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2021.05.04 Agenda Packet - Regular Meeting
City Council/Public Financing Authority Agenda Tuesday, May 4, 2021 Study Session 5:00 PM Regular Meeting 6:30 PM PUBLIC ADVISORY: Consistent with the Governor’s latest Executive Order to Stay at Home, avoid gatherings and maintain social distancing, the regular meeting portion of the agenda will be conducted telephonically and Members of the City Council and staff will be participating via Teleconference. There will be no physical meeting location for the regular meeting. How to Observe the Meeting: To maximize public safety while still maintaining transparency and public access, members of the public can observe the meeting by calling +1 (21 3) 929-4212 Attendee Access Code: 538- 327-075 or by visiting https://attendee.gotowebinar.com/register/3969989456874783757 . How to Submit Public Comment: Members of the public may provide public comment by sending written comments to the City Clerk by email at cityclerk@DiamondBarCA.gov by 4:00 p.m. on the day of the meeting. Please indicate in the Subject Line “FOR PUBLIC COMMENT.” Written comments will be distributed to the Council Members and read into the record at the meeting, up to a maximum of five minutes. Alternatively, public comment may be submitted by logging onto the meeting through this link: https://attendee.gotowebinar.com/register/3969989456874783757. Members of the public will be called upon one at a time during the Public Comment portion of the agend a, and will be asked to state their name and agenda item they wish to comment on. Speakers are limited to five minutes per agenda item, unless the Mayor determines otherwise. American Disability Act Accommodations: Pursuant to the Executive Order, and in compliance with the Americans with Disabilities Act, if you need special assistance to participate in the Council Meeting, please contact the City Clerk’s Office (909) 839-7010 within 72 hours of the meeting. City Council video recordings with transcription will be available upon request the day following the Council Meeting. The City of Diamond Bar thanks you in advance for taking all precautions to prevent spreading the COVID-19 virus. ANDREW CHOU Council Member STAN LIU Council Member STEVE TYE Council Member NANCY A. LYONS Mayor RUTH M. LOW Mayor Pro Tem City Manager Dan Fox • City Attorney David DeBerry • City Clerk Kristina Santana DIAMOND BAR CITY COUNCIL MEETING RULES Welcome to the meeting of the Diamond Bar City Council. Meetings are open to the public and are broadcast on Spectrum Cable Channel 3 and Frontier FiOS television Channel 47. You are invited to attend and participate. Copies of staff reports or other written documentation relating to agenda items are on file and available for public inspection by contacting the Office of the City Clerk. If requested, the agenda will be made available in an alternative format to a person with disability as required by Section 202 of the Americans with Disabilities Act of 1990. If you have questions regarding an agenda item, please contact the City Clerk at (909) 839-7010 during regular business hours. PUBLIC INPUT Members of the public may address the Council on any item of business on the agenda during the time the item is taken up by the Council. In addition, members of the public may, during the Public Comment period address the Council on any Consent Calendar item or any matter not on the agenda and within the Council’s subject matter jurisdiction. Any material to be submitted to the City Council at the meeting should be submitted through the City Clerk. Speakers are limited to five minutes per agenda item, unless the Mayor determines otherwise. The Mayor may adjust this time limit depending on the number of people wishing to speak, the complexity of the matter, the length of the agenda, the hour and any other relevant consideration. Speakers may address the Council only once on an agenda item, except during public hearings, when the applicant/appellant may be afforded a rebuttal. Public comments must be directed to the City Council. Behavior that disrupts the orderly conduct of the meeting may result in the speaker being removed from the meeting. INFORMATION RELATING TO AGENDAS AND ACTIONS OF THE COUNCIL Agendas for regular City Council meetings are available 72 hours prior to the meeting and are posted in the City’s regular posting locations, on DBTV Channel 3, Spectrum Cable Channel 3, Frontier FiOS television Channel 47 and on the City’s website at www.diamondbarca.gov. The City Council may take action on any item listed on the agenda. HELPFUL PHONE NUMBERS Copies of agendas, rules of the Council, Video of meetings: (909) 839-7010 Computer access to agendas: www.diamondbarca.gov General information: (909) 839-7000 Written materials distributed to the City Council within 72 hours of the City Counc il meeting are available for public inspection immediately upon distribution in the City Clerk’s Office at 21810 Copley Dr., Diamond Bar, California, during normal business hours. THIS MEETING IS BEING VIDEO RECORDED AND BY PARTICIPATING VIA TELECONFERENCE, YOU ARE GIVING YOUR PERMISSION TO BE TELEVISED. THIS MEETING WILL BE RE-BROADCAST EVERY SATURDAY AND SUNDAY AT 9:00 A.M. AND ALTERNATE TUESDAYS AT 8:00 P.M. AND IS ALSO AVAILABLE FOR LIVE VIEWING AT HTTPS://ATTENDEE.GOTOWEBINAR.COM/REGISTER/3969989456874783757 AND ARCHIVED VIEWING ON THE CITY’S WEB SITE AT WWW.DIAMONDBARCA.GOV. CITY OF DIAMOND BAR CITY COUNCIL/PUBLIC FINANCING AUTHORITY AGENDA May 04, 2021 STUDY SESSION: 5:00 p.m. DRAFT FY 2021-22 CAPITAL IMPROVEMENT PROJECT BUDGET. PUBLIC COMMENTS CALL TO ORDER: 6:30 p.m. PLEDGE OF ALLEGIANCE: Mayor ROLL CALL: Chou, Liu, Tye, Mayor Pro Tem Low, Mayor Lyons APPROVAL OF AGENDA: Mayor. 1. CITY MANAGER REPORTS AND RECOMMENDATIONS: 2. PUBLIC COMMENTS: "Public Comments" is the time reserved on each regular meeting agenda to provide an opportunity for members of the public to directly address the Council on Consent Calendar items or other matters of interest not on the agenda that are within the subject matter jurisdiction of the Council. Although the City Council values your comments, pursuant to the Brown Act, members of the City Council or Staff may briefly respond to public comments if necessary, but no extended discussion and no action on such matters may take place. There is a five-minute maximum time limit when addressing the City Council. At this time, the teleconference moderator will ask callers one at a time to give their name and if there is an agenda item number they wish to speak on before providing their MAY 4, 2021 PAGE 2 comment. If you wish to speak on a public hearing item or council consideration item, you will then be called upon to speak at that point in the agenda. 3. CONSENT CALENDAR: All items listed on the Consent Calendar are considered by the City Counci l to be routine and will be acted on by a sin gle motion unless a Council Member or member of the public request otherwise, in which case, the item will be removed for separate consideration. 3.1 CITY COUNCIL MINUTES OF THE APRIL 20, 2021 REGULAR MEETING. 3.1.a April 20, 2021 City Council Minutes Recommended Action: Approve the April 20, 2021 Regular City Council meeting minutes. Requested by: City Clerk 3.2 RATIFICATION OF CHECK REGISTER DATED APRIL 8, 2021 THROUGH APRIL 21, 2021 TOTALING $1,059,636.46. Recommended Action: Ratify the Check Register. Requested by: Finance Department 3.3 SURPLUS OF THE 1997 OLDSMOBILE ACHIEVA TO THE LOS ANGELES COUNTY SHERIFF'S DEPARTMENT. Recommended Action: Declare the 1997 Oldsmobile Achieva (VIN 1G3NL52M3VM333500) as surplus, and authorize the City Manager to transfer title to the Los Angeles County Sheriff’s Department. Requested by: City Manager 3.4 CONSIDERATION TO EXTEND A LOCAL EMERGENCY REGARDING NOVEL CORONAVIRUS (COVID-19). Recommended Action: Adopt Resolution No. 2021-14 extending the Declared Local Emergency regarding Novel Coronavirus (COVID-19). Requested by: City Manager 3.5 CALIFORNIA'S WATER AWARENESS MONTH PROCLAMATION. Recommended Action: MAY 4, 2021 PAGE 3 Adopt the Proclamation declaring May as Water Awareness Month. Requested by: City Manager 4. PUBLIC HEARINGS: 4.1 DISSOLVE LANDSCAPE ASSESSMENT DISTRICT NO. 39. Recommended Action: Receive presentation, open Public Hearing, receive testimony, close Public Hearing, discuss, and adopt Resolution No. 2021 -15 to Dissolve Landscape Assessment District No. 39. Requested by: Public Works Department 4.2 DISSOLVE LANDSCAPE ASSESSMENT DISTRICT NO. 41. Recommended Action: Receive presentation, open Public Hearing, receive testimony, close Public Hearing, discuss, and adopt Resolution No. No. 2021 -16 to Dissolve Landscape Assessment District No. 41. Requested by: Public Works Department 5. COUNCIL CONSIDERATION: 5.1 APPOINTMENT TO THE PARKS & RECREATION COMMISSION TO FILL UNEXPIRED TERM. Recommended Action: Ratify appointment of Lia Murphy to the Parks & Recreation Commission by Council Member Tye. Requested by: City Manager 5.2 2021 LEASE REVENUE REFUNDING BONDS (DIAMOND BAR CENTER). Recommended Action: Adopt Resolution No. 2021-17 approving the legal documents for the issuance of City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A (“2021 Bonds”), authorizing the execution of the necessary documents and certificates, and other related actions. Requested by: Finance Department MAY 4, 2021 PAGE 4 RECESS TO ANNUAL PUBLIC FINANCING AUTHORITY: 1. CALL TO ORDER: 2. ROLL CALL: Authority Members Liu, Low, Lyons, Vice Chair Tye, Chair Chou 3. PUBLIC COMMENTS: "Public Comments" is the time reserved on each regular meeting agenda to provide an opportunity for members of the public to directly address the Authority on Consent Calendar items or other matters of interest not on the agenda that are within the subject matter jurisdiction of the Authority. Al though the Authority values your comments, pursuant to the Brown Act, the Authority generally cannot take any action on items not listed on the posted agenda. There is a five -minute maximum time limit when addressing the Authority. 4. CONSENT CALENDAR: All items listed on the Consent Calendar are considered by the Authority to be routine and will be acted on by a single motion unless a Authority Member or member of the public request otherwise, in which case, the item will be removed for separate consideration. 4.1 PUBLIC FINANCING AUTHORITY MEETING MINUTES. Recommended Action: Approve the April 20, 2021 meeting minutes. Requested by: City Manager 5. AUTHORITY CONSIDERATION: 5.1 2021 LEASE REVENUE REFUNDING BONDS (DIAMOND BAR CENTER). Recommended Action: Adopt Resolution No. PFA 2021-03 approving the legal documents for the issuance of City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A (“2021 Bonds”), authorizing the execution of the necessary documents and certificates, and other related actions. Requested by: Finance Department MAY 4, 2021 PAGE 5 6. AUTHORITY MEMBER COMMENTS: Items raised by individual Authority members are for Authority Discussion. Direction may be given at this meeting or the item may be scheduled for action at a future meeting. 7. ADJOURN PUBLIC FINANCING AUTHORITY MEETING: RECONVENE CITY COUNCIL MEETING: 6. COUNCIL SUB-COMMITTEE REPORTS AND MEETING ATTENDANCE REPORTS/COUNCIL MEMBER COMMENTS: 7. ADJOURNMENT: Agenda #: Meeting Date: May 4, 2021 CITY COUNCIL STUDY SESSION REPORT TO: Honorable Mayor and Members of the City Council VIA: Daniel Fox, City Manager FROM: Brent Mason, Interim Finance Director TITLE: DRAFT FY 2021-22 CAPITAL IMPROVEMENT PROJECT BUDGET. Each year, the City prepares an annual Operating Budget and Ca pital Improvement Program for City Council consideration that implements the Council’s priorities and Strategic Plan Goals, and provides the financial resources to deliver services to the community. The preparation of the annual budget is a significant an d important undertaking that takes place over the course of more than five months. Below is the schedule for the preparation of the FY 2021/22 City Budget: • FY 2020/21 Mid-Year Budget Review – City Council completed on 2/16/2021 • Council Study Session on Draft FY 2021/22 Capital Improvement Projects – Scheduled for 5/4/2021 • Council Study Session on Draft FY 2021/22 Operating Budget – Scheduled for 5/18/2021 • Adoption of the FY 2021/22 City Budget – Scheduled for 6/1/2021 The purpose of this study session is to provide the opportunity for the City Council to review the Draft FY 2021-22 Budget for the Capital Improvement Projects (CIP). The Draft FY 2021-22 CIP budget includes projects totaling $7,527,036 million, of which $4,809,394 million are new projects, and $2,717,642 are project carryovers from FY 2020-21. Carryover projects are those that have commenced during the current fiscal year and will not be complete by June 30, 2021. The remaining encumbered funds must be carried over and re-appropriated in FY 2021-22. The proposed new and existing carryover CIP projects, along with the various funding sources, are included in the following categories and itemized in Attachment 1: Packet Pg. 8 • Street Improvement Projects • Traffic Management/Safety Projects • Transportation Infrastructure Improvement Projects • Miscellaneous Public Works Projects • Facilities, Parks and Recreation Improvement Projects As the Council will recall, the CIP for FY 2020/21 was extremely constrained due to anticipated financial impacts related to the COVID-19 global pandemic on local revenue sources. As a result, a list of deferred projects was established. This deferred list was comprised of seven (7) projects with a total resource amount of $4,442,575. The proposed FY 2021/22 CIP advances all of those deferred projects with the exception of the DBC Slope Stabilization Project and a newly added LED Illuminated Street Name Sign and Highway Safety Light Replacement Project , pending the identification of available funding resources. It should also be noted that a Citywide Bus Shelter/Stop Renovation project has been included as suggested during the previous discussions surrounding the use of Prop A funds in December 2020 and January 2021. Project descriptions for each of the proposed new and existing carryover projects are included in Attachment 2. Proposed new projects for FY 2021-22 include: • Residential and Collector Street Rehab (Construction) – Area 1 • Arterial Street Rehab – Golden Springs (Brea Canyon to Lemon) • ADA Curb Ramp Improvements – Area 2 • Battery Backup and CCTV Replacement Program • Citywide Bus Shelter/Stop Renovations • Groundwater Drainage Improvements (Design and Construction) – Phase 3 (Flapjack) • DBC A/C Replacement and Air Quality Upgrades (Design) Existing Carry-Over projects include: • Residential and Collector Street Rehab (Design) – Areas 1 & 2 • Arterial Street Rehab – Diamond Bar Blvd (Construction), from Pathfinder to Mountain Laurel • Lemon Avenue Quiet Zone (City of Industry Lead Agency) Packet Pg. 9 • Bus Shelter Replacement @ Golden Springs/Calbourne • Grand/Golden Springs Intersection Enhancement Improvements • Electric Charging Station @ City Hall • Canyon Loop Trail (Design and Construction) • Sycamore Canyon Creek and Slope Repair Completed CIP Projects in FY 2020/21 A total of four (4) capital improvement projects are anticipated to be completed during FY 2020-21 which include: • Arterial Street Rehab – Diamond Bar Blvd (design), from Pathfinder to Mountain Laurel - completed • Battery Backup System (Final 11 locations) – completed • Heritage Park Roof Replacement – by 6/30/21 • DBC Slope Stabilization Project (Design) – by 6/30/21 As noted above, there are 10 carryover projects that will be in progress at June 30, 2021. The total amount anticipated to be spent on capital improvement projects during FY 2020-21 is $3,582,776. The CIP budget is scheduled to be reviewed for consistency with the City's General Plan at the May 11, 2021 Planning Commission meeting. Attachments: 1. a DRAFT FY 2021/22 CIP Budget 2. b CIP Project Details Packet Pg. 10 FY 2021/2022 CAPITAL IMPROVEMENT PROJECTS BUDGET Exhibit 1a Street Improvement Projects (301610-56101) Project #Old Project #Phase Project Description Status Total FY Budget (202) RMRA (203) Measure M (204) Measure R Local Return (205) Gas Tax (207) Prop C (252) Hauler Fees (225) CDBG SI20100 01420 DESIGN * Residential and Collector Street Rehab.- Area 1, 2 (Design) Arterial Street Rehab (Design) (DBB from Pathfinder to Mountain Laurel) (Golden Springs from Brea Canyon to Lemon) (Golden Springs from Grand to BCY) Carryover - In Design 30,000$ 30,000$ SI20101 02120 CONSTRUCT *Arterial Street Rehab (DBB from Pathfinder to Mountain Laurel Way) (Const.)Carryover - Under Construction 300,000$ 300,000$ SI22102 N/A CONSTRUCT **Residential and Collector Street Rehab - Area 1 (Const.)New 2,100,000$ 1,000,000$ 900,000$ 64,000$ 136,000$ SI22100 N/A CONSTRUCT **Arterial Street Rehab (Golden Springs from Brea Canyon to Lemon Ave.) (Const.)New 900,000$ 400,000$ 500,000$ SI22101 N/A CONSTRUCT **CDBG Area 2 ADA Curb Ramp Project (Const.)New 176,394$ 176,394$ Total - Street Improvement Projects 3,506,394$ 700,000$ 1,030,000$ 900,000$ 64,000$ 500,000$ 136,000$ 176,394$ -$ -$ Traffic Management/Safety Projects (301610-56102) Project #Old Project #Phase Project Description Status Total FY Budget (207) Prop C TM22200 N/A CONSTRUCT Battery Back-Up and CCTV Replacement Program New 51,000$ 51,000$ Total - Traffic Projects 51,000$ 51,000$ Transportation Infrastructure Improvements (310610-56103) Project #Old Project #Phase Project Description Status Total FY Budget (207) Prop C Foothill Transit Grant (45030) (206) Prop A TI18300 23318 DESIGN *Lemon Avenue Quiet Zone Carryover 75,000$ 75,000$ TI20300 23420 CONTRUCT *Bus Shelter Replacement - GSD/Calbourne Carryover 40,000$ 40,000$ TI22300 N/A ALL Citywide Bus Shelter Replacement Program (Design & Construction)New 930,000$ 930,000$ Total-Transportation Infrastructure Improvements 1,045,000$ 75,000$ 40,000$ 930,000$ Miscellaneous PW Improvements (301610-56105) Project #Old Project #Phase Project Description Status Total FY Budget MSRC Grant (43130) (202) RMRA (203) Measure M (207) Prop C (251) AB2766 (209) TDA (201) Measure W PW18400 22818 CONSTRUCT *Grand/GSD Intersection Enhancement (Construction)Carryover - Under Construction 1,402,973$ 876,811$ 207,691$ 217,685$ 100,787$ PW22400 N/A DESIGN **Groundwater Drainage Improvements-Phase 3 (Flapjack-Design)New 77,000$ 77,000$ PW22400 N/A CONSTRUCT **Groundwater Drainage Improvements-Phase 3 (Flapjack-Construction)New 500,000$ 500,000$ PW19400 26319 CONSTRUCT *Electric Charging Station at City Hall Carryover - Under Construction 6,386$ 3,893$ 2,493$ Total-Miscellaneous PW Improvements 1,986,359$ 3,893$ 876,811$ 207,691$ 217,685$ 2,493$ 100,787$ 577,000$ -$ -$ Facilities, Parks and Rec Improvements (301630-56104) Project #Old Project #Phase Project Description Status Total Budget (100) General Fund (260) Quimby (262) Park Development (504) Building & Facilities Fund FEMA (42010) CalOES (42055) Habitat Conserv Grant (43110) (201) Measure W (261) Measure A FP17500 25517 DESIGN *Canyon Loop Trail (Design)Carryover - In Design 165,996$ 90,436$ 11,946$ 63,614$ FP17500 25517 CONSTRUCT **Canyon Loop Trail (Construction)Carryover 485,500$ 267,500$ 33,000$ 185,000$ FP17501 25917 CONSTRUCT *Sycamore Canyon Park Slope Erosion Repairs Carryover - Awaiting Final Pmt 131,787$ 56,875$ 40,862$ 34,050$ FP 17502 25819 ALL **Sycamore Canyon Creek Repair Carryover 80,000$ 80,000$ FP22500 N/A DESIGN DBC AC Replacement & Air Quality Upgrades (Design)New 75,000$ 75,000$ TOTAL 938,283$ 90,436$ 68,821$ 63,614$ 75,000$ 40,862$ 34,050$ 267,500$ 113,000$ 185,000$ FY 21-22 CIP Projects Grand Total 7,527,036$ *Carryover projects **Projects moved from 20-21 deferred list Funding Source Totals 100 General Fund 90,436 CIP Project Type Totals 201 Measure W 690,000 Street Improvements 3,506,394 202 RMRA (SB-1)1,576,811 Traffic Management/Safety Improvements 51,000 203 Measure M 1,237,691 Transportation Infrastructure Improvements 1,045,000 204 Measure R 900,000 Miscellaneous PW Improvements 1,986,359 205 Gas Tax 64,000 Facilites, Parks and Rec. Improvements 938,283 206 Prop A 930,000 7,527,036$ 207 Prop C 843,685 209 SB 821 Fund - Bike and Pedestrian Paths (TDA)100,787 251 AB2766 2,493 225 CDBG 176,394 252 Hauler Fees 136,000 260 Quimby Funds 68,821 261 Measure A 185,000 262 Park Development 63,614 301 MSRC Grant 3,893 504 Building & Facilities Maintenance Fund 75,000 301-42010 FEMA 40,862 301-42055 CalOES 34,050 301-45030 Foothill Transit Grant 40,000 301-43110 Habitat Conservation Grant 267,500 7,527,036$ 1 a Packet Pg. 11 CATEGORY: Street ImprovementTotal Proposed$3,506,394 •Residential & Collector Street Rehabilitation-Areas 1 and 2 Arterial Street Rehabilitation- Golden Springs (Lemon to Brea Canyon) (Brea Canyon to Grand) (Design)Carryover $30,000 •Arterial Street Rehabilitation Diamond Bar Blvd. (Construction) Pathfinder to Mountain Laurel Carryover $300,000•Residential and Collector Street Rehab -Area 1 (Const.) $2,100,000•Arterial Street Rehab (Construction) Golden Springs from Brea Canyon to Lemon Ave $900,000•CDBG Area 2 Curb Ramp Project (Construction) $176,394bPacket Pg. 12 CATEGORY: Traffic Management/Safety•Battery Backup and CCTV Replacement Program$51,000CCTV Replacement Locations:- Golden Springs Drive/Lemon Avenue- Diamond Bar Blvd./Temple AvenueBattery Backup Replacement Locations:- Golden Springs Drive/Brea Canyon Road- Diamond Bar Blvd./Mountain Laurel Way- Diamond Bar Blvd./Maple Hill RoadTotal Proposed$51,000bPacket Pg. 13 CATEGORY: Transportation InfrastructureTotal Proposed$1,045,000•Lemon Ave. Quiet Zone (Construction)Carryover $75,000(City Share w/ City of Industry)•Bus Shelter ReplacementsGolden Springs Drive/CalbourneCarryover $40,000(Foothill Transit Grant @ $40k/Shelter)•Citywide Bus Shelter Replacement Program (Design & Construction) $930,000bPacket Pg. 14 CATEGORY: Miscellaneous Public Works•Grand/GSD Intersection Enhancements (Construction)Carryover $1,402,973•Groundwater Drainage Improvements Phase 3 - Flapjack (Design) $77,000•Groundwater Drainage Improvements Phase 3 – Flapjack (Construction) $500,000•Electric Charging Station at City Hall (Construction) Carryover $6,386 Total Proposed$1,986,359bPacket Pg. 15 CATEGORY: Facilities, Parks and RecTotal Proposed$938,283•Canyon Loop Trail (Design) Carryover $165,996•Canyon Loop Trail (Construction) Carryover $485,500•Sycamore Canyon Park Slope Erosion RepairsWaiting for Final Payment $131,787•Sycamore Canyon Creek Repair Carryover $80,000•DBC AC Replacement & Air Quality Upgrades (Design)$75,000bPacket Pg. 16 FY 21/22 PROPOSED CIPPRIORITIZED PROJECTS FUNDING SOURCESGeneral Fund $ 90,436 CDBG $ 176,394 Measure W $ 690,000 Hauler Fees $ 136,000 RMRA (SB-1) $ 1,576,811 Quimby Funds $ 68,821 Measure M $ 1,237,691 Measure A $ 185,000 Measure R $ 900,000 Park Development $ 63,614 Gas Tax $ 64,000 MSRC Grant $ 3,893 Prop A $ 930,000 Building & Facilities Maintenance Fund $ 75,000 Prop C $ 843,685 FEMA $ 40,862 SB 821 Fund - Bike and Pedestrian Paths (TDA)$ 100,787 CalOES $ 34,050 AB2766 $ 2,493 Foothill Transit Grant $ 40,000 Habitat Conservation Grant $ 267,500 Total $ 7,527,036 bPacket Pg. 17 Agenda #: 3.1 Meeting Date: May 4, 2021 TO: Honorable Mayor and Members of the City Council FROM: Daniel Fox, City Manager TITLE: CITY COUNCIL MINUTES OF THE APRIL 20, 2021 REGULAR MEETING. STRATEGIC GOAL: Open, Engaged & Responsive Government RECOMMENDATION: Approve the April 20, 2021 Regular City Council meeting minutes. FINANCIAL IMPACT: None. BACKGROUND/DISCUSSION: Minutes have been prepared and are being presented for approval. PREPARED BY: REVIEWED BY: 3.1 Packet Pg. 18 Attachments: 1. 3.1.a April 20, 2021 City Council Minutes 3.1 Packet Pg. 19 CITY OF DIAMOND BAR MINUTES OF THE CITY COUNCIL REGULAR MEETING APRIL 20, 2021 CALL TO ORDER: Mayor Lyons called the Regular City Council meeting to order at 6:30 p.m. Mayor Lyons announced that consistent with COVID-19 regulations, all Council Members and staff participated via teleconference and there was no physical location for public attendance. The Public was invited to join the meeting online or by phone at the numbers printed on the agenda. PLEDGE OF ALLEGIANCE: M/Lyons led the Pledge of Allegiance. ROLL CALL: Council Members Andrew Chou, Stan Liu, Steve Tye, Mayor Pro Tem Ruth Low, Mayor Nancy Lyons Staff participating telephonically: Dan Fox, City Manager; Dave DeBerry, City Attorney; Ryan McLean, Assistant City Manager; Anthony Santos, Assistant to the City Manager; Ryan Wright, Parks and Recreation Director; David Liu, Public Works Director; Hal Ghafari, Public Works Manager/Assistant City Engineer; Fabian Aoun, Assistant Engineer; Greg Gubman, Community Development Director; Grace Lee, Senior Planner; Brent Mason, Interim Director of Finance; Amy Haug, Human Resources and Risk Manager; Ken Desforges, Director of Information Services; Marsha Roa, Public Information Manager; Cecilia Arellano, Public Information Coordinator; Kristina Santana, City Clerk Also Present Diamond Bar/Walnut Station Captain Stephen Tousey, LA County Sheriff’s Department APPROVAL OF AGENDA: As submitted. 1. CITY MANAGER REPORTS AND RECOMMENDATIONS: None 2. PUBLIC COMMENTS: CC/Santana read the following public comments submitted via email: David Lee asked for help in locating the owner of what he believed to be an abandoned house that he was interested in purchasing. David Huerta asked when the City planned to trim the overgrown pine tree on lot #29 in Landscape District 41. 3.1.a Packet Pg. 20 APRIL 20, 2021 PAGE 2 CITY COUNCIL Mariann Hess asked why LLAD No. 39 was not being given consideration for another vote. Pui-Ching Ho, Community Library Manager, announced that the Diamond Bar Library is providing select in-person services. For information regarding hours and services, please visit https://lacountylibrary.org/reopening. There were no comments offered telephonically. 3. CONSENT CALENDAR: MPT/Low moved, C/Chou seconded, to approve the Consent Calendar as presented. Motion carried by the following Roll Call vote: AYES: COUNCIL MEMBERS: Chou, Liu, Tye, MPT/Low, M/Lyons NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: None 3.1 APPROVED CITY COUNCIL MINUTES: 3.1a APRIL 6, 2021 REGULAR MEETING AS UPDATED. 3.2 RATIFIED CHECK REGISTER DATED MARCH 25, 20221 THROUGH APRIL 7, 2021 TOTALING $907,984.83. 3.3 APPROVED TREASURER’S STATEMENT FOR THE MONTH OF DECEMBER 2020. 3.4 APPROPRIATED $84,545 OF GENERAL FUND RESERVES WITH ANTICIPATED REIMBURSEMENT FROM MEASURE A, MEASURE W, PROP 68 AND HABITAT CONSERVATION GRANT; AND, APPROVED AND AUTHORIZED THE MAYOR TO SIGN, THE FIRST AMENDMENT WITH MICHAEL BAKER INTERNATIONAL, INC. IN THE AMOUNT OF $84,545. 3.5 AWARDED CONSTRUCTION AGREEMENT TO R.J. NOBLE COMPANY, INC. FOR THE DIAMOND BAR BOULEVARD STREET REHABILITATION PROJECT FROM PATHFINDER ROAD TO MOUNTAIN LAUREL WAY (NO. S120101). 3.6 ADOPTED RESOLUTION NO. 2021-13: AUTHORIZING THE PUBLIC WORKS DIRECTOR/CITY ENGINEER TO RELEASE RESTRICTED USE AREAS (RUAs) AND TO RECORD A WRITTEN INSTRUCTION WITH THE LOS ANGELES COUNTY RECORDER RELEASING THE RUAs. RECESS: M/Lyons recessed the Regular City Council Meeting to the Regular Public Financing Authority Meeting at 6:41 p.m. 3.1.a Packet Pg. 21 APRIL 20, 2021 PAGE 3 CITY COUNCIL RECONVENE: M/Lyons reconvened the Regular City Council Meeting at 6:46 p.m. 4. PUBLIC HEARINGS: None 5. COUNCIL CONSIDERATION: 5.1 RECOGNITION OF HIGH SCHOOL SENIORS: CM/Fox provided a report to Council and following discussion, comments and questions, Council concurred to move forward with both Options A and B included in the staff report. 6. COUNCIL SUBCOMMITTEE REPORTS AND MEETING ATTENDANCE REPORTS/COUNCIL MEMBER COMMENTS: C/Chou attended the Regional Chamber of Commerce Government Action Committee meeting and commented that everyone age 16 and over is eligible for the COVID vaccine. C/Liu thanked staff for their presentations, said that the sch ool district announced the students will return to in-person learning on April 19th, thanked staff for working to reopen City Hall for in-person services and announced that Summer Day Camp will operate in-person from 8:00 to 5:00 p.m. at the Diamond Bar Center Monday through Friday. C/Tye spoke about Congresswoman Napolitano’s continued focus on and advocacy for the SR57/60 Confluence Project and COVID relief, commented on the presentation to Council by the Urban Land Institute regarding a potential Diamond Bar Town Center, and voiced his excitement for the City and country to get back to normal. VC/Low thanked the Parks and Recreation Department for their ideas to honor graduating seniors as well as summer camp. She commented on Parks & Recreation programs such as the windmill hunt and May the 4th Be With You. She congratulated Captain Stephen Tousey and his promotion. Lastly, she said she shares C/Tye’s excitement that places such as City Hall, the Library and parks are beginning to open up again. M/Lyons commented on the Urban Land Institute’s presentation regarding the potential for a Town Center, she gave a shout out to the City’s Records Management efforts which recently led to the digitization and destruction of 57 boxes of records. She is also very impressed with the Parks and 3.1.a Packet Pg. 22 APRIL 20, 2021 PAGE 4 CITY COUNCIL Recreation staff and enjoys seeing residents participating in events such as the Windmill Hunt. She is hopeful that by the end of the summer the City would host some kind of in-person socially distanced event and asked everyone to participate in the Friends of the Library’s virtual Wine Soiree on May 16th by going online at www.dblibraryfriends.org to get more information and purchase tickets. 7. ADJOURNMENT: With no further business to conduct, M/Lyons adjourned the Regular City Council Meeting at 7:11 p.m. Respectfully submitted: __________________________ Kristina Santana, City Clerk The foregoing minutes are hereby approved this 4th day of May, 2021. __________________________ Nancy Lyons, Mayor 3.1.a Packet Pg. 23 Agenda #: 3.2 Meeting Date: May 4, 2021 TO: Honorable Mayor and Members of the City Council FROM: Daniel Fox, City Manager TITLE: RATIFICATION OF CHECK REGISTER DATED APRIL 8, 2021 THROUGH APRIL 21, 2021 TOTALING $1,059,636.46. STRATEGIC GOAL: Responsible Stewardship of Public Resources RECOMMENDATION: Ratify the Check Register. FINANCIAL IMPACT: Expenditure of $1,059,636.46. BACKGROUND/DISCUSSION: The City has established the policy of issuing accounts payable checks on a weekly basis with City Council ratification at the next scheduled City Council Meeting. The attached check register containing checks dated April 8, 2021 through April 21, 2021 totaling $1,059,636.46 is being presented for ratification. All payments have been made in compliance with the City’s purchasing policies and procedures, and have been reviewed and approved by the appropriate departmental staff . The attached Affidavit affirms that the check register has been audited and deemed accurate by the Finance Director. PREPARED BY: 3.2 Packet Pg. 24 REVIEWED BY: Attachments: 1. 3.2.a Check Register Affidavit 5-4-2021 2. 3.2.b Check Register 5-4-2021 3.2 Packet Pg. 25 3.2.a Packet Pg. 26 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 1591 4/16/2021 VANTAGEPOINT TRNSFR AGNTS- 303248 DEFERRED COMP CONTRIBUTIONS/LOAN PYMTS 04/16/21 239 21109 $100.15 4/16/2021 VANTAGEPOINT TRNSFR AGNTS- 303248 DEFERRED COMP CONTRIBUTIONS/LOAN PYMTS 04/16/21 241 21109 $100.15 4/16/2021 VANTAGEPOINT TRNSFR AGNTS- 303248 DEFERRED COMP CONTRIBUTIONS/LOAN PYMTS 04/16/21 201 21109 $111.57 4/16/2021 VANTAGEPOINT TRNSFR AGNTS- 303248 DEFERRED COMP CONTRIBUTIONS/LOAN PYMTS 04/16/21 238 21109 $200.30 4/16/2021 VANTAGEPOINT TRNSFR AGNTS- 303248 DEFERRED COMP CONTRIBUTIONS/LOAN PYMTS 04/16/21 207 21109 $395.37 4/16/2021 VANTAGEPOINT TRNSFR AGNTS- 303248 DEFERRED COMP CONTRIBUTIONS/LOAN PYMTS 04/16/21 250 21109 $461.76 4/16/2021 VANTAGEPOINT TRNSFR AGNTS- 303248 DEFERRED COMP CONTRIBUTIONS/LOAN PYMTS 04/16/21 206 21109 $468.00 4/16/2021 VANTAGEPOINT TRNSFR AGNTS- 303248 DEFERRED COMP CONTRIBUTIONS/LOAN PYMTS 04/16/21 100 21109 $21,982.64 CHECK TOTAL $23,819.94 1592 4/16/2021 CALPERS PENSION CONTRIBUTION 03/27/21- 04/09/21 PP 08/21 239 21110 $75.33 4/16/2021 CALPERS PENSION CONTRIBUTION 03/27/21- 04/09/21 PP 08/21 241 21110 $75.33 4/16/2021 CALPERS PENSION CONTRIBUTION 03/27/21- 04/09/21 PP 08/21 238 21110 $150.66 4/16/2021 CALPERS PENSION CONTRIBUTION 03/27/21- 04/09/21 PP 08/21 201 21110 $377.09 4/16/2021 CALPERS PENSION CONTRIBUTION 03/27/21- 04/09/21 PP 08/21 207 21110 $476.62 4/16/2021 CALPERS PENSION CONTRIBUTION 03/27/21- 04/09/21 PP 08/21 206 21110 $593.22 4/16/2021 CALPERS PENSION CONTRIBUTION 03/27/21- 04/09/21 PP 08/21 250 21110 $1,011.10 4/16/2021 CALPERS PENSION CONTRIBUTION 03/27/21- 04/09/21 PP 08/21 100 21110 $33,780.87 CHECK TOTAL $36,540.22 1593 4/16/2021 TASC FLEX SPENDING MEDICAL/CHILDCARE 04/16/2021 207 21118 $13.82 3.2.b Packet Pg. 27 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 4/16/2021 TASC FLEX SPENDING MEDICAL/CHILDCARE 04/16/2021 250 21118 $25.76 4/16/2021 TASC FLEX SPENDING MEDICAL/CHILDCARE 04/16/2021 206 21118 $27.28 4/16/2021 TASC FLEX SPENDING MEDICAL/CHILDCARE 04/16/2021 100 21118 $1,303.41 CHECK TOTAL $1,370.27 1594 4/19/2021 QUADIENT FINANCE USA INC POSTAGE 100130 52170 $5,325.43 CHECK TOTAL $5,325.43 1595 4/21/2021 AIRGAS INC HELIUM 100630 51200 $8.00 4/21/2021 AIRGAS INC HELIUM 100520 51200 $93.00 CHECK TOTAL $101.00 1596 4/21/2021 BEST LIGHTING PRODUCTS INC MONTHLY MAINTENANCE - FEB 2021 238638 52320 $173.22 4/21/2021 BEST LIGHTING PRODUCTS INC MONTHLY MAINTENANCE - FEB 2021 100620 52320 $259.42 4/21/2021 BEST LIGHTING PRODUCTS INC MONTHLY MAINTENANCE - FEB 2021 100510 52320 $263.08 4/21/2021 BEST LIGHTING PRODUCTS INC MONTHLY MAINTENANCE - FEB 2021 100630 55505 $1,653.21 4/21/2021 BEST LIGHTING PRODUCTS INC MONTHLY MAINTENANCE - MARCH 2021 238638 52320 $157.38 4/21/2021 BEST LIGHTING PRODUCTS INC MONTHLY MAINTENANCE - MARCH 2021 100510 52320 $214.36 4/21/2021 BEST LIGHTING PRODUCTS INC MONTHLY MAINTENANCE - MARCH 2021 100620 52320 $259.18 4/21/2021 BEST LIGHTING PRODUCTS INC MONTHLY MAINTENANCE - MARCH 2021 100630 55505 $1,036.34 CHECK TOTAL $4,016.19 1597 4/21/2021 BRIGHTVIEW LANDSCAPE SERVICES INC LANDSCAPE MAINTENANCE - MARCH 2021 100510 55505 $6,044.00 4/21/2021 BRIGHTVIEW LANDSCAPE SERVICES INC LANDSCAPE MAINTENANCE - MARCH 2021 100630 55505 $29,719.00 CHECK TOTAL $35,763.00 1598 4/21/2021 CALIFORNIA NEWSPAPERS PARTNERSHIP PRINTING OF APRIL 2021 SIX-PAGE CITY NEWSLETTER 100240 52110 $3,228.06 4/21/2021 CALIFORNIA NEWSPAPERS PARTNERSHIP PRINTING OF MAY NEWSLETTER (INC SUMMER REC GUIDE) 100240 52110 $6,071.11 CHECK TOTAL $9,299.17 3.2.b Packet Pg. 28 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 1599 4/21/2021 CENGAGE LEARNING INC INSTRUCTOR PAYMENT FOR W/S 2021 100520 55320 $75.00 CHECK TOTAL $75.00 1600 4/21/2021 CLEAN EARTH ENVIRONMENTAL SOLUTIONS INC HHW PICK UP FROM CITY HALL 250170 55000 $1,166.50 CHECK TOTAL $1,166.50 1601 4/21/2021 COLLEY AUTO CARS INC VEHICLE MAINTENANCE - PARKS & FACILITIES 502630 52312 $940.91 CHECK TOTAL $940.91 1602 4/21/2021 DAPEER ROSENBLIT & LITVAK LLP CITY PROSECUTOR - CODE ENFORCEMENT - FEB 2021 100120 54024 $4,126.30 CHECK TOTAL $4,126.30 1603 4/21/2021 DIANA CHO & ASSOCIATES CDBG PROGRAM CONSULTANT - SENIOR SVCS JAN-FEB 2021 225440 54900 $615.00 CHECK TOTAL $615.00 1604 4/21/2021 DMPR 4 LLC STORAGE UNIT FOR MAY 2021 100130 52302 $1,576.00 CHECK TOTAL $1,576.00 1605 4/21/2021 ECOFERT INC FERTILIZER INJECTION SYSTEM - MARCH 2021 100630 52320 $1,150.00 CHECK TOTAL $1,150.00 1606 4/21/2021 EIDE BAILLY LLP PROFESSIONAL SERVICES - INTERIM FINANCE DIRECTOR 100130 54900 $3,545.00 CHECK TOTAL $3,545.00 1607 4/21/2021 EMERALD LANDSCAPE SERVICES INC LANDSCAPING SERVICES - CITY HALL MARCH 2021 100620 52320 $1,026.00 CHECK TOTAL $1,026.00 1608 4/21/2021 FEDERAL EXPRESS CORPORATION EXPRESS MAIL - GENERAL 100130 52170 $19.89 CHECK TOTAL $19.89 1609 4/21/2021 FIDUCIARY EXPERTS LLC 457 PLAN CONSULTING SERVICES 100210 54010 $2,000.00 CHECK TOTAL $2,000.00 1610 4/21/2021 FRONTIER COMMUNICATIONS CORP ANALOG PHONE/EMERGENCY LINES 3/28/21 100230 52200 $365.82 4/21/2021 FRONTIER COMMUNICATIONS CORP SUMMARY BILL - ANALOG PHONE LINES 4/1/21 100230 52200 $775.00 3.2.b Packet Pg. 29 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT CHECK TOTAL $1,140.82 1611 4/21/2021 GATEWAY CORP CENTER ASSOC ASSOCIATION DUES FOR APRIL 2021 100620 52400 $1,911.58 CHECK TOTAL $1,911.58 1612 4/21/2021 GOVCONNECTION INC LOGITECH USB HEADSETS (2) 100230 51300 $83.22 4/21/2021 GOVCONNECTION INC HEADSET ADAPTER FOR PHONE 100230 51300 $34.28 4/21/2021 GOVCONNECTION INC CISCO MINI SWITCHES (3) 100230 51200 $174.07 4/21/2021 GOVCONNECTION INC USB FLASH DRIVES - 6-PACK 100230 51200 $83.37 CHECK TOTAL $374.94 1613 4/21/2021 GRAFFITI CONTROL SYSTEMS GRAFFITI ABATEMENT-MARCH 2021 100430 55540 $2,975.00 CHECK TOTAL $2,975.00 1614 4/21/2021 GUARANTEED JANITORIAL SERVICE INC JANITORIAL SERVICES - MARCH 2021 100630 55505 $2,450.00 4/21/2021 GUARANTEED JANITORIAL SERVICE INC JANITORIAL SERVICES - MARCH 2021 100510 55505 $5,400.00 4/21/2021 GUARANTEED JANITORIAL SERVICE INC JANITORIAL SERVICES - MARCH 2021 100620 52320 $8,724.00 CHECK TOTAL $16,574.00 1615 4/21/2021 HARRY H JOH CONSTRUCTION INC WASHINGTON PARK POURED-IN-PLACE SURFACING 504630 56100 $37,899.11 CHECK TOTAL $37,899.11 1616 4/21/2021 HOME DEPOT CREDIT SERVICES PARKS & FACILITIES SUPPLIES 100630 52320 $472.28 CHECK TOTAL $472.28 1617 4/21/2021 K7 ENTERPRISES SIGNS FOR LIBRARY CLOSED AND DIRECTIONAL 106240 52110 $97.59 4/21/2021 K7 ENTERPRISES DBC PARKING SIGNS 100510 51200 $170.41 CHECK TOTAL $268.00 1618 4/21/2021 KEVIN D JONES CONTRACT SERVICES - SR 57/60 ADVOCACY MAR 2021 100615 54400 $4,000.00 CHECK TOTAL $4,000.00 1619 4/21/2021 LANDSCAPE STRUCTURES INC PARK MAINTENANCE - PANTERA PARK 100630 52320 $301.00 CHECK TOTAL $301.00 1620 4/21/2021 LOOMIS COURIER SVCS - APRIL 2021 100210 54900 $320.44 3.2.b Packet Pg. 30 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 4/21/2021 LOOMIS COURIER SVCS - APRIL 2021 100510 54900 $320.44 CHECK TOTAL $640.88 1621 4/21/2021 LOS ANGELES COUNTY PUBLIC WORKS INDUSTRIAL WASTE SERVICES - THRU FEB 2021 100610 55550 $4,602.87 4/21/2021 LOS ANGELES COUNTY PUBLIC WORKS INDUSTRIAL WASTE SERVICES - THRU JAN 2021 100610 55550 $5,279.31 CHECK TOTAL $9,882.18 1622 4/21/2021 LOS ANGELES COUNTY SHERIFF'S DEPT SHERIFF'S LAW ENF. SVCS - GEN LAW 3/2021 100310 55400 $589,029.04 CHECK TOTAL $589,029.04 1623 4/21/2021 MCE CORPORATION LANDSCAPE MAINT - DISTRICTS 38, 39, 41 - MAR 2021 241641 55524 $4,922.61 4/21/2021 MCE CORPORATION LANDSCAPE MAINT - DISTRICTS 38, 39, 41 - MAR 2021 239639 55524 $12,173.54 4/21/2021 MCE CORPORATION LANDSCAPE MAINT - DISTRICTS 38, 39, 41 - MAR 2021 238638 55524 $14,806.30 CHECK TOTAL $31,902.45 1624 4/21/2021 MITY LITE INC COUNCIL MEETING PLEXIGLASS PANELS - MITY LITE 100130 52410 $61.71 4/21/2021 MITY LITE INC COUNCIL MEETING PLEXIGLASS PANELS - MITY LITE 100130 52410 $834.40 CHECK TOTAL $896.11 1625 4/21/2021 NETWORK PARATRANSIT SYSTEMS INC DIAMOND RIDE SERVICES FY2020-21 - FEBRUARY 2021 206650 55560 $10,205.30 CHECK TOTAL $10,205.30 1626 4/21/2021 OFFICE SOLUTIONS SUPPLIES - COVID/CITY MANAGER 106130 51200 $389.60 4/21/2021 OFFICE SOLUTIONS SUPPLIES - COVID/CITY MANAGER 106130 51200 $548.07 CHECK TOTAL $937.67 1627 4/21/2021 ONE TIME PAY VENDOR ALFRED CHIN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $16.00 CHECK TOTAL $16.00 1628 4/21/2021 ONE TIME PAY VENDOR ALICE WONG RECREATION HOUSEHOLD CREDIT REFUND FROM COVID-19 100 20202 $248.00 CHECK TOTAL $248.00 3.2.b Packet Pg. 31 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 1629 4/21/2021 ONE TIME PAY VENDOR ANDREW HUYNH RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $18.00 CHECK TOTAL $18.00 1630 4/21/2021 ONE TIME PAY VENDOR ANTOINETTE LOU RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1631 4/21/2021 ONE TIME PAY VENDOR BILL KWAN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $18.00 CHECK TOTAL $18.00 1632 4/21/2021 ONE TIME PAY VENDOR BILL ZHANG RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $16.00 CHECK TOTAL $16.00 1633 4/21/2021 ONE TIME PAY VENDOR BLAKE BARSAMIAN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1634 4/21/2021 ONE TIME PAY VENDOR BOBBY LE RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1635 4/21/2021 ONE TIME PAY VENDOR BRIANA AINSWORTH RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1636 4/21/2021 ONE TIME PAY VENDOR CHESTER CABRALES RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1637 4/21/2021 ONE TIME PAY VENDOR CHONGYANG ZHAO RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $628.00 CHECK TOTAL $628.00 1638 4/21/2021 ONE TIME PAY VENDOR CHRISTINE REYES RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1639 4/21/2021 ONE TIME PAY VENDOR CYNTHIA HOANG RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1640 4/21/2021 ONE TIME PAY VENDOR DARLENE ESTRADA RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 3.2.b Packet Pg. 32 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 1641 4/21/2021 ONE TIME PAY VENDOR DAVID CHUANG RECREATION HOUSHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $193.32 CHECK TOTAL $193.32 1642 4/21/2021 ONE TIME PAY VENDOR DENNIS KIM RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $18.00 CHECK TOTAL $18.00 1643 4/21/2021 ONE TIME PAY VENDOR DEVINDA KURERA RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $18.00 CHECK TOTAL $18.00 1644 4/21/2021 ONE TIME PAY VENDOR ERIC SMITH RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $234.60 CHECK TOTAL $234.60 1645 4/21/2021 ONE TIME PAY VENDOR ERWIN ALLENEGUI RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1646 4/21/2021 ONE TIME PAY VENDOR FIDAYANE KHAN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1647 4/21/2021 ONE TIME PAY VENDOR FRANCISCO NGUYEN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1648 4/21/2021 ONE TIME PAY VENDOR GABRIELA JIMENEZ RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1649 4/21/2021 ONE TIME PAY VENDOR GRIZEL NORTE-AVILA RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.67 CHECK TOTAL $14.67 1650 4/21/2021 ONE TIME PAY VENDOR HAMID EMAMI RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.67 CHECK TOTAL $14.67 1651 4/21/2021 ONE TIME PAY VENDOR HEMALI DALAL RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1652 4/21/2021 ONE TIME PAY VENDOR IRUM KHAN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $342.50 CHECK TOTAL $342.50 3.2.b Packet Pg. 33 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 1653 4/21/2021 ONE TIME PAY VENDOR JACK YEN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $16.00 CHECK TOTAL $16.00 1654 4/21/2021 ONE TIME PAY VENDOR JANET FRANCISCO RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1655 4/21/2021 ONE TIME PAY VENDOR JASMIN CORREA RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $256.00 CHECK TOTAL $256.00 1656 4/21/2021 ONE TIME PAY VENDOR JAVIER SALAS RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID 19 100 20202 $280.00 CHECK TOTAL $280.00 1657 4/21/2021 ONE TIME PAY VENDOR JENNIFER SALEY RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1658 4/21/2021 ONE TIME PAY VENDOR JIANWU CHEN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $258.75 CHECK TOTAL $258.75 1659 4/21/2021 ONE TIME PAY VENDOR JIM LIU RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $18.00 CHECK TOTAL $18.00 1660 4/21/2021 ONE TIME PAY VENDOR JOANNA ELIZABETH BURGOSS RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1661 4/21/2021 ONE TIME PAY VENDOR JOANNE VELASCO ALERE RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1662 4/21/2021 ONE TIME PAY VENDOR JOHN MARTIN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1663 4/21/2021 ONE TIME PAY VENDOR JONATHAN CHIEN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1664 4/21/2021 ONE TIME PAY VENDOR JULIE HOVEN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $10.00 CHECK TOTAL $10.00 3.2.b Packet Pg. 34 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 1665 4/21/2021 ONE TIME PAY VENDOR JUN HSIUNG LIN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $18.00 CHECK TOTAL $18.00 1666 4/21/2021 ONE TIME PAY VENDOR KA CHIU RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1667 4/21/2021 ONE TIME PAY VENDOR KENNETH VAN HORN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $18.00 CHECK TOTAL $18.00 1668 4/21/2021 ONE TIME PAY VENDOR KEYANA LASHAWN NELSON RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1669 4/21/2021 ONE TIME PAY VENDOR KIMBERLY NELSON RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.67 CHECK TOTAL $14.67 1670 4/21/2021 ONE TIME PAY VENDOR LIJUAN MO RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $212.50 CHECK TOTAL $212.50 1671 4/21/2021 ONE TIME PAY VENDOR LINDA MANISA RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1672 4/21/2021 ONE TIME PAY VENDOR LISETH PALACIOS RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1673 4/21/2021 ONE TIME PAY VENDOR LU WISNIEWSKI RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $234.60 CHECK TOTAL $234.60 1674 4/21/2021 ONE TIME PAY VENDOR LUIS HARO RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1675 4/21/2021 ONE TIME PAY VENDOR MARK MAHFOUZ RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1676 4/21/2021 ONE TIME PAY VENDOR MICHAEL NEGRETE RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 3.2.b Packet Pg. 35 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 1677 4/21/2021 ONE TIME PAY VENDOR MICHAEL ZHAO RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $18.00 CHECK TOTAL $18.00 1678 4/21/2021 ONE TIME PAY VENDOR MIKE MA RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $18.00 CHECK TOTAL $18.00 1679 4/21/2021 ONE TIME PAY VENDOR NAKEDA ROSS RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1680 4/21/2021 ONE TIME PAY VENDOR NANCY KOZIARA- CLARK RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $248.75 CHECK TOTAL $248.75 1681 4/21/2021 ONE TIME PAY VENDOR NATALIE LIU RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1682 4/21/2021 ONE TIME PAY VENDOR NICOLE LATTIMORE RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1683 4/21/2021 ONE TIME PAY VENDOR PRISCILLA LUU RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1684 4/21/2021 ONE TIME PAY VENDOR REGINALD HOLLIS RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1685 4/21/2021 ONE TIME PAY VENDOR SAMUEL LEOS EVENT REFUND 100 20202 $2,413.45 CHECK TOTAL $2,413.45 1686 4/21/2021 ONE TIME PAY VENDOR SANDRA CASTILLO RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1687 4/21/2021 ONE TIME PAY VENDOR SEUNG YUN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $217.50 CHECK TOTAL $217.50 1688 4/21/2021 ONE TIME PAY VENDOR STEPHANIE GONZALEZ RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.67 CHECK TOTAL $14.67 3.2.b Packet Pg. 36 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 1689 4/21/2021 ONE TIME PAY VENDOR STEVEN PARK RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $18.00 CHECK TOTAL $18.00 1690 4/21/2021 ONE TIME PAY VENDOR SUNG KIM RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $16.00 CHECK TOTAL $16.00 1691 4/21/2021 ONE TIME PAY VENDOR SYNTHIA HE RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1692 4/21/2021 ONE TIME PAY VENDOR TAISAN LIN RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $15.00 CHECK TOTAL $15.00 1693 4/21/2021 ONE TIME PAY VENDOR TIM LUC RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $204.75 CHECK TOTAL $204.75 1694 4/21/2021 ONE TIME PAY VENDOR TINA WU RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $212.00 CHECK TOTAL $212.00 1695 4/21/2021 ONE TIME PAY VENDOR TISCARENO'S CATERING & EVENTS SENIOR BOX LUNCH APRIL 21 100520 55310 $558.45 CHECK TOTAL $558.45 1696 4/21/2021 ONE TIME PAY VENDOR TUONG QUACH RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $18.00 CHECK TOTAL $18.00 1697 4/21/2021 ONE TIME PAY VENDOR VICTOR OLVERA RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1698 4/21/2021 ONE TIME PAY VENDOR VIRGINIA SALCIDO RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1699 4/21/2021 ONE TIME PAY VENDOR WUPENG CUI RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $14.37 CHECK TOTAL $14.37 1700 4/21/2021 ONE TIME PAY VENDOR YINGBOMG XU RECREATION HOUSEHOLD CREDIT REFUND DUE TO COVID-19 100 20202 $233.75 CHECK TOTAL $233.75 3.2.b Packet Pg. 37 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 1701 4/21/2021 ONE TIME PAY VENDOR ALAMO ROOFING SERVICE CORPORATION DEPOSIT REFUND 100 22105 $250.00 CHECK TOTAL $250.00 1702 4/21/2021 ONE TIME PAY VENDOR DOMITILA SANCHEZ DEPOSIT REFUND 100 22105 $250.00 CHECK TOTAL $250.00 1703 4/21/2021 PROTECTION ONE INC FIRE ALARM SERVICES - HERITAGE COMMUNITY CENTER 100630 52320 $184.57 4/21/2021 PROTECTION ONE INC BURGLAR ALARM SERVICES - HERITAGE COMMUNITY CENTER 100630 52320 $142.85 4/21/2021 PROTECTION ONE INC BURGLAR ALARM - 04.29.21 - 05.28.21 100620 52320 $166.95 CHECK TOTAL $494.37 1704 4/21/2021 PUBLIC STORAGE #23051 STORAGE FOR MAY 2021 100130 52302 $466.00 CHECK TOTAL $466.00 1705 4/21/2021 PYRO COMM SYSTEMS INC FIRE ALARM MONITORING - CITY HALL 100620 52320 $135.00 CHECK TOTAL $135.00 1706 4/21/2021 REGISTRAR-RECORDER/COUNTY CLERK NOV 3, 2020 GENERAL MUNICIPAL ELECTION 100130 53530 $90,812.00 CHECK TOTAL $90,812.00 1707 4/21/2021 RETAIL MARKETING SERVICES INC SHOPPING CART RETRIEVAL 250170 55000 $290.00 CHECK TOTAL $290.00 1708 4/21/2021 RICHARD FISHER ASSOCIATES MARCH 2021 INVOICE 301630 56104 $1,160.00 CHECK TOTAL $1,160.00 1709 4/21/2021 RKA CONSULTING GROUP AREA 1 & 2 - DESIGN - DBB/FEB 2021 301610 56101 $420.00 CHECK TOTAL $420.00 1710 4/21/2021 SC FUELS FLEET VEHICLE FUEL 502620 52330 $44.55 4/21/2021 SC FUELS FLEET VEHICLE FUEL 502430 52330 $176.18 4/21/2021 SC FUELS FLEET VEHICLE FUEL 502630 52330 $717.06 4/21/2021 SC FUELS FLEET VEHICLE FUEL 502655 52330 $817.63 CHECK TOTAL $1,755.42 1711 4/21/2021 SCHAFER CONSULTING CONSULTING SERVICES - ERP PROJECT MAR 2021 503230 56135 $12,322.50 3.2.b Packet Pg. 38 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT CHECK TOTAL $12,322.50 1712 4/21/2021 SCI CONSULTING GROUP PROF SERVICES - LLAD #38, #39 & 41 239639 54900 $2,653.33 4/21/2021 SCI CONSULTING GROUP PROF SERVICES - LLAD #38, #39 & 41 241641 54900 $2,653.33 4/21/2021 SCI CONSULTING GROUP PROF SERVICES - LLAD #38, #39 & 41 238638 54900 $2,653.34 CHECK TOTAL $7,960.00 1713 4/21/2021 SHEPPARD MULLIN RICHTER & HAMPTON PROFESSIONAL SERVICES - TRES HERMANOS MAR 2021 100120 54022 $4,777.44 CHECK TOTAL $4,777.44 1714 4/21/2021 SIMPSON ADVERTISING INC DESIGN OF MAY 2021 NEWSLETTER AND SUMMER REC GUIDE 100240 54900 $3,695.00 CHECK TOTAL $3,695.00 1715 4/21/2021 SOCIAL VOCATIONAL SERVICES WEED ABATEMENT - MAR 2021 100645 55528 $2,909.00 CHECK TOTAL $2,909.00 1716 4/21/2021 SOUTHERN CALIFORNIA EDISON 575 DBB & 20671 GOLD SP MAR 2021 238638 52210 $27.80 4/21/2021 SOUTHERN CALIFORNIA EDISON TRAFFIC CONTROL - 1611 S. BREA CANYON RD TC-1 100655 52210 $65.27 4/21/2021 SOUTHERN CALIFORNIA EDISON SAFETY LIGHTS - 2746 BREA CANYON RD B-PEB LS-3 100655 52210 $137.18 4/21/2021 SOUTHERN CALIFORNIA EDISON TRAFFIC CONTROL - 2201 DBB PED TC-1 100655 52210 $51.90 4/21/2021 SOUTHERN CALIFORNIA EDISON TRAFFIC CONTROL - 1450 BRIDGEGATE & VARIOUS TC-1 100655 52210 $408.34 4/21/2021 SOUTHERN CALIFORNIA EDISON TRAFFIC CONTROL - 20781 PATHFINDER TC-1 100655 52210 $109.81 4/21/2021 SOUTHERN CALIFORNIA EDISON GS-1 23331 GOLDEN SPRINGS PED 100655 52210 $69.89 4/21/2021 SOUTHERN CALIFORNIA EDISON TRAFFIC CONTROL - 717 GRAND AVE TC-1 100655 52210 $133.01 4/21/2021 SOUTHERN CALIFORNIA EDISON TRAFFIC CONTROL - 21010 WASHINGTON ST. TC-1 100655 52210 $73.40 4/21/2021 SOUTHERN CALIFORNIA EDISON GS-1 2838 S DBB PED 100655 52210 $198.87 4/21/2021 SOUTHERN CALIFORNIA EDISON GS-1 1215 S. BREA CANYON ROAD 100655 52210 $85.39 4/21/2021 SOUTHERN CALIFORNIA EDISON 20671 GOLDEN SPRINGS 2.12.21 - 3.16.21 238638 52210 $16.28 4/21/2021 SOUTHERN CALIFORNIA EDISON DISTRICT 38 - MAR 2021 238638 52210 $264.36 3.2.b Packet Pg. 39 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 4/21/2021 SOUTHERN CALIFORNIA EDISON DISTRICT 39 - MAR 2021 239639 52210 $195.22 4/21/2021 SOUTHERN CALIFORNIA EDISON DISTRICT 41 - 3.1.21 - 3.25.21 241641 52210 $118.12 CHECK TOTAL $1,954.84 1717 4/21/2021 SPECTRUM BUSINESS CABLE TV SERVICE - DBC - 3/30/21 100230 54030 $122.78 4/21/2021 SPECTRUM BUSINESS INTERNET SERVICE - HERITAGE PARK 3/2/21 100230 54030 $268.95 CHECK TOTAL $391.73 1718 4/21/2021 THE COMDYN GROUP INC PROF SERVICES/GIS SUPPORT - 3/13/21 - 4/9/21 100230 54900 $3,097.77 CHECK TOTAL $3,097.77 1719 4/21/2021 THE TAIT GROUP INC CS-ENGR/VARIOUS TRAFFIC-RELATED PROJ - MAR 2021 100615 54410 $3,500.00 CHECK TOTAL $3,500.00 1720 4/21/2021 TRANE SERVICE GROUP INC HVAC MAINTENANCE - PANTERA PARK 100630 52320 $760.15 4/21/2021 TRANE SERVICE GROUP INC HVAC MAINTENANCE - DIAMOND BAR CENTER 100510 52320 $4,551.68 4/21/2021 TRANE SERVICE GROUP INC HVAC MAINTENANCE - CITY HALL 100620 52320 $3,873.27 CHECK TOTAL $9,185.10 1721 4/21/2021 TYLER TECHNOLOGIES INC IMPLEMENTATION - ERP SYSTEM 1/12/21- 1/14/21 503230 56135 $4,200.00 4/21/2021 TYLER TECHNOLOGIES INC IMPLEMENTATION - ERP SYSTEM 1/4/21- 1/7/21 503230 56135 $4,900.00 4/21/2021 TYLER TECHNOLOGIES INC IMPLEMENTATION - ERP SYSTEM 12/7/20- 12/10/20 503230 56135 $6,300.00 4/21/2021 TYLER TECHNOLOGIES INC IMPLEMENTATION - ERP SYSTEM 503230 56135 $5,600.00 4/21/2021 TYLER TECHNOLOGIES INC IMPLEMENTATION - ERP SYSTEM 1/18/21- 1/21/21 503230 56135 $5,600.00 4/21/2021 TYLER TECHNOLOGIES INC IMPLEMENTATION - ERP SYSTEM 7/17/20- 7/27/20 503230 56135 $5,600.00 CHECK TOTAL $32,200.00 1722 4/21/2021 UNITED RECORDS MANAGEMENT INC OFF-SITE STORAGE OF BACK-UP TAPES - MAR 2021 100230 55000 $594.00 CHECK TOTAL $594.00 1723 4/21/2021 WAXIE SANITARY SUPPLY JANITORIAL SUPPLIES - CITY HALL 100620 51200 $401.69 3.2.b Packet Pg. 40 City of Diamond Bar Check Register CHECK # CHECK DATE VENDOR NAME OTP VENDOR NAME INVOICE DESCRIPTION ORG OBJECT AMOUNT 4/21/2021 WAXIE SANITARY SUPPLY JANITORIAL SUPPLIES - CITY HALL 100620 51200 $1,116.42 4/21/2021 WAXIE SANITARY SUPPLY JANITORIAL SUPPLIES - CITY HALL 100620 51200 $29.58 CHECK TOTAL $1,547.69 1724 4/21/2021 WEST COAST ARBORISTS INC CITYWIDE TREE WATERING 3.16.21 - 3.31.21 100645 55522 $1,360.00 4/21/2021 WEST COAST ARBORISTS INC TREE CARE AND MAINTENANCE - DISTRICT 38 238638 55522 $382.50 4/21/2021 WEST COAST ARBORISTS INC TREE CARE AND MAINTENANCE - DISTRICT 41 241641 55522 $198.00 4/21/2021 WEST COAST ARBORISTS INC CITYWIDE TREE CARE/MAINT. 3.16.21 - 3.31.21 100645 55522 $26,962.00 CHECK TOTAL $28,902.50 1725 4/21/2021 WILLDAN GEOTECHNICAL GEOTECH REVIEW - 22589 PACIFIC LANE THRU 2-26-21 100 22109 $840.00 CHECK TOTAL $840.00 GRAND TOTAL $1,059,636.46 3.2.b Packet Pg. 41 Agenda #: 3.3 Meeting Date: May 4, 2021 TO: Honorable Mayor and Members of the City Council FROM: Daniel Fox, City Manager TITLE: SURPLUS OF THE 1997 OLDSMOBILE ACHIEVA TO THE LOS ANGELES COUNTY SHERIFF'S DEPARTMENT. STRATEGIC GOAL: Responsible Stewardship of Public Resources RECOMMENDATION: Declare the 1997 Oldsmobile Achieva (VIN 1G3NL52M3VM333500) as surplus, and authorize the City Manager to transfer title to the Los Angeles County Sheriff’s Department. FINANCIAL IMPACT: None. BACKGROUND: The City purchased the 1997 Oldsmobile Achieva (VIN 1G3NL52M3VM333500) and provided the vehicle to the Los Angeles County Sheriff's Department for use by volunteers at the Diamond Bar/Walnut Station (Attachment 1). The vehicle has been maintained by the Sheriff’s Department since that time, and due to its age, it is no longer serviceable and the recommendation by Fleet Bureau is to dispose of the vehicle. ANALYSIS: Per Diamond Bar Municipal Code Sec. 3.24.190, each department shall periodically review its equipment and complete a surplus property list for items deemed surplus or have become obsolete or worn out. The completed list shall be submitted to the City Manager for approval. As the Sheriff’s Department is currently in possession of the Oldsmobile Achieva and has requested title so they may dispose of the vehicle since it is inoperable, Section 3.24.190 (d) requires City Council authorization to provide the City’s purchasing manager with the authority to sign title over to the Sheriff’s 3.3 Packet Pg. 42 Department. If approved by the City Council, the City Manager will sign title over to the Sheriff’s Department, at which time the vehicle will be removed from the City’s Asset List and insurance. The vehicle will then become property of the Sheriff’s Department for disposal or surplus under its disposal procedures. PREPARED BY: REVIEWED BY: Attachments: 1. 3.3.a County Agreement 07-30-1997 3.3 Packet Pg. 43 SHERMAN BLOCK, SHERIFF July 30, 1997 <!Iaunl!! af l!Jag 1\ngt>ll's ~heriff'.n IDepnrtment ibfenllqunrter.n -;:/1 4700 3Rnmnnn 1111nuleltnrlt / 1ill{~nlere!! Jnrlt, <llnlifnrnin 91754-2169 ADOPTED BO#~FD 01: :1U?tiWlSORS cc-.).t:'f c;r ,_w .'.~lG~l£S AUG 121997 The Honorable Board of Supervisors County of Los Angeles 3 9 w~ C\oLVU' _z_ Strv\00f.. 0 JOANNE STURGES EXECUTIVE OFFICER 383 Kenneth Hahn Hall of Administration 500 West Temple Street Los Angeles, California 90012 Dear Supervisors: CONTRACT WITH THE CITY OF DIAMOND BAR FOR USE OF VEHICLES (3 Votes) IT IS RECOMMENDED THAT YOUR BOARD: 1. 2. 3. Approve and instruct the Chairman to sign an agreement with the City of Diamond Bar at no cost to the County, for use of three vehicles: 1997 Oldsmobile Achieva, 4 door, VIN# 1G3NL52M3VM333500, 1997 Ford Aerostar, 4 door, VIN# 1FMDA11U6V2B57374, and a 1997 Ford Taurus, 4 door, VIN# 1 FALP5212VG246371 for the Walnut Sheriff's Station, effective upon Board approval and terminating when mutually agreed upon. Approve County to provide repairs and maintenance service for the vehicles and to indemnify and defend the agency, from all liability arising out of the County's use of the vehicles, other than liability resulting from defects or malfunctions related to acts or omissions of the manufacture. Instruct the Executive Officer of the Board to send a letter of appreciation to RobertS. Huff, Mayor, City of Diamond Bar, 21660 East Copley. Drive, Suite 100, Diamond Bar, California 91765-4177, for the generous loan and use of these three vehicles. Jl 'Jradi!ion oJ Oervice 3.3.a Packet Pg. 44 The Honorable Board of Supervisors July 30, 1997 Page2 PURPOSE OF RECOMMENDED ACTION The City of Diamond Bar continues to improve its delivery of community based policing efforts. JUSTIFICATION The City of Diamond Bar recently purchased three vehicles and offered to loan them to Walnut Sheriff's Station to improve its community based policing efforts. The vehicles will only be available to Diamond Bar team members, crime prevention personnel, and civilian volunteers. The 1997 Oldsmobile Ahieva will be used in surveillance, investigations, and other plain clothes operations. The 1997 Ford Aerostar will be used for community relations activities and other similar functions. The 1997 Ford Taurus will be used by the City of Diamond Bar Community Volunteer Patrol. FISCAL IMPACT The County of Los Angeles will hold title as registered owner only. The City of Diamond Bar will hold legal title. All liability insurance, maintenance, repairs, gasoline, and other necessary vehicle services will be provided and paid for by the Sheriff's Department. FINANCING None. 3.3.a Packet Pg. 45 The Honorable Board of Supervisors July 30, 1997 Page3 FACTS AND PROVISIONS/LEGAL REQUIREMENTS The vehicles will be on loan to the Sheriff's Department for an indeterminate time, however, the vehicles will be returned to the City of Diamond Bar when, in the opinion of the Sheriff's Department, the vehicles are no longer suitable for County service or when the County or City of Diamond Bar have mutually agreed upon the termination of this Bailment and five (5) days advance written notice for the return of the vehicles was given. The County will provide all necessary maintenance and repairs at no cost to the City of Diamond Bar. CONTRACTING PROCESS See Attachment A for detailed information regarding Bailment Contract. IMPACT ON CURRENT SERVICES (OR PROJECTS) There is no impact on current County services. NEGATIVE DECLARATION/ENVIRONMENTAL IMPACT REPORTS None. 3.3.a Packet Pg. 46 The Honorable Board of Supervisors July 30, 1997 Page4 CONCLUSION 1. Upon Board's approval of Bailment Contract, please return adopt stamped copies to the Fleet Management Bureau, Attention: Deputy Robert Alford or Operations Assistant II Brenda Capers, 1277 North Eastern Avenue, Los Angeles, California 90063. Respectfully submitted, )(/{?~;2 SHERMAN BLOCK SHERIFF 3.3.a Packet Pg. 47 70941 BAILMENT CONTRACT T is Contract of Bailment ("Agreement") is made and entered into this /Jikday of --1--L'--f~L\--1997, by and between the County of Los Angeles, hereinafter referred to UNTY" and the City of Diamond Bar hereinafter called "City of Diamond Bar". 1. Bailment of Property: City of Diamond Bar hereby bails to COUNTY three (3) vehicles: 1997 Oldsmobile Achieva, 4 door, VIN Number 1 G3NL52M3VM333500, 1997 Ford Aerostar, 4 door, VIN Number 1 FMDA 11 U6VZB5737 4, and a 1997 Ford Taurus, 4 door, VIN Number 1 FALP5212VG246371, which are hereby referred to as the "VEHICLES". 2. Term of Bailment: This bailment shall commence on the day first written above, and shall terminate when mutually agreed upon by giving the COUNTY five (5) days advance written notice for the return of the VEHICLES and the VEHICLES have been redelivered to City of Diamond Bar within five {5) days of such notice. 3. Safekeeping and Maintenance: COUNTY shall exercise due care for the safekeeping of the VEHICLES. COUNTY will provide all necessary maintenance and repairs at no cost to City of Diamond Bar. COUNTY has the right to inspect said VEHICLES prior to acceptance. City of Diamond Bar shall assume responsibility for ensuring that the VEHICLES have been inspected or otherwise tested in accordance with the laws of the State of California and the United States. COUNTY shall inspect the VEHICLES upon delivery and by acceptance thereof finds the VEHICLES are in good working order and condition. COUNTY shall maintain the VEHICLES in good working order and condition, ensure proper servicing and shall comply in every respect with any manufacturer's/owner's manuals that come with the VEHICLES. COUNTY shall pay for normal service required for the proper opeation of the VEHICLES. 3.3.a Packet Pg. 48 Agenda #: 3.4 Meeting Date: May 4, 2021 TO: Honorable Mayor and Members of the City Council FROM: Daniel Fox, City Manager TITLE: CONSIDERATION TO EXTEND A LOCAL EMERGENCY REGARDING NOVEL CORONAVIRUS (COVID-19). STRATEGIC GOAL: Safe, Sustainable & Healthy Community RECOMMENDATION: Adopt Resolution No. 2021-14 extending the Declared Local Emergency regarding Novel Coronavirus (COVID-19). FINANCIAL IMPACT: Potentially significant. The continuation of the declared local emergency is necessary to ensure access to reimbursement for related costs in response to COVID-19. The City has submitted a Request for Public Assistance with California Office of Emergency Services (CalOES) to seek reimbursement for all eligible COVID-19 related expenses. BACKGROUND: The rapid global spread of Novel Coronavirus (COVID-19) has resulted in unprecedented actions by Federal, State, County and local agencies, as well as private individuals and businesses, to help combat the community spread of the virus. On March 4, 2020, the Los Angeles County Board of Supervisors declared a State of Emergency and the Los Angeles County Public Health Officials declared a Local Health Emergency. Since that time, numerous actions have been, and continue to be taken, at the Federal, State and County levels to implement far reaching measures that include Stay at Home Orders, prohibit gatherings of any size, require closure of a wide range of businesses, schools, colleges, public facilities, cancellation of large community and sporting events, and other limitations all aimed at slowing the community spread of the virus. Conditions continue to change on a daily basis. At the time the City Council declared a local emergency on March 19, 2020, LA County Public Health Officials reported (as of March 18, 2020) 190 confirmed cases (including 2 3.4 Packet Pg. 49 in Diamond Bar), with one death in the County. As of April 27, 2021, there were 1,232,079 confirmed cases and 23,801 deaths in Los Angeles County (including 3,221 cases and 81 deaths in Diamond Bar). Updated numbers will be provided for the Resolution at the meeting. On January 25, 2021, Governor Newsom canceled the Regional Stay Home Order that tied restrictions to available ICU capacity state-wide. All Counties have gone back to the Tier System under the Blue Print for Safer Economy. Conditions continue to improve and as for April 27, 2021, Los Angeles County became eligible to move to the Yellow Tier (Minimal) under the State’s Blueprint for a Safer Economy. The Governor recently announced that the California Economy would fully reopen June 15 under the following criteria: 1. If Vaccine Supply is sufficient for Californians 16 years and older who wish to be inoculated; and 2. If hospitalization rates are stable and low. While case counts and testing positivity rate are lower, the variety of COVID variants requires that social distancing and mask wearing continue to be a high priority. The State of California’s vaccination portal https://myturn.ca.gov/ includes updated information on eligibility tiers and vaccination locations. Starting in May, vaccinations will be expanded to every individual 16 years and older. The Council is being asked to continue the Local State of Emergency (Attachment 1) regarding the COVID-19 pandemic, which was last adopted by Council on March 2, 2021, as is required every 60 days during the existence of the local emergency. The City Manager, as the Emergency Services Director for the City, also intends to continue the activation of the Emergency Operations Center at the lo west level (Level 3) to be able to provide enhanced communications with LA County Emergency Operations Center (already activated), and with LA County Sheriff and Fire personnel to monitor and respond to essential service requests that may be needed through out the City. Should the Governor move forward with fully reopening the economy in June, staff will bring an item to Council for consideration discontinuing the local emergency at that time. ANALYSIS: The City has taken extraordinary actions and precautions to help protect residents, businesses and our workforce from community spread of COVID-19. The City has transitioned to online service delivery and recreation programming to better serve the public, and recently began a limited reopening by appoint ment only for certain in-person services. The current status of city services is noted below and may change based on the latest guidance and orders from State and County Public Health Officials. City Operations: • City Hall began limited reopening by appointment only starting April 12 for in- person building, planning, public works/engineering, as well as transit passes, Diamond Ride identifications, and environmental services. Appointments are 3.4 Packet Pg. 50 available Monday through Thursday from 8am to 12pm. Prior to entering the City Hall lobby, residents and patrons must go through a temperature screening process. Appointments may be scheduled online through the City website. • Diamond Bar Center staff is preparing for a limited reopening by appointment only starting May 1 for tours and Recreation registration. Hours of operation will be Monday through Friday from 8am to 12pm, Wednesday and Thursday evenings from 5:30 to 7:30pm, and Saturday’s from 8am to 12:30pm. Heritage Park will remain closed. • City playgrounds, skate park, ball fields, tennis/pickleball courts, Basketball/volleyball courts, picnic shelters, trails, and dog park are open under required guidelines issued by Los Angeles County Public Health. • City Staff continue to work remotely, with plans underway for future modifications in accordance with City policies and required guidelines issued by Los Angeles County Public Health. • City Staff is preparing to return to in-person Council/Commission meetings with appropriate safety protocols and limited public attendance based on room capacity and spacing requirements. • Street sweeping activities continue, with the resumption of parking enforcement in January 2021. Recreation & Special Events Update: • Virtual recreation programs are being expanded, with in-person and virtual recreation programming available for residents – with information on the City website. Recreation staff continues to sell Rec-to-go bags for community youth. • Recreation staff and Council conducted a senior bag giveaway, and will evaluate future opportunities should resources become available. • Community in-person special events remain cancelled or postponed, with plans underway for Summer and Fall pending State and County reopening plans. • Field allocations for youth sports organizations are following City policies and in accordance with LA County Public Health. The City continues to encourage residents and businesses to adhere to the most recent guidance and health orders issued by our Federal, State, County and local agencies to help prevent and slow community spread of COVID-19. The City is also undertaking planning efforts for the eventual lifting or relaxing of the Stay-at-Home Order at the State and County levels, and will implement operational procedures to be compliant with Public Health Orders. LEGAL REVIEW: 3.4 Packet Pg. 51 City Attorney has reviewed and approved the Resolution as to form. PREPARED BY: REVIEWED BY: Attachments: 1. 3.4.a Resolution No. 2021-14, Declaration of Emergency Extension 3.4 Packet Pg. 52 RESOLUTION NO. 2021-14 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DIAMOND BAR, CALIFORNIA, PROCLAIMING EXISTENCE OF A LOCAL EMERGENCY REGARDING NOVEL CORONAVIRUS (COVID-19) WHEREAS, the Emergency Services Act (Government Code sections 8550 et seq.), and in particular California Government Code sections 8630, et seq. thereof, and Chapter 8.00 of Title 8 of the Diamond Bar Municipal Code, provide that the City Council may proclaim the existence of a local emergency when the City of Diamond Bar is affected or likely to be affected by public calamity; and WHEREAS, the City Council has been requested by the City Manager as the Director of Emergency Services to proclaim the existence of a local emergency in the City of Diamond Bar; and WHEREAS, COVID-19 has spread globally to over 192 countries, infecting more than ___________ persons and killing nearly _________ individuals worldwide. As of March 1, 2021 there were nearly ____________ cases in the United States with more than __________ deaths, including _________ cases and _______ deaths in Los Angeles County (________ cases and ____deaths in Diamond Bar) related to COVID- 19. Due to the expanding list of countries with widespread transmission of COVID-19, increasing travel alerts and warnings for countries experiencing sustained or uncontrolled community transmission issued by the Centers for Disease Control and Prevention (“CDC”), the escalation of United States domestic cases of and deaths from COVID-19, and the identification of COVID-19 cases in California, including Los Angeles County, COVID-19 has created conditions that are likely to be beyond the control of local resources and require the combined forces of other political subdivisions to combat; and WHEREAS, on February 26, 2020, the CDC confirmed the first possible case of community transmission of COVID-19 in the United States. On March 4, 2020, the Health Officer of Los Angeles County determined that there is an imminent and proximate threat to the public health from the introduction of COVID-19 in Los Angeles County and declared a Local Health Emergency and the Los Angeles County Board of Supervisors concurrently proclaimed the existence of a local emergency for the County of Los Angeles; and WHEREAS, on March 4, 2020, Governor Newsom of the State of California declared a State of Emergency in response to the COVID-19 (Corona Virus Disease 19); and WHEREAS, on March 11, 2020 the World Health Organization (WHO) publicly characterized COVID-19 as a global pandemic; and WHEREAS, on March 12, 2020 Governor Newsom of the State of California issued Executive Order N-25-20 in a further effort to confront and contain COVID-19 that among 3.4.a Packet Pg. 53 Resolution No. 2021-14 2 other things, required residents of California to follow orders and guidance of local public health officials, including following social distancing requirements and suspended certain provision of the Ralph M. Brown Act providing local agencies with greater flexibility to hold meetings via teleconferencing; and WHEREAS, on March 13, 2020, the President of the United States declared a National Emergency due to the continue spread and the effects of COVID -19; and WHEREAS, on March 19, 2020, Governor Newsom issued Executive Order N-33- 20 mandating that residents stay at home while carving out exceptions for workers in specified federal critical infrastructure sectors; and WHEREAS, the State of California and numerous other public and private organizations have announced the cancellation or postponement of all events where social distancing cannot be reasonably achieved; and WHEREAS, the City's ability to mobilize local resources, coordinate interagency response, accelerate procurement of vital supplies, use mutual aid, and seek future reimbursement by the State and Federal governments will be critical to successfully responding to COVID-19; and WHEREAS, the Diamond Bar City Council adopted Resolution 2020-04 on March 19, 2020, proclamation the existence of a local emergency in response to the COVID -19 public health emergency; and WHEREAS, the Diamond Bar City Council adopted Resolution 2020-12 on May 5, 2020, extending the local emergency due to the continued existen ce of a local emergency; and WHEREAS, the Diamond Bar City Council adopted Resolution No. 2020-22 on July 7, 2020, extending the local emergency due to the continued existence of a local emergency; and WHEREAS, the Diamond Bar City Council adopted Resolution No. 2020-38 on September 1, 2020, extending the local emergency due to the continued existence of a local emergency; and WHEREAS, the Diamond Bar City Council adopted Resolution No. 2020-41 on November 3, 2020, extending the local emergency due to the continued existence of a local emergency; and WHEREAS, the Diamond Bar City Council adopted Resolution No. 2021-01 on January 5, 2021, extending the local emergency due to the continued existence of a local emergency; and 3.4.a Packet Pg. 54 Resolution No. 2021-14 3 WHEREAS, the Diamond Bar City Council adopted Resolution No. 2021-06 on March 2, 2021, extending the local emergency due to the continued existence of a local emergency; and WHEREAS, the State of California’s Blueprint for a Safer Economy has Los Angeles County in the moderate category as Orange Tier, indicating that COVID is moderate in the county; and WHEREAS, Los Angeles County Public Health issued a series of Revised Temporary Order’s over the past several months, including the most recent on April 14, 2021. The April 14th Revised Temporary Order added new reopening protocols for indoor seated live entertainment, private events including meetings and conferences, guidance for informal social gatherings, and added Fairs to the protocol for Amusement and Theme Parks; and WHEREAS, the California Governor has indicated that pending further reductions in case counts and hospitalizations, it may be possible for the State to fully reopen starting June 15, 2021. If, at that time the Governor issues such directive, an additional Resolution will be brought before the Council for consideration regarding discontinuing the emergency declaration pending those criteria be met; and WHEREAS, the Diamond Bar City Council must review the local emergency at least once every 60 days to determine the need for continuing the local emergency until its termination by the Diamond Bar City Council. NOW, THEREFORE, IT IS HEREBY PROCLAIMED that as authorized by Government Code section 8630 and Diamond Bar Municipal Code section 8.00.050, the City Council proclaims that as defined in Government Code section 8558 and Section 8.00.020 of the Diamond Bar Municipal Code, a “local emergency” continues to exist throughout the City of Diamond Bar, which proclamation is based on the following findings by the City Council: 1. That the above recitals are true and correct and based thereon, hereby finds that the spread and potential further spread of COVID -19 constitutes a situation that severely impairs the public health and safety, and constitutes conditions of extreme peril to the safety of persons and property within the City of Diamond Bar; 2. That these conditions are likely to be beyond the control of the services, personnel, equipment, and facilities of the City of Diamond Bar; and 3. That the conditions of extreme peril warrant and necessitate the extension of the proclamation of the existence of a local emergency. IT IS HEREBY FURTHER PROCLAIMED AND ORDERED that during the threatened existence and actual existence of the local emergency, the powers, functions 3.4.a Packet Pg. 55 Resolution No. 2021-14 4 and duties of the Director of Emergency Services and the emergency organization of the City shall be those prescribed by state law, by ordinances and resolutions of the City and approved by the City Council. IT IS FURTHER PROCLAIMED AND ORDERED to ensure that City vendors are paid in a timely manner, the City Manager and the City Treasurer or their designees are authorized and directed to approve the claims and demands, make payments thereon, and finally to bring those claims and demands to the City Council at future meetings for ratification of the payments made. IT IS FURTHER PROCLAIMED AND ORDERED that the City Council will utilize, to the extent reasonably feasible and appropriate, the ability to conduct its council meetings via teleconferencing and other electronic means to permit council members and members of the public to implement recommended social distancing while still proceeding with the efficient handling of the City’s business, in compliance with California Executive Orders N-25-20 and N-33-20, and such other orders issued by the Governor of the State of California and President of the United States. IT IS FURTHER PROCLAIMED AND ORDERED that a copy of this proclamation be forwarded to the Director of California Governor’s Office of Emergency Services requesting that the Director find it acceptable in accordance with State law that the Governor of California, pursuant to the Emergency Services Act, issue a proclamation declaring an emergency in the City of Diamond Bar; that the Governor waive regulations that may hinder response and recovery efforts; that response and recovery assistance be made available under the California Disaster Assistance Act and the Stafford Act; and that the State expedite access to State and Federal resources and any other appropriate federal disaster relief programs. IT IS FURTHER PROCLAIMED AND ORDERED that the proclamation of a local emergency shall be reviewed at least once every 60 days until its termination is proclaimed by the City Council of the City of Diamond Bar, State of California. PASSED, APPROVED AND ADOPTED this 4th day of May, 2021. ___________________________ Nancy Lyons, Mayor 3.4.a Packet Pg. 56 Resolution No. 2021-14 5 ATTEST: I, Kristina Santana, City Clerk for the City of Diamond Bar, hereby certify that the foregoing resolution, Resolution No. 2021-14, was duly passed, approved and adopted by the City Council of the City of Diamond Bar at a regular meeting held on the 4th day of May, 2021, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: ___________________________ Kristina Santana, City Clerk 3.4.a Packet Pg. 57 Agenda #: 3.5 Meeting Date: May 4, 2021 TO: Honorable Mayor and Members of the City Council FROM: Daniel Fox, City Manager TITLE: CALIFORNIA'S WATER AWARENESS MONTH PROCLAMATION. STRATEGIC GOAL: Safe, Sustainable & Healthy Community RECOMMENDATION: Adopt the Proclamation declaring May as Water Awareness Month. BACKGROUND: Water Awareness Month is an annual celebration in May during which the Walnut Valley Water District partners with water agencies, water advocates, and community leaders as a steward of sustainable water use to educate and ensure all Californians have the resources and tools they need to use water wisely. During Water Awareness Month, the City of Diamond Bar urges everyone to support and promote water use efficiency, water-smart policies, and fiscally healthy water systems. PREPARED BY: 3.5 Packet Pg. 58 REVIEWED BY: Attachments: 1. 3.5.a Water Awareness Month Proclamation 3.5 Packet Pg. 59 PP RR OO CC LL AA MM AA TT II OO NN ““WW AA TT EE RR AA WW AA RR EE NN EE SS SS MM OO NN TT HH ”” WWHHEERREEAASS,, water is California’s, the nation’s, and the world’s most precious resource, and WWHHEERREEAASS,, California’s history of cyclical drought periods and climate change around the world highlights the importance of embracing the essential need for water efficiency, and WWHHEERREEAASS,, all Californians need to continue to conserve water and to use water wisely, and WWHHEERREEAASS,, as the world faces an unprecedented public health crisis of the COVID-19 pandemic, safe and reliable tap water services are an essential part in protecting public health, including the treatment processes that ensure safe drinking water, and WWHHEERREEAASS,, now is the time to work towards a world where communities and the environment have the water they need to thrive, and WWHHEERREEAASS,, during the month of May, WALNUT VALLEY WATER DISTRICT partners with water agencies, water advocates, and community leaders as a steward of sustainable water use to educate and ensure all Californians have the resources and tools they need to use water wisely. NNOOWW TTHHEERREEFFOORREE,, the CITY OF DIAMOND BAR does hereby proclaim MMaayy 22002211 as WWAATTEERR AAWWAARREENNEESSSS MMOONNTTHH and urges everyone to support and promote water use efficiency, water-smart policies, and fiscally healthy water systems. May 4, 2021 Nancy A. Lyons Mayor Ruth M. Low Andrew Chou Mayor Pro Tem Council Member Stan Liu Steve Tye Council Member Council Member 3.5.a Packet Pg. 60 Agenda #: 4.1 Meeting Date: May 4, 2021 TO: Honorable Mayor and Members of the City Council FROM: Daniel Fox, City Manager TITLE: DISSOLVE LANDSCAPE ASSESSMENT DISTRICT NO. 39. STRATEGIC GOAL: Responsible Stewardship of Public Resources RECOMMENDATION: Receive presentation, open Public Hearing, receive testimony, close Public Hearing, discuss, and adopt Resolution No. 2021-15 to Dissolve Landscape Assessment District No. 39. FINANCIAL IMPACT: In reviewing the past two Fiscal Years’ budgets (2018/19 and 2019/20), the actual annual General Fund (GF) subsidy amount averaged $176,754 for District No. 39. In Fiscal Year 2020/21, the budgeted GF subsidy is &80,984. This lower subsidy amount reflects the City’s ongoing effort to reduce the GF burden by reducing the District’s maintenance service levels and costs. After the dissolution, the maintenance of the publicly owned mini parks, trails, and open space areas will remain the City’s responsibilities. As such, the annual cost to the GF after dissolution is anticipated to be $156,000 and that compares favorably to the averaged $176,754 in actual expenditures, for a savings of approximately $20,000 . With adequate funding, the City will return the level of maintenance of the five (5) mini-parks, public trails and open space areas to the level that it should be to keep up with the City’s needs and requirements. Appropriate funding will be proposed in the Public Works Department Operating Budget for Fiscal Year 2021/22 for the maintenance of th ese public properties in the former District 39. BACKGROUND: Landscape Assessment District No. 39 (“District”) was formed in the mid-1980’s by the 4.1 Packet Pg. 61 original developer and the County of Los Angeles pursuant to Part 2 of Division 15 of the California Streets and Highways Code (§ 22500, et seq.). Upon inco rporation in 1989, the City of Diamond Bar (City) assumed jurisdiction over the District. Comprised of 1,249 parcels with an annual asse ssment rate of $236 per parcel, the District is bound on the west by Diamond Bar Boulevard and on the east by City lim its. The City services and maintains five (5) mini-parks, 15 acres of slopes, 39 acres of open space areas, and other landscape and irrigation improvements (Improvements) in the District. When the District was created it was structured in order that revenue from the assessments would self-support its maintenance. Over the past decades, although the cost of the service increased, the City hasn’t been able to increase the asse ssment fee due to the addition of Article XIIIC and Article XIIID to State of Calif ornia’s Constitution by Proposition 218 (Prop 218), in 1996. Consequently, since Fiscal Year 2008/09, the revenue being generated by the assessments have been insufficient to cover the cost of maintaining the District and the City has been subsidizing the District by using its General Fund. To have the District self-support its maintenance as originally structured and to end the General Fund subsidy, the City proposed an increase in the District assessment fee in 2019 per the majority protest procedure prescribed under Prop 218, but it was overwhelmingly rejected by property owners that returned ballots (78.76%) within the District. On March 16, 2021 the City Council adopted Resolution No. 2021 -10 declaring its intent to dissolve the District fixing 6:30 p.m. on May 4, 2021, as the time for a public hearing on the question of the dissolution of the District pursuant to California Streets and Highways Code section 22610. On April 28, 2021 the City received a signed petition/letter from a group of resident s (about 60 signatures from 48 properties) requesting the City Council to postpone the decision to dissolve the District (Attachment 2). There are a total of 1,249 parcels within the District. ANALYSIS: The public interest and convenience require, and the City Council is authorized, to dissolve the District pursuant to Division 15, Part 2, Chapter 2, Sections 22605 et seq. of the California Streets and Highways Code, and specifically Section 22610 thereof. A general description of the District improvements is as follows: The maintenance and servicing of landscaping and any facilities which are appurtenant thereto or which are necessary or convenient for the maintenance and servicing thereof, including but not limited to, repair, removal or replacement, grading, clearing, removal of debris, pruning, fertilization, pest control, weed control, and the installation or construction of appurtenant facilities, including curbs, gutters, walls, sidewalks or paving, or water, irrigation, or electrical 4.1 Packet Pg. 62 facilities. Said maintenance and servicing of the landscaping and installation, maintenance and servicing of related work shall be within the area of Assessment District No. 39. Upon the District’s dissolution, the City will not provide any services or maintenance on private property in the District, with the exception of the public trails and the five (5) mini-parks. Private property maintenance shall become the responsibility of the underlying property owners who will be required to maintain the property in accorda nce with City ordinances. A detailed map of the maintenance areas under the District is available for inspection in the Public Works Department. When complete, the City will cease the levy and collection of assessments against parcels of land within the District beginning July 1, 2021. LEGAL REVIEW: The City Attorney has reviewed and approved the Resolution as to form. PREPARED BY: REVIEWED BY: Attachments: 1. 4.1.a Resolution No. 2021-15 2. 4.1.b District 39 Petition Letter 4.1 Packet Pg. 63 RESOLUTION NO. 2021-15 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DIAMOND BAR TO DISSOLVE LANDSCAPE ASSESSMENT DISTRICT NO. 39. WHEREAS, Landscape Assessment District No. 39 (“District”) was created by the County of Los Angeles pursuant to Part 2 of Division 15 of the California Streets and Highways Code (§ 22500, et seq.); and WHEREAS, upon incorporation in 1989, the City of Diamond Bar (City) assumed jurisdiction over the District; and WHEREAS, the City services and maintains five (5) mini-parks, 15 acres of slopes, 39 acres of open space areas, and other landscape and irrigation improvements (Improvements) in the District; and WHEREAS, the District is bound on the west by Diamond Bar Boulevard and on the east by City limits, as shown on Exhibit “A”; and WHEREAS, the District comprises 1,249 parcels, with an annual assessment rate of $236 per parcel; and WHEREAS, since Fiscal Year 2008/09, the revenue being generated by the assessments have been insufficient to cover the cost of maintaining the District; and WHEREAS, when the District was created it was structured in order that revenue from the assessments would self-support its maintenance; and WHEREAS, due to the increase in the cost of the service over the years and the inability to increase assessments to cover those costs, the City has been subsidizing the maintenance of the Improvements in the District by using its General Fund; and WHEREAS, in 1996, Article XIIIC and Article XIIID were added to State of California’s Constitution by Proposition 218 (Prop 218), requiring that any increases in assessments must be approved by way of a majority protest procedure; and WHEREAS, in order to have the District self-support its maintenance as originally structured and to end the General Fund subsidy, the City proposed an increase in the District assessment fee in 2019 per the majority protest procedure prescribed under Prop 218, but it was overwhelmingly rejected by property owners within the District; and WHEREAS, on March 16, 2021 the City Council adopted Resolution No. 2021-10 declaring its intent to dissolve the District fixing 6:30 p.m. on May 4, 2021, as the time for a public hearing on the question of the dissolution of the District pursuant to California Streets and Highways Code section 22610; and 4.1.a Packet Pg. 64 Resolution No. 2021-15 WHEREAS, on May 4, 2021 the City Council held a public hearing and received and considered public input regarding the dissolution of Landscaping Assessment District No. 39. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Diamond Bar as follows: Section 1. The Recitals, as set forth above, are in all respects true and correct, and are incorporated herein by reference. Section 2. The public interest and convenience require, and the City Council is authorized, to dissolve the District pursuant to Division 15, Part 2, Chapter 2, Sections 22605 et seq. of the California Streets and Highways Code, and specifically Section 22610 thereof. Section 3. A general description of the District improvements is as follows: The maintenance and servicing of landscaping and any facilities which are appurtenant thereto or which are necessary or convenient for the maintenance and servicing thereof, including but not limited to, repair, removal or replacement, grading, clearing, removal of debris, pruning, fertilization, pest control, weed control, and the installation or construction of appurtenant facilities, including curbs, gutters, walls, sidewalks or paving, or water, irrigation, or electrical facilities. Said maintenance and servicing of the landscaping and installation, maintenance and servicing of related work shall be within the area of Assessment District No. 39 as shown on Exhibit “A” as attached hereto and incorporated by reference. Section 4. Upon the District’s dissolution, the City will not provide any services or maintenance on private property in the District, with the exception of the public trails and the five (5) mini-parks. Private property maintenance shall become the responsibility of the underlying property owners who will be required to maintain the property in accordance with City ordinances. A detailed map of the maintenance areas under the District is available for inspection with the Public Works Director/City Engineer. Section 5. Upon the District’s dissolution, the City will cease the levy and collection of assessments against parcels of land within the District beginning July 1, 2021. Section 6. The City Council hereby dissolves Landscaping Assessment District No. 39, effective July 1, 2021. Section 7. The City Clerk shall certify to the adoption of this Resolution, staff shall mail notice to all property owners within the District of the adoption of this Resolution, and staff shall take such actions as may be necessary to cease the collection of assessments against parcels with the District as of July 1, 2021, and cause a true and 4.1.a Packet Pg. 65 Resolution No. 2021-15 correct copy of this Resolution to be published pursuant to California Government Code § 6061. PASSED, APPROVED AND ADOPTED this 4th day of May, 2021. __________________________ Nancy A. Lyons, Mayor ATTEST: I, Kristina Santana, City Clerk of the City of Diamond Bar, do hereby certify that the foregoing Resolution was passed, adopted and approved at a regular meeting of the City Council of the City of Diamond Bar held on the 4th day of May, 2021, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAINED: COUNCIL MEMBERS: __________________________ Kristina Santana, City Clerk 4.1.a Packet Pg. 66 Resolution No. 2021-15 Exhibit A Landscape Assessment District No. 39 Map 4.1.a Packet Pg. 67 4.1.b Packet Pg. 68 4.1.b Packet Pg. 69 4.1.b Packet Pg. 70 4.1.b Packet Pg. 71 4.1.b Packet Pg. 72 4.1.b Packet Pg. 73 Agenda #: 4.2 Meeting Date: May 4, 2021 TO: Honorable Mayor and Members of the City Council FROM: Daniel Fox, City Manager TITLE: DISSOLVE LANDSCAPE ASSESSMENT DISTRICT NO. 41. STRATEGIC GOAL: Responsible Stewardship of Public Resources RECOMMENDATION: Receive presentation, open Public Hearing, receive testimony, close Public Hearing, discuss, and adopt Resolution No. No. 2021 -16 to Dissolve Landscape Assessment District No. 41. FINANCIAL IMPACT: In the past three Fiscal Years (2018/19, 2019/20, 2020/21), on average, the City paid $133,730.67 of General Fund subsidy on District No. 41. Therefore, dissolution of the District is estimated to result in a net gain to the GF in the average amount of approximately $133,000 per year based on prior years’ activity and avoids the gradual escalation over time inherent in managing the district under the current state law. BACKGROUND: Landscape Assessment District No. 41 (“District”) was formed in the mid-1980’s by the original developer and the County of Los Angeles pursuant to Part 2 of Division 15 of the California Streets and Highways Code (§ 22500, et seq.). Upon incorporation in 1989, the City of Diamond Bar (City) assumed jurisdiction over the District. Comprised of 544 parcels with an annual assessment rate of $220.50 per parcel, the District is bound by Pathfinder Road to the north, Brea Canyon Cutoff Road to the south, and State Route 57 to the east. The City services and maintains over 12 acres of slopes, 3 acres of brush areas, and other landscape and irrigation improvements (Improvements) in the District. 4.2 Packet Pg. 74 When the District was created it was structured in order that revenue from the assessments would self-support its maintenance. Over the past decades, although the cost of the service increased, the City hasn’t been able to increa se the assessment fee due to the addition of Article XIIIC and Article XIIID to State of California’s Constitution by Proposition 218 (Prop 218), in 1996. Consequently, since Fiscal Year 2011/12, the revenue being generated by the assessments have been insufficient to cover the cost of maintaining the District and the City has been subsidizing the District by using its General Fund. To have the District self-support its maintenance as originally structured and to end the General Fund subsidy, the City proposed an increase in the District assessment fee in 2019 per the majority protest procedure prescribed under Prop 218, but it was overwhelmingly rejected by property owners that returned the ballot (74.7%) within the District. On March 16, 2021 the City Council adopted Resolution No. 2021-09 declaring its intent to dissolve the District fixing 6:30 p.m. on May 4, 2021, as the time for a public hearing on the question of the dissolution of the District pursuant to California Streets and Highways Code section 22610. On May 6, 2021 the City Council adopted Resolution No. 2021-12 initiating proceedings for the formation of a new landscape assessment District No. 41-2021 (proposed District) with the same area of services. For the May 18, 2021 City Council meeting, the Council is scheduled to consider a resolution to approve an Engineer’s Report (with the proposed assessments) and set a hearing date for the proposed District. ANALYSIS: The public interest and convenience require, and the City Council is authorized, to dissolve the District pursuant to Division 15, Part 2, Chapter 2, Sections 22605 et seq. of the California Streets and Highways Code, and specifically Section 22610 thereof. A general description of the District improvements is as follows: The maintenance and servicing of landscaping and any facilities which are appurtenant thereto or which are necessary or convenient for the maintenance and servicing thereof, including but not limited to, repair, removal or replacement, grading, clearing, removal of debris, pruning, fertilization, pest control, weed control, and the installation or construction of appurtenant facilities, including curbs, gutters, walls, sidewalks or paving, or water, irrigation, or electrical facilities. Said maintenance and servicing of the landscaping and installation, maintenance and servicing of related work shall be within the area of the District. Upon the District’s dissolution, the City will not provide any services or maintenance on private property in the District. Private property maintenance shall become the responsibility of the underlying property owners/HOAs who will be required to maintain the property in accordance with City ordinances. A detailed map of the maintenance areas under the District is available for inspection in the Public Works Department. 4.2 Packet Pg. 75 When complete, the City will cease the levy and collection of assessments against parcels of land within the District beginning July 1, 2021. LEGAL REVIEW: The City Attorney has reviewed and approved the Resolution as to form. PREPARED BY: REVIEWED BY: Attachments: 1. 4.2.a Resolution No. 2021-16 4.2 Packet Pg. 76 RESOLUTION NO. 2021-16 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DIAMOND BAR TO DISSOLVE LANDSCAPE ASSESSMENT DISTRICT NO. 41. WHEREAS, Landscape Assessment District No. 41 (“District”) was created by the County of Los Angeles pursuant to Part 2 of Division 15 of the California Streets and Highways Code (§ 22500, et seq.); and WHEREAS, upon incorporation in 1989, the City of Diamond Bar (City) assumed jurisdiction over the District; and WHEREAS, the City services and maintains over 12 acres of slopes, 3 acres of brush areas, and other landscape/irrigation improvements (Improvements) in the District; and WHEREAS, the District is bound by Pathfinder Road to the north, Brea Canyon Cutoff Road to the south, and State Route 57 to the east, as shown on Exhibit “A”, and WHEREAS, the District comprises 544 parcels, with an annual assessment rate of $220.50 per parcel; and WHEREAS, since Fiscal Year 2011/12, the revenue being generated by the assessments have been insufficient to cover the cost of maintaining the District; and WHEREAS, when the District was created it was structured in order that revenue from the assessments would self-support its maintenance; and WHEREAS, due to the increase in the cost of the service over the years and the inability to increase assessments to cover those costs, the City has been subsidizing the maintenance of the Improvements in the District by using its General Fund; and WHEREAS, in 1996, Article XIIIC and Article XIIID were added to State of California Constitution by Proposition 218 (Prop 218), requiring that any increases in assessments must be approved by way of a majority protest procedure; and WHEREAS, in order to have the District self-support its maintenance as originally structured and to end the General Fund subsidy, the City proposed an increase in the District assessment fee in 2019, per the majority protest procedure prescribed under Prop 218, but it was overwhelmingly rejected by property owners within the District; and WHEREAS, on March 16, 2021 the City Council adopted Resolution No. 2021-09 declaring its intent to dissolve the District and fixing 6:30 p.m. on May 4, 2021, as the time for a public hearing on this question of the dissolution of the District pursuant to California Streets and Highways Code section 22610; and 4.2.a Packet Pg. 77 Resolution No. 2021-16 WHEREAS, on May 4, 2021 the City Council held a public hearing and received and considered public input regarding the dissolution of Landscaping Assessment District No. 41. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Diamond Bar as follows: Section 1. The Recitals, as set forth above, are in all respects true and correct, and are incorporated herein by reference. Section 2. The public interest and convenience require, and the City Council is authorized, to dissolve the District pursuant to Division 15, Part 2, Chapter 2, Sections 22605 et seq. of the California Streets and Highways Code, and specifically Section 22610 thereof. Section 3. A general description of the District improvements is as follows: The maintenance and servicing of landscaping and any facilities which are appurtenant thereto or which are necessary or convenient for the maintenance and servicing thereof, including but not limited to, repair, removal or replacement, grading, clearing, removal of debris, pruning, fertilization, pest control, weed control, and the installation or construction of appurtenant facilities, including curbs, gutters, walls, sidewalks or paving, or water, irrigation, or electrical facilities. Said maintenance and servicing of the landscaping and installation, maintenance and servicing of related work shall be within the area of the District as shown on Exhibit “A” as attached hereto and incorporated by reference. Section 4. Upon the District’s dissolution, the City will not provide any services or maintenance on private property in the District. Private property maintenance shall become the responsibility of the underlying property owners who w ill be required to maintain the property in accordance with City ordinances. A detailed map of the maintenance areas under the District is available for inspection with the Public Works Director/City Engineer. Section 5. Upon the District’s dissolution, the City will cease the levy and collection of assessments against parcels of land within the District beginning July 1, 2021. Section 6. The City Council hereby dissolves Landscaping Assessment District No. 41, effective July 1, 2021. Section 7. The City Clerk shall certify to the adoption of this Resolution, staff shall mail notice to all property owners within the District of the adoption of this Resolution, and staff shall take such actions as may be necessary to cease the collection of assessments against parcels with the District as of July 1, 2021, and cause a true and 4.2.a Packet Pg. 78 Resolution No. 2021-16 correct copy of this Resolution to be published pursuant to California Government Code § 6061. PASSED, APPROVED AND ADOPTED this 4th day of May, 2021. _________________________ Nancy A. Lyons, Mayor ATTEST: I, Kristina Santana, City Clerk of the City of Diamond Bar, do hereby certify that the foregoing Resolution was passed, adopted and approved at a regular meeting of the City Council of the City of Diamond Bar held on the 4th day of May, 2021, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAINED: COUNCIL MEMBERS: ______________________________ Kristina Santana, City Clerk 4.2.a Packet Pg. 79 Resolution No. 2021-16 Exhibit A Landscape Assessment District No. 41 Map 4.2.a Packet Pg. 80 Agenda #: 5.1 Meeting Date: May 4, 2021 TO: Honorable Mayor and Members of the City Council FROM: Daniel Fox, City Manager TITLE: APPOINTMENT TO THE PARKS & RECREATION COMMISSION TO FILL UNEXPIRED TERM. STRATEGIC GOAL: Open, Engaged & Responsive Government RECOMMENDATION: Ratify appointment of Lia Murphy to the Parks & Recreation Commission by Council Member Tye. FINANCIAL IMPACT: No Financial Impact. BACKGROUND: The City’s Municipal Code provides for each Council Member to make appointments to each of the City’s Commissions subject to confirmation by a majority vote of the full Council. An unscheduled vacancy on the Parks and Recreation Commission occurred on March 25, 2021 due to a resignation. A notice of vacancy was posted soliciting interested persons to submit applications between March 25, 2021 and April 19, 2021. The appointment of Lia Murphy has been proposed to fill the unexpired term on the Parks and Recreation Commission through February 2022. PREPARED BY: 5.1 Packet Pg. 81 REVIEWED BY: 5.1 Packet Pg. 82 Agenda #: 5.2 Meeting Date: May 4, 2021 TO: Honorable Mayor and Members of the City Council FROM: Daniel Fox, City Manager TITLE: 2021 LEASE REVENUE REFUNDING BONDS (DIAMOND BAR CENTER). STRATEGIC GOAL: Responsible Stewardship of Public Resources RECOMMENDATION: Adopt Resolution No. 2021-17 approving the legal documents for the issuance of City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A (“2021 Bonds”), authorizing the execution of the necessary documents and certificates, and other related actions. FINANCIAL IMPACT: The refunding will result in annual savings to the City in the form of reduced debt service payments. Current annual debt service ranges from $857,000 to $878,000 per year, including both principal and interest. The current favorable environment in which these refunding bonds will be issued is anticipated to reduce the annual debt service to a range of $709,000 to $726,000. This will generate annual savings of approximately $150,000 per year for the 12-year remaining life of the bonds. The calculated net present value savings of the transaction are estimated to be in excess of $1,700,000. The final savings will be determined upon the completion of the pricing of the 2021 Bonds. The annual debt service is made through an annual appropriation of resources within the General Fund, and these savings will accrue directly to the benefit of the General Fund. The bonds are scheduled to be fully repaid on June 1, 2033. BACKGROUND: On December 19, 2002, the Diamond Bar Public Financing Authority (Authority) issued the 2002 Variable Rate Lease Revenue Bonds (“2002 Bonds”) in the amount of $13,755,000 to finance the acquisition and construction of the community/senior center commonly known as the Diamond Bar Center (DBC). In conjunction with the sale of the 2002 Bonds, on December 2, 2002, the Authority executed a rate swap agreement to 5.2 Packet Pg. 83 manage the overall interest cost on the bonds. These bonds were restructured in 2011 converting the weekly variable rate structure to a fixed rate. The restructured 2002 Bonds are currently outstanding in the amount of $8,315,000. The scheduled principal payment of $485,000 due on June 1, 2021 will be made from funds on hand, reducing the outstanding amount being refunded to $7,830,000. The transaction is being proposed to take advantage of favorable market conditions that will enable the City to achieve lower interest costs as it continues to pay down the balance of the bonds. The savings will be discussed in the analysis section below. The Resolution before the Council (Attachment 1) will authorize staff to refinance the bonds described above, generating savings for the General Fund. Pursuant to the documents associated with the 2021 Bonds, the City will enter into lease/leaseback transactions with the Authority. The bonds will be issued by the Authority with repayment being made from lease payments made by the City based on its lease for the use of the DBC from the Authority. The City leases the DBC to, and then leases it back from, the Authority in order to facilitate the legal structure of the transaction originally executed in 2002 (including the same leased asset (the DBC) that is currently securing the 2002 Bonds) and continuing today for the proposed refinancing transaction. When the full d ebt service for the bonds has been repaid, the City’s title to the DBC will be unencumbered by the lease and leaseback. ANALYSIS: Associated with the COVID-19 pandemic, municipal interest rates have improved to near record low levels creating a particularly favorable bond sale environment. Based on this favorable interest rate environment, it is prudent to place the City in position to refinance the 2002 Bonds to capture the estimated savings at this time. The plan of finance would involve issuing app roximately $6,675,000 in new lease revenue bonds to refinance the existing 2002 Bonds and pay for issuance costs. The 2021 Bonds maintain the same repayment term as the Prior Obligations —there is no extension to the term of the City’s debt . The financing team anticipates selling approximately $6,675,000 in bonds using a “premium” structure which will generate additional proceeds beyond the par (face) amount of the bonds. This is because the interest coupon on the bonds is higher than current market rates . The “higher than market” interest payments are then offset by the premium received and interest charged on a lower par amount of bonds needed to generate the $7,839,852 required to retire the 2002 Bonds. In this way, issuing new bonds in the principal amount of approximately $6,675,000 will generate sufficient proceeds to repay the larger outstanding amount of the 2002 Bonds of $7,830,000 in June 2021. Based on current interest rates, issuing the 2021 Bonds can save the City an estimated $1,800,000 of gross cash flow savings over the remaining life of the 2002 Bonds. As noted above, the 2021 Bonds do not extend the term of the existing debt. The net present value savings for the 2021 Bonds, which are the savings AFTER paying for all costs of issuance on the 2021 Bonds, are projected to be approximately $1,700,000 (or nearly 22% of the refunded bond amount). “Net present value savings” represents the 5.2 Packet Pg. 84 annual cash flow savings in “today’s dollars.” Typically, municipal issuers set a minimum net present value savings goal equal to at least 3% of the refunded bond amount to determine if a refinancing is worthwhile to pursue. The projected net present value savings of nearly 22% certainly exceed that typical savings goal. The City’s General Fund credit currently has an “AA+” rating from Standard & Poor’s. It is expected that the upcoming 2021 Bonds will receive the same rating based on the stable credit characteristics of the City. This rating should enable the City’s underwriter to sell the 2021 Bonds at favorable interest rates from investors relative to many other bonds that are currently being sold in the municipal market. Further, the strong rating allows the financing to be completed without the need to purchase bond insurance, which will further reduce the overall cost of the financing. In addition, similar to the 2002 Bonds being refunded, the transaction’s structure does not include a debt service reserve fund, saving additional costs with the refinancing. All costs of issuance associated with the transaction will be paid for from the issuance of the 2021 Bonds. Depending on market conditions, the 2021 Bonds are scheduled to be sold the week of May 12, 2021 with an expected closing date of June 9, 2021. This represents an extended closing schedule which will minimize the cost of the escrow required to hold the funds between closing and actual repayment of the 2002 Bonds. This structure will enable a cash funded escrow rather than having to purchase securities and hire an Escrow Verification Agent. As required by Government Code section 5852.1, Exhibit A to the Resolution includes information providing a good faith estimate of: (1) the true interest cost of the 2021 Bonds, (2) the finance charge of the 2021 Bonds (the sum of all fees and charges p aid to third parties), (3) the estimated amount of proceeds and any reserves or capitalized interest (none for this transaction) and (4) the estimated total debt service on the 2021 Bonds. Documents being authorized with approval of the Resolution : Approval of the Resolution will accomplish the following: • Approves the form of the following documents (attached), allowing designated Authorized Officers to execute such documents provided the final terms are consistent with certain parameters established in the Resolution: o Ground Lease (Attachment 2) o Lease Agreement (Attachment 3) o Indenture (Attachment 4) o Bond Purchase Agreement (Attachment 5) o Preliminary Official Statement (Attachment 6) o Continuing Disclosure Certificate (Attachment 7) o Escrow Agreement (Attachment 8) • Approves the appointment of an underwriter, Raymond James & Associates, 5.2 Packet Pg. 85 Inc., to price and sell the bonds (City Council previously approved retention of the Financial Advisor and Bond Counsel). • Authorizes staff to take certain other actions, including terminating the recorded lease documents for the 2002 Bonds, delivering redemption instructions for the 2002 Bonds to the 2002 Bond trustee and obtaining title insurance on the DBC for the benefit of the 2021 Bondholders. LEGAL REVIEW: The City Attorney and/or Special Bond Counsel has approved the Resolution and related legal documents as to form. PREPARED BY: REVIEWED BY: Attachments: 1. 5.2.a Resolution No. 2021-17, 2021 Lease Revenue Bonds (2002 Refunding) 2. 5.2.b Ground Lease, 2021 Lease Revenue Bonds (2002 Refunding) 3. 5.2.c Lease Agreement, 2021 Lease Revenue Bonds (2002 Refunding) 4. 5.2.d Bond Purchase Agreement, 2021 Lease Revnue Bonds (2002 Refunding) 5. 5.2.e Indenture, 2021 Lease Revenue Bonds (2002 Refunding) 6. 5.2.f Preliminary Official Statement, 2021 Lease Revenue Bonds (2002 Refunding) 7. 5.2.g Continuing Disclosure Certificate, 2021 Lease Revenue Bonds (2002 Refunding) 8. 5.2.h Escrow Agreement (2002 Bonds) 5.2 Packet Pg. 86 RESOLUTION NO. 2021-17 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DIAMOND BAR AUTHORIZING THE EXECUTION AND DELIVERY OF A GROUND LEASE, LEASE AGREEMENT, INDENTURE, BOND PURCHASE AGREEMENT, CONTINUING DISCLOSURE CERTIFICATE AND ESCROW AGREEMENT IN CONNECTION WITH THE ISSUANCE OF CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A, APPROVING THE ISSUANCE OF SUCH BONDS IN AN AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $8,000,000, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH BONDS AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND CERTIFICATES AND RELATED ACTIONS. The City Council of the City of Diamond Bar does hereby find, order and resolve as follows: Section1. Recitals. A. The City of Diamond Bar (the “City”), a municipal corporation and general law city that is located in Los Angeles County, California, previously caused the City of Diamond Bar Public Financing Authority (the “Authority”) to issue its Variable Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (the “Original 2002 Bonds”) in 2002 in order to finance certain capital improvements of the City , consisting primarily of a community/senior center in Summitridge Park (the “2002 Project”). B. In 2012, the City caused the Authority to effect: (i) a mandatory tender of the Original 2002 Bonds; (ii) a conversion of the Original 2002 Bonds to a fixed interest rate; and (iii) a remarketing of the Original 2002 Bonds at a fixed interest rate (such remarketed Original 2002 Bonds, which were redesignated as the City of Diamond Bar Public Financing Authority Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project), the “2002 Bonds”). C. The 2002 Bonds are currently outstanding in the aggregate principal amount of $8,315,000, of which $485,000 in principal amount is coming due on June 1, 2021 and will be paid by the City as regularly scheduled. D. The Authority and the City have determined that it would be in the best interests of the City and residents of the City to authorize the preparation, sale and delivery of the “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A” (the “Bonds”) for the purposes of redeeming the 2002 Bonds maturing after June 1, 2021 and refinancing the 2002 Project. 5.2.a Packet Pg. 87 Resolution No. 2021-17 2 E. The 2002 Project constitutes “public capital improvements” within the meaning of the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code (the “Act”), all of which are or shall be located within the boundaries of the City. F. In order to facilitate the issuance of the Bonds, the City and the Authority desire to enter into a Ground Lease (the “Ground Lease”) pursuant to which the City will lease certain real property of the City (which real property consist s of the 2002 Project and the associated land), as described in the Ground Lease (collectively, the “Leased Assets”)), to the Authority, and a Lease Agreement (the “Lease Agreement”), pursuant to which the City will lease the Leased Assets back from the Authority, and pay certain Base Rental Payments (as such term is defined in the Lease Agreement), which are pledged to the owners of the Bonds by the Authority pursuant to an Indentu re, by and among U.S. Bank National Association (the “Trustee”), the City and the Authority (the “Indenture”). G. The City and the Authority desire to undertake a negotiated sale of the Bonds to Raymond James & Associates, Inc., as the underwriter of the Bonds (the “Underwriter”), pursuant to a purchase agreement by and among the City, the Authority and the Underwriter (the “Bond Purchase Agreement”). H. Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”) requires that, in order to be able to purchase or sell the Bonds, the Underwriter must have reasonably determined that the City has undertaken in a written agreement or contract for the benefit of the holders of the Bonds to provide disclosure of certain financial information and certain events on an ongoing basis. I. In order to cause such requirement to be satisfied, the City desires to execute and deliver a Continuing Disclosure Certificate (the “Continuing Disclosure Certificate”) in connection with the issuance of the Bonds. J. In order to effect the redemption of the 2002 Bonds, the City, the Authority and the Trustee desire to enter into an Escrow Agreement (2002 Bonds) (the “Escrow Agreement”). K. Rule 15c2-12 also requires that, in order to offer the Bonds for sale to the public, the Underwriter must receive a disclosure document with respect to the Bonds and the City. L. In order to cause such requirement to be satisfied, the City and the Authority have prepared a Preliminary Official Statement (the “POS”) in connection with the issuance of the Bonds. M. In compliance with California Government Code Section 5852.1, the City has obtained from the Underwriter and the City’s municipal advisor required good faith 5.2.a Packet Pg. 88 Resolution No. 2021-17 3 estimates relating to the Bonds, and such estimates are disclosed and set forth in Exhibit A attached hereto. N. The City is a member of the Authority and the 2002 Project is located within the boundaries of the City. O. The City Council has been presented with the form of each document that is referred to herein relating to the refinancing that is contemplated hereby, and the City Council has examined and approved each document and desires to authorize and direct the execution of such documents and the consummation of such refinancing . P. All acts, conditions and things that are required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the refinancing that are authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such refinancing and financing for the purpose, in the manner and upon the terms herein provided . Section 2. Findings. The City Council hereby approves the refinancing that is described in this Resolution and further finds and determines that there are significant public benefits to the citizens of the City through the approval of the issuance of the Bonds by the Authority pursuant to the Act and otherwise hereunder within the meaning of Section 6586(a) through (d), inclusive, of the Act, in that the issuance of the Bonds by the Authority and related transactions will result in demonstrable savings in effective interest rate to the City. Section 3. Approval of Lease Documents. The forms of Ground Lease and Lease Agreement presented at this meeting are hereby approved, and the Mayor of the City, the City Manager of the City and the Assistant City Manager of the City, or their respective designees (collectively, the “Authorized Officers”), are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Ground Lease and the Lease Agreement in substantially said forms, with s uch changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that: (a) the term of the Ground Lease a nd the Lease Agreement shall terminate no later than June 1, 2033 (provided that such term may be extended as provided therein); and (b) the true interest cost applicable to the interest components of the Base Rental Payments under the Lease Agreement shall not exceed 3.00%. Section 4. Approval of Indenture. The form of Indenture presented at this meeting is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Indenture in substantially said form, with such changes, insertions and omissions therein 5.2.a Packet Pg. 89 Resolution No. 2021-17 4 as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 5. Approval of Bond Purchase Agreement. The form of Bond Purchase Agreement presented at this meeting is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Bond Purchase Agreement in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the Underwriter’s discount shall not exceed 0.50% of the principal amount of the Bonds. Section 6. Approval of POS. The form of POS presented at this meeting, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the POS in connection with the offering and sale of the Bonds is hereby authorized and approved. Each Authorized Officer is hereby authorized to certify on behalf of the City that the POS is deemed final as of its date within the meaning of Rule 15c2-12 (except for the omission of certain final pricing, rating and related information as permitted by Rule 15c2-12). The Authorized Officers are each hereby authorized and directed to furnish, or cause to be furnished, to prospective bidders for the Bonds a reasonable number of copies of the POS. Section 7. Authorization of Official Statement. The preparation and delivery of an Official Statement, and its use in connection with the offering and sale of the Bonds, is hereby authorized and approved. The Official Statement shall be in substantially the form of the POS, with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. The Authorized Officers are each hereby authorized and directed, for and in the name of and on behalf of the City, to execute the final Official Statement and any amendment or supplement thereto for and in the name and on behalf of the City. Section 8. Approval of Continuing Disclosure Certificate . The form of Continuing Disclosure Certificate presented at this meeting is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Continuing Disclosure Certificate in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 9. Approval of Escrow Agreement. The form of Escrow Agreement presented at this meeting is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Escrow Agreement in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. 5.2.a Packet Pg. 90 Resolution No. 2021-17 5 Section 10. Further Action. The Authorized Officers are hereby authorized, empowered and directed, individually, to execute such other documents in addition to those enumerated herein and to take such other actions as each deems necessary or advisable in order to consummate the issuance of the Bonds and the redemption of the 2002 Bonds (including, but not limited to, causing terminations of or amendments to the lease documents related to the 2002 Bonds to be recorded in the Office of the Los Angeles County Recorder, causing the Indenture, the Lease Agreement and the Ground Lease, or memoranda thereof, to be recorded in the Office of the Los Angeles County Recorder, causing one or more title insurance policies to be issued relating to the Leased Assets and delivering instructions to the title company with respect thereto , executing escrow or redemption notices and/or instructions to be delivered in connection with the redemption of the 2002 Bonds, approving changes to the name and/or series designation of the Bonds to reflect the timing of the issuance of the Bonds or otherwise and entering into a commitment for municipal bond insurance or a debt service reserve fund insurance policy if determined to be in the best interest of the City). Such actions heretofore taken by the Authorized Officers or their designees are hereby ratified, confirmed and approved. Section 11. Special Services. Stradling Yocca Carlson & Rauth, a Professional Corporation is hereby appointed to serve as Bond Counsel and Disclosure Coun sel with respect to the Bonds and Fieldman, Rolapp & Associates, Inc. (“FRA”) is hereby appointed to serve as the City’s Municipal Advisor. Each of the Authorized Officers is further authorized to provide for all other services that are necessary to effect the matters that are described in this Resolution. Such services shall include, but not be limited to, legal services, trustee services, title insurance services, escrow verification services and any other services that are deemed appropriate by an Authorized Officer. Any one of the Authorized Officers is authorized to pay for the cost of such services and to enter into agreements as needed to engage such consultants. Section 12. Attestations. The City Clerk and such person or persons as may have been designated by the City Clerk to act on the City Clerk’s behalf, are hereby authorized and directed to attest the signature of the Authorized Officers designated herein to execute any documents described herein, and to affix and attest the seal of the City, as may be required or appropriate in connection with the execution and delivery of the documents that are described herein. Section 13. Effect. This Resolution shall take effect from and after its date of adoption. Section 14. Certification. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions. 5.2.a Packet Pg. 91 Resolution No. 2021-17 6 PASSED, APPROVED, and ADOPTED on this 4th day of May, 2021. __________________________ Nancy A. Lyons, Mayor ATTEST: I, Kristina Santana, City Clerk of the City of Diamond Bar, California, do hereby certify that the foregoing Resolution was duly and regularly passed and adopted by the City Council of the City of Diamond Bar, California, at its regular meeting held on the 4th day of May, 2021, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: __________________________ Kristina Santana, City Clerk 5.2.a Packet Pg. 92 EXHIBIT A GOVERNMENT CODE SECTION 5852.1 DISCLOSURE The good faith estimates set forth herein are provided with respect to the Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the City by Fieldman, Rolapp & Associates, Inc. Principal Amount. Based on the City’s financing plan and current market conditions, the good faith estimate of total gross proceeds of the Bonds is $8,024,669, which includes the estimated principal amount of the Bonds of $6,675,000 (the “Estimated Principal Amount”), plus net original issue premium estimated to be generated based on current market conditions. Net premium is generated when, on a net aggregate basis for a single issuance of bonds, the price paid for such bonds is higher than the face value of such bonds. True Interest Cost. Assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Bon ds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 1.01%. Finance Charge of the Bonds. Assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Bonds, which means the sum of all fees and charges paid to third parties (or costs associat ed with the Bonds), is $184,818. Amount of Proceeds to be Received. Assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of t he amount of proceeds expected to be received by the City for sale of the Bonds, less the finance charge of the Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the Bonds, is $7,839,852. Total Payment Amount. Assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the City will make to pay debt service on the Bonds, plus the finance charge for the Bonds, as described above, not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $8,578,267. The foregoing constitute good faith estimates only. The principal amount of the Bonds, the true interest cost of the Bonds, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to: (a) the actual date of the sale of the Bonds being 5.2.a Packet Pg. 93 different than the date assumed for purposes of such estimates; (b) the actual principal amount of Bonds sold being different from the Estimated Principal Amount; (c) th e actual amortization of the Bonds being different than the amortization assumed for purposes of such estimates; (d) the actual market interest rates at the time of sale of the Bonds being different than those estimated for purposes of such estimates; (e) other market conditions; or (f) alterations in the City’s financing plan, or a combination of such factors. The actual date of sale of the Bonds and the actual principal amount of Bonds sold will be determined by the City based on a variety of factors. Market interest rates are affected by economic and other factors beyond the control of the City. 5.2.a Packet Pg. 94 4850-6606-8705/200928-0001 RECORDING REQUESTED BY: City of Diamond Bar AND WHEN RECORDED RETURN TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Cyrus Torabi, Esq. [Space above for Recorder’s use.] GROUND LEASE 5.2.b Packet Pg. 95 4850-6606-8705/200928-0001 RECORDING REQUESTED BY: City of Diamond Bar AND WHEN RECORDED RETURN TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Cyrus Torabi, Esq. THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11921 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. THE GRANTOR AND THE GRANTEE ARE GOVERNMENTAL AGENCIES. GROUND LEASE by and between CITY OF DIAMOND BAR and CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY Dated as of June 1, 2021 Relating to $_______ CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A 5.2.b Packet Pg. 96 4850-6606-8705/200928-0001 GROUND LEASE THIS GROUND LEASE (this “Ground Lease”) is executed and entered into as of June 1, 2021, by and between the CITY OF DIAMOND BAR (the “City”), a municipal corporation and general law city that is duly organized and existing under and by virtue of the Constitution and laws of the State of California, as lessor, and the CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY (the “Authority”), a joint exercise of powers entity that is duly organized and existing under the laws of the State of California, as lessee. RECITALS A. The Authority previously issued its Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (the “2002 Bonds”), which are currently outstanding in the aggregate principal amount of $7,830,000, in order to finance certain capital improvements of the City (the “2002 Project”). B. The Authority and the City have determined that it would be in the best interests of the City and residents of the City to authorize the preparation, sale and delivery by the Authority of the “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A” (the “Bonds”) for the purposes of refunding the 2002 Bonds and refinancing the 2002 Project, which Bonds will be payable from certain base rental payments (the “Base Rental Payments”) to be made by the City under the below-defined Lease Agreement. C. In connection with the foregoing, the City will lease certain real property of the City and the improvements located thereon, consisting of the Community/Senior Center at Summitridge Park (1600 Grand Avenue, Diamond Bar, California 91765) (collectively, the “Property”), to the Authority pursuant to this Ground Lease, and the City will sublease the Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof (the “Lease Agreement”), by and between the City and the Authority. D. The Property is more particularly described in Exhibit A hereto. E. The City and the Authority have determined that it would be in the best interests of the City and the Authority to provide for the issuance of the Bonds pursuant to an Indenture, dated as of the date hereof (the “Indenture”), by and among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”). F. All rights to receive the Base Rental Payments have been assigned without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of the date hereof (the “Assignment Agreement”), by and between the Authority and the Trustee. G. All acts, conditions and things that are required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Ground Lease do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Ground Lease. In consideration of the mutual covenants hereinafter contained, the parties hereto agree as follows: 5.2.b Packet Pg. 97 2 4850-6606-8705/200928-0001 ARTICLE I DEFINITIONS Except as otherwise defined herein, or unless the context clearly otherwise requires, words and phrases that are defined in Article I of the Lease Agreement shall have the same meaning in this Ground Lease. ARTICLE II LEASE OF THE PROPERTY; RENTAL Section 2.01 Lease of Property. The City hereby leases to the Authority, and the Authority hereby leases from the City, for the benefit of the Owners of the Bonds, the Property, subject only to Permitted Encumbrances, to have and to hold for the term of this Ground Lease. Section 2.02 Rental. The Authority shall pay to the City as and for rental of the Property hereunder, the net proceeds of the Bonds, the receipt of which is hereby acknowledged. ARTICLE III QUIET ENJOYMENT The parties intend that the Property will be leased back to the City pursuant to the Lease Agreement for the term thereof. It is further intended that, to the extent provided herein and in the Lease Agreement, if an event of default occurs under the Lease Agreement, the Authority, or its assignee, will have the right, for the then-remaining term of this Ground Lease: (a) to take possession of the Property; (b) if it deems it appropriate, to cause an appraisal of the Property and a study of the then reasonable use thereof to be undertaken; and (c) to relet the Property. Subject to any rights that the City may have under the Lease Agreement (in the absence of an event of default) to possession and enjoyment of the Property, the City hereby covenants and agrees that it will not take any action to prevent the Authority from having quiet and peaceable possession and enjoyment of the Property during the term hereof and will, at the request of the Authority and at the City’s cost, to the extent that it may lawfully do so, join in any legal action in which the Authority asserts its right to such possession and enjoyment. ARTICLE IV SPECIAL COVENANTS AND PROVISIONS Section 4.01 Waste. The Authority agrees that at all times that it is in possession of the Property, it will not commit, suffer or permit any waste on the Property, and that it will not willfully or knowingly use or permit the use of the Property for any illegal purpose or act. Section 4.02 Further Assurances and Corrective Instruments. The City and the Authority agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements h ereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Property hereby 5.2.b Packet Pg. 98 3 4850-6606-8705/200928-0001 leased or intended so to be or for carrying out the expressed intention of this Ground Lease, the Indenture and the Lease Agreement. Section 4.03 Waiver of Personal Liability. All liabilities under this Ground Lease on the part of the Authority shall be solely liabilities of the Authority as a joint exercise of powers entity, and the City hereby releases each and every director, officer and employee of the Authority of and from any personal or individual liability under this Ground Lease. No director, officer or employee of the Authority shall at any time or under any circumstances be individually or personally liable under this Ground Lease to the City or to any other party whomsoever for anything done or omitted to be done by the Authority hereunder. All liabilities under this Ground Lease on the part of the City shall be solely liabilities of the City as a public corporation, and the Authority hereby releases each and every member, officer and employee of the City of and from any personal or individual liability under this Ground Lease. No member, officer or employee of the City shall at any time or under any circumstances be individually or personally liable under this Ground Lease to the Authority or to any other party whomsoever for anything done or omitted to be done by the City hereunder. Section 4.04 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 Property. Section 4.05 Right of Entry. The City reserves the right for any of its duly authorized representatives to enter upon the Property at any reasonable time to inspect the same. Section 4.06 Representations of the City. The City represents and warrants to the Authority and the Trustee as follows: (a) the City has the full power and authority to enter into, to execute and to deliver this Ground Lease, and to perform all of its duties and obligations hereunder, and has duly authorized the execution of this Ground Lease; (b) except for Permitted Encumbrances, the Property is not subject to any dedication, easement, right of way, reservation in patent, covenant, condition, restriction, lien or encumbrance which would prohibit or materially interfere with the use of the Property for governmental purposes as contemplated by the City; (c) all taxes, assessments or impositions of any kind with respect to the Property, except current taxes, have been paid in full; and (d) the Property is necessary to the City in order for the City to perform its governmental functions. Section 4.07 Representations of the Authority. The Authority represents and warrants to the City and the Trustee that the Authority has the full power and authority to enter into, to execute and to deliver this Ground Lease, and to perform all of its duties and obligations hereunder, and has duly authorized the execution and delivery of this Ground Lease. 5.2.b Packet Pg. 99 4 4850-6606-8705/200928-0001 ARTICLE V ASSIGNMENT, SUBLEASING, MORTGAGING AND SELLING Section 5.01 Assignment and Subleasing. This Ground Lease may be sold or assigned and the Property subleased, as a whole or in part, by the Authority without the necessity of obtaining the consent of the City, if an event of default occurs under the Lease Agreement. The Authority shall, within 30 days after such an assignment, sale or sublease, furnish or cause to be furnished to the City a true and correct copy of such assignment, sale or sublease, as the case may be. Section 5.02 Restrictions on City. The City agrees that, except with respect to Permitted Encumbrances, it will not mortgage, sell, encumber, assign, transfer or convey the Property or any portion thereof during the term of this Ground Lease. ARTICLE VI TERM; TERMINATION Section 6.01 Term. The term of this Ground Lease shall commence as of the date o f commencement of the term of the Lease Agreement and shall remain in full force and effect from such date to and including June 1, 2033 (the “Scheduled Termination Date”), unless such term is extended or sooner terminated as hereinafter provided. Section 6.02 Extension; Early Termination. If, on the Scheduled Termination Date, the Bonds shall not be fully paid, or provision therefor made in accordance with Article X of the Indenture, or the Indenture shall not be discharged by its terms, or if the Rental Payments paya ble under the Lease Agreement shall have been abated at any time, then the term of this Ground Lease shall be automatically extended until the date upon which all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, and the Indenture shall be discharged by its terms, except that the term of this Ground Lease shall in no event be extended more than ten years beyond the Scheduled Termination Date. If, prior to the Scheduled Termination Date, all Bonds shall be fully paid, or provisions therefor made in accordance with Article X of the Indenture, and the Indenture shall be discharged by its terms, the term of this Ground Lease shall end simultaneously therewith. ARTICLE VII MISCELLANEOUS Section 7.01 Binding Effect. This Ground Lease shall inure to the benefit of and shall be binding upon the City, the Authority and their respective successors and assigns. Section 7.02 Severability. In the event that any provision of this Ground Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 7.03 Amendments, Changes and Modifications. This Ground Lease may be amended, changed, modified, altered or terminated only in accordance with the provisions of the Lease Agreement. 5.2.b Packet Pg. 100 5 4850-6606-8705/200928-0001 Section 7.04 Assignment to Trustee. The Authority and City acknowledge that the Authority has assigned its right, title and interest in and to this Ground Lease (but none of its obligations and none of its rights to provide consents or approvals hereunder) to the Trustee pursuant to certain provisions of the Assignment Agreement. The City consents to such assignment. Section 7.05 Execution in Counterparts. This Ground Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.06 Applicable Law. This Ground Lease shall be governed by and construed in accordance with the laws of the State of California. Section 7.07 Captions. The captions or headings in this Ground Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Ground Lease. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 5.2.b Packet Pg. 101 S-1 4850-6606-8705/200928-0001 IN WITNESS WHEREOF, the Authority and the City have caused this Ground Lease to be executed by their respective officers hereunto duly authorized, all as of the day and year first above written. CITY OF DIAMOND BAR By: City Manager ATTEST: City Clerk CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Executive Director ATTEST: Secretary 5.2.b Packet Pg. 102 4850-6606-8705/200928-0001 CERTIFICATE OF ACCEPTANCE This is to certify that the interest in the Property that is conveyed under the foregoing agreement to the City of Diamond Bar Public Financing Authority (the “Authority”), a joint exercise of powers authority that is duly organized and existing under and by virtue of the Constitution and the laws of the State of California, is hereby accepted by the undersigned officer or agent on behalf of the Board of Directors of the Authority, pursuant to authority conferred by a resolution of the Board of Directors of Authority adopted on May __, 2021, and the grantee consents to recordation thereof by its duly authorized officer. Dated: June __, 2021 CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Executive Director 5.2.b Packet Pg. 103 4850-6606-8705/200928-0001 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 LOS ANGELES On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC 5.2.b Packet Pg. 104 A-1 4850-6606-8705/200928-0001 EXHIBIT A DESCRIPTION OF THE PROPERTY PARCEL A: IN THE CITY OF DIAMOND BAR, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, BEING THAT ADJUSTED PARCEL 1 OF THAT CERTAIN LOT LINE ADJUSTMENT NO. 02- 001, RECORDED OCTOBER 23, 2003 AS INSTRUMENT NO. 03-3180260 AND RE- RECORDED MARCH 09, 2004 AS INSTRUMENT NO. 04-0566670, BOTH OF OFFICIAL RECORDS. BEING A PORTION OF LOTS 3 AND 4 OF TRACT NO. 31479, RECORDED IN BOOK 998, PAGES 7 THROUGH 17 OF MAPS, RECORDS OF SAID COUNTY AND SAID STATE, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE NORTHERLY RIGHT-OF-WAY OF GRAND AVENUE, SAID POINT ALSO BEING THE SOUTHWESTERLY CORNER OF SAID LOT 4; 1. THENCE SOUTH 76° 57' 27" EAST, A DISTANCE OF 394.04 FEET; 2. THENCE NORTH 14° 53' 14" EAST, A DISTANCE OF 245.22 FEET; 3. THENCE NORTH 18° 21' 02" WEST, A DISTANCE OF 178.70 FEET; 4. THENCE NORTH 9° 23' 07" EAST, A DISTANCE OF 156.42 FEET; 5. THENCE NORTH 37° 50' 26" WEST, A DISTANCE OF 115.92 FEET; 6. THENCE NORTH 13° 57' 31" EAST, A DISTANCE OF 56.83 FEET; 7. THENCE NORTH 28° 21' 05" WEST, A DISTANCE OF 36.23 FEET; 8. THENCE NORTH 23° 50' 39" WEST, A DISTANCE OF 68.67 FEET; 9. THENCE NORTH 64° 30' 56" WEST, A DISTANCE OF 147.67 FEET; 10. THENCE NORTH 26° 41' 29" WEST, A DISTANCE OF 325.87 FEET; 11. THENCE NORTH 19° 09' 09" EAST, A DISTANCE OF 42.03 FEET; 12. THENCE NORTH 86° 38' 16" EAST, A DISTANCE OF 49.43 FEET; 13. THENCE SOUTH 72° 43' 51" EAST, A DISTANCE OF 32.64 FEET; 14. THENCE SOUTH 50° 34' 22" EAST, A DISTANCE OF 39.12 FEET; 15. THENCE NORTH 78° 32' 58" EAST, A DISTANCE OF 28.47 FEET; 16. THENCE NORTH 47° 26' 38" EAST, A DISTANCE OF 19.24 FEET; 17. THENCE NORTH 4° 33' 42" EAST, A DISTANCE OF 22.12 FEET; 18. THENCE NORTH 86° 38' 16" EAST, A DISTANCE OF 39.10 FEET; 19. THENCE SOUTH 75° 25' 56" EAST, A DISTANCE OF 34.13 FEET; 20. THENCESOUTH 59° 09' 05" EAST, A DISTANCE OF 37.15 FEET; 21. THENCE SOUTH 38° 38' 59" EAST, A DISTANCE OF 20.60 FEET; 22. THENCE SOUTH 17° 17' 41" WEST, A DISTANCE OF 59.02 FEET; 23. THENCE SOUTH 68° 07' 01" EAST, A DISTANCE OF 86.71 FEET; 24. THENCE NORTH 20° 39' 47" EAST, A DISTANCE OF 18.27 FEET; 25. THENCE NORTH 57° 15' 30" EAST, A DISTANCE OF 25.91 FEET; 26. THENCE SOUTH 70° 02' 32" EAST, A DISTANCE OF 52.31 FEET; 27. THENCE SOUTH 87° 07' 40" EAST, A DISTANCE OF 154.39 FEET; 28. THENCE SOUTH 41° 09' 40" EAST, A DISTANCE OF 80.72 FEET; 29. THENCE SOUTH 72° 03' 30" EAST, A DISTANCE OF 99.38 FEET; 30. THENCE NORTH 18° 09' 01" EAST, A DISTANCE OF 53.93 FEET; 31. THENCE NORTH 20° 53' 53" EAST, A DISTANCE OF 38.44 FEET; 32. THENCE NORTH 1° 09' 11" WEST, A DISTANCE OF 48.07 FEET; 5.2.b Packet Pg. 105 A-2 4850-6606-8705/200928-0001 33. THENCE NORTH 67° 49' 25" EAST, A DISTANCE OF 58.40 FEET; 34. THENCE NORTH 74° 34' 34" EAST, A DISTANCE OF 48.18 FEET; 35. THENCE NORTH 62° 17' 56" EAST, A DISTANCE OF 24.67 FEET; 36. THENCE NORTH 66° 41' 43" EAST, A DISTANCE OF 24.75 FEET; 37. THENCE NORTH 49° 03' 44" EAST, A DISTANCE OF 19.88 FEET; 38. THENCE NORTH 9° 28' 28" EAST, A DISTANCE OF 13.81 FEET; 39. THENCE NORTH 37° 31' 39" EAST, A DISTANCE OF 48.90 FEET; 40. THENCE NORTH 58° 12' 53" EAST, A DISTANCE OF 79.91 FEET; 41. THENCE NORTH 33° 31' 11" WEST, A DISTANCE OF 18.79 FEET; 42. THENCE NORTH 52° 49' 59" EAST, A DISTANCE OF 41.11 FEET; 43. THENCE NORTH 71° 52' 42" EAST, A DISTANCE OF 66.51 FEET 44. THENCE NORTH 77° 00' 19" EAST, A DISTANCE OF 38.93 FEET; 45. THENCE NORTH 45° 48' 25" EAST, A DISTANCE OF 150.63 FEET; 46. THENCE NORTH 70° 39' 20" WEST, A DISTANCE OF 73.13 FEET; 47. THENCE NORTH 5° 43' 20" WEST, A DISTANCE OF 100.28 FEET; 48. THENCE NORTH 56° 58' 00" EAST, A DISTANCE OF 119.27 FEET; 49. THENCE NORTH 11° 05' 40" WEST, A DISTANCE OF 262.39 FEET; 50. THENCE NORTH 25° 02' 30" EAST, A DISTANCE OF 277.59 FEET; 51. THENCE SOUTH 64° 45' 30" EAST, A DISTANCE OF 309.56 FEET; 52. THENCE NORTH 7° 00' 30" EAST, A DISTANCE OF 299.24 FEET; 53. THENCE NORTH 13° 14' 00" EAST, A DISTANCE OF 286.10 FEET; 54. THENCE SOUTH 84° 11' 50" EAST, A DISTANCE OF 123.63 FEET; 55. THENCE NORTH 70° 46' 10" EAST, A DISTANCE OF 45.54 FEET; 56. THENCE NORTH 24° 00' 31" EAST, A DISTANCE OF 196.88 FEET; 57. THENCE SOUTH 87° 14' 22" WEST, A DISTANCE OF 128.32 FEET; 58. THENCE NORTH 84° 46' 41" WEST, A DISTANCE OF 283.70 FEET; 59. THENCE NORTH 76° 50' 24" WEST, A DISTANCE OF 605.52 FEET; 60. THENCE NORTH 76° 55' 09" WEST, A DISTANCE OF 699.02 FEET; 61. THENCE NORTH 83° 05' 17" WEST, A DISTANCE OF 622.72 FEET; 62. THENCE NORTH 83° 11' 50" WEST, A DISTANCE OF 656.41 FEET; 63. THENCE SOUTH 74° 55' 05" EAST, A DISTANCE OF 39.24 FEET; 64. THENCE SOUTH 22° 06' 13" WEST, A DISTANCE OF 19.69 FEET; 65. THENCE NORTH 83° 13' 36" WEST, A DISTANCE OF 22.65 FEET; 66. THENCE SOUTH 16° 28' 56" EAST, A DISTANCE OF 171.62 FEET; 67. THENCE SOUTH 8° 35' 01" EAST, A DISTANCE OF 53.60 FEET; 68. THENCE SOUTH 80° 03' 36" EAST, A DISTANCE OF 8.45 FEET; 69. THENCE SOUTH 9° 56' 23" WEST, A DISTANCE OF 139.69 FEET; 70. THENCE SOUTH 25° 26' 54" WEST, A DISTANCE OF 172.70 FEET; 71. THENCE SOUTH 14° 55' 58" WEST, A DISTANCE OF 27.70 FEET 72. THENCE SOUTH 5° 00' 00" WEST, A DISTANCE OF 50.00 FEET; 73. THENCE SOUTH 19° 00' 00" WEST, A DISTANCE OF 102.50 FEET; 74. THENCE SOUTH 67° 36' 32" WEST, A DISTANCE OF 221.86 FEET; 75. THENCE SOUTH 46° 31' 54" EAST, A DISTANCE OF 264.55 FEET; 76. THENCE SOUTH 10° 03' 28" EAST, A DISTANCE OF 80.00 FEET; 77. THENCE SOUTH 9° 56' 23" WEST, A DISTANCE OF 255.00 FEET; 78. THENCE SOUTH 59° 50' 20" WEST, A DISTANCE OF 129.48 FEET; 79. THENCE SOUTH 21° 35' 43" WEST, A DISTANCE OF 258.12 FEET; 80. THENCE SOUTH 23° 44' 58" EAST, A DISTANCE OF 54.63 FEET; 81. THENCE SOUTH 5° 57' 52" EAST, A DISTANCE OF 67.36 FEET; 5.2.b Packet Pg. 106 A-3 4850-6606-8705/200928-0001 82. THENCE SOUTH 26° 47' 29" EAST, A DISTANCE OF 113.15 FEET; 83. THENCE SOUTH 72° 09' 54" EAST, A DISTANCE OF 120.81 FEET; 84. THENCE SOUTH 87° 01' 54" EAST, A DISTANCE OF 135.18 FEET; 85. THENCE SOUTH 52° 07' 30" EAST, A DISTANCE OF 57.01 FEET; 86. THENCE SOUTH 86° 33' 59" EAST, A DISTANCE OF 50.09 FEET; 87. THENCE SOUTH 20° 18' 08" EAST, A DISTANCE OF 106.63 FEET; 88. THENCE SOUTH 32° 56' 57" EAST, A DISTANCE OF 64.35 FEET; 89. THENCE SOUTH 74° 39' 25" EAST, A DISTANCE OF 116.42 FEET; 90. THENCE SOUTH 44° 39' 25" EAST, A DISTANCE OF 1117.89 FEET; 91. THENCE SOUTH 24° 04' 29" WEST, A DISTANCE OF 299.68 FEET TO THE POINT OF BEGINNING. EXCEPT THEREFROM ALL OIL, GAS AND OTHER HYDROCARBONS AND MINERALS NOW OR AT ANY TIME HEREAFTER SITUATED THEREIN AND THEREUNDER, TOGETHER WITH THE EXCLUSIVE RIGHT TO DRILL FOR, PRODUCE, EXTRACT, TAKE AND MINE THEREFROM SUCH OIL, GAS AND OTHER HYDROCARBONS AND MINERAL AND TO STORE THE SAME UPON THE SURFACE OF SAID LAND, OR BELOW THE SURFACE OF SAID LAND, TOGETHER WITH THE RIGHT TO STORE UPON THE SURFACE OF SAID LAND, OIL, GAS AND OTHER HYDROCARBONS AND MINERALS WHICH MAY BE PRODUCED OTHER LANDS, WITH THE RIGHT OF ENTRY THEREON FOR THE SAID PURPOSES, AND WITH THE RIGHT TO CONSTRUCT, USE, MAINTAIN, ERECT, REPAIR, REPLACE AND REMOVE THEREON AND THEREFROM, ALL PIPE LINES, TELEPHONE AND TELEGRAPH LINES, TANKS, MACHINERY, BUILDINGS AND OTHER STRUCTURES WHICH MAY BE NECESSARY AND REQUISITE TO CARRY ON OPERATIONS ON SAID LANDS, WITH RIGHT TO ERECT, MAINTAIN, OPERATE AND REMOVE A PLANT, WITH ALL NECESSARY APPURTENANTS FOR THE EXTRACTION OF GASOLINE FROM GAS, INCLUDING ALL RIGHTS NECESSARY OR CONVENIENT THERETO, AS EXCEPT AND RESERVED IN THE DEED FROM TRANSAMERICA DEVELOPMENT COMPANY, A CORPORATION, RECORDED MARCH 29, 1968, AS DOCUMENT NO. 2456, IN BOOK D3955, PAGE 185, OFFICIAL RECORDS; AND RE- RECORDED JUNE 19, 1969, AS DOCUMENT NO. 1776, IN BOOK D4407, PAGE 591, OFFICIAL RECORDS; AND AS MODIFIED WITH RESPECT TO A PORTION THEREON BY A QUITCLAIM DEED RECORDED NOVEMBER 12, 1970, AS INSTRUMENT NO. 2112, OFFICIAL RECORDS, WHICH RELINQUISHED ALL RIGHT TO THE USE OF THE SURFACE AND SUBSURFACE TO A DEPTH OF 500 FEET FROM THE SURFACE OF THE LAND. ALL RIGHTS TO THE USE OF THE SURFACE AND SUB-SURFACE TO A DEPTH OF FIVE HUNDRED (500) FEET FROM THE SURFACE FOR ANY PURPOSE INCIDENTAL TO THE OWNERSHIP OF ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES AND MINERALS WERE QUITCLAIMED BY DEED RECORDED DECEMBER 24, 1981, AS INSTRUMENT NO. 81-1263075, OFFICIAL RECORDS, OF SAID COUNTY. PARCEL B: IN THE CITY OF DIAMOND BAR, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, BEING A PORTION OF ADJUSTED PARCEL 2 AND A PORTION OF ADJUSTED PARCEL 3 OF LOT LINE ADJUSTMENT NUMBER 02-001, RECORDED OCTOBER 23, 2003 AS INSTRUMENT NO. 03-3180260 AND RE-RECORDED MARCH 09, 2004 AS INSTRUMENT 5.2.b Packet Pg. 107 A-4 4850-6606-8705/200928-0001 NO. 04-0566670 OFFICIAL RECORDS OF SAID COUNTY AND SAID STATE, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHWESTERLY CORNER OF SAID ADJUSTED PARCEL 2, ALSO BEING IN THE NORTHERLY RIGHT-OF-WAY OF GRAND AVENUE; THENCE SOUTH 76° 57' 27" EAST, A DISTANCE OF 306.53 FEET TO A TANGENT CURVE CONCAVE NORTHWESTERLY HAVING A RADIUS OF 13.00 FEET; THENCE NORTHEASTERLY, A DISTANCE OF 20.42 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00"; THENCE TANGENT FROM SAID CURVE NORTH 13° 02' 33" EAST, A DISTANCE OF 66.52 FEET TO A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 465.00 FEET; THENCE NORTHERLY, A DISTANCE OF 91.99 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 11° 20' 03"; THENCE TANGENT FROM SAID CURVE NORTH 01° 42' 30" EAST, A DISTANCE OF 118.11 FEET TO A TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 528.00 FEET; THENCE NORTHERLY, A DISTANCE OF 332.12 ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 36° 02' 23" TO THE MOST SOUTHERLY POINT OF SAID ADJUSTED PARCEL 3; THENCE CONTINUING ALONG SAID CURVE, A DISTANCE OF 195.69 FEET THROUGH A CENTRAL ANGLE OF 21° 14' 07"; THENCE TANGENT FROM SAID CURVE NORTH 58° 59' 00" WEST, A DISTANCE OF 176.43 FEET TO A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 472.00 FEET; THENCE NORTHERLY, A DISTANCE OF 351.12 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 42° 37' 20"; THENCE TANGENT FROM SAID CURVE NORTH 16° 21' 40" EAST, A DISTANCE OF 105.08 FEET TO A TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 728.00 FEET; THENCE NORTHERLY, A DISTANCE OF 49.95 FEET THROUGH A CENTRAL ANGLE OF 03° 55' 53"; THENCE NON-TANGENT FROM SAID CURVE NORTH 69° 42' 32" WEST, A DISTANCE OF 4.00 FEET; THENCE NORTH 47° 20' 32" WEST, A DISTANCE OF 288.17 FEET TO THE WESTERLY MOST CORNER OF SAID ADJUSTED PARCEL 3; THENCE SOUTH 77° 00' 57" WEST, A DISTANCE OF 38.92 FEET; THENCE SOUTH 71° 52' 42" WEST, A DISTANCE OF 66.51 FEET; THENCE SOUTH 52° 49' 59" WEST, A DISTANCE OF 41.11 FEET; THENCE SOUTH 33° 31' 11" EAST, A DISTANCE OF 18.79 FEET; THENCE SOUTH 58° 12' 53" WEST, A DISTANCE OF 79.91 FEET; THENCE SOUTH 37° 31' 39" WEST, A DISTANCE OF 48.90 FEET; THENCE SOUTH 09° 28' 28" WEST, A DISTANCE OF 13.81 FEET; THENCE SOUTH 49° 03' 44" WEST, A DISTANCE OF 19.88 FEET; THENCE SOUTH 66° 41' 43" WEST, A DISTANCE OF 24.75 FEET; THENCE SOUTH 62° 17' 56" WEST, A DISTANCE OF 24.67 FEET; THENCE SOUTH 74° 34' 34" WEST, A DISTANCE OF 48.18 FEET; THENCE SOUTH 67° 49' 25" WEST, A DISTANCE OF 58.40 FEET; THENCE SOUTH 01° 09' 11" EAST, A DISTANCE OF 48.07 FEET; THENCE SOUTH 20° 53' 53" WEST, A DISTANCE OF 38.44 FEET; THENCE SOUTH 18° 09' 01" WEST, A DISTANCE OF 53.93 FEET; THENCE NORTH 72° 03' 30" WEST, A DISTANCE OF 99.38 FEET; THENCE NORTH 41° 09' 40" WEST, A DISTANCE OF 80.72 FEET; THENCE NORTH 87° 07' 40" WEST, A DISTANCE OF 154.39 FEET; THENCE NORTH 70° 02' 32" WEST, A DISTANCE OF 52.31 FEET; THENCE SOUTH 57° 15' 30" WEST, A DISTANCE OF 25.91 FEET; THENCE SOUTH 20° 39' 47" WEST, A DISTANCE OF 18.27 FEET; THENCE NORTH 68° 07' 01" WEST, A DISTANCE OF 86.71 FEET; THENCE NORTH 17° 17' 41" EAST, A DISTANCE OF 59.02 FEET; THENCE NORTH 38° 38' 59" WEST A DISTANCE OF 20.60 FEET; THENCE NORTH 59° 09' 05" WEST, A DISTANCE OF 37.15 FEET; THENCE NORTH 75° 25' 56" WEST, A DISTANCE OF 34.13 FEET; THENCE SOUTH 86° 38' 16" WEST, A DISTANCE OF39.10 FEET; THENCE SOUTH 04° 33' 42" WEST, A DISTANCE OF 22.12 FEET; THENCE SOUTH 47° 26' 38" WEST, A DISTANCE OF 19.24 FEET; THENCE SOUTH 78° 32' 58" WEST, A DISTANCE OF 28.47 5.2.b Packet Pg. 108 A-5 4850-6606-8705/200928-0001 FEET; THENCE NORTH 50° 34' 22" WEST, A DISTANCE OF 39.12 FEET; THENCE NORTH 72° 43' 51" WEST, A DISTANCE OF 32.64 FEET; THENCE SOUTH 86° 38' 16" WEST, A DISTANCE OF 49.43 FEET; THENCE SOUTH 19° 09' 09" WEST, A DISTANCE OF 42.03 FEET; THENCE SOUTH 26° 41' 29" EAST, A DISTANCE OF 325.87 FEET; THENCE SOUTH 64° 30' 56" EAST, A DISTANCE OF 147.67 FEET; THENCE SOUTH 23° 50' 39" EAST, A DISTANCE OF 68.67 FEET; THENCE SOUTH 28° 21' 05" EAST, A DISTANCE OF 36.23 FEET; THENCE SOUTH 13° 57' 31" WEST, A DISTANCE OF 56.83 FEET; THENCE SOUTH 37° 50' 26" EAST, A DISTANCE OF 115.92 FEET; THENCE SOUTH 09° 23' 07" WEST, A DISTANCE OF 156.42 FEET; THENCE SOUTH 18° 21' 02" EAST, A DISTANCE OF 178.70 FEET; THENCE SOUTH 14° 53' 14" WEST, A DISTANCE OF 245.22 TO THE POINT OF BEGINNING. SAID DESCRIPTION IS MADE PURSUANT TO ADJUSTED PARCEL B, OF LOT LINE ADJUSTMENT NO. 07-002, RECORDER JUNE 26, 2008 AS INSTRUMENT NO. 20081143590, OFFICIAL RECORDS OF SAID COUNTY. For conveyancing purposes only: APN(S) 8701-059-904 AND 8701-059-909 5.2.b Packet Pg. 109 Stradling Yocca Carlson & Rauth Draft of 4/19/21 4849-6802-8385/200928-0001 LEASE AGREEMENT by and between CITY OF DIAMOND BAR and CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY Dated as of June 1, 2021 Relating to $_______ CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A 5.2.c Packet Pg. 110 TABLE OF CONTENTS Page i 4849-6802-8385/200928-0001 ARTICLE I DEFINITIONS Section 1.01 Definitions ..................................................................................................................... 2 ARTICLE II LEASE OF PROPERTY; TERM Section 2.01 Lease of Property .......................................................................................................... 4 Section 2.02 Term; Occupancy .......................................................................................................... 4 ARTICLE III RENTAL PAYMENTS Section 3.01 Base Rental Payments ................................................................................................... 4 Section 3.02 Additional Rental Payments ......................................................................................... 5 Section 3.03 Fair Rental Value .......................................................................................................... 6 Section 3.04 Payment Provisions ....................................................................................................... 6 Section 3.05 Appropriations Covenant .............................................................................................. 6 Section 3.06 Rental Abatement .......................................................................................................... 6 ARTICLE IV MAINTENANCE, ALTERATIONS AND ADDITIONS Section 4.01 [Reserved] ..................................................................................................................... 7 Section 4.02 Maintenance and Utilities ............................................................................................. 7 Section 4.03 Additions to Property .................................................................................................... 7 Section 4.04 Installation of City’s Equipment ................................................................................... 7 ARTICLE V INSURANCE Section 5.01 Commercial General Liability and Property Damage Insurance; Workers’ Compensation Insurance ............................................................................................... 8 Section 5.02 Title Insurance .............................................................................................................. 9 Section 5.03 Additional Insurance Provision; Form of Policies ........................................................ 9 Section 5.04 Self-Insurance ............................................................................................................... 9 ARTICLE VI DEFAULTS AND REMEDIES Section 6.01 Defaults and Remedies ............................................................................................... 10 Section 6.02 Waiver ......................................................................................................................... 13 ARTICLE VII EMINENT DOMAIN; PREPAYMENT Section 7.01 Eminent Domain ......................................................................................................... 13 Section 7.02 Prepayment ................................................................................................................. 13 5.2.c Packet Pg. 111 TABLE OF CONTENTS (continued) Page ii 4849-6802-8385/200928-0001 ARTICLE VIII COVENANTS Section 8.01 Right of Entry ............................................................................................................. 14 Section 8.02 Liens ............................................................................................................................ 14 Section 8.03 Quiet Enjoyment ......................................................................................................... 14 Section 8.04 Authority Not Liable ................................................................................................... 15 Section 8.05 Assignment and Subleasing ........................................................................................ 15 Section 8.06 Title to Property .......................................................................................................... 16 Section 8.07 Authority’s Purpose .................................................................................................... 16 Section 8.08 Representations of the City ......................................................................................... 16 Section 8.09 Representation of the Authority .................................................................................. 16 Section 8.10 Environmental Compliance ........................................................................................ 16 Section 8.11 Covenant against Condemnation ................................................................................ 17 ARTICLE IX NO CONSEQUENTIAL DAMAGES; USE OF THE PROPERTY; SUBSTITUTION OR RELEASE Section 9.01 No Consequential Damages ........................................................................................ 17 Section 9.02 Use of the Property ..................................................................................................... 17 Section 9.03 Substitution or Release of the Property....................................................................... 18 ARTICLE X MISCELLANEOUS Section 10.01 Law Governing ........................................................................................................... 18 Section 10.02 Notices ........................................................................................................................ 18 Section 10.03 Validity and Severability ............................................................................................ 19 Section 10.04 Net-Net-Net Lease ...................................................................................................... 19 Section 10.05 Taxes ........................................................................................................................... 19 Section 10.06 Section Headings ........................................................................................................ 20 Section 10.07 Amendments ............................................................................................................... 20 Section 10.08 Assignment ................................................................................................................. 21 Section 10.09 Execution .................................................................................................................... 21 Signatures ................................................................................................................................... S-1 EXHIBIT A DESCRIPTION OF THE PROPERTY .................................................................... A-1 EXHIBIT B BASE RENTAL PAYMENT SCHEDULE ............................................................. B-1 5.2.c Packet Pg. 112 1 4849-6802-8385/200928-0001 LEASE AGREEMENT THIS LEASE AGREEMENT (this “Lease Agreement”) is executed and entered into as of June 1, 2021, by and between the CITY OF DIAMOND BAR (the “City”), a municipal corporation and general law city that is duly organized and existing under and by virtue of the Constitution and laws of the State of California, as sublessee, and the CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY (the “Authority”), a joint exercise of powers entity that is duly organized and existing under and by virtue of the laws of the State of California, as sublessor. RECITALS A. The Authority previously issued its Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (the “2002 Bonds”), which are currently outstanding in the aggregate principal amount of $7,830,000, in order to finance certain capital improvements of the City (the “2002 Project”). B. The Authority and the City have determined that it would be in the best interests of the City and residents of the City to authorize the preparation, sale and delivery by the Authority of the “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A” (the “Series 2021 Bonds”) for the purposes of refunding the 2002 Bonds and refinancing the 2002 Project, which Bonds will be payable from certain base rental payments (the “Base Rental Payments”) to be made by the City under this Lease Agreement. C. In connection with the foregoing, the City will lease certain real property of the City and the improvements located thereon, consisting of the Community/Senior Center at Summitridge Park (1600 Grand Avenue, Diamond Bar, California 91765) (collectively, the “Property”), to the Authority pursuant to a Ground Lease, dated as of the date hereof (the “Ground Lease”), by and between the City and the Authority, and the City will sublease the Property back from the Authority pursuant to this Lease Agreement. D. The Property is more particularly described in Exhibit A hereto. E. The City and the Authority have determined that it would be in the best interests of the City and the Authority to provide for the issuance of the Bonds pursuant to an Indenture, dated as of the date hereof (the “Indenture”), by and among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”). F. All rights to receive the Base Rental Payments have been assigned without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of the date he reof (the “Assignment Agreement”), by and between the Authority and the Trustee. G. All acts, conditions and things that are required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and enterin g into of this Lease Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease Agreement. In consideration of the mutual covenants hereinafter contained, the parties hereto agree as follows: 5.2.c Packet Pg. 113 2 4849-6802-8385/200928-0001 ARTICLE I DEFINITIONS Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Lease Agreement, have the meanings herein s pecified, which meanings shall be equally applicable to both the singular and plural forms of any of the terms herein defined. Capitalized terms that are not otherwise defined herein shall have the meanings assigned to such terms in the Indenture. “Additional Bonds” means bonds other than the Series 2021 Bonds issued under the Indenture in accordance with the provisions thereof. “Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.02. “Authority” means the City of Diamond Bar Public Financing Authority, a joint exercise of powers authority that is duly organized and existing under the laws of the State of California. “Base Rental Deposit Date” means the fifteenth (15th) day of the month preceding each Interest Payment Date. “Base Rental Payments” means all amounts payable to the Authority from the City as Base Rental Payments pursuant to Section 3.01(a). “Base Rental Payment Schedule” means the schedule of Base Rental Payments payable to the Authority from the City pursuant to Section 3.01(a) and attached hereto as Exhibit B. “Bonds” means the Series 2021 Bonds and any Additional Bonds. “City” means the City of Diamond Bar, a municipal corporation and general law city that is duly organized and existing under and by virtue of the Constitution and laws of the State of California. “Delivery Date” means June __, 2021. “Ground Lease” means the Ground Lease relating to the Property, dated as of the date hereof, by and between the City and the Authority, as originally executed and as it may from time to time be amended in accordance with to the provisions thereof and hereof. “Hazardous Materials” means flammable explosives, polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide, radon, petroleum products, asbestos or any asbestos containing materials, methane, radioactive materials, pollutants, hazardous materials, hazard ous wastes, hazardous, toxic or regulated substances or related materials, as defined in CERCLA, RCRA, CWA, CAA, TSCA and Title III, and the regulations promulgated pursuant thereto, and in all other federal, state or local environmental laws and regulations. “Indenture” means the Indenture relating to the Series 2021 Bonds, dated as of the date hereof, by and among the Authority, the City and the Trustee, as originally executed and as it may from time to time be amended or supplemented in accordance with the provisions thereof. 5.2.c Packet Pg. 114 3 4849-6802-8385/200928-0001 “Joint Powers Agreement” means the Joint Exercise of Powers Agreement, dated as of November 19, 2002, by and between the City and the Successor Agency to the Redevelopment Agency of the City of Diamond Bar, as successor the Redevelopment Agency of the City of Diamond Bar, as originally executed and as it may from time to time be amended in accordance with the provisions thereof, which agreement establishes the Authority. “Lease Agreement” means this Lease Agreement, as originally executed and as it may from time to time be amended in accordance with the provisions hereof. “Net Insurance Proceeds” means any insurance proceeds or condemnation award in excess of $50,000, paid with respect to any of the Property, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof. “Permitted Encumbrances” means, with respect to the Property, as of any particular time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to provisions of Article V hereof, permit to remain unpaid; (b) the Assignment Agreement; (c) this Lease Agreement; (d) the Ground Lease; (e) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or per fected in the manner prescribed by law as normally exist with respect to properties similar to the Property for the purposes for which it was acquired or is held by the City; (f) easements, rights of way, mineral rights, drilling rights and other rights (including but not limited to rights in cellular telephone network infrastructure on the Property), reservations, covenants, conditions or restrictions which exist of record as of the Delivery Date which the City certifies in writing will not affect the inte nded use of the Property or impair the security granted to the Trustee for the benefit of the Owners of the Bonds by the Indenture and the Assignment Agreement and to which the Authority and the City consent in writing; (g) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions existing on the Delivery Date and set forth in a title insurance policy with respect to the Property; and (h) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the Delivery Date which the City certifies in writing do not affect the intended use of the Property or impair the security granted to the Trustee for the benefit of the Owners of the Bonds by the Indenture and the Assignment Agreement and to which the Authority and the City consent in writing. “Property” means the real property that is described in Exhibit A, together with the improvements thereon. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments. “Rental Period” means the twelve-month period commencing on June 1 of each year during the term of this Lease Agreement; provided that the first Rental Period shall be the period from the Delivery Date through May 31, 2022. “Scheduled Termination Date” means June 1, 2033, unless extended or sooner terminated as provided in Section 2.02 hereof. “Series 2021 Bonds” means the City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A issued under the Indenture. 5.2.c Packet Pg. 115 4 4849-6802-8385/200928-0001 “Termination Date” means the Scheduled Termination Date, unless extended or sooner terminated as provided in Section 2.02. “Trustee” means the trustee appointed under the Indenture and referred to therein as the Trustee. ARTICLE II LEASE OF PROPERTY; TERM Section 2.01 Lease of Property. (a) The Authority hereby subleases to the City and the City hereby subleases from the Authority the Property, on the terms and conditions hereinafter set forth, subject to all Permitted Encumbrances. (b) The leasing of the Property by the City to the Authority pursuant to the Ground Lease shall not effect or result in a merger of the City’s leasehold estate pursuant to this Lease Agreement and its fee estate as lessor under the Ground Lease, and the Authority shall continue to have a leasehold estate in the Property pursuant to the Ground Lease throughout the term thereof and hereof. The leasehold interest granted by the City to the Authority pursuant to the Ground Lease is and shall be independent of this Lease Agreement; this Lease Agreement shall not be an assignment or surrender of the leasehold interest granted to the Authority under the Ground Lease. Section 2.02 Term; Occupancy. The term of this Lease Agreement shall commence on the Delivery Date and shall end on the Scheduled Termination Date, unless such term is extended or sooner terminated as hereinafter provided. If, on the Scheduled Termination Date, the Bonds shall not be fully paid, or provision therefor made in accordance with Article X of the Indenture, or the Indenture shall not be discharged by its terms, or if the Rental Payments shall remain due and payable or shall have been abated at any time and for any reason remain due and owing, then the term of this Lease Agreement shall be extended until the date upon which: (a) all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture; or (b) the Indenture shall be discharged by its terms and all Rental Payments shall have been paid in full. Notwithstanding the foregoing, the term of this Lease Agreement shall in no event be extended more than ten years beyond the Scheduled Termination Date, such extended date being the “Maximum Lease Term.” If prior to the Scheduled Termination Date, all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, the Indenture shall be discharged by its terms and all Rental Payments shall have been paid in full, and the term of this Lease Agreement shall end simultaneously therewith. ARTICLE III RENTAL PAYMENTS Section 3.01 Base Rental Payments. (a) Subject to the provisions hereof relating to a revision of the Base Rental Payment Schedule pursuant to subsection (b) of this Section, the City shall pay to the Authority, as 5.2.c Packet Pg. 116 5 4849-6802-8385/200928-0001 Base Rental Payments (subject to the provisions of Section 3.06 and Article VII) the amount at the times specified in the Base Rental Payment Schedule, a portion of which Base Rental Payments shall constitute principal, and a portion of which shall constitute interest. (b) Rental Payments, including Base Rental Payments, shall be paid by the City to the Authority for and in consideration of the right to use and occupy the Property and in consideration of the continued right to the quiet use and enjoyment thereof during each Rental Period for which such Rental Payments are to be paid. The obligation of the City to make the Base Rental Payments does not constitute a debt of the City or of the State of California, 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 or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged any form of taxation. (c) If the term of this Lease Agreement shall have been extended pursuant to Section 2.02 hereof, the obligation of the City to pay Rental Payments shall continue to and including the Base Rental Deposit Date preceding the date of termination of this Lease Agreement (as so extended pursuant to Section 2.02). Upon such extension, the Base Rental Payments shall be established so that they will be sufficient to pay all extended and unpaid Base Rental Payments; provided, however, that the Rental Payments payable in any Rental Period shall not exceed the annual fair rental value of the Property. Section 3.02 Additional Rental Payments. The City shall also pay, as Additional Rental Payments, such amounts as shall be required for the payment of the following: (a) all taxes and assessments of any type or nature charged to the Authority or the City or affecting the Property or the respective interests or estates of the Authority or the City therein; (b) all reasonable administrative costs of the Authority relating to the Property including, but without limiting the generality of the foregoing, salaries, wages, fees and expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture, fees of auditors, accountants, attorneys or engineers, and all other necessary and reasonable administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Indenture or th is Lease Agreement or to defend the Authority and its members, officers, agents and employees; (c) insurance premiums for all insurance required pursuant to Article V hereof; (d) any amounts with respect to this Lease Agreement or the Bonds required to be rebated to the federal government in accordance with Section 148(f) of the Code; and (e) all other payments required to be paid by the City under the provisions of this Lease Agreement or the Indenture. Amounts constituting Additional Rental Payments payable hereunder shall be paid by the City directly to the person or persons to whom such amounts shall be payable. The City shall pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any 5.2.c Packet Pg. 117 6 4849-6802-8385/200928-0001 other case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof. Section 3.03 Fair Rental Value. The parties hereto have agreed and determined that the annual fair rental value of the Property is not less than the maximum annual Rental Payments due in any year. In making such determination of fair rental value, consideration has been given to the uses and purposes that may be served by the Property and the benefits therefrom which will accrue to the City and the general public. Payments of the Rental Payments for the Property during each Rental Period shall constitute the total rental for said Rental Period. Section 3.04 Payment Provisions. Each installment of Base Rental Payments payable hereunder shall be paid in lawful money of the United States of America to or upon the order of the Authority at the principal office of the Trustee in Los Angeles, California, or such other place or entity as the Authority or Trustee shall designate. Each Base Rental Payment shall be deposited with the Trustee no later than the Base Rental Deposit Date preceding the Interest Payment Date on which such Base Rental Payment is due. Any Base Rental Payment which shall not be paid by the City when due and payable under the terms of this Lease Agreement shall bear interest from the date when the same is due hereunder until the same shall be paid at the rate equal to the highest rate of interest on any of the Outstanding Bonds. Notwithstanding any dispute between the Authority and the City, the City shall make all Rental Payments when due without deduction or offset of any kind and shall not withhold any Rental Payments pending the final resolution of such dispute. In the event of a determination that the City was not liable for said Rental Payments or any portion thereof, said payments or excess of payments, as the case may be, shall be credited against subsequent Rental Payments due hereunder or refunded at the time of such determination. Amounts required to be deposited by the City with the Trustee pursuant to this Section on any date shall be reduced to the extent of available amounts on deposit in the Base Rental Payment Fund, the Interest Fund or the Principal Fund. Section 3.05 Appropriations Covenant. The City covenants to take such action as may be necessary to include all Rental Payments due hereunder as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Payments. The City will deliver to the Authority and the Trustee a Written Certificate of the City stating that its final annual budget includes all Base Rental Payments due in such fiscal year within ten days after the filing or adoption thereof. The covenants on the part of the City herein c ontained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the City to take such action and do such things as are 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 Agreement agreed to be carried out and performed by the City. Section 3.06 Rental Abatement. Except as otherwise specifically provided in this Section, during any period in which, by reason of material damage to, or destruction or condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property, Rental Payments shall be abated proportionately, and the City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate th is Lease Agreement by virtue of any such interference, and this Lease Agreement shall continue in full force and effect. The amount of such abatement shall be agreed upon by the City and the Authority; provided, however, that the Rental Payments due for any Rental Period shall not exceed the annual fair rental value of that portion of the Property available for use and occupancy by the City during such Rental Period. The City and the 5.2.c Packet Pg. 118 7 4849-6802-8385/200928-0001 Authority shall calculate such abatement and shall provide the Trustee with a certificate setting forth such calculation and the basis therefor. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the Property, ending with the substantial completion of the work of repair or replacement of the Property, or the portion thereof so damaged or destroyed; and the term of this Lease Agreement shall be extended as provided in Section 2.02 hereof, except that the term shall in no event be extended beyond the Maximum Lease Term . Notwithstanding the foregoing, to the extent that moneys are available for the payment of Rental Payments in any of the funds and accounts established under the Indenture, Rental Payments shall not be abated as provided above but, rather, shall be payabl e by the City as a special obligation payable solely from said funds and accounts. ARTICLE IV MAINTENANCE, ALTERATIONS AND ADDITIONS Section 4.01 [Reserved]. Section 4.02 Maintenance and Utilities. Throughout the term of this Lease Agreement, as part of the consideration for rental of the Property, all improvement, repair and maintenance of the Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of all utility services supplied to the Property, which may include, without limitati on, janitor service, security, power, gas, telephone, light, heating, ventilation, air conditioning, water and all other utility services, and shall pay for or otherwise arrange for payment of the cost of the repair and replacement of the 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 Rental Payments, the Authority agrees to provide only the Property. Section 4.03 Additions to Property. Subject to Section 8.02, the City and any sublessee shall, at its own expense, have the right to make additions, modifications and improvements to the Property. To the extent that the removal of such additions, modifications or improvements would not cause material damage to the Property, such additions, modifications and improvements shall remain the sole property of the City or such sublessee, and neither the Authority nor the Trustee shall have any interest therein. Such additions, modifications and improvements shall not in any way dam age the Property or cause it to be used for purposes other than those authorized under the provisions of state and federal law; and the Property, upon completion of any additions, modifications and improvements made pursuant to this Section, shall be of a value which is at least equal to the value of the Property immediately prior to the making of such additions, modifications and improvements. Section 4.04 Installation of City’s Equipment. The City and any sublessee may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed items of equipment or other personal property in or upon the Property. All such items shall remain the sole property of the City or such sublessee, and neither the Authority nor the Trust ee shall have any interest therein. The City or such sublessee may remove or modify such equipment or other personal property at any time, provided that such party shall repair and restore any and all damage to the Property resulting from the installation, modification or removal of any such items. Nothing in this Lease Agreement shall prevent the City or any sublessee from purchasing items to be installed pursuant to this Section under a conditional sale or lease purchase contract, or subject to a vendor ’s 5.2.c Packet Pg. 119 8 4849-6802-8385/200928-0001 lien or security agreement as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest shall attach to any part of the Property. ARTICLE V INSURANCE Section 5.01 Commercial General Liability and Property Damage Insurance; Workers’ Compensation Insurance. (a) The City shall maintain or cause to be maintained, throughout the term of this Lease Agreement, a standard commercial general liability insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents and employees. 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 use or ownership of the Property. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in a single accident or event, and in a m inimum amount of $500,000 for damage to property resulting from a single accident or event. Such commercial general liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried or required to be carried by the City, and may be maintained in whole or in part in the form of self -insurance by the City, provided that such self-insurance complies with the provisions of Section 5.04. The Net Insurance Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the Net Insurance Proceed s of such insurance shall have been paid. (b) The City shall maintain or cause to be maintained, throughout the term of this Lease Agreement, workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State of California t o insure employers against liability for compensation under the California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Property and to cover full liability for compensation under any such act; provided, however, that the City’s obligations under this subsection may be satisfied by self -insurance, provided that such self-insurance complies with the provisions of Section 5.04. (c) The City shall maintain or cause to be maintained, fire, lightning and special extended coverage insurance (which shall include coverage for vandalism and malicious mischief, but need not include coverage for earthquake damage) on all improvements constituting any part of the Property in an amount equal to the greater of 100% of the replacement cost of such improvements or 100% of the outstanding principal amount of the Bonds. The City has an insurance policy which provides replacement cost coverage. All insurance required to be maintained pursuant to this subsection may be subject to a deductible in an amount not to exceed $500,000. The City’s obligations under this subsection may be satisfied by self -insurance, provided that such self-insurance complies with the provisions of Section 5.04. (d) The City shall maintain rental interruption insurance to cover the Authority’s loss, total or partial, of Base Rental Payments resulting from the loss, total or partial, of the use of 5.2.c Packet Pg. 120 9 4849-6802-8385/200928-0001 any part of the Property as a result of any of the hazards required to be covered pursuant to subsection (c) of this Section in an amount sufficient at all times to pay an amount not less than the product of two times the maximum amount of Base Rental Payments scheduled to be paid during any Rental Period. The City shall not be permitted to self-insure its obligation under this subsection. (e) The insurance required by this Section shall be provided by reputable insurance companies with claims paying abilities determined, in the r easonable opinion of a professionally certified risk manager or an independent insurance consultant, to be adequate for the purposes hereof. Section 5.02 Title Insurance. The City shall provide, at its own expense, one or more CLTA or ALTA title insurance policies for the Property, in the aggregate amount of not less than the aggregate principal amount of the Bonds. Such policy or policies shall insure: (a) the fee interest of the City in the Property; (b) the Authority’s ground leasehold estate in the Property under the Ground Lease; and (c) the City’s leasehold estate hereunder in the Property, subject only to Permitted Encumbrances. All Net Insurance Proceeds received under said policy or policies shall be deposited with the Trustee and applied as provided in Section 5.04 of the Indenture. So long as any of the Bonds remain Outstanding, each policy of title insurance obtained pursuant to the Indenture or this Lease Agreement or required thereby or hereby shall provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Bond Owners. Section 5.03 Additional Insurance Provision; Form of Policies. The City shall pay or cause to be paid when due the premiums for all insurance policies required by Section 5.01 hereof, and shall promptly furnish or cause to be furnished evidence of such payments to the Trustee. All such policies shall provide that the Trustee shall be given 30 days ’ notice of the expiration thereof or any intended cancellation thereof. The Trustee shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee. The City shall cause to be delivered to the Trustee on or before November 1 each year, commencing November 1, 2021 a Written Certificate of the City stating that such policies are in full force and effect and that the City is in full compliance with the requirements of this Article. The Trustee shall be entitled to rely upon said Written Certificate of the City as to the City’s compliance with this Article. The Trustee shall not be responsible for the sufficiency of coverage or amounts of such policies. Section 5.04 Self-Insurance. Insurance provided through a California joint powers authority of which the City is a member or with which the City contracts for insurance shall be deemed to be self-insurance for purposes hereof. Any self-insurance maintained by the City pursuant to this Article shall comply with the following terms: (a) the self-insurance program and any self-insured retentions maintained by the City shall be approved in writing by the City’s Risk Management Department, a professionally certified risk manager or an independent insurance consultant; (b) the self-insurance program shall include an actuarially sound claims reserve fund out of which each self-insured claim shall be paid, the adequacy of each such fund shall be evaluated on an annual basis by the City’s Risk Management Department, a professionally certified risk manager or an independent insurance consultant and any deficiencies in any self -insured claims 5.2.c Packet Pg. 121 10 4849-6802-8385/200928-0001 reserve fund shall be remedied in accordance with the recommendation of the City’s Risk Management Department, a professionally certified risk manager or an independent insurance consultant, as applicable; and (c) in the event that the self-insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by a professionally certified risk manager or by an independent insurance consultant, shall be maintained. ARTICLE VI DEFAULTS AND REMEDIES Section 6.01 Defaults and Remedies. (a) (i) If the City shall fail: (A) to pay any Rental Payment payable hereunder when the same becomes due and payable, time being expressly declared to be of the essence in this Lease Agreement; or (B) to keep, observe or perform any other term, covenant or condition contained herein or in the Indenture to be kept or performed by the City; or (ii) upon the happening of any of the events specified in this subsection or in subsection (b) of this Section, the City shall be deemed to be in default hereunder and it shall be lawful for the Authority to exercise any and all remedies available pursuant to law or granted pursuant to this Lease Agreement. The City shall in no event be in default in the observance or performance of any covenant, condition or agreement in this Lease Agreement on its part to be observed or performed, other than as referred to in clause (i)(A) or (ii) of the preceding sentence, unless the City shall have failed, for a period of 30 days or such additional time as is reasonably required, to correct any such default after notice by the Authority to the City properly specifying wherein the City has failed to perform any such covenant, conditio n or agreement. Upon any such default, the Authority, in addition to all other rights and remedies it may have at law, shall have the option to do any of the following: (1) To terminate this Lease Agreement in the manner hereinafter provided on account of default by the City, notwithstanding any re -entry or re-letting of the Property as hereinafter provided for in subparagraph (2) hereof, and to re -enter the Property and remove all persons in possession thereof and all personal property whatsoever situated upon the Property and place such personal property in storage in any warehouse or other suitable place, for the account of and at the expense of the City. In the event of such termination, the City agrees to surrender immediately possession of the Property, without let or hindrance, and to pay the Authority all damages recoverable at law that the Authority may incur by reason of default by the City, including, without limitation, any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon the Property and removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions here in contained. Neither notice to pay Rental Payments or to deliver up possession of the Property given pursuant to law nor any entry or re-entry by the Authority nor any proceeding in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Property nor the appointment of a receiver upon initiative of the Authority to protect the Authority’s interest under this Lease Agreement shall of itself operate to terminate this Lease Agreement , and no termination of this Lease Agreement on account of default by the City shall be or become effective by operation of law or acts of the parties hereto, 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 Agreement. The City covenants and agrees that no surrender of the Property or of the 5.2.c Packet Pg. 122 11 4849-6802-8385/200928-0001 remainder of the term hereof or any termination of this Lease Agreement shall be valid in any manner or for any purpose whatsoever unless stated by the Authority by such written notice. (2) Without terminating this Lease Agreement: (x) to collect each installment of Rental Payments as the same become due and enforce any other terms or provisions hereof to be kept or performed by the City, regardless of whether or not the City has abandoned the Property; or (y) to exercise any and all rights of entry and re -entry upon the Property. In the event that the Authority does not elect to terminate this Lease Agreement in the manner provided for in subparagraph (1) hereof, the City shall remain liable and agrees to keep or perform all covenants and conditions herein contained to be kept or performed by the City and, if the Property is not re -let, to pay the full amount of the Rental Payments to the end of the term of this Lease Agreement or, in the event that the Property is re-let, to pay any deficiency in Rental Payments that results therefrom; and further agrees to pay said Rental Payments and/or Rental Payment deficiency pu nctually at the same time and in the same manner as hereinabove provided for the payment of Rental Payments hereunder, notwithstanding the fact that the Authority may have received in previous years or may receive thereafter in subsequent years Rental Paym ents in excess of the Rental Payments herein specified, and notwithstanding any entry or re -entry by the Authority or suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Property. Should the Authority elect to re-enter as herein provided, the City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City to re-let the Property, or any part thereof, from time to time, either in the Authority’s name or otherwise, upon such terms and conditions and for such use and period as the Authority may deem advisable and to remove all persons in possession thereof and all personal property whatsoever situated upon the Property and to place such personal property in storage in any warehouse or other suitable place, for the account of and at the expense of the City, and the City hereby indemnifies and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising out of, in connecti on with, or incident to any such re-entry upon and re-letting of the Property and removal and storage of such 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 Agreement constitute full and sufficient notice of the right of the Authority to re-let the Property in the event of such re-entry without effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority in effecting such re-letting shall constitute a surrender or termination of this Lease Agreement irrespective of the use or the term for which such re-letting is made or the terms and conditions of such re-letting, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease Agreement shall vest in the Authority to be effected in the sole and exclusive manner provided for in subparagraph (1) hereof. The City further agrees to pay the Authority the cost of any alterations or additions to the Property necessary to place the Property in condition for re-letting immediately upon notice to the City of the completion and installation of such additions or alterations. The City hereby waives any and all claims for damages c aused or which may be caused by the Authority in re-entering and taking possession of the Property as herein provided and all claims for damages that may result from the destruction of or injury to the Property and all claims for damages to or loss of any property belonging to the City, or any other person, that may be in or upon the Property. (b) If: (i) the City’s interest in this Lease Agreement or any part thereof is assigned or transferred, either voluntarily or by operation of law or otherwise, without the written consent of the Authority and, as hereinafter provided for; or (ii) the City or any assignee shall file any petition or institute any proceeding under any act or acts, state or federal, dealing with or relating to 5.2.c Packet Pg. 123 12 4849-6802-8385/200928-0001 the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or wher eby the City asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of the City’s debts or obligations, or offers to the City’s creditors to elect a composition or extension of time to pay the City’s debts or asks, seek s or prays for reorganization or to effect a plan of reorganization, or for a readjustment of the City’s debts, or for any other similar relief, or if any such petition or any such proceedings of the same or similar kind or character be filed or be institu ted or taken against the City, or if a receiver of the business or of the property or assets of the City shall be appointed by any court, except a receiver appointed at the instance or request of the Authority, or if the City shall make a general assignment for the benefit of the City’s creditors; or (iii) the City shall abandon or vacate the Property; or (iv) the City shall default under the Ground Lease, then the City shall be deemed to be in default hereunder. (c) In addition to the other remedies set forth in this Section, upon the occurrence of an event of default, the Authority and its assignee shall be entitled to proceed to protect and enforce the rights vested in the Authority and its assignee by this Lease Agreement or by law. The provisions of this Lease Agreement and the duties of the City and of its city council, officers or employees shall be enforceable by the Authority or its assignee by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction. Without limi ting the generality of the foregoing, the Authority and its assignee shall have the right to bring the following actions: (i) Accounting. By action or suit in equity to require the City and its city council, officers and employees and its assigns to account as the trustee of an express trust. (ii) Injunction. By action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of the Authority or its assignee. (iii) Mandamus. By mandamus or other suit, action or proceeding at law or in equity to enforce the Authority’s or its assignee’s rights against the City (and its city council, officers and employees) and to compel the City to perform and carry out its duties and obligations under the law and its covenants and agreements with the City as provided herein. Each and all of the remedies given to the Authority hereunder or by any law now or hereafter enacted are cumulative and the single or partial exercise of any right, power or privilege hereunder shall not impair the right of the Authority to the further exercise thereof or the exercise of any or all other rights, powers or privileges. The term “re-let” or “re-letting” as used in this Section shall include, but not be limited to, re-letting by means of the operation by the Authority of the Property. If any statute or rule of law validly shall limit the remed ies given to the Authority hereunder, the Authority nevertheless shall be entitled to whatever remedies are allowable under any statute or rule of law. In the event that the Authority shall prevail in any action brought to enforce any of the terms and provisions of this Lease Agreement, the City agrees to pay a reasonable amount as and for attorney’s fees incurred by the Authority in attempting to enforce any of the remedies available to the Authority hereunder. Notwithstanding anything to the contrary cont ained in this Lease Agreement, the Authority shall have no right upon a default hereunder by the City to accelerate Rental Payments. 5.2.c Packet Pg. 124 13 4849-6802-8385/200928-0001 (d) Notwithstanding anything to the contrary contained in this Lease Agreement, the termination of this Lease Agreement by the Authority and its assignees on account of a default by the City under this Section shall not effect or result in a termination of the Ground Lease. Section 6.02 Waiver. Failure of the Authority to take advantage of any default on the part of the City shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may grow up between the parties in the course of administering this instrument be construed to waive or to lessen the right of the Authority to insist upon performance by the City of any term, covenant or condition hereof, or to exercise any rights given the Authority on account of such default. A waiver of a particular default shall not be deemed to be a waive r of any other default or of the same default subsequently occurring. The acceptance of Rental Payments hereunder shall not be, or be construed to be, a waiver of any term, covenant or condition of this Lease Agreement. ARTICLE VII EMINENT DOMAIN; PREPAYMENT Section 7.01 Eminent Domain. If all of the Property (or portions thereof such that the remainder is not usable for public purposes by the City) shall be taken under the power of eminent domain, the term hereof shall cease as of the day that possession shall be so taken. If less than all of the Property shall be taken under the power of eminent domain and the remainder is usable for public purposes by the City at the time of such taking, then this Lease Agreement shall continue in full force and effect as to such remainder, and the parties waive the benefits of any law to the contrary, and in such event there shall be a partial abatement of the Rental Payments in accordance with the provisions of Section 3.06. So long as any Bonds shall be Outstanding, any award made in eminent domain proceedings for the taking of the Property, or any portion thereof, shall be paid to the Trustee and applied to the redemption of Bonds as provided in subsection (a) of Section 4.01 of the Indenture, in the corresponding provisions of any Supple mental Indenture pursuant to which Additional Bonds are issued and in Section 5.03 of the Indenture. Any such award made after all of the Bonds, and all other amounts due under the Indenture and hereunder, have been fully paid, shall be paid to the Authority and to the City as their respective interests may appear. Section 7.02 Prepayment. (a) The City may prepay all or a portion of the Base Rental Payments which are payable after June 1, 20__ from any source of available funds, on ____ 1, 20__ or any date thereafter, by paying: (i) all or a portion, as selected by the City, of the principal components of such Base Rental Payments; and (ii) the accrued but unpaid interest component of such Base Rental Payments to be prepaid to the date of such prepayment. (b) The City may prepay, from any source of available funds, all or any portion of the Base Rental Payments by depositing with the Trustee moneys or securities as provided, and subject to the terms and conditions set forth, in Article X of the Indenture in an amount that is sufficient to make such Base Rental Payments when due or to make such Base Rental Payments through a specified date on which the City has a right to prepay such Base Rental Payments pursuant to subsection (a) of this Section, and to prepay such Base Rental Payments on such prepayment date, at a prepayment price determined in accordance with subsection (a) of this Section. 5.2.c Packet Pg. 125 14 4849-6802-8385/200928-0001 (c) If less than all of the Base Rental Payments are prepaid pursuant to this Section then, as of the date of such prepayment pursuant to subsection (a) of this Section, or the date of a deposit pursuant to subsection (b) of this Section, the principal and interest components of such Base Rental Payments shall be recalculated by the City and transmitted to the Trustee in order to take such prepayment into account. The City agrees that if, following a partial prepayment of such Base Rental Payments, the Property is damaged or destroyed or taken by eminent domain, or a defect in title to the Property is discovered, the City shall not be entitled to, and by such prepayment waives the right of, abatement of such prepaid Base Rental Payments and the City shall not be entitled to any reimbursement of such Base Rental Payments. (d) If all of the Base Rental Payments are prepaid in accordance with the provisions of this Lease Agreement then, as of the date of such prepayment pursuant to subsection (a) of this Section and, if applicable, the corresponding provisions hereof relating to the prepayment of Base Rental Payments attributable to Additional Bonds, or de posit pursuant to subsection (b) of this Section and, if applicable, such corresponding provisions, and payment of all other amounts owed under this Lease Agreement, the term of this Lease Agreement shall be terminated. (e) Prepayments of Base Rental Payments attributable to the Series 2021 Bonds and made pursuant to this Section shall be applied to the redemption of the Series 2021 Bonds as directed by the City and as provided in Section 4.01 of the Indenture. ARTICLE VIII COVENANTS Section 8.01 Right of Entry. The Authority and its assignees shall have the right to enter upon and to examine and inspect the Property during reasonable business hours (and in emergencies at all times) for any purpose connected with the Authority’s rights or obligations under this Lease Agreement, and for all other lawful purposes. Section 8.02 Liens. In the event that the City shall at any time during the term of this Lease Agreement cause any changes, alterations, additions, improvements, or other work to be done or performed or materials to be supplied, in or upon the Property, the City shall pay, when due, all sums of money that may become due for, or purporting to be for, any labor, services, materials, supplies or equipment furnished or alleged to have been furnished to or for the City in, upon or about the Property and which may be secured by a mechanic ’s, materialmen’s or other lien against the Property or the Authority’s interest therein, and will cause each such lien to be fully discharged and released at the time that the performance of any obligation secured by any such lien matures or becomes due, except that, if the City desires to contest any such lien, it may do so as long as such contestment is in good faith. If any such lien shall be reduced to final judgment and such judgment or such process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the City shall forthwith pay and discharge said judgment. Section 8.03 Quiet Enjoyment. The parties hereto mutually covenant that the City, by keeping and performing the covenants and agreements that are contained herein, shall at all times during the term of this Lease Agreement peaceably and quietly have, hold and enjoy the Property without suit, trouble or hindrance from the Authority. 5.2.c Packet Pg. 126 15 4849-6802-8385/200928-0001 Section 8.04 Authority Not Liable. The Authority and its directors, officers, agents and employees shall not be liable to the City or to any other party whomsoever for any death, injury or damage that may result to any person or property by or from any cause whatsoever in, on or ab out the Property. To the extent permitted by law, the City shall, at its expense, indemnify and hold the Authority and the Trustee and all directors, members, officers, agents and employees thereof harmless against and from any and all claims by or on beh alf of any person, firm, corporation or governmental authority arising from the acquisition, construction, occupation, use, operation, maintenance, possession, conduct or management of or from any work done in or about the Property or from the subletting of any part thereof, including any liability for violation of conditions, agreements, restrictions, laws, ordinances, or regulations affecting the Property or the occupancy or use thereof, but excepting the negligence or willful misconduct of the persons or entity seeking indemnity. The City also covenants and agrees, at its expense, to pay and indemnify and save the Authority and the Trustee and all directors, officers and employees thereof harmless against and from any and all claims arising from: (a) any condition of the Property and the adjoining sidewalks and passageways; (b) any breach or default on the part of the City in the performance of any covenant or agreement to be performed by the City pursuant to this Lease Agreement; (c) any act or negligence of licensees in connection with their use, occupancy or operation of the Property; or (d) any accident, injury or damage whatsoever caused to any person, firm or corporation in or about the Property or upon or under the sidewalks and from and against all costs, reasonable counsel fees, expenses and liabilities incurred in any action or proceeding brought by reason of any claim referred to in this Section, but excepting the negligence or willful misconduct of the person or entity seeking indemnity. In the event that any action or proceeding is brought against the Authority or the Trustee or any director, member, officer or employee thereof by reason of any such claim, the City, upon notice from the Authority or the Trustee or such director, member, officer employee thereof, covenants to resist or defend such action or proceeding by counsel reasonably satisfactory to the Authority or the Trustee or such director, member, officer or employee thereof. Section 8.05 Assignment and Subleasing. Neither this Lease Agreement nor any interest of the City hereunder shall be sold, mortgaged, pledged, assigned or transferred by the City by voluntary act or by operation by law or otherwise. The Property may not be subleased in whole or in part by the City without the prior written consent of the Authority. Any such sublease shall be subject to all of the following conditions: (a) this Lease Agreement and the obligation of the City to make all Rental Payments hereunder shall remain the primary obligation of the City; (b) the City shall, 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 shall cause the Property to be used for a purpose other than a governmental or proprietary function authorized under the provisions of the Constitution and laws of the State of California; (d) any sublease of the Property by the City shall explicitly provide that such sublease is subject to all rights of the Authority under this Lease Agreement, including the right to re-enter and re-let the Property or terminate this Lease Agreement upon a default by the City; and 5.2.c Packet Pg. 127 16 4849-6802-8385/200928-0001 (e) the City shall furnish the Authority and the Trustee with an Opinion of Counsel to the effect that such sublease will not, in and of itself, cause the interest on the Bonds to be included in gross income for federal income tax purposes. Section 8.06 Title to Property. Upon the termination or expiration of this Lease Agreement (other than as provided in Sections 6.01 and 7.01), and the first date upon which the Bonds are no longer Outstanding, all right, title and interest in and to the Property shall vest in the City. Upon any such termination or expiration, the Authority shall execute such conveyances, deeds and other documents as may be necessary to effect such vesting of record. Section 8.07 Authority’s Purpose. The Authority covenants that, prior to the discharge of this Lease Agreement and the Bonds, it will not engage in any activities that are inconsistent with the purposes for which the Authority is organized, as set forth in the Joint Powers Agreement. Section 8.08 Representations of the City. The City represents and warrants to the Authority that: (a) the City has the full power and authority to enter into, to execute and to deliver this Lease Agreement and the Indenture, and to perform all of its duties and obligations hereunder and thereunder, and has duly authorized the execution and delivery of this Lease Agreement and the Indenture; and (b) the Property will be used in the performance of essential governmental functions. Section 8.09 Representation of the Authority. The Authority represents and warrants to the City that the Authority has the full power and authority to enter into, to execute and to deliver this Lease Agreement, the Assignment Agreement and the Indenture, and to perform all of its duties and obligations hereunder and thereunder, and has duly authorized the execution and delivery of this Lease Agreement, the Assignment Agreement and the Indenture. Section 8.10 Environmental Compliance. (a) The City will not use or permit the Property or any part thereof to be used to generate, manufacture, refine, treat, store, handle, transport or dispose of, transfer, produce or process Hazardous Materials, except, and only to the extent, if necessary to maintain the improvements on the Property or conduct lawful activities of the City on the Property and then, only in compliance with all federal, state and local laws and regulations, now or later in effect, with respect to Hazardous Materials, nor will it permit, as a result of any intentional or unintentional act or omission on its part or by any tenant, subtenant, licensee, guest, invitee, contractor, employee and agent, th e storage, transportation, disposal or use of Hazardous Materials or the release or threat of release of Hazardous Materials on, from or beneath the Property or onto any other property excluding, however, those Hazardous Materials in those amounts ordinarily found in the inventory of a municipal government, the use, storage, treatment, transportation and disposal of which is in compliance with all environmental regulations. (b) The City will comply with, and will cause all tenants, subtenants, licensees, guests, invitees, contractors, employees and agents on the Property to comply with, all environmental regulations, and will keep the Property free and clear of any liens imposed pursuant thereto; provided, however, that notwithstanding that a portion of the foregoing covenant is limited to the City’s use of its best efforts, the City will remain solely responsible for ensuring such compliance and such limitation will not diminish or affect in any way the City’s environmental compliance obligations as provided in this Lease Agreement. Upon receipt of any notice from any person with regard to the release of Hazardous Materials on, from or beneath the Property, the City will give 5.2.c Packet Pg. 128 17 4849-6802-8385/200928-0001 prompt written notice thereof to the Trustee prior to the expiration of any period in which to respond to such notice under any environmental regulation. (c) The City will, to the extent permitted by law, defend, indemnify and hold harmless the Trustee, the Series 2021 Bond Owners, their partners, depositors and each of their respective employees, agents, officers, directors, trustees, successors and assigns, from and against any claims, demands, penalties, fines, attorneys’ fees (including, without limitation, attorneys’ fees and expenses incurred to enforce the indemnification contained in this Section 8.10), consultants’ fees, investigation and laboratory fees, liabilities, settlements, court costs, damages, losses, costs or expenses of whatever kind or nature, known or unknown, contingent or otherwise, occurring in whole or in part, arising out of, or in any way related to: (i) the disposal, release, threat of release, discharge, storage or transportation of any Hazardous Materials on, from or beneath the Property; (ii) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials; (iii) any lawsuit brought or threatened, settlement reached or governmental order relating to Hazardous Materials on, from or beneath the Property; (iv) any violation of environmental regulations or Sections 8.10(a) or (b) by the City or any of its agents, tenants, employees, contractors, licensees, guests, subtenants or invitees; and (v) the imposition of any governmental lien for the recovery of environmental cleanup or removal costs. To the extent that the City is strictly liable under any environmental regulation, its obligation to the Series 2021 Bond Owners and the other indemnitees under the foregoing indemnification will likewise be without regard to fault on its part with respect to the violation of any environmental regulation which results in liability to any indemnitee. The foregoing obligations and liabilities under will survive the payment and satisfaction of all Bonds, and with regard to the Trustee the resignation and removal of the Trustee. Section 8.11 Covenant against Condemnation. The City hereby covenants and agrees, to the extent that it may lawfully do so, that so long as any of the Bonds remain Outstanding and unpaid, the City will not exercise the power of condemnation with respe ct to the Property. The City further covenants and agrees, to the extent that it may lawfully do so, that if for any reason the foregoing covenant is determined to be unenforceable or if the City should fail or refuse to abide by such covenant and condemns the Property, then the appraised value of the Property will not be less than the greater of: (a) if such Bonds are then subject to redemption, the principal and interest components of the Bonds outstanding through the date of their redemption; or (b) if such Bonds are not then subject to redemption, the amount necessary to defease such Bonds to the first available redemption date in accordance with the Indenture. ARTICLE IX NO CONSEQUENTIAL DAMAGES; USE OF THE PROPERTY; SUBSTITUTION OR RELEASE Section 9.01 No Consequential Damages. In no event shall the Authority or the Trustee be liable for any incidental, indirect, special or consequential damage in connection with or arising out of this Lease Agreement or the City’s use of the Property. Section 9.02 Use of the Property. The City will not use, operate or maintain the Property improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by this Lease Agreement. In addition, the City agrees to comply in all respects (including, without limitation, with respect to the use, maintenance and operation of the Property) 5.2.c Packet Pg. 129 18 4849-6802-8385/200928-0001 with all laws of the jurisdictions in which its operations may extend and any legislative, executive, administrative or judicial body exercising any power or jurisdiction over the Property; provided, however, that the City may contest in good faith the validity or application of any such law or rule in any reasonable manner which does not, in the opinion of the Authority, adversely affect the estate of the Authority in and to any of the Property or its interest or rights under this Lease Agreement. Section 9.03 Substitution or Release of the Property. The City shall have the right to substitute alternate real property for any portion of the Property or to release a portion of the Prop erty from this Lease Agreement. All costs and expenses incurred in connection with such substitution or release shall be borne by the City. Notwithstanding any substitution or release of Property pursuant to this subsection, there shall be no reduction in or abatement of the Base Rental Payments due from the City hereunder as a result of such substitution or release. Any such substitution or release of any portion of the Property shall be subject to the following specific conditions, which are hereby made conditions precedent to such substitution or release: (a) The City shall have delivered a Written Certificate to the Trustee setting forth its findings that the Property, as constituted after such substitution or release : (i) has an annual fair rental value at least equal to the maximum Base Rental Payments payable by the City in any Rental Period; and (ii) has a useful life in excess of the final maturity of any Outstanding Bonds; (b) the City shall have obtained or caused to be obtained a CLTA or ALTA title insurance policy or policies with respect to any substituted property in the amount at least equal to the aggregate principal amount of any Outstanding Bonds of the type and with the endorsements described in Section 5.02 hereof; (c) the City shall have provided the Trustee with an Opinion of Counsel to the effect that such substitution or release will not, in and of itself, cause the interest on the Bonds to be included in gross income for federal income tax purposes; (d) the City, the Authority and the Trustee shall have executed, and the City shall have caused to be recorded with the Los Angeles County Recorder, any document necessary to reconvey to the City the portion of the Property being released and to include any substituted real property in the description of the Property contained herein and in the Ground Lease; and (e) the City shall have provided notice of such substitution to each rati ng agency then rating the Bonds. ARTICLE X MISCELLANEOUS Section 10.01 Law Governing. THIS LEASE AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY THE PROVISIONS HEREOF AND BY THE LAWS OF THE STATE OF CALIFORNIA AS THE SAME FROM TIME TO TIME EXIST. Section 10.02 Notices. All written notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: 5.2.c Packet Pg. 130 19 4849-6802-8385/200928-0001 If to the City: City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 Attention: City Manager If to the Authority: City of Diamond Bar Public Financing Authority c/o City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 Attention: Executive Director Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed: (a) if personally served or delivered, upon delivery; (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender’s receipt of an appropriate answerback or other written acknowledgment; (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail; (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier; or (e) if given by any other means, upon delivery at the address specified in this Section. Section 10.03 Validity and Severability. If for any reason this Lease Agreement shall be held by a court of competent jurisdiction to be void, voidable or unenforceable by the Authority or by the City, or if for any reason it is held by such a court that any of the covenants and conditions of the City hereunder, including the covenant to pay Rental Payments, is unenforceable for the full term hereof; then and in such event this Lease Agreement is and shall be deemed to be a Lease Agreement under which the Rental Payments are to be paid by the City annually in consideration of the right of the City to possess, occupy and use the Property, and all of the terms, provisions and conditions of this Lease Agreement, except to the extent that such terms, pro visions and conditions are contrary to or inconsistent with such holding, shall remain in full force and effect. Section 10.04 Net-Net-Net Lease. This Lease Agreement shall be deemed and construed to be a “net-net-net lease” and the City hereby agrees that the Rental Payments shall be an absolute net return to the Authority, free and clear of any expenses, charges or set -offs whatsoever and notwithstanding any dispute between the City and the Authority. Section 10.05 Taxes. The City shall pay or cause to be paid all taxes and assessments of any type or nature charged to the Authority or affecting the Property or the respective interests or estates therein; provided, however, 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 be obligated to pay only such installments as are required to be paid during the term of this Lease Agreement as and when the same become due. The City or any sublessee may, at the City’s or such sublessee’s 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 or the Trustee shall notify the City or such sublessee that, in the opinion of independent counsel, by nonpayment of any such items, the interest of the Authority in the Property will be materially endangered or the Property, or any part 5.2.c Packet Pg. 131 20 4849-6802-8385/200928-0001 thereof, will be subject to loss or forfeiture, in which event the City or such sublessee 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 10.06 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 Lease Agreement. Section 10.07 Amendments. (a) This Lease Agreement and the Ground Lease may be amended and the rights and obligations of the Authority and the City hereunder and thereunder may be amended at any time by an amendment hereto or thereto which shall become binding upon execution and delivery by the Authority and the City, but only with the prior written consent of the Owners of a majority of the principal amount of the Bonds then Outstanding pursuant to the Indenture, provided that no such amendment shall: (i) extend the payment date of any Base Rental Payments, reduce the interest component or principal component of any Base Rental Payments or change the prepayment terms and provisions, without the prior written consent of the Owner of each Bond so affected ; or (ii) reduce the percentage of the principal amount of the Bonds the consent of the Owners of which is required for the execution of any amendment of this Lease Agreement or the Ground Lease. (b) This Lease Agreement and the Ground Lease and the rights and obligations of the Authority and the City hereunder and thereunder may also be amended at any time by an amendment hereto or thereto which shall become bindin g upon execution by the Authority and the City, without the written consents of any Owners, but only: (1) to the extent permitted by law; and (2) for any one or more of the following purposes: (i) to add to the agreements, conditions, covenants and terms requi red by the Authority or the City to be observed or performed herein or therein other agreements, conditions, covenants and terms thereafter to be observed or performed by the Authority or the City, or to surrender any right or power reserved herein or therein to or conferred herein or therein on the Authority or the City, and which in either case shall not materially adversely affect the interests of the Owners, as evidenced by an Opinion of Bond Counsel; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or therein or in regard to questions arising hereunder or thereunder which the Authority or the City may deem desirable or necessary and not inconsistent herewith or therewith, and which shall not materially adversely affect the interests of the Owners, as evidenced by an Opinion of Bond Counsel; (iii) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of the interest on the Bonds; (iv) to provide for the substitution or release of all or a portion of the Property in accordance with the provisions of Section 9.03; (v) to provide for the issuance of Additional Bonds in accordance with Article III of the Indenture; or 5.2.c Packet Pg. 132 21 4849-6802-8385/200928-0001 (vi) to make such other changes herein or therein or modifications hereto or thereto as the Authority or the City may deem desirable or necessary, and which shall not materially adversely affect the rights and interests of the Owners, as evidenced by an Opinion of Bond Counsel. Section 10.08 Assignment. The City and the Authority hereby acknowledge the assignment of this Lease Agreement (except for the Authority’s obligations and its rights to give consents or approvals hereunder), and the Base Rental Payments payable hereunder, to the Trustee pursuant to the Assignment Agreement. To the extent that this Lease Agreement confers upon or gives or grants the Trustee any right, remedy or claim under or by reason of this Lease Agreemen t, the Trustee is hereby explicitly recognized as being a third-party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder. Section 10.09 Execution. This Lease Agreement 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 Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 5.2.c Packet Pg. 133 S-1 4849-6802-8385/200928-0001 IN WITNESS WHEREOF, the Authority and the City have caused this Lease Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. CITY OF DIAMOND BAR By: City Manager ATTEST: City Clerk CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Executive Director ATTEST: Secretary 5.2.c Packet Pg. 134 A-1 4849-6802-8385/200928-0001 EXHIBIT A DESCRIPTION OF THE PROPERTY PARCEL A: IN THE CITY OF DIAMOND BAR, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, BEING THAT ADJUSTED PARCEL 1 OF THAT CERTAIN LOT LINE ADJUSTMENT NO. 02- 001, RECORDED OCTOBER 23, 2003 AS INSTRUMENT NO. 03-3180260 AND RE- RECORDED MARCH 09, 2004 AS INSTRUMENT NO. 04-0566670, BOTH OF OFFICIAL RECORDS. BEING A PORTION OF LOTS 3 AND 4 OF TRACT NO. 31479, RECORDED IN BOOK 998, PAGES 7 THROUGH 17 OF MAPS, RECORDS OF SAID COUNTY AND SAID STATE, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE NORTHERLY RIGHT-OF-WAY OF GRAND AVENUE, SAID POINT ALSO BEING THE SOUTHWESTERLY CORNER OF SAID LOT 4; 1. THENCE SOUTH 76° 57' 27" EAST, A DISTANCE OF 394.04 FEET; 2. THENCE NORTH 14° 53' 14" EAST, A DISTANCE OF 245.22 FEET; 3. THENCE NORTH 18° 21' 02" WEST, A DISTANCE OF 178.70 FEET; 4. THENCE NORTH 9° 23' 07" EAST, A DISTANCE OF 156.42 FEET; 5. THENCE NORTH 37° 50' 26" WEST, A DISTANCE OF 115.92 FEET; 6. THENCE NORTH 13° 57' 31" EAST, A DISTANCE OF 56.83 FEET; 7. THENCE NORTH 28° 21' 05" WEST, A DISTANCE OF 36.23 FEET; 8. THENCE NORTH 23° 50' 39" WEST, A DISTANCE OF 68.67 FEET; 9. THENCE NORTH 64° 30' 56" WEST, A DISTANCE OF 147.67 FEET; 10. THENCE NORTH 26° 41' 29" WEST, A DISTANCE OF 325.87 FEET; 11. THENCE NORTH 19° 09' 09" EAST, A DISTANCE OF 42.03 FEET; 12. THENCE NORTH 86° 38' 16" EAST, A DISTANCE OF 49.43 FEET; 13. THENCE SOUTH 72° 43' 51" EAST, A DISTANCE OF 32.64 FEET; 14. THENCE SOUTH 50° 34' 22" EAST, A DISTANCE OF 39.12 FEET; 15. THENCE NORTH 78° 32' 58" EAST, A DISTANCE OF 28.47 FEET; 16. THENCE NORTH 47° 26' 38" EAST, A DISTANCE OF 19.24 FEET; 17. THENCE NORTH 4° 33' 42" EAST, A DISTANCE OF 22.12 FEET; 18. THENCE NORTH 86° 38' 16" EAST, A DISTANCE OF 39.10 FEET; 19. THENCE SOUTH 75° 25' 56" EAST, A DISTANCE OF 34.13 FEET; 20. THENCESOUTH 59° 09' 05" EAST, A DISTANCE OF 37.15 FEET; 21. THENCE SOUTH 38° 38' 59" EAST, A DISTANCE OF 20.60 FEET; 22. THENCE SOUTH 17° 17' 41" WEST, A DISTANCE OF 59.02 FEET; 23. THENCE SOUTH 68° 07' 01" EAST, A DISTANCE OF 86.71 FEET; 24. THENCE NORTH 20° 39' 47" EAST, A DISTANCE OF 18.27 FEET; 25. THENCE NORTH 57° 15' 30" EAST, A DISTANCE OF 25.91 FEET; 26. THENCE SOUTH 70° 02' 32" EAST, A DISTANCE OF 52.31 FEET; 27. THENCE SOUTH 87° 07' 40" EAST, A DISTANCE OF 154.39 FEET; 28. THENCE SOUTH 41° 09' 40" EAST, A DISTANCE OF 80.72 FEET; 29. THENCE SOUTH 72° 03' 30" EAST, A DISTANCE OF 99.38 FEET; 30. THENCE NORTH 18° 09' 01" EAST, A DISTANCE OF 53.93 FEET; 31. THENCE NORTH 20° 53' 53" EAST, A DISTANCE OF 38.44 FEET; 5.2.c Packet Pg. 135 A-2 4849-6802-8385/200928-0001 32. THENCE NORTH 1° 09' 11" WEST, A DISTANCE OF 48.07 FEET; 33. THENCE NORTH 67° 49' 25" EAST, A DISTANCE OF 58.40 FEET; 34. THENCE NORTH 74° 34' 34" EAST, A DISTANCE OF 48.18 FEET; 35. THENCE NORTH 62° 17' 56" EAST, A DISTANCE OF 24.67 FEET; 36. THENCE NORTH 66° 41' 43" EAST, A DISTANCE OF 24.75 FEET; 37. THENCE NORTH 49° 03' 44" EAST, A DISTANCE OF 19.88 FEET; 38. THENCE NORTH 9° 28' 28" EAST, A DISTANCE OF 13.81 FEET; 39. THENCE NORTH 37° 31' 39" EAST, A DISTANCE OF 48.90 FEET; 40. THENCE NORTH 58° 12' 53" EAST, A DISTANCE OF 79.91 FEET; 41. THENCE NORTH 33° 31' 11" WEST, A DISTANCE OF 18.79 FEET; 42. THENCE NORTH 52° 49' 59" EAST, A DISTANCE OF 41.11 FEET; 43. THENCE NORTH 71° 52' 42" EAST, A DISTANCE OF 66.51 FEET 44. THENCE NORTH 77° 00' 19" EAST, A DISTANCE OF 38.93 FEET; 45. THENCE NORTH 45° 48' 25" EAST, A DISTANCE OF 150.63 FEET; 46. THENCE NORTH 70° 39' 20" WEST, A DISTANCE OF 73.13 FEET; 47. THENCE NORTH 5° 43' 20" WEST, A DISTANCE OF 100.28 FEET; 48. THENCE NORTH 56° 58' 00" EAST, A DISTANCE OF 119.27 FEET; 49. THENCE NORTH 11° 05' 40" WEST, A DISTANCE OF 262.39 FEET; 50. THENCE NORTH 25° 02' 30" EAST, A DISTANCE OF 277.59 FEET; 51. THENCE SOUTH 64° 45' 30" EAST, A DISTANCE OF 309.56 FEET; 52. THENCE NORTH 7° 00' 30" EAST, A DISTANCE OF 299.24 FEET; 53. THENCE NORTH 13° 14' 00" EAST, A DISTANCE OF 286.10 FEET; 54. THENCE SOUTH 84° 11' 50" EAST, A DISTANCE OF 123.63 FEET; 55. THENCE NORTH 70° 46' 10" EAST, A DISTANCE OF 45.54 FEET; 56. THENCE NORTH 24° 00' 31" EAST, A DISTANCE OF 196.88 FEET; 57. THENCE SOUTH 87° 14' 22" WEST, A DISTANCE OF 128.32 FEET; 58. THENCE NORTH 84° 46' 41" WEST, A DISTANCE OF 283.70 FEET; 59. THENCE NORTH 76° 50' 24" WEST, A DISTANCE OF 605.52 FEET; 60. THENCE NORTH 76° 55' 09" WEST, A DISTANCE OF 699.02 FEET; 61. THENCE NORTH 83° 05' 17" WEST, A DISTANCE OF 622.72 FEET; 62. THENCE NORTH 83° 11' 50" WEST, A DISTANCE OF 656.41 FEET; 63. THENCE SOUTH 74° 55' 05" EAST, A DISTANCE OF 39.24 FEET; 64. THENCE SOUTH 22° 06' 13" WEST, A DISTANCE OF 19.69 FEET; 65. THENCE NORTH 83° 13' 36" WEST, A DISTANCE OF 22.65 FEET; 66. THENCE SOUTH 16° 28' 56" EAST, A DISTANCE OF 171.62 FEET; 67. THENCE SOUTH 8° 35' 01" EAST, A DISTANCE OF 53.60 FEET; 68. THENCE SOUTH 80° 03' 36" EAST, A DISTANCE OF 8.45 FEET; 69. THENCE SOUTH 9° 56' 23" WEST, A DISTANCE OF 139.69 FEET; 70. THENCE SOUTH 25° 26' 54" WEST, A DISTANCE OF 172.70 FEET; 71. THENCE SOUTH 14° 55' 58" WEST, A DISTANCE OF 27.70 FEET 72. THENCE SOUTH 5° 00' 00" WEST, A DISTANCE OF 50.00 FEET; 73. THENCE SOUTH 19° 00' 00" WEST, A DISTANCE OF 102.50 FEET; 74. THENCE SOUTH 67° 36' 32" WEST, A DISTANCE OF 221.86 FEET; 75. THENCE SOUTH 46° 31' 54" EAST, A DISTANCE OF 264.55 FEET; 76. THENCE SOUTH 10° 03' 28" EAST, A DISTANCE OF 80.00 FEET; 77. THENCE SOUTH 9° 56' 23" WEST, A DISTANCE OF 255.00 FEET; 78. THENCE SOUTH 59° 50' 20" WEST, A DISTANCE OF 129.48 FEET; 79. THENCE SOUTH 21° 35' 43" WEST, A DISTANCE OF 258.12 FEET; 80. THENCE SOUTH 23° 44' 58" EAST, A DISTANCE OF 54.63 FEET; 5.2.c Packet Pg. 136 A-3 4849-6802-8385/200928-0001 81. THENCE SOUTH 5° 57' 52" EAST, A DISTANCE OF 67.36 FEET; 82. THENCE SOUTH 26° 47' 29" EAST, A DISTANCE OF 113.15 FEET; 83. THENCE SOUTH 72° 09' 54" EAST, A DISTANCE OF 120.81 FEET; 84. THENCE SOUTH 87° 01' 54" EAST, A DISTANCE OF 135.18 FEET; 85. THENCE SOUTH 52° 07' 30" EAST, A DISTANCE OF 57.01 FEET; 86. THENCE SOUTH 86° 33' 59" EAST, A DISTANCE OF 50.09 FEET; 87. THENCE SOUTH 20° 18' 08" EAST, A DISTANCE OF 106.63 FEET; 88. THENCE SOUTH 32° 56' 57" EAST, A DISTANCE OF 64.35 FEET; 89. THENCE SOUTH 74° 39' 25" EAST, A DISTANCE OF 116.42 FEET; 90. THENCE SOUTH 44° 39' 25" EAST, A DISTANCE OF 1117.89 FEET; 91. THENCE SOUTH 24° 04' 29" WEST, A DISTANCE OF 299.68 FEET TO THE POINT OF BEGINNING. EXCEPT THEREFROM ALL OIL, GAS AND OTHER HYDROCARBONS AND MINERALS NOW OR AT ANY TIME HEREAFTER SITUATED THEREIN AND THEREUNDER, TOGETHER WITH THE EXCLUSIVE RIGHT TO DRILL FOR, PRODUCE, EXTRACT, TAKE AND MINE THEREFROM SUCH OIL, GAS AND OTHER HYDROCARBONS AND MINERAL AND TO STORE THE SAME UPON THE SURFACE OF SAID LAND, OR BELOW THE SURFACE OF SAID LAND, TOGETHER WITH THE RIGHT TO STORE UPON THE SURFACE OF SAID LAND, OIL, GAS AND OTHER HYDROCARBONS AND MINERALS WHICH MAY BE PRODUCED OTHER LANDS, WITH THE RIGHT OF ENTRY THEREON FOR THE SAID PURPOSES, AND WITH THE RIGHT TO CONSTRUCT, USE, MAINTAIN, ERECT, REPAIR, REPLACE AND REMOVE THEREON AND THEREFROM, ALL PIPE LINES, TELEPHONE AND TELEGRAPH LINES, TANKS, MACHINERY, BUILDINGS AND OTHER STRUCTURES WHICH MAY BE NECESSARY AND REQUISITE TO CARRY ON OPERATIONS ON SAID LANDS, WITH RIGHT TO ERECT, MAINTAIN, OPERATE AND REMOVE A PLANT, WITH ALL NECESSARY APPURTENANTS FOR THE EXTRACTION OF GASOLINE FROM GAS, INCLUDING ALL RIGHTS NECESSARY OR CONVENIENT THERETO, AS EXCEPT AND RESERVED IN THE DEED FROM TRANSAMERICA DEVELOPMENT COMPANY, A CORPORATION, RECORDED MARCH 29, 1968, AS DOCUMENT NO. 2456, IN BOOK D3955, PAGE 185, OFFICIAL RECORDS; AND RE- RECORDED JUNE 19, 1969, AS DOCUMENT NO. 1776, IN BOOK D4407, PAGE 591, OFFICIAL RECORDS; AND AS MODIFIED WITH RESPECT TO A PORTION THEREON BY A QUITCLAIM DEED RECORDED NOVEMBER 12, 1970, AS INSTRUMENT NO. 2112, OFFICIAL RECORDS, WHICH RELINQUISHED ALL RIGHT TO THE USE OF THE SURFACE AND SUBSURFACE TO A DEPTH OF 500 FEET FROM THE SURFACE OF THE LAND. ALL RIGHTS TO THE USE OF THE SURFACE AND SUB-SURFACE TO A DEPTH OF FIVE HUNDRED (500) FEET FROM THE SURFACE FOR ANY PURPOSE INCIDENTAL TO THE OWNERSHIP OF ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES AND MINERALS WERE QUITCLAIMED BY DEED RECORDED DECEMBER 24, 1981, AS INSTRUMENT NO. 81-1263075, OFFICIAL RECORDS, OF SAID COUNTY. PARCEL B: IN THE CITY OF DIAMOND BAR, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, BEING A PORTION OF ADJUSTED PARCEL 2 AND A PORTION OF ADJUSTED PARCEL 3 OF LOT LINE ADJUSTMENT NUMBER 02-001, RECORDED OCTOBER 23, 2003 AS 5.2.c Packet Pg. 137 A-4 4849-6802-8385/200928-0001 INSTRUMENT NO. 03-3180260 AND RE-RECORDED MARCH 09, 2004 AS INSTRUMENT NO. 04-0566670 OFFICIAL RECORDS OF SAID COUNTY AND SAID STATE, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHWESTERLY CORNER OF SAID ADJUSTED PARCEL 2, ALSO BEING IN THE NORTHERLY RIGHT-OF-WAY OF GRAND AVENUE; THENCE SOUTH 76° 57' 27" EAST, A DISTANCE OF 306.53 FEET TO A TANGENT CURVE CONCAVE NORTHWESTERLY HAVING A RADIUS OF 13.00 FEET; THENCE NORTHEASTERLY, A DISTANCE OF 20.42 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00"; THENCE TANGENT FROM SAID CURVE NORTH 13° 02' 33" EAST, A DISTANCE OF 66.52 FEET TO A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 465.00 FEET; THENCE NORTHERLY, A DISTANCE OF 91.99 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 11° 20' 03"; THENCE TANGENT FROM SAID CURVE NORTH 01° 42' 30" EAST, A DISTANCE OF 118.11 FEET TO A TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 528.00 FEET; THENCE NORTHERLY, A DISTANCE OF 332.12 ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 36° 02' 23" TO THE MOST SOUTHERLY POINT OF SAID ADJUSTED PARCEL 3; THENCE CONTINUING ALONG SAID CURVE, A DISTANCE OF 195.69 FEET THROUGH A CENTRAL ANGLE OF 21° 14' 07"; THENCE TANGENT FROM SAID CURVE NORTH 58° 59' 00" WEST, A DISTANCE OF 176.43 FEET TO A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 472.00 FEET; THENCE NORTHERLY, A DISTANCE OF 351.12 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 42° 37' 20"; THENCE TANGENT FROM SAID CURVE NORTH 16° 21' 40" EAST, A DISTANCE OF 105.08 FEET TO A TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 728.00 FEET; THENCE NORTHERLY, A DISTANCE OF 49.95 FEET THROUGH A CENTRAL ANGLE OF 03° 55' 53"; THENCE NON-TANGENT FROM SAID CURVE NORTH 69° 42' 32" WEST, A DISTANCE OF 4.00 FEET; THENCE NORTH 47° 20' 32" WEST, A DISTANCE OF 288.17 FEET TO THE WESTERLY MOST CORNER OF SAID ADJUSTED PARCEL 3; THENCE SOUTH 77° 00' 57" WEST, A DISTANCE OF 38.92 FEET; THENCE SOUTH 71° 52' 42" WEST, A DISTANCE OF 66.51 FEET; THENCE SOUTH 52° 49' 59" WEST, A DISTANCE OF 41.11 FEET; THENCE SOUTH 33° 31' 11" EAST, A DISTANCE OF 18.79 FEET; THENCE SOUTH 58° 12' 53" WEST, A DISTANCE OF 79.91 FEET; THENCE SOUTH 37° 31' 39" WEST, A DISTANCE OF 48.90 FEET; THENCE SOUTH 09° 28' 28" WEST, A DISTANCE OF 13.81 FEET; THENCE SOUTH 49° 03' 44" WEST, A DISTANCE OF 19.88 FEET; THENCE SOUTH 66° 41' 43" WEST, A DISTANCE OF 24.75 FEET; THENCE SOUTH 62° 17' 56" WEST, A DISTANCE OF 24.67 FEET; THENCE SOUTH 74° 34' 34" WEST, A DISTANCE OF 48.18 FEET; THENCE SOUTH 67° 49' 25" WEST, A DISTANCE OF 58.40 FEET; THENCE SOUTH 01° 09' 11" EAST, A DISTANCE OF 48.07 FEET; THENCE SOUTH 20° 53' 53" WEST, A DISTANCE OF 38.44 FEET; THENCE SOUTH 18° 09' 01" WEST, A DISTANCE OF 53.93 FEET; THENCE NORTH 72° 03' 30" WEST, A DISTANCE OF 99.38 FEET; THENCE NORTH 41° 09' 40" WEST, A DISTANCE OF 80.72 FEET; THENCE NORTH 87° 07' 40" WEST, A DISTANCE OF 154.39 FEET; THENCE NORTH 70° 02' 32" WEST, A DISTANCE OF 52.31 FEET; THENCE SOUTH 57° 15' 30" WEST, A DISTANCE OF 25.91 FEET; THENCE SOUTH 20° 39' 47" WEST, A DISTANCE OF 18.27 FEET; THENCE NORTH 68° 07' 01" WEST, A DISTANCE OF 86.71 FEET; THENCE NORTH 17° 17' 41" EAST, A DISTANCE OF 59.02 FEET; THENCE NORTH 38° 38' 59" WEST A DISTANCE OF 20.60 FEET; THENCE NORTH 59° 09' 05" WEST, A DISTANCE OF 37.15 FEET; THENCE NORTH 75° 25' 56" WEST, A DISTANCE OF 34.13 FEET; THENCE SOUTH 86° 38' 16" WEST, A DISTANCE OF39.10 FEET; THENCE SOUTH 5.2.c Packet Pg. 138 A-5 4849-6802-8385/200928-0001 04° 33' 42" WEST, A DISTANCE OF 22.12 FEET; THENCE SOUTH 47° 26' 38" WEST, A DISTANCE OF 19.24 FEET; THENCE SOUTH 78° 32' 58" WEST, A DISTANCE OF 28.47 FEET; THENCE NORTH 50° 34' 22" WEST, A DISTANCE OF 39.12 FEET; THENCE NORTH 72° 43' 51" WEST, A DISTANCE OF 32.64 FEET; THENCE SOUTH 86° 38' 16" WEST, A DISTANCE OF 49.43 FEET; THENCE SOUTH 19° 09' 09" WEST, A DISTANCE OF 42.03 FEET; THENCE SOUTH 26° 41' 29" EAST, A DISTANCE OF 325.87 FEET; THENCE SOUTH 64° 30' 56" EAST, A DISTANCE OF 147.67 FEET; THENCE SOUTH 23° 50' 39" EAST, A DISTANCE OF 68.67 FEET; THENCE SOUTH 28° 21' 05" EAST, A DISTANCE OF 36.23 FEET; THENCE SOUTH 13° 57' 31" WEST, A DISTANCE OF 56.83 FEET; THENCE SOUTH 37° 50' 26" EAST, A DISTANCE OF 115.92 FEET; THENCE SOUTH 09° 23' 07" WEST, A DISTANCE OF 156.42 FEET; THENCE SOUTH 18° 21' 02" EAST, A DISTANCE OF 178.70 FEET; THENCE SOUTH 14° 53' 14" WEST, A DISTANCE OF 245.22 TO THE POINT OF BEGINNING. SAID DESCRIPTION IS MADE PURSUANT TO ADJUSTED PARCEL B, OF LOT LINE ADJUSTMENT NO. 07-002, RECORDER JUNE 26, 2008 AS INSTRUMENT NO. 20081143590, OFFICIAL RECORDS OF SAID COUNTY. For conveyancing purposes only: APN(S) 8701-059-904 AND 8701-059-909 5.2.c Packet Pg. 139 B-1 4849-6802-8385/200928-0001 EXHIBIT B BASE RENTAL PAYMENT SCHEDULE Base Rental Payments Date (Fifteenth Day of Calendar Month Prior to) Principal Component Interest Component Total Base Rental 12/1/2021 $ [ - $ $ 6/1/2022 12/1/2022 - 6/1/2023 12/1/2023 - 6/1/2024 12/1/2024 - 6/1/2025 12/1/2025 - 6/1/2026 12/1/2026 - 6/1/2027 12/1/2027 - 6/1/2028 12/1/2028 - 6/1/2029 12/1/2029 - 6/1/2030 12/1/2030 - 6/1/2031 12/1/2031 - 6/1/2032 12/1/2032 - 6/1/2033 ] $_____ $ $ 5.2.c Packet Pg. 140 Jones Hall Draft 4-21-2021 $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A BOND PURCHASE AGREEMENT [Pricing Date] City of Diamond Bar Public Financing Authority c/o City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 Ladies and Gentlemen: Raymond James & Associates, Inc. (the “Underwriter”) offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with the City of Diamond Bar Public Financing Authority (the “Authority”) and the City of Diamond Bar (the “City”) for the purchase of the above- captioned bonds (the “Bonds”). This offer is made subject to the Authority’s and the City’s acceptance by execution of this Purchase Agreement and delivery of the same to the Underwriter on or before 6:00 p.m. California time on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Authority and the City at any time prior to such acceptance. Upon the Authority’s and the City’s acceptance hereof, the Purchase Agreement will be binding upon the Authority, the City and the Underwriter. The Authority and the City acknowledge and agree that: (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the Authority, the City, and the Underwriter; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as agent or Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and has not assumed any advisory or fiduciary responsibility in favor of the Authority or the City with respect to the offering of the Bonds or the process leading thereto (whether or not the Underwriter has advised or is currently advising the Authority or the City on other matters); (iii) the only obligations the Underwriter has to the Authority and the City with respect to the transaction contemplated hereby expressly are set forth in this Purchase Agreement; (iv) the Authority and the City have consulted their own legal, financial, accounting, tax and other advisors to the extent each has deemed appropriate; (v) the Underwriter has financial interests that differ from and may be adverse to those of the City and the Authority; and (vi) the Underwriter has provided the Authority and the City with certain disclosures required under the rules of the Municipal Securities Rulemaking Board (the “MSRB”). The Authority and the City acknowledge and represent that they have engaged Fieldman, Rolapp & Associates, Inc. (the “Municipal Advisor”) as their municipal advisor (as defined in Securities and Exchange Commission Rule 15Ba1) and will rely on the financial advice of the Municipal Advisor with respect to the Bonds. 5.2.d Packet Pg. 141 2 Capitalized terms used in this Purchase Agreement and not otherwise defined herein will have the respective meanings set forth for such terms in the Indenture (defined below). Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations set forth in this Purchase Agreement, the Underwriter agrees to purchase from the Authority, and the Authority agrees to sell and deliver to the Underwriter, all (but not less than al l) of the Bonds at a purchase price of $__________ (being an amount equal to the principal amount of the Bonds ($[PAR].00), plus original issue premium of $__________, and less an underwriter’s discount of $__________). The obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds will be conditioned on the sale and delivery of all of the Bonds by the Authority to the Underwriter at Closing (hereafter defined). Section 2. Bond Terms; Purpose. (a) The Bonds will be dated their date of delivery and will mature and bear interest as shown on Exhibit A. The Bonds will be as described in, and will be issued and secured under, an Indenture, dated as of June 1, 2021 (the “Indenture”), by and among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”). The Bonds are payable and subject to redemption as shown in Exhibit A. (b) The Bonds will be payable from and secured by the Authority’s pledge of “Base Rental Payments” under and as defined in the Indenture, which will be made by the City under a Lease Agreement, dated as of June 1, 2021, between the Authority, as sublessor, and the City, as sublessee (the “Lease Agreement”). (c) The City and the Authority are also entering into a Ground Lease dated as of June 1, 2021 (the “Ground Lease”). Under the Ground Lease, the City will lease the real property described therein to the Authority and, under the Lease Agreement, the Authority will lease the same real property back to the City. The Authority will assign to the Trustee its right to receive the Base Rental Payments pursuant to an Assignment Agreement, dated as of June 1, 2021 (the “Assignment Agreement”). (d) The Authority is issuing the Bonds to refund all of the outstanding Authority’s Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) [maturing after June 1, 2021] (the “2002 Bonds”), and pay costs of issuance relating to the Bonds. In connection with the refunding of a portion of the outstanding 2002 Bonds, (i) the City, the Authority, and U.S. Bank National Association, as escrow bank and as trustee of the 2002 Bonds (in such capacities, the “Escrow Bank”) will enter into an Escrow Agreement (2002 Bonds), dated as of June 1, 2021 (the “Escrow Agreement”), (ii) the City and the Authority will enter into a Termination of Lease Agreement, dated as of June 1, 2021 (the “Termination of Lease”), and (iii) the City and the Authority will enter into Termination of Site Lease, dated as of June 1, 2021 (the “Termination of Site Lease”). Section 3. Public Offering. The Underwriter agrees to make an initial bona fide public offering of all of the Bonds, at not in excess of the initial publ ic offering yields or prices set forth on Exhibit A. Following the initial public offering of the Bonds, the offering prices may be changed from time to time by the Underwriter, provided that the Underwriter shall not change any of the principal amounts or the interest rates set forth on Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices . The Bonds are subject to redemption as set forth in Exhibit A. 5.2.d Packet Pg. 142 3 Section 4. Official Statement; Continuing Disclosure. (a) The Authority and the City have delivered to the Underwriter the Preliminary Official Statement dated ____________, 2021 (the “Preliminary Official Statement”) and will deliver to the Underwriter a final official statement dated the date of this Purchase Agreement (as amended and supplemented from time to time pursuant to Section 5(i) of this Purchase Agreement, the “Official Statement”). Subsequent to its receipt of the Authority’s and the City’s 15c2-12 Certificate, in substantially the form attached hereto as Exhibit B, deeming the Preliminary Official Statement final for purposes of Rule 15c2 -12 of the Securities and Exchange Commission, as amended (“Rule 15c2-12”), the Underwriter has distributed copies of the Preliminary Official Statement. The Authority and the City hereby ratify the use by the Underwriter of the Preliminary Official Statement and authorize the Underwriter to use and distribute in printed and/or electronic format the Official Statement (including all in formation previously permitted to have been omitted by Rule 15c2-12, and any supplements and amendments thereto as have been approved by the Authority and the City as evidenced by the execution and delivery of such document by an officer of the Authority and the City), the Indenture, the Ground Lease, the Assignment Agreement, the Lease Agreement, this Purchase Agreement, the Escrow Agreement, the Continuing Disclosure Certificate (hereinafter defined) and all information contained therein, and all other documents, certificates and written statements furnished by the Authority and the City to the Underwriter in connection with the transactions contemplated by this Purchase Agreement, in connection with the offer and sale of the Bonds by the Underwriter. The Underwriter hereby agrees to deliver a copy of the Official Statement to the MSRB through the Electronic Municipal Marketplace Access website of the MSRB on or before the Clos ing Date and otherwise to comply with all applicable statutes and regulations in connection with the offering and sale of the Bonds, including, without limitation, MSRB Rule G-32 and Rule 15c2-12. The Authority and the City agree to deliver to the Underwriter as many copies of the Official Statement as the Underwriter will reasonably request as necessary to comply with paragraph (b)(4) of Rule 15c2-12. The Authority and the City agree to deliver the final Official Statement within seven business days after the execution hereof, or such earlier date identified by the Underwriter to be necessary to allow the Underwriter to meet its obligations under Rule 15c2-12 and Rule G-32 of the MSRB. (b) The Underwriter agrees to: (1) provide the Authority with final pricing information on the Bonds on a timely basis prior to the Closing and (2) take any and all other actions necessary to comply with applicable Securities and Exchange Commission rules and MSRB rules governing the offering, sale and delivery of the Bonds to ultimate purchasers. (c) In connection with issuance of the Bonds, and in order to assist the Underwriter with complying with the provisions of Rule 15c2-12, the City will execute and deliver a Continuing Disclosure Certificate (the “Continuing Disclosure Certificate”) under which the City will undertake to provide certain financial and operating data as required by Rule 15c2 -12. The form of the Continuing Disclosure Certificate is attached as an appendix to the Preliminary Official Statement and will be attached as an appendix to the final Official Statement. Section 5. Representations, Warranties and Covenants of the Authority. The Authority hereby represents, warrants and agrees with the Underwriter that: (a) The Authority is a joint exercise of powers authority duly organized and existing under the laws of the State (the “State”) and has all necessary power and authority to adopt the 5.2.d Packet Pg. 143 4 Authority Resolution (as hereinafter defined), to enter into and perform its duties under the Indenture, the Assignment Agreement, the Lease Agreement, the Ground Lease, Termination of Lease, Termination of Site Lease, the Escrow Agreement, and this Purchase Agreement (collectively, the “Authority Agreements”) and, when executed and delivered by the respective parties thereto, each Authority Agreement will constitute legal, valid and binding obligation of the Authority enforceable in accordance with its respective terms. (b) The board of directors (the “Board”) of the Authority has taken official action by a resolution adopted on May [4], 2021 (the “Authority Resolution”) adopted by a majority of the members of the Board at a regular meeting duly called, noticed and conducted, at which a quorum was present and acting throughout, authorizing the execution, delivery and due performance of the Authority Agreements and the Official Statement and the taking of any and all such action as may be required on the part of the Authority to carry out, give effect to and co nsummate the transactions contemplated hereby. (c) By all necessary official action, the Authority has duly authorized the preparation and delivery of the Preliminary Official Statement and the preparation, execution and delivery of the Official Statement, has duly authorized and approved the execution and delivery of, and the performance of its obligations under, the Bonds and the Authority Agreements, and the consummation by it of all other transactions contemplated by the Authority Resolution, the Authority Agreements, the Preliminary Official Statement and the Official Statement. When executed and delivered by the respective parties thereto, the Authority Agreements (assuming due authorization, execution and delivery by and enforceability against the other parties thereto) will be in full force and effect and each will constitute legal, valid and binding agreements or obligations of the Authority, enforceable in accordance with their respective terms, except as enforcement thereof may be limite d by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors rights generally, the application of equitable principles, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State. (d) The statements and information contained in the Preliminary Official Statement and Official Statement (other than information relating to DTC and its book-entry only system or provided by the Underwriter) are correct and complete in all material respects, and the information contained in the Preliminary Official Statement and Official Statement (other than information relating to DTC and its book-entry only system or provided by the Underwriter) does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make such statements therein, in the light of the circumstances under which they were made, not misleading. (e) As of the date hereof, there is no action, suit, proceeding or investigation before or by any court, public board or body pending against the Authority or, to the best knowledge of the Authority, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the Authority, or the titles of its members or officers; (ii) in any way question or affect the validity or enforceability of Authority Agreements or the Bonds, or (iii) in any way question or affect the Authority Agreements or the transactions contemplated by the Authority Agreements, the Official Statement, or any other agreement or instrument to which the Authority is a party relating to the Bonds. (f) There is no consent, approval, authorization or other order of, or filing or registration with, or certification by, any regulatory authority having jurisdiction over the Authority required for 5.2.d Packet Pg. 144 5 the execution and delivery of this Purchase Agreement or the consummation by the Authority of the other transactions contemplated by the Official Statement or the Authority Agreements. (g) Any certificate signed by any official of the Authority authorized to do so will be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein. (h) Except as previously disclosed to the Underwriter, the Authority is not in default, and at no time has the Authority defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding. (i) (1) If between the date of this Purchase Agreement and the date which is 25 days following the End of the Underwriting Period (as defined below), any event will occur which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Authority will immediately notify the Underwriter, and if, in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will at its expense supplement or amend the Official Statement in a form and in a manner approved by the Underwriter. “End of the Underwriting Period” will mean the later of: (i) the Closing Date, and (ii) the date the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public, provided that unless the Underwriter notifies the Authority on or prior to the Closing Date that it retains, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public, the End of the Underwriting Period will be deemed to have occurred on the Closing Date. (2) After the Closing, the Authority will not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the Underwriter reasonably objects in writing or which is disapproved by Underwriter’s Counsel (hereinafter defined). If any event relating to or affecting the Authority occurs as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, the Authority will use its best efforts to assist the Underwriter in preparing (at the expense of the Authority for 90 days after the date of the Closing, and thereafter at the expense of the Underwriter) a reasonable number of copies of an amendment of or suppleme nt to the Official Statement (in form and substance satisfactory to the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in orde r to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. For the purposes of this subsection, the Authority will furnish such information with respect to itself as the Underwriter may from time to time reasonably request. 5.2.d Packet Pg. 145 6 (j) Except as disclosed in the Preliminary Official Statement and the Official Statement, the Authority has not previously failed to comply in all material respects with any undertakings under Rule 15c2-12 during the past five years. (k) The Authority covenants with the Underwriter that the Authority will cooperate with the Underwriter (at the cost and written directions of the Underwriter), in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdicti on of the United States as the Underwriter may reasonably request; provided, however, that the Authority shall not be required to consent to suit or to service of process, or to qualify to do business, in any jurisdiction. The Authority consents to the use by the Underwriter of the Authority Agreements, the Preliminary Official Statement and the Official Statement in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions related to the offering and sale of the Bonds. Section 6. Representations, Warranties and Covenants of the City. The City hereby represents, warrants and agrees with the Underwriter that: (a) The City is a general law city and municipal corporation, organized and existing under the Constitution and the laws of the State and has all necessary power and authority to adopt its resolution adopted on May [4], 2021 (the “City Resolution”), to enter into and perform its duties under the Indenture, the Ground Lease, the Lease Agreement, Termination of Lease, Termination of Site Lease, the Continuing Disclosure Certificate, the Escrow Agreement and this Purchase Agreement (collectively, the “City Agreements”) and, when executed and delivered by the respective parties thereto, the City Agreements will each constitute legal, valid and binding obligations of the City enforceable in accordance with their respective terms. (b) The city council (the “City Council”) of the City has taken official action by adopting the City Resolution by a majority of the members of the City Council at a meeting duly called, noticed and conducted, at which a quorum was present and acting throughout, authorizing the execution, delivery and due performance of the City Agreements and the Official Statement and the taking of any and all such action as may be required on the part of the City to carry out, give effect to and consummate the transactions contemplated hereby. (c) By all necessary official action, the City has duly adopted the City Resolution, has duly authorized the preparation and delivery of the Preliminary Official Statement and the preparation, execution and delivery of the Official Statement, has duly authorized and a pproved the execution and delivery of, and the performance of its obligations under, the City Agreements, and the consummation by it of all other transactions contemplated by the City Resolution, the City Agreements, the Preliminary Official Statement and the Official Statement. When executed and delivered by the respective parties thereto, the City Agreements (assuming due authorization, execution and delivery by and enforceability against the other parties thereto) will be in full force and effect and each will constitute legal, valid and binding agreements or obligations of the City, enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors rights generally, the application of equitable principles, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State. (d) At the time of the City’s acceptance hereof and at all times subsequent thereto up to and including the time of the Closing, the information and statements in the Preliminary Official Statement and the Official Statement (other than any information concerning the Depository Trust 5.2.d Packet Pg. 146 7 Company and the book-entry system for the Bonds or provided by the Underwriter) does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therei n, in the light of the circumstances under which they were made, not misleading. (e) As of the date hereof, there is no action, suit, proceeding or investigation before or by any court, public board or body pending against the City or, to the best knowle dge of the City, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the City, or the titles of its members or officers; (ii) in any way question or affect the validity or enforceability of City Agreements or the Bonds, or (iii) in any way question or affect the Purchase Agreement or the transactions contemplated by the Purchase Agreement, the Official Statement, or any other agreement or instrument to which the City is a party relating to the Bonds. (f) There is no consent, approval, authorization or other order of, or filing or registration with, or certification by, any regulatory authority having jurisdiction over the City required for the execution and delivery of this Purchase Agreement or the consummation by the City of the other transactions contemplated by the Official Statement or the City Agreements. (g) Any certificate signed by any official of the City authorized to do so will be deemed a representation and warranty by the City to the Underwriter as to the statements made therein. (h) Except as previously disclosed to the Underwriter, the City is not in default, and at no time has the City defaulted in any material respect, on any bond, note or other obliga tion for borrowed money or any agreement under which any such obligation is or was outstanding. (i) (1) Except as disclosed in the Official Statement or otherwise disclosed in writing to the Underwriter, there has not been any materially adverse change in the financial condition of the City since June 30, 2020, and there has been no occurrence or circumstance or combination thereof that is reasonably expected to result in any such materially adverse change. (2) If between the date of this Purchase Agreement and the date which is 25 days following the End of the Underwriting Period, any event will occur which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the lig ht of the circumstances under which they were made, not misleading, the City will immediately notify the Underwriter, and if, in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will at its expense supplement or amend the Official Statement in a form and in a manner approved by the Underwriter. (3) After the Closing, the City will not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the Underwriter reasonably objects in writing or which is disapproved by Underwriter’s Counsel. If any event relating to or affecting the City occurs as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make 5.2.d Packet Pg. 147 8 the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, the City will use its best efforts to assist the Underwriter in preparing (at the expense of the City for 90 days after the date of the Closing, and thereafter at the expense of the Underwriter) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. For the purposes of this subsection, the City will furnish such information with respect to itself as the Underwriter may from time to time reasonably request. (j) Except as disclosed in the Official Statement or otherwise disclosed in writing to the Underwriter, the City has not previously failed to comply in all material respects with any undertakings under Rule 15c2-12 in the past five years. (k) The City does not need the consent of its auditor to include its comprehensive annual financial report for the fiscal year ended June 30, 2020 as an appendix to the Preliminary Official Statement and the Official Statement. (l) The City covenants with the Underwriter that the City will cooperate with the Underwriter (at the cost and written directions of the Underwriter), in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdiction of the United States as the Underwriter may reasonably request; provided, however, that the City shall not be required to consent to suit or to service of process, or to qualify to do business, in any jurisdiction. The City consents to the use by the Underwriter of the City Agreements, the Preliminary Official Statement and the Official Statement in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions related to the offering and sale of the Bonds. Section 7. The Closing. (a) At 8:30 A.M., California time, on [Closing Date] (the “Closing Date”), or on such earlier or later time or date as may be agreed upon by the Underwriter, the Authority and the City (the “Closing”), the Authority will deliver the Bonds to the Underwriter, through the book-entry system of The Depository Trust Company (“DTC”). Prior to the Closing, the Authority and the City will deliver, at the offices of Stradling Yocca Carlson & Rauth, a Professional Corporation (“Bond Counsel”), in Newport Beach, California, or such other place as is mutually agreed upon by the Underwriter and the Authority, the other documents described in this Purchase Agreement. On the date of the Closing, the Underwriter will pay the purchase price of the Bonds as set forth in Section 1 of this Purchase Agreement in immediately available funds to the order of the Trustee. (b) The Bonds will be issued in fully registered form and will be prepared and delivered as one Bond for each maturity registered in the name of a nominee of DTC. It is anticipated that CUSIP identification numbers will be inserted on the Bonds, but neither the failure to provide such numbers nor any error with respect thereto will constitute a cause for failure or refusal by the Underwriter to accept delivery of the Bonds in accordance with the terms of this Purchase Agreement. Section 8. Conditions to Underwriter’s Obligations. The Underwriter has entered into this Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein and to be contained in the documents and instruments to be delivered on the 5.2.d Packet Pg. 148 9 date of the Closing, and upon the performance by the Authority and the City of their respective obligations to be performed hereunder and under such documents and instruments to be delivered at or prior to the date of the Closing. The Underwriter’s obligations under this Purchase Agreement are and will also be subject to the sale, issuance and delivery of the Bonds as well as the followi ng conditions: (a) The representations and warranties of the Authority and the City contained in this Purchase Agreement will be true and correct in all material respects on the date of this Purchase Agreement and on and as of the date of the Closing as if made on the date of the Closing; (b) As of the date of the Closing, the Official Statement may not have been amended, modified or supplemented, except in any case as may have been agreed to by the Underwriter; (c) (i) As of the date of the Closing, the Authority Resolution, the City Resolution, the Authority Agreements and the City Agreements will be in full force and effect, and will not have been amended, modified or supplemented, except as may have been agreed to by the Underwriter, (ii) the Authority will perform or have performed all of its obligations required under or specified in the Authority Resolution, the Authority Agreements and this Purchase Agreement to be performed at or prior to the date of the Closing; and (iii) the City will perform or have performed all of its obligations required under or specified in the City Resolution, the City Agreements and this Purchase Agreement to be performed at or prior to the date of the Closing; (d) As of the date of the Closing, all necessary official action of the Authority relating to the Authority Agreements, the Authority Resolution and the Official Statement, and all necessary official action of the City relating to the City Agreements, the City Resolution, and the Official Statement, will have been taken and will be in full force and effect and will not have been amended, modified or supplemented in any material respect, except as may have been agreed to by the City and Underwriter; and (e) As of or prior to the date of the Closing, the Underwriter will have received each of the following documents: (1) Certified copies of the Authority Resolution and the City Resolution. (2) Duly executed copies of the Indenture, the Assignment Agreement, the Lease Agreement, the Ground Lease, the Continuing Disclosure Certificate, the Escrow Agreement, the Termination of Lease, the Termination of Site Lease, and this Purchase Agreement. (3) The Preliminary Official Statement and the Official Statement, with the Official Statement duly executed on behalf of the Authority and the City. (4) An approving opinion of Bond Counsel, dated as of the Closing, as to the validity of the Bonds and the exclusion of interest on the Bonds from federal gross income and State income taxation addressed to the Authority and the City substantially in the form attached as an appendix to the Official Statement, and a reliance letter with respect thereto addressed to the Underwriter. (5) A supplemental opinion of Bond Counsel, addressed to the Underwriter, to the effect that: 5.2.d Packet Pg. 149 10 (i) The Continuing Disclosure Certificate, Purchase Agreement and the Escrow Agreement have been duly executed and delivered by the City and are each valid and binding upon the City, subject to laws relating to bankruptcy, insolvency, reorganization or creditors’ rights generally and to the application of equitable principles; (ii) The Purchase Agreement and the Escrow Agreement have been duly executed and delivered by the Authority and are each valid and binding upon the Authority, subject to laws relating to bankruptcy, insolvency, reorganization or creditors’ rights generally and to the application of equitable principles; (iii) The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; and (iv) The statements contained in the Official Statement on the cover and under the headings [“INTRODUCTION,” “REFUNDING PLAN,” “THE 2021 BONDS,” “SECURITY AND SOURCES FOR PAYMENT FOR THE 2021 BONDS” and “TAX MATTERS,” and in “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” and “APPENDIX D –FORM OF BOND COUNSEL OPINION,”] insofar as such statements purport to describe certain provisions of the Bonds, the Indenture, the Lease Agreement, the Ground Lease, the Escrow Agreement, and the Assignment Agreement, or to state legal conclusions and the opinion of Bond Counsel regarding the tax-exempt nature of the Bonds, present a fair and accurate summary of the provisions thereof. (6) An opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, as disclosure counsel to the City, addressed to the Underwriter, to the effect that: We are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Preliminary Offici al Statement or the Official Statement and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. However, in our capacity as disclosure counsel to the Authority and the City, we have revie wed certain documents as described above and have participated in conferences during which the contents of the Preliminary Official Statement and the Official Statement and related matters were discussed. Based on our review of documents and our participation in the above-mentioned conferences, and with the assumptions described in the second preceding paragraph, we advise you that, during the course of our assistance in the preparation of the Preliminary Official Statement and the Official Statement, no facts have come to the attention of the attorneys in our firm rendering legal services in connection with such representation that caused us to believe that the Preliminary Official Statement and the Official Statement, as of their date and as of the date of this letter contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (excep t that we express no opinion or belief with respect to: (i) the expressions of opinion, the assumptions, the projections, the financial statements or other financial, numerical, economic, demographic or statistical data contained in the Preliminary Officia l Statement and the Official Statement, (ii) any CUSIP numbers or information relating thereto contained in the Preliminary Official 5.2.d Packet Pg. 150 11 Statement and the Official Statement, (iii) any information contained in the appendices to the Preliminary Official Statement and the Official Statement, (iv) any information with respect to the Depository Trust Company and its book entry system for the Bonds contained or incorporated in the Preliminary Official Statement and the Official Statement, (v) any information incorporated by reference into the Preliminary Official Statement and the Official Statement, (vi) information with respect to the rating on the Bonds and the rating agency referenced in the Preliminary Official Statement and the Official Statement, and (vii) compliance by the City with its obligations to provide notices of the events described in Part (b)(5)(i)(C) of Rule 15c2-12 of the United States Securities and Exchange Commission, as amended (the “Rule”) or to file annual reports described in Part (b)(5)(i)(A) of the Rule, which compliance we have not reviewed pursuant to your direction). (7) An opinion or opinions of Woodruff Spradlin & Smart, Costa Mesa, California, as General Counsel to the Authority and as City Attorney, dated as of the Closing addressed to the Authority, the City, the Trustee and the Underwriter, in form and substance acceptable to the Underwriter, to the effect that: (i) The City is a municipal corporation and general law city duly organized and validly existing under the laws and the Constitution of the State. The City Council is the governing body of the City. (ii) The City has all necessary power and authority to adopt the City Resolution, and to enter into and perform its duties under the City Agreements, and, when executed and delivered by the respective parties thereto, the City Agreements will each constitute a legal, valid and binding obligation of the City enforceable in accordance with its respective terms, except as such enforcement may be limited by bankruptcy, moratorium and the exercise of equitable principles where equitable remedies are sought. (iii) The City Resolution was duly adopted at a meeting of the City Council, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the City Resolution is in full force and effect and has not been modified, amended or rescinded since the date of its adoption. (iv) The execution and delivery by the City of the City Agreements, the Official Statement and the other instruments contemplated by any of such documents to which the City is a party, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States or any department, division, agency or instrumentality of either thereof, or any applicable court or administrative decree or order or any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound in a manner which could materially adversely affect the City’s performance under the City Agreements. (v) All approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or 5.2.d Packet Pg. 151 12 the absence of which could materially adversely affect, the performance by the City of its obligations under the City Agreements have been obtained and are in full force and effect. (vi) To the best of the City Attorney’s knowledge, after due inquiry, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, is pending or threatened in any way against the City (A) affecting the existence of the City or the titles of its City Council members or its officers to their respective offices, (B) affecting the existence of the City, (C) seeking to restrain or to enjoin the issuance or sale of the Bonds, (D) in any way contesting or affecting the validity or enforceability of the City Resolution or the City Agreements, (E) in any way contesting the powers of the City to issue or sell the Bonds or its authority with respect to the City Resolution or the City Agreements, (F) in any way contesting or affecting any of the rights, powers, duties or obligations of the City with respect to the money or property pledged or to be pledged under the Indenture, the Lease Agreement or the Ground Lease or (G) in any way questioning the accuracy of the statements in the Preliminary Official Statement or the Official Statement. (vii) The Authority is a joint exercise of powers authority organized and validly existing under the laws of the State. The Board of Directors of the Authority is the governing body of the Authority. (viii) The Authority has all necessary power and authority to adopt the Authority Resolution, and to enter into and perform its duties under the Authority Agreements and, when executed and delivered by the respective parties thereto, the Authority Agreements will each constitute legal, valid and binding obligation of the Authority enforceable in accordance with its respective terms, except as such enforcement may be limited by bankruptcy, moratorium and the exercise of equitable principles where equitable remedies are sought. (ix) The Authority Resolution was duly adopted at a regular meeting of the Authority’s Board of Directors, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the Authority Resolution is in full force and effect and has not been modified, amended or rescinded since the date of its adoption. (x) To the best of the City Attorney’s knowledge, after due inquiry, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, is pending or threatened in any way against the Authority (A) affecting the existence of the Authority or the titles of its Board members or its officers to their respective offices, (B) affecting the existence of the Authority, (C) seeking to restrain or to enjoin the issuance or sale of the Bonds, (D) in any way contesting or affecting the validity or enforceability of the Authority Resolution or the Authority Agreements, (E) in any way contesting the powers of the Authority to issue or sell the Bonds or its authority with respect to the Authority Resolution or the Authority Agreements, (F) in any way contesting or affecting any of the rights, powers, duties or obligations of the Authority with respect to the money or property pledged or to be pledged under the Indenture, the Lease Agreement or the Ground 5.2.d Packet Pg. 152 13 Lease or (G) in any way questioning the accuracy of the statements in the Preliminary Official Statement or the Official Statement. (xi) The execution and delivery by the Authority of the Authority Agreements, the Official Statement and the other instruments contemplated by any of such documents to which the Authority is a party, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States or any department, division, agency or instrumentality of either thereof, or any applicable court or administrative decree or order or any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Authority is a party or is otherwise subject or bound in a manner which would materially adversely affect the Authority’s performance under the Authority Agreements. (xii) All approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Authority of its obligations under the Authority Agreements have been obtained and are in full force and effect. (8) A letter of Jones Hall, A Professional Law Corporation (“Underwriter’s Counsel”), addressed to the Underwriter, in form and substance acceptable to the Underwriter. (9) An executed certificate(s) of the Authority and the City, dated as of the date of the Preliminary Official Statement, substantially in the form attached as Exhibit B. (10) An executed closing certificate of the Authority, dated as of the Closing, in the form attached as Exhibit C. (11) An executed closing certificate of the City, dated as of the Closing, in the form attached as Exhibit D. (12) The opinion of counsel to U.S. Bank National Association (“U.S. Bank”), as Trustee and Escrow Bank, dated as of the Closing, addressed to the Authority, the City and the Underwriter to the effect that: (i) U.S. Bank is a national banking association duly organized and validly existing under the laws of the jurisdiction of its organization, and has the corporate power to execute and deliver, and to perform its obligations under, the Indenture, the Assignment Agreement and the Escrow Agreement. (ii) The Indenture, the Assignment Agreement and the Escrow Agreement have been duly authorized, executed and delivered by U.S. Bank, and, assuming due authorization, execution and delivery by the other parties thereto, the Indenture, the Assignment Agreement and the Escrow Agreement constitute valid and legally binding agreements of U.S. Bank enforceable in accordance with their terms, subject to laws relating in bankruptcy, insolvency or other laws affecting the 5.2.d Packet Pg. 153 14 enforcement of creditors’ rights generally and the application of equitable principles if equitable remedies are sought. (iii) U.S. Bank has duly authenticated and delivered the Bonds. (iv) To the best knowledge of counsel, after due inquiry, there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending, or threatened against U.S. Bank which in the reasonable judgment of U.S. Bank would affect the existence of U.S. Bank or in any way contesting or affecting the validity or enforceability of the Indenture, the Assignment Agreement or the Escrow Agreement or contesting the powers of U.S. Bank or its authority to enter into and perform its obligations thereunder. (13) A certificate of U.S Bank, dated as of the Closing, in the form attached as Exhibit E. (14) A tax certificate duly signed on behalf of the Authority and the City in form and substance acceptable to Bond Counsel and the Underwriter. (15) Evidence of required filings with the California Debt and Investment Advisory Commission. (16) Evidence of one or more of the CLTA or ALTA title insurance policies in form and substance required under the Lease Agreement for the real property described therein. (17) A copy of the executed Blanket Issuer Letter of Representations by and between the Authority and DTC relating to the book-entry system. (18) Evidence that the Bonds have received the ratings set forth on the cover of the Official Statement. . (19) A verification report of Robert Thomas CPA, LLC, Minneapolis, Minnesota, confirming the sufficiency of the deposits in the escrow fund established under the Escrow Agreement to defease and redeem the outstanding 2002 Bonds to be refunded with proceeds of the Bonds as provided in the Escrow Agreement. (20) A certificate of the Municipal Advisor, in substantially the form attached hereto as Exhibit F. (21) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may reasonably request to ev idence compliance by the Authority and the City with legal requirements, the truth and accuracy, as of the date of the Closing, of the representations of the Authority and the City herein contained and of the Official Statement and the due performance or satisfaction by the Authority and the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Authority and the City. 5.2.d Packet Pg. 154 15 All of the opinions, letters, certificates, instruments and other documents m entioned in this Purchase Agreement will be deemed to be in compliance with the provisions of this Purchase Agreement if, but only if, they are in form and substance satisfactory to the Underwriter. If the Authority and the City are unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds contained in this Purchase Agreement or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds will be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement will terminate and neither the Underwriter, the Authority nor the City will be under further obligations hereunder, except that the respective obligations of the Authori ty, the City and the Underwriter set forth in Section 12 of this Purchase Agreement will continue in full force and effect. Section 9. Conditions to Authority’s and City’s Obligations. The performance by the Authority and the City of their respective obligations under this Purchase Agreement are conditioned upon: (i) the performance by the Underwriter of its obligations hereunder and (ii) receipt by the Authority and the City of opinions addressed to the Authority and the City, and receipt by the Underwriter of opinions addressed to the Underwriter, and the delivery of certificates being delivered on the date of the Closing by persons and entities other than the Authority and the City. Section 10. Establishment of Issue Price. (a) The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit G, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. (b) Except as otherwise set forth in Exhibit A attached hereto, the Authority will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Authority the price or prices at which it has sold to the public e ach maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that the Underwriter’s reporting obligation after the date of the Closing may be at reasonable periodic intervals or otherwise upon request of the Authority or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds. (c) The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as 5.2.d Packet Pg. 155 16 the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the- offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. The Underwriter will advise the Authority promptly after the close of the fifth (5th) bus iness day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. (d) The Underwriter confirms that: (i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable: (A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that the reporting obligation after the date of the Closing may be at reasonable periodic intervals or otherwise upon request of the Underwriter, and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter, (B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter partici pating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker -dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public. (ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker -dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, 5.2.d Packet Pg. 156 17 provided that the reporting obligation after the date of the Closing may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. (e) The Authority acknowledges that, in making the representations set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The Authority further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold -the-offering- price rule, if applicable to the Bonds. (f) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for pur poses of this section. Further, for purposes of this section: (i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a “related party” t o an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and 5.2.d Packet Pg. 157 18 (iv) “sale date” means the date of execution of this Purchase Agreement by all parties. Section 11. Termination Events. The Underwriter will have the right to terminate the Underwriter’s obligations under this Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds by notifying the Authority and the City of its election to do so if, after the execution hereof and prior to the Closing, any of the following events occurs: (a) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially and adversely affected by any decision issued by a court of the United States (including the United States Tax Court) or of the State, by any ruling or regulation (final, temporary or proposed) issued by or on behalf of the Department of the Treasury of the United States, the Internal Revenue Service, or other governmental agency of the United States, or any governmental agency of the State, or by a tentative decision or announcement by any member of the House Ways and Means Committee, the Senate Finance Committee, or the Conference Committee with respect to contemplated legislation or by legislation enacted by, pending in, or favorably reported to either the House of Representatives or either House of the Legislature of the State, or formally proposed to the Congress of the United States by the President of the United States or to the Legislature of the State by the Governor of the State in an executive communication, affecting the tax status of the Authority or the City, its property or income, its bonds (including the Bonds) or the interest thereon or any tax exemption granted or authorized by the Internal Revenue Code of 1986, as amended; (b) the United States becomes engaged in hostilities that result in a declaration of war or a national emergency, or any other outbreak of hostilities occurs, or a local, national or international calamity or crisis occurs, financial or otherwise, th e effect of such outbreak, calamity or crisis being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds; (c) there occurs a general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction; (d) a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission is issued or made to the effect that the issuance, offering or sale of the Bonds is or would be in violation of any provision of the Securities Act of 1933, as then in effect, or of the Securities Exchange Act of 1934, as then in effect, or of the Trust Indenture Act of 1939, as then in effect; (e) legislation is enacted by the House of Representatives or the Senate of the Congress of the United States of America, or a decision by a court of the United States of America is rendered, or a ruling or regulation by or on behalf of the Securities and Ex change Commission or other governmental agency having jurisdiction of the subject matter is made or proposed to the effect that the Authority’s obligations of the general character of the Bonds, including the Bonds are not exempt from registration, qualifi cation or other similar 5.2.d Packet Pg. 158 19 requirements of the Securities Act of 1933, as then in effect, or of the Trust Indenture Act of 1939, as then in effect; (f) in the reasonable judgment of the Underwriter, the market price of the Bonds, or the market price generally of obligations of the general character of the Bonds, might be materially and adversely affected because additional material restrictions not in force as of the date hereof is imposed upon trading in securities generally by any governmental authority or by any national securities exchange; (g) the Comptroller of the Currency, The New York Stock Exchange, or other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increases materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, or financial responsibility requirements of the Underwriter; (h) a general banking moratorium is established by federal, New York or State authorities; (i) any legislation, ordinance, rule or regulation is introduced in or be enacted by any governmental body, department or agency in the State or a decision of a court of compe tent jurisdiction within the State is rendered, which, in the opinion of the Underwriter, after consultation with the Authority and the City, materially adversely affects the market price of the Bonds; (j) any federal or California court, authority or re gulatory body takes action materially and adversely affecting the payment, and collection, of Base Rental Payments under the Lease Agreement and the Indenture, respectively; (k) any withdrawal, downgrading or placement on credit watch negative of any underlying rating of any securities of the Authority or the City by a national municipal bond rating agency that, in the opinion of the Underwriter, adversely affects the market price of the Bonds; or (l) an event occurs which in the reasonable opinion of the Underwriter requires a supplement or amendment to the Official Statement and: (i) the City or the Authority refuses to prepare and furnish such supplement or amendment; or (ii) in the reasonable judgment of the Underwriter, the occurrence of such event materially and adversely affects the marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; (m) additional material restrictions that are not in force as of the date hereof shall have been imposed upon trading in securities generally by any domestic governmental authority or by any domestic national securities exchange, which are material to the marketability of the Bonds; or (n) the commencement of any action, suit or proceeding that is described in Section 5(e) and 6(e). 5.2.d Packet Pg. 159 20 Section 12. Payment of Expenses. (a) The Underwriter will be under no obligation to pay, and the Authority and/or the City will pay the following expenses incident to the performance of the Authority’s and the City’s obligations hereunder: (i) the fees and disbursements of the advisor of the City and the Authority, including the Municipal Advisor, Bond Counsel, and Disclosure Counsel; (ii) the cost of printing and delivering the Bonds, the Preliminary Official Statement and the Official Statement (and any amendment or supplement prepared pursuant to Section s 5 and 6 of this Purchase Agreement); (iii) the fees and disbursements of accountants, advisers and of any other experts or consultants retained by the Authority or the City; and (iv) any other expenses and costs of the Authority and the City incident to the performance of their respective obligations in connection with the authorization, issuance and sale of the Bonds, including out-of-pocket expenses and regulatory expenses, and any other expenses agreed to by the parties. (b) The City and the Authority will be under no obligation to pay, and the Underwriter will pay, any fees of the California Debt and Inv estment Advisory Commission, the cost of obtaining CUSIP numbers, the cost of preparation of any “blue sky” or legal investment memoranda and this Purchase Agreement; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of Underwriter’s Counsel, meals, transportation and lodging (but not entertainment expenses), and any advertising e xpenses in connection with the public offering of the Bonds. Section 13. Notices. Any notice or other communication to be given to the Authority or the City under this Purchase Agreement may be given by delivering the same in writing to the Authority and the City at the addresses set forth on the first page of this Purchase Agreement, and any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Raymond James & Associates, Inc., One Embarcadero Center, Suite 650, San Francisco, California 94111, Attention: Emily Giles, Managing Director. Section 14. Survival of Representations, Warranties, Agreements. All of the Authority’s and the City’s representations, warranties and agreements contained in this Purchase Agreement will remain operative and in full force and effect regardless of: (a) any investigations made by or on behalf of the Underwriter; or (b) delivery of and payment for the Bonds pursuant to this Purchase Agreement. The agreements contained in this Section and in Section 12 will survive any termination of this Purchase Agreement. Section 15. Benefit; No Assignment. This Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter (including its successors and assigns), and no other person will acquire or have any right hereunder or by virtue hereof. The rights and obligations created by this Purchase Agreement are not subject to assignment by the Underwriter, the Authority or the City without the prior written consent of the other parties hereto. 5.2.d Packet Pg. 160 21 Section 16. Severability. In the event that any provision of this Purchase Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision of this Purchase Agreement. Section 17. Counterparts. This Purchase Agreement may be executed in any number of counterparts, all of which taken together will constitute one agreement, and any of the parties hereto may execute the Purchase Agreement by signing any such counterpart. Section 18. Governing Law. This Purchase Agreement will be governed by the laws of the State. 5.2.d Packet Pg. 161 S-1 Section 19. Effectiveness. This Purchase Agreement will become effective upon the execution of the acceptance hereof by an authorized officer of the Authority and the City, and will be valid and enforceable as of the time of such acceptance. Very truly yours, RAYMOND JAMES & ASSOCIATES, INC., as Underwriter By: Managing Director Accepted: CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Authorized Representative Time of Execution: California Time CITY OF DIAMOND BAR By: Authorized Representative Time of Execution: California Time 5.2.d Packet Pg. 162 A-1 EXHIBIT A MATURITY SCHEDULE Maturity (June 1) Principal Amount Interest Rate Yield Price 10% Test Satisfied* 10% Test Not Satisfied Subject to Hold-The- Offering- Price Rule T: Term Bond. C: Priced to optional redemption date of June __, 20__, at par. * At the time of execution of this Purchase Agreement and assuming orders are confirmed immediately after the execution of this Purchase Agreement. REDEMPTION Extraordinary Redemption. The Bonds shall be subject to redemption, in whole or in part, on any date as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, in Authorized Denominations, from and to the extent of any Net Insurance Proceeds received with respect to all or a portion of the Property, deposited by the Trustee in the Redemption Fund, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. Optional Redemption. The Bonds maturing on or after June 1, 20__, shall be subject to optional redemption, in whole or in part, on _____ 1, 20__ or any date thereafter, as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser 5.2.d Packet Pg. 163 A-2 number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, i n Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease Agreement, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemptio n, without premium. Mandatory Sinking Fund Redemption. The Bonds with stated maturities on June 1, 20__, are subject to mandatory sinking fund redemption in part (by lot) on June 1, 20__ and each June 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Mandatory Sinking Fund Redemption Dates (June 1) Principal Amount of Bonds to be Redeemed 20__ $ 20__* * Maturity. If, during the Fiscal Year immediately preceding one of the redemption dates specified above, the Authority purchases Bonds, at least 45 days prior to the redemption date, the Authority shall notify the Trustee as to the principal amount purchased and the amount of Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming mandatory sinking fund redemption payment for the applicable Bonds so purchased. All Bonds purchased pursuant to this subsection shall be cancelled. 5.2.d Packet Pg. 164 B-1 EXHIBIT B CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A 15c2-12 CERTIFICATE The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of the City of Diamond Bar (the “City”) and the City of Diamond Bar Public Financing Authority (the “Authority”), and is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the City and the Authority as follows: (1) This Certificate is delivered in connection with the offering and sale of the bonds captioned above (the “Bonds”) in order to enable the underwriter of the Bonds to comply with Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (the “Rule”). (2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement, setting forth information concerning the Bonds, the Authority and the City (the “Preliminary Official Statement”). (3) As used herein, “Permitted Omissions” means the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters, all with respect to the Bonds. (4) The Preliminary Official Statement is, except for the Permi tted Omissions, deemed final within the meaning of Rule 15c2-12, and the information therein is accurate and complete except for the Permitted Omissions. Dated: ____________, 2021 CITY OF DIAMOND BAR By:_____________________________ Authorized Officer CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By:_____________________________ Authorized Officer 5.2.d Packet Pg. 165 C-1 EXHIBIT C $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A CLOSING CERTIFICATE OF THE AUTHORITY The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of the City of Diamond Bar Public Financing Authority (the “Authority”), and is duly authorized to execute and deliver this Certificate and furth er hereby certifies and reconfirms on behalf of the Authority as follows: (i) The representations, warranties and covenants of the Authority contained in the Bond Purchase Agreement dated [Pricing Date], among the Authority, the City of Diamond Bar and Raymond James & Associates, Inc., as underwriter (the “Purchase Agreement”), are true and correct and in all material respects on and as of the date of the Closing with the same effect as if made on the date of the Closing. (ii) The Authority Resolution is in full force and effect at the date of the Closing and has not been amended, modified or supplemented, except as agreed to by the Authority and the Underwriter. (iii) The Authority has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied on or prior to the date of the Closing. (iv) Subsequent to the date of the Official Statement and on or prior to the date of such certificate, there has been no material adverse change in the condition (financial o r otherwise) of the Authority, whether or not arising in the ordinary course of the operations of the Authority, as described in the Official Statement. (v) The Preliminary Official Statement as of its date and the date of the Purchase Agreement and the Official Statement as of its date and the Closing Date (other than any information it contains concerning The Depository Trust Company and the book -entry system for the Bonds or provided by the Underwriter) do not contain any untrue or misleading statement of a material fact and do not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading. Capitalized terms used but not defined herein have the meanings given in the Bond Purchase Agreement. Dated: [Closing Date] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By:_____________________________ Authorized Officer 5.2.d Packet Pg. 166 D-1 EXHIBIT D $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A CLOSING CERTIFICATE OF THE CITY The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of the City of Diamond Bar (the “City”), and is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the City as follows: (i) The representations, warranties and covenants of the City contained in the Bond Purchase Agreement dated [Pricing Date], among the City, the City of Diamond Bar Public Financing Authority and Raymond James & Associates, Inc., as underwriter (the “Purchase Agreement”) are true and correct and in all material respects on and as of the date of the Closing with the same effect as if made on the date of the Closing. (ii) The City Resolution is in full force and effect at the date of the Closing and has not been amended, modified or supplemented, except as agreed to by the City and the Underwriter. (iii) The City has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied on or prior to the date of the Closing. (iv) Subsequent to the date of the Official Statement and on or prior to the date of such certificate, there has been no material adverse change in the condition (financial or otherwise) of the City, whether or not arising in the ordinary course of operations, as described in the Official Statement. (v) The Preliminary Official Statement as of its date and the date of the Purchase Agreement and the Official Statement as of its date and the Closing Date (other than any information it contains concerning the Authority, the Depository Trust Company and the book-entry system for the Bonds or provided by the Underwriter) do not contain any untrue or misleading statement of a material fact and do not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading. Capitalized terms used but not defined herein have the meanings given in the Purchase Agreement. Dated: [Closing Date] CITY OF DIAMOND BAR By:_____________________________ Authorized Officer 5.2.d Packet Pg. 167 E-1 EXHIBIT E $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A CLOSING CERTIFICATE OF U.S. BANK NATIONAL ASSOCIATION The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of U.S. Bank National Association (“U.S. Bank”) and is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of U.S. Bank as follows: (i) U.S. Bank has all necessary power to enter into the following documents (collectively, the “U.S. Bank Documents”): (A) the Indenture, dated as of June 1, 2021, by and among the City of Diamond Bar Public Financing Authority (the “Authority”), the City of Diamond Bar (the “City”) and U.S. Bank, as trustee; (B) the Assignment Agreement, dated as of June 1, 2021, by and between the Authority and U.S. Bank, as trustee; and (C) the Escrow Agreement (2002 Bonds), dated as of June 1, 2021, by and among the Authority, the City and U.S. Bank, as prior trustee and escrow bank; (ii) The U.S. Bank Documents have been duly authorized, executed and delivered by U.S. Bank, and the U.S. Bank Documents constitute the legal, valid and binding obligation s of U.S. Bank enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles, if equitable remedies are sought; (iii) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over U.S. Bank that has not been obtained is or will be required for the execution and delivery of U.S. Bank or the performance by U.S. Bank of its duties and obligations under the U.S. Bank Documents; (iv) The execution and delivery by U.S. Bank of the U.S. Bank Documents and compliance with the terms thereof will not conflict with, or result in a viol ation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which U.S. Bank is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over U.S. Bank or any of its activities or properties (except that no representation, warranty or agreem ent need be made by such counsel with respect to any federal or State securities or blue sky laws or regulations); and (v) there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending, or the best knowledge of U.S. Bank, threatened against U.S Bank which in the reasonable judgment of U.S. Bank would affect the existence of U.S. Bank or in any way contesting or affecting the validity or enforceability of the U.S. Bank Documents or contesting the powers of U.S. Bank or its authority to enter into and perform its obligations thereunder. 5.2.d Packet Pg. 168 E-2 Capitalized terms used but not defined herein have the meanings given in the Bond Purchase Agreement dated [Pricing Date], among the City, the Authority and Raymond James & Associates, Inc., as underwriter. Dated: [Closing Date] U.S. BANK NATIONAL ASSOCIATION, as Trustee, Prior Trustee and Escrow Bank By:_____________________________ Authorized Officer 5.2.d Packet Pg. 169 F-1 EXHIBIT F $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A CERTIFICATE OF MUNICIPAL ADVISOR The undersigned hereby states and certifies: (i) that the undersigned is an authorized officer of Fieldman, Rolapp & Associates, Inc. (the “Municipal Advisor”), which has acted as municipal advisor to the City of Diamond Bar Public Financing Authority (the “Authority”) in connection with the issuance of the above-referenced bonds (the “Bonds”), and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (ii) that the Municipal Advisor has participated in the review of the Preliminary Official Statement dated [POS Date] (the “Preliminary Official Statement”) and the final Official Statement dated [Pricing Date] (the “Official Statement”) relating to the Bonds; and (iii) that nothing has come to the attention of the Municipal Advisor which would lead it to believe that the Preliminary Official Statement as of its date or the date of the pricing of the Bonds or the Official Statement as of its date or the date hereof contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. Dated: [Closing Date] FIELDMAN, ROLAPP & ASSOCIATES, INC., as Municipal Advisor By: Authorized Officer 5.2.d Packet Pg. 170 G-2 EXHIBIT G $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A ISSUE PRICE CERTIFICATE The undersigned, Raymond James & Associates, Inc. (“Raymond James”), hereby certifies as set forth below with respect to the sale and issuance of the above -captioned obligations (the “Bonds”). 1. Bond Purchase Agreement. On [Pricing Date] (the “Sale Date”), Raymond James, the Issuer and the City of Diamond Bar executed a Bond Purchase Agreement (the “Purchase Agreement”) in connection with the sale of the Bonds. Raymond James has not modified the Purchase Agreement since its execution on the Sale Date. 2. Price. (a) As of the date of this Certificate, for each [Maturity] [[of the General Rule Maturities] of the Bonds, the first price at which at least 10% of each such Maturity of the Bonds was sold to the Public (the “10% Test”) was the respective price for such Maturity listed in Schedule A attached hereto. (b) [Raymond James offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B. (c) As set forth in the Bond Purchase Agreement, Raymond James has agreed in writing that, (i) for each Maturity of the Hold-the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any perso n at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold -the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold-the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.] (d) [** With respect to each of the General Rule Maturities of the Bonds: (1) As of the date of this Certificate, Raymond James has not sold at least 10% of the Bonds of these Maturities at any single price. (2) As of the date of this Certificate, Raymond James reasonably expects that the first sale to the Public of Bonds of these Maturities will be at or below the respective 5.2.d Packet Pg. 171 G-3 price or prices listed on the attached Schedule A as the “Reasonably Expected Sale Prices for Undersold Maturities.” (3) Raymond James will provide actual sales information (substantially similar to the information contained on Schedule B) as to the price at which the first 10% of each such Maturity (i.e., the Undersold Maturity or Maturities) is sold to the Public. (4) On the date the 10% Test is satisfied with respect to all Maturities of the Bonds, Raymond James will execute a supplemental certificate substantially in the form attached hereto as Schedule C with respect to any remaining Maturities for which the 10% Test has not been satisfied as of the Closing Date.**] 3. Defined Terms. (a) “General Rule Maturities” means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.” (b) “Hold-the-Offering-Price Maturities” means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (c) “Holding Period” means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date, or (ii) the date on which Raymond James has sold at least 10% of such Hold-the-Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity. (d) “Issuer” means the City of Diamond Bar Public Financing Authority. (e) “Maturity” means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities. (f) “Public” means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) “Underwriter” means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead Underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). 4. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the interpretation by Raymond James of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the 5.2.d Packet Pg. 172 G-4 Tax Certificate of the Issuer dated [Closing Date] and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel, in connection wi th rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038 -G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. RAYMOND JAMES & ASSOCIATES, INC. By: [Title] Dated: [Closing Date] 5.2.d Packet Pg. 173 G-5 SCHEDULE A TO ISSUE PRICE CERTIFICATE [Schedules to be updated at pricing in the event there are Hold-the-Offering-Price-Maturities] Actual Sales Information as of Closing Date Maturity/CUSIP Coupon Date Sold Time Sold Par Amount Sale Price [**Reasonably Expected Sales Prices for Undersold Maturities as of Closing Date Maturity/CUSIP Coupon Par Amount Offering Prices **] 5.2.d Packet Pg. 174 G-6 [**SCHEDULE B TO ISSUE PRICE CERTIFICATE Actual Sales for Undersold Maturities as of the Closing Date Maturity/CUSIP Date Sold Time Sold Par Amount Sale Price **] 5.2.d Packet Pg. 175 G-7 [**SCHEDULE C TO ISSUE PRICE CERTIFICATE SUPPLEMENTAL ISSUE PRICE CERTIFICATE OF UNDERWRITER $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A The undersigned, Raymond James & Associates, Inc. (“Raymond James”), hereby certifies as set forth below with respect to the sale and issuance of the above -captioned obligations (the “Bonds”). 1. Issue Price. (a) Raymond James sold at least 10% of the _______ Maturities of the Bonds to the Public at the price or prices shown on the Issue Price Certificate dated as of the Closing Date (the “10% Test”). With respect to each of the ______ Maturities of the Bonds, Raymond James had not satisfied the 10% Test as of the Closing Date (the “Undersold Maturities”). (b) As of the date of this Supplemental Certificate, Raymond James has satisfied the 10% Test with respect to the Undersold Maturities. The first price or prices at which at least 10% of each such Undersold Maturity was sold to the Public are the respective prices listed on Exhibit A attached hereto. 2. Defined Terms. (a) “Issuer” means the City of Diamond Bar Public Financing Authority. (b) “Maturity” means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities. (c) “Public” means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (d) “Underwriter” means (1) any person that agrees pursuant to a written contract with the Issuer (or with the lead Underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (2) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (1) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). 3. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the interpretation by Raymond James of any laws, including 5.2.d Packet Pg. 176 G-8 specifically Sections 103 and 148 of the Internal Revenue Code of 1986 , as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate of the Issuer dated [Closing Date] and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. RAYMOND JAMES & ASSOCIATES, INC. By: [Title] Dated: ____________, 20__ 5.2.d Packet Pg. 177 Stradling Yocca Carlson & Rauth Draft of 4/19/21 4837-5803-9009v3/200928-0001 INDENTURE by and among CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY and CITY OF DIAMOND BAR and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of June 1, 2021 Relating to $_____ CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A 5.2.e Packet Pg. 178 TABLE OF CONTENTS Page i 4837-5803-9009v3/200928-0001 ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01 Definitions ..................................................................................................................... 2 Section 1.02 Equal Security ............................................................................................................. 10 ARTICLE II THE BONDS Section 2.01 Authorization of Bonds ............................................................................................... 10 Section 2.02 Terms of Series 2021 Bonds ....................................................................................... 10 Section 2.03 Form of Series 2021 Bonds ......................................................................................... 11 Section 2.04 Transfer and Exchange of Bonds ................................................................................ 11 Section 2.05 Registration Books ...................................................................................................... 12 Section 2.06 Execution of Bonds ..................................................................................................... 12 Section 2.07 Authentication of Bonds ............................................................................................. 12 Section 2.08 Temporary Bonds ........................................................................................................ 12 Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen ............................................................... 12 Section 2.10 Book-Entry Bonds ...................................................................................................... 13 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS Section 3.01 Issuance of Series 2021 Bonds.................................................................................... 14 Section 3.02 Application of Proceeds of the Series 2021 Bonds ..................................................... 15 Section 3.03 [RESERVED] ............................................................................................................. 15 Section 3.04 Costs of Issuance Fund ............................................................................................... 15 Section 3.05 [RESERVED] ............................................................................................................. 15 Section 3.06 Conditions for the Issuance of Additional Bonds ....................................................... 15 Section 3.07 Procedure for the Issuance of Additional Bonds ........................................................ 17 Section 3.08 Additional Bonds ........................................................................................................ 17 ARTICLE IV REDEMPTION OF BONDS Section 4.01 Redemption of Series 2021 Bonds .............................................................................. 18 Section 4.02 Notice of Redemption ................................................................................................. 19 Section 4.03 Selection of Bonds for Redemption ............................................................................ 19 Section 4.04 Partial Redemption of Bonds ...................................................................................... 19 Section 4.05 Effect of Notice of Redemption .................................................................................. 19 ARTICLE V SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS Section 5.01 Pledge; Special Obligations ........................................................................................ 20 Section 5.02 Flow of Funds ............................................................................................................. 20 Section 5.03 Application of Net Insurance Proceeds ....................................................................... 21 Section 5.04 Title Insurance ............................................................................................................ 23 Section 5.05 Rebate Fund ................................................................................................................ 23 Section 5.06 Investment of Moneys ................................................................................................. 24 5.2.e Packet Pg. 179 TABLE OF CONTENTS (continued) Page ii 4837-5803-9009v3/200928-0001 ARTICLE VI COVENANTS Section 6.01 Compliance with Agreements ..................................................................................... 25 Section 6.02 Compliance with Ground Lease and Lease Agreement .............................................. 26 Section 6.03 Observance of Laws and Regulations ......................................................................... 26 Section 6.04 Other Liens .................................................................................................................. 26 Section 6.05 Prosecution and Defense of Suits ............................................................................... 26 Section 6.06 Accounting Records and Statements........................................................................... 26 Section 6.07 Recordation and Filing ................................................................................................ 27 Section 6.08 Tax Covenants ............................................................................................................ 27 Section 6.09 Continuing Disclosure ................................................................................................ 28 Section 6.10 Further Assurances ...................................................................................................... 28 Section 6.11 Continued Existence of Authority............................................................................... 28 ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01 Action on Default ........................................................................................................ 28 Section 7.02 Other Remedies of the Trustee.................................................................................... 28 Section 7.03 Non-Waiver ................................................................................................................. 29 Section 7.04 Remedies Not Exclusive ............................................................................................. 29 Section 7.05 No Liability by the Authority to the Owners .............................................................. 29 Section 7.06 No Liability by the City to the Owners ....................................................................... 29 Section 7.07 No Liability of the Trustee to the Owners .................................................................. 30 Section 7.08 Application of Amounts After Default ....................................................................... 30 Section 7.09 Trustee May Enforce Claims Without Possession of Bonds ...................................... 30 Section 7.10 Limitation on Suits ...................................................................................................... 30 ARTICLE VIII THE TRUSTEE Section 8.01 Employment of the Trustee ......................................................................................... 31 Section 8.02 Duties, Removal and Resignation of the Trustee ........................................................ 31 Section 8.03 Compensation of the Trustee ...................................................................................... 32 Section 8.04 Protection of the Trustee ............................................................................................. 32 ARTICLE IX MODIFICATION OR AMENDMENTS Section 9.01 Modifications and Amendments Permitted................................................................. 35 Section 9.02 Effect of Supplemental Indenture ............................................................................... 37 Section 9.03 Endorsement of Bonds; Preparation of New Bonds ................................................... 37 Section 9.04 Amendment of Particular Bonds ................................................................................. 37 ARTICLE X DEFEASANCE Section 10.01 Discharge of Indenture ................................................................................................ 37 Section 10.02 Bonds Deemed To Have Been Paid ............................................................................ 38 5.2.e Packet Pg. 180 TABLE OF CONTENTS (continued) Page iii 4837-5803-9009v3/200928-0001 Section 10.03 Payment of Bonds After Discharge of Indenture ........................................................ 39 ARTICLE XI MISCELLANEOUS Section 11.01 Benefits of Indenture Limited to Parties ..................................................................... 39 Section 11.02 Successor Deemed Included in all References to Predecessor ................................... 39 Section 11.03 Execution of Documents by Owners .......................................................................... 39 Section 11.04 Waiver of Personal Liability ....................................................................................... 40 Section 11.05 Destruction of Bonds .................................................................................................. 40 Section 11.06 Funds and Accounts .................................................................................................... 40 Section 11.07 Article and Section Headings Gender and References ............................................... 40 Section 11.08 Partial Invalidity .......................................................................................................... 40 Section 11.09 Disqualified Bonds ...................................................................................................... 41 Section 11.10 Money Held for Particular Bonds ............................................................................... 41 Section 11.11 Payment on Non-Business Days ................................................................................. 41 Section 11.12 California Law ............................................................................................................ 41 Section 11.13 Notices ........................................................................................................................ 41 Section 11.14 Notice to Rating Agencies .......................................................................................... 42 Section 11.15 Execution in Counterparts ........................................................................................... 42 Signatures ................................................................................................................................... S-1 EXHIBIT A FORM OF SERIES 2021 BOND ............................................................................. A-1 EXHIBIT B DESCRIPTION OF THE 2002 PROJECT ............................................................... B-1 5.2.e Packet Pg. 181 1 4837-5803-9009v3/200928-0001 INDENTURE THIS INDENTURE (this “Indenture”), executed and entered into and dated as of June 1, 2021, is by and among the CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY, a joint exercise of powers entity that is duly organized and existing under the laws of the State of California (the “Authority”), the CITY OF DIAMOND BAR, a municipal corporation and general law city that is duly organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association that is duly organized and existing under and by virtue of the laws of the United States, as Trustee (the “Trustee”). RECITALS A. The Authority previously issued its Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (the “2002 Bonds”), which are currently outstanding in the aggregate principal amount of $7,830,000, in order to finance certain capital improvements of the City (the “2002 Project”). B. The Authority and the City have determined that it would be in the best interests of the City and residents of the City to authorize the preparation, sale and delivery b y the Authority of the “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A” (the “Series 2021 Bonds”) for the purposes of refunding all of the outstanding 2002 Bonds and refinancing the 2002 Project, which Bonds will be payable from certain base rental payments (the “Base Rental Payments”) to be made by the City under the below-defined Lease Agreement. C. In connection with the foregoing, the City will lease certain real property of the City and the improvements located thereon, consisting of the Community/Senior Center at Summitridge Park (1600 Grand Avenue, Diamond Bar, California 91765) (collectively, the “Property”), to the Authority pursuant to a Ground Lease, dated as of the date hereof (the “Ground Lease”), by and between the City and the Authority, and the City will sublease the Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof (the “Lease Agreement”), by and between the City and the Authority. D. The Property is more particularly described in Exhibit A to the Lease Agreement. E. All rights to receive the Base Rental Payments have been assigned without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of the date hereof (the “Assignment Agreement”), by and between the Authority and the Trustee. F. The Authority and the City desire to provide for the issuance of additional bonds (the “Additional Bonds”) payable from the Base Rental Payments on a parity with the Series 2021 Bonds (the Series 2021 Bonds and any such Additional Bonds being collectively referred to as the “Bonds”). G. 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 secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Authority and the City have authorized the execution and delivery of this Indenture. 5.2.e Packet Pg. 182 2 4837-5803-9009v3/200928-0001 H. The Authority and the City have determined that all a cts and proceedings that are 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 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 the Indenture has been in all respects duly authorized. In consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties do hereby agree as follows: ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of the Bonds and of any certificate, opinion, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein. Capitalized terms that are not otherwise defined herein shall have the meanings assigned to such terms in the Lease Agreement. “Additional Bonds” means Bonds (other than the Series 2021 Bonds) issued hereunder in accordance with the provisions of Sections 3.06 and 3.07. “Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.02 of the Lease Agreement. “Assignment Agreement” means the Assignment Agreement relating to the Series 2021 Bonds, dated as of the date hereof, by and between the Authority and the Trustee. “Authority” means the City of Diamond Bar Public Financing Authority, a joint exercise of powers entity that is duly organized and existing under and by virtue of the laws of the State of California. “Authorized Authority Representative” means the Chair, Vice Chair, Executive Director, Treasurer and Secretary of the Authority, or any other person authorized by the Board of Directors of the Authority to act on behalf of the Authority under or with respect to this Indenture. “Authorized City Representative” means the Mayor of the City, the Mayor Pro Tem of the City, the City Manager of the City, the Finance Director of the City or the City Clerk, or any other person authorized by the City Council of the City to act on behalf of the City under or with respect to this Indenture. “Authorized Denominations” means $5,000 or any integral multiple thereof. “Base Rental Payment Fund” means the fund by that name established in accordance with Section 5.02. 5.2.e Packet Pg. 183 3 4837-5803-9009v3/200928-0001 “Base Rental Payments” means all amounts payable to the Authority by the City as Base Rental Payments pursuant to Section 3.01(a) of the Lease Agreement and any payments under Section 3.01 of the Lease Agreement which are attributable to Additional Bonds. “Beneficial Owner” means, whenever used with respect to a Book-Entry Bond, the person whose name is recorded as the beneficial owner of such Book-Entry Bond or a portion of such Book-Entry Bond by a Participant on the records of such Participant or such person’s subrogee. “Bonds” means the Series 2021 Bonds and any Additional Bonds issued hereunder. “Book-Entry Bonds” means the Bonds of a Series registered in the name of the nominee of DTC, or any successor securities depository for such Series of Bonds, as the registered owner thereof pursuant to the terms and provisions of Section 2.10. “Business Day” means a day which is not: (a) a Saturday, Sunday or legal holiday; (b) a day on which banking institutions in the State of California, or in any state in which the Office of the Trustee is located, are required or authorized by law (including executive order) to close ; or (c) a day on which the New York Stock Exchange is closed. “Cede & Co.” means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to a Series of Book-Entry Bonds. “City” means the City of Diamond Bar, a municipal corporation and general law city that is duly organized and existing under and by virtue of the Constitution and laws of the State of California. “Closing Date” means June __, 2021. “Code” means the Internal Revenue Code of 1986, as amended. “Continuing Disclosure Certificate” means the Continuing Disclosure Certificate relating to the Series 2021 Bonds, dated the Closing Date, executed by the City, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. “Costs of Issuance” means all of the costs of issuing and delivering the Bonds, including, but not limited to, all printing and document preparation expenses in connection with this Indenture, the Lease Agreement, the Ground Lease, the Assignment Agreement, the Bonds and any prelim inary official statement and final official statement pertaining to the Bonds, rating agency fees, CUSIP Service Bureau charges, market study fees, legal fees, municipal advisor and other consultant fees, printing fees and expenses of counsel with the issuance and delivery of the Bonds, the initial fees and expenses of the Trustee and its counsel and other fees and expenses incurred in connection with the issuance and delivery of the Bonds, to the extent such fees and expenses are approved by the City. “Costs of Issuance Fund” means the fund by that name established in accordance with Section 3.04. “DTC” means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of New York, and its successors as securities depo sitory for any Series of Book-Entry Bonds, including any such successor appointed pursuant to Section 2.10. 5.2.e Packet Pg. 184 4 4837-5803-9009v3/200928-0001 “Escrow Bank” means U.S. Bank National Association, as trustee for the 2002 Bonds. “Federal Securities” means: (a) non-callable direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), fully and unconditionally guaranteed as to timely payment; and (b) obligations of any agency, department or instrumentality of the United States of America the timely payment of principal of and interest on which are fully guaranteed by the United States of America, provided that such securities are eligible for defeasance under the then-existing criteria of S&P. “Ground Lease” means the Ground Lease relating to the Property, dated as of the date hereof, by and between the City and the Authority, as originally executed and as it may from time to time be amended in accordance with the provisions thereof and of the Lease Agreement. “Indenture” means this Indenture, as originally executed and as it may be amended or supplemented from time to time by any Supplemental Indenture. “Information Services” means the Municipal Securities Rulemaking Board through the Electronic Municipal Marketplace Access (EMMA) website; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other services providing information with respect to called bonds as the Authority may designate in a Written Certificate of the Authority delivered to the Trustee. “Interest Fund” means the fund by that name established in accordance with Section 5.02. “Interest Payment Date” means ____ 1, 202__ and each June 1 and December 1 thereafter. “Lease Agreement” means the Lease Agreement relating to the Property, dated as of the date hereof, by and between the City and the Authority, as originally executed and as it may be from time to time amended in accordance with the provisions thereof. “Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, except that if such corporation shall no longer perform the function of a securities rating agency for any reason, the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. “Net Insurance Proceeds Fund” means the fund by that name established in accordance with Section 5.02. “Office of the Trustee” means the corporate trust office of the Trustee in St. Paul, Minnesota, or such other office as may be specified to the Authority and the City by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing. “Opinion of Counsel” means a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the Authority or the City and which written opinion, if to be delivered to the Trustee, is satisfactory to the Trustee. 5.2.e Packet Pg. 185 5 4837-5803-9009v3/200928-0001 “Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 11.09) 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 10.01; 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 pursuant to this Indenture. “Owner” means, with respect to a Bond, the Person in whose name such Bond is registered on the Registration Books. “Participant” means any entity which is recognized as a participant by DTC in the book - entry system of maintaining records with respect to Book-Entry Bonds. “Participating Underwriter” has the meaning ascribed thereto in the Continuing Disclosure Certificate. “Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein (the Trustee is entitled to rely upon the investment direction of the City as a determination that such investment is a legal investment): (a) Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the timely payment of principal of and interest on which are fully and unconditionally guaranteed by the United States of America. (b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided that such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (i) U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership (ii) Farmers Home Administration (FmHA) Certificates of beneficial ownership (iii) Federal Financing Bank (iv) Federal Housing Administration Debentures (FHA) (v) General Services Administration Participation certificates (vi) Government National Mortgage Association (GNMA or “Ginnie Mae”) GNMA – guaranteed mortgage-backed bonds GNMA – guaranteed pass-through obligations (vii) U.S. Maritime Administration 5.2.e Packet Pg. 186 6 4837-5803-9009v3/200928-0001 Guaranteed Title XI financing (viii) U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures – U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds – U.S. government guaranteed public housing notes and bonds. (c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): (i) Federal Home Loan Bank System Senior debt obligations (ii) Federal Home Loan Mortgage Corporation (FHLMC or “Freddie Mac”) Participation Certificates Senior debt obligations (iii) Federal National Mortgage Association (FNMA or “Fannie Mae”) Mortgage-backed securities and senior debt obligations (iv) Student Loan Marketing Association (SLMA or “Sallie Mae”) Senior debt obligations (v) Resolution Funding Corp. (REFCORP) obligations (vi) Farm Credit System Consolidated systemwide bonds and notes. (d) 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 h aving a rating by S&P of AAAm-G, AAA-m or AA-m and if rated by Moody’s rated Aaa, Aa1 or Aa2, including funds for which the Trustee and its affiliates provide investment advisory, custodial transfer agency and other management services, and receive and retain a fee for such services provided to the fund. (e) Certificates of deposit (including those placed by a third party pursuant to a separate agreement between the Authority and the Trustee) secured at all times by collateral described in (a) and/or (b) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks or mutual savings banks whose sho rt term obligations are rated “A-1+” or better by S&P and “Prime-1” by Moody’s. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. (f) Bank deposit products, certificates of deposit (including those placed by a third party pursuant to a separate agreement between the Authority and the Trustee), savings accounts, deposit accounts, including time deposits, trust funds, trust accounts, overnight bank deposits, interest bearing accounts, interest bearing money market accounts, banker’s acceptances, money market deposits which are fully insured by FDIC, including BIF and SAIF, including those of the Trustee and its affiliates. 5.2.e Packet Pg. 187 7 4837-5803-9009v3/200928-0001 (g) Investment agreements, including guaranteed investment contracts. (h) Commercial paper rated, at the time of purchase, “Prime-1” by Moody’s and/or “A-1” or better by S&P. (i) Bonds or notes issued by any state or municipality which are rated by Moody’s and/or S&P in one of the two highest long-term rating categories assigned by such agencies. (j) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of “Prime-1” or “A3” or better by Moody’s and/or “A-1+” or better by S&P. (k) Repurchase agreements or reverse repurchase agreements (“Repos”) that provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Trustee (buyer/lender), and the transfer of cash from the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the Trustee in exchange for the securities at a specified date. Repos must satisfy the following criteria: (a) Repos must be among the City, the Trustee and a dealer bank or securities firm (i) Primary dealers on the Federal Reserve reporting dealer list which are rated “A” or better by S&P and Moody’s, or (ii) Banks rated “A” or above by S&P and Moody’s. (b) The written repo contract must include the following: (i) Securities which are acceptable for transfer are: (I) Direct U.S. Governments (II) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC) (ii) The term of the repo may be up to 30 days (iii) The collateral must be delivered to the City or the Trustee (if Trustee is not supplying the collateral) or third party acting as agent for the Trustee (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities). (iv) Valuation of Collateral (I) The securities must be valued weekly, marked-to-market at current market price plus accrued interest. 5.2.e Packet Pg. 188 8 4837-5803-9009v3/200928-0001 (II) The value of collateral must be equal to 104% of the amount of cash transferred by the City or the Trustee, on behalf of the City, to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by District or the Trustee, on behalf of the City, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%. (III) Legal opinion which must be delivered to the City and the Trustee. Repos must also meet guidelines under state law for legal investment of public funds. (l) The Local Agency Investment Fund of the State, created pursuant to Section 16429.1 of the California Governmental Code, to the extent that the Trustee is authorized to register such investment in its own name. “Person” means an individual, corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. “Principal Fund” means the fund by that name established in accordance with Section 5.02. “2002 Bonds” has the meaning set forth in the Recitals hereof. “2002 Project” has the meaning set forth in the Recitals hereof, as more particularly described in Exhibit B. “Property” has the meaning set forth in the Recitals hereof. “Rebate Fund” means the fund by that name established in accordance with Section 5.05. “Rebate Requirement” has the meaning ascribed thereto in the Tax Certificate. “Record Date” means the fifteenth day of the month next preceding an Interest Payment Date, whether or not such day is a Business Day. “Redemption Fund” means the fund by that name established in accordance with Section 5.02. “Redemption Price” means the aggregate amount of principal of, accrued interest to the date of redemption on and premium, if any, on the Bonds upon the redemption thereof pursuant hereto. “Registration Books” means the records maintained by the Trustee for the registration of ownership and registration of transfer of the Bonds pursuant to Section 2.05. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments. 5.2.e Packet Pg. 189 9 4837-5803-9009v3/200928-0001 “Rental Period” means the period from the Closing Date through May 31, 2022 and, thereafter, the twelve-month period commencing on June 1 of each year during the term of the Lease Agreement. “Representation Letter” means the Letter of Representations from the Authority to DTC, or any successor securities depository for any Series of Book-Entry Bonds, in which the Authority makes certain representations with respect to issues of its securities for deposit by DTC or such successor depository. “S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term “S&P” shall be dee med to refer to any other nationally recognized securities rating agency selected by the Authority. “Securities Depositories” means The Depository Trust Company; and, in accordance with then current guidelines of the Securities and Exchange Commission, suc h other securities depositories as the Authority may designate in a Written Certificate of the Authority delivered to the Trustee. “Series” means the Series 2021 Bonds executed, authenticated and delivered on the Closing Date and identified pursuant to this Indenture and any Additional Bonds issued pursuant to a Supplemental Indenture and identified as a separate Series of Bonds. “Series 2021 Bonds” means the City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A issued hereunder. “Supplemental Indenture” means any supplemental indenture amendatory of or supplemental to this Indenture, but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder. “Tax Certificate” means the Tax Certificate executed by the Authority and the City at the time of issuance of the Series 2021 Bonds relating to the requirements of Section 148 of the Code, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. “Trustee” means U.S. Bank National Association, a national banking association that is duly organized and existing under and by virtue of the laws of the United States, or any successor thereto as Trustee hereunder, appointed as provided herein. “2021 Costs of Issuance Account” means the account by that name within the Costs of Issuance Fund established pursuant to Section 3.04. “Written Certificate of the Authority” and “Written Request of the Authority” mean, respectively, a written certificate or written request signed in the name of the Authority by an Authorized Authority Representative. Any such certificate or request 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. “Written Certificate of the City” and “Written Request of the City” mean, respectively, a written certificate or written request signed in the name of the City by an Authorized City 5.2.e Packet Pg. 190 10 4837-5803-9009v3/200928-0001 Representative. Any such certificate or request 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. Section 1.02 Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the Authority, the City, the Trustee and the Owners from time to time of all Bonds authorized, executed, issued and delivered hereunder and then Outstanding to secure the full and final payment of the principal of, premium, if any, and interest on all Bonds which may from time to time be authorized, executed, issued and delivered hereunder, subject to the agreements, condi tions, covenants and provisions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Authority or the City shall be for the equal and proportionate benefit, protection and security of all Owners of the Bonds without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number or date thereof or the time of authorization, sale, execution, issuance or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. ARTICLE II THE BONDS Section 2.01 Authorization of Bonds. The Authority hereby authorizes the issuance of the Bonds under and subject to the terms of this Indenture and applicable laws of the State of California. The Bonds may consist of one or more Series of Bonds of varying denominations, dates, maturities, interest rates and other provisions, subject to the provisions and conditions contained herein. The Series 2021 Bonds are authorized hereunder for the purpose of refunding the 2002 Bonds. Section 2.02 Terms of Series 2021 Bonds. (a) The Series 2021 Bonds shall be designated the “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A.” Each Series of Additional Bonds shall bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series of Bonds. (b) The Series 2021 Bonds shall be issued in fully registered form without coupons in Authorized Denominations, so long as no Series 2021 Bond shall have more than one maturity date. The Series 2021 Bonds shall be dated as of the Closing Date, shall be issued in the aggregate principal amount of $____, shall mature on June 1 of each year and shall bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the rates per annum as follows: Maturity Date (June 1) Principal Amount Interest Rate 20__ $ % (c) Interest on the Series 2021 Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless: (i) a Series 2021 Bond is authenticated 5.2.e Packet Pg. 191 11 4837-5803-9009v3/200928-0001 on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it shall bear interest from such Interest Payment Date ; (ii) a Series 2021 Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the dated date thereof; or (iii) interest on any Series 2021 Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Interest shall be paid in lawful money of the United States on each Interest Payment Date to the Persons in whose names the ownership of the Series 2021 Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Except as provided in Section 2.10(a), interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Series 2021 Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. (d) The principal and premium, if any, of the Series 2021 Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee. (e) The Series 2021 Bonds shall be subject to redemption as provided in Article IV. Section 2.03 Form of Series 2021 Bonds. The Series 2021 Bonds shall be in substantially the form set forth in Exhibit A, with appropriate or necessary insertions, omissions and variations as permitted or required hereby. Section 2.04 Transfer and Exchange of Bonds. 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 such person’s duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds of the same Series in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of the same Series of other Authorized Denominations. The Trustee shall require the payment by the Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be obligated to make any transfer or exchange of Bonds of a Series pursuant to this Section during the period established by the Trustee for the selection of Bonds of such Series for redemption, or with respect to any Bonds of such Series selected for redemption. Prior to any transfer of the Bonds outside the book-entry system (including, but not limited to, the initial transfer outside the book-entry system) the transferor will provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045, as amended. The Trustee will conclusively rely on the 5.2.e Packet Pg. 192 12 4837-5803-9009v3/200928-0001 information provided to it and has no responsibility to verify or ensure the accuracy of such information. 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 be open to inspection during regular business hours and upon reasonable n otice by the City; 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 Execution of Bonds. The Bonds shall be executed in the name and on behalf of the Authority with the facsimile signature of an Authorized Officer of the Authority attested by the manual or facsimile signature of the Secretary of the Authority. The Bonds shall then be delivered to the Trustee for authentication by it. In case any of such officers of the Authority who shall have signed or attested any of the Bonds shall cease to be such officers of the Authority before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee, or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as thou gh those who signed and attested the same had continued to be such officers of the Authority, and also any Bonds may be signed and attested on behalf of the Authority by such Persons as at the actual date of execution of such Bonds shall be the proper officers of the Authority although at the nominal date of such Bonds any such Person shall not have been such officer of the Authority. Section 2.07 Authentication of Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form as that set forth in Exhibit A, manually or electronically executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of or on behalf of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture. Section 2.08 Temporary Bonds. The Bonds of a Series may be issued in temporary form exchangeable for definitive Bonds of such Series when ready for delivery. Any temporary Bonds may be printed, lithographed or typewritten, shall be of such authorized denominations as may be determined by the Authority, shall be in fully registered form without coupons and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds of a Series, it will execute and deliver definitive Bonds of such Series as promptly thereafter as practicable, and thereupon the temporary Bonds of such Series may be surrendered, for cancellation, at the Office of the Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of such Series in Authorized Denominations. Until so exchanged, the temporary Bonds of such Series shall be entitled to the same benefits under this Indenture as definitive Bonds of such Series authenticated and delivered hereunder. Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and Series in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so 5.2.e Packet Pg. 193 13 4837-5803-9009v3/200928-0001 mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or in accordance with the order of, the Authority. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trust ee and, if such evidence and indemnity satisfactory to the Trustee shall be 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 and Series in lieu of and in replacement for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been selected for redemption, instead of issuing a replacement Bond, the Trustee may pay the same without surrender thereof). The Authority may requi re payment by the Owner of a sum not exceeding the actual cost of preparing each replacement Bond issued under this Section and of the expenses which may be incurred by the Authority and the Trustee. Any Bond of a Series issued under the provisions of this Section in lieu of any Bond of such Series alleged to be lost, destroyed or stolen shall 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 entitled to the benefits of this Indenture with all other Bonds of such Series secured by this Indenture. Section 2.10 Book-Entry Bonds. (a) Prior to the issuance of a Series of Bonds, the Authority may provide that such Series of Bonds shall initially be issued as Book-Entry Bonds and, in such event, the Bonds of such Series for each maturity shall be in the form of a separate single fully registered Bond (which may be typewritten). The Series 2021 Bonds shall initially be issued as Book-Entry Bonds. Except as provided in subsection (c) of this Section, the registered Owner of all of the Book- Entry Bonds shall be Cede & Co., as nominee of DTC. Notwithstanding anything to the contrary contained in this Indenture, payment of interest with respect to any Book-Entry Bond registered as of each Record Date in the name of Cede & Co. shall be made by wire transfer of same -day funds to the account of Cede & Co. on the Interest Payment Date at the address indicated on the Record Date for Cede & Co. in the Registration Books or as otherwise provided in the Representation Letter. (b) The Trustee, the City and the Authority may treat DTC (or its nominee) as the sole and exclusive Owner of Book-Entry Bonds registered in its name for the purposes of payment of the principal, premium, if any, or interest with respect to Book-Entry Bonds, selecting Book-Entry Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Owners of Book-Entry Bonds under this Indenture, registering the transfer of Book-Entry Bonds, obtaining any consent or other action to be taken by Owners of Book -Entry Bonds and for all other purposes whatsoever, and neither the Trustee nor the Authority shall be affected by any notice to the contrary. None of the Trustee, the City nor the Authority shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in Book -Entry Bonds under or through DTC or any Participant, or any other person which is not shown on the Registration Books as being an Owner, with respect to the accuracy of any records maintained by DTC or any Participant, the payment by DTC or any Participant of any amount in respect of the principal, premium, if any, or interest with respect to Book-Entry Bonds, any notice which is permitted or required to be given to Owners of Book-Entry Bonds under this Indenture, the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of Book -Entry Bonds, or any consent given or other action taken by DTC as Owner of Book -Entry Bonds. The Trustee shall pay all principal, premium, if any and interest with respect to Book -Entry Bonds, only to DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority’s obligations with respect to the principal, premium, if any, and interest with respect to the 5.2.e Packet Pg. 194 14 4837-5803-9009v3/200928-0001 Book-Entry Bonds to the extent of the sum or sums so paid. Except under the conditions of subsection (c) of this Section, no person other than DTC shall receive an executed Book-Entry Bond for each separate stated maturity. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to record dates, the term “Cede & Co.” in this Indenture shall refer to such new nominee of DTC. (c) In the event that: (i) DTC, including any successor as securities depository for a Series of Bonds, determines not to continue to act as securities depository for such Series of Bonds; or (ii) the Authority determines that the incumbent securities depository shall no longer so act, and delivers a written certificate to the Trustee to that effect, then the Authority will disc ontinue the book-entry system with the incumbent securities depository for such Series of Bonds. If the Authority determines to replace the incumbent securities depository for such Series of Bonds with another qualified securities depository, the Authority shall prepare or direct the preparation of a new single, separate fully registered Bond of such Series for the aggregate outstanding principal amount of Bonds of such Series of each maturity, registered in the name of such successor or substitute qualified securities depository, or its nominee, or make such other arrangement acceptable to the Authority, the Trustee and the successor securities depository for the Bonds of such Series as are not inconsistent with the terms of this Indenture. If the Authori ty fails to identify another qualified successor securities depository for such Series of Bonds to replace the incumbent securities depository, then the Bonds of such Series shall no longer be restricted to being registered in the Registration Books in the name of the incumbent securities depository or its nominee, but shall be registered in whatever name or names the incumbent securities depository for such Series of Bonds, or its nominee, shall designate. In such event the Authority shall execute, and de liver to the Trustee, a sufficient quantity of Bonds of such Series to carry out the transfers and exchanges provided in Sections 2.04, 2.08 and 2.09. All such Bonds of such Series shall be in fully registered form in Authorized Denominations. (d) Notwithstanding any other provision of this Indenture to the contrary, so long as any Book-Entry Bond is registered in the name of DTC, or its nominee, all payments with respect to the principal, premium, if any, and interest with respect to such Book -Entry Bond and all notices with respect to such Book-Entry Bond shall be made and given, respectively, as provided in the Representation Letter. (e) In connection with any notice or other communication to be provided to Owners of Book-Entry Bonds pursuant to this Indenture by the Authority, the City or the Trustee with respect to any consent or other action to be taken by Owners, the Authority, the City or the Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS Section 3.01 Issuance of Series 2021 Bonds. The Authority may, at any time, execute the Series 2021 Bonds for issuance hereunder and deliver the same to the Trustee. The Trustee shall authenticate the Series 2021 Bonds and deliver the Series 2021 Bonds to the original purchaser 5.2.e Packet Pg. 195 15 4837-5803-9009v3/200928-0001 thereof upon receipt of a Written Request of the Authority and upon receipt of the purchase price therefor. Section 3.02 Application of Proceeds of the Series 2021 Bonds. (a) On the Closing Date, the proceeds of the sale of the Series 2021 Bonds received by the Trustee, $_____, shall be deposited by the Trustee as follows: (i) The Trustee shall deposit the amount of $______ in the 2021 Costs of Issuance Account. (ii) The Trustee shall transfer the amount of $_____ to the Escrow Bank to be applied to redeem the 2002 Bonds. (b) The Trustee may establish temporary funds and accounts in its records connection with the receipt of the proceeds of the Series 2021 Bonds. Section 3.03 [RESERVED]. Section 3.04 Costs of Issuance Fund. The Trustee shall establish and maintain a separate fund designated the “Costs of Issuance Fund,” and within such fund the “2021 Costs of Issuance Account.” On the Closing Date, there shall be deposited in the 2021 Costs of Issuance Account the amount specified in Section 3.02(a)(i). There shall additionally be deposited in the Costs of Issuance Fund the portion, if any, of the proceeds of the sale of any Additional Bonds required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued. The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of the Authority stating: (a) the Person to whom payment is to be made; (b) the amount to be paid, together with payment instructions; (c) the purpose for which the obligation was incurred; (d) that such payment is a proper charge against the Costs of Issuance Fund; and (e) that such amounts have not been the subject of a prior disbursement from the Costs of Issuance Fund, in each case to gether with a statement or invoice for each amount requested thereunder. Each such Written Request 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. On the six month anniversary of the Closing Date, all amounts, if any, remaining in the 2021 Costs of Issuance Account shall be withdrawn therefrom by the Trustee and transferred to the Interest Fund , and the 2021 Costs of Issuance Account shall be closed. Section 3.05 [RESERVED]. Section 3.06 Conditions for the Issuance of Additional Bonds. The Authority may at any time issue one or more Series of Additional Bonds (in addition to the Series 2021 Bonds) payable from Base Rental Payments as provided herein on a parity with all other Bonds theretofore issued hereunder, but only subject to the following conditions, which are hereby made conditions precedent to the issuance of such Additional Bonds: (a) The issuance of such Additional Bonds shall have been authorized under and pursuant hereto and shall have been provided for by a Supplemental Indenture which shall specify the following: 5.2.e Packet Pg. 196 16 4837-5803-9009v3/200928-0001 (1) The application of the proceeds of the sale of such Additional Bonds; (2) The principal amount and designation of such Series of Additional Bonds and the denomination or denominations of the Additional Bonds; (3) The date, the maturity date or dates, the interest payment dates and the dates on which mandatory sinking fund redemptions, if any, are to be made for such Additional Bonds; provided, however, that: (i) the serial Bonds of such Series of Additional Bonds shall be payable as to principal annually on June 1 of each year in which principal falls due, and the term Bonds of such Series of Additional Bonds shall have annual mandatory sinking fund redemptio ns on June 1; (ii) the Additional Bonds shall be payable as to interest semiannually on June 1 and December 1 of each year, except that the first installment of interest may be payable on either June 1 or December 1 and shall be for a period of not longer than twelve months and the interest shall be payable thereafter semiannually on June 1 and December 1; (iii) all Additional Bonds of a Series of like maturity shall be identical in all respects, except as to number or denomination; and (iv) serial maturities of serial Bonds or mandatory sinking fund redemptions for term Bonds, or any combination thereof, shall be established to provide for the redemption or payment of such Additional Bonds on or before their respective maturity dates; (4) The redemption premiums and terms, if any, for such Additional Bonds; (5) The form of such Additional Bonds; and (6) Such other provisions that are appropriate or deemed necessary by the Authority and are not inconsistent with the provisions hereof; (b) The Authority shall be in compliance with all agreements, conditions, covenants and terms contained herein, in the Lease Agreement and in the Ground Lease required to be observed or performed by it; (c) The City shall be in compliance with all agreements, conditions, covenants and terms contained herein, in the Lease Agreement and in the Ground Lease required to be observed or performed by it; and (d) The Ground Lease shall have been amended, to the extent necessary, and the Lease Agreement shall have been amended so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount equal to the principal of and interest on such Additional Bonds, payable at such times and in such manner as may be necessary to provide for the payment o f the principal of and interest on such Additional Bonds; provided, however, that no such amendment shall be made such that the sum of Base Rental Payments, including any increase in the Base Rental Payments as a result of such amendment, plus Additional R ental Payments, in any Rental Period shall be in excess of the annual fair rental value of the Property after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith (evidence of the satisfaction of such condition shall be made by a Written Certificate of the City). Nothing contained herein shall limit the issuance of any bonds or other obligations payable from Base Rental Payments if, after the issuance and delivery of such bonds or other obligations, none of the Bonds theretofore issued hereunder will be Outstanding. 5.2.e Packet Pg. 197 17 4837-5803-9009v3/200928-0001 Section 3.07 Procedure for the Issuance of Additional Bonds. At any time after the sale of any Additional Bonds, such Additional Bonds shall be executed by the Authority for issuance hereunder and shall be delivered to the Trustee and thereupon shall be authenticated and delivered by the Trustee, but only upon receipt by the Trustee of the following: (a) Certified copies of the Supplemental Indenture authorizing the issuance of such Additional Bonds, the amendment to the Lease Agreement required by Section 3.06 and the amendment to the Ground Lease, if any, required by Section 3.06, together with satisfactory evidence that such amendment to the Lease Agreement and such amendment to the Ground Lease, if any, have been duly recorded; (b) A Written Request of the Authority as to the delivery of such Additional Bonds; (c) An Opinion of Counsel substantially to the effect that: (i) the Indenture (including all Supplemental Indentures), the Lease Agreement (including the amendment thereto required by Section 3.06) and the Ground Lease (including any amendment thereto required by Section 3.06) have been duly authorized, executed and delivered by, and constitute the valid and binding obligations of, the Authority and the City, enforceab le in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights and by the application of equitable principles and by the exercise of judicial discretion in appropriate cases and subject to the limitations on legal remedies against political subdivisions in the State of California); (ii) such Additional Bonds constitute valid and binding special obligations of the Authority payable solely from Base Rental Payments as provided herein and are enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights and by the application of equitable principles and by the exercise of judicial discretion in appropriate cases and subject to the limitations on legal remedies against political subdivisions in the State of California); and (iii) the issuance of such Additional Bonds, in and of itself, will not adversely affect the exclusion of interest on the Bonds Outstanding prior to the issuance of such Additional Bonds from gross income for federal income tax purposes; (d) a Written Certificate of the Authority that the requirements of Section 3.06 have been met; (e) a Written Certificate of the City that the requirements of Sections 5.01 and 5.02 of the Lease Agreement have been met, and a Written Certificate of the City as to the fair rental value of the Property, after giving effect to the executio n and delivery of the Additional Bonds, and to the use of proceeds received therefrom; and (f) Such further documents as are required by the provisions hereof or by the provisions of the Supplemental Indenture authorizing the issuance of such Additional Bonds. Section 3.08 Additional Bonds. So long as any of the Bonds remain Outstanding, the Authority shall not issue any Additional Bonds or obligations payable from the Base Rental Payments, except pursuant to Sections 3.06 and 3.07. 5.2.e Packet Pg. 198 18 4837-5803-9009v3/200928-0001 ARTICLE IV REDEMPTION OF BONDS Section 4.01 Redemption of Series 2021 Bonds. (a) Extraordinary Redemption. The Series 2021 Bonds shall be subject to redemption, in whole or in part, on any date as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, in Authorized Denominations, from and to the extent of any Net Insurance Proceeds received with respect to all or a portion of the Property, deposited by the Trustee in the Redemption Fund pursuant to Sections 5.03 and 5.04, at a Redemption Price equal to the principal amount of the Series 2021 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premiu m. (b) Optional Redemption. The Series 2021 Bonds maturing on or after June 1, 20__, shall be subject to optional redemption, in whole or in part, on _____ 1, 20__ or any date thereafter, as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to subsection (a) of Section 7.02 of the Lease Agreement, at a Redemption Price equal to the principal amount of the Series 2021 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. (c) Mandatory Sinking Fund Redemption. The Series 2021 Bonds with stated maturities on June 1, 20__, are subject to mandatory sinking fund redemption in part (by lot) on June 1, 20__ and each June 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Mandatory Sinking Fund Redemption Dates (June 1) Principal Amount of Bonds to be Redeemed 20__ $ 20__* * Maturity. If, during the Fiscal Year immediately preceding one of the redemption dates specified above, the Authority purchases Series 2021 Bonds, at least 45 days prior to the redemption date, the Authority shall notify the Trustee as to the principal amount purchased and the amount of Series 2021 Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming mandatory sinking fund redemption payment for the applicable Series 2021 Bonds so purchased. All Series 2021 Bonds purchased pursuant to this subsection shall be cancelled pursuant to Section 11.09. In the event of a redemption pursuant to Section 4.01(a) or (b) or in the event of the purchase of Series 2021 Bonds, the City shall provide the Trustee with a revised mandatory sinking fund schedule giving effect to the redemption so completed. 5.2.e Packet Pg. 199 19 4837-5803-9009v3/200928-0001 Section 4.02 Notice of Redemption. The Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice of any redemption to the resp ective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, to the Securities Depositories and to one or more Information Services, at least 20 but not more than 60 days prior to the date fixed for redemption. Such notice shall state the date of the notice, the redemption date, the redemption place and the Redemption Price and sha ll designate the CUSIP numbers and the maturity or portion of the maturity of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at the Office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Bonds will not accrue from and after the date fixed for redemption. Such notice of redemption may also state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Bonds. Neither the failure to receive any notice so mailed, nor any defect in such notice, shall affect the validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of optional redemption of Bonds, such notice may state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such Bonds to be redeemed and that, if such moneys shall not have been so received, said notice s hall be of no force and effect and the Trustee shall not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption shall not be made, and the Trustee shall within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. Section 4.03 Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption: (a) with respect to any optional redemption of Bonds of a Series, among maturities of Bonds of such Series as directed in a Written Request of the Authority; (b) with respect to any redemption pursuant to Section 4.01(a) and the corresponding provision of any Supplemental Indenture pursuant to which Additional Bonds are issued, among maturities of all Series of Bonds on a pro rata basi s as nearly as practicable; and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued, and by lot among Bonds of the same Series with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treat ed as separate Bonds which may be separately redeemed. Section 4.04 Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same Series in Authorized Denominations equal in aggregate principal amount representing the unredeemed portion of the Bonds surrendered. Section 4.05 Effect of Notice of Redemption. Notice having been mailed as aforesaid, and moneys for the Redemption Price, and the interest to the applicable date fixed for redemption, having been set aside in the Redemption Fund, the Bonds shall become due and payable on said date, and, upon presentation and surrender thereof at the Office of the Trustee, said Bonds shall be paid at the Redemption Price thereof, together with interest accrued and unpaid to said date. 5.2.e Packet Pg. 200 20 4837-5803-9009v3/200928-0001 If, on said date fixed for redemption, moneys for the Redemption Price of all the Bonds to be redeemed, together with interest to said date, shall be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof shall have been mailed as aforesaid and not canceled, then, from and after said date, interest on said Bonds shall cease t o accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds shall be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to such Owners for interest thereon. All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed. ARTICLE V SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS Section 5.01 Pledge; Special Obligations. 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 Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund are hereby pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of this Indenture. Subject to Section 7.08(a), said pledge shall constitute a first lien on such assets. All obligations of the Authority under this Indenture shall be special obligations of the Authority, payable solely from Rental Payments and the other assets pledged therefor hereunder; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor hereunder. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds. Section 5.02 Flow of Funds. (a) The Trustee shall establish and maintain separate funds designated the “Base Rental Payment Fund,” the “Interest Fund,” the “Principal Fund,” the “Redemption Fund” and the “Net Insurance Proceeds Fund.” All Base Rental Payments shall be paid directly by the City to the Trustee, and if received by the Authority at any time shall be transferred by the Authority to the Trustee within one Business Day after the receipt thereof. All Base Rental Payments received by the Trustee shall be deposited by the Trustee in the Base Rental Payment Fund. (b) The Trustee shall transfer the amounts on deposit in the Base Rental Pa yment Fund, at the times and in the manner hereinafter provided, to the following respective funds: (i) Interest Fund. On the Business Day immediately preceding each Interest Payment Date, the Trustee shall transfer from the Base Rental Payment Fund to the Interest Fund the amount, if any, necessary to cause the amount on deposit in the Interest Fund to be equal to the interest due on the Bonds on such Interest Payment Date. 5.2.e Packet Pg. 201 21 4837-5803-9009v3/200928-0001 (ii) Principal Fund. On the Business Day immediately preceding each June 1, commencing June 1, 20__, the Trustee shall transfer from the Base Rental Payment Fund to the Principal Fund the amount, if any, necessary to cause the amount on deposit in the Principal Fund to be equal to the principal amount of the Bonds due on such June 1 either as a result of the maturity thereof or mandatory sinking fund redemption payments required to be made with respect thereto. Moneys in the Principal Fund shall be used by the Trustee for the purpose of paying the principal of the Bonds when due and payable at their maturity dates or upon earlier mandatory sinking fund redemption. (iii) Redemption Fund. The Trustee, on the redemption date specified in the Written Request of the City filed with the Trustee at the time that any prepaid Base Rental Payment is paid to the Trustee pursuant to the Lease Agreement, shall deposit in the Redemption Fund that amount of moneys representing the portion of the Base Rental Payments designated as prepaid Base Rental Payments. Additionally, the Trustee shall deposit in the Redemptio n Fund any amounts required to be deposited therein pursuant to Section s 5.03 or 5.04. Moneys in the Redemption Fund shall be used by the Trustee for the purpose of paying the principal of and interest and premium, if any, on Series 2021 Bonds redeemed pursuant to the provisions of subsections (a) and (c) of Section 4.01 and Additional Bonds redeemed pursuant to the corresponding provisions of the Supplemental Indenture pursuant to which such Additional Bonds are issued; provided, however, that moneys deposited in the Redemption Fund may also be used to purchase Outstanding Series 2021 Bonds or Additional Bonds in the manner hereinafter provided. Purchases of Outstanding Series 2021 Bonds or Additional Bonds may be made by the Authority at public or private sale as and when and at such prices as the Authority may in its discretion determine, but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption or an extraordinary redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to Sections 4.01(a) or (b), as applicable, or in the case of Additional Bonds the premium established in any Supplemental Indenture. Any accrued interest payable upon the purchase of Series 2021 Bonds or Additional Bonds may be paid from the amount reserved in the Interest Fund. (iv) Surplus. With respect to each Rental Period, moneys on deposit in the Base Rental Payment Fund which are in excess of the payments required above for such Rental Period may be expended by the Authority at any time for any purpose permitted by law as directed by the Authority. (c) Upon receipt of a Written Certificate of the City pursuant to Section 3.06 of the Lease Agreement that the City has commenced repairs of the Property, the Trustee will transfer moneys from the Redemption Fund at the times and in the manner required by subsection (b)(iii) above if and to the extent there are insufficient funds in the Base Rental Payment Fund to make such transfers. Upon receipt of a Written Certificate of the City pursuant to Section 3.06 of the Lease Agreement that the City has completed repairs of the Property and will recommence to make Base Rental Payments or that the City has determined not to make such repairs and made the certifications required pursuant to the Lease Agreement, the Trustee will transfer any funds remaining on deposit in the Redemption Fund to the City for any lawful use. Section 5.03 Application of Net Insurance Proceeds. If the Property or any portion thereof shall be damaged or destroyed, subject to the further requirements of this Section, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted 5.2.e Packet Pg. 202 22 4837-5803-9009v3/200928-0001 the repair or replacement thereof, unless the City elects not to repair or replace the Property or the affected portion thereof in accordance with the provisions hereof. The Net Insurance Proceeds (other than Net Insurance Proceeds of rental interruption insurance), including the proceeds of any self-insurance, received on account of any damage or destruction of the Property or a portion thereof shall as soon as possible be deposited with the Trustee and be held by the Trustee in the Net Insurance Proceeds Fund and made available for and, to the extent necessary, shall be applied to the cost of repair or replacement of the Property or the affected portion thereof upon receipt of a Written Request of th e City, together with invoices therefor. Each such Written Request of the City 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. Pending such application, such proceeds may be invested by the Trustee as directed by the City in Permitted Investments that mature not later than such times moneys are expected to be needed to pay such costs of repair or replacement. Notwithstanding the foregoing, the City shall, within 60 days of the occurrence of the event of damage or destruction, notify the Trustee in writing as to whether the City intends to replace or repair the Property or the portions of the Property which were damaged or destroyed. If the City does intend to replace or repair the Property or portions thereof, the City shall deposit with the Trustee the full amount of any insurance deductible to be credited to the Net Insurance Proceeds Fund. In the event of any damage to or destruction of the Property caused by one of the perils covered by the insurance required by Section 5.01(c) of the Lease Agreement which would result in an abatement of rental payments or any portion thereof pursuant to Section 3.06 thereof, then the City shall apply the Net Insurance Proceeds, together with other legally available funds that the City elects to contribute, to the repair, reconstruction or replacement of the damaged or destroyed portions of the Property; provided, however, that the City shall not be required to repair or replace any portion of the Property pursuant to this Section 5.03 if such Net Insurance Proceeds, together with any other amounts held under this Indenture and any other legally available funds made available by the City at its election, are sufficient to prepay: (i) all of the Outstanding Bonds; or (ii) a portion of the Outstanding Bonds such that the resulting Base Rental Payments under Section 4.01(a) in any Rental Period following such partial prepayment are sufficient to pay in such Rental Period the principal of and interest on all Bonds to remain Outstanding immediately after such partial redemption. If the City is not required to replace or repair the Property, or the affected portion thereof, or to use such amounts to redeem Bonds, in each case as set forth in this Section 5.03, then such proceeds shall, if there is first delivered to the Trustee a Written Certificate of the City to the effect that the annual fair rental value of the Property after such damage or destruction, and after any rep airs or replacements made as a result of such damage or destruction, is at least equal to 100% of the maximum amount of Base Rental Payments becoming due under the Lease Agreement in the then current Rental Period or any subsequent Rental Period and the fair replacement value of the Property after such damage or destruction is at least equal to the principal amount of the Outstanding Bonds, be paid to the City to be used for any lawful purpose. The proceeds of any award in eminent domain received in respe ct to the Property shall be deposited by the Trustee in the Redemption Fund and applied to the redemption of Bonds pursuant to subsection (a) of Section 4.01 and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued. 5.2.e Packet Pg. 203 23 4837-5803-9009v3/200928-0001 Section 5.04 Title Insurance. Proceeds of any policy of title insurance received by the Trustee in respect of the Property shall be applied and disbursed by the Trustee as follows: (a) if the City determines that the title defect giving rise to such proceeds h as not substantially interfered with its use and occupancy of the Property and will not result in an abatement of Rental Payments payable by the City under the Lease Agreement, such proceed s shall be remitted to the City upon written direction from the City and used for any lawful purpose thereof; or (b) if the City determines that the title defect giving rise to such proceeds has substantially interfered with its use and occupancy of the Property and will result in an abatement of Rental Payments payable by the City under the Lease Agreement, then, upon written direction of the City, the Trustee shall immediately deposit such proceeds in the Redemption Fund and such proceeds shall be applied to the redemption of Bonds in the manner provided in subsection (a) of Section 4.01 and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued. Section 5.05 Rebate Fund. (a) Establishment. The Trustee shall establish a fund for the Bonds designated the “Rebate Fund” when required in accordance herewith. Absent an Opinion of Counsel that the exclusion from gross income for federal income tax purposes of interest on the Bonds will not be adversely affected, the Authority shall cause to be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to this Section and the Tax Certificate. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust for payment to the United States Treasury. All amounts on deposit in the Rebate Fund for the Bonds shall be governed by this Section and the Tax Certificate, unless and to the extent that the Author ity delivers to the Trustee an Opinion of Counsel that the exclusion from gross income for federal income tax purposes of interest on the Bonds will not be adversely affected if such requirements are not satisfied. Notwithstanding anything to the contrary contained herein or in the Tax Certificate, the Trustee: (1) shall be deemed conclusively to have complied with the provisions thereof if it follows all Written Requests of the Authority or Written Requests of the City; (2) shall have no liability or responsibility to enforce compliance by the Authority or the City with the terms of the Tax Certificate and shall not be deemed to have knowledge of the terms thereof; (3) may rely conclusively on the Authority’s or the City’s calculations and determinations and certifications relating to rebate mat ters; and (4) shall have no responsibility to independently make any calculations or determinations or to review the Authority’s or the City’s calculations or determinations thereunder. (i) Computation. Within 55 days of the end of each fifth Bond Year (as such term is defined in the Tax Certificate), the Authority shall calculate or cause to be calculated the amount of rebatable arbitrage, in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Treasury Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage, described, if applicable, in the Tax Certificate (e.g., the temporary investments exceptions of Section 148(f)(4)(B) and the construction expenditures exception of Section 148(f)(4)(C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the “1½% Penalty”) has been made), for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Treasury Regulations (the “Rebatable Arbitrage”). The Authority shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section. 5.2.e Packet Pg. 204 24 4837-5803-9009v3/200928-0001 (ii) Transfer. Within 55 days of the end of each fifth Bond Year, upon the Written Request of the Authority or Written Request of the City, an amount shall be deposited to the Rebate Fund by the Trustee from any Rental Payments legally available for such purpose (as specified by the Authority or the City in the aforesaid Written Request), if and to the extent required, so that the balance in the Rebate Fund shall equal the amount of Rebatable Arbitrage so calculated in accordance with clause (i) of this subsection (a). In the event that immediately fol lowing the transfer required by the previous sentence, the amount then on deposit to the credit of the Rebate Fund exceeds the amount required to be on deposit therein, upon Written Request of the Authority or Written Request of the City, the Trustee shall withdraw the excess from the Rebate Fund and then credit the excess to the Base Rental Payment Fund. (iii) Payment to the Treasury. The Trustee shall pay, as directed by Written Request of the Authority, to the United States Treasury, out of amounts in the Rebate Fund: (1) Not later than 60 days after the end of: (X) the fifth Bond Year; and (Y) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year; and (2) Not later than 60 days after the payment of all of the Bonds, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code and Section 1.148-3 of the Treasury Regulations. In the event that, prior to the time of any payment required to be made from the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such payment is due, the Authority shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to this subsec tion (a) shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038 -T (prepared by the Authority), or shall be made in such other manner as provided under the Code. (b) Disposition of Unexpended Funds. Any funds remaining in the Rebate Fund after redemption and payment of the Bonds and the payments described in subsection (a) above being made may be withdrawn by the Authority and utilized in any manner by the Authority. (c) Survival of Defeasance. Notwithstanding anything in this Section to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance or payment in full of the Bonds. Section 5.06 Investment of Moneys. Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Indenture and held by the Trustee shall be invested by the Trustee solely in Permitted Investments, as directed in writing by the Autho rity filed with the Trustee at least two (2) Business Days in advance of the making of such investments . Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments maturing not later than the date on which it is estima ted that such moneys will be required for the purposes specified in this Indenture; provided, however, that such Permitted Investments may be redeemed at par so as to be available on each Interest Payment Date. Absent timely written direction from the Authority, the Trustee shall hold any funds held by it uninvested. 5.2.e Packet Pg. 205 25 4837-5803-9009v3/200928-0001 Subject to the provisions hereof, all interest, profits and other income received from the investment of moneys in any fund or account established pursuant to this Indenture shall be retained in such fund or account. For investment purposes, the Trustee may commingle the funds and accounts established hereunder, but shall account for each separately. Permitted Investments acquired as an investment of moneys in any fund established under this Indenture shall be credited to such fund. In determining fair market value, the Trustee may use and rely conclusively on any generally recognized securities pricing service available to it (including brokers and dealers in securities and the service available through the Trustee’s accounting system). The Trustee may act as principal or agent in the making or disposing of any investment. Upon the Written Request of the Authority, the Trustee shall sell or present for redemption any Permitted Investments so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investments is credited, and the Trustee shall not be liable or responsible for any loss res ulting from any investment made or sold pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of the funds and accounts established hereunder. The Trustee may make any investments hereunder through the bond or inves tment department or trust investment department of the entity acting as Trustee hereunder, or those of such entity’s parent or any affiliate, and such entity, or its parent or affiliate, as applicable, shall be entitled to its normal, customary and reasonable compensation for such services. The entity acting as Trustee hereunder, or any of its affiliates, may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder and such entity, or its affiliate, as applicable, shall be entitled to its normal, customary and reasonable compensation for such services. The City and the Authority acknowledge that to the extent that regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City or the Authority the right to receive brokerage confirmations of security transactions as they occur, the City and the Authority specifically waive receipt of such confirmations to the extent permitted by law. The City and the Authority further understand that trade confirmations for securities transactions effected by the Trustee will be available upon request at no additional cost and other trade confirmations may be obtained from the applicable broker. The Trustee will furnish the City with periodic cash transaction statements which shall include detail for all investment transactions effected by the Trustee hereunder. Upon the City’s election, such statements will be delivered via the Trustee’s online service and upon electing such service, paper statements will be provided only upon request. ARTICLE VI COVENANTS Section 6.01 Compliance with Agreements. The Trustee will not authenticate or deliver any Bonds in any manner other than in accordance with the provisions hereof, and the Authority and the City will not suffer or permit any default by them to occur hereunder, but will faithfully comply with, keep, observe and perform all of the agreements, conditions, covenants and terms hereof required to be complied with, kept, observed and performed by them. 5.2.e Packet Pg. 206 26 4837-5803-9009v3/200928-0001 Section 6.02 Compliance with Ground Lease and Lease Agreement. The Authority and the City will faithfully comply with, keep, observe and perform all of the agreements, conditions, covenants and terms contained in the Ground Lease and the Lease Agreement required to be complied with, kept, observed and performed by them and, together with the Trustee, will enforce the Ground Lease and the Lease Agreement against the other party thereto in accordance with their respective terms. Section 6.03 Observance of Laws and Regulations. The Authority, the City and the Trustee will faithfully comply with, keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on them by contract, or prescribed by any law of the United States of America or of the State of California , or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by them, including their right to exist and carry on their respective businesses, to the end that such franchises, rights and privileges shall be maintained and preserved and shall not become abandoned, forfeited or in any manner impaired. Section 6.04 Other Liens. The City will keep the Property and all parts thereof free from judgments and materialmen’s and mechanics’ liens and free from all claims, demands, encumbrances and other liens of whatever nature or character, and free from any claim or liability which materially impairs the City in conducting its business or utilizin g the Property, and the Trustee at its option (after first giving the City ten days’ written notice to comply therewith and failure of the City to so comply within such ten-day period) may, but is in no event obligated to, defend against any and all actions or proceedings, or may pay or compromise any claim or demand asserted in any such actions or proceedings; provided, however, that, in defending against any such actions or proceedings or in paying or compromising any such claims or demands, the Trustee s hall not in any event be deemed to have waived or released the City from liability for or on account of any of its agreements and covenants contained herein, or from its liability hereunder and to perform such agreements and covenants. So long as any Bonds are Outstanding, none of the Trustee, the Authority or the City shall create or suffer to be created any pledge of or lien on the amounts on deposit in any of the funds or accounts created hereunder, other than the pledge and lien hereof. The Authority, the City and the Trustee shall not encumber the Property other than in accordance with the Ground Lease, the Lease Agreement, the Indenture and the Assignment Agreement. Section 6.05 Prosecution and Defense of Suits. The City will promptly, upon request of the Trustee (which request the Trustee is not required to make), take such action from time to time as may be necessary or proper to remedy or cure any cloud upon or defect in the title to the Property or any part thereof, whether now existing or hereafter developing, will prosecute all actions, suits or other proceedings as may be appropriate for such purpose and will indemnify and save the Trustee harmless from all cost, damage, expense or loss, including attorneys’ fees and expenses, which it or the Owners may incur by reason of any such cloud, defect, action, suit or other proceeding. Section 6.06 Accounting Records and Statements. The Trustee will keep proper accounting records in which complete and correct entries shall be made of all transactions of the Trustee relating to the receipt, deposit and disbursement of the Base Rental Payments, and such 5.2.e Packet Pg. 207 27 4837-5803-9009v3/200928-0001 accounting records shall be available for inspection by the Authority and the City at reasonable hours and under reasonable conditions upon reasonable notice. Section 6.07 Recordation and Filing. The City will record, or cause to be recorded, with the appropriate county recorder, the Lease Agreement, the Ground Lease and the Assignment Agreement, or memoranda thereof. Section 6.08 Tax Covenants. Notwithstanding any other provision of the Indenture, absent an Opinion of Counsel that the exclusion from gross income of the interest on the Series 2021 Bonds will not be adversely affected for federal income tax purposes, the City and the Authority covenant to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income with respect to the Series 2021 Bonds, and specifically covenant, without limiting the generality of the foregoing, as follows: (a) Private Activity. The City and the Authority will not take any action or refrain from taking any action or make any use of the proceeds of the Series 2021 Bonds or of any other moneys or property which would cause the Series 2021 Bonds to be “private activity bonds” within the meaning of Section 141 of the Code; (b) Arbitrage. The City and the Authority will make no use of the proceeds of the Series 2021 Bonds or of any other amounts or property, regardless of the source, and will not take any action or refrain from taking any action which would cause the Series 2021 Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code; (c) Federal Guarantee. The City and the Authority will make no use of the proceeds of the Series 2021 Bonds and will not take or omit to take any action that would cause the Series 2021 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code; (d) Information Reporting. The City and the Authority will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code necessary to preserve the exclusion of interest on the Series 2021 Bonds pursuant to Section 103(a) of the Code; (e) Hedge Bonds. The City and the Authority will make no use of the proceeds of the Series 2021 Bonds or any other amounts or property, regardless of the source, and will not take any action or refrain from taking any action that would cause the Series 2021 Bonds to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the City and the Authority take all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income of interest on the Series 2021 Bonds for federal income tax purposes; and (f) Miscellaneous. The City and the Authority will not take any action or refrain from taking any action inconsistent with its expectations stated in the Tax Certificate and will comply with the covenants and requirements stated therein and incorporated by reference herein. This Section and the covenants set forth herein shall not be applicable to, and nothing contained herein shall be deemed to prevent the City and the Authority from causing the issuance of Additional Bonds, the interest with respect to which has been determined by an Opinion of Counsel to be subject to federal income taxation. 5.2.e Packet Pg. 208 28 4837-5803-9009v3/200928-0001 Section 6.09 Continuing Disclosure. The City will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this Indenture, failure of the City to comply with the Continuing Disclosure Certificate shall not constitute an event of default hereunder; provided, however, that the Trustee may (and, at the written direction of any Participating Underwriter or the holders of at least 25% of the aggregate principal amount of Outstanding Series 2021 Bonds, and upon being indemnified to its reasonable satisfaction therefor, shall) or any holder or Beneficial Owner of the Series 2021 Bonds may take such actions as may be necessary and appropriate to compel performance, in cluding seeking mandate or specific performance by court order. Section 6.10 Further Assurances. Whenever and so often as requested to do so by the Trustee, the Authority and the City will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Trustee all advantages, benefits, interests, powers, privileges and rights conferred or intended to be conferred upon it hereby or by the Assignment Agreement, the Ground Lease or the Lease Agreement, and to preserve the priority of the pledge of the Rental Payments under applicable law. Section 6.11 Continued Existence of Authority. The City and the Authority will take or cause to be taken all actions reasonably necessary to continue the Authority’s existence until such time as the Bonds are no longer Outstanding hereunder, including but not limited to the addition of one or more new members to the Authority and execution of the JPA Agreement pursuant to which the Authority was created by such new members. ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01 Action on Default. If an event of default (within the meaning of Article VI of the Lease Agreement) shall happen, then such event of default shall constitute an event of default hereunder. The Trustee shall give notice, as assignee of the Authority, of an event of default under the Lease Agreement to the City to the extent that it has actual knowledge thereof . In each and every case during the continuance of an event of default, the Trustee may and, at the direction of the Owners of not less than a majority of the aggregate principal amount of Bonds then Outst anding, and upon being indemnified to its reasonable satisfaction therefor, shall, upon notice in writing to the City and the Authority, exercise any of the remedies granted to the Authority under the Lease Agreement and, in addition, take whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the Owners by this Indenture or by the Bonds, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right, including any one or more of the remedies set forth in Section 7.02 hereof. Section 7.02 Other Remedies of the Trustee. Subject to the provisions of Section 7.01 hereof, the Trustee shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Authority or the City or any member, director, officer or employee 5.2.e Packet Pg. 209 29 4837-5803-9009v3/200928-0001 thereof, and to compel the Authority or the City or any such member, director, officer or employee to perform or carry out its or his or her duties under law and the agreements and covenants required to be performed by it or him or her contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee; or (c) by suit in equity upon the happening of any event of default hereunder to require the Authority and the City to account as the trustee of an express trust. Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment or composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners so affected. Section 7.03 Non-Waiver. A waiver of any default or breach of duty or contract by the Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee to exercise any right or remedy accruing upon any default or breac h of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee by law or by this Article may be enforced and exercised from time to time and as often as the Trustee shall deem expedient. If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or any Owner, then subject to any adverse determination, the Trustee, such Owner, the Authority and the City shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 7.04 Remedies Not Exclusive. Subject to the provisions of Section 7.01, no remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prev ent the concurrent assertion or employment of any other appropriate right or remedy. Section 7.05 No Liability by the Authority to the Owners. Except as expressly provided herein, the Authority shall not have any obligation or liability to the Owners with respect to t he payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of the other agreements and covenants required to be performed by it contained in the Lease Agreement or herein, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.06 No Liability by the City to the Owners. Except for the payment when due of the Base Rental Payments and the performance of the other agreements and covenants requir ed to be performed by it contained in the Lease Agreement, the Ground Lease or herein, the City shall not have any obligation or liability to the Owners with respect to the Indenture or the preparation, execution, delivery or transfer of the Bonds or the disbursement of the Base Rental Payments by the 5.2.e Packet Pg. 210 30 4837-5803-9009v3/200928-0001 Trustee to the Owners, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.07 No Liability of the Trustee to the Owners. Except as expressly provided herein, the Trustee shall not have any obligation or liability to the Owners with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the Authority or the City of the other agreements and covenants required to be performed by them contained in the Lease Agreement, the Ground Lease or herein. Section 7.08 Application of Amounts After Default. All payments received by the Trustee with respect to the rental of the Property after a default by the City pursuant to Article VI of the Lease Agreement (including, without limitation, any proceeds received in connection with the sale, assignment or sublease of the Authority’s right, title and interest in the Ground Lease), and all damages or other payments received by the Trustee for the enforcement of any rights and powers of the Trustee under Article VI of the Lease Agreement, shall be deposited into the Base Rental Payment Fund and as soon as practicable thereafter applied, together with all other funds held hereunder (except funds in the Rebate Fund): (a) to the payment of all amounts due to the Trustee under Article VIII hereof; (b) to the payment of all amounts then due for interest on the Bonds, in respect of which, or for the benefit of which, money has been collected (other than Bonds which have become payable prior to such event of default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of interest on such Bonds due and payable; and (c) to the payment of all amounts then due for principal of the Bonds, in respect of which, or for the benefit of which, money has been collected (other than Bonds which have become payable prior to such event of default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of principal of such Bonds due and payable. Section 7.09 Trustee May Enforce Claims Without Possession of Bonds. All rights of action and claims 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 proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Owners in respec t of which such judgment has been recovered. Section 7.10 Limitation on Suits. No Owner of any Bond shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or Trustee, or for any other remedy hereunder, unless: (a) such Owner shall have previously given written notice to the Trustee of a continuing event of default; (b) the Owners of not less than 25% of the aggregate principal amount of the applicable Series of Bonds then Outstanding shall have made written request to the Trustee to institute proceedings in respect of such event of default in its own name as Trustee hereunder; (c) such Owner or Owners shall have afforded to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be 5.2.e Packet Pg. 211 31 4837-5803-9009v3/200928-0001 incurred in compliance with such request; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceedings; and (e) no direction inconsistent with such written request shall have been given to the Trustee during such 60 day period by the Owners of a majority of the aggregate principal amount of the applicable Series of Bonds then Outstanding; it being understood and intended that no one or more Owners shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Owner, or to obtain or seek to obtain priority or preference over any other Owner or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Owners. ARTICLE VIII THE TRUSTEE Section 8.01 Employment of the Trustee. The Authority hereby appoints and employs the Trustee to receive, deposit and disburse the Base Rental Payments, to authenticate, deliver and transfer the Bonds and to perform the other functions contained herein, all in the manner provided herein and subject to the conditions and terms hereof. By executing and de livering this Indenture, the Trustee accepts the appointment and employment hereinabove referred to and accepts the rights and obligations of the Trustee provided herein, subject to the conditions and terms hereof. Other than when an event of default has occurred and is continuing, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee. In case an event of default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, 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. Section 8.02 Duties, Removal and Resignation of the Trustee. The Authority may, by an instrument in writing, with at least 30 days’ prior notice, remove the Trustee initially a party hereto and any successor thereto unless an event of default shall have occurred and then be continuing, and shall remove the Trustee initially a party hereto and any successor thereto if at any time: (a) requested to do so by an instrument or concurrent instruments in writing signed by the Owners of a majority of the aggregate principal amount of Bonds at the time Outstanding (or their attorneys duly authorized in writing); or (b) the Trustee shall cease to be eligible in accordance with the following sentence, and shall appoint a successor Trustee. The Trustee and any successor Trustee shall be a banking corporation or association or trust company having (or if such banking corporation or association or trust company is a member of a bank holding company, its bank holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000 and subject to supervision or examination by federal or state authorities. If such banking corporation or association or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such bank , association or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Authority and the City and by giving notice, by first class mail, postage prepaid, of suc h resignation to the Owners at their addresses appearing on the Registration Books. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing; 5.2.e Packet Pg. 212 32 4837-5803-9009v3/200928-0001 provided, however, that in the event that the Authority does not appoint a successor Trustee within 30 days following receipt of such notice of resignation, the resigning Trustee may, at the expense of the Authority, petition the appropriate court having jurisdiction to appoint a successor Trustee . Any resignation or removal of a Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. Any corporation, association or agency into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided that such entity meets the combined capital and surplus requirements of this Section, ipso facto, shall be and become successor trustee under this Indenture and vested with all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 8.03 Compensation of the Trustee. The City shall from time to time, subject to any written agreement then in effect with the Trustee, pay the Trustee reasonable compensation for all its services rendered hereunder and reimburse the Trustee for all of its reasonable advances and expenditures (which shall not include “overhead expenses” except as such expenses are included as a component of the Trustee’s stated annual fees) hereunder, including but not limited to advances to and reasonable fees and reasonable expenses of accountants, agents, appraisers, consultants or other experts, and counsel, employed by it in the exercise and performance of its rights and obligations hereunder. The Trustee may take whatever legal actions are lawfully available to it directly against the Authority or the City. The City shall, to the extent permitted by law, indemnify and save the Trustee and its officers, directors, agents and employees harmless against any liabilities, costs, suits, judgments, damages, claims or expenses, including those of its attorneys, which it may incur in the exercise and performance of its powers and duties hereunder, under the Lease Agreement or in connection with any document or transaction contemplated hereunder or thereunder, including the enforcement of any remedies and the defense of any suit, and which are not due to its negligence or its misconduct. The duty of the City to indemnify the Trustee shall survive the termination and discharge of this Indenture and the earlier removal or resignation of the Trustee. No provision of this Indenture shall require 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 hereunder. Upon an event of default, and only upon an event of default, the Trustee shall have a first lien with right of payment prior to payment on account of principal of and premium, if any, and interest on any Bond, upon the trust estate for the foregoing fees, charges and expenses incurred by it. 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. Section 8.04 Protection of the Trustee. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any affida vit, bond, certificate, consent, notice, 5.2.e Packet Pg. 213 33 4837-5803-9009v3/200928-0001 request, requisition, resolution, statement, telegram, voucher, waiver or other paper or document which it shall in good faith believe to be genuine and to have been adopted, executed or delivered by the proper party or pursuant to any of the provisions hereof, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evi dence of the truth and accuracy of such statements. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Owners of the Bonds pursuant to this Indenture, unless such Owners shall have offered to the Trustee security or indemnity, reasonably satisfactory to the Trustee, against the reasonable costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Trust ee may consult with counsel, who may be counsel to the Authority or the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect to any action taken or suffered by it hereunder in good faith in accordance therewith. The Trustee shall not be responsible for the sufficiency of the Bonds or the Lease Agreement, or of the assignment made to it by the Assignment Agreement, or for statements made in any preliminary or final official statement relating to the Bonds, or of the title to the Property. Whenever in the administration of its rights and obligations hereunder the Trustee shall deem 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 is specifically prescribed herein) may be deemed to be conclusively proved and established by a Written Certificate of the City or a Written Certificate of the Authority, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it deems reasonable. The Trustee may buy, sell, own, hold and deal in any of the Bonds and may join in any action which any Owner may be entitled to take with like effect as if the Trustee were not a party hereto. The Trustee, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Authority or the City, and may act as agent, depository or trustee for any committee or body of Owners or of owners of obligations of the Authority or the City as freely as if it were not the Trustee hereunder. The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers hereof and perform any rights and obligations required of it hereunder by or through agents, attorneys or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its rights and obligations hereunder, and the Trustee shall not be answerable for the negligence or misconduct of any such agent, attorney or receiver selected by it with reaso nable care; provided, however, that in the event of any negligence or misconduct of any such attorney, agent or receiver, the Trustee shall in a commercially reasonable manner pursue all remedies of the Trustee against such agent, attorney or receiver. The Trustee shall not be liable for any error of judgment made by it in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee shall not be answerable for the exercise of any trusts or powers here under or for anything whatsoever in connection with the funds established hereunder, except only for its own willful misconduct or negligence. 5.2.e Packet Pg. 214 34 4837-5803-9009v3/200928-0001 The Trustee shall not be deemed to have knowledge of an event of default unless it has actual knowledge thereof. The Trustee may, on behalf of the Owners, intervene in any judicial proceeding to which the Authority or the City is a party and which, in the opinion of the Trustee and its counsel, affects the Bonds or the security therefor, and shall do so if requested in writing by the Owners of at least 5% of the aggregate principal amount of the applicable Series of Bonds then Outstanding, provided that the Trustee shall have no duty to take such action unless it has been indemnified to its reasonable satisfaction against all risk or liability arising from such action. The Trustee’s rights to immunities and protection from liability hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and final payment or defeasance of the Bonds. All indemnifications and releases from liability granted herein to the Trustee shall extend to the directors, officers, employees and agents of the Trustee. The permissive right of the Trustee to do things enumerated in this Indent ure shall not be construed as a duty, and the Trustee shall not be answerable for other than its negligence or willful default. The Trustee shall have no responsibility or liability with respect to any information, statements or recitals in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of these Bonds. The Trustee shall not be accountable for the use or application by the Borrower of any of the Bonds or the proceeds thereof or for the use or application of any money paid over by the Trustee in accordance with the provisions of this Indenture or for the use and application of money received by any paying agent. The Trustee shall have the right to accept and act upon instructions, including funds tr ansfer 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). The Authority and the 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 wheneve r a person is to be added or deleted from the listing. If the Authority or the City elect to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Authority and the 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 the City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Authority, the 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. 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 the fact that such directions conflict or are inconsistent with a subsequent written instruction. The Authority and the City agree: (i) to assume all risks arising out of the use of Electronic Means to 5.2.e Packet Pg. 215 35 4837-5803-9009v3/200928-0001 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 they are 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 tr ansmitting Instructions than the method(s) selected by the Authority or the City; (iii) that the security procedures (if any) to be followed in connection with its 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. The Trustee shall not be liable to the parties hereto or deemed in breach or defaul t 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 . In acting or omitting to act pursuant to the Assignment Agreement, the Lease Agreement, Ground Lease or any other document executed in connection herewith or therewith, the Trustee shall be entitled to all of the rights, immunities and indemnities accorded to it under this Indenture and the Lease Agreement, including, but not limited to, this Article VIII. Ratings of Permitted Investments referred to herein shall be determined at the time of purchase of such Permitted Investments and without regard to rating subcategories. The Trustee shall have no responsibility to monitor the ratings of Permitted Investment s after the initial purchase of such Permitted Investments, or the responsibility to validate Permitted Investments the ratings of Permitted Investments prior to the initial purchase. The Trustee may conclusively rely upon the City or the Authority’s Written Request as to both the suitability and legality of the directed investments and such written direction shall be deemed to be a certification that such directed investments constitute Permitted Investments. The Trustee shall have no duty to review, verify or analyze any financial statements furnished to it by the City, and shall hold such financial statements solely as a repository for the Owners. The Trustee shall not be deemed to have notice of any informa tion contained therein or any default or event of default that may be disclosed therein in any manner. ARTICLE IX MODIFICATION OR AMENDMENTS Section 9.01 Modifications and Amendments Permitted. (a) This Indenture and the rights and obligations of the Authority, the City, the Owners of the Bonds and the Trustee may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into with the prior written consent of the Owners of a majority in aggregate pri ncipal amount of all Bonds then Outstanding, which shall have been filed with the Trustee. No such modification or amendment shall: (i) extend the fixed maturity of any Bonds, or reduce the amount of principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the Owner of each Bond so 5.2.e Packet Pg. 216 36 4837-5803-9009v3/200928-0001 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 (iii) permit the creation of any lien on the Base Rental Payments and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture or deprive the Owners of the Bonds of the lien created by this Indenture on such Base Rental Payments and other assets (except as expressly provided in this Indenture), without the consent of the Owners of all of the Bonds then Outstanding. It shall not be necessary for the consent of the Bond Owners to approve the particular form of any Supplemental Indentu re, but it shall be sufficient if such consent shall approve the substance thereof. (b) This Indenture and the rights and obligations of the Authority, the City, the Trustee and the Owners of the Bonds may also be modified or amended from time to time and at a ny time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into without the consent of any Bond Owners, but only for any one or more of the following purposes: (i) to add to the covenants and agreements of the Authority or the City 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 or the City; (ii) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision contained in this Indenture; (iii) to provide for the issuance of one or more Series of Additional Bonds, and to provide the terms and conditions under which such Series of Additional Bonds may be issued, subject to and in accordance with the provisions of Article III hereof; (iv) 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 add such other terms, conditions and provisions as may be permitted by said act or similar federal statute; (v) to modify, amend or supplement this Indenture in such manner as to cause interest on the Bonds to be excludable from gross income for purposes of federal income taxation by the United States of America, if applicable to such Series of Bonds; and (vi) in any other respect whatsoever as the Authority and the City may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the rights and interests of the Bond Owners hereunder, in the Opinion of Counsel filed with the Authority, the City and the Trustee. (c) Promptly after the execution by the Authority, the City and the Trustee of any Supplemental Indenture, the Trustee shall mail a notice (the form of which shall be furnished to the Trustee by the Authority), by first class mail postage prepaid, setting forth in general terms the substance of such Supplemental Indenture, to the Owners of the Bonds at the respective addresses shown on the Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture. 5.2.e Packet Pg. 217 37 4837-5803-9009v3/200928-0001 (d) No Supplemental Indenture shall modify any of the rights or obligations of the Trustee without its prior written consent. (e) In executing, or accepting the additional trusts created by, any Supplemental Indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, the Trustee shall receive, and shall be fully protected in relying upon, an Opinion of Counsel addressed and delivered to the Trustee stating that the execution of such Supplemental Indenture is permitted by and in compliance with this Indenture and, if applicable, that the execution and delivery thereof will not in and of itself adversely affect the exclusion from federal gross income t ax of interest on the Series of Bonds. Section 9.02 Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, 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 City, 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 of 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 pursuant to this Article may, and if the Authority so determines shall, bear a notation by endorsement or otherwise in form approved by the Authority and the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Owner of any Bonds Outstanding at the time of such execution and presentation of such Owner’s Bonds for such purpose at the Office of the Trustee 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 and the Trustee, 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 of 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 interest rate and maturity. Section 9.04 Amendment of Particular Bonds. The provisions of this Article shall 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. If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Bonds the principal thereof and the interest and premium, if any, thereon at the times and in the manner stipulated he rein and therein, then the Owners of such Bonds shall cease to be entitled to the pledge of the Base Rental Payments and the other assets as provided herein, and all agreements, covenants and other obligations of the Authority and the City to the Owners of such Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to 5.2.e Packet Pg. 218 38 4837-5803-9009v3/200928-0001 the Authority and the City all such instruments as may be necessary or desirable to evidence su ch discharge and satisfaction, and the Trustee shall pay over or deliver to the City all money or securities held by it pursuant hereto which are not required for the payment of the principal of and interest and premium, if any, on such Bonds. Subject to the provisions of the above paragraph, when any of the Bonds shall have been paid and if, at the time of such payment, the Authority and the City shall have kept, performed and observed all of the covenants and promises in such Bonds and in this Indenture r equired or contemplated to be kept, performed and observed by them on or prior to that time, then this Indenture shall be considered to have been discharged in respect of such Bonds and such Bonds shall cease to be entitled to the lien of this Indenture and such lien and all covenants, agreements and other obligations of the Authority and the City hereunder shall cease, terminate become void and be completely discharged as to such Bonds. Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non-presentment of Bonds, and the duties of the Trustee in connection with all of the foregoing, shall remain in effect and shall be binding upon the Trustee and the Owners of the Bonds and the Trustee shall continue to be obligated to hold in trust any moneys or investments then held by the Trustee for the payment of the principal of and interest and premium, if any, on the Bonds, to pay to the Owners of Bonds the funds so held by the Trustee as and when such payment becomes due. Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the compensation and indemnity of the Trustee shall remain in effect and shall be binding upon the Trustee, the City and the Authority. Section 10.02 Bonds Deemed To Have Been Paid. If moneys shall have been set aside and held by the Trustee for the payment or redemption of any Bonds and the interest thereon at the maturity or redemption date thereof, such Bonds shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01. Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the mea ning of and with the effect expressed in Section 10.01 if: (a) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to mail, on a date in accordance with the provisions of Section 4.02, notice of redemption of such Bonds on said redemption date, said notice to be given in accordance with Section 4.02; (b) there shall have been deposited with the Trustee either: (i) money in an amount which shall be sufficient; or (ii) Federal Securities that are not subject to redemption other than at the option of the holder thereof, the interest on and principal of which when paid will provide money which, together with the money, if any deposited with the Trustee at the same time, shall, as verified in writing by an independent certified public accountant, be sufficient to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and premium, if any, on such Bonds; and (c) in the event that such Bonds are not by their terms subject to redemption within the next succeeding 60 days, the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the owners of such Bonds that the deposit required by clause (b) above has been made with the Trustee and that such Bonds, are deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon whic h money is to be available for the payment of the principal of and premium, if any, on such Bonds. 5.2.e Packet Pg. 219 39 4837-5803-9009v3/200928-0001 Section 10.03 Payment of Bonds After Discharge of Indenture. Notwithstanding any provisions of this Indenture, to the extent permitted by law, any moneys held by the Trus tee in trust for the payment of the principal of, or premium or interest on, any Bonds and remaining unclaimed for two years after the date of deposit of such moneys, shall be repaid to the Authority (without liability for interest) 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 may (at the cost of the Authority) first mai l, by first class mail postage prepaid, to the Owners of Bonds which have not yet been paid, at the respective 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 Benefits of Indenture Limited to Parties. Nothing contained herein, expressed or implied, is intended to give to any person other than the Authority, the City, the Trustee and the Owners any claim, remedy or right under or pursuant hereto, and any agreement, condition, covenant or term required herein to be observed or performed by or on behalf of the Authority or the City shall be for the sole and exclusive benefit of the Trustee and the Owners. Section 11.02 Successor Deemed Included in all References to Predecessor. Whenever the Authority, the City or the Trustee, or any officer thereof, is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority, the City or the Trustee, or such officer, and all agreements, conditions, covenants and terms required hereby to be observed or performed by or on behalf of the Authority, the City or the Trustee, or any officer thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 11.03 Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or by such other proof as the Trustee may accept which it may deem sufficient. The ownership of any Bonds and the amount, payment date, number and date of owning the same may be proved by the Registration Books. Any declaration, request or other instrument in writing of the Owner of any Bond shall bind all future Owners of such Bond with respect to anything done or suffered to be done by the Authority, the City or the Trustee in good faith and in accordance therewith. 5.2.e Packet Pg. 220 40 4837-5803-9009v3/200928-0001 Section 11.04 Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the Authority or the City shall be individually or personally liable for the payment of any moneys, including without limitation, the principal of or interest on the Bonds, but nothing contained herein shall relieve any member, officer or employee of the City or the Authority from the performance of any official duty provided by any applicable provisions of law, by the Lease Agreement or hereby. 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 may, in lieu of such cancellation and delivery, destroy such Bonds. Section 11.06 Funds and Accounts. Any fund or account required to be established and maintained herein by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Bonds and the rights of the Owners. The Trustee may commingle any of the moneys held by it hereunder for investment purposes only; provided, however, that the Trustee shall account separately for th e moneys in each fund or account established pursuant to this Indenture. The Trustee may establish such funds and accounts as it deems necessary or appropriate to perform its obligations hereunder. Section 11.07 Article and Section Headings Gender and References. The singular form of any word used herein, including the terms defined in Section 1.01, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to “Articles,” “Sections,” subsections or clauses are to the corresponding Articles, Sections, subsections or clauses hereof, and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith,” “hereunder” and other words of similar import refer to this Indenture a s a whole and not to any particular Article, Section, subsection or clause thereof. Section 11.08 Partial Invalidity. If any one or more of the agreements, conditions, covenants or terms required herein to be observed or performed by or on the part of the Authority, the City or the Trustee shall be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms shall be null and void to the extent contrary to law and shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the Bonds, and the Owners shall retain all the benefit, protection and security afforded to them under any applicable provisions of law. The Authority, the City and the Trustee hereby declare that they would have executed this Indenture, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Bonds pursuant hereto irrespective of the fact that any one or more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. 5.2.e Packet Pg. 221 41 4837-5803-9009v3/200928-0001 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 Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; except that, in determining whether the Trustee shall be protected in relying upon any such demand, request, direction, consent or waiver of an Owner, only Bonds which the Trustee actually knows to be o wned or held by or for the account of the Authority or the City, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded 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. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Authority and the City shall specify in a Written Certificate of the City and Authority those Bonds disqualified pursuant to this Section and the Trustee may conclusively rely on such Certificate. Section 11.10 Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to p articular 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 10.03 but without any liability for interest thereon. Section 11.11 Payment on Non-Business Days. In the event that 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 with the same effect as if made on such non-Business Day. Section 11.12 California Law. This Indenture shall be construed and governed in accordance with the laws of the State of California. Section 11.13 Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the City: City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 Attention: Finance Director If to the Authority: City of Diamond Bar Public Financing Authority c/o City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 Attention: Executive Director 5.2.e Packet Pg. 222 42 4837-5803-9009v3/200928-0001 If to the Trustee: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Global Corporate Trust Ref: City of Diamond Bar 2021 Bonds Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed: (a) if personally served or delivered, upon delivery; (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender’s rec eipt of an appropriate answer back or other written acknowledgment; (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail; (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier; or (e) if given by any other means, upon delivery at the address specified in this Section. Section 11.14 Notice to Rating Agencies. The Trustee shall provide S&P, if the Bonds are then rated by S&P, and Moody’s, if the Bonds are then rated by Moody’s, with prompt notice of any substitution or release of property pursuant to Section 9.03 of the Lease Agreement. Section 11.15 Execution in Counterparts. This Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 5.2.e Packet Pg. 223 S-1 4837-5803-9009v3/200928-0001 IN WITNESS WHEREOF, the Authority and the City have caused this Indenture to be signed in their respective names by their representative thereunto duly authorized, and the Trustee, 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. CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Executive Director ATTEST: Secretary CITY OF DIAMOND BAR By: City Manager ATTEST: City Clerk [SIGNATURES CONTINUED ON NEXT PAGE.] 5.2.e Packet Pg. 224 S-2 4837-5803-9009v3/200928-0001 [SIGNATURE PAGE CONTINUED.] U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 5.2.e Packet Pg. 225 A-1 4837-5803-9009v3/200928-0001 EXHIBIT A FORM OF SERIES 2021 BOND No. ____ $___________ UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO 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. CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BOND, 2021 SERIES A INTEREST RATE MATURITY DATE DATED DATE CUSIP ______% June 1, 20__ June __, 2021 _____ ___ REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: _________________________ DOLLARS The City of Diamond Bar Public Financing Authority (the “Authority”), for value received, hereby promises to pay, solely from the Base Rental Payments (as hereinafter defined) or amounts in certain funds and accounts held under the Indenture (as hereinafter defined), to the Registered Owner identified above or registered assigns (the “Registered Owner”), on the Maturity Date identified above or on any earlier redemption date, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest Rate identified above in like lawful money from the date hereof payable semiannually on ____ 1, 202__ and each June 1 and December 1 thereafter (the “Interest Payment Dates”), until payment of such Principal Amount in full. This Bond shall bear interest from the Interest Payment Date next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date, whether or not such day is a Business Day, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to _____ 15, 2021, in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, interest on t his Bond shall be payable from the date to which interest hereon has been paid in full, payable on each Interest Payment Date). The Principal Amount hereof is payable upon surrender hereof upon maturity or earlier redemption at the Office of the Trustee (as hereinafter defined). Interest hereon is payable by wire or check of U.S. Bank National Association, as trustee (the “Trustee”), mailed by first class mail, postage prepaid, on each Interest Payment Date to the Registered Owner hereof at the address 5.2.e Packet Pg. 226 A-2 4837-5803-9009v3/200928-0001 of the Registered Owner shown on the Registration Books at the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date. “Office of the Trustee” means the corporate trust office of the Trustee in St. Paul, Minnesota, or such other office as may be specified to the Authority and the City of Diamond Bar (the “City”) by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange , such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing. This Bond is one of a series of a duly authorized issue of bo nds issued for the purpose of refinancing the acquisition, construction and installation of certain capital improvements of the City, and is one of the series of bonds designated “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A” (the “Series 2021 Bonds”) in the aggregate principal amount of $_______. The Series 2021 Bonds are issued pursuant to the Indenture, dated as of June 1, 2021 (the “Indenture”), by and among the Authority, the City and the Trustee, and thi s reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Indenture, additi onal bonds (“Additional Bonds”) may be issued by the Authority secured by a lien on a parity with the lien securing the Series 2021 Bonds. The Series 2021 Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The Indenture is entered into, and this Bond is issued under, the laws of the State of California. Pursuant to the Indenture, the principal of and interest on the Bonds are payable solely from certain base rental payments (the “Base Rental Payments”) under and pursuant to that certain Lease Agreement, dated as of June 1, 2021 (the “Lease Agreement”), by and between the City, as sublessee, and the Authority, as sublessor, all of which rights to receive such Base Rental Payments have been assigned without recourse by the Authority to the Trustee. 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 Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund established under the Indenture are pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms and the provisions of the Indenture. Said pledge constitutes a first lien on such assets. The Series 2021 Bonds are authorized to be issued in the form of fully registered bonds without coupons in denominations of $5,000 or any integral multiple thereof (“Authorized Denominations”). The Series 2021 Bonds shall be subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any net insurance proceeds received with respect to all or a portion of the property leased under the Lease Agreement, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof, which are deposited by the Trustee in the Redemption Fund established under the Indenture, at a Redemption Price equal to the principal amount of the Series 2021 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. The Series 2021 Bonds maturing on or after June 1, 20__, shall be subject to optional redemption, in whole or in part, on ____ 1, 20__ or any date thereafter, in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease 5.2.e Packet Pg. 227 A-3 4837-5803-9009v3/200928-0001 Agreement, at a Redemption Price equal to the principal amount of the Series 2021 Bonds to be redeemed, plus accrued interest thereon to the date of redemption. The Series 2021 Bonds with stated maturities on June 1, 20__, are subject to mandatory sinking fund redemption in part (by lot) on June 1, 20__ and each June 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule : Mandatory Sinking Fund Redemption Dates (June 1) Principal Amount of Bonds to be Redeemed 20__ $ 20__* * Maturity. If, during the Fiscal Year immediately preceding one of the redemption dates specified above, the Authority purchases Series 2021 Bonds, at least 45 days prior to the redemption date, the Authority will notify the Trustee as to the principal amount purchased and the amount of Series 2021 Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming mandatory sinking fund redemption payment for the Series 2021 Bonds so purchased. All Series 2021 Bonds purchased pursuant to the Indenture will be cancelled. The Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice of any redemption to the respective owners of any Series 2021 Bonds designated for redemption, at their respective addresses appearing on the Registration Books, at least 20 but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed, nor any defect therei n, shall affect the validity of the proceedings for the redemption of such Series 2021 Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. The Redemption Price of the Series 2021 Bonds to be redeemed shall be paid only upon presentation and surrender thereof at the Office of the Trustee. From and after the date fixed for redemption of any Series 2021 Bonds, interest on such Series 2021 Bonds will cease to accrue and become payable. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, fully registered Series 2021 Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount and maturity of fully registered Series 2021 Bonds of other authorized denominations. This Bond is transferable by the Registered Owner hereof, in person or by his or her duly authorized attorney, 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 such transfer a new fully registered Series 2021 Bond or Series 2021 Bonds, in Authorized Denominations, for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Authority, the City and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority, the City and the Trustee shall not be affected by any notice to the contrary. 5.2.e Packet Pg. 228 A-4 4837-5803-9009v3/200928-0001 The Indenture and the rights and obligations of the Authority, the City, the owners of the Bonds and the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture; provided that no such modification or amendment shall: (a) extend the fixed maturity of any Bonds, or reduce the principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the owner of each Bond so affected; or (b) reduce the percentage of Bonds the consent of the owners of which is required to effect any such amendment or modification ; or (c) permit the creation of any lien on the Base Rental Payments and other assets pledged under the Indenture prior to or on a parity with the lien created by the Indenture or deprive the owners of the Bonds of the lien created by the Indenture on such the Base Rental Payments and such other assets (except as expressly provided in the Indenture), without the consent of the owners of all Bonds then outstanding. The Indenture contains provisions permitting the Authority to make provision for the payment of interest on, and the principal and premium, if any, of any of the Bond so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture. All obligations of the Authority under the Indenture shall be special obligations of the Authority, payable solely from Rental Payments and the other assets pledged therefor under the Indenture; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other asse ts pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds. It is hereby certified 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 Joint Exercise of Powers Agreement, and the laws of the State of California and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit under 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. 5.2.e Packet Pg. 229 A-5 4837-5803-9009v3/200928-0001 IN WITNESS WHEREOF, the Authority has caused this Bond to be signed in its name and on its behalf by the facsimile signatures of its Chair and Secretary, all as of the Dated Date identified above. CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Chair Attest: Secretary [FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION] This is one of the Series 2021 Bonds described in the within-mentioned Indenture and registered on the Registration Books. Date: June __, 2021 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Signatory 5.2.e Packet Pg. 230 A-6 4837-5803-9009v3/200928-0001 [FORM OF LEGAL OPINION] The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office. Secretary of the City of Diamond Bar Public Financing Authority [FORM OF 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. Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within pond in every particular without alteration or enlargement or any change whatsoever. 5.2.e Packet Pg. 231 B-1 4837-5803-9009v3/200928-0001 EXHIBIT B DESCRIPTION OF THE 2002 PROJECT Construction of a community/senior center located in Summitridge Park at the corner of Grand Avenue & Summitridge Drive. The 2002 Project, which is built on a 17 acre site, is a 22,500 square foot facility that includes a dedicated senior citizen center and a meeting facility/banquet room that accommodates up to 500 people for dining. The meeting facility/banquet r oom also features a stage area for presentations and musical performances as well as video and audio capability. Also available are specialized rooms for youth recreational programs such as gymnastics and dance, and a craft room for various City-run arts programs. The 2002 Project was completed in 2004. 5.2.e Packet Pg. 232 Stradling Yocca Carlson & Rauth Draft of 4/26/21 4827-8234-0833v4/200928-0001 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. PRELIMINARY OFFICIAL STATEMENT DATED MAY ___, 2021 NEW ISSUE – BOOK-ENTRY ONLY Rating: See the caption “RATING.” In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, under existing statutes, regulations, rulings an d judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements descri bed in this Official Statement, interest (and original issue discount) on the 2021 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the 2021 Bonds is exempt from State of California personal income tax. See the caption “TAX MATTERS.” $_____* CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A Dated: Date of Delivery Due: June 1, as shown on inside cover The 2021 Bonds will be issued pursuant to an Indenture, dated as of June 1, 2021, by and among the City, the Authority and U.S. Bank National Association, as trustee. The 2021 Bonds are payable from Base Rental Payments to be made by the City for the right to the use of certain real property pursuant to a Lease Agreement, dated as of June 1, 2021, by and between the City, as lessee, and the Authority, as lessor. The 2021 Bonds are being issued to provide funds: (i) to refund the Authority’s Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project); and (ii) to pay the costs of issuing the 2021 Bonds. The City has covenanted under the Lease Agreement to take such action as may be necessary to include all Rental Payments due thereunder as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Paym ents. The City’s obligation to make Base Rental Payments under the Lease Agreement is subject to abatement during any period in which, by reason of material damage to, or destruction or condemnation of, the Property, or any defects in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property. The 2021 Bonds are being issued in fully registered book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York . Interest on the 2021 Bonds is payable semiannually on December 1, 2021 and each June 1 and December 1 thereafter. Purchasers will not receive certificates representing their interest in the 2021 Bonds. Individual purchases will be in principal amounts of integral multiples of $5,000. Principal of and interest and premium, if any, on the 2021 Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the 2021 Bonds. The Authority may issue Additional Bonds payable from Base Rental Payments. The 2021 Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The 2021 Bonds are subject to optional, mandatory sinking fund and extraordinary redemption prior to maturity as describe d in this Official Statement. The 2021 Bonds are special obligations of the Authority, payable solely from the Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the 2021 Bonds. The Authority has no taxing power. The obligation of the City to make Base Rental Payments does not constitute a debt of the City or the State of California or any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not c onstitute an obligation for which the City or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged any form of taxation. The 2021 Bonds are not subject to acceleration in the event of a payment default. No debt service reserve fund or account has been established by the Authority or the City in connection with the issuance of the 2021 Bonds. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The 2021 Bonds will be offered when, as and if issued and received by the Underwriter, subject to the approval as to their validity by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed upon for the City and the Authority by the City Attorney. Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California is acting as disclosure counsel. Certain legal matters will be passed upon for the Underwriter by Jones Hall, A Professional Law Corporation, San Francisco, California, and for the Trustee by its counsel. It is anticipated that the 2021 Bonds in definitive form will be available for delivery to DTC on or about June __, 2021. [RAYMOND JAMES LOGO] Dated: May __, 2021 * Preliminary, subject to change. 5.2.f Packet Pg. 233 4827-8234-0833v4/200928-0001 MATURITY SCHEDULE BASE CUSIP†: _____ $_______* CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A Principal Payment Date (June 1) Principal Interest Rate Yield Price CUSIP† 20__ $ % % $_____ _____% Term 2021 Bonds due June 1, 20__; Yield: ____%; Price: ____ CUSIP†: ___ *Preliminary, subject to change. † CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the Ameri can Bankers Association by S&P Global Market Intelligence. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substit ute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the Authority, the City , the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers. 5.2.f Packet Pg. 234 4827-8234-0833v4/200928-0001 No dealer, broker, salesperson or other person has been authorized by the City or the Authority to give any information or to make any representations in connection with the offer or sale of the 2021 Bonds other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Authority. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sale of the 2021 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers or owners of the 2021 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described in this Official Statement, are intended solely as such and are not to be construed as representations of fact. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as 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. This Official Statement and the information contained in this Official Statement are subject to completion or amendment without notice and neither delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the City or the Authority or any other parties described in this Official Statement since the date hereof. These securities may not be sold, nor may an offer to buy be accepted, prior to the time that the Official Statement is delivered in final form. This Official Statement is being submitted in connection with the sale of the 2021 Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the City. All summaries of documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget,” “intend” or similar words. Such forward-looking statements include, but are not limited to, certain statements contained under the captions “THE CITY” and “CITY FINANCIAL INFORMATION.” THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD -LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. IN EVALUATING SUCH STATEMENTS, POTENTIAL INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS THAT COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS. IN CONNECTION WITH THE OFFERING OF THE 2021 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2021 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE 2021 5.2.f Packet Pg. 235 4827-8234-0833v4/200928-0001 BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. THE 2021 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. The City maintains a website; however, information presented there is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the 2021 Bonds. 5.2.f Packet Pg. 236 4827-8234-0833v4/200928-0001 CITY OF DIAMOND BAR, CALIFORNIA CITY COUNCIL Nancy A. Lyons, Mayor Ruth M. Low, Mayor Pro Tem Andrew Chou, Council Member Stan Liu, Council Member Steve Tye, Council Member CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY Andrew Chou, Chair Steve Tye, Vice Chair Ruth M. Low, Director Stan Liu, Director Nancy A. Lyons, Director CITY/AUTHORITY STAFF Daniel Fox, City Manager/Authority Executive Director Ryan McLean, Assistant City Manager Brent Mason, Interim Finance Director/Authority Treasurer Kristina Santana, City Clerk/Authority Secretary SPECIAL SERVICES City Attorney Woodruff, Spradlin & Smart Costa Mesa, California Bond Counsel and Disclosure Counsel Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California Municipal Advisor Fieldman, Rolapp & Associates, Inc. Irvine, California Trustee U.S. Bank National Association Los Angeles, California 5.2.f Packet Pg. 237 i 4827-8234-0833v4/200928-0001 TABLE OF CONTENTS INTRODUCTION ................................................. 2 General ............................................................... 2 Security for the 2021 Bonds; Base Rental Payments .............................................. 2 Limited Obligation ............................................. 3 No Reserve Fund ................................................ 3 Additional Bonds ................................................ 3 The City .............................................................. 3 Continuing Disclosure ........................................ 4 Risk Factors ........................................................ 4 Summaries Not Definitive .................................. 4 REFUNDING PLAN ............................................. 4 2002 Bonds ......................................................... 4 Estimated Sources and Uses of Funds ................ 5 THE LEASED PROPERTY .................................. 5 BASE RENTAL PAYMENT SCHEDULE .......................................................... 6 THE 2021 BONDS ................................................ 7 General ............................................................... 7 Registration, Transfers and Exchanges .............. 7 Redemption ........................................................ 7 Book-Entry Only System ................................... 9 SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS ................. 10 Pledge of Base Rental Payments ...................... 10 Additional Bonds .............................................. 10 Base Rental Payments ...................................... 11 Additional Rental Payments ............................. 12 Abatement ........................................................ 12 Substitution or Release of the Property ............ 13 Action on Default ............................................. 14 No Reserve Fund .............................................. 14 Insurance .......................................................... 14 THE CITY ........................................................... 15 General ............................................................. 15 Government and Administration ...................... 16 Risk Management ............................................. 16 COVID-19 Outbreak ........................................ 17 CITY FINANCIAL INFORMATION ................. 19 Accounting and Financial Reporting ................ 19 General Economic Condition and Outlook of the City ....................................... 20 Budget Procedure, Current Budget and Historical Budget Information ...................... 22 Change in Fund Balance of the City General Fund ................................................. 27 General Fund Balance Sheets of the City ............................................................... 28 Tax Revenues of the City ................................. 28 Sales Taxes ...................................................... 29 Property Taxes ................................................. 30 Other Taxes ...................................................... 33 Charges for Services ........................................ 33 State of California Motor Vehicle In- Lieu Payments .............................................. 33 No Other Indebtedness ..................................... 34 City Investment Policy ..................................... 35 City Reserve Policies ....................................... 36 Retirement Contributions ................................. 37 Other Post-Employment Benefits .................... 41 City Financial Statements ................................ 43 THE AUTHORITY ............................................. 43 STATE OF CALIFORNIA BUDGET INFORMATION ................................................. 44 General ............................................................. 44 Budget for State Fiscal Year 2020-21 .............. 44 Budget for State Fiscal Year 2021-22 .............. 46 Potential Impact of State Financial Condition on the City ................................... 46 Redevelopment Dissolution ............................. 47 Future State Budgets ........................................ 47 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS .................... 47 Article XIIIA of the State Constitution ............ 48 Article XIIIB of the State Constitution ............ 48 Proposition 62 .................................................. 49 Proposition 218 ................................................ 49 Unitary Property............................................... 50 Proposition 22 .................................................. 50 Proposition 26 .................................................. 50 Future Initiatives .............................................. 51 RISK FACTORS ................................................. 51 General Considerations – Security for the 2021 Bonds ............................................. 51 Abatement ........................................................ 52 Initiative and Referendum ................................ 52 Insurance on the Property ................................ 52 Condemnation of the Property ......................... 53 Value of Property ............................................. 53 No Acceleration of Base Rental Payments....................................................... 53 Certain Risks Associated with Sales Tax and Other Local Tax Revenues .................... 53 5.2.f Packet Pg. 238 ii 4827-8234-0833v4/200928-0001 Assessed Value of Taxable Property ................ 54 Increasing Retirement-Related Costs ............... 54 Dependence on State for Certain Revenues ....................................................... 55 Litigation .......................................................... 55 Natural Disasters .............................................. 55 Climate Change ................................................ 56 Cybersecurity.................................................... 56 Hazardous Substances ...................................... 56 Economy of City and State ............................... 57 Split Roll Initiative ........................................... 57 Additional City Obligations ............................. 57 Tax-Related Issues ........................................... 58 Possible Consequence of Tax Compliance Audit ......................................... 58 Remedies .......................................................... 58 Limitation on Trustee’s Obligations under the Indentures ...................................... 58 Release of Property; Additional Bonds ............ 59 Limitations on Enforceability ........................... 59 Secondary Market ............................................. 61 TAX MATTERS.................................................. 61 CERTAIN LEGAL MATTERS .......................... 63 MUNICIPAL ADVISOR .................................... 63 LITIGATION ...................................................... 63 UNDERWRITING .............................................. 63 RATING .............................................................. 64 CONTINUING DISCLOSURE .......................... 64 MISCELLANEOUS ............................................ 65 APPENDIX A DEMOGRAPHIC AND ECONOMIC INFORMATION .................... A-1 APPENDIX B SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ....................... B-1 APPENDIX C AUDITED FINANCIAL STATEMENTS ...................... C-1 APPENDIX D FORM OF BOND COUNSEL OPINION ............ D-1 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE ...................... E-1 APPENDIX F BOOK-ENTRY ONLY SYSTEM .................................F-1 5.2.f Packet Pg. 239 2 4827-8234-0833v4/200928-0001 $_____* CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A INTRODUCTION General This Official Statement, which includes the cover page and appendices (the “Official Statement”), provides certain information concerning the above-captioned bonds (the “2021 Bonds”). The 2021 Bonds are being issued by the City of Diamond Bar Public Financing Authority (the “Authority”), a joint exercise of powers agency the members of which are the City of Diamond Bar, California (the “City”) and the Successor Agency to the Redevelopment Agency of the City of Diamond Bar (the “Successor Agency”). The 2021 Bonds will be issued pursuant to Articles 9 through 11 of Chapter 3 of Part 1 of Division 2 of Title 5 (commencing with Section 53550) of the California Government Code (the “Refunding Law”), and an Indenture, dated as of June 1, 2021 (the “Indenture”), by and among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”). The 2021 Bonds are being issued in fully registered book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Purchasers will not receive certificates representing their interest in the 2021 Bonds. Individual purchases will be in integral multiples of $5,000. Principal of and interest on the 2021 Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the 2021 Bonds. See the caption “THE 2021 BONDS—Book-Entry Only System.” The 2021 Bonds are subject to optional, mandatory sinking fund and extraordinary redemption prior to maturity as described in this Official Statement. See the caption “THE 2021 BONDS—Redemption.” The 2021 Bonds are being issued to provide funds: (i) to refund the Authority’s Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (the “2002 Bonds”); and (ii) to pay the costs of issuing the 2021 Bonds. See the caption “REFUNDING PLAN.” Security for the 2021 Bonds; Base Rental Payments Pursuant to a Ground Lease, dated as of June 1, 2021 (the “Ground Lease”), by and between the City, as lessor, and the Authority, as lessee, the City has leased certain real property of the City and the improvements thereon (the “Property”) to the Authority in consideration for the Authority’s assistance in issuing the 2021 Bonds. Pursuant to a Lease Agreement, dated as of June 1, 2021 (the “Lease Agreement”), by and between the Authority, as sublessor, and the City, as sublessee, the Authority has subleased the Property back to the City. The 2021 Bonds are payable from base rental payments (the “Base Rental Payments”) to be made by the City for the right to use the Property pursuant to the Lease Agreement. The Trustee and the Authority have entered into an Assignment Agreement, dated as of June 1, 2021 (the “Assignment Agreement”), pursuant to which the Authority has assigned to the Trustee for the benefit of the 2021 Bond Owners substantially all of the Authority’s right, title and interest in and to the Ground Lease and the Lease Agreement, including its right to receive the Base Rental Payments due under the Lease Agreement and to enforce any remedies in the event of a default by the City. * Preliminary, subject to change. 5.2.f Packet Pg. 240 3 4827-8234-0833v4/200928-0001 The City has covenanted under the Lease Agreement to take such action as may be necessary to include all Rental Payments (including the Base Rental Payments and certain Additional Rental Payments described under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS— Additional Rental Payments”) due thereunder as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Payments. The City has also covenanted deliver to the Authority and the Trustee a Written Certificate of the City stating that its final annual budget includes all Base Rental Payments due in such Fiscal Year within ten days after the filing or adoption of its budget. Base Rental Payments payable under the Lease Agreement are subject to complete or partial abatement in the event and to the extent that there is substantial interference with the City’s right to use and occupy the Property or any portion thereof. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Abatement” and “RISK FACTORS—Abatement.” Abatement of Base Rental Payments under the Lease Agreement, to the extent that payment is not made from alternative sources as set forth in the following sentence, would result in all Owners of the 2021 Bonds receiving less than the full amount of principal of and interest on the 2021 Bonds. To the extent that moneys in any of the funds and accounts established under the Indenture or proceeds of insurance are available, Base Rental Payments (or a portion thereof) may be made during periods of abatement. Limited Obligation THE 2021 BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM THE BASE RENTAL PAYMENTS AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE CITY OR THE STATE OF CALIFORNIA (THE “STATE”), OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE 2021 BONDS. THE AUTHORITY HAS NO TAXING POWER. THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY OR THE STATE OR 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 OR THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. No Reserve Fund No debt service reserve fund or account has been established by the Authority or the City in connection with the issuance of the 2021 Bonds. Additional Bonds Under the Lease Agreement, the Authority may issue additional bonds (the “Additional Bonds”) payable from Base Rental Payments on a parity basis with the 2021 Bonds. The 2021 Bonds and any Additional Bonds are collectively referred to in this Official Statement as the “Bonds.” See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Additional Bonds.” The City See the captions “THE CITY” and “CITY FINANCIAL INFORMATION,” as well as Appendices A and C for information with respect to the City and the General Fund, including other obligations which are payable from general revenues of the City. 5.2.f Packet Pg. 241 4 4827-8234-0833v4/200928-0001 The City notes that much of the historical information related to the City is the latest available but does not in certain instances reflect the impact of the COVID-19 pandemic. See the caption “THE CITY— COVID-19 Outbreak.” Accordingly, such historical information below does not necessarily reflect present economic conditions and future information could be significantly different from such historical information. Continuing Disclosure The City has agreed to provide, or to cause to be provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for purposes of Securities and Exchange Commission Rule 15c2-12 (the “Rule”) certain annual financial information and operating data and, in a timely manner, notice of certain listed events. See the caption “CONTINUING DISCLOSURE.” Risk Factors Certain events could affect the ability of the City to make the Base Rental Payments when due. See the caption “RISK FACTORS” for a discussion of certain factors that should be considered, in addition to other matters that are set forth in this Official Statement, in evaluating an investment in the 2021 Bonds. Summaries Not Definitive The summaries of and references to documents, statutes, reports and other instruments in this Official Statement do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by the complete document, statute, report or instrument. The capitalization of any word that is not conventionally capitalized, or otherwise defined in this Official Statement, indicates that such word is defined in a particular agreement or other document and, as has the meaning that is given to such word in Appendix B. Copies of the documents described in this Official Statement will be available at the Finance Director’s office, City of Diamond Bar, 21810 Copley Drive, Diamond Bar, California 91765. REFUNDING PLAN 2002 Bonds The Authority issued the 2002 Bonds, which are currently outstanding in the aggregate principal amount of $8,315,000, pursuant to an Indenture of Trust, dated as of December 1, 2002 (as amended by Amendment No. 1 thereto dated as of December 1, 2011, the “2002 Indenture”), by and between the City and U.S. Bank National Association, as successor to MUFG Union Bank, N.A., formerly known as Union Bank of California, N.A., as trustee (the “2002 Trustee”). The 2002 Bonds are payable from lease payments made under a Lease Agreement, dated as of December 1, 2002 (as amended by Amendment No. 1 thereto dated as of December 1, 2011, the “2002 Lease”), by and between the City and the Authority. After making a regularly scheduled payment in the principal amount of $485,000 on the 2002 Bonds on June 1, 2021, the City plans to apply a portion of the proceeds of the 2021 Bonds to refund the 2002 Bonds maturing after June 1, 2021 in the aggregate principal amount of $7,830,000 on or about June __, 2021 (the “Redemption Date”) at a redemption price equal to the outstanding principal amount of the 2002 Bonds, plus accrued interest to such date, without premium. Under an Escrow Agreement (2002 Bonds), dated as of June 1, 2021 (the “2002 Escrow Agreement”), by and among the City, the Authority and the 2002 Trustee, the Authority will deliver a portion of the proceeds of the 2021 Bonds to the 2002 Trustee for deposit in the escrow fund established under the 2002 Escrow Agreement (the “2002 Escrow Fund”). In addition, the 2002 Trustee will deposit certain moneys held in connection with the 2002 Bonds in the 2002 Escrow Fund on or about the date of issuance of the 2021 Bonds. The 2002 Trustee will hold the amounts so deposited in the 2002 Escrow Fund uninvested. 5.2.f Packet Pg. 242 5 4827-8234-0833v4/200928-0001 From the moneys on deposit in the 2002 Escrow Fund, the 2002 Trustee will pay on the Redemption Date the principal of the 2002 Bonds maturing after June 1, 2021, plus interest accrued to such date, without premium. The amounts delivered to the 2002 Trustee to redeem the 2002 Bonds are pledged solely to the redemption of such 2002 Bonds. Neither such moneys nor any related interest will be available for the payments of principal of and interest on the 2021 Bonds. Estimated Sources and Uses of Funds The estimated sources and uses of funds with respect to the 2021 Bonds are shown below. Sources(1) Principal Amount of 2021 Bonds $ Plus/Less Net Original Issue Premium/Discount Other Moneys(2) Total Sources $ Uses(1) Redemption of 2002 Bonds $ Costs of Issuance(3) Total Uses $ (1) Rounded to the nearest dollar. (2) Reflects moneys held in funds and accounts established for the 2002 Bonds. (3) Includes legal fees, Underwriter’s discount, printing costs, rating agency fees, Municipal Advisor fees and other miscellaneous expenses. THE LEASED PROPERTY The Property is currently owned by the City and leased to the Authority pursuant to the Ground Lease and subleased back to the City pursuant to the Lease Agreement. The Property is located in the City at 1600 Grand Avenue, Diamond Bar, California 91765 and consists of a community/senior center within Summitridge Park, a City-owned park that is located at the corner of Grand Avenue and Summitridge Drive. The community/senior center, which is built on a 17 acre site, is a 22,500 square foot facility that includes a dedicated senior citizen center and a meeting facility/banquet room that accommodates up to 500 people for dining. The versatile meeting facility/banquet room can handle large functions such as wedding receptions, banquet dinners, corporate training and other community events. The meeting facility/banquet room also features a stage area for presentations and musical performances as well as video and audio capability. Also available are specialized rooms for youth recreational programs such as gymnastics and dance and a craft room for various City-run arts programs. Three parking lots which have a total footprint of over 136,000 square feet serve the Property. The community/senior center was financed from proceeds of the 2002 Bonds and completed in 2004. The insured value of the Property, including land and improvements, is $8,459,800. Under the quitclaim deed pursuant to which Summitridge Park was dedicated to the City upon the City’s incorporation in 1989, the use of the Property is restricted to recreational and playground purposes. There are two freestanding cellular towers and two associated telecommunications equipment sheds adjacent to one of the parking lots on the Property. The total footprint of such improvements is approximately 1,500 square feet. The owners of the cellular towers have licenses to use the Property to operate the towers and non-exclusive easement rights to access the towers and equipment sheds. The City has certified in the Lease Agreement that the annual fair rental value of the Property is at least equal to the annual Base Rental Payments. For a discussion of the insurance required to be maintained 5.2.f Packet Pg. 243 6 4827-8234-0833v4/200928-0001 on the Property, see the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS— Insurance.” The City has the right to substitute or release all or portion of the Property subject to certain conditions precedent. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS⎯Substitution or Release of the Property.” BASE RENTAL PAYMENT SCHEDULE Set forth below is a schedule of Base Rental Payments, which secure the 2021 Bonds, assuming no optional prepayments. Base Rental Payment Date(1) Principal Interest Total Base Rental Payments 12/1/2021 $ - $ $ 6/1/2022 12/1/2022 - 6/1/2023 12/1/2023 - 6/1/2024 12/1/2024 - 6/1/2025 12/1/2025 - 6/1/2026 12/1/2026 - 6/1/2027 12/1/2027 - 6/1/2028 12/1/2028 - 6/1/2029 12/1/2029 - 6/1/2030 12/1/2030 - 6/1/2031 12/1/2031 - 6/1/2032 12/1/2032 - 6/1/2033 - Total: $ $ $ (1) The Base Rental Payment Date is the fifteenth day prior to the corresponding Interest Payment Date for the 2021 Bonds. 5.2.f Packet Pg. 244 7 4827-8234-0833v4/200928-0001 THE 2021 BONDS General The 2021 Bonds will be issued in fully registered form without coupons in denominations of integral multiples of $5,000. The 2021 Bonds will be dated as of and bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) from the dated date thereof at the rates set forth on the inside cover page. Interest on the 2021 Bonds will be paid semiannually on December 1, 2021 and each June 1 and December 1 thereafter (each, an “Interest Payment Date”). Interest on the 2021 Bonds will be payable from the Interest Payment Date next preceding the date of authentication thereof unless: (i) a 2021 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; (ii) a 2021 Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the dated date thereof; or (iii) interest on any 2021 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 will be paid in lawful money of the United States on each Interest Payment Date to the Persons in whose names the ownership of the 2021 Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Except when the 2021 Bonds are held in book-entry form, interest will be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the 2021 Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. The principal and premium, if any, of the 2021 Bonds will be payable in lawful money of the United States upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee. The 2021 Bonds will be subject to optional, mandatory sinking fund and extraordinary redemption as set forth in this Official Statement. Registration, Transfers and Exchanges The 2021 Bonds will be issued as fully registered bonds, registered in the name of Cede & Co. as nominee of DTC, and will be available to actual purchasers of the 2021 Bonds (the “Beneficial Owners”) in the denominations set forth above, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants (as defined in Appendix F) as described in this Official Statement. Beneficial Owners will not be entitled to receive physical delivery of the 2021 Bonds. See the caption “—Book-Entry Only System.” Redemption Optional Redemption. The 2021 Bonds maturing on or after June 1, 20__, are subject to optional redemption, in whole or in part, on _____ 1, 20__ or any date thereafter, as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease Agreement, at a Redemption Price equal to the principal amount of the 2021 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. 5.2.f Packet Pg. 245 8 4827-8234-0833v4/200928-0001 Mandatory Sinking Fund Redemption. The 2021 Bonds with stated maturities on June 1, 20__, are subject to mandatory sinking fund redemption in part (by lot) on June 1, 20__ and each June 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Redemption Date (June 1) Principal Amount 20__ $ 20__* * Maturity. Extraordinary Redemption from Condemnation Award or Insurance Proceeds. The 2021 Bonds of a series are subject to redemption, in whole or in part, on any date as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, in Authorized Denominations, from and to the extent of any Net Insurance Proceeds received with respect to all or a portion of the Property, deposited by the Trustee in the Redemption Fund pursuant to the Indenture, at a Redemption Price equal to the principal amount of the 2021 Bonds of such series to be redeemed, plus accrued interest thereon to the date of redemption, without premium. Purchase in Lieu of Redemption. If, during the Fiscal Year immediately preceding one of the redemption dates specified above under the subcaption “—Mandatory Sinking Fund Redemption,” the Authority purchases 2021 Bonds, at least 45 days prior to the redemption date, the Authority will notify the Trustee as to the principal amount purchased and the amount of 2021 Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming mandatory sinking fund redemption payment for the 2021 Bonds so purchased. All 2021 Bonds purchased pursuant to the foregoing provisions will be cancelled pursuant to the Indenture. Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the 2021 Bonds, the Trustee will select the 2021 Bonds to be redeemed from all Bonds of such series not previously called for redemption: (a) with respect to any optional redemption of 2021 Bonds, among maturities of 2021 Bonds of such series as directed in a Written Request of the Authority; (b) with respect to any redemption from and to the extent of any Net Insurance Proceeds, among maturities of all 2021 Bonds of such series on a pro rata basis as nearly as practicable, and (c) with respect to any other redemption of Additional Bonds of such series, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds of such series are issued, and by lot among Bonds of the same series with the same maturity in any manner which the Trustee in its sole discretion will deem appropriate and fair. For purposes of such selection, all Bonds will be deemed to be comprised of separate $5,000 denominations, and such separate denominations will be treated as separate Bonds that may be separately redeemed. Notice of Redemption. So long as the 2021 Bonds are held in book-entry form, notices of redemption will be mailed by the Trustee only to DTC and not to any Beneficial Owners. The Trustee on behalf and at the expense of the Authority will mail (by first class mail) notice of any redemption to the Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, to the Securities Depositories and to one or more Information Services, at least 20 but not more than 60 days prior to the date fixed for redemption. Such notice will state the date of the notice, the redemption date, the redemption place and the Redemption Price and will designate the CUSIP numbers and the maturity or portion of the maturity of the 2021 Bonds to be redeemed, and will require that such 2021 Bonds be then surrendered at the principal corporate trust office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such 2021 Bonds will not accrue from and after the date fixed for redemption. Such notice of redemption may also state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the 2021 Bonds. Neither the failure to receive any notice so mailed, nor any 5.2.f Packet Pg. 246 9 4827-8234-0833v4/200928-0001 defect in such notice, will affect the validity of the proceedings for the redemption of the 2021 Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of optional redemption of 2021 Bonds, such notice may state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such 2021 Bonds to be redeemed and that, if such moneys shall not have been so received, said notice shall be of no force and effect and the Trustee shall not be required to redeem such 2021 Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption will not be made, and the Trustee will within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new 2021 Bond or Bonds of such series in Authorized Denominations equal in aggregate principal amount representing the unredeemed portion of the 2021 Bonds surrendered. Effect of Notice of Redemption. If a redemption notice has been mailed, and moneys for the Redemption Price, and the interest to the date fixed for redemption, have been set aside in the Redemption Fund, the 2021 Bonds will become due and payable on the redemption date, and, upon presentation and surrender of a Bond at the principal corporate trust office of the Trustee, the Authority will pay the Redemption Price of the Bond, together with interest accrued and unpaid to said date. If, on the redemption date, moneys for the Redemption Price of all the 2021 Bonds to be redeemed, together with interest to said date, is held by the Trustee so as to be available therefor on such date, and, if a notice of redemption has been mailed and not canceled, then, from and after said date, interest on the 2021 Bonds to be redeemed will cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds will be held in trust for the account of the Owners of the 2021 Bonds so to be redeemed without liability to such Owners for interest thereon. All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions of the Indenture will be canceled upon surrender thereof and destroyed. Book-Entry Only System The 2021 Bonds are registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository for the 2021 Bonds. Ownership interests in the 2021 Bonds may be purchased in book- entry form only. So long as DTC, or Cede & Co. as its nominee, is the registered owner of all 2021 Bonds, all payments on the 2021 Bonds will be made directly to DTC, and disbursement of such payments to the DTC Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of the Participants, as more fully described in Appendix F. As long as Cede & Co. is the registered owner of the 2021 Bonds, references herein to the Owners of the 2021 Bonds will refer to Cede & Co. and not to the Beneficial Owners. Neither the Authority nor the City gives any assurance that DTC, DTC Participants nor others will distribute payments with respect to the 2021 Bonds nor notices concerning the 2021 Bonds to the Beneficial Owners or that DTC will otherwise serve and act in the manner described in this Official Statement. See Appendix F for a further description of DTC and its book-entry system. The information presented therein is based solely on information provided by DTC. 5.2.f Packet Pg. 247 10 4827-8234-0833v4/200928-0001 SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS Pledge of Base Rental Payments The 2021 Bonds are payable from and secured by the Base Rental Payments and certain amounts on deposit in the funds and accounts established under the Indenture. Base Rental Payments will be paid by the City from any and all legally available funds. The Authority, pursuant to the Assignment Agreement, has assigned to the Trustee for the benefit of the 2021 Bond Owners all of the Authority’s right, title and interest in and to the Ground Lease and the Lease Agreement, including, without limitation, its right to receive the Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement; provided that the Authority will retain the rights to indemnification and to payment of reimbursement of its reasonable costs and expenses under the Lease Agreement. The City will pay Base Rental Payments directly to the Trustee, as assignee of the Authority. See the caption “—Base Rental Payments.” Pursuant to the Indenture, the Authority may issue Additional Bonds payable from the Base Rental Payments on parity with the 2021 Bonds. See the caption “—Additional Bonds.” Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the 2021 Bonds) held in the Base Rental Payment Fund, Interest Fund, Principal Fund and Redemption Fund are pledged by the Authority pursuant to the Indenture to secure the payment of the principal of, premium, if any, and interest on the 2021 Bonds in accordance with their terms and the provisions of the Indenture. Subject to the Indenture, said pledge constitutes a first lien on such assets. THE 2021 BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM THE BASE RENTAL PAYMENTS AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE CITY OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE 2021 BONDS. THE AUTHORITY HAS NO TAXING POWER. Additional Bonds The Authority may at any time issue one or more Series of Additional Bonds under the Indenture (in addition to the 2021 Bonds issued thereunder) payable from Base Rental Payments as provided in the Indenture on a parity with all other Bonds theretofore issued under the Indenture, but only subject to the following conditions, which are conditions precedent to the issuance of such Additional Bonds: (a) The issuance of such Additional Bonds has been authorized under and pursuant to the Indenture and has been provided for by a Supplemental Indenture which specifies the following: (1) the application of the proceeds of the sale of such Additional Bonds; (2) the principal amount and designation of such Series of Additional Bonds and the denomination or denominations of the Additional Bonds; (3) the date, the maturity date or dates, the interest payment dates and the dates on which mandatory sinking fund redemptions, if any, are to be made for such Additional Bonds; provided, however, that: (i) the serial Bonds of such Series of Additional Bonds will be payable as to principal annually on June 1 of each year in which principal falls due, and the term Bonds of such Series of Additional Bonds will have annual mandatory sinking fund redemptions on June 1; (ii) the Additional Bonds will be payable as to interest semiannually on June 1 and December 1 of each year, except that the first installment of interest may be payable on either June 1 or December 1 and will be for a period of not longer than twelve months and the interest will be payable thereafter semiannually on June 1 and December 1; (iii) all Additional Bonds of like maturity will be identical in all respects, except as to number or denomination; and (iv) serial maturities of serial Bonds or mandatory sinking fund redemptions for term Bonds, or any combination thereof, will be established to provide for the 5.2.f Packet Pg. 248 11 4827-8234-0833v4/200928-0001 redemption or payment of such Additional Bonds on or before their respective maturity dates; (4) the redemption premiums and terms, if any, for such Additional Bonds; (5) the form of such Additional Bonds; and (6) such other provisions that are appropriate or necessary and are not inconsistent with the provisions of the Indenture; (b) the Authority is in compliance with all agreements, conditions, covenants and terms contained in the Indenture, Lease Agreement and Ground Lease required to be observed or performed by it; (c) the City is in compliance with all agreements, conditions, covenants and terms contained in the Indenture, Lease Agreement and Ground Lease required to be observed or performed by it; and (d) the Ground Lease has been amended, to the extent necessary, and the Lease Agreement has been amended so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount equal to the principal of and interest on such Additional Bonds, payable at such times and in such manner as may be necessary to provide for the payment of the principal of and interest on such Additional Bonds; provided, however, that no such amendment will be made such that the sum of such Base Rental Payments, including any increase in the Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Rental Period is in excess of the annual fair rental value of the Property after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith (evidence of the satisfaction of such condition will be made by a Written Certificate of the City). Nothing contained in the Indenture limits the issuance of any bonds or other obligations payable from Base Rental Payments if, after the issuance and delivery of such bonds or other obligations, none of the Bonds theretofore issued under the Indenture will be Outstanding. Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds set forth in the Indenture, Additional Bonds may not be issued if an Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) exists, unless such default will be cured upon such issuance. Base Rental Payments General. Rental Payments, including Base Rental Payments, will be paid by the City to the Authority for and in consideration of the right to use and occupy the Property and in consideration of the continued right to the quiet use and enjoyment thereof during each Rental Period for which such Rental Payments are to be paid. Each Base Rental Payment will be deposited with the Trustee no later than fifteenth day of the month preceding each Interest Payment Date (the “Base Rental Deposit Date”). All Base Rental Payments will be paid directly by the City to the Trustee, and if received by the Authority at any time will be transferred by the Authority to the Trustee within one Business Day after the receipt thereof. All Base Rental Payments received by the Trustee will be deposited by the Trustee in the Base Rental Payment Fund. Pursuant to the Indenture, on the Business Day immediately preceding each Interest Payment Date, the Trustee will transfer amounts in the Base Rental Payment Fund to the Interest Fund and the Principal Fund as necessary to provide for the payment of the interest on and principal of the 2021 Bonds. Fair Rental Value. The City and the Authority have agreed and determined that the annual fair rental value of the Property is not less than the maximum annual Rental Payments due in any year for the Property. In making such determination of fair rental value, consideration has been given to the uses and purposes that may be served by the Property and the benefits therefrom which will accrue to the City and the general public. Payments of the Rental Payments for the Property during each Rental Period constitute the total rental for said Rental Period. 5.2.f Packet Pg. 249 12 4827-8234-0833v4/200928-0001 Covenant to Budget and Appropriate. The City covenants in the Lease Agreement to take such action as may be necessary to include all Rental Payments due under the Lease Agreement as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Payments. The City covenants to deliver to the Authority and the Trustee a Written Certificate of the City stating that its final annual budget includes all Base Rental Payments due in such Fiscal Year within 10 days after the filing or adoption of the final annual budget. The Lease Agreement declares that these covenants are and will be construed to be duties imposed by law and that it is the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the City’s covenants and agreements under the Lease Agreement. See, however, the caption “—Abatement.” Limited Obligation. THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY, THE STATE OR 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 OR THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXAT ION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. Additional Rental Payments For the right to use and occupy the Property, the Lease Agreement requires the City to pay, as Additional Rental Payments, such amounts as will be required for the payment of the following: (i) All taxes and assessments of any type or nature charged to the Authority or the City or affecting the Property or the respective interests or estates of the Authority or the City therein. (ii) All reasonable administrative costs of the Authority relating to the Property including, but without limiting the generality of the foregoing, salaries, wages, fees and expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture, fees of auditors, accountants, attorneys or engineers, and all other necessary and reasonable administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Indenture or Lease Agreement or to defend the Authority and its members, officers, agents and employees. (iii) Insurance premiums for all insurance required pursuant to the Lease Agreement. (iv) Any amounts with respect to the Lease Agreement or the 2021 Bonds required to be rebated to the federal government in accordance with section 148(f) of the Internal Revenue Code of 1986, as amended. (v) All other payments required to be paid by the City under the provisions of the Lease Agreement or Indenture. Amounts constituting Additional Rental Payments payable under the Lease Agreement will be paid by the City directly to the person or persons to whom such amounts will be payable. The City will pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any other case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof. Abatement Base Rental Payments and Additional Rental Payments are paid by the City in each Rental Period for and in consideration of the right to use and occupy the Property. Except as otherwise specifically provided in the Lease Agreement, during any period in which, by reason of material damage to, or destruction or 5.2.f Packet Pg. 250 13 4827-8234-0833v4/200928-0001 condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property, Rental Payments will be subject to abatement proportionately, and the City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate the Lease Agreement by virtue of any such interference, and the Lease Agreement will continue in full force and effect. The amount of such abatement will be agreed upon by the City and the Authority; provided, however, that the Rental Payments due for any Rental Period will not exceed the annual fair rental value of that portion of the Property available for use and occupancy by the City during such Rental Period. Any such abatement will continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the Property, ending with the substantial completion of the work of repair or replacement of such Property, or the portion thereof so damaged or destroyed; and the term of the Lease Agreement will be extended as provided in the Lease Agreement, except that the term will in no event be extended ten years beyond the stated termination date of the Lease Agreement. The Trustee cannot terminate the Lease Agreement in the event of such substantial interference. Abatement of Base Rental Payments and Additional Rental Payments is not an event of default under the Lease Agreements and does not permit the Trustee to take any action or avail itself of any remedy against the City. Notwithstanding the foregoing, to the extent that moneys are available for the payment of Rental Payments due under the Lease Agreement in any of the funds and accounts established under the Indenture (including as a result of the availability of insurance proceeds), such Rental Payments will not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely from said funds and accounts. The City is permitted to apply Net Insurance Proceeds: (a) together with other legally available funds that the City elects to appropriate, to the repair, reconstruction or replacement of the damaged or destroyed portions of the Property; (b) to redeem 2021 Bonds; and/or (c) if the annual fair rental value of the Property is at least equal to 100% of the Base Rental Payments, to any other lawful purpose, including Base Rental Payments. See the captions “THE 2021 BONDS—Redemption—Extraordinary Redemption from Condemnation Award or Insurance Proceeds,” “RISK FACTORS—Abatement” and Appendix B under the caption “INDENTURE—SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS—Application of Net Insurance Proceeds.” Substitution or Release of the Property The Authority and the City may amend the Lease Agreement to substitute alternate real property for any portion of the Property or to release a portion of the Property from the Lease Agreement, upon compliance with all of the conditions set forth in the Lease Agreement and described below. After a substitution or release, the portion of the Property for which the substitution or release has been effected will be released from the leasehold encumbrance of the Lease Agreement. The Lease Agreement provides that there will be no reduction in or abatement of the Base Rental Payments due from the City as a result of such substitution or release. Any such substitution or release will be subject to the following specific conditions precedent: (a) The City will deliver a Written Certificate to the Trustee setting forth its findings that the Property, as constituted after such substitution or release: (i) has an annual fair rental value at least equal to the maximum Base Rental Payments payable by the City in any Rental Period; and (ii) has a useful life in excess of the final maturity of any Outstanding Bonds. (b) The City will obtain or cause to be obtained a CLTA or ALTA title insurance policy or policies with respect to any substituted property in an amount at least equal to the aggregate principal amount of any Outstanding Bonds, of the type and with the endorsements described in the Lease Agreement. 5.2.f Packet Pg. 251 14 4827-8234-0833v4/200928-0001 (c) The City will provide the Trustee with an opinion of counsel to the effect that such substitution or release will not, in and of itself, cause the interest on the 2021 Bonds to be included in gross income for federal income tax purposes. (d) The City, the Authority and the Trustee will execute, and the City will cause to be recorded with the Los Angeles County Recorder, any document necessary to reconvey to the City the portion of the Property being released and to include any substituted real property in the description of the Property contained in the Lease Agreement and Ground Lease. (e) The City will provide notice of such substitution to each rating agency then rating the 2021 Bonds. Action on Default Should the City default under the Lease Agreement, the Trustee, as assignee of the Authority under the Lease Agreement, may terminate the Lease Agreement and recover certain damages from the City, or may retain the Lease Agreement and hold the City liable for all Base Rental Payments thereunder on an annual basis, and will have the right to re-enter and re-let the Property. Base Rental Payments may not be accelerated upon a default under the Lease Agreement. See the caption “RISK FACTORS—No Acceleration of Base Rental.” For purposes of certain actions of 2021 Bond Owners of a series under the Indenture and Lease Agreement, such as certain consents and amendments and the direction of remedies following default, such 2021 Bond Owners do not act alone and may not control such matters to the extent that such matters are not supported by the requisite number of the Owners of all Bonds and Additional Bonds, if any, of such series. For a description of the events of default and permitted remedies of the Trustee (as assignee of the Authority) contained in the Lease Agreement and the Indenture, see Appendix B. No Reserve Fund No debt service reserve fund or account has been established by the Authority or the City in connection with the issuance of the 2021 Bonds. Insurance The Lease Agreement requires the City to maintain or cause to be maintained, throughout the term of the Lease Agreement: (1) A standard commercial general liability insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents and employees. Said policy or policies will 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 use or ownership of the Property. Said policy or policies must provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in a single accident or event, and in a minimum amount of $500,000 for damage to property resulting from a single accident or event. Such commercial general liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried or required to be carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City, provided that such self-insurance complies with the provisions of the Lease Agreement. The Net Insurance Proceeds of such liability insurance will be applied toward extinguishment or satisfaction of the liability with respect to which the Net Insurance Proceeds of such insurance have been paid. 5.2.f Packet Pg. 252 15 4827-8234-0833v4/200928-0001 (2) Workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State to insure employers against liability for compensation under the California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Property and to cover full liability for compensation under any such act, that the City’s obligations to carry workers’ compensation insurance may be satisfied by self-insurance, provided that such self-insurance complies with the provisions of the Lease Agreement. (3) The City will maintain or cause to be maintained, fire, lightning and special extended coverage insurance (which includes coverage for vandalism and malicious mischief, but need not include coverage for earthquake damage) on all improvements constituting any part of the Property in an amount equal to the greater of 100% of the replacement cost of such improvements or 100% of the outstanding principal amount of the Bonds. The City has an insurance policy which provides replacement cost coverage. All of the foregoing insurance may be subject to a deductible in an amount not to exceed $500,000. The foregoing obligations may be satisfied by self-insurance, provided that such self-insurance complies with the provisions of the Lease Agreement. (4) The City will maintain rental interruption insurance to cover the Authority’s loss, total or partial, of Base Rental Payments under the Lease Agreement resulting from the loss, total or partial, of the use of any part of the Property as a result of any of the hazards required to be covered pursuant to clause (3) above in an amount sufficient at all times to pay an amount not less than the product of two times the maximum amount of the Base Rental Payments scheduled to be paid during any Rental Period. The City is not permitted to self-insure its obligation to maintain rental interruption insurance. The insurance required to be maintained by the Lease Agreement must be provided by reputable insurance companies with claims-paying abilities determined, in the reasonable opinion of a professionally certified risk manager or an independent insurance consultant, to be adequate for the purposes hereof. The City will provide, at its own expense, one or more CLTA or ALTA title insurance policies for the Property, in the aggregate amount of not less than the aggregate principal amount of the Bonds. Such policy or policies will insure: (a) the fee interest of the City in the Property; (b) the Authority’s ground leasehold estate in the Property under the Ground Lease; and (c) the City’s leasehold estate under the Lease Agreement in the Property, subject only to Permitted Encumbrances. All Net Insurance Proceeds received under said policy or policies will be deposited with the Trustee and applied as provided in the Indenture. So long as any of the Bonds remain Outstanding, each policy of title insurance obtained pursuant to the Indenture or Lease Agreement or required thereby must provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Bond Owners. THE CITY General The City is located in the southeastern portion of the County of Los Angeles (the “County”), approximately 30 miles east of the City of Los Angeles, at the junction of State Routes 57 and 60. The City was incorporated in 1989 under the general laws of the State and has an area of approximately 15 square miles. The population of the City is estimated to be approximately 57,177. The City operates under a Council/Manager form of government. Councilmembers are elected at large for four-year alternating terms and the City Council, in turn, selects one of the City Council Members to serve as Mayor for one year. The City Council selects a City Manager to administer the affairs of the City. The City Manager is responsible for implementing the policies, ordinances and directives of the City Council and for overseeing the daily operations of the City. 5.2.f Packet Pg. 253 16 4827-8234-0833v4/200928-0001 The City provides a wide range of municipal services, including parks and recreation, community development, neighborhood improvement and street maintenance. The City also contracts for many public services, including water service from the Walnut Valley Water District, police services from the Los Angeles County Sheriff, library services from the County, highway and street maintenance, landscape maintenance, building and safety inspection and other services. Fire services are provided by the Los Angeles County Fire Department and funded from property taxes levied by the County. Government and Administration The City had approximately 56 full-time and 29 full-time equivalent part-time employees (primarily seasonal employees in the Parks and Recreation Department) as of June 30, 2020. City employees are not represented by a labor union and senior managers serve as “at-will” employees. The City has never experienced a strike, slowdown or work stoppage. The City operates under a council-manager form of government. The City Council members and the expiration dates of their respective terms are as follows: Name Office Term Expires Nancy A. Lyons Mayor November 2022 Ruth M. Low Mayor Pro Tem November 2024 Andrew Chou Council Member November 2022 Stan Liu Council Member November 2024 Steve Tye Council Member November 2022 The City Manager, who is appointed by the City Council, serves as the City’s chief administrative officer and is responsible for overseeing the daily operations of City departments and efficient management of all City business. Daniel Fox serves as the City Manager. Mr. Fox was appointed City Manager in 2017. Prior to his appointment as City Manager, Mr. Fox served as the Assistant City Manager and Director of Community Development for the City of Laguna Niguel, California. Mr. Fox has a Bachelor of Science degree in Urban and Regional Planning from California State Polytechnic University, Pomona. Other key personnel responsible for management of the City include the Assistant City Manager and the Finance Director. Ryan McLean serves as the Assistant City Manager of the City. Mr. McLean was appointed Assistant City Manager in 2016. Prior to his appointment as Assistant City Manager, Mr. McLean served as Deputy City Manager. Mr. McLean has a Bachelor of Arts degree in Economics from the University of California, Irvine. Brent Mason is the Interim Finance Director of the City. Mr. Mason was appointed Interim Finance Director in March 2021. Prior to his appointment as Interim Finance Director, Mr. Mason served as the Finance Director of the City of San Bernardino and the Finance Director/Treasurer for the City of Riverside. Mr. Mason has a Bachelor of Science degree in Business and Accounting from Biola University and is a Certified Public Accountant. Risk Management The City 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 disasters. The City is a member of the California Joint Powers Insurance Authority (the “JPIA”), a joint exercise of powers agency with over 100 California public agency members that arranges and administers programs for the pooling of self-insured losses, arranges for group-purchased insurance and purchases excess insurance cover on behalf of its members. 5.2.f Packet Pg. 254 17 4827-8234-0833v4/200928-0001 Through the JPIA, the City maintains the following coverages as of June 30, 2020: • Workers compensation insurance up to statutory limits. • Pollution insurance up to $10 million over a 3-year period. • All-risk property insurance for covered City properties (including the Property) in the amount of $500 million. This policy also includes earthquake and flood coverage for certain City properties, including the Property, with a deductible of the greater of 5% of property value or $100,000. • Crime insurance up to $1 million. • Special event tenant user liability insurance, with premiums paid by tenant users, for certain activities on City property. Claims have not exceeded the City’s insurance coverage in any of the last three years. No assurance can be given as to the adequacy of the insurance maintained now or in the future by the City to fund necessary repairs or replacement of any portion of the Property, and the City does not have any obligation under the Lease Agreement to maintain earthquake or other coverage in the current coverage amounts. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS— Insurance” for a description of the insurance requirements with respect to the Property. Significant damage to any of the Property could cause Base Rental Payments to be abated. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Abatement” and “RISK FACTORS—Natural Disasters.” COVID-19 Outbreak The spread of the novel strain of coronavirus called SARS-CoV-2, which causes the disease known as COVID-19 (“COVID-19”), and local, State and federal actions in response to COVID-19, have impacted the City’s operations and finances. In response to the increasing number of cases of COVID-19 infections and fatalities, health officials and experts have recommended, and some governments have mandated, a variety of responses ranging from travel bans and social distancing practices to complete shutdowns of certain services and facilities. The World Health Organization has declared the COVID-19 outbreak to be a pandemic and, on March 4, 2020, as part of the State’s response to address the outbreak, the Governor declared a state of emergency. On March 13, 2020, the President declared a national emergency, freeing up funding for federal assistance to state and local governments. Many school districts across the State have temporarily closed some or all school campuses (including schools within the City) in response to local and State directives or guidance. On March 19, 2020, the Governor issued Executive Order N-33-20, a mandatory Statewide shelter-in- place order applicable to all non-essential services. Certain aspects of the shelter-in-place directives have been extended indefinitely until indicators for modifying the stay-at-home order have been met. The County has also declared a state of emergency in response to the COVID-19 outbreak. On May 4, 2020, the Governor issued an executive order informing local health jurisdictions and industry sectors that they could gradually re-open under new modifications and guidance provided by the State. A phased re-opening of various sectors has been underway since mid-2020 in accordance with a four-stage re-opening plan. Although pursuant to the re-opening plan certain restrictions on activities have been eased, restrictions have also been re-imposed in various jurisdictions (including the County) as local conditions warrant, and such restrictions may be expanded as the pandemic continues. In addition, the Governor extended the deadline to file and pay spring 2020 property taxes for residential and certain commercial property owners and first quarter 2020 sales and use tax returns by 90 days for all but the very largest taxpayers. As a result of the extended deadline to file sales and use tax returns, it is 5.2.f Packet Pg. 255 18 4827-8234-0833v4/200928-0001 estimated that up to 361,000 California businesses with less than $5 million in taxable annual sales were permitted to defer up to $50,000 in sales tax and enter into 12-month payment plans at zero interest. These actions have resulted in delays in the receipt by the City of its portion of such tax payments. On March 27, 2020, the President signed the $2.2 trillion Coronavirus Aid, Relief, and Economic Stabilization Act (the “CARES Act”) which provides, among other measures, $150 billion in financial assistance to states, tribal governments and local governments to provide emergency assistance to those most significantly impacted by COVID-19. Under the CARES Act, local governments are eligible for reimbursement of certain costs which were expended to address the impacts of the pandemic. The City received a total reimbursement of $705,972 under the CARES Act. The funds received by the City under the CARES Act are not available for payment of the 2021 Bonds and cannot be used to backfill any City revenue losses related to COVID-19. On December 27, 2020, the President signed the $900 billion Coronavirus Response and Relief Supplemental Appropriations Act. Although the act did not provide additional financial assistance to state and local governments, it did extend the deadline (to October 2021) for them to use unspent funds that were previously approved under the CARES Act. On March 11, 2021, the President signed the American Rescue Plan Act of 2021 (the “ARP Act”), a $1.9 trillion economic stimulus package designed to help the United States’ economy recover from the adverse impacts of the COVID-19 pandemic. The ARP Act includes approximately $350 billion in aid to state and local governments such as the City, consisting of both direct funding from the United States Department of Treasury and program moneys that will flow from other federal agencies. Half of the aid to state and local governments will be distributed in spring 2021, with the other half following in 2022. The City has been allocated a total of approximately $10.5 million. This funding is available for a broad range of uses, including responding directly to the health emergency, addressing its negative economic impacts with assistance to households and small businesses, restoring government services that were reduced in response to pandemic- related revenue losses and making certain necessary infrastructure improvements. The City has not yet determined how the ARP Act funds that it expects to be receive will ultimately be spent, but planning efforts are underway. The effects of the COVID-19 outbreak and governmental actions responsive to it are altering the behavior of businesses and people in a manner that is having significant negative impacts on global and local economies. In addition, financial markets in the United States and globally have seen significant declines and experienced significant volatility attributed to COVID-19 concerns. Volatility in the financial markets has caused CalPERS’ earnings to fall below its investment targets in Fiscal Year 2020, which could result in increases in the City’s unfunded pension liability and future pension costs commencing in Fiscal Year 2023. See the caption “CITY FINANCIAL INFORMATION—Retirement Contributions.” The outbreak has resulted in increased pressure on State finances as budgetary resources are directed towards containing the pandemic and tax revenues sharply decline. Identified cases of COVID-19 and deaths attributable to the COVID-19 outbreak continue to occur throughout the United States, including the County. The County is the most populous County in the United States and has both the highest number of confirmed COVID-19 infections and the highest number of COVID-19 fatalities in the United States. Potential impacts to the City associated with the COVID-19 outbreak include, but are not limited to, increasing costs and challenges to the public health system in and around the City, cancellations of public events and disruption of the regional and local economy with corresponding decreases in General Fund revenues, including as a result of reduced sales which are subject to sales taxes, reduced hotel occupancy, which is subject to transient occupancy taxes, fewer business license applications and potential declines in property values. See the captions “CITY FINANCIAL INFORMATION—Sales Taxes,” “CITY FINANCIAL INFORMATION—Property Taxes” and “CITY FINANCIAL INFORMATION—Other Taxes.” 5.2.f Packet Pg. 256 19 4827-8234-0833v4/200928-0001 In response to the COVID-19 outbreak, the City modified its operations to implement remote work opportunities for employees and provide City services online, closed many City facilities to the public, cancelled many programs, rentals and community events and deferred several non-essential capital improvement projects. The City continues to stagger employee shifts, enable certain employees to telecommute and move employees to multiple locations in order to prevent large gatherings of City personnel at any one time and maintain their health and the operations of the City. In addition, on-site personnel are wearing masks and practicing social distancing while working. Access to the City’s administrative offices has been restricted and City Council meetings are occurring via teleconference. The City has not experienced and does not at this time foresee a future negative impact on the execution of City services as a result of the COVID-19 outbreak. However, there can be no assurance that absences of employees or City leadership due to COVID-19 will not adversely impact City operations. At the onset of the COVID-19 outbreak in early 2020, the City initially estimated that it would need to apply approximately $1,250,000 from the Contingency Reserve Fund (as discussed under the caption “CITY FINANCIAL INFORMATION—City Reserve Policies”) to address an anticipated revenue shortfall in Fiscal Year 2020. However, as a result of the actions that are described in the previous paragraph, the City achieved sufficient reductions in its expenditures that it ultimately did not need to draw upon the Contingency Reserve Fund in Fiscal Year 2020. The COVID-19 outbreak is ongoing, and the duration and severity of the outbreak and the economic and other actions that may be taken by governmental authorities to contain the outbreak or to treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the City and the General Fund is unknown. The City reports that although Fiscal Year 2020 General Fund revenues were lower than budgeted, Fiscal Year 2020 General Fund expenditures were also lower than budgeted, and the overall effect of the COVID-19 outbreak on the General Fund was not material. The Fiscal Year 2021 budget was developed taking the COVID-19 outbreak into consideration. The City is currently estimating that Fiscal Year 2021 General Fund revenues will be approximately $619,000 lower than budgeted (and approximately $131,000 lower than Fiscal Year 2020 revenues), while Fiscal Year 2021 General Fund expenditures will be approximately $689,000 lower than budgeted (and approximately $2,224,000 higher than Fiscal Year 2020 actual expenditures). The City anticipates that Fiscal Year 2021 General Fund expenditures will slightly exceed Fiscal Year 2021 General Fund revenues, requiring a draw on the City’s General Fund reserves in an amount that is expected to be less than 4% of the total reserve amount. See the captions “CITY FINANCIAL INFORMATION—General Economic Condition and Outlook of the City” and “CITY FINANCIAL INFORMATION—Budget Procedure, Current Budget and Historical Budget Information—Fiscal Year 2021 Budget.” The City continues to actively monitor General Fund revenues and expenditures so that any further impacts of the COVID-19 pandemic can be anticipated. The City does not currently expect that the COVID-19 outbreak will have a material adverse effect on the City’s ability to pay the Base Rental Payments. CITY FINANCIAL INFORMATION Accounting and Financial Reporting The City maintains its accounting records in accordance with Generally Accepted Accounting Principles (“GAAP”) and the standards established by the Governmental Accounting Standards Board (“GASB”). The City Council and City staff review fiscal performance against the budget at the mid-point of each Fiscal Year. Combined financial statements of the City and its component units are produced following the close of each fiscal year of the City ended June 30 (each, a “Fiscal Year”). The City Council employs an independent certified public accountant who examines at least annually the financial statements of the City in accordance with GAAP, including tests of the accounting records and 5.2.f Packet Pg. 257 20 4827-8234-0833v4/200928-0001 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 the independent accountant to the City Council. The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting 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 spending activities are controlled. The budget is adopted in accordance with GAAP. Revenues are recognized on the accrual basis (i.e., when they are earned). Expenditures are recorded when the related fund liability is incurred. See the caption “—City Financial Statements” for a discussion of the City’s audited financial statements for Fiscal Year 2020. The General Fund is the general operating fund of the City. It is used to account for all financial resources except those that are required to be accounted for in another fund because there are legal restrictions on their use. It is expected that Base Rental Payments will be paid for from amounts in the General Fund. Tables 1 through 3 below set forth certain historical and current Fiscal Year budget information for the General Fund. Information on the remaining governmental funds of the City as of June 30, 2020, is set forth in Appendix C. General Economic Condition and Outlook of the City Financial Conditions. As of June 30, 2020, the General Fund had a year-end surplus of approximately $2.37 million prior to transfers in and out, reflecting revenues of approximately $24.38 million in excess of expenditures of approximately $22.01 million. The Fiscal Year 2020 budget, which was adopted prior to the COVID-19 outbreak that is discussed under the caption “THE CITY—COVID-19 Outbreak,” had anticipated a year-end General Fund surplus of approximately $60,000, with revenues expected to total approximately $24.58 million and expenditures expected to total $24.52 million prior to transfers in and out. Actual General Fund revenues were $24.38 million, almost equivalent to the adopted budgeted amount. Variances from the original budget for Fiscal Year 2020 consisted primarily of lower revenues in the amount of approximately $800,000 in the Charges for Services category and of approximately $500,000 in Taxes, in each case primarily as a result of the COVID-19 pandemic. The impact of the lower revenues was almost entirely offset by various categories outperforming budgeted amounts, with the greatest positive variance reflected in the Use of Money and Property category. Actual General Fund expenditures were lower than budgeted in Fiscal Year 2020 primarily as a result of an aggregate reduction of approximately $2.52 million across all departments as a result of mitigating measures to address the impact of the COVID-19 pandemic. For Fiscal Year 2021, the mid-year General Fund operating budget projects revenues of approximately $23.20 million prior to transfers in, which is approximately $1.18 million (4.8%) below Fiscal Year 2020 audited revenues. In addition, the mid-year Fiscal Year 2021 General Fund operating budget projects expenditures of approximately $23.15 million prior to transfers out, an increase of approximately $1.14 million (5.2%) from Fiscal Year 2020 audited expenditures. Based on operating results to date, the City currently expects both Fiscal Year 2021 General Fund revenues and Fiscal Year 2021 General Fund expenditures to come in slightly less than budgeted, resulting in a minor improvement to the City’s net position of approximately $70,000 after accounting for transfers in and out as a result of the City’s conservative budgeting practices. Only sales tax revenues are expected to vary significantly from the adopted budget at this time, with the mid-year budget report to the City Council anticipating receipt of approximately $500,000 more in sales tax revenues than was originally projected in the adopted Fiscal Year 2021 budget. For the City’s various departmental budgets, only the Parks & Recreation 5.2.f Packet Pg. 258 21 4827-8234-0833v4/200928-0001 Department anticipates a material variance from the original budget, with the mid-year budget report to the City Council anticipating significant savings associated with reduced programming during the COVID-19 pandemic. Budgeted Fiscal Year 2021 expenditures did not reflect any scheduled increases in employee compensation. Personnel costs (including salaries, benefits and contract payments for fire and police services) make up over 75% of General Fund expenditures. To date, the City has not laid off or furloughed any employees as a result of the COVID-19 outbreak. The City is projecting increased General Fund expenditures in Fiscal Year 2021 and future Fiscal Years in order to address significantly higher required pension contributions resulting from the lowering of the discount rate attributable to pension investments. Based on information from the California Public Employees Retirement System (“CalPERS”), during the seven year phase-in period relating to the reduction in the discount rate (Fiscal Years 2019 through 2025), the City expects to contribute a cumulative additional amount of approximately $2.4 million above its former base contribution toward its unfunded liability. See the caption “—Retirement Contributions.” The City also expects that CalPERS’ failure to achieve its investment targets in Fiscal Year 2020 will increase future contribution rates for plan participants, including the City, beginning in Fiscal Year 2023, although the City is unable to quantify the magnitude of any resultant increases in future contribution rates at this time. See the caption “THE CITY—COVID-19 Outbreak.” The City currently expects to be able to make all such increased contributions without a material effect on the General Fund. Strategic Plan. The City’s Strategic Plan, which is updated every three years, provides a unified guiding framework for setting priorities and allocating resources to produce optimal outcomes for the community’s well-being and the City’s fiscal health. The City’s annual operating budgets and capital improvement plans are prepared in alignment with the Strategic Plan, which contains three overarching goals: (i) responsible stewardship of public resources; (ii) an open, engaged and responsive government; and (iii) a safe, sustainable and healthy community. The first Strategic Plan was adopted in early 2017 and covered the period from July 1, 2017 through June 30, 2020. Of the 94 action items that were laid out in the first Strategic Plan, over 95% of them were completed or in progress on June 30, 2020. The current Strategic Plan covers the period from July 1, 2020 through June 30, 2024 and includes the following goals, among others: (a) reducing subsidies to lighting and landscape assessment districts, which operate at a deficit and require General Fund reserves to cover operating deficits, as discussed further under the caption “—Lighting and Landscape Assessment Districts;” (b) developing a program to attract and retain local businesses; (c) prioritizing the City’s capital improvements and new facility needs through the City’s five-year capital improvement program; (d) utilizing a Pavement Management System to prioritize street maintenance; (e) creating and funding maintenance reserve accounts; (f) implementing a new land management system; (g) maintaining secure and reliable network infrastructure; (h) utilizing enterprise software across City departments; (i) conducting a resident satisfaction survey; (j) developing an interactive City website and increasing traffic to an online customer request system; (k) auditing the City’s business practices; (l) digitizing City records within 10 years; (m) developing an employee mission and values statement; (n) establishing formal employee training and recognition programs; (o) developing new emergency preparedness resources for residents and enhanced preparedness exercises for staff; (p) developing a block captain education program to enhance neighborhood watch programs; (q) securing funding for the State Route 57 and 60 Confluence project; (r) updating the City’s Development Code and Housing Element; (s) developing a property owner education program; and (t) improving energy efficiency, resource conservation and environmental sustainability in City operations. City staff prepares a quarterly report to update City leadership and residents on the City’s progress in achieving the initiatives that are set forth in the Strategic Plan. 5.2.f Packet Pg. 259 22 4827-8234-0833v4/200928-0001 Lighting and Landscape Assessment Districts. In the 1980s, the developers of certain residential developments within the City, together with the County, established three lighting and landscape assessment districts (each, an “LLAD”) to fund certain landscape and irrigation improvements to property within each LLAD. Upon the City’s incorporation in 1989, the City assumed jurisdiction over the LLADs. The LLADs have consistently operated at a deficit, with the City’s attempts to increase assessment fees having been rejected by residents within the LLADs. As a result, the General Fund has routinely subsidized the LLADs’ operations by means of interfund transfers. The City has begun the process of dissolving two of the LLADs and expects such dissolutions to be completed by July 1, 2021. If the LLADs are dissolved, the LLADs (and the City) will no longer be obligated to provide services or maintenance to the affected areas, with such tasks becoming the responsibility of the property owners. With respect to one of such LLADs, the property owners will also vote later in 2021 on the formation of a new LLAD. If a new LLAD is approved and established, the proposed tax collections will be in an amount that will be sufficient to fund its operations without City subsidies. The budgeted General Fund subsidy for the two LLADs which the City is dissolving totaled approximately $225,000 in Fiscal Year 2021. In the event that the City does not complete the dissolution of the LLADs, the City will continue to be responsible for subsidizing their operations, and there can be no assurance that the cost of providing services and maintenance to the affected properties will not increase in the future as a result of weather events, natural disasters, deferred maintenance or otherwise. The City’s third LLAD, which the City has no current plans to dissolve, funds slope and median maintenance on certain property within the City. General Fund subsidies to this LLAD totaled $234,800, $280,591 and $235,498 in Fiscal Years 2018, 2019 and 2020, respectively. The City does not expect that its ongoing obligation to subsidize LLAD operations will have a material effect on the City’s ability to make the Base Rental Payments. Budget Procedure, Current Budget and Historical Budget Information General. The City Council adopts the City’s annual operating budget, which is prepared under the supervision of the City Manager, by no later than June 30 of each Fiscal Year. Beginning July 1, the budget process approves operating appropriations at the department and fund level and allows the City to make resource allocation decisions, including choices about staffing, technology and equipment, as well as determining which program priorities will be addressed in the coming Fiscal Year. Although the City Council deliberates the proposed budget in June, the budget process occurs throughout the year, as described below. Financial information containing actual revenue receipts and expenditures trends is presented to the City Council at the mid-point of each Fiscal Year and adjustments made as appropriate based on actual results to date. During the Fiscal Year, the City Council may amend the budget with the approval of supplemental appropriations and reviews and amends the budget at mid-year and at year-end. Budgetary control is maintained at the program level. Formal budgetary integration is employed as a management control device during the Fiscal Year for the General Fund, Special Revenue Funds, Debt Service Funds and Capital Projects Funds. The City Manager may transfer (or increase, if undesignated funds are available) budget appropriations between departments within a fund, but only the City Council may transfer appropriations between funds. Expenditures may not legally exceed budgeted appropriations at the department level within a fund. The City Council is empowered to increase total appropriations, if required. Appropriations lapse at Fiscal Year end to the extent that they have not been expended and new budget appropriations are approved for the 5.2.f Packet Pg. 260 23 4827-8234-0833v4/200928-0001 coming year. Project-length financial plans are adopted for all capital projects and appropriations are carried forward, with City Council approval, until project completion. Grant funds are carried forward until the grant expires. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of money are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the governmental funds. Encumbrances outstanding at Fiscal Year end are recorded as a restriction of fund balance and do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year. Budget Timeline. Staff begins work on the budget in earnest each January based on City Council direction with respect to spending priorities. In February of each year, City departments assess anticipated adjustments to their current Fiscal Year budgets based on City Council direction with respect to spending priorities. The capital improvement project list is also completed at this time. In April of each year, budgetary information is compiled by the City’s Finance Department and presented to the City Manager. The City Manager reviews such information and discusses the proposed budget with department managers, which may result in revisions to balance the budget. In May of each year, public study sessions are held in which the City Council reviews the proposed budget and directs staff to make changes. Comments from members of the public are also taken into account at this time. On or before June 30, the City Council votes to adopt the budget, including any amendments to the proposed budget that may occur, by an affirmative vote of the majority of the City Council. At any meeting after the adoption of the budget, the City Council may amend or supplement the budget by a majority vote of the City Council. Upon final adoption, the budget becomes the legal authorization for the various departments to expend revenues, subject to any controls established by the City Manager, City Council and internal audit requirements. The budget is also published and distributed to interested parties. 5.2.f Packet Pg. 261 24 4827-8234-0833v4/200928-0001 A summary of the actions taken during the budgetary process is set forth below: CITY OF DIAMOND BAR BUDGET PROCESS Source: City. Fiscal Year 2021 Budget. The City Council adopted a balanced budget for Fiscal Year 2021 on June 16, 2020. Budgeted expenditures for all funds totaled approximately $33.93 million for Fiscal Year 2021, excluding transfers out. The City’s Fiscal Year 2021 budgeted expenditures for the General Fund totaled approximately $23.47 million, excluding transfers out. Based on Fiscal Year 2021 results to date, the City currently projects that actual expenditures for the General Fund (before transfers out) will total approximately $23.15 million, or approximately $320,000 (1.4%) less than the adopted Fiscal Year 2021 budget, primarily as a result of Parks & Recreation program expenditures coming in lower than budgeted as a result of the continued impact of the COVID-19 impact on City programs. After accounting for transfers in and transfers out, the Fiscal Year 2021 budget reflects the projected application of $850,000 from the City’s Contingency Reserve Fund (as discussed under the caption “—City Reserve Policies”) to balance the budget, as well the application of approximately $100,000 in Building & Facilities Maintenance Fund reserves to fund a new roof on a City park building and $433,000 in General Fund reserves for LLAD budgets. See the caption “—General Economic Condition and Outlook of the City— Lighting and Landscape Assessment District.” The budget also reflects increases in Public Safety costs of $445,000 to reflect negotiated compensation increases for Los Angeles County Sheriff deputies, and the cancellation of several large community events, with no revenues projected therefrom. The Fiscal Year 2021 budget also reflects a reduction of approximately 62% in capital improvement project spending, from $8.8 million in Fiscal Year 2020 to $3.3 million in Fiscal Year 2021 (including $2.6 million for projects that are already in progress). In order to effect reductions in expenditures, the Fiscal Year 2021 budget also includes the following elements: (i) the City will make the minimum required CalPERS payment ($200,600); (ii) the City will suspend contributions to the Building & Facilities Maintenance Fund and the Technology Reserve Fund, which is expected to save approximately $200,000; (iii) the City will defer vehicle and equipment purchases, which is expected to save approximately $93,000; (iv) business travel for City employees is prohibited, which is expected to save approximately $71,000; (v) City employees will not Budget Kick-Off City Council Provides Direction on Spending Priorities Department-Level Review Assess Adjustments to Current Fiscal Year Budget; Develop Capital Improvement Plan Finance Department Compilation Finance Department Compiles Budget Requests and Presents them to City Manager City Manager Review Review of Department- Level Budget Requests; Discussion with Department Managers City Council Review City Council Reviews Proposed Budget and Suggests Changes Public Input Public Study Sessions are held with the City Council; Public Input is Received Approval City Council Approves Budget at Public Meeting Implementation Budget Implemented; Copies Distributed to Interested Parties January February April April May May June July 5.2.f Packet Pg. 262 25 4827-8234-0833v4/200928-0001 receive performance pay bonuses, which is expected to save approximately $90,000; (vi) City employees will not receive cost of living adjustments, which were anticipated to increase compensation by 3%, which is expected to save approximately $254,000; (vii) the City will reduce utility costs through various measures, which is expected to save approximately $110,000; (viii) City departments will reduce expenditures on various items, which is expected to save a total of approximately $713,000. Budgeted revenues for all funds totaled approximately $34.81 million for Fiscal Year 2021, excluding transfers out. The City’s Fiscal Year 2021 budgeted revenues for the General Fund totaled approximately $23.26 million, excluding transfers out. Based on Fiscal Year 2021 results to date, the City currently expects actual revenues for the General Fund to total approximately $23.20 million, or approximately $60,000 (<1%) less than budgeted, primarily as a result of Charges for Services for Parks & Recreation programs coming in lower than anticipated as a result of the COVID-19 pandemic, which is somewhat offset by sales tax revenues coming in higher than anticipated. The Fiscal Year 2021 budget reflects the City’s expectation of the following: (i) property tax and motor vehicle in-lieu tax revenues will each increase by approximately 3% from Fiscal Year 2020 amounts; (ii) sales tax revenues will decrease by approximately 19% from the Fiscal Year 2020 amount; (iii) transient occupancy tax revenues will decrease by approximately 25% from the Fiscal Year 2020 amount; (iv) gas tax revenues will decrease by approximately 17% from the Fiscal Year 2020 amount; (v) service charge revenues will decrease by between 17% and 27% from Fiscal Year 2020 amounts. These significant changes from the prior Fiscal Year reflect the ongoing impact to the City of the COVID-19 pandemic. Fiscal Year 2022 Budget. [TO COME DEPENDING ON TIMING OF BOND ISSUE] Future Budgets. Looking forward, the City currently anticipates that it will be able to achieve balanced budgets in the future. The City believes that controlling the main cost drivers of wages, pension, health insurance and workers compensation is key to managing future budgets. See the caption “—General Economic Condition and Outlook of the City—Strategic Plan.” 5.2.f Packet Pg. 263 26 4827-8234-0833v4/200928-0001 Set forth in the table below are the General Fund budgets for Fiscal Years 2017 through 2021 and the audited General Fund results for Fiscal Years 2017 through 2020. During the course of each Fiscal Year, the budget may be amended and revised as necessary by the City Council; budgeted amounts shown below reflect such amendments and revisions in certain Fiscal Years. TABLE 1 CITY OF DIAMOND BAR GENERAL FUND BUDGETS AND RESULTS Adopted Fiscal Year 2017 Budget Audited Fiscal Year 2017 Results Adopted Fiscal Year 2018 Budget Audited Fiscal Year 2018 Results Adopted Fiscal Year 2019 Budget Audited Fiscal Year 2019 Results Adopted Fiscal Year 2020 Budget Actual Fiscal Year 2020 Results Adopted Fiscal Year 2021 Budget Revenues Property Tax $ 4,801,230 $ 4,951,033 $ 5,122,000 $ 5,187,630 $ 5,329,169 $ 5,405,335 $ 5,577,160 $ 5,590,899 $ 5,729,400 Sales Tax 4,557,000 4,789,172 5,162,100 4,999,873 5,196,000 4,970,980 5,020,000 4,846,330 4,300,000 Franchise Tax 1,465,000 1,320,617 1,390,000 1,419,605 1,285,000 1,355,003 1,380,000 1,340,960 1,376,000 Transient Occupancy Tax 950,000 923,527 950,000 1,019,915 1,050,000 1,222,925 1,400,000 1,128,386 1,106,250 Other Taxes 648,300 714,246 289,500 404,452 444,500 278,790 420,000 293,904 236,250 Licenses and Permits 2,382,251 2,220,572 2,500,883 2,558,690 2,129,729 2,589,628 2,357,880 2,095,324 1,633,724 Intergovernmental(1) 6,207,423 6,207,423 6,206,138 6,011,177 7,097,924 7,174,004 6,489,465 6,545,989 6,691,600 Charges for Services 1,652,032 1,544,032 1,720,137 1,652,143 1,641,365 1,351,841 1,564,900 851,612 1,265,100 Use of Money and Property(2) 306,500 (65,606) 357,000 (34,130) 450,400 1,215,723 562,700 1,048,214 412,620 Fines and Forfeitures 422,000 460,325 415,500 459,615 407,500 415,701 430,000 432,774 328,750 Miscellaneous 230,351 371,045 172,630 182,615 278,237 278,317 179,800 201,503 177,900 Transfers In 1,586,957 1,155,511 1,160,296 1,099,268 927,348 916,352 1,129,936 1,098,897 1,328,528 Total Revenues $ 25,209,044 $ 24,591,897 $ 25,446,184 $ 24,960,853 $ 26,237,172 $ 27,174,599 $ 26,511,841 $ 25,474,792 $ 24,586,122 Expenditures Current: General Government $ 5,851,093 $ 4,960,482 $ 6,007,120 $ 5,904,876 $ 6,667,260 $ 6,878,152 $ 6,177,427 $ 5,607,821 $ 6,003,350 Public Safety 6,714,391 6,567,087 6,927,793 6,881,227 7,307,703 7,131,562 7,694,901 7,354,473 8,042,744 Community Development 1,664,179 2,290,877 1,844,395 2,248,142 1,627,770 2,339,296 1,733,149 2,254,071 1,736,624 Parks and Recreation 3,254,940 2,662,622 3,279,608 2,831,120 3,496,499 3,021,569 3,428,564 2,669,570 3,204,592 Public Works 4,876,829 4,788,397 5,338,138 4,534,288 5,399,927 4,567,894 5,019,874 4,108,647 4,483,312 Capital Outlay - 86,625 - 796,535 - 18,770 - 8,918 - Transfers Out 3,429,433 1,838,218 5,845,374 2,738,250 4,912,947 4,056,356 2,443,684 2,293,831 2,340,537 Total Expenditures $ 25,790,865 $ 23,194,308 $ 29,242,428 $ 25,934,438 $ 29,412,106 $ 28,013,599 $ 26,497,599 $ 24,297,331 $ 25,811,159 Excess (Deficiency) of Revenues Over (Under) Expenditures(3) $ (581,821) $ 1,397,589 $ (3,796,244) $ (973,585) $ (3,174,934) $ (839,000) $ 14,242 $ 1,177,461 $ (1,225,037) (1) Includes Vehicle In-Lieu Property Tax revenues. See Table 4 under the caption “—Tax Revenues of the City” for historical Vehicle In-Lieu Property Tax revenues alone. (2) Negative amounts in Fiscal Years 2017 and 2018 reflect effect of marking to market the City’s investment portfolio in accordance with GAAP. (3) Projected deficits reflect budgeted transfers out, primarily for capital improvement projects. Sources: Adopted budgets of the City for Fiscal Years 2017 through 2021; audited financial statements of the City for Fiscal Years 2017 through 2020. 5.2.f Packet Pg. 264 27 4827-8234-0833v4/200928-0001 Change in Fund Balance of the City General Fund Set forth in the table below are the City’s audited General Fund statements of revenues, expenditures and changes in fund balance for Fiscal Years 2016 through 2020. TABLE 2 CITY OF DIAMOND BAR GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Fiscal Year Ended June 30, 2016 2017 2018 2019 2020 Revenues Taxes $ 12,930,081 $ 12,698,595 $ 13,031,475 $ 13,233,033 $ 13,200,479 Licenses and Permits 3,183,449 2,220,572 2,558,690 2,589,628 2,095,324 Intergovernmental 5,411,926 6,207,423 6,011,177 7,174,004 6,545,989 Charges for Services 1,689,328 1,544,032 1,652,143 1,351,841 851,612 Use of Money and Property(1) 492,443 (65,606) (34,130) 1,215,723 1,048,214 Fines and Forfeitures 470,722 460,325 459,615 415,701 432,774 Miscellaneous 177,449 371,045 182,615 278,317 201,503 Total Revenues $ 24,355,398 $ 23,436,386 $ 23,861,585 $ 26,258,247 $ 24,375,895 Expenditures Current: General Government $ 5,176,138 $ 4,960,482 $ 5,904,876 $ 6,878,152 $ 5,607,821 Public Safety 6,197,285 6,567,087 6,881,227 7,131,562 7,354,473 Community Development 1,787,433 2,290,877 2,248,142 2,339,296 2,254,071 Parks and Recreation 4,160,806 2,662,622 2,831,120 3,021,569 2,669,570 Public Works 3,133,330 4,788,397 4,534,288 4,567,894 4,108,647 Capital Outlay 178,477 86,625 796,535 18,770 8,918 Total Expenditures $ 20,633,469 $ 21,356,090 $ 23,196,188 $ 23,957,343 $ 22,003,500 Excess (Deficiency) of Revenues Over (Under) Expenditures $ 3,721,929 $ 2,080,296 $ 665,397 $ 2,301,004 $ 2,372,395 Other Financing Sources (Uses) Transfers In $ 1,199,015 $ 1,155,511 $ 1,099,268 $ 916,352 $ 1,098,897 Transfers Out(2) (3,226,681) (1,838,218) (2,738,250) (4,056,356) (2,293,831) Total Other Financing Sources (Uses) $ (2,027,666) $ (682,707) $ (1,638,982) $ (3,140,004) $ (1,194,934) Net Change in Fund Balance $ 1,694,263 $ 1,397,589 $ (973,585) $ (839,000) $ 1,177,461 Fund Balance, Beginning of Year 22,232,546 23,926,809 24,921,962 23,948,377 23,109,377 Restatements(3) - (402,436) - - 406,046 Fund Balance, Beginning of Year, as Restated 22,232,546 23,524,373 24,921,962 23,948,377 23,515,423 Fund Balance, End of Year $ 23,926,809 $ 24,921,962 $ 23,948,377 $ 23,109,377 $ 24,692,884 (1) Negative amounts in Fiscal Years 2017 and 2018 reflect effect of “marking to market” the City’s investment portfolio in accordance with GAAP. (2) Fiscal Year 2019 amount reflects funding of capital improvement projects and technology purchases from General Fund revenues. (3) Fiscal Year 2017 amount reflects booking of sales tax revenue in contravention of the City’s revenue recognition policy. Fiscal Year 2020 amount reflects booking of sales tax revenue that should have been recorded in Fiscal Year 2019 but was mistakenly omitted. See the caption “—City Financial Statements—Prior Period Adjustments.” Source: Audited financial statements of the City for Fiscal Years 2016 through 2020. 5.2.f Packet Pg. 265 28 4827-8234-0833v4/200928-0001 General Fund Balance Sheets of the City Set forth in the table below are the City’s audited General Fund balance sheets for Fiscal Years 2016 through 2020. TABLE 3 CITY OF DIAMOND BAR GENERAL FUND BALANCE SHEET SUMMARY Fiscal Year Ended June 30, 2016 2017 2018 2019 2020 Assets Pooled Cash and Investments $ 24,202,998 $ 27,100,597 $ 25,830,783 $ 26,140,848 $ 27,125,291 Receivables: Accounts 350,784 324,411 478,839 592,654 452,843 Accrued Interest 101,862 127,936 151,508 190,396 154,522 Prepaid Costs 75,866 42,108 8,230 26,203 4,496 Due from Other Governments 1,651,713 1,041,380 1,094,918 517,405 1,015,672 Due from Other Funds 932,921 48,789 45,004 353,080 462,037 Due from Employees 4,301 1,075 1,069 318 607 Total Assets $ 27,320,445 $ 28,686,296 $ 27,610,351 $ 27,820,904 $ 29,215,468 Liabilities Accounts Payable $ 1,992,878 $ 2,123,833 $ 1,410,652 $ 2,024,095 $ 1,909,581 Accrued Liabilities 401,025 265,702 233,018 217,639 246,832 Unearned Revenues 77,481 109,612 102,520 478,914 461,544 Deposits Payable 918,327 1,265,187 1,915,784 1,990,879 1,893,687 Total Liabilities $ 3,389,711 $ 3,764,334 $ 3,661,974 $ 4,711,527 $ 4,511,644 Deferred Inflows of Resources 3,925 - - - 10,940 Fund Balances Nonspendable $ 75,866 $ 42,108 $ 8,230 $ 26,203 $ 4,496 Committed(1) - 4,500,000 4,500,000 4,500,000 6,000,627 Assigned 4,500,000 - - - - Unassigned 19,350,943 20,379,854 19,440,147 18,583,174 18,687,761 Total Fund Balances $ 23,926,809 $ 24,921,962 $ 23,948,377 $ 23,109,377 $ 24,692,884 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 27,320,445 $ 28,686,296 $ 27,610,351 $ 27,820,904 $ 29,215,468 (1) Reflects Contingency Reserve Fund. See the caption “—City Reserve Policies.” Source: Audited financial statements of the City for Fiscal Years 2016 through 2020. Tax Revenues of the City A summary of taxes received by the City in the last five Fiscal Years is set forth below. Certain general taxes currently imposed by the City are affected by various State Constitutional provisions. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” 5.2.f Packet Pg. 266 29 4827-8234-0833v4/200928-0001 TABLE 4 CITY OF DIAMOND BAR GENERAL GOVERNMENT MAJOR TAX REVENUES BY SOURCE Fiscal Year Ended June 30, % of Total General Fund Revenues(1) 2016 2017 2018 2019 2020 Sales Tax $ 4,598,858 $ 4,789,172 $ 4,999,873 $ 4,970,980 $ 4,846,330 19.02% Property Tax 4,655,140 4,951,033 5,187,630 5,405,335 5,590,899 21.95 Franchise Tax 1,431,513 1,320,617 1,419,605 1,355,003 1,340,960 5.26 Vehicle In-Lieu Property Tax 5,411,143 5,757,423 6,011,177 6,285,504 6,545,989 25.70 Transient Occupancy Tax 994,476 923,527 1,019,915 1,222,925 1,128,386 4.43 TOTAL $16,096,654 $17,741,772 $18,638,200 $19,239,747 $19,452,564 76.36% (1) Reflects percentage of total Fiscal Year 2020 General Fund revenues of $25,474,792. Source: Audited financial statements of the City for Fiscal Years 2016 through 2020. Sales Taxes Receipts of sales taxes totaled $4,846,330 in Fiscal Year 2020. Such sales taxes provided the third largest tax revenue source for the City in Fiscal Year 2020, contributing approximately 35% of General Fund tax revenues and approximately 19% of total General Fund revenues. A sales tax is imposed on retail sales or consumption of personal property and collected and distributed by the State Board of Equalization (the “SBE”). The basic sales tax rate is established by the State Legislature, and local overrides may be approved by voters. The current sales tax rate in the City is 9.50%. As part of the City’s prior Strategic Plan for Fiscal Years 2018 through 2020, the City placed a measure (“Measure DB”) on the November 2020 ballot to authorize an additional sales tax of 0.75%, which was projected to generate an estimated $3.8 million per year for essential services such as street maintenance, public safety and parks and recreation facilities and programs. Measure DB would thereby have increased the total sales tax rate in Diamond Bar from 9.50% to 10.25%. Measure DB was not adopted by the City’s voters and the City currently has no plans to bring a similar measure before voters in the future. The table below presents taxable sales information for the last ten Fiscal Years for the City. CITY OF DIAMOND BAR TAXABLE TRANSACTIONS HISTORICAL SUMMARY(1) Fiscal Year Taxable Transactions(2) 2011 $345,505 2012 353,512 2013 359,146 2014 355,393 2015 455,002 2016 494,672 2017 509,027 2018 520,256 2019 535,651 2020 464,855 (1) The values listed above do not reflect transactions reported in the State- and County-wide pools. Taxable transaction values are not adjusted for administrative fees charged by the California Department of Tax and Fee Administration. 5.2.f Packet Pg. 267 30 4827-8234-0833v4/200928-0001 (2) Dollars in thousands. Source: SBE; HdL Companies. As discussed under the caption “THE CITY—COVID-19 Outbreak,” the Governor extended the deadline to file and pay spring 2020 property taxes for residential and certain commercial property owners and first quarter 2020 sales and use tax returns by 90 days for all but the very largest taxpayers. As a result of the extended deadline to file sales and use tax returns, it is estimated that up to 361,000 California businesses with less than $5 million in taxable annual sales were permitted to defer up to $50,000 in sales tax and enter into 12- month payment plans at zero interest. These actions have resulted in delays in the receipt by the City of its portion of such tax payments. As a result of such extension, as well as the general economic slowdown and the closure of businesses in the wake of the COVID-19 outbreak, the City’s Fiscal Year 2021 budget reflects the receipt of approximately $4.3 million in sales tax revenues in Fiscal Year 2021, a decrease of approximately $720,000 (14%) from the Fiscal Year 2020 budgeted amount. Property Taxes Property tax receipts of $5,590,899 (excluding property taxes in lieu of vehicle license fees) provided the second largest tax revenue source of the City in Fiscal Year 2020, contributing approximately 42% of General Fund tax revenues and approximately 22% of total General Fund revenues during Fiscal Year 2020. Property in the State which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens, arising pursuant to State law, on the secured property, regardless of the time of the creation of other liens. The exclusive means of forcing the payment of delinquent taxes with respect to secured property is the sale of the property securing the taxes of the State for the amount of taxes that are delinquent. The taxing authority has three methods of collecting unsecured personal property taxes: (1) filing a civil action against the taxpayer; (2) obtaining a judgment lien on certain property of the taxpayer from the county clerk or county recorder; and (3) seizing and selling personal property, improvements or possessory interests belonging or taxable to the assessee. A 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, beginning on the July 1 following a delinquency, interest begins accruing at the rate of 1.5% per month on the amount delinquent. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A 10% penalty also applies to the delinquent taxes or property on the unsecured roll, and further, an additional penalty of 1.5% per month accrues with respect to such taxes beginning on the varying dates related to the tax billing date. In an attempt to mitigate the effects of the COVID-19 pandemic on State property taxpayers, on May 6, 2020, the Governor signed Executive Order N-61-20 (“Order N-61-20”). Under Order N-61-20, certain provisions of the State Revenue and Taxation Code were suspended until May 6, 2021 to the extent that they required a tax collector to impose penalties, costs or interest for the failure to pay secured or unsecured property taxes, or to pay a supplemental bill, before the date that such taxes become delinquent. Such penalties, costs and interest will be cancelled under the conditions provided for in Order N-61-20, including if the property is residential real property occupied by the taxpayer or the real property qualifies as a small business under certain State laws, the taxes were not delinquent prior to March 4, 2020, the taxpayer files a claim for relief with the tax collector and the taxpayer demonstrates economic hardship or other circumstances that have arisen due to the COVID-19 pandemic or due to a local, state, or federal governmental response thereto. See the caption “THE CITY—COVID-19 Outbreak.” 5.2.f Packet Pg. 268 31 4827-8234-0833v4/200928-0001 As discussed in detail in the paragraph immediately preceding Table 5, the City does not participate in the “Teeter Plan” and is therefore exposed to the risk of delinquencies in the payment of property taxes. State law also provides for the supplemental assignment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Collection of taxes based on supplemental assessments occurs throughout the year. Taxes due are prorated according to the amount of time remaining in the tax year. See the caption “RISK FACTORS—Split Roll Initiative” for a discussion of an initiative that appeared on the November 2020 Statewide ballot which sought to amend provisions of State law relating to property taxes, including the provisions that are discussed above. For a number of years, the State Legislature shifted property taxes from cities, counties and special districts to the Educational Revenue Augmentation Fund (“ERAF”). In Fiscal Years 1993 and 1994, in response to serious budgetary shortfalls, the State Legislature and administration permanently redirected over $3 billion of property taxes from cities, counties, and special districts to schools and community college districts pursuant to ERAF shifts. The Fiscal Year 2005 State Budget included an additional $1.3 billion shift of property taxes from certain local agencies, including the City, in Fiscal Years 2005 and 2006. On July 27, 2009, the Governor signed a revised Fiscal Year 2010 State budget that included an ERAF shift of approximately 8% of 1% ad valorem property tax revenues from certain local agencies, including the City. On November 2, 2010, State voters approved Proposition 22, which: (i) prohibits the State from shifting or delaying the distribution of funds from special districts to schools and community colleges; (ii) eliminates the authority to shift property taxes temporarily during a severe financial hardship of the State; and (iii) restricts the State’s authority to use fuel tax revenues to pay debt service on transportation bonds, to borrow or change the distribution of fuel tax revenues or to use vehicle license fee revenues to reimburse local governments for state-mandated costs. Despite the passage of Proposition 22, there can be no assurance that 1% ad valorem property tax revenues which the City currently expects to receive will not be temporarily shifted from the City or reduced pursuant to State legislation enacted in the future, including in response to State budget deficits in the wake of the COVID-19 pandemic. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION.” If the property tax formula is permanently changed in the future, it could have a material adverse effect on the receipt of its share of 1% property tax revenues by the City. Set forth in the table below are the secured and unsecured assessed valuations for property in the City for the last five Fiscal Years. CITY OF DIAMOND BAR ASSESSED VALUATION HISTORY Fiscal Year Secured Value Unsecured Value Less Exemptions Total Taxable Assessed Value % Increase 2017 $ 9,175,049,277 $74,892,798 $62,484,967 $ 9,187,457,108 N/A 2018 9,589,040,619 76,356,565 78,363,662 9,587,033,522 4.35% 2019 10,037,428,342 83,787,675 90,713,106 10,030,502,911 4.63 2020 10,435,977,033 76,572,055 93,257,612 10,419,291,476 3.88 2021 10,834,109,675 94,903,135 90,417,003 10,838,595,807 4.02 Sources: California Municipal Statistics; Los Angeles County Assessor’s Office; Los Angeles County Auditor-Controller. 5.2.f Packet Pg. 269 32 4827-8234-0833v4/200928-0001 Set forth in the table below are property tax collections (including amounts that do not constitute General Fund money) and delinquencies in the City as of June 30 for the last five full Fiscal Years. The County does not participate in the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (known as the “Teeter Plan”), as provided for in Section 4701 et seq. of the Revenue and Taxation Code of the State, and the City is therefore exposed to the risk of delinquencies in the payment of property taxes. However, the City also receives penalties and interest when property taxes are paid late. The City also receives supplemental taxes throughout the year. As discussed above, under Order N-61-20, the City expects to receive certain property tax payments for Fiscal Year 2020 later than usual, and without penalties or late payments, as a result of the COVID-19 pandemic. TABLE 5 CITY OF DIAMOND BAR PROPERTY TAX LEVIES AND COLLECTIONS Fiscal Year Total Tax Levy Collections within the Fiscal Year of Levy(1) Percent of Levy Collected within the Fiscal Year of Levy Collections in Subsequent Years Percent of Levy Collected to Date(2) 2016 $4,568,789 $4,412,561 96.58% 156,228 100.00% 2017 4,842,897 4,643,891 95.89 199,007 100.00 2018 5,081,117 4,838,019 95.22 243,098 100.00 2019 5,313,057 5,131,554 96.58 181,503 100.00 2020 5,540,291 5,267,524 95.08 272,767 100.00 (1) The amounts shown in this column reflect all property tax collections of the City, including non -General Fund money. See Table 2 under the caption “—Change in Fund Balance of the City General Fund” for historic General Fund property tax revenues alone. (2) Does not reflect the collection of penalties and interest for delinquent property tax collections. Sources: Los Angeles County Auditor; City Finance Department. The ten largest secured and unsecured taxpayers in the City as shown on the Fiscal Year 2021 tax roll, the assessed valuation and the percentage of the City’s total property tax revenues attributable to each are set forth in the table below. TABLE 6 CITY OF DIAMOND BAR TEN LARGEST SECURED AND UNSECURED TAXPAYERS Rank Property Owner Type of Business Fiscal Year 2021 Assessed Valuation % of Total(1) 1. Apex 2015 LLC Residential Apartments $ 72,250,000 0.67% 2. ROIC Diamond Hills Plaza LLC Commercial 55,145,661 0.51 3. BSP Senita Gateway Center Commercial 47,627,013 0.44 4. Emerald Point Apartments LLC Residential Apartments 41,757,679 0.39 5. Bridgegate Drive Properties LLC Commercial 32,200,380 0.30 6. Diamond Springs LLC Uncategorized 31,369,227 0.29 7. Hua Qing Enterprise LLC Commercial 31,295,056 0.29 8. ROIC DBTC LLC Commercial 30,851,952 0.28 9. Target Corporation Retail 29,926,174 0.28 10. Muller Rock 2 Gateway Commercial 29,429,069 0.27 TOTAL $401,852,211 3.72% (1) Fiscal Year 2021 Taxable Assessed Value: $10,838,595,807. Sources: Los Angeles County Assessor’s Office; HdL Companies. 5.2.f Packet Pg. 270 33 4827-8234-0833v4/200928-0001 Based on current trends and County Assessor estimates, the City’s Fiscal Year 2021 budget reflects the receipt of $5,729,400 in property tax revenues, an increase of $138,500 (2.5%) over the Fiscal Year 2020 amount. Other Taxes Transient occupancy taxes, franchise taxes and other taxes provided approximately 9% of General Fund tax revenues and 5% of total General Fund revenues during Fiscal Year 2020. Transient occupancy taxes, which are levied on users of hotels in the City, are currently imposed at the rate of 14%. As a result of the general economic slowdown, including reductions in travel and the closure of businesses in the wake of the COVID-19 outbreak, the City’s Fiscal Year 2021 budget reflects the receipt of: (i) approximately $1,106,250 in transient occupancy tax revenues, a decrease of approximately $368,750 (25%) from the Fiscal Year 2020 budgeted amount; (ii) approximately $1,376,000 in franchise tax revenues, a slight decrease (less than 1%) from the Fiscal Year 2020 budgeted amount; and (iii) approximately $206,250 in other tax revenues, a decrease of approximately $118,750 (37%) from the Fiscal Year 2020 budgeted amount. Charges for Services The City provides various services which generate revenue for the General Fund. Services provided by the City include building construction and planning fees, engineering encroachment inspections, police fees such as fingerprinting, police reports, and towing, as well as a number of recreation programs. In Fiscal Year 2020, charges for services accounted for approximately 3.3% of General Fund revenues. Charges for services are expected to come in lower than budgeted in Fiscal Year 2021, as the COVID-19 pandemic compelled the City to cancel many recreation programs that would otherwise have generated revenues. State of California Motor Vehicle In-Lieu Payments The State imposes a Vehicle License Fee (the “VLF”), which is the portion of the fees paid in lieu of personal property taxes on a vehicle. The VLF is based on vehicle value and declines as the vehicle ages. Prior to the adoption of the Fiscal Year 2005 State Budget, the VLF was 2% of the value of a vehicle. Through legislation in prior Fiscal Years, the State enacted VLF reductions under which the State was required to “backfill” local governments for their revenue losses resulting from the lowered fee. The Fiscal Year 2005 State Budget permanently reduced the VLF from 2% to 0.65% of the value of a vehicle and deleted the requirement for backfill payments, providing instead that the amount of the backfill requirement will be met by an increase in the property tax allocation to cities and counties. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION.” The table below shows the total VLF revenues received by the City in the last five Fiscal Years, all of which was distributed from property tax receipts. 5.2.f Packet Pg. 271 34 4827-8234-0833v4/200928-0001 TABLE 7 CITY OF DIAMOND BAR STATE OF CALIFORNIA MOTOR VEHICLE IN-LIEU PAYMENTS Fiscal Year Amount Collected Percentage Change 2016 $5,411,143 N/A 2017 5,757,423 6.40% 2018 6,011,177 4.41 2019 6,285,504 4.56 2020 6,545,989 4.14 Source: City. No Other Indebtedness No Other General Fund-Supported Obligations. Other than the 2002 Lease which is being prepaid as discussed under the caption “REFUNDING PLAN,” there are no other debt obligations of the City which are payable from general revenues of the City. The City may issue obligations payable from its general revenues at any time. See the caption “RISK FACTORS—General Considerations – Security for the 2021 Bonds.” No Other Long-Term Debt. The City has no outstanding obligations that are payable from sources other than the City’s General Fund. No Short-Term Debt. The City currently has no short-term debt outstanding. Estimated Direct and Overlapping Bonded Debt. The estimated direct and overlapping bonded debt of the City as of April 1, 2021, is set forth in the table below. The information in the table below has been derived from data assembled and reported to the City by California Municipal Statistics, Inc. None of the City, the Authority or the Underwriter have independently verified the information in the table below and the City, the Authority and the Underwriter do not guarantee its accuracy. 5.2.f Packet Pg. 272 35 4827-8234-0833v4/200928-0001 TABLE 8 CITY OF DIAMOND BAR ESTIMATED DIRECT AND OVERLAPPING BONDED DEBT Fiscal Year 2021 Assessed Valuation: $10,838,595,807 OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 4/1/21 The Metropolitan Water District of Southern California 0.332% $ 89,076 Mt. San Antonio Community College District 10.705 82,621,776 Pomona Unified School District 18.615 68,583,158 Walnut Valley Unified School District 59.626 109,152,571 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $260,446,581 DIRECT AND OVERLAPPING GENERAL FUND DEBT: County of Los Angeles General Fund Obligations 0.634% $ 16,658,016 County of Los Angeles Superintendent of School Certificates of Participation 0.634 28,944 County Sanitation District No. 21 Authority 17.787 269,151 Pomona Unified School District General Fund Obligations 18.615 1,911,761 City of Diamond Bar General Fund Obligations(1) 100.000 8,315,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $27,182,872 COMBINED TOTAL DEBT $287,629,453(2) Ratios to Fiscal Year 2021 Assessed Valuation: Total Direct and Overlapping Tax and Assessment Debt ................. 2.40% Combined Direct Debt ($8,315,000) .............................................. 0.08% Combined Total Debt........................................................................ 2.65% (1) Reflects 2002 Bonds and excludes 2021 Bonds. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. City Investment Policy The City invests its funds in accordance with the City’s investment policy (the “Investment Policy”), which was most recently updated in June 2020. In accordance with Section 53600 et seq. of the California Government Code, idle cash management and investment transactions are the responsibility of the City Finance Director. The City’s Investment Policy sets forth the policies and procedures applicable to the investment of City funds and designates eligible investments. The Investment Policy sets forth a stated objective, among others, of insuring the safety of invested funds by limiting credit and market risks. Eligible investments are generally limited to the Local Agency Investment Fund which is operated by the California State Treasurer (limited to 60% of the portfolio), United States Treasury bills and notes and obligations issued by United States Government agencies with maximum maturities of five years, FDIC-insured or negotiable certificates of deposit (limited to 30% of the portfolio and maximum maturities of five years), repurchase agreements with maximum maturities of one year, banker’s acceptances (limited to 40% of the portfolio and maximum maturities of 180 days), commercial paper (limited to 25% of the portfolio and maximum maturities of 270 days), medium-term corporate notes rated “A” or higher (limited to 30% of the portfolio and maximum maturities of five years) and money market mutual funds (limited to 20% of the portfolio and maximum maturities of five years). Funds are invested in the following order of priority: • Safety of Principal; • Liquidity; and • Return on Investment. The City has never invested in derivatives or reverse repurchase agreements and such investments and instruments are not allowed by the Investment Policy. 5.2.f Packet Pg. 273 36 4827-8234-0833v4/200928-0001 A summary of the City’s cash and investments as of June 30, 2020 is set forth in the below table. Approximately $27,125,291 (59%) of the total investment portfolio as of June 30, 2020 was attributed to the General Fund. CITY OF DIAMOND BAR SUMMARY OF CASH AND INVESTMENTS AS OF JUNE 30, 2020(1) Cash Cash/Cash Equivalents $ 3,050 Imprest Cash on Hand 2,280,050 Subtotal $ 2,283,100 Investments United States Government Securities $ 2,507,594 Certificates of Deposit 10,464,009 Corporate Bonds 3,600,829 Municipal Bonds 3,358,757 Local Agency Investment Fund 23,388,686 Money Market Mutual Funds 19 Subtotal $ 43,319,894 Total cash and investments $ 45,602,994 Investment Maturities 0-12 months 1-3 years 3-5 years Total United States Government Securities $ - $ - $2,507,594 $ 2,507,594 Certificates of Deposit 2,753,647 5,915,559 1,794,803 10,464,009 Corporate Bonds 1,265,224 1,812,072 523,533 3,600,829 Municipal Bonds 1,912,096 1,446,661 - 3,358,757 Local Agency Investment Fund 23,388,686 - - 23,388,686 Money Market Mutual Funds 19 - - 19 Total $ 29,319,672 $ 9,174,292 $4,825,930 $ 43,319,894 (1) Totals may not add due to rounding. Source: City. See Note 2 in Appendix C for further information with respect to City investments. City Reserve Policies The City has established a Contingency Reserve Fund in an amount equal to 25% of the City’s operating budget. The purpose of the Contingency Reserve Fund is to provide a source of liquid funds in the event of local emergencies, economic uncertainty and other financial hardships or downturns in the local, State or national economies. At the onset of the COVID-19 outbreak in early 2020, the City initially estimated that it would need to apply approximately $1,250,000 from the Contingency Reserve Fund to balance its books in Fiscal Year 2020. However, the City modified its operations to implement remote work opportunities for employees and provide City services online, closed many City facilities to the public, cancelled many programs, rentals and community events and deferred several non-essential capital improvement projects. As a result of these actions, the City achieved sufficient reductions in its expenditures that it ultimately did not need to draw upon the Contingency Reserve Fund in Fiscal Year 2020; rather, the City added approximately $1.58 million to its General Fund reserves in Fiscal Year 2020. In an effort to continue budgeting conservatively, the City’s Fiscal Year 2021 budget reflects the projected application of $850,000 from the City’s Contingency Reserve Fund to balance the budget, as well the 5.2.f Packet Pg. 274 37 4827-8234-0833v4/200928-0001 application of approximately $100,000 in Building & Facilities Maintenance Fund reserves to fund a new roof on a City park building and $433,000 in General Fund reserves for LLAD budgets. See also the caption “—General Fund Balance Sheet” for reserve amounts held by the City as of June 30, 2020. As shown under such caption, the majority of such amounts are reflected in the unassigned fund balance category. Retirement Contributions Accounting and financial reporting by state and local government employers for defined benefit pension plans is governed by Governmental Accounting Standards Board (“GASB”) Statement No. 68 (“GASB 68”). GASB 68 governs the accounting treatment of defined benefit pension plans, including how expenses and liabilities are calculated and reported by state and local government employers in their financial statements. GASB 68 includes the following components: (i) unfunded pension liabilities are included on the employer’s balance sheet; (ii) pension expense incorporates rapid recognition of actuarial experience and investment returns and is not based on the employer’s actual contribution amounts; (iii) lower actuarial discount rates are required to be used for underfunded plans in certain cases for purposes of the financial statements; (iv) closed amortization periods for unfunded liabilities are required to be used for certain purposes of the financial statements; and (v) the difference between expected and actual investment returns will be recognized over a closed five-year smoothing period. GASB 68 affects the City’s accounting and reporting requirements, but it does not change the City’s pension plan funding obligations. The City participates in a two-tier Miscellaneous plan to fund pension benefits for employees. The City’s pension plan is administered by CalPERS. CalPERS administers an agent multiple-employer public employee defined benefit pension plan for all of the City’s full-time and certain part-time employees. CalPERS provides retirement, disability and death benefits to plan members and beneficiaries and acts as a common investment and administrative agent for participating public entities within the State, including the City. CalPERS plan benefit provisions and all other requirements are established by State statute and the City Council. City employees are subject to different benefit levels based on their hire date. Benefit provisions for City employees as of June 30, 2020 are set forth below. CITY OF DIAMOND BAR CALPERS PENSION PLANS – SUMMARY OF BENEFIT PROVISIONS Employees Hired Before January 1, 2013 Employees Hired On or After January 1, 2013 (Not Prior CalPERS Members) Benefit Formula 2.0% @ age 55 2.0% @ age 62 Benefit Vesting 5 years of service 5 years of service Benefit Payments Monthly for life Monthly for life Minimum Retirement Age 50 52 Monthly Benefits as % of Eligible Compensation 1.426% - 2.418% 1.0% - 2.5% Employee Normal Cost 6.906%(1) 6.750%(3) Employer Normal Cost Rate 9.680% 6.985% (1) The City makes the full employee contribution on behalf of employees hired before January 1, 2013. (2) Employees hired on or after January 1, 2013 are required to make the full employee contribution themselves. Source: City. 5.2.f Packet Pg. 275 38 4827-8234-0833v4/200928-0001 Contributions to the City’s pension plan consist of contributions from plan participants (i.e., employees) and contributions by the City. City employees who were hired on and after January 1, 2013 and who were not previously CalPERS members receive benefits based on a 2.0% at age 62 formula. Such employees are required to make the full amount of required employee contributions themselves under the California Public Employees’ Pension Reform Act of 2013 (“AB 340”), which was signed by the Governor on September 12, 2012. AB 340 established a new pension tier for such employees. Benefits for such participants are calculated on the highest average annual compensation over a consecutive 36-month period. Employees are required to pay at least 50% of the total normal cost rate. AB 340 also capped pensionable income as noted below. Amounts are set annually, subject to Consumer Price Index increases, and retroactive benefits increases are prohibited, as are contribution holidays and purchases of additional non-qualified service credit. CITY OF DIAMOND BAR PENSIONABLE INCOME CAPS FOR CALENDAR YEAR 2021 (AB 340 AND NON-AB 340 EMPLOYEES) Employees Hired Before January 1, 2013 (Non-AB 340 Employees) Employees Hired On or After January 1, 2013 (AB 340 Employees) Maximum Pensionable Income $290,000 $153,671 Maximum Pensionable Income if also Participating in Social Security N/A $128,059 Source: City. Additional employee contributions, limits on pensionable compensation and higher retirement ages for new members as a result of the passage of AB 340 are expected to reduce the City’s unfunded pension lability and potentially reduce City contribution levels in the long term. The City is also required to contribute the actuarially determined remaining amounts necessary to fund benefits for its members. Employer contribution rates for all public employers are determined on an annual basis by the CalPERS actuary and are effective on the July 1 following notice of a change in the rate. Total plan contributions are determined through the CalPERS annual actuarial valuation process. The total minimum required employer contribution is the sum of: (i) the plan’s employer normal cost rate, which funds pension benefits for current employees for the upcoming Fiscal Year (expressed as a percentage of payroll); plus (ii) the employer unfunded accrued liability contribution amount, which funds pension benefits that were previously earned by current and former employees (billed monthly). For Fiscal Year 2020, required employer normal cost rates were 9.680% and 6.985% of payroll for the non-AB 340 and AB 340 Miscellaneous benefit levels, respectively, and the total required employer payment of the unfunded accrued liability was $517,300 and $1,797, for the non-AB 340 and AB 340 Miscellaneous benefit levels, respectively. Required employer normal cost rates for Fiscal Year 2021 are 10.484% and 7.732% for the non-AB 340 and AB 340 Miscellaneous benefit levels, respectively. The total required employer payment of the unfunded accrued liability for Fiscal Year 2021 is estimated at $417,115. The City’s pension plan contributions for Fiscal Year 2020 totaled $1,005,631. The City currently expects its annual required contribution in Fiscal Year 2021 to be approximately $1,302,524. Beginning in Fiscal Year 2018, CalPERS began collecting employer contributions toward a pension plan’s unfunded liability as dollar amounts instead of the prior method of a percentage of payroll. According to CalPERS, this change was intended to address potential funding issues that could arise from a declining payroll or a reduction in the number of active members in the plan. Funding the unfunded liability as a 5.2.f Packet Pg. 276 39 4827-8234-0833v4/200928-0001 percentage of payroll could lead to underfunding of pension plans. Due to stakeholder feedback regarding internal needs for total contributions expressed as an estimated percentage of payroll, the CalPERS reports include such results in the contribution projection for informational purposes only. Contributions toward a pension plan’s unfunded liability will continue to be collected as set dollar amounts. The City’s required contributions to CalPERS fluctuate each year and, as noted, include a normal cost component and a component equal to an amortized amount of the unfunded liability. Many assumptions are used to estimate the ultimate liability of pensions and the contributions that will be required to meet those obligations. The CalPERS Board of Administration has adjusted and may in the future further adjust certain assumptions used in the CalPERS actuarial valuations, which adjustments may increase the City’s required contributions to CalPERS in future years. Accordingly, the City cannot provide any assurances that the City’s required contributions to CalPERS in future years will not significantly increase (or otherwise vary) from any past or current projected levels of contributions. CalPERS earnings reports for Fiscal Years 2010 through 2020 report investment gains of approximately 13.3%, 21.7%, 0.1%, 13.2%, 18.4%, 2.4%, 0.6%, 11.2%, 8.6%, 6.7% and 4.7%, respectively. Future earnings performance may increase or decrease future contribution rates for plan participants, including the City. The City notes that CalPERS’ earnings in Fiscal Year 2020 were below its investment targets as a result of stock market declines in the wake of the COVID-19 outbreak, which could increase contribution rates for plan participants, including the City, beginning in Fiscal Year 2023. See the caption “THE CITY—COVID-19 Outbreak.” On December 21, 2016, the CalPERS Board of Administration voted to lower its discount rate from the current rate of 7.50% to 7.00% according to the schedule set forth below. Actuarial Valuation Date Fiscal Year of Applicable Required Contribution Discount Rate June 30, 2016 Fiscal Year 2019 7.375% June 30, 2017 Fiscal Year 2020 7.250 June 30, 2018 Fiscal Year 2021 7.000 For public agencies such as the City, the new discount rate took effect July 1, 2017 and caused pension contribution costs to increase beginning in Fiscal Year 2019. Lowering the discount rate means that employers that contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities. Active members who were hired after January 1, 2013 will also see their contribution rates rise under AB 340. The reduction of the discount rate will result in average employer rate increases of approximately 1% to 3% of normal cost as a percentage of payroll for most retirement plans such as the City’s plan. Additionally, many employers will see a 30% to 40% increase in their current unfunded accrued liability payments (relative to the unfunded accrued liability payments projected in the June 30, 2015 valuation report) for pension plans. These payments are made to amortize unfunded liabilities over 20 years to bring pension funds to a fully funded status over the long-term in accordance with CalPERS’ amortization policy, as described in the following paragraph. On February 14, 2018 the CalPERS Board of Administration approved a new amortization and rate smoothing policy. Beginning with the June 30, 2019 actuarial valuation, CalPERS shortened the amortization period for actuarial gains and losses from 30 years to 20 years (applicable only to new gains and losses after the effective policy change date). A 5-year asset smoothing period was eliminated for assumption rate changes and any investment gains and losses. Portions of the above information are primarily derived from information that has been produced by CalPERS, its independent accountants and its actuaries. The City and the Authority have not independently verified such information and neither make any representations nor express any opinion as to the accuracy of the information that has been provided by CalPERS. 5.2.f Packet Pg. 277 40 4827-8234-0833v4/200928-0001 The comprehensive annual financial reports of CalPERS are available on CalPERS’ Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information that concerns benefits and other matters. The textual reference to such Internet website is provided for convenience only. None of the information on such Internet website is incorporated by reference herein. The City and the Authority cannot guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be may changed in the future. The City’s CalPERS plan had a total net pension liability of approximately $6,830,478 as of the measurement date of June 30, 2019. The net pension liability is the difference between the total pension liability and the fair market value of pension assets. The City’s total pension assets include funds that are held by CalPERS, and its net pension asset or liability is based on such amounts. A summary of principal assumptions and methods used to determine the total pension liability for Fiscal Year 2020 is shown below. CITY OF DIAMOND BAR ACTUARIAL ASSUMPTIONS FOR CALPERS PENSION PLANS Actuarial Cost Method Entry Age Normal in accordance with the requirements of GASB 68 Asset Valuation Method Market Value of Assets Actuarial Assumptions: Discount Rate 7.00% Inflation 2.50% Salary Increases Varies by entry age and service Investment Rate of Return 7.00% net of pension plan investment and administrative expenses; includes projected inflation rate of 2.50% Mortality Rate Table(1) Derived using CalPERS’ membership data for all funds (1) The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using Society of Actuaries 90% of Scale MP 2016. Source: City. Changes in the net pension liability for the City’s pension plans in the most recent Fiscal Year for which information is available were as follows: CITY OF DIAMOND BAR CHANGES IN CALPERS PENSION PLAN NET PENSION LIABILITY Increase / (Decrease) Total Pension Liability Plan Fiduciary Net Position Net Pension Liability / (Asset) Funded Ratio Balance at June 30, 2018 $ 28,044,369 $ 21,673,850 $ 6,370,519 77.28% Balance at June 30, 2019 29,844,798 23,014,320 6,830,478 77.11 Net Changes for period from July 1, 2018 through June 30, 2019 $ 1,800,429 $ 1,340,470 $ 459,959 Source: City. The table below presents the net pension liability of the City’s pension plans, calculated using the discount rate applicable to Fiscal Year 2020 (7.00%), as well as what the net pension liability would be if it 5.2.f Packet Pg. 278 41 4827-8234-0833v4/200928-0001 were calculated using a discount rate that is 1 percentage point lower (6.00%) or 1 percentage point higher (8.00%) than the Fiscal Year 2019 rate: CITY OF DIAMOND BAR SENSITIVITY OF CALPERS PENSION PLAN NET PENSION LIABILITY TO CHANGES IN THE DISCOUNT RATE Discount Rate – 1% (6.00%) Applicable Discount Rate (7.00%) Discount Rate + 1% (8.00%) Net Liability/Asset $11,536,125 $6,830,478 $3,003,998 Source: City. For additional information relating to the City’s CalPERS Miscellaneous pension plan, see Note 7 to the City’s audited financial statements set forth in Appendix C. Other Post-Employment Benefits In addition to the pension benefits that are described under the caption “—Retirement Contributions,” the City provides other post-employment health care benefits (“OPEB”) to qualified retired employees pursuant to a Public Employees Medical and Hospital Care Act (“PEMHCA”) plan that is administered by CalPERS. The PEMHCA plan is a multi-employer healthcare plan that provides medical insurance benefits to active and eligible retirees who retire from the City, and their families. Under the PEMHCA plan, the City makes a monthly contribution for health insurance premiums up to a 2021 amount of $143 per month. Employees are eligible to receive OPEB benefits upon reaching age 50 (or 52 for AB 340 employees) and attaining five years of service to the City. As of July 1, 2019, the latest date for which such information is available, there were 7 inactive plan members or beneficiaries who were receiving benefit payments and 59 active plan members. GASB has issued two pronouncements, known as GASB 43 and GASB 45, related to funding and accounting for OPEB liabilities. Under GASB 45, costs of OPEB must be matched to the current period in which employees are performing services for the City. In effect, there is an exchange between the employee and the City in which the employee renders services to the City and in consideration therefor receives certain salaries and benefits, part of which are OPEB, which the employee will not actually use until some point in the future. GASB 45 also requires the City to provide information about the accrued actuarial liabilities for the promised benefits for past services, extent to which such liabilities have been funded and the extent to which there will be demands from OPEB on the City’s future cash flows. The City has been required to comply with the accounting and reporting requirements of GASB 45 since Fiscal Year 2008. For the period ended June 30, 2020, the City engaged an actuarial consultant to calculate the City’s OPEB funding status using a valuation date of June 30, 2019. The actuarial report concluded that the City’s accrued actuarial liability for OPEB based upon a 6% discount rate was $951,911 as of June 30, 2020. The consultant’s report also concluded that the City’s annual required contribution was $116,427 as of June 30, 2020, representing the sum of the normal cost ($113,606) and the unfunded accrued actuarial liability ($2,821). The annual required contribution was calculated assuming that: (i) the unfunded accrued actuarial liability will be amortized over the next 30 years; (ii) benefits will remain constant; and (iii) funding in excess of actual benefit costs will be invested at a 6.22% annual return, and making certain other assumptions regarding medical cost inflation. The actuarial report was developed in accordance with accounting standards established by GASB Statement No. 75, which requires that the valuation include the value of the “implied subsidy” of older retired 5.2.f Packet Pg. 279 42 4827-8234-0833v4/200928-0001 participants by a younger active workforce in a pooled rate medical plan. The City intends to continue to pay the full annual required contribution without consideration of the impact of the implied subsidy. The City is not required to fund the amortization of the unfunded OPEB actuarial liability. Prior to 2017, the City’s policy was to pay for OPEB plan costs as they were incurred. In 2017, the City entered into a contract with the California Employer’s Benefit Retirement Trust (“CERBT”) pursuant to which the City irrevocably deposits funds toward the City’s accrued OPEB actuarial liability in addition to current year normal costs. In Fiscal Years 2019 and 2020, the City deposited $88,000 and $88,000, respectively, into the CERBT trust fund. As of June 30, 2020, the City’s CERBT trust fund held $455,795 in assets. The City believes that the establishment of the CERBT trust fund and pre-funding of the City’s OPEB liability will significantly reduce the City’s unfunded OPEB obligation. Changes in the net liability for the City’s OPEB plan for Fiscal Year 2020 were as follows. CITY OF DIAMOND BAR CHANGES IN OPEB PLAN LIABILITY Increase / (Decrease) Total OPEB Plan Liability OPEB Plan Fiduciary Net Position Net OPEB Plan Liability / (Asset) Funded Ratio Balance at June 30, 2019 $866,732 $345,827 $520,905 39.90% Balance at June 30, 2020 951,911 455,795 496,116 47.88 Changes $ 85,179 $109,968 $(24,789) Source: City. The following table presents the net liability of the City’s OPEB plan, calculated using the discount rate applicable to Fiscal Year 2020 (6.00%), as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.00%) or 1 percentage point higher (7.00%) than the current rate: CITY OF DIAMOND BAR SENSITIVITY OF THE OPEB PLAN NET LIABILITY TO CHANGES IN THE DISCOUNT RATE Discount Rate – 1% (5.00%) Current Discount Rate (6.00%) Discount Rate + 1% (7.00%) Net Liability/(Asset) $650,524 $496,116 $372,022 Source: City. Future changes in funding policies and assumptions, including those related to assumed rates of investment return and healthcare cost inflation, could trigger increases in the City’s annual required OPEB plan contributions, and such increases could be material to the finances of the City. No assurance can be provided that such expenses will not increase significantly in the future. The City does not expect that any increased funding of OPEB will have a material adverse effect on the ability of the City to pay the Base Rental Payments. For additional information relating to the City’s OPEB obligations, see Note 8 in Appendix C. 5.2.f Packet Pg. 280 43 4827-8234-0833v4/200928-0001 City Financial Statements General. A copy of the most recent audited financial statements of the City (the “Financial Statements”) for the Fiscal Year ended June 30, 2020, prepared by Lance, Soll & Lunghard, LLP, Brea, California (the “Auditor”), are included as Appendix C to this Official Statement. The Auditor’s letter dated December 23, 2020 is set forth therein. The Financial Statements are public documents and are included within this Official Statement without the prior approval of the Auditor. Accordingly, the Auditor has not performed any post-audit analysis of the financial condition of the City, nor has the Auditor reviewed or audited this Official Statement. Certain financial information that is set forth in this Official Statement is derived from the Financial Statements and the City’s audited financial statements for prior years (excluding certain non-cash items and after certain other adjustments) and is qualified in their entirety by reference to such statements, including the notes thereto. The Auditor has not reviewed or audited such financial information or any other portion of this Official Statement. In the Financial Statements, data relating to governmental funds such as the General Fund focus on current financial resources, which emphasize near-term inflows and outflows of expendable resources as well as balances of expendable resources at the end of each Fiscal Year. The City’s accounting and budgeting records for general governmental operations are maintained on a modified accrual basis, with the revenues being recorded when available and measurable and the expenditures being recorded when the services or goods are received or the liabilities incurred, in each case regardless of the timing of related cash flows. As examples, property taxes, franchise fees, investment income and charges for services are considered to be susceptible to accruals and recognized as revenues in the year for which they are levied. For these purposes, the City considers revenues as available if they are collected within 60 days of the end of the current fiscal period. Expenditures such as principal and interest on long-term debt and certain estimated liabilities such as compensated absences, OPEB and self-insurance claims are recorded only when payment is due. Prior Period Adjustments. The City recorded a prior period adjustment in Fiscal Year 2020 in the amount of $406,046 associated with the underreporting of sales tax revenue in the prior year. The underreporting occurred because the State of California’s office that manages the distribution of sales tax revenue to local jurisdictions underpaid cities throughout the State in Fiscal Year 2019. See Footnote 3 to Table 2 under the caption “—Change in Fund Balance of the City General Fund.” Restatements. The City restated its General Fund balances in Fiscal Years 2017 and 2020 in the amount of $(402,436) and $406,046, respectively. The Fiscal Year 2017 restatement reflected the booking of $402,436 in sales tax revenues in contravention of the City’s revenue recognition policy, while the Fiscal Year 2020 restatement reflecting the omission of $406,046 in sales tax revenue that should have been recorded in Fiscal Year 2019 but was mistakenly omitted. See Footnote 3 to Table 2 under the caption “—Change in Fund Balance of the City General Fund.” THE AUTHORITY The Authority was organized pursuant to the provisions of Articles 1 through 4 of Chapter 5 of Division 7 of Title 1 of the State Government Code and a Joint Exercise of Powers Agreement, dated November 19, 2002, by and between the City and the Successor Agency. Prior to the issuance of the 2021 Bonds, the City intends to establish the City of Diamond Bar Parking Authority, which will become a member of the Authority upon its establishment. The Authority has no financial liability to the Owners of the 2021 Bonds with respect to the payment of Base Rental Payments by the City or with respect to the performance by the City of the other agreements and covenants that the City is required to perform. 5.2.f Packet Pg. 281 44 4827-8234-0833v4/200928-0001 STATE OF CALIFORNIA BUDGET INFORMATION General Information about the State budget is regularly available at various State-maintained websites. Text of proposed and adopted budgets may be found at the website of the State Department of Finance (the “DOF”), http://www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the budget is posted by the Legislative Analyst’s Office (the “LAO”) at http://www.lao.ca.gov. In addition, various State Official Statements, many of which contain a summary of the current and past State budgets and the impact of those budgets on cities in the State, may be found at the website of the State Treasurer, http://www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by the City or the Authority, and the City and the Authority take no responsibility for the continued accuracy of these Internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references. Budget for State Fiscal Year 2020-21 On January 10, 2020, prior to the COVID-19 outbreak, the Governor released his proposed State budget for State fiscal year 2020-21. On May 14, 2020, the Governor released the May Revision to the Proposed 2020-21 State Budget (the “May Revision”). The May Revision noted that the COVID-19 pandemic and resulting recession had changed the State’s fiscal landscape dramatically. Unemployment claims have surged, with increased unemployment claims of 4.4 million from mid-March to May 9, 2020. Job losses have occurred in nearly every sector of the economy and personal income was projected to decline by 9% in 2020. Following record economic expansion, the United States economy entered into a recession in March 2020, causing an immediate negative impact on State revenues, with all three of the State’s major revenue sources showing significant declines relative to the Governor’s original budget forecast. From fiscal years 2018-19 through 2020-21, the May Revision baseline revenue estimate decreased by over $43 billion, before accounting for transfers. The changes in the three largest State tax sources are: • Personal income tax revenues, which were revised downward by $32.6 billion (including $6.9 billion less in State fiscal year 2019-20 and $26.3 billion less in State fiscal year 2020-21) due to a decline in all income sources, but particularly wages, proprietorship income and capital gains; • Sales and use tax receipts, which were revised downward by almost $10 billion ($2.2 billion less in State fiscal year 2019-20 and $7.7 billion less in State fiscal year 2020-21) due mainly to lower consumption and investment by business; and • Corporate tax revenues, which were revised downward by over $5 billion based on a significant drop in corporate profits. On June 29, 2020, the Governor signed into law the State budget for State fiscal year 2020-21 (the “2020-21 Budget”). The following information is drawn from summaries of the 2020-21 Budget prepared by the DOF and the LAO. The 2020-21 Budget acknowledges that the rapid onset of COVID-19 has had an immediate and severe impact on the State’s economy. The ensuing recession has caused significant job losses and precipitous drops in family and business income and has exacerbated income inequality. The May Revision forecast included a peak unemployment rate of 24.5% in the second quarter of 2020 and a decline in personal income of nearly 9%. The 2020-21 Budget reported that the official unemployment rate exceeded 16% in both April and May 2020. 5.2.f Packet Pg. 282 45 4827-8234-0833v4/200928-0001 The 2020-21 Budget includes a number of measures intended to address a projected deficit of $54.3 billion occasioned principally by declines in the State’s three main tax revenues (personal income, sales and use and corporate, as discussed above). The measures included in the 2020-21 Budget, and described below, are intended to close this deficit and set aside $2.6 billion in the State’s traditional general fund reserve, including $716 million for the State to respond to the changing conditions of the COVID-19 pandemic: • Drawdown of Reserves – The 2020-21 Budget draws down $8.8 billion in total State reserves, including $7.8 billion from the State’s basic reserve fund, known as the Budget Stabilization Account (the “BSA”), $450 million from the Safety Net Reserve and all money in the Public School System Stabilization Account. • Triggers – The 2020-21 Budget includes $11.1 billion in reductions and deferrals that would have been restored if at least $14 billion in federal funds were received by October 15, 2020. Such funds were not received. The triggers include $6.6 billion in deferred spending on education, $970 million in funding for the California State University and University of California systems, $2.8 billion in State employee compensation and $150 million for courts, as well as funding for various other State programs. The triggers would also fund an additional $250 million for county programs to backfill revenue losses. • Federal Funds – The 2020-21 Budget relies on $10.1 billion in federal funds, $8.1 billion of which has already been received. This relief includes recent Congressional approval for a temporary increase in the federal government’s share of Medicaid costs, a portion of the State’s Coronavirus Relief Fund allocation pursuant to the CARES Act and federal funds provided for childcare programs. • Borrowing/Transfers/Deferrals – The 2020-21 Budget relies on $9.3 billion in special fund borrowing and transfers, as well as deferrals to K-14 education spending. Approximately $900 million of special fund borrowing is associated with reductions to State employee compensation and is subject to the triggers discussed above. • Increased Revenues – The 2020-21 Budget temporarily suspends for three years net operating loss tax deductions for medium and large businesses and limits business tax credits, with an estimated increase in tax revenues of $4.3 billion in State fiscal year 2020-21. • Cancelled Expansions, Updated Assumptions and Other Measures – The 2020-21 Budget includes an additional $10.6 billion of measures, including cancelling multiple programmatic expansions, anticipated governmental efficiencies, higher ongoing revenues above the forecast included in the May Revision and lower health and human services caseload costs than assumed by the May Revision. For State fiscal year 2019-20, the 2020-21 Budget projects total State general fund revenues and transfers of $137.6 billion and authorizes expenditures of $146.9 billion. The State is projected to end State fiscal year 2019-20 with total available general fund reserves of $17 billion, including $16.1 billion in the BSA and $900 million in the Safety Net Reserve Fund. For State fiscal year 2020-21, the 2020-21 Budget projects total State general fund revenues and transfers of $137.7 billion and authorizes expenditures of $133.9 billion. The State is projected to end State fiscal year 2020-21 with total available general fund reserves of $11.4 billion, including $2.6 billion in the traditional State general fund reserve (of which $716 million is earmarked for COVID-19-related responses), $8.3 billion in the BSA and $450 million in the Safety Net Reserve Fund. As a result of the projected reduction of State revenues occasioned by the COVID-19 pandemic, the 2020-21 Budget estimates that the Proposition 98 minimum funding guarantee for fiscal year 2020-21 is $70.1 5.2.f Packet Pg. 283 46 4827-8234-0833v4/200928-0001 billion, approximately $10 billion below the revised prior-year funding level. For K-12 school districts, this results in per-pupil spending in fiscal year 2020-21 of $10,654, a reduction of $1,339 from the prior year. The 2020-21 Budget proposes several measures intended to ameliorate the immediate impact of State revenue declines, and avoid a permanent decline in education funding: • Local Control Funding Formula – The 2020-21 Budget provides for $1.9 billion in Local Control Funding Formula apportionment deferrals for State fiscal year 2019-20. The deferrals increase to $11 billion in State fiscal year 2020-21, which results in Local Control Funding Formula funding remaining at 2019-20 levels in both years. The 2020-21 Budget also suspends the statutory cost of living adjustment in State fiscal year 2020-21. Of the total deferrals, $5.8 billion will be cancelled in State fiscal year 2020-21 if sufficient federal funding for this purpose is received. • CalSTRS/CalPERS – The 2020-21 Budget redirects $2.3 billion in funds that were previously appropriated for prefunding California State Teachers Retirement System (“CalSTRS”) and CalPERS liabilities, instead applying them to further reduce local educational agency contribution rates for such programs in State fiscal years 2020-21 and 2021-22. This reduces CalSTRS employer rates to 16.15% in fiscal year 2020-21 and 16.02% in fiscal year 2021-22. CalPERS employer rates are reduced to 20.7% in fiscal year 2020-21 and 22.84% in fiscal year 2021-22. • Federal Funds – In addition to the CARES Act funding previously discussed, the 2020-21 Budget appropriates $1.6 billion in federal Elementary and Secondary School Emergency Relief funds recently awarded to the State. Of this amount, approximately $1.5 billion will be allocated to local educational agencies in proportion to the amount of federal Title I-A funding such agencies receive, to be used for COVID-19 related costs. The remaining amount will be allocated to state- level activities. • Temporary Revenue Increases – As discussed above, as part of closing the State’s projected deficit, the 2020-21 Budget provides for a temporary revenue increase of approximately $4.3 billion in fiscal year 2020-21, of which approximately $1.6 billion counts towards the Proposition 98 funding guarantee. For additional information regarding the 2020-21 Budget, see the DOF and LAO websites. The information presented on such websites is not incorporated herein by reference. None of the websites or webpages that are referenced above is in any way incorporated into this Official Statement. They are cited for informational purposes only. The City, the Authority and the Underwriter make no representation whatsoever as to the accuracy or completeness of any of the information on such websites. There can be no assurance that additional legislation will not be enacted in the future to implement provisions relating to the State budget, address the COVID-19 outbreak or otherwise that may affect the City or its General Fund revenues. Budget for State Fiscal Year 2021-22 [TO COME] Potential Impact of State Financial Condition on the City The State has experienced significant financial stress in recent years, with budget shortfalls in the several billions of dollars. Currently, the COVID-19 outbreak is materially adversely impacting the financial condition of the State and the waning of the infection crisis is expected to be followed by a continuing 5.2.f Packet Pg. 284 47 4827-8234-0833v4/200928-0001 recession and increases in unfunded liabilities of the two main retirement systems managed by State entities, CalPERS and CalSTRS. The State also has a significant unfunded liability with respect to OPEB. Current and future State budgets will be significantly affected by the COVID-19 outbreak and other factors over which the City has no control. The City cannot determine what actions will be taken in the future by the State Legislature and the Governor to deal with the COVID-19 outbreak, the recession and resulting changing State revenues and expenditures. There can be no assurance that, as a result of the COVID-19 outbreak or otherwise, the State will not significantly reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of its efforts to address State financial conditions. Although the State is not a significant source of City revenues, there can be no assurance that State actions to respond to the COVID-19 outbreak will not materially adversely affect the financial condition of the City. Redevelopment Dissolution On December 29, 2011, the State Supreme Court upheld Assembly Bill 1x26 (“AB 1x26”), which dissolved redevelopment agencies in the State. The effect of AB 1x26 upon the City was the termination of the redevelopment functions of the Redevelopment Agency of the City of Diamond Bar (the “Former Agency”) and the transfer of such functions to a successor agency (the City, referred to in the capacity of a successor agency, and being referred to in this context as the “Successor Agency”) tasked with winding down the Former Agency’s redevelopment activities. Under AB 1x26, the Successor Agency cannot enter into new redevelopment projects or obligations and its assets can be used only to pay enforceable obligations, which enforceable obligations are generally limited to obligations in existence in mid-2011, when AB 1x26 was signed by the Governor. The Successor Agency’s activities are subject to review by an oversight board established under AB 1x26. Under AB 1x26, liabilities of the Successor Agency are not liabilities of the City. Although the City had established the Former Agency, the Former Agency did not have an active redevelopment project area and did not receive tax increment or have any enforceable obligations. Accordingly, the City does not believe that the enactment of AB 1x26 will affect the Successor Agency or compel the Successor Agency or the City to make any payments to the State. Similarly, the City does not believe that it has received material amounts from the Former Agency or the Successor Agency which may be asserted to be in violation of AB 1x26. Future State Budgets No prediction can be made by the City as to whether the State will continue to encounter budgetary problems in future years, and if it were to do so, it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the final outcome of future State budget negotiations, the impact that such budgets will have on City finances and operations or what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures. There can be no assurance that actions taken by the State to address its financial condition will not materially adversely affect the financial condition of the City. Current and future State budgets will be affected by national and State economic conditions and other factors, including the current economic downturn, over which the City has no control. CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS There are a number of provisions of the State Constitution that limit the ability of the City to raise and expend tax revenues. 5.2.f Packet Pg. 285 48 4827-8234-0833v4/200928-0001 Article XIIIA of the State Constitution On June 6, 1978, State voters approved an amendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the State Constitution. The amendment, which added Article XIIIA to the State Constitution, among other things affects the valuation of real property for the purpose of taxation in that it defines the full cash property 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 newly constructed, or when a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or a reduction in the consumer price index or comparable local data at a rate not to exceed 2% per year, or reduced in the event of declining property value caused by damage, destruction or other factors including a general economic downturn. The amendment further limits the amount of any ad valorem tax on real property to 1% of the full cash value, except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to December 1, 1978, and bonded indebtedness for the acquisition or improvement of real property approved on or after December 1, 1978 by two-thirds of the votes cast by the voters voting on the proposition (55% in the case of certain school facilities). Property taxes that are subject to Proposition 13 are a significant source of the City’s General Fund revenues. See the caption “CITY FINANCIAL INFORMATION.” Legislation enacted by the State Legislature to implement Article XIIIA provides that all taxable property is shown at full assessed value as described above. Tax rates for voter approved bonded indebtedness are also applied to 100% of assessed value. Future assessed valuation growth allowed under Article XIIIA (for new construction, change of ownership or 2% annual value growth) is allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and school districts share the growth of “base” revenue from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation the following year. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above the 1% limit except for taxes to support indebtedness approved by the voters as described above. 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, and 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 certain other limited circumstances. Article XIIIB of the State Constitution At the Statewide special election on November 6, 1979, the voters approved an initiative entitled “Limitation on Government Appropriations,” which added Article XIIIB to the State Constitution. Under Article XIIIB, State and local government entities have an annual “appropriations limit” which limits the ability to spend certain money which are called “appropriations subject to limitation” (consisting of tax revenues and investment proceeds thereof, certain State subventions and regulatory license fees, user charges and user fees to the extent that the proceeds thereof exceed the costs of providing such services, together called “proceeds of taxes,” and certain other funds) in an amount higher than the “appropriations limit.” Article XIIIB does not affect the appropriation of moneys which are excluded from the definition of “appropriations limit,” including debt service on indebtedness existing or authorized as of October 1, 1979, or bonded indebtedness subsequently approved by the voters. In general terms, the “appropriations limit” is to be based on certain 1978-79 expenditures and is to be adjusted annually to reflect changes in the consumer price index, population and services provided by these entities. Among other provisions of Article XIIIB, if those entities’ revenues in any year exceed the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years. To the best of the City’s knowledge, the City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the State Constitution. 5.2.f Packet Pg. 286 49 4827-8234-0833v4/200928-0001 Proposition 62 A statutory initiative (“Proposition 62”) was adopted by the voters of the State at the November 4, 1986 general election which: (a) requires that any tax for general governmental purposes imposed by local governmental entities be approved by resolution or ordinance adopted by two-thirds vote of the governmental agency’s legislative body and by a majority of the electorate of the governmental entity; (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 within the jurisdiction; (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax is 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 that is imposed by a local governmental entity on or after August 1, 1985 be ratified by a majority vote of the electorate within two years of the adoption of the initiative or be terminated by November 15, 1988. The requirements imposed by Proposition 62 were upheld by the State Supreme Court in Santa Clara County Local Transportation Authority v. Guardino, 11 Cal.4th 220 (1995). Proposition 62 applies to the imposition of any taxes or the implementation of any tax increases after its enactment in 1986, but the requirements of Proposition 62 are largely subsumed by the requirements of Proposition 218 for the imposition of any taxes or the effecting of any tax increases after November 5, 1996. See the caption “—Proposition 218” below. Proposition 218 On November 5, 1996, State voters approved Proposition 218, an initiative measure entitled the “Right to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Proposition 218 states that all taxes imposed by local governments are deemed to be either general taxes or special taxes. Special purpose districts, including school districts, have no power to levy general taxes. No local government may impose, extend or increase any general tax unless and until such tax is submitted to the electorate and approved by a majority vote. No local government may impose, extend or increase any special tax unless and until such tax is submitted to the electorate and approved by a two-thirds vote. Proposition 218 also provides that no tax, assessment, fee or charge may be assessed by any agency upon any parcel of property or upon any person as an incident of property ownership except: (a) the ad valorem property tax imposed pursuant to Articles XIII and XIIIA of the State Constitution; (b) any special tax receiving a two-thirds vote pursuant to the State Constitution; and (c) assessments, fees and charges for property-related services as provided in Proposition 218. Proposition 218 then goes on to add voter requirements for assessments and fees and charges imposed as an incident of property ownership, other than fees and charges for sewer, water, and refuse collection services. In addition, all assessments and fees and charges imposed as an incident of property ownership, including sewer, water and refuse collection services, are subjected to various additional procedures, such as hearings and stricter and more individualized benefit requirements and findings. Proposition 218 also extended the initiative power to reducing or repealing any local taxes, assessments, fees and charges. This extension of the initiative power is not limited to taxes imposed on or after November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or reduction in any existing taxes, assessments, fees and charges, subject to overriding federal constitutional principles relating to the impairments of contracts. Legislation implementing Proposition 218 provides that the initiative power provided for in Proposition 218 “shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after (the effective date of Proposition 218) assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of 5.2.f Packet Pg. 287 50 4827-8234-0833v4/200928-0001 contractual rights” protected by the United States Constitution. However, no assurance can be given that the voters of the City will not, in the future, approve an initiative which reduces or repeals local taxes, assessments, fees or charges that currently are deposited into the City’s General Fund. Although a portion of the City’s General Fund revenues are derived from general taxes purported to be governed by Proposition 218, as discussed under the caption “CITY FINANCIAL INFORMATION — Other Taxes,” all of such taxes were imposed in accordance with the requirements of Proposition 218. 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 which support the City’s General Fund. Unitary Property Some amount of property tax revenue of the City is derived from utility property which is considered part of a utility system with components located in many taxing jurisdictions (“unitary property”). Under the State Constitution, such property is assessed by the SBE as part of a “going concern” rather than as individual pieces of real or personal property. State-assessed unitary and certain other property is allocated to the counties by the SBE, taxed at special county-wide rates, and the tax revenues distributed to taxing jurisdictions (including the City) according to a statutory formula that is generally based on the distribution of taxes in the prior year. Proposition 22 On November 2, 2010, State voters approved Proposition 22, which eliminates the State’s ability to borrow or shift local revenues and certain State revenues that fund transportation programs. It restricts the State’s authority over a broad range of tax revenues, including property taxes allocated to cities (including the City), counties and special districts, the VLF, State excise taxes on gasoline and diesel fuel, the State sales tax on diesel fuel, and the former State sales tax on gasoline. It also makes a number of significant other changes, including restricting the State’s ability to use motor vehicle fuel tax revenues to pay debt service on voter- approved transportation bonds. Proposition 26 On November 2, 2010, State voters approved Proposition 26. Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government” except the following: (a) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (b) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (c) a charge imposed for the reasonable regulatory costs of a local government for issuing licenses and permits, performing investigations, inspections and audits, enforcing agricultural marketing orders and the administrative enforcement and adjudication thereof; (d) a charge imposed for entrance to or use of local government property, or the purchase, rental or lease of local government property; (e) a fine, penalty or other monetary charge imposed by the judicial branch of government or a local government as a result of a violation of law; (f) a charge imposed as a condition of property development; and (g) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the 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. The City does not believe that Proposition 26 will adversely affect its General Fund revenues. 5.2.f Packet Pg. 288 51 4827-8234-0833v4/200928-0001 Future Initiatives Articles XIIIA and XIIIB and Propositions 62, 218, 22 and 26 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 the City’s current revenues or its ability to raise and expend revenues. RISK FACTORS Prospective purchasers of the 2021 Bonds should consider carefully all possible factors that may affect the ability of the City to pay Base Rental Payments under the Lease Agreement. The 2021 Bonds may not be a suitable investment for all prospective purchasers. The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating the purchase of the 2021 Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the 2021 Bonds and there can be no assurance that other risk factors will not become material in the future. In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks. General Considerations – Security for the 2021 Bonds The 2021 Bonds are special obligations of the Authority, payable solely from Base Rental Payments. Neither the faith and credit nor the taxing power of the Authority, the City, the State or any political subdivision thereof is pledged to the payment of the 2021 Bonds. The Authority has no taxing power. The obligation of the City to make the Base Rental Payments does not constitute a debt of the City, the County, the State or 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, the County or the State is obligated to levy or pledge any form of taxation or for which the City, the County or the State has levied or pledged any form of taxation. Although the Lease Agreement does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Lease Agreement to pay the Base Rental Payments and Additional Rental Payments from any source of legally available funds, and the City has covenanted in the Lease Agreement to take such action as may be necessary to include all such Base Rental Payments and Additional Rental Payments due thereunder in its annual budgets, and to make necessary annual appropriations for all such Base Rental Payments and Additional Rental Payments, subject to abatement. The City is currently liable and may become liable on other obligations payable from general revenues. See the caption “CITY FINANCIAL INFORMATION—Other Indebtedness—General Fund-Supported Debt.” The City has the capacity to enter into other obligations which may constitute additional charges against its revenues, including pension obligations and essential services. To the extent that additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased. In the event that the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before making Base Rental Payments. The same result could occur if, because of State Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues. However, to the best of the City’s knowledge, the City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the State Constitution. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS— Article XIIIB of the State Constitution.” 5.2.f Packet Pg. 289 52 4827-8234-0833v4/200928-0001 Abatement In the event of substantial interference with the City’s right to use and occupy any portion of the Property by reason of damage to or destruction or condemnation of the Property, or any defects in title to the Property, the Base Rental Payments will be subject to abatement. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Abatement.” The amount of abatement will be such that the resulting payments of Base Rental Payments and Additional Rental Payments do not exceed the fair rental value for the use and possession of the remaining portions of the Property as to which the City has beneficial use and occupancy and as to which such damage or destruction or defect in title do not substantially interfere. In the event that such portion of the Property, if damaged or destroyed by an insured casualty, could not be replaced during the period of time in which proceeds of the City’s rental interruption insurance will be available in lieu of the Base Rental Payments, plus the period in which funds are available from the funds and accounts established under the Indenture, or in the event that casualty insurance proceeds are insufficient to provide for complete repair or replacement of such portion of the Property or redemption of the 2021 Bonds, there could be insufficient funds to make payments to Owners in full. It is not always possible to predict the circumstances under which abatement of rental may occur. In addition, there is no statute, case or other law specifying how such an abatement of rental should be measured. For example, it is not clear whether fair rental value is established as of commencement of the lease or at the time of the abatement. If the latter, the value of the Property could be substantially higher or lower than its value at the time of the issuance of the 2021 Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the 2021 Bonds. If damage, destruction, title defect or eminent domain proceedings with respect to the Property results in abatement of the Base Rental Payments and if such abated Base Rental Payments, if any, together with moneys from rental interruption or use and occupancy insurance (in the event of any insured loss due to damage or destruction), and eminent domain proceeds, if any, are insufficient to make all payments of principal and interest with respect to the 2021 Bonds during the period that the Property is being replaced, repaired or reconstructed, then all or a portion of such payments of principal and interest may not be made. Under the Lease Agreement and the Indenture, no remedy is available to the 2021 Bond Owners for nonpayment under such circumstances. Initiative and Referendum The ability of the City to comply with its covenants under the Lease Agreement and to generate revenues that are sufficient to pay Base Rental Payments may be adversely affected by actions and events outside the control of the City, including without limitation actions taken (or not taken) by voters. Under the State Constitution, voters of the State have the ability to initiate legislation and require a public vote on legislation passed by the State Legislature through the powers of initiative and referendum, respectively. The Authority and the City are unable to predict whether any such initiatives might be submitted to or approved by the voters, the nature of such initiatives, or their potential impact on the City and its operations. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Future Initiatives.” Insurance on the Property Under the Lease Agreement, the City is required to maintain through the term of the Lease Agreement policies of insurance covering loss or damage to the Property up to replacement costs and covering title defects. If the Property is damaged or destroyed, there can be no assurance that the insurance proceeds will be sufficient to repair or restore the Property, or to redeem or defease all of the then-Outstanding 2021 Bonds. In addition, neither the Authority nor the City can provide any assurance as to whether the provider of an 5.2.f Packet Pg. 290 53 4827-8234-0833v4/200928-0001 insurance policy will pay under such policy. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Insurance” for a description of the insurance coverages that are required by the Lease Agreement. See the caption “THE CITY—Risk Management” for a description of the City’s current insurance coverages. Certain risks, such as earthquakes and floods, are not required to be covered under the Lease Agreement and, although the City currently maintains earthquake and flood coverage, it is not required to maintain such coverage during the term of the Lease Agreement. Condemnation of the Property If all or a portion of the Property were condemned, there can be no assurance that any such award or payment will be sufficient at the time to prepay or defease all of the then-Outstanding 2021 Bonds. If the award is less than the amounts remaining on such Outstanding 2021 Bonds, then the Owners will be paid less than the amounts remaining on such Outstanding 2021 Bonds. Value of Property In the event that the Trustee re-enters or re-lets the Property upon the occurrence of an Event of Default, there can be no assurance such actions will provide funds in an amount that is sufficient to pay the principal of and interest on the 2021 Bonds. The security under the Lease Agreement extends only to the Authority’s leasehold interest in the Property granted under the Ground Lease and is subject to the restrictions of the Ground Lease and all other use restrictions applicable to the site. The Property has not been appraised in connection with the issuance of the 2021 Bonds. No Acceleration of Base Rental Payments Nothing in the Lease Agreement permits the Authority or the Trustee to accelerate Base Rental Payments. Although the Trustee is entitled to pursue all available remedies under the Indenture, there can be no assurance that sufficient funds will be available at the time to redeem or defease all of the then-Outstanding 2021 Bonds. Certain Risks Associated with Sales Tax and Other Local Tax Revenues For the past several Fiscal Years, sales and use tax revenues have been the third largest source of General Fund revenues to the City. See the caption “CITY FINANCIAL INFORMATION.” Sales and use tax revenues are based upon the gross receipts of retail sales of tangible goods and products by retailers with taxable transactions in the City, which could be impacted by a variety of factors. For example, in times of economic recession, the gross receipts of retailers often decline, and such a decline would cause the sales tax revenues received by the City to decline. An economic recession would also be expected to affect hotel occupancy within the City, and consequently, the City’s receipt of transient occupancy taxes. See the captions “THE CITY—COVID-19 Outbreak” and “CITY FINANCIAL INFORMATION.” In addition, changes or amendments in the laws applicable to the City’s receipt of sales tax revenues or other local taxes, whether implemented by State legislative action or voter initiative, could have an adverse effect on sales tax revenues received by the City. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” Many categories of transactions are exempt from the Statewide sales tax, and additional categories could be added in the future. Currently, most sales of food products for human consumption are exempt; this exemption, however, does not apply to liquor or to restaurant meals. The rate of sales tax levied on taxable transactions in the City or the fee charged by the SBE for administering the City’s sales tax could also be changed. 5.2.f Packet Pg. 291 54 4827-8234-0833v4/200928-0001 As discussed under the caption “THE CITY—COVID-19 Outbreak,” the Governor extended the deadline to file and pay first quarter 2020 sales and use tax returns by 90 days for all but the very largest taxpayers, and up to 361,000 California businesses with less than $5 million in taxable annual sales were allowed to defer up to $50,000 in sales tax and enter into 12-month payment plans at zero interest. The extension resulted in a delay in the receipt by the City of its portion of sales tax payments for 2020. There can be no assurance that additional extensions of payment deadlines will not be ordered should the COVID-19 outbreak continue or economic recessions occur in the future. Assessed Value of Taxable Property Property taxes are currently the second largest source of the City’s General Fund revenues. Natural and economic forces can affect the assessed value of taxable property within the City. The City is located in a seismically active region, and damage from an earthquake in or near the area could cause extensive damage to taxable property. Other natural or manmade disasters, such as flood, fire, wildfire, ongoing drought, toxic dumping, erosion, civil unrest or acts of terrorism, could cause a reduction in the assessed value of taxable property within the City. See the captions “—Natural Disasters” and “—Hazardous Substances.” In addition, economic and market forces, such as a downturn in the regional economy, could affect assessed values, particularly as these forces might reverberate in the residential housing and commercial property markets as has been experienced in the past. In addition, the total assessed value can be reduced through the reclassification of taxable property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by State and local agencies and property used for qualified educational, hospital, charitable or religious purposes). Reductions in the market values of taxable property may cause property owners to appeal assessed values and may also be associated with an increase in delinquency rates for property taxes. Section 2(b) of Article XIIIA of the State Constitution and Section 51 of the State Revenue and Taxation Code, which were adopted pursuant to Proposition 8, which was adopted in 1978, require the County assessor to annually enroll either a property’s adjusted base year value (the “Proposition 13 Value”) or its current market value, whichever is less. When the current market value replaces the higher Proposition 13 Value on the assessor’s roll, such lower value is referred to as the “Proposition 8 Value.” Although the annual increase for a Proposition 13 Value is limited to no more than 2%, the same restriction does not apply to a Proposition 8 Value. The Proposition 8 Value of a property is reviewed annually as of January 1; the current market value must be enrolled as long as the Proposition 8 Value falls below the Proposition 13 Value. Thus, any subsequent increase or decrease in market value is enrolled regardless of any percentage increase or decrease. Only when a current Proposition 8 Value exceeds the Proposition 13 Value attributable to a piece of property (adjusted for inflation) does a county assessor reinstate the Proposition 13 Value. Decreases in the assessed value of taxable property within the City resulting from a natural disaster or other calamity, economic recession, reclassification by ownership or use or as a result of the implementation of Proposition 8 all may have an adverse impact on property tax collections by the City, and consequently, the General Fund revenues that are available to make Base Rental Payments. Increasing Retirement-Related Costs The City is required to make contributions to CalPERS and to its OPEB plan for City employees and retirees. Such obligations are a significant financial obligation of the City and could increase in the future. Actual contribution rates will depend on a variety of factors, including but not limited to actual investment returns and future changes to benefits or actuarial assumptions. The City notes that pension contributions in future years may increase as a result of investment losses in CalPERS’ portfolio. There can be no assurances that actual increases in required contributions will not be higher than the amounts which are currently 5.2.f Packet Pg. 292 55 4827-8234-0833v4/200928-0001 projected by the City. See the captions “CITY FINANCIAL INFORMATION—Retirement Contributions” and “CITY FINANCIAL INFORMATION—Other Post-Employment Benefits.” Dependence on State for Certain Revenues A number of the City’s revenues are collected and dispersed by the State (such as sales taxes and the VLF) or allocated in accordance with State law (most importantly, property taxes). Therefore, State budget decisions can have an impact on City finances. In the event of a material economic downturn in the State, including as a result of the COVID-19 outbreak that is discussed under the caption “THE CITY—COVID-19 Outbreak,” there can be no assurance that any resulting revenue shortfalls to the State will not reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of the State’s efforts to address any such related State financial difficulties. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION.” Litigation The City may be or become a party to litigation that has an impact on the General Fund. Although the City maintains certain insurance policies that provide liability coverage under certain circumstances and with respect to certain types of incidents (as discussed under the caption “THE CITY—Risk Management”), the City cannot predict what types of liabilities may arise in the future. See the caption “LITIGATION.” Natural Disasters The occurrence of any natural disaster in the City, including, without limitation, fire, windstorm, drought, earthquake, landslide, mudslide or flood, could have an adverse material impact on the economy within the City, its General Fund and the revenues available for the payment of Base Rental Payments. The Although the City currently maintain earthquake insurance for the Property, it is not required to do so by the Lease Agreement and may elect to discontinue such insurance coverage in the future. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Insurance” and “THE CITY—Risk Management.” Earthquakes are considered a threat to the City due to the highly active seismic region and the proximity of fault zones, which could influence the entire coastal portion of the State. There are also likely to be unmapped faults in or near the City. Seismically induced ground shaking has affected the City in the past and is expected to affect the City in the future. An earthquake along one of the faults in the vicinity of the City, either known or unknown, could cause a number of casualties and extensive property damage. The effects of an earthquake could be aggravated by aftershocks and secondary effects such as fires, landslides, dam failure, liquefaction, floods and other threats to public health, safety and welfare. Portions of the City are located within floodways as defined by the Federal Emergency Management Agency. The potential direct and indirect consequences of a major earthquake could easily exceed the resources of the City and would require a high level of self-help, coordination and cooperation. The State, including the City, is periodically subject to wildfires, which can result in destruction of property directly. In addition, when wildfires scorch land, they destroy all vegetation on mountains and hillsides. As a result, when heavy rain falls in the winter, there is nothing to stop the rain from penetrating directly into the soil. In addition, waxy compounds in plants and soil that are released during fires create a natural barrier in the soil that prevents rain water from seeping deep into the ground. The result is erosion, mudslides and excess water running off the hillsides often causing flash flooding. The occurrence of natural disasters in the City could result in substantial damage to the City and the Property which, in turn, could substantially reduce General Fund revenues and affect the ability of the City to 5.2.f Packet Pg. 293 56 4827-8234-0833v4/200928-0001 make Base Rental Payments or cause an abatement in Base Rental Payments if the City is unable to use and occupy the Property. The City maintains liability insurance, rental interruption insurance and property casualty insurance (for losses other than from seismic events) for the Property. See the caption “THE CITY— Risk Management.” However, there can be no assurance that specific losses will be covered by insurance or, if covered, that claims will be paid in full by the applicable insurers. Climate Change The State has historically been susceptible to wildfires and hydrologic variability. As greenhouse gas emissions continue to accumulate in the atmosphere as a result of economic activity, climate change is expected to intensify, increasing the frequency, severity and timing of extreme weather events such as coastal storm surges, drought, wildfires, floods and heat waves, and raising sea levels. The future fiscal impact of climate change on the City is difficult to predict, but it could be significant and it could have a material adverse effect on the General Fund by requiring greater expenditures to counteract the effects of climate change or by changing the operations and activities of City residents and business establishments. The Diamond Bar Climate Action Plan (the “CAP”) is designed to reinforce the City’s commitment to reducing greenhouse gas (“GHG”) emissions and demonstrate how the City will comply with State GHG emission reduction standards. As a Qualified GHG Reduction Strategy under State law, the CAP will also enable streamlined environmental review of future development projects, in accordance with the California Environmental Quality Act. The CAP was prepared concurrently with the updated Diamond Bar General Plan and approved in December 2019, reflecting the City’s most current land use and transportation strategy, and GHG implications of various General Plan’s goals and policies. The General Plan Environmental Impact Report (the “EIR”) also serves as the EIR for the CAP, and the GHG analysis in the CAP is fully synchronized with the analysis in the EIR. Cybersecurity Municipal agencies, like other business entities, face significant risks relating to the use and application of computer software and hardware. Recently, there have been significant cybersecurity incidents affecting municipal agencies, including a freeze affecting computer systems of the City of Atlanta, an attack on the City of Baltimore’s 911 system, an attack on the Colorado Department of Transportation’s computers and an attack that resulted in the temporary closure of the Port of Los Angeles’ largest terminal. The City employs a multi-level cyber protection scheme that includes firewalls, anti-virus software, anti-spam/malware software, intrusion protection and domain name system filtering software. In addition, the City contracts with third party vendors to monitor and augment external monitoring of the City’s computer systems. The City implements recommended strategies suggested by the vendor and makes internal computer system changes as needed. To date, the City has not experienced a significant attack on its computer operating systems. However, there is no assurance that a future attack or attempted attack would not result in disruption of City operations. The City expects that any such disruptions would be temporary in nature. Hazardous Substances A condition that may result in the reduction in the assessed value of property, and therefore property tax revenue available to pay Base Rental Payments, would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the City. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but State laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or 5.2.f Packet Pg. 294 57 4827-8234-0833v4/200928-0001 handling the hazardous substance. The effect, therefore, should any of the property within the City be affected by a hazardous substance, could be to reduce the marketability and value of such property by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. The City and the Authority have not independently verified, but are not aware of, the presence of any hazardous substances on the Property. Hazardous substance liabilities may arise in the future with respect to any of the property in the City resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise from the method of handling such substance. These possibilities could significantly affect the value of a parcel. Economy of City and State A deterioration in the level of economic activity in the City, the County, the State or the United States, including as a result of the COVID-19 outbreak that is discussed under the caption “THE CITY—COVID-19 Outbreak,” is not currently expected to have a material adverse effect on the City’s general revenues or on the ability of the City to pay principal of and interest on the 2021 Bonds. See the caption “CITY FINANCIAL INFORMATION—General Economic Condition and Outlook of the City.” However, there can be no assurance that adverse economic conditions will not have a negative effect on the City. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION” for information about the State economy and State budget. Split Roll Initiative An initiative measure (the “Split Roll Initiative”) to amend Article XIIIA of the State Constitution qualified for the State’s November 2020 ballot. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Article XIIIA of the State Constitution.” Although it was not adopted by State voters, the Split Roll Initiative would have based property taxes for commercial and industrial properties on periodic analyses of market values beginning in tax year 2020-21. Such market values would have been reassessed by the applicable county assessor’s office at least once every three years. The Split Roll Initiative included exceptions for businesses with a total market value of less than $2 million (adjusted for inflation), which would have continued to be subject to property taxes based on purchase price, and exempted from property tax assessments up to $500,000 of the value of personal property, or all personal property for businesses with fewer than 50 employees. Although the Split Roll Initiative was not adopted, there can be no assurance that a similar initiative will not be brought before voters in the future. The City is unable to predict how the adoption of such a future initiative would affect the level of commercial building activity within the City and the relationship between the assessed value of different land use types (i.e. residential versus commercial) in the City, or what other impacts such an initiative might have on the local economy or the City’s financial condition, including the receipt of property tax revenues. Additional City Obligations The Base Rental Payments under the Lease Agreement are payable from funds that are lawfully available to the City. The City is currently liable for other obligations payable from general revenues of the City. The City has the authority to enter into other obligations that constitute additional claims on such general revenues, including Additional Bonds payable from a lease of the Property. To the extent that the City incurs additional obligations, the funds available to make Base Rental Payments may be decreased. See the captions “CITY FINANCIAL INFORMATION—Other Indebtedness—General Fund-Supported Obligations” and “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Additional Bonds.” 5.2.f Packet Pg. 295 58 4827-8234-0833v4/200928-0001 Tax-Related Issues The Internal Revenue Code of 1986, as amended (the “Code”) imposes a number of requirements that must be satisfied in order for interest on state and local obligations, such as the 2021 Bonds, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of 2021 Bond proceeds, limitations on the investment earnings of 2021 Bond proceeds, a requirement that certain investment earnings on 2021 Bond proceeds be paid periodically to the United States and a requirement that issuers file an information report with the Internal Revenue Service (the “IRS”). See the caption “TAX MATTERS.” The City and the Authority have covenanted in certain of the documents that are referred to in this Official Statement to comply with such requirements. Failure by any of the foregoing to comply with the requirements stated in the Code and related regulations, rulings and policies may result in the treatment of interest on the 2021 Bonds as taxable retroactively to the date of initial issuance of the 2021 Bonds. The 2021 Bonds would not be subject to higher rates of interest or acceleration if such an event were to occur. Possible Consequence of Tax Compliance Audit The IRS has established a general audit program to determine whether issuers of tax-exempt obligations, such as the 2021 Bonds, are in compliance with requirements of the Code that must be satisfied in order for the interest on those obligations to be, and continue to be, excluded from gross income for federal income tax purposes. As a result, organizations such as the City are subject to possible scrutiny. The primary penalty available to the IRS under the Code with respect to a tax-exempt entity engaged in improper use of tax- exempt proceeds is the revocation of tax-exempt status for the applicable obligations. Although the IRS has not frequently revoked the tax-exempt status of municipal bonds, it could do so in the future. See the caption “—Tax-Related Issues.” The City and the Authority cannot predict whether the IRS will commence an audit of the 2021 Bonds. Depending on the facts and circumstances and the type of audit involved, it is possible that an audit of the 2021 Bonds or obligations similar to the 2021 Bonds, even if the tax exemption of the 2021 Bonds is not implicated, could adversely affect the market value and liquidity of the 2021 Bonds until the audit is concluded, regardless of its ultimate outcome. Remedies Upon an Event of Default under the Indenture, the Trustee may exercise certain remedies under the Indenture and the Lease Agreement. In the event of a monetary default under the Indenture, the Trustee has the right to enter and take possession of the Property, and the Trustee may hold, operate and manage the Property and apply revenues therefrom toward payment of the 2021 Bonds. There can be no assurance that the Trustee will be able to realize from such actions an amount that is sufficient to pay the principal of and interest on the 2021 Bonds. In addition, the Trustee may incur significant operating costs in connection with the Property. Limitation on Trustee’s Obligations under the Indentures The Trustee has no obligation to advance its own funds to pursue any remedies. As a consequence, the Trustee’s willingness and ability to pursue any of the remedies provided in the Indenture, Lease Agreement or Assignment Agreement may be dependent upon the availability of funds from an interested party. Additionally, the Trustee is not required to acquire possession of the Property if doing so subjects it to potential liability. There can be no assurance that the Trustee will be willing and able to perform its duties under the Indenture. 5.2.f Packet Pg. 296 59 4827-8234-0833v4/200928-0001 Release of Property; Additional Bonds The Authority and the City may amend the Lease Agreement to substitute or release a portion of the Property upon compliance with all of the conditions set forth in the Lease Agreement. After a substitution or release, the portion of the Property for which the substitution or release has been effected will be released from the leasehold encumbrance of the Lease Agreement. Moreover, the City may issue Additional Bonds secured by Base Rental Payments which are increased above current levels. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS―Substitution or Release of the Property” and “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Additional Bonds.” Although the Lease Agreement requires, among other things, that the Property, as constituted after such substitution or release, have an annual fair rental value at least equal to the maximum Base Rental Payments for the Property coming due in the then-current Fiscal Year or in any subsequent Fiscal Year, it does not require that the Property have an annual fair rental value equal to the annual fair rental value of the Property prior to the substitution release of any portion thereof. Thus, a portion of the Property could be replaced with less valuable real property, or could be released altogether. Such a substitution or release could have an adverse impact on the security for the 2021 Bonds, particularly if an event requiring abatement of the Base Rental Payments were to occur subsequent to such substitution or release. The Indenture requires, among other things, that upon the issuance of Additional Bonds, the Lease Agreement will be amended, to the extent necessary, so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount that is sufficient to pay the principal of and interest on such Additional Bonds; provided, however, that no such amendment may be made such that the sum of such Base Rental Payments, including any increase in Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Fiscal Year is in excess of the annual fair rental value of the applicable Property after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS— Additional Bonds” for a full description of the requirements that must be met in order for the City to deliver Additional Bonds. Limitations on Enforceability General. The enforcement of any remedies that are provided for in the Lease Agreement and the Indenture could prove both expensive and time consuming. The rights and remedies provided in the Lease Agreement and the Indenture may be limited by and are subject to: (i) the limitations on legal remedies against cities in the State, including State constitutional limits on expenditures and limitations on the enforcement of judgments against funds that are needed to serve the public welfare and interest; (ii) federal bankruptcy laws, as now or later enacted, as discussed in detail under the subcaption “—Bankruptcy” below; (iii) applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or later in effect; (iv) equity principles which may limit the specific enforcement under State law of certain remedies; (v) the exercise by the United States of America of the powers delegated to it by the federal Constitution; and (vi) the reasonable and necessary exercise, in certain exceptional situations, of the police powers that are 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 2021 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 legal opinions that will be delivered concurrently with the issuance of the 2021 Bonds will be qualified, as to the enforceability of the 2021 Bonds, the Indenture, the Lease Agreement and other related documents, by bankruptcy, insolvency, reorganization, moratorium, arrangement, fraudulent conveyance and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitations on legal remedies against counties in the State. 5.2.f Packet Pg. 297 60 4827-8234-0833v4/200928-0001 Failure by the City to pay Base Rental Payments or failure to observe and perform any other terms, covenants or conditions of the Lease Agreement for a period of 30 days after written notice of such failure and request that it be remedied has been given to the City by the Trustee, constitute Events of Default under the Indenture and permit the Trustee or the Authority to pursue the remedies that are described in the Lease Agreement and Indenture. Upon an Event of Default, there is no right under any circumstances to accelerate Base Rental Payments or otherwise declare any Base Rental Payment that is not then in default to be immediately due and payable, nor do the Authority or the Trustee have any right to re-enter or re-let the affected Property, except to the limited extent that is described in the Lease Agreement, and only to the extent of the Authority’s leasehold interest under the Ground Lease. Rather, if the City defaults on its obligation to pay Base Rental Payments with respect to such Property, the Trustee must sue to recover Base Rental Payments on an annual basis. Alternatively, the Authority or the Trustee may terminate the Lease Agreement, retake possession of the Property and proceed against the City to recover damages pursuant to the Lease Agreement. Due to the specialized and limited nature of the Property, existing encumbrances on the Property and restrictions on the use of the Property, it is unlikely that 2021 Bond Owners would be able to generate rental income that is sufficient to make all payments of principal of and interest on the 2021 Bonds when due. Moreover, the Trustee is not empowered to sell the fee interest in the Property (which is owned by the City) for the benefit of the Owners of the 2021 Bonds. Any suit for money damages against the City would be subject to limitations on legal remedies against cities in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Bankruptcy. Enforceability of the rights and remedies of the Owners of the 2021 Bonds, and the obligations incurred by the City, may become subject to the provisions of Title 11 of the United States Code (the “Bankruptcy Code”) and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or later in effect, equity principles 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, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against cities in the State. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the Owners of the 2021 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. Under Chapter 9 of the Bankruptcy Code, which governs the bankruptcy proceedings for public agencies such as the City, involuntary petitions are not permitted. If the City were to file a petition under Chapter 9 of the Bankruptcy Code, the Owners of the 2021 Bonds, the Trustee and the Authority could be prohibited from taking any steps to enforce their rights under the Lease Agreement or from taking any steps to collect amounts due from the City under the Lease Agreement. In particular, if the City were to become a debtor under the Bankruptcy Code, the City would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 case. Among the adverse effects of such a bankruptcy might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the City, and which could prevent the Trustee from making payments from funds in its possession; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or secured debt which may have a priority of payment that is superior to that of Owners of the 2021 Bonds; and (iv) the possibility of the adoption of a plan (an “Adjustment Plan”) for the adjustment of the City’s various obligations over the objections of the Trustee or all of the Owners of the 2021 Bonds and without their consent, which Adjustment Plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that such Adjustment Plan is “fair and equitable” and in the best interests of creditors. The Adjustment Plans approved by the Bankruptcy Courts in connection with the bankruptcies of the cities of Vallejo, San Bernardino and Stockton resulted in 5.2.f Packet Pg. 298 61 4827-8234-0833v4/200928-0001 significant reductions in the amounts payable by the cities under lease revenue obligations that were substantially identical or similar to the 2021 Bonds. The City can provide no assurances about the outcome of the bankruptcy cases of other California municipalities or the nature of any Adjustment Plan if it were to file for bankruptcy. In addition, the City could either reject one or both of the Ground Lease or the Lease Agreement or assume one or both of the Ground Lease or the Lease Agreement despite any provision of such documents that makes the bankruptcy or insolvency of the City an event of default thereunder. If the City rejects the Lease Agreement, the Trustee, on behalf of the Owners of the 2021 Bonds, would have a pre-petition unsecured claim that may be substantially limited in amount, and this claim would be treated in a manner under an Adjustment Plan over the objections of the Trustee or Owners of the 2021 Bonds. Moreover, such rejection would terminate the Lease Agreement and the City’s obligations to make payments thereunder. The City may also be permitted to assign the Ground Lease or the Lease Agreement to a third party, regardless of the terms of the transaction documents. Secondary Market There can be no guarantee that there will be a secondary market for the 2021 Bonds, or, if a secondary market exists, that the 2021 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 in connection with a particular issue is suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances. Such prices could be substantially different from the original purchase price. In addition, the City has entered into a continuing disclosure undertaking in connection with the 2021 Bonds. Any material failure to comply with such undertaking in the future may adversely affect the liquidity of the affected 2021 Bonds and their market price in the secondary market. TAX MATTERS In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the 2021 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the 2021 Bonds is exempt from State of California personal income tax. Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the 2021 Bonds is based upon certain representations of fact and certifications made by the City, the Authority and others and is subject to the condition that the City and the Authority comply with all requirements of the Code that must be satisfied subsequent to the issuance of the 2021 Bonds to assure that interest (and original issue discount) on the 2021 Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the 2021 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the 2021 Bonds. The City and the Authority have covenanted to comply with all such requirements. In the opinion of Bond Counsel, the difference between the issue price of a 2021 Bond (the first price at which a substantial amount of the 2021 Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity of such 2021 Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received 5.2.f Packet Pg. 299 62 4827-8234-0833v4/200928-0001 by a Beneficial Owner will increase the Beneficial Owner’s basis in the 2021 Bonds. The amount of original issue discount that accrues to the Beneficial Owner of a 2021 Bond is excluded from the gross income of such Beneficial Owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals, and is exempt from State of California personal income tax. The amount by which a 2021 Bond Owner’s original basis for determining loss on sale or exchange in the 2021 Bonds (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the 2021 Bond Owner’s basis in the 2021 Bond (and the amount of tax- exempt interest received with respect to the 2021 Bonds), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a 2021 Bond Owner realizing a taxable gain when a 2021 Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the 2021 Bond to the Owner. Purchasers of the 2021 Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium. The IRS has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the 2021 Bonds will be selected for audit by the IRS. It is also possible that the market value of the 2021 Bonds might be affected as a result of such an audit of the 2021 Bonds (or by an audit of similar municipal obligations). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the 2021 Bonds to the extent that it adversely affects the exclusion from gross income of interest (and original issue discount) on the 2021 Bonds or their market value. SUBSEQUENT TO THE ISSUANCE OF THE 2021 BONDS THERE MIGHT BE FEDERAL, STATE OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR INTERPRETATIONS OF FEDERAL, STATE OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE OR LOCAL TAX TREATMENT OF THE 2021 BONDS INCLUDING THE IMPOSITION OF ADDITIONAL FEDERAL INCOME OR STATE TAXES ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE 2021 BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE 2021 BONDS. NO ASSURANCE CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE 2021 BONDS STATUTORY CHANGES WILL NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE 2021 BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE 2021 BONDS. Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the 2021 Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest (and original issue discount) for federal income tax purposes with respect to any 2021 Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation. Although Bond Counsel has rendered an opinion that interest (and original issue discount) on the 2021 Bonds is excluded from gross income for federal income tax purposes provided that the City continue to comply with certain requirements of the Code, the ownership of the 2021 Bonds and the accrual or receipt of interest (and original issue discount) on the 2021 Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before 5.2.f Packet Pg. 300 63 4827-8234-0833v4/200928-0001 purchasing any of the 2021 Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the 2021 Bonds. Should interest (and original issue discount) on the 2021 Bonds become includable in gross income for federal income tax purposes, the 2021 Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Indenture. The form of Bond Counsel’s proposed opinion with respect to the 2021 Bonds is set forth in Appendix D. CERTAIN LEGAL MATTERS The validity of the 2021 Bonds and certain other legal matters are subject to the approving opinions of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel and Disclosure Counsel. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix D. Bond Counsel and Disclosure Counsel will receive compensation from the City contingent upon the sale and delivery of the 2021 Bonds. Certain legal matters will be passed upon for the City and the Authority by the City Attorney, for the Underwriter by Jones Hall, A Professional Law Corporation, San Francisco, California, and for the Trustee by its counsel. Furthermore, from time to time Bond Counsel serves as counsel to the Underwriter with respect to transactions other than the issuance of the 2021 Bonds. MUNICIPAL ADVISOR The Authority has retained Fieldman, Rolapp & Associates, Inc., Irvine, California (the “Municipal Advisor”) as municipal advisor in connection with the sale of the 2021 Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained herein. The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities. LITIGATION At the time of issuance of the 2021 Bonds, the Authority and the City will deliver certificates stating that there is no litigation then pending or threatened to restrain or enjoin the issuance of the 2021 Bonds or in any way contesting or affecting the validity of the 2021 Bonds, the Ground Lease or the Lease Agreement, any proceedings of the Authority or the City taken with respect to the delivery or sale of the 2021 Bonds, the pledge or application of any money or security provided for the payment of the 2021 Bonds, the existence or powers of the Authority or the City or the title of any officers of the Authority or the City to their respective positions. UNDERWRITING Raymond James & Associates, Inc. (the “Underwriter”), will purchase the 2021 Bonds from the Authority at an aggregate purchase price of $____ (representing the principal amount of the 2021 Bonds ($_____), plus/less a net original issue premium/discount ($_____) and less an Underwriter’s discount of $____). 5.2.f Packet Pg. 301 64 4827-8234-0833v4/200928-0001 The 2021 Bonds are offered for sale at the initial prices stated on the inside cover page of this Official Statement, which may be changed from time to time by the Underwriter. The 2021 Bonds may be offered and sold to certain dealers at prices lower than the public offering prices. RATING S&P Global Ratings, a Standard & Poor’s Financial Services LLC business (“S&P”) has assigned the rating of “[__]” to the 2021 Bonds. A rating is not a recommendation to buy, sell or hold securities. Future events, including the impacts of the COVID-19 pandemic that is described under the caption “THE CITY—COVID-19 Outbreak,” could have an adverse impact on the rating of the 2021 Bonds, and there is no assurance that any credit rating that is given to the 2021 Bonds will be maintained for any period of time or that a rating may not be qualified, downgraded, lowered or withdrawn entirely by S&P if, in the judgment of S&P, circumstances so warrant, nor can there be any assurance that the criteria required to achieve the rating on the 2021 Bonds will not change during the period that the 2021 Bonds remain outstanding. Any qualification, downward revision, lowering or withdrawal of the rating on the 2021 Bonds may have an adverse effect on the market price of the 2021 Bonds. Such rating reflects only the current views of S&P (which could change at any time), and an explanation of the significance of such rating may be obtained from S&P. Generally, rating agencies base their ratings on information and materials furnished to them (which may include information and material from the City that is not included in this Official Statement) and on investigations, studies and assumptions by the rating agencies. The City has covenanted in its continuing disclosure undertakings to file notices of any rating changes on the 2021 Bonds with EMMA. See the caption “CONTINUING DISCLOSURE” and Appendix E. Notwithstanding such covenant, information relating to rating changes on the 2021 Bonds may be publicly available from S&P prior to such information being provided to the City and prior to the date by which the City is obligated to file a notice of rating change. Purchasers of the 2021 Bonds are directed to S&P and its websites and official media outlets for the most current ratings with respect to the 2021 Bonds after the issuance of the 2021 Bonds. CONTINUING DISCLOSURE The City has agreed in a continuing disclosure undertaking for the 2021 Bonds: (1) to provide certain financial information and operating data (each, an “Annual Report”) relating to the City by not later than April 1 after the end of the City’s Fiscal Year; and (2) to provide notices of the occurrence of certain enumerated events. The Annual Reports will be filed by the City with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, which is maintained on the Internet at http://emma.msrb.org/ (“EMMA”). The notices of enumerated events will also be filed by the City with EMMA. The specific nature of the information to be contained in the Annual Reports and the notices of enumerated events is set forth in the continuing disclosure undertakings of the City. The form of the continuing disclosure undertaking for the 2021 Bonds is set forth in Appendix E. [DISCLOSURE RE PAST COMPLIANCE TO COME]. 5.2.f Packet Pg. 302 65 4827-8234-0833v4/200928-0001 MISCELLANEOUS The City has approved and authorized the preparation, execution and distribution of this Official Statement. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such, and are not representations of fact. This Official Statement is not to be construed as an agreement or contract among any of the City, the Authority and the purchasers or holders of any 2021 Bonds. CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Executive Director CITY OF DIAMOND BAR By: City Manager 5.2.f Packet Pg. 303 A-1 4827-8234-0833v4/200928-0001 APPENDIX A DEMOGRAPHIC AND ECONOMIC INFORMATION The following information is presented as general background data. The 2021 Bonds are payable solely from moneys of the City as described in the Official Statement. The taxing power of the City, the County, the State of California or any political subdivision thereof is not pledged to the payment of the 2021 Bonds. The City also notes that the below information is the latest available but does not in any instance reflect the impact of the COVID-19 pandemic. See the Official Statement under the caption “THE CITY— COVID-19 Outbreak.” Accordingly, the historical information below does not necessarily reflect present economic conditions and future information could be significantly different from the historical information below. Introduction City of Diamond Bar. The City is located in the southeastern portion of the County, approximately 30 miles east of the City of Los Angeles, at the junction of State Routes 57 and 60. The City was incorporated in 1989 under the general laws of the State and has an area of approximately 15 square miles. The population of the City is estimated to be approximately 57,177. The City operates under a Council/Manager form of government. Councilmembers are elected at large for four-year alternating terms and the City Council, in turn, selects one of the City Council Members to serve as Mayor for one year. The City Council selects a City Manager to administer the affairs of the City. The City Manager is responsible for implementing the policies, ordinances and directives of the City Council and for overseeing the daily operations of the City. The City provides a wide range of municipal services, including parks and recreation, community development neighborhood improvement and street maintenance. The City also contracts for many public services, including water service from the Walnut Valley Water District, police services from the Los Angeles County Sheriff, library services from the County, highway and street maintenance, landscape maintenance, building and safety inspection and other services. Fire services are provided by the Los Angeles County Fire Department and funded from property taxes levied by the County. The city is named for the “diamond over a bar” branding iron registered in 1918 by ranch owner Frederick E. Lewis. Los Angeles County. The County was established by an act of the State Legislature on February 18, 1850 as one of California’s original 27 counties. Located in the southern portion of the State, the County covers 4,083 square miles. With a population of over 10 million, its population is the largest of any county in the nation. The County’s economy is larger than that of 43 states and all but 20 countries. The County serves as the central trade district for the western United States and the gateway to the Asian economies, as it has evolved into a leader in international commerce and investments. Population The table below summarizes population of the City, the County, and the State of California for the last five calendar years. 5.2.f Packet Pg. 304 A-2 4827-8234-0833v4/200928-0001 CITY OF DIAMOND BAR, LOS ANGELES COUNTY AND CALIFORNIA Population Year City of Diamond Bar Los Angeles County State of California 2016 57,336 10,185,196 39,131,307 2017 57,414 10,193,753 39,398,702 2018 57,488 10,209,676 39,586,646 2019 57,308 10,184,378 39,695,376 2020 57,177 10,172,951 39,782,870 Source: California Department of Finance, E-4 Population Estimate for Cities, Counties, and the State, 2011-20, with 2010 Census Benchmark. Employment The following table summarizes historical employment and unemployment for the County, the State of California and the United States for the last five calendar years. LOS ANGELES COUNTY, CALIFORNIA AND UNITED STATES Civilian Labor Force, Employment, and Unemployment (Annual Averages) Year Area Labor Force Employment Unemployment Unemployment Rate(1) 2016 Los Angeles County 5,018,900 4,751,200 267,700 5.3 California 19,012,000 17,965,400 1,046,600 5.5 United States 159,187,000 151,436,000 7,751,000 4.9 2017 Los Angeles County 5,088,900 4,843,700 245,200 4.8 California 19,173,800 18,246,800 927,000 4.8 United States 160,320,000 153,337,000 6,982,000 4.4 2018 Los Angeles County 5,094,300 4,857,300 237,000 4.7 California 19,263,900 18,442,400 821,500 4.3 United States 162,075,000 155,761,000 6,314,000 3.9 2019 Los Angeles County 5,122,800 4,888,600 234,300 4.6 California 19,353,700 18,550,500 803,200 4.2 United States 163,539,000 157,538,000 6,001,000 3.7 2020 Los Angeles County 4,921,500 4,291,700 629,800 12.8 California 18,821,200 16,913,100 1,908,100 10.1 United States 160,742,000 147,795,000 12,947,000 8.1 (1) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures available in this table. Source: California Employment Development Department, Monthly Labor Force Data for Counties, Annual Average 2010-20, March 2020 Benchmark, and US Department of Labor. 5.2.f Packet Pg. 305 A-3 4827-8234-0833v4/200928-0001 Major Industries in the County The table below sets forth the ten largest industries by employment in Los Angeles County in 2020. LOS ANGELES COUNTY Major Industries – 2020 Industry Number of Employees % of Total Educational & Health Services 799,800 19.47% Trade, Transportation and Utilities 777,000 18.92 Professional & Business Services 590,100 14.37 Government 579,300 14.10 Leisure & Hospitality 378,600 9.22 Manufacturing 314,700 7.66 Financial Activities 218,600 5.32 Information 178,400 4.34 Construction 146,100 3.56 Other Services 118,900 2.90 Total Top 10 Industries 4,101,500 99.86 All Other Industries 5,700 0.14 Total All Industries 4,107,200 100.00% Source: Los Angeles County Fiscal Year 2019-20 audited financial statements. Construction Activity The following tables reflect building permit valuations for the City and the County for the five most recent calendar years for which information is available. CITY OF DIAMOND BAR Building Permits and Valuation (Dollars in Thousands) 2015 2016 2017 2018 2019 Permit Valuation: New Single-family $ 31,894 $ 7,195 $ 29,252 $ 10,276 $ 175 New Multi-family 2,216 -- -- -- -- Res. Alterations/Additions 5,495 5,599 2,390 2,019 5,024 Total Residential 39,605 12,794 31,642 12,295 5,199 Total Nonresidential 4,730 9,173 2,247 5,287 14,847 Total All Building $ 44,335 $ 21,967 $ 33,889 $ 17,582 $ 20,046 New Dwelling Units: Single Family 115 13 72 27 3 Multiple Family 12 -- -- - - Total 127 13 -- 27 3 Note: Columns may not sum to totals due to independent rounding. Source: Construction Industry Research Board: “Building Permit Summary.” 5.2.f Packet Pg. 306 A-4 4827-8234-0833v4/200928-0001 LOS ANGELES COUNTY Building Permits and Valuation (Dollars in Thousands) 2015 2016 2017 2018 2019 Permit Valuation: New Single-family $ 1,897,829 $ 2,162,018 $ 2,352,614 $ 2,277,101 $ 1,967,219 New Multi-family 2,843,749 2,774,294 3,257,833 3,222,530 2,961,257 Res. Alterations/Additions 1,641,457 1,639,294 1,757,904 1,941,369 1,625,839 Total Residential 6,383,036 6,575,607 7,368,352 7,441,001 6,554,315 Total Nonresidential 5,645,372 5,287,623 6,037,502 6,694,097 6,589,602 Total All Building $ 12,028,408 $ 11,863,230 $ 13,405,855 $ 14,135,098 $13,143,917 New Dwelling Units: Single Family 4,487 4,780 5,456 6,070 5,738 Multiple Family 18,405 15,589 17,023 17,152 15,884 Total 22,892 20,369 23,479 23,222 21,622 Note: Columns may not sum to totals due to independent rounding. Source: Construction Industry Research Board: “Building Permit Summary.” Median Household Income The following table summarizes the median household income for the City, the County, the State of California and the nation for the five most recent calendar years for which information is available. CITY OF DIAMOND BAR, LOS ANGELES COUNTY, STATE OF CALIFORNIA AND UNITED STATES Median Household Income 2015 2016 2017 2018 2019 Diamond Bar(1) $85,505 $89,409 $94,630 $98,660 $101,862 Los Angeles County(2) 48,950 50,236 54,720 53,831 60,174 California(2) 53,589 55,681 59,646 62,637 65,870 United States(2) 46,738 48,043 50,735 52,841 55,303 (1) Reflects median household income in dollars without regard to cost of living. Source: Fiscal Year 20220 audited financial statements of the City of Diamond Bar. (2) Reflects median household effective buying income and includes adjustments for cost of living. Source: Nielsen, Inc. 5.2.f Packet Pg. 307 B-1 4827-8234-0833v4/200928-0001 APPENDIX B SUMMARY OF PRINCIPAL LEGAL DOCUMENTS The following is a summary of certain definitions and provisions of the Lease Agreement and the Indenture which are not described elsewhere in the Official Statement. This summary does not purport to be comprehensive and reference should be made to the Lease Agreement and the Indenture for a full and complete statement of their provisions. LEASE AGREEMENT [TO COME FROM BOND COUNSEL] INDENTURE [TO COME FROM BOND COUNSEL] 5.2.f Packet Pg. 308 C-1 4827-8234-0833v4/200928-0001 APPENDIX C AUDITED FINANCIAL STATEMENTS 5.2.f Packet Pg. 309 D-1 4827-8234-0833v4/200928-0001 APPENDIX D FORM OF BOND COUNSEL OPINION Upon the issuance of the 2021 Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to render its final approving opinion in substantially the following form: June __, 2021 City of Diamond Bar Public Financing Authority c/o City of Diamond Bar 200 Lincoln Avenue Diamond Bar, California 93901 Re: $_______ City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A Members of the Board of Directors: We have acted as Bond Counsel to the City of Diamond Bar Public Financing Authority (the “Authority”) in connection with the issuance by the Authority of its Lease Revenue Refunding Bonds, 2021 Series A in the aggregate principal amount of $_____ (the “2021 Bonds”). In connection therewith, we have reviewed: (i) the Indenture, dated as of June 1, 2021 (the “Indenture”), by and among U.S. Bank National Association, as trustee (the “Trustee”), the Authority and the City of Diamond Bar (the “City”); (ii) the “Lease Agreement, dated as of June 1, 2021 (the “Lease Agreement”), by and between the City and the Authority; (iii) the Ground Lease, dated as of June 1, 2021 (the “Ground Lease”), by and between the City and the Authority; (iv) the Assignment Agreement, dated as of June 1, 2021 (the “Assignment Agreement”), by and between the Authority and the Trustee; (v) the Tax Certificate of the Authority and the City, dated as of the date hereof (the “Tax Certificate”); and (vi) opinions of counsel to the Authority, the City and the Trustee, certificates of the Authority, the City and the Trustee and others and such other documents, opinions and matters to the extent that we deemed necessary to render the opinions set forth herein. Capitalized terms that are not otherwise defined herein have the meanings ascribed thereto in the Indenture. Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that: 1. The obligation of the City to pay Base Rental Payments in accordance with the terms of the Lease Agreement is a valid and binding obligation payable from the funds of the City lawfully available therefor. The obligation of the City to make Base Rental Payments under the Lease Agreement does not constitute a debt of the City, the State of California (the “State”) or any political subdivision thereof within the meaning of any statutory or constitutional debt limitation or restriction and does not constitute a pledge of the faith and credit or taxing power of the City, the State or any political subdivision thereof. 2. The Lease Agreement and the Indenture have been duly authorized, executed and delivered by the City and the Authority and constitute valid and legally binding agreements of the City and the Authority enforceable against the City and the Authority in accordance with their terms, except that we express no opinion as to any provisions in the Lease Agreement or the Indenture with respect to indemnification, penalty, contribution, choice of law, choice of forum or waiver. 3. Under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest 5.2.f Packet Pg. 310 D-2 4827-8234-0833v4/200928-0001 (and original issue discount) on the 2021 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. 4. Interest (and original issue discount) on the 2021 Bonds is exempt from personal income taxes imposed in the State. 5. The difference between the issue price of a 2021 Bond (the first price at which a substantial amount of the 2021 Bonds of the same series and maturity is to be sold to the public) and the stated redemption price at maturity with respect to such 2021 Bonds constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a 2021 Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by the 2021 Bond Owner will increase the 2021 Bond Owner’s basis in the 2021 Bond. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the owner of the 2021 Bond is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State personal income tax. 6. The amount by which a 2021 Bond Owner’s original basis for determining loss on sale or exchange in a 2021 Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the 2021 Bond Owner’s basis in the 2021 Bonds (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a 2021 Bond Owner realizing a taxable gain when a 2021 Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the 2021 Bond to the Owner. Purchasers of the 2021 Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium. The opinions that are expressed herein as to the exclusion from gross income of interest (and original issue discount) on the 2021 Bonds are based upon certain representations of fact and certifications made by the City and the Authority and are subject to the condition that the City and the Authority comply with all requirements of the Code that must be satisfied subsequent to the issuance of the 2021 Bonds to assure that such interest (and original issue discount) on the 2021 Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the 2021 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the 2021 Bonds. The City and the Authority have covenanted to comply with all such requirements. The opinions that are expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Our engagement with respect to the 2021 Bonds terminates on the date of their issuance. The Indenture, the Lease Agreement and the Tax Certificate permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. No opinion is expressed herein as to the effect on the exclusion from gross income of interest (and original issue discount) on the 2021 Bonds for federal income tax purposes if any such action is taken or omitted based upon the opinion or advice of counsel other than ourselves. Other than as expressly stated herein, we express no other opinion regarding tax consequences with respect to the 2021 Bonds. We have not made or undertaken to make an investigation of the state of title to any of the real property described in the Lease Agreement, the Ground Lease and the Assignment Agreement or of the accuracy or sufficiency of the description of such property contained therein, and we express no opinion with respect to such matters. 5.2.f Packet Pg. 311 D-3 4827-8234-0833v4/200928-0001 Our opinion is limited to matters governed by the laws of the State and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction. The opinions that are expressed herein are based upon our analysis and interpretation of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the rights and obligations under the Indenture, the Lease Agreement and the 2021 Bonds are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State. We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the 2021 Bonds and expressly disclaim any duty to advise the Owners of the 2021 Bonds with respect to matters contained in the Official Statement. Respectfully submitted, 5.2.f Packet Pg. 312 E-1 4827-8234-0833v4/200928-0001 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE Upon issuance of the 2021 Bonds, the City proposes to enter into a Continuing Disclosure Certificate in substantially the following form: This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Diamond Bar (the “City”) in connection with the issuance by the City of Diamond Bar Public Financing Authority (the “Authority”) of its $_____ Lease Revenue Refunding Bonds, 2021 Series A (the “Bonds”). The Bonds are being issued pursuant to an Indenture, dated as of June 1, 2021 (the “Indenture”), by and among the City, the Authority and U.S. Bank National Association, as trustee (the “Trustee”). The City covenants and agrees as follows: 1. Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule. 2. Definitions. In addition to the definitions that are set forth in the Indenture, which apply to any capitalized term that is used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: Annual Report. The term “Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. Beneficial Owner. The term “Beneficial Owner” means any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for federal income tax purposes. EMMA. The term “EMMA” means the Municipa l Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/. Financial Obligation. The term “Financial Obligation” means a: (A) debt obligation; (B) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (C) guarantee of (A) or (B). The term “Financial Obligation” does not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule. Fiscal Year. The term “Fiscal Year” means the one-year period ending on the last day of June of each year. Holder. The term “Holder” means a registered owner of the Bonds. Listed Events. The term “Listed Events” means any of the events listed in Sections 5(a) and (b) of this Disclosure Certificate. Official Statement. The term “Official Statement” means the Official Statement dated May __, 2021 relating to the Bonds. Participating Underwriter. The term “Participating Underwriter” means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. Rule. The term “Rule” means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. 5.2.f Packet Pg. 313 E-2 4827-8234-0833v4/200928-0001 3. Provision of Annual Reports. (a) The City shall provide not later than each April 1 following the end of its Fiscal Year (commencing April 1, 2022 with the Fiscal Year 2021 Annual Report) to EMMA an Annual Report relating to the immediately preceding Fiscal Year which is consistent with the requirements of Section 4 of this Disclosure Certificate, which Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate. (b) If the City is unable to provide to EMMA an Annual Report by the date required in subsection (a), the City shall send in a timely manner to EMMA a notice in the manner prescribed by the Municipal Securities Rulemaking Board. 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements of the City for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If 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 Re port 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 come availabl e. (b) To the extent not included in the audited financial statements provided pursuant to the foregoing Section 4(a), the Annual Report shall contain the following information as of the end of the prior Fiscal Year: (i) The principal amount of the Bonds outstanding; (ii) An update of the information in Tables 1, 2, 3 and 4 under the caption “CITY FINANCIAL INFORMATION” in the Official Statement. The items described above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to EMMA; provided, that if any document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board; and provided further, that the City shall clearly identify each such document so included by reference. 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) Business Days after the event: 1. principal and interest payment delinquencies; 2. unscheduled draws on debt service reserves reflecting financial difficulties; 3. unscheduled draws on credit enhancements reflecting financial difficulties; 4. substitution of credit or liquidity providers, or their failure to perform; 5. adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability or Notices of Proposed Issue (IRS Form 5701 TEB); 6. tender offers; 5.2.f Packet Pg. 314 E-3 4827-8234-0833v4/200928-0001 7. defeasances; 8. ratings changes; 9. bankruptcy, insolvency, receivership or similar proceedings. Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law i n which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in pos session but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person; and 10. default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties. (b) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material , in a timely manner not more than ten (10) Business Days after occurrence: 1. unless described in Section 5(a)(5), other notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other events affecting the tax status of the Bonds; 2. modifications to the rights of Bond holders; 3. Bond calls; 4. release, substitution or sale of property securing repayment of the Bonds; 5. non-payment related defaults; 6. the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; 7. appointment of a successor or additional trustee or the change of the name of a trustee; and 8. incurrence of a Financial Obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect security holders, if material. (c) If the City determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws, the City shall file a notice of such occurrence with EMMA in a timely manner not more than ten (10) Business Days after the event. 6. [Reserved]. 7. Termination of Obligation. The City’s obligations under this Disclosure Certific ate with respect to the Bonds shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds . If any 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). 5.2.f Packet Pg. 315 E-4 4827-8234-0833v4/200928-0001 8. 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 waive d, provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the Rule. 9. 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 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 notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall not thereby have any obligation under this Disclosure Certificate to update such information or include it in any future notice of occurrence of a Listed Event. 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate or any Holders 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 or the Lease Agreement, 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 actio n to compel performance. No Holder or Beneficial Owner of the Bonds may institute such action, suit or proceeding to compel performance unless they shall have first delivered to the City satisfactory written evidence of their status as such, and a written notice of and request to cure such failure, and the City shall have refused to comply therewith within a reasonable time. 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, 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. Dated: June __, 2021 CITY OF DIAMOND BAR By: City Manager Its: City Manager 5.2.f Packet Pg. 316 F-1 4827-8234-0833v4/200928-0001 APPENDIX F BOOK-ENTRY ONLY SYSTEM The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the City and the Authority believe to be reliable, but the City and the Authority take no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the 2021 Bonds, payment of principal, premium, if any, accreted value and interest on the 2021 Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the 2021 Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. 1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2021 Bonds (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 2021 Bond will be issued for each maturity of the Securities in the aggregate principal amount of such maturity, 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 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 is rated “AA+” by Standard & Poor’s. 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. 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. 5.2.f Packet Pg. 317 F-2 4827-8234-0833v4/200928-0001 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 will be sent to DTC. If less than all of the Securities within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity 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 the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Principal, redemption price and interest 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 the Authority or the Paying 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, the Paying Agent, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Paying 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. If applicable, a Beneficial Owner will give notice to elect to have its Securities purchased or tendered, through its Participant, to tender/remarketing agent, and will effect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to tender/remarketing 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 tender/remarketing agent’s DTC account. 5.2.f Packet Pg. 318 F-3 4827-8234-0833v4/200928-0001 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the Authority or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, 2021 Bonds are required to be printed and delivered. 11. The Authority may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, 2021 Bonds will be printed and delivered to DTC. 5.2.f Packet Pg. 319 Stradling Yocca Carlson & Rauth Draft of 4/26/21 1 4840-6621-6167v1/200928-0001 CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Diamond Bar (the “City”) in connection with the issuance by the City of Diamond Bar Public Financing Authority (the “Authority”) of its $_____ Lease Revenue Refunding Bonds, 2021 Series A (the “Bonds”). The Bonds are being issued pursuant to an Indenture, dated as of June 1, 2021 (the “Indenture”), by and among the City, the Authority and U.S. Bank National Association, as trustee (the “Trustee”). The City covenants and agrees as follows: 1. Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule. 2. Definitions. In addition to the definitions that are set forth in the Indenture, which apply to any capitalized term that is used in this Di sclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: Annual Report. The term “Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. Beneficial Owner. The term “Beneficial Owner” means any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for federal income tax purposes. EMMA. The term “EMMA” means the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/. Financial Obligation. The term “Financial Obligation” means a: (A) debt obligation; (B) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (C) guarantee of (A) or (B). The term “Financial Obligation” does not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule. Fiscal Year. The term “Fiscal Year” means the one-year period ending on the last day of June of each year. Holder. The term “Holder” means a registered owner of the Bonds. Listed Events. The term “Listed Events” means any of the events listed in Sections 5(a) and (b) of this Disclosure Certificate. Official Statement. The term “Official Statement” means the Officia l Statement dated May __, 2021 relating to the Bonds. Participating Underwriter. The term “Participating Underwriter” means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. 5.2.g Packet Pg. 320 2 4840-6621-6167v1/200928-0001 Rule. The term “Rule” means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. 3. Provision of Annual Reports. (a) The City shall provide not later than each April 1 following the end of its Fiscal Year (commencing April 1, 2022 with the Fiscal Year 2021 Annual Report) to EMMA an Annual Report relating to the immediately preceding Fiscal Year which is consistent with the requirements of Section 4 of this Disclosure Certificate, which Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate. (b) If the City is unable to provide to EMMA an Annual Report by the date required in subsection (a), the City shall sen d in a timely manner to EMMA a notice in the manner prescribed by the Municipal Securities Rulemaking Board. 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements of the City for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If 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, a nd the audited financial statements shall be filed in the same manner as the Annual Report when they come available. (b) To the extent not included in the audited financial statements provided pursuant to the foregoing Section 4(a), the Annual Report shall contain the following information as of the end of the prior Fiscal Year: (i) The principal amount of the Bonds outstanding; (ii) An update of the information in Tables 1, 2, 3 and 4 under the caption “CITY FINANCIAL INFORMATION” in the Official Statement. The items described above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to EMMA; provided, that if any document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board; and provided further, that the City shall clearly identify each such document so included by reference. 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) Business Days after the event: 1. principal and interest payment delinquencies; 5.2.g Packet Pg. 321 3 4840-6621-6167v1/200928-0001 2. unscheduled draws on debt service reserves reflecting financial difficulties; 3. unscheduled draws on credit enhancements reflecting financial difficulties; 4. substitution of credit or liquidity providers, or their failure to perform; 5. adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability or Notices of Proposed Issue (IRS Form 5701 TEB); 6. tender offers; 7. defeasances; 8. ratings changes; 9. bankruptcy, insolvency, receivership or similar proceedings. Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, o r if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person; and 10. default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties. (b) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not more than ten (10) Business Days after occurrence: 1. unless described in Section 5(a)(5), other notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other events affecting the tax status of the Bonds; 2. modifications to the rights of Bond holders; 3. Bond calls; 4. release, substitution or sale of property securing repayment of the Bonds; 5. non-payment related defaults; 5.2.g Packet Pg. 322 4 4840-6621-6167v1/200928-0001 6. the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the ass ets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; 7. appointment of a successor or additional trustee or the change of the name of a trustee; and 8. incurrence of a Financial Obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect security holders, if material. (c) If the City determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws, the City shall file a notice of such occurrence with EMMA in a timely manner not more than ten (10) Business Days after the event. 6. [Reserved]. 7. Termination of Obligation. The City’s obligations under this Disclosure Certificate with respect to the Bonds shall terminate u pon the legal defeasance, prior redemption or payment in full of all of the Bonds. If any 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 Secti on 5(c). 8. 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, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the Rule. 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination se t forth in this Disclosure Certificate or any other means of communication, or including any other information in any notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to incl ude any information in any notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall not thereby have any obligation under this Disclosure Certificate to update such information or include it in any future notice of occurrence of a Listed Event. 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate or any Holders 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 or the Lease Agreement, 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. No Holder or Beneficial Owner of the Bonds may institute such action, suit or proceeding to compel performance unless they shall have first delivered to the City satisfactory written evidence of 5.2.g Packet Pg. 323 5 4840-6621-6167v1/200928-0001 their status as such, and a written notice of and request to cure such failure, and the City shall have refused to comply therewith within a reasonable time. 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Participating Underwriter and Holders and Beneficial Owners from time to time of t he Bonds, and shall create no rights in any other person or entity. Dated: June __, 2021 CITY OF DIAMOND BAR By: City Manager 5.2.g Packet Pg. 324 Stradling Yocca Carlson & Rauth Draft of 4/26/21 4824-4135-2929v4/200928-0001 ESCROW AGREEMENT (2002 BONDS) By and Among CITY OF DIAMOND BAR, CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY and U.S. BANK NATIONAL ASSOCIATION, as Escrow Bank Dated as of June 1, 2021 Relating to CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY FIXED RATE LEASE REVENUE BONDS, 2002 SERIES A (COMMUNITY/SENIOR CENTER PROJECT) 5.2.h Packet Pg. 325 4824-4135-2929v4/200928-0001 ESCROW AGREEMENT (2002 BONDS) THIS ESCROW AGREEMENT (2002 BONDS), dated as of June 1, 2021 (the “Escrow Agreement”), by and among the City of Diamond Bar (the “City”), the City of Diamond Bar Public Financing Authority (the “Authority”) and U.S. Bank National Association, as escrow agent (the “Escrow Bank”) and as Prior Trustee (as such term is defined below), is entered into in accordance with resolutions of the City Council of the City and the Board of Directors of the Authority adopted on [May 4], 2021 and an Indenture, dated as of June 1, 2021 (the “Indenture”), by and among the City, the Authority and U.S. Bank National Association, as trustee, to refund the outstanding City of Diamond Bar Public Financing Authority Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (as shown on Schedule B, the “Refunded Bonds”), which were issued pursuant to an Indenture, dated as of December 1, 2002 (as amended by Amendment No. 1 thereto dated as of December 1, 2011, the “Prior Indenture”), by and between the City and U.S. Bank National Association, as successor trustee to MUFG Union Bank, N.A., formerly known as Union Bank of California, N.A., as trustee (the “Prior Trustee”). RECITALS A. Pursuant to the Prior Indenture, the Authority has previously issued the City of Diamond Bar Public Financing Authority Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) in the aggregate principal amount of $13,755,000, of which $7,830,000 of Refunded Bonds are currently outstanding. B. The Authority has determined to issue its City of Diamond Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A in the aggregate principal amount of $_____ (the “2021A Bonds”), a portion of the proceeds of which will be used to optionally redeem the Refunded Bonds on June __, 2021 (the “Redemption Date”) at a redemption price equal to 100% of the outstanding aggregate principal amount thereof, together with interest accrued on the Refunded Bonds through the Redemption Date (the “Redemption Price”), as required under the Prior Indenture. C. The City will irrevocably deposit with the Escrow Bank moneys (as permitted by, in the manner prescribed by, and all in accordance with the Prior Indenture), [which moneys will be used to purchase securities as described in Schedule A hereto (the “Federal Securities”)], which Federal Securities satisfy the criteria for “Authorized Investments” set forth in Sections 10.01(c) of the Prior Indenture, provided that the principal of and the interest o n the Federal Securities when paid will provide money which, together with the moneys deposited with the Escrow Bank at the same time pursuant to this Escrow Agreement, will be fully sufficient to pay and discharge the Refunded Bonds. In consideration of the mutual covenants and agreements herein contained, the City, the Authority and the Escrow Bank agree as follows: Deposit of Moneys. The Authority hereby deposits with the Escrow Bank $______, comprised of a portion of the net sale proceeds of the 2021A Bonds, and instructs the Prior Trustee to transfer to the Escrow Bank $_____, comprised of $____ held by the Prior Trustee in the ___ related to the Refunded Bonds, to be held in irrevocable escrow by the Escrow Bank separate and apart from all other securities, investments or moneys on deposit with the Escrow Bank, in a 5.2.h Packet Pg. 326 2 4824-4135-2929v4/200928-0001 fund hereby created and established and to be known as the “2002 Escrow Fund,” and to be applied solely as provided in this Escrow Agreement. The Authority represents that such moneys are at least equal to an amount sufficient to purchase the Federal Securities listed in Schedule A hereto, and to hold $___ uninvested as cash. Investment of Moneys. The Escrow Bank acknowledges receipt of the moneys described in Section 1 and agrees immediately to invest such moneys in the Federal Securities listed in Schedule A hereto and to deposit such Federal Securities in the 2002 Escrow Fund. The Escrow Bank shall be entitled to rely upon the conclusion of Robert Thomas CPA, LLC, Minneapolis, Minnesota (the “Verification Agent”), that the Federal Securities listed in Schedule A hereto mature and bear interest payable in such amounts and at such times as, toget her with cash on deposit in the 2002 Escrow Fund, will be sufficient to pay the Redemption Price of the Refunded Bonds on the Redemption Date. Investment of Any Remaining Moneys. At the written direction of the City or the Authority, the Escrow Bank shall reinvest any other amount of principal and interest, or any portion thereof, received from the Federal Securities prior to the date on which such payment is required for the purposes set forth herein, in noncallable Federal Securities maturing not later t han the date on which such payment or portion thereof is required for the purposes set forth in Section 5, as verified in a report prepared by an independent certified public accountant or firm of certified public accountants of favorable national reputati on experienced in the refunding of obligations of political subdivisions to the effect that the reinvestment described in said report will not adversely affect the sufficiency of the amounts of securities, investments and money in the 2002 Escrow Fund to pay the Redemption Price of the Refunded Bonds on the Redemption Date, and provided that the City has obtained and delivered to the Escrow Bank an unqualified opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, that such reinvestment will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Refunded Bonds. Any interest income resulting from investment or reinvestment of moneys pursuant to this Section 3 which is not required for the purposes set forth in Section 5, as verified in the letter of the Verification Agent originally obtained by the City with respect to the refunding of the Refunded Bonds or in any other report prepared by an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of tax - exempt obligations of political subdivisions, shall be paid to the City promptly upon the receipt of such interest income by the Escrow Bank. The determination of the City as to whether an accountant qualifies under this Escrow Agreement shall be conclusive. Substitution of Securities. Upon the written request of the City or the Authority, and subject to the conditions and limitations herein set forth and a pplicable governmental rules and regulations, the Escrow Bank shall sell, redeem or otherwise dispose of the Federal Securities, provided that there are substituted therefor from the proceeds of the Federal Securities other Federal Securities, but only after the City has obtained and delivered to the Escrow Bank: (i) an unqualified opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, to the effect that the substitution of securities is permitted under the legal documents in effect with re spect to the Refunded Bonds and that such reinvestment will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Refunded Bonds; and (ii) a report by a firm of independent certified public accountants to the effect that the reinvestment described in said report will not adversely affect the sufficiency of the amounts of securities, investments and money in the 2002 Escrow Fund to pay the Redemption Price of the Refunded Bonds on the Redemption Date. The Escrow Bank shall not be liable or responsible for any loss resulting from any 5.2.h Packet Pg. 327 3 4824-4135-2929v4/200928-0001 reinvestment made pursuant to this Escrow Agreement and in full compliance with the provisions hereof. Refunding of the Refunded Bonds. (a) Payment. From the maturing principal of the Federal Securities and the investment income and other earnings thereon and other moneys on deposit in the 2002 Escrow Fund, the Escrow Bank shall, on the Redemption Date, transfer the amounts on deposit in the 2002 Escrow Fund to the Prior Trustee to pay the Redemption Price of the Refunded Bonds on the Redemption Date. (b) Irrevocable Instructions to Provide Notice. The forms of the notices required to be mailed pursuant to Section 4.06 and Article X of the Prior Indenture are substantially in the forms attached hereto as Exhibits 1 and 2. The Prior Trustee has previously mailed a notice of redemption of the Refunded Bonds in accordance with Section 4.06 of the Prior Indenture and direction provided by the City and the Authority. The City and the Authority hereby irrevocably instruct the Prior Trustee to mail a notice of defeasance of the Refunded Bonds in accordance with Article X of the Prior Indenture, as required to provide for the defeasance of the Refunded Bonds in accordance with this Section 5, including to the Municipal Securities Rulemaking Board. (c) Unclaimed Moneys. Any moneys which remain unclaimed for two years after the Redemption Date shall be repaid by the Escrow Bank to the City. (d) Priority of Payments. The owners of the Refunded Bonds shall have a first and exclusive lien on all moneys and securities in the 2002 Escrow Fund until such moneys and such securities are used and applied as provided in this Escrow Agreement. (e) Termination of Obligation. As provided in the Prior Indenture, upon deposit of moneys with the Escrow Bank in the 2002 Escrow Fund as set forth in Section 1 hereof and the purchase of the various Federal Securities as provided in Section 2 hereof, all obligations of the City, the Authority and the Trustee with respect to all outstanding Refunded Bonds shall cease and terminate, except as set forth in the Prior Indenture, and the City’s obligations under the Lease (as such term is defined in the Prior Indenture) have terminated. Application of Certain Terms of the Prior Indenture. All of the terms of the Prior Indenture relating to notices to the Prior Trustee or the City, the making of payments of principal and interest on the Refunded Bonds and the exchange or transfer of the Refunded Bonds are incorporated in this Escrow Agreement as if set forth in full herein. The procedures set forth in Article VIII of the Prior Indenture relating to the resignation and removal and merger of the Prior Trustee under the Prior Indenture are also incorporated in this Escrow Agreement a s if set forth in full herein and shall be the procedures to be followed with respect to any resignation or removal of the Escrow Bank hereunder. Performance of Duties. The Escrow Bank agrees to perform the duties set forth herein and shall have no responsibility to take any action or omit to take any action not set forth herein. Escrow Bank’s Authority to Make Investments. Except as provided in Sections 2, 3 and 4 hereof, the Escrow Bank shall have no power or duty to invest any funds held 5.2.h Packet Pg. 328 4 4824-4135-2929v4/200928-0001 under this Escrow Agreement or to sell, transfer or otherwise dispose of the moneys or Federal Securities held hereunder. Indemnity. The City and the Authority hereby assume liability for, and hereby agree (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and keep harmless the Escrow Bank and its respective successors, assigns, directors, agents, employees and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, the Escrow Bank at any time (whether or not also indemnified against the same by the City, the Authority or any other person under any other agreement or instrument, but without double indemnity) in any way relating to or arising out o f the execution, delivery and performance of this Escrow Agreement, the establishment hereunder of the 2002 Escrow Fund, the acceptance of the funds deposited therein, the acceptance of the securities deposited therein, the retention of the proceeds thereof and any payment, transfer or other application of moneys by the Escrow Bank in accordance with the provisions of this Escrow Agreement; provided, however, that the City and the Authority shall not be required to indemnify the Escrow Bank against the Escr ow Bank’s own negligence or willful misconduct or the negligent or willful misconduct of the Escrow Bank’s respective agents and employees or the breach by the Escrow Bank of the terms of this Escrow Agreement. In no event shall the City, the Authority or the Escrow Bank be liable to any person by reason of the transactions contemplated hereby other than to each other as set forth in this Section. The indemnities contained in this Section shall survive the termination of this Escrow Agreement. Responsibilities of the Escrow Bank. The Escrow Bank and its respective successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort, contract or otherwise, in connection with the execution and delivery of this Escrow Agre ement, the establishment of the 2002 Escrow Fund, the acceptance of the moneys or securities deposited therein, the retention of the Federal Securities or the proceeds thereof, the sufficiency of the Federal Securities to pay the Refunded Bonds or any payment, transfer or other application of moneys or obligations by the Escrow Bank in accordance with the provisions of this Escrow Agreement or by reason of any non-negligent act, non-negligent omission or non-negligent error of the Escrow Bank made in good faith in the conduct of its duties. The recitals of fact herein shall be taken as the statements of the City and the Authority, and the Escrow Bank assumes no responsibility for the correctness thereof. The Escrow Bank makes no representation as to the su fficiency of the funds deposited in the 2002 Escrow Fund to accomplish the refunding of the Refunded Bonds on the Redemption Date or to the validity of this Escrow Agreement as to the City or the Authority and, except as otherwise provided herein, the Escrow Bank shall incur no liability with respect thereto. The Escrow Bank shall not be liable in connection with the performance of its duties under this Escrow Agreement except for its own negligence or willful misconduct, and the duties and obligations of the Escrow Bank shall be determined by the express provisions of this Escrow Agreement. The Escrow Bank may consult with counsel, who may or may not be counsel to the City or the Authority, and in reliance upon the written opinion of such counsel shall ha ve full and complete authorization and protection with respect to any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Bank shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting any action under this Escrow Agreement, such matter may be deemed to be conclusively established by a certificate signed by an authorized officer of the City or the Authority. 5.2.h Packet Pg. 329 5 4824-4135-2929v4/200928-0001 The liability of the Escrow Bank to make the payments required by this Escrow Agreement shall be limited to the moneys in the 2002 Escrow Fund. No provision of this Escrow Agreement shall require the Escrow Bank to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. The Escrow Bank shall not be liable for the accuracy of any calculations provided herein. Any company into which the Escrow Bank may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Escrow Bank may sell or transfer all or substantially all of its corporate trust business shall be the successor to the Escrow Bank without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. The City shall pay the Escrow Bank full compensation for its duties under this Escrow Agreement, including out-of-pocket costs such as publication costs, redemption or redemption expenses, legal fees and other costs and expenses relating hereto. Under no circumstances shall amounts deposited in the 2002 Escrow Fund be deemed to be available for said purposes. The Escrow Bank may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and shall not be responsible for any willful misconduct or negli gence on the part of any agent, attorney, custodian or nominee so appointed. The Escrow Bank agrees to accept and act upon instructions or directions pursuant to this Escrow Agreement sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that, the Escrow Bank shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the City or the Authority elect to give the Escrow Bank e-mail or facsimile instructions (or instructions by a similar electronic method) and the Escrow Bank in its discretion elects to act upon such instructions, the Escrow Bank’s understanding of such instructions shall be deemed controlling. The Escrow Bank shall not be liable for any losses, costs or expenses arising directly or indirectly from the Escrow Bank’s reliance upon and compliance with such instructions notwithstanding that such instructions conflict or are inconsistent with a subsequent written instruction. The City and the Authority agree to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Escrow Bank, including without limitation the risk of the Escrow Bank acting on unauthorized instructions, and the risk of interception and misuse by third parties. Amendments. This Escrow Agreement is made for the benefit of the City, the Authority and the holders from time to time of the Refunded Bonds and it shall not be repealed, revoked, altered or amended without the written consent of all such holders, the Escrow Bank, the Authority and the City, as defined in the Indenture; provided, however, but only after the receipt by the Escrow Bank of an opinion of nationally recognized bond counsel that the exclusion from gross income of interest on the Refunded Bonds will not be adve rsely affected for federal income tax purposes, the City, the Authority and the Escrow Bank may, without the consent of, or notice to, such holders, amend this Escrow Agreement or enter into such agreements supplemental to this Escrow 5.2.h Packet Pg. 330 6 4824-4135-2929v4/200928-0001 Agreement as shall not adversely affect the rights of such holders and as shall not be inconsistent with the terms and provisions of this Escrow Agreement for any one or more of the following purposes: (i) to cure any ambiguity or formal defect or omission in this Escrow Agree ment; (ii) to grant to, or confer upon, the Escrow Bank for the benefit of the holders of the Refunded Bonds any additional rights, remedies, powers or authority that may lawfully be granted to, or conferred upon, such holders or the Escrow Bank; and (iii) to include under this Escrow Agreement additional funds, securities or properties. The Escrow Bank shall be entitled to rely conclusively upon an unqualified opinion of nationally recognized bond counsel with respect to compliance with this Section, including the extent, if any, to which any change, modification, addition or elimination affects the rights of the holders of the Refunded Bonds or that any instrument executed hereunder complies with the conditions and provisions of this Section. Term. This Escrow Agreement shall commence upon its execution and delivery and shall terminate on the later to occur of either: (i) the date upon which the Refunded Bonds have been paid in accordance with this Escrow Agreement; or (ii) the date upon which no unclaimed moneys remain on deposit with the Escrow Bank and all amounts owed to the Escrow Bank shall have been paid in full. Any unclaimed money which remains in the 2002 Escrow Fund for two years from the date upon which the Refunded Bonds have been paid in acc ordance with this Escrow Agreement shall be remitted by the Escrow Bank to the City. Compensation. The Escrow Bank shall receive its reasonable fees and expenses as agreed to and any other reasonable fees and expenses of the Escrow Bank approved by the City; provided, however, that under no circumstances shall the Escrow Bank be entitled to any lien nor will it assert a lien whatsoever on any moneys or obligations in the 2002 Escrow Fund for the payment of fees and expenses for services rendered by the Escrow Bank under this Escrow Agreement. Severability. If any one or more of the covenants or agreements provided in this Escrow Agreement on the part of the City, the Authority or the Escrow Bank to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements shall be null and void and shall be deemed separate from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Escrow Agreement. Counterparts. This Escrow Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. Governing Law. This Escrow Agreement shall be construed under the laws of the State of California. Holidays. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Escrow Agreement, shall be a legal holiday or a day on which banking institutions in the state in which is located the principal office of the Escrow Bank are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are authorized by law to remain closed, with the same force and effect as if done on the nominal date provided in this Escrow Agreement, and no interest shall accrue for the period from and after such nominal date. 5.2.h Packet Pg. 331 7 4824-4135-2929v4/200928-0001 Assignment. This Escrow Agreement shall not be assigned by the Escrow Bank or any successor thereto without the prior written consent of the City and the Authority. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 5.2.h Packet Pg. 332 S-1 4824-4135-2929v4/200928-0001 IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed by their duly authorized officers and attested as of the date and year first written above. CITY OF DIAMOND BAR By: Mayor ATTEST: City Clerk CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Chair ATTEST: Secretary [SIGNATURES CONTINUED ON NEXT PAGE.] 5.2.h Packet Pg. 333 S-2 4824-4135-2929v4/200928-0001 [SIGNATURE PAGE CONTINUED.] U.S. BANK NATIONAL ASSOCIATION, as Escrow Bank and as Prior Trustee By: Name: Title: 5.2.h Packet Pg. 334 A-1 4824-4135-2929v4/200928-0001 SCHEDULE A FEDERAL SECURITIES Security Maturity Principal Amount Interest Rate [__] June __, 2021 $ [__] [__]% ESCROW REQUIREMENTS Period Ending Principal Interest Principal Redeemed Total June __, 2021 $[__] $ [__] $ [__] $ [__] 5.2.h Packet Pg. 335 B-1 4824-4135-2929v4/200928-0001 SCHEDULE B REFUNDED BONDS The Refunded Bonds are described in the below table: Principal Payment Date (June 1) Outstanding Principal Amount Interest Rate CUSIP® (25256P) 2022 $ 505,000 5.000% AM4 2023 530,000 5.000 AN2 2024 555,000 3.875 AP7 2025 580,000 4.000 AQ5 2026 610,000 4.125 AR3 2030 2,735,000 4.500 AS1 2033 2,315,000 4.750 AT9 TOTAL $7,830,000 5.2.h Packet Pg. 336 1-1 4824-4135-2929v4/200928-0001 EXHIBIT 1 CONDITIONAL NOTICE OF FULL OPTIONAL REDEMPTION CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY FIXED RATE LEASE REVENUE BONDS, 2002 SERIES A (COMMUNITY/SENIOR CENTER PROJECT) BASE CUSIP 25256P NOTICE IS HEREBY GIVEN to the owners of the above -captioned bonds (the “Bonds”) pursuant to the Indenture, dated as of December 1, 2002 (as amended by Amendment No. 1 thereto, dated as of December 1, 2011, the “Indenture”), by and between the City of Diamond Bar Public Financing Authority (the “Authority”) and U.S. Bank National Association, as successor trustee to MUFG Union Bank, N.A. (the “Trustee”), that outstanding Bonds in the principal amount of $7,830,000 have been called for redemption on June __, 2021 (the “Redemption Date”). The Bonds to be called, which were originally issued on December 19, 2002, are described in the below table and referred to herein as the “Refunded Bonds”: Principal Payment Date (June 1) Outstanding Principal Amount Interest Rate CUSIP® 2022 $ 505,000 5.000% AM4 2023 530,000 5.000 AN2 2024 555,000 3.875 AP7 2025 580,000 4.000 AQ5 2026 610,000 4.125 AR3 2030 2,735,000 4.500 AS1 2033 2,315,000 4.750 AT9 TOTAL $7,830,000 The Refunded Bonds will be payable on the Redemption Date at a redemption price of 100% of the principal amount thereof plus accrued interest thereon to such date (the “Redemption Price”). The Redemption Price of the Refunded Bonds to be redeemed will become due and payable on the Redemption Date. From and after the Redemption Date, interest on the Refunded Bonds to be redeemed will cease to accrue on and after the Redemption Date, and such Refunded Bonds will be surrendered to the Trustee. Redemption of the Refunded Bonds is conditional upon the receipt by the Trustee on or prior to the Redemption Date of moneys that are sufficient to pay the principal of and interest on the Refunded Bonds and, if such moneys have not been so received, this notice shall be of no force and effect and the Trustee shall not be required to redeem such Bonds . In such event, the Trustee has the right to rescind this notice. To receive payment on the Redemption Date, owners of the Refunded Bonds should present and surrender said Refunded Bonds on the Redemption Date at the address of the Trustee set forth below: 5.2.h Packet Pg. 337 1-2 4824-4135-2929v4/200928-0001 Delivery Instructions U.S. Bank National Association Global Corporate Trust c/o MUFG Union Bank, N.A. 445 South Figueroa Street, 8th Floor Los Angeles, California 90071 REQUIREMENT INFORMATION For a list of redemption requirements please visit our website at www.usbank.com/corporatetrust and click on the “Bondholder Information” link for Redemption instructions. You may also contact our Bondholder Communications team at 1 -800-934-6802 Monday through Friday from 8 AM to 6 PM CST. IMPORTANT NOTICE Federal law requires the Trustee to withhold taxes at the applicable rate from the payment if an IRS Form W-9 or applicable IRS Form W-8 is not provided. Please visit www.irs.gov for additional information on the tax forms and instructions. If the Owner of any Refunded Bond that is subject to optional redemption fails to deliver such Refunded Bond to the Trustee on the Redemption Date, such Refunded Bond shall nevertheless be deemed redeemed on the Redemption Date and the Owner of such Refunded Bond shall have no rights in respect thereof except to receive payment of the Redemption Price from funds held by the Trustee for such payment. Note: The City of Diamond Bar, the Authority and the Trustee shall not be responsible for the selection or use of the CUSIP numbers selected, nor is any representation made as to their correctness in the notice or as printed on any Bond. They are included solely for the convenience of the holders. By: U.S. BANK NATIONAL ASSOCIATION, as successor trustee to MUFG UNION BANK, N.A. Dated: May __, 2021. 5.2.h Packet Pg. 338 2-1 4824-4135-2929v4/200928-0001 EXHIBIT 2 NOTICE OF DEFEASANCE CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY FIXED RATE LEASE REVENUE BONDS, 2002 SERIES A (COMMUNITY/SENIOR CENTER PROJECT) BASE CUSIP 25256P Notice is hereby given to the owners of the outstanding obligations which are captioned above (the “2002 Bonds”) that: (i) there have been deposited with U.S. Bank National Association, as trustee (the “Trustee”) under the Indenture, dated as of December 1, 2002 (as amended by Amendment No. 1 thereto, dated as of December 1, 2011, the “Indenture”), by and between the City of Diamond Bar Public Financing Authority (the “City”) and the Trustee, moneys and Authorized Investments as permitted by the Indenture that are sufficient and available to redeem the 2002 Bonds on June __, 2021 at a Redemption Price equal to 100% of the aggregate principal amount of such 2002 Bonds plus accrued interest thereon; (ii) all obligations of the City, the Authority and the Trustee with respect to such 2002 Bonds shall cease and terminate, except as set forth in the Indenture; and (iii) all obligations of the City under the Continuing Disclosure Certificate relating to the 2002 Bonds, dated December 1, 2011, executed by the City, have ceased and terminated. The 2002 Bonds to be refunded, which were originally issued on December 19, 2011, are described in the below table: Principal Payment Date (June 1) Outstanding Principal Amount Interest Rate CUSIP® 2022 $ 505,000 5.000% AM4 2023 530,000 5.000 AN2 2024 555,000 3.875 AP7 2025 580,000 4.000 AQ5 2026 610,000 4.125 AR3 2030 2,735,000 4.500 AS1 2033 2,315,000 4.750 AT9 TOTAL $7,830,000 No representation is made as to the correctness of the CUSIP number either as printed on any 2002 Bond or as contained herein and any error in the CUSIP number shall not affect the validity of the proceedings for redemption of the 2002 Bonds. Dated: June __, 2021. CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY U.S. BANK NATIONAL ASSOCIATION, as Trustee 5.2.h Packet Pg. 339 Agenda #: 1 Meeting Date: May 4, 2021 TO: Honorable Chair and Members of the Public Financing Authority FROM: Daniel Fox, City Manager TITLE: PUBLIC FINANCING AUTHORITY MEETING MINUTES. STRATEGIC GOAL: Open, Engaged & Responsive Government RECOMMENDATION: Approve the April 20, 2021 meeting minutes. FINANCIAL IMPACT: None. BACKGROUND: The minutes of the Public Financing Authority meeting on April 20, 2021 have been prepared and are being presented for approval. PREPARED BY: 1 Packet Pg. 340 REVIEWED BY: Attachments: 1. 1.a April 20, 2021 Public Financing Authority Minutes 1 Packet Pg. 341 CITY OF DIAMOND BAR MINUTES OF THE PUBLIC FINANCING AUTHORITY REGULAR MEETING APRIL 20, 2021 Consistent with COVID-19 regulations, all Authority Members and staff participated via teleconference and there was no physical location for public attendance. The Public was invited to join the meeting online or by phone at the numbers printed on the agenda. 1. CALL TO ORDER: Chairman Chou called the meeting to order at 6:41 p.m. 2. ROLL CALL: Authority Members Liu, Low, Lyons, VC/Tye, and Chair/Chou Staff participating telephonically: Dan Fox, City Manager; Dave DeBerry, City Attorney; Ryan McLean, Assistant City Manager; Anthony Santos, Assistant to the City Manager; Ryan Wright, Parks and Recreation Director; David Liu, Public Works Director; Hal Ghafari, Public Works Manager/Assistant City Engineer; Fabian Aoun, Assistant Engineer; Greg Gubman, Community Development Director; Grace Lee, Senior Planner; Brent Mason, Interim Director of Finance; Amy Haug, Human Resources and Risk Manager; Ken De sforges, Director of Information Services; Marsha Roa, Public Information Manager; Cecilia Arellano, Public Information Coordinator; Kristina Santana, City Clerk Also Present: Captain Stephen Tousey, LA County Sheriff’s Department. 3. PUBLIC COMMENTS: NONE 4. CONSENT CALENDAR: AM/Lyons moved, AM/Liu seconded, to approve the Consent Calendar as presented. Motion carried by the following Roll Call vote: AYES: AUTHORITY MEMBERS: Liu, Low, Lyons, VC/Tye, Chair/Chou NOES: AUTHORITY MEMBERS: None ABSENT: AUTHORITY MEMBERS: None 4.1 APPROVED PUBLIC FINANCING AUTHORITY MINUTES – Special Meeting of April 6, 2021 – As submitted. 5. PUBLIC HEARINGS: NONE 6. AUTHORITY MEMBER COMMENTS: NONE 7. ADJOURNMENT: With no further business to conduct, Chair/Chou adjourned the Public Financing Authority Regular Meeting at 6:46 p.m. back to the Regular City Council meeting. 1.a Packet Pg. 342 APRIL 20, 2021 PAGE 2 PUBLIC FINANCE AUTHORITY Respectfully submitted, __________________________ Kristina Santana, City Clerk The foregoing minutes are hereby approved this 4th day of May, 2021. __________________________ Andrew Chou, Chair 1.a Packet Pg. 343 Agenda #: 2 Meeting Date: May 4, 2021 TO: Honorable Chair and Members of the Public Financing Authority FROM: Daniel Fox, City Manager TITLE: 2021 LEASE REVENUE REFUNDING BONDS (DIAMOND BAR CENTER). STRATEGIC GOAL: Responsible Stewardship of Public Resources RECOMMENDATION: Adopt Resolution No. PFA 2021-03 approving the legal documents for the issuance of City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A (“2021 Bonds”), authorizing the execution of the necessary documents and certificates, and other related actions. FINANCIAL IMPACT: The refunding will result in annual savings to the City of Diamond Bar (“the City”) in the form of reduced debt service payments. Current annual debt service ranges from $857,000 to $878,000 per year, including both principal and interest. The current favorable environment in which these refunding bonds will be issued is anticipated to reduce the annual debt service to a range of $709,000 to $726,000. This will generate annual savings of approximately $150,000 per year for the 12-year remaining life of the bonds. The calculated net present value savings of the transaction are estimated to be in excess of $1,700,000. The final savings will be determined upon the completion of the pricing of the 2021 Bonds. The annual debt service is made through an annual appropriation of resources within the General Fund, and these savings will accrue directly to the benefit of the General Fund. The bonds are scheduled to be fully repaid on June 1, 2033. BACKGROUND: The Public Financing Authority staff report, resolution, and accompanying documents 2 Packet Pg. 344 are very similar to the previous City Council Item as required for the transaction. The only substantive difference is the Authority is approving an Assignment Agreement (Attachment 7) and the Authority will not enter into a continuing disclosure certificate. On December 19, 2002, the Diamond Bar Public Financing Authority (“Authority”) issued the 2002 Variable Rate Lease Revenue Bonds (“2002 Bonds”) in the amount of $13,755,000 to finance the acquisition and construction of the community/senior center commonly known as the Diamond Bar Center (DBC). In conjunction with the sale of the 2002 Bonds, on December 2, 2002, the Authority executed a rate swap agreement to manage the overall interest cost on the bonds. These bonds were restructured in 2011 converting the weekly variable rate structure to a fixed rate. The restructured 2002 Bonds are currently outstanding in the amount of $8,315,000. The scheduled principal payment of $485,000 due on June 1, 2021 will be made from funds on hand, reducing the outstanding amount being refunded to $7,830,000. The transaction is being proposed to take advantage of favorable market conditions that will enable the City to achieve lower interest costs as it continues to pay down the balance of the bonds. The savings will be discussed in the analysis section below. The Resolution before the Authority (Attachment 1) will authorize staff to refinance the bonds described above, generating savings for the General Fund. Pursuant to the documents associated with the 2021 Bonds, the City will enter into lease/leaseback transactions with the Authority. The bonds will be issued by the Authority with repayment being made from lease payments made by the City based on its lease for the use of the DBC from the Authority. The City leases the DBC to, and then leases it back, from the Authority in order to facilitate the legal structure of the transaction originally executed in 2002 (including the same leased asset (the DBC) that is currently securing the 2002 Bonds) and continuing today for the proposed refinancing transaction. When the full debt service for the bonds has been repaid, the City’s title to the DBC will be unencumbered by the lease and leaseback. ANALYSIS: Associated with the COVID-19 pandemic, municipal interest rates have improved to near record low levels creating a particularly favorable bond sale environment. Based on this favorable interest rate environment, it is prudent to place the City in position to refinance the 2002 Bonds to capture the estimated savings at this time. The plan of finance would involve issuing approximately $6,675,000 in new lease revenue bonds to refinance the existing 2002 Bonds and pay for issuance cost s. The 2021 Bonds maintain the same repayment term as the Prior Obligations —there is no extension to the term of the City’s debt . The financing team anticipates selling approximately $6,675,000 in bonds using a “premium” structure which will generate additional proceeds beyond the par (face) amount of the bonds. This is because the interest coupon on the bonds is higher than current market rates. The “higher than market” interest payments are then offset by the premiums received and interest charged on a lower par amount of bonds needed to generate the $7,839,852 required to 2 Packet Pg. 345 retire the 2002 Bonds. In this way, issuing new bonds in the principal amount of approximately $6,675,000 will generate sufficient proceeds to repay the larger outstanding amount of the 2002 Bonds of $7,830,000 in June 2021. Based on current interest rates, issuing the 2021 Bonds can save the City an estimated $1,800,000 of gross cash flow savings over the remaining life of the 2002 Bonds. As noted above, the 2021 Bonds do not extend the term of the existing debt. The net present value savings for the 2021 Bonds, which are the savings AFTER paying for all costs of issuance on the 2021 Bonds, are projected to be approximately $1,700,000 (or nearly 22% of the refunded bond amount). “Net present value savings” represents the annual cash flow savings in “today’s dollars.” Typically, municipal issuers set a minimum net present value savings goal equal to at least 3% of the refunded bond amount to determine if a refinancing is worthwhile to pursue. The projected net present value savings of nearly 22% certainly exceed that typical savings goal. The City’s General Fund credit currently has an “AA+” rating from Standard & Poor’s. It is expected that the upcoming 2021 Bonds will receive t he same rating based on the stable credit characteristics of the City. This rating should enable the City’s underwriter to sell the 2021 Bonds at favorable interest rates from investors relative to many other bonds that are currently being sold in the municipal market. Further, the strong rating allows the financing to be completed without the need to purchase bond insurance, which will further reduce the overall cost of the financing. In addition, similar to the 2002 Bonds being refunded, the transaction’s structure does not include a debt service reserve fund, saving additional costs with the refinancing. All costs of issuance associated with the transaction will be paid for from the issuance of the 2021 Bonds. Depending on market conditions, the 2021 Bonds are scheduled to be sold the week of May 12, 2021 with an expected closing date of June 9, 2021. This represents an extended closing schedule which will minimize the cost of the escrow required to hold the funds between closing and actual repayment o f the 2002 Bonds. This structure will enable a cash funded escrow rather than having to purchase securities and hire an Escrow Verification Agent. As required by Government Code section 5852.1, Exhibit A to the Resolution includes information providing a good faith estimate of: (1) the true interest cost of the 2021 Bonds, (2) the finance charge of the 2021 Bonds (the sum of all fees and charges paid to third parties), (3) the estimated amount of proceeds and any reserves or capitalized interest (none for this transaction) and (4) the estimated total debt service on the 2021 Bonds. Documents being authorized with approval of the Resolution : Approval of the Resolution will accomplish the following: • Approves the form of the following documents (attached), allowing designated Authorized Officers to execute such documents provided the final terms are consistent with certain parameters established in the Resolution: 2 Packet Pg. 346 o Ground Lease (Attachment 2) o Lease Agreement (Attachment 3) o Indenture (Attachment 4) o Bond Purchase Agreement (Attachment 5) o Preliminary Official Statement (Attachment 6) o Assignment Agreement (Attachment 7) o Escrow Agreement (Attachment 8) • Approves the appointment of an underwriter, Raymond James and Associates, Inc., to price and sell the bonds (City Council previously approved retention of the Financial Advisor and Bond Counsel). • Authorizes staff to take certain other actions, including terminating the recorded lease documents for the 2002 Bonds, delivering redemption instructions for the 2002 Bonds to the 2002 Bond trustee and obtaining title insurance on the DBC for the benefit of the 2021 Bondholders. LEGAL REVIEW: The City Attorney and/or Special Bond Counsel has approved the Resolution and related legal documents as to form. PREPARED BY: REVIEWED BY: Attachments: 1. 2.a Resolution No. PFA 2021-03, 2021 Lease Revenue Bonds (2002 Refunding) 2. 2.b Ground Lease, 2021 Lease Revenue Bonds (2002 Refunding) 3. 2.c Lease Agreement, 2021 Lease Revenue Bonds (2002 Refunding) 4. 2.d Indenture, 2021 Lease Revenue Bonds (2002 Refunding) 2 Packet Pg. 347 5. 2.e Bond Purchase Agreement, 2021 Lease Revenue Bonds (2002) Refunding) 6. 2.f Preliminary Official Statement, 2021 Lease Revenue Bonds (2002 Refunding) 7. 2.g Assignment Agreement, 2021 Lease Revenue Bonds (2002 Refunding) 8. 2.h Escrow Agreement (2002 Bonds) 2 Packet Pg. 348 RESOLUTION NO. PFA 2021-03 A RESOLUTION OF THE CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY AUTHORIZING THE EXECUTION AND DELIVERY OF A GROUND LEASE, LEASE AGREEMENT, INDENTURE, BOND PURCHASE AGREEMENT, ASSIGNMENT AGREEMENT AND ESCROW AGREEMENT IN CONNECTION WITH THE ISSUANCE OF CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A, APPROVING THE ISSUANCE OF SUCH BONDS IN AN AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $8,000,000, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH BONDS AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND CERTIFICATES AND RELATED ACTIONS The Board of Directors of the City of Diamond Bar Public Financing Authority does hereby find, order and resolve as follows: SECTION 1. Recitals. A. The City of Diamond Bar (the “City”), a municipal corporation and general law city that is located in Los Angeles County, California, is a member of the City of Diamond Bar Public Financing Authority (the “Authority”), a joint exercise of powers authority. B. In 2002, the City caused the Authority to issue its Variable Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (the “Original 2002 Bonds”) in order to finance certain capital improvements of the City, consisting primarily of a community/senior center in Summitridge Park (the “2002 Project”). C. In 2012, the City caused the Authority to effect: (i) a mandatory tender of the Original 2002 Bonds; (ii) a conversion of the Original 2002 Bonds to a fixed interest rate; and (iii) a remarketing of the Original 2002 Bonds at a fixed interest rate (such remarketed Original 2002 Bonds, which were redesignated as the City of Diamond Bar Public Financing Authority Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project), the “2002 Bonds”). D. The 2002 Bonds are currently outstanding in the aggregate principal amount of $8,315,000, of which $485,000 in principal amount is coming due on June 1, 2021 and will be paid by the City as regularly scheduled. E. The Authority and the City have determined that it would be in the best interests of the City and residents of the City to authorize the preparation, sale and delivery of the “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A” (the “Bonds”) for the purposes of redeeming the 2002 Bonds maturing after June 1, 2021 and refinancing the 2002 Project. 2.a Packet Pg. 349 PFA Resolution No. 2021-03 2 F. The 2002 Project constitutes “public capital improvements” within the meaning of the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code (the “Act”), all of which are or shall be located within the boundaries of the City. G. In order to facilitate the issuance of the Bonds, the City and the Authority desire to enter into a Ground Lease (the “Ground Lease”) pursuant to which the City will lease certain real property of the City (which real property consist s of the 2002 Project and the associated land), as described in the Ground Lease (collectively, the “Leased Assets”)), to the Authority, and a Lease Agreement (the “Lease Agreement”), pursuant to which the City will lease the Leased Assets back from the Authority, and pay certain Base Rental Payments (as such term is defined in the Lease Agreement), which are pledged to the owners of the Bonds by the Authority pursuant to an Indenture, by and among U.S. Bank National Association (the “Trustee”), the City and the Authority (the “Indenture”). H. The Authority and the Trustee desire to enter into an Assignment Agreement (the “Assignment Agreement”) in order to provide, among other things, that all rights to receive the Base Rental Payments payable under the Lease Agreement be assigned without recourse by the Authority to the Trustee. I. In order to effect the redemption of the 2002 Bonds, the City, the Authority and the Trustee desire to enter into an Escrow Agreement (2002 Bonds) (the “Escrow Agreement”). J. The City and the Authority desire to undertake a negotiated sale of the Bonds to Raymond James & Associates, Inc., as the underwriter of the Bonds (the “Underwriter”), pursuant to a purchase agreement by and among the City, the Authority and the Underwriter (the “Bond Purchase Agreement”). K. Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”) requires that, in order to offer the Bonds for sale to the public, the Underwriter must receive a disclosure document with respect to the B onds and the City. L. In order to cause such requirement to be satisfied, the City and the Authority have prepared a Preliminary Official Statement (the “POS”) in connection with the issuance of the Bonds. M. In compliance with California Government Code Section 5852.1, the Authority has obtained from the Underwriter and the Authority’s municipal advisor required good faith estimates relating to the Bonds, and such estimates are disclosed and set forth in Exhibit A attached hereto. N. The 2002 Project is located within the boundaries of the City. O. The Board of Directors has been presented with the form of each document that is referred to herein relating to the refinancing that is contemplated hereby, and the 2.a Packet Pg. 350 PFA Resolution No. 2021-03 3 Board of Directors has examined and approved each document and desires to authorize and direct the execution of such documents and the consummation of such refinancing . P. All acts, conditions and things that are required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the refinancing that are authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the Authority is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such refinancing for the purpose, in the manner and upon the terms herein provided. SECTION 2. Findings. The Board of Directors hereby approves the refinancing that is described in this Resolution and further finds and determines that there are significant public benefits to the citizens of the City through the approval of the issuance of the Bonds by the Authority pursuant to the Act and otherwise hereunder within the meaning of Section 6586(a) through (d), inclusive, of the Act, in that the issuance o f the Bonds by the Authority and related transactions will result in demonstrable savings in effective interest rate to the City. SECTION 3. Approval of Lease Documents. The forms of Ground Lease and Lease Agreement presented at this meeting are hereby approved, and the Chair of the Authority, the Vice Chair of the Authority and the Executive Director of the Authority, or their respective designees (collectively, the “Authorized Officers”), are each hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Ground Lease and the Lease Agreement in substantially said forms, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that: (a) the term of the Ground Lease and the Lease Agreement shall terminate no la ter than June 1, 2033 (provided that such term may be extended as provided therein); and (b) the true interest cost applicable to the interest components of the Base Rental Payments under the Lease Agreement shall not exceed 3.00%. SECTION 4. Approval of Indenture. The form of Indenture presented at this meeting is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Indenture in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 5. Approval of Bond Purchase Agreement. The form of Bond Purchase Agreement presented at this meeting is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Bond Purchase Agreement in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and 2.a Packet Pg. 351 PFA Resolution No. 2021-03 4 delivery thereof; provided, however, that the Underwriter’s discount shall not exceed 0.50% of the principal amount of the Bonds. SECTION 6. Approval of POS. The form of POS presented at this meeting, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the POS in connection with the offering and sale of the Bonds is hereby authorized and approved. Each Authorized Officer is hereby authorized to certify on behalf of the Authority that the POS is deemed final as of its date within the meaning of Rule 15c2-12 (except for the omission of certain final pricing, rating and related information as permitted by Rule 15c2-12). The Authorized Officers are each hereby authorized and directed to furnish, or cause to be furnished, to prospective bidders for the Bonds a reasonable number of copies of the POS. SECTION 7. Authorization of Official Statement. The preparation and delivery of an Official Statement, and its use in connection with the offering and sale of the Bonds, is hereby authorized and approved. The Official Statement shall be in substantially the form of the POS, with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. The Authorized Officers are each hereby authorized and directed, for and in the name of and on behalf of the Authority, to execute the final Official Statement and any amendment or supplement thereto for and in the name and on behalf of the Authority. SECTION 8. Approval of Assignment Agreement. The form of Assignment Agreement presented at this meeting is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Assignment Agreement in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 9. Approval of Escrow Agreement. The form of Escrow Agreement presented at this meeting is hereby approved, an d the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Escrow Agreement in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 10. Further Action. The Authorized Officers are hereby authorized, empowered and directed, individually, to execute such other documents in addition to those enumerated herein and to take such other actions as each deems necessary or advisable in order to consummate the issuance of the Bonds and the redemption of the 2002 Bonds (including, but not limited to, causing terminations of or amendments to the lease documents related to the 2002 Bonds to be recorded in the Office of the Los Angeles County Recorder, causing the Indenture, the Assignment Agreement, the Lease Agreement and the Ground Lease, or memoranda thereof, to be recorded in the Office of 2.a Packet Pg. 352 PFA Resolution No. 2021-03 5 the Los Angeles County Recorder, causing one or more title insurance policies to be issued relating to the Leased Assets and d elivering instructions to the title company with respect thereto, executing an escrow or redemption notices and/or instructions to be delivered in connection with the redemption of the 2002 Bonds, approving changes to the name and/or series designation of the Bonds to reflect the timing of the issuance of the Bonds or otherwise and entering into a commitment for municipal bond insurance or a debt service reserve fund insurance policy if determined to be in the best interest of the City). Such actions heretofore taken by the Authorized Officers or their designees are hereby ratified, confirmed and approved. SECTION 11. Special Services. Stradling Yocca Carlson & Rauth, a Professional Corporation is hereby appointed to serve as Bond Counsel and Disclosure Coun sel with respect to the Bonds and Fieldman, Rolapp & Associates, Inc. is hereby appointed to serve as the Authority’s Municipal Advisor. Each of the Authorized Officers is further authorized to provide for all other services that are necessary to effect the matters that are described in this Resolution. Such services shall include, but not be limited to, legal services, trustee services, title insurance services, escrow verification services and any other services that are deemed appropriate by an Authorized Officer. Any one of the Authorized Officers is authorized to pay for the cost of such services and to enter into agreements as needed to engage such consultants. SECTION 12. Attestations. The Secretary and such person or persons as may have been designated by the Secretary to act on the Secretary’s behalf, are hereby authorized and directed to attest the signature of the Authorized Officers designated herein to execute any documents described herein, an d to affix and attest the seal of the City, as may be required or appropriate in connection with the execution and delivery of the documents that are described herein. SECTION 13. Effect. This Resolution shall take effect from and after its date of adoption. SECTION 14. Certification. The Secretary shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions PASSED, APPROVED, and ADOPTED on this 4th day of May, 2021. _______________________________ Andrew Chou, Chair 2.a Packet Pg. 353 PFA Resolution No. 2021-03 6 ATTEST: I, Kristina Santana, Secretary of the City of Diamond Bar Public Financing Authority, do hereby certify that the foregoing Resolution was duly and regularly passed and adopted by the City of Diamond Bar Public Financing Authority, at its Regular Meeting held on the 4th day of May, 2021, by the following vote: AYES: AUTHORITY MEMBERS: NOES: AUTHORITY MEMBERS: ABSENT: AUTHORITY MEMBERS: ABSTAIN: AUTHORITY MEMBERS: ________________________________ Kristina Santana, Authority Secretary 2.a Packet Pg. 354 EXHIBIT A GOVERNMENT CODE SECTION 5852.1 DISCLOSURE The good faith estimates set forth herein are provided with respect to the Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the Authority by Fieldman, Rolapp & Associates, Inc. Principal Amount. Based on the City’s financing plan and current market conditions, the good faith estimate of total gross proceeds of the Bonds is $8,024,669, which includes the estimated principal amount of the Bonds of $6,675,000 (the “Estimated Principal Amount”), plus net original issue premium estimated to be generated based on current market conditions. Net premium is generated when, on a net aggregate basis for a single issuance of bonds, the price paid for such bonds is higher than the face value of such bonds. True Interest Cost. Assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 1.01%. Finance Charge of the Bonds. Assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $184,818. Amount of Proceeds to be Received. Assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the City for sale of the Bonds, less the finance charge of the Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the Bonds, is $7,839,852. Total Payment Amount. Assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the City will make to pay debt service on the Bonds, plus the finance charge for the Bonds, as described above, not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $8,578,267. The foregoing constitute good faith estimates only. The principal amount of the Bonds, the true interest cost of the Bonds, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to: (a) the actual date of the sale of the Bonds being 2.a Packet Pg. 355 different than the date assumed for purposes of such estimates; (b) the actual principal amount of Bonds sold being different from the Estimated Principal Amount; (c) the actual amortization of the Bonds being different than the amortization assumed for purposes of such estimates; (d) the actual market interest rates at the time of sale of the Bonds being different than those estimated for purposes of such estimates; (e) other market conditions; or (f) alterations in the City’s financing plan, or a combination of such factors. The actual date of sale of the Bonds and the actual principal amount of Bonds sold will be determined by the City based on a variety of factors. Market interest rates are affected by economic and other factors beyond the control of the City and the Authority. 2.a Packet Pg. 356 4850-6606-8705/200928-0001 RECORDING REQUESTED BY: City of Diamond Bar AND WHEN RECORDED RETURN TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Cyrus Torabi, Esq. [Space above for Recorder’s use.] GROUND LEASE 2.b Packet Pg. 357 4850-6606-8705/200928-0001 RECORDING REQUESTED BY: City of Diamond Bar AND WHEN RECORDED RETURN TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Cyrus Torabi, Esq. THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11921 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. THE GRANTOR AND THE GRANTEE ARE GOVERNMENTAL AGENCIES. GROUND LEASE by and between CITY OF DIAMOND BAR and CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY Dated as of June 1, 2021 Relating to $_______ CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A 2.b Packet Pg. 358 4850-6606-8705/200928-0001 GROUND LEASE THIS GROUND LEASE (this “Ground Lease”) is executed and entered into as of June 1, 2021, by and between the CITY OF DIAMOND BAR (the “City”), a municipal corporation and general law city that is duly organized and existing under and by virtue of the Constitution and laws of the State of California, as lessor, and the CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY (the “Authority”), a joint exercise of powers entity that is duly organized and existing under the laws of the State of California, as lessee. RECITALS A. The Authority previously issued its Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (the “2002 Bonds”), which are currently outstanding in the aggregate principal amount of $7,830,000, in order to finance certain capital improvements of the City (the “2002 Project”). B. The Authority and the City have determined that it would be in the best interests of the City and residents of the City to authorize the preparation, sale and delivery by the Authority of the “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A” (the “Bonds”) for the purposes of refunding the 2002 Bonds and refinancing the 2002 Project, which Bonds will be payable from certain base rental payments (the “Base Rental Payments”) to be made by the City under the below-defined Lease Agreement. C. In connection with the foregoing, the City will lease certain real property of the City and the improvements located thereon, consisting of the Community/Senior Center at Summitridge Park (1600 Grand Avenue, Diamond Bar, California 91765) (collectively, the “Property”), to the Authority pursuant to this Ground Lease, and the City will sublease the Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof (the “Lease Agreement”), by and between the City and the Authority. D. The Property is more particularly described in Exhibit A hereto. E. The City and the Authority have determined that it would be in the best interests of the City and the Authority to provide for the issuance of the Bonds pursuant to an Indenture, dated as of the date hereof (the “Indenture”), by and among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”). F. All rights to receive the Base Rental Payments have been assigned without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of the date hereof (the “Assignment Agreement”), by and between the Authority and the Trustee. G. All acts, conditions and things that are required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Ground Lease do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Ground Lease. In consideration of the mutual covenants hereinafter contained, the parties hereto agree as follows: 2.b Packet Pg. 359 2 4850-6606-8705/200928-0001 ARTICLE I DEFINITIONS Except as otherwise defined herein, or unless the context clearly otherwise requires, words and phrases that are defined in Article I of the Lease Agreement shall have the same meaning in this Ground Lease. ARTICLE II LEASE OF THE PROPERTY; RENTAL Section 2.01 Lease of Property. The City hereby leases to the Authority, and the Authority hereby leases from the City, for the benefit of the Owners of the Bonds, the Property, subject only to Permitted Encumbrances, to have and to hold for the term of this Ground Lease. Section 2.02 Rental. The Authority shall pay to the City as and for rental of the Property hereunder, the net proceeds of the Bonds, the receipt of which is hereby acknowledged. ARTICLE III QUIET ENJOYMENT The parties intend that the Property will be leased back to the City pursuant to the Lease Agreement for the term thereof. It is further intended that, to the extent provided herein and in the Lease Agreement, if an event of default occurs under the Lease Agreement, the Authority, or its assignee, will have the right, for the then-remaining term of this Ground Lease: (a) to take possession of the Property; (b) if it deems it appropriate, to cause an appraisal of the Property and a study of the then reasonable use thereof to be undertaken; and (c) to relet the Property. Subject to any rights that the City may have under the Lease Agreement (in the absence of an event of default) to possession and enjoyment of the Property, the City hereby covenants and agrees that it will not take any action to prevent the Authority from having quiet and peaceable possession and enjoyment of the Property during the term hereof and will, at the request of the Authority and at the City’s cost, to the extent that it may lawfully do so, join in any legal action in which the Authority asserts its right to such possession and enjoyment. ARTICLE IV SPECIAL COVENANTS AND PROVISIONS Section 4.01 Waste. The Authority agrees that at all times that it is in possession of the Property, it will not commit, suffer or permit any waste on the Property, and that it will not willfully or knowingly use or permit the use of the Property for any illegal purpose or act. Section 4.02 Further Assurances and Corrective Instruments. The City and the Authority agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements h ereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Property hereby 2.b Packet Pg. 360 3 4850-6606-8705/200928-0001 leased or intended so to be or for carrying out the expressed intention of this Ground Lease, the Indenture and the Lease Agreement. Section 4.03 Waiver of Personal Liability. All liabilities under this Ground Lease on the part of the Authority shall be solely liabilities of the Authority as a joint exercise of powers entity, and the City hereby releases each and every director, officer and employee of the Authority of and from any personal or individual liability under this Ground Lease. No director, officer or employee of the Authority shall at any time or under any circumstances be individually or personally liable under this Ground Lease to the City or to any other party whomsoever for anything done or omitted to be done by the Authority hereunder. All liabilities under this Ground Lease on the part of the City shall be solely liabilities of the City as a public corporation, and the Authority hereby releases each and every member, officer and employee of the City of and from any personal or individual liability under this Ground Lease. No member, officer or employee of the City shall at any time or under any circumstances be individually or personally liable under this Ground Lease to the Authority or to any other party whomsoever for anything done or omitted to be done by the City hereunder. Section 4.04 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 Property. Section 4.05 Right of Entry. The City reserves the right for any of its duly authorized representatives to enter upon the Property at any reasonable time to inspect the same. Section 4.06 Representations of the City. The City represents and warrants to the Authority and the Trustee as follows: (a) the City has the full power and authority to enter into, to execute and to deliver this Ground Lease, and to perform all of its duties and obligations hereunder, and has duly authorized the execution of this Ground Lease; (b) except for Permitted Encumbrances, the Property is not subject to any dedication, easement, right of way, reservation in patent, covenant, condition, restriction, lien or encumbrance which would prohibit or materially interfere with the use of the Property for governmental purposes as contemplated by the City; (c) all taxes, assessments or impositions of any kind with respect to the Property, except current taxes, have been paid in full; and (d) the Property is necessary to the City in order for the City to perform its governmental functions. Section 4.07 Representations of the Authority. The Authority represents and warrants to the City and the Trustee that the Authority has the full power and authority to enter into, to execute and to deliver this Ground Lease, and to perform all of its duties and obligations hereunder, and has duly authorized the execution and delivery of this Ground Lease. 2.b Packet Pg. 361 4 4850-6606-8705/200928-0001 ARTICLE V ASSIGNMENT, SUBLEASING, MORTGAGING AND SELLING Section 5.01 Assignment and Subleasing. This Ground Lease may be sold or assigned and the Property subleased, as a whole or in part, by the Authority without the necessity of obtaining the consent of the City, if an event of default occurs under the Lease Agreement. The Authority shall, within 30 days after such an assignment, sale or sublease, furnish or cause to be furnished to the City a true and correct copy of such assignment, sale or sublease, as the case may be. Section 5.02 Restrictions on City. The City agrees that, except with respect to Permitted Encumbrances, it will not mortgage, sell, encumber, assign, transfer or convey the Property or any portion thereof during the term of this Ground Lease. ARTICLE VI TERM; TERMINATION Section 6.01 Term. The term of this Ground Lease shall commence as of the date o f commencement of the term of the Lease Agreement and shall remain in full force and effect from such date to and including June 1, 2033 (the “Scheduled Termination Date”), unless such term is extended or sooner terminated as hereinafter provided. Section 6.02 Extension; Early Termination. If, on the Scheduled Termination Date, the Bonds shall not be fully paid, or provision therefor made in accordance with Article X of the Indenture, or the Indenture shall not be discharged by its terms, or if the Rental Payments paya ble under the Lease Agreement shall have been abated at any time, then the term of this Ground Lease shall be automatically extended until the date upon which all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, and the Indenture shall be discharged by its terms, except that the term of this Ground Lease shall in no event be extended more than ten years beyond the Scheduled Termination Date. If, prior to the Scheduled Termination Date, all Bonds shall be fully paid, or provisions therefor made in accordance with Article X of the Indenture, and the Indenture shall be discharged by its terms, the term of this Ground Lease shall end simultaneously therewith. ARTICLE VII MISCELLANEOUS Section 7.01 Binding Effect. This Ground Lease shall inure to the benefit of and shall be binding upon the City, the Authority and their respective successors and assigns. Section 7.02 Severability. In the event that any provision of this Ground Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 7.03 Amendments, Changes and Modifications. This Ground Lease may be amended, changed, modified, altered or terminated only in accordance with the provisions of the Lease Agreement. 2.b Packet Pg. 362 5 4850-6606-8705/200928-0001 Section 7.04 Assignment to Trustee. The Authority and City acknowledge that the Authority has assigned its right, title and interest in and to this Ground Lease (but none of its obligations and none of its rights to provide consents or approvals hereunder) to the Trustee pursuant to certain provisions of the Assignment Agreement. The City consents to such assignment. Section 7.05 Execution in Counterparts. This Ground Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.06 Applicable Law. This Ground Lease shall be governed by and construed in accordance with the laws of the State of California. Section 7.07 Captions. The captions or headings in this Ground Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Ground Lease. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 2.b Packet Pg. 363 S-1 4850-6606-8705/200928-0001 IN WITNESS WHEREOF, the Authority and the City have caused this Ground Lease to be executed by their respective officers hereunto duly authorized, all as of the day and year first above written. CITY OF DIAMOND BAR By: City Manager ATTEST: City Clerk CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Executive Director ATTEST: Secretary 2.b Packet Pg. 364 4850-6606-8705/200928-0001 CERTIFICATE OF ACCEPTANCE This is to certify that the interest in the Property that is conveyed under the foregoing agreement to the City of Diamond Bar Public Financing Authority (the “Authority”), a joint exercise of powers authority that is duly organized and existing under and by virtue of the Constitution and the laws of the State of California, is hereby accepted by the undersigned officer or agent on behalf of the Board of Directors of the Authority, pursuant to authority conferred by a resolution of the Board of Directors of Authority adopted on May __, 2021, and the grantee consents to recordation thereof by its duly authorized officer. Dated: June __, 2021 CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Executive Director 2.b Packet Pg. 365 4850-6606-8705/200928-0001 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 LOS ANGELES On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC 2.b Packet Pg. 366 A-1 4850-6606-8705/200928-0001 EXHIBIT A DESCRIPTION OF THE PROPERTY PARCEL A: IN THE CITY OF DIAMOND BAR, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, BEING THAT ADJUSTED PARCEL 1 OF THAT CERTAIN LOT LINE ADJUSTMENT NO. 02- 001, RECORDED OCTOBER 23, 2003 AS INSTRUMENT NO. 03-3180260 AND RE- RECORDED MARCH 09, 2004 AS INSTRUMENT NO. 04-0566670, BOTH OF OFFICIAL RECORDS. BEING A PORTION OF LOTS 3 AND 4 OF TRACT NO. 31479, RECORDED IN BOOK 998, PAGES 7 THROUGH 17 OF MAPS, RECORDS OF SAID COUNTY AND SAID STATE, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE NORTHERLY RIGHT-OF-WAY OF GRAND AVENUE, SAID POINT ALSO BEING THE SOUTHWESTERLY CORNER OF SAID LOT 4; 1. THENCE SOUTH 76° 57' 27" EAST, A DISTANCE OF 394.04 FEET; 2. THENCE NORTH 14° 53' 14" EAST, A DISTANCE OF 245.22 FEET; 3. THENCE NORTH 18° 21' 02" WEST, A DISTANCE OF 178.70 FEET; 4. THENCE NORTH 9° 23' 07" EAST, A DISTANCE OF 156.42 FEET; 5. THENCE NORTH 37° 50' 26" WEST, A DISTANCE OF 115.92 FEET; 6. THENCE NORTH 13° 57' 31" EAST, A DISTANCE OF 56.83 FEET; 7. THENCE NORTH 28° 21' 05" WEST, A DISTANCE OF 36.23 FEET; 8. THENCE NORTH 23° 50' 39" WEST, A DISTANCE OF 68.67 FEET; 9. THENCE NORTH 64° 30' 56" WEST, A DISTANCE OF 147.67 FEET; 10. THENCE NORTH 26° 41' 29" WEST, A DISTANCE OF 325.87 FEET; 11. THENCE NORTH 19° 09' 09" EAST, A DISTANCE OF 42.03 FEET; 12. THENCE NORTH 86° 38' 16" EAST, A DISTANCE OF 49.43 FEET; 13. THENCE SOUTH 72° 43' 51" EAST, A DISTANCE OF 32.64 FEET; 14. THENCE SOUTH 50° 34' 22" EAST, A DISTANCE OF 39.12 FEET; 15. THENCE NORTH 78° 32' 58" EAST, A DISTANCE OF 28.47 FEET; 16. THENCE NORTH 47° 26' 38" EAST, A DISTANCE OF 19.24 FEET; 17. THENCE NORTH 4° 33' 42" EAST, A DISTANCE OF 22.12 FEET; 18. THENCE NORTH 86° 38' 16" EAST, A DISTANCE OF 39.10 FEET; 19. THENCE SOUTH 75° 25' 56" EAST, A DISTANCE OF 34.13 FEET; 20. THENCESOUTH 59° 09' 05" EAST, A DISTANCE OF 37.15 FEET; 21. THENCE SOUTH 38° 38' 59" EAST, A DISTANCE OF 20.60 FEET; 22. THENCE SOUTH 17° 17' 41" WEST, A DISTANCE OF 59.02 FEET; 23. THENCE SOUTH 68° 07' 01" EAST, A DISTANCE OF 86.71 FEET; 24. THENCE NORTH 20° 39' 47" EAST, A DISTANCE OF 18.27 FEET; 25. THENCE NORTH 57° 15' 30" EAST, A DISTANCE OF 25.91 FEET; 26. THENCE SOUTH 70° 02' 32" EAST, A DISTANCE OF 52.31 FEET; 27. THENCE SOUTH 87° 07' 40" EAST, A DISTANCE OF 154.39 FEET; 28. THENCE SOUTH 41° 09' 40" EAST, A DISTANCE OF 80.72 FEET; 29. THENCE SOUTH 72° 03' 30" EAST, A DISTANCE OF 99.38 FEET; 30. THENCE NORTH 18° 09' 01" EAST, A DISTANCE OF 53.93 FEET; 31. THENCE NORTH 20° 53' 53" EAST, A DISTANCE OF 38.44 FEET; 32. THENCE NORTH 1° 09' 11" WEST, A DISTANCE OF 48.07 FEET; 2.b Packet Pg. 367 A-2 4850-6606-8705/200928-0001 33. THENCE NORTH 67° 49' 25" EAST, A DISTANCE OF 58.40 FEET; 34. THENCE NORTH 74° 34' 34" EAST, A DISTANCE OF 48.18 FEET; 35. THENCE NORTH 62° 17' 56" EAST, A DISTANCE OF 24.67 FEET; 36. THENCE NORTH 66° 41' 43" EAST, A DISTANCE OF 24.75 FEET; 37. THENCE NORTH 49° 03' 44" EAST, A DISTANCE OF 19.88 FEET; 38. THENCE NORTH 9° 28' 28" EAST, A DISTANCE OF 13.81 FEET; 39. THENCE NORTH 37° 31' 39" EAST, A DISTANCE OF 48.90 FEET; 40. THENCE NORTH 58° 12' 53" EAST, A DISTANCE OF 79.91 FEET; 41. THENCE NORTH 33° 31' 11" WEST, A DISTANCE OF 18.79 FEET; 42. THENCE NORTH 52° 49' 59" EAST, A DISTANCE OF 41.11 FEET; 43. THENCE NORTH 71° 52' 42" EAST, A DISTANCE OF 66.51 FEET 44. THENCE NORTH 77° 00' 19" EAST, A DISTANCE OF 38.93 FEET; 45. THENCE NORTH 45° 48' 25" EAST, A DISTANCE OF 150.63 FEET; 46. THENCE NORTH 70° 39' 20" WEST, A DISTANCE OF 73.13 FEET; 47. THENCE NORTH 5° 43' 20" WEST, A DISTANCE OF 100.28 FEET; 48. THENCE NORTH 56° 58' 00" EAST, A DISTANCE OF 119.27 FEET; 49. THENCE NORTH 11° 05' 40" WEST, A DISTANCE OF 262.39 FEET; 50. THENCE NORTH 25° 02' 30" EAST, A DISTANCE OF 277.59 FEET; 51. THENCE SOUTH 64° 45' 30" EAST, A DISTANCE OF 309.56 FEET; 52. THENCE NORTH 7° 00' 30" EAST, A DISTANCE OF 299.24 FEET; 53. THENCE NORTH 13° 14' 00" EAST, A DISTANCE OF 286.10 FEET; 54. THENCE SOUTH 84° 11' 50" EAST, A DISTANCE OF 123.63 FEET; 55. THENCE NORTH 70° 46' 10" EAST, A DISTANCE OF 45.54 FEET; 56. THENCE NORTH 24° 00' 31" EAST, A DISTANCE OF 196.88 FEET; 57. THENCE SOUTH 87° 14' 22" WEST, A DISTANCE OF 128.32 FEET; 58. THENCE NORTH 84° 46' 41" WEST, A DISTANCE OF 283.70 FEET; 59. THENCE NORTH 76° 50' 24" WEST, A DISTANCE OF 605.52 FEET; 60. THENCE NORTH 76° 55' 09" WEST, A DISTANCE OF 699.02 FEET; 61. THENCE NORTH 83° 05' 17" WEST, A DISTANCE OF 622.72 FEET; 62. THENCE NORTH 83° 11' 50" WEST, A DISTANCE OF 656.41 FEET; 63. THENCE SOUTH 74° 55' 05" EAST, A DISTANCE OF 39.24 FEET; 64. THENCE SOUTH 22° 06' 13" WEST, A DISTANCE OF 19.69 FEET; 65. THENCE NORTH 83° 13' 36" WEST, A DISTANCE OF 22.65 FEET; 66. THENCE SOUTH 16° 28' 56" EAST, A DISTANCE OF 171.62 FEET; 67. THENCE SOUTH 8° 35' 01" EAST, A DISTANCE OF 53.60 FEET; 68. THENCE SOUTH 80° 03' 36" EAST, A DISTANCE OF 8.45 FEET; 69. THENCE SOUTH 9° 56' 23" WEST, A DISTANCE OF 139.69 FEET; 70. THENCE SOUTH 25° 26' 54" WEST, A DISTANCE OF 172.70 FEET; 71. THENCE SOUTH 14° 55' 58" WEST, A DISTANCE OF 27.70 FEET 72. THENCE SOUTH 5° 00' 00" WEST, A DISTANCE OF 50.00 FEET; 73. THENCE SOUTH 19° 00' 00" WEST, A DISTANCE OF 102.50 FEET; 74. THENCE SOUTH 67° 36' 32" WEST, A DISTANCE OF 221.86 FEET; 75. THENCE SOUTH 46° 31' 54" EAST, A DISTANCE OF 264.55 FEET; 76. THENCE SOUTH 10° 03' 28" EAST, A DISTANCE OF 80.00 FEET; 77. THENCE SOUTH 9° 56' 23" WEST, A DISTANCE OF 255.00 FEET; 78. THENCE SOUTH 59° 50' 20" WEST, A DISTANCE OF 129.48 FEET; 79. THENCE SOUTH 21° 35' 43" WEST, A DISTANCE OF 258.12 FEET; 80. THENCE SOUTH 23° 44' 58" EAST, A DISTANCE OF 54.63 FEET; 81. THENCE SOUTH 5° 57' 52" EAST, A DISTANCE OF 67.36 FEET; 2.b Packet Pg. 368 A-3 4850-6606-8705/200928-0001 82. THENCE SOUTH 26° 47' 29" EAST, A DISTANCE OF 113.15 FEET; 83. THENCE SOUTH 72° 09' 54" EAST, A DISTANCE OF 120.81 FEET; 84. THENCE SOUTH 87° 01' 54" EAST, A DISTANCE OF 135.18 FEET; 85. THENCE SOUTH 52° 07' 30" EAST, A DISTANCE OF 57.01 FEET; 86. THENCE SOUTH 86° 33' 59" EAST, A DISTANCE OF 50.09 FEET; 87. THENCE SOUTH 20° 18' 08" EAST, A DISTANCE OF 106.63 FEET; 88. THENCE SOUTH 32° 56' 57" EAST, A DISTANCE OF 64.35 FEET; 89. THENCE SOUTH 74° 39' 25" EAST, A DISTANCE OF 116.42 FEET; 90. THENCE SOUTH 44° 39' 25" EAST, A DISTANCE OF 1117.89 FEET; 91. THENCE SOUTH 24° 04' 29" WEST, A DISTANCE OF 299.68 FEET TO THE POINT OF BEGINNING. EXCEPT THEREFROM ALL OIL, GAS AND OTHER HYDROCARBONS AND MINERALS NOW OR AT ANY TIME HEREAFTER SITUATED THEREIN AND THEREUNDER, TOGETHER WITH THE EXCLUSIVE RIGHT TO DRILL FOR, PRODUCE, EXTRACT, TAKE AND MINE THEREFROM SUCH OIL, GAS AND OTHER HYDROCARBONS AND MINERAL AND TO STORE THE SAME UPON THE SURFACE OF SAID LAND, OR BELOW THE SURFACE OF SAID LAND, TOGETHER WITH THE RIGHT TO STORE UPON THE SURFACE OF SAID LAND, OIL, GAS AND OTHER HYDROCARBONS AND MINERALS WHICH MAY BE PRODUCED OTHER LANDS, WITH THE RIGHT OF ENTRY THEREON FOR THE SAID PURPOSES, AND WITH THE RIGHT TO CONSTRUCT, USE, MAINTAIN, ERECT, REPAIR, REPLACE AND REMOVE THEREON AND THEREFROM, ALL PIPE LINES, TELEPHONE AND TELEGRAPH LINES, TANKS, MACHINERY, BUILDINGS AND OTHER STRUCTURES WHICH MAY BE NECESSARY AND REQUISITE TO CARRY ON OPERATIONS ON SAID LANDS, WITH RIGHT TO ERECT, MAINTAIN, OPERATE AND REMOVE A PLANT, WITH ALL NECESSARY APPURTENANTS FOR THE EXTRACTION OF GASOLINE FROM GAS, INCLUDING ALL RIGHTS NECESSARY OR CONVENIENT THERETO, AS EXCEPT AND RESERVED IN THE DEED FROM TRANSAMERICA DEVELOPMENT COMPANY, A CORPORATION, RECORDED MARCH 29, 1968, AS DOCUMENT NO. 2456, IN BOOK D3955, PAGE 185, OFFICIAL RECORDS; AND RE- RECORDED JUNE 19, 1969, AS DOCUMENT NO. 1776, IN BOOK D4407, PAGE 591, OFFICIAL RECORDS; AND AS MODIFIED WITH RESPECT TO A PORTION THEREON BY A QUITCLAIM DEED RECORDED NOVEMBER 12, 1970, AS INSTRUMENT NO. 2112, OFFICIAL RECORDS, WHICH RELINQUISHED ALL RIGHT TO THE USE OF THE SURFACE AND SUBSURFACE TO A DEPTH OF 500 FEET FROM THE SURFACE OF THE LAND. ALL RIGHTS TO THE USE OF THE SURFACE AND SUB-SURFACE TO A DEPTH OF FIVE HUNDRED (500) FEET FROM THE SURFACE FOR ANY PURPOSE INCIDENTAL TO THE OWNERSHIP OF ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES AND MINERALS WERE QUITCLAIMED BY DEED RECORDED DECEMBER 24, 1981, AS INSTRUMENT NO. 81-1263075, OFFICIAL RECORDS, OF SAID COUNTY. PARCEL B: IN THE CITY OF DIAMOND BAR, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, BEING A PORTION OF ADJUSTED PARCEL 2 AND A PORTION OF ADJUSTED PARCEL 3 OF LOT LINE ADJUSTMENT NUMBER 02-001, RECORDED OCTOBER 23, 2003 AS INSTRUMENT NO. 03-3180260 AND RE-RECORDED MARCH 09, 2004 AS INSTRUMENT 2.b Packet Pg. 369 A-4 4850-6606-8705/200928-0001 NO. 04-0566670 OFFICIAL RECORDS OF SAID COUNTY AND SAID STATE, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHWESTERLY CORNER OF SAID ADJUSTED PARCEL 2, ALSO BEING IN THE NORTHERLY RIGHT-OF-WAY OF GRAND AVENUE; THENCE SOUTH 76° 57' 27" EAST, A DISTANCE OF 306.53 FEET TO A TANGENT CURVE CONCAVE NORTHWESTERLY HAVING A RADIUS OF 13.00 FEET; THENCE NORTHEASTERLY, A DISTANCE OF 20.42 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00"; THENCE TANGENT FROM SAID CURVE NORTH 13° 02' 33" EAST, A DISTANCE OF 66.52 FEET TO A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 465.00 FEET; THENCE NORTHERLY, A DISTANCE OF 91.99 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 11° 20' 03"; THENCE TANGENT FROM SAID CURVE NORTH 01° 42' 30" EAST, A DISTANCE OF 118.11 FEET TO A TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 528.00 FEET; THENCE NORTHERLY, A DISTANCE OF 332.12 ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 36° 02' 23" TO THE MOST SOUTHERLY POINT OF SAID ADJUSTED PARCEL 3; THENCE CONTINUING ALONG SAID CURVE, A DISTANCE OF 195.69 FEET THROUGH A CENTRAL ANGLE OF 21° 14' 07"; THENCE TANGENT FROM SAID CURVE NORTH 58° 59' 00" WEST, A DISTANCE OF 176.43 FEET TO A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 472.00 FEET; THENCE NORTHERLY, A DISTANCE OF 351.12 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 42° 37' 20"; THENCE TANGENT FROM SAID CURVE NORTH 16° 21' 40" EAST, A DISTANCE OF 105.08 FEET TO A TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 728.00 FEET; THENCE NORTHERLY, A DISTANCE OF 49.95 FEET THROUGH A CENTRAL ANGLE OF 03° 55' 53"; THENCE NON-TANGENT FROM SAID CURVE NORTH 69° 42' 32" WEST, A DISTANCE OF 4.00 FEET; THENCE NORTH 47° 20' 32" WEST, A DISTANCE OF 288.17 FEET TO THE WESTERLY MOST CORNER OF SAID ADJUSTED PARCEL 3; THENCE SOUTH 77° 00' 57" WEST, A DISTANCE OF 38.92 FEET; THENCE SOUTH 71° 52' 42" WEST, A DISTANCE OF 66.51 FEET; THENCE SOUTH 52° 49' 59" WEST, A DISTANCE OF 41.11 FEET; THENCE SOUTH 33° 31' 11" EAST, A DISTANCE OF 18.79 FEET; THENCE SOUTH 58° 12' 53" WEST, A DISTANCE OF 79.91 FEET; THENCE SOUTH 37° 31' 39" WEST, A DISTANCE OF 48.90 FEET; THENCE SOUTH 09° 28' 28" WEST, A DISTANCE OF 13.81 FEET; THENCE SOUTH 49° 03' 44" WEST, A DISTANCE OF 19.88 FEET; THENCE SOUTH 66° 41' 43" WEST, A DISTANCE OF 24.75 FEET; THENCE SOUTH 62° 17' 56" WEST, A DISTANCE OF 24.67 FEET; THENCE SOUTH 74° 34' 34" WEST, A DISTANCE OF 48.18 FEET; THENCE SOUTH 67° 49' 25" WEST, A DISTANCE OF 58.40 FEET; THENCE SOUTH 01° 09' 11" EAST, A DISTANCE OF 48.07 FEET; THENCE SOUTH 20° 53' 53" WEST, A DISTANCE OF 38.44 FEET; THENCE SOUTH 18° 09' 01" WEST, A DISTANCE OF 53.93 FEET; THENCE NORTH 72° 03' 30" WEST, A DISTANCE OF 99.38 FEET; THENCE NORTH 41° 09' 40" WEST, A DISTANCE OF 80.72 FEET; THENCE NORTH 87° 07' 40" WEST, A DISTANCE OF 154.39 FEET; THENCE NORTH 70° 02' 32" WEST, A DISTANCE OF 52.31 FEET; THENCE SOUTH 57° 15' 30" WEST, A DISTANCE OF 25.91 FEET; THENCE SOUTH 20° 39' 47" WEST, A DISTANCE OF 18.27 FEET; THENCE NORTH 68° 07' 01" WEST, A DISTANCE OF 86.71 FEET; THENCE NORTH 17° 17' 41" EAST, A DISTANCE OF 59.02 FEET; THENCE NORTH 38° 38' 59" WEST A DISTANCE OF 20.60 FEET; THENCE NORTH 59° 09' 05" WEST, A DISTANCE OF 37.15 FEET; THENCE NORTH 75° 25' 56" WEST, A DISTANCE OF 34.13 FEET; THENCE SOUTH 86° 38' 16" WEST, A DISTANCE OF39.10 FEET; THENCE SOUTH 04° 33' 42" WEST, A DISTANCE OF 22.12 FEET; THENCE SOUTH 47° 26' 38" WEST, A DISTANCE OF 19.24 FEET; THENCE SOUTH 78° 32' 58" WEST, A DISTANCE OF 28.47 2.b Packet Pg. 370 A-5 4850-6606-8705/200928-0001 FEET; THENCE NORTH 50° 34' 22" WEST, A DISTANCE OF 39.12 FEET; THENCE NORTH 72° 43' 51" WEST, A DISTANCE OF 32.64 FEET; THENCE SOUTH 86° 38' 16" WEST, A DISTANCE OF 49.43 FEET; THENCE SOUTH 19° 09' 09" WEST, A DISTANCE OF 42.03 FEET; THENCE SOUTH 26° 41' 29" EAST, A DISTANCE OF 325.87 FEET; THENCE SOUTH 64° 30' 56" EAST, A DISTANCE OF 147.67 FEET; THENCE SOUTH 23° 50' 39" EAST, A DISTANCE OF 68.67 FEET; THENCE SOUTH 28° 21' 05" EAST, A DISTANCE OF 36.23 FEET; THENCE SOUTH 13° 57' 31" WEST, A DISTANCE OF 56.83 FEET; THENCE SOUTH 37° 50' 26" EAST, A DISTANCE OF 115.92 FEET; THENCE SOUTH 09° 23' 07" WEST, A DISTANCE OF 156.42 FEET; THENCE SOUTH 18° 21' 02" EAST, A DISTANCE OF 178.70 FEET; THENCE SOUTH 14° 53' 14" WEST, A DISTANCE OF 245.22 TO THE POINT OF BEGINNING. SAID DESCRIPTION IS MADE PURSUANT TO ADJUSTED PARCEL B, OF LOT LINE ADJUSTMENT NO. 07-002, RECORDER JUNE 26, 2008 AS INSTRUMENT NO. 20081143590, OFFICIAL RECORDS OF SAID COUNTY. For conveyancing purposes only: APN(S) 8701-059-904 AND 8701-059-909 2.b Packet Pg. 371 Stradling Yocca Carlson & Rauth Draft of 4/19/21 4849-6802-8385/200928-0001 LEASE AGREEMENT by and between CITY OF DIAMOND BAR and CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY Dated as of June 1, 2021 Relating to $_______ CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A 2.c Packet Pg. 372 TABLE OF CONTENTS Page i 4849-6802-8385/200928-0001 ARTICLE I DEFINITIONS Section 1.01 Definitions ..................................................................................................................... 2 ARTICLE II LEASE OF PROPERTY; TERM Section 2.01 Lease of Property .......................................................................................................... 4 Section 2.02 Term; Occupancy .......................................................................................................... 4 ARTICLE III RENTAL PAYMENTS Section 3.01 Base Rental Payments ................................................................................................... 4 Section 3.02 Additional Rental Payments ......................................................................................... 5 Section 3.03 Fair Rental Value .......................................................................................................... 6 Section 3.04 Payment Provisions ....................................................................................................... 6 Section 3.05 Appropriations Covenant .............................................................................................. 6 Section 3.06 Rental Abatement .......................................................................................................... 6 ARTICLE IV MAINTENANCE, ALTERATIONS AND ADDITIONS Section 4.01 [Reserved] ..................................................................................................................... 7 Section 4.02 Maintenance and Utilities ............................................................................................. 7 Section 4.03 Additions to Property .................................................................................................... 7 Section 4.04 Installation of City’s Equipment ................................................................................... 7 ARTICLE V INSURANCE Section 5.01 Commercial General Liability and Property Damage Insurance; Workers’ Compensation Insurance ............................................................................................... 8 Section 5.02 Title Insurance .............................................................................................................. 9 Section 5.03 Additional Insurance Provision; Form of Policies ........................................................ 9 Section 5.04 Self-Insurance ............................................................................................................... 9 ARTICLE VI DEFAULTS AND REMEDIES Section 6.01 Defaults and Remedies ............................................................................................... 10 Section 6.02 Waiver ......................................................................................................................... 13 ARTICLE VII EMINENT DOMAIN; PREPAYMENT Section 7.01 Eminent Domain ......................................................................................................... 13 Section 7.02 Prepayment ................................................................................................................. 13 2.c Packet Pg. 373 TABLE OF CONTENTS (continued) Page ii 4849-6802-8385/200928-0001 ARTICLE VIII COVENANTS Section 8.01 Right of Entry ............................................................................................................. 14 Section 8.02 Liens ............................................................................................................................ 14 Section 8.03 Quiet Enjoyment ......................................................................................................... 14 Section 8.04 Authority Not Liable ................................................................................................... 15 Section 8.05 Assignment and Subleasing ........................................................................................ 15 Section 8.06 Title to Property .......................................................................................................... 16 Section 8.07 Authority’s Purpose .................................................................................................... 16 Section 8.08 Representations of the City ......................................................................................... 16 Section 8.09 Representation of the Authority .................................................................................. 16 Section 8.10 Environmental Compliance ........................................................................................ 16 Section 8.11 Covenant against Condemnation ................................................................................ 17 ARTICLE IX NO CONSEQUENTIAL DAMAGES; USE OF THE PROPERTY; SUBSTITUTION OR RELEASE Section 9.01 No Consequential Damages ........................................................................................ 17 Section 9.02 Use of the Property ..................................................................................................... 17 Section 9.03 Substitution or Release of the Property....................................................................... 18 ARTICLE X MISCELLANEOUS Section 10.01 Law Governing ........................................................................................................... 18 Section 10.02 Notices ........................................................................................................................ 18 Section 10.03 Validity and Severability ............................................................................................ 19 Section 10.04 Net-Net-Net Lease ...................................................................................................... 19 Section 10.05 Taxes ........................................................................................................................... 19 Section 10.06 Section Headings ........................................................................................................ 20 Section 10.07 Amendments ............................................................................................................... 20 Section 10.08 Assignment ................................................................................................................. 21 Section 10.09 Execution .................................................................................................................... 21 Signatures ................................................................................................................................... S-1 EXHIBIT A DESCRIPTION OF THE PROPERTY .................................................................... A-1 EXHIBIT B BASE RENTAL PAYMENT SCHEDULE ............................................................. B-1 2.c Packet Pg. 374 1 4849-6802-8385/200928-0001 LEASE AGREEMENT THIS LEASE AGREEMENT (this “Lease Agreement”) is executed and entered into as of June 1, 2021, by and between the CITY OF DIAMOND BAR (the “City”), a municipal corporation and general law city that is duly organized and existing under and by virtue of the Constitution and laws of the State of California, as sublessee, and the CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY (the “Authority”), a joint exercise of powers entity that is duly organized and existing under and by virtue of the laws of the State of California, as sublessor. RECITALS A. The Authority previously issued its Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (the “2002 Bonds”), which are currently outstanding in the aggregate principal amount of $7,830,000, in order to finance certain capital improvements of the City (the “2002 Project”). B. The Authority and the City have determined that it would be in the best interests of the City and residents of the City to authorize the preparation, sale and delivery by the Authority of the “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A” (the “Series 2021 Bonds”) for the purposes of refunding the 2002 Bonds and refinancing the 2002 Project, which Bonds will be payable from certain base rental payments (the “Base Rental Payments”) to be made by the City under this Lease Agreement. C. In connection with the foregoing, the City will lease certain real property of the City and the improvements located thereon, consisting of the Community/Senior Center at Summitridge Park (1600 Grand Avenue, Diamond Bar, California 91765) (collectively, the “Property”), to the Authority pursuant to a Ground Lease, dated as of the date hereof (the “Ground Lease”), by and between the City and the Authority, and the City will sublease the Property back from the Authority pursuant to this Lease Agreement. D. The Property is more particularly described in Exhibit A hereto. E. The City and the Authority have determined that it would be in the best interests of the City and the Authority to provide for the issuance of the Bonds pursuant to an Indenture, dated as of the date hereof (the “Indenture”), by and among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”). F. All rights to receive the Base Rental Payments have been assigned without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of the date he reof (the “Assignment Agreement”), by and between the Authority and the Trustee. G. All acts, conditions and things that are required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and enterin g into of this Lease Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease Agreement. In consideration of the mutual covenants hereinafter contained, the parties hereto agree as follows: 2.c Packet Pg. 375 2 4849-6802-8385/200928-0001 ARTICLE I DEFINITIONS Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Lease Agreement, have the meanings herein s pecified, which meanings shall be equally applicable to both the singular and plural forms of any of the terms herein defined. Capitalized terms that are not otherwise defined herein shall have the meanings assigned to such terms in the Indenture. “Additional Bonds” means bonds other than the Series 2021 Bonds issued under the Indenture in accordance with the provisions thereof. “Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.02. “Authority” means the City of Diamond Bar Public Financing Authority, a joint exercise of powers authority that is duly organized and existing under the laws of the State of California. “Base Rental Deposit Date” means the fifteenth (15th) day of the month preceding each Interest Payment Date. “Base Rental Payments” means all amounts payable to the Authority from the City as Base Rental Payments pursuant to Section 3.01(a). “Base Rental Payment Schedule” means the schedule of Base Rental Payments payable to the Authority from the City pursuant to Section 3.01(a) and attached hereto as Exhibit B. “Bonds” means the Series 2021 Bonds and any Additional Bonds. “City” means the City of Diamond Bar, a municipal corporation and general law city that is duly organized and existing under and by virtue of the Constitution and laws of the State of California. “Delivery Date” means June __, 2021. “Ground Lease” means the Ground Lease relating to the Property, dated as of the date hereof, by and between the City and the Authority, as originally executed and as it may from time to time be amended in accordance with to the provisions thereof and hereof. “Hazardous Materials” means flammable explosives, polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide, radon, petroleum products, asbestos or any asbestos containing materials, methane, radioactive materials, pollutants, hazardous materials, hazard ous wastes, hazardous, toxic or regulated substances or related materials, as defined in CERCLA, RCRA, CWA, CAA, TSCA and Title III, and the regulations promulgated pursuant thereto, and in all other federal, state or local environmental laws and regulations. “Indenture” means the Indenture relating to the Series 2021 Bonds, dated as of the date hereof, by and among the Authority, the City and the Trustee, as originally executed and as it may from time to time be amended or supplemented in accordance with the provisions thereof. 2.c Packet Pg. 376 3 4849-6802-8385/200928-0001 “Joint Powers Agreement” means the Joint Exercise of Powers Agreement, dated as of November 19, 2002, by and between the City and the Successor Agency to the Redevelopment Agency of the City of Diamond Bar, as successor the Redevelopment Agency of the City of Diamond Bar, as originally executed and as it may from time to time be amended in accordance with the provisions thereof, which agreement establishes the Authority. “Lease Agreement” means this Lease Agreement, as originally executed and as it may from time to time be amended in accordance with the provisions hereof. “Net Insurance Proceeds” means any insurance proceeds or condemnation award in excess of $50,000, paid with respect to any of the Property, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof. “Permitted Encumbrances” means, with respect to the Property, as of any particular time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to provisions of Article V hereof, permit to remain unpaid; (b) the Assignment Agreement; (c) this Lease Agreement; (d) the Ground Lease; (e) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or per fected in the manner prescribed by law as normally exist with respect to properties similar to the Property for the purposes for which it was acquired or is held by the City; (f) easements, rights of way, mineral rights, drilling rights and other rights (including but not limited to rights in cellular telephone network infrastructure on the Property), reservations, covenants, conditions or restrictions which exist of record as of the Delivery Date which the City certifies in writing will not affect the inte nded use of the Property or impair the security granted to the Trustee for the benefit of the Owners of the Bonds by the Indenture and the Assignment Agreement and to which the Authority and the City consent in writing; (g) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions existing on the Delivery Date and set forth in a title insurance policy with respect to the Property; and (h) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the Delivery Date which the City certifies in writing do not affect the intended use of the Property or impair the security granted to the Trustee for the benefit of the Owners of the Bonds by the Indenture and the Assignment Agreement and to which the Authority and the City consent in writing. “Property” means the real property that is described in Exhibit A, together with the improvements thereon. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments. “Rental Period” means the twelve-month period commencing on June 1 of each year during the term of this Lease Agreement; provided that the first Rental Period shall be the period from the Delivery Date through May 31, 2022. “Scheduled Termination Date” means June 1, 2033, unless extended or sooner terminated as provided in Section 2.02 hereof. “Series 2021 Bonds” means the City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A issued under the Indenture. 2.c Packet Pg. 377 4 4849-6802-8385/200928-0001 “Termination Date” means the Scheduled Termination Date, unless extended or sooner terminated as provided in Section 2.02. “Trustee” means the trustee appointed under the Indenture and referred to therein as the Trustee. ARTICLE II LEASE OF PROPERTY; TERM Section 2.01 Lease of Property. (a) The Authority hereby subleases to the City and the City hereby subleases from the Authority the Property, on the terms and conditions hereinafter set forth, subject to all Permitted Encumbrances. (b) The leasing of the Property by the City to the Authority pursuant to the Ground Lease shall not effect or result in a merger of the City’s leasehold estate pursuant to this Lease Agreement and its fee estate as lessor under the Ground Lease, and the Authority shall continue to have a leasehold estate in the Property pursuant to the Ground Lease throughout the term thereof and hereof. The leasehold interest granted by the City to the Authority pursuant to the Ground Lease is and shall be independent of this Lease Agreement; this Lease Agreement shall not be an assignment or surrender of the leasehold interest granted to the Authority under the Ground Lease. Section 2.02 Term; Occupancy. The term of this Lease Agreement shall commence on the Delivery Date and shall end on the Scheduled Termination Date, unless such term is extended or sooner terminated as hereinafter provided. If, on the Scheduled Termination Date, the Bonds shall not be fully paid, or provision therefor made in accordance with Article X of the Indenture, or the Indenture shall not be discharged by its terms, or if the Rental Payments shall remain due and payable or shall have been abated at any time and for any reason remain due and owing, then the term of this Lease Agreement shall be extended until the date upon which: (a) all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture; or (b) the Indenture shall be discharged by its terms and all Rental Payments shall have been paid in full. Notwithstanding the foregoing, the term of this Lease Agreement shall in no event be extended more than ten years beyond the Scheduled Termination Date, such extended date being the “Maximum Lease Term.” If prior to the Scheduled Termination Date, all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, the Indenture shall be discharged by its terms and all Rental Payments shall have been paid in full, and the term of this Lease Agreement shall end simultaneously therewith. ARTICLE III RENTAL PAYMENTS Section 3.01 Base Rental Payments. (a) Subject to the provisions hereof relating to a revision of the Base Rental Payment Schedule pursuant to subsection (b) of this Section, the City shall pay to the Authority, as 2.c Packet Pg. 378 5 4849-6802-8385/200928-0001 Base Rental Payments (subject to the provisions of Section 3.06 and Article VII) the amount at the times specified in the Base Rental Payment Schedule, a portion of which Base Rental Payments shall constitute principal, and a portion of which shall constitute interest. (b) Rental Payments, including Base Rental Payments, shall be paid by the City to the Authority for and in consideration of the right to use and occupy the Property and in consideration of the continued right to the quiet use and enjoyment thereof during each Rental Period for which such Rental Payments are to be paid. The obligation of the City to make the Base Rental Payments does not constitute a debt of the City or of the State of California, 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 or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged any form of taxation. (c) If the term of this Lease Agreement shall have been extended pursuant to Section 2.02 hereof, the obligation of the City to pay Rental Payments shall continue to and including the Base Rental Deposit Date preceding the date of termination of this Lease Agreement (as so extended pursuant to Section 2.02). Upon such extension, the Base Rental Payments shall be established so that they will be sufficient to pay all extended and unpaid Base Rental Payments; provided, however, that the Rental Payments payable in any Rental Period shall not exceed the annual fair rental value of the Property. Section 3.02 Additional Rental Payments. The City shall also pay, as Additional Rental Payments, such amounts as shall be required for the payment of the following: (a) all taxes and assessments of any type or nature charged to the Authority or the City or affecting the Property or the respective interests or estates of the Authority or the City therein; (b) all reasonable administrative costs of the Authority relating to the Property including, but without limiting the generality of the foregoing, salaries, wages, fees and expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture, fees of auditors, accountants, attorneys or engineers, and all other necessary and reasonable administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Indenture or th is Lease Agreement or to defend the Authority and its members, officers, agents and employees; (c) insurance premiums for all insurance required pursuant to Article V hereof; (d) any amounts with respect to this Lease Agreement or the Bonds required to be rebated to the federal government in accordance with Section 148(f) of the Code; and (e) all other payments required to be paid by the City under the provisions of this Lease Agreement or the Indenture. Amounts constituting Additional Rental Payments payable hereunder shall be paid by the City directly to the person or persons to whom such amounts shall be payable. The City shall pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any 2.c Packet Pg. 379 6 4849-6802-8385/200928-0001 other case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof. Section 3.03 Fair Rental Value. The parties hereto have agreed and determined that the annual fair rental value of the Property is not less than the maximum annual Rental Payments due in any year. In making such determination of fair rental value, consideration has been given to the uses and purposes that may be served by the Property and the benefits therefrom which will accrue to the City and the general public. Payments of the Rental Payments for the Property during each Rental Period shall constitute the total rental for said Rental Period. Section 3.04 Payment Provisions. Each installment of Base Rental Payments payable hereunder shall be paid in lawful money of the United States of America to or upon the order of the Authority at the principal office of the Trustee in Los Angeles, California, or such other place or entity as the Authority or Trustee shall designate. Each Base Rental Payment shall be deposited with the Trustee no later than the Base Rental Deposit Date preceding the Interest Payment Date on which such Base Rental Payment is due. Any Base Rental Payment which shall not be paid by the City when due and payable under the terms of this Lease Agreement shall bear interest from the date when the same is due hereunder until the same shall be paid at the rate equal to the highest rate of interest on any of the Outstanding Bonds. Notwithstanding any dispute between the Authority and the City, the City shall make all Rental Payments when due without deduction or offset of any kind and shall not withhold any Rental Payments pending the final resolution of such dispute. In the event of a determination that the City was not liable for said Rental Payments or any portion thereof, said payments or excess of payments, as the case may be, shall be credited against subsequent Rental Payments due hereunder or refunded at the time of such determination. Amounts required to be deposited by the City with the Trustee pursuant to this Section on any date shall be reduced to the extent of available amounts on deposit in the Base Rental Payment Fund, the Interest Fund or the Principal Fund. Section 3.05 Appropriations Covenant. The City covenants to take such action as may be necessary to include all Rental Payments due hereunder as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Payments. The City will deliver to the Authority and the Trustee a Written Certificate of the City stating that its final annual budget includes all Base Rental Payments due in such fiscal year within ten days after the filing or adoption thereof. The covenants on the part of the City herein c ontained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the City to take such action and do such things as are 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 Agreement agreed to be carried out and performed by the City. Section 3.06 Rental Abatement. Except as otherwise specifically provided in this Section, during any period in which, by reason of material damage to, or destruction or condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property, Rental Payments shall be abated proportionately, and the City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate th is Lease Agreement by virtue of any such interference, and this Lease Agreement shall continue in full force and effect. The amount of such abatement shall be agreed upon by the City and the Authority; provided, however, that the Rental Payments due for any Rental Period shall not exceed the annual fair rental value of that portion of the Property available for use and occupancy by the City during such Rental Period. The City and the 2.c Packet Pg. 380 7 4849-6802-8385/200928-0001 Authority shall calculate such abatement and shall provide the Trustee with a certificate setting forth such calculation and the basis therefor. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the Property, ending with the substantial completion of the work of repair or replacement of the Property, or the portion thereof so damaged or destroyed; and the term of this Lease Agreement shall be extended as provided in Section 2.02 hereof, except that the term shall in no event be extended beyond the Maximum Lease Term . Notwithstanding the foregoing, to the extent that moneys are available for the payment of Rental Payments in any of the funds and accounts established under the Indenture, Rental Payments shall not be abated as provided above but, rather, shall be payabl e by the City as a special obligation payable solely from said funds and accounts. ARTICLE IV MAINTENANCE, ALTERATIONS AND ADDITIONS Section 4.01 [Reserved]. Section 4.02 Maintenance and Utilities. Throughout the term of this Lease Agreement, as part of the consideration for rental of the Property, all improvement, repair and maintenance of the Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of all utility services supplied to the Property, which may include, without limitati on, janitor service, security, power, gas, telephone, light, heating, ventilation, air conditioning, water and all other utility services, and shall pay for or otherwise arrange for payment of the cost of the repair and replacement of the 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 Rental Payments, the Authority agrees to provide only the Property. Section 4.03 Additions to Property. Subject to Section 8.02, the City and any sublessee shall, at its own expense, have the right to make additions, modifications and improvements to the Property. To the extent that the removal of such additions, modifications or improvements would not cause material damage to the Property, such additions, modifications and improvements shall remain the sole property of the City or such sublessee, and neither the Authority nor the Trustee shall have any interest therein. Such additions, modifications and improvements shall not in any way dam age the Property or cause it to be used for purposes other than those authorized under the provisions of state and federal law; and the Property, upon completion of any additions, modifications and improvements made pursuant to this Section, shall be of a value which is at least equal to the value of the Property immediately prior to the making of such additions, modifications and improvements. Section 4.04 Installation of City’s Equipment. The City and any sublessee may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed items of equipment or other personal property in or upon the Property. All such items shall remain the sole property of the City or such sublessee, and neither the Authority nor the Trust ee shall have any interest therein. The City or such sublessee may remove or modify such equipment or other personal property at any time, provided that such party shall repair and restore any and all damage to the Property resulting from the installation, modification or removal of any such items. Nothing in this Lease Agreement shall prevent the City or any sublessee from purchasing items to be installed pursuant to this Section under a conditional sale or lease purchase contract, or subject to a vendor ’s 2.c Packet Pg. 381 8 4849-6802-8385/200928-0001 lien or security agreement as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest shall attach to any part of the Property. ARTICLE V INSURANCE Section 5.01 Commercial General Liability and Property Damage Insurance; Workers’ Compensation Insurance. (a) The City shall maintain or cause to be maintained, throughout the term of this Lease Agreement, a standard commercial general liability insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents and employees. 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 use or ownership of the Property. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in a single accident or event, and in a m inimum amount of $500,000 for damage to property resulting from a single accident or event. Such commercial general liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried or required to be carried by the City, and may be maintained in whole or in part in the form of self -insurance by the City, provided that such self-insurance complies with the provisions of Section 5.04. The Net Insurance Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the Net Insurance Proceed s of such insurance shall have been paid. (b) The City shall maintain or cause to be maintained, throughout the term of this Lease Agreement, workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State of California t o insure employers against liability for compensation under the California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Property and to cover full liability for compensation under any such act; provided, however, that the City’s obligations under this subsection may be satisfied by self -insurance, provided that such self-insurance complies with the provisions of Section 5.04. (c) The City shall maintain or cause to be maintained, fire, lightning and special extended coverage insurance (which shall include coverage for vandalism and malicious mischief, but need not include coverage for earthquake damage) on all improvements constituting any part of the Property in an amount equal to the greater of 100% of the replacement cost of such improvements or 100% of the outstanding principal amount of the Bonds. The City has an insurance policy which provides replacement cost coverage. All insurance required to be maintained pursuant to this subsection may be subject to a deductible in an amount not to exceed $500,000. The City’s obligations under this subsection may be satisfied by self -insurance, provided that such self-insurance complies with the provisions of Section 5.04. (d) The City shall maintain rental interruption insurance to cover the Authority’s loss, total or partial, of Base Rental Payments resulting from the loss, total or partial, of the use of 2.c Packet Pg. 382 9 4849-6802-8385/200928-0001 any part of the Property as a result of any of the hazards required to be covered pursuant to subsection (c) of this Section in an amount sufficient at all times to pay an amount not less than the product of two times the maximum amount of Base Rental Payments scheduled to be paid during any Rental Period. The City shall not be permitted to self-insure its obligation under this subsection. (e) The insurance required by this Section shall be provided by reputable insurance companies with claims paying abilities determined, in the r easonable opinion of a professionally certified risk manager or an independent insurance consultant, to be adequate for the purposes hereof. Section 5.02 Title Insurance. The City shall provide, at its own expense, one or more CLTA or ALTA title insurance policies for the Property, in the aggregate amount of not less than the aggregate principal amount of the Bonds. Such policy or policies shall insure: (a) the fee interest of the City in the Property; (b) the Authority’s ground leasehold estate in the Property under the Ground Lease; and (c) the City’s leasehold estate hereunder in the Property, subject only to Permitted Encumbrances. All Net Insurance Proceeds received under said policy or policies shall be deposited with the Trustee and applied as provided in Section 5.04 of the Indenture. So long as any of the Bonds remain Outstanding, each policy of title insurance obtained pursuant to the Indenture or this Lease Agreement or required thereby or hereby shall provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Bond Owners. Section 5.03 Additional Insurance Provision; Form of Policies. The City shall pay or cause to be paid when due the premiums for all insurance policies required by Section 5.01 hereof, and shall promptly furnish or cause to be furnished evidence of such payments to the Trustee. All such policies shall provide that the Trustee shall be given 30 days ’ notice of the expiration thereof or any intended cancellation thereof. The Trustee shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee. The City shall cause to be delivered to the Trustee on or before November 1 each year, commencing November 1, 2021 a Written Certificate of the City stating that such policies are in full force and effect and that the City is in full compliance with the requirements of this Article. The Trustee shall be entitled to rely upon said Written Certificate of the City as to the City’s compliance with this Article. The Trustee shall not be responsible for the sufficiency of coverage or amounts of such policies. Section 5.04 Self-Insurance. Insurance provided through a California joint powers authority of which the City is a member or with which the City contracts for insurance shall be deemed to be self-insurance for purposes hereof. Any self-insurance maintained by the City pursuant to this Article shall comply with the following terms: (a) the self-insurance program and any self-insured retentions maintained by the City shall be approved in writing by the City’s Risk Management Department, a professionally certified risk manager or an independent insurance consultant; (b) the self-insurance program shall include an actuarially sound claims reserve fund out of which each self-insured claim shall be paid, the adequacy of each such fund shall be evaluated on an annual basis by the City’s Risk Management Department, a professionally certified risk manager or an independent insurance consultant and any deficiencies in any self -insured claims 2.c Packet Pg. 383 10 4849-6802-8385/200928-0001 reserve fund shall be remedied in accordance with the recommendation of the City’s Risk Management Department, a professionally certified risk manager or an independent insurance consultant, as applicable; and (c) in the event that the self-insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by a professionally certified risk manager or by an independent insurance consultant, shall be maintained. ARTICLE VI DEFAULTS AND REMEDIES Section 6.01 Defaults and Remedies. (a) (i) If the City shall fail: (A) to pay any Rental Payment payable hereunder when the same becomes due and payable, time being expressly declared to be of the essence in this Lease Agreement; or (B) to keep, observe or perform any other term, covenant or condition contained herein or in the Indenture to be kept or performed by the City; or (ii) upon the happening of any of the events specified in this subsection or in subsection (b) of this Section, the City shall be deemed to be in default hereunder and it shall be lawful for the Authority to exercise any and all remedies available pursuant to law or granted pursuant to this Lease Agreement. The City shall in no event be in default in the observance or performance of any covenant, condition or agreement in this Lease Agreement on its part to be observed or performed, other than as referred to in clause (i)(A) or (ii) of the preceding sentence, unless the City shall have failed, for a period of 30 days or such additional time as is reasonably required, to correct any such default after notice by the Authority to the City properly specifying wherein the City has failed to perform any such covenant, conditio n or agreement. Upon any such default, the Authority, in addition to all other rights and remedies it may have at law, shall have the option to do any of the following: (1) To terminate this Lease Agreement in the manner hereinafter provided on account of default by the City, notwithstanding any re -entry or re-letting of the Property as hereinafter provided for in subparagraph (2) hereof, and to re -enter the Property and remove all persons in possession thereof and all personal property whatsoever situated upon the Property and place such personal property in storage in any warehouse or other suitable place, for the account of and at the expense of the City. In the event of such termination, the City agrees to surrender immediately possession of the Property, without let or hindrance, and to pay the Authority all damages recoverable at law that the Authority may incur by reason of default by the City, including, without limitation, any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon the Property and removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions here in contained. Neither notice to pay Rental Payments or to deliver up possession of the Property given pursuant to law nor any entry or re-entry by the Authority nor any proceeding in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Property nor the appointment of a receiver upon initiative of the Authority to protect the Authority’s interest under this Lease Agreement shall of itself operate to terminate this Lease Agreement , and no termination of this Lease Agreement on account of default by the City shall be or become effective by operation of law or acts of the parties hereto, 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 Agreement. The City covenants and agrees that no surrender of the Property or of the 2.c Packet Pg. 384 11 4849-6802-8385/200928-0001 remainder of the term hereof or any termination of this Lease Agreement shall be valid in any manner or for any purpose whatsoever unless stated by the Authority by such written notice. (2) Without terminating this Lease Agreement: (x) to collect each installment of Rental Payments as the same become due and enforce any other terms or provisions hereof to be kept or performed by the City, regardless of whether or not the City has abandoned the Property; or (y) to exercise any and all rights of entry and re -entry upon the Property. In the event that the Authority does not elect to terminate this Lease Agreement in the manner provided for in subparagraph (1) hereof, the City shall remain liable and agrees to keep or perform all covenants and conditions herein contained to be kept or performed by the City and, if the Property is not re -let, to pay the full amount of the Rental Payments to the end of the term of this Lease Agreement or, in the event that the Property is re-let, to pay any deficiency in Rental Payments that results therefrom; and further agrees to pay said Rental Payments and/or Rental Payment deficiency pu nctually at the same time and in the same manner as hereinabove provided for the payment of Rental Payments hereunder, notwithstanding the fact that the Authority may have received in previous years or may receive thereafter in subsequent years Rental Paym ents in excess of the Rental Payments herein specified, and notwithstanding any entry or re -entry by the Authority or suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Property. Should the Authority elect to re-enter as herein provided, the City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City to re-let the Property, or any part thereof, from time to time, either in the Authority’s name or otherwise, upon such terms and conditions and for such use and period as the Authority may deem advisable and to remove all persons in possession thereof and all personal property whatsoever situated upon the Property and to place such personal property in storage in any warehouse or other suitable place, for the account of and at the expense of the City, and the City hereby indemnifies and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising out of, in connecti on with, or incident to any such re-entry upon and re-letting of the Property and removal and storage of such 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 Agreement constitute full and sufficient notice of the right of the Authority to re-let the Property in the event of such re-entry without effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority in effecting such re-letting shall constitute a surrender or termination of this Lease Agreement irrespective of the use or the term for which such re-letting is made or the terms and conditions of such re-letting, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease Agreement shall vest in the Authority to be effected in the sole and exclusive manner provided for in subparagraph (1) hereof. The City further agrees to pay the Authority the cost of any alterations or additions to the Property necessary to place the Property in condition for re-letting immediately upon notice to the City of the completion and installation of such additions or alterations. The City hereby waives any and all claims for damages c aused or which may be caused by the Authority in re-entering and taking possession of the Property as herein provided and all claims for damages that may result from the destruction of or injury to the Property and all claims for damages to or loss of any property belonging to the City, or any other person, that may be in or upon the Property. (b) If: (i) the City’s interest in this Lease Agreement or any part thereof is assigned or transferred, either voluntarily or by operation of law or otherwise, without the written consent of the Authority and, as hereinafter provided for; or (ii) the City or any assignee shall file any petition or institute any proceeding under any act or acts, state or federal, dealing with or relating to 2.c Packet Pg. 385 12 4849-6802-8385/200928-0001 the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or wher eby the City asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of the City’s debts or obligations, or offers to the City’s creditors to elect a composition or extension of time to pay the City’s debts or asks, seek s or prays for reorganization or to effect a plan of reorganization, or for a readjustment of the City’s debts, or for any other similar relief, or if any such petition or any such proceedings of the same or similar kind or character be filed or be institu ted or taken against the City, or if a receiver of the business or of the property or assets of the City shall be appointed by any court, except a receiver appointed at the instance or request of the Authority, or if the City shall make a general assignment for the benefit of the City’s creditors; or (iii) the City shall abandon or vacate the Property; or (iv) the City shall default under the Ground Lease, then the City shall be deemed to be in default hereunder. (c) In addition to the other remedies set forth in this Section, upon the occurrence of an event of default, the Authority and its assignee shall be entitled to proceed to protect and enforce the rights vested in the Authority and its assignee by this Lease Agreement or by law. The provisions of this Lease Agreement and the duties of the City and of its city council, officers or employees shall be enforceable by the Authority or its assignee by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction. Without limi ting the generality of the foregoing, the Authority and its assignee shall have the right to bring the following actions: (i) Accounting. By action or suit in equity to require the City and its city council, officers and employees and its assigns to account as the trustee of an express trust. (ii) Injunction. By action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of the Authority or its assignee. (iii) Mandamus. By mandamus or other suit, action or proceeding at law or in equity to enforce the Authority’s or its assignee’s rights against the City (and its city council, officers and employees) and to compel the City to perform and carry out its duties and obligations under the law and its covenants and agreements with the City as provided herein. Each and all of the remedies given to the Authority hereunder or by any law now or hereafter enacted are cumulative and the single or partial exercise of any right, power or privilege hereunder shall not impair the right of the Authority to the further exercise thereof or the exercise of any or all other rights, powers or privileges. The term “re-let” or “re-letting” as used in this Section shall include, but not be limited to, re-letting by means of the operation by the Authority of the Property. If any statute or rule of law validly shall limit the remed ies given to the Authority hereunder, the Authority nevertheless shall be entitled to whatever remedies are allowable under any statute or rule of law. In the event that the Authority shall prevail in any action brought to enforce any of the terms and provisions of this Lease Agreement, the City agrees to pay a reasonable amount as and for attorney’s fees incurred by the Authority in attempting to enforce any of the remedies available to the Authority hereunder. Notwithstanding anything to the contrary cont ained in this Lease Agreement, the Authority shall have no right upon a default hereunder by the City to accelerate Rental Payments. 2.c Packet Pg. 386 13 4849-6802-8385/200928-0001 (d) Notwithstanding anything to the contrary contained in this Lease Agreement, the termination of this Lease Agreement by the Authority and its assignees on account of a default by the City under this Section shall not effect or result in a termination of the Ground Lease. Section 6.02 Waiver. Failure of the Authority to take advantage of any default on the part of the City shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may grow up between the parties in the course of administering this instrument be construed to waive or to lessen the right of the Authority to insist upon performance by the City of any term, covenant or condition hereof, or to exercise any rights given the Authority on account of such default. A waiver of a particular default shall not be deemed to be a waive r of any other default or of the same default subsequently occurring. The acceptance of Rental Payments hereunder shall not be, or be construed to be, a waiver of any term, covenant or condition of this Lease Agreement. ARTICLE VII EMINENT DOMAIN; PREPAYMENT Section 7.01 Eminent Domain. If all of the Property (or portions thereof such that the remainder is not usable for public purposes by the City) shall be taken under the power of eminent domain, the term hereof shall cease as of the day that possession shall be so taken. If less than all of the Property shall be taken under the power of eminent domain and the remainder is usable for public purposes by the City at the time of such taking, then this Lease Agreement shall continue in full force and effect as to such remainder, and the parties waive the benefits of any law to the contrary, and in such event there shall be a partial abatement of the Rental Payments in accordance with the provisions of Section 3.06. So long as any Bonds shall be Outstanding, any award made in eminent domain proceedings for the taking of the Property, or any portion thereof, shall be paid to the Trustee and applied to the redemption of Bonds as provided in subsection (a) of Section 4.01 of the Indenture, in the corresponding provisions of any Supple mental Indenture pursuant to which Additional Bonds are issued and in Section 5.03 of the Indenture. Any such award made after all of the Bonds, and all other amounts due under the Indenture and hereunder, have been fully paid, shall be paid to the Authority and to the City as their respective interests may appear. Section 7.02 Prepayment. (a) The City may prepay all or a portion of the Base Rental Payments which are payable after June 1, 20__ from any source of available funds, on ____ 1, 20__ or any date thereafter, by paying: (i) all or a portion, as selected by the City, of the principal components of such Base Rental Payments; and (ii) the accrued but unpaid interest component of such Base Rental Payments to be prepaid to the date of such prepayment. (b) The City may prepay, from any source of available funds, all or any portion of the Base Rental Payments by depositing with the Trustee moneys or securities as provided, and subject to the terms and conditions set forth, in Article X of the Indenture in an amount that is sufficient to make such Base Rental Payments when due or to make such Base Rental Payments through a specified date on which the City has a right to prepay such Base Rental Payments pursuant to subsection (a) of this Section, and to prepay such Base Rental Payments on such prepayment date, at a prepayment price determined in accordance with subsection (a) of this Section. 2.c Packet Pg. 387 14 4849-6802-8385/200928-0001 (c) If less than all of the Base Rental Payments are prepaid pursuant to this Section then, as of the date of such prepayment pursuant to subsection (a) of this Section, or the date of a deposit pursuant to subsection (b) of this Section, the principal and interest components of such Base Rental Payments shall be recalculated by the City and transmitted to the Trustee in order to take such prepayment into account. The City agrees that if, following a partial prepayment of such Base Rental Payments, the Property is damaged or destroyed or taken by eminent domain, or a defect in title to the Property is discovered, the City shall not be entitled to, and by such prepayment waives the right of, abatement of such prepaid Base Rental Payments and the City shall not be entitled to any reimbursement of such Base Rental Payments. (d) If all of the Base Rental Payments are prepaid in accordance with the provisions of this Lease Agreement then, as of the date of such prepayment pursuant to subsection (a) of this Section and, if applicable, the corresponding provisions hereof relating to the prepayment of Base Rental Payments attributable to Additional Bonds, or de posit pursuant to subsection (b) of this Section and, if applicable, such corresponding provisions, and payment of all other amounts owed under this Lease Agreement, the term of this Lease Agreement shall be terminated. (e) Prepayments of Base Rental Payments attributable to the Series 2021 Bonds and made pursuant to this Section shall be applied to the redemption of the Series 2021 Bonds as directed by the City and as provided in Section 4.01 of the Indenture. ARTICLE VIII COVENANTS Section 8.01 Right of Entry. The Authority and its assignees shall have the right to enter upon and to examine and inspect the Property during reasonable business hours (and in emergencies at all times) for any purpose connected with the Authority’s rights or obligations under this Lease Agreement, and for all other lawful purposes. Section 8.02 Liens. In the event that the City shall at any time during the term of this Lease Agreement cause any changes, alterations, additions, improvements, or other work to be done or performed or materials to be supplied, in or upon the Property, the City shall pay, when due, all sums of money that may become due for, or purporting to be for, any labor, services, materials, supplies or equipment furnished or alleged to have been furnished to or for the City in, upon or about the Property and which may be secured by a mechanic ’s, materialmen’s or other lien against the Property or the Authority’s interest therein, and will cause each such lien to be fully discharged and released at the time that the performance of any obligation secured by any such lien matures or becomes due, except that, if the City desires to contest any such lien, it may do so as long as such contestment is in good faith. If any such lien shall be reduced to final judgment and such judgment or such process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the City shall forthwith pay and discharge said judgment. Section 8.03 Quiet Enjoyment. The parties hereto mutually covenant that the City, by keeping and performing the covenants and agreements that are contained herein, shall at all times during the term of this Lease Agreement peaceably and quietly have, hold and enjoy the Property without suit, trouble or hindrance from the Authority. 2.c Packet Pg. 388 15 4849-6802-8385/200928-0001 Section 8.04 Authority Not Liable. The Authority and its directors, officers, agents and employees shall not be liable to the City or to any other party whomsoever for any death, injury or damage that may result to any person or property by or from any cause whatsoever in, on or ab out the Property. To the extent permitted by law, the City shall, at its expense, indemnify and hold the Authority and the Trustee and all directors, members, officers, agents and employees thereof harmless against and from any and all claims by or on beh alf of any person, firm, corporation or governmental authority arising from the acquisition, construction, occupation, use, operation, maintenance, possession, conduct or management of or from any work done in or about the Property or from the subletting of any part thereof, including any liability for violation of conditions, agreements, restrictions, laws, ordinances, or regulations affecting the Property or the occupancy or use thereof, but excepting the negligence or willful misconduct of the persons or entity seeking indemnity. The City also covenants and agrees, at its expense, to pay and indemnify and save the Authority and the Trustee and all directors, officers and employees thereof harmless against and from any and all claims arising from: (a) any condition of the Property and the adjoining sidewalks and passageways; (b) any breach or default on the part of the City in the performance of any covenant or agreement to be performed by the City pursuant to this Lease Agreement; (c) any act or negligence of licensees in connection with their use, occupancy or operation of the Property; or (d) any accident, injury or damage whatsoever caused to any person, firm or corporation in or about the Property or upon or under the sidewalks and from and against all costs, reasonable counsel fees, expenses and liabilities incurred in any action or proceeding brought by reason of any claim referred to in this Section, but excepting the negligence or willful misconduct of the person or entity seeking indemnity. In the event that any action or proceeding is brought against the Authority or the Trustee or any director, member, officer or employee thereof by reason of any such claim, the City, upon notice from the Authority or the Trustee or such director, member, officer employee thereof, covenants to resist or defend such action or proceeding by counsel reasonably satisfactory to the Authority or the Trustee or such director, member, officer or employee thereof. Section 8.05 Assignment and Subleasing. Neither this Lease Agreement nor any interest of the City hereunder shall be sold, mortgaged, pledged, assigned or transferred by the City by voluntary act or by operation by law or otherwise. The Property may not be subleased in whole or in part by the City without the prior written consent of the Authority. Any such sublease shall be subject to all of the following conditions: (a) this Lease Agreement and the obligation of the City to make all Rental Payments hereunder shall remain the primary obligation of the City; (b) the City shall, 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 shall cause the Property to be used for a purpose other than a governmental or proprietary function authorized under the provisions of the Constitution and laws of the State of California; (d) any sublease of the Property by the City shall explicitly provide that such sublease is subject to all rights of the Authority under this Lease Agreement, including the right to re-enter and re-let the Property or terminate this Lease Agreement upon a default by the City; and 2.c Packet Pg. 389 16 4849-6802-8385/200928-0001 (e) the City shall furnish the Authority and the Trustee with an Opinion of Counsel to the effect that such sublease will not, in and of itself, cause the interest on the Bonds to be included in gross income for federal income tax purposes. Section 8.06 Title to Property. Upon the termination or expiration of this Lease Agreement (other than as provided in Sections 6.01 and 7.01), and the first date upon which the Bonds are no longer Outstanding, all right, title and interest in and to the Property shall vest in the City. Upon any such termination or expiration, the Authority shall execute such conveyances, deeds and other documents as may be necessary to effect such vesting of record. Section 8.07 Authority’s Purpose. The Authority covenants that, prior to the discharge of this Lease Agreement and the Bonds, it will not engage in any activities that are inconsistent with the purposes for which the Authority is organized, as set forth in the Joint Powers Agreement. Section 8.08 Representations of the City. The City represents and warrants to the Authority that: (a) the City has the full power and authority to enter into, to execute and to deliver this Lease Agreement and the Indenture, and to perform all of its duties and obligations hereunder and thereunder, and has duly authorized the execution and delivery of this Lease Agreement and the Indenture; and (b) the Property will be used in the performance of essential governmental functions. Section 8.09 Representation of the Authority. The Authority represents and warrants to the City that the Authority has the full power and authority to enter into, to execute and to deliver this Lease Agreement, the Assignment Agreement and the Indenture, and to perform all of its duties and obligations hereunder and thereunder, and has duly authorized the execution and delivery of this Lease Agreement, the Assignment Agreement and the Indenture. Section 8.10 Environmental Compliance. (a) The City will not use or permit the Property or any part thereof to be used to generate, manufacture, refine, treat, store, handle, transport or dispose of, transfer, produce or process Hazardous Materials, except, and only to the extent, if necessary to maintain the improvements on the Property or conduct lawful activities of the City on the Property and then, only in compliance with all federal, state and local laws and regulations, now or later in effect, with respect to Hazardous Materials, nor will it permit, as a result of any intentional or unintentional act or omission on its part or by any tenant, subtenant, licensee, guest, invitee, contractor, employee and agent, th e storage, transportation, disposal or use of Hazardous Materials or the release or threat of release of Hazardous Materials on, from or beneath the Property or onto any other property excluding, however, those Hazardous Materials in those amounts ordinarily found in the inventory of a municipal government, the use, storage, treatment, transportation and disposal of which is in compliance with all environmental regulations. (b) The City will comply with, and will cause all tenants, subtenants, licensees, guests, invitees, contractors, employees and agents on the Property to comply with, all environmental regulations, and will keep the Property free and clear of any liens imposed pursuant thereto; provided, however, that notwithstanding that a portion of the foregoing covenant is limited to the City’s use of its best efforts, the City will remain solely responsible for ensuring such compliance and such limitation will not diminish or affect in any way the City’s environmental compliance obligations as provided in this Lease Agreement. Upon receipt of any notice from any person with regard to the release of Hazardous Materials on, from or beneath the Property, the City will give 2.c Packet Pg. 390 17 4849-6802-8385/200928-0001 prompt written notice thereof to the Trustee prior to the expiration of any period in which to respond to such notice under any environmental regulation. (c) The City will, to the extent permitted by law, defend, indemnify and hold harmless the Trustee, the Series 2021 Bond Owners, their partners, depositors and each of their respective employees, agents, officers, directors, trustees, successors and assigns, from and against any claims, demands, penalties, fines, attorneys’ fees (including, without limitation, attorneys’ fees and expenses incurred to enforce the indemnification contained in this Section 8.10), consultants’ fees, investigation and laboratory fees, liabilities, settlements, court costs, damages, losses, costs or expenses of whatever kind or nature, known or unknown, contingent or otherwise, occurring in whole or in part, arising out of, or in any way related to: (i) the disposal, release, threat of release, discharge, storage or transportation of any Hazardous Materials on, from or beneath the Property; (ii) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials; (iii) any lawsuit brought or threatened, settlement reached or governmental order relating to Hazardous Materials on, from or beneath the Property; (iv) any violation of environmental regulations or Sections 8.10(a) or (b) by the City or any of its agents, tenants, employees, contractors, licensees, guests, subtenants or invitees; and (v) the imposition of any governmental lien for the recovery of environmental cleanup or removal costs. To the extent that the City is strictly liable under any environmental regulation, its obligation to the Series 2021 Bond Owners and the other indemnitees under the foregoing indemnification will likewise be without regard to fault on its part with respect to the violation of any environmental regulation which results in liability to any indemnitee. The foregoing obligations and liabilities under will survive the payment and satisfaction of all Bonds, and with regard to the Trustee the resignation and removal of the Trustee. Section 8.11 Covenant against Condemnation. The City hereby covenants and agrees, to the extent that it may lawfully do so, that so long as any of the Bonds remain Outstanding and unpaid, the City will not exercise the power of condemnation with respe ct to the Property. The City further covenants and agrees, to the extent that it may lawfully do so, that if for any reason the foregoing covenant is determined to be unenforceable or if the City should fail or refuse to abide by such covenant and condemns the Property, then the appraised value of the Property will not be less than the greater of: (a) if such Bonds are then subject to redemption, the principal and interest components of the Bonds outstanding through the date of their redemption; or (b) if such Bonds are not then subject to redemption, the amount necessary to defease such Bonds to the first available redemption date in accordance with the Indenture. ARTICLE IX NO CONSEQUENTIAL DAMAGES; USE OF THE PROPERTY; SUBSTITUTION OR RELEASE Section 9.01 No Consequential Damages. In no event shall the Authority or the Trustee be liable for any incidental, indirect, special or consequential damage in connection with or arising out of this Lease Agreement or the City’s use of the Property. Section 9.02 Use of the Property. The City will not use, operate or maintain the Property improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by this Lease Agreement. In addition, the City agrees to comply in all respects (including, without limitation, with respect to the use, maintenance and operation of the Property) 2.c Packet Pg. 391 18 4849-6802-8385/200928-0001 with all laws of the jurisdictions in which its operations may extend and any legislative, executive, administrative or judicial body exercising any power or jurisdiction over the Property; provided, however, that the City may contest in good faith the validity or application of any such law or rule in any reasonable manner which does not, in the opinion of the Authority, adversely affect the estate of the Authority in and to any of the Property or its interest or rights under this Lease Agreement. Section 9.03 Substitution or Release of the Property. The City shall have the right to substitute alternate real property for any portion of the Property or to release a portion of the Prop erty from this Lease Agreement. All costs and expenses incurred in connection with such substitution or release shall be borne by the City. Notwithstanding any substitution or release of Property pursuant to this subsection, there shall be no reduction in or abatement of the Base Rental Payments due from the City hereunder as a result of such substitution or release. Any such substitution or release of any portion of the Property shall be subject to the following specific conditions, which are hereby made conditions precedent to such substitution or release: (a) The City shall have delivered a Written Certificate to the Trustee setting forth its findings that the Property, as constituted after such substitution or release : (i) has an annual fair rental value at least equal to the maximum Base Rental Payments payable by the City in any Rental Period; and (ii) has a useful life in excess of the final maturity of any Outstanding Bonds; (b) the City shall have obtained or caused to be obtained a CLTA or ALTA title insurance policy or policies with respect to any substituted property in the amount at least equal to the aggregate principal amount of any Outstanding Bonds of the type and with the endorsements described in Section 5.02 hereof; (c) the City shall have provided the Trustee with an Opinion of Counsel to the effect that such substitution or release will not, in and of itself, cause the interest on the Bonds to be included in gross income for federal income tax purposes; (d) the City, the Authority and the Trustee shall have executed, and the City shall have caused to be recorded with the Los Angeles County Recorder, any document necessary to reconvey to the City the portion of the Property being released and to include any substituted real property in the description of the Property contained herein and in the Ground Lease; and (e) the City shall have provided notice of such substitution to each rati ng agency then rating the Bonds. ARTICLE X MISCELLANEOUS Section 10.01 Law Governing. THIS LEASE AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY THE PROVISIONS HEREOF AND BY THE LAWS OF THE STATE OF CALIFORNIA AS THE SAME FROM TIME TO TIME EXIST. Section 10.02 Notices. All written notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: 2.c Packet Pg. 392 19 4849-6802-8385/200928-0001 If to the City: City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 Attention: City Manager If to the Authority: City of Diamond Bar Public Financing Authority c/o City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 Attention: Executive Director Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed: (a) if personally served or delivered, upon delivery; (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender’s receipt of an appropriate answerback or other written acknowledgment; (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail; (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier; or (e) if given by any other means, upon delivery at the address specified in this Section. Section 10.03 Validity and Severability. If for any reason this Lease Agreement shall be held by a court of competent jurisdiction to be void, voidable or unenforceable by the Authority or by the City, or if for any reason it is held by such a court that any of the covenants and conditions of the City hereunder, including the covenant to pay Rental Payments, is unenforceable for the full term hereof; then and in such event this Lease Agreement is and shall be deemed to be a Lease Agreement under which the Rental Payments are to be paid by the City annually in consideration of the right of the City to possess, occupy and use the Property, and all of the terms, provisions and conditions of this Lease Agreement, except to the extent that such terms, pro visions and conditions are contrary to or inconsistent with such holding, shall remain in full force and effect. Section 10.04 Net-Net-Net Lease. This Lease Agreement shall be deemed and construed to be a “net-net-net lease” and the City hereby agrees that the Rental Payments shall be an absolute net return to the Authority, free and clear of any expenses, charges or set -offs whatsoever and notwithstanding any dispute between the City and the Authority. Section 10.05 Taxes. The City shall pay or cause to be paid all taxes and assessments of any type or nature charged to the Authority or affecting the Property or the respective interests or estates therein; provided, however, 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 be obligated to pay only such installments as are required to be paid during the term of this Lease Agreement as and when the same become due. The City or any sublessee may, at the City’s or such sublessee’s 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 or the Trustee shall notify the City or such sublessee that, in the opinion of independent counsel, by nonpayment of any such items, the interest of the Authority in the Property will be materially endangered or the Property, or any part 2.c Packet Pg. 393 20 4849-6802-8385/200928-0001 thereof, will be subject to loss or forfeiture, in which event the City or such sublessee 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 10.06 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 Lease Agreement. Section 10.07 Amendments. (a) This Lease Agreement and the Ground Lease may be amended and the rights and obligations of the Authority and the City hereunder and thereunder may be amended at any time by an amendment hereto or thereto which shall become binding upon execution and delivery by the Authority and the City, but only with the prior written consent of the Owners of a majority of the principal amount of the Bonds then Outstanding pursuant to the Indenture, provided that no such amendment shall: (i) extend the payment date of any Base Rental Payments, reduce the interest component or principal component of any Base Rental Payments or change the prepayment terms and provisions, without the prior written consent of the Owner of each Bond so affected ; or (ii) reduce the percentage of the principal amount of the Bonds the consent of the Owners of which is required for the execution of any amendment of this Lease Agreement or the Ground Lease. (b) This Lease Agreement and the Ground Lease and the rights and obligations of the Authority and the City hereunder and thereunder may also be amended at any time by an amendment hereto or thereto which shall become bindin g upon execution by the Authority and the City, without the written consents of any Owners, but only: (1) to the extent permitted by law; and (2) for any one or more of the following purposes: (i) to add to the agreements, conditions, covenants and terms requi red by the Authority or the City to be observed or performed herein or therein other agreements, conditions, covenants and terms thereafter to be observed or performed by the Authority or the City, or to surrender any right or power reserved herein or therein to or conferred herein or therein on the Authority or the City, and which in either case shall not materially adversely affect the interests of the Owners, as evidenced by an Opinion of Bond Counsel; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or therein or in regard to questions arising hereunder or thereunder which the Authority or the City may deem desirable or necessary and not inconsistent herewith or therewith, and which shall not materially adversely affect the interests of the Owners, as evidenced by an Opinion of Bond Counsel; (iii) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of the interest on the Bonds; (iv) to provide for the substitution or release of all or a portion of the Property in accordance with the provisions of Section 9.03; (v) to provide for the issuance of Additional Bonds in accordance with Article III of the Indenture; or 2.c Packet Pg. 394 21 4849-6802-8385/200928-0001 (vi) to make such other changes herein or therein or modifications hereto or thereto as the Authority or the City may deem desirable or necessary, and which shall not materially adversely affect the rights and interests of the Owners, as evidenced by an Opinion of Bond Counsel. Section 10.08 Assignment. The City and the Authority hereby acknowledge the assignment of this Lease Agreement (except for the Authority’s obligations and its rights to give consents or approvals hereunder), and the Base Rental Payments payable hereunder, to the Trustee pursuant to the Assignment Agreement. To the extent that this Lease Agreement confers upon or gives or grants the Trustee any right, remedy or claim under or by reason of this Lease Agreemen t, the Trustee is hereby explicitly recognized as being a third-party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder. Section 10.09 Execution. This Lease Agreement 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 Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 2.c Packet Pg. 395 S-1 4849-6802-8385/200928-0001 IN WITNESS WHEREOF, the Authority and the City have caused this Lease Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. CITY OF DIAMOND BAR By: City Manager ATTEST: City Clerk CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Executive Director ATTEST: Secretary 2.c Packet Pg. 396 A-1 4849-6802-8385/200928-0001 EXHIBIT A DESCRIPTION OF THE PROPERTY PARCEL A: IN THE CITY OF DIAMOND BAR, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, BEING THAT ADJUSTED PARCEL 1 OF THAT CERTAIN LOT LINE ADJUSTMENT NO. 02- 001, RECORDED OCTOBER 23, 2003 AS INSTRUMENT NO. 03-3180260 AND RE- RECORDED MARCH 09, 2004 AS INSTRUMENT NO. 04-0566670, BOTH OF OFFICIAL RECORDS. BEING A PORTION OF LOTS 3 AND 4 OF TRACT NO. 31479, RECORDED IN BOOK 998, PAGES 7 THROUGH 17 OF MAPS, RECORDS OF SAID COUNTY AND SAID STATE, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE NORTHERLY RIGHT-OF-WAY OF GRAND AVENUE, SAID POINT ALSO BEING THE SOUTHWESTERLY CORNER OF SAID LOT 4; 1. THENCE SOUTH 76° 57' 27" EAST, A DISTANCE OF 394.04 FEET; 2. THENCE NORTH 14° 53' 14" EAST, A DISTANCE OF 245.22 FEET; 3. THENCE NORTH 18° 21' 02" WEST, A DISTANCE OF 178.70 FEET; 4. THENCE NORTH 9° 23' 07" EAST, A DISTANCE OF 156.42 FEET; 5. THENCE NORTH 37° 50' 26" WEST, A DISTANCE OF 115.92 FEET; 6. THENCE NORTH 13° 57' 31" EAST, A DISTANCE OF 56.83 FEET; 7. THENCE NORTH 28° 21' 05" WEST, A DISTANCE OF 36.23 FEET; 8. THENCE NORTH 23° 50' 39" WEST, A DISTANCE OF 68.67 FEET; 9. THENCE NORTH 64° 30' 56" WEST, A DISTANCE OF 147.67 FEET; 10. THENCE NORTH 26° 41' 29" WEST, A DISTANCE OF 325.87 FEET; 11. THENCE NORTH 19° 09' 09" EAST, A DISTANCE OF 42.03 FEET; 12. THENCE NORTH 86° 38' 16" EAST, A DISTANCE OF 49.43 FEET; 13. THENCE SOUTH 72° 43' 51" EAST, A DISTANCE OF 32.64 FEET; 14. THENCE SOUTH 50° 34' 22" EAST, A DISTANCE OF 39.12 FEET; 15. THENCE NORTH 78° 32' 58" EAST, A DISTANCE OF 28.47 FEET; 16. THENCE NORTH 47° 26' 38" EAST, A DISTANCE OF 19.24 FEET; 17. THENCE NORTH 4° 33' 42" EAST, A DISTANCE OF 22.12 FEET; 18. THENCE NORTH 86° 38' 16" EAST, A DISTANCE OF 39.10 FEET; 19. THENCE SOUTH 75° 25' 56" EAST, A DISTANCE OF 34.13 FEET; 20. THENCESOUTH 59° 09' 05" EAST, A DISTANCE OF 37.15 FEET; 21. THENCE SOUTH 38° 38' 59" EAST, A DISTANCE OF 20.60 FEET; 22. THENCE SOUTH 17° 17' 41" WEST, A DISTANCE OF 59.02 FEET; 23. THENCE SOUTH 68° 07' 01" EAST, A DISTANCE OF 86.71 FEET; 24. THENCE NORTH 20° 39' 47" EAST, A DISTANCE OF 18.27 FEET; 25. THENCE NORTH 57° 15' 30" EAST, A DISTANCE OF 25.91 FEET; 26. THENCE SOUTH 70° 02' 32" EAST, A DISTANCE OF 52.31 FEET; 27. THENCE SOUTH 87° 07' 40" EAST, A DISTANCE OF 154.39 FEET; 28. THENCE SOUTH 41° 09' 40" EAST, A DISTANCE OF 80.72 FEET; 29. THENCE SOUTH 72° 03' 30" EAST, A DISTANCE OF 99.38 FEET; 30. THENCE NORTH 18° 09' 01" EAST, A DISTANCE OF 53.93 FEET; 31. THENCE NORTH 20° 53' 53" EAST, A DISTANCE OF 38.44 FEET; 2.c Packet Pg. 397 A-2 4849-6802-8385/200928-0001 32. THENCE NORTH 1° 09' 11" WEST, A DISTANCE OF 48.07 FEET; 33. THENCE NORTH 67° 49' 25" EAST, A DISTANCE OF 58.40 FEET; 34. THENCE NORTH 74° 34' 34" EAST, A DISTANCE OF 48.18 FEET; 35. THENCE NORTH 62° 17' 56" EAST, A DISTANCE OF 24.67 FEET; 36. THENCE NORTH 66° 41' 43" EAST, A DISTANCE OF 24.75 FEET; 37. THENCE NORTH 49° 03' 44" EAST, A DISTANCE OF 19.88 FEET; 38. THENCE NORTH 9° 28' 28" EAST, A DISTANCE OF 13.81 FEET; 39. THENCE NORTH 37° 31' 39" EAST, A DISTANCE OF 48.90 FEET; 40. THENCE NORTH 58° 12' 53" EAST, A DISTANCE OF 79.91 FEET; 41. THENCE NORTH 33° 31' 11" WEST, A DISTANCE OF 18.79 FEET; 42. THENCE NORTH 52° 49' 59" EAST, A DISTANCE OF 41.11 FEET; 43. THENCE NORTH 71° 52' 42" EAST, A DISTANCE OF 66.51 FEET 44. THENCE NORTH 77° 00' 19" EAST, A DISTANCE OF 38.93 FEET; 45. THENCE NORTH 45° 48' 25" EAST, A DISTANCE OF 150.63 FEET; 46. THENCE NORTH 70° 39' 20" WEST, A DISTANCE OF 73.13 FEET; 47. THENCE NORTH 5° 43' 20" WEST, A DISTANCE OF 100.28 FEET; 48. THENCE NORTH 56° 58' 00" EAST, A DISTANCE OF 119.27 FEET; 49. THENCE NORTH 11° 05' 40" WEST, A DISTANCE OF 262.39 FEET; 50. THENCE NORTH 25° 02' 30" EAST, A DISTANCE OF 277.59 FEET; 51. THENCE SOUTH 64° 45' 30" EAST, A DISTANCE OF 309.56 FEET; 52. THENCE NORTH 7° 00' 30" EAST, A DISTANCE OF 299.24 FEET; 53. THENCE NORTH 13° 14' 00" EAST, A DISTANCE OF 286.10 FEET; 54. THENCE SOUTH 84° 11' 50" EAST, A DISTANCE OF 123.63 FEET; 55. THENCE NORTH 70° 46' 10" EAST, A DISTANCE OF 45.54 FEET; 56. THENCE NORTH 24° 00' 31" EAST, A DISTANCE OF 196.88 FEET; 57. THENCE SOUTH 87° 14' 22" WEST, A DISTANCE OF 128.32 FEET; 58. THENCE NORTH 84° 46' 41" WEST, A DISTANCE OF 283.70 FEET; 59. THENCE NORTH 76° 50' 24" WEST, A DISTANCE OF 605.52 FEET; 60. THENCE NORTH 76° 55' 09" WEST, A DISTANCE OF 699.02 FEET; 61. THENCE NORTH 83° 05' 17" WEST, A DISTANCE OF 622.72 FEET; 62. THENCE NORTH 83° 11' 50" WEST, A DISTANCE OF 656.41 FEET; 63. THENCE SOUTH 74° 55' 05" EAST, A DISTANCE OF 39.24 FEET; 64. THENCE SOUTH 22° 06' 13" WEST, A DISTANCE OF 19.69 FEET; 65. THENCE NORTH 83° 13' 36" WEST, A DISTANCE OF 22.65 FEET; 66. THENCE SOUTH 16° 28' 56" EAST, A DISTANCE OF 171.62 FEET; 67. THENCE SOUTH 8° 35' 01" EAST, A DISTANCE OF 53.60 FEET; 68. THENCE SOUTH 80° 03' 36" EAST, A DISTANCE OF 8.45 FEET; 69. THENCE SOUTH 9° 56' 23" WEST, A DISTANCE OF 139.69 FEET; 70. THENCE SOUTH 25° 26' 54" WEST, A DISTANCE OF 172.70 FEET; 71. THENCE SOUTH 14° 55' 58" WEST, A DISTANCE OF 27.70 FEET 72. THENCE SOUTH 5° 00' 00" WEST, A DISTANCE OF 50.00 FEET; 73. THENCE SOUTH 19° 00' 00" WEST, A DISTANCE OF 102.50 FEET; 74. THENCE SOUTH 67° 36' 32" WEST, A DISTANCE OF 221.86 FEET; 75. THENCE SOUTH 46° 31' 54" EAST, A DISTANCE OF 264.55 FEET; 76. THENCE SOUTH 10° 03' 28" EAST, A DISTANCE OF 80.00 FEET; 77. THENCE SOUTH 9° 56' 23" WEST, A DISTANCE OF 255.00 FEET; 78. THENCE SOUTH 59° 50' 20" WEST, A DISTANCE OF 129.48 FEET; 79. THENCE SOUTH 21° 35' 43" WEST, A DISTANCE OF 258.12 FEET; 80. THENCE SOUTH 23° 44' 58" EAST, A DISTANCE OF 54.63 FEET; 2.c Packet Pg. 398 A-3 4849-6802-8385/200928-0001 81. THENCE SOUTH 5° 57' 52" EAST, A DISTANCE OF 67.36 FEET; 82. THENCE SOUTH 26° 47' 29" EAST, A DISTANCE OF 113.15 FEET; 83. THENCE SOUTH 72° 09' 54" EAST, A DISTANCE OF 120.81 FEET; 84. THENCE SOUTH 87° 01' 54" EAST, A DISTANCE OF 135.18 FEET; 85. THENCE SOUTH 52° 07' 30" EAST, A DISTANCE OF 57.01 FEET; 86. THENCE SOUTH 86° 33' 59" EAST, A DISTANCE OF 50.09 FEET; 87. THENCE SOUTH 20° 18' 08" EAST, A DISTANCE OF 106.63 FEET; 88. THENCE SOUTH 32° 56' 57" EAST, A DISTANCE OF 64.35 FEET; 89. THENCE SOUTH 74° 39' 25" EAST, A DISTANCE OF 116.42 FEET; 90. THENCE SOUTH 44° 39' 25" EAST, A DISTANCE OF 1117.89 FEET; 91. THENCE SOUTH 24° 04' 29" WEST, A DISTANCE OF 299.68 FEET TO THE POINT OF BEGINNING. EXCEPT THEREFROM ALL OIL, GAS AND OTHER HYDROCARBONS AND MINERALS NOW OR AT ANY TIME HEREAFTER SITUATED THEREIN AND THEREUNDER, TOGETHER WITH THE EXCLUSIVE RIGHT TO DRILL FOR, PRODUCE, EXTRACT, TAKE AND MINE THEREFROM SUCH OIL, GAS AND OTHER HYDROCARBONS AND MINERAL AND TO STORE THE SAME UPON THE SURFACE OF SAID LAND, OR BELOW THE SURFACE OF SAID LAND, TOGETHER WITH THE RIGHT TO STORE UPON THE SURFACE OF SAID LAND, OIL, GAS AND OTHER HYDROCARBONS AND MINERALS WHICH MAY BE PRODUCED OTHER LANDS, WITH THE RIGHT OF ENTRY THEREON FOR THE SAID PURPOSES, AND WITH THE RIGHT TO CONSTRUCT, USE, MAINTAIN, ERECT, REPAIR, REPLACE AND REMOVE THEREON AND THEREFROM, ALL PIPE LINES, TELEPHONE AND TELEGRAPH LINES, TANKS, MACHINERY, BUILDINGS AND OTHER STRUCTURES WHICH MAY BE NECESSARY AND REQUISITE TO CARRY ON OPERATIONS ON SAID LANDS, WITH RIGHT TO ERECT, MAINTAIN, OPERATE AND REMOVE A PLANT, WITH ALL NECESSARY APPURTENANTS FOR THE EXTRACTION OF GASOLINE FROM GAS, INCLUDING ALL RIGHTS NECESSARY OR CONVENIENT THERETO, AS EXCEPT AND RESERVED IN THE DEED FROM TRANSAMERICA DEVELOPMENT COMPANY, A CORPORATION, RECORDED MARCH 29, 1968, AS DOCUMENT NO. 2456, IN BOOK D3955, PAGE 185, OFFICIAL RECORDS; AND RE- RECORDED JUNE 19, 1969, AS DOCUMENT NO. 1776, IN BOOK D4407, PAGE 591, OFFICIAL RECORDS; AND AS MODIFIED WITH RESPECT TO A PORTION THEREON BY A QUITCLAIM DEED RECORDED NOVEMBER 12, 1970, AS INSTRUMENT NO. 2112, OFFICIAL RECORDS, WHICH RELINQUISHED ALL RIGHT TO THE USE OF THE SURFACE AND SUBSURFACE TO A DEPTH OF 500 FEET FROM THE SURFACE OF THE LAND. ALL RIGHTS TO THE USE OF THE SURFACE AND SUB-SURFACE TO A DEPTH OF FIVE HUNDRED (500) FEET FROM THE SURFACE FOR ANY PURPOSE INCIDENTAL TO THE OWNERSHIP OF ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES AND MINERALS WERE QUITCLAIMED BY DEED RECORDED DECEMBER 24, 1981, AS INSTRUMENT NO. 81-1263075, OFFICIAL RECORDS, OF SAID COUNTY. PARCEL B: IN THE CITY OF DIAMOND BAR, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, BEING A PORTION OF ADJUSTED PARCEL 2 AND A PORTION OF ADJUSTED PARCEL 3 OF LOT LINE ADJUSTMENT NUMBER 02-001, RECORDED OCTOBER 23, 2003 AS 2.c Packet Pg. 399 A-4 4849-6802-8385/200928-0001 INSTRUMENT NO. 03-3180260 AND RE-RECORDED MARCH 09, 2004 AS INSTRUMENT NO. 04-0566670 OFFICIAL RECORDS OF SAID COUNTY AND SAID STATE, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHWESTERLY CORNER OF SAID ADJUSTED PARCEL 2, ALSO BEING IN THE NORTHERLY RIGHT-OF-WAY OF GRAND AVENUE; THENCE SOUTH 76° 57' 27" EAST, A DISTANCE OF 306.53 FEET TO A TANGENT CURVE CONCAVE NORTHWESTERLY HAVING A RADIUS OF 13.00 FEET; THENCE NORTHEASTERLY, A DISTANCE OF 20.42 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00"; THENCE TANGENT FROM SAID CURVE NORTH 13° 02' 33" EAST, A DISTANCE OF 66.52 FEET TO A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 465.00 FEET; THENCE NORTHERLY, A DISTANCE OF 91.99 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 11° 20' 03"; THENCE TANGENT FROM SAID CURVE NORTH 01° 42' 30" EAST, A DISTANCE OF 118.11 FEET TO A TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 528.00 FEET; THENCE NORTHERLY, A DISTANCE OF 332.12 ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 36° 02' 23" TO THE MOST SOUTHERLY POINT OF SAID ADJUSTED PARCEL 3; THENCE CONTINUING ALONG SAID CURVE, A DISTANCE OF 195.69 FEET THROUGH A CENTRAL ANGLE OF 21° 14' 07"; THENCE TANGENT FROM SAID CURVE NORTH 58° 59' 00" WEST, A DISTANCE OF 176.43 FEET TO A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 472.00 FEET; THENCE NORTHERLY, A DISTANCE OF 351.12 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 42° 37' 20"; THENCE TANGENT FROM SAID CURVE NORTH 16° 21' 40" EAST, A DISTANCE OF 105.08 FEET TO A TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 728.00 FEET; THENCE NORTHERLY, A DISTANCE OF 49.95 FEET THROUGH A CENTRAL ANGLE OF 03° 55' 53"; THENCE NON-TANGENT FROM SAID CURVE NORTH 69° 42' 32" WEST, A DISTANCE OF 4.00 FEET; THENCE NORTH 47° 20' 32" WEST, A DISTANCE OF 288.17 FEET TO THE WESTERLY MOST CORNER OF SAID ADJUSTED PARCEL 3; THENCE SOUTH 77° 00' 57" WEST, A DISTANCE OF 38.92 FEET; THENCE SOUTH 71° 52' 42" WEST, A DISTANCE OF 66.51 FEET; THENCE SOUTH 52° 49' 59" WEST, A DISTANCE OF 41.11 FEET; THENCE SOUTH 33° 31' 11" EAST, A DISTANCE OF 18.79 FEET; THENCE SOUTH 58° 12' 53" WEST, A DISTANCE OF 79.91 FEET; THENCE SOUTH 37° 31' 39" WEST, A DISTANCE OF 48.90 FEET; THENCE SOUTH 09° 28' 28" WEST, A DISTANCE OF 13.81 FEET; THENCE SOUTH 49° 03' 44" WEST, A DISTANCE OF 19.88 FEET; THENCE SOUTH 66° 41' 43" WEST, A DISTANCE OF 24.75 FEET; THENCE SOUTH 62° 17' 56" WEST, A DISTANCE OF 24.67 FEET; THENCE SOUTH 74° 34' 34" WEST, A DISTANCE OF 48.18 FEET; THENCE SOUTH 67° 49' 25" WEST, A DISTANCE OF 58.40 FEET; THENCE SOUTH 01° 09' 11" EAST, A DISTANCE OF 48.07 FEET; THENCE SOUTH 20° 53' 53" WEST, A DISTANCE OF 38.44 FEET; THENCE SOUTH 18° 09' 01" WEST, A DISTANCE OF 53.93 FEET; THENCE NORTH 72° 03' 30" WEST, A DISTANCE OF 99.38 FEET; THENCE NORTH 41° 09' 40" WEST, A DISTANCE OF 80.72 FEET; THENCE NORTH 87° 07' 40" WEST, A DISTANCE OF 154.39 FEET; THENCE NORTH 70° 02' 32" WEST, A DISTANCE OF 52.31 FEET; THENCE SOUTH 57° 15' 30" WEST, A DISTANCE OF 25.91 FEET; THENCE SOUTH 20° 39' 47" WEST, A DISTANCE OF 18.27 FEET; THENCE NORTH 68° 07' 01" WEST, A DISTANCE OF 86.71 FEET; THENCE NORTH 17° 17' 41" EAST, A DISTANCE OF 59.02 FEET; THENCE NORTH 38° 38' 59" WEST A DISTANCE OF 20.60 FEET; THENCE NORTH 59° 09' 05" WEST, A DISTANCE OF 37.15 FEET; THENCE NORTH 75° 25' 56" WEST, A DISTANCE OF 34.13 FEET; THENCE SOUTH 86° 38' 16" WEST, A DISTANCE OF39.10 FEET; THENCE SOUTH 2.c Packet Pg. 400 A-5 4849-6802-8385/200928-0001 04° 33' 42" WEST, A DISTANCE OF 22.12 FEET; THENCE SOUTH 47° 26' 38" WEST, A DISTANCE OF 19.24 FEET; THENCE SOUTH 78° 32' 58" WEST, A DISTANCE OF 28.47 FEET; THENCE NORTH 50° 34' 22" WEST, A DISTANCE OF 39.12 FEET; THENCE NORTH 72° 43' 51" WEST, A DISTANCE OF 32.64 FEET; THENCE SOUTH 86° 38' 16" WEST, A DISTANCE OF 49.43 FEET; THENCE SOUTH 19° 09' 09" WEST, A DISTANCE OF 42.03 FEET; THENCE SOUTH 26° 41' 29" EAST, A DISTANCE OF 325.87 FEET; THENCE SOUTH 64° 30' 56" EAST, A DISTANCE OF 147.67 FEET; THENCE SOUTH 23° 50' 39" EAST, A DISTANCE OF 68.67 FEET; THENCE SOUTH 28° 21' 05" EAST, A DISTANCE OF 36.23 FEET; THENCE SOUTH 13° 57' 31" WEST, A DISTANCE OF 56.83 FEET; THENCE SOUTH 37° 50' 26" EAST, A DISTANCE OF 115.92 FEET; THENCE SOUTH 09° 23' 07" WEST, A DISTANCE OF 156.42 FEET; THENCE SOUTH 18° 21' 02" EAST, A DISTANCE OF 178.70 FEET; THENCE SOUTH 14° 53' 14" WEST, A DISTANCE OF 245.22 TO THE POINT OF BEGINNING. SAID DESCRIPTION IS MADE PURSUANT TO ADJUSTED PARCEL B, OF LOT LINE ADJUSTMENT NO. 07-002, RECORDER JUNE 26, 2008 AS INSTRUMENT NO. 20081143590, OFFICIAL RECORDS OF SAID COUNTY. For conveyancing purposes only: APN(S) 8701-059-904 AND 8701-059-909 2.c Packet Pg. 401 B-1 4849-6802-8385/200928-0001 EXHIBIT B BASE RENTAL PAYMENT SCHEDULE Base Rental Payments Date (Fifteenth Day of Calendar Month Prior to) Principal Component Interest Component Total Base Rental 12/1/2021 $ [ - $ $ 6/1/2022 12/1/2022 - 6/1/2023 12/1/2023 - 6/1/2024 12/1/2024 - 6/1/2025 12/1/2025 - 6/1/2026 12/1/2026 - 6/1/2027 12/1/2027 - 6/1/2028 12/1/2028 - 6/1/2029 12/1/2029 - 6/1/2030 12/1/2030 - 6/1/2031 12/1/2031 - 6/1/2032 12/1/2032 - 6/1/2033 ] $_____ $ $ 2.c Packet Pg. 402 Stradling Yocca Carlson & Rauth Draft of 4/19/21 4837-5803-9009v3/200928-0001 INDENTURE by and among CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY and CITY OF DIAMOND BAR and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of June 1, 2021 Relating to $_____ CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A 2.d Packet Pg. 403 TABLE OF CONTENTS Page i 4837-5803-9009v3/200928-0001 ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01 Definitions ..................................................................................................................... 2 Section 1.02 Equal Security ............................................................................................................. 10 ARTICLE II THE BONDS Section 2.01 Authorization of Bonds ............................................................................................... 10 Section 2.02 Terms of Series 2021 Bonds ....................................................................................... 10 Section 2.03 Form of Series 2021 Bonds ......................................................................................... 11 Section 2.04 Transfer and Exchange of Bonds ................................................................................ 11 Section 2.05 Registration Books ...................................................................................................... 12 Section 2.06 Execution of Bonds ..................................................................................................... 12 Section 2.07 Authentication of Bonds ............................................................................................. 12 Section 2.08 Temporary Bonds ........................................................................................................ 12 Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen ............................................................... 12 Section 2.10 Book-Entry Bonds ...................................................................................................... 13 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS Section 3.01 Issuance of Series 2021 Bonds.................................................................................... 14 Section 3.02 Application of Proceeds of the Series 2021 Bonds ..................................................... 15 Section 3.03 [RESERVED] ............................................................................................................. 15 Section 3.04 Costs of Issuance Fund ............................................................................................... 15 Section 3.05 [RESERVED] ............................................................................................................. 15 Section 3.06 Conditions for the Issuance of Additional Bonds ....................................................... 15 Section 3.07 Procedure for the Issuance of Additional Bonds ........................................................ 17 Section 3.08 Additional Bonds ........................................................................................................ 17 ARTICLE IV REDEMPTION OF BONDS Section 4.01 Redemption of Series 2021 Bonds .............................................................................. 18 Section 4.02 Notice of Redemption ................................................................................................. 19 Section 4.03 Selection of Bonds for Redemption ............................................................................ 19 Section 4.04 Partial Redemption of Bonds ...................................................................................... 19 Section 4.05 Effect of Notice of Redemption .................................................................................. 19 ARTICLE V SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS Section 5.01 Pledge; Special Obligations ........................................................................................ 20 Section 5.02 Flow of Funds ............................................................................................................. 20 Section 5.03 Application of Net Insurance Proceeds ....................................................................... 21 Section 5.04 Title Insurance ............................................................................................................ 23 Section 5.05 Rebate Fund ................................................................................................................ 23 Section 5.06 Investment of Moneys ................................................................................................. 24 2.d Packet Pg. 404 TABLE OF CONTENTS (continued) Page ii 4837-5803-9009v3/200928-0001 ARTICLE VI COVENANTS Section 6.01 Compliance with Agreements ..................................................................................... 25 Section 6.02 Compliance with Ground Lease and Lease Agreement .............................................. 26 Section 6.03 Observance of Laws and Regulations ......................................................................... 26 Section 6.04 Other Liens .................................................................................................................. 26 Section 6.05 Prosecution and Defense of Suits ............................................................................... 26 Section 6.06 Accounting Records and Statements........................................................................... 26 Section 6.07 Recordation and Filing ................................................................................................ 27 Section 6.08 Tax Covenants ............................................................................................................ 27 Section 6.09 Continuing Disclosure ................................................................................................ 28 Section 6.10 Further Assurances ...................................................................................................... 28 Section 6.11 Continued Existence of Authority............................................................................... 28 ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01 Action on Default ........................................................................................................ 28 Section 7.02 Other Remedies of the Trustee.................................................................................... 28 Section 7.03 Non-Waiver ................................................................................................................. 29 Section 7.04 Remedies Not Exclusive ............................................................................................. 29 Section 7.05 No Liability by the Authority to the Owners .............................................................. 29 Section 7.06 No Liability by the City to the Owners ....................................................................... 29 Section 7.07 No Liability of the Trustee to the Owners .................................................................. 30 Section 7.08 Application of Amounts After Default ....................................................................... 30 Section 7.09 Trustee May Enforce Claims Without Possession of Bonds ...................................... 30 Section 7.10 Limitation on Suits ...................................................................................................... 30 ARTICLE VIII THE TRUSTEE Section 8.01 Employment of the Trustee ......................................................................................... 31 Section 8.02 Duties, Removal and Resignation of the Trustee ........................................................ 31 Section 8.03 Compensation of the Trustee ...................................................................................... 32 Section 8.04 Protection of the Trustee ............................................................................................. 32 ARTICLE IX MODIFICATION OR AMENDMENTS Section 9.01 Modifications and Amendments Permitted................................................................. 35 Section 9.02 Effect of Supplemental Indenture ............................................................................... 37 Section 9.03 Endorsement of Bonds; Preparation of New Bonds ................................................... 37 Section 9.04 Amendment of Particular Bonds ................................................................................. 37 ARTICLE X DEFEASANCE Section 10.01 Discharge of Indenture ................................................................................................ 37 Section 10.02 Bonds Deemed To Have Been Paid ............................................................................ 38 2.d Packet Pg. 405 TABLE OF CONTENTS (continued) Page iii 4837-5803-9009v3/200928-0001 Section 10.03 Payment of Bonds After Discharge of Indenture ........................................................ 39 ARTICLE XI MISCELLANEOUS Section 11.01 Benefits of Indenture Limited to Parties ..................................................................... 39 Section 11.02 Successor Deemed Included in all References to Predecessor ................................... 39 Section 11.03 Execution of Documents by Owners .......................................................................... 39 Section 11.04 Waiver of Personal Liability ....................................................................................... 40 Section 11.05 Destruction of Bonds .................................................................................................. 40 Section 11.06 Funds and Accounts .................................................................................................... 40 Section 11.07 Article and Section Headings Gender and References ............................................... 40 Section 11.08 Partial Invalidity .......................................................................................................... 40 Section 11.09 Disqualified Bonds ...................................................................................................... 41 Section 11.10 Money Held for Particular Bonds ............................................................................... 41 Section 11.11 Payment on Non-Business Days ................................................................................. 41 Section 11.12 California Law ............................................................................................................ 41 Section 11.13 Notices ........................................................................................................................ 41 Section 11.14 Notice to Rating Agencies .......................................................................................... 42 Section 11.15 Execution in Counterparts ........................................................................................... 42 Signatures ................................................................................................................................... S-1 EXHIBIT A FORM OF SERIES 2021 BOND ............................................................................. A-1 EXHIBIT B DESCRIPTION OF THE 2002 PROJECT ............................................................... B-1 2.d Packet Pg. 406 1 4837-5803-9009v3/200928-0001 INDENTURE THIS INDENTURE (this “Indenture”), executed and entered into and dated as of June 1, 2021, is by and among the CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY, a joint exercise of powers entity that is duly organized and existing under the laws of the State of California (the “Authority”), the CITY OF DIAMOND BAR, a municipal corporation and general law city that is duly organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association that is duly organized and existing under and by virtue of the laws of the United States, as Trustee (the “Trustee”). RECITALS A. The Authority previously issued its Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (the “2002 Bonds”), which are currently outstanding in the aggregate principal amount of $7,830,000, in order to finance certain capital improvements of the City (the “2002 Project”). B. The Authority and the City have determined that it would be in the best interests of the City and residents of the City to authorize the preparation, sale and delivery b y the Authority of the “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A” (the “Series 2021 Bonds”) for the purposes of refunding all of the outstanding 2002 Bonds and refinancing the 2002 Project, which Bonds will be payable from certain base rental payments (the “Base Rental Payments”) to be made by the City under the below-defined Lease Agreement. C. In connection with the foregoing, the City will lease certain real property of the City and the improvements located thereon, consisting of the Community/Senior Center at Summitridge Park (1600 Grand Avenue, Diamond Bar, California 91765) (collectively, the “Property”), to the Authority pursuant to a Ground Lease, dated as of the date hereof (the “Ground Lease”), by and between the City and the Authority, and the City will sublease the Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof (the “Lease Agreement”), by and between the City and the Authority. D. The Property is more particularly described in Exhibit A to the Lease Agreement. E. All rights to receive the Base Rental Payments have been assigned without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of the date hereof (the “Assignment Agreement”), by and between the Authority and the Trustee. F. The Authority and the City desire to provide for the issuance of additional bonds (the “Additional Bonds”) payable from the Base Rental Payments on a parity with the Series 2021 Bonds (the Series 2021 Bonds and any such Additional Bonds being collectively referred to as the “Bonds”). G. 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 secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Authority and the City have authorized the execution and delivery of this Indenture. 2.d Packet Pg. 407 2 4837-5803-9009v3/200928-0001 H. The Authority and the City have determined that all a cts and proceedings that are 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 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 the Indenture has been in all respects duly authorized. In consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties do hereby agree as follows: ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of the Bonds and of any certificate, opinion, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein. Capitalized terms that are not otherwise defined herein shall have the meanings assigned to such terms in the Lease Agreement. “Additional Bonds” means Bonds (other than the Series 2021 Bonds) issued hereunder in accordance with the provisions of Sections 3.06 and 3.07. “Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.02 of the Lease Agreement. “Assignment Agreement” means the Assignment Agreement relating to the Series 2021 Bonds, dated as of the date hereof, by and between the Authority and the Trustee. “Authority” means the City of Diamond Bar Public Financing Authority, a joint exercise of powers entity that is duly organized and existing under and by virtue of the laws of the State of California. “Authorized Authority Representative” means the Chair, Vice Chair, Executive Director, Treasurer and Secretary of the Authority, or any other person authorized by the Board of Directors of the Authority to act on behalf of the Authority under or with respect to this Indenture. “Authorized City Representative” means the Mayor of the City, the Mayor Pro Tem of the City, the City Manager of the City, the Finance Director of the City or the City Clerk, or any other person authorized by the City Council of the City to act on behalf of the City under or with respect to this Indenture. “Authorized Denominations” means $5,000 or any integral multiple thereof. “Base Rental Payment Fund” means the fund by that name established in accordance with Section 5.02. 2.d Packet Pg. 408 3 4837-5803-9009v3/200928-0001 “Base Rental Payments” means all amounts payable to the Authority by the City as Base Rental Payments pursuant to Section 3.01(a) of the Lease Agreement and any payments under Section 3.01 of the Lease Agreement which are attributable to Additional Bonds. “Beneficial Owner” means, whenever used with respect to a Book-Entry Bond, the person whose name is recorded as the beneficial owner of such Book-Entry Bond or a portion of such Book-Entry Bond by a Participant on the records of such Participant or such person’s subrogee. “Bonds” means the Series 2021 Bonds and any Additional Bonds issued hereunder. “Book-Entry Bonds” means the Bonds of a Series registered in the name of the nominee of DTC, or any successor securities depository for such Series of Bonds, as the registered owner thereof pursuant to the terms and provisions of Section 2.10. “Business Day” means a day which is not: (a) a Saturday, Sunday or legal holiday; (b) a day on which banking institutions in the State of California, or in any state in which the Office of the Trustee is located, are required or authorized by law (including executive order) to close ; or (c) a day on which the New York Stock Exchange is closed. “Cede & Co.” means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to a Series of Book-Entry Bonds. “City” means the City of Diamond Bar, a municipal corporation and general law city that is duly organized and existing under and by virtue of the Constitution and laws of the State of California. “Closing Date” means June __, 2021. “Code” means the Internal Revenue Code of 1986, as amended. “Continuing Disclosure Certificate” means the Continuing Disclosure Certificate relating to the Series 2021 Bonds, dated the Closing Date, executed by the City, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. “Costs of Issuance” means all of the costs of issuing and delivering the Bonds, including, but not limited to, all printing and document preparation expenses in connection with this Indenture, the Lease Agreement, the Ground Lease, the Assignment Agreement, the Bonds and any prelim inary official statement and final official statement pertaining to the Bonds, rating agency fees, CUSIP Service Bureau charges, market study fees, legal fees, municipal advisor and other consultant fees, printing fees and expenses of counsel with the issuance and delivery of the Bonds, the initial fees and expenses of the Trustee and its counsel and other fees and expenses incurred in connection with the issuance and delivery of the Bonds, to the extent such fees and expenses are approved by the City. “Costs of Issuance Fund” means the fund by that name established in accordance with Section 3.04. “DTC” means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of New York, and its successors as securities depo sitory for any Series of Book-Entry Bonds, including any such successor appointed pursuant to Section 2.10. 2.d Packet Pg. 409 4 4837-5803-9009v3/200928-0001 “Escrow Bank” means U.S. Bank National Association, as trustee for the 2002 Bonds. “Federal Securities” means: (a) non-callable direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), fully and unconditionally guaranteed as to timely payment; and (b) obligations of any agency, department or instrumentality of the United States of America the timely payment of principal of and interest on which are fully guaranteed by the United States of America, provided that such securities are eligible for defeasance under the then-existing criteria of S&P. “Ground Lease” means the Ground Lease relating to the Property, dated as of the date hereof, by and between the City and the Authority, as originally executed and as it may from time to time be amended in accordance with the provisions thereof and of the Lease Agreement. “Indenture” means this Indenture, as originally executed and as it may be amended or supplemented from time to time by any Supplemental Indenture. “Information Services” means the Municipal Securities Rulemaking Board through the Electronic Municipal Marketplace Access (EMMA) website; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other services providing information with respect to called bonds as the Authority may designate in a Written Certificate of the Authority delivered to the Trustee. “Interest Fund” means the fund by that name established in accordance with Section 5.02. “Interest Payment Date” means ____ 1, 202__ and each June 1 and December 1 thereafter. “Lease Agreement” means the Lease Agreement relating to the Property, dated as of the date hereof, by and between the City and the Authority, as originally executed and as it may be from time to time amended in accordance with the provisions thereof. “Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, except that if such corporation shall no longer perform the function of a securities rating agency for any reason, the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. “Net Insurance Proceeds Fund” means the fund by that name established in accordance with Section 5.02. “Office of the Trustee” means the corporate trust office of the Trustee in St. Paul, Minnesota, or such other office as may be specified to the Authority and the City by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing. “Opinion of Counsel” means a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the Authority or the City and which written opinion, if to be delivered to the Trustee, is satisfactory to the Trustee. 2.d Packet Pg. 410 5 4837-5803-9009v3/200928-0001 “Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 11.09) 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 10.01; 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 pursuant to this Indenture. “Owner” means, with respect to a Bond, the Person in whose name such Bond is registered on the Registration Books. “Participant” means any entity which is recognized as a participant by DTC in the book - entry system of maintaining records with respect to Book-Entry Bonds. “Participating Underwriter” has the meaning ascribed thereto in the Continuing Disclosure Certificate. “Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein (the Trustee is entitled to rely upon the investment direction of the City as a determination that such investment is a legal investment): (a) Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the timely payment of principal of and interest on which are fully and unconditionally guaranteed by the United States of America. (b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided that such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (i) U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership (ii) Farmers Home Administration (FmHA) Certificates of beneficial ownership (iii) Federal Financing Bank (iv) Federal Housing Administration Debentures (FHA) (v) General Services Administration Participation certificates (vi) Government National Mortgage Association (GNMA or “Ginnie Mae”) GNMA – guaranteed mortgage-backed bonds GNMA – guaranteed pass-through obligations (vii) U.S. Maritime Administration 2.d Packet Pg. 411 6 4837-5803-9009v3/200928-0001 Guaranteed Title XI financing (viii) U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures – U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds – U.S. government guaranteed public housing notes and bonds. (c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): (i) Federal Home Loan Bank System Senior debt obligations (ii) Federal Home Loan Mortgage Corporation (FHLMC or “Freddie Mac”) Participation Certificates Senior debt obligations (iii) Federal National Mortgage Association (FNMA or “Fannie Mae”) Mortgage-backed securities and senior debt obligations (iv) Student Loan Marketing Association (SLMA or “Sallie Mae”) Senior debt obligations (v) Resolution Funding Corp. (REFCORP) obligations (vi) Farm Credit System Consolidated systemwide bonds and notes. (d) 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 h aving a rating by S&P of AAAm-G, AAA-m or AA-m and if rated by Moody’s rated Aaa, Aa1 or Aa2, including funds for which the Trustee and its affiliates provide investment advisory, custodial transfer agency and other management services, and receive and retain a fee for such services provided to the fund. (e) Certificates of deposit (including those placed by a third party pursuant to a separate agreement between the Authority and the Trustee) secured at all times by collateral described in (a) and/or (b) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks or mutual savings banks whose sho rt term obligations are rated “A-1+” or better by S&P and “Prime-1” by Moody’s. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. (f) Bank deposit products, certificates of deposit (including those placed by a third party pursuant to a separate agreement between the Authority and the Trustee), savings accounts, deposit accounts, including time deposits, trust funds, trust accounts, overnight bank deposits, interest bearing accounts, interest bearing money market accounts, banker’s acceptances, money market deposits which are fully insured by FDIC, including BIF and SAIF, including those of the Trustee and its affiliates. 2.d Packet Pg. 412 7 4837-5803-9009v3/200928-0001 (g) Investment agreements, including guaranteed investment contracts. (h) Commercial paper rated, at the time of purchase, “Prime-1” by Moody’s and/or “A-1” or better by S&P. (i) Bonds or notes issued by any state or municipality which are rated by Moody’s and/or S&P in one of the two highest long-term rating categories assigned by such agencies. (j) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of “Prime-1” or “A3” or better by Moody’s and/or “A-1+” or better by S&P. (k) Repurchase agreements or reverse repurchase agreements (“Repos”) that provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Trustee (buyer/lender), and the transfer of cash from the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the Trustee in exchange for the securities at a specified date. Repos must satisfy the following criteria: (a) Repos must be among the City, the Trustee and a dealer bank or securities firm (i) Primary dealers on the Federal Reserve reporting dealer list which are rated “A” or better by S&P and Moody’s, or (ii) Banks rated “A” or above by S&P and Moody’s. (b) The written repo contract must include the following: (i) Securities which are acceptable for transfer are: (I) Direct U.S. Governments (II) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC) (ii) The term of the repo may be up to 30 days (iii) The collateral must be delivered to the City or the Trustee (if Trustee is not supplying the collateral) or third party acting as agent for the Trustee (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities). (iv) Valuation of Collateral (I) The securities must be valued weekly, marked-to-market at current market price plus accrued interest. 2.d Packet Pg. 413 8 4837-5803-9009v3/200928-0001 (II) The value of collateral must be equal to 104% of the amount of cash transferred by the City or the Trustee, on behalf of the City, to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by District or the Trustee, on behalf of the City, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%. (III) Legal opinion which must be delivered to the City and the Trustee. Repos must also meet guidelines under state law for legal investment of public funds. (l) The Local Agency Investment Fund of the State, created pursuant to Section 16429.1 of the California Governmental Code, to the extent that the Trustee is authorized to register such investment in its own name. “Person” means an individual, corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. “Principal Fund” means the fund by that name established in accordance with Section 5.02. “2002 Bonds” has the meaning set forth in the Recitals hereof. “2002 Project” has the meaning set forth in the Recitals hereof, as more particularly described in Exhibit B. “Property” has the meaning set forth in the Recitals hereof. “Rebate Fund” means the fund by that name established in accordance with Section 5.05. “Rebate Requirement” has the meaning ascribed thereto in the Tax Certificate. “Record Date” means the fifteenth day of the month next preceding an Interest Payment Date, whether or not such day is a Business Day. “Redemption Fund” means the fund by that name established in accordance with Section 5.02. “Redemption Price” means the aggregate amount of principal of, accrued interest to the date of redemption on and premium, if any, on the Bonds upon the redemption thereof pursuant hereto. “Registration Books” means the records maintained by the Trustee for the registration of ownership and registration of transfer of the Bonds pursuant to Section 2.05. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments. 2.d Packet Pg. 414 9 4837-5803-9009v3/200928-0001 “Rental Period” means the period from the Closing Date through May 31, 2022 and, thereafter, the twelve-month period commencing on June 1 of each year during the term of the Lease Agreement. “Representation Letter” means the Letter of Representations from the Authority to DTC, or any successor securities depository for any Series of Book-Entry Bonds, in which the Authority makes certain representations with respect to issues of its securities for deposit by DTC or such successor depository. “S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term “S&P” shall be dee med to refer to any other nationally recognized securities rating agency selected by the Authority. “Securities Depositories” means The Depository Trust Company; and, in accordance with then current guidelines of the Securities and Exchange Commission, suc h other securities depositories as the Authority may designate in a Written Certificate of the Authority delivered to the Trustee. “Series” means the Series 2021 Bonds executed, authenticated and delivered on the Closing Date and identified pursuant to this Indenture and any Additional Bonds issued pursuant to a Supplemental Indenture and identified as a separate Series of Bonds. “Series 2021 Bonds” means the City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A issued hereunder. “Supplemental Indenture” means any supplemental indenture amendatory of or supplemental to this Indenture, but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder. “Tax Certificate” means the Tax Certificate executed by the Authority and the City at the time of issuance of the Series 2021 Bonds relating to the requirements of Section 148 of the Code, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. “Trustee” means U.S. Bank National Association, a national banking association that is duly organized and existing under and by virtue of the laws of the United States, or any successor thereto as Trustee hereunder, appointed as provided herein. “2021 Costs of Issuance Account” means the account by that name within the Costs of Issuance Fund established pursuant to Section 3.04. “Written Certificate of the Authority” and “Written Request of the Authority” mean, respectively, a written certificate or written request signed in the name of the Authority by an Authorized Authority Representative. Any such certificate or request 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. “Written Certificate of the City” and “Written Request of the City” mean, respectively, a written certificate or written request signed in the name of the City by an Authorized City 2.d Packet Pg. 415 10 4837-5803-9009v3/200928-0001 Representative. Any such certificate or request 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. Section 1.02 Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the Authority, the City, the Trustee and the Owners from time to time of all Bonds authorized, executed, issued and delivered hereunder and then Outstanding to secure the full and final payment of the principal of, premium, if any, and interest on all Bonds which may from time to time be authorized, executed, issued and delivered hereunder, subject to the agreements, condi tions, covenants and provisions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Authority or the City shall be for the equal and proportionate benefit, protection and security of all Owners of the Bonds without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number or date thereof or the time of authorization, sale, execution, issuance or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. ARTICLE II THE BONDS Section 2.01 Authorization of Bonds. The Authority hereby authorizes the issuance of the Bonds under and subject to the terms of this Indenture and applicable laws of the State of California. The Bonds may consist of one or more Series of Bonds of varying denominations, dates, maturities, interest rates and other provisions, subject to the provisions and conditions contained herein. The Series 2021 Bonds are authorized hereunder for the purpose of refunding the 2002 Bonds. Section 2.02 Terms of Series 2021 Bonds. (a) The Series 2021 Bonds shall be designated the “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A.” Each Series of Additional Bonds shall bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series of Bonds. (b) The Series 2021 Bonds shall be issued in fully registered form without coupons in Authorized Denominations, so long as no Series 2021 Bond shall have more than one maturity date. The Series 2021 Bonds shall be dated as of the Closing Date, shall be issued in the aggregate principal amount of $____, shall mature on June 1 of each year and shall bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the rates per annum as follows: Maturity Date (June 1) Principal Amount Interest Rate 20__ $ % (c) Interest on the Series 2021 Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless: (i) a Series 2021 Bond is authenticated 2.d Packet Pg. 416 11 4837-5803-9009v3/200928-0001 on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it shall bear interest from such Interest Payment Date ; (ii) a Series 2021 Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the dated date thereof; or (iii) interest on any Series 2021 Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Interest shall be paid in lawful money of the United States on each Interest Payment Date to the Persons in whose names the ownership of the Series 2021 Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Except as provided in Section 2.10(a), interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Series 2021 Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. (d) The principal and premium, if any, of the Series 2021 Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee. (e) The Series 2021 Bonds shall be subject to redemption as provided in Article IV. Section 2.03 Form of Series 2021 Bonds. The Series 2021 Bonds shall be in substantially the form set forth in Exhibit A, with appropriate or necessary insertions, omissions and variations as permitted or required hereby. Section 2.04 Transfer and Exchange of Bonds. 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 such person’s duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds of the same Series in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of the same Series of other Authorized Denominations. The Trustee shall require the payment by the Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be obligated to make any transfer or exchange of Bonds of a Series pursuant to this Section during the period established by the Trustee for the selection of Bonds of such Series for redemption, or with respect to any Bonds of such Series selected for redemption. Prior to any transfer of the Bonds outside the book-entry system (including, but not limited to, the initial transfer outside the book-entry system) the transferor will provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045, as amended. The Trustee will conclusively rely on the 2.d Packet Pg. 417 12 4837-5803-9009v3/200928-0001 information provided to it and has no responsibility to verify or ensure the accuracy of such information. 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 be open to inspection during regular business hours and upon reasonable n otice by the City; 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 Execution of Bonds. The Bonds shall be executed in the name and on behalf of the Authority with the facsimile signature of an Authorized Officer of the Authority attested by the manual or facsimile signature of the Secretary of the Authority. The Bonds shall then be delivered to the Trustee for authentication by it. In case any of such officers of the Authority who shall have signed or attested any of the Bonds shall cease to be such officers of the Authority before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee, or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as thou gh those who signed and attested the same had continued to be such officers of the Authority, and also any Bonds may be signed and attested on behalf of the Authority by such Persons as at the actual date of execution of such Bonds shall be the proper officers of the Authority although at the nominal date of such Bonds any such Person shall not have been such officer of the Authority. Section 2.07 Authentication of Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form as that set forth in Exhibit A, manually or electronically executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of or on behalf of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture. Section 2.08 Temporary Bonds. The Bonds of a Series may be issued in temporary form exchangeable for definitive Bonds of such Series when ready for delivery. Any temporary Bonds may be printed, lithographed or typewritten, shall be of such authorized denominations as may be determined by the Authority, shall be in fully registered form without coupons and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds of a Series, it will execute and deliver definitive Bonds of such Series as promptly thereafter as practicable, and thereupon the temporary Bonds of such Series may be surrendered, for cancellation, at the Office of the Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of such Series in Authorized Denominations. Until so exchanged, the temporary Bonds of such Series shall be entitled to the same benefits under this Indenture as definitive Bonds of such Series authenticated and delivered hereunder. Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and Series in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so 2.d Packet Pg. 418 13 4837-5803-9009v3/200928-0001 mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or in accordance with the order of, the Authority. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trust ee and, if such evidence and indemnity satisfactory to the Trustee shall be 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 and Series in lieu of and in replacement for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been selected for redemption, instead of issuing a replacement Bond, the Trustee may pay the same without surrender thereof). The Authority may requi re payment by the Owner of a sum not exceeding the actual cost of preparing each replacement Bond issued under this Section and of the expenses which may be incurred by the Authority and the Trustee. Any Bond of a Series issued under the provisions of this Section in lieu of any Bond of such Series alleged to be lost, destroyed or stolen shall 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 entitled to the benefits of this Indenture with all other Bonds of such Series secured by this Indenture. Section 2.10 Book-Entry Bonds. (a) Prior to the issuance of a Series of Bonds, the Authority may provide that such Series of Bonds shall initially be issued as Book-Entry Bonds and, in such event, the Bonds of such Series for each maturity shall be in the form of a separate single fully registered Bond (which may be typewritten). The Series 2021 Bonds shall initially be issued as Book-Entry Bonds. Except as provided in subsection (c) of this Section, the registered Owner of all of the Book- Entry Bonds shall be Cede & Co., as nominee of DTC. Notwithstanding anything to the contrary contained in this Indenture, payment of interest with respect to any Book-Entry Bond registered as of each Record Date in the name of Cede & Co. shall be made by wire transfer of same -day funds to the account of Cede & Co. on the Interest Payment Date at the address indicated on the Record Date for Cede & Co. in the Registration Books or as otherwise provided in the Representation Letter. (b) The Trustee, the City and the Authority may treat DTC (or its nominee) as the sole and exclusive Owner of Book-Entry Bonds registered in its name for the purposes of payment of the principal, premium, if any, or interest with respect to Book-Entry Bonds, selecting Book-Entry Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Owners of Book-Entry Bonds under this Indenture, registering the transfer of Book-Entry Bonds, obtaining any consent or other action to be taken by Owners of Book -Entry Bonds and for all other purposes whatsoever, and neither the Trustee nor the Authority shall be affected by any notice to the contrary. None of the Trustee, the City nor the Authority shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in Book -Entry Bonds under or through DTC or any Participant, or any other person which is not shown on the Registration Books as being an Owner, with respect to the accuracy of any records maintained by DTC or any Participant, the payment by DTC or any Participant of any amount in respect of the principal, premium, if any, or interest with respect to Book-Entry Bonds, any notice which is permitted or required to be given to Owners of Book-Entry Bonds under this Indenture, the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of Book -Entry Bonds, or any consent given or other action taken by DTC as Owner of Book -Entry Bonds. The Trustee shall pay all principal, premium, if any and interest with respect to Book -Entry Bonds, only to DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority’s obligations with respect to the principal, premium, if any, and interest with respect to the 2.d Packet Pg. 419 14 4837-5803-9009v3/200928-0001 Book-Entry Bonds to the extent of the sum or sums so paid. Except under the conditions of subsection (c) of this Section, no person other than DTC shall receive an executed Book-Entry Bond for each separate stated maturity. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to record dates, the term “Cede & Co.” in this Indenture shall refer to such new nominee of DTC. (c) In the event that: (i) DTC, including any successor as securities depository for a Series of Bonds, determines not to continue to act as securities depository for such Series of Bonds; or (ii) the Authority determines that the incumbent securities depository shall no longer so act, and delivers a written certificate to the Trustee to that effect, then the Authority will disc ontinue the book-entry system with the incumbent securities depository for such Series of Bonds. If the Authority determines to replace the incumbent securities depository for such Series of Bonds with another qualified securities depository, the Authority shall prepare or direct the preparation of a new single, separate fully registered Bond of such Series for the aggregate outstanding principal amount of Bonds of such Series of each maturity, registered in the name of such successor or substitute qualified securities depository, or its nominee, or make such other arrangement acceptable to the Authority, the Trustee and the successor securities depository for the Bonds of such Series as are not inconsistent with the terms of this Indenture. If the Authori ty fails to identify another qualified successor securities depository for such Series of Bonds to replace the incumbent securities depository, then the Bonds of such Series shall no longer be restricted to being registered in the Registration Books in the name of the incumbent securities depository or its nominee, but shall be registered in whatever name or names the incumbent securities depository for such Series of Bonds, or its nominee, shall designate. In such event the Authority shall execute, and de liver to the Trustee, a sufficient quantity of Bonds of such Series to carry out the transfers and exchanges provided in Sections 2.04, 2.08 and 2.09. All such Bonds of such Series shall be in fully registered form in Authorized Denominations. (d) Notwithstanding any other provision of this Indenture to the contrary, so long as any Book-Entry Bond is registered in the name of DTC, or its nominee, all payments with respect to the principal, premium, if any, and interest with respect to such Book -Entry Bond and all notices with respect to such Book-Entry Bond shall be made and given, respectively, as provided in the Representation Letter. (e) In connection with any notice or other communication to be provided to Owners of Book-Entry Bonds pursuant to this Indenture by the Authority, the City or the Trustee with respect to any consent or other action to be taken by Owners, the Authority, the City or the Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS Section 3.01 Issuance of Series 2021 Bonds. The Authority may, at any time, execute the Series 2021 Bonds for issuance hereunder and deliver the same to the Trustee. The Trustee shall authenticate the Series 2021 Bonds and deliver the Series 2021 Bonds to the original purchaser 2.d Packet Pg. 420 15 4837-5803-9009v3/200928-0001 thereof upon receipt of a Written Request of the Authority and upon receipt of the purchase price therefor. Section 3.02 Application of Proceeds of the Series 2021 Bonds. (a) On the Closing Date, the proceeds of the sale of the Series 2021 Bonds received by the Trustee, $_____, shall be deposited by the Trustee as follows: (i) The Trustee shall deposit the amount of $______ in the 2021 Costs of Issuance Account. (ii) The Trustee shall transfer the amount of $_____ to the Escrow Bank to be applied to redeem the 2002 Bonds. (b) The Trustee may establish temporary funds and accounts in its records connection with the receipt of the proceeds of the Series 2021 Bonds. Section 3.03 [RESERVED]. Section 3.04 Costs of Issuance Fund. The Trustee shall establish and maintain a separate fund designated the “Costs of Issuance Fund,” and within such fund the “2021 Costs of Issuance Account.” On the Closing Date, there shall be deposited in the 2021 Costs of Issuance Account the amount specified in Section 3.02(a)(i). There shall additionally be deposited in the Costs of Issuance Fund the portion, if any, of the proceeds of the sale of any Additional Bonds required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued. The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of the Authority stating: (a) the Person to whom payment is to be made; (b) the amount to be paid, together with payment instructions; (c) the purpose for which the obligation was incurred; (d) that such payment is a proper charge against the Costs of Issuance Fund; and (e) that such amounts have not been the subject of a prior disbursement from the Costs of Issuance Fund, in each case to gether with a statement or invoice for each amount requested thereunder. Each such Written Request 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. On the six month anniversary of the Closing Date, all amounts, if any, remaining in the 2021 Costs of Issuance Account shall be withdrawn therefrom by the Trustee and transferred to the Interest Fund , and the 2021 Costs of Issuance Account shall be closed. Section 3.05 [RESERVED]. Section 3.06 Conditions for the Issuance of Additional Bonds. The Authority may at any time issue one or more Series of Additional Bonds (in addition to the Series 2021 Bonds) payable from Base Rental Payments as provided herein on a parity with all other Bonds theretofore issued hereunder, but only subject to the following conditions, which are hereby made conditions precedent to the issuance of such Additional Bonds: (a) The issuance of such Additional Bonds shall have been authorized under and pursuant hereto and shall have been provided for by a Supplemental Indenture which shall specify the following: 2.d Packet Pg. 421 16 4837-5803-9009v3/200928-0001 (1) The application of the proceeds of the sale of such Additional Bonds; (2) The principal amount and designation of such Series of Additional Bonds and the denomination or denominations of the Additional Bonds; (3) The date, the maturity date or dates, the interest payment dates and the dates on which mandatory sinking fund redemptions, if any, are to be made for such Additional Bonds; provided, however, that: (i) the serial Bonds of such Series of Additional Bonds shall be payable as to principal annually on June 1 of each year in which principal falls due, and the term Bonds of such Series of Additional Bonds shall have annual mandatory sinking fund redemptio ns on June 1; (ii) the Additional Bonds shall be payable as to interest semiannually on June 1 and December 1 of each year, except that the first installment of interest may be payable on either June 1 or December 1 and shall be for a period of not longer than twelve months and the interest shall be payable thereafter semiannually on June 1 and December 1; (iii) all Additional Bonds of a Series of like maturity shall be identical in all respects, except as to number or denomination; and (iv) serial maturities of serial Bonds or mandatory sinking fund redemptions for term Bonds, or any combination thereof, shall be established to provide for the redemption or payment of such Additional Bonds on or before their respective maturity dates; (4) The redemption premiums and terms, if any, for such Additional Bonds; (5) The form of such Additional Bonds; and (6) Such other provisions that are appropriate or deemed necessary by the Authority and are not inconsistent with the provisions hereof; (b) The Authority shall be in compliance with all agreements, conditions, covenants and terms contained herein, in the Lease Agreement and in the Ground Lease required to be observed or performed by it; (c) The City shall be in compliance with all agreements, conditions, covenants and terms contained herein, in the Lease Agreement and in the Ground Lease required to be observed or performed by it; and (d) The Ground Lease shall have been amended, to the extent necessary, and the Lease Agreement shall have been amended so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount equal to the principal of and interest on such Additional Bonds, payable at such times and in such manner as may be necessary to provide for the payment o f the principal of and interest on such Additional Bonds; provided, however, that no such amendment shall be made such that the sum of Base Rental Payments, including any increase in the Base Rental Payments as a result of such amendment, plus Additional R ental Payments, in any Rental Period shall be in excess of the annual fair rental value of the Property after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith (evidence of the satisfaction of such condition shall be made by a Written Certificate of the City). Nothing contained herein shall limit the issuance of any bonds or other obligations payable from Base Rental Payments if, after the issuance and delivery of such bonds or other obligations, none of the Bonds theretofore issued hereunder will be Outstanding. 2.d Packet Pg. 422 17 4837-5803-9009v3/200928-0001 Section 3.07 Procedure for the Issuance of Additional Bonds. At any time after the sale of any Additional Bonds, such Additional Bonds shall be executed by the Authority for issuance hereunder and shall be delivered to the Trustee and thereupon shall be authenticated and delivered by the Trustee, but only upon receipt by the Trustee of the following: (a) Certified copies of the Supplemental Indenture authorizing the issuance of such Additional Bonds, the amendment to the Lease Agreement required by Section 3.06 and the amendment to the Ground Lease, if any, required by Section 3.06, together with satisfactory evidence that such amendment to the Lease Agreement and such amendment to the Ground Lease, if any, have been duly recorded; (b) A Written Request of the Authority as to the delivery of such Additional Bonds; (c) An Opinion of Counsel substantially to the effect that: (i) the Indenture (including all Supplemental Indentures), the Lease Agreement (including the amendment thereto required by Section 3.06) and the Ground Lease (including any amendment thereto required by Section 3.06) have been duly authorized, executed and delivered by, and constitute the valid and binding obligations of, the Authority and the City, enforceab le in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights and by the application of equitable principles and by the exercise of judicial discretion in appropriate cases and subject to the limitations on legal remedies against political subdivisions in the State of California); (ii) such Additional Bonds constitute valid and binding special obligations of the Authority payable solely from Base Rental Payments as provided herein and are enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights and by the application of equitable principles and by the exercise of judicial discretion in appropriate cases and subject to the limitations on legal remedies against political subdivisions in the State of California); and (iii) the issuance of such Additional Bonds, in and of itself, will not adversely affect the exclusion of interest on the Bonds Outstanding prior to the issuance of such Additional Bonds from gross income for federal income tax purposes; (d) a Written Certificate of the Authority that the requirements of Section 3.06 have been met; (e) a Written Certificate of the City that the requirements of Sections 5.01 and 5.02 of the Lease Agreement have been met, and a Written Certificate of the City as to the fair rental value of the Property, after giving effect to the executio n and delivery of the Additional Bonds, and to the use of proceeds received therefrom; and (f) Such further documents as are required by the provisions hereof or by the provisions of the Supplemental Indenture authorizing the issuance of such Additional Bonds. Section 3.08 Additional Bonds. So long as any of the Bonds remain Outstanding, the Authority shall not issue any Additional Bonds or obligations payable from the Base Rental Payments, except pursuant to Sections 3.06 and 3.07. 2.d Packet Pg. 423 18 4837-5803-9009v3/200928-0001 ARTICLE IV REDEMPTION OF BONDS Section 4.01 Redemption of Series 2021 Bonds. (a) Extraordinary Redemption. The Series 2021 Bonds shall be subject to redemption, in whole or in part, on any date as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, in Authorized Denominations, from and to the extent of any Net Insurance Proceeds received with respect to all or a portion of the Property, deposited by the Trustee in the Redemption Fund pursuant to Sections 5.03 and 5.04, at a Redemption Price equal to the principal amount of the Series 2021 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premiu m. (b) Optional Redemption. The Series 2021 Bonds maturing on or after June 1, 20__, shall be subject to optional redemption, in whole or in part, on _____ 1, 20__ or any date thereafter, as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to subsection (a) of Section 7.02 of the Lease Agreement, at a Redemption Price equal to the principal amount of the Series 2021 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. (c) Mandatory Sinking Fund Redemption. The Series 2021 Bonds with stated maturities on June 1, 20__, are subject to mandatory sinking fund redemption in part (by lot) on June 1, 20__ and each June 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Mandatory Sinking Fund Redemption Dates (June 1) Principal Amount of Bonds to be Redeemed 20__ $ 20__* * Maturity. If, during the Fiscal Year immediately preceding one of the redemption dates specified above, the Authority purchases Series 2021 Bonds, at least 45 days prior to the redemption date, the Authority shall notify the Trustee as to the principal amount purchased and the amount of Series 2021 Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming mandatory sinking fund redemption payment for the applicable Series 2021 Bonds so purchased. All Series 2021 Bonds purchased pursuant to this subsection shall be cancelled pursuant to Section 11.09. In the event of a redemption pursuant to Section 4.01(a) or (b) or in the event of the purchase of Series 2021 Bonds, the City shall provide the Trustee with a revised mandatory sinking fund schedule giving effect to the redemption so completed. 2.d Packet Pg. 424 19 4837-5803-9009v3/200928-0001 Section 4.02 Notice of Redemption. The Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice of any redemption to the resp ective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, to the Securities Depositories and to one or more Information Services, at least 20 but not more than 60 days prior to the date fixed for redemption. Such notice shall state the date of the notice, the redemption date, the redemption place and the Redemption Price and sha ll designate the CUSIP numbers and the maturity or portion of the maturity of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at the Office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Bonds will not accrue from and after the date fixed for redemption. Such notice of redemption may also state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Bonds. Neither the failure to receive any notice so mailed, nor any defect in such notice, shall affect the validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of optional redemption of Bonds, such notice may state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such Bonds to be redeemed and that, if such moneys shall not have been so received, said notice s hall be of no force and effect and the Trustee shall not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption shall not be made, and the Trustee shall within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. Section 4.03 Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption: (a) with respect to any optional redemption of Bonds of a Series, among maturities of Bonds of such Series as directed in a Written Request of the Authority; (b) with respect to any redemption pursuant to Section 4.01(a) and the corresponding provision of any Supplemental Indenture pursuant to which Additional Bonds are issued, among maturities of all Series of Bonds on a pro rata basi s as nearly as practicable; and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued, and by lot among Bonds of the same Series with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treat ed as separate Bonds which may be separately redeemed. Section 4.04 Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same Series in Authorized Denominations equal in aggregate principal amount representing the unredeemed portion of the Bonds surrendered. Section 4.05 Effect of Notice of Redemption. Notice having been mailed as aforesaid, and moneys for the Redemption Price, and the interest to the applicable date fixed for redemption, having been set aside in the Redemption Fund, the Bonds shall become due and payable on said date, and, upon presentation and surrender thereof at the Office of the Trustee, said Bonds shall be paid at the Redemption Price thereof, together with interest accrued and unpaid to said date. 2.d Packet Pg. 425 20 4837-5803-9009v3/200928-0001 If, on said date fixed for redemption, moneys for the Redemption Price of all the Bonds to be redeemed, together with interest to said date, shall be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof shall have been mailed as aforesaid and not canceled, then, from and after said date, interest on said Bonds shall cease t o accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds shall be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to such Owners for interest thereon. All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed. ARTICLE V SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS Section 5.01 Pledge; Special Obligations. 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 Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund are hereby pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of this Indenture. Subject to Section 7.08(a), said pledge shall constitute a first lien on such assets. All obligations of the Authority under this Indenture shall be special obligations of the Authority, payable solely from Rental Payments and the other assets pledged therefor hereunder; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor hereunder. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds. Section 5.02 Flow of Funds. (a) The Trustee shall establish and maintain separate funds designated the “Base Rental Payment Fund,” the “Interest Fund,” the “Principal Fund,” the “Redemption Fund” and the “Net Insurance Proceeds Fund.” All Base Rental Payments shall be paid directly by the City to the Trustee, and if received by the Authority at any time shall be transferred by the Authority to the Trustee within one Business Day after the receipt thereof. All Base Rental Payments received by the Trustee shall be deposited by the Trustee in the Base Rental Payment Fund. (b) The Trustee shall transfer the amounts on deposit in the Base Rental Pa yment Fund, at the times and in the manner hereinafter provided, to the following respective funds: (i) Interest Fund. On the Business Day immediately preceding each Interest Payment Date, the Trustee shall transfer from the Base Rental Payment Fund to the Interest Fund the amount, if any, necessary to cause the amount on deposit in the Interest Fund to be equal to the interest due on the Bonds on such Interest Payment Date. 2.d Packet Pg. 426 21 4837-5803-9009v3/200928-0001 (ii) Principal Fund. On the Business Day immediately preceding each June 1, commencing June 1, 20__, the Trustee shall transfer from the Base Rental Payment Fund to the Principal Fund the amount, if any, necessary to cause the amount on deposit in the Principal Fund to be equal to the principal amount of the Bonds due on such June 1 either as a result of the maturity thereof or mandatory sinking fund redemption payments required to be made with respect thereto. Moneys in the Principal Fund shall be used by the Trustee for the purpose of paying the principal of the Bonds when due and payable at their maturity dates or upon earlier mandatory sinking fund redemption. (iii) Redemption Fund. The Trustee, on the redemption date specified in the Written Request of the City filed with the Trustee at the time that any prepaid Base Rental Payment is paid to the Trustee pursuant to the Lease Agreement, shall deposit in the Redemption Fund that amount of moneys representing the portion of the Base Rental Payments designated as prepaid Base Rental Payments. Additionally, the Trustee shall deposit in the Redemptio n Fund any amounts required to be deposited therein pursuant to Section s 5.03 or 5.04. Moneys in the Redemption Fund shall be used by the Trustee for the purpose of paying the principal of and interest and premium, if any, on Series 2021 Bonds redeemed pursuant to the provisions of subsections (a) and (c) of Section 4.01 and Additional Bonds redeemed pursuant to the corresponding provisions of the Supplemental Indenture pursuant to which such Additional Bonds are issued; provided, however, that moneys deposited in the Redemption Fund may also be used to purchase Outstanding Series 2021 Bonds or Additional Bonds in the manner hereinafter provided. Purchases of Outstanding Series 2021 Bonds or Additional Bonds may be made by the Authority at public or private sale as and when and at such prices as the Authority may in its discretion determine, but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption or an extraordinary redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to Sections 4.01(a) or (b), as applicable, or in the case of Additional Bonds the premium established in any Supplemental Indenture. Any accrued interest payable upon the purchase of Series 2021 Bonds or Additional Bonds may be paid from the amount reserved in the Interest Fund. (iv) Surplus. With respect to each Rental Period, moneys on deposit in the Base Rental Payment Fund which are in excess of the payments required above for such Rental Period may be expended by the Authority at any time for any purpose permitted by law as directed by the Authority. (c) Upon receipt of a Written Certificate of the City pursuant to Section 3.06 of the Lease Agreement that the City has commenced repairs of the Property, the Trustee will transfer moneys from the Redemption Fund at the times and in the manner required by subsection (b)(iii) above if and to the extent there are insufficient funds in the Base Rental Payment Fund to make such transfers. Upon receipt of a Written Certificate of the City pursuant to Section 3.06 of the Lease Agreement that the City has completed repairs of the Property and will recommence to make Base Rental Payments or that the City has determined not to make such repairs and made the certifications required pursuant to the Lease Agreement, the Trustee will transfer any funds remaining on deposit in the Redemption Fund to the City for any lawful use. Section 5.03 Application of Net Insurance Proceeds. If the Property or any portion thereof shall be damaged or destroyed, subject to the further requirements of this Section, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted 2.d Packet Pg. 427 22 4837-5803-9009v3/200928-0001 the repair or replacement thereof, unless the City elects not to repair or replace the Property or the affected portion thereof in accordance with the provisions hereof. The Net Insurance Proceeds (other than Net Insurance Proceeds of rental interruption insurance), including the proceeds of any self-insurance, received on account of any damage or destruction of the Property or a portion thereof shall as soon as possible be deposited with the Trustee and be held by the Trustee in the Net Insurance Proceeds Fund and made available for and, to the extent necessary, shall be applied to the cost of repair or replacement of the Property or the affected portion thereof upon receipt of a Written Request of th e City, together with invoices therefor. Each such Written Request of the City 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. Pending such application, such proceeds may be invested by the Trustee as directed by the City in Permitted Investments that mature not later than such times moneys are expected to be needed to pay such costs of repair or replacement. Notwithstanding the foregoing, the City shall, within 60 days of the occurrence of the event of damage or destruction, notify the Trustee in writing as to whether the City intends to replace or repair the Property or the portions of the Property which were damaged or destroyed. If the City does intend to replace or repair the Property or portions thereof, the City shall deposit with the Trustee the full amount of any insurance deductible to be credited to the Net Insurance Proceeds Fund. In the event of any damage to or destruction of the Property caused by one of the perils covered by the insurance required by Section 5.01(c) of the Lease Agreement which would result in an abatement of rental payments or any portion thereof pursuant to Section 3.06 thereof, then the City shall apply the Net Insurance Proceeds, together with other legally available funds that the City elects to contribute, to the repair, reconstruction or replacement of the damaged or destroyed portions of the Property; provided, however, that the City shall not be required to repair or replace any portion of the Property pursuant to this Section 5.03 if such Net Insurance Proceeds, together with any other amounts held under this Indenture and any other legally available funds made available by the City at its election, are sufficient to prepay: (i) all of the Outstanding Bonds; or (ii) a portion of the Outstanding Bonds such that the resulting Base Rental Payments under Section 4.01(a) in any Rental Period following such partial prepayment are sufficient to pay in such Rental Period the principal of and interest on all Bonds to remain Outstanding immediately after such partial redemption. If the City is not required to replace or repair the Property, or the affected portion thereof, or to use such amounts to redeem Bonds, in each case as set forth in this Section 5.03, then such proceeds shall, if there is first delivered to the Trustee a Written Certificate of the City to the effect that the annual fair rental value of the Property after such damage or destruction, and after any rep airs or replacements made as a result of such damage or destruction, is at least equal to 100% of the maximum amount of Base Rental Payments becoming due under the Lease Agreement in the then current Rental Period or any subsequent Rental Period and the fair replacement value of the Property after such damage or destruction is at least equal to the principal amount of the Outstanding Bonds, be paid to the City to be used for any lawful purpose. The proceeds of any award in eminent domain received in respe ct to the Property shall be deposited by the Trustee in the Redemption Fund and applied to the redemption of Bonds pursuant to subsection (a) of Section 4.01 and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued. 2.d Packet Pg. 428 23 4837-5803-9009v3/200928-0001 Section 5.04 Title Insurance. Proceeds of any policy of title insurance received by the Trustee in respect of the Property shall be applied and disbursed by the Trustee as follows: (a) if the City determines that the title defect giving rise to such proceeds h as not substantially interfered with its use and occupancy of the Property and will not result in an abatement of Rental Payments payable by the City under the Lease Agreement, such proceed s shall be remitted to the City upon written direction from the City and used for any lawful purpose thereof; or (b) if the City determines that the title defect giving rise to such proceeds has substantially interfered with its use and occupancy of the Property and will result in an abatement of Rental Payments payable by the City under the Lease Agreement, then, upon written direction of the City, the Trustee shall immediately deposit such proceeds in the Redemption Fund and such proceeds shall be applied to the redemption of Bonds in the manner provided in subsection (a) of Section 4.01 and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued. Section 5.05 Rebate Fund. (a) Establishment. The Trustee shall establish a fund for the Bonds designated the “Rebate Fund” when required in accordance herewith. Absent an Opinion of Counsel that the exclusion from gross income for federal income tax purposes of interest on the Bonds will not be adversely affected, the Authority shall cause to be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to this Section and the Tax Certificate. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust for payment to the United States Treasury. All amounts on deposit in the Rebate Fund for the Bonds shall be governed by this Section and the Tax Certificate, unless and to the extent that the Author ity delivers to the Trustee an Opinion of Counsel that the exclusion from gross income for federal income tax purposes of interest on the Bonds will not be adversely affected if such requirements are not satisfied. Notwithstanding anything to the contrary contained herein or in the Tax Certificate, the Trustee: (1) shall be deemed conclusively to have complied with the provisions thereof if it follows all Written Requests of the Authority or Written Requests of the City; (2) shall have no liability or responsibility to enforce compliance by the Authority or the City with the terms of the Tax Certificate and shall not be deemed to have knowledge of the terms thereof; (3) may rely conclusively on the Authority’s or the City’s calculations and determinations and certifications relating to rebate mat ters; and (4) shall have no responsibility to independently make any calculations or determinations or to review the Authority’s or the City’s calculations or determinations thereunder. (i) Computation. Within 55 days of the end of each fifth Bond Year (as such term is defined in the Tax Certificate), the Authority shall calculate or cause to be calculated the amount of rebatable arbitrage, in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Treasury Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage, described, if applicable, in the Tax Certificate (e.g., the temporary investments exceptions of Section 148(f)(4)(B) and the construction expenditures exception of Section 148(f)(4)(C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the “1½% Penalty”) has been made), for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Treasury Regulations (the “Rebatable Arbitrage”). The Authority shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section. 2.d Packet Pg. 429 24 4837-5803-9009v3/200928-0001 (ii) Transfer. Within 55 days of the end of each fifth Bond Year, upon the Written Request of the Authority or Written Request of the City, an amount shall be deposited to the Rebate Fund by the Trustee from any Rental Payments legally available for such purpose (as specified by the Authority or the City in the aforesaid Written Request), if and to the extent required, so that the balance in the Rebate Fund shall equal the amount of Rebatable Arbitrage so calculated in accordance with clause (i) of this subsection (a). In the event that immediately fol lowing the transfer required by the previous sentence, the amount then on deposit to the credit of the Rebate Fund exceeds the amount required to be on deposit therein, upon Written Request of the Authority or Written Request of the City, the Trustee shall withdraw the excess from the Rebate Fund and then credit the excess to the Base Rental Payment Fund. (iii) Payment to the Treasury. The Trustee shall pay, as directed by Written Request of the Authority, to the United States Treasury, out of amounts in the Rebate Fund: (1) Not later than 60 days after the end of: (X) the fifth Bond Year; and (Y) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year; and (2) Not later than 60 days after the payment of all of the Bonds, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code and Section 1.148-3 of the Treasury Regulations. In the event that, prior to the time of any payment required to be made from the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such payment is due, the Authority shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to this subsec tion (a) shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038 -T (prepared by the Authority), or shall be made in such other manner as provided under the Code. (b) Disposition of Unexpended Funds. Any funds remaining in the Rebate Fund after redemption and payment of the Bonds and the payments described in subsection (a) above being made may be withdrawn by the Authority and utilized in any manner by the Authority. (c) Survival of Defeasance. Notwithstanding anything in this Section to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance or payment in full of the Bonds. Section 5.06 Investment of Moneys. Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Indenture and held by the Trustee shall be invested by the Trustee solely in Permitted Investments, as directed in writing by the Autho rity filed with the Trustee at least two (2) Business Days in advance of the making of such investments . Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments maturing not later than the date on which it is estima ted that such moneys will be required for the purposes specified in this Indenture; provided, however, that such Permitted Investments may be redeemed at par so as to be available on each Interest Payment Date. Absent timely written direction from the Authority, the Trustee shall hold any funds held by it uninvested. 2.d Packet Pg. 430 25 4837-5803-9009v3/200928-0001 Subject to the provisions hereof, all interest, profits and other income received from the investment of moneys in any fund or account established pursuant to this Indenture shall be retained in such fund or account. For investment purposes, the Trustee may commingle the funds and accounts established hereunder, but shall account for each separately. Permitted Investments acquired as an investment of moneys in any fund established under this Indenture shall be credited to such fund. In determining fair market value, the Trustee may use and rely conclusively on any generally recognized securities pricing service available to it (including brokers and dealers in securities and the service available through the Trustee’s accounting system). The Trustee may act as principal or agent in the making or disposing of any investment. Upon the Written Request of the Authority, the Trustee shall sell or present for redemption any Permitted Investments so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investments is credited, and the Trustee shall not be liable or responsible for any loss res ulting from any investment made or sold pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of the funds and accounts established hereunder. The Trustee may make any investments hereunder through the bond or inves tment department or trust investment department of the entity acting as Trustee hereunder, or those of such entity’s parent or any affiliate, and such entity, or its parent or affiliate, as applicable, shall be entitled to its normal, customary and reasonable compensation for such services. The entity acting as Trustee hereunder, or any of its affiliates, may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder and such entity, or its affiliate, as applicable, shall be entitled to its normal, customary and reasonable compensation for such services. The City and the Authority acknowledge that to the extent that regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City or the Authority the right to receive brokerage confirmations of security transactions as they occur, the City and the Authority specifically waive receipt of such confirmations to the extent permitted by law. The City and the Authority further understand that trade confirmations for securities transactions effected by the Trustee will be available upon request at no additional cost and other trade confirmations may be obtained from the applicable broker. The Trustee will furnish the City with periodic cash transaction statements which shall include detail for all investment transactions effected by the Trustee hereunder. Upon the City’s election, such statements will be delivered via the Trustee’s online service and upon electing such service, paper statements will be provided only upon request. ARTICLE VI COVENANTS Section 6.01 Compliance with Agreements. The Trustee will not authenticate or deliver any Bonds in any manner other than in accordance with the provisions hereof, and the Authority and the City will not suffer or permit any default by them to occur hereunder, but will faithfully comply with, keep, observe and perform all of the agreements, conditions, covenants and terms hereof required to be complied with, kept, observed and performed by them. 2.d Packet Pg. 431 26 4837-5803-9009v3/200928-0001 Section 6.02 Compliance with Ground Lease and Lease Agreement. The Authority and the City will faithfully comply with, keep, observe and perform all of the agreements, conditions, covenants and terms contained in the Ground Lease and the Lease Agreement required to be complied with, kept, observed and performed by them and, together with the Trustee, will enforce the Ground Lease and the Lease Agreement against the other party thereto in accordance with their respective terms. Section 6.03 Observance of Laws and Regulations. The Authority, the City and the Trustee will faithfully comply with, keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on them by contract, or prescribed by any law of the United States of America or of the State of California , or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by them, including their right to exist and carry on their respective businesses, to the end that such franchises, rights and privileges shall be maintained and preserved and shall not become abandoned, forfeited or in any manner impaired. Section 6.04 Other Liens. The City will keep the Property and all parts thereof free from judgments and materialmen’s and mechanics’ liens and free from all claims, demands, encumbrances and other liens of whatever nature or character, and free from any claim or liability which materially impairs the City in conducting its business or utilizin g the Property, and the Trustee at its option (after first giving the City ten days’ written notice to comply therewith and failure of the City to so comply within such ten-day period) may, but is in no event obligated to, defend against any and all actions or proceedings, or may pay or compromise any claim or demand asserted in any such actions or proceedings; provided, however, that, in defending against any such actions or proceedings or in paying or compromising any such claims or demands, the Trustee s hall not in any event be deemed to have waived or released the City from liability for or on account of any of its agreements and covenants contained herein, or from its liability hereunder and to perform such agreements and covenants. So long as any Bonds are Outstanding, none of the Trustee, the Authority or the City shall create or suffer to be created any pledge of or lien on the amounts on deposit in any of the funds or accounts created hereunder, other than the pledge and lien hereof. The Authority, the City and the Trustee shall not encumber the Property other than in accordance with the Ground Lease, the Lease Agreement, the Indenture and the Assignment Agreement. Section 6.05 Prosecution and Defense of Suits. The City will promptly, upon request of the Trustee (which request the Trustee is not required to make), take such action from time to time as may be necessary or proper to remedy or cure any cloud upon or defect in the title to the Property or any part thereof, whether now existing or hereafter developing, will prosecute all actions, suits or other proceedings as may be appropriate for such purpose and will indemnify and save the Trustee harmless from all cost, damage, expense or loss, including attorneys’ fees and expenses, which it or the Owners may incur by reason of any such cloud, defect, action, suit or other proceeding. Section 6.06 Accounting Records and Statements. The Trustee will keep proper accounting records in which complete and correct entries shall be made of all transactions of the Trustee relating to the receipt, deposit and disbursement of the Base Rental Payments, and such 2.d Packet Pg. 432 27 4837-5803-9009v3/200928-0001 accounting records shall be available for inspection by the Authority and the City at reasonable hours and under reasonable conditions upon reasonable notice. Section 6.07 Recordation and Filing. The City will record, or cause to be recorded, with the appropriate county recorder, the Lease Agreement, the Ground Lease and the Assignment Agreement, or memoranda thereof. Section 6.08 Tax Covenants. Notwithstanding any other provision of the Indenture, absent an Opinion of Counsel that the exclusion from gross income of the interest on the Series 2021 Bonds will not be adversely affected for federal income tax purposes, the City and the Authority covenant to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income with respect to the Series 2021 Bonds, and specifically covenant, without limiting the generality of the foregoing, as follows: (a) Private Activity. The City and the Authority will not take any action or refrain from taking any action or make any use of the proceeds of the Series 2021 Bonds or of any other moneys or property which would cause the Series 2021 Bonds to be “private activity bonds” within the meaning of Section 141 of the Code; (b) Arbitrage. The City and the Authority will make no use of the proceeds of the Series 2021 Bonds or of any other amounts or property, regardless of the source, and will not take any action or refrain from taking any action which would cause the Series 2021 Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code; (c) Federal Guarantee. The City and the Authority will make no use of the proceeds of the Series 2021 Bonds and will not take or omit to take any action that would cause the Series 2021 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code; (d) Information Reporting. The City and the Authority will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code necessary to preserve the exclusion of interest on the Series 2021 Bonds pursuant to Section 103(a) of the Code; (e) Hedge Bonds. The City and the Authority will make no use of the proceeds of the Series 2021 Bonds or any other amounts or property, regardless of the source, and will not take any action or refrain from taking any action that would cause the Series 2021 Bonds to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the City and the Authority take all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income of interest on the Series 2021 Bonds for federal income tax purposes; and (f) Miscellaneous. The City and the Authority will not take any action or refrain from taking any action inconsistent with its expectations stated in the Tax Certificate and will comply with the covenants and requirements stated therein and incorporated by reference herein. This Section and the covenants set forth herein shall not be applicable to, and nothing contained herein shall be deemed to prevent the City and the Authority from causing the issuance of Additional Bonds, the interest with respect to which has been determined by an Opinion of Counsel to be subject to federal income taxation. 2.d Packet Pg. 433 28 4837-5803-9009v3/200928-0001 Section 6.09 Continuing Disclosure. The City will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this Indenture, failure of the City to comply with the Continuing Disclosure Certificate shall not constitute an event of default hereunder; provided, however, that the Trustee may (and, at the written direction of any Participating Underwriter or the holders of at least 25% of the aggregate principal amount of Outstanding Series 2021 Bonds, and upon being indemnified to its reasonable satisfaction therefor, shall) or any holder or Beneficial Owner of the Series 2021 Bonds may take such actions as may be necessary and appropriate to compel performance, in cluding seeking mandate or specific performance by court order. Section 6.10 Further Assurances. Whenever and so often as requested to do so by the Trustee, the Authority and the City will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Trustee all advantages, benefits, interests, powers, privileges and rights conferred or intended to be conferred upon it hereby or by the Assignment Agreement, the Ground Lease or the Lease Agreement, and to preserve the priority of the pledge of the Rental Payments under applicable law. Section 6.11 Continued Existence of Authority. The City and the Authority will take or cause to be taken all actions reasonably necessary to continue the Authority’s existence until such time as the Bonds are no longer Outstanding hereunder, including but not limited to the addition of one or more new members to the Authority and execution of the JPA Agreement pursuant to which the Authority was created by such new members. ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01 Action on Default. If an event of default (within the meaning of Article VI of the Lease Agreement) shall happen, then such event of default shall constitute an event of default hereunder. The Trustee shall give notice, as assignee of the Authority, of an event of default under the Lease Agreement to the City to the extent that it has actual knowledge thereof . In each and every case during the continuance of an event of default, the Trustee may and, at the direction of the Owners of not less than a majority of the aggregate principal amount of Bonds then Outst anding, and upon being indemnified to its reasonable satisfaction therefor, shall, upon notice in writing to the City and the Authority, exercise any of the remedies granted to the Authority under the Lease Agreement and, in addition, take whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the Owners by this Indenture or by the Bonds, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right, including any one or more of the remedies set forth in Section 7.02 hereof. Section 7.02 Other Remedies of the Trustee. Subject to the provisions of Section 7.01 hereof, the Trustee shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Authority or the City or any member, director, officer or employee 2.d Packet Pg. 434 29 4837-5803-9009v3/200928-0001 thereof, and to compel the Authority or the City or any such member, director, officer or employee to perform or carry out its or his or her duties under law and the agreements and covenants required to be performed by it or him or her contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee; or (c) by suit in equity upon the happening of any event of default hereunder to require the Authority and the City to account as the trustee of an express trust. Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment or composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners so affected. Section 7.03 Non-Waiver. A waiver of any default or breach of duty or contract by the Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee to exercise any right or remedy accruing upon any default or breac h of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee by law or by this Article may be enforced and exercised from time to time and as often as the Trustee shall deem expedient. If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or any Owner, then subject to any adverse determination, the Trustee, such Owner, the Authority and the City shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 7.04 Remedies Not Exclusive. Subject to the provisions of Section 7.01, no remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prev ent the concurrent assertion or employment of any other appropriate right or remedy. Section 7.05 No Liability by the Authority to the Owners. Except as expressly provided herein, the Authority shall not have any obligation or liability to the Owners with respect to t he payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of the other agreements and covenants required to be performed by it contained in the Lease Agreement or herein, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.06 No Liability by the City to the Owners. Except for the payment when due of the Base Rental Payments and the performance of the other agreements and covenants requir ed to be performed by it contained in the Lease Agreement, the Ground Lease or herein, the City shall not have any obligation or liability to the Owners with respect to the Indenture or the preparation, execution, delivery or transfer of the Bonds or the disbursement of the Base Rental Payments by the 2.d Packet Pg. 435 30 4837-5803-9009v3/200928-0001 Trustee to the Owners, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.07 No Liability of the Trustee to the Owners. Except as expressly provided herein, the Trustee shall not have any obligation or liability to the Owners with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the Authority or the City of the other agreements and covenants required to be performed by them contained in the Lease Agreement, the Ground Lease or herein. Section 7.08 Application of Amounts After Default. All payments received by the Trustee with respect to the rental of the Property after a default by the City pursuant to Article VI of the Lease Agreement (including, without limitation, any proceeds received in connection with the sale, assignment or sublease of the Authority’s right, title and interest in the Ground Lease), and all damages or other payments received by the Trustee for the enforcement of any rights and powers of the Trustee under Article VI of the Lease Agreement, shall be deposited into the Base Rental Payment Fund and as soon as practicable thereafter applied, together with all other funds held hereunder (except funds in the Rebate Fund): (a) to the payment of all amounts due to the Trustee under Article VIII hereof; (b) to the payment of all amounts then due for interest on the Bonds, in respect of which, or for the benefit of which, money has been collected (other than Bonds which have become payable prior to such event of default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of interest on such Bonds due and payable; and (c) to the payment of all amounts then due for principal of the Bonds, in respect of which, or for the benefit of which, money has been collected (other than Bonds which have become payable prior to such event of default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of principal of such Bonds due and payable. Section 7.09 Trustee May Enforce Claims Without Possession of Bonds. All rights of action and claims 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 proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Owners in respec t of which such judgment has been recovered. Section 7.10 Limitation on Suits. No Owner of any Bond shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or Trustee, or for any other remedy hereunder, unless: (a) such Owner shall have previously given written notice to the Trustee of a continuing event of default; (b) the Owners of not less than 25% of the aggregate principal amount of the applicable Series of Bonds then Outstanding shall have made written request to the Trustee to institute proceedings in respect of such event of default in its own name as Trustee hereunder; (c) such Owner or Owners shall have afforded to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be 2.d Packet Pg. 436 31 4837-5803-9009v3/200928-0001 incurred in compliance with such request; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceedings; and (e) no direction inconsistent with such written request shall have been given to the Trustee during such 60 day period by the Owners of a majority of the aggregate principal amount of the applicable Series of Bonds then Outstanding; it being understood and intended that no one or more Owners shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Owner, or to obtain or seek to obtain priority or preference over any other Owner or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Owners. ARTICLE VIII THE TRUSTEE Section 8.01 Employment of the Trustee. The Authority hereby appoints and employs the Trustee to receive, deposit and disburse the Base Rental Payments, to authenticate, deliver and transfer the Bonds and to perform the other functions contained herein, all in the manner provided herein and subject to the conditions and terms hereof. By executing and de livering this Indenture, the Trustee accepts the appointment and employment hereinabove referred to and accepts the rights and obligations of the Trustee provided herein, subject to the conditions and terms hereof. Other than when an event of default has occurred and is continuing, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee. In case an event of default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, 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. Section 8.02 Duties, Removal and Resignation of the Trustee. The Authority may, by an instrument in writing, with at least 30 days’ prior notice, remove the Trustee initially a party hereto and any successor thereto unless an event of default shall have occurred and then be continuing, and shall remove the Trustee initially a party hereto and any successor thereto if at any time: (a) requested to do so by an instrument or concurrent instruments in writing signed by the Owners of a majority of the aggregate principal amount of Bonds at the time Outstanding (or their attorneys duly authorized in writing); or (b) the Trustee shall cease to be eligible in accordance with the following sentence, and shall appoint a successor Trustee. The Trustee and any successor Trustee shall be a banking corporation or association or trust company having (or if such banking corporation or association or trust company is a member of a bank holding company, its bank holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000 and subject to supervision or examination by federal or state authorities. If such banking corporation or association or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such bank , association or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Authority and the City and by giving notice, by first class mail, postage prepaid, of suc h resignation to the Owners at their addresses appearing on the Registration Books. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing; 2.d Packet Pg. 437 32 4837-5803-9009v3/200928-0001 provided, however, that in the event that the Authority does not appoint a successor Trustee within 30 days following receipt of such notice of resignation, the resigning Trustee may, at the expense of the Authority, petition the appropriate court having jurisdiction to appoint a successor Trustee . Any resignation or removal of a Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. Any corporation, association or agency into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided that such entity meets the combined capital and surplus requirements of this Section, ipso facto, shall be and become successor trustee under this Indenture and vested with all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 8.03 Compensation of the Trustee. The City shall from time to time, subject to any written agreement then in effect with the Trustee, pay the Trustee reasonable compensation for all its services rendered hereunder and reimburse the Trustee for all of its reasonable advances and expenditures (which shall not include “overhead expenses” except as such expenses are included as a component of the Trustee’s stated annual fees) hereunder, including but not limited to advances to and reasonable fees and reasonable expenses of accountants, agents, appraisers, consultants or other experts, and counsel, employed by it in the exercise and performance of its rights and obligations hereunder. The Trustee may take whatever legal actions are lawfully available to it directly against the Authority or the City. The City shall, to the extent permitted by law, indemnify and save the Trustee and its officers, directors, agents and employees harmless against any liabilities, costs, suits, judgments, damages, claims or expenses, including those of its attorneys, which it may incur in the exercise and performance of its powers and duties hereunder, under the Lease Agreement or in connection with any document or transaction contemplated hereunder or thereunder, including the enforcement of any remedies and the defense of any suit, and which are not due to its negligence or its misconduct. The duty of the City to indemnify the Trustee shall survive the termination and discharge of this Indenture and the earlier removal or resignation of the Trustee. No provision of this Indenture shall require 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 hereunder. Upon an event of default, and only upon an event of default, the Trustee shall have a first lien with right of payment prior to payment on account of principal of and premium, if any, and interest on any Bond, upon the trust estate for the foregoing fees, charges and expenses incurred by it. 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. Section 8.04 Protection of the Trustee. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any affida vit, bond, certificate, consent, notice, 2.d Packet Pg. 438 33 4837-5803-9009v3/200928-0001 request, requisition, resolution, statement, telegram, voucher, waiver or other paper or document which it shall in good faith believe to be genuine and to have been adopted, executed or delivered by the proper party or pursuant to any of the provisions hereof, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evi dence of the truth and accuracy of such statements. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Owners of the Bonds pursuant to this Indenture, unless such Owners shall have offered to the Trustee security or indemnity, reasonably satisfactory to the Trustee, against the reasonable costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Trust ee may consult with counsel, who may be counsel to the Authority or the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect to any action taken or suffered by it hereunder in good faith in accordance therewith. The Trustee shall not be responsible for the sufficiency of the Bonds or the Lease Agreement, or of the assignment made to it by the Assignment Agreement, or for statements made in any preliminary or final official statement relating to the Bonds, or of the title to the Property. Whenever in the administration of its rights and obligations hereunder the Trustee shall deem 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 is specifically prescribed herein) may be deemed to be conclusively proved and established by a Written Certificate of the City or a Written Certificate of the Authority, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it deems reasonable. The Trustee may buy, sell, own, hold and deal in any of the Bonds and may join in any action which any Owner may be entitled to take with like effect as if the Trustee were not a party hereto. The Trustee, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Authority or the City, and may act as agent, depository or trustee for any committee or body of Owners or of owners of obligations of the Authority or the City as freely as if it were not the Trustee hereunder. The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers hereof and perform any rights and obligations required of it hereunder by or through agents, attorneys or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its rights and obligations hereunder, and the Trustee shall not be answerable for the negligence or misconduct of any such agent, attorney or receiver selected by it with reaso nable care; provided, however, that in the event of any negligence or misconduct of any such attorney, agent or receiver, the Trustee shall in a commercially reasonable manner pursue all remedies of the Trustee against such agent, attorney or receiver. The Trustee shall not be liable for any error of judgment made by it in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee shall not be answerable for the exercise of any trusts or powers here under or for anything whatsoever in connection with the funds established hereunder, except only for its own willful misconduct or negligence. 2.d Packet Pg. 439 34 4837-5803-9009v3/200928-0001 The Trustee shall not be deemed to have knowledge of an event of default unless it has actual knowledge thereof. The Trustee may, on behalf of the Owners, intervene in any judicial proceeding to which the Authority or the City is a party and which, in the opinion of the Trustee and its counsel, affects the Bonds or the security therefor, and shall do so if requested in writing by the Owners of at least 5% of the aggregate principal amount of the applicable Series of Bonds then Outstanding, provided that the Trustee shall have no duty to take such action unless it has been indemnified to its reasonable satisfaction against all risk or liability arising from such action. The Trustee’s rights to immunities and protection from liability hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and final payment or defeasance of the Bonds. All indemnifications and releases from liability granted herein to the Trustee shall extend to the directors, officers, employees and agents of the Trustee. The permissive right of the Trustee to do things enumerated in this Indent ure shall not be construed as a duty, and the Trustee shall not be answerable for other than its negligence or willful default. The Trustee shall have no responsibility or liability with respect to any information, statements or recitals in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of these Bonds. The Trustee shall not be accountable for the use or application by the Borrower of any of the Bonds or the proceeds thereof or for the use or application of any money paid over by the Trustee in accordance with the provisions of this Indenture or for the use and application of money received by any paying agent. The Trustee shall have the right to accept and act upon instructions, including funds tr ansfer 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). The Authority and the 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 wheneve r a person is to be added or deleted from the listing. If the Authority or the City elect to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Authority and the 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 the City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Authority, the 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. 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 the fact that such directions conflict or are inconsistent with a subsequent written instruction. The Authority and the City agree: (i) to assume all risks arising out of the use of Electronic Means to 2.d Packet Pg. 440 35 4837-5803-9009v3/200928-0001 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 they are 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 tr ansmitting Instructions than the method(s) selected by the Authority or the City; (iii) that the security procedures (if any) to be followed in connection with its 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. The Trustee shall not be liable to the parties hereto or deemed in breach or defaul t 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 . In acting or omitting to act pursuant to the Assignment Agreement, the Lease Agreement, Ground Lease or any other document executed in connection herewith or therewith, the Trustee shall be entitled to all of the rights, immunities and indemnities accorded to it under this Indenture and the Lease Agreement, including, but not limited to, this Article VIII. Ratings of Permitted Investments referred to herein shall be determined at the time of purchase of such Permitted Investments and without regard to rating subcategories. The Trustee shall have no responsibility to monitor the ratings of Permitted Investment s after the initial purchase of such Permitted Investments, or the responsibility to validate Permitted Investments the ratings of Permitted Investments prior to the initial purchase. The Trustee may conclusively rely upon the City or the Authority’s Written Request as to both the suitability and legality of the directed investments and such written direction shall be deemed to be a certification that such directed investments constitute Permitted Investments. The Trustee shall have no duty to review, verify or analyze any financial statements furnished to it by the City, and shall hold such financial statements solely as a repository for the Owners. The Trustee shall not be deemed to have notice of any informa tion contained therein or any default or event of default that may be disclosed therein in any manner. ARTICLE IX MODIFICATION OR AMENDMENTS Section 9.01 Modifications and Amendments Permitted. (a) This Indenture and the rights and obligations of the Authority, the City, the Owners of the Bonds and the Trustee may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into with the prior written consent of the Owners of a majority in aggregate pri ncipal amount of all Bonds then Outstanding, which shall have been filed with the Trustee. No such modification or amendment shall: (i) extend the fixed maturity of any Bonds, or reduce the amount of principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the Owner of each Bond so 2.d Packet Pg. 441 36 4837-5803-9009v3/200928-0001 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 (iii) permit the creation of any lien on the Base Rental Payments and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture or deprive the Owners of the Bonds of the lien created by this Indenture on such Base Rental Payments and other assets (except as expressly provided in this Indenture), without the consent of the Owners of all of the Bonds then Outstanding. It shall not be necessary for the consent of the Bond Owners to approve the particular form of any Supplemental Indentu re, but it shall be sufficient if such consent shall approve the substance thereof. (b) This Indenture and the rights and obligations of the Authority, the City, the Trustee and the Owners of the Bonds may also be modified or amended from time to time and at a ny time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into without the consent of any Bond Owners, but only for any one or more of the following purposes: (i) to add to the covenants and agreements of the Authority or the City 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 or the City; (ii) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision contained in this Indenture; (iii) to provide for the issuance of one or more Series of Additional Bonds, and to provide the terms and conditions under which such Series of Additional Bonds may be issued, subject to and in accordance with the provisions of Article III hereof; (iv) 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 add such other terms, conditions and provisions as may be permitted by said act or similar federal statute; (v) to modify, amend or supplement this Indenture in such manner as to cause interest on the Bonds to be excludable from gross income for purposes of federal income taxation by the United States of America, if applicable to such Series of Bonds; and (vi) in any other respect whatsoever as the Authority and the City may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the rights and interests of the Bond Owners hereunder, in the Opinion of Counsel filed with the Authority, the City and the Trustee. (c) Promptly after the execution by the Authority, the City and the Trustee of any Supplemental Indenture, the Trustee shall mail a notice (the form of which shall be furnished to the Trustee by the Authority), by first class mail postage prepaid, setting forth in general terms the substance of such Supplemental Indenture, to the Owners of the Bonds at the respective addresses shown on the Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture. 2.d Packet Pg. 442 37 4837-5803-9009v3/200928-0001 (d) No Supplemental Indenture shall modify any of the rights or obligations of the Trustee without its prior written consent. (e) In executing, or accepting the additional trusts created by, any Supplemental Indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, the Trustee shall receive, and shall be fully protected in relying upon, an Opinion of Counsel addressed and delivered to the Trustee stating that the execution of such Supplemental Indenture is permitted by and in compliance with this Indenture and, if applicable, that the execution and delivery thereof will not in and of itself adversely affect the exclusion from federal gross income t ax of interest on the Series of Bonds. Section 9.02 Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, 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 City, 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 of 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 pursuant to this Article may, and if the Authority so determines shall, bear a notation by endorsement or otherwise in form approved by the Authority and the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Owner of any Bonds Outstanding at the time of such execution and presentation of such Owner’s Bonds for such purpose at the Office of the Trustee 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 and the Trustee, 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 of 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 interest rate and maturity. Section 9.04 Amendment of Particular Bonds. The provisions of this Article shall 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. If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Bonds the principal thereof and the interest and premium, if any, thereon at the times and in the manner stipulated he rein and therein, then the Owners of such Bonds shall cease to be entitled to the pledge of the Base Rental Payments and the other assets as provided herein, and all agreements, covenants and other obligations of the Authority and the City to the Owners of such Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to 2.d Packet Pg. 443 38 4837-5803-9009v3/200928-0001 the Authority and the City all such instruments as may be necessary or desirable to evidence su ch discharge and satisfaction, and the Trustee shall pay over or deliver to the City all money or securities held by it pursuant hereto which are not required for the payment of the principal of and interest and premium, if any, on such Bonds. Subject to the provisions of the above paragraph, when any of the Bonds shall have been paid and if, at the time of such payment, the Authority and the City shall have kept, performed and observed all of the covenants and promises in such Bonds and in this Indenture r equired or contemplated to be kept, performed and observed by them on or prior to that time, then this Indenture shall be considered to have been discharged in respect of such Bonds and such Bonds shall cease to be entitled to the lien of this Indenture and such lien and all covenants, agreements and other obligations of the Authority and the City hereunder shall cease, terminate become void and be completely discharged as to such Bonds. Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non-presentment of Bonds, and the duties of the Trustee in connection with all of the foregoing, shall remain in effect and shall be binding upon the Trustee and the Owners of the Bonds and the Trustee shall continue to be obligated to hold in trust any moneys or investments then held by the Trustee for the payment of the principal of and interest and premium, if any, on the Bonds, to pay to the Owners of Bonds the funds so held by the Trustee as and when such payment becomes due. Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the compensation and indemnity of the Trustee shall remain in effect and shall be binding upon the Trustee, the City and the Authority. Section 10.02 Bonds Deemed To Have Been Paid. If moneys shall have been set aside and held by the Trustee for the payment or redemption of any Bonds and the interest thereon at the maturity or redemption date thereof, such Bonds shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01. Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the mea ning of and with the effect expressed in Section 10.01 if: (a) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to mail, on a date in accordance with the provisions of Section 4.02, notice of redemption of such Bonds on said redemption date, said notice to be given in accordance with Section 4.02; (b) there shall have been deposited with the Trustee either: (i) money in an amount which shall be sufficient; or (ii) Federal Securities that are not subject to redemption other than at the option of the holder thereof, the interest on and principal of which when paid will provide money which, together with the money, if any deposited with the Trustee at the same time, shall, as verified in writing by an independent certified public accountant, be sufficient to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and premium, if any, on such Bonds; and (c) in the event that such Bonds are not by their terms subject to redemption within the next succeeding 60 days, the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the owners of such Bonds that the deposit required by clause (b) above has been made with the Trustee and that such Bonds, are deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon whic h money is to be available for the payment of the principal of and premium, if any, on such Bonds. 2.d Packet Pg. 444 39 4837-5803-9009v3/200928-0001 Section 10.03 Payment of Bonds After Discharge of Indenture. Notwithstanding any provisions of this Indenture, to the extent permitted by law, any moneys held by the Trus tee in trust for the payment of the principal of, or premium or interest on, any Bonds and remaining unclaimed for two years after the date of deposit of such moneys, shall be repaid to the Authority (without liability for interest) 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 may (at the cost of the Authority) first mai l, by first class mail postage prepaid, to the Owners of Bonds which have not yet been paid, at the respective 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 Benefits of Indenture Limited to Parties. Nothing contained herein, expressed or implied, is intended to give to any person other than the Authority, the City, the Trustee and the Owners any claim, remedy or right under or pursuant hereto, and any agreement, condition, covenant or term required herein to be observed or performed by or on behalf of the Authority or the City shall be for the sole and exclusive benefit of the Trustee and the Owners. Section 11.02 Successor Deemed Included in all References to Predecessor. Whenever the Authority, the City or the Trustee, or any officer thereof, is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority, the City or the Trustee, or such officer, and all agreements, conditions, covenants and terms required hereby to be observed or performed by or on behalf of the Authority, the City or the Trustee, or any officer thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 11.03 Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or by such other proof as the Trustee may accept which it may deem sufficient. The ownership of any Bonds and the amount, payment date, number and date of owning the same may be proved by the Registration Books. Any declaration, request or other instrument in writing of the Owner of any Bond shall bind all future Owners of such Bond with respect to anything done or suffered to be done by the Authority, the City or the Trustee in good faith and in accordance therewith. 2.d Packet Pg. 445 40 4837-5803-9009v3/200928-0001 Section 11.04 Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the Authority or the City shall be individually or personally liable for the payment of any moneys, including without limitation, the principal of or interest on the Bonds, but nothing contained herein shall relieve any member, officer or employee of the City or the Authority from the performance of any official duty provided by any applicable provisions of law, by the Lease Agreement or hereby. 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 may, in lieu of such cancellation and delivery, destroy such Bonds. Section 11.06 Funds and Accounts. Any fund or account required to be established and maintained herein by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Bonds and the rights of the Owners. The Trustee may commingle any of the moneys held by it hereunder for investment purposes only; provided, however, that the Trustee shall account separately for th e moneys in each fund or account established pursuant to this Indenture. The Trustee may establish such funds and accounts as it deems necessary or appropriate to perform its obligations hereunder. Section 11.07 Article and Section Headings Gender and References. The singular form of any word used herein, including the terms defined in Section 1.01, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to “Articles,” “Sections,” subsections or clauses are to the corresponding Articles, Sections, subsections or clauses hereof, and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith,” “hereunder” and other words of similar import refer to this Indenture a s a whole and not to any particular Article, Section, subsection or clause thereof. Section 11.08 Partial Invalidity. If any one or more of the agreements, conditions, covenants or terms required herein to be observed or performed by or on the part of the Authority, the City or the Trustee shall be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms shall be null and void to the extent contrary to law and shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the Bonds, and the Owners shall retain all the benefit, protection and security afforded to them under any applicable provisions of law. The Authority, the City and the Trustee hereby declare that they would have executed this Indenture, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Bonds pursuant hereto irrespective of the fact that any one or more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. 2.d Packet Pg. 446 41 4837-5803-9009v3/200928-0001 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 Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; except that, in determining whether the Trustee shall be protected in relying upon any such demand, request, direction, consent or waiver of an Owner, only Bonds which the Trustee actually knows to be o wned or held by or for the account of the Authority or the City, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded 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. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Authority and the City shall specify in a Written Certificate of the City and Authority those Bonds disqualified pursuant to this Section and the Trustee may conclusively rely on such Certificate. Section 11.10 Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to p articular 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 10.03 but without any liability for interest thereon. Section 11.11 Payment on Non-Business Days. In the event that 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 with the same effect as if made on such non-Business Day. Section 11.12 California Law. This Indenture shall be construed and governed in accordance with the laws of the State of California. Section 11.13 Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the City: City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 Attention: Finance Director If to the Authority: City of Diamond Bar Public Financing Authority c/o City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 Attention: Executive Director 2.d Packet Pg. 447 42 4837-5803-9009v3/200928-0001 If to the Trustee: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Global Corporate Trust Ref: City of Diamond Bar 2021 Bonds Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed: (a) if personally served or delivered, upon delivery; (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender’s rec eipt of an appropriate answer back or other written acknowledgment; (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail; (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier; or (e) if given by any other means, upon delivery at the address specified in this Section. Section 11.14 Notice to Rating Agencies. The Trustee shall provide S&P, if the Bonds are then rated by S&P, and Moody’s, if the Bonds are then rated by Moody’s, with prompt notice of any substitution or release of property pursuant to Section 9.03 of the Lease Agreement. Section 11.15 Execution in Counterparts. This Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 2.d Packet Pg. 448 S-1 4837-5803-9009v3/200928-0001 IN WITNESS WHEREOF, the Authority and the City have caused this Indenture to be signed in their respective names by their representative thereunto duly authorized, and the Trustee, 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. CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Executive Director ATTEST: Secretary CITY OF DIAMOND BAR By: City Manager ATTEST: City Clerk [SIGNATURES CONTINUED ON NEXT PAGE.] 2.d Packet Pg. 449 S-2 4837-5803-9009v3/200928-0001 [SIGNATURE PAGE CONTINUED.] U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 2.d Packet Pg. 450 A-1 4837-5803-9009v3/200928-0001 EXHIBIT A FORM OF SERIES 2021 BOND No. ____ $___________ UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO 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. CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BOND, 2021 SERIES A INTEREST RATE MATURITY DATE DATED DATE CUSIP ______% June 1, 20__ June __, 2021 _____ ___ REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: _________________________ DOLLARS The City of Diamond Bar Public Financing Authority (the “Authority”), for value received, hereby promises to pay, solely from the Base Rental Payments (as hereinafter defined) or amounts in certain funds and accounts held under the Indenture (as hereinafter defined), to the Registered Owner identified above or registered assigns (the “Registered Owner”), on the Maturity Date identified above or on any earlier redemption date, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest Rate identified above in like lawful money from the date hereof payable semiannually on ____ 1, 202__ and each June 1 and December 1 thereafter (the “Interest Payment Dates”), until payment of such Principal Amount in full. This Bond shall bear interest from the Interest Payment Date next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date, whether or not such day is a Business Day, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to _____ 15, 2021, in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, interest on t his Bond shall be payable from the date to which interest hereon has been paid in full, payable on each Interest Payment Date). The Principal Amount hereof is payable upon surrender hereof upon maturity or earlier redemption at the Office of the Trustee (as hereinafter defined). Interest hereon is payable by wire or check of U.S. Bank National Association, as trustee (the “Trustee”), mailed by first class mail, postage prepaid, on each Interest Payment Date to the Registered Owner hereof at the address 2.d Packet Pg. 451 A-2 4837-5803-9009v3/200928-0001 of the Registered Owner shown on the Registration Books at the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date. “Office of the Trustee” means the corporate trust office of the Trustee in St. Paul, Minnesota, or such other office as may be specified to the Authority and the City of Diamond Bar (the “City”) by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange , such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing. This Bond is one of a series of a duly authorized issue of bo nds issued for the purpose of refinancing the acquisition, construction and installation of certain capital improvements of the City, and is one of the series of bonds designated “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A” (the “Series 2021 Bonds”) in the aggregate principal amount of $_______. The Series 2021 Bonds are issued pursuant to the Indenture, dated as of June 1, 2021 (the “Indenture”), by and among the Authority, the City and the Trustee, and thi s reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Indenture, additi onal bonds (“Additional Bonds”) may be issued by the Authority secured by a lien on a parity with the lien securing the Series 2021 Bonds. The Series 2021 Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The Indenture is entered into, and this Bond is issued under, the laws of the State of California. Pursuant to the Indenture, the principal of and interest on the Bonds are payable solely from certain base rental payments (the “Base Rental Payments”) under and pursuant to that certain Lease Agreement, dated as of June 1, 2021 (the “Lease Agreement”), by and between the City, as sublessee, and the Authority, as sublessor, all of which rights to receive such Base Rental Payments have been assigned without recourse by the Authority to the Trustee. 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 Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund established under the Indenture are pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms and the provisions of the Indenture. Said pledge constitutes a first lien on such assets. The Series 2021 Bonds are authorized to be issued in the form of fully registered bonds without coupons in denominations of $5,000 or any integral multiple thereof (“Authorized Denominations”). The Series 2021 Bonds shall be subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any net insurance proceeds received with respect to all or a portion of the property leased under the Lease Agreement, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof, which are deposited by the Trustee in the Redemption Fund established under the Indenture, at a Redemption Price equal to the principal amount of the Series 2021 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. The Series 2021 Bonds maturing on or after June 1, 20__, shall be subject to optional redemption, in whole or in part, on ____ 1, 20__ or any date thereafter, in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease 2.d Packet Pg. 452 A-3 4837-5803-9009v3/200928-0001 Agreement, at a Redemption Price equal to the principal amount of the Series 2021 Bonds to be redeemed, plus accrued interest thereon to the date of redemption. The Series 2021 Bonds with stated maturities on June 1, 20__, are subject to mandatory sinking fund redemption in part (by lot) on June 1, 20__ and each June 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule : Mandatory Sinking Fund Redemption Dates (June 1) Principal Amount of Bonds to be Redeemed 20__ $ 20__* * Maturity. If, during the Fiscal Year immediately preceding one of the redemption dates specified above, the Authority purchases Series 2021 Bonds, at least 45 days prior to the redemption date, the Authority will notify the Trustee as to the principal amount purchased and the amount of Series 2021 Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming mandatory sinking fund redemption payment for the Series 2021 Bonds so purchased. All Series 2021 Bonds purchased pursuant to the Indenture will be cancelled. The Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice of any redemption to the respective owners of any Series 2021 Bonds designated for redemption, at their respective addresses appearing on the Registration Books, at least 20 but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed, nor any defect therei n, shall affect the validity of the proceedings for the redemption of such Series 2021 Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. The Redemption Price of the Series 2021 Bonds to be redeemed shall be paid only upon presentation and surrender thereof at the Office of the Trustee. From and after the date fixed for redemption of any Series 2021 Bonds, interest on such Series 2021 Bonds will cease to accrue and become payable. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, fully registered Series 2021 Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount and maturity of fully registered Series 2021 Bonds of other authorized denominations. This Bond is transferable by the Registered Owner hereof, in person or by his or her duly authorized attorney, 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 such transfer a new fully registered Series 2021 Bond or Series 2021 Bonds, in Authorized Denominations, for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Authority, the City and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority, the City and the Trustee shall not be affected by any notice to the contrary. 2.d Packet Pg. 453 A-4 4837-5803-9009v3/200928-0001 The Indenture and the rights and obligations of the Authority, the City, the owners of the Bonds and the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture; provided that no such modification or amendment shall: (a) extend the fixed maturity of any Bonds, or reduce the principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the owner of each Bond so affected; or (b) reduce the percentage of Bonds the consent of the owners of which is required to effect any such amendment or modification ; or (c) permit the creation of any lien on the Base Rental Payments and other assets pledged under the Indenture prior to or on a parity with the lien created by the Indenture or deprive the owners of the Bonds of the lien created by the Indenture on such the Base Rental Payments and such other assets (except as expressly provided in the Indenture), without the consent of the owners of all Bonds then outstanding. The Indenture contains provisions permitting the Authority to make provision for the payment of interest on, and the principal and premium, if any, of any of the Bond so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture. All obligations of the Authority under the Indenture shall be special obligations of the Authority, payable solely from Rental Payments and the other assets pledged therefor under the Indenture; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other asse ts pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds. It is hereby certified 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 Joint Exercise of Powers Agreement, and the laws of the State of California and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit under 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. 2.d Packet Pg. 454 A-5 4837-5803-9009v3/200928-0001 IN WITNESS WHEREOF, the Authority has caused this Bond to be signed in its name and on its behalf by the facsimile signatures of its Chair and Secretary, all as of the Dated Date identified above. CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Chair Attest: Secretary [FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION] This is one of the Series 2021 Bonds described in the within-mentioned Indenture and registered on the Registration Books. Date: June __, 2021 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Signatory 2.d Packet Pg. 455 A-6 4837-5803-9009v3/200928-0001 [FORM OF LEGAL OPINION] The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office. Secretary of the City of Diamond Bar Public Financing Authority [FORM OF 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. Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within pond in every particular without alteration or enlargement or any change whatsoever. 2.d Packet Pg. 456 B-1 4837-5803-9009v3/200928-0001 EXHIBIT B DESCRIPTION OF THE 2002 PROJECT Construction of a community/senior center located in Summitridge Park at the corner of Grand Avenue & Summitridge Drive. The 2002 Project, which is built on a 17 acre site, is a 22,500 square foot facility that includes a dedicated senior citizen center and a meeting facility/banquet room that accommodates up to 500 people for dining. The meeting facility/banquet r oom also features a stage area for presentations and musical performances as well as video and audio capability. Also available are specialized rooms for youth recreational programs such as gymnastics and dance, and a craft room for various City-run arts programs. The 2002 Project was completed in 2004. 2.d Packet Pg. 457 Jones Hall Draft 4-21-2021 $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A BOND PURCHASE AGREEMENT [Pricing Date] City of Diamond Bar Public Financing Authority c/o City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 City of Diamond Bar 21810 Copley Drive Diamond Bar, California 91765 Ladies and Gentlemen: Raymond James & Associates, Inc. (the “Underwriter”) offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with the City of Diamond Bar Public Financing Authority (the “Authority”) and the City of Diamond Bar (the “City”) for the purchase of the above- captioned bonds (the “Bonds”). This offer is made subject to the Authority’s and the City’s acceptance by execution of this Purchase Agreement and delivery of the same to the Underwriter on or before 6:00 p.m. California time on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Authority and the City at any time prior to such acceptance. Upon the Authority’s and the City’s acceptance hereof, the Purchase Agreement will be binding upon the Authority, the City and the Underwriter. The Authority and the City acknowledge and agree that: (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the Authority, the City, and the Underwriter; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as agent or Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and has not assumed any advisory or fiduciary responsibility in favor of the Authority or the City with respect to the offering of the Bonds or the process leading thereto (whether or not the Underwriter has advised or is currently advising the Authority or the City on other matters); (iii) the only obligations the Underwriter has to the Authority and the City with respect to the transaction contemplated hereby expressly are set forth in this Purchase Agreement; (iv) the Authority and the City have consulted their own legal, financial, accounting, tax and other advisors to the extent each has deemed appropriate; (v) the Underwriter has financial interests that differ from and may be adverse to those of the City and the Authority; and (vi) the Underwriter has provided the Authority and the City with certain disclosures required under the rules of the Municipal Securities Rulemaking Board (the “MSRB”). The Authority and the City acknowledge and represent that they have engaged Fieldman, Rolapp & Associates, Inc. (the “Municipal Advisor”) as their municipal advisor (as defined in Securities and Exchange Commission Rule 15Ba1) and will rely on the financial advice of the Municipal Advisor with respect to the Bonds. 2.e Packet Pg. 458 2 Capitalized terms used in this Purchase Agreement and not otherwise defined herein will have the respective meanings set forth for such terms in the Indenture (defined below). Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations set forth in this Purchase Agreement, the Underwriter agrees to purchase from the Authority, and the Authority agrees to sell and deliver to the Underwriter, all (but not less than al l) of the Bonds at a purchase price of $__________ (being an amount equal to the principal amount of the Bonds ($[PAR].00), plus original issue premium of $__________, and less an underwriter’s discount of $__________). The obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds will be conditioned on the sale and delivery of all of the Bonds by the Authority to the Underwriter at Closing (hereafter defined). Section 2. Bond Terms; Purpose. (a) The Bonds will be dated their date of delivery and will mature and bear interest as shown on Exhibit A. The Bonds will be as described in, and will be issued and secured under, an Indenture, dated as of June 1, 2021 (the “Indenture”), by and among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”). The Bonds are payable and subject to redemption as shown in Exhibit A. (b) The Bonds will be payable from and secured by the Authority’s pledge of “Base Rental Payments” under and as defined in the Indenture, which will be made by the City under a Lease Agreement, dated as of June 1, 2021, between the Authority, as sublessor, and the City, as sublessee (the “Lease Agreement”). (c) The City and the Authority are also entering into a Ground Lease dated as of June 1, 2021 (the “Ground Lease”). Under the Ground Lease, the City will lease the real property described therein to the Authority and, under the Lease Agreement, the Authority will lease the same real property back to the City. The Authority will assign to the Trustee its right to receive the Base Rental Payments pursuant to an Assignment Agreement, dated as of June 1, 2021 (the “Assignment Agreement”). (d) The Authority is issuing the Bonds to refund all of the outstanding Authority’s Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) [maturing after June 1, 2021] (the “2002 Bonds”), and pay costs of issuance relating to the Bonds. In connection with the refunding of a portion of the outstanding 2002 Bonds, (i) the City, the Authority, and U.S. Bank National Association, as escrow bank and as trustee of the 2002 Bonds (in such capacities, the “Escrow Bank”) will enter into an Escrow Agreement (2002 Bonds), dated as of June 1, 2021 (the “Escrow Agreement”), (ii) the City and the Authority will enter into a Termination of Lease Agreement, dated as of June 1, 2021 (the “Termination of Lease”), and (iii) the City and the Authority will enter into Termination of Site Lease, dated as of June 1, 2021 (the “Termination of Site Lease”). Section 3. Public Offering. The Underwriter agrees to make an initial bona fide public offering of all of the Bonds, at not in excess of the initial publ ic offering yields or prices set forth on Exhibit A. Following the initial public offering of the Bonds, the offering prices may be changed from time to time by the Underwriter, provided that the Underwriter shall not change any of the principal amounts or the interest rates set forth on Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices . The Bonds are subject to redemption as set forth in Exhibit A. 2.e Packet Pg. 459 3 Section 4. Official Statement; Continuing Disclosure. (a) The Authority and the City have delivered to the Underwriter the Preliminary Official Statement dated ____________, 2021 (the “Preliminary Official Statement”) and will deliver to the Underwriter a final official statement dated the date of this Purchase Agreement (as amended and supplemented from time to time pursuant to Section 5(i) of this Purchase Agreement, the “Official Statement”). Subsequent to its receipt of the Authority’s and the City’s 15c2-12 Certificate, in substantially the form attached hereto as Exhibit B, deeming the Preliminary Official Statement final for purposes of Rule 15c2 -12 of the Securities and Exchange Commission, as amended (“Rule 15c2-12”), the Underwriter has distributed copies of the Preliminary Official Statement. The Authority and the City hereby ratify the use by the Underwriter of the Preliminary Official Statement and authorize the Underwriter to use and distribute in printed and/or electronic format the Official Statement (including all in formation previously permitted to have been omitted by Rule 15c2-12, and any supplements and amendments thereto as have been approved by the Authority and the City as evidenced by the execution and delivery of such document by an officer of the Authority and the City), the Indenture, the Ground Lease, the Assignment Agreement, the Lease Agreement, this Purchase Agreement, the Escrow Agreement, the Continuing Disclosure Certificate (hereinafter defined) and all information contained therein, and all other documents, certificates and written statements furnished by the Authority and the City to the Underwriter in connection with the transactions contemplated by this Purchase Agreement, in connection with the offer and sale of the Bonds by the Underwriter. The Underwriter hereby agrees to deliver a copy of the Official Statement to the MSRB through the Electronic Municipal Marketplace Access website of the MSRB on or before the Clos ing Date and otherwise to comply with all applicable statutes and regulations in connection with the offering and sale of the Bonds, including, without limitation, MSRB Rule G-32 and Rule 15c2-12. The Authority and the City agree to deliver to the Underwriter as many copies of the Official Statement as the Underwriter will reasonably request as necessary to comply with paragraph (b)(4) of Rule 15c2-12. The Authority and the City agree to deliver the final Official Statement within seven business days after the execution hereof, or such earlier date identified by the Underwriter to be necessary to allow the Underwriter to meet its obligations under Rule 15c2-12 and Rule G-32 of the MSRB. (b) The Underwriter agrees to: (1) provide the Authority with final pricing information on the Bonds on a timely basis prior to the Closing and (2) take any and all other actions necessary to comply with applicable Securities and Exchange Commission rules and MSRB rules governing the offering, sale and delivery of the Bonds to ultimate purchasers. (c) In connection with issuance of the Bonds, and in order to assist the Underwriter with complying with the provisions of Rule 15c2-12, the City will execute and deliver a Continuing Disclosure Certificate (the “Continuing Disclosure Certificate”) under which the City will undertake to provide certain financial and operating data as required by Rule 15c2 -12. The form of the Continuing Disclosure Certificate is attached as an appendix to the Preliminary Official Statement and will be attached as an appendix to the final Official Statement. Section 5. Representations, Warranties and Covenants of the Authority. The Authority hereby represents, warrants and agrees with the Underwriter that: (a) The Authority is a joint exercise of powers authority duly organized and existing under the laws of the State (the “State”) and has all necessary power and authority to adopt the 2.e Packet Pg. 460 4 Authority Resolution (as hereinafter defined), to enter into and perform its duties under the Indenture, the Assignment Agreement, the Lease Agreement, the Ground Lease, Termination of Lease, Termination of Site Lease, the Escrow Agreement, and this Purchase Agreement (collectively, the “Authority Agreements”) and, when executed and delivered by the respective parties thereto, each Authority Agreement will constitute legal, valid and binding obligation of the Authority enforceable in accordance with its respective terms. (b) The board of directors (the “Board”) of the Authority has taken official action by a resolution adopted on May [4], 2021 (the “Authority Resolution”) adopted by a majority of the members of the Board at a regular meeting duly called, noticed and conducted, at which a quorum was present and acting throughout, authorizing the execution, delivery and due performance of the Authority Agreements and the Official Statement and the taking of any and all such action as may be required on the part of the Authority to carry out, give effect to and co nsummate the transactions contemplated hereby. (c) By all necessary official action, the Authority has duly authorized the preparation and delivery of the Preliminary Official Statement and the preparation, execution and delivery of the Official Statement, has duly authorized and approved the execution and delivery of, and the performance of its obligations under, the Bonds and the Authority Agreements, and the consummation by it of all other transactions contemplated by the Authority Resolution, the Authority Agreements, the Preliminary Official Statement and the Official Statement. When executed and delivered by the respective parties thereto, the Authority Agreements (assuming due authorization, execution and delivery by and enforceability against the other parties thereto) will be in full force and effect and each will constitute legal, valid and binding agreements or obligations of the Authority, enforceable in accordance with their respective terms, except as enforcement thereof may be limite d by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors rights generally, the application of equitable principles, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State. (d) The statements and information contained in the Preliminary Official Statement and Official Statement (other than information relating to DTC and its book-entry only system or provided by the Underwriter) are correct and complete in all material respects, and the information contained in the Preliminary Official Statement and Official Statement (other than information relating to DTC and its book-entry only system or provided by the Underwriter) does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make such statements therein, in the light of the circumstances under which they were made, not misleading. (e) As of the date hereof, there is no action, suit, proceeding or investigation before or by any court, public board or body pending against the Authority or, to the best knowledge of the Authority, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the Authority, or the titles of its members or officers; (ii) in any way question or affect the validity or enforceability of Authority Agreements or the Bonds, or (iii) in any way question or affect the Authority Agreements or the transactions contemplated by the Authority Agreements, the Official Statement, or any other agreement or instrument to which the Authority is a party relating to the Bonds. (f) There is no consent, approval, authorization or other order of, or filing or registration with, or certification by, any regulatory authority having jurisdiction over the Authority required for 2.e Packet Pg. 461 5 the execution and delivery of this Purchase Agreement or the consummation by the Authority of the other transactions contemplated by the Official Statement or the Authority Agreements. (g) Any certificate signed by any official of the Authority authorized to do so will be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein. (h) Except as previously disclosed to the Underwriter, the Authority is not in default, and at no time has the Authority defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding. (i) (1) If between the date of this Purchase Agreement and the date which is 25 days following the End of the Underwriting Period (as defined below), any event will occur which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Authority will immediately notify the Underwriter, and if, in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will at its expense supplement or amend the Official Statement in a form and in a manner approved by the Underwriter. “End of the Underwriting Period” will mean the later of: (i) the Closing Date, and (ii) the date the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public, provided that unless the Underwriter notifies the Authority on or prior to the Closing Date that it retains, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public, the End of the Underwriting Period will be deemed to have occurred on the Closing Date. (2) After the Closing, the Authority will not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the Underwriter reasonably objects in writing or which is disapproved by Underwriter’s Counsel (hereinafter defined). If any event relating to or affecting the Authority occurs as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, the Authority will use its best efforts to assist the Underwriter in preparing (at the expense of the Authority for 90 days after the date of the Closing, and thereafter at the expense of the Underwriter) a reasonable number of copies of an amendment of or suppleme nt to the Official Statement (in form and substance satisfactory to the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in orde r to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. For the purposes of this subsection, the Authority will furnish such information with respect to itself as the Underwriter may from time to time reasonably request. 2.e Packet Pg. 462 6 (j) Except as disclosed in the Preliminary Official Statement and the Official Statement, the Authority has not previously failed to comply in all material respects with any undertakings under Rule 15c2-12 during the past five years. (k) The Authority covenants with the Underwriter that the Authority will cooperate with the Underwriter (at the cost and written directions of the Underwriter), in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdicti on of the United States as the Underwriter may reasonably request; provided, however, that the Authority shall not be required to consent to suit or to service of process, or to qualify to do business, in any jurisdiction. The Authority consents to the use by the Underwriter of the Authority Agreements, the Preliminary Official Statement and the Official Statement in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions related to the offering and sale of the Bonds. Section 6. Representations, Warranties and Covenants of the City. The City hereby represents, warrants and agrees with the Underwriter that: (a) The City is a general law city and municipal corporation, organized and existing under the Constitution and the laws of the State and has all necessary power and authority to adopt its resolution adopted on May [4], 2021 (the “City Resolution”), to enter into and perform its duties under the Indenture, the Ground Lease, the Lease Agreement, Termination of Lease, Termination of Site Lease, the Continuing Disclosure Certificate, the Escrow Agreement and this Purchase Agreement (collectively, the “City Agreements”) and, when executed and delivered by the respective parties thereto, the City Agreements will each constitute legal, valid and binding obligations of the City enforceable in accordance with their respective terms. (b) The city council (the “City Council”) of the City has taken official action by adopting the City Resolution by a majority of the members of the City Council at a meeting duly called, noticed and conducted, at which a quorum was present and acting throughout, authorizing the execution, delivery and due performance of the City Agreements and the Official Statement and the taking of any and all such action as may be required on the part of the City to carry out, give effect to and consummate the transactions contemplated hereby. (c) By all necessary official action, the City has duly adopted the City Resolution, has duly authorized the preparation and delivery of the Preliminary Official Statement and the preparation, execution and delivery of the Official Statement, has duly authorized and a pproved the execution and delivery of, and the performance of its obligations under, the City Agreements, and the consummation by it of all other transactions contemplated by the City Resolution, the City Agreements, the Preliminary Official Statement and the Official Statement. When executed and delivered by the respective parties thereto, the City Agreements (assuming due authorization, execution and delivery by and enforceability against the other parties thereto) will be in full force and effect and each will constitute legal, valid and binding agreements or obligations of the City, enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors rights generally, the application of equitable principles, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State. (d) At the time of the City’s acceptance hereof and at all times subsequent thereto up to and including the time of the Closing, the information and statements in the Preliminary Official Statement and the Official Statement (other than any information concerning the Depository Trust 2.e Packet Pg. 463 7 Company and the book-entry system for the Bonds or provided by the Underwriter) does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therei n, in the light of the circumstances under which they were made, not misleading. (e) As of the date hereof, there is no action, suit, proceeding or investigation before or by any court, public board or body pending against the City or, to the best knowle dge of the City, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the City, or the titles of its members or officers; (ii) in any way question or affect the validity or enforceability of City Agreements or the Bonds, or (iii) in any way question or affect the Purchase Agreement or the transactions contemplated by the Purchase Agreement, the Official Statement, or any other agreement or instrument to which the City is a party relating to the Bonds. (f) There is no consent, approval, authorization or other order of, or filing or registration with, or certification by, any regulatory authority having jurisdiction over the City required for the execution and delivery of this Purchase Agreement or the consummation by the City of the other transactions contemplated by the Official Statement or the City Agreements. (g) Any certificate signed by any official of the City authorized to do so will be deemed a representation and warranty by the City to the Underwriter as to the statements made therein. (h) Except as previously disclosed to the Underwriter, the City is not in default, and at no time has the City defaulted in any material respect, on any bond, note or other obliga tion for borrowed money or any agreement under which any such obligation is or was outstanding. (i) (1) Except as disclosed in the Official Statement or otherwise disclosed in writing to the Underwriter, there has not been any materially adverse change in the financial condition of the City since June 30, 2020, and there has been no occurrence or circumstance or combination thereof that is reasonably expected to result in any such materially adverse change. (2) If between the date of this Purchase Agreement and the date which is 25 days following the End of the Underwriting Period, any event will occur which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the lig ht of the circumstances under which they were made, not misleading, the City will immediately notify the Underwriter, and if, in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will at its expense supplement or amend the Official Statement in a form and in a manner approved by the Underwriter. (3) After the Closing, the City will not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the Underwriter reasonably objects in writing or which is disapproved by Underwriter’s Counsel. If any event relating to or affecting the City occurs as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make 2.e Packet Pg. 464 8 the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, the City will use its best efforts to assist the Underwriter in preparing (at the expense of the City for 90 days after the date of the Closing, and thereafter at the expense of the Underwriter) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. For the purposes of this subsection, the City will furnish such information with respect to itself as the Underwriter may from time to time reasonably request. (j) Except as disclosed in the Official Statement or otherwise disclosed in writing to the Underwriter, the City has not previously failed to comply in all material respects with any undertakings under Rule 15c2-12 in the past five years. (k) The City does not need the consent of its auditor to include its comprehensive annual financial report for the fiscal year ended June 30, 2020 as an appendix to the Preliminary Official Statement and the Official Statement. (l) The City covenants with the Underwriter that the City will cooperate with the Underwriter (at the cost and written directions of the Underwriter), in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdiction of the United States as the Underwriter may reasonably request; provided, however, that the City shall not be required to consent to suit or to service of process, or to qualify to do business, in any jurisdiction. The City consents to the use by the Underwriter of the City Agreements, the Preliminary Official Statement and the Official Statement in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions related to the offering and sale of the Bonds. Section 7. The Closing. (a) At 8:30 A.M., California time, on [Closing Date] (the “Closing Date”), or on such earlier or later time or date as may be agreed upon by the Underwriter, the Authority and the City (the “Closing”), the Authority will deliver the Bonds to the Underwriter, through the book-entry system of The Depository Trust Company (“DTC”). Prior to the Closing, the Authority and the City will deliver, at the offices of Stradling Yocca Carlson & Rauth, a Professional Corporation (“Bond Counsel”), in Newport Beach, California, or such other place as is mutually agreed upon by the Underwriter and the Authority, the other documents described in this Purchase Agreement. On the date of the Closing, the Underwriter will pay the purchase price of the Bonds as set forth in Section 1 of this Purchase Agreement in immediately available funds to the order of the Trustee. (b) The Bonds will be issued in fully registered form and will be prepared and delivered as one Bond for each maturity registered in the name of a nominee of DTC. It is anticipated that CUSIP identification numbers will be inserted on the Bonds, but neither the failure to provide such numbers nor any error with respect thereto will constitute a cause for failure or refusal by the Underwriter to accept delivery of the Bonds in accordance with the terms of this Purchase Agreement. Section 8. Conditions to Underwriter’s Obligations. The Underwriter has entered into this Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein and to be contained in the documents and instruments to be delivered on the 2.e Packet Pg. 465 9 date of the Closing, and upon the performance by the Authority and the City of their respective obligations to be performed hereunder and under such documents and instruments to be delivered at or prior to the date of the Closing. The Underwriter’s obligations under this Purchase Agreement are and will also be subject to the sale, issuance and delivery of the Bonds as well as the followi ng conditions: (a) The representations and warranties of the Authority and the City contained in this Purchase Agreement will be true and correct in all material respects on the date of this Purchase Agreement and on and as of the date of the Closing as if made on the date of the Closing; (b) As of the date of the Closing, the Official Statement may not have been amended, modified or supplemented, except in any case as may have been agreed to by the Underwriter; (c) (i) As of the date of the Closing, the Authority Resolution, the City Resolution, the Authority Agreements and the City Agreements will be in full force and effect, and will not have been amended, modified or supplemented, except as may have been agreed to by the Underwriter, (ii) the Authority will perform or have performed all of its obligations required under or specified in the Authority Resolution, the Authority Agreements and this Purchase Agreement to be performed at or prior to the date of the Closing; and (iii) the City will perform or have performed all of its obligations required under or specified in the City Resolution, the City Agreements and this Purchase Agreement to be performed at or prior to the date of the Closing; (d) As of the date of the Closing, all necessary official action of the Authority relating to the Authority Agreements, the Authority Resolution and the Official Statement, and all necessary official action of the City relating to the City Agreements, the City Resolution, and the Official Statement, will have been taken and will be in full force and effect and will not have been amended, modified or supplemented in any material respect, except as may have been agreed to by the City and Underwriter; and (e) As of or prior to the date of the Closing, the Underwriter will have received each of the following documents: (1) Certified copies of the Authority Resolution and the City Resolution. (2) Duly executed copies of the Indenture, the Assignment Agreement, the Lease Agreement, the Ground Lease, the Continuing Disclosure Certificate, the Escrow Agreement, the Termination of Lease, the Termination of Site Lease, and this Purchase Agreement. (3) The Preliminary Official Statement and the Official Statement, with the Official Statement duly executed on behalf of the Authority and the City. (4) An approving opinion of Bond Counsel, dated as of the Closing, as to the validity of the Bonds and the exclusion of interest on the Bonds from federal gross income and State income taxation addressed to the Authority and the City substantially in the form attached as an appendix to the Official Statement, and a reliance letter with respect thereto addressed to the Underwriter. (5) A supplemental opinion of Bond Counsel, addressed to the Underwriter, to the effect that: 2.e Packet Pg. 466 10 (i) The Continuing Disclosure Certificate, Purchase Agreement and the Escrow Agreement have been duly executed and delivered by the City and are each valid and binding upon the City, subject to laws relating to bankruptcy, insolvency, reorganization or creditors’ rights generally and to the application of equitable principles; (ii) The Purchase Agreement and the Escrow Agreement have been duly executed and delivered by the Authority and are each valid and binding upon the Authority, subject to laws relating to bankruptcy, insolvency, reorganization or creditors’ rights generally and to the application of equitable principles; (iii) The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; and (iv) The statements contained in the Official Statement on the cover and under the headings [“INTRODUCTION,” “REFUNDING PLAN,” “THE 2021 BONDS,” “SECURITY AND SOURCES FOR PAYMENT FOR THE 2021 BONDS” and “TAX MATTERS,” and in “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” and “APPENDIX D –FORM OF BOND COUNSEL OPINION,”] insofar as such statements purport to describe certain provisions of the Bonds, the Indenture, the Lease Agreement, the Ground Lease, the Escrow Agreement, and the Assignment Agreement, or to state legal conclusions and the opinion of Bond Counsel regarding the tax-exempt nature of the Bonds, present a fair and accurate summary of the provisions thereof. (6) An opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, as disclosure counsel to the City, addressed to the Underwriter, to the effect that: We are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Preliminary Offici al Statement or the Official Statement and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. However, in our capacity as disclosure counsel to the Authority and the City, we have revie wed certain documents as described above and have participated in conferences during which the contents of the Preliminary Official Statement and the Official Statement and related matters were discussed. Based on our review of documents and our participation in the above-mentioned conferences, and with the assumptions described in the second preceding paragraph, we advise you that, during the course of our assistance in the preparation of the Preliminary Official Statement and the Official Statement, no facts have come to the attention of the attorneys in our firm rendering legal services in connection with such representation that caused us to believe that the Preliminary Official Statement and the Official Statement, as of their date and as of the date of this letter contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (excep t that we express no opinion or belief with respect to: (i) the expressions of opinion, the assumptions, the projections, the financial statements or other financial, numerical, economic, demographic or statistical data contained in the Preliminary Officia l Statement and the Official Statement, (ii) any CUSIP numbers or information relating thereto contained in the Preliminary Official 2.e Packet Pg. 467 11 Statement and the Official Statement, (iii) any information contained in the appendices to the Preliminary Official Statement and the Official Statement, (iv) any information with respect to the Depository Trust Company and its book entry system for the Bonds contained or incorporated in the Preliminary Official Statement and the Official Statement, (v) any information incorporated by reference into the Preliminary Official Statement and the Official Statement, (vi) information with respect to the rating on the Bonds and the rating agency referenced in the Preliminary Official Statement and the Official Statement, and (vii) compliance by the City with its obligations to provide notices of the events described in Part (b)(5)(i)(C) of Rule 15c2-12 of the United States Securities and Exchange Commission, as amended (the “Rule”) or to file annual reports described in Part (b)(5)(i)(A) of the Rule, which compliance we have not reviewed pursuant to your direction). (7) An opinion or opinions of Woodruff Spradlin & Smart, Costa Mesa, California, as General Counsel to the Authority and as City Attorney, dated as of the Closing addressed to the Authority, the City, the Trustee and the Underwriter, in form and substance acceptable to the Underwriter, to the effect that: (i) The City is a municipal corporation and general law city duly organized and validly existing under the laws and the Constitution of the State. The City Council is the governing body of the City. (ii) The City has all necessary power and authority to adopt the City Resolution, and to enter into and perform its duties under the City Agreements, and, when executed and delivered by the respective parties thereto, the City Agreements will each constitute a legal, valid and binding obligation of the City enforceable in accordance with its respective terms, except as such enforcement may be limited by bankruptcy, moratorium and the exercise of equitable principles where equitable remedies are sought. (iii) The City Resolution was duly adopted at a meeting of the City Council, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the City Resolution is in full force and effect and has not been modified, amended or rescinded since the date of its adoption. (iv) The execution and delivery by the City of the City Agreements, the Official Statement and the other instruments contemplated by any of such documents to which the City is a party, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States or any department, division, agency or instrumentality of either thereof, or any applicable court or administrative decree or order or any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound in a manner which could materially adversely affect the City’s performance under the City Agreements. (v) All approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or 2.e Packet Pg. 468 12 the absence of which could materially adversely affect, the performance by the City of its obligations under the City Agreements have been obtained and are in full force and effect. (vi) To the best of the City Attorney’s knowledge, after due inquiry, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, is pending or threatened in any way against the City (A) affecting the existence of the City or the titles of its City Council members or its officers to their respective offices, (B) affecting the existence of the City, (C) seeking to restrain or to enjoin the issuance or sale of the Bonds, (D) in any way contesting or affecting the validity or enforceability of the City Resolution or the City Agreements, (E) in any way contesting the powers of the City to issue or sell the Bonds or its authority with respect to the City Resolution or the City Agreements, (F) in any way contesting or affecting any of the rights, powers, duties or obligations of the City with respect to the money or property pledged or to be pledged under the Indenture, the Lease Agreement or the Ground Lease or (G) in any way questioning the accuracy of the statements in the Preliminary Official Statement or the Official Statement. (vii) The Authority is a joint exercise of powers authority organized and validly existing under the laws of the State. The Board of Directors of the Authority is the governing body of the Authority. (viii) The Authority has all necessary power and authority to adopt the Authority Resolution, and to enter into and perform its duties under the Authority Agreements and, when executed and delivered by the respective parties thereto, the Authority Agreements will each constitute legal, valid and binding obligation of the Authority enforceable in accordance with its respective terms, except as such enforcement may be limited by bankruptcy, moratorium and the exercise of equitable principles where equitable remedies are sought. (ix) The Authority Resolution was duly adopted at a regular meeting of the Authority’s Board of Directors, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the Authority Resolution is in full force and effect and has not been modified, amended or rescinded since the date of its adoption. (x) To the best of the City Attorney’s knowledge, after due inquiry, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, is pending or threatened in any way against the Authority (A) affecting the existence of the Authority or the titles of its Board members or its officers to their respective offices, (B) affecting the existence of the Authority, (C) seeking to restrain or to enjoin the issuance or sale of the Bonds, (D) in any way contesting or affecting the validity or enforceability of the Authority Resolution or the Authority Agreements, (E) in any way contesting the powers of the Authority to issue or sell the Bonds or its authority with respect to the Authority Resolution or the Authority Agreements, (F) in any way contesting or affecting any of the rights, powers, duties or obligations of the Authority with respect to the money or property pledged or to be pledged under the Indenture, the Lease Agreement or the Ground 2.e Packet Pg. 469 13 Lease or (G) in any way questioning the accuracy of the statements in the Preliminary Official Statement or the Official Statement. (xi) The execution and delivery by the Authority of the Authority Agreements, the Official Statement and the other instruments contemplated by any of such documents to which the Authority is a party, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States or any department, division, agency or instrumentality of either thereof, or any applicable court or administrative decree or order or any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Authority is a party or is otherwise subject or bound in a manner which would materially adversely affect the Authority’s performance under the Authority Agreements. (xii) All approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Authority of its obligations under the Authority Agreements have been obtained and are in full force and effect. (8) A letter of Jones Hall, A Professional Law Corporation (“Underwriter’s Counsel”), addressed to the Underwriter, in form and substance acceptable to the Underwriter. (9) An executed certificate(s) of the Authority and the City, dated as of the date of the Preliminary Official Statement, substantially in the form attached as Exhibit B. (10) An executed closing certificate of the Authority, dated as of the Closing, in the form attached as Exhibit C. (11) An executed closing certificate of the City, dated as of the Closing, in the form attached as Exhibit D. (12) The opinion of counsel to U.S. Bank National Association (“U.S. Bank”), as Trustee and Escrow Bank, dated as of the Closing, addressed to the Authority, the City and the Underwriter to the effect that: (i) U.S. Bank is a national banking association duly organized and validly existing under the laws of the jurisdiction of its organization, and has the corporate power to execute and deliver, and to perform its obligations under, the Indenture, the Assignment Agreement and the Escrow Agreement. (ii) The Indenture, the Assignment Agreement and the Escrow Agreement have been duly authorized, executed and delivered by U.S. Bank, and, assuming due authorization, execution and delivery by the other parties thereto, the Indenture, the Assignment Agreement and the Escrow Agreement constitute valid and legally binding agreements of U.S. Bank enforceable in accordance with their terms, subject to laws relating in bankruptcy, insolvency or other laws affecting the 2.e Packet Pg. 470 14 enforcement of creditors’ rights generally and the application of equitable principles if equitable remedies are sought. (iii) U.S. Bank has duly authenticated and delivered the Bonds. (iv) To the best knowledge of counsel, after due inquiry, there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending, or threatened against U.S. Bank which in the reasonable judgment of U.S. Bank would affect the existence of U.S. Bank or in any way contesting or affecting the validity or enforceability of the Indenture, the Assignment Agreement or the Escrow Agreement or contesting the powers of U.S. Bank or its authority to enter into and perform its obligations thereunder. (13) A certificate of U.S Bank, dated as of the Closing, in the form attached as Exhibit E. (14) A tax certificate duly signed on behalf of the Authority and the City in form and substance acceptable to Bond Counsel and the Underwriter. (15) Evidence of required filings with the California Debt and Investment Advisory Commission. (16) Evidence of one or more of the CLTA or ALTA title insurance policies in form and substance required under the Lease Agreement for the real property described therein. (17) A copy of the executed Blanket Issuer Letter of Representations by and between the Authority and DTC relating to the book-entry system. (18) Evidence that the Bonds have received the ratings set forth on the cover of the Official Statement. . (19) A verification report of Robert Thomas CPA, LLC, Minneapolis, Minnesota, confirming the sufficiency of the deposits in the escrow fund established under the Escrow Agreement to defease and redeem the outstanding 2002 Bonds to be refunded with proceeds of the Bonds as provided in the Escrow Agreement. (20) A certificate of the Municipal Advisor, in substantially the form attached hereto as Exhibit F. (21) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may reasonably request to ev idence compliance by the Authority and the City with legal requirements, the truth and accuracy, as of the date of the Closing, of the representations of the Authority and the City herein contained and of the Official Statement and the due performance or satisfaction by the Authority and the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Authority and the City. 2.e Packet Pg. 471 15 All of the opinions, letters, certificates, instruments and other documents m entioned in this Purchase Agreement will be deemed to be in compliance with the provisions of this Purchase Agreement if, but only if, they are in form and substance satisfactory to the Underwriter. If the Authority and the City are unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds contained in this Purchase Agreement or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds will be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement will terminate and neither the Underwriter, the Authority nor the City will be under further obligations hereunder, except that the respective obligations of the Authori ty, the City and the Underwriter set forth in Section 12 of this Purchase Agreement will continue in full force and effect. Section 9. Conditions to Authority’s and City’s Obligations. The performance by the Authority and the City of their respective obligations under this Purchase Agreement are conditioned upon: (i) the performance by the Underwriter of its obligations hereunder and (ii) receipt by the Authority and the City of opinions addressed to the Authority and the City, and receipt by the Underwriter of opinions addressed to the Underwriter, and the delivery of certificates being delivered on the date of the Closing by persons and entities other than the Authority and the City. Section 10. Establishment of Issue Price. (a) The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit G, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. (b) Except as otherwise set forth in Exhibit A attached hereto, the Authority will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Authority the price or prices at which it has sold to the public e ach maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that the Underwriter’s reporting obligation after the date of the Closing may be at reasonable periodic intervals or otherwise upon request of the Authority or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds. (c) The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as 2.e Packet Pg. 472 16 the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the- offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. The Underwriter will advise the Authority promptly after the close of the fifth (5th) bus iness day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. (d) The Underwriter confirms that: (i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable: (A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that the reporting obligation after the date of the Closing may be at reasonable periodic intervals or otherwise upon request of the Underwriter, and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter, (B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter partici pating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker -dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public. (ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker -dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, 2.e Packet Pg. 473 17 provided that the reporting obligation after the date of the Closing may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. (e) The Authority acknowledges that, in making the representations set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The Authority further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold -the-offering- price rule, if applicable to the Bonds. (f) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for pur poses of this section. Further, for purposes of this section: (i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a “related party” t o an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and 2.e Packet Pg. 474 18 (iv) “sale date” means the date of execution of this Purchase Agreement by all parties. Section 11. Termination Events. The Underwriter will have the right to terminate the Underwriter’s obligations under this Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds by notifying the Authority and the City of its election to do so if, after the execution hereof and prior to the Closing, any of the following events occurs: (a) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially and adversely affected by any decision issued by a court of the United States (including the United States Tax Court) or of the State, by any ruling or regulation (final, temporary or proposed) issued by or on behalf of the Department of the Treasury of the United States, the Internal Revenue Service, or other governmental agency of the United States, or any governmental agency of the State, or by a tentative decision or announcement by any member of the House Ways and Means Committee, the Senate Finance Committee, or the Conference Committee with respect to contemplated legislation or by legislation enacted by, pending in, or favorably reported to either the House of Representatives or either House of the Legislature of the State, or formally proposed to the Congress of the United States by the President of the United States or to the Legislature of the State by the Governor of the State in an executive communication, affecting the tax status of the Authority or the City, its property or income, its bonds (including the Bonds) or the interest thereon or any tax exemption granted or authorized by the Internal Revenue Code of 1986, as amended; (b) the United States becomes engaged in hostilities that result in a declaration of war or a national emergency, or any other outbreak of hostilities occurs, or a local, national or international calamity or crisis occurs, financial or otherwise, th e effect of such outbreak, calamity or crisis being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds; (c) there occurs a general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction; (d) a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission is issued or made to the effect that the issuance, offering or sale of the Bonds is or would be in violation of any provision of the Securities Act of 1933, as then in effect, or of the Securities Exchange Act of 1934, as then in effect, or of the Trust Indenture Act of 1939, as then in effect; (e) legislation is enacted by the House of Representatives or the Senate of the Congress of the United States of America, or a decision by a court of the United States of America is rendered, or a ruling or regulation by or on behalf of the Securities and Ex change Commission or other governmental agency having jurisdiction of the subject matter is made or proposed to the effect that the Authority’s obligations of the general character of the Bonds, including the Bonds are not exempt from registration, qualifi cation or other similar 2.e Packet Pg. 475 19 requirements of the Securities Act of 1933, as then in effect, or of the Trust Indenture Act of 1939, as then in effect; (f) in the reasonable judgment of the Underwriter, the market price of the Bonds, or the market price generally of obligations of the general character of the Bonds, might be materially and adversely affected because additional material restrictions not in force as of the date hereof is imposed upon trading in securities generally by any governmental authority or by any national securities exchange; (g) the Comptroller of the Currency, The New York Stock Exchange, or other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increases materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, or financial responsibility requirements of the Underwriter; (h) a general banking moratorium is established by federal, New York or State authorities; (i) any legislation, ordinance, rule or regulation is introduced in or be enacted by any governmental body, department or agency in the State or a decision of a court of compe tent jurisdiction within the State is rendered, which, in the opinion of the Underwriter, after consultation with the Authority and the City, materially adversely affects the market price of the Bonds; (j) any federal or California court, authority or re gulatory body takes action materially and adversely affecting the payment, and collection, of Base Rental Payments under the Lease Agreement and the Indenture, respectively; (k) any withdrawal, downgrading or placement on credit watch negative of any underlying rating of any securities of the Authority or the City by a national municipal bond rating agency that, in the opinion of the Underwriter, adversely affects the market price of the Bonds; or (l) an event occurs which in the reasonable opinion of the Underwriter requires a supplement or amendment to the Official Statement and: (i) the City or the Authority refuses to prepare and furnish such supplement or amendment; or (ii) in the reasonable judgment of the Underwriter, the occurrence of such event materially and adversely affects the marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; (m) additional material restrictions that are not in force as of the date hereof shall have been imposed upon trading in securities generally by any domestic governmental authority or by any domestic national securities exchange, which are material to the marketability of the Bonds; or (n) the commencement of any action, suit or proceeding that is described in Section 5(e) and 6(e). 2.e Packet Pg. 476 20 Section 12. Payment of Expenses. (a) The Underwriter will be under no obligation to pay, and the Authority and/or the City will pay the following expenses incident to the performance of the Authority’s and the City’s obligations hereunder: (i) the fees and disbursements of the advisor of the City and the Authority, including the Municipal Advisor, Bond Counsel, and Disclosure Counsel; (ii) the cost of printing and delivering the Bonds, the Preliminary Official Statement and the Official Statement (and any amendment or supplement prepared pursuant to Section s 5 and 6 of this Purchase Agreement); (iii) the fees and disbursements of accountants, advisers and of any other experts or consultants retained by the Authority or the City; and (iv) any other expenses and costs of the Authority and the City incident to the performance of their respective obligations in connection with the authorization, issuance and sale of the Bonds, including out-of-pocket expenses and regulatory expenses, and any other expenses agreed to by the parties. (b) The City and the Authority will be under no obligation to pay, and the Underwriter will pay, any fees of the California Debt and Inv estment Advisory Commission, the cost of obtaining CUSIP numbers, the cost of preparation of any “blue sky” or legal investment memoranda and this Purchase Agreement; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of Underwriter’s Counsel, meals, transportation and lodging (but not entertainment expenses), and any advertising e xpenses in connection with the public offering of the Bonds. Section 13. Notices. Any notice or other communication to be given to the Authority or the City under this Purchase Agreement may be given by delivering the same in writing to the Authority and the City at the addresses set forth on the first page of this Purchase Agreement, and any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Raymond James & Associates, Inc., One Embarcadero Center, Suite 650, San Francisco, California 94111, Attention: Emily Giles, Managing Director. Section 14. Survival of Representations, Warranties, Agreements. All of the Authority’s and the City’s representations, warranties and agreements contained in this Purchase Agreement will remain operative and in full force and effect regardless of: (a) any investigations made by or on behalf of the Underwriter; or (b) delivery of and payment for the Bonds pursuant to this Purchase Agreement. The agreements contained in this Section and in Section 12 will survive any termination of this Purchase Agreement. Section 15. Benefit; No Assignment. This Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter (including its successors and assigns), and no other person will acquire or have any right hereunder or by virtue hereof. The rights and obligations created by this Purchase Agreement are not subject to assignment by the Underwriter, the Authority or the City without the prior written consent of the other parties hereto. 2.e Packet Pg. 477 21 Section 16. Severability. In the event that any provision of this Purchase Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision of this Purchase Agreement. Section 17. Counterparts. This Purchase Agreement may be executed in any number of counterparts, all of which taken together will constitute one agreement, and any of the parties hereto may execute the Purchase Agreement by signing any such counterpart. Section 18. Governing Law. This Purchase Agreement will be governed by the laws of the State. 2.e Packet Pg. 478 S-1 Section 19. Effectiveness. This Purchase Agreement will become effective upon the execution of the acceptance hereof by an authorized officer of the Authority and the City, and will be valid and enforceable as of the time of such acceptance. Very truly yours, RAYMOND JAMES & ASSOCIATES, INC., as Underwriter By: Managing Director Accepted: CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Authorized Representative Time of Execution: California Time CITY OF DIAMOND BAR By: Authorized Representative Time of Execution: California Time 2.e Packet Pg. 479 A-1 EXHIBIT A MATURITY SCHEDULE Maturity (June 1) Principal Amount Interest Rate Yield Price 10% Test Satisfied* 10% Test Not Satisfied Subject to Hold-The- Offering- Price Rule T: Term Bond. C: Priced to optional redemption date of June __, 20__, at par. * At the time of execution of this Purchase Agreement and assuming orders are confirmed immediately after the execution of this Purchase Agreement. REDEMPTION Extraordinary Redemption. The Bonds shall be subject to redemption, in whole or in part, on any date as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, in Authorized Denominations, from and to the extent of any Net Insurance Proceeds received with respect to all or a portion of the Property, deposited by the Trustee in the Redemption Fund, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. Optional Redemption. The Bonds maturing on or after June 1, 20__, shall be subject to optional redemption, in whole or in part, on _____ 1, 20__ or any date thereafter, as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser 2.e Packet Pg. 480 A-2 number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, i n Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease Agreement, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemptio n, without premium. Mandatory Sinking Fund Redemption. The Bonds with stated maturities on June 1, 20__, are subject to mandatory sinking fund redemption in part (by lot) on June 1, 20__ and each June 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Mandatory Sinking Fund Redemption Dates (June 1) Principal Amount of Bonds to be Redeemed 20__ $ 20__* * Maturity. If, during the Fiscal Year immediately preceding one of the redemption dates specified above, the Authority purchases Bonds, at least 45 days prior to the redemption date, the Authority shall notify the Trustee as to the principal amount purchased and the amount of Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming mandatory sinking fund redemption payment for the applicable Bonds so purchased. All Bonds purchased pursuant to this subsection shall be cancelled. 2.e Packet Pg. 481 B-1 EXHIBIT B CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A 15c2-12 CERTIFICATE The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of the City of Diamond Bar (the “City”) and the City of Diamond Bar Public Financing Authority (the “Authority”), and is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the City and the Authority as follows: (1) This Certificate is delivered in connection with the offering and sale of the bonds captioned above (the “Bonds”) in order to enable the underwriter of the Bonds to comply with Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (the “Rule”). (2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement, setting forth information concerning the Bonds, the Authority and the City (the “Preliminary Official Statement”). (3) As used herein, “Permitted Omissions” means the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters, all with respect to the Bonds. (4) The Preliminary Official Statement is, except for the Permi tted Omissions, deemed final within the meaning of Rule 15c2-12, and the information therein is accurate and complete except for the Permitted Omissions. Dated: ____________, 2021 CITY OF DIAMOND BAR By:_____________________________ Authorized Officer CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By:_____________________________ Authorized Officer 2.e Packet Pg. 482 C-1 EXHIBIT C $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A CLOSING CERTIFICATE OF THE AUTHORITY The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of the City of Diamond Bar Public Financing Authority (the “Authority”), and is duly authorized to execute and deliver this Certificate and furth er hereby certifies and reconfirms on behalf of the Authority as follows: (i) The representations, warranties and covenants of the Authority contained in the Bond Purchase Agreement dated [Pricing Date], among the Authority, the City of Diamond Bar and Raymond James & Associates, Inc., as underwriter (the “Purchase Agreement”), are true and correct and in all material respects on and as of the date of the Closing with the same effect as if made on the date of the Closing. (ii) The Authority Resolution is in full force and effect at the date of the Closing and has not been amended, modified or supplemented, except as agreed to by the Authority and the Underwriter. (iii) The Authority has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied on or prior to the date of the Closing. (iv) Subsequent to the date of the Official Statement and on or prior to the date of such certificate, there has been no material adverse change in the condition (financial o r otherwise) of the Authority, whether or not arising in the ordinary course of the operations of the Authority, as described in the Official Statement. (v) The Preliminary Official Statement as of its date and the date of the Purchase Agreement and the Official Statement as of its date and the Closing Date (other than any information it contains concerning The Depository Trust Company and the book -entry system for the Bonds or provided by the Underwriter) do not contain any untrue or misleading statement of a material fact and do not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading. Capitalized terms used but not defined herein have the meanings given in the Bond Purchase Agreement. Dated: [Closing Date] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By:_____________________________ Authorized Officer 2.e Packet Pg. 483 D-1 EXHIBIT D $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A CLOSING CERTIFICATE OF THE CITY The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of the City of Diamond Bar (the “City”), and is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the City as follows: (i) The representations, warranties and covenants of the City contained in the Bond Purchase Agreement dated [Pricing Date], among the City, the City of Diamond Bar Public Financing Authority and Raymond James & Associates, Inc., as underwriter (the “Purchase Agreement”) are true and correct and in all material respects on and as of the date of the Closing with the same effect as if made on the date of the Closing. (ii) The City Resolution is in full force and effect at the date of the Closing and has not been amended, modified or supplemented, except as agreed to by the City and the Underwriter. (iii) The City has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied on or prior to the date of the Closing. (iv) Subsequent to the date of the Official Statement and on or prior to the date of such certificate, there has been no material adverse change in the condition (financial or otherwise) of the City, whether or not arising in the ordinary course of operations, as described in the Official Statement. (v) The Preliminary Official Statement as of its date and the date of the Purchase Agreement and the Official Statement as of its date and the Closing Date (other than any information it contains concerning the Authority, the Depository Trust Company and the book-entry system for the Bonds or provided by the Underwriter) do not contain any untrue or misleading statement of a material fact and do not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading. Capitalized terms used but not defined herein have the meanings given in the Purchase Agreement. Dated: [Closing Date] CITY OF DIAMOND BAR By:_____________________________ Authorized Officer 2.e Packet Pg. 484 E-1 EXHIBIT E $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A CLOSING CERTIFICATE OF U.S. BANK NATIONAL ASSOCIATION The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of U.S. Bank National Association (“U.S. Bank”) and is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of U.S. Bank as follows: (i) U.S. Bank has all necessary power to enter into the following documents (collectively, the “U.S. Bank Documents”): (A) the Indenture, dated as of June 1, 2021, by and among the City of Diamond Bar Public Financing Authority (the “Authority”), the City of Diamond Bar (the “City”) and U.S. Bank, as trustee; (B) the Assignment Agreement, dated as of June 1, 2021, by and between the Authority and U.S. Bank, as trustee; and (C) the Escrow Agreement (2002 Bonds), dated as of June 1, 2021, by and among the Authority, the City and U.S. Bank, as prior trustee and escrow bank; (ii) The U.S. Bank Documents have been duly authorized, executed and delivered by U.S. Bank, and the U.S. Bank Documents constitute the legal, valid and binding obligation s of U.S. Bank enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles, if equitable remedies are sought; (iii) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over U.S. Bank that has not been obtained is or will be required for the execution and delivery of U.S. Bank or the performance by U.S. Bank of its duties and obligations under the U.S. Bank Documents; (iv) The execution and delivery by U.S. Bank of the U.S. Bank Documents and compliance with the terms thereof will not conflict with, or result in a viol ation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which U.S. Bank is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over U.S. Bank or any of its activities or properties (except that no representation, warranty or agreem ent need be made by such counsel with respect to any federal or State securities or blue sky laws or regulations); and (v) there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending, or the best knowledge of U.S. Bank, threatened against U.S Bank which in the reasonable judgment of U.S. Bank would affect the existence of U.S. Bank or in any way contesting or affecting the validity or enforceability of the U.S. Bank Documents or contesting the powers of U.S. Bank or its authority to enter into and perform its obligations thereunder. 2.e Packet Pg. 485 E-2 Capitalized terms used but not defined herein have the meanings given in the Bond Purchase Agreement dated [Pricing Date], among the City, the Authority and Raymond James & Associates, Inc., as underwriter. Dated: [Closing Date] U.S. BANK NATIONAL ASSOCIATION, as Trustee, Prior Trustee and Escrow Bank By:_____________________________ Authorized Officer 2.e Packet Pg. 486 F-1 EXHIBIT F $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A CERTIFICATE OF MUNICIPAL ADVISOR The undersigned hereby states and certifies: (i) that the undersigned is an authorized officer of Fieldman, Rolapp & Associates, Inc. (the “Municipal Advisor”), which has acted as municipal advisor to the City of Diamond Bar Public Financing Authority (the “Authority”) in connection with the issuance of the above-referenced bonds (the “Bonds”), and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (ii) that the Municipal Advisor has participated in the review of the Preliminary Official Statement dated [POS Date] (the “Preliminary Official Statement”) and the final Official Statement dated [Pricing Date] (the “Official Statement”) relating to the Bonds; and (iii) that nothing has come to the attention of the Municipal Advisor which would lead it to believe that the Preliminary Official Statement as of its date or the date of the pricing of the Bonds or the Official Statement as of its date or the date hereof contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. Dated: [Closing Date] FIELDMAN, ROLAPP & ASSOCIATES, INC., as Municipal Advisor By: Authorized Officer 2.e Packet Pg. 487 G-2 EXHIBIT G $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A ISSUE PRICE CERTIFICATE The undersigned, Raymond James & Associates, Inc. (“Raymond James”), hereby certifies as set forth below with respect to the sale and issuance of the above -captioned obligations (the “Bonds”). 1. Bond Purchase Agreement. On [Pricing Date] (the “Sale Date”), Raymond James, the Issuer and the City of Diamond Bar executed a Bond Purchase Agreement (the “Purchase Agreement”) in connection with the sale of the Bonds. Raymond James has not modified the Purchase Agreement since its execution on the Sale Date. 2. Price. (a) As of the date of this Certificate, for each [Maturity] [[of the General Rule Maturities] of the Bonds, the first price at which at least 10% of each such Maturity of the Bonds was sold to the Public (the “10% Test”) was the respective price for such Maturity listed in Schedule A attached hereto. (b) [Raymond James offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B. (c) As set forth in the Bond Purchase Agreement, Raymond James has agreed in writing that, (i) for each Maturity of the Hold-the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any perso n at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold -the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold-the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.] (d) [** With respect to each of the General Rule Maturities of the Bonds: (1) As of the date of this Certificate, Raymond James has not sold at least 10% of the Bonds of these Maturities at any single price. (2) As of the date of this Certificate, Raymond James reasonably expects that the first sale to the Public of Bonds of these Maturities will be at or below the respective 2.e Packet Pg. 488 G-3 price or prices listed on the attached Schedule A as the “Reasonably Expected Sale Prices for Undersold Maturities.” (3) Raymond James will provide actual sales information (substantially similar to the information contained on Schedule B) as to the price at which the first 10% of each such Maturity (i.e., the Undersold Maturity or Maturities) is sold to the Public. (4) On the date the 10% Test is satisfied with respect to all Maturities of the Bonds, Raymond James will execute a supplemental certificate substantially in the form attached hereto as Schedule C with respect to any remaining Maturities for which the 10% Test has not been satisfied as of the Closing Date.**] 3. Defined Terms. (a) “General Rule Maturities” means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.” (b) “Hold-the-Offering-Price Maturities” means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (c) “Holding Period” means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date, or (ii) the date on which Raymond James has sold at least 10% of such Hold-the-Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity. (d) “Issuer” means the City of Diamond Bar Public Financing Authority. (e) “Maturity” means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities. (f) “Public” means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) “Underwriter” means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead Underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). 4. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the interpretation by Raymond James of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the 2.e Packet Pg. 489 G-4 Tax Certificate of the Issuer dated [Closing Date] and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel, in connection wi th rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038 -G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. RAYMOND JAMES & ASSOCIATES, INC. By: [Title] Dated: [Closing Date] 2.e Packet Pg. 490 G-5 SCHEDULE A TO ISSUE PRICE CERTIFICATE [Schedules to be updated at pricing in the event there are Hold-the-Offering-Price-Maturities] Actual Sales Information as of Closing Date Maturity/CUSIP Coupon Date Sold Time Sold Par Amount Sale Price [**Reasonably Expected Sales Prices for Undersold Maturities as of Closing Date Maturity/CUSIP Coupon Par Amount Offering Prices **] 2.e Packet Pg. 491 G-6 [**SCHEDULE B TO ISSUE PRICE CERTIFICATE Actual Sales for Undersold Maturities as of the Closing Date Maturity/CUSIP Date Sold Time Sold Par Amount Sale Price **] 2.e Packet Pg. 492 G-7 [**SCHEDULE C TO ISSUE PRICE CERTIFICATE SUPPLEMENTAL ISSUE PRICE CERTIFICATE OF UNDERWRITER $[PAR] CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A The undersigned, Raymond James & Associates, Inc. (“Raymond James”), hereby certifies as set forth below with respect to the sale and issuance of the above -captioned obligations (the “Bonds”). 1. Issue Price. (a) Raymond James sold at least 10% of the _______ Maturities of the Bonds to the Public at the price or prices shown on the Issue Price Certificate dated as of the Closing Date (the “10% Test”). With respect to each of the ______ Maturities of the Bonds, Raymond James had not satisfied the 10% Test as of the Closing Date (the “Undersold Maturities”). (b) As of the date of this Supplemental Certificate, Raymond James has satisfied the 10% Test with respect to the Undersold Maturities. The first price or prices at which at least 10% of each such Undersold Maturity was sold to the Public are the respective prices listed on Exhibit A attached hereto. 2. Defined Terms. (a) “Issuer” means the City of Diamond Bar Public Financing Authority. (b) “Maturity” means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities. (c) “Public” means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (d) “Underwriter” means (1) any person that agrees pursuant to a written contract with the Issuer (or with the lead Underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (2) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (1) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). 3. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the interpretation by Raymond James of any laws, including 2.e Packet Pg. 493 G-8 specifically Sections 103 and 148 of the Internal Revenue Code of 1986 , as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate of the Issuer dated [Closing Date] and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. RAYMOND JAMES & ASSOCIATES, INC. By: [Title] Dated: ____________, 20__ 2.e Packet Pg. 494 Stradling Yocca Carlson & Rauth Draft of 4/26/21 4827-8234-0833v4/200928-0001 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. PRELIMINARY OFFICIAL STATEMENT DATED MAY ___, 2021 NEW ISSUE – BOOK-ENTRY ONLY Rating: See the caption “RATING.” In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, under existing statutes, regulations, rulings an d judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements descri bed in this Official Statement, interest (and original issue discount) on the 2021 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the 2021 Bonds is exempt from State of California personal income tax. See the caption “TAX MATTERS.” $_____* CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A Dated: Date of Delivery Due: June 1, as shown on inside cover The 2021 Bonds will be issued pursuant to an Indenture, dated as of June 1, 2021, by and among the City, the Authority and U.S. Bank National Association, as trustee. The 2021 Bonds are payable from Base Rental Payments to be made by the City for the right to the use of certain real property pursuant to a Lease Agreement, dated as of June 1, 2021, by and between the City, as lessee, and the Authority, as lessor. The 2021 Bonds are being issued to provide funds: (i) to refund the Authority’s Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project); and (ii) to pay the costs of issuing the 2021 Bonds. The City has covenanted under the Lease Agreement to take such action as may be necessary to include all Rental Payments due thereunder as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Paym ents. The City’s obligation to make Base Rental Payments under the Lease Agreement is subject to abatement during any period in which, by reason of material damage to, or destruction or condemnation of, the Property, or any defects in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property. The 2021 Bonds are being issued in fully registered book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York . Interest on the 2021 Bonds is payable semiannually on December 1, 2021 and each June 1 and December 1 thereafter. Purchasers will not receive certificates representing their interest in the 2021 Bonds. Individual purchases will be in principal amounts of integral multiples of $5,000. Principal of and interest and premium, if any, on the 2021 Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the 2021 Bonds. The Authority may issue Additional Bonds payable from Base Rental Payments. The 2021 Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The 2021 Bonds are subject to optional, mandatory sinking fund and extraordinary redemption prior to maturity as describe d in this Official Statement. The 2021 Bonds are special obligations of the Authority, payable solely from the Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the 2021 Bonds. The Authority has no taxing power. The obligation of the City to make Base Rental Payments does not constitute a debt of the City or the State of California or any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not c onstitute an obligation for which the City or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged any form of taxation. The 2021 Bonds are not subject to acceleration in the event of a payment default. No debt service reserve fund or account has been established by the Authority or the City in connection with the issuance of the 2021 Bonds. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The 2021 Bonds will be offered when, as and if issued and received by the Underwriter, subject to the approval as to their validity by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed upon for the City and the Authority by the City Attorney. Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California is acting as disclosure counsel. Certain legal matters will be passed upon for the Underwriter by Jones Hall, A Professional Law Corporation, San Francisco, California, and for the Trustee by its counsel. It is anticipated that the 2021 Bonds in definitive form will be available for delivery to DTC on or about June __, 2021. [RAYMOND JAMES LOGO] Dated: May __, 2021 * Preliminary, subject to change. 2.f Packet Pg. 495 4827-8234-0833v4/200928-0001 MATURITY SCHEDULE BASE CUSIP†: _____ $_______* CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A Principal Payment Date (June 1) Principal Interest Rate Yield Price CUSIP† 20__ $ % % $_____ _____% Term 2021 Bonds due June 1, 20__; Yield: ____%; Price: ____ CUSIP†: ___ *Preliminary, subject to change. † CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the Ameri can Bankers Association by S&P Global Market Intelligence. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substit ute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the Authority, the City , the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers. 2.f Packet Pg. 496 4827-8234-0833v4/200928-0001 No dealer, broker, salesperson or other person has been authorized by the City or the Authority to give any information or to make any representations in connection with the offer or sale of the 2021 Bonds other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Authority. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sale of the 2021 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers or owners of the 2021 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described in this Official Statement, are intended solely as such and are not to be construed as representations of fact. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as 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. This Official Statement and the information contained in this Official Statement are subject to completion or amendment without notice and neither delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the City or the Authority or any other parties described in this Official Statement since the date hereof. These securities may not be sold, nor may an offer to buy be accepted, prior to the time that the Official Statement is delivered in final form. This Official Statement is being submitted in connection with the sale of the 2021 Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the City. All summaries of documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget,” “intend” or similar words. Such forward-looking statements include, but are not limited to, certain statements contained under the captions “THE CITY” and “CITY FINANCIAL INFORMATION.” THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD -LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. IN EVALUATING SUCH STATEMENTS, POTENTIAL INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS THAT COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS. IN CONNECTION WITH THE OFFERING OF THE 2021 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2021 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE 2021 2.f Packet Pg. 497 4827-8234-0833v4/200928-0001 BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. THE 2021 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. The City maintains a website; however, information presented there is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the 2021 Bonds. 2.f Packet Pg. 498 4827-8234-0833v4/200928-0001 CITY OF DIAMOND BAR, CALIFORNIA CITY COUNCIL Nancy A. Lyons, Mayor Ruth M. Low, Mayor Pro Tem Andrew Chou, Council Member Stan Liu, Council Member Steve Tye, Council Member CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY Andrew Chou, Chair Steve Tye, Vice Chair Ruth M. Low, Director Stan Liu, Director Nancy A. Lyons, Director CITY/AUTHORITY STAFF Daniel Fox, City Manager/Authority Executive Director Ryan McLean, Assistant City Manager Brent Mason, Interim Finance Director/Authority Treasurer Kristina Santana, City Clerk/Authority Secretary SPECIAL SERVICES City Attorney Woodruff, Spradlin & Smart Costa Mesa, California Bond Counsel and Disclosure Counsel Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California Municipal Advisor Fieldman, Rolapp & Associates, Inc. Irvine, California Trustee U.S. Bank National Association Los Angeles, California 2.f Packet Pg. 499 i 4827-8234-0833v4/200928-0001 TABLE OF CONTENTS INTRODUCTION ................................................. 2 General ............................................................... 2 Security for the 2021 Bonds; Base Rental Payments .............................................. 2 Limited Obligation ............................................. 3 No Reserve Fund ................................................ 3 Additional Bonds ................................................ 3 The City .............................................................. 3 Continuing Disclosure ........................................ 4 Risk Factors ........................................................ 4 Summaries Not Definitive .................................. 4 REFUNDING PLAN ............................................. 4 2002 Bonds ......................................................... 4 Estimated Sources and Uses of Funds ................ 5 THE LEASED PROPERTY .................................. 5 BASE RENTAL PAYMENT SCHEDULE .......................................................... 6 THE 2021 BONDS ................................................ 7 General ............................................................... 7 Registration, Transfers and Exchanges .............. 7 Redemption ........................................................ 7 Book-Entry Only System ................................... 9 SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS ................. 10 Pledge of Base Rental Payments ...................... 10 Additional Bonds .............................................. 10 Base Rental Payments ...................................... 11 Additional Rental Payments ............................. 12 Abatement ........................................................ 12 Substitution or Release of the Property ............ 13 Action on Default ............................................. 14 No Reserve Fund .............................................. 14 Insurance .......................................................... 14 THE CITY ........................................................... 15 General ............................................................. 15 Government and Administration ...................... 16 Risk Management ............................................. 16 COVID-19 Outbreak ........................................ 17 CITY FINANCIAL INFORMATION ................. 19 Accounting and Financial Reporting ................ 19 General Economic Condition and Outlook of the City ....................................... 20 Budget Procedure, Current Budget and Historical Budget Information ...................... 22 Change in Fund Balance of the City General Fund ................................................. 27 General Fund Balance Sheets of the City ............................................................... 28 Tax Revenues of the City ................................. 28 Sales Taxes ...................................................... 29 Property Taxes ................................................. 30 Other Taxes ...................................................... 33 Charges for Services ........................................ 33 State of California Motor Vehicle In- Lieu Payments .............................................. 33 No Other Indebtedness ..................................... 34 City Investment Policy ..................................... 35 City Reserve Policies ....................................... 36 Retirement Contributions ................................. 37 Other Post-Employment Benefits .................... 41 City Financial Statements ................................ 43 THE AUTHORITY ............................................. 43 STATE OF CALIFORNIA BUDGET INFORMATION ................................................. 44 General ............................................................. 44 Budget for State Fiscal Year 2020-21 .............. 44 Budget for State Fiscal Year 2021-22 .............. 46 Potential Impact of State Financial Condition on the City ................................... 46 Redevelopment Dissolution ............................. 47 Future State Budgets ........................................ 47 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS .................... 47 Article XIIIA of the State Constitution ............ 48 Article XIIIB of the State Constitution ............ 48 Proposition 62 .................................................. 49 Proposition 218 ................................................ 49 Unitary Property............................................... 50 Proposition 22 .................................................. 50 Proposition 26 .................................................. 50 Future Initiatives .............................................. 51 RISK FACTORS ................................................. 51 General Considerations – Security for the 2021 Bonds ............................................. 51 Abatement ........................................................ 52 Initiative and Referendum ................................ 52 Insurance on the Property ................................ 52 Condemnation of the Property ......................... 53 Value of Property ............................................. 53 No Acceleration of Base Rental Payments....................................................... 53 Certain Risks Associated with Sales Tax and Other Local Tax Revenues .................... 53 2.f Packet Pg. 500 ii 4827-8234-0833v4/200928-0001 Assessed Value of Taxable Property ................ 54 Increasing Retirement-Related Costs ............... 54 Dependence on State for Certain Revenues ....................................................... 55 Litigation .......................................................... 55 Natural Disasters .............................................. 55 Climate Change ................................................ 56 Cybersecurity.................................................... 56 Hazardous Substances ...................................... 56 Economy of City and State ............................... 57 Split Roll Initiative ........................................... 57 Additional City Obligations ............................. 57 Tax-Related Issues ........................................... 58 Possible Consequence of Tax Compliance Audit ......................................... 58 Remedies .......................................................... 58 Limitation on Trustee’s Obligations under the Indentures ...................................... 58 Release of Property; Additional Bonds ............ 59 Limitations on Enforceability ........................... 59 Secondary Market ............................................. 61 TAX MATTERS.................................................. 61 CERTAIN LEGAL MATTERS .......................... 63 MUNICIPAL ADVISOR .................................... 63 LITIGATION ...................................................... 63 UNDERWRITING .............................................. 63 RATING .............................................................. 64 CONTINUING DISCLOSURE .......................... 64 MISCELLANEOUS ............................................ 65 APPENDIX A DEMOGRAPHIC AND ECONOMIC INFORMATION .................... A-1 APPENDIX B SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ....................... B-1 APPENDIX C AUDITED FINANCIAL STATEMENTS ...................... C-1 APPENDIX D FORM OF BOND COUNSEL OPINION ............ D-1 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE ...................... E-1 APPENDIX F BOOK-ENTRY ONLY SYSTEM .................................F-1 2.f Packet Pg. 501 2 4827-8234-0833v4/200928-0001 $_____* CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A INTRODUCTION General This Official Statement, which includes the cover page and appendices (the “Official Statement”), provides certain information concerning the above-captioned bonds (the “2021 Bonds”). The 2021 Bonds are being issued by the City of Diamond Bar Public Financing Authority (the “Authority”), a joint exercise of powers agency the members of which are the City of Diamond Bar, California (the “City”) and the Successor Agency to the Redevelopment Agency of the City of Diamond Bar (the “Successor Agency”). The 2021 Bonds will be issued pursuant to Articles 9 through 11 of Chapter 3 of Part 1 of Division 2 of Title 5 (commencing with Section 53550) of the California Government Code (the “Refunding Law”), and an Indenture, dated as of June 1, 2021 (the “Indenture”), by and among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”). The 2021 Bonds are being issued in fully registered book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Purchasers will not receive certificates representing their interest in the 2021 Bonds. Individual purchases will be in integral multiples of $5,000. Principal of and interest on the 2021 Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the 2021 Bonds. See the caption “THE 2021 BONDS—Book-Entry Only System.” The 2021 Bonds are subject to optional, mandatory sinking fund and extraordinary redemption prior to maturity as described in this Official Statement. See the caption “THE 2021 BONDS—Redemption.” The 2021 Bonds are being issued to provide funds: (i) to refund the Authority’s Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (the “2002 Bonds”); and (ii) to pay the costs of issuing the 2021 Bonds. See the caption “REFUNDING PLAN.” Security for the 2021 Bonds; Base Rental Payments Pursuant to a Ground Lease, dated as of June 1, 2021 (the “Ground Lease”), by and between the City, as lessor, and the Authority, as lessee, the City has leased certain real property of the City and the improvements thereon (the “Property”) to the Authority in consideration for the Authority’s assistance in issuing the 2021 Bonds. Pursuant to a Lease Agreement, dated as of June 1, 2021 (the “Lease Agreement”), by and between the Authority, as sublessor, and the City, as sublessee, the Authority has subleased the Property back to the City. The 2021 Bonds are payable from base rental payments (the “Base Rental Payments”) to be made by the City for the right to use the Property pursuant to the Lease Agreement. The Trustee and the Authority have entered into an Assignment Agreement, dated as of June 1, 2021 (the “Assignment Agreement”), pursuant to which the Authority has assigned to the Trustee for the benefit of the 2021 Bond Owners substantially all of the Authority’s right, title and interest in and to the Ground Lease and the Lease Agreement, including its right to receive the Base Rental Payments due under the Lease Agreement and to enforce any remedies in the event of a default by the City. * Preliminary, subject to change. 2.f Packet Pg. 502 3 4827-8234-0833v4/200928-0001 The City has covenanted under the Lease Agreement to take such action as may be necessary to include all Rental Payments (including the Base Rental Payments and certain Additional Rental Payments described under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS— Additional Rental Payments”) due thereunder as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Payments. The City has also covenanted deliver to the Authority and the Trustee a Written Certificate of the City stating that its final annual budget includes all Base Rental Payments due in such Fiscal Year within ten days after the filing or adoption of its budget. Base Rental Payments payable under the Lease Agreement are subject to complete or partial abatement in the event and to the extent that there is substantial interference with the City’s right to use and occupy the Property or any portion thereof. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Abatement” and “RISK FACTORS—Abatement.” Abatement of Base Rental Payments under the Lease Agreement, to the extent that payment is not made from alternative sources as set forth in the following sentence, would result in all Owners of the 2021 Bonds receiving less than the full amount of principal of and interest on the 2021 Bonds. To the extent that moneys in any of the funds and accounts established under the Indenture or proceeds of insurance are available, Base Rental Payments (or a portion thereof) may be made during periods of abatement. Limited Obligation THE 2021 BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM THE BASE RENTAL PAYMENTS AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE CITY OR THE STATE OF CALIFORNIA (THE “STATE”), OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE 2021 BONDS. THE AUTHORITY HAS NO TAXING POWER. THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY OR THE STATE OR 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 OR THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. No Reserve Fund No debt service reserve fund or account has been established by the Authority or the City in connection with the issuance of the 2021 Bonds. Additional Bonds Under the Lease Agreement, the Authority may issue additional bonds (the “Additional Bonds”) payable from Base Rental Payments on a parity basis with the 2021 Bonds. The 2021 Bonds and any Additional Bonds are collectively referred to in this Official Statement as the “Bonds.” See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Additional Bonds.” The City See the captions “THE CITY” and “CITY FINANCIAL INFORMATION,” as well as Appendices A and C for information with respect to the City and the General Fund, including other obligations which are payable from general revenues of the City. 2.f Packet Pg. 503 4 4827-8234-0833v4/200928-0001 The City notes that much of the historical information related to the City is the latest available but does not in certain instances reflect the impact of the COVID-19 pandemic. See the caption “THE CITY— COVID-19 Outbreak.” Accordingly, such historical information below does not necessarily reflect present economic conditions and future information could be significantly different from such historical information. Continuing Disclosure The City has agreed to provide, or to cause to be provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for purposes of Securities and Exchange Commission Rule 15c2-12 (the “Rule”) certain annual financial information and operating data and, in a timely manner, notice of certain listed events. See the caption “CONTINUING DISCLOSURE.” Risk Factors Certain events could affect the ability of the City to make the Base Rental Payments when due. See the caption “RISK FACTORS” for a discussion of certain factors that should be considered, in addition to other matters that are set forth in this Official Statement, in evaluating an investment in the 2021 Bonds. Summaries Not Definitive The summaries of and references to documents, statutes, reports and other instruments in this Official Statement do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by the complete document, statute, report or instrument. The capitalization of any word that is not conventionally capitalized, or otherwise defined in this Official Statement, indicates that such word is defined in a particular agreement or other document and, as has the meaning that is given to such word in Appendix B. Copies of the documents described in this Official Statement will be available at the Finance Director’s office, City of Diamond Bar, 21810 Copley Drive, Diamond Bar, California 91765. REFUNDING PLAN 2002 Bonds The Authority issued the 2002 Bonds, which are currently outstanding in the aggregate principal amount of $8,315,000, pursuant to an Indenture of Trust, dated as of December 1, 2002 (as amended by Amendment No. 1 thereto dated as of December 1, 2011, the “2002 Indenture”), by and between the City and U.S. Bank National Association, as successor to MUFG Union Bank, N.A., formerly known as Union Bank of California, N.A., as trustee (the “2002 Trustee”). The 2002 Bonds are payable from lease payments made under a Lease Agreement, dated as of December 1, 2002 (as amended by Amendment No. 1 thereto dated as of December 1, 2011, the “2002 Lease”), by and between the City and the Authority. After making a regularly scheduled payment in the principal amount of $485,000 on the 2002 Bonds on June 1, 2021, the City plans to apply a portion of the proceeds of the 2021 Bonds to refund the 2002 Bonds maturing after June 1, 2021 in the aggregate principal amount of $7,830,000 on or about June __, 2021 (the “Redemption Date”) at a redemption price equal to the outstanding principal amount of the 2002 Bonds, plus accrued interest to such date, without premium. Under an Escrow Agreement (2002 Bonds), dated as of June 1, 2021 (the “2002 Escrow Agreement”), by and among the City, the Authority and the 2002 Trustee, the Authority will deliver a portion of the proceeds of the 2021 Bonds to the 2002 Trustee for deposit in the escrow fund established under the 2002 Escrow Agreement (the “2002 Escrow Fund”). In addition, the 2002 Trustee will deposit certain moneys held in connection with the 2002 Bonds in the 2002 Escrow Fund on or about the date of issuance of the 2021 Bonds. The 2002 Trustee will hold the amounts so deposited in the 2002 Escrow Fund uninvested. 2.f Packet Pg. 504 5 4827-8234-0833v4/200928-0001 From the moneys on deposit in the 2002 Escrow Fund, the 2002 Trustee will pay on the Redemption Date the principal of the 2002 Bonds maturing after June 1, 2021, plus interest accrued to such date, without premium. The amounts delivered to the 2002 Trustee to redeem the 2002 Bonds are pledged solely to the redemption of such 2002 Bonds. Neither such moneys nor any related interest will be available for the payments of principal of and interest on the 2021 Bonds. Estimated Sources and Uses of Funds The estimated sources and uses of funds with respect to the 2021 Bonds are shown below. Sources(1) Principal Amount of 2021 Bonds $ Plus/Less Net Original Issue Premium/Discount Other Moneys(2) Total Sources $ Uses(1) Redemption of 2002 Bonds $ Costs of Issuance(3) Total Uses $ (1) Rounded to the nearest dollar. (2) Reflects moneys held in funds and accounts established for the 2002 Bonds. (3) Includes legal fees, Underwriter’s discount, printing costs, rating agency fees, Municipal Advisor fees and other miscellaneous expenses. THE LEASED PROPERTY The Property is currently owned by the City and leased to the Authority pursuant to the Ground Lease and subleased back to the City pursuant to the Lease Agreement. The Property is located in the City at 1600 Grand Avenue, Diamond Bar, California 91765 and consists of a community/senior center within Summitridge Park, a City-owned park that is located at the corner of Grand Avenue and Summitridge Drive. The community/senior center, which is built on a 17 acre site, is a 22,500 square foot facility that includes a dedicated senior citizen center and a meeting facility/banquet room that accommodates up to 500 people for dining. The versatile meeting facility/banquet room can handle large functions such as wedding receptions, banquet dinners, corporate training and other community events. The meeting facility/banquet room also features a stage area for presentations and musical performances as well as video and audio capability. Also available are specialized rooms for youth recreational programs such as gymnastics and dance and a craft room for various City-run arts programs. Three parking lots which have a total footprint of over 136,000 square feet serve the Property. The community/senior center was financed from proceeds of the 2002 Bonds and completed in 2004. The insured value of the Property, including land and improvements, is $8,459,800. Under the quitclaim deed pursuant to which Summitridge Park was dedicated to the City upon the City’s incorporation in 1989, the use of the Property is restricted to recreational and playground purposes. There are two freestanding cellular towers and two associated telecommunications equipment sheds adjacent to one of the parking lots on the Property. The total footprint of such improvements is approximately 1,500 square feet. The owners of the cellular towers have licenses to use the Property to operate the towers and non-exclusive easement rights to access the towers and equipment sheds. The City has certified in the Lease Agreement that the annual fair rental value of the Property is at least equal to the annual Base Rental Payments. For a discussion of the insurance required to be maintained 2.f Packet Pg. 505 6 4827-8234-0833v4/200928-0001 on the Property, see the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS— Insurance.” The City has the right to substitute or release all or portion of the Property subject to certain conditions precedent. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS⎯Substitution or Release of the Property.” BASE RENTAL PAYMENT SCHEDULE Set forth below is a schedule of Base Rental Payments, which secure the 2021 Bonds, assuming no optional prepayments. Base Rental Payment Date(1) Principal Interest Total Base Rental Payments 12/1/2021 $ - $ $ 6/1/2022 12/1/2022 - 6/1/2023 12/1/2023 - 6/1/2024 12/1/2024 - 6/1/2025 12/1/2025 - 6/1/2026 12/1/2026 - 6/1/2027 12/1/2027 - 6/1/2028 12/1/2028 - 6/1/2029 12/1/2029 - 6/1/2030 12/1/2030 - 6/1/2031 12/1/2031 - 6/1/2032 12/1/2032 - 6/1/2033 - Total: $ $ $ (1) The Base Rental Payment Date is the fifteenth day prior to the corresponding Interest Payment Date for the 2021 Bonds. 2.f Packet Pg. 506 7 4827-8234-0833v4/200928-0001 THE 2021 BONDS General The 2021 Bonds will be issued in fully registered form without coupons in denominations of integral multiples of $5,000. The 2021 Bonds will be dated as of and bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) from the dated date thereof at the rates set forth on the inside cover page. Interest on the 2021 Bonds will be paid semiannually on December 1, 2021 and each June 1 and December 1 thereafter (each, an “Interest Payment Date”). Interest on the 2021 Bonds will be payable from the Interest Payment Date next preceding the date of authentication thereof unless: (i) a 2021 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; (ii) a 2021 Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the dated date thereof; or (iii) interest on any 2021 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 will be paid in lawful money of the United States on each Interest Payment Date to the Persons in whose names the ownership of the 2021 Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Except when the 2021 Bonds are held in book-entry form, interest will be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the 2021 Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. The principal and premium, if any, of the 2021 Bonds will be payable in lawful money of the United States upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee. The 2021 Bonds will be subject to optional, mandatory sinking fund and extraordinary redemption as set forth in this Official Statement. Registration, Transfers and Exchanges The 2021 Bonds will be issued as fully registered bonds, registered in the name of Cede & Co. as nominee of DTC, and will be available to actual purchasers of the 2021 Bonds (the “Beneficial Owners”) in the denominations set forth above, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants (as defined in Appendix F) as described in this Official Statement. Beneficial Owners will not be entitled to receive physical delivery of the 2021 Bonds. See the caption “—Book-Entry Only System.” Redemption Optional Redemption. The 2021 Bonds maturing on or after June 1, 20__, are subject to optional redemption, in whole or in part, on _____ 1, 20__ or any date thereafter, as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease Agreement, at a Redemption Price equal to the principal amount of the 2021 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. 2.f Packet Pg. 507 8 4827-8234-0833v4/200928-0001 Mandatory Sinking Fund Redemption. The 2021 Bonds with stated maturities on June 1, 20__, are subject to mandatory sinking fund redemption in part (by lot) on June 1, 20__ and each June 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Redemption Date (June 1) Principal Amount 20__ $ 20__* * Maturity. Extraordinary Redemption from Condemnation Award or Insurance Proceeds. The 2021 Bonds of a series are subject to redemption, in whole or in part, on any date as directed by the City in a Written Request of the City provided to the Trustee not less than 30 days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to such date, in Authorized Denominations, from and to the extent of any Net Insurance Proceeds received with respect to all or a portion of the Property, deposited by the Trustee in the Redemption Fund pursuant to the Indenture, at a Redemption Price equal to the principal amount of the 2021 Bonds of such series to be redeemed, plus accrued interest thereon to the date of redemption, without premium. Purchase in Lieu of Redemption. If, during the Fiscal Year immediately preceding one of the redemption dates specified above under the subcaption “—Mandatory Sinking Fund Redemption,” the Authority purchases 2021 Bonds, at least 45 days prior to the redemption date, the Authority will notify the Trustee as to the principal amount purchased and the amount of 2021 Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming mandatory sinking fund redemption payment for the 2021 Bonds so purchased. All 2021 Bonds purchased pursuant to the foregoing provisions will be cancelled pursuant to the Indenture. Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the 2021 Bonds, the Trustee will select the 2021 Bonds to be redeemed from all Bonds of such series not previously called for redemption: (a) with respect to any optional redemption of 2021 Bonds, among maturities of 2021 Bonds of such series as directed in a Written Request of the Authority; (b) with respect to any redemption from and to the extent of any Net Insurance Proceeds, among maturities of all 2021 Bonds of such series on a pro rata basis as nearly as practicable, and (c) with respect to any other redemption of Additional Bonds of such series, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds of such series are issued, and by lot among Bonds of the same series with the same maturity in any manner which the Trustee in its sole discretion will deem appropriate and fair. For purposes of such selection, all Bonds will be deemed to be comprised of separate $5,000 denominations, and such separate denominations will be treated as separate Bonds that may be separately redeemed. Notice of Redemption. So long as the 2021 Bonds are held in book-entry form, notices of redemption will be mailed by the Trustee only to DTC and not to any Beneficial Owners. The Trustee on behalf and at the expense of the Authority will mail (by first class mail) notice of any redemption to the Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, to the Securities Depositories and to one or more Information Services, at least 20 but not more than 60 days prior to the date fixed for redemption. Such notice will state the date of the notice, the redemption date, the redemption place and the Redemption Price and will designate the CUSIP numbers and the maturity or portion of the maturity of the 2021 Bonds to be redeemed, and will require that such 2021 Bonds be then surrendered at the principal corporate trust office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such 2021 Bonds will not accrue from and after the date fixed for redemption. Such notice of redemption may also state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the 2021 Bonds. Neither the failure to receive any notice so mailed, nor any 2.f Packet Pg. 508 9 4827-8234-0833v4/200928-0001 defect in such notice, will affect the validity of the proceedings for the redemption of the 2021 Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of optional redemption of 2021 Bonds, such notice may state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such 2021 Bonds to be redeemed and that, if such moneys shall not have been so received, said notice shall be of no force and effect and the Trustee shall not be required to redeem such 2021 Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption will not be made, and the Trustee will within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new 2021 Bond or Bonds of such series in Authorized Denominations equal in aggregate principal amount representing the unredeemed portion of the 2021 Bonds surrendered. Effect of Notice of Redemption. If a redemption notice has been mailed, and moneys for the Redemption Price, and the interest to the date fixed for redemption, have been set aside in the Redemption Fund, the 2021 Bonds will become due and payable on the redemption date, and, upon presentation and surrender of a Bond at the principal corporate trust office of the Trustee, the Authority will pay the Redemption Price of the Bond, together with interest accrued and unpaid to said date. If, on the redemption date, moneys for the Redemption Price of all the 2021 Bonds to be redeemed, together with interest to said date, is held by the Trustee so as to be available therefor on such date, and, if a notice of redemption has been mailed and not canceled, then, from and after said date, interest on the 2021 Bonds to be redeemed will cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds will be held in trust for the account of the Owners of the 2021 Bonds so to be redeemed without liability to such Owners for interest thereon. All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions of the Indenture will be canceled upon surrender thereof and destroyed. Book-Entry Only System The 2021 Bonds are registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository for the 2021 Bonds. Ownership interests in the 2021 Bonds may be purchased in book- entry form only. So long as DTC, or Cede & Co. as its nominee, is the registered owner of all 2021 Bonds, all payments on the 2021 Bonds will be made directly to DTC, and disbursement of such payments to the DTC Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of the Participants, as more fully described in Appendix F. As long as Cede & Co. is the registered owner of the 2021 Bonds, references herein to the Owners of the 2021 Bonds will refer to Cede & Co. and not to the Beneficial Owners. Neither the Authority nor the City gives any assurance that DTC, DTC Participants nor others will distribute payments with respect to the 2021 Bonds nor notices concerning the 2021 Bonds to the Beneficial Owners or that DTC will otherwise serve and act in the manner described in this Official Statement. See Appendix F for a further description of DTC and its book-entry system. The information presented therein is based solely on information provided by DTC. 2.f Packet Pg. 509 10 4827-8234-0833v4/200928-0001 SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS Pledge of Base Rental Payments The 2021 Bonds are payable from and secured by the Base Rental Payments and certain amounts on deposit in the funds and accounts established under the Indenture. Base Rental Payments will be paid by the City from any and all legally available funds. The Authority, pursuant to the Assignment Agreement, has assigned to the Trustee for the benefit of the 2021 Bond Owners all of the Authority’s right, title and interest in and to the Ground Lease and the Lease Agreement, including, without limitation, its right to receive the Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement; provided that the Authority will retain the rights to indemnification and to payment of reimbursement of its reasonable costs and expenses under the Lease Agreement. The City will pay Base Rental Payments directly to the Trustee, as assignee of the Authority. See the caption “—Base Rental Payments.” Pursuant to the Indenture, the Authority may issue Additional Bonds payable from the Base Rental Payments on parity with the 2021 Bonds. See the caption “—Additional Bonds.” Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the 2021 Bonds) held in the Base Rental Payment Fund, Interest Fund, Principal Fund and Redemption Fund are pledged by the Authority pursuant to the Indenture to secure the payment of the principal of, premium, if any, and interest on the 2021 Bonds in accordance with their terms and the provisions of the Indenture. Subject to the Indenture, said pledge constitutes a first lien on such assets. THE 2021 BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM THE BASE RENTAL PAYMENTS AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE CITY OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE 2021 BONDS. THE AUTHORITY HAS NO TAXING POWER. Additional Bonds The Authority may at any time issue one or more Series of Additional Bonds under the Indenture (in addition to the 2021 Bonds issued thereunder) payable from Base Rental Payments as provided in the Indenture on a parity with all other Bonds theretofore issued under the Indenture, but only subject to the following conditions, which are conditions precedent to the issuance of such Additional Bonds: (a) The issuance of such Additional Bonds has been authorized under and pursuant to the Indenture and has been provided for by a Supplemental Indenture which specifies the following: (1) the application of the proceeds of the sale of such Additional Bonds; (2) the principal amount and designation of such Series of Additional Bonds and the denomination or denominations of the Additional Bonds; (3) the date, the maturity date or dates, the interest payment dates and the dates on which mandatory sinking fund redemptions, if any, are to be made for such Additional Bonds; provided, however, that: (i) the serial Bonds of such Series of Additional Bonds will be payable as to principal annually on June 1 of each year in which principal falls due, and the term Bonds of such Series of Additional Bonds will have annual mandatory sinking fund redemptions on June 1; (ii) the Additional Bonds will be payable as to interest semiannually on June 1 and December 1 of each year, except that the first installment of interest may be payable on either June 1 or December 1 and will be for a period of not longer than twelve months and the interest will be payable thereafter semiannually on June 1 and December 1; (iii) all Additional Bonds of like maturity will be identical in all respects, except as to number or denomination; and (iv) serial maturities of serial Bonds or mandatory sinking fund redemptions for term Bonds, or any combination thereof, will be established to provide for the 2.f Packet Pg. 510 11 4827-8234-0833v4/200928-0001 redemption or payment of such Additional Bonds on or before their respective maturity dates; (4) the redemption premiums and terms, if any, for such Additional Bonds; (5) the form of such Additional Bonds; and (6) such other provisions that are appropriate or necessary and are not inconsistent with the provisions of the Indenture; (b) the Authority is in compliance with all agreements, conditions, covenants and terms contained in the Indenture, Lease Agreement and Ground Lease required to be observed or performed by it; (c) the City is in compliance with all agreements, conditions, covenants and terms contained in the Indenture, Lease Agreement and Ground Lease required to be observed or performed by it; and (d) the Ground Lease has been amended, to the extent necessary, and the Lease Agreement has been amended so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount equal to the principal of and interest on such Additional Bonds, payable at such times and in such manner as may be necessary to provide for the payment of the principal of and interest on such Additional Bonds; provided, however, that no such amendment will be made such that the sum of such Base Rental Payments, including any increase in the Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Rental Period is in excess of the annual fair rental value of the Property after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith (evidence of the satisfaction of such condition will be made by a Written Certificate of the City). Nothing contained in the Indenture limits the issuance of any bonds or other obligations payable from Base Rental Payments if, after the issuance and delivery of such bonds or other obligations, none of the Bonds theretofore issued under the Indenture will be Outstanding. Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds set forth in the Indenture, Additional Bonds may not be issued if an Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) exists, unless such default will be cured upon such issuance. Base Rental Payments General. Rental Payments, including Base Rental Payments, will be paid by the City to the Authority for and in consideration of the right to use and occupy the Property and in consideration of the continued right to the quiet use and enjoyment thereof during each Rental Period for which such Rental Payments are to be paid. Each Base Rental Payment will be deposited with the Trustee no later than fifteenth day of the month preceding each Interest Payment Date (the “Base Rental Deposit Date”). All Base Rental Payments will be paid directly by the City to the Trustee, and if received by the Authority at any time will be transferred by the Authority to the Trustee within one Business Day after the receipt thereof. All Base Rental Payments received by the Trustee will be deposited by the Trustee in the Base Rental Payment Fund. Pursuant to the Indenture, on the Business Day immediately preceding each Interest Payment Date, the Trustee will transfer amounts in the Base Rental Payment Fund to the Interest Fund and the Principal Fund as necessary to provide for the payment of the interest on and principal of the 2021 Bonds. Fair Rental Value. The City and the Authority have agreed and determined that the annual fair rental value of the Property is not less than the maximum annual Rental Payments due in any year for the Property. In making such determination of fair rental value, consideration has been given to the uses and purposes that may be served by the Property and the benefits therefrom which will accrue to the City and the general public. Payments of the Rental Payments for the Property during each Rental Period constitute the total rental for said Rental Period. 2.f Packet Pg. 511 12 4827-8234-0833v4/200928-0001 Covenant to Budget and Appropriate. The City covenants in the Lease Agreement to take such action as may be necessary to include all Rental Payments due under the Lease Agreement as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Payments. The City covenants to deliver to the Authority and the Trustee a Written Certificate of the City stating that its final annual budget includes all Base Rental Payments due in such Fiscal Year within 10 days after the filing or adoption of the final annual budget. The Lease Agreement declares that these covenants are and will be construed to be duties imposed by law and that it is the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the City’s covenants and agreements under the Lease Agreement. See, however, the caption “—Abatement.” Limited Obligation. THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY, THE STATE OR 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 OR THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXAT ION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. Additional Rental Payments For the right to use and occupy the Property, the Lease Agreement requires the City to pay, as Additional Rental Payments, such amounts as will be required for the payment of the following: (i) All taxes and assessments of any type or nature charged to the Authority or the City or affecting the Property or the respective interests or estates of the Authority or the City therein. (ii) All reasonable administrative costs of the Authority relating to the Property including, but without limiting the generality of the foregoing, salaries, wages, fees and expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture, fees of auditors, accountants, attorneys or engineers, and all other necessary and reasonable administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Indenture or Lease Agreement or to defend the Authority and its members, officers, agents and employees. (iii) Insurance premiums for all insurance required pursuant to the Lease Agreement. (iv) Any amounts with respect to the Lease Agreement or the 2021 Bonds required to be rebated to the federal government in accordance with section 148(f) of the Internal Revenue Code of 1986, as amended. (v) All other payments required to be paid by the City under the provisions of the Lease Agreement or Indenture. Amounts constituting Additional Rental Payments payable under the Lease Agreement will be paid by the City directly to the person or persons to whom such amounts will be payable. The City will pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any other case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof. Abatement Base Rental Payments and Additional Rental Payments are paid by the City in each Rental Period for and in consideration of the right to use and occupy the Property. Except as otherwise specifically provided in the Lease Agreement, during any period in which, by reason of material damage to, or destruction or 2.f Packet Pg. 512 13 4827-8234-0833v4/200928-0001 condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property, Rental Payments will be subject to abatement proportionately, and the City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate the Lease Agreement by virtue of any such interference, and the Lease Agreement will continue in full force and effect. The amount of such abatement will be agreed upon by the City and the Authority; provided, however, that the Rental Payments due for any Rental Period will not exceed the annual fair rental value of that portion of the Property available for use and occupancy by the City during such Rental Period. Any such abatement will continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the Property, ending with the substantial completion of the work of repair or replacement of such Property, or the portion thereof so damaged or destroyed; and the term of the Lease Agreement will be extended as provided in the Lease Agreement, except that the term will in no event be extended ten years beyond the stated termination date of the Lease Agreement. The Trustee cannot terminate the Lease Agreement in the event of such substantial interference. Abatement of Base Rental Payments and Additional Rental Payments is not an event of default under the Lease Agreements and does not permit the Trustee to take any action or avail itself of any remedy against the City. Notwithstanding the foregoing, to the extent that moneys are available for the payment of Rental Payments due under the Lease Agreement in any of the funds and accounts established under the Indenture (including as a result of the availability of insurance proceeds), such Rental Payments will not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely from said funds and accounts. The City is permitted to apply Net Insurance Proceeds: (a) together with other legally available funds that the City elects to appropriate, to the repair, reconstruction or replacement of the damaged or destroyed portions of the Property; (b) to redeem 2021 Bonds; and/or (c) if the annual fair rental value of the Property is at least equal to 100% of the Base Rental Payments, to any other lawful purpose, including Base Rental Payments. See the captions “THE 2021 BONDS—Redemption—Extraordinary Redemption from Condemnation Award or Insurance Proceeds,” “RISK FACTORS—Abatement” and Appendix B under the caption “INDENTURE—SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS—Application of Net Insurance Proceeds.” Substitution or Release of the Property The Authority and the City may amend the Lease Agreement to substitute alternate real property for any portion of the Property or to release a portion of the Property from the Lease Agreement, upon compliance with all of the conditions set forth in the Lease Agreement and described below. After a substitution or release, the portion of the Property for which the substitution or release has been effected will be released from the leasehold encumbrance of the Lease Agreement. The Lease Agreement provides that there will be no reduction in or abatement of the Base Rental Payments due from the City as a result of such substitution or release. Any such substitution or release will be subject to the following specific conditions precedent: (a) The City will deliver a Written Certificate to the Trustee setting forth its findings that the Property, as constituted after such substitution or release: (i) has an annual fair rental value at least equal to the maximum Base Rental Payments payable by the City in any Rental Period; and (ii) has a useful life in excess of the final maturity of any Outstanding Bonds. (b) The City will obtain or cause to be obtained a CLTA or ALTA title insurance policy or policies with respect to any substituted property in an amount at least equal to the aggregate principal amount of any Outstanding Bonds, of the type and with the endorsements described in the Lease Agreement. 2.f Packet Pg. 513 14 4827-8234-0833v4/200928-0001 (c) The City will provide the Trustee with an opinion of counsel to the effect that such substitution or release will not, in and of itself, cause the interest on the 2021 Bonds to be included in gross income for federal income tax purposes. (d) The City, the Authority and the Trustee will execute, and the City will cause to be recorded with the Los Angeles County Recorder, any document necessary to reconvey to the City the portion of the Property being released and to include any substituted real property in the description of the Property contained in the Lease Agreement and Ground Lease. (e) The City will provide notice of such substitution to each rating agency then rating the 2021 Bonds. Action on Default Should the City default under the Lease Agreement, the Trustee, as assignee of the Authority under the Lease Agreement, may terminate the Lease Agreement and recover certain damages from the City, or may retain the Lease Agreement and hold the City liable for all Base Rental Payments thereunder on an annual basis, and will have the right to re-enter and re-let the Property. Base Rental Payments may not be accelerated upon a default under the Lease Agreement. See the caption “RISK FACTORS—No Acceleration of Base Rental.” For purposes of certain actions of 2021 Bond Owners of a series under the Indenture and Lease Agreement, such as certain consents and amendments and the direction of remedies following default, such 2021 Bond Owners do not act alone and may not control such matters to the extent that such matters are not supported by the requisite number of the Owners of all Bonds and Additional Bonds, if any, of such series. For a description of the events of default and permitted remedies of the Trustee (as assignee of the Authority) contained in the Lease Agreement and the Indenture, see Appendix B. No Reserve Fund No debt service reserve fund or account has been established by the Authority or the City in connection with the issuance of the 2021 Bonds. Insurance The Lease Agreement requires the City to maintain or cause to be maintained, throughout the term of the Lease Agreement: (1) A standard commercial general liability insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents and employees. Said policy or policies will 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 use or ownership of the Property. Said policy or policies must provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in a single accident or event, and in a minimum amount of $500,000 for damage to property resulting from a single accident or event. Such commercial general liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried or required to be carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City, provided that such self-insurance complies with the provisions of the Lease Agreement. The Net Insurance Proceeds of such liability insurance will be applied toward extinguishment or satisfaction of the liability with respect to which the Net Insurance Proceeds of such insurance have been paid. 2.f Packet Pg. 514 15 4827-8234-0833v4/200928-0001 (2) Workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State to insure employers against liability for compensation under the California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Property and to cover full liability for compensation under any such act, that the City’s obligations to carry workers’ compensation insurance may be satisfied by self-insurance, provided that such self-insurance complies with the provisions of the Lease Agreement. (3) The City will maintain or cause to be maintained, fire, lightning and special extended coverage insurance (which includes coverage for vandalism and malicious mischief, but need not include coverage for earthquake damage) on all improvements constituting any part of the Property in an amount equal to the greater of 100% of the replacement cost of such improvements or 100% of the outstanding principal amount of the Bonds. The City has an insurance policy which provides replacement cost coverage. All of the foregoing insurance may be subject to a deductible in an amount not to exceed $500,000. The foregoing obligations may be satisfied by self-insurance, provided that such self-insurance complies with the provisions of the Lease Agreement. (4) The City will maintain rental interruption insurance to cover the Authority’s loss, total or partial, of Base Rental Payments under the Lease Agreement resulting from the loss, total or partial, of the use of any part of the Property as a result of any of the hazards required to be covered pursuant to clause (3) above in an amount sufficient at all times to pay an amount not less than the product of two times the maximum amount of the Base Rental Payments scheduled to be paid during any Rental Period. The City is not permitted to self-insure its obligation to maintain rental interruption insurance. The insurance required to be maintained by the Lease Agreement must be provided by reputable insurance companies with claims-paying abilities determined, in the reasonable opinion of a professionally certified risk manager or an independent insurance consultant, to be adequate for the purposes hereof. The City will provide, at its own expense, one or more CLTA or ALTA title insurance policies for the Property, in the aggregate amount of not less than the aggregate principal amount of the Bonds. Such policy or policies will insure: (a) the fee interest of the City in the Property; (b) the Authority’s ground leasehold estate in the Property under the Ground Lease; and (c) the City’s leasehold estate under the Lease Agreement in the Property, subject only to Permitted Encumbrances. All Net Insurance Proceeds received under said policy or policies will be deposited with the Trustee and applied as provided in the Indenture. So long as any of the Bonds remain Outstanding, each policy of title insurance obtained pursuant to the Indenture or Lease Agreement or required thereby must provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Bond Owners. THE CITY General The City is located in the southeastern portion of the County of Los Angeles (the “County”), approximately 30 miles east of the City of Los Angeles, at the junction of State Routes 57 and 60. The City was incorporated in 1989 under the general laws of the State and has an area of approximately 15 square miles. The population of the City is estimated to be approximately 57,177. The City operates under a Council/Manager form of government. Councilmembers are elected at large for four-year alternating terms and the City Council, in turn, selects one of the City Council Members to serve as Mayor for one year. The City Council selects a City Manager to administer the affairs of the City. The City Manager is responsible for implementing the policies, ordinances and directives of the City Council and for overseeing the daily operations of the City. 2.f Packet Pg. 515 16 4827-8234-0833v4/200928-0001 The City provides a wide range of municipal services, including parks and recreation, community development, neighborhood improvement and street maintenance. The City also contracts for many public services, including water service from the Walnut Valley Water District, police services from the Los Angeles County Sheriff, library services from the County, highway and street maintenance, landscape maintenance, building and safety inspection and other services. Fire services are provided by the Los Angeles County Fire Department and funded from property taxes levied by the County. Government and Administration The City had approximately 56 full-time and 29 full-time equivalent part-time employees (primarily seasonal employees in the Parks and Recreation Department) as of June 30, 2020. City employees are not represented by a labor union and senior managers serve as “at-will” employees. The City has never experienced a strike, slowdown or work stoppage. The City operates under a council-manager form of government. The City Council members and the expiration dates of their respective terms are as follows: Name Office Term Expires Nancy A. Lyons Mayor November 2022 Ruth M. Low Mayor Pro Tem November 2024 Andrew Chou Council Member November 2022 Stan Liu Council Member November 2024 Steve Tye Council Member November 2022 The City Manager, who is appointed by the City Council, serves as the City’s chief administrative officer and is responsible for overseeing the daily operations of City departments and efficient management of all City business. Daniel Fox serves as the City Manager. Mr. Fox was appointed City Manager in 2017. Prior to his appointment as City Manager, Mr. Fox served as the Assistant City Manager and Director of Community Development for the City of Laguna Niguel, California. Mr. Fox has a Bachelor of Science degree in Urban and Regional Planning from California State Polytechnic University, Pomona. Other key personnel responsible for management of the City include the Assistant City Manager and the Finance Director. Ryan McLean serves as the Assistant City Manager of the City. Mr. McLean was appointed Assistant City Manager in 2016. Prior to his appointment as Assistant City Manager, Mr. McLean served as Deputy City Manager. Mr. McLean has a Bachelor of Arts degree in Economics from the University of California, Irvine. Brent Mason is the Interim Finance Director of the City. Mr. Mason was appointed Interim Finance Director in March 2021. Prior to his appointment as Interim Finance Director, Mr. Mason served as the Finance Director of the City of San Bernardino and the Finance Director/Treasurer for the City of Riverside. Mr. Mason has a Bachelor of Science degree in Business and Accounting from Biola University and is a Certified Public Accountant. Risk Management The City 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 disasters. The City is a member of the California Joint Powers Insurance Authority (the “JPIA”), a joint exercise of powers agency with over 100 California public agency members that arranges and administers programs for the pooling of self-insured losses, arranges for group-purchased insurance and purchases excess insurance cover on behalf of its members. 2.f Packet Pg. 516 17 4827-8234-0833v4/200928-0001 Through the JPIA, the City maintains the following coverages as of June 30, 2020: • Workers compensation insurance up to statutory limits. • Pollution insurance up to $10 million over a 3-year period. • All-risk property insurance for covered City properties (including the Property) in the amount of $500 million. This policy also includes earthquake and flood coverage for certain City properties, including the Property, with a deductible of the greater of 5% of property value or $100,000. • Crime insurance up to $1 million. • Special event tenant user liability insurance, with premiums paid by tenant users, for certain activities on City property. Claims have not exceeded the City’s insurance coverage in any of the last three years. No assurance can be given as to the adequacy of the insurance maintained now or in the future by the City to fund necessary repairs or replacement of any portion of the Property, and the City does not have any obligation under the Lease Agreement to maintain earthquake or other coverage in the current coverage amounts. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS— Insurance” for a description of the insurance requirements with respect to the Property. Significant damage to any of the Property could cause Base Rental Payments to be abated. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Abatement” and “RISK FACTORS—Natural Disasters.” COVID-19 Outbreak The spread of the novel strain of coronavirus called SARS-CoV-2, which causes the disease known as COVID-19 (“COVID-19”), and local, State and federal actions in response to COVID-19, have impacted the City’s operations and finances. In response to the increasing number of cases of COVID-19 infections and fatalities, health officials and experts have recommended, and some governments have mandated, a variety of responses ranging from travel bans and social distancing practices to complete shutdowns of certain services and facilities. The World Health Organization has declared the COVID-19 outbreak to be a pandemic and, on March 4, 2020, as part of the State’s response to address the outbreak, the Governor declared a state of emergency. On March 13, 2020, the President declared a national emergency, freeing up funding for federal assistance to state and local governments. Many school districts across the State have temporarily closed some or all school campuses (including schools within the City) in response to local and State directives or guidance. On March 19, 2020, the Governor issued Executive Order N-33-20, a mandatory Statewide shelter-in- place order applicable to all non-essential services. Certain aspects of the shelter-in-place directives have been extended indefinitely until indicators for modifying the stay-at-home order have been met. The County has also declared a state of emergency in response to the COVID-19 outbreak. On May 4, 2020, the Governor issued an executive order informing local health jurisdictions and industry sectors that they could gradually re-open under new modifications and guidance provided by the State. A phased re-opening of various sectors has been underway since mid-2020 in accordance with a four-stage re-opening plan. Although pursuant to the re-opening plan certain restrictions on activities have been eased, restrictions have also been re-imposed in various jurisdictions (including the County) as local conditions warrant, and such restrictions may be expanded as the pandemic continues. In addition, the Governor extended the deadline to file and pay spring 2020 property taxes for residential and certain commercial property owners and first quarter 2020 sales and use tax returns by 90 days for all but the very largest taxpayers. As a result of the extended deadline to file sales and use tax returns, it is 2.f Packet Pg. 517 18 4827-8234-0833v4/200928-0001 estimated that up to 361,000 California businesses with less than $5 million in taxable annual sales were permitted to defer up to $50,000 in sales tax and enter into 12-month payment plans at zero interest. These actions have resulted in delays in the receipt by the City of its portion of such tax payments. On March 27, 2020, the President signed the $2.2 trillion Coronavirus Aid, Relief, and Economic Stabilization Act (the “CARES Act”) which provides, among other measures, $150 billion in financial assistance to states, tribal governments and local governments to provide emergency assistance to those most significantly impacted by COVID-19. Under the CARES Act, local governments are eligible for reimbursement of certain costs which were expended to address the impacts of the pandemic. The City received a total reimbursement of $705,972 under the CARES Act. The funds received by the City under the CARES Act are not available for payment of the 2021 Bonds and cannot be used to backfill any City revenue losses related to COVID-19. On December 27, 2020, the President signed the $900 billion Coronavirus Response and Relief Supplemental Appropriations Act. Although the act did not provide additional financial assistance to state and local governments, it did extend the deadline (to October 2021) for them to use unspent funds that were previously approved under the CARES Act. On March 11, 2021, the President signed the American Rescue Plan Act of 2021 (the “ARP Act”), a $1.9 trillion economic stimulus package designed to help the United States’ economy recover from the adverse impacts of the COVID-19 pandemic. The ARP Act includes approximately $350 billion in aid to state and local governments such as the City, consisting of both direct funding from the United States Department of Treasury and program moneys that will flow from other federal agencies. Half of the aid to state and local governments will be distributed in spring 2021, with the other half following in 2022. The City has been allocated a total of approximately $10.5 million. This funding is available for a broad range of uses, including responding directly to the health emergency, addressing its negative economic impacts with assistance to households and small businesses, restoring government services that were reduced in response to pandemic- related revenue losses and making certain necessary infrastructure improvements. The City has not yet determined how the ARP Act funds that it expects to be receive will ultimately be spent, but planning efforts are underway. The effects of the COVID-19 outbreak and governmental actions responsive to it are altering the behavior of businesses and people in a manner that is having significant negative impacts on global and local economies. In addition, financial markets in the United States and globally have seen significant declines and experienced significant volatility attributed to COVID-19 concerns. Volatility in the financial markets has caused CalPERS’ earnings to fall below its investment targets in Fiscal Year 2020, which could result in increases in the City’s unfunded pension liability and future pension costs commencing in Fiscal Year 2023. See the caption “CITY FINANCIAL INFORMATION—Retirement Contributions.” The outbreak has resulted in increased pressure on State finances as budgetary resources are directed towards containing the pandemic and tax revenues sharply decline. Identified cases of COVID-19 and deaths attributable to the COVID-19 outbreak continue to occur throughout the United States, including the County. The County is the most populous County in the United States and has both the highest number of confirmed COVID-19 infections and the highest number of COVID-19 fatalities in the United States. Potential impacts to the City associated with the COVID-19 outbreak include, but are not limited to, increasing costs and challenges to the public health system in and around the City, cancellations of public events and disruption of the regional and local economy with corresponding decreases in General Fund revenues, including as a result of reduced sales which are subject to sales taxes, reduced hotel occupancy, which is subject to transient occupancy taxes, fewer business license applications and potential declines in property values. See the captions “CITY FINANCIAL INFORMATION—Sales Taxes,” “CITY FINANCIAL INFORMATION—Property Taxes” and “CITY FINANCIAL INFORMATION—Other Taxes.” 2.f Packet Pg. 518 19 4827-8234-0833v4/200928-0001 In response to the COVID-19 outbreak, the City modified its operations to implement remote work opportunities for employees and provide City services online, closed many City facilities to the public, cancelled many programs, rentals and community events and deferred several non-essential capital improvement projects. The City continues to stagger employee shifts, enable certain employees to telecommute and move employees to multiple locations in order to prevent large gatherings of City personnel at any one time and maintain their health and the operations of the City. In addition, on-site personnel are wearing masks and practicing social distancing while working. Access to the City’s administrative offices has been restricted and City Council meetings are occurring via teleconference. The City has not experienced and does not at this time foresee a future negative impact on the execution of City services as a result of the COVID-19 outbreak. However, there can be no assurance that absences of employees or City leadership due to COVID-19 will not adversely impact City operations. At the onset of the COVID-19 outbreak in early 2020, the City initially estimated that it would need to apply approximately $1,250,000 from the Contingency Reserve Fund (as discussed under the caption “CITY FINANCIAL INFORMATION—City Reserve Policies”) to address an anticipated revenue shortfall in Fiscal Year 2020. However, as a result of the actions that are described in the previous paragraph, the City achieved sufficient reductions in its expenditures that it ultimately did not need to draw upon the Contingency Reserve Fund in Fiscal Year 2020. The COVID-19 outbreak is ongoing, and the duration and severity of the outbreak and the economic and other actions that may be taken by governmental authorities to contain the outbreak or to treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the City and the General Fund is unknown. The City reports that although Fiscal Year 2020 General Fund revenues were lower than budgeted, Fiscal Year 2020 General Fund expenditures were also lower than budgeted, and the overall effect of the COVID-19 outbreak on the General Fund was not material. The Fiscal Year 2021 budget was developed taking the COVID-19 outbreak into consideration. The City is currently estimating that Fiscal Year 2021 General Fund revenues will be approximately $619,000 lower than budgeted (and approximately $131,000 lower than Fiscal Year 2020 revenues), while Fiscal Year 2021 General Fund expenditures will be approximately $689,000 lower than budgeted (and approximately $2,224,000 higher than Fiscal Year 2020 actual expenditures). The City anticipates that Fiscal Year 2021 General Fund expenditures will slightly exceed Fiscal Year 2021 General Fund revenues, requiring a draw on the City’s General Fund reserves in an amount that is expected to be less than 4% of the total reserve amount. See the captions “CITY FINANCIAL INFORMATION—General Economic Condition and Outlook of the City” and “CITY FINANCIAL INFORMATION—Budget Procedure, Current Budget and Historical Budget Information—Fiscal Year 2021 Budget.” The City continues to actively monitor General Fund revenues and expenditures so that any further impacts of the COVID-19 pandemic can be anticipated. The City does not currently expect that the COVID-19 outbreak will have a material adverse effect on the City’s ability to pay the Base Rental Payments. CITY FINANCIAL INFORMATION Accounting and Financial Reporting The City maintains its accounting records in accordance with Generally Accepted Accounting Principles (“GAAP”) and the standards established by the Governmental Accounting Standards Board (“GASB”). The City Council and City staff review fiscal performance against the budget at the mid-point of each Fiscal Year. Combined financial statements of the City and its component units are produced following the close of each fiscal year of the City ended June 30 (each, a “Fiscal Year”). The City Council employs an independent certified public accountant who examines at least annually the financial statements of the City in accordance with GAAP, including tests of the accounting records and 2.f Packet Pg. 519 20 4827-8234-0833v4/200928-0001 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 the independent accountant to the City Council. The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting 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 spending activities are controlled. The budget is adopted in accordance with GAAP. Revenues are recognized on the accrual basis (i.e., when they are earned). Expenditures are recorded when the related fund liability is incurred. See the caption “—City Financial Statements” for a discussion of the City’s audited financial statements for Fiscal Year 2020. The General Fund is the general operating fund of the City. It is used to account for all financial resources except those that are required to be accounted for in another fund because there are legal restrictions on their use. It is expected that Base Rental Payments will be paid for from amounts in the General Fund. Tables 1 through 3 below set forth certain historical and current Fiscal Year budget information for the General Fund. Information on the remaining governmental funds of the City as of June 30, 2020, is set forth in Appendix C. General Economic Condition and Outlook of the City Financial Conditions. As of June 30, 2020, the General Fund had a year-end surplus of approximately $2.37 million prior to transfers in and out, reflecting revenues of approximately $24.38 million in excess of expenditures of approximately $22.01 million. The Fiscal Year 2020 budget, which was adopted prior to the COVID-19 outbreak that is discussed under the caption “THE CITY—COVID-19 Outbreak,” had anticipated a year-end General Fund surplus of approximately $60,000, with revenues expected to total approximately $24.58 million and expenditures expected to total $24.52 million prior to transfers in and out. Actual General Fund revenues were $24.38 million, almost equivalent to the adopted budgeted amount. Variances from the original budget for Fiscal Year 2020 consisted primarily of lower revenues in the amount of approximately $800,000 in the Charges for Services category and of approximately $500,000 in Taxes, in each case primarily as a result of the COVID-19 pandemic. The impact of the lower revenues was almost entirely offset by various categories outperforming budgeted amounts, with the greatest positive variance reflected in the Use of Money and Property category. Actual General Fund expenditures were lower than budgeted in Fiscal Year 2020 primarily as a result of an aggregate reduction of approximately $2.52 million across all departments as a result of mitigating measures to address the impact of the COVID-19 pandemic. For Fiscal Year 2021, the mid-year General Fund operating budget projects revenues of approximately $23.20 million prior to transfers in, which is approximately $1.18 million (4.8%) below Fiscal Year 2020 audited revenues. In addition, the mid-year Fiscal Year 2021 General Fund operating budget projects expenditures of approximately $23.15 million prior to transfers out, an increase of approximately $1.14 million (5.2%) from Fiscal Year 2020 audited expenditures. Based on operating results to date, the City currently expects both Fiscal Year 2021 General Fund revenues and Fiscal Year 2021 General Fund expenditures to come in slightly less than budgeted, resulting in a minor improvement to the City’s net position of approximately $70,000 after accounting for transfers in and out as a result of the City’s conservative budgeting practices. Only sales tax revenues are expected to vary significantly from the adopted budget at this time, with the mid-year budget report to the City Council anticipating receipt of approximately $500,000 more in sales tax revenues than was originally projected in the adopted Fiscal Year 2021 budget. For the City’s various departmental budgets, only the Parks & Recreation 2.f Packet Pg. 520 21 4827-8234-0833v4/200928-0001 Department anticipates a material variance from the original budget, with the mid-year budget report to the City Council anticipating significant savings associated with reduced programming during the COVID-19 pandemic. Budgeted Fiscal Year 2021 expenditures did not reflect any scheduled increases in employee compensation. Personnel costs (including salaries, benefits and contract payments for fire and police services) make up over 75% of General Fund expenditures. To date, the City has not laid off or furloughed any employees as a result of the COVID-19 outbreak. The City is projecting increased General Fund expenditures in Fiscal Year 2021 and future Fiscal Years in order to address significantly higher required pension contributions resulting from the lowering of the discount rate attributable to pension investments. Based on information from the California Public Employees Retirement System (“CalPERS”), during the seven year phase-in period relating to the reduction in the discount rate (Fiscal Years 2019 through 2025), the City expects to contribute a cumulative additional amount of approximately $2.4 million above its former base contribution toward its unfunded liability. See the caption “—Retirement Contributions.” The City also expects that CalPERS’ failure to achieve its investment targets in Fiscal Year 2020 will increase future contribution rates for plan participants, including the City, beginning in Fiscal Year 2023, although the City is unable to quantify the magnitude of any resultant increases in future contribution rates at this time. See the caption “THE CITY—COVID-19 Outbreak.” The City currently expects to be able to make all such increased contributions without a material effect on the General Fund. Strategic Plan. The City’s Strategic Plan, which is updated every three years, provides a unified guiding framework for setting priorities and allocating resources to produce optimal outcomes for the community’s well-being and the City’s fiscal health. The City’s annual operating budgets and capital improvement plans are prepared in alignment with the Strategic Plan, which contains three overarching goals: (i) responsible stewardship of public resources; (ii) an open, engaged and responsive government; and (iii) a safe, sustainable and healthy community. The first Strategic Plan was adopted in early 2017 and covered the period from July 1, 2017 through June 30, 2020. Of the 94 action items that were laid out in the first Strategic Plan, over 95% of them were completed or in progress on June 30, 2020. The current Strategic Plan covers the period from July 1, 2020 through June 30, 2024 and includes the following goals, among others: (a) reducing subsidies to lighting and landscape assessment districts, which operate at a deficit and require General Fund reserves to cover operating deficits, as discussed further under the caption “—Lighting and Landscape Assessment Districts;” (b) developing a program to attract and retain local businesses; (c) prioritizing the City’s capital improvements and new facility needs through the City’s five-year capital improvement program; (d) utilizing a Pavement Management System to prioritize street maintenance; (e) creating and funding maintenance reserve accounts; (f) implementing a new land management system; (g) maintaining secure and reliable network infrastructure; (h) utilizing enterprise software across City departments; (i) conducting a resident satisfaction survey; (j) developing an interactive City website and increasing traffic to an online customer request system; (k) auditing the City’s business practices; (l) digitizing City records within 10 years; (m) developing an employee mission and values statement; (n) establishing formal employee training and recognition programs; (o) developing new emergency preparedness resources for residents and enhanced preparedness exercises for staff; (p) developing a block captain education program to enhance neighborhood watch programs; (q) securing funding for the State Route 57 and 60 Confluence project; (r) updating the City’s Development Code and Housing Element; (s) developing a property owner education program; and (t) improving energy efficiency, resource conservation and environmental sustainability in City operations. City staff prepares a quarterly report to update City leadership and residents on the City’s progress in achieving the initiatives that are set forth in the Strategic Plan. 2.f Packet Pg. 521 22 4827-8234-0833v4/200928-0001 Lighting and Landscape Assessment Districts. In the 1980s, the developers of certain residential developments within the City, together with the County, established three lighting and landscape assessment districts (each, an “LLAD”) to fund certain landscape and irrigation improvements to property within each LLAD. Upon the City’s incorporation in 1989, the City assumed jurisdiction over the LLADs. The LLADs have consistently operated at a deficit, with the City’s attempts to increase assessment fees having been rejected by residents within the LLADs. As a result, the General Fund has routinely subsidized the LLADs’ operations by means of interfund transfers. The City has begun the process of dissolving two of the LLADs and expects such dissolutions to be completed by July 1, 2021. If the LLADs are dissolved, the LLADs (and the City) will no longer be obligated to provide services or maintenance to the affected areas, with such tasks becoming the responsibility of the property owners. With respect to one of such LLADs, the property owners will also vote later in 2021 on the formation of a new LLAD. If a new LLAD is approved and established, the proposed tax collections will be in an amount that will be sufficient to fund its operations without City subsidies. The budgeted General Fund subsidy for the two LLADs which the City is dissolving totaled approximately $225,000 in Fiscal Year 2021. In the event that the City does not complete the dissolution of the LLADs, the City will continue to be responsible for subsidizing their operations, and there can be no assurance that the cost of providing services and maintenance to the affected properties will not increase in the future as a result of weather events, natural disasters, deferred maintenance or otherwise. The City’s third LLAD, which the City has no current plans to dissolve, funds slope and median maintenance on certain property within the City. General Fund subsidies to this LLAD totaled $234,800, $280,591 and $235,498 in Fiscal Years 2018, 2019 and 2020, respectively. The City does not expect that its ongoing obligation to subsidize LLAD operations will have a material effect on the City’s ability to make the Base Rental Payments. Budget Procedure, Current Budget and Historical Budget Information General. The City Council adopts the City’s annual operating budget, which is prepared under the supervision of the City Manager, by no later than June 30 of each Fiscal Year. Beginning July 1, the budget process approves operating appropriations at the department and fund level and allows the City to make resource allocation decisions, including choices about staffing, technology and equipment, as well as determining which program priorities will be addressed in the coming Fiscal Year. Although the City Council deliberates the proposed budget in June, the budget process occurs throughout the year, as described below. Financial information containing actual revenue receipts and expenditures trends is presented to the City Council at the mid-point of each Fiscal Year and adjustments made as appropriate based on actual results to date. During the Fiscal Year, the City Council may amend the budget with the approval of supplemental appropriations and reviews and amends the budget at mid-year and at year-end. Budgetary control is maintained at the program level. Formal budgetary integration is employed as a management control device during the Fiscal Year for the General Fund, Special Revenue Funds, Debt Service Funds and Capital Projects Funds. The City Manager may transfer (or increase, if undesignated funds are available) budget appropriations between departments within a fund, but only the City Council may transfer appropriations between funds. Expenditures may not legally exceed budgeted appropriations at the department level within a fund. The City Council is empowered to increase total appropriations, if required. Appropriations lapse at Fiscal Year end to the extent that they have not been expended and new budget appropriations are approved for the 2.f Packet Pg. 522 23 4827-8234-0833v4/200928-0001 coming year. Project-length financial plans are adopted for all capital projects and appropriations are carried forward, with City Council approval, until project completion. Grant funds are carried forward until the grant expires. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of money are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the governmental funds. Encumbrances outstanding at Fiscal Year end are recorded as a restriction of fund balance and do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year. Budget Timeline. Staff begins work on the budget in earnest each January based on City Council direction with respect to spending priorities. In February of each year, City departments assess anticipated adjustments to their current Fiscal Year budgets based on City Council direction with respect to spending priorities. The capital improvement project list is also completed at this time. In April of each year, budgetary information is compiled by the City’s Finance Department and presented to the City Manager. The City Manager reviews such information and discusses the proposed budget with department managers, which may result in revisions to balance the budget. In May of each year, public study sessions are held in which the City Council reviews the proposed budget and directs staff to make changes. Comments from members of the public are also taken into account at this time. On or before June 30, the City Council votes to adopt the budget, including any amendments to the proposed budget that may occur, by an affirmative vote of the majority of the City Council. At any meeting after the adoption of the budget, the City Council may amend or supplement the budget by a majority vote of the City Council. Upon final adoption, the budget becomes the legal authorization for the various departments to expend revenues, subject to any controls established by the City Manager, City Council and internal audit requirements. The budget is also published and distributed to interested parties. 2.f Packet Pg. 523 24 4827-8234-0833v4/200928-0001 A summary of the actions taken during the budgetary process is set forth below: CITY OF DIAMOND BAR BUDGET PROCESS Source: City. Fiscal Year 2021 Budget. The City Council adopted a balanced budget for Fiscal Year 2021 on June 16, 2020. Budgeted expenditures for all funds totaled approximately $33.93 million for Fiscal Year 2021, excluding transfers out. The City’s Fiscal Year 2021 budgeted expenditures for the General Fund totaled approximately $23.47 million, excluding transfers out. Based on Fiscal Year 2021 results to date, the City currently projects that actual expenditures for the General Fund (before transfers out) will total approximately $23.15 million, or approximately $320,000 (1.4%) less than the adopted Fiscal Year 2021 budget, primarily as a result of Parks & Recreation program expenditures coming in lower than budgeted as a result of the continued impact of the COVID-19 impact on City programs. After accounting for transfers in and transfers out, the Fiscal Year 2021 budget reflects the projected application of $850,000 from the City’s Contingency Reserve Fund (as discussed under the caption “—City Reserve Policies”) to balance the budget, as well the application of approximately $100,000 in Building & Facilities Maintenance Fund reserves to fund a new roof on a City park building and $433,000 in General Fund reserves for LLAD budgets. See the caption “—General Economic Condition and Outlook of the City— Lighting and Landscape Assessment District.” The budget also reflects increases in Public Safety costs of $445,000 to reflect negotiated compensation increases for Los Angeles County Sheriff deputies, and the cancellation of several large community events, with no revenues projected therefrom. The Fiscal Year 2021 budget also reflects a reduction of approximately 62% in capital improvement project spending, from $8.8 million in Fiscal Year 2020 to $3.3 million in Fiscal Year 2021 (including $2.6 million for projects that are already in progress). In order to effect reductions in expenditures, the Fiscal Year 2021 budget also includes the following elements: (i) the City will make the minimum required CalPERS payment ($200,600); (ii) the City will suspend contributions to the Building & Facilities Maintenance Fund and the Technology Reserve Fund, which is expected to save approximately $200,000; (iii) the City will defer vehicle and equipment purchases, which is expected to save approximately $93,000; (iv) business travel for City employees is prohibited, which is expected to save approximately $71,000; (v) City employees will not Budget Kick-Off City Council Provides Direction on Spending Priorities Department-Level Review Assess Adjustments to Current Fiscal Year Budget; Develop Capital Improvement Plan Finance Department Compilation Finance Department Compiles Budget Requests and Presents them to City Manager City Manager Review Review of Department- Level Budget Requests; Discussion with Department Managers City Council Review City Council Reviews Proposed Budget and Suggests Changes Public Input Public Study Sessions are held with the City Council; Public Input is Received Approval City Council Approves Budget at Public Meeting Implementation Budget Implemented; Copies Distributed to Interested Parties January February April April May May June July 2.f Packet Pg. 524 25 4827-8234-0833v4/200928-0001 receive performance pay bonuses, which is expected to save approximately $90,000; (vi) City employees will not receive cost of living adjustments, which were anticipated to increase compensation by 3%, which is expected to save approximately $254,000; (vii) the City will reduce utility costs through various measures, which is expected to save approximately $110,000; (viii) City departments will reduce expenditures on various items, which is expected to save a total of approximately $713,000. Budgeted revenues for all funds totaled approximately $34.81 million for Fiscal Year 2021, excluding transfers out. The City’s Fiscal Year 2021 budgeted revenues for the General Fund totaled approximately $23.26 million, excluding transfers out. Based on Fiscal Year 2021 results to date, the City currently expects actual revenues for the General Fund to total approximately $23.20 million, or approximately $60,000 (<1%) less than budgeted, primarily as a result of Charges for Services for Parks & Recreation programs coming in lower than anticipated as a result of the COVID-19 pandemic, which is somewhat offset by sales tax revenues coming in higher than anticipated. The Fiscal Year 2021 budget reflects the City’s expectation of the following: (i) property tax and motor vehicle in-lieu tax revenues will each increase by approximately 3% from Fiscal Year 2020 amounts; (ii) sales tax revenues will decrease by approximately 19% from the Fiscal Year 2020 amount; (iii) transient occupancy tax revenues will decrease by approximately 25% from the Fiscal Year 2020 amount; (iv) gas tax revenues will decrease by approximately 17% from the Fiscal Year 2020 amount; (v) service charge revenues will decrease by between 17% and 27% from Fiscal Year 2020 amounts. These significant changes from the prior Fiscal Year reflect the ongoing impact to the City of the COVID-19 pandemic. Fiscal Year 2022 Budget. [TO COME DEPENDING ON TIMING OF BOND ISSUE] Future Budgets. Looking forward, the City currently anticipates that it will be able to achieve balanced budgets in the future. The City believes that controlling the main cost drivers of wages, pension, health insurance and workers compensation is key to managing future budgets. See the caption “—General Economic Condition and Outlook of the City—Strategic Plan.” 2.f Packet Pg. 525 26 4827-8234-0833v4/200928-0001 Set forth in the table below are the General Fund budgets for Fiscal Years 2017 through 2021 and the audited General Fund results for Fiscal Years 2017 through 2020. During the course of each Fiscal Year, the budget may be amended and revised as necessary by the City Council; budgeted amounts shown below reflect such amendments and revisions in certain Fiscal Years. TABLE 1 CITY OF DIAMOND BAR GENERAL FUND BUDGETS AND RESULTS Adopted Fiscal Year 2017 Budget Audited Fiscal Year 2017 Results Adopted Fiscal Year 2018 Budget Audited Fiscal Year 2018 Results Adopted Fiscal Year 2019 Budget Audited Fiscal Year 2019 Results Adopted Fiscal Year 2020 Budget Actual Fiscal Year 2020 Results Adopted Fiscal Year 2021 Budget Revenues Property Tax $ 4,801,230 $ 4,951,033 $ 5,122,000 $ 5,187,630 $ 5,329,169 $ 5,405,335 $ 5,577,160 $ 5,590,899 $ 5,729,400 Sales Tax 4,557,000 4,789,172 5,162,100 4,999,873 5,196,000 4,970,980 5,020,000 4,846,330 4,300,000 Franchise Tax 1,465,000 1,320,617 1,390,000 1,419,605 1,285,000 1,355,003 1,380,000 1,340,960 1,376,000 Transient Occupancy Tax 950,000 923,527 950,000 1,019,915 1,050,000 1,222,925 1,400,000 1,128,386 1,106,250 Other Taxes 648,300 714,246 289,500 404,452 444,500 278,790 420,000 293,904 236,250 Licenses and Permits 2,382,251 2,220,572 2,500,883 2,558,690 2,129,729 2,589,628 2,357,880 2,095,324 1,633,724 Intergovernmental(1) 6,207,423 6,207,423 6,206,138 6,011,177 7,097,924 7,174,004 6,489,465 6,545,989 6,691,600 Charges for Services 1,652,032 1,544,032 1,720,137 1,652,143 1,641,365 1,351,841 1,564,900 851,612 1,265,100 Use of Money and Property(2) 306,500 (65,606) 357,000 (34,130) 450,400 1,215,723 562,700 1,048,214 412,620 Fines and Forfeitures 422,000 460,325 415,500 459,615 407,500 415,701 430,000 432,774 328,750 Miscellaneous 230,351 371,045 172,630 182,615 278,237 278,317 179,800 201,503 177,900 Transfers In 1,586,957 1,155,511 1,160,296 1,099,268 927,348 916,352 1,129,936 1,098,897 1,328,528 Total Revenues $ 25,209,044 $ 24,591,897 $ 25,446,184 $ 24,960,853 $ 26,237,172 $ 27,174,599 $ 26,511,841 $ 25,474,792 $ 24,586,122 Expenditures Current: General Government $ 5,851,093 $ 4,960,482 $ 6,007,120 $ 5,904,876 $ 6,667,260 $ 6,878,152 $ 6,177,427 $ 5,607,821 $ 6,003,350 Public Safety 6,714,391 6,567,087 6,927,793 6,881,227 7,307,703 7,131,562 7,694,901 7,354,473 8,042,744 Community Development 1,664,179 2,290,877 1,844,395 2,248,142 1,627,770 2,339,296 1,733,149 2,254,071 1,736,624 Parks and Recreation 3,254,940 2,662,622 3,279,608 2,831,120 3,496,499 3,021,569 3,428,564 2,669,570 3,204,592 Public Works 4,876,829 4,788,397 5,338,138 4,534,288 5,399,927 4,567,894 5,019,874 4,108,647 4,483,312 Capital Outlay - 86,625 - 796,535 - 18,770 - 8,918 - Transfers Out 3,429,433 1,838,218 5,845,374 2,738,250 4,912,947 4,056,356 2,443,684 2,293,831 2,340,537 Total Expenditures $ 25,790,865 $ 23,194,308 $ 29,242,428 $ 25,934,438 $ 29,412,106 $ 28,013,599 $ 26,497,599 $ 24,297,331 $ 25,811,159 Excess (Deficiency) of Revenues Over (Under) Expenditures(3) $ (581,821) $ 1,397,589 $ (3,796,244) $ (973,585) $ (3,174,934) $ (839,000) $ 14,242 $ 1,177,461 $ (1,225,037) (1) Includes Vehicle In-Lieu Property Tax revenues. See Table 4 under the caption “—Tax Revenues of the City” for historical Vehicle In-Lieu Property Tax revenues alone. (2) Negative amounts in Fiscal Years 2017 and 2018 reflect effect of marking to market the City’s investment portfolio in accordance with GAAP. (3) Projected deficits reflect budgeted transfers out, primarily for capital improvement projects. Sources: Adopted budgets of the City for Fiscal Years 2017 through 2021; audited financial statements of the City for Fiscal Years 2017 through 2020. 2.f Packet Pg. 526 27 4827-8234-0833v4/200928-0001 Change in Fund Balance of the City General Fund Set forth in the table below are the City’s audited General Fund statements of revenues, expenditures and changes in fund balance for Fiscal Years 2016 through 2020. TABLE 2 CITY OF DIAMOND BAR GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Fiscal Year Ended June 30, 2016 2017 2018 2019 2020 Revenues Taxes $ 12,930,081 $ 12,698,595 $ 13,031,475 $ 13,233,033 $ 13,200,479 Licenses and Permits 3,183,449 2,220,572 2,558,690 2,589,628 2,095,324 Intergovernmental 5,411,926 6,207,423 6,011,177 7,174,004 6,545,989 Charges for Services 1,689,328 1,544,032 1,652,143 1,351,841 851,612 Use of Money and Property(1) 492,443 (65,606) (34,130) 1,215,723 1,048,214 Fines and Forfeitures 470,722 460,325 459,615 415,701 432,774 Miscellaneous 177,449 371,045 182,615 278,317 201,503 Total Revenues $ 24,355,398 $ 23,436,386 $ 23,861,585 $ 26,258,247 $ 24,375,895 Expenditures Current: General Government $ 5,176,138 $ 4,960,482 $ 5,904,876 $ 6,878,152 $ 5,607,821 Public Safety 6,197,285 6,567,087 6,881,227 7,131,562 7,354,473 Community Development 1,787,433 2,290,877 2,248,142 2,339,296 2,254,071 Parks and Recreation 4,160,806 2,662,622 2,831,120 3,021,569 2,669,570 Public Works 3,133,330 4,788,397 4,534,288 4,567,894 4,108,647 Capital Outlay 178,477 86,625 796,535 18,770 8,918 Total Expenditures $ 20,633,469 $ 21,356,090 $ 23,196,188 $ 23,957,343 $ 22,003,500 Excess (Deficiency) of Revenues Over (Under) Expenditures $ 3,721,929 $ 2,080,296 $ 665,397 $ 2,301,004 $ 2,372,395 Other Financing Sources (Uses) Transfers In $ 1,199,015 $ 1,155,511 $ 1,099,268 $ 916,352 $ 1,098,897 Transfers Out(2) (3,226,681) (1,838,218) (2,738,250) (4,056,356) (2,293,831) Total Other Financing Sources (Uses) $ (2,027,666) $ (682,707) $ (1,638,982) $ (3,140,004) $ (1,194,934) Net Change in Fund Balance $ 1,694,263 $ 1,397,589 $ (973,585) $ (839,000) $ 1,177,461 Fund Balance, Beginning of Year 22,232,546 23,926,809 24,921,962 23,948,377 23,109,377 Restatements(3) - (402,436) - - 406,046 Fund Balance, Beginning of Year, as Restated 22,232,546 23,524,373 24,921,962 23,948,377 23,515,423 Fund Balance, End of Year $ 23,926,809 $ 24,921,962 $ 23,948,377 $ 23,109,377 $ 24,692,884 (1) Negative amounts in Fiscal Years 2017 and 2018 reflect effect of “marking to market” the City’s investment portfolio in accordance with GAAP. (2) Fiscal Year 2019 amount reflects funding of capital improvement projects and technology purchases from General Fund revenues. (3) Fiscal Year 2017 amount reflects booking of sales tax revenue in contravention of the City’s revenue recognition policy. Fiscal Year 2020 amount reflects booking of sales tax revenue that should have been recorded in Fiscal Year 2019 but was mistakenly omitted. See the caption “—City Financial Statements—Prior Period Adjustments.” Source: Audited financial statements of the City for Fiscal Years 2016 through 2020. 2.f Packet Pg. 527 28 4827-8234-0833v4/200928-0001 General Fund Balance Sheets of the City Set forth in the table below are the City’s audited General Fund balance sheets for Fiscal Years 2016 through 2020. TABLE 3 CITY OF DIAMOND BAR GENERAL FUND BALANCE SHEET SUMMARY Fiscal Year Ended June 30, 2016 2017 2018 2019 2020 Assets Pooled Cash and Investments $ 24,202,998 $ 27,100,597 $ 25,830,783 $ 26,140,848 $ 27,125,291 Receivables: Accounts 350,784 324,411 478,839 592,654 452,843 Accrued Interest 101,862 127,936 151,508 190,396 154,522 Prepaid Costs 75,866 42,108 8,230 26,203 4,496 Due from Other Governments 1,651,713 1,041,380 1,094,918 517,405 1,015,672 Due from Other Funds 932,921 48,789 45,004 353,080 462,037 Due from Employees 4,301 1,075 1,069 318 607 Total Assets $ 27,320,445 $ 28,686,296 $ 27,610,351 $ 27,820,904 $ 29,215,468 Liabilities Accounts Payable $ 1,992,878 $ 2,123,833 $ 1,410,652 $ 2,024,095 $ 1,909,581 Accrued Liabilities 401,025 265,702 233,018 217,639 246,832 Unearned Revenues 77,481 109,612 102,520 478,914 461,544 Deposits Payable 918,327 1,265,187 1,915,784 1,990,879 1,893,687 Total Liabilities $ 3,389,711 $ 3,764,334 $ 3,661,974 $ 4,711,527 $ 4,511,644 Deferred Inflows of Resources 3,925 - - - 10,940 Fund Balances Nonspendable $ 75,866 $ 42,108 $ 8,230 $ 26,203 $ 4,496 Committed(1) - 4,500,000 4,500,000 4,500,000 6,000,627 Assigned 4,500,000 - - - - Unassigned 19,350,943 20,379,854 19,440,147 18,583,174 18,687,761 Total Fund Balances $ 23,926,809 $ 24,921,962 $ 23,948,377 $ 23,109,377 $ 24,692,884 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 27,320,445 $ 28,686,296 $ 27,610,351 $ 27,820,904 $ 29,215,468 (1) Reflects Contingency Reserve Fund. See the caption “—City Reserve Policies.” Source: Audited financial statements of the City for Fiscal Years 2016 through 2020. Tax Revenues of the City A summary of taxes received by the City in the last five Fiscal Years is set forth below. Certain general taxes currently imposed by the City are affected by various State Constitutional provisions. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” 2.f Packet Pg. 528 29 4827-8234-0833v4/200928-0001 TABLE 4 CITY OF DIAMOND BAR GENERAL GOVERNMENT MAJOR TAX REVENUES BY SOURCE Fiscal Year Ended June 30, % of Total General Fund Revenues(1) 2016 2017 2018 2019 2020 Sales Tax $ 4,598,858 $ 4,789,172 $ 4,999,873 $ 4,970,980 $ 4,846,330 19.02% Property Tax 4,655,140 4,951,033 5,187,630 5,405,335 5,590,899 21.95 Franchise Tax 1,431,513 1,320,617 1,419,605 1,355,003 1,340,960 5.26 Vehicle In-Lieu Property Tax 5,411,143 5,757,423 6,011,177 6,285,504 6,545,989 25.70 Transient Occupancy Tax 994,476 923,527 1,019,915 1,222,925 1,128,386 4.43 TOTAL $16,096,654 $17,741,772 $18,638,200 $19,239,747 $19,452,564 76.36% (1) Reflects percentage of total Fiscal Year 2020 General Fund revenues of $25,474,792. Source: Audited financial statements of the City for Fiscal Years 2016 through 2020. Sales Taxes Receipts of sales taxes totaled $4,846,330 in Fiscal Year 2020. Such sales taxes provided the third largest tax revenue source for the City in Fiscal Year 2020, contributing approximately 35% of General Fund tax revenues and approximately 19% of total General Fund revenues. A sales tax is imposed on retail sales or consumption of personal property and collected and distributed by the State Board of Equalization (the “SBE”). The basic sales tax rate is established by the State Legislature, and local overrides may be approved by voters. The current sales tax rate in the City is 9.50%. As part of the City’s prior Strategic Plan for Fiscal Years 2018 through 2020, the City placed a measure (“Measure DB”) on the November 2020 ballot to authorize an additional sales tax of 0.75%, which was projected to generate an estimated $3.8 million per year for essential services such as street maintenance, public safety and parks and recreation facilities and programs. Measure DB would thereby have increased the total sales tax rate in Diamond Bar from 9.50% to 10.25%. Measure DB was not adopted by the City’s voters and the City currently has no plans to bring a similar measure before voters in the future. The table below presents taxable sales information for the last ten Fiscal Years for the City. CITY OF DIAMOND BAR TAXABLE TRANSACTIONS HISTORICAL SUMMARY(1) Fiscal Year Taxable Transactions(2) 2011 $345,505 2012 353,512 2013 359,146 2014 355,393 2015 455,002 2016 494,672 2017 509,027 2018 520,256 2019 535,651 2020 464,855 (1) The values listed above do not reflect transactions reported in the State- and County-wide pools. Taxable transaction values are not adjusted for administrative fees charged by the California Department of Tax and Fee Administration. 2.f Packet Pg. 529 30 4827-8234-0833v4/200928-0001 (2) Dollars in thousands. Source: SBE; HdL Companies. As discussed under the caption “THE CITY—COVID-19 Outbreak,” the Governor extended the deadline to file and pay spring 2020 property taxes for residential and certain commercial property owners and first quarter 2020 sales and use tax returns by 90 days for all but the very largest taxpayers. As a result of the extended deadline to file sales and use tax returns, it is estimated that up to 361,000 California businesses with less than $5 million in taxable annual sales were permitted to defer up to $50,000 in sales tax and enter into 12- month payment plans at zero interest. These actions have resulted in delays in the receipt by the City of its portion of such tax payments. As a result of such extension, as well as the general economic slowdown and the closure of businesses in the wake of the COVID-19 outbreak, the City’s Fiscal Year 2021 budget reflects the receipt of approximately $4.3 million in sales tax revenues in Fiscal Year 2021, a decrease of approximately $720,000 (14%) from the Fiscal Year 2020 budgeted amount. Property Taxes Property tax receipts of $5,590,899 (excluding property taxes in lieu of vehicle license fees) provided the second largest tax revenue source of the City in Fiscal Year 2020, contributing approximately 42% of General Fund tax revenues and approximately 22% of total General Fund revenues during Fiscal Year 2020. Property in the State which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens, arising pursuant to State law, on the secured property, regardless of the time of the creation of other liens. The exclusive means of forcing the payment of delinquent taxes with respect to secured property is the sale of the property securing the taxes of the State for the amount of taxes that are delinquent. The taxing authority has three methods of collecting unsecured personal property taxes: (1) filing a civil action against the taxpayer; (2) obtaining a judgment lien on certain property of the taxpayer from the county clerk or county recorder; and (3) seizing and selling personal property, improvements or possessory interests belonging or taxable to the assessee. A 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, beginning on the July 1 following a delinquency, interest begins accruing at the rate of 1.5% per month on the amount delinquent. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A 10% penalty also applies to the delinquent taxes or property on the unsecured roll, and further, an additional penalty of 1.5% per month accrues with respect to such taxes beginning on the varying dates related to the tax billing date. In an attempt to mitigate the effects of the COVID-19 pandemic on State property taxpayers, on May 6, 2020, the Governor signed Executive Order N-61-20 (“Order N-61-20”). Under Order N-61-20, certain provisions of the State Revenue and Taxation Code were suspended until May 6, 2021 to the extent that they required a tax collector to impose penalties, costs or interest for the failure to pay secured or unsecured property taxes, or to pay a supplemental bill, before the date that such taxes become delinquent. Such penalties, costs and interest will be cancelled under the conditions provided for in Order N-61-20, including if the property is residential real property occupied by the taxpayer or the real property qualifies as a small business under certain State laws, the taxes were not delinquent prior to March 4, 2020, the taxpayer files a claim for relief with the tax collector and the taxpayer demonstrates economic hardship or other circumstances that have arisen due to the COVID-19 pandemic or due to a local, state, or federal governmental response thereto. See the caption “THE CITY—COVID-19 Outbreak.” 2.f Packet Pg. 530 31 4827-8234-0833v4/200928-0001 As discussed in detail in the paragraph immediately preceding Table 5, the City does not participate in the “Teeter Plan” and is therefore exposed to the risk of delinquencies in the payment of property taxes. State law also provides for the supplemental assignment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Collection of taxes based on supplemental assessments occurs throughout the year. Taxes due are prorated according to the amount of time remaining in the tax year. See the caption “RISK FACTORS—Split Roll Initiative” for a discussion of an initiative that appeared on the November 2020 Statewide ballot which sought to amend provisions of State law relating to property taxes, including the provisions that are discussed above. For a number of years, the State Legislature shifted property taxes from cities, counties and special districts to the Educational Revenue Augmentation Fund (“ERAF”). In Fiscal Years 1993 and 1994, in response to serious budgetary shortfalls, the State Legislature and administration permanently redirected over $3 billion of property taxes from cities, counties, and special districts to schools and community college districts pursuant to ERAF shifts. The Fiscal Year 2005 State Budget included an additional $1.3 billion shift of property taxes from certain local agencies, including the City, in Fiscal Years 2005 and 2006. On July 27, 2009, the Governor signed a revised Fiscal Year 2010 State budget that included an ERAF shift of approximately 8% of 1% ad valorem property tax revenues from certain local agencies, including the City. On November 2, 2010, State voters approved Proposition 22, which: (i) prohibits the State from shifting or delaying the distribution of funds from special districts to schools and community colleges; (ii) eliminates the authority to shift property taxes temporarily during a severe financial hardship of the State; and (iii) restricts the State’s authority to use fuel tax revenues to pay debt service on transportation bonds, to borrow or change the distribution of fuel tax revenues or to use vehicle license fee revenues to reimburse local governments for state-mandated costs. Despite the passage of Proposition 22, there can be no assurance that 1% ad valorem property tax revenues which the City currently expects to receive will not be temporarily shifted from the City or reduced pursuant to State legislation enacted in the future, including in response to State budget deficits in the wake of the COVID-19 pandemic. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION.” If the property tax formula is permanently changed in the future, it could have a material adverse effect on the receipt of its share of 1% property tax revenues by the City. Set forth in the table below are the secured and unsecured assessed valuations for property in the City for the last five Fiscal Years. CITY OF DIAMOND BAR ASSESSED VALUATION HISTORY Fiscal Year Secured Value Unsecured Value Less Exemptions Total Taxable Assessed Value % Increase 2017 $ 9,175,049,277 $74,892,798 $62,484,967 $ 9,187,457,108 N/A 2018 9,589,040,619 76,356,565 78,363,662 9,587,033,522 4.35% 2019 10,037,428,342 83,787,675 90,713,106 10,030,502,911 4.63 2020 10,435,977,033 76,572,055 93,257,612 10,419,291,476 3.88 2021 10,834,109,675 94,903,135 90,417,003 10,838,595,807 4.02 Sources: California Municipal Statistics; Los Angeles County Assessor’s Office; Los Angeles County Auditor-Controller. 2.f Packet Pg. 531 32 4827-8234-0833v4/200928-0001 Set forth in the table below are property tax collections (including amounts that do not constitute General Fund money) and delinquencies in the City as of June 30 for the last five full Fiscal Years. The County does not participate in the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (known as the “Teeter Plan”), as provided for in Section 4701 et seq. of the Revenue and Taxation Code of the State, and the City is therefore exposed to the risk of delinquencies in the payment of property taxes. However, the City also receives penalties and interest when property taxes are paid late. The City also receives supplemental taxes throughout the year. As discussed above, under Order N-61-20, the City expects to receive certain property tax payments for Fiscal Year 2020 later than usual, and without penalties or late payments, as a result of the COVID-19 pandemic. TABLE 5 CITY OF DIAMOND BAR PROPERTY TAX LEVIES AND COLLECTIONS Fiscal Year Total Tax Levy Collections within the Fiscal Year of Levy(1) Percent of Levy Collected within the Fiscal Year of Levy Collections in Subsequent Years Percent of Levy Collected to Date(2) 2016 $4,568,789 $4,412,561 96.58% 156,228 100.00% 2017 4,842,897 4,643,891 95.89 199,007 100.00 2018 5,081,117 4,838,019 95.22 243,098 100.00 2019 5,313,057 5,131,554 96.58 181,503 100.00 2020 5,540,291 5,267,524 95.08 272,767 100.00 (1) The amounts shown in this column reflect all property tax collections of the City, including non -General Fund money. See Table 2 under the caption “—Change in Fund Balance of the City General Fund” for historic General Fund property tax revenues alone. (2) Does not reflect the collection of penalties and interest for delinquent property tax collections. Sources: Los Angeles County Auditor; City Finance Department. The ten largest secured and unsecured taxpayers in the City as shown on the Fiscal Year 2021 tax roll, the assessed valuation and the percentage of the City’s total property tax revenues attributable to each are set forth in the table below. TABLE 6 CITY OF DIAMOND BAR TEN LARGEST SECURED AND UNSECURED TAXPAYERS Rank Property Owner Type of Business Fiscal Year 2021 Assessed Valuation % of Total(1) 1. Apex 2015 LLC Residential Apartments $ 72,250,000 0.67% 2. ROIC Diamond Hills Plaza LLC Commercial 55,145,661 0.51 3. BSP Senita Gateway Center Commercial 47,627,013 0.44 4. Emerald Point Apartments LLC Residential Apartments 41,757,679 0.39 5. Bridgegate Drive Properties LLC Commercial 32,200,380 0.30 6. Diamond Springs LLC Uncategorized 31,369,227 0.29 7. Hua Qing Enterprise LLC Commercial 31,295,056 0.29 8. ROIC DBTC LLC Commercial 30,851,952 0.28 9. Target Corporation Retail 29,926,174 0.28 10. Muller Rock 2 Gateway Commercial 29,429,069 0.27 TOTAL $401,852,211 3.72% (1) Fiscal Year 2021 Taxable Assessed Value: $10,838,595,807. Sources: Los Angeles County Assessor’s Office; HdL Companies. 2.f Packet Pg. 532 33 4827-8234-0833v4/200928-0001 Based on current trends and County Assessor estimates, the City’s Fiscal Year 2021 budget reflects the receipt of $5,729,400 in property tax revenues, an increase of $138,500 (2.5%) over the Fiscal Year 2020 amount. Other Taxes Transient occupancy taxes, franchise taxes and other taxes provided approximately 9% of General Fund tax revenues and 5% of total General Fund revenues during Fiscal Year 2020. Transient occupancy taxes, which are levied on users of hotels in the City, are currently imposed at the rate of 14%. As a result of the general economic slowdown, including reductions in travel and the closure of businesses in the wake of the COVID-19 outbreak, the City’s Fiscal Year 2021 budget reflects the receipt of: (i) approximately $1,106,250 in transient occupancy tax revenues, a decrease of approximately $368,750 (25%) from the Fiscal Year 2020 budgeted amount; (ii) approximately $1,376,000 in franchise tax revenues, a slight decrease (less than 1%) from the Fiscal Year 2020 budgeted amount; and (iii) approximately $206,250 in other tax revenues, a decrease of approximately $118,750 (37%) from the Fiscal Year 2020 budgeted amount. Charges for Services The City provides various services which generate revenue for the General Fund. Services provided by the City include building construction and planning fees, engineering encroachment inspections, police fees such as fingerprinting, police reports, and towing, as well as a number of recreation programs. In Fiscal Year 2020, charges for services accounted for approximately 3.3% of General Fund revenues. Charges for services are expected to come in lower than budgeted in Fiscal Year 2021, as the COVID-19 pandemic compelled the City to cancel many recreation programs that would otherwise have generated revenues. State of California Motor Vehicle In-Lieu Payments The State imposes a Vehicle License Fee (the “VLF”), which is the portion of the fees paid in lieu of personal property taxes on a vehicle. The VLF is based on vehicle value and declines as the vehicle ages. Prior to the adoption of the Fiscal Year 2005 State Budget, the VLF was 2% of the value of a vehicle. Through legislation in prior Fiscal Years, the State enacted VLF reductions under which the State was required to “backfill” local governments for their revenue losses resulting from the lowered fee. The Fiscal Year 2005 State Budget permanently reduced the VLF from 2% to 0.65% of the value of a vehicle and deleted the requirement for backfill payments, providing instead that the amount of the backfill requirement will be met by an increase in the property tax allocation to cities and counties. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION.” The table below shows the total VLF revenues received by the City in the last five Fiscal Years, all of which was distributed from property tax receipts. 2.f Packet Pg. 533 34 4827-8234-0833v4/200928-0001 TABLE 7 CITY OF DIAMOND BAR STATE OF CALIFORNIA MOTOR VEHICLE IN-LIEU PAYMENTS Fiscal Year Amount Collected Percentage Change 2016 $5,411,143 N/A 2017 5,757,423 6.40% 2018 6,011,177 4.41 2019 6,285,504 4.56 2020 6,545,989 4.14 Source: City. No Other Indebtedness No Other General Fund-Supported Obligations. Other than the 2002 Lease which is being prepaid as discussed under the caption “REFUNDING PLAN,” there are no other debt obligations of the City which are payable from general revenues of the City. The City may issue obligations payable from its general revenues at any time. See the caption “RISK FACTORS—General Considerations – Security for the 2021 Bonds.” No Other Long-Term Debt. The City has no outstanding obligations that are payable from sources other than the City’s General Fund. No Short-Term Debt. The City currently has no short-term debt outstanding. Estimated Direct and Overlapping Bonded Debt. The estimated direct and overlapping bonded debt of the City as of April 1, 2021, is set forth in the table below. The information in the table below has been derived from data assembled and reported to the City by California Municipal Statistics, Inc. None of the City, the Authority or the Underwriter have independently verified the information in the table below and the City, the Authority and the Underwriter do not guarantee its accuracy. 2.f Packet Pg. 534 35 4827-8234-0833v4/200928-0001 TABLE 8 CITY OF DIAMOND BAR ESTIMATED DIRECT AND OVERLAPPING BONDED DEBT Fiscal Year 2021 Assessed Valuation: $10,838,595,807 OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 4/1/21 The Metropolitan Water District of Southern California 0.332% $ 89,076 Mt. San Antonio Community College District 10.705 82,621,776 Pomona Unified School District 18.615 68,583,158 Walnut Valley Unified School District 59.626 109,152,571 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $260,446,581 DIRECT AND OVERLAPPING GENERAL FUND DEBT: County of Los Angeles General Fund Obligations 0.634% $ 16,658,016 County of Los Angeles Superintendent of School Certificates of Participation 0.634 28,944 County Sanitation District No. 21 Authority 17.787 269,151 Pomona Unified School District General Fund Obligations 18.615 1,911,761 City of Diamond Bar General Fund Obligations(1) 100.000 8,315,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $27,182,872 COMBINED TOTAL DEBT $287,629,453(2) Ratios to Fiscal Year 2021 Assessed Valuation: Total Direct and Overlapping Tax and Assessment Debt ................. 2.40% Combined Direct Debt ($8,315,000) .............................................. 0.08% Combined Total Debt........................................................................ 2.65% (1) Reflects 2002 Bonds and excludes 2021 Bonds. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. City Investment Policy The City invests its funds in accordance with the City’s investment policy (the “Investment Policy”), which was most recently updated in June 2020. In accordance with Section 53600 et seq. of the California Government Code, idle cash management and investment transactions are the responsibility of the City Finance Director. The City’s Investment Policy sets forth the policies and procedures applicable to the investment of City funds and designates eligible investments. The Investment Policy sets forth a stated objective, among others, of insuring the safety of invested funds by limiting credit and market risks. Eligible investments are generally limited to the Local Agency Investment Fund which is operated by the California State Treasurer (limited to 60% of the portfolio), United States Treasury bills and notes and obligations issued by United States Government agencies with maximum maturities of five years, FDIC-insured or negotiable certificates of deposit (limited to 30% of the portfolio and maximum maturities of five years), repurchase agreements with maximum maturities of one year, banker’s acceptances (limited to 40% of the portfolio and maximum maturities of 180 days), commercial paper (limited to 25% of the portfolio and maximum maturities of 270 days), medium-term corporate notes rated “A” or higher (limited to 30% of the portfolio and maximum maturities of five years) and money market mutual funds (limited to 20% of the portfolio and maximum maturities of five years). Funds are invested in the following order of priority: • Safety of Principal; • Liquidity; and • Return on Investment. The City has never invested in derivatives or reverse repurchase agreements and such investments and instruments are not allowed by the Investment Policy. 2.f Packet Pg. 535 36 4827-8234-0833v4/200928-0001 A summary of the City’s cash and investments as of June 30, 2020 is set forth in the below table. Approximately $27,125,291 (59%) of the total investment portfolio as of June 30, 2020 was attributed to the General Fund. CITY OF DIAMOND BAR SUMMARY OF CASH AND INVESTMENTS AS OF JUNE 30, 2020(1) Cash Cash/Cash Equivalents $ 3,050 Imprest Cash on Hand 2,280,050 Subtotal $ 2,283,100 Investments United States Government Securities $ 2,507,594 Certificates of Deposit 10,464,009 Corporate Bonds 3,600,829 Municipal Bonds 3,358,757 Local Agency Investment Fund 23,388,686 Money Market Mutual Funds 19 Subtotal $ 43,319,894 Total cash and investments $ 45,602,994 Investment Maturities 0-12 months 1-3 years 3-5 years Total United States Government Securities $ - $ - $2,507,594 $ 2,507,594 Certificates of Deposit 2,753,647 5,915,559 1,794,803 10,464,009 Corporate Bonds 1,265,224 1,812,072 523,533 3,600,829 Municipal Bonds 1,912,096 1,446,661 - 3,358,757 Local Agency Investment Fund 23,388,686 - - 23,388,686 Money Market Mutual Funds 19 - - 19 Total $ 29,319,672 $ 9,174,292 $4,825,930 $ 43,319,894 (1) Totals may not add due to rounding. Source: City. See Note 2 in Appendix C for further information with respect to City investments. City Reserve Policies The City has established a Contingency Reserve Fund in an amount equal to 25% of the City’s operating budget. The purpose of the Contingency Reserve Fund is to provide a source of liquid funds in the event of local emergencies, economic uncertainty and other financial hardships or downturns in the local, State or national economies. At the onset of the COVID-19 outbreak in early 2020, the City initially estimated that it would need to apply approximately $1,250,000 from the Contingency Reserve Fund to balance its books in Fiscal Year 2020. However, the City modified its operations to implement remote work opportunities for employees and provide City services online, closed many City facilities to the public, cancelled many programs, rentals and community events and deferred several non-essential capital improvement projects. As a result of these actions, the City achieved sufficient reductions in its expenditures that it ultimately did not need to draw upon the Contingency Reserve Fund in Fiscal Year 2020; rather, the City added approximately $1.58 million to its General Fund reserves in Fiscal Year 2020. In an effort to continue budgeting conservatively, the City’s Fiscal Year 2021 budget reflects the projected application of $850,000 from the City’s Contingency Reserve Fund to balance the budget, as well the 2.f Packet Pg. 536 37 4827-8234-0833v4/200928-0001 application of approximately $100,000 in Building & Facilities Maintenance Fund reserves to fund a new roof on a City park building and $433,000 in General Fund reserves for LLAD budgets. See also the caption “—General Fund Balance Sheet” for reserve amounts held by the City as of June 30, 2020. As shown under such caption, the majority of such amounts are reflected in the unassigned fund balance category. Retirement Contributions Accounting and financial reporting by state and local government employers for defined benefit pension plans is governed by Governmental Accounting Standards Board (“GASB”) Statement No. 68 (“GASB 68”). GASB 68 governs the accounting treatment of defined benefit pension plans, including how expenses and liabilities are calculated and reported by state and local government employers in their financial statements. GASB 68 includes the following components: (i) unfunded pension liabilities are included on the employer’s balance sheet; (ii) pension expense incorporates rapid recognition of actuarial experience and investment returns and is not based on the employer’s actual contribution amounts; (iii) lower actuarial discount rates are required to be used for underfunded plans in certain cases for purposes of the financial statements; (iv) closed amortization periods for unfunded liabilities are required to be used for certain purposes of the financial statements; and (v) the difference between expected and actual investment returns will be recognized over a closed five-year smoothing period. GASB 68 affects the City’s accounting and reporting requirements, but it does not change the City’s pension plan funding obligations. The City participates in a two-tier Miscellaneous plan to fund pension benefits for employees. The City’s pension plan is administered by CalPERS. CalPERS administers an agent multiple-employer public employee defined benefit pension plan for all of the City’s full-time and certain part-time employees. CalPERS provides retirement, disability and death benefits to plan members and beneficiaries and acts as a common investment and administrative agent for participating public entities within the State, including the City. CalPERS plan benefit provisions and all other requirements are established by State statute and the City Council. City employees are subject to different benefit levels based on their hire date. Benefit provisions for City employees as of June 30, 2020 are set forth below. CITY OF DIAMOND BAR CALPERS PENSION PLANS – SUMMARY OF BENEFIT PROVISIONS Employees Hired Before January 1, 2013 Employees Hired On or After January 1, 2013 (Not Prior CalPERS Members) Benefit Formula 2.0% @ age 55 2.0% @ age 62 Benefit Vesting 5 years of service 5 years of service Benefit Payments Monthly for life Monthly for life Minimum Retirement Age 50 52 Monthly Benefits as % of Eligible Compensation 1.426% - 2.418% 1.0% - 2.5% Employee Normal Cost 6.906%(1) 6.750%(3) Employer Normal Cost Rate 9.680% 6.985% (1) The City makes the full employee contribution on behalf of employees hired before January 1, 2013. (2) Employees hired on or after January 1, 2013 are required to make the full employee contribution themselves. Source: City. 2.f Packet Pg. 537 38 4827-8234-0833v4/200928-0001 Contributions to the City’s pension plan consist of contributions from plan participants (i.e., employees) and contributions by the City. City employees who were hired on and after January 1, 2013 and who were not previously CalPERS members receive benefits based on a 2.0% at age 62 formula. Such employees are required to make the full amount of required employee contributions themselves under the California Public Employees’ Pension Reform Act of 2013 (“AB 340”), which was signed by the Governor on September 12, 2012. AB 340 established a new pension tier for such employees. Benefits for such participants are calculated on the highest average annual compensation over a consecutive 36-month period. Employees are required to pay at least 50% of the total normal cost rate. AB 340 also capped pensionable income as noted below. Amounts are set annually, subject to Consumer Price Index increases, and retroactive benefits increases are prohibited, as are contribution holidays and purchases of additional non-qualified service credit. CITY OF DIAMOND BAR PENSIONABLE INCOME CAPS FOR CALENDAR YEAR 2021 (AB 340 AND NON-AB 340 EMPLOYEES) Employees Hired Before January 1, 2013 (Non-AB 340 Employees) Employees Hired On or After January 1, 2013 (AB 340 Employees) Maximum Pensionable Income $290,000 $153,671 Maximum Pensionable Income if also Participating in Social Security N/A $128,059 Source: City. Additional employee contributions, limits on pensionable compensation and higher retirement ages for new members as a result of the passage of AB 340 are expected to reduce the City’s unfunded pension lability and potentially reduce City contribution levels in the long term. The City is also required to contribute the actuarially determined remaining amounts necessary to fund benefits for its members. Employer contribution rates for all public employers are determined on an annual basis by the CalPERS actuary and are effective on the July 1 following notice of a change in the rate. Total plan contributions are determined through the CalPERS annual actuarial valuation process. The total minimum required employer contribution is the sum of: (i) the plan’s employer normal cost rate, which funds pension benefits for current employees for the upcoming Fiscal Year (expressed as a percentage of payroll); plus (ii) the employer unfunded accrued liability contribution amount, which funds pension benefits that were previously earned by current and former employees (billed monthly). For Fiscal Year 2020, required employer normal cost rates were 9.680% and 6.985% of payroll for the non-AB 340 and AB 340 Miscellaneous benefit levels, respectively, and the total required employer payment of the unfunded accrued liability was $517,300 and $1,797, for the non-AB 340 and AB 340 Miscellaneous benefit levels, respectively. Required employer normal cost rates for Fiscal Year 2021 are 10.484% and 7.732% for the non-AB 340 and AB 340 Miscellaneous benefit levels, respectively. The total required employer payment of the unfunded accrued liability for Fiscal Year 2021 is estimated at $417,115. The City’s pension plan contributions for Fiscal Year 2020 totaled $1,005,631. The City currently expects its annual required contribution in Fiscal Year 2021 to be approximately $1,302,524. Beginning in Fiscal Year 2018, CalPERS began collecting employer contributions toward a pension plan’s unfunded liability as dollar amounts instead of the prior method of a percentage of payroll. According to CalPERS, this change was intended to address potential funding issues that could arise from a declining payroll or a reduction in the number of active members in the plan. Funding the unfunded liability as a 2.f Packet Pg. 538 39 4827-8234-0833v4/200928-0001 percentage of payroll could lead to underfunding of pension plans. Due to stakeholder feedback regarding internal needs for total contributions expressed as an estimated percentage of payroll, the CalPERS reports include such results in the contribution projection for informational purposes only. Contributions toward a pension plan’s unfunded liability will continue to be collected as set dollar amounts. The City’s required contributions to CalPERS fluctuate each year and, as noted, include a normal cost component and a component equal to an amortized amount of the unfunded liability. Many assumptions are used to estimate the ultimate liability of pensions and the contributions that will be required to meet those obligations. The CalPERS Board of Administration has adjusted and may in the future further adjust certain assumptions used in the CalPERS actuarial valuations, which adjustments may increase the City’s required contributions to CalPERS in future years. Accordingly, the City cannot provide any assurances that the City’s required contributions to CalPERS in future years will not significantly increase (or otherwise vary) from any past or current projected levels of contributions. CalPERS earnings reports for Fiscal Years 2010 through 2020 report investment gains of approximately 13.3%, 21.7%, 0.1%, 13.2%, 18.4%, 2.4%, 0.6%, 11.2%, 8.6%, 6.7% and 4.7%, respectively. Future earnings performance may increase or decrease future contribution rates for plan participants, including the City. The City notes that CalPERS’ earnings in Fiscal Year 2020 were below its investment targets as a result of stock market declines in the wake of the COVID-19 outbreak, which could increase contribution rates for plan participants, including the City, beginning in Fiscal Year 2023. See the caption “THE CITY—COVID-19 Outbreak.” On December 21, 2016, the CalPERS Board of Administration voted to lower its discount rate from the current rate of 7.50% to 7.00% according to the schedule set forth below. Actuarial Valuation Date Fiscal Year of Applicable Required Contribution Discount Rate June 30, 2016 Fiscal Year 2019 7.375% June 30, 2017 Fiscal Year 2020 7.250 June 30, 2018 Fiscal Year 2021 7.000 For public agencies such as the City, the new discount rate took effect July 1, 2017 and caused pension contribution costs to increase beginning in Fiscal Year 2019. Lowering the discount rate means that employers that contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities. Active members who were hired after January 1, 2013 will also see their contribution rates rise under AB 340. The reduction of the discount rate will result in average employer rate increases of approximately 1% to 3% of normal cost as a percentage of payroll for most retirement plans such as the City’s plan. Additionally, many employers will see a 30% to 40% increase in their current unfunded accrued liability payments (relative to the unfunded accrued liability payments projected in the June 30, 2015 valuation report) for pension plans. These payments are made to amortize unfunded liabilities over 20 years to bring pension funds to a fully funded status over the long-term in accordance with CalPERS’ amortization policy, as described in the following paragraph. On February 14, 2018 the CalPERS Board of Administration approved a new amortization and rate smoothing policy. Beginning with the June 30, 2019 actuarial valuation, CalPERS shortened the amortization period for actuarial gains and losses from 30 years to 20 years (applicable only to new gains and losses after the effective policy change date). A 5-year asset smoothing period was eliminated for assumption rate changes and any investment gains and losses. Portions of the above information are primarily derived from information that has been produced by CalPERS, its independent accountants and its actuaries. The City and the Authority have not independently verified such information and neither make any representations nor express any opinion as to the accuracy of the information that has been provided by CalPERS. 2.f Packet Pg. 539 40 4827-8234-0833v4/200928-0001 The comprehensive annual financial reports of CalPERS are available on CalPERS’ Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information that concerns benefits and other matters. The textual reference to such Internet website is provided for convenience only. None of the information on such Internet website is incorporated by reference herein. The City and the Authority cannot guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be may changed in the future. The City’s CalPERS plan had a total net pension liability of approximately $6,830,478 as of the measurement date of June 30, 2019. The net pension liability is the difference between the total pension liability and the fair market value of pension assets. The City’s total pension assets include funds that are held by CalPERS, and its net pension asset or liability is based on such amounts. A summary of principal assumptions and methods used to determine the total pension liability for Fiscal Year 2020 is shown below. CITY OF DIAMOND BAR ACTUARIAL ASSUMPTIONS FOR CALPERS PENSION PLANS Actuarial Cost Method Entry Age Normal in accordance with the requirements of GASB 68 Asset Valuation Method Market Value of Assets Actuarial Assumptions: Discount Rate 7.00% Inflation 2.50% Salary Increases Varies by entry age and service Investment Rate of Return 7.00% net of pension plan investment and administrative expenses; includes projected inflation rate of 2.50% Mortality Rate Table(1) Derived using CalPERS’ membership data for all funds (1) The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using Society of Actuaries 90% of Scale MP 2016. Source: City. Changes in the net pension liability for the City’s pension plans in the most recent Fiscal Year for which information is available were as follows: CITY OF DIAMOND BAR CHANGES IN CALPERS PENSION PLAN NET PENSION LIABILITY Increase / (Decrease) Total Pension Liability Plan Fiduciary Net Position Net Pension Liability / (Asset) Funded Ratio Balance at June 30, 2018 $ 28,044,369 $ 21,673,850 $ 6,370,519 77.28% Balance at June 30, 2019 29,844,798 23,014,320 6,830,478 77.11 Net Changes for period from July 1, 2018 through June 30, 2019 $ 1,800,429 $ 1,340,470 $ 459,959 Source: City. The table below presents the net pension liability of the City’s pension plans, calculated using the discount rate applicable to Fiscal Year 2020 (7.00%), as well as what the net pension liability would be if it 2.f Packet Pg. 540 41 4827-8234-0833v4/200928-0001 were calculated using a discount rate that is 1 percentage point lower (6.00%) or 1 percentage point higher (8.00%) than the Fiscal Year 2019 rate: CITY OF DIAMOND BAR SENSITIVITY OF CALPERS PENSION PLAN NET PENSION LIABILITY TO CHANGES IN THE DISCOUNT RATE Discount Rate – 1% (6.00%) Applicable Discount Rate (7.00%) Discount Rate + 1% (8.00%) Net Liability/Asset $11,536,125 $6,830,478 $3,003,998 Source: City. For additional information relating to the City’s CalPERS Miscellaneous pension plan, see Note 7 to the City’s audited financial statements set forth in Appendix C. Other Post-Employment Benefits In addition to the pension benefits that are described under the caption “—Retirement Contributions,” the City provides other post-employment health care benefits (“OPEB”) to qualified retired employees pursuant to a Public Employees Medical and Hospital Care Act (“PEMHCA”) plan that is administered by CalPERS. The PEMHCA plan is a multi-employer healthcare plan that provides medical insurance benefits to active and eligible retirees who retire from the City, and their families. Under the PEMHCA plan, the City makes a monthly contribution for health insurance premiums up to a 2021 amount of $143 per month. Employees are eligible to receive OPEB benefits upon reaching age 50 (or 52 for AB 340 employees) and attaining five years of service to the City. As of July 1, 2019, the latest date for which such information is available, there were 7 inactive plan members or beneficiaries who were receiving benefit payments and 59 active plan members. GASB has issued two pronouncements, known as GASB 43 and GASB 45, related to funding and accounting for OPEB liabilities. Under GASB 45, costs of OPEB must be matched to the current period in which employees are performing services for the City. In effect, there is an exchange between the employee and the City in which the employee renders services to the City and in consideration therefor receives certain salaries and benefits, part of which are OPEB, which the employee will not actually use until some point in the future. GASB 45 also requires the City to provide information about the accrued actuarial liabilities for the promised benefits for past services, extent to which such liabilities have been funded and the extent to which there will be demands from OPEB on the City’s future cash flows. The City has been required to comply with the accounting and reporting requirements of GASB 45 since Fiscal Year 2008. For the period ended June 30, 2020, the City engaged an actuarial consultant to calculate the City’s OPEB funding status using a valuation date of June 30, 2019. The actuarial report concluded that the City’s accrued actuarial liability for OPEB based upon a 6% discount rate was $951,911 as of June 30, 2020. The consultant’s report also concluded that the City’s annual required contribution was $116,427 as of June 30, 2020, representing the sum of the normal cost ($113,606) and the unfunded accrued actuarial liability ($2,821). The annual required contribution was calculated assuming that: (i) the unfunded accrued actuarial liability will be amortized over the next 30 years; (ii) benefits will remain constant; and (iii) funding in excess of actual benefit costs will be invested at a 6.22% annual return, and making certain other assumptions regarding medical cost inflation. The actuarial report was developed in accordance with accounting standards established by GASB Statement No. 75, which requires that the valuation include the value of the “implied subsidy” of older retired 2.f Packet Pg. 541 42 4827-8234-0833v4/200928-0001 participants by a younger active workforce in a pooled rate medical plan. The City intends to continue to pay the full annual required contribution without consideration of the impact of the implied subsidy. The City is not required to fund the amortization of the unfunded OPEB actuarial liability. Prior to 2017, the City’s policy was to pay for OPEB plan costs as they were incurred. In 2017, the City entered into a contract with the California Employer’s Benefit Retirement Trust (“CERBT”) pursuant to which the City irrevocably deposits funds toward the City’s accrued OPEB actuarial liability in addition to current year normal costs. In Fiscal Years 2019 and 2020, the City deposited $88,000 and $88,000, respectively, into the CERBT trust fund. As of June 30, 2020, the City’s CERBT trust fund held $455,795 in assets. The City believes that the establishment of the CERBT trust fund and pre-funding of the City’s OPEB liability will significantly reduce the City’s unfunded OPEB obligation. Changes in the net liability for the City’s OPEB plan for Fiscal Year 2020 were as follows. CITY OF DIAMOND BAR CHANGES IN OPEB PLAN LIABILITY Increase / (Decrease) Total OPEB Plan Liability OPEB Plan Fiduciary Net Position Net OPEB Plan Liability / (Asset) Funded Ratio Balance at June 30, 2019 $866,732 $345,827 $520,905 39.90% Balance at June 30, 2020 951,911 455,795 496,116 47.88 Changes $ 85,179 $109,968 $(24,789) Source: City. The following table presents the net liability of the City’s OPEB plan, calculated using the discount rate applicable to Fiscal Year 2020 (6.00%), as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.00%) or 1 percentage point higher (7.00%) than the current rate: CITY OF DIAMOND BAR SENSITIVITY OF THE OPEB PLAN NET LIABILITY TO CHANGES IN THE DISCOUNT RATE Discount Rate – 1% (5.00%) Current Discount Rate (6.00%) Discount Rate + 1% (7.00%) Net Liability/(Asset) $650,524 $496,116 $372,022 Source: City. Future changes in funding policies and assumptions, including those related to assumed rates of investment return and healthcare cost inflation, could trigger increases in the City’s annual required OPEB plan contributions, and such increases could be material to the finances of the City. No assurance can be provided that such expenses will not increase significantly in the future. The City does not expect that any increased funding of OPEB will have a material adverse effect on the ability of the City to pay the Base Rental Payments. For additional information relating to the City’s OPEB obligations, see Note 8 in Appendix C. 2.f Packet Pg. 542 43 4827-8234-0833v4/200928-0001 City Financial Statements General. A copy of the most recent audited financial statements of the City (the “Financial Statements”) for the Fiscal Year ended June 30, 2020, prepared by Lance, Soll & Lunghard, LLP, Brea, California (the “Auditor”), are included as Appendix C to this Official Statement. The Auditor’s letter dated December 23, 2020 is set forth therein. The Financial Statements are public documents and are included within this Official Statement without the prior approval of the Auditor. Accordingly, the Auditor has not performed any post-audit analysis of the financial condition of the City, nor has the Auditor reviewed or audited this Official Statement. Certain financial information that is set forth in this Official Statement is derived from the Financial Statements and the City’s audited financial statements for prior years (excluding certain non-cash items and after certain other adjustments) and is qualified in their entirety by reference to such statements, including the notes thereto. The Auditor has not reviewed or audited such financial information or any other portion of this Official Statement. In the Financial Statements, data relating to governmental funds such as the General Fund focus on current financial resources, which emphasize near-term inflows and outflows of expendable resources as well as balances of expendable resources at the end of each Fiscal Year. The City’s accounting and budgeting records for general governmental operations are maintained on a modified accrual basis, with the revenues being recorded when available and measurable and the expenditures being recorded when the services or goods are received or the liabilities incurred, in each case regardless of the timing of related cash flows. As examples, property taxes, franchise fees, investment income and charges for services are considered to be susceptible to accruals and recognized as revenues in the year for which they are levied. For these purposes, the City considers revenues as available if they are collected within 60 days of the end of the current fiscal period. Expenditures such as principal and interest on long-term debt and certain estimated liabilities such as compensated absences, OPEB and self-insurance claims are recorded only when payment is due. Prior Period Adjustments. The City recorded a prior period adjustment in Fiscal Year 2020 in the amount of $406,046 associated with the underreporting of sales tax revenue in the prior year. The underreporting occurred because the State of California’s office that manages the distribution of sales tax revenue to local jurisdictions underpaid cities throughout the State in Fiscal Year 2019. See Footnote 3 to Table 2 under the caption “—Change in Fund Balance of the City General Fund.” Restatements. The City restated its General Fund balances in Fiscal Years 2017 and 2020 in the amount of $(402,436) and $406,046, respectively. The Fiscal Year 2017 restatement reflected the booking of $402,436 in sales tax revenues in contravention of the City’s revenue recognition policy, while the Fiscal Year 2020 restatement reflecting the omission of $406,046 in sales tax revenue that should have been recorded in Fiscal Year 2019 but was mistakenly omitted. See Footnote 3 to Table 2 under the caption “—Change in Fund Balance of the City General Fund.” THE AUTHORITY The Authority was organized pursuant to the provisions of Articles 1 through 4 of Chapter 5 of Division 7 of Title 1 of the State Government Code and a Joint Exercise of Powers Agreement, dated November 19, 2002, by and between the City and the Successor Agency. Prior to the issuance of the 2021 Bonds, the City intends to establish the City of Diamond Bar Parking Authority, which will become a member of the Authority upon its establishment. The Authority has no financial liability to the Owners of the 2021 Bonds with respect to the payment of Base Rental Payments by the City or with respect to the performance by the City of the other agreements and covenants that the City is required to perform. 2.f Packet Pg. 543 44 4827-8234-0833v4/200928-0001 STATE OF CALIFORNIA BUDGET INFORMATION General Information about the State budget is regularly available at various State-maintained websites. Text of proposed and adopted budgets may be found at the website of the State Department of Finance (the “DOF”), http://www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the budget is posted by the Legislative Analyst’s Office (the “LAO”) at http://www.lao.ca.gov. In addition, various State Official Statements, many of which contain a summary of the current and past State budgets and the impact of those budgets on cities in the State, may be found at the website of the State Treasurer, http://www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by the City or the Authority, and the City and the Authority take no responsibility for the continued accuracy of these Internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references. Budget for State Fiscal Year 2020-21 On January 10, 2020, prior to the COVID-19 outbreak, the Governor released his proposed State budget for State fiscal year 2020-21. On May 14, 2020, the Governor released the May Revision to the Proposed 2020-21 State Budget (the “May Revision”). The May Revision noted that the COVID-19 pandemic and resulting recession had changed the State’s fiscal landscape dramatically. Unemployment claims have surged, with increased unemployment claims of 4.4 million from mid-March to May 9, 2020. Job losses have occurred in nearly every sector of the economy and personal income was projected to decline by 9% in 2020. Following record economic expansion, the United States economy entered into a recession in March 2020, causing an immediate negative impact on State revenues, with all three of the State’s major revenue sources showing significant declines relative to the Governor’s original budget forecast. From fiscal years 2018-19 through 2020-21, the May Revision baseline revenue estimate decreased by over $43 billion, before accounting for transfers. The changes in the three largest State tax sources are: • Personal income tax revenues, which were revised downward by $32.6 billion (including $6.9 billion less in State fiscal year 2019-20 and $26.3 billion less in State fiscal year 2020-21) due to a decline in all income sources, but particularly wages, proprietorship income and capital gains; • Sales and use tax receipts, which were revised downward by almost $10 billion ($2.2 billion less in State fiscal year 2019-20 and $7.7 billion less in State fiscal year 2020-21) due mainly to lower consumption and investment by business; and • Corporate tax revenues, which were revised downward by over $5 billion based on a significant drop in corporate profits. On June 29, 2020, the Governor signed into law the State budget for State fiscal year 2020-21 (the “2020-21 Budget”). The following information is drawn from summaries of the 2020-21 Budget prepared by the DOF and the LAO. The 2020-21 Budget acknowledges that the rapid onset of COVID-19 has had an immediate and severe impact on the State’s economy. The ensuing recession has caused significant job losses and precipitous drops in family and business income and has exacerbated income inequality. The May Revision forecast included a peak unemployment rate of 24.5% in the second quarter of 2020 and a decline in personal income of nearly 9%. The 2020-21 Budget reported that the official unemployment rate exceeded 16% in both April and May 2020. 2.f Packet Pg. 544 45 4827-8234-0833v4/200928-0001 The 2020-21 Budget includes a number of measures intended to address a projected deficit of $54.3 billion occasioned principally by declines in the State’s three main tax revenues (personal income, sales and use and corporate, as discussed above). The measures included in the 2020-21 Budget, and described below, are intended to close this deficit and set aside $2.6 billion in the State’s traditional general fund reserve, including $716 million for the State to respond to the changing conditions of the COVID-19 pandemic: • Drawdown of Reserves – The 2020-21 Budget draws down $8.8 billion in total State reserves, including $7.8 billion from the State’s basic reserve fund, known as the Budget Stabilization Account (the “BSA”), $450 million from the Safety Net Reserve and all money in the Public School System Stabilization Account. • Triggers – The 2020-21 Budget includes $11.1 billion in reductions and deferrals that would have been restored if at least $14 billion in federal funds were received by October 15, 2020. Such funds were not received. The triggers include $6.6 billion in deferred spending on education, $970 million in funding for the California State University and University of California systems, $2.8 billion in State employee compensation and $150 million for courts, as well as funding for various other State programs. The triggers would also fund an additional $250 million for county programs to backfill revenue losses. • Federal Funds – The 2020-21 Budget relies on $10.1 billion in federal funds, $8.1 billion of which has already been received. This relief includes recent Congressional approval for a temporary increase in the federal government’s share of Medicaid costs, a portion of the State’s Coronavirus Relief Fund allocation pursuant to the CARES Act and federal funds provided for childcare programs. • Borrowing/Transfers/Deferrals – The 2020-21 Budget relies on $9.3 billion in special fund borrowing and transfers, as well as deferrals to K-14 education spending. Approximately $900 million of special fund borrowing is associated with reductions to State employee compensation and is subject to the triggers discussed above. • Increased Revenues – The 2020-21 Budget temporarily suspends for three years net operating loss tax deductions for medium and large businesses and limits business tax credits, with an estimated increase in tax revenues of $4.3 billion in State fiscal year 2020-21. • Cancelled Expansions, Updated Assumptions and Other Measures – The 2020-21 Budget includes an additional $10.6 billion of measures, including cancelling multiple programmatic expansions, anticipated governmental efficiencies, higher ongoing revenues above the forecast included in the May Revision and lower health and human services caseload costs than assumed by the May Revision. For State fiscal year 2019-20, the 2020-21 Budget projects total State general fund revenues and transfers of $137.6 billion and authorizes expenditures of $146.9 billion. The State is projected to end State fiscal year 2019-20 with total available general fund reserves of $17 billion, including $16.1 billion in the BSA and $900 million in the Safety Net Reserve Fund. For State fiscal year 2020-21, the 2020-21 Budget projects total State general fund revenues and transfers of $137.7 billion and authorizes expenditures of $133.9 billion. The State is projected to end State fiscal year 2020-21 with total available general fund reserves of $11.4 billion, including $2.6 billion in the traditional State general fund reserve (of which $716 million is earmarked for COVID-19-related responses), $8.3 billion in the BSA and $450 million in the Safety Net Reserve Fund. As a result of the projected reduction of State revenues occasioned by the COVID-19 pandemic, the 2020-21 Budget estimates that the Proposition 98 minimum funding guarantee for fiscal year 2020-21 is $70.1 2.f Packet Pg. 545 46 4827-8234-0833v4/200928-0001 billion, approximately $10 billion below the revised prior-year funding level. For K-12 school districts, this results in per-pupil spending in fiscal year 2020-21 of $10,654, a reduction of $1,339 from the prior year. The 2020-21 Budget proposes several measures intended to ameliorate the immediate impact of State revenue declines, and avoid a permanent decline in education funding: • Local Control Funding Formula – The 2020-21 Budget provides for $1.9 billion in Local Control Funding Formula apportionment deferrals for State fiscal year 2019-20. The deferrals increase to $11 billion in State fiscal year 2020-21, which results in Local Control Funding Formula funding remaining at 2019-20 levels in both years. The 2020-21 Budget also suspends the statutory cost of living adjustment in State fiscal year 2020-21. Of the total deferrals, $5.8 billion will be cancelled in State fiscal year 2020-21 if sufficient federal funding for this purpose is received. • CalSTRS/CalPERS – The 2020-21 Budget redirects $2.3 billion in funds that were previously appropriated for prefunding California State Teachers Retirement System (“CalSTRS”) and CalPERS liabilities, instead applying them to further reduce local educational agency contribution rates for such programs in State fiscal years 2020-21 and 2021-22. This reduces CalSTRS employer rates to 16.15% in fiscal year 2020-21 and 16.02% in fiscal year 2021-22. CalPERS employer rates are reduced to 20.7% in fiscal year 2020-21 and 22.84% in fiscal year 2021-22. • Federal Funds – In addition to the CARES Act funding previously discussed, the 2020-21 Budget appropriates $1.6 billion in federal Elementary and Secondary School Emergency Relief funds recently awarded to the State. Of this amount, approximately $1.5 billion will be allocated to local educational agencies in proportion to the amount of federal Title I-A funding such agencies receive, to be used for COVID-19 related costs. The remaining amount will be allocated to state- level activities. • Temporary Revenue Increases – As discussed above, as part of closing the State’s projected deficit, the 2020-21 Budget provides for a temporary revenue increase of approximately $4.3 billion in fiscal year 2020-21, of which approximately $1.6 billion counts towards the Proposition 98 funding guarantee. For additional information regarding the 2020-21 Budget, see the DOF and LAO websites. The information presented on such websites is not incorporated herein by reference. None of the websites or webpages that are referenced above is in any way incorporated into this Official Statement. They are cited for informational purposes only. The City, the Authority and the Underwriter make no representation whatsoever as to the accuracy or completeness of any of the information on such websites. There can be no assurance that additional legislation will not be enacted in the future to implement provisions relating to the State budget, address the COVID-19 outbreak or otherwise that may affect the City or its General Fund revenues. Budget for State Fiscal Year 2021-22 [TO COME] Potential Impact of State Financial Condition on the City The State has experienced significant financial stress in recent years, with budget shortfalls in the several billions of dollars. Currently, the COVID-19 outbreak is materially adversely impacting the financial condition of the State and the waning of the infection crisis is expected to be followed by a continuing 2.f Packet Pg. 546 47 4827-8234-0833v4/200928-0001 recession and increases in unfunded liabilities of the two main retirement systems managed by State entities, CalPERS and CalSTRS. The State also has a significant unfunded liability with respect to OPEB. Current and future State budgets will be significantly affected by the COVID-19 outbreak and other factors over which the City has no control. The City cannot determine what actions will be taken in the future by the State Legislature and the Governor to deal with the COVID-19 outbreak, the recession and resulting changing State revenues and expenditures. There can be no assurance that, as a result of the COVID-19 outbreak or otherwise, the State will not significantly reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of its efforts to address State financial conditions. Although the State is not a significant source of City revenues, there can be no assurance that State actions to respond to the COVID-19 outbreak will not materially adversely affect the financial condition of the City. Redevelopment Dissolution On December 29, 2011, the State Supreme Court upheld Assembly Bill 1x26 (“AB 1x26”), which dissolved redevelopment agencies in the State. The effect of AB 1x26 upon the City was the termination of the redevelopment functions of the Redevelopment Agency of the City of Diamond Bar (the “Former Agency”) and the transfer of such functions to a successor agency (the City, referred to in the capacity of a successor agency, and being referred to in this context as the “Successor Agency”) tasked with winding down the Former Agency’s redevelopment activities. Under AB 1x26, the Successor Agency cannot enter into new redevelopment projects or obligations and its assets can be used only to pay enforceable obligations, which enforceable obligations are generally limited to obligations in existence in mid-2011, when AB 1x26 was signed by the Governor. The Successor Agency’s activities are subject to review by an oversight board established under AB 1x26. Under AB 1x26, liabilities of the Successor Agency are not liabilities of the City. Although the City had established the Former Agency, the Former Agency did not have an active redevelopment project area and did not receive tax increment or have any enforceable obligations. Accordingly, the City does not believe that the enactment of AB 1x26 will affect the Successor Agency or compel the Successor Agency or the City to make any payments to the State. Similarly, the City does not believe that it has received material amounts from the Former Agency or the Successor Agency which may be asserted to be in violation of AB 1x26. Future State Budgets No prediction can be made by the City as to whether the State will continue to encounter budgetary problems in future years, and if it were to do so, it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the final outcome of future State budget negotiations, the impact that such budgets will have on City finances and operations or what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures. There can be no assurance that actions taken by the State to address its financial condition will not materially adversely affect the financial condition of the City. Current and future State budgets will be affected by national and State economic conditions and other factors, including the current economic downturn, over which the City has no control. CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS There are a number of provisions of the State Constitution that limit the ability of the City to raise and expend tax revenues. 2.f Packet Pg. 547 48 4827-8234-0833v4/200928-0001 Article XIIIA of the State Constitution On June 6, 1978, State voters approved an amendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the State Constitution. The amendment, which added Article XIIIA to the State Constitution, among other things affects the valuation of real property for the purpose of taxation in that it defines the full cash property 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 newly constructed, or when a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or a reduction in the consumer price index or comparable local data at a rate not to exceed 2% per year, or reduced in the event of declining property value caused by damage, destruction or other factors including a general economic downturn. The amendment further limits the amount of any ad valorem tax on real property to 1% of the full cash value, except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to December 1, 1978, and bonded indebtedness for the acquisition or improvement of real property approved on or after December 1, 1978 by two-thirds of the votes cast by the voters voting on the proposition (55% in the case of certain school facilities). Property taxes that are subject to Proposition 13 are a significant source of the City’s General Fund revenues. See the caption “CITY FINANCIAL INFORMATION.” Legislation enacted by the State Legislature to implement Article XIIIA provides that all taxable property is shown at full assessed value as described above. Tax rates for voter approved bonded indebtedness are also applied to 100% of assessed value. Future assessed valuation growth allowed under Article XIIIA (for new construction, change of ownership or 2% annual value growth) is allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and school districts share the growth of “base” revenue from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation the following year. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above the 1% limit except for taxes to support indebtedness approved by the voters as described above. 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, and 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 certain other limited circumstances. Article XIIIB of the State Constitution At the Statewide special election on November 6, 1979, the voters approved an initiative entitled “Limitation on Government Appropriations,” which added Article XIIIB to the State Constitution. Under Article XIIIB, State and local government entities have an annual “appropriations limit” which limits the ability to spend certain money which are called “appropriations subject to limitation” (consisting of tax revenues and investment proceeds thereof, certain State subventions and regulatory license fees, user charges and user fees to the extent that the proceeds thereof exceed the costs of providing such services, together called “proceeds of taxes,” and certain other funds) in an amount higher than the “appropriations limit.” Article XIIIB does not affect the appropriation of moneys which are excluded from the definition of “appropriations limit,” including debt service on indebtedness existing or authorized as of October 1, 1979, or bonded indebtedness subsequently approved by the voters. In general terms, the “appropriations limit” is to be based on certain 1978-79 expenditures and is to be adjusted annually to reflect changes in the consumer price index, population and services provided by these entities. Among other provisions of Article XIIIB, if those entities’ revenues in any year exceed the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years. To the best of the City’s knowledge, the City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the State Constitution. 2.f Packet Pg. 548 49 4827-8234-0833v4/200928-0001 Proposition 62 A statutory initiative (“Proposition 62”) was adopted by the voters of the State at the November 4, 1986 general election which: (a) requires that any tax for general governmental purposes imposed by local governmental entities be approved by resolution or ordinance adopted by two-thirds vote of the governmental agency’s legislative body and by a majority of the electorate of the governmental entity; (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 within the jurisdiction; (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax is 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 that is imposed by a local governmental entity on or after August 1, 1985 be ratified by a majority vote of the electorate within two years of the adoption of the initiative or be terminated by November 15, 1988. The requirements imposed by Proposition 62 were upheld by the State Supreme Court in Santa Clara County Local Transportation Authority v. Guardino, 11 Cal.4th 220 (1995). Proposition 62 applies to the imposition of any taxes or the implementation of any tax increases after its enactment in 1986, but the requirements of Proposition 62 are largely subsumed by the requirements of Proposition 218 for the imposition of any taxes or the effecting of any tax increases after November 5, 1996. See the caption “—Proposition 218” below. Proposition 218 On November 5, 1996, State voters approved Proposition 218, an initiative measure entitled the “Right to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Proposition 218 states that all taxes imposed by local governments are deemed to be either general taxes or special taxes. Special purpose districts, including school districts, have no power to levy general taxes. No local government may impose, extend or increase any general tax unless and until such tax is submitted to the electorate and approved by a majority vote. No local government may impose, extend or increase any special tax unless and until such tax is submitted to the electorate and approved by a two-thirds vote. Proposition 218 also provides that no tax, assessment, fee or charge may be assessed by any agency upon any parcel of property or upon any person as an incident of property ownership except: (a) the ad valorem property tax imposed pursuant to Articles XIII and XIIIA of the State Constitution; (b) any special tax receiving a two-thirds vote pursuant to the State Constitution; and (c) assessments, fees and charges for property-related services as provided in Proposition 218. Proposition 218 then goes on to add voter requirements for assessments and fees and charges imposed as an incident of property ownership, other than fees and charges for sewer, water, and refuse collection services. In addition, all assessments and fees and charges imposed as an incident of property ownership, including sewer, water and refuse collection services, are subjected to various additional procedures, such as hearings and stricter and more individualized benefit requirements and findings. Proposition 218 also extended the initiative power to reducing or repealing any local taxes, assessments, fees and charges. This extension of the initiative power is not limited to taxes imposed on or after November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or reduction in any existing taxes, assessments, fees and charges, subject to overriding federal constitutional principles relating to the impairments of contracts. Legislation implementing Proposition 218 provides that the initiative power provided for in Proposition 218 “shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after (the effective date of Proposition 218) assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of 2.f Packet Pg. 549 50 4827-8234-0833v4/200928-0001 contractual rights” protected by the United States Constitution. However, no assurance can be given that the voters of the City will not, in the future, approve an initiative which reduces or repeals local taxes, assessments, fees or charges that currently are deposited into the City’s General Fund. Although a portion of the City’s General Fund revenues are derived from general taxes purported to be governed by Proposition 218, as discussed under the caption “CITY FINANCIAL INFORMATION — Other Taxes,” all of such taxes were imposed in accordance with the requirements of Proposition 218. 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 which support the City’s General Fund. Unitary Property Some amount of property tax revenue of the City is derived from utility property which is considered part of a utility system with components located in many taxing jurisdictions (“unitary property”). Under the State Constitution, such property is assessed by the SBE as part of a “going concern” rather than as individual pieces of real or personal property. State-assessed unitary and certain other property is allocated to the counties by the SBE, taxed at special county-wide rates, and the tax revenues distributed to taxing jurisdictions (including the City) according to a statutory formula that is generally based on the distribution of taxes in the prior year. Proposition 22 On November 2, 2010, State voters approved Proposition 22, which eliminates the State’s ability to borrow or shift local revenues and certain State revenues that fund transportation programs. It restricts the State’s authority over a broad range of tax revenues, including property taxes allocated to cities (including the City), counties and special districts, the VLF, State excise taxes on gasoline and diesel fuel, the State sales tax on diesel fuel, and the former State sales tax on gasoline. It also makes a number of significant other changes, including restricting the State’s ability to use motor vehicle fuel tax revenues to pay debt service on voter- approved transportation bonds. Proposition 26 On November 2, 2010, State voters approved Proposition 26. Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government” except the following: (a) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (b) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (c) a charge imposed for the reasonable regulatory costs of a local government for issuing licenses and permits, performing investigations, inspections and audits, enforcing agricultural marketing orders and the administrative enforcement and adjudication thereof; (d) a charge imposed for entrance to or use of local government property, or the purchase, rental or lease of local government property; (e) a fine, penalty or other monetary charge imposed by the judicial branch of government or a local government as a result of a violation of law; (f) a charge imposed as a condition of property development; and (g) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the 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. The City does not believe that Proposition 26 will adversely affect its General Fund revenues. 2.f Packet Pg. 550 51 4827-8234-0833v4/200928-0001 Future Initiatives Articles XIIIA and XIIIB and Propositions 62, 218, 22 and 26 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 the City’s current revenues or its ability to raise and expend revenues. RISK FACTORS Prospective purchasers of the 2021 Bonds should consider carefully all possible factors that may affect the ability of the City to pay Base Rental Payments under the Lease Agreement. The 2021 Bonds may not be a suitable investment for all prospective purchasers. The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating the purchase of the 2021 Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the 2021 Bonds and there can be no assurance that other risk factors will not become material in the future. In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks. General Considerations – Security for the 2021 Bonds The 2021 Bonds are special obligations of the Authority, payable solely from Base Rental Payments. Neither the faith and credit nor the taxing power of the Authority, the City, the State or any political subdivision thereof is pledged to the payment of the 2021 Bonds. The Authority has no taxing power. The obligation of the City to make the Base Rental Payments does not constitute a debt of the City, the County, the State or 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, the County or the State is obligated to levy or pledge any form of taxation or for which the City, the County or the State has levied or pledged any form of taxation. Although the Lease Agreement does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Lease Agreement to pay the Base Rental Payments and Additional Rental Payments from any source of legally available funds, and the City has covenanted in the Lease Agreement to take such action as may be necessary to include all such Base Rental Payments and Additional Rental Payments due thereunder in its annual budgets, and to make necessary annual appropriations for all such Base Rental Payments and Additional Rental Payments, subject to abatement. The City is currently liable and may become liable on other obligations payable from general revenues. See the caption “CITY FINANCIAL INFORMATION—Other Indebtedness—General Fund-Supported Debt.” The City has the capacity to enter into other obligations which may constitute additional charges against its revenues, including pension obligations and essential services. To the extent that additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased. In the event that the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before making Base Rental Payments. The same result could occur if, because of State Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues. However, to the best of the City’s knowledge, the City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the State Constitution. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS— Article XIIIB of the State Constitution.” 2.f Packet Pg. 551 52 4827-8234-0833v4/200928-0001 Abatement In the event of substantial interference with the City’s right to use and occupy any portion of the Property by reason of damage to or destruction or condemnation of the Property, or any defects in title to the Property, the Base Rental Payments will be subject to abatement. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Abatement.” The amount of abatement will be such that the resulting payments of Base Rental Payments and Additional Rental Payments do not exceed the fair rental value for the use and possession of the remaining portions of the Property as to which the City has beneficial use and occupancy and as to which such damage or destruction or defect in title do not substantially interfere. In the event that such portion of the Property, if damaged or destroyed by an insured casualty, could not be replaced during the period of time in which proceeds of the City’s rental interruption insurance will be available in lieu of the Base Rental Payments, plus the period in which funds are available from the funds and accounts established under the Indenture, or in the event that casualty insurance proceeds are insufficient to provide for complete repair or replacement of such portion of the Property or redemption of the 2021 Bonds, there could be insufficient funds to make payments to Owners in full. It is not always possible to predict the circumstances under which abatement of rental may occur. In addition, there is no statute, case or other law specifying how such an abatement of rental should be measured. For example, it is not clear whether fair rental value is established as of commencement of the lease or at the time of the abatement. If the latter, the value of the Property could be substantially higher or lower than its value at the time of the issuance of the 2021 Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the 2021 Bonds. If damage, destruction, title defect or eminent domain proceedings with respect to the Property results in abatement of the Base Rental Payments and if such abated Base Rental Payments, if any, together with moneys from rental interruption or use and occupancy insurance (in the event of any insured loss due to damage or destruction), and eminent domain proceeds, if any, are insufficient to make all payments of principal and interest with respect to the 2021 Bonds during the period that the Property is being replaced, repaired or reconstructed, then all or a portion of such payments of principal and interest may not be made. Under the Lease Agreement and the Indenture, no remedy is available to the 2021 Bond Owners for nonpayment under such circumstances. Initiative and Referendum The ability of the City to comply with its covenants under the Lease Agreement and to generate revenues that are sufficient to pay Base Rental Payments may be adversely affected by actions and events outside the control of the City, including without limitation actions taken (or not taken) by voters. Under the State Constitution, voters of the State have the ability to initiate legislation and require a public vote on legislation passed by the State Legislature through the powers of initiative and referendum, respectively. The Authority and the City are unable to predict whether any such initiatives might be submitted to or approved by the voters, the nature of such initiatives, or their potential impact on the City and its operations. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Future Initiatives.” Insurance on the Property Under the Lease Agreement, the City is required to maintain through the term of the Lease Agreement policies of insurance covering loss or damage to the Property up to replacement costs and covering title defects. If the Property is damaged or destroyed, there can be no assurance that the insurance proceeds will be sufficient to repair or restore the Property, or to redeem or defease all of the then-Outstanding 2021 Bonds. In addition, neither the Authority nor the City can provide any assurance as to whether the provider of an 2.f Packet Pg. 552 53 4827-8234-0833v4/200928-0001 insurance policy will pay under such policy. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Insurance” for a description of the insurance coverages that are required by the Lease Agreement. See the caption “THE CITY—Risk Management” for a description of the City’s current insurance coverages. Certain risks, such as earthquakes and floods, are not required to be covered under the Lease Agreement and, although the City currently maintains earthquake and flood coverage, it is not required to maintain such coverage during the term of the Lease Agreement. Condemnation of the Property If all or a portion of the Property were condemned, there can be no assurance that any such award or payment will be sufficient at the time to prepay or defease all of the then-Outstanding 2021 Bonds. If the award is less than the amounts remaining on such Outstanding 2021 Bonds, then the Owners will be paid less than the amounts remaining on such Outstanding 2021 Bonds. Value of Property In the event that the Trustee re-enters or re-lets the Property upon the occurrence of an Event of Default, there can be no assurance such actions will provide funds in an amount that is sufficient to pay the principal of and interest on the 2021 Bonds. The security under the Lease Agreement extends only to the Authority’s leasehold interest in the Property granted under the Ground Lease and is subject to the restrictions of the Ground Lease and all other use restrictions applicable to the site. The Property has not been appraised in connection with the issuance of the 2021 Bonds. No Acceleration of Base Rental Payments Nothing in the Lease Agreement permits the Authority or the Trustee to accelerate Base Rental Payments. Although the Trustee is entitled to pursue all available remedies under the Indenture, there can be no assurance that sufficient funds will be available at the time to redeem or defease all of the then-Outstanding 2021 Bonds. Certain Risks Associated with Sales Tax and Other Local Tax Revenues For the past several Fiscal Years, sales and use tax revenues have been the third largest source of General Fund revenues to the City. See the caption “CITY FINANCIAL INFORMATION.” Sales and use tax revenues are based upon the gross receipts of retail sales of tangible goods and products by retailers with taxable transactions in the City, which could be impacted by a variety of factors. For example, in times of economic recession, the gross receipts of retailers often decline, and such a decline would cause the sales tax revenues received by the City to decline. An economic recession would also be expected to affect hotel occupancy within the City, and consequently, the City’s receipt of transient occupancy taxes. See the captions “THE CITY—COVID-19 Outbreak” and “CITY FINANCIAL INFORMATION.” In addition, changes or amendments in the laws applicable to the City’s receipt of sales tax revenues or other local taxes, whether implemented by State legislative action or voter initiative, could have an adverse effect on sales tax revenues received by the City. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” Many categories of transactions are exempt from the Statewide sales tax, and additional categories could be added in the future. Currently, most sales of food products for human consumption are exempt; this exemption, however, does not apply to liquor or to restaurant meals. The rate of sales tax levied on taxable transactions in the City or the fee charged by the SBE for administering the City’s sales tax could also be changed. 2.f Packet Pg. 553 54 4827-8234-0833v4/200928-0001 As discussed under the caption “THE CITY—COVID-19 Outbreak,” the Governor extended the deadline to file and pay first quarter 2020 sales and use tax returns by 90 days for all but the very largest taxpayers, and up to 361,000 California businesses with less than $5 million in taxable annual sales were allowed to defer up to $50,000 in sales tax and enter into 12-month payment plans at zero interest. The extension resulted in a delay in the receipt by the City of its portion of sales tax payments for 2020. There can be no assurance that additional extensions of payment deadlines will not be ordered should the COVID-19 outbreak continue or economic recessions occur in the future. Assessed Value of Taxable Property Property taxes are currently the second largest source of the City’s General Fund revenues. Natural and economic forces can affect the assessed value of taxable property within the City. The City is located in a seismically active region, and damage from an earthquake in or near the area could cause extensive damage to taxable property. Other natural or manmade disasters, such as flood, fire, wildfire, ongoing drought, toxic dumping, erosion, civil unrest or acts of terrorism, could cause a reduction in the assessed value of taxable property within the City. See the captions “—Natural Disasters” and “—Hazardous Substances.” In addition, economic and market forces, such as a downturn in the regional economy, could affect assessed values, particularly as these forces might reverberate in the residential housing and commercial property markets as has been experienced in the past. In addition, the total assessed value can be reduced through the reclassification of taxable property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by State and local agencies and property used for qualified educational, hospital, charitable or religious purposes). Reductions in the market values of taxable property may cause property owners to appeal assessed values and may also be associated with an increase in delinquency rates for property taxes. Section 2(b) of Article XIIIA of the State Constitution and Section 51 of the State Revenue and Taxation Code, which were adopted pursuant to Proposition 8, which was adopted in 1978, require the County assessor to annually enroll either a property’s adjusted base year value (the “Proposition 13 Value”) or its current market value, whichever is less. When the current market value replaces the higher Proposition 13 Value on the assessor’s roll, such lower value is referred to as the “Proposition 8 Value.” Although the annual increase for a Proposition 13 Value is limited to no more than 2%, the same restriction does not apply to a Proposition 8 Value. The Proposition 8 Value of a property is reviewed annually as of January 1; the current market value must be enrolled as long as the Proposition 8 Value falls below the Proposition 13 Value. Thus, any subsequent increase or decrease in market value is enrolled regardless of any percentage increase or decrease. Only when a current Proposition 8 Value exceeds the Proposition 13 Value attributable to a piece of property (adjusted for inflation) does a county assessor reinstate the Proposition 13 Value. Decreases in the assessed value of taxable property within the City resulting from a natural disaster or other calamity, economic recession, reclassification by ownership or use or as a result of the implementation of Proposition 8 all may have an adverse impact on property tax collections by the City, and consequently, the General Fund revenues that are available to make Base Rental Payments. Increasing Retirement-Related Costs The City is required to make contributions to CalPERS and to its OPEB plan for City employees and retirees. Such obligations are a significant financial obligation of the City and could increase in the future. Actual contribution rates will depend on a variety of factors, including but not limited to actual investment returns and future changes to benefits or actuarial assumptions. The City notes that pension contributions in future years may increase as a result of investment losses in CalPERS’ portfolio. There can be no assurances that actual increases in required contributions will not be higher than the amounts which are currently 2.f Packet Pg. 554 55 4827-8234-0833v4/200928-0001 projected by the City. See the captions “CITY FINANCIAL INFORMATION—Retirement Contributions” and “CITY FINANCIAL INFORMATION—Other Post-Employment Benefits.” Dependence on State for Certain Revenues A number of the City’s revenues are collected and dispersed by the State (such as sales taxes and the VLF) or allocated in accordance with State law (most importantly, property taxes). Therefore, State budget decisions can have an impact on City finances. In the event of a material economic downturn in the State, including as a result of the COVID-19 outbreak that is discussed under the caption “THE CITY—COVID-19 Outbreak,” there can be no assurance that any resulting revenue shortfalls to the State will not reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of the State’s efforts to address any such related State financial difficulties. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION.” Litigation The City may be or become a party to litigation that has an impact on the General Fund. Although the City maintains certain insurance policies that provide liability coverage under certain circumstances and with respect to certain types of incidents (as discussed under the caption “THE CITY—Risk Management”), the City cannot predict what types of liabilities may arise in the future. See the caption “LITIGATION.” Natural Disasters The occurrence of any natural disaster in the City, including, without limitation, fire, windstorm, drought, earthquake, landslide, mudslide or flood, could have an adverse material impact on the economy within the City, its General Fund and the revenues available for the payment of Base Rental Payments. The Although the City currently maintain earthquake insurance for the Property, it is not required to do so by the Lease Agreement and may elect to discontinue such insurance coverage in the future. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Insurance” and “THE CITY—Risk Management.” Earthquakes are considered a threat to the City due to the highly active seismic region and the proximity of fault zones, which could influence the entire coastal portion of the State. There are also likely to be unmapped faults in or near the City. Seismically induced ground shaking has affected the City in the past and is expected to affect the City in the future. An earthquake along one of the faults in the vicinity of the City, either known or unknown, could cause a number of casualties and extensive property damage. The effects of an earthquake could be aggravated by aftershocks and secondary effects such as fires, landslides, dam failure, liquefaction, floods and other threats to public health, safety and welfare. Portions of the City are located within floodways as defined by the Federal Emergency Management Agency. The potential direct and indirect consequences of a major earthquake could easily exceed the resources of the City and would require a high level of self-help, coordination and cooperation. The State, including the City, is periodically subject to wildfires, which can result in destruction of property directly. In addition, when wildfires scorch land, they destroy all vegetation on mountains and hillsides. As a result, when heavy rain falls in the winter, there is nothing to stop the rain from penetrating directly into the soil. In addition, waxy compounds in plants and soil that are released during fires create a natural barrier in the soil that prevents rain water from seeping deep into the ground. The result is erosion, mudslides and excess water running off the hillsides often causing flash flooding. The occurrence of natural disasters in the City could result in substantial damage to the City and the Property which, in turn, could substantially reduce General Fund revenues and affect the ability of the City to 2.f Packet Pg. 555 56 4827-8234-0833v4/200928-0001 make Base Rental Payments or cause an abatement in Base Rental Payments if the City is unable to use and occupy the Property. The City maintains liability insurance, rental interruption insurance and property casualty insurance (for losses other than from seismic events) for the Property. See the caption “THE CITY— Risk Management.” However, there can be no assurance that specific losses will be covered by insurance or, if covered, that claims will be paid in full by the applicable insurers. Climate Change The State has historically been susceptible to wildfires and hydrologic variability. As greenhouse gas emissions continue to accumulate in the atmosphere as a result of economic activity, climate change is expected to intensify, increasing the frequency, severity and timing of extreme weather events such as coastal storm surges, drought, wildfires, floods and heat waves, and raising sea levels. The future fiscal impact of climate change on the City is difficult to predict, but it could be significant and it could have a material adverse effect on the General Fund by requiring greater expenditures to counteract the effects of climate change or by changing the operations and activities of City residents and business establishments. The Diamond Bar Climate Action Plan (the “CAP”) is designed to reinforce the City’s commitment to reducing greenhouse gas (“GHG”) emissions and demonstrate how the City will comply with State GHG emission reduction standards. As a Qualified GHG Reduction Strategy under State law, the CAP will also enable streamlined environmental review of future development projects, in accordance with the California Environmental Quality Act. The CAP was prepared concurrently with the updated Diamond Bar General Plan and approved in December 2019, reflecting the City’s most current land use and transportation strategy, and GHG implications of various General Plan’s goals and policies. The General Plan Environmental Impact Report (the “EIR”) also serves as the EIR for the CAP, and the GHG analysis in the CAP is fully synchronized with the analysis in the EIR. Cybersecurity Municipal agencies, like other business entities, face significant risks relating to the use and application of computer software and hardware. Recently, there have been significant cybersecurity incidents affecting municipal agencies, including a freeze affecting computer systems of the City of Atlanta, an attack on the City of Baltimore’s 911 system, an attack on the Colorado Department of Transportation’s computers and an attack that resulted in the temporary closure of the Port of Los Angeles’ largest terminal. The City employs a multi-level cyber protection scheme that includes firewalls, anti-virus software, anti-spam/malware software, intrusion protection and domain name system filtering software. In addition, the City contracts with third party vendors to monitor and augment external monitoring of the City’s computer systems. The City implements recommended strategies suggested by the vendor and makes internal computer system changes as needed. To date, the City has not experienced a significant attack on its computer operating systems. However, there is no assurance that a future attack or attempted attack would not result in disruption of City operations. The City expects that any such disruptions would be temporary in nature. Hazardous Substances A condition that may result in the reduction in the assessed value of property, and therefore property tax revenue available to pay Base Rental Payments, would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the City. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but State laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or 2.f Packet Pg. 556 57 4827-8234-0833v4/200928-0001 handling the hazardous substance. The effect, therefore, should any of the property within the City be affected by a hazardous substance, could be to reduce the marketability and value of such property by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. The City and the Authority have not independently verified, but are not aware of, the presence of any hazardous substances on the Property. Hazardous substance liabilities may arise in the future with respect to any of the property in the City resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise from the method of handling such substance. These possibilities could significantly affect the value of a parcel. Economy of City and State A deterioration in the level of economic activity in the City, the County, the State or the United States, including as a result of the COVID-19 outbreak that is discussed under the caption “THE CITY—COVID-19 Outbreak,” is not currently expected to have a material adverse effect on the City’s general revenues or on the ability of the City to pay principal of and interest on the 2021 Bonds. See the caption “CITY FINANCIAL INFORMATION—General Economic Condition and Outlook of the City.” However, there can be no assurance that adverse economic conditions will not have a negative effect on the City. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION” for information about the State economy and State budget. Split Roll Initiative An initiative measure (the “Split Roll Initiative”) to amend Article XIIIA of the State Constitution qualified for the State’s November 2020 ballot. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Article XIIIA of the State Constitution.” Although it was not adopted by State voters, the Split Roll Initiative would have based property taxes for commercial and industrial properties on periodic analyses of market values beginning in tax year 2020-21. Such market values would have been reassessed by the applicable county assessor’s office at least once every three years. The Split Roll Initiative included exceptions for businesses with a total market value of less than $2 million (adjusted for inflation), which would have continued to be subject to property taxes based on purchase price, and exempted from property tax assessments up to $500,000 of the value of personal property, or all personal property for businesses with fewer than 50 employees. Although the Split Roll Initiative was not adopted, there can be no assurance that a similar initiative will not be brought before voters in the future. The City is unable to predict how the adoption of such a future initiative would affect the level of commercial building activity within the City and the relationship between the assessed value of different land use types (i.e. residential versus commercial) in the City, or what other impacts such an initiative might have on the local economy or the City’s financial condition, including the receipt of property tax revenues. Additional City Obligations The Base Rental Payments under the Lease Agreement are payable from funds that are lawfully available to the City. The City is currently liable for other obligations payable from general revenues of the City. The City has the authority to enter into other obligations that constitute additional claims on such general revenues, including Additional Bonds payable from a lease of the Property. To the extent that the City incurs additional obligations, the funds available to make Base Rental Payments may be decreased. See the captions “CITY FINANCIAL INFORMATION—Other Indebtedness—General Fund-Supported Obligations” and “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Additional Bonds.” 2.f Packet Pg. 557 58 4827-8234-0833v4/200928-0001 Tax-Related Issues The Internal Revenue Code of 1986, as amended (the “Code”) imposes a number of requirements that must be satisfied in order for interest on state and local obligations, such as the 2021 Bonds, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of 2021 Bond proceeds, limitations on the investment earnings of 2021 Bond proceeds, a requirement that certain investment earnings on 2021 Bond proceeds be paid periodically to the United States and a requirement that issuers file an information report with the Internal Revenue Service (the “IRS”). See the caption “TAX MATTERS.” The City and the Authority have covenanted in certain of the documents that are referred to in this Official Statement to comply with such requirements. Failure by any of the foregoing to comply with the requirements stated in the Code and related regulations, rulings and policies may result in the treatment of interest on the 2021 Bonds as taxable retroactively to the date of initial issuance of the 2021 Bonds. The 2021 Bonds would not be subject to higher rates of interest or acceleration if such an event were to occur. Possible Consequence of Tax Compliance Audit The IRS has established a general audit program to determine whether issuers of tax-exempt obligations, such as the 2021 Bonds, are in compliance with requirements of the Code that must be satisfied in order for the interest on those obligations to be, and continue to be, excluded from gross income for federal income tax purposes. As a result, organizations such as the City are subject to possible scrutiny. The primary penalty available to the IRS under the Code with respect to a tax-exempt entity engaged in improper use of tax- exempt proceeds is the revocation of tax-exempt status for the applicable obligations. Although the IRS has not frequently revoked the tax-exempt status of municipal bonds, it could do so in the future. See the caption “—Tax-Related Issues.” The City and the Authority cannot predict whether the IRS will commence an audit of the 2021 Bonds. Depending on the facts and circumstances and the type of audit involved, it is possible that an audit of the 2021 Bonds or obligations similar to the 2021 Bonds, even if the tax exemption of the 2021 Bonds is not implicated, could adversely affect the market value and liquidity of the 2021 Bonds until the audit is concluded, regardless of its ultimate outcome. Remedies Upon an Event of Default under the Indenture, the Trustee may exercise certain remedies under the Indenture and the Lease Agreement. In the event of a monetary default under the Indenture, the Trustee has the right to enter and take possession of the Property, and the Trustee may hold, operate and manage the Property and apply revenues therefrom toward payment of the 2021 Bonds. There can be no assurance that the Trustee will be able to realize from such actions an amount that is sufficient to pay the principal of and interest on the 2021 Bonds. In addition, the Trustee may incur significant operating costs in connection with the Property. Limitation on Trustee’s Obligations under the Indentures The Trustee has no obligation to advance its own funds to pursue any remedies. As a consequence, the Trustee’s willingness and ability to pursue any of the remedies provided in the Indenture, Lease Agreement or Assignment Agreement may be dependent upon the availability of funds from an interested party. Additionally, the Trustee is not required to acquire possession of the Property if doing so subjects it to potential liability. There can be no assurance that the Trustee will be willing and able to perform its duties under the Indenture. 2.f Packet Pg. 558 59 4827-8234-0833v4/200928-0001 Release of Property; Additional Bonds The Authority and the City may amend the Lease Agreement to substitute or release a portion of the Property upon compliance with all of the conditions set forth in the Lease Agreement. After a substitution or release, the portion of the Property for which the substitution or release has been effected will be released from the leasehold encumbrance of the Lease Agreement. Moreover, the City may issue Additional Bonds secured by Base Rental Payments which are increased above current levels. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS―Substitution or Release of the Property” and “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS—Additional Bonds.” Although the Lease Agreement requires, among other things, that the Property, as constituted after such substitution or release, have an annual fair rental value at least equal to the maximum Base Rental Payments for the Property coming due in the then-current Fiscal Year or in any subsequent Fiscal Year, it does not require that the Property have an annual fair rental value equal to the annual fair rental value of the Property prior to the substitution release of any portion thereof. Thus, a portion of the Property could be replaced with less valuable real property, or could be released altogether. Such a substitution or release could have an adverse impact on the security for the 2021 Bonds, particularly if an event requiring abatement of the Base Rental Payments were to occur subsequent to such substitution or release. The Indenture requires, among other things, that upon the issuance of Additional Bonds, the Lease Agreement will be amended, to the extent necessary, so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount that is sufficient to pay the principal of and interest on such Additional Bonds; provided, however, that no such amendment may be made such that the sum of such Base Rental Payments, including any increase in Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Fiscal Year is in excess of the annual fair rental value of the applicable Property after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2021 BONDS— Additional Bonds” for a full description of the requirements that must be met in order for the City to deliver Additional Bonds. Limitations on Enforceability General. The enforcement of any remedies that are provided for in the Lease Agreement and the Indenture could prove both expensive and time consuming. The rights and remedies provided in the Lease Agreement and the Indenture may be limited by and are subject to: (i) the limitations on legal remedies against cities in the State, including State constitutional limits on expenditures and limitations on the enforcement of judgments against funds that are needed to serve the public welfare and interest; (ii) federal bankruptcy laws, as now or later enacted, as discussed in detail under the subcaption “—Bankruptcy” below; (iii) applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or later in effect; (iv) equity principles which may limit the specific enforcement under State law of certain remedies; (v) the exercise by the United States of America of the powers delegated to it by the federal Constitution; and (vi) the reasonable and necessary exercise, in certain exceptional situations, of the police powers that are 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 2021 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 legal opinions that will be delivered concurrently with the issuance of the 2021 Bonds will be qualified, as to the enforceability of the 2021 Bonds, the Indenture, the Lease Agreement and other related documents, by bankruptcy, insolvency, reorganization, moratorium, arrangement, fraudulent conveyance and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitations on legal remedies against counties in the State. 2.f Packet Pg. 559 60 4827-8234-0833v4/200928-0001 Failure by the City to pay Base Rental Payments or failure to observe and perform any other terms, covenants or conditions of the Lease Agreement for a period of 30 days after written notice of such failure and request that it be remedied has been given to the City by the Trustee, constitute Events of Default under the Indenture and permit the Trustee or the Authority to pursue the remedies that are described in the Lease Agreement and Indenture. Upon an Event of Default, there is no right under any circumstances to accelerate Base Rental Payments or otherwise declare any Base Rental Payment that is not then in default to be immediately due and payable, nor do the Authority or the Trustee have any right to re-enter or re-let the affected Property, except to the limited extent that is described in the Lease Agreement, and only to the extent of the Authority’s leasehold interest under the Ground Lease. Rather, if the City defaults on its obligation to pay Base Rental Payments with respect to such Property, the Trustee must sue to recover Base Rental Payments on an annual basis. Alternatively, the Authority or the Trustee may terminate the Lease Agreement, retake possession of the Property and proceed against the City to recover damages pursuant to the Lease Agreement. Due to the specialized and limited nature of the Property, existing encumbrances on the Property and restrictions on the use of the Property, it is unlikely that 2021 Bond Owners would be able to generate rental income that is sufficient to make all payments of principal of and interest on the 2021 Bonds when due. Moreover, the Trustee is not empowered to sell the fee interest in the Property (which is owned by the City) for the benefit of the Owners of the 2021 Bonds. Any suit for money damages against the City would be subject to limitations on legal remedies against cities in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Bankruptcy. Enforceability of the rights and remedies of the Owners of the 2021 Bonds, and the obligations incurred by the City, may become subject to the provisions of Title 11 of the United States Code (the “Bankruptcy Code”) and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or later in effect, equity principles 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, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against cities in the State. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the Owners of the 2021 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. Under Chapter 9 of the Bankruptcy Code, which governs the bankruptcy proceedings for public agencies such as the City, involuntary petitions are not permitted. If the City were to file a petition under Chapter 9 of the Bankruptcy Code, the Owners of the 2021 Bonds, the Trustee and the Authority could be prohibited from taking any steps to enforce their rights under the Lease Agreement or from taking any steps to collect amounts due from the City under the Lease Agreement. In particular, if the City were to become a debtor under the Bankruptcy Code, the City would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 case. Among the adverse effects of such a bankruptcy might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the City, and which could prevent the Trustee from making payments from funds in its possession; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or secured debt which may have a priority of payment that is superior to that of Owners of the 2021 Bonds; and (iv) the possibility of the adoption of a plan (an “Adjustment Plan”) for the adjustment of the City’s various obligations over the objections of the Trustee or all of the Owners of the 2021 Bonds and without their consent, which Adjustment Plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that such Adjustment Plan is “fair and equitable” and in the best interests of creditors. The Adjustment Plans approved by the Bankruptcy Courts in connection with the bankruptcies of the cities of Vallejo, San Bernardino and Stockton resulted in 2.f Packet Pg. 560 61 4827-8234-0833v4/200928-0001 significant reductions in the amounts payable by the cities under lease revenue obligations that were substantially identical or similar to the 2021 Bonds. The City can provide no assurances about the outcome of the bankruptcy cases of other California municipalities or the nature of any Adjustment Plan if it were to file for bankruptcy. In addition, the City could either reject one or both of the Ground Lease or the Lease Agreement or assume one or both of the Ground Lease or the Lease Agreement despite any provision of such documents that makes the bankruptcy or insolvency of the City an event of default thereunder. If the City rejects the Lease Agreement, the Trustee, on behalf of the Owners of the 2021 Bonds, would have a pre-petition unsecured claim that may be substantially limited in amount, and this claim would be treated in a manner under an Adjustment Plan over the objections of the Trustee or Owners of the 2021 Bonds. Moreover, such rejection would terminate the Lease Agreement and the City’s obligations to make payments thereunder. The City may also be permitted to assign the Ground Lease or the Lease Agreement to a third party, regardless of the terms of the transaction documents. Secondary Market There can be no guarantee that there will be a secondary market for the 2021 Bonds, or, if a secondary market exists, that the 2021 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 in connection with a particular issue is suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances. Such prices could be substantially different from the original purchase price. In addition, the City has entered into a continuing disclosure undertaking in connection with the 2021 Bonds. Any material failure to comply with such undertaking in the future may adversely affect the liquidity of the affected 2021 Bonds and their market price in the secondary market. TAX MATTERS In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the 2021 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the 2021 Bonds is exempt from State of California personal income tax. Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the 2021 Bonds is based upon certain representations of fact and certifications made by the City, the Authority and others and is subject to the condition that the City and the Authority comply with all requirements of the Code that must be satisfied subsequent to the issuance of the 2021 Bonds to assure that interest (and original issue discount) on the 2021 Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the 2021 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the 2021 Bonds. The City and the Authority have covenanted to comply with all such requirements. In the opinion of Bond Counsel, the difference between the issue price of a 2021 Bond (the first price at which a substantial amount of the 2021 Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity of such 2021 Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received 2.f Packet Pg. 561 62 4827-8234-0833v4/200928-0001 by a Beneficial Owner will increase the Beneficial Owner’s basis in the 2021 Bonds. The amount of original issue discount that accrues to the Beneficial Owner of a 2021 Bond is excluded from the gross income of such Beneficial Owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals, and is exempt from State of California personal income tax. The amount by which a 2021 Bond Owner’s original basis for determining loss on sale or exchange in the 2021 Bonds (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the 2021 Bond Owner’s basis in the 2021 Bond (and the amount of tax- exempt interest received with respect to the 2021 Bonds), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a 2021 Bond Owner realizing a taxable gain when a 2021 Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the 2021 Bond to the Owner. Purchasers of the 2021 Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium. The IRS has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the 2021 Bonds will be selected for audit by the IRS. It is also possible that the market value of the 2021 Bonds might be affected as a result of such an audit of the 2021 Bonds (or by an audit of similar municipal obligations). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the 2021 Bonds to the extent that it adversely affects the exclusion from gross income of interest (and original issue discount) on the 2021 Bonds or their market value. SUBSEQUENT TO THE ISSUANCE OF THE 2021 BONDS THERE MIGHT BE FEDERAL, STATE OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR INTERPRETATIONS OF FEDERAL, STATE OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE OR LOCAL TAX TREATMENT OF THE 2021 BONDS INCLUDING THE IMPOSITION OF ADDITIONAL FEDERAL INCOME OR STATE TAXES ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE 2021 BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE 2021 BONDS. NO ASSURANCE CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE 2021 BONDS STATUTORY CHANGES WILL NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE 2021 BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE 2021 BONDS. Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the 2021 Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest (and original issue discount) for federal income tax purposes with respect to any 2021 Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation. Although Bond Counsel has rendered an opinion that interest (and original issue discount) on the 2021 Bonds is excluded from gross income for federal income tax purposes provided that the City continue to comply with certain requirements of the Code, the ownership of the 2021 Bonds and the accrual or receipt of interest (and original issue discount) on the 2021 Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before 2.f Packet Pg. 562 63 4827-8234-0833v4/200928-0001 purchasing any of the 2021 Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the 2021 Bonds. Should interest (and original issue discount) on the 2021 Bonds become includable in gross income for federal income tax purposes, the 2021 Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Indenture. The form of Bond Counsel’s proposed opinion with respect to the 2021 Bonds is set forth in Appendix D. CERTAIN LEGAL MATTERS The validity of the 2021 Bonds and certain other legal matters are subject to the approving opinions of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel and Disclosure Counsel. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix D. Bond Counsel and Disclosure Counsel will receive compensation from the City contingent upon the sale and delivery of the 2021 Bonds. Certain legal matters will be passed upon for the City and the Authority by the City Attorney, for the Underwriter by Jones Hall, A Professional Law Corporation, San Francisco, California, and for the Trustee by its counsel. Furthermore, from time to time Bond Counsel serves as counsel to the Underwriter with respect to transactions other than the issuance of the 2021 Bonds. MUNICIPAL ADVISOR The Authority has retained Fieldman, Rolapp & Associates, Inc., Irvine, California (the “Municipal Advisor”) as municipal advisor in connection with the sale of the 2021 Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained herein. The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities. LITIGATION At the time of issuance of the 2021 Bonds, the Authority and the City will deliver certificates stating that there is no litigation then pending or threatened to restrain or enjoin the issuance of the 2021 Bonds or in any way contesting or affecting the validity of the 2021 Bonds, the Ground Lease or the Lease Agreement, any proceedings of the Authority or the City taken with respect to the delivery or sale of the 2021 Bonds, the pledge or application of any money or security provided for the payment of the 2021 Bonds, the existence or powers of the Authority or the City or the title of any officers of the Authority or the City to their respective positions. UNDERWRITING Raymond James & Associates, Inc. (the “Underwriter”), will purchase the 2021 Bonds from the Authority at an aggregate purchase price of $____ (representing the principal amount of the 2021 Bonds ($_____), plus/less a net original issue premium/discount ($_____) and less an Underwriter’s discount of $____). 2.f Packet Pg. 563 64 4827-8234-0833v4/200928-0001 The 2021 Bonds are offered for sale at the initial prices stated on the inside cover page of this Official Statement, which may be changed from time to time by the Underwriter. The 2021 Bonds may be offered and sold to certain dealers at prices lower than the public offering prices. RATING S&P Global Ratings, a Standard & Poor’s Financial Services LLC business (“S&P”) has assigned the rating of “[__]” to the 2021 Bonds. A rating is not a recommendation to buy, sell or hold securities. Future events, including the impacts of the COVID-19 pandemic that is described under the caption “THE CITY—COVID-19 Outbreak,” could have an adverse impact on the rating of the 2021 Bonds, and there is no assurance that any credit rating that is given to the 2021 Bonds will be maintained for any period of time or that a rating may not be qualified, downgraded, lowered or withdrawn entirely by S&P if, in the judgment of S&P, circumstances so warrant, nor can there be any assurance that the criteria required to achieve the rating on the 2021 Bonds will not change during the period that the 2021 Bonds remain outstanding. Any qualification, downward revision, lowering or withdrawal of the rating on the 2021 Bonds may have an adverse effect on the market price of the 2021 Bonds. Such rating reflects only the current views of S&P (which could change at any time), and an explanation of the significance of such rating may be obtained from S&P. Generally, rating agencies base their ratings on information and materials furnished to them (which may include information and material from the City that is not included in this Official Statement) and on investigations, studies and assumptions by the rating agencies. The City has covenanted in its continuing disclosure undertakings to file notices of any rating changes on the 2021 Bonds with EMMA. See the caption “CONTINUING DISCLOSURE” and Appendix E. Notwithstanding such covenant, information relating to rating changes on the 2021 Bonds may be publicly available from S&P prior to such information being provided to the City and prior to the date by which the City is obligated to file a notice of rating change. Purchasers of the 2021 Bonds are directed to S&P and its websites and official media outlets for the most current ratings with respect to the 2021 Bonds after the issuance of the 2021 Bonds. CONTINUING DISCLOSURE The City has agreed in a continuing disclosure undertaking for the 2021 Bonds: (1) to provide certain financial information and operating data (each, an “Annual Report”) relating to the City by not later than April 1 after the end of the City’s Fiscal Year; and (2) to provide notices of the occurrence of certain enumerated events. The Annual Reports will be filed by the City with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, which is maintained on the Internet at http://emma.msrb.org/ (“EMMA”). The notices of enumerated events will also be filed by the City with EMMA. The specific nature of the information to be contained in the Annual Reports and the notices of enumerated events is set forth in the continuing disclosure undertakings of the City. The form of the continuing disclosure undertaking for the 2021 Bonds is set forth in Appendix E. [DISCLOSURE RE PAST COMPLIANCE TO COME]. 2.f Packet Pg. 564 65 4827-8234-0833v4/200928-0001 MISCELLANEOUS The City has approved and authorized the preparation, execution and distribution of this Official Statement. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such, and are not representations of fact. This Official Statement is not to be construed as an agreement or contract among any of the City, the Authority and the purchasers or holders of any 2021 Bonds. CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Executive Director CITY OF DIAMOND BAR By: City Manager 2.f Packet Pg. 565 A-1 4827-8234-0833v4/200928-0001 APPENDIX A DEMOGRAPHIC AND ECONOMIC INFORMATION The following information is presented as general background data. The 2021 Bonds are payable solely from moneys of the City as described in the Official Statement. The taxing power of the City, the County, the State of California or any political subdivision thereof is not pledged to the payment of the 2021 Bonds. The City also notes that the below information is the latest available but does not in any instance reflect the impact of the COVID-19 pandemic. See the Official Statement under the caption “THE CITY— COVID-19 Outbreak.” Accordingly, the historical information below does not necessarily reflect present economic conditions and future information could be significantly different from the historical information below. Introduction City of Diamond Bar. The City is located in the southeastern portion of the County, approximately 30 miles east of the City of Los Angeles, at the junction of State Routes 57 and 60. The City was incorporated in 1989 under the general laws of the State and has an area of approximately 15 square miles. The population of the City is estimated to be approximately 57,177. The City operates under a Council/Manager form of government. Councilmembers are elected at large for four-year alternating terms and the City Council, in turn, selects one of the City Council Members to serve as Mayor for one year. The City Council selects a City Manager to administer the affairs of the City. The City Manager is responsible for implementing the policies, ordinances and directives of the City Council and for overseeing the daily operations of the City. The City provides a wide range of municipal services, including parks and recreation, community development neighborhood improvement and street maintenance. The City also contracts for many public services, including water service from the Walnut Valley Water District, police services from the Los Angeles County Sheriff, library services from the County, highway and street maintenance, landscape maintenance, building and safety inspection and other services. Fire services are provided by the Los Angeles County Fire Department and funded from property taxes levied by the County. The city is named for the “diamond over a bar” branding iron registered in 1918 by ranch owner Frederick E. Lewis. Los Angeles County. The County was established by an act of the State Legislature on February 18, 1850 as one of California’s original 27 counties. Located in the southern portion of the State, the County covers 4,083 square miles. With a population of over 10 million, its population is the largest of any county in the nation. The County’s economy is larger than that of 43 states and all but 20 countries. The County serves as the central trade district for the western United States and the gateway to the Asian economies, as it has evolved into a leader in international commerce and investments. Population The table below summarizes population of the City, the County, and the State of California for the last five calendar years. 2.f Packet Pg. 566 A-2 4827-8234-0833v4/200928-0001 CITY OF DIAMOND BAR, LOS ANGELES COUNTY AND CALIFORNIA Population Year City of Diamond Bar Los Angeles County State of California 2016 57,336 10,185,196 39,131,307 2017 57,414 10,193,753 39,398,702 2018 57,488 10,209,676 39,586,646 2019 57,308 10,184,378 39,695,376 2020 57,177 10,172,951 39,782,870 Source: California Department of Finance, E-4 Population Estimate for Cities, Counties, and the State, 2011-20, with 2010 Census Benchmark. Employment The following table summarizes historical employment and unemployment for the County, the State of California and the United States for the last five calendar years. LOS ANGELES COUNTY, CALIFORNIA AND UNITED STATES Civilian Labor Force, Employment, and Unemployment (Annual Averages) Year Area Labor Force Employment Unemployment Unemployment Rate(1) 2016 Los Angeles County 5,018,900 4,751,200 267,700 5.3 California 19,012,000 17,965,400 1,046,600 5.5 United States 159,187,000 151,436,000 7,751,000 4.9 2017 Los Angeles County 5,088,900 4,843,700 245,200 4.8 California 19,173,800 18,246,800 927,000 4.8 United States 160,320,000 153,337,000 6,982,000 4.4 2018 Los Angeles County 5,094,300 4,857,300 237,000 4.7 California 19,263,900 18,442,400 821,500 4.3 United States 162,075,000 155,761,000 6,314,000 3.9 2019 Los Angeles County 5,122,800 4,888,600 234,300 4.6 California 19,353,700 18,550,500 803,200 4.2 United States 163,539,000 157,538,000 6,001,000 3.7 2020 Los Angeles County 4,921,500 4,291,700 629,800 12.8 California 18,821,200 16,913,100 1,908,100 10.1 United States 160,742,000 147,795,000 12,947,000 8.1 (1) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures available in this table. Source: California Employment Development Department, Monthly Labor Force Data for Counties, Annual Average 2010-20, March 2020 Benchmark, and US Department of Labor. 2.f Packet Pg. 567 A-3 4827-8234-0833v4/200928-0001 Major Industries in the County The table below sets forth the ten largest industries by employment in Los Angeles County in 2020. LOS ANGELES COUNTY Major Industries – 2020 Industry Number of Employees % of Total Educational & Health Services 799,800 19.47% Trade, Transportation and Utilities 777,000 18.92 Professional & Business Services 590,100 14.37 Government 579,300 14.10 Leisure & Hospitality 378,600 9.22 Manufacturing 314,700 7.66 Financial Activities 218,600 5.32 Information 178,400 4.34 Construction 146,100 3.56 Other Services 118,900 2.90 Total Top 10 Industries 4,101,500 99.86 All Other Industries 5,700 0.14 Total All Industries 4,107,200 100.00% Source: Los Angeles County Fiscal Year 2019-20 audited financial statements. Construction Activity The following tables reflect building permit valuations for the City and the County for the five most recent calendar years for which information is available. CITY OF DIAMOND BAR Building Permits and Valuation (Dollars in Thousands) 2015 2016 2017 2018 2019 Permit Valuation: New Single-family $ 31,894 $ 7,195 $ 29,252 $ 10,276 $ 175 New Multi-family 2,216 -- -- -- -- Res. Alterations/Additions 5,495 5,599 2,390 2,019 5,024 Total Residential 39,605 12,794 31,642 12,295 5,199 Total Nonresidential 4,730 9,173 2,247 5,287 14,847 Total All Building $ 44,335 $ 21,967 $ 33,889 $ 17,582 $ 20,046 New Dwelling Units: Single Family 115 13 72 27 3 Multiple Family 12 -- -- - - Total 127 13 -- 27 3 Note: Columns may not sum to totals due to independent rounding. Source: Construction Industry Research Board: “Building Permit Summary.” 2.f Packet Pg. 568 A-4 4827-8234-0833v4/200928-0001 LOS ANGELES COUNTY Building Permits and Valuation (Dollars in Thousands) 2015 2016 2017 2018 2019 Permit Valuation: New Single-family $ 1,897,829 $ 2,162,018 $ 2,352,614 $ 2,277,101 $ 1,967,219 New Multi-family 2,843,749 2,774,294 3,257,833 3,222,530 2,961,257 Res. Alterations/Additions 1,641,457 1,639,294 1,757,904 1,941,369 1,625,839 Total Residential 6,383,036 6,575,607 7,368,352 7,441,001 6,554,315 Total Nonresidential 5,645,372 5,287,623 6,037,502 6,694,097 6,589,602 Total All Building $ 12,028,408 $ 11,863,230 $ 13,405,855 $ 14,135,098 $13,143,917 New Dwelling Units: Single Family 4,487 4,780 5,456 6,070 5,738 Multiple Family 18,405 15,589 17,023 17,152 15,884 Total 22,892 20,369 23,479 23,222 21,622 Note: Columns may not sum to totals due to independent rounding. Source: Construction Industry Research Board: “Building Permit Summary.” Median Household Income The following table summarizes the median household income for the City, the County, the State of California and the nation for the five most recent calendar years for which information is available. CITY OF DIAMOND BAR, LOS ANGELES COUNTY, STATE OF CALIFORNIA AND UNITED STATES Median Household Income 2015 2016 2017 2018 2019 Diamond Bar(1) $85,505 $89,409 $94,630 $98,660 $101,862 Los Angeles County(2) 48,950 50,236 54,720 53,831 60,174 California(2) 53,589 55,681 59,646 62,637 65,870 United States(2) 46,738 48,043 50,735 52,841 55,303 (1) Reflects median household income in dollars without regard to cost of living. Source: Fiscal Year 20220 audited financial statements of the City of Diamond Bar. (2) Reflects median household effective buying income and includes adjustments for cost of living. Source: Nielsen, Inc. 2.f Packet Pg. 569 B-1 4827-8234-0833v4/200928-0001 APPENDIX B SUMMARY OF PRINCIPAL LEGAL DOCUMENTS The following is a summary of certain definitions and provisions of the Lease Agreement and the Indenture which are not described elsewhere in the Official Statement. This summary does not purport to be comprehensive and reference should be made to the Lease Agreement and the Indenture for a full and complete statement of their provisions. LEASE AGREEMENT [TO COME FROM BOND COUNSEL] INDENTURE [TO COME FROM BOND COUNSEL] 2.f Packet Pg. 570 C-1 4827-8234-0833v4/200928-0001 APPENDIX C AUDITED FINANCIAL STATEMENTS 2.f Packet Pg. 571 D-1 4827-8234-0833v4/200928-0001 APPENDIX D FORM OF BOND COUNSEL OPINION Upon the issuance of the 2021 Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to render its final approving opinion in substantially the following form: June __, 2021 City of Diamond Bar Public Financing Authority c/o City of Diamond Bar 200 Lincoln Avenue Diamond Bar, California 93901 Re: $_______ City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A Members of the Board of Directors: We have acted as Bond Counsel to the City of Diamond Bar Public Financing Authority (the “Authority”) in connection with the issuance by the Authority of its Lease Revenue Refunding Bonds, 2021 Series A in the aggregate principal amount of $_____ (the “2021 Bonds”). In connection therewith, we have reviewed: (i) the Indenture, dated as of June 1, 2021 (the “Indenture”), by and among U.S. Bank National Association, as trustee (the “Trustee”), the Authority and the City of Diamond Bar (the “City”); (ii) the “Lease Agreement, dated as of June 1, 2021 (the “Lease Agreement”), by and between the City and the Authority; (iii) the Ground Lease, dated as of June 1, 2021 (the “Ground Lease”), by and between the City and the Authority; (iv) the Assignment Agreement, dated as of June 1, 2021 (the “Assignment Agreement”), by and between the Authority and the Trustee; (v) the Tax Certificate of the Authority and the City, dated as of the date hereof (the “Tax Certificate”); and (vi) opinions of counsel to the Authority, the City and the Trustee, certificates of the Authority, the City and the Trustee and others and such other documents, opinions and matters to the extent that we deemed necessary to render the opinions set forth herein. Capitalized terms that are not otherwise defined herein have the meanings ascribed thereto in the Indenture. Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that: 1. The obligation of the City to pay Base Rental Payments in accordance with the terms of the Lease Agreement is a valid and binding obligation payable from the funds of the City lawfully available therefor. The obligation of the City to make Base Rental Payments under the Lease Agreement does not constitute a debt of the City, the State of California (the “State”) or any political subdivision thereof within the meaning of any statutory or constitutional debt limitation or restriction and does not constitute a pledge of the faith and credit or taxing power of the City, the State or any political subdivision thereof. 2. The Lease Agreement and the Indenture have been duly authorized, executed and delivered by the City and the Authority and constitute valid and legally binding agreements of the City and the Authority enforceable against the City and the Authority in accordance with their terms, except that we express no opinion as to any provisions in the Lease Agreement or the Indenture with respect to indemnification, penalty, contribution, choice of law, choice of forum or waiver. 3. Under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest 2.f Packet Pg. 572 D-2 4827-8234-0833v4/200928-0001 (and original issue discount) on the 2021 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. 4. Interest (and original issue discount) on the 2021 Bonds is exempt from personal income taxes imposed in the State. 5. The difference between the issue price of a 2021 Bond (the first price at which a substantial amount of the 2021 Bonds of the same series and maturity is to be sold to the public) and the stated redemption price at maturity with respect to such 2021 Bonds constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a 2021 Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by the 2021 Bond Owner will increase the 2021 Bond Owner’s basis in the 2021 Bond. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the owner of the 2021 Bond is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State personal income tax. 6. The amount by which a 2021 Bond Owner’s original basis for determining loss on sale or exchange in a 2021 Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the 2021 Bond Owner’s basis in the 2021 Bonds (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a 2021 Bond Owner realizing a taxable gain when a 2021 Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the 2021 Bond to the Owner. Purchasers of the 2021 Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium. The opinions that are expressed herein as to the exclusion from gross income of interest (and original issue discount) on the 2021 Bonds are based upon certain representations of fact and certifications made by the City and the Authority and are subject to the condition that the City and the Authority comply with all requirements of the Code that must be satisfied subsequent to the issuance of the 2021 Bonds to assure that such interest (and original issue discount) on the 2021 Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the 2021 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the 2021 Bonds. The City and the Authority have covenanted to comply with all such requirements. The opinions that are expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Our engagement with respect to the 2021 Bonds terminates on the date of their issuance. The Indenture, the Lease Agreement and the Tax Certificate permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. No opinion is expressed herein as to the effect on the exclusion from gross income of interest (and original issue discount) on the 2021 Bonds for federal income tax purposes if any such action is taken or omitted based upon the opinion or advice of counsel other than ourselves. Other than as expressly stated herein, we express no other opinion regarding tax consequences with respect to the 2021 Bonds. We have not made or undertaken to make an investigation of the state of title to any of the real property described in the Lease Agreement, the Ground Lease and the Assignment Agreement or of the accuracy or sufficiency of the description of such property contained therein, and we express no opinion with respect to such matters. 2.f Packet Pg. 573 D-3 4827-8234-0833v4/200928-0001 Our opinion is limited to matters governed by the laws of the State and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction. The opinions that are expressed herein are based upon our analysis and interpretation of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the rights and obligations under the Indenture, the Lease Agreement and the 2021 Bonds are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State. We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the 2021 Bonds and expressly disclaim any duty to advise the Owners of the 2021 Bonds with respect to matters contained in the Official Statement. Respectfully submitted, 2.f Packet Pg. 574 E-1 4827-8234-0833v4/200928-0001 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE Upon issuance of the 2021 Bonds, the City proposes to enter into a Continuing Disclosure Certificate in substantially the following form: This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Diamond Bar (the “City”) in connection with the issuance by the City of Diamond Bar Public Financing Authority (the “Authority”) of its $_____ Lease Revenue Refunding Bonds, 2021 Series A (the “Bonds”). The Bonds are being issued pursuant to an Indenture, dated as of June 1, 2021 (the “Indenture”), by and among the City, the Authority and U.S. Bank National Association, as trustee (the “Trustee”). The City covenants and agrees as follows: 1. Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule. 2. Definitions. In addition to the definitions that are set forth in the Indenture, which apply to any capitalized term that is used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: Annual Report. The term “Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. Beneficial Owner. The term “Beneficial Owner” means any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for federal income tax purposes. EMMA. The term “EMMA” means the Municipa l Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/. Financial Obligation. The term “Financial Obligation” means a: (A) debt obligation; (B) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (C) guarantee of (A) or (B). The term “Financial Obligation” does not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule. Fiscal Year. The term “Fiscal Year” means the one-year period ending on the last day of June of each year. Holder. The term “Holder” means a registered owner of the Bonds. Listed Events. The term “Listed Events” means any of the events listed in Sections 5(a) and (b) of this Disclosure Certificate. Official Statement. The term “Official Statement” means the Official Statement dated May __, 2021 relating to the Bonds. Participating Underwriter. The term “Participating Underwriter” means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. Rule. The term “Rule” means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. 2.f Packet Pg. 575 E-2 4827-8234-0833v4/200928-0001 3. Provision of Annual Reports. (a) The City shall provide not later than each April 1 following the end of its Fiscal Year (commencing April 1, 2022 with the Fiscal Year 2021 Annual Report) to EMMA an Annual Report relating to the immediately preceding Fiscal Year which is consistent with the requirements of Section 4 of this Disclosure Certificate, which Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate. (b) If the City is unable to provide to EMMA an Annual Report by the date required in subsection (a), the City shall send in a timely manner to EMMA a notice in the manner prescribed by the Municipal Securities Rulemaking Board. 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements of the City for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If 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 Re port 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 come availabl e. (b) To the extent not included in the audited financial statements provided pursuant to the foregoing Section 4(a), the Annual Report shall contain the following information as of the end of the prior Fiscal Year: (i) The principal amount of the Bonds outstanding; (ii) An update of the information in Tables 1, 2, 3 and 4 under the caption “CITY FINANCIAL INFORMATION” in the Official Statement. The items described above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to EMMA; provided, that if any document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board; and provided further, that the City shall clearly identify each such document so included by reference. 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) Business Days after the event: 1. principal and interest payment delinquencies; 2. unscheduled draws on debt service reserves reflecting financial difficulties; 3. unscheduled draws on credit enhancements reflecting financial difficulties; 4. substitution of credit or liquidity providers, or their failure to perform; 5. adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability or Notices of Proposed Issue (IRS Form 5701 TEB); 6. tender offers; 2.f Packet Pg. 576 E-3 4827-8234-0833v4/200928-0001 7. defeasances; 8. ratings changes; 9. bankruptcy, insolvency, receivership or similar proceedings. Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law i n which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in pos session but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person; and 10. default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties. (b) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material , in a timely manner not more than ten (10) Business Days after occurrence: 1. unless described in Section 5(a)(5), other notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other events affecting the tax status of the Bonds; 2. modifications to the rights of Bond holders; 3. Bond calls; 4. release, substitution or sale of property securing repayment of the Bonds; 5. non-payment related defaults; 6. the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; 7. appointment of a successor or additional trustee or the change of the name of a trustee; and 8. incurrence of a Financial Obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect security holders, if material. (c) If the City determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws, the City shall file a notice of such occurrence with EMMA in a timely manner not more than ten (10) Business Days after the event. 6. [Reserved]. 7. Termination of Obligation. The City’s obligations under this Disclosure Certific ate with respect to the Bonds shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds . If any 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). 2.f Packet Pg. 577 E-4 4827-8234-0833v4/200928-0001 8. 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 waive d, provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the Rule. 9. 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 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 notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall not thereby have any obligation under this Disclosure Certificate to update such information or include it in any future notice of occurrence of a Listed Event. 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate or any Holders 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 or the Lease Agreement, 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 actio n to compel performance. No Holder or Beneficial Owner of the Bonds may institute such action, suit or proceeding to compel performance unless they shall have first delivered to the City satisfactory written evidence of their status as such, and a written notice of and request to cure such failure, and the City shall have refused to comply therewith within a reasonable time. 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, 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. Dated: June __, 2021 CITY OF DIAMOND BAR By: City Manager Its: City Manager 2.f Packet Pg. 578 F-1 4827-8234-0833v4/200928-0001 APPENDIX F BOOK-ENTRY ONLY SYSTEM The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the City and the Authority believe to be reliable, but the City and the Authority take no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the 2021 Bonds, payment of principal, premium, if any, accreted value and interest on the 2021 Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the 2021 Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. 1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2021 Bonds (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 2021 Bond will be issued for each maturity of the Securities in the aggregate principal amount of such maturity, 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 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 is rated “AA+” by Standard & Poor’s. 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. 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. 2.f Packet Pg. 579 F-2 4827-8234-0833v4/200928-0001 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 will be sent to DTC. If less than all of the Securities within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity 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 the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Principal, redemption price and interest 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 the Authority or the Paying 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, the Paying Agent, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Paying 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. If applicable, a Beneficial Owner will give notice to elect to have its Securities purchased or tendered, through its Participant, to tender/remarketing agent, and will effect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to tender/remarketing 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 tender/remarketing agent’s DTC account. 2.f Packet Pg. 580 F-3 4827-8234-0833v4/200928-0001 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the Authority or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, 2021 Bonds are required to be printed and delivered. 11. The Authority may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, 2021 Bonds will be printed and delivered to DTC. 2.f Packet Pg. 581 4852-7119-9457/200928-0001 RECORDING REQUESTED BY: City of Diamond Bar Public Financing Authority AND WHEN RECORDED RETURN TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Cyrus Torabi, Esq. [Space above for Recorder’s use.] ASSIGNMENT AGREEMENT 2.g Packet Pg. 582 4852-7119-9457/200928-0001 RECORDING REQUESTED BY: City of Diamond Bar Financing Authority AND WHEN RECORDED RETURN TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Cyrus Torabi, Esq. THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11921 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE BECAUSE THE ASSIGNOR IS A GOVERNMENTAL AGENCY. LEASE TERM LESS THAN 35 YEARS. ASSIGNMENT AGREEMENT by and between CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of June 1, 2021 Relating to $_________ CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2021 SERIES A 2.g Packet Pg. 583 1 4852-7119-9457/200928-0001 ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT (this “Assignment Agreement”) is executed and entered into as of June 1, 2021, by and between the CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY, a joint exercise of powers entity that is organized and existing under and by virtue of the laws of the State of California (the “Authority”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association that is organized and existing under the laws of the United States, as Trustee (the “Trustee”). RECITALS A. The Authority previously issued its Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (the “2002 Bonds”), which are currently outstanding in the aggregate principal amount of $7,830,000, in order to finance certain capital improvements (the “2002 Project”) of the City of Diamond Bar (the “City”). B. The Authority and the City have determined that it would be in the best interests of the City and residents of the City to authorize the preparation, sale and delivery by the Authority of the “City of Diamond Bar Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A” (the “Bonds”) for the purposes of refunding the 2002 Bonds and refinancing the 2002 Project, which Bonds will be payable from certain base rental payments (the “Base Rental Payments”) to be made by the City under the below-defined Lease Agreement. C. In connection with the foregoing, the City will lease certain real property of the City and the improvements located thereon, consisting of the Community/Senior Center at Summitridge Park (1600 Grand Avenue, Diamond Bar, California 91765) (collectively, the “Property”), to the Authority pursuant to a Ground Lease, dated as of the date hereof (the “Ground Lease”), by and between the City and the Authority, and the City will sublease the Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof (the “Lease Agreement”), by and between the City and the Authority. D. The Property is more particularly described in Exhibit A hereto. E. The City and the Authority have determined that it would be in the best interests of the City and the Authority to provide for the issuance of the Bonds pursuant to an Indenture, dated as of the date hereof (the “Indenture”), by and among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”). F. The Authority desires to assign to the Trustee without recourse all rights to receive the Base Rental Payments pursuant to this Assignment Agreement. G. All acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Assignment Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Assignment Agreement; In consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties hereto do hereby agree as follows: 2.g Packet Pg. 584 2 4852-7119-9457/200928-0001 Section 1. Assignment. The Authority, for good and valuable consideration, the receipt of which is hereby acknowledged, does hereby sell, assign and transfer to the Trustee, irrevocably and absolutely, without recourse, for the benefit of the owners of the Bonds, all of its right, title and interest in and to the Ground Lease and the Lease Agreement including, without limitation, its right to receive the Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement; provided, however, that the Authority shall retain its obligations under the Lease Agreement and Ground Lease, its rights to indemnification, its rights to give approvals and consents under the Lease Agreement and the Ground Lease and its rights to payment or reimbursement of its reasonable costs and expenses under the Lease Agreement. Section 2. Acceptance. The Trustee hereby accepts the foregoing assignment, subject to the terms and provisions of the Indenture, and all such Base Rental Payments shall be applied and the rights so assigned shall be exercised by the Trustee as provided in the Lease Agreement and the Indenture. Section 3. Conditions. This Assignment Agreement shall impose no obligations upon the Trustee beyond those expressly provided in the Indenture. The Trustee shall have the same rights, protections, immunities and indemnities hereunder as afforded to it under the Indenture. Section 4. Further Assurances. The Authority shall make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Assignment Agreement, and for the better assuring and confirming to the Trustee, for the benefit of the owners of the Bonds, the rights intended to be conveyed pursuant hereto. Section 5. Governing Law. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY THE PROVISIONS HEREOF AND BY THE LAWS OF THE STATE OF CALIFORNIA AS THE SAME FROM TIME TO TIME EXIST. Section 6. Execution. This Assignment Agreement 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 Assignment Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 2.g Packet Pg. 585 S-1 4852-7119-9457/200928-0001 IN WITNESS WHEREOF, the Authority and the Trustee have caused this Assignment Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first above-written. CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Executive Director ATTEST: Secretary [SIGNATURES CONTINUED ON NEXT PAGE.] 2.g Packet Pg. 586 S-2 4852-7119-9457/200928-0001 [SIGNATURE PAGE CONTINUED.] U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 2.g Packet Pg. 587 4852-7119-9457/200928-0001 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 LOS ANGELES On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC 2.g Packet Pg. 588 4852-7119-9457/200928-0001 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 LOS ANGELES On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC 2.g Packet Pg. 589 A-1 4852-7119-9457/200928-0001 EXHIBIT A DESCRIPTION OF THE PROPERTY PARCEL A: IN THE CITY OF DIAMOND BAR, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, BEING THAT ADJUSTED PARCEL 1 OF THAT CERTAIN LOT LINE ADJUSTMENT NO. 02- 001, RECORDED OCTOBER 23, 2003 AS INSTRUMENT NO. 03-3180260 AND RE- RECORDED MARCH 09, 2004 AS INSTRUMENT NO. 04-0566670, BOTH OF OFFICIAL RECORDS. BEING A PORTION OF LOTS 3 AND 4 OF TRACT NO. 31479, RECORDED IN BOOK 998, PAGES 7 THROUGH 17 OF MAPS, RECORDS OF SAID COUNTY AND SAID STATE, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE NORTHERLY RIGHT-OF-WAY OF GRAND AVENUE, SAID POINT ALSO BEING THE SOUTHWESTERLY CORNER OF SAID LOT 4; 1. THENCE SOUTH 76° 57' 27" EAST, A DISTANCE OF 394.04 FEET; 2. THENCE NORTH 14° 53' 14" EAST, A DISTANCE OF 245.22 FEET; 3. THENCE NORTH 18° 21' 02" WEST, A DISTANCE OF 178.70 FEET; 4. THENCE NORTH 9° 23' 07" EAST, A DISTANCE OF 156.42 FEET; 5. THENCE NORTH 37° 50' 26" WEST, A DISTANCE OF 115.92 FEET; 6. THENCE NORTH 13° 57' 31" EAST, A DISTANCE OF 56.83 FEET; 7. THENCE NORTH 28° 21' 05" WEST, A DISTANCE OF 36.23 FEET; 8. THENCE NORTH 23° 50' 39" WEST, A DISTANCE OF 68.67 FEET; 9. THENCE NORTH 64° 30' 56" WEST, A DISTANCE OF 147.67 FEET; 10. THENCE NORTH 26° 41' 29" WEST, A DISTANCE OF 325.87 FEET; 11. THENCE NORTH 19° 09' 09" EAST, A DISTANCE OF 42.03 FEET; 12. THENCE NORTH 86° 38' 16" EAST, A DISTANCE OF 49.43 FEET; 13. THENCE SOUTH 72° 43' 51" EAST, A DISTANCE OF 32.64 FEET; 14. THENCE SOUTH 50° 34' 22" EAST, A DISTANCE OF 39.12 FEET; 15. THENCE NORTH 78° 32' 58" EAST, A DISTANCE OF 28.47 FEET; 16. THENCE NORTH 47° 26' 38" EAST, A DISTANCE OF 19.24 FEET; 17. THENCE NORTH 4° 33' 42" EAST, A DISTANCE OF 22.12 FEET; 18. THENCE NORTH 86° 38' 16" EAST, A DISTANCE OF 39.10 FEET; 19. THENCE SOUTH 75° 25' 56" EAST, A DISTANCE OF 34.13 FEET; 20. THENCESOUTH 59° 09' 05" EAST, A DISTANCE OF 37.15 FEET; 21. THENCE SOUTH 38° 38' 59" EAST, A DISTANCE OF 20.60 FEET; 22. THENCE SOUTH 17° 17' 41" WEST, A DISTANCE OF 59.02 FEET; 23. THENCE SOUTH 68° 07' 01" EAST, A DISTANCE OF 86.71 FEET; 24. THENCE NORTH 20° 39' 47" EAST, A DISTANCE OF 18.27 FEET; 25. THENCE NORTH 57° 15' 30" EAST, A DISTANCE OF 25.91 FEET; 26. THENCE SOUTH 70° 02' 32" EAST, A DISTANCE OF 52.31 FEET; 27. THENCE SOUTH 87° 07' 40" EAST, A DISTANCE OF 154.39 FEET; 28. THENCE SOUTH 41° 09' 40" EAST, A DISTANCE OF 80.72 FEET; 29. THENCE SOUTH 72° 03' 30" EAST, A DISTANCE OF 99.38 FEET; 30. THENCE NORTH 18° 09' 01" EAST, A DISTANCE OF 53.93 FEET; 31. THENCE NORTH 20° 53' 53" EAST, A DISTANCE OF 38.44 FEET; 32. THENCE NORTH 1° 09' 11" WEST, A DISTANCE OF 48.07 FEET; 2.g Packet Pg. 590 A-2 4852-7119-9457/200928-0001 33. THENCE NORTH 67° 49' 25" EAST, A DISTANCE OF 58.40 FEET; 34. THENCE NORTH 74° 34' 34" EAST, A DISTANCE OF 48.18 FEET; 35. THENCE NORTH 62° 17' 56" EAST, A DISTANCE OF 24.67 FEET; 36. THENCE NORTH 66° 41' 43" EAST, A DISTANCE OF 24.75 FEET; 37. THENCE NORTH 49° 03' 44" EAST, A DISTANCE OF 19.88 FEET; 38. THENCE NORTH 9° 28' 28" EAST, A DISTANCE OF 13.81 FEET; 39. THENCE NORTH 37° 31' 39" EAST, A DISTANCE OF 48.90 FEET; 40. THENCE NORTH 58° 12' 53" EAST, A DISTANCE OF 79.91 FEET; 41. THENCE NORTH 33° 31' 11" WEST, A DISTANCE OF 18.79 FEET; 42. THENCE NORTH 52° 49' 59" EAST, A DISTANCE OF 41.11 FEET; 43. THENCE NORTH 71° 52' 42" EAST, A DISTANCE OF 66.51 FEET 44. THENCE NORTH 77° 00' 19" EAST, A DISTANCE OF 38.93 FEET; 45. THENCE NORTH 45° 48' 25" EAST, A DISTANCE OF 150.63 FEET; 46. THENCE NORTH 70° 39' 20" WEST, A DISTANCE OF 73.13 FEET; 47. THENCE NORTH 5° 43' 20" WEST, A DISTANCE OF 100.28 FEET; 48. THENCE NORTH 56° 58' 00" EAST, A DISTANCE OF 119.27 FEET; 49. THENCE NORTH 11° 05' 40" WEST, A DISTANCE OF 262.39 FEET; 50. THENCE NORTH 25° 02' 30" EAST, A DISTANCE OF 277.59 FEET; 51. THENCE SOUTH 64° 45' 30" EAST, A DISTANCE OF 309.56 FEET; 52. THENCE NORTH 7° 00' 30" EAST, A DISTANCE OF 299.24 FEET; 53. THENCE NORTH 13° 14' 00" EAST, A DISTANCE OF 286.10 FEET; 54. THENCE SOUTH 84° 11' 50" EAST, A DISTANCE OF 123.63 FEET; 55. THENCE NORTH 70° 46' 10" EAST, A DISTANCE OF 45.54 FEET; 56. THENCE NORTH 24° 00' 31" EAST, A DISTANCE OF 196.88 FEET; 57. THENCE SOUTH 87° 14' 22" WEST, A DISTANCE OF 128.32 FEET; 58. THENCE NORTH 84° 46' 41" WEST, A DISTANCE OF 283.70 FEET; 59. THENCE NORTH 76° 50' 24" WEST, A DISTANCE OF 605.52 FEET; 60. THENCE NORTH 76° 55' 09" WEST, A DISTANCE OF 699.02 FEET; 61. THENCE NORTH 83° 05' 17" WEST, A DISTANCE OF 622.72 FEET; 62. THENCE NORTH 83° 11' 50" WEST, A DISTANCE OF 656.41 FEET; 63. THENCE SOUTH 74° 55' 05" EAST, A DISTANCE OF 39.24 FEET; 64. THENCE SOUTH 22° 06' 13" WEST, A DISTANCE OF 19.69 FEET; 65. THENCE NORTH 83° 13' 36" WEST, A DISTANCE OF 22.65 FEET; 66. THENCE SOUTH 16° 28' 56" EAST, A DISTANCE OF 171.62 FEET; 67. THENCE SOUTH 8° 35' 01" EAST, A DISTANCE OF 53.60 FEET; 68. THENCE SOUTH 80° 03' 36" EAST, A DISTANCE OF 8.45 FEET; 69. THENCE SOUTH 9° 56' 23" WEST, A DISTANCE OF 139.69 FEET; 70. THENCE SOUTH 25° 26' 54" WEST, A DISTANCE OF 172.70 FEET; 71. THENCE SOUTH 14° 55' 58" WEST, A DISTANCE OF 27.70 FEET 72. THENCE SOUTH 5° 00' 00" WEST, A DISTANCE OF 50.00 FEET; 73. THENCE SOUTH 19° 00' 00" WEST, A DISTANCE OF 102.50 FEET; 74. THENCE SOUTH 67° 36' 32" WEST, A DISTANCE OF 221.86 FEET; 75. THENCE SOUTH 46° 31' 54" EAST, A DISTANCE OF 264.55 FEET; 76. THENCE SOUTH 10° 03' 28" EAST, A DISTANCE OF 80.00 FEET; 77. THENCE SOUTH 9° 56' 23" WEST, A DISTANCE OF 255.00 FEET; 78. THENCE SOUTH 59° 50' 20" WEST, A DISTANCE OF 129.48 FEET; 79. THENCE SOUTH 21° 35' 43" WEST, A DISTANCE OF 258.12 FEET; 80. THENCE SOUTH 23° 44' 58" EAST, A DISTANCE OF 54.63 FEET; 81. THENCE SOUTH 5° 57' 52" EAST, A DISTANCE OF 67.36 FEET; 2.g Packet Pg. 591 A-3 4852-7119-9457/200928-0001 82. THENCE SOUTH 26° 47' 29" EAST, A DISTANCE OF 113.15 FEET; 83. THENCE SOUTH 72° 09' 54" EAST, A DISTANCE OF 120.81 FEET; 84. THENCE SOUTH 87° 01' 54" EAST, A DISTANCE OF 135.18 FEET; 85. THENCE SOUTH 52° 07' 30" EAST, A DISTANCE OF 57.01 FEET; 86. THENCE SOUTH 86° 33' 59" EAST, A DISTANCE OF 50.09 FEET; 87. THENCE SOUTH 20° 18' 08" EAST, A DISTANCE OF 106.63 FEET; 88. THENCE SOUTH 32° 56' 57" EAST, A DISTANCE OF 64.35 FEET; 89. THENCE SOUTH 74° 39' 25" EAST, A DISTANCE OF 116.42 FEET; 90. THENCE SOUTH 44° 39' 25" EAST, A DISTANCE OF 1117.89 FEET; 91. THENCE SOUTH 24° 04' 29" WEST, A DISTANCE OF 299.68 FEET TO THE POINT OF BEGINNING. EXCEPT THEREFROM ALL OIL, GAS AND OTHER HYDROCARBONS AND MINERALS NOW OR AT ANY TIME HEREAFTER SITUATED THEREIN AND THEREUNDER, TOGETHER WITH THE EXCLUSIVE RIGHT TO DRILL FOR, PRODUCE, EXTRACT, TAKE AND MINE THEREFROM SUCH OIL, GAS AND OTHER HYDROCARBONS AND MINERAL AND TO STORE THE SAME UPON THE SURFACE OF SAID LAND, OR BELOW THE SURFACE OF SAID LAND, TOGETHER WITH THE RIGHT TO STORE UPON THE SURFACE OF SAID LAND, OIL, GAS AND OTHER HYDROCARBONS AND MINERALS WHICH MAY BE PRODUCED OTHER LANDS, WITH THE RIGHT OF ENTRY THEREON FOR THE SAID PURPOSES, AND WITH THE RIGHT TO CONSTRUCT, USE, MAINTAIN, ERECT, REPAIR, REPLACE AND REMOVE THEREON AND THEREFROM, ALL PIPE LINES, TELEPHONE AND TELEGRAPH LINES, TANKS, MACHINERY, BUILDINGS AND OTHER STRUCTURES WHICH MAY BE NECESSARY AND REQUISITE TO CARRY ON OPERATIONS ON SAID LANDS, WITH RIGHT TO ERECT, MAINTAIN, OPERATE AND REMOVE A PLANT, WITH ALL NECESSARY APPURTENANTS FOR THE EXTRACTION OF GASOLINE FROM GAS, INCLUDING ALL RIGHTS NECESSARY OR CONVENIENT THERETO, AS EXCEPT AND RESERVED IN THE DEED FROM TRANSAMERICA DEVELOPMENT COMPANY, A CORPORATION, RECORDED MARCH 29, 1968, AS DOCUMENT NO. 2456, IN BOOK D3955, PAGE 185, OFFICIAL RECORDS; AND RE- RECORDED JUNE 19, 1969, AS DOCUMENT NO. 1776, IN BOOK D4407, PAGE 591, OFFICIAL RECORDS; AND AS MODIFIED WITH RESPECT TO A PORTION THEREON BY A QUITCLAIM DEED RECORDED NOVEMBER 12, 1970, AS INSTRUMENT NO. 2112, OFFICIAL RECORDS, WHICH RELINQUISHED ALL RIGHT TO THE USE OF THE SURFACE AND SUBSURFACE TO A DEPTH OF 500 FEET FROM THE SURFACE OF THE LAND. ALL RIGHTS TO THE USE OF THE SURFACE AND SUB-SURFACE TO A DEPTH OF FIVE HUNDRED (500) FEET FROM THE SURFACE FOR ANY PURPOSE INCIDENTAL TO THE OWNERSHIP OF ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES AND MINERALS WERE QUITCLAIMED BY DEED RECORDED DECEMBER 24, 1981, AS INSTRUMENT NO. 81-1263075, OFFICIAL RECORDS, OF SAID COUNTY. PARCEL B: IN THE CITY OF DIAMOND BAR, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, BEING A PORTION OF ADJUSTED PARCEL 2 AND A PORTION OF ADJUSTED PARCEL 3 OF LOT LINE ADJUSTMENT NUMBER 02-001, RECORDED OCTOBER 23, 2003 AS INSTRUMENT NO. 03-3180260 AND RE-RECORDED MARCH 09, 2004 AS INSTRUMENT 2.g Packet Pg. 592 A-4 4852-7119-9457/200928-0001 NO. 04-0566670 OFFICIAL RECORDS OF SAID COUNTY AND SAID STATE, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHWESTERLY CORNER OF SAID ADJUSTED PARCEL 2, ALSO BEING IN THE NORTHERLY RIGHT-OF-WAY OF GRAND AVENUE; THENCE SOUTH 76° 57' 27" EAST, A DISTANCE OF 306.53 FEET TO A TANGENT CURVE CONCAVE NORTHWESTERLY HAVING A RADIUS OF 13.00 FEET; THENCE NORTHEASTERLY, A DISTANCE OF 20.42 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00"; THENCE TANGENT FROM SAID CURVE NORTH 13° 02' 33" EAST, A DISTANCE OF 66.52 FEET TO A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 465.00 FEET; THENCE NORTHERLY, A DISTANCE OF 91.99 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 11° 20' 03"; THENCE TANGENT FROM SAID CURVE NORTH 01° 42' 30" EAST, A DISTANCE OF 118.11 FEET TO A TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 528.00 FEET; THENCE NORTHERLY, A DISTANCE OF 332.12 ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 36° 02' 23" TO THE MOST SOUTHERLY POINT OF SAID ADJUSTED PARCEL 3; THENCE CONTINUING ALONG SAID CURVE, A DISTANCE OF 195.69 FEET THROUGH A CENTRAL ANGLE OF 21° 14' 07"; THENCE TANGENT FROM SAID CURVE NORTH 58° 59' 00" WEST, A DISTANCE OF 176.43 FEET TO A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 472.00 FEET; THENCE NORTHERLY, A DISTANCE OF 351.12 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 42° 37' 20"; THENCE TANGENT FROM SAID CURVE NORTH 16° 21' 40" EAST, A DISTANCE OF 105.08 FEET TO A TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 728.00 FEET; THENCE NORTHERLY, A DISTANCE OF 49.95 FEET THROUGH A CENTRAL ANGLE OF 03° 55' 53"; THENCE NON-TANGENT FROM SAID CURVE NORTH 69° 42' 32" WEST, A DISTANCE OF 4.00 FEET; THENCE NORTH 47° 20' 32" WEST, A DISTANCE OF 288.17 FEET TO THE WESTERLY MOST CORNER OF SAID ADJUSTED PARCEL 3; THENCE SOUTH 77° 00' 57" WEST, A DISTANCE OF 38.92 FEET; THENCE SOUTH 71° 52' 42" WEST, A DISTANCE OF 66.51 FEET; THENCE SOUTH 52° 49' 59" WEST, A DISTANCE OF 41.11 FEET; THENCE SOUTH 33° 31' 11" EAST, A DISTANCE OF 18.79 FEET; THENCE SOUTH 58° 12' 53" WEST, A DISTANCE OF 79.91 FEET; THENCE SOUTH 37° 31' 39" WEST, A DISTANCE OF 48.90 FEET; THENCE SOUTH 09° 28' 28" WEST, A DISTANCE OF 13.81 FEET; THENCE SOUTH 49° 03' 44" WEST, A DISTANCE OF 19.88 FEET; THENCE SOUTH 66° 41' 43" WEST, A DISTANCE OF 24.75 FEET; THENCE SOUTH 62° 17' 56" WEST, A DISTANCE OF 24.67 FEET; THENCE SOUTH 74° 34' 34" WEST, A DISTANCE OF 48.18 FEET; THENCE SOUTH 67° 49' 25" WEST, A DISTANCE OF 58.40 FEET; THENCE SOUTH 01° 09' 11" EAST, A DISTANCE OF 48.07 FEET; THENCE SOUTH 20° 53' 53" WEST, A DISTANCE OF 38.44 FEET; THENCE SOUTH 18° 09' 01" WEST, A DISTANCE OF 53.93 FEET; THENCE NORTH 72° 03' 30" WEST, A DISTANCE OF 99.38 FEET; THENCE NORTH 41° 09' 40" WEST, A DISTANCE OF 80.72 FEET; THENCE NORTH 87° 07' 40" WEST, A DISTANCE OF 154.39 FEET; THENCE NORTH 70° 02' 32" WEST, A DISTANCE OF 52.31 FEET; THENCE SOUTH 57° 15' 30" WEST, A DISTANCE OF 25.91 FEET; THENCE SOUTH 20° 39' 47" WEST, A DISTANCE OF 18.27 FEET; THENCE NORTH 68° 07' 01" WEST, A DISTANCE OF 86.71 FEET; THENCE NORTH 17° 17' 41" EAST, A DISTANCE OF 59.02 FEET; THENCE NORTH 38° 38' 59" WEST A DISTANCE OF 20.60 FEET; THENCE NORTH 59° 09' 05" WEST, A DISTANCE OF 37.15 FEET; THENCE NORTH 75° 25' 56" WEST, A DISTANCE OF 34.13 FEET; THENCE SOUTH 86° 38' 16" WEST, A DISTANCE OF39.10 FEET; THENCE SOUTH 04° 33' 42" WEST, A DISTANCE OF 22.12 FEET; THENCE SOUTH 47° 26' 38" WEST, A DISTANCE OF 19.24 FEET; THENCE SOUTH 78° 32' 58" WEST, A DISTANCE OF 28.47 2.g Packet Pg. 593 A-5 4852-7119-9457/200928-0001 FEET; THENCE NORTH 50° 34' 22" WEST, A DISTANCE OF 39.12 FEET; THENCE NORTH 72° 43' 51" WEST, A DISTANCE OF 32.64 FEET; THENCE SOUTH 86° 38' 16" WEST, A DISTANCE OF 49.43 FEET; THENCE SOUTH 19° 09' 09" WEST, A DISTANCE OF 42.03 FEET; THENCE SOUTH 26° 41' 29" EAST, A DISTANCE OF 325.87 FEET; THENCE SOUTH 64° 30' 56" EAST, A DISTANCE OF 147.67 FEET; THENCE SOUTH 23° 50' 39" EAST, A DISTANCE OF 68.67 FEET; THENCE SOUTH 28° 21' 05" EAST, A DISTANCE OF 36.23 FEET; THENCE SOUTH 13° 57' 31" WEST, A DISTANCE OF 56.83 FEET; THENCE SOUTH 37° 50' 26" EAST, A DISTANCE OF 115.92 FEET; THENCE SOUTH 09° 23' 07" WEST, A DISTANCE OF 156.42 FEET; THENCE SOUTH 18° 21' 02" EAST, A DISTANCE OF 178.70 FEET; THENCE SOUTH 14° 53' 14" WEST, A DISTANCE OF 245.22 TO THE POINT OF BEGINNING. SAID DESCRIPTION IS MADE PURSUANT TO ADJUSTED PARCEL B, OF LOT LINE ADJUSTMENT NO. 07-002, RECORDER JUNE 26, 2008 AS INSTRUMENT NO. 20081143590, OFFICIAL RECORDS OF SAID COUNTY. For conveyancing purposes only: APN(S) 8701-059-904 AND 8701-059-909 2.g Packet Pg. 594 Stradling Yocca Carlson & Rauth Draft of 4/26/21 4824-4135-2929v4/200928-0001 ESCROW AGREEMENT (2002 BONDS) By and Among CITY OF DIAMOND BAR, CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY and U.S. BANK NATIONAL ASSOCIATION, as Escrow Bank Dated as of June 1, 2021 Relating to CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY FIXED RATE LEASE REVENUE BONDS, 2002 SERIES A (COMMUNITY/SENIOR CENTER PROJECT) 2.h Packet Pg. 595 4824-4135-2929v4/200928-0001 ESCROW AGREEMENT (2002 BONDS) THIS ESCROW AGREEMENT (2002 BONDS), dated as of June 1, 2021 (the “Escrow Agreement”), by and among the City of Diamond Bar (the “City”), the City of Diamond Bar Public Financing Authority (the “Authority”) and U.S. Bank National Association, as escrow agent (the “Escrow Bank”) and as Prior Trustee (as such term is defined below), is entered into in accordance with resolutions of the City Council of the City and the Board of Directors of the Authority adopted on [May 4], 2021 and an Indenture, dated as of June 1, 2021 (the “Indenture”), by and among the City, the Authority and U.S. Bank National Association, as trustee, to refund the outstanding City of Diamond Bar Public Financing Authority Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) (as shown on Schedule B, the “Refunded Bonds”), which were issued pursuant to an Indenture, dated as of December 1, 2002 (as amended by Amendment No. 1 thereto dated as of December 1, 2011, the “Prior Indenture”), by and between the City and U.S. Bank National Association, as successor trustee to MUFG Union Bank, N.A., formerly known as Union Bank of California, N.A., as trustee (the “Prior Trustee”). RECITALS A. Pursuant to the Prior Indenture, the Authority has previously issued the City of Diamond Bar Public Financing Authority Fixed Rate Lease Revenue Bonds, 2002 Series A (Community/Senior Center Project) in the aggregate principal amount of $13,755,000, of which $7,830,000 of Refunded Bonds are currently outstanding. B. The Authority has determined to issue its City of Diamond Public Financing Authority Lease Revenue Refunding Bonds, 2021 Series A in the aggregate principal amount of $_____ (the “2021A Bonds”), a portion of the proceeds of which will be used to optionally redeem the Refunded Bonds on June __, 2021 (the “Redemption Date”) at a redemption price equal to 100% of the outstanding aggregate principal amount thereof, together with interest accrued on the Refunded Bonds through the Redemption Date (the “Redemption Price”), as required under the Prior Indenture. C. The City will irrevocably deposit with the Escrow Bank moneys (as permitted by, in the manner prescribed by, and all in accordance with the Prior Indenture), [which moneys will be used to purchase securities as described in Schedule A hereto (the “Federal Securities”)], which Federal Securities satisfy the criteria for “Authorized Investments” set forth in Sections 10.01(c) of the Prior Indenture, provided that the principal of and the interest o n the Federal Securities when paid will provide money which, together with the moneys deposited with the Escrow Bank at the same time pursuant to this Escrow Agreement, will be fully sufficient to pay and discharge the Refunded Bonds. In consideration of the mutual covenants and agreements herein contained, the City, the Authority and the Escrow Bank agree as follows: Deposit of Moneys. The Authority hereby deposits with the Escrow Bank $______, comprised of a portion of the net sale proceeds of the 2021A Bonds, and instructs the Prior Trustee to transfer to the Escrow Bank $_____, comprised of $____ held by the Prior Trustee in the ___ related to the Refunded Bonds, to be held in irrevocable escrow by the Escrow Bank separate and apart from all other securities, investments or moneys on deposit with the Escrow Bank, in a 2.h Packet Pg. 596 2 4824-4135-2929v4/200928-0001 fund hereby created and established and to be known as the “2002 Escrow Fund,” and to be applied solely as provided in this Escrow Agreement. The Authority represents that such moneys are at least equal to an amount sufficient to purchase the Federal Securities listed in Schedule A hereto, and to hold $___ uninvested as cash. Investment of Moneys. The Escrow Bank acknowledges receipt of the moneys described in Section 1 and agrees immediately to invest such moneys in the Federal Securities listed in Schedule A hereto and to deposit such Federal Securities in the 2002 Escrow Fund. The Escrow Bank shall be entitled to rely upon the conclusion of Robert Thomas CPA, LLC, Minneapolis, Minnesota (the “Verification Agent”), that the Federal Securities listed in Schedule A hereto mature and bear interest payable in such amounts and at such times as, toget her with cash on deposit in the 2002 Escrow Fund, will be sufficient to pay the Redemption Price of the Refunded Bonds on the Redemption Date. Investment of Any Remaining Moneys. At the written direction of the City or the Authority, the Escrow Bank shall reinvest any other amount of principal and interest, or any portion thereof, received from the Federal Securities prior to the date on which such payment is required for the purposes set forth herein, in noncallable Federal Securities maturing not later t han the date on which such payment or portion thereof is required for the purposes set forth in Section 5, as verified in a report prepared by an independent certified public accountant or firm of certified public accountants of favorable national reputati on experienced in the refunding of obligations of political subdivisions to the effect that the reinvestment described in said report will not adversely affect the sufficiency of the amounts of securities, investments and money in the 2002 Escrow Fund to pay the Redemption Price of the Refunded Bonds on the Redemption Date, and provided that the City has obtained and delivered to the Escrow Bank an unqualified opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, that such reinvestment will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Refunded Bonds. Any interest income resulting from investment or reinvestment of moneys pursuant to this Section 3 which is not required for the purposes set forth in Section 5, as verified in the letter of the Verification Agent originally obtained by the City with respect to the refunding of the Refunded Bonds or in any other report prepared by an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of tax - exempt obligations of political subdivisions, shall be paid to the City promptly upon the receipt of such interest income by the Escrow Bank. The determination of the City as to whether an accountant qualifies under this Escrow Agreement shall be conclusive. Substitution of Securities. Upon the written request of the City or the Authority, and subject to the conditions and limitations herein set forth and a pplicable governmental rules and regulations, the Escrow Bank shall sell, redeem or otherwise dispose of the Federal Securities, provided that there are substituted therefor from the proceeds of the Federal Securities other Federal Securities, but only after the City has obtained and delivered to the Escrow Bank: (i) an unqualified opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, to the effect that the substitution of securities is permitted under the legal documents in effect with re spect to the Refunded Bonds and that such reinvestment will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Refunded Bonds; and (ii) a report by a firm of independent certified public accountants to the effect that the reinvestment described in said report will not adversely affect the sufficiency of the amounts of securities, investments and money in the 2002 Escrow Fund to pay the Redemption Price of the Refunded Bonds on the Redemption Date. The Escrow Bank shall not be liable or responsible for any loss resulting from any 2.h Packet Pg. 597 3 4824-4135-2929v4/200928-0001 reinvestment made pursuant to this Escrow Agreement and in full compliance with the provisions hereof. Refunding of the Refunded Bonds. (a) Payment. From the maturing principal of the Federal Securities and the investment income and other earnings thereon and other moneys on deposit in the 2002 Escrow Fund, the Escrow Bank shall, on the Redemption Date, transfer the amounts on deposit in the 2002 Escrow Fund to the Prior Trustee to pay the Redemption Price of the Refunded Bonds on the Redemption Date. (b) Irrevocable Instructions to Provide Notice. The forms of the notices required to be mailed pursuant to Section 4.06 and Article X of the Prior Indenture are substantially in the forms attached hereto as Exhibits 1 and 2. The Prior Trustee has previously mailed a notice of redemption of the Refunded Bonds in accordance with Section 4.06 of the Prior Indenture and direction provided by the City and the Authority. The City and the Authority hereby irrevocably instruct the Prior Trustee to mail a notice of defeasance of the Refunded Bonds in accordance with Article X of the Prior Indenture, as required to provide for the defeasance of the Refunded Bonds in accordance with this Section 5, including to the Municipal Securities Rulemaking Board. (c) Unclaimed Moneys. Any moneys which remain unclaimed for two years after the Redemption Date shall be repaid by the Escrow Bank to the City. (d) Priority of Payments. The owners of the Refunded Bonds shall have a first and exclusive lien on all moneys and securities in the 2002 Escrow Fund until such moneys and such securities are used and applied as provided in this Escrow Agreement. (e) Termination of Obligation. As provided in the Prior Indenture, upon deposit of moneys with the Escrow Bank in the 2002 Escrow Fund as set forth in Section 1 hereof and the purchase of the various Federal Securities as provided in Section 2 hereof, all obligations of the City, the Authority and the Trustee with respect to all outstanding Refunded Bonds shall cease and terminate, except as set forth in the Prior Indenture, and the City’s obligations under the Lease (as such term is defined in the Prior Indenture) have terminated. Application of Certain Terms of the Prior Indenture. All of the terms of the Prior Indenture relating to notices to the Prior Trustee or the City, the making of payments of principal and interest on the Refunded Bonds and the exchange or transfer of the Refunded Bonds are incorporated in this Escrow Agreement as if set forth in full herein. The procedures set forth in Article VIII of the Prior Indenture relating to the resignation and removal and merger of the Prior Trustee under the Prior Indenture are also incorporated in this Escrow Agreement a s if set forth in full herein and shall be the procedures to be followed with respect to any resignation or removal of the Escrow Bank hereunder. Performance of Duties. The Escrow Bank agrees to perform the duties set forth herein and shall have no responsibility to take any action or omit to take any action not set forth herein. Escrow Bank’s Authority to Make Investments. Except as provided in Sections 2, 3 and 4 hereof, the Escrow Bank shall have no power or duty to invest any funds held 2.h Packet Pg. 598 4 4824-4135-2929v4/200928-0001 under this Escrow Agreement or to sell, transfer or otherwise dispose of the moneys or Federal Securities held hereunder. Indemnity. The City and the Authority hereby assume liability for, and hereby agree (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and keep harmless the Escrow Bank and its respective successors, assigns, directors, agents, employees and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, the Escrow Bank at any time (whether or not also indemnified against the same by the City, the Authority or any other person under any other agreement or instrument, but without double indemnity) in any way relating to or arising out o f the execution, delivery and performance of this Escrow Agreement, the establishment hereunder of the 2002 Escrow Fund, the acceptance of the funds deposited therein, the acceptance of the securities deposited therein, the retention of the proceeds thereof and any payment, transfer or other application of moneys by the Escrow Bank in accordance with the provisions of this Escrow Agreement; provided, however, that the City and the Authority shall not be required to indemnify the Escrow Bank against the Escr ow Bank’s own negligence or willful misconduct or the negligent or willful misconduct of the Escrow Bank’s respective agents and employees or the breach by the Escrow Bank of the terms of this Escrow Agreement. In no event shall the City, the Authority or the Escrow Bank be liable to any person by reason of the transactions contemplated hereby other than to each other as set forth in this Section. The indemnities contained in this Section shall survive the termination of this Escrow Agreement. Responsibilities of the Escrow Bank. The Escrow Bank and its respective successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort, contract or otherwise, in connection with the execution and delivery of this Escrow Agre ement, the establishment of the 2002 Escrow Fund, the acceptance of the moneys or securities deposited therein, the retention of the Federal Securities or the proceeds thereof, the sufficiency of the Federal Securities to pay the Refunded Bonds or any payment, transfer or other application of moneys or obligations by the Escrow Bank in accordance with the provisions of this Escrow Agreement or by reason of any non-negligent act, non-negligent omission or non-negligent error of the Escrow Bank made in good faith in the conduct of its duties. The recitals of fact herein shall be taken as the statements of the City and the Authority, and the Escrow Bank assumes no responsibility for the correctness thereof. The Escrow Bank makes no representation as to the su fficiency of the funds deposited in the 2002 Escrow Fund to accomplish the refunding of the Refunded Bonds on the Redemption Date or to the validity of this Escrow Agreement as to the City or the Authority and, except as otherwise provided herein, the Escrow Bank shall incur no liability with respect thereto. The Escrow Bank shall not be liable in connection with the performance of its duties under this Escrow Agreement except for its own negligence or willful misconduct, and the duties and obligations of the Escrow Bank shall be determined by the express provisions of this Escrow Agreement. The Escrow Bank may consult with counsel, who may or may not be counsel to the City or the Authority, and in reliance upon the written opinion of such counsel shall ha ve full and complete authorization and protection with respect to any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Bank shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting any action under this Escrow Agreement, such matter may be deemed to be conclusively established by a certificate signed by an authorized officer of the City or the Authority. 2.h Packet Pg. 599 5 4824-4135-2929v4/200928-0001 The liability of the Escrow Bank to make the payments required by this Escrow Agreement shall be limited to the moneys in the 2002 Escrow Fund. No provision of this Escrow Agreement shall require the Escrow Bank to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. The Escrow Bank shall not be liable for the accuracy of any calculations provided herein. Any company into which the Escrow Bank may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Escrow Bank may sell or transfer all or substantially all of its corporate trust business shall be the successor to the Escrow Bank without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. The City shall pay the Escrow Bank full compensation for its duties under this Escrow Agreement, including out-of-pocket costs such as publication costs, redemption or redemption expenses, legal fees and other costs and expenses relating hereto. Under no circumstances shall amounts deposited in the 2002 Escrow Fund be deemed to be available for said purposes. The Escrow Bank may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and shall not be responsible for any willful misconduct or negli gence on the part of any agent, attorney, custodian or nominee so appointed. The Escrow Bank agrees to accept and act upon instructions or directions pursuant to this Escrow Agreement sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that, the Escrow Bank shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the City or the Authority elect to give the Escrow Bank e-mail or facsimile instructions (or instructions by a similar electronic method) and the Escrow Bank in its discretion elects to act upon such instructions, the Escrow Bank’s understanding of such instructions shall be deemed controlling. The Escrow Bank shall not be liable for any losses, costs or expenses arising directly or indirectly from the Escrow Bank’s reliance upon and compliance with such instructions notwithstanding that such instructions conflict or are inconsistent with a subsequent written instruction. The City and the Authority agree to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Escrow Bank, including without limitation the risk of the Escrow Bank acting on unauthorized instructions, and the risk of interception and misuse by third parties. Amendments. This Escrow Agreement is made for the benefit of the City, the Authority and the holders from time to time of the Refunded Bonds and it shall not be repealed, revoked, altered or amended without the written consent of all such holders, the Escrow Bank, the Authority and the City, as defined in the Indenture; provided, however, but only after the receipt by the Escrow Bank of an opinion of nationally recognized bond counsel that the exclusion from gross income of interest on the Refunded Bonds will not be adve rsely affected for federal income tax purposes, the City, the Authority and the Escrow Bank may, without the consent of, or notice to, such holders, amend this Escrow Agreement or enter into such agreements supplemental to this Escrow 2.h Packet Pg. 600 6 4824-4135-2929v4/200928-0001 Agreement as shall not adversely affect the rights of such holders and as shall not be inconsistent with the terms and provisions of this Escrow Agreement for any one or more of the following purposes: (i) to cure any ambiguity or formal defect or omission in this Escrow Agree ment; (ii) to grant to, or confer upon, the Escrow Bank for the benefit of the holders of the Refunded Bonds any additional rights, remedies, powers or authority that may lawfully be granted to, or conferred upon, such holders or the Escrow Bank; and (iii) to include under this Escrow Agreement additional funds, securities or properties. The Escrow Bank shall be entitled to rely conclusively upon an unqualified opinion of nationally recognized bond counsel with respect to compliance with this Section, including the extent, if any, to which any change, modification, addition or elimination affects the rights of the holders of the Refunded Bonds or that any instrument executed hereunder complies with the conditions and provisions of this Section. Term. This Escrow Agreement shall commence upon its execution and delivery and shall terminate on the later to occur of either: (i) the date upon which the Refunded Bonds have been paid in accordance with this Escrow Agreement; or (ii) the date upon which no unclaimed moneys remain on deposit with the Escrow Bank and all amounts owed to the Escrow Bank shall have been paid in full. Any unclaimed money which remains in the 2002 Escrow Fund for two years from the date upon which the Refunded Bonds have been paid in acc ordance with this Escrow Agreement shall be remitted by the Escrow Bank to the City. Compensation. The Escrow Bank shall receive its reasonable fees and expenses as agreed to and any other reasonable fees and expenses of the Escrow Bank approved by the City; provided, however, that under no circumstances shall the Escrow Bank be entitled to any lien nor will it assert a lien whatsoever on any moneys or obligations in the 2002 Escrow Fund for the payment of fees and expenses for services rendered by the Escrow Bank under this Escrow Agreement. Severability. If any one or more of the covenants or agreements provided in this Escrow Agreement on the part of the City, the Authority or the Escrow Bank to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements shall be null and void and shall be deemed separate from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Escrow Agreement. Counterparts. This Escrow Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. Governing Law. This Escrow Agreement shall be construed under the laws of the State of California. Holidays. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Escrow Agreement, shall be a legal holiday or a day on which banking institutions in the state in which is located the principal office of the Escrow Bank are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are authorized by law to remain closed, with the same force and effect as if done on the nominal date provided in this Escrow Agreement, and no interest shall accrue for the period from and after such nominal date. 2.h Packet Pg. 601 7 4824-4135-2929v4/200928-0001 Assignment. This Escrow Agreement shall not be assigned by the Escrow Bank or any successor thereto without the prior written consent of the City and the Authority. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 2.h Packet Pg. 602 S-1 4824-4135-2929v4/200928-0001 IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed by their duly authorized officers and attested as of the date and year first written above. CITY OF DIAMOND BAR By: Mayor ATTEST: City Clerk CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY By: Chair ATTEST: Secretary [SIGNATURES CONTINUED ON NEXT PAGE.] 2.h Packet Pg. 603 S-2 4824-4135-2929v4/200928-0001 [SIGNATURE PAGE CONTINUED.] U.S. BANK NATIONAL ASSOCIATION, as Escrow Bank and as Prior Trustee By: Name: Title: 2.h Packet Pg. 604 A-1 4824-4135-2929v4/200928-0001 SCHEDULE A FEDERAL SECURITIES Security Maturity Principal Amount Interest Rate [__] June __, 2021 $ [__] [__]% ESCROW REQUIREMENTS Period Ending Principal Interest Principal Redeemed Total June __, 2021 $[__] $ [__] $ [__] $ [__] 2.h Packet Pg. 605 B-1 4824-4135-2929v4/200928-0001 SCHEDULE B REFUNDED BONDS The Refunded Bonds are described in the below table: Principal Payment Date (June 1) Outstanding Principal Amount Interest Rate CUSIP® (25256P) 2022 $ 505,000 5.000% AM4 2023 530,000 5.000 AN2 2024 555,000 3.875 AP7 2025 580,000 4.000 AQ5 2026 610,000 4.125 AR3 2030 2,735,000 4.500 AS1 2033 2,315,000 4.750 AT9 TOTAL $7,830,000 2.h Packet Pg. 606 1-1 4824-4135-2929v4/200928-0001 EXHIBIT 1 CONDITIONAL NOTICE OF FULL OPTIONAL REDEMPTION CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY FIXED RATE LEASE REVENUE BONDS, 2002 SERIES A (COMMUNITY/SENIOR CENTER PROJECT) BASE CUSIP 25256P NOTICE IS HEREBY GIVEN to the owners of the above -captioned bonds (the “Bonds”) pursuant to the Indenture, dated as of December 1, 2002 (as amended by Amendment No. 1 thereto, dated as of December 1, 2011, the “Indenture”), by and between the City of Diamond Bar Public Financing Authority (the “Authority”) and U.S. Bank National Association, as successor trustee to MUFG Union Bank, N.A. (the “Trustee”), that outstanding Bonds in the principal amount of $7,830,000 have been called for redemption on June __, 2021 (the “Redemption Date”). The Bonds to be called, which were originally issued on December 19, 2002, are described in the below table and referred to herein as the “Refunded Bonds”: Principal Payment Date (June 1) Outstanding Principal Amount Interest Rate CUSIP® 2022 $ 505,000 5.000% AM4 2023 530,000 5.000 AN2 2024 555,000 3.875 AP7 2025 580,000 4.000 AQ5 2026 610,000 4.125 AR3 2030 2,735,000 4.500 AS1 2033 2,315,000 4.750 AT9 TOTAL $7,830,000 The Refunded Bonds will be payable on the Redemption Date at a redemption price of 100% of the principal amount thereof plus accrued interest thereon to such date (the “Redemption Price”). The Redemption Price of the Refunded Bonds to be redeemed will become due and payable on the Redemption Date. From and after the Redemption Date, interest on the Refunded Bonds to be redeemed will cease to accrue on and after the Redemption Date, and such Refunded Bonds will be surrendered to the Trustee. Redemption of the Refunded Bonds is conditional upon the receipt by the Trustee on or prior to the Redemption Date of moneys that are sufficient to pay the principal of and interest on the Refunded Bonds and, if such moneys have not been so received, this notice shall be of no force and effect and the Trustee shall not be required to redeem such Bonds . In such event, the Trustee has the right to rescind this notice. To receive payment on the Redemption Date, owners of the Refunded Bonds should present and surrender said Refunded Bonds on the Redemption Date at the address of the Trustee set forth below: 2.h Packet Pg. 607 1-2 4824-4135-2929v4/200928-0001 Delivery Instructions U.S. Bank National Association Global Corporate Trust c/o MUFG Union Bank, N.A. 445 South Figueroa Street, 8th Floor Los Angeles, California 90071 REQUIREMENT INFORMATION For a list of redemption requirements please visit our website at www.usbank.com/corporatetrust and click on the “Bondholder Information” link for Redemption instructions. You may also contact our Bondholder Communications team at 1 -800-934-6802 Monday through Friday from 8 AM to 6 PM CST. IMPORTANT NOTICE Federal law requires the Trustee to withhold taxes at the applicable rate from the payment if an IRS Form W-9 or applicable IRS Form W-8 is not provided. Please visit www.irs.gov for additional information on the tax forms and instructions. If the Owner of any Refunded Bond that is subject to optional redemption fails to deliver such Refunded Bond to the Trustee on the Redemption Date, such Refunded Bond shall nevertheless be deemed redeemed on the Redemption Date and the Owner of such Refunded Bond shall have no rights in respect thereof except to receive payment of the Redemption Price from funds held by the Trustee for such payment. Note: The City of Diamond Bar, the Authority and the Trustee shall not be responsible for the selection or use of the CUSIP numbers selected, nor is any representation made as to their correctness in the notice or as printed on any Bond. They are included solely for the convenience of the holders. By: U.S. BANK NATIONAL ASSOCIATION, as successor trustee to MUFG UNION BANK, N.A. Dated: May __, 2021. 2.h Packet Pg. 608 2-1 4824-4135-2929v4/200928-0001 EXHIBIT 2 NOTICE OF DEFEASANCE CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY FIXED RATE LEASE REVENUE BONDS, 2002 SERIES A (COMMUNITY/SENIOR CENTER PROJECT) BASE CUSIP 25256P Notice is hereby given to the owners of the outstanding obligations which are captioned above (the “2002 Bonds”) that: (i) there have been deposited with U.S. Bank National Association, as trustee (the “Trustee”) under the Indenture, dated as of December 1, 2002 (as amended by Amendment No. 1 thereto, dated as of December 1, 2011, the “Indenture”), by and between the City of Diamond Bar Public Financing Authority (the “City”) and the Trustee, moneys and Authorized Investments as permitted by the Indenture that are sufficient and available to redeem the 2002 Bonds on June __, 2021 at a Redemption Price equal to 100% of the aggregate principal amount of such 2002 Bonds plus accrued interest thereon; (ii) all obligations of the City, the Authority and the Trustee with respect to such 2002 Bonds shall cease and terminate, except as set forth in the Indenture; and (iii) all obligations of the City under the Continuing Disclosure Certificate relating to the 2002 Bonds, dated December 1, 2011, executed by the City, have ceased and terminated. The 2002 Bonds to be refunded, which were originally issued on December 19, 2011, are described in the below table: Principal Payment Date (June 1) Outstanding Principal Amount Interest Rate CUSIP® 2022 $ 505,000 5.000% AM4 2023 530,000 5.000 AN2 2024 555,000 3.875 AP7 2025 580,000 4.000 AQ5 2026 610,000 4.125 AR3 2030 2,735,000 4.500 AS1 2033 2,315,000 4.750 AT9 TOTAL $7,830,000 No representation is made as to the correctness of the CUSIP number either as printed on any 2002 Bond or as contained herein and any error in the CUSIP number shall not affect the validity of the proceedings for redemption of the 2002 Bonds. Dated: June __, 2021. CITY OF DIAMOND BAR PUBLIC FINANCING AUTHORITY U.S. BANK NATIONAL ASSOCIATION, as Trustee 2.h Packet Pg. 609 1 Kristina Santana From:Terry Carlos <scarmonkey7@yahoo.com> Sent:Tuesday, May 4, 2021 9:28 AM To:Kristina Santana Subject:Fw: FOR PUBLIC COMMENT May 4th, 2021 meeting CAUTION: This message originated outside of our City of Diamond Bar network. Dear City Council, I have reached out to several of you and have only received a response from one council member regarding my city's council's position regarding this criminal district attorney. Quite frankly, I am disappointed. After all, I have fiercely supported a few of you, and this is not a partisan issue. In fact, I'd invite all of you the next Victims of Crime rally so that you can see the people from all walks of life that want justice for their loved ones. I attended the one in West Covina a few weeks ago on a Friday evening, and representatives from several cities attended, but Diamond Bar did not. As a resident of Diamond Bar, I would like to avoid the pain and anguish that victims of crime are suffering everywhere in Los Angeles County and beyond due to the lack of prosecution of violent crimes by this corrupt District Attorney. He makes light of victims and the tragedy their families still endure. He is very anti-police and unfortunately mayhem is ensuing in the L.A. County. It is only a matter of time before the City of Diamond Bar falls into this nightmare that is plaguing these other communities. His message to criminals of no consequences is just creating chaos. Diamond Bar has always been a safe city, and that too will change should this fake DA be allowed to stay in his position -- which he is abusing. He has gone against Marcy's Law and the California Constitution which under the California Constitution Article 1, Section 28B provides victims to be treated with fairness and respect for his or her privacy and dignity and to be free from intimidation harassment and abuse throughout the criminal or juvenile justice process. Gascon has unlawfully gone against voters who voted for cash bail and has reduced it to $1. He refuses to press charges against minors who commit murder and other violent acts of crime. He has also dismantled the Hardcore Gang unit, and has gotten rid of gang enhancement and gun charges, which kept many gang members in check because they know that gang enhancements will add to their sentences. We are not that far from violent gangs in Pomona who used to be afraid to come over here and commit crimes. We also have a few gangs here in DB. Thanks to this DA, they are emboldened that they will not be punished. DDA's are not even allowed to attend parole hearings with victims, and on the daily, they are not allowed to contact families to let them know the suspect in a case that harmed them is being released or that charges are being dropped. He hired a public defender as part of his staff. That alone screams volumes as to his complete disregard to victims of crime. Unless you live under a rock, you would not know about the Gabriel Fernandez case. Those murderers could be out way sooner than expected and get away with torturing that child to death for months. I apologize for the rude tone, but I am angry that you can torture a child to death and not pay your debt to society. Please stand up for us, your community and say that you do not have confidence in this incompetent individual. Should any council members support Gascon, that is a shame because we don’t. I am grateful we know who he is…we will be making sure he does not get re-elected and I will work hard to make sure that anybody on this current council who supports this law-breaking DA is not not re-elected. Diamond Bar has a large Asian population. It's sad that if any members of my community are attacked for being Asian, that nothing will happen to the criminals that do so. Whittier, Pico Rivera, La Mirada, Beverly Hills, Santa Clarita, and Lancaster have issued votes of no confidence in this horrible DA. There are more cities to come. Some are very nice neighborhoods and some are neighborhoods that know what it is like to live with gang members doing whatever they want to the people that live in those communities. I lived in horrible communities growing up. I know what it is like being afraid to go outside after dark. I do not want to live in a city as an adult that is taken over by criminals. Please protect the citizens of Diamond Bar and do what is right. Cast a vote of no confidence in this fake DA. Terry Carlos 1 Kristina Santana From:KATHY GIORDANO <gkathy2@aol.com> Sent:Tuesday, May 4, 2021 10:41 AM To:Kristina Santana Subject:For Public Comment CAUTION: This message originated outside of our City of Diamond Bar network. Just last year the residents of Diamond Bar, stood behind and supported our law enforcement agency. We supported and refused to allow a “defunding of our police department” to occur. Now I am asking that our city council members stand behind and support ALL of us by taking and passing a “Vote of No Confidence” in the newly elected DA George Gascon. To quote the mayor of Beverly Hills when they passed their vote of “no confidence”, “Safety and security is job one,” “By discarding the actions of criminals, we are undermining the work of our women and men in law enforcement. The laws which DA Gascon are ignoring were democratically passed and need to be enforced”. I challenge and encourage you, vote “NO CONFIDENCE in DA Gascon” Thank you Kathy Giordano Sent from my iPhone 1 Kristina Santana From:jaime va <talljaime63@yahoo.com> Sent:Tuesday, May 4, 2021 12:24 PM To:Kristina Santana Subject:For Public Comment CAUTION: This message originated outside of our City of Diamond Bar network. Hi, I support a vote of NO confidence against George Gascon. I feel unsafe in the community that I reside and work, due to his policies. Thank you. ‐ Jaime Va Sent from Yahoo Mail for iPhone 1 Kristina Santana From:Garret Rukes <grukes@martinezsteel.com> Sent:Tuesday, May 4, 2021 2:50 PM To:Kristina Santana Subject:District dissolution CAUTION: This message originated outside of our City of Diamond Bar network. I understand there is a vote to dissolve landscape districts 39 & 41 coming up soon. The proposed solution to cancel the property tax contributions and let the residents maintain the properties is not a workable solution. It will almost certainly result in the parcels getting run down and the property values in the city plunging downward. I urge you to think of a better solution before a final decision is made. Other options might be: 1. Use the money already allocated in the property tax subsidies to perform whatever maintenance can be afforded (reduce the service to a minimum). 2. Educate the population more clearly and give us time to vote for other options that may be possible. I personally never saw a proposed amount of an increase. When we voted before, I just know that we were voting for (or against) an increase (not how much) 3. Maybe the residents can relinquish the parcels over to the city so the city can maintain without worrying about maintaining private property (the parcel in question for my property is not useable by me, and I would gladly forfeit it to the city. There must be other options to consider before just giving up. Let’s get creative! Thank you for your consideration. Regards, Garret J. Rukes Resident 1505 Longview Drive 1 Kristina Santana From:Mimi Chan <chalenemo@gmail.com> Sent:Wednesday, April 28, 2021 11:33 AM To:Kristina Santana; Dan Fox Cc:Nancy Lyons Subject:District 39 Landscaping , May 4 Agenda Attachments:20210428101651891.pdf CAUTION: This message originated outside of our City of Diamond Bar network. Dear City Clerk and City Manager, On behalf of District 39 residents , we would like to submit the letter along with signed signatures from group of the residents as a supporting document for the upcoming meeting on May 4. Due to pandemic, we have tried our best to obtain signatures from the support residents regarding a request to postpone the dissolved landscaping and we will continue to reaching out to them. Mayor Lyons has advised me to forward the documents to the City Clerk. Please advise if you need further information. Best regards, Mimi > > > > > > ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ > > IMPORTANT NOTICE: This message is intended only for the addressee and may contain confidential, privileged information. If you are not the intended recipient, you may not use, copy or disclose any information contained in the message. If you have received this message in error, please notify the sender by reply e‐mail and delete the message. 1 Kristina Santana From:JC_Heartsonics <johncatanzaro@mindspring.com> Sent:Monday, May 3, 2021 10:14 AM To:Kristina Santana Cc:Kristina Santana; Kristina Santana Subject:Re: Letter to city council from 4 HOA's in LAD-41 CAUTION: This message originated outside of our City of Diamond Bar network. -----Original Message----- From: JC_Heartsonics Sent: May 3, 2021 9:44 AM To: Kristina Santana Dbar city clerk Cc: DBar city clerk , DBar city council Subject: Letter to city council from 4 HOA's in LAD-41 Hi Kristina, Please confirm the receipt of the attached letter below to be read on Tuesday May 4th 2021 for the city council meeting at appropriate place in the agenda. This is from all four HOA representatives in LAD-41. I would appreciate your reading this as you have done in the past. Thank you very much, John Catanzaro, President Ridgeline HOA May 4, 2021 Honorable mayor and members of the city council of Diamond Bar, We are jointly addressing you this evening, together as the presidents and members of the board of directors of the four HOA's residing in LAD-41. It has been approximately 7 weeks since a number of us attended the online city council meetings on March 16th and 18th and April 6th, and during this time we have come together in unity and common cause to deal with the issue that you have put before us and placed into our hands. In response, our resolve has only strengthened and our advocacy has become more focused and widespread throughout our communities. Given the timeliness and the potential impact of what is at stake, our combined leadership team, using volunteer time and limited resources, has been able to coordinate a strong community outreach program to get the message across concerning what a yes or no vote would mean for us all. We have been meeting bi-weekly via zoom to discuss communication strategies and share the progress of our individual and combined efforts. Newly updated flyers have been distributed and posted in several languages as well as curb signs forthcoming and letters being sent to homeowners along with continued phone calls, emails, and face-to-face communication when safe, during individual walks within our various neighborhoods. 2 It takes a concerted effort to plan out a communications campaign that is not too much too soon, but recognizes the insight that less is more, yet presents the necessary information required to make an informed decision. Also, the timing is crucial as we await the engineers report as well as the city mailing out of the ballots. This will enable us to prepare for a stronger push after these arrive, so that we can encourage people to take care of business and return their ballot in a timely manner! It is significant to witness the response from homeowners and to see their increasing awareness and grasp of the issues and understanding of the potential consequences resulting from this action. We often hear of the power of grassroots efforts and we are experiencing that first hand. We want you to be aware that our determination has become stronger and the citizen voters and homeowners in this part of Diamond Bar are standing up and taking notice! It is our expectation that they will respond strongly in one voice with a resounding YES vote (based on the original intentions and implications of prop 218), which will impact the dissolution and establishment of a new LAD that will continue to service the ongoing landscaping needs of all of us who reside in this area of Diamond Bar. We understand that it is in our own best interests to vote for the property tax increase which is minor in comparison to the potential increase in HOA fees that we have calculated and estimated. Further, the intensive labor involved as well as the probable inconsistency of the results of individuals taking care of such massive hillside landscaping tends to forecast a very negative impact on our home values. Again, we appreciate the opportunity you are giving us to have a second chance to recast the vote and overturn the current dissolution status of our LAD-41. It has become evident to us that the city is the first, best choice to continue the necessary, uninterrupted, ongoing landscape maintenance services. We believe you get the point, and we certainly thank you again for your support. We look forward to a successful closure on this situation resulting in a positive outcome for all of us. Very sincerely yours, John Catanzaro, president Ridgeline HOA Tony Lee, president Oakridge HOA Dino Luzzi, president Woodglen I HOA Alex Stewart, vice-president Woodglen II