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SR 07-13-2021 9B City Council Public Financing Authority Report City Council Meeting: July 13, 2021 Agenda Item: 9.B 1 of 8 To: Public Financing Authority, Mayor and City Council From: Gigi Decavalles-Hughes, Director, Finance Department, Revenue Subject: Adoption of Resolutions Authorizing Issuance of Lease Revenue Bonds for City Yards Modernization Project Recommended Actions Staff recommends that the City Council: 1. Hold a public hearing, receive public comment, adopt the attached Resolution Authorizing Issuance of Lease Revenue Bonds (City Yards Project) Series 2021 (Attachment A), and approve the related documents required for the Issuance of Lease Revenue Bonds (City Yards Project), Series 2021 (Attachments C, D, E, F, G, and H). Staff recommends that the Public Financing Authority: 1. Hold a public hearing, receive public comment, adopt the attached Resolution Authorizing Issuance of Lease Revenue Bonds (City Yards Project), Series 2021 (Attachment B), and approve the related documents required for the Issuance of Lease Revenue Bonds (City Yards Project), Series 2021 (Attachments C, D, E, F, G, and H). Executive Summary Staff recommends that the City Council and Public Financing Authority (PFA) approve documents required for the issuance of Lease Revenue Bonds (City Yards Project), Series 2021 to finance certain capital improvements at the City Yards undertaken as part of the City Yards Modernization Project. The determination to issue lease revenue bonds is made based on the City’s intent to distribute the cost of the City Yards Modernization Project over its useful life, the City’s access to low-cost financing, and the City’s low level of existing debt. The Bonds will be secured by a lease agreement between the City and the PFA. During the construction period of the City Yards project, the City’s Main Library will be the asset used to secure the lease. Upon completion of the City Yards construction, lease payments will be for City Yards use and occupancy only. This arrangement allows the 9.B Packet Pg. 2255 2 of 8 City to reduce the amount of capitalized interest, saving approximately $2.6 million in the required par amount of the bonds and resulting in debt service savings over the life of the bond repayment schedule. Bond proceeds will also cover bond issuance costs and interest due on the Series 2021 Bonds through July 1, 2022. The proposed Series 2021 bonds will be for a maximum principal amount of $70,000,000, with a final maturity date of July 1, 2051 and a maximum true interest cost of 3.50%. The attached resolutions and documents establish general parameters for the proposed Series 2021 Bonds, including: (1) a maximum principal amount of $70,000,000; (2) a final maturity date of July 1, 2051; (3) a maximum underwriting discount of 0.50%; and (4) a maximum true interest cost of 3.50%. These amounts are higher than the expected levels in order to provide a cushion to absorb possible market movements before the Series 2021 Bonds are priced in late July. True interest cost measures the average financing cost taking bond yields and underwriting discount into account. Background For the past 70 years, the 14.7-acre City Yards at 2500 Michigan Avenue has served as the City’s primary base for City maintenance services, including Water Resources, Resource Recovery and Recycling, Facilities Maintenance, Fleet, Fire Training, storage facilities, and other industrial uses. Over that time, Santa Monica’s population and workforce increased significantly, technology advanced rapidly, and City equipment and practices modernized, prompting planning for a much-needed upgrade of the City Yards. On December 10, 2019, Council approved a second modification to the guaranteed maximum price contract with Hathaway Dinwiddie Construction Company for the City Yards Modernization Project for construction of the above‐ground portion of work for a total project budget of $118 million. Anticipating that bond financing in the form of Lease Revenue Bonds would be needed for the project, Council approved reimbursement resolutions allowing bond proceeds to reimburse the City for costs incurred on the project on June 11, 2019 and on December 10, 2019. Staff noted that they would return 9.B Packet Pg. 2256 3 of 8 in spring 2020 with a financing plan for the project as well as a request to approve issuance of lease revenue bonds (Attachment I). The COVID-19 pandemic resulted in market turmoil in spring and early summer 2020 and required the City to pause on financing plans. A pause was also necessary to address the City’s funding gap due to the pandemic-related revenue losses. Council reviewed the City Yards project on May 5, 2020 (Attachment J) and approved a reduction in scope that allowed the City to complete the first construction phase underway at the time and site improvements related to circulation and safety without the additional support of bond funds. Phase 1 included a new Fleet Building and CNG fueling system and various site improvements. Phase 2 is primarily a new Operations/Administration Building and related site improvements. As the services located at the City Yards provide critical benefits across all aspects of the City, staff allocated the financial cost of the project across all impacted funds based on a pro rata analysis for the total revised project budget of $81.4 million reflected in Table 1 below. Several funds (General, Water, Wastewater, Risk, and Fleet) had their contributions readily available and have already provided those funds towards the development of the project. Other funds (RRR, Beach, Pier, and Cemetery) did not have an available fund balance capable of meeting their obligations. This funding would be covered by the General Fund with repayment schedules based on the bond debt service schedule. Additionally, the Airport Fund repayment will be completed by 2028 consistent with the settlement agreement/consent decree between the City and the Federal Aviation Administration. In the ensuing months, the municipal bond market has stabilized. In March 2021, the City successfully entered the market to refund $22.5 million in 2011 lease revenue bonds which resulted in savings of over $4.0 million to the General Fund. The market remains stable and very favorable for new bond issues, and given the severe decrease in the City’s General Fund reserves over the past eighteen months to allow for the provision of essential services in the face of sudden catastrophic revenue losses, the City has the opportunity to reimburse itself and strengthen its reserves at a minimal cost. 9.B Packet Pg. 2257 4 of 8 Phase 1 of the City Yards Modernization Project was completed and delivered for staff occupancy in May 2021. Preparation for Phase 2 is already underway with construction to be completed in early 2023. Total project budget expenditures to-date are over $51.6 million. Of this amount, approximately $40.6 million relates to the bond-funded portion of the project and will be reimbursed to the City upon bond issuance per reimbursement resolutions approved by Council on June 11, 2019 and December 10, 2019. Table 1 Fund Name Project Budget Share City Equity Lease Revenue Bond Financing General Fund $ 284,300 $ 49,755,200 Water Fund $ 7,406,100 Wastewater Fund $ 1,084,600 Wastewater Fund* $ 650,000 Risk Fund $ 60,300 Grant Fund $ 372,857 Fleet Fund** $ 1,500,000 RRR Fund*** $ 15,824,500 Beach Fund*** $ 2,244,100 Airport Fund*** $ 952,100 Pier Fund*** $ 748,100 Cemetery Fund*** $ 476,000 Total $ 11,358,157 $ 70,000,000 Total Project Budget $81,358,157 *Non-Potable Water Main Expansion **CNG Tank Replacement ***Funds will reimburse General Fund for their share of bonds Discussion Staff is recommending that the City issue lease revenue bonds in an amount not to exceed $70.0 million to fund the City Yard projects. Most of the remaining costs of the $81.4 million project are paid by the Water, Wastewater, Risk, Grant and Fleet Funds. The bond proceeds will partially reimburse the General Fund for reserves previously set 9.B Packet Pg. 2258 5 of 8 aside for the project and cover the project costs allocated to the RRR, Beach, Airport, Pier and Cemetery Funds. As noted in the Background section, with the exception of the Airport Fund, these funds do not have sufficient available fund balance to pay their allocated cost up-front and will pay back the General Fund over time. The Airport Fund repayment will be completed by 2028 consistent with the settlement agreement/consent decree between the City and the Federal Aviation Administration. Funds generated by the bonds will restore General Fund fund balance and will serve to strengthen reserves that may be used to cover extraordinary expenses. When determining whether to issue bonds to cover this capital cost, the City has considered a number of factors. First, the City’s adopted financial policies assert the prudence of using debt financing to distribute the cost of a facility over its useful life. Also, owing to its sound financial health and resulting high credit ratings, the City is able to benefit from low-cost financing. This allows for greater flexibility in allocating existing resources. Finally, the City is able to take advantage of favorable conditions in the municipal bond market due to its very low level of debt. With regard to the last factor, the City’s indebtedness is limited by Article VI of the City Charter, which states that the bonded indebtedness of the City may not exceed the sum of 10% of the total assessed valuation of property within the City. With this bond issuance, staff estimates that this indicator would reach 0.50%. The PFA’s Series 2021 Bonds would be payable from base rental payments to be made by the City to the Santa Monica Public Financing Authority (PFA) for rights to the use of the City’s Main Library during the construction of the City Yards during which time bond interest will be capitalized. Once the City Yards Project is completed and fully occupied by the City, expected in February 2023, the Main Library will be removed from security for the lease and lease payments will be solely for City Yards. This arrangement allows the City to reduce the amount of capitalized interest, saving approximately $2.6 million in the required par amount of the bonds and resulting in debt service savings over the life of the bond repayment schedule. 9.B Packet Pg. 2259 6 of 8 Staff is proposing to sell the Series 2021 Bonds through a negotiated sale whereby the bond underwriter is predetermined and the Bond interest rates are set through a process of negotiation. A negotiated sale, as compared to an open competitive bid, is the best way to ensure the bond underwriter is compliant with the City’s banking services Resolution (Resolution No. 11025). Upon Council approval of the Series 2021 Bond issuance, the City’s financial advisor will assist staff in determining the fair market value for the Bond interest rates at the time of sale. To select a bond underwriter, the City’s financial advisor distributed a Request for Qualifications (“RFQ”) to 13 commercial and investment banking institutions active in the California municipal bond market. The RFQ required respondents to certify the firm was compliant with the City’s banking services Resolution. Nine firms responded to the RFQ. The financial advisor rated the firms based on a combination of factors including their recommended approach to the bond sale, relevant experience with similar financings, methodology to execute the bond sale, compensation, and compliance with City social responsibility guidelines per Resolution 11025. The recommendations were then presented to Finance Department staff who made the final selection of Jeffries LLC as lead manager and UBS Financial Services, Inc. and Ramirez and Co. as co- managers. In preparation for issuance of the bonds, credit ratings were requested from two of the credit rating agencies that currently maintain credit ratings on the City and Authority bonds, Fitch Ratings and Standard & Poors. The attached resolutions and documents permit the City and PFA to proceed with all steps necessary for the issuance of the Series 2021 Bonds. The resolutions approve the attached documents and authorize their execution and delivery by the specified agency’s officials and employees. The resolutions also approve the preparation, execution, and delivery of a Final Official Statement; the execution and delivery of any additional documents and certificates; and the performance of such acts or related actions as may be necessary or desirable to effect the offering, sale, and issuance of the Series 2021 Bonds. 9.B Packet Pg. 2260 7 of 8 This July 13, 2021 meeting serves as a public hearing relating to the public benefits of financing the City Yard improvements through the PFA. Staff published this public hearing notice in the [Santa Monica Daily Press] on July 5, 2021; at least five days prior to the hearing date as the Joint Exercise of Powers Agreement (JPA) law requires. Financial Impacts & Budget Actions Approving the recommended actions will result in the PFA issuing up to $70,000,000 in Series Lease Revenue Bonds. The estimated annual debt service, to be paid from the City’s annual base rental payments pursuant to the Lease Agreement, would be approximately $2.4 million in FY 2022-23 and $3.6 million between FY 2023-24 and FY 2050-51. Approximately 29% of the General Fund’s annual debt service amount will be reimbursed by the RRR, Beach, Airport, Pier and Cemetery Funds. These estimated amounts, including the base rental payments (debt service) and the reimbursements from the other funds, were considered in developing the General Fund Five Year Financial Forecast presented to Council on May 25, 2021 along with the Proposed FY 2021-23 Biennial Budget. Other accounts required to record transactions related to the bond issuance and debt service payments are listed in the table below. Any necessary budget changes will be made as part of the FY 2020-21 Year-End Budget Report after the bonds are issued and exact amounts are known. Account Estimated Amount Other Financing Sources (proceeds from the sale of the Series 2021 Bonds, net of any original issue discount or premium): 01000001.601001 $59,760,000 Other Financing Uses – Original issue Discount/Premium 01000001.602001 $12,430,000 Series 2021 Bond Issue Costs (costs of issuance, underwriter’s discount) 01800004.540000 $610,000 9.B Packet Pg. 2261 8 of 8 Prepared By: David Carr, Assistant City Treasurer Approved Forwarded to Council Attachments: A. City Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) B. Authority Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) C. Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) D. Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) E. Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) F. Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) G. Continuing Disclosure Certificate Santa Monica PFA 2021 Lease Rev Bonds (City Yards) H. Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) I. December 10, 2019 Staff Report (Weblink) J. May 5, 2020 Staff Report (Weblink) 9.B Packet Pg. 2262 4139-1074-5647.2 City Council Meeting July 13, 2021 Santa Monica, California RESOLUTION NO. _______ (CCS) (CITY COUNCIL SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA AUTHORIZING THE EXECUTION AND DELIVERY BY THE CITY OF A GROUND LEASE, A LEASE AGREEMENT, AN INDENTURE, A BOND PURCHASE AGREEMENT AND A CONTINUING DISCLOSURE CERTIFICATE IN CONNECTION WITH THE ISSUANCE OF SANTA MONICA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (CITY YARDS PROJECT), SERIES 2021, APPROVING THE ISSUANCE OF SUCH BONDS IN AN AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $70,000,000, 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 WHEREAS, the City of Santa Monica (the “City”) desires to finance a portion of the costs of the construction and installation of certain capital improvements to the City’s maintenance operations and storage facilities known as the “City Yards” (the “Project”); WHEREAS, the Santa Monica Public Financing Authority (the “Authority”) desires to assist the City with such financing; WHEREAS, in order to finance the Project, the City will lease certain real property, and the improvements thereto (the “Property”), to the Authority pursuant to a Ground Lease (such Ground Lease, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Ground Lease”); WHEREAS, the City will sublease the Property back from the Authority pursuant to a Lease Agreement (such Lease Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Lease Agreement”); WHEREAS, in order to provide the funds necessary to finance the Project, the City and the Authority desire that the Authority issue its Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 (the “Bonds”), in an aggregate principal amount of not to exceed $70,000,000, payable from the base rental payments (the “Base Rental Payments”) to be made by the City pursuant to the Lease Agreement; WHEREAS, the Bonds will be issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code (the “Act”); 9.B.a Packet Pg. 2263 Attachment: City Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution Authorizing 2 4139-1074-5647.2 WHEREAS, 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 City, the Authority and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), propose to enter into an Indenture (such Indenture, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Indenture”); WHEREAS, all rights to receive the Base Rental Payments will be assigned without recourse by the Authority to the Trustee pursuant to the Indenture; WHEREAS, Jefferies LLC (the “Representative”), on behalf of itself and UBS Financial Services Inc. and Samuel A. Ramirez & Co., Inc., has presented a proposal, in the form of a Bond Purchase Agreement by and among the Representative, the Authority and the City, to purchase the Bonds from the Authority (such Bond Purchase Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Purchase Agreement”); WHEREAS, 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 underwriters thereof must have reasonably determined that the issuer thereof has, or one or more appropriate obligated persons have, 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 material events on an ongoing basis; WHEREAS, in order to cause such requirement to be satisfied, the City desires to execute and deliver a Continuing Disclosure Certificate (such Continuing Disclosure Certificate, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Continuing Disclosure Certificate”); WHEREAS, a form of the Preliminary Official Statement to be distributed in connection with the public offering of the Bonds has been prepared (such Preliminary Official Statement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Preliminary Official Statement”); WHEREAS, the City is a member of the Authority and the Project is to be located within the boundaries of the City; WHEREAS, on this date, the City held a public hearing on the financing of the Project in accordance with Section 6586.5 of the Act, which hearing was held at 1685 Main Street, Santa Monica, California; WHEREAS, in accordance with Section 6586.5 of the Act, notice of such hearing was published once at least five days prior to the hearing in the Santa Monica Daily Press, a newspaper of general circulation in the City; WHEREAS, there have been prepared and submitted to this meeting forms of: 9.B.a Packet Pg. 2264 Attachment: City Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution Authorizing 3 4139-1074-5647.2 (a) the Ground Lease; (b) the Lease Agreement; (c) the Indenture; (d) the Purchase Agreement; (e) the Continuing Disclosure Certificate; and (f) the Preliminary Official Statement; WHEREAS, the City desires to authorize the execution of such documents and the performance of such acts as may be necessary or desirable to effect the offering, sale and issuance of the Bonds; and WHEREAS, all acts, conditions and things required by the Constitution, laws of the State of California and the City Charter of the City to exist, to have happened and to have been performed precedent to and in connection with the consummation of the transactions 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 transactions for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Monica, as follows: Section 1. The foregoing recitals are true and correct, and the City Council of the City (the “City Council”) so finds and determines. Section 2. The City Council, on behalf of the City, hereby finds that the use of the Act to assist the City in financing the Project will result in significant public benefits to the citizens of the City because it is expected that such use will provide demonstrable savings in effective interest rate costs. Section 3. The form of the Ground Lease, on file with the City Clerk of the City (the “City Clerk”), is hereby approved. Each of the Mayor of the City, or such other member of the City Council as the Mayor may designate, the City Manager of the City, the Director of Finance/Treasurer of the City and the Assistant City Treasurer of the City (each, an “Authorized Officer”) is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the City, to execute and deliver the Ground Lease in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Ground Lease by such Authorized Officer. Section 4. The form of the Lease Agreement, on file with the City Clerk, is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the City, to execute and deliver the Lease 9.B.a Packet Pg. 2265 Attachment: City Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution Authorizing 4 4139-1074-5647.2 Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Lease Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate principal amount of the Bonds payable from the Base Rental Payments in excess of $70,000,000, shall not result in the term of the Lease Agreement terminating later than July 1, 2051 (provided that such term may be extended as provided therein) and shall not result in a true interest cost attributable to the Base Rental Payments in excess of 3.50% per annum. Section 5. Subject to the provisions of Section 6 hereof, the issuance of the Bonds, in an aggregate principal amount of not to exceed $70,000,000, on the terms and conditions set forth in, and subject to the limitations specified in, the Indenture, be and the same is hereby authorized and approved. The Bonds shall be dated, shall bear interest at the rates, shall mature on the dates, shall be subject to call and redemption, shall be issued in the form and shall be as otherwise provided in the Indenture, as the same shall be completed as provided in this Resolution. Section 6. The form of the Indenture, on file with the City Clerk, is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the City, to execute and deliver the Indenture in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Indenture by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate principal amount of Bonds in excess of $70,000,000, shall not result in a final maturity date of the Bonds later than July 1, 2051 and shall not result in a true interest cost for the Bonds in excess of 3.50%. Section 7. The form of the Purchase Agreement, on file with the City Clerk, is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the City, to execute and deliver the Purchase Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate underwriters’ discount (not including any original issue discount) from the principal amount of the Bonds in excess of 0.50% of the aggregate principal amount of the Bonds. Section 8. The form of the Continuing Disclosure Certificate, on file with the City Clerk, is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the City, to execute and deliver the Continuing Disclosure Certificate in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Continuing Disclosure Certificate by such Authorized Officer. Section 9. The form of the Preliminary Official Statement, on file with the City Clerk, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the Preliminary Official Statement in connection with the 9.B.a Packet Pg. 2266 Attachment: City Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution Authorizing 5 4139-1074-5647.2 offering and sale of the Bonds is hereby authorized and approved. The Authorized Officers are each hereby authorized to certify on behalf of the City that the Preliminary Official Statement 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). Section 10. The preparation and delivery of a final Official Statement (the “Official Statement”), and its use in connection with the offering and sale of the Bonds, be and the same is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Statement, 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. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the City, to execute the final Official Statement and any amendment or supplement thereto. Section 11. The City Council hereby approves the execution and delivery of all agreements, documents, certificates and instruments referred to herein with electronic signatures as may be permitted under the California Uniform Electronic Transactions Act and digital signatures as may be permitted under Section 16.5 of the California Government Code using DocuSign. Section 12. The Authorized Officers and the officers and employees of the City are, and each of them is, hereby authorized and directed, for and in the name of the City to do any and all things and to execute and deliver any and all documents which they or any of them deem necessary or advisable in order to consummate the transactions contemplated by this Resolution and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution. Section 13. All actions heretofore taken by the officers and employees of the City with respect to the issuance and sale of the Bonds, or in connection with or related to any of the agreements or documents referred to herein, are hereby approved, confirmed and ratified. Section 14. The City Clerk shall certify to the adoption of this Resolution and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: Adopted and approved this 13th day of July, 2021. Sue Himmelrich, Mayor George S. Cardona, Interim City Attorney 9.B.a Packet Pg. 2267 Attachment: City Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution Authorizing 4139-1074-5647.2 I hereby certify that the foregoing Resolution No. __________ (CCS) was duly adopted by the City Council of the City of Santa Monica at a meeting thereof held on July 13, 2021 by the following Council vote: Ayes: Councilmembers: Noes: Councilmembers: Abstain: Councilmembers: Absent: Councilmembers: ATTEST: Denise Anderson-Warren, City Clerk 9.B.a Packet Pg. 2268 Attachment: City Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution Authorizing 4157-5545-2719.2 Public Financing Authority Meeting July 13, 2021 Santa Monica, California RESOLUTION NO. _______ (PFAS) (PUBLIC FINANCE AUTHORITY SERIES) A RESOLUTION OF THE BOARD OF DIRECTORS OF THE SANTA MONICA PUBLIC FINANCING AUTHORITY AUTHORIZING THE EXECUTION AND DELIVERY OF A GROUND LEASE, A LEASE AGREEMENT, AN INDENTURE AND A BOND PURCHASE AGREEMENT IN CONNECTION WITH THE ISSUANCE OF SANTA MONICA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (CITY YARDS PROJECT), SERIES 2021, AUTHORIZING THE ISSUANCE OF SUCH BONDS IN AN AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $70,000,000, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION THEREWITH AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND CERTIFICATES AND RELATED ACTIONS WHEREAS, the City of Santa Monica (the “City”) desires to finance a portion of the costs of the construction and installation of certain capital improvements to the City’s maintenance operations and storage facilities known as the “City Yards” (the “Project”); WHEREAS, the Santa Monica Public Financing Authority (the “Authority”) desires to assist the City with such financing; WHEREAS, in order to finance the Project, the City will lease certain real property, and the improvements thereto (the “Property”), to the Authority pursuant to a Ground Lease (such Ground Lease, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Ground Lease”); WHEREAS, the City will sublease the Property back from the Authority pursuant to a Lease Agreement (such Lease Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Lease Agreement”); WHEREAS, in order to provide the funds necessary to finance the Project, the City and the Authority desire that the Authority issue its Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 (the “Bonds”), in an aggregate principal amount of not to exceed $70,000,000, payable from the base rental payments (the “Base Rental Payments”) to be made by the City pursuant to the Lease Agreement; WHEREAS, 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 City, the Authority and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee), 9.B.b Packet Pg. 2269 Attachment: Authority Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution 2 4157-5545-2719.2 propose to enter into an Indenture (such Indenture, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Indenture”); WHEREAS, all rights to receive the Base Rental Payments will be assigned without recourse by the Authority to the Trustee pursuant to the Indenture; WHEREAS, Jefferies LLC (the “Representative”), on behalf of itself and UBS Financial Services Inc. and Samuel A. Ramirez & Co., Inc., has presented a proposal, in the form of a Bond Purchase Agreement by and among the Representative, the Authority and the City, to purchase the Bonds from the Authority (such Bond Purchase Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Purchase Agreement”); WHEREAS, a form of the Preliminary Official Statement to be distributed in connection with the public offering of the Bonds has been prepared (such Preliminary Official Statement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Preliminary Official Statement”); WHEREAS, the City is a member of the Authority and the Project is to be located within the boundaries of the City; WHEREAS, there have been prepared and submitted to this meeting forms of: (a) the Ground Lease; (b) the Lease Agreement; (c) the Indenture; (d) the Purchase Agreement; and (e) the Preliminary Official Statement; WHEREAS, the Authority desires to authorize the execution of such documents and the performance of such acts as may be necessary or desirable to effect the offering, sale and issuance of the Bonds; WHEREAS, Section 5852.1 of the California Government Code (the “Government Code”) requires that the Board of Directors of the Authority (“Board of Directors”) obtain from an underwriter, financial advisor or private lender and disclose, in a meeting open to the public, prior to authorization of the issuance of the Bonds, good faith estimates of (a) the true interest cost of the Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Bonds, (c) the amount of proceeds of the Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Bonds, and (d) the sum total of all debt service payments on the Bonds calculated to the final maturity of the Bonds, plus the fees and charges paid to third parties not paid with the proceeds of the Bonds; 9.B.b Packet Pg. 2270 Attachment: Authority Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution 3 4157-5545-2719.2 WHEREAS, in compliance with Government Code Section 5852.1, the Board of Directors has obtained from Public Resources Advisory Group, as the City’s municipal advisor (the “Municipal Advisor”), the required good faith estimates and such estimates are disclosed and set forth in Exhibit A attached hereto; and WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the transactions 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 transactions for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Santa Monica Public Financing Authority, as follows: Section 1. The foregoing recitals are true and correct, and the Board of Directors so finds and determines. Section 2. The form of the Ground Lease, on file with the Secretary of the Authority (the “Secretary”), is hereby approved. Each of the Chairperson of the Authority, or such other member of the Board of Directors as the Chairperson may designate, the Executive Director of the Authority and the Treasurer of the Authority (each, an “Authorized Officer”) is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Authority, to execute and deliver the Ground Lease in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Ground Lease by such Authorized Officer. Section 3. The form of the Lease Agreement, on file with the Secretary, is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Authority, to execute and deliver the Lease Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Lease Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate principal amount of the Bonds payable from the Base Rental Payments in excess of $70,000,000, shall not result in the term of the Lease Agreement terminating later than July 1, 2051 (provided that such term may be extended as provided therein) and shall not result in the true interest cost attributable to the Base Rental Payments exceeding 3.50% per annum. Section 4. Subject to the provisions of Section 5 hereof, the issuance of the Bonds, in an aggregate principal amount of not to exceed $70,000,000, on the terms and conditions set forth in, and subject to the limitations specified in, the Indenture, be and the same is hereby authorized and approved. The Bonds shall be dated, shall bear interest at the rates, shall mature on the dates, shall be subject to call and redemption, shall be issued in the form and shall be as otherwise provided in the Indenture, as the same shall be completed as provided in this Resolution. 9.B.b Packet Pg. 2271 Attachment: Authority Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution 4 4157-5545-2719.2 Section 5. The form of the Indenture, on file with the Secretary, is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Authority, to execute and deliver the Indenture in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Indenture by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate principal amount of Bonds in excess of $70,000,000, shall not result in a final maturity date of the Bonds later than July 1, 2051 and shall not result in a true interest cost for the Bonds in excess of 3.50%. Section 6. The form of the Purchase Agreement, on file with the Secretary, is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Authority, to execute and deliver the Purchase Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate underwriters’ discount (not including any original issue discount) from the principal amount of the Bonds in excess of 0.50% of the aggregate principal amount of the Bonds. Section 7. The form of the Preliminary Official Statement, on file with the Secretary, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Bonds is hereby authorized and approved. The Authorized Officers are each hereby authorized to certify on behalf of the Authority that the Preliminary Official Statement is deemed final as of its date, within the meaning of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (except for the omission of certain final pricing, rating and related information as permitted by said Rule). Section 8. The preparation and delivery of a final Official Statement (the “Official Statement”), and its use in connection with the offering and sale of the Bonds, be and the same is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Statement, 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. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Authority, to execute the final Official Statement and any amendment or supplement thereto. Section 9. The Board of Directors hereby approves the execution and delivery of all agreements, documents, certificates and instruments referred to herein with electronic signatures as may be permitted under the California Uniform Electronic Transactions Act and digital signatures as may be permitted under Section 16.5 of the California Government Code using DocuSign. Section 10. The officers and agents of the Authority are, and each of them is, hereby authorized and directed, for and in the name of the Authority to do any and all things and to execute and deliver any and all documents which they or any of them deem necessary or advisable in order 9.B.b Packet Pg. 2272 Attachment: Authority Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution 5 4157-5545-2719.2 to consummate the transactions contemplated by this Resolution and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution. Section 11. All actions heretofore taken by the officers and agents of the Authority with respect to the issuance and sale of the Bonds, or in connection with or related to any of the agreements or documents referred to herein, are hereby approved, confirmed and ratified. Section 12. The Secretary shall certify to the adoption of this Resolution and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: Adopted and approved this 13th day of July, 2021. Sue Himmelrich, Chairperson George S. Cardona, Interim City Attorney 9.B.b Packet Pg. 2273 Attachment: Authority Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution A-1 4157-5545-2719.2 EXHIBIT A GOOD FAITH ESTIMATES 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 Public Resources Advisory Group, the City’s municipal advisor (the “Municipal Advisor”). Principal Amount. The Municipal Advisor has informed the Authority that, based on the City’s financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Bonds to be sold is $60,370,000 (the “Estimated Principal Amount”). True Interest Cost of the Bonds. The Municipal Advisor has informed the Authority that, 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 2.65%. Finance Charge of the Bonds. The Municipal Advisor has informed the Authority that, 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 $600,000. Amount of Proceeds to be Received. The Municipal Advisor has informed the Authority that, 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 Authority 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 $70,000,000. Total Payment Amount. The Municipal Advisor has informed the Authority that, 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 Authority 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 $104,000,000, which excludes any reserves or capitalized interest paid or funded with proceeds of the Bonds (which may offset such total payment amount). The foregoing estimates constitute good faith estimates only and are based on market conditions prevailing at the time of preparation of such estimates. The actual principal amount of the Bonds issued and sold, the true interest cost thereof, 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 different than the date assumed for purposes of such estimates, (b) the actual principal amount of Bonds sold 9.B.b Packet Pg. 2274 Attachment: Authority Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution A-2 4157-5545-2719.2 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 Authority based on the timing of the need for proceeds of the Bonds and other factors. The actual interest rates borne by the Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the Authority. 9.B.b Packet Pg. 2275 Attachment: Authority Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution 4157-5545-2719.2 I hereby certify that the foregoing Resolution No. __________ (PFAS) was duly adopted by the Board of Directors of the Santa Monica Public Financing Authority at a meeting thereof held on July 13, 2021 by the following vote of the Board of Directors thereof: Ayes: Directors: Noes: Directors: Abstain: Directors: Absent: Directors: ATTEST: Denise Anderson-Warren, Secretary 9.B.b Packet Pg. 2276 Attachment: Authority Resolution - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) [Revision 1] (4614 : Adoption of Resolution 4138-1198-2895.3 TO BE RECORDED AND WHEN RECORDED RETURN TO: Orrick, Herrington & Sutcliffe LLP 777 South Figueroa Street, 32nd Floor Los Angeles, California 90017 Attention: Laura Gao THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. GROUND LEASE by and between CITY OF SANTA MONICA and SANTA MONICA PUBLIC FINANCING AUTHORITY Dated as of [__________] 1, 2021 9.B.c Packet Pg. 2277 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 4138-1198-2895.3 GROUND LEASE THIS GROUND LEASE (this “Ground Lease”), dated as of [__________] 1, 2021, is by and between the CITY OF SANTA MONICA, a municipal corporation and charter city organized and existing under the laws of the State of California (the “City”), as lessor, and the SANTA MONICA PUBLIC FINANCING AUTHORITY, a joint powers authority organized and existing under the laws of the State of California (the “Authority”), as lessee. RECITALS WHEREAS, the City desires to finance a portion of the costs of the construction and installation of certain capital improvements to the City’s maintenance operations and storage facilities known as the “City Yards” (the “Project”); WHEREAS, the Authority desires to assist the City with such financing; WHEREAS, in order to finance the Project, the City is leasing certain real property, and the improvements thereto (the “Property”), to the Authority pursuant to a Ground Lease, dated as of the date hereof, and the City is subleasing the Property back from the Authority pursuant to the Lease Agreement, dated as of the date hereof (the “Lease Agreement”); WHEREAS, the Property is more particularly described in Exhibit A attached hereto; WHEREAS, in order to provide the funds necessary to finance the Project, the Authority is issuing $[_________] aggregate principal amount of its Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 (the “Bonds”), payable from the base rental payments to be made by the City pursuant to the Lease Agreement; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of 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; NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties hereto do hereby agree as follows: ARTICLE I DEFINITIONS Except as otherwise defined herein, or unless the context clearly otherwise requires, capitalized undefined terms used herein shall have the meanings ascribed thereto in the Lease Agreement. 9.B.c Packet Pg. 2278 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 2 4138-1198-2895.3 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. (a) The Authority shall pay to the City as and for rental of the Property hereunder, the sum of not to exceed $[__________] (the “Ground Lease Payment”). The Ground Lease Payment shall be paid from the proceeds of the Bonds; provided, however, that in the event the available proceeds of the Bonds are not sufficient to enable the Authority to pay such amount in full, the remaining amount of the Ground Lease Payment shall be reduced to an amount equal to the amount of such available proceeds. (b) The City shall deposit the Ground Lease Payment in one or more separate funds or accounts to be held and administered for the purpose of financing the Project. The Authority and the City hereby find and determine that the amount of the Ground Lease Payment does not exceed the fair market value of the leasehold interest in the Property that is conveyed hereunder by the City to the Authority. No other amounts of rental shall be due and payable by the Authority for the use and occupancy of the Property under this Ground Lease. 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. Subject to any rights the City may have under the Lease Agreement (in the absence of a Lease Default Event) 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. At all times that the Authority is in possession of the Property, it shall not commit, suffer or permit any waste on the Property, and shall 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. Each of the City and the Authority shall, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Property hereby leased or intended so to be or for carrying out the expressed intention of this Ground Lease, the Indenture and the Lease Agreement. 9.B.c Packet Pg. 2279 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 3 4138-1198-2895.3 Section 4.03. Waiver of Personal Liability. (a) All liabilities under this Ground Lease on the part of the Authority shall be solely liabilities of the Authority as a joint powers authority, 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. (b) All liabilities under this Ground Lease on the part of the City shall be solely liabilities of the City as a city and municipal 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 shall 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 and Warranties of the City. The City represents and warrants 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; and (c) all taxes, assessments or impositions of any kind with respect to the Property, except current taxes, have been paid in full. Section 4.07. Representations and Warranties of the Authority. The Authority represents and warrants 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. ARTICLE V RESTRICTIONS ON CITY Except with respect to Permitted Encumbrances, the City shall not mortgage, sell, encumber, assign, transfer or convey the Property or any portion thereof during the term of this Ground Lease. 9.B.c Packet Pg. 2280 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 4 4138-1198-2895.3 ARTICLE VI IMPROVEMENTS Title to all improvements made on the Property during the term hereof shall vest in the City. ARTICLE VII TERM; TERMINATION Section 7.01. Term. The term of this Ground Lease shall commence as of the date of commencement of the term of the Lease Agreement and shall remain in full force and effect from such date to and including July 1, 20[__], unless such term is extended or sooner terminated as hereinafter provided; provided, however, that, so long as no Lease Default Event shall have occurred and be continuing under the Lease Agreement, the term of this Ground Lease with respect to the Library Property shall terminate on the date the Written Certificate of the City required by Section 3.04(c) of the Indenture is filed with the Trustee, unless such term is sooner terminated as hereinafter provided, and, from and after the date of such termination (i) the description of the Library Property set forth in Exhibit A hereto shall be deemed to have been deleted therefrom and the term “Property” shall, for all purposes hereof, be deemed not to include the Library Property, and (ii) all right, title and interest in and to the portion of the Library Property shall vest in the City (in connection with which, the Authority shall execute such conveyances, deeds and other documents as may be necessary to effect such vesting of record). [Assess whether to add provision that authorizes recordation of a supplement that restates the Property description.] Section 7.02. Extension; Early Termination. If, on July 1, 20[__], 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 payable 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. If, prior to July 1, 20[__], 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 VIII MISCELLANEOUS Section 8.01. 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 8.02. Severability. In the event 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. 9.B.c Packet Pg. 2281 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 5 4138-1198-2895.3 Section 8.03. Amendments; Substitution and Release. This Ground Lease may be amended, supplemented or otherwise modified only in accordance with the provisions of the Lease Agreement. The City shall have the right to substitute alternate real property for the Property or to release portions of the Property as provided in the Lease Agreement. Section 8.04. Assignment. The Authority and City acknowledge that the Authority has assigned and transferred certain of its right, title and interest in and to this Ground Lease to the Trustee pursuant to the Indenture. The City consents to such assignment. Section 8.05. Section Headings. Headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Ground Lease. Section 8.06. Governing Laws. This Ground Lease shall be governed by and construed in accordance with the laws of the State of California. Section 8.07. Execution in Counterparts. This Ground Lease may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 9.B.c Packet Pg. 2282 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 6 4138-1198-2895.3 IN WITNESS WHEREOF, the parties hereto have caused this Ground Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first written above. CITY OF SANTA MONICA By: ATTEST: ____________________________________ APPROVED AS TO FORM: SANTA MONICA PUBLIC FINANCING AUTHORITY By: ATTEST: ____________________________________ APPROVED AS TO FORM: 9.B.c Packet Pg. 2283 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 7 4138-1198-2895.3 EXHIBIT A DESCRIPTION OF THE PROPERTY City Yards Property [All or a portion of] that real property situated in the County of Los Angeles, State of California, described as follows, and any improvements thereto: PARCEL A: (APN: 4268-015-901) THAT PORTION OF LOT 1 IN BLOCK 29 OF THE ERKENDRECHER’S SYNDICATE SANTA MONICA TRACT, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 6, PAGES 26 AND 27 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE NORTHWESTERLY LINE OF SAID LOT, 247 FEET NORTHEASTERLY FROM THE MOST WESTERLY CORNER OF SAID LOT 1; THENCE SOUTHEASTERLY PARALLEL WITH THE SOUTHWESTERLY LINE OF SAID LOT, 245 FEET; THENCE NORTHEASTERLY PARALLEL WITH THE NORTHWESTERLY LINE OF SAID LOT, 108 FEET TO THE NORTHEASTERLY LINE OF SAID LOT; THENCE NORTHWESTERLY ALONG THE NORTHEASTERLY LINE, 245 FEET TO THE MOST NORTHERLY CORNER OF SAID LOT; THENCE SOUTHWESTERLY ALONG THE NORTHWESTERLY LINE OF SAID LOT, 108 FEET TO THE POINT OF BEGINNING. PARCEL B: (APN: 4268-016-902) PARCEL 1: LOTS 2, 3 AND 4 IN BLOCK 29 OF ERKENBRECHER SYNDICATE SANTA MONICA TRACT, AS PER MAP RECORDED IN BOOK 6, PAGES 26 AND 27 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER, TOGETHER WITH PORTIONS OF CERTAIN STREETS AND AN ALLEY VACATED ADJOINING SAID LOTS, ALL IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE NORTHERLY LINE OF MICHIGAN AVENUE VACATED WITH THE NORTHEASTERLY LINE OF THE SOUTHWEST 10 FEET OF STEWART ALLEY VACATED (OR PROLONGATION THEREOF) AS SAID VACATED AVENUE AND ALLEY ARE SHOWN ON A MAP RECORDED IN BOOK 107, PAGE 30 OF MISCELLANEOUS RECORDS OF SAID COUNTY; THENCE WESTERLY ALONG SAID NORTHERLY LINE OF MICHIGAN AVENUE TO THE NORTHEASTERLY PROLONGATION OF SOUTHWESTERLY LINE OF SAID LOT 4, BLOCK 29; THENCE SOUTHEASTERLY ALONG SAID PROLONGATION TO THE MOST WESTERLY CORNER OF SAID LOT 4; THENCE WESTERLY ALONG THE NORTHERLY LINE OF SAID LOT 3, BLOCK 29, A DISTANCE OF 44.71 FEET TO AN ANGLE POINT THEREIN; THENCE SOUTHWESTERLY ALONG THE NORTHWESTERLY LINE OF LOT 3, AND LOT 2 IN BLOCK 29, A DISTANCE OF 671.39 FEET TO THE MOST WESTERLY CORNER OF SAID LOT 2; THENCE SOUTHEASTERLY ALONG THE SOUTHWESTERLY LINE OF LOT 2, A DISTANCE OF 490.15 FEET TO THE MOST SOUTHERLY CORNER OF SAID LOT; THENCE NORTHEASTERLY ALONG THE SOUTHEASTERLY LINE OF SAID LOTS 2 AND 3 A DISTANCE OF 707.04 FEET TO THE MOST EASTERLY CORNER OF SAID LOT 3; THENCE SOUTHEASTERLY ALONG THE SOUTHWESTERLY LINE OF THAT PORTION OF DELAWARE AVENUE, VACATED BY ORDINANCE NO. 91 OF THE CITY OF SANTA MONICA, A DISTANCE OF 30 FEET TO THE CENTER LINE OF SAID DELAWARE AVENUE; THENCE NORTHEASTERLY ALONG SAID CENTER LINE TO AND ALONG THE CENTER LINE OF THAT PORTION OF TOWNER AVENUE, SHOWN AS VACATED ON MAP RECORDED IN BOOK 107, PAGE 30 OF MISCELLANEOUS RECORDS, TO SAID NORTHEAST LINE OF THE SOUTHWEST 10 FEET OF VACATED STEWART ALLEY; THENCE NORTHWESTERLY IN A DIRECT LINE TO THE POINT OF BEGINNING. EXCEPT THEREFROM THAT PORTION OF SAID LAND DESCRIBED AS FOLLOWS: 9.B.c Packet Pg. 2284 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 8 4138-1198-2895.3 BEGINNING AT THE MOST SOUTHERLY CORNER OF SAID LOT; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID LOT, NORTH 45° 54' 33" EAST, 19.81 FEET TO A CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 45 FEET; THENCE ALONG SAID CURVE, WESTERLY FROM A TANGENT WHICH BEARS SOUTH 78° 11' 56" WEST, THROUGH AN ANGLE 13° 01' 57", AN ARC DISTANCE OF 10.24 FEET; THENCE TANGENT FROM SAID CURVE, NORTH 88° 46' 07" WEST, 16.85 FEET TO THE SOUTHWESTERLY LINE OF SAID LOT; THENCE ALONG SAID SOUTHWESTERLY LINE, SOUTHEASTERLY 18.44 FEET TO THE POINT OF BEGINNING. ALSO EXCEPT THAT PORTION OF LOT 2 OF BLOCK 29 OF ERKENBRECHER SYNDICATE SANTA MONICA TRACT, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 6, PAGES 26 AND 27 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHERLY CORNER OF SAID LOT; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID LOT, NORTH 45° 54' 33" EAST 19.81 FEET TO A CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 45 FEET; THENCE WESTERLY ALONG SAID CURVE FROM A TANGENT WHICH BEARS SOUTH 78° 11' 56" WEST, THROUGH AN ANGLE OF 13° 01' 57",AN ARC DISTANCE OF 10.24 FEET; THENCE TANGENT FROM SAID CURVE, NORTH 88° 46' 07" WEST 16.85 FEET, MORE OR LESS TO THE MOST WESTERLY POINT OF PARCEL 1 AS DESCRIBED IN INSTRUMENT NO. 1532 OF OFFICIAL RECORDS AS RECORDED IN BOOK 1486, PAGE 778; THENCE ALONG SAID SOUTHWESTERLY LINE 10.27 FEET TO THE TRUE POINT OF BEGINNING; THENCE ALONG SAID SOUTHWESTERLY LINE NORTH 44° 05' 59" WEST 59.00 FEET; THENCE NORTHEASTERLY AT RIGHT ANGLE TO THE SAID SOUTHWESTERLY LINE, TO A POINT IN A LINE PARALLEL WITH AND DISTANT 12 FEET NORTHEASTERLY TO SAID SOUTHWESTERLY LINE; THENCE ALONG SAID PARALLEL LINE SOUTH 44° 05' 59" EAST 65.49 FEET MORE OR LESS, TO THE POINT IN A CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 210 FEET, A RADIAL LINE OF SAID CURVE TO SAID POINT BEARS SOUTH 17° 33' 28" EAST; THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 3° 43' 22" 13.64 FEET, TO THE TRUE POINT OF BEGINNING, A RADIAL LINE OF SAID CURVE TO SAID POINT BEARS SOUTH 13° 50' 06" EAST. PARCEL 2: ALL OF LOTS 1, 3, 5 AND 7, BLOCK 1, VILLA TRACT, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS SHOWN IN THE MAP IN BOOK 6, PAGE 165 OF MAPS, RECORDS OF LOS ANGELES COUNTY; AND LOTS 4 AND 5 IN BLOCK 28 OF ERKENBRECHER SYNDICATE SANTA MONICA TRACT, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 6, PAGES 26 AND 27, OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, TOGETHER WITH THOSE PORTIONS OF STEWART STREET (FORMERLY STEWART ALLEY), AND DELAWARE AVENUE (FORMERLY TOWNER AVENUE) VACATED BY ORDER OF THE LOS ANGELES COUNTY BOARD OF SUPERVISORS, AS SHOWN IN MISCELLANEOUS RECORDS IN BOOK 107, PAGE 30, RECORDS OF LOS ANGELES COUNTY, DESCRIBED AS FOLLOWS: STEWART STREET, FROM ITS INTERSECTION WITH THE CENTERLINE OF DELAWARE AVENUE TO A LINE 425 FEET NORTHWEST FROM AND PARALLEL WITH THE SOUTHEASTERLY LINE OF LOT 5 OF SAID BLOCK 28. EXCEPTING THEREFROM THE NORTHEASTERLY 20 FEET OF SAID VACATED PORTION OF STEWART STREET, AND THE SOUTHEASTERLY 30 FEET OF DELAWARE AVENUE FROM STEWART STREET TO A LINE 529.35 FEET SOUTHWEST OF THE SOUTHWESTERLY LINE OF STEWART STREET AND PARALLEL THERETO; AND THE SOUTHEASTERLY 30 FEET OF A PORTION OF DELAWARE AVENUE VACATED HYDROCARBON SUBSTANCES, SPECIAL ORDINANCE NO. 91 (STREET SERIES) DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHERLY CORNER OF LOT 4, BLOCK 29, SAID ERKENBRECHER SYNDICATE SANTA MONICA TRACT, THENCE NORTHEASTERLY ALONG THE NORTHWESTERLY LINE OF DELAWARE AVENUE 177.45 FEET TO A POINT; THENCE SOUTH 44° 48', EAST 60 FEET TO A POINT IN THE SOUTHEASTERLY LINE OF DELAWARE AVENUE; THENCE SOUTHWESTERLY ALONG THE SOUTHEASTERLY LINE OF DELAWARE AVENUE 177.50 FEET TO THE MOST WESTERLY CORNER OF LOT 4, BLOCK 28, SAID ERKENBRECHER SYNDICATE, SANTA MONICA TRACT; THENCE NORTHWESTERLY IN A DIRECT LINE ACROSS DELAWARE AVENUE 60 FEET TO THE POINT OF BEGINNING. EXCEPT FROM SAID LOTS 4 AND 5 IN SAID BLOCK 28 OF THE SOUTHEASTERLY 425.00 FEET THEREOF. 9.B.c Packet Pg. 2285 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of A-1 4138-1198-2895.3 APNs: 4268-015-901 & 4268-016-902 Library Property* All that real property situated in the County of Los Angeles, State of California, described as follows, and any improvements thereto: PARCEL 5: (LIBRARY BUILDING) PARCEL 5A: LOTS K, L, M, N, O, P, Q, R AND S IN BLOCK 143 OF THE TOWN OF SANTA MONICA, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGES 80 AND 81 AND IN BOOK 39 PAGES 45 ET SEQ. OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL 5B: LOT J IN BLOCK 143 OF THE TOWN OF SANTA MONICA, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGES 80 AND 81 AND IN BOOK 39 PAGES 45 ET SEQ. OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THEREFROM ALL OIL, GAS, HYDROCARBON SUBSTANCES AND MINERALS OF ANY KIND AND CHARACTER LYING MORE THAN 500 FEET BELOW THE SURFACE OF SAID LAND, TOGETHER WITH THE RIGHT TO DRILL INTO, THROUGH, AND TO USE AND OCCUPY ALL PARTS OF SAID LAND LYING MORE THAN 500 FEET BELOW THE SURFACE THEREOF FOR ANY AND ALL PURPOSES INCIDENTAL TO THE EXPLORATION FOR AND PRODUCTION OF OIL, GAS, HYDROCARBON SUBSTANCES OR MINERALS FROM SAID OR OTHER LANDS, BUT WITHOUT, HOWEVER, ANY RIGHT TO USE EITHER THE SURFACE OF SAID LAND OR ANY PORTION OF SAID LAND WITHIN 500 FEET OF THE SURFACE FOR ANY PURPOSE OR PURPOSES, AS PROVIDED IN A FINAL ORDER OF CONDEMNATION RECORDED JULY 23, 1992 AS INSTRUMENT NO. 92-1343795, OFFICIAL RECORDS. PARCEL 5C: LOT F IN BLOCK 143 OF THE TOWN OF SANTA MONICA, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGES 80 AND 81 AND IN BOOK 39 PAGES 45 ET SEQ. OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THEREFROM ALL OIL, GAS OR OTHER MINERAL SUBSTANCES BELOW A DEPTH OF 500 FEET WITHOUT THE RIGHT OF ACCESS THERETO FROM THE SURFACE OF SAID PROPERTY OR WITHIN 500 FEET THEREOF, AS PROVIDED IN DEED RECORDED FEBRUARY 26, 1965 AS INSTRUMENT NO. 913, OFFICIAL RECORDS. * The Ground Lease provides that, so long as no Lease Default Event shall have occurred and be continuing under the Lease Agreement, the term of this Ground Lease with respect to the Library Property shall terminate on the date the Written Certificate of the City required by Section 3.04(c) of the Indenture is filed with the Trustee, unless such term is sooner terminated as hereinafter provided, and, from and after the date of such termination (i) the description of the Library Property set forth in Exhibit A hereto shall be deemed to have been deleted therefrom and the term “Property” shall, for all purposes hereof, be deemed not to include the Library Property, and (ii) all right, title and interest in and to the portion of the Library Property shall vest in the City. 9.B.c Packet Pg. 2286 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of A-2 4138-1198-2895.3 PARCEL 5D: LOT H IN BLOCK 143 OF THE TOWN OF SANTA MONICA, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGES 80 AND 81 AND IN BOOK 39 PAGES 45 ET SEQ. OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THEREFROM ALL CRUDE OIL, PETROLEUM, GAS, BREA, ASPHALTUM AND KINDRED SUBSTANCES AND OTHER MINERAL RIGHTS BELOW A DEPTH OF 500 FEET WITHOUT THE RIGHT OF SURFACE ENTRY, AS PROVIDED IN DEED RECORDED MARCH 12, 1965 AS INSTRUMENT NO. 674, OFFICIAL RECORDS. PARCEL 5E: LOTS G AND I IN BLOCK 143 OF THE TOWN OF SANTA MONICA, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGES 80 AND 81 AND IN BOOK 39 PAGES 45 ET SEQ. OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. APN: [__________] 9.B.c Packet Pg. 2287 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 4138-1198-2895.3 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) On _____________, 2021, before me, , Notary Public, personally appeared ____________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same 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 [SEAL] A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 9.B.c Packet Pg. 2288 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 4138-1198-2895.3 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) On _____________, 2021, before me, , Notary Public, personally appeared ____________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same 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 [SEAL] A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 9.B.c Packet Pg. 2289 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 4138-1198-2895.3 CERTIFICATE OF ACCEPTANCE In accordance with Section 27281 of the California Government Code, this is to certify that the interest in the real property conveyed by the Ground Lease, dated as of [__________] 1, 2021, by and between the City of Santa Monica, a municipal corporation and chartered city organized and existing under and by virtue of the laws of the State of California (the “City”), and the Santa Monica Public Financing Authority, a joint powers authority organized and existing under the laws of the State of California (the “Authority”), from the City to the Authority, is hereby accepted by the undersigned on behalf of the Authority pursuant to authority conferred by resolution of the Board of Directors of the Authority adopted on July 13, 2021, and the Authority consents to recordation thereof by its duly authorized officer. Dated: [__________], 2021 SANTA MONICA PUBLIC FINANCING AUTHORITY By: ________________________________ 9.B.c Packet Pg. 2290 Attachment: Ground Lease - Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of 4164-2903-2495.3 LEASE AGREEMENT by and between CITY OF SANTA MONICA and SANTA MONICA PUBLIC FINANCING AUTHORITY Dated as of [_________] 1, 2021 9.B.d Packet Pg. 2291 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease TABLE OF CONTENTS Page i 4164-2903-2495.3 ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION ............................................ 2 Section 1.01. Definitions............................................................................................ 2 Section 1.02. Rules of Construction .......................................................................... 4 ARTICLE II LEASE OF PROPERTY; TERM .................................................................... 6 Section 2.01. Lease of Property ................................................................................. 6 Section 2.02. Occupancy; Term ................................................................................. 6 ARTICLE III RENTAL PAYMENTS ................................................................................... 8 Section 3.01. Rental Payments................................................................................... 8 Section 3.02. Base Rental Payments .......................................................................... 8 Section 3.03. Additional Rental Payments ................................................................ 8 Section 3.04. Fair Rental Value ................................................................................. 9 Section 3.05. Payment Provisions .............................................................................. 9 Section 3.06. Appropriations Covenant ..................................................................... 9 Section 3.07. Rental Abatement................................................................................. 9 Section 3.08. Prepayment ........................................................................................ 10 ARTICLE IV QUIET ENJOYMENT; MAINTENANCE; ALTERATIONS; LIENS ........ 12 Section 4.01. Quiet Enjoyment ................................................................................ 12 Section 4.02. Net-Net-Net Lease ............................................................................. 12 Section 4.03. Right of Entry .................................................................................... 12 Section 4.04. Maintenance and Utilities .................................................................. 12 Section 4.05. Additions to Property ......................................................................... 12 Section 4.06. Installation of City’s Equipment ........................................................ 12 Section 4.07. Mechanics’, Etc. Liens ....................................................................... 13 Section 4.08. Other Liens......................................................................................... 13 ARTICLE V INSURANCE; NET PROCEEDS; EMINENT DOMAIN ............................ 14 Section 5.01. Public Liability and Property Damage Insurance; Workers’ Compensation Insurance .................................................................... 14 Section 5.02. Title Insurance ................................................................................... 15 Section 5.03. Additional Insurance Provision; Form of Policies ............................. 15 Section 5.04. Self-Insurance .................................................................................... 15 Section 5.05. Damage or Destruction ...................................................................... 15 9.B.d Packet Pg. 2292 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease TABLE OF CONTENTS (continued) Page ii 4164-2903-2495.3 Section 5.06. Net Proceeds of Title Insurance ......................................................... 16 Section 5.07. Eminent Domain ................................................................................ 17 ARTICLE VI REPRESENTATIONS; COVENANTS ........................................................ 18 Section 6.01. Representations of the City ................................................................ 18 Section 6.02. Representation of the Authority ......................................................... 18 Section 6.03. Recordation ........................................................................................ 18 Section 6.04. Use of the Property ............................................................................ 18 Section 6.05. Other Liens......................................................................................... 18 Section 6.06. Taxes .................................................................................................. 18 Section 6.07. No Liability; Indemnification ............................................................ 19 Section 6.08. Further Assurances............................................................................. 20 ARTICLE VII LEASE DEFAULT EVENTS AND REMEDIES ......................................... 21 Section 7.01. Lease Default Events and Remedies .................................................. 21 Section 7.02. Waiver ................................................................................................ 24 ARTICLE VIII AMENDMENTS; ASSIGNMENT AND SUBLEASING; SUBSTITUTION OR RELEASE .................................................................. 25 Section 8.01. Amendments ...................................................................................... 25 Section 8.02. Assignment and Subleasing ............................................................... 25 Section 8.03. Substitution or Release of the Property ............................................. 26 ARTICLE IX MISCELLANEOUS ...................................................................................... 28 Section 9.01. Assignment to Trustee ....................................................................... 28 Section 9.02. Validity and Severability ................................................................... 28 Section 9.03. Notices ............................................................................................... 28 Section 9.04. Section Headings ............................................................................... 29 Section 9.05. Governing Laws ................................................................................. 29 Section 9.06. Electronic Signature ........................................................................... 29 Section 9.07. Execution in Counterparts.................................................................. 29 EXHIBIT A DESCRIPTION OF THE PROPERTY ....................................................... A-1 EXHIBIT B DESCRIPTION OF THE PROJECT ........................................................... B-1 9.B.d Packet Pg. 2293 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 4164-2903-2495.3 LEASE AGREEMENT THIS LEASE AGREEMENT (this “Lease Agreement”), dated as of [_________] 1, 2021, is by and between the CITY OF SANTA MONICA, a municipal corporation and charter city organized and existing under the laws of the State of California (the “City”), as lessee, and the SANTA MONICA PUBLIC FINANCING AUTHORITY, a joint powers authority organized and existing under the laws of the State of California (the “Authority”), as lessor. RECITALS WHEREAS, the City desires to finance a portion of the costs of the construction and installation of certain capital improvements to the City’s maintenance operations and storage facilities known as the “City Yards” (the “Project”); WHEREAS, the Authority desires to assist the City with such financing; WHEREAS, in order to finance the Project, the City is leasing certain real property, and the improvements thereto (the “Property”), to the Authority pursuant to a Ground Lease, dated as of the date hereof, and the City is subleasing the Property back from the Authority pursuant to this Lease Agreement; WHEREAS, the Property is more particularly described in Exhibit A attached hereto; WHEREAS, in order to provide the funds necessary to finance the Project, the Authority is issuing $[_________] aggregate principal amount of its Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021, payable from the base rental payments to be made by the City pursuant to this Lease Agreement; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of 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; NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties hereto do hereby agree as follows: 9.B.d Packet Pg. 2294 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 2 4164-2903-2495.3 ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION 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 specified, which meanings shall be equally applicable to both the singular and plural forms of any of the terms herein defined. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture. “Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.03 hereof. “Authority” means the Santa Monica Public Financing Authority, a joint powers authority organized and existing under the laws of the State, and any successor thereto. “Authorized Representative” means (a) with respect to the Authority, the Chairperson, the Executive Director or the Treasurer of the Authority, and any other Person designated as an Authorized Representative of the Authority in a Written Certificate of the Authority filed with the Trustee, and (b) with respect to the City, the Mayor of the City, the City Manager of the City, the Director of Finance/Treasurer of the City, the Assistant City Treasurer of the City, and any other Person designated as an Authorized Representative of the City in a Written Certificate of the City filed with the Trustee. “Base Rental Deposit Date” means the fifth Business Day next 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 3.02 hereof. “Bonds” means the Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021, issued under the Indenture. “City” means the City of Santa Monica, a municipal corporation and charter city organized and existing under the laws of the State, and any successor thereto. “Code” means the Internal Revenue Code of 1986. “Delivery Date” means [__________], 2021. “Fair Rental Value” means, with respect to the Property, the annual fair rental value thereof. “Fiscal Year” means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period hereafter selected and designated as the official fiscal year period of the City. 9.B.d Packet Pg. 2295 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 3 4164-2903-2495.3 “Ground Lease” means the Ground Lease, dated as of [_________] 1, 2021, by and between the City and the Authority, as originally executed and as it may from time to time be amended, supplemented or otherwise modified in accordance with the provisions thereof and hereof. “Indenture” means the Indenture, dated as of [_________] 1, 2021, by and among the Authority, the City and The Bank of New York Mellon Trust Company, N.A., as Trustee, as originally executed and as it may from time to time be amended, supplemented or otherwise modified in accordance with the provisions thereof. “Interest Payment Dates” means January 1 and July 1 of each year, commencing [January 1, 2021]. “Lease Agreement” means this Lease Agreement, dated as of [_________] 1, 2021, by and between the City and the Authority, as the same may from time to time be amended, supplemented or otherwise modified pursuant to the provisions hereof. “Lease Default Event” means any event or circumstance specified in Section 7.01 hereof as a Lease Default Event. “Library Property” means the property described under the caption “Library Property” in Exhibit A hereto. “Net 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. “Opinion of Bond 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 and satisfactory to and approved by the Trustee. “Outstanding” has the meaning ascribed to such term in the Indenture. “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 that the City may, pursuant to provisions of Section 6.06 hereof, permit to remain unpaid, (b) this Lease Agreement, (c) the Ground Lease, (d) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected 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, (e) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions that exist of record as of the Delivery Date, and (f) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the Delivery Date that 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. 9.B.d Packet Pg. 2296 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 4 4164-2903-2495.3 “Project” means the construction and installation of certain capital improvements to the City’s maintenance operations and storage facilities known as the “City Yards”, as described in Exhibit B hereto, a portion of the costs of which are to be financed with proceeds of the Bonds. “Property” means the real property described in Exhibit A hereto and any improvements thereto, subject to the provisions of Section 2.02 hereof relating to the termination of the term of this Lease Agreement with respect to the Library Property. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments. “Rental Period” means the period from the Delivery Date through June 30, 2022 and, thereafter, the twelve-month period commencing on July 1 of each year during the term of this Lease Agreement. “Scheduled Termination Date” means July 1, 20[__]. “State” means the State of California. “Trustee” means The Bank of New York Mellon Trust Company, N.A., as trustee under the Indenture, or any successor thereto as trustee thereunder substituted in its place as provided therein. “Written Certificate” and “Written Request” of the City mean, respectively, a written certificate or written request signed in the name of the City by an Authorized Representative of the City. 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. Rules of Construction. (a) The terms defined herein expressed in the singular shall, unless the context otherwise indicates, include the plural and vice versa. (b) The use herein of the masculine, feminine or neuter gender is for convenience only and shall be deemed and construed to include correlative words of the masculine, feminine or neuter gender, as appropriate. (c) References herein to a document shall include all amendments, supplements or other modifications to such document, and any replacements, substitutions or novation of, that document. (d) Any term defined herein by reference to another document shall continue to have the meaning ascribed thereto whether or not such other document remains in effect. (e) The use herein of the words “including” and “includes,” and words of similar import, shall be deemed to be followed by the phrase “without limitation.” 9.B.d Packet Pg. 2297 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 5 4164-2903-2495.3 (f) Headings of Articles and Sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. (g) All references herein to designated “Articles,” “Sections,” “Exhibits,” “subsections,” “paragraphs,” “clauses,” and other subdivisions are to the designated Articles, Sections, Exhibits, subsections, paragraphs, clauses, and other subdivisions of this Lease Agreement. (h) The words “hereof” (except when preceded by a specific Section or Article reference) “herein,” “hereby,” “hereunder,” “hereinabove,” “hereinafter,” and other equivalent words and phrases used herein refer to this Indenture and not solely to the particular portion hereof in which any such word is used. 9.B.d Packet Pg. 2298 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 6 4164-2903-2495.3 ARTICLE II LEASE OF PROPERTY; TERM Section 2.01. Lease of Property. (a) The Authority hereby leases to the City and the City hereby leases from the Authority the Property, on the terms and conditions hereinafter set forth, and 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 in the Property as lessee under this Lease Agreement and its leasehold or fee estate, as applicable, in the Property 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. This Lease Agreement shall constitute a sublease with respect to the Property. The leasehold interest in the Property 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 in the Property granted to the Authority under the Ground Lease. Section 2.02. Occupancy; Term. (a) The City shall take possession of the Property on the Delivery Date. (b) 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; 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; provided, however, that, so long as no Lease Default Event shall have occurred and be continuing under this Lease Agreement, the term of this Lease Agreement with respect to the Library Property shall terminate on the date the Written Certificate of the City required by Section 3.04(c) of the Indenture is filed with the Trustee, unless such term is sooner terminated as hereinafter provided, and, from and after the date of such termination (i) the description of the Library Property set forth in Exhibit A hereto shall be deemed to have been deleted therefrom and the term “Property” shall, for all purposes hereof, be deemed not to include the Library Property, and (ii) all right, title and interest in and to the Library Property shall vest in the City (in connection with which, the Authority and the Trustee shall execute such conveyances, deeds and other documents as may be necessary to effect such vesting of record). [Assess whether to add provision that authorizes recordation of a supplement that restates the Property description.] (c) If all of the Property shall be taken under the power of eminent domain, and the City does not elect to cause alternate real property to be substituted for all or a portion of the Property pursuant to, and in accordance with the provisions of, Section 8.03 hereof, as provided in clause (i) of Section 5.07(c) hereof but, rather, elects to deliver or cause to be delivered any award made in eminent domain proceedings for such taking to the Trustee for the application to the redemption, pursuant to Section 4.01 of the Indenture, of all or a portion of the Outstanding Bonds, as provided in clause (ii) of Section 5.07(c) hereof, then, on the date that possession thereof shall be so taken, the term of this Lease Agreement shall terminate. 9.B.d Packet Pg. 2299 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 7 4164-2903-2495.3 (d) If, prior to the Scheduled Termination Date, all Bonds shall be fully paid, or deemed paid in accordance with Article X of the Indenture, then, on the date of such payment or deemed payment, the term of this Lease Agreement shall terminate. (e) If on the Scheduled Termination Date, the Rental Payments payable hereunder shall have been abated at any time and for any reason, then the term of this Lease Agreement shall be extended until the date upon which all such Rental Payments shall have been paid in full, except that the term of this Lease Agreement shall in no event be extended more than ten years beyond the Scheduled Termination Date. (f) Upon the termination of the term of this Lease Agreement (other than as provided in Section 7.01 hereof), 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 and the Trustee shall execute such conveyances, deeds and other documents as may be necessary to effect such vesting of record. 9.B.d Packet Pg. 2300 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 8 4164-2903-2495.3 ARTICLE III RENTAL PAYMENTS Section 3.01. Rental Payments. (a) Rental Payments, consisting of Base Rental Payments and Additional 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. (b) The obligation of the City to make the Rental Payments, including the Base Rental Payments, does not constitute a debt of the City or of the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City 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. (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. Section 3.02. Base Rental Payments. (a) The City, subject to the provisions of Section 3.07 hereof, shall pay Base Rental Payments to the Authority. The Base Rental Payments shall be payable on the Interest Payment Dates and the Base Rental Payment payable on each Interest Payment Date shall be equal to the principal, if any, of and interest on the Bonds due and payable on such Interest Payment Date, including principal due and payable by reason of mandatory sinking fund redemption of the Bonds. (b) If the term of this Lease Agreement shall have been extended pursuant to Section 2.02 hereof, the Base Rental Payments shall be established so that the Base Rental Payment payable on each Interest Payment Date after the Scheduled Termination Date shall be equal to the principal, if any, of and interest on the Bonds remaining due and payable on such Interest Payment Date; provided, however, that the Rental Payments payable in any Rental Period shall not exceed the annual fair rental value of the Property. Section 3.03. Additional Rental Payments. (a) The City shall also pay, as Additional Rental Payments, such amounts as shall 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) insurance premiums for all insurance required pursuant to Article V hereof; and (iii) all other payments not constituting Base Rental Payments required to be paid by the City pursuant to the provisions of this Lease Agreement. 9.B.d Packet Pg. 2301 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 9 4164-2903-2495.3 (b) 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 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 3.04. Fair Rental Value. The parties hereto have agreed and determined that the Fair Rental Value of the Property is not less than $[__________] as of the Delivery Date[, and that, upon termination of the term of this Lease Agreement with respect to the Library Property pursuant to Section 2.02(b) hereof, the Fair Rental Value of the Property on the date of such termination will be not less than said amount]. In making such determinations of Fair Rental Value, consideration has been given to the uses and purposes that may be served by the Property and the benefits therefrom that 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 3.05. 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, or such other place or entity as the Authority 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 that 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 a 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. Section 3.06. Appropriations Covenant. The City shall 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 covenants on the part of the City herein contained 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 3.07. Rental Abatement. (a) 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 California Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate this Lease Agreement by virtue of any such interference, and this Lease Agreement shall continue in full force and effect. The City 9.B.d Packet Pg. 2302 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 10 4164-2903-2495.3 and the Authority shall, in a reasonable manner and in good faith, determine the amount of such abatement; 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 Authority shall provide the Trustee with a certificate setting forth the amount of abatement 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. (b) Notwithstanding the foregoing, to the extent that Net Proceeds of rental interruption insurance are available for the payment of Rental Payments, Rental Payments shall not be abated as provided in subsection (a) of this Section but, rather, shall be payable by the City as a special obligation payable solely from such Net Proceeds. Section 3.08. Prepayment. (a) The City may cause all or a portion of the Bonds to be optionally redeemed pursuant to Section 4.02 of the Indenture by prepaying on any date on or after July 1, 20__, all or a portion of the Base Rental Payments from any source of available funds, which prepayment shall be accomplished by the City’s paying an amount sufficient to cause such Bonds to be redeemed pursuant to Section 4.02 of the Indenture on such prepayment date. (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 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. (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 the Base Rental Payments shall be recalculated in order to take such prepayment into account. The City agrees that if, following a partial prepayment of 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, or deposit pursuant to subsection (b) of this Section, the term of this Lease Agreement shall be terminated. (e) Before making any prepayment pursuant to this Article, the City shall give written notice to the Authority and the Trustee specifying the date on which the prepayment will be made, 9.B.d Packet Pg. 2303 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 11 4164-2903-2495.3 which date shall be not less than 45 days prior to the prepayment date, unless such notice shall be waived by the Authority and the Trustee. 9.B.d Packet Pg. 2304 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 12 4164-2903-2495.3 ARTICLE IV QUIET ENJOYMENT; MAINTENANCE; ALTERATIONS; LIENS Section 4.01. Quiet Enjoyment. The Authority hereby covenants and agrees that it will not take any action to prevent the City, so long as the City is keeping and performing the covenants and agreements herein contained, from having quiet and peaceable possession and enjoyment of the Property during the term hereof. Section 4.02. 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 4.03. Right of Entry. The Authority 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 4.04. 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 limitation, 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 4.05. Additions to Property. Subject to Section 4.07 hereof, 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 damage 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 that is at least equal to the value of the Property immediately prior to the making of such additions, modifications and improvements. Section 4.06. 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 Trustee 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 9.B.d Packet Pg. 2305 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 13 4164-2903-2495.3 any and all damage to the Property resulting from the installation, modification or removal of any such items; and the Property, upon completion of any installations, modifications or removals made pursuant to this Section, shall be of a value that is at least equal to the value of the Property immediately prior to the making of such installations, modifications or removals. 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 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. Section 4.07. Mechanics’, Etc. Liens. In the event 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 that may be secured by a mechanics’, materialmen’s or other lien against the Property or the Authority’s interest therein, and shall cause each such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due, except that, if the City desires to contest any such lien, it may do so as long as such contest 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 4.08. Other Liens. The City shall 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 that materially impairs the City in conducting its business or utilizing 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 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 shall 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 obligation hereunder to perform such agreements and covenants. The Trustee shall have no liability with respect to any determination made in good faith to proceed or decline to defend, pay or compromise any such claim or demand. 9.B.d Packet Pg. 2306 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 14 4164-2903-2495.3 ARTICLE V INSURANCE; NET PROCEEDS; EMINENT DOMAIN Section 5.01. Public 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 comprehensive 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 minimum amount of $500,000 for damage to property (subject to a deductible clause of not to exceed $100,000) resulting from a single accident or event. Such public 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. The Net Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the Net Proceeds of such insurance shall have been paid. 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 hereof. (b) The City shall maintain or cause to be maintained casualty insurance insuring the Property against fire, lightning and all other risks covered by an extended coverage endorsement (excluding earthquake and flood) to the full insurable value of the Property, subject to a $100,000 loss deductible provision. Full insurable value shall not be less than the aggregate principal amount of the Outstanding Bonds. The Net Proceeds of such casualty insurance shall be applied as provided in Section 5.05 hereof. 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 hereof. (c) 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 any part of the Property as a result of any of the hazards required to be covered pursuant to subsection (b) of this Section in 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 Net Proceeds of such rental interruption insurance shall be applied to the payment of Rental Payments during the period in which, as a result of the damage or destruction to the Property that resulted in the receipt of such Net Proceeds, there is substantial interference with the City’s right to the use or occupancy of the Property. The City’s obligations under this subsection may not be satisfied by self-insurance. (d) The insurance required by this Section shall be provided by reputable insurance companies with claims paying abilities determined, in the reasonable opinion of the City’s professionally qualified risk manager or an independent insurance consultant, to be adequate for the purposes hereof. 9.B.d Packet Pg. 2307 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 15 4164-2903-2495.3 Section 5.02. Title Insurance. The City shall provide, on the Closing Date, 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 Outstanding Bonds. Said 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; provided, however, that one or more of said estates may be insured through an endorsement to such policy or policies. The Net Proceeds of such title insurance shall be applied as provided as provided in Section 5.06 hereof. Section 5.03. Additional Insurance Provision; Form of Policies. (a) 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 contain a standard lessee clause in favor of the Trustee and the general liability insurance policies shall be endorsed to show the Trustee, as an additional insured. All such policies shall provide that the Trustee shall be given 30 days’ notice of the expiration thereof, any intended cancellation thereof or any reduction in the coverage provided thereby. 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 City. (b) The City shall cause to be delivered to the Trustee, on or before August 15 of each year, commencing August 15, 2022, a schedule of the insurance policies being maintained in accordance herewith and 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. Any self-insurance maintained by the City pursuant to this Article shall comply with the following terms: (a) the self-insurance program shall be approved in writing by the City’s professionally qualified risk manager or by 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 a bi-annual basis by the City’s professionally qualified risk manager or by an independent insurance consultant and any deficiencies in any self-insured claims reserve fund shall be remedied in accordance with the recommendation of the City’s professionally qualified risk manager or such independent insurance consultant, as applicable; and (c) in the event the self-insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by the City’s professionally qualified risk manager or by an independent insurance consultant, shall be maintained. Section 5.05. Damage or Destruction. (a) If the Property or any portion thereof shall be damaged or destroyed, the City shall, within 30 days of the occurrence of the event of damage or 9.B.d Packet Pg. 2308 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 16 4164-2903-2495.3 destruction, notify the Trustee in writing of the City’s determination as to whether or not such damage or destruction will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof. (b) If the City determines that such damage or destruction will not result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof. (c) If the City determines that such damage or destruction will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, then the City shall (i) apply sufficient funds from the Net Proceeds of any insurance (other than Net Proceeds of rental interruption insurance), including the proceeds of any self-insurance, received on account of such damage or destruction and other legally available funds to the repair or replacement of the Property or the portions thereof that have been damaged or destroyed to the condition that existed prior to such damage or destruction, provided that, within 40 days of the occurrence of the event of damage or destruction, the City delivers to the Trustee a Written Certificate of the City (A) certifying that the City has sufficient funds to so complete such repair or replacement of the Property or such portions thereof and identifying such funds and the location thereof, and (B) stating that such funds will not be used for any other purpose until such repair or replacement is completed, (ii) within 60 days of the occurrence of the event of damage or destruction, cause alternate real property to be substituted for all or a portion of the Property pursuant to, and in accordance with the provisions of, Section 8.03 hereof, or (iii) within 60 days of the occurrence of the event of damage or destruction, deliver sufficient funds from such Net Proceeds and other legally available funds to the Trustee for the application to the redemption, pursuant to Section 4.01 of the Indenture (A) of all of the Outstanding Bonds, or (B) of such portion of the Outstanding Bonds as shall result in (I) the annual fair rental value of the Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, as certified in a Written Certificate of the City delivered to the Trustee, being at least equal to 105% of the maximum amount of the principal (including principal due and payable by reason of mandatory sinking fund redemption of such Bonds) of and interest on the Bonds coming due in the then current Rental Period or any subsequent Rental Period, and (II) the fair replacement value of the Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, as certified in a Written Certificate of the City delivered to the Trustee, being at least equal to the aggregate principal amount of the Bonds then Outstanding. Section 5.06. Net Proceeds of Title Insurance. (a) If a defect in title to the Property results in the creation of a right to receive Net Proceeds under any policy of title insurance with respect to the Property or any portion thereof, the City shall, within 30 days of the creation of such right, notify the Trustee in writing of the City’s determination as to whether or not such title defect will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof. 9.B.d Packet Pg. 2309 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 17 4164-2903-2495.3 (b) If the City determines that such title defect will not result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, such Net Proceeds shall be remitted to the City and used for any lawful purpose thereof. (c) If the City determines that such title defect will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, then the City shall (i) within 60 days of the creation of such right to receive such Net Proceeds, cause alternate real property to be substituted for all or a portion of the Property pursuant to, and in accordance with the provisions of, Section 8.03 hereof, or (ii) immediately upon receipt thereof, deliver or cause to be delivered such Net Proceeds to the Trustee for the application to the redemption, pursuant to Section 4.01 of the Indenture, of all or a portion of the Outstanding Bonds. Section 5.07. Eminent Domain. (a) If all or a portion of the Property shall be taken under the power of eminent domain, the City shall, no later than 45 days prior to the day that possession thereof shall be so taken, notify the Trustee in writing of the City’s determination as to whether or not such taking will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof. (b) If the City determines that such taking will not result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, any award made in eminent domain proceedings for such taking shall be remitted to the City and used for any lawful purpose thereof. (c) If the City determines that such taking will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, then the City shall (i) no later than 60 days prior to the day that possession thereof shall be so taken, cause alternate real property to be substituted for all or a portion of the Property pursuant to, and in accordance with the provisions of, Section 8.03 hereof, or (ii) immediately upon receipt thereof, deliver or cause to be delivered any award made in eminent domain proceedings for such taking to the Trustee for the application to the redemption, pursuant to Section 4.01 of the Indenture, of all or a portion of the Outstanding Bonds. 9.B.d Packet Pg. 2310 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 18 4164-2903-2495.3 ARTICLE VI REPRESENTATIONS; COVENANTS Section 6.01. Representations of the City. The City represents and warrants (a) that the City has the full power and authority to enter into, to execute and to deliver this Lease Agreement and to perform all of its duties and obligations hereunder, and has duly authorized the execution and delivery of this Lease Agreement, and (b) the Property will be used in the performance of essential governmental functions. Section 6.02. Representation of the Authority. The Authority represents and warrants that the Authority 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. Section 6.03. Recordation. The City shall record, or cause to be recorded, with the Los Angeles County Recorder, the Lease Agreement and the Ground Lease, or memoranda thereof, and a memorandum of the assignment of the City’s right, title and interest in and to the Ground Lease and the Lease Agreement pursuant to Section 5.01 of the Indenture. Section 6.04. 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) 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 that 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 6.05. Other Liens. The City shall 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 that materially impairs the City in conducting its business or utilizing 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 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 shall 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 obligation hereunder to perform such agreements and covenants. The Trustee shall have no liability with respect to any determination made in good faith to proceed or decline to defend, pay or compromise any such claim or demand. Section 6.06. Taxes. (a) 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 9.B.d Packet Pg. 2311 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 19 4164-2903-2495.3 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. (b) After giving notice to the Authority and the Trustee, 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 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 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 that may result from nonpayment, in form satisfactory to the Authority. Section 6.07. No Liability; Indemnification. (a) 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 about 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 and employees thereof harmless against and from any and all claims by or on behalf of Person 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 (i) any condition of the Property and the adjoining sidewalks and passageways, (ii) 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, (iii) any act or negligence of licensees in connection with their use, occupancy or operation of the Property, or (iv) 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 or 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. (b) In no event shall the Authority 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. 9.B.d Packet Pg. 2312 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 20 4164-2903-2495.3 Section 6.08. Further Assurances. The City shall make, execute and deliver any and all such further agreements, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Lease Agreement and for the better assuring and confirming unto the Authority of the rights and benefits provided in this Lease Agreement. 9.B.d Packet Pg. 2313 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 21 4164-2903-2495.3 ARTICLE VII LEASE DEFAULT EVENTS AND REMEDIES Section 7.01. Lease Default Events and Remedies. (a) If (i) 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 to be kept or performed by the City, if such failure shall have continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the City by the Trustee, the Authority, or the Owners of not less than 5% of the aggregate principal amount of the Bonds at the time Outstanding; provided, however, that if the failure stated in the notice can be corrected, but not within such 30 day period, such failure shall not constitute a Lease Default Event hereunder if corrective action is instituted by the City within such 30 day period and the City shall thereafter diligently and in good faith cure such failure in a reasonable period of time, provided, further, that, unless consented to by the Trustee, such period of time shall not exceed 180 days, (ii) except as otherwise provided in Article VIII hereof, the City’s interest in this Lease Agreement or any part thereof be assigned or transferred, either voluntarily or by operation of law or otherwise, (iii) the City or the Authority shall commence a voluntary case under Title 11 of the United States Code or any substitute or successor statute, or (iv) the City shall fail to observe and perform any of the covenants, agreements or conditions on its part in the Indenture contained, if such failure shall have continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the City by the Trustee, the Authority or the Owners of not less than 5% of the aggregate principal amount of the Bonds at the time Outstanding; provided, however, that if the failure stated in the notice can be corrected, but not within such 30 day period, such failure shall not constitute a Lease Default Event hereunder if corrective action is instituted by the City within such 30 day period and the City shall thereafter diligently and in good faith cure such failure in a reasonable period of time, provided, further, that, unless consented to by the Trustee, such period of time shall not exceed 180 days, such failure or event shall constitute a Lease Default Event under this Lease Agreement. (b) Upon the occurrence of any Lease Default Event hereunder, 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: (i) To terminate this Lease Agreement in the manner hereinafter provided on account of such Lease Default Event, notwithstanding any re-entry or re-letting of the Property as hereinafter provided for in subparagraph (ii) 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 such Lease Default Event, 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 herein contained. Neither notice 9.B.d Packet Pg. 2314 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 22 4164-2903-2495.3 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 a Lease Default Event hereunder 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 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. (ii) Without terminating this Lease Agreement, (A) 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 (B) to exercise any and all rights of entry and re-entry upon the Property. In the event the Authority does not elect to terminate this Lease Agreement in the manner provided for in subparagraph (i) 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 punctually 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 Payments 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 connection 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 9.B.d Packet Pg. 2315 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 23 4164-2903-2495.3 otherwise, but that, on the contrary, upon the occurrence of a Lease Default Event hereunder, 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 (i) 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 caused or that 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. (c) In addition to the other remedies set forth in this Section, upon the occurrence of a Lease Default Event hereunder, the Authority shall be entitled to proceed to protect and enforce the rights vested in the Authority by this Lease Agreement or by law. The provisions of this Lease Agreement and the duties of the City and of its board, officers or employees shall be enforceable by the Authority by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction. Without limiting the generality of the foregoing, the Authority shall have the right to bring the following actions: (i) Accounting. By action or suit in equity to require the City and its board, 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 that may be unlawful or in violation of the rights of the Authority. (iii) Mandamus. By mandamus or other suit, action or proceeding at law or in equity to enforce the Authority’s rights against the City (and its board, 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. (d) 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 remedies given to the Authority hereunder, the Authority nevertheless shall be entitled to whatever remedies are allowable under any statute or rule of law. (e) In the event 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. 9.B.d Packet Pg. 2316 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 24 4164-2903-2495.3 (f) Notwithstanding anything to the contrary contained in this Lease Agreement, the Authority shall have no right upon a default by the City hereunder, a Lease Default Event hereunder or otherwise to accelerate Rental Payments. (g) Notwithstanding anything herein to the contrary, the termination of this Lease Agreement by the Authority on account of a Lease Default Event hereunder shall not effect or result in a termination of the lease of the Property by the City to the Authority pursuant to the Ground Lease. Section 7.02. 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 that 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 waiver 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. 9.B.d Packet Pg. 2317 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 25 4164-2903-2495.3 ARTICLE VIII AMENDMENTS; ASSIGNMENT AND SUBLEASING; SUBSTITUTION OR RELEASE Section 8.01. Amendments. (a) This Lease Agreement and the Ground Lease, 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 by the City and the Authority, but only with the prior written consent of the Owners of a majority of the aggregate principal amount the Bonds then Outstanding, provided that no such amendment shall (i) extend the payment date of any Base Rental Payment or reduce any Base Rental Payment, without the prior written consent of the Owner of each Bond so affected, or (ii) reduce the percentage of the aggregate principal amount 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, without the prior written consent of the Owners of all the Bonds then Outstanding. (b) This Lease Agreement and the Ground Lease, and the rights and obligations of the City and the Authority hereunder and thereunder, may also be amended at any time by an amendment hereto or thereto, which shall become binding upon execution by the City and the Authority, without the written consents of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes: (i) to add to the agreements, conditions, covenants and terms required 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; (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 that the Authority or the City may deem desirable or necessary and not inconsistent herewith or therewith, and that shall not materially adversely affect the rights or interests of the Owners; (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 interest on the Bonds; (iv) to provide for the substitution or release of a portion of the Property in accordance with the provisions of Section 8.03 hereof; or (v) 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 that shall not materially adversely affect the interests of the Owners. Section 8.02. 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 of law or otherwise; provided, however, that the Property 9.B.d Packet Pg. 2318 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 26 4164-2903-2495.3 may be subleased in whole or in part by the City, provided that 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) 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 Lease Default Event hereunder; and (d) the City shall furnish the Authority and the Trustee with an Opinion of Bond 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 8.03. 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 Property 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 pursuant to this Section, 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; provided, however, that such conditions shall not apply to a release of the Library Property in connection with the termination of the term of this Lease Agreement with respect to the Library Property pursuant to Section 2.02(b) hereof: (a) an independent certified real estate appraiser selected by the City shall have found (and shall have delivered a certificate to the City and the Trustee setting forth its findings) that the Property, as constituted after such substitution or release (i) has an annual fair rental value greater than or equal to 105% of the maximum amount of the principal of and interest on the Bonds coming due in the then current Rental Period or any subsequent Rental Period, including principal due and payable by reason of mandatory sinking fund redemption of such Bonds), (ii) has a fair replacement value at least equal to the aggregate principal amount of the Bonds then Outstanding, and (iii) has a useful life equal to or greater than the useful life of the Property, as constituted prior to such substitution or release; (b) the City shall have obtained or caused to be obtained an CLTA or ALTA title insurance policy or policies with respect to any substituted property in the amount of the fair market value of such substituted property (which fair market value shall have been determined by an independent certified real estate appraiser), of the type and with the endorsements described in Section 5.02 hereof; 9.B.d Packet Pg. 2319 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 27 4164-2903-2495.3 (c) the City shall have certified to the Trustee that the substituted real property is of approximately the same degree of essentiality to the City as the portion of the Property for which it is being substituted; (d) the City shall have provided the Trustee with an Opinion of Bond 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; and (e) 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 substituted or released and to include any substituted real property in the description of the Property contained herein and in the Ground Lease. 9.B.d Packet Pg. 2320 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 28 4164-2903-2495.3 ARTICLE IX MISCELLANEOUS Section 9.01. Assignment to Trustee. The City understands and agrees that, upon the execution and delivery of the Indenture (which is occurring simultaneously with the execution and delivery hereof), certain right, title and interest of the Authority in and to this Lease Agreement will be sold, assigned and transferred to the Trustee for the benefit of the Owners of the Bonds. The City hereby consents to such sale, assignment and transfer. Upon the execution and delivery of the Indenture, references in the operative provisions hereof to the Authority shall be deemed to be references to the Trustee, as assignee of the Authority. Section 9.02. 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, provisions and conditions are contrary to or inconsistent with such holding, shall remain in full force and effect. Section 9.03. 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: If to the City: City of Santa Monica 1685 Main Street, Mail Stop 9 Santa Monica, California 90401 Attention: Finance Director If to the Authority: Santa Monica Public Financing Authority c/o City of Santa Monica 1685 Main Street, Mail Stop 9 Santa Monica, California 90401 Attention: Finance Director 9.B.d Packet Pg. 2321 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 29 4164-2903-2495.3 If to the Trustee: The Bank of New York Mellon Trust Company, N.A. 400 South Hope Street, Suite 500 Los Angeles, California 90071 Attention: Corporate Trust Department 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 given by courier or delivery service or if personally served or delivered, upon delivery, (b) if given by 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, or (d) if given by any other means, upon delivery at the address specified in this Section. Section 9.04. 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 9.05. Governing Laws. This Lease Agreement shall be governed by and construed in accordance with the laws of the State. Section 9.06. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Lease Agreement may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Lease Agreement using an electronic signature, it is signing, adopting, and accepting this Lease Agreement and that signing this Lease Agreement using an electronic signature is the legal equivalent of having placed its handwritten signature on this Lease Agreement on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Lease Agreement in a usable format. Section 9.07. Execution in Counterparts. This Lease Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 9.B.d Packet Pg. 2322 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 30 4164-2903-2495.3 IN WITNESS WHEREOF, the parties hereto have caused this Lease Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first written above. CITY OF SANTA MONICA By: ATTEST: ____________________________________ APPROVED AS TO FORM: SANTA MONICA PUBLIC FINANCING AUTHORITY By: ATTEST: ____________________________________ APPROVED AS TO FORM: 9.B.d Packet Pg. 2323 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 31 4164-2903-2495.3 EXHIBIT A DESCRIPTION OF THE PROPERTY City Yards Property [All or a portion of] that real property situated in the County of Los Angeles, State of California, described as follows, and any improvements thereto: PARCEL A: (APN: 4268-015-901) THAT PORTION OF LOT 1 IN BLOCK 29 OF THE ERKENDRECHER’S SYNDICATE SANTA MONICA TRACT, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 6, PAGES 26 AND 27 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE NORTHWESTERLY LINE OF SAID LOT, 247 FEET NORTHEASTERLY FROM THE MOST WESTERLY CORNER OF SAID LOT 1; THENCE SOUTHEASTERLY PARALLEL WITH THE SOUTHWESTERLY LINE OF SAID LOT, 245 FEET; THENCE NORTHEASTERLY PARALLEL WITH THE NORTHWESTERLY LINE OF SAID LOT, 108 FEET TO THE NORTHEASTERLY LINE OF SAID LOT; THENCE NORTHWESTERLY ALONG THE NORTHEASTERLY LINE, 245 FEET TO THE MOST NORTHERLY CORNER OF SAID LOT; THENCE SOUTHWESTERLY ALONG THE NORTHWESTERLY LINE OF SAID LOT, 108 FEET TO THE POINT OF BEGINNING. PARCEL B: (APN: 4268-016-902) PARCEL 1: LOTS 2, 3 AND 4 IN BLOCK 29 OF ERKENBRECHER SYNDICATE SANTA MONICA TRACT, AS PER MAP RECORDED IN BOOK 6, PAGES 26 AND 27 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER, TOGETHER WITH PORTIONS OF CERTAIN STREETS AND AN ALLEY VACATED ADJOINING SAID LOTS, ALL IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE NORTHERLY LINE OF MICHIGAN AVENUE VACATED WITH THE NORTHEASTERLY LINE OF THE SOUTHWEST 10 FEET OF STEWART ALLEY VACATED (OR PROLONGATION THEREOF) AS SAID VACATED AVENUE AND ALLEY ARE SHOWN ON A MAP RECORDED IN BOOK 107, PAGE 30 OF MISCELLANEOUS RECORDS OF SAID COUNTY; THENCE WESTERLY ALONG SAID NORTHERLY LINE OF MICHIGAN AVENUE TO THE NORTHEASTERLY PROLONGATION OF SOUTHWESTERLY LINE OF SAID LOT 4, BLOCK 29; THENCE SOUTHEASTERLY ALONG SAID PROLONGATION TO THE MOST WESTERLY CORNER OF SAID LOT 4; THENCE WESTERLY ALONG THE NORTHERLY LINE OF SAID LOT 3, BLOCK 29, A DISTANCE OF 44.71 FEET TO AN ANGLE POINT THEREIN; THENCE SOUTHWESTERLY ALONG THE NORTHWESTERLY LINE OF LOT 3, AND LOT 2 IN BLOCK 29, A DISTANCE OF 671.39 FEET TO THE MOST WESTERLY CORNER OF SAID LOT 2; THENCE SOUTHEASTERLY ALONG THE SOUTHWESTERLY LINE OF LOT 2, A DISTANCE OF 490.15 FEET TO THE MOST SOUTHERLY CORNER OF SAID LOT; THENCE NORTHEASTERLY ALONG THE SOUTHEASTERLY LINE OF SAID LOTS 2 AND 3 A DISTANCE OF 707.04 FEET TO THE MOST EASTERLY CORNER OF SAID LOT 3; THENCE SOUTHEASTERLY ALONG THE SOUTHWESTERLY LINE OF THAT PORTION OF DELAWARE AVENUE, VACATED BY ORDINANCE NO. 91 OF THE CITY OF SANTA MONICA, A DISTANCE OF 30 FEET TO THE CENTER LINE OF SAID DELAWARE AVENUE; THENCE NORTHEASTERLY ALONG SAID CENTER LINE TO AND ALONG THE CENTER LINE OF THAT PORTION OF TOWNER AVENUE, SHOWN AS VACATED ON MAP RECORDED IN BOOK 107, PAGE 30 OF MISCELLANEOUS RECORDS, TO SAID NORTHEAST LINE OF THE SOUTHWEST 10 FEET OF VACATED STEWART ALLEY; THENCE NORTHWESTERLY IN A DIRECT LINE TO THE POINT OF BEGINNING. EXCEPT THEREFROM THAT PORTION OF SAID LAND DESCRIBED AS FOLLOWS: 9.B.d Packet Pg. 2324 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 32 4164-2903-2495.3 BEGINNING AT THE MOST SOUTHERLY CORNER OF SAID LOT; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID LOT, NORTH 45° 54' 33" EAST, 19.81 FEET TO A CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 45 FEET; THENCE ALONG SAID CURVE, WESTERLY FROM A TANGENT WHICH BEARS SOUTH 78° 11' 56" WEST, THROUGH AN ANGLE 13° 01' 57", AN ARC DISTANCE OF 10.24 FEET; THENCE TANGENT FROM SAID CURVE, NORTH 88° 46' 07" WEST, 16.85 FEET TO THE SOUTHWESTERLY LINE OF SAID LOT; THENCE ALONG SAID SOUTHWESTERLY LINE, SOUTHEASTERLY 18.44 FEET TO THE POINT OF BEGINNING. ALSO EXCEPT THAT PORTION OF LOT 2 OF BLOCK 29 OF ERKENBRECHER SYNDICATE SANTA MONICA TRACT, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 6, PAGES 26 AND 27 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHERLY CORNER OF SAID LOT; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID LOT, NORTH 45° 54' 33" EAST 19.81 FEET TO A CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 45 FEET; THENCE WESTERLY ALONG SAID CURVE FROM A TANGENT WHICH BEARS SOUTH 78° 11' 56" WEST, THROUGH AN ANGLE OF 13° 01' 57",AN ARC DISTANCE OF 10.24 FEET; THENCE TANGENT FROM SAID CURVE, NORTH 88° 46' 07" WEST 16.85 FEET, MORE OR LESS TO THE MOST WESTERLY POINT OF PARCEL 1 AS DESCRIBED IN INSTRUMENT NO. 1532 OF OFFICIAL RECORDS AS RECORDED IN BOOK 1486, PAGE 778; THENCE ALONG SAID SOUTHWESTERLY LINE 10.27 FEET TO THE TRUE POINT OF BEGINNING; THENCE ALONG SAID SOUTHWESTERLY LINE NORTH 44° 05' 59" WEST 59.00 FEET; THENCE NORTHEASTERLY AT RIGHT ANGLE TO THE SAID SOUTHWESTERLY LINE, TO A POINT IN A LINE PARALLEL WITH AND DISTANT 12 FEET NORTHEASTERLY TO SAID SOUTHWESTERLY LINE; THENCE ALONG SAID PARALLEL LINE SOUTH 44° 05' 59" EAST 65.49 FEET MORE OR LESS, TO THE POINT IN A CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 210 FEET, A RADIAL LINE OF SAID CURVE TO SAID POINT BEARS SOUTH 17° 33' 28" EAST; THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 3° 43' 22" 13.64 FEET, TO THE TRUE POINT OF BEGINNING, A RADIAL LINE OF SAID CURVE TO SAID POINT BEARS SOUTH 13° 50' 06" EAST. PARCEL 2: ALL OF LOTS 1, 3, 5 AND 7, BLOCK 1, VILLA TRACT, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS SHOWN IN THE MAP IN BOOK 6, PAGE 165 OF MAPS, RECORDS OF LOS ANGELES COUNTY; AND LOTS 4 AND 5 IN BLOCK 28 OF ERKENBRECHER SYNDICATE SANTA MONICA TRACT, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 6, PAGES 26 AND 27, OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, TOGETHER WITH THOSE PORTIONS OF STEWART STREET (FORMERLY STEWART ALLEY), AND DELAWARE AVENUE (FORMERLY TOWNER AVENUE) VACATED BY ORDER OF THE LOS ANGELES COUNTY BOARD OF SUPERVISORS, AS SHOWN IN MISCELLANEOUS RECORDS IN BOOK 107, PAGE 30, RECORDS OF LOS ANGELES COUNTY, DESCRIBED AS FOLLOWS: STEWART STREET, FROM ITS INTERSECTION WITH THE CENTERLINE OF DELAWARE AVENUE TO A LINE 425 FEET NORTHWEST FROM AND PARALLEL WITH THE SOUTHEASTERLY LINE OF LOT 5 OF SAID BLOCK 28. EXCEPTING THEREFROM THE NORTHEASTERLY 20 FEET OF SAID VACATED PORTION OF STEWART STREET, AND THE SOUTHEASTERLY 30 FEET OF DELAWARE AVENUE FROM STEWART STREET TO A LINE 529.35 FEET SOUTHWEST OF THE SOUTHWESTERLY LINE OF STEWART STREET AND PARALLEL THERETO; AND THE SOUTHEASTERLY 30 FEET OF A PORTION OF DELAWARE AVENUE VACATED HYDROCARBON SUBSTANCES, SPECIAL ORDINANCE NO. 91 (STREET SERIES) DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHERLY CORNER OF LOT 4, BLOCK 29, SAID ERKENBRECHER SYNDICATE SANTA MONICA TRACT, THENCE NORTHEASTERLY ALONG THE NORTHWESTERLY LINE OF DELAWARE AVENUE 177.45 FEET TO A POINT; THENCE SOUTH 44° 48', EAST 60 FEET TO A POINT IN THE SOUTHEASTERLY LINE OF DELAWARE AVENUE; THENCE SOUTHWESTERLY ALONG THE SOUTHEASTERLY LINE OF DELAWARE AVENUE 177.50 FEET TO THE MOST WESTERLY CORNER OF LOT 4, BLOCK 28, SAID ERKENBRECHER SYNDICATE, SANTA MONICA TRACT; THENCE NORTHWESTERLY IN A DIRECT LINE ACROSS DELAWARE AVENUE 60 FEET TO THE POINT OF BEGINNING. EXCEPT FROM SAID LOTS 4 AND 5 IN SAID BLOCK 28 OF THE SOUTHEASTERLY 425.00 FEET THEREOF. 9.B.d Packet Pg. 2325 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease A-1 4164-2903-2495.3 APNs: 4268-015-901 & 4268-016-902 Library Property* All that real property situated in the County of Los Angeles, State of California, described as follows, and any improvements thereto: PARCEL 5: (LIBRARY BUILDING) PARCEL 5A: LOTS K, L, M, N, O, P, Q, R AND S IN BLOCK 143 OF THE TOWN OF SANTA MONICA, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGES 80 AND 81 AND IN BOOK 39 PAGES 45 ET SEQ. OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL 5B: LOT J IN BLOCK 143 OF THE TOWN OF SANTA MONICA, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGES 80 AND 81 AND IN BOOK 39 PAGES 45 ET SEQ. OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THEREFROM ALL OIL, GAS, HYDROCARBON SUBSTANCES AND MINERALS OF ANY KIND AND CHARACTER LYING MORE THAN 500 FEET BELOW THE SURFACE OF SAID LAND, TOGETHER WITH THE RIGHT TO DRILL INTO, THROUGH, AND TO USE AND OCCUPY ALL PARTS OF SAID LAND LYING MORE THAN 500 FEET BELOW THE SURFACE THEREOF FOR ANY AND ALL PURPOSES INCIDENTAL TO THE EXPLORATION FOR AND PRODUCTION OF OIL, GAS, HYDROCARBON SUBSTANCES OR MINERALS FROM SAID OR OTHER LANDS, BUT WITHOUT, HOWEVER, ANY RIGHT TO USE EITHER THE SURFACE OF SAID LAND OR ANY PORTION OF SAID LAND WITHIN 500 FEET OF THE SURFACE FOR ANY PURPOSE OR PURPOSES, AS PROVIDED IN A FINAL ORDER OF CONDEMNATION RECORDED JULY 23, 1992 AS INSTRUMENT NO. 92-1343795, OFFICIAL RECORDS. PARCEL 5C: LOT F IN BLOCK 143 OF THE TOWN OF SANTA MONICA, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGES 80 AND 81 AND IN BOOK 39 PAGES 45 ET SEQ. OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THEREFROM ALL OIL, GAS OR OTHER MINERAL SUBSTANCES BELOW A DEPTH OF 500 FEET WITHOUT THE RIGHT OF ACCESS THERETO FROM THE SURFACE OF SAID PROPERTY OR WITHIN 500 FEET THEREOF, AS PROVIDED IN DEED RECORDED FEBRUARY 26, 1965 AS INSTRUMENT NO. 913, OFFICIAL RECORDS. * The Ground Lease provides that, so long as no Lease Default Event shall have occurred and be continuing under the Lease Agreement, the term of this Ground Lease with respect to the Library Property shall terminate on the date the Written Certificate of the City required by Section 3.04(c) of the Indenture is filed with the Trustee, unless such term is sooner terminated as hereinafter provided, and, from and after the date of such termination (i) the description of the Library Property set forth in Exhibit A hereto shall be deemed to have been deleted therefrom and the term “Property” shall, for all purposes hereof, be deemed not to include the Library Property, and (ii) all right, title and interest in and to the portion of the Library Property shall vest in the City. 9.B.d Packet Pg. 2326 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease A-2 4164-2903-2495.3 PARCEL 5D: LOT H IN BLOCK 143 OF THE TOWN OF SANTA MONICA, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGES 80 AND 81 AND IN BOOK 39 PAGES 45 ET SEQ. OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THEREFROM ALL CRUDE OIL, PETROLEUM, GAS, BREA, ASPHALTUM AND KINDRED SUBSTANCES AND OTHER MINERAL RIGHTS BELOW A DEPTH OF 500 FEET WITHOUT THE RIGHT OF SURFACE ENTRY, AS PROVIDED IN DEED RECORDED MARCH 12, 1965 AS INSTRUMENT NO. 674, OFFICIAL RECORDS. PARCEL 5E: LOTS G AND I IN BLOCK 143 OF THE TOWN OF SANTA MONICA, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGES 80 AND 81 AND IN BOOK 39 PAGES 45 ET SEQ. OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. APN: [__________] 9.B.d Packet Pg. 2327 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease B-1 4164-2903-2495.3 EXHIBIT B DESCRIPTION OF THE PROJECT The Project consists of the construction and installation of certain capital improvements to the City’s maintenance operations and storage facilities known as the “City Yards” located at the City Yards, 2500 Michigan Avenue, near the intersection of 24th Street and Michigan Avenue. 9.B.d Packet Pg. 2328 Attachment: Lease K Santa Monica PFA 2021 Lease Revenue Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 4124-3559-5823.3 INDENTURE by and among SANTA MONICA PUBLIC FINANCING AUTHORITY and CITY OF SANTA MONICA and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., AS TRUSTEE Dated as of [__________] 1, 2021 Relating to Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 9.B.e Packet Pg. 2329 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease TABLE OF CONTENTS Page i 4124-3559-5823.3 ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION; EQUAL SECURITY ........ 3 Section 1.01. Definitions............................................................................................ 3 Section 1.02. Rules of Construction .......................................................................... 8 Section 1.03. Equal Security ...................................................................................... 9 ARTICLE II THE BONDS ................................................................................................. 10 Section 2.01. Authorization of Bonds ...................................................................... 10 Section 2.02. Terms of Bonds .................................................................................. 10 Section 2.03. Execution of Bonds ............................................................................ 11 Section 2.04. Authentication of Bonds .................................................................... 11 Section 2.05. Registration Books ............................................................................. 11 Section 2.06. Transfer and Exchange of Bonds ....................................................... 12 Section 2.07. Book-Entry System ............................................................................ 12 Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen ...................................... 14 Section 2.09. Temporary Bonds............................................................................... 15 ARTICLE III DELIVERY OF BONDS; APPLICATION OF AMOUNTS ........................ 16 Section 3.01. Issuance of Bonds .............................................................................. 16 Section 3.02. Issuance of Bonds; Application of Proceeds ..................................... 16 Section 3.03. Costs of Issuance Fund ...................................................................... 16 Section 3.04. Project Fund ....................................................................................... 16 ARTICLE IV REDEMPTION OF BONDS ......................................................................... 18 Section 4.01. Extraordinary Redemption ................................................................. 18 Section 4.02. Optional Redemption ......................................................................... 18 Section 4.03. Mandatory Sinking Fund Redemption ............................................... 18 Section 4.04. Notice of Redemption ........................................................................ 19 Section 4.05. Selection of Bonds for Redemption ................................................... 20 Section 4.06. Partial Redemption of Bonds ............................................................. 20 Section 4.07. Effect of Notice of Redemption ......................................................... 20 ARTICLE V PLEDGE AND ASSIGNMENT; FUNDS AND ACCOUNTS .................... 21 Section 5.01. Pledge and Assignment ...................................................................... 21 Section 5.02. Payment Fund .................................................................................... 21 Section 5.03. Redemption Fund ............................................................................... 22 Section 5.04. Rebate Fund ....................................................................................... 22 9.B.e Packet Pg. 2330 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease TABLE OF CONTENTS (continued) Page ii 4124-3559-5823.3 Section 5.05. Investments ........................................................................................ 22 ARTICLE VI NET PROCEEDS AND TITLE INSURANCE; COVENANTS .................. 24 Section 6.01. Application of Net Proceeds .............................................................. 24 Section 6.02. Title Insurance ................................................................................... 25 Section 6.03. Punctual Payment............................................................................... 25 Section 6.04. Compliance with Indenture ................................................................ 25 Section 6.05. Compliance with Ground Lease and Lease Agreement ..................... 25 Section 6.06. Observance of Laws and Regulations ................................................ 26 Section 6.07. Other Liens......................................................................................... 26 Section 6.08. Prosecution and Defense of Suits ...................................................... 26 Section 6.09. Recordation ........................................................................................ 26 Section 6.10. Tax Covenants ................................................................................... 26 Section 6.11. Continuing Disclosure ....................................................................... 27 Section 6.12. Further Assurances............................................................................. 27 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES ................................................ 28 Section 7.01. Events of Default ............................................................................... 28 Section 7.02. Action on Default ............................................................................... 28 Section 7.03. Other Remedies .................................................................................. 29 Section 7.04. Remedies Not Exclusive .................................................................... 29 Section 7.05. Application of Amounts After Default .............................................. 29 Section 7.06. Power of Trustee to Enforce .............................................................. 30 Section 7.07. Owners’ Direction of Proceedings ..................................................... 30 Section 7.08. Limitation on Owners’ Right to Sue .................................................. 30 Section 7.09. Termination of Proceedings ............................................................... 31 Section 7.10. No Waiver of Default......................................................................... 31 ARTICLE VIII THE TRUSTEE ............................................................................................. 32 Section 8.01. Duties and Liabilities of Trustee ........................................................ 32 Section 8.02. Qualifications; Removal and Resignation; Successors ...................... 32 Section 8.03. Liability of Trustee ............................................................................ 33 Section 8.04. Right to Rely on Documents and Opinions ....................................... 35 Section 8.05. Accounting Records and Financial Statements.................................. 36 Section 8.06. Preservation and Inspection of Documents........................................ 37 9.B.e Packet Pg. 2331 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease TABLE OF CONTENTS (continued) Page iii 4124-3559-5823.3 Section 8.07. Compensation and Indemnification of the Trustee ............................ 37 ARTICLE IX SUPPLEMENTAL INDENTURES .............................................................. 38 Section 9.01. Supplemental Indentures .................................................................... 38 Section 9.02. Effect of Supplemental Indenture ...................................................... 39 Section 9.03. Endorsement of Bonds; Preparation of New Bonds .......................... 39 Section 9.04. Amendment of Particular Bonds ........................................................ 39 ARTICLE X DEFEASANCE.............................................................................................. 40 Section 10.01. Discharge of Indenture ....................................................................... 40 Section 10.02. Bonds Deemed to Have Been Paid .................................................... 40 Section 10.03. Unclaimed Moneys ............................................................................ 41 ARTICLE XI MISCELLANEOUS ...................................................................................... 43 Section 11.01. Successor Deemed Included in all References to Predecessor .......... 43 Section 11.02. Limitation of Rights ........................................................................... 43 Section 11.03. Destruction of Bonds ......................................................................... 43 Section 11.04. Severability of Invalid Provisions ...................................................... 43 Section 11.05. Notices ............................................................................................... 43 Section 11.06. Evidence of Rights of Owners ........................................................... 44 Section 11.07. Disqualified Bonds............................................................................. 44 Section 11.08. Money Held for Particular Bonds ...................................................... 45 Section 11.09. Funds and Accounts ........................................................................... 45 Section 11.10. Business Days .................................................................................... 45 Section 11.11. Waiver of Personal Liability .............................................................. 45 Section 11.12. Conclusive Evidence of Regularity ................................................... 46 Section 11.13. Partial Invalidity................................................................................. 46 Section 11.14. Governing Laws ................................................................................. 46 Section 11.15. Electronic Signature ........................................................................... 46 Section 11.16. Execution in Counterparts.................................................................. 46 EXHIBIT A PERMITTED INVESTMENTS .................................................................. A-1 EXHIBIT B FORM OF BOND ........................................................................................ B-1 9.B.e Packet Pg. 2332 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 4124-3559-5823.3 INDENTURE THIS INDENTURE (this “Indenture”), dated as of [__________] 1, 2021, is by and among the SANTA MONICA PUBLIC FINANCING AUTHORITY, a joint powers authority organized and existing under the laws of the State of California (the “Authority”), the CITY OF SANTA MONICA, a municipal corporation and charter city organized and existing under the laws of the State of California (the “City”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States of America, as Trustee (the “Trustee”). W I T N E S S E T H: WHEREAS, the City desires to finance a portion of the costs of the construction and installation of certain capital improvements to the City’s maintenance operations and storage facilities known as the “City Yards” (the “Project”); WHEREAS, the Authority desires to assist the City with such financing; WHEREAS, in order to finance the Project, the City is leasing certain real property, and the improvements thereto (the “Property”), to the Authority pursuant to a Ground Lease, dated as of the date hereof, and the City is subleasing the Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof (the “Lease Agreement”); WHEREAS, in order to provide the funds necessary to finance the Project, the Authority and the City desire to provide for the issuance of $[________] aggregate principal amount of its Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 (the “Bonds”), payable from the base rental payments to be made by the City pursuant to the Lease Agreement; WHEREAS, 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, each of the Authority and the City has authorized the execution and delivery of this Indenture; WHEREAS, the Authority and the City have determined that all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid and binding special obligations of the Authority, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Indenture has been in all respects duly authorized; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Indenture 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 Indenture. 9.B.e Packet Pg. 2333 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 2 4124-3559-5823.3 NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of, and premium, if any, and interest on all Bonds at any time issued and outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the owners thereof, and for other valuable consideration, the receipt whereof is hereby acknowledged, the Authority and the City do hereby covenant and agree with the Trustee, for the benefit of the respective owners from time to time of the Bonds, as follows: 9.B.e Packet Pg. 2334 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 3 4124-3559-5823.3 ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION; EQUAL SECURITY Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Indenture and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Lease Agreement. “Act” means the Marks-Roos Local Bond Pooling Act of 1985, constituting Section 6584 et seq. of the California Government Code. “Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.03 of the Lease Agreement. “Authority” means the Santa Monica Public Financing Authority, a joint powers authority organized and existing under the laws of the State, and any successor thereto. “Authorized Denominations” means, with respect to the Bonds, $5,000 and integral multiples thereof. “Authorized Representative” means (a) with respect to the Authority, the Chairperson, the Executive Director or the Treasurer of the Authority, and any other Person designated as an Authorized Representative of the Authority in a Written Certificate of the Authority filed with the Trustee, and (b) with respect to the City, the Mayor of the City, the City Manager of the City, the Director of Finance/Treasurer of the City, the Assistant City Treasurer of the City, and any other Person designated as an Authorized Representative of the City in a Written Certificate of the City filed with the Trustee. “Base Rental Payments” means all amounts payable to the Authority by the City as Base Rental Payments pursuant to Section 3.02 of the Lease Agreement. “Beneficial Owners” means those Persons for which the Participants have caused the Depository to hold Book-Entry Bonds. “Bond Year” means each twelve-month period beginning on July 2 in each year and extending to the next succeeding July 1, both dates inclusive, except that the first Bond Year shall begin on the Closing Date and end on July 1, 2022. “Bonds” means the Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021, issued hereunder. “Book-Entry Bonds” means the Bonds registered in the name of the Depository, or the Nominee thereof, as the registered owner thereof pursuant to the terms and provisions of Section 2.07. “Business Day” means a day that is not (a) a Saturday, Sunday or legal holiday in the State, (b) a day on which banking institutions in the State, or in any state in which the Office of 9.B.e Packet Pg. 2335 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 4 4124-3559-5823.3 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 Book-Entry Bonds. “City” means the City of Santa Monica, a municipal corporation and charter city organized and existing under the laws of the State, and any successor thereto. “Closing Date” means the date upon which the Bonds are delivered to the Original Purchaser, being [_________], 2021. “Code” means the Internal Revenue Code of 1986. “Continuing Disclosure Certificate” means the Continuing Disclosure Certificate, dated as of [__________] 1, 2021, executed by the City, as originally executed and as it may from time to time be amended, supplemented or otherwise modified in accordance with the provisions thereof. “Costs of Issuance” means all 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 Bonds and any preliminary official statement and final official statement pertaining to the Bonds, rating agency fees, CUSIP Service Bureau charges, legal 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 pursuant to Section 3.03 hereof. “Defeasance Securities” means (a) non-callable direct obligations of the United States of America (“United States Treasury Obligations”), and (b) evidences of ownership of proportionate interests in future interest and principal payments on United States Treasury Obligations held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying United States Treasury Obligations are not available to any Person claiming through the custodian or to whom the custodian may be obligated. “Depository” means DTC, and its successors as securities depository for any Book-Entry Bonds, including any such successor appointed pursuant to Section 2.07 hereof. “DTC” means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of New York. “Electronic Means” means e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the 9.B.e Packet Pg. 2336 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 5 4124-3559-5823.3 Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder. “Event of Default” means any event or circumstance specified in Section 7.01 hereof. “Ground Lease” means the Ground Lease, dated as of [__________] 1, 2021, by and between the City and the Authority, as originally executed and as it may from time to time be amended, supplemented or otherwise modified in accordance with the provisions thereof and of the Lease Agreement. “Indenture” means this Indenture, dated as of [__________] 1, 2021, by and among the Authority, the City and The Bank of New York Mellon Trust Company, N.A., as Trustee, as originally executed and as it may from time to time be amended or supplemented by any Supplemental Indenture. “Interest Account” means the account by that name within the Payment Fund established pursuant to Section 5.02 hereof. “Interest Payment Dates” means January 1 and July 1 of each year, commencing [January 1, 2022]. “Lease Agreement” means the Lease Agreement, dated as of [__________] 1, 2021, by and between the City and the Authority, as originally executed and as it may from time to time be amended, supplemented or otherwise modified in accordance with the provisions thereof. “Lease Default Event” means an event of default pursuant to and as described in Section 7.01 of the Lease Agreement. “Lease Revenues” means all Base Rental Payments payable by the City pursuant to the Lease Agreement, including any prepayments thereof, any Net Proceeds and any amounts received by the Trustee as a result of or in connection with the Trustee’s pursuit of remedies under the Lease Agreement upon a Lease Default Event. “Letter of Representations” means the Letter of Representations from the Authority to the Depository, in which the Authority makes certain representations with respect to issues of its securities for deposit by the Depository. “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. “Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.07 hereof. “Office of the Trustee” means the principal corporate trust office of the Trustee in Los Angeles, California, or such other office as may be specified to the Authority and the City in 9.B.e Packet Pg. 2337 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 6 4124-3559-5823.3 writing; provided, however, that with respect to presentation of Bonds for payment or for registration of transfer and exchange, such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business shall be conducted, which other office or agency shall be specified to the Authority and the City by the Trustee in writing. “Opinion of Bond 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 and satisfactory to and approved by the Trustee. “Original Purchaser” means the original purchaser of the Bonds from the Authority. “Outstanding” means, when used as of any particular time with reference to Bonds, subject to the provisions of Section 11.07 hereof, 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 hereof, and (c) Bonds in lieu of which other Bonds shall have been authenticated and delivered by the Trustee, or that have been paid without surrender thereof, pursuant to Section 2.08 hereof. “Owner” means, with respect to a Bond, the Person in whose name such Bond is registered on the Registration Books. “Participant” means any entity that is recognized as a participant by DTC in the book- entry system of maintaining records with respect to Book-Entry Bonds. “Participating Underwriters” has the meaning ascribed thereto in the Continuing Disclosure Certificate. “Payment Fund” means the fund by that name established in accordance with Section 5.02 hereof. “Permitted Investments” is defined in Exhibit A attached hereto. “Person” means an individual, corporation, limited liability company, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. “Principal Account” means the account by that name within the Payment Fund established pursuant to Section 5.02 hereof. “Principal Payment Date” means a date on which the principal of the Bonds becomes due and payable, either as a result of the maturity thereof or by mandatory sinking fund redemption. “Project Costs” means all costs of constructing and installing the Project, including but not limited to (a) all costs which the Authority or the City shall be required to pay to a seller or any other Person under the terms of any contract or contracts for the purchase of the Project, (b) all costs which the Authority or the City shall be required to pay a contractor or any other Person for the construction and installation of the Project, (c) obligations of the Authority or the City 9.B.e Packet Pg. 2338 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 7 4124-3559-5823.3 incurred for services (including obligations payable to the Authority or the City for actual out-of-pocket expenses of the Authority or the City) in connection with the construction and installation of the Project, including reimbursement to the Authority or the City for all advances and payments made in connection with the Project prior to or after delivery of the Bonds, (d) the actual out-of-pocket costs of the Authority or the City for test borings, surveys, estimates and preliminary investigations therefor, as well as for the performance of all other duties required by or consequent to the proper construction and installation of the Project, including administrative expenses under the Lease Agreement and hereunder relating to the construction and installation of the Project, and (e) any sums required to reimburse the Authority or the City for advances made by the Authority or the City for any of the above items or for any other costs incurred and for work done by the Authority or the City that are properly chargeable to the Project. “Project Fund” means the fund by that name established pursuant to Section 3.04 hereof. “Rebate Fund” means the fund by that name established pursuant to Section 5.04 hereof. “Rebate Requirement” has the meaning ascribed thereto in the Tax Certificate. “Record Date” means, with respect to interest payable on any Interest Payment Date, the 15th calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day. “Redemption Fund” means the fund by that name established pursuant to Section 5.03 hereof. “Redemption Price” means the aggregate amount of principal of 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 hereof. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments. “Rental Period” means the period from the Closing Date through June 30, 2022 and, thereafter, the twelve-month period commencing on July 1 of each year during the term of the Lease Agreement. “S&P” means S&P Global Ratings, a corporation organized and existing under the laws of the State of New York, 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 deemed to refer to any other nationally recognized securities rating agency selected by the Authority and approved by the Trustee. “State” means the State of California. 9.B.e Packet Pg. 2339 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 8 4124-3559-5823.3 “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 Bonds relating to the requirements of Section 148 of the Code, including the exhibits thereto, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. “Trustee” means The Bank of New York Mellon Trust Company, N.A., a national banking association organized and existing under the laws of the United States of America, or any successor thereto as Trustee hereunder substituted in its place as provided herein. “Verification Report” means, with respect to the deemed payment of Bonds pursuant to Section 10.02(a) hereof, a report of a nationally recognized certified public accountant, or firm of such accountants, verifying that the Defeasance Securities and cash, if any, deposited in connection with such deemed payment satisfy the requirements of clause (ii)(B) of subsection (a) of Section 10.02(a) hereof. “Written Certificate” and “Written Request” (a) of the Authority mean, respectively, a written certificate or written request signed in the name of the Authority by an Authorized Representative of the Authority, and (b) of the City mean, respectively, a written certificate or written request signed in the name of the City by an Authorized Representative of the City. 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. Rules of Construction. (a) The terms defined herein expressed in the singular shall, unless the context otherwise indicates, include the plural and vice versa. (b) The use herein of the masculine, feminine or neuter gender is for convenience only and shall be deemed and construed to include correlative words of the masculine, feminine or neuter gender, as appropriate. (c) References herein to a document shall include all amendments, supplements or other modifications to such document, and any replacements, substitutions or novation of, that document. (d) Any term defined herein by reference to another document shall continue to have the meaning ascribed thereto whether or not such other document remains in effect. (e) The use herein of the words “including” and “includes,” and words of similar import, shall be deemed to be followed by the phrase “without limitation.” (f) Headings of Articles and Sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. 9.B.e Packet Pg. 2340 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 9 4124-3559-5823.3 (g) All references herein to designated “Articles,” “Sections,” “Exhibits,” “subsections,” “paragraphs,” “clauses,” and other subdivisions are to the designated Articles, Sections, Exhibits, subsections, paragraphs, clauses, and other subdivisions of this Indenture. (h) The words “hereof” (except when preceded by a specific Section or Article reference) “herein,” “hereby,” “hereunder,” “hereinabove,” “hereinafter,” and other equivalent words and phrases used herein refer to this Indenture and not solely to the particular portion hereof in which any such word is used. Section 1.03.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, and premium, if any, and interest on all Bonds that may from time to time be authorized, executed, issued and delivered hereunder, subject to the agreements, conditions, 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. 9.B.e Packet Pg. 2341 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 10 4124-3559-5823.3 ARTICLE II THE BONDS Section 2.01. Authorization of Bonds. (a) The Authority hereby authorizes the issuance of the Bonds under and subject to the terms of this Indenture, the Act and other applicable laws of the State. (b) The Bonds shall be special obligations of the Authority, payable solely from the Lease Revenues and the other assets pledged therefor hereunder. 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 Bonds. Section 2.02. Terms of Bonds. (a) The Bonds shall be designated “Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021.” The aggregate principal amount of Bonds that may be issued and Outstanding under this Indenture shall not exceed $[__________], except as may be otherwise provided in Section 2.08 hereof. (b) The Bonds shall be issued in fully registered form without coupons in Authorized Denominations, so long as no Bond shall have more than one maturity date. The Bonds shall be dated as of the Closing Date, shall be issued in the aggregate principal amount of $[__________], shall mature on July 1 of each year, shall bear interest at the rates per annum (calculated on the basis of a 360-day year comprised of twelve 30-day months) and shall be in the principal amounts as follows: Maturity Date (July 1) Principal Amount Interest Rate (c) Interest on the Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event interest thereon shall be payable from such Interest Payment Date, (ii) a Bond is authenticated on 9.B.e Packet Pg. 2342 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 11 4124-3559-5823.3 or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (iii) interest on any 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 previously been paid or duly provided for. Interest shall be paid in lawful money of the United States on each Interest Payment Date. Interest shall be paid by check of the Trustee mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date, or by wire transfer at the written request of an Owner of not less than $1,000,000 aggregate principal amount of Bonds, which written request is received by the Trustee on or prior to the Record Date. Notwithstanding the foregoing, interest on any Bond that is not punctually paid or duly provided for on any Interest Payment Date shall, if and to the extent that amounts subsequently become available therefor, be paid on a payment date established by the Trustee to the Person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee for the payment of such defaulted interest, notice of which shall be given to such Owner not less than ten days prior to such special record date. (d) The principal of and premium, if any, on the 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 Bonds shall be in substantially the form set forth in Exhibit B hereto, with appropriate or necessary insertions, omissions and variations as permitted or required hereby. Section 2.03. Execution of Bonds. The Bonds shall be executed in the name and on behalf of the Authority with the manual or facsimile signature of an Authorized Representative 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 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 though those who signed and attested the same had continued to be such officers, 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 2.04. 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 B hereto for the Bonds, manually 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 2.05. Registration Books. The Trustee shall 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 available for inspection and copying by the Authority and the City during regular 9.B.e Packet Pg. 2343 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 12 4124-3559-5823.3 business hours and upon reasonable notice; 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 herein provided. Section 2.06. Transfer and Exchange of Bonds. (a) Any Bond may 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 to the Trustee 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 maturity in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. (b) The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of the same maturity of other Authorized Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. (c) The Trustee shall not be obligated to make any transfer or exchange of Bonds pursuant to this Section during the period established by the Trustee for the selection of Bonds for redemption, or with respect to any Bonds selected for redemption. Section 2.07. Book-Entry System. (a) The Bonds shall initially be issued as Book-Entry Bonds, and the Bonds of each maturity date shall be in the form of a separate single fully-registered Bond (which may be typewritten). Upon initial issuance, the ownership of each Bond shall be registered in the Registration Books in the name of the Nominee, as nominee of the Depository. Payment of principal of, and interest and premium, if any, on, any Book-Entry Bond registered in the name of the Nominee shall be made on the applicable payment date by wire transfer of New York clearing house or equivalent next day funds or by wire transfer of same day funds to the account of the Nominee. Such payments shall be made to the Nominee at the address that is, on the Record Date, shown for the Nominee in the Registration Books. (b) With respect to Book-Entry Bonds, the Authority, the City and the Trustee shall have no responsibility or obligation to any Participant or to any Person on behalf of which such a Participant holds an interest in such Book-Entry Bonds. Without limiting the immediately preceding sentence, the Authority, the City and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in Book-Entry Bonds, (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the Registration Books, of any notice with respect to Book-Entry Bonds, including any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in Book-Entry Bonds of a maturity to be redeemed in the event such Book-Entry Bonds are redeemed in part, (iv) the payment to any Participant or any other Person, other than an Owner as shown in the Registration Books, of any amount with respect to principal of, or premium, if any, or interest on Book-Entry Bonds, or (v) any consent given or other action taken by the Depository as Owner. 9.B.e Packet Pg. 2344 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 13 4124-3559-5823.3 (c) The Authority, the City and the Trustee may treat and consider the Person in whose name each Book-Entry Bond is registered in the Registration Books as the absolute Owner of such Book-Entry Bond for the purpose of payment of principal of, and premium, if any, and interest on such Bond, for the purpose of selecting any Bonds, or portions thereof, to be redeemed, for the purpose of giving notices of redemption and other matters with respect to such Book-Entry Bond, for the purpose of registering transfers with respect to such Book-Entry Bond, for the purpose of obtaining any consent or other action to be taken by Owners and for all other purposes whatsoever, and the Authority, the City and the Trustee shall not be affected by any notice to the contrary. (d) In the event of a redemption of all or a portion of a Book-Entry Bond, the Depository, in its discretion (i) may request the Trustee to authenticate and deliver a new Book-Entry Bond, or (ii) if the Depository is the sole Owner of such Book-Entry Bond, shall make an appropriate notation on the Book-Entry Bond indicating the date and amounts of the reduction in principal thereof resulting from such redemption, except in the case of final payment, in which case such Book-Entry Bond must be presented to the Trustee prior to payment. (e) The Trustee shall pay all principal of, and premium, if any, and interest on the Book-Entry Bonds only to or “upon the order of” (as that term is used in the Uniform Commercial Code as adopted in the State) the respective Owner, as shown in the Registration Books, or such Owner’s respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the obligations with respect to payment of principal of, and premium, if any, and interest on the Book-Entry Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the Registration Books, shall receive an authenticated Book-Entry Bond. Upon delivery by the Depository to the Owners, the Authority, the City and the Trustee of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall refer to such nominee of the Depository. (f) In order to qualify the Book-Entry Bonds for the Depository’s book-entry system, the Authority shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the Authority, the City or the Trustee any obligation whatsoever with respect to Persons having interests in such Book-Entry Bonds other than the Owners, as shown on the Registration Books. Such Letter of Representations may provide the time, form, content and manner of transmission, of notices to the Depository. In addition to the execution and delivery of a Letter of Representations by the Authority, the Authority, the City and the Trustee shall take such other actions, not inconsistent with this Indenture, as are reasonably necessary to qualify Book-Entry Bonds for the Depository’s book-entry program. (g) In the event the Authority determines that it is in the best interests of the Beneficial Owners that they be able to obtain certificated Bonds and that such Bonds should therefore be made available, and notifies the Depository and the Trustee of such determination, the Depository will notify the Participants of the availability through the Depository of certificated Bonds. In such event, the Trustee shall transfer and exchange certificated Bonds as requested by the Depository and any other Owners in appropriate amounts. In the event (i) the Depository determines not to continue to act as securities depository for Book-Entry Bonds, or (ii) the Depository shall no longer so act and gives notice to the Trustee of such determination, then the Authority shall discontinue 9.B.e Packet Pg. 2345 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 14 4124-3559-5823.3 the Book-Entry system with the Depository. If the Authority determines to replace the Depository with another qualified securities depository, the Authority shall prepare or direct the preparation of a new single, separate, fully-registered Bond for each maturity date of such Book-Entry Bonds, registered in the name of such successor or substitute qualified securities depository or its nominee. If the Authority fails to identify another qualified securities depository to replace the Depository, then the Book-Entry Bonds shall no longer be restricted to being registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging such Bonds shall designate, in accordance with the provisions of Sections 2.06, 2.08 and 2.09. Whenever the Depository requests the Authority to do so, the Authority shall cooperate with the Depository in taking appropriate action after reasonable notice (i) to make available one or more separate certificates evidencing the Book-Entry Bonds to any Participant having Book-Entry Bonds credited to its account with the Depository, and (ii) to arrange for another securities depository to maintain custody of certificates evidencing the Book- Entry Bonds. (h) Notwithstanding any other provision of this Indenture to the contrary, if the Depository is the sole Owner of the Bonds, so long as any Book-Entry Bond is registered in the name of the Nominee, all payments of principal of, and premium, if any, and interest on such Book-Entry Bond and all notices with respect to such Book-Entry Bond shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed by the Depository. (i) In connection with any notice or other communication to be provided to Owners 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 of Book-Entry Bonds, the Trustee shall establish a record date for such consent or other action and give the Depository notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. (j) Prior to any transfer of Book-Entry Bonds outside the Depository’s book-entry system, the Authority shall 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 any cost basis reporting obligations under Section 6045 of the Code. Section 2.08. 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 the same maturity in a like principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or upon 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 Trustee 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 the same maturity in a like aggregate principal amount 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 require payment by the Owner of a sum not exceeding the actual cost of preparing each replacement Bond issued under this Section and of the 9.B.e Packet Pg. 2346 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 15 4124-3559-5823.3 expenses that may be incurred by the Authority and the Trustee. Any Bond issued under the provisions of this Section in lieu of any Bond 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 secured by this Indenture. Section 2.09. Temporary Bonds. The Bonds may be issued in temporary form exchangeable for definitive Bonds 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 it shall execute and deliver definitive Bonds as promptly thereafter as practicable, and thereupon the temporary Bonds 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 and maturities in Authorized Denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder. 9.B.e Packet Pg. 2347 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 16 4124-3559-5823.3 ARTICLE III DELIVERY OF BONDS; APPLICATION OF AMOUNTS Section 3.01. Issuance of Bonds. The Authority may, at any time, execute the Bonds and deliver the same to the Trustee. The Trustee shall authenticate the Bonds and deliver the Bonds to the Original Purchaser upon receipt of a Written Request of the Authority and upon receipt of the purchase price therefor. Section 3.02. Issuance of Bonds; Application of Proceeds. On the Closing Date, the proceeds of the sale of the Bonds received by the Trustee, $[__________] shall be deposited by the Trustee as follows: (a) the Trustee shall deposit the amount of $[__________] in the Costs of Issuance Fund; (b) the Trustee shall deposit the amount of $[__________] in the Interest Account of the Payment Fund; and (c) the Trustee shall deposit the amount of $[__________] in the Project Fund. Section 3.03. Costs of Issuance Fund. (a) The Trustee shall establish and maintain a separate fund designated the “Costs of Issuance Fund.” On the Closing Date, the Trustee shall deposit in the Costs of Issuance Fund the amount required to be deposited therein pursuant to Section 3.02 hereof. (b) 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 City stating (i) the Person to whom payment is to be made and instructions for such payment, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment is a proper charge against the Costs of Issuance Fund, and (v) that such amounts have not been the subject of a prior disbursement from the Costs of Issuance Fund, in each case together with a statement or invoice for each amount requested thereunder. On the last Business Day that is no later than six months after the Closing Date, the Trustee shall transfer any amount remaining in the Costs of Issuance Fund to the Project Fund and, upon making such transfer, the Costs of Issuance Fund shall be closed. Section 3.04. Project Fund. (a) The Trustee shall establish and maintain a separate fund designated the “Project Fund.” On the Closing Date, the Trustee shall deposit in the Project Fund the amount required to be deposited therein pursuant to Section 3.02 hereof. (b) The moneys in the Project Fund shall be used and withdrawn by the Trustee from time to time to pay the Project Costs upon submission of a Written Request of the City stating (i) the Person to whom payment is to be made and instructions for such payment, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment is a proper charge against the Project Fund, and (v) that such amounts have not been the subject of a prior disbursement from the Project Fund, in each case together with a statement or invoice for each amount requested thereunder. 9.B.e Packet Pg. 2348 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 17 4124-3559-5823.3 (c) Upon the filing of a Written Certificate of the City stating (i) that the Project has been completed and that all costs of the Project have been paid, or (ii) that the Project has been substantially completed and that all remaining costs of the Project to be paid from the Project Fund have been determined and specifying the amount to be retained therefor, the Trustee shall (A) if the amount remaining in the Project Fund (less any such retention) is equal to or greater than $25,000, transfer the portion of such amount equal to the largest integral multiple of $5,000 that is not greater than such amount to the Redemption Fund, to be applied to the redemption of Bonds, and (B) after making the transfer, if any, required to be made pursuant to the preceding clause (A), transfer all of the amount remaining in the Project Fund (less any such retention) to the Interest Account, to be applied to the payment of interest on the Bonds; provided, however, that, if, prior to such transfers, the Trustee receives (I) a Written Request of the City directing the Trustee make an alternate disposition of all or a portion of such amount remaining in the Project Fund (less any such retention), and (II) an Opinion of Bond Counsel to the effect that such disposition would not, in and of itself, adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes, the Trustee shall make such alternate disposition of such remaining amount or portion thereof in accordance with such Written Request of the City. 9.B.e Packet Pg. 2349 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 18 4124-3559-5823.3 ARTICLE IV REDEMPTION OF BONDS Section 4.01. Extraordinary Redemption. The 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 Proceeds received with respect to all or a portion of the Property and deposited by the Trustee in the Redemption Fund in accordance with the provisions hereof, at a Redemption Price equal to the principal amount thereof, plus accrued interest thereon to the date fixed for redemption, without premium. Section 4.02. Optional Redemption. The Bonds maturing on or after July 1, 20[__] shall be subject to optional redemption, in whole or in part in Authorized Denominations on any date on or after July 1, 20[__], from and to the extent of prepaid Base Rental Payments paid pursuant to subsection (a) of Section 3.08 of 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 redemption, without premium. Section 4.03. Mandatory Sinking Fund Redemption. (a) The Bonds maturing July 1, 20[__] shall be subject to mandatory sinking fund redemption, in part, on July 1 in each year, commencing July 1, 20[__], at a Redemption Price equal to the principal amount of the Bonds maturing July 1, 20[__] to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows: Sinking Fund Redemption Date (July 1) Principal Amount to be Redeemed (Maturity) If some but not all of the Bonds maturing on July 1, 20[__] are redeemed pursuant to Section 4.01 hereof, the principal amount of the Bonds maturing on July 1, 20[__] to be redeemed pursuant to this Section 4.03(a) on any subsequent July 1 shall be reduced by the aggregate principal amount of the Bonds maturing on July 1, 20[__] so redeemed pursuant to Section 4.01 hereof, such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination shall be given by the Trustee to the City. If some but not all of the Bonds maturing on July 1, 20[__] are redeemed pursuant to Section 4.02 hereof, the principal amount of the Bonds maturing on July 1, 20[__] to be redeemed pursuant to this Section 4.03(a) on any subsequent July 1 shall be reduced, by $5,000 or an integral multiple thereof, as designated by the City in a Written Certificate of the City filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the Bonds maturing on July 1, 20[__] redeemed pursuant to Section 4.02 hereof. 9.B.e Packet Pg. 2350 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 19 4124-3559-5823.3 (b) The Bonds maturing July 1, 20[__] shall be subject to mandatory sinking fund redemption, in part, on July 1 in each year, commencing July 1, 20[__], at a Redemption Price equal to the principal amount of the Bonds maturing July 1, 20[__] to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows: Sinking Fund Redemption Date (July 1) Principal Amount to be Redeemed (Maturity) If some but not all of the Bonds maturing on July 1, 20[__] are redeemed pursuant to Section 4.01 hereof, the principal amount of the Bonds maturing on July 1, 20[__] to be redeemed pursuant to this Section 4.03(b) on any subsequent July 1 shall be reduced by the aggregate principal amount of the Bonds maturing on July 1, 20[__] so redeemed pursuant to Section 4.01 hereof, such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination shall be given by the Trustee to the City. If some but not all of the Bonds maturing on July 1, 20[__] are redeemed pursuant to Section 4.02 hereof, the principal amount of the Bonds maturing on July 1, 20[__] to be redeemed pursuant to this Section 4.03(b) on any subsequent July 1 shall be reduced, by $5,000 or an integral multiple thereof, as designated by the City in a Written Certificate of the City filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the Bonds maturing on July 1, 20[__] redeemed pursuant to Section 4.02 hereof. Section 4.04. 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 respective Owners of any 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. Such notice shall state the date of the notice, the redemption date, the redemption place and the Redemption Price and shall designate the CUSIP numbers, if any, the Bond numbers and the maturity or maturities of the Bonds to be redeemed (except in the event of redemption of all of the Bonds of such maturity or maturities in whole), 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. 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 any optional redemption of Bonds, unless at the time such notice is given the Bonds to be redeemed shall be deemed to have been paid within the meaning of Section 10.02 hereof, such notice shall state that such redemption is conditional upon receipt by the Trustee, on or prior to the date fixed for such redemption, of moneys that, together with other available amounts held by the Trustee, are sufficient to pay the Redemption 9.B.e Packet Pg. 2351 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 20 4124-3559-5823.3 Price of, and accrued interest on, the 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 Authority shall not be required to redeem such Bonds. In the event a notice of redemption of Bonds contains such a condition and such moneys are not so received, the redemption of Bonds as described in the conditional notice of redemption shall not be made and the Trustee shall, within a reasonable time after the date on which such redemption was to occur, give notice to the Persons and in the manner in which the notice of redemption was given, that such moneys were not so received and that there shall be no redemption of Bonds pursuant to such notice of redemption. Section 4.05. Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds pursuant to Section 4.01 hereof, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption (a) with respect to any redemption of Bonds pursuant to Section 4.01 hereof, among maturities of the Bonds on a pro rata basis as nearly as practicable, and (b) with respect to any redemption of Bonds pursuant to Section 4.02 hereof, as directed in a Written Certificate of the City, and by lot among Bonds with the same maturity in any manner that the Trustee in its sole discretion shall deem appropriate and fair. The Trustee shall promptly notify the Authority and the City in writing of the numbers of the Bonds so selected for redemption on such date. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treated as separate Bonds that may be separately redeemed. Section 4.06. 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 in Authorized Denominations in an aggregate principal amount equal to the unredeemed portion of the Bonds surrendered. Section 4.07. Effect of Notice of Redemption. (a) 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 with the Trustee, 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. (b) 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 to 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. (c) All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed. 9.B.e Packet Pg. 2352 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 21 4124-3559-5823.3 ARTICLE V PLEDGE AND ASSIGNMENT; FUNDS AND ACCOUNTS Section 5.01. Pledge and Assignment. (a) Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, in order 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 and the Act, the Authority hereby pledges to the Owners, and grants thereto a lien on and a security interest in, all of the Lease Revenues and any other amounts held in the Payment Fund. Said pledge shall constitute a first lien on and security interest in such assets, which shall immediately attach to such assets and be effective, binding and enforceable against the Authority, its successors, purchasers of any of such assets, creditors and all others asserting rights therein, to the extent set forth in, and in accordance with, this Indenture, irrespective of whether those parties have notice of the pledge of, lien on and security interest in such assets and without the need for any physical delivery, recordation, filing or further act. (b) The Authority hereby assigns and transfers to the Trustee, irrevocably and absolutely, without recourse, for the benefit of the Owners, all of its right, title and interest in and to the Ground Lease and the Lease Agreement, including, without limitation, the right to receive Base Rental Payments and the right to exercise any remedies provided in the Lease Agreement in the event of a default by the City thereunder; provided, however, that the Trustee shall not be required to perform any of the substantive obligations of the Authority thereunder, and, provided, further that Authority shall retain the rights to indemnification, to give consents and approvals thereunder, and to payment or reimbursement of its reasonable costs and expenses under the Lease Agreement. The Trustee hereby accepts said assignment for the benefit of the Owners, subject to the provisions of this Indenture. (c) The Trustee shall be entitled to and shall receive all of the Base Rental Payments, and any Base Rental Payments collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as agent of the Trustee and shall forthwith be paid by the Authority to the Trustee. Section 5.02. Payment Fund. (a) The Trustee shall establish and maintain a separate fund designated the “Payment Fund.” Within the Payment Fund, the Trustee shall establish and maintain a separate account designated the “Interest Account” and a separate account designated the “Principal Account.” (b) All Lease Revenues received by the Trustee shall be deposited by the Trustee in the Payment Fund; provided, however, that Net Proceeds, other than those constituting proceeds of rental interruption insurance received with respect to the Property, shall not be deposited in the Payment Fund but, rather, shall be applied as provided in Section 6.01 or Section 6.02 hereof, as applicable. (c) The Trustee, on each Interest Payment Date, shall transfer from the Payment Fund to the Interest Account an amount equal to the interest on the Bonds coming due on such Interest Payment Date. On each Interest Payment Date, the Trustee shall withdraw from the Interest 9.B.e Packet Pg. 2353 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 22 4124-3559-5823.3 Account for payment to the Owners of the Bonds the interest on the Bonds then due and payable. In the event that, on such Interest Payment Date, amounts in the Interest Account are insufficient to pay the interest on the Bonds due and payable on such Interest Payment Date, the Trustee shall apply available funds therein in accordance with the provisions of Section 7.05 hereof. (d) The Trustee, on each Principal Payment Date, shall transfer from the Payment Fund to the Principal Account an amount equal to the principal of the Bonds, including principal due and payable by reason of mandatory sinking fund redemption, coming due on such date. On each Principal Payment Date, the Trustee shall withdraw from the Principal Account for payment to the Owners of the Bonds such principal then due and payable. In the event that, on such Principal Payment Date, amounts in the Principal Account are insufficient to pay the principal due and payable on such Principal Payment Date, including principal due and payable by reason of mandatory sinking fund redemption of such Bonds, the Trustee shall apply available funds therein in accordance with the provisions of Section 7.05 hereof. Section 5.03. Redemption Fund. The Trustee shall establish and maintain a special fund designated the “Redemption Fund.” The Trustee shall deposit in the Redemption Fund any amounts required to be deposited therein pursuant to Section 6.01 or Section 6.02 hereof. Amounts in the Redemption Fund shall be disbursed therefrom by the Trustee for the payment of the Redemption Price of, and accrued interest on, Bonds redeemed pursuant to Section 4.01 hereof or Section 4.02 hereof. Section 5.04. Rebate Fund. (a) The Trustee shall establish and maintain a special fund designated the “Rebate Fund.” There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate, as specified in a Written Request of the Authority or a Written Request of the City. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement, for payment to the United States of America. Notwithstanding defeasance of the Bonds pursuant to Article X hereof or anything to the contrary contained herein, all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Authority or the City, and shall have no liability or responsibility to enforce compliance by the Authority or the City with the terms of the Tax Certificate. The Trustee may conclusively rely upon the determinations, calculations and certifications of the Authority or the City required by the Tax Certificate. The Trustee shall have no responsibility to independently make any calculation or determination or to review the calculations of the Authority or the City. (b) Any funds remaining in the Rebate Fund after payment in full of all of the Bonds and after payment of any amounts described in this Section, shall, upon receipt by the Trustee of a Written Request of the City, be withdrawn by the Trustee and remitted to the City. Section 5.05. Investments. (a) Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Indenture shall be invested by the Trustee solely in Permitted Investments, as directed in a Written Request of the City received by the Trustee no later than two Business Days prior to the making of such investment. Moneys in all such funds and accounts shall be invested in Permitted Investments maturing not later than the date on which 9.B.e Packet Pg. 2354 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 23 4124-3559-5823.3 it is estimated that such moneys will be required for the purposes specified in this Indenture. Absent a timely Written Request of the City with respect to the investment of moneys in any of the funds or accounts established pursuant to this Indenture held by the Trustee, the Trustee shall invest such moneys in Permitted Investments described in paragraph (6) of the definition thereof; provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a Written Request of the City specifying a specific money market fund that satisfies the requirements of said paragraph in which such investment is to be made and, if no such Written Request of the City is so received, the Trustee shall hold such moneys uninvested. (b) Subject to the provisions of Section 5.04 hereof, any interest or profits received with respect to investments held in any of the funds or accounts established under this Indenture shall be retained therein; provided, however, that any interest or profits received with respect to investments held in the Project Fund shall be credited to the Interest Account of the Payment Fund. (c) Permitted Investments acquired as an investment of moneys in any fund or account established under this Indenture shall be credited to such fund or account. For the purpose of determining the amount in any fund or account, all Permitted Investments credited to such fund or account shall be valued by the Trustee at the market value thereof, such valuation to be performed not less frequently than semiannually on or before each June 15 and December 15. In determining the market value of Permitted Investments, the Trustee may use and rely upon any generally recognized pricing information service (including brokers and dealers in securities) available to it. (d) The Trustee may act as principal or agent in the making or disposing of any investment. Upon the Written Request of the City, 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 are credited, and the Trustee shall not be liable or responsible for any loss resulting 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. (e) Each of the Authority and the City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority or the City the right to receive brokerage confirmations of security transactions as they occur, at no additional cost, each of the Authority and the City specifically waives receipt of such confirmations to the extent permitted by law. The Trustee shall furnish the Authority and the City periodic cash transaction statements, which shall include details for all investment transactions made by the Trustee hereunder. 9.B.e Packet Pg. 2355 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 24 4124-3559-5823.3 ARTICLE VI NET PROCEEDS AND TITLE INSURANCE; COVENANTS Section 6.01. Application of Net Proceeds. (a) 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 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. (b) The Net Proceeds of any insurance (other than Net 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 a special account 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 the City, together with invoices therefor. Pending such application, such proceeds may, pursuant to a Written Request of the City, be invested by the Trustee in Permitted Investments that mature not later than such times as moneys are expected to be needed to pay such costs of repair or replacement. (c) 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 that 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 special account referred to above. (d) If such damage, destruction or loss was such that there resulted a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments results from such damage or destruction pursuant to Section 3.07 of the Lease Agreement, then the City shall be required either to (i) apply sufficient funds from the insurance proceeds and other legally available funds to the replacement or repair of the Property or the portions thereof that have been damaged to the condition that existed prior to such damage or destruction, or (ii) apply sufficient funds from the insurance proceeds and other legally available funds to the redemption, pursuant to Section 4.01 hereof (A) of all of the Outstanding Bonds, or (B) of such portion of the Outstanding Bonds as shall result in the remaining, non-abated Base Rental Payments being sufficient to pay, as and when due, the principal of and interest on the Bonds that will remain Outstanding after such redemption. If the City is required to apply funds from the insurance proceeds and other legally available funds to the redemption of Bonds in accordance with clause (ii) above, the City shall direct the Trustee, in a Written Request of the City, to transfer the funds to be applied to such redemption to the Redemption Fund and the Trustee shall transfer such funds to the Redemption Fund. Any proceeds of any insurance, including the proceeds of any self-insurance remaining after the portion of the Property that was damaged or destroyed is restored to and made available to the City in substantially the same condition and annual fair rental value as that that existed prior to the damage or destruction as required by clause (i) above, or the redemption of Bonds as required by clause (ii) above, in each case as evidenced by a Written Certificate of the City to such effect, or any proceeds not required to replace or repair 9.B.e Packet Pg. 2356 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 25 4124-3559-5823.3 the Property, or the affected portion thereof, as set forth in clause (i) above, or to use such amounts to redeem Bonds as set forth in clause (ii) above, shall be paid to the City to be used for any lawful purposes; provided, however, that the City shall first deliver 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 repairs 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 sum of the then unpaid principal components of Base Rental Payments. (e) The proceeds of any award in eminent domain shall be deposited by the Trustee in the Redemption Fund and applied to the redemption of Bonds pursuant to Section 4.01 hereof. Section 6.02. Title Insurance. Net 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 has 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 proceeds shall be remitted to 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 in whole or in part of Rental Payments payable by the City under the Lease Agreement, then the City shall, in a Written Request of the City, direct the Trustee to, and 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 Section 4.01 hereof. Section 6.03. Punctual Payment. The Authority shall punctually pay or cause to be paid the principal of, and premium, if any, and interest on the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of the Lease Revenues and other assets pledged for such payment as provided in this Indenture and received by the Authority or the Trustee. Section 6.04. Compliance with Indenture. Each of the Authority and the City shall faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in this Indenture required to be complied with, kept, observed and performed by it. Section 6.05. Compliance with Ground Lease and Lease Agreement. Each of the Authority and the City shall faithfully comply with, keep, observe and perform all 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 it and, together with the Trustee, shall enforce the Ground Lease and the Lease Agreement against the other party thereto in accordance with their respective terms. 9.B.e Packet Pg. 2357 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 26 4124-3559-5823.3 Section 6.06. Observance of Laws and Regulations. Each of the Authority and the City shall faithfully comply with, keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on it by contract, or prescribed by any law of the United States of America or of the State, 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 it, including its right to exist and carry on its 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 6.07. Other Liens. (a) The City shall 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 that materially impairs the City in conducting its business or utilizing 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 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 shall 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 obligation hereunder to perform such agreements and covenants. The Trustee shall have no liability with respect to any determination made in good faith to proceed or decline to defend, pay or compromise any such claim or demand. (b) 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. (c) Neither the Authority nor the Trustee shall encumber the Property other than in accordance with the Ground Lease, the Lease Agreement and this Indenture. Section 6.08. Prosecution and Defense of Suits. The City shall promptly, upon request of the Trustee, 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, shall prosecute all actions, suits or other proceedings as may be appropriate for such purpose and shall indemnify and save the Trustee and every Owner harmless from all cost, damage, expense or loss, including attorneys’ fees, which they or any of them may incur by reason of any such cloud, defect, action, suit or other proceeding. Section 6.09. Recordation. The City shall record, or cause to be recorded, with the Los Angeles County Recorder, the Lease Agreement and the Ground Lease, or memoranda thereof, and a memorandum of the assignment of the City’s right, title and interest in and to the Ground Lease and the Lease Agreement pursuant to Section 5.01 hereof. Section 6.10. Tax Covenants. (a) Neither the Authority nor the City shall take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Bonds under Section 103 of the Code. Without limiting the generality of the foregoing, each of the Authority and the City shall comply with the 9.B.e Packet Pg. 2358 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 27 4124-3559-5823.3 requirements of the Tax Certificate, which is incorporated herein as if fully set forth herein. This covenant shall survive payment in full or defeasance of the Bonds. (b) In the event that at any time the Authority or the City is of the opinion that for purposes of this Section it is necessary or helpful to restrict or limit the yield on the investment of any moneys held by the Trustee in any of the funds or accounts established hereunder, the Authority or the City shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. (c) Notwithstanding any provisions of this Section, if the Authority or the City shall provide to the Trustee an Opinion of Bond Counsel to the effect that any specified action required under this Section is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Bonds, the Trustee may conclusively rely on such opinion in complying with the requirements of this Section and of the Tax Certificate, and the covenants hereunder shall be deemed to be modified to that extent. Section 6.11. Continuing Disclosure. The City shall 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 the Participating Underwriters or the Owners of at least 25% of the aggregate principal amount of Outstanding Bonds, and upon receipt of indemnification reasonably satisfactory to the Trustee, shall) or any Owner or Beneficial Owner of the Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. Section 6.12. Further Assurances. Each of the Authority and the Trustee shall make, execute and deliver any and all such further agreements, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Indenture, the Ground Lease and the Lease Agreement. 9.B.e Packet Pg. 2359 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 28 4124-3559-5823.3 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.01. Events of Default. The following events shall be Events of Default: (a) failure to pay any installment of principal of any Bond as and when the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption or otherwise; (b) failure to pay any installment of interest on any Bond as and when the same shall become due and payable; (c) the occurrence and continuation of a Lease Default Event; (d) failure by the Authority to observe and perform any of the other covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, if such failure shall have continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the Authority by the Trustee, the City or the Owners of not less than 5% in aggregate principal amount of the Bonds at the time Outstanding; provided, however, that if, in the reasonable opinion of the Authority, the failure stated in the notice can be corrected, but not within such 30 day period, such failure shall not constitute an Event of Default if corrective action is instituted by the Authority within such 30 day period and the Authority shall thereafter diligently and in good faith cure such failure in a reasonable period of time, provided, further, that, unless consented to by the Trustee, such period of time shall not exceed 180 days; (e) failure by the City to observe and perform any of the covenants, agreements or conditions on its part in this Indenture contained, if such failure shall have continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the City by the Trustee, the Authority or the Owners of not less than 5% in aggregate principal amount of the Bonds at the time Outstanding; provided, however, that if, in the reasonable opinion of the City, the failure stated in the notice can be corrected, but not within such 30 day period, such failure shall not constitute an Event of Default if corrective action is instituted by the City within such 30 day period and the City shall thereafter diligently and in good faith cure such failure in a reasonable period of time, provided, further, that, unless consented to by the Trustee, such period of time shall not exceed 180 days; or (f) the commencement by the Authority or the City of a voluntary case under Title 11 of the United States Code or any substitute or successor statute. Section 7.02. Action on Default. In each and every case during the continuance of an Event of Default, the Trustee may or, at the written direction of the Owners of not less than a majority of the aggregate principal amount of Bonds then Outstanding, shall 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 protect and enforce any of the rights 9.B.e Packet Pg. 2360 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 29 4124-3559-5823.3 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 7.03 hereof. Section 7.03. Other Remedies. If an Event of Default shall have occurred and be continuing, 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 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 or in the Bonds; (b) by suit in equity to enjoin any acts or things that are unlawful or violate the rights of the Trustee or the Owners; or (c) by suit, action or proceeding in any court of competent jurisdiction, to require the Authority or the City, or both, to account as if it or they were the trustee or trustees of an express trust. Section 7.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter 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 prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 7.05. Application of Amounts After Default. If an Event of Default shall occur and be continuing, all Lease Revenues and any other funds thereafter received by the Trustee under any of the provisions of this Indenture shall be applied by the Trustee as follows and in the following order: (a) to the payment of any expenses incurred by the Trustee necessary in the opinion of the Trustee to protect the interests of the Owners and payment of reasonable fees, charges and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Indenture; (b) to the payment of all amounts then due for interest on the Bonds, ratably without preference or priority of any kind, according to the amounts of interest on such Bonds due and payable, with interest on the overdue interest at the rate borne by the respective Bonds; and (c) to the payment of all amounts then due for principal of the Bonds, ratably without preference or priority of any kind, according to the amounts of principal of the 9.B.e Packet Pg. 2361 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 30 4124-3559-5823.3 Bonds due and payable, with interest on the overdue principal at the rate borne by the respective Bonds. Section 7.06. Power of Trustee to Enforce. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of the Owners of such Bonds, subject to the provisions of this Indenture. 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 7.07. Owners’ Direction of Proceedings. Anything in this Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, and upon indemnification of the Trustee to its reasonable satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder; provided, however, that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, and, provided, further, that the Trustee shall have the right to decline to follow any such direction that in the opinion of the Trustee would be unjustly prejudicial to Owners not parties to such direction. Section 7.08. Limitation on Owners’ Right to Sue. No Owner of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Act or any other applicable law with respect to such Bond, unless (a) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default, (b) the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name, (c) such Owner or said Owners shall have tendered to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request, and (d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder or under law; it being understood and intended that no one or more Owners shall have any right in any manner whatever by such Owner’s or Owners’ action to affect, disturb or prejudice the security of this Indenture or the rights of any other Owners, or to enforce any right under the Bonds, this Indenture, the Act or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners, subject to the provisions of this Indenture. 9.B.e Packet Pg. 2362 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 31 4124-3559-5823.3 Section 7.09. Termination of Proceedings. 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 such 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. In case any proceedings taken by the Trustee or any one or more Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or any Owner, then in every such case the Trustee, such Owner, the Authority and the City, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Trustee, the Owners, the Authority and the City shall continue as though no such proceedings had been taken. Section 7.10. No Waiver of Default. No delay or omission of the Trustee or of any Owner to exercise any right or power arising upon the occurrence of any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or an acquiescence therein, and every power and remedy given by this Indenture to the Trustee or to the Owners may be exercised from time to time and as often as may be deemed expedient. 9.B.e Packet Pg. 2363 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 32 4124-3559-5823.3 ARTICLE VIII THE TRUSTEE Section 8.01. Duties and Liabilities of Trustee. The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of Default that may have occurred, perform such duties and only such duties as are expressly and specifically set forth in this Indenture. The Trustee shall, during the existence of any Event of Default that has not been cured or waived, 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 person would exercise or use under the circumstances in the conduct of such person’s own affairs. Section 8.02. Qualifications; Removal and Resignation; Successors. (a) The Trustee initially a party hereto and any successor thereto shall at all times be a trust company, national banking association or bank having trust powers in good standing in or incorporated under the laws of the United States or any state thereof, which is (or if such trust company, national banking association or bank is a member of a bank holding company system, its parent bank holding company is) (i) a national banking association that is supervised by the Office of the Comptroller of the Currency and has at least $250 million of assets, or (ii) a state-chartered commercial bank that is a member of the Federal Reserve System and has at least $1 billion of assets. If such trust company, national banking association or bank publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining agency above referred to, then for the purpose of this subsection the combined capital and surplus of such trust company, national banking association or bank shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) The Authority and the City may, by an instrument in writing, upon at least 30 days’ notice to the Trustee, 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 (i) at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing), or (ii) the Trustee shall cease to be eligible in accordance with subsection (a) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Trustee. (c) The Trustee may at any time resign by giving written notice of such resignation by first-class mail, postage prepaid, to the Authority and the City, and to the Owners at the respective addresses shown on the Registration Books. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of subsection (a) of this Section, the Trustee shall resign immediately in the manner and with the effect specified in this Section. (d) Upon removal or resignation of the Trustee, the Authority and the City shall promptly appoint a successor Trustee by an instrument in writing. Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of 9.B.e Packet Pg. 2364 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 33 4124-3559-5823.3 appointment by the successor Trustee; provided, however, that any successor Trustee shall be qualified as provided in subsection (a) of this Section. If no qualified successor Trustee shall have been appointed and have accepted appointment within 45 days following notice of removal or notice of resignation as aforesaid, the removed or resigning Trustee or any Owner (on behalf of such Owner and all other Owners) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice, if any, as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture shall signify its acceptance of such appointment by executing and delivering to the Authority and the City and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Written Request of the Authority or the Written Request of the City or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the successor Trustee shall, within 15 days after such acceptance, mail, by first-class mail postage prepaid, a notice of the succession of such Trustee to the trusts hereunder to the Owners at the addresses shown on the Registration Books. (e) Any trust company, national banking association or bank into which the Trustee may be merged or converted or with which it may be consolidated or any trust company, national banking association or bank resulting from any merger, conversion or consolidation to which it shall be a party or any trust company, national banking association or bank to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such trust company, national banking association or bank shall be eligible under subsection (a) of this Section, shall be the successor to such Trustee, without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. Section 8.03. Liability of Trustee. (a) The recitals of facts herein and in the Bonds contained shall be taken as statements of the Authority or the City, as applicable, and the Trustee shall not assume responsibility for the correctness of the same or incur any responsibility in respect thereof, other than as expressly stated herein in connection with the respective duties or obligations herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. (b) The Trustee makes no representations as to the validity or sufficiency of this Indenture or of any Bonds, or in respect of the security afforded by this Indenture and the Trustee shall incur no responsibility in respect thereof. The Trustee shall be under no responsibility or duty with respect to the issuance of the Bonds for value, the application of the proceeds thereof except to the extent that such proceeds are received by it in its capacity as Trustee, or the application of any moneys paid to the Authority, the City or others in accordance with this Indenture. 9.B.e Packet Pg. 2365 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 34 4124-3559-5823.3 (c) The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. (d) No provision of this Indenture or any other document related hereto shall require the Trustee to risk or advance its own funds. (e) The Trustee may execute any of its powers or duties hereunder through attorneys, agents or receivers and shall not be answerable for the actions of such attorneys, agents or receivers if selected by it with reasonable care. (f) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. (g) The immunities and protections extended to the Trustee also extend to its directors, officers, employees and agents. (h) Before taking action under Article VII, under this Article or upon the direction of the Owners, the Trustee may require indemnity satisfactory to the Trustee be furnished to it to protect it against all fees and expenses, including those of its attorneys and advisors, and protect it against all liability it may incur. (i) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. (j) The Trustee may become the Owner of Bonds with the same rights it would have if it were not Trustee and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners, whether or not such committee shall represent the Owners of a majority in aggregate principal amount of the Bonds then Outstanding. (k) The Trustee shall have no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds. (l) The Trustee shall not be liable for the failure to take any action required to be taken by it hereunder if and to the extent that the Trustee’s taking such action is prevented by reason of an act of God, terrorism, war, riot, strike, fire, flood, earthquake, epidemic or other, similar occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. (m) The Trustee shall not be deemed to have knowledge of an Event of Default hereunder unless it has actual knowledge thereof. 9.B.e Packet Pg. 2366 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 35 4124-3559-5823.3 (n) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct. (o) The Trustee shall not be responsible for or accountable to anyone for the subsequent use or application of any moneys that shall be released or withdrawn in accordance with the provisions hereof. Section 8.04. Right to Rely on Documents and Opinions. (a) The Trustee shall be protected in acting upon any notice, requisition, resolution, request, consent, order, certificate, report, opinion, bonds or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. (b) The Trustee shall have the right to accept and act upon a Written Request of the City delivered using Electronic Means. If the City elects to deliver a Written Request of the City to the Trustee using Electronic Means and the Trustee acts upon such Written Request, the Trustee’s understanding of such Written Request shall be deemed controlling. The City understands and agrees that the Trustee cannot determine the identity of the actual sender of such Written Request and that the Trustee shall conclusively presume that Written Requests of the City that purport to have been sent by an Authorized Representative of the City have been sent by such Authorized Representative. The City shall be responsible for ensuring that only Authorized Representatives transmit such Written Requests of the City to the Trustee and that the City is solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt thereof by the City. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Written Requests of the City delivered using Electronic Means notwithstanding such directions conflict or are inconsistent with a subsequent Written Request of the City. The City agrees (i) to assume all risks arising out of the use of Electronic Means to submit Written Requests of the City to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Written Requests of the City, and the risk of interception and misuse by third parties, (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Written Requests of the City to the Trustee and that there may be more secure methods of transmitting Written Requests of the City than the method selected by the City, (iii) that the security procedures, if any, to be followed in connection with its transmission of Written Requests of the City 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. Notwithstanding the foregoing, the provisions of this subsection, and the Trustee’s actions pursuant hereto, are subject to the Trustee’s standard of care and limitations on liability set forth in Sections 8.03 and 8.04; provided, however, that the Trustee’s reliance on a Written Request of the City that purports to have been sent by an Authorized Representative of the City delivered in accordance with this Section using Electronic Means shall not, in and of itself, be construed as negligence. (c) The Trustee shall have the right to accept and act upon a Written Request of the Authority delivered using Electronic Means. If the Authority elects to deliver a Written Request of the Authority to the Trustee using Electronic Means and the Trustee acts upon such Written Request, the Trustee’s understanding of such Written Request shall be deemed controlling. The 9.B.e Packet Pg. 2367 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 36 4124-3559-5823.3 Authority understands and agrees that the Trustee cannot determine the identity of the actual sender of such Written Request and that the Trustee shall conclusively presume that Written Requests of the Authority that purport to have been sent by an Authorized Representative of the Authority have been sent by such Authorized Representative. The Authority shall be responsible for ensuring that only Authorized Representatives transmit such Written Requests of the Authority to the Trustee and that the Authority is solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt thereof 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 Written Requests of the Authority delivered using Electronic Means notwithstanding such directions conflict or are inconsistent with a subsequent Written Request of the Authority. The Authority agrees (i) to assume all risks arising out of the use of Electronic Means to submit Written Requests of the Authority to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Written Requests of the Authority, and the risk of interception and misuse by third parties, (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Written Requests of the Authority to the Trustee and that there may be more secure methods of transmitting Written Requests of the Authority than the method selected by the Authority, (iii) that the security procedures, if any, to be followed in connection with its transmission of Written Requests of the Authority 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. Notwithstanding the foregoing, the provisions of this subsection, and the Trustee’s actions pursuant hereto, are subject to the Trustee’s standard of care and limitations on liability set forth in Sections 8.03 and 8.04; provided, however, that the Trustee’s reliance on a Written Request of the Authority that purports to have been sent by an Authorized Representative of the Authority delivered in accordance with this Section using Electronic Means shall not, in and of itself, be construed as negligence. (d) Whenever in the administration of the duties imposed upon it by this Indenture 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 be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the Authority or Written Certificate of the City, and such Written Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Written Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable. (e) The Trustee may consult with counsel, who may be counsel to the Authority or the City, with regard to legal questions, including with respect to compliance herewith of amendments hereto or to the Lease Agreement or the Ground Lease, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. Section 8.05. Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with prudent corporate trust industry standards, in which accurate entries shall be made of all transactions made by it relating to the proceeds of the Bonds, the Lease Revenues received by it 9.B.e Packet Pg. 2368 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 37 4124-3559-5823.3 and all funds and accounts established by it pursuant to this Indenture. Such books of record and account shall be available for inspection by the Authority and the City during regular business hours and upon reasonable notice and under reasonable circumstances as agreed to by the Trustee. The Trustee shall deliver to the Authority and the City a monthly accounting of the funds and accounts it holds under this Indenture; provided, however, that the Trustee shall not be obligated to deliver an accounting for any fund or account that (a) has a balance of zero, and (b) has not had any activity since the last reporting date. Section 8.06. Preservation and Inspection of Documents. All documents received by the Trustee under the provisions of this Indenture shall be retained in its possession and shall be subject during business hours and upon reasonable notice to the inspection of the Authority, the City, the Owners and their agents and representatives duly authorized in writing. Section 8.07. Compensation and Indemnification of the Trustee. The City shall pay to the Trustee from time to time all reasonable compensation pursuant to a pre-approved fee letter for all services rendered under this Indenture, and also all reasonable expenses, charges, legal and consulting fees pursuant to a pre-approved fee letter and other disbursements pursuant to a pre-approved fee letter and those of its attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Indenture. The City shall, to the extent permitted by law, indemnify and save the Trustee and its officers, directors and employees harmless against any costs, suits, judgments, damages, liabilities, claims, expenses, including legal fees and expenses, and liabilities that it may incur in the exercise and performance of its powers and duties hereunder and under any related documents, including the enforcement of any remedies and the defense of any suit, and that are not due to its negligence or its willful misconduct. The duty of the City to indemnify the Trustee shall survive the resignation or removal of the Trustee and the discharge and satisfaction of this Indenture. 9.B.e Packet Pg. 2369 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 38 4124-3559-5823.3 ARTICLE IX SUPPLEMENTAL INDENTURES Section 9.01. Supplemental Indentures. (a) This Indenture and the rights and obligations of the Authority, the City, the Trustee and the Owners hereunder 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 when there are filed with the Trustee the written consents of the Owners of a majority of the aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 11.07 hereof. No such modification or amendment shall (i) extend the fixed maturity of any Bond, reduce the amount of principal thereof or the rate of interest thereon, extend the time of payment thereof or alter the redemption provisions thereof, without the consent of the Owner of each Bond so affected, (ii) permit any pledge of, or the creation of any lien on, security interest in or charge or other encumbrance upon the assets pledged under this Indenture prior to or on a parity with the pledge contained in, and the lien and security interest created by, this Indenture or deprive the Owners of the pledge contained in, and the lien and security interest created by, this Indenture, except as expressly provided in this Indenture, without the consent of the Owners of all of the Bonds then Outstanding, or (iii) modify or amend this Section without the prior written consents of the Owners of all Bonds then Outstanding. (b) This Indenture and the rights and obligations of the Authority, the City, the Trustee and the Owners hereunder may also 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 without the consent of any Owners 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 or in regard to questions arising hereunder that the Authority or the City may deem desirable or necessary and not inconsistent herewith, provided that such modification or amendment does not materially adversely affect the rights or interests of the Owners hereunder; (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 interest on the Bonds; and (iv) in any other respect whatsoever as the Authority or the City may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the rights or interests of the Owners hereunder. (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 9.B.e Packet Pg. 2370 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 39 4124-3559-5823.3 the Trustee by the Authority or the City), by first class mail postage prepaid, setting forth in general terms the substance of such Supplemental Indenture, to the Owners 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. 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 the Owners shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the effective date of any Supplemental Indenture pursuant to this Article may and, if the Authority or the City so determines, shall bear a notation by endorsement or otherwise in form approved by the Authority and the City as to any modification or amendment provided for in such Supplemental Indenture and, in that case, upon demand of the Owner of any Bond Outstanding at the time of such effective date, and presentation of such Bond for such purpose at the Office of the Trustee, a suitable notation shall be made on such Bond. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Authority and the City, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the Authority and authenticated by the Trustee and, in that case, upon demand of the Owner of any Bond Outstanding at the time of such effective date, and presentation of such Bond for such purpose at the Office of the Trustee, such a new Bond in equal principal amount of the same interest rate and maturity shall be exchanged for such Owner’s Bond so surrendered. Section 9.04. Amendment of Particular Bonds. The provisions of this Article shall not prevent any Owner from accepting any amendment or modification as to any particular Bond owned by it, provided that due notation thereof is made on such Bond. 9.B.e Packet Pg. 2371 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 40 4124-3559-5823.3 ARTICLE X DEFEASANCE Section 10.01. Discharge of Indenture. (a) 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 herein and therein, then the Owners shall cease to be entitled to the pledge of the Lease Revenues and the other assets as provided herein, and all agreements, covenants and other obligations of the Authority hereunder shall thereupon cease, terminate and become void and this Indenture shall be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority and the City all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the Authority all money or securities held by it pursuant hereto that are not required for the payment of the principal of and interest and premium, if any, on the Bonds. (b) Subject to the provisions of subsection (a) of this Section, when any Bond shall have been paid and if, at the time of such payment, each of the Authority and the City shall have kept, performed and observed all of the covenants and promises in such Bonds and in this Indenture required or contemplated to be kept, performed and observed by it or on its part on or prior to that time, then this Indenture shall be considered to have been discharged in respect of such Bond and such Bond shall cease to be entitled to the pledge of the Lease Revenues and the other assets as provided herein, and all agreements, covenants and other obligations of the Authority and the City hereunder shall cease, terminate, become void and be completely discharged and satisfied as to such Bond. (c) Notwithstanding the discharge and satisfaction of this Indenture or the discharge and satisfaction of this Indenture in respect of any Bond, 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 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 the Bonds the funds so held by the Trustee as and when such payment becomes due. Notwithstanding the discharge and satisfaction of this Indenture, the obligation of the City to indemnify the Trustee pursuant to Section 8.07 shall remain in effect and be binding upon the City. Section 10.02. Bonds Deemed to Have Been Paid. (a) If moneys shall have been set aside and held by the Trustee for the payment or redemption of any Bond and the payment of the interest thereon to the maturity or redemption date thereof, such Bond shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01 hereof. Any Outstanding Bond shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in Section 10.01 hereof if (i) 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 4.04 hereof, notice of redemption of such Bond on said 9.B.e Packet Pg. 2372 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 41 4124-3559-5823.3 redemption date, said notice to be given in accordance with Section 4.04 hereof, (ii) there shall have been deposited with the Trustee either (A) money in an amount which shall be sufficient, or (B) Defeasance Securities, the principal of and the interest on which when due, and without any reinvestment thereof, together with the money, if any, deposited therewith, will provide moneys that shall be sufficient to pay when due the interest to become due on such Bond 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 Bond, and (iii) in the event such Bond is not by its 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 Owner of such Bond that the deposit required by clause (ii) above has been made with the Trustee and that such Bond is deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and premium, if any, on such Bond. Neither the money nor the Defeasance Securities deposited with the Trustee pursuant to this subsection in connection with the deemed payment of Bonds, nor principal or interest payments on any such Defeasance Securities, shall be withdrawn or used for any purpose other than, and shall be held in trust for and pledged to, the payment of the principal of and, premium, if any, and interest on such Bonds. (b) No Bond shall be deemed to have been paid pursuant to clause (ii) of subsection (a) of this Section unless the Authority or the City shall have caused to be delivered to the Authority, the City and the Trustee (i) an executed copy of a Verification Report with respect to such deemed payment, addressed to the Authority, the City and the Trustee, in form and in substance acceptable to the Authority and the City, (ii) a copy of the escrow agreement entered into in connection with the deposit pursuant to clause (ii)(B) of subsection (a) of this Section resulting in such deemed payment, which escrow agreement shall be in form and in substance acceptable to the Authority, the City and the Trustee, which escrow agreement shall provide that no substitution of Defeasance Securities shall be permitted except with other Defeasance Securities and upon delivery of a new Verification Report and no reinvestment of Defeasance Securities shall be permitted except as contemplated by the original Verification Report or upon delivery of a new Verification Report, and (iii) a copy of an Opinion of Bond Counsel, dated the date of such deemed payment and addressed to the Authority, the City and the Trustee, in form and in substance acceptable to the Authority and the City, to the effect that such Bond has been paid within the meaning and with the effect expressed in this Indenture, this Indenture has been discharged in respect of such Bond and all agreements, covenants and other obligations of the Authority and the City hereunder as to such Bond have ceased, terminated, become void and been completely discharged and satisfied. (c) The Trustee may seek and is entitled to rely upon (i) an Opinion of Bond Counsel reasonably satisfactory to the Trustee to the effect that the conditions precedent to a deemed payment pursuant to clause (ii) of subsection (a) of this Section have been satisfied, and (ii) such other opinions, certifications and computations, as the Trustee may reasonably request, of accountants or other financial consultants concerning the matters described in subsection (b) of this Section. Section 10.03. Unclaimed Moneys. Any moneys held by the Trustee in trust for the payment and discharge of the principal of, or premium or interest on, any Bond that remain unclaimed for two years after the date when such principal, premium or interest has become payable, if such moneys were held by the Trustee at such date, or for two years after the date of 9.B.e Packet Pg. 2373 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 42 4124-3559-5823.3 deposit of such moneys if deposited with the Trustee after the date when such principal, premium or interest become payable, shall, at the Written Request of the Authority, be repaid by the Trustee to the Authority as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owner of such Bond shall look only to the Authority for the payment of such principal, premium or interest. The Trustee shall hold any such moneys uninvested. 9.B.e Packet Pg. 2374 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 43 4124-3559-5823.3 ARTICLE XI MISCELLANEOUS Section 11.01. Successor Deemed Included in all References to Predecessor. Whenever the Authority, the City or the Trustee is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority, the City or the Trustee, 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 shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 11.02. Limitation of Rights. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any Person other than the Trustee, the Authority, the City and the Owners, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained, and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Trustee, the Authority, the City and the Owners. Section 11.03. Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee shall, in lieu of such cancellation and delivery, destroy such Bonds. Section 11.04. Severability of Invalid Provisions. If any one or more of the provisions contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority hereby declares that it would have entered into this Indenture and each and every other Section, subsection, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, subsections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable. Section 11.05. Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be given 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: If to the Authority: Santa Monica Public Financing Authority c/o City of Santa Monica 1685 Main Street, Mail Stop 9 Santa Monica, California 90401 Attention: Director of Finance 9.B.e Packet Pg. 2375 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 44 4124-3559-5823.3 If to the City: City of Santa Monica 1685 Main Street, Mail Stop 9 Santa Monica, California 90401 Attention: Director of Finance If to the Trustee: The Bank of New York Mellon Trust Company, N.A. 400 South Hope Street, 5th Floor Los Angeles, California 90071 Attention: Corporate Trust Department 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 given by courier or delivery service or if personally served or delivered, upon delivery, (b) if given by 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, or (d) if given by any other means, upon delivery at the address specified in this Section. Section 11.06. Evidence of Rights of Owners. (a) Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Owners may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Owners in Person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the holding by any Person of Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Authority, the City and the Trustee if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the Person signing such request, consent or other instrument acknowledged to him or her the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. (c) The ownership of Bonds shall be proved by the Registration Books. (d) Any request, consent, or other instrument or writing of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Authority, the City or the Trustee in accordance therewith or reliance thereon. Section 11.07. 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 that are actually known by the Trustee to be owned or held by or for the account of the Authority or the City or any other obligor on the Bonds, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common 9.B.e Packet Pg. 2376 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 45 4124-3559-5823.3 control with, the Authority or the City, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided, however, that if 100% of the Bonds are so owned or held, such Bonds shall be deemed to be Outstanding. Bonds so owned that have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City or any other obligor on the Bonds. In case of a dispute as to such right, 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 shall specify in a Written Certificate of the Authority delivered to the Trustee that Bonds, if any, are, as of the date of such Written Certificate, owned or held by or for the account of the Authority. Upon request of the Trustee, the City shall specify in a Written Certificate of the City delivered to the Trustee that Bonds, if any, are, as of the date of such Written Certificate, owned or held by or for the account of the City. Section 11.08. 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 particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners entitled thereto, subject, however, to the provisions of Section 10.03 hereof but without any liability for interest thereon. Section 11.09. Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with prudent corporate trust industry standards to the extent practicable, and with due regard for the requirements hereof and for the protection of the security of the Bonds and the rights of every Owner thereof. The Trustee may establish any such additional funds or accounts as it deems necessary to perform its obligations hereunder. Section 11.10. Business Days. 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 Indenture shall not be a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day, with the same force and effect as if done on the nominal date provided in this Indenture and, unless otherwise specifically provided in this Indenture, no interest shall accrue for the period from and after such nominal date Section 11.11. 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 Authority or the City from the performance of any official duty provided by any applicable provisions of law, by the Lease Agreement or hereby. 9.B.e Packet Pg. 2377 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 46 4124-3559-5823.3 Section 11.12. Conclusive Evidence of Regularity. Bonds issued pursuant to this Indenture shall constitute evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes. Section 11.13. 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, authentication, issuance 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. Section 11.14. Governing Laws. This Indenture and the Bonds shall be construed and governed in accordance with the laws of the State. Section 11.15. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Indenture may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Indenture using an electronic signature, it is signing, adopting, and accepting this Indenture and that signing this Indenture using an electronic signature is the legal equivalent of having placed its handwritten signature on this Indenture on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Indenture in a usable format. Section 11.16. Execution in Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 9.B.e Packet Pg. 2378 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease 47 4124-3559-5823.3 IN WITNESS WHEREOF, the Authority has caused this Indenture to be signed in its name by its representative thereunto duly authorized, the City has caused this Indenture to be signed in its name by its 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. SANTA MONICA PUBLIC FINANCING AUTHORITY By: ATTEST: ____________________________________ APPROVED AS TO FORM: CITY OF SANTA MONICA By: ATTEST: ____________________________________ APPROVED AS TO FORM: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., AS TRUSTEE By: Authorized Officer 9.B.e Packet Pg. 2379 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease A-1 4124-3559-5823.3 EXHIBIT A PERMITTED INVESTMENTS “Permitted Investments” means the following: (1) 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); (2) Obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including: - Export-Import Bank - Rural Economic Community Development Administration - U.S. Maritime Administration - Small Business Administration - U.S. Department of Housing & Urban Development (PHAs) - Federal Housing Administration - Federal Financing Bank; (3) Direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: - Senior debt obligations issued by the Federal National Mortgage Association (FNMA), Federal Farm Credit Bank (FFCB), or Federal Home Loan Mortgage Corporation (FHLMC) - Obligations of the Resolution Funding Corporation (REFCORP) - Senior debt obligations of the Federal Home Loan Bank System; (4) U.S. dollar denominated deposit accounts, demand deposits, including time deposits, trust funds, trust accounts, overnight bank deposits, interest-bearing deposits, other deposit products, certificates of deposit, including those placed by a third party pursuant to an agreement between the Trustee and the Authority, federal funds and bankers’ acceptances with domestic commercial banks (which may include the Trustee and its affiliates) that have a rating on their short term certificates of deposit on the date of purchase of “P-1” by Moody’s and “A-1” or “A-1+” by S&P and maturing not more than 360 calendar days after the date of purchase (ratings on holding companies are not considered as the rating of the bank); (5) Commercial paper that is rated at the time of purchase in the single highest classification, “P-1” by Moody’s and “A-1+” by S&P and that matures not more than 270 calendar days after the date of purchase; (6) Investments in a money market fund rated “AAAm” or “AAAm-G” or better by S&P, including a fund for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee receive and retain a fee in a reasonable amount for services provided to the fund whether as a custodian, transfer agent, investment advisor or trustee; 9.B.e Packet Pg. 2380 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease A-2 4124-3559-5823.3 (7) Pre-refunded Municipal Obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state that are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (a) that are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highest rating category of Moody’s or S&P or any successors thereto; or (b) (i) that are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (1) or (2) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate; (8) Municipal obligations rated “Aa/AA1” or general obligations of states with a rating of “A2/A” or higher by both Moody’s and S&P; (9) Investment agreements with a domestic or foreign bank or corporation (other than a life or property casualty insurance company) the long-term debt of which, or, in the case of a guaranteed corporation the long-term debt, or, in the case of a monoline financial guaranty insurance company, claims paying ability, of the guarantor is rated at least “Aa3” by Moody’s and “AA-” by S&P; provided, that, by the terms of the investment agreement: (a) the invested funds are available for withdrawal without penalty or premium, at any time upon not more than seven days’ prior notice; (b) the investment agreement shall state that it is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof or, if the provider is a bank, the agreement or the opinion of counsel shall state that the obligation of the provider to make payments thereunder ranks pari passu with the obligations of the provider to its other depositors and its other unsecured and unsubordinated creditors; (c) the Trustee or the City receive the opinion of domestic counsel that such investment agreement is legal, valid and binding and enforceable against the provider in accordance with its terms and of foreign counsel (if applicable); (d) the investment agreement shall provide that if during its term (i) the provider’s rating by either Moody’s or S&P falls below “Aa3” or “AA-,” respectively, the provider shall, at its option, within 10 days of receipt of publication of such downgrade, either (A) collateralize the investment agreement by delivering or transferring in accordance with applicable state and federal laws (other than by means of entries on the provider’s books) to the Trustee or a holder of the collateral, collateral free and clear of 9.B.e Packet Pg. 2381 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease A-3 4124-3559-5823.3 any third-party liens or claims the market value of which collateral is maintained at levels and upon such conditions as would be acceptable to Moody’s and S&P to maintain an “A” rating in an “A” rated structured financing (with a market value approach); or (B) repay the principal of and accrued but unpaid interest, on the investment, and (ii) the provider’s rating by either Moody’s or S&P is withdrawn or suspended or falls below “A3” or “A-,” respectively, the provider must, at the direction of the City or the Trustee, within 10 days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the Trustee; (e) the investment agreement shall state, and an opinion of counsel shall be rendered, in the event collateral is required to be pledged by the provider under the terms of the investment agreement, at the time such collateral is delivered, that the holder of collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the holder of collateral is in possession); and (f) the investment agreement must provide that if during its term (i) the provider shall default in its payment obligations, the provider’s obligations under the investment agreement shall, at the direction of the City or the Trustee, be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Trustee, and (ii) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc., the provider’s obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Trustee. (10) Except as described in paragraph (6) above, 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 Investments after the initial purchase of such Permitted Investments or the responsibility to validate the ratings of Permitted Investments prior to the initial purchase. 9.B.e Packet Pg. 2382 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease B-1 4124-3559-5823.3 EXHIBIT B FORM OF BOND No. R- ***$*** SANTA MONICA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (CITY YARDS PROJECT), SERIES 2021 INTEREST RATE MATURITY DATE DATED DATE CUSIP % July 1, 20__ _______, 2021 REGISTERED OWNER: PRINCIPAL AMOUNT: The Santa Monica Public Financing Authority (the “Authority”) hereby promises to pay, solely from the sources hereinafter described, 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 January 1 and July 1 in each year, commencing [_________] 1, 20[__] (the “Interest Payment Dates”), until payment of such Principal Amount in full. This Bond is one of a series of a duly authorized issue of bonds designated “Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021” (the “Bonds”) in the aggregate principal amount of $[__________]. The Bonds are issued pursuant to the Indenture, dated as of [__________] 1, 2021 (the “Indenture”), by and among the Authority (the “Authority”), the City of Santa Monica (the “City”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), and this reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. The Indenture is entered into, and this Bond is issued under, the Marks-Roos Local Bond Pooling Act of 1985, constituting Section 6584 et seq. of the California Government Code (the “Act”) and the laws of the State of California. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. Interest on the Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event interest thereon shall be payable from such Interest Payment Date, (ii) a Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (iii) interest on any 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 previously been paid or duly provided 9.B.e Packet Pg. 2383 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease B-2 4124-3559-5823.3 for. Interest shall be paid in lawful money of the United States on each Interest Payment Date. Interest shall be paid by check of the Trustee mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. Notwithstanding the foregoing, interest on any Bond that is not punctually paid or duly provided for on any Interest Payment Date shall, if and to the extent that amounts subsequently become available therefor, be paid on a payment date established by the Trustee to the Person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee for the payment of such defaulted interest, notice of which shall be given to such Owner not less than ten days prior to such special record date. The principal of the 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. The Bonds are special obligations of the Authority, payable, as provided in the Indenture, solely from Lease Revenues and the other assets pledged therefor thereunder. 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 Bonds. The Lease Revenues consist of all Base Rental Payments payable by the City pursuant to the Lease Agreement, including any prepayments thereof, any Net Proceeds and any amounts received by the Trustee as a result of or in connection with the Trustee’s pursuit of remedies under the Lease Agreement upon a Lease Default Event. Pursuant to and as more particularly provided in the Indenture, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, in order to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act, the Authority pledges to the Owners, and grants thereto a lien on and a security interest in, all of the Lease Revenues and any other amounts held in the Payment Fund. Said pledge constitutes a first lien on and security interest in such assets, which shall immediately attach to such assets and be effective, binding and enforceable against the Authority, its successors, purchasers of any of such assets, creditors and all others asserting rights therein, to the extent set forth in, and in accordance with, the Indenture, irrespective of whether those parties have notice of the pledge of, lien on and security interest in such assets and without the need for any physical delivery, recordation, filing or further act. The Bonds are subject to redemption on the dates, at the Redemption Prices and pursuant to the terms set forth in the Indenture. Notice of redemption of any Bond or any portion thereof shall be given as provided in the Indenture. The Bonds are issuable as fully-registered Bonds without coupons in Authorized Denominations ($5,000 and integral multiples thereof). Any Bond may 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 to the Trustee 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 so surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds of the same maturity in a like aggregate principal amount, in any 9.B.e Packet Pg. 2384 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease B-3 4124-3559-5823.3 Authorized Denomination. The Trustee shall require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of the same maturity of other Authorized Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Indenture and the rights and obligations of the Authority, the City the Trustee and the Owners may be modified or amended in the manner, to the extent, and upon the terms provided in the Indenture. The Indenture contains provisions permitting the Authority to make provision for the payment of the principal of and the interest and premium, if any, on any of the Bonds so that such Bonds shall no longer be deemed to be Outstanding under the terms of the Indenture. 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. IN WITNESS WHEREOF, the Authority has caused this Bond to be signed in its name and on its behalf by the manual or facsimile signature of its representative thereunto duly authorized, attested by the manual or facsimile signature of the Secretary of the Authority, all as of the Dated Date identified above. SANTA MONICA PUBLIC FINANCING AUTHORITY By: Treasurer ATTEST: Secretary 9.B.e Packet Pg. 2385 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease B-4 4124-3559-5823.3 CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within-mentioned Indenture and registered on the Registration Books. Date: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., AS TRUSTEE By: Authorized Signatory 9.B.e Packet Pg. 2386 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease B-5 4124-3559-5823.3 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 guarantee shall be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in such other guarantee program acceptable to the Trustee. Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. 9.B.e Packet Pg. 2387 Attachment: Indenture Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution Authorizing Issuance of Lease Stradling Yocca Carlson & Rauth Draft of 6/29/21 1 4826-8175-7424v3/200262-0005 SANTA MONICA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (CITY YARDS PROJECT) SERIES 2021 BOND PURCHASE AGREEMENT _____, 2021 Santa Monica Public Financing Authority c/o City of Santa Monica 1685 Main Street, Mail Stop 09 Santa Monica, California 90401 Attention: Executive Director City of Santa Monica 1685 Main Street, Mail Stop 09 Santa Monica, California 90401 Attention: City Manager Ladies and Gentlemen: The undersigned, Jefferies LLC (the “Representative”), on behalf of itself, and UBS Financial Services Inc. and Samuel A. Ramirez & Co., Inc. (collectively, the “Underwriters”), acting not as a fiduciary or agent for you, offers to enter into this Bond Purchase Agreement (which, together with Exhibit A and Exhibit B, is referred to as the “Purchase Agreement”) with the Santa Monica Public Financing Authority (the “Authority”) and the City of Santa Monica, California (the “City”), which, upon the acceptance of the Authority and the City, will be binding upon the Authority, the City and the Underwriters. This offer is made subject to acceptance by the Authority and by the City by the execution of this Purchase Agreement and delivery of the same to the Representative prior to 11:59 P.M., California time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Representative upon notice delivered to the Authority and the City at any time prior to the acceptance hereof by the Authority and the City. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture dated as of August 1, 2021 (the “Indenture”), by and among the Authority, the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements herein set forth, the Underwriters, jointly and severally, hereby agree to purchase from the Authority, and the Authority hereby agrees to issue, sell and deliver to the Underwriters all (but not less than all) of the Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 in the aggregate principal amount of $__________ (the “Bonds”). The Bonds will be dated as of their date of delivery. Interest on the Bonds shall be payable semiannually on January 1 and July 1 in each year, commencing January 1, 2022 and will mature, bear interest and be subject to redemption prior to maturity as set forth in Exhibit A hereto. The purchase price for the Bonds shall be equal to $__________ (being the aggregate principal amount thereof [plus/less] a [net] original issue [premium/discount] of $__________, less an underwriters’ discount of $__________). 9.B.f Packet Pg. 2388 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 2 4826-8175-7424v3/200262-0005 Section 2. The Bonds. The Bonds shall be secured by a pledge of Lease Revenues consisting primarily of base rental payments (“Base Rental Payments”) to be paid by the City pursuant to the Lease Agreement, dated as of August 1, 2021 (the “Lease Agreement”), by and between the City and the Authority. The Bonds shall be as described in, and shall be secured under and pursuant to the Indenture substantially in the form previously submitted to the Underwriters with only such changes therein as shall be mutually agreed upon by the Authority, the City and the Representative. The proceeds of the Bonds shall be used: (i) finance a portion of the costs of the construction and installation of certain capital improvements to the City’s maintenance operations and storage facilities known as the “City Yards,” as further described in the Official Statement, (ii) finance capitalized interest on the Bonds to July 1, 2022, and (iii) pay the costs incurred in connection with the issuance of the Bonds. The Bonds, this Purchase Agreement, the Indenture, the Lease Agreement and the Ground Lease, dated as of August 1, 2021 (the “Ground Lease”), by and between the Authority and the City are collectively referred to herein as the “Authority Documents.” This Purchase Agreement, the Continuing Disclosure Certificate, dated as of August 1, 2021 (the “Continuing Disclosure Certificate”), executed and delivered by the City, the Lease Agreement and the Ground Lease are collectively referred to herein as the “City Documents.” Section 3. Public Offering and Establishment of Issue Price. (a) The Underwriters agree to make an initial public offering of all of the Bonds at the public offering prices (or yields) set forth on Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriters reserve the right to change the public offering prices (or yields) as the Underwriters deem necessary in connection with the marketing of the Bonds, provided that the Underwriters shall not change 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 City and the Authority 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 City and the Authority, on one hand, and the Underwriters, on the other; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriters are and have been acting solely as principals and not as Municipal Advisors (as defined in Section 15B of The Securities Exchange Act of 1934, as amended); (iii) the Underwriters have not assumed an advisory or fiduciary responsibility in favor of the City or Authority with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriters have provided other services or are currently providing other services to the City or Authority on other matters); (iv) the Underwriters have financial and other interests that differ from those of the City and the Authority; and (v) the City and Authority have consulted their own legal, financial and other advisors to the extent they have deemed appropriate. (b) The Representative, on behalf of the Underwriters, agrees to assist the Authority in establishing the issue price of the Bonds and the Representative 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 B, 9.B.f Packet Pg. 2389 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 3 4826-8175-7424v3/200262-0005 with such modifications as may be appropriate or necessary, in the reasonable judgment of the Representative, 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 respective allotted Bonds. All actions to be taken by the Authority under this section to establish the issue price of the Bonds may be taken on behalf of the Authority by the Authority’s municipal advisor, Public Resources Advisory Group, Los Angeles, California (the “Municipal Advisor”) and any notice or report to be provided to the Authority may be provided to the Municipal Advisor. (c) Except as otherwise set forth in Exhibit A, 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 (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Purchase Agreement, the Representative shall report to the Authority the price or prices at which the Underwriters have sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Representative agrees to promptly report to the Authority the prices at which Bonds of that maturity have been sold by the Underwriters to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) all Bonds of that maturity have been sold or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Underwriters’ reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Representative, the Authority or Bond Counsel. (d) The Representative confirms that the Underwriters have 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, except as otherwise set forth therein. Exhibit A also sets forth, identified under the column “Hold the Offering Price Rule Used,” 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 Representative, on behalf of the Underwriters, agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriters 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: (i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the Underwriters have 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 Representative shall promptly advise the Authority promptly after the close of the fifth (5th) business day after the sale date whether the Underwriters have 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. (e) The Representative confirms that: 9.B.f Packet Pg. 2390 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 4 4826-8175-7424v3/200262-0005 (i) any agreement among underwriters, any selling group agreement and each third-party distribution agreement (to which the Representative is a party) relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each Underwriter, 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 Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Representative that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Representative, and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Representative and as set forth in the related pricing wires; (B) to promptly notify the Representative of any sales of Bonds that, to its knowledge, are made to a purchaser who 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; and (C) to acknowledge that, unless otherwise advised by the Underwriter, dealer or broker-dealer, the Representative shall assume that each order submitted by the Underwriter, dealer or broker-dealer is a sale to the public. (ii) any agreement among underwriters or 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 Underwriter or 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 Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Representative or such Underwriter or dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Representative or such Underwriter or dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Representative or the Underwriter or the dealer and as set forth in the related pricing wires. (f) The Authority acknowledges that, in making the representations set forth in this section, the Representative will rely on (i) the agreement of each Underwriter 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 an agreement among underwriters and the related pricing wires, (ii) 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 (iii) in the event that an Underwriter or dealer who is a member of the selling group is a party to a third-party distribution agreement that 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 9.B.f Packet Pg. 2391 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 5 4826-8175-7424v3/200262-0005 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 each Underwriter shall be solely liable for its failure to comply with its agreement regarding 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, and that no Underwriter shall be liable for the failure of any other Underwriter, or 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. (g) The Underwriters acknowledge 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 purposes of this section. Further, for purposes of this section: (i) “public” means any person other than an underwriter or a related party; (ii) “underwriter” means: (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” to 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 (iv) “sale date” means the date of execution of this Purchase Agreement by all parties. Section 4. The Official Statement. By its acceptance of this proposal, the Authority and the City ratify, confirm and approve of the use and distribution by the Underwriters prior to the date hereof of the preliminary official statement relating to the Bonds dated _____, 2021 (including the cover page, all appendices and all information incorporated therein and any supplements or amendments thereto and as disseminated in its printed physical form or in electronic form in all respects materially consistent with such physical form, the “Preliminary Official Statement”) that authorized officers of the Authority and City deemed “final” as of its date, for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”), except for certain information permitted to be omitted therefrom by Rule 15c2-12. The Authority and the City hereby agree to deliver or cause to be delivered to the Underwriters, within seven 9.B.f Packet Pg. 2392 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 6 4826-8175-7424v3/200262-0005 business days of the date hereof, copies of the final official statement, dated the date hereof, relating to the Bonds (including all information previously permitted to have been omitted by Rule 15c2-12), including the cover page, all appendices, all information incorporated therein and any amendments or supplements as have been approved by the Authority, the City and the Representative (the “Official Statement”) in such quantity as the Underwriters shall reasonably request to comply with Section (b)(4) of Rule 15c2-12 and the rules of the Municipal Securities Rulemaking Board (the “MSRB”). The Underwriters hereby agree that they will not request that payment be made by any purchaser of the Bonds prior to delivery by the Underwriters to the purchaser of a copy of the Official Statement. The Underwriters agree to provide the Authority and the City with final pricing information on the Bonds on a timely basis. The Representative agrees to promptly file a copy of the Official Statement, including any supplements prepared by the Authority or the City with the MSRB at http://emma.msrb.org. The Authority and the City hereby approve of the use and distribution by the Underwriters of the Preliminary Official Statement in connection with the offer and sale of the Bonds. The Authority and the City will cooperate with the Representative in the filing by the Representative of the Official Statement with the MSRB. Section 5. Closing. At 8:30 a.m., Pacific Standard Time, on _____, 2021, or at such other time or date as the Authority and the Representative agree upon (the “Closing Date”), the Authority shall deliver or cause to be delivered to the Trustee, the Bonds, in definitive form, registered in the name of Cede & Co., as the nominee of The Depository Trust Company (“DTC”), so that the Bonds may be authenticated by the Trustee and credited to the account specified by the Representative under DTC’s FAST procedures. Concurrently with the delivery of the Bonds, the Authority and the City will deliver the documents hereinafter mentioned at the offices of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California (“Bond Counsel”), or another place to be mutually agreed upon by the Authority, the City and the Representative. The Representative will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer in immediately available funds. This payment for and delivery of the Bonds, together with the delivery of the aforementioned documents, is herein called the “Closing.” The Bonds shall be registered in the name of Cede & Co., as nominee of DTC in denominations of five thousand dollars ($5,000) or any integral multiple thereof. The Authority and the City acknowledge that the services of DTC will be used initially by the Underwriters in order to permit the issuance of the Bonds in book-entry form, and agree to cooperate fully with the Underwriters in employing such services. Section 6. Representations, Warranties and Covenants of the Authority. The Authority represents, warrants and covenants to the Underwriters and the City that: (a) The Authority is a public body, duly organized and existing under the Constitution and laws of the State of California (the “State”), including Article 1 of Chapter 15 of Division 7 of Title 1 of the Government Code of the State of California (the “JPA Act”) and the Joint Exercise of Powers Agreement, dated as of July 25, 1995, as amended (the “JPA Agreement”), by and between the City and the former Redevelopment Agency of the City of Santa Monica. (b) The Authority has full legal right, power and authority to issue, execute and deliver the Bonds, and to adopt or enter into, as the case may be, and to carry out and consummate the transactions on its part contemplated by the Authority Documents and the resolution of the 9.B.f Packet Pg. 2393 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 7 4826-8175-7424v3/200262-0005 Authority authorizing the issuance of the Bonds and the execution and delivery of the Authority Documents (the “Authority Resolution”). (c) By all necessary official action, the Authority has adopted the Authority Resolution, has duly authorized and approved the Authority Documents and the issuance, execution and delivery of the Bonds, has duly authorized and approved the Preliminary Official Statement, will, by execution thereof, duly authorize and approve the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained in, the Authority Documents and the consummation by it of all other transactions contemplated by the Authority Documents in connection with the issuance of the Bonds. As of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, and assuming due execution and delivery by the other parties thereto, if applicable, the Authority Documents will constitute the legally valid and binding obligations of the Authority enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally, or by the exercise of judicial discretion and the limitations on legal remedies against joint powers authorities in the State. The Authority has complied, and will at the Closing be in compliance in all material respects, with the terms of the Authority Documents. (d) The Authority is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of any state or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party which breach or default has or may have a materially adverse effect on the ability of the Authority to perform its obligations under the Authority Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the adoption, execution and delivery of the Authority Documents, if applicable, and compliance with the provisions on the Authority’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Authority or under the terms of any such law, regulation or instrument, except as may be provided by the Authority Documents. (e) All material authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by the Authority of its obligations in connection with the Authority Documents have been duly obtained or, when required for future performance, are expected to be obtained, other than such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Preliminary Official Statement and the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due 9.B.f Packet Pg. 2394 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 8 4826-8175-7424v3/200262-0005 performance by, the Authority of its obligations under the Authority Documents have been duly obtained. (f) The Authority hereby agrees that it will notify the other parties hereto if, within the period from the date of this Purchase Agreement to and including the date twenty-five (25) days following the end of the underwriting period (as defined herein), the Authority discovers any pre-existing or subsequent fact or becomes aware of the occurrence of any event, in any such case, which might cause the Official Statement (as the same may have then been supplemented or amended) to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (g) As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental authority, public board or body, pending, with service of process upon the Authority having been accomplished, or threatened in writing to the Authority: (i) in any way questioning the corporate existence of the Authority or the titles of the officers of the Authority to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of Base Rental Payments with respect to the Lease Agreement or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds or the other Authority Documents or the consummation of the transactions contemplated thereby or hereby, or contesting the exclusion of the interest on the Bonds from taxation or contesting the powers of the Authority or its authority to issue the Bonds; (iii) which would be likely to result in any material adverse change relating to the business, operations or financial condition of the Authority; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (h) To the best of the Authority’s knowledge, there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of paragraph 6(g). (i) The information set forth under the caption “THE AUTHORITY” contained in the Preliminary Official Statement, as of its date and of as of the date of this Purchase Agreement, and the information set forth under the caption “THE AUTHORITY” contained in the Official Statement, as of its date and as of the Closing, does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) The Authority will refrain from taking any action, or permitting any action to be taken, with regard to which the Authority may exercise control, that results in the loss of the tax-exempt status of the interest on the Bonds. (k) The Authority will refrain from taking any action, or permitting any action to be taken, to reduce the amount of the Base Rental Payments while the Bonds are Outstanding, and the Authority will collect the Base Rental Payments in accordance with the Lease Agreement. 9.B.f Packet Pg. 2395 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 9 4826-8175-7424v3/200262-0005 (l) Any certificate signed by any officer of the Authority authorized to execute such certificate in connection with the execution, sale and delivery of the Bonds and delivered to the Representative shall be deemed a representation and warranty of the Authority to the Underwriters and the City as to the statements made therein but not of the person signing such certificate. Section 7. Representations, Warranties and Covenants of the City. The City represents, warrants and covenants to the Underwriters and the Authority that: (a) The City is a chartered city duly organized and existing under and by virtue of the laws of the State. (b) The City has full legal right, power and authority to adopt or enter into, as the case may be, and to carry out and consummate the transactions on its part contemplated by the City Documents and the City resolution approving the execution and delivery of the City Documents and the issuance of the Bonds by the Authority (the “City Resolution”). (c) By all necessary official action, the City has adopted the City Resolution and has duly authorized and approved the City Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in, the City Documents and the consummation by it of all other transactions contemplated by the City Documents in connection with the issuance of the Bonds. As of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, and assuming due execution and delivery by the other parties thereto, if applicable, the City Documents will constitute the legally valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally, or by the exercise of judicial discretion and the limitations on legal remedies against municipal corporations in the State. The City has complied, and will at the Closing be in compliance in all material respects, with the terms of the City Documents. (d) The City is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of any state or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party which breach or default has or may have a materially adverse effect on the ability of the City to perform its obligations under the City Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the adoption, execution and delivery of the City Documents, if applicable, and compliance with the provisions on the City’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or under the terms of any such law, regulation or instrument, except as may be provided by the City Documents. 9.B.f Packet Pg. 2396 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 10 4826-8175-7424v3/200262-0005 (e) All material authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by the City of its obligations in connection with the City Documents have been duly obtained or, when required for future performance, are expected to be obtained, other than such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Preliminary Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations under the City Documents have been duly obtained. (f) The Preliminary Official Statement was as of its date, and the Official Statement is, and at all times subsequent to the date of the Official Statement up to and including the Closing will be, true and correct in all material respects, and the Preliminary Official Statement and the Official Statement do not and will not contain and up to and including the Closing will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading (except that this representation does not include statements in the Official Statement under the captions “THE AUTHORITY” and “UNDERWRITING” and information regarding DTC and its book-entry only system, as to which no view is expressed). (g) The City will advise the Representative promptly of any proposal to amend or supplement the Official Statement. The City will advise the Representative promptly of the institution of any proceedings known to it by any governmental authority prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (h) As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental authority, public board or body, pending, with service of process upon the City having been accomplished, or threatened in writing to the City: (i) in any way questioning the corporate existence of the City or the titles of the officers of the City to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of Base Rental Payments with respect to the Lease Agreement or of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds, or the City Documents or the consummation of the transactions contemplated thereby or hereby, or contesting the exclusion of the interest on the Bonds from taxation, or contesting the powers of the Authority to issue the Bonds; (iii) which would be likely to result in any material adverse change relating to the business, operations or financial condition of the City; and (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 9.B.f Packet Pg. 2397 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 11 4826-8175-7424v3/200262-0005 (i) To the City’s knowledge, there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of paragraph 7(h). (j) Until the date which is twenty-five (25) days after the “end of the underwriting period” (as hereinafter defined), if any event shall occur of which the City is aware that would cause the Official Statement to contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading (except that this representation does not include information regarding DTC and its book entry only system, as to which no view is expressed), the City shall forthwith notify the Representative of any such event of which it has knowledge and shall cooperate fully in furnishing any information available to it for any supplement to the Official Statement necessary, in the Representative’s reasonable opinion, so that the statements therein as so supplemented will not be misleading in the light of the circumstances existing at such time and the City shall promptly furnish to the Underwriters a reasonable number of copies of such supplement. As used herein, the term “end of the underwriting period” means the later of such time as: (i) the Authority delivers the Bonds to the Underwriters; or (ii) the Underwriters do not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Representative gives notice to the contrary, the “end of the underwriting period” shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the Representative at or prior to the Closing Date of the Bonds and shall specify a date (other than the Closing Date) to be deemed the “end of the underwriting period.” (k) Except as disclosed in the Preliminary Official Statement and the Official Statement, the City has not within the last five years failed to comply in any material respect with any continuing disclosure undertakings with regard to Rule 15c2-12, to provide annual reports or notices of material events specified in such rule. (l) The City will refrain from taking any action, or permitting any action to be taken, with regard to which the City may exercise control, that results in the loss of the tax-exempt status of the interest on the Bonds. (m) The financial statements relating to the receipts, expenditures and cash balances of the City as of June 30, 2020 attached as Appendix B to the Official Statement fairly represent the receipts, expenditures and cash balances of the City. Except as disclosed in the Official Statement or otherwise disclosed in writing to the Representative, there has not been any materially adverse change in the financial condition of the City or in its operations since June 30, 2020 and there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change. (n) To the extent required by law, the City will undertake, pursuant to the Continuing Disclosure Certificate and the other City Documents, to provide annual reports and notices of certain events, if material. A description of this undertaking is set forth in Appendix E to the Preliminary Official Statement and will also be set forth in the Official Statement. (o) Except in connection with the issuance of refunding bonds pursuant to the terms of the Indenture or as permitted under the Lease Agreement due to damage, destruction, or substantial interference with the use and occupancy by the City of the Property or any portion thereof, the City will refrain from taking any action, or permitting any action to be taken, to reduce 9.B.f Packet Pg. 2398 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 12 4826-8175-7424v3/200262-0005 the amount of the Base Rental Payments while the Bonds are Outstanding, and the City will pay the Base Rental Payments in accordance with the Lease Agreement. (p) Any certificate signed by any officer of the City authorized to execute such certificate in connection with the execution, sale and delivery of the Bonds and delivered to the Representative shall be deemed a representation and warranty of the City to the Underwriters and the Authority as to the statements made therein but not of the person signing such certificate. Section 8. Conditions to the Obligations of the Underwriters. The Underwriters have entered into this Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein. The obligations of the Underwriters to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Representative, to the accuracy in all material respects of the statements of the officers and other officials of the Authority and of the City, as well as authorized representatives of Bond Counsel and the Trustee made in any Bonds or other documents furnished pursuant to the provisions hereof; to the performance by the Authority and the City of their obligations to be performed hereunder at or prior to the Closing Date; and to the following additional conditions: (a) The representations, warranties and covenants of the City and the Authority contained herein shall be true and correct at the date hereof and at the time of the Closing, as if made on the Closing Date. (b) At the time of Closing, the City Documents and the Authority Documents shall be in full force and effect as valid and binding agreements between or among the various parties thereto, and the City Documents, the Authority Documents and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Representative, and the City Resolution and the Authority Resolution shall be in full force and effect. (c) At the time of the Closing, no material default shall have occurred or be existing under the City Documents, Authority Documents, or any other agreement or document pursuant to which any of the City’s financial obligations were executed and delivered, and the City shall not be in default in the payment of principal or interest with respect to any of its financial obligations, which default would materially adversely impact the ability of the City to pay the Base Rental Payments. (d) In recognition of the desire of the Authority, the City and the Underwriters to effect a successful public offering of the Bonds, and in view of the potential adverse impact of any of the following events on such a public offering, the Underwriters shall have the right to cancel their obligation to purchase the Bonds and to terminate this Purchase Agreement by written notice to the Authority and the City if, between the date of this Purchase Agreement to and including the Closing Date, in the Representative’s sole and reasonable judgment any of the following events shall occur regardless of whether any of the following events were in existence or known of on the date of this Purchase Agreement: (i) any event shall occur which makes untrue any material statement or results in an omission to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading, which event, in the reasonable opinion of the Representative would materially or adversely affect the ability of the Underwriters to market the Bonds; or 9.B.f Packet Pg. 2399 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 13 4826-8175-7424v3/200262-0005 (ii) the marketability of the Bonds or the market price thereof, in the opinion of the Representative, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any federal or state court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority affecting the federal or State tax status of the Authority or the City, or the interest on or with respect to bonds or notes (including the Bonds); or (iii) any legislation, ordinance, rule or regulation shall be enacted by any governmental body, department or authority of the State, or a decision by any court of competent jurisdiction within the State shall be rendered which materially adversely affects the market price of the Bonds; or (iv) an order, decree or injunction issued by any court of competent jurisdiction, or order, ruling, regulation (final, temporary or proposed), official statement or other form of notice or communication issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental authority having jurisdiction of the subject matter, to the effect that: (i) obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under the Trust Indenture Act of 1939, as amended; or (ii) the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including any or all underlying obligations, as contemplated hereby or by the Official Statement, is or would be in violation of the federal securities laws as amended and then in effect; or (v) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, to the effect that obligations of the general character of the Bonds, or the Bonds are not exempt from registration under or other requirements of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; or (vi) additional material restrictions 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 9.B.f Packet Pg. 2400 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 14 4826-8175-7424v3/200262-0005 (vii) a general banking moratorium shall have been declared by federal, State or New York authorities; or (viii) the market price or marketability of the Bonds, or the ability of the Underwriters to enforce contracts for the sale of the Bonds, shall be materially adversely affected by any of the following events: (A) there shall have occurred (i) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (ii) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis; or (B) 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 Securities and Exchange Commission or any other governmental authority having jurisdiction; or (ix) any rating of the Bonds or the rating of any obligations of the City secured by the City’s general fund shall have been downgraded or withdrawn by a national rating service, which, in the opinion of the Representative, materially adversely affects the market price of the Bonds; or (x) the commencement of any action, suit or proceeding described in Section 6(g) or Section 7(h). (e) at or prior to the Closing, the Representative shall receive the following documents, in each case to the reasonable satisfaction in form and substance of the Representative: (i) The Authority Resolution; (ii) The City Resolution; (iii) The City Documents and the Authority Documents duly executed and delivered by the respective parties thereto, with only such amendments, modifications or supplements as may have been agreed to in writing by the Representative; (iv) The approving opinion of Bond Counsel dated the Closing Date and addressed to the Authority, in substantially the form attached as Appendix F to the Official Statement, and a reliance letter thereon addressed to the Underwriters; (v) A supplemental opinion of Bond Counsel dated the Closing Date and addressed to the Underwriters, to the effect that: (A) the statements in the Official Statement under the captions “INTRODUCTION,” “THE BONDS” (excluding therefrom all information pertaining to DTC and its book-entry only system, as to which no opinion is expressed), “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS,” and “TAX MATTERS,” and in Appendix C—“DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS,” excluding any material that may be 9.B.f Packet Pg. 2401 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 15 4826-8175-7424v3/200262-0005 treated as included under such captions and appendices by any cross-reference, insofar as such statements expressly summarize provisions of the Bonds, the Indenture, the Ground Lease, the Lease Agreement and Bond Counsel’s final opinion concerning certain federal tax matters relating to the Bonds, are accurate in all material respects as of the Closing Date, provided that Bond Counsel need not express any opinion with respect to any financial or statistical data contained therein or with respect to the book-entry system in which the Bonds are initially delivered; (B) The Purchase Agreement and the Continuing Disclosure Certificate have been duly executed and delivered by the City and the Authority, as applicable, and are the valid and binding agreements of the City and the Authority, as applicable, enforceable in accordance with their respective terms, except that the rights and obligations under the Purchase Agreement and the Continuing Disclosure Certificate are subject to bankruptcy, insolvency, reorganization, receivership, arrangement, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against joint powers authorities in the State, and provided that no opinion is expressed with respect to any indemnification contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in such documents, nor is any opinion provided with respect to the state or quality of title to or interest in any real or personal property described in the Ground Lease, the Lease Agreement or as subject to the lien of the Indenture, or the accuracy or sufficiency of the descriptions contained therein of, or the remedies available to enforce liens on, any such property; and provided further that no opinion, conclusion or view is expressed regarding the adequacy of the Continuing Disclosure Certificate for purposes of Securities and Exchange Commission Rule 15c2-12; and (C) The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; (vi) The Official Statement, executed on behalf of the Authority and the City, and the Preliminary Official Statement; (vii) Evidence that the ratings on the Bonds are as described in the Official Statement; (viii) A certificate, dated the Closing Date, signed by a duly authorized officer of the Authority satisfactory in form and substance to the Representative to the effect that: (i) the representations, warranties and covenants of the Authority contained in this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date by the Authority, and the Authority has complied with, in all material respects, all of the terms and conditions of this Purchase Agreement required to be complied with by the Authority at or prior to the Closing Date; (ii) no event affecting the Authority has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (iii) the Authority is not, in any material respect, in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is 9.B.f Packet Pg. 2402 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 16 4826-8175-7424v3/200262-0005 a party or is otherwise subject, which would have a material adverse impact on the Authority’s ability to perform its obligations under the Authority Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument; (ix) A certificate, dated the Closing Date, signed by a duly authorized officer of the City satisfactory in form and substance to the Representative to the effect that: (i) the representations, warranties and covenants of the City contained in this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date by the City, and the City has complied with, in all material respects, all of the terms and conditions of the Purchase Agreement required to be complied with by the City at or prior to the Closing Date; (ii) no event affecting the City has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (iii) the information and statements contained in the Preliminary Official Statement did not as of its date and as of the date of this Purchase Agreement, and the Official Statement did not as of its date and does not as of the Closing (in each case excluding therefrom the information under the captions “THE AUTHORITY” and “UNDERWRITING” and information regarding DTC and its book entry only system) contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; and (iv) the City is not, in any material respect, in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement (including but not limited to the Lease Agreement) or other instrument to which the City is a party or is otherwise subject, which would have a material adverse impact on the City’s ability to perform its obligations under the City Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; (x) An opinion dated the Closing Date and addressed to the Underwriters and the Trustee, of the City Attorney, as counsel to the Authority, to the effect that: (A) The Authority is a public body, organized and existing under the Constitution and laws of the State, including the JPA Act and the JPA Agreement; (B) The Authority Resolution has been duly adopted by the Authority, is in full force and effect and has not been modified, amended, rescinded or repealed since its date of adoption; (C) The Bonds and the Authority Documents have been duly authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery by the other parties to them, constitute the valid, legal and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting enforcement of creditors’ rights or by the application of equitable principles if equitable remedies are sought; 9.B.f Packet Pg. 2403 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 17 4826-8175-7424v3/200262-0005 (D) Except as otherwise disclosed in the Official Statement, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental authority or body, pending, with service of process upon the Authority having been accomplished, or to the best knowledge of such counsel threatened in writing against the Authority, challenging the creation, organization or existence of the Authority, or the validity of the Authority Documents or seeking to restrain or enjoin the collection of Base Rental Payments with respect to the Lease Agreement or the repayment of the Bonds or in any way contesting or affecting the validity of the Authority Documents or contesting the authority of the Authority to enter into or perform its obligations under any of the Authority Documents; (E) The execution and delivery of the Authority Documents and the issuance of the Bonds and compliance with the provisions thereof, do not and will not in any material respect conflict with or constitute on the part of the Authority a breach of or default under any agreement or other instrument to which the Authority is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the Authority is subject, which breach or default has or may have a material adverse effect on the ability of the Authority to perform its obligations under the Authority Documents; and (xi) an opinion dated the Closing Date and addressed to the Underwriters and the Trustee, of the City Attorney, as counsel to the City, to the effect that: (A) The City is a municipal corporation, duly organized and existing under and by virtue of the laws of the State; (B) The City Resolution has been duly adopted by the City Council, is in full force and effect and has not been modified, amended, rescinded or repealed since its date of adoption; (C) The City Documents have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties to them, constitute the valid, legal and binding obligations of the City enforceable against the City in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting enforcement of creditors’ rights or by the application of equitable principles if equitable remedies are sought; (D) Except as otherwise disclosed in the Official Statement there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental authority or body, pending, with service of process upon the City having been accomplished, or to the best knowledge of such counsel threatened in writing against the City, challenging the creation, organization or existence of the City, or the validity of the City Documents or seeking to restrain or enjoin the payment of the Base Rental Payments or the repayment of the Bonds or in any way contesting or affecting the validity of the City Documents or contesting the authority of the City to enter into or perform its obligations under any of the City Documents, or which, in any manner, questions the right of the City to pay the Base Rental Payments under the Lease Agreement; (E) To the best of such counsel’s knowledge the execution and delivery of the City Documents and compliance with the provisions thereof, do not and will not in any material respect conflict with or constitute on the part of the City a breach of or default under any 9.B.f Packet Pg. 2404 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 18 4826-8175-7424v3/200262-0005 agreement or other instrument to which the City is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the City is subject, which breach or default has or may have a material adverse effect on the ability of the City to perform its obligations under the City Documents; and (xii) A letter of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, in its capacity as Disclosure Counsel, dated the Closing Date and addressed to the Authority, the City and the Underwriters, to the effect that, based upon the information made available to them in the course of their participation in the preparation of the Preliminary Official Statement and the Official Statement and without passing on and without assuming any responsibility for the accuracy, completeness and fairness of the statements in the Preliminary Official Statement or the Official Statement, and having made no independent investigation or verification thereof, and stated as a matter of fact and not opinion that, during the course of its representation of the Authority and the City on this matter, (a) no facts had come to the attention of the attorneys rendering legal services with respect to the Preliminary Official Statement which caused them to believe as of the date of the Preliminary Official Statement and the date of the Purchase Agreement, based on the documents, drafts and facts in existence and received as of those dates, that the Preliminary Official Statement contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except any information marked as preliminary or subject to change, any information permitted to be omitted by Securities and Exchange Commission Rule 15c2-12 or otherwise left blank and any other differences with information in the Official Statement), and (b) no facts had come to the attention of the rendering legal service with respect to the Official Statement which caused them to believe that the Official Statement contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, they express no view or opinion, with respect to both the Preliminary Official Statement and the Official Statement, about any CUSIP numbers, financial, accounting, statistical or economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, any information about verification, feasibility, valuation, appraisals, real estate or environmental matters, any management discussion and analysis, any statements about compliance with prior continuing disclosure undertakings, the Appendices thereto, or any information about book-entry, The Depository Trust Company, Cede & Co., ratings, rating agencies, tax-exemption, the Municipal Advisor, the Underwriters and underwriting, included or referred to therein or omitted therefrom and no responsibility is undertaken or view expressed with respect to any other disclosure document, materials or activity, or as to any information from another document or source referred to by or incorporated by reference in the Preliminary Official Statement or the Official Statement; (xiii) An opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, counsel to the Underwriters, in form and substance satisfactory to the Representative; (xiv) An opinion or opinions of counsel to the Trustee, addressed to the Underwriters and dated the Closing Date, in form and substance satisfactory to the Representative and to Bond Counsel; (xv) A certificate or certificates, dated the Closing Date, signed by a duly authorized official of the Trustee in form and substance satisfactory to the Representative; 9.B.f Packet Pg. 2405 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 19 4826-8175-7424v3/200262-0005 (xvi) The preliminary and final Statement of Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583 of the Government Code and Section 8855(g) of the Government Code; (xvii) A copy of the executed Blanket Issuer Letter of Representations by and between the Authority and DTC relating to the book-entry system; (xviii) The tax and nonarbitrage certificate of the Authority and the City, relating to the Bonds, in form and substance to the reasonable satisfaction of Bond Counsel and the Representative; (xix) A certificate, dated the date of the Preliminary Official Statement, of the City, as required under Rule 15c2-12; (xx) A certificate, dated the date of the Preliminary Official Statement, of the Authority, as required under Rule 15c2-12; (xxi) Certified copies of the JPA Agreement and all amendments thereto and related certificates issued by the Secretary of State of the State (or, alternatively, a certificate of the Authority confirming that notice of the JPA Agreement and all amendments thereto have been filed with the Secretary of State prior to the Closing Date); (xxii) A certified copy of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution and delivery of the Indenture and the authentication and delivery of the Bonds by the Trustee; (xxiii) a copy of an ALTA or CLTA title insurance policy in an amount equal to the principal amount of the Bonds, insuring the City’s leasehold interest in the Property, subject only to permitted encumbrances or such other encumbrances approved in writing by the Representative; and (xxiv) Such additional legal opinions, certificates, proceedings, instruments or other documents as Bond Counsel or the Underwriters may reasonably request. Section 9. Changes in Official Statement. After the Closing, neither the Authority nor the City will adopt any amendment of or supplement to the Official Statement to which the Representative shall reasonably object in writing. Within 90 days after the Closing or within 25 days following the “end of the underwriting period” (as defined in Rule 15c2-12), whichever occurs first, if any event relating to or affecting the Bonds, the Trustee, the City or the Authority shall occur as a result of which it is necessary, in the opinion of the Representative, to amend or supplement the Official Statement in order to make the Official Statement not misleading in any material respect in the light of the circumstances existing at the time it is delivered to a purchaser, the Authority will forthwith prepare and furnish to the Underwriters an amendment or supplement that 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 purchaser, not misleading. The City and the Authority shall cooperate with the Representative in the filing by the Representative 9.B.f Packet Pg. 2406 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 20 4826-8175-7424v3/200262-0005 of such amendment or supplement to the Official Statement with the MSRB. The Underwriters acknowledges that the “end of the underwriting period” will be the Closing Date. Section 10. Expenses. The Authority or the City will pay or cause to be paid the approved expenses incident to the performance of its obligations hereunder and certain expenses relating to the sale of the Bonds, including, but not limited to (a) the cost of the preparation and printing or other reproduction of the Authority Documents and the City Documents (other than this Purchase Agreement); (b) the fees and disbursements of Bond Counsel, Disclosure Counsel, the Municipal Advisor and any other experts or other consultants retained by the Authority or the City; (c) the costs and fees of the credit rating agencies; (d) the cost of preparing and delivering the definitive Bonds; (e) the cost of providing immediately available funds on the Closing Date; (f) the cost of the printing or other reproduction of the Preliminary Official Statement and Official Statement and any amendment or supplement thereto, including a reasonable number of certified or conformed copies thereof; (g) the Underwriters’ out-of-pocket expenses (included in the expense component of the Underwriter’s discount) incurred by the Underwriters on behalf of the City’s employees which are incidental to implementing this Purchase Agreement; and (h) the fees for counsel to the Underwriters. The Underwriters will pay the expenses of the preparation of this Purchase Agreement, including CDIAC fees, CUSIP Services Bureau charges, regulatory fees imposed on new securities issuers and any and all other expenses incurred by the Underwriters in connection with the public offering and distribution of the Bonds. Section 11. Notices. Any notice or other communication to be given to the Underwriters under this Purchase Agreement may be given by delivering the same in writing to Jefferies LLC, 11100 Santa Monica Blvd., 12th Floor, Los Angeles, CA 90025, Attention: Simon Wirecki. The approval of the Representative when required hereunder or the determination of its satisfaction as to any document referred to herein shall be in writing signed by the Representative and delivered to the Authority and to the City. All notices or communications hereunder by any party shall be given and served upon each other party. Any notice or communication to be given the Authority under this Purchase Agreement may be given by delivering the same in writing to the Santa Monica Public Financing Authority, c/o City of Santa Monica, 1685 Main Street, Mail Stop 09, Santa Monica, California 90401, Attention: Executive Director. Any notice or communication to be given the City under this Purchase Agreement may be given by delivering the same in writing to the City of Santa Monica, 1685 Main Street, Mail Stop 09, Santa Monica, California 90401, Attention: City Manager. Section 12. Parties in Interest. This Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriters (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof. All representations, warranties and agreements of the Authority and the City in this Purchase Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriters and shall survive the delivery of and payment for the Bonds. Section 13. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof. Section 14. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Purchase Agreement may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Purchase Agreement using an electronic signature, it is signing, adopting, and accepting this Purchase Agreement and that 9.B.f Packet Pg. 2407 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 21 4826-8175-7424v3/200262-0005 signing this Purchase Agreement using an electronic signature is the legal equivalent of having placed its handwritten signature on this Purchase Agreement on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Purchase Agreement in a usable format. Section 15. Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 9.B.f Packet Pg. 2408 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of S-1 4826-8175-7424v3/200262-0005 Section 16. Governing Law. This Purchase Agreement shall be governed by and construed in accordance with the laws of the State. JEFFERIES LLC By: Title: Authorized Officer Accepted as of the date first stated above: CITY OF SANTA MONICA By: Its: Director of Finance/City Treasurer Time of Execution: _____ p.m. Pacific Time SANTA MONICA PUBLIC FINANCING AUTHORITY By: Its: Treasurer Time of Execution: _____ p.m. Pacific Time 9.B.f Packet Pg. 2409 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of A-1 4826-8175-7424v3/200262-0005 EXHIBIT A MATURITY SCHEDULES SANTA MONICA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (CITY YARDS PROJECT) SERIES 2021 Maturity Date (July 1) Principal Amount Interest Rate Initial Offering Price Yield 10% Test Used Hold the Offering Price Rule Used REDEMPTION Optional Redemption. The Bonds maturing on or after July 1, 20__ are subject to optional redemption, in whole or in part in Authorized Denominations on any date on or after July 1, 20__, from and to the extent of prepaid Base Rental Payments paid pursuant to subsection (a) of Section 3.08 of 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 redemption, without premium. Mandatory Sinking Fund Redemption. The Bonds maturing July 1, 20__ are subject to mandatory sinking fund redemption, in part, on July 1 in each year, commencing July 1, 20__, at a Redemption Price equal to the principal amount of the Bonds maturing July 1, 20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows: Sinking Fund Redemption Date (July 1) Principal Amount to be Redeemed * _____________________ * (Maturity) If some but not all of the Bonds maturing on July 1, 20__ are redeemed pursuant to the terms for extraordinary redemption, the principal amount of the Bonds maturing on July 1, 20__ to be redeemed from mandatory sinking fund payments on any subsequent July 1 shall be reduced by the aggregate principal amount of the Bonds maturing on July 1, 20__ so redeemed pursuant to the terms for 9.B.f Packet Pg. 2410 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of A-2 4826-8175-7424v3/200262-0005 extraordinary redemption, such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination will be given by the Trustee to the City. If some but not all of the Bonds maturing on July 1, 20__ are optionally redeemed, the principal amount of the Bonds maturing on July 1, 20__ to be redeemed from mandatory sinking fund payments on any subsequent July 1 will be reduced, by $5,000 or an integral multiple thereof, as designated by the City in a Written Certificate of the City filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the Bonds maturing on July 1, 20__ optionally redeemed. The Bonds maturing July 1, 20__ are subject to mandatory sinking fund redemption, in part, on July 1 in each year, commencing July 1, 20__, at a Redemption Price equal to the principal amount of the Bonds maturing July 1, 20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows: Sinking Fund Redemption Date (July 1) Principal Amount to be Redeemed * _____________________ * (Maturity) If some but not all of the Bonds maturing on July 1, 20__ are redeemed pursuant to the terms for extraordinary redemption, the principal amount of the Bonds maturing on July 1, 20__ to be redeemed from mandatory sinking fund payments on any subsequent July 1 shall be reduced by the aggregate principal amount of the Bonds maturing on July 1, 20__ so redeemed pursuant to the terms for extraordinary redemption, such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination will be given by the Trustee to the City. If some but not all of the Bonds maturing on July 1, 20__ are optionally redeemed, the principal amount of the Bonds maturing on July 1, 20__ to be redeemed from mandatory sinking fund payments on any subsequent July 1 will be reduced, by $5,000 or an integral multiple thereof, as designated by the City in a Written Certificate of the City filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the Bonds maturing on July 1, 20__ optionally redeemed. Extraordinary Redemption from Condemnation Award or Insurance Proceeds. The Bonds are subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any insurance proceeds or condemnation award received (in excess of $50,000) 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 Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. 9.B.f Packet Pg. 2411 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of B-1 4826-8175-7424v3/200262-0005 EXHIBIT B SANTA MONICA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (CITY YARDS PROJECT) SERIES 2021 FORM OF ISSUE PRICE CERTIFICATE The undersigned, Jefferies LLC (“Jefferies”), on behalf of itself and as representative (the “Representative”) of UBS Financial Services Inc. and Samuel A. Ramirez & Co., Inc. (together with the Representative, the “Underwriting Group”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Bonds”). 1. Bond Purchase Agreement. On _____, 2021 (the “Sale Date”), the Representative, the Authority and the City of Santa Monica executed a Bond Purchase Agreement (the “Purchase Agreement”) in connection with the sale of the Bonds. The Representative has not modified the Purchase Agreement since its execution on the Sale Date. 2. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the Bonds listed as a “10% Test Maturity” in Exhibit A attached to the Purchase Agreement, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Exhibit A attached to the Purchase Agreement. 3. Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) The Underwriting Group offered the “Hold-the-Price Maturities” (as listed in Exhibit A attached to the Purchase Agreement) to the Public for purchase at the respective initial offering prices listed in Exhibit A attached to the Purchase Agreement (the “Initial Offering Prices”) on or before the Sale Date. (b) With respect to the Hold-the-Price Maturities, as agreed to in writing by the Representative in the Purchase Agreement, the Representative has (i) retained the unsold Bonds of each Hold-the-Price Maturity and not allocated any such Bonds to any other member of the Underwriter and (ii) not offered or sold unsold Bonds of any of the Hold-the-Price Maturities to any person at a price that is higher than or a yield lower than the respective Initial Offering Prices for such Maturities of the Bonds during the Holding Period. 4. Pricing Wire or Equivalent Communication. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule A. 5. Defined Terms. (a) 10% Test Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “10% Test Maturities.” (b) Authority means the Santa Monica Public Financing Authority. (c) Hold-the-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Price Maturities.” 9.B.f Packet Pg. 2412 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of B-2 4826-8175-7424v3/200262-0005 (d) Holding Period means, with respect to a Hold-the-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 at least 10% of such Hold-the-Price Maturity was sold to the Public at prices that are no higher than or yields that are no lower than the Initial Offering Price for such Hold-the-Price Maturity. (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. (g) Related Party. A purchaser of any Bonds is a “Related Party” to an Underwriter if the Underwriter and the purchaser are subject, directly or indirectly, to (i) 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), (ii) 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 (iii) 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). (h) Tax Certificate means the Tax Certificate, dated _____, 2021, executed and delivered by the Authority in connection with the issuance of the Bonds. (i) Underwriter means (i) 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 (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). The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Jefferies’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Authority and the City of Santa Monica with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel in connection with rendering their 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 Authority and the City of Santa Monica from time to time relating to the Bonds. The certifications contained herein are not necessarily based on personal knowledge, but may instead be based on either inquiry deemed adequate by the undersigned or institutional knowledge (or both) regarding the matters set forth herein. 9.B.f Packet Pg. 2413 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of B-3 4826-8175-7424v3/200262-0005 JEFFERIES LLC By: Name: Dated: _____, 2021 9.B.f Packet Pg. 2414 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of B-4 4826-8175-7424v3/200262-0005 SCHEDULE A PRICING WIRE OR EQUIVALENT COMMUNICATION (Attached) 9.B.f Packet Pg. 2415 Attachment: Bond Purchase Agreement (Santa Monica PFA LRBs (City Yards Project) (4614 : Adoption of Resolution Authorizing Issuance of 4157-0826-7055.1 CONTINUING DISCLOSURE CERTIFICATE CITY OF SANTA MONICA Dated as of [__________] 1, 2021 Relating to Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 9.B.g Packet Pg. 2416 Attachment: Continuing Disclosure Certificate Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution 4157-0826-7055.1 CONTINUING DISCLOSURE CERTIFICATE THIS CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”), dated as of [__________] 1, 2021, is executed and delivered by the City of Santa Monica (the “City”). WHEREAS, pursuant to the Indenture, dated as of [__________] 1, 2021 (the “Indenture”), by and among the Santa Monica Public Financing Authority (the “Authority”), the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), the Authority has issued $[__________] aggregate principal amount of its Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 (the “Bonds”); WHEREAS, the Bonds are payable from the base rental payments to be made by the City under the Lease Agreement, dated as of [__________] 1, 2021, by and between the City, as lessee, and the Authority, as lessor; and WHEREAS, this Disclosure Certificate is being executed and delivered by the City for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the underwriters of the Bonds in complying with Securities and Exchange Commission Rule 15c2-12(b)(5); NOW, THEREFORE, the City covenants as follows: Section 1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Disclosure Certificate have the meanings herein specified. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. “Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 2 and 3 hereof. “Annual Report Date” means the date in each year that is nine months after the end of the City’s fiscal year, which date, as of the date of this Disclosure Certificate, is April 1. “Dissemination Agent” means the City, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. “Financial Obligation” means (a) a debt obligation of the City, (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation of the City, or (c) a guarantee of (i) a debt obligation of the City, or (ii) a derivative instrument described in clause (b), above; provided, however, that the term “Financial Obligation” shall not include “municipal securities” (as such term is defined in the Securities Exchange Act of 1934, as amended) as to which a “final official statement” (as such term is defined in the Rule) has been provided to the MSRB consistent with the Rule. “Listed Events” means any of the events listed in Section 4(a) or (b) hereof. “MSRB” means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with 9.B.g Packet Pg. 2417 Attachment: Continuing Disclosure Certificate Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution 2 4157-0826-7055.1 the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. “Official Statement” means the Official Statement, dated [__________], 2021 (including all exhibits or appendices thereto), relating to the offering and sale of Bonds. “Participating Underwriters” means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 2. Provision of Annual Reports. (a) The City shall, or shall cause the Dissemination Agent to provide to the MSRB an Annual Report which is consistent with the requirements of Section 3 hereof, not later than the Annual Report Date, commencing with the report for the 2020-21 fiscal year. The Annual Report may include by reference other information as provided in Section 3 hereof; provided, however, that the audited financial statements of the City may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the City’s fiscal year changes, it shall, or it shall instruct the Dissemination Agent to, give notice of such change in a filing with the MSRB. (b) During any period in which the City is the Dissemination Agent, the City shall file each Annual Report with the MSRB not later than the Annual Report Date for such Annual Report. (c) During any period in which the City is not the Dissemination Agent (i) the City shall, not later than 15 Business Days prior to each Annual Report Date (a), provide to the Dissemination Agent the Annual Report to be filed not later than such Annual Report Date, (ii) the Dissemination Agent shall (A) not later than such Annual Report Date, file such Annual Report received by it with the MSRB, as provided herein, and (B) file a report with the City certifying that such Annual Report has been filed with the MSRB pursuant to this Disclosure Certificate and stating the date such Annual Report was so filed. (d) If the City is unable to file, or cause the Dissemination Agent to file, an Annual Report with the MSRB by the Annual Report Date for such Annual Report, the City shall, in a timely manner, file or cause to be filed with the MSRB, a notice in substantially the form attached as Exhibit A. Section 3. Content of Annual Reports. The City’s Annual Report shall contain or include by reference the following: (a) Audited financial statements of the City for the preceding fiscal year, prepared in accordance with the generally accepted auditing standards for municipalities in the State of California. If the City’s audited financial statements are not available by the time the Annual Report is required to be provided to the MSRB pursuant to Section 2(a) hereof, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial 9.B.g Packet Pg. 2418 Attachment: Continuing Disclosure Certificate Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution 3 4157-0826-7055.1 statements shall be provided to the MSRB in the same manner as the Annual Report when such audited financial statements become available. (b) To the extent not included in the audited financial statements of the City, the Annual Report shall include the principal amount of Bonds Outstanding as of the January 2 next preceding the Annual Report Date. (c) To the extent not included in the audited financial statements of the City, the Annual Report shall include the following items, providing financial and operating data (as of the end of the preceding fiscal year) substantially similar to that provided in the corresponding tables and charts in the Official Statement: (i) City Principal Property Taxpayers; (ii) City Assessed Value of Taxable Property; (iii) City Property Tax Rates, Secured Levies, and Collections and Delinquencies; (iv) City Tax Revenues by Source; (v) City General Fund Balance Sheet; (vi) City General Fund Statement of Revenues and Expenditures; (vii) City Statement of Overlapping Debt; (viii) Information in the Official Statement under the captions “CITY OF SANTA MONICA FINANCES – Retirement System” and “−Other Post Employment Benefits”; and (ix) Summary of City’s current fiscal year’s investments most recently completed and accepted by City Council, including types and amounts of investments, return on investments, average yield of investments and market value of investments. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities that have been made available to the public on the MSRB website. The City shall clearly identify each such other document so included by reference. Section 4. Reporting of Listed Events. (a) Pursuant to the provisions of this Section, 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 later than ten business days after the occurrence of the event: (i) principal and interest payment delinquencies; 9.B.g Packet Pg. 2419 Attachment: Continuing Disclosure Certificate Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution 4 4157-0826-7055.1 (ii) unscheduled draws on debt service reserves reflecting financial difficulties; (iii) unscheduled draws on credit enhancements reflecting financial difficulties; (iv) substitution of credit or liquidity providers or their failure to perform; (v) adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB); (vi) tender offers; (vii) defeasances; (viii) rating changes; (ix) bankruptcy, insolvency, receivership or similar event of the City; (x) Default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation, any of which reflect financial difficulties. For purposes of the event identified in paragraph (ix), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) Pursuant to the provisions of this Section, 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 later than ten business days after the occurrence of the event: (i) unless described in paragraph (v) of subsection (a) of this Section, other material notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; (ii) modifications to rights of Owners; (iii) optional, unscheduled or contingent bond calls; (iv) release, substitution or sale of property securing repayment of the Bonds; (v) non-payment related defaults; 9.B.g Packet Pg. 2420 Attachment: Continuing Disclosure Certificate Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution 5 4157-0826-7055.1 (vi) the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; (vii) appointment of a successor or additional Trustee or the change of name of a Trustee; and (viii) Incurrence of a Financial Obligation, or agreement to covenants, events of default, remedies, priority rights or other similar terms of a Financial Obligation, any of which affect holders of the Bonds. (c) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (b) of this Section, the City shall determine if such event would be material under applicable Federal securities laws. (d) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (a) of this Section, or determines that knowledge of a Listed Event described in subsection (b) of this Section would be material under applicable Federal securities laws, the City shall file, or shall cause the Dissemination Agent to file, within ten business days of such occurrence, a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of Listed Events described in paragraph (iii) of subsection (b) of this Section need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Indenture. Section 5. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB. Section 6. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give, or, if the City is not the Dissemination Agent, cause the Dissemination Agent to give, notice of such termination in a filing with the MSRB. Section 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the City. If at any time there is not any other designated Dissemination Agent, the City shall be the Dissemination Agent. Section 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 the following conditions are satisfied: 9.B.g Packet Pg. 2421 Attachment: Continuing Disclosure Certificate Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution 6 4157-0826-7055.1 (a) if the amendment or waiver relates to the provisions of Section 2(a), Section 3 or Section 4(a) or (b) hereof, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by the Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the City shall describe such amendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements (i) notice of such change shall be given in a filing with the MSRB, and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 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 Annual Report or notice required to be filed pursuant to this Disclosure Certificate, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice required to be filed pursuant to this Disclosure Certificate. Section 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Owner 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; provided, that any such action may be instituted only in Superior Court of the State of California in and for the County of Los Angeles or in U.S. City Court in or nearest to the County of Los Angeles. A default under this Disclosure Certificate shall not be deemed an event of default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance. 9.B.g Packet Pg. 2422 Attachment: Continuing Disclosure Certificate Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution 7 4157-0826-7055.1 Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate. The City covenants that, if a Dissemination Agent other than the City has been appointed pursuant to Section 7 hereof, the City will indemnify and save such Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to such Dissemination Agent’s negligence or willful misconduct. The obligations of the City under this Section shall survive resignation or removal of such Dissemination Agent and payment of the Bonds. Section 12. Electronic Signature. The City acknowledges that the transaction consisting of this Disclosure Certificate may be conducted by electronic means. The City agrees, and acknowledges that it is its intent, that by signing this Disclosure Certificate using an electronic signature, it is signing, adopting, and accepting this Disclosure Certificate and that signing this Disclosure Certificate using an electronic signature is the legal equivalent of having placed its handwritten signature on this Disclosure Certificate on paper. The City acknowledges that it is being provided with an electronic or paper copy of this Disclosure Certificate in a usable format. 9.B.g Packet Pg. 2423 Attachment: Continuing Disclosure Certificate Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution 8 4157-0826-7055.1 Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriters and the Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. CITY OF SANTA MONICA By: ATTEST: APPROVED AS TO FORM: 9.B.g Packet Pg. 2424 Attachment: Continuing Disclosure Certificate Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution A-1 4157-0826-7055.1 EXHIBIT A FORM OF NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Santa Monica Public Financing Authority Name of Issue: Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 Date of Issuance: [_________], 2021 NOTICE IS HEREBY GIVEN that the City of Santa Monica (the “City”) has not provided an Annual Report with respect to the above-named Bonds as required by Section 2 of the Continuing Disclosure Certificate, dated as of [__________] 1, 2021, executed and delivered by the City. [The City anticipates that the Annual Report will be filed by _____________.] Dated: _______________ CITY OF SANTA MONICA By: 9.B.g Packet Pg. 2425 Attachment: Continuing Disclosure Certificate Santa Monica PFA 2021 Lease Rev Bonds (City Yards) (4614 : Adoption of Resolution OH&S 7/5/21 Draft PRELIMINARY OFFICIAL STATEMENT DATED JULY __, 2021 4155-7018-4495.3 NEW ISSUE – FULL BOOK-ENTRY RATINGS: Fitch: “___” Standard & Poor’s: “___” (See “RATINGS” herein) In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel is also of the opinion that interest on the Bonds is exempt from State of California personal income taxes. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. See “TAX MATTERS.” LOGO $__________∗ SANTA MONICA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (CITY YARDS PROJECT) SERIES 2021 Dated: Date of Delivery Due: July 1, as shown on the inside cover page The Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 (the “Bonds”) are being issued pursuant to an Indenture, dated as of August 1, 2021 (the “Indenture”), by and among the Santa Monica Public Financing Authority (the “Authority”), the City of Santa Monica (the “City”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The Bonds are payable from base rental payments (the “Base Rental Payments”) to be made by the City for the right to the use of certain real property (the “Property”) pursuant to a Lease Agreement, dated as of August 1, 2021 (the “Lease Agreement”), by and between the City, as lessee, and the Authority, as lessor. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein. The Bonds are being issued to provide funds to (i) finance a portion of the costs of the construction and installation of certain capital improvements to the City’s maintenance operations and storage facilities known as the “City Yards” as described herein, (ii) finance capitalized interest on the Bonds through July 1, 2022, and (iii) pay the costs incurred in connection with the issuance of the Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS” and “PLAN OF FINANCE” herein. The City has covenanted under the Lease Agreement to make all Base Rental Payments provided for therein, to include all such payments as a separate line item in its annual budgets, and to make all the necessary annual appropriations for such Base Rental Payments. The City’s obligation to make Base Rental Payments 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. See “RISK FACTORS – Abatement” herein. The 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”). Interest on the Bonds is payable semiannually on January 1 and July 1 of each year, commencing on January 1, 20[22]. Purchasers will not receive certificates representing their interest in the Bonds. Individual purchases will be in principal amounts of $5,000 or integral multiples thereof. Principal of, and premium, if any, and interest on the 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 Bonds. See APPENDIX D – “BOOK-ENTRY ONLY SYSTEM” herein. The Bonds are subject to optional, mandatory sinking fund and extraordinary redemption from condemnation award or insurance proceeds prior to maturity as described herein. See “THE BONDS – Redemption” herein. THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE, AS PROVIDED IN THE INDENTURE, SOLELY FROM LEASE REVENUES 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 BONDS. THE LEASE REVENUES CONSIST OF ALL BASE RENTAL PAYMENTS PAYABLE BY THE CITY PURSUANT TO THE LEASE AGREEMENT, INCLUDING ANY PREPAYMENTS THEREOF, ANY NET PROCEEDS AND ANY AMOUNTS RECEIVED BY THE TRUSTEE AS A RESULT OF OR IN CONNECTION WITH THE TRUSTEE’S PURSUIT OF REMEDIES UNDER THE LEASE AGREEMENT UPON A LEASE DEFAULT EVENT. THE AUTHORITY HAS NO TAXING POWER. THE OBLIGATION OF THE CITY TO MAKE THE RENTAL PAYMENTS, INCLUDING THE BASE RENTAL PAYMENTS, DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY 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. 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 Bonds will be offered when, as and if issued and received by the Underwriters, subject to the approval as to their validity by Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel to the Authority and certain other conditions. Certain legal matters will be passed on for the Authority and the City by the City Attorney of the City and by Orrick, Herrington & Sutcliffe LLP, Los Angeles California, as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriters by their counsel, Stradling Yocca Carlson & Rauth, a Professional Corporation. Public Resources Advisory Group has served as municipal advisor to the City in connection with the issuance of the Bonds. It is anticipated that the Bonds in definitive form will be available for delivery through the facilities of DTC on or about August __, 2021. ∗ Preliminary, subject to change. 9.B.h Packet Pg. 2426 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 4155-7018-4495.3 Jefferies [UBS Financial Services Inc.] [Samuel A. Ramirez & Co., Inc.] Dated July __, 2021 9.B.h Packet Pg. 2427 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 4155-7018-4495.3 MATURITY SCHEDULE∗ SANTA MONICA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (CITY YARDS PROJECT) SERIES 2021 (Base CUSIP No.† 802437) Maturity Date (July 1) Principal Amount Interest Rate Yield CUSIP Suffix† 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 $_______ ____% Term Bonds due July 1, 20__ - Yield: ____% CUSIP suffix† ____ $_______ ____% Term Bonds due July 1, 2051 - Yield: ____% CUSIP suffix† ____ ∗ Preliminary, subject to change. † CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright© 2021 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 substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. The City, the Authority, the Municipal Advisor and the Underwriters take no responsibility for the accuracy of such numbers. 9.B.h Packet Pg. 2428 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 4155-7018-4495.3 No dealer, broker, salesperson or other person has been authorized by the Authority or the City to provide any information or to make any representations other than as contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the Authority or the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 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 of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly described herein, are intended solely as such and are not to be construed as a representation of facts. The information set forth herein has been obtained from official sources which are believed by the Authority and the City to be reliable but it is not guaranteed as to accuracy or completeness. The information and expression of opinion herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the City since the date hereof. The information in this Official Statement has been provided by the City and sources the City considers reliable. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 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 UNDERWRITERS MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS, INSTITUTIONAL INVESTORS AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE HEREOF AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS. This Official Statement contains forward-looking statements within the meaning of the federal securities laws. Such statements are based on currently available information, expectations, estimates, assumptions, projections and general economic conditions. Such words as expects, intends, plans, believes, estimates, anticipates or variations of such words or similar expressions are intended to identify forward-looking statements and include, but are not limited to, statements under the captions “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and “CITY OF SANTA MONICA FINANCES.” The forward-looking statements are not guarantees of future performance. Actual results may vary materially from what is contained in a forward-looking statement. 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. No assurance is given that actual results will meet the Authority’s or the City’s forecasts in any way, regardless of the level of optimism communicated in the information. The City and the Authority assume no obligation to provide public updates of forward-looking statements. CUSIP data herein (Copyright 2021, American Bankers Association) is provided by Standard and Poor’s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. CUSIP numbers are provided for convenience of reference only. The City, the Authority, the Municipal Advisor and the Underwriters take no responsibility for the accuracy of such numbers. The City maintains a website, however, the information presented therein is not a part of this Official Statement and should not be relied on in making an investment decision with respect to the Bonds. 9.B.h Packet Pg. 2429 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 4155-7018-4495.3 CITY OF SANTA MONICA (County of Los Angeles, California) City Council Sue Himmelrich, Mayor Kristin McCowan, Mayor Pro Tempore Phil Brock Gleam Davis Oscar de la Torre Lana Negrete Christine Parra Santa Monica Public Financing Authority Sue Himmelrich, Chairperson Kristin McCowan, Chairperson Pro Tempore Phil Brock Gleam Davis Oscar de la Torre Lana Negrete Christine Parra City Manager/Authority Executive Director [John Jalili (Interim City Manager)] City Attorney/Authority Counsel George Cardona (Interim City Attorney) City Clerk/Authority Secretary Denise Anderson-Warren Director of Finance/City Treasurer/Authority Treasurer Gigi Decavalles-Hughes Municipal Advisor Public Resources Advisory Group Bond Counsel Orrick, Herrington & Sutcliffe LLP Disclosure Counsel Orrick, Herrington & Sutcliffe LLP Trustee The Bank of New York Mellon Trust Company, N.A. 9.B.h Packet Pg. 2430 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 4155-7018-4495.3 (THIS PAGE INTENTIONALLY LEFT BLANK) 9.B.h Packet Pg. 2431 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution TABLE OF CONTENTS Page -i- INTRODUCTION ....................................................................................................................................... 1 THE BONDS ............................................................................................................................................... 3 General .................................................................................................................................................. 3 Redemption ........................................................................................................................................... 4 Transfer and Exchange of Bonds .......................................................................................................... 6 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ........................................................... 7 Pledge of Revenues ............................................................................................................................... 7 Abatement ............................................................................................................................................. 7 Substitution and Removal of Property .................................................................................................. 8 Action on Default .................................................................................................................................. 8 No Reserve Fund for the Bonds ............................................................................................................ 9 Base Rental Payments ........................................................................................................................... 9 Additional Rental Payments .................................................................................................................. 9 Insurance ............................................................................................................................................. 10 Damage or Destruction of the Property ............................................................................................... 11 ESTIMATED SOURCES AND USES OF FUNDS ................................................................................. 12 BASE RENTAL PAYMENT SCHEDULE .............................................................................................. 12 PLAN OF FINANCE ................................................................................................................................. 13 THE PROPERTY ...................................................................................................................................... 13 THE AUTHORITY ................................................................................................................................... 14 CITY OF SANTA MONICA ..................................................................................................................... 15 General ................................................................................................................................................ 15 Government and Administration ......................................................................................................... 15 City Council Elections ......................................................................................................................... 15 CITY OF SANTA MONICA FINANCES ................................................................................................ 16 Accounting Policies and Financial Reporting ..................................................................................... 17 Budgetary Process ............................................................................................................................... 17 Fiscal Year 2019-20 and 2020-21 Budgets ......................................................................................... 17 Fiscal Year 2021-22 Budget ................................................................................................................ 19 Tax Receipts ........................................................................................................................................ 20 Proposition 1A of 2004 ....................................................................................................................... 24 Proposition 22 ...................................................................................................................................... 25 Principal Property Taxpayers .............................................................................................................. 26 Management Discussion ...................................................................................................................... 26 General Fund Financial Summary ....................................................................................................... 33 9.B.h Packet Pg. 2432 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution TABLE OF CONTENTS (continued) Page -ii- Assessed Valuations ............................................................................................................................ 38 Ad Valorem Property Taxes ................................................................................................................ 41 Dissolution of Redevelopment ............................................................................................................ 44 Dependence on State for Certain Revenues ........................................................................................ 44 State Budget Acts ................................................................................................................................ 45 Future Budgets and Budgetary Actions ............................................................................................... 49 Investment of City Funds .................................................................................................................... 49 Self-Insurance ...................................................................................................................................... 51 Retirement System .............................................................................................................................. 52 Other Postemployment Benefits .......................................................................................................... 59 Medical Trusts ..................................................................................................................................... 60 Labor Relations ................................................................................................................................... 61 Capital Improvement Program ............................................................................................................ 62 Long-Term Debt .................................................................................................................................. 62 Overlapping Debt ................................................................................................................................ 64 RISK FACTORS ....................................................................................................................................... 64 General Considerations – Security for the Bonds ............................................................................... 64 Abatement ........................................................................................................................................... 65 Infectious Disease Outbreak – COVID-19 .......................................................................................... 66 Seismic Activity and Natural Disasters ............................................................................................... 68 Climate Change and Sea Level ............................................................................................................ 69 Cybersecurity ....................................................................................................................................... 70 Substitution and Removal of Property ................................................................................................ 71 Limited Recourse on Default; No Acceleration of Base Rental .......................................................... 71 Possible Insufficiency of Insurance Proceeds ..................................................................................... 72 Limitations on Remedies ..................................................................................................................... 72 Loss of Tax Exemption ....................................................................................................................... 72 No Liability of Authority to the Owners ............................................................................................. 72 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS .................................................................................................................................. 73 Article XIIIA of the California Constitution ....................................................................................... 73 Article XIIIB of the California Constitution ....................................................................................... 74 Articles XIIIC and XIIID of the California Constitution .................................................................... 75 Tiered Municipal Water Rate Structures After Capistrano Taxpayers Association Case ................... 77 Statutory Spending Limitations ........................................................................................................... 77 Recent Initiative Measures Affecting State and Local Governments .................................................. 78 Future Initiatives .................................................................................................................................. 79 Risk of Tax Audit ................................................................................................................................ 79 9.B.h Packet Pg. 2433 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution TABLE OF CONTENTS (continued) Page -iii- TAX MATTERS ........................................................................................................................................ 79 CERTAIN LEGAL MATTERS................................................................................................................. 81 ABSENCE OF MATERIAL LITIGATION .............................................................................................. 81 UNDERWRITING .................................................................................................................................... 83 RATINGS .................................................................................................................................................. 84 MUNICIPAL ADVISOR ........................................................................................................................... 84 CONTINUING DISCLOSURE ................................................................................................................. 84 MISCELLANEOUS .................................................................................................................................. 85 APPENDIX A - GENERAL DEMOGRAPHIC INFORMATION REGARDING THE CITY OF SANTA MONICA ...................................................................................................... A-1 APPENDIX B - CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020 ................................................ B-1 APPENDIX C - DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ........... C-1 APPENDIX D - BOOK-ENTRY-ONLY SYSTEM................................................................................ D-1 APPENDIX E - FORM OF CONTINUING DISCLOSURE CERTIFICATE........................................ E-1 APPENDIX F - PROPOSED FORM OF OPINION OF BOND COUNSEL ......................................... F-1 9.B.h Packet Pg. 2434 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 4155-7018-4495.3 OFFICIAL STATEMENT $__________∗ SANTA MONICA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (CITY YARDS PROJECT) SERIES 2021 INTRODUCTION This Official Statement (which includes the cover page, inside cover page and Appendices hereto), provides certain information concerning the sale and issuance by the Santa Monica Public Financing Authority (the “Authority”) of $__________* aggregate principal amount of its Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 (the “Bonds”). The 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”). Interest on the Bonds is payable semiannually on January 1 and July 1 of each year, commencing on January 1, 20[22]. Purchasers will not receive certificates representing their interest in the Bonds. Individual purchases will be in principal amounts of $5,000 or integral multiples thereof. Principal of, and premium, if any, and interest on the Bonds will be paid by The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the Bonds. See APPENDIX D – “BOOK-ENTRY ONLY SYSTEM” herein. The Bonds are subject to optional, mandatory sinking fund and extraordinary redemption from condemnation award or insurance proceeds prior to maturity as described herein. See “THE BONDS – Redemption” herein. The proceeds of the sale of the Bonds will be used to (i) finance a portion of the costs of the construction and installation of certain capital improvements to the City’s maintenance operations and storage facilities known as the “City Yards” (the “Project”) as described herein, (ii) finance capitalized interest on the Bonds through July 1, 2022, and (iii) pay the costs incurred in connection with the issuance of the Bonds. See “PLAN OF FINANCE” herein. The finances and operations of the City have been significantly impacted by SARS-CoV-2, the virus which causes the coronavirus disease (“COVID-19”), which has been characterized as a pandemic (the “Pandemic”) by the World Health Organization and is currently affecting many parts of the world, including the United States and California. As discussed under the captions “CITY OF SANTA MONICA FINANCES” and “RISK FACTORS – Infectious Disease Outbreak – COVID-19,” the City’s sales tax revenues, transient occupancy tax revenues and parking related revenues have been particularly affected. The City released its Proposed Biennial Budget for Fiscal Year 2021-23 on May 10, 2021, followed by budget study sessions on May 25 and May 26, 2021. The City adopted its Fiscal Year 2021-23 Biennial Budget on June 22, 2021. The overall budget for the City of Santa Monica is $707.8 million in Fiscal Year 2021-22 and $598.9 million in Fiscal Year 2022-23. This budget reflects the operating and capital activities of 31 funds across 14 departments and approximately 1,941 permanent and temporary full-time equivalent positions. The Fiscal Year 2021-22 General Fund budget is $351.7 million; by way of comparison, the pre-Pandemic Fiscal Year 2018-19 General Fund adopted budget was $440.2 million. As a result of careful planning, the Fiscal Year 2021-23 Biennial Budget reflects no deficit – either now ∗ Preliminary, subject to change. 9.B.h Packet Pg. 2435 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 2 4155-7018-4495.3 or in the associated five-year forecast. In addition, over the past year, City operations have been stabilized and streamlined to provide the core services on which the community relies. Eleven prior operating departments have been consolidated into ten; the City Manager's Office has been pared down to support organizational effectiveness and interdepartmental coordination; decades-old internal processes have been redesigned; and digital customer service tools including a new website and 311 system have been brought online to enhance responsiveness and reduce redundancies. The Bonds are being issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985, constituting Section 6584 et seq. of the California Government Code (the “Act”), and the laws of the State of California (the “State”), and an Indenture, dated as of August 1, 2021 (the “Indenture”), by and among the Authority, the City of Santa Monica (the “City”) and the Trustee. The Bonds are payable from base rental payments (the “Base Rental Payments”) to be made by the City for the right to the use of certain real property and the improvements thereto (the “Property”) pursuant to a Lease Agreement, dated as of August 1, 2021 (the “Lease Agreement”), between the City, as lessee, and the Santa Monica Public Financing Authority (the “Authority”), as lessor. The City has leased the Property to the Authority pursuant to a Ground Lease, dated as of August 1, 2021 (the “Ground Lease”). See “THE PROPERTY.” The City covenants under the Lease Agreement to take such action as may be necessary to include all Rental Payments, which are comprised of Base Rental Payments and Additional Rental Payments (which include taxes and assessments affecting the Property, administrative costs of the Authority relating to the Property, fees and expenses of the Trustee and other amounts payable under the Lease Agreement), due under the Lease Agreement as a separate line item in its annual budgets and to make the necessary annual appropriations therefor, subject to abatement as described herein. Rental Payments 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 “RISK FACTORS – Abatement” herein. Abatement of Base Rental Payments under the Lease Agreement, to the extent payment is not made from alternative sources as set forth below, would result in all Bond Owners receiving less than the full amount of principal of and interest on the Bonds. To the extent that Net Proceeds of rental interruption insurance are available for the payment of Rental Payments due under the Lease Agreement, Rental Payments will not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely from such Net Proceeds. The City will not fund a reserve fund for the Bonds. Amounts held or to be held in a reserve fund or account established for any other series of bonds or any reserve fund credit policy for any other series of bonds will not be used or drawn upon to pay principal of, and premium, if any, and interest on the Bonds. THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE, AS PROVIDED IN THE INDENTURE, SOLELY FROM LEASE REVENUES 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 BONDS. THE LEASE REVENUES CONSIST OF ALL BASE RENTAL PAYMENTS PAYABLE BY THE CITY PURSUANT TO THE LEASE AGREEMENT, INCLUDING ANY PREPAYMENTS THEREOF, ANY NET PROCEEDS AND ANY AMOUNTS RECEIVED BY THE TRUSTEE AS A RESULT OF OR IN CONNECTION WITH THE TRUSTEE’S PURSUIT OF REMEDIES UNDER THE LEASE AGREEMENT UPON A LEASE DEFAULT EVENT. THE AUTHORITY HAS NO TAXING POWER. 9.B.h Packet Pg. 2436 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 3 4155-7018-4495.3 THE OBLIGATION OF THE CITY TO MAKE THE RENTAL PAYMENTS, INCLUDING THE BASE RENTAL PAYMENTS, DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY 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. The City has agreed to provide, or cause to be provided, certain annual financial information and operating data through the Electronic Municipal Market Access (“EMMA”) website of the Municipal Securities Rulemaking Board (“MSRB”), or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to S.E.C. Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”). These covenants have been made in order to assist the Underwriters in complying with SEC Rule 15c2-12(b)(5). See “CONTINUING DISCLOSURE.” For a complete listing of items of information which will be provided in the Annual Report and notices of enumerated events, see APPENDIX E – “FORM OF CONTINUING DISCLOSURE CERTIFICATE.” The summaries or references to the Indenture, Lease Agreement and other documents, agreements and statutes referred to herein, and the description of the Bonds included in this Official Statement, do not purport to be comprehensive or definitive, and such summaries, references and descriptions are qualified in their entireties by reference to each such document or statute. All capitalized terms used in this Official Statement (unless otherwise defined herein) which are defined in the Indenture or the Lease Agreement shall have the meanings set forth therein, some of which are summarized in APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.” THE BONDS General The Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof (each, an “Authorized Denomination”). The 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 hereof. Interest on the Bonds will be paid semiannually on January 1 and July 1 (each, an “Interest Payment Date”) of each year, commencing on January 1, 20[22]. Interest on the Bonds will be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event interest thereon will be payable from such Interest Payment Date, (ii) a Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date, or (iii) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has previously been paid or duly provided for. As defined in the Indenture, the term “Record Date” means, with respect to interest payable on any Interest Payment Date, the 15th calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day. Interest will be paid in lawful money of the United States on each Interest Payment Date. Interest will be paid by check of the Trustee mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date, or by wire transfer at the written request of an Owner of not less than $1,000,000 aggregate principal amount of Bonds, which written request is received by the Trustee on or prior to the 9.B.h Packet Pg. 2437 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 4 4155-7018-4495.3 Record Date. Notwithstanding the foregoing, interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date will, if and to the extent that amounts subsequently become available therefor, be paid on a payment date established by the Trustee to the Person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee for the payment of such defaulted interest, notice of which will be given to such Owner not less than ten days prior to such special record date. The principal of and premium, if any, on the Bonds will 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. The 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 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 herein) as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. See APPENDIX D – “BOOK-ENTRY ONLY SYSTEM” herein. Redemption Optional Redemption. The Bonds maturing on or after July 1, 20__ are subject to optional redemption, in whole or in part in Authorized Denominations on any date on or after July 1, 20__, from and to the extent of prepaid Base Rental Payments paid pursuant to subsection (a) of Section 3.08 of 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 redemption, without premium. Mandatory Sinking Fund Redemption. The Bonds maturing July 1, 20__ are subject to mandatory sinking fund redemption, in part, on July 1 in each year, commencing July 1, 20__, at a Redemption Price equal to the principal amount of the Bonds maturing July 1, 20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows: Sinking Fund Redemption Date (July 1) Principal Amount to be Redeemed * * (Maturity) If some but not all of the Bonds maturing on July 1, 20__ are redeemed pursuant to the terms for extraordinary redemption, the principal amount of the Bonds maturing on July 1, 20__ to be redeemed from mandatory sinking fund payments on any subsequent July 1 shall be reduced by the aggregate principal amount of the Bonds maturing on July 1, 20__ so redeemed pursuant to the terms for extraordinary redemption, such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination will be given by the Trustee to the City. If some but not all of the Bonds maturing on July 1, 20__ are optionally redeemed, the principal amount of the Bonds maturing on July 1, 20__ to be redeemed from mandatory sinking fund payments on any subsequent July 1 will be reduced, 9.B.h Packet Pg. 2438 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 5 4155-7018-4495.3 by $5,000 or an integral multiple thereof, as designated by the City in a Written Certificate of the City filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the Bonds maturing on July 1, 20__ optionally redeemed. The Bonds maturing July 1, 20__ are subject to mandatory sinking fund redemption, in part, on July 1 in each year, commencing July 1, 20__, at a Redemption Price equal to the principal amount of the Bonds maturing July 1, 20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows: Sinking Fund Redemption Date (July 1) Principal Amount to be Redeemed * * (Maturity) If some but not all of the Bonds maturing on July 1, 20__ are redeemed pursuant to the terms for extraordinary redemption, the principal amount of the Bonds maturing on July 1, 20__ to be redeemed from mandatory sinking fund payments on any subsequent July 1 shall be reduced by the aggregate principal amount of the Bonds maturing on July 1, 20__ so redeemed pursuant to the terms for extraordinary redemption, such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination will be given by the Trustee to the City. If some but not all of the Bonds maturing on July 1, 20__ are optionally redeemed, the principal amount of the Bonds maturing on July 1, 20__ to be redeemed from mandatory sinking fund payments on any subsequent July 1 will be reduced, by $5,000 or an integral multiple thereof, as designated by the City in a Written Certificate of the City filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the Bonds maturing on July 1, 20__ optionally redeemed. Extraordinary Redemption from Condemnation Award or Insurance Proceeds. The Bonds are subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any insurance proceeds or condemnation award received (in excess of $50,000) 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 Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. Notice of Redemption. So long as the 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, 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 shall designate the CUSIP numbers, if any, the Bond numbers and the maturity or maturities of the Bonds to be redeemed (except in the event of redemption of all of the Bonds of such maturity or maturities in whole), 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. 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. 9.B.h Packet Pg. 2439 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 6 4155-7018-4495.3 Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds pursuant to Section 4.01 hereof, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption (a) with respect to any redemption of Bonds pursuant to the terms for extraordinary redemption, among maturities of the Bonds on a pro rata basis as nearly as practicable, and (b) with respect to any redemption of Bonds pursuant to the terms for optional redemption, as directed in a Written Certificate of the City, which shall include a revised mandatory sinking fund schedule, and by lot among Bonds with the same maturity in any manner that the Trustee in its sole discretion shall deem appropriate and fair. The Trustee will promptly notify the Authority and the City in writing of the numbers of the Bonds so selected for redemption on such date. 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. 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 in Authorized Denominations in an aggregate principal amount equal to the unredeemed portion of the Bonds surrendered. 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 with the Trustee, 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. 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 to 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. Transfer and Exchange of Bonds The following provisions regarding the exchange and transfer of the Bonds apply only during any period in which the Bonds are not subject to DTC’s book-entry system. While the Bonds are subject to DTC’s book-entry system, their exchange and transfer will be effected through DTC and the Participants and will be subject to the procedures, rules and requirements established by DTC. Any Bond may, in accordance with its terms, be transferred upon the books required to be kept by the Trustee pursuant to the provisions of the Indenture by the Person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond to the Trustee 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 maturity in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of the same maturity of other Authorized Denominations. The Trustee shall require the payment 9.B.h Packet Pg. 2440 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 7 4155-7018-4495.3 by the 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 during the period established by the Trustee for the selection of Bonds for redemption, or with respect to any Bonds selected for redemption. SECURITY AND SOURCES OF PAYMENT FOR THE BONDS Pledge of Revenues The Bonds are payable from and secured by Lease Revenues and any other amounts held in the Payment Fund established under the Indenture. The term “Lease Revenues” means all Base Rental Payments payable by the City pursuant to the Lease Agreement, including any prepayments thereof, any Net Proceeds and any amounts received by the Trustee as a result of or in connection with the Trustee’s pursuit of remedies under the Lease Agreement upon a Lease Default Event. Base Rental Payments shall be paid by the City from any and all legally available funds. The City has covenanted 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 the necessary annual appropriations therefor. As provided in the Indenture, the Authority will assign to the Trustee for the benefit of the Bond Owners all of the Authority’s right, title and interest in and to the Lease Agreement, including, without limitation, its right to receive 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 “– Base Rental Payments” below. 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 Bonds) held in the Payment Fund are pledged by the Authority pursuant to the Indenture to secure the payment of the principal of, and premium, if any, and interest on the Bonds in accordance with their terms and the provisions of the Indenture. Such pledge constitutes a first lien on such assets. The Bonds are special obligations of the Authority, payable, as provided in the Indenture, solely from Lease Revenues 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 Bonds. The Lease Revenues consist of all Base Rental Payments payable by the City pursuant to the Lease Agreement, including any prepayments thereof, any Net Proceeds and any amounts received by the Trustee as a result of or in connection with the Trustee’s pursuit of remedies under the Lease Agreement upon a Lease Default Event. The Authority has no taxing power. 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 and in consideration of the continued right to the quiet use and enjoyment thereof during each such period. Except as otherwise specifically provided in the Lease Agreement, 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 9.B.h Packet Pg. 2441 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 8 4155-7018-4495.3 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 California 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 shall continue in full force and effect. The term “Rental Period” means the period from the date of delivery of the Bonds through June 30, 2022 and, thereafter, the twelve-month period commencing on July 1 of each year during the term of the Lease Agreement. 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. 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 the Lease Agreement shall be extended as provided in the Lease Agreement, except that the term shall 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 a Lease Default Event under the Lease Agreement and does not permit the Trustee to take any action or avail itself of any remedy against the City. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease Agreement – Rental Abatement.” Notwithstanding the foregoing, to the extent that Net Proceeds of rental interruption insurance are available for the payment of Rental Payments due under the Lease Agreement, Rental Payments will not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely from such Net Proceeds. Substitution and Removal of 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. After a substitution or release, the portion of the Property for which the substitution or release has been effected shall be released from the leasehold encumbrance of the Lease Agreement and the Ground Lease. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease Agreement – Substitution and Removal of Property.” Action on Default Should the City default under the Lease Agreement, the Trustee, as assignee of the Authority’s rights 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 or terminate the Lease Agreement upon a Lease Default Event thereunder. In the event such re-letting occurs, the City would be liable for any resulting deficiency in Base Rental Payments. Base Rental Payments may not be accelerated upon a Lease Default Event under the Lease Agreement. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease Agreement – Events of Default and Remedies.” See also “RISK FACTORS – Limited Recourse on Default; No Acceleration of Base Rental” herein. 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 C – “DEFINITIONS 9.B.h Packet Pg. 2442 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 9 4155-7018-4495.3 AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease Agreement – Default” and “– The Indenture – Events of Default,” “– Other Remedies of the Trustee,” and “Limitation on Suits.” No Reserve Fund for the Bonds The City will not fund a reserve fund for the Bonds. Amounts held or to be held in a reserve fund or account established for any other series of bonds or any reserve fund credit policy for any other series of bonds will not be used or drawn upon to pay principal of, redemption premium, if any, or interest on the Bonds. Base Rental Payments 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. Each Base Rental Payment shall be deposited with the Trustee no later than the fifth Business Day next preceding each Interest Payment Date (the “Base Rental Deposit Date”) on which such Base Rental Payment is due. 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 Payment Fund. Pursuant to the Indenture, on the Business Day immediately preceding each Interest Payment Date and on the Business Day immediately preceding each Principal Payment Date, the Trustee will transfer amounts in the Payment Fund as are necessary to the Interest Account and the Principal Account to provide for the payment of the interest on and principal of the Bonds. Scheduled Base Rental Payments relating to the Bonds are set forth below under the heading “BASE RENTAL PAYMENT SCHEDULE.” THE OBLIGATION OF THE CITY TO MAKE THE RENTAL PAYMENTS, INCLUDING THE BASE RENTAL PAYMENTS, DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY 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. Additional Rental Payments For the right to use and occupy the Property, the Lease Agreement requires the City to pay, as Additional Rental payments thereunder, in addition to the Base Rental Payments, such amounts as shall 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) insurance premiums for all insurance required pursuant to the Lease Agreement; and 9.B.h Packet Pg. 2443 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 10 4155-7018-4495.3 (iii) all other payments not constituting Base Rental Payments required to be paid by the City pursuant to the provisions of the Lease Agreement. 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 shall 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. Insurance The Lease Agreement requires the City to maintain or cause to be maintained throughout the term of the Lease Agreement, a standard comprehensive general liability insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents and employees. Such 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. Such policy or policies will 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 (subject to a deductible clause of not to exceed $100,000) resulting from a single accident or event. Such public 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. The Net Proceeds of such liability insurance will be applied toward extinguishment or satisfaction of the liability with respect to which the Net Proceeds of such insurance shall have been paid. The City’s obligations under this subsection may be satisfied by self-insurance in accordance with the Lease Agreement. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease Agreement – Insurance.” The City will maintain or cause to be maintained casualty insurance insuring the Property against fire, lightning and all other risks covered by an extended coverage endorsement (excluding earthquake and flood) to the full insurable value of the Property, subject to a $100,000 loss deductible provision. Full insurable value will not be less than the aggregate principal amount of the Outstanding Bonds. The Net Proceeds of such casualty insurance will be applied as set forth below under “Damage or Destruction of the Property.” The City’s obligations under this subsection may be satisfied by self-insurance in accordance with the Lease Agreement. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease Agreement – Insurance.” The City will 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 any part of the Property as a result of any of the hazards required to be covered pursuant to the paragraph immediately above in 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 Net Proceeds of such rental interruption insurance will be applied to the payment of Rental Payments during the period in which, as a result of the damage or destruction to the Property that resulted in the receipt of such Net Proceeds, there is substantial interference with the City’s right to the use or occupancy of the Property. The City’s obligations under this subsection may not be satisfied by self-insurance. The insurance required above will be provided by reputable insurance companies with claims paying abilities determined, in the reasonable opinion of the City’s professionally qualified risk manager or an independent insurance consultant, to be adequate for the purposes of the Lease Agreement. All such 9.B.h Packet Pg. 2444 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 11 4155-7018-4495.3 policies will contain a standard lessee clause in favor of the Trustee and the general liability insurance policies will be endorsed to show the Trustee, as an additional insured. All such policies will provide that coverage shall not be cancelled except with notice to the City of the expiration thereof, any intended cancellation thereof or any reduction in the coverage provided thereby. The Trustee will 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 is required under the Lease Agreement to provide, at its own expense, one or more CLTA title insurance policies for the Property, in the aggregate amount of not less than the initial aggregate principal amount of the Bonds, insuring the fee interest of the Authority in the Property, and the City’s leasehold estate in the Property under the Lease Agreement, subject only to Permitted Encumbrances, and providing that all proceeds thereunder are payable to the Trustee for the benefit of the Owners. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease Agreement – Insurance.” Damage or Destruction of the Property If the Property or any portion thereof shall be damaged or destroyed, the City shall, within 30 days of the occurrence of the event of damage or destruction, notify the Trustee in writing of the City’s determination as to whether or not such damage or destruction will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to the Lease Agreement. If the City determines that such damage or destruction will not result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to the Lease Agreement, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof. If the City determines that such damage or destruction will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to the Lease Agreement, then the City shall (i) apply sufficient funds from the Net Proceeds of any insurance (other than Net Proceeds of rental interruption insurance), including the proceeds of any self-insurance, received on account of such damage or destruction and other legally available funds to the repair or replacement of the Property or the portions thereof which have been damaged or destroyed to the condition that existed prior to such damage or destruction, provided that, within 40 days of the occurrence of the event of damage or destruction, the City delivers to the Trustee a Written Certificate of the City (A) certifying that the City has sufficient funds to so complete such repair or replacement of the Property or such portions thereof and identifying such funds and the location thereof, and (B) stating that such funds will not be used for any other purpose until such repair or replacement is completed, (ii) within 60 days of the occurrence of the event of damage or destruction, cause alternate real property to be substituted for all or a portion of the Property pursuant to the Lease Agreement, or (iii) within 60 days of the occurrence of the event of damage or destruction, deliver sufficient funds from such Net Proceeds and other legally available funds to the Trustee for the application to the redemption from and to the extent of any insurance proceeds or condemnation award received with respect to all or a portion of the Property (A) of all of the Outstanding Bonds, or (B) of such portion of the Outstanding Bonds as shall result in (I) the annual fair rental value of the Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, as certified in a Written Certificate of the City delivered to the Trustee, being at least equal to 105% of the maximum amount of the principal (including principal due and payable by reason of mandatory sinking fund redemption of such Bonds) of and interest on the Bonds coming due in the then current Rental Period or any subsequent Rental Period, and (II) the fair replacement value of the Property after such damage or destruction, and after any repairs or replacements made as a result of such damage 9.B.h Packet Pg. 2445 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 12 4155-7018-4495.3 or destruction, as certified in a Written Certificate of the City delivered to the Trustee, being at least equal to the aggregate principal amount of the Bonds then Outstanding. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease Agreement – Abatement,” “– Substitution or Release of the Property” and “– Damage or Destruction.” ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds with respect to the Bonds are shown below. Sources: Total Principal Amount of Bonds Plus Net Original Issue Premium Total Sources Uses: Deposit to Project Fund (1) Deposit to Interest Account (2) Costs of Issuance (3) Total Uses (1) See “Plan of Finance.” (2) Capitalized interest through the July 1, 2022 Interest Payment Date. (3) Includes legal, Municipal Advisor, underwriting, rating agency, printing fees and other miscellaneous costs of issuance. BASE RENTAL PAYMENT SCHEDULE Following is the schedule of Base Rental Payments due with respect to the Bonds, assuming no optional or extraordinary redemption prior to maturity: Date Total 9.B.h Packet Pg. 2446 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 13 4155-7018-4495.3 PLAN OF FINANCE For the past 70 years, the 14.7-acre City Yards at 2500 Michigan Avenue has served as the City’s primary base for City maintenance services, including Water Resources, Resource Recovery and Recycling, Facilities Maintenance, Fleet, Fire Training, storage facilities, and other industrial uses. Over that time, Santa Monica’s population and workforce increased significantly, technology advanced rapidly, and City equipment and practices modernized, prompting planning for a much-needed upgrade of the City Yards. On December 10, 2019, the City Council approved the City Yards Modernization Project for construction of the above‐ground portion of work with a total project budget of $118 million. In response to the Pandemic and to address the City’s budget deficit, the City Council reviewed the City Yards Modernization Project on May 5, 2020 and approved a reduction in scope to complete the first construction phase underway at the time and site improvements related to circulation and safety. This included a new Fleet Building and fueling system, new non‐potable water main extending through the City Yards from Michigan Avenue to Stewart Street, and an Operations Center. As the services located at the City Yards provide critical benefits across all aspects of the City, staff allocated the financial cost of the project across all impacted funds based on a pro rata analysis for the total revised project budget of $81.4 million. Net proceeds of the Bonds, together with approximately $11.4 million of City funds, are projected to be applied to pay costs of the City Yards Modernization Project. See “ESTIMATED SOURCES AND USES OF FUNDS” herein. Several funds, including General, Water, Wastewater, Risk, and Fleet, had their total of $11.4 million in contributions readily available from fund balance reserves and have already provided those funds towards the development of the project. Other funds (RRR, Beach, Airport, Pier, and Cemetery) do not have an available fund balance capable of meeting their obligations. This funding will be covered by the General Fund with repayment schedules based on the debt service schedule. Phase 1 of the City Yards Modernization Project is complete and was delivered for staff occupancy in May 2021. Preparation for Phase 2 is already underway with construction to be completed in early 2023. Total project budget expenditures to-date as of June 2021 are over $51.6 million. Of this amount, approximately $40.6 million relates to the Bond-funded portion of the project and will be reimbursed to the City from the net proceeds of the Bonds. None of the other funds contributing to the Project other than the General Fund will assume a continuing obligation to make any portion of the annual Base Rental Payments nor assume any obligation to assist the Authority with its obligation to make payments of principal of and interest on Bonds. THE PROPERTY The Property consists of (i) the real property and the improvements thereto constituting [the City Yards Project] as described above, and (ii) the real property and the improvements thereto constituting the Santa Monica Public Library Main Branch, consisting of an approximately 2.38 acre site owned by the City, located at the corner of 6th Street and Santa Monica Boulevard, and the improvements thereon, which were substantially completed in 2006 (the “Library Property” and, together with real property and improvements constituting [the City Yards Project], the “Property”). The Library Property includes an approximately 104,000-square-foot facility honored with a Leadership in Energy and Environmental Design (LEED) award. 9.B.h Packet Pg. 2447 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 14 4155-7018-4495.3 The City and the Authority have agreed and determined that as of the date of delivery of the Bonds, the Property has an annual fair rental value greater than or equal to the maximum Base Rental Payments payable by the City in any Rental Period. The parties hereto have agreed and determined that the Fair Rental Value of the Property is not less than $__________ as of the Delivery Date, and that, upon termination of the term of the Lease Agreement with respect to the Library Property pursuant to the Facility Lease, the Fair Rental Value of the Property on the date of such termination will be not less than said amount. In making such determinations of Fair Rental Value, consideration has been given to the uses and purposes that may be served by the Property and the benefits therefrom that 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. The City will lease the Property to the Authority pursuant to the Ground Lease. The Authority will then sublease the Property to the City pursuant to the Lease Agreement. Upon completion of the Project, the Library Property is expected to be automatically released from among the leased property under the Lease Agreement and the Ground Lease. The Lease Agreement provides that so long as no Lease Default Event shall have occurred and be continuing under the Lease Agreement, the term of the Lease Agreement with respect to the Library Property shall terminate on the date the City certifies in a Written Certificate of the City filed with the Trustee, (i) that the Project has been completed and that all costs of the Project have been paid, or (ii) that the Project has been substantially completed and that all remaining costs of the Project are to be paid from the Project Fund. The Lease Agreement provides that from and after the date of such termination (i) the description of the Library Property shall be deemed to have been deleted from the property leased under the Ground Lease and the Lease Agreement and the term “Property” shall, for all purposes thereof, be deemed not to include the Library Property, and (ii) all right, title and interest in and to the Library Property shall vest in the City (in connection with which, the Authority and the Trustee shall execute such conveyances, deeds and other documents as may be necessary to effect such vesting of record). See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease Agreement – Substitution or Release of the Property.” THE AUTHORITY The Santa Monica Public Financing Authority was organized pursuant to the provisions of Article I of Chapter 15 of Division 7 of Title 1 of the State Government Code and a Joint Exercise of Powers Agreement, dated as of July 25, 1995, as amended, by and between the City and the former Redevelopment Agency of the City of Santa Monica. Pursuant to California Health & Safety Code Section 34178(b)(3), joint powers agreements in which the former redevelopment agency is a member of the joint powers authority remain valid and bind the successor agency, subject to the constraints on the successor agency under the redevelopment agency dissolution law. The Authority was organized for the purpose of financing and assisting local agencies in financing capital improvements, working capital, liability or other insurance needs or projects. The City Council serves as the governing body of the Authority. The Authority has no financial liability to the Owners of the 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 it is required to perform. 9.B.h Packet Pg. 2448 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 15 4155-7018-4495.3 CITY OF SANTA MONICA General The City of Santa Monica is situated on the western side of Los Angeles County, bordered by the City of Los Angeles on three sides and by the Pacific Ocean to the west. The City encompasses an area slightly greater than eight square miles and, as of January 1, 2021, had an estimated residential population of 92,968 making it the 18th largest of the 88 cities in Los Angeles County. The Santa Monica Freeway passes through the approximate center of the City on an east-west course and provides direct connection with downtown Los Angeles, approximately 16 miles to the east. About six miles southeast of the City is Los Angeles International Airport, which is easily accessible via the San Diego Freeway, about one mile beyond the eastern border of Santa Monica on a north-south course. Government and Administration The City was incorporated in 1886 and adopted its City Charter in 1945. In 1947 a council- manager form of government was established following a vote of the City’s residents and approval by the California Legislature. The City Council consists of seven members, voted at-large, with overlapping terms of four years. Elections are held every two years, at which time three Council members or four Council members are elected. After each election, Council members select one of their group to act as Mayor, who then presides over Council meetings. The City Council appoints a City Manager, City Attorney and City Clerk. The City Manager is responsible for administering day-to-day operations of the City and for carrying out policies set by the City Council. The City is currently in process to recruit a City Manager, a Fire Chief and Police Chief. The City Council appoints a City Manager, City Attorney and City Clerk. The City Manager is responsible for supervising day-to-day operations of the City and for carrying out policies set by the City Council. The City is currently in process to recruit a City Manager, Fire Chief and Police Chief. See also, APPENDIX A – “GENERAL DEMOGRAPHIC INFORMATION REGARDING THE CITY OF SANTA MONICA.” City Council Elections The City’s at-large election system is currently a matter before the California Supreme Court, after a holding of the California Court of Appeals in favor of the City was appealed to the California Supreme Court. The case originated when the City was sued in a California Voting Rights Act of 2001 (CVRA) case brought by a Santa Monica resident and a Santa Monica neighborhood organization to compel the City to move to district-based elections as opposed to the current system of “at-large,” citywide elections for City Council members. The CVRA expands on the federal Voting Rights Act of 1965 and related case law, making it easier for minority groups in California to prove that their votes are being diluted in at-large elections. In July 2020, the California 2nd District Court of Appeal ruled in favor of the City, finding that Latinos, who account for 14 percent of the City’s electorate, lack the numbers to win an election in the 30 percent Latino district ordered by the court, which ruling the plaintiffs appealed to the California Supreme Court. On October 21, 2020, the Supreme Court agreed to review a limited issue arising from the Court of Appeal ruling and depublished that ruling. See also 9.B.h Packet Pg. 2449 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 16 4155-7018-4495.3 “ABSENCE OF MATERIAL LITIGATION.” The case is expected to be heard by the Supreme Court in August 2021 with a ruling anticipated by mid-2023. In the event that the City does not prevail and cannot continue to maintain its current system, City Council members will be compelled to establish a new system of district elections and the City will be required to pay the plaintiffs’ costs and attorneys’ fees. Similar complaints have been brought against other California cities, and terms of the CVRA have been deemed constitutional under the State Constitution. CITY OF SANTA MONICA FINANCES The following selected financial information provides a brief overview of the City’s finances. This financial information has been extracted from the City’s audited financial statements and, in some cases, from unaudited information provided by the City’s Finance Department. The most recent audited financial statements of the City with an unqualified auditors’ opinion is included as Appendix B hereto. See APPENDIX B – “CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020.” Accompanying the Independent Auditors’ Report in Appendix B are introductory materials entitled the City’s Letter of Transmittal, and Management’s Discussion and Analysis, which are not audited, but provide additional summary detail on the City’s operations and finances. Each should be reviewed in conjunction with the information presented below to obtain an understanding of the City’s financial condition. The City’s Management’s Discussion and Analysis is supplementary information required by the Government Accounting Standards Board. Santa Monica’s economy was particularly hard hit by the Pandemic, and while the economy has begun to improve, the impacts are expected to linger for some time. Cities with a high dependence on sales and transient occupancy taxes are facing the most significant economic challenges. Tourism and hospitality are key components of the Santa Monica economy. In fact, these two sources, along with parking-related revenues accounted for nearly one-half of General Fund revenues prior to the Pandemic and for Fiscal Year 2020-21 were projected to decrease 44% from pre-COVID levels. The full or partial shutdown of non-essential businesses has also affected other key City revenue sources such as utility users taxes, business license taxes, and charges for services. As of June 15, 2021, California Governor Newsom terminated the executive orders that put into place the Stay Home Order and the Blueprint for a Safer Economy. He also phased out the vast majority of executive actions put in place since March 2020 as part of the Pandemic response, leaving a subset of provisions that facilitate the ongoing recovery. The new public health order effective June 15 supersedes all prior health orders. Certain restrictions applicable to large gatherings (particularly the indoor event gatherings) are expected to be in place effective June 15, 2021 through October 1, 2021. The State will assess conditions by September 1, 2021, to determine whether updated requirements or recommendations are needed beyond October 1, 2021. It may be months or even years before international and interstate travel resume in a meaningful way, and business travel may never return to pre-virus levels. People’s shopping habits may also be altered for a significant amount of time or forever. The City released its Proposed Biennial Budget for Fiscal Year 2021-23 on May 10, 2021, followed by budget study sessions on May 25 and May 26, 2021. The City adopted its Fiscal Year 2021-23 Biennial Budget on June 22, 2021. The General Fund budget is $351.7 million in Fiscal Year 2021-22 and $375.9 million in Fiscal Year 2022-23. By way of comparison, the pre-Pandemic Fiscal Year 2018-19 General Fund adopted budget was $440.2 million. During the Pandemic, the City has seen less retail shopping, less business travel, and less office work in key entertainment and technology sectors, City revenue streams across transient occupancy tax, sales tax, and parking have been diminished. For this two-year budget cycle, the City remains in a recovery stage. 9.B.h Packet Pg. 2450 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 17 4155-7018-4495.3 Accounting Policies and Financial Reporting The City’s accounting records are organized and operated on a “fund” basis, which is the basic fiscal and accounting entity in governmental accounting. The three broad fund categories include governmental, proprietary and fiduciary funds. The operations of the different funds are accounted for with separate sets of self-balancing accounts with assets, liabilities, fund balance or net assets, revenues, and expenditures or expenses. The basis of accounting for all funds is more fully explained in the Notes to the City’s combined audited financial statements contained in Appendix B. The Government Finance Officers Association has awarded its Certificate of Achievement for Excellence in Financial Reporting to the City for each of the past 36 years. Budgetary Process The budgetary process is guided by City Council’s priorities, with input from residents, neighborhood groups, boards, commissions, and businesses following fall neighborhood meetings and various year-round opportunities for suggestions and comments. To improve the efficiency of budget development, the City produces a biennial budget. In May of alternating years, the City Manager submits a proposed operating and capital budget to the City Council for the two Fiscal Years commencing on the following July 1. Study sessions and public hearings are conducted by the City Council to obtain City staff and citizen comments to the proposed budget, and prior to June 30, the first year of the budget is adopted, and the second year approved, each through passage of appropriate resolutions. The City’s fiscal year for budgeting and accounting purposes runs from July 1 to June 30. Since 2011, the City has utilized a biennial budget process, which allows the City to plan ahead and focus on strategic projects and capital budgeting in the second year, and has the added benefit of decreasing requested budget increases from one year to the next. The City adopted its Fiscal Year 2019-21 Biennial Budget on June 25, 2019. Beginning with the Fiscal Year 2019-21 Biennial Budget, the City transitioned to a 10-year forecast to better plan for significant increases in the City’s pension costs as well as to gauge the lifecycle costs of programs. While the City aims to resume forecasting at the 10-year timeframe, the uncertainty of the current economic climate renders long term forecasts too prone to substantial inaccuracy, and therefore has reverted to a five-year projection for the near-term that shows the most realistic scenario based on revenue modelling and expert forecasting. Fiscal Year 2019-20 and 2020-21 Budgets The City adopted its Fiscal Year 2019-21 Biennial Budget on June 25, 2019, which included the adoption of the Fiscal Year 2019-20 budget and the approval of the Fiscal Year 2020-21 budget plan. The City Charter requires the City Council to adopt a budget annually. On June 23, 2020, the City adopted the Fiscal Year 2020-21 Budget. The Fiscal Year 2020-21 Budget reflected the impacts of the Pandemic as noted below. In 2020, the historic impacts of the Pandemic and the absence of meaningful federal stimulus support at that time forced the City to make substantial adjustments in the midst of its biennial budget process in order to maintain fiscal sustainability, strong financial health, and a balanced budget for the community and its workforce. Beginning in mid-March 2020, with the initial State and County Stay at Home Orders attributable to the Pandemic, the public health emergency changed how, and whether, the City could operate programs and facilities. These orders resulted in closures and contractions in services. The economic impacts of the Pandemic have devastated nearly all of the City’s long-trusted revenue streams, as noted 9.B.h Packet Pg. 2451 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 18 4155-7018-4495.3 above. Considering these impacts, City staff projected revenue losses that would result in General Fund deficits of $48 million in Fiscal Year 2019-20, $102 million in Fiscal Year 2020-21, and $74 million in Fiscal Year 2021-22. After reviewing these impacts, The City Council directed City staff to develop a plan for Fiscal Year 2020-21 to restructure City operations to meet the challenges posed by COVID-19 and to balance the budget. In the Summer of 2020, the City confronted this crisis by accessing $117 million in one-time funds and adopting a Fiscal Year 2020-21 budget that reflected a 50% decrease in capital program funding and a 20% decrease in annual operating expenditures, as well as 299 fewer full-time equivalent (FTE) permanent positions and 122 fewer FTE as-needed positions than the Fiscal Year 2019-20 budget. Strong reserves allowed the use of contingency and economic uncertainty funds while the City retained a stable reserve level of 12.5% of ongoing expenditures in the event of a new emergency. Three long-term strategies for fiscal health were maintained but temporarily suspended or deferred to allow for continued provision of essential services. These included the one-year (Fiscal Year 2020-21) suspension of one quarter of the City's Transaction and Use Tax revenue to the Affordable Housing Trust Fund; the extension, in accordance with emergency provisions, of the City's accelerated paydown of its unfunded pension liability from thirteen years to fifteen years; and the suspension of prefunding of the City's other postemployment benefits (OPEB) for two years. These fiscal measures enabled the City to maintain essential and emergency operations during the Pandemic while preserving the City's financial resilience to the greatest extent possible. On March 11, 2021, the American Rescue Plan Act (ARP) was signed into law. While local government stabilization funds were expressly included to “remedy [the] mismatch between rising costs and falling revenues” experienced during COVID, the allocation formula provided only $28.6 million in stabilization aid, an amount that represents less than 15% of the City’s estimated revenues lost and approximately 4% of the City’s annual budget. The City has received the first half of the approximately $28.6 million in aid through the federal $1.9 trillion American Rescue Plan, with the remainder to be received in Fiscal Year 2021-22. These funds will be used to support the reopening of services while City revenues recover, including those services and programs focusing on addressing three community priorities adopted by the City Council- addressing homelessness, providing services for clean and safe public spaces and neighborhoods, and ensuring an inclusive and equitable economic recovery. Of the City’s $28.6 million in American Rescue Plan stabilization funding, $6.3 million has been allocated in accordance with City Council direction to enable the General Fund to transfer the annual allocation of Measure GSH funds in Fiscal Year 2021-22 to support affordable housing. These funds supplement affordable housing grants of over $5.5 million that were successfully received and an increase in the City’s federal lobbying contract to $45,000 per year to support continued pursuit of federal funds in this and other priority areas. Another $6.3 million has been allocated, based on City Council direction, towards economic recovery efforts spanning rent relief for the City’s small business tenants, assistance for the broader small business community, and assistance for the City’s most vulnerable community members. Another $5 million is allocated to back-stop any deficits to the City’s Beach and Pier funds over Fiscal Year 2020-22 as these funds were particularly impacted by revenue loss due to closures. The remaining $11 million will be allocated over 3.5 years to allow ongoing programs to reopen or expand in advance of revenue recovery. The City also received a nominal $1.14 million allocation of federal Coronavirus Aid, Relief and Economic Security (CARES) Act funding through the State. These funds covered a very small portion of the City’s unfunded needs related to the public health emergency and the economic crisis that ensued; however, they allowed the City to address, on a one-time basis, critical service needs in the areas of emergency response, clean and safe spaces and services, and economic recovery. 9.B.h Packet Pg. 2452 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 19 4155-7018-4495.3 Fiscal Year 2021-22 Budget The City released its Proposed Biennial Budget for Fiscal Year 2021-23 on May 10, 2021, followed by budget study sessions on May 25 and May 26, 2021. The City adopted its Fiscal Year 2021-23 Biennial Budget on June 22, 2021. The overall budget for the City of Santa Monica is $707.8 million in Fiscal Year 2021-22 and $598.9 million in Fiscal Year 2022-23, net of reimbursements and transfers, adopted as a balanced biennial budget focused on community priorities of a safe and clean Santa Monica, addressing homelessness, and an equitable and inclusive economic recovery. The budget includes allocations to enhance safety services on the Santa Monica Pier, Colorado Esplanade, and beach area during busy summer weekends, as well as funds to support the formation of a possible business improvement district (“BID”) on the Santa Monica Pier and a rent abatement program that seeks to support small Santa Monica businesses who are tenants of the City. The City Council also approved changes to some permit and user fees, fines and civil penalties, and parking rates to reflect cost recovery. The budget reflects the operating and capital activities of 31 funds across 14 departments and approximately 1,941 permanent and temporary full-time equivalent positions. The largest component of the budget is the General Fund. The General Fund budget is $351.7 million in Fiscal Year 2021-22 and $375.9 million in Fiscal Year 2022-23. By way of comparison, the pre-Pandemic Fiscal Year 2018-19 General Fund adopted budget was $440.2 million. The Citywide budget also includes a number of enterprise and special revenue funds that operate with sufficient revenues to sustain necessary operating and capital needs, and others that have a structural deficit where ongoing revenues are not sufficient to cover ongoing expenditures. Among the larger funds contributing to operations, the Resource Recovery and Recycling (RRR), Water, Wastewater, Big Blue Bus (BBB), Airport and Cemetery funds have sufficient revenue to cover operational and capital needs during the biennial budget period. The Pier and Beach Recreation Funds are projected to require subsidies and advances during the biennial budget period, totaling approximately $6.0 million. With the approval by the voters on the November 3, 2020 ballot, and its commencement on March 1, 2021, Measure SM, a general tax measure increasing the Documentary Transfer Tax on properties selling for $5 million or more by $3.00 per $1,000 in sale price, the City’s Fiscal Year 2021-22 General Fund budget projects additional revenues of $3.8 million. City staff anticipates that 10% of properties sold in the City annually will be subject to the tax increase and that the measure will generate $3 - 5 million annually. These operating revenues of approximately $353.3 million are $47.4 million (15.5%) greater than the Fiscal Year 2020-21 estimated actual. The projections, while positive, assume that while the national economy will begin to rebound strongly as COVID-19 restrictions are lifted, the recovery in Santa Monica will lag due to the local economy’s reliance on tourism. The recovery will also be tempered by changes in consumer behavior, as many trends that could lower the demand for parking have been accelerated during the Pandemic. Revenue increases primarily reflect gains in Transient Occupancy Taxes ($24.5 million), parking-related revenues ($12.6 million including parking fines and parking taxes), and Sales Taxes ($5.9 million) as tourists and other visitors return and contribute to the local economy. Additional increases are projected from Documentary Transfer Taxes reflecting the tax rate increase per voter-approved Measure SM ($3.8 million), Property Taxes ($2.4 million), and a net increase of $4.9 million from various other revenue sources. Partially offsetting are decreases of $4 million from Business License Taxes and $2.7 million from Investment Income reflecting the impact of the Pandemic. The capital improvement program (CIP) Adopted Biennial Budget funds over 90 capital projects across 21 Funds. The Adopted Budget is $94.4 million in Fiscal Year 2020-21, and $163.7 million in Fiscal Year 2021-22. The increase is due to the appropriation of $78 million in bond-funded capital projects in the Water Fund to complete projects that advance the adopted Sustainable Water Master Plan 9.B.h Packet Pg. 2453 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 20 4155-7018-4495.3 and build and improve the infrastructure that delivers water services to Santa Monica households and businesses. The Fiscal Year 2020-21 Adopted CIP Budget represents a decrease of $44 million or 31 percent compared to the Fiscal Year 2019-20 Adopted CIP Budget of $136.4 million. Of this, the General Fund portion is $6,800,650 in Fiscal Year 2020-21 $9,116,500 in Fiscal Year 2021-22, and $11,953,714 in Fiscal Year 2022-23. Tax Receipts Taxes received by the City include Utility User’s Taxes, Sales Taxes, Property Taxes, Business License Taxes, Transient Occupancy Taxes and other miscellaneous taxes. The City has a diversified tax base; for each of Fiscal Years 2018-19 and 2019-20, the five major tax sources listed above have historically accounted for approximately two-thirds of General Fund revenues with each source ranging between 7% and 18%. However, the Pandemic shifted the City’s revenue generation such that in Fiscal Years 2020-21 and 2021-22, the total of the five major tax sources are projected to account for approximately 70% of total General Find revenues with each source’s ranging between 6% and 24% in Fiscal Year 2020-21 and 8% to 21% in Fiscal Year 2021-22. As discussed below and under the caption “RISK FACTORS – Infectious Disease Outbreak – COVID-19,” the finances and operations of the City have been and can be expected to continue to be impacted by COVID-19 in the near term. See “RISK FACTORS – Infectious Disease Outbreak – COVID-19” and APPENDIX B – “CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020.” The following table sets forth General Fund tax revenues received by the City during the last five Fiscal Years, and projected to be received during the current Fiscal Year, by source: Table 1 City of Santa Monica Tax Revenues by Source(1) For Fiscal Years 2016-17 through 2021-22 (dollars in thousands) Source 2017 2018 2019 2020 2021(4) 2022(5) Utility User’s Tax $ 29,438 $ 29,288 $ 28,307 $ 28,026 $ 26,686 $ 29,950 Sales Taxes(2) 54,505 68,480 73,709 64,666 59,200 65,100 Property Taxes(3) 56,424 56,955 62,615 67,791 73,064 75,443 Transient Occupancy Tax 55,532 60,631 60,763 48,625 18,600 43,100 Business License Taxes 30,712 31,575 31,947 33,895 33,648 29,617 Parking Facility Taxes 11,231 11,558 12,699 11,072 7,000 8,829 Vehicle License Fees 42 49 44 74 53 10 Real Property Transfer Tax 10,952 8,169 9,808 6,857 6,500 10,320 Condominium Taxes 38 9 25 43 20 20 Total $248,874 $266,714 $279,917 $261,049 $224,771 $262,389 (1) Does not include Highway Users’ Taxes which are recorded in the Gas Tax Fund, Unit Dwelling Taxes, which are recorded in the Parks and Recreation Facilities Fund, or TORCA (Tenant Ownership Rights Charter Amendment) Conversion Taxes, which are recorded in the TORCA Fund. (2) Sales taxes includes Measure GSH transactions (a 50% share of which GSH revenues are paid to the SMMUSD), and Use Tax, as described below. (3) This number includes tax override to pay debt service general obligation bonds. This amount is $1,160,000 for Fiscal Year 2020-21 and $1,102,400 for Fiscal Year 2021-22. (4) Projected and/budgeted. (5) Budgeted. Source: City of Santa Monica Finance Department. 9.B.h Packet Pg. 2454 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 21 4155-7018-4495.3 A brief discussion of Property Taxes, Transient Occupancy Taxes, Sales Taxes, Utility User’s Taxes, and Business License Taxes follows. Property Taxes, Transient Occupancy Taxes and Sales Taxes have constituted the largest major tax revenue sources for the City for many years. Property Taxes. Property Tax receipts of approximately $62.6 million received during Fiscal Year 2018-19, representing one of the largest major tax revenue sources for the City, contributed approximately 22% of General Fund tax revenues and approximately 15% of total General Fund revenues during Fiscal Year 2018-19. Property Tax receipts of approximately $67.8 million received during Fiscal Year 2019-20 contributed approximately 26% of General Fund tax revenues and approximately 19% of total General Fund revenues during Fiscal Year 2019-20. For Fiscal Year 2020-21, Property Tax receipts allocable to the General Fund are projected to be approximately $73.1 million or approximately 32% of projected General Fund tax revenues and approximately 24% of total projected General Fund revenues during Fiscal Year 2020-21. For Fiscal Year 2021-22, property tax receipts allocable to the General Fund are budgeted at approximately $75.4 million or approximately 29% of projected General Fund tax revenues and approximately 21% of total projected General Fund revenues during Fiscal Year 2021-22. See “PROPERTY TAXATION” and “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS” for discussion of pertinent aspects of the City’s property tax revenues. Approximately $1.1 million is attributable to debt service on the City’s general obligation bonds that financed certain library improvements, and such amounts are not available to fund any other activities supported by the City’s General Fund, including Base Rental Payments. The City’s receipt of property taxes is affected by property tax delinquencies, appeals, refunds and collection of delinquent amounts. The property tax delinquency rate in the City in Fiscal Year 2019-20 was approximately 1.3%. Los Angeles County does not offer “Teeter Plan” advances (i.e., the alternative method of distribution of tax levies and collections and of tax sale proceeds, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code). Transient Occupancy Tax. Transient Occupancy Tax receipts of approximately $60.8 million received during Fiscal Year 2018-19, representing one of the larger major tax revenue sources for the City, contributed approximately 22% of General Fund tax revenues and approximately 15% of total General Fund revenues during Fiscal Year 2018-19. Transient Occupancy Tax receipts of approximately $48.6 million received during Fiscal Year 2019-20, contributed approximately 19% of General Fund tax revenues and approximately 13% of total General Fund revenues during Fiscal Year 2019-20. For Fiscal Year 2020-21, Transient Occupancy Tax receipts allocable to the General Fund are projected to be approximately $18.6 million or approximately 8% of projected General Fund tax revenues and approximately 6% of total projected General Fund revenues during Fiscal Year 2020-21. For Fiscal Year 2021-22, Transient Occupancy Tax receipts allocable to the General Fund are budgeted at approximately $43.1 million or approximately 16% of projected General Fund tax revenues and approximately 12% of total projected General Fund revenues during Fiscal Year 2021-22. A Transient Occupancy Tax (“TOT”) is imposed on persons staying 30 days or less in a hotel, motel, inn, hostelry, tourist home, rooming house or other lodging place within the City. The TOT has been in effect since November 1963. The current tax rate is 14%, last increased in 2005. Exemptions are granted to federal, State and City of Santa Monica officials or employees on official business. Exemptions account for a very minor amount of the total TOT base. Payments are primarily made to the City on a monthly basis and are deposited to the City’s General Fund. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS.” Sales Tax. Sales Tax receipts of approximately $73.7 million received during Fiscal Year 2018-19, representing one of the largest major tax revenue sources for the City, contributed approximately 26% of General Fund tax revenues and approximately 18% of total General Fund revenues during Fiscal Year 2018-19. Sales Tax receipts of approximately $64.7 million received during Fiscal Year 2019-20 continued to represent one of the largest, although also significantly impacted by the effects of COVID- 9.B.h Packet Pg. 2455 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 22 4155-7018-4495.3 19, major tax revenue sources for the City, contributed approximately 25% of General Fund tax revenues and approximately 17% of total General Fund revenues during Fiscal Year 2019-20. For Fiscal Year 2020-21, Sales Tax receipts allocable to the General Fund are projected to be approximately $59.2 million or approximately 26% of projected General Fund tax revenues and approximately 19% of total projected General Fund revenues during Fiscal Year 2020-21. For Fiscal Year 2021-22, Sales Tax receipts allocable to the General Fund are budgeted at approximately $65.1 million or approximately 25% of projected General Fund tax revenues and approximately 18% of total projected General Fund revenues during Fiscal Year 2021-22. A sales tax is imposed on retail sales or consumption of personal property. The statewide sales tax rate is established by the State Legislature and local overrides may be approved by voters. As of the date of this Official Statement, the Statewide tax rate is 7.25%. The California Department of Tax and Fee Administration (“CDTFA”) collects and administers the tax, makes distributions on taxes collected within the City, and transfers tax receipts to the City’s General Fund each month. The total sales tax rate within the City is currently 10.25% as increased most recently with the July 1, 2017 effective date of Los Angeles County Metropolitan Transportation Authority Measure M approved in November 2016 (as described below). A ¼ cent sales tax approved by County voters in March 2017 (Measure H) to provide for homeless services has not been imposed in the City because the tax would effectively raise the aggregate tax rate applicable in the City above the State-wide maximum amount. The Measure H sales tax will terminate in 2027, ten years after its effective date. Special legislation would be required to ever impose the tax within the City. Sales taxes totaling 2% are authorized locally under Propositions A and C and Measures R and M by the Los Angeles County Metropolitan Transportation Authority for transportation including bus, rail and some streets and road projects. These funds are collected by the CDTFA but administered by the Los Angeles County Metropolitan Transportation Authority. On November 8, 2016, Los Angeles County voters approved Measure M, which increased the County-wide sales tax rate by an additional ½ cent (included in the 2% above) with the proceeds to be used for traffic improvements. Beginning on July 1, 2017, eligible transactions have been subject to this tax. Measure M is administered similar to Propositions A, Proposition C, and Measure R, with a portion of the proceeds returned to cities for use on approved projects. On November 2, 2010, Santa Monica voters approved Measure Y, which created an additional ½ cent transaction and use tax. Beginning on April 1, 2011, eligible transactions have been subject to this tax. A non-binding advisory Measure YY calling for 50% of the tax to be paid to the Santa Monica-Malibu Unified School District (“SMMUSD”) also passed. Pursuant to Measure YY, the City is currently sharing 50% of Measure Y revenues with SMMUSD. Measure Y has no sunset provision. The CDTFA collects and administers the tax, makes distributions on taxes collected within the City. With the November 8, 2016 election, Santa Monica voters approved Measure GSH, which added an additional ½ cent to the City’s transaction and use tax. Measure GHS effectively replaced Measure Y. Beginning on April 1, 2017, eligible transactions have been subject to this tax. A non-binding advisory Measure GS calling for 50% of the additional tax to be paid to the SMMUSD to be used to improve and maintain local schools and the other 50% of the additional tax to be used for affordable housing purposes also passed. The transfer for affordable housing was suspended during the Pandemic, but will resume in Fiscal Year 2021-22. Like Measure Y before it, Measure GSH has no sunset provision and the CDTFA collects and administers the tax and makes distributions on taxes collected within the City. Approximately $29.2 million of Measure GSH (and remaining Measure Y) revenue was received in Fiscal Year 2019-20, 50% of which was paid to the SMMUSD. Approximately $29.4 million is 9.B.h Packet Pg. 2456 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 23 4155-7018-4495.3 projected to be received in Fiscal Year 2020-21 and $31 million is projected to be received in Fiscal Year 2021-22. Sales taxes are collected and administered by the CDTFA subject to further administration and allocation applicable to each tax measure. The CDTFA began operation following the enactment of the Taxpayer Transparency and Fairness Act of 2017 which restructured the State Board of Equalization into three separate entities: The State Board of Equalization, the CDTFA and the Office of Tax Appeals. The State Board of Equalization remains independent from any agency, and retains its constitutional responsibilities, including reviewing, equalizing, or adjusting property tax assessments, assessing taxes on insurers, and assessing/collecting excise taxes on alcoholic beverages. CDTFA is housed within the Government Operations Agency and handles most of the taxes and fees previously collected by the Board of Equalization, including sales and use tax. The Office of Tax Appeals is an independent entity. Utility User’s Tax. Utility User’s Tax receipts of approximately $28 million received during each of Fiscal Years 2018-19 and 2019-20 contributed approximately 10%-13% of General Fund tax revenues and approximately 7% of total General Fund revenues. For Fiscal Year 2020-21, Utility User’s tax receipts allocable to the General Fund are projected to be approximately $26.7 million or approximately 12% of projected General Fund tax revenues and approximately 9% of total projected General Fund revenues during Fiscal Year 2020-21. For Fiscal Year 2021-22, Utility User’s Tax receipts allocable to the General Fund are budgeted at approximately $30 million or approximately 11% of projected General Fund tax revenues and approximately 9% of total projected General Fund revenues during Fiscal Year 2021-22. The Utility User’s Tax is imposed on all users of services within the City limits. The tax rate is 10% on gas, electricity, water/wastewater, video (CATV and IP-TV) and telecommunications services. The tax on prepaid wireless services is 9%. The Utility User’s Tax has been in effect since July 1, 1969. On November 4, 2008, City residents voted to update and modernize the City’s Utility User’s Tax ordinance to include new technologies. The Utility User’s Tax does not sunset. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS.” An exemption from the Utility User’s Tax is available to senior citizens over the age of 62 and to permanently disabled individuals, provided that the combined adjusted gross income of all household members is below $37,524 or $32,746 for persons living alone (as of July 1, 2020). As provided by the California Constitution, insurance companies are exempt from the Utility User’s Tax. In addition, county, state, federal and foreign governments within the City are not subject to this tax, as the City has no authority to impose a tax on these entities. Exemptions account for a minor amount of the total Utility User’s Tax base. All utility companies, including the City’s water and wastewater operations, collect and transmit the Utility User’s Tax monthly to the City’s Finance Department which then deposits the tax revenues into the General Fund. Business License Tax. Business License Tax receipts of approximately $32 million received during Fiscal Year 2018-19 contributed approximately 11% of General Fund tax revenues and approximately 8% of total General Fund revenues. Business License Tax receipts of approximately $34 million received during Fiscal Year 2019-20 contributed approximately 13% of General Fund tax revenues and approximately 9% of total General Fund revenues. For Fiscal Year 2020-21, Business License tax receipts allocable to the General Fund are projected to be approximately $33.6 million or approximately 15% of projected General Fund tax revenues and approximately 11% of total projected General Fund revenues during Fiscal Year 2020-21. For Fiscal Year 2021-22, the first year in which the full impact of the Pandemic on these Business License tax receipts is demonstrated, Business License Tax receipts allocable to the General Fund are budgeted at approximately $29.6 million or approximately 8% 9.B.h Packet Pg. 2457 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 24 4155-7018-4495.3 of projected General Fund tax revenues and approximately 11% of total projected General Fund revenues during Fiscal Year 2021-22. The business license tax represents a City tax upon gross receipts of certain business activities located in the City. Since the tax in any Fiscal Year is based on the prior calendar year gross receipts of businesses, the full impact of the Pandemic on these taxes will not be seen until Fiscal Year 2021-22. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS.” Other Taxes. The City also imposes a parking facility tax on the use of public and private parking garages and lots, a real property transfer tax and other local taxes, which have contributed approximately $21.4 million during Fiscal Year 2018-19, representing approximately 8% of General Fund tax revenues and approximately 5% of total General Fund revenues and approximately $18 million during Fiscal Year 2019-20, representing approximately 7% of General Fund tax revenues and approximately 5% of total General Fund revenues. For Fiscal Year 2020-21, other tax receipts allocable to the General Fund are projected to be approximately $14 million or approximately 6% of projected General Fund tax revenues and approximately 4% of total projected General Fund revenues during Fiscal Year 2020-21. For Fiscal Year 2021-22, other taxes allocable to the General Fund are budgeted at approximately $19 million or approximately 7% of projected General Fund tax revenues and approximately 5% of total projected General Fund revenues during Fiscal Year 2021-22. On November 3, 2020, Santa Monica voters approved Measure SM, a general tax measure increasing the Documentary Transfer Tax on properties selling for $5 million or more by $3.00 per $1,000 in sale price. The measure was approved with a substantial majority, securing 71.88% of the vote. City staff anticipates that 10% of properties sold in the City annually will be subject to the tax increase and that the measure will generate $3 million annually initially, and up to $6 million annually in 4-5 years. The tax increase took effect March 1, 2021. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS.” Proposition 1A of 2004 City services are funded with money from local taxes, fees and user charges, State aid and other sources. Property tax, sales taxes, transient occupancy tax, utility user’s tax, business license tax, parking revenues and development-related fees constitute the majority of City revenue sources. On November 3, 2004 the voters of the State approved Proposition 1A (“Proposition 1A of 2004”). Proposition 1A of 2004 amended the State Constitution to, among other things, reduce the Legislature’s authority over local government revenue sources by placing restrictions on the State’s access to local governments’ property, sales, and vehicle license fee (VLF) revenues as of November 3, 2004. Pursuant to Proposition 1A of 2004, the State is able to borrow up to 8% of local property tax revenues but only if the Governor proclaims such action is necessary due to a severe State fiscal hardship and two-thirds of both houses of the State Legislature approve the borrowing. Any amounts borrowed are required to be repaid within three years. Proposition 1A of 2004 also permits the State to borrow from local property tax revenues for no more than two fiscal years within a period of 10 fiscal years, and only if previous borrowings have been repaid. In addition, the State cannot reduce the local sales tax rate or restrict the authority of the local governments to impose or change the distribution of the Statewide local sales tax. Proposition 1A of 2004 generally prohibits the State from mandating activities on cities, counties, or special districts without providing the funding needed to comply with the mandates, and if the State does not provide funding for the activity that has been determined to be mandated, the requirement on cities, counties, or special districts to abide by the mandate is suspended. Proposition 1A of 2004 also expanded the definition of what constitutes a mandate to encompass State action that transfers to cities, counties, and special districts financial responsibility for a required program for which the State previously had partial or complete responsibility. The State mandate provisions of 9.B.h Packet Pg. 2458 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 25 4155-7018-4495.3 Proposition 1A of 2004 do not apply to schools or community colleges or to mandates relating to employee rights. Proposition 22 Proposition 22 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, special districts and redevelopment agencies, 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 22 supersedes certain provisions of Proposition 1A of 2004. See “—Proposition 1A of 2004” above. In addition, Proposition 22 generally eliminates the State’s authority to temporarily shift property taxes from cities, counties, and special districts to schools, temporarily increase school and community college district’s share of property tax revenues, prohibits the State from borrowing or redirecting redevelopment property tax revenues or requiring increased pass-through payments thereof, and prohibits the State from reallocating VLF revenues to pay for State imposed mandates. In addition, Proposition 22 requires a two-thirds vote of each house of the State Legislature and a public hearing process to be conducted in order to change the amount of fuel excise tax revenues shared with cities and counties. Proposition 22 prohibits the State from borrowing sales taxes or excise taxes on motor vehicle fuels or changing the allocations of those taxes among local government except pursuant to specified procedures involving public notices and hearings. In addition, Proposition 22 requires that the State apply the formula setting forth the allocation of State fuel tax revenues to local agencies revert to the formula in effect on June 30, 2009. 9.B.h Packet Pg. 2459 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 26 4155-7018-4495.3 Principal Property Taxpayers The ten principal property taxpayers in the City and their taxable assessed values are listed below. Table 2 City of Santa Monica Principal Property Taxpayers For Fiscal Year 2019-20 (Based on Taxes Paid) Taxpayer Taxable Assessed Value Rank Percentage of Total City Taxable Assessed Value Douglas Emmett $ 741,573,703 1 1.88% California Colorado Center LLC 543,217,750 2 1.37 Water Garden Company 527,212,466 3 1.33 Office Block Investment LLC 382,451,040 4 0.97 SC Enterprises SMBP LLC 365,118,595 5 0.92 Macerich Santa Monica Place LP 355,180,630 6 0.90 New Santa Monica Beach Hotel LLC 227,001,271 7 0.57 SM Campus LLC 222,333,480 8 0.56 Kite Pharma Inc. 203,821,623 9 0.52 Prudential Insurance 203,754,926 10 0.52 Assessed Value $ 3,771,665,484 9.54% Total City Net Taxable Assessed Value $39,521,345,611 100.00% Source: City of Santa Monica Finance Department; Hdl, Coren and Cone; Los Angeles County Auditor-Controller. Management Discussion The City’s economy has been and will continue to be significantly impacted by the Pandemic. Cities with a high dependence on sales and transient occupancy taxes are facing the most significant economic challenges. Tourism and hospitality are key components of the City’s economy. Transient Occupancy Taxes have historically accounted for a higher proportion of General Fund revenues (up to 17%) than in most cities, and sales taxes generated by tourists and daytime visitors at restaurants and retail outlets also contribute greatly to the City’s revenues. In fact, these two sources account for nearly one-third of General Fund revenues. The Fiscal Year 2021-23 Biennial Budget is not the budget of prior abundant years. The largest component of the budget is the General Fund. The General Fund budget is $351.7 million in Fiscal Year 2021-22 and $375.9 million in Fiscal Year 2022-23. By way of comparison, the pre-Pandemic Fiscal Year 2018-19 General Fund adopted budget was $440.2 million. During the Pandemic, the City has seen less retail shopping, less business travel, and less office work in key entertainment and technology sectors, City revenue streams across transient occupancy tax, sales tax, and parking have been diminished. For this two-year budget cycle, the City remains in a recovery stage. The Fiscal Year 2021-23 Biennial Budget reflects the operating and capital activities of 31 funds across 14 departments and approximately 1,941 permanent and temporary full-time equivalent positions. Over the past year, City operations have been stabilized and streamlined to provide the core services on 9.B.h Packet Pg. 2460 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 27 4155-7018-4495.3 which the community relies. Eleven prior operating departments have been consolidated into ten; the City Manager's Office has been pared down to support organizational effectiveness and interdepartmental coordination; decades-old internal processes have been redesigned; and digital customer service tools including a new website and 311 system have been brought online to enhance responsiveness and reduce redundancies. Currently, General Fund revenues are expected to begin to recover in Fiscal Year 2021-22. Estimated actual revenues in Fiscal Year 2020-21 are anticipated to be approximately 25% less than in Fiscal Year 2018-19, the last full Fiscal Year before the Pandemic. Overall, General Fund revenues are not projected to return to pre-COVID levels until Fiscal Year 2024-25. It should also be pointed out that the future is still somewhat uncertain and revenues could be impacted, either positively or negatively, by future events. On April 14, 2020, recognizing the negative impacts of the Pandemic on City revenues and operations, the City Council authorized the City Manager to implement a Voluntary Early Separation Incentive Program (VESIP) for eligible employees and directed City staff to return to the City Council with a proposed plan to restructure City operations and balance the City budget. Following this direction, on May 5, 2020, City staff presented a revised forecast for City revenues for the remainder of Fiscal Year 2019-20, as well as Fiscal Years 2020-21 and 2021-22. As the Council has repeatedly recognized, the homelessness crisis requires urgent efforts to preserve and produce affordable housing in the City. The Fiscal Year 2021-23 Biennial Budget reflects the City's ongoing commitment to keep economically vulnerable Santa Monicans in their homes through allocations including ongoing staffing in the City Attorney's Office dedicated to ensuring that landlords and owners comply with the City's tenant protection, tenant harassment, and affordable housing ordinances, as well as the terms of development agreements and affordable housing deed restrictions; $240,000 over two years to support a right-to-counsel program to even the playing field for tenants who face eviction proceedings brought by landlords who are almost always represented by experienced counsel; $2 million in Housing Trust Fund funds to continue the City's Preserving Our Diversity basic income program for low-income seniors in rent-controlled apartments; and one-time economic recovery funds to provide emergency assistance to economically vulnerable Santa Monicans. The Fiscal Year 2021-23 Biennial Budget also supports the ambitious direction articulated by the City Council on March 30, 2021, that the City should meet its State-imposed obligation to plan for 6,168 new affordable housing units during the 2021-2029 Housing Element cycle by prioritizing 100% affordable housing projects on City-owned land while also pursuing 100% affordable housing overlay zoning throughout the City, with the exception of environmental justice and previously redlined areas. Of the City's $28.6 million in American Rescue Plan stabilization funding, $6.3 million has been allocated in accordance with City Council direction to enable the General Fund to transfer the annual allocation of Measure GSH funds in Fiscal Years 2021-23 to support affordable housing. These funds supplement affordable housing grants successfully received of over $5.5 million and an increase in the City's federal lobbying contract to $45,000 per year to support continued pursuit of federal funds in this and other priority areas. As City resources, personnel, and services have been reduced to safeguard fiscal stability, maintaining the City’s premier public spaces is a priority. In addressing this priority, the City recognizes Santa Monica's unique status as both a seaside town of 90,000 residents and a municipal government in Los Angeles County serving hundreds of thousands of visitors and with daily responsibility for maintaining globally recognized public spaces such as the Santa Monica Beach and Santa Monica Pier. 9.B.h Packet Pg. 2461 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 28 4155-7018-4495.3 The Fiscal Year 2021-23 Biennial Budget maintains prior support across core City departments that serve the City Council's clean and safe priority (though departmental budgets reflect adjustments based on enhanced accuracy of the City's personnel-related budget calculations). In addition to these foundational services, the Fiscal Year 2021-23 Biennial Budget provides targeted enhancements to achieve a clean and safe Santa Monica enjoyable for all. These include annual expenditures of: • $1 million in one-time funds to enhance clean and safe services on the Santa Monica Pier, Colorado Esplanade and beach area during busy summer weekends; • $146,246 to restore a limited term two-year Senior Park Planner position to provide ongoing planning to maintain current parks and envision and implement plans for the City’s parks of the future; • $726,059 from the Resource, Recycling, & Recovery Fund to increase street sweeping frequency; • $90,300 from the Stormwater Fund to support protected bikeway sweeping services; • $205,824 to support continuation of City-wide weekend and holiday park trash removal; • $264,548 to restore two Code Enforcement Officers to enhance clean and safe operations at the Pier, as well as $11,725 to provide new safety equipment for Code Enforcement Officers, in addition to prior one-time allocations of $237,300 for Pier Ambassadors and enhanced cleaning and disinfection at the Pier; • $520,734 to maintain the Reed Park Ambassador program through Downtown Santa Monica, Inc.; and • $121,000 to provide continued tree maintenance services following prevailing wage increases. Through these strategic allocations, the City will continue to care for and safeguard its prized public spaces for residents and visitors alike. This will be particularly important as the City welcomes back to full operation those facilities whose operations were impacted by the Pandemic. The Fiscal Year 2021-23 Biennial Budget period is expected to be marked by civic and economic recovery from the Pandemic. In this recovery, it is more important than ever for the City to support a thriving, more equitable and inclusive future. The Fiscal Year 2021-23 Biennial Budget includes the building blocks of an economic recovery for all. These include but are not limited to: • $2.6 million in one-time funds, including $580,000 appropriated in Fiscal Year 20-21, to support outdoor dining license waivers and a rent abatement program for non-profit tenants, Pier and Beach tenants, and other for-profit tenants; • $589,087 to upgrade the City's permitting system and restore, on a two-year limited term basis, key permitting positions needed to address backlogs and advance streamlining and process improvements; • $75,000 to facilitate improvements to the City's leasing processes; 9.B.h Packet Pg. 2462 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 29 4155-7018-4495.3 • $25,000 to support business improvement district formation or an alternative means of re-envisioning and improving coordination, collaboration, and governance on the Santa Monica Pier; • $500,000 a year for two years for emergency assistance and economic recovery for vulnerable Santa Monicans in order to maintain economic diversity in the community; • $387,932 annually to enhance Santa Monica Public Library services, including increasing in-person access to the Main Library, as well as the Montana, Ocean Park, and Pico Branches, and hiring a Library Program Specialist—Youth and Family Services to address education equity concerns associated with the Pandemic; • $290,000 to support grants to nonprofits for events to support arts and culture in Santa Monica; • $100,000 in each Fiscal Year to support the participation of low-income students as the Santa Monica-Malibu School District initiates a youth sports program for younger students; • $100,000 annually to support language justice programs to promote inclusivity and accessibility across City services; and • $50,000 in racial equity funds to support the work of Equity & Inclusion Officers appointed in each and every City Department, the Special Assistant to the City Manager on Equity & Community Recovery, and an Equity & Communications Coordinator who will move into the City Manager's Office to support inclusive community engagement and communications across City projects. These funds support coordinated, collaborative work across multiple City departments and with the City’s community partners to set a path toward economic recovery for all. Notable annual expenditures in the Fiscal Year 2021-23 Biennial Budget that support direct services to address homelessness include but are not limited to: • $1.4 million to maintain the Homeless Multidisciplinary Street Team (HMST) and C3 (City + County + Community) homeless engagement teams at their current levels; • $394,000 for two positions in the Community Services Department added since the restructuring to support local and regional strategies to address homelessness; • $2.76 million in Human Services Grant Program funding to community partners addressing homelessness; • $2.04 million for ongoing Santa Monica Police Department Homeless Liaison Program Team services; • $480,000 for a second two-year pilot of a Santa Monica Fire Department Community Response Unit program staffed by a Firefighter — EMT and a Firefighter — Paramedic; and 9.B.h Packet Pg. 2463 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 30 4155-7018-4495.3 • $210,000 to maintain and expand services provided by West Coast Cares through the Santa Monica Fire Department. These efforts supplement a previously-funded partnership with the Los Angeles County Department of Mental Health to pilot mobile mental health van services to offer direct, immediate, professional mental health intervention to those experiencing mental health crisis on the City’s streets, as well as previously allocated one-time funds to advance non-congregate shelter and behavioral health priorities articulated by the City Council. Finally, as the City’s moves into its recovery period, the Fiscal Year 2021-23 Biennial Budget restores a matching grant funding program for neighborhood organizations as they partner with the City to enhance community participation and support shared outcomes. Information on the City’s key General Fund revenue sources is provided below: • Sales taxes (both sales and use and transaction and use tax) have been impacted by the Pandemic, but by less than previously anticipated. Sales taxes in Fiscal Year 2020-21 are projected to be about 9% less than in Fiscal Year 2019-20 after a 12% decrease the year before. Sales Taxes are also expected to rebound, increasing approximately 10% in Fiscal Year 2021-22 and another 6% in Fiscal Year 2022-23. Sharp declines in the restaurant/hotel and general consumer goods categories have been partially offset by strong receipts from State and County pools reflecting on-line purchases. Also, auto sales have been stronger than expected. Subsequent Fiscal Years are expected to show increases of 3% to 4% annually. • As would be expected, Transient Occupancy Taxes (TOT) continue to be hit hardest by the Pandemic with a 62% decrease projected for Fiscal Year 2020-21 after a 20% decrease in Fiscal Year 2019-20. TOT revenues are expected to more than double in Fiscal Year 2021-22 and then increase more than 20% the following year as most Pandemic-related restrictions have now been lifted. International and business travel are not anticipated to resume quickly. Rather, TOT revenues are expected to begin recovering beginning in Fiscal Year 2021-22, but are not projected to reach pre-COVID levels until Fiscal Year 2024-25. • Due to the reporting period for Business License Taxes, the full impact of the Pandemic will not be seen until Fiscal Year 2021-22, as taxes are based on gross receipts from the prior calendar year. Business License Taxes for Fiscal Year 2021-22 (which are based on 2020 calendar year gross receipts) are projected to decrease 12% in Fiscal Year 2021-22 based on factors including business closures, a shift to teleworking, and Pandemic-related impacts on the leisure and hospitality sector before recovering slightly the next year. Although Business License Tax revenues are expected to begin to recover in Fiscal Year 2022-23, they are not projected to recover to pre-COVID levels until Fiscal Year 2025- 26. • Parking revenues are projected to decline by about 38% in Fiscal Year 2020-21 following a 20.0% decrease in Fiscal Year 2019-20. Parking-related revenues are anticipated to recover 40% in Fiscal Year 2021-22 and another 18% in Fiscal Year 2022-23. Stay at home orders, business closings, and increases in teleworking have all decreased visitation to the City. Additionally, recent shifts in how people travel into and around the City as well as the opening of certain streets for outdoor dining are expected to impact parking 9.B.h Packet Pg. 2464 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 31 4155-7018-4495.3 revenues on an ongoing basis. Parking Facility Taxes are expected to show a similar pattern. • Utility Users Tax revenues are expected to grow by an average 4% annually primarily due to scheduled water and wastewater rate increases. • Investment income will drop sharply as interest rates are anticipated to remain near historically low levels for much of the May 2021 Five-Year Forecast period and the City’s investable fund balance will also decline as the City has been forced to use reserves during the Pandemic. • Revenues from fees, charges, and certain other revenue sources declined nearly 30% in Fiscal Year 2020-21 based on the closing and/or scaling back of programs in the Pandemic as well as a decline in certain development-related revenues due to the economic downturn. The City recently completed a comprehensive City-wide cost of services study to ensure fees are set at appropriate levels for full cost recovery. The City Council approved changes to some permit and user fees, fines and civil penalties, and parking rates to reflect cost recovery as part of the Fiscal Year 2021-23 Biennial Budget process. The City’s primary enterprise funds are projected to bring in sufficient revenues to support operations throughout the biennial forecast period, including the Water and Wastewater Funds, the Resource Recovery and Recycling (RRR) Fund, the Big Blue Bus (BBB) Fund, the Airport Fund, the Community Broadband Fund, the Cemetery Fund, the Housing Authority Fund, the Stormwater Management Fund, the Special Revenue Fund, and the Internal Services Funds. Among the larger funds contributing to operations, the Resource Recovery and Recycling (RRR), Water, Wastewater, Big Blue Bus (BBB), Airport and Cemetery funds have sufficient revenue to cover operational and capital needs during the biennial budget period. The Pier Fund and the Beach Fund are projected to require subsidies and advances during the biennial budget period, totaling approximately $6.0 million. The primary revenue sources for the Pier Fund are lease payments, filming and event fees, and parking income. The current commercial eviction moratorium and limited rent relief programs have also significantly impacted revenues. Beach lot parking revenues and concessions revenues, the primary Beach Fund revenue contributors, have been the most affected by the Pandemic, with concessions revenue decreases exacerbated by commercial eviction moratorium and limited rent relief programs. The Beach Fund is dependent on local and regional visitors to the beach. It is projected that domestic and international tourism will not return to pre-Pandemic levels until 2024. Over the years, the City has worked to add policies and reserves to affirm its commitment to safeguarding public funds through transparent and careful fiscal management. For more than ten years, the City kept an economic uncertainty reserve of $9.7 million in addition to its General Fund contingency reserve totaling 15% of the annual ongoing expenditure budget. In addition to a comprehensive set of fiscal policies, the City Council has approved a Fiscal Sustainability Philosophy, a Compensation Philosophy, and Guiding Principles to Handle Pension Liability. These reserves allowed the City to preserve essential services during the sudden and protracted decrease in revenues resulting from the Pandemic. The City accessed its economic uncertainty reserves and lowered its contingency reserve to 12.5% of its annual ongoing expenditure budget, mobilizing approximately $30 million from these reserves, as well as other one-time funds from deferred or reduced capital projects and recalling funds that had been granted to other funds to further community priorities. The Fiscal Year 2020-21 Adopted Budget sought to preserve the City’s long-term fiscal health by drawing from $117 million in one-time 9.B.h Packet Pg. 2465 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 32 4155-7018-4495.3 funds to balance the budget while protecting essential services. This included setting aside a $20 million “Shutdown Reserve” to prepare for the possibility that a winter COVID-19 surge between December 2020 and February 2021 would result in another shutdown of the economy and further reduce City revenues. In addition to the extraordinary fiscal challenges the City is facing during and in the aftermath of the Pandemic, longstanding areas of pressure on the City’s finances continue to be considered in the City’s fiscal management. The key long term challenges the City faces are steep increases in pension costs reflecting the phasing in of the California Public Employees’ Retirement System (CalPERS) discount rate decrease from 7.5% to 7.0% and additional changes to the methods in which liability is amortized, all of which have the effect of stabilizing the pension fund but resulting in higher contribution rates for employers. In addition to pension costs, the City must forecast steady increases in workers’ compensation costs and healthcare costs, all of which were anticipated to outpace revenue growth before building in the effects of the Pandemic. Risk Management is implementing and managing a variety of measures to help control workers’ compensation costs. The City’s Big Blue Bus (BBB) has extended a pilot program in which claims administration responsibilities for all BBB claims are transferred from the City’s in-house workers’ compensation unit to a private claims administrator; through June 30, 2020, BBB’s total program liabilities were reduced from $7.44 million to $5.8 million. Risk Management’s comprehensive case management program for the Police and Fire Departments has reduced the number of litigated workers’ compensation claims from sworn personnel, thereby reducing medical expenses, temporary and permanent disability expenses, and legal expenses. Risk Management is continuing its implementation of a citywide Functional Evaluation Testing Program in which a certified functional evaluation testing vendor administers functional tests to all candidates applying for physically demanding jobs at the City. This type of testing, considered an industry best practice, has proven to reduce employee injuries and, over time, lower workers’ compensation costs. While the City had previously reported that it had embarked on a six year transition from maintenance of effort budgeting to one based on Framework Priorities in order to focus limited resources on the areas and items that are most critical to the community, the severe reduction in revenues forced an acceleration of this priority setting, at least for the current situation. The City used the priority areas identified in the Framework for a Sustainable City of Wellbeing as a basis to gauge the City’s community’s needs and focus resources and effort on those areas as funding becomes available. The community priorities adopted by the City Council on March 13, 2021 were: • Addressing Homelessness: Prevent housed Santa Monicans from becoming homeless; address the behavioral health needs of vulnerable individuals; advocate for regional capacity to address homelessness; and maintain access to safe, fun, and healthy open spaces. • Clean and Safe Santa Monica: Create an atmosphere marked by clean and safe public spaces and neighborhoods. • Equitable and Inclusive Economic Recovery: Cultivate equitable and inclusive economic opportunity and recovery, including access for all community members to educational, employment, and economic resources and opportunities, and create a community where differences in life outcomes cannot be predicted by race, class, gender, disability or other identities. 9.B.h Packet Pg. 2466 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 33 4155-7018-4495.3 General Fund Financial Summary The information contained in the following tables of revenues, expenditures and changes in fund balance, and assets and liabilities has been derived from the City’s audited financial statements for Fiscal Years 2017-18 through 2019-20. The City’s audited financial statements for the Fiscal Year ended June 30, 2020 are attached as APPENDIX B hereto. Audited financial statements for prior years are available upon request from the Finance Department of the City. 9.B.h Packet Pg. 2467 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 34 4155-7018-4495.3 Table 3 City of Santa Monica General Fund Balance Sheet For Fiscal Years 2017-18 through 2019-20 2017-18 2018-19 2019-20 ASSETS Cash and investments $336,406,540 $267,538,714 $221,516,063 Restricted cash and investments 409,304 404,113 427,435 Receivables (net, where applicable, of allowances for uncollectibles): Accounts 5,754,221 13,236,612 6,794,875 Notes -- -- -- Property taxes 13,500,368 6,634,511 9,310,413 Interest 1,764,103 1,885,469 1,100,199 Settlement 11,010,000 -- -- Due from other funds 3,230,990 3,320,119 2,116,856 Due from Successor Agency Deposits 58,528 58,528 55,702 Prepaids 994,792 1,680,473 3,680,815 Restricted cash and investments with fiscal agent 98,771,076 76,373,131 32,024,476 Advances to other funds 12,062,484 10,012,863 9,737,875 Notes Receivable Successor Agency 8,361,793 7,766,028 7,488,093 Total assets $492,324,199 $388,910,561 $294,252,802 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities Accounts payable $ 24,123,169 $ 25,663,456 $ 21,725,257 Accrued liabilities 6,686,042 6,656,858 9,084,305 Contracts payable (retained percentage) 889,539 1,643,674 3,248,858 Due to other funds (1) -- -- 20,300,000 Unearned revenue 7,181,878 7,860,529 7,150,026 Deposits payable 618,175 673,751 652,977 Total liabilities $ 39,498,803 $ 42,498,268 $ 62,161,423 Deferred inflows of resources 17,014,268 5,733,513 5,547,326 Fund balances Nonspendable $ 12,853,565 $ 11,554,753 $ 13,326,312 Restricted 97,740,458 69,975,839 21,447,581 Committed 2,478,476 1,943,558 1,671,078 Assigned 256,273,855 182,199,922 143,176,947 Unassigned 66,464,774 75,004,708 46,922,135 Total fund balance $435,811,128 $340,678,780 $226,544,053 Total liabilities, deferred inflows of resources, and fund balance $492,324,199 $388,910,561 $294,252,802 (1) Amount in Fiscal Year 2019-20 represents the General Fund’s contribution to fund one half of a legal settlement, the remaining half to be paid in Fiscal Year 2020-21, reported as a liability to the City’s Self-Insurance General Liability / Auto Fund. This statement is a summary statement only. The complete Comprehensive Annual Financial Report of the City, including the Notes to the Financial Statements therein, is an integral part of this statement. For Fiscal Year 2019-20 results, see APPENDIX B – “CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020.” Source: City of Santa Monica Comprehensive Annual Financial Reports for Fiscal Years 2017-18 through 2019-20. 9.B.h Packet Pg. 2468 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 35 4155-7018-4495.3 Table 4 City of Santa Monica General Fund Statement of Revenues and Expenditures For Fiscal Years 2017-18 through 2019-20 2017-18 2018-19 2019-20 Revenues: Property taxes $ 56,954,925 $ 62,615,270 $ 67,791,186 Sales and use taxes 68,479,438 73,709,191 64,665,646 Transient occupancy taxes 60,631,025 60,762,881 48,624,638 Utility user taxes 29,288,341 28,306,582 28,026,008 Business license taxes 31,050,087 31,947,056 33,894,714 Other taxes 20,310,577 22,576,476 18,046,183 Licenses and permits 41,850,055 44,987,628 38,559,605 Intergovernmental 1,206,256 1,860,596 1,335,931 Charges for services 45,818,800 45,279,116 44,869,845 Fine and forfeitures 16,362,857 14,877,572 10,357,155 Investment income 2,372,838 15,284,964 9,344,420 Rental income 8,039,950 7,561,578 7,239,944 Settlement income 14,085,000 -- -- Other 7,080,808 6,220,509 4,939,961 Total revenues $403,530,957 $415,989,419 $ 377,695,236 Expenditures: General government $ 89,300,051 $101,784,875 $ 132,110,963 Public safety 143,822,470 167,607,704 172,302,785 General services 70,353,866 69,726,299 63,263,101 Cultural and recreation services 57,293,143 59,371,679 60,052,065 Library 12,939,806 13,628,409 12,990,189 Housing and community development 30,166,605 29,771,917 30,170,367 Bond issue costs 938,932 4,025 -- Total expenditures $404,814,873 $441,894,908 $ 470,889,470 Excess (deficit) of revenues over (under) expenditures (1,283,916) (25,905,489) (93,194,234) Other financing sources (uses): Transfers in (1) $ 9,541,155 $ 9,082,615 $ 34,192,236 Transfers out (2) (33,998,654) (78,309,472) (21,010,700) Bonds issued 102,785,000 -- -- Premium on debt issued 12,247,767 -- -- Total other financing sources (uses) $ 90,575,268 $ (69,226,857) $ 13,181,536 Special items (3) -- -- (34,122,029) Net change in fund balance $ 89,291,352 $ (95,132,346) $(114,134,727) Fund balance at beginning of year, as restated 346,519,776 435,811,126 340,678,780 Fund balance at end of year $435,811,128 $340,678,780 $ 226,544,053 (1) Transfers in in Fiscal Year 2019-20 include approximately $26.9 million from the City’s water enterprise fund. (2) Transfers out include, among other transfers, Measure GSH revenues paid to the SMMUSD, maintenance and debt service expenses and, in Fiscal Years 2017-18 and 2018-19, payments to the water enterprise fund for pollution remediation. (3) Special items are unusual and infrequent in nature but within the control of management. The following transactions are reported as special items: Due to the effect of the Pandemic and to manage future expenditures, the City offered incentives to employees to retire early and also effected an involuntary reduction in force. As such the City reported $6,038,153 related to these early retirements and layoffs as a special item. The City settled a legal claim in the amount of $42.6 million. The City’s insurance coverage paid $11,000,000, the City’s Self-Insurance General Liability / Auto Fund paid $2,000,000 and the City’s General Fund paid $29,600,000 which is reported as a special item. This statement is a summary statement only. The complete Comprehensive Annual Financial Report of the City, including the Notes to the Financial Statements therein, is an integral part of this statement. For Fiscal Year 2019-20 results, see APPENDIX B – “CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020.” Source: City of Santa Monica Comprehensive Annual Financial Reports for Fiscal Years 2017-18 through 2019-20. 9.B.h Packet Pg. 2469 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 36 4155-7018-4495.3 The following table sets forth the budgetary information for Fiscal Years 2018-19 (final) and 2019-20 (adopted and final), the budget for Fiscal Year 2020-21 as approved by the City Council on June 23, 2020 and as revised as of January 26, 2021, and the budget for Fiscal Year 2021-22 as approved by the City Council on June 22, 2021. The City currently expects no materially adverse changes in year-end Fiscal Year 2020-21 General Fund budget results as compared to the Fiscal Year 2020-21 revised General Fund budget information shown below. 9.B.h Packet Pg. 2470 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 37 4155-7018-4495.3 Table 5 City of Santa Monica General Fund Budget Summary For Fiscal Years 2018-19 through 2021-22 Fiscal Year 2018-19 Actual Fiscal Year 2019-20 Adopted Fiscal Year 2019-20 Actual Fiscal Year 2020-21 Adopted Fiscal Year 2020-21 Revised Fiscal Year 2021-22 Adopted Revenues: Property Taxes $ 62,615,270 $ 64,453,176 $ 67,791,186 $ 70,615,501 $ 73,063,972 $ 75,443,566 Sales Taxes 73,709,191 69,801,000 64,665,646 54,575,000 59,200,000 65,100,000 Other Taxes 143,592,995 150,482,082 128,591,543 97,913,358 92,507,000 121,846,000 Licenses and Permits 44,987,628 47,088,027 38,559,605 32,157,020 22,419,589 29,289,143 Intergovernmental 1,860,596 1,212,389 1,335,931 1,300,786 1,848,283 1,249,461 Charges for Services 45,279,116 47,072,598 44,869,845 40,404,660 35,744,848 38,121,323 Fine and Forfeitures 14,877,572 15,722,024 10,357,155 11,139,499 7,532,151 11,291,195 Investment Income 15,284,964 8,400,000 9,344,420 3,000,000 4,100,000 1,400,000 Other 13,782,087 13,274,508 12,179,905 9,243,509 9,160,331 9,615,360 Total Revenues $415,989,419 $417,505,804 $377,695,236 $320,349,333 $305,576,174 $353,356,048 Operating Appropriations: City Council $ 936,979 $ 904,357 $ 1,050,250 $ 760,166 $ 1,072,762 $ 766,447 City Manager 12,721,247 12,761,668 13,564,037 9,954,171 10,300,286 10,615,723 Records and Election Services 3,312,296 2,730,243 2,541,093 3,110,613 3,062,119 2,579,467 Finance 13,436,221 14,720,227 13,563,014 12,423,420 12,536,355 11,181,286 City Attorney 17,195,925 12,160,629 12,497,801 11,063,176 10,912,239 10,985,926 Human Resources 5,171,360 5,412,603 5,138,838 4,714,281 5,075,880 5,121,387 Information Services 9,222,387 10,089,570 10,191,901 9,170,427 9,042,062 9,053,189 General Services 65,587,833 69,544,825 65,255,554 59,631,166 59,752,443 60,264,517 Police 96,011,374 100,025,998 100,800,571 98,943,776 97,943,150 95,651,701 Fire 45,038,326 45,891,062 48,865,877 43,442,960 43,965,448 44,537,959 Cultural and Recreational Services 55,281,931 55,791,759 52,474,170 45,779,797 45,722,369 50,004,971 Library 13,390,314 13,172,900 12,853,376 8,430,145 8,455,177 8,950,590 Housing and Community Development 29,712,654 30,475,247 29,589,462 26,417,379 28,268,757 27,079,052 Other (1) 6,036,205 9,448,164 6,079,528 6,346,222 23,897,955 9,990,801 Subtotal $373,055,052 $383,129,252 $374,465,472 $340,187,699 $360,007,003 $346,783,016 Interfund Transfers (2) 69,226,857 11,912,233 (13,181,536) 7,294,559 (6,437,734) (4,231,675) Total Operating Expenditures $442,281,909 $395,041,485 $361,283,936 $347,482,258 $353,569,269 $342,551,341 Net Operating Revenues $ (26,292,490) $ 22,464,319 $ 16,411,300 $ (27,132,925) $ (47,993,095) $ 10,804,707 Capital Project Expenditures (3) $ (68,839,856) $ (25,449,021) $ (96,423,998) $ (6,800,650) $ (85,258,874) (9,116,500) Special Items (4) -- -- $ (34,122,029) -- -- -- Use of Reserves and Bond Proceeds $ 83,357,602 $ 7,300,000 $ 108,225,869 $ 34,399,757 $ 77,567,799 -- Ending Budgetary Surplus/ (Use of Continuing Capital Reserves for capital projects) (5) $ (11,774,744) $ 4,315,298 $ (5,908,858) $ 466,182 $ (55,684,170) $ 1,688,207 (1) Fiscal Year 2020-21 Revised Budget includes payment of legal settlement. (2) Fiscal Year 2018-19 Actual includes transfer of water settlement funds to water fund. (3) Capital projects often span numerous years and actual expenditures may have been budgeted in a prior fiscal period. Funds have been reserved as Assigned Continuing Capital Projects to cover these costs. (4) Special Items in Fiscal Year 2019-20 Actual consist of legal settlement costs and early retirement program. (5) Fiscal Years 2019-20 and 2020-21 overages funded by use of reserves budgeted for specific capital projects in prior years. Source: City of Santa Monica Finance Department. 9.B.h Packet Pg. 2471 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 38 4155-7018-4495.3 In June 2020, three months into the Pandemic, the City Council adopted the City budget for Fiscal Year 2020-21. The budget called for the restructuring of City operations and capital improvement spending to reduce the previously proposed City budget by nearly 25% to ensure fiscal sustainability amidst severely diminished revenues, while focusing City efforts during the Pandemic on emergency response, delivering foundational services, economic recovery, and racial equity. On January 26, 2021, the City Council considered its midyear budget report as the second opportunity to examine the financial status of the City, following the Year-End Budget Report delivered to the City Council on October 27, 2020. The Fiscal Year 2020-21 Adopted Budget sought to preserve the City’s long-term fiscal health by drawing from $117 million in one-time funds to balance the budget while protecting essential services. This included setting aside a $20 million “Shutdown Reserve” to prepare for the possibility that a winter COVID-19 surge between December 2020 and February 2021 would result in another shutdown of the economy and further reduce City revenues. In preparing the midyear budget report, actual revenues for Fiscal Year 2020-21 were projected to be $305.7 million, $14.6 million lower than initial projections included in the adopted budget. Based on this estimate, it was clear that the General Fund would be required to access the Shutdown Reserve. The mid-year budget also included a number of recommended budget reallocations within the General Fund. These reallocations are made consistent with guidance provided by the City Council in September 2020 that City staff should seek to minimize inequities between departmental budgets that occurred as the City focused on essential services in the Fiscal Year 2020-21 Adopted Budget and should recognize the role of many departments in promoting public safety and community wellbeing. As predicted prior to adoption of the Fiscal Year 2020-21 Budget, the City did not receive adequate stimulus funds from the federal government to compensate for lost revenue. The City received an approximately $1.14 million allocation of federal Coronavirus Aid, Relief and Economic Security (CARES) Act funding through the State. The Big Blue Bus Fund, however, a proprietary fund that supports the City’s transit agency operations, did receive approximately $24 million in stimulus funds in 2020. The City has received the first half of the approximately $28.6 million in aid through the federal $1.9 trillion American Rescue Plan, with the remainder to be received in Fiscal Year 2021-22. As discussed herein, these funds will be used to support the reopening of services while City revenues recover, including those services and programs focusing on addressing three community priorities adopted by the City Council- addressing homelessness, providing services for clean and safe public spaces and neighborhoods, and ensuring an inclusive and equitable economic recovery. Of the City’s $28.6 million in American Rescue Plan stabilization funding, $6.3 million has been allocated in accordance with City Council direction to enable the General Fund to transfer the annual allocation of Measure GSH funds in Fiscal Years 2021-23 to support affordable housing. Another $6.3 million was allocated to economic recovery efforts, $5 million was allocated to address projected deficits in the Beach and Pier Funds, and the remaining $11 million was allocated to temporarily support the restoration of services until General Fund revenues recover. Assessed Valuations The City uses the facilities and services of the County of Los Angeles (the “County”) for the assessment and collection of property taxes. City taxes are collected at the same time and on the same tax 9.B.h Packet Pg. 2472 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 39 4155-7018-4495.3 rolls as are the County, City and special district taxes. Assessed valuations are the same for both City and County taxing purposes. The valuation of property in the City is established by the Los Angeles County Assessor, except for public utility property, which is assessed by the State Board of Equalization. Assessed valuations are reported at 100% of the full value of the property, as defined in Article XIIIA of the California Constitution. Prior to Fiscal Year 1981-82, assessed valuations were reported at 25% of the full value of the property. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” herein. The California State Legislature adopted two types of State-reimbursed exemptions beginning in the tax year 1969-70. The first currently exempts 100% of the full value of business inventories from taxation. The second exemption currently provides a credit of $7,000 of the full value of an owner-occupied dwelling for which application has been made to the Los Angeles County Assessor. Revenue estimated to be lost to local taxing agencies due to the above exemptions has in the past been reimbursed from State sources. Reimbursement is based upon total taxes due upon such exemption values and therefore is not reduced by any estimated amount of actual delinquencies. The following table shows assessed valuation for secured and unsecured property within the City for the ten most recent Fiscal Years. 9.B.h Packet Pg. 2473 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 40 4155-7018-4495.3 Table 6 City of Santa Monica Assessed Value of Taxable Property For Fiscal Years 2011-12 through 2020-21 (dollars in thousands) Fiscal Year Land Improvements Personal Property Public Utilities Secured Gross Exemptions(1) Secured Net Net Unsecured Net Assessed Valuations Total Direct Tax Rate(2) 2011-12 $14,235,295 $10,349,621 $228,784 $742 $24,814,442 $1,073,027 $23,741,415 $ 902,707 24,644,122 1.00 2012-13 14,828,199 10,846,677 370,673 742 26,046,292 1,222,722 24,823,570 942,035 25,765,605 1.00 2013-14 16,046,789 11,701,427 402,171 742 28,151,130 1,573,052 26,578,078 936,031 27,514,109 1.00 2014-15 16,867,678 12,433,379 437,194 742 29,738,993 1,609,033 28,129,960 916,381 29,046,341 1.00 2015-16 17,890,583 12,932,934 472,362 -- 31,295,879 1,042,924 30,252,955 902,502 31,155,457 1.00 2016-17 19,308,450 13,550,065 48,643 -- 32,907,158 653,548 32,253,610 906,371 33,159,981 1.00 2017-18 20,799,168 14,235,956 124,391 -- 35,159,515 1,656,924 33,502,591 925,241 34,427,832 1.00 2018-19 22,406,863 15,268,820 428,740 -- 38,104,423 1,628,684 36,475,739 1,002,111 37,477,850 1.00 2019-20 23,887,232 16,243,029 84,504 -- 40,214,765 1,699,358 38,515,407 1,005,939 39,521,346 1.00 2020-21 25,589,175 17,188,677 369,459 -- 43,147,311 1,975,152 41,172,159 1,099,941 42,272,100 1.00 (1) Includes homeowner exemption. The City is reimbursed by the State for taxes lost because of these exemptions. (2) Excludes direct and overlapping Rates. See Table 10 for overlapping debt rates. Source: Los Angeles County Auditor-Controller. 9.B.h Packet Pg. 2474 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 41 4155-7018-4495.3 Ad Valorem Property Taxes Taxes are levied for each fiscal year on taxable real and personal property which is situated in the County as of the preceding January 1. However, upon a change in ownership of real property or completion of new construction, State law permits an accelerated recognition and taxation of increases in real property assessed valuation (known as a “floating lien date”). For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State and County assessed property secured by a lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.” See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” herein. The County levies a one percent property tax on behalf of all taxing agencies in the County. The taxes collected are allocated on the basis of a formula established by State law enacted in 1979. Under this formula, the County and all other taxing entities receive a base year allocation plus an allocation on the basis of “situs” growth in assessed value (new construction, change of ownership, inflation) prorated among the jurisdictions which serve the tax rate areas within which the growth occurs. Tax rate areas are specifically defined geographic areas which were developed to permit the levying of taxes for less than county-wide or less than city-wide special and school districts. In addition, the County levies and collects additional approved property taxes and assessments on behalf of any taxing agency within the County. Property taxes on the secured roll are due in two installments, on November 1 and February 1. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, and a ten percent penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared tax-defaulted on or about June 30. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus costs and redemption penalty of one and one-half percent per month to the time of redemption. If taxes are unpaid for a period of five years or more, the tax-defaulted property is subject to sale by the Treasurer and Tax Collector of the County of Los Angeles. Los Angeles County does not offer “Teeter Plan” advances (i.e., the alternative method of distribution of tax levies and collections and of tax sale proceeds, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code). Property taxes on the unsecured roll are assessed as of the January 1 lien date and become delinquent, if unpaid, on August 31. A ten percent penalty attaches to delinquent taxes on property on the unsecured roll and an additional penalty of one and one-half percent per month begins to accrue on November 1. The taxing authority has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for recordation in the County Recorder’s office in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the taxpayer. City taxes are collected on the same bill as County taxes. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIA of the California Constitution” herein for information on the effect, if any, of current litigation on assessed values in the City or the availability of revenue sources which may be provided by the State to replace lost property tax revenues. 9.B.h Packet Pg. 2475 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 4155-7018-4495.3 The following tabulation shows the secured taxes levied by the City during the past ten Fiscal Years, together with the total amounts and percentages of taxes uncollected as of June 30 of each fiscal Year. 9.B.h Packet Pg. 2476 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 43 4155-7018-4495.3 Table 7 City of Santa Monica Property Tax Rates, Secured Levies and Collections and Delinquencies For Fiscal Years 2010-11 through 2019-20 Fiscal Year Total Secured Tax Levy Current Secured Tax Collections Percent of Levy Collected Delinquent Secured Tax Collections(1) Total Tax Collections Total Secured Tax Collections as Percent of Total Tax Levy Outstanding Delinquent Taxes(2) Outstanding Delinquent Taxes as Percent of Total Secured Tax Levy 2010-11 $22,293,648 $21,759,685 97.6% $937,340 $22,697,025 101.8% $669,232 3.0% 2011-12 23,211,627 22,641,826 97.5 645,927 23,287,753 100.3 661,315 2.8 2012-13 23,446,717 23,428,590 99.9 713,956 24,142,546 103.0 585,417 2.5 2013-14 25,173,273 24,689,372 98.1 570,037 25,259,409 100.3 512,940 2.0 2014-15 26,567,114 26,190,114 98.6 600,642 26,790,756 100.8 438,248 1.6 2015-16 25,198,360 27,662,256 109.8 512,080 28,174,336 111.8 358,568 1.4 2016-17 30,859,806 30,545,235 99.0 489,991 31,035,226 100.6 375,288 1.2 2017-18 30,578,295 30,099,534 98.4 479,245 30,578,779 100.0 379,776 1.2 2018-19 32,779,676 32,167,281 98.1 419,000 32,586,281 99.4 407,817 1.2 2019-20 34,710,721 33,896,039 97.7 540,988 34,437,027 99.2 452,675 1.3 (1) Exclusive of penalties and collections related to tax overrides for debt service on general obligation bonds. (2) Reflects City of Santa Monica proportionate share of county-wide outstanding delinquencies. The Los Angeles County property tax system does not provide City of Santa Monica specific statistics related to delinquencies. Source: Los Angeles County Auditor-Controller. 9.B.h Packet Pg. 2477 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 44 Dissolution of Redevelopment On December 29, 2011, the California Supreme Court issued its decision in the case of California Redevelopment Association et al v. Matosantos et al. The net effect of the decision was to require all California redevelopment agencies, including the Redevelopment Agency of the City of Santa Monica (the “Former RDA”), to be dissolved as of February 1, 2012. On January 10, 2012, the Santa Monica City Council elected to become the Successor Agency to the Former RDA in order to satisfy all enforceable obligations of the Former RDA until paid, as well as to retain housing assets and functions of the Former RDA. California redevelopment law allows sufficient tax revenues to be allocated to the Successor Agency in an amount equal to pay debt service that is deemed to be an enforceable obligation. The assets and activities of the dissolved redevelopment agency are reported in a private-purpose trust fund in the financial statements of the City. The City’s June 30, 2020 audited financial statements reports cash inflows of approximately $7.5 million from the second-to-last year of the repayment of three City/Former RDA loans, as approved by the California Department of Finance (“DOF”) during the course of Fiscal Year 2015-16. This repayment is part of an approximately $70 million repayment made and to be made over a period of 8 years. The Successor Agency has received Final and Conclusive Determinations on its tax allocation bonded indebtedness and its bank loans, ensuring that the DOF will continue to approve the use of tax increment funds for debt service payments on bonds of the Successor Agency. In addition, the DOF has declared that a number of the City’s assets that were formerly owned by the Former RDA, such as the City’s eight Downtown parking structures, are governmental purpose assets and are therefore exempt from disposition as required under redevelopment dissolution law. One of the consequential benefits to the City of redevelopment dissolution is that the City receives a 10-14% share of residual property tax increment that was formerly directed to the Former RDA. These residual payments should increase as the Former RDA’s debt service is paid off. The most significant and lasting impacts of the dissolution of redevelopment for the City are the loss of ongoing funding for affordable housing rehabilitation and production in the City, and the suspension of the Civic Center Joint Use Project with SMMUSD and the rehabilitation of the Civic Auditorium. However, the passage of Measures GS and GSH established a regular, albeit decreased, revenue stream to fund affordable housing. Dependence on State for Certain Revenues State budget decisions can have an impact on City finances. In the event of a material economic downturn in the State, 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. 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 Department of Finance, www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the budget is posted by the Office of the Legislative Analyst at www.lao.ca.gov. In addition, various State official statements, many of which contain a summary of the current and past State budgets, may be found at the website of the State Treasurer, www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website, and neither the Authority nor the City takes 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. 9.B.h Packet Pg. 2478 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 45 State Budget Acts The following information concerning the State of California’s budgets has been obtained from publicly available information which the City believes to be reliable; however, the City takes no responsibility as to the accuracy or completeness thereof and has not independently verified such information. Information about the State budget is regularly available at various State-maintained websites. Text of the State budget may be found at the Department of Finance website, www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the State budget is posted by the Office of the Legislative Analyst (the “LAO”) at www.lao.ca.gov. In addition, various State official statements, many of which contain a summary of the current and past State budgets, may be found at the website of the State Treasurer, www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by the Authority, the City or the Underwriters, and the Authority, the City and the Underwriters take no responsibility for the continued accuracy of the internet addresses or for the accuracy or timeliness of information posted there, and such information is not incorporated herein by these references. The State’s fiscal year begins on July 1 and ends on June 30. The annual budget is proposed by the Governor by January 10 of each year for the next fiscal year (the “Governor’s Budget”). Under State law, the annual proposed Governor’s Budget cannot provide for projected expenditures in excess of projected revenues and balances available from prior fiscal years. Following the submission of the Governor’s Budget, the Legislature takes up the proposal. Under the State Constitution, money may be drawn from the Treasury only through an appropriation made by law. The primary source of the annual expenditure authorizations is the Budget Act as approved by the Legislature and signed by the Governor. The Budget Act must be approved by a two-thirds majority vote of each house of the Legislature. The Governor may reduce or eliminate specific line items in the Budget Act or any other appropriations bill without vetoing the entire bill. Such individual line-item vetoes are subject to override by a two-thirds majority vote of each house of the Legislature. Appropriations also may be included in legislation other than the Budget Act. Continuing appropriations, available without regard to fiscal year, may also be provided by statute or the State Constitution. Funds necessary to meet an appropriation need not be in the State treasury at the time such appropriation is enacted; revenues may be appropriated in anticipation of their receipt. According to the State Constitution, the Governor must propose a budget to the State Legislature no later than January 10 of each year, and a final budget must be adopted no later than June 15. The budget requires a simple majority vote of each house of the State Legislature for passage. The budget becomes law upon the signature of the Governor, who may veto specific items of expenditure. A two–thirds vote of the State Legislature is required to override any veto by the Governor. 2020-21 State Budget. The Governor released his proposed State budget for fiscal year 2020-21 (the “Proposed 2020-21 State Budget”) on January 10, 2020. Since the Proposed 2020-21 State Budget preceded the Pandemic, it did not take into account the significant adverse impacts it will have on the State’s financial condition in fiscal year 2020-21. The Governor released the May Revision to the Proposed 2020-21 State Budget (the “2020-21 May Revision”) on May 14, 2020. The 2020-21 May Revision reflected the initial and profound effects of the Pandemic on the State’s economy, with job losses and business closures sharply reducing State revenues. Consistent with the State’s constitutional obligation to enact a balanced budget and the prohibition against issuing long-term bonds to finance deficits, the 2020-21 May Revision proposed certain action to achieve a balanced budget for fiscal year 2020-21. 9.B.h Packet Pg. 2479 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 46 The Governor signed the State budget for the 2020-21 fiscal year (the “2020-21 State Budget”) on June 29, 2020. 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 economic downturn has caused significant job losses, 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 reports that the official unemployment rate exceeded 16% in both April and May 2020. The 2020-21 Budget includes a number of measures intended to address a projected deficit of $54.3 billion and 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 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 Pandemic. Because of such measures described above, the 2020-21 State Budget is a balanced budget for fiscal year 2020-21 that projects approximately $137.7 billion in revenues. The 2020-21 State Budget sets aside $2.6 billion in the Special Fund for Economic Uncertainties (SFEU). The complete 2020-21 State Budget is available from the California Department of Finance website at www.dof.ca.gov. The City can take no responsibility for the continued accuracy of this internet address or for the accuracy, completeness or timeliness of information posted therein, and such information is not incorporated herein by such reference. [TO BE REVISED UPON RELEASE OF ADOPTED 2021-22 STATE BUDGET:] Proposed 2021-22 State Budget. The Governor released his proposed State budget for fiscal year 2021-22 (the “Proposed 2021-22 State Budget”) on January 8, 2021. The Proposed 2021-22 State Budget sets forth a balanced budget for fiscal year 2021-22 with an economic outlook and revenue forecast that is much improved from the 2020-21 State Budget. The Governor cautions that as the State enters fiscal year 2021-22, the risks to such positive forecast remain higher than usual as the State’s health and economy are threatened by the highest infection rate since the start of the Pandemic. With increasing distribution of vaccines, however, the Governor notes that the State is poised to begin an equitable and broad-based recovery. The Proposed 2021-22 State Budget estimates that total resources available in fiscal year 2020-21 will total approximately $168.10 billion (including a prior year balance of approximately $5.36 billion) and total expenditures in fiscal year 2020-21 will total approximately $155.90 billion. The Proposed 2021-22 State Budget anticipates the following fund balances for fiscal year 2020-21: $3.18 billion in the State’s Reserve for Liquidation of Encumbrances (the “Encumbrances Reserve”), $9.03 billion in the State’s Special Fund for Economic Uncertainties (SFEU), $747.00 million in the Proposition 98 Rainy Day Fund (for education), $450.00 million in the State’s Safety Net Reserve, and $12.54 billion in the State Rainy Day Fund. The Proposed 2021-22 State Budget projects total resources available for fiscal year 2021-22 of approximately $170.57 billion, inclusive of revenues and transfers of approximately $158.37 billion and a prior year balance of approximately $12.20 billion. The Proposed 2021-22 State Budget projects total expenditures of approximately $164.52 billion, inclusive of non-Proposition 98 expenditures of approximately $103.68 billion and Proposition 98 expenditures of approximately $60.83 billion. The Proposed 2021-22 State Budget proposes to allocate approximately $3.18 billion of the general fund’s projected fund balance to the Encumbrances Reserve and approximately $2.88 billion of such fund balance to the SFEU. In addition, the Proposed 2021-22 State Budget includes deposits to the PSSSA and 9.B.h Packet Pg. 2480 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 47 State Rainy Day Fund with estimated fund balances of approximately $2.99 billion in the PSSSA and approximately $15.57 billion in the State Rainy Day Fund in fiscal year 2021-22 while maintaining the State’s Safety Net Reserve fund balance of approximately $450 million. The Proposed 2021-22 State Budget notes that such fund balances will be critical to the State’s financial resiliency as the Proposed 2021-22 State Budget projects that expenditures will grow faster than revenues, with a structural deficit of approximately $7.6 billion projected for fiscal year 2022-23 that is forecast to grow to over approximately $11 billion by fiscal year 2024-25. The Proposed 2021-22 State Budget currently projects that the State’s appropriations limit (referred to as the “Gann Limit”) will be exceeded for just the second time since its passage in 1979. The Gann Limit is currently projected to be exceeded by approximately $102 million. As a result, any funds above the Gann Limit are constitutionally required to be allocated evenly between school districts and a tax refund. The complete Proposed 2021-22 State Budget is available from the California Department of Finance website at www.dof.ca.gov. The City can take no responsibility for the continued accuracy of this internet address or for the accuracy, completeness or timeliness of information posted therein, and such information is not incorporated herein by such reference. The final State budget for the 2021-22 fiscal year, which requires approval by a majority vote of each house of the State Legislature, may differ substantially from the Proposed 2021-22 State Budget. 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. LAO Overview of Proposed 2021-22 State Budget. The Legislative Analyst’s Office (“LAO”), a nonpartisan State office which provides fiscal and policy information and advice to the State Legislature, released its report on the Proposed 2021-22 State Budget entitled “The 2021-22 Budget: Overview of the Governor’s Budget” on January 10, 2021 (the “2021-22 Proposed Budget Overview”). In the 2021-22 Proposed Budget Overview, the LAO summarizes the condition of the Proposed 2021-22 State Budget and notes the State’s improved fiscal picture amidst the ongoing Pandemic. The LAO also highlights key features of the Proposed 2021-22 State Budget, which include a wide array of one-time programmatic spending and efforts to alleviate the impacts of the Pandemic. The LAO notes that, under the Proposed 2021-22 State Budget, the State would end fiscal year 2021-22 with approximately $18.91 billion in total reserves, representing an increase of $7.50 billion from the budgeted reserve level of $11.4 billion in fiscal year 2020-21 set forth in the 2020-21 State Budget. The increase in total reserves is the result of an estimated $3 billion required deposit into the State Rainy Day Fund, a $4.20 billion true-up deposit into the State Rainy Day Fund for fiscal years 2019-20 and 2020-21, and an increase in the discretionary SFEU of $267 million. The LAO summarizes that at the end of fiscal year 2021-22, the State Rainy Day Fund would reach a balance of approximately $15.57 billion, the SFEU would reach a balance of approximately $2.88 billion, and the Safety Net Reserve would contain a balance of approximately $450 million. Despite the overall increase in reserves, the LAO anticipates that the State will face large multiyear operating deficits if the State legislature adopts the Proposed 2021-22 State Budget. In particular, the LAO warns that the State would experience an operating deficit of $7.60 billion in fiscal year 2022‑23 that would grow to $11.30 billion in fiscal year 2024‑25. The LAO recommends that the State legislature begin to consider the ways in which the State might address the multiyear structural deficit, including, for example, by considering the use of discretionary spending to make supplemental pension payments. 9.B.h Packet Pg. 2481 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 48 The LAO estimates that the Governor had a $15.50 billion surplus to allocate in the Proposed 2021-22 State Budget, and that the Governor allocated approximately $8.10 billion to one-time or temporary spending, approximately $2.90 billion to the SFEU, approximately $2.50 billion to revenue reductions, approximately $1.30 billion to ongoing spending (the costs of which the LAO estimates will grow slightly over time to $1.40 billion by fiscal year 2024‑25), and approximately $700 million to repay State debts and liabilities. The LAO comments that the Proposed 2021-22 State Budget provides a reasonable mix of one-time and ongoing spending. The LAO observes that most one-time spending is allocated to housing and homelessness, as well as natural resources and the environment, while most ongoing spending is allocated to health and behavioral health. The LAO notes that of the new spending specifically attributable to fiscal year 2021-22, the Proposed 2021-22 State Budget allocates $2.60 billion for ongoing commitments and $2.90 billion for one-time activities. The LAO observes that the 2020-21 State Budget addressed a $54 billion budget shortfall, which arose as a result of significant declines in expected revenues. Although such revenue estimates were reasonable at the time, the LAO notes that revenues have nearly returned to pre-Pandemic levels while State costs have not risen as dramatically as expected. The LAO also calls attention to the fact that some of the State’s actions in response to the Pandemic (including making withdrawals from reserves and shifting costs) were larger than necessary and that the Proposed 2021-22 State Budget uses very little discretionary spending to restore budget resilience. While the LAO agrees that the State should remain focused on its response to the Pandemic, it suggests that taking actions now to restore budget resilience is nonetheless important both to address the State’s multiyear budget problem and to help the State weather the next unexpected downturn. The LAO remarks that the Proposed 2021-22 State Budget offers the State legislature an opportunity to consider how the State can best use its resources to help it respond to and recover from the Pandemic. In December 2020, the federal government passed a fifth round of Pandemic relief, providing additional funding to most taxpayers, people receiving unemployment insurance benefits, renters, businesses, and schools. The Proposed 2021-22 State Budget includes a number of significant proposals that address overlapping needs relating to the Pandemic. The LAO observes that while this overlap is understandable given the timing of the release of the Proposed 2021-22 State Budget, the State legislature should examine the Proposed 2021-22 State Budget in light of the new federal relief. Specifically, the LAO recommends that the State legislature determine how to best target State funds to those not already benefiting from the federal assistance, and strive to complement, rather than duplicate, the federal stimulus. Ultimately, the LAO recognizes that making decisions with the benefit of knowing how COVID-19 vaccine distribution proceeds, how the State economy responds, how State revenues perform in the spring, and whether the federal government distributes additional funds to states will be very valuable for evaluating how to allocate the State’s limited resources. The 2021-22 Proposed Budget Overview is available on the LAO website at www.lao.ca.gov. The City can take no responsibility for the continued accuracy of this internet address or for the accuracy, completeness or timeliness of information posted therein, and such information is not incorporated herein by such reference. [UPDATE FOR STATE 2021-22 BUDGET ADOPTION] Further information about the State budget is available from the Public Finance Division of the State Treasurer’s Office. In addition, information about the State budget is regularly available at various State-maintained websites, including www.dof.ca.gov (Department of Finance), www.lao.ca.gov (Office of the Legislative Analyst) and www.treasurer.ca.gov (State Treasurer). The above-mentioned websites are included herein for informational purposes only. The City makes no representations concerning, and 9.B.h Packet Pg. 2482 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 49 do not take any responsibility for, the accuracy or timeliness of information posted on such websites or the continued maintenance of such websites by the respective entities. Future Budgets and Budgetary Actions The City cannot predict what future actions will be taken by the State Legislature and the Governor to address changing State revenues and expenditures or the impact such actions will have on State revenues available in the current or future years. Current and future State budgets will be significantly affected by the Pandemic and other factors over which the City has no control. There can be no assurance that, as a result of the Pandemic 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 Pandemic will not materially adversely affect the financial condition of the City. The State budget will be affected by national and State economic conditions and other factors beyond the City’s ability to predict or control. Certain actions could result in a significant shortfall of revenue and cash, and could impair the State’s ability to fund local agencies in future fiscal years. Certain factors, like an economic recession, could result in State budget shortfalls in any fiscal year and could have a material adverse financial impact on the City. 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. Investment of City Funds The City may invest moneys not immediately required for operations in a manner consistent with the City’s Investment Policy (the “Investment Policy”) and State law. The Investment Policy. An Investment Committee, consisting of the City Manager, Assistant City Manager, Director of Finance/City Treasurer, and the Assistant City Treasurer, provides general oversight and acts in an advisory capacity regarding City investments. In addition, the Committee will include one other department head serving one-year terms on a rotating basis and one member of the public. The Committee meets at least once each calendar quarter to review and evaluate previous investment activity, to review the current status of all funds held by the City, to discuss anticipated cash requirements and investment activity for the next quarter, and to discuss investment strategy with the Director of Finance/City Treasurer. The policy follows best practices and guidelines issued by the Government Financial Officers Association and the Association of Public Treasurers, United States and Canada. The Investment Policy establishes three objectives for City investment: (1) Safety of principal: The overall value of City funds shall not be diminished in the process of securing and investing those funds or over the duration of the investments. (2) Liquidity of funds: Funds shall be made available to meet all anticipated City obligations and a prudent reserve shall be kept to meet unanticipated cash requirements. (3) Return on investment: Earn a market rate of interest from City funds commensurate with the objectives of safety and availability of the principal invested. 9.B.h Packet Pg. 2483 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 50 Specific Investment Restrictions. The Investment Policy mandates “prudent” investment in those instruments specifically authorized by State law and establishes additional diversification guidelines with respect to instruments, maturity, and deposit institutions. It is the City Treasurer’s policy to generally hold investments to maturity and the Treasurer does not anticipate any event in the future that would require selling investments prior to maturity to meet cash flow needs. The Investment Policy restricts the average weighted maturity of all pooled City investments to a maximum of three years. The City’s practice is not to permit investment of the City’s pooled securities either in derivatives or reverse repurchase agreements, nor does it permit leveraging of the City’s investment portfolio. The Investment Policy is annually submitted to the City Council for approval with the most recent approval occurring February 23, 2021. There is no assurance that State law and/or the Investment Policy will not be amended in the future to allow for investments that are currently prohibited. The City’s investment policy dictates certain socially responsible guidelines for the investment of the City’s excess funds including a prohibition of investments in fossil fuel-related companies and banks which fund those companies. In an effort to enhance the socially responsible nature of the City’s investment portfolio, City staff now invests in green bonds and other social impact bonds as part of its investment strategy and plan. Investments in green bonds and other social impact bonds are required to meet the City’s legal and strategic investment parameters. As of March 31, 2021, the City’s portfolio has a total of approximately $46 million in green or impact bonds representing about 8% of the total value of the portfolio. When analyzing corporations for potential investment, the City included a review of the corporation’s Environmental, Social, and Governance (ESG) performance as a part of the overall credit analysis. The Monthly Report. Section 711 of the City Charter delegates investment authority to the City Treasurer. The Investment Policy requires the City Treasurer to keep a record of all investment transactions, and make monthly reports to the City Council and the City Manager detailing and summarizing all transactions and stating the present status of City investments (the “Monthly Report”). The Monthly Report for March 2021 (the “March 2021 Cash and Investment Report”) provides a monthly summary review of the City’s investment portfolio and cash position. As of March 31, 2021, the total value of cash and investments held in the pooled portfolio (excluding investments held in trust by third parties such as bond proceeds, perpetual care funds and other escrow accounts) was $650.9 million. The March 2021 Cash and Investment Report shows an aggregate value $105 million less than for the same period last year. The pooled portfolio yield-to-maturity of 0.54% was one basis point (.01%) greater than the prior month but 135 basis points (1.35%) less than in March 2020. Net investment earnings for the month on a cash basis were $0.3 million. Fiscal year-to-date earnings of $9.4 million as of March 31, 2021 were 18.2% less than for the same period last year. As of March 31, 2021, the market value of the City’s investments was approximately $3.2 million less than the unamortized book value (purchase price). As of March 31, 2021, the average weighted days-to-maturity was 818 days (2.2 years). In addition to the pooled portfolio, the City’s total cash holdings as of March 31, 2021 included $15.4 million in debt proceeds held in trust with various fiscal agents, $19 million in other funds held in trust, and $27 thousand in petty cash/change funds for a total balance of $685.3 million. The Monthly Report dated March 31, 2021, indicates that: 50.7% of the City’s pooled investment portfolio (approximately $320.6 million) was invested in Federal Agency securities; 16.4% (approximately $106.6 million) was invested in corporate bonds; 11.5% (approximately $74.6 million) was invested in the Local Agency Investment Fund of the State (LAIF); 5% (approximately $32.8 million) was invested in supranationals; 7.1% (approximately $32.7 million) was held as cash in a general bank account; 10.3% (approximately $67.3 million) was invested in Municipal Bonds; and 0.4% 9.B.h Packet Pg. 2484 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 51 (approximately $2.5 million) was held in Commercial Paper. Supranational organizations are international financial institutions that are generally established by agreements among nations, with member nations contributing capital and participating in management. Supranational bonds finance economic and infrastructure development and support environmental protection, poverty reduction, and renewable energy around the globe, which are issued by International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank. Self-Insurance 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 others, and natural disasters. The City has chosen to establish risk financing internal service funds where assets are set aside for claim settlements associated with such risks of loss up to certain limits and has obtained excess liability coverage through the Authority for California Cities Excess Liability (“ACCEL”), a California joint powers authority comprised of thirteen medium-size California cities self-insuring their catastrophic losses. Member cities first joined together in 1986 when the marketplace was unable to offer cities sufficient insurance coverage. ACCEL pools general liability, automobile liability, and public officials errors and omissions losses. Member cities share risk in excess of $1,000,000 and jointly purchase excess liability insurance to cover losses over $5,000,000 and up to $55,000,000 as described below. ACCEL is a member of PRISM (Public Risk Innovation, Solutions, and Management) Excess Insurance Authority for the purpose of providing access to excess workers’ compensation coverage for major employee injury risks through a program of pooled self-insurance/re-insurance and insurance on a risk sharing basis. The City participates in the PRISM Excess Workers Compensation Program through ACCEL but does not currently otherwise participate in the PRISM self-insurance programs. In 2020, the former CSAC Excess Insurance Authority announced its official rebranding as PRISM. In order to provide funds to pay claims, ACCEL collects premiums from each member. The premiums paid are credited with investment income at the rate earning on ACCEL’s investments. Based on ACCEL’s June 30, 2020 audited financial statements, the net reserves amounts related to the City were minus $2,452,041 (17% of ACCEL’s total net reserves and incurred but not reported claims). Total assets of ACCEL at June 30, 2020 were $40,427,154. ACCEL has no capital contributions. The City retains self-insurance up to $1,000,000 for general liability, automobile liability, and bus operations liability. Through ACCEL, the City covers all general liability losses between $1,000,000 and $5,000,000, and purchases excess liability insurance to cover losses over $5,000,000 and up to $55,000,000. The City retains self-insurance up to $1,000,000 for workers’ compensation. ACCEL covers up to an additional $4,250,000 for workers’ compensation and arranges for excess of workers’ compensation over $5,000,000 and up to statutory limits. The City’s unpaid claims liabilities are based on the results of actuarial studies. The unpaid claims liabilities are compiled by the Risk Manager of the City and include amounts for claims incurred but not reported as of year-end. Claims liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. Net present values of the unpaid claims liabilities are estimated for the year ended June 30, 2020, based on a 2.0% interest rate. Revenues of the risk management funds, together with funds to be provided in the future, are expected to provide adequate resources to meet liabilities as they come due. Non-incremental claims expenses have not been included as part of the liability for claims. 9.B.h Packet Pg. 2485 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 52 During year ended June 30, 2020, the City entered into settlement agreements with a compendium of claimants for a total of $42.6 million. Of this amount, $11.0 million was reimbursed by ACCEL with the City making up the difference. Retirement System The City contributes to the State of California Public Employees’ Retirement System (CalPERS), an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for cities in the State. CalPERS provides retirement and disability benefits, annual cost-of living adjustments, and death benefits to plan members and beneficiaries. CalPERS also provides death and disability benefits. These benefit provisions and all other requirements are established by state statute and City ordinance. CalPERS acts as a common investment and administrative agent for participating public entities within California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of CalPERS annual financial reports may be obtained from their executive office: 400 Q Street, Sacramento, CA 95811 or on their website: www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information concerning benefits and other matters. Neither the City nor the Authority can 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 changed in the future. Actuarial assessments will change with the future experience of the pension plans. The information on such website is not incorporated herein by such reference or otherwise. See Note 16 in APPENDIX B – “CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020.” A menu of benefit provisions as well as other requirements are established by State statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits by City ordinance. Pursuant to its contract with CalPERS, the City invests in separate plans for Miscellaneous Members, Fire Safety Members and Police Safety Members. As to each plan, the staff actuaries at CalPERS prepare annually an actuarial valuation which covers a Fiscal Year ending approximately 12 to 15 months before the actuarial valuation is delivered (thus, the actuarial valuation delivered to the City in July 2020 (the “2019 CalPERS Report”) covered CalPERS’ fiscal year ended June 30, 2019). The actuarial valuations express the City’s required contribution rates in percentages of covered payroll, which percentages the City must contribute in the Fiscal Year immediately following the Fiscal Year in which the actuarial valuation is prepared (thus, the City’s contribution rate derived from the actuarial valuation as of June 30, 2019, that was delivered in July 2020, will affect the City’s Fiscal Year 2021-22 required contribution rate). CalPERS rules require the City to implement the actuary’s recommended rates. With respect to the City’s portion of the Public Employees’ Retirement Fund, the market value of assets available for benefits as of the 2019 CalPERS Reports was $1,500,809,000, with an accrued liability of $1,997,677,000, for an aggregate funded ratio of 75.1%. Section 20814(c) of the California Public Employees' Retirement Law (“PERL”) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS' annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability, The City is required to contribute the 9.B.h Packet Pg. 2486 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 53 difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions. The California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) made several changes to the pension benefits that may be offered to employees hired on or after January 1, 2013, including setting a new maximum benefit, a lower-cost pension formula for safety and non-safety employees with requirements to work longer in order to reach full retirement age and a cap on the amount used to calculate a pension. As such, the defined pension benefit is payable monthly for life, in an amount that varies, for employees hired before July 1, 2012, from 2.4% at age 50 to a maximum of 3% at age 55 for Fire safety employees, 3% at age 50 for Police safety employees and 2% at age 50 to a maximum of 2.7% at age 55 for Miscellaneous employees, of the employee’s single highest twelve months’ salary for each year of credited service. As described below, in 2012, the City and miscellaneous employees agreed to create a second tier benefit for those hired July 1, 2012 through December 31, 2012. The benefits vary from 1.4% at age 50 to a maximum of 2.4% at age 62. For employees hired after December 31, 2012, Miscellaneous employees benefits vary from 1% at age 52 to a maximum of 2.5% at age 67 and for Fire and Police safety employees from 2% at age 50 to a maximum 2.7% at age 57, of the average of the employee’s highest thirty six months’ salary subject to limitations. Retirement benefits are calculated based on a member's years of service credit, age at retirement, and final compensation (average salary for a defined period of employment). Active full-time members in the City’s Retirement Plan are required to contribute 6.25% to 8.00% (for Miscellaneous employees), 9.00% to 11.25% (for Police safety employees), and 9.00% to 9.5% (for Fire safety employees), of their annual covered salary. In addition to such employee/members contributions, the annual total required minimum employer contribution is the sum of the Employer Normal Cost Rate (Employer Rate, expressed as a percentage of payroll) plus the Employer Unfunded Accrued Liability (UAL) Contribution amount, that actuarially determined remaining amount necessary to fund the benefits for its members earned during the year with an additional amount to amortize the unfunded accrued liability. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration (the “Board of Administration”) and as may be amended by CalPERS. The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be amended by CalPERS. Over the past few years, CalPERS adopted measures intended to strengthen the long-term future of the system. In 2017, CalPERS completed its most recent asset liability management study incorporating actuarial assumptions and strategic asset allocation. In December 2017, the Board of Administration adopted relatively modest changes to the asset allocation that reduced the expected volatility of returns. The adopted asset allocation was expected to have a long-term blended return that continued to support a discount rate assumption of 7.00 percent. The Board of Administration also approved several changes to the demographic assumptions that more closely aligned with actual experience. On December 21, 2016, the Board of Administration lowered the discount rate from 7.50 percent to 7.00 percent using a three-year phase-in beginning with the June 30, 2016 actuarial valuations. The minimum employer contributions for Fiscal Year 2020-21 determined in 2019 CalPERS Reports were calculated using a discount rate of 7.00 percent. The decision to reduce the discount rate was primarily based on reduced capital market assumptions provided by external investment consultants and CalPERS investment staff. The specific decision adopted by the Board of Administration reflected 9.B.h Packet Pg. 2487 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 54 recommendations from CalPERS staff and additional input from employer and employee stakeholder groups. Based on the investment allocation adopted by the Board of Administration and capital market assumptions, the reduced discount rate schedule provides a more realistic assumption for the long-term investment return of the fund. In addition to lowering the discount rate from 7.5% to 7.0%, the Board of Administration adopted a new amortization policy effective with the June 30, 2019 actuarial valuation. The new policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount. In addition, the new policy removes the 5-year ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy removes the 5-year ramp-down on investment gains/losses. These changes will apply only to new UAL bases established on or after June 30, 2019. While these changes can result in short-term increases to required employer contributions, they are not expected to increase the long-term cost of the plan. Notwithstanding the Board of Administration's decision to phase into a 7.0 percent discount rate, subsequent analysis of the expected investment return of CalPERS assets or changes to the investment allocation may result in a change to this discount rate schedule. Also significantly, as noted above, the Governor, in September 2012, signed AB 340 and AB 197, two bills which enacted the California Public Employees’ Pension Reform Act of 2013 (PEPRA). AB 340 made several changes to the pension benefits that may be offered to employees hired on or after January 1, 2013, including setting a new maximum benefit, a lower-cost pension formula for safety and non-safety employees with requirements to work longer in order to reach full retirement age and a cap on the amount used to calculate a pension. Among other things, AB 340 also enacted pension spiking reform for new and existing employees, required three-year averaging of final compensation for new employees, and provided employers with new authority to negotiate cost-sharing agreements with current employees. AB 340 also contained limitations on the use of retired annuitants, requiring that an annuitant have a six-month break in service prior to returning to work. The legislation created mandatory benefits tiers for new employees who have not worked for another CalPERS agency hired beginning January 1, 2013 ranging from 2.0% at age 50 to a maximum of 2.7% at age 57 for Police safety and Fire safety employees and 1.1% at age 50 to a maximum of 2.5% at age 67 for miscellaneous employees. In addition to paying the employee portion of the contribution, Police safety employees hired prior to July 1, 2012 reimburse the City at a rate of 8.5% and Fire safety employees reimburse the City at a rate of 6.0%. Employee reimbursements totaled $11,687,459 in Fiscal Year 2019-20. As of November 7, 2020, the City had 1,878 active members of which 1,050 are considered “classic” members (hired prior to December 31, 2012), and 828 fall under the decreased benefits as prescribed in the Public Employees’ Pension Reform Act of 2012 (PEPRA) or the City’s decreased “Tier 2” structure of reduced benefits for employees that were hired from July 1, 2012 through December 31, 2012. PEPRA members pay a higher employee contribution which, by law, cannot be paid by the employer. Additionally, PEPRA employees have a higher eligible retirement age and a lower benefit. Starting July 1, 2020, the City eliminated Employer Paid Member Contributions for Miscellaneous members. This is expected to reduce employer contributions in future years. During Fiscal Year 2019-20, the City’s work force was reduced by 232 employees due to incentivized voluntary retirements and lay-offs. This reduction in force is expected to reduce future pension expense and reduce the unfunded liability. PEPRA members pay a higher employee contribution which, by law, cannot be paid by the employer. Additionally, PEPRA employees have a higher eligible retirement age and a lower benefit. 9.B.h Packet Pg. 2488 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 55 The City has enacted a number of initiatives to mitigate the pressure of these cost drivers on the budget. 44% of current employees receive a reduced level of pension benefits based on Public Employee Pension Reform Act (PEPRA) levels or the City’s own “Tier 2” levels established on July 1, 2012, six months before the enactment of PEPRA, for employees who entered the City during those six months as new Miscellaneous bargaining group (non-sworn) employees. Employees in all bargaining groups hired after January 1, 2013 receive lower benefits as well. All employee groups have eliminated the employer paid member contribution (EPMC) benefit and the employee-paid portion of the pension cost is deducted from employees’ paychecks and paid directly to PERS. In March 2020, the City’s Coalition of Miscellaneous employees agreed to a lower level of pension benefits, eliminating the employer paid member contribution (EPMC) benefit that will result in a further $35 million decrease in the City’s unfunded pension liability. In addition to paying the employee portion of the contribution, Public Safety employee bargaining groups reimburse the City for a portion of the employer cost. Both Police and Fire Classic sworn employees (those hired before PEPRA benefits were established) pay over a quarter of the annual pension contribution cost, while Miscellaneous Classic employees, who have a lower level of benefits and therefore a lower cost contribution, pay approximately 23% of the annual cost. Among the City’s cost-saving measures is the series of payments made to CalPERS beyond the actuarially determined contribution. These additional discretionary payments reduce the City's net pension liability. In 2014, after a series of pay downs funded from year-end savings, the City Council adopted a policy that, provided that there are sufficient funds, the annual budget would include a minimum set-aside of $1.0 million in the General Fund, and commensurate set-aside amounts in all other funds, to be used towards pay downs of the CalPERS unfunded liability. Based on the availability of additional funds, staff would annually assess the set-aside of additional CalPERS payments against other unfunded needs and present the City Council with a recommendation. In June 2017, responding to the prospect of additional significant pension contribution rate increases beginning in Fiscal Year 2018-19, the City Council approved a $45 million pay down of the City’s pension unfunded liability. In Fiscal Year 2018-19, in light of continuing pension challenges, and following resident interest in the City’s plan to manage pensions, the City Manager established an ad hoc Pension Advisory Committee (PAC) made up of residents and City employees. The PAC unanimously recommended an accelerated plan to pay down the City’s current pension unfunded liability over 13 years, to conclude in 2032-33. This accelerated paydown plan was adopted by the City Council and incorporated into the Fiscal Year 2019-20 budget as part of the Guiding Principles to Handle Pension Liability. It was projected that the accelerated 13-year repayment would save more than $100 million in interest costs over 30 years ($41 million Present Value). This pay down plan superseded the previous annual pay down plan described above. The first accelerated payment in the amount of $9.3 million was made on October 31, 2019. With the latest payment, the City has made a total of $88.1 million in pay downs beyond the annual actuarially determined contribution. Due to the economic impact of the Pandemic, the City Council has temporarily changed the schedule of the accelerated paydowns, shifting to a 15-year paydown schedule and suspend the accelerated payments for up to the next two years. Another cost-saving measure is the City’s prepayment of its annual employer contributions to CalPERS since Fiscal Year 2007-08. The City continued this practice in Fiscal Year 2020-21, adjusting for the CalPERS change in policy that only allows for the unfunded liability portion of the annual contribution to be prepaid. Discounts received from such prepayments are used for pay downs of the net pension liability. For Fiscal Year 2017-18, CalPERS changed payment for the employer paid amortization of the unfunded pension liability from using a level percentage of pay to a flat dollar amount. In Fiscal Year 2019-20, the City paid CalPERS $20,063,066, $9,838,418 and $4,694,334 for the employer paid amortization of the unfunded liability for the miscellaneous, police and fire plans respectively. In 9.B.h Packet Pg. 2489 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 56 addition, the City paid $9.3 million beyond the actuarially determined contribution to conform to the City-adopted policy to amortize the unfunded liability over 13 years. Because of the fiscal impact of the Pandemic, future payments will correspond to a 15 year amortization schedule. Pension Funding Information. In calculating the annual actuarially recommended contribution rates, the CalPERS actuary calculates, on the basis of certain assumptions, the actuarial present value of benefits that CalPERS will fund under the CalPERS Plans, which includes two components, the normal cost and the Unfunded Accrued Liability (the “UAL”). The normal cost represents the actuarial present value of benefits that CalPERS will fund under the CalPERS Plans that are attributed to the current year, and the actuarial accrued liability (the “AAL”) represents the actuarial present value of benefits that CalPERS will fund that are attributed to past years. The UAL represents an estimate of the actuarial shortfall between actuarial value of assets on deposit at CalPERS and the present value of the benefits that CalPERS will pay under the CalPERS Plans to retirees and active employees upon their retirement. The UAL is based on several assumptions such as, among others, the rate of investment return, average life expectancy, average age of retirement, inflation, salary increases and occurrences of disabilities. In addition, the UAL includes certain actuarial adjustments such as, among others, the actuarial practice of smoothing losses and gains over multiple years (which is described in more detail below). As a result, the UAL may be considered an estimate of the unfunded actuarial present value of the benefits that CalPERS will fund under the CalPERS Plans to retirees and active employees upon their retirement and not as a fixed expression of the liability the City owes to CalPERS under its CalPERS Plans. The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The total pension liability of each of the Plans is measured as of June 30, 2019, using an annual actuarial valuation as of June 30, 2018 rolled forward to June 30, 2019 using standard update procedures. The discount rate used to measure the total pension liability was 7.15% for each Plan. The projection of cash flows used to determine the discount rate assumed that contributions from all plan members will be made at current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefits to determine total pension liability. The actuarial funding method used is the Entry Age Normal Cost Method. Under this method, projected benefits are determined for all members and the associated liabilities are spread in a manner that produces level annual cost as a percent of pay in each year from the age of hire (entry age) to the assumed retirement age. The cost allocated to the current fiscal year is called the normal cost. The actuarial accrued liability for active members is then calculated as the portion of the total cost of the plan allocated to prior years. The actuarial accrued liability for members currently receiving benefits, for active members beyond the assumed retirement age, and for members entitled to deferred benefits, is equal to the present value of the benefits expected to be paid. No normal costs are applicable for these participants. The excess of the total actuarial accrued liability over the actuarial value of plan assets is called the unfunded actuarial accrued liability. Funding requirements are determined by adding the normal cost and an amortization of the unfunded liability expressed as a dollar amount. The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first annual valuation following the effective date of the legislation. Voluntary benefit changes by plan amendment are generally included in the first valuation that is prepared after the amendment becomes effective, even if the valuation date is prior to the effective date of the amendment. 9.B.h Packet Pg. 2490 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 57 Notwithstanding the Board of Administration’s decision to phase into a 7.0 percent discount rate, subsequent analysis of the expected investment return of CalPERS assets or changes to the investment allocation may result in a change to this discount rate schedule. Projected Future Employer Contribution Rates. CalPERS recently updated its projections for the City’s future employer contribution rates, considering the City’s aggregate $88.1 million paydown, and updated information on investment earnings, the City’s experience level, and payroll. The table below shows projected employer contributions as percentages of projected payroll (before cost sharing) for the next six fiscal years. The estimates are based on a 7.00% assumed investment return, and assuming that all other actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. The projected normal cost percentages do not reflect that the normal cost will decline over time as new employees are hired into PEPRA or other lower cost benefit tiers. Projected Future Employer Contribution Rates Miscellaneous Fire Police Fiscal Year Normal Cost† UAL Deposit* Normal Cost† UAL Deposit* Normal Cost† UAL Deposit* 2021-22 10.8% 15.4% 18.3% 30.1% 24.0% 35.1% 2022-23 10.5 16.4 18.1 32.0 23.7 37.0 2023-24 10.3 16.8 17.9 33.0 23.3 37.8 2024-25 10.1 17.3 17.7 33.9 23.0 38.6 2025-26 9.8 17.4 17.5 34 22.6 38.8 2026-27 9.6 17.4 17.2 34.1 22.3 38.7 † CalPERS projected. * Projected by CalPERS and the City of Santa Monica Finance Department. Source: City of Santa Monica Finance Department and CalPERS Supplemental estimates. While CalPERS will collect employer contributions toward the plan’s unfunded liability as dollar amounts instead of the prior method of a contribution rate beginning with the fiscal year ended June 30, 2019, latest estimates for the City in the table above have been provided as percentages. This change to fixed dollar amounts is intended to address potential funding issues that could arise from a declining payroll or reduction in the number of active members in the plan. Funding the unfunded liability as a percentage of payroll could lead to the underfunding of the plans. Although employers will be invoiced at the beginning of the fiscal year for their unfunded liability payment the plan’s normal cost contribution will continue to be collected as a percentage of payroll. Reporting obligations under Governmental Accounting Standards Board Statement No. 68 (including as amended by Statement No. 71, “GASB 68”) commenced with financial statements for the fiscal year ended June 30, 2015. Under GASB 68, an employer reports the net pension liability, pension expense and deferred outflows/deferred inflows of resources related to pensions in its financial statements as part of its financial position. Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. 9.B.h Packet Pg. 2491 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 58 See Note 16 in APPENDIX B – “CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020.” Funding History. The City’s Pension Plan includes separate valuations for Miscellaneous Members, Fire Safety Members and Police Safety Members. The funded status of the retirement plan for each of these member groups for the market value and actuarial valuations performed for each of the fiscal years ending June 30, 2015 through June 30, 2019 are set forth in the tables below. Underfunded liability is primarily the result of a significant decline in the value of the plan assets, less than anticipated investment returns by CalPERS and an increase in benefits for Miscellaneous and Public Safety employees. As described above, the City has addressed the underfunded liability through significant changes to its compensation structure including annual incremental increases to public safety employee pension contributions and a second tier of reduced retirement benefits for new miscellaneous employees. The City cannot predict the level of future contributions to CalPERS which may be required by CalPERS but such amounts may increase significantly over current levels. Miscellaneous Members (dollars in thousands) Valuation Date (June 30) Entry Age Normal Accrued Liability Market Value of Assets Underfunded Liability (MVA) Market Value Funded Ratio Annual Covered Payroll UAL as a Percentage of Covered Payroll 2015 $ 947,897 $715,137 $232,760 75.4% $138,779 167.7% 2016 1,006,963 720,374 286,589 71.5 143,079 200.3 2017 1,071,563 828,192 243,371 77.3 145,418 167.4 2018 1,168,227 892,957 275,270 76.4 150,624 182.8 2019 1,221,092 946,032 275,061 77.5 148,049 185.8 Fire Safety Members (dollars in thousands) Valuation Date (June 30) Entry Age Normal Accrued Liability Market Value of Assets Underfunded Liability (MVA) Market Value Funded Ratio Annual Covered Payroll UAL as a Percentage of Covered Payroll 2015 $213,153 $152,542 $60,611 71.6% $15,245 397.6% 2016 223,711 148,440 75,271 66.4 16,370 459.8 2017 236,740 165,137 71,603 69.8 27,274 414.5 2018 255,006 174,194 80,812 68.3 18,293 441.8 2019 265,485 181,106 84,379 68.2 18,597 453.7 9.B.h Packet Pg. 2492 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 59 Police Safety Members (dollars in thousands) Valuation Date (June 30) Entry Age Normal Accrued Liability Market Value of Assets Underfunded Liability (MVA) Market Value Funded Ratio Annual Covered Payroll UAL as a Percentage of Covered Payroll 2015 $403,448 $291,484 $111,964 72.2% $28,327 395.3% 2016 426,762 289,290 137,473 67.8 29,701 462.9 2017 454,456 331,635 122,821 73.0 30,919 397.2 2018 487,508 354,700 132,808 72.8 30,449 436.2 2019 511,100 373,671 137,429 73.1 33,199 414.0 Source: City of Santa Monica Finance Department. The City expects to continue to work with its employees to identify measures that will ensure that increases in ongoing compensation costs do not outstrip those of revenue growth. The passage of PEPRA in September 2012 is working to further control cost increases in the future, as new employees are receiving reduced retirement benefits and cities will be encouraged to increase employees’ share of contribution costs. Other Postemployment Benefits In addition to providing pension benefits through CalPERS, the City, in accordance with agreements with various bargaining units and groups, provides medical insurance benefits that are considered other postemployment benefits (“OPEB”) to certain retired employees under a single employer benefit plan. These benefits are subject to negotiations between the City and each bargaining unit and the related memorandum of understanding (“MOU”) is approved by the City Council. Employees of the Executive Pay Plan group and management employees of the Rent Control Board are eligible for a City paid medical insurance benefit if their combined retirement age and years of City service equals or exceeds 70. Under the terms of a MOU between the City and a coalition of the various non-sworn bargaining units (Coalition), all non-sworn permanent retirees are allowed to continue participating in one of the City’s health plans at the same rate as active employees. As with other MOU’s, this benefit is subject to bargaining between the City and the Coalition. The City also maintains minimum benefits for public safety employees provided by the City’s contract with its healthcare provider. The City has paid OPEB through employer only contributions on a pay-as-you-go basis and no contribution is required from employees. The Plan does not issue a stand-alone financial statement. As of June 30, 2019 measurement date, the plan was 19.31% funded. The Total OPEB Liability was $40,906,328, the Plan Fiduciary Net Position was $7,899,459, resulting in a net OPEB liability of $33,006,869, of which $28,234,108 is payable from Governmental Activities. The covered payroll (annual payroll of active employees covered by the plan) was approximately $237 million. See Note 16 in APPENDIX B – “CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020” and the Supplemental Table therein. The discount rate used to measure the OPEB liability was 3.73%. This discount rate was determined based on the results of analysis described in GASB 75. Plan benefits for all current and future retirees are projected from year to year from the results of the valuation. Future employer contributions are projected based on levels over the last 5 years and certain assumptions about the benefit costs of 9.B.h Packet Pg. 2493 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 60 future employees. Trust assets are projected based on the projected future contributions and the assumed return on assets. The City has historically funded OPEB on a pay-as-you-go basis however, in Fiscal Year 2014-15, the City began to prefund its OPEB obligation by paying into an Internal Revenue Code Section 115 irrevocable trust administered through the California Employees’ Retirement Benefit Trust (CERBT), an affiliate of CalPERS. Except as described below, the City has paid the equivalent of its annual actuarially determined OPEB contribution into the irrevocable trust each year. This has allowed the City to benefit from a higher discount rate used in calculating its OPEB unfunded liability. As one response to the COVID-19 economic crisis, the City Council authorized the suspension of these prefunding payments to the OPEB trust through June 30, 2023, and the City elected not to make its actuarially determined OPEB liability contribution of $2,452,877 for Fiscal Year 2019-20. As a result, the discount rate used to determine the unfunded liability in the Fiscal Year 2019-20 financial statements was blended and lowered. The City expects the discount rate to increase once contributions continue. City staff has set aside the equivalent amount of the suspended payment as an assignment in the fund balance in case a better than projected financial situation in Fiscal Year 2020-21 allows for the prefunding. To counter the trend of health insurance cost increases, all members from the City’s collective bargaining groups contribute to health insurance premiums. Additionally, the City’s current contract with its insurance provider provides fixed rates through calendar year 2021. In addition, Miscellaneous employees increased their contribution towards healthcare premiums by 1 percent in the most recent labor agreement approved in March 2020. For actuarial methods and assumptions, see Note 16 in APPENDIX B – “CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020” and the Supplemental Table therein. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the City are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress above, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the City and plan members) and include the types of benefits provided at the time of each valuation. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Medical Trusts In addition to other postemployment benefits described above, the City has agreed, pursuant to bargaining unit agreements, to contribute monies to monies to medical trusts, a defined contribution plan that provide postemployment medical benefits to employees. The amount of benefits provided to employees under these plans is limited solely to the amount contributed (determined by negotiations between the various bargaining groups and the City) related investment earnings, and forfeitures. For 9.B.h Packet Pg. 2494 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 61 Fiscal Year 2019-20 the City contributed $4,190,105 towards the retiree medical trusts. These are administered through third-party administrators and the City does not perform the investing function or have other significant responsibility relating to the management of plan assets and, accordingly, plan assets and any related liabilities have been excluded from the City’s basic financial statements. Labor Relations In accordance with the Meyers-Milias-Brown Act, the City has adopted an Ordinance, which establishes the procedures for the administration of employer-employee relations. This includes the procedure by which the City meets and confers with representatives of recognized employee organizations (i.e., unions and associations) regarding matters within the scope of representation, including wages, hours and other terms and conditions of employment within the appropriate unit. The table below sets forth the City’s existing bargaining units and the term of each current agreement. Of the approximately 1,847 budgeted permanent full-time equivalent (FTE) City employees, most are represented by two groups and 11 bargaining units (the Executive Pay Plan and Confidential Unrepresented Employees groups are not actual bargaining units). As to the agreements which have a term that concluded before the date of this Official Statement, each bargaining unit or group continues to function under the terms of its respective agreement as if it had not expired. City employees in the process of negotiations have historically continued to work under the terms of their previous contract with no interruption in services. Table 8 City of Santa Monica Bargaining Units and Groups Bargaining Unit/Group Fiscal Year 2020-21 Budgeted Permanent FTEs Term From To Administrative Team Associates 270 July 1, 2020 June 30, 2022 Executive Pay Plan 17 July 1, 2020 June 30, 2021† Fire Executive Management Association 2 July 1, 2020 June 30, 2022 International Brotherhood of Teamsters 371 July 1, 2017 June 30, 2020† Management Team Associates 41 July 1, 2020 June 30, 2023 Municipal Employee Association 386 July 1, 2020 June 30, 2022 Public Attorneys’ Legal Staff Support Union 15 July 1, 2018 June 30, 2021† Public Attorneys Union 24 July 1, 2020 June 30, 2022 Santa Monica Firefighters 116 July 1, 2020 June 30, 2023 Santa Monica Police Officers Association 222 July 1, 2020 June 30, 2022 SMART (Transportation Division) 272 July 1, 2020 June 30, 2022† Confidential Unrepresented Employees (CUE) 16 July 1, 2020 July 31, 2021† Supervisory Team Associates 96 July 1, 2020 June 30, 2021† † Expired contracts are currently under active negotiations with bargaining units functioning under existing terms. The City has never had an employee work stoppage. Source: City of Santa Monica Finance Department. 9.B.h Packet Pg. 2495 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 62 Capital Improvement Program The City biennially develops a five-year Capital Improvement Program (CIP) budget. Although the program spans five years, funds are appropriated annually as part of the annual budget process. Budget plan numbers for Fiscal Year 2022-23 through Fiscal Year 2024-25 are included as a planning tool to demonstrate total anticipated capital funding needs. Project needs will be reevaluated over time. The City's two-year budget approach means that Fiscal Year 2021-22 represents the exception-based year for the City’s capital improvement program (CIP) biennial budget. The current Citywide CIP funds over 90 capital projects across 21 Funds. The Adopted Budget is $94.4 million in Fiscal Year 2020-21, and $163.7 million in Fiscal Year 2021-22. The Fiscal Year 2020-21 Adopted CIP Budget represents a decrease of $44 million or 31 percent compared to the Fiscal Year 2019-20 Adopted CIP Budget of $136.4 million. The prior year budget included the Sustainable Water Infrastructure Project and significantly more one-time projects that could no longer move forward as a result of COVID-19 resource impacts. The Fiscal Year 2021-22 Adopted Budget includes $78 million in bond-funded projects in the Water Fund that advance the Sustainable Water Master Plan and build and improve the infrastructure that delivers water services to Santa Monica households and businesses. Of this, the General Fund portion is $6,800,650 in Fiscal Year 2020-21 $9,116,500 in Fiscal Year 2021-22, and $11,953,714 in Fiscal Year 2022-23. In the face of the Pandemic's impact on capital project and construction programs, available capital funds were maximized to protect the City's existing capital investments and minimize future maintenance and replacement cost. As a result, only a limited number of projects were approved in the Fiscal Year 2020-22 Biennial CIP Budget cycle. These include projects to address critical infrastructure needs; projects that could not be deferred without compromising essential operations or public health and safety; and revenue-generating projects. From repaving streets to renewing alleys and sidewalks to maintaining parking structures and lots to purchasing necessary equipment to modernizing streetlights and replacing aging water and sewer mains, these capital projects prioritize a clean and safe Santa Monica. In addition, the City's Water Fund will use bond financing to advance capital improvement projects to provide long-term cost benefits for ratepayers by achieving water self-sufficiency and a more sustainable, drought-resilient water supply. Except for the Bonds, the City has no plans to finance any portion of this capital budget allocation with long-term General Fund indebtedness. Long-Term Debt The City is able to issue general obligation bonds for the acquisition and improvement of real property, subject to the approval of two-thirds of the voters voting on the bond proposition. A tax on all real property within the City to pay principal of and interest on general obligation bonds is levied by the City and collected by the County on the secured and unsecured property tax bills. As of June 30, 2020, the City had $3.2 million in general obligation bonds outstanding. The City Charter limits general obligation bonded indebtedness to 10.0% of the total assessed valuation of property within the City, exclusive of any indebtedness that has been or may be incurred for the purpose of acquiring and establishing a system of waterworks for the supplying of water, or for the purpose of constructing sewers or drains in the City, for which purposes a further indebtedness may be incurred by the issuance of bonds, subject only to the provisions of the California Constitution and of the City Charter. The City may enter into certain long-term lease obligations without first obtaining voter approval. The City has entered into various lease arrangements under which the City is obligated to make annual payments. Securities have been issued which certificate or are payable from these lease arrangements. 9.B.h Packet Pg. 2496 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 63 A summary of long-term General Fund obligations outstanding as of June 30, 2021 is as follows: Table 9 City of Santa Monica Long-Term General Fund Obligations Outstanding (As of June 30, 2021) Governmental Activities Date of Issue Original Issue Final Maturity Date Interest Rate Balance at June 30, 2021 Lease Obligations(1) Public Finance Authority Refunding 2015 July 9, 2015 $ 26,360,000 July 1, 2033 3.00-5.00% $ 21,010,000 Public Finance Authority Refunding 2017 Sept. 14, 2017 68,565,000 July 1, 2047 3.00-5.00 68,565,000 Public Finance Authority Refunding 2018 June 6, 2018 34,220,000 July 1, 2048 3.625-5.000 34,220,000 Public Finance Authority Refunding 2021A May 5, 2021 17,860,000 July 1, 2031 4.00 17,860,000 Public Finance Authority Refunding 2021B May 5, 2021 1,840,000 July 1, 2023 0.30 1,840,000 Total $157,470,000 $143,495,000 (1) For the financing and refinancing of the construction of City facilities. Source: City of Santa Monica Finance Department. For additional detail, see Note 9 in See APPENDIX B – “CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020.” On May 5, 2021, the Authority issued its Santa Monica Public Financing Authority Lease Revenue Refunding Bonds (Parking Structure 6 Project), Series 2021A and Santa Monica Public Financing Authority Lease Revenue Refunding Bonds (Parking Structure 6 Project), Series 2021B (Federally Taxable) pursuant to an Indenture, dated as of May 1, 2021, by and among Authority, the City and The Bank of New York Mellon Trust Company, N.A., as trustee. These bonds are payable from base rental payments to be made by the City for the right to the use of certain real property. These bonds were issued to provide funds to refinance then outstanding lease obligations and to pay the costs incurred in connection with the issuance of these bonds. As of June 30, 2020, there was approximately $158.6 million in non-voter approved City long-term capital lease obligations and installment payment obligations, including obligations of the City’s enterprise funds, with respect to revenue bond offerings outstanding. See APPENDIX B – “CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020.” 9.B.h Packet Pg. 2497 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 64 Overlapping Debt Contained within the City are overlapping local agencies providing public services which have issued general obligation bonds and other types of indebtedness. A table setting forth the overlapping debt of the City as of June 30, 2020 is provided below: Table 10 City of Santa Monica Statement of Overlapping Debt Debt Outstanding Estimated Percentage Applicable(1) Estimated Share of Overlapping Debt Overlapping Debt: Los Angeles County General Fund Obligations $ 2,317,550,679 2.450% $ 56,779,992 Los Angeles County Superintendent of Schools Certificates of Participation 5,182,434 2.450 126,970 Metropolitan Water District 37,300,000 1.278 476,694 Santa Monica Community College District 596,884,412 66.490 396,868,446 Los Angeles Unified School District 10,624,010,000 0.0001 10,624 Santa Monica-Malibu Unified School District 566,375,232 66.546 376,900,062 Santa Monica-Malibu Unified School District School Facilities Improvement District 1 110,000,000 100.000 110,000,000 Los Angeles County Regional Park and Open Space Assessment District -- 2.468 -- Santa Monica Community College District Certificates of Participation 12,421,229 66.490 8,258,875 Los Angeles Unified School District Certificates of Participation 164,430,000 0.0001 164 Los Angeles Community College District 4,234,460,000 0.0110 465,791 Santa Monica-Malibu Unified School District Certificates of Participation 4,559,389 66.546 3,034,091 Overlapping Tax Increment Debt (Successor Agency) 76,045,000 100.000 76,045,000 Total Overlapping Debt $1,028,966,709 (1) Percentage of overlapping agency’s assessed valuation located within boundaries of the City. Source: California Municipal Statistics, Inc. and City of Santa Monica Comprehensive Annual Financial Report for Fiscal Year 2019-20. RISK FACTORS The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating purchase of the Bonds. However, they do not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the Bonds. 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 Bonds The Bonds are special obligations of the Authority, payable, as provided in the Indenture, solely from Lease Revenues 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 9.B.h Packet Pg. 2498 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 65 pledged to the payment of the Bonds. The Lease Revenues consist of all Base Rental Payments payable by the City pursuant to the Lease Agreement, including any prepayments thereof, any Net Proceeds and any amounts received by the Trustee as a result of or in connection with the Trustee’s pursuit of remedies under the Lease Agreement upon a Lease Default Event. The Authority has no taxing power. The obligation of the City to make the Rental Payments, including the Base Rental Payments, does not constitute a debt of the City or of the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City 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. 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 that it will 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 is currently liable and may become liable on other obligations payable from general revenues, some of which may have a priority over the Base Rental Payments. The City has the capacity to enter into other obligations which may constitute additional charges against its revenues. 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 the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before making Base Rental Payments and other payments due under the Lease Agreement. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues. However, the City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the California Constitution. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIB of the California Constitution” herein. 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, Rental Payments will be subject to abatement. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Abatement” herein. 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 Base Rental Payments 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 Bonds, there could be insufficient funds to make payments to Owners in full. It is not possible to predict the circumstances under which such an 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, it may be that the value of the Property is substantially higher or lower than its value at the time of the execution and delivery of the Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the Bonds. 9.B.h Packet Pg. 2499 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 66 If damage, destruction, title defect or eminent domain proceedings with respect to the Property results in abatement of the Rental Payments related to such Property 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 of and interest on 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 Bond Owners for nonpayment under such circumstances. To the extent that Net Proceeds of rental interruption insurance are available for the payment of Rental Payments due under the Lease Agreement, Rental Payments will not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely from such Net Proceeds. The City will not fund a reserve fund for the Bonds. Infectious Disease Outbreak – COVID-19 General. The finances and operations of the City have been and will continue to be impacted by the Pandemic. The Pandemic is ongoing, and the duration and severity of the outbreak and any mutant strain thereof, and the economic and other actions that may be taken by governmental authorities to contain the outbreak or to address its impacts are uncertain. The spread of COVID-19 has altered the behavior of businesses and people in a manner that has had a negative effect on global and local economies, including activities that generate, in particular, transient occupancy taxes or hotel taxes, sales and use taxes, and property taxes. Federal, State and Local Actions. On January 31, 2020, the Secretary of the United States Health and Human Services Department declared a public health emergency for the United States and on March 13, 2020, the President of the United States declared the outbreak of COVID-19 in the United States a national emergency. Also on March 13, 2020, California Governor Gavin Newsom issued Executive Order N-26-20, proclaiming a State of Emergency to exist in California as a result of the threat of COVID-19. Subsequently, the President’s Coronavirus Guidelines for America and the United States Centers for Disease Control and Prevention called upon Americans to take actions to slow the spread of COVID-19 in the United States. On March 16, 2020, the Governor issued Executive Order N-28-20, lifting the State’s preemption of landlord/tenant law, authorizing local governments to halt evictions for renters and homeowners, slows foreclosures, and protects against utility shutoffs for Californians affected by COVID-19, and further providing that the order does not relieve a tenant from the obligation to pay rent, or restrict the landlord’s ability to recover rent that is due. The order expands a local government’s authority to limit residential or commercial evictions, but only as to nonpayment evictions caused by a documented loss of income caused by the Pandemic or the governmental responses. In August 2020, the Governor ordered an extension of protections through January 31, 2021, unless extended. The order also requests banks and other financial institutions to halt foreclosures and related evictions during this time period. On March 19, 2020, the Governor issued Executive Order N-33-20, a State-wide Stay at Home order to protect the health and well-being of all Californians and to establish consistency across the State in order to slow the spread of COVID-19; such order to go into effect immediately and to stay in effect until further notice. The order directs all individuals living in the State to stay home or at their place of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors. On April 29, 2020, the Governor released a four-stage plan for reopening of the economy. On May 23, 2020, the State authorized the County’s plan to move to a Stage 2 reopening. Businesses that 9.B.h Packet Pg. 2500 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 67 fall under the category of the Stage 2 business reopening included dine-in restaurants, destination retail, shopping malls, and in-store retail, with proper safety protocols in place. On August 28, 2020, the Governor released a new system, “Blueprint for a Safer California.” Starting September 9, 2020, the State began utilizing a four-tier, color-coded system for tracking COVID-19 trends. The new system will determine when counties can move forward with business reopenings. The four tiers, purple (widespread), substantial (red), moderate (orange), and minimal (yellow), have a different set of rules regarding what businesses are and aren’t allowed to reopen, whether they may open indoors or outdoors, and at what capacity they can operate. Counties must remain at each tier for a minimum of 21 days. Initially in the red tier, the County was permitted to allow for limited reopening of restaurants, places of worship, shopping centers, hair salons, movie theaters, and other businesses with modifications and/or capacity limits. Breweries (where no meals are provided), cardrooms, convention centers, and festivals remain closed under this tier. On or about November 20, 2020, the County was assigned to the purple tier. On March 15, 2021, the County was assigned to the less restrictive red tier, with an announcement that the County has met the state’s threshold to reopen key sectors will permit a wide range of indoor operations to resume in sectors including middle and high schools, and restaurants, movie theaters, gyms, museums, zoos and aquariums, all with safeguards in place. The move into the State’s less restrictive red tier came as COVID-19 case rates declined significantly from their winter peak. On May 6, 2021, the County was assigned to the least restrictive yellow tier, allowing for increases in capacity in many sectors and bars to begin providing indoor service at 25% capacity. Certain safety modifications remain as requirements, including masking, distancing and infection control to reduce the risk of transmission. The sectors with increases in capacity limits include amusement parks and fairs, gyms and fitness centers, yoga studios, private events, bars, hotels and short-term lodging rentals, private gatherings, breweries, indoor playgrounds, restaurants, cardrooms and racetracks, indoor and outdoor live events and performances, wineries and tasting rooms, family entertainment centers, and museums, zoos, and aquariums. With widespread vaccination currently underway in the United States and many countries worldwide, some of the governmental-imposed stay-at-home orders and restrictions on operations of schools and businesses implemented to respond to and control the outbreak have been eased. As of June 15, 2021, California Governor Newsom terminated the executive orders that put into place the Stay Home Order and the Blueprint for a Safer Economy. He also phased out the vast majority of executive actions put in place since March 2020 as part of the Pandemic response, leaving a subset of provisions that facilitate the ongoing recovery. The new public health order effective June 15 supersedes all prior health orders. Certain restrictions applicable to large gatherings (particularly the indoor event gatherings) are expected to be in place effective June 15, 2021 through October 1, 2021. The State will assess conditions by September 1, 2021, to determine whether updated requirements or recommendations are needed beyond October 1, 2021. Throughout the Pandemic, the City closely monitored the needs of its residential and commercial communities. On January 19, 2021, the City’s thirty-second emergency supplement extended the timeline for eviction protections for residential tenants and commercial tenants unable to pay rent due to financial impacts of COVID-19 to March 31, 2021, aligning with the extension of the moratorium on evictions of residential tenants for reasons other than nonpayment of rent adopted in the thirty-first supplement in December 2020. On January 28, 2021, the City’s thirty-third supplement further extended the City’s residential tenant eviction moratorium, extending the City’s moratorium on evictions of residential tenants for non-payment of rent due to the financial impacts of COVID-19 to apply to rents due and unpaid during the period February 1, 2021 through June 30, 2021 (the initial order applied to the nonpayment of rent that was due and unpaid between March 14, 2020 and September 30, 2020 and was 9.B.h Packet Pg. 2501 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 68 subject to several prior extensions); and extended the City’s moratorium on evictions of tenants for reasons other than nonpayment of rent through June 30, 2021. On June 15, 2021, the City’s thirty- seventh emergency supplement, the City confirmed its residential tenant eviction moratorium, which initially applied to the nonpayment of rent that was due and unpaid between March 14, 2020 and September 30, 2020 and was subject to several prior extensions, extending such terms through September 30, 2021. Through September 30, 2021, a landlord may not endeavor to evict a covered residential tenant for nonpayment of such rent due to the financial impacts of COVID-19. Accordingly, the eviction moratorium for residential tenants for reasons other than non-payment of rent remains in place through June 30, 2021, but is not further extended by such supplemental order. Any further extension of the eviction moratorium for residential tenants for reasons other than non-payment of rent shall be by a separate order. Many of the federal, State and local actions and policies under the aforementioned disaster declarations and shelter-in-place orders are focused on limiting instances where the public can congregate or interact with each other, which affects the operation of businesses and directly impacts the economy. These include, for example, imposing limitations on social gatherings and temporarily closing school districts throughout the State. In addition to the actions by the State and federal officials, certain local officials, including the County, have declared a local state of disaster and have issued “shelter-in-place” orders. For the latest information with respect to the City, please visit santamonica.gov/coronavirus. A continued spread of COVID-19, future outbreak of COVID-19 or another infectious disease, or the fear of any such outbreak, and measures taken to prevent or reduce it, could adversely impact State, national and global economic activities and, accordingly, adversely impact the financial condition and operations of the City, and the extent of impact could be material. These events and other factors resulting from such an outbreak, particularly if prolonged, could result in, or increase the likelihood of, the occurrence of certain of the other potential adverse effects described in this Official Statement, including those relating to declines in the collection of City TOT and sales and use tax revenues and/or future collections of TOT, sales and use tax revenues and property tax revenues within the City. Additionally, the City cannot predict what impact the Pandemic may have on the City’s general financial condition or operations, or the assessed values of property within the City. Seismic Activity and Natural Disasters The City, like all southern California communities, may be subject to unpredictable seismic activity, fires or floods. The City, like most regions that border the Pacific Ocean, is an area of significant seismic activity and, therefore, is subject to potentially destructive earthquakes. The San Andreas fault is the major active fault in the State, and is approximately 40 miles from the Property. Several active or potentially active faults are located closer to the Property, including the Santa Monica fault, the Malibu Coast fault and the Newport-Inglewood fault. Properties and improvements within the City are sometimes subject violent shaking from periodic earthquakes. On January 17, 1994, a 6.8 magnitude earthquake occurred in Northridge, California which resulted in 450 injuries and 3 fatalities in the City. The City sustained damage to 530 buildings, including 2,300 housing units and the temporary shutdown of St. John’s Hospital. A total of 53 of the 530 damaged buildings were demolished. In July 2017, the California Geological Survey released new draft maps showing the location of earthquake fault lines that run beneath the City, the general locations of which have been known for many years. The City expects that the maps will impact future development on and near the identified fault lines. In advance of the draft maps, in March 2017 the City Council unanimously approved a comprehensive seismic retrofit ordinance intended to increase safety of earthquake-vulnerable buildings 9.B.h Packet Pg. 2502 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 69 in the event of a large earthquake. As part of that process, the City released a City-wide list of almost 4,600 addresses in some 2,400 structures identified as at-risk in earthquakes. The Ordinance establishes a program under which building owners will receive notices to complete a seismic assessment for possible structural improvement. The Ordinance mandates strengthening and structural retrofit of buildings identified by the City as potentially hazardous, with retrofitting expected to occur over multiple years as buildings are brought into compliance with the requirements. Timelines for submitting structural evaluation reports and retrofitting will vary based on the complexity of work involved in each building type. The City’s program is designed to limit the loss of life and infrastructure in the event of a disaster. Similarly, the City is susceptible to tsunami and seiche hazards. A tsunami is a sea wave generated by a submarine earthquake, landslide or volcanic eruption. A seiche is another form of earthquake- or landslide-induced wave or oscillation that can be generated in an enclosed body of water such as a lagoon or harbor. Tsunamis and seiches have both caused damage in the Santa Monica area. According to the City, based on recent programmatic environmental impact reports and City strategic planning documents, the Property does not appear to be located in an area that is susceptible to tsunami run up and seiche hazards. The Safety Element of the City of Santa Monica General Plan (dated January 1995), and more recent programmatic environmental impact reports and City strategic planning documents, identify the area of the City in which the Property is located as one that is considered to be at a very low level of susceptibility to liquefaction in the event of an earthquake. In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the City, which could impact the ability of the City to make Base Rental Payments when due and, accordingly, could have an adverse effect on the Authority’s ability to make timely payments of principal of and interest on Bonds. The City is not required under the Lease Agreement to maintain earthquake or flood insurance on the Property. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Insurance” herein. Climate Change and Sea Level Sea levels rise due to increased water volume from higher water temperatures and the melting of glaciers and ice sheets. Sea level rise can create multiple coastal hazards, such as beach erosion, increased frequency and intensity of coastal storms, permanent inundation and saltwater intrusion. Coastal flooding caused by storms and high tides is a temporary condition but can have damaging consequences. Over the longer-term, sea level rise (SLR) will compound the effects from coastal flooding as storms will occur on top of higher sea levels. In an effort to prepare for the anticipated impacts of SLR and coastal hazards, the City, with assistance from the University of Southern California Sea Grant, the Ocean Protection Council, the California Coastal Commission (CCC), and the State Coastal Conservancy, commissioned technical reports that providing shoreline change projections, coastal hazard modeling, and vulnerability assessments. Miles of transportation and public and private utilities infrastructure, beaches, homes, businesses and concessionaires within the City bear some risk from SLR and coastal flooding. The City considered modelling of projected SLR and coastal flooding by 2100 along the coast of Santa Monica. A significant number of public facilities and infrastructure buildings, and other structures are likely to be affected by storm-induced flooding. In addition, the Santa Monica Pier, a major tourist destination in the City, could 9.B.h Packet Pg. 2503 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 70 also be impacted by increased wave height and water volume. As the level of the Pacific Ocean continues to rise, areas that would have only been temporarily flooded or submerged during very high 'King' tides or El Niño conditions, may gradually begin to be permanently submerged or inundated. Over the mid-term (i.e., SLR of 6 inches to 24 inches), the Santa Monica sandy beach area towards Pacific Coast Highway is expected to see moderate inundation levels. Some areas have been flooded in the past during severe storms or El Niño events, and research indicates that this will become an occurrence of increasing frequency. Over the long-term (i.e., SLR of 16 inches to 66 inches, with a possibility of a 113 inch extreme rise) the coastal inundation hazard area is expected to expand further inland. The City is considering infrastructure to mitigate some of these impacts. Cybersecurity The City, like other public and private entities, relies on a large and complex technology environment to conduct its operations, and consequently faces the threat of cybersecurity incidents. Such incidents can result from unintentional events, or from deliberate attacks by unauthorized entities or individuals attempting to gain access to the City’s information technology systems to misappropriate assets or information or to cause operational disruption and damage. The City and its departments face cyber threats from time to time, including but not limited to hacking, viruses, malware, phishing, distributed denial-of-service, and other attacks on computers, networks, and systems. The City has not experienced a major cyber breach that resulted in a financial loss. The City currently purchases cyber insurance coverage. Over the past two years, the City’s Information Services Department has partnered with several third-party vendors to perform cybersecurity assessments to evaluate all computing resources including networking infrastructure, operating systems, business applications, and related systems. City staff has conducted penetration tests and assessments of all technology systems. The findings of these assessments have been used to drive the recommendations to increase the overall resiliency of the City’s computing resources, cybersecurity strategic plan, and on-going capital funding. Currently, the City has established cybersecurity governance through the use of published policies, processes, and technologies to provide direction, structure, and safeguards when utilizing the City systems and handling of data. Core policies and procedures, such as Information Security Policy, Vulnerability Management Plan, Business Continuity and Disaster Recovery Plans, and various other procedural documents have been established within the City. The City also maintains an Incident Response Plan that outlines the City’s plan to monitor, identify, detect, respond, contain, and recover from security incidents, such as unauthorized access, use, disclosure, modification, destruction of information, or interference with City systems operations. The City performs annual tabletop exercises and actively participants in the FBI Cyberhood Watch, United States Secret Service, and MS-ISAC Cybersecurity Advisory Intelligence Communities. City staff is also fully engaged with cybersecurity peers within the industry. The City maintains a Cyber Risk Management program that identifies and prioritizes the digital risks and had developed a complex layered cyber security posture to protect the City’s digital assets and networks. In addition, the City is instituting measures to increase cloud security with the use of safety measures that will aid in the governance of the City’s cloud solutions and protect City data stored with cloud-based providers. 9.B.h Packet Pg. 2504 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 71 In an effort to cultivate a cybersecurity culture, the City practices annual mandatory security awareness training and monthly phishing simulations for end-users to assess the City’s human risk exposure. The City disseminates notices of common threat vectors and safeguards that staff should follow. Substitution and Removal of 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; provided, however, that such conditions shall not apply to a release of the Library Property as described herein under the caption “THE PROPERTY.” After a substitution or release, the portion of the Property for which the substitution or release has been effected shall be released from the leasehold encumbrance of the Lease Agreement and the Ground Lease. See “SECURITY FOR AND SOURCES OF PAYMENT FOR THE BONDS – Substitution or Release of the Property” herein. Although the Lease Agreement requires, among other things, that the Property, as constituted after such substitution or release, have an annual fair rental value greater than or equal to 105% of the maximum Base Rental Payments payable by the City in any Rental Period, such a replacement or release could have an adverse impact on the security for the Bonds, particularly if an event requiring abatement of Base Rental Payments were to occur subsequent to such substitution or release. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease Agreement – Substitution or Release of the Property.” Limited Recourse on Default; No Acceleration of Base Rental Failure by the City to make Base Rental Payments or other payments required to be made under the Lease Agreement, or failure to observe and perform any other terms, covenants or conditions contained in the Lease Agreement or in the Indenture 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 Authority or the Trustee, constitute events of default under the Lease Agreement and permit the Trustee or the Authority to pursue any and all remedies available. In the event of a default, notwithstanding anything in the Lease Agreement or in the Indenture to the contrary, there shall be no right under any circumstances to accelerate the Base Rental Payments or otherwise declare any Base Rental Payments not then in default to be immediately due and payable, nor shall the Authority or the Trustee have any right to re-enter or re-let the Property except as described in the Lease Agreement. The enforcement of any remedies provided in the Lease Agreement and the Indenture could prove both expensive and time consuming. If the City defaults on its obligation to make Base Rental Payments with respect to the Property, the Trustee, as assignee of the Authority, may retain the Lease Agreement and hold the City liable for all Base Rental Payments thereunder on an annual basis and enforce any other terms or provisions of the Lease Agreement to be kept or performed by the City. 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 nature of the Property or any property substituted therefor pursuant to the Lease Agreement, no assurance can be given that the Trustee will be able to re-let the Property so as to provide rental income sufficient to make all payments of principal of, and premium, if any, and interest on the Bonds when due, and the Trustee is not empowered to sell the Property for the benefit of the Owners of the Bonds. Any suit for money damages would be subject to limitations on legal remedies against cities in California, including a limitation on enforcement of judgments against funds needed to serve the public 9.B.h Packet Pg. 2505 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 72 welfare and interest. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein and APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease Agreement – Default.” Possible Insufficiency of Insurance Proceeds The Lease Agreement obligates the City to keep in force various forms of insurance, subject to deductibles, for repair or replacement of the Property in the event of damage, destruction or title defects, subject to certain exceptions. The Authority and the City make no representation as to the ability of any insurer to fulfill its obligations under any insurance policy obtained pursuant to the Lease Agreement and no assurance can be given as to the adequacy of any such insurance to fund necessary repair or replacement or to pay principal of and interest on the Bonds when due. In addition, certain risks, such as earthquakes and floods, are not covered by the insurance required under the Lease Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Insurance” herein. Limitations on Remedies The rights of the Owners of the Bonds are subject to the 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. Additionally, enforceability of the rights and remedies of the Owners of the Bonds, and the obligations incurred by the City, may become subject to the federal bankruptcy code (Title 11, 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 hereafter in effect, equity principles which may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the U.S. 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 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, there are no involuntary petitions in bankruptcy. If the City were to file a petition under Chapter 9 of the Bankruptcy Code, the Owners of the Bonds, the Trustee and the Authority could be prohibited from taking any steps to enforce their rights under the Lease Agreement, and from taking any steps to collect amounts due from the City under the Lease Agreement. Loss of Tax Exemption As discussed under the heading “TAX MATTERS,” the interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the Bonds, as a result of acts or omissions of the Authority or the City in violation of its covenants in the Indenture and the Lease Agreement. Should such an event of taxability occur, the Bonds would not be subject to a special redemption and would remain Outstanding until maturity or until redeemed under the redemption provisions contained in the Indenture. No Liability of Authority to the Owners Except as expressly provided in the Indenture, the Authority will not have any obligation or liability to the Owners of the Bonds with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of other agreements and covenants required to 9.B.h Packet Pg. 2506 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 73 be performed by it contained in the Lease Agreement or the Indenture, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Indenture. CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS Article XIIIA of the California Constitution Section 1(a) of Article XIIIA of the California Constitution limits the maximum ad valorem tax on real property to 1% of full cash value (as defined in Section 2 of Article XIIIA), to be collected by each county and apportioned among the county and other public agencies and funds according to law. Section 1(b) of Article XIIIA provides that the 1% limitation does not apply to ad valorem taxes to pay interest or redemption charges on (a) indebtedness approved by the voters prior to July 1, 1978, (b) any bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition, or (c) bonded indebtedness incurred by a school district or a community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters of the district, but only if certain accountability measures are included in the proposition. Section 2 of Article XIIIA defines “full cash value” to mean “the County Assessor’s valuation of real property as shown on the 1975-76 tax bill under full cash value or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership 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 to reflect a reduction in the consumer price index or comparable data for the area under the taxing jurisdiction, or reduced in the event of declining property values caused by substantial damage, destruction, or other factors. Legislation enacted by the State Legislature to implement Article XIIIA provides that notwithstanding any other law, local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above. In addition, legislation enacted by the California Legislature to implement Article XIIIA provides that all taxable property is shown at full assessed value as described above. Prior to Fiscal Year 1981-82, assessed valuations were reported at 25% of the full value of the property. In conformity with this procedure, all taxable property value included in this Official Statement (except as noted) is shown at 100% of assessed value and all general tax rates reflect the $1 per $100 of taxable value. Tax rates for voter approved bonded indebtedness and pension liability are also applied to 100% of assessed value. On June 3, 1986, California voters approved an amendment to Article XIIIA, which added an additional exemption to the 1% tax limitation imposed by Article XIIIA. Under this amendment to Article XIIIA, local governments and school districts may increase the property tax rate above 1% for the period necessary to retire new general obligation bonds, if two-thirds of those voting in a local election approve the issuance of such bonds and the money raised through the sale of the bonds is used exclusively to purchase or improve real property. In the June 1990 election, the voters of the State approved amendments to Article XIIIA permitting the State Legislature to extend the replacement dwelling provisions applicable to persons over 55 to severely disabled homeowners for a replacement dwelling purchased or newly constructed on or after June 5, 1990, and to exclude from the definition of “new construction” triggering reassessment improvements to certain dwellings for the purpose of making the dwelling more accessible to severely disabled persons. In the November 1990 election, the voters of the State approved an amendment of Article XIIIA to permit the State Legislature to exclude from the definition of “new construction” seismic retrofitting improvements or improvements utilizing earthquake hazard mitigation technologies 9.B.h Packet Pg. 2507 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 74 constructed or installed in existing buildings after November 6, 1990. Since 1990, the voters have approved several other minor exemptions from the reassessment provisions of Article XIIIA. Future assessed valuation growth allowed under Article XIIIA (new construction, change of ownership, 2% annual value growth) will be 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 will 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. In a Minute Order issued on November 2, 2001 in County of Orange v. Orange County Assessment Appeals Board No. 3, case no. 00CC03385, the Orange County Superior Court held that where a home’s taxable value did not increase for two years, due to a flat real estate market, the Orange County assessor violated the two percent inflation adjustment provision of Article XIIIA, when the assessor tried to “recapture” the tax value of the property by increasing its assessed value by 4% in a single year. The assessors in most California counties, including Los Angeles County, use a similar methodology in raising the taxable values of property beyond 2% in a single year. The State Board of Equalization has approved this methodology for increasing assessed values. The Orange County Superior Court has not ruled on a motion to restate the complaint as a class action, which could have the effect of extending this ruling to other similar cases. The City is unable to predict at this time the outcome of this litigation and what effect, if any, it might have on assessed values in the City or the availability of revenue sources which may be provided by the State to replace lost property tax revenues. Article XIIIB of the California Constitution On November 6, 1979, California voters approved Proposition 4, which added Article XIIIB to the California Constitution. In June 1990, Article XIIIB was amended by the voters through their approval of Proposition 111. Article XIIIB of the California Constitution limits the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted annually for changes in the cost of living, population and services rendered by the governmental entity. The “base year” for establishing such appropriation limit is the 1978-79 fiscal year. Increases in appropriations by a governmental entity are also permitted (i) if financial responsibility for providing services is transferred to the governmental entity, or (ii) for emergencies so long as the appropriations limits for the three years following the emergency are reduced to prevent any aggregate increase above the California Constitution limit. Decreases are required where responsibility for providing services is transferred from the governmental entity. Appropriations subject to Article XIIIB include, generally, any authorization to expend during the fiscal year the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds. Appropriations subject to limitation pursuant to Article XIIIB do not include debt service on indebtedness existing or legally authorized as of January 1, 1979, on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for such purpose, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified outlay projects, and appropriations by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to any entity of 9.B.h Packet Pg. 2508 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 75 government from (i) regulatory licenses, user charges, and user fees to the extent such proceeds exceed the cost of providing the service or regulation, (ii) the investment of tax revenues, and (iii) certain State subventions received by local governments. Article XIIIB includes a requirement that if an entity’s revenues in any year exceed the amount permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two fiscal years. As amended in June 1990, the appropriations limit for the City in each year is based on the limit for the prior year, adjusted annually for changes in the costs of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government. The change in the cost of living is, at the City’s option, either (i) the percentage change in California per capita personal income, or (ii) the percentage change in the local assessment roll for the jurisdiction due to the addition of nonresidential new construction. The measurement of change in population is a blended average of statewide overall population growth, and change in attendance at local school and community college (“K-14”) districts. As amended by Proposition 111, the appropriations limit is tested over consecutive two-year periods. Any excess of the aggregate “proceeds of taxes” received by the City over such two-year period above the combined appropriations limits for those two years is to be returned to taxpayers by reductions in tax rates or fee schedules over the subsequent two years. Article XIIIB permits any government entity to change the appropriations limit by vote of the electorate in conformity with statutory and Constitutional voting requirements, but any such voter- approved change can only be effective for a maximum of four years. When adopting the second year of the City’s Fiscal Year 2019-21 Biennial Budget, the City calculated its appropriations limit at $2,449,026,486 for Fiscal Year 2020-21, with appropriations subject to the limit estimated at $233,953,081. The City adopted its Fiscal Year 2021-23 Biennial Budget on June 22, 2021 and has calculated its appropriations limit at $2,535,966,926 for Fiscal Year 2021-22, with appropriations subject to the limit estimated at $259,250,259. The City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the California Constitution. The impact of the appropriations limit on the City’s financial needs in the future is unknown. Articles XIIIC and XIIID of the California Constitution On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the California Constitution, which contain a number of provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges. The interpretation and application of certain provisions of Proposition 218 will ultimately be determined by the courts with respect to some of the matters discussed below. It is not possible at this time to predict with certainty the future impact of such interpretations. The provisions of Proposition 218, as so interpreted and applied, may affect the City’s ability to meet certain obligations. Proposition 218 (Article XIIIC) requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City require a majority vote and taxes for specific purposes, even if deposited in the City’s General Fund, require a two-thirds vote. Further, any general purpose tax which the City imposed, extended or increased, without voter approval, after December 31, 1994 may continue to be imposed only if approved by a majority vote in an 9.B.h Packet Pg. 2509 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 76 election which must be held within two years of November 5, 1996. The City has not so imposed, extended or increased any such taxes which are currently in effect. Article XIIIC also expressly extends the initiative power to give voters the power to reduce or repeal local taxes, assessments, fees and charges, regardless of the date such taxes, assessments, fees and charges were imposed. Article XIIIC expands the initiative power to include reducing or repealing assessments, fees, and charges, which had previously been considered administrative rather than legislative matters and therefore beyond the initiative power. This extension of the initiative power is not limited by the terms of Article XIIIC to fees imposed after November 6, 1996 and absent other legal authority could result in the retroactive reduction in any existing taxes, assessments, or fees and charges. No assurance can be given that the voters of the City will not, in the future, approve initiatives which reduce or repeal, or prohibit the future imposition or increase of, local taxes, assessments, fees or charges. The voter approval requirements of Proposition 218 reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs. Proposition 218 (Article XIIID) also added several new provisions relating to how local agencies may levy and maintain “assessments” for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that the assessment must confer a “special benefit,” as defined in Article XIIID, over and above any general benefits conferred, and (iii) a majority protest procedure which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party. “Assessment” in Article XIIID is defined to mean any levy or charge upon real property for a special benefit conferred upon the real property. While this definition applies to landscape and maintenance assessments for open space areas, street medians, street lights and parks, the City currently has no landscape and maintenance assessments for open space areas, street medians, street lights and parks. In addition, Proposition 218 (Article XIIID) added several provisions affecting “fees” and “charges,” defined for purposes of Article XIIID to mean “any levy other than an ad valorem tax, a special tax, or an assessment, imposed by a [local government] upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service.” All new and existing property related fees and charges must conform to requirements prohibiting, among other things, fees and charges which (i) generate revenues exceeding the funds required to provide the property related service, (ii) are used for any purpose other than those for which the fees and charges are imposed, (iii) are for a service not actually used by, or immediately available to, the owner of the property in question, or (iv) are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Depending on the interpretation of what constitutes a “property related fee” under Article XIIID, there could be future restrictions on the ability of the City’s General Fund to charge its enterprise funds for various services provided. Further, before any property related fee or charge may be imposed or increased, written notice must be given to the record owner of each parcel of land affected by such fee or charge. The City must then hold a hearing upon the proposed imposition or increase, and if written protests against the proposal are presented by a majority of the owners of the identified parcels, the City may not impose or increase the fee or charge. Moreover, except for fees or charges for wastewater, water and refuse collection services, or fees for electrical and gas service, which are not treated as “property related” for purposes of Article XIIID, no property related fee or charge may be imposed or increased without majority approval by the property owners subject to the fee or charge or, at the option of the local agency, two-thirds voter approval by the electorate residing in the affected area. 9.B.h Packet Pg. 2510 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 77 Proposition 218 (Article XIIIC) also removes many of the limitations on the initiative power in matters of reducing or repealing any local tax, assessment, fee or charge. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. “Assessments,” “fees” and “charges” are not defined in Article XIIIC, and it is unclear whether these terms are intended to have the same meanings for purposes of Article XIIIC as for Article XIIID described above. If not, the scope of the initiative power under Article XIIIC potentially could include any General Fund local tax, assessment, or fee not received from or imposed by the federal or State government or derived from investment income. The City does not levy any property related “fees” or “charges” which it considers subject to challenge under Proposition 218 (Article XIIIC). The City is a defendant, with over 80 other California water providers, in litigation brought by a water ratepayer arguing the inclusion in water rates of costs to fund public fire hydrant flows violates Proposition 218 because these fire flows are not property based water service, but a general government service to be funded by taxes. The City cannot currently estimate potential costs of this litigation. See “ABSENCE OF MATERIAL LITIGATION - Legal Challenge To Water Rates For Water Distributed Through Hydrants.” Tiered Municipal Water Rate Structures After Capistrano Taxpayers Association Case In consideration of the April 2014 decision by the Court of Appeal of the State of California, Fourth Appellate District, issued a published decision (Capistrano Taxpayers Association v. City of San Juan Capistrano), the City recently completed its five-year water and wastewater rate study (2020-2024), and the new rate structure was adopted on January 28, 2020. The new rate structure includes a fixed charge for approximately 15% of the fund’s revenue requirements and the rest is billed through a three tiered rate structure. The three tiers are based on the State of California’s goal for indoor water use (tier 1 allotment), available local groundwater supplies (tier 2), and imported water supplies (tier 3). The proposed rate increase will ensure that the City continues to have a well-maintained water system, maintain reserves at industry recommended levels, keep water bills low over time, and achieve the City’s goal of water self-sufficiency by 2023. This discussion is intended as an update to prior City disclosure and is specific to the City’s water enterprise fund. The ruling in the Capistrano case addresses two elements of Proposition 218; the use of tiered municipal water rate structures, which are commonly established to create an economic incentive for conservation and efficiency and, second, a fee imposed on all water customers to pay for a recycled water system. With tiered rates, the intended result is that with the more water that any individual household or business uses, the more paid for each additional increment or “tier” of water, with successive tiers imposing a greater premium on water. Such rates are intended to send a price signal that incentivizes conservation. Proposition 218 requires that all taxes and fees imposed by a public agency must not be any greater than the “cost of service” to the individual. Litigants in the Capistrano case argued that Proposition 218 requires public water agencies to calculate actual costs of providing water at various levels of tiered usage. The court agreed. The court acknowledged the importance of conservation, but reasoned that agencies must achieve that goal without violating the required cost basis under Proposition 218. With respect to the fee component of a recycled water system, the court held that “a service” cannot be read to differentiate between recycled water and traditional potable water. Statutory Spending Limitations 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 9.B.h Packet Pg. 2511 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 78 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 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 California Supreme Court in Santa Clara County Local Transportation Authority v. Guardino, 11 Cal.4th 220; 45 Cal.Rptr.2d 207 (1995). Proposition 62 applies to the imposition of any taxes or the effecting of any tax increases after its enactment in 1986, but the requirements of Proposition 62 are 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 “– Articles XIIIC and XIIID of the California Constitution” above. In the opinion of the City Attorney, the provisions of Proposition 62 do not apply to charter cities, although this position is being challenged by various groups, and may be the subject of future litigation. If ultimately found valid and applicable to charter cities, however, Proposition 62 could affect the ability of the City to continue the imposition of certain taxes, such as Utility User’s Taxes, Sales Taxes and Transient Occupancy Taxes, and may further restrict the City’s ability to raise revenue. Recent Initiative Measures Affecting State and Local Governments At the State general election on November 2, 2010, three initiative measures that affect State and local fiscal affairs were approved by the voters. As described in more detail above, Proposition 22 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, special districts and redevelopment agencies, 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 25 reduces the legislative vote requirement for passage of the annual State budget and certain related trailer bills from two-thirds to a simple majority. The reduced vote requirement does not apply to measures that increase State tax revenues, which will continue to require a two-thirds vote. It also requires members of the legislature to permanently forfeit their pay and reimbursement for travel and living expenses for each day after June 15 that a budget is not passed. It does not change the ability of the Governor to eliminate or reduce any appropriation using a line-item veto. Proposition 26 imposes a two-thirds voter approval requirement for the imposition of certain fees and charges by the State. It would also impose a majority voter approval requirement on local governments with respect to fees and charges for general purposes, and a two-thirds voter approval requirement with respect to fees and charges for special purposes. The initiative, according to its supporters, is intended to prevent the circumvention of tax limitations imposed by the voters pursuant to Proposition 13, approved in 1978, and other measures through the use of non-tax fees and charges. Proposition 26 expressly excludes from its scope “a charge imposed for a specific government service or 9.B.h Packet Pg. 2512 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 79 product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable cost to the local government of providing the service or product to the payor.” The City believes that the initiative is not intended to and would not apply to fees for utility services charged by local governments such as the City; however, the City is unable to predict whether Proposition 26 will be interpreted by the courts to apply to the provision of utility services by local governments such as the City. Future Initiatives Article XIIIA, Article XIIIB, Article XIIIC and Article XIIID and Propositions 22, 25, 26 and 62 were each adopted as measures that qualified for the ballot pursuant to California’s constitutional initiative process. From time to time other initiative measures could be adopted, affecting the ability of the City to increase revenues and to increase appropriations. For example, ballot initiatives currently in process for qualification for consideration at future elections include a measure that would require a two-thirds vote of the electorate for all taxes, including local general and special taxes put on the ballot through an initiative and a measure to revoke Proposition 13 protections for commercial and industrial properties. Risk of Tax Audit In December 1999, as a part of a larger reorganization of the Internal Revenue Service (the “IRS”), the IRS commenced operation of its Tax Exempt and Government Entities Division (the “TE/GE Division”), as the successor to its Employee Plans and Exempt Organizations division. The TE/GE Division has a subdivision that is specifically devoted to tax-exempt bond compliance. The City has not been contacted by the IRS regarding the examination of any of its tax-exempt bond transactions. The City is audited from time to time and is currently undergoing an IRS audit relating to settlement payments for litigation and other disputes. TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP, bond counsel to the Authority (“Bond Counsel”), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix F hereto. To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each beneficial owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, 9.B.h Packet Pg. 2513 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 80 redemption, or payment on maturity) of such Bonds. Beneficial owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of beneficial owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public. Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a beneficial owner’s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such beneficial owner. Beneficial owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The Authority and the City have each made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters. Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Bonds may otherwise affect a beneficial owner’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the beneficial owner or the beneficial owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express no opinion. The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about 9.B.h Packet Pg. 2514 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 81 the future activities of the Authority or the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Authority and the City have each covenanted, however, to comply with the requirements of the Code. Bond Counsel’s engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Authority, the City, or the beneficial owners regarding the tax-exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Authority, the City and their appointed counsel, including the beneficial owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Authority or the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the Authority, the City or the beneficial owners to incur significant expense. CERTAIN LEGAL MATTERS The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix F hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel, will provide certain other legal services for the Authority and the City. Orrick, Herrington & Sutcliffe LLP will receive compensation from the City contingent upon the sale and issuance of the Bonds. Certain legal matters will be passed on for the Authority and the City by the City Attorney of the City. Certain legal matters will be passed upon for the Underwriters by their counsel, Stradling Yocca Carlson & Rauth, a Professional Corporation. ABSENCE OF MATERIAL LITIGATION There is no action, suit or proceeding known to be pending or threatened either restraining or enjoining the execution or delivery of the Bonds, the Lease Agreement or the Indenture, or in any way contesting or affecting the validity of the foregoing or any proceedings of the Authority or the City taken with respect to any of the foregoing. Various claims and suits have been and can be expected to be filed against the City in the normal course of business. The aggregate amount of the uninsured liabilities of the City which may result from all claims will not, in the opinion of the City, materially affect the City’s finances or impair its ability to make Base Rental Payments under the Lease Agreement. The City has determined that four subject matter claims involving the City are potentially relevant to the making of an informed investment decision: Eric Uller Settlements and Claims. As of March 2021, 93 individuals have sued or made claims against the City alleging abuse by a former City employee. That former employee, Eric Uller, was the subject of a 2018 indictment by the Los Angeles County District Attorney's Office charging five counts of sexual crimes against four minors. The criminal charges related to alleged incidents dating back to 1989 that were alleged to have occurred while Uller was volunteering and/or working as a City employee at the Santa Monica Police Activities League (“SM-PAL”). After pleading not guilty, Uller was released on bail; prior to a scheduled court appearance in November 2018, Uller was found dead in his residence of an apparent suicide. Following Uller's arrest and subsequent suicide, a total of 23 individuals filed suit against the City and SM-PAL alleging abuse by Uller between the late 1980s and early 2000s while he was associated 9.B.h Packet Pg. 2515 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 82 with SM-PAL and one individual (a young girl at the time of the alleged abuse) alleging abuse by another individual within this same time period while he allegedly was a probationer performing community service at SM-PAL. In early 2020, the City reached settlements, fully executed and effective April 7, 2020, with the 24 plaintiffs for a total of $42.6 million payable in two installments. As of October 10, 2020, the City has fully paid these settlements. After the original settlements, an additional 20 plaintiffs sued the City and SM-PAL alleging abuse by Uller between the 1980s and early 2000s while he was associated with SM-PAL. The City reached settlements with all 20 plaintiffs for a total of approximately $9.9 million payable in several installments through July 30, 2022. The City paid the first approximately $4.16 million installments of these settlements in late November and early December 2020. The City intends to pay the remaining installments of these settlements as follows: $2.4 million on or before July 30, 2021, $162,500 on or before October 13, 2021, and approximately $3.25 million on or before July 30, 2022. As of July [__], 2021, another 62 individuals have sued or made claims against the City and SM- PAL alleging abuse by Uller. The City Attorney is engaged in settlement discussions, not yet finalized and remaining subject to review and approval by the City Council, with several counsel representing these individuals. Individual settlement amounts are anticipated to fall within the range of the earlier settlement amounts described in the paragraphs above. The City cannot currently predict with certainty whether additional claimants over and above the 62 referenced above will come forward with new claims. As a result, the City cannot predict with certainty the potential remaining costs of litigation in this matter. The City has adopted new policies, standards, and procedures, effective as of March 9, 2020, designed to prevent abuse in City-managed and City-grant programs providing services to youth. Legal Challenge To Water Rates For Water Distributed Through Hydrants. The City is a defendant, with over 80 other California water providers, in litigation brought by a water ratepayer arguing that the inclusion in water rates of costs to fund public fire hydrant flows violates Proposition 218 because these fire flows are not property based water service, but a general government service to be funded by taxes. Proposition 218 provides that no property related fee or charge may be imposed or increased without majority approval by the property owners subject to the fee or charge or, at the option of the local agency, two-thirds voter approval by the electorate residing in the affected area, but fees or charges for water service, among other enumerated services, are not treated as “property related.” The City cannot currently estimate potential costs of this litigation or whether such costs may be allocable in their entirety to the City’s water enterprise fund. The California State Legislature has acted to address the potential negative impacts of this litigation. Senate Bill No. 1386, signed into law on September 28, 2020, provides that that water rates may recover the cost to provide fire flows (i.e., water service in the volumes and at the pressures needed to serve fire hydrants and sprinklers). Senate Bill No. 1386 provides that, “hydrants, as defined, are part of the system of public improvements included in the definition of “water” for purposes of the Proposition 218.” The bill would specify that the fees or charges for property-related water service imposed or increased, as specified, may include the costs to construct, maintain, repair, or replace hydrants as needed or consistent with fire codes and industry standards, and may include the cost of water distributed through hydrants. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Articles XIIIC and XIIID of the California Constitution.” Pico Neighborhood Association, et al. v. City of Santa Monica. The City’s at-large election system for its City Council is currently the subject of litigation pending before the California Supreme Court, which granted review on a limited question following a holding of the California Court of Appeals in favor of the City. The case originated when a Santa Monica resident and a Santa Monica neighborhood 9.B.h Packet Pg. 2516 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 83 organization filed a lawsuit alleging that the City’s at-large system for electing its City Council violated the California Voting Rights Act (“CVRA”) and the Equal Protection clause of the California Constitution. Plaintiffs alleged that the City should be compelled to change to a district-based election system for its City Council. The CVRA expands on the federal Voting Rights Act of 1965 and related case law, making it easier for minority groups in California to prove that their votes are being diluted in at-large elections. In July 2020, the California 2nd District Court of Appeal ruled in favor of the City, finding that Latinx voters, who account for 14 percent of the City’s electorate, lack the numbers to win an election in the 30 percent Latinx district ordered by the court. Plaintiffs sought review by the California Supreme Court. On October 21, 2020, the Supreme Court agreed to review a limited issue arising from the Court of Appeal ruling and depublished that ruling, while leaving intact the Court of Appeal’s holding in favor of the City on the Equal Protection claim. Briefing in the Supreme Court is expected to be completed in August 2021; no date has been set for oral argument. In the event that the Plaintiffs prevail on their CVRA claim, the City will be compelled to establish a new system of district elections and the City will be required to pay the plaintiffs’ costs and attorneys’ fees. Plaintiffs have sought approximately $22 million in attorneys’ fees and costs in motions filed in the trial court, hearing and ruling on which have been stayed pending final resolution of the plaintiffs’ appeal. The City cannot currently estimate the potential costs of this litigation. Curfew Lawsuit. In a complaint filed at the end of February 2021, the City and its Police Department, together with the cities of Los Angeles and Beverly Hills and their police departments, are defendants in a civil action alleging the imposition of illegal curfews by defendants, and related civil rights violations, assault and battery and infliction of emotional distress, arising out of the public protests that occurred during the late spring and summer of 2020. The complaint seeks compensatory damages, civil penalties, and attorneys’ fees. The action is brought by approximately 38 individuals. A second complaint with similar claims was filed in June 2021. Although the damages and costs are likely covered by insurance, the City cannot currently estimate the potential outcome or costs of litigation of these matters. UNDERWRITING The Bonds are being purchased by Jefferies LLC, on behalf of itself, UBS Financial Services Inc. and Samuel A. Ramirez & Co., Inc. (together, the “Underwriters”). Pursuant to a Bond Purchase Agreement between ______, as representative of the Underwriters, and the Authority (the “Purchase Agreement”), the Underwriters have agreed to purchase the Bonds for an aggregate purchase price of $_______, which represents the par amount of the Bonds, plus original issue premium of $_______, less an underwriters’ discount of $_______, subject to the conditions set forth in the Purchase Agreement. The Purchase Agreement provides that the Underwriters will purchase all of the Bonds, if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in such Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriters may offer and sell the Bonds to certain dealers, institutional investors and others at prices lower than the public offering prices stated on the inside cover page hereof and such public offering prices may be changed from time to time by the Underwriters. The Underwriters and their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage services. The Underwriters and their affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the Authority, or the City, for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, the Underwriters and their affiliates may make or hold a broad array of investments and 9.B.h Packet Pg. 2517 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 84 actively trade debt and equity securities (or related derivative securities, which may include credit default swaps) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Authority, the City, or the State, or any political subdivision thereof. The Underwriters and their affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments. Jefferies LLC, one of the Underwriters, has entered into a distribution agreement with 280 Securities LLC for the retail distribution of municipal securities. Pursuant to the agreement, if Jefferies LLC sells the Bonds to 280 Securities, it will share a portion of its selling concession compensation with 280 Securities. RATINGS Fitch Ratings (“Fitch”) and S&P Global Ratings (“S&P”), respectively, have assigned ratings of “___” and “___” to the Bonds. Such ratings reflect only the views of such rating agencies, and an explanation of the significance of the ratings may be obtained by contacting them at: Fitch Ratings, One State Street Plaza, New York, New York 10004; and Standard & Poor’s, 55 Water Street, New York, New York 10041. Such ratings are not a recommendation to buy, sell or hold the Bonds. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by such organizations, if in their judgment circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. MUNICIPAL ADVISOR Public Resources Advisory Group, Los Angeles, California, served as Municipal Advisor (the “Municipal Advisor”) to the Authority and the City with respect to the issuance of the Bonds. The Municipal Advisor has not been engaged, nor has it undertaken, to audit, authenticate or otherwise verify the information set forth in this Official Statement with respect to accuracy and completeness of disclosure of such information. The Municipal Advisor will receive compensation contingent upon the sale and issuance of the Bonds. CONTINUING DISCLOSURE The City has covenanted for the benefit of the Owners of the Bonds to provide annually certain financial information and operating data relating to the Bonds and the City (the “Annual Report”) and notice of certain events. For a complete listing of items of information which will be provided in the Annual Report and notices of enumerated events, see APPENDIX E – “FORM OF CONTINUING DISCLOSURE CERTIFICATE.” Such information is to be provided by the City not later than nine (9) months after the end of the City’s fiscal year (which currently would be April 1), commencing with the report for Fiscal Year 2020-21. Pursuant to the Continuing Disclosure Certificate, the Annual Report will be filed by the City through the Electronic Municipal Market Access (EMMA) website of the MSRB, or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to S.E.C. Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”). These covenants have been made in order to assist the Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). 9.B.h Packet Pg. 2518 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution 85 Within the last five years, with respect to the City of Santa Monica Wastewater Refunding Revenue Bonds, Series 2012A the City failed to timely file, and initially failed to file notice of such failure to timely file, information with respect to wastewater rate changes for Fiscal Year 2015-16, as required. Such failure to file was previously remedied in a corrective filing posted to EMMA. In addition, the City failed to tag all CUSIP numbers on one annual report with respect to the Authority’s Lease Revenue Refunding Bonds, Series 2015 (Civic Center Parking Project), made one corrective filing, and has recently made an additional corrective filing posted to EMMA to address such technical failure to tag all CUSIP numbers for such series of lease revenue refunding bonds. The City has adopted disclosure policies and procedures in an effort to formalize its disclosure practices and implement additional procedures to timely file complete annual reports and event notices in the future. MISCELLANEOUS References are made herein to certain documents and reports which are brief summaries thereof which do not purport to be complete or definitive and reference is made to such documents and reports for full and complete statements of the contents thereof. Copies of the Indenture, the Lease Agreement and other documents are available, upon request, and upon payment to the City of a charge for copying, mailing and handling, from the City Clerk at the City of Santa Monica, 1685 Main Street, Santa Monica, California 90401. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority or the City and the purchasers or Owners of any of the Bonds. The execution and delivery of this Official Statement have been duly authorized by the Authority and the City. SANTA MONICA PUBLIC FINANCING AUTHORITY By: Treasurer CITY OF SANTA MONICA By: [Interim City Manager] 9.B.h Packet Pg. 2519 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution A-1 4155-7018-4495.3 APPENDIX A GENERAL DEMOGRAPHIC INFORMATION REGARDING THE CITY OF SANTA MONICA Information contained in this Appendix A is presented as general background data. The Bonds are payable solely from Base Rental Payments to be made by the City of Santa Monica. The County of Los Angeles and the State of California have no obligation to make any payments with respect to the Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein for a description of the security for the Bonds. Further, the information in this Appendix A is obtained from publicly available sources which do not yet provide current information in many cases to reflect the adverse impact of the Pandemic, particularly with respect to employment and taxable transactions. See “CITY OF SANTA MONICA FINANCES” and “RISK FACTORS – Infectious Disease Outbreak – COVID-19” in this Official Statement for additional information. General The City is situated on the western side of Los Angeles County, bordered by the City of Los Angeles on three sides and by the Pacific Ocean to the west. The City encompasses an area slightly greater than eight square miles and, as of January 1, 2021, had an estimated residential population of 92,968 making it the 18th largest of the 88 cities in Los Angeles County. The Santa Monica Freeway passes through the approximate center of the City on an east-west course and provides direct connection with downtown Los Angeles, approximately 16 miles to the east. About six miles southeast of the City is Los Angeles International Airport, which is easily accessible via the San Diego Freeway, which runs about one mile beyond the eastern border of Santa Monica on a north-south course. Government and Administration The City was incorporated in 1886 and adopted its City Charter in 1945. In 1947 a council-manager form of government was established following a vote of the City’s residents and approval by the California Legislature. The City Council consists of seven members with overlapping terms of four years. Elections are held every two years, at which time three City Council members or four City Council members are elected. After each election, City Council members select one of their group to act as Mayor, who then presides over City Council meetings. The City Council appoints a City Manager, City Attorney and City Clerk. The City Manager is responsible for supervising day-to-day operations of the City and for carrying out policies set by the City Council. The election of City Council members is currently a matter before the California Supreme Court, after a holding of the California Court of Appeals in favor of the City was appealed to the California Supreme Court. See “CITY OF SANTA MONICA – City Council Elections” in this Official Statement. 9.B.h Packet Pg. 2520 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution A-2 4155-7018-4495.3 Population The following table sets forth population data for the City. City of Santa Monica Population Year Population 1970 88,289 1980 88,100 1990 87,000 2000 84,084 2010 89,494 2011 90,350 2012 90,702 2013 91,757 2014 92,483 2015 93,199 2016 93,395 2017 93,763 2018 93,650 2019 93,309 2020 92,995 2021 92,968 Source: 1970-2000 data from U.S. Census Bureau; 2010-2021 data from State of California Department of Finance. City Enterprise Operations The City operates an airport, bus line, cemetery and pier. The City also provides water, refuse collection, recycling, wastewater and stormwater services. A portion of the revenues from these enterprises is annually paid to the City’s General Fund for various administrative support services provided to the enterprises. The City operates the Santa Monica Airport is a 227-acre general aviation airport, located at the southeastern edge of the City. On January 28, 2017, the City reached an agreement with the Federal Aviation Administration that, among other things, allows the City to close Santa Monica Airport to all aeronautical uses after December 31, 2028. In Fiscal Year 2019-20, the City’s 189 fixed route buses carried about 10.29 million revenue passengers. Woodlawn Cemetery was purchased by the City in 1897 and the mausoleum was purchased in 1972. It is operated as an enterprise competitive with comparable private facilities. It is located in the south-central portion of the City. The Santa Monica Pier is a local historical landmark built in 1909. It currently contains an amusement park, carousel, games, aquarium, restaurants, entertainment venues, and retail. Santa Monica Amusements, a privately-owned enterprise, operates Pacific Park, with its Ferris wheel, roller coaster, famous vintage wooden carousel, games and a food court. The Santa Monica Pier Aquarium has been operated by Heal the Bay since June 2003. The Aquarium attracted nearly 100,000 visitors per year prior 9.B.h Packet Pg. 2521 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution A-3 4155-7018-4495.3 to the impacts of the Pandemic. The Pier was closed to the public at various points in the Pandemic. Initially, when the Pier began to reopen in Fiscal Year 2020-21, many restrictions were in place, including closures of the amusement rides at Pacific Park, the Pier Carousel, the Aquarium and the Arcade, as well as the Pier parking lot. The Pier and its amusements are now open. As of June 15, 2021, the State phased out the vast majority of executive actions put in place since March 2020 as part of the Pandemic response, leaving a subset of provisions that facilitate the ongoing recovery. See “CITY OF SANTA MONICA FINANCES – Management Discussion” and “RISK FACTORS – Infectious Disease Outbreak – COVID-19.” The City’s Water Resources Division provides water and wastewater services to over 18,000 accounts through two self-supporting enterprise funds. The water fund supports the production and distribution of high-quality drinking water for the City. Approximately 65-75% of the City’s water supply is provided through local groundwater from the Santa Monica Groundwater Basin, with well fields in the Charnock, Olympic, and Arcadia sub-basins. The City’s local groundwater supply is supplemented by imported water purchased from The Metropolitan Water District of Southern California for the remainder 25-35%. The City’s water treatment and distribution system includes the 5 million gallon per day (mgd) Charnock Treatment Plant, 10 mgd Arcadia Water Treatment Plant, four water storage reservoirs that total approximately 40 million gallons, and over 200 miles of water mains. The Water Resources Division is currently implementing various water supply projects designed to achieve water self-sufficiency by 2023. The wastewater enterprise fund supports operation of the City’s wastewater collection system. The wastewater is collected and sent to the City of Los Angeles’ Hyperion Treatment Plant for treatment where the City is a contracting agency with the City of Los Angeles. The Water Resources Division also operates the Santa Monica Urban Runoff Recycling Facility, a joint project with the City of Los Angeles, that treats up to 500,000 gallons per day of dry weather urban runoff (from excessive irrigation, spills, construction sites, pool draining, car washing, the washing down of paved areas, and some wet weather runoff) to produce treated water for non-potable uses (e.g., landscape irrigation and dual-plumbed systems (buildings plumbed to accept recycled water for the flushing of toilets)). To increase the City’s recycled water supply, the Water Resources Division is implementing the Sustainable Water Infrastructure Project (the SWIP as described in greater detail below) that will leverage municipal wastewater and stormwater to produce an additional 1,100 acre-feet per year of advanced treated recycled water to offset potable water demand and increase recycled water use in the City, including using the advanced treated recycled water to recharge local groundwater basins. During the State’s drought years, the City implemented several conservation programs including rebates for water-wise landscaping and harvesting rainwater. One of the City’s water/wastewater conservation programs is a program of retrofitting bathrooms in the City with ultra-low flow toilets and low flow showerheads. This program significantly reduces the City’s wastewater treatment and disposal costs by eliminating the need for the City to acquire additional capacity in the local Hyperion Sewage Treatment Plant of the City of Los Angeles. Industry and Employment The Santa Monica business community is comprised of a diverse collection of businesses ranging from traditional retailers to hi-tech post-production and internet firms. Tourism, health industries, and retail augment the large business service sector. Mainstay firms like Providence Saint John’s Health Center and UCLA Santa Monica Medical Center, Loews and Marriott Hotels, and new car dealerships occupy a more traditional niche as large institutional property owners, sales tax producers, and employers. Major entertainment and multimedia-software industry firms like Snap Inc., Universal Music Group, 9.B.h Packet Pg. 2522 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution A-4 4155-7018-4495.3 Apple, Hulu and Lionsgate Entertainment are among over 200 hi-tech, multimedia, and entertainment firms of all sizes that maintain a presence in the City. The City invests significant governmental resources in its pedestrian-oriented commercial districts, including such nationally-recognized venues as the Third Street Promenade, Santa Monica Place Mall, which reopened in 2011 after a $265 million renovation facelift and now includes such luxury retailers as Tiffany, Nordstrom, Louis Vuitton and Coach, along with the Santa Monica Pier, Santa Monica’s world-renowned visitor destination. The City provides support for the Santa Monica Travel + Tourism Center and a variety of other services, including Downtown Ambassadors to assist with parking, maintenance, parks, and safety. A designated Quality of Life Team deals primarily with long-standing issues that impact the downtown, allowing hospitality and maintenance ambassadors to focus on providing a great experience for our residents, employees and visitors. Recently completed City projects include the Colorado Avenue Esplanade project, the California Incline Bridge Replacement and Pedestrian Overpass project and Ishihara Park. This investment has paid off in a healthy retail and restaurant sector and an active tourism industry which provides significant sales tax revenues to the City. However, the Pandemic has had significant impacts, particularly in certain sectors. The three largest business types producing taxable goods (exclusive of allocations from state and local pools) in the City for calendar year 2020 are: New Motor Vehicle Dealers, 18% of the City’s sales tax revenue; Electronics/Appliance Stores producing 11% of the City’s sales tax revenue; and Auto Leasing producing approximately 9% of City Sales Tax revenue. Sales Tax revenues from Casual Dining, traditionally one of the City’s largest sales tax producing categories, fell approximately 50% from 2019 as a direct result of the Pandemic. When grouped into major business groups, for calendar year 2020 (again excluding allocations from state and local pools), Autos and Transportation has provided over 32% of the City’s Sales Tax revenues. General Consumer Goods has provided 26% of Sales Tax revenues, and Restaurants and Hotels has provided approximately 18% of the City’s sales tax revenue. The City’s focus on “quality of life” issues has created a positive environment on the west side of Los Angeles in which to live, work, and visit. The resulting environment has attracted a stable, dynamic business base and a strong local economy. 9.B.h Packet Pg. 2523 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution A-5 4155-7018-4495.3 The major employers within the City boundaries and the number of persons employed by each organization are shown below: City of Santa Monica Major Employers As of June 30, 2020 Company Number of Employees UCLA Medical Center, Santa Monica 2,879 City of Santa Monica 2,298(1) Santa Monica-Malibu Unified School District 1,962 Santa Monica College 1,800 SNAP Inc 1,460 Providence Saint John’s Health Center 1,400 Activision Publishing (Includes Beachhead Studios, Treyarch Corp) 1,231 RAND Corporation 891 Hulu 882 Lionsgate Entertainment Corp 819 Total jobs provided by principal employers 15,622 Average Total jobs in Santa Monica 90,567 Principal Employers As Percent Of Total Jobs 17.25% (1) Currently 1,878, as of November 7, 2020. Source: City of Santa Monica Economic Development Division, Housing and Economic Development Department. The following chart provides a comparison, for the years indicated, of the average annual unemployment rates in the City of Santa Monica, the City of Los Angeles, the County of Los Angeles, the State of California and the United States. Annual Average Unemployment Rates For Years 2010 through 2020 Year City of Santa Monica City of Los Angeles County of Los Angeles State of California United States 2010 10.8% 13.3% 12.6% 12.5% 9.6% 2011 10.5 12.9 12.2 11.9 8.9 2012 9.4 11.6 11.0 10.5 8.1 2013 8.3 10.3 9.8 9.0 7.4 2014 7.0 8.7 8.2 7.6 6.2 2015 5.7 7.1 6.7 6.3 5.3 2016 5.1 5.3 5.3 5.5 4.9 2017 4.5 4.8 4.8 4.8 4.4 2018 4.4 4.7 4.7 4.3 3.9 2019 4.4 4.6 4.6 4.2 3.7 2020 10.5 12.9 12.8 10.1 8.1 Source: State of California, Employment Development Department, Labor Market Information Division and U.S. Department of Labor, Bureau of Labor Statistics. 9.B.h Packet Pg. 2524 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution A-6 4155-7018-4495.3 The following table summarizes employment data for the County of Los Angeles for the years 2016 through 2020. Los Angeles County Annual Average Industry Employment and Labor Force 2016 2017 2018 2019 2020 Civilian Labor Force 5,018,900 5,088,900 5,094,300 5,122,800 4,921,500 Civilian Employment 4,751,200 4,843,700 4,857,300 4,888,600 4,291,700 Civilian Unemployment 267,700 245,200 237,000 234,300 629,800 Civilian Unemployment Rate 5.3% 4.8% 4.7% 4.6% 12.8% Total Farm 5,300 5,700 4,600 4,400 4,400 Total Nonfarm 4,396,100 4,449,200 4,516,100 4,561,500 4,146,700 Total Private 3,819,400 3,863,100 3,925,500 3,974,600 3,581,000 Goods Producing 498,500 491,100 490,800 492,500 460,900 Mining and Logging 2,400 2,000 1,900 1,900 1,700 Construction 134,000 138,700 146,300 149,800 145,500 Manufacturing 362,000 350,400 342,600 340,700 313,800 Service Providing 3,897,600 3,958,100 4,025,300 4,069,000 3,685,800 Trade, Transportation and Utilities 835,600 845,700 851,600 851,400 787,300 Wholesale Trade 222,100 221,500 223,200 220,500 200,100 Retail Trade 424,600 426,100 424,800 417,900 378,600 Transportation, Warehousing and Utilities 188,900 198,200 203,600 213,000 208,600 Information 229,400 214,900 216,400 217,900 185,800 Financial Activities 219,800 221,600 223,200 223,500 211,500 Professional and Business Services 603,000 612,100 630,400 643,900 593,300 Educational and Health Services 769,900 797,400 817,900 839,900 820,900 Leisure and Hospitality 510,000 524,600 536,500 547,200 394,400 Other Services 153,300 155,700 158,800 158,400 127,000 Government 576,700 586,100 590,600 586,900 565,600 Total, All Industries 4,401,400 4,454,900 4,520,700 4,565,800 4,151,000 Note: Total may not sum due to rounding. Source: State of California, Employment Development Department, March 2020 Benchmark. 9.B.h Packet Pg. 2525 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution A-7 4155-7018-4495.3 Per Capita Income The following table summarizes per capita personal income for the Los Angeles-Long Beach- Anaheim Statistical Area, California and the United States for the years 2010 through 2019. Year Los Angeles-Long Beach-Anaheim Statistical Area California United States 2010 $45,050 $43,636 $40,547 2011 47,662 46,175 42,739 2012 50,912 48,813 44,605 2013 50,487 49,303 44,860 2014 53,450 52,363 47,071 2015 56,945 55,833 49,019 2016 58,945 58,048 50,015 2017 61,159 60,549 52,118 2018 63,886 63,720 54,606 2019 66,684 66,619 56,490 Source: U.S. Department of Commerce, Bureau of Economic Analysis. Commercial Activity The following table summarizes the annual volume of taxable transactions within the City for calendar years shown. City of Santa Monica Taxable Transactions Calendar Years 2015 through 2020 (in Thousands of Dollars) Year Retail and Food Services Total All Outlets 2015 $2,452,622 $3,236,937 2016 2,457,171 3,237,178 2017 2,391,704 3,225,625 2018 2,418,485 3,340,563 2019 2,347,397 3,383,652 2020 1,579,496 2,455,334 Source: California Department of Tax and Fee Administration. 9.B.h Packet Pg. 2526 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution A-8 4155-7018-4495.3 A six-year history of taxable transactions by type of business for the City are shown in the tables below. City of Santa Monica Taxable Transactions by Type of Business (in Thousands of Dollars) 2015-2017 Retail and Food Services 2015 2016 2017 Motor Vehicle and Parts Dealers $ 538,533 $ 520,199 $ 502,657 Home Furnishings and Appliance Stores 102,879 93,229 89,052 Building Material and Garden Equipment and Supplies Dealers 72,435 68,558 70,899 Food and Beverage Stores 120,335 119,903 120,712 Gasoline Stations 104,087 88,396 96,230 Clothing and Clothing Accessories Stores 436,328 444,031 396,455 General Merchandise Stores 46,095 40,384 40,399 Food Services and Drinking Places 637,231 680,660 692,408 Other Retail Group 394,699 401,811 382,892 Total Retail and Food Services 2,452,622 2,457,171 2,391,704 All Other Outlets 784,315 780,007 833,921 Total All Outlets 3,236,937 3,237,178 3,225,625 Source: California Department of Tax and Fee Administration. City of Santa Monica Taxable Transactions by Type of Business (in Thousands of Dollars) 2018-2020 Retail and Food Services 2018 2019 2020 Motor Vehicle and Parts Dealers $ 543,859 $ 528,251 $ 465,423 Home Furnishings and Appliance Stores 73,162 71,752 48,962 Building Material and Garden Equipment and Supplies Dealers 71,629 74,955 75,305 Food and Beverage Stores 126,835 135,131 135,139 Gasoline Stations 102,149 96,008 43,993 Clothing and Clothing Accessories Stores 379,474 339,541 159,602 General Merchandise Stores 31,547 36,248 22,412 Food Services and Drinking Places 707,379 716,234 361,041 Other Retail Group 382,452 349,278 267,619 Total Retail and Food Services 2,418,485 2,347,397 1,579,496 All Other Outlets 922,078 1,036,255 875,838 Total All Outlets 3,340,563 3,383,652 2,455,334 Source: California Department of Tax and Fee Administration. 9.B.h Packet Pg. 2527 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution A-9 4155-7018-4495.3 Education Public instruction in the City is provided by the Santa Monica-Malibu Unified School District with 10 elementary schools (three of which are in the City of Malibu), three middle schools (one of which is in the City of Malibu), two high schools (one of which is in the City of Malibu), one continuation high school, one alternative school, an adult education program and child care and development centers. The City also has one community college, Santa Monica College, which includes technical and vocational schools, including the Academy of Entertainment and Technology. Culture and Recreation Each year, Southern California’s natural and commercial attractions bring millions of visitors to the region. Good weather, miles of Pacific coastline, and picturesque mountain ranges combine with world class destinations such as the Getty Center, Disneyland, Dodger Stadium, the Los Angeles Music Center, the Rose Bowl, Knott’s Berry Farm, Universal Studios Hollywood, and the Long Beach Aquarium to make the Los Angeles basin one of the most traveled to places in the world. Santa Monica’s strong recreational identity is historically tied to the beachside community’s extraordinary natural setting and mild climate. Residents walk, bike, skate, participate in cultural events, experience nature, and engage in a wide range of active sports throughout the year. For the past twelve consecutive years the City has hosted the finish line for the Los Angeles Marathon, allowing thousands of participants to be cheered on by residents and visitors. Santa Monica residents and visitors see the entire City as their park system – where users enjoy the community’s renowned public gathering places including the Third Street Promenade and Santa Monica Pier, green streets, 245 acres of sandy beach and 27 parks to pursue their recreational activities of choice. In 2011, the City began implementation of a 5-year and 20-year Bike Action Plan with a goal of increasing bicycle transportation to a 14-35% share of transportations modes by 2030. The 2011 Bike Action plan provided a 5-year and 20-year road map for developing Santa Monica’s bicycle network. At that time protected bicycle lanes were not yet well-known in the United States. In October 2020, the Bike Action Plan was amended to build on the 20-year vision by updating corridors to protected bikeways citywide in the next five years, compete for outside grant funding, and to continue progress towards the community’s climate, safety, and mobility goals, and build resilience in these uncertain economic times. The City continues to have a profound effect on the development of art and culture in this country. More visual and performing artists, arts presenters, designers, architects, and film and music producers per capita can be found in the City than in any other city in the State. Santa Monica has over 70 galleries and artist studios, two major museums (including the California Heritage Museum and the Museum of Flying), over a dozen theaters and performance spaces presenting a wide range of music, dance and performance art, photography, film, interactive media and award-winning architecture. Capital Improvements Consistent with its focus on community and infrastructure investment, the City has recently completed or is in the process of implementing a number of projects. The limited number of new projects adopted in the Fiscal Year 2020-21 CIP Budget represent critical infrastructure needs, projects that cannot be deferred without compromising essential operations or public health and safety, and projects that generate revenue. City Services Building Project. The City Services Building Project constructed 50,200 square foot office building annexed to historic City Hall to house City staff and provide a one-stop hub to better 9.B.h Packet Pg. 2528 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution A-10 4155-7018-4495.3 serve the community. This project was built to obtain a full Living Building Certification. Due to this high environmental standard associated with the design of the City Services Building, lease revenue bonds issued in 2017 to finance the project carry the designation of “Green Bonds” and funded the entire project budget. Debt service costs will be offset by lease savings resulting from the elimination of various non-City-owned office spaces, with those uses now housed in the City Services Building. Fire Station 1 Project. The Fire Station 1 Project constructed a new 25,000 square foot facility at 1337-45 7th Street to replace the existing 60-year station at a different location. Additionally, the Fire Training Facility project will convert Fire Station 4 to a functional set of classrooms and offices for training purposes, creating a new training drill yard, environmental burn building, and hydrant(s) structures. Lease revenue bonds were issued in Spring 2018 for this project. City Yards Modernization Project. The City Yards Modernization Project is a phased major renovation of the existing 14.7-acre facility located at 2500 Michigan Avenue. The project will retrofit and address long standing functional and space needs of the City’s corporation yards. The current facility accommodates more staff than originally intended when it was built in the 1950s, and the buildings are beyond their useful life. The City Yards houses a majority of Public Works’ field operations equipment and staff and site uses include resource recycling and recovery, water and wastewater operations, fleet maintenance, shop buildings and fire training space. Phases 1 and 2 of the project design and construction costs were funded using a combination of the City’s General Fund and enterprise fund resources. Construction of these initial two phases is 41% complete and scheduled to be completed in early 2023. Sustainable Water Infrastructure Project (SWIP). The Sustainable Water Infrastructure Project improves drought resiliency, increases water supply, and reduces stormwater discharges into the Santa Monica Bay. The project consists of three elements. Element 1 is a modular reverse osmosis (RO) unit at the Santa Monica Urban Runoff Recycling Facility (SMURRF) and new solar panels that will help offset the energy required for the new RO. Element 2 is a below grade stormwater and sewer treatment facility with 1 million gallons per day (MGD) capacity. Element 3 is a new stormwater harvesting tank with 1.5 million gallon (MG) capacity. The project is funded using the City’s Wastewater, Stormwater, and Clean Beaches and Ocean Parcel Tax Funds with financing from Clean Water State Revolving Fund loan. The project was awarded Los Angeles County Measure W and State Water Board Prop 1 Stormwater grants. All elements are being implemented in one phase. Design of all elements is 100% complete and construction is approximately 50% complete. The project is scheduled to be completed in late 2022. North Beach Trail Improvements Project. The North Beach Trail Improvements Project includes improvements to Ocean Front Walk north of the Pier and the bike path north from Bay Street to the northern City limit to solve the circulation conflicts on the bike path. The project renovated Ocean Front Walk by installing new paving, architectural concrete seat walls, and lighting. It also widened approximately two miles of the Marvin K. Braude Bike Trail, as outlined in the City’s Bike Action Plan, from 14 feet to 30 feet to accommodate a 16-foot-wide bike path and a 12-foot-wide pedestrian path that provides safer passage for the high volume of cyclists and pedestrians using the trail. Construction on the project was substantially completed in early 2021 on time and on budget. Early Childhood Lab School. The Early Childhood Lab School, led by Santa Monica College in partnership with the City, will design and construct an early childhood education center that will serve as a 'lab school' for Santa Monica College students in the early childhood education department and will provide infant, toddler, pre-school services for approximately 110 children. Construction of the project was completed in spring of 2021. 9.B.h Packet Pg. 2529 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution A-11 4155-7018-4495.3 Bus Replacement Project. The Bus Replacement Project includes the purchase of 18 Battery-Electric 40-foot Gillig buses and bus chargers. The City Council awarded a contract to Gillig in October 2019. The first battery-electric buses from this order is scheduled to be delivered in April 2021 with the remaining vehicles to be delivered between September 2021 through November 2021. The bus chargers will be delivered in early summer. Historic Belmar Park Project. The Historic Belmar Park Project constructed a new universally accessible sports field complex originally incorporated into the Civic Center Specific Plan in 2005 and prioritized for design and construction by the City Council in 2017. The design accommodates children and adults of all abilities, including Santa Monica High School students from the campus across the street. The project is built on a 3.5-acre site, which was previously the location of the Civic Center Parking Lot, located at 1840 4th Street and adjacent to the Santa Monica Civic Auditorium. Construction was completed in the summer of 2020 and the site is now available for public use. Arcadia Water Treatment Plant Expansion and Production Efficiency Enhancement. The Arcadia Water Treatment Plant (WTP) would be upgraded to enhance its production efficiency and expanded to treat up to 13 million gallons per day of groundwater. The Arcadia WTP currently operates at approximately 80% efficiency and the existing reverse osmosis process will be upgraded to enhance its recovery to 90% or greater. In addition, the overall plant raw groundwater treatment capacity will be expanded to accommodate additional groundwater from the Olympic Well Field once it is restored to full production capacity. Capacity expansion of the Arcadia WTP will include improvements to the greensand filters, wash water recovery system, chemical storage and feed facilities, addition of a new decarbonation tower, and upgrades to site electrical equipment. Construction is scheduled to begin in September of 2021 and scheduled to be completed in late 2023. Utilities Southern California Gas Company and Southern California Edison Company (“SCE”) provide gas and electricity service within the City, respectively. Frontier California supplies local telecommunication service. Over 100 telecommunications companies provide long-distance and wireless service. The City provides water and wastewater service. Public Transportation The City has one of the most extensive transit networks among cities of its size. The City and the Los Angeles County Metropolitan Transportation Authority’s (“LA Metro”) have made significant investments in the Expo Light Rail Line, and also on facilities and services designed to increase access to future station areas for people walking, biking or busing. The Expo Light Rail Line is open and offering convenient service between downtown Los Angeles and downtown Santa Monica and destinations in between. The City’s Big Blue Bus continues its operations in the City, offering revised routes and enhanced features in recent years. Increasing use of the Light Rail Line along the bus corridors and increased automobile ownership and bicycle use has generally resulted in declining ridership. 9.B.h Packet Pg. 2530 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution B-1 4155-7018-4495.3 APPENDIX B CITY OF SANTA MONICA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020 9.B.h Packet Pg. 2531 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution C-1 4155-7018-4495.3 APPENDIX C DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS 9.B.h Packet Pg. 2532 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution D-1 4155-7018-4495.3 APPENDIX D BOOK-ENTRY-ONLY SYSTEM The description that follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Bonds, payment of principal of and interest on Bonds to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Bonds, and other Bonds-related transactions by and between DTC, Participants and Beneficial Owners, is based on information furnished by DTC which the City and the Authority each believes to be reliable, but the City and the Authority take no responsibility for the completeness or accuracy thereof. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds will be authenticated and 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 bond certificate for each maturity of the Bonds will be authenticated and issued for the Bonds in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information on such website is not incorporated herein by such reference or otherwise. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“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 Bonds 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 Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. 9.B.h Packet Pg. 2533 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution D-2 4155-7018-4495.3 To facilitate subsequent transfers, all Bonds 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 Bonds 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 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as prepayments, tenders, defaults, and proposed amendments to the Indenture and Lease Agreement. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds 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. Prepayment notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Prepayment proceeds, distributions, and dividend payments on the Bonds 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 City or the Trustee, 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 Trustee, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of prepayment proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered to DTC. 9.B.h Packet Pg. 2534 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution E-1 4155-7018-4495.3 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE THIS CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”), dated as of August 1, 2021, is executed and delivered by the City of Santa Monica (the “City”). WHEREAS, pursuant to the Indenture, dated as of August 1, 2021 (the “Indenture”), by and among the Santa Monica Public Financing Authority (the “Authority”), the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), the Authority has issued $__________ aggregate principal amount of its Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 (the “Bonds”); WHEREAS, the Bonds are payable from the base rental payments to be made by the City under the Lease Agreement, dated as of August 1, 2021, by and between the City, as lessee, and the Authority, as lessor; and WHEREAS, this Disclosure Certificate is being executed and delivered by the City for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the underwriters of the Bonds in complying with Securities and Exchange Commission Rule 15c2-12(b)(5); NOW, THEREFORE, the City covenants as follows: Section 1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Disclosure Certificate have the meanings herein specified. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. “Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 2 and 3 hereof. “Annual Report Date” means the date in each year that is nine months after the end of the City’s fiscal year, which date, as of the date of this Disclosure Certificate, is April 1. “Dissemination Agent” means the City, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. “Financial Obligation” means (a) a debt obligation of the City, (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation of the City, or (c) a guarantee of (i) a debt obligation of the City, or (ii) a derivative instrument described in clause (b), above; provided, however, that the term “Financial Obligation” shall not include “municipal securities” (as such term is defined in the Securities Exchange Act of 1934, as amended) as to which a “final official statement” (as such term is defined in the Rule) has been provided to the MSRB consistent with the Rule. “Listed Events” means any of the events listed in Section 4(a) or (b) hereof. “MSRB” means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. 9.B.h Packet Pg. 2535 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution E-2 4155-7018-4495.3 “Official Statement” means the Official Statement, dated ______ __, 2021 (including all exhibits or appendices thereto), relating to the offering and sale of Bonds. “Participating Underwriters” means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 2. Provision of Annual Reports. (a) The City shall, or shall cause the Dissemination Agent to provide to the MSRB an Annual Report which is consistent with the requirements of Section 3 hereof, not later than the Annual Report Date, commencing with the report for the 2020-21 fiscal year. The Annual Report may include by reference other information as provided in Section 3 hereof; provided, however, that the audited financial statements of the City may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the City’s fiscal year changes, it shall, or it shall instruct the Dissemination Agent to, give notice of such change in a filing with the MSRB. (b) During any period in which the City is the Dissemination Agent, the City shall file each Annual Report with the MSRB not later than the Annual Report Date for such Annual Report. (c) During any period in which the City is not the Dissemination Agent (i) the City shall, not later than 15 Business Days prior to each Annual Report Date (a), provide to the Dissemination Agent the Annual Report to be filed not later than such Annual Report Date, (ii) the Dissemination Agent shall (A) not later than such Annual Report Date, file such Annual Report received by it with the MSRB, as provided herein, and (B) file a report with the City certifying that such Annual Report has been filed with the MSRB pursuant to this Disclosure Certificate and stating the date such Annual Report was so filed. (d) If the City is unable to file, or cause the Dissemination Agent to file, an Annual Report with the MSRB by the Annual Report Date for such Annual Report, the City shall, in a timely manner, file or cause to be filed with the MSRB, a notice in substantially the form attached as Exhibit A. Section 3. Content of Annual Reports. The City’s Annual Report shall contain or include by reference the following: (a) Audited financial statements of the City for the preceding fiscal year, prepared in accordance with the generally accepted auditing standards for municipalities in the State of California. If the City’s audited financial statements are not available by the time the Annual Report is required to be provided to the MSRB pursuant to Section 2(a) hereof, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be provided to the MSRB in the same manner as the Annual Report when such audited financial statements become available. (b) To the extent not included in the audited financial statements of the City, the Annual Report shall include the following: (i) The principal amount of Bonds Outstanding as of the January 2 next preceding the Annual Report Date; and (c) To the extent not included in the audited financial statements of the City, the Annual Report shall include the following items, providing financial and operating data (as of the end of the 9.B.h Packet Pg. 2536 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution E-3 4155-7018-4495.3 preceding fiscal year) substantially similar to that provided in the corresponding tables and charts in the Official Statement: (i) City Principal Property Taxpayers; (ii) City Assessed Value of Taxable Property; (iii) City Property Tax Rates, Secured Levies, and Collections and Delinquencies; (iv) City Tax Revenues by Source; (v) City General Fund Balance Sheet; (vi) City General Fund Statement of Revenues and Expenditures; (vii) City Statement of Overlapping Debt; (viii) Information in the Official Statement under the captions “CITY OF SANTA MONICA FINANCES – Retirement System” and “– Other Postemployment Benefits”; and (ix) Summary of City’s current fiscal year’s investments most recently completed and accepted by City Council, including types and amounts of investments, return on investments, average yield of investments and market value of investments. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities that have been made available to the public on the MSRB website. The City shall clearly identify each such other document so included by reference. Section 4. Reporting of Listed Events. (a) Pursuant to the provisions of this Section, 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 later than ten business days after the occurrence of the event: (i) principal and interest payment delinquencies; (ii) unscheduled draws on debt service reserves reflecting financial difficulties; (iii) unscheduled draws on credit enhancements reflecting financial difficulties; (iv) substitution of credit or liquidity providers or their failure to perform; (v) adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB); (vi) tender offers; (vii) defeasances; (viii) rating changes; (ix) bankruptcy, insolvency, receivership or similar event of the City; and 9.B.h Packet Pg. 2537 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution E-4 4155-7018-4495.3 (x) Default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation, any of which reflect financial difficulties. For purposes of the event identified in paragraph (ix), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) Pursuant to the provisions of this Section, 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 later than ten business days after the occurrence of the event: (i) unless described in paragraph (v) of subsection (a) of this Section, other material notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; (ii) modifications to rights of Owners; (iii) optional, unscheduled or contingent bond calls; (iv) release, substitution or sale of property securing repayment of the Bonds; (v) non-payment related defaults; (vi) the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; (vii) appointment of a successor or additional Trustee or the change of name of a Trustee; and (viii) Incurrence of a Financial Obligation, or agreement to covenants, events of default, remedies, priority rights or other similar terms of a Financial Obligation, any of which affect holders of the Bonds. (c) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (b) of this Section, the City shall determine if such event would be material under applicable Federal securities laws. (d) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (a) of this Section, or determines that knowledge of a Listed Event described in subsection (b) of this Section would be material under applicable Federal securities laws, the City shall file, or shall cause the Dissemination Agent to file, within ten business days of such occurrence, a notice of such 9.B.h Packet Pg. 2538 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution E-5 4155-7018-4495.3 occurrence with the MSRB. Notwithstanding the foregoing, notice of Listed Events described in paragraph (iii) of subsection (b) of this Section need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Indenture. Section 5. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB. Section 6. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give, or, if the City is not the Dissemination Agent, cause the Dissemination Agent to give, notice of such termination in a filing with the MSRB. Section 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the City. If at any time there is not any other designated Dissemination Agent, the City shall be the Dissemination Agent. Section 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 the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Section 2(a), Section 3 or Section 4(a) or (b) hereof, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by the Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the City shall describe such amendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements (i) notice of such change shall be given in a filing with the MSRB, and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. 9.B.h Packet Pg. 2539 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution E-6 4155-7018-4495.3 Section 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 Annual Report or notice required to be filed pursuant to this Disclosure Certificate, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice required to be filed pursuant to this Disclosure Certificate. Section 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Owner 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; provided, that any such action may be instituted only in Superior Court of the State of California in and for the County of Los Angeles or in U.S. City Court in or nearest to the County of Los Angeles. A default under this Disclosure Certificate shall not be deemed an event of default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate. The City covenants that, if a Dissemination Agent other than the City has been appointed pursuant to Section 7 hereof, the City will indemnify and save such Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to such Dissemination Agent’s negligence or willful misconduct. The obligations of the City under this Section shall survive resignation or removal of such Dissemination Agent and payment of the Bonds. Section 12. Electronic Signature. The City acknowledges that the transaction consisting of this Disclosure Certificate may be conducted by electronic means. The City agrees, and acknowledges that it is its intent, that by signing this Disclosure Certificate using an electronic signature, it is signing, adopting, and accepting this Disclosure Certificate and that signing this Disclosure Certificate using an electronic signature is the legal equivalent of having placed its handwritten signature on this Disclosure Certificate on paper. The City acknowledges that it is being provided with an electronic or paper copy of this Disclosure Certificate in a usable format. 9.B.h Packet Pg. 2540 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution E-7 4155-7018-4495.3 Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriters and the Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. CITY OF SANTA MONICA By: City Manager ATTEST: Denise Anderson-Warren, City Clerk APPROVED AS TO FORM: George Cardona Interim City Attorney 9.B.h Packet Pg. 2541 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution E-8 4155-7018-4495.3 EXHIBIT A FORM OF NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Santa Monica Public Financing Authority Name of Issue: Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 Date of Issuance: August __, 2021 NOTICE IS HEREBY GIVEN that the City of Santa Monica (the “City”) has not provided an Annual Report with respect to the above-named Bonds as required by Section 2 of the Continuing Disclosure Certificate, dated as of August 1, 2021, executed and delivered by the City. [The City anticipates that the Annual Report will be filed by _____________.] Dated: _______________ CITY OF SANTA MONICA By: 9.B.h Packet Pg. 2542 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution F-1 4155-7018-4495.3 APPENDIX F PROPOSED FORM OF OPINION OF BOND COUNSEL Upon delivery of the Bonds, Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel, proposes to render its final approving opinion with respect to the Bonds in substantially the following form: [Date of Delivery] Santa Monica Public Financing Authority Santa Monica, California Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Project), Series 2021 (Final Opinion) Ladies and Gentlemen: Faithfully yours, ORRICK, HERRINGTON & SUTCLIFFE LLP per 9.B.h Packet Pg. 2543 Attachment: Official Statement -Santa Monica 2021 Lease Revenue Bonds (City Yards Project) [Revision 1] (4614 : Adoption of Resolution