the “City”), on behalf of the San Rafael Joint Powers Financing
Authority (the “Authority”) and itself, in connection with the issuance by the Authority of the bonds
captioned above (the “Bonds”). The Bonds are being issued under an Indenture of Trust dated
as of March 1, 2018 (the “Indenture”), by and between the Authority and MUFG Union Bank, N.A.,
as trustee (the “Trustee”). The City hereby covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the City on behalf of itself and the Authority for the benefit of the holders
and beneficial owners of the Bonds and in order to assist the Participating Underwriter in
complying with S.E.C. Rule 15c2-12(b)(5).
Section 2. Definitions. In addition to the definitions set forth above and in the Indenture,
which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in
this Section, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Certificate.
“Annual Report Date” means nine months after the end of the City's fiscal year (currently
April 1, based on the City’s fiscal year-end of June 30).
“Dissemination Agent” means Willdan Financial Services, or any successor Dissemination
Agent designated in writing by the City and which has filed with the City a written acceptance of
such designation.
“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.
“MSRB” means the Municipal Securities Rulemaking Board, which has been designated
by the Securities and Exchange Commission as the sole repository of disclosure information for
purposes of the Rule, or any other repository of disclosure information that may be designated by
the Securities and Exchange Commission as such for purposes of the Rule in the future.
“Official Statement” means the final official statement dated _____________, 2018,
executed by the City and the Authority in connection with the issuance of the Bonds.
“Participating Underwriter” means Raymond James & Associates, Inc., the original
purchaser of the Bonds required to comply with the Rule in connection with offering of the Bonds.
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
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Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual
Report Date, commencing April 1, 2018, with the report for the 2016-17 Fiscal Year, provide to
the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent
with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days
prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination
Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the
Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the
Dissemination Agent shall contact the City to determine if the City is in compliance with the
previous sentence. The Annual Report may be submitted as a single document or as separate
documents comprising a package, and may include by reference other information as provided in
Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City
may be submitted separately from the balance of the Annual Report, and later than the Annual
Report Date, if not available by that date. If the City’s Fiscal Year changes, it shall give notice of
such change in the same manner as for a Listed Event under Section 5(c). The City shall provide
a written certificate with each Annual Report furnished to the Dissemination Agent to the effect
that such Annual Report constitutes the Annual Report required to be furnished by the City
hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an
Annual Report by the Annual Report Date, the City shall, in a timely manner as required by the
Rule, provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format
as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable
rules and electronic format prescribed by the MSRB for the filing of annual continuing
disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City
certifying that the Annual Report has been provided pursuant to this Disclosure Certificate,
and stating the date it was provided.
Section 4. Content of Annual Reports. The City’s Annual Report shall contain or
incorporate by reference the following:
(a) Financial Statements. Audited financial statements of the City for the preceding fiscal
year, prepared in accordance generally accepted accounting principles. If the City’s audited
financial statements are not available by the time the Annual Report is required to be filed
pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a
format similar to the financial statements contained in the final Official Statement, and the audited
financial statements shall be filed in the same manner as the Annual Report when they become
available.
(b) Other Annual Information. To the extent not included in the audited final statements of
the City, the Annual Report shall also include financial and operating data with respect to the City
for preceding fiscal year, in format substantially similar to that provided in certain corresponding
tables and charts in the Official Statement, as follows:
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(i) comparison of budgeted and actual General Fund revenues, expenditures
and fund balances (Table 3);
(ii) General Fund revenue sources by source (Table 4);
(iii) sales tax rates (Table 5)
(iv) assessed valuations (Table 7);
(v) typical property tax rates per $100 assessed value (Table 8);
(vi) City’s share of net pension liability (Table 10);
(vii) Net OPEB liability (Table 11);
(viii) summary of investments (Table 13);
(ix) Collective bargaining data (Table 14);
(x) to the extent not summarize in the Audited Financial Statements, a
schedule of General Fund long term debt, indicating type of issue, final
maturity, interest rate range, original issue amount, indenture fund
balances as of the end of the fiscal year to which the report relates and
principal amount outstanding as of the end of the fiscal year to which the
report relates; and
(xi) a description of any events of default under the Lease Agreement.
(c) Cross References. 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 City or related
public entities, which are available to the public through the MSRB. The City shall clearly identify
each such other document so included by reference. If the document included by reference is a
final official statement, it must be available from the MSRB.
Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the
following events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform.
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(6) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue
(IRS Form 5701-TEB) or other material notices or determinations with
respect to the tax status of the security, or other material events affecting
the tax status of the security.
(7) Modifications to rights of security holders, if material.
(8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the
securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City or other
obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the
City or an obligated person, or the sale of all or substantially all of the assets
of the City or an obligated person (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, if material.
(14) Appointment of a successor or additional trustee or the change of name of
a trustee, if material.
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City
shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence
with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in
excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the
foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given
under this subsection any earlier than the notice (if any) of the underlying event is given to holders
of affected Bonds under the Indenture.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7),
(a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the qualifier
“if material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to
certain notices, determinations or other events affecting the tax status of the Bonds. The City
shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event
only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal
securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed
Events, the City will as soon as possible determine if such event would be material under
applicable federal securities law. If such event is determined to be material, the City will cause a
notice to be filed as set forth in paragraph (b) above.
(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12)
above is considered to occur when any of the following occur: the appointment of a receiver,
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fiscal agent, or similar officer for the City in a proceeding under the United States 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 City, or if
such jurisdiction has been assumed by leaving the existing governing 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 City.
Section 6. Identifying Information for Filings with the MSRB. All documents provided to
the MSRB under the Disclosure Certificate shall be accompanied by identifying information as
prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The City’s obligations under this
Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City
shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate,
and may discharge any such Agent, with or without appointing a successor Dissemination Agent.
The initial Dissemination Agent will be Willdan Financial Services. Any Dissemination Agent may
resign by providing 30 days’ written notice to the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure
Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), 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 an obligated
person with respect to the Bonds, 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 Bonds, 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 either (i) is approved by holders of the Bonds
in the manner provided in the Indenture for amendments to the Indenture with the consent of
holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair
the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is
amended pursuant to the provisions hereof, the first annual financial information filed pursuant
hereto 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
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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 City to meet its obligations. To the extent reasonably
feasible, the comparison shall be quantitative.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same
manner as for a Listed Event under Section 5(c).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed
to prevent the City from disseminating any other information, using the means of dissemination
set forth in this Disclosure Certificate 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 Certificate. If the City 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 Certificate, the City shall have no obligation under this Disclosure
Certificate to update such information or include it in any future Annual Report or notice of
occurrence of a Listed Event.
Section 11. Default. In the event of a failure of the City to comply with any provision of
this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the
Bonds may take such actions as may be necessary and appropriate, including seeking mandate
or specific performance by court order, to cause the City to comply with its obligations under this
Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event
of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event
of any failure of the City to comply with this Disclosure Certificate shall be an action to compel
performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent.
(a) The Dissemination Agent shall have only such duties as are specifically set forth
in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent,
its officers, directors, employees and agents, harmless against any loss, expense and liabilities
which it may incur arising out of or in the exercise or performance of its powers and duties
hereunder, 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 Dissemination Agent shall have no duty or obligation to review any information
provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the
City, the Bond owners or any other party. The obligations of the City under this Section shall
survive resignation or removal of the Dissemination Agent and payment of the Bonds.
(b) The Dissemination Agent shall be paid compensation by the City for its services
provided hereunder in accordance with its schedule of fees as amended from time to time, and
shall be reimbursed for all expenses, legal fees and advances made or incurred by the
Dissemination Agent in the performance of its duties hereunder.
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Section 13. Notices. Any notice or communications to be among any of the parties to this
Disclosure Certificate may be given as follows:
To the Issuer: San Rafael Joint Powers Financing Authority
c/o City of San Rafael
1400 Fifth Avenue
San Rafael, CA 94901
Fax: (415) 485-3109
Any person may, by written notice to the other persons listed above, designate a different
address or telephone number(s) to which subsequent notices or communications should be sent.
Section 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of
the City, the Dissemination Agent, the Participating Underwriter and holders and beneficial
owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 15. Counterparts. This Disclosure Certificate may be executed in several
counterparts, each of which shall be regarded as an original, and all of which shall constitute one
and the same instrument.
Dated: ________________, 2018
CITY OF SAN RAFAEL
By:
City Manager
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EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: San Rafael Joint Powers Financing Authority (the “Authority”)
Name of Bond Issue: San Rafael Joint Powers Financing Authority
Lease Revenue Bonds, Series 2018
(Public Safety Facilities Project)
(Green Bonds)
Date of Issuance: _________________, 2018
NOTICE IS HEREBY GIVEN that the City of San Rafael, on behalf of itself and the
Authority, has not provided an Annual Report with respect to the above-named Bonds as required
by the Indenture of Trust dated as of March 1, 2018, between the Authority and MUFG Union
Bank, N.A. The City anticipates that the Annual Report will be filed by _____________.
Dated:
CITY OF SAN RAFAEL
By:
Its:
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APPENDIX F
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company (“DTC”), the procedures and
record keeping with respect to beneficial ownership interests in the 2018 Bonds, payment of
principal, interest and other payments on the 2018 Bonds to DTC Participants or Beneficial
Owners, confirmation and transfer of beneficial ownership interest in the 2018 Bonds and other
related transactions by and between DTC, the DTC Participants and the Beneficial Owners is
based solely on information provided by DTC. Accordingly, no representations can be made
concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely
on the foregoing information with respect to such matters, but should instead confirm the same
with DTC or the DTC Participants, as the case may be.
Neither the City (the “Issuer”) nor the Trustee (the “Agent”) take any responsibility for the
information contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will
distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with
respect to the 2018 Bonds, (b) certificates representing ownership interest in or other confirmation
or ownership interest in the 2018 Bonds, or (c) redemption or other notices sent to DTC or Cede
& Co., its nominee, as the registered owner of the 2018 Bonds, or that they will so do on a timely
basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described
in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and
Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC
Participants are on file with DTC.
1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository
for the securities (the “Securities”). The Securities will be issued 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 Security certificate will
be issued for each issue of the Securities, each in the aggregate principal amount of such issue,
and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds
$500 million, one certificate will be issued with respect to each $500 million of principal amount,
and an additional certificate will be issued with respect to any remaining principal amount of such
issue.
2. 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. 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
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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 Securities and Exchange Commission. More
information about DTC can be found at www.dtcc.com and www.dtc.org. The information
contained on this Internet site is not incorporated herein by reference.
3. Purchases of Securities under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Securities on DTC’s records. The ownership
interest of each actual purchaser of each Security (“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 Securities 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
Securities, except in the event that use of the book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities 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 Securities with DTC
and their registration in the name of Cede & Co. or such other DTC nominee do not effect any
change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the
Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts
such Securities 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.
5. 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 Securities
may wish to take certain steps to augment the transmission to them of notices of significant events
with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments
to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain
that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices
to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and
addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an
issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each
Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with
respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting
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rights to those Direct Participants to whose accounts Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities 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 Issuer or Agent, on 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, Agent, or Issuer, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of redemption proceeds,
distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested
by an authorized representative of DTC) is the responsibility of Issuer or Agent, 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.
9. A Beneficial Owner shall give notice to elect to have its Securities purchased or
tendered, through its Participant, to the Agent, and shall effect delivery of such Securities by
causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s
records, to the Agent. The requirement for physical delivery of Securities in connection with an
optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in
the Securities are transferred by Direct Participants on DTC’s records and followed by a book-
entry credit of tendered Securities to the Agent’s DTC account.
10. DTC may discontinue providing its services as depository with respect to the Securities
at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the
event that a successor depository is not obtained, Security certificates are required to be printed
and delivered.
11. Issuer may decide to discontinue use of the system of book-entry-only transfers
through DTC (or a successor securities depository). In that event, Security certificates will be
printed and delivered to DTC.
12. The information in this section concerning DTC and DTC’s book-entry system has
been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility
for the accuracy thereof.
[THIS PAGE INTENTIONALLY LEFT BLANK]
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APPENDIX G
FORM OF GREEN BOND PROJECT REPORT
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, Series 2018
(Public Safety Facilities Project)
(Green Bonds)
Date of issuance: _____, 2018
CUSIP: ________
NOTICE IS HEREBY GIVEN, that the City of San Rafael has financed the following project
with the above-referenced bonds (the “Bonds”):
Amount Financed Project Description
$
This notice is to provide interested parties with information regarding the use of proceeds
of the Bonds. [ Once all proceeds of the Bonds have been spent, no further updates will be
provided. ] [ All proceeds of the Bonds have been spent; no further updates on the projects or the
use of the Bonds will be provided. ]
Dated: __________________
STAFF REPORT APPROVAL
ROUTING SLIP
Staff Report Author: Mark Moses Date of Meeting: 03/05/2018
Department: Finance
Topic: Authorization to Issue Bonds
Subject: RESOLUTION OF THE SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
AUTHORIZING THE ISSUANCE OF LEASE REVENUE BONDS IN AN INITIAL AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $55,000,000 IN CONNECTION WITH FINANCING
CERTAIN PUBLIC CAPITAL IMPROVEMENTS CONSISTING OF A PUBLIC SAFETY FACILITIES,
AUTHORIZING AND DIRECTING EXECUTION OF AN INDENTURE OF TRUST, A LEASE
AGREEMENT, A SITE LEASE AND CERTAIN OTHER DOCUMENTS, AUTHORIZING THE
NEGOTIATION FOR THE SALE OF BONDS PURSUANT TO A BOND PURCHASE AGREEMENT,
APPROVING AN OFFICIAL STATEMENT, AND AUTHORIZING OTHER RELATED ACTIONS
Type: (check all that apply) ☐ Consent Calendar ☐ Public Hearing
☒ Discussion Item ☒ Resolution ☐ Ordinance
☐ Professional Services Agreement ☐ Informational Report
*If PSA, City Attorney approval is required prior to start of staff report approval process
Was agenda item publicly noticed? ☐ Yes ☐No Date noticed: ☐Mailed ☐Site posted ☐Marin IJ
Due Date Responsibility Description Completed
Date Initial / Comment
DEPARTMENT REVIEW
FRIDAY noon
Director Director approves staff
report is ready for ACM,
City Attorney & Finance
review.
2/16/2018
☒
MM
CONTENT REVIEW
MONDAY
morning
Assistant City Manager
City Attorney
Finance
ACM, City Attorney &
Finance will review items,
make edits using track
changes and ask questions
using comments. Items will
be returned to the author
by end of day Wednesday.
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2/21/2018
☐
☒
LG
☒
DEPARTMENT REVISIONS
WEDNESDAY
noon
Author Author revises the report
based on comments
receives and produces a
final version (all track
changes and comments
removed) by Friday at
noon.
2/26/2018
☒
MM
ACM, CITY ATTORNEY, FINANCE FINAL APPROVAL
MONDAY
morning
Assistant City Manager
City Attorney
Finance
ACM, City Attorney &
Finance will check to see
their comments were
adequately addressed and
sign-off for the City
Manager to conduct the
final review.
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☐
☐
☐
TUES
noon
City Manager Final review and approval Click here to
enter a date.
☐