2003-01 Res Revenue Bonds RESOLUTION NO. 2003-01
RESOLUTION OF THE ENCINITAS PUBLIC FINANCING AUTHORITY
AUTHORIZING THE REFUNDING OF ITS REVENUE BONDS ISSUED IN 1993 IN THE
ORIGINAL PRINCIPAL AMOUNT OF $16,960,000, AND AUTHORIZING OFFICIAL
ACTIONS AND EXECUTION OF RELATED DOCUMENTS
WHEREAS, the Encinitas Public Financing Authority (the "Authority") has been formed
pursuant to a Joint Exercise of Powers Agreement, by and among the San Dieguito Water
District (the "District "), the City of Encinitas, the Cardiff Sanitation District (which District has
been merged into the City of Encinitas), the Encinitas Consolidated Fire Protection District
(which District has been merged into the City of Encinitas) and the Encinitas Sanitation District
(which District has been merged into the City of Encinitas), and is authorized under said
Agreement and under the laws of the State of California to finance and refinance the
acquisition and construction of public capital improvements for any of its members; and
WHEREAS, the District issued its 1993 Water Revenue Refunding Bonds in an aggregate
principal amount of $8,890,000 (the "1993 Bonds"), for the purpose of refunding its 1986
Refunding Revenue Bonds, issued in the original principal amount of $10,970,000; and
WHEREAS, in addition to the issuance of its 1993 Bonds, the District financed the
acquisition and construction of its share of the improvements to the R.E. Badger Filtration
Plant, which constitutes a part of the water supply, treatment and distribution enterprise of the
District, through the delivery of an Installment Sale Agreement, dated as of December 1, 1993,
between the Authority and the District, in the principal amount of $8,070,000 (the "1993
Installment Sale Agreement"); and
WHEREAS, the 1993 Bonds and the 1993 Installment Sale Agreement are referred to
herein as the "1993 District Obligations"; and
WHEREAS, the Authority issued its revenue bonds in an aggregate original principal
amount of $16,960,000 (the "1993 Authority Bonds") under the provisions of Article 4
(commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code
of the State of California (the "Act"), which are payable from payments to be made by the
District under the 1993 District Obligations; and
WHEREAS, the District has determined to refund the 1993 District Obligations through
the issuance of its refunding revenue bonds (the "2003 District Refunding Bonds"), which will
cause the 1993 Authority Bonds to be refunded; and
WHEREAS, the Board of Directors (the "Board") of the Authority has duly considered
such transactions and wishes at this time to approve said transactions in the public interests of
the Authority;
NOW, THEREFORE, BE IT RESOLVED, by the Board of Directors of the Encinitas
Public Financing Authority as follows:
Section 1. Findings and Determinations. The Authority hereby determines to refund
its 1993 Authority Bonds on or after October 1, 2003, from the proceeds of the 2003 District
Refunding Bonds.
Section 2. Refunding of 1993 Bonds; Notice of Redemption; Approval of Escrow
Agreement. The Board hereby authorizes the refunding of the 1993 Authority Bonds, and
authorizes the City Public Works Director ("Director") or the City Finance Manager ("Finance
Manager") to direct the Trustee for the Authority's 1993 Bonds to give revocable notice to the
holders of the Authority's 1993 Bonds that such Bonds will be redeemed in full on or after
October 1, 2003, and authorizes the execution and delivery of that certain Escrow Deposit and
Trust Agreement (the "Escrow Agreement"), dated as of September 1, 2003, by and among the
District, the Authority and U.S. Bank National Association, as successor to State Street Bank
and Trust Company, in substantially the form on file with the City Clerk, together with any
changes therein or additions thereto deemed advisable by the Director or Finance Manager,
whose execution thereof shall be conclusive evidence of such approval. The Director and/or
Finance Manager are hereby authorized and directed for and in the name and on behalf of the
Authority and District to execute, and the City Clerk is hereby authorized and directed to attest,
the final form of the Escrow Agreement.
Section 3. Effective Date. This Resolution shall take effect from and after the date of its
passage and adoption.
Adopted and Approved this 27th day of August, 2003.
I, Deborah Cervone, City Clerk of the City o~--Em~nitas, and acting as Secretary of the
Encinitas Public Financing Authority, do hereby certify that the foregoing Resolution was
passed at a regular meeting of the Board of Directors of the Encin/tas Public Financing
Authority held on this 27th day of August, 2003 by the following roll call vote:
AYES: Bond, Dalager, Guerin, Houlihan, Stocks
NOES: None
ABSENT: None
ABSTAINED: None
ATTEST:; _~d-~,~
Secretary of the
Encinitas Public Financing
Authority
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29215-02 JH:WHM 8/1/03
ESCROW DEPOSIT AND TRUST AGREEMENT
by and between the
ENCINITAS PUBLIC FINANCING AUTHORITY
SAN DIEGUITO WATER DISTRICT
and
U.S. BANK NATIONAL ASSOCIATION
as Escrow Bank
Dated as of September 1, 2003
Relating to the refunding and defeasance of the
$16,960,000 Original Principal Amount of
Encinitas Public Financing Authority 1993 Water Revenue Bonds,
Series A (San Dieguito Water Distric0
TABLE OF CONTENTS
Section 1. Appointment of Escrow Bank ................................................................................ 2
Section 2. Establishment of Escrow Fund ............................................................................... 2
Section 3. Deposit into Escrow Fund ...................................................................................... 2
Section 4. Investment of Deposit in Escrow Fund .................................................................... 2
Section 5. Instructions as to Application of Deposit ............................................................... 2
Section 6. Remaining Moneys ............................................................................................... 3
Section 7. Substitution of Federal Securities ......................................................................... 3
Section 8. Notice of Redemption ........................................................................................... 3
Section 9. Application of Certain Terms of the 1993 Indenture ............................................... 3
Section 10. Compensation to Escrow Bank ............................................................................... 3
Section 11. Protection of Escrow Bank ..................................................................................... 3
Section 12. Notices ................................................................................................................ 3
Section 13. California Law .................................................................................................... 4
Section 14. Severability ........................................................................................................ 4
Section 15. Execution in Counterpart ....................................................................................... 4
EXHIBIT A SCHEDULE OF ESCROWED FEDERAL SECURITIES
EXHIBIT B REDEMPTION SCHEDULE OF 1993 BONDS
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ESCROW DEPOSIT AND TRUST AGREEMENT
This Escrow Deposit and Trust Agreement is made and entered into as of this 1st day
of September, 2003, by and between the ENCINITAS PUBLIC FINANCING AUTHORITY, a
joint exercise of powers authority duly organized and existing under the laws of the State of
California (the "Authority"), the SAN DIEGUITO WATER DISTRICT, an irrigation district
duly organized and existing under the laws of the State of California (the "District") and U.S.
BANK NATIONAL ASSOCIATION, a national banking association organized and existing
under the laws of the United States of America, having a corporate trust office in the City of
_, California, as successor to State Street Bank and Trust Company of
California, N.A. (the "Escrow Bank");
WlTNESSETH:
WHEREAS, the District issued its 1993 Water Reven~e Refunding Bonds in an aggregate
principal amount of $8,890~000 (the "1993 Bonds"), for the purpose of refunding its 1986
Refunding Revenue Bonds~ issued in the original principal amount of $10,970~000: and
WHEREAS, in addition to the issuance of its 1993 Bonds, the District financed the
acquisition and construction of its share of the improvements to the R.E~ Badger Filtration
Plant, which constitutes a part of the water supply, treatment and distribution enterprise of the
District (the "Water System"), through the delivery of an Installment Sale Agreement~ dated as
of December 1, 1993, between the Encinitas Public Financing Authority (the "Authority") and
the District, in the principal amount of $8,070,000 (the "1993 Installment Sale Agreement"):
and
WHEREAS, the 1993 Bonds and the 1993 Installment Sale Agreement are referred to
herein as the ~ 1993 Obligations"; and
WHEREAS, in order to achieve a more efficient borrowing incurred by the District under
the 1993 Obligations, the Authority issued its 1993 Water Revenue Bonds, Series A (San
Dieguito Water District) in the principal amount of $16~960,000 (the "1993 Authority Bonds"),
the proceeds of which were applied to fund the 1993 Obligations:
WHEREAS, interest rates have declined since the 1993 Obligations were issued, and the
District will receive economic benefit by refunding the 1993 Obligations: and
WHEREAS, the refunding and defeasance of the 1993 Obligations will refund the 1993
Authority Bonds; and
WHEREAS, the District has entered into an Indenture of Trust, dated as of September 1,
2003, by and between Union Bank of California, N.A., acting as Trustee, and the District (the
"2003 Trust Indenture") pursuant to which $. principal amount of refunding revenue
bonds will be issued (the "2003 Bonds"); and
WHEREAS, the District and the Authority propose to make a deposit of moneys and
Federal Securities from the proceeds of the 2003 Bonds and other sources (as specified in
Section 3), and to appoint the Escrow Bank as their agent for the purpose of applying said
deposit to the payment and redemption of the 1993 Bonds in accordance with the 1993
Indenture, and the Escrow Bank desires to accept said appointment: and
WHEREAS, the Escrow Bank has full powers to act with respect to the irrevocable
escrow created herein and to perform the duties and obligations to be undertaken pursuant to
this Escrow Deposit and Trust Agreement:
NOW, THEREFORE, in consideration of the above premises and of the mutual promises
and covenants herein contained, the parties hereto DO HEREBY AGREE as follows:
Section 1. Appointment of Escrow Bank. The Authority and the District hereby
appoint the Escrow Bank as escrow holder for all purposes of this Escrow Deposit and Trust
Agreement, and the Escrow Bank hereby accepts such appointment.
Section 2. Establishment of Escrow Fund. There is hereby created by the Authority
with, and to be held by, the Escrow Bank, as security for the payment of the redemption price
of the 1993 Bonds, an irrevocable escrow, to be held in trust by the Escrow Bank on behalf of
the Authority and for the benefit of the owners of the 1993 Bonds, said escrow to be designated
the "Encinitas Public Financing Authority 1993 Refunding Escrow Fund" (the "Escrow Fund").
All moneys and Federal Securities in the Escrow Fund are hereby irrevocably transferred to the
Escrow Bank, as security for payment of the redemption price of the 1993 Bonds, to be held by
the Escrow Bank in trust for the benefit of the owners of the 1993 Bonds, except as specified in
Section 7 hereof. If at any time the Escrow Bank shall receive actual knowledge that the moneys
and Federal Securities in the Escrow Fund will not be sufficient to make the payment required
by Section 5 hereof, the Escrow Bank shall notify the Authority of such fact, and the Authority
shall immediately cure such deficiency.
Section 3. Deposit into Escrow Fund. Concurrently with the delivery of the 2003
Bonds, the District shall cause to be transferred to the Escrow Bank for deposit in the Escrow
Fund the amount of $. in immediately available funds, which shall be derived
from the proceeds of sale of the 2003 Bonds. In addition, the Authority hereby directs the
Escrow Bank, as Trustee for the 1993 Bonds, to transfer to the Escrow Fund the following
amounts, from the following sources: (a) $ shall be derived from amounts on
deposit in the Reserve Account established for the 1993 Bonds; (b) $ shall be
derived from amounts on deposit in the Interest Account established for the 1993 Bonds [; and
(c) $ ...... shall be derived from a deposit made by (the "Provider"),
pursuant to the terms of the Reserve Fund Forward Delivery Agreement, dated September __,
2003, between the Trustee, the District and the Provider].
Section 4. Investment of Deposit in Escrow Fund. The Escrow Bank shall (a) invest
$ of the moneys deposited into the Escrow Fund pursuant to the preceding
section in the Federal Securities set forth in Exhibit attached hereto and by this reference
incorporated herein (the "Escrowed Federal Securities"), and (b) shall hold the remaining
$ in cash uninvested. The Escrowed Federal Securities and said cash shall be
deposited with and held by the Escrow Bank in the Escrow Fund solely for the uses and
purposes set forth herein.
Section 5. Instructions as to Application of Deposit. The Authority hereby instructs
the Escrow Bank as its agent to apply the moneys and Escrowed Federal Securities deposited in
the Escrow Fund pursuant to Section 3 hereof to pay the redemption price of all outstanding
1993 Bonds on ,2003, including premium and accrued interest; all pursuant to
and in accordance with the provisions of the 1993 Indenture and in the amounts set forth in
Exhibit B attached hereto and by this reference incorporated herein.
Section 6. Remaining Moneys. Any moneys remaining in any of the funds and
accounts created under the 1993 Indenture shall, after redemption in full of the 1993 Bonds, be
paid to the District.
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Section 7. Substitution of Federal Securities, The Authority may at any time direct the
Escrow Bank to substitute Federal Securities then issued by the United States of America for
any or all of the Federal Securities then deposited in the Escrow Fund, provided that any such
direction and substitution shall be accompanied with a certification of an independent certified
public accountant or firm of certified public accountants of favorable national reputation
experienced in the refunding of obligations of political subdivisions that the Federal Securities
then to be so deposited in the Escrow Fund, together with interest to be derived therefrom, shall
be in an amount at all times at least sufficient to make the payments specified in Section 5
hereof and, further, to be accompanied with an opinion of nationally recognized bond counsel
that the substitution will not affect, for federal income tax purposes, the exclusion from gross
income for purposes of federal income taxes of the interest payable with respect to the 2003
Bonds or payable with respect to the 1993 Bonds. In the event that, following any such
substitution of Federal Securities pursuant to this Section 7, there is an amount of moneys or
Federal Securities in excess of an amount sufficient to make the payments required by Section 5
hereof, such excess shall be paid to the Authority.
Section 8. Notice of Redemption. The Authority has instructed the Escrow Bank to
take all steps required to redeem all outstanding 1993 Bonds on ......... 2003 (the
"Redemption Date"), at a redemption price equal to the principal amount thereof, together with
accrued interest represented thereby to the redemption date, plus the premium required by
Section 4.01 (b) of the 1993 Indenture.
Section 9. Application of Certain Terms of the 1993 Indenture. All of the terms of the
1993 Indenture regarding the making of payments of principal, premium, and interest on the
1993 Bonds are incorporated in this Escrow Deposit and Trust Agreement as if set forth in full
herein. Provisions of the 1993 Indenture relating to the resignation and removal of a trustee
shall be the procedure to be followed with respect to any resignation or removal of the Escrow
Bank hereunder.
Section 10. Compensation to Escrow Bank. The Escrow Bank hereby acknowledges
that it has received on the date hereof full compensation for its duties under this Escrow
Deposit and Trust Agreement representing its administration fees, except that the Authority
shall indemnify and hold harmless the Escrow Bank for out-of-pocket costs such as mailing
costs, redemption expenses, legal fees and other costs and expenses relating hereto and, in
addition, fees, costs and expenses relating to the purchase of any Federal Securities, but under
no circumstances shall amounts deposited in the Escrow Fund be deemed to be available for
said purposes.
Section 11. Protection of Escrow Bank. Provisions of the 1993 Indenture relating to the
protection, liability and indemnification of the 1993 Trustee shall apply to the Escrow Bank.
Section 12. Notices. All written notices to be given under this Escrow Deposit and
Trust Agreement shall be given by mail to the party entitled thereto at its address set forth
below, or at such address as the party may provide to the other parties in writing from time to
time.
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If to the Authority: Encinitas Public Financing Authority
505 South Vulcan Avenue
Encinitas, CA 92024
Attention: Executive Director
If to the District: San Dieguito Water District
505 South Vulcan Avenue
Encinitas, CA 92024
Attention: District Manager
If to Escrow Bank: U.S. Bank National Association
[to come]
Attention: Corporate Trust Department
Section 13. California Law. This Escrow Deposit and Trust Agreement shall be
construed and governed in accordance with the laws of the State of California.
Section 14. Severability. Any provision of this Escrow Deposit and Trust Agreement
found to be prohibited by law shall be ineffective only to the extent of such prohibition, and
shall not invalidate the remainder of this Escrow Deposit and Trust Agreement.
Section 15. Execution in Counterpart. This Escrow Deposit and Trust Agreement may
be executed in counterparts and each of said counterparts shall be deemed an original for all
purposes of this Escrow Deposit and Trust Agreement. All of such counterparts taken together
shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the Escrow Bank, the Authority have each caused this Escrow
Deposit and Trust Agreement to be executed by their duly authorized officers all as of the date
first above written.
ENCINITAS PUBLIC FINANCING
AUTHORITY
By:.
Executive Director
SAN DIEGUITO WATER DISTRICT
By:
District Manager
U.S. BANK NATIONAL ASSOCIATION,
as Escrow Bank
By:
Authorized Officer
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EXHIBIT A
SCHEDULE OF ESCROWED FEDERAL SECURITIES
Interest Principal
Type Maturity Date Rate Amount
Exhibit A
Page 1
EXHIBIT B
PAYMENT AND REDEMPTION SCHEDULE OF 1993 BONDS
Payment Redemption Total
Date Principal Premium Interest Payment
Exhibit B
Page 1