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Home My WebLink About021208 CC Agenda In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the office of the City Clerk (951) 694-6444. Notification 48 hours prior to a meeting v.ill enable the City to make reasonable arrangements to ensure accessibility to that meeting [28 CFR 35.102.35.104 ADA Title II] AGENDA TEMECULA CITY COUNCIL A REGULAR MEETING CITY COUNCIL CHAMBERS 43200 BUSINESS PARK DRIVE FEBRUARY 12,2008 -7:00 PM At approximately 9:45 P.M., the City Council will determine which of the remaining agenda items can be considered and acted upon prior to 10:00 P.M. and may continue all other items on which additional time is required until a future meeting. All meetings are scheduled to end at 10:00 P.M. 6:15 P.M. - Closed Session of the City Council/Redevelopment Agency pursuant to Government Code Section: 1. Conference with City Attorney and legal counsel pursuant to Government Code Section 54957.6 with respect to labor negotiations. The negotiating parties are the City of Temecula and California Teamsters Public, Professional, and Medical Employees Union Local 911. City negotiators are Shawn Nelson, Aaron Adams, and Grant Yates. Public Information concerning existing litigation between the City and various parties may be acquired by reviewing the public documents held by the City Clerk. Next in Order: Ordinance: 08-02 Resolution: 08-16 CALL TO ORDER: Mayor Mike Naggar Prelude Music: Show Choir with Dean Aamodt Invocation: Pastor Larry Koger of Hope Lutheran Church Flag Salute: Council Member Roberts ROLL CALL: Comerchero, Edwards, Roberts, Washington, Naggar PRESENTA TIONS/PROCLAMA TIONS State of the Utilitv Address Presentation bv Southern California Edison (SCE) PUBLIC COMMENTS A total of 30 minutes is provided so members of the public may address the Council on items that appear within the Consent Calendar or ones that are not listed on the agenda. Speakers are limited to two (2) minutes each. If you desire to speak to the Council on an item which is listed on the Consent Calendar or a matter not listed on the agenda, a pink "Request to Speak" form should be filled out and filed with the City Clerk. When you are called to speak, please come forward and state your name for the record. For all Public Hearing or Council Business matters on the agenda, a "Request to Speak" form must be filed with the City Clerk prior to the Council addressing that item. There is a five minute (5) time limit for individual speakers CITY COUNCIL REPORTS Reports by the members of the City Council on matters not on the agenda will be made at this time. A total, not to exceed, ten (10) minutes will be devoted to these reports CONSENT CALENDAR NOTICE TO THE PUBLIC All matters listed under Consent Calendar are considered to be routine and all will be enacted by one roll call vote. There will be no discussion of these items unless Members of the City Council request specific items be removed from the Consent Calendar for separate action 1 Standard Ordinance and Resolution Adoption Procedure RECOMMENDATION: 1 .1 Motion to waive the reading of the text of all ordinances and resolutions included in the agenda. 2 Minutes RECOMMENDATION: 2.1 Approve the minutes of January 8, 2008. 3 List of Demands RECOMMENDATION: 3.1 Adopt a resolution entitled: 2 RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN EXHIBIT A 4 Citv Treasurer's Report as of December 31. 2007 RECOMMENDATION: 4.1 Approve and file the City Treasurer's Report as of December 31, 2007. 5 Propertv Insurance Renewal RECOMMENDATION: 5.1 Approve the City of Temecula Property Insurance Policy renewal with Travelers Insurance Company and Empire Indemnity Company for the period of February 26, 2008 through February 26, 2009, in the amount of $225,222. 6 Authorization to proceed with establishinq an irrevocable trust with California Public Emplovees Retirement Svstem (CaIPERS) for retiree benefits RECOMMENDATION: 6.1 Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA PROVIDING FOR THE DELEGATION OF AUTHORITY TO REQUEST DISBURSEMENT PURSUANT TO THE CITY'S AGREEMENT WITH THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM FOR PREFUNDING OF CERTAIN POST EMPLOYMENT BENEFITS 6.2 Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA APPROVING THAT CERTAIN AGREEMENT TITLED "AGREEMENT AND ELECTION OF THE CITY OF TEMECULA TO PREFUND OTHER POST EMPLOYMENT BENEFITS THROUGH CaIPERS" 6.3 Approve and file the City of Temecula Retiree Health Care Plan, Actuarial Valuation Report, as of June 30, 2007, prepared by Gabriel Roeder Smith & Company, Consultants & Actuaries, and the supplemental ARC (Annually Required Contribution) projected each year; 6.4 Approve an appropriation of $3,572,029 to operating transfers out from General Fund Designated Fund Balance to establish the trust; 3 6.5 Approve all related CalPERS documents to facilitate the funding, investment management and administration of Other Post Employment Benefits. 7 First Amendment to the Aqreement for Consultant Services between the Citv of Temecula and Environmental Science Associates for preparation of a Supplemental Environmental Impact Report for Planninq Application No. PA07-0335 RECOMMENDATION: 7.1 Approve the First Amendment to the Agreement with Environmental Science Associates, in the amount of $126,200 for the preparation of a Supplemental Environmental Impact Report for the Mercedes Benz Automobile Dealership, Planning Application Number PA07-0335. 8 Santa Marqarita Area Annexation Update - at the request of Mavor Naqqar RECOMMENDATION: 8.1 Receive and file the report. 9 First Amendment to Aqreement for Consultinq Services between the Citv of Temecula and Plan Net Consultinq for the Old Town Civic Center IS Master Plan RECOMMENDATION: 9.1 Approve an amendment to the Agreement for consulting services for the Old Town Civic Center IS Master Plan in the amount of $95,784 and authorize the Mayor to execute the amendment. 10 Completion and Acceptance of Wolf Creek Fire Station Project. Project Number PW01-11 RECOMMENDATION: 10.1 Accept the construction of the Wolf Creek Fire Station, Project No. PW01-11 as complete; 10.2 Direct the City Clerk to file and record the Notice of Completion, release the Performance Bond, and accept a one (1) year Maintenance Bond in the amount of 10% of the contract amount; 10.3 Release the Materials and Labor Bond seven months after filing of the Notice of Completion if no liens have been filed. 11 Old Town Infrastructure Project - Underqround Utilitv District. PW06-07 (1 B). Authorization to Solicit Construction Bids RECOMMENDATION: 4 11 .1 Authorize the Department of Public Works to solicit construction bids for Rule 20B portion of Project No. PW06-07(1 B), Old Town Infrastructure Project - Underground Utility District. 12 Citv Council Meetinq Schedule - March 2008 RECOMMENDATION: 12.1 Direct the City Clerk to re-schedule the City Council meeting of March 11, 2008 to March 18, 2008, and to perform the appropriate postings and noticing requirements of the Government Code. 13 RDAlOld Town Steerinq Committee RECOMMENDATION: 13.1 Appoint Council Member Roberts and remove Council Member Comerchero from the RDAlOld Town Steering Committee. 14 First Amendment to Fiscal Year 2007-2008 Annual Maintenance Contract RECOMMENDATION: 14.1 Approve the First Amendment to the Fiscal Year 2007-2008 Annual Maintenance Contract with Becker Construction Services, in the amount of $200,000 and authorize the Mayor to execute the amendment. 15 First Amendment to Fiscal Year 2007-2008 Citvwide Maintenance Contract RECOMMENDATION: 15.1 Approve the First Amendment to the Fiscal Year 2006-2007 Annual Citywide Routine Maintenance Contract with Imperial Paving Company, Inc. in the amount of $200,000 and authorize the Mayor to execute the amendment. 16 Murrieta Creek Flood Control Environmental Restoration and Recreation Project - Phase II - at the request of Mavor Pro-Tem Edwards RECOMMENDATION: 16.1 Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA TO SUPPORT THE MAYOR PRO-TEM TO TRAVEL TO WASHINGTON, D.C. TO MEET WITH FEDERAL LEGISLATORS AND REQUEST AN ADDITIONAL APPROPRIATION OF $13 MILLION TO COMPLETE PHASE II OF MURRIETA CREEK IMPROVEMENTS 5 17 First amendment to Aqreement for Professional Enqineerinq Desiqn Services for the Pavement Rehabilitation - STPL Project PW06-14 RECOMMENDATION: 17.1 Approve the first amendment to the Agreement with Harris & Associates for the Pavement Rehabilitation - STPL Project No. PW06-14, in the amount not to exceed $29,130 and authorize the Mayor to execute the amendment. 18 Authorize Temporarv Street Closures for the 2008 Temecula Sprinq Rod Run Event (Old Town Front Street. between Moreno Road and Second Street. and other related streets) RECOMMENDATION: 18.1 Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA AUTHORIZING STREET CLOSURES FOR THE 2008 TEMECULA SPRING ROD RUN EVENT, AND AUTHORIZING THE CITY ENGINEER TO ISSUE A PERMIT FOR THIS SPECIFIC SPECIAL EVENT 19 First Amendment to the Professional Services Aqreement with KRW & Associates for Plan Check. Map. and Leqal Description Review RECOMMENDATION: 19.1 Approve the First Amendment to the Professional Services Agreement with KRW & Associates in an amount not to exceed $15,000 for Engineering Plan Check, Map, and Legal Description Review, and authorize the Major to execute the Amendment to the Agreement. 20 Convevance of Redevelopment Owned Propertv to the Citv of Temecula RECOMMENDATION 20.1 Authorize staff to convey three Agency owned properties in Old Town to the City of Temecula: APN's 922-034-029, 030, and 031, located along the north side of Main Street, west of Mercedes Street, and APN 922-042-004 and 005 located at the SEC of 3rd Street and Mercedes Street; 20.2 Authorize the City Manager to accept a grant deed on behalf of the City and take all other necessary action relating to the conveyance of the property. 21 Second Readinq of Ordinance No. 08-01 RECOMMENDATION: 6 21.1 Adopt an Ordinance entitled: ORDINANCE NO. 08-01 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMECULA AMENDING THE OFFICIAL ZONING MAP OF THE CITY OF TEMECULA FROM PROFESSIONAL OFFICE (PO) AND PLANNED DEVELOPMENT OVERLAY (PDO-8) TO PLANNED DEVELOPMENT OVERLAY-9 (PDO-9) AND ADDING SECTIONS 17.22.200 THROUGH 17.22.206, TO THE TEMECULA MUNICIPAL CODE FOR A SITE GENERALLY LOCATED ON THE NORTH SIDE OF HIGHWAY 79 SOUTH, APPROXIMATELY 700 FEET WEST OF MARGARITA ROAD AND KNOWN AS ASSESSOR'S PARCEL NUMBERS 959-080-001 THROUGH 959-080-004 AND 959-080-007 THROUGH 959-080-010 (PA07-0199), AND RESCINDING ORDINANCE NO. 06-01 TEMECULA COMMUNITY SERVICES DISTRICT MEETING CSD PUBLIC COMMENTS A total of 15 minutes is provided so members of the public may address the Board of Directors on items that are not listed on the agenda or on the Consent Calendar. Speakers are limited to two (2) minutes each. If you decide to speak to the Board of Directors on an item not on the agenda or on the Consent Calendar, a pink "Request to Speak" form should be filled out and filed with the City Clerk. When you are called to speak, please come forward and state your name for the record. For all other agenda items, a "Request to Speak" form must be filed with the City Clerk Prior to the Board of Directors addressing that item. There is a five (5) minute time limit for individual speakers. Anyone wishing to address the Board of Directors should present a completed pink "Request to Speak" form to the City Clerk. When you are called to speak, please come forward and state your name and address for the record. CSD CONSENT CALENDAR 22 Minutes RECOMMENDATION: 22.1 Approve the minutes of January 22, 2008. 23 Approval of the Plans and Specifications and Authorization to solicit construction bids for Phase 1 of the Temecula Communitv Center Expansion (Gradinq), Project No PW06-05 RECOMMENDATION: 23.1 Approve the Plans and Specifications and authorize the Public Works Department to solicit bids for the Temecula Community Center Expansion (Grading), Project No. PW06-05. 7 24 Approval of the Plans and Specifications and authorization to solicit construction bids for the Roller Hockev Rink Dasher Board Replacement Project PW07-12 RECOMMENDATION: 24.1 Approve the Plans and Specifications and authorize the Public Works Department to solicit bids for the Roller Hockey Rink Dasher Board Replacement Project PW07- 12. CSD DIRECTOR OF COMMUNITY SERVICES REPORT CSD GENERAL MANAGERS REPORT CSD BOARD OF DIRECTORS REPORTS CSD ADJOURNMENT TEMECULA REDEVELOPMENT AGENCY MEETING RDA PUBLIC COMMENTS A total of 15 minutes is provided so members of the public may address the Redevelopment Agency on items that are not listed on the agenda or on the Consent Calendar. Speakers are limited to two (2) minutes each. If you decide to speak to the Board of Directors on an item not on the agenda or on the Consent Calendar, a pink "Request to Speak" form should be filled out and filed with the City Clerk. When you are called to speak, please come forward and state your name for the record. For all other agenda items, a "Request to Speak" form must be filed with the City Clerk Prior to the Board of Directors addressing that item. There is a five (5) minute time limit for individual speakers. Anyone wishing to address the Board of Directors should present a completed pink "Request to Speak" form to the City Clerk. When you are called to speak, please come forward and state your name and address for the record RDA CONSENT CALENDAR 25 Minutes RECOMMENDATION: 25.1 Approve the minutes of January 22, 2008. 26 Convevance of Redevelopment Aqencv Owned Propertv to the Citv of Temecula RECOMMENDATION 8 26.1 Authorize staff to convey three Agency owned properties in Old Town to the City of Temecula: APN's 922-034-029, 030, and 031, located along the north side of Main Street, west of Mercedes Street, and APN 922-042-004 and 005 located at the SEC of 3rd Street and Mercedes Street; 26.2 Authorize the Executive Director to execute the grant deed on behalf of the Agency and take all other necessary action relating to the conveyance of the property. RDA EXECUTIVE DIRECTORS REPORT RDA AGENCY MEMBERS REPORTS RDA ADJOURNMENT TPFA CONSENT CALENDAR 27 Minutes RECOMMENDATION: 27.1 Approve the minutes of July 24, 2007. JOINT CITY COUNCILITPFA BUSINESS 28 Execution and Deliverv of Certificates of Participation Relatinq to the New Civic Center Facilitv RECOMMENDATION: 28.1 Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA AUTHORIZING AND DIRECTING THE PREPARATION AND EXECUTION OF CERTAIN LEASE FINANCING DOCUMENTS, AUTHORIZING THE PREPARATION AND DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF CERTIFICATES OF PARTICIPATION RELATING THERETO, AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO 28.2 Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY APPROVING, AUTHORIZING, AND DIRECTING PREPARATION AND EXECUTION OF CERTAIN LEASE FINANCING g DOCUMENTS AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO RECONVENE TEMECULA CITY COUNCIL PUBLIC HEARING Any person may submit written comments to the City Council before a public hearing or may appear and be heard in support of or in opposition to the approval of the project(s) at the time of the hearing. If you challenge any of the project(s) in court, you may be limited to raising only those issues you or someone else raised at the public hearing or in written correspondence delivered to the City Clerk at, or prior to, the public hearing 29 Approval for levvinq an assessment for Fiscal Year 2008-2009 in connection with the Temecula Vallev Tourism Business Improvement District (TVTBID); RECOMMENDATION: 29.1 Conduct a public hearing to consider protests regarding the levy of an assessment in conjunction with the Temecula Valley Tourism Business Improvement District; 29.2 Instruct the City Clerk to tabulate any written protests which might be received prior to the close of the public hearing regarding the formation of the proposed District. 29.3 If the City Clerk reports that there is not a majority protest received regarding this District, then adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA LEVYING AN ASSESSMENT FOR FISCAL YEAR 2008-09 IN CONNECTION WITH THE TEMECULA VALLEY TOURISM BUSINESS IMPROVEMENT DISTRICT (TVTBID) CITY MANAGER REPORT CITY ATTORNEY REPORT ADJOURNMENT Next regular meeting: City Council Regular, Tuesday, February 26, 2008, at 5:30 P.M., for a Closed Session, with regular session commencing at 7:00 PM, City Council Chambers, 43200 Business Park Drive, Temecula, California. 10 CONSENT CALENDAR ITEM NO.1 ITEM NO.2 MINUTES OF A REGULAR MEETING OF THE TEMECULA CITY COUNCIL JANUARY 8, 2008 The City Council convened in Closed Session at 6:15 p.m. and its regular meeting commenced at 7:00 p.m., on Tuesday, January 8, 2008, in the City Council Chambers of Temecula City Hall, 43200 Business Park Drive, Temecula, California. Present: Council Members: Comerchero, Edwards, and Mayor Naggar Absent: Council Members: Roberts and Washington PRELUDE MUSIC The prelude music was provided by Michael Hamrin, Flutist; and JoAnn Algier, Pianist. INVOCATION The invocation was provided by Pastor Jay Cartwright of True Vine Pentecostal Church. PLEDGE OF ALLEGIANCE The pledge of allegiance was presented by Council Member Comerchero. PRESENTA TIONS/PROCLAMA TIONS Service Pin Awards At this time, Mayor Pro Tem Edwards presented Commissioner Ramos with a 5-year Service Pin. Thanking the City Council for the recognition, Commissioner Ramos stated that he has enjoyed serving as a Commissioner for the City of Temecula. Mayor Pro Tem Edwards presented the following Commissioners with their 10-year Service Pins: . Dennis Chiniaeff, Planning Commission . John Telesio, Planning Commission . Jim Meyler, Community Services . AI Blair, Old Town Local Review Board The above-mentioned Commissioners thanked the City Council for its recognition. At this time, Mayor Naggar presented Mayor Pro Tem Edwards with a 5-year Service Pin. Mayor Pro Tem Edwards thanked the City Council for the 5-year Service Pin. RIMinutesl010808 PUBLIC COMMENT A. Referencing the negative affects of Proposition No. 94, Ms. Stephanie Williams, Temecula, requested that the City of Temecula protest the proposition. B. Speaking on a newly implemented program in Temecula called Team in Training Chapter in Temecula, Mr. and Mrs. Harned, Temecula, encouraged residents to participate in the program and advised that that all proceeds go toward cancer research. In response to Council Member Comerchero's query, Mr. Harned noted that Team in Training Chapter Temecula is a non-profit organization. CITY COUNCIL REPORTS A. Mayor Naggar advised that the City of Moreno Valley will be hosting a Traffic Safety Symposium meeting on February 6,2008, from 10:00 a.m. to 1 :00 p.m., and requested that two members of the PubliclTraffic Safety Commission attend the meeting and return with an update. CONSENT CALENDAR 1 Standard Ordinance and Resolution Adoption Procedure RECOMMENDATION: 1 .1 Motion to waive the reading of the text of all ordinances and resolutions included in the agenda. 2 Minutes RECOMMENDATION: 2.1 Approve the minutes of November 27, 2007; 2.2 Approve the minutes of December 11, 2007. 3 List of Demands RECOMMENDATION: 3.1 Adopt a resolution entitled: RESOLUTION NO. 08-01 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN EXHIBIT A 4 Citv Treasurer's Report as of November 30, 2007 RECOMMENDATION: 4.1 Approve and file the City Treasurer's Report as of November 30, 2007. RIMinutesl010808 2 5 Comprehensive Annual Financial Report (CAFR) for Fiscal Year Ended June 30, 2007 RECOMMENDATION: 5.1 Approve the Comprehensive Annual Financial Statements, Auditor's Report, and Management's Discussion and Analysis (MD&A) for Fiscal Year Ended June 30, 2007. 6 Communitv Development Block Grant Application Proposals for FY 2008-09 RECOMMENDATION: 6.1 Approve the Community Development Block Grant (CDBG) Finance Committee funding recommendations for fiscal year 2008/09; 6.2 Authorize the Mayor to execute the fiscal year 2006/07 Amendment to Supplemental Agreement for the Use of Community Block Grant Funds for the Temecula Community Pantry in the amount of $150,000; 6.3 Authorize the City Manager to reprogram CDBG funds in accordance with the current budget resolution for general administration, and to reprogram CDBG funds from the Old Town Gymnasium project to the Temecula Community Center Expansion project in the amount of $758,311, and to the Temecula Community Pantry project (Escallier house and barn rehab) in the amount of $400,000. 7 Completion and Acceptance for the Architectural Enhancement Panels on the southerlv side of the Overland Drive Bridqe over Interstate 15 - Project No. PW05-09 RECOMMENDATION: 7.1 Accept the construction of the Architectural Enhancement Panels on Southerly Side Overland Drive Bridge Over Interstate 15 - Project No. PW05-09, as complete; 7.2 Direct the City Clerk to file and record the Notice of Completion, release the Performance Bond, and accept a one (1) year Maintenance Bond in the amount of 10% of the contract amount; 7.3 Release the Materials and Labor Bond seven (7) months after filing of the Notice of Completion, if no liens have been filed. 8 Purchase and Sale Aqreement for certain propertv riqhts on propertv located at 44618 and 44700 Pechanqa Parkwav, Temecula RECOMMENDATION: 8.1 Approve substantially in the form attached hereto the Purchase and Sale Agreement between the City of Temecula and AquiportlAmsdell III, LLC, a Delaware limited liability company ("Aquiport/Amsdell"), for the purchase of an approximate 3,529 square foot permanent easement on property located at 44618 and 44700 Pechanga Parkway, Temecula (APN 961-010-009 and 961-010-047) for the widening of Pechanga Parkway at a purchase price of $90,000 plus escrow fees; RIMinutesl010808 3 8.2 Authorize the City Manager to execute the Purchase and Sale Agreement in the amount of $90,000 to cover the cost of the easement plus the associated escrow fees not to exceed $2,000.00, approve and execute any necessary documents and to take all necessary actions to complete this acquisition, including without limitation, all escrow instructions. 9 YMCA Groud Lease Amendment RECOMMENDATION: 9.1 Approve the First Amendment to the YMCA Ground Lease. 10 Authorize Temporarv Street Closure of Main Street between Old Town Front Street and the east side of the Children's Museum Drivewav Entrance for the "Gospel & Arts Festival" event scheduled for September 27, 2008, at the Request of Mavor Pro Tem Marvann Edwards and Council Member Chuck Washinqton, and Deleqate Authoritv to Issue a Special EventslStreet Closures Permit to the Director of Public Works RECOMMENDATION: 10.1 Adopt a resolution entitled: RESOLUTION NO. 08-02 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA, AUTHORIZING TEMPORARY STREET CLOSURE OF MAIN STREET BETWEEN OLD TOWN FRONT STREET AND THE EAST SIDE OF THE CHILDREN'S MUSEUM DRIVEWAY ENTRANCE FOR THE "GOSPEL & ARTS FESTIVAL" EVENT SCHEDULED FOR SEPTEMBER 27,2008 AND AUTHORIZING THE DIRECTOR OF PUBLIC WORKS TO ISSUE A SPECIAL EVENTS PERMIT INCLUDING STREET CLOSURE Consent Calendar Item No. 11 was pulled for separate discussion: see paqes 5 - 8 11 Press Inquiries - Press Enterprise (at the request of Council Member Roberts) RECOMMENDATION: 11 .1 Direct City staff to require all press inquiries from the Press Enterprise newspaper be submitted in writing to the City Council and City staff. Further, City staff will commit to respond in writing to all Press Enterprise inquires in a timely, efficient and professional manner to ensure the accuracy and effective flow of communication. RIMinutesl010808 4 12 Second Readinq of Ordinance No. 07-20 RECOMMENDATION: 12.1 Adopt an Ordinance entitled: ORDINANCE NO. 07-20 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMECULA, CALIFORNIA, AMENDING THE TEMECULA REDEVELOPMENT PLAN 1-1988 PURSUANT TO THE PROVISIONS OF HEALTH AND SAFETY CODE SECTION 33333.6 TO REPEAL THE TIME LIMIT ON THE ESTABLISHMENT OF LOANS, ADVANCES, AND INDEBTEDNESS 13 Second Readinq of Ordinance No. 07-21 RECOMMENDATION: 13.1 Adopt an Ordinance entitled: ORDINANCE NO. 07-21 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMECULA AS REQUIRED BY SB53, CONFIRMING THAT THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA DOES NOT HAVE THE AUTHORITY TO ACQUIRE REAL PROPERTY BY EMINENT DOMAIN Referencing Consent Calendar Item No.6, City Attorney Thorson stated that any Council Members that are Board Members of any of the partaking entities would be required to abstain from Item NO.6. Mayor Naggar and Council Members Comerchero and Edwards advised that they would not have a conflict of interest with Consent Calendar Item NO.6. It was the consensus of the City Council to pull Item No. 11 for discussion; see pages 5-8. MOTION: Council Member Comerchero moved to approve the Consent Calendar Item Nos. 1- 10 and 12-13 (Item No. 11 was pulled for discussion). Mayor Pro Tem Edwards seconded the motion and electronic vote reflected approval with the exception of Council Members Roberts and Washington who were both absent. 11 Press Inquiries - Press Enterprise (at the request of Council Member Roberts) RECOMMENDATION: 11.2 Direct City staff to require all press inquiries from the Press Enterprise newspaper be submitted in writing to the City Council and City staff. Further, City staff will commit to respond in writing to all Press Enterprise inquires in a timely, efficient and professional manner to ensure the accuracy and effective flow of communication. RIMinutesl010808 5 City Manager Nelson provided a staff report (of record), and stated that Council Member Roberts requested that the City Council not adopt the proposed policy, advising that in an effort to show good faith and to create a better working relationship between the Press Enterprise and the City, the City Council has directed the City Manager to meet with the Editor of the Press Enterprise (Ms. Maria De Varenne) to discuss methods of improving its communication process. In response to Council Member Comerchero's query with regard to the staff recommendation, City Attorney Thorson advised that with or without a policy in place, each individual City Council Member has the right to say as much or as little as he or she chooses to say to the news media. For Mayor Naggar, City Manager Nelson stated that with respect to concerns of an article that was written in the Press Enterprise on December 2, 2007, he wrote a letter and attempted to contact the Editor (Ms. De Varenne) to discuss the concerns of the City; to the Editor that Ms. De Varenne was unwilling to speak with him via telephone; that he did receive a written response from Ms. De Varenne, but that at this point in time, he has not yet spoken with her. Mr. Nelson also stated that it would be important to note that the impetus of the proposed policy would be to maintain an open government. A. Mr. AI Wickers, representing the Press Enterprise, relayed his enthusiasm to staff's recommendation to delay the proposal (as requested by Council Member Roberts), to allow further communication between the City and the Press Enterprise to ensure an effective flow of communication; and stated that the ultimate goal of the Press Enterprise would be to provide the public with clear, concise, and accurate information. In response to Council Member Comerchero's question, Mr. Wickers noted that it would be his opinion that every newspaper would have an obligation to print an accurate record. In response to Mayor Naggar's query with respect to the Press Enterprise's position in relation to egregious omissions andlor inaccurate information, Mr. Wickers stated that the Press Enterprise has a stated policy that would endeavor to correct any error made on behalf of the Press Enterprise; stated that newspapers have been known to make errors; however, there have been many instances where what one would perceive as an error would be an interpretation; and that any concerns with respect to inaccuracies should be reported to the Editor via email. Council Member Comerchero expressed concern with the City's lack of recourse with regard to correcting perceived inaccuracies. Referencing Council Member Comerchero's comment, Mr. Wickers stated that the Press Enterprise would always reserve the editorial discretion to decide whether or not to publish a correction. Thanking Mr. Wickers for his comments, Mayor Pro Tem Edwards expressed concern with the communication process and stated that it would be difficult to resolve concerns of the City if Ms. De Varenne does not accept calls from the City Manager. Not knowing the details of the City Manager's attempts to communicate with, Ms. De Varenne, Editor, Mr. Wickers noted that he would not be able to comment; however, Mr. Wickers advised that Ms. De Varenne has regularly communicated with individuals who have had frustrations with coverage in the Press Enterprise; stated that although the desire would be to have open communication with City officials, such communications would not provide the City the ability to exert or influence any editorial decision made by the Press Enterprise. RIMinutesl010808 6 Mayor Pro Tem Edwards relayed her concern with the lack of recourse that the City would have with respect to correcting inaccuracies in editorials, and noted that it would be her opinion that the Press Enterprise is not acting responsibly to its readers and not being accountable for its actions. For Mayor Naggar, Mr. Wickers stated that it would be his opinion that the reporters for the Press Enterprise do not report with a political slant. In response to City Manager Nelson's query, Mr. Wickers noted that he may attempt to call Ms. De Varenne at the Press Enterprise with concerns or may contact him to facilitate further communication. B. Relaying his delight with the City Council's reconsideration of staff's recommendation to allow an opportunity to remedy the City's issue of concern with the Press Enterprise, Mr. Mel Optowsky, Board Member of the California First Amendment Coalition, relayed his concern of censorship and discrimination; stated that he would be hopeful that the City would carefully examine the specific points that were either misinterpreted andlor errors that resulted from communications with the Press Enterprise; noted that it would not be the City's purview to control the message or the messenger of the Press Enterprise; and stated that he would be hopeful that the City and the Press Enterprise will work out its issues. Understanding the right of freedom of speech, Mayor Pro Tem Edwards relayed her frustration with a reporter blatantly not providing facts to the public regarding an interview which ultimately resulted in wrongful implications. In an effort to provide professional reporting, Mr. Optowsky advised that in order to overcome prejudice, three to four layers of handling a story have been developed to ensure fairness. At this time, Mr. Optowsky and the Council discussed opinions of the truth and interpretations as it would relate to reporters and articles in the newspaper. Mr. Optowsky relayed that the California First Amendment Coalition would be willing to provide its services to the City. C. Ms. Gina Diamante, representing KZSW, noted that she would be in agreement of the Council's reconsideration of staff's recommendation and noted that it may be helpful for the City to consider having a public information officer who specializes in the media and who can communicate the City's position. D. Relaying his delight for the change of events this evening, Mr. Paul Jacobs, Temecula, relayed his concurrence with the City's reconsideration of the proposed policy. E. Mr. Chris Pedersen, Temecula, relayed his dismay with the Press Enterprise's evasion of the City Council's questions. F. Ms. Nancy Austin, Temecula, relayed her concern with Mr. Wicker's comments, noting that it would be her opinion that the Press Enterprise is not being responsible to its public. G. Mr. Tyler Saldana, Temecula, stated that because reporters of the Press Enterprise relay their interpretation, it would be important for the public to understand that it cannot believe everything reported in the newspapers. RIMinutesl010808 7 Thanking Council Member Roberts for adding this issue to the agenda and recalling the recommendation for further discussion, Council Member Comerchero relayed the importance of the Press Enterprise and the City preserving and protecting the integrity of the truth in order to provide the public with accurate and concise information. Echoing comments made by Council Member Comerchero, Mayor Pro Tem Edwards relayed that it would be her opinion that approving staff's previous recommendation would not be in the public's best interest, and would be hopeful that the Press Enterprise will strive to provide accurate and concise information. Mayor Pro Tem Edwards further commented on inaccuracies reported about her in a recent Press Enterprise article. Noting the importance of residents being informed of its local government, City Manager Nelson relayed his enthusiasm with the discussion and reiterated that the intent of the proposed recommendation was to ensure that that Temecula citizens know the truth and facts with respect to its local government; and that it may be beneficial to work with various representatives of the news media to develop an independent journalist ethics committee that would address potential issues or concerns that may arise from the City, County, news media, or any other governmental entity. With respect to City Manager Nelson's suggestion, Mr. Wickers stated, for the record, that he would have an unwavering commitment to ensure that the Press Enterprise prints the truth in an unbiased accurate manner for its residents; and that he will discuss the ethics committee proposal made by the City Manager with the editor of the Press Enterprise. Mayor Naggar gave examples on how the Press Enterprise has manipulated the truth and would be hopeful that news reporters write with truth and honesty. MOTION: Council Member Comerchero moved to direct the City Manager to meet with the Editor of the Press Enterprise to work toward improving communication and the working relationship between the paper and the City; also directed to discuss formation of a Media Peer ReviewlEthics Committee. Mayor Pro Tem Edwards seconded the motion and electronic vote reflected approval with the exception of Council Members Roberts and Washington who were both absent. At 8:28 p.m., the City Council convened as the Temecula Community Services District and the Redevelopment Agency. At 8:32 p.m., the City Council resumed with regular business. PUBLIC HEARING 17 Weed Abatement Lien Resolution for FY 2007-2008 RECOMMENDATION: 17.1 Adopt a resolution entitled: RESOLUTION NO. 08-03 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ORDERING CONFIRMATION OF THE SPECIAL ASSESSMENT AGAINST PARCELS OF LAND WITHIN THE CITY OF TEMECULA FOR COSTS OF ABATEMENT AND REMOVAL OF HAZARDOUS VEGETATION FOR THE FISCAL YEAR 2007 -2008 RIMinutesl010808 8 Planning Director Ubnoske provided a staff report (of record). At this time, the public hearing was opened and due to no speakers, it was closed. MOTION: Council Member Comerchero moved to approve staff recommendation. Mayor Pro Tem Edwards seconded the motion and electronic vote reflected approval with the exception of Council Members Roberts and Washington who were both absent. 18 Abatement Lien Resolution for FY 2007-2008 RECOMMENDATION: 18.1 Adopt a resolution entitled: RESOLUTION NO. 08-04 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ORDERING CONFIRMATION OF THE SPECIAL ASSESSMENTS AGAINST PARCELS OF LAND WITHIN THE CITY OF TEMECULA FOR COSTS OF ABATEMENT AND REMOVAL OF A BEE HIVE AND DRAINING OF TWO GREEN POOLS FOR THE FISCAL YEAR 2007 -2008 Director of Planning Ubnoske provided a staff report (of written material). At this time, the public hearing was opened and due to no speakers, it was closed. Mayor Pro Tem Edwards advised the public that the City is working on a policy to address foreclosures in the City. MOTION: Council Member Comerchero moved to approve staff recommendation. Mayor Pro Tem Edwards seconded the motion and electronic vote reflected approval with the exception of Council Members Roberts and Washington who were both absent. 19 Addition of Water Qualitv Manaqement Plan !wQMP) Fees to the Citvwide User Fee Schedule RECOMMENDATION: 19.1 Adopt a resolution entitled: RESOLUTION NO. 08-05 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ADDING WATER QUALITY MANAGEMENT PLAN (WQMP) FEES TO THE CITYWIDE USER FEE SCHEDULE Director of Finance Roberts provided the City Council with a staff report (of record), and advised that representatives from Maxtrix Consulting Group would be available for any questions. At this time, the public hearing was opened and due to no speakers, it was closed. RIMinutesl010808 g MOTION: Council Member Comerchero moved to approve staff recommendation. Mayor Pro Tem Edwards seconded the motion and electronic vote reflected approval with the exception of Council Members Roberts and Washington who were both absent. DEPARTMENTAL REPORTS No additional comments. CITY MANAGER REPORT No reports at this time. CITY ATTORNEY REPORT With respect to Closed Session, City Attorney Thorson advised that the City Council by vote of 3:0 (Roberts and Washington abstained), authorized the City Manager to settle the claim of contractor Douglas E. Barnhart for the net amount of $275,000 and that a change order budget authorization will be agendized for an upcoming City Council meeting; and stated that no action was taken on the Marina, Landscape, Inc., claim. ADJOURNMENT At 8:38 p.m. the City Council meeting was formally adjourned to Tuesday, January 22, 2008, at 5:30 p.m. for a Closed Session, with regular session commencing at 7:00 p.m. City Council Chambers, 43200 Business Park Drive, Temecula, California. Mike Naggar, Mayor ATTEST: Susan W. Jones, CMC City Clerk [SEAL] RIMinutesl010808 10 ITEM NO.3 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Genie Roberts, Director of Finance DATE: February 12, 2008 SUBJECT: List of Demands PREPARED BY: Pascale Brown, Accounting Manager Leah Thomas, Accounting Specialist RECOMMENDATION: That the City Council: 1. Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN EXHIBIT A BACKGROUND: All claims and demands are reported and summarized for review and approval by the City Council on a routine basis at each City Council meeting. The attached claims represent the paid claims and demands since the last City Council meeting. FISCAL IMPACT: All claims and demands were paid from appropriated funds or authorized resources of the City and have been recorded in accordance with the City's policies and procedures. ATTACHMENTS: Resolution List of Demands RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN EXHIBIT A THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. That the following claims and demands as set forth in Exhibit A, on file in the office of the City Clerk, has been reviewed by the City Manager's Office and that the same are hereby allowed in the amount of $4,713,321.23. Section 2. The City Clerk shall certify the adoption of this resolution. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 12th day of February, 2008. Mike Naggar, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 08- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 12th day of February, 2008, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk CITY OF TEMECULA LIST OF DEMANDS 01/17/2008 TOTAL CHECK RUN: $ 949,873.19 01/24/2008 TOTAL CHECK RUN: 1,947,475.62 01/31/2008 TOTAL CHECK RUN: 1,322,960.46 01/24/2008 TOTAL PAYROLL RUN: 493,011.96 TOTAL LIST OF DEMANDS FOR 02/12/2008 COUNCIL MEETING: $ 4,713,321.23 DISBURSEMENTS BY FUND: CHECKS: 001 GENERAL FUND $ 2,197,654.04 165 RDA LOWiMOD - 20% SET ASIDE 15,787.76 190 TEMECULA COMMUNITY SERVICES DISTRICT 374,494.44 192 TCSD SERVICE LEVEL B 64,010.38 193 TCSD SERVICE LEVEL"C" LANDSCAPE/SLOPE 84,057.87 194 TCSD SERVICE LEVEL D 10,363.86 196 TCSD SERVICE LEVEL "L" LAKE PARK MAINT. 13,378.83 197 TEMECULA LIBRARY FUND 9,815.96 210 CAPITAL IMPROVEMENT PROJECTS FUND 280,032.25 280 REDEVELOPMENT AGENCY - CIP PROJECT 22,911.05 300 INSURANCE FUND 5,466.39 320 INFORMATION SYSTEMS 89,403.93 330 SUPPORT SERVICES 16,698.28 340 FACILITIES 11 ,561.73 380 RDA 2002 TABS DEBT SERVICE FUND 1,015,382.50 460 CFD 88-12 DEBT SERVICE FUND 1,327.14 472 CFD 01-2 HARVEST ON A&B DEBT SERVICE 1,327.14 473 CFD 03-1 CROWNE HILL DEBT SERVICE FUND 1,327.14 474 AD03-4 JOHN WARNER ROAD DEBT SERVICE 1,327.16 475 CFD03-3 WOLF CREEK DEBT SERVICE FUND 1,327.14 476 CFD 03-6 HARVEST ON 2 DEBT SERVICE FUND 1,327.14 477 CFD- RORIPAUGH 1,327.14 $ 4,220,309.27 001 GENERAL FUND $ 322,348.81 165 RDA LOWiMOD - 20% SET ASIDE 5,681.23 190 TEMECULA COMMUNITY SERVICES DISTRICT 112,332.85 192 TCSD SERVICE LEVEL B 123.67 193 TCSD SERVICE LEVEL"C" LANDSCAPE/SLOPE 5,245.34 194 TCSD SERVICE LEVEL D 757.92 196 TCSD SERVICE LEVEL "L" LAKE PARK MAINT. 604.58 197 TEMECULA LIBRARY FUND 379.76 280 REDEVELOPMENT AGENCY - CIP PROJECT 2,707.18 300 INSURANCE FUND 1,283.45 320 INFORMATION SYSTEMS 29,554.91 330 SUPPORT SERVICES 4,071.20 340 FACILITIES 7,921.06 $ 493,011.96 TOTAL BY FUND: $ 4,713,321.23 apChkLst Final Check List Page: 1 01/1712008 1:35:38PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA Check # Date Vendor Description Amount Paid Check Total 992 01/17/2008 000283 INSTATAX (IRS) Employees fed pr taxes 12/31/07 18.95 18.95 121454 01/1712008 004594 2 HOT ACTIVEWEAR uniforms: police traffic div 1,422.62 1,422.62 121455 01/17/2008 001985 A E P (ASSOC OF ENVIRO PROF) mbrshp 4/09-3/09: Brown, Steve 140.00 140.00 121456 01/17/2008 004973 ABACHERLI, L1NDI TCSD instructor earnings 800.00 800.00 121457 01/17/2008 008552 ADKINS DESIGN CONSULTING Dec graphic design svcs: Theater 1,212.19 1,212.19 121458 01/17/2008 008698 ADVANCED APPLIED Aug Cnslt Svcs: Signing/striping Impv 12,966.00 ENGINEERING Dec eng design:79S park & ride 8,662.90 21,628.90 121459 01/17/2008 003679 AEI CASC ENGINEERING Oct Wqmp Plan Ck SVcs: Npdes 4,228.00 4,228.00 121460 01/17/2008 001281 ALHAMBRA GROUP Dec architect svcs:pechanga pkwy 3,750.00 Dec architect svcs:pechanga pkwy 161.20 3,911.20 121461 01/1712008 009374 ALLEGRO MUSICAL VENTURES Dec Piano Tuning Svcs: Library 140.00 140.00 121462 01/17/2008 004240 AMERICAN FORENSIC NURSES February stand by fee: Police 1,000.00 DUI & drug screenings: Police 333.00 DUI & drug screenings: Police 222.00 1,555.00 121463 01/1712008 008279 AMERICOMP IN FOSYSTEMS INC computer supplies: Info Sys 161.63 computer supplies: Info Sys 64.65 computer supplies: Info Sys 37.71 263.99 121464 01/17/2008 009402 AMEZCUA, CHRISTINE release claims agreement pmt 900.00 900.00 121465 01/17/2008 002187 ANIMAL FRIENDS OF THE Dec animal control services 13,000.00 13,000.00 VALLEYS 121466 01/17/2008 000101 APPLE ON E INC temp help ppe 12/15 Ortiz, V. 710.00 temp help ppe 12/29 Ortiz, V. 426.00 temp help ppe 12/22 Oritiz, V. 422.98 1,558.98 121467 01/17/2008 001323 ARROWHEAD WATER INC Bottled wtr svcs: City Hall 560.35 560.35 121468 01/17/2008 003203 ARTISTIC EMBROIDERY Safe driver award jacket: HR 86.20 86.20 Page:1 apChkLst Final Check List Page: 2 01/1712008 1:35:38PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121469 01/17/2008 002648 AUTO CLUB OF SOUTHERN New Mb: Clark, M & Cox, K 134.00 CALIF Membership: 67481325 Smith, Jim 47.00 Membership: 18594333 Hudson, M. 47.00 228.00 121470 01/17/2008 002648 AUTO CLUB OF SOUTHERN mbrshp: 42114932 Camberos, Dino 47.00 47.00 CALIF 121471 01/17/2008 011666 BPS TACTICAL INC ballistic vests: police 2,036.48 2,036.48 121472 01/17/2008 005716 BIRTH CHOICE OF TEMECULA community service funding pgm 07/08 5,000.00 5,000.00 INC 121473 01/17/2008 005665 BLACK'S TOWING Tow Svc:TE7354229 Police 262.50 Tow Svc:TE7355127 Police 175.00 437.50 121474 01/17/2008 011631 BODYVOX 1/18-19 Theater Performance 12,850.00 12,850.00 121475 01/17/2008 008013 BOSTRE-LE, ANNIE employee computer purchase prgm 869.99 869.99 121476 01/1712008 000128 BROWN & BROWN OF CALIF INC bond 68806638 1/08-1/09 Nelson, S. 350.00 bond 70210685 1/08-1/09 Johnson, R. 350.00 700.00 121477 01/1712008 011705 BURD, RYAN release claims agreement pmt 200.36 200.36 121478 01/17/2008 003138 CAL MAT PW patch truck materials 284.25 PW patch truck materials 278.72 PW patch truck materials 205.40 768.37 121479 01/17/2008 005384 CALIF BAGEL BAKERY & DELI refreshments:EOC command post 4,315.39 refreshments:EOC command post 2,160.39 6,475.78 121480 01/17/2008 001054 CALIF BUILDING OFFICIALS mbrshp: Tooke, Michael 35.00 35.00 121481 01/17/2008 011657 CALIF STATE OF PUBLIC emp retirement actuarial study:HR 400.00 400.00 EMPLOYEE 121482 01/17/2008 004228 CAMERON WELDING SUPPLY Helium tanks rental/refill:TCSD 41.72 41.72 121483 01/17/2008 000131 CARL WARREN & COMPANY INC 8/2-8/21 Claim adjuster services 268.00 8/22-10/11 Claim adjuster services 141.50 409.50 121484 01/17/2008 009640 CERTIFION CORPORATION Dec investigative dbase svc:Police 158.95 158.95 121485 01/17/2008 000137 CHEVRON USA INC City vehicles fuel: Police 652.89 City vehicles fuel: City Manager 359.04 1,011.93 Page2 apChkLst Final Check List Page: 3 01/1712008 1:35:38PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121486 01/17/2008 002058 CHRISTIAN YOUTH THEATER community service funding pgm FY 07108 1,000.00 1,000.00 121487 01/17/2008 005417 CINTAS FIRST AID & SAFETY First aid supplies: City Hall 132.12 132.12 121488 01/17/2008 004414 COMMUNITY WORKS DESIGN Oct Insp Plan Ck Svcs: Planning 1,100.00 GROUP Oct Indscp pin ck svcs: Planning 383.75 Billing Adj: Pa05-Q305 Pin Ck 260.00 1,743.75 121489 01/17/2008 006303 CONDUrT NETWORKS, INC Shortel Telephone Equip Maint: IS 2,833.49 network consulting library: IS 443.10 Nov Network Svcs: Info Sys 200.00 3,476.59 121490 01/17/2008 001264 COSTCO WHOLESALE Misc supplies: TCC 247.55 refreshments:fire prevention mtgs 97.58 345.13 121491 01/17/2008 001233 DANS FEED & SEED INC hay & straw bails:pw maint div 134.63 134.63 121492 01/17/2008 002990 DAVID TURCH & ASSOCIATES Jan Federal lobbyist svcs: CM 3,350.00 3,350.00 121493 01/17/2008 008943 DEPT OF GENERAL SERVICES Nov Admin Hearing Svcs: Code Enf 1,955.25 1,955.25 (DGS) 121494 01/17/2008 001669 DUNN EDWARDS CORPORATION misc supplies:pw maint div 678.83 painting supplies: Theater 141.37 misc supplies:pw maint div 36.34 856.54 121495 01/17/2008 009981 ENVIRONMENTAL SPECIALTY garden benches: Fld Op Ctr 1,901.97 1,901.97 PROD 121496 01/17/2008 000164 ESGIL CORPORATION Nov plan check svcs: B&S 39,681.42 Oct plan check svcs: B&S 18,681.17 Sept plan check svcs: B&S 18,507.32 billing adj: B07-271 0-2780 Nov invoice 2,161.28 billing adj: B07-2558 Sept invoice 1,772.68 80,803.87 Page:3 apChkLst Final Check List Page: 4 01/1712008 1:35:38PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121498 01/17/2008 001056 EXCEL LANDSCAPE Dec Idscp maint svc: sports parks 44,371.22 Dec Idscp maint svc: slope areas 43,066.22 Dec Idscp maint svc: slope areas 29,372.80 Dec Idscp maint svc: medians 14,070.19 Ldscp Impr:Kent Hindergardt Park 9,142.00 Oct median irrigation repairs:tcsd 999.22 irrigation repairs:vail ranch pkwy 744.97 mainline repairs: vail rnch pkwy 370.11 mainline repairs:crowne hill 362.15 mainline repairs: martinique 270.81 mainline repairs:crowne hill 256.43 irrigation repairs: ridgeview 256.20 mainline repairs: villages 227.39 mainline repairs: rancho highlands 225.92 mainline repairs: vintage hills 224.31 mainline repairs: mirada 192.46 mainline repairs: martinique 191.91 mainline repairs: winchester creek 142.21 mainline repairs: mirada 141.02 mainline repairs: harveston 136.53 irrigation repairs: signet series 110.88 electrical repairs: harveston 56.33 billing adj: so# 34557 slope site -301.72 144,629.56 121499 01/17/2008 009953 FEDERAL CLEANING Jan cleaning svc:Police Mall Storefront 410.00 410.00 CONTRACTORS 121500 01/17/2008 000165 FEDERAL EXPRESS INC 12/12-19 express mail svcs: Citywide 68.96 68.96 121501 01/17/2008 004000 FENCING BY ACREY INC res impr prgm: Navarro, Roberto 6,788.00 6,788.00 121502 01/17/2008 003747 FINE ARTS NETWORK sttlmtYou're a Good Man Charlie Brown 4,561.11 4,561.11 121503 01/17/2008 003347 FIRST BANKCARD CENTER INT'L ASSOC OF ELECTRICAL MH Book: 2 Neon Lighting 2005 120.00 CAFE DANIEL JM Refreshments:Old Twn Wrkg Mtg 75.00 195.00 121504 01/17/2008 011704 FLOHR, JOHN reimb: supplies High Hopes pgrm 80.72 80.72 121505 01/17/2008 003633 FOOTHILL EASTERN Jul-Dec toll roads usage:Var. City Depts 78.30 78.30 TRANSPORTN. 121506 01/17/2008 009097 FULL COMPASS SYSTEMS Misc Supplies: Theater 89.85 89.85 Page:4 apChkLst Final Check List Page: 5 01/1712008 1:35:38PM CITY OF TEMECUlA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121507 01/17/2008 007866 G C S SUPPLIES INC printer toner/cartridges: Info Sys 1,439.42 1,439.42 121508 01/17/2008 011665 G E SERVICES appliance repair: TCC 266.25 266.25 121509 01/17/2008 011283 GABRIEL ROEDER SMITH & Nov Cnslt SVcs:Retirement Health 252.50 252.50 COMPANY 121510 01/17/2008 011204 GERMAN, JUANITA M. Tcsd Instructor earnings 281.40 Tcsd Instructor earnings 213.50 Tcsd Instructor earnings 92.40 Tcsd Instructor earnings 67.20 654.50 121511 01/17/2008 005405 GilLILAND, ROBIN employee computer purchase prgm 1,215.70 1,215.70 121512 01/17/2008 003792 GRAINGER Misc Supplies: Ch Museum 129.66 Misc Supplies: Ch Museum 120.44 Misc Supplies: Ch Museum 60.51 310.61 121513 01/17/2008 002174 GROUP 1 PRODUCTIONS Video Prod Svcs: City Council 1/8 2,100.00 photography svcs: RDA 150.00 2,250.00 121514 01/1712008 011698 GUERARD, JULIA refund: "Riley in the Moming" 18.95 18.95 121515 01/17/2008 005311 H20 CERTIFIED POOL WATER Dec maint svcs: crc & tes pools 900.00 900.00 SPCl. 121516 01/1712008 000186 HANKS HARDWARE INC Hardware supplies: TCSD Parks 1,044.72 Hardware supplies: City Hall 250.95 Hardware supplies: Ch Museum 232.D7 Hardware supplies: PW Maint 165.48 Hardware supplies: Fld Op Ctr 78.95 Hardware supplies: TCC 53.19 Hardware supplies: Library 27.63 Hardware supplies: Aquatics 24.29 Hardware supplies: B&S 21.53 Hardware supplies: Library 16.14 Hardware supplies: TV Museum 8.49 1,923.44 121517 01/17/2008 001135 HEALTH POINTE MEDICAL Employee Physicals: Hr 70.00 70.00 GROUP INC 121518 01/1712008 010044 HEALTHY MGT DIABETES community service funding pgm FY 07/08 500.00 500.00 EDUCATION 121519 01/17/2008 003198 HOME DEPOT, THE Hardware Supplies: Theater 119.46 Hardware supplies: Parks 29.06 148.52 PageS apChkLst Final Check List Page: 6 01/1712008 1:35:38PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121520 01/17/2008 001060 HYATT htl 1/24:Naggar,Nelson, Butler, Roberts 1,533.95 1,533.95 121521 01/17/2008 005874 I E BIKES equip repair & maint: police 299.02 299.02 121522 01/17/2008 004406 IGOE & COMPANY INC Dec flex benefit plan pmt 390.00 billing adj: Feb flex benefit plan pmt -22.50 367.50 121523 01/17/2008 001407 INTER VALLEY POOL SUPPLY pool sanitizing chemicals:tcsd maint 895.67 895.67 INC 121524 01/17/2008 003266 IRON MOUNTAIN OFFSITE Dec records storage:IS back-up tape 451.83 451.83 121525 01/17/2008 004908 JIFFY LUBE 1878 vehicle repair/maint: B&S 80.01 80.01 121526 01/1712008 011699 JOHNSON, JAIDEEN refund: "The Mystery of the Tigers" 14.95 14.95 121527 01/17/2008 002531 KA TY FM RADIO broadcasting:Old Town holiday event 1,600.00 1,600.00 121528 01/17/2008 003046 K FRO G 95.1 FM RADIO broadcasting:Old Town holiday event 2,000.00 2,000.00 121529 01/17/2008 001091 KEYSER MARSTON ASSOCIATES Dec cnslt svcs:RDA Real Estate Eco 3,392.15 INC Dec cnslt svcs:RDA affordable housing 474.38 3,866.53 121530 01/17/2008 004481 KIMLEY HORN & ASSOCIATES Nov prof svcs:Santiago Det Basin 5,102.31 INC Nov cnslt svcs:murrieta creek trail 4,446.74 9,549.05 121531 01/17/2008 000548 KIPLINGER LETTER, THE Subscr: 3/08-09 Naggar,Mike 73.00 73.00 121532 01/17/2008 009620 KITCHEL, JANET reimb: certificates '08 recycling 791.00 reimb: supplies '08 recycling calendar 67.88 858.88 121533 01/17/2008 010922 KITTENS 'N' PUPS K-9 Food & Supplies: Police 92.64 92.64 CORPORATION 121534 01/1712008 011700 KONICKI, MANISHA G. refund:grading dep 31107 Mariposa 995.00 995.00 121535 01/17/2008 006744 LAMAR CORPORATION, THE Jan billboard advertising: RDA 3,380.00 3,380.00 121536 01/17/2008 004905 LIEBERT, CASSIDY & WHITMORE Nov HR legal svcs for TE060-01 270.00 270.00 121537 01/17/2008 003726 LIFE ASSIST INC medical supplies: paramedics 594.73 medical supplies: TCC 240.67 835.40 Page:6 apChkLst Final Check List Page: 7 01/1712008 1:35:38PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121538 01/17/2008 004087 LOWES INC Hardware supplies: TCC 206.71 206.71 121539 01/17/2008 003782 MAIN STREET SIGNS street signs:pw maint div 581.85 581.85 121540 01/17/2008 004141 MAINTEX INC Custodial Supplies: CRC 1,054.48 Custodial Supplies: Parks 711.97 Custodial Supplies: TCC 624.90 Custodial Supplies: Parks 103.31 2,494.66 121541 01/17/2008 000220 MAURICE PRINTERS INC 1000 CAP Brochures:Temecula Police 602.32 602.32 121542 01/1712008 005690 MICHELLE'S PLACE WOMENS FY 07/08 Community Service Funding 1,500.00 1,500.00 BREAST 121543 01/17/2008 007210 MIDORI GARDENS Dec Idscp maint srvcs:Parks 68,969.46 68,969.46 121544 01/17/2008 011440 MILLMORE'S WAA CREW City vehicles detailing svcs:PW Depts 125.00 City vehicle detailing srvcs:PW 25.00 150.00 121545 01/17/2008 001384 MINUTEMAN PRESS business cards: B. Barnett 43.37 43.37 121546 01/17/2008 001892 MOBILE MODULAR Deposit/module lease:the pantry 8,133.29 12/5-01/3/08 modular bldg rental:TCC 832.40 8,965.69 121547 01/1712008 004534 MOBILE SATELLITE VENTURES Dec EOC Stn Satellite Phone SVcs 72.78 72.78 LP 121548 01/17/2008 005853 MOMS CLUB OF TEMECULA refund:sec.depositfTCC 12/18 150.00 150.00 SOUTH 121549 01/17/2008 010990 MOORE IACOFANO GOLTSMAN Nov consulting srvcs:youth master plan 5,846.55 5,846.55 INC 121550 01/17/2008 011701 MULLIN, DONNA refund:Ellis Island Days 11.89 11.89 121551 01/17/2008 004490 MUSCO SPORTS LIGHTING INC Lighting supplies: Various Park Sites 1,416.26 1,416.26 121552 01/17/2008 001986 MUZAK -SOUTHERN CALIFORNIA Jan music broadcast:Old Town 69.11 69.11 121553 01/17/2008 002925 NAPA AUTO PARTS City vehicle parts:fire stn 84 City vehicle parts:fire stn 84 misc supplies:pw maint div 182.24 75.26 16.80 274.30 Page:? apChkLst Final Check List Page: 8 01/1712008 1:35:38PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121554 01/17/2008 005006 NBS GOVERNMENT FINANCE Spcl Tax Admin Srvcs:Finance Dept 9,290.00 9,290.00 GROUP 121555 01/17/2008 011143 NEW WORLD LANGUAGE election/ntcs translation srvcs: TCSD 473.76 473.76 SERVICES 121556 01/17/2008 002139 NORTH COUNTY TIMES Nov ads:Dickens holiday/Safety Expo 1,532.52 Dec ads:Dickens Holiday/Safety Expo 940.28 Dec display ads: theater 623.83 Dec display ads: CSD holiday events 498.10 3,594.73 121557 01/17/2008 002105 OLD TOWN TIRE & SERVICE City Vehicle RepairlMaint Svcs 546.12 City Vehicle Repair/Maint SVcs 210.77 City Vehicle Repair/Maint SVcs 59.16 City Vehicle Repair/Maint SVcs 34.27 City Vehicle Repair/Maint SVcs 34.27 City Vehicle Repair/Maint SVcs 34.27 918.86 121558 01/1712008 009602 ORANGE COUNTY BUSINESS 1 yr subscription: Econ Dev 58.00 58.00 JOURNAL 121559 01/17/2008 000249 PETTY CASH Petty Cash Reimbursement 507.28 507.28 121560 01/1712008 007484 PHILIPS MEDICAL SYSTEMS INC misc CPR supplies:paramedics 226.28 226.28 121561 01/17/2008 011660 PLANNET CONSULTING consult srvcs:Civic Cntr IS Master Plan 57,918.00 57,918.00 121562 01/17/2008 000253 POSTMASTER Express Mail & Postal Svcs 30.70 30.70 121563 01/17/2008 002012 R D 0 EQUIPMENT COMPANY Equip repair & maint:pw maint div 2,013.81 2,013.81 121564 01/17/2008 000262 RANCHO CALIF WATER DISTRICT Various TCSD Water Meters 3,559.62 Various TCSD Water Meters 3,386.03 Various TCSD Water Meters 1,386.30 Jan 01-02-02001-0 Rancho Vista Rd 441.87 Various PWWater Meters 137.96 Various RDA Water Meters 76.33 8,988.11 121565 01/1712008 000271 RBF CONSULTING Nov dsgn:Winchester corridor prjt 13,618.00 13,618.00 121566 01/17/2008 003591 RENES COMMERCIAL citywide weed control:pw maint 14,950.00 14,950.00 MANAGEMENT Page:8 apChklst Final Check List Page: 9 01/1712008 1:35:38PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121567 01/17/2008 002110 RENTAL SERVICE equip rental:PWmntc 11.00 11.00 CORPORATION 121568 01/17/2008 004498 REPUBLIC INTELLIGENT Dec traffic sgnl repair:pw 757.13 street Light Maint:pw 309.72 1,066.85 121569 01/17/2008 000352 RIVERSIDE CO ASSESSOR Dec assessor maps:b&s dept 18.00 18.00 121570 01/17/2008 003698 RIVERSIDE CO ECONOMIC 3rd Dist.Eco Dev Forum 1/31 M.Edwards 35.00 35.00 121571 01/17/2008 000268 RIVERSIDE CO HABITAT Dec '07 K-Rat payment 1,985.00 1,985.00 121572 01/17/2008 011681 ROBINETTE, BRIAN ALAN Refund:Cite 60233 Dismissed by PO 10.00 10.00 121573 01/1712008 002226 RUSSO, MARY ANNE TCSD Instructor Earnings 504.00 504.00 121574 01/17/2008 000277 S & S ARTS & CRAFTS INC misc supplies:tiny tot pgrm 281.56 281.56 121575 01/17/2008 010089 SECURITAS SECURITY SRVCS Dec security srvcs:Harveston lake 3,202.50 USA 12/28-01/03/08 security srvcs:stn 95 1,452.16 4,654.66 121576 01/17/2008 009213 SHERRY BERRY MUSIC Jazz @the Merc 01/10/08 367.50 367.50 121577 01/17/2008 009746 SIGNS BY TOMORROW "reclaimed water" signs:csd 514.01 514.01 121578 01/17/2008 008823 SILVER STAR PAINTING Fac Imp Prgm: The Bank Of Mexican Food 1,880.00 1,880.00 121579 01/17/2008 000645 SMART & FINAL INC misc.supplies - mpsc 120.11 120.11 121580 01/17/2008 002718 SO CALIF CITY CLERKS ASSN gen.mtg:S.J.lG.F. Pismo Beach,Ca 1/25 70.00 70.00 121581 01/1712008 000537 SO CALIF EDISON Jan 2-01-202-7330 various mtrs 63,893.36 Jan 2-01-202-7603 arterial st lights 23,662.95 Jan 2-00-397-5059 various mtrs 9,526.64 Jan 2-02-351-5281 CRC 4,792.49 Jan 2-10-331-2153 TCC 731.07 Jan 2-28-171-2620 Police Mall Stn 446.89 Jan 2-29-479-2981 Hghwy 79S 110.80 103,164.20 121582 01/17/2008 002503 SOUTH COAST AIR QUALITY ann'l operating fees/em erg gen:C.H. 266.55 ann'l emissions fee/em erg gen:C.H. 99.09 365.64 Page:9 apChkLst Final Check List Page: 10 01/1712008 1:35:38PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121583 01/17/2008 007851 SOUTH COAST HEATING & AIR HVAC services:theater 759.00 HVAC repair:city hall 170.04 HVAC repair:CRC 150.00 HVAC repairs: Fire Station 84 112.50 1,191.54 121584 01/17/2008 002366 STEAM SUPERIOR CARPET facility maint srvcs:theater 1,614.00 CLEANING facility maint srvcs:crc 400.00 facility maint srvcs:city hall 75.00 2,089.00 121585 01/17/2008 011341 STEARNS, CONRAD & SCHMIDT Oct consultant srvcs: EIR hospital prjt 5,272.50 5,272.50 121586 01/17/2008 006145 STENO SOLUTIONS Dec transcription srvcs:Police 719.36 719.36 TRANSCRIPTION 121587 01/17/2008 011667 T & T JANITORIAL INC Dec janitorial srvcs:var. City 7,301.76 7,301.76 121588 01/17/2008 000305 TARGET BANK BUS CARD SRVCS hospitality supplies:theater 31.22 hospitality supplies:theater 26.47 recreation supplies: c. museum 19.76 77.45 121589 01/17/2008 010679 TEMECULA AUTO City vehicle maint:fire prevention 663.41 REPAIR/RADIATOR City vehicle maint: Code Enfocement 78.20 741.61 121590 01/17/2008 004260 TEMECULA STAMP & GRAPHICS Self-Inking Stamp:Finance 30.94 30.94 121591 01/17/2008 004209 TEMECULA SUNRISE ROTARY Jul-Dec Bus bench maint agrmnt pmt 6,000.00 6,000.00 FOUND. 121592 01/17/2008 000515 TEMECULA VALLEY CHAMBER FY 07/08 3rd qtr agreement pmt 37,850.00 37,850.00 OF 121593 01/17/2008 010046 TEMECULA VALLEY Nov '07 Bus. ImplY District Asmnts 49,100.32 49,100.32 CONVENTION & 121594 01/17/2008 010276 TIME WARNER CABLE Jan high speed internet Stn 92 44.95 44.95 121595 01/17/2008 004759 TWIN GRAPHICS vehicle graphics:police units 538.75 538.75 121596 01/17/2008 009709 U H S OF RANCHO SPRINGS, INC Oct-Dec forensic assault exams:police 900.00 900.00 121597 01/1712008 000389 U S C M WEST (OBRA), billing correction:amt duelee 06107 40.24 40.24 NATIONWIDE RETIREMENT Page:10 apChkLst Final Check List Page: 11 01/1712008 1:35:38PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121598 01/17/2008 002702 US POSTAL SERVICE Postage meter deposit 3,914.25 3,914.25 121599 01/17/2008 002065 UNISOURCE paper supplies: central services 1,631.12 1,631.12 121600 01/17/2008 004261 VERIZON Jan xxx-5072 general usage 4,723.62 Dee xxx-8900 GIS Library 748.69 Dee xxx-7530 GIS Library 442.91 Jan xxx-1341 Theater 403.27 Dee xxx-5509 general usage 146.49 Dee xxx-1540 Old Town Prk Lot 89.48 Jan xxx-1941 PTA CD TTACSD 66.19 Dee xxx-0049 general usage 42.83 Dee xxx-1999 general usage 37.79 Dee xxx-5180 79S Irrg Cntr 35.85 Jan xxx-391 0 1 st St Irrigation 35.69 Dee xxx-6620 general usage 31.72 6,804.53 121601 01/17/2008 004279 VERIZON CALIFORNIA INC. Jan access phone line 467.25 467.25 121602 01/17/2008 003487 VETERANS OF FOREIGN WARS FY 07/08 Community Service Funding 2,500.00 2,500.00 4089 121603 01/17/2008 001890 VORTEX DOORS garage door repairs:Fire Stn 73 124.95 124.95 121604 01/17/2008 006612 WEATHERPROOFING TECH, INC Roof Repair:City Hall 431.25 Roof repair:CRC 431.25 862.50 121605 01/17/2008 003730 WEST COAST ARBORISTS INC 12/1-15/07 tree trimming srvcs:citywide 17,150.00 17,150.00 121606 01/17/2008 000621 WESTERN RIVERSIDE COUNCIL Dee '07 TUMF Payment 93,236.22 93,236.22 OF 121607 01/17/2008 000621 WESTERN RIVERSIDE COUNCIL add'l amt due:Expo 2/6 SB/PR/DU/DW 40.00 40.00 OF 121608 01/1712008 008402 WESTERN RIVERSIDE COUNTY Dee '07 MSHCP payment 19,442.31 19,442.31 Grand total for UNION BANK OF CALIFORNIA: 949,873.19 Page:11 apChkLst 01/1712008 1:35:38PM Final Check List CITY OF TEMECULA Page: 12 155 checks in this report. Grand Total All Checks: 949,873.19 Page:12 apChkLst Final Check List Page: 1 01/24/2008 1:11:42PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA Check # Date Vendor Description Amount Paid Check Total 993 01/24/2008 000444 INSTATAX (EDD) State Disability Ins Payment 21,847.49 21,847.49 994 01/24/2008 000283 INSTATAX (IRS) Federal Income Taxes Payment 88,291.30 88,291.30 995 01/24/2008 001065 NATIONWIDE RETIREMENT Nationwide Retirement Payment 20,828.63 20,828.63 SOLUTION 996 01/24/2008 000246 PERS (EMPLOYEES' PERS ER Paid Member Contr Payment 123,227.25 123,227.25 RETIREMENT) 997 01/24/2008 000389 U S C M WEST (OBRA), OBRA - Project Retirement Payment 4,221.40 4,221.40 NATIONWIDE RETIREMENT 998 01/24/2008 000444 INSTATAX (EDD) U I & ETT 4th Qtr 2007 7,074.04 7,074.04 121609 01/22/2008 000871 HILTON Hotel: Eco Devel trip to Scottsdale,AZ 1,397.75 1,397.75 121610 01/24/2008 004594 2 HOT ACTIVEWEAR uniforms: Police Traffic Division 1,085.04 1,085.04 121611 01/24/2008 011718 ABARCA-RAZI, AIME refund: Tiny Tots Bijan 60.00 60.00 121612 01/24/2008 000747 AMERICAN PLANNING 4/08-3/09 mbrshp: Richardson, Patrick 465.00 ASSOCIATION 4/08-3/09 mbrshp: Johnson, Robert 340.00 4/08-3/09 mbrshp: Schuma, Dana 265.00 4/08-3/09 mbrshp: Le Comte, Katie 245.00 4/08-3/09 mbrshp: Jones, Eric 245.00 4/08-3/09 mbrshp: Chiniaeff, Dennis 160.00 1,720.00 121613 01/24/2008 000101 APPLE ON E INC temp help ppe 1/5 Ortiz, V. 497.00 497.00 121614 01/24/2008 005891 ASPEN PUBLISHERS, INC '08 Basic Guide to Payroll publication 297.08 297.08 121615 01/24/2008 002648 AUTO CLUB OF SOUTHERN Membership: 53956093 Ryan, P. 47.00 47.00 CALIF 121616 01/24/2008 011711 BARKLEY, KARENA Refund: Cite 59263 Duplicate Pymt 463.00 463.00 121617 01/24/2008 011710 BURNS, DANIEL Refund: Cite 59947 fee reduced 50.00 50.00 121618 01/24/2008 000154 CSMFO '08 conf 3/5 Anaheim:GR,JS,RG,PB 1,400.00 1,400.00 Page:1 apChklst Final Check List Page: 2 01/24/2008 1:11:42PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121619 01/24/2008 003138 CAL MAT PW patch truck materials 269.90 PW patch truck materials 199.58 469.48 121620 01/24/2008 010349 CALIF DEPT OF CHILD SUPPORT Support Payment Case # DF099118 25.00 25.00 121621 01/24/2008 004248 CALIF DEPT OF JUSTICE- Oct fingerprinting svcs: Police/HR 4,944.00 ACCTING Nov fingerprinting svcs: Police/HR 3,537.00 Dee fingerprinting svcs: Police/HR 2,524.00 11,005.00 121622 01/24/2008 009847 CALIFORNIA PRESENTERS '08 mbrshp CA Presenters: Theater 150.00 150.00 121623 01/24/2008 008644 CANTRELL, ROGER, AlA, AICP Dee design cnslt svcs: Planning 1,010.00 1,010.00 121624 01/24/2008 009539 CHARLES ABBOTT ASSOCIATES Dee plan check svcs:fire prevention 1,166.75 1,166.75 INC 121625 01/24/2008 004609 CINTAS DOCUMENT 1/4 doc shredding: City Facilities 110.00 MANAGEMENT 1/4 doc shredding:PD Mall Storefront 32.50 1/8 doc shredding:PD Mall Storefront 24.00 1/8 doc shredding: CRC 22.50 189.00 121626 01/24/2008 005417 CINTAS FIRST AID & SAFETY First aid supplies: City Hall 97.65 97.65 121627 01/24/2008 004405 COMMUNITY HEALTH CHARITIES Community Health Charities Payment 107.05 107.05 121628 01/24/2008 010650 CRAFTSMEN PLUMBING & HVAC plumbing svcs: Skate Park 6,265.32 INC plumbing svcs: TES pool 967.17 plumbing svcs: CRC 318.61 plumbing svcs: City Hall 160.00 7,711.10 121629 01/24/2008 011346 DALY, DANIEL B. access mat system: PBSP 14,994.82 14,994.82 121630 01/24/2008 004192 DOWNS COMMERCIAL FUELING Fuel for City vehicles: PW Maint 1,828.28 INC Fuel for City vehicles: TCSD 1,679.56 Fuel for City vehicles: PW lnd Dv 451.21 Fuel for City vehicles: B&S 435.17 Fuel for City vehicles: Planning/Code 412.54 Fuel for City vehicles: PWCIP 114.53 Fuel for City vehicles: PO 69.86 Fuel for City vehicles: PWCIP 51.02 Fuel for City vehicles: PWTraffic 47.05 5,089.22 Page2 apChkLst Final Check List Page: 3 01/24/2008 1:11:42PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121631 01/24/2008 000161 EDEN SYSTEMS INC '08 Eden Financial/Payroll Support 31,682.02 31,682.02 121632 01/24/2008 011375 EDUCATIONAL INNOVATIONS INC misc supplies: Children's Museum 23.91 23.91 121633 01/24/2008 000517 ENTENMANN ROVIN & COMPANY ceremonial police badge:M Naggar 144.20 144.20 121634 01/24/2008 011292 ENVIRONMENTAL SCIENCE Nov hospital EIR study svcs:Planning 2,153.65 2,153.65 ASSOC. 121635 01/24/2008 001056 EXCEL LANDSCAPE Dec Idscp maint svc: City Facilities 9,986.81 Irrigation repairs:medians/parks 877.62 Irrigation repairs: Martinique 117.29 10,981.72 121636 01/24/2008 003665 EXCEL TELECOMMUNICATIONS Dec long distance phone svcs 53.58 53.58 121637 01/24/2008 000478 FAST SIGNS Merc signs: Theater 27.16 Merc signs: Theater 27.06 54.22 121638 01/24/2008 000165 FEDERAL EXPRESS INC 12/26-1/8 express mail svcs: Citywide 121.87 121.87 121639 01/24/2008 003747 FINE ARTS NETWORK You're a Good Man Charlie BroVvn 1/10 1,375.00 1,375.00 Page:3 apChkLst Final Check List Page: 4 01/24/2008 1:11:42PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121640 01/24/2008 003347 FIRST BANKCARD CENTER VERISIGN, INC. TT Bus License:2yr secure site 1,790.00 CHARTHOUSE LEARNING CORP. AA training materials:DVD 976.36 US AIRWAYS AA Airiare:EcoDevTrip:Scottsdale:AA 619.00 AT & T MOBILITY TT Cellular phone equip:SpclEvent 539.54 DRI TT Software:Crystal11 509.99 GEOTRUST INC TT City's Domain Name Registration 436.00 NATIONAL LEAGUE OF CITIES ME RegistNLC Cf:3/B-12:WshgtnDC 420.00 HYATT TT Htl:MISAC Conf:10/7-10:Monterey 385.10 SOUTHWEST AIRLINES AA Airfare:LCC mtg:1/17:TM 216.00 VINEYARD ROSE RESTAURANT AA Refreshments:Eco DevTour 206.95 WOLFE EATS PIZZA TT Refreshments: MIS Steering Mtg 196.64 STADIUM PIZZA INC TT Refreshments:EOC Mtg 149.64 LEARNVISUALSTUDIONET TT Webmstr Lifetime subscription 139.97 FCC CONFERENCECALLSVC RJ Conference calls svcs 103.52 LASER SERVICE TT HP OfficeJet R-series printer 61.07 FRANKLIN QUEST COMPANY INC TT Day timer supplies:IS 49.50 PA YPAL TT Veri sign Payflow Pro Transaction 47.00 STAPLES BUSINESS TT misc cell-phone equip 43.08 ADVANTAGE TEMECULA, CITY OF TT business license test 35.00 PA YPAL TT verisign/Ebook:Effect Mgmt w/Outlk 31.05 GODADDY.COM INC. TT SSL 1 yr certificate 19.99 GOVERNING RJ Subscription postage fee 16.00 GODADDY.COM INC. TT Theater Domain Name Registration 7.19 PA YPAL TT Veri sign Payflow Pro Transaction 0.50 NATIONAL LEAGUE OF CITIES ME Credit-Regist:NLC Cf:11/12 -325.00 AT & T MOBILITY TT Cellular phone equip:SpclEvent -442.61 SKILLPATH INC TT Credit-RegistMaster MS Prjt -1,472.00 4,759.48 Page:4 apChkLst Final Check List Page: 5 01/24/2008 1:11:42PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121641 01/24/2008 002982 FRANCHISE TAX BOARD Support Payment Case # 452379267 75.00 75.00 121642 01/24/2008 011351 GBA MASTER SERIES, INC. computerized maint mgmt sys: IS 14,223.95 GBA equip/warehouse license: IS 3,315.11 17,539.06 121643 01/24/2008 004477 GFWC-TEMECULA VLYWOMANS FY 07/08 Comm Svc Funding Award 5,000.00 5,000.00 CLUB 121644 01/24/2008 000177 GLENNIES OFFICE PRODUCTS Office Supplies: TCC/Paramedics 249.94 INC Office Supplies: Records 236.24 486.18 121645 01/24/2008 008361 GRAPE STOMPERS SQ DANCE TCSD instructor earnings 178.50 CLUB TCSD instructor earnings 140.00 TCSD instructor earnings 59.50 TCSD instructor earnings 42.00 420.00 121646 01/24/2008 002174 GROUP 1 PRODUCTIONS Videotaping svcs:HoIiday Parade 3,800.00 3,800.00 121647 01/24/2008 011719 GUITAR CENTER gift cards- Teen Band Jam Awards:tcsd 250.00 250.00 121648 01/24/2008 000378 HAFELI, THOMAS reimb: scanner imaging lamp 219.66 reimb: scanner light bulb 81.18 300.84 121649 01/24/2008 000186 HANKS HARDWARE INC Office Supplies: Fire Dept 832.75 Hardware supplies: Theater 669.77 Hardware supplies: CRC 350.70 1,853.22 121650 01/24/2008 011708 HOGAN CAMP, JOHN Refund: Cite 60446 fee reduced 50.00 50.00 121651 01/24/2008 010210 HOME DEPOT SUPPLY INC, THE maintenance supplies: parks 50.15 Hardware supplies: TCSD 28.19 credit: returned product -46.31 32.03 121652 01/24/2008 001517 HORIZON HEALTH Jan employee assistance pgrm: HR 880.00 880.00 121653 01/24/2008 000194 I C M A RETIREMENT-PLAN I C M A Retirement Trust 457 Payment 11,826.04 11,826.04 303355 121654 01/24/2008 011228 INLAND PLANNING AND DESIGN Oct cnslt svcs:Old Town Urban Design 22,628.55 22,628.55 INC 121655 01/24/2008 010766 INLAND VALLEY SYMPHONY sttlmt: I.V. Symphony perim 1/14 905.90 905.90 PageS apChkLst Final Check List Page: 6 01/24/2008 1:11:42PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121656 01/24/2008 006914 INNOVATIVE DOCUMENT Dec copier maintlusage: City wide 4,846.78 SOLUTIONS Dec copier maint & usage: Library 627.12 5,473.90 121657 01/24/2008 006766 INTL RIGHT OF WAY '08 mbrshp renewal: Chiodo, Carol 215.00 215.00 ASSOC(IRWA) 121658 01/24/2008 010119 IRS-OIC Sup Pmt Offer #1 000497587 452379267 140.11 140.11 121659 01/24/2008 001186 IRWIN, JOHN TCSD instructor earnings 93.10 93.10 121660 01/24/2008 001282 KNORR SYSTEMS INC misc parts: CRCfTES pools 199.D7 199.07 121661 01/24/2008 010120 L G C INLAND INC Dec geotech svcs:Verizon fiber optic 10,713.47 Sep geotech svcs:Verizon fiber optic 10,625.74 Oct geotech svcs:Verizon fiber optic 9,551.62 Oct geotech svcs:Verizon fiber optic 480.00 31,370.83 121662 01/24/2008 011713 LONG, LISA Refund: Cite 59922 Cite Dismissed 25.00 25.00 121663 01/24/2008 010042 MACKEY, LAMISHA refund:sec.depositlCRC 1/5/08 150.00 150.00 121664 01/24/2008 003782 MAIN STREET SIGNS Street sign supplies:pw maint div 83.51 83.51 121665 01/24/2008 004141 MAINTEX INC Custodial Supplies: T.Mus/Old Town 914.47 Custodial Supplies: Old Town 396.95 Custodial Supplies:Field Ops Center 7.00 1,318.42 121666 01/24/2008 004307 MARINE BIOCHEMISTS Dec water maint srvcs:Harv/Duck Pond 4,855.00 4,855.00 121667 01/24/2008 011721 MARRS, LYDIA refund:sec.depositlCRC 3/16/08 150.00 150.00 121668 01/24/2008 007210 MIDORI GARDENS irrigation repairs:Btrfield Stage Pk 121.06 irrigation repairs:Serena Hills Prk 103.29 224.35 121669 01/24/2008 011140 OLD TOWN TEMECULA '08 membership dues: Theater 150.00 150.00 BUSINESS 121670 01/24/2008 002105 OLD TOWN TIRE & SERVICE City Vehicle RepairlMaint Svcs 493.81 City Vehicle Repair/Maint SVcs 386.03 City Vehicle Repair/Maint SVcs 26.19 906.03 121671 01/24/2008 011723 PATTERSON, HANNA & settlement pmt: Diaz Rd Alignment Prjt 73,638.00 73,638.00 ASSOCIATES Page:6 apChkLst Final Check List Page: 7 01/24/2008 1:11:42PM CITY OF TEMECUlA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121672 01/24/2008 001958 PERS lONG TERM CARE PERS Long Term Care Payment 305.56 305.56 PROGRAM 121673 01/24/2008 000249 PETTY CASH Petty Cash Reimbursement 486.32 486.32 121674 01/24/2008 000254 PRESS ENTERPRISE COMPANY Dec ads:rda/csd recreation pgrms 1,498.92 1,498.92 INC 121675 01/24/2008 000907 RANCHO TEMECUlA CAR WASH City vehicle detailing srvcs:var depts 149.00 149.00 121676 01/24/2008 000271 RBF CONSULTING Nov consulting srvcs:I-15/UIt. Intrchng 1,815.90 credit:billing adj/Ult. Intrchng/I-15 -20.60 1,795.30 121677 01/24/2008 004584 REGENCY LIGHTING misc electrical supplies:csd facilities 1,512.38 1,512.38 121678 01/24/2008 002412 RICHARDS WATSON & GERSHON Nov 2007 legal services 141,285.08 141,285.08 121679 01/24/2008 006483 RICHARDS, TYREOSHA I. TCSD Instructor Earnings 462.00 TCSD Instructor Earnings 98.00 TCSD Instructor Earnings 49.00 609.00 121680 01/24/2008 003072 RIVERSIDE AREA RAPE CRISIS FY 07/08 Community Srvc Funding 2,500.00 2,500.00 CTR 121681 01/24/2008 000406 RIVERSIDE CO SHERIFFS DEPT Oct 11 to Nov 07, 2007:law enforcement 1,153,529.98 1,153,529.98 121682 01/24/2008 005406 RIVERSIDE CO TRAIN OFF. ASSN Prevo 1A:Troy Pollock 1/28-2/1/08 160.00 160.00 121683 01/24/2008 005736 SAN BERNARDINO CO SHERIFFS Mtrcycle Officer Updt:1130 Sgt.Southern 113.00 113.00 DEP 121684 01/24/2008 006815 SAN DIEGO, COUNTY OF Support Payment Account # 581095025 12.50 12.50 121685 01/24/2008 010089 SECURITAS SECURITY SRVCS 1/4-10/08 security srvcs:stn 95 1,357.96 1,357.96 USA 121686 01/24/2008 008529 SHERIFF'S CIVil DIV - CENTRAL Support Payment La File # 2007052618 100.00 100.00 121687 01/24/2008 010745 SHERWIN WilLIAMS painting supplies:harveston lake park 30.70 30.70 Page:? apChkLst Final Check List Page: 8 01/24/2008 1:11:42PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121688 01/24/2008 000537 SO CALIF EDISON Jan 2-27-560-0625 DeerhollowWay 2,724.57 Jan 2-26-887-0789 various mtrs 1,638.95 Jan 2-25-393-4681 TES Pool 736.56 Jan 2-28-397-1315 Redhawk Pkwy 16.90 5,116.98 121689 01/24/2008 001212 SO CALIF GAS COMPANY Jan 015 575 0195 2 stn 92 603.41 Jan 055-475-6169-5 PBSP 100.73 704.14 121690 01/24/2008 000293 STADIUM PIZZA INC rirshmnts:team pace event 12/27 136.74 rirshmnts:TCSD Maint recogn 9/4/07 88.72 rirshmnts:CRC stafftrng 113/08 47.38 272.84 121691 01/24/2008 002366 STEAM SUPERIOR CARPET repair & maint facility:City Hall 225.00 225.00 CLEANING 121692 01/24/2008 011722 STONE, RACHEL LIEN refund:sec.depositlCRC 1/8108 150.00 150.00 121693 01/24/2008 004972 TEA M COMMUNITY PANTRY FY 07108 Community Srvc Funding 5,000.00 5,000.00 121694 01/24/2008 000305 TARGET BANK BUS CARD SRVCS recreation supplies: tcc 162.02 recreation supplies: fam 53.26 recreation supplies: child museum 27.31 242.59 121695 01/24/2008 010679 TEMECULA AUTO City vehicle repair/maint: Fire Prev 898.35 REPAIR/RADIATOR City vehicle repair/maint: Fire Prev 142.90 City vehicle repair/maint: Fire Prev 93.30 1,134.55 121696 01/24/2008 003140 TEMECULA VALLEY TCSD Instructor Earnings 109.20 TAEKWONDO TCSD Instructor Earnings 27.30 136.50 121697 01/24/2008 010278 TIGER EQUIPMENT COMPANY emerg channel clearing: CRC 25,640.00 25,640.00 INC 121698 01/24/2008 010013 TOP DAWG TERMITE COMPANY Res Imp Prgm: Vanderharst, Christina 3,000.00 3,000.00 INC 121699 01/24/2008 002706 US POSTAL SERVICE 1 yr subscr/zip code directory:C.M. 50.00 50.00 121700 01/24/2008 007118 US TELEPACIFIC CORPORATION Jan Internet IP Addresses Block 1,565.88 1,565.88 121701 01/24/2008 000325 UNITED WAY United Way Charities Payment 73.00 73.00 Page:8 apChkLst Final Check List 01/24/2008 1:11:42PM CITY OF TEMECUlA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid 121702 01/24/2008 004261 VERIZON Jan xxx-0073 general usage 249.22 Jan xxx-6812 general usage 88.82 Jan xxx-4723 Police Storefront 67.32 Jan xxx-3143 PO Ovlnd Office 35.93 Jan xxx-7562 irrigation controller 34.65 Jan xxx-8573 general usage 32.55 Jan xxx-5473 Moraga Rd 32.55 Jan xxx-2372 Wlf Crk Irrg Cntrl 32.55 121703 01/24/2008 010245 VilLA, DOLORES Retirement Medical Payment 585.88 121704 01/24/2008 001890 VORTEX DOORS garage door repairs:Fire Stn 84 224.95 121705 01/24/2008 001342 WAXIE SANITARY SUPPLY INC custodial supplies:City facilities 342.25 121706 01/24/2008 003730 WEST COAST ARBORISTS INC 12/16-31/07 tree trimming:citywide 13,838.00 121707 01/24/2008 000339 WEST PUBLISHING CORP Dec Law Library Judicial Updates 1,349.62 121708 01/24/2008 005754 WESTERN EAGLE FOUNDATION settlement pmt:Diaz Rd Alignment prjt 30,000.00 121709 01/24/2008 011709 WIDMER, DAVID Refund: Cite 61390 Cite Dismissed 300.00 121710 01/24/2008 011707 WlllCUT, ROSALIE Refund: Cite 54546 Dismissed by PO 325.00 121711 01/24/2008 004774 WOODCREST UNIFORMS Uniform srvcs:policelvolunteers 268.31 Page: 9 Grand total for UNION BANK OF CALIFORNIA: Check Total 573.59 585.88 224.95 342.25 13,838.00 1,349.62 30,000.00 300.00 325.00 268.31 1,947,475.62 Page:9 apChkLst 01/24/2008 1:11:42PM Final Check List CITY OF TEMECULA Page: 10 109 checks in this report. Grand Total All Checks: 1,947,475.62 Page:10 apChkLst Final Check List Page: 1 01/31/2008 11:27:24AM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA Check # Date Vendor Description Amount Paid Check Total 999 01/30/2008 005460 US 8ANK 2006 RDA TABs Debt Srvc Pmt 346,774.37 346,774.37 1000 01/30/2008 005460 US 8ANK RDA Debt Srvc Pmt 668,608.13 668,608.13 121712 01/28/2008 000418 RIVERSIDE CO CLERK & NOD recordation:Hospital final EIR 2,670.75 2,670.75 RECORDER 121713 01/31/2008 000745 AT & T M081L1TY Cellular phone svcs:CM/Council 479.22 479.22 121714 01/31/2008 011734 A88E,MARCUS ReimbVericom Cmptr Cf:1/16-18:Chula 255.95 255.95 121715 01/31/2008 000733 A88EY PARTY RENTS equip rental:RDA Old ToVVTl Event 401.00 401.00 121716 01/31/2008 008698 ADVANCED APPLIED NOV CNSL T SVC' CITYWIDE 9,724.50 9,724.50 ENGINEERING SIGNING/STRIPING 121717 01/31/2008 001916 AL8ERT A WE88 ASSOCIATES Dec cnslt svcs:Santa Marg EIR 5740 5740 121718 01/31/2008 006915 ALLIE'S PARTY EQUIPMENT rental equip:Old Town Holiday 252.79 252.79 121719 01/31/2008 004240 AMERICAN FORENSIC NURSES DUI & drug screening: Police 276.50 DUI & drug screening: Police 185.00 461.50 121720 01/31/2008 000747 AMERICAN PLANNING htl Nat'1 ConfVegas 4/27-5/1 CD/SK 1,630.64 1,630.64 ASSOCIATION 121721 01/31/2008 008279 AMERICOMP INFOSYSTEMS computer supplies/equip: Info Sys 226.28 226.28 INC 121722 01/31/2008 000101 APPLE ONE INC temp help ppe 1/12 Ortiz, V 705.56 705.56 121723 01/31/2008 000475 8 N I PU8L1CATIONS INC publication: B&S 26.18 26.18 121724 01/31/2008 010086 8AGGIT INC waste receptacle: dog park 445.73 445.73 121725 01/31/2008 002377 8EST 8UY COMPANY INC Employee Computer Purchase Prgm 1,762.57 1,762.57 121726 01/31/2008 004262 810- TOX LA80RATORIES DUI & DRUG SCREENING: POLICE 727.50 DUI & DRUG SCREENING: POLICE 356.45 DUI & DRUG SCREENING: POLICE 219.80 1,303.75 Page:1 apChkLst Final Check List Page: 2 01/31/2008 11:27:24AM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121727 01/31/2008 006908 C C & COMPANY INC costume rental: TCSD 538.75 entertainment:high hopes pgrm 175.00 713.75 121728 01/31/2008 004248 CALIF DEPT OF DUI & drug screening: Police 1,645.00 1,645.00 JUSTICE-ACCTING 121729 01/31/2008 003577 CALIF STATE 80ARD OF Sales & Use Tax Retum Jan-Dec 07 25,430.20 25,430.20 121730 01/31/2008 005714 CAMP DEL CORAZON community service funding pgm FY 07/08 5,000.00 5,000.00 121731 01/31/2008 004971 CANON FINANCIAL SERVICES, FE8 COPIER LEASES. CITYWIDE 4,744.84 4,744.84 INC 121732 01/31/2008 010434 CATERERS CAFE refreshments:City Attorney mtg 1/22 152.41 152.41 121733 01/31/2008 011510 CATO GEOSCIENCE INC Dec cnslt svcs:santa marg annex 10,207.00 10,207.00 121734 01/31/2008 001249 CENTRE FOR ORG reg:'08 Reg Mgmt Acdmy C'bad MDL T 1,950.00 1,950.00 EFFECTIVENESS 121735 01/31/2008 004609 CINTAS DOCUMENT 1/4 doc shredding svcs: Library 32.50 32.50 MANAGEMENT 121736 01/31/2008 003997 COAST RECREATION INC recreational equip: RedhaVV'k park 682.95 682.95 121737 01/31/2008 002756 COMPLETE EM8ROIDERY Police Logos FlexFit Ball Caps 490.26 DESIGNS recognition shirts:police explorer's 290.93 781 19 121738 01/31/2008 000447 COMTRONIX OF HEMET equip repair/maint: Police PA 200.00 200.00 121739 01/31/2008 001264 COSTCO WHOLESALE HP Officejet Pro L7650 printer/fax 366.34 366.34 121740 01/31/2008 001264 COSTCO WHOLESALE MISC SUPPLlESTHEATER 221.83 HOSPITALITY MISC SUPPLlESTHEATER HOSPITALITY 125.30 MISC SUPPLlESTHEATER HOSPITALITY 6.13 353.26 121741 01/31/2008 010212 CREATIVE 8USINESS pmt svc: recycling calendar 2008 8,752.01 8,752.01 GRAPHICS 121742 01/31/2008 009214 CROWN INDUSTRIES INC SUPPLIES. THEATER STANCHIONS 89.55 89.55 121743 01/31/2008 011729 CUELLAR, MICHAEL refund: security deposit TCC 1/5 150.00 150.00 Page2 apChkLst Final Check List Page: 3 01/31/2008 11:27:24AM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121744 01/31/2008 005925 CYGNUS EXPOSITIONS Fire House VVorld Cf 213-7:Buckley,T 335.00 335.00 121745 01/31/2008 010054 DANCE MAGAZINE, INC. subscription: 2 yr "Dance" Theater 64.90 64.90 121746 01/31/2008 001393 DATA TICKET INC Dec parking citation svc: Police 2,514.44 2,514.44 121747 01/31/2008 006150 DIALOGIC COMMUNICATIONS ADDTL PHONE MINUTES. EOC OPS 1,821.55 1,821.55 CORP 121748 01/31/2008 004417 DISCOUNT SCHOOL SUPPLY rec supplies: Children's Museum 134.22 134.22 121749 01/31/2008 011730 DORAN-GOGA, WEN DY "The Constitution" "Independence Hall" 33.00 33.00 121750 01/31/2008 004192 DOWNS COMMERCIAL Fuel for City vehicles: TCSD 73.04 73.04 FUELING INC 121751 01/31/2008 001669 DUNN EDWARDS misc supplies: PVV Maint 23749 CORPORATION misc supplies: PVV Maint 23749 misc supplies: PVV Maint 4.87 479.85 121752 01/31/2008 011202 EM H SPORTS & FITNESS TCSD instructor earnings 546.00 TCSD instructor earnings 168.00 714.00 121753 01/31/2008 002528 EAGLE GRAPHIC CREATIONS recognition mugs: HR 34.91 INC recognition plaque: HR 32.33 67.24 121754 01/31/2008 000523 EASTERN MUNICIPAL WATER Jan 95366-02 Diego Dr Ldscp 17.73 DIST Jan 190304-02 Seraphina Rd 14.13 31.86 121755 01/31/2008 008704 EDWARDS, MARYANN Reimb:LCC Mayor's/Council Cf:7/25-28 329.80 329.80 121756 01/31/2008 011731 EGLER, MARY refund:"Pikachu Shocks Back" 12.95 12.95 121757 01/31/2008 010493 FOREST CITY COMMERCIAL Feb lease pymtPolice Mall Storefront 1,458.33 1,458.33 MGMT 121758 01/31/2008 007866 G C S SUPPLIES INC printer toner/cartridges: Info Sys 237.05 237.05 121759 01/31/2008 010326 G E 10NICS INC equip maintlrepair: Stn 73 112.06 equip maintlrepair" Stn 73 52.00 equip maintlrepair" Stn 73 23.71 187.77 Page:3 apChkLst Final Check List Page: 4 01/31/2008 11:27:24AM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121760 01/31/2008 000177 GLENNIES OFFICE PRODUCTS Office supplies: PVV 1,425.80 INC Office Supplies: CM/Council 797.29 2,223.09 121761 01/31/2008 005947 GOLDEN STATE OVERNIGHT 1/2-1/8 express mail svc: Fire Prev 153.09 153.09 121762 01/31/2008 000175 GOVERNMENT FINANCE 3/08-2/09 mb:Roberts/Brovvn/Simpson 570.00 570.00 OFFICERS 121763 01/31/2008 003792 GRAINGER misc equipment: Stn 92 140.70 misc equipment: Stn 92 25.67 166.37 121764 01/31/2008 008444 GREAT OAK HIGH SCHOOL Community Service Funding FY 07/08 5,000.00 5,000.00 121765 01/31/2008 000378 HAFELI, THOMAS reimb:teleconferencing webcams 258.56 258.56 121766 01/31/2008 006250 HAZ MAT TRANS INC Haz Mat waste disposal svcs:PVV 827.50 827.50 121767 01/31/2008 003198 HOME DEPOT, THE misc supplies: PVV Maint 624.95 misc supplies: TCC 217.90 credit: returned product TCSD -6.40 credit: returned product TCSD -139.90 696.55 121768 01/31/2008 007981 I D EDGE INC misc supplies: CRC 161 14 161 14 121769 01/31/2008 003571 INTL ASSN OF PLUM81NG AND '06 Mechanical Codes: B&S 231.76 231.76 121770 01/31/2008 006766 INTL RIGHT OF VVAY Public Educ Symposium:2/12-14 445.00 445.00 ASSOC(lRVVA) 121771 01/31/2008 004884 J & VV REDVVOOD LU M8ER CO misc supplies: PVV Maint 24.83 24.83 INC 121772 01/31/2008 000820 K R VV & ASSOCIATES Nov/Dec eng plan ck svcs: PVV 5,720.00 5,720.00 121773 01/31/2008 002424 KELLEY DISPLAY INC Car Show banner maint: RDA 232.00 232.00 121774 01/31/2008 001282 KN OR R SYSTE MS IN C Equip svc: CRC pool 1,259.10 1,259.10 121775 01/31/2008 010120 L G C INLAND INC Nov geotech svcs:Verizon fiber optic 9,224.23 9,224.23 121776 01/31/2008 011732 LAU, KAR EN refund:security deposit CRC 2/1 150.00 150.00 Page4 apChkLst Final Check List Page: 5 0113112008 11:27:24AM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121777 01/31/2008 004905 L1E8ERT, CASSIDY & Dec H R legal svcs for TE060-01 999.00 999.00 WHITMORE 121778 01/31/2008 003726 LIFE ASSIST INC medical supplies: Paramedics 905.31 905.31 121779 01/31/2008 011691 LISA KERSTEN WE88 Memories Swing Team event 212 699.00 699.00 121780 01/31/2008 004776 M P SIGNS "paramedic" lettering for fire vehicles 26.40 26.40 121781 01/31/2008 003782 MAIN STREET SIGNS Street signs:pw maint div 533.36 533.36 121782 01/31/2008 001967 MANPOWER TEMPORARY temp help wle 12123 ACfTF 1,601.01 SERVICES temp help wle 01113 ACfTF 1,227.76 temp help wle 12130 ACfTF 1,126.44 temp help wle 01106 ACfTF 679.44 4,634.65 121783 01/31/2008 010974 MATRIX CONSULTING GROUP reimb expense:user fee study 58.40 58.40 121784 01/31/2008 011129 MIDDLECAMP, TAMRA Reimb:Dvvntvvn Scottsdale Tour"1123-24 83.35 Reimb:LCC Bill Support Mtg:1117:Sacr 43.01 126.36 121785 01/31/2008 011440 MILLMORE'S WAX CREW City vehicles detailing srvcs:PVV 100.00 100.00 121786 01/31/2008 001384 MINUTEMAN PRESS windowenvelopes:finance 989.03 989.03 121787 01/31/2008 000973 MIRACLE RECREATION PLAYGROUND EQUIP MAINT:WIN CRK 424.53 424.53 EQUIPMENT PARK 121788 01/31/2008 011467 MOFFATT, KATHERINE L. entertainment theater 2/8108 4,000.00 4,000.00 121789 01/31/2008 001214 MORNINGSTAR equip repair & mainttheater monitor 73.08 73.08 PRODUCTIONS, LLC 121790 01/31/2008 006146 MT SAN JACINTO COMMUNITY entertainment:old tovvn holiday 1219 450.00 450.00 121791 01/31/2008 011634 MULTI LITE USA INC Lighting:library 1,850.10 1,850.10 121792 01/31/2008 003996 MUSIC HERITAGE, INC FY07108 Community Srvc Funding 4,000.00 4,000.00 121793 01/31/2008 011728 NICHOLS, JAMESA. refund:ovrpmt/28765 140 single oak dr 343.00 343.00 PageS apChkLst Final Check List Page: 6 01/31/2008 11:27:24AM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121794 01/31/2008 002105 OLD TOWN TIRE & SERVICE City Vehicle Repair/Maint Svcs 877.60 City Vehicle Repair/Maint Svcs 322.98 City Vehicle Repair/Maint Svcs 211.37 City Vehicle Repair/Maint Svcs 34.27 1,446.22 121795 01/31/2008 001171 ORIENTAL TRADING COMPANY program supplies: c. museum 129.28 129.28 INC 121796 01/31/2008 011727 OSTRANDER, CODY refund:sec.depositltcc 1/26/08 400.00 400.00 121797 01/31/2008 000249 PETTY CASH Petty Cash Reimbursement 580.44 580.44 121798 01/31/2008 002185 POSTMASTER postage/returned srvc:Level C Ballots 1,000.00 1,000.00 121799 01/31/2008 005075 PRUDENTIAL OVERALL Dec uniforms/fir mts/tvv1 rentals:City 1,680.35 SU PPL Y creditchrg not per contract -40.00 1,640.35 121800 01/31/2008 002012 R D 0 EQUIPMENT COMPANY City vehicle repair & maintpw maint 1,143.75 City vehicle maint parts:pw maint 49.69 1,193.44 121801 01/31/2008 000262 RANCHO CALIF WATER Various TCSD Water Meters 5,093.88 D ISTR ICT Jan 01-04-47210-0 T.E.S. Pool 252.46 Various Fire Water Meters 118.29 Jan 01-04-10033-2 Margarita Rd 57.87 5,522.50 121802 01/31/2008 000526 REGENTS OF UNIVERSITY OF crash zone-crime zone 2/11-15 Dep 710.00 710.00 CALIF Hoctor 121803 01/31/2008 002110 RENTAL SERVICE Equip rental:PW mntc 24.06 CORPORATION Equip rental:PW mntc 1719 41.25 121804 01/31/2008 000353 RIVERSIDE CO AUDITOR Dec 2007 parking citation 9,101 13 9,101 13 121805 01/31/2008 000418 RIVERSIDE CO CLERK & Res Imprv Prgm: Dimopoulos, C. 11.00 11.00 RECORDER 121806 01/31/2008 000418 RIVERSIDE CO CLERK & Res Imprv Prgm: Wooldridge, R. & T 11.00 11.00 RECORDER 121807 01/31/2008 000418 RIVERSIDE CO CLERK & Res Imprv Prgm: Hedberg, V 11.00 11.00 RECORDER 121808 01/31/2008 000418 RIVERSIDE CO CLERK & Res Imprv Prgm: Mack, R. 11.00 11.00 RECORDER Page:6 apChkLst Final Check List Page: 7 01/31/2008 11:27:24AM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121809 01/31/2008 000418 RIVERSIDE CO CLERK & Res Imprv Prgm: Barnes, D. 11.00 11.00 RECORDER 121810 01/31/2008 011693 ROYAL CROWN REVUE entertainment:cultural arts pgnn 2/2/08 4,000.00 4,000.00 121811 01/31/2008 009196 SACRAMENTO THEATRICAL misc lighting supplies:theater 468.19 LIGHTING misc lighting supplies:theater 127.50 595.69 121812 01/31/2008 010089 SECURITAS SECURITY SRVCS 1/11-17/08 security srvcs:stn 95 1,357.96 1,357.96 USA 121813 01/31/2008 009213 SHERRY 8ERRY MUSIC Jazz@the Merc 1/17/08 336.00 336.00 121814 01/31/2008 000645 SMART & FINAL INC REFRESHMENTSTHEATER PRGRMS 224.66 misc supplies teen pgnns 89.59 misc rec supplies:high hopes 63.24 377 49 121815 01/31/2008 000537 SO CALIF EDISON Jan 2-29-224-0173 Fire Stn 1,944.34 Jan 2-29-933-3831 FOC 1,592.13 Jan 2-29-295-3510 VVolfVlly 945.13 Dec 2-02-351-4946 MPSC 836.16 Jan 2-20-817-9929 Police OT Stn 289.30 Jan 2-28-904-7706 Overland Trail 166.27 Jan 2-28-331-4847 Pauba Rd 137.38 Jan 2-29-657-2563 Various TCSD Meters 114.17 Jan 2-21-981-4720 Hwy 79S 80.96 Jan 2-29-657-2787 VVinchester Rd 37.53 Jan 2-27-371-8494 Offsite Storage 25.31 Jan 2-29-807-1382 Irrigation Meter 16.38 Jan 2-29-807-1093 Irrigation Diaz Rd 16.01 6,201.07 121816 01/31/2008 001212 SO CALIF GAS COMPANY Jan 125-244-2108-3 Library 922.81 Jan 095-167-7907-2 Fire Stn 84 317.61 1,240.42 121817 01/31/2008 000282 SO CALIF MUNICIPAL '08 mbrshp dues:HP/JP/CM/JVVfTZ 350.00 350.00 ATHLETIC 121818 01/31/2008 011726 SOFIA HOTEL, THE htl:VVorld Expo 2/5-7 SD, Ca T.Buckley 312.76 312.76 121819 01/31/2008 011726 SOFIA HOTEL, THE htl:VVorld Expo 2/5 S.D., Ca S.Dakin 156.38 156.38 121820 01/31/2008 011726 SOFIA HOTEL, THE htl:VVorld Expo 2/5-6 SD, Ca G.Patterson 156.38 156.38 121821 01/31/2008 000519 SOUTH COUNTY PEST Jan pest control services: fs 84 80.00 80.00 CONTROL INC Page:? apChkLst Final Check List Page: 8 01/31/2008 11:27:24AM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121822 01/31/2008 008141 SOUTHWESTERN ASSN annual mbrshp dues:5 Police staff 325.00 325.00 TECHN ICAL 121823 01/31/2008 000293 STADIUM PIZZA INC STAFFING TRAINING: C MUSEUM 49.24 49.24 121824 01/31/2008 007273 STUMPS PRINTING COMPANY misc supplies:Father/Dghtr Date Night 75748 75748 INC 121825 01/31/2008 000305 TARGET BANK BUS CARD recreation supplies: c. museum 61.01 61.01 SRVCS 121B26 01/31/200B 000310 TEMECULA CREEK INN INC Emp recognition eventhuman res 16,362.72 16,362.72 121B27 01/31/200B 00392B TEMECULA TOWNE CENTER CFD 88-12 Reimb:APN 910420005 76,969.26 ASSN CFD 88-12 Reimb:APN 910420007 7,997.7B CFD 88-12 Reimb:APN 910420008 5,B66.70 CFD 88-12 Reimb:APN 910470012 1,B05.14 92,63B.BB 121B2B 01/31/200B 005722 TEMECULA VALLEY GARDEN FY07/08 Community Srvc Funding 500.00 500.00 CLUB 121B29 01/31/200B 004B73 TEMECULA VALLEY FY07/08 Comm. Svc Fund:Plaques/Pub 750.00 750.00 HISTORICAL SOC 121B30 01/31/200B 004B73 TEMECULA VALLEY FY 07/08 Comm. Srvc Fund:VVolfs Tomb 750.00 750.00 HISTORICAL SOC 121B31 01/31/200B 000306 TEMECULA VALLEY PIPE & plumbing supplies:csd/pw maint 423.73 423.73 SU PPL Y 121B32 01/31/200B 000919 TEMECULA VALLEY UNIFIED Oct-Nov City vehicles fuel usage 1,150.6B 1,150.6B SCHOOL 121B33 01/31/200B 003B49 TERRYBERRY COMPANY Service Recognition pins: HR 2007 1,256.19 1,256.19 121B34 01/31/200B 010276 TIME WARNER CABLE Jan high speed intemet Stn 92 5B.91 Jan high speed intemet MPSC 44.95 103.B6 121B35 01/31/200B 000319 TOMARK SPORTS INC Var sports equip:csd sports pgnn 2,933.66 2,933.66 121B36 01/31/200B 00430B TOWNE & COUNTRY AUTO & Veh repair & maint:pw patch truck 120.00 120.00 TOWING 121B37 01/31/200B 007766 UNDERGROUND SERVICE Dec undrgrnd svcs alert tickets:PVV 401.60 401.60 ALERT Page:8 apChkLst Final Check List Page: 9 01/31/2008 11:27:24AM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 121838 01/31/2008 002065 UNISOURCE Paper Supplies - Central Services 4,137.60 4,137.60 121839 01/31/2008 008517 UNITED SITE SERVICES OF 113-30/08 FENCE RENTAL:MAIN ST 26.40 26.40 CA,INC 8RIDGE 121840 01/31/2008 011733 URI8E, RICHARD Reimb:IMSA Cert:1/15-17:LasVegas 451.67 451.67 121841 01/31/2008 004794 VALLEYVVINDS COMMUNITY entertainment:old tOVVTl holiday 12/8 150.00 150.00 121842 01/31/2008 011735 VERICOM COMPUTERS INC Veri com trng 1/17-18 Oep. Abbe/Burns 350.00 350.00 121843 01/31/2008 004261 VERIZON Jan xxx-0074 general usage 284.00 Jan xxx-3564 alann 65.18 Jan xxx-0714 PO Mall Alarm 34.65 Jan xxx-5275 PO OSL 33.59 Jan xxx-3984 M.Naggar 32.55 Jan xxx-6084 general usage 31.62 481.59 121844 01/31/2008 004789 VERIZON ONLINE Internet svcs xx9647@ Library 439.95 Internet svcs xx2527 Police OSL 39.95 479.90 121845 01/31/2008 008445 VVAL T ALLEN ARCH ITECT architectural srvcs:frnch val overcross 8,136.32 8,136.32 121846 01/31/2008 000348 ZIGLER, GAIL Reimb:meeting supplies 1/24/08 9141 9141 Grand total for UNION BANK OF CALIFORNIA: 1,322,960.46 Page:9 apChkLst 01/31/2008 11:27:24AM Final Check List CITY OF TEMECULA 137 checks in this report. Grand Total All Checks: Page: 10 1,322,960.46 Page:10 ITEM NO.4 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Genie Roberts, Director of Finance DATE: February 12, 2008 SUBJECT: City Treasurer's Report as of December 31,2007 PREPARED BY: Rudy Graciano, Revenue Manager Shannon Buckley, Accountant RECOMMENDATION: 2007. Approve and file the City Treasurer's Report as of December 31, BACKGROUND: Government Code Sections 53646 and 41004 require reports to the City Council regarding the City's investment portfolio, receipts, and disbursements respectively. Adequate funds will be available to meet budgeted and actual expenditures of the City for the next six months. Current market values are derived from the Local Agency Investment Fund (LAIF) reports, Union Bank of California trust and custody statements, and from US Bank trust statements. Attached is the City Treasurer's Report that provides this information. The City's investment portfolio is in compliance with the statement of investment policy and Government Code Sections 53601 and 53635 as of December 31,2007. FISCAL IMPACT: None. ATTACHMENTS: City Treasurer's Report as of December 31,2007 City of Temecula, California Portfolio Management Portfolio Summary December 31, 2007 City of Temecula 43200 Business Park Drive P.O.80X9033 Temecula, CA, 92590 (951)694-6430 p., Market Book %01 Days to YTM YTM Investments Value Value Value Portfolio Term Maturity 350 Equiv. 365 Equiv. Certificat6<3ofDep.asit-Bart 970,451.03 970,451.03 970,451.03 0.51 1,079 eec 5.548 5.B25 Managed Pool Accolllts 84,3B8,8B4.12 54,3B8,5&4.12 84,3B8,8B4.12 44.2B , , 4.B9B 4.7Bl Letter of Credit TOG TOG 3.00 O.OG , , O.OGG O.OGG LccalAgencylnv6<3tmeriFunds S9,B13,181.31 S9,B41,531.11 59,B13,181.31 31.27 , , 4.735 4.801 FederalAgE>llcyCallableSecurities 39,B15,GGO.OG 39,858,5&5.35 39,B15,GGO.OG 2G.78 1,474 ew 4.410 4472 FederalAgE>llcyBuletS~llities 1,GGG,GGO.OG 1,031,88000 1,GGG,GGO.OG 0.52 1,21B en 4,934 5.002 Investment Contracts S,GBB,400.7B S,GBB,400.7B S,GBB,4W.7B 2.BB 9,33B 7,100 4.209 4.349 190,633,988.22 190,938,083.37 190,633,988.22 100.00% 567 380 4.644 4.708 Investments Cash and Accrued Interest Passbook/Chockirr;] 7,9G7,3SB.29 7,9G7,3SB.29 7,9G7,35B.29 G.G53 G.G54 (rKltincludooin'yieldcalculatioos) Accrued Interest at plfchase 4,13B.9S 4,13B.9S Subtotal 7,911,493.24 7,911,493.24 Total Cash and Investments 198,541,344.51 198,849,576.61 198,545,481.46 567 380 4.644 4.708 Total Earnings December 31 Month Ending Fiscal Year To Date CurrentYear 814,642.65 5,532,g17.85 Average Daily Balance 200,190,699.96 203,427,600.07 Effective Rate of Return 4.79% 5.40% Reporting period 1210112007-12/3112007 Portfolio TEME CP PM(PRF]M1)SymFep8.41.2D2a ReportVer.5.DD Run Date: D1!3O'20D3. 13:13 City of Temecula, California Portfolio Management Page 2 Portfolio Details - Investments December 31, 2007 Average Purchase Stated YTM YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate 360 365 Maturity Date Certificates of Deposit - Bank 94686006-1 03-4 RESERVE USBANK 08/29/2007 96,467.50 96,467.50 96,467.50 5.080 5.080 5.151 62 03103/2008 95453518-2 88-12 GENIM2 USBANK 06/12/2007 873,983.53 873,983.53 873,983.53 5.600 5.600 5.678 974 09/01/2010 --- Subtotal and Average 970,451.03 970,451.03 970,451.03 970,451.03 5.548 5.625 883 Managed Pool Accounts 104348008 01-2 IMP First American Treasury 253,077.48 253,077.48 253,077.48 3.200 3.156 3.200 104348006 01-2 RES A First American Treasury 465,731.59 465,731.59 465,731.59 3.200 3.156 3.200 104348016 01-2 RES B First American Treasury 214,395.69 214,395.69 214,395.69 3.200 3.156 3.200 104348000 01-2 SP TAX First American Treasury 30,810.86 30,810.86 30,810.86 3.200 3.156 3.200 94669911 03-1 ACOA1 First American Treasury 4,204.76 4,204.76 4,204.76 3.200 3.156 3.200 94669921 03-1 ACOB1 First American Treasury 14,873.07 14,873.07 14,873.07 3.200 3.156 3.200 94669902 03-1 BOND First American Treasury 0.34 0.34 0.34 2.940 2.900 2.940 94669916 03-1 RES B First American Treasury 245,243.23 245,243.23 245,243.23 3.200 3.156 3.200 94669000 03-1 SPTAX First American Treasury 147,731.22 147,731.22 147,731.22 3.200 3.156 3.200 793593011 03-2 ACO First American Treasury 90,569.55 90,569.55 90,569.55 3.200 3.156 3.200 793593009 03-2 EMW D First American Treasury 4,162.28 4,162.28 4,162.28 3.200 3.156 3.200 793593007 03-2 IMP First American Treasury 3,387.19 3,387.19 3,387.19 3.200 3.156 3.200 793593010 03-2 PW ADM First American Treasury 2,530.67 2,530.67 2,530.67 3.200 3.156 3.200 793593006 03-2 RES First American Treasury 361.72 361.72 361.72 3.200 3.156 3.200 793593000 03-2 SP TX First American Treasury 1,509.27 1,509.27 1,509.27 3.200 3.156 3.200 744727011 03-3 ACO 1 First American Treasury 8,948.59 8,948.59 8,948.59 3.200 3.156 3.200 744727002 03-3 BON D First American Treasury 0.51 0.51 0.51 3.920 3.866 3.920 744727007 03-3 CITY 1 First American Treasury 156.13 156.13 156.13 3.200 3.156 3.200 744727009 03-3 EMW D 1 First American Treasury 136.23 136.23 136.23 3.200 3.156 3.200 94669000 03-3 SP TAX First American Treasury 63,317.58 63,317.58 63,317.58 3.200 3.156 3.200 94686001 03-4 ADMIN First American Treasury 17,601.82 17,601.82 17,601.82 3.200 3.156 3.200 94686005 03-4 PREPMT First American Treasury 4,006.82 4,006.82 4,006.82 3.200 3.156 3.200 94686000 03-4 REDEMP First American Treasury 7,259.87 7,259.87 7,259.87 3.200 3.156 3.200 94686006 03-4 RES First American Treasury 11,799.88 11,799.88 11,799.88 3.200 3.156 3.200 78776002 03-6 BON D First American Treasury 0.02 0.02 0.02 4.740 4.675 4.740 786776007 03-6 IMP First American Treasury 17.89 17.89 17.89 3.190 3.146 3.190 786776006 03-6 RES First American Treasury 342,505.37 342,505.37 342,505.37 3.200 3.156 3.200 786776000 03-6 SP TAX First American Treasury 690.32 690.32 690.32 3.200 3.156 3.200 95453510 88-12 BOND First American Treasury 43,521.91 43,521.91 43,521.91 3.200 3.156 3.200 95453518 88-12 GEN I First American Treasury 07/01/2007 14,133.55 14,133.55 14,133.55 3.200 3.156 3.200 107886000 RDA 06 A INT First American Treasury 36,343.76 36,343.76 36,343.76 3.200 3.156 3.200 107886010 RDA 06 B INT First American Treasury 5.77 5.77 5.77 3.120 3.077 3.120 107886008 RDA 06 CIP A First American Treasury 911.33 911.33 911.33 3.200 3.156 3.200 Portlolio TEME CP Run Date: 01/30/2008-13:18 PM (PRF _PM2) SymRept 6.41.202a ReportVer.5.00 City of Temecula, California Portfolio Management Page 3 Portfolio Details - Investments December 31, 2007 Average Purchase Stated YTM YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate 360 365 Maturity Date Managed Pool Accounts 107886018 RDA 06 CIP B First American Treasury 6,716.50 6,716.50 6,716.50 3.200 3.156 3.200 107886016 RDA 06 RES B First American Treasury 2,140.84 2,140.84 2,140.84 3.200 3.156 3.200 107886030 RDA 07 CAP I First American Treasury 11/01/2007 66.09 66.09 66.09 3.190 3.146 3.190 107886029 RDA 07 COI First American Treasury 11/01/2007 74,133.76 74,133.76 74,133.76 3.200 3.156 3.200 107886027 RDA 07 ESCRO First American Treasury 11/01/2007 447.60 447.60 447.60 3.200 3.156 3.200 107886028 RDA 07 PROJE First American Treasury 11/01/2007 1,581.18 1,581.18 1,581.18 3.200 3.156 3.200 107886026 RDA 07 RESER First American Treasury 11/01/2007 90.02 90.02 90.02 3.200 3.156 3.200 94434160 RDA TABs INT First American Treasury 716.58 716.58 716.58 3.200 3.156 3.200 94432360 TCSD COPs IN First American Treasury 724.41 724.41 724.41 3.200 3.156 3.200 793593011-1 03-2-1 ACOUI CA Local Agency Investment Fun 07/01/2007 40,256,406.28 40,256,406.28 40,256,406.28 4.801 4.735 4.801 793593009-1 03-2-1 EMW D CA Local Agency Investment Fun 07/01/2007 1,472,450.25 1,472,450.25 1,472,450.25 4.801 4.735 4.801 793593007-1 03-2-1 IMPRO CA Local Agency Investment Fun 07/01/2007 1,132,887.26 1,132,887.26 1,132,887.26 4.801 4.735 4.801 793593010-1 03-2-1 PW AD CA Local Agency Investment Fun 07/01/2007 677,157.81 677,157.81 677,157.81 4.801 4.735 4.801 793593006-3 03-2-3 RESER CA Local Agency Investment Fun 07/01/2007 3,673,546.15 3,673,546.15 3,673,546.15 4.801 4.735 4.801 107886008-1 RDA 06 CIP-1 CA Local Agency Investment Fun 16,949,273.61 16,949,273.61 16,949,273.61 4.801 4.735 4.801 107886018-2 RDA 06 CIP-2 CA Local Agency Investment Fun 2,889,577.51 2,889,577.51 2,889,577.51 4.801 4.735 4.801 107886030-1 RDA 07 CAP-1 CA Local Agency Investment Fun 11/01/2007 596,531.25 596,531.25 596,531.25 4.801 4.735 4.801 107886027-1 RDA 07 ESC-1 CA Local Agency Investment Fun 11/01/2007 4,040,000.00 4,040,000.00 4,040,000.00 4.801 4.735 4.801 107886028-1 RDA 07 PRO-1 CA Local Agency Investment Fun 11/01/2007 9,752,018.75 9,752,018.75 9,752,018.75 4.801 4.735 4.801 107886026-1 RDA 07 RES-1 CA Local Agency Investment Fun 11/01/2007 812,450.00 812,450.00 812,450.00 4.801 4.735 4.801 107886006 RDA 06 RES A MBIA Surety Bond 1.00 1.00 1.00 2.190 2.160 2.190 94434166 RDA TABs RES MBIA Surety Bond 1.00 1.00 1.00 2.190 2.160 2.190 --- Subtotal and Average 84,382,586.56 84,368,864.12 84,368,864.12 84,368,864.12 4.696 4.761 Letter of Credit 104348006-1 02008 ASSURANCE CO BOND INSURANCE 07/01/2007 1.00 1.00 1.00 0.000 0.000 793593006-2 02006 Citibank, NA 07/01/2007 1.00 1.00 1.00 0.000 0.000 793593006-1 02005 Ohio Savings Bank 07/01/2007 1.00 1.00 1.00 0.000 0.000 --- Subtotal and Average 3.00 3.00 3.00 3.00 0.000 0.000 Local Agency Investment Funds 94669911-1 03-1 ACO A2 CA Local Agency Investment Fun 1,450,873.50 1,450,873.50 1,450,873.50 4.801 4.735 4.801 94669921-1 03-1 ACO B2 CA Local Agency Investment Fun 3,659,694.09 3,659,694.09 3,659,694.09 4.801 4.735 4.801 744727011-1 03-3 ACO 2 CA Local Agency Investment Fun 8,839,657.38 8,839,657.38 8,839,657.38 4.801 4.735 4.801 744727007-1 03-3 CITY 2 CA Local Agency Investment Fun 2,891,271.89 2,891,271.89 2,891,271.89 4.801 4.735 4.801 744727009-1 03-3 EMW D 2 CA Local Agency Investment Fun 527,657.31 527,657.31 527,657.31 4.801 4.735 4.801 786776007-1 03-6 IMP 1 CA Local Agency Investment Fun 498,820.87 498,820.87 498,820.87 4.801 4.735 4.801 SYSCITY CITY CA Local Agency Investment Fun 17,824,216.82 17,836,321.52 17,824,216.82 4.801 4.735 4.801 Portlolio TEME CP Run Date: 01/30/2008-13:18 PM (PRF _PM2) SymRept 6.41.202a City of Temecula, California Portfolio Management Page 4 Portfolio Details - Investments December 31, 2007 Average Purchase Stated YTM YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate 360 365 Maturity Date Local Agency Investment Funds SYSRDA RDA CA Local Agency Investment Fun 19,620,088.48 19,633,412.78 19,620,088.48 4.801 4.735 4.801 SYSTCSD TCSD CA Local Agency Investment Fun 4,300,900.97 4,303,821.77 4,300,900.97 4.801 4.735 4.801 --- Subtotal and Average 63,477,697.44 59,613,181.31 59,641,531.11 59,613,181.31 4.735 4.801 Federal Agency Callable Securities 31331XMA7 01058 Federal Farm Credit Bank 01/18/2007 2,000,000.00 2,001,260.00 2,000,000.00 5.400 5.326 5.400 1,478 01/18/2012 3133X4M1 01075 Federal Farm Credit Bank 09/28/2007 1,000,000.00 1,020,630.00 1,000,000.00 5.000 4.932 5.000 1,732 09/28/2012 3133X55G9 01014 Federal Home Loan Bank 04/08/2004 3,050,000.00 3,049,054.50 3,050,000.00 3.100 3.058 3.101 7 01/08/2008 3133X52S6 01015 Federal Home Loan Bank 04/07/2004 2,965,000.00 2,964,080.85 2,965,000.00 3.000 2.960 3.001 6 01/07/2008 3133X5DV7 01018 Federal Home Loan Bank 04/14/2004 1,000,000.00 999,380.00 1,000,000.00 3.150 3.108 3.151 13 01/14/2008 3133X5GE2 01019 Federal Home Loan Bank 04/15/2004 2,000,000.00 1,998,760.00 2,000,000.00 3.070 3.029 3.071 14 01/15/2008 3133X5K49 01020 Federal Home Loan Bank 04/16/2004 1,000,000.00 999,380.00 1,000,000.00 3.125 3.083 3.126 15 01/16/2008 3133X5QF8 01021 Federal Home Loan Bank 04/22/2004 2,000,000.00 1,998,120.00 2,000,000.00 3.000 2.960 3.001 21 01/22/2008 3133X5ZL5 01022 Federal Home Loan Bank 04/30/2004 2,000,000.00 1,998,120.00 2,000,000.00 3.520 3.473 3.521 29 01/30/2008 3133XD3RO 01036 Federal Home Loan Bank 09/28/2005 2,000,000.00 1,999,380.00 2,000,000.00 4.500 4.438 4.500 B7 03/28/2008 3133XKGD1 01063 Federal Home Loan Bank 04/25/2007 200,000.00 200,688.00 200,000.00 5.250 5.177 5.249 B36 04/16/2010 3133XKGD1 01064 Federal Home Loan Bank 04/26/2007 1,000,000.00 1,003,440.00 1,000,000.00 5.250 5.177 5.249 B36 04/16/2010 3133XL4P5 01066 Federal Home Loan Bank 06/04/2007 1,000,000.00 1,005,000.00 1,000,000.00 5.300 5.227 5.300 BB5 06/04/2010 3133XL6S7 01067 Federal Home Loan Bank 06/06/2007 1,000,000.00 1,009,060.00 1,000,000.00 6.000 5.918 6.000 1,618 06/06/2012 3133XLBS1 01068 Federal Home Loan Bank 07/19/2007 1,000,000.00 1,006,880.00 1,000,000.00 5.500 5.423 5.498 906 06/25/2010 3133XLSQ7 01069 Federal Home Loan Bank 07/30/2007 1,000,000.00 1,030,000.00 1,000,000.00 5.650 5.573 5.650 1,672 07/30/2012 3133XLXW8 01071 Federal Home Loan Bank 08/15/2007 1,000,000.00 1,009,690.00 1,000,000.00 5.500 5.425 5.500 1,688 08/15/2012 3133XK2N4 01072 Federal Home Loan Bank 08/24/2007 2,000,000.00 2,035,000.00 2,000,000.00 5.330 5.256 5.329 1,526 03/06/2012 3133XM5R8 01073 Federal Home Loan Bank 08/28/2007 1,000,000.00 1,023,130.00 1,000,000.00 5.080 5.011 5.080 1,333 08/26/2011 3133XM5E7 01074 Federal Home Loan Bank 08/28/2007 1,000,000.00 1,023,750.00 1,000,000.00 5.220 5.135 5.206 1,701 08/28/2012 3133XMDMO 01077 Federal Home Loan Bank 10/02/2007 1,000,000.00 1,008,750.00 1,000,000.00 5.300 5.227 5.300 1,736 10/02/2012 3133XMLM1 01079 Federal Home Loan Bank 10/17/2007 1,000,000.00 1,008,750.00 1,000,000.00 5.000 4.930 4.999 1,385 10/17/2011 3133XMLG4 01080 Federal Home Loan Bank 10/18/2007 1,000,000.00 1,009,380.00 1,000,000.00 5.200 5.128 5.200 1,743 10/09/2012 3133XKH24 1062 Federal Home Loan Bank 04/16/2007 1,000,000.00 1,018,440.00 1,000,000.00 5.250 5.178 5.250 1,567 04/16/2012 3128X6ML7 01076 Federal Home Loan Mtg Corp 10/01/2007 1,000,000.00 1,006,570.00 1,000,000.00 5.000 4.932 5.000 1,004 10/01/2010 3128X6MQ6 01081 Federal Home Loan Mtg Corp 10/18/2007 1,000,000.00 1,004,840.00 1,000,000.00 5.250 5.177 5.249 1,735 10/01/2012 3128X6RP3 01082 Federal Home Loan Mtg Corp 11/28/2007 1,400,000.00 1,399,202.00 1,400,000.00 4.600 4.537 4.600 1,060 11/26/2010 31398ADF6 01070 Federal National Mtg Assn 08/09/2007 1,000,000.00 1,007,500.00 1,000,000.00 5.600 5.521 5.598 1,624 06/12/2012 3136F8TE5 01078 Federal National Mtg Assn 10/15/2007 1,000,000.00 1,008,750.00 1,000,000.00 5.002 4.936 5.005 1,291 07/15/2011 31398ABC5 1065 Federal National Mtg Assn 05/11/2007 1,000,000.00 1,011,880.00 1,000,000.00 5.300 5.227 5.300 1,588 05/07/2012 --- Subtotal and Average 45,904,112.90 39,615,000.00 39,858,865.35 39,615,000.00 4.410 4.472 860 Run Date: 01/30/2008-13:18 Portlolio TEME CP PM (PRF _PM2) SymRept 6.41.202a City of Temecula, California Portfolio Management Portfolio Details - Investments December 31, 2007 Page 5 Average Purchase Stated YTM YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate 360 365 Maturity Date Federal Agency Bullet Securities 31331XMQ2 01059 Federal Farm Credit Bank 01/26/2007 1,000,000.00 1,031,880.00 1,000,000.00 5.000 4.934 5.002 B76 OS/26/2010 --- Subtotal and Average 1,000,000.00 1,000,000.00 1,031,880.00 1,000,000.00 4.934 5.002 876 Investment Contracts 94669906-1 03-1 RESA2 American International Group M 04/28/2004 863,900.00 863,900.00 863,900.00 4.830 4.764 4.830 9,374 08/31/2033 744727006-1 03-3 RESERV IXIS Funding Corp 07/28/2004 2,171,120.00 2,171,120.00 2,171,120.00 3.000 2.959 3.000 9,739 08/31/2034 95453518-1 88-12 GEN 1M IXIS Funding Corp 07/24/1998 500,000.00 500,000.00 500,000.00 5.430 5.509 5.585 3,531 09/01/2017 95453516-1 88-12 RES 2 IXIS Funding Corp 07/24/1998 1,531 ,468.76 1,531 ,468.76 1,531,468.76 5.430 5.509 5.585 3,531 09/01/2017 --- Subtotal and Average 5,066,488.76 5,066,488.76 5,066,488.76 5,066,488.76 4.289 4.349 7,188 Total and Average 200,190,699.96 190,633,988.22 190,938,083.37 190,633,988.22 4.644 4.708 380 Run Date: 01/30/2008-13:18 Portlolio TEME CP PM (PRF _PM2) SymRept 6.41.202a City of Temecula, California Portfolio Management Portfolio Details - Cash December 31, 2007 Average Purchase CUSIP Investment # Issuer Balance Date Par Value Market Value Retention Escrow Account SYSBARN HART 1 BARN HART 1 California Bank & Trust 134,989.13 134,989.13 PFF BANK & TRUS PFF BANK PFF BANK & TRUST 9,712.31 9,712.31 Passbook/Checking Accounts SYSPetty Cash Petty Cash City of Temecula 07/01/2007 2,710.00 2,710.00 SYSFlex Ck Acet Flex Ck Acet Union Bank of California 07/01/2007 17,112.25 17,112.25 SYSGen Ck Acct Gen Ck Acct Union Bank of California 07/01/2007 7,722,799.60 7,722,799.60 SYSParking Ck PARKING CITA Union Bank of California 07/01/2007 20,033.00 20,033.00 Average Balance 0.00 Accrued Interest at Purchase 4,136.95 Subtotal 7,911,493.24 Total Cash and Investmentss 200,190,699.96 198,541,344.51 198,849,576.61 Run Date: 01/30/2008-13:18 Page 6 Stated YTM YTM Days to Book Value Rate 360 365 Maturity 134,989.13 3.040 2.998 3.040 9,712.31 1.736 1.712 1.736 2,710.00 17,112.25 7,722,799.60 20,033.00 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 4,136.95 7,911,493.24 198,545,481.46 4.644 4.708 380 Portlolio TEME CP PM (PRF _PM2) SymRept 6.41.202a CASH AND INVESTMENTS REPORT CITY OF TEMECULA THROUGH DECEMBER 2007 001 GENERAL FUND 100 STATE GAS TAX FUND 101 STATE TRANSPORTATION FUND 120 DEVELOPMENT IMP ACT FUND 150 AB 2766 FUND 165 RDA DEV LOW/MOD 20% SET ASIDE 170 MEASURE A FUND 190 TEMECULA COMMUNITY SERVICES DISTRICT 192 TCSD SERVICE LEVEL "B" STREET LIGHTS 193 TCSD SERVICE LEVEL"C" LANDSCAPE/SLOPE 194 TCSD SERVICE LEVEL "D" REFUSE/RECYCLING 195 TCSD SERVICE LEVEL "R" STREET/ROAD MAINT 196 TCSD SERVICE LEVEL "L" LAKE PARK MAINT. 197 TEMECULA LIBRARY FUND 210 CAPITAL IMPROVEMENT PROJECT FUND 272 CFD 01-2 HARVESTON A&B IMPROVEMENT FUND 273 CFD 03-1 CROWNE HILL IMPROVEMENT FUND 275 CFD 03-3 WOLF CREEK IMPROVEMENT FUND 276 CFD 03-6 HARVESTON 2 IMPROVEMENT FUND 277 CFD-RORIPAUGH 280 REDEVELOPMENT AGENCY - CIP PROJECT 300 INSURANCE FUND 310 VEHICLES FUND 320 INFORMATION SYSTEMS 330 SUPPORT SERVICES 340 FACILITIES 380 RDA 2002 TABS DEBT SERVICE 390 TCSD 2001 COP'S DEBT SERVICE 460 CFD 88-12 DEBT SERVICE FUND 472 CFD 01-2 HARVESTON A&B DEBT SERVICE 473 CFD 03-1 CROWNE HILL DEBT SERVICE FUND 474 AD 03-4 JOHN WARNER ROAD DEBT SERVICE 475 CFD 03-3 WOLF CREEK DEBT SERVICE FUND 476 CFD 03-6 HARVESTON 2 DEBT SERVICE FUND 477 CFD- RORIPAUGH GRAND TOTAL: FUND TOTAL $ 44,251,914.88 1.12 6,883.13 3,944,874.16 438,087.46 5,492,489.36 6,364,730.73 141,656.14 881.10 158.99 178,300.01 33,798. 78 193,962.03 1,646,379.78 20,945,799.31 253,077.48 5,129,645.42 12,267,827.53 498,838. 76 42,959,862.81 32,077,350.02 1,303,286.62 545,971.84 322,468. 78 247,854.03 48,723.62 6,195,890.38 7,789.53 3,367,488. 57 777,735.01 1,296,198.96 152,490.24 2,522,115.34 350,304.76 4,884,739.93 $ 198,849,576.61 ITEM NO.5 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Genie Roberts, Director of Finance DATE: February 12, 2008 SUBJECT: Property I nsurance Renewal PREPARED BY: Gus Papagolos, Fiscal Services Manager RECOMMENDATION: That the City Council approve the City of Temecula Property Insurance Policy renewal with Travelers Insurance Company and Empire Indemnity Company for the period of February 26, 2008 through February 26, 2009, in the amount of $225,222. BACKGROUND: The City's property insurance policy with Chubb Insurance Company and Empire Indemnity/AXIS Specialty Insurance Company expires on February 26,2008. Based on the current market conditions, staff directed the City's property insurance broker, Brown & Brown/Cal-Surance Associates, Inc., to market the City's property insurance policy. I n response to this request, Brown & Brown/Cal-Surance Associates, Inc. validated the inventory of all City buildings and property requiring coverage and obtained several qualified proposals for basic property insurance. Four of the most competitive proposals were received from the following companies in the amounts listed below. Additionally, Brown & Brown/Cal-Surance Associates, Inc. has provided a proposal for earthquake and flood insurance from Empire Indemnity Company: EARTHQUAKEI BASE BUILDING I ARCHESI INSURANCE CARRIER PREMIUM MEMORIAL PREMIUM TOTAL Travelers Insurance $79,755 $145,467 $ 225,222 Company Chubb Insurance $90,263 $145,467 $ 235,730 Company Philadelphia Indemnity $98,746 $145,467 $ 244,213 Insurance Company Insurance Company of $102,840 $145,467 $ 248,307 The West The total premium of $225,222 is an overall decrease of $61,427 from last year's premium. This is a substantial savings when considering a total property value increase of approximately $12 million. The addition of the Field MaintenancelOperation Center and Wolf Creek Fire Station represented a significant increase to the total insured value. The City's basic earthquake and flood insurance premium is $145,467 and maintains coverage in the amount of $25 million. Based on the total insured property of over $80 million, and the factthat total losses are not likely to occur in the event of an earthquake or flood this coverage is considered sufficient. This is the recommendation from the City's property insurance broker and is in accordance with the industry standard and practices. The City's risk is minimal in using Travelers Insurance Company because in addition to being an admitted carrier in the State of California, it has a financial size category of more than $2 billion of reported capital surplus and conditional reserve funds. The attached proposals summarize the premium and coverage provided by Travelers Insurance Company and Empire IndemnityCompany. FISCAL IMPACT: Adequate funds for the property insurance premium are available for the remaining four months of FY 2007-08. The Annual Operating Budget for FY 08-09 will establish additional funding for the remaining eight months of the total annual premium. ATTACHMENTS: -Travelers Insurance Company Proposal Summary -Earthquake/Flood Proposal (Empire Indemnity Company) Attachment I TRAVELERS INSURANCE COMPANY PROPOSAL SUMMARY TERM: FORMAT: NAMED INSURED: February 26, 2008 - February 26, 2009 Occurrence City of Temecula PROPERTY COVERAGE LOCATION BUILDING & CONTENTS DEDUCTIBLE ALL $80,801,938 $10,000 per occurrence COVERAGE INCLUDED: COVERAGE LIABILITY LIMIT Building & Personal Property $80,801,938 Contractor's Equipment $409,900 Business Income Extra Expense - Blanket $721,716 Fine Arts (Museum)1 Others $250,0001$250,000 Fine Arts at Other Locations and in Transit $100,000 Valuable Papers $3,170,000 Misc Unscheduled Equip & Mobile Voice Equip $150,000 EDP Property Blanket $3,785,000 Personal Property at Unnamed Locations $636,000 Newly Acquired Equipment $1,000,000 Miscellaneous Unscheduled Equipment Including $150,000 Mobile & Voice Communication Equipment Machinery Breakdown Included Attachment I cont'd Additional Coverage ADDITIONAL COVERAGE Travelers Form LIMIT Personal Property of Employees $50,000 Fire Department Service Charges $25,000 Fine ArtslProperty of Others $250,000 Extra Expenses $125,000 Accounts Receivable $100,000 Valuable Papers $100,000 Outdoor Trees, Shrubs, Plants or Lawns Installation $2,500/50,000 Newly Acquired Premises or Constructed Property (180 Days) COVERAGES With Specific Limits LIMIT Building $2,000,000 Personal Property $1,000,000 Electronic Data Processing Equipment $1,000,000 Electronic Data Processing Media & Duplicates $100,000 Attachment II EARTHQUAKE COVERAGE TO BE PROVIDED BY EMPIRE INDEMNITY COMPANY COVERAGE: Difference in Conditions including earthquake, earthquake sprinkler leakage, and flood. INTERESTS COVERED: Real property, personal property, business income, extra expense, valuable papers, EDP hardware, EDP software, EDP extra expense, stock tenant's improvements, and betterments, and equipment. LIMITS: $25,000,000 per occurrence, and in the annual aggregate as respects earthquake sprinkler leakage subject to earthquake aggregate. UNDERLYING L1MITS/DEDUCTIBLE: $50,000 per occurrence, except 7.5% per unit of insurance (including time element) subject to a minimum of $200,000 per occurrence for earthquake $100,000 per occurrence for flood EXCLUSIONS: Pollution, contamination, asbestos, Shaded 'X' flood zone or 100 Year flood plain. VALUATION: Replacement cost, except actual loss sustained on time element ITEM NO.6 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Genie Roberts, Director of Finance DATE: February 12, 2008 SUBJECT: Authorization to proceed with establishing an irrevocable trust with California Public Employees Retirement System (CaIPERS) for retiree benefits PREPARED BY: Jason Simpson, Assistant Finance Director RECOMMENDATION: That the City Council: 1. Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA PROVIDING FOR THE DELEGATION OF AUTHORITY TO REQUEST DISBURSEMENT PURSUANT TO THE CITY'S AGREEMENT WITH THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM FOR PREFUNDING OF CERTAIN POST EMPLOYMENT BENEFITS 2. Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA APPROVING THAT CERTAIN AGREEMENT TITLED "AGREEMENT AND ELECTION OF THE CITY OF TEMECULA TO PREFUND OTHER POST EMPLOYMENT BENEFITS THROUGH CaIPERS" 3. Approve and file the City of Temecula Retiree Health Care Plan, Actuarial Valuation Report, as of June 30, 2007, prepared by Gabriel Roeder Smith & Company, Consultants & Actuaries, and the supplemental ARC (Annually Required Contribution) projected each year. 4. Approve an appropriation of $3,572,029 to operating transfers out from General Fund Designated Fund Balance to establish the trust. 5. Approve all related CalPERS documents to facilitate the funding, investment management and administration of Other Post Employment Benefits. BACKGROUND: Pursuant to GASB 45, the City of Temecula will be required to recognize in its financial statements any unfunded, earned retiree medical costs including those for current active employees beginning in fiscal year 2008-09. The Governmental Accounting Standards Board (GAS B) issued GASB Statement 45 in order to provide more complete, reliable, and decision-useful financial reporting. This includes reporting of the costs and financial obligations that governments incur when they provide post-employment benefits, other than pensions, as part of the compensation for services rendered by their employees. Post-employment healthcare benefits, the most common form of Other Post-Employment Benefits, are a very significant financial commitment for many governments. GASB 45 mandates that, effective for fiscal years beginning after December 15, 2006, governments with over $1 00 million in revenue will have to start valuing and reporting the liability for other post-employment benefits (OPEB). Smaller governments have to report in the two years following, depending upon their size. To address this issue, in fiscal year 2006-07, staff engaged actuary Gabriel Roeder Smith & Company, Consultants & Actuaries, to update the City's OPEB liability. Additionally, staff sought additional information how to best facilitate the requirements of this accounting pronouncement in terms of prefunding OPEB. ANAL YSIS: While the GASB pronouncement dictates the accounting treatment of OPEB, cities have a number of decisions that deal with the fiscal impact of implementing OPEB. These decisions include: . Will the City fund the cost of OPEB at all, partially, or fully? . If it is not funded, or partially funded, what will the negative impact on the City's credit rating be? . If partially or fully funded, what mechanism will be chosen to facilitate the investment and management of OPEB funds? . Should the City create its own trust and manage the funds internally, or use an external provider such as a financial institution or another public agency such as CaIPERS? Please note that if an external provider is used, a higher discount factor can be used in determining the unfunded actuariallyaccrued liability (UAAL), thereby reducing the UAAL to the City. . What amortization period should be used to pay down the UAAL? While there are numerous other complicated and detailed issues, the general position and the recommendations that staff is proposing are as follows: 1. Transfer the funds designated for retiree benefits in the General Fund as (currently $3,574,851) to fully fund the liability noted in the attached actuarial report as $3,572,029. Due to long standing policies of the City Council, it is important to highlight that due to annual set-asides of funds, the City is in a unique position to fully fund our Actuarial Accrued Liability. In fact, staff was within $2,822 of the liability amount determined by the actuary. Based upon reviews of surveys, the City of Temecula is in the top 1 % percentile of cities able to address their GASB 45 issues without impacting operations and City services. Most other cities and districts are just now realizing that they will endure significant budget constraints in order to address their GASB 45 responsibly. In addition, the City will be required to meet the normal costs annually which requires annual payments of approximately $252,000 to fully fund the annual required contribution (ARC) of the OPEB. This is the most fiscally responsible option. It eliminates any potential negative credit rating issue with the City, as well as putting money in an irrevocable trust to pay for the benefits for the employees. If funds were not set aside, the City's annual required contribution amount (ARC) would be between $550,000 and $786,000 as described on page B-1 of the Actuarial Report (attached hereto as Exhibit B). 2. Contract with CalPERS to provide benefit trust services that include investment management and administration for the following reasons: a. This allows the City to utilize the CalPERS investment expertise and leverage. Expectations of investment return are similar to that of the pension investments, and those have exceeded 12% in recent years. If investment returns exceed 7.75%, that should lessen the ARC in future years. b. Because CalPERS is an external agency, the actuarially assumed discount rate that determines what the City can use to actuarially determine the liability can be higher, thereby reducing the UAAL. Under this scenario, a 7.75% return is assumed versus an assumed discount rate of 4% to 5% if funds were managed in an internal trust. The 7.75% rate is the same assumed rate of return that CalPERS uses in the pension valuations. c. Since CalPERS is a non-profit entity, their fees are less expensive than a commercial bank or financial institution. d. CalPERS has established the retiree benefits trust in March of 2007, and is ready to accept contributions, and provide investment and administrative services. e. Lastly, since the City already deals with CaIPERS, the familiarity of the administration process with CalPERS is already known, and is straightforward. Indications are that it will be virtually the same as how the City handles the pension contributions and administration. The California Employers' Retiree Benefit Trust (CERBT) Fund is a new fund, a Section 115 Trust, set up for the purpose of receiving employer contributions that will prefund health and other post- employment benefit costs for retirees and their beneficiaries. By joining this new trust fund, CalPERS PEMHCA employers can help finance future costs in large part from the investment earnings provided by CaIPERS. Just as earnings from invested retirement contributions cover $3 of every $4 spent in pension benefits, this new trust will generate significant revenues to apply toward OPEB obligations. In addition, staff has reviewed and attached CalPERS Statement of Investment Policy as Exhibit I. Based on the recommendations above, staff worked with Gabriel Roeder Smith & Company, Consultants & Actuaries, to finalize the actuarial valuation, as well as taking the necessary steps to enter into a trust agreement with CaIPERS. These steps include approval and execution of the following documents by City Council, staff, and Gabriel Roeder Smith & Company, Consultants & Actuaries: . Agreement and Election to Prefund OPEB through CaIPERS; . Delegation of Authority to Request Disbursements; . Summary of Actuarial Information required for CalPERS Financial Statements; . Employer Contribution by Check Under Agreement and Election to Prefund OPEB; and, . Certification of OPEB Actuarial Information and Funding Policy. This final valuation report received from Gabriel Roeder Smith & Company, Consultants & Actuaries, incorporated the $3.6 million from the reserve that City Council has been funding annually since establishing the retiree health benefit in order meet the OPEB liability. As a result of establishing a trust, the new unfunded actuarial determined liability of the City will be $0. While the annual required contribution (ARC) is approximately $252,000 in order to fund normal costs defined by the actuary, the City is in a sound fiscal position to effectively administer this liability and program. A new actuarial study is necessary every two years under GASB requirements, and staff has been able to negotiate an annual study at a reduced rate will monitor the liability annually. This actuarial has been added to the 2007-08 budget, and will continue to budget this study in the future. Because the CalPERS trust is new, they will not be offering actuarial services for at least three to four years, so staff will continue to engage Gabriel Roeder Smith & Company, Consultants & Actuaries, to perform this service. It is important to note that Gabriel Roeder Smith & Company, Consultants & Actuaries, is one of a few actuarial firms that CalPERS has approved to perform these valuations, and they advised CalPERS on the design of the actuary guidelines for these valuations. The annual costs for CalPERS administration is approximately $17,000, and the annual cost of the required actuarial analysis is approximately $10,000. FISCAL IMPACT: As indicated above, the City has set-aside funds in the General Fund for several years in order to fund its obligation for retiree benefits. The set-aside funds have grown to $3.5 million, which is the amount required to fully fund the actuarial accrued liability. In addition, the City will be making annually required payments (ARC) to the trust of approximately $252,000 to cover normal costs determined by the actuary. Since the City has budgeted $400,000 in the five- year budget, the ARC payment will provide a go-forward budget savings of approximately $150,000, while continuing to maintain fully funding the City's GASB 45 liability for OPEB. ATTACHMENTS: Resolution No. 08-_ Resolution No. 08-_ Exhibit A: Actuarial Valuation Report, as of June 30, 2007 Exhibit B: Calculation of Annual Required Contribution (ARC) for FYE 2008 Exhibit C: Agreement and Election to Prefund Other Post Employment Benefits Through CalPERS Exhibit D: Delegation of Authority to Request Disbursements Exhibit E: Summary of Actuarial Information required for CalPERS Financial Statements Exhibit F: Employer Contribution by Check under Agreement and Election to Prefund Other Post Employment Benefits Exhibit G: Certification of OPEB Actuarial Information and Funding Policy Exhibit H: GASB Statement 45 on OPEB Accounting by Governments - A Few Basic Questions and Answers Exhibit I: California Public Employees' Retirement System (CaIPERS) Statement of Investment Policy for Annuitants' Healthcare Coverage Fund RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA PROVIDING FOR THE DELEGATION OF AUTHORITY TO REQUEST DISBURSEMENT PURSUANT TO THE CITY'S AGREEMENT WITH THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM FOR PREFUNDING OF CERTAIN POST EMPLOYMENT BENEFITS THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. On _' 2008, the City Council approved that certain agreement between the City and the California Public Employment Retirement System entitled "Agreement and Election of the City of Temecula to Prefund Other Post Employment Benefits Through CaIPERS" ("Agreement"). Section 2. The Agreement provides for the City's participation in the Annuitants' Health Care Coverage Fund for the prefunding of health care coverage for annuitants ("Prefunding Plan" or "Other Post Employment Prefunding Plan"). Section 3. The Agreement requires the City Council to adopt a resolution delegating to certain individuals the authority to take certain actions to implement and administer the Prefunding Plan described in the Agreement. Section 4. The City Council of the City of Temecula hereby delegates to the incumbents in the positions of City Manager and Director of Finance authority to request on behalf of the City of Temecula disbursements from the Other Post Employment Prefunding Plan and to certify as to the purposes for which the disbursed funds will be used. Section 5. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 12th day of February, 2008. Michael S. Naggar, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 08- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 12th day of February, 2008, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA APPROVING THAT CERTAIN AGREEMENT TITLED "AGREEMENT AND ELECTION OF THE CITY OF TEMECULA TO PREFUND OTHER POST EMPLOYMENT BENEFITS THROUGH CALPERS" THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. GOVernment Accounting Standards Board Statement Number 45 ("GASB 45") requires certain financial reporting of the costs and financial obligations that governments incur when they provide post employment benefits other than pensions as part of the compensation for services rendered by their employees. The City has traditionally budgeted and held funds for this obligation, which involves retiree health care coverage. However, following implementation of GASB 45, there are certain advantages for financial reporting and credit rating when these funds are placed in a trust fund established for the prefunding of post employment benefits. Section 2. GOVernment Code Section 22940 establishes the Annuitants' Health Care Coverage Fund for the prefunding of post employment health care coverage of eligible retirees ("Prefunding Plan"). Control and power over the administration and investment of the Prefunding Plan is granted to the California Public Employees' Retirement System ("CaIPERS") through its Board, which is authorized to contract with eligible employers for their participation in the Prefunding Plan. Section 3. The City desires to elect participation in the Prefunding Plan and to prefund its post employment health care benefits pursuant to the terms and conditions set by agreement with the CalPERS Board of Administration. Section 4. The City Council of the City of Temecula hereby approves that certain agreement titled "Agreement and Election of the City of Temecula to Prefund Other Post Employment Benefits through CaIPERS" ("Agreement") in conformance with the form of such agreement attached to this resolution as Exhibit A. The Mayor is authorized to execute the Agreement on behalf of the City. The City Clerk shall file a copy of the Agreement with CaIPERS, as provided under the Agreement. A copy of the final Agreement when executed by the Mayor and CalPERS shall be placed on file in the Office of the City Clerk. Section 5. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 12th day of February, 2008. Michael S. Naggar, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 08- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 12th day of February, 2008, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk EXHIBIT A CITY OF TEMECULA RETIREE HEALTH CARE PLAN ACTUARIAL VALUATION REPORT AS OF JUNE 30, 2007 TABLE OF CONTENTS Page Section Number Cover Letter Executive Summary 1-2 EXECUTIVE SUMMARY A OVERVIEW 1-2 GASB Background 3 GASB Standards 4-5 OPEB Specific Assumptions 6 Actuarial Cost Method 7 OPEB Pre funding B VALUATION RESULTS 1 Development ofthe Annual Required Contributions 2-7 Determination of Unfunded Accrued Liability 8 Comments C COMMUNITY RATING EXEMPTION 1-2 Community Rating Exemption D SUMMARY OF BENEFITS 1 Summary of Benefits E SUMMARY OF PARTICIPANT DATA 1-3 Active Members by Attained Age and Years of Service 4 Retired Members by Attained Age F ACTUARIAL COST METHOD AND ACTUARIAL ASSUMPTIONS 1-2 Valuation Methods 3-7 Actuarial Assumptions 8 Miscellaneous and Technical Assumptions Appendix 1-2 Glossary City of Temecula Retiree Health Care Plan - Draft -i- GRS Gabriel Roeder Smith & Company Consulrants&Acruarics 20 North Clark Street Suite 2400 Chicago, IL 60602-5111 312.456.9800 phone 312.456.9801 fax www.gabrielroeder.com July 27, 2007 Mr. Jason Simpson City ofTernecula City ofTernecula, California Finance Department Temecula, CA 92589-9033 Dear Mr. Simpson: Submitted in this report are the results of an Actuarial Valuation of the liabilities associated with the retiree healthcare benefits sponsored by City of Ternecula. The date of the valuation was hme 30, 2007. The annual required contribution has been calculated for the fiscal year beginning July 1, 2007. The actuarial calculations were prepared for purposes of complying \Vith the requirements of Statements No. 43 and No. 45 of the Governmental AccOlmting Standards Board (GASB). The calculations reported herein have been made on a basis consistent with our lUlderstanding of these accOlmting standards. Determinations of the liability associated with the benefits described in this report for purposes other than satisfying City of Temecula's financial reporting requirements may produce significantly different results. This report may be provided to parties other than City of Temecula only in its entirety and only with the permission of City of Temecula. The valuation was based upon information, furnished by City of Temecula, concerning retiree health benefits and individual employees, and financial data. Data was checked for internal consistency but was not otherwise audited. To the best of our knowledge, this report is complete and accurate and was made in accordance with generally recognized actuarial methods. One or more of the lUldersigned are members of the American Academy of Actuaries and meet the Qualification Standards of the Academy of Actuaries to render the actuarial opinion herein. Respectfully submitted, Alex Rivera, FSA, MAAA Senior Consultant Leslie Thompson, FSA, MAAA Senior Consultant EXECUTIVE SUMMARY EXECUTIVE SUMMARY This report presents the results of our actuarial valuation as of July 1, 2007, for the Retiree Healthcare Benefit Program sponsored by the City of Temecula. The City provides healthcare benefits to active and retired members through the healthcare plans administered by CaIPERS. The valuation was based on GASB Statement No. 45. Our valuation was based on a discount rate assumption of 4.5 percent and an ultimate healthcare trend assumption of 4.5 percent, as approved by the City of Temecula. These assumptions are also consistent with the CalPERS OPEB assumption model. The discount rate reflects the employer's pay-as-you-go funding policy. We have also provided the results based upon a discount rate of 7.75 percent. This discount rate reflects a funding policy in which the ARC is contributed on a year to year basis and the assets are invested in the CalPERS OPEB trust. The key valuation results are summarized below. Full Fundinl! Pay-As-You-Go (7.75%) (4.5%) Actuarial Accrued Liabilities as of July 1, 2007 $3,572,029 $5,305,279 Normal Cost for FY 2008 $252,474 $467,504 FY 2008 Benefit Payments $83,133 $83,133 GASB No. 45 FY 2008 Expense (Level Dollar Amortization) $550,899 $786,087 GASB No. 45 FY 2008 Expense (Level Percent of Pay Amortization) $466,933 $681,564 Number of Active Members 202 202 Number of Retired Members 12 12 According to GASB Statement No. 45, the City of Temecula will need to accrue a GASB expense or Annual OPEB Cost beginning in fiscal years after December 15, 2007 (Phase 2 Governments). However, earlier application of the statement is encouraged. The Net OPEB Obligation or balance sheet liability represents the sum of excess Annual OPEB Costs over actual employer contributions. Our calculations assume an opening transition liability of zero as of July 1,2007. The valuation was based on the following: . Census data as of July 1, 2007, as provided by the City of Temecula, and premium data, as provided by CaIPERS; . Plan provisions and funding policy in effect as of July 1, 2007, as provided by the City of Temecula and summarized in Section D; City of Temecula Retiree Health Care Plan - Draft -1- EXECUTIVE SUMMARY . Our understanding of the substantive plan in effect as currently being administered; . Actuarial assumptions and methods shown in Section F which are consistent with the CalPERS OPEB Model and the CalPERS pension plan valuation; and . The City of Temecula is eligible for the community rating exception under GASB No. 45 and the implicit subsidy does not need to be valued. City of Temecula Retiree Health Care Plan - Draft -2- SECTION A OVERVIEW GASB BACKGROUND The purpose of this valuation is to provide information on the cost associated with providing postemployment benefits other than pensions, or OPEB, to current and former employees. OPEB benefits are most often associated with postemployment health care, but cover almost any benefit not provided through a pension plan, including life insurance, dental and vision benefits. It is important to note that OPEB benefits, by definition, do not include benefits currently being provided to active employees - however, this report includes the liabilities for benefits expected to be paid to current active employees when they terminate employment at a future date. The rising cost of health care has been a cause of concern to both individuals and employers who sponsor health care plans. The accounting community became concerned that many sponsors of public plans were accounting for the cost of their OPEB plans solely on the basis of benefits paid and that this method did not accurately reflect the ultimate cost of benefits promised to current and former employees. In 1988, the Governmental Accounting Standards Board (GAS B) began working on a project to develop comprehensive standards for financial reporting ofOPEB plans. The GASB determined that an OPEB plan was similar to a pension plan in that benefits are earned during an active employee's working lifetime but paid out at a future date. In the GASB's view, accounting for OPEB should follow the same basic principle as accounting for public plan pension cost: these benefits are compensation for employees' services and should be accounted for during the period of time that services are performed. City of Temecula Retiree Health Care Plan - Draft A-I GASB BACKGROUND (CONCLUDED) The GASB worked on comprehensive standards for OPEB accounting for more than a decade, culminating with the release of GASB Statements No. 43 and No. 45 in the Spring of 2004. GASB Statement No. 43 covers the accounting rules for OPEB plans while GASB Statement No. 45 describes the rules for employers sponsoring OPEB plans. The effective dates of the Statements are based on the implementation of GASB Statement No. 34, based on the sponsor's annual revenue for the first fiscal year ending on or after June 15, 1999, and follow the schedule below: GASB No. 43 GASB No. 45 OPEB Standards for the OPEB Standards for the Plan's Financial Employer's Financial Total Annnal Revenne Statements will be Statements will be In the First Fiscal Year Effective for Periods Effective for Periods Endinl! After June 15, 1999 Be!!inninl! After Bel!inninl! After Phase 1 Govts. - $100 million or more December 15, 2005 December 15, 2006 Phase 2 Govts. - $10 million or more, December 15, 2006 December 15, 2007 But less than $100 million Phase 3 Govts. - Less than $10 million December 15, 2007 December 15, 2008 City of Temecula Retiree Health Care Plan - Draft A-2 GASB STANDARDS Unlike pension plans, OPEB plans often do not have a formal document detailing the specific terms of the plan. Under GASB No. 43 and No. 45 the benefits to be accounted for are those provided by the substantive plan - loosely defined as the benefits covered by the plan as understood by the employer and plan members at the time of each actuarial valuation. The substantive plan provisions used in this valuation are summarized in Section D. GASB also requires that the calculations assume the terms of the substantive plan continue indefinitely. It has been argued that there is a likelihood future OPEB plan provisions would be different than the current substantive plan (due to rising health care costs or social changes) and therefore liabilities based on the current substantive plan may overstate what will actually occur. However, the GASB Statement is designed to measure liabilities for the plan as it currently exists. While it may be reasonable to assume future changes in the OPEB plan for other purposes, recognition of anticipated changes is not allowed for purposes of accounting for OPEB. The specific items required to be disclosed on an OPEB sponsor's financial statements are described in detail in GASB No. 43 and No. 45. In general terms, though, the plan sponsor is required to disclose an annual OPEB cost, the funded status of the plan and the funding progress on the valuation date. Although GASB does not require OPEB contributions, it has chosen to call the base component of the annual OPEB cost the Annual Required Contribution, or ARC. The ARC consists of the cost of benefits accruing in a year plus an amount calculated to amortize any unfunded actuarial accrued liability over a period of not more than 30 years. The funded status of the plan is a ratio of the plan's assets (if any) to the actuarial accrued liability on the valuation date. The plan is also required to disclose the cumulative difference between the ARC and the employer's actual contribution to the plan. This amount is known as the Net OPEB Obligation (NOO). Each year, the NOO accumulates with interest, plus the difference between the ARC and actual contributions for the year, plus some technical adjustments. For most plans the NOO is set to zero as of the effective date of the GASB OPEB standard. It is the NOO, and not the actuarial accrued liability, that will be disclosed on the employer's Statement of Net Assets. City of Temecula Retiree Health Care Plan - Draft A-3 OPEB SPECIFIC ASSUMPTIONS In any long-term actuarial valuation (such as for pensions and OPE B) certain demographic, economic and behavioral assumptions must be made concerning the population, investment discount rates, and the benefits provided. These actuarial assumptions form the basis for the actuarial model which is used to project the future population, benefits to be provided, and contributions to be collected. The investment return rate assumption is used to discount the future benefits to a present value on the valuation date. While assumptions such as future rates of retirement and mortality are similar for both OPEB and pension plans, there are some additional assumptions required when projecting benefits for a health care plan. The cost of providing medical services has been increasing more rapidly than prices in general for many years. During the period from 1955 to 2005 general inflation averaged 4.0%, while health expenditures increased by an average of about 10% per year. If this trend is proj ected to continue for years to come, it implies that years from now virtually all our expenditures will be for health care. The seemingly more reasonable alternative is that in the not too distant future medical expense inflation will stabilize at a level at or near general inflation. It is on this basis that we project that retiree health care costs will continue to exceed general inflation in the near term, but by less each year until leveling off at an ultimate rate that is similar to general price increases. Health care increase rates used in this valuation lie within a range of reasonable assumptions, and are described in Section G of this report. The health care increase rate assumption has a major effect on the calculation of plan liabilities. To illustrate the effect of differing future medical inflation rates, the following chart proj ects the growth of $1 of health care benefit under three sets of assumptions. In this illustration, each set of assumptions trends smoothly to an assumed long term rate of inflation over the next ten years: The assumption set labeled "Pessimistic" begins at a rate of 10% in excess of general inflation, the "Intermediate" assumption begins at a rate of 7% in excess of general inflation, while the "Optimistic" assumption begins at a rate of 3% in excess of general inflation. City of Temecula Retiree Health Care Plan - Draft A-4 OPEB SPECIFIC ASSUMPTIONS (CONCLUDED) Future Cost of $1 Health Care Under Alternate Inflation Assumptions (In 2005 Dollars) $1.80 $1.10 $1.56 $LSO Optimistic $140 / -Intermediate $1.30 / _Pessimistic $L20 / $1.10 / $100 L---'" -#'" #' #' ~" ~" ," ~ ...0;1 ",' ",' "," ~o ~ ~ ~o ~ ~o The chart above shows that the cost of providing health care is expected to increase over 50% in inflation-adjusted dollars over the next 20 years, using the "Intermediate" health care increase assumption set. To put this in perspective, assuming health care increases are brought llllder control almost immediately, as in the "Optimistic" assumption set, implies future per capita health care costs vviIl be expected to increase less than 20% over current levels. In addition to the per capita health care inflation, costs are expected to rise as the retiree population increases. The selection of an investment return rate also has a major impact on the calculation of the reported GASB OPEB expense. It is important to note that GASB Statements No. 43 and No. 45 require the selection of an interest rate assumption to be based on the expected long-term rate of return on the assets expected to pay the OPEB when due. GASB states that the return should be based on expected returns of: . Plan assets - if the sponsor has been contributing the ARC on a regular basis; . The employer's general assets - where no OPEB assets have been accumulated; . A blend of plan and employer assets - in cases where OPEB assets exist but the plan is contributing amollllts less than the ARC. City ofTemEcula Retiree Health Care Plan - Draft A-5 ACTUARIAL COST METHOD GASB Statement No. 45 provides some flexibility to governmental employers (and their actuaries) in the use of various actuarial cost methods. It should be noted that an actuarial cost method determines a contribution or expense by assigning portions of the present value of projected benefits to various years with the general goal of accruing the cost of benefits over the working lifetime of the employees. The choice of a particular method does not change the ultimate cost of the promised benefits. The Entry Age Normal, actuarial cost method has been used to calculate the GASB ARC for this valuation. Using the plan benefits, the present health premiums and a set of actuarial assumptions, the anticipated future payments are projected. The entry age method then provides for a systematic funding for these anticipated payments. The yearly ARC is computed to cover the cost of benefits being earned by covered members as well as to amortize a portion of the unfunded accrued liability. If experience is in accordance with the assumptions used, the ARC will increase at approximately the same rate as active member payrolL This is both an acceptable and reasonable cost method. The use of another actuarial cost method would produce different results. City of Temecula Retiree Health Care Plan - Draft A-6 OPEB PRE FUNDING Many employers fund retiree heath care benefits using the pay-as-you-go (or cash disbursement) method. The employer's annual contribution for these benefits is equal to the actual disbursements during the year for health care benefits for retired employees. This method of funding will result in increasing contributions over time. First, per capita cash disbursements will tend to increase from year to year as the cost of health care services, or the utilization of these services, increases. Second, the number of retired members is likely to increase for years to come. The more retirees, the greater the disbursements as a percentage of employee payroll. A retiree health care plan is similar to a defined benefit pension plan, in that promises are made to employees to provide them with a benefit payable at some future date. For defined benefit pension plan sponsors a common funding objective is to contribute annual amounts to a fund which will i) remain level as a percentage of active member payroll, and ii) when combined with present assets and future investment return will be sufficient to meet the financial obligations of the Plan to current and future retirees. The ultimate determination as to the level of pre-funding will be the result of decisions made in an attempt to reconcile the often conflicting needs of benefit security for members and fiscal responsibility for the Municipality. The GASB accounting standards noted in the previous section of the report can factor into decisions concerning the level of pre- funding. City of Temecula Retiree Health Care Plan - Draft A-7 SECTION B VALUATION RESULTS CITY OF TEMECULA DEVELOPMENT OF THE ANNUAL REQUIRED CONTRIBUTION I I Development of the Contributions for Annual Required Contribution Fiscal Year Be!!innill!! 2007 Full Fundin~ Pay-As-You-Go 17.75%) 14.5%) Employer Normal Cost $252,479 $467,504 Amortization ofVAL* $298.420 $318,583 Annual Required Contribution (ARC) $550,899 $786,087 ARC Per Active Participant $2,727 $3,891 * Unfunded Actuarial Accrued Liabilities (UAL) were amortized over 30 years on a level dollar basis. The unfunded actuarial accrued liabilities were amortized as a level dollar amount over a period of 30 years. A 30-year amortization period for unfunded actuarial accrued liabilities is the maximum period that complies with the GASB requirements. The "full funding" scenario at 7.75% discount rate means that the City is fully funding to the ARC, and investing the funds in an asset allocation that can support the long-term rate of 7.75%. The "pay-as-you-go" scenario presumes no advance funding, thus the payments for benefits will come from a fund that earns a short-term rate (in this case the assumption is 4.5%). City of Temecula Retiree Health Care Plan - Draft B-1 CITY OF TEMECULA DETERMINA TION OF UNFUNDED ACTUARIAL ACCRUED LIABILITY AS OF JUNE 30, 2007 A. Present Value of Future Benefits i) Retirees and Beneficiaries ii) Vested Terminated Members iii) Active Members Total Present Value of Future Benefits Full Fundin~ Pay-As-You-Go 17.75%) 14.5%) $795,821 $1,089,297 $0 $0 $4,93 1.348 $9.414,015 $5,727,169 $10,503,312 $2,155,140 $5,198,033 $3,572,029 $5,305,279 $0 $0 $3,572,029 $5,305,279 0.00% 0.00% B. Present Value of Future Normal Costs C. Actuarial Accrued Liabilities (A.-B.) D. Actuarial Value of Assets E. Unfunded Actuarial Accrued Liability (C.-D.) F. Funded Ratio (D./C.) The Unfunded Actuarial Accrued Liability (UAAL) is not booked as an expense all in one year and does not appear in the Employer's Statement of Net Assets. Nevertheless, it is reported in the Notes to the Financial Statements and in the Required Supplementary Information. These are information sections within the employer's financial statements. City of Temecula Retiree Health Care Plan - Draft B-2 ANNUAL REQUIRED CONTRIBUTIONS COMPARISON BY OPEB REPORT GROUP Annual Required Contribution for OPEB Report Group July 1, 2007 - June 30, 2008 Full Fllllding 0.75%) Pay-As-You-Go (4.5%) Union $316,001 $474,082 Non-Union $234,898 $312,005 Total $550,899 $786,087 City of Temecula Retiree Health Care Plan - Draft B-3 CITY OF TEMECULA - UNION DEVELOPMENT OF THE ANNUAL REQUIRED CONTRIBUTION I I Development of the Contributions for Annual Reqnired Contribution Fiscal Year Bel!inninl! 2007 Full Fundin~ Pav-As- You-Go 17.75%) 14.5%) Employer Normal Cost $174,086 $318,861 Amortization ofUAL* $141.915 $155,221 Annual Required Contribution (ARC) $316,001 $474,082 ARC Per Active Participant $2,150 $3,225 * Unfunded Actuarial Accrued Liabilities (UAL) were amortized over 30 years on a level dollar basis. The unfunded actuarial accrued liabilities were amortized as a level dollar amount over a period of 30 years. A 30-year amortization period for unfunded actuarial accrued liabilities is the maximum period that complies with the GASB requirements. City of Temecula Retiree Health Care Plan - Draft B-4 CITY OF TEMECULA - UNION DETERMINA TION OF UNFUNDED ACTUARIAL ACCRUED LIABILITY AS OF JUNE 30, 2007 Full Fundin~ Pav-As- You-Go 17.75% ) 14.5%) A. Present Value of Future Benefits i) Retirees and Beneficiaries $0 $0 ii) Vested Terminated Members $0 $0 iii) Active Members $3,196,174 $6,183,544 Total Present Value of Future Benefits $3,196,174 $6,183,544 B. Present Value of Future Normal Costs $1,497,476 $3,598,687 C. Actuarial Accrued Liabilities (A.-B.) $1,698,698 $2,584,857 D. Actuarial Value of Assets $0 $0 E. Unfunded Actuarial Accrued Liability (C.-D.) $1,698,698 $2,584,857 F. Funded Ratio (D./C.) 0.00% 0.00% The Unfunded Actuarial Accrued Liability (UAAL) is not booked as an expense all in one year and does not appear in the Employer's Statement of Net Assets. Nevertheless, it is reported in the Notes to the Financial Statements and in the Required Supplementary Information. These are information sections within the employer's financial statements. City of Temecula Retiree Health Care Plan - Draft B-5 CITY OF TEMECULA - NON-UNION DEVELOPMENT OF THE ANNUAL REQUIRED CONTRIBUTION I I Development of the Contributions for Annual Reqnired Contribution Fiscal Year Bel!inninl! 2007 Full Fundin~ Pay-As-You-Go 17.75%) 14.5%) Employer Normal Cost $78,393 $148,643 Amortization ofUAL* $156,505 $163,362 Annual Required Contribution (ARC) $234,898 $312,005 ARC Per Active Participant $4,271 $5,673 * Unfunded Actuarial Accrued Liabilities (UAL) were amortized over 30 years on a level dollar basis. The unfunded actuarial accrued liabilities were amortized as a level dollar amount over a period of 30 years. A 30-year amortization period for unfunded actuarial accrued liabilities is the maximum period that complies with the GASB requirements. City of Temecula Retiree Health Care Plan - Draft B-6 CITY OF TEMECULA - NON-UNION DETERMINA TION OF UNFUNDED ACTUARIAL ACCRUED LIABILITY AS OF JUNE 30, 2007 Full Fundin~ Pay-As-You-Go 17.75%) 14.5%) A. Present Value of Future Benefits i) Retirees and Beneficiaries $795,821 $1,089,297 ii) Vested Terminated Members $0 $0 iii) Active Members $1.735,174 $3,230.471 Total Present Value of Future Benefits $2,530,995 $4,319,768 B. Present Value of Future Normal Costs $657,664 $1,599,346 C. Actuarial Accrued Liabilities (A.-B.) $1,873,331 $2,720,422 D. Actuarial Value of Assets $0 $0 E. Unfunded Actuarial Accrued Liability (C.-D.) $1,873,331 $2,720,422 F. Funded Ratio (D./C.) 0.00% 0.00% The Unfunded Actuarial Accrued Liability (UAAL) is not booked as an expense all in one year and does not appear in the Employer's Statement of Net Assets. Nevertheless, it is reported in the Notes to the Financial Statements and in the Required Supplementary Information. These are information sections within the employer's financial statements. City of Temecula Retiree Health Care Plan - Draft B-7 COMMENTS COMMENT A: One of the key assumptions used in any valuation of the cost of post-employment benefits is the rate of return on Plan assets. Higher assumed investment returns will result in a lower ARC. Lower returns will tend to increase the computed ARC. Based on information from the plan sponsor we have calculated the liability and the resulting ARC using an assumed long term rate of investment. If the Plan Sponsor chooses to pre-fund with contributions less than the ARC (or not prefund at all), GASB requires the use of a lower rate of return on assets. Use of such an interest rate would considerably increase the ARC and the net OPEB obligation that is disclosed on the employers' financial statement. In the full funding scenarios, it is presumed that an irrevocable trust is established, that the annual amount contributed is at least equal to the ARC and that the assets are invested in such a manner to support the 7.75% assumed rate of return. The "pay-as-you-go" scenario assumes that the payments made are strictly the required premiums. This means that all payments are made from current revenues, and not from investment returns from the trust. GASB allows the use of a short term discount rate, and the assumed rate for this valuation is 4.5%. COMMENT B: Based on the number of plan members as of this valuation, the plan sponsor is required by GASB to perform annual actuarial valuations at least biannually. An annual actuarial valuation will re-compute the required contribution rate each year. This will permit fluctuations and trends in experience to be reflected in the contribution rate on a regular basis. COMMENT C: The contribution rates shown include amortization of the unfunded actuarial accrued liability over 30 years. This is the maximum time period permitted by the Governmental Accounting Standards Board Statement No. 43 and No. 45. A shorter amortization period would result in a higher ARC. City of Temecula Retiree Health Care Plan - Draft B-8 SECTION C COMMUNITY RATING EXEMPTION COMMUNITY RATING EXEMPTION Community Rating Exception. The City of Temecula participates in the CalPERS Health Benefits Program and appears to be eligible for the community rating exception because: . Healthcare costs for a group of participating employers are pooled either through a fully- insured program or a self-insured agent multiple employer arrangement; . The same premium rate is charged to all active members and pre-Medicare retiree in the pool; . The individual plan sponsor's experience or change in demographics does not affect the pooled premium rate; and . The same premium rate would be charged ifthe group covered only pre-Medicare retirees. Plan sponsors eligible for the community rating exception do not need to recognize an implicit rate subsidy and may determine costs under GASB No. 45 using unadjusted premiums in the actuarial valuation. The following tables show the 2007 medical premiums for the Southern Region of California. 2007 HEALTH PLAN RATES Basic Plans - HMO PLAN Employee Only Employee & 1 Dep. Employee & 2+ Dep. Blue Shield $407.02 $814.04 $1,058.25 Kais er $360.60 $721.20 $937.56 2007 HEALTH PLAN RATES Basic Plans - PPO PLAN Employee Only Employee & 1 Dep. Employee & 2+ Dep. PERS Choice $462.34 $924.68 $1,124.86 PERSCare $731.40 $1,462.80 $1,901.64 City of Temecula Retiree Health Care Plan - Draft C-1 COMMUNITY RATING EXEMPTION 2007 HEALTH PLAN RATES Supplement/Managed Medicare Plans - HMO PLAN Employee Only Employee & 1 Dep. Employee & 2+ Dep. Blue Shield $318.95 $637.90 $956.85 Kais er $289.68 $579.36 $869.04 2007 HEALTH PLAN RATES Supplement/Managed Medicare Plans - PPO PLAN Employee Only Employee & 1 Dep. Employee & 2+ Dep. PERS Choice $341.75 $683.50 $1,025.25 PERSCare $371.68 $743.36 $1,1l5.04 City of Temecula Retiree Health Care Plan - Draft C-2 SECTION D SUMMARY OF BENEFITS SUMMARY OF RETIREE HEALTHCARE BENEFIT PROVISIONS A. Eligibilitv Employees retiring with at least 12 years of City service that terminate service and commence a retirement or disability benefit within 120 days of termination are eligible. Members must have been hired prior to June 30, 2005, to be eligible for the full City subsidy. In addition, the member must have been enrolled in the City's healthcare plan at retirement. Surviving spouses/domestic partners of eligible retirees are eligible for the mandated subsidy only. Surviving spouses/domestic partners of deceased active employees are eligible for the mandated subsidy only if the employee had attained age 50 with five years of service. B. Benefits For eligible members hired prior to June 30, 2005, the City reimburses members the lesser of the total premium for coverage, or $800 per month. Premiums may include medical, dental, and vision coverage. The $800 monthly reimbursement is not assumed to increase in the future, and includes the mandated contribution, which is currently $80.80. The City pays a mandated monthly subsidy regardless of coverage elected of: Calendar year 2007 Calendar year 2008 $80.80 $97.00 Thereafter, the subsidy is adjusted annually to reflect changes in the medical component of the Consumer Price Index. The mandated subsidy is provided for all retirees, not just those hired prior to June 30, 2005. City of Temecula Retiree Health Care Plan - Draft D-1 SECTION E SUMMARY OF PARTICIPANT DATA CITY OF TEMECULA TOTAL ACTIVE MEMBERS AS OF JUNE 30, 2007 BY ATTAINED AGE AND YEARS OF SERVICE Years of Service to Valuation Date Attained A!!e 0-4 5-9 10-14 15-19 20-24 25-29 30 Plus Total Under 20 0 20-24 2 I 3 25-29 12 I 13 30-34 7 5 12 35-39 13 7 6 26 40-44 17 13 8 4 I 43 45-49 8 9 8 7 4 I 37 50-54 6 4 5 8 5 2 30 55-59 6 5 I 4 2 I 19 60-64 3 6 3 I I 14 65 & Over 3 2 5 Totals 74 54 33 24 13 4 202 While not used in the financial computations, the following group averages are computed and shown because oftheir general interest. Age: Service: 45.9 years 8.8 years City of Temecula Retiree Health Care Plan - Draft E-1 CITY OF TEMECULA - UNION ACTIVE MEMBERS AS OF JUNE 30, 2007 BY ATTAINED AGE AND YEARS OF SERVICE Years of Service to Valuation Date Attained A!!e 0-4 5-9 10-14 15-19 20-24 25-29 30 Plus Total Under 20 0 20-24 I I 2 25-29 II I 12 30-34 6 5 II 35-39 10 6 4 20 40-44 13 8 4 I 26 45-49 9 9 5 I 2 26 50-54 5 3 5 7 I I 22 55-59 5 4 I I I I 13 60-64 2 3 2 I I 9 65 & Over I 3 2 6 Totals 63 43 23 11 5 2 147 While not used in the financial computations, the following group averages are computed and shown because oftheir general interest. Age: Service: 45.0 years 7.4 years City of Temecula Retiree Health Care Plan - Draft E-2 CITY OF TEMECULA - NON-UNION ACTIVE MEMBERS AS OF JUNE 30, 2007 BY ATTAINED AGE AND YEARS OF SERVICE Years of Service to Valuation Date Attained A!!e 0-4 5-9 10-14 15-19 20-24 25-29 30 Plus Total Under 20 0 20-24 0 25-29 0 30-34 2 2 35-39 4 2 6 40-44 I 4 3 3 I 12 45-49 2 I 2 4 2 I 12 50-54 I I 2 2 4 I II 55-59 I 4 I 6 60-64 I 3 I 5 65 & Over I I Totals 11 11 10 13 8 2 55 While not used in the financial computations, the following group averages are computed and shown because oftheir general interest. Age: Service: 48.2 years 12.5 years City of Temecula Retiree Health Care Plan - Draft E-3 CITY OF TEMECULA TOTAL RETIRED MEMBERS AS OF JUNE 30, 2007 BY ATTAINED AGE Attained Number of Retirees A!!e Male Female Total Under 55 I 0 I 55-59 2 I 3 60-64 2 3 5 65 & Over 2 I 3 I Totals I 7 I 5 I 12 I The number counts above only include those retirees who have elected to receive retiree health care coverage through the City of Temecula Retiree Health Care Plan. City of Temecula Retiree Health Care Plan - Draft E-4 SECTION F ACTUARIAL COST METHOD AND ACTUARIAL ASSUMPTIONS VALUATION METHODS FOR CITY OF TEMECULA AS OF JUNE 30, 2007 Actuarial Cost Method. Normal cost and the allocation of benefit values between service rendered before and after the valuation date was determined using an Individual Entry-Age Actuarial Cost Method having the following characteristics: (i) the annual normal cost for each individual active member, payable from the date of employment to the date of retirement, is sufficient to accumulate the value of the member's benefit at the time of retirement; (ii) each annual normal cost is a constant percentage of the member's year by year projected covered pay. Actuarial gains (losses), as they occur, reduce (increase) the Unfunded Actuarial Accrued Liability. Financing of Unfunded Actuarial Accrued Liabilities. Unfunded actuarial accrued liabilities (UAAL) (full funding credit if assets exceed liabilities) were amortized by level (principal & interest combined) dollar contributions. The UAAL was determined using the funding value of assets and actuarial accrued liability calculated as of the valuation date. The UAAL amortization payment (one component of the contribution requirement), is the level dollar amount required to fully amortize the UAAL over a 30 year period. Actuarial Value of System Assets. The Actuarial Value of Assets is set equal to the reported market value of assets. The assets are allocated among the divisions based on liabilities valued at 7.75%. The assets may not be allowed for consideration as GASB assets, but are shown for illustrative purposes. The Rate of Investment Return. Funding Policy Discount Rate Pay-as-you-go 4.50% Full funding 7.75% The medical component of the Consumer Price Index is assumed to increase at a rate of 4.5% per year. Participation in Retiree Medical Plans. We assume 100% of future retirees meeting the eligibility conditions and hired before June 30, 2005, will participate in the retiree medical plan. For members hired after June 30, 2005, we assume that 75% will participate in the retiree medical plan. Members are assumed to select the plan they elected as an active in retirement. Members that have not elected coverage currently are assumed to elect coverage before retirement and elect a blend of coverage based on the current elections of the entire population. City of Temecula Retiree Health Care Plan - Draft F-1 VALUATION METHODS FOR CITY OF TEMECULA AS OF JUNE 30, 2007 The probability of electing spouse/domestic partner coverage at retirement is assumed to be 85% for future retirees hired prior to June 30, 2005, and 50% for future retirees hired after June 30, 2005. Male spouses are assumed to be three years older than their spouses, and females are assumed to be three years younger. Community Rating Exception. The City of Temecula participates in the CalPERS Health Benefits Program and appears to be eligible for the community rating exception because: . Healthcare costs for a group of participating employers are pooled either through a fully- insured program or a self-insured agent multiple employer arrangement; . The same premium rate is charged to all active members and pre-Medicare retiree in the pool; . The individual plan sponsor's experience or change in demographics does not affect the pooled premium rate; and . The same premium rate would be charged ifthe group covered only pre-Medicare retirees. Plan sponsors eligible for the community rating exception do not need to recognize an implicit rate subsidy and may determine costs under GASB No. 45 using unadjusted premiums in the actuarial valuation. Health cost increases for active members are displayed in the following table: Pre Commencement Health Care Trend Inflation Rates Year Medical Premiums Mandatorv Subsidy 2008 7.0% 20.1% 2009 9.5 4.5 2010 9.0 4.5 2011 8.5 4.5 2012 8.0 4.5 2013 7.5 4.5 2014 7.0 4.5 2015 6.5 4.5 2016 5.5 4.5 2017 and Beyond 4.5 4.5 The other economic and demographic assumptions as shown below and used in the valuation will be the same as those used by CalPERS in the pension valuation. lt is our understanding that these assumptions comply with the requirements set forth by CaIPERS. City of Temecula Retiree Health Care Plan - Draft F-2 ACTUARIAL ASSUMPTIONS FOR CITY OF TEMECULA AS OF JUNE 30, 2007 The rates of salary increase used for individual members are in accordance with the following table. This assumption is used to project a member's current salary to the salaries upon which future contributions will be based. % Increase in Salary By Entry Age and Years of Service Years of Service Entry Age 20 Entry Age 30 Entry Age 40 0 14.45 12.65 10.05 I 12.15 10.75 8.75 2 10.35 9.35 7.75 3 9.05 8.25 6.95 4 8.05 7.35 6.35 5 7.25 6.75 5.85 10 4.95 4.75 4.15 15 4.45 4.25 3.75 20 4.15 3.95 3.55 25 3.65 9.65 3.46 30 3.25 3.25 3.25 The number of active members is assumed to remain constant in the future. The payroll growth rate for financing Unfunded Actuarial Accrued Liabilities was assumed to be 3.25% per year. City of Temecula Retiree Health Care Plan - Draft F-3 ACTUARIAL ASSUMPTIONS FOR CITY OF TEMECULA AS OF JUNE 30, 2007 (CONTINUED) The rates of post retirement mortality used for individual members are in accordance with the following tables. For normal retirees, the probabilities of dying at sample attained ages were as follows: Sample Probability of Dying Future Life Attained Next Year (Healthy) Expectancy (years) A!!es Men Women Men Women 50 0.25% 0.14% 30.90 34.76 55 0.43 0.25 26.35 30.04 60 0.72 0.44 21.98 25.49 65 1.30 0.80 17.92 21.14 70 2.14 1.28 14.18 17.09 75 3.72 2.16 10.88 13.31 80 6.26 3.88 8.03 9.91 For disabled retirees, the probabilities of dying at sample attained ages were as follows: Sample Probability of Dying Attained Next Year A!!es Men Women 50 1.46% 1.13% 55 2.12 1.48 60 2.87 1.88 65 3.62 2.36 70 4.67 3.02 75 6.55 4.30 80 9.48 6.51 These assumptions are used to measure the probabilities of each benefit payment being made after retirement. City of Temecula Retiree Health Care Plan - Draft F-4 ACTUARIAL ASSUMPTIONS FOR CITY OF TEMECULA AS OF JUNE 30, 2007 (CONTINUED) The rates of mortality for active members are in accordance with the following tables. Sample Probability of Ordinary Attained Death Next Year A!!es Men Women 50 0.16% 0.10% 55 0.22 0.15 60 0.31 0.23 65 0.45 0.34 70 0.63 0.50 75 0.90 0.75 80 1.28 l.ll Sample Probability of Duty Attained Death Next Year A!!es Men Women 50 0.02% 0.02% 55 0.03 0.03 60 0.03 0.03 65 0.03 0.03 70 0.04 0.04 75 0.04 0.04 80 0.04 0.04 City of Temecula Retiree Health Care Plan - Draft F-5 ACTUARIAL ASSUMPTIONS FOR CITY OF TEMECULA AS OF JUNE 30, 2007 (CONTINUED) The rates of retirement used to measure the probability of eligible members retiring during the next year were as follows: Retirement Rates of A!!es Retirement Male Female 50 5% 7% 51 2 5 52 3 5 53 3 5 54 4 5 55 8 9 56 6 7 57 7 6 58 8 10 59 9 9 60 16 12 61 15 10 62 26 21 63 22 18 64 15 13 65 25 25 66 14 15 67 12 14 68 12 II 69 9 13 70 100 100 City of Temecula Retiree Health Care Plan - Draft F-6 ACTUARIAL ASSUMPTIONS FOR CITY OF TEMECULA AS OF JUNE 30, 2007 (CONTINUED) Rates of separation from active membership were as shown below (rates do not apply to members eligible to retire and do not include separation on account of death or disability). This assumption measures the probabilities of members remaining in employment. % of Active Members Separating Within Next Year Years of Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Service 20 25 30 35 40 45 0 17.60 16.91 16.22 15.53 14.83 14.14 I 15.61 14.92 14.23 13.53 12.84 12.15 2 13.62 12.93 12.24 11.54 10.85 10.16 3 11.63 10.94 10.25 9.55 8.86 8.17 4 9.64 8.95 8.26 7.56 6.87 6.18 5 7.65 6.96 6.27 5.57 4.88 1.55 10 5.74 5.04 4.35 3.66 0.95 0.73 15 4.46 3.76 3.07 0.64 0.46 0.27 20 3.18 2.49 0.41 0.25 0.09 0.02 25 1.9 0.22 0.09 0.02 0.02 0.02 30 0.1 0.02 0.02 0.02 0.02 0.02 Rates of disability among active members. Ordinary Disability Sample % Becoming Disabled A!!es within Next Year 20 0.01% 25 0.02 30 0.02 35 0.08 40 0.15 45 0.24 50 0.37 55 0.49 60 0.55 65 0.54 City of Temecula Retiree Health Care Plan - Draft F-7 MISCELLANEOUS AND TECHNICAL ASSUMPTIONS FOR CITY OF TEMECULA AS OF JUNE 30, 2007 Administrative Expenses No explicit assumption has been made for administrative expenses. Decrement Operation Disability and mortality decrements do not operate during the first 5 years of service. Disability also does not operate during retirement eligibility. Decrement Timing Decrements of all types are assumed to occur mid-year. Eligibility Testing Eligibility for benefits is determined based upon the age nearest birthday and service nearest whole year on the date the decrement is assumed to occur. Incidence of Contributions Contributions are assumed to be received continuously throughout the year based upon the computed percent of payroll shown in this report, and the actual payroll payable at the time contributions are made. Marriage Assumption 85% of males and 85% of females are assumed to be married at time of decrement. Male spouses are assumed to be three years older than female spouses for active member valuation purposes. Medicare Coverage Assumed to be available for all covered employees on attainment of age 65. Disabled retirees were assumed to be eligible for Medicare coverage at age 65. City of Temecula Retiree Health Care Plan - Draft F-8 APPENDIX GLOSSARY Accrued Service. The service credited under the plan which was rendered before the date of the actuarial valuation. Actuarial Accrued Liability. The difference between (i) the actuarial present value of future plan benefits, and (ii) the actuarial present value of future normal cost. Sometimes referred to as "accrued liability" or "past service liability." Actuarial Assumptions. Estimates of future plan expenence with respect to rates of mortality, disability, turnover, retirement, rate or rates of investment income and salary increases. Decrement assumptions (rates of mortality, disability, turnover and retirement) are generally based on past experience, often modified for projected changes in conditions. Economic assumptions (salary increases and investment income) consist of an underlying rate in an inflation-free environment plus a provision for a long-term average rate of inflation. Actuarial Cost Method. A mathematical budgeting procedure for allocating the dollar amount ofthe "actuarial present value of future plan benefits" between the actuarial present value of future normal cost and the actuarial accrued liability. Sometimes referred to as the "actuarial funding method." Actuarial Eqnivalent. A single amount or series of amounts of equal value to another single amount or series of amounts, computed on the basis of the rate(s) of interest and mortality tables used by the plan. Actuarial Present Value. The amount of funds presently required to provide a payment or series of payments in the future. lt is determined by discounting the future payments at a predetermined rate of interest, taking into account the probability of payment. Amortization. Paying off an interest-bearing liability by means of periodic payments of interest and principal, as opposed to paying it off with a lump sum payment. City of Temecula Retiree Health Care Plan - Draft -1- GLOSSARY (CONCLUDED) Annual Reqnired Contribution (ARC). The ARC is the normal cost plus the portion of the unfunded actuarial accrued liability to be amortized in the current period. The ARC is an amount that is actuarially determined in accordance with the requirements so that, if paid on an ongoing basis, it would be expected to provide sufficient resources to fund both the normal cost for each year and the amortized unfunded liability. Govermnental Accounting Standards Board (GAS B). GASB is the private, nonpartisan, nonprofit organization that works to create and improve the rules U. S. state and local governments follow when accounting for their finances and reporting them to the public. Medical Trend Rate (Health Care Inflation). The increase in the cost of providing health care benefits over time. Trend includes such elements as pure price inflation, changes in utilization, advances in medical technology, and cost shifting. Normal Cost. The annual cost assigned, under the actuarial funding method, to current and subsequent plan years. Sometimes referred to as "current service cost." Any payment toward the unfunded actuarial accrued liability is not part ofthe normal cost. Other Post-Employment Employee Benefits (OPEB). OPEB are post-employment benefits other than pensions. OPEB generally takes the form of health insurance and dental, vision, prescription drugs or other healthcare benefits. Reserve Account. An account used to indicate that funds have been set aside for a specific purpose and are not generally available for other uses. Unfunded Actuarial Accrued Liability. The difference between the actuarial accrued liability and valuation assets. Sometimes referred to as "unfunded accrued liability." Valuation Assets. The value of current plan assets recognized for valuation purposes. City of Temecula Retiree Health Care Plan - Draft -2- EXHIBIT B GRS Gabriel Roeder Smith & Company Consultants & Actuaries 20 North Clark Street Suite 2400 Chicago, IL 60602-5111 312.456.9800 phone 312.456.9801 fax www.gabrielroeder.com November 8, 2007 Mr. Jason Simpson Assistant Director of Finance City of Temecula 43200 Business Park Drive Temecula, CA 92590 Re: City ofTemecula- GASB 45 Valuation Dear Jason: Based on our recent conference call, we have attached an exhibit showing the cost impact under the following scenario: (1) The City's OPEB reserve of $3,572,029 as of July 1,2007, (same as the actuarial accrued liability at 7.75% discount rate) is assumed to qualify as a GASB 43 compliant asset. (2) The City invests the OPEB asset in a trust fund that is expected to earn 7.75%, similar to the CalPERS 0 PEB trust. (3) The City contributes the full-funding annual required contribution (ARC) beginning with FYE 2008. Given this scenario, the ARC for FYE 2008 is equal to normal cost of $252,4 79 because the unfunded actuarial liability is zero at the beginning of the fiscal year. The amortization period will not affect the ARC in FYE 2008; however, the amortization period will affect the ARC in subsequent years due to emerging actuarial gains and losses which will produce an unfunded liability or surplus. If the City contributes less than the ARC, after the initial deposit of assets, then the ARC may need to be measured at a lower discount rate. Please contact us if you have questions or comments. Sincerely, t24~ Alex Rivera, F .S.A. Senior Consultant AR:ap cc: Leslie Thompson, Gabriel, Roeder, Smith & Company City of T emecula, California GASB 45 Valuation as of June 30, 2007 Calculation of Annual Reqnired Contribution for FYE 2008 Based on City Contributing ARC (7.75% full funding interest rate) Cost Method Present Value of Future Benefits (PVB) Actuarial Accrued Liability (AAL) Normal Cost Assets Unfunded Actuarial Accrued Liability (UAAL) Amortization ofUAAL ARC Funded Ratio AL Basis Funded Ratio PVB Basis Amortization Basis Entry Age Normal 30-Year $ 5,727,169 3,572,029 252,479 3,572,029 $ 252,479 Entry Age Normal 20- Year $ 5,727,169 3,572,029 252,479 3,572,029 $ 252,479 100.00% 62.37% 30-year level dollar 100.00% 62.37% 20-year level dollar 11/09/2007 Gabriel, Roeder, Smith & Company EXHIBIT C CALIFORNIA EMPLOYER'S RETIREE BENEFIT TRUST PROGRAM ("CERBT") AGREEMENT AND ELECTION OF (NAME OF EMPLOYER) TO PREFUND OTHER POST EMPLOYMENT BENEFITS THROUGH CalPERS WH EREAS (1) Government Code Section 22940 establishes in the State Treasury the Annuitants' Health Care Coverage Fund for the prefunding of health care coverage for annuitants (Prefunding Plan); and WHEREAS (2) The California Public Employees' Retirement System (CaIPERS) Board of Administration (Board) has sole and exclusive control and power over the administration and investment of the Prefunding Plan (sometimes also referred to as CERBT), the purposes of which include, but are not limited to (i) receiving contributions from participating employers and establishing separate Employer Prefunding Accounts in the Prefunding Plan for the performance of an essential governmental function (ii) investing contributed amounts and income thereon, if any, in order to receive yield on the funds and (iii) disbursing contributed amounts and income thereon, if any, to pay for costs of administration of the Prefunding Plan and to pay for health care costs or other post employment benefits in accordance with the terms of participating employers' plans; and WHEREAS (3) (NAME OF EMPLOYER) (Employer) desires to participate in the Prefunding Plan upon the terms and conditions set by the Board and as set forth herein; and WHEREAS (4) Employer may participate in the Prefunding Plan upon (i) approval by the Board and (ii) filing a duly adopted and executed Agreement and Election to Prefund Other Post Employment Benefits (Agreement) as provided in the terms and conditions of the Agreement; and WHEREAS (5) The Prefunding Plan is a trust fund that is intended to perform an essential governmental function within the meaning of Section 115 of the Internal Revenue Code as an agent multiple-employer plan as defined in Governmental Accounting Standards Board (GAS B) Statement No. 43 consisting of an aggregation of single-employer plans, with pooled administrative and investment functions; Rev OI/09!2D08 NOW, THEREFORE, BE IT RESOLVED THAT EMPLOYER HEREBY MAKES THE FOLLOWING REPRESENTATION AND WARRANTY AND THAT THE BOARD AND EMPLOYER AGREE TO THE FOLLOWING TERMS AND CONDITIONS: A. Representation and Warranty Employer represents and warrants that it is a political subdivision of the State of California or an entity whose income is excluded from gross income under Section 115 (1) of the Internal Revenue Code. B. Adoption and Approval of the Agreement; Effective Date; Amendment (1) Employer's governing body shall elect to participate in the Prefunding Plan by adopting this Agreement and filing with the CalPERS Board a true and correct original or certified copy of this Agreement as follows: Filing by mail, send to: CalPERS Constituent Relations Office CERBT (OPEB) P.O. Box 942709 Sacramento, CA 94229-2709 Filing in person, deliver to: CalPERS Mailroom Attn: Employer Services Division 400 Q Street Sacramento, CA 95814 (2) Upon receipt of the executed Agreement, and after approval by the Board, the Board shall fix an effective date and shall promptly notify Employer of the effective date of the Agreement. (3) The terms of this Agreement may be amended only in writing upon the agreement of both CalPERS and Employer, except as otherwise provided herein. Any such amendment or modification to this Agreement shall be adopted and executed in the same manner as required for the Agreement. Upon receipt of the executed amendment or modification, the Board shall fix the effective date of the amendment or modification. (4) The Board shall institute such procedures and processes as it deems necessary to administer the Prefunding Plan, to carry out the purposes of this Agreement, and to maintain the tax exempt status of the Prefunding Plan. Employer agrees to follow such procedures and processes. Rev OI/09!2D08 2 C. Actuarial Valuation and Employer Contributions (1) Employer shall provide to the Board an actuarial valuation report on the basis of the actuarial assumptions and methods prescribed by the Board. Such report shall be for the Board's use in financial reporting, shall be prepared at least as often as the minimum frequency required by GASB Statement No. 43, and shall be: (a) prepared and signed by a Fellow or Associate of the Society of Actuaries who is also a Member of the American Academy of Actuaries or a person with equivalent qualifications acceptable to the Board; (b) prepared in accordance with generally accepted actuarial practice and GASB Statement Nos. 43 and 45; and, (c) provided to the Board prior to the Board's acceptance of contributions for the valuation period or as otherwise required by the Board. (2) The Board may reject any actuarial valuation report submitted to it, but shall not unreasonably do so. In the event that the Board determines, in its sole discretion, that the actuarial valuation report is not suitable for use in the Board's financial statements or if Employer fails to provide a required actuarial valuation, the Board may obtain, at Employer's expense, an actuarial valuation that meets the Board's financial reporting needs. The Board may recover from Employer the cost of obtaining such actuarial valuation by billing and collecting from Employer or by deducting the amount from Employer's account in the Prefunding Plan. (3) Employer shall notify the Board of the amount and time of contributions which contributions shall be made in the manner established by the Board. (4) Employer contributions to the Prefunding Plan may be limited to the amount necessary to fully fund Employer's actuarial present value of total projected benefits, as supported by the actuarial valuation acceptable to the Board. As used throughout this document, the meaning of the term "actuarial present value of total projected benefits" is as defined in GASB Statement No. 45. If Employer's contribution causes its assets in the Prefunding Plan to exceed the amount required to fully fund the actuarial present value of total projected benefits, the Board may refuse to accept the contribution. (5) Any Employer contribution will be at least $5000 or be equal to Employer's Annual Required Contribution as that term is defined in GASB Statement No. 45. Contributions can be made at any time following the seventh day after the effective date of the Agreement provided that Employer has first complied with the requirements of Paragraph C. Rev OI/09!2D08 3 D. Administration of Accounts, Investments, Allocation of Income (1) The Board has established the Prefunding Plan as an agent plan consisting of an aggregation of single-employer plans, with pooled administrative and investment functions, under the terms of which separate accounts will be maintained for each employer so that Employer's assets will provide benefits only under employer's plan. (2) All Employer contributions and assets attributable to Employer contributions shall be separately accounted for in the Prefunding Plan (Employer's Prefunding Account). (3) Employer's Prefunding Account assets may be aggregated with prefunding account assets of other employers and may be co-invested by the Board in any asset classes appropriate for a Section 115 Trust. (4) The Board may deduct the costs of administration of the Prefunding Plan from the investment income or Employer's Prefunding Account in a manner determined by the Board. (5) Investment income shall be allocated among employers and posted to Employer's Prefunding Account as determined by the Board but no less frequently than annually. (6) If Employer's assets in the Prefunding Plan exceed the amount required to fully fund the actuarial present value of total projected benefits, the Board, in compliance with applicable accounting and legal requirements, may return such excess to Employer. E. Reports and Statements (1) Employer shall submit with each contribution a contribution report in the form and containing the information prescribed by the Board. (2) The Board shall prepare and provide a statement of Employer's Prefunding Account at least annually reflecting the balance in Employer's Prefunding Account, contributions made during the period and income allocated during the period, and such other information as the Board determines. F. Disbursements (1) Employer may receive disbursements not to exceed the annual premium and other costs of post employment healthcare benefits and other post employment benefits as defined in GASB 43. (2) Employer shall notify CalPERS in writing in the manner specified by CalPERS of the persons authorized to request disbursements from the Prefunding Plan on behalf of Employer. Rev OI/09!2D08 4 (3) Employer's request for disbursement shall be in writing signed by Employer's authorized representative, in accordance with procedures established by the Board. The Board may require that Employer certify or otherwise establish that the monies will be used for the purposes of the Prefunding Plan. (4) Requests for disbursements that satisfy the requirements of paragraphs (2) and (3) that are received on or after the first of a month will be processed by the 15th of the following month. (For example, a disbursement request received on or between March 1 st and March 31 st will be processed by April 15th; and a disbursement request received on or between April 1 st and April 30th will be processed by May 15th.) (5) CalPERS shall not be liable for amounts disbursed in error if it has acted upon the instruction of an individual authorized by Employer to request disbursements. In the event of any other erroneous disbursement, the extent of CaIPERS' liability shall be the actual dollar amount of the disbursement, plus interest at the actual earnings rate but not less than zero. (6) No disbursement shall be made from the Prefunding Plan which exceeds the balance in Employer's Prefunding Account. G. Costs of Administration Employer shall pay its share of the costs of administration of the Prefunding Plan, as determined by the Board. H. Termination of Employer Participation in Prefunding Plan (1) The Board may terminate Employer's participation in the Prefunding Plan if: (a) Employer gives written notice to the Board of its election to terminate; (b) The Board finds that Employer fails to satisfy the terms and conditions of this Agreement or of the Board's rules or regulations. (2) If Employer's participation in the Prefunding Plan terminates for any of the foregoing reasons, all assets in Employer's Prefunding Account shall remain in the Prefunding Plan, except as otherwise provided below, and shall continue to be invested and accrue income as provided in Paragraph D. (3) After Employer's participation in the Prefunding Plan terminates, Employer may not make contributions to the Prefunding Plan. Rev OI/09!2D08 5 (4) After Employer's participation in the Prefunding Pia n terminates, disbursements from Employer's Prefunding Account may continue upon Employer's instruction or otherwise in accordance with the terms of this Agreement. (5) After thirty-six (36) months have elapsed from the effective date of this Agreement: (a) Employer may request a trustee to trustee transfer of the assets in Employer's Prefunding Account. Upon satisfactory showing to the Board that the transfer will satisfy applicable requirements of the Internal Revenue Code and the Board's fiduciary duties, then the Board shall effect the transfer within one hundred twenty (120) days. The amount to be transferred shall be the amount in the Employer's Prefunding Account as of the disbursement date and shall include investment earnings up to the investment earnings allocation date immediately preceding the disbursement date. In no event shall the investment earnings allocation date precede the transfer by more than 120 days. (b) Employer may request a disbursement of the assets in Employer's Prefunding Account. Upon satisfactory showing to the Board that all of Employer's obligations for payment of post employment health care benefits and other post employment benefits and reasonable administrative costs of the Board have been satisfied, then the Board shall effect the disbursement within one hundred twenty (120) days. The amount to be disbursed shall be the amount in the Employer's Prefunding Account as of the disbursement date and shall include investment earnings up to the investment earnings allocation dale immediately preceding the disbursement date. In no event shall the investment earnings allocation date precede the disbursement by more than 120 days. (6) After Employer's participation in the Prefunding Plan terminates and at such time that no assets remain in Employer's Prefunding Account, this Agreement shall terminate. (7) If, for any reason, the Board terminates the Prefunding Plan, the assets in Employer's Prefunding Account shall be paid to Employer after retention of (i) amounts sufficient to pay post employment health care benefits and other post employment benefits to annuitants for current and future annuitants described by the employer's current substantive plan (as defined in GASB 43), and (ii) amounts sufficient to pay reasonable administrative costs of the Board. (8) If Employer ceases to exist but Employer's Prefunding Plan continues to exist and if no provision has been made by Employer for ongoing payments to pay post employment health care benefits and other post employment benefits to annuitants for current and future annuitants, the Board is authorized to and shall appoint a third party administrator to carry out Employer's Prefunding Plan. Any and all costs associated Rev 01/0912008 6 with such appointment shall be paid from the assets attributable to contributions by Employer. (9) If Employer should breach the representation and warranty set forth in Paragraph A., the Board shall take whatever action it deems necessary to preserve the tax-exempt status of the Prefunding Plan. I. General Provisions (1) Books and Records. Employer shall keep accurate books and records connected with the performance of this Agreement. Employer shall ensure that books and records of subcontractors, suppliers, and other providers shall also be accurately maintained. Such books and records shall be kept in a secure location at the Employer's office(s) and shall be available for inspection and copying by CalPERS and its representatives. (2) Audit. (a) During and for three years after the term of this Agreement, Employer shall permit the Bureau of State Audits, CaIPERS, and its authorized representatives, and such consultants and specialists as needed, at all reasonable times during normal business hours to inspect and copy, at the expense of CaIPERS, books and records of Employer relating to its performance of this Agreement. (b) Employer shall be subject to examination and audit by the Bureau of State Audits, CaIPERS, and its authorized representatives, and such consultants and specialists as needed, during the term of this Agreement and for three years after final payment under this Agreement. Any examination or audit shall be confined to those matters connected with the performance of this Agreement, including, but not limited to, the costs of administering this Agreement. Employer shall cooperate fully with the Bureau of State Audits, CaIPERS, and its authorized representatives, and such consultants and specialists as needed, in connection with any examination or audit. All adjustments, payments, and/or reimbursements determined to be necessary by any examination or audit shall be made promptly by the appropriate party. (3) Notice. (a) Any notice, approval, or other communication required or permitted under this Agreement will be given in the English language and will be deemed received as follows: Rev OI/09!2D08 7 1. Personal delivery. When personally delivered to the recipient. Notice is effective on delivery. 2. First Class Mail. When mailed first class to the last address of the recipient known to the party giving notice. Notice is effective three delivery days after deposit in a United States Postal Service office or mailbox. 3. Certified mail. When mailed certified mail, return receipt requested. Notice is effective on receipt, if delivery is confirmed by a return receipt. 4. Overnight Delivery. When delivered by an overnight delivery service, charges prepaid or charged to the sender's account, Notice is effective on delivery, if delivery is confirmed by the delivery service. 5. Telex or Facsimile Transmission. When sent by telex or fax to the last telex or fax number of the recipient known to the party giving notice. Notice is effective on receipt, provided that (i) a duplicate copy of the notice is promptly given by first-class or certified mail or by overnight delivery, or (ii) the receiving party delivers a written confirmation of receipt. Any notice given by telex or fax shall be deemed received on the next business day if it is received after 5:00 p.m. (recipient's time) or on a nonbusiness day. 6. E-mail transmission. When sent by e-mail using software that provides unmodifiable proof (i) that the message was sent, (ii) that the message was delivered to the recipient's information processing system, and (iii) of the time and date the message was delivered to the recipient along with a verifiable electronic record of the exact content of the message sent. Addresses for the purpose of giving notice are as shown in Paragraph B.(1) of this Agreement. (b) Any correctly addressed notice that is refused, unclaimed, or undeliverable because of an act or omission of the party to be notified shall be deemed effective as of the first date that said notice was refused, unclaimed, or deemed undeliverable by the postal authorities, messenger or overnight delivery service. (c) Any party may change its address, telex, fax number, or e -mail address by giving the other party notice of the change in any manner permitted by this Agreement. Rev OI/09!2D08 8 (d) All notices, requests, demands, amendments, modifications or other communications under this Agreement shall be in writing. Notice shall be sufficient for all such purposes if personally delivered, sent by first class, registered or certified mail, return receipt requested, delivery by courier with receipt of delivery, facsimile transmission with written confirmation of receipt by recipient, or e-mail delivery with verifiable and unmodifiable proof of content and time and date of sending by sender and delivery to recipient. Notice is effective on confirmed receipt by recipient or 3 business days after sending, whichever is sooner. (4) Modification This Agreement may be supplemented, amended, or modified only by the mutual agreement of the parties. No supplement, amendment, or modification of this Agreement shall be binding unless it is in writing and signed by the party to be charged. (5) Survival All representations, warranties, and covenants contained in this Agreement, or in any instrument, certificate, exhibit, or other writing intended by the parties to be a part of their Agreement shall survive the termination of this Agreement until such time as all amounts in Employer's Prefunding Account have been disbursed. (6) Waiver No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this Agreement shall be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy shall be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies. (7) Necessary Acts, Further Assurances The parties shall at their own cost and expense execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to evidence or carry out the intent and purposes of this Agreement. Rev OI/09!2D08 9 A majority vote of Employer's Governing Body at a public meeting held on the day of the month of in the year , authorized entering into this Agreement. Signature of the Presiding Officer: Printed Name of the Presiding Officer: Name of Governing Body: Name of Employer: Date: BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM BY KENNETH W. MARZION ACTUARIAL AND EMPLOYER SERVICES BRANCH CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM To be completed by CalPERS The effective date of this Agreement is: Rev OI/09!2D08 10 EXHIBIT D A CalPERS DELEGATION OF AUTHORITY TO REQUEST DISBURSEMENTS RESOLUTION OF THE (GOVERNING BODY) OF THE (NAME OF EMPLOYER) The delegates to the incumbents in (GOVERNING BODY) the positions of and (TITLE) authority to request on behalf (TITLE) of the Employer disbursements from the Other Post Employment Prefunding Plan and to certify as to the purpose for which the disbursed funds will be used. By Title Witness Date OPES Delegation of Authority (2/07) EXHIBIT E SUMMARY OF ACTUARIAL INFORMATION REQUIRED FOR CALPERS FINANCIAL STATEMENTS As part of your agreement to use CalPERS to pre-fund OPEB, the following information must be provided to CalPERS each time an OPEB actuarial valuation report is delivered to CaIPERS. For actuarial valuations performed once every two or three years, employers must in addition to first year information, provide additional information for the other years. This information is extremely important to CalPERS since it will be used to satisfy the requirements of GASB Statement No. 43. If you have questions, please call (888) CalPERS (225-7377). Contact Information for EmDlover Contact Information for Actuarial Firm ER Name City ofTemecula Contact Name Jason Simpson Phone Number (951 )694-6430 Name of Actuarial Firm Gabriel, Roeder, Smith and Co. Leslie Thompson FSA, EA, MAAA (303)846-3038 Actuary/Contact Name Phone Number Column Ie) applies to employers who file actuarial valuations every year. Columns Ie) and ld) apply to those who file actuarial valuations every two years. Columns Ie), ld) and Ie) apply to those who file actuarial valuations every three years. Item No Item Description First Year Second Year Third Year Comments (a) (b) ( c) (d) (e) (f) 1 Actuarial Valuation Date 07/01/2007 2 Frequency of Actuarial valuations Every Year 3 Fiscal Year for ARC 2008 4 Actuarial Value of Assets I 5 Market Value of Assets I 60 Actuarial Accrued Liability for Active Members I 2,776,208 61 Actuarial Accrued Liability for Separated/Inactive Members I 62 Actuarial Accrued Liability for Recipients I 795,821 63 Total Accrued Liability I 3,572,029 7 Annual Covered Payroll I 13,069,614 8 Present Value of Future Benefits I 5,727,169 9 Amortization Method {whether its based on closed or open Level Dollar Open approach) 10.0 Average Remaining Amortization Period 30 11.0 Annual Required Contribution (ARC) in dollars I 550,899 11.1 Annual Required Contribution (ARC) as a Dercentaae of 4.22% ~ 120 Normal Cost in dollars I 252,479 12_1 Normal Costas a Dercentaae of Davroll 1.93% 130 UAL Amortization in dollars I 298,420 13.1 UAL Amortization as a oercentaae of oavroll 2.28% 14 DscountRate Assumption 00775 15 For a partialG' lunded plan, the method used to determine NJA the blended discount rate 16 Salary Increase Assumption (ifrelevantto benefit levels) NJA 17 Expected Benelit Payments I 83,133 18 Number 01 Active Members 202 19 Average Attained Age 01 Actrves 45.9 20 Average Years 01 Service 01 Acbves 88 21 Number 01 Recipients 12 22 Average Attained Age 01 Recipients 62.6 23 Vision Trend Rates (II Applicable) NfA 24 Dental Trend Rates (II Applicable) NfA 25 Health Assumptions FILL IN THE TABLE BELOW WHERE APPLICABLE EXHIBIT F s Employer Contribution By Check Under Agreement and Election to PTeflllld Other Post Employment Benefits Employer No. Employer Name Employer Address Authorized Employer Representative Name Title Signature Telephone Number Effective date of Agreement and Election to Prefimd Other Posternployrnent Benefits:_ I I - Month (mm) Day (dd) Year (yyyy) ArnOlmt of Contribution Check Number Notes: Contributions to the Prefunding Plan are governed by the terms ofthe Agreement and Election to Prefund Other Postemployment Benefits (Agreement). To ask questions concerning Contributions to the Pre-funding Plan, call 1-888-225-7377, or email questions to CORE4U la!calpers.ca. gov For proper crediting to your prefunding account, please complete this form and mail with your check payable to CalPERS at the following address: CalPERS Fiscal Seryices Diyision PO Box 942703 Sacramento, CA. 94229-2703 If possible, email an electronic copy of this form to FCSD-CERBTla1calpers.ca.!!ov For CalPERS use only Bank Deposit Code: PEB Deposit Date _~-.: __I ~~_ (mm/dd/yyyy) PERS01F0030 DMC (02-2007) EXHIBIT G ~\ CalPERS CERTIFICATION OF OPES ACTUARIAL INFORMATION AND FUNDING POLICY CERTIFICATION OF OPES ACTUARIAL INFORMATION As Actuary for the plan, I certify that the valuation upon which the enclosed summary of actuarial information is based, meets the following criteria: . The valuation was prepared on the basis of the OPEB assumption model prescribed by the CalPERS Board and in effect at the time of the valuation. . The valuation has been prepared and signed by a Fellow or Associate of the Society of Actuaries who is also a Member of the American Academy of Actuaries.' . The valuation has been prepared in accordance with generally accepted actuarial principles. . In the case where the actuarial valuation is to be performed on a bi-annual cycle, this valuation includes information that covers two fiscal years. . The valuation has been prepared in accordance with the requirements set forth in Governmental Accounting Standards Board (GASB) Statements No. 43 and No. 45. . The summary of actuarial information pertains to employees/retirees covered under PEHMCA and prefunded through CaIPERS. I certify that the valuation report clearly identifies these liabilities and the ARC. If assets to prefund other post-employment benefits are invested outside of CaIPERS, the liabilities associated with those assets are not included in the summary of actuarial information. I further certify that the discount rate is consistent with the anticipated level of funding pursuant to the relevant section of GASB 43, and the employer's certification. Valuation Date Printed Name of Actuary and Designation Signature Date 1 In cases where the actuary performing the work does not meet these criteria, the valuation may be acceptable if the person has equivalent qualifications that are acceptable to the CalPERS Board. Please provide the qualifications of the actuary performing the valuation. CERTIFICATION OF FUNDING POLICY As the employer, I certify that our funding policy is to contribute consistently an amount at least equal to % of the ARC. Name of Employer Printed Name and Title of Person Signing the Form Signature Date EXHIBIT H ~:~ GASB STATEMENT 45 ON OPEB ACCOUNTING BY GOVERNMENTS A FEW BASIC QUESTIONS AND ANSWERS 1. Why was Statement 45 on OPEB accounting by governments necessary? Statement 45 was issued to provide more complete, reliable, and decision-useful financial reporting regarding the costs and financial obligations that governments incur when they provide postemployment benefits other than pensions (OPEB) as part of the compensation for services rendered by their employees. Postemployment health care benefits, the most common form of OPEB, are a very significant financial commitment for many governments. 2. How was OPEB accounting and financial reporting done prior to Statement 45? Prior to Statement 45, governments typically followed a "pay-as-you-go" accounting approach in which the cost of benefits is not reported until after employees retire. However, this approach is not comprehensive-only revealing a limited amount of data and failing to account for costs and obligations incurred as governments receive employee services each year for which they have promised future benefit payments in exchange. 3. What does Statement 45 accomplish? . When they implement Statement 45, many governments will report, for the first time, annual OPEB cost and their unfunded actuarial accrued liabilities for past service costs. This will foster improved accountability and a better foundation for informed policy decisions about, for example, the level and types of benefits provided and potential methods of financing those benefits. The Standard also: . Results in reporting the estimated cost of the benefits as expense each year during the years that employees are providing services to the government and its constituents in exchange for those benefits. . Provides, to the diverse users of a government's financial reports, more accurate information about the total cost of the services that a government provides to its constituents. . Clarifies whether the amount a government has paid or contributed for OPEB during the report year has covered its annual OPEB cost. Generally, the more of its annual OPEB cost that a government chooses to defer, the higher will be (a) its unfunded actuarial accrued liability and (b) the cash flow demands on the government and its tax or rate payers in future years. . Provides better information to report users about a government's unfunded actuarial accrued liabilities (the difference between a government's total obligation for OPEB and any assets it has set aside for financing the benefits) and changes in the funded status of the benefits over time. 4. What are the most common misconceptions about Statement 45? a. That it requires governments to fund OPEB. Statement 45 establishes standards for accounting and financial reporting. How a government actually finances benefits is a policy decision made by government officials. The objective of Statement 45 is to more accurately reflect the financial effects of OPEB transactions, including the amounts paid or contributed by the government, whatever those amounts may be. b. That it requires immediate reporting of a fmancial-statement liability for the entire unfunded actuarial accrued liability. Statement 45 does not require immediate recognition of the unfunded actuarial accrued liability (UAAL) as a financial-statement liability. The requirements regarding the reporting of an OPEB liability on the face ofthe financial statements work as follows: . Governments may apply Statement 45 prospectively. At the beginning of the year of implementation, nearly all governments will start with zero financial- statement liability. . From that point forward, a government will accumulate a liability called the net OPEE obligation, if and to the extent its actual OPEB contributions are less than its annual OPEB cost, or expense. . The net OPEB obligation (not the same as the UAAL) will increase rapidly over time if, for example, a government's OPEB financing policy is pay-as- you-go, and the amounts paid for current premiums are much less than the annual OPEB cost. Statement 45 does, however, also require the disclosure of information about the funded status of the plan, including the UAAL, in the notes to the financial statements-and the presentation of multi-year funding progress trend information as a required supplementary schedule. c. That it requires govermnents to report "future costs" for OPEB. It is misleading and incorrect to describe accrual accounting for OPEB as requiring the expensing of "future costs." From an accrual accounting standpoint (the basis of accounting required for all transactions in the government-wide financial statements), the reported expenses relate entirely to transactions (exchanges of employee services for the promised future benefits) that already have occurred. Statement 45 requires governments to report costs and obligations incurred as a consequence of receiving employee services, for which benefits are owed in exchange. The normal cost component of annual expense is the portion of the present value of estimated total benefits that is attributed to services received in the current year. The annual expense also includes an amortization component representing a portion ofthe UAAL, which relates to past service costs. Estimated benefit costs associated with projectedfuture years of service are not reported. EXHIBIT I CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM STATEMENT OF INVESTMENT POLICY FOR ANNUITANTS' HEAL THCARE COVERAGE FUND December 18, 2006 This Policy is effective immediately upon adoption. I. PURPOSE This document sets forth the investment policy ("the Policy") for the Annuitants' Healthcare Coverage Fund ("the Fund"). The design of this Policy ensures that investors, managers, consultants, or other participants selected by the California Public Employees' Retirement System ("the System") take prudent and careful action while managing the Fund. Additionally, use of this Policy provides assurance that there is sufficient flexibility in controlling investment risks and returns associated with this Fund. II. STRATEGIC OBJECTIVE Ensure that the Fund has liquidity adequate to meet its projected cash flow needs, while at the same time keeping its cash balances fully invested, so as to achieve the highest total rate of return possible, consistent with a prudent level of risk. The Fund shall be managed to accomplish the following: A. Provide sufficient liquidity to meet all cash needs; B. Enhance the Fund's total rate of return by ensuring that all cash balances are fully invested at all times until they are needed by the Fund; C. Maintain sufficient diversification to avoid large losses and preserve capital; and D. Consider solely the interest of the Fund's participants and their beneficiaries in accordance with California State Law. III. RESPONSIBILITIES AND DELEGATIONS A. The System's Investment Committee ("the Investment Committee") is responsible for approving and amending the Policy. The Investment Committee delegates the responsibility for administering the Fund to the Investment Staff through the Delegation of Authority (Delegation Nos. 89- 13 and 95-50). Copyright @ 2006 by CaIPERS. Reproduction of any part of this manual is permissible if reproduction contains notice of CaIPERS' copyright as follows: "Copyright@ 2006 by CaIPERS". ANNUITANTS' HEAL THCARE COVERAGE FUND Paqe 2 of 4 B. The System's Investment Staff ("the Staff') is responsible for: 1. Implementing and adhering to the Policy; 2. Reporting internally to senior management concerning the implementation of this Policy. This report shall be prepared at least monthly to include, but is not limited to, the current market value and allocations by asset class compared to the asset allocation targets. C. The General Pension Consultant ("the Consultant") is responsible for monitoring, evaluating, and reporting to the Investment Committee, at least quarterly, the Fund's performance relative to the benchmark and Policy guidelines. IV. PERFORMANCE OBJECTIVE The Fund, at a minimum, shall generate a long-term total return that meets or exceeds the Fund's actuarial interest rate assumption. V. INVESTMENT APPROACHES AND PARAMETERS A. Philosophy and Approach The Fund shall be managed in accordance with the CalPERS Statement of Investment Policy for Asset Allocation Strategy approved by the Investment Committee and in a manner consistent with each individual Board-Approved Policy governing each asset class. Such policies shall specify the method and parameters for implementation and provide for the ongoing monitoring of that asset class. B. Fund Structure/Parameters The System shall manage the Fund in accordance with the following strategic asset allocation. In order to increase the investment opportunities, the Fund shall hold an interest in pooled funds managed by the System. The System's Master Custodian shall employ a unitized fund structure to maintain separate and distinct historical records and to produce individual net asset values (NA V's) for each asset class in the Fund. Copyright @ 2006 by CaIPERS. Reproduction of any part of this manual is permissible if reproduction contains notice of CaIPERS' copyright as follows: "Copyright @ 2006 by CalPERS . ANNUITANTS' HEAL THCARE COVERAGE FUND Paqe 3 of 4 The Annuitants' Healthcare Coverage Fund Strategic Asset Allocation Asset Class Policy Allocation Policy Range U. S. Equity 35% 30% - 40% Int'l Equity 29% 24% - 34% REITs 10% 7% - 13% U. S. Fixed Income 20% 17% - 23% High Yield 6% 3% - 9% Cash Equivalent 0% 0% Expected Return: Expected Risk: Return/Risk: 7.75% 11.91% 0.65 C. Restrictions, Prohibitions and Permissible Securities Restrictions, Prohibitions and Permissible Securities of the Fund are defined in the Board-Approved Policy governing each asset class, as follows: U. S. Equity: Pooled S&P 500 Equity Index Fund - Internally Managed Int'l Equity: Equity Index Funds - Internally Managed REITs: Enhanced CORE Index Public Real Estate Equity Securities - Internally Managed U. S. Fixed Income and High Yield: Dollar-Denominated Fixed Income Program Cash: Dollar-Denominated Short-Term Program -Internally Managed Copyright @ 2006 by CaIPERS. Reproduction of any part of this manual is permissible if reproduction contains notice of CaIPERS' copyright as follows: "Copyright @ 2006 by CalPERS . ANNUITANTS' HEAL THCARE COVERAGE FUND Paqe 4 of 4 VI. BENCHMARK The benchmark for each of the Fund's asset class investments is defined in the Board-Approved Policy governing each asset class. The benchmark for the Fund as a whole shall be a weighted asset class benchmark based on asset class index returns weighted by asset class policy targets. VII. GENERAL Investors, managers, consultants, or other participants selected by the System shall make all calculations and computations on a market value basis, as recorded by the System's custodian. VIII. GLOSSARY OF TERMS Definitions of key words used in this policy are located in the Miscellaneous Investment Policies Glossary of Terms which is included in the System's Master Glossary of Terms. Annuitants' Healthcare Coveraqe Fund Approved by the Policy Subcommittee: Adopted by the Investment Committee: December 15, 2006 December 18, 2006 Copyright @ 2006 by CaIPERS. Reproduction of any part of this manual is permissible if reproduction contains notice of CaIPERS' copyright as follows: "Copyright @ 2006 by CalPERS . Facts At A Glance is a monthly compilation of information of interest to Board Members, staff, and the general public. Information is current as of October 31, 2007 unless otherwise noted. Every effort has been made to verify the accuracy of the information, which is intended for general use only Figures for this document are rounded for viewing purposes. Please direct any questions and comments to the Public Affairs Office at (916) 795-3991. Investment Portfolio Market Value: (As of October 31 ,2007) $260.6 Billion ASSET CLASS BY MARKET VALUE & ALLOCATION: Asset Class Market Value Cash Market Effective Current Previous % ($ Billion) Allocation Allocation Taraet* Taraet Passi ve vs. Acti ve (Percentagel Percentanel (Percentagel (Percentagel Passi ve Active Cash $2.2 0.8% 0.3% 0.0% 0.0% 0.0% 100.0% Equivalents Fixed Income Domestic $60.4 23.2% 23.2% 23.0 0.0% 100.0% International $7.4 2.8% 2.8% 3.0 0.0% 100.0% Total Global Fixed Income $67.7 26.0% 26.0% 26.0 26.0 Equities AIM $19.5 7.5% 7.5% 6.0 7.0 0.0% 100.0% Domestic $93.6 35.9% 36.2% 40.0 39.0 67.5% 32.5% International $55.8 21.4% 21.6% 20.0 19.0 45.2% 54.8% Total Equities $168.9 64.8% 65.3% 66.0% 65.0% Real Estate $21.9 8.4% 8.4% 8.0% 9.0% 5.8% 94.2% - - - - - - Total Fund $260.6 100.0% 100.0% 100.0% 100.0% 33.9% 66.1% 'Target allocation effective January 1, 2005. GROWTH OF FUND: Year 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 Year-End 6/30 $28.6 billion $58.2 billion $87.8 billion $100.7 billion $119.7 billion $143.3 billion $159.1 billion $172.2 billion $156.0 billion $143.4 billion Year-End 12/31 $32.7 billion $57.5 billion $96.9 billion $108.0 billion $128.2 billion $150.6 billion $171.9 billion $165.2 billion $151.8 billion $133.8 billion 2003 2004 2005 2006 2007 I nvestments Facts Page 2 $144.8 billion $166.3 billion $189.8 billion $208.2 billion $247.7 billion $161.4 billion $182.8 billion $200.9 billion $230.3 billion TOTAL RETURNS: Fiscal year to date ended 3 years for period ended 5 years for period ended 10/31/07 10/31/07 10/31/07 5.29% 15.62% 15.50% CALIFORNIA INVESTMENTS AND COMMITMENTS: Approximately $26.5 billion -- or 10.2 percent of total fund as of October 31 ,2007. Fixed Income Equities Real Estate $ 2.6 billion $ 15.2 billion $ 8.7 billion HISTORICAL RATES OF RETURNS1: Year-End 6/30 -3.1 35.4 24.6 13.8 3.9 15.7 9.7 6.5 12.5 14.5 2.0 16.3 15.3 20.1 19.5 12.5 10.5 -7.2 _5.91 3.9 16.7 12.7 12.3 19.1 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Dated: 12/17/2007 Year-End 12/31 12.9 28.0 15.9 4.3 12.8 21.3 -0.8 23.0 6.5 13.4 -1.0 25.3 12.8 19.0 18.5 16.0 -1.4 -6.2 -9.5 23.3 13.4 11.1 15.7 1 Beginning 6/30/02 performance figures are reported as gross of fees. ITEM NO.7 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Debbie Ubnoske, Director of Planning DATE: February 12, 2008 SUBJECT: First Amendment to the Agreement for Consultant Services Between the City of Temecula and Environmental Science Associates for Preparation of a Supplemental Environmental Impact Report for Planning Application PA07-0335 PREPARED BY: Christine Damko, Associate Planner RECOM M ENDA TION: That the City Council approve the First Amendment to the Agreement with Environmental Science Associates in the amount of $126,200 for the preparation of a Supplemental Environmental Impact Report for the Mercedes Benz Automobile Dealership, Planning Application Number PA07-0335. BACKGROUND: On January 22, 2008, the City Manager administratively approved a consultant services agreement with Environmental Science Associates in the amount of $22,500 to start the preparation of a Supplemental Environmental Impact Report (EIR) for the proposed Mercedes Benz Automobile dealership. An amendment to this agreement is requested to complete the Supplemental EI R for an amount of $126,200. The total maximum cost of this contract would be $148,700. Environmental Science Associate's proposal consists of weekly meetings with staff, attendance of community meetings and public hearings, the preparation and research of project related studies, and the preparation of a Supplemental EIR and associated Mitigation Monitoring Program. FISCAL IMPACT: The total cost of the original agreement is $22,500. The First Amendment is for an amount not to exceed $126,200, for a total agreement amount not to exceed $148,700. Sufficient funds were received by the applicant and were deposited into Trust Account # 13000 on January 7,2008. ATTACHMENTS: First Amendment Attachment "A" - Description of Schedule/Scope of Work Attachment "B" - Cost FIRST AMENDMENT TO THE AGREEMENT FOR CONSULTANT SERVICES BElWEEN THE CITY OF TEMECULA AND ENVIRONMENTAL SCIENCE ASSOCIATES ("ESA") PREPARATION OF A SUPPLEMENTAL ENVIRONMENTAL IMPACT REPORT FOR THE MERCEDES BENZ AUTOMOBILE DEALERSHIP (PA07-0335) THIS FIRST AMENDMENT is made and entered into as of February 12, 2008 by and between the City of Temecula, a municipal corporation ("Agency") and Environmental Science Associates ("Consultant"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. This Amendment is made with respect to the following facts and purposes: A. On January 7, 2008 the City and Consultant entered into that certain agreement entitled Consultant Agreement between the City of Temecula and Consultant for project management/coordination/preliminary environmental consulting services in the amount of Twenty Two Thousand Five Hundred Dollars and No Cents ($22,500.00). B. The parties now desire to increase the payment for additional consulting services in the amount of One Hundred Twenty Six Thousand Two Hundred Dollars and No Cents ($126,200.00) and amend the Agreement as set forth in this Amendment. 2. Section 5.a. Pavment of the Agreement is hereby amended to read as follows: The City agrees to pay Consultant monthly, in accordance with the payment rates and terms and schedule of payment as set forth in Exhibit B, for services described in Section B of Exhibit A, attached hereto and incorporated herein by this reference as though set forth in full based upon actual time spent on the above tasks. Any terms in Exhibit A or Bother than the payment rates and schedule of payment are null and void. The first amendment shall not exceed One Hundred Twenty Six Thousand Two Hundred Dollars and No Cents ($126,200.00) for additional consulting services for a total agreement amount of One Hundred Forty Eight Thousand Seven Hundred Dollars and No Cents ($148,700.00). 3. "Exhibit "A" and "B" to the Agreement are hereby amended by adding the items set forth on Attachment "A" to this Amendment, which is attached hereto and incorporated herein as though set forth in full." 4. Except for the changes specifically set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect. C\Program Files (x86)\Neevia.Com\Document Converter\temp\870564.doc IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed the day and year first above written. CITY OF TEMECULA Michael S. Naggar, Mayor ATTEST: Susan W. Jones, MMC, City Clerk Approved As to Form: Peter M. Thorson, City Attorney CONSULTANT: Environmental Science Association Eric Ruby, Vice President/Regional Director 9191 Towne Center Drive, Suite 340 (858)638-0900 Bv: Name: Title: Bv: Name: Title: (Two Signatures Required For Corporations) 2 C\Program Files (x86)\Neevia.Com\Document Converter\temp\870564.doc ATTACHMENT "A" DESCRIPTION OF SCHEDULE / SCOPE OF WORK AMENDMENT TO THE SCOPE OF WORK Scope of Work will now include: Task 2 - Draft Supplemental EIR ESA will prepare an Administrative Draft Supplemental EIR for review by the City of Temecula and the project team. The Administrative Draft SEIR will be prepared in accordance with the provisions of Sections 15163 of the CEQA Guidelines. It will include the above outlined specific CEQA-required sections and will incorporate the balance of the CEQA sections contained in the original EIR by reference. Notice of Preparation / Initial Study / Scoping The City of Temecula will prepare a Notice of Preparation (NOP) and Initial Study for the proposed project to solicit input into the content of the SEIR. Based on our preliminary knowledge of the project the following environmental issues will be identified in the Initial Study/NOP as being evaluated in the SEIR: aesthetics, air quality, noise traffic and biological resources. The City of Temecula is responsible for all CEQA and public hearing noticing and advertising costs. The following outline summarizes the proposed organization of the Draft SEIR: Executive Summary: The executive summary is intended to encapsulate the entire Draft SEIR in order to provide a quick understanding of the project's potential impacts. It will identify, in an overview fashion, the proposed project under consideration and its objectives including any design features of the project which will be implemented. The executive summary will briefly discuss the environmental impacts associated with project implementation (whether beneficial or adverse, significant as well as insignificant), and will contain a summary analysis of the alternatives to the proposed project. In addition the executive summary will provide an overview of the courts action and how each writ of mandate issues will be addressed in the SEIR. Section 1.0 - Introduction: The introduction will include the purpose of an SEIR and procedural information. A detailed discussion of the Writ of Mandate and SEIR structure will be included in the introduction as well as a summary of the incorporation by reference process. In addition the introduction will summarize all of the impact analysis contained in the original Draft EIR. Section 2.0 - Project Description: The project description will be based on existing information and include the project location and setting, site characteristics, project objectives and the characteristics of the project. This section will also include the requested permits and approvals for the proposed project. In addition, this section will include a discussion of the past, present, and reasonably foreseeable future projects and activities in the surrounding areas that will serve as the basis for the cumulative impact analysis. Section 3.0 - Environmental Impact Analysis: For each potentially significant issue identified in the NOP/lnitial Study, this section of the SEIR will include a discussion of the environmental setting, project impacts, cumulative impacts, project design features, level of significance before mitigation, mitigation measures, and the level of significance after mitigation. The assessment of impacts will be consistent with CEQA requirements and will utilize defined thresholds of significance to determine the impacts of the proposed project. ESA will be responsible for the preparation of the technical analysis with regard to the environmental issues identified in Task 3 below. Section 4.0 - Alternatives: An alternative site will be evaluated in the draft SEIR. Alternative site plan design schemes will be developed for the project, and will be incorporated into the draft SEIR. For the purposes of this proposal, a total of one alternative site in addition to the mandatory no project alternative will be considered in this section of the SEIR. For each alternative, a description of the alternative, consideration of the alternative's feasibility in relation to the basic objectives of the project (established by the applicant and the City), and a comparative analysis of the environmental impacts attributable to the alternative versus those associated with the proposed project for each of the environmental categories discussed above will be provided. Consideration of any further alternatives which may be required will result in modifications to the project budget. Section 5.0 - Long-term Implications of the Proposed Project: ESA will prepare the following CEQA-required analysis sections: significant irreversible environmental changes and growth-inducing impacts. Section 6.0 - Persons and Organizations Consulted/References: ESA will prepare this section of the SEI R to document all persons and sources that contributed to the environmental analysis. ESA will email individual EIR sections to the city as they are completed to expedite document review. Subsequent to review by City and the project team of the Screencheck Draft SEIR, ESA will prepare the Draft SEIR which incorporates final changes. We assume that changes will be minimal due to early consultation with the City, previous approval of technical reports by City personnel, and submittal of the Screencheck Draft SEIR. This scope of INOrk assumes two rounds of screen check Draft SEIR review. Copies of the Draft SEIR, including technical appendices, will be provided for distribution. ESA will prepare the Notice of Completion prior to public circulation of the Draft SEIR and will assist the City in transmitting the required copies to the State Clearinghouse and required agencies. Task 3 - Final SEIR/Findings/Mitigation Monitoring At the conclusion of the public review period, ESA will work with City to obtain all comments received on the Draft SEIR. An Administrative Final SEIR containing proposed responses to comments and revisions to the Draft SEIR, where required, will be prepared once all comments are received. It is assumed that if required, the applicant's technical consultants will provide any and all necessary input to the responses to comment letters that may be required. It is difficult to predict public reaction to the Draft SEIR at this time. For the purposes of this proposal, it is assumed that public reaction to the document will be limited to a maximum of 20 comment letters. In the event that the public comments on the Draft SEIR are greater than expected, ESA will meet with the city to adjust the work program/budget as necessary. An Administrative Final SEIR will be submitted to the City for review. Upon incorporation of comments on the Administrative Final SEIR, ESA will prepare a Screencheck Final SEIR for submittal to the City and project team. ESA assumes that comments on the Screencheck Final SEIR will be minimal, due to early consultation with the City and the applicant when comments were received. This scope of work assumes two rounds of screen check Final SEIR review. Subsequent to City review of the Screencheck Final SEIR, ESA will prepare the Final SEIR, including findings. It is understood that ESA would only prepare the Statement of Overriding Considerations, which incorporates final changes, as an optional task. ESA will assist the City in transmitting the required copies to the State Clearinghouse, required agencies and commentators. ESA will prepare a detailed Mitigation Monitoring and Reporting Program (MMRP) in accordance with Section 15063 of the CEQA Guidelines in response to any significant environmental impacts that may be identified to result from the proposed development. The MMRP will be submitted with the Draft SEIR and will be finalized once the FEIR is certified. Environmental Issues Based on the knowledge of the project, the following specific issues will be evaluated and addressed in the SEIR: Landform and Aesthetics The proposed project includes the construction of a new automobile dealership and may result in substantial visual changes to the project area. Tasks . Review the architectural and site plans design prepared for the proposed project. . Analyze the existing visual character of the project site. Compare the height and massing of the proposed project with surrounding land uses and structures. . Discuss consistency of the proposed project with visual quality and design policies and guidelines of the City General Plan and Adopted Harveston Specific Plan and other plans and studies, as appropriate. . Evaluate the project site for potential nighttime light and glare impacts on nearby uses. . Prepare a visual simulation of the proposed project from adjacent residential areas . Discuss measures included in the proposed project to mitigate potentially significant visual impacts. As appropriate, identify additional or alternative measures to avoid or reduce any potentially significant effects to a less-than-significant level. . Determine the significance of potential project impacts on the existing character of the area. Air Quality Analysis Site preparation and construction activities, as well as operational characteristics, could generate substantial short term temporary and long term operational emissions of particulates and other criteria air pollutants that may exceed significance thresholds. Stationary and mobile source emissions associated with the project may result in project emissions that exceed South Coast Air Quality Management District (SCAQMD) thresholds of significance. These new emissions, added to existing sources of air pollution and cumulative development planned for the area, could contribute to the degraded air quality within the Air Basin. Tasks . Review the local and regional climate, meteorology, and topography as they affect the accumulation or dispersion of pollutants . Identify federal, state, and local regulatory agencies responsible for air quality management, and briefly summarize pertinent federal, state, and local air quality policies, regulations and standards as they pertain to the proposed project site. . Summarize current air quality conditions and recent trends (last three years) in the project area on the basis of the annual air quality monitoring data summaries published by the Air Resources Board (ARB). . Discuss SCAQMD projections of future air quality trends over the life of the project as presented in the most recent Air Quality Management Plan (AQMP), and the assumptions upon which the projections are based. Identify any policies or goals embodied in the AQMP that would apply to the proposed project site. . Identify air pollutant-sensitive land uses or activities in the vicinity of the project site or along roads providing access to the project site. . Describe the SCAQMD air quality impact significance thresholds for new developments. . Discuss, at an appropriate level of detail, the potential for short-term emissions of criteria air pollutants (those for which the U.S. Environmental Protection Agency has established ambient air quality standards) generated by construction activities. . Use URBEMIS 2007, version 9.2 air quality model to prepare a daily inventory of criteria air pollutant and carbon dioxide emissions for the proposed project. . Discuss the potential for air pollutant emissions from development in the project area to adversely affect sensitive land uses or activities, or to impede attainment of state or federal air quality goals. . Discuss conformance of the project with the AQMP, and determine whether identified air quality impacts would meet any SCAQMD thresholds of significance. . Summarize statewide planning efforts relative to climate change and the generation of greenhouse gas emissions, including Assembly Bill 32, Executive order S-01-07, and the reporting and recommendations to date of the California EPA Climate Action Team. Present discussion about how the California Code of Regulations Title 24 requires the construction of new energy efficient buildings that result in less greenhouse gas emissions. . Identify the greenhouse gas analysis recommendations of the Association of Environmental Professionals (AEP) as presented in its Alternative Approaches to Analyzing Greenhouse Gas Emissions and Global Climate Change in CEQA Documents, recently finalized on June 29, 2007. Recommend AEP endorsed feasible mitigation measures to help the proposed dealership reduce greenhouse gas without any major project redesigns, such as encouraging recycling, landscaping recommendations, increased building efficiency, use of energy efficient appliances, use of highly efficient compact fluorescent lighting, worker carpooling, and pedestrian friendly design features, to reduce the project's contribution to greenhouse gas emissions. . Identify cumulative development in the area (i.e., development that has been approved or is in-process) and discuss the potential for cumulative development to adversely affect air quality or impede attainment of air quality goals. . Identify practical, feasible and clear measures to mitigate the adverse impacts of the project on air quality that are identified in the analysis. Mitigation measures will be developed in consultation with the Authority as appropriate. . Quantify project impacts and evaluate whether mitigation measures would reduce the impacts below a level of significance. Identify the parties responsible for implementing each measure. Incorporate standard mitigations provided by the City, as appropriate. ESA has been listed by the California Climate Registry as a firm qualified to perform baseline emission inventories for greenhouse gases. ESA has been implementing greenhouse gas emissions analyses for the past eight months and has responded to comments from local air districts and the state attorney general. Acoustical Analysis Noise generated by construction activities and operational noise from the completed project would increase noise levels as a result of an increase in local traffic and operational activities. This analysis will be based on the traffic report and construction equipment mix. Tasks . Briefly describe and discuss existing major noise sources at the project site, particularly the noise from adjacent roadways. Describe the existing noise environment on the basis of up to four short-term measurements carried out by ESA staff. . Briefly summarize state and local noise policies, regulations, and standards as they pertain to the proposed project. . Identify noise-sensitive land uses or activities in the vicinity of the project site, and along roads providing access to the project site, that would be affected by development of the proposed project. . Discuss the potential for on-site construction activities to affect nearby residences and other sensitive receptors. This discussion will be based upon proposed construction activities and scheduling information provided by the applicant. Otherwise, this discussion will be based upon peak noise levels generated by an assumed standard mix of construction equipment and activities. . Using the Federal Highway Administration's Highway Traffic Noise Prediction Model (FHWA-RD-77-108), ESA will calculate existing, future base case (i.e., without the project), future project case (i.e., with the project), roadside noise levels along road segments that would be affected by motor vehicle traffic generated by the project, to determine whether project vehicular traffic would adversely affect adjacent land uses. . Identify cumulative development in the project area (i.e., development that is under formal consideration or has been approved, and discuss the potential for cumulative development to adversely affect noise-sensitive land uses. . Identify practical, feasible and clear measures to mitigate the adverse impacts of the project on noise. Mitigation measures will be developed in consultation with the lead agency and responsible agencies as appropriate. . Develop and discuss measures to mitigate potentially significant noise impacts. Biological Assessment / MSHCP Conformance Report ESA will use available information sources, including aerial photographs, topographic maps, habitat conversation plans and existing biological and planning documents in the project region to document existing biological resources onsite and in the vicinity of the site. ESA will utilize the California Department of Fish and Game (CDFG) California Natural Diversity Data Base (CNDDB) and the California Native Plant Society's Electronic Inventory of Rare and Endangered Vascular Plants of California to develop a list of threatened and endangered and other sensitive species with potential to occur within, or in habitats adjacent to, the project area. ESA will also obtain official special status species lists for the project area from the U.S. Fish and Wildlife Service. Tasks ESA will conduct a field survey to detail vegetation and wildlife habitat in the project area to identify the potential for special-status species, jurisdictional waters/wetlands and other sensitive biological resources, including wildlife movement corridors, to be present onsite. Potential special-status species that may be associated with habitats on, or adjacent to, the project site include: burrowing owl, California Gnatcatcher, Quino checker spot butterfly and other riparian bird species. For each special-status species for which suitable habitat has been identified in the project area, the following specific information will be collected or estimated: . Distribution and abundance onsite - observed or expected; . Historic and recent status within the area; . Habitat quality; . Ecology, behavior, and habitat requirements; and . Aspects of biology of each species which could be relevant to the proposed uses of the project site Once the above biological resources assessment is completed, it will be incorporated into an MSHCP conformance report / HANS application for submittal to the RCA. Traffic and Circulation ESA will coordinate the traffic study to be prepared by DKS and will summarize findings in the SEIR document. The traffic impact analysis will include an evaluation of construction related and operational effects. Tasks . DKS Associates (DKS) will prepare a traffic impact analysis (TIA) of the potential traffic and circulation impacts related to the development of a new car full-service dealership (proposed project). Based on a cursory trip generation analysis using trip rates from the Institute of Transportation Engineers' (ITE) Trip Generation, 7th Edition, the proposed 65,561 square foot Mercedes Benz dealership would generate approximately 2,186 daily trips, 134 a.m. peak hour trips, and 173 p.m. peak hour trips on a typical weekday. For a typical Saturday, the proposed project would generate approximately 1,379 daily trips and 195 peak hour trips. . The TIA will be prepared consistent with the requirements of the City of Temecula's General Plan Circulation Element and the County of Riverside's current Traffic Impact Analysis Preparation Guide. DKS will conduct a scoping session with the City's Traffic Engineer prior to initiating the TIA to ensure that potential on-site circulation impacts, off-site traffic impacts, and parking impacts are adequately addressed in the TIA. For purposes of this scope of work, it is assumed that all new roadway and intersection traffic counts will need to be collected. DKS will contract with a qualified traffic count firm to collect 24-hour machine counts for up to four (4) roadway segments; and weekday a.m. and p.m. peak hour traffic counts at up to eight (8) intersections. Due to the upcoming holidays, traffic counts will not be collected until the second week of January 2008. . The on-site circulation analysis will be based on the City's development standards and will ensure that vehicles would have adequate and efficient circulation on-site. The parking analysis will focus on the ability for the proposed project to meet the parking requirements called for in the City's Municipal Code. For any significant traffic or parking impacts created by the proposed project, DKS will work with the City and the project development team to determine appropriate and feasible mitigation measures. In addition, DKS will attend up to three (3) meetings in support of the TIA. These meetings may include project team meetings, or public hearings. . Summarize the traffic analysis which is anticipated to include a description of project area roadways, existing traffic volumes and intersection conditions, applicable plans and policies, construction and operational impacts, and mitigation measures, if required. Cumulative Impacts Implementation of the proposed project could contribute to cumulative impacts in the region. Cumulative impacts and mitigation measures will be documented and will be easily differentiated from project specific impacts and mitigation measures. Tasks . Compile a list of projects in the project vicinity in cooperation with the City and county and based on information provided in the traffic report. . Address the cumulative impacts of the proposed project in conjunction with other uses, existing and proposed, in the surrounding area. . Identify measures that would reduce cumulative impacts of the project to the City. Alternative Site Analysis Pursuant to Section 15126.6 of the CEQA Guidelines, an alternative site or alternative location to the currently proposed site/location will be identified, evaluated and compared and contrasted with the impacts associated with the proposed project site. Tasks . Clearly identify the process employed for selection of the alternative site and document impacts associated with the alternative site for each environmental factor contained in the original Draft EIR. . Document the environmental setting, and impacts associated with implementation of the project at the alternative site. Identify any required mitigation measures. . Determine if implementation of the project at the alternative site will reduce or eliminate impacts associated with the proposed project at its currently proposed location. . If the alternative site does not reduce identified environmental effects and/or is not feasible, provide the basis for rejection of the alternative. Schedule We understand that an aggressive schedule is required for this project and that certification of the SEIR by the City will be the critical path for project scheduling purposes. The Administrative Draft SEIR can be completed within two weeks of receipt of the final land plan and all technical studies, if the applicant and ESA are confident that no substantial changes to technical studies would occur in response to City comments. The start to finish CEQA process for the SEIR is approximately 6 months. The following schedule (Table 1) supports achievement of the major milestones of the project, and the certification of the environmental documentation. TASK TABLE 1 SCHEDULE - FLETCHER JONES MERCEDES BENZ DEALERSHIP SEIR DURATION Task 2 - Draft SEI R Preparation Prepare Administrative Draft SEIR and Technical Studies City/Project Team Review Prepare Screen check Draft SEIR City/Project Team Review Prepare Draft SEIR Draft SEIR Public Review Period 8 weeks a 2 week b 2 week 2 week b 1 weeks 45 days Task 3 -Final SEI RfResponse to Comments Prepare Administrative Final SEIR City/Project Team Review Prepare Screen check Final SEIR City/Project Team Review Prepare Final SEIR Submit Final SEIR For Certification 3 weeks a, C 1 week b o week 1 week b o week 1 day This preparation period is dependent on receipt of all documents and electronic information. Preparation of the document may overlap with other tasks and sections will be submitted prior to completion of entire document, in order to meet schedule requirements. This review period is just an estimate, dependent on City schedule. Assumes that technical report authors will provide responses to comments on respective technical issues within two weeks. Initial work on technical reports will begin during the NOP process in order to save time. Technical reports will be completed within about a week of receipt of traffic report. ATTACHMENT "8" COST Cost Estimate The following cost estimate (Table 2) has been prepared to outline estimated costs to complete the above outlined tasks. Reimbursable expenses, including travel/parking, etc. will be invoiced in accordance with ESA standard rate schedule. Our services will be billed monthly on a time-and-materials basis. Should the need arise for additional professional services beyond those set forth in the scope of services due to revisions to the project, the regulatory environment, requirements exceeding our specified budget allowances, ESA will only undertake such additional services upon receipt of authorization by the City of Temecula. TABLE 2 COST ESTIMATE - FLETCHER JONES MERCEDES BENZ DEALERSHIP SEIR TASK Task 2 - Draft SEIR a Air Quality Assessment Acoustical Assessment Biological Assessment I MSHCP Conformance Report Traffic Report Visual Simulation Task 3 - Final SEIR/Response to Comments I Mitigation Monitoring Program COST $ 37,500 $ 6,500 $ 5,500 $ 13,500 $ 29,200 $ 7,500 $ 15,500 $ Reimbursable Expenses (in-house copying, mileage, postage, etc.) a Document Reproduction - Assumes 75 Copies of DSEI R & 25 copies of the Final SEIR & misc. reproduction $ 1,250 $ 9,750 Total $126,200 Cost Estimate assumes that the following will be provided by the city or applicant: topography, aerial imagery, land plan, market study, grading and earthwork, preliminary hydrology, and Phase 1 Environmental Site Assessment and hazardous materials assessment. Document reproduction costs are variable, but can be reduced if copies of all documents are provided by the city's reproduction supplier which eliminates ESA's standard mark up on printing expenses. ITEM NO.8 Approvals City Attorney Director of Finance City Manager ~, " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Debbie Ubnoske, Director of Planning DATE: February 12, 2008 SUBJECT: Santa Margarita Area Annexation Update - at the request of Mayor Naggar PREPARED BY: Stephen Brown, Principal Planner RECOMMENDATION: That the City Council receive and file. BACKGROUND: The City Council adopted a resolution on March 6, 2007, requesting the commencement of proceedings to annex approximately 4,900 acres southwest of the City of Temecula. Staff subsequently prepared an Initial Environmental Assessment and determined that an Environmental I mpact Report was required in order to comply with the California Environmental Quality Act. The City Council approved a contract for consultant services in March of 2007 with Albert A. Webb and Associates to prepare an Environmental Impact Report. A further amendment was approved for a traffic analysis to study project traffic impacts and a separate mineral resource study was also prepared. There have been several screen check versions of the Draft Environmental Impact Report that have been reviewed by the City Attorney's Office and City staff. We now anticipate the public distribution of the Draft Environmental Impact Report (DEI R) the second week of February. Forty-five days are allowed for public comment on the DEI R. After the public comments are received, the consultants and staff will prepare the response to these comments and finalize the preparation of the Final EI R. Depending on the responses to the comments, we will submit the Final Environmental Impact Report, General Plan Amendment and the Pre Zoning to the Planning Commission on May 7,2008 and could potentially submit the Final Environmental Impact Report, General Plan Amendment, Zone Change and a Resolution for Sphere of Influence and Annexation proceedings to the City Council on May 27,2008. Immediately after the City Council Action, the Annexation and Sphere of Influence request will be submitted to the Local Agency Formation Commission (LAFCO). LAFCO will need to hold a public hearing at the City's request which could occur as early as four months after submittal. FISCAL IMPACT: None ATTACHMENTS: None ITEM NO.9 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Tim Thorson, Director of Information Systems (IS) DATE: February 12, 2008 SUBJECT: First Amendment to Agreement for Consulting Services between the City of Temecula and PlanNet Consulting for the Old Town Civic Center IS Master Plan RECOMMENDATION: That the City Council approve an amendment to the Agreement for consulting Services for the Old Town Civic Center IS Master Plan in the amount of $95,784.00 and authorize the Mayor to execute the amendment. BACKGROUND: On December 11,2007 the City Council approved a contract for $144,795.00 and retained PlanNet Consulting to develop an IS Master Plan for the Old Town Civic Center. This plan is a conceptual study of the City's current and required technology environments. The deliverables are physical and logical diagrams, budgetary estimates, and phasing strategies for the new Civic Center. It is the staff's desire to amend this agreement for the subsequent phases of the IS Master Plan, where the scope will include: design and specifications; bid support services; as well as construction administration support. These services will address the technology areas for physical infrastructure (structured cabling) and Data Center design. These services will entail the preparation of separate bid packages for the furnishing and installation of the information technology identified in the IS Master Plan and will compliment the facilities included in the Civic Center construction contract being prepared by the City's architectural consultant, NMR. FISCAL IMPACT: The Old Town Civic Center- Phase II project is included in the FY2008-12 Capital Improvement Program, and is funded with Cap Reserves, Certificates of Participation and Development Impact Funds - Corporate Facilities. Adequate funds are available in the project account - Account# 210-165-751-5802 for this expense. The total amount requested for this amendment is $95,784. The total authorized will be $258,358.50 which includes the current amendment and the original agreement amount of $144,795 plus a ten percent contingency of 14,479.50. ATTACHMENTS: Amendment to Agreement with PlanNet Consulting FIRST AMENDMENT TO AGREEMENT BElWEEN CITY OF TEMECULA AND PLANNET CONSULTING OLD TOWN CIVIC CENTER IS MASTER PLAN THIS FIRST AMENDMENT is made and entered into as of February 12, 2008, by and between the City of Temecula ("City"), a municipal corporation, and Brassfield Communications, Inc. ("Consultant"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. This Amendment is made with respect to the following facts and purposes: a. On December 11, 2007, the City and Consultant entered into that certain agreement entitled "Agreement for Consultant Services between the City of Temecula and Plan Net Consulting" in the amount of One Hundred Forty Four Thousand, Seven Hundred Ninety Five and No Cents. ($144,795.00) b. The parties now desire to amend the Agreement in order to extend the term of the agreement to December 10, 2010, add addition scope of work, and increase the payment for services in the amount of Ninety Five Thousand Seven Hundred Eighty Four and No Cents ($95,784.00) and amend the Agreement as set forth in this Amendment. 2. Section 1: Term of the Agreement is hereby amended to read as follows: a. This Agreement shall commence on December 11, 2007, and shall remain and continue in effect until tasks described herein are completed, but in no event later than December 10,2010, unless sooner terminated, pursuant to the provisions of this Agreement. 3. Section 4.a: Payment of the Agreement is hereby amended to read as follows: a. The City agrees to pay Consultant monthly, in accordance with the payment rates and terms and the schedule of payment as set forth in Exhibit B, Payment Rates and Schedule, attached hereto and incorporated herein by this reference as though set forth in full, based upon actual time spent on the above tasks. Any terms in Exhibit B, other than the payment rates and schedule of payment, are null and void. The first amendment amount shall not exceed $95,784.00 (Ninety Five Thousand, Seven Hundred Eighty Four Dollars and Ne Cents ) for additional design & consulting services for a total contract amount of $240,579.00 (Two Hundred Forty-four Thousand Five Hundred Seventy Nine Dollars) for the total term of the Agreement, unless additional payment is approved as provided in this Agreement 4. Exhibits 'A' & 'B' to the Agreement is hereby amended by adding thereto the items set forth on Attachments 'A' & 'B' to this Amendment, which is attached hereto and incorporated herein as though set forth in full. 1 C:\Program Files (x86)\Neevia.Com\Document Converter\temp\870321.doc 5. Except for the changes specifically set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. CITY OF TEMECULA BY: Michael S. Naggar, Mayor ATTEST: BY: Susan W. Jones, MMC, City Clerk Approved As to Form: BY: Peter M. Thorson, City Attorney CONSULTANT: PlanNet Consulting 2850 Saturn Street Suite 100 Brea, CA 92821 BY: NAME: TITLE: BY: NAME: TITLE: 2 C:\Program Files (x86)\Neevia.Com\Document Converter\temp\870321.doc ATTACHMENT 'A' Scope of Work City of Temecula has currently retained Plan Net Consulting to develop the Master IS Plan for the new Civic Center planned for the Old Town section of the city. Plan Net Consulting is responsible for conducting a conceptual study on the City's current and required IT environment, and develop a Master Implementation Plan that defines the IT and communications technologies, budgetary estimates, and phasing strategy for the technology needs of the new Civic Center and the adjacent plaza. The scope of technology being considered includes: . Physical infrastructure . Communications technology . Audiovisual Technology . Data Center . Physical Security It is the City's desire to obtain a proposal for the subsequent phases to the Master IS Plan, where the scope of work will include: design and specifications; bid support services; as well as construction administration support. These services will address the technology areas for: Physical Infrastructure (cabling); Data Center; and Audiovisual Systems only. Plan Net will be performing similar services for: Audiovisual Infrastructure; Acoustics; and Physical Security under separate proposal as a subconsultant to Nichols Melburg & Rossetto Architects/Engineers (NMR). It is in response to these needs that Plan Net Consulting submits this scope of services. PROJECT BACKGROUND Plan Net Consulting's understanding of the project is as follows: . The new Civic Center project will be developed on 4+ acres as a multi-story building (three-stories plus a possible basement level) of approximately 95,544 square feet (sf). A plaza area will also be developed in an adjacent area that is 0.75 to 1.5 acres. . The following schedule is anticipated on this project: o Design Development and Review (Jan - March 2008) o Construction Drawings and Bid Documents (March - June 2008) o Construction Administration (Sep 2008 - Jan 2010; approximately 16 months). o Move-in Jan 2010. . Plan Net Consulting is proposing this scope of work to the City of Temecula to provide consulting services including detailed design development drawings and specifications, construction documents, bidding support, technical oversight during construction (implementation), and project management services. 3 C:\Program Files (x86)\Neevia.Com\Document Converter\temp\870321.doc . The architect of record for City of Temecula's Civic Center is Nichols Melburg & Rossetto Architects/Engineers. basic SERVICES 1. Physical Infrastructure (Cabling) Consulting Services 1.1. Design Phase. Conduct up to two (2) on-site planning and design work sessions with the project team (City of Temecula management and staff, architect) to establish technology design criteria, requirements and design approaches. Review existing Architect-Engineer (AE) drawings including spaces for telecommunications (i.e. IDF's), cable conveyance, connections to campus backbone, etc. Develop DO level drawings and design narratives detailing requirements for coordination with AE design team. Review and refine budget for voice, data and video cabling. 1.2. 1.3. 1.4. Prepare conduit plan for voice/data/video cabling including interconnection to campus, telco and cable TV (CATV) service provider feeds. 1.5. Coordinate underground communications conduit work with AE team for placement of other utilities, landscaping, etc. (Note: Plan Net will not be issuing CD's for site plan. We assume our conduit plan will be placed on Architect or Civil drawings). 1.6. Prepare outside plant drawings which document all communications cabling installation requirements required to connect the new Civic Center to existing City facilities. 1.7. Work with City of Temecula to review voice/data/video outlet plans for typical office layouts and common area (assumes 10 typical layouts). Coordinate system furniture and millwork integration requirements with furniture consultant. 1.8. Complete the IDF layouts. Coordinate room dedicated power and cooling requirements with AE team. 1.9. Construction Drawings Phase. Develop cabling drawings and specifications Construction Document (CD) submittals (one submittal and one revision). 1.10. Bid Services Phase. Issue drawings and RFP/specifications for the Structured Communications Cabling System (SCCS) bid. The bid RFP/specifications will address cabling for voice, data, CATV and wireless infrastructure. Wireless Access Point system design upon request (see Additional Services section). 1.11. The City of Temecula and Plan Net will issue the bid to up to four (4) pre-qualified cabling contractors. 1.12. Conduct a bidder's site walk and respond to bidder questions and issue addenda during the bid preparation period. 1.13. Evaluate proposals and provide a summary evaluation document. 1.14. Review, negotiate and approve pricing and Bill of Materials (BOM) as appropriate. Provide technical support to City of Temecula project team during contract negotiations with selected cabling contractor. 4 C:\Program Files (x86)\Neevia.Com\Document Converter\temp\870321.doc 1.15. Construction Administration Phase. Participate in up to twelve (12) construction/coordination meetings during construction to coordinate technology related issues. (Note: Site visits will be coordinated for the same day as construction meetings). 1.16. Review and negotiate, as required, any change orders or contractor's claims for extras related to telecommunications work. 1.17. Monitor and review acceptance testing and contractor's test and acceptance reports, field change orders and other submittals. 1.18. Conduct up to (6) site visits to inspect SCCS installation and prepare punch lists. These site visits will be conducted in conjunction with attending a design or construction meeting. Potential field visits: 1.18.1. Prior to walls closing, Date: (4) days prior to scheduled inspection date 1.18.2. Prior to ceiling closing, Date: (4) days prior to scheduled inspection date 1.18.3. Completion of IT rooms, Date: (4) weeks prior to actual completion 1.18.4. Final punch list: The \Neek prior to move in. 1.18.5. Be on site the first day in service (with the selected cable contractor) to assist in addressing cable related issues. Conduct final inspection of entire facility. 1.19. Review and approve contractor submittals including cut-sheets and design drawings; 1.20. Review and approve close-out package (includes up to two reviews); 1.21. Recommend system acceptance when appropriate. 2. Data Center Consulting Services 2.1. Design and Bidding 2.1.1. Participate in two (2) pre-design site visits to review existing data center facility conditions. 2.1.2. Review existing City of Temecula design criteria from the IT Master Plan and refine for the Data Center facility. This information will be utilized by the AE team to develop programming requirements for the following: 2.1.2.1. Space Requirements - Work with City IT staff to develop Data Center equipment layout options. Determine final space requirements. Provide up to (4) equipment layouts. 2.1.2.2. Work in conjunction with City of Temecula IT to develop a comprehensive list of current and future Data Center equipment. The list will be incorporated into a spreadsheet with dimensions, power and BTUs for equipment. 2.1.2.3. UPS Loads - Work with City of Temecula to determine develop IT equipment list. Develop projected IT equipment power loads. Coordinate projected loads with facility Electrical Engineers. 5 C:\Program Files (x86)\Neevia.Com\Document Converter\temp\870321.doc 2.1.2.4. Computer Room Air Conditioning (CRAC) Requirements - Work with City of Temecula to determine IT equipment heat loads. Coordinate projected loads with facility Mechanical Engineers. 2.1.2.5. Fire Suppression (Pre-Action, clean agent) - Work with City of Temecula to review fire suppression systems options. 2.1.2.6. Monitoring and Controls - Review options for monitoring capabilities. Document monitoring connectivity requirements within design documents. 2.1.2.7. Telco Facilities (Meet Me Hand-off Room) - Coordinate extension of service provider connection requirements from Telco facilities to data center space. 2.1.2.8. Data Center Cabling - Work with City of Temecula IT to define data center cable infrastructure requirements. Coordinate impacts of cable infrastructure with mechanical and electrical systems. 2.1.2.9. Equipment Cabinets - Work with City of Temecula IT to develop server cabinet requirements. Work with team to select up to four server cabinets to mock-up. Work with IT to mock-up cabinets with equipment, cabling, monitoring, wire management and power distribution. 2.1.3. Develop/refine budget for data center SCCS (Structured Communications Cabling System). 2.1.4. Develop schedule for SCCS to dovetail with the construction schedule. 2.1.5. Develop drawings. Drawings will include as appropriate: Symbol legend Space plan including rack and cabinet layout, office, NOC and furniture layout Connectivity diagrams Cable pathway plan Elevations for placement of patch panels and cable management within racks 2.1.5.6. Grounding Requirements/Details 2.1.5.7. Design details 2.1.6. Review architectural and MEP drawings and specifications at each submittal to ensure conformance with design criteria. 2.1.5.1. 2.1.5.2. 2.1.5.3. 2.1.5.4. 2.1.5.5. 2.1.7. Coordinate Data Center connectivity requirements with existing city facilities. 2.1.8. Develop SCCS specifications that are integrated into Request for Proposal (RFP) format. 2.1.9. Assist in developing a short list of qualified cabling contractors. 2.1.10. Issue RFP or specifications (assume up to three bidders). 6 C:\Program Files (x86)\Neevia.Com\Document Converter\temp\870321.doc 2.1.11. Assist vendors during the RFP process - respond to bidder questions, issue addenda as required, etc. 2.1.12. Review and evaluate proposals and assist City of Temecula with selection of the most qualified cabling contractor. 5.2 Construction Administration Phase 5.2.1 Participate in up to (6) construction/coordination meetings during construction to coordinate Data Center technology related issues. (Note: Site visits will be coordinated for the same day as construction meetings.) 5.2.2 Review and negotiate, as required, any change orders or contractor's claims for extras related to telecommunications work. 5.2.3 Monitor and review acceptance testing and contractor's test and acceptance reports, field change orders and other submittals. 5.2.4 Conduct up to (6) site visits to inspect Data Center installation and prepare punch lists. These site visits will be conducted in conjunction with attending a design or construction meeting. 5.2.5 Review and approve close-out package (includes up to two reviews); 5.2.6 Recommend system acceptance when appropriate. 7 C:\Program Files (x86)\Neevia.Com\Document Converter\temp\870321.doc Assumptions and Clarifications Our proposal is based on the following assumptions: 1. General: 1.1. The fees for this project are based upon an approximate 23-month project schedule. 1.2. Our scope of work assumes Schematic Design Level drawings have already been completed by the AE team. Plan Net will utilize our previous work effort from the IT Master Plan development as a starting point for our design efforts. 1.3. Plan Net can begin work on this project in one week from the Authorization to Proceed. 1.4. City of Temecula management and staff will provide any required information to Plan Net Consulting in a timely fashion. 1.5. Where practical, Plan Net Consulting will participate in meetings remotely via conference call or video-conference. 2. Cable Infrastructure and Wireless: 2.1. Plan Net understands the Architect will be coordinating and documenting Telecom Outlets on the power and signal plans. If Plan Net is asked to coordinate and/or document Telecom Outlets, it may result in an additional charge. 2.2. Plan Net will base our wireless infrastructure work on the 802.11 wireless standards and best practices, including extension from the Civic Center facility to integrate with the City's Tropos wireless mesh network. Cellular phones and RFID are excluded from this plan. 3. Data Center: 3.1. Our proposal does not include MEP drawings. 3.2. Our fees do not include commissioning services. Plan Net will be pleased to provide this under separate services. 3.3. Data Center Migration Planning and implementation management are not included in our fees. 8 C:\Program Files (x86)\Neevia.Com\Document Converter\temp\870321.doc ATTACHMENT '8' PAYMENT RATES AND SCHEDULE Plan Net Consulting will conduct this project for the fixed-fee amount below. These fees can be distributed between technology areas only upon mutual consent of the Plan Net PM and City of Temecula IS Director. CONSULTING SERVICES FEE APPROVAL Technology Desig n Construction Bid Construction Area Development Drawings Support Administration Physical Infrastructure $22,080 $32,952 $6,336 $34,416 $95,784 & Data Center TOTAL $95,784.00 Payment Schedule Payment Schedule Amount Description Number 1 Upon execution of the Amendment $19,156.80 20% payment 2 Design Development Completed $19,156.80 20% payment 3 Construction Drawings Completed $19,156.80 20% payment 4 Bid Specifications Completed $19,156.80 20% payment 5 Construction Cabling/Data Center Bid Awarded $19,156.80 20% payment Expenses: Plan Net Consulting will invoice reimbursable expenses such as travel, lodging, car rental, mileage, postage, copvinq and printinq at our cost. 9 C:\Program Files (x86)\Neevia.Com\Document Converter\temp\870321.doc 10 C:\Program Files (x86)\Neevia.Com\Document Converter\temp\870321.doc ITEM NO.1 0 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: William G. Hughes, Director of Public Works DATE: February 12, 2008 SUBJECT: Completion and Acceptance of the Wolf Creek Fire Station Project, Project No. PW01-11 PREPARED BY: Greg Butler, Deputy Director of Public Works - CIP Mayra De La Torre, Senior Engineer - CIP RECOMMENDATION: That the City Council: 1. Accept the construction of the Wolf Creek Fire Station, Project No. PW01-11; 2. Direct the City Clerk to file and record the Notice of Completion, release the Performance Bond and accept a one (1) year Maintenance Bond in the amount of 10% of the contract amount and; 3. Release the Materials and Labor Bond seven months after filing of the Notice of Completion if no liens have been filed. BACKGROUND: On July 25,2006, the City Council awarded a construction contract for Project No. PW01-11, Wolf Creek Fire Station, to Robert Clapper Construction Services, Inc. in the amount of $3,591,000. The project provided for the construction of a three bay heavy urban station on a 1.5 acre site located at the intersection of Wolf Valley Road and Wolf Creek Drive South. More specifically, the project included construction of the following: wet and dry utilities, precise grading, site drainage systems, erosion control, foundation systems, a new single story fire station totaling approximately 9,062 square feet, a storage structure building totaling approximately 576 square feet, trash enclosure, two above ground fuel tanks (1,000 gallon each), site walkways and hardscape improvements, site landscaping, site concrete masonry unit walls and a parking lot. In addition, the project provided for procurement and installation of certain furnishings and fixtures necessary to support the fire station. The Contractor has completed the work in accordance with the approved plans and specifications to the satisfaction of the Director of Public Works. Three (3) contract change orders were issued for a total of $59,041.13. All work will be warranted for a period of one (1) year from the date the City obtained "beneficial use" (i.e., July 30,2007). The final amount of the contract is $3,650,041.13. The construction retention for this project has been released due to the fact that Fire staff obtained "beneficial use" of the facility on July 30,2007. As noted on the Contractor's Affidavit and Final Release, there is a potential claim by the Contractor in the amount of $21 ,921.00 for underground conduit and volume control relocations. FISCAL IMPACT: The Wolf Creek Fire Station is a Capital Improvement Projectfunded by the Wolf Creek Community Facilities District CFD No, 03-03, the City's Development Impact Fees (DIF) for Fire Mitigation, Fire Facility, Public Facility and Public Service and other reimbursements from the Developer (i.e., Standard Pacific Homes) and Special Distribution Fund (SDF). The total project cost is $3,650,041.13, which includes the final paid contract amount of $3,591,000 plus $59,041.13 for change orders. ATTACHMENTS: 1. Notice of Completion 2. Maintenance Bond 3. Contractor's Affidavit and Final Release RECORDING REQUESTED BY AND RETURN TO: CITY CLERK CITY OF TEMECULA P.O. Box 9033 43200 Business Park Drive Temecula, CA 92589-9033 NOTICE OF COMPLETION NOTICE IS HEREBY GIVEN THAT 1. The City of Temecula is the owner of the property hereinafter described. 2. The full address of the City of Temecula is 43200 Business Park Drive, Temecula, California 92590. 3. The Nature of Interest is a Contract which was awarded by the City of Temecula to Robert Claooer Construction Services. Inc. /2223 N. Locust Avenue. Rialto. CA 923771 to perform the following work of improvement: WOLF CREEK FIRE STATION Project No. PW01-11 4. Said work was completed by said company according to plans and specifications and to the satisfaction of the Director of Public Works of the City of Temecula and that said work was accepted by the City Council ofthe City ofTemecula at a regular meeting thereof held on Februarv 12. 2008. That upon said contract the Safeco Insurance Comoanv of America was surety for the bond given by the said company as required by law. 5. The property on which said work of improvement was completed is in the City of Temecula, County of Riverside, State of California, and is described as follows: WOLF CREEK FIRE STATION. Proiect No. PW01-11 6. The location of said property is: 32211 Wolf Valley Road, Temecula, California Dated at Temecula, California, this 12'h day of Februarv. 2008 City of T emecula Susan W Jones MMC, City Clerk STATE OF CALIFORNIA COUNTY OF RIVERSIDE ss CITY OF TEMECULA I, Susan W. Jones CMC, City Clerk of the City ofTemecula, California and do hereby certify under penalty of perjury, that the foregoing NOTICE OF COMPLETION is true and correct, and that said NOTICE OF COMPLETION was duly and regularly ordered to be recorded in the Office of the County Recorder of Riverside by said City Council. Dated at Temecula, California, this 12'h day of February, 2008. City of T emecula Susan W Jones MMC, City Clerk C\Program Files (x86)\NeeviaCom\Document Converter\temp\870186 doc Form . . CITY OF TEMECULA, PUBLIC WORKS DEPARTMENT PREMIUM INCLUDED IN PERFORMANCE BOND MAINTENANCE BOND FOR PROJECT NO. PW01-11 WOLF CREEK FIRE STATION KNOW ALL PERSONS BY THESE PRESENT THAT: Robert Claooer Construction Services. Inc.: 15384 Arrow Blvd.: Fontana. CA 92335 NAME AND ADDRESS OF CONTRACTOR a Corooration (fill in whether B COIpOfBtit')n, Psrtnership or individual) , hereinafter called Principal, and SAFEeo INSURANCE COMPANY OF AMERICA. 330 N. Brand Blvd..10th Floor. Glendale. CA 91203 NAME AND ADDRESS OF SURETY hereinafter called SURETY, are held and firmly bound unto CITY OF TEMECULA, hereinafter called OWNER, in the penal sum of Three Million. Five Hundred Ninety One Thousand DOLLARS and no CENTS ($ 3,591.000.00 I in lawful money of the United Sta1es, said sum being not less than ten (10%) of the Contract value payable by the said City of Temecula under the terms of the Contract, for the payment of which, we bind ourselves, successors, and assigns, jointly and severally, firmly by these presents. THE CONDITION OF THIS OBLIGATION is such that whereas, the Principal entered into a certain Contract with the OWNER, dated the 25th day of Julv 2006, a copy of which is hereto attached and made a part hereof for the construction of PROJECT NO. PW01-11, WOLF CREEK FIRE STATION. WHEREAS, said Contract provides that the Principal will furnish a bond conditioned to guarantee for the period of ~ (1) year after approval of the final estimate on said job, by the OWNER, against all defects in workmanship and materials which may become apparent during said period; and WHEREAS, the said Contract has been completed, and was the final estimate approved on _ ,2006. NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if within one year from the date of approval of the final estimate on said job pursuant to the Contract, the work done under the terms of said Contract shall disclose poor workmanship in the execution of said work, and the carrying out of the terms of said Contract, or it shall appear that defective materials were furnished thereunder, then this obligation shall remain in full force and virtue, otherwise this instrument shall be void. As a part of the obligation secured hereby and in addition to the face amount specified, costs and reasonable expenses and fees shall be included, including reasonable attorney's fees incurred by tJutlllT'F C:'Dotum&l'llSilnd~sIJelNlFERG/8OOEYILOtIiSellflll$\TlI\llOfiI'JtnlerneIIle$IOI..Klf2\WolfCrtdlBondsl2).cIoc . . . the City of TemecuJa in successfully enforcing this obligation, all to be taxed as costs and . included in any judgment rendered. The SUfety hereby stipulates and agrees that no change, extension of time, alteration, or addition to the terms of the Contract, or to the work to be performed thereunder, or to the specifications accompanying the same, shall in any way affect its Obligations on this bond, and it does hereby waive notice of any such change, extension of time, alteration, or addition to the terms of the Contract, or to the work, Of to the Specifications. Signed and sealed this 1 day of AUGUST .2006. (Seal) SURETY SAFECO INSU AMERICA By: YUNG T. MUL (Name) I J ATTORNEy-M-FACT (Titte) , PRINCIPAL ROBERT ~~c:rST I N OF SERVI 5 w# v' . '~"" _ v c" ..:..~ :\ "," I'~..." RobertW. ClaDoer ~. ~~ ..;.%'\1 (Name) - 0$. - '::' -;>:.- President - :.:: -::: ~i ~~ tb~/' ';;: Rebecca A. Claooer (Name) APPROVED AS TO FORM: Pet!" M. Thorson. City Attorney Secrelarv (Tilte) ,..-' ..., .~ .... '" .,1 .......... " ~. ....... .'-:.- ~ . ~". 7:'.....'~ - .......";. "." "'""') ..-'; ~ - ;:- -..? :;..;=- ..-: \.:'~:-.~;; ., "'......... ,'. '-:~';.;.."'''= ,. . " ~ ,:,..:..~..... EXHIBIT 'E' C;!Doc:lIlleICSWldSeaings\.EtHfER GIBOtI:Yllocal SetlingsITtfI1laaylnlefhd FiIK'DLl(lF2\WoIfClBBonds (2)<<K: . . CAUFORNIA A.....PURPOSE ACKNOWLEDGMENT State of California County of California . ss. On August 7, 2006 .... Marie J. Updegrove, Notary Public. before me. pel1lonaUy appeered ,.,........1* tlOtIcltf (t~..... 0.. NNrJ NIlk1 Robert W. Clauoer and Rebecca A. ClaDoer NlJN(s)cI~1I J\!S personaly knoWn to me o proved to me on the baSiS of salisfact"'Y evidence '~ ~ - - - - - - - - . @ MARIE J. UPDEGROvE ~ ;s Comrnlulon" 1630279 t NoIQIy l'utlIc . C'llIIIo "" JI I San .. $ 1 Mvec.r:,;,~:""~,of to be !he pel1lon(s) whose neme(sl -IsIare subscribed to tha within Instrument and acknowledged to me that halehaMley executed the same in ~helr authorized capaclty(iesl. and that by .AicAlerIthelr signaturels) on the instrument the person(s), or the entity upon beha" of which the pel1lon(s) acted, exectited the Instrument. I I I ~ .~ ~ ~ ~ ~ Signer'. Name: Robert w. GlaDoer. Rebecca A. Claooer ~ ~ 1iII~ftk'I~\~_ ~ ~ 0 Individual 'K)p of 1l1umo h&UI ~ j. 119 CorporaleOfficer-l1rte(s): President, Secretary ~.-' o Partner - 0 LImited 0 General ~ , 0 Attorney.ln-Fact ~ I 0 Trustee ~ ~ 0 Guardian or Conservalllr ~ 1 0 Other: ~ cL~=:=:~=:::::~~~~ OI99llNalionalHoWy....IklCialKIII.I35ODe$Glo"ve~P.O.1Ioa2<<R.0WI1swo111.CAll:a13-Z4U'l._ .", IlfV PPOl1Ho.mr ReordIr.CIllTol~","1..._,~.....~, WITNESS my hand and 01f1Cia1 seal. f'~/~~ Though tho ..".-. opnONAL , _.110/ rwqu/todbylo..'...y,.... _.._ toIyIrtg ""...-.-. _couJd_ tnw.::MtmIlfHftOvalllId ru~roflhis /otm 10 .nofher~L Description of Attached Document l1t1e or Type of Oocument: Bond Document Date: Ammst 1. 2006 Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer I ~ ) I . . CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT STATE OF CALIFORNIA ) COUNTY OF ORANGE ) On August I, 2006 before me, JENNIFER C. GIBONEY, NOTARY PUBLIC NAME OF NOTARY PUBLIC personally appeared, YUNG T. MULLICK personally known to me (or 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 helshe/they executed the same in hislher/their authorized capacity(ies), and that by hislher/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. j@" . .~ . . jENNlfER C~ GIBONEY I en COMM. #1470955 l ~ ~ Public CoIIfomIa Ul ORANGE c:cuNT'f - J. _ _ _ . . .Ki~~~,17:~1 (SEAL) OPTIONAL INFORMATION TITLE OR TYPE OF DOCUMENT DATE OF DOCUMENT J . . ~. SAFECO' POWER OF ATTORNEY WECO INSURANCE COUPNn' OF AMIRlCA GENERAL IHBURAHCE COMPANY OF NrotIRlCA tIQIoIOFl'ICe: WECO PlAZA 1,",'mI, WASHlHGTON ..,.. No. 'DI14 l<HOW A~ BY TH!ll1 PRII'NT8: Thol SAffCO INSURANCE COMPANY OF AMeRICA n GENElW.lHSuIlANC! COMPANY 01' AIIERIC.... _ I W....1/lgIon ., ,. ,.:, . does _ horoby - .............,........................................Y\JHG T. MUWCKo 1n1nl.~...........t.....""................................................... I1a true Ind _ .1lDItlOJ(o~iIHld. wiIh MlllUlIloIilwlo_...llobeholl\j....."...- _1l&<<undetIak. 1Illl__,.~.<#I._......__ issued in tne QJUf'M of ItI INti.... tnd to tlind.,. 'tt1l1'lplr'ly 1horet1t. IN wl'I"NESS WHl!RI!OF, 8AFECO INSUIIANCll COMI'ANY OP AMElUCA n OE_~ INlIl.IWIC& COMPANY 01' "MIiItICA _ "'" _ .". .ttNtId ~ j)fM<<lb this 17 clOy of _.... .19" 1lA._N.IECRETARY kl~~ W.1IANOAl.L 1T00000RD. r_ .-"R d.2P ~ C2R1Y>>CATI ............ lie o,.u. of s.veeo ..,""""oE ClOMPANY CI' "'MERICA IIId 01 GENIRA~ IIIliURANCE COIll'ANY Of AMI!RICA: "ArtIcle V. Sedicln 13. . FlCELnv AND SURETY BOND$... .. _..~ 11ft VIco _.. -.." """ ..,""'I1ml _ P_. --' for "'" .......br..........'" """..,.....,.. ---0VlIl60tt......,...-..-"""""'.......- ;" ..., lIlIo.wlIIl.~.. ._CII_oI"'__IIcIoIIly.nd.....,_...__oI__ ........, ","_"","coune"''' ""_.. On.., rllWmlnl mMrlg or evICIIndng....et. ;'" . ...' I' ".., ., lIflIwd by fal:WnIIL On... IrIllrWnWll .. , I ....fOb euIhoriIw' << on iJIft bond or U~.,'" _"Y, tho _" a'__. INtf'" lmpmSOdor_orin "'_1!11_~ ptOVIcI_, _. ".!he ...",..not be nec:esoa'Y" tho voIioIly of MY''''''' in_ or UIlClorlollillg." l!JrltI<t """' I _ "'1110 _<# 01_ <#l5AFI!CO .............CE COIIPANY CI' AMelllCA and ofOENERAt. ...URANCE COMPANY O~ AWRICA odaplod July 21. 1110. "On""Y__~h_....y"'..-Iotanl_lYd...~-ngo... (I) lne~,. ~'. . oIArtJdeV.~n'3of.,.~tnd (il) A copy 0( the -,. r / .I:, ~JMY eppolnbnent, ~ pursuant "*",, and (m) ~lhoI,.Id_"'_ac>lXliI1lmenIisinlua","",..d_ 1M lIigrvdIJ.. DlItw eenftjing offICl&f"IWI be by facs.,*. and tho soaI of It1e Company may be a haimilt Vltfeof... I. R.A. Pimon, Secretory 01 IAFECO IN5VRANCE COMPANY OF AMERIC... and of GENIiRAL INSURAHCE COMPANY OF "'''''RICA,'' _ c:etlIfy.... tho lor.QOlng __ ., th.ev....... Ind OIl RoI<ll_ 01 ". _ '" DI_ on~a corpor_1nd of. """" 01 AIlomOy ;_ "".... _. wlnJo Jnd ""ooet..ncl tha'_,"" 9y-la.... fie _ ond the _01 AlIOITI<l' ore sill In MI_1nd tIra,t. JNWlTNESS\\"~,,,..,1 hlHehol'ountolOtrrTtfhandandalrlwedthetMml1c1Cll oI'lIkI " ,,' .,... 't ... 1 ..,'" AUGUST 2006 . .' ....~ .:....:., . .~... .":'t., .~:" ... .......:::., ,..... _. .,-. /O.d ~~~b1~ ~H~......~....... ... ""'I-:." '., - ,- -. R.A. mset.j&E,CRET^RY:~ :' ,.......,...~ "'_.. ._:....:\'1:" . ;., S.0914/$A1!J ,.'" . Rtg"larecI ndMI&rtl 01 WECO Corpomlan. "'17/t9911 PDF CITY OF TEMECULA, PUBLIC WORKS DEPARTMENT CONTRACTOR'S AFFIDAVIT AND FINAL RELEASE PROJECT NO. PW01-11 WOLF CREEK FIRE STA TION This is to certify that RC Construction ,(hereinafter the "CONTRACTOR") declares to the City of Temecula, under oath, that he/she/it has paid in full for all materials, supplies, labor, services, tools, equipment, and all other bills contracted for by the CONTRACTOR or by any of the CONTRACTOR's agents, employees or subcontractors used or in contribution to the execution of it's contract with the City of Temecula, with regard to the building, erection, construction, or repair of that certain work of improvement known as PROJECT NO. PW01-11, WOLF CREEK FIRE STATION, situated in the City of Temecula, State of California, more particularly described as follows: 32211 Wolf Vallev Rd.._ Temculi'l. r'r> 92'\9n INSERT ADDRESS OR DESCRIBE LOCATION OF WORK The CONTRACTOR declares that it knows of no unpaid debts or claims arising out of said Contract which would constitute grounds for any third party to claim a Stop Notice against of any unpaid sums owing to the CONTRACTOR. Further, in connection with the final payment of the Contract, the CONT~CTOR hereby disputes the following amounts: Description Dollar Amount to Dispute Building Electrical Jlnch:~r~rnllnn .....nn~l1-i +- $2q,211.00 Volumn Control relocation <1:1 _ 71 n nn Pursuant to Public Contract Code 37100, the CONTRACTOR does hereby fully release and acquit the City of Temecula and all agents and employees of the City, and each of them, from any and all claims, debts, demands, or cause of action which exist or might exist in favor of the CONTRACTOR by reason of payment by the City of Temecula of any contract amount which the CONTRACTOR has not disputed above. CONTRACTOR Dated: 1-8-08 By: ~ Signature Steven R. Marshall - Project Manager Print Name and TItle RELEASE R-l RICIPlPROJECTS\PWD1\PW01.11WC mId Oocs\Specs\Front EndIPWD1.11 Specs,doc ITEM NO. 11 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: William G. Hughes, Director of Public Works DATE: February 12, 2008 SUBJECT: Old Town Infrastructure Project - Underground Utility District, PW06-07(1 B) Authorization to solicit Construction Bids PREPARED BY: Greg Butler, Deputy Director of Public Works - CIP RECOMMENDATION: That the City Council authorize the Department of Public Works to solicit construction bids for Rule 20B portion of Project No. PW06-07(1 B), Old Town Infrastructure Project - Underground Utility District. BACKGROUND: On June 26,2006 the Council approved the Old Town Civic Center Master Plan in reliance on the Initial Study and Mitigated Negative Declaration approved that same day by Resolution No. 06-58. The undergrounding work for the Old Town Infrastructure Project, PW 06-07(1 B) are a part of the Old Town Civic Center Master Plan and were all considered and studied in the Initial Study and Mitigated Negative Declaration. The Old Town Civic Center Master Plan described in the Mitigated Negative Declaration has not changed since its adoption. There are no new significant effects that will be caused by construction of the undergrounding of the overhead utilities for the Old Town Infrastructure Project - Underground Utility District, PW 06- 07(1 B); nor will the construction of said improvements increase the severity of any previously identified impacts. The impacts will remain the same as analyzed in the Mitigated Negative Declaration. On October 10,2006 the City Council adopted Resolution 06-90 establishing Underground Utility District NO.2 and ordering removal of overhead utility facilities and installation of underground facilities within said district. The boundary of the District encompasses Mercedes Street from 2nd to 6th streets, Main Street from Murrieta Creek to the freeway and Old Town Front Street from 2nd to 6th streets. There are two types of Rule 20 underground utility districts, Rule 20A districts which utilize 100% SCE funding and Rule 20B districts which are funded by the sponsoring agency. There are not adequate Rule 20A funds available to completely underground all overhead electrical lines at this time; therefore the City and SCE have split the undergrounding effort into phases. Phase 1 will include all of Mercedes Street and Main Street from the freeway to the west side of Old Town Front Street. The extent of the Rule 20A funding (100% SCE funds) will complete the work on Mercedes St. The City will fund the underground work on Main Street, the Rule 20B portion. Franchise agreements with the other overhead utility purveyors, telephone and cable television, require those companies to underground their overhead facilities within both Rule 20A & Rule 20B districts at no cost to the City. Southern California Edison (SCE) has prepared and completed the necessary plans for the undergrounding of their facilities. City Staff and SCE have coordinated the preparation of the plans for the undergrounding the Verizon telephone and Time Warner CA TV overhead facilities. The construction of underground electrical, telephone and CATV facilities must be performed by specialty contractors approved by the serving utility companies for both safety and continuity of service reasons. For efficiency and economy the undergrounding work for all overhead utility company facilities within an underground district is bid as one construction contract with each company paying their proportionate share of the construction cost. Because the City is funding the Rule 20B district it is more economical for the City to contract directly with the specialty contractor and avoid any SCE contract administration fees which would be incurred if SCE administered the Rule 20B construction. The Rule 20A & Rule 20B contracts will be bid simultaneously, with the project awarded to the lowest responsible bidder from the utility company's list of nine approved contractors, based the cumulative total for the Rule 20A & Rule 20B portions of the work. SCE's opinion of probable cost for the underground utility districts is $1,750,000 for the Rule 20A portion of the work and $335,000 for the Rule 20B portion of the work. FISCAL IMPACT: The Old Town Infrastructure Projects - Underground Utility District is included in the City's FY 2008-2012 Capital I mprovement Program and is funded with Rule 20A and RDA tax allocation bond proceeds. Adequate funds are available in the project account, No. 210- 199-646-5804. ATTACHMENTS: Location Map and Project Description ----_._--~ ~ -<'.s> 01< 00 '" ~.s> "" .... .... .... ...:i .... .... ;;J Q :z: ;;J 0 i:I:: ~ "" r-- Q 00 :z: ;;J '" .... u "" ... ~ !>.. ~ ;;J e<- .... ell> u ;;J ."'....'1> i:I:: ~~' .... ~v '" ~ r.. :z: .... :z: ~ ~ 0 .... ~ 1:: Q o'v ...:i ,:)~ (j 0 <( C '-4 E-. ~ \.) - ::; E::: - c .- " z ...-;;;;( ~ .~ e !>.. ~ t::: e:: ei ~ q .... \.) ::; c ~ .... " 0) 0) E: 0) .D ;;.; E-< ~ o ~ ~ " 0) J:l C/) '" 0) 13i I;; 0) 0) J:l :2:~ 'O.g 8 g t) ~ 0):2: J:l C/)S ~-'" " 0) o 0) .... .... >'-<u ~ .~ E-< ;:l '0:2: o s gf,g ~jj '" J:l O)C/) .S c ..... '(; 0:2 ::e c ;:l 0 '" '0 '" a1~ .-e ::: 0) '" I:; '" _" oS~ 'OC/) ~9-= 0) 0 " S 50'- ....C/) o 0) '0 ~]8 0) ;:l ~ '0 0) IV::::: IV ~'~c55 ,,~'O "Vi g c ::S'-:"'Io ~ ::: g ....O-.C/) 00 f:l E-< .... ... .... 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Q N Q .... , 0\ Q Q N 0\ Q , 00 Q Q N 'D <::> ""0 ~ 0\ 0" Ic\ln ..... on Q <::> ~ N" "" "" "" on O'D 0,," on,," 00" ("")" 00 o C"-' "" "" O'D 0"" v:.. -=::t" 00 '" 00 o N "" "" 0,," o on trl,.,1.()" "" "" "" .... 0) 0) " 'M " &l o 'p 5 8 g.p 'p '" " " :5 E E 8,.!!l E ~ ~ '00 .s "0 0 0 v 0 <UUPE-< 000 000 000 Ov{v1 on '" 00 f"-." M 0 N^ "" "" "" 00 00 - ~ '" '0 " o co ~ >. " '" '" eo --< ;:: eo a .S <><'0 --< .s S ~ ~ ~ ~..g'E <( ~ Q) 0 ~P::P::E-< Z ;,; - '" o r.,; U't:l ~ ~ c<J~ 0'0 0) 0) ... '-I = ... - = = Q ~oo ITEM NO. 12 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Susan W. Jones, City Clerk/Director of Support Services DATE: February 12, 2008 SUBJECT: City Council Meeting Schedule - March 2008 RECOM M ENDA TION: Direct the City Clerk to re-schedule the City Council meeting of March 11, 2008 to March 18, 2008, and to perform the appropriate postings and noticing requirements of the Government Code. BACKGROUND: Due to the 2008 National League of Cities Conference scheduled for March 8-1ih, in Washington D.C., and a lack of a quorum on the regularly scheduled meeting, it is suggested that the City Council Meeting of March 11, 2008, be rescheduled to Tuesday, March 18, 2008. FISCAL IMPACT: Changes of dates for City Council, TCSD, and RDA meetings will result in no additional cost to the City. ITEM NO. 13 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Susan W. Jones, City Clerk/Director of Support Services DATE: February 12, 2008 SUBJECT: RDA/Old Town Steering Committee RECOMMENDATION: That the City Council appoint Council Member Roberts and remove Council Member Comerchero from the RDA/Old Town Steering Committee. BACKGROUND: After the general committee assignments were made on January 22, 2008, it was brought to staff's attention that Ron Roberts, as RDA Chair Person, was currently not serving on the RDA/Old Town Steering Committee. Since it is common practice for the RDA Chair Person to serve on this committee, it is proposed that Ron Roberts be appointed in place of Council Member Comerchero. Council Member Comerchero has graciously stepped aside to allow Council Roberts to serve for the upcoming year. FISCAL IMPACT: None ATTACHMENTS: None ITEM NO. 14 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: William G. Hughes, Director of Public Works DATE: Feburary 12, 2008 SUBJECT: First Amendment to Fiscal Year 2007-2008 Annual Maintenance Contract PREPARED BY: Bradley A. Buron, Maintenance Superintendent RECOM M ENDA TION: That the City Council approves the First Amendment to the Fiscal Year 2007 -2008 Annual Maintenance Contract with Becker Construction Services, in the amount of $200,000.00 and authorize the Mayor to execute the amendment. BACKGROUND: On May 22,2007 the City Council approved Fiscal Year 2007-2008 Annual Maintenance with Becker Construction Services in the amount of $200,000.00 to provide Citywide routine maintenance and miscellaneous repairs to roadways, drainage areas, sidewalks, curbs, gutters, storm drains, including excavation and emergency call-out. The First Amendment to the contract with Becker Construction Services is necessary due to a large number of miscellaneous maintenance projects continuously needed throughout the city. This amendment is necessary for the Public Works Maintenance Division to continue to maintain the needed repairs on an as needed basis. Therefore, we are requesting approval of this First Amendment for the remaining Fiscal Year 2007-2008. The First Amendment provides for these additional services in the amount of $200,000.00. With this amendment the total contract amount with Becker Construction Services is $400,000.00. All other terms of the agreement remain the same. FISCAL IMPACT: Adequate funds have been budgeted in the FY2007-2008 Operating Budget for the Public Works Maintenance Division for Facilities Maintenance and Routine Street Maintenance for Becker Construction Services. The original contract amount of $200,000.00 plus the First Amendment amount of $200,000.00 provides a total contract amount $400,000.00. ATTACHMENTS: First Amendment FIRST AMENDMENT TO FISCAL YEAR 2007-2008 ANNUAL CITYWIDE MAINTENANCE CONTRACT BETWEEN CITY OF TEMECULA AND BECKER ENGINEERING THIS FIRST AMENDMENT is made and entered into as of February 12, 2008 by and between the City of Temecula, a municipal corporation ("City") and BECKER ENGINEERING ("Contractor"). In consideration of the mutual covenants and conditions setforth herein, the parties agree as follows: 1. This Amendment is made with respect to the following facts and purposes: A. On May 22,2007 the City and Contractor entered into that certain agreement entitled "City of Temecula Agreement in the amount of $200,000.00 for Fiscal Year 2007-2008 Citywide Routine Maintenance" ("Contract"). B. The parties now desire to amend the Agreement as set forth in this First Amendment for an amount not to exceed Two Hundred Thousand Dollars and No Cents ($200,000.00) for additional Fiscal Year 2007-2008 Citywide Routine Maintenance. 2. Section 3a of the Agreement is hereby amended to read as follows: a. Contractor shall be compensated for actual work performed on the basis of the labor and equipment rates set forth in Exhibit "B", Labor and Equipment Rates, attached hereto and incorporated herein as though set forth in full, the cost of materials approved by the Director pursuant to the procedures set forth in Exhibit "A". The First Amendment amount shall not exceed Two Hundred Thousand Dollars and No Cents ($200,000.00) for additional Fiscal Year 2007-2008 Citywide Maintenance for a total contract amount of Four Hundred Thousand Dollars and No Cents ($400,000.00). 3. Except for the changes specifically set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect. 1 c: IPROGRAM FILES (X86)\NEEVTA.COMIDOCUMENT CONVERTERITEMP\870320.DOC IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. CITY OF TEMECULA Michael S. Naggar, Mayor ATTEST: Susan W. Jones, MMC, City Clerk Approved As to Form: Peter M. Thorson, City Attorney CONTRACTOR Becker Engineering P.O. Box 890365 Temecula, CA. 92589-0365 (909) 694-6965 Fritz Coy, Secretary/Treasurer 2 c: IPROGRAM FILES (X86)\NEEVTA.COMIDOCUMENT CONVERTERITEMP\870320.DOC EXHIBIT B LABOR AND EQUIPMENT RATES 3 c: IPROGRAM FILES (X86)\NEEVTA.COMIDOCUMENT CONVERTERITEMP\870320.DOC ITEM NO. 15 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: William G. Hughes, Director of Public Works/City Engineer DATE: Feburary 12, 2008 SUBJECT: First Amendment to Fiscal Year 2007-2008 Citywide Maintenance Contract PREPARED BY: Bradley A. Buron, Maintenance Superintendent RECOM M ENDA TION: That the City Council approve the First Amendment to the Fiscal Year 2007-2008 Annual Citywide Routine Maintenance Contract with Imperial Paving Company, Inc. in the amount of $200,000.00 and authorize the Mayor to execute the amendment. BACKGROUND: On May 22,2007 the City Council approved Fiscal Year 2007-2008 Annual Citywide Routine Maintenance with Imperial Paving Company, Inc. in the amount of $200,000.00 to provide citywide routine and emergency asphalt street repair work throughout the City. This work generally ranges in costs from $1,000.00 to under $25,000.00 and involves routine asphalt repairs on City Streets. The First Amendment to the contract with Imperial Paving Company, Inc. is necessary due to an increase in the large number of projects requiring asphalt paving repairs which were larger than anticipated. This amendment is necessary for the Public Works Maintenance Division to continue to maintain the asphalt repairs on an as needed basis. Therefore, we are requesting approval of this First Amendment for the remaining Fiscal Year 2007-2008. Although we also have other contractors available under contract, some of the types of services provided by others are limited and Imperial Paving Company, Inc. has been most consistently available and responsive. The First Amendment in the amount of $200,000.00 for Imperial Paving Company, Inc. and the original contract amount of $200,000.00 for a total contract amount of $400,000.00. FISCAL IMPACT: Adequate funds have been budgeted in the FY2007-2008 Operating Budget for the Public Works Maintenance Division, Routine Street Maintenance for Imperial Paving Company, Inc. original contract amount of $200,000.00 plus the First Amendment amount of $200,000.00 for a total contract amount $400,000.00. ATTACHMENTS: First Amendment FIRST AMENDMENT TO FISCAL YEAR 2007-2008 ANNUAL CITYWIDE MAINTENANCE CONTRACT BETWEEN CITY OF TEMECULA AND IMPERIAL PAVING COMPANY, INC. THIS FIRST AMENDMENT is made and entered into as of February 12, 2008 by and between the City of Temecula, a municipal corporation ("City") and IMPERIAL PAVING COMPANY, INC. ("Contractor"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. This Amendment is made with respect to the following facts and purposes: A. On May 22,2007 the City and Contractor entered into that certain agreement entitled "City of Temecula Agreement in the amount of $200,000.00 for Fiscal Year 2007-2008 Citywide Routine Maintenance" ("Contract"). B. The parties now desire to amend the Agreement as set forth in this First Amendment for an amount not to exceed Two Hundred Thousand Dollars and No Cents ($200,000.00) for additional Fiscal Year 2007-2008 Citywide Routine Maintenance. 2. Section 3a of the Agreement is hereby amended to read as follows: a. Contractor shall be compensated for actual work performed on the basis of the labor and equipment rates set forth in Exhibit "B", Labor and Equipment Rates, attached hereto and incorporated herein as though set forth in full, the cost of materials approved by the Director pursuant to the procedures set forth in Exhibit "A". The First Amendment amount shall not exceed Two Hundred Thousand Dollars and No Cents ($200,000.00) for additional Fiscal Year 2007-2008 Citywide Maintenance for a total contract amount of Four Hundred Thousand Dollars and No Cents ($400,000.00). 3. Except for the changes specifically set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect. 1 c: IPROGRAM FILES (X86)\NEEVTA.COMIDOCUMENT CONVERTERITEMP\870323.DOC IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. CITY OF TEMECULA Michael S. Naggar, Mayor ATTEST: Susan W. Jones, MMC, City Clerk Approved As to Form: Peter M. Thorson, City Attorney CONTRACTOR Imperial Paving Company, Inc. 13555 E.lmperial Highway Whittier, CA 90605 (562) 523-4492 Fritz Coy, Secretary/Treasurer 2 c: IPROGRAM FILES (X86)\NEEVTA.COMIDOCUMENT CONVERTERITEMP\870323.DOC EXHIBIT B LABOR AND EQUIPMENT RATES 3 c: IPROGRAM FILES (X86)\NEEVTA.COMIDOCUMENT CONVERTERITEMP\870323.DOC ITEM NO. 16 Approvals City Attorney Director of Finance City Manager f/1a:r i- CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Aaron Adams, Assistant City Manager DATE: February 12, 2008 SUBJECT: Murrieta Creek Flood Control Environmental Restoration and Recreation Project - Phase II (at the request of Mayor Pro-Tem Edwards) PREPARED BY: Tamra Middlecamp, Senior Management Analyst RECOMMENDATION: That the City Council: 1. Adopt a resolution entitled: RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA TO SUPPORT THE MAYOR PRO-TEM TO TRAVEL TO WASHINGTON, D.C. TO MEET WITH FEDERAL LEGISLATORS AND REQUEST AN ADDITIONAL APPROPRIATION OF $13 MILLION TO COMPLETE PHASE II OF MURRIETA CREEK IMPROVEMENTS BACKGROUND: Riverside County Flood Control and Water Conservation District is working with Army Corps of Engineers (Corps) to reduce the potential threat of future flooding from an undersized creek with a tributary watershed of over 220 square miles, which in 1993 caused severe flooding resulting in nearly $20 million in damages. As a result of the periodic flooding, the Corps initiated studies on the creek, which lead to Congressional authorization in 2000 for a $90 million project known as the Murrieta Creek Flood Control, Environmental Restoration and Recreation Project (Murrieta Creek Flood Control Project). The Murrieta Creek Flood Control, Environmental Restoration and Recreation Project is being designed and constructed in four phases: Phase I and II include channel improvements through the City of Temecula; Phase III involves the construction of a 250-acre detention basin, including 160 acres of new habitat and over 50 acres of recreational facilities; and Phase IV involves channel improvements through the City of Murrieta. Phase II of the Murrieta Creek Flood Control Project is estimated to require an additional $13 million to fully fund the project. This project was appropriated $1.813 million in the FY 2008 Appropriations signed on December 26, 2007. The City of Temecula is actively seeking support from all stakeholders to advocate for federal funding for the balance of the project in the amount of $13 million through a congressional appropriation. If successful, the funding will allow the Corps to complete the Design Documentation Report, and to initiate construction of Phase II. Withoutthese improvements, vital environmental habitat, local cities and businesses, as well as the water treatment plant located on Camp Pendleton Marine Corps Base will remain at risk. The Mayor Pro-Tem will travel to Washington D.C. in March to meet with federal legislators to emphasize the importance of this project and lobby for full funding in the upcoming fiscal year appropriations. FISCAL IMPACT: Temecula has committed to a cost-sharing agreement with Riverside County Flood Control on this project. These costs are identified in the Capital Improvement Program. Any costs associated with the travel to Washington, D.C. have been budgeted in the City Council's budget. ATTACHMENTS: Map and information sheet on Murrieta Creek. RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA TO SUPPORT THE MAYOR PRO-TEM TO TRAVEL TO WASHINGTON, D.C. TO MEET WITH FEDERAL LEGISLATORS AND REQUEST AN ADDITIONAL APPROPRIATION OF $13 MILLION TO COMPLETE PHASE II OF MURRIETA CREEK IMPROVEMENTS THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: WHEREAS, during rainstorms of January through March 1993, Old Town Temecula suffered closed streets, loss of east/west access, flooding of homes and commercial entities, damage to properties at a cost of nearly $20 million, as well as, a need for emergency personnel around the clock to establish both an Emergency Operating Center and Disaster Shelter; and WHEREAS, the flooding of Murrieta Creek has caused extensive damage to the City of Temecula, particularly in Old Town Temecula; and WHEREAS, rainstorms have historically caused extreme flooding of Murrieta Creek; and WHEREAS, flood protection will promote economic development and multi- purpose recreational amenities along Murrieta Creek's 11.5 mile corridor; and WHEREAS, the City Council considers the improvement of the Creek as one of its highest priority capital projects needs; and WHEREAS, $13 million in additional funding for Phase II of the Murrieta Creek Improvements is still needed; and NOW, THEREFORE, BE IT RESOLVED THAT the City of Temecula hereby supports the Mayor Pro-Tem to travel to Washington, D.C. to meet with federal legislators and request an additional appropriation of $13 million to complete Phase II of Murrieta Creek Improvements. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 12th day of February, 2008. Michael S. Naggar, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 12th day of February, 2008, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk Murrieta Creek Flood Control Environmental Restoration and Recreation Project Legend - I I Project Alignment 100 yr Floodplain Phase II-Protection of Old Town Temecula Corps Engineering staff has completed a Treatment Alternative Analysis' for Phase II. The Main Street Bridge design is nearing completion. Right of way engineering and real processes are well underway improvements. estate acquisition for Phase II Rancho California Road Bridge 1993: A 35-Year Storm Proposed Main Street Bridge Whv is it so critical to complete the entire Murrieta Creek Flood Control. Environmental Restoration and Recreation Proiect as soon as possible? Phases I & II - Protection of Historic Old Town Temecnla Due to R1W constraints, Phases I & II only have capacity for about 60% of what a 100 year storm would produce. Without the Phase III Basin. 100 year protec- tion cannot be provided for Phases I & II. Citizens and businesses remain at risk and must continue to purchase flood insurance. Portions already constructed (Phase I) remain at risk and subject to damages due to non- containment of flows. Phase III The Basin In addition to providing the critically important detention needed for Phases I & II downstream, the Basin provides a tremendously valuable environmental restoration project. This area has extraordinary potential for the establishment of several listed endangered species that have already been found nearby, such as the least Bell's vireo. Phase IV-Sewaee Treatment Faeilitv & Camo Pendleton ImDacts Currently, moderate storms jeopardize the treatment plant. A spill of untreated water will contaminate the downstream waters including the Santa Margarita River (SMR) and the Ecological Preserve, a field research station of the San Diego State University. The SMR is home to over 500 plants, 236 bird species. 52 mammals. 43 reptile species. 26 fish species and 24 species of aquatic invertebrates-all at risk. The SMR also provides water supply by restoring groundwater aquifers utilized by local residents as well the Camp PendletOl Marine Base. Phase I after 04-05 Winter I The Santa ~ Marearita River ",'. "' The Santa Margarita -;. I River has a rich 1 ' ~ ecosystem providing , :~~ :~1?- habitat to several listed ~ Ii: ..../".~ species. It supports '. ... ~ extensive coastal wetlands and is home to one 0 f the last free flowing rivers in Soulhern California which BLM has determined qualifies for National Wild & Scenic River status. The SMR is also actively used by kayakers afler storms providing challenging Class II-IV rapids. . I Conclusion: The piecemealing of funding does not allow for sufficient construction to take place to remove the many threats that exist. Total Project Costs have increased almost 22% since the completion of the Feasibility Study in 2000. Delays in funding result in substantial increases in costs while communities, habitats, species. the already constructed Phase I and even an active military base remain at risk. Proiect Summary Design-level digital topographic mapping has been compiled for the entire 7-mile length of the project. The project provides a riparian habitat corridor throughout the length of the project, which will promote species movement and provide connectivity to existing wildlife preserves. It significantly enlarges the open space corridor and provides esthetic benefits. It provides for equestrian and hiking/biking trails with connections to the active recreation site at the detention basin and to "pocket parks" along the length of the channel project. It improves water quality through the creation of an extensive natural wetlands system that can efficiently remove contaminants from stream flows destined for Camp Pendleton's aquifer. The Cities of Temecula and Murrieta continue to be actively engaged in both the design and funding issues related to the project. The detention basin (250 acres) attenuates flood flows from the over ISO square mile watershed. It includes: Creation of over 160 acres of wildlife habitat (wetland and riparian) Development of a 50 - acre regional sports park Reduces downstream flood flow peaks and captures sediment, benefiting the overall water quality of the watershed and Camp Pendleton. Creates a regional sports park within the detention basin to include several soccer fields, baseball/softball fields, a tot playground, comfort stations and picnic areas in cooperation with [he Cities ofTemecula and Murrieta. ITEM NO. 17 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: William G. Hughes, Director of Public Works/City Engineer DATE: February 12, 2008 SUBJECT: First Amendment to Agreement for Professional Engineering Design Services for the Pavement Rehabilitation - STPL Project PW06-14 PREPARED BY: Greg Butler, Deputy Director of Public Works - CI P Kavon Haghighi, Project Manager RECOM M ENDA TION: That the City Council approve the first amendment to the Agreement with Harris & Associates for the Pavement Rehabilitation - STPL Project, Project No. PW06-14, in the not to exceed amount of $29,130.00 and authorize the Mayor to execute the amendment. BACKGROUND: On April 24, 2007, the City entered into that certain agreement entitled "Agreement for Professional Engineering Design Services" for Project No. PW06-14, Pavement Rehabilitation - STPL Project, with Harris & Associates in the amount of $136,764.00 plus a 10% contingency. The original project envisioned utilizing the budget of $3,132,000.00 to rehabilitate (e.g. asphalt concrete overlay or pavement removal and replacement) only the worst portions of Rancho California Road (RCR) from Ynez to the east City limit. While investigating the improvements to RCR, staff determined it would be more cost effective (i.e. larger projects have lower unit costs) and desirable to rehabilitate all of RCR from Ynez Road to the east city limits. In order to improve the entire stretch of RCR it is necessary to utilize the current year's Citywide Pavement Rehabilitation funds of $2,000,000.00 for the RCR project, thereby creating a project funding total of $5,132,000.00. With the increased scope of the project, the City's design firm, Harris & Associates, has requested additional compensation in the amount of $29,130.00 for their additional work effort. Staff has reviewed their request and found it to be reasonable and cost effective. In addition Harris & Associates has performed very well to date. The project schedule currently shows the project will be ready to advertise for construction bids in April 2008, with construction commencing in June 2008 and if all goes well the rehabilitation work should be completed by the end of the year. FISCAL IMPACT: The Pavement Rehabilitation -STPL Project, Project No. PW06-14 is funded by and State Transportation Program Funds (Federal) and the Annual Citywide Pavement Rehabilitation Program is funded by Measure A Funds. At the time of award, staff will include a recommendation to transfer adequate Citywide Pavement Rehabilitation funds to fully fund this all encompassing rehabilitation project. The total amount of the original design contract was $150,440.00 which includes a 10% contingency amount of $13,676.00. With addition of this amendment the total amount of the amended Agreement will be $179,570.00. There are adequate funds within the existing project (account 210-165-657) to cover this amendment. ATTACHMENTS: 1. Amendment NO.1 FIRST AMENDMENT TO AGREEMENT BETWEEN CITY OF TEMECULA AND HARRIS AND ASSOCIATES PAVEMENT REHABILITATION - STPL PROJECT NO. PW06-14 THIS FIRST AMENDMENT is made and entered into as of FEBRUARY 12, 2008 by and between the City of Temecula, a municipal corporation ("City") and Harris and Associates ("Consultant"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. This Amendment is made with respect to the following facts and purposes: A. On April 24, 2007 the City and Consultant entered into that certain agreement entitled "Agreement for Professional Engineering Services between the City of Temecula and Harris and Associates for the Pavement Rehabilitation - STPL Project, Project No. PW06-14 ("Agreement") in the amount of $136,764.00. B. The parties now desire to increase the payment for services in the amount of Twenty nine Thousand one Hundred thirty Dollars and No Cents ($29,130.00) and amend the Agreement as set forth in this Amendment. 2. Section 1 Term of the Agreement is hereby amended to read as follows: This agreement shall commence on April 24, 2007 and shall remain and continue in effect until tasks described herein are completed, but in no event later than December 31, 2008 unless sooner terminated pursuant to the provisions of this agreement. 3. Section 5.A Payment of the Agreement is hereby amended to read as follows: a. The City of Temecula agrees to pay Consultant monthly, in accordance with the payment rates and schedules and terms set forth in Attachment B for services described in Attachment "A", attached hereto and incorporated herein by this reference as though set forth in full. The first amendment amount shall not exceed Twenty nine Thousand one Hundred thirty Dollars and No Cents ($29,130.00) for additional design services for a total agreement amount, of One Hundred Sixty five Thousands Eight Hundred Ninty-Four Dollars and No Cents ($165,894.00 ). 4. Attachment "A" to the Agreement is hereby amended by adding thereto the items set forth on Attachment "A" to this Amendment, which is attached hereto and incorporated herein as though set forth in full. 5. Except for the changes specifically set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect. 1 C\Program Files (x86)Weevia.Com\Document Converter\temp\870355.doc IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. City of Temecula BY: Mike Naggar, Mayor ATTEST: BY: Susan W. Jones, MMC, City Clerk Approved As to Form: BY: Peter M. Thorson, City Attorney CONSULTANT Harris and Associates 750 B Street, Suite 1800 San Diego, CA 92101 Office: 619-236-1778 Fax: 619-236-1179 Attention: Ehab Gerges, P.E. Ehab Gerges, PE, Associate Javier Saunders, Regional Manager (Two Signatures Required For Corporations) 2 C\Program Files (x86)Weevia.Com\Document Converter\temp\870355.doc ATTACHMENT "A" TASKS TO BE PERFORMED PROFESSIONAL ENGINEERING DESIGN SERVICES PAVEMENT REHABILITATION - STPL PROJECT PROJECT NO. PW06-14 3 C\Program Files (x86)Weevia.Com\Document Converter\temp\870355.doc ATTACHMENT "B" PAYMENT RATES PROFESSIONAL ENGINEERING DESIGN SERVICES PAVEMENT REHABILITATION - STPL PROJECT PROJECT NO. PW06-14 4 C\Program Files (x86)Weevia.Com\Document Converter\temp\870355.doc Aitk.~V.a.JT 11A'1 .. n Harris & Associates. No~rnber2.2007 Progmn M_~ eons1rut:llonManagers CMlEn~ Mr. KavonHaghighi Cil)'ofTeme<.:llla 41200Bus;nes.sPar'kf)rjve T~cul...CA92S90 Re: "rureMia..' EDliDHriD.g DalgD Mn'K:n f..,. Rucho C.lif"nl. Road De.rK.V<lll, Pu~uanl to our discussion.t ourprogrns m<<tingon August 23, 2007, we are submitlingu.is proposal foc an IldjllStrnern toOtlr fees for the subj<<l projecl As we discUS:;ed in our meeting. the design efforts required for the proje....t exceeded wlull was anticipated. as staled in the Cil)". Request foc I'roposal (RFl') and as descried in ourscopcofwort. PertheCily'. RFP, the eSlimaled eon.ll'\lCtion rest foc\he I'fIll""'Cd improvemenu is 12.7 millillTl, however, based on our evaluation of the existing roadway wndilion .nd lhe pretin'insy probablo wmlruclion estimale, the: ncrual I'I"<'bableeonstructionoosti. estimated at $4.Smilhon. The following will swnn,arize the areas ofour scopc, wheTeadditional efl"orl was requi",d. T..k2.0Prrlimin'T)'lo"e.Ii~.lion 2.2 C,wleehnieallnvntil"lio. Based onourpreliminal)'p.II"l:lI\entC\o'aluatioo, it was detennined th..t the project constructioo tool far eueeded the Cily's estimaled budl,<el.. AJa result, St'veral prnject design altcmatives were developed and COfIlmlDlicaledooSt'Yn'lItoccasionswithCilystaff..nddiscussedotthelXlOlteptualdesignmeeting. 2.4 D.t.G.theri.l{udSite\-'1s11 Due to the disJ'llrilY of existing roadw.y sl1IlCtural KCtinn and existing pa~menl eondilions. our field review effort and inventOl)' of existing improvements far excecded our anticipalcd effort. Tad, .1.0 (:"nceplull)c.iIlD (30% DaillD ~ubmiU.ll A.weaddn:ssedprojectfindingsdisco~eredinthepn:limi""'Yln""sligation.OlIfan[ieipatedeffortforthe conceplualde~ignfarexceededwhalweanticipatedinnur""opeorw(>l\. Tltis.ddiliooal effort ineluded dcvelopmcntofaWJiliooal project alternatives indudlng probable toostruc:tiOll eslimalts. h,\I. 4.0 l'rdlminary Dail(a \1U% Submlllall 4.1 Ro.d....y Rehbilitatio. P1... AddiliOllllI des.ign effort WllS required 10 odd,..,... addili"",,1 J'fOjcct design elements u discovered in om rn:liminlll)' investigatiooand contepltlill design. 7SO B Stre.t, Suite 1100 ~ Dirtlo. Califomio 92101 619.216.1771 fAX 619.216,1179 oaruJiego@harrl.-....oc.._ AT\f\c::.M,,^I!-Ul \\AII Mr, Kavllflll~ghj~h.i CityofTemecula November 16.2007 Pa~2of2 Our~dditional ree.rorthcaoovcetforti.S29.130. A \Ireo.kdowTlofouraddilional fccs is altacbed for yoorcvalualionoflhispropos.o1.Webclicwthallhcaboveadjustmcnli.rairandrcasona.bleforthelevelof cflnna S4.S million projecl ufthis lypc required Sincerely, . lI.rri.&-~i.1H I " l(<;:',.__.- EhabS.O....gc.,p_E. Design Man.gcrlAosociate ..-..---, .--- Ce: E.J.vi....Saunden,PE. JovidSimioou,P.E. , . II] Karris & Associates. I . , , I . 6 I II III l , J .! II. ,I' , 'I II I ' . A1\~tl.t>.U:\Ji 116\\ ITEM NO. 18 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: William G. Hughes, Director of Public Works DATE: February 12, 2008 SUBJECT: Authorize Temporary Street Closures for the 2008 Temecula Spring Rod Run Event (Old Town Front Street, between Moreno Road and Second Street, and other related streets) PREPARED BY: Daniel York, Deputy Director of Public Works/City Engineer Steve Charette, Associate Engineer RECOMMENDATION: That the City Council: 1. Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA CALIFORNIA, AUTHORIZING STREET CLOSURES FOR THE 2008 TEMECULA SPRING ROD RUN EVENT, AND AUTHORIZING THE CITY ENGINEER TO ISSUE A PERMIT FOR THIS SPECIFIC SPECIAL EVENT BACKGROUND: The 2008 Temecula Spring Rod Run Event necessitates the physical closure of certain streets in the Old Town area, and related detouring, to accommodate and provide the "Street Scene" ambience that allows the free movement of pedestrian traffic by minimizing potential vehicular-pedestrian conflicts. Under Vehicular Code Section 21101, "Regulation of Highways", local authorities, for those highways under their jurisdiction, may adopt rules and regulations by ordinance or resolution for, among other instances, "temporary closing a portion of any street for celebrations, parades, local special events, and other purposes, when, in the opinion of local authorities having jurisdiction, the closing is necessary for the safety and protection of persons who are to use that portion of the street during the temporary closing". The City Council adopted Resolution No. 91-96 on September 10, 1991, which provided standards and procedures for special events on public streets, highways, sidewalks, or public right of way. While a process was established for reviews and approvals, no mechanism was provided for delegating authority to temporarily close streets, or portions of streets, for these special events. The recommended resolution delegates the authority to approve temporary street closures for the 2008 Temecula Spring Rod Run Event sponsored by P & R Foundation. This authority is limited to and delegated to the City Engineer (or an authorized representative) only. Anyother special events requiring temporary street closures, construction related closures, etc., remain subject to the approval of the City Council subject to rules and regulations established by the City Council. These rules and regulations shall also be adopted by resolution in accordance with California Vehicular Code Section 21101. This year's Temecula Spring Rod Run Event sponsors propose street closures as follows: Old Town Front Street between Moreno Road (E) to Second Street from 1 :30 pm to 8:30 pm on Friday March 7'h, 2008, and from 5:30 am to 4:30 pm on Saturday, March 8'h, 2008. Sixth Street, Fifth Street, Fourth Street, Main Street and Third Street will be closed between Mercedes Street and Murrieta Creek. Access is provided to handicap parking lots located at Sixth Street and Mercedes Street and Main Street and Mercedes Street. Show car parking will be at designated parking lots and along both sides of Old Town Front Street as shown on the attached Location Map. The event will require the closure of Main Street between Old Town Front Street and the Main Street Bridge. Provisions have been included in the encroachment permit to insure public access and public parking at the Children's Museum during the road closure. The event will require assistance from the Public Works Department by providing support services for the street closure, public safety monitoring, and the permit process. FISCAL IMPACT: The costs of police services, and for provision, placement, and retrieval of necessary warning and advisory devices by the Public Works Department are included in budgetary items. ATTACHMENTS: 1. 2. Resolution No. 2008 -_ Location Map RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA, CALIFORNIA, AUTHORIZING TEMPORARY STREET CLOSURES FOR THE 2008 TEMECULA SPRING ROD RUN EVENT, AND AUTHORIZING THE CITY ENGINEER TO ISSUE A PERMIT FOR THIS SPECIFIC SPECIAL EVENT THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: WHEREAS, The California State Vehicular Code provides for the promulgation of rules and regulations for the temporary closure of public streets by local authorities by Resolution; and, WHEREAS, the City Council desires to establish rules and regulations for the temporary closure of public streets in the interest of promoting safety and protection; and, WHEREAS, The City of Temecula desires to authorize the closure of public streets for the Temecula Spring Rod Run Event sponsored by P & R Foundation, for which such temporary street closures promote the safety and protection of persons using or proposing to use those streets for the special event: and, WHEREAS, the City Council desires to facilitate the issuance of permission to temporarily close public streets for the Temecula Spring Rod Run Event, specifically Old Town Front Street between Moreno Road (E) and Second Street and also Sixth Street, Fifth Street, Fourth Street, Main Street and Third Street between Mercedes Street and Murrieta Creek on Friday, March 7, 2008 from 1 :30 PM to 8:30 PM and on Saturday, March 8, 2008 from 5:30 AM to 4:30 PM; and, NOW, WHEREAS, the City Council desires to authorize the City Engineer to approve temporary street closures for the Temecula Spring Rod Run Event sponsored by P & R Foundation, and to establish the general rule that all other proposed temporary street closures shall be reviewed and approved subject to conditions, or disapproved, by the City Council; and, THEREFORE, BE IT RESOLVED, that the City Council of the City of Temecula, hereby authorizes the City Engineer to permit temporary street closures for the Temecula Spring Rod Run Event, and establishes the general rule that all other temporary public street closures shall be approved or denied approval by the City Council as follows: Old Town Front Street between Moreno Road (E) and Second Street and also Sixth Street, Fifth Street, Fourth Street, Main Street and Third Street between Mercedes Street and Murrieta Creek on Friday, March 7, 2008 from 1 :30 PM to 8:30 PM and on Saturday, March 8, 2008 from 5:30 AM to 4:30 PM. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 12th day of February, 2008. Mike Naggar, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 08- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 12th day of February, 2008, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk ITEM NO. 19 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: William G. Hughes, Director of Public Works DATE: February 12, 2008 SUBJECT: First Amendment to the Professional Services Agreement with KRW & Associates for Plan Check, Map, and Legal Description Review PREPARED BY: Daniel A. York, Deputy Director of Public Works/City Engineer Kendra Hannah-Meistrell, Assistant Engineer RECOMMENDATION: That the City Council approve the First Amendment to the Professional Services Agreement with KRW & Associates in an amount not to exceed $15,000.00 for Engineering Plan Check, Map, and Legal Description Review, and authorize the Mayor to execute the Amendment to the Agreement. BACKGROUND: On July 1, 2007, the City entered into a Professional Services Agreement with KRW & Associates in the amount of $25,000.00 for engineering plan check, map, and legal description review for Fiscal Year 2007-08. The Land Development Division utilizes this consultant on an as-needed basis to help ensure a quick turnaround to the public for these services. To date, the amount of the original agreement is nearly expended. Staff has determined that additional funds are necessary to augment our engineering plan check, map, and legal description review services through the end of the current Fiscal Year 2007-08. The First Amendment provides for the cost of these additional services in an amount not to exceed $15,000.00. With this Amendment, the total agreement amount with KRW is $40,000.00. All other terms of the Agreement remain the same. FISCAL IMPACT: The cost of the original Agreement with KRW & Associates is $25,000.00. This First Amendment to the Agreement provides for an additional amount not to exceed $15,000.00, for a total Agreement amount of $40,000.00. Adequate funds are available within the Land Development Division operating budget to support the recommended action. ATTACHMENTS: First Amendment. FIRST AMENDMENT TO THE AGREEMENT BETWEEN THE CITY OF TEMECULA AND KRW & ASSOCIATES FOR ENGINEERING PLAN CHECK, MAP, AND LEGAL DESCRIPTION REVIEW THIS FIRST AMENDMENT is made and entered into as of February 12, 2008 by and bet\Neen the City of Temecula, a municipal corporation ("City") and KRW & Associates ("Consultant"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. purposes: This Amendment is made with respect to the following facts and A. On July 1, 2007, the City and Consultant entered into that certain agreement entitled "Agreement for Professional Consultant Services Engineering Plan Check, Map, and Legal Description Review" ("Agreement") in the amount of Twenty Five Thousand Dollars and No Cents ($25,000.00). B. The parties desire to increase the payment for additional consultant services in the amount of Fifteen Thousand Dollars and No Cents ($15,000.00) through the term of the Agreement. 2. as follows: Section 5(a). PAYMENT of the Agreement is hereby amended to read Section 5(a). PAYMENT: The City agrees to pay Consultant monthly, in accordance with the payment rates and schedules and terms for services described in Exhibit 'A', attached hereto and incorporated herein by this reference as though set forth in full. The First Amendment amount shall not exceed Fifteen Thousand Dollars and No Cents ($15,000.00) for additional Fiscal Year 2007-2008 Engineering Plan Check, Map, and Legal Description Review for a contract amount of Forty Thousand Dollars and No Cents ($40,000.00) unless a higher amount is approved by the City Council by amendment to this Agreement. 3. Except for the changes specifically set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect. 1 RIAgreementslLandDevl2007-2008lLGC VerizonGeotech Amend 2 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. CITY OF TEMECULA Michael S. Naggar, Mayor ATTEST: Susan W. Jones, MMC, City Clerk Approved As to Form: Peter M. Thorson, City Attorney CONSULTANT KRW & ASSOCIATES P.O. Box 867 Murrieta, CA 92564 (951) 245-0159 Kris R. Winchak 2 RIAgreementslLandDevl2007-2008lLGC VerizonGeotech Amend 2 EXHIBIT A TASKS TO BE PERFORMED AND PAYMENT RATE ENGINEERING PLAN CHECK, MAP AND LEGAL DESCRIPTION REVIEW FOR THE FISCAL YEAR 2007-2008 9 I KRW & ASSOCIATES Land Surveying, Planning and Land Development P.O. Box 867 Murrieta, CA. 92564 Bus. (951) 245-0159, Fax (951) 245-0159 June 08, 2007 . RECEIVED JUN 0 8 2007 City ofTemecula., Dept. of Public Works P.O. Box 9033 Temecula, Ca. 92589-9033 Attn: Daniel A. York, City Engineer City ofTemecula CITY OF TEMECULA PUBLIC WORKS DEPARTMENT Dear Mr. Yark This letter is to infonn you afmy desire to continue to perfonn Map Checking and Consulting Services to the City ofTemecula for Fiscal Year 2007 -2008 starting July 1. I understand the teoos of this request are based on the attached City Agreement. The compensation for Professional Services provided will be paid at a rate of One Hundred Ten Dollars ($110.00) per hour on a project by project basis, not to exceed the amount specified in the City Agreement. I am very pleased to be of service to the Department of Public Works and look forward to the continuation of our work relationship. Very Truly Yours, ~~ R. uJ~ Kris R. Winchak, L.S. 6240 KRW & Associates ITEM NO. 20 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: John Meyer, Redevelopment Director DATE: February 12, 2008 SUBJECT: Conveyance of Redevelopment Owned Property To the City of Temecula RECOMMENDATION: That the City Council: (1) Authorize staff to convey three Agency owned properties in Old Town to the City of Temecula: APN's 922-034-029,030 and 031, located along the north side of Main Street, west of Mercedes Street, and APN 922-042-004 and 005 located at the SEC of 3rd Street and Mercedes Street, and (2) Authorize the City Manager to accept a grant deed on behalf of the City and take all other necessary action relating to the conveyance of the property. BACKGROUND: In March, 1996, December 1999 and March 2003, the Redevelopment Agency acquired three parcels located in Old Town. Two of the parcels are APN's 922-034-029, 030 and 031, located along the north side of Main Street, west of Mercedes Street, and APN 922-042-004 and 005 located at the SEC of 3rd Street and Mercedes Street. The property was purchased with Redevelopment Funds with the intent of providing public parking or other public purpose. The parcels are now part of the Civic Center improvements. In order to facilitate the official map for the Civic Center project it is recommended that the property be conveyed from the Agency to the City. After the official map is approved, the commercial lots surrounding the Town Square will be re-conveyed back to the Agency. The commercial lots that will be conveyed back to the Agency in the future will be .05 acres smaller than the property being conveyed to City by this action. FISCAL IMPACT: The value of the .05 acre given up by the Agency is estimated at $137,214. At the time the property is conveyed to the Agency, the City will reduce the Agency's debt in that amount. ITEM NO. 21 ORDINANCE NO. 08-01 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMECULA AMENDING THE OFFICIAL ZONING MAP OF THE CITY OF TEMECULA FROM PROFESSIONAL OFFICE (PO) AND PLANNED DEVELOPMENT OVERLAY (PDO-8) TO PLANNED DEVELOPMENT OVERLAY-9 (PDO-9) AND ADDING SECTIONS 17.22.200 THROUGH 17.22.206, TO THE TEMECULA MUNICIPAL CODE FOR A SITE GENERALLY LOCATED ON THE NORTH SIDE OF HIGHWAY 79 SOUTH, APPROXIMATELY 700 FEET WEST OF MARGARITA ROAD AND KNOWN AS ASSESSOR'S PARCEL NUMBERS 959-080-001 THROUGH 959- 080-004 AND 959-080-007 THROUGH 959-080-010 (PA07 -0199), AND RESCINDING ORDINANCE NO. 06-01 THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Procedural Findinqs. The City Council of the City of Temecula does hereby find, determine and declare that: A. Universal Health Services of Rancho Springs, Inc. ("UHS"), filed Planning Application Numbers PA04-0462, General Plan Amendment; PA05-0302, Zone Change to PDO-9 (Planned Development Overlay-9); PA04-0463, Conditional Use Permit and Development Plan; and PA04-0571, Tentative Parcel Map in a manner in accordance with the City of Temecula General Plan and Development Code, which applications are hereby incorporated by reference, for the property consisting of approximately 35.31 acres generally located on the north side of Highway 79 South, approximately 70 feet west of Margarita Road, known as Assessor's Parcel Numbers 959-080-001 through 959-080-004 and 959-080-007 through 959-080-010 ("Project"). B. The Project was processed including, but not limited to, public notice in the time and manner prescribed by State and local law, including the California Environmental Quality Act. C. On April 6, 2005, the Planning Commission considered the Project at a duly noticed public hearing as prescribed by law, at which time the City staff and interested persons had an opportunity to, and did testify either in support of or opposition to this matter. D. The Planning Commission, based on testimony presented by the general public, determined that an Environmental Impact Report would be required for this Project. E. On April 20, 2005, a scoping session was held before the Planning Commission to determine the extent of issues to be addressed in the Environmental Impact Report for the Project. R:/Ords 2008/0rds 08-01 F. A Draft Environmental Impact Report was prepared in accordance with the California Environmental Quality Act and the California Environmental Quality Act Guidelines and circulated for public review from September 28, 2005 through October 8, 2005. G. On November 16, 2005, and again on January 5, 2006, the Planning Commission considered the Project at duly noticed public hearings as prescribed by law, at which time the City staff and interested persons had an opportunity to, and did testify either in support of or opposition to this matter. H. Following consideration of the entire record of information received at the public hearings, the Planning Commission adopted Resolution No. 06-01 recommending that the City Council certify the Final Environmental Impact Report for the Project and approve a Mitigation Monitoring Program for the Project. I. Following consideration of the entire record of information received at the public hearings and due consideration of the proposed Project, the Planning Commission adopted Resolution No. 06-03, recommending that the City Council approve a Zone Change to amend the land use designation from Professional Office and Planned Development Overlay (PDO-8) to Planned Development Overlay (PDO-9) and adopt Sections 17.22.200 through 17.22.206, including the PDO text and development standards for property generally located north of Highway 79 South, approximately 700 feet west of Margarita road, known as Assessor's Parcel Numbers 959-080-001 through 959-080-004 and 959-080-007 through 959-080-010 (PA05- 0302). J. On January 24, 2006, the City Council held a duly noticed public hearing as prescribed by law on the Final Environmental Impact Report at which time all persons interested had the opportunity to present oral and written evidence on the Final Environmental Impact Report. K. On January 24, 2006, following consideration of the entire record of information received at the public hearings before the Planning Commission and the City Council, and due consideration of the Project, the City Council adopted Resolution No. 06-05, entitled "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA CERTIFYING THE FINAL ENVIRONMENTAL IMPACT REPORT PREPARED FOR PLANNING APPLICATION NUMBERS PA04-0462 (GENERAL PLAN AMENDMENT), PA05-0302 (ZONE CHANGE), PA04-0463 (CONDITIONAL USE PERMIT AND DEVELOPMENT PLAN) AND PA04-0571 (TENTATIVE PARCEL MAP) AND RELATED ACTIONS, AND ADOPTING THE FINDINGS PURSUANT TO THE CALIFORNIA ENVIRONMENTAL QUALITY ACT, A STATEMENT OF OVERRIDING CONSIDERATIONS, AND A MITIGATION MONITORING AND REPORTING PROGRAM IN CONNECTION THEREWITH FOR THE PROPERTY CONSISTING OF APPROXIMATELY 35.31 ACRES GENERALLY LOCATED ON THE NORTH SIDE OF HIGHWAY 79 SOUTH, APPROXIMATELY 700 FEET WEST OF MARGARITA ROAD, KNOWN AS ASSESSOR'S PARCEL NUMBERS 959-080-001 THROUGH 959-080-004 R:/Ords 2008/0rds 08-01 2 AND 959-080-007 THROUGH 959-080-010 (PA04-0462, PA05-0302, PA04-0463, PA04-0571 )." L. On January 24, 2006, the City Council considered the Zone Change at a duly noticed public hearing as prescribed by law, at which time the City staff and interested persons had an opportunity to, and did testify either in support of or opposition to this matter. M. Following consideration of the entire record of information received at the public hearings and due consideration of the proposed Project, the City Council adopted Ordinance No. 06-01, amending the Official Zoning Map of the City of Temecula from Professional Office (PO) and Planned Development Overlay (PDO-8) to Planned Development Overlay-9 (PDO-9) and adding Sections 17.22.200 through 17.22.206, to the Temecula Municipal Code (PA05-0302). N. Two lawsuits were timely filed seeking to set aside the certification of the Final EIR and approval of the Project by the City Council of the City of Temecula. The lawsuit filed by Petitioners California Nurses Association (Riverside County Superior Court Case No. RIC 445394) was filed on February 24, 2006. The second suit, by Petitioners Citizens Against Noise and Traffic (Riverside County Superior Court Case No. RIC 445411), was filed on February 24, 2006. O. On May 3, 2007, the Riverside County Superior Court (hereafter, the "Court") ordered that the City of Temecula set aside its approval of the Project, and its certification of the Final EIR. In its Order, the Court concluded that the EIR failed to adequately address construction noise impacts, siren noise impacts and mitigation measures for traffic impacts, and did not address potential impacts from underground methyl tertiary butyl ether (MTBE) plumes potentially generated by three gas stations in the vicinity that might have the potential to migrate under the site, contaminate the soil on the site and generate unhealthful gas vapors. P. The Court also held that the Final Environmental Impact Report properly addressed: (1) cumulative noise, light and glare, and aesthetic impacts; (2) landscaping mitigation deferral; (3) biological resources; (4) geology and soils mitigation; and (5) land use consistency. All other aspects of the Final EIR were unchallenged during the challenge period, and thus are presumed to be adequate along with those aspects specifically upheld by the Court. Q. On July 12, 2007, a scoping session was held to determine the extent of issues to be addressed in the Draft Supplemental Environmental Impact Report ("Draft SEIR") for the Project. R. In response to the Riverside County Superior Court's decision, a Draft Supplemental Environmental Impact Report was prepared in accordance with the California Environmental Quality Act and the California Environmental Quality Act Guidelines and circulated for public review from November 5, 2007 through December 5, 2007. R:/Ords 2008/0rds 08-01 3 S. On January 9, 2008, the Planning Commission considered Planning Application Numbers PA07 -0198 (General Plan Amendment), PA07 -0199 (Zone Change), PA07-0202 (Conditional Use Permits), PA07-0200 (Development Plan) and PA07-0201 (Tentative Parcel Map) in a manner in accordance with the City of Temecula General Plan and Development Code, which applications are hereby incorporated by reference, for the property consisting of approximately 35.31 acres generally located on the north side of Highway 79 South, approximately 700 feet west of Margarita Road, known as Assessor's Parcel Numbers 959-080-001 through 959-080-004 and 959-080- 007 through 959-080-010 ("Project"), at a duly noticed public hearing as prescribed by law, at which time the City staff and interested persons had an opportunity to, and did testify either in support of or opposition to this matter. T. Following consideration of the entire record of information received at the public hearing, the Planning Commission adopted Resolution No. 08-01 recommending that the City Council certify the Final Supplemental Environmental Impact Report for the Project, adopt a Statement of Overriding Considerations, and approve a Mitigation Monitoring Program for the Project. U. Following consideration of the entire record of information received at the public hearings and due consideration of the proposed Project, the Planning Commission adopted Resolution No. 08-03, recommending that the City Council approve a Zone Change to amend the land use designation from Professional Office and Planned Development Overlay (PDO-8) to Planned Development Overlay (PDO-9) and adopt Sections 17.22.200 through 17.22.206, including the PDO text and development standards for property generally located north of Highway 79 South, approximately 700 feet west of Margarita road, known as Assessors Parcel No(s). 959- 080-001 through 959-080-004 and 959-080-007 through 959-080-010 (PA07-0199). V. On January 22, 2008, the City Council rescinded and invalidated its approvals of Planning Application Nos. PA04-0462, General Plan Amendment; PA04- 0463, Conditional Use Permit and Development Plan; and PA04-0571, Tentative Parcel Map for the property consisting of approximately 35.31 acres generally located on the north side of Highway 79 South, approximately 700 feet west of Margarita Road, known as Assessors Parcel No(s). 959-080-001 through 959-080-004 and 959-080-007 through 959-080-010. W. On January 22, 2008, the City Council considered the Zone Change (PA07 -0199) at a duly noticed public hearing as prescribed by law, at which time the City staff and interested persons had an opportunity to, and did testify either in support of or opposition to this matter. X. Following consideration of the entire record of information received at the public hearings before the Planning Commission and the City Council, and due consideration of the proposed Project, the City Council adopted Resolution No. 08-10, entitled "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA CERTIFYING A SUPPLEMENTAL ENVIRONMENTAL IMPACT REPORT, ADOPTING FINDINGS PURSUANT TO THE CALIFORNIA ENVIRONMENTAL QUALITY ACT, R:/Ords 2008/0rds 08-01 4 ADOPTING A STATEMENT OF OVERRIDING CONSIDERATIONS, AND ADOPTING A MITIGATION MONITORING AND REPORTING PROGRAM IN CONNECTION THEREWITH; AND RESCINDING THE PRIOR APPROVAL OF THE PROJECT AND CERTIFICATION OF A FINAL ENVIRONMENTAL IMPACT REPORT PURSUANT TO A COURT ORDER, ALL FOR THE TEMECULA REGIONAL HOSPITAL PROJECT, LOCATED ON THE NORTH SIDE OF TEMECULA PARKWAY (HIGHWAY 79 SOUTH) APPROXIMATELY 700 FEET WEST OF MARGARITA ROAD, AND KNOWN AS ASSESSOR'S PARCEL NUMBERS 959-080-001 THROUGH 959-080-004 AND 959- 080-007 THROUGH 959-080-010 (PA07-0198, PA07-0199, PA07-0202, PA07-0200, and PA07 -0201 )." Y. The proposed Zone Change is consistent with the proposed land use designation for the General Plan and the related General Plan text amendment. The PDO text, as proposed is also consistent with the General Plan and related General Plan Amendment Z. All legal preconditions to the adoption of this Resolution have occurred. Section 2. Rescission of Prior Approval. The City Council of the City of Temecula hereby rescinds its approval of Ordinance No. 06-01, amending the Official Zoning Map of the City of Temecula from Professional Office (PO) and Planned Development Overlay (PDO-8) to Planned Development Overlay-9 (PDO-9) and adding Sections 17.22.200 through 17.22.206, to the Temecula Municipal Code (PA05-0302). Section 3. Zone Chanqe. The City Council of the City of Temecula hereby amends the Official Zoning Map of the City of Temecula by changing the zoning designation from Professional Office (PO) and Planned Development Overlay (PDO-8) to Planned Development Overlay (PDO-9) for the property consisting of approximately 35.31 acres generally located on the north side of Highway 79 South, approximately 700 feet west of Margarita Road, and specifically known as Assessors Parcel No(s). 959-080-001 through 959-080-004 and 959-080-007 through 959-080-010 (Amending the official Zoning Map as shown on Exhibit A, Existing Zoning; Exhibit B Proposed Zoning attached hereto and incorporated herein as though set forth in full). Section 4. Zone Text Amendment. The City Council of the City of Temecula hereby adds Sections 17.22.200 through 17.22.206 to read as follows: "TEMECULA HOSPITAL PLANNED DEVELOPMENT OVERLAY DISTRICT 17.22.200 TITLE. Sections 17.22.200 through 17.22.206 shall be known as "PDO-9" (Temecula Hospital Planned Overlay District). R:/Ords 2008/0rds 08-01 5 17.22.202 PURPOSE AND INTENT. The Temecula Hospital planned development overlay district is intended to provide for design flexibility with regards to the building height of hospital projects. Other aspects of this PDO will be consistent with the land use designations that are described in the land use element of the Temecula general plan. 17.22.204 RELATIONSHIP WITH THE DEVELOPMENT CODE AND CITYWIDE DESIGN GUIDELINES. Except as modified by the provisions of Section 17.22.206, the following rules and regulations shall apply to all planning applications in this area: 1. The development standards in the Development Code that would apply to any development in a Professional Office zoning district that are in effect at the time an application is deemed complete. 2. The Citywide Design Guidelines that are in effect at the time an application is deemed complete. 3. The approval requirements contained in the Development Code that are in effect at the time the application is deemed complete. 4. Any other relevant rule, regulation or standard that is in effect at the time the application is deemed complete. 17.22.206 DEVELOPMENT STANDARDS. The development standards set forth in Chapter 17.08 apply to this PDO with the exception of the following modification to allowable building heights. The maximum allowable building heights, as defined in Chapter 17.34 for hospital buildings in the Temecula Hospital PDO District shall be limited as follows: No more than 30% of the total roof area of the hospital building may exceed the 75-foot building height limit. The maximum building height for those portions of the hospital building within the 30% area may not exceed 115 feet. For the purposes of this PDO, roof area is defined as that portion of the roof above occupied conditioned spaces bound by the inside face of the parapet wall that defines the roof area." Section 5. Severability. If any sentence, clause or phrase of this ordinance is for any reason held to be unconstitutional or otherwise invalid, such decision shall not affect the validity of the remaining provisions of this ordinance. The City Council hereby declares that the provisions of this Ordinance are severable and if for any reason a court of competent jurisdiction shall hold any sentence, paragraph, or section of this Ordinance to be invalid, such decision shall not affect the validity of the remaining parts of this Ordinance. R:/Ords 2008/0rds 08-01 6 Section 6. The City Clerk shall certify to the adoption of this Ordinance and shall cause the same to be published as required by law. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 1 ih day of February, 2008. Michael S. Naggar, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Ordinance No. 08-01 was duly introduced and placed upon its first reading at a meeting of the City Council of the City of Temecula on the 22nd day of January, 2008, and that thereafter, said Ordinance was duly adopted by the City Council of the City of Temecula at a meeting thereof held on the 1 ih day of February, 2008, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk R:/Ords 2008/0rds 08-01 7 Zonrng _tua.4.R.....,...,(I1!{j ~v.vlJhlrOlI\l.....~.,(lfl) _l_c.-ptR"'''''(l''' _'-o.rw,A~'(l.'Z) [::;;] l40r M..J..., 0....., R....-...J tlM) _Utd.""o.r.."Re........I'l} _HolfIO'U~R..-t.....(H) _,,"",R...OtI'MlIRR) _..""t.o<fW>>dCOrmwt.ollltlC) _001r'lO'l...,.,C--~11C<:1 _~""_'CCrr~"(Nr) _s-e.:..c~(Sq _"...._.Ol'I~(POI c:I 0..-..... ~ tUP) Gl.oiiIht,.....{UJ ~Plbcm..liOIWltPl} CI ep... 6pK.(0S) _~cPn"R__.!liQftIPN') _co.-r.~(08-C) c:J~ o..,_P"*'1Io-a., _$pedoc:P1"18P}~ C$p.cAcI"'l"'~'" mr....r....on -~ SP-4 \If.&\-Q~O ...,.o"'~O-6 SP-9 Zone Change Exhibit A - Exislina ~ -'" - . ' ~ ' " I Zoning _IU'.ot.R....t~t~RJ e=l \olIIIy Low DeMItr R.~. (Ir'\J _l(Mloentlt1R........lL.,) _Lo.oe""~R~{L~ ~ u...~edotAO".IyR.~"'r(tMJ _.t.Ieda.om.,.,..~I:.......i\l) _ K\1I o.n.., RH""" [1ft _1bo~R.......llRR) _~r>>~C<arl'lTlelC..(NCI _~"IC~{CC) _~.yfJ'Olo"'tC-O.(HfJ _ sw..-C--ltI'l{6C1 _Pro4In.C1RIIOI!ClItPOJ IDIJ 0.-....." (Op) c:JUaNI.n......(lJ} ~f'\Mw:rn.""liOlIIltPl) Cl___toSl .PIb'(;P_&ReeiWI!oO"(PR) _Co~_niOs.e1 ~ ....,..1 o...kIP"*f Owrl., _~,I't_f&P)~ I::J ~("'W'\~<<-d ~f"lIfn"llTn t9\.O~ ....o""~~ sP.g Zone Change Exhibit 8 - Proposed TEMECULA COMMUNITY SERVICES DISTRICT ITEM NO. 22 MINUTES OF A REGULAR MEETING OF THE TEMECULA COMMUNITY SERVICES DISTRICT JANUARY 22, 2008 A regular meeting of the City of Temecula Community Services District was called to order at 7:54 p.m., in the City Council Chambers, 43200 Business Park Drive, Temecula, California. ROLL CALL PRESENT: 5 DIRECTORS: Edwards, Naggar, Roberts, Washington Comerchero ABSENT: o DIRECTORS: None Also present were City Manager Nelson, City Attorney Thorson, and City Clerk Jones. PUBLIC COMMENTS No input. CSD CONSENT CALENDAR 9 Minutes RECOMMENDATION: 9.1 Approve the minutes of January 8, 2008. Item No. 10 was pulled for separate discussion: see paQe 2 10 Whitnev Vail Wilkinson Collection - at the request of Mavor Naqqar RECOMMENDATION: 10.1 Consider accepting the donation of the Whitney Vail Wilkinson Collection at the request of Mayor Mike Naggar and to direct staff to develop an agreement to facilitate the transfer of the collection to the Temecula Valley Museum. 11 First Amendment to the Aqreement with Kimlev-Horn Associates for the Murrieta Creek Multi-Purpose Trail. Proiect No. PW01-27 RECOMMENDATION: 11.1 Approve the First Amendment to the Agreement for Services with Kimley-Horn and Associates, Inc. in the amount of $27,345.00 for additional design services necessary to revise the irrigation plans and for construction staking of jurisdictional limits for Murrieta Creek. R:\Minutes\01220B 12 Amendment NO.1 to Aqreement with Securitas Securitv Services USA. Inc. RECOMMENDATION: 12.1 Approve Amendment NO.1 to the Agreement with Securitas Security Services USA, Inc. for security services at the Dog Park in Redhawk Community Park and various other security needs in the amount of $52,000, for a total agreement amount of $100,000. MOTION: Director Edwards moved to approve Consent Calendar Item Nos. 9 and 11-12 (Item No. 10 was pulled for discussion). Director Naggar seconded the motion and electronic vote reflected approval with the exception of Directors Washington and Roberts who abstained on Item NO.9. 10 Whitnev Vail Wilkinson Collection - at the request of Mavor Naqqar RECOMMENDATION: 10.2 Consider accepting the donation of the Whitney Vail Wilkinson Collection at the request of Mayor Mike Naggar and to direct staff to develop an agreement to facilitate the transfer of the collection to the Temecula Valley Museum. Director of Community Services Parker provided a brief staff report (of record). Mr. Darell Farnbach, representing the Vail Ranch Restoration Association, spoke in favor of the extensive collection and encouraged the City Council to facilitate the transfer of the Whitney Wilkinson Collection to the Temecula Valley Museum. MOTION: Director Naggar moved to approve Item No. 10. Director Roberts seconded the motion and electronic vote reflected unanimous approval. CSD DIRECTOR OF COMMUNITY SERVICES REPORT No report at this time. CSD GENERAL MANAGERS REPORT No additional comments. CSD BOARD OF DIRECTORS REPORTS No additional comments. R:\Minutes\01220B 2 CSD ADJOURNMENT At 7:59 p.m., the Temecula Community Services District meeting was formally adjourned to Tuesday, February 12, 2008, at 5:30 p.m. for a Closed Session, with regular session commencing at 7:00 p.m., City Council Chambers, 43200 Business Park Drive, Temecula, California. Jeff Comerchero, President ATTEST: Susan W. Jones, MMC City Clerk/District Secretary [SEAL] R:\Minutes\01220B 3 ITEM NO. 23 Approvals City Attorney Director of Finance City Manager f/ta:rl " TEMECULA COMMUNITY SERVICES DISTRICT AGENDA REPORT TO: General Manager/Board of Directors FROM: Herman D. Parker, Director of Community Services DATE: February 12, 2008 SUBJECT: Approval of the Plans and Specifications and Authorization to solicit construction bids for Phase 1 of the Temecula Community Center Expansion (Grading), Project No. PW06-05 Phase PREPARED BY: Greg Butler, Deputy Director of Public Works Bill McAteer, Construction Manager RECOM M ENDA TION: That the Board of Directors approve the Plans and Specifications and authorize the Public Works Department to solicit bids for the Temecula Community Center Expansion (Grading), Project No. PW06-05. BACKGROUND: On November 22, 2005, the Community Services District Board of Directors awarded a design contract to Meyer and Associates for the preparation of the master plan and construction documents for an expansion at the Temecula Community Center (TCC). During the development of the master plan, it was determined that the two historically significant structures, (the Escallier House and Barn), that presently occupy the future Old Town Civic Center site could be relocated to the southern-most part of the TCC site. Meyer and Associates has worked with the design committee to create a master plan of the TCC Expansion that will provide a facility for S.A.F. E. and a location for the two buildings. On February 27, 2007 Board of Directors adopted a categorical exemption prepared for the Temecula Community Center Expansion and the relocation of the historical house and barn. In accordance with the California Environmental Quality Act, staff determined the proposed expansion of the T emecula Community Center is exempt from environmental review (Class 1, Section 1530, Existing Facilities) as the proposed project is a negligible expansion of the existing permitted use. To expedite these moves, the grading of the TCC Expansion will be bid as a separate contract with the building improvements to follow. This will allow the historic buildings to be moved prior to the commencement of the Civic Center improvements. The plans and specifications for the grading portion of the TCC Expansion have been completed and are on file in the office of the Director of Public Works for review. The Engineer's estimate for this phase of the work is $65,000.00 FISCAL IMPACT: The Temecula Community Center Expansion project is a Capital Improvement Program and is funded through a Community Development Block Grant, Development Impact Fees and Quimby. 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'.;j lI... ~ 1i.i (J U c.::::.... :~ ~ ~ .~ ~ ~ -@ -d=l:ltll~lJ.).- ~888~a~ 000 000 0,,00 00 0" 00'" "<to"<t r--, '"' M' - '" '" '" '" N - co '" V"> \0' M - '" ~ >, CiS ~ .- U ::l 00' 05, ..Q ...... en c; ~ ~ ::l S ~ ~ g. g L~ CI bb o E.5 80" "0 r--"~ j ~ s ~ 5 o " 0 ",UClf-< '" ;,; .... '" " '" U-o ~ 3 0(1"" 0'8 " " ... .. " ... .... " " Q ""'" ITEM NO. 24 Approvals City Attorney Director of Finance City Manager f/ta:rl " TEMECULA COMMUNITY SERVICES DISTRICT AGENDA REPORT TO: General Manager/Board of Directors FROM: Herman D. Parker, Director of Community Services DATE: February 12, 2008 SUBJECT: Approval of the Plans and Specifications and authorization to solicit construction bids for the Roller Hockey Rink Dasher Board Replacement Project PW07-12 PREPARED BY: Greg Butler, Deputy Director of Public Works Bill McAteer, Construction Manager RECOM M ENDA TION: That the Board of Directors approve the Plans and Specifications and authorize the Public Works Department to solicit bids for the Roller Hockey Rink Dasher Board Replacement Project PW07-12. BACKGROUND: The existing Roller Hockey Rink has been in use since June 1996 when it was constructed as part of the Rancho California Sports Park Improvement Project (now known as the Ronald Reagan Sports Park). The existing framework and dasher board system is deteriorating and needs to be replaced. The Temecula Valley Inline Hockey Association submitted a report to the City in August 2005 highlighting the deteriorating condition of the rink and has requested the City renovate the facility for use in its league play. The Engineer's estimate for this phase of the work is $175,000.00. FISCAL IMPACT: The Roller Hockey Rink Dasher Board Replacement Project is a Capital Improvement Project and is funded by Parks and Recreation Development Impact Fees. Adequate funds are available for this project. ATTACHMENTS: 1.Project Description 2. Project Location -(o~.../ <l-.. /~ Vt~ ~/<f) ~ :z: Iii :>< ~ u 0 == i:.: ~ ~ ...l ...l f:: 0 U i:.: ~ >-.:i ~ .... (.) - ~ E:: - ~ '" <ll ~ .- e i>< ( I \ ~/ i~ ~f:l - 0 s: fJ; ~ 0 t. ~__I~:c --- (:). '" ~ ~Q :0'1- '1-<<' ,,<-0 ~~ 7<tp,~ Oz 11011-._____~ 071111111; I z~ I I i I I \- -. \ ""ii,", "~ VI1nlN3A 31W8 tv7 --...... :J Oll1tv~ '.I./-{f)' '<tQ r-- "<t \ , , , , I 2/ I'! ff3r- 30IJ31\ ~?i <; ~ f..; ~ u ~ ~ f... U r::; C ~ ::a:: z Sl >< ~ u o l:l:l ~ i:01 ...l ...l o ~ -'" .... '" r:>-. <J> t: o 0- CIl " '" OJ) '" 0) P:: .", OJ " o ~ .S .", 0) :;; " ..s "'" " .>:; ;0-, <lJ "'" " o --" .... ~ -0 .... 0) .,s <lJ - '" 12 2; .... " '" <lJ r:>-.P:: ~ .... E:: .... '" " ..., Q ... il.. 0; <= ~~ .... c.. " .~ " ... '" Q '" ... " il..~ '" 1'-"8 M '" ;;2 ~ i:; --" o ~ -.", "'4-< o 0 zi:: _ <lJ " S ;;l 0) o " " '" "-a -< <lJ 10::: ~ :: " ',= <J> t:. 'en 0) " CIl 8 - r~ o u .;,; '" " ~ 'e :ilr:>-. 8'- .... Q ... " ,; c.. " Q ~~ '8 ;;l ~ o " 0) --" - .... 0.2 <J> .!! - '8 2 .... o .... " <lJ '0' .... r:>-. o OJ " .S - '" 0) .... " <lJ .... OJ " .~ 'i3 .", '" .... ~ 4-< o V"l _"<t .~ 6 ,,00 0) '" 8€A r:>-. .... " " '0' ... .;;~ ,..- " c: <= .... " Q ~E-< .... .... <:> '" , <:> .... <:> '" <:> .... , ~ <:> <:> '" '" <:> , 00 <:> <:> '" 0000 =88 t!. v)" 0 <:> M- ~ '" €A €A V"l "''' "<t -;..... 00 := ~ 0\ ....~ " Q -<.... .;,; '" Q U " .8 s:::: - 0 '" .~ J:l tl J i -<u 00 00 00 ....0_" NI'- '" €A €A €A 6b~ .~ '" <J> _ <lJ 0 QE-< V"l V"l "<t"<t 00 00 0"'0 00 00 '" N €A €A " .S - '" <lJ .... " " ~ o(j <J> ~ '" r:>-. 00 '" - , <J> 0) 0) ~ V"l "<t 00 0\ - " '" a- :: bb s:::: .5 <lJ .", 8 3 g.~ ~ <lJ OJ ~ [) 0 ZQE-< €A ;,; .... <J> Q ~ U't:l ~ S ~r.. 0'<:: " " ... '" = ... .... = = Q r..rn REDEVELOPMENT AGENCY ITEM NO. 25 MINUTES OF A REGULAR MEETING OF THE TEMECULA REDEVELOPMENT AGENCY JANUARY 22, 2008 A regular meeting of the City of Temecula Redevelopment Agency was called to order at 7:59 p.m., in the City Council Chambers, at 43200 Business Park Drive, Temecula, California. ROLL CALL PRESENT: 5 AGENCY MEMBERS: Comerchero, Edwards, Naggar, Washington, Roberts ABSENT: o AGENCY MEMBERS: None Also present were City Manager Nelson, City Attorney Thorson, and City Clerk Jones. PUBLIC COMMENTS None. RDA CONSENT CALENDAR 13 Minutes RECOMMENDATION: 13.1 Approve the minutes of January 8, 2008. MOTION: Agency Member Edwards moved to approve the RDA Consent Calendar. Agency Member Comerchero seconded the motion and electronic vote reflected approval with the exception of Agency Members Washington and Roberts who both abstained. RDA DEPARTMENTAL REPORT 14 Redevelopment Department Monthlv Report RDA EXECUTIVE DIRECTORS REPORT No reports at this time. RDA AGENCY MEMBERS REPORTS No reports at this time. R:\Minutes\01220B RDA ADJOURNMENT At 8:01 p.m., the Temecula Redevelopment Agency meeting was formally adjourned to Tuesday, February 12, 2008, at 5:30 p.m. for Closed Session, with regular session commencing at 7:00 p.m., City Council Chambers, 43200 Business Park Drive, Temecula, California Ron Roberts, Chairperson ATTEST: Susan W. Jones, MMC City Clerk/Agency Secretary [SEAL] R:\Minutes\01220B 2 ITEM NO. 26 Approvals City Attorney Director of Finance City Manager f/ta:rl " TEMECULA REDEVELOPMENT AGENCY AGENDA REPORT TO: Executive Director/Agency Members FROM: John Meyer, Redevelopment Director DATE: February 12, 2008 SUBJECT: Conveyence of Redevelopment Agency Owned Property to the City of T emecula. RECOMMENDATION: That the Agency Members: (1) Authorize staff to convey three Agency owned properties in Old Town to the City of Temecula: APN's 922-034-029,030 and 031, located along the north side of Main Street, west of Mercedes Street, and APN 922-042-004 and 005 located at the SEC of 3rd Street and Mercedes Street, and (2) Authorize the Executive Director to execute grant deed on behalf of the Agency and take all other necessary action relating to the conveyance of the property. BACKGROUND: In March, 1996, December 1999 and March 2003, the Redevelopment Agency acquired three parcels located in Old Town. Two of the parcels are APN's 922-034-029, 030 and 031, located along the north side of Main Street, west of Mercedes Street, and APN 922- 042-004 and 005 located at the SEC of 3rd Street and Mercedes Street. The property was purchased with Redevelopment Funds with the intent of providing public parking or other public purpose. The parcels are now part of the Civic Center improvements. I n order to facilitate the official map for the Civic Center project it is recommended that the property be conveyed from the Agency to the City. After the official map is approved, the commercial lots surrounding the Town Square will be re-conveyed back to the Agency. The commercial lots that will be conveyed back to the Agency in the future will be .05 acres smaller than the property being conveyed to City by this action. FISCAL IMPACT: The value of the .05 acre given up by the Agency is estimated at $137,214. At the time the property is conveyed to the Agency, the City will reduce the Agency's debt in that amount. TEMECULA PUBLIC FINANCING AUTHORITY ITEM NO. 27 MINUTES OF A REGULAR MEETING OF THE TEMECULA PUBLIC FINANCING AUTHORITY JULY 24, 2007 A regular meeting of the City of Temecula Public Financing Authority was called to order at 7:58 p.m., in the City Council Chambers, 43200 Business Park Drive, Temecula. ROLL CALL PRESENT: 5 AUTHORITY MEMBERS: Comerchero, Edwards, Naggar, Roberts and Washington ABSENT: o AUTHORITY MEMBERS: None Also present were Executive Director Nelson, City Attorney Thorson, and City Clerk Jones. PUBLIC COMMENTS No input. TPFA CONSENT CALENDAR 23 Minutes RECOMMENDATION: 23.1 Approve the minutes of June 26, 2007. 24 Authorization of Special Tax Levv in Communitv Facilities District No. 03-1 (Crowne Hill) RECOMMENDATION: 24.1 Adopt a resolution entitled: RESOLUTION NO. TPFA 07 -06 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY AUTHORIZING THE LEVY OF A SPECIAL TAX IN COMMUNITY FACILITIES DISTRICT NO. 03-1 (CROWNE HILL) 25 Authorization of Special Tax Levv in Communitv Facilities District No. 01-2 (Harveston) RECOMMENDATION: 25.1 Adopt a resolution entitled: RESOLUTION NO. TPFA 07 -07 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY AUTHORIZING THE LEVY OF A SPECIAL TAX IN COMMUNITY FACILITIES DISTRICT NO. 01-2 (HARVESTON) R :\Minutes. tpfa \062607 26 Authorization of Special Tax Levy in Communitv Facilities District No. 03-6 (Harveston II) RECOMMENDATION: 26.1 Adopt a resolution entitled: RESOLUTION NO. TPFA 07 -08 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY AUTHORIZING THE LEVY OF A SPECIAL TAX IN COMMUNITY FACILITIES DISTRICT NO. 03-6 (HARVESTON II) 27 Authorization of Special Tax Levy in Communitv Facilities District No. 03-2 (Roripauqh Ranch) RECOMMENDATION: 27.1 Adopt a resolution entitled: RESOLUTION NO. TPFA 07 -09 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY AUTHORIZING THE LEVY OF A SPECIAL TAX IN COMMUNITY FACILITIES DISTRICT NO. 03-2 (RORIPAUGH RANCH) 28 Authorization of Special Tax Levy in Communitv Facilities District No. 03-3 (Wolf Creek) RECOMMENDATION: 28.1 Adopt a resolution entitled: RESOLUTION NO. TPFA 07-10 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY AUTHORIZING THE LEVY OF A SPECIAL TAX IN COMMUNITY FACILITIES DISTRICT NO. 03-3 (WOLF CREEK) MOTION: Authority Member Edwards moved to approve the Consent Calendar. Authority Member Roberts seconded the motion and electronic vote reflected unanimous approval. R :\Minutes. tpfa \062607 2 ADJOURNMENT At 7:59 p.m., the Temecula Public Financing Authority Meeting was formally adjourned. Chuck Washington, Chairman ATTEST: Susan W. Jones, CMC City Clerk/Agency Secretary [SEAL] R :\Minutes. tpfa \062607 3 JOINT CITY COUNCIL/TPFA BUSINESS ITEM NO. 28 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA and TEMECULA PUBLIC FINANCING AUTHORITY AGENDA REPORT TO: City Manager / City Council/Executive Director / Authority Members FROM: Genie Roberts, Director of Finance DATE: February 12, 2008 SUBJECT: Execution and Delivery of Certificates of Participation Relating to the New Civic Center Facility RECOMMENDATION: That the City Council and Temecula Public Financing Authority: 1. Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULAAUTHORIZING AND DIRECTING THE PREPARATION AND EXECUTION OF CERTAIN LEASE FINANCING DOCUMENTS, AUTHORIZING THE PREPARATION AND DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF CERTIFICATES OF PARTICIPATION RELATING THERETO, AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO 2. Adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY OF THE CITY OF TEMECULA APPROVING, AUTHORIZING AND DIRECTING PREPARATION AND EXECUTION OF CERTAIN LEASE FINANCING DOCUMENTS AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO BACKGROUND: On December 11, 2007, the City Council adopted a Resolution entitled, "RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA DESIGNATING CONSULTANTS IN CONNECTION WITH THE PROPOSED EXECUTION AND DELIVERY OF CERTIFICATES OF PARTICIPATION TO FINANCE THE CONSTRUCTION OF A NEW CIVIC CENTER FACILITY AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO", expressing the intent of the City to deliver certificates of participation to finance a portion of the costs of construction of a new civic center facility and designating various professionals, including a financial advisor, bond counsel, disclosure counsel and a bond underwriter, to assist the City in connection with the delivery of the certificates of participation (the "Certificates"). The City Staff and consultants have been working to prepare the necessary documents to deliver the Certificates, including a Site and Facility Lease, a Lease Agreement, an Assignment Agreement and a Trust Agreement which provide for the terms of the proposed certificates issue, a Preliminary Official Statement which describes the certificates and is to be used to market the Certificates to prospective investors, a Certificate Purchase Agreement pursuant to which the certificates would be sold, and a Continuing Disclosure Certificate regarding ongoing disclosure of the City over the term of the certificates and related matters. It is proposed that the proceeds of the Certificates be used to finance the costs of the new civic center facility that will not be paid by cash reserves of the City. The project consists of the new Temecula Civic Center, including a new City Hall office building, an attached Council Chambers, and a Community Room, totaling approximately 95,500 square feet. Construction is estimated to be completed in the first quarter of 201 O. The aggregate costs of the new Temecula Civic Center is approximately $54,500,000, of which approximately $22,500,000 will be provided with proceeds of the certificates and the balance is being provided with designated General Fund reserves. Design work has been paid for and the balance of the construction project is $44,000,000, plus $5,000,000 of fixtures, furniture and equipment. The City has considered the changes in estimated operating costs associated with operation of the new Civic Center, and such costs will be included in future budgets approved by the City Council. The principal amount of the certificates is anticipated to be $25,000,000, with net proceeds of $22,500,000 for the project. The financing is being structured to allow the City to prepay the certificates early if there are available funds to do so. The certificates will be sold to Stone & Youngberg LLC for resale to investors. The maximum underwriter's discount is 1.2% of the principal amount of the certificates. The City's payment obligation with respect to the certificates will be payable from the General Fund. The City Council resolution being presented for approval directs the preparation and authorizes the execution of the various documents related to the certificates, including a Site and Facility Lease, a Lease Agreement, a Trust Agreement, a Preliminary Official Statement, a Certificate Purchase Agreement, and a Continuing Disclosure Certificate. These documents will be finalized when the exact terms of the certificates are determined at the time the certificates are sold to investors. The Authority resolution being presented for approval directs the preparation and authorizes the execution of the various documents related to the certificates, including a Site and Facility Lease, a Lease Agreement, an Assignment Agreement and a Trust Agreement. These documents will be finalized when the exact terms of the certificates are determined at the time the certificates are sold to investors. The date for the closing of the certificates, and the time when proceeds of the certificates are expected to be available, is March 13,2008. The action requested of the City Council is to adopt a resolution directing the preparation and authorizing the execution of the various documents related to the certificates by the City. The action requested of the Authority is to adopt a resolution directing the preparation and authorizing the execution of the various documents related to the certificates by the Authority. FISCAL IMPACT: The City's payment obligation with respect to the certificates will be payable from the General Fund. Based upon the current expected principal amount of the certificates of $25,000,000 and current market interest rates, the annual debt service payment obligation of the General Fund will be approximately $1 ,500,000, which has been identified and programmed in the City's five-year budget forecast. I n addition, the General Fund will be obligated to pay the annual costs of administering the certificates. ATTACHMENTS: Resolution No. 08- (City) Resolution No. 08- (TPFA) Preliminary Official Statement Site and Facility Lease Lease Agreement Assignment Agreement Trust Agreement Purchase Agreement Continuing Disclosure Certificate RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA AUTHORIZING AND DIRECTING THE PREPARATION AND EXECUTION OF CERTAIN LEASE FINANCING DOCUMENTS, AUTHORIZING THE PREPARATION AND DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF CERTIFICATES OF PARTICIPATION RELATING THERETO, AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The City of Temecula, with the assistance of the Temecula Public Financing Authority (the "Authority"), has determined to finance the construction of a new civic center facility (the "Project"), and the City has proposed to implement a lease financing for the purpose of raising the funds for such purposes. Section 2. It is in the public interest and for the public benefit that the City authorize and direct execution of the Lease Agreement (hereinafter defined) and certain other documents in connection therewith. Section 3. A preliminary official statement (the "Preliminary Official Statement") containing information material to the offering and sale of the Certificates described below have been prepared on behalf of the City. Section 4. The documents below specified shall be filed with the City and the members of the Council, with the aid of its staff, shall review said documents. Section 5. Certificates of Participation (2008 Temecula Civic Center Financing Project) (the "Certificates") are hereby authorized to be executed and delivered pursuant to the provisions of the Trust Agreement (hereinafter defined), so long as the total principal amount of the Lease Agreement does not exceed $25,000,000, so long as the maximum annual lease payments to be paid by the City under the Lease Agreement does not exceed $1,750,000, plus the payment of Additional Payments, as set forth therein, and so long as the term of the Lease Agreement does not exceed thirty-one years (subject to extension, as provided therein). Section 6. The below-enumerated documents be and are hereby approved, and the Mayor, the City Manager or the Finance Director, or the designee of any such official, is hereby authorized and directed to execute said documents, with such changes, insertions and omissions as may be approved by such official, and the City Clerk is hereby authorized and directed to attest to such official's signature. A Site and Facility Lease, between the City, as Lessor, and the Authority, as Lessee, pursuant to which the City will lease certain existing, unencumbered property to the Authority (the "Property"). B. A Lease Agreement, by and between the Authority, as Lessor, and the City, as Lessee (the "Lease Agreement"), pursuant to which the Authority will lease the Property back to the City. C. A Trust Agreement, by and among the Authority, the City and U.S. Bank National Association, as Trustee (the "Trust Agreement"), relating to the financing, and the execution and delivery of the Certificates. D. A Certificate Purchase Agreement, by and between Stone & Youngberg LLC (the "Underwriter") and the City, relating to the purchase by the Underwriter of the Certificates, so long as the Underwriter's discount does not exceed 1.2% of the principal amount of the Certificates, exclusive of any original issue discount which does not represent compensation to the Underwriter. E. A Continuing Disclosure Certificate pursuant to which the City, will provide certain annual information and material event disclosures to the municipal bond market as provided therein. Section 7. The Council hereby approves the Preliminary Official Statement, in substantially the form on file with the City Clerk, together with any changes therein or additions thereto deemed advisable by the Mayor, the City Manager or the Finance Director, or the designee of any such official. The Council authorizes and directs the Mayor, the City Manager or the Finance Director, or the designee of any such official, to deem "final" pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") the Preliminary Official Statement prior to its distribution by the Underwriter. Section 8. The Mayor, the City Manager or the Finance Director, or the designee of any such official, is authorized and directed to cause the Preliminary Official Statement to be brought into the form of a final official statement (the "Final Official Statement") and to execute the Final Official Statement, dated as of the date of the sale of the Certificates, and a statement that the facts contained in the Final Official Statement, and any supplement or amendment thereto (which shall be deemed an original part thereof for the purpose of such statement) were, at the time of sale of the Certificates, true and correct in all material respects and that the Final Official Statement did not, on the date of sale of the Certificates, and does not, as of the date of delivery of the Certificates, contain any untrue statement of a material fact with respect to the City, its finances, the Property and the Project or omit to state material facts with respect to the City required to be stated where necessary to make any statement made therein not misleading in the light of the circumstances under which it was made. The Mayor, the City Manager or the Finance Director, or the designee of any such official, shall take such further actions prior to the signing of the Final Official Statement as are deemed necessary or appropriate to verify the accuracy thereof. The execution of the final Official Statement, which shall include such changes and additions thereto deemed advisable by the Mayor, the City Manager or the Finance Director, or the designee of any such official, and such information permitted to be excluded from the Preliminary Official Statement pursuant to the Rule, shall be conclusive evidence of the approval of the final Official Statement by the City. Section 9. The Final Official Statement, when prepared, is approved for distribution in connection with the offering and sale of the Certificates. Section 10. The Mayor, the City Manager, the Finance Director, the City Clerk and all other appropriate officials of the City are hereby authorized and directed to solicit proposals for municipal bond insurance for the Certificates and a reserve fund surety bond in lieu of cash funding a reserve fund for the Certificates. The Council hereby ratifies prior solicitations for any such municipal bond insurance or reserve fund surety bonds. The Finance Director, or her designee, is hereby authorized to determine if such municipal bond insurance and/or reserve fund surety bond is financially advantageous to the City and if it is determined that such municipal bond insurance and/or reserve fund surety bond is financially advantageous to the City and a commitment therefor is received, the Finance Director, or her designee, is hereby authorized to accept such commitment and to revise the legal documents as may be appropriate to provide for such items. Section 11. The Mayor, the City Manager, the Finance Director, the City Clerk and all other appropriate officials of the City are hereby authorized and directed to execute such other agreements, documents and certificates as may be necessary to affect the purposes of this resolution and the financing herein authorized. Section 12. All actions heretofore taken by the officers and agents of the City with respect to the transactions set forth above are hereby approved, confirmed and ratified. Section 13. This Resolution shall take effect upon its adoption by this Council. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 12th day of February, 2008. Michael S. Naggar, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 08- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 12th day of February, 2008, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk RESOLUTION NO. 08- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY OF THE CITY OF TEMECULA APPROVING, AUTHORIZING AND DIRECTING PREPARATION AND EXECUTION OF CERTAIN LEASE FINANCING DOCUMENTS AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The City of Temecula, with the assistance of the Temecula Public Financing Authority (the "Authority"), has determined to finance the construction of a new civic center facility (the "Project"), and the City has proposed to implement a lease financing for the purpose of raising the funds for such purposes. Section 2. It is in the public interest and for the public benefit that the Authority authorize and direct execution of certain financing documents in connection therewith. Section 3. The documents below specified shall be filed with the Authority and the members of the Board, with the aid of its staff, shall review said documents. Section 4. The below-enumerated documents, substantially in the forms on file with the Secretary, be and are hereby approved, and the Chairman, the Executive Director or the Treasurer is hereby authorized and directed to execute said documents, with such changes, insertions and omissions as may be approved by such official, and the Secretary is hereby authorized and directed to attest to such official's signature. A Site and Facility Lease, between the City, as Lessor, and the Authority, as Lessee, pursuant to which the City will lease certain existing, unencumbered property to the Authority (the "Property"). B. A Lease Agreement, by and between the Authority, as Lessor, and the City, as Lessee (the "Lease Agreement"), pursuant to which the Authority will lease the Property back to the City. C. An Assignment Agreement, by and between the Authority and U.S. Bank National Association, as trustee (the "Trustee"), pursuant to which the Authority will assign certain of its rights under the Lease Agreement, including its right to receive lease payments thereunder, to the Trustee. D. A trust agreement, by and among the Authority, the City and the Trustee, relating to the financing and the execution and delivery of Certificates of Participation evidencing the direct, undivided fractional interests of the owners thereof in lease payments to be made by the City under the Lease Agreement. Section 7. The Chairman, the Executive Director, the Treasurer, the Secretary and other officials of the Authority are hereby authorized and directed to execute such other agreements, documents and certificates as may be necessary to affect the purposes of this resolution and the lease financing herein authorized. Section 8. All actions heretofore taken by the officers and agents of the Authority with respect to the transactions set forth above are hereby approved, confirmed and ratified. Section 9. This Resolution shall take effect upon its adoption by the Board. PASSED, APPROVED, AND ADOPTED by the Board of Directors of the Temecula Public Financing Authority this 12th day of February, 2008. Michael S. Naggar, Chairperson ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 08- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 12th day of February, 2008, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk PRELIMINARY OFFICIAL STATEMENT DATED .2008 NEW ISSUE (BOOK-ENTRY ONL Yl RATINGS: (See "RATINGS" herein.) In~ureJ Rating: S&P Underlying Rating: S&P _ In the opilllon ojQuint & Thimmig LLP, San Fr{mcisco, California, Special C01D1sel, wIder e:r.isting law, subject to the City's compliance with certain covel/OJlis. interest with respect to the Certificates is e.r.cludablejrom gross income ojfhe owners thereojjor federal income ta:r.purposes under Section 103 ojfhe Internal RevelHle Code oj 1986. as amended (the "Code "), (mdunder Section 55 ojfhe Code is not included as em item ojtmprejerence in computing thejederaJ alternative minimum tmjor individuals {md corporations wIder the Code but is taken into account in computing WI artjustment used in determining thejederal alternative minimum taxjor certain cOlporations. In thejurther opinion ojSpecial Counsel, sllCh interest is e.temptjrom California personal income !mes. See "T.4..Y A1.4TTERS" herein STATE OF CALIFORNIA COUNTY OF RIVERSIDE [CITY LOGO] $ CERTIFICATES OF PARTICIPATION (2008 TEMECULA CIVIC CENTER FlNANCING PROJECT) Evidencing the Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be Made by the CITY OF TEMECULA, CALIFORNIA As Rental for Certain Property Pursuant to a Lease Agreement with the Temecula Public Financing Authority Dated: Date of Delivery Due: September 1, as shown on the inside cover The Certificates are being executed and delivered pursuant to a Trust Agreement, dated as of March 1, 2008, among the City ofTemecula (the "City"), theTemecula Public Financing Authority (the "Authority") and u.s. Bank National Association, Los Angeles, California (the "Trustee"), and will be secured as described herein. The Certificates are being executed and delivered to: (i) finance a portion of the costs of anew civic center facility, (ii) [food a Reserve Fund for the Certificates], and (iii) pay costs incurred in connection with executing and delivering the Certificates, including the premium for the municipal insurance policy [and the reserve fund surety]. The Certificates, when delivered, will be registered in the name of Cede & Co., as nominee for the DepositoryTrustCompany ("DTC"), New York, NewY ork, DTCwill aetas securities depository for the Certificates. Individual purchases will bemade in book-entry form only, in denominations of $5,000 or any integral multiple thereof. Purchasers will not receive physical certificates representing their interest in the Certificates purchased. Interest represented by the Certificates is payable on September 1, 2008, and semiannually thereafter on each March 1 and September 1. The principal and interest components represented by the Certificates arepayable by the Trustee to DTC, which will in turn be responsible to remit such principal and interest to its "participants," which will in turn beresponsibletoremit such principal and interest to the beneficial owners ofthe Certificates, as described under the caption 'THE CERTIFICATES DTC and Book-Entry System" herein. The Certificates represent and evidence, and arepayablefrom, lease payments (the "Lease Payments") to be made by the City pursuant to aLease Agreement (the "Lease Agreement") between the Authority and the City, dated as of March 1, 2008. Pursuant to an Assignment Agreement between the Authority and the Trustee, the Authority will assign to the Trustee, among other things, its right to receive Lease Payments. The City will agree in the Lease Agreement to make all Lease Payments provided for therein, to include all such payments in its annual budgets, and to make the necessary annual appropriations for such Lease Payments, which are calculated to be sufficient to pay principal and interest represented by the Certificates. The City's obligation is to make Lease Payments subject to abatement in the event of damage to, destruction or condenmation of, or title defects relating to theProperty described herein, except to the extent of special funds, such as proceeds of rental intenuption insurance, amounts in the Reserve Fund and/or the Lease Payment Food. The Certificates are subject to optional, e:draordinary and mandatory redemption, as described herein. Payment of the principal and intere~t component~ of the Certificate~ when due will be in~ured by a financial guaranty in~urance policy to be issued by [INSURER] simultaneously with the delivery of the Certificates. [INSURER LOGO] THE OBLIGATION OF THE CITY TO MAKE LEASE PAYMENTS DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS UBLIGA TED TU LEV'{ UR PLEDGE ANY FURM UF TAXA TIUN UR FUR WHICH THE CITY HAS LEVIED UR PLEDGED AN'{ FURM UF TAXATIUN. NJ:<.ll.t1J:<.K THE CERTIFICATES NUR THE UBLIGATIUN UF THE CITYTU MAKE LEASE PA1:MENTS UNDER THE LEASE AGREEMENT CONSTITUTE A DEBT OR INDEBTEDNESS OF THE CITY, THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY OTHER POLITICAL SUBDIVISION, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATIUN UR RESTRICTIUN. THE UBLIGATIUN UFTHE CITY TU MAKE LEASE PAYMENTS IS IN CUNSIDERATIUN UF THE RIGHT UF THE CITY TU THE CUNTINUED USE AND PUSSESSIUN UF THE PRUPERTY. IN THE EVENT UF FAILURE UF SUCH USE AND POSSESSION, THE OBLIGATION OF THE CITY MAY BE ABATED IN WHOLE OR IN PART AS DESCRIBED HEREIN. This cover page contains information for general reference only. It is not a summary of the security or the tenns of the Lease Agreement. Investors are advised to read the entire Ufficial Statement, including the section entitled "Special Risk Factors" for a discussion of certain risk factors that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the Certificates. 'Preliminary, subject to change. MATURITY SCHEDULE (See inside cover) The Certificates will be offered when, as and if executed and delivered to the Underwriter, subject to approval by {Juint & Thimmig LLP, San Francisco, California, Special Counsel, and certain other conditions. Certain legal matters will be passed upon for the City by the City Attorney, Richards, Watson & Gershon, Los Angeles, California, and McFarlin & Anderson LLP, Lake Forest, California, Disclosure Counsel, and for the Underwriter by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Underwriter's COlll1Sel. It is anticipated that the Certificates in definitive book-entry form will be available for delivery through the DTC book-entry system on or about [March 13]. 2008. STONE & YOUNGBERG Dated: ,2008 The/allowing language to be inserted by the printe}; in red, at the top a/the PO::;Fontcover: PRELIMINARY OFFICIAL STATEMENT DATED ,2008 TIle/allowing language to be inserted by the printer. in red, vertically along the l~ft margin ~fthe POS/ront cover: This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. $ CERTIFICATES OF PARTICIPATION (2008 TEMECULA CIVIC CENTER FINANCING PROJECT) Evidencing the Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be Made by the CITY OF TEMECULA, CALIFORNIA As Rental for Certain Property Pursuant to a Lease Agreement with the Temecula Public Financing Authority MATURITY SCHEDULE (BASE CUSIP" NO. )1 $ SERIAL CERTIFICATES % CUSlp. Maturity ~ (Senternber 1) 2017 2018 2019 2020 2021 2022 2023 2024 Principal ArnOlmt Interest Rate Yield CUSlp. ~ Maturity (Senternber 1 ) 2009 2010 2011 2012 2013 2014 2015 2016 Principal ArnOlmt Interest Rate Yield $ % $ % % $ $ % Term Certificates Due September L 20 Price % Term Certificates Due September L 2038 Price % CUSIpooNo % CUSIpooNo +-prel1rnmary, subject to change. t CUSIpoo A registered trademark of the American Bankers Association Copyright iD 1999-2008 Standard & Poor's, a Division of The McGraw-Hill Companies, Inc. CUSIpoo data herein is provided by Standard & Poor's CUSIpoo Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the ClTSlpoo Service Bureau. CUSIpoo numbers are provided for convenience of reference only Neither the City nor the Underwriter takes any responsibility for the accuracy of such numbers. CITY OF TEMECULA Riverside County, California MAYOR AND CITY COllNCIL Michael S. Naggar, Mayor Maryann Edwards, Mayor Pro Tern Ron Roberts, Council Member Jeff Comerchero, Council Member Charles W. Washington, Council Member CITY OFFICIALS Shawn Nelson, City Manager Susan Jones, City Clerk William Hughes, Director of Public Works Genie Roberts, Director of Finance TEMECULA PUBLIC FINANCING AlfIHORITY BOARD OF DIRECTORS Michael S. Naggar, Chairperson Maryann Edwards, Vice Chairperson Ron Roberts, Director Jeff Comerchero, Director Charles W. Washington, Director AlfIHORITY OFFICERS Shawn Nelson, Executive Director Susan Jones, Secretary Genie Roberts, Chief Financial Officer CITY ATTORNEY Richards, Watson & Gershon A Professional Corporation Los Angeles, California SPECIAL COllNSEL Quint & Thirnrnig liP San Francisco, California DISCLOSllRE COUNSEL McFarlin & Anderson LLP Lake Forest, California FINANCIAL ADVISOR Fieldman, Rolapp & Associates Irvine, California TRUSTEE/DISSEMINA nON AGENT u. S. Bank National Association Los Angeles, California GENERAL INFORMATION ABOUT THE OFFICIAL STATEMENT Use of OffIrial Statement. This ()fficial Statement is submitted in connection with the offer and sale of the Certificates referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Certificates. Estimates and Forecasts. When used in this ()fficial Statement and in any continuing disclosure by the City, in any press release and in any oral statement made with the approval of an authorized officer of the City or any other entity described or referenced herein, the words or phrases "will likely result," "are expected to," ""will continue," ""is anticipated," ""estimate," ""project," "forecast," ""expect," "'intend," and similar expressions identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results and those differences may be material. The information set forth in this ()fficial Statement has been obtained from official sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Authority or the City. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this ()fficial Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the City, the Authority, or any other entity described or referenced herein since the date hereof. Limited Offering. No dealer, broker, salesperson or other person has been authorized by the City or the Authority to give any information or to make any representations in connection with the offer or sale of the Certificates other than those contained herein and if given or made, such other information or representation must not be relied upon as having been authorized by the Authority, the City, or any other party. This ()fficial Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Certificates by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Information subject to Change; Summaries subject to Complete Documents. The information and expressions of opinions herein are subject to change without notice and neither delivery of this ()fficial Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City, the Authority or any other entity described or referenced herein since the date hereof. All summaries of the documents referred to in this ()fficial Statement are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions. Involvement of Underwriter. The Underwriter has provided the following statement for inclusion in this ()fficial Statement: The Underwriter has reviewed the information in this ()fficial Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Stabilization of Prices. In connection with this offering, the Underwriter may over allot or effect transactions which stabilize or maintain the market price ofthe Certificates at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the Certificates to certain dealers and others at prices lower than the public offering prices set forth on the cover page hereof and said public offering prices may be changed from time to time by the Underwriter. [INSURER] ("[INSURER]") makes no representation regarding the Certificates or the advisability of investing in the Certificates and makes no representation regarding, nor has it participated in the preparation of, this Official Statement other than the information supplied by [INSURER] and presented under the captions "INTRODUCTION - Financial Guaranty Insurance Policy and Surety Policy," "FINANCIAL GUARANTY INSURANCE The Insurance Policy" and APPENDIX E "SPE('IMEN INSURAN('E PC lLIC'Y" herein. THE CERTIFIC ATES HAVE N( IT BEEN REGISTERED UNDER THE SECURITIES ACT (IF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION RE()UIREMENTS CONTAINED IN SUCH ACT. THE CERTIFICATES HAVE NOT BEEN REGISTERED (lR ()UALIFIED UNDER THE SECURITIES LAWS (IF ANY STATE. TABLE OF CONTENTS Page INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1 General .................................................................... 1 The City ................................................................... 2 Sources of Payment of the Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2 Other Obligations ............................................................ 2 Description of the Certificates .................................................. 2 Financial Guaranty Insurance Policy and Surety Policy .............................. 3 Tax Exemption ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3 Professionals Involved in the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3 Special Risk Factors .......................................................... 3 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4 THE CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4 General Provisions ........................................................... 4 Redemption of the Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4 Purchase of Certificates ....................................................... 6 Transfer and Exchange of Certificates ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6 DTC and Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7 SOURCES AND USES OF CERTIFICATE PROCEEDS ................................... 7 PLAN OF FINANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7 The Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8 ~~~.................................................................8 LEASE PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8 SECURITY F< lR THE CERTIFICATES AND S( lURCES (IF P A'{MENT . . . . . . . . . . . . . . . . . . . .. 9 General .................................................................... 9 Financial Guaranty Insurance Policy and Surety Policy ............................. 10 Lease Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10 Reserve Fund .............................................................. 11 [REVISE AS APPR( lPRIATE] Reserve Fund - Surety Policy . . . . . . . . . . . . . . . . . . . . . . .. 11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 12 Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 12 Abatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13 Substitution of Site ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13 Amendment of Lease Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14 Use of the Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15 FINANCIAL GUARANTY INSURANCE .............................................. 16 The Insurance Policy ........................................................ 16 Payment Pursuant to Policy ................................................... 16 The Insurer ................................................................ 16 Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 16 Rights ofInsurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 16 C(lNSTITUTHlNAL AMENDMENTS AND STATUTES AFFECTING CITY REVENUES AND APPR(lPRIATI<lNS ............................... 16 THE AUTHORITY ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 21 THE CITY OF TEMECULA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 21 General ................................................................... 21 -I- Employee Relations ......................................................... 22 Accounting Policies and Financial Reporting ..................................... 22 Retirement System .......................................................... 23 Other Post Retirement Benefits ................................................ 23 ~~;m~~c~:t;t : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :: ~: Long Term Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 24 Capital Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 25 Assessed Value of Taxable Property ............................................ 26 Tax Levies and Delinquencies ................................................. 27 Tax Rate .................................................................. 27 Commercial Activity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 29 Annual Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 29 Summary of Revenues and Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 30 Investments ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 34 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 37 STATE OF CALIFORNIA BUDGET INFORMATION ................................... 37 Economic Conditions in California ............................................. 37 2008 Budget Act and 2009 Proposed Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 37 Future State Budgets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 38 SPECIAL RISK FACTORS ......................................................... 38 T~XMATTERS .................................................................. 44 NO LITIGATION ................................................................. 45 RATINGS ....................................................................... 45 APPROV AL OF LEGALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 46 l~ER\VRlTING................................................................. 46 CONTINUING DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 46 CERTIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 47 ADDITIONAL INFORMATION ..................................................... 47 APPENDLX A - SUMMARY (IF CERTAIN PR( NISI< lNS (IF PRINCIPAL LEGAL DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. A-I APPENDLX B - COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF TEMECULA ..................................................... B-1 APPENDLX C - FORM OF OPINION OF SPECIAL COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . .. C-I APPENDLX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE. . . . . . . . . . . . . . . . . D-I APPENDLX E - SPECIMEN INSURANCE POLICY .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. E-I APPENDLX F - GENERAL INFORMATION ABOUT THE CITY OF TEMECULA ......... F-I APPENDLXG- BOOK-ENTRY SYSTEM ........................................... G-I -11- OFFICIAL STATEMENT $ CERTIFICATES OF PARTICIPATION (2008 TEMECULA CIVIC CENTER FINANCING PROJECT) Evidencing the Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be Made by the CITY OF TEMECULA, CALIFORNIA As Rental for Certain Property Pursuant to a Lease Agreement with the Temecula Public Financing Authority INTRODUCTION This Introduction is not a summary of this Official Statement. It is only a brief description of, and guide to, and is qualified by more complete and detailed information contained in, this Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A complete review should be made of the entire Official Statement. The offering of the Certificates of Participation (200S Temecula Civic Center Financing Pro/ect) (the "Certificates ") is made only by means of this Official Statement. General The purpose ofthis (Jfficial Statement is to furnish information regarding the execution and delivery of $ aggregate principal amount of Certificates of Participation (2008 Temecula Civic Center Financing Project) (the "Certificates") pursuant to the provisions of a Trust Agreement, dated as of March 1, 2008 (the "Trust Agreement"), among the City of Temecula (the "City"), the Temecula Public Financing Authority (the "Authority") and U.S. Bank National Association, as trustee (the "Trustee"). Definitions of certain capitalized terms used in this (Jfficial Statement are set forth in APPENDLX A - "SUMMARY (JF CERT AINPR( NISI< JNS (JF THE PRINCIP AL LEGAL D( JCUMENTS." This (Jfficial Statement contains brief descriptions of the Certificates, the Trust Agreement, the Lease Agreement, the City, the Property and the Project. Such descriptions do not purport to be comprehensive or definitive. All references in this (Jfficial Statement to specific documents are qualified in their entirety by reference to such documents and references to the Certificates are qualified in their entirety by reference to the form of the Certificates included in the Trust Agreement. Copies ofthe Trust Agreement, the Lease Agreement and other documents described in this (Jfficial Statement may be obtained from the City as described under the subheading "( Jther Information" below. The Certificates are being executed and delivered to pay a portion of the cost to construct a new civic center facility (the "Project"). To finance the Project, the City and the Authority will enter into the Lease Agreement, dated as of March 1,2008 (the "Lease Agreement"), with respect to certain parcels of real property owned by the City (the "Site") and the improvements thereon (the "Facility" and together with the Site, the "Property"), as described herein. The Property will be leased by the City to the Authority pursuant to a Site and Facility Lease, dated as of March 1,2008 (the "Site and Facility Lease"), for lease back to the City pursuant to the Lease Agreement. The City is obligated to pay lease payments (''Lease Payments") under the Lease Agreement from any legally available moneys, including its general fund and special funds described below. The City will agree in the Lease Agreement that it will make Lease Payments to the Authority for and in consideration of the right of the use and occupancy of, and the continued quiet use and enjoyment of the Property during each Rental Period. Pursuant to an Assignment Agreement, dated as of March 1, 2008 (the "Assignment Agreement"), the Authority will assign to the Trustee, among other things, its right to receive 'Preliminary, subject to change. Lease Payments. The Lease Payments are calculated to be an amount sufficient to pay all principal and interest represented by the Certificates when due. The City Located on Interstate 15, the City is the 11th largest city in the area of Southern California known as the Inland Empire and the 4th largest in Riverside County (the "County"), encompassing approximately 30 square miles. The City is approximately 85 miles southeast of Los Angeles, 60 miles north of San Diego, 61 miles southeast of Orange County, and 20 miles inland from the cities of San Juan Capistrano and Oceanside. For further information concerning the City, see "THE CITY OF TEMECULA" and APPENDLX F - "GENERAL INF( lRMATI< IN AB( JUT THE CITY (IF TEMECULA" Sources of Payment of the Certificates Each Certificate evidences a direct, undivided fractional interest in the principal component of the Lease Payments due under the Lease Agreement, payable by the City to the Authority, as rental payments for the right of the City to use and occupy the Property. The obligation of the City to pay Lease Payments when due is a General Fund obligation of the City. The obligations by the City to pay Lease Payments may be abated in whole or in part in the event of damage to, condemnation or destruction of, or title defects relating to, the Property. In addition, the City will agree in the Lease Agreement to pay additional rental (the "Additional Payments") to the Trustee, as assignee of the Authority, to cover all costs and expenses of the Authority and the Trustee incurred in connection with the Certificates or the Property, including but not limited to payment of all costs and expenses incurred by the Authority and all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Property or their respective interests or estates therein. The City will also assume responsibility for all improvement, repair and maintenance of the Property and is required to maintain or cause to be maintained insurance on the Property, including a standard comprehensive general insurance policy and a casualty insurance policy against loss or damage to all buildings situated on the Property and rental interruption insurance with respect to property damage risks in an amount at least equal to the maximum Lease Payments corning due and payable during the current or any future fiscal year. The City currently insures certain risks through the California Joint Powers Insurance Authority. See "LEASE PA'{MENTS," "SECURITY FOR THE CERTIFICATES AND SOURCES OF PA'{MENT," "THE CITY (IF TEMECULA - Risk Management," and APPENDIX A - "SUMMARY (IF CERTAIN PR( NISI< lNS (IF PRINCIPAL LEGAL D( lCUMENTS - Lease Agreement" herein. THE (lBLIGATI< IN (IF THE CITY T< 1 MAKE LEASE P A'{MENTS D( lES N( IT C( lNSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY F< lRM (IF T AXATI< IN (lR F< lR WHICH THE CITY HAS LEVIED (lR PLEDGED ANY F< lRM (IF T AXATI< IN. NEITHER THE CERTIFIC ATES N( lR THE (lBLIGATI< IN (IF THE CITY T< 1 MAKE LEASE P A '>:1\1ENTS UNDER THE LEASE AGREEMENT C( lNSTITUTE ADEBT (lRINDEBTEDNESS (IF THE CITY, THE C( lutHY, THE STATE (lR ANY (lTHER P( lLITIC AL SUBDIVISI< IN, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE OBLIGATION OF THE CITY TO MAKE LEASE PA'>:1\1ENTS IS IN C( lNSIDERATI< IN (IF THE RIGHT (IF THE CITY T< 1 THE C( lNTINUED USE AND P( lSSESSI< IN (IF THE PROPERTY. IN THE EVENT OF FAILURE OF SUCH USE AND POSSESSION, THE (lBLIGATI< IN (IF THE CITY MAY BE ABATED IN WH( lLE (lR IN PART AS DESCRIBED HEREIN. Other Obligations The City has the authority to enter into other obligations which may constitute additional charges against its general revenues. To the extent that additional obligations are incurred by the City, the funds available to make Lease Payments may be decreased. Description of the Certificates 2 Purpose. The net proceeds of the Certificates, along with other available funds, will be applied by the City to: (i) finance a portion of the costs of the Project, (ii) [fund a Reserve Fund for the Certificates], and (iii) pay costs incurred in connection with executing and delivering the Certificates, including the premium for the municipal insurance policy [and the reserve fund surety]. See "S( lURCES AND USES ()F CERTIFICATE PROCEEDS." Payments. Interest with respect to the Certificates is payable on September I, 2008, and semiannually thereafter on each March I and September 1. Principal represented by the Certificates is payable on September I in the years and amounts set forth on the inside front cover of this Official Statement. Principal of and premium, if any, and interest with respect to the Certificates shall be payable by the Trustee, as registrar, transfer agent and trustee. See "THE CERTIFICATES" and APPENDIX G- "B()()K-ENTRY SYSTEM" herein. Redemption. The Certificates are subject to optional, extraordinary and mandatory redemption as described herein. See "THE CERTIFICATES - Redemption" herein. Registration, Transfers and E~changes. The Certificates will be executed and delivered as fully- registered certificates, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (''DTC''), and will be available to actual purchasers of the Certificates (the "Beneficial Owners") under the book-entry system maintained by DTC. See "THE CERTIFICATES" and APPENDLX G - "BOOK-ENTRY SYSTEM." Financial Guaranty Insurance Policy and Surety Policy Payment of the principal and interest evidenced by the Certificates when due will be insured by a financial guaranty insurance policy (the "Policy") to be issued by _ (the "Insurer") simultaneously with the delivery ofthe Certificates. See "FINANCIAL GUARANTY INSURANCE"herein. [In addition, a reserve fund surety bond, in an amount equal to the Reserve Requirement (the "Surety Policy"), will be issued by the Insurer and deposited in the Reserve Fund simultaneously with the delivery of the Certificates.] Tax Exem ption Assuming compliance with certain covenants and provisions of the Internal Revenue Code of 1986, in the opinion of Special Counsel, interest with respect to the Certificates will not be includable in gross income for federal income tax purposes although it may be includable in the calculation for certain taxes. Also in the opinion of Special Counsel, interest with respect to the Certificates will be exempt from State personal income taxes. See "TAX MATTERS" herein. Professionals Involved in the Offering All proceedings in connection with the issuance of the Certificates are subject to the approval of (Juint & Thimmig LLP, San Francisco, California, Special Counsel to the City. U.S. Bank National Association, Los Angeles, California, will act as the Trustee. McFarlin & Anderson LLP, Lake Forest, California, is acting as Disclosure Counsel. Fieldman, Rolapp & Associates, Irvine, California, is acting as Financial Advisor. Payment of the fees and expenses of Special Counsel, Disclosure Counsel and the FinancialAdvisor is contingent upon the execution and delivery of the Certificates. Special Risk Factors See the section of this ()fficial Statement entitled "SPECIAL RISK FACT< )RS" for a discussion of special factors which should be considered, in addition to the other materials set forth herein, in considering the investment quality of the Certificates. 3 Other Information This ()fficial Statement speaks only as of its date, and the information contained herein is subject to change. Brief descriptions of the Certificates, certain sections in the Trust Agreement, security for the Certificates, special risk factors, the City, and other information are included in this ()fficial Statement. Such descriptions and information do not purport to be comprehensive or definitive. The descriptions herein of the Certificates, the Trust Agreement, and other resolutions and documents referenced herein are qualified in their entirety by reference to the forms thereof and the information with respect thereto included in the Certificates, the Trust Agreement, such resolutions and other documents. All such descriptions are further qualified in their entirety by reference to laws and to principles of equity relating to or affecting generally the enforcement of creditors' rights. Additional copies of this Official Statement and copies of the Trust Agreement and the Lease Agreement may be obtained during the initial offering period from the City, City of Temecula, 43200 Business Park Drive, Temecula, California 92589-9033. THE CERTIFICATES General Provisions The Certificates will be dated as of their date of delivery and will be payable as to interest from such date, semiannually on each March 1 and September 1, commencing September 1, 2008 (each an "Interest Payment Date"), and will mature in the amounts and on the dates set forth on the inside cover page hereof. Interest evidenced by the Certificates will be calculated on the basis of a 360-day year comprised of twelve 30-day months. The Certificates will be delivered in denominations of $5,000 or any integral multiple thereof. The Certificates will initially be registered in the name of Cede & Co., as nominee ofDTC, which will act as securities depository for the Certificates. Payments of principal, interest and premium, if any, evidenced by the Certificates will be paid by the Trustee to DTC which is obligated in turn to remit such principal, interest and premium, if any, with respect to the Certificates to its DTC Participants for subsequent disbursement to the Beneficial ()wners of the Certificates. See "DTC and Book-Entry System" below and APPENDLX G - "BOOK-ENTRY SYSTEM" attached hereto. Interest evidenced by a Certificate is required to be payable from the Interest Payment Date next preceding the date of execution thereof, unless: (i) it is executed as of an Interest Payment Date, in which event interest with respect thereto shall be payable from such Interest Payment Date; or (ii) it is executed after a Regular Record Date and before the following Interest Payment Date, in which event interest with respect thereto shall be payable from such Interest Payment Date; or (iii) it is executed on or before August 15, 2008, in which event interest with respect thereto shall be payable from the Closing Date; provided, however, that if, as of the date of execution of any Certificate, interest is in default with respect to such Certificate, interest represented by such Certificate shall be payable from the Interest Payment Date to which interest has previously been paid or made available for payment. Payment of defaulted interest shall be paid by check mailed to the Owners as of a special record date to be fixed by the Trustee in its sole discretion, notice of which shall be given to the Owners not less than ten (10) days prior to such special record date. Redemption of the Certificates Optional Redemption. The Certificates maturing on September 1, 2009, are not subject to optional redemption prior to maturity. The Certificates maturing on and after September 1, 2010, are subject to optional redemption in whole or in part on any date in such order of maturity as shall be desiguated by the City (or, if the City shall fail to so desiguate the order of redemption, pro rata among maturities) and by lot within a maturity, on or after September 1,2009, at a redemption price equal to the principal amount thereof together with accrued interest to the date fixed for redemption, from the proceeds ofthe optional prepayment of Lease Payments made by the City pursuant to the Lease Agreement, without premium. Extraordinary Redemption From Net Proceeds of Insurance, Title Insurance, Condemnation or Eminent Domain Award. The Certificates are subject to mandatory redemption in whole or in part on any date from the Net Proceeds of an insurance, title insurance, condemnation, or eminent domain award to the 4 extent credited towards the prepayment of the Lease Payments by the City pursuant to the Lease Agreement, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium. Alandatory Redemption. The Certificates maturing on September 1,20_, are subject to mandatory redemption in part beginning September I, 20~, and on each September I thereafter to and including September I, 20~, from the principal component of scheduled Lease Payments required to be paid by the City pursuant to the Lease Agreement with respect to each such redemption date (subject to abatement, as set forth in the Lease Agreement), at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, as follows: Mandatory Redem ption Date (Septem ber 1) Principal Amount of Certificates to be Redeemed The Certificates maturing on September 1, 2038, are subject to mandatory redemption in part beginning September 1,20 , and on each September 1 thereafter to and including September 1, 20 , from the principal component of scheduled Lease Payments required to be paid by the City pursuant to the Lease Agreement with respect to each such redemption date (subject to abatement, as set forth in the Lease Agreement), at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, as follows: Mandatory Redem ption Date (Septem ber 1) Principal Amount of Certificates to be Redeemed In the event that the Trustee shall pursuant to optional or extraordinary mandatory redemption described above redeem Certificates maturing on September 1,20_, or September 1, 2038, in part but not in whole pursuant to the Lease Agreement, the amount of the Certificates to be redeemed in each subsequent year pursuant to the Lease Agreement shall be reduced to correspond to the principal components of the Lease Payments prevailing following such redemption as determined pursuant to the Lease Agreement. Selection of Certificates for Redemption. Whenever provision is made in the Trust Agreement for the redemption of Certificates and less than all of the Outstanding Certificates are to be redeemed, the Trustee shall select Certificates for redemption from the Outstanding Certificates not previously called for redemption in such order of maturity as designated by the City (and, in lieu of such designation, pro rata among maturities) and by lot within a maturity. The Trustee shall select Certificates for redemption within a maturity by lot in any manner which the Trustee shall, in its sole discretion, deem appropriate. For the purposes of such selection, Certificates will be deemed to be composed of $5,000 portions and any such portion may be separately redeemed. The Trustee shall promptly notify the City and the Authority in writing of the Certificates so selected for redemption. Selection by the Trustee of Certificates for redemption shall be final and conclusive. Upon the occurrence of an extraordinary redemption in part, the selection of Certificates to be redeemed shall be subject to the approval of the Insurer. 5 Notice of Redemption. Unless waived in writing by any Owner of a Certificate to be redeemed, notice of any such redemption shall be given by the Trustee, on behalf and at the expense of the City, by mailing a copy of a redemption notice by first class mail, postage prepaid, at least thirty (30) days and not more than sixty (60) days prior to the date fixed for redemption to such Owner of the Certificate or Certificates to be redeemed at the address shown on the Certificate Registration Books maintained by the Trustee or at such other address as is furnished in writing by such (lwner to the Trustee; provided, however, that neither the failure to receive such notice nor any defect in any notice shall affect the sufficiency of the proceedings for the redemption of the Certificates. Partial Redemption of Certificates. Upon surrender of any Certificate redeemed in part only, the Trustee shall execute and deliver to the Owner thereof a new Certificate or Certificates of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Certificate surrendered and of the same interest rate and the same maturity. Purchase of Certificates In lieu of redemption of Certificates as provided in the Trust Agreement, amounts held by the Trustee for such redemption may also be used on any Interest Payment Date, upon receipt by the Trustee at least ninety (90) days prior to the next scheduled Interest Payment Date of the written request of a City representative, for the purchase of Certificates at public or private sale as and when and at such prices (including brokerage, accrued interest and other charges) as the City may in its discrete discretion direct, but not to exceed the redemption price which would be payable if such Certificates were redeemed; provided, however, that no Certificates will be purchased in lieu of redemption with a trade settlement date less than seventy-five (75) days prior to the relevant redemption date. Such purchases may be affected through the investment department of the Trustee or of an affiliate of the Trustee. The aggregate principal amount of Certificates of the same maturity purchased in lieu of redemption pursuant to the Trust Agreement will not exceed the aggregate principal amount of Certificates of such maturity which would otherwise be subject to such redemption. Remaining moneys, if any, shall be deposited in the Lease Payment Fund. The exercise of any provision of the Trust Agreement which permits the purchase of Certificates in lieu of redemption shall require the approval of the Insurer wherein any Certificate so purchased is not extinguished. Transfer and Exchange of Certificates Subject to the provisions relating to book-entry form only, the registration of any Certificate may, in accordance with its terms, be transferred upon the Registration Books by the person in whose name it is registered, in person or by his attorney duly authorized in writing upon surrender of such Certificate for cancellation at the Principal Corporate Trust Office, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Certificate or Certificates shall be surrendered for registration of transfer, the Trustee shall execute and deliver a new Certificate or Certificates for like aggregate principal amount in authorized denominations. The City shall pay any costs of the Trustee incurred in connection with such transfer, except that the Trustee may require the payment by the Certificate Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. The Trustee shall not be required to transfer (i) any Certificates or portion thereof during the period between the date fifteen ( 15) days prior to the date of selection of Certificates for redemption and such date of selection, or (ii) any Certificates selected for redemption. Certificates may be exchanged, upon surrender thereof, at the Principal Corporate Trust (lffice for a like aggregate principal amount of Certificates of other authorized denominations of the same maturity. Whenever any Certificate or Certificates shall be surrendered for exchange, the Trustee shall execute and deliver a new Certificate or Certificate for like aggregate principal amount in authorized denominations. The City shall pay any costs of the Trustee incurred in connection with such exchange, except that the Trustee may require the payment by the Certificate (lwnerrequesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be required to exchange (i) any Certificate or any portion thereof during the period between the date fifteen (15) days prior to the date of selection of Certificates for redemption and such date of selection, or (ii) any Certificate selected for redemption. 6 DTC and Book-Entry System DTC will act as securities depository for the Certificates. The Certificates are being delivered in fully-registered form and, when executed and delivered, will be registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Certificate will be executed and delivered for each maturity of the Certificates, each in the aggregate principal amount of such maturity, and will be deposited with DTC. So long as Cede & Co. is the registered owner of the Certificates, as nominee ofDTC, references herein to the Owners of the Certificates shall mean Cede & Co. and shall not mean the actual purchasers of the Certificates (the "Beneficial Owners "). The information in this section and in Appendix G concerning DTC and DTC's book-entry system is based solely on information provided by DTC, and no representations can be made by the City or the Trustee concerning the accuracy thereof. See APPENDLX G "BOOK -ENTRY SYSTEM' attached hereto for a further description ofDTC and its book-entry system. SOlTRCES AND lTSES OF CERTIFICATE PROCEEDS The proceeds received from the sale of the Certificates, together with moneys held under the Trust Agreement are to be applied as follows: SOlTRCES OF CERTIFICATE PROCEEDS Proceeds of Certificates: Principal Amount of Certificates Less Net (lriginal Issue Discount Less lTnderwriter's Discount Total Sources $ $ lTSES OF CERTIFICATE PROCEEDS Deposit to the Project Fund [Deposit to the Reserve Fund] Deposit to the Delivery Costs Fund'!) TotallTses $ $ ,1, Includes legal fees, Trustee fees, consultant fees, the premium for the Policy, [the premium for the Surety Policy,] printing, expenses and miscellaneous financing costs. PLAN OF FINANCE The Certificates are being delivered to provide funds: (i) to finance a portion of the costs of the Project, (ii) [to fund a Reserve Fund for the Certificates], and (iii) to pay costs incurred in connection with executing and delivering the Certificates, including the premium for the municipal insurance policy [and the reserve fund surety]. 7 Th e Pro perty Under the Lease Agreement, the City is obligated to make Lease Payments for the use and occupancy of the Property. The Property consists of several different properties owned by the City, including the following: (i) the Community Theater, an approximately 22,330 square foot building with an estimated land and improvement value of approximately $13,200,000 built in 2005, (ii) Birdsall Parle, with an estimated land and improvement value of approximately $28,000,000, completed in 2006, which includes an approximately 44 acres park with four lighted synthetic turf soccer fields, four lighted ball fields, four lighted basketball courts, picnic facilities, concession facilities, restrooms and approximately 460 parking spaces, (iii) Fire Station No. 84, an approximately 9,727 square foot building with an estimated land and improvement value of approximately $2,600,000 built in 1997 and (iv) the Wolf Creek Fire Station, an approximately 9,062 square foot building with an estimated land and improvement value of approximately $4,650,000 completed in 2007. The City may substitute other properties for all or any portion of the Property, subject to the terms and conditions ofthe Lease Agreement. See "SECURITYF< lR THE CERTIFICATES AND S( lURCES (IF PAYMENT. The Property is not subject to a mortgage or a deed of trust. Th e Project The Project consists of the new Temecula Civic Center including a new city hall office building, an attached council chambers and a community room totaling approximately 95,500 square feet estimated to be completed in the second quarter of 2010. The building will be a two and three-story building. The aggregate costs of the new Temecula Civic Center is approximately $54,500,000, of which approximately [$22,500,000] will be provided with proceeds of the Certificates and the balance is being provided with designated general fund reserves. The City has considered the changes in estimated operating costs associated with operation ofthe new Civic Center, and such costs will be included in future budgets approved by the City Council. LEASE PAYMENTS The Lease Agreement requires the City to make Lease Payments on February 15 and Augnst 15 of each year, beginning on Augnst 15,2008, and continuing until the end of the term of the Lease Agreement. Each Lease Payment shall be payable by the City to the Trustee, as assignee of the Authority. The interest components of the Lease Payments payable by the City under the Lease Agreement shall be paid by the City as, and shall constitute interest paid on, the principal components of the Lease Payments payable by the City under the Lease Agreement. Lease Payments have been calculated to be at least sufficient to pay principal and interest represented by the Certificates when due on each Interest Payment Date. 8 The following is a schedule of principal and interest represented by the Certificates for each year until maturity: CITY OF TEMECULA Certificates of Participation (2008 Temecula Civic Center Financing Project) Period Ending (September I) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Iotal Principal Component Interest Component Iotal Lease Payments $ $ $ $ $ $ SECURITY FOR THE CERTIFIC ATES AND SOI1RCES OF PAYMENT General Each Certificate evidences a direct, undivided fractional interest in the principal component of the Lease Payments due under the Lease Agreement, payable by the City to the Authority, as rental payments for the right of the City to use and occupy the Property. The obligation of the City to pay Lease Payments when due is a General Fund obligation of the City. 9 THE (lBLIGATH IN (IF THE CITY T< 1 MAKE LEASE P A'{MENTS D( lES N( IT C( lNSTITUTE AN (lBLIGATHlN (IF THE CITY F<lR WHICH THE CITY IS (lBLIGATED T<l LEVY (lR PLEDGE ANY F< lRM (IF T ~XATI< IN (lR F< lR WHICH THE CITY HAS LEVIED (lR PLEDGED ANY F< lRM (IF T ~XATH IN. NEITHER THE CERTIFICATES N( lR THE (lBLIGATH IN (IF THE CITY T< 1 MAKE LEASE P A'{MENTS UNDER THE LEASE AGREEMENTC( lNSTITUTE ADEBT (lRINDEBTEDNESS (IF THE CITY, THE C( lUNTY, THE STATE (lR ANY (lTHER P( lLITIC AL SUBDIVISH IN, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE OBLIGATION OF THE CITY TO MAKE LEASE PA'{MENTS IS IN C( lNSIDERATH IN (IF THE RIGHT (IF THE CITY T< 1 THE C( lNTINUED USE AND P( lSSESSH IN (IF THE PROPERTY. IN THE EVENT OF FAILURE OF SUCH USE AND POSSESSION, THE (lBLIGATI< IN (IF THE CITY MAY BE ABATED IN WH( lLE (lR IN PART AS DESCRIBED HEREIN. "Lease Payments" are defined in the Trust Agreement to mean a portion of the total payments required to be paid by the City pursuant to the Lease Agreement, including any prepayment thereof pursuant to the Lease Agreement, which payments consist of an interest component and a principal component, as set forth in the Lease Agreement. The Authority, pursuant to the Assignment Agreement, will transfer, assign and set over to the Trustee, for the benefit of the (lwners, all of the Authority's rights and interests under the Lease Agreement (excepting the Authority's rights under the Lease Agreement relating to advances, release and indemnification covenants and payment of attorneys' fees and expenses), including, without limitation the right to (i) receive and collect all of the Lease Payments from the City, (ii) receive and collect any proceeds of any insurance maintained under the Lease Agreement and of any condemnation award rendered with respectto the Property and (iii) exercise rights and remedies conferred on the Authority pursuantto the Lease Agreement. The City will pay Lease Payments directly to the Trustee as assignee of the Authority. For information regarding the City, including financial information, see "THE CITY OF TEMECULA" herein and APPENDLX B - "C( lMPREHENSIVE ANNUAL FINANCIAL REP( lRT (IF THE CITY (IF TEMECULA" attached hereto. See also "SPECIALRISKF ACT< lRS" and "0 lNSTITUTH lNAL AMENDMENTS AND STATUTES AFFECTING CITY REVENUES AND APPR( lPRIATH lNS"herein. Financial Guaranty Insurance Policy and Surety Policy Payment of the principal and interest components of the Certificates when due will be insured by the Policy to be issued by the Insurer simultaneously with the delivery of the Certificates. [In addition, the Insurer will issue the Surety Policy to fund the Reserve Fund.] See "FINANCIAL GUARANTY INSURANCE" below. Lease Payments The City has covenanted in the Lease Agreement that it will make Lease Payments which are calculated to be at least sufficient to pay principal and interest represented by the Certificates when due. The City also will pay to the Authority as Additional Payments amounts required for payment of all costs and expenses incurred by the City and the Authority to comply with the provisions of the Trust Agreement and the Lease Agreement, or otherwise arising from the leasing of the Property, including without limitation, all Delivery Costs (to the extent not paid from amounts on deposit in the Delivery Costs Fund), compensation and indemnification due to the Trustee and all costs and expenses of auditors, engineers, attorneys and accountants. The Lease Payments shall be payable from any source of lawfully available moneys of the City, subject to the provisions ofthe Lease Agreement relating to damage, destruction and eminent domain. Under California law, the obligation of the City to make Lease Payments is contingent upon the availability of the Property for use and occupancy by the City, except to the extent of special funds, such as proceeds of rental interruption insurance, amounts in the Reserve Fund and! or the Insurance and Condemnation Fund and! or the Lease Payment Fund. Accordingly, the Lease Payments may be abated proportionately during any period in which, by reason of damage, destruction, condemnation or title defect, there is substantial interference with the use and occupancy of the Property by the City, and such abatement shall continue for the period 10 commencing with such damage or destruction and ending with completion by the City of the work of repair or reconstruction. Any abatement of Lease Payments could affect the availability offunds to make payments when due on the Certificates. The Lease Agreement requires the City to maintain rental interruption insurance or use and occupancy insurance to cover loss, total or partial, of the use of any part of the Property, in an amount equal to two times the Reserve Requirement during the Term of the Lease Agreement following the effective date of said policy. See APPENDLX A - "SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS - Lease Agreement - Insurance" and" - Lease Agreement - Abatement of Lease Payments in the Event of Damage and! or Destruction" herein. The City agrees in the Lease Agreement to take such action as may be necessary to include all Lease Payments in each of its annual budgets during the term of the Lease Agreement and to make the necessary annual appropriations for all such Lease Payments and Additional Payments under the Lease Agreement so long as it has beneficial use of the Property. For information concerning the City's revenues and expenditures, see "THE CITY (IF TEMECULA" herein. Reserve Fund The Trust Agreement requires the establishment of a Reserve Fund in an amount equal to $ (the "Reserve Requirement"); provided, however, that such amount shall be reduced if Certificates are refunded [or prepaid], to an amount equal to the maximum annual Lease Payments relating to the remaining Certificates not so refunded. Pursuant to the Trust Agreement, moneys on deposit in the Reserve Fund may be substituted by the City with a letter of credit, surety bond, bond insurance policy or other form of guaranty in an amount equal to the Reserve Requirement, as more fully described in the Trust Agreement. [The criteria relating to the surety bond or insurance policy will be satisfied at the time the surety bond or insurance policy is delivered, and the Trust Agreement does not require the City to substitute another credit instrument or funds for the surety bond or insurance policy as a result of a subsequent rating downgrade or downgrades of the issuer of the surety bond or insurance policy.] [Pursuant to the Trust Agreement, the Reserve Fund will be funded with the Surety Policy to be issued by the Insurer simultaneously with the delivery of the Certificates.] [REVISE AS APPROPRIATE] Reserve Fund - Surety Policy The Trust Agreement requires the establishment of a Reserve Fund in an amount equal to $ _. The Trust Agreement authorizes the City to obtain a reserve surety bond in place of fully funding the Reserve Fund with cash. Accordingly, application has been made to the Insurer for the issuance of the Surety Policy for the purpose of funding the Reserve Fund. The Certificates will only be delivered upon the issuance of such Surety Policy. The premium on the Surety Policy is to be fully paid at or prior to the execution and delivery of the Certificates. The Surety Policy provides that upon the later of (i) one (I) day after receipt by the Insurer of a demand for payment executed by the Trustee certifying that provision for the payment of principal of or interest components of the Certificates when due has not been made or (ii) the Interest Payment Date specified in the Demand for Payment submitted to the Insurer, the Insurer will promptly deposit funds with the Trustee sufficient to enable the Trustee to make such payments due with respect to the Certificates, but in no event exceeding the Surety Policy Coverage, as defined in the Surety Policy. [The criteria relating to the Surety Bond will be satisfied at the time the Surety Bond is delivered, and the Trust Agreement does not require the City to substitute another credit instrument or funds for the Surety Bond as a result of a subsequent rating downgrade or downgrades of the Insurer.] Pursuant to the terms of the Surety Policy, the Surety Policy Coverage is automatically reduced to the extent of each payment made by the Insurer under the terms of the Surety Policy and the City is required to reimburse the Insurer for any draws under the Surety Policy with interest at a market rate from legally available moneys. Upon such reimbursement, the Surety Policy is reinstated to the extent of each principal reimbursement up to but not exceeding the Surety Policy Coverage. The reimbursement obligation of the City is subordinate to the City's obligations with respect to the Certificates. In the event the amount on deposit in, or credited to, the Reserve Fund exceeds the amount of the Surety Policy, any draw on the Surety Policy shall be made only after all the funds in the Reserve Fund have 11 been expended. In the event that the amount on deposit in, or credited to, the Reserve Fund, in addition to the amount available under the Surety Policy, includes amounts available under a letter of credit, insurance policy, reserve fund surety bond or other such funding instrument (the "Additional Funding Instrument"), draws on the Surety Policy and the Additional Funding Instrument shall be made on a pro rata basis to fund the insufficiency. The Trust Agreement provides that the Reserve Fund shall be replenished in the following priority: (i) principal and interest on the Surety Policy shall be paid from first available Lease Payments; (ii) after all such amounts are paid in full, amounts necessary to fund the Reserve Fund to the required level, after taking into account the amounts available under the Surety Policy shall be deposited from next available Lease Payments. The Surety Policy does not insure against nonpayment caused by the insolvency or negligence of the Trustee. In the event that the Insurer were to become insolvent, any claims arising under the Surety Policy would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California. Insurance The City is required to keep or cause to be kept casualty insurance against loss or damage by fire and lightning, with extended coverage for vandalism and malicious mischief to any part of the Property, in an amount at least equal to one hundred percent (100%) of the replacement cost of the Property. Such insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage and smoke and such other hazards as are normally covered by such insurance. While the City currently maintains earthquake insurance with an aggregate claims paying limit of $15,000,000, and with separate limits established for each Facility, the City is not required by the Lease Agreement to maintain any earthquake coverage and the City may discontinue such coverage at any time.) The City must also keep public liability and property damage policies protecting the City and the Authority subject to the terms of the Lease Agreement. To insure against loss of rental income caused by perils mentioned above, the City is required to maintain, or cause to be maintained throughout the term of the Lease Agreement, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of the Property as a result of any of the hazards described above in an amount equal to two times the Reserve Requirement. Public liability and property damage insurance coverage is required in the minimum liability limits of$I,OOO,OOO for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in each accident or event, and in a minimum amount of $100,000 (subject to a deductible clause of not to exceed $5,000) for damage to property resulting from each 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 by the City and may be maintained in the form of insurance maintained through a joint exercise of powers authority created for such purpose or, with the prior written consent of the Insurer, in the form of self-insurance 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 insurance proceeds shall have been paid. See "THE CITY (IF TEMECULA - Risk Management" and APPENDLX A-"SUMMARY (IF CERTAINPR(lVISI<lNS (IF PRINCIPAL LEGAL D(lCUMENTS- Lease Agreement - Insurance" herein. The City shall provide, from moneys in the Delivery Costs Fund or at its own expense, on the Closing Date, a CL T A title insurance policy in the amount of not less than the principal amount of the Certificates, insuring the City's leasehold estate in the Property, subject only to Permitted Encumbrances (as defined in the Trust Agreement). A copy of such policy shall be delivered to the Insurer. Eminent Domain Under the Lease Agreement, if all of the Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the term of the Lease Agreement will cease as of the day possession is taken. Ifless than all of the Property is taken permanently, 12 or if all of the Property or any part thereof is taken temporarily under the power of eminent domain, ( I) the Lease Agreement will continue in full force and effect and will not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (2) there will be a partial abatement of Lease Payments as a result of the application of the Net Proceeds of any eminent domain award to the redemption of the Lease Payments under the Lease Agreement, in an amount to be agreed upon by the City and the Authority and communicated to the Trustee such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portion of the Property. The Net Proceeds of such eminent domain award are required to be applied to the redemption of Certificates as provided in the Lease Agreement and the Trust Agreement. Abatement Under the Lease Agreement, Lease Payments will be abated during any period in which, by reason of damage or destruction, there is substantial interference with the use and occupancy by the City of the Property or any portion thereof (other than certain portions of the Property which have been modified by the City as described in the Lease Agreement) to the extent to be agreed upon by the City and the Authority and communicated by a certificate of a City representative to the Trustee. The parties agree that the amounts of the Lease Payments under such circumstances will not be less than the amounts of the unpaid Lease Payments as are then set forth in an exhibit attached to the Lease Agreement, unless such unpaid amounts are determined, upon consultation with the Insurer, to be greater than the fair rental value of the portions of the Property not damaged or destroyed (giving due consideration to the factors identified related to fair rental value as discussed in the Lease Agreement), based upon the opinion of a MAl appraiser or other appropriate method of valuation, in which event the Lease Payments will be abated such that they represent said fair rental value. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of replacement, repair or reconstruction as evidenced by a certificate of a City representative to the Trustee. In the event of any such damage or destruction, the Lease Agreement will continue in full force and effect and the City waives any right to terminate the Lease Agreement by virtue of any such damage and destruction. Notwithstanding the foregoing, there will be no abatement of Lease Payments under the Lease Agreement to the extent that (a) the proceeds of rental interruption insurance or (b) amounts in the Reserve Fund and/or the Insurance and Condemnation Fund and/or the Lease Payment Fund are available to pay Lease Payments which would otherwise be abated under the Lease Agreement. Substitution of Site (a) Substitution of Site or Facility. The City has the option at any time and from time to time, with the prior written consent of the Authority and the Insurer to substitute other land (the "Substitute Site") and/or a substitute facility (a "Substitute Facility") for the Site (the "Former Site"), or any portion thereof, and/or the Facility (the "Former Facility"), or a portion thereof, provided that the City satisfies all of the following requirements (to the extent applicable) which are hereby declared to be conditions precedent to such substitution: (i) If a substitution of the Site, the City files with the Authority and the Trustee an amended exhibit to the Site and Facility Lease and Lease Agreement which adds thereto a description of such Substitute Site and/or Substitute Facility and deletes therefrom the description of the Former Site and/ or the facilities thereon; (ii) The City certifies in writing to the Authority and the Trustee that such Substitute Site and/or Substitute Facility serves the purposes of the City, constitutes property that is unencumbered, subject to Permitted Encumbrances, and constitutes property which the City is permitted to lease under the laws of the State; (iii) The City delivers to the Trustee and the Authority evidence that the value of the Property following such substitution is equal to or greater than the (lutstanding principal amount of the Certificates and confirms in writing to the Trustee and the Authority that the indemnification provided pursuant to the Trust Agreement applies with respect to the Substitute Site and/or Substitute Facility; 13 (iv) The Substitute Site and/or Substitute Facility does not cause the City to violate any of its covenants, representations and warranties made in the Lease Agreement or in the Trust Agreement; (v) The City obtains an amendment to the title insurance policy required pursuant to the Lease Agreement which adds thereto a description of the Substitute Site and deletes therefrom the description of the Former Site; (vi) The City certifies that the Substitute Site and/or the Substitute Facility is one of the same or greater essentiality to the City as was the Former Site and/or Former Facility; (vii) The Insurer shall provide prior written consent to such substitution; (viii) The City provides notice of the substitution to any rating agency then rating the Certificates; and (ix) The City furnishes the Authority and the Trustee with a written opinion of Bond Counsel, which shall be Independent Counsel, stating that such substitution does not cause the interest components of the Lease Payments to become subject to federal income taxes or State personal income taxes. (b) Release of Site. The City shall have, and is granted, the option at any time and from time to time during the term of the Lease Agreement to release any portion of the Site, provided that the City shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such release: (i) The City files with the Authority and the Trustee an amended exhibit to the Site and Facility Lease which describes the Site, as revised by such release; (ii) The City delivers to the Trustee and the Authority evidence that the value of the Site, as revised by such release, is equal to or greater than the (lutstanding principal amount of the Certificates and confirms in writing to the Trustee and the Authority that the indemnification provided pursuant to the Trust Agreement applies with respect to the Site, as revised by such release; (iii) Such release shall not cause the City to violate any of its covenants, representations and warranties made in the Lease Agreement and in the Trust Agreement; (iv) The City shall obtain an amendment to the title insurance policy required pursuant to the Lease Agreement which describes the Site, as revised by such release; (v) The Insurer shall provide prior written consent to such release; and (vi) The City shall provide notice of the release to any rating agency then rating the Certificates. Amendment of Lease Agreement Generally. The Authority and the City may at any time amend or modify any of the provisions of the Lease Agreement, but only (a) with the prior written consent of the Owners of a majority in aggregate principal amount of the Outstanding Certificates and the Insurer, or (b) without the consent of the Owners, but with the consent of the Insurer, but only if such amendment or modification is for anyone or more of the following purposes: (i) to add to the covenants and agreements ofthe City contained in the Lease Agreement, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the City; 14 (ii) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, or in any other respect whatsoever as the Authority and the City may deem necessary or desirable, provided that, in the opinion of Bond Counsel, such modifications or amendments will not materially adversely affect the interests of the Owners; or (iii) to amend any provision thereof relating to the Code (as defined below), to any extent whatsoever but only if and to the extent such amendment will not adversely affect the exclusion from gross income of interest with respect to the Certificates under the Code, in the opinion of Bond Counsel. Use of the Property ~Maintenance, r 1tilities, T{[~es andAssessments. Throughout the term of the Lease Agreement, as part of the consideration for the rental ofthe Property, all improvements, repairs and maintenance ofthe Property will be the responsibility of the City and the City will pay for, or otherwise arrange for, the payment of all utility services supplied to the Property and 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 assiguee or sublessee thereof. In exchange for the Lease Payments provided in the Lease Agreement, the Authority agrees that it will provide only the Property, as provided in the Lease Agreement. The City will also payor cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Property or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in instalhnents over a period of years, the City will be obligated to pay only such installments as are required to be paid during the term of the Lease Agreement as and when the same become due. The City may, at the City's expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority or the Insurer notifies the City 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 will promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority. Alodification of Property. Under the Lease Agreement, the City will, at its own expense, have the right to remodel the Property or to make additions, modifications and improvements to the Property. All additions, modifications and improvements to the Property will thereafter comprise part of the Property and be subject to the provisions of the Lease Agreement. Such additions, modifications and improvements will not in any way damage the Property, substantially alter its nature, cause the interest component of Lease Payments to be subject to federal income taxes or cause the Property 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 thereto pursuant to the Lease Agreement, will be of a value which is not substantially less than the value of the Property immediately prior to the making of such additions, modifications and improvements. The City will not permit any mechanic's or other lien to be established or remain against the Property for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City pursuant to the Lease Agreement; provided that if any such lien is established and the City will first notify the Authority of the City's intention to do so, the City may in good faith contest any lien filed or established against the Property, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and will provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City. Installation of City 's Equipment. Under the Lease Agreement, the City may, at any time and from time to time in its sole discretion and at its own expense, install or permit to be installed items of equipment 15 or other personal property in or upon any portion of the Property. All such items will remain the sole property of the City in which neither the Authority nor the Trustee will have any interest and may be modified or removed by the City at any time provided that the City repairs and restores any and all damage to the Property resulting from the installation, modification or removal of any such items. Nothing in the Lease Agreement will prevent the City from purchasing or leasing items to be installed under a lease or conditional sale agreement, or subject to a vendor's lien or security agreement, as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest will attach to any part of the Property. FINANCIAL GUARANTY INSURANCE The Insurance Policy Concurrently with the execution and delivery of the Certificates, the Insurer will issue the Policy. The Policy guarantees the scheduled payment of principal and interest with respect to the Certificates when due as set forth in the form of the Policy included as an exhibit to this Official Statement. Payment Pursuant to Policy [TO COME] The Insurer [TO COME] Available Information [TO COME] Rights of Insurer For a description of the rights of the Insurer under the Trust Agreement, see "APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS - Trust Agreement- Rights ofInsurer." CONSTITUTIONAL AMENDMENTS AND STATUTES AFFECTING CITY REVENUES AND APPROPRIATIONS From time to time, the California legislation adopts legislation or initiative measures are submitted to the electorate which limit revenues or appropriations of public agencies. The City cannot predict the impact on its revenues or appropriations from such measures should they be enacted and upheld by the courts . Article XIIIA of the California Constitution Section l(a) of Article XIIIA of the State 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 counties and apportioned according to law. Section l(b) of Article XIIIA provides that the 1% limitation does not apply to ( 1) ad valorem taxes to pay interest or redemption charges on indebtedness approved by the voters prior 16 to July I, 1978, or (2) any bonded indebtedness for the acquisition or improvement of real property approved on or after July I, 1978 by two-thirds of the votes cast by the voters voting on the proposition, or (3) any bonded indebtedness incurred by a school district, community college district or county office of education for the construction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities approved after November 8, 2000, by 55% of the voters ofthe district or county, as appropriate, voting on 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" ("Full Cash Value"). 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 taxing jurisdiction, or may be reduced in the event of declining property value 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. The voters of the State subsequently approved various measures that further amended Article XIIIA. (Jne such amendment generally provides that the purchase or transfer of (i) real property between spouses or (ii) the principal residence and the first $1,000,000 of the Full Cash Value of other real property between parents and children, do not constitute a "purchase" or "change of ownership" triggering reappraisal under Article XIIIA. (Jther amendments permitted the State Legislature to allow persons over the age of 5 5 who meet certain criteria or "severely disabled homeowners" who sell their residence and buy or build another of equal or lesser value within two years in the same county, to transfer the old residence's assessed value to the new residence. Other amendments permit the State Legislature to allow persons who are either 55 years of age or older, or who are "severely disabled," to transfer the old residence's assessed value to their new residence located in either the same or a different county and acquired or newly constructed within two years of the sale of their old residence. In the November 1990 election, the voters approved an amendment of Article XIIIA to permit the State Legislature to exclude from the definition of "new construction" certain additions and improvements, including seismic retrofitting improvements and improvements utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings after November 6, 1990. Article XIIIA has also been amended to provide that there would be no increase in the Full Cash Value base in the event of reconstruction of property damaged or destroyed in a disaster. Section 4 of Article XIIIA provides that cities, counties and special districts cannot, without a two- thirds vote of the qualified electors, impose special taxes, which has been interpreted to include special fees in excess of the cost of providing the services or facility for which the fee is charged, or fees levied for general revenue purposes. Article XIIIB of the California Constitution State and local government agencies in California are each subject to annual "appropriations limits" imposed by Article XIIIB of the State Constitution ("Article XIIIB"). Article XIIIB prohibits government agencies and the State from spending "appropriations subject to limitation" in excess of the appropriations limit imposed. "Appropriations subject to limitation" are generally authorizations to spend "proceeds of taxes," which include all, but are not limited to, tax revenues, and the proceeds from (i) regulatory licenses, user charges or other user fees to the extent that such proceeds exceed 'the cost reasonably borne by that entity in providing the regulation, product, or service" (ii) the investment of tax revenues, and (iii) certain subventions received from the State. No limit is imposed on appropriations of funds which are not "proceeds of taxes," appropriated for debt service on indebtedness existing prior to the passage of Article XIIIB or authorized by the voters or appropriations required to comply with certain mandates of courts or the federal government. 17 As amended at the June 5, 1990, election by Proposition Ill, Article XIIIB provides that, in general terms, a city's appropriations limit is based on the limit for the prior year adjusted annually to reflect changes in cost ofliving, population and, when appropriate, transfer of financial responsibility of providing services from one governmental unit to another. Proposition III liberalized the aforementioned adjustment factors as compared to the original provisions of Article XIIIB. If city revenues during any two consecutive fiscal years exceed the combined appropriations limits for those two years, the excess must be returned by a revision of tax rates or fee schedules within the two subsequent fiscal years. Section 7900, et seq. of the California Government Code defines certain terms used in Article XIIIB and sets forth the methods for determining the appropriations limits for local jurisdictions. The City's appropriation limit for Fiscal Year 2007-08 is $84,096,724. It has been determined that $50,215,016 of the City's Fiscal Year 2007-08 budgeted appropriations is subject to the limitation, and the City is therefore $33,881,707 under the appropriations limit for Fiscal Year 2007-08. Article XIIIC and Article XIIID of the California Constitution ()n November 5, 1996, the voters ofthe State approved Proposition 218, the "Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which contain a number of provisions affecting the ability ofthe City to levy and collect both existing and future taxes, assessments, fees and charges. 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 majorityvote and taxes for specific purposes, even if deposited in the general fund, require a two-thirds vote. The voter approval requirements of Article XIIIC reduce the City's flexibility to deal with fiscal problems by raising revenue through new or extended or increased taxes and no assurance can be given that the City will be able to raise taxes in the future to meet increased expenditure requirements. Article XIIID contains several new provisions making it generally more difficult for local agencies to levy and maintain "assessments" for municipal services and programs. "Assessment" is defined to mean any levy or charge upon real property for a special benefit conferred upon the real property. This definition applies to landscape and maintenance assessments for open space areas, street medians, street lights and parks . Article XIIID also contains several new provisions affecting a "fee" or "charge," 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 user fees or charges 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) with respect to any parcel or person, exceed the proportional cost of the service attributable to the parcel, (iv) are for a service not actually used by, or irnmediately available to, the owner of the property in question, or (v) 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. 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 ofthe owners ofthe identified parcels, the City may not impose or increase the fee or charge. Moreover, except for fees or charges for sewer, 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. In addition to the provisions described above, Article XIIIC removes prohibitions and limitations on the initiative power in matters of any "local tax, assessment, fee or charge." Consequently, the voters of the City could, by future initiative, repeal, reduce or prohibit the future imposition or increase of any local tax, 18 assessment, fee or charge. "Assessment," "fee" and "charge," are not defined in Article XIIIC and it is not clear whether the definitions of these terms in Article XIIID (which are generally property-related as described above) would limit the scope of the initiative power set forth in Article XIIIC. If the Article XIIID definitions are not held to limit the scope of Article XIIIC initiative powers, then the Article XIIIC initiative power could potentially apply to revenue sources that currently constitute a substantial portion of general fund revenues. No assurance can be given that the voters of the City will not, in the future, approve initiatives that repeal, reduce or prohibit the future imposition or increase of local taxes, assessments, fees or charges. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination. The City imposes some taxes, assessments, fees and charges that could be affected by Proposition 218. To date, Proposition 218 has not impacted the revenues that are available to the City to make the Lease Payments required pursuant to the Lease Agreement. ProDosition lA As part of Governor Schwarzenegger's agreement with local jurisdictions, Senate Constitutional Amendment No.4 was enacted by the Legislature and subsequently approved by the voters as Proposition lA ("Proposition lA") at the November 2004 election. Proposition lA 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 revenues as of November 3, 2004. Beginning with Fiscal Year 2008-09, the State will be able to borrow up to 8% of local property tax revenues within a county, 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 Legislature approves the borrowing. The amount borrowed is required to be paid back within three years. The State also will not be able to borrow from local property tax revenues for more than 2 fiscal years within a period of 10 fiscal years. In addition, the State cannot reduce the local sales tax rate or restrict the authority of local governments to impose or change the distribution of the statewide local sales tax. The 8% loan oflocal property tax revenues is an aggregate amount within a county, and the actual impact to the county and cities or special districts within a county may be more than, or less than, 8%. On January 10, 2008, the Governor presented a proposed Fiscal Year 2008-09 State budget and declared a fiscal emergency which triggers a special session of the Legislature and gives Legislators 45 days to act on short term solutions. The proposed Fiscal Year 2008-09 budget, provides for a 10 percent across- the-board cut in Fiscal Year 2008-09 budget expenditures. It is not known whether the Governor and Legislature will utilize the Proposition lA provisions allowing the State to borrow up to 8% oflocal property tax revenues, calculated on a county-wide basis, as a means to address the State deficit. See "STATE OF CALIF< lRNIA BUDGET INF( lRMATH IN'' herein. Proposition lA also prohibits the State from mandating activities on cities, counties or special districts without providing for the funding needed to comply with the mandates. Beginning in Fiscal Year 2005-06, if the State does not provide funding for the mandated activity, the requirement on cities, counties or special districts to abide by the mandate would be suspended. In addition, Proposition lA expanded the definition of what constitutes a mandate on local governments 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 Proposition lA do not apply to schools or community colleges or to mandates relating to employee rights. ProDosition 62 A statutory initiative (''Proposition 62") was adopted by State voters at the November 4, 1986 General Election, which (1) requires that any tax for general governmental purposes imposed by local governmental entities be approved by resolution or ordinance adopted by two-thirds vote ofthe governmental agency's legislative body and by a majority of the electorate of the governmental entity voting in such election, (2) 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 ofthe voters within that 19 jurisdiction voting in such election, (3) restricts the use of revenues from a special tax to the purpose or for the service for which the special tax was imposed, (4) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (5) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities and (6) requires that any tax imposed by a local governmental entity on or after August 1, 1985, be ratified by a majorityvote of the electorate voting in such election within two years of the adoption of the initiative or be terminated by November 15, 1988. Proposition 62 requirements are generally not applicable to general taxes and special taxes levied prior to its November 4, 1986 effective date. ()n September 28, 1995, the California Supreme Court filed its decision in Santa Clara County Local Transportation Authority v. Carl Guardino, 11 Ca!. 4th 220 (1995) (the "Santa Clara decision"), which upheld a Court of Appeal decision invalidating a 1/2-cent countywide sales tax for transportation purposes levied by a local transportation authority. The California Supreme Court based its decision on the failure of the authority to obtain a two-thirds vote of the electorate for the levy of a "special tax," as required by Proposition 62. The Santa Clara decision did not address the question of whether or not it should be applied retroactively. In deciding the Santa Clara case on Proposition 62 grounds, the California Supreme Court disapproved the decision in City ofFVoodlake v. Logan, 230 Ca!. App. 3d 1058 (1991) ("FVoodlake"), where the Court of Appeal had held portions of Proposition 62 unconstitutional as a referendum on taxes prohibited by the California Constitution. The California Supreme Court determined that the voter approval requirement of Proposition 62 is a condition precedent to the enactment of each tax statute to which it applies, while referendum refers to a process invoked only after a statute has been enacted. Numerous taxes to which Proposition 62 would apply were imposed or increased without voter approval in reliance on FVoodlake. The California Supreme Court notes as apparently distinguishable, but did not confirm, the decision in City of FVestminster v. County of Orange, 204 Ca!. App. 3d 623 (1988), which held unconstitutional the provision of Proposition 62 requiring voter approval of taxes imposed during the "window period" of August 1, 1985 until November 5, 1986. Proposition 62 as an initiative statute does not have the same level of authority as a constitutional initiative, but is analogous to legislation adopted by the State Legislature. After the passage of Proposition 218, certain provisions of Proposition 62 (e.g. voter approval of taxes) are governed by the State Constitution. Following the Guardino decision upholding Proposition 62, several actions were filed challenging taxes imposed by public agencies since the adoption of Proposition 62. On June 4, 2001, the California Supreme Court released its decision in one of these cases, HowardJarvis T{[~payers Association v. City of La Habra, et al. ("La Habn!''). In this case, the California Supreme Court held that a public agency's continued imposition and collection of a tax is an ongoing violation upon which the statute of limitations period begins anew with each collection. The California Supreme Court also held that, unless another statute or constitutional rule provided differently, the statute of limitations for challenges to taxes subject to Proposition 62 is three years. Accordingly, a challenge to a tax subject to Proposition 62 may only be made for those taxes received within three years of the date the action is brought. The City does not believe any of the taxes constituting City revenues are levied in violation of Proposition 62. ProDosition 111 Proposition Ill, entitled the Traffic Congestion Relief and Spending Act of 1990 was approved by the voters on June 5, 1990. Proposition 111 changes the formula which allows for adjustments in the expenditure limits under Article XIIIB. Rather than adjusting the limit by the percentage change in the California Consumer Price Index, Proposition III adjusts it by the percentage change in California Personal Income per capita. Local governments are given the option of using Personal Income per capita or the change in local assessment rolls for new, nonresidential construction as the basis for adjusting their limits. This change allows local governments' expenditure limits to reflect economic growth particularly in rapidly growing communities. Furthermore, Proposition III allows the averaging of two years' tax revenues before requiring action regarding excess tax revenues. 20 Future LeQ:islation or Initiatives Article XIIIA, Article XIIIB and Propositions 62, 218 and IA were each adopted as measures that qualified for the ballot pursuant to the State's initiative process. From time to time legislative measures may be approved by the State Legislature or other initiative measures may be submitted to the electorate containing similar or other limitations on taxes, assessments, fees, charges or other rights of the electorate. Accordingly, the Authority and the City cannot now determine what the precise effect of any such legislation, if approved by the Legislature or initiatives, if approved by the voters, upon the City's operations and financial obligations will be. THE AUTHORITY The Authority was established pursuant to a Joint Exercise of Powers Agreement, dated April 10, 2001 (the "Joint Powers Agreement"), by and between the City and the Redevelopment Agency of the City ofTemecula. The Joint Powers Agreement was entered into pursuant to the provisions of Articles I through 4 (cornmencing with Section 6500) of Chapter 5, Division 7, Title I of the Government Code of the State of California. The Authority was formed for the primary purpose of assisting in the fmancing and refinancing of public capital improvements in the City. The Authority is administered by a five-member Board of Directors, which currently consists of the members of the City Council of the City. The Authority has no independent staff. The Executive Director of the Authority is the City Manager of the City, and the Treasurer of the Authority is the City's Finance Director. The Executive Director administers the day-to-day affairs of the Authority, and the Finance Director has custody of all money of the Authority from whatever source. THE CITY OF TEMECULA General Following a vote by the residents on November 7,1989, the City incorporated under the general laws of the State of California on December I, 1989. The City has a Council-Manager form of govemment, and is represented by the five members of the City Council who are elected at-large to serve a four-year term. The Mayor is selected annually by the members of the City Council. Located on Interstate 15, the City is the 11th largest city in the Inland Empire and the 4th largest in Riverside County, encompassing approximately 30 square miles. The City of Temecula is approximately 85 miles southeast of Los Angeles, 60 miles north of San Diego, 61 miles southeast of (Jrange County, and 20 miles inland from the cities of San Juan Capistrano and Oceanside. The City's approximately 97,935 residents are offered a broad range of housing options from apartments to luxury custom homes. The City, either directly or by contract, provides police, fire, animal control, building safety regulation and inspection, street lighting, beautification, land use planning, zoning, housing and community services, maintenance and improvement of streets and related structures and traffic safety maintenance and improvement. Refuse collection is provided by the Temecula Cornmunity Services District (the "TCSD") through a contract with a private company. The TCSD was also established in 1989 and is also responsible for providing parks, recreation services and cultural programs to the citizens ofTemecula, as well as street lighting and slope maintenance in certain areas of the TCSD. (Jther governmental entities, such as the State of California, the County and various school, water and other districts, also provide various levels of service within the City. However, the City Council does not have a continuing oversight responsibility over these other governmental entities. Water and sewer services are provided by the Rancho California Water District. 21 Em ployee Relations As of January 1, 2008, the City employs approximately 210.75 full-time employees. The City currently contracts for police, fire, and animal control services with Riverside County. The Teamsters Union currently represents non-management employees in the City. Accounting Policies and Financial Reporting The government -wide, proprietary fund and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities ofthe current period. For this purpose, the City considers revenues to be available ifthey are collected within 180 days ofthe end of the current fiscal period, except for property taxes, which the City considers available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, are recorded only when payment is due. The governmental funds used to liquidate compensated absences are the General Fund and Cornmunity Services District Fund. Proprietary funds distingnish operating revenues and expenses from nonoperating items. (lperating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's proprietary funds are charges to customers for sales and services. (lperating expenses include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. In accordance with Governmental Accounting Standards Board ("GASB") Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the City has elected to apply all applicable GASB pronouncements as well as any applicable pronouncements of the Financial Accounting Standards Board, the Accounting Principles Board or any Accounting Research Bulletins issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements and Interpretations), are accounting principles generally accepted in the United States of America. In June 2004, GASB issued Statement No. 45 ("GASB 45"), Accounting and Financial Reporting by Employers for Post Employment Benefits Other than Pensions, which addresses how state and local governments should account for and report their costs and obligations related to post employment healthcare and other non-pension benefits. Collectively, these benefits are commonly referred to as other post employment benefits ('XlPEB"). (See 'Xlther Post Retirement Benefits" below.) GASB 45 generally requires that employers account for and report the annual cost of (lPEB and the outstanding obligations and cornmitments related to (lPEB in essentially the same manner as they currently do for pensions. Annual (lPEB cost for most employers will be based on actuarially determined amounts that, if paid on an ongoing basis, generally would provide sufficient resources to pay benefits as they come due. GASB 45's provisions may be applied prospectively and do not require the City to fund its (lPEB plan. An employer may establish its OPEB liability at zero as of the beginning of the initial year of implementation, however, the unfunded actuarial liability is required to be amortized over future periods. GASB 45 establishes disclosure requirements for information about the plans in which an employer participates, the funding policy followed, the actuarial valuation process and assumptions, and, for certain employers, the extent to which the plan has 22 been funded over time. GASB 45 is likely to result in a substantial increase in the annual expense recognized by state and local governments for post-employment health care and other non-pension benefits. GASB 45 is effective for the City starting with the Fiscal Year ending June 30, 2008. The City of Temecula Retiree Health Care Plan, Actuarial Valuation Report as of June 30, 2007 prepared by Gabriel Roeder Smith & Company, Consultants & Actuaries reports a liability of $3,572,029, for which the City has set-aside and reserved this entire amount. The City is in the process of formally establishing an irrevocable trust and related investment management contracts and agreements with CalPERS with an expected implementation date by March 31, 2008. Furthermore, the City's actuarial report has validated the City's prudent financial management of the GASB 45 liability since the City immediately started funding the benefits it provides to retirees at the time of adoption. The City is in a very small group of local government entities which have successfully fully-funded their respective GASB 45 obligations. Retirement System The City contributes to the California Public Employees' Retirement System ("CalPERS"), an agent multiple-employer public employee defined benefit pension plan for all authorized employees. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a cornmon investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State statute and City ordinance, with the City providing benefits based on a "2.5% at 55" formula. The City makes the required 8% contributions on behalf of all authorized employees in addition to the required actuarially determined rate. The rate of covered payroll is 1.649% for Fiscal Year 2007-08. All full-time employees are eligible to participate in CalPERS and become vested in the system after five years of service. City contributions (including the employees' portion of payments) to the pension benefit plan were approximately $2,962,575 in the Fiscal Year ended June 30, 2007, and it has budgeted approximately $3,260,128 for the Fiscal Year ended June 30, 2008. In addition to the pension benefits, the City maintains a deferred compensation plan. All full-time employees of the City are eligible for participation in both plans. Contributions to the deferred compensation plan are primarily from employees with a small amount from the City. Retired employees can purchase certain health care benefits through CalPERS and the City contributes specified amounts with respect thereto. While the actuarial valuation for June 30, 2006 indicates the City has a $7,037,706 unfunded liability for the City's Pension Plan, the funded ratio at that time was approximately 76.5% and the City does not anticipate any financial impacts related to its retirement contribution rates which have remained unchanged from year to year for the past several years. For information regarding retirement plans, deferred compensation plans, defined contribution plans and post employment benefits, see Notes 8, 9, 10 and 14 in APPENDIX B - "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF TEMECULA." Other Post Retirement Benefits The City of Temecula has a defined benefit plan that provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. The plan is part of the Public Agency portion of CalPERS, an agent multiple-employer plan administered by C AlPERS. An actuarial basis is used to determine the amount necessary to fund the benefits for its members. The City pays 100 percent for the employer and employee share of funding this plan. Upon retirement, the City will continue to pay the employer's contribution rate, an amount not to exceed 8 percent of each represented employee's gross compensation to the extent allowable by law. As noted above, the City has set-aside and reserved the entire amount identified related to its (lPEB plan and the City is in the process of formally establishing an irrevocable trust and related investment management contracts and agreements with CalPERS with an expected implementation date by March 31, 2008. Certain provisions of the Small Business Job Protection Act (the "Act") affected Internal Revenue Code Section 457 plans by eliminating the requirement that Section 457 plan assets legally remain the assets of the sponsoring government. The Act requires that amounts deferred under a Section 457 plan be held in trust for the exclusive benefit of participating employees and not be accessible by the government or its creditors. 23 The City has implemented GASB 32, "Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans." The assets have been transferred into a trust, and are no longer subject to claims of the City's general creditors, and are no longer considered the assets of the City. The plan permits all City employees to defer a portion oftheir salary until future years. The amount deferred is not available to employees until termination, retirement, death or unavoidable emergency. The City's project employees (part-time, temporary) are provided pension benefits through a defined contribution plan. Federal legislation requires contribution of at least 7.5% to a retirement plan. The City and the employee each contribute 3.75% of the employee's salary into the plan. The City's contribution is fully vested immediately. Medical benefits are provided at time of retirement for all represented employees of the City who meet the eligibility requirement as defined as a CalPERS service or industrial disability retirement. In addition to the pension benefits described in Note 7 of APPENDIX B - "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF TEMECULA," the City provides post retirement health care benefits in accordance with memorandum of understanding agreements signed between the City and the various labor groups. Employees who retire from the City under the CalPERS retirement plan are eligible to have their medical, dental and life benefits continued in accordance with their eligibility level at retirement, subject to an annual contribution cap of$9,600 for each employee. The City's regnlar health care benefit providers underwrite the retirees' policies. Retirees may not convert the benefit into an in-lieu payment to secure coverage under independent plans. As of year-end, there are 12 retired employees receiving post retirement benefits. The City finances the plan on a pay-as-you-go basis. For the year ended June 30, 2007, the City recognized as incurred $48,009 of expenditures. There are no retiree contributions received. Risk Management For Fiscal Year 2007-08, the City is self-insured for general and auto liability claims up to $150,000. For amounts in excess of $150,000 and up to $10,000,000 per occurrence with an aggregate coverage of $10,000,000, the City has purchased insurance coverage. The City maintains workers compensation insurance coverage through American Insurance Group. The City's insurance policies are reviewed each year and the term could change. The City's risk management program focuses on proactive identification of exposures to eliminate any potential impacts to public safety and welfare. This is accomplished through effectively monitoring City programs, particularly those in the Community Services and Public Works Departments, and providing clear gnidance to correct those situations where exposures have been identified. Additionally, the City works closely with all contracted insurance carriers to ensure that the transfer of liability occurs timely, when applicable. Seismic Activity Seismic activity affecting Temecula is comparable to that affecting most surrounding areas in southern California. Like these other areas, it is possible that the Property or areas in the City could be adversely affected by seismic activity. Long Term Obligations While not an obligation of the General Fund ofthe City, in December 200 1, the TCSD, working with the Temecula Public Financing Authority, executed and delivered $6,465,000 of Certificates of Participation. The proceeds were used to refund the TCSD' s 1992 Certificates of Participation executed to finance the costs of construction of a community recreation center, finance a portion of the cost of construction of various recreational facilities, purchase a municipal bond debt service reserve insurance policy in lieu of cash funding a reserve fund and to pay certain expenses of the transaction. The defeased debt was redeemed on 24 October 1, 2002. Total 2001 Certificates of Participation outstanding as of February I, 2008, were $4,985,000. Other than the City's operating leases, and the obligations with respect to the Lease Payments, as of January I, 2008, the City had no long-term debt. Except for its community facilities district financings payable from special taxes levied by the applicable community facilities district, the Authority has no outstanding revenue obligations payable from funds paid to the Authority. For a discussion of the City's and its related agency's long term debt obligations, see Note 5 in APPENDLXB - "C( lMPREHENSIVE ANNUAL FINANCIAL REP( lRT (IF THE CITY (IF TEMECULA." See also, "- Direct and (lverlapping Debt" below. Capital Projects The City Council annually adopts the five-year Capital Improvement Program (CIP) budget, which serves as a planning tool to coordinate the financing and scheduling of major projects undertaken by the City. It is revised to address changing needs, priorities and financial conditions. The budget is developed by key management based on community comments and feedback, availability of funding and priority ranking guidelines set by the City Council. Through workshops, the needs are identified by area, i.e., Circulation, Infrastructure/( lther, Parks and Redevelopment Agency. The Fiscal Years 2008-2012 CIP budget identifies 82 projects with a total estimated costs of $416,055,573. Proposed expenditures for Fiscal Year 2007-08 aggregate approximately $123,810,809. Number of Projects 26 25 20 11 82 Type of Project Circulation Infrastructure/Other Parks Redevelopment Costs of Projects $275309,(130 82,779,085 10,443,618 47.523.840 $416,055,573 The CIP budget includes projects with unspecified funding sources. These projects have been identified as necessary infrastructure for the City, and will require that funding sources be identified before the projects can commence. Administrative costs associated with managing these projects have been estimated (generally at five to twenty-five percent of estimated construction costs) and included in each project budget. Some of the major projects planned for construction in the next few years include the Project, the new French Valley Interchange, the ultimate interchange at Interstate-15 and State Route 79 South, the Old Town gymnasium and various park improvements. The following schedule identifies various funding sources generally anticipated for the projects listed above. 25 City of Temecula Capital 1m provement Projects Sources of Funding (2008-2012) Fundine: Sources(1) Development Impact Fees Feueral Grants State Grants City Reuevelopment Agency County Special Districts Other Amount $411340,668 15,522,616 52,615,856 66,489,466 41,563,614 119,787,919 49,163,969 12.844.269 $39832837~ (1) Certain fimding sources have restrictions as to the type of project costs which can be fimded. In some cases, a fimding source category of a capital improvement project has been identified generally and the specific fimding source within that fimding source category has not yet been identified, resulting in approximately $36 million in projects with unspecified specific fimding sources. A project will not proceed lmtil fimds are available through an identified fimding source. Source" City ofTemecula Capital Improvement Projects Budget 2007-08. Assessed Value of Taxable Property For assessment and collection purposes, property is classified either as "secured" or "unsecured," and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing State assessed property and property, the taxes on which are a lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll." Property tax revenues for Fiscal Year 2007-08 were derived from the following types of property (approximate percentages): 81. 7% residential, 5.5% commercial, 2.8% industrial, 1.9% unsecured and 8.1% other, of which 6.3% is vacant property. Shown below is a summary of estimated assessed valuations in the City of Temecula for the Fiscal Years 2000-01 through 2007-08 (inclusive of property within the boundaries of the Redevelopment Agency). 26 CITY OF TEMECULA ASSESSED AND ESTIMATED ACTUAL VALUE OF TA.XABLE PROPERTY FOR THE FISCAL YEARS 2000-01 THROUGH 2007-08 (Values in Thousands) Total Fiscal Secured and Real Estate Net Taxable Homeowners Year Unsecured Exemptions Assessed Value Exemption 2000-01 $3,821394 $(25,597) $3,807,797 $(61,464) 2001-02 4,563,253 (29,666) 4,533,587 (64,372) 2()()2-()3 5,2111,11]11 (33,3611) 5,167,6511 (68,938) 2003-04 6,201,896 (30,010) 6,171,886 (82,926) 2004-05 6,93 L291 (43,142) 6,888,149 (92,362) 211115-116 7,794,688 (53,2411) 7,741,448 (94,237) 2006-07 10,328,097 (51,063) 10,277,034 (108,654) 2007-08 11,836,051 (75,481) 11,760,969 (111,392) Source" Riverside County Assessor's qjfice Tax Levies and Delinquencies Net Total Assessed Value $3,740,333 4,469,215 5,1198,712 6,088,960 6,795,787 7,647,211 10,168,380 11,649,577 The Riverside County Tax Collector collects property tax levies for each fiscal year on taxable real and personal property which is situated in the County as of the preceding January 1. Unsecured taxes are due on March 1 of each year and become delinquent August 31. One half of the secured tax levy is due November 1, and becomes delinquent December 10; the second half is due February I, and becomes delinquent April 10. A ten percent penalty is added to any late instalhnent. Property owners may redeem defaulted properties upon payment of delinquent taxes and penalties. Such properties incur a redemption penalty of one and one-half percent ( 1. 5%) of the tax due per month. Properties may be redeemed under an instalhnent plan by paying current taxes, plus twenty percent (20%) of delinquent taxes for five (5) years. Interest accrues at one and one-half percent (1.5%) per month on the unpaid balance. If no payments have been made on delinquent taxes at the end of five fiscal years, the property is subject to public auction by the County Tax Collector as provided by law. Tax Rate The following table sets forth a typical general ad valorem tax rate for a tax rate area in the City. Tax rates on specific properties may increase due to overlapping special tax and assessment districts. There are approximately 97 tax rate areas in the City. The following table is for Tax Rate Area 013-004. 27 CITY OF TEMEClTLA Typical Total Tax Rate" (Per $100 Assessed Valuation) 2003 2004 2005 2006 2007 Basic County, City and School Levy 10000 10000 10000 10000 10000 ( )verlapping Rates: Various Water Districts School District Iotal 0.3200 0.3700 0.3490 0.3162 0.2485 11.11668 11.11482 11.113311 11.113311 11.119911 13868 14182 138211 13492 13475 Under Article XIIIA of the California Con<;t:itution, local agencies within the State of California can only levy an ad valorem ta.'\: rate for general obligation bonds. In addition, Article XIIIA of the California Constitution specifies that the cOlmties within the State of California may levy a basic ta.'\:rate, distributing the proceeds to the proper agencies. Total may not add due to fOlmding. Source: City ofTemecula Ca1tfomia Comprehensive Annual Financial Report Year EndedJune 30,2007. The following table sets forth the levy and collection for the City's share of property tax collections. [Review table:] CITY OF TEMEClTLA Property Tax Levies and Tax Collections Last Ten Fiscal Years Collected within the Fiscal Year of the Levy Iotal Collections to Date Fiscal Year Taxes Levied for Percentage Collections in Percentage Ended June 311, the Fiscal Year Amount of Levy Subsequent Years Amount of Levy 1998 $ 1233340 $1206,1 74 9780', $50,768 $ 1256,942 101.91', 1999 1297,037 1290,459 9949', 53,390 1343,849 10361', 2()()() 1,468,721 1,4611,2114 99420'0 51,566 1,511,7711 1()2.93O'o 2001 1,893,848 1,810,665 9561', 75,686 1,886,351 9960', 2002 2,145,106 2,1 93,463 102.250/0 99,460 2,292,923 106.89', 211113 2,483,384 2,489,1132 1()().23O'0 1115,1176 2,594,1117 1114.46'" 2004 2,923,1 96 2,824,269 96.620/0 109,537 2,933,806 100.36', 2005 3,317,949 3,1 93, 730 96.260/0 120,996 3,314,726 99.90', 211116 4,579,225 4,349,1176 94.97'" 251,1145 4,61111,121 11111 46'" 2007 5,334,622 4,751,074 8906', 475,692 5,226,766 97.98', Source: City ofTemecula, Califomia, Comprehensive Annual Financial Report Year EndedJune 30,200'7 Since the Fiscal Year ended June 30, 1994, the City has received its property tax revenues in accordance with the Teeter Plan. Under the Teeter Plan, the City is paid in full each year for the actual amount of property taxes levied, regardless of the amount of delinquencies. As delinquent property taxes are collected, they are kept by the County, including any penalties and interest. [REVIEW: After 1994, the differences between the total tax levy and the total collections are due to tax roll adjustments made during the year.] 28 The Temecula Redevelopment Agency also receives tax increment revenues derived from property tax assessments. As of Fiscal Year 2007-08, approximately 17.6% ($2,055,608,000) of the total City net total assessed value ($11,649,577,000) is within the project area of the Temecula Redevelopment Agency. Commercial Activity The City derives a significant portion of its general fund revenues from the receipt of its portion of sales taxes collected within the City. Not all sales tax revenues collected are paid to the City. Most of sales taxes collected in the City are paid to the State, with smaller portions paid to the Riverside County Transportation Commission and to the City. The table below summarizes the volume oftaxable transactions by type of business for the City during the five years ended 2006: CITY OF TEMEClTLA Taxable Transactions by Type of Business, Calendar Year 2002 - 2006' (In Thousands of Dollars) Type Retail Stores: Apparel Stores General Merchandise Stores Food Stores Eating and Drinking Places Home Furnish. & Appliances Bldg. Matrl. & Farm Implmts. Auto Dealers and Auto Supplies Service Stations (Jther Retail Stores Retail Stores Total All (Jther (Jutlets Totals All Outlets 'Calendar Year 2006 data through 3rd Quarter. C":alendar Year 2002 2003 2004 2005 $ 63,822 $ 78,633 $ 93,658 $ 118,716 3117,216 343,276 368,1148 4118,2115 64,443 69,564 63,242 66,932 149,612 175,741 193.312 210,692 83,828 1113,463 127,722 136,3211 127,1124 1411,453 175,1129 184,1119 440.344 513,401 557,058 600,906 91,452 124,918 1511,132 185,2511 248,4115 287.2811 324.3(J! 374.358 $L576,146 $ L836, 729 $2,052,502 $2.285.398 2811.827 312.631 368.538 344.988 $ L856,973 $2,149.360 $2,421.040 $2,630.386 SOllrce: State Board ~fEqllalizatio/1. Taxable Sales i/1 Caltfomia. Annual Reports 20061' $ 89,891 297,4511 54,397 168,732 87,9115 137,878 437.389 157,437 281.667 $L712,746 285.399 $1.998,145 The Director of Finance of the City is responsible for the preparation of a comprehensive annual financial report setting forth the financial condition of the City as of June 30 of each fiscal year. The latest completed report is for the year ended June 30, 2007. The Comprehensive Annual Financial Report is the official financial report of the City and is prepared following generally accepted accounting principles. The financial statements of the City for the Fiscal Year ended June 30, 2007 (the "Financial Statements"), have been examined by Diehl, Evans & Company, LLP, Irvine, California, independent certified public accountants, whose report thereon is included within Appendix B - "0 lMPREHENSIVE ANNlTAL FINANCIAL REPORT OF THE CITY OF TEMEClTLA". The complete copy of the Comprehensive Annual Financial Report of the City for the year ended June 30, 2007, which included the 29 Financial Statements as well as certain other supplemental and statistical information, is also available upon written request from the City, Department of Finance, 43200 Business Park Drive, Temecula, California 92589-9033, Attention: Director of Finance. Summary of Revenues and Expenditures The City receives only approximately 5.6% of the general property tax collected within the City. The major sources of General Fund revenues for the City are property tax revenues (approximately 10%), sales and use taxes (approximately 46.4%) and revenues from other agencies (approximately 11.5%), excluding Certificate proceeds. The City Council reviews and adopts an annual budget for the General and Special Revenue funds. These budgets are prepared on the modified accrual basis of accounting and such budgets are controlled to the overall fund level. The operating appropriations lapse at the fiscal year end. Appropriations for capital improvements are funded by the City Council to continue until the specific projects are completed. The following table summarizes general fund revenues, expenditures, transfers and ending fund balances for the City for Fiscal Years ending June 30, 2005, 2006 and 2007. See Appendix B herein for the complete audited report of the City for the year ending June 30, 2007. CITY OF TEMECULA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE (Year Ended June 30) REVENllES Taxes License and permits Intergovernrnental Charges for services Fines and forfeitures Investment income Other TOTAL REVENllES EXPENDITllRES Current General government Public safety Public works Community development Capital outlay Ie JT AL EXPENDITllRES EXCESS (IF REVENllES (lVER (llNDER) EXPENDITllRES OTHER FINANCING SOllRCES (lTSES); Transfers in Transfers out Actual Actual Actual FY 2004-05 FY 2005-06 FY2006-07 $32,894/191 $45,074,024 $45,694.463 4,786,930 5.486,534 5,884,122 6,5119,153 8117,729 1,751,1148 7,! 74.485 8,889,714 6,671,346 U56,891 L259,194 1,307,!74 U91,812 1,542,1 16 3.471,793 114,983 49,987 157,547 $53,828,345 $63, lii9,298 $64,937.493 $ 13,1 11,662 $ 16,1 48,564 $15,143,673 17,716,631 19,745,813 21,950,928 6,1I33,6lii 7,6611,252 8,6112,982 8,237,236 8,707.415 9,139,563 633,260 267,033 $45,732,399 $52,529,077 $54,837,!46 $ 8,1195,946 $ lii,5811,221 lii,lIIlJ,347 $1,728,1 85 $1, 728,81 III $2,81 U93 (4,6811,156) (6,11211.422) (6,969,111111) 30 Ie JI AL (JIHER FINANC'lNG S( JllR('ES (USES) ($2,951,971) ($4,291,622) ($4,157,807) NET (,HANGE IN FllND BALAN('ES $5,143,975 $6,288,599 $5,942,5411 FllND BALANCES AT BEGINNING OF YEAR AS RESTATED $26,557,220 $31,70U95 $37,989,794 FllND BALAN(,E AT END (IF YEAR $31,70U95 $37,989,794 $43,932,334 The above infonnation i~ derived from the financial ~tatement~ of the City The note~ to the financial ~tatement~ are an integral component of~uch financial ~tatement~. See. APPENDIX B - "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF lEMECULA." Source: City ofTemecula. 31 The following table presents a comparison summary of the City budget to the actual budget at year end for Fiscal Year 2005-06 and Fiscal Year 2006-07 as well as a summary of the budget approved for Fiscal Year 2007-08. CITY OF TEMECULA Budget Summary (Year Ended June 30) FISCAL FISCAL YEAR 05-06 FISCAL YEAR 06-07 YEAR 07 -08 REVENUES BUDGET ACTUAL BUDGET ACTUAL Budget Taxe~ $42.54(),555 $45Jl74Jl24 $45.319.523 $45.694.463 $50.365.280 Licenses and pennits 5,088,648 5,486,534 4,959,048 5,884,1 22 2,912,475 Intergovernmental 832,678 807,729 1,339,073 1,751,048 1.100.000 Charges for services 8,529,452 8.889.714 6,910,678 6,671,346 6,496,365 Fine~ and forfeiture~ 1,260J)()() 1.259.194 1,320.!)()() L307J 74 1,2()()J)()() Inve~tment income L03IJ)()() 1.542.116 L725J)()() 3,471,793 1,649J)()() Mi~cellaneou~ 52J)()() 49.987 50.952 157.547 119.()()() TOTAL REVENUES $59.334333 $63.109.298 $61.624.274 $64.937.493 $63842.120 EXPENDITURES General Government: City Council $413.486 $367,4()3 $464,715 $416J)()() $493.281 Community ~upport 750Jl63 69L076 4()(),750 338.166 25L4()() City manager LI0L885 1.068.493 1.237.989 1.174.140 1.294378 Cityc1erk 925376 887356 1.063.383 1.014.197 1.043.288 City attorney 800.000 604.601 800.000 681.011 760.000 Finance 1.888.800 1. 742.034 2.086.755 1.959.739 2.132.766 Per~onnel 589J)68 588.498 686.635 627.960 717.119 Nondepartmental 11.162.421 llU99.103 9.689.627 8.932.460 10.592J)86 Total General Government $17.631.099 $16.148.564 .$16.429.854 $15.143.673 $17.284.318 Public Safety Police $16.518.811 $16.195.593 $17.979.612 $17.685.965 $20.387.4 76 Fire 3.791.248 3.398.638 5.323.274 4.105366 5.771.026 Animal Control 160.000 151.582 160.000 159.597 170.000 Total Public Safety $20.470.059 $19.745.813 $23.462.886 $21.950.928 $26.328.502 Public Worb $9.337.295 $7.660.252 $10.993369 $8.602.982 $9.450.226 Community Development: Planning $3.597.845 $3.120374 $4.100.284 $3.277309 $3.791.350 Building and safety 3.088.768 2.852.030 3.139374 2.794.729 2.724.938 Land development 2.397314 1.925.575 2.690.205 2.168.543 2.020387 Economic development 857310 802.286 935.582 862.554 902.1 64 Di~a~ter relief 12.250 7.150 43J)89 36.428 II Total Community Development $9.953.487 $8.707.415 $10.908.534 $9.139.563 $9.438.839 Capital Outlay $292.118 $267J)33 TOTAL EXPENDITURES $57.684.058 $52.529.077 $61.794.643 $54.837.146 $62.501.885 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES $1.650.275 $10.580.221 (170.369) $10.100.347 $1.340.235 OTHER FINANCING SOURCES (USES): Tran~er~ in $1.728.800 $1.728.800 $2.811.509 $2.811.193 1.822.5()() Tran~er~ out (6J)20.422) (6.020.422) (6.969.00()) (6.969.00()) (1.327.364) TOTAL OTHER FINANCING SOURCES (USES) (4.291.622) 4.291.622) (4.157.491l (4.157.807) 495.136 NET CHANGE IN FUND BALANCE (2.641.347) 6.288.599 (4327.86()) 5.942.540 1.835371 FUND BALANCE AT BEGINNING OF YEAR $31.701.195 $31.701.195 $37.989.794 $37.989.794 $43.932334 FUND BALANCE AT END OF YEAR $29.059.848 $37.989.794 $33.661.934 $43.932.334 $44.427.470 32 The table below shows the General FundBalance Sheet for the Fiscal Years 2004-05 through 2006-07: CITY OF TEMEClTLA General Fund Balance Sheet Fiscal Year 2004-05 - 2006-07(1) Fiscal Year 2004-05 Fiscal Year 2005-06 Fiscal Year 2006-07 ASSETS Assets: Cash and investments Interest receivable Ta.'\:es receivable ACcOlmts receivable Notes receivable Intergovernmental receivable Other receivables Due from other fimd<; (Note 4) Advances to other fimd<; (Note 4) Inventory Deposits Total Assets LIABILITIES AND FUND BALANCES Liabilities: ACcOlmts payable Accmed payroll Deposits Deferred revenues Total Liabilities FUND BALANCES $33,015,217 $46,512,818 $48,688,608 362,990 570)20 725,137 1,018,569 3,058) 14 1)19)01 147)35 127,375 256,820 22)49 7)82,570 4)38)86 4,585,676 25,180 177,127 344,460 165)08 26,883 2)80,927 2,072,558 1,984,552 4,875 4)74 3,147 136.347 60.339 110.881 $44,675,690 $56,831.041 ~57,523,O12 $2,656,543 $4,699,378 $4,882,356 6,327,157 8,932) 73 5,486,340 1)88) 79 2) 77,549 1)21,029 2.702.606 3.032.147 2.000.953 $12.974.495 $18841247 $13.590.678 Reserved: EnclUllbrances Long-term assets: Inventory Deposit and prepaid items Umeserved: Designated(ci Undesignated Total Flmd Balances Total Liabilities and Flllld Balances $1,890,854 $ U38,896 $1,813)48 256,820 4,875 4)74 3,147 136,347 60,339 110,881 $22,104,169 $20,017) 79 $20,598,499 5.237.353 15.298.929 20.335.782 $3L70Ll95 $37989 794 $49.932.334 $44.675.690 $56,831.041 $57,523,012 (11 See Independent Audit Report and note~ to ba~ic financial ~tatement~. '"' A portion of the amount shO\vn for Fiscal Year 2006-07 as a designated amount of the unreserved fund balance will be used to acquire and con~truct a portion of the co~t~ of the Project. The above infonnation i~ derived from the financial ~tatement~ of the City The note~ to the financial ~tatement~ are an integral component of~uch financial statements. See, APPENDIX B - "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF TEMECULA." Source: City ofTemecula. 33 The components of the Unreserved Fund Balance was comprised of the following at June 30, 2007: Components of General Fund U ureserved Fund Balance Designated Continuing Appropriations Economic Uncertainty Comprehensive Leave Open Space Retiree Health Dutch Village Liberty Quarry Project SB621 (Tasinl Future elP Total Designated Undesignated Total Umeserved $ 200,543 12)99,321 1,415,494 506226 3,574,851 150,000 266,908 857,792 L327.364 $20.598.499 $20,335,782 $40,934,281 Information regarding the reserved fund balance is set forth in Note 7 of the financial statements included within Appendix B. Investments The City Council annually adopts an investment policy, which is intended to minimize credit and market risks while maintaining a competitive yield on its portfolio. During each fiscal year, idle funds are deposited in accordance with the policy in demand deposit accounts and invested primarily in a pooled investment account administered by the State of California. Investment income totaled $3,471,793 for the General Fund for the Fiscal Year ended June 30, 2007, or about 5.3% of the total City General Fund revenues. The City's portfolio earned monthly annualized rates of return ranging from 1.100 to 4.4100 on pooled investments, from .8% to 2.16% on the investment of cash held by fiscal agents and 5.58% on bond proceeds invested in bank investment agreements. At all times, the investment policy is to be adhered to, and safety and liquidity objectives placed above rates of return considerations in making deposits and investments. All deposits during the year are to be either insured by the Federal Deposit Insurance Corporation or collateralized. The majority of the City's investments are in the Local Agency Investment Fund (state pool). The State pool generally is not categorized in terms of credit risk in accordance with guidelines of the Government Account in Standards Board. Nevertheless, given the size and liquidity of the pool, the investment policies governing the pool, and the investment expertise of the pool's management, it is believed that these investments conform to the City's investment policy. The investment policy provides that the portfolio be structured with sufficient liquidity to allow the City to meet expected cash requirements. This is to be accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands. Since all possible cash demands cannot be anticipated, the portfolio is to maintain a liquidity buffer and invest primarily in securities with active secondary and resale markets. The policy allows for the purchase of a variety of securities in compliance with the City Municipal Code, Chapter 3.04, Revenue and Finance, Fiscal Provisions Generally and California Government Code Sections 5922, 16429.1. 53600 to 53609, and 53630 to 53686. Copies of the City's investment policy can be obtained from the City's Finance Department. As of December 31, 2007, the market value of the balance on deposit in the City Treasury with respect to the General Fund was approximately $61,225,907.89. The market value and liquidity of the pool depends upon, among other factors, cash position and the maturity of various investments. The moneys on 34 deposit in the Local Agency Investment Fund may be withdrawn with one day's notice and the Federal Agency Callable Securities and Federal Agency Bullet Securities (see the table below) have an average maturity date of 4.5 years and 5.0 years, respectively, based on a 365 day year. [CITY WILL UPDATE AFTER REVIEW] The following is a summary of the Treasurer's Investment Pool as of December 31, 2007. Type ofInvestment Local Agency Investment Funds Federal Agency Callable Securities Federal Agency Bullet Securities Market Value 20,535,576.64 39,660,321.25 1,030,010.00 $61,225,907.89 Book Value % of Portfolio(1) 20,524,216.82 39,415,000.00 1,000,000.00 $60,939,216.82 33.5 64.8 1.7 100.00% ,1., As a percentage of the market value and excluding cash. Source: City's Finance Department. Direct and Overlapping Debt Set forth below is information prepared by California Municipal Statistics, Inc. and dated January 1, 2008. This information is included for general information purposes only. The Authority and the City have not reviewed this information and make no representations as to its completeness or accuracy. The information generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long term obligations are not payable from the revenues of the City. In many cases, long term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency. 35 CITY OF TEMEClTLA DIRECT AND OVERLAPPING DEBT 2()()7-08 A~~e~~eJ Valuation: Redevelopment Incremental Valuation: AJju~teJ A~~e~~eJ Valuation: $13.338.805A13 1.690.174.221 $11.648.631.192 OVERLAPPING TAX AND ASSESSMENT DEBT. Metropolitan Water District Ea~tern Municipal Water Di~trict, ID No. U-8 Temecula Valley Unified School District Rancho California Water Di~trict, Rancho Divi~ion Rancho California Water District, Santa Rosa Division Rancho California Water Di~trict Community Facilitie~ Di~trict No. 88-3 City of Temecula Community Services District Certificates of Participation Ea~tern Municipal Water Di~trict Community Facilitie~ Di~trict No. 2()()2-04 Eastern Municipal Water District Community Facilities District No. 2002-08 Ea~tern Municipal Water Di~trict Community Facilitie~ Di~trict No. 2005-38. LA. B Temecula Community Facilities District No. 88-12 Temecula Public Financing Authority CommunityFacilitie~ Di~trict No. 01-2 Temecula Public Financing Authority Community Facilities District No. 03-1 Temecula Public Financing Authority Community Facilitie~ Di~trict No. 03-2 Temecula Public Financing Authority Community Facilities District No. 03-3 Temecula Public Financing Authority Community Facilitie~ Di~trict No. 03-6 Temecula Valley Unified School District Community Facilities District No. 89-1 Temecula Valley Unified School Di~trict CommunityFacilitie~ Di~trict No. 2002-1. LA. No. Temecula Valley Unified School District Community Facilities District No. 2002-2 Temecula Valley Unified School Di~trict Community Facilitie~ Di~trict No. 2004-1. LA. A Temecula Valley Unified School District Community Facilities District No. 2005-1 County 1915 Act Bond~ (E~timated) City of Temecula 1915 Act Bonds TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND DEBT Riverside County General Fund Obligations River~ide County Pen~ion Obligation~ Riverside County Board of Education Certificates of Participation Mt. San Jacinto Community College Di~trict General Fund Obligation~ Rancho California Water District General Fund Obligations TOTAL GROSS OVERLAPPING GENERAL FUND DEBT Less: Riverside County self-supporting obligations Rancho California Water Di~trict General Fund Obligation~ (77 78%) ~elf-~upporting) TOTAL NET OVERLAPPING GENERAL FUND DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT %) Annlicable 0.65~'o 84.019 67.046 76.275 5.102 100. 100. 100. 100. 100. 100. 100. 100. 100. 100. 100. 100. 57435 100. 100. 21.484 Variou~ 100. 6.705% 6.705 6.705 16.637 58.712 Debt 1/1/08 $ 2,359,386 5,564,578 27.183,801 2,097,563 176,784 3,830,000 4,985,000 (1) 825,000 4,895,000 875,000 11.480.000 17,245,000 15.190,000 50A85,OOO 29A55,000 4,675,000 16,070,000 4.123.833 12,895,000 12,700,000 2.107.580 17,235,680 980.000 $247A34,205 $ 47,875.730 26,343,275 621.889 1.216.165 63.464.883 $139,521,942 1.210,373 49,362,985 $ 88.948.584 $386,956.147 (2) $336.382.789 (1) Exclude~ i~~ue to be ~old. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligation~. Ratio~ to 2007-08 A~~e~~ed Valuation: Direct Debt ($4,985,000) ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 0.040/0 Total Direct and Overlapping Tax and A~~e~~ent Debt 1.85%) Ratio~ to Adju~ted A~~e~~ed Valuation: Gross Combined Total Debt 3.32% Net Combined Total Debt 2.89%) STATE SCHOOL BUll.DING AID REPAYABLE AS OF 6/3()j07 $0 SOURCE. City ofTemecllla FinaJlce Department aJld California Afllnicipal Statistics, fne. 36 Litigation The City is presently involved in certain matters oflitigation that have arisen in the normal course of City business. City management believes, based upon consultation with the City Attorney, that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the City. STATE OF CALIFORNIA BlTDGET INFORMATION The following information concerning the State of California (the "State") 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 State 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 of California 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 City, and the City takes 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. Economic Conditions in California Since early 2001, the State has faced a series of financial challenges, challenges that may continue or reoccur in future years. The major forces involved in the State's economic downturn were sharp declines in the high technology, internet and telecommunications sectors, lower demand for exports, the effects of the events of September 11, 200 I, rising unemployment levels and large stock market declines. The downturn resulted in a serious erosion of the State's tax revenues. State finances had recovered but more recently, the downturn in the real estate market and other factors are adversely affecting State finances. 2008 Budget Act and 2009 Proposed Budget On August 24,2007, the Governor sigued the State Budget Act for Fiscal Year 2007-08 (the "2008 Budget Act"). The 2008 Budget Act assumed a carryover balance from Fiscal Year 2006-07 of$4.8 billion. The 2008 Budget Act projected $102.3 billion in revenues for Fiscal Year 2007-08 and authorized the expenditure of an equal amount, leaving the State's General Fund with a year-end reserve of $4.1 billion. Even though the expenditures authorized under the 2008 Budget Act did not exceed the projected revenues for Fiscal Year 2007-08, the State was anticipated to face operating shortfalls in both Fiscal Years 2008-09 and 2009-10. According to the LAO, the shortfall in future years is due to the fact that many of the State's solutions enacted in the 2008 Budget Act are one-time in nature. For example, the State assumes $1 billion in one-time revenues from the sale of EdFund, the State's nonprofit student loan guaranty agency, $293 million in General Fund revenues from amended tribal gaming compacts and $600 million in General Fund revenues due to the transfer from the State's tobacco securitization fund, which transfer was originally scheduled for Fiscal Years 2008-09 and 2009-10. In addition, due to the fluctuation in estimates of State revenues in Fiscal Year 2006-07, the 2008 Budget Act assumes no additional Proposition 98 funding for Fiscal Year 2006-07. If, however, the finalized revenue figures for Fiscal Year 2006-07 are higher than expected, the State will automatically owe a settle-up payment of approximately $411 million for Fiscal Year 2006-07 Proposition 98 funding, which will be paid out of the State's reserve. The 2008 Budget Act also uses $567 million of one-time and special fund moneys to support Fiscal Year 2007-08 K-12 costs, which results in the State entering Fiscal Year 2008-09 with a large ongoing shortfall for K-12 education. 37 As of January 2008, a number of assumptions made with respect to the Fiscal Year 2007-08 have not occurred, and there are now projections that the State faces an approximately $3 Billion deficit in Fiscal Year 2007-08 and a $14 Billion deficit in Fiscal Year 2008-09, absent revisions to the State Budget. As noted above, on January 10, 2008, the Governor presented a proposed Fiscal Year 2008-09 State budget and declared a fiscal emergency which triggers a special session of the Legislature and gives Legislators 45 days to act on short term solutions. The proposed Fiscal Year 2008-09 budget, provides for a 10 percent across- the-board cut in Fiscal Year 2008-09 budget expenditures. It is not known whether the Governor and Legislature will utilize the Proposition IA provisions allowing the State to borrow up to 8% of local property tax revenues, calculated on a county-wide basis, as a means to address the State deficit. The City cannot predict what the State Legislature and the Governor will ultimately do with respect to the State budget or how that may affect revenues to the City. Future State Budgets The City cannot predict what actions will be taken in 2008 or in future years by the State Legislature and the Governor to address the current or future State budget deficits. The current and future State budgets are affected by national and state economic conditions and other factors over which the City has no control. To the extent that the State budget process results in reduced revenues to the City, the City will be required to make adjustments to its budgets. SPECIAL RISK FACTORS The following factors, along with all other information in this Official Statement, should be considered by potential investors in evaluating the investment risks inherent in purchases ofthe Certificates. However, this section does not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the Certificates. 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 Certificates The obligation of the City to make Lease Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Certificates nor the obligation of the City to make Lease Payments under the Lease Agreement constitute a debt or indebtedness of the City, the County, the State or any other political subdivision, within the meaning of any constitutional or statutory debt limitation or restriction. The obligation of the City to make Lease Payments is in consideration of the right of the City to the continued use and possession of the Property. In the event of failure of such use and possession, the obligation of the City may be abated in whole or in part as described, except to the extent of special funds, such as proceeds of rental interruption insurance, amounts in the Reserve Fund and! or the Lease Payment Fund. Although the Lease Agreement does not create a pledge, lien or encumbrance under the funds of the City, the City is obligated under the Lease Agreement to pay the Lease Payments from any source of legally available funds, and the City has covenanted in the Lease Agreement that, for so long as the Property is available for its use, it will make the necessary annual appropriations within its budget for its Lease 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 Lease Payments. 38 Other ObliQ:ations The City has the authority 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 Lease Payments may be decreased. In the event that City's revenue sources are less than its total obligations, the City could choose to fund other activities before making Lease Payments and other payments due under the Lease Agreement. State Law Limitations on Revenues and Aoorooriations: State BudQ:et Deficits There are limitations on the ability of the City to increase revenues payable to the General Fund. The ability of the City to increase the ad valorem property taxes (which have historically been a primary source of revenues for cities in California) is limited pursuant to Article XIIIA of the State Constitution, which was enacted in 1978. Furthermore, Articles XIIIB of the California Constitution limits the amount that local governments can appropriate annually. In addition, California voters in 1986 approved an initiative statute that limits the imposition of new or higher taxes by local agencies, including the City. In 1996, voters approved Proposition 218, which added Articles XIIIC and XIIID to the State Constitution. See "CONSTITUTIONAL AND ST ATUTORYLIMIT ATIONS ONT ~XES AND APPROPRIATIONS." These same legal limitations generally restrict the ability of cities to increase fees in excess of the amount needed to provide the service or facilities with respect to which such fees are charged. Additional limitations may also be imposed through legislation or initiatives. The City receives a significant portion of its revenue from State sources or from sources which can be affected by State actions (e.g., the provisions of Proposition lA allowing the State to borrow up to 8% of local property tax revenues, calculated on a county-wide basis, as a means to address the State deficit). The State is facing a deficit in Fiscal Year 2007-08 of approximately $3 Billion and a projected deficit of approximately $14 Billion in Fiscal Year 2008-09, which the Governor and State Legislature will be addressing. Decreases in revenues received by the State can affect subventions made to the City and other cities in the State. The potential impact of State budget actions for future fiscal years on the City in particular, and other cities in the State generally, is uncertain at this time. See "STATE OF CALIFORNIA BUDGET INFORMATION." See also, APPENDIX B "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF TEMECULA." Furthermore, from time to time, legislation or initiatives may be enacted which restrict the authority of local governments to impose taxes, assessments, fees or charges. See "CONSTITUTIONAL AMENDMENTS AND STATUTES AFFECTING CITY REVENUES AND APPROPRIATIONS"herein. Abatement Use and Possession of the PrODertv. The obligation of the City under the Lease Agreement to make Lease Payments is in consideration for the use and possession of the Property. The obligation of the City to make Lease Payments maybe abated in whole or in part if the City does not have full use and possession of the Property, except to the extent of special funds, such as proceeds of rental interruption insurance, amounts in the Reserve Fund [(including funds available pursuant to the Surety Policy)] and/or the Lease Payment Fund. Dama"e or Destruction: Eminent Domain. If damage, destruction, flood, wildfire, title defects or eminent domain proceedings with respect to the Property result in abatement or adjustment of Lease Payments and the resulting Lease Payments, [together with moneys available under the Surety Policy] (and in the event of damage or destruction, together with rental interruption insurance proceeds, if any), are insufficient to make all payments of principal and interest due with respect to the Certificates during the 39 period that the Property is being replaced, repaired or reconstructed, then such payments of principal and interest may not be made in full and no remedy is available to the Trustee or the Owners of the Certificates under the Lease Agreement or Trust Agreement for nonpayment under such circumstances. The City, however, is obligated under the Lease Agreement to maintain casualty insurance (excluding earthquake insurance). While the City currently maintains earthquake insurance with an aggregate claims paying limit of $15,000,000, and with separate limits established for each Facility, the City is not required by the Lease Agreement to maintain any earthquake coverage and the City may discontinue such coverage at any time. See APPENDIX A "SUMMARY OF CERTAlN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS." No Obli"ation to Afaintain Earthauake Insurance: Natural Disasters. The obligation of the City to make Lease Payments may be adversely affected if the Property or any improvements thereon are damaged or destroyed by natural hazard such as earthquake, wildfire, flooding and! or landslide and thereby resulting in abatement of the City's obligations to pay the Lease Payments. The City, however, is not obligated under the Lease Agreement to keep, or cause to be kept, earthquake coverage. While the City currently maintains earthquake insurance with an aggregate claims paying limit of $15,000,000, and with separate limits established for each Facility, the City is not required by the Lease Agreement to maintain any earthquake coverage and the City may discontinue such coverage at any time. Natural disasters could also adversely affect economic activities in the City thereby negatively impacting the City's finances. Since the City lies in a seismically active region in the western United States, the area at and surrounding the Property may be subject to unpredictable seismic activity. These geological faults have the potential to cause serious earthquakes which could result in damages to buildings, roads, bridges and other properties within the City. The City is located within a regional network of several active and potentially active faults. For a description of these faults, see "THE CITY OF TEMECULA Seismic Activity." Limited Recourse on Default If the City defaults on its obligations to make Lease Payments with respect to the Property, the Trustee, as assignee of the Authority, may (subject to the restrictions described below) retain the Lease Agreement and hold the City liable for all Lease Payments on an annual basis and will have the right to re- enter and re-let the Property. Such re-entry and re-letting shall not effect a surrender of the Lease Agreement. Alternatively, the Trustee may terminate the Lease Agreement and proceed against the City to recover damages pursuant to the Lease Agreement. In the event the Property is repossessed by reason of a default in Lease Payments or for any other reason, there can be no assurance that the Property can be re-let for an amount sufficient to pay the Certificates or that such re-letting will not adversely affect the exclusion of any interest component oflease payments from federal or state income taxation. The Trustee is not empowered to sell the Property for the benefit of the Owners. In addition, due to the governmental function of the Property, it is not certain whether a court would permit the exercise of the remedies of repossession and re-letting with respect thereto. See "THE CERTIFICATES Source of Payment for the Certificates" and APPENDLX A "SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS." No Acceleration Unon Default If the City defaults on its obligations to make Lease Payments, the Trustee may have limited ability to re-let the Property so as to preserve the tax exempt nature of the interest component of the Lease Payments and the Certificates. In the event of a default, there is no remedy of acceleration of the total Lease Payments due over the term of the Lease Agreement and the Trustee is not empowered to sell the Property and use the proceeds of such sale to redeem the Certificates or pay principal and/or interest components 40 with respect thereto. The City will only be liable for Lease Payments on an annual basis, and the Trustee may be required to seek a separate judgment in each fiscal year for that fiscal year's Lease Payments. Any such suit for money damages would be subject to limitations on legal remedies against municipalities in California, including a limitation on enforcement of judgments against funds of a fiscal year other than the fiscal year in which the Lease Payments are due and against funds needed to serve the public welfare and interest. Bankruotcv In addition to the limitation on remedies contained in the Trust Agreement, the rights and remedies provided in the Trust Agreement and the Lease Agreement may be limited by and are subject to the provisions of federal bankruptcy laws, as now or hereafter enacted, and to other laws or equitable principles that may affect the enforcement of creditors' rights. Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs the bankruptcy proceedings for public agencies, there are no involuntary petitions in bankruptcy. If the City were to file a petition under Chapter 9 of the Bankruptcy Code, the Owners, 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. If a Bankruptcy Court were to determine that the Lease Agreement is a lease for the purposes of the Bankruptcy Code, the City would have the right to reject (i.e., terminate) the Lease Agreement. If the City elects to reject the Lease Agreement, the Property could be re-let for the benefit of the Owners, but there can be no assurance that the Property can be re-let for an amount sufficient to pay the Certificates or that such re-letting will not adversely affect the exclusion of any interest component of lease payments from federal or state income taxation. In addition, the Bankruptcy Code severely limits any claim for damages suffered as a result of rejection of a lease. No Liabilitv bv the Authoritv to the Owners The Authority shall not have any obligation or liability to the Owners with respect to the payment when due of the Lease Payments by the City, or with respect to the performance by the City of other agreements and covenants required to be performed by it contained in the Lease Agreement or the Trust Agreement, or with respect to the performance by the Trustee of any right or obligation to be performed by it contained in the Trust Agreement. ChanQ:es in Law There can be no assurance that the State Legislature will not at some future time enact legislation that will amend or create laws resulting in a reduction of moneys securing or available to pay the Certificates. Similarly, the California electorate has from time to time adopted initiatives amending the State Constitution and the laws of the State which have had the effect of limiting the City's ability to increase ad valorem taxes, which could result in a reduction of moneys available to the City to pay the Certificates. There can be no assurance that future initiatives having a similar effect will not be approved by the electorate. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON T~XES AND APPROPRIATIONS" herein. Hazardous Substances The City knows of no existing hazardous substances which require remedial action on or near the Property. However, it is possible that such substances do currently or potentially exist and that the City is 41 not aware of them. The City does not currently carry insurance covering the risks of hazardous substances. Owners and operators of real property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Superfund Act," is the most well known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it, Should hazardous substances exist near or on the Property, all of these possibilities could significantly and adversely affect the operations and finances of the City and/or the value of the Property. Investment of Funds Funds held under the Trust Agreement are required to be invested in Permitted Investments as provided under the Trust Agreement. See Appendix A attached hereto for a summary of the definition of Permitted Investments. All investments, including the Permitted Investments and those authorized by law from time to time for investments by municipalities, contain a certain degree of risk. Such risks include, but are not limited to, a lower rate of return than expected, decline in market value and loss or delayed receipt of principal. The occurrence of these events with respect to amounts held under the Trust Agreement or the funds and accounts held by the City could have a material adverse affect on the source of payment for the Certificates and! or the financial condition of the City. Tax Exemotion of the Certificates The City has covenanted in the Trust Agreement that it shall not use or permit the use of any proceeds of the Certificates or any funds of the Authority or the City, directly or indirectly, in any manner, and shall not take or omit to take any action that would cause the interest component of the Lease Payments to be included in the gross income of the Owners of the Certificates for federal income tax purposes. In the event the City fails to comply with the foregoing tax covenant, the interest represented by the Certificates may be includable in the gross income of the Owners thereof for federal tax purposes. See "T ~X MATTERS" herein. Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Certificates to be subj ect, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. As one example, on May 21, 2007, the United States Supreme Court agreed to hear an appeal from a KentuckY' state court which ruled that the United States Constitution prohibited the state from providing a tax exemption for interest on obligations issued by the state and its political subdivisions but taxing interest on obligations issued by other states and their political subdivisions. The introduction or enactment of any such future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Certificates. Prospective purchasers of the Certificates should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regnlations or litigation as to which Bond Counsel expresses no opmIOn. IRS Audit of Tax-Exemot ObliQ:ations 42 The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax- exempt obligations, including both random and targeted audits. It is possible that the Certificates will be 43 selected for audit by the IRS. It is also possible that the market value of the Certificates might be affected as a result of such an audit of the Certificates (or by an audit of similar obligations). Back-uD WithholdinQ: Commencing with interest paid in 2006, interest paid with respect to tax-exempt obligations such as the Certificates is subj ect to information reporting to the IRS in a manner similar to interest paid on taxable obligations. In addition, interest with respect to the Certificates may be subject to back-up withholding if such interest is paid to a registered owner that (a) fails to provide certain identifying information (such as the registered owner's taxpayer identification number) in the manner required by the IRS, or (b) has been identified by the IRS as being subject to back-up withholding. TA,X MATTERS Federal tax law contains a number of requirements and restrictions which apply to the Certificates, including investment restrictions, periodic payments of arbitrage profits to the United States of America, requirements regarding the proper use of bond proceeds and facilities financed therewith, and certain other matters. The City has covenanted to comply with all requirements that must be satisfied in order for the interest with respect to the Certificates to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest with respect to the Certificates to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the Certificates. Subject to the City's compliance with the above-referenced covenants, under present law, in the opinion of Quint & Thimmig LLP, San Francisco, California, Special Counsel, interest with respect to the Certificates is excludable from the gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations. Interest with respect to the Certificates is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. The Internal Revenue Code of 1986, as amended (the "Code"), includes provisions for an alternative minimum tax ("AMI") for corporations in addition to the corporate regular tax in certain cases. The AMT, if any, depends upon the corporation's alternative minimum taxable income ("AMTI"), which is the corporation's taxable income with certain adjustments. One of the adjustment items used in computing the AMII of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation's "adjusted current earnings" over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). "Adjusted current earnings" would include all tax exempt interest, including interest with respect to the Certificates. In rendering its opinion, Special Counsel will rely upon certifications of the City with respect to certain material facts within the City's knowledge. Special Counsel's opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result. Ownership of the Certificates may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profit tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Certificates should consult their tax advisors as to applicability of any such collateral consequences. 44 The issue price (the "Issue Price") for the Certificates is the price at which a substantial amount of the Certificates is first sold to the public. The Issue Price of a maturity of the Certificates may be different from the price set forth, or the price corresponding to the yield set forth, on the cover page hereof. There are or may be pending in the Congress of the United States of America legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters, referred to above or adversely affect the market value of the Certificates. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to Certificates executed and delivered prior to enactment. Prospective purchasers of the Certificates should consult their own tax advisors regarding any pending or proposed federal tax legislation. Special Counsel expresses no opinion regarding any pending or proposed federal tax legislation. The IRS has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the IRS, interest on such tax-exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the IRS will commence an audit of the Certificates. If an audit is commenced, under current procedures the IRS will treat the City as the taxpayer and the Bondholders may have not right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Certificates until the audit is concluded, regardless of the ultimate outcome. In the future opinion of Special Counsel, interest with respect to the Certificates is exempt from California personal income taxes. Owners of the Certificates should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Certificates may have federal or state tax consequences other than as described above. Special Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Certificates other than as expressly described above. NO LITIGATION There is no proceeding or litigation of any nature now pending to restrain or enjoin the execution or delivery of the Certificates, or in any way contesting or affecting the validity of the Certificates, the proceedings of the Authority taken with respect to the execution or delivery thereof, the pledge or application of any moneys or securities provided for the payment of the Certificates, the existence or powers of the Authority, the title of any officers of the Authority to their respective positions or the validity of the Lease Agreement or the Trust Agreement. The City is not aware of any litigation pending or threatened questioning the political existence of the City or contesting the City's ability to appropriate or make Lease Payments. RATINGS Standard & Poor's, a Division of McGraw Hill Companies ("S&P") has assigned a municipal rating of" "to the Certificates, with the understanding that, upon delivery of the Certificates, the Policy will be issued by the Insurer. S&P has also assigned an underlying rating of" "to the Certificates. An explanation of the significance of such ratings may be obtained only from such rating agency. The City has furnished to the rating agency certain information and materials which are not included in this Official Statement. Generally, the rating agency bases its rating(s) on such information and materials, and, 45 in addition, on investigations, studies and assumptions made by the rating agency itself. There is no assurance that a rating mentioned above will continue for any given period of time or that a rating may not be revised downward or withdrawn entirely by the rating agency if, in the judgment of such rating agency, circumstances so warrant. The City has undertaken no responsibility to oppose any proposed revision or withdrawal of a rating. Any such downward revision or withdrawal of a rating may have an adverse effect on the market price of the Certificates. The City has not requested any other organization to consider the assignment of a rating for the Certificates. AFPROV AL OF LEGALITY All legal matters in connection with the execution and delivery of the Certificates are subject to the approval of Quint Thirnmig LLP, San Francisco, California, Special Counsel. A copy of the approving opinion of Special Counsel will be provided to the registered owners of the Certificates and is attached hereto as Appendix C. Except with respect to certain legal matters, Special Counsel undertakes no responsibility for the accuracy, completeness or fairness of the Official Statement. Certain legal matters will be passed upon for the Authority and the City by the City Attorney. UNDERWRITING The Certificates were sold to Stone & Youngberg LLC (the "Underwriter"), which is offering the Bonds at the prices set forth on the inside front cover page hereof. The initial offering prices may be changed from time to time and concessions from the offering prices may be allowed to dealers, banks and others. The Underwriter has purchased the Certificates at a price equal to $ of the aggregate principal amount of the Certificates, which amount represents the principal amount of the Certificates, less an Underwriter's discount of $ , [less a net original issue discount] [plus a net original premium] of $ . The Underwriter will pay certain of its expenses relating to the offering. CONTINUING DISCLOSURE The City will covenant for the benefit of Owners and beneficial owners of the Certificates to provide certain financial information and operating data relating to the City by not later than March 1 after the end of the City's fiscal year (presently June 30), commencing with the report for the 2007-08 Fiscal Year (the "Annual Report"), and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by or on behalf of the City with each Nationally Recognized Municipal Securities Information Repository certified by the Securities and Exchange Commission (the "Repositories "). The notices of material events will be filed by or on behalf of the City with the Municipal Securities Rulemaking Board and/or with the Repositories. The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in APPENDIX D "FORM OF CONTINUING DISCLOSURE CERTIFICATE." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b )(5). The City has a prior undertaking with respect to an assessment district financing in 2003 and in the previous five years has never failed to comply in all material respects with any previous undertaking with regard to said Rule to provide annual reports or notices of material events. Other entities, such as the Ternecula Public Financing Authority and the Temecula Redevelopment Agency have prior undertakings with respect to financings each has undertaken. Neither has failed to comply in all material respects with any previous undertaking with regard to said Rule to provide annual reports or notices of material events in the last five years. 46 CERTIFICATION On the date of delivery of the Certificates, an authorized officer of the City will furnish a written certification to the effect that this Official Statement, to the best of his knowledge and belief as of the date of sale and the date of delivery, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein, in light of the circumstances under which they were made, not misleading. ADDITIONAL INFORMATION 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 and the purchasers or Owners of any of the Certificates. The execution and delivery of this Official Statement have been authorized by the members of the Authority and the City. The purpose of this Official Statement is to supply information to prospective buyers of the Certificates. Quotations and summaries and explanations of the Certificates and of statutes and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents and statutes for full and complete statements of their provisions. The preparation and distribution of this Official Statement have been authorized by the City. CITY OF TEMEClTLA By Shawn Nelson, City Manager 47 APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS [THIS P AGE INTENTIONALLY LEFT BLANK] APPENDIX B COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF TEMECULA [THIS P AGE INTENTIONALLY LEFT BLANK] APPENDIX C FORM OF OPINION OF SPECIAL COUNSEL [Letterhead of Quint & Thirnmig LLP] [CLOSING DATE] City Council of the City of Temecula 43200 Business Park Drive Temecula, California 92589-9033 Re: $ Certificates of Participation (2008 Temecula Civic Center Financing Project) Evidencing the Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be Made by the City of Temecula, California As Rental for Certain Property Pursuant to a Lease Agreement with the Temecula Public Financing Authority Members of the City Council: We have acted as special counsel in connection with the delivery by the City of Temecula, California (the "City"), of its $ Lease Agreement, dated March 1, 2008, by and between the Temecula Public Financing Authority (the "Authority") and the City (the "Lease Agreement"), pursuant to the California Government Code. The Authority has, pursuant to the Assignment Agreement, dated as of March 1, 2008 (the "Assignment Agreement"), by and between the Authority and U.S. Bank National Association, as trustee (the "Trustee"), assigned certain of its rights under the Lease Agreement, including its rights to receive a portion of the lease payments made by the City thereunder (the "Lease Payments"), to the Trustee. Pursuant to the Trust Agreement, dated March 1, 2008, by and among the Trustee, the Authority and the City (the "Trust Agreement"), the Trustee has executed and delivered certificates of participation (the "Certificates ") evidencing direct, undivided fractional interests of the owners thereof in the Lease Payments. We have examined the law and such certified proceedings and other papers as we deem necessary to render this option. As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Lease Agreement and in the certified proceedings and certifications of public officials and other furnished to us without undertaking to verify the same by independent investigation. Based upon our examination, we are of the opinion, under existing law, as follows: 1. The City is duly created and validly existing as a public political subdivision organized and existing under the laws of the State of California with the power to enter into the Lease Agreement and the Trust Agreement and to perform the agreements on its part contained therein. 2. The Lease Agreement has been duly authorized, executed and delivered by the City and is an obligation of the City valid, binding and enforceable against the City in accordance with its terms. C-l 3. The Trust Agreement and the Assignment Agreement are valid, binding and enforceable in accordance with their terms. 4. Subjectto the terms and provisions ofthe Lease Agreement, the Lease Payments to be made by the City are payable from general funds of the City lawfully available therefor. By virtue of the Assignment Agreement, the owners of the Certificates are entitled to receive their fractional share of the Lease Payments in accordance with the terms and provisions of the Trust Agreement. 5. The portion of the Lease Payments designated as and comprising interest and received by the owners of the Certificates is excludable from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986, as amended (the "Code") and, under section 55 of the Code, is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations under the Code but is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. The opinions set forth in the preceding sentence are subject to the condition that the City comply with all requirements of the Code that must be satisfied subsequent to the delivery of the Lease Agreement in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of delivery of the Lease Agreement. We express no opinion regarding other federal tax consequences arising with respect to the Lease Agreement and the Certificates. 6. The portion of the Lease Payments designated as and comprising interest and received by the owners of the Certificates is exempt from personal income taxation imposed by the State of California. Ownership of the Certificates may result in other tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Certificates. The rights of the owners of the Certificates and the enforceability of the Lease Agreement, the Assignment Agreement and the Trust Agreement may be subject to the Bankruptcy Sincerely, QUINT & THIMMIG LLP C-2 [THIS P AGE INTENTIONALLY LEFT BLANK] APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE D-l [THIS P AGE INTENTIONALLY LEFT BLANK] APPENDIX E SPECIMEN INSITRANCE POLICY E-l [THIS P AGE INTENTIONALLY LEFT BLANK] APPENDIX F GENERAL INFORMATION ABOlTT THE CITY OF TEMEClTLA The following economic data for the city is presented for information purposes only. The Certificates are not a debt or obligation of the City. General Following a vote by the residents on November 7, 1989, the City of Temecula (the "City") incorporated under the general laws of the State of California on December 1, 1989. The City has a Council-Manager form of government and is represented by the five members of the City Council who are elected at-large to serve a four-year term. The Mayor is selected annually by the members of the City Council. The Temecula Community Services District ("TCSD") was also established in 1989. The TCSD is responsible for providing parks and recreation services to the citizens of Temecula, as well as street lighting and slope maintenance in certain areas of the district. Other governmental entities, such as the State of California, the County of Riverside and various school, water and other districts, also provide various levels of service within the City of Temecula. However, the Temecula City Council does not have a continuing oversight responsibility over these other governmental entities. Located on Interstate 15, the City is the 11th largest city in the Inland Empire and the 4th largest city in Riverside County, encompassing approximately 30 square miles. The City ofTemecula is approximately 85 miles southeast of Los Angeles, 60 miles north of San Diego, 61 miles southeast of Orange County, and 20 miles inland from the cities of San Juan Capistrano and Oceanside. The City's approximately 97,935 residents are offered a broad range of housing options from apartments to luxury custom homes. Ern ployment The City is a part of the County of Riverside Metropolitan Statistical Area ("MSA") which includes all of Riverside County. In addition to varied manufacturing employment, the MSA has large and growing commercial and service sector employment, as reflected in the following table. F-l County of Riverside MSA Wage and Salary Workers by Industry December December Industrv 2003 2004 Total (all industries) U52,400 1223300 Total Farm 1R,71111 1R,31111 Total Nonfarm U33,700 1,205,000 Mining 1,200 1,300 Construction 1113,41111 116,61111 Manufacturing 118,500 120,300 Durable goods 84,000 86,100 Nondurable goods 34,51111 34,21111 Transportation & Public Utilities 249,900 277,700 Wholesale Trade 43,100 48200 Retail Trade 154,41111 169,RIIII Finance Insurance & Real 38,400 41,200 Estate Services 9111,61111 966,RIIII Government 211,300 219,400 Federal 17200 17,700 State & Local 194,11111 2111,71111 Source: State of Ca1tfonlia Employment Development Department. F-2 December 2005 1,282,700 1R,31111 1,264,400 1,400 129,91111 121,800 86,400 35,41111 295,700 52,100 1RII,21111 44,300 1,1111,31111 225,500 18,800 2116,71111 December 2006 1,3 13,300 17,31111 1,296,000 1,400 126,RIIII 124,100 87,300 36,RIIII 300,700 54200 1RII,31111 46200 1,1143,71111 229,800 18,700 21UIIII September 2007 1,335,100 14,91111 1,320200 1,300 134,31111 126,900 89,300 37,61111 302,000 57,300 176,RIIII 47,300 1,1157,71111 227,300 19,000 211R,31 II 1 Economic Condition and Outlook Temecula's economic base is anchored by a number of firms specializing in biomedical technology and supplies, high technology controllers and semi-conductors, among others. The City's retail base is also experiencing growth and is home to several auto dealers including Honda, Toyota and Nissan. The following table sets forth major employers located in the City: CITY OF TEMECULA LARGEST EMPLOYERS BY NUMBER OF EMPLOYEES (As of June 30, 2007) Employer Abbott Vascular flk/a Guidant ('orporation Temecula Valley Unified School District Professional Hospital Supply International Rectifier Milgard Manufacturing Norm Reeves Auto Group Casteo \Vholesale Corporation (,herni-Con International (,hannell ('ommercial ('orp. Plant Equipment, Inc. Southwest Traders Sears Albertson's Macy's Group, Inc. T emecula ('reek Inn (,ity of T emecula Dayton Hudson ('orporation: Target Opto 22, Inc. J(' Penney ('ompany Toyota of Temecula Valley Source: City Finance Department. Approximate No. of Employees 4,79R 2,R2R 1,235 6115 4211 369 352 3511 31111 294 257 249 245 2311 2311 2]11 2()() 2()() 195 IRS F-3 Type of Business Medical equipment Public school system Medical equipment and supplies Power semi-conuuctors Windows Auto Dealer Wholesale warehouse Manufacturing Cable enclosures Telephone equipment Product Distribution Retail Supennarket Retail Hotel Municipal corporation Retail Manufacturing Retail Auto Dealer The civilian labor force in the County increased to an estimated annual average of 1,841,479 in 2007, an increase from the 2006 average of 1,770,514. The following table summarizes the labor force, employment and unemployment figures over the past five years for the City, the County, the State and the nation as a whole. COUNTY OF RIVERSIDE LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT Yearly Average for Years 2003 through 2007 Year and Area 2003 C'ity of T emeGula Riverside County MSA C'alifomia 2004 C'ity of T emeGula Riverside C'ounty MSA California 2005 City of T emeGula Riverside C'ounty MSA C'alifomia 2006 C'ity of T emeGula Riverside County MSA C'alifomia 20a?' C'ity of T emeGula Riverside C'ounty MSA" California H Civilian Unemployment Labor Force Emnlovment Unemolovment Rate 32,IIR2 311,6R3 1,399 4.40'0 1,591,635 1,489,830 101,805 6.4 17.445,635 16,279,937 1,165,69R 6.7 33,9112 32,545 1,357 4.()O,o 1,662.456 1,564,559 97,R97 5.9 17,622,786 16,585,565 1,037,221 5.9 35,520 34,249 1,271 360/0 1,724,7119 1,633,2R3 91.426 5.3 17,R41,2R3 16,932,526 911R,757 5 1 36,535 1,770,514 1 R,1I1 I,RII7 35,3211 1,684,379 17,1411,9R6 1,215 86,135 R711,R21 3.30'0 4.9 4.R 3R,1I42 I,R4R.473 18,374,164 36.42R 1,737,1 R9 17,353.466 1,614 I11,2R4 1,029,698 4.20'0 6.11 56 21)( 17 data through November 21)( 17 Source: Bureau afLabor Statistics Data. Industry The County's economy has always had a strong agricultural base, though industry has been developing rapidly in recent years. Numerous manufacturing firms are located in the County producing items including many steel products, materials made from concrete and glass, canned foods, paper goods and commercial and scientific equipment, as well as numerous Internet-based companies. F-4 The following table presents the largest private sector employers in the County, their product or service and the number of employees: Employer Name Stater Brother~ Market Pechanga Resort and Casino Kaiser Pennanente GuiJant Corporation Morongo Casino, Report &. Spa Fleetwood Enterprises Riven_ide Community Ho~pital La Quinta Resort &. Club Corona Regional Medical Center The Press Enterprise Co. Eisenhower Medical Center Valley Health Sy..;tem KSL Desert Resorts Inc. Ralph's Grocery Co. De~ert Regional Medical Center Vans SBC Communications Inc. Industry Retail/Di~tribution Hospitality/Gaming Healthcare Manufacturing Gaming Manufacturing RV's Healthcare Gaming Healthcare News Publications LARGEST COUNTY EMPLOYERS 2006 0/0 of Total County Employees Employment 6J)()() () 74%) 4.600 O.57~'o 3,025 O.37~'o 3J)()() 0.37%) 2,500 O.31~'o 2,452 O.30~'o 1,511 0.19%) 1,450 0.18~'o LOll 0.12%) 972 0.12% Fiscal Year 2005 2004 2003 (% of Total 0/0 of Total % of Total County County County Employees Employment Employees Employment Employees Employment 5.600 0.70%) 5.600 073%) 5.600 0.770/0 2.893 0.36% 2.893 0.38% 2.893 0.40% 2.386 1.641 0.30% 0.20% 2.125 1.641 0.28% 0.21% 2.125 1.641 0.29% 0.23% 1.168 0.15% 1.972 0.25% 1.756 0.22% 1.600 0.20% 1.500 0.19% 1.972 0.26% 1.972 1.756 0.23% 1.756 1.600 0.21% 1.600 1.500 0.19% 1.500 1.500 0.19% 1.500 1.100 0.14% 1.100 0.27% 0.24% 0.22% 0.21% 0.21% 1.100 0.14% 0.15% :>ouree: River;ide County Comprehensive Annual Financial Rep0/1for Fiscal Year Ended June 30. 2006. [CHECK FOR UPDATE:> AFTER JAN 15 ED of Supervisors meeting) F-5 CITY OF TEMEClTLA PRINCIPAL SEClTImn PROPERTY OWNERS FOR FISCAL YEAR 2007-081' Secured Unsecured Total 2007-08 2007-08 Percent of 2007-08 Assessed Assessed Total Assessed Valuation Valuation Assessed Valuation Taxpayer Type of Business (in OOOs) (in OOOs) (Valuation) (in OOOs)(2) Abbott Vascular, Inc.'" Medical Appliances Mfg. $!IIR,1I31 $169,725 2.350'0 $277, 756 International Rectifier Corporation Electronics Mfg. 28,396 74,240 087 102,636 T ernecula Towne Center Associates Regional Shopping Center 98,122 0 083 98,122 Macy's West Inc.'4' Retail Department Stores 37,3RII 16,934 II 46 54,315 Inland Western Ternecula Commons Commercial Shopping Center 53,618 0 045 53,618 Kimco Palm Plaza Commercial Shopping Center 44,293 0 0.37 44,293 WGABel Villagio", Commercial Shopping Center 36,5RR II 11.31 36,5RR DCH Investments Inc. Vacant land! Auto dealer 32,615 0 0.28 32,615 27511 Ynez Road LLC Commercial shopping center 25,325 0 0.21 25,325 Costa Wholesale Corp. Retail Store 1R.951 4.1176 11.19 23,II2R T olals $483,319 $264,975 6.320/0 $748,296 (I! Assessed values of parcels owned by related entities have been aggregated. 12) Totals may not add due to fOlmding. 111 The facility operating in the City is locally now known as Abbott Vascular, Inc. which is a subsidiary of Abbott Laboratories, Ownership of some parcels is in the name of Advanced Cardiovascular Systems, Inc., also a subsidiary of Abbott Laboratories, which acquired Advanced Cardiovascular Systems, Inc. in April 2006, in connection with Boston Scientific Corporation's purchase of Guidant Corporation. Some personal property and fixtures are listed as owned by Abbott Vascular Inc. (4) Macy's West Inc. is a subsidiary of Macy's, Inc. Some personal property and fixtures are listed as owned by Macy's Department Stores, Inc. ('), Owner had pending appeals on one or more parcels. Source: HdL Coren & Cone. Community Facilities Public Utilities. Water is provided by the Rancho California Water District. Sewer services are provided by the Eastern Municipal Water District. Electricity is supplied by the Southern California Edison Company and natural gas by the Southern California Gas Company. Verizon provides telephone service. Solid waste is collected by a private collection company, CR&R, contracted by the City and disposed of at a Riverside County landfill. Police. The City contracts with the Riverside County Sheriff's Department for police services which employs approximately 110 sworn persons. The Sheriff's Department employs officers at the rate of about 1 ()fficer per approximately 890 residents. Temecula has two storefront police locations (one in (lid Town Temecula and one in the Promenade Mall), a traffic team, investigations bureau, and special teams to deal with drugs and gang-related issues. F-6 Fire. The City operates the Temecula Fire Department and contracts with the County of Riverside, and through the County of Riverside with the California Department of Forestry and Fire Protection (Cal Fire), for fire service, rescue, hazardous materials response and emergency medical services. Within the City limits, Temecula Fire Department has 5 manned and equipped fire stations. There are approximately 17 pieces of equipment and approximately 68 on-duty personnel, plus 30 reserves. Temecula Fire Department staffs 4 paramedic engine companies (4 personnel, and at minimum one a day is a certified firefighter medic), and a 100-foot ladder/medic company (4 personnel). Services are provided on a 24-hour basis utilizing three shifts. An area Battalion Chief, who covers all five stations, manages each shift. The Fire Authority (Riverside County Fire) maintains a fire prevention program. Temecula Fire Department has mutual assistance agreements with surrounding fire agencies. General Information Industrial Real Estate. According to the Housing Report dated January 8, 2007, the City is part of America's strongest industrial market. In 2002, the Inland Empire saw its manufacturers and distributors take a record 48.0 million square feet of space. However, by June 2006, the area's vacancy rate was down to just 3.8% despite construction of29.5 million square feet in the prior 12 months. In June 2006, the City had 9.8 million square feet of manufacturing space in existence or under construction representing 2.7% of the Inland Empire's 362 million square feet. Only 104,358 square feet of the City's space was vacant, giving it a 1.100 vacancy rate, with no facilities under construction. Another 180,356 was occupied but coming on to the market, making 2.9% of its stock eventually available. According to Grubb & Ellis, the Inland Empire's office market had 22.3 million square feet of office space completed or under construction in June 2006. The City was the area's sixth largest sub-market with 1,343,720 square feet or 6.0% of the market. This included 1,288,086 square feet of completed space and 55,634 square feet under construction. Agriculture. The climate and soil in the City are particularly favorable for growing avocado, grape and citrus crops. There are currently several agricultural management firms in the Temecula area which manage agricultural production of thousands of acres of land owned by individual investors, partnerships and corporations. The agricultural managers apply economies of scale, by combining many small and medium sized parcels of land as if these parcels were one large ranch. In addition, a substantial wine industry has been developed in the City and the surrounding area. As of May, 2007, there were twenty (20) wineries which produce wine with locally grown grapes. Climate. Temecula Valley enjoys a mild Mediterranean climate with year-round temperatures averaging in the mid 70's. The weather is comparable to the Napa Valley, as evidenced by a thriving wine industry, with warm, dry days and cool evenings. Summer-time temperatures, which can average in the mid 80's or the mid 90's during the day, are often cooled by afternoon ocean breezes blowing into the valley through gaps in the Santa Ana foothills to the west. Although separated from the Pacific by the Santa Rosa range of mountains, the Rainbow Gap funnels the mild beach climate into the valley. Mild winter temperatures average in the mid 60's. Yearly average rainfall in Temecula is approximately 14 inches, as compiled by the Rancho California Water District. The quality of air in the Temecula Valley is consistently better than that of surrounding communities. Ocean breezes flow through the Rainbow Gap ahnost every day, sweeping away smog. In the summer, Pacific winds yield temperatures up to 10 degrees lower than in towns just a few miles away. F-7 Education. The City is served by Temecula Valley Unified School District, one of the fastest growing school districts in the State, with 5 high schools (including 2 alternative schools), 6 middle schools, 2 charter schools, 1 horne-schooling program, 18 elementary schools and 1 adult school. In addition, there are 9 private schools and several pre-schools. The general boundaries extend north to Jean Nicholas Road in French Valley, south to the Riverside County line, east to Vail Lake, and west to the Ternecula city limit. The District covers approximately 150 square miles. As of May 14, 2007, approximately 28,680 students (Grades K -12) are enrolled in the District. The University of California, Riverside has opened an extension center in the City and Mt. San Jacinto Community College operates a campus ten miles north of the City to serve the growing population. Temecula began the 2000's with a well-educated population, and its population trends and school performance figures have allowed it to maintain that position. Transportation. Interstate 15 and its connecting arterials provide convenient links to San Diego and Riverside, Los Angeles (Interstate 10), Orange County (Highway 91) and San Bernardino (Interstate 215). The French Valley Airport, 4 miles north ofInterstate 15 on Winchester Road, accommodates business jets and commuter airlines. Housing. Temecula is unique in that its residents are about equidistant from both San Diego and Orange County via the Interstate 15 freeway. As a result, it is receiving growth impulses from the south as well as the north, as families spill into the Inland Empire from Southern California's more congested coastal counties. Ternecula's rapid population growth represents a relatively new phenomenon in Southern California. A large number of the City's new residents have migrated north from San Diego County along the Interstate 15 freeway. Normally, a Southern California community undergoes rapid growth only when population spills from Orange or Los Angeles counties. The latest population data shows Temecula with 97,935 residents as of January 1, 2007, which includes the annexation of the Vail Ranch area in July, 2001 and the March, 2004 annexation of the community of Red hawk, which became official June 30, 2005. There are other areas within the City's sphere of influence which may be annexed to the City at some point in the future. F-8 Construction Activity The following table shows a five-year history of construction activity in the City. CITY OF TEMEClTLA BlTILDING PERMITS AND V ALlTATIONS (Calendar Year 2002 - 2007") 2002 2003 2004 2005 2006 2007" Valuation ($000): Residential $100.516,1 15 $194.699.509 $185.(141.089 $261.657J64 $145.638.382 $182,452.588 Non-residential 43,487.229 36.1187.11111 56658.233 73.749.612 144.623.957 1 !ll.716.323 Total $144.003.344 $230.786.510 $241.699.322 $335,406.776 $290.262.339 $293,1 68.':..!.l Residential Units: Single family 650 L271 888 996 589 653 Multiple family -0- 142 408 360 ---.lQ 229 Total 6511 1.413 L296 1.356 6117 882 Source: Construction Indusf1:v Research Board "Through Uctober 2007 F-9 The following table shows historical commercial and residential construction and property values. CITY OF TEMEClTLA COMMERCIAL AND RESIDENTIAL CONSTRlTCTION AND PROPERTY V ALlTES 1996 - 2006 Commercial Construction' 1 , Residential Construction' 1 , Number Number Fiscal Year of Permits Value of Units Value 1996 136 $23,572 987 $93,674 1997 202 32,863 857 85257 1998 2113 66,226 835 1115,527 1999 337 159286 1384 180,840 2000 437 52,497 U79 148,660 21)(11 265 39,511 1,6116 169,687 2002 252 51,686 938 97,773 2003 304 41,402 U62 145387 21)(14 116 79,579 918 241322 2005 513 49,777 1354 246,466 2006 218 114,015 604 133,837 Values in thousands of dollars. Source" (J) City ofTemecula, Building aJld Safety Department. (2) County LaJld Use Statistical Recap Rep011. F-lO Property Values\21 Commercial $1,478230 1347/100 1321,1144 1378364 1,524/191 1,935,537 2,1 83,862 2,633,661 2,757,4117 2,894,954 3/124,934 Residential $1,671,720 1,856203 1,958,7116 2/167,549 2303303 2,627,716 3/117J48 4,127318 4,8118,1 16 6,895,413 8/178,687 Population A summary of the City, County and State population from 1998 to 2007, is shown below. From 1998 2007, the City's population grew from 48,817 to 97,935, a gain of 49,118 or 100.6%. In this same period, Riverside County added 580,254, a gain of 40.0%. City of Temecula (Incorporated 11/7/1989) Percentage Year Population Increase 1998 48,817 1999 5l,568 56 2()()() 57,716 98 2(Hll-l< 6U87 9.2 2002 73,1 34 18.4 211113 75,958 3.9 211114 78,738 37 2005 8L804 3.9 211116"" 94,575 156 211117 97,935 36 Includes annexation a/Vail Ranch area. Includes annexation of Red hawk area. Source: California Department of Finance. POPULATION DATA Riverside County PODulation 1,451,371 1.4911.474 l,535,125 l,5911,1I52 1,653,529 I, 725,8911 1,8115,519 L885,627 1,966,6117 2,1131,625 F-11 Percentage Increase 2.7 3 36 4.0 4.4 4.6 4.4 4.3 3.3 State of California Population 32,657,877 33,1411,771 33,72l,583 34.44l,561 35,088,671 35,69l,534 36,252,878 36,743,1 86 37,l95,2411 37,662,518 Percentage Increase l,5 1 8 2.1 1,9 17 16 14 1.2 1,3 APPENDIX G BOOK-ENTRY SYSTEM The folImving description of the procedures and record keeping with respect to beneficial mvnership interests in the Certificates, payment of principal, interest and other payments with respect to the Certifirates to Direct Participants, Indirect Participants or Beneficial Owners, confU'lnation and transfer of beneficial mvnership interests in such Certificates and other related transactions by and between D TC, the Direct Participants, Indirect Participants and the Beneficial o.vners is based on informationfurnished by DTC Although the City believes DTC to be a reliable source of information, it takes no responsibility for the accuracy of the information. The Depository Trust Company (''DTC''), New York, New York, will act as securities depository for the Certificates. The Certificates will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. (Jne fully-registered Certificate will be issued for each maturity of the Certificates, each 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 17 A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues ofU. 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, in turn, is owned by a number of Direct Participants ofDTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, FlCC, and EMCC, also subsidiaries ofDTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. 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 Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Certificates on DTC's records. The ownership interest of each actual purchaser of each Certificate ("Beneficial (Jwner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial (Jwners will not receive written confirmation from DTC of their purchase. Beneficial (Jwners 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 Certificates are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial G-l Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Certificates, except in the event that use of the book-entry system for the Certificates is discontinued. To facilitate subsequent transfers, all Certificates deposited by Direct Participants withDTC are registered in the name ofDTC's partnership nominee, Cede & Co., or such other name as requested by an authorized representative ofDTC. The deposit of the Certificates 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 Certificates; DTC's records reflect only the identity of the Direct Participants to whose accounts such Certificates are credited, which mayor may not be the Beneficial Owners. The Direct or 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 the Certificates may wish to take certain steps to augment the transmissions to them of notices of siguificant events with respect to the Certificates, such as redemptions, tenders, defaults, and proposed amendments to the Certificates documents. For example, Beneficial Owners of the Certificates may wish to ascertain that the nominee holding the Certificates 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 Trustee and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. Ifless than all of the Certificates are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Certificates unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigus Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, redemption price and interest payments on the Certificates 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 and or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative ofDTC) is the responsibility of the City of the Trustee, disbursement of such payments to Direct Participants will be the responsibility ofDTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its service as depository with respect to the Certificates 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. G-2 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, the certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. Discontinuance ofDTC Services In the event that (a) DTC determines not to continue to act as securities depository for the Certificates, or (b) the City determines that DTC shall no longer act and delivers a written certificate to the Trustee to that effect, then the City will discontinue the Book-Entry System with DTC for the Certificates. If the City determines to replace DTC with another qualified securities depository, the City will prepare or direct the preparation of a new single separate, fully-registered Certificate for each maturity of the Certificates registered in the name of such successor or substitute securities depository as are not inconsistent with the terms of the Indenture. If the City fails to identify another qualified securities depository to replace the incumbent securities depository for the Certificates, then the Certificates shall no longer be restricted to being registered in the Certificate registration books in the name of the incumbent securities depository or its nominee, but shall be registered in whatever name or names the incumbent securities depository or its nominee transferring or exchanging the Certificates shall designate. In the event that the Book-Entry System is discontinued, the following provisions would also apply: (i) the Certificates will be made available in physical form, (ii) principal of, and redemption premiums if any, on the Certificates will be payable upon surrender thereof at the trust office of the Trustee identified in the Indenture, and (iii) the Certificates will be transferable and exchangeable as provided in the Indenture. The City and the Trustee do not have any responsibility or obligation to DTC Participants. to the persons for whom they act as nominees. to Beneficial Owners. or to any other person who is not shown on the registration books as being an owner of the Certificates. with respect to (i! the accuracy of any records maintained by DTC or any DTC Participants; (ii! the payment by DTC or any DTC Participant of any amount in respect of the principal of redemption price of or interest on the Certificates; (iii! the delivery of any notice which is permitted or required to be given to registered owners under the Indenture; (iv) the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial redemption of the Certificates; (v) any consent given or other action taken by DTC as registered owner; or (vi! any other matter arising with respect to the Certificates or the Indenture. The City and the Trustee cannot and do not give any assurances that DTC. DTC Participants or others will distribute payments of principal of or interest on the Certificates paid to DTC or its nominee. as the registered owner. or any notices to the Beneficial Owners or that they will do so on a timely basis or will serve and act in a manner described in this Official Statement. The City and the Trustee are not responsible or liable for the failure ofDTC or any DTC Participant to make any payment or give any notice to a Beneficial Owner in respect to the Certificates or any error or delay relating thereto. G-3 [THIS PAGE INTENTIONALLY LEFT BLANK] Quint & Thimmig LLP 10/22/07 11/19/07 02/01/08 AFTER RECORDATION PLEASE RETURN TO: Quint & Thimmig LLP 575 Market Street, Suite 3600 San Francisco, CA 94105-2874 Attention: Brian D. Quint, Esq. 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. SITE AND FACILITY LEASE Dated as of March 1, 2008 by and between the CITY OF TEMECULA, CALIFORNIA, as Lessor and the TEMECULA PUBLIC FINANCING AUTHORITY, as Lessee (2008 Temecula Civic Center Financing Project) 20002.06 SITE AND FACILITY LEASE THIS SITE AND FACILITY LEASE (this "Site and Facility Lease"), dated as of March 1,2008, is by and between the CITY OF TEMECULA, a municipal corporation and general law city, duly organized and existing under and by virtue of the laws of the State of California (the "City"), as lessor, and the TEMECULA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority duly organized and existing under and by virtue of the laws of the State of California (the" Authority"), as lessee; WITNE SSE TH: WHEREAS, the Authority intends to assist the City in undertaking the financing of the construction of a new civic center facility (the "Project"), by leasing certain land and improvements to the City pursuant to a Lease Agreement, dated as of March 1, 2008, a memorandum of which is recorded concurrently herewith (the "Lease Agreement"); and WHEREAS, the City proposes to enter into this Site and Facility Lease with the Authority as a material consideration for the Authority's agreement to lease such land and improvements to the City; NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED, as follows: Section 1. Definitions. Capitalized terms used, but not otherwise defined, in this Site and Facility Lease shall have the meanings ascribed to them in the Lease Agreement. Section 2. Site and Facility Lease. The City hereby leases to the Authority and the Authority hereby leases from the City, on the terms and conditions hereinafter set forth, those certain parcels of real property situated in Riverside County, State of California, more particularly described in Exhibit A attached hereto and made a part hereof (the "Site"), and those certain improvements on the Site more particularly described in Exhibit B attached hereto and made a part hereof (collectively, the "Facility"). Section 3. Term. The term of this Site and Facility Lease shall commence on the date of recordation of this Site and Facility Lease in the Office of the County Recorder of Riverside County, State of California, and shall end on September 1, 2038, unless such term is extended or sooner terminated as hereinafter provided. If, on September 1, 2038, the aggregate amount of Lease Payments (as defined in and as payable under the Lease Agreement) shall not have been paid, or provision shall not have been made for their payment, then the term of this Site and Facility Lease shall be extended until such Lease Payments shall be fully paid or provision made for such payment. If, prior to September 1, 2038, all Lease Payments shall be fully paid or provision made for such payment in accordance with Section 4.4 or 10.1 of the Lease Agreement, the term of this Site and Facility Lease shall end ten (10) days thereafter. Section 4. Advance Rental Payment. The City agrees to lease the Site and the Facility to the Authority in consideration of the payment by the Authority of an advance rental payment of _______ dollars ($_____). The City and the Authority agree that by reason of the sale of the Certificates and deposit of proceeds pursuant to the provisions of the Trust Agreement, dated as of March 1,2008, by and among the City, the Authority and U.S. Bank National Association, as trustee thereunder (the "Trust Agreement"), the advance rental payment referenced in the preceding sentence shall be deemed to have been paid. Section 5. Purpose. The Authority shall use the Site and the Facility solely for the purpose of leasing the Site and the Facility to the City pursuant to the Lease Agreement and for such purposes as may be incidental thereto; provided, however, that in the event of default by the City under the Lease Agreement, the Authority and its assigns may exercise the remedies provided in the Lease Agreement. Section 6. City's Interest in the Site and the Facility. The City covenants that it is the owner in fee of the Site and the Facility. Section 7. Assignments and Subleases. Unless the City shall be in default under the Lease Agreement, the Authority may not assign its rights under this Site and Facility Lease or sublet the Site or the Facility, except as provided in the Lease Agreement, without the written consent of the City and the Municipal Bond Insurer. Section 8. Right of Entry. The City reserves the right for any of its duly authorized representatives to enter upon the Site and the Facility at any reasonable time to inspect the same or to make any repairs, improvements or changes necessary for the preservation thereof. Section 9. Termination. The Authority agrees, upon the termination of this Site and Facility Lease, to quit and surrender the Site and the Facility in the same good order and condition as the same were in at the time of commencement of the term hereunder, reasonable wear and tear excepted, and agrees that any permanent improvements and structures existing upon the Site at the time of the termination of this Site and Facility Lease shall remain thereon and title thereto shall vest in the City. Section 10. Default. In the event the Authority shall be in default in the performance of any obligation on its part to be performed under the terms of this Site and Facility Lease, which default continues for thirty (30) days following notice and demand for correction thereof to the Authority, the City may exercise any and all remedies granted by law, except that no merger of this Site and Facility Lease and of the Lease Agreement shall be deemed to occur as a result thereof and the City shall have no right to terminate this Site and Facility Lease as a remedy for such default; provided, however, that so long as any Certificates are Outstanding and unpaid in accordance with the terms thereof, the Lease Payments assigned by the Authority to the Trustee under the Assignment Agreement shall continue to be paid to the Trustee. Section 11. Ouiet Enjoyment. The Authority, at all times during the term of this Site and Facility Lease, shall peaceably and quietly have, hold and enjoy all of the Site subject to the provisions of the Lease Agreement and the Trust Agreement. Section 12. Waiver of Personal Liability. All liabilities under this Site and Facility Lease on the part of the Authority are solely liabilities of the Authority and the City hereby releases each and every, member, director, officer, employee and agent of the Authority of and from any personal or individual liability under this Site and Facility Lease. No member, director, officer, employee or agent of the Authority shall at any time or under any circumstances be individually or personally liable under this Site and Facility Lease for anything done or omitted to be done by the Authority hereunder. Section 13. Taxes. All assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Site and the Facility (including both land and improvements) will be paid in accordance with the Lease Agreement. -2- Section 14. Eminent Domain. In the event the whole or any part of the Site or the Facility thereon is taken by eminent domain proceedings, the interest of the Authority shall be recognized and is hereby determined to be the amount of the then unpaid Certificates including the unpaid principal and interest with respect to any then outstanding such Certificates and, subject to the provisions of the Lease Agreement, the balance of the award, if any, shall be paid to the City. Section 15. Use of the Proceeds. The City and the Authority hereby agree that the lease to the Authority of the City's right and interest in the Site and the Facility pursuant to Section 1 serves the public purposes of the City by providing funds to enable the City to finance the Project or to finance other capital projects of the City. The City hereby agrees that the proceeds of the Certificates shall be used solely for the purpose of paying the costs of the Project or other capital projects of the City, to be owned, held or controlled by the City for its public purposes, on or before the date three years following the date of execution and delivery of the Certificates, or to refinance prior obligations of the City incurred for such purposes. Section 16. Partial Invalidity. If anyone or more of the terms, provisions, covenants or conditions of this Site and Facility Lease shall, to any extent, be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding, order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site and Facility Lease shall be affected thereby, and each provision of this Site and Facility Lease shall be valid and enforceable to the fullest extent permitted by law. Section 17. Notices. All notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder by either party to the other shall be in writing and shall be sufficiently given and served upon the other party if delivered personally or if mailed by United States registered mail, return receipt requested, postage prepaid, and, if to the City, addressed to the City in care of the Finance Director, City of Temecula, 43200 Business Park Drive, Temecula, CA 92589, or if to the Authority, addressed to the Authority in care of the Finance Director of the City, City of Temecula, 43200 Business Park Drive, Temecula, CA 92589, or to such other addresses as the respective parties may from time to time designate by notice in writing. Section 18. Binding Effect. This Site and Facility Lease shall inure to the benefit of and shall be binding upon the City and the Authority and their respective successors and assigns. The Municipal Bond Insurer shall be deemed to be a third party beneficiary of this Site and Facility Lease. Section 19. Amendment. This Site and Facility Lease may not be amended except as permitted under Section 10.01 of the Trust Agreement. Section 20. Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Site and Facility Lease. Section 21. Applicable Law. This Site and Facility Lease shall be governed by and construed in accordance with the laws of the State of California. Section 22. Execution in Counterparts. This Site and Facility Lease may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same instrument. -3- IN WITNESS WHEREOF, the City and the Authority have caused this Site and Facility Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. CITY OF TEMECULA, CALIFORNIA By City Manager Attest: City Clerk TEMECULA PUBLIC FINANCING AUTHORITY By Executive Director Attest: Secretary -4- [NOTARY ACKNOWLEDGMENTS TO BE ATTACHED] EXHIBIT A DESCRIPTION OF THE SITE All that certain real property situated in Riverside County, State of California, described as follows: PARCEL A: (COMMUNITY THEATRE) LOTS 16 THROUGH 22 INCLUSIVE IN BLOCK 27 OF THE TOWN OF TEMECULA, AS SHOWN BY MAP ON FILE IN BOOK 15 PAGE 726 OF MAPS, RECORDS OF SAN DIEGO COUNTY, CALIFORNIA; TOGETHER WITH THAT PORTION OF RIVER STREET AS V ACA TED AND CLOSED TO PUBLIC USE BY RESOLUTION RECORDED AUGUST 6, 1940 IN BOOK 474 PAGE 109 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CAIAFORNIA, AS DESCRIBED IN PARCEL 1 OF SAID RESOLUTION, AND LYING NORTHWESTERLY OF THE SOUTHWESTERLY PROLONGATION OF THE CENTER LINE OF THE ALLEY IN SAID BLOCK 27; ALSO TOGETHER WITH THAT PORTION OF THE NORTHWESTERLY HALF OF THE ALLEY ADJOINING SAID LOTS 16 THROUGH 22 INCLUSIVE, ON THE SOUTHEAST AS V ACA TED AND CLOSED TO PUBLIC USE BY RESOLUTION N0.79-68, RECORDED APRIL 23, 1979 AS INSTRUMINT NO. 80863 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; ALSO TOGETHER WITH THAT PORTION OF THE SOUTHEASTERLY HALF OF FOURTH STREET ADJOINING SAID LOTS 16 THROUGH 22 INCLUSIVE ON THE NORTHWEST, AS V ACA TED AND CLOSED TO PUBLIC USE BY RESOLUTION NO.87-272, RECORDED JULY 29, 1987 AS INSTRUMENT NO. 218023 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. APN: 922-036-037 PARCEL B: (COMMUNITY THEATRE) LOT 4 AND LOT 5 IN BLOCK 27 OF TH OWN OF TEMECULA AS SHOWN BY MAP ON FILE IN BOOK 15. PAGE 726. RECORDS OF SAN DIEGO COUNTY, TOGETHER WITH THAT PORTION OF AN ALLEY ADJOINING SAID LOTS 4 AND 5, AS ABANDONED BY A RESOLUTION OF THE BOARD OF SUPERVISORS. COUNTY OF RIVERSIDE, RECORDED APRIL 23, 1979 AS INSTRUMENT NUMBER 80863. OF OFFICIAL RECORDS OF SAID COUNTY AND THAT PORTION OF THE NORTHWEST 10 FEET OF MAIN STREET AS ABANDONED BY RESOLUTION NUMBER 75-104, RECORDED APRIL 23, 1975 AS INSTRUMENT NUMBER 46491, OFFICIAL RECORDS OF SAID COUNTY. EXCEPTING THEREFROM THE SOUTHWESTERLY 22.30 FEET OF SAID LOT 4. APN: 922-036-041 PARCEL C: (COMMUNITY THEATRE) LOT 6 IN BLOCK 27 OF THE TOWN OF TEMECULA, AS SHOWN BY MAP ON FILE IN BOOK 15 PAGE 726, OF MAPS, RECORDS OF SAN DIEGO COUNTY, CALIFORNIA. TOGETHER WITH THAT PORTION OP THE NORTHWESTERLY 10 FEET OF MAIN STREET, ADJACENT TO THE SOUTHEASTERLY LINE OF SAID LAND, WHICH WOULD PASS WITH A CONVEYANCE OF SAID LAND, AS VACATED BY RESOLUTION MO. 75-104 OF THE BOARD SUPERVISORS OF THE COUNTY OP RIVERSIDE, RECORDED APRIL 23, 1975 AS INSTRUMENT NO. 46491 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; Exhibit A Page 1 TOGETHER WITH THAT PORTION OF AN ALLEY ADJOINING SAID LOT 6, AS ABANDONED BY A RESOLUTION OF THE BOARD OF SUPERVISORS. COUNTY OF RIVERSIDE, RECORDED APRIL 23, 1979 AS INSTRUMENT NUMBER 80863. OF OFFICIAL RECORDS OF SAID COUNTY. APN: 922-036-034 PARCEL D: (FIRE STATION #84) THAT PORTION OF RANCHO TEMECULA, IN THE CITY OF TEMECULA, AS GRANTED BY THE GOVERNMENT OF THE UNITED STATES OF AMERICA, TO LUIS VIGNES, BY PATENT DATED JANUARY 18, 1860, AS SHOWN BY MAP ON FILE IN BOOK 1 PAGE 37, OF PATENTS, RECORDS OF SAN DIEGO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF PARCEL 4 AS SHOWN ON PARCEL MAP 8840 FILED IN BOOK 41 PAGES 54 AND 55, RECORDS OF SAID COUNTY, SAID POINT BEING ON THE CENTERLINE OF PAUBA ROAD AND BEING MARKED BY A 1-1/2 INCH IRON PIPE TAGGED 1.S. 3160 PER SAID MAP, SAID POINT ALSO BEING A POINT ON A CURVE CONCAVE SOUTHERLY, HAVING A RADIUS OF 2,000.00 FEET, A RADIAL LINE THROUGH SAID POINT BEARS NORTH 14031'39" WEST; THENCE WESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 02001'20", AN ARC DISTANCE OF 70.59 FEET, TO THE END OF CURVE, A RADIAL LINE THROUGH SAID POINT BEARS NORTH 16032'59" WEST; THENCE ALONG A RADIAL LINE NORTH 16032'59" WEST 44.00 FEET TO A POINT ON THE NORTHERLY RIGHT OF WAY OF PAUBA ROAD, SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE SOUTH 73027'01" WEST, 23.37 FEET ALONG SAID RIGHT OF WAY; THENCE LEAVING SAID RIGHT OF WAY NORTH 16032'59" WEST, 18.52 FEET ALONG THE WESTERLY LINE OF THE TEMECULA PUBLIC LIBRARY PARCEL, AS DESCRIBED IN THE LEGAL DESCRIPTION FOR TEMECULA PUBLIC LIBRARY; THENCE NORTH 17045'09" EAST, 66.36 FEET ALONG SAID WESTERLY LINE OF THE TEMECULA PUBLIC LIBRARY PARCEL; THENCE NORTH 11001'46" WEST, 75.21 FEET ALONG SAID WESTERLY LINE OF THE TEMECULA PUBLIC LIBRARY PARCEL; THENCE NORTH 51049'47" EAST, 162.16 FEET; THENCE SOUTH 88055'20" EAST, 136.08 FEET; THENCE SOUTH 64000'57" EAST, 56.13 FEET; THENCE SOUTH 22021'01" EAST, 161.46 FEET TO A POINT ON SAID NORTHERLY RIGHT OF WAY OF PAUBA ROAD, SAID POINT BEING ON A CURVE CONCAVE SOUTHERLY HAVING A RADIUS OF 2044.00 FEET, A RADIAL LINE THROUGH SAID POINT BEARS NORTH 06025'24" WEST; THENCE WESTERLY ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 10007'35", AN ARC DISTANCE OF 361.25 FEET TO THE TRUE POINT OF BEGINNING. CONTAINING 64,635.71 SQUARE FEET OR 1.48 ACRES, MORE OR LESS. APN: 945-050-020 Exhibit A Page 2 PARCEL E: (WOLF CREEK FIRE STATION) THAT PORTION OF PARCEL 2 AS DESCRIBED IN LOT LINE ADJUSTMENT PA02-0052, IN THE CITY OF TEMECULA, CALIFORNIA, RECORDED MAY 4, 2002 AS INSTRUMENT NO. 02-172869, AND PERFECTED IN GRANT DEED TO S-P MURDY, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY,RECORDED JUNE 3, 2002 AS INSTRUMENT NO. 02-299299 OFFICIAL RECORDS OF RNERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHWESTERLY TERMINUS OF THAT CERTAIN COURSE IN THE BOUNDARY OF SAID PARCEL 2 DESCRIBED AS HAVING A BEARING AND LENGTH OF NORTH 37055'02" EAST 726.21 FEET; THENCE NORTHERLY ALONG SAID BOUNDARY NORTH 37054'25" EAST (NORTH 37055'02" EAST PER SAID DEED AND LOT LINE ADJUSTMENT) 7939 FEET TO THE TRUE POINT OF BEGINNING; THENCE LEAVING SAID BOUNDARY SOUTH 52005'35" EAST 233.21 FEET; THENCE PARALLEL WITH THE BOUNDARY OF SAID PARCEL 2, NORTH 37054'25" EAST (NORTH 37055'02" EAST PER SAID DEED AND LOT LINE ADJUSTMENT) 280.18 FEET; THENCE NORTH 52005'35" WEST 233.21 FEET TO A POINT ON SAID BOUNDARY, SAID POINT LIES NORTH 37054'25" EAST (NORTH 37055'02" EAST PER SAID DEED AND LOT LINE ADJUSTMENT) 280.18 FEET ALONG SAID BOUNDARY FROM THE TRUE POINT OF BEGINNING; THENCE ALONG SAID BOUNDARY SOUTH 37054'25" WEST 280.18 FEET TO THE TRUE POINT OF BEGINNING. APN: 962-580-091 PARCEL F: (BIRDSALL PARK): THAT PORTION OF PARCEL 2 AS DESCRIBED IN LOT LINE ADJUSTMENT PA02-0052, IN THE CITY OF TEMECULA, CALIFORNIA, RECORDED APRIL 4, 2002 AS INSTRUMENT NO. 2002- 172869, AND PERFECTED IN GRANT DEED TO S-P MURDY, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, RECORDED JUNE 3, 2002 AS INSTRUMENT NO. 2002-299299 OF OFFICIAL RECORDS OF RNERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT A POINT ON THE CENTERLINE OF PECHANGA P ARKW A Y (FORMERLY PALA ROAD), SAID POINT BEING THE NORTHWESTERLY TERMINUS OF THAT CERTAIN COURSE SHOWN AS HAVING A BEARING AND DISTANCE OF SOUTH 47044'36" EAST, 3252.10 FEET IN SAID LOT LINE ADJUSTMENT AND DEED; THENCE ALONG SAID CERTAIN COURSE AND SAID CENTERLINE, SOUTH 47045'28" EAST 3252.10 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF THE LITILE TEMECULA RANCHO, AS SHOWN ON THE MAP ENTITLED PARTITION MAP OF THE LITILE TEMECULA RANCHO ON FILE IN THE OFFICE OF THE COUNTY CLERK OF SAID SAN DIEGO COUNTY, IN ACT NO. 5756 IN THE SUPERIOR COURT OF SAID SAN DIEGO COUNTY, AND THAT PORTION OF SECTION 28, TOWNSHIP 8 SOUTH, RANGE 2 WEST, SAN BERNARDINO BASE AND MERIDIAN, OFFICIAL PLAT OF THE SURVEY OF SAID LAND APPROVED BY THE SURVEYOR GENERAL, APRIL 10, 1886; THENCE LEAVING SAID CENTERLINE SOUTH 53008'27" WEST (SOUTH 53009'19" WEST PER SAID LOT LINE ADJUSTMENT AND DEED) ALONG SAID SOUTHEASTERLY LINE, 44.72 FEET TO A POINT ON SAID SOUTHEASTERLY LINE, SAID LAST MENTIONED POINT LIES NORTH 50006'54" WEST, 0.65 FEET FROM A FOUND 3/4" IRON PIPE 12-INCHES DEEP PER SAID FIELD Exhibit A Page 3 BOOK 445 PAGE 52, SAID 3/4" IRON PIPE BEING ACCEPTED AS LYING ON THE CENTERLINE OF PALA ROAD PER DEED PLAT MAP 25-L, RECORDS OF RNERSIDE COUNTY, CALIFORNIA, AND PER QUITCLAIM DEED RECORDED JULY 20, 1959 AS INSTRUMENT NO. 62786 OF OFFICIAL RECORDS OF RNERSIDE COUNTY, CALIFORNIA; THENCE ALONG SAID CENTERLINE SOUTH 50007'46" EAST (SOUTH 50006'54" EAST PER SAID LOT LINE ADJUSTMENT AND DEED) 836.20 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE SOUTHWESTERLY AND HAVING A RADIUS OF 500.00 FEET AND SHOWN ON SAID DEED PLAT 25-L AS P.c. 24+86.36; THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 19044'57" AN ARC LENGTH OF 172.34 FEET; THENCE TANGENT TO SAID CURVE SOUTH 30022'49" EAST (SOUTH 30021'57" EAST PER SAID LOT LINE ADJUSTMENT AND DEED) 247.93 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 1000.00 FEET; THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 14027'00" AN ARC LENGTH OF 252.20 FEET; THENCE TANGENT TO SAID CURVE, SOUTH 44049'49" EAST 109.70 FEET (SOUTH 44048'57" EAST 109.79 FEET PER SAID LOT LINE ADJUSTMENT AND DEED); THENCE LEAVING SAID CENTERLINE ALONG THE CENTERLINE OF DEER HOLLOW WAY, NORTH 42023'14" EAST 160.20 FEET (NORTH 42023'59" EAST PER SAID LOT LINE ADJUSTMENT AND DEED); THENCE LEAVING SAID CENTERLINE OF DEER HOLLOW WAY, NORTH 47036'46" WEST 44.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE ALONG THE NORTHWESTERLY RIGHT(S) OF WAY OF SAID DEER HOLLOW WAY (44.00 FEET WIDE) NORTH 42023'14" EAST l,789.36 FEET (NORTH 42023'59" EAST PER SAID LOT LINE ADJUSTMENT AND DEED) TO A POINT, SAID POINT LIES 323.10 FEET SOUTHERLY ALONG SAID RIGHT(S) OF WAY FROM THE MOST SOUTHERLY CORNER OF OPEN SPACE LOT 51 AS SHOWN ON TRACT NO. 23065-1 FILED IN MAP BOOK 261 PAGES 21 THROUGH 28, INCLUSIVE, OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; THENCE LEAVING SAID NORTHWESTERLY RIGHT(S) OF WAY LINE, NORTH 47036'46" WEST 608.36 FEET; THENCE NORTH 89041'48" WEST 978.27 FEET TO THE BEGINNING OF A NON-TANGENT CURVE CONCAVE NORTHWESTERLY AND HAVING A RADIUS OF 933.00 FEET, A RADIAL TO THE BEGINNING OF SAID CURVE BEARS SOUTH 87054'41" EAST; THENCE SOUTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 41043'31" AND AN ARC LENGTH OF 701.30 FEET; THENCE TANGENT TO SAID CURVE, SOUTH 43048'50" WEST 401.74 FEET; THENCE SOUTH 58024'42" EAST 74.51 FEET; THENCE SOUTH 46011'10" EAST 45.04 FEET; THENCE SOUTH 41035'36" EAST 701.67 FEET; THENCE SOUTH 42056'23" EAST 301.14 FEET TO THE TRUE POINT OF BEGINNING. Exhibit A Page 4 EXHIBIT B DESCRIPTION OF THE FACILITY The Facility consists of several different facilities owned by the City, situated on portion of the Site, as follows: (a) Community Theater, an approximately 22,330 square foot building with an estimated land and improvement value of approximately $13,200,000 built in 2005, (b) Fire Station No. 84, an approximately 9,727 square foot building with an estimated land and improvement value of approximately $2,600,000 built in 1997; (c) Wolf Creek Fire Station, an approximately 9,062 square foot building with an estimated land and improvement value of approximately $4,650,000 completed in 2007; and (d) Birdsall Park, with an estimated land and improvement value of approximately $28,000,000, completed in 2006, which includes approximately 44 acres parkwith four lighted synthetic turf soccer fields, four lighted ball fields, four lighted basketball courts, picnic facilities, concession facilities, restrooms and approximately 460 parking spaces, Exhibit B Quint & Thimmig LLP 10/22/07 11/19/07 11/29/07 02/01/08 LEASE AGREEMENT Dated as of March 1, 2008 by and between the TEMECULA PUBLIC FINANCING AUTHORITY, as Lessor and the CITY OF TEMECULA, CALIFORNIA, as Lessee (2008 Temecula Civic Center Financing Project) 20002.06 Section 1.1. Section 1.2. Section 2.1. Section 2.2. Section 3.1. Section 3.2. Section 3.3. TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND EXHIBITS Definitions................................................................................................................. 2 Exhibits...................................................................................................................... 2 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Representations, Covenants and Warranties of the City............................................... 3 Representations, Covenants and Warranties of Authority............................................3 ARTICLE III DEPOSIT OF MONEYS Deposi t of Moneys..................................................................................................... 5 Payment of Project Costs............................................................................................ 5 Payment of Delivery Costs......................................................................................... 5 ARTICLE IV AGREEMENT TO LEASE; TERM OF THIS LEASE AGREEMENT; LEASE PAYMENTS Section 4.1. Section 4.2. Section 4.3. Section 4.4. Section 4.5. Section 4.6. Section 4.7. Lease.........................................................................................................................6 Term of Agreement.................................................................................................... 6 Possession.................................................................................................................. 6 Lease Payments..........................................................................................................6 Quiet Enjoyment........................................................................................................ 8 Title...........................................................................................................................8 Additional Payments.................................................................................................. 8 ARTICLE V MAINTENANCE; TAXES; INSURANCE; USE LIMITATIONS; AND OTHER MATTERS Section 5.1. Section 5.2. Section 5.3. Section 5.4. Section 5.5. Section 5.6. Section 5.7. Section 5.8. Section 5.9. Section 5.10. Section 5.11. Section 5.12. Section 5.13. Section 5.14. Section 5.15. Section 5.16. Maintenance, Utilities, Taxes and Assessments.......................................................... 10 Modification of Property.......................................................................................... 10 Public Liability and Property Damage Insurance...................................................... 11 Fire and Extended Coverage Insurance; No Earthquake Insurance........................... 11 Rental Interruption Insurance .................................................................................. 11 Title Insurance......................................................................................................... 12 Insurance Net Proceeds; Form of Policies ................................................................ 12 Advances................................................................................................................. 12 Installation of City's Equipment ...............................................................................12 Liens........................................................................................................................ 13 Private Activity Bond Limitation.............................................................................. 13 Federal Guarantee Prohibition ................................................................................. 13 Rebate Requirement................................................................................................. 13 No Arbitrage........................................................................................................... 13 Maintenance of Tax-Exemption ................................................................................ 13 No Condemnation................................................................................................... 13 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1. Section 6.2. Section 6.3. Eminent Domain...................................................................................................... 15 Application of Net Proceeds .................................................................................... 15 Abatement of Lease Payments in the Event of Damage or Destruction...................... 15 -i- Section 7.1. Section 7.2. Section 7.3. Section 8.1. Section 8.2. Section 8.3. Section 9.1. Section 9.2. Section 9.3. Section 9 A. Section 9.5. Section 9.6. Section 9.7. Section 9.8. Section 10.1. Section 10.2. Section 10.3. Section lOA. Section 11.1. Section 11.2. Section 11.3. Section 11A. Section 11.5. Section 11.6. Section 11.7. Section 11.8. Section 11.9. Section 11.10. EXHIBIT A: EXHIBIT B: EXHIBIT C: ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS; INDEMNIFICATION Disclaimer of Warranties. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ..... 17 Access to the Property ............................................................................................. 17 Release and Indemnification Covenants ................................................................... 17 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Assignment by the Authority................................................................................... 18 Assignment and Subleasing by the City.................................................................... 18 Amendment of Lease Agreement .............................................................................18 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES Events of Default Defined......................................................................................... 22 Remedies on Default................................................................................................ 22 No Remedy Exclusive.............................................................................................. 24 Agreement to Pay Attorneys' Fees and Expenses...................................................... 24 No Additional Waiver Implied by One Waiver........................................................ 24 Application of Proceeds........................................................................................... 24 Trustee and Certificate Owners to Exercise Rights..................................................... 24 No Right to Terminate for Authority Default............................................................ 24 ARTICLE X PREPAYMENT OF LEASE PAYMENTS Security Deposit....................................................................................................... 25 Prepayment Option.................................................................................................. 25 Mandatory Prepayment From Net Proceeds of Insurance, Title Insurance or Eminent Domain...................................................................................................... 26 Credit for Amounts on Deposit ................................................................................ 26 ARTICLE XI MISCELLANEOUS Notices.................................................................................................................... 27 Information to be Given to the Municipal Bond Insurer........................................... 27 Binding Effect.......................................................................................................... 28 Severabili ty.............................................................................................................. 28 Net-net-net Lease ..................................................................................................... 28 Further Assurances and Corrective Instruments........................................................28 Execution in Counterparts.. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ..... 28 Applicable Law....................................................................................................... 28 Authority and City Representatives.......................................................................... 28 Captions.................................................................................................................. 28 DESCRIPTION OF THE SITE DESCRIPTION OF THE FACILITY SCHEDULE OF LEASE PAYMENTS -ii- LEASE AGREEMENT THIS LEASE AGREEMENT (the "Lease Agreement"), dated for convenience as of March 1, 2008, by and between the TEMECULA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the State of California, as lessor (the "Authority"), and the CITY OF TEMECULA, a municipal corporation and general law city, duly organized and existing under and by virtue of the laws of the State of California, as lessee (the "City"); WITNE SSE TH: WHEREAS, pursuant to that certain Site and Facility Lease, dated as of March 1,2008 (the "Site and Facility Lease"), the City has leased those certain parcels of real property situated in Riverside County, State of California, more particularly described in Exhibit A attached hereto and made a part hereof (the "Site"), and those certain improvements thereon, more particularly described in Exhibit B hereto (the "Facility" and, with the Site, the "Property"), to the Authority, all for the purpose of enabling the City to finance the construction of a new civic center facility (the "Project"); WHEREAS, the Authority proposes to lease the Property back to the City pursuant to this Lease Agreement and to assign its right to receive lease payments under this Lease Agreement (the "Lease Payments"), its right to enforce payment of the Lease Payments and otherwise to enforce its interest and rights under this Lease Agreement in the event of a default hereunder by the City, to U.S. Bank National Association, as trustee (the "Trustee"), pursuant to that certain Assignment Agreement, dated as of March 1, 2008, by and between the Authority and the Trustee; WHEREAS, pursuant to that certain Trust Agreement, dated as of March 1,2008, by and among the City, the Authority and the Trustee, the Trustee will execute and deliver certificates of participation (the "Certificates") in the Lease Payments; and WHEREAS, the proceeds of the Certificates, together with other available moneys, will be applied by the City to (a) finance the Project, (b) fund a reserve fund for the Certificates, and (c) pay delivery costs incurred in connection with the execution, delivery and sale of the Certificates; NOW, THEREFORE, for and in consideration of the premises and the material covenants hereinafter contained, the parties hereto hereby formally covenant, agree and.bind themselves as follows: ARTICLE I DEFINITIONS AND EXHIBITS Section 1.1. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms in this Lease Agreement shall have the respective meanings specified in Section 1.01 of the Trust Agreement, dated as of March 1, 2008, by and among the City, the Authority and the Trustee. Section 1.2. Exhibits. The following exhibits are attached to, and by this reference made a part of, this Lease Agreement: Exhibit A: The description of the Site. Exhibit B: The description of the Facility. Exhibit C: The schedule of Lease Payments to be paid by the City hereunder with respect to the Property, showing the Lease Payment Date and amount of each such Lease Payment. -2- ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.1. Representations. Covenants and Warranties of the City. The City represents, covenants and warrants to the Authority and the Municipal Bond Insurer as follows: (a) Due Organization and Existence. The City is a municipal corporation and general law city, duly organized and existing under and by virtue of the laws of the State. (b) Authorization. The laws of the State authorize the City to enter into the Site and Facility Lease, this Lease Agreement and the Trust Agreement and to enter into the transactions contemplated by and to carry out its obligations under all of the aforesaid agreements, and the City has duly authorized and executed all of the aforesaid agreements and such agreements constitute the legal, valid and binding agreements of the City, enforceable against the City in accordance with their respective terms. (c) No Violations. Neither the execution and delivery of the Site and Facility Lease, this Lease Agreement or the Trust Agreement, the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction, agreement or instrument to which the City is now a party or by which the City is bound, constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrances whatsoever upon any of the property or assets of the City, or upon the Property, except Permitted Encumbrances. (d) Execution and Delivery. The City has duly authorized and executed this Lease Agreement in accordance with all applicable laws. Section 2.2. Representations. Covenants and Warranties of Authority. The Authority represents, covenants and warrants to the City and the Municipal Bond Insurer as follows: (a) Due Organization and Existence. The Authority is a joint exercise of powers authority, organized and existing under and by virtue of the laws of the State; has power to enter into the Site and Facility Lease, this Lease Agreement, the Assignment Agreement and the Trust Agreement; is possessed of full power to own and hold, improve and equip real and personal property and to lease and sell the same; has duly authorized the execution and delivery of all of the aforesaid agreements and such agreements constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms. (b) No Encumbrances. The Authority will not pledge the Lease Payments or other amounts derived from the Property and from its other rights under this Lease Agreement and will not mortgage or encumber the Property, except as provided under the terms of this Lease Agreement and the Trust Agreement. (c) No Violations. Neither the execution and delivery of the Site and Facility Lease, this Lease Agreement, the Assignment Agreement or the Trust Agreement, the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the Authority is now a party or by which the Authority is bound, constitutes a default -3- under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Authority, or upon the Property, except Permitted Encumbrances. (d) No Assignments. Except as provided herein, the Authority will not assign this Lease Agreement, its right to receive Lease Payments from the City or its duties and obligations hereunder to any other person, firm or corporation so as to impair or violate the representations, covenants and warranties contained in this Section 2.2. (e) Execution and Delivery. The Authority has duly authorized and executed this Lease Agreement in accordance with all applicable laws. -4- ARTICLE III DEPOSIT OF MONEYS Section 3.1. Deposit of Moneys. On the Closing Date, the Authority shall cause to be deposited with the Trustee the Proceeds of sale of the Certificates, net of amounts paid by the Original Purchaser to the Municipal Bond Insurer as an accommodation to the City for the premium relating to the Municipal Bond Insurance Policy. Amounts estimated to be required to pay Delivery Costs shall be deposited in the Delivery Costs Fund, an amount equal to the Reserve Requirement shall be deposited in the Reserve Fund and the remaining balance of said amount required to pay Project Costs shall be deposited in the Project Fund. Section 3.2. Payment of Project Costs. Payment of Project Costs shall be made from the moneys deposited in the Project Fund, which moneys shall be disbursed for such purpose in accordance and upon compliance with Section 3.02 of the Trust Agreement. Section 3.3. Payment of Delivery Costs. Payment of Delivery Costs shall be made from the moneys deposited in the Delivery Costs Fund, which moneys shall be disbursed for such purpose in accordance and upon compliance with Section 3.04 of the Trust Agreement. -5- ARTICLE IV AGREEMENT TO LEASE; TERM OF THIS LEASE AGREEMENT; LEASE PAYMENTS Section 4.1. Lease. (a) The Authority hereby leases the Property to the City, and the City hereby leases the Property from the Authority, upon the terms and conditions set forth in this Lease Agreement. (b) The leasing of the Property by the City to the Authority pursuant to the Site and Facility Lease shall not affect or result in a merger of the City's leasehold estate pursuant to this Lease Agreement and its fee estate as lessor under the Site and Facility Lease. Section 4.2. Term of Agreement. The Term of the Lease Agreement shall commence on the Closing Date, and shall end on September 1, 2038, unless such term is extended as hereinafter provided. If, on September 1,2038, the Trust Agreement shall not be discharged by its terms or if the Lease Payments payable hereunder shall have been abated at any time and for any reason, then the Term of the Lease Agreement shall be extended without the need to execute any amendment to this Section 4.2 until there has been deposited with the Trustee an amount sufficient to pay all obligations due under the Lease Agreement, but in no event shall the Term of the Lease Agreement extend beyond September 1,2048. If, prior to September 1,2038, the Trust Agreement shall be discharged by its terms, the Term of the Lease Agreement shall thereupon end. The Trustee shall notify the Authority of the termination of this Lease Agreement pursuant to Section 14.03 of the Trust Agreement. Notwithstanding the foregoing, but subject to the provisions of the prior paragraph, the Term of the Lease Agreement shall not end so long as any amounts are owed to the Municipal Bond Insurer with respect to the Municipal Bond Insurance Policy. Section 4.3. Possession. The City hereby agrees to accept and take possession of the Property on or prior to the date of recordation of this Lease Agreement. The first Lease Payment shall be due on August 15, 2008. Section 4.4. Lease Payments. (a) Obligation to Pay. Subject to the provisions of Articles VI and X hereof, the City agrees to pay to the Authority, its successors and assigns, as rental for the use and occupancy of the Property during each Rental Period, the Lease Payments (denominated into components of principal and interest) in the respective amounts specified in Exhibit C hereto, to be due and payable on the respective Lease Payment Dates specified in Exhibit C hereto. Any amount held in the Lease Payment Fund on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole pursuant to Article X hereof and other than amounts required for payment of Certificates not yet surrendered) shall be credited towards the Lease Payment then due and payable; and no Lease Payment need be made on any Lease Payment Date if the amounts then held in the Lease Payment Fund are at least equal to the Lease Payment then required to be paid. The Lease Payments for the Property payable in any Rental Period shall be for the use of the Property for such Rental Period. (b) Effect of Prepayment. In the event that the City prepays all remaining Lease Payments and all additional payments due under Section 4.7 hereof in full pursuant to Article X hereof, the City's obligations under this Lease Agreement shall thereupon cease -D- and terminate including, but not limited to, the City's obligation to pay Lease Payments under this Section 4.4; subject however, to the provisions of Section 10.1 hereof in the case of prepayment by application of a security deposit. In the event that the City optionally prepays the Lease Payments in part but not in whole pursuant to Section 10.2 hereof or pursuant to Section 10.3 hereof as a result of any insurance or condemnation award with respect to any portion of the Property, such prepayment shall be credited entirely towards the prepayment of the Lease Payments as follows: (i) the principal components of each remaining such Lease Payments shall be reduced in such order as shall be selected by the City in integral multiples of $5,000; and (ii) the interest component of each remaining Lease Payment shall be reduced by the aggregate corresponding amount of interest which would otherwise be payable with respect to the Certificates thereby redeemed pursuant to Sections 4.01(a) or (b), as the case may be, of the Trust Agreement. (c) Rate on Overdue Payments. In the event the City should fail to make any of the payments required in this Section 4.4, the payment in default shall continue as an obligation of the City until the amount in default shall have been fully paid, and the City agrees to pay the same with interest thereon, to the extent permitted by law, from the date of default to the date of payment at the rate per annum payable with respect to the Certificates. Such interest, if received, shall be deposited in the Lease Payment Fund or in the Reserve Fund to replenish the Reserve Fund if withdrawals were made therefrom as a res ult of the default. (d) Fair Rental Value. The Lease Payments for the Property for each Rental Period shall constitute the total rental for the Property for each such Rental Period and shall be paid by the City in each Rental Period for and in consideration of the right of the use and occupancy and the continued quiet use and enjoyment of the Property during each Rental Period. The parties hereto have agreed and determined that the total Lease Payments for the Property represent the fair rental value of the Property. In making such determination, consideration has been given to the obligations of the parties under this Lease Agreement, the uses and purposes which may be served by the Property and the benefits therefrom which will accrue to the City and the general public. (e) Source of Payments; Budget and Appropriation. Lease Payments shall be payable from any source of available funds of the City, subject to the provisions of Articles VI and X hereof. The City covenants to take such action as may be necessary to include all Lease Payments due hereunder in each of its budgets during the Term of the Lease Agreement and to make the necessary annual appropriations for all such Lease Payments and for additional payments due under Section 4.7 hereof. To that end, the City Council shall direct budgetary staff to include in each annual budget proposal to the City Council an appropriation sufficient to pay Lease Payments and Additional Payments. The City hereby expresses its present intent to appropriate Lease Payments and additional payments due under Section 4.7 hereof during the Term of the Lease Agreement. 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. (f) Assignment. The City understands and agrees that all Lease Payments have been assigned by the Authority to the Trustee in trust, pursuant to the Assignment Agreement, for the benefit of the Owners of the Certificates, and the City hereby assents to such assignment. The Authority hereby directs the City, and the City hereby agrees to pay to the -7- Trustee at the Principal Corporate Trust Office, all payments payable by the City pursuant to this Section 4.4 and all amounts payable by the City pursuant to Article X hereof. Section 4.5. Ouiet Enjoyment. During the Term of the Lease Agreement, the Authority shall provide the City with quiet use and enjoyment of the Property and the City shall, during such Term, peaceably and quietly have and hold and enjoy the Property without suit, trouble or hindrance from the Authority, except as expressly set forth in this Lease Agreement. The Authority will, at the request of the City and at the City's cost, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so. Notwithstanding the foregoing, the Authority shall have the right to inspect the Property as provided in Section 7.2. hereof. Section 4.6. Title. During the Term of the Lease Agreement, the Authority shall hold leasehold title to the Property and shall hold fee title to those portions of the Property which are newly acquired or constructed and any and all additions which comprise fixtures, repairs, replacements or modifications to the Property, except for those fixtures, repairs, replacements or modifications which are added to the Property by the City at its own expense and which may be removed without damaging the Property and except for any items added to the Property by the City pursuant to Section 5.9 hereof. If the City prepays the Lease Payments in full pursuant to Article X hereof or makes the security deposit permitted by Section 10.1 hereof, or pays all Lease Payments during the Term of the Lease Agreement as the same become due and payable, all right, title and interest of the Authority in and to the Property shall be terminated. The Authority agrees to take any and all steps and execute and record any and all documents reasonably required by the City to consummate any such transfer of title. Section 4.7. Additional Payments. (a) In addition to the Lease Payments, the City shall pay when due all costs and expenses incurred by the City and the Authority to comply with the provisions of the Trust Agreement and this Lease Agreement, or otherwise arising from the leasing of the Property, including without limitation (i) all Delivery Costs (to the extent not paid from amounts on deposit in the Delivery Costs Fund), (ii) compensation and indemnification due to the Trustee, (iii) all costs and expenses of auditors, engineers, attorneys and accountants engaged by the Authority or the Trustee in connection with the Property or the performance of their duties under the Lease Agreement or under the Trust Agreement, (iv) premiums for the Municipal Bond Insurance Policy, whether advanced by the Trustee or the Authority or otherwise due to the Municipal Bond Insurer, (v) taxes, assessments or in lien taxes, if any, charged to the City or the Authority affecting the Property or the respective interests or estates therein; and (vi) any rebate amounts payable to the Federal Government. (b) The City shall payor reimburse the Municipal Bond Insurer any and all charges, fees, costs and expenses which the Municipal Bond Insurer may reasonably payor incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in this Lease Agreement or the Trust Agreement; (ii) the pursuit of any remedies under this Lease Agreement or the Trust Agreement or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, this Lease Agreement or the Trust Agreement whether or not executed or completed, (iv) the violation by the City of any law, rule or regulation, or any judgment, order or decree applicable to them, (v) any litigation or other dispute in connection with this Lease Agreement or the Trust Agreement or the transactions contemplated thereby, other than amounts resulting from the failure of the Municipal Bond Insurer to honor its obligations under the Municipal -13- Bond Insurance Policy, and (vi) the City's obligations under Section 6.02(b) of the Trust Agreement. The Municipal Bond Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of this Lease Agreement or the Trust Agreement. -9- ARTICLE V MAINTENANCE; TAXES; INSURANCE; USE LIMITATIONS; AND OTHER MATTERS Section 5.1. Maintenance. Utilities. Taxes and Assessments. Throughout the Term of the Lease Agreement, as part of the consideration for the rental of the Property, all improvement, repair and maintenance of the Property shall be the responsibility of the City and the City shall pay, 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, water and all other utility services, and shall pay for or otherwise arrange for the 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 Lease Payments herein provided, the Authority agrees to provide only the Property, as hereinbefore more specifically set forth. The City waives the benefits of subsections 1 and 2 of section 1932 of the California Civil Code, but such waiver shall not limit any of the rights of the City under the terms of this Lease Agreement. The City shall also payor cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Property or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are required to be paid during the Term of the Lease Agreement as and when the same become due. The City may, at the City's expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority or the Municipal Bond Insurer shall notify the City 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 shall promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority. The City shall provide the Authority and the Municipal Bond Insurer with written notice of any such contest and shall provide such updates on the contest as the Authority or the Municipal Bond Insurer may reasonably request. Section 5.2. Modification of Property. The City shall, at its own expense, have the right to remodel the Property or to make additions, modifications and improvements to the Property. All additions, modifications and improvements to the Property shall thereafter comprise part of the Property and be subject to the provisions of this Lease Agreement. Such additions, modifications and improvements shall not in any way damage the Property, substantially alter its nature, cause the interest component of Lease Payments to be subject to federal income taxes or cause the Property 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 thereto pursuant to this Section 5.2, shall be of a value which is not substantially less than the value of the Property immediately prior to the making of such additions, modifications and improvements. The City will not permit any mechanic's or other lien to be established or remain against the Property for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City pursuant to this Section 5.2; provided that if any such lien is established -10- and the City shall first notify the Authority of the City's intention to do so, the City may in good faith contest any lien filed or established against the Property, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City. Section 5.3. Public Liability and Property Damage Insurance. The City shall maintain or cause to be maintained, throughout the Term of the Lease Agreement, insurance policies, including a standard comprehensive general insurance policy or policies in protection of the Authority, the City and the Trustee and their respective members, officers, agents and employees. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried by the City, and may be maintained through a joint exercise of powers authority created for such purpose or, with the prior written consent of the Municipal Bond Insurer, in the form of self- insurance by the City. Said policy or policies shall provide for indemnification of said parties against direct or consequential loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation 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 each accident or event, and in a minimum amount of $100,000 (subject to a deductible clause of not to exceed $5,000) for damage to property resulting from each 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 by the City and may be maintained in the form of insurance maintained through a joint exercise of powers authority created for such purpose or, with the prior written consent of the Municipal Bond Insurer, in the form of self- insurance 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 insurance proceeds shall have been paid. Section 5.4. Fire and Extended Coverage Insurance: No Earthquake Insurance. The City shall maintain, or cause to be maintained throughout the Term of the Lease Agreement, insurance against loss or damage to any part of the Property constituting structures, if any, by fire and lightning, with extended coverage and vandalism and malicious mischief insurance; provided, however, that the City shall not be required to maintain earthquake insurance with respect to the Property. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance shall be in an amount equal to one hundred percent (100%) of the replacement cost of such portion of the Property, if any. Such insurance may be subject to deductible clauses of not to exceed $100,000 for anyone loss. Such insurance may be maintained as part of or in conjunction with any other fire and extended coverage insurance carried by the City and, with the prior consent of the Municipal Bond Insurer, may be maintained in whole or in part in the form of insurance maintained through a joint exercise of powers authority created for such purpose. The Net Proceeds of such insurance shall be applied as provided in Section 6.2(a) hereof. The City may not satisfy the requirements of this Section 5.4 with self-insurance except with the prior written consent of the Municipal Bond Insurer. Section 5.5. Rental Interruption Insurance. The City shall maintain, or cause to be maintained, throughout the Term of the Lease Agreement rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of any part of the Property -11- during the Term of the Lease Agreement as a result of any of the hazards covered in the insurance required by Section 5.4 hereof, if any, in an amount at least equal to two times the Reserve Requirement. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Lease Payment Fund and shall be credited towards the payment of the Lease Payments in the order in which such Lease Payments come due and payable. Such insurance may be maintained as part of or in conjunction with any other insurance carried by the City and, with the prior consent of the Municipal Bond Insurer, may be maintained in whole or in part in the form of insurance maintained through a joint exercise of powers authority created for such purpose. The City may not satisfy the requirements of this Section 5.5 with self-insurance, except with the prior written consent of the Municipal Bond Insurer. Section 5.6. Title Insurance. (a) The City shall provide, from moneys in the Delivery Costs Fund or at its own expense, on the Closing Date, an CLTA title insurance policy covering, and in the amount of not less than the principal amount of the Certificates, insuring the City's leasehold estate in the Property, subject only to Permitted Encumbrances. A copy of such policy shall be delivered to the Municipal Bond Insurer. (b) The Net Proceeds of such title insurance shall be applied as provided in Section 6.2(c) hereof. Section 5.7. Insurance Net Proceeds: Form of Policies. Each policy or other evidence of insurance required by Sections 5.3, 5.4, 5.5 and 5.6 hereof shall provide that all proceeds thereunder shall be payable to the Trustee as and to the extent required hereunder, shall name the Trustee and the Municipal Bond Insurer as additional insureds and shall be applied as provided in Section 6.2 hereof. Insurance must be provided by an insurer rated U AU or better by S&P or A.M. Best Company unless waived by the Municipal Bond Insurer. The City shall payor cause to be paid when due the premiums for all insurance policies required by this Lease Agreement. Notice of cancellation of any such policy shall be filed with the Municipal Bond Insurer. The Trustee shall not be responsible for the sufficiency of any insurance herein required, including any forms of self-insurance and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss. The City shall cause to be delivered annually on or before each September 1 to the Trustee and the Municipal Bond Insurer a certification, signed by a City Representative, stating compliance with the provisions of Section 5.3 through 5.7 of this Lease Agreement. The Trustee shall be entitled to rely on such certification without independent investigation. The City shall have the adequacy of any insurance reserves maintained by the City or by a joint exercise of powers authority, if applicable, for purposes of the insurance required by Section 5.3 and 5.4 hereof reviewed at least annually, on or before each September 1, by an independent insurance consultant and shall maintain reserves in accordance with the recommendations of such consultant to the extent moneys are available for such purpose and not otherwise appropriated. Section 5.8. Advances. If the City shall fail to perform any of its obligations under this Article V, the Authority or the Trustee may, but shall not be obligated to, take such action as may be necessary to cure such failure, including the advancement of money, and the City shall be obligated to repay all such advances as soon as possible, with interest at a rate equal to the rate then payable with respect to the Certificates from the date of the advance to the date of repayment. Section 5.9. Installation of City's Equipment. The City may, at any time and from time to time in its sole discretion and at its own expense, install or permit to be installed -12- items of equipment or other personal property in or upon any portion of the Property. All such items shall remain the sole property of the City in which neither the Authority nor the Trustee shall have any interest and may be modified or removed by the City at any time provided that the City shall repair and restore any and all damage to the Property resulting from the installation, modification or removal of any such items. Nothing in this Lease Agreement shall prevent the City from purchasing or leasing items to be installed pursuant to this Section 5.9 under a lease or conditional sale agreement, or subject to a vendor's lien or security agreement, as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest shall attach to any part of the Property. Section 5.10. Liens. The City shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Property, other than the respective rights of the Authority and the City as provided herein and Permitted Encumbrances. Except as expressly provided in this Article V, the City shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at any time. The City shall reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. Section 5.11. Private Activity Bond Limitation. The City shall assure that proceeds of the Certificates are not so used as to cause the Certificates or the Lease Agreement to satisfy the private business tests of section 141(b) of the Code or the private loan financing test of section 141(c) of the Code. Section 5.12. Federal Guarantee Prohibition. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Certificates or the Lease Agreement to be "federally guaranteed" within the meaning of section 149(b) of the Code. Section 5.13. Rebate Requirement. The City shall take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Certificates and the Lease Agreement. Section 5.14. No Arbitrage. The City shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the Certificates which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date would have caused the Certificates or the Lease Agreement to be "arbitrage bonds" within the meaning of section 148 of the Code. Section 5.15. Maintenance of Tax-Exemption. The City shall take all actions necessary to assure the exclusion of interest with respect to the Certificates from the gross income of the Owners of the Certificates to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the Closing Date. Section 5.16. No Condemnation. The City hereby covenants and agrees, to the extent it may lawfully do so, that so long as any of the Certificates remain outstanding and unpaid, the City will not exercise the power of condemnation with respect to the Property. The City further covenants and agrees, to the extent it may lawfully do so, that if for any reason the foregoing covenant is determined to be unenforceable or if the City should fall or refuse to abide by such covenant and condemns the Property, the appraised value of the Property shall not be less than the greater of (i) if the Certificates are then subject to redemption, the principal and interest components of the Certificates Outstanding through the date of their -13- redemption, or (ii) if the Certificates are not then subject to redemption, the amount necessary to defease the Certificates to the first available redemption date in accordance with the Trust Agreement. -14- ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1. Eminent Domain. If all of the Property shall be taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of this Lease Agreement shall cease as of the day possession shall be so taken. If less than all of the Property shall be taken permanently, or if all of the Property or any part thereof shall be taken temporarily under the power of eminent domain, (1) this Lease Agreement shall continue in full force and effect and shall not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (2) there shall be a partial abatement of Lease Payments as a result of the application of the Net Proceeds of any eminent domain award to the prepayment of the Lease Payments hereunder, in an amount to be agreed upon by the City and the Authority and communicated to the Trustee such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portion of the Property, except to the extent of special funds, such as amounts in the Reserve Fund available for the payment of Lease Payments. Section 6.2. Application of Net Proceeds. (a) From Insurance Award. The Net Proceeds of any insurance award resulting from any damage to or destruction of any portion of the Property constituting structures, if any, by fire or other casualty shall be paid by the City to the Trustee, as assignee of the Authority under the Assignment Agreement, deposited in the Insurance and Condemnation Fund held by the Trustee and applied as set forth in Section 7.01 of the Trust Agreement. (b) From Eminent Domain Award. The Net Proceeds of any eminent domain award resulting from any event described in Section 6.1 hereof shall be paid by the City to the Trustee, as assignee of the Authority under the Assignment Agreement, deposited in the Insurance and Condemnation Fund and applied as set forth in Section 7.02 of the Trust Agreement. (c) From Title Insurance. The Net Proceeds of any title insurance award shall be paid to the Trustee, as assignee of the Authority under the Assignment Agreement, deposited in the Insurance and Condemnation Fund and applied as set forth in Section 7.03 of the Trust Agreement. Section 6.3. Abatement of Lease Payments in the Event of Damage or Destruction. Lease Payments shall be abated during any period in which, by reason of damage or destruction, there is substantial interference with the use and occupancy by the City of the Property or any portion thereof (other than any portions of the Property described in Section 5.2 hereof) to the extent to be agreed upon by the City and the Authority and communicated by a Certificate of a City Representative to the Trustee. The parties agree that the amounts of the Lease Payments under such circumstances shall not be less than the amounts of the unpaid Lease Payments as are then set forth in Exhibit C, unless such unpaid amounts are determined, upon consultation with the Municipal Bond Insurer, to be greater than the fair rental value of the portions of the Property not damaged or destroyed (giving due consideration to the factors identified in the last sentence of Section 4.4(d)), based upon the opinion of an MAl appraiser with expertise in valuing such properties or other appropriate method of valuation, in which event the Lease Payments shall be abated such that they represent said fair rental value. Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion -15- of the work of repair or reconstruction as evidenced by a Certificate of a City Representative to the Trustee. In the event of any such damage or destruction, this Lease Agreement shall continue in full force and effect and the City waives any right to terminate this Lease Agreement by virtue of any such damage and destruction. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 6.3 to the extent that (a) the proceeds of rental interruption insurance or (b) amounts in the Reserve Fund, if cash funded, and/or the Insurance and Condemnation Fund and/or the Lease Payment Fund are available to pay Lease Payments which would otherwise be abated under this Section 6.3, it being hereby declared that such proceeds and amounts constitute special funds for the payment of the Lease Payments. -16- ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS; INDEMNIFICA TION Section 7.1. Disclaimer of Warranties. THE AUTHORITY MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE PROPERTY OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE PROPERTY. IN NO EVENT SHALL THE AUTHORITY OR ITS ASSIGNS BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE SITE AND FACILITY LEASE, THIS LEASE AGREEMENT OR THE TRUST AGREEMENT FOR THE EXISTENCE, FURNISHING, FUNCTIONING OR THE CITY'S USE OF THE PROPERTY. Section 7.2. Access to the Property. The City agrees that the Authority and any Authority Representative, and the Authority's successors or assigns, shall have the right at all reasonable times to enter upon and to examine and inspect the Property. The City further agrees that the Authority, any Authority Representative, and the Authority's successors or assigns shall have such rights of access to the Property as may be reasonably necessary to cause the proper maintenance of the Property in the event of failure by the City to perform its obligations hereunder. Section 7.3. Release and Indemnification Covenants. The City shall and hereby agrees to indemnify and save the Authority and the Trustee and their officers, agents, directors, employees, successors and assigns harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on the Property by the City, (ii) any breach or default on the part of the City in the performance of any of its obligations under this Lease Agreement or the Trust Agreement, (iii) any act or omission of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Property, (iv) any act or omission of any sublessee of the City with respect to the Property, or (v) the authorization of payment of the Delivery Costs. Such indemnification shall include the costs and expenses of defending any claim or liability arising under this Lease Agreement or the Trust Agreement and the transactions contemplated thereby. No indemnification is made under this Section 7.3 or elsewhere in this Lease Agreement for willful misconduct, negligence or breach of duty under this Lease Agreement by the Authority, its officers, agents, directors, employees, successors or assigns. -17- ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Section 8.1. Assignment by the Authority. The Authority's rights under this Lease Agreement, including the right to receive and enforce payment of the Lease Payments to be made by the City under this Lease Agreement, have been assigned to the Trustee pursuant to the Assignment Agreement. Section 8.2. Assignment and Subleasing by the City. This Lease Agreement may not be assigned by the City. The City may sublease the Property or any portion thereof, but only with the written consent of the Authority and the Municipal Bond Insurer and subject to, and delivery to the Authority of a certificate as to, all of the following conditions: (a) This Lease Agreement and the obligation of the City to make Lease Payments hereunder shall remain obligations of the City; (b) The City shall, within thirty (30) days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease; (c) No such sublease by the City shall cause the Property to be used for a purpose other than as may be authorized under the provisions of the Constitution and laws of the State; and (d) The City shall furnish the Authority and the Trustee with a written opinion of Bond Counsel, which shall be an Independent Counsel, stating that such sublease does not cause the interest components of the Lease Payments to become subject to federal income taxes or State personal income taxes. Section 8.3. Amendment of Lease Agreement. (a) Substitution of Site or Facility. The City shall have, and is hereby granted, the option at any time and from time to time during the Term of the Lease Agreement to substitute other land (a "Substitute Site") and/or a substitute facility (a "Substitute Facility") for the Site (the "Former Site"), or a portion thereof, and/or the Facility (the "Former Facility"), or a portion thereof, provided that the City shall satisfy all of the following requirements (to the extent applicable) which are hereby declared to be conditions precedent to such substitution: (i) If a substitution of the Site, the City shall file with the Authority and the Trustee an amended Exhibit A to the Site and Facility Lease which adds thereto a description of such Substitute Site and deletes therefrom the description of the Former Site; (ii) If a substitution of the Site, the City shall file with the Authority and the Trustee an amended Exhibit A to this Lease Agreement which adds thereto a description of such Substitute Site and deletes therefrom the description of the Former Site; (iii) If a substitution of the Facility, the City shall file with the Authority and the Trustee an amended Exhibit B to the Site and Facility Lease which adds thereto a description of such Substitute Facility and deletes therefrom the description of the Former Facility; -18- (iv) If a substitution of the Facility, the City shall file with the Authority and the Trustee an amended Exhibit B to this Lease Agreement which adds thereto a description of such Substitute Facility and deletes therefrom the description of the Former Facility; (v) The City shall certify in writing to the Authority and the Trustee that such Substitute Site and/or Substitute Facility serve the purposes of the City, constitutes property that is unencumbered, subject to Permitted Encumbrances, and constitutes property which the City is permitted to lease under the laws of the State; (vi) The City delivers to the Trustee and the Authority evidence that the value of the Property following such substitution is equal to or greater than the Outstanding principal amount of the Certificates and confirms in writing to the Trustee that the indemnification provided pursuant to Section 12.03 of the Trust Agreement applies with respect to the Substitute Site and/or Substitute Facility; (vii) The Substitute Site and/or Substitute Facility shall not cause the City to violate any of its covenants, representations and warranties made herein and in the Trust Agreement; (viii) The City shall obtain an amendment to the title insurance policy required pursuant to Section 5.6 hereof which adds thereto a description of the Substitute Site and deletes therefrom the description of the Former Site; (ix) The City shall certify that the Substitute Site and/or the Substitute Facility is of the same or greater essentiality to the City as was the Former Site and/or the Former Facility; (x) The Municipal Bond Insurer shall provide prior written consent to such substitution; (xi) The City shall provide notice of the substitution to any rating agency then rating the Certificates which rating was provided at the request of the City or the Authority; and (xii) The City shall furnish the Authority and the Trustee with a written opinion of Bond Counsel, which shall be an Independent Counsel, stating that such substitution does not cause the interest components of the Lease Payments to become subject to federal income taxes or State personal income taxes. (b) Release of Site. The City shall have, and is hereby granted, the option at any time and from time to time during the Term of the Lease Agreement to release any portion of the Site, provided that the City shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such release: (i) The City shall file with the Authority and the Trustee an amended Exhibit A to the Site and Facility Lease which describes the Site, as revised by such release; (ii) The City delivers to the Trustee, the Municipal Bond Insurer and the Authority evidence that the value of the Site, as revised by such release, is equal to or greater than the Outstanding principal amount of the Certificates and confirms in writing to the Trustee and the Authority that the indemnification provided pursuant to Section 12.03 of the Trust Agreement applies with respect to the Site, as revised by such release; -19- (iii) Such release shall not cause the City to violate any of its covenants, representations and warranties made herein and in the Trust Agreement; (iv) The City shall obtain an amendment to the title insurance policy required pursuant to Section 5.6 hereof which describes the Site, as revised by such release; and (v) The City shall provide notice of the release to any rating agency then rating the Certificates which rating was provided at the request of the City or the Authority. (c) Substitution of Project for the Property. Notwithstanding the forgoing, the City shall have, and is hereby granted, the option at any time, to substitute the Project for the original Property, provided that the City shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such substitution; provided that no action of the City Council of the City shall be required to consummate such substitution: (i) The City shall file with the Authority and the Trustee an amended Exhibit A to the Site and Facility Lease which adds thereto a description of the site of the Project (the "Project Site") and deletes therefrom the description of the Site; (ii) The City shall file with the Authority and the Trustee an amended Exhibit A to this Lease Agreement which adds thereto a description of the Project Site and deletes therefrom the description of the Site; (iii) The City shall file with the Authority and the Trustee an amended Exhibit B to the Site and Facility Lease which adds thereto a description of the Project and deletes therefrom the description of the Facility; (iv) The City shall file with the Authority and the Trustee an amended Exhibit B to this Lease Agreement which adds thereto a description of the Project and deletes therefrom the description of the Facility; (v) The substitution of the Property with the Project shall not cause the City to violate any of its covenants, representations and warranties made herein and in the Trust Agreement; (vi) The City shall obtain an amendment to the title insurance policy required pursuant to Section 5.6 hereof which adds thereto a description of the Project Site and deletes therefrom the description of the Site or obtains a new title insurance policy, substantially in the form required by Section 5.6 hereof, relating to the Project Site, setting forth only such encumbrances as shall not, in the opinion of counsel to the City, impair the City's use and possession of the Project following substitution; and (vii) The City shall furnish the Authority and the Trustee with a written opinion of Bond Counsel stating that such substitution does not cause the interest components of the Lease Payments to become subject to federal income taxes or State personal income taxes. (d) Generally. The Authority and the City may at any time amend or modify any of the provisions of this Lease Agreement, but only (a) with the prior written consent of the Owners of a majority in aggregate principal amount of the Outstanding Certificates and the -20- Municipal Bond Insurer, or (b) without the consent of any of the Owners, but with the consent of the Municipal Bond Insurer, but only if such amendment or modification is for anyone or more of the following purposes: (i) to add to the covenants and agreements of the City contained in this Lease Agreement, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the City; (ii) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, or in any other respect whatsoever as the Authority and the City may deem necessary or desirable, provided that, in the opinion of Bond Counsel, such modifications or amendments will not materially adversely affect the interests of the Owners; or (iii) to amend any provision thereof relating to the Code, to any extent whatsoever but only if and to the extent such amendment will not adversely affect the exclusion from gross income of interest with respect to the Certificates under the Code, in the opinion of Bond Counsel. -21- ARTICLE IX EVENTS OF DEFAULT AND REMEDIES Section 9.1. Events of Default Defined. The following shall be "events of default" under this Lease Agreement and the terms "Events of Default" and "Default" shall mean, whenever they are used in this Lease Agreement, with respect to the Property, anyone or more of the following events: (a) Failure by the City to pay any Lease Payment or other payment required to be paid hereunder at the time specified herein. (b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed under this Lease Agreement (including failure to request appropriation pursuant to Section 4.4(e) hereof) or under the Trust Agreement, other than as referred to in clause (a) of this Section 9.1, for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority, the Trustee, the Municipal Bond Insurer or the Owners of not less than five percent (5%) in aggregate principal amount of Certificates then outstanding; provided, however, if the failure stated in the notice can be corrected, but not within the applicable period, the Authority, the Trustee, the Municipal Bond Insurer and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the City within the applicable period and diligently pursued until the default is corrected; provided further, however, that no grace period for a covenant default shall exceed 30 days, nor be extended for more than 60 days, without the prior written consent of the Municipal Bond Insurer. (c) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Act, as amended, or under any similar acts which may hereafter be enacted. Section 9.2. Remedies on Default. The Trustee, acting at the direction of the Municipal Bond Insurer, shall have the right to re-enter and re-Iet the Property and to terminate this Lease Agreement. The Municipal Bond Insurer shall have the right to control all remedies for default under both this Lease Agreement and the Trust Agreement. Whenever any Event of Default referred to in Section 9.1 hereof shall have happened and be continuing, it shall be lawful for the Authority to exercise any and all remedies available pursuant to law or granted pursuant to this Lease Agreement; prauided, however, that notwithstanding anything herein or in the Trust Agreement to the contrary, there shall be no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. Each and every covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof, the Authority may exercise any and all rights of entry and re-entry upon the Property, and also, at its option, with or without such entry, may terminate this Lease Agreement; provided, that no such termination shall be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. In the event of such default and notwithstanding any re-entry by the Authority, the City shall, -22- as herein expressly provided, continue to remain liable for the payment of the Lease Payments and/or damages for breach of this Lease Agreement and the performance of all conditions herein contained and, in any event such rent and/or damages shall be payable to the Authority at the time and in the manner as herein provided, to wit: (a) In the event the Authority does not elect to terminate this Lease Agreement in the manner hereinafter provided for in subparagraph (b) hereof, the City agrees to and shall remain liable for the payment of all Lease Payments and the performance of all conditions herein contained and shall reimburse the Authority for any deficiency arising out of the re- leasing of the Property, or, in the event the Authority is unable to re-lease the Property, then for the full amount of all Lease Payments to the end of the Term of the Lease Agreement, but said Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as hereinabove provided for the payment of Lease Payments hereunder, notwithstanding such entry or re-entry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Property or the exercise of any other remedy by the Authority. The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City to enter upon and re-lease the Property in the event of default by the City in the performance of any covenants herein contained to be performed by the City and to remove all personal property whatsoever situated upon the Property, to place such property in storage or other suitable place within Riverside County, for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re-Ieasing of the Property and the removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. The City hereby waives any and all claims for damages caused or which may be caused by the Authority in re-entering and taking possession of the Property as herein provided and all claims for damages that may result from the destruction of or injury to the Property and all claims for damages to or loss of any property belonging to the City that may be in or upon the Property. The City agrees that the terms of this Lease Agreement constitute full and sufficient notice of the right of the Authority to re-lease 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-Ieasing shall constitute a surrender or termination of this Lease Agreement irrespective of the term for which such re-Ieasing is made or the terms and conditions of such re-Ieasing, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease Agreement shall vest in the Authority to be effected in the sole and exclusive manner hereinafter provided for in paragraph (b) hereof. (b) In an Event of Default hereunder, the Authority at its option may terminate this Lease Agreement and re-lease all or any portion of the Property. In the event of the termination of this Lease Agreement by the Authority at its option and in the manner hereinafter provided on account of default by the City (and notwithstanding any re-entry upon the Property by the Authority in any manner whatsoever or the re-Ieasing of the Property), the City nevertheless agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of Lease Payments. Any surplus received by the Authority from such re-Ieasing shall be credited towards the Lease Payments next coming due and payable. Neither notice to pay rent or to deliver up possession of the premises given pursuant to law nor any proceeding in unlawful detainer taken by the Authority shall of itself operate to terminate this Lease Agreement, and no termination of this Lease Agreement on account of default by the City shall be or become effective by operation of law, or 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 -23- covenants and agrees that no surrender of the Property and/or of the remainder of the Term of the Lease Agreement or any termination of this Lease Agreement shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice. Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease Agreement now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article IX it shall not be necessary to give any notice, other than such notice as may be required in this Article IX or by law. Section 9.4. Agreement to Pay Attorneys' Fees and Expenses. In the event either party to this Lease Agreement should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party; provided, however, that the Trustee shall not be required to expend its own funds for any payment described in this Section 9.4. Section 9.5. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Lease Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. Section 9.6. Application of Proceeds. All net proceeds received from the re-lease or other disposition of the Property under this Article IX, and all other amounts derived by the Authority or the Trustee as a result of an Event of Default hereunder, shall be transferred to the Trustee promptly upon receipt thereof and after payment of all fees and expenses of the Trustee, including indemnifications and attorneys fees, shall be deposited by the Trustee in the Lease Payment Fund to be applied to the Lease Payments in order of payment date. Section 9.7. Trustee and Certificate Owners to Exercise Rights. Such rights and remedies as are given to the Authority under this Article IX have been assigned by the Authority to the Trustee under the Assignment Agreement, to which assignment the City hereby consents. Such rights and remedies shall be exercised by the Trustee, the Municipal Bond Insurer and the Owners of the Certificates as provided in the Trust Agreement and herein. Section 9.8. No Right to Terminate for Authority Default. The City shall not have the right to terminate this Lease Agreement as a remedy for a default by the Authority in the performance of its obligations hereunder. -24- ARTICLE X PREPAYMENT OF LEASE PAYMENTS Section 10.1. Security Deposit. Notwithstanding any other provision of this Lease Agreement, the City may, on any date, secure the payment of all or a portion of the Lease Payments remaining due by an irrevocable deposit with the Trustee or an escrow holder under an escrow deposit and trust agreement as referenced in Section 14.01(b) of the Trust Agreement, of: (a) in the case of a security deposit relating to all Lease Payments, either (i) cash in an amount which, together with amounts on deposit in the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, is sufficient to pay all unpaid Lease Payments, including the principal and interest components thereof, in accordance with the Lease Payment schedule set forth in Exhibit C, or (ii) Defeasance Obligations in such amount as will, in the written opinion of an independent certified public accountant or other firm of recognized experts in such matters (addressed to the Municipal Bond Insurer), together with interest to accrue thereon and, if required, all or a portion of moneys or Defeasance Obligations or cash then on deposit and interest earnings thereon in the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, be fully sufficient to pay all unpaid Lease Payments on their respective Lease Payment Dates; or (b) in the case of a security deposit relating to a portion of the Lease Payments, a certificate executed by a City Representative designating the portion of the Lease Payments to which the deposit pertains, and either (i) cash in an amount which is sufficient to pay the portion of the Lease Payments designated in such City Representative's certificate, including the principal and interest components thereof, or (ii) Defeasance Obligations in such amount as will, together with interest to be received thereon, if any, in the written opinion of an independent certified public accountant or other firm of recognized experts in such matters (addressed to the Municipal Bond Insurer), be fully sufficient to pay the portion of the Lease Payments designated in the aforesaid City Representative's certificate. In the event of a deposit pursuant to this Section 10.1 as to all Lease Payments and the payment of all fees, expenses and indemnifications owed to the Trustee and the Municipal Bond Insurer, all obligations of the City under this Lease Agreement shall cease and terminate, excepting only the obligation of the City to make, or cause to be made, all payments from the deposit made by the City pursuant to this Section 10.1 and the obligations of the City pursuant to Section 5.13 hereof and title to the Property shall vest in the City on the date of said deposit automatically and without further action by the City or the Authority. Said deposit and interest earnings thereon shall be deemed to be and shall constitute a special fund for the payments provided for by this Section 10.1 and said obligation shall thereafter be deemed to be and shall constitute the installment purchase obligation of the City for the Property. Upon said deposit, the Authority will execute or cause to be executed any and all documents as may be necessary to confirm title to the Property in accordance with the provisions hereof. In addition, the Authority hereby appoints the City as its agent to prepare, execute and file or record, in appropriate offices, such documents as may be necessary to place record title to the Property in the City. Section 10.2. Prepayment Option. The Authority hereby grants an option to the City to prepay the principal component of the Lease Payments in full, by paying the aggregate unpaid principal components of the Lease Payments as set forth in Exhibit C hereto, or in part, in a prepayment amount equal to the principal amount of Lease Payments to be prepaid, together with accrued interest to the date fixed for prepayment, without premium. Said option may be exercised with respect to Lease Payments due on and after August 15,2010, in whole or in part on any date, commencing August 15, 2009. Said option shall be exercised by the City by giving written notice to the Authority and the Trustee of -25- the exercise of such option at least forty-five (45) days prior to said prepayment date. In the event of prepayment in part, the partial prepayment shall be applied against Lease Payments in such order of payment date as shall be selected by the City. Lease Payments due after any such partial prepayment shall be in the amounts set forth in a revised Lease Payment schedule which shall be provided by, or caused to be provided by, the City to the Trustee and which shall represent an adjustment to the schedule set forth in Exhibit C attached hereto taking into account said partial prepayment. The Trustee agrees to notify the Authority in the event of any prepayment of Lease Payments, as provided in Section 14.03 of the Trust Agreement. Notwithstanding the foregoing, the City shall not be permitted to prepay any Lease Payments if any amounts are owed to the Municipal Bond Insurer with respect to the Municipal Bond Insurance Policy. Section 10.3. Mandatory Prepayment From Net Proceeds of Insurance. Title Insurance or Eminent Domain. The City shall be obligated to prepay the Lease Payments, in whole on any date or in part on any Lease Payment Date, from and to the extent of any Net Proceeds of an insurance, title insurance or condemnation award with respect to the Property theretofore deposited in the Lease Payment Fund for such purpose pursuant to Article VI hereof and Article VII of the Trust Agreement. The City and the Authority hereby agree that such Net Proceeds shall be applied first to the payment of any delinquent Lease Payments, and thereafter shall be credited towards the Ci ty's obligations under this Section 10.3. Lease Payments due after any such partial prepayment shall be in the amounts set forth in a revised Lease Payment schedule which shall be provided by, or caused to be provided by, the City to the Trustee and which shall represent an adjustment to the schedule set forth in Exhibit C attached hereto taking into account said partial prepayment. Section 10.4. Credit for Amounts on Deposit. In the event of prepayment of the principal components of the Lease Payments in full under this Article X, such that the Trust Agreement shall be discharged by its terms as a result of such prepayment, remaining amounts on deposit in the Lease Payment Fund or the Reserve Fund shall be credited towards the amounts then required to be so prepaid. -26- ARTICLE XI MISCELLANEOUS Section 11.1. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed to have been received 48 hours after deposit in the United States mail in first-class form with postage fully prepaid: If to the Authority: Temecula Public Financing Authority c/o City of Temecula 43200 Business Park Drive Temecula, CA 92589-9033 Attention: Finance Director Phone: (951) 694-6433 Fax: (951) 694-6479 If to the City: City of Temecula 43200 Business Park Drive Temecula, CA 92589-9033 Attention: Finance Director Phone: (951) 694-6433 Fax: (951) 694-6479 If to the Trustee: u.s. Bank National Association 550 South Hope Street, Suite 500 Los Angeles, CA 90071 Attention: Corporate Trust Department Phone: (213) 615-6005 Fax: (213) 615-6199 If to the Municipal Bond Insurer: Attention: __ Phone: (_) _-_ Fax: (_) _-_ The Authority, the City, the Trustee and the Municipal Bond Insurer, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent. Section 11.2. Information to be Given to the Municipal Bond Insurer. The City will permit the Municipal Bond Insurer to discuss the affairs, finances and accounts of the City or any information the Municipal Bond Insurer may reasonably request regarding the security for the Lease Payments with appropriate officers of the City. The City will permit the Municipal Bond Insurer to have access to the Property and have access to and to make copies of all books and records relating to the Certificates at any reasonable time upon reasonable notice on any Business Day. The Municipal Bond Insurer shall have the right to direct an accounting at the City's expense, and the City's failure to comply with such direction within thirty (30) days after receipt of written notice of the direction from the Municipal Bond Insurer shall be deemed an Event of Default hereunder; provided, however, that if compliance cannot occur within such period, then such period will be extended so long as compliance is begun within such period and diligently pursued, but only if such extension would not materially adversely affect the interests of any Owner. -27- Section 11.3. Binding Effect. This Lease Agreement shall inure to the benefit of and shall be binding upon the Authority and the City and their respective successors and assigns. The Municipal Bond Insurer shall be deemed to be a third party beneficiary of this Lease Agreement. Section 11.4. Severability. In the event any provision of this Lease Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 11.5. 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 Lease Payments shall be an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever. Section 11.6. Further Assurances and Corrective Instruments. The Authority and the City agree that they will, 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 intentions of this Lease Agreement. Section 11.7. Execution in Counterparts. This Lease Agreement may be executed In several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 11.8. Applicable Law. This Lease Agreement shall be governed by and construed in accordance with the laws of the State. Section 11.9. Authority and City Representatives. Whenever under the provisions of this Lease Agreement the approval of the Authority or the City is required, or the Authority or the City is required to take some action at the request of the other, such approval or such request shall be given for the Authority by an Authority Representative and for the City by a City Representative, and each party hereto shall be authorized to rely upon any such approval or request. Section 11.10. Captions. The captions or headings in this Lease Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Lease Agreement. -28- IN WITNESS WHEREOF, the Authority has caused this Lease Agreement to be executed in its corporate name by its duly authorized officers; and the City has caused this Lease Agreement to be executed in its name by its duly authorized officers, as of the date first above written. TEMECULA PUBLIC FINANCING AUTHORITY By Executive Director Attest: Secretary CITY OF TEMECULA, CALIFORNIA By City Manager Attest: City Clerk -29- EXHIBIT A DESCRIPTION OF THE SITE All that certain real property situated in Riverside County, State of California, described as follows: PARCEL A: (COMMUNITY THEATRE) LOTS 16 THROUGH 22 INCLUSIVE IN BLOCK 27 OF THE TOWN OF TEMECULA, AS SHOWN BY MAP ON FILE IN BOOK 15 PAGE 726 OF MAPS, RECORDS OF SAN DIEGO COUNTY, CALIFORNIA; TOGETHER WITH THAT PORTION OF RIVER STREET AS V ACA TED AND CLOSED TO PUBLIC USE BY RESOLUTION RECORDED AUGUST 6, 1940 IN BOOK 474 PAGE 109 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CAIAFORNIA, AS DESCRIBED IN PARCEL 1 OF SAID RESOLUTION, AND LYING NORTHWESTERLY OF THE SOUTHWESTERLY PROLONGATION OF THE CENTER LINE OF THE ALLEY IN SAID BLOCK 27; ALSO TOGETHER WITH THAT PORTION OF THE NORTHWESTERLY HALF OF THE ALLEY ADJOINING SAID LOTS 16 THROUGH 22 INCLUSIVE, ON THE SOUTHEAST AS V ACA TED AND CLOSED TO PUBLIC USE BY RESOLUTION N0.79-68, RECORDED APRIL 23, 1979 AS INSTRUMINT NO. 80863 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; ALSO TOGETHER WITH THAT PORTION OF THE SOUTHEASTERLY HALF OF FOURTH STREET ADJOINING SAID LOTS 16 THROUGH 22 INCLUSIVE ON THE NORTHWEST, AS V ACA TED AND CLOSED TO PUBLIC USE BY RESOLUTION NO.87-272, RECORDED JULY 29, 1987 AS INSTRUMENT NO. 218023 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. APN: 922-036-037 PARCEL B: (COMMUNITY THEATRE) LOT 4 AND LOT 5 IN BLOCK 27 OF TH OWN OF TEMECULA AS SHOWN BY MAP ON FILE IN BOOK 15. PAGE 726. RECORDS OF SAN DIEGO COUNTY, TOGETHER WITH THAT PORTION OF AN ALLEY ADJOINING SAID LOTS 4 AND 5, AS ABANDONED BY A RESOLUTION OF THE BOARD OF SUPERVISORS. COUNTY OF RIVERSIDE, RECORDED APRIL 23, 1979 AS INSTRUMENT NUMBER 80863. OF OFFICIAL RECORDS OF SAID COUNTY AND THAT PORTION OF THE NORTHWEST 10 FEET OF MAIN STREET AS ABANDONED BY RESOLUTION NUMBER 75-104, RECORDED APRIL 23, 1975 AS INSTRUMENT NUMBER 46491, OFFICIAL RECORDS OF SAID COUNTY. EXCEPTING THEREFROM THE SOUTHWESTERLY 22.30 FEET OF SAID LOT 4. APN: 922-036-041 PARCEL C: (COMMUNITY THEATRE) LOT 6 IN BLOCK 27 OF THE TOWN OF TEMECULA, AS SHOWN BY MAP ON FILE IN BOOK 15 PAGE 726, OF MAPS, RECORDS OF SAN DIEGO COUNTY, CALIFORNIA. TOGETHER WITH THAT PORTION OP THE NORTHWESTERLY 10 FEET OF MAIN STREET, ADJACENT TO THE SOUTHEASTERLY LINE OF SAID LAND, WHICH WOULD PASS WITH A CONVEYANCE OF SAID LAND, AS VACATED BY RESOLUTION MO. 75-104 OF THE BOARD SUPERVISORS OF THE COUNTY OP RIVERSIDE, RECORDED APRIL 23, 1975 AS INSTRUMENT NO. 46491 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; Appendix A Page 1 TOGETHER WITH THAT PORTION OF AN ALLEY ADJOINING SAID LOT 6, AS ABANDONED BY A RESOLUTION OF THE BOARD OF SUPERVISORS. COUNTY OF RIVERSIDE, RECORDED APRIL 23, 1979 AS INSTRUMENT NUMBER 80863. OF OFFICIAL RECORDS OF SAID COUNTY. APN: 922-036-034 PARCEL D: (FIRE STATION #84) THAT PORTION OF RANCHO TEMECULA, IN THE CITY OF TEMECULA, AS GRANTED BY THE GOVERNMENT OF THE UNITED STATES OF AMERICA, TO LUIS VIGNES, BY PATENT DATED JANUARY 18, 1860, AS SHOWN BY MAP ON FILE IN BOOK 1 PAGE 37, OF PATENTS, RECORDS OF SAN DIEGO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF PARCEL 4 AS SHOWN ON PARCEL MAP 8840 FILED IN BOOK 41 PAGES 54 AND 55, RECORDS OF SAID COUNTY, SAID POINT BEING ON THE CENTERLINE OF PAUBA ROAD AND BEING MARKED BY A 1-1/2 INCH IRON PIPE TAGGED L.S. 3160 PER SAID MAP, SAID POINT ALSO BEING A POINT ON A CURVE CONCAVE SOUTHERLY, HAVING A RADIUS OF 2,000.00 FEET, A RADIAL LINE THROUGH SAID POINT BEARS NORTH 14031'39" WEST; THENCE WESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 02001'20", AN ARC DISTANCE OF 70.59 FEET, TO THE END OF CURVE, A RADIAL LINE THROUGH SAID POINT BEARS NORTH 16032'59" WEST; THENCE ALONG A RADIAL LINE NORTH 16032'59" WEST 44.00 FEET TO A POINT ON THE NORTHERLY RIGHT OF WAY OF PAUBA ROAD, SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE SOUTH 73027'01" WEST, 23.37 FEET ALONG SAID RIGHT OF WAY; THENCE LEAVING SAID RIGHT OF WAY NORTH 16032'59" WEST, 18.52 FEET ALONG THE WESTERLY LINE OF THE TEMECULA PUBLIC LIBRARY PARCEL, AS DESCRIBED IN THE LEGAL DESCRIPTION FOR TEMECULA PUBLIC LIBRARY; THENCE NORTH 17045'09" EAST, 66.36 FEET ALONG SAID WESTERLY LINE OF THE TEMECULA PUBLIC LIBRARY PARCEL; THENCE NORTH 11001'46" WEST, 75.21 FEET ALONG SAID WESTERLY LINE OF THE TEMECULA PUBLIC LIBRARY PARCEL; THENCE NORTH 51049'47" EAST, 162.16 FEET; THENCE SOUTH 88055'20" EAST, 136.08 FEET; THENCE SOUTH 64000'57" EAST, 56.13 FEET; THENCE SOUTH 22021'01" EAST, 161.46 FEET TO A POINT ON SAID NORTHERLY RIGHT OF WAY OF PAUBA ROAD, SAID POINT BEING ON A CURVE CONCAVE SOUTHERLY HAVING A RADIUS OF 2044.00 FEET, A RADIAL LINE THROUGH SAID POINT BEARS NORTH 06025'24" WEST; THENCE WESTERLY ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 10007'35", AN ARC DISTANCE OF 361.25 FEET TO THE TRUE POINT OF BEGINNING. CONTAINING 64,635.71 SQUARE FEET OR 1.48 ACRES, MORE OR LESS. APN: 945-050-020 Appendix A Page 2 PARCEL E: (WOLF CREEK FIRE STATION) THAT PORTION OF PARCEL 2 AS DESCRIBED IN LOT LINE ADJUSTMENT PA02-0052, IN THE CITY OF TEMECULA, CALIFORNIA, RECORDED MAY 4, 2002 AS INSTRUMENT NO. 02-172869, AND PERFECTED IN GRANT DEED TO S-P MURDY, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY,RECORDED JUNE 3, 2002 AS INSTRUMENT NO. 02-299299 OFFICIAL RECORDS OF RNERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHWESTERLY TERMINUS OF THAT CERTAIN COURSE IN THE BOUNDARY OF SAID PARCEL 2 DESCRIBED AS HAVING A BEARING AND LENGTH OF NORTH 37055'02" EAST 726.21 FEET; THENCE NORTHERLY ALONG SAID BOUNDARY NORTH 37054'25" EAST (NORTH 37055'02" EAST PER SAID DEED AND LOT LINE ADJUSTMENT) 7939 FEET TO THE TRUE POINT OF BEGINNING; THENCE LEAVING SAID BOUNDARY SOUTH 52005'35" EAST 233.21 FEET; THENCE PARALLEL WITH THE BOUNDARY OF SAID PARCEL 2, NORTH 37054'25" EAST (NORTH 37055'02" EAST PER SAID DEED AND LOT LINE ADJUSTMENT) 280.18 FEET; THENCE NORTH 52005'35" WEST 233.21 FEET TO A POINT ON SAID BOUNDARY, SAID POINT LIES NORTH 37054'25" EAST (NORTH 37055'02" EAST PER SAID DEED AND LOT LINE ADJUSTMENT) 280.18 FEET ALONG SAID BOUNDARY FROM THE TRUE POINT OF BEGINNING; THENCE ALONG SAID BOUNDARY SOUTH 37054'25" WEST 280.18 FEET TO THE TRUE POINT OF BEGINNING. APN: 962-580-091 PARCEL F: (BIRDSALL PARK): THAT PORTION OF PARCEL 2 AS DESCRIBED IN LOT LINE ADJUSTMENT PA02-0052, IN THE CITY OF TEMECULA, CALIFORNIA, RECORDED APRIL 4, 2002 AS INSTRUMENT NO. 2002- 172869, AND PERFECTED IN GRANT DEED TO S-P MURDY, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, RECORDED JUNE 3, 2002 AS INSTRUMENT NO. 2002-299299 OF OFFICIAL RECORDS OF RNERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT A POINT ON THE CENTERLINE OF PECHANGA P ARKW A Y (FORMERLY PALA ROAD), SAID POINT BEING THE NORTHWESTERLY TERMINUS OF THAT CERTAIN COURSE SHOWN AS HAVING A BEARING AND DISTANCE OF SOUTH 47044'36" EAST, 3252.10 FEET IN SAID LOT LINE ADJUSTMENT AND DEED; THENCE ALONG SAID CERTAIN COURSE AND SAID CENTERLINE, SOUTH 47045'28" EAST 3252.10 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF THE LITTLE TEMECULA RANCHO, AS SHOWN ON THE MAP ENTITLED PARTITION MAP OF THE LITTLE TEMECULA RANCHO ON FILE IN THE OFFICE OF THE COUNTY CLERK OF SAID SAN DIEGO COUNTY, IN ACT NO. 5756 IN THE SUPERIOR COURT OF SAID SAN DIEGO COUNTY, AND THAT PORTION OF SECTION 28, TOWNSHIP 8 SOUTH, RANGE 2 WEST, SAN BERNARDINO BASE AND MERIDIAN, OFFICIAL PLAT OF THE SURVEY OF SAID LAND APPROVED BY THE SURVEYOR GENERAL, APRIL 10, 1886; THENCE LEAVING SAID CENTERLINE SOUTH 53008'27" WEST (SOUTH 53009'19" WEST PER SAID LOT LINE ADJUSTMENT AND DEED) ALONG SAID SOUTHEASTERLY LINE, 44.72 FEET TO A POINT ON SAID SOUTHEASTERLY LINE, SAID LAST MENTIONED POINT LIES NORTH 50006'54" WEST, 0.65 FEET FROM A FOUND 3/4" IRON PIPE 12-INCHES DEEP PER SAID FIELD Appendix A Page 3 BOOK 445 PAGE 52, SAID 3/4" IRON PIPE BEING ACCEPTED AS LYING ON THE CENTERLINE OF PALA ROAD PER DEED PLAT MAP 25-L, RECORDS OF RNERSIDE COUNTY, CALIFORNIA, AND PER QUITCLAIM DEED RECORDED JULY 20, 1959 AS INSTRUMENT NO. 62786 OF OFFICIAL RECORDS OF RNERSIDE COUNTY, CALIFORNIA; THENCE ALONG SAID CENTERLINE SOUTH 50007'46" EAST (SOUTH 50006'54" EAST PER SAID LOT LINE ADJUSTMENT AND DEED) 836.20 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE SOUTHWESTERLY AND HAVING A RADIUS OF 500.00 FEET AND SHOWN ON SAID DEED PLAT 25-L AS P.c. 24+86.36; THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 19044'57" AN ARC LENGTH OF 172.34 FEET; THENCE TANGENT TO SAID CURVE SOUTH 30022'49" EAST (SOUTH 30021'57" EAST PER SAID LOT LINE ADJUSTMENT AND DEED) 247.93 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 1000.00 FEET; THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 14027'00" AN ARC LENGTH OF 252.20 FEET; THENCE TANGENT TO SAID CURVE, SOUTH 44049'49" EAST 109.70 FEET (SOUTH 44048'57" EAST 109.79 FEET PER SAID LOT LINE ADJUSTMENT AND DEED); THENCE LEAVING SAID CENTERLINE ALONG THE CENTERLINE OF DEER HOLLOW WAY, NORTH 42023'14" EAST 160.20 FEET (NORTH 42023'59" EAST PER SAID LOT LINE ADJUSTMENT AND DEED); THENCE LEAVING SAID CENTERLINE OF DEER HOLLOW WAY, NORTH 47036'46" WEST 44.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE ALONG THE NORTHWESTERLY RIGHT(S) OF WAY OF SAID DEER HOLLOW WAY (44.00 FEET WIDE) NORTH 42023'14" EAST 1,789.36 FEET (NORTH 42023'59" EAST PER SAID LOT LINE ADJUSTMENT AND DEED) TO A POINT, SAID POINT LIES 323.10 FEET SOUTHERLY ALONG SAID RIGHT(S) OF WAY FROM THE MOST SOUTHERLY CORNER OF OPEN SPACE LOT 51 AS SHOWN ON TRACT NO. 23065-1 FILED IN MAP BOOK 261 PAGES 21 THROUGH 28, INCLUSIVE, OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; THENCE LEAVING SAID NORTHWESTERLY RIGHT(S) OF WAY LINE, NORTH 47036'46" WEST 608.36 FEET; THENCE NORTH 89041'48" WEST 978.27 FEET TO THE BEGINNING OF A NON-TANGENT CURVE CONCAVE NORTHWESTERLY AND HAVING A RADIUS OF 933.00 FEET, A RADIAL TO THE BEGINNING OF SAID CURVE BEARS SOUTH 87054'41" EAST; THENCE SOUTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 41043'31" AND AN ARC LENGTH OF 701.30 FEET; THENCE TANGENT TO SAID CURVE, SOUTH 43048'50" WEST 401.74 FEET; THENCE SOUTH 58024'42" EAST 74.51 FEET; THENCE SOUTH 46011'10" EAST 45.04 FEET; THENCE SOUTH 41035'36" EAST 701.67 FEET; THENCE SOUTH 42056'23" EAST 301.14 FEET TO THE TRUE POINT OF BEGINNING. Appendix A Page 4 EXHIBIT B DESCRIPTION OF THE FACILITY The Facility consists of several different facilities owned by the City, situated on portion of the Site, as follows: (a) Community Theater, an approximately 22,330 square foot building with an estimated land and improvement value of approximately $13,200,000 built in 2005, (b) Fire Station No. 84, an approximately 9,727 square foot building with an estimated land and improvement value of approximately $2,600,000 built in 1997; (c) Wolf Creek Fire Station, an approximately 9,062 square foot building with an estimated land and improvement value of approximately $4,650,000 completed in 2007; and (d) Birdsall Park, with an estimated land and improvement value of approximately $28,000,000, completed in 2006, which includes approximately 44 acres parkwith four lighted synthetic turf soccer fields, four lighted ball fields, four lighted basketball courts, picnic facilities, concession facilities, restrooms and approximately 460 parking spaces, Appendix B EXHIBIT C SCHEDULE OF LEASE PAYMENTS Lease Payment Date 08/15/08 02/15/09 08/15/09 02/15/10 08/15/10 02/15/11 08/15/11 02/15/12 08/15/12 02/15/13 08/15/13 02/15/14 08/15/14 02/15/15 08/15/15 02/15/16 08/15/16 02/15/17 08/15/17 02/15/18 08/15/18 02/15/19 08/15/19 02/15/20 08/15/20 02/15/21 08/15/21 02/15/22 08/15/22 02/15/23 08/15/23 02/15/24 08/15/24 02/15/25 08/15/25 02/15/26 08/15/26 02/15/27 08/15/27 02/15/28 08/15/28 02/15/29 08/15/29 02/15/30 08/15/30 02/15/31 08/15/31 Principal Interest Component Component Appendix C Page 1 Total Lease Payment 02/15/32 08/15/32 02/15/33 08/15/33 02/15/34 08/15/34 02/15/35 08/15/35 02/15/36 08/15/36 02/15/37 08/15/37 02/15/38 08/15/38 Appendix C Page 2 Quint & Thimmig LLP 10/22/07 11/19/07 02/01/08 AFTER RECORDATION RETURN TO: Quint & Thimmig LLP 575 Market Street, Suite 3600 San Francisco, CA 94105-2874 Attention: Brian D. Quint, Esq. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. ASSIGNMENT AGREEMENT Dated as of March 1, 2008 by and between the TEMECULA PUBLIC FINANCING AUTHORITY and U.S. BANK NATIONAL ASSOCIATION, as Trustee (2008 Temecula Civic Center Financing Project) 20002.06 ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT, dated as of March 1,2008, by and between the TEMECULA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the State of California (the "Authority"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under and by virtue of the laws of the United States of America, as trustee (the "Trustee"); WITNE SSE TH: In the joint and mutual exercise of their powers, in consideration of the mutual covenants herein contained, and for other valuable consideration, the parties hereto recite and agree as follows: Section 1. Recitals. (a) The Authority and the City of Temecula, California (the "City"), have entered into a lease agreement, dated as of March 1, 2008, a memorandum of which is recorded concurrently herewith (the "Lease Agreement"), whereby the Authority has agreed to lease to the City, and the City has agreed to lease from the Authority, those certain parcels of real property situated in Riverside County, State of California, more particularly described in Exhibit A hereto (the "Site"), and those certain improvements thereon, more particularly described in Exhibit B hereto (the "Facility" and, with the Site, the "Property"), in the manner and on the terms set forth in the Lease Agreement, which terms include, without limitation, the obligation of the City to pay lease payments (the "Lease Payments") to the Authority in consideration of the City's use and enjoyment of the Property. (b) Under the Lease Agreement, the Authority is required to cause to be deposited with the Trustee certain sums of money to be credited, held and applied in accordance with the Lease Agreement and with a trust agreement, dated as of March 1, 2008 (the "Trust Agreement"), by and among the Authority, the City and the Trustee. (c) Upon delivery of the Lease Agreement, the Authority is required to deposit with the Trustee moneys to finance the construction of a new civic center facility (the "Project"). For the purpose of obtaining such moneys, the Authority is willing to convey to certain persons (the "Owners") direct, undivided fractional interests in the Lease Payments, such direct, undivided fractional interests to be evidenced by certificates of participation therein (the "Certificates"). In order to make such fractional interests marketable on terms acceptable to the Authority, the Authority is willing to assign and transfer its rights under the Lease Agreement to the Trustee for the benefit of the Owners. Concurrently with the delivery of this Assignment Agreement, the Trustee is executing and delivering Certificates in an aggregate principal amount of _ dollars ($ ). The proceeds of such sale are anticipated to be sufficient to permit the Authority to make the deposits required under the Lease Agreement and the Trust Agreement and to permit the Authority to pay therewith the costs of financing the Project. (d) Each of the parties has authority to enter into this Assignment Agreement and has taken all actions necessary to authorize its officers to execute it. Section 2. Assignment. The Authority, for good and valuable consideration, hereby transfers, assigns and sets over to the Trustee, for the benefit of the Owners of the Certificates, all of the Authority's rights and interests under the Lease Agreement (excepting only the Authority's rights under Sections 5.8, 7.3 and 9.4 but none of its obligations, including, without limitation, its obligations under Section 4.7 of the Lease Agreement), including without limitation (i) the right to receive and collect all of the Lease Payments from the City, (ii) the right to receive and collect any proceeds of any insurance maintained thereunder and of any condemnation award rendered with respect to the Property, and (iii) the right to exercise such rights and remedies conferred on the Authority pursuant to the Lease Agreement as may be necessary or convenient (A) to enforce payment of the Lease Payments and any other amounts required to be deposited in the Lease Payment Fund or the Insurance and Condemnation Fund established under the Trust Agreement, or (B) otherwise to protect the interests of the Owners in the event of a default by the City under the Lease Agreement. All rights assigned by the Authority shall be administered by the Trustee in accordance with the provisions of the Trust Agreement and for the equal and fractional benefit of the Owners of the Certificates. Section 3. Acceptance. The Trustee hereby accepts the assignments made herein for the purpose of securing, equally and fractionally, the payments due pursuant to the Lease Agreement and the Trust Agreement to, and the rights under the Lease Agreement and Trust Agreement of, the Owners of the Certificates delivered pursuant to the Trust Agreement, all subject to the provisions of the Trust Agreement. Section 4. Conditions. This Assignment Agreement shall neither confer rights nor impose duties upon the Trustee beyond those expressly provided in the Trust Agreement. The Trustee assumes no responsibility for the accuracy of the recitals herein. Section 5. Amendment. This Assignment Agreement may not be amended except as permitted under Section 10.01 of the Trust Agreement. Section 6. Execution in Counterparts. This Assignment Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. -2- IN WITNESS WHEREOF, the parties have executed this Assignment Agreement by their officers thereunto duly authorized as of the day and year first written above. TEMECULA PUBLIC FINANCING AUTHORITY By Executive Director Attest: Secretary U.S. BANK NATIONAL ASSOCIATION, as Trustee By Authorized Officer -3- [NOTARY ACKNOWLEDGMENTS TO BE ATTACHED] EXHIBIT A DESCRIPTION OF THE SITE All that certain real property situated in Riverside County, State of California, described as follows: PARCEL A: (COMMUNITY THEATRE) LOTS 16 THROUGH 22 INCLUSIVE IN BLOCK 27 OF THE TOWN OF TEMECULA, AS SHOWN BY MAP ON FILE IN BOOK 15 PAGE 726 OF MAPS, RECORDS OF SAN DIEGO COUNTY, CALIFORNIA; TOGETHER WITH THAT PORTION OF RIVER STREET AS V ACA TED AND CLOSED TO PUBLIC USE BY RESOLUTION RECORDED AUGUST 6, 1940 IN BOOK 474 PAGE 109 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CAIAFORNIA, AS DESCRIBED IN PARCEL 1 OF SAID RESOLUTION, AND LYING NORTHWESTERLY OF THE SOUTHWESTERLY PROLONGATION OF THE CENTER LINE OF THE ALLEY IN SAID BLOCK 27; ALSO TOGETHER WITH THAT PORTION OF THE NORTHWESTERLY HALF OF THE ALLEY ADJOINING SAID LOTS 16 THROUGH 22 INCLUSIVE, ON THE SOUTHEAST AS V ACA TED AND CLOSED TO PUBLIC USE BY RESOLUTION N0.79-68, RECORDED APRIL 23, 1979 AS INSTRUMINT NO. 80863 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; ALSO TOGETHER WITH THAT PORTION OF THE SOUTHEASTERLY HALF OF FOURTH STREET ADJOINING SAID LOTS 16 THROUGH 22 INCLUSIVE ON THE NORTHWEST, AS V ACA TED AND CLOSED TO PUBLIC USE BY RESOLUTION NO.87-272, RECORDED JULY 29, 1987 AS INSTRUMENT NO. 218023 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. APN: 922-036-037 PARCEL B: (COMMUNITY THEATRE) LOT 4 AND LOT 5 IN BLOCK 27 OF TH OWN OF TEMECULA AS SHOWN BY MAP ON FILE IN BOOK 15. PAGE 726. RECORDS OF SAN DIEGO COUNTY, TOGETHER WITH THAT PORTION OF AN ALLEY ADJOINING SAID LOTS 4 AND 5, AS ABANDONED BY A RESOLUTION OF THE BOARD OF SUPERVISORS. COUNTY OF RIVERSIDE, RECORDED APRIL 23, 1979 AS INSTRUMENT NUMBER 80863. OF OFFICIAL RECORDS OF SAID COUNTY AND THAT PORTION OF THE NORTHWEST 10 FEET OF MAIN STREET AS ABANDONED BY RESOLUTION NUMBER 75-104, RECORDED APRIL 23, 1975 AS INSTRUMENT NUMBER 46491, OFFICIAL RECORDS OF SAID COUNTY. EXCEPTING THEREFROM THE SOUTHWESTERLY 22.30 FEET OF SAID LOT 4. APN: 922-036-041 PARCEL C: (COMMUNITY THEATRE) LOT 6 IN BLOCK 27 OF THE TOWN OF TEMECULA, AS SHOWN BY MAP ON FILE IN BOOK 15 PAGE 726, OF MAPS, RECORDS OF SAN DIEGO COUNTY, CALIFORNIA. TOGETHER WITH THAT PORTION OP THE NORTHWESTERLY 10 FEET OF MAIN STREET, ADJACENT TO THE SOUTHEASTERLY LINE OF SAID LAND, WHICH WOULD PASS WITH A CONVEYANCE OF SAID LAND, AS VACATED BY RESOLUTION MO. 75-104 OF THE BOARD SUPERVISORS OF THE COUNTY OP RIVERSIDE, RECORDED APRIL 23, 1975 AS INSTRUMENT NO. 46491 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; Exhibit A Page 1 TOGETHER WITH THAT PORTION OF AN ALLEY ADJOINING SAID LOT 6, AS ABANDONED BY A RESOLUTION OF THE BOARD OF SUPERVISORS. COUNTY OF RIVERSIDE, RECORDED APRIL 23, 1979 AS INSTRUMENT NUMBER 80863. OF OFFICIAL RECORDS OF SAID COUNTY. APN: 922-036-034 PARCEL D: (FIRE STATION #84) THAT PORTION OF RANCHO TEMECULA, IN THE CITY OF TEMECULA, AS GRANTED BY THE GOVERNMENT OF THE UNITED STATES OF AMERICA, TO LUIS VIGNES, BY PATENT DATED JANUARY 18, 1860, AS SHOWN BY MAP ON FILE IN BOOK 1 PAGE 37, OF PATENTS, RECORDS OF SAN DIEGO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF PARCEL 4 AS SHOWN ON PARCEL MAP 8840 FILED IN BOOK 41 PAGES 54 AND 55, RECORDS OF SAID COUNTY, SAID POINT BEING ON THE CENTERLINE OF PAUBA ROAD AND BEING MARKED BY A 1-1/2 INCH IRON PIPE TAGGED L.S. 3160 PER SAID MAP, SAID POINT ALSO BEING A POINT ON A CURVE CONCAVE SOUTHERLY, HAVING A RADIUS OF 2,000.00 FEET, A RADIAL LINE THROUGH SAID POINT BEARS NORTH 14031'39" WEST; THENCE WESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 02001'20", AN ARC DISTANCE OF 70.59 FEET, TO THE END OF CURVE, A RADIAL LINE THROUGH SAID POINT BEARS NORTH 16032'59" WEST; THENCE ALONG A RADIAL LINE NORTH 16032'59" WEST 44.00 FEET TO A POINT ON THE NORTHERLY RIGHT OF WAY OF PAUBA ROAD, SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE SOUTH 73027'01" WEST, 23.37 FEET ALONG SAID RIGHT OF WAY; THENCE LEAVING SAID RIGHT OF WAY NORTH 16032'59" WEST, 18.52 FEET ALONG THE WESTERLY LINE OF THE TEMECULA PUBLIC LIBRARY PARCEL, AS DESCRIBED IN THE LEGAL DESCRIPTION FOR TEMECULA PUBLIC LIBRARY; THENCE NORTH 17045'09" EAST, 66.36 FEET ALONG SAID WESTERLY LINE OF THE TEMECULA PUBLIC LIBRARY PARCEL; THENCE NORTH 11001'46" WEST, 75.21 FEET ALONG SAID WESTERLY LINE OF THE TEMECULA PUBLIC LIBRARY PARCEL; THENCE NORTH 51049'47" EAST, 162.16 FEET; THENCE SOUTH 88055'20" EAST, 136.08 FEET; THENCE SOUTH 64000'57" EAST, 56.13 FEET; THENCE SOUTH 22021'01" EAST, 161.46 FEET TO A POINT ON SAID NORTHERLY RIGHT OF WAY OF PAUBA ROAD, SAID POINT BEING ON A CURVE CONCAVE SOUTHERLY HAVING A RADIUS OF 2044.00 FEET, A RADIAL LINE THROUGH SAID POINT BEARS NORTH 06025'24" WEST; THENCE WESTERLY ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 10007'35", AN ARC DISTANCE OF 361.25 FEET TO THE TRUE POINT OF BEGINNING. CONTAINING 64,635.71 SQUARE FEET OR 1.48 ACRES, MORE OR LESS. APN: 945-050-020 Exhibit A Page 2 PARCEL E: (WOLF CREEK FIRE STATION) THAT PORTION OF PARCEL 2 AS DESCRIBED IN LOT LINE ADJUSTMENT PA02-0052, IN THE CITY OF TEMECULA, CALIFORNIA, RECORDED MAY 4, 2002 AS INSTRUMENT NO. 02-172869, AND PERFECTED IN GRANT DEED TO S-P MURDY, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY,RECORDED JUNE 3, 2002 AS INSTRUMENT NO. 02-299299 OFFICIAL RECORDS OF RNERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHWESTERLY TERMINUS OF THAT CERTAIN COURSE IN THE BOUNDARY OF SAID PARCEL 2 DESCRIBED AS HAVING A BEARING AND LENGTH OF NORTH 37055'02" EAST 726.21 FEET; THENCE NORTHERLY ALONG SAID BOUNDARY NORTH 37054'25" EAST (NORTH 37055'02" EAST PER SAID DEED AND LOT LINE ADJUSTMENT) 7939 FEET TO THE TRUE POINT OF BEGINNING; THENCE LEAVING SAID BOUNDARY SOUTH 52005'35" EAST 233.21 FEET; THENCE PARALLEL WITH THE BOUNDARY OF SAID PARCEL 2, NORTH 37054'25" EAST (NORTH 37055'02" EAST PER SAID DEED AND LOT LINE ADJUSTMENT) 280.18 FEET; THENCE NORTH 52005'35" WEST 233.21 FEET TO A POINT ON SAID BOUNDARY, SAID POINT LIES NORTH 37054'25" EAST (NORTH 37055'02" EAST PER SAID DEED AND LOT LINE ADJUSTMENT) 280.18 FEET ALONG SAID BOUNDARY FROM THE TRUE POINT OF BEGINNING; THENCE ALONG SAID BOUNDARY SOUTH 37054'25" WEST 280.18 FEET TO THE TRUE POINT OF BEGINNING. APN: 962-580-091 PARCEL F: (BIRDSALL PARK): THAT PORTION OF PARCEL 2 AS DESCRIBED IN LOT LINE ADJUSTMENT PA02-0052, IN THE CITY OF TEMECULA, CALIFORNIA, RECORDED APRIL 4, 2002 AS INSTRUMENT NO. 2002- 172869, AND PERFECTED IN GRANT DEED TO S-P MURDY, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, RECORDED JUNE 3, 2002 AS INSTRUMENT NO. 2002-299299 OF OFFICIAL RECORDS OF RNERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT A POINT ON THE CENTERLINE OF PECHANGA P ARKW A Y (FORMERLY PALA ROAD), SAID POINT BEING THE NORTHWESTERLY TERMINUS OF THAT CERTAIN COURSE SHOWN AS HAVING A BEARING AND DISTANCE OF SOUTH 47044'36" EAST, 3252.10 FEET IN SAID LOT LINE ADJUSTMENT AND DEED; THENCE ALONG SAID CERTAIN COURSE AND SAID CENTERLINE, SOUTH 47045'28" EAST 3252.10 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF THE LITTLE TEMECULA RANCHO, AS SHOWN ON THE MAP ENTITLED PARTITION MAP OF THE LITTLE TEMECULA RANCHO ON FILE IN THE OFFICE OF THE COUNTY CLERK OF SAID SAN DIEGO COUNTY, IN ACT NO. 5756 IN THE SUPERIOR COURT OF SAID SAN DIEGO COUNTY, AND THAT PORTION OF SECTION 28, TOWNSHIP 8 SOUTH, RANGE 2 WEST, SAN BERNARDINO BASE AND MERIDIAN, OFFICIAL PLAT OF THE SURVEY OF SAID LAND APPROVED BY THE SURVEYOR GENERAL, APRIL 10, 1886; THENCE LEAVING SAID CENTERLINE SOUTH 53008'27" WEST (SOUTH 53009'19" WEST PER SAID LOT LINE ADJUSTMENT AND DEED) ALONG SAID SOUTHEASTERLY LINE, 44.72 FEET TO A POINT ON SAID SOUTHEASTERLY LINE, SAID LAST MENTIONED POINT LIES NORTH 50006'54" WEST, 0.65 FEET FROM A FOUND 3/4" IRON PIPE 12-INCHES DEEP PER SAID FIELD Exhibit A Page 3 BOOK 445 PAGE 52, SAID 3/4" IRON PIPE BEING ACCEPTED AS LYING ON THE CENTERLINE OF PALA ROAD PER DEED PLAT MAP 25-L, RECORDS OF RNERSIDE COUNTY, CALIFORNIA, AND PER QUITCLAIM DEED RECORDED JULY 20, 1959 AS INSTRUMENT NO. 62786 OF OFFICIAL RECORDS OF RNERSIDE COUNTY, CALIFORNIA; THENCE ALONG SAID CENTERLINE SOUTH 50007'46" EAST (SOUTH 50006'54" EAST PER SAID LOT LINE ADJUSTMENT AND DEED) 836.20 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE SOUTHWESTERLY AND HAVING A RADIUS OF 500.00 FEET AND SHOWN ON SAID DEED PLAT 25-L AS P.c. 24+86.36; THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 19044'57" AN ARC LENGTH OF 172.34 FEET; THENCE TANGENT TO SAID CURVE SOUTH 30022'49" EAST (SOUTH 30021'57" EAST PER SAID LOT LINE ADJUSTMENT AND DEED) 247.93 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 1000.00 FEET; THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 14027'00" AN ARC LENGTH OF 252.20 FEET; THENCE TANGENT TO SAID CURVE, SOUTH 44049'49" EAST 109.70 FEET (SOUTH 44048'57" EAST 109.79 FEET PER SAID LOT LINE ADJUSTMENT AND DEED); THENCE LEAVING SAID CENTERLINE ALONG THE CENTERLINE OF DEER HOLLOW WAY, NORTH 42023'14" EAST 160.20 FEET (NORTH 42023'59" EAST PER SAID LOT LINE ADJUSTMENT AND DEED); THENCE LEAVING SAID CENTERLINE OF DEER HOLLOW WAY, NORTH 47036'46" WEST 44.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE ALONG THE NORTHWESTERLY RIGHT(S) OF WAY OF SAID DEER HOLLOW WAY (44.00 FEET WIDE) NORTH 42023'14" EAST 1,789.36 FEET (NORTH 42023'59" EAST PER SAID LOT LINE ADJUSTMENT AND DEED) TO A POINT, SAID POINT LIES 323.10 FEET SOUTHERLY ALONG SAID RIGHT(S) OF WAY FROM THE MOST SOUTHERLY CORNER OF OPEN SPACE LOT 51 AS SHOWN ON TRACT NO. 23065-1 FILED IN MAP BOOK 261 PAGES 21 THROUGH 28, INCLUSIVE, OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; THENCE LEAVING SAID NORTHWESTERLY RIGHT(S) OF WAY LINE, NORTH 47036'46" WEST 608.36 FEET; THENCE NORTH 89041'48" WEST 978.27 FEET TO THE BEGINNING OF A NON-TANGENT CURVE CONCAVE NORTHWESTERLY AND HAVING A RADIUS OF 933.00 FEET, A RADIAL TO THE BEGINNING OF SAID CURVE BEARS SOUTH 87054'41" EAST; THENCE SOUTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 41043'31" AND AN ARC LENGTH OF 701.30 FEET; THENCE TANGENT TO SAID CURVE, SOUTH 43048'50" WEST 401.74 FEET; THENCE SOUTH 58024'42" EAST 74.51 FEET; THENCE SOUTH 46011'10" EAST 45.04 FEET; THENCE SOUTH 41035'36" EAST 701.67 FEET; THENCE SOUTH 42056'23" EAST 301.14 FEET TO THE TRUE POINT OF BEGINNING. Exhibit A Page 4 EXHIBIT B DESCRIPTION OF THE FACILITY The Facility consists of several different facilities owned by the City, situated on portion of the Site, as follows: (a) Community Theater, an approximately 22,330 square foot building with an estimated land and improvement value of approximately $13,200,000 built in 2005, (b) Fire Station No. 84, an approximately 9,727 square foot building with an estimated land and improvement value of approximately $2,600,000 built in 1997; (c) Wolf Creek Fire Station, an approximately 9,062 square foot building with an estimated land and improvement value of approximately $4,650,000 completed in 2007; and (d) Birdsall Park, with an estimated land and improvement value of approximately $28,000,000, completed in 2006, which includes approximately 44 acres parkwith four lighted synthetic turf soccer fields, four lighted ball fields, four lighted basketball courts, picnic facilities, concession facilities, restrooms and approximately 460 parking spaces, Exhibit B Quint & Thimmig LLP 10/22/07 11/19/07 11/29/07 02/01/08 TRUST AGREEMENT Dated as of March 1, 2008 by and among U.S. BANK NATIONAL ASSOCIATION, as Trustee, the TEMECULA PUBLIC FINANCING AUTHORITY and the CITY OF TEMECULA, CALIFORNIA (2008 Temecula Civic Center Financing Project) 20002.06 Section 1.01. Section 1.02. Section 1.03. Section 2.01. Section 2.02. Section 2.03. Section 2.04. Section 2.05. Section 2.06. Section 2.07. Section 2.08. Section 2.09. Section 2.10. Section 2.11. Section 2.12. Section 2.13. Section 2.14. Section 2.15. TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Definitions ................................................................................................................ 2 Authorization............................................................................................................ 2 Exh i bits.. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... . 2 ARTICLE II THE CERTIFICATES OF PARTICIPATION Authorization............................................................................................................ 3 Date; Payment of Interest.......................................................................................... 3 Maturity; Interest Rates; Percentages .........................................................................3 Interest... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... . 3 Forms .......................................................................................................................4 Execution.................................................................................................................. 4 Application of Proceeds............................................................................................ 4 Transfer and Exchange.............................................................................................. 4 Certificates Mutilated, Lost, Destroyed or Stolen ........................................................ 5 Payment ................................................................................................................... 5 Execution of Documents and Proof of Ownership ...................................................... 5 Registration Books .................................................................................................... 6 CUSIP Numbers ....................................................................................................... 6 Use of Depository. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ....6 Claims Upon the Municipal Bond Insurance Policy and Payments by and to the Municipal Bond Insurer....................................................................................... 8 ARTICLE III ESTABLISHMENT AND DISBURSEMENT OF PROJECT FUND; ESTABLISHMENT AND DISBURSEMENT OF DELIVERY COSTS FUND Section 3.01. Section 3.02. Section 3.03. Section 3.04. Section 3.05. Section 4.01. Section 4.02. Section 4.03. Section 4.04. Section 4.05. Section 5.01. Section 5.02. Section 5.03. Section 5.04. Section 5.05. Project Fund.............................................................................................................. 9 Payment of Project Costs ........................................................................................... 9 Del ivery Costs Fund. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ....9 Payment of Delivery Costs ...................................................................................... 10 Transfers of Unexpended Proceeds .......................................................................... 10 ARTICLE IV REDEMPTION OF CERTIFICATES Redemption............................................................................................................ 11 Selection of Certificates for Redemption ...................................................................12 Notice of Redemption............................................................................................. 12 Partial Redemption of Certificate .............................................................................13 Purchase of Certificates............................................................................................ 13 ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND Assignment of Rights in Lease Agreement ............................................................... 15 Establishment of Lease Payment Fund .....................................................................15 Deposits.................................................................................................................. 15 Appl ication of Moneys............................................................................................ 15 Surplus................................................................................................................... 15 -1- Section 6.01. Section 6.02. Section 6.03. Section 6.04. Section 6.05. ARTICLE VI RESERVE FUND Establishment of Reserve Fund ................................................................................ 16 Deposits.................................................................................................................. 16 Transfers of Excess .................................................................................................. 16 Application in Event of Deficiency in the Lease Payment Fund ................................ 16 Transfer To Make All Lease Payments .....................................................................16 ARTICLE VII INSURANCE AND CONDEMNATION FUND; INSURANCE; EMINENT DOMAIN; TITLE INSURANCE Section 7.01. Section 7.02. Section 7.03. Section 7.04. Section 8.01. Section 8.02. Section 8.03. Section 8.04. Section 8.05. Section 9.01. Section 9.02. Section 9.03. Section 9.04. Section 9.05. Section 9.06. Section 9.07. Section 9.08. Section 9.09. Section 9.10. Establishment of Insurance and Condemnation Fund; Application of Net Proceeds of Insurance Award .................................................................................. 18 Application of Net Proceeds of Eminent Domain Award ......................................... 19 Application of Net Proceeds of Title Insurance Award ............................................ 19 Cooperation............................................................................................................ 19 ARTICLE VIII MONEYS IN FUNDS; INVESTMENT Held in Trust........................................................................................................... 21 Investments Authorized.......................................................................................... 21 Accounting............................................................................................................. 21 Allocation of Earnings ............................................................................................ 21 Acquisition, Disposition and Valuation of Investments ............................................ 22 ARTICLE IX THE TRUSTEE Appointment of Trustee.. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ..... 23 Acceptance of Trusts............................................................................................... 23 Fees, Charges and Expenses of Trustee .....................................................................26 Notice to Certificate Owners of Default ...................................................................26 Intervention by Trustee........................................................................................... 26 Removal of Trustee................................................................................................. 27 Resignation by Trustee ............................................................................................ 27 Appointment of Successor Trustee ........................................................................... 27 Merger or Consol idation ......................................................................................... 27 Concerning any Successor Trustee .......................................................................... 27 ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS Section 10.01. Amendments Permitted........................................................................................... 29 Section 10.02. Procedure for Amendment with Written Consent of Certificate Owners ................... 29 Section 10.03. Disqualified Certificates ........................................................................................... 30 Section 10.04. Effect of Supplemental Agreement ........................................................................... 30 Section 10.05. Endorsement or Replacement of Certificates Delivered After Amendments .............. 31 Section 10.06. Amendatory Endorsement of Certificates ................................................................. 31 ARTICLE XI COVENANTS Section 11.01. Compliance With and Enforcement of Lease Agreement .......................................... 32 Section 11.02. Observance of Laws and Regulations ...................................................................... 32 -11- Section 11.03. Prosecution and Defense of Suits .............................................................................32 Section 11.04. Recordation and Filing ............................................................................................ 32 Section 11.05. Budgets................................................................................................................... 32 Section 11.06. Further Assurances.................................................................................................. 33 Section 11.07. Satisfaction of Conditions Precedent ........................................................................ 33 Section 11.08. Continuing Disclosure............................................................................................. 33 Section 12.01. Section 12.02. Section 12.03. Section 12.04. Section 13.01. Section 13.02. Section 13.03. Section 13.04. Section 13.05. Section 13.06. Section 13.07. Section 13.08. Section 13.09. Section 14.01. Section 14.02. Section 14.03. Section 14.05. Section 14.06. Section 14.07. Section 14.08. Section 14.09. Section 14.10. Section 14.11. Section 14.12. Section 14.13. EXH IBIT A: EXHIBIT B: EXH IBIT C: ARTICLE XII LIMITATION OF LIABILITY Limited Liability of City.......................................................................................... 34 No Liability of City or Authority for Trustee Performance ....................................... 34 Indemnification of Trustee....................................................................................... 34 Limitation of Rights to Parties and Certificate Owners .............................................34 ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Assignment of Rights.............................................................................................. 36 Remedies................................................................................................................ 36 Application of Funds............................................................................................... 36 Institution of Legal Proceedings .............................................................................. 36 Non-waiver............................................................................................................ 37 Remedies Not Exclusive.......................................................................................... 37 Power of Trustee to Control Proceedings ................................................................ 37 Limitation on Certificate Owners' Right to Sue ........................................................ 38 Parties Interested Herein ......................................................................................... 38 ARTICLE XIV MISCELLANEOUS Defeasance.............................................................................................................. 41 Records .................................................................................................................. 41 Notices................................................................................................................... 42 Governing Law...................................................................................................... 43 Binding Effect; Successors ....................................................................................... 43 Execution in Counterparts....................................................................................... 43 Destruction of Canceled Certificates ........................................................................ 43 Headings ................................................................................................................43 Waiver of Notice..................................................................................................... 44 Payments Due on Other than Business Day............................................................. 44 Payment of Unclaimed Moneys ............................................................................... 44 Separability of Invalid Provisions ............................................................................ 44 DEFINITIONS FORM OF THE CERTIFICATES DESCRIPTION OF THE PROJECT -111- TRUST AGREEMENT THIS TRUST AGREEMENT, dated as of March 1,2008, by and among U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the "Trustee"), the TEMECU LA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the State of California (the "Authority"), and the CITY OF TEMECULA, a municipal corporation and general law city, organized and existing under the laws of the State of Cal ifornia (the "City"); WITNESSETH: WH EREAS, the City and the Authority have entered into a lease agreement dated as of the date hereof (the" Lease Agreement"), whereby the Authority has agreed to lease certain real property and improvements (collectively, the "Property") to the City and the City has agreed to lease the Property from the Authority; WHEREAS, for the purpose of obtaining the moneys required to be deposited by it with the Trustee all for the purpose of enabling the City to finance the construction of a new civic center facility or other capital improvements (the "Project"), the Authority proposes to assign and transfer certain of its rights under the Lease Agreement to the Trustee, and the Trustee has agreed to execute and deliver certificates of participation, each evidencing a direct fractional interest in lease payments made by the City under the Lease Agreement to provide the moneys required herein to be deposited by the Authority; and WHEREAS, the proceeds of the Certificates, together with other available moneys, will be applied by the City to (a) finance the Project (b) fund a reserve fund for the Certificates, and (c) pay delivery costs incurred in connection with the execution, delivery and sale of the Certificates; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. The terms defined in Exhibit A attached hereto and by this reference incorporated herein, as used and capitalized herein, shall, for all purposes of this Trust Agreement have the meanings ascribed to them in said Exhibit A unless the context clearly requires some other meaning. Section 1.02. Authorization. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Trust Agreement and has taken all actions necessary to authorize the execution of this Trust Agreement by the officers and persons signing it. Section 1.03. Exhibits. The following exhibits are attached to, and by reference made a part of, this Trust Agreement: EXHIBIT A: DEFINITIONS EXHIBIT B: FORM OF THE CERTIFICATES EXHIBIT C: DESCRIPTION OF THE PROJECT -2- ARTICLE II THE CERTIFICATES OF PARTICIPATION Section 2.01. Authorization. The Trustee is hereby authorized and directed upon written request from the Authority to execute and deliver, to the Original Purchaser identified in such written request Certificates in an aggregate principal amount of _______ dollars ($__J evidencing direct undivided fractional interests of the Owners thereof in the Lease Payments. Section 2.02. Date; Payment of Interest. Each Certificate shall be dated as of the Closing Date. Interest with respect thereto shall be payable from the Interest Payment Date next preceding the date of execution thereof, unless; (i) it is executed as of an Interest Payment Date, in which event interest with respect thereto shall be payable from such Interest Payment Date; or (ii) it is executed after a Regular Record Date and before the following Interest Payment Date, in which event interest with respect thereto shall be payable from such I nterest Payment Date; or (i i i) it is executed on or before August 15, 2008, in which event interest with respect thereto shall be payable from the Closing Date; provided, however, that if, as of the date of execution of any Certificate, interest is in default with respect to any Outstanding Certificates, interest represented by such Certificate shall be payable from the Interest Payment Date to which interest has previously been paid or made available for payment with respect to the Outstanding Certificates. Payment of defaulted interest shall be paid by check mailed to the Owners as of a special record date to be fixed by the Trustee in its sole discretion, notice of which shall be given to the Owners not less than ten (10) days prior to such special record date. Section 2.03. Maturity; Interest Rates; Percentages. (a) Maturity; Interest Rates. The Certificates shall mature on September 1 in each of the respective years, and in the respective amounts, except that no Certificate may have principal maturing in more than one year, and interest represented thereby shall be computed at the respective rates, as follows; Maturity (September 1) Principal Amount Interest Rate Maturity (September 1) Principal Amount Interest Rate (b) Payments With Respect to Certificates Equal to Total Lease Payments. The total principal and interest due with respect to all Certificates shall not exceed the total Lease Payments due under the Lease Agreement. Section 2.04. Interest. Interest represented by the Certificates shall be payable on each Interest Payment Date to and including the date of maturity or redemption, whichever is earlier, as provided in Section 2.10 hereof. Said interest shall represent the portion of Lease Payments designated as interest and coming due during the six-month period preceding each Interest Payment Date. The portion of Lease Payments designated as interest with respect to any Certificate shall be computed by multiplying the portion of Lease Payments -3- designated as principal with respect to such Certificate by the rate of interest applicable to such Certificate (on the basis of a 360-day year of twelve 30-day months). Section 2.05. Forms. The Certificates shall be delivered in the form of fully registered Certificates without coupons in the denomination of $5,000 or any integral multiple thereof. The Certificates shall be numbered consecutively, beginning with R-1. The Certificates shall be substantially in the form set forth in Exhibit B attached hereto and by this reference incorporated herein. Section 2.06. Execution. The Certificates shall be executed by and in the name of the Trustee by the manual signature of an authorized officer or signatory of the Trustee. If any officer or signatory whose signature appears on any Certificate ceases to be such officer or signatory before the date of delivery of said Certificate, such signature shall nevertheless be as effective as if the officer or signatory had remained in office until such date. Section 2.07. Application of Proceeds. The net proceeds received by the Trustee from the sale of the Certificates in the aggregate amount of $____, being the face amount of the Certificates ($_ _), less an underwriter's discount of $___, less a net original issue discount of $ , less the sum of L_ transferred to the Municipal Bond Insurer in payment of the premium for the Municipal Bond Insurance Policy (paid as an accommodation to the City) shall forthwith be deposited by the Trustee in the following respective funds: (a) The Trustee shall transfer an amount equal to $____ to the City for deposit in the Project Fund; (b) The Trustee shall deposit in the Delivery Costs Fund an amount equal to $____; and (c) The Trustee shall deposit in the Reserve Fund an amount equal to $_ (the Reserve Requirement). The Trustee may establish a temporary fund or account in its records to facilitate such deposits and transfers. Section 2.08. Transfer and Exchange. (a) Transfer of Certificates. The registration of any Certificate may, in accordance with its terms, be transferred upon the Registration Books by the person in whose name it is registered, in person or by his attorney duly authorized in writing upon surrender of such Certificate for cancellation at the Principal Corporate Trust Office, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Certificate or Certificates shall be surrendered for registration of transfer, the Trustee shall execute and deliver a new Certificate or Certificates for like aggregate principal amount in authorized denominations. The City shall pay any costs of the Trustee incurred in connection with such transfer, except that the Trustee may require the payment by the Certificate Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. The Trustee shall not be required to transfer (i) any Certificates or portion thereof during the period between the date fifteen (15) days prior to the date of selection of Certificates for redemption and such date of selection, or (ii) any Certificates selected for redemption. (b) Exchange of Certificates. Certificates may be exchanged, upon surrender thereof, at the Principal Corporate Trust Office for a like aggregate principal amount of Certificates of -4- other authorized denominations of the same maturity. Whenever any Certificate or Certificates shall be surrendered for exchange, the Trustee shall execute and deliver a new Certificate or Certificates for like aggregate principal amount in authorized denominations. The City shall pay any costs of the Trustee incurred in connection with such exchange, except that the Trustee may require the payment by the Certificate 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 required to exchange (i) any Certificate or any portion thereof during the period between the date fifteen (15) days prior to the date of selection of Certificates for redemption and such date of selection, or (ii) any Certificate selected for redemption. Section 2.09. Certificates Mutilated, Lost Destroyed or Stolen. If any Certificate shall become mutilated, the Trustee, at the expense of the Owner of said Certificate, shall execute and deliver a new Certificate of like tenor, maturity and amount in exchange and substitution for the Certificate so muti lated, but only upon surrender to the Trustee of the Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall be canceled by it and destroyed with a certificate of destruction furnished to the City. If any Certificate shall be lost destroyed or stolen, evidence of such loss, destruction or theft shall be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and if an indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Certificate Owner, shall execute and deliver a new Certificate of like tenor, matu rity and amount and numbered as the Trustee shall determine in lieu of and in substitution for the Certificate so lost destroyed or stolen. The Trustee may require payment by the City of the expenses which may be incurred by the Trustee in carrying out the duties under this Section 2.09. Any Certificate executed and del ivered under the provisions of this Section 2.09 in lieu of any Certificate alleged to be lost destroyed or stolen shall be equally and fractionally entitled to the benefits of this Trust Agreement with all other Certificates secured by this Trust Agreement The Trustee shall not be required to treat both the original Certificate and any replacement Certificate as being Outstanding for the purpose of determining the principal amount of Certificates which may be executed and delivered hereunder or for the purpose of determining any percentage of Certificates Outstanding hereunder, but both the original and replacement Certificate shall be treated as one and the same. Notwithstanding any other provision of this Section 2.09, in lieu of delivering a new Certificate to replace a Certificate which has been muti lated, lost destroyed or stolen, and which has matured or has been called for redemption or is about to be called for redemption, the Trustee may make payment with respect to such Certificate upon receipt of the aforementioned indemnity. Section 2.10. Payment. Payment of interest due with respect to any Certificate on any Interest Payment Date shall be made to the person appearing on the Registration Books as the Owner thereof as of the Regular Record Date immediately preceding such Interest Payment Date, such interest to be paid by check mailed on the Interest Payment Date by first class mail to such Owner at his address as it appears on the Registration Books as of such Regular Record Date or, upon written request filed with the Trustee prior to the Regular Record Date by an Owner of at least $1,000,000 in aggregate principal amount of Certificates, by wire transfer in immediately available funds to an account in the United States designated by such Owner in such written request Any such written request shall remain in effect until rescinded in writing by the Owner. The principal and redemption price with respect to the Certificates at maturity or upon prior redemption shall be payable by check denominated in lawful money of the United States of America upon surrender of the Certificates at the Principal Corporate Trust Office. Section 2.11. Execution of Documents and Proof of Ownership. Any request direction, consent revocation of consent or other instrument in writing required or -5- permitted by this Trust Agreement to be signed or executed by Certificate Owners may be in any number of concurrent instruments of similar tenor, and may be signed or executed by such Owners in person or by their attorneys or agents appointed by an instrument in writing for that purpose, or by any bank, tru st company or other depository for such Certificates. Proof of the execution of any such instrument or of any instrument appointing any such attorney or agent and of the ownership of Certificates shall be sufficient for any purpose of this Trust Agreement (except as otherwise herein provided), if made in the following manner: (a) The fact and date of the execution by any Owner or his attorney or agent of any such instrument and of any instrument appointing any such attorney or agent may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company located within the United States of America, or of any notary public, or other officer authorized to take acknowledgments of deeds to be recorded in such jurisdictions, stating that the persons signing such instruments acknowledged before him the execution thereof. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such certificate shall also constitute sufficient proof of his authority. (b) The fact of the ownership of Certificates by any person and the amount the maturity and the numbers of such Certificates and the date of his holding the same shall be proved by the Registration Books. Any request or consent of the Owner of any Certificate shall bind every future Owner of the same Certificate in respect of anything done or suffered to be done by the Trustee pursuant to such request or consent. Section 2.12. Registration Books. The Trustee shall keep or cause to be kept at its Principal Corporate Trust Office, sufficient records for the registration and registration of transfer of the Certificates, which shall at all reasonable times be open to inspection by the City and the Authority during regular business hours on any Business Day with reasonable prior 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 the Registration Books, Certificates as hereinbefore provided. Section 2.13. CUSIP Numbers. The Trustee, the City and the Authority shall not be liable for any defect or inaccuracy in the CUSIP number that appears on any Certificate or in any redemption notice. The Trustee may, in its discretion, include in any redemption notice a statement to the effect that the CUSI P numbers on the Certificates have been assigned by an independent service and are included in such notice solely for the convenience of the Owners and that neither the Trustee, the City nor the Authority shall be liable for any inaccuracies in such numbers. Section 2.14. Use of Depository. Notwithstanding any provision of this Trust Agreement to the contrary: (a) The Certificates shall be initially executed, delivered and registered in the name of "Cede & Co.," as nominee of The Depository Trust Company, the depository designated by the Original Purchaser, and shall be evidenced by one Certificate maturing on each of the maturity dates set forth in Section 2.03 hereof to be in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such Certificates, or any portions thereof, may not thereafter be transferred except: -6- (i) to any successor of The Depository Trust Company or its nominee, or of any substitute depository designated pursuant to paragraph (ii) of this subsection (a) ("substitute depository"); provided that any successor of The Depository Trust Company or substitute depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) to any substitute depository designated in a written request of the City, upon (A) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository or (B) a determination by the City that The Depository Trust Company or its successor is no longer able to carry out its functions as depository; provided that any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (iii) to any person as provided below, upon (A) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository or (B) a determination by the City that The Depository Trust Company or its successor is no longer able to carry out its functions as depository; provided that no substitute depository which is not objected to by the City and the Trustee can be obtained. (b) In the case of any transfer pursuant to paragraph (i) or paragraph (ii) of subsection (a) of this Section 2.14, upon receipt of all Outstanding Certificates by the Trustee, together with a written request of a City Representative to the Trustee, a single new Certificate shall be executed and delivered for each maturity of such Certificate then outstanding, registered in the name of such successor or such substitute depository or their nominees, as the case may be, all as specified in such written request of a City Representative. In the case of any transfer pursuant to paragraph (iii) of subsection (a) of this Section 2.14, upon receipt of all Outstanding Certificates by the Trustee together with a written request of a City Representative, new Certificates shall be executed and delivered in such denominations and registered in the names of such persons as are requested in a written request of the City provided the Trustee shall not be required to deliver such new Certificates within a period less than sixty (60) days from the date of receipt of such a written request of a City Representative. (c) In the case of partial redemption or an advance refunding of any Certificates evidencing all of the principal maturing in a particular year, The Depository Trust Company shall, at the City's expense, deliver the Certificates to the Trustee for cancellation and re-registration to reflect the amounts of such reduction in principal. (d) The City and the Trustee shall be entitled to treat the person in whose name any Certificate is registered as the absolute Owner thereof for all purposes of this Trust Agreement and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the City and the City and the Trustee shall have no responsibility for the accuracy of any records maintained by DTC or any participant in DTC or transmitting payments to, communication with, notifying or otherwise dealing with any beneficial owners of the Certificates. Neither the City nor the Trustee will have any responsibility or obligations, legal or otherwise, to the beneficial owners or to any other party including The Depository Trust Company or its successor (or substitute depository or its successor), except for the registered owner of any Certificate. (e) So long as a II outstanding Certificates are registered in the name of Cede & Co. or its registered assign, the City and the Trustee shall reasonably cooperate with Cede & Co., as sole registered Owner, or its registered assign in effecting payment of the principal and -7- and interest due with respect to the Certificates by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due, in accordance with the Letter of Representations between DTC and the Trustee. (f) So long as all Outstanding Certificates are registered in the name of Cede & Co. or its registered assigns (hereinafter, for purposes of this paragraph (f), the "Owner"): (i) All notices and payments addressed to the Owners shall contain the Certificates' CUSIP number. (ii) Notices to the Owner shall be forwarded in the manner set forth in the form of DTC's standard form blanket issuer letter of representations executed by the City and received and accepted by DTC. Section 2.15. Claims Upon the Municipal Bond Insurance Policy and Payments by and to the Municipal Bond Insurer. [TO COME] -8- ARTICLE III ESTABLISHMENT AND DISBURSEMENT OF PROJECT FUND; ESTABLISHMENT AND DISBURSEMENT OF DELIVERY COSTS FUND Section 3.01. Project Fund. The Trustee shall establish a special fund designated as the "Project Fund;" shall keep such fund separate and apart from all other funds and moneys held by it; and shall administer such fund as provided herein. There shall be deposited in the Project Fund from the proceeds of the Certificates the amount required to be deposited therein pursuant to Section 2.07 (a) hereof, together with any other amounts from time to time deposited with the Trustee for such purpose as may be identified in writing to the Trustee. Section 3.02. Payment of Project Costs. Amounts in the Project Fund shall be disbursed for Project Costs. Disbursements from the Project Fund shall be made by the Trustee upon receipt of a sequentially numbered requisition requesting disbursement executed by a City Representative. Each such requisition shall: (a) set forth the amounts to be disbursed for payment or reimbursement of previous payments of Project Costs and the person or persons to whom said amounts are to be disbursed; (b) state that the amounts to be disbursed constitute Project Costs, that said amounts are required to be disbursed pursuant to a contract entered into therefor by or on behalf of the City, or were necessarily and reasonably incurred, and that said amounts are not being paid in advance of the time, if any, fixed for payment; (c) state that no amount set forth in the requisition was included in any requisition requesting disbursement previously filed with the Trustee pursuant to this Section 3.02; and (d) state that there has been compliance with Section 5.11 of the Lease Agreement relating to the private use limitation and the private loan limitation. The Trustee shall be responsible for the safekeeping and investment (in accordance with Section 8.02 hereof) of the moneys held in the Project Fund and the payment thereof in accordance with this Section 3.02, but the Trustee shall not be responsible for the truth or accuracy of such requisitions, may rely conclusively thereon and shall be under no duty to investigate or verify any statements made therein. Notwithstanding the foregoing, following an Event of Default (i) draws from the Project Fund shall require the prior written consent of the Municipal Bond Insurer, and (ii) amounts remaining therein shall be available for the payment of principal and interest with respect to the Certificates. Section 3.03. Delivery Costs Fund. The Trustee shall establish a special fund designated as the "Delivery Costs Fund;" shall keep such fund separate and apart from all other funds and moneys held by it; and shall administer such fund as provided herein. There shall be deposited in the Delivery Costs Fund the proceeds of sale of the Certificates required to be deposited therein pursuant to Section 2.07(b) hereof and any other funds from time to time deposited with the Trustee for such purpose and identified in writing to the Trustee. -9- Section 3.04. Payment of Delivery Costs. The moneys in the Delivery Costs Fund shall be disbursed by the Trustee to pay the Delivery Costs. (a) The Trustee shall disburse moneys in the Delivery Costs Fund only upon a receipt of a sequentially numbered requisition, signed by a City Representative, setting forth the amounts to be disbursed for payment or reimbursement of Delivery Costs and the name and address of the person or persons to whom said amounts are to be disbursed, stating that the amounts to be disbursed are for Delivery Costs properly chargeable to the Delivery Costs Fund. (b) The Trustee shall be responsible for the safekeeping and investment (in accordance with Section 8.02 hereof) of the moneys held in the Delivery Costs Fund and the payment thereof in accordance with this Section 3.04, but the Trustee shall not be responsible for the truth or accuracy of such requisitions, may rely conclusively thereon and shall be under no duty to investigate or verify any statements made therein. (c) Upon written notice from a City Representative that all Delivery Costs have been paid, but in no event later than September 13, 2008, the Trustee shall transfer any moneys then remaining in the Delivery Costs Fund to the Lease Payment Fund and applied for the purposes of such fund, the Delivery Costs Fund shall be closed, the Trustee shall no longer be obligated to make payments for Delivery Costs and all further Delivery Costs shall be paid by the City. Section 3.05. Transfers of Unexpended Proceeds. The Trustee is hereby directed that all unexpended moneys remaining in the Project Fund and not identified in writing by a City Representative to be required for payment of Project Costs or other capital improvements shall, on the Completion Date and following receipt by the Trustee of a Certificate of Completion, be transferred to the Lease Payment Fund and applied to pay the Lease Payments as the same become due and payable and the Project Fund shall be closed. -10- ARTICLE IV REDEMPTION OF CERTIFICATES Section 4.01. Redemption. (a) Optional Redemption. The Certificates maturing on or before September 1,2009, are not subject to optional redemption prior to maturity. The Certificates maturing on and after September 1,2010 are subject to optional redemption in whole or in part on any date in such order of maturity as shall be designated by the City (or, if the City shall fail to so designate the order of redemption, in pro rata among maturities) and by lot within a maturity, on or after September 1,2009, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption from the proceeds of the optional prepayment of Lease Payments made by the City pursuant to the Lease Agreement without premium. (b) Redemption From Net Proceeds of Insurance, Title Insurance, Condemnation or Eminent Domain Award. The Certificates are subject to mandatory redemption in whole or in part on any date from the Net Proceeds of an insurance, title insurance, condemnation, or eminent domain award to the extent credited towards the prepayment of the Lease Payments by the City pursuant to Section 10.3 of the Lease Agreement at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium. (c) Mandatory Redemption. (i) The Certificates maturing on September 1, __' are subject to mandatory redemption in part on September 1, __' and on each September 1, _' thereafter, to and including September 1, __' from the principal components of scheduled Lease Payments required to be paid by the City pursuant to Section 4.4 of the Lease Agreement with respect to each such redemption date (subject to abatement as set forth in Section 6.3 of the Lease Agreement), at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, as follows: Year (September 1) Principal Amount of Certificates to be Redeemed lMaturity (ii) The Certificates maturing on September 1, _' are subject to mandatory redemption in part on September 1, _' and on each September 1, _' thereafter, to and including September 1, ___' from the principal components of scheduled Lease Payments required to be paid by the City pursuant to Section 4.4 of the Lease Agreement with respect to each such redemption date (subject to abatement as set forth in Section 6.3 of the Lease Agreement), at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, as follows: -11- Year (September 1) Principal Amount of Certificates to be Redeemed lMaturity (iii) In the event that the Trustee shall redeem Certificates maturing on September 1, _' or September 1, _' in part but not in whole pursuant to subsections (a) or (b) of this Section 4.01, the amount of the Certificates to be redeemed in each subsequent year pursuant to this subsection (c)(i) shall be reduced to correspond to the principal components of the Lease Payments prevailing following such redemption as determined pursuant to Section 4.4(b) of the Lease Agreement. Section 4.02. Selection of Certificates for Redemption. Whenever provision is made in this Trust Agreement for the redemption of Certificates and less than all Outstanding Certificates are to be redeemed, the Trustee shall select Certificates for redemption from the Outstanding Certificates not previously called for redemption in such order of maturity as shall be designated by the City (and, in lieu of such designation, pro rata among maturities) and by lot within a maturity. The Trustee shall select Certificates for redemption within a maturity by lot in any manner which the Trustee shall, in its sole discretion, deem appropriate. For the purposes of such selection, Certificates shall be deemed to be composed of $5,000 portions and any such portion may be separately redeemed. The Trustee shall promptly notify the City and the Authority in writing of the Certificates so selected for redemption. Selection by the Trustee of Certificates for redemption shall be final and conclusive. Upon the occurrence of an extraordinary redemption in part. the selection of Certificates to be redeemed shall be subject to the approval of the Municipal Bond Insurer. Section 4.03. Notice of Redemption. Unless waived in writing by any Owner of a Certificate to be redeemed, notice of any such redemption shall be given by the Trustee on behalf and at the expense of the City, by mailing a copy of a redemption notice by first class mail, postage prepaid, at least thirty (30) days and not more than sixty (60) days prior to the date fixed for redemption to such Owner of the Certificate or Certificates to be redeemed at the address shown on the Certificate Registration Books maintained by the Trustee or at such other address as is furnished in writing by such Owner to the Trustee; provided, however, that neither the fai lure to receive such notice nor any defect in any notice shall affect the sufficiency of the proceedings for the redemption of the Certificates. All notices of redemption shall be dated and shall state: (i) the redemption date; (ii) the redemption price; (iii) if less than all Outstanding Certificates of a maturity are to be redeemed, the Certificate numbers (and, in the case of partial redemption, the respective principal amounts) of the Certificates to be redeemed; (iv) that on the redemption date the redemption price will become due and payable upon each such Certificate or portion thereof called for redemption and that interest with respect thereto shall cease to accrue from and after said date; (v) the place where such Certificates are to be surrendered for payment of the redemption price, which place of payment shall be the Principal Corporate Trust Office; (vi) the CUSIP numbers of all Certificates being redeemed; (vii) the original date of execution and delivery of the Certificates; (viii) the rate of interest payable with respect to each maturity of Certificates being redeemed; (ix) the maturity date of each Certificate being redeemed; and (x) any other descriptive information needed to identify accurately the Certificates being redeemed. -12- Notwithstanding the foregoing, in the case of any optional redemption of the Certificates under Section 4.01 (a), the notice of redemption shall state that the redemption is conditioned upon receipt by the Trustee of sufficient moneys to redeem the Certificates on the anticipated redemption date, and that the optional redemption shall not occur if, by no later than the schedu led redemption date, sufficient moneys to redeem the Certificates have not been deposited with the Trustee. In the event that the Trustee does not receive sufficient funds by the scheduled optional redemption date to so redeem the Certificates to be optionally redeemed, such event shall not constitute an Event of Default; the Trustee shall send written notice to the Owners, to the Securities Depositories and to one or more of the Information Services to the effect that the redemption did not occur as anticipated, and the Certificates for which notice of optional redemption was given shall remain Outstanding for all purposes of this Trust Agreement. Notice of redemption having been given as aforesaid and the deposit of the redemption price having been made by the City, the Certificates or portions of Certificates so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date interest with respect to such Certificates or portions of Certificates shall cease to be payable. Upon surrender of such Certificates for redemption in accordance with said notice, such Certificates shall be paid by the Trustee at the redemption price. Upon the payment of the redemption price of Certificates being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the Certificates being redeemed with the proceeds of such check or other transfer, to the extent possible. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. All Certificates which have been redeemed shall be canceled by the Trustee, shall not be redelivered and shall be destroyed pursuant to Section 14.08. In addition to the foregoing notice to the Owners, notice shall also be given by the Trustee, by telecopy, registered, certified or overnight mail, to all Securities Depositories and to an Information Service which shall state the information set forth above, but no defect in said notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption. The Trustee shall have no responsibility for a defect in the CUSIP number that appears on any Certificate or in the redemption notice. The redemption notice may provide that the CUSIP numbers have been assigned by an independent service and are included in the notice solely for the convenience of Certificate Owners and that the Trustee and the City shall not be liable in any way for inaccuracies in said numbers. Section 4.04. Partial Redemption of Certificate. Upon surrender of any Certificate redeemed in part only, the Trustee shall execute and del iver to the Owner thereof a new Certificate or Certificates of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Certificate surrendered and of the same interest rate and the same maturity. Section 4.05. Purchase of Certificates. In lieu of redemption of Certificates as provided in this Article IV, amounts held by the Trustee for such redemption may also be used on any Interest Payment Date, upon receipt by the Trustee at least ninety (90) days prior to the next scheduled Interest Payment Date of the written request of a City Representative, for the purchase of Certificates at public or private sale as and when and at such prices (including brokerage, accrued interest and other charges) as the City may in its discretion direct. Such purchases may be effected through the investment department of the Trustee or of an affiliate of the Trustee. The aggregate principal amount of Certificates of -13- the same maturity purchased in lieu of redemption pursuant to this Section 4.05 shall not exceed the aggregate principal amount of Certificates of such maturity which would otherwise be subject to such redemption. Remaining moneys, if any, shall be deposited in the Lease Payment Fund. The exercise of any provision of this Trust Agreement which permits the purchase of Certificates in lieu of redemption shall require approval of the Municipal Bond Insurer wherein any Certificate so purchased is not extinguished. -14- ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND Section 5.01. Assignment of Rights in Lease Agreement. The Authority has, in the Assignment Agreement transferred, assigned and set over to the Trustee certain of its rights but none of its obligations set forth in the Lease Agreement including but not limited to all of the Authority's rights to receive and collect Lease Payments and all other amounts required to be deposited in the Lease Payment Fund pursuant to the Lease Agreement or pursuant hereto. All Lease Payments and such other amounts to which the Authority may at any time be entitled shall be paid directly to the Trustee and all of the Lease Payments collected or received by the Authority shall be deemed to be held and to have been collected or received by the Authority as the agent of the Trustee, and if received by the Authority at any time shall be deposited by the Authority with the Trustee within one Business Day after the receipt thereof, and all such Lease Payments and such other amounts shall be forthwith deposited by the Trustee upon the receipt thereof in the Lease Payment Fund (except as provided in Section 6.04 hereof). Section 5.02. Establishment of Lease Payment Fund. The Trustee shall establish a special fund designated as the "Lease Payment Fund." All moneys at any time deposited by the Trustee in the Lease Payment Fund shall be held by the Trustee in trust for the benefit of the Owners of the Certificates. So long as any Certificates are Outstanding, neither the City nor the Authority shall have any beneficial right or interest in the Lease Payment Fund or the moneys deposited therein, except only as provided in this Trust Agreement and such moneys shall be used and applied by the Trustee as hereinafter set forth. Section 5.03. Deposits. There shall be deposited in the Lease Payment Fund all Lease Payments received by the Trustee (except as provided in Section 6.04 hereof), including any moneys received by the Trustee for deposit therein pursuant to Sections 2.07(c), 4.01, 5.01 or Article VII hereof, or Article X of the Lease Agreement and any other moneys requ ired to be deposited therein pursuant to the Lease Agreement or pursuant to this Trust Agreement. Section 5.04. Application of Moneys. All amounts in the Lease Payment Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal and interest with respect to the Certificates as the same shall become due and payable in accordance with the provisions of Article II and Article IV hereof. Section 5.05. Surplus. Any surplus remaining in the Lease Payment Fund after redemption and/or payment of all Certificates, including accrued interest (if any) and payment of any applicable fees and expenses to the Trustee, or provision for such redemption or payment having been made to the satisfaction of the Trustee and payment of any amounts owed to the Municipal Bond Insurer, shall be withdrawn by the Trustee and remitted to the City. -15- ARTICLE VI RESERVE FUND Section 6.01. Establishment of Reserve Fund. The Trustee shall establish a special fund designated as the "Reserve Fund." All moneys at any time on deposit in the Reserve Fund shall be held by the Trustee in trust for the benefit of the Owners of the Certificates, and applied solely as provided herein. Section 6.02. Deposits. (a) There shall be deposited in the Reserve Fund the proceeds of sale of the Certificates required to be deposited therein pursuant to Section 2.07(c) hereof and any other funds from time to time deposited with the Trustee for such purpose and identified in writing to the Trustee. Moneys in the Reserve Fund shall be held in trust as a reserve for the payment when due of the Lease Payments. (b) At any time, moneys on deposit in the Reserve Fund may be substituted by the City with a letter of credit surety bond, bond insurance policy or other form of guaranty from a financial institution, the long-term, unsecured obligations of which are rated in the highest rating category by Moody's and S&P, in an amount equal to the Reserve Requirement upon presentation to the Trustee of such letter of credit surety bond, bond insurance policy or other form of guaranty from a financial institution, with evidence from the City that such letter of credit surety bond, bond insurance policy or other form of guaranty from a financial institution rated in the highest rating category by Moody's and S&P. Upon such substitution, the Trustee shall transfer amounts on deposit in the Reserve Fund to the City in an amount equal to the maximum limits or principal amount as applicable, of such letter of credit surety bond, bond insurance policy or other form of guarantee which shall be segregated by the City and applied solely to the funding of capital projects. Section 6.03. Transfers of Excess. The Trustee shall, on or before each March 1 and September 1, value investments in the Reserve Fund at market value and transfer any moneys in the Reserve Fund then in excess of the Reserve Requirement in accordance with Section 8.04; provided, however that the Trustee shall not liquidate an investment to make such transfer of excess unless so directed in writing by a City Representative. Section 6.04. Application in Event of Deficiency in the Lease Payment Fund. If, on any Interest Payment Date, the moneys available in the Lease Payment Fund do not equal the amount of the principal and interest with respect to the Certificates then coming due and payable, the Trustee shall apply the moneys available in the Reserve Fund to make delinquent Lease Payments by transferring the amount necessary for this purpose to the Lease Payment Fund. Upon receipt of any delinquent Lease Payment with respect to which moneys have been advanced from the Reserve Fund, such Lease Payment shall be deposited in the Reserve Fund to the extent of such advance. Section 6.05. Transfer To Make All Lease Payments. If, on any Interest Payment Date, the moneys on deposit in the Reserve Fund and the Lease Payment Fund (excluding amounts required for payment of principal and interest with respect to Certificates not presented for payment) are sufficient to pay all Outstanding Certificates, including all principal and interest the Trustee shall transfer all amounts then on deposit in the Reserve Fund to the Lease Payment Fund to be appl ied to the payment of the Lease Payments, and such moneys shall be distributed to the Owners of Certificates in accordance with Article II -16- and IV of this Trust Agreement. Any amounts remaining in the Reserve Fund upon payment in full of all Outstanding Certificates and all amounts due the Trustee hereunder, or upon provision for such payment as provided in Section 14.01, shall be withdrawn by the Trustee and paid to the City. -17- ARTICLE VII INSURANCE AND CONDEMNATION FUND; INSURANCE; EMINENT DOMAIN; TITLE INSURANCE Section 7.01. Establishment of Insurance and Condemnation Fund; Application of Net Proceeds of I nsurance A ward. (a) Any Net Proceeds of insurance against damage to or destruction of any part of the Property collected by the City in the event of any such damage or destruction shall be paid to the Trustee by the City pursuant to Section 6.2(a) of the Lease Agreement and deposited by the Trustee promptly upon receipt thereof in a special fund designated as the "Insurance and Condemnation Fund" to be established by the Trustee when deposits are required to be made therein. (b) Within ninety (90) days following the date of such deposit the City shall determine and notify the Trustee in writing of its determination either (i) that the replacement repair, restoration, modification or improvement of the Property is not economically feasible or in the best interest of the City, or (ii) that all or a portion of such Net Proceeds are to be applied to the prompt replacement repair, restoration, modification or improvement of the damaged or destroyed portions of the Property. (c) In the event the City's determination is as set forth in clause (i) of paragraph (b) above, such Net Proceeds shall be promptly transferred by the Trustee to the Lease Payment Fund, applied to the prepayment of Lease Payments pursuant to Section 10.3 of the Lease Agreement and applied to the redemption of Certificates as provided in Section 4.01 (b) hereof; provided, however, that in the event of damage or destruction of the Property in full, such Net Proceeds may be transferred to the Lease Payment Fund only if sufficient together with other moneys available therefor, to cause the prepayment of the principal components of all unpaid Lease Payments pursuant to Section 10.3 of the Lease Agreement otherwise such Net Proceeds shall be applied to the replacement repair, restoration, modification or improvement of the Property; provided further, however, that in the event of damage or destruction of the Property in part such Net Proceeds may be transferred to the Lease Payment Fund and applied to the prepayment of Lease Payments only if the resulting Lease Payments represent fair consideration for the remaining portions of the Property, evidenced by a certificate signed by a City Representative and an Authority Representative. (d) In the event the City's determination is as set forth in clause (ii) of paragraph (b) above, Net Proceeds deposited in the Insurance and Condemnation Fund shall be appl ied to the prompt replacement repair, restoration, modification or improvement of the damaged or destroyed portions of the Property by the City, and disbursed by the Trustee upon receipt of requisitions signed by a City Representative stating with respect to each payment to be made (i) the requisition number, (ii) the name and address of the person, firm or corporation to whom payment is due, (iii) the amount to be paid and (iv) that each obligation mentioned therein has been properly incurred, is a proper charge against the Insurance and Condemnation Fund, has not been the basis of any previous withdrawal, and specifying in reasonable detail the nature of the obligation, accompanied by a bill or a statement of account for such obligation. The Trustee shall not be responsible for the representations made in such requisitions and may conclusively rely thereon and shall be under no duty to investigate or verify any statements made therein. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to the City. -18- Section 7.02. Application of Net Proceeds of Eminent Domain Award. If all or any part of the Property shall be taken by eminent domain proceedings (or sold to a government threatening to exercise the power of eminent domain), the Net Proceeds therefrom shall be deposited with the Trustee in the Insurance and Condemnation Fund pursuant to Section 6.2(b) of the Lease Agreement and shall be applied and disbursed by the Trustee as follows: (a) If the City has given written notice to the Trustee of its determination that (i) such eminent domain proceedings have not materially affected the operation of the Property or the ability of the City to meet any of its obligations with respect to the Property under the Lease Agreement and (ii) such proceeds are not needed for repair or rehabilitation of the Property, the City shall so certify to the Trustee and the Trustee, at the City's written request shall transfer such proceeds to the Lease Payment Fund to be credited towards the prepayment of the Lease Payments pursuant to Section 10.3 of the Lease Agreement and applied to the redemption of Certificates in the manner provided in Section 4.01 (b) hereof. (b) If the City has given written notice to the Trustee of its determination that (i) such eminent domain proceedings have not materially affected the operation of the Property or the ability of the City to meet any of its obligations with respect to the Property under the Lease Agreement and (i i) such proceeds are needed for repa ir, rehabi I itation or replacement of the Property, the City shall so certify to the Trustee and the Trustee, at the City's written request shall pay to the City, or to its order, from said proceeds such amounts as the City may expend for such repair or rehabilitation, upon the filing with the Trustee of requisitions of the City Representative in the form and containing the provisions set forth in Section 7.01. The Trustee shall not be responsible for the representations made in such requisitions and may conclusively rely thereon and shall be under no duty to investigate or verify any statements made therein. (c) If (i) less than all of the Property shall have been taken in such eminent domain proceedings or sold to a government threatening the use of eminent domain powers, and if the City has given written notice to the Trustee of its determination that such eminent domain proceedings have materially affected the operation of the Property or the ability of the City to meet any of its obligations with respect to the Property under the Lease Agreement or (ii) all of the Property shall have been taken in such eminent domain proceedings, then the Trustee shall tra nsfer such proceeds to the Lease Payment Fund to be credited toward the prepayment of the Lease Payments pursuant to Section 10.3 of the Lease Agreement and appl ied to the redemption of Certificates in the manner provided in 4.01 (b) hereof. (d) In making any determination under this Section 7.02, the City may, but shall not be required to, obtain at its expense, the report of an independent engineer or other independent professional consultant a copy of which shall be filed with the Trustee. Any such determination by the City shall be final. Section 7.03. Application of Net Proceeds of Title Insurance Award. The Net Proceeds from a title insurance award shall be deposited with the Trustee in the Insurance and Condemnation Fund pursuant to Section 6.2(c) of the Lease Agreement and shall be transferred to the Lease Payment Fund to be credited towards the prepayment of Lease Payments required to be paid pursuant to Section 10.3 of the Lease Agreement and appl ied to the redemption of Certificates in the manner provided in Section 4.01 (b). Section 7.04. Cooperation. The Authority and the Trustee shall cooperate fully with the City, at the expense of the City, in filing any proof of loss with respect to any insurance policy maintained pursuant to Article V of the Lease Agreement and in the prosecution or -19- defense of any prospective or pending condemnation proceeding with respect to the Property or any portion thereof. Neither the Trustee nor the Authority shall be obligated to join in such action if it believes it will be exposed to liability or has not been indemnified to its satisfaction from any loss, liability or expense including, but not limited to, attorneys fees. -20- ARTICLE VIII MONEYS IN FUNDS; INVESTMENT Section 8.01. Held in Trust. The moneys and investments held by the Trustee under this Trust Agreement are irrevocably held in trust for the benefit of the Owners of the Certificates and for the purposes herein specified and such moneys, and any income or interest earned thereon, shall be expended only as provided in this Trust Agreement and shall not (except as set forth in Section 9.03 hereof) be subject to levy, attachment or lien by or for the benefit of any creditor of the Authority, the Trustee, the City or any Owner of Certificates. Section 8.02. Investments Authorized. Moneys held by the Trustee hereunder shall, upon written order of a City Representative, be invested and reinvested by the Trustee in Permitted Investments. The Trustee may deem all investments directed by a City Representative as Perm itted I nvestments without independent investigation thereof. If a City Representative shall fail to so direct investments, the Trustee shall invest the affected moneys in Permitted Investments described in paragraph (g) of the definition thereof. Such investments, if registrable, shall be registered in the name of and held by the Trustee or its nominee. The Trustee may purchase or sell to itself or any affiliate, as principal or agent. investments authorized by this Section 8.02. Such investments and reinvestments shall be made giving full consideration to the time at which funds are required to be available. The Trustee may act as principal or agent in the making or disposing of any investment and make or dispose of any investment through its investment department or that of an affiliate and shall be entitled to its customary fees therefor. The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section 8.02, to deal with itself (in its individual capacity) or with one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or dealing as principal for its own account. Section 8.03. Accounting. The Trustee shall furnish to the City, at least monthly, an accounting which may be in the form of its customary accounting statements of all investments made by the Trustee; provided that the Trustee shall not be obligated to deliver an accounting for any fund or account that (a) has a balance of $0.00 and (b) has not had any activity since the last reporting date. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with Section 8.02 hereof. The City acknowledges that to the extent that regu lations of the Comptroller of the Currency or other applicable regulatory agency grant the City the right to receive brokerage confirmations of security transactions, the City waives recei pt of such confirmations. The Trustee shall furnish to the City periodic statements of account which shall include detail of all investment transactions made by the Trustee. Section 8.04. Allocation of Earnings. Unless and until otherwise directed by the City to the Trustee in writing, all interest or income received by the Trustee on investment of the Lease Payment Fund shall as received, prior to the Completion Date, be transferred to the Project Fund (except as otherwise provided herein) and thereafter shall be retained in the Lease Payment Fund. Amounts retained or deposited in the Lease Payment Fund pursuant to this Section 8.04 shall be applied as a credit against the Lease Payment due by the City pursuant to the Lease Agreement on the Lease Payment Date following the date of deposit. All interest received by the Trustee on investment of the Reserve Fund shall be retained in the Reserve Fund in the event that amounts on deposit in the Reserve Fund are less than the Reserve Requirement. Reserve Fund investments may not have maturities extending beyond five years, except for investment agreements or repurchase agreements approved by the -21- Municipal Bond Insurer. In the event that amounts then on deposit in the Reserve Fund on the valuation date described in Section 6.03 hereof equal or exceed the Reserve Requirement such excess shall, prior to the Completion Date, be transferred to the Project Fund and thereafter shall be transferred to the Lease Payment Fund. Transfers to the Lease Payment Fund from the Reserve Fund shall be made by the Trustee on or prior to each February 1 and August 1. All interest or income in the Project Fund shall be retained in the Project Fund until the Project Fund is closed pursuant to Section 3.05 hereof. All interest or income in the Delivery Costs Fund shall be retained in the Delivery Costs Fund until the Delivery Costs Fund is closed pursuant to Section 3.04 hereof. Section 8.05. Acquisition, Disposition and Valuation of Investments. The City covenants that all investments of amounts deposited in any fund or account created by or pursuant to this Trust Agreement or otherwise containing gross proceeds of the Certificates (within the meaning of section 148 of the Code) shall be acquired, disposed of, and valued at their market value. -22- ARTICLE IX THE TRUSTEE Section 9.01. Appointment of Trustee. U.S. Bank National Association, a national banking association organized and existing under the laws of the United States of America with a Principal Corporate Trust Office in Los Angeles, California, is hereby appointed Trustee, registrar and paying agent by the Authority and the City for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Trust Agreement. The Authority and the City agree that they will maintain a Trustee which shall be a corporation or association organized under the laws of any state, the United States of America, or the City of Columbia, authorized under such laws to exercise corporate trust powers, which shall have (or, in the case of a bank or trust company included in a bank holding company system, the related bank holding company shall have) a combined capital and surplus of at least fifty million dollars ($50,000,000), subject to supervision or examination by federal or State authority, so long as any Certificates are Outstanding and acceptable to the Municipal Bond Insurer. If such corporation or association publishes a report of condition at least annually pursuant to law or to the requi rements of any supervising or examining authority above referred to then for the purpose of this Section 9.01, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 9.01, the Trustee shall resign immediately in the manner and with the effect specified in Section 9.07. The Trustee is hereby authorized to pay the Certificates when du Iy presented for payment at maturity, or on redemption, or on purchase by the Trustee prior to maturity in accordance with Section 4.05 hereof, and to cancel all Certificates upon payment thereof. The Trustee shall keep records in accordance with industry standards of all funds administered by it and of all Certificates paid and discharged. Section 9.02. Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Trust Agreement and agrees to perform said trusts, but only upon and subject to the following express terms and conditions: (a) The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Trust Agreement and no implied duties or obligations shall be read into this Trust Agreement against the Trustee. In case an Event of Default has occurred (which has not been cured or waived) the Trustee may exercise such of the rights and powers vested in it by this Trust Agreement and shall use the same degree of care and skill in their exercise as a prudent and reasonable person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) No provision in this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (c) The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder either directly or by or through attorneys, receivers or agents and shall be entitled to advice of counsel concerning all matters of trust and its duty -23- hereunder and shall be absolutely protected in relying thereon. The Trustee shall not be responsible for the misconduct of such persons selected by it with reasonable care. (d) The Trustee shall not be responsible for any recital herein, in the Assignment Agreement or in the Certificates, or for any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Certificates delivered hereunder or intended to be secured hereby and the Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Authority or the City under the Lease Agreement. (e) The Trustee shall not be accountable for the use of any Certificates del ivered hereunder or the proceeds thereof. The Trustee, in its individual or any other capacity, may become the Owner or pledgee of Certificates secured hereby with the same rights which it would have if it were not the Trustee; may acquire and dispose of other bonds or evidence of indebtedness of the City with the same rights it would have if it were not the Trustee; and may act as a 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 of Certificates, whether or not such comm ittee sha II represent the Owners of the majority in principal amount of the Certificates then Outstanding. (f) In the absence of bad faith on its part, the Trustee shall be protected in acting or refraining from acting upon any notice, request. consent. requisition, certificate, order, affidavit. facsimile, letter, telegram or other paper or document believed by it to be genuine and to have been signed or sent by the proper person or persons. Any action taken or omitted to be taken by the Trustee in good faith pursuant to this Trust Agreement upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Certificate, shall be conclusive and binding upon all future Owners of the same Certificate and upon Certificates executed and delivered in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Certificate or to take any action at his request unless such person is the registered owner as shown on the Registration Books. (g) As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument. paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed by an Authority Representative or a City Representative as sufficient evidence of the facts therein contained and prior to the occurrence of an Event of Default of which the Trustee has been given notice or is deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient. The Trustee may accept a certificate of an Authority Representative or a City Representative to the effect that an authorization in the form therein set forth has been adopted by the Authority or the City, as the case may be, as conclusive evidence that such authorization has been duly adopted, and is in full force and effect. (h) The permissive right of the Trustee to do things enumerated in this Trust Agreement shall not be construed as a duty and the Trustee shall not be answerable for other than its negligence or willful misconduct. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees, affiliates and agents. (i) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder except failure by the City to make any of the Lease Payments to the Trustee required to be made by the City pursuant to the Lease Agreement or failure by the Authority or the City to file with the Trustee any document required by this Trust Agreement or a Lease Agreement to be so fi led subsequent to the del ivery of the Certificates, unless the Trustee shall be specifically notified in writing of such default by the -24- Authority, the City or by the Owners of at least five percent (5%) in aggregate principal amount of Certificates then Outstanding and all notices or other instruments required by this Trust Agreement to be delivered to the Trustee must in order to be effective, be delivered at the Principal Corporate Trust Office, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default except as aforesaid. 0) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. (k) Notwithstanding anything elsewhere in this Trust Agreement with respect to the execution of any Certificates, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Trust Agreement the Trustee shall have the right but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action, deemed desirable by the Trustee for the purpose of establishing the right of the City to the withdrawal of any cash, or the taking of any other action by the Trustee. (I) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of moneys made by it in accordance with Article VIII of this Trust Agreement. (m) 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 a majority in aggregate principal amount of the Outstanding Certificates 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 Trust Agreement. (n) Before taking any action under Article XIII hereof or this section 9.02 at the request or direction of the Certificate Owners, the Trustee may require payment or reimbursement of its fees and expenses, including fees and expenses of counsel and receipt of an indemnity bond satisfactory to it from the Certificate Owners or Municipal Bond Insurer to protect it against all liability, except liability which is adjudicated to have resulted from its own negligence or willful misconduct in connection with any action so taken. Before being required to take any action, the Trustee may require an opinion of Independent Counsel acceptable to the Trustee, which opinion shall be made available to the other parties hereto upon request which counsel may be counsel to any of the parties hereto, or a verified certificate of any party hereto, or both, concerning the proposed action. If it does so in good faith, the Trustee shall be absolutely protected in relying thereon. (0) Under no circumstances shall the Trustee be liable for the obligations evidenced by the Certificates. (p) The Trustee shall not be accountable for the use or application by the City or the Authority or any other party of any funds which the Trustee has released in accordance with the terms of this Trust Ag reement. (q) The Trustee has no obi igation or duty to insure compl iance by the City with the Code. -25- (r) The Trustee makes no representation or warranty, express or impl ied, as to the title, value, design, compliance with specifications or legal or environmental requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the City or the Authority of the Property. In no event shall the Trustee be liable for incidental, indirect special or consequential damages in connection with or arising from the Lease Agreement or this Trust Agreement for the existence, furnishing or use of the Property. (s) The Trustee makes no representations as to the validity or sufficiency of the Certificates and shall incur no responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Certificates assigned to or imposed upon it. The Trustee shall not be responsible for the validity or sufficiency of the Lease Agreement or the assignment under the Assignment Agreement. The Trustee shall not be liable for the sufficiency or collection of any Lease Payments or other moneys required to be paid to it under the Lease Agreement (except as provided in thi s Trust Agreement), its right to receive moneys pursuant to the Lease Agreement or the value of or title to the premises upon which the Property is located or the Property. The Trustee makes no representations and shall have no responsibility for any official statement or other offering material prepared or distributed with respect to the Certificates. (t) In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity and all persons, including without limitation the Owners and the City or the Authority having any claim against the Trustee arising from this Trust Agreement shall look only to the funds and accounts held by the Trustee hereunder for payment except as otherwise provided herein. (u) The Trustee is authorized and directed to execute the Assignment Agreement in its capacity as Trustee hereunder. Section 9.03. Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to payment and reimbursement for reasonable fees for its services rendered hereunder and under the Assignment Agreement and all advances and expenditures, including but not limited to, advances to and fees and expenses of independent appraisers, accountants, consultants, counsel, agents and attorneys or other experts employed by the Trustee in connection with such services and the Trustee shall, in the Event of Default have a first and prior lien on the funds held hereunder to secure the same. The Trustee's rights hereunder, including its rights under Section 12.03 hereof, shall survive its resignation or removal and final payment of the Certificates. Section 9.04. Notice to Certificate Owners of Default. If an Event of Default occurs of which the Trustee has been given or is deemed to have notice pursuant to Section 9.02(i) hereof, then the Trustee shall, within ninety (90) days of the occurrence thereof, give written notice thereof at the expense of the City by first class mail, postage prepaid, to the Owner of each Certificate, unless such Event of Default shall have been cured before the giving of such notice; prauided, however that unless such Event of Default consists of the fail ure by the City to make any Lease Payment when due, the Trustee may elect not to give such notice if and so long as the Trustee in good faith determines that it is in the best interests of the Certificate Owners not to give such notice. Section 9.05. Intervention by Trustee. In any judicial proceeding to which the Authority or the City is a party which, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of the Certificates, the Trustee may intervene on behalf of the Certificate Owners and shall do so if requested in writing by the Owners of at least twenty-five percent (25%) of the aggregate principal amount of Certificates then -26- Outstanding, provided the Trustee shall have no duty to take such action unless it has received payment or reimbursement and has been indemnified to its satisfaction as provided in Section 9.02(n) hereof against all risk or liability arising from such action. Section 9.06. Removal of Trustee. Upon thirty (30) days' notice, the City (so long as no Event of Default shall have occurred and be continuing) or the Owners of at least a majority of the aggregate principal amount of Certificates then Outstanding may, with the consent of the Authority, remove the Trustee initially appointed, and any successor thereto, by an instrument or concurrent instruments in writing delivered to the Trustee and the Authority, and may appoint a successor or successors thereto; provided that any such successor shall be a corporation or association meeting the requirements set forth in Section 9.01 hereof. The Trustee may be removed at any time, at the request of the Municipal Bond Insurer with the consent of the City, for any breach of the trust set forth herein and by the Municipal Bond Insurer, without the consent of the City, following an Event of Default hereunder. Section 9.07. Resignation by Trustee. The Trustee and any successor Trustee may, at any time, resign by giving thirty (30) days' written notice by registered or certified mail to the City and the Authority. The Municipal Bond Insurer shall receive written notice prior to the effective date of any Trustee resignation. Section 9.08. Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant to Sections 9.06 or 9.07 hereof, the City shall promptly appoint a successor Trustee. In the event the City shall, for any reason whatsoever, fail to appoint a successor Trustee within thirty (30) days following the delivery to the Trustee of the instrument described in Section 9.06 hereof or within thirty (30) days following the receipt of notice by the City pursuant to Section 9.07 hereof, the Trustee may apply to a court of competent jurisdiction at the expense of the City, for the appointment of a successor Trustee meeting the requirements of Section 9.01 hereof. Any such successor Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any action by the City purporting to appoint a successor Trustee following the expiration of such thirty (30) day period. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Notwithstanding any other provision of this Trust Agreement no removal, resignation or termination of the Trustee shall take effect until a successor, reasonably acceptable to the Municipal Bond Insurer, shall be appointed. Section 9.09. Merger or Consolidation. Any company or association into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company or association to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company or association shall be eligible under Section 9.01 hereof, shall be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act anything herein to the contrary notwithstanding. Section 9.10. Concerning any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its or his predecessor and also the Authority and the City an instrument in writing accepting such appointment hereunder -27- and thereupon such successor, without any further act deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor shall, nevertheless, on the written request of the City, or of its successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and moneys held by it as the Trustee hereunder to its successor. Upon such acceptance, the City shall mail, by first class mail, postage prepaid, or cause the mailing of, notice thereof to the Certificate Owners at their respective addresses set forth on the Registration Books. Should any instrument in writing from the City be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request be executed, acknowledged and delivered by the City. The resignation of any Trustee and the instrument or instruments removing any Trustee and appointing a successor hereunder, together with all other instruments provided for in this Article IX, shall be filed or recorded by the successor Trustee in each recording office where the Assignment Agreement shall have been fi led or recorded. -28- ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS Section 10.01. Amendments Permitted. This Trust Agreement and the rights and obligations of the Owners of the Certificates, the Lease Agreement and the rights and obligations of the parties thereto, the Site and Facility Lease and the rights and obligations of the parties thereto and the Assignment Agreement and the rights and obi igations of the parties thereto, may be modified or amended at any time by a supplemental agreement which shall become effective when the written consent of the Municipal Bond Insurer and the Owners of at least sixty percent (60%) in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 10.03 hereof, shall have been filed with the Trustee. No such modification or amendment shall (1) extend or have the effect of extending the fixed maturity of any Certificate or reducing the interest rate with respect thereto or extending the time of payment of interest or reducing the amount of principal thereof, without the express consent of the Owner of such Certificate, or (2) reduce or have the effect of reducing the percentage of Certificates required for the affirmative vote or written consent to an amendment or modification of a Lease Agreement or (3) modify any of the rights or obligations of the Trustee without its written assent thereto. Any such supplemental agreement shall become effective as provided in Section 10.02 hereof. This Trust Agreement and the rights and obligations of the Owners of the Certificates and the Lease Agreement and the rights and obligations of the respective parties thereto, may, with the consent of the Municipal Bond Insurer, be modified or amended at any time by a supplemental agreement without the consent of any such Owners, but only to the extent permitted by law and only (1) to add to the covenants and agreements of the Authority or the City, (2) to cure, correct or supplement any ambiguous or defective provision contained herein or therein and which shall not in the opinion of nationally recognized bond counsel, adversely affect the interests of the Owners of the Certificates, (3) in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and which shall not in the opinion of nationally recognized bond counsel, materially adversely affect the interests of the Owners of the Certificates; (4) to make such additions, deletions or modifications as may be necessary or appropriate in the opinion of bond counsel to assure the exclusion from gross income for federal income tax purposes of the interest component of Lease Payments and the interest payable with respect to the Certificates, (5) to add to the rights of the Trustee, or (6) to maintain the rating or ratings assigned to the Certificates. Any such supplemental agreement shall become effective upon execution and delivery by the parties hereto or thereto, as the case may be. This Trust Agreement and the Lease Agreement may not be modified or amended at any time by a supplemental agreement which would modify any of the rights and obi igations of the Trustee without its written assent thereto. The Trustee may obtain an opinion of Independent Counsel that any amendment entered into hereunder complies with the provisions of this Article X and the Trustee may rely conclusively on such opinion. Section 10.02. Procedure for Amendment with Written Consent of Certificate Owners. This Trust Agreement and the Lease Agreement may be amended by supplemental agreement as provided in this Section 10.02 in the event the consent of the Owners of the Certificates is required pursuant to Section 10.01 hereof. A copy of such supplemental agreement (or a summary thereof), together with a request to the Certificate Owners for -29- their consent thereto, shall be mailed by first class mail, postage prepaid, by the Trustee at the expense of the City, to each Owner of a Certificate at his address as set forth on the Registration Books, but failure to mail copies of such supplemental agreement and request shall not affect the validity of the supplemental agreement when assented to as in this Section 10.02 provided. Such supplemental agreement shall not become effective unless there shall be filed with the Trustee the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section 10.03 hereof) and a notice shall have been mailed as hereinafter in this Section 10.02 provided. Each such consent shall be effective only if accompanied by proof of ownership of the Certificates for which such consent is given, which proof shall be such as is permitted by Section 2.11 hereof. Any such consent shall be binding upon the Owner of the Certificate giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter in the following paragraph of this Section 10.02 provided for has been mailed. After the Owners of the required percentage of Certificates shall have filed their consents to such supplemental agreement the Trustee shall mail by first class mail, postage prepaid, a notice at the expense of the City, to the Owners of the Certificates in the manner hereinbefore provided in this Section 10.02 for the mailing of such supplemental agreement of the notice of adoption thereof, stating in substance that such supplemental agreement has been consented to by the Owners of the required percentage of Certificates and will be effective as provided in this Section 10.02 (but failure to mail copies of said notice shall not affect the validity of such supplemental agreement or consents thereto). A record, consisting of the papers required by this Section 10.02 to be filed with the Trustee, shall be conclusive proof of the matters therein stated. Such supplemental agreement shall become effective upon the mailing of such last-mentioned notice, and such supplemental agreement shall be deemed conclusively binding upon the parties hereto and the Owners of all Certificates at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty (60) day period. Section 10.03. Disqualified Certificates. Certificates owned or held by or for the account of the City or by any person directly or indirectly controlled or controlled by, or under direct or indirect common control with the City (except any Certificates held in any pension or retirement fund) shall not be deemed Outstanding for the purpose of any vote, consent waiver or other action or any calculation of Outstanding Certificates provided for in this Trust Agreement and shall not be entitled to vote upon, consent to, or take any other action provided for in this Trust Agreement; provided, however, that the Trustee shall not be liable for determining whether Certificates are owned or held by the City or any such other person unless such Certificates are registered in the name of the City or such other person on the Reg istration Books. Section 10.04. Effect of Supplemental Agreement. From and after the time any supplemental agreement becomes effective pursuant to this Article X, this Trust Agreement or a Lease Agreement as the case may be, shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obi igations of the parties hereto or thereto and all Owners of Certificates Outstanding, as the case may be, 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 supplemental agreement shall be -30- deemed to be part of the terms and conditions of this Trust Agreement or a Lease Agreement as the case may be, for any and all purposes. Section 10.05. Endorsement or Replacement of Certificates Delivered After Amendments. The City may determine that Certificates delivered after the effective date of any action taken as provided in this Article X shall bear a notation, by endorsement or otherwise, in form approved by the Trustee, as to such action. In that case, upon demand of the Owner of any Certificate Outstanding at such effective date and presentation of his Certificate for such purpose at the Principal Corporate Trust Office, a suitable notation shall be made on such Certificate. The City may determine that the delivery of substitute Certificates, so modified as in the opinion of the City is necessary to conform to such Certificate Owners' action, is necessary and such substitute Certificates shall thereupon be prepared, executed and delivered. In that case, upon demand of the Owner of any Certificate then Outstanding, such substitute Certificate shall be exchanged at the Principal Corporate Trust Office, at the expense of the City, for a Certificate of the same character then Outstanding, upon surrender of such Outstanding Certificate. Section 10.06. Amendatory Endorsement of Certificates. The provisions of this Article X shall not prevent any Certificate Owner from accepting any amendment as to the particular Certificates held by him, provided that proper notation thereof is made on such Certificates. -31- ARTICLE XI COVENANTS Section 11.01. Compliance With and Enforcement of Lease Agreement. The City covenants and agrees with the Owners of the Certificates to perform all obligations and duties imposed on it under the Lease Agreement. The Authority covenants and agrees with the Owners of the Certificates to perform all obi igations and duties imposed on it under the Lease Agreement. The City will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be a ground for cancellation or termination of their respective Lease Agreement by the Authority thereunder. The Authority and the City, immediately upon receiving or giving any notice, communication or other document in any way relating to or affecting their respective estates, or either of them, in the Property, which mayor can in any manner affect such estate of the City or the Authority, will deliver the same, or a copy thereof, to the Trustee and the Municipal Bond Insurer. Section 11.02. Observance of Laws and Regulations. The City and the Authority will well and truly keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on them by contract. or prescribed by any law of the United States, or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right. privilege or franchise now owned or hereafter acquired by the City or the Authority, respectively, including its right to exist and carryon business as a publ ic entity, to the end that such rights, privi leges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired. Section 11.03. Prosecution and Defense of Suits. The City shall promptly, upon request of the Trustee or any Certificate Owner, from time to time take such action as may be necessary or proper to remedy or cure any defect in or cloud upon the title to the Property, whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose and shall indemnify and save the Trustee and every Certificate Owner harmless from all loss, cost. damage and expense, including attorneys' fees, which they or any of them may incur by reason of any such defect. cloud, suit. action or proceeding. Section 11.04. Recordation and Filing. The City shall record and file, or cause to be recorded and filed, the Site Lease, the Lease Agreement (or a memorandum thereof), the Assignment Agreement and all such documents as may be required by law (and shall take all further actions which may be necessary or be reasonably required by the Trustee), all in such manner, at such times and in such places as may be required by law in order fully to preserve, protect and perfect the security of the Trustee and the Certificate Owners. Section 11.05. Budgets. The City shall supply to the Trustee as soon as practicable, but not later than September 15 in each year, a written determination by a City Representative that the City has made adequate provision in its annual budget for the payment of Lease Payments due under the Lease Agreement in the Fiscal Year covered by such budget. The determination given by the City to the Trustee shall be that the amounts so budgeted are fully adequate for the payment of all Lease Payments and Additional Payments due under the Lease Agreement in the annual period covered by such budget. -32- Section 11.06. Further Assurances. The Authority and the City wi II make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Trust Agreement and the Lease Agreement or as may be requested by the Trustee and for the better assuring and confirming unto the Owners of the Certificates and the Trustee the rights and benefits provided herein. Section 11.07. Satisfaction of Conditions Precedent. The City hereby certifies, recites and declares that all acts, conditions and things required by the constitution and statutes of the State, the Lease Agreement and this Trust Agreement to exist to have happened and to have been performed precedent to and in the delivery of the Certificates, do exist have happened and have been performed in due time, form and manner as required by law. Section 11.08. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this Trust Agreement failure of the City to comply with the Continuing Disclosure Certificate shall not be considered an Event of Default; however, the Trustee may, upon payment of its fees and expenses, including counsel fees, and receipt of indemnity satisfactory to it at the request of any Participating Underwriter or the holders of at least 25% aggregate principal amount of Outstanding Certificates, shall or any holder or beneficial owner of the Certificates may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. -33- ARTICLE XII LIMITATION OF LIABILITY Section 12.01. Limited Liability of City. Except for the payment of Lease Payments when due in accordance with the Lease Agreement and the performance of the other covenants and agreements of the City contained in the Lease Agreement and this Trust Agreement the City shall have no pecuniary obligation or liability to any of the other parties or to the Owners of the Certificates with respect to this Trust Agreement or the terms, execution, delivery or transfer of the Certificates, or the distribution of Lease Payments to the Owners by the Trustee, except as expressly set forth herein. Section 12.02. No Liability of City or Authority for Trustee Performance. Neither the City nor the Authority shall have any obligation or liability to any of the other parties or to the Owners of the Certificates with respect to the performance by the Trustee of any duty imposed upon it under this Trust Agreement. Section 12.03. Indemnification of Trustee. The City shall to the extent permitted by law indemnify and save the Trustee, its officers, employees, directors, affiliates and agents harmless from and against all claims, losses, costs, expenses, liability and damages, including legal fees and expenses (including allocated costs of internal counsel), arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on, the Property by the Authority or the City, (ii) any breach or default on the part of the Authority or the City the performance of any of their respective obligations under the Lease Agreement the Assignment Agreement this Trust Agreement and any other agreement made and entered into for purposes of the Property, (iii) any act of the Authority or the City or of any of their respective agents, contractors, servants, employees, licensees with respect to the Property, (iv) any act of any assignee of, or purchaser from the Authority or the City or of any of its or their respective agents, contractors, servants, employees or licensees with respect to the Property, (v) the authorization of payment of Delivery Costs, (vi) the actions of any other party, including but not limited to the ownership, operation or use of the Property by the Authority or the City including, without limitation, the use, storage, presence, disposal or release of any Hazardous Substances on or about the Property, (vi i) the Trustee's exercise and performance of its powers and duties hereunder or as assigned to it under the Assignment Agreement (viii) the offering and sale of the Certificates; (ix) the presence under or about or release from the Property, or any portion thereof, of any substance, material or waste which is or becomes regulated or classified as hazardous or toxic under State, local or federal law, or the violation of any such law by the City; or (x) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading, in any official statement or other offering document utilized in connection with the sale of the Certificates. Such indemnification shall include the costs and expenses of defending against any claim or liability arising under this Trust Agreement. No indemnification will be made under this Section 12.03 or elsewhere in this Trust Agreement for willful misconduct or negligence under this Trust Agreement by the Trustee, its officers, affiliates or employees. The City's obligations hereunder shall remain valid and binding notwithstanding maturity and payment of the Certificates or resignation or remova I of the Trustee. Section 12.04. Limitation of Rights to Parties and Certificate Owners. Nothing in this Trust Agreement or in the Certificates expressed or implied is intended or shall be construed to give any person other than the City, the Authority, the Municipal Bond Insurer, the Trustee and the Owners of the Certificates, any legal or equitable right remedy -34- or claim under or in respect of this Trust Agreement or any covenant condition or provision hereof; and all such covenants, conditions and provisions are and shall be for the sole and exclusive benefit of the City, the Authority, the Municipal Bond Insurer, the Trustee and said Owners. -35- ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 13.01. Assignment of Rights. Pursuant to the Assignment Agreement the Authority has transferred, assigned and set over to the Trustee all of the Authority's rights in and to the Lease Agreement (excepting only the Authority's rights under Sections 5.8, 7.3 and 9.4 and the obligations under Section 4.7 thereof), including without limitation all of the Authority's rights to exercise such rights and remedies conferred on the Authority pursuant to the Lease Agreement as may be necessary or convenient (i) to enforce payment of the Lease Payments and any other amounts required to be deposited in the Lease Payment Fund or the Insurance and Condemnation Fund, and (ii) otherwise to exercise the Authority's rights and take any action to protect the interests of the Trustee or the Certificate Owners in an Event of Default. Section 13.02. Remedies. If an Event of Default shall happen, then and in each and every such case during the continuance of such Event of Default the Trustee may, with the consent of the Municipal Bond Insurer and shall at the written direction of the Municipal Bond Insurer, and shall upon request of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding, with the consent of the Municipal Bond Insurer, and upon payment of its fees and expenses, including counsel fees, and being indemnified to its satisfaction therefor shall, exercise any and all remedies available pursuant to law or granted pursuant to the Lease Agreement; provided, however, that notwithstanding anything herein or in the Lease Agreement to the contrary, there shall be no right under any circumstances to accelerate the maturities of the Certificates or otherwise to declare any Lease Payment not then in default to be immediately due and payable. Section 13.03. Application of Funds. All moneys held by the Trustee in the funds and accounts held hereunder and all moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article XIII or Article IX of the Lease Agreement shall be applied by the Trustee in the following order upon presentation of the several Certificates: First, to the payment of the costs and expenses of the Trustee and of the Certificate Owners in declaring such Event of Default and collecting moneys owed hereunder, including reasonable compensation to its or their agents, attorneys and counsel (including allocated costs of internal counsel), including all fees and expenses past due; and Second, to the payment of the whole amount then owing and unpaid with respect to the Certificates for principal and interest with interest on the overdue principal and installments of interest at the rate per annum payable with respect to the Certificates (but such interest on overdue installments of interest shall be paid only to the extent funds are available therefor following payment of principal and interest and interest on overdue principal, as aforesaid), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid with respect to the Certificates, then to the payment of such principal and interest without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest ratably to the aggregate of such principal and interest. Section 13.04. Institution of Legal Proceedings. If one or more Events of Default shall happen and be continuing, or if there shall be nonpayment of principal or interest with respect to the Certificates, the Trustee in its discretion may, with the consent of the -36- Municipal Bond Insurer, and shall, at the written direction of the Municipal Bond Insurer, and upon the written request of the Owners of a majority in principal amount of the Certificates then Outstanding, with the consent of the Municipal Bond Insurer, and upon payment of its fees and expenses, including counsel fees, and being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Owners of Certificates by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder. If one or more Events of Default shall occur and be continuing, the Trustee shall be entitled as a matter of right to the appointment of a receiver or receivers for the Property and for any property securing the Certificates and the revenues, income, produce, and profits thereon. In the case of any receivership, insolvency, bankruptcy, reorganization, or other judicial proceedings affecting the City or the Property, the Trustee shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Trustee and Owners allowed in such proceedings for the entire amount due and payable under this Trust Agreement at the time of the institution of such proceedings, and also for any additional amount which may become due and payable thereafter, without prejudice to the right of any Owner to file a claim on his or her own behalf. The Trustee shall not be obligated to take any such action unless offered compensation, indemnity for its potential liability, and reimbursement for its legal fees and expenses in accordance with this Section 13.04. Section 13.05. Non-waiver. Nothing in this Article XIII or in any other provision of this Trust Agreement or in the Certificates, shall affect or impair the obligation of the City to payor prepay the Lease Payments as provided in the Lease Agreement or affect or impair the right of action, which is absolute and unconditional, of the Certificate Owners to institute suit to enforce and collect such payment. No delay or omission of the Trustee or of any Owner of any of the Certificates to exercise any right or power arising upon the happening of any Event of Default shall impair any such right or power or shall be construed to be a wa iver of any such Event of Defau It or an acqu iescence therei n, and every power and remedy given by this Article XIII to the Trustee, the Municipal Bond Insurer or to the Owners of Certificates may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Certificate Owners. Section 13.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Certificate Owners is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise. Section 13.07. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Certificates then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Certificates, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; pravided, however, that the Trustee shall not discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, without the consent of a majority in aggregate principal amount of the Certificates Outstanding. -37- Section 13.08. Limitation on Certificate Owners' Right to Sue. No Owner of any Certificate executed and delivered hereunder shall have the right to institute any suit action or proceeding at law or in equity, for any remedy under or upon this Trust Agreement unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default hereunder; (b) the Owners of at least twenty-five percent (25%) in aggregate principal amount of all the Certificates then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee reasonable indemnity 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 sixty (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 Certificates of any remedy hereunder; it being understood and intended that no one or more Owners of Certificates shall have any right in any manner whatever by his or their action to enforce any right under this Trust Agreement except in the manner herein provided, and that all proceedings at law or in equity with respect to an Event of Default shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates. The right of any Owner of any Certificate to receive payment of said Owner's fractional interest in the Lease Payments as the same become due, or to institute suit for the enforcement of such payment shall not be impaired or affected without the consent of such Owner, notwithstanding the foregoing provisions of this Section 13.08 or any other provision of this Trust Agreement. Section 13.09. Parties Interested Herein. (a) Nothing in this Trust Agreement expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the City, the Authority, the Trustee, the Municipal Bond Insurer, their officers, employees and agents, and the Owners any right remedy or claim under or by reason of this Trust Agreement or any covenant condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Trust Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the City, the Authority, the Trustee, the Municipal Bond Insurer, their officers, employees and agents, and the Owners. (b) Notwithstanding any other provision of this Trust Agreement if the Trustee is required to determine whether the rights of the Owners will be adversely affected by any action taken pursuant to the terms and provisions of this Trust Agreement the Trustee shall consider the effect on the Owners as ifthere was no Municipal Bond Insurance Policy. (c) In the event the maturity of the Certificates is accelerated, the Municipal Bond Insurer may elect in its sole discretion, to pay accelerated principal and interest accrued on such principal to the date of acceleration (to the extent unpaid by the City) and the Trustee shall be required to accept such amounts. Upon payment of such accelerated principal and interest accrued to the acceleration date as provided above, the Municipal Bond Insurer's obligations under the Municipal Bond Insurance Policy with respect to such Certificates shall be fully discharged. (d) The Municipal Bond Insurer shall be deemed to be a third-party beneficiary of this Trust Agreement. -38- (e) The prior written consent of the Municipal Bond Insurer shall be a condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the Reserve Fund, if any. Notwithstanding anything to the contrary set forth in this Trust Agreement amounts on deposit in the Reserve Fund shall be applied solely to the payment of debt service due with respect to the Certificates. (f) Rights of the Municipal Bond Insurer to direct or consent to City, Trustee or Owner actions under this Trust Agreement shall be suspended during any period in which the Municipal Bond Insurer is in default in its payment obligations under the Municipal Bond Insurance Policy (except to the extent of amounts previously paid by the Municipal Bond Insurer and due and owing to the Municipal Bond Insurer) and shall be of no force or effect in the event the Municipal Bond Insurance Policy is no longer in effect or the Municipal Bond Insurer asserts that the Municipal Bond Insurance Policy is not in effect or the Municipal Bond Insurer shall have provided written notice that it waives such rights. (g) The rights granted to the Municipal Bond Insurer under this Trust Agreement or the Lease Agreement to request consent to or direct any action are rights granted to the Municipal Bond Insurer in consideration of its issuance of the Municipal Bond Insurance Policy. Any exercise by the Municipal Bond Insurer of such rights is merely an exercise of the Municipal Bond Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit or on behalf of the Owners nor does such action evidence any position of the Municipal Bond Insurer, positive or negative, as to whether Owner consent is required in addition to consent of the Municipal Bond Insurer. (h) Payments required to be made to the Municipal Bond Insurer shall be payable solely from the Lease Payments and Additional Payments and shall be paid prior to an event of default to the extent not paid from the Lease Payment Fund, after required deposits to the Reserve Fund. The obligations to the Municipal Bond Insurer shall survive discharge or termination of this Trust Agreement and the Lease Agreement. Section 13.10. Consent of Municipal Bond Insurer. The provisions of this Section 13.10 shall govern, notwithstanding anything to the contrary set forth in this Trust Agreement. (a) Rights of the Municipal Bond Insurer to direct or consent to City, Trustee or Owner actions under this Trust Agreement shall be suspended during any period in which the Municipal Bond Insurer is in default in its payment obligations under the Municipal Bond Insurance Policy (except to the extent of amounts previously paid by the Municipal Bond Insurer and due and owing to the Municipal Bond Insurer) and shall be of no force or effect in the event the Municipal Bond Insurance Policy is no longer in effect or the Municipal Bond Insurer asserts that the Municipal Bond Insurance Policy is not in effect or the Municipal Bond Insurer shall have provided written notice that it waives such rights. (b) The Municipal Bond Insurer's prior written consent shall be required for the following purposes: (i) execution and delivery of any amendment supplement or change to or modification of this Trust Agreement the Assignment Agreement the Lease Agreement or the Site and Facility Lease that requires Owner consent or that adversely affects the rights and interest of the Municipal Bond Insurer. (c) Anything in this Trust Agreement to the contrary notwithstanding, the Municipal Bond Insurer shall be deemed to be the sole holder of the Certificates insured by it for the purpose of exercising any voting right or privilege or giving any consent or direction or -39- taking any other action that the Owners insured by it are entitled to take pursuant to this Trust Agreement. -40- ARTICLE XIV MISCELLANEOUS Section 14.01. Defeasance. If and when all Outstanding Certificates shall be paid and discharged and all other amounts due and owing hereunder have been paid (as set forth below) then, notwithstanding that any Certificates shall not have been surrendered for payment all obligations of the Authority, the Trustee and the City with respect to all Outstanding Certificates shall cease and terminate, except only the obligation of the City to payor cause to be paid, from Lease Payments paid by or on behalf of the City from funds deposited pursuant to paragraph (b) of this Section 14.01, to the Owners of the Certificates not so surrendered and paid all sums due with respect thereto, and in the event of deposits pursuant to paragraph (b), the Certificates shall continue to represent direct and fractional interests of the Owners thereof in Lease Payments under the Lease Agreement. Such payment and discharge may be accompl ished in either of the following ways: (a) by well and truly paying or causing to be paid the principal, and interest with respect to all Certificates Outstanding, as and when the same become due and payable; or (b) by irrevocably depositing with the Trustee or an escrow holder security for the payment of Lease Payments as more particularly described in Section 10.1 of the Lease Agreement to be applied to pay the Lease Payments as the same become due and payable and prepay the Lease Payments in full on any prepayment date, pursuant to Section 10.1 of the Lease Agreement. Any funds held by the Trustee, at the time of one of the events described in paragraphs (a) or (b) of this Section 14.01, which are not required for the payment to be made to Owners, shall, after payment of all fees and expenses of the Trustee, including attorneys fees (including allocated costs of internal counsel), be paid over to the City. To accomplish defeasance, the City shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants or such other accountant as shall be acceptable to the Municipal Bond Insurer ("Accountant") verifying the sufficiency of the escrow established to pay the Certificates in full on the maturity or redemption date ("Verification"), (ii) an escrow deposit agreement (which shall be acceptable in form and substance to the Municipal Bond Insurer), and (iii) an opinion of nationally recognized bond counsel to the effect that the Certificates are no longer Outstanding; each Verification and defeasance opinion shall be acceptable in form and substance to the City and the Municipal Bond Insurer, and addressed, to the City and the Trustee and the Municipal Bond Insurer. In the event a forward purchase agreement will be employed in the refunding, such agreement shall be subject to the approval of the Municipal Bond Insurer and shall be accompanied by such opinions of counsel as may be required by the Municipal Bond Insurer. The Municipal Bond Insurer shall be provided with final drafts of the above-referenced documentation not less than five Business Days prior to the funding of the escrow. Certificates shall be deemed Outstanding under this Trust Agreement unless and until they are in fact paid and retired or the above criteria are met. Section 14.02. Records. The Trustee shall keep records in accordance with industry standards of all moneys received and disbursed by it under this Trust Agreement which shall be available for inspection by the City, the Authority and any Owner of at least five -41- percent (5%) of the Outstanding principal amount of the Certificates, or the agent of any of them, at any time during regular business hours on any Business Day upon reasonable prior notice. Section 14.03. Notices. All written notices to be given under this Trust Agreement shall be given by first class mai I, postage prepaid, to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective upon deposit in the United States first class mail, postage prepaid to the address set forth below: If to the Authority: Temecula Public Financing Authority c/o City of Temecula 43200 Business Park Drive Temecula, CA 92589-9033 Attention: Finance Director Phone: (951) 694-6433 Fax: (951) 694-6479 If to the City: City of Temecula 43200 Business Park Drive Temecula, CA 92589-9033 Attention: Finance Director Phone: (951) 694-6433 Fax: (951) 694-6479 If to the Trustee: U.S. Bank National Association 550 South Hope Street, Suite 500 Los Angeles, CA 90071 Attention: Corporate Trust Department Phone: (213) 615-6005 Fax: (213) 615-6199 If to the Municipal Bond Insurer: Attention: __ Phone: L) _-_ Fax: L) _-_ The Trustee agrees to notify the Authority in the event of any prepayment by the City of Lease Payments under the Lease Agreement and upon the termination of the Lease Agreement. Section 14.04. Information and Notices to be Given to the Municipal Bond Insurer. While the Municipal Bond Insurance Policy is in effect. the City shall furnish, or cause to be furnished, to the Municipal Bond Insurer: (a) Annual audited financial statements of the City within 180 days after the end of the City's fiscal year and the City's annual budget within 30 days after the approval thereof; (b) Notice of any draw upon the Reserve Fund within two Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Reserve Requirement and (ii) withdrawals in connection with a refunding of the Certificates; (c) Notice of any default known to the Trustee within five Business Days after knowledge thereof; -42- (d) Prior notice of the advance refunding or redemption of any of the Certificates, including the principal amount maturities and CUSIP numbers thereof; (e) Notice of the resignation or removal of the Trustee and the appointment of, and acceptance of duties by, any successor thereto; (f) Notice of the commencement of any proceeding by or against the City or the Authority commenced under the United States Bankruptcy Code or any other applicable Bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding"); (g) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal or interest with respect to the Certificates; (h) A full original transcript of all proceedings relating to the execution of any amendment or supplement to the Lease Agreement or this Trust Agreement; and (i) All reports, notices and correspondence to be delivered under the terms of the Lease Agreement or this Trust Agreement. 0) a copy of any notice to be given to the Owners and any certificate rendered pursuant to this Trust Agreement or the Lease Agreement relating to the security for the Certificates; (k) notice of resignation of the Trustee; and (I) such additional information it may reasonably request. Section 14.05. Governing Law. This Trust Agreement shall be construed and governed in accordance with the laws of the State. Section 14.06. Binding Effect; Successors. This Trust Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Whenever in this Trust Agreement the Authority, the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Trust Agreement contained by or on behalf of the Authority, the City or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 14.07. Execution in Counterparts. This Trust Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement. Section 14.08. Destruction of Canceled Certificates. Whenever in this Trust Agreement provision is made for the surrender to or cancellation by the Trustee and the delivery to the City of any Certificates, the Trustee may, in lieu of such cancellation and del ivery, destroy such Certificates and del iver a certificate of such destruction to the City. Section 14.09. Headings. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Trust Agreement. All references herein to "Articles," "Sections," and other subdivisions are to the -43- corresponding Articles, Sections or subdivisions of this Trust Agreement; and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or subdivision hereof. Section 14.10. Waiver of Notice. Whenever in this Trust Agreement the giving of notice by first class mail, postage prepaid, or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 14.11. Payments Due on Other than Business Day. If the date for making any payment as provided in this Trust Agreement is not a Business Day, such payment may be made on the next succeeding Business Day with the same force and effect as if done on the date provided therefore herein. Section 14.12. Payment of Unclaimed Moneys. Notwithstanding any provisions of this Trust Agreement and subject to the escheat laws of the State, any moneys hel d by the Trustee in trust for the payment of the principal or interest due with respect to any Certificates and remaining unclaimed two years from the date of deposit of such funds, or if the law shall have been changed and the City has notified the Trustee of such change or the Trustee notifies the City, then on the date thirty (30) days prior to the then applicable escheat provision of State law, shall, on such date, be repaid to the City free from the trusts created by this Trust Agreement and all liabi lity of the Trustee with respect to such moneys sha II thereupon cease; provided, however, that before the repayment of such moneys to the City as aforesaid, the Trustee may (at the cost and request of the City) first mail to the Owners to whom such amounts have not yet been paid, at the addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the amounts so payable and with respect to the provisions relating to the repayment to the City of the moneys held for the payment thereof. The Trustee shall not be liable for any interest on funds held by it. The City shall not be liable for any interest on the sums paid to it pursuant to this Section 14.12 and shall not be regarded as a trustee of such money. Section 14.13. Separability of Invalid Provisions. In case anyone or more of the provisions contained in this Trust Agreement or in the Certificates shall for any reason be held to be invalid, illegal or unenforceable in any respect then such invalidity, illegality or unenforceability shall not affect any other provision of this Trust Agreement and this Trust Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The parties hereto hereby declare that they would have entered into this Trust Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificates pursuant thereto irrespective of the fact that anyone or more sections, paragraphs, sentences, clauses or phrases of this Trust Agreement may be held illegal, invalid or unenforceable. -44- IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement as of the date and year first above written. U.S. BANK NATIONAL ASSOCIATION, as Trustee By Authorized Officer TEMECULA PUBLIC FINANCING AUTHORITY By Executive Director Attest: Secreta ry CITY OF TEMECULA CALIFORNIA By City Manager Attest: City Clerk -45- Quint & Thimmig LLP 10/22/07 11/19/07 11/29/07 02/01/08 EXHIBIT A DEFINITIONS "Assignment Agreement" means the Assignment Agreement dated as of March 1, 2008, by and between the Authority and the Trustee, together with any du Iy authorized and executed amendments thereto. "Authority" means the Temecula Publ ic Financing Authority, a joint exercise of powers authority organized and existing under and by virtue of the laws of the State. "Authority Representative" means the Chairman, Vice Chairman, Executive Director, Treasurer, Secretary, or the designee of any such official, or any other person authorized by resolution of the Authority delivered to the Trustee to act on behalf of the Authority under or with respect to the Site and Facility Lease, the Lease Agreement the Assignment Agreement and the Trust Agreement. "Bond Counsel" means (a) Quint & Thimmig LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the City of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Code. "Business Day" means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the state in which the Principal Corporate Trust Office is located or in the State are closed or are required to close or a day on which the New York Stock Exchange is closed. "Certificate of Completion" means the certificate of a City Representative certifying that the construction of the Project has been completed by the City and that all costs relating thereto have been paid. "Certificates" means the L________ aggregate principal amount of certificates of participation to be executed and delivered pursuant to the Trust Agreement which evidence direct undivided fractional Interests of the Owners thereof in Lease Payments. "City" means City of Temecula, a municipal corporation and general law city, duly organized and existing under and by virtue of the laws of the State of California. "City Representative" means the Mayor, the City Manager, the Finance Director, the City Clerk, or the designee of any such official, or any other person authorized by resolution to act on behalf of the City under or with respect to the Trust Agreement and/or the Lease Agreement and/or the Site and Facility Lease and identified as such to the Trustee in writing. "Closing Date" means March 13, 2008, the date upon which there is a physical delivery of the Certificates in exchange for the amount representing the purchase price of the Certificates by the Original Purchaser. Exhibit A Page 1 20002.06 "Code" means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced in the Lease Agreement or the Trust Agreement) as it may be amended to apply to obligations issued on the Closing Date, together with applicable temporary and final regulations promulgated under the Code. "Completion Date" means the date of completion of the construction of the Project as evidenced by the filing with the Trustee of a Certificate of Completion. "Continuing Disclosure Certificate" shall mean that certain Continuing Disclosure Certificate executed by the City and dated the date of issuance and delivery of the Certificates, as originally executed and as it may be amended from time to time in accordance with the terms thereof. "Council" means the City Council of the City. "Defeasance Obligations" means (a) cash, (b) non-callable direct obligations of the United States of America ("Treasuries"), (c) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries 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 Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obi igated, (d) subject to the prior written consent of the Municipal Bond Insurer, pre-refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively, or (e) subject to the prior written consent of the Municipal Bond Insurer, securities eligible for "AAA" defeasance under then existing criteria of S&P or any combination thereof, unless the Municipal Bond Insurer otherwise approves. "Delivery Costs Fund" means the fund by that name established and held by the Trustee pursuant to Article III of the Trust Agreement. "Delivery Costs" means all items of expense directly or indirectly payable by or reimbursable to the City or the Authority relating to the execution and del ivery of the Site and Faci I ity Lease, the Lease Agreement the Trust Agreement and the Assignment Agreement or the execution, sale and delivery of the Certificates, including but not limited to filing and recording costs, settlement costs, printing costs, reproduction and binding costs, costs for statistical data, initial fees and charges of the Trustee (including the fees and expenses of its counsel). financing discounts, legal fees and charges, insurance fees and charges (including title insurance), financial and other professional consultant fees, costs of rating agencies for credit ratings, fees for execution, transportation and safekeeping of the Certificates, the premium for the Municipal Bond Insurance Policy and charges and fees in connection with the foregoing. "Event of Default" means an event of default under the Lease Agreement as defined in Section 9.1 thereof. "Facility" means those certain existing facilities more particularly described in Exhibit B to the Site and Facility Lease and in Exhibit B to the Lease Agreement. "Federal Securities" means 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) or obligations the payment of principal of and interest on which are unconditionally guaranteed by the United States of America. Exhibit A Page 2 "Fiscal Year" means the twelve-month period beginning on July 1 of any year and ending on June 30 of the next succeeding year, or any other twelve-month period selected by the City as its fiscal year. "Independent Counsel" means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Authority, the Trustee or the City. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street 10th Floor, Jersey City, NJ 07302, Attention: Editor; Kenny Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, NY 10006; Moody's "Municipal and Government" 5250 77 Center Drive, Suite 150, Charlotte, NC 28217, Attention: Municipal News Reports; and S&P's "Called Bond Record," 25 Broadway, 3rd Floor, New York, NY 10004; or to such other addresses and/or such other national information services providing information or disseminating notices of redemption of obligations similar to the Certificates. "Insurance and Condemnation Fund" means the fund by that name established and held by the Trustee pursuant to Section 7.01 of the Trust Agreement. "Interest Payment Date" means the first (1 st) day of each March and September, commencing September 1,2008, so long as any Certificates are Outstanding. "Lease Agreement" means that certain agreement for the lease of the Property by the Authority to the City, dated as of March 1, 2008, together with any duly authorized and executed amendments thereto. "Lease Payment Date" means the fifteenth (15th) day of February and August in each year during the Term of the Lease Agreement commencing August 15, 2008. "Lease Payment Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.02 of the Trust Agreement. "Lease Payments" means the total payments required to be paid by the City pursuant to Section 4.4 of the Lease Agreement including any prepayment thereof pursuant to Article X of the Lease Agreement which payments consist of an interest component and a principal component as set forth in Exhibit C to the Lease Agreement. "Moody's" means Moody's Investors Service, New York, New York, or its successors. "Municipal Bond Insurance Policy" means the insurance policy issued by the Municipal Bond Insurer guaranteeing the scheduled payment of principal and interest with respect to the Certificates when due. "Municipal Bond Insurer" means _' a , or any successor thereto or assignee thereof, as issuer of the Municipal Bond Insurance Policy. "Net Proceeds," when used with respect to insurance or condemnation proceeds, means any insurance proceeds or condemnation award paid with respect to the Property, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof. "Original Purchaser" means the first purchaser of the Certificates upon their delivery by the Trustee on the Closing Date. Exhibit A Page 3 "Outstanding," when used as of any particular time with respect to Certificates, means (subject to the provisions of Section 10.03 of the Trust Agreement) all Certificates theretofore executed and del ivered by the Trustee under the Trust Agreement except - (a) Certificates theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Certificates for the payment or redemption of which funds or Defeasance Obligations in the necessary amount shall have theretofore been deposited with the Trustee or an escrow holder (whether upon or prior to the maturity or redemption date of such Certificates), provided that if such Certificates are to be redeemed prior to maturity, notice of such redemption shall have been given as provided in Section 4.03 of the Trust Agreement or provision satisfactory to the Trustee shall have been made for the giving of such notice; and (c) Certificates in lieu of or in exchange for which other Certificates shall have been executed and delivered by the Trustee pursuant to Section 2.09 of the Trust Agreement. "Owner" or "Certificate Owner" or "Owner of a Certificate," or any similar term, when used with respect to a Certificate means the person in whose name such Certificate shall be registered on the Registration Books. "Participating Underwriter" shall have the meaning ascribed thereto in the Continuing Disclosure Certificate. "Permitted Encumbrances" means, as of any particular time: (a) liens for general ad valorem taxes and assessments, if any, not then del inquent or which the City may, pursuant to provisions of Article V of the Lease Agreement permit to remain unpaid; (b) the Assignment Agreement; (c) the Site and Facility Lease; (d) the Lease Agreement; (e) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (f) easements, rights-of-way, mineral rights, dri II ing rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Closing Date and which the City certifies in writing will not materially impair the use of the Property; and (g) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of recordation of the Lease Agreement and to which the Authority, Municipal Bond Insurer and the City agree in writing do not reduce the value of the Property. "Permitted Investments" means any of the following: (a) (i) Direct obligations (other than an obligation subject to variation in principal repayment) of the United States of America ("United States Treasury Obligations"), (ii) obligations fully and unconditionally guaranteed as to timely payment of principal an interest by the United States of America, (iii) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumentality of the United States of America, or (iv) evidences of ownership or proportionate interests in future interest and principal payments on obligations described above 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 government obligations are not available to any person claiming through the custodian or to which the custodian may be obi igated; Exhibit A Page 4 (b) Federal Housing Administration debentures; (c) The I isted obligations of the following government-sponsored agencies which are not backed by the full faith and credit of the United States of America: (i) participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts) and senior debt obligations of the Federal Home Loan Mortgage Corporation (FHLMC); (ii) consolidated system-wide bonds and notes of the Farm Credit Banks (formerly Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives), (iii) consolidated debt obligations of the Federal Home Loan Banks (FHL Banks), (iv) senior debt obligations and mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts) of the Federal National Mortgage Association (FNMA), (v) senior debt obligations (excluded are securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date) of the Student Loan Marketing Association (SLMA), (vi) debt obligations of the Financing Corporation (FICO), and (vii) debt obligations of the Resolution Funding Corporation (REFCORP); (d) Unsecured certificates of deposit time deposits, deposit accounts, and bankers' acceptances (having maturities of not more than 30 days) of any bank, including the Trustee, its parent and their affiliates, the short-term obligations of which are rated "A-l" or better by S&P; (e) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation (FDIC), in banks, including the Trustee, its parent and their affiliates, which have capital and surplus of at least $5 million; (f) Commercial paper (having original maturities of not more than 270 days) rated at the time of initial investment "A-l +" by S&P and "Prime-l" by Moody's; (g) Money market funds rated "AAm" or AAm-G" by S&P, or better; including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee or such holding company provide investment advisory or other management services; (h) "State Obligations:' which means: (i) Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated "A3" by Moody's and "A" by S&P, or better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation is so rated, (ii) Direct general short-term obligations of any state agency or subdivision or agency thereof described in (ii) above and rated "A-l+" by S&P and "Prime-l" by Moody's, and (iii) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state, state agency or subdivision described in (A) above and rated "AA" or better by S&P and "Aa" or better by Moody's; (i) Pre-refunded municipal obligations rated "AAA" by S&P and "Aaa" by Moody's meeting the following requirements: (i) the municipal obligations are (A) not subject to redemption prior to maturity or (B) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions, (ii) the municipal obligations are secured by cash or United States Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations, (iii) the principal of and interest on the United States Treasury Obligations (plus any cash in the escrow) has been verified by Exhibit A Page 5 the report of independent certified public accountants to be sufficient to pay in full all principal of, interest and premium, if any, due and to become due on the municipal obligations ("Verification"), (iv) the cash or United States Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations, (v) no substitution of a United States Treasury Obligation shall be permitted except with another United States Treasury Obligation and upon delivery of a new Verification, and (vi) the cash or United States Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent. u) Repurchase agreements with: (i) any domestic bank, or domestic branch of a foreign bank, the long term debt of which is rated at least "A" by S&P and Moody's; or (ii) any broker-dealer with "retail customers" or a related affiliate thereof which broker-dealer has, or the parent company (which guarantees the provider) of which has, long-term debt rated at least "A" by S&P and Moody's, which broker- dealer falls under the jurisdiction of the Securities Investors Protection Corporation; or (iii) any other entity rated "A" or better by S&P and Moody's and acceptable to the Municipal Bond Insurer, provided that: (A) the market value of the collateral is maintained at levels and upon such conditions as would be acceptable to S & P and Moody's to maintain an "A" rating in an "A" rated structured financing (with a market value approach); (B) the Trustee or a third party acting solely as agent therefor or for the City (the "Holder of the Collateral") has possession of the collateral or the collateral has been transferred to the Holder of the Collateral in accordance with applicable state and federal laws (other than by means of entries on the transferor's books); (C) the repurchase agreement shall state and an opinion of counsel shall be rendered at the time such collateral is delivered that the Holder of the 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 the Collateral is in possession); (D) all other requirements of S&P in respect of repurchase agreements shall be met; (E) the repurchase agreement shall provide that if during its term the provider's rating by either Moody's or S&P is withdrawn or suspended or falls below "A-" by S&P or "A3" by Moody's, as appropriate, the provider must at the direction of the City or the Trustee (who shall give such direction if so directed by the Municipal Bond Insurer), within 10 days of receipt of such direction, repurchase all collateral and terminate the agreement with no penalty or premium to the City or the Trustee. Notwithstanding the above, if a repurchase agreement has a term of 270 days or less (with no evergreen provision), collateral levels need not be as specified in (A) above, so Exhibit A Page 6 long as such collateral levels are 103% or better and the provider is rated at least "A" by S&P and Moody's, respectively. (k) 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 "AA" by S&P and "Aa" by Moody's; provided that. by the terms of the investment agreement: (i) interest payments are to be made to the Trustee at times and in amounts as necessary to pay debt service (or, if the investment agreement is for the construction fund, construction draws) with respect to the Certificates; (ii) the invested funds are available for withdrawal without penalty or premium, at any time upon not more than seven days' prior notice; the City and the Trustee hereby agree to give or cause to be given notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid; (iii) 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 obi igations of the provider to its other depositors and its other unsecured and unsubordinated creditors; (iv) the City or the Trustee receives the opinion of domestic counsel (which opinion shall be addressed to the City and the Municipal Bond Insurer) that such investment agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms and of foreign counsel (if applicable) in form and substance acceptable, and addressed to, the Municipal Bond Insurer; (v) the investment agreement shall provide that if during its term (1) the provider's rating by either S&P or Moody's falls below "AA-" or "Aa3", 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 City, the Trustee or a third party acting solely as agent therefor (the "Holder of the Collateral") collateral free and clear of 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 S & P and Moody's 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 (2) the provider's rating by either S&P or Moody's is withdrawn or suspended or falls below "A-" or "A3", respectively, the provider must. at the direction of the City or the Trustee (who shall give such direction if so directed by the Municipal Bond Insurer), 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 City or Trustee, and Exhibit A Page 7 (vi) 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 the 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 the Collateral is in possession); (vii) the investment agreement must provide that if during its term (1) 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 (who shall give such direction if so directed by the Municipal Bond Insurer), be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the City or Trustee, as appropriate, and (2) the provider shall become insolvent. not pay its debts as they become due, be declared or petition to be declared bankrupt. etc. ("event of insolvency"), the provider's obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the City or Trustee, as appropriate; and (I) the Local Agency Investment Fund to the extent any moneys invested by the Trustee are subject to deposit and withdrawa I solely by the Trustee. "Principal Corporate Trust Office" means the corporate trust office of the Trustee located at 550 South Hope Street Suite 500, Los Angeles, CA 90071; provided, however, for transfer, registration, exchange, payment and surrender of Certificates, means in care of the corporate trust office of U.S. Bank National Association in St. Paul, Minnesota, or such other office designated by the Trustee from time to time. "Proceeds." when used with reference to the Certificates, means the face amount of the Certificates, plus accrued interest and original issue premium, if any, less original issue discount. if any. "Project" includes, but is not limited to, the capital improvements to be financed by the City with the proceeds of the Certificates, all as more particularly described in Exhibit C attached to the Trust Agreement. "Project Costs" means all costs of payment of, or reimbursement for, the Project. "Project Fund" means the fund by that name established and held by the Trustee pursuant to Article III of the Trust Agreement. "Property" means, collectively, the Site and the Faci I ity. "Rating Category" means, with respect to any Permitted Investment. one of the generic categories of rating by Moody's or S&P appl icable to such Permitted Investment. without regard to any refinement or graduation of such rating category by a plus or minus sign or a numeral. "Registration Books" means the records maintained by the Trustee pursuant to Section 2.12 of the Trust Agreement for registration of the ownership and transfer of ownership of the Certificates. Exhibit A Page 8 "Regular Record Date" means the close of business on the fifteenth (15th) day of the month preceding each Interest Payment Date, whether or not such fifteenth (15th) day is a Business Day. "Rental Period" means each twelve-month period during the Term of the Lease Agreement commencing on September 2 in any year and ending on September 1 in the next succeeding year; provided, however, that the first Rental Period shall commence on the Closing Date and shall end on September 1,2008. "Reserve Fund" means the fund by that name established and held by the Trustee pursuant to Section 6.01 of the Trust Agreement. "Reserve Requirement" means an amount equal to L___; provided, however, that if the Certificates are partially refunded, such amount shall be reduced to an amount equal to the maximum annual Lease Payments relating to the Certificates not so refunded, as specified in a certificate of a City Representative delivered to the Trustee. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hili Companies, Inc., New York, New York, or its successors. "Securities Depositories" means The Depository Trust Company, 55 Water Street. 50" Floor, New York, NY 10041-0099 Attention: Call Notification Department; or to such other addresses and/or such other registered securities depositories holding substantial amounts of obligations of types similar to the Certificates. "Site" means that certain real property more particularly described in Exhibit A to the Site and Facility Lease and in Exhibit A to the Lease Agreement. "Site and Facility Lease" means the Site and Facility Lease, dated as of March 1,2008, by and between the City, as lessor, and the Authority, as lessee, together with any duly authorized and executed amendments thereto. "State" means the State of California. "Term of the Lease Agreement" means the time during which the Lease Agreement is in effect. as provided in Section 4.2 of the Lease Agreement. "Trust Agreement" means the Trust Agreement dated as of March 1, 2008, by and among the City, the Authority and the Trustee, together with any du Iy authorized amendments thereto. "Trustee" means U.S. Bank National Association, or any successor thereto, acting as Trustee pursuant to the Trust Agreement. Exhibit A Page 9 Quint & Thimmig LLP 10/22/07 11/19/07 11/29/07 02/01/08 EXHIBIT B FORM OF THE CERTIFICATES Certificate of Participation (2008 Temecula Civic Center Financing Project) Evidencing a Direct, Undivided Fractional Interest of the Owners Hereof in Lease Payments to be Made by the CITY OF TEMECULA, CALIFORNIA As the Rental for Certain Property Pursuant to a Lease Agreement with the Temecula Public Financing Authority RATE OF INTEREST % MATURITY DATE Se tember 1, DATED DATE March ,2008 CUSIP REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: DOLLARS THIS IS TO CERTIFY THAT the registered owner identified above, or registered assigns (the "Owner"), as the registered owner of this Certificate of Participation (the "Certificate"), is the owner of a direct. undivided, fractional interest in a portion of the lease payments (the "Lease Payments") to be paid by the City of Temecula, California, a municipal corporation and general law city, duly organized and existing under the laws of the State of California (the "City"). pursuant to that certain Lease Agreement. dated as of March 1,2008, by and between the Temecula Public Financing Authority, ajoint exercise of powers authority organized and existing under the laws of the State of California (the "Authority") and the City, (the "Lease Agreement"), which Lease Payments, prepayments and certain other rights and interests under the Lease Agreement have been assigned to U.S. Bank National Association, as trustee (the "Trustee"), having a corporate trust office in Los Angeles, California, or any other such location so designated by the Trustee (the "Principal Corporate Trust Office"). The Owner is entitled to receive, subject to the terms of the Lease Agreement. on the Maturity Date identified above, the Principal Amount identified above, representing a direct. undivided fractional portion of the Lease Payments designated as principal coming due on such date, and to receive on March 1 and September 1 of each year, commencing September 1,2008 (each, an "Interest Payment Date"), until payment in full of said Principal Amount the Owner's direct. undivided fractional share of the Lease Payments designated as interest coming due during the six months immediately preceding each of the Interest Payment Dates; provided that interest represented hereby shall be payable from the Interest Payment Date next preceding the date of execution of this Certificate unless (i) this Certificate is executed on an Interest Payment Date, in which event interest shall be payable from such Interest Payment Date, or (ii) this Certificate is executed after the close of business on the fifteenth (15th) day of the month immediately preceding an Interest Payment Date, and prior to such Interest Payment Date, in which event interest shall be payable from such Interest Payment Date, or (iii) this Certificate is executed on or before Exhibit B Page 1 20002.06 August 15, 2008, in which event interest shall be payable from the Dated Date stated above; provided, however, that if, as of the date of execution of any Certificate, interest is in default with respect to any Outstanding Certificates, interest represented by such Certificate shall be payable from the Interest Payment Date to which interest has previously been paid or made available for payment with respect to the Outstanding Certificates. Payment of defaulted interest shall be paid by check of the Trustee mailed to the registered owners of the Certificates as of a special record date to be fixed by the Trustee in its sole discretion, notice of which shall be given to the registered owners of the Certificates not less than ten (10) days prior to such special record date. Said direct. undivided fractional share of the portion of the Lease Payments designated as interest is the result of the multiplication of the aforesaid portion of the Lease Payments designated as principal by the Rate of Interest per annum identified above. Interest represented hereby is payable in lawful money of the United States of America by check mailed by the Trustee on each Interest Payment Date by first class mail to the Owner at his address as it appears on the registration books of the Trustee, as of the close of business on the fifteenth (15th) day of the month immediately preceding each Interest Payment Date or, upon written request filed with the Trustee prior to the fifteenth (15th) day of the month immediately preceding the Interest Payment Date by a registered owner of at least $1,000,000 in aggregate principal amount of Certificates, by wire transfer in immediately available funds to an account in the United States designated by each registered owner in such written request. Principal represented hereby is payable in lawful money of the United States of America by check of the Trustee upon presentation and surrender hereof at the Principal Corporate Trust Office. This Certificate has been executed and del ivered by the Trustee pursuant to the terms of a Trust Agreement by and among the Trustee, the Authority and the City, dated as of March 1, 2008 (the "Trust Agreement"). The City is authorized to enter into the Lease Agreement and the Trust Agreement under the laws of the State of California. Reference is hereby made to the Lease Agreement and the Trust Agreement (copies of which are on fi Ie at the Principal Corporate Trust Office) for a description of the terms on which the Certificates are delivered, the rights thereunder of the registered owners of the Certificates, the rights, duties and immunities of the Trustee and the rights and obligations of the City under the Lease Agreement. all of the provisions of which the Owner of this Certificate, by acceptance hereof, assents and agrees. The City is obi igated under the Lease Agreement to pay Lease Payments from any source of legally available moneys and the City has covenanted in the Lease Agreement to make the necessary annual appropriations therefor. The obligation of the City to pay the Lease Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Lease Payments does not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. To the extent and in the manner permitted by the terms of the Trust Agreement. the provisions of the Trust Agreement may be amended by the parties thereto with the written consent of the registered owners of at least sixty percent (60%) in aggregate principal amount of the Certificates then outstanding and may be amended without such consent under certain circumstances; provided that no such amendment shall impair the right of any registered owner to receive, in any case, such registered owner's fractional share of any Lease Payment or prepayment thereof in accordance with such registered owner's Certificate, without the consent of such registered owner. This Certificate is transferable and exchangeable by the Owner, in person or by his attorney duly authorized in writing, at the Principal Corporate Trust Office, but only in the Exhibit B Page 2 manner, subject to the limitations and upon payment of any charges provided in the Trust Agreement and upon surrender and cancellation of this Certificate. Upon such transfer, a new Certificate or Certificates of an authorized denomination or denominations for the same aggregate principal amount will be delivered to the transferee in exchange for this Certificate. The City, the Authority and the Trustee may treat the Owner as the absolute owner hereof for all purposes, whether or not the payments represented by this Certificate shall be overdue and the City, the Authority and the Trustee shall not be affected by any notice to the contrary. The Certificates maturing on or before September 1,2009, are not subject to optional redemption prior to maturity. The Certificates maturing on and after September 1,2010, are subject to optional redemption in whole or in part on any date in such order of maturity as shall be designated by the City (or, if the City shall fail to so designate the order of redemption, in pro rata among maturities) and by lot within a maturity, on or after September 1,2009, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption from the proceeds of the optional prepayment of Lease Payments made by the City pursuant to the Lease Agreement. without premium. The Certificates are subject to extraordinary mandatory redemption in whole at any time, or in part on any Interest Payment Date, in such order of maturity as shall be selected by the City and by lot within a maturity, from the net proceeds of an insurance or condemnation award to the extent credited towards the prepayment of the Lease Payments by the City pursuant to the Lease Agreement. at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium. The Certificates maturing on September 1, ____, are subject to mandatory redemption in part on September 1, __' and on each September 1, __' thereafter, to and including September 1, __' from the principal components of scheduled Lease Payments required to be paid by the City pursuant to the Lease Agreement with respect to each such redemption date (subject to abatement. as set forth in the Lease Agreement), at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, as follows: Year (September 1) Principal Amount of Certificates to be Redeemed lMaturity The Certificates maturing on September 1, ____, are subject to mandatory redemption in part on September 1, __' and on each September 1, __' thereafter, to and including September 1, __' from the principal components of scheduled Lease Payments required to be paid by the City pursuant to the Lease Agreement with respect to each such redemption date (subject to abatement. as set forth in the Lease Agreement), at a redemption price equal to the pri ncipal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, as follows: Exhibit B Page 3 Year (September 1) Principal Amount of Certificates to be Redeemed lMaturity Notice of redemption is to be given by the Trustee by mailing a redemption notice by first class mail at least thirty (30) days and not more than sixty (60) days prior to the date fixed for redemption to the registered owner of the Certificate or Certificates to be redeemed at the address shown on the Certificate registration books maintained by the Trustee. Notice of redemption having been given as aforesaid, the Certificates or portions of Certificates so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) interest with respect to such Certificates or portions of Certificates shall cease to accrue and be payable. The Trustee has no obligation or liability to the registered owners of the Certificates to make payments of principal or interest with respect to the Certificates. The Trustee's sole obligations are to administer, for the benefit of the registered owners of the Certificates, the various funds and accounts established under the Trust Agreement. The Trustee makes no representation concerning the recitals contained in the Trust Agreement or in this Certificate. The City has certified, recited and declared that all conditions, things and acts required by the constitution and statutes of the State of California, the Lease Agreement and the Trust Agreement to exist. to have happened and to have been performed precedent to and in the delivery of this Certificate, do exist. have happened and have been performed in due time, form and manner as required by law. Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (" DTC"), to the City or its agent for registration of transfer, exchange, or payment. and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. IN WITNESS WHEREOF, this Certificate has been executed by U.S. BANK NATIONAL ASSOCIATION, as trustee, acting pursuant to the Trust Agreement. Date of Execution: U.S. BANK NATIONAL ASSOCIATION, as Trustee By Authorized Signatory Exhibit B Page 4 STATEMENT OF INSURANCE [TO COME] Exhibit B Page 5 ASSIGNMENT For value received, the undersigned dotes) hereby sell, assign and transfer unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within Certificate and dotes) hereby irrevocably constitute and appoint attorney, to transfer the same on the registration books of the Trustee, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an eligible guarantor. NOTICE: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Certificate in every particular, without alteration or enlargement or any change whatsoever. Exhibit B Page 6 EXHIBIT C DESCRIPTION OF THE PROJECT The Project consists of the new Temecula Civic Center including a new city hall office building and attached council chambers totaling approximately 92,000 square feet. The building will be a two and three-story building with an optional partial basement. The Civic Center project also includes a semi-attached Community Room totaling roughly 3000 square feet, which will include a full service kitchen. Exhibit C CITY OF TEMECULA CERTIFICATES OF PARTICIPATION (2008 TEMECULA CIVIC CENTER FINANCING PROJECT) PURCHASE AGREEMENT .2008 City of Temecula 43200 Business Park Drive Temecula. Califomia 92589 Temecula Public Financing Authority 43200 Business Park Drive Temecula. Califomia 92589 Ladies and Gentlemen: The undersigned (the "Underwriter") hereby offers to enter into this Purchase Agreement with the Temecula Public Financing Authority (the "Authority") and the City of Temecula (the "City"), for the purchase by the Underwriter and the delivery by the Authority of the Certificates specified below. The proceeds of the Certificates will be used, in part to: (i) finance a portion of the costs of a new civic center facility, (ii) [fund a Reserve Fund for the Certificates], and (iii) pay costs incurred in connection with executing and delivering the Certificates, including the premium for the municipal insurance policy [and the reserve fund surety]. This offer is made subject to acceptance by you and delivery to the Underwriter of an executed copy hereof prior to 10:00 a.m. local time in the City on the date hereof. Upon such acceptance, this Purchase Agreement shall be in full force and effect in accordance with its terms and shall be binding upon you and the Underwriter. All terms not defined herein shall have the meanings set forth in the Trust Agreement (defined below). 1. Upon the terms and conditions and upon the basis ofthe representations herein set forth, the Underwriter hereby agrees to purchase for offering to the public, and the Authority and the City hereby agree to execute and deliver to the Underwriter, all (but not less than all) ofthe $ principal components of Certificates of Participation (2008 Temecula Civic Center Financing Project) (the "Certificates") to be dated as oftheir date of execution and delivery (and more fully described in the Official Statement referred to below), at a total price of $ , being the principal amount ofthe Certificates ($ ), less [net] original issue discount of $ , less an Underwriter's discount of $ The Underwriter agrees to make a bona fide public offering of all the Certificates at the initial public offering price or prices (or yields) set forth on Exhibit A attached hereto and made a part hereof; provided. however, the Underwriter reserves the right to change such initial public offering price as the Underwriter deems necessary or desirable, in its sole discretion in connection with the marketing of the Certificates, and to sell the Certificates to certain dealers (including dealers depositing the Certificates into investment trusts) and others at prices lower than the initial offering prices or higher than the yields set forth in the Official Statement. The Underwriter also reserves the right (a) to over-allot or effect transactions that stabilize or maintain the market price ofthe Certificates at a level above that which might otherwise prevail in the open market, and (b) to discontinue such stabilizing, if commenced, at any time. A "bona fide public offering" shall include an offering to institutional investors or registered investment companies, regardless ofthe number of such investors to which the Certificates are sold. TEM"" :'P BP All wpdl1v1' 'I7n The Certificates shall be as described in and shall be secured under and pursuant to a Trust Agreement, dated as of March 1, 2008 (the "Trust Agreement"), among the Authority, the City and u.s. Bank National Association (the "Trustee"), substantially in the form previously submitted to the Underwriter with only such changes therein as shall be mutually agreed upon by the Authority, the City, the Trustee and the Underwriter. The Certificates evidence the direct, undivided, proportionate interest ofthe owners thereof in lease payments to be paid by the City (the "Lease Payments") pursuant to a lease agreement, dated as of March 1, 2008 (the "Lease Agreement"), between the City and the Authority. The obligation to pay Lease Payments is a general obligation ofthe City payable from available moneys. The Authority's rights to receive Lease Payments and to exercise remedies upon an Event of Default under the Lease Agreement have been assigned to the Trustee for the benefit ofthe Certificate owners pursuant to the assigrnnent agreement, dated as of March 1, 2008, between the Authority and the Trustee (the" Assignment Agreement"). 2. The Authority and the City have authorized the Underwriter to use and distribute, in connection with the offer and sale ofthe Certificates, the Preliminary Official Statement, dated ,2008, relating to the Certificates, which, together with the cover page and all appendices thereto, is herein called the "Preliminary Official Statement." The City hereby certifies such Preliminary Official Statement to be deemed final as of its date for purposes ofSEC Rule 15c2-12 adopted by the Securities and Exchange Commission on January 28, 1989 ("Rule 15c2-12"), with the exception of certain final pricing and related information referred to in Rule 15c2-12. The Underwriter will distribute a single copy of the Preliminary Official Statement to any potential customer on request if and when required by Rule 15c2-12. 3. The City shall deliver to the Underwriter two (2) copies ofthe final Official Statement manually executed by an authorized officer thereof. The City shall also deliver a sufficient number of copies of the Official Statement to enable the Underwriter to distribute a single copy of each Official Statement to any potential customer of the Underwriter requesting an Official Statement during the time period beginning when the Official Statement becomes available and ending on the End Date (defined below). The City shall deliver these copies to the Underwriter within seven (7) business days after the date ofthis Purchase Agreement and in sufficient time to accompany or precede any sales confirmation that requests payment from any customer ofthe Underwriter. Unless the Underwriter otherwise notifies the Authority and the City in writing of the End Date, and covenants to file the final Official Statement with a nationally recognized municipal securities information repository ("NRMSIR") on a timely basis. The Official Statement shall be provided on a timely basis so that the Underwriter may comply with paragraph (b)(5) of Rule 15c2-12 and Rules G-12, G-15, G-32 and G-36 ofthe Municipal Securities Rulemaking Board (the "MSRB"). The Underwriter further confirms that it will comply with all suitability requirements ofthe SEC and MSRB in connection with its sale ofthe Bonds to investors. "End Date" as used herein is that date which is the earlier of: (a) ninety (90) days after the end ofthe underwriting period (as defined in Rule 15c2-12); or (b) the time when the Official Statement becomes available from a NRMSIR, but in no event less than twenty-five (25) days after the underwriting period (as defined in Rule 15c2-12) ends. The Authority and the City have authorized the use ofthe Official Statement in connection with the public offering of the Certificates. The Underwriter has distributed a single copy of each Preliminary Official Statement to potential customers on request if and when required by Rule 15c2-12. 4. By 10:00 a.m., Pacific daylight time, on [March 13], 2008, or at such other time or on such earlier or later business day as shall have been mutually agreed upon by the Authority, the City and the Underwriter, the Authority and the City will deliver (i) the Certificates through the services of The Depository Trust Company ("DTC"), New York, New York, and (ii) the closing documents hereinafter mentioned at the offices of Quint & Thirnrnig LLP, San Francisco, California ("Special Counsel"), or another 2 TEM"" :'P BP All wpdl1v1' 'I7n place to be mutually agreed upon by the Authority, the City and the Underwriter. The Underwriter will pay the purchase price of the Certificates as set forth in Section 1 hereof by wire transfer of immediately available funds. This payment and delivery, together with the delivery ofthe aforementioned documents, is herein called the "Closing." 5. The Authority represents, warrants and covenants to the Underwriter that: (a) The Authority is a joint exercise of powers authority, duly organized and validly existing pursuant to the laws ofthe State of California (the "State") and has all necessary power and authority to enter into and pc.:uuu its duties under the Trust Agreement, the Lease Agreement, the Assigrnnent Agreement and this Purchase Agreement (collectively, the" Authority Documents") and, when executed and delivered by the respective parties thereto, the Authority Documents will constitute the legal, valid and binding obligations ofthe Authority in accordance with their respective terms. (b) By official action of the Authority taken prior to or concurrently with the acceptance hereof(the" Authority Resolution"), the Authority has duly authorized and approved the execution and delivery of, and the pc.:uuuance by the Authority of the obligations contained in this Purchase Agreement, and has authorized and approved the pc.:uuuance by the Authority of its obligations contained in the Authority Resolution and the Authority Documents, and the consummation by it of all other transactions contemplated by the Official Statement. (c) Neither the approval, execution and delivery ofthe Authority Documents, and compliance with the provisions on the Authority's part contained therein, nor the consummation of any other of the transactions herein and therein contemplated, nor the fulfillment of the terms hereof and thereof, conflicts with or constitutes a breach of or default under nor contravenes any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, nor does any such execution, delivery, adoption or compliance result in the security interest or encumbrance of any nature whatsoever upon any ofthe properties or assets of the Authority under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Authority Documents. (d) Except as may be required under blue sky or other securities laws of any state, there is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory authority having jurisdiction over the Authority required for the execution and delivery of the Certificates or the consummation by the Authority ofthe other transactions contemplated by the Official Statement and this Purchase Agreement. (e) To the best ofthe knowledge ofthe Authority, there is, and on the Closing there will be, no action, suit, proceeding or investigation at law or in equity before or by any court or governmental agency or body pending or threatened against the Authority to restrain or enjoin the delivery of any ofthe Certificates, or the payments to be made pursuant to the Authority Documents, or in any way contesting or affecting the validity ofthe Authority Documents or the authority ofthe Authority to enter into the Authority Documents or contesting the powers ofthe Authority to perform its obligations under any of the foregoing or in any way contesting the powers of the Authority in connection with any action contemplated by this Purchase Agreement. (f) As of its date and as of the date hereof, the information relating to the Authority and the Certificates contained in the Preliminary Official Statement is true and correct in all material respects and such information does not contain any untrue or misleading statement of a material fact (other than final pricing and similar information not required under the "deemed final" provisions of Rule 3 TEM"" :'P BP All wpdl1v1' 'I7n 15c2-12) 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. (g) The Authority agrees to cooperate with the Underwriter in endeavoring to qualifY the Certificates for offering and sale under the securities or blue sky laws of such jurisdictions ofthe United States of America as the Underwriter may request; provided, however, that the Authority will not be required to execute a special or general consent to service of process in any jurisdiction in which it is not now so subject or to qualifY to do business in any jurisdiction where it is not so qualified. (h) By official action ofthe Authority prior to or concurrently with the execution hereof, the Authority has duly approved the distribution ofthe Official Statement, and has duly authorized and approved the execution and delivery of, and the pc.:uuuance by the Authority ofthe obligations on its part contained in the Authority Documents and the consummation by it of all other transactions contemplated by the Official Statement and this Purchase Agreement. (i) The Authority is not in breach of or default under any applicable law or administrative regulation ofthe State or the United States of America 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 or is otherwise subject, and no event has occurred and is continuing which, with the passage oftime or the giving of notice, or both, would constitute a default or an event of default under any such instrument. (j) The Authority is not in default, nor has been in default at any time, as to the payment of principal or interest with respect to an obligation issued by the Authority or successor of the Authority or with respect to an obligation guaranteed by the Authority as guarantor or successor of a guarantor. (k) If between the date ofthis Purchase Agreement and the End Date an event occurs, of which the Authority has knowledge, which might or would cause the information relating to the Authority or the Authority's functions, duties and responsibilities contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading, the Authority will notifY the Underwriter, and if, in the opinion ofthe Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will cooperate with the Underwriter in the preparation of an amendment or supplement to the Official Statement in a form and in a manner approved by the Underwriter, provided all expenses thereby incurred will be paid for by the City. (I) At all times up to and including the date ofthe Closing, the portions ofthe Official Statement relating to the Authority, its functions, duties and responsibilities (including any financial and statistical data contained therein) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading. (m) No consent, approval, authorization or other action by a govemmental or regulatory authority that has not been obtained is or will be required of the Authority for the delivery and sale ofthe Certificates or the consummation ofthe other transactions contemplated by this Purchase Agreement and the Official Statement, except as may be required under the state securities or blue sky laws in connection with the sale ofthe Certificates by the Underwriter. (n) The Authority will deliver all OpllllOnS, certificates, letters and other instruments and documents reasonably required by the Underwriter and this Purchase Agreement. 4 TEM"" :'P BP All wpdl1v1' 'I7n (0) Any certificate of the Authority delivered to the Underwriter shall be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein. (p) Between the date of this Purchase Agreement and the date of Closing, the Authority will not, without the prior written consent of the Underwriter, and except as disclosed in the Official Statement, offer or issue any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent. 6. The City represents, warrants and covenants to the Underwriter that: (a) The City is a municipal corporation and a general law city ofthe State, duly organized and validly existing pursuant to the Constitution and laws ofthe State and has, and at the date of the Closing will have, full legal right, power and authority (i) to enter into and pc.;uuu its duties under this Purchase Agreement, the Trust Agreement, the Lease Agreement and the Continuing Disclosure Certificate ofthe City (collectively, the "City Documents"), (ii) to execute and deliver the Certificates to the Underwriter as priced herein, and (iii) to carry out and consummate the transactions contemplated by the City Documents and the Official Statement. When executed and delivered by the respective parties thereto, the City Documents will constitute the legal, valid and binding obligations of the City in accordance with their respective terms. (b) By official action of the City taken prior to or concurrently with the acceptance hereof(the "City Resolution"), the City has duly authorized and approved the Preliminary Official Statement, has duly authorized and approved the execution and delivery of, and the pc.;uuuance by the City of the obligations contained in the Rule (as defined herein), the Certificates and this Purchase Agreement, and has authorized and approved the pc.;uuuance by the City of its obligations contained in the City Resolution and the City Documents, and the consummation by it of all other transactions contemplated by the Official Statement. (c) Neither the execution and delivery ofthe City Documents, or the approval and execution ofthe Official Statement, and compliance with the provisions on the City's part contained therein, nor the consummation of any other of the transactions herein and therein contemplated, nor the fulfillment ofthe terms hereof and thereof, conflicts with or constitutes a breach of or default under nor contravenes any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, nor does any such execution, delivery, adoption or compliance result in the security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the City under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the City Documents. (d) The Certificates will be paid from available revenues ofthe City subject to abatement in the event of damage to, destruction or condemnation of, or title defects relating to the Leased Property, except that there shall be no abatement to the extent of special funds, such as proceeds of rental interruption insurance, amounts in the Reserve Fund and/or the Lease Payment Fund are available to make such payments. (e) Except as may be required under blue sky or other securities laws of any state, there is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory authority having jurisdiction over the City required for the execution and delivery of the Certificates or the consummation by the City ofthe other transactions contemplated by the Official Statement and this Purchase Agreement. 5 TEM"" :'P BP All wpdl1v1' 'I7n (f) To the best ofthe knowledge ofthe City, there is, and on the Closing there will be, no action, suit, proceeding or investigation at law or in equity before or by any court or govemmental agency or body pending or threatened against the City to restrain or enjoin the delivery of any of the Certificates, or the payments to be made pursuant to the City Documents, or in any way contesting or affecting the validity of the City Documents or the authority of the City to approve and enter into the City Documents or materially adversely affecting the Project or the Property. (g) The Preliminary Official Statement provided to the Underwriter has been deemed final by the City, as required by Rule 15c2-12. As ofthe date thereof and at all times subsequent thereto up to and including the End Date, the information relating to the City, the Certificates and the City Documents contained in the Preliminary Official Statement will be complete and will not contain any untrue or misleading statement of a material fact or omit to state any material fact (unless an event occurs of the nature described in Section 6(k) below) necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of its date and as of the date hereof, the information relating to the City, the Certificates and the City Documents contained in the Preliminary Official Statement is true and correct in all material respects and such information does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light ofthe circumstances under which they were made, not misleading. (h) The City agrees to cooperate with the Underwriter in endeavoring to qualifY the Certificates for offering and sale under the securities or blue sky laws of such jurisdictions ofthe United States of America as the Underwriter may request; provided. however, that the City will not be required to execute a special or general consent to service of process in any jurisdiction in which it is not now so subject or to qualifY to do business in any jurisdiction where it is not so qualified. (i) The City is not in breach of or default under any applicable law or administrative regulation ofthe State or the United States of America 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 or is otherwise subject, and no event has occurred and is continuing which, with the passage oftime or the giving of notice, or both, would constitute a default or an event of default under any such instrument. (j) The City is not in default, nor has been in default at any time, as to the payment of principal or interest with respect to an obligation issued by the City or successor ofthe City or with respect to an obligation guaranteed by the City as guarantor or successor of a guarantor. (k) If between the date ofthis Purchase Agreement and the End Date an event occurs, of which the City has knowledge, which might or would cause the information relating to the City, the City Documents or the City's functions, duties and responsibilities contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading, the City will notifY the Underwriter, and if, in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will cooperate with the Underwriter in the preparation of an amendment or supplement to the Official Statement in a form and in a manner approved by the Underwriter, provided all reasonable expenses thereby incurred will be paid for by the City. (1) Ifthe information relating to the City Documents and the City, its functions, duties and responsibilities contained in the Official Statement is amended or supplemented pursuant to the immediately preceding subparagraph, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and including the date of the Closing, the portions of the Official Statement so supplemented or amended (including any financial and statistical data contained therein) will not contain any untrue statement 6 TEM"" :'P BP All wpdl1v1' 'I7n of a material fact or omit to state a material fact required to be stated therein or necessary to make such information therein, in the light ofthe circumstances under which it was presented, not misleading. (m) The City covenants that it will comply with all tax covenants relating to it in the City Documents and the Tax Certificate ofthe City. (n) The City has complied, and will at the Closing be in compliance in all respects, with the City Resolution and all other City Documents and the City has complied with all provisions of the Constitution and laws of the State in connection with the transactions contemplated by the City Resolution, this Purchase Agreement, the Official Statement and the City Documents. No consent, approval, authorization or other action by any govemmental or regulatory agency that has not been obtained is or will be required of the City for the delivery and sale of the Certificates or the consummation of the other transactions contemplated by this Purchase Agreement, the City Documents and the Official Statement, except as may be required under the state securities or blue sky laws in connection with the sale of the Certificates by the Underwriter. (0) Substantially all the proceeds from the sale ofthe Certificates (after deducting the expenses of issuance and sale of the Certificates) will be used to finance the Project (as defined in the Official Statement), [to purchase a Reserve Policy for the Certificates] and to pay costs of executing and delivering the Certificates, and the City will not take or omit to take any action which action or omission will in any way cause the proceeds from the sale of the Certificates to be applied in a manner contrary to that provided in the Trust Agreement, as amended from time to time. (p) The City will deliver all opinions, certificates, letters and other instruments and documents reasonably required by the Underwriter and this Purchase Agreement. (q) Any certificate of the City delivered to the Underwriter shall be deemed a representation and warranty by the City to the Underwriter as to the statements made therein. (r) Other than as described in the Official Statement, as ofthe time of acceptance hereof and as of the Closing, the City does not and will not have outstanding any indebtedness superior to or on a parity with the lien ofthe Certificates thereon. (s) Between the date ofthis Purchase Agreement and the date of Closing, the City will not, without the prior written consent of the Underwriter, and except as disclosed in the Official Statement, offer or issue any bonds, notes or other obligations for borrowed money, or incur any material liabilities, directly or contingently. (t) The City will undertake, pursuant to the Trust Agreement and a Continuing Disclosure Certificate, to provide annual financial reports and notices of certain events; a description ofthis undertaking is set forth in the Preliminary Official Statement and will also be set forth as an appendix to the Official Statement. 7. The Underwriter has entered into this Purchase Agreement in reliance upon the representations, warranties and agreements ofthe Authority and the City contained herein, and the opinions of Special Counsel, Counsel to the Trustee, counsel to the City and Counsel to the Authority required hereby. The Underwriter's obligations under this Purchase Agreement are and shall be subjectto the following further conditions: (a) At the time of Closing, this Purchase Agreement, the Trust Agreement, the Lease Agreement, the Assigrnnent Agreement and the Continuing Disclosure Certificate (collectively the "Legal Documents") all as described in the Official Statement, shall be in full force and effect as valid and 7 TEM"" :'P BP All wpdl1v1' 'I7n binding agreements between or among the various parties thereto and the Legal Documents and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, and there shall be in full force and effect such resolutions as, in the opinion of Quint & Thirnrnig LLP (herein called "Bond Counsel"), shall be necessary in connection with the transactions contemplated hereby. (b) At or prior to the Closing, the Underwriter shall receive two copies of the following documents (which may be in electronic form), in each case satisfactory in form and substance to them: (1) The unqualified approving opinion of Special Counsel, dated the date of Closing, addressed to the City and the Underwriter (or a reliance letter to the Underwriter), in substantially the form attached as APPENDIX C to the Official Statement; (2) A supplemental opinion of Special Counsel, addressed to the underwriter, in form and substance to the effect that: (a) The statements and information contained in the Official Statement under the captions "INTRODUCTION," "THE CERTIFICATES," "LEASE PAYMENTS," "SECURITY FOR THE CERTIFICATES AND SOURCES OF PAYMENT," "SPECIAL RISK FACTORS - General Considerations" "- Security for the Certificates," and" Abatement," "APPENDLX A" and "APPENDIX C," insofar as such statements expressly summarize certain provisions of the Certificates, the Legal Documents and their legal opinion concerning federal and state tax matters relating to the Certificates, are accurate in all material respects; (b) The Certificates are not subject to the registration requirements of Section 3(a)(2) ofthe Securities Act of1933, as amended (the "1933 Act"), and the Trust Agreement is exempt from qualification under the TrustIndenture Act of1939, as amended (provided that no opinion need be expressed with respect to the Insurance Policy); and (c) The Purchase Agreement has been duly executed and delivered by the City, and, assuming due authorization, execution and delivery by the other parties thereto, is a valid and binding agreement of the City, except as (i) provisions contained therein shall have been waived by the Underwriter prior to Closing, or (ii) the enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and equitable remedies if equitable remedies are sought, and except no opinion need be expressed as to the enforceability of the indemnification, waiver, choice oflaw or contributions provisions contained in the Purchase Agreement. (3) An opinion of Counsel to the City ("City Attorney"), dated the date of Closing in form and substance satisfactory to the Underwriter and its counsel, addressed to the Underwriter, to the effect that: (a) the City is a municipal corporation and general law city of the State, duly organized and validly existing pursuant to the Constitution and laws ofthe State; 8 TEM"" :'P BP All wpdl1v1' 'I7n (b) the City Resolution was duly adopted at a meeting ofthe City Council, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout; (c) to the best of his knowledge and belief, except as otherwise disclosed in the Official Statement, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened against or affecting the City, the Project or the Property, or in any way contesting or affecting the validity of the City Resolution wherein an unfavorable decision, ruling or finding would adversely affect the validity and enforceability of the City's obligations under the City Documents or the City Resolution or materially adversely affecting the Project or the Property; (d) the representations and warranties ofthe City as set forth herein are, as to all matters oflaw and after reasonable investigation, true and accurate at and as of the date of Closing as though made on such date; and such representation and warranties are, as to all other matters, true and accurate to the best knowledge and belief of such counsel at and as of the date of Closing as though made on such date, except that no opinion regarding the financial condition ofthe City shall be rendered by City Attorney; (e) no authorization, approval, consent, or other order ofthe State or any other governmental authority or agency within the State is required for the valid authorization, execution and delivery ofthe City Documents and the approval and execution ofthe Official Statement; (f) the City is not in material breach or default under any applicable constitutional provision, law or administrative regulation of the State or the United States of America 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 or to which the City or any of its property or assets is otherwise subject, and, to the best of such counsel's knowledge, no event has occurred (including the execution and delivery of the City Documents) and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or any event of default under any such instrument; (g) the City Documents have been duly authorized, executed and delivered by the City, and, assuming due authorization, execution and delivery by the other parties thereto, constitute legal, valid and binding obligations ofthe City enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or otherlaws affecting the enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought and by the limitations on legal remedies imposed on actions against public agencies in the State; and (h) nothing has corne to his attention which would lead him to believe that the information relating to the City or the City Documents contained in the Official Statement contains an untrue statement or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. City Attorney in rendering such opinions as referred to in clauses (b), (c) and (d) of this subparagraph (3) may reasonably rely upon such representations, statements, and where appropriate, 9 TEM"" :'P BP All wpdl1v1' 'I7n certificates, as may be furnished by City officials having responsibilities with regard to the activities referred to in the aforementioned sections. (4) An opinion of Counsel to the Authority, dated the date of Closing in form and substance satisfactory to the Underwriter and its counsel, addressed to the Underwriter, to the effect that: (i) the Authority is a joint exercise of powers authority, duly organized, validly existing and in good standing under the laws of the State; (ii) the Authority has the power to enter into the Authority Documents, and to own its properties and to carry on its business as then conducted; (iii) the Authority Resolution approving and authorizing the execution and delivery of the Authority Documents has been duly adopted at a meeting of the governing body of the Authority which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout; (iv) the Authority Documents have been validly authorized, executed and delivered by the Authority and constitute legally valid and binding agreements ofthe Authority, enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors' rights and by the application of equitable principles if equitable remedies are sought; (v) to the best knowledge of such counsel, after investigation, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened against or affecting the Authority, which would adversely impact the Authority's ability to complete the transactions described in and contemplated by the Official Statement or in any way contesting or affecting the validity of the Authority Documents, wherein an unfavorable decision, ruling or finding would adversely affect the validity and enforceability ofthe Authority Documents; (vi) to the best knowledge of such counsel, the execution and delivery of the Authority Documents by the Authority and performance by the Authority of its obligations thereunder will not conflict with or result in a breach of any of the terms, conditions or provisions of any agreement or instrument to which the Authority is a party or constitute a default thereunder and all consents, approvals, authorizations and orders of a governmental or regulatory authority, if any, which are required to be obtained by the Authority for the consummation ofthe transactions contemplated thereby or as conditions precedent to the issuance ofthe Certificates have been obtained (provided no opinion need be expressed as to any action required under state securities or blue sky laws in connection with the purchase or distribution ofthe Certificates by the Underwriter); (vii) nothing has corne to the attention of such counsel which would indicate that the description ofthe Authority or the Authority Documents contained in the Official Statement contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (5) the opinion of McFarlin & Anderson LLP, dated the date of Closing and addressed to the Underwriter, to the effect that nothing has corne to their attention which would lead 10 TEM"" :'P BP All wpdl1v1' 'I7n them to believe that the Official Statement (excluding therefrom the financial statements and the statistical data included therein, information regarding [the Insurer], The Depository Trust Company and the continuing disclosure obligations ofthe City, and the appendices to the Official Statements, as to which no view need be expressed) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light ofthe circumstances under which they were made, not misleading. (6) The opinion of counsel to the Trustee, dated the date of Closing in form and substance satisfactory to the Underwriter and its counsel, and addressed to the Underwriter, to the effect that: (i) the Trustee is a national banking association duly organized and validly existing under the laws of the United States of America having full power and being qualified to enter, accept and administer the trust created under the Trust Agreement and the Assigrnnent Agreement, and to execute and deliver the Certificates; (ii) the Trust Agreement and the Assignment Agreement have been duly authorized, executed and delivered by the Trustee and constitute the valid and binding obligations ofthe Trustee in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws or equitable principles relating to or limiting creditors' rights generally; and (iii) the execution and delivery of the Certificates have been duly authorized by the Trustee and the Trustee has duly executed and delivered the Certificates. (7) A certificate, dated the date of Closing, signed by a duly authorized official of the Authority satisfactory in form and substance to the Underwriter and counsel to the Underwriter, (a) confirming as of such date the representations and warranties of the Authority contained in this Purchase Agreement; (b) certifYing that the Authority has complied with all agreements, covenants and conditions to be complied with by the Authority at or prior to the Closing under the Authority Documents; and (c) certifYing that to the best of such official's knowledge, no event affecting the Authority has occurred since the date ofthe Official Statement which either makes untrue or incorrect in any material respect as ofthe Closing the statements or information contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect. (8) a certificate of the Mayor or the City Manager or other duly authorized official in the City, addressed to the Underwriter, dated the date ofthe Closing, in form and substance acceptable to Special Counsel and substantially to the effect that (i) as to the information and statistical data relating to the City included in the Official Statement and the Appendices to the Official Statement, the material contained therein does not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (ii) the representations and warranties of the City contained herein are true and correct in all material respects on and as ofthe date ofthe Closing; (iii) other than disclosed in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending or, to the knowledge of the City, threatened, wherein an unfavorable decision, ruling or finding would: (A) enjoin or restrain the issuance, sale and delivery of the Certificates or the collection of any moneys pledged or to be pledged under the City Documents, or the pledge thereof, (B) in any way question or affect any ofthe rights, powers, duties or obligations ofthe City with respect to the moneys pledged or to be pledged to pay the principal of, premium, if any, or interest with respect to the Certificates, (C) in any way question or affect any authority for the issuance ofthe Certificates, 11 TEM"" :'P BP All wpdl1v1' 'I7n or the validity or enforceability ofthe Certificates or the City Documents, (D) in any way question or affect the authority or validity of this Purchase Agreement, the City Resolution, the City Documents, the Official Statement or the documents referred to in the Official Statement or (E) materially adversely affect the Project or the Property; (iv) the City has complied with all the terms of the City Documents and this Purchase Agreement to be complied with by it prior to or concurrently with the Closing, (v) since the date ofthe Official Statement there had been no material adverse change in the condition (financial or otherwise) ofthe City; and (vi) certifYing that the City has authorized and consented to the inclusion in the Official Statement ofthe City's audited financial report and accountant's opinion for the fiscal years ending June 30, 2007, and no further consent of any party is required for such inclusion. (9) One executed or certified copies ofthe Legal Documents. (10) One executed copy ofthe Official Statement. (11) One certified copy ofthe general resolution ofthe Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution and delivery of documents such as the Certificates and the Trust Agreement. (12) A copy of the Authority Resolution certified by the Secretary of the Authority authorizing the execution and delivery ofthe Authority Documents. (13) A copy ofthe City Resolution certified by the City Secretary, authorizing the execution and delivery ofthe City Documents and the Official Statement. (14) Tax certifications by the City in form and substance acceptable to Special Counsel. (15) A Certificate ofthe Trustee, dated the Closing Date to the effect that: (i) the Trustee is duly organized and existing as a national banking association in good standing under the laws ofthe United States of America having the full power and authority to enter into and pc.;uuu its duties under the Trust Agreement and the Assignment Agreement, and to execute and deliver the Certificates to the Underwriter pursuant to the Trust Agreement; (ii) the Trustee is duly authorized to enter into the Trust Agreement and the Assigrnnent Agreement, and when the Trust Agreement and the Assignment Agreement are duly executed and delivered by the respective parties thereto, to execute and deliver the Certificates to the Underwriter pursuant to the Trust Agreement; (iii) to the best ofthe knowledge ofthe Trustee, no consent, approval, authorization or other action by any govemmental or regulatory agency having jurisdiction over the Trustee that has not been obtained is or will be required for the execution and delivery of the Certificates or the pc.;uuuance by the Trustee of its duties under the Trust Agreement, except as such may be required under the state securities or blue sky laws in connection with the distribution ofthe Certificates by the Underwriter; (iv) to the best of the knowledge of the Trustee, the execution and delivery by the Trustee ofthe Trust Agreement, the Certificates and the Assignment Agreement and compliance with the terms thereof will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other 12 TEM"" :'P BP All wpdl1v1' 'I7n agreement or instrument to which the Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties (except that no representation, warranty or agreement is made by the Trustee with respect to any Federal or state securities or blue sky laws or regulations), or (except with respect to the lien of the Trust Agreement) result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any ofthe property or assets ofthe Trustee; (v) to the best ofthe knowledge ofthe Trustee, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or govemmental agency, public board or body served upon or threatened against or affecting the existence of the Trustee or seeking to prohibit, restrain or enjoin the execution and delivery ofthe Certificates or the collection of Lease Payments to pay the principal and interest which are represented by the Certificates, or the pledge thereof, or in any way contesting or affecting the validity or enforceability ofthe Certificates, the Trust Agreement or the Assigrnnent Agreement or contesting the powers of the Trustee to enter into and perform its obligation under any of the foregoing, wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated hereby, or which, in any way, would adversely affect the validity ofthe Certificates, the Trust Agreement, the Assigrnnent Agreement or any agreement or instrument to which the Trustee is a party and which is used or contemplated for use in the consummation ofthe transactions contemplated hereby; and (vi) subject to the provisions ofthe Trust Agreement, the Trustee will apply the proceeds from the Certificates to the purposes specified in the Trust Agreement. (16) a Continuing Disclosure Certificate in the form attached to the Official Statement as APPENDLX D. [(17) evidence as of the Closing satisfactory to the Underwriter that the Certificates have received [a rating of' AAA "from Standard & Poor's Rating Group ("S&P") (or such other equivalent ratings as S&P shall issue), and] an underlying rating of "A" from S&P, and that such ratings have not been revoked or downgraded. [(18) an Insurance Policy issued by the Insurer insuring the Certificates, substantially in the form attached as APPENDIX E to the Official Statement.] [(19) an opinion of counsel to the Insurer in form and substance satisfactory to the Underwriter. ] (20) Evidence that the federal tax information form 8038-G has been prepared for filing. (21) A copy ofthe Notice of Final Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 8855 ofthe California Government Code. (22) Such additional legal opinions, certificates, proceedings, instruments and other documents as Special Counsel, the Underwriter and counsel to the Underwriter may reasonably request to evidence compliance with legal requirements, the truth and accuracy, as ofthe time of Closing, of the representations contained herein and in the Official Statement and the due performance or satisfaction by the Trustee, the Authority and the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied. 13 TEM"" :'P BP All wpdl1v1' 'I7n (c) All matters relating to this Purchase Agreement, the Certificates and the sale thereof, the Legal Documents and the consummation ofthe transactions contemplated by this Purchase Agreement shall have been approved by the Underwriter, such approval not to be unreasonably withheld. Ifthe conditions to the Underwriter's obligations contained in this Purchase Agreement are not satisfied or ifthe Underwriter's obligations shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Underwriter, the Authority nor the City shall have any further obligation hereunder. 8. The Underwriter shall have the right to terminate this Purchase Agreement, without liability therefor, by written notification to the Authority and the City if at any time at or prior to the Closing: (i) any event shall occur which causes any statement contained in the Official Statement to be materially misleading or results in a failure ofthe Official Statement 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; or (ii) the marketability ofthe Certificates or the market price thereof, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States of America or by any legislation in or by the Congress of the United States of America 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 of America, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the Mayor ofthe United States of America, the Treasury Department ofthe United States of America, the Internal Revenue Service or the Chairman or ranking minority member ofthe 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 oflegislation by either such Committee, or the presentment of legislation for consideration as an option by either such Committee, or by the staff ofthe Joint Committee on Taxation ofthe Congress ofthe United States of America, or the favorable reporting for passage oflegislation to either House ofthe Congress of the United States of America 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 materially adversely affecting the Federal or State tax status of the City, or the interest on the Certificates or notes or obligations ofthe general character ofthe Certificates; or (iii) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any govemmental body, department or agency ofthe States or a decision by any court of competent jurisdiction within the State or any court ofthe United States of America shall be rendered which, in the reasonable opinion of the Underwriter, materially adversely affects the market price ofthe Certificates; or (iv) legislation shall be enacted by the Congress ofthe United States of America, or a decision by a court ofthe United States of America shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction ofthe subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Certificates, or the issuance, offering or sale ofthe Certificates, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations ofthe general character ofthe Certificates, or the Certificates, are not exempt from 14 TEM"" :'P BP All wpdl1v1' 'I7n registration under, any provision ofthe federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Trust Agreement needs to be qualified under the Trust Agreement Act of 1939, as amended and as then in effect; or (v) additional material restrictions not in force as ofthe date hereof shall have been imposed upon trading in securities generally by any govemmental authority by any national securities exchange which restrictions materially adversely affect the Underwriter's ability to market the Certificates; or (vi) a general banking moratorium shall have been established by federal or State authorities; or (vii) the United States of America has become engaged in hostilities which have resulted in a declaration of war or a national emergency or there has occurred any other outbreak of hostilities or a national or international calamity or crisis, financial or otherwise, the effect of such outbreak, calamity or crisis on the financial markets ofthe United States of America, being such as, in the reasonable opinion ofthe Underwriter, would affect materially and adversely the ability ofthe Underwriter to market the Certificates; or (viii) the commencement of any action, suit or proceeding which, in the judgment ofthe Underwriter, materially adversely affects the market price ofthe Certificates; or (ix) York Stock Exchange; or there shall be in force a general suspension oftrading on the New (x) the market for the Certificates or the market prices ofthe Certificates or the ability ofthe Underwriter to enforce contracts for the sale ofthe Certificates shall have been materially, and adversely affected, in the reasonable professional judgment ofthe Underwriter; or (xi) an event described in Section 5(k) or 6(k) hereof shall have occurred which, in the reasonable professional judgment of the Underwriter, requires the preparation and publication of a supplement or amendment to the Official Statement; or (xii) any rating ofthe Certificates by a national rating agency shall have been withdrawn or downgraded. 9. Pc.;uuuance by the Authority and the City oftheir respective obligations under this Purchase Agreement is conditioned upon (i) pc.Luuance by the Underwriter of its obligations hereunder and (ii) receipt by the Underwriter of all opinions and Certificates to be delivered at Closing by persons and entities other than the Authority or the City. 10. After the Closing and until the End Date (a) neither the Authority nor the City will adopt any amendment of or supplement to the Official Statement to which the Underwriter shall object in writing or which shall be disapproved by counsel for the Underwriter, and (b) if any event relating to or affecting the Authority or the City shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light ofthe circumstances existing at the time it is delivered to an initial purchaser of the Certificates, and the City will forthwith prepare and furnish to the Underwriter a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to counsel for the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of 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 an initial purchaser of the Certificates, 15 TEM"" :'P BP All wpdl1v1' 'I7n not misleading. The costs of preparing any necessary amendment or supplement to the Official Statement to be utilized until the End Date shall be borne by the City and any costs incurred thereafter incident to amending or supplementing the Official Statement shall be borne by the Underwriter. For the purposes of this section the City will furnish such information with respect to itself as the Underwriter may from time to time request. 11. In connection with the initial placement and underwriting, the City shall pay, or cause to be paid, the following expenses (a) the cost of preparation, printing, execution and delivery ofthe Certificates; (b) the acceptance fees ofthe Trustee and any fees and expenses ofthe Trustee's counsel; (c) any fees charged by any rating agency for rating the Certificates; (d) the fees and disbursements of Special Counsel, City Attorney, McFarlin & Anderson, LLP, Disclosure Counsel and any financial advisor or independent certified public accountant; (e) the cost of preparation, distribution, delivery, amendment or supplement ofthe Official Statement and this Purchase Agreement, and (f) any out-of-pocket disbursements ofthe City to be paid from the proceeds ofthe Certificates. All out-of-pocket expenses ofthe Underwriter, including the fees of the California Debt and Investment Advisory Commission, shall be paid by the Underwriter. 12. Any notice or other communication to be given to the Underwriter may be given by delivering the same in writing to Stone & Youngberg LLC, 515 South Figueroa Street, Suite 1060, Los Angeles, California 90071, Attention: Public Finance Department. The approval ofthe Underwriter when required hereunder or the determination of their satisfaction as to any document referred to herein shall be in writing signed by an authorized representative of Stone & Youngberg LLC and delivered to you. 13. This Purchase Agreement is made solely for the benefit ofthe Authority, the City and the Underwriter (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof. 14. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which such counterparts shall together constitute but one and the same instrument. 15. This Purchase Agreement shall be governed by the laws ofthe State. STONE & YOUNGBERG LLC By: Director CITY OF TEMECULA By: Mayor TEMECULA PUBLIC FINANCING AUTHORITY By: Chairman TEM"" :'P BP All wpdl1v1' 'I7n EXHIBIT A MATURITY SCHEDULE Maturity Date Principal (September 1) Amount 2009 $ 2010 20ll 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20 Interest Rate Yield 0/0 0/0 A-I TEM"" :'P BP All wpdl1v1' 'I7n Quint & Thimmig LLP 10/22/07 11/19/07 11/29/07 02/01/08 CONTINUING DISCLOSURE CERTIFICATE This CONTINUING DISCLOSURE CERTIFICATE (the "Disclosure Certificate") is executed and delivered by the CITY OF TEMECULA (the "City") in connection with the execution and delivery of $________ City of Temecula (Riverside County, California) Certificates of Participation (2008 Temecula Civic Center Financing Project) (the "Certificates"). The Certificates are being executed and delivered pursuant to a Trust Agreement, dated as of March 1, 2008, by and among U.S. Bank National Association, as trustee (the "Trustee"), the City and the Temecula Public Financing Authority (the "Trust Agreement"). The City covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Certificates and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Dissemination Agent" shall mean U.S. Bank National Association, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. "Participating Underwriter" shall mean any of the original underwriters of the Certificates required to comply with the Rule in connection with offering of the Certificates. "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean 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. "State Repository" shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is no State Repository. 20002.06 Section 3. Provision of Annual Reports. (a) The City shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the City's fiscal year (which currently would be March 31), commencing March 31, 2008, with the report for the 2006-2007 fiscal year, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than fifteen (15) Business Days prior to said date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). Submission of the Official Statement, dated _____, 2008, relating to the Certificates shall satisfy the filing requirement for the report due by March 31, 2008. The City shall provide a written certificate with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certificate of the City and shall have no duty or obligation to review such Annual Report. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the City's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5( c). (b) If the City is unable to provide to the Repositories an Annual Report by the date required in subsection (a), the Dissemination Agent shall send a notice to the Municipal Securities Rulemaking Board and the State Repository in substantially the form attached as Exhibit A (c) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and (ii) if the Dissemination Agent is other than the City and if the City requests the Dissemination Agent to provide the Annual Report to the Repositories, and if and to the extent the City has provided an Annual Report in final form to the Dissemination Agent for dissemination, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided. Section 4. Content of Annual Reports. The City's Annual Report shall be in a format suitable for filing with each Repository and shall contain or incorporate by reference the following: (a) Audited Financial Statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. -2- (b) The following information: [TO BE DETERMINED] Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The City shall clearly identify each such other document so included by reference. (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. The City is solely responsible for the content and format of the Annual Report. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Certificates, if the City determines that such event is material: (i) Principal and interest payment delinquencies. (ii) Non-payment related defaults. (iii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iv) Unscheduled draws on credit enhancements reflecting financial difficulties. (v) Substitution of credit or liquidity providers, or their failure to perform. (vi) Adverse tax opinions or events affecting the tax-exempt status of the security. (vii) Modifications to rights of security holders. (viii) Contingent or unscheduled bond calls. (ix) Defeasances. (x) Release, substitution, or sale of property securing repayment of the securities. (xi) Rating changes. (b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall as soon as possible determine if such event would be material under applicable Federal securities law. The Dissemination Agent shall have no responsibility for such determination and shall be entitled to conclusively rely on the City's determination. (c) If the City determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the City shall promptly file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Certificates pursuant to the Trust Agreement. 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 Certificates. If such termination occurs prior to the final -3- maturity of the Certificates, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). 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 U.s. Bank National Association The Dissemination Agent may resign by providing thirty days written notice to the City. If at any time there is no designated Dissemination Agent appointed by the City, or if the Dissemination Agent so appointed is unwilling or unable to perform the duties of Dissemination Agent hereunder, the City shall be the Dissemination Agent and undertake or assume its obligations hereunder. Section 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate (provided the Dissemination Agent shall not be obligated to enter into any such amendment that modifies or increases its duties hereunder), and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Certificates, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Certificates, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the Certificates in the manner provided in the Trust Agreement for amendments to the Trust Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Certificates. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under Section 5(c). -4- 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 of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate any holder or beneficial owner of the Certificates may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Lease Agreement or the Trust Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Dissemination Agent. All of the immunities, indemnities, and exceptions from liability in Article IX of the Trust Agreement insofar as the relate to the Trustee shall apply to the Dissemination Agent in this Disclosure Certificate. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of the disclosure of information pursuant to the Disclosure Certificate or arising out of or in the exercise of performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent shall have no duty of obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the owner of a Certificate, or any other party. The Trustee shall have no liability to any party for any monetary damages or other financial liability of any kind whatsoever related to or arising from any breach of this Disclosure Certificate. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Certificate. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any written direction from the City or an opinion of Bond CounseL The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent or the Trustee and payment of the Certificates. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Certificates, and shall create no rights in any other person or entity. Section 13. Fees and Expenses. (a) The Dissemination Agent shall be entitled to payment and reimbursement from the City for its services and all advances, counsel fees and other expenses reasonably made and incurred by the Dissemination Agent. -5- (b) The Dissemination Agent may rely on and shall be protected in acting and refraining from acting upon any direction from the City or an opinion of nationally recognized bond counseL Section 14. Alternative Filing Location. Any filing under this Disclosure Certificate may be made solely by transmitting such filing to the Texas Municipal Advisory Council (the "MAC") as provided at http:j jwww.disclosureusa.org, unless the United States Securities and Exchange Commission has withdrawn the interpretive advice in its letter to the MAC, dated September 7, 2004. Date: March 13, 2008 CITY OF TEMECULA, CALIFORNIA By City Manager ACKNOWLEDGED: U.s. BANK NATIONAL ASSOCIATION, as Dissemination Agent By Authorized Officer -D- EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Temecula, California Name of Issue: $ Certificates of Participation (2008 Temecula Civic Center Financing Project) Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be made by the City of Temecula, California, as the Rental for Certain Property Pursuant to a Lease Agreement with the Temecula Public Financing Authority Date of Issuance: March 13, 2008 NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to the above-named Certificates as required by Section 11.08 of the Trust Agreement, dated as of March 1, 2008, by and among U.S. Bank National Association, as trustee, the Issuer and the Temecula Public Financing Authority. The Issuer anticipates that the Annual Report will be filed by ____. Dated: U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent By Title cc: City PUBLIC HEARING ITEM NO. 29 Approvals City Attorney Director of Finance City Manager f/ta:rl " CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Genie Roberts, Director of Finance DATE: February 12, 2008 SUBJECT: Approval for levying an assessment for Fiscal Year 2008 -2009 in connection with the Temecula Valley Tourism Business Improvement District (TVTBID) PREPARED BY: David Bilby, Senior Debt Analyst Rudy J. Graciano, Revenue Manager RECOMMENDATION: That the City Council: 1. Conduct a public hearing to consider protests regarding the levy of an assessment in conjunction with the Temecula Valley Tourism Business Improvement District. 2. Instruct the City Clerk to tabulate any written protests which might be received prior to the close of the public hearing regarding the formation of the proposed District. 3. If the City Clerk reports that there is not a majority protest received regarding this District, then adopt a resolution entitled: RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA LEVYING AN ASSESSMENT FOR FISCAL YEAR 2008-09 IN CONNECTION WITH THE TEMECULA VALLEY TOURISM BUSINESS IMPROVEMENT DISTRICT (TVTBID) BACKGROUND: On September 27, 2005, the City Council considered a request from the Temecula Valley Convention and Visitor's Bureau (CONVIS) to form a Tourism Business Improvement District to promote tourism in the Temecula Valley. As part of its consideration of this item, the City Council held a public meeting on November 8, 2005, to receive further information regarding the intended purpose and operation of the District. All sixteen of the potentially affected lodging establishments were notified and three representatives of Temecula hotels spoke to urge formation of the District. On December 13, 2005, a Public Hearing was held to consider protests regarding the formation of the Temecula Valley Tourism Business Improvement District. A majority protest was not received and, therefore, Council enacted Ordinance No. 05-17 establishing the Temecula Valley Tourism Business Improvement District (TVTBID). Also adopted were Resolution No. 05-120 to levy an assessment for FY 2006/07 in the TVTBID, and Resolution No. 05-121 to establish an advisory board forthe TVTBID. A Management Agreement between the City of Temecula and the CONVIS was also approved for the operation and administration of the TVTBID. According to the Parking and Business Improvement Area Law of 1989 (the Law), the City Council is authorized to annually undertake proceedings to levy an assessment against businesses within the TVTBID. In accordance with Section 36533 of the Law, the TVTBID Advisory Board has prepared and filed with the City Clerk a report for FY 2008-09. The report, which was presented to City Council and approved on January 22,2008, thoroughly details the proposed budget and activities, and programs and events for the District for the coming year. After approving the report, City Council adopted Resolution No. 08-09 to declare its intention to levy an assessment against lodging businesses for Fiscal Year 2008-09 within the District, and to set the time and place of a Public Hearing. At this Public Hearing, testimony will be heard and protests may be made by any person with an interest in the proposed levy. I n the absence of a majority protest, it is recommended that the City Council adopt the resolution to levy the assessment for the Fiscal Year 2008-09 (March 1,2008 through February 28, 2009). FISCAL IMPACT: It is anticipated that the 2% annual assessment would result in the collection of approximately $578,000 in Fiscal Year 2008-09, which would be used by the CONVIS for the promotion of tourism. The City would receive up to 2% of the assessments, or approximately $11,560, to offset administrative costs. For the twelve month period beginning December 2006 through November 2007, the City of Temecula received $12,072 for administrative costs. ATTACHMENTS: Resolution No. 08- RESOLUTION NO. 08- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA LEVYING AN ASSESSMENT FOR FISCAL YEAR 2008-2009 IN CONNECTION WITH THE TEMECULA VALLEY TOURISM BUSINESS IMPROVEMENT DISTRICT THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The Parking and Business Improvement Area Law of 1989, California Streets and Highways Code Section 36500 et seq. (the "Act"), authorizes the City Council (the "City Council") of the City of Temecula (the "City") to levy an assessment against businesses within a parking and business improvement area which is in addition to any assessments, fees, charges, or taxes imposed in the City. Section 2. Pursuant to the Act, the City Council adopted Ordinance No. 05-16 establishing the Temecula Valley Tourism Business Improvement District (the "District") in the City. Section 3. The boundaries of the District are the boundaries of the City and include all lodging businesses therein (as defined in Temecula Municipal Code Section 3.40.020). Section 4. In accordance with Section 36533 of the Law, the Advisory Board for the District prepared and filed with the City Clerk reports entitled "07 Annual Report" and "08 Annual Report: Budget and Marketing Plan" (the "Reports"), and on January 22, 2008, Resolution No. 08-08, the City Council preliminarily approved such Report as filed. Section 5. On January 22, 2008, the City Council adopted its Resolution of Intention, Resolution No. 08-09, declaring its intention to levy and collect an assessment for fiscal year 2008-2009 (March 1, 2008 through February 28, 2009) against lodging businesses in the District. Section 6. Following notice duly given pursuant to law, the City Council has held a full and fair public hearing regarding the levy and collection of an assessment within the District for fiscal year 2008-2009. At the public hearing, the testimony of all interested persons regarding the levy of an assessment against lodging businesses within the District for fiscal year 2008-2009 was heard and considered. The City Council hereby determines that there was no majority protest within the meaning of the Act. Section 7. Based upon its review of the Report, a copy of which has been presented to the City Council and which has been filed with the City Clerk, and other reports and information presented to the City, the City Council hereby finds and determines that (i) the lodging businesses in the District will be benefited by the expenditure of funds raised by the assessment for fiscal year 2008-2009, (ii) the District includes all of the businesses so benefited; and (iii) the net amount of the assessment levied within the District for fiscal year 2008-2009 in accordance with Resolution No. 08-09, the Report, and Chapter 3.40 of the Temecula Municipal Code is apportioned by a formula and method which fairly distributes the net amount in proportion to the estimated benefits to be received by each such lodging business. Section 8. The City Council hereby confirms the Report as originally filed. Section 9. The adoption of this Resolution constitutes the levy of an assessment for fiscal year 2008-2009. The assessment formula is set forth in Chapter 3.40 of the Temecula Municipal Code. Assessments shall be paid in monthly installments. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 12th day of February, 2008. Michael S. Naggar, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 08- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 12th day of February, 2008, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk