The URL can be used to link to this page

Home My WebLink About2020-02-12 e-packet@7:00Wednesday, February 12, 2020 7:00 PM City of South San Francisco P.O. Box 711 South San Francisco, CA Municipal Services Building, Council Chambers 33 Arroyo Drive, South San Francisco, CA City Council Regular Meeting Agenda February 12, 2020City Council Regular Meeting Agenda PEOPLE OF SOUTH SAN FRANCISCO You are invited to offer your suggestions. In order that you may know our method of conducting Council business, we proceed as follows: The regular meetings of the City Council are held on the second and fourth Wednesday of each month at 7:00 p.m. in the Municipal Services Building, Council Chambers, 33 Arroyo Drive, South San Francisco, California. The City Clerk will read successively the items of business appearing on the Agenda. As she completes reading an item, it will be ready for Council action. RICHARD A. GARBARINO, Mayor MARK ADDIEGO, Vice Mayor MARK NAGALES, Councilmember BUENAFLOR NICOLAS, Councilmember KARYL MATSUMOTO, Councilmember FRANK RISSO, City Treasurer ROSA GOVEA ACOSTA, City Clerk MIKE FUTRELL, City Manager SKY WOODRUFF, City Attorney PLEASE SILENCE CELL PHONES AND PAGERS HEARING ASSISTANCE EQUIPMENT AVAILABLE FOR USE BY THE HEARING IMPAIRED AT CITY COUNCIL MEETINGS In accordance with California Government Code Section 54957.5, any writing or document that is a public record, relates to an open session agenda item, and is distributed less than 72 hours prior to a regular meeting will be made available for public inspection in the City Clerk’s Office located at City Hall. If, however, the document or writing is not distributed until the regular meeting to which it relates, then the document or writing will be made available to the public at the location of the meeting, as listed on this agenda. The address of City Hall is 400 Grand Avenue, South San Francisco, California 94080. Page 2 City of South San Francisco Printed on 5/5/2020 February 12, 2020City Council Regular Meeting Agenda CALL TO ORDER ROLL CALL PLEDGE OF ALLEGIANCE AGENDA REVIEW ANNOUNCEMENTS FROM STAFF PRESENTATIONS Presentation of a Certificate of Recognition to the City of South San Francisco-San Bruno Water Quality Control Plant for being named Plant of the Year - Medium as part of the California Water Environment Association Awards Program. (Richard Garbarino, Mayor) 1. Presentation of a proclamation recognizing and celebrating the Centennial of the 19th Amendment to the U.S. Constitution and the 100th Anniversary of the League of Women Voters and their historic role in the Women Suffrage Movement. (Richard Garbarino, Mayor) 2. PUBLIC COMMENTS For those wishing to address the City Council on any Agenda or non-agendized item, please complete a Speaker Card located at the entrance to the Council Chamber’s and submit it to the City Clerk. Please be sure to indicate the Agenda Item # you wish to address or the topic of your public comment. California law prevents the City Council from taking action on any item not on the Agenda (except in emergency circumstances). Your question or problem may be referred to staff for investigation and/or action where appropriate or the matter may be placed on a future Agenda for more comprehensive action or a report. When your name is called, please come to the podium, state your name and address (optional) for the Minutes. COMMENTS ARE LIMITED TO THREE (3) MINUTES PER SPEAKER. Thank you for your cooperation. COUNCIL COMMENTS/REQUESTS CONSENT CALENDAR Motion to approve the Minutes for the meetings of November 25, 2019, December 3, 2019, December 11, 2019 and December 20, 2019. (Rosa Govea Acosta, City Clerk) 3. Page 3 City of South San Francisco Printed on 5/5/2020 February 12, 2020City Council Regular Meeting Agenda Report regarding a Resolution declaring the City-owned real property located at 109 Longford Drive (APN 010-071-050) to be surplus, and authorizing the City Manager to initiate the process of disposing of the property pursuant to the Surplus Land Act and marketing of the property for sale at a market rate price if the City does not negotiate the sale of the property to a preferred buyer under the Surplus Land Act. (Deanna Talavera, Management Analyst) 4. Resolution declaring the City-owned real property located at 109 Longford Drive (APN 010-071-050) to be surplus, and authorizing the City Manager to initiate the process of disposing of the property pursuant to the Surplus Land Act and marketing of the property for sale at a market rate price if the City does not negotiate the sale of the property to a preferred buyer under the Surplus Land Act. 4a. PUBLIC HEARING Report regarding approval by the City of South San Francisco of the issuance by the City of South San Francisco Public Facilities Financing Authority of its Lease Revenue Bonds, Series 2020A. (Janet Salisbury, Director of Finance) 5. Resolution of the City of South San Francisco Authorizing the Execution and Delivery of a Ground Lease, Lease Agreement, Indenture, Continuing Disclosure Agreement and Bond Purchase Agreement in Connection with the Issuance of the City of South San Francisco Public Facilities Financing Authority (Police Station Project) Lease Revenue Bonds, Series 2020A, Approving the Issuance of Such Bonds in an Aggregate Principal Amount of Not to Exceed $65,000,000 Authorizing the Distribution of an Official Statement in Connection with the Offering and Sale of such Bonds and Authorizing the Execution of Necessary Documents and Certificates and Related Actions. 5a. Report regarding an Ordinance approving the First Amendment to the Second Amended and Restated Development Agreement to the Gateway Business Park Master Plan Project between the City of South San Francisco and BMR-700 Gateway LP, BMR-750, 800, 850 Gateway LP, BMR-900 Gateway LP, and BMR-1000 Gateway LP to make minor modifications to the previously approved Development Agreement, and determining that no subsequent environmental document is necessary pursuant to the criteria of Section 15162 of the California Environmental Quality Act Guidelines. (Billy Gross, Senior Planner) 6. Page 4 City of South San Francisco Printed on 5/5/2020 February 12, 2020City Council Regular Meeting Agenda Ordinance adopting a First Amendment to the Second Amended and Restated Development Agreement (DAA19-0003) to the Gateway Business Park Master Plan Project between the City of South San Francisco and between BMR-700 Gateway LP, BMR-750, 800, 850 Gateway LP, BMR-900 Gateway LP, and BMR-1000 Gateway LP to make minor modifications to amend provisions relating to childcare facilities within the development. 6a. Report regarding consideration of a Development Agreement, a Relocation Agreement, and Sign Permit to allow the installation of a 80 foot tall, double-faced, digital billboard on property located at 345 Shaw Road, and determining that the 2015 IS/MND continues to serve as the applicable environmental review document pursuant to CEQA. (Billy Gross, Senior Planner) 7. ITEMS FROM COUNCIL – COMMITTEE REPORTS AND ANNOUNCEMENTS CLOSED SESSION Conference with Legal Counsel - Anticipated Litigation (Pursuant to Government Code section 54956.9(d)(2)) Significant Exposure to Litigation: One Potential Case (Sky Woodruff, City Attorney and Christina Fernandez, Assistant to the City Manager) 8. Closed Session: Conference with Legal Counsel - Existing Litigation (Paragraph (1) of subdivision (d) of Government Code Section 54956.9) Name of Case: Kashiwa Fudosan America, Inc. v. City of South San Francisco Case Number: 18-CIV-01728 9. CONFERENCE WITH LABOR NEGOTIATORS Agency designated representatives: Leah Lockhart, Human Resources Director, Donna Williamson, Liebert Cassidy Whitmore Employee organization: AFSCME, Local 829; Confidential Unit - Teamsters Local 856; International Union of Operating Engineers, Local 39; and Mid-management Unit - Teamsters Local 856; IAFF Local 1507 10. ADJOURNMENT Page 5 City of South San Francisco Printed on 5/5/2020 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-59 Agenda Date:2/12/2020 Version:1 Item #:1. Presentation of a Certificate of Recognition to the City of South San Francisco-San Bruno Water Quality Control Plant for being named Plant of the Year - Medium as part of the California Water Environment Association Awards Program. (Richard Garbarino, Mayor) City of South San Francisco Printed on 2/12/2020Page 1 of 1 powered by Legistar™ CITY OF SOUTH SAN FRANCISCO Certificate of Recognition City of South San Francisco-San Bruno Water Quality Control Plant Mayor Richard Garbarino and the City Council of South San Francisco do hereby congratulate the City of South San Francisco-San Bruno Water Quality Control Plant for being named Plant of the Year—Medium as part of the California Water Environmental Association Awards Program. Presented on this 12th day of February, 2020, by the City Council of South San Francisco. Richard Garbarino, Mayor Mark Addiego Vice Mayor Karyl Matsumoto, Councilmember Mark Nagales, Councilmember Buenaflor Nicolas, Councilmember City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-32 Agenda Date:2/12/2020 Version:1 Item #:2. Presentation of a proclamation recognizing and celebrating the Centennial of the 19 th Amendment to the U.S. Constitution and the 100th Anniversary of the League of Women Voters and their historic role in the Women Suffrage Movement. (Richard Garbarino, Mayor) City of South San Francisco Printed on 2/6/2020Page 1 of 1 powered by Legistar™ Dated: February 12, 2020 CITY OF SOUTH SAN FRANCISCO JOINS THE LEAGUE OF WOMEN VOTERS IN CELEBRATING THE CENTENNIAL OF THE 19TH AMENDMENT February 12, 2020 WHEREAS, during the historic year 2020, the League of Women Voters commemorate the 100th anniversary of the adoption of the 19th Amendment as part of the U.S. Constitution, which secured for women the right to vote; and WHEREAS, the League of Women Voters of North & Central San Mateo County joins more than 700 other local and state chapters of the League of Women Voters to celebrate this historic milestone; and WHEREAS, on February 14, 1920, the League of Women Voters was founded to prepare for the implementation of the 19th Amendment; and WHEREAS, Carrie Chapman Catt, founder of the League of Women Voters and the International Alliance of Women as well as the president of the National American Woman Suffrage Association, “led an army of voteless women in 1919 to pressure Congress to pass the constitutional amendment giving them the right to vote and convinced state legislatures to ratify it in 1920;” and WHEREAS, the members of the League of Women Voters across the North & Central San Mateo County continue to recruit and invite members and activists who share the League’s commitment to “Making Democracy Work;” and WHEREAS, the League of Women Voters historic commitment to register, educate, and mobilize voters is not only stronger, but more effective than ever, utilizing such tools as VOTE411.org – a cutting-edge election information website used by millions of voters each election cycle; and WHEREAS, the City of South San Francisco joins the League of Women Voters of North & Central San Mateo County in recognizing that the right to vote by every citizen across the country is vital to making changes in our political system, that access to voting is essential, and supporting millions of informed voters regardless of formal party affiliation guarantees and empowers a government defined by the first three words of the U.S. Constitution: “We The People.” NOW, THEREFORE, BE IT RESOLVED that Mayor Richard Garbarino and the City Council of the City of South San Francisco celebrates with the League of Women Voters of North & Central San Mateo County the historic occasion of the Centennial of the 19th Amendment and Women’s Suffrage. ________________________________ Richard Garbarino, Mayor ________________________________ Mark Addiego, Vice Mayor ________________________________ Karyl Matsumoto, Councilmember ________________________________ Mark Nagales, Councilmember ________________________________ Buenaflor Nicolas, Councilmember City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-35 Agenda Date:2/12/2020 Version:1 Item #:3. Motion to approve the Minutes for the meetings of November 25, 2019, December 3, 2019, December 11, 2019 and December 20, 2019. (Rosa Govea Acosta, City Clerk) City of South San Francisco Printed on 5/4/2020Page 1 of 1 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-64 Agenda Date:2/12/2020 Version:1 Item #:4. Report regarding a Resolution declaring the City-owned real property located at 109 Longford Drive (APN 010 -071-050)to be surplus,and authorizing the City Manager to initiate the process of disposing of the property pursuant to the Surplus Land Act and marketing of the property for sale at a market rate price if the City does not negotiate the sale of the property to a preferred buyer under the Surplus Land Act.(Deanna Talavera, Management Analyst) RECOMMENDATION Staff recommends that the City Council adopt a Resolution declaring the City-owned real property located at 109 Longford Drive (APN 010-071-050)to be surplus,and authorizing the City Manager to initiate the process of disposing of the property pursuant to the Surplus Land Act and marketing of the property for sale at a market rate price if the City does not negotiate the sale of the property to a preferred buyer under the Surplus Land Act. BACKGROUND/DISCUSSION The three-bedroom,one-bath single family home located on the parcel at 109 Longford (collectively,the “Property”)was purchased by the City in 1998 for $207,000 for the purpose of reducing blight.The City rehabilitated the Property in 2009 using a wide array of green building techniques,such as solar panels,tank- less water heaters,and recyclable insulation.Since then it has been used as a model “green”home to educate contractors,students,and homeowners.While the Property has served as an educational tool for the City,the home’s technology is no longer cutting-edge and is now obsolete as a model “green”home.The property is vacant. The Property was purchased using funds from the City’s General Fund and rehabilitated using funds from the City’s Low and Moderate Income Housing Fund (former Redevelopment Agency housing funds).Following the dissolution of its Redevelopment Agency,the City as the Housing Successor Agency to the former Redevelopment Agency adopted a Housing Investment Plan (HIP)to categorize the use and/or disposition of remaining housing assets.The Property at 109 Longford Drive was identified in the HIP as a property to sell at market rate. Its estimated value is just over $900,000. In order to proceed with the sale of the Property in accordance with the HIP,the City,as a public agency,must first declare the Property surplus and comply with requirements under the California Surplus Land Act. California Surplus Land Act The City will follow the Surplus Land Act (Cal.Gov’t Code §§52240-55259)in disposing of the Property,as it is no longer needed for City purposes.The disposal process under the Surplus Land Act requires the City to notify certain entities,including housing sponsors,school districts,and parks district (collectively “Preferred Buyers”)of the availability of the surplus Property,and wait at least 60 days for a Preferred Buyer to notify the City of an interest to negotiate the purchase of the Property.If a Preferred Buyer notifies the City of its intention to purchase,the City is obligated to negotiate with said entity for a minimum of 90 days.If the City does not reach agreement with a Preferred Buyer, the City may sell the property to any other entity. City of South San Francisco Printed on 2/7/2020Page 1 of 2 powered by Legistar™ File #:20-64 Agenda Date:2/12/2020 Version:1 Item #:4. Disposition Process The City’s goal is to maximize the sale proceeds from the sale of 109 Longford and it is to the City’s advantage to begin the Surplus Land Act process in order to gauge the interest and the true value of the property.Under the Surplus Land Act,City staff will notify Preferred Buyers of the availability of the property,and if the City receives a response from a Preferred Buyer,the City will engage in the required 90-days of good faith negotiations with Preferred Buyers.City staff will present offers and negotiated terms from Preferred Buyers to the City Council for consideration. If the City does not receive notice from any Preferred Buyers,or cannot reach a deal,then staff would proceed with placing the Property on the open market. The table below identifies the anticipated timeline: Sale Process Designate 109 Longford Drive as Surplus Property: February 12, 2020 60-day Notice to Preferred Buyers: February 2020-April 2020 90-day Negotiation with Preferred Buyers (if triggered): April 2020-July 2020 Place Property on the Open Market (if needed): August 2020 Select Buyer: September 2020 Close Escrow: October 2020 FISCAL IMPACT Staff estimates that the Property,if sold at market rate,will generate roughly $900,000 in sale proceeds,which would be split between the General Fund and the City’s Housing Trust Fund,as funds for the Property’s acquisition and rehabilitation came from both of these funding sources. CONCLUSION In conclusion,it is recommended that the City Council adopt a Resolution declaring the City-owned real property located at 109 Longford Drive (APN 010-071-050)to be surplus,and authorizing the City Manager to initiate the process of disposing of the property pursuant to the Surplus Land Act and marketing of the property for sale at a market rate price if the City does not negotiate the sale of the property to a preferred buyer under the Surplus Land Act. Attachments: 1.Property Profile and Map City of South San Francisco Printed on 2/7/2020Page 2 of 2 powered by Legistar™ Property Profile 109 Longford Drive, South San Francisco Facts and Features Type Lot Size Single Family 4,486 sqft Year Built Bedrooms 1952 3 Parking Bathrooms 1 Space, Attached Garage 1 Living Sqft Neighborhood 1,030 sqft West Winston Manor Air Conditioning Type Water Heater Central Tankless Zoning Code Acres R10006 0.1033 APN # County 010-071-050 San Mateo City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-93 Agenda Date:2/12/2020 Version:1 Item #:4a. Resolution declaring the City-owned real property located at 109 Longford Drive (APN 010-071-050)to be surplus,and authorizing the City Manager to initiate the process of disposing of the property pursuant to the Surplus Land Act and marketing of the property for sale at a market rate price if the City does not negotiate the sale of the property to a preferred buyer under the Surplus Land Act. WHEREAS,the City of South San Francisco (“City”)owns certain real property located in the City of South San Francisco at 109 Longford Drive,referred to as Assessor’s Parcel Number 010-071-050 (the “Property”); and WHEREAS,the City is authorized to sell,lease,or otherwise dispose of real property if it is no longer required for the purposes of the City; and WHEREAS, the City has determined that the Property is unnecessary for any use by the City; and WHEREAS, the City desires to dispose of the Property; and WHEREAS,pursuant to the Surplus Lands Act,Government Code sections 54220 et seq.,prior to the disposing of any surplus real property,the City must send a written offer to sell or lease the property for certain specific uses to local public entities and certain private parties. NOW THEREFORE, BE IT RESOLVED, by the City Council of the City of South San Francisco: 1. The foregoing recitals are true, correct, and incorporated herein by reference. 2. The City Council of the City of South San Francisco declares the Property to be surplus. 3.The City Manager,or his designee,is authorized and directed to take any action and to execute and deliver any and all documents that he may deem necessary or advisable in order to comply with the Surplus Lands Act and market the Property for sale. 4. This resolution shall take effect immediately upon adoption. ***** City of South San Francisco Printed on 5/4/2020Page 1 of 1 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-101 Agenda Date:2/12/2020 Version:1 Item #:5. Report regarding approval by the City of South San Francisco of the issuance by the City of South San Francisco Public Facilities Financing Authority of its Lease Revenue Bonds,Series 2020A.(Janet Salisbury, Director of Finance) RECOMMENDATION Staff recommends that the City Council of the City of South San Francisco adopt the following resolution: Resolution approving execution and delivery of a Ground Lease,Lease Agreement,Indenture, Continuing Disclosure Agreement and Bond Purchase Agreement in connection with the issuance of the City of South San Francisco Public Facilities Financing Authority Lease Revenue Bonds and authorizing the distribution of an Official Statement in connection therewith. BACKGROUND/DISCUSSION General.This item relates to the issuance of lease revenue bonds by the City of South San Francisco Public Facilities Financing Authority (the “Authority”)to finance certain costs of the first phase of the City of South San Francisco’s (the “City”)new main civic center campus project.In December 2019,the City and the Parking Authority of the City of South San Francisco approved a joint powers agreement,which created the Authority.The Authority is now duly formed and authorized to assist the City in the financing by issuing lease revenue bonds. The Lease Revenue Bonds,Series 2020A (the “2020A Bonds”)are being issued to finance certain costs of the first phase of the civic center campus project,consisting of a new police station facility.On the date of this meeting,the City Council has held a duly noticed public hearing relating to the issuance of the 2020A Bonds. Legal Structure.The Authority is the issuer of the proposed 2020A Bonds.In connection with the issuance of the 2020A Bonds,the City will enter into a Ground Lease with the Authority,pursuant to which the City will lease certain City-owned property (currently consisting of the Miller Parking Garage (excluding the commercial office space on the ground floor)and the Orange Memorial Park)(together,the “Leased Property”) to the Authority.Under a Lease Agreement,the Authority will lease the Leased Property back to the City. Under the Lease Agreement,the City will agree to make rental payments to the Authority for the beneficial use and occupancy of the Leased Property.Such rental amounts will be calculated to be sufficient in time and amount to pay the debt service payments on the 2020A Bonds.Pursuant to an Assignment Agreement,the Authority will assign certain rights under the Lease Agreement to The Bank of New York Mellon Trust Company,N.A.,as trustee (the “Trustee”)for the 2020A Bonds,including the right to receive the rental payments under the Lease Agreement. The 2020A Bonds will be issued pursuant to an Indenture of Trust to be entered into among the City,the Authority and the Trustee,which will govern certain key terms of the 2020A Bonds including,repayment dates, City of South San Francisco Printed on 2/7/2020Page 1 of 4 powered by Legistar™ File #:20-101 Agenda Date:2/12/2020 Version:1 Item #:5. redemption terms, interest rate and rights and remedies of 2020A Bond owners. The foregoing legal documents are drafted to allow for the issuance of additional series of bonds to finance subsequent phases of the civic center campus project and/or other City improvements.The issuance of additional bonds will be subject to City Council and Authority approval.In addition,the foregoing legal documents allow for the substitution of property in place of the Miller Parking Garage and the Orange Memorial Park as the Leased Property, subject to certain conditions. Disclosure Documents.Staff and the City’s financing team have prepared a Preliminary Official Statement in connection with the offering of the 2020A Bonds.The Preliminary Official Statement presents material information relating to the 2020A Bonds and the City’s finances and operations and will be used in the offering of the 2020A Bonds to potential investors. The United States Securities Exchange Commission has stated that elected officials have certain responsibilities under federal securities law.If City Council members during their review of the Preliminary Official Statement determine that it contains any material false statements or omissions of material information, they should bring this to the attention of City staff. To comply with federal securities law,the City will enter into a Continuing Disclosure Agreement in connection with the issuance of the 2020A Bonds.Under the Continuing Disclosure Agreement,the City will agree to annually provide certain financial information relating to the City and notices of certain enumerated events to the market.Such information will be provided through the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website. Documents.The form of the legal documents reference above related to the 2020A Bonds are attached to this Staff Report for reference. These documents will be executed as necessary as part of the issuance process. Financing Structure.Based on a preliminary pricing analysis reflecting market conditions as of January 31,2020 with a 50 basis point cushion,the 2020A Bonds have an estimated par amount of $45.6 million and will be issued at an estimated premium of approximately $10.3 million for total proceeds of approximately $54.9 million.Such proceeds will be used to fund $54.6 million in project costs and approximately $300,000 of issuance costs.The final maturity of the 2020A Bonds is June 1,2046.Certain estimates with respect to the financing are set forth below.Such figures are estimates and the final principal amount and interest cost for the 2020A Bonds will be determined on the actual sale date of the 2020A Bonds, which is currently scheduled for late February. The 2020A Bonds will be sold on a public offering basis (sale of bonds on the open market),by Stifel, Nicolaus &Company,Incorporated,as representative of Citigroup Global Markets,Inc.,and Raymond James &Associates,Inc.(together,the “Underwriters”)pursuant to a Bond Purchase Agreement among the Authority, the City and the Underwriters.The sale of the 2020A Bonds is expected to occur in late February with a closing/settlement in early March. The foregoing dates are subject to change depending on market conditions. Financing Team. The following firms serve on the financing team for the 2020A Bonds: Municipal Advisor: Sperry Capital Inc. Underwriters:Stifel,Nicolaus &Company,Incorporated (as representative),Citigroup Global Markets, Inc., and Raymond James & Associates, Inc. City of South San Francisco Printed on 2/7/2020Page 2 of 4 powered by Legistar™ File #:20-101 Agenda Date:2/12/2020 Version:1 Item #:5. Bond and Disclosure Counsel: Stradling Yocca Carlson & Rauth, a Professional Corporation Good Faith Estimates.The good faith estimates set forth below are provided with respect to the 2020A Bonds in accordance with California Government Code Section 5852.1.Such good faith estimates have been provided to the Authority and the City by Sperry Capital Inc.(the City’s “Municipal Advisor”)in consultation with Stifel, Nicolaus & Company, Incorporated. Principal Amount.Based on the City’s financing plan and current market conditions (and a 50 basis point cushion),the good faith estimate of the aggregate principal amount of the 2020A Bonds to be sold is $45.6 million (the “Estimated Principal Amount”),which excludes approximately $10.3 of net premium estimated to be generated.Net premium is generated when,on a net aggregate basis for a single issuance of bonds,the price paid for the 2020A Bonds is higher than the face value of such bonds. True Interest Cost of the 2020A Bonds.Assuming that the Estimated Principal Amount of the 2020A Bonds is sold,and based on market interest rates prevailing at the time of preparation of such estimate (and a 50 basis point cushion),its good faith estimate of the true interest cost of the 2020A Bonds,which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the 2020A Bonds, is 3.13%. Finance Charge of the 2020A Bonds.Assuming that the Estimated Principal Amount of the 2020A Bonds is sold,and based on market interest rates prevailing at the time of preparation of such estimate (and a 50 basis point cushion),its good faith estimate of the finance charge for the 2020A Bonds,which means the sum of all fees and charges paid to third parties (or costs associated with the 2020A Bonds), is $300,000. Amount of Proceeds to be Received.Assuming that the Estimated Principal Amount of the 2020A Bonds is sold,and based on market interest rates prevailing at the time of preparation of such estimate,its good faith estimate of the amount of proceeds expected to be received by the City for sale of the 2020A Bonds,less the finance charge of the 2020A Bonds,as estimated above,and any reserves or capitalized interest paid or funded with proceeds of the 2020A Bonds, is $54.8 million. Total Payment Amount.Assuming that the Estimated Principal Amount of the 2020A Bonds is sold,and based on market interest rates prevailing at the time of preparation of such estimate (and a 50 basis point cushion),its good faith estimate of the total payment amount,which means the sum total of all payments to be made to pay debt service on the 2020A Bonds,plus the finance charge for the 2020A Bonds,as described above,not paid with the proceeds of the 2020A Bonds,calculated to the final maturity of the 2020A Bonds,is $81.12 million. The foregoing estimates constitute good faith estimates only.The actual principal amount of the 2020A Bonds issued and sold,the true interest cost thereof,the finance charges thereof,the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a)the actual date of the sale of the 2020A Bonds being different than the date assumed for purposes of such estimates,(b)the actual principal amount of Bonds sold being different from the Estimated Principal Amount,(c)the actual amortization of the 2020A Bonds being different than the amortization assumed for purposes of such estimates,(d)the actual market interest rates at the time of sale of the 2020A Bonds being different than those estimated for purposes of such estimates,(e)other market conditions,or (f)alterations in the City’s financing plan,delays in the financing,additional legal work,or a combination of such factors and additional finance charges,if any,attributable thereto.The actual date of sale of the 2020A Bonds and the actual principal amount of 2020A Bonds sold will be determined by the City based on the timing of the need for proceeds of the 2020A Bonds and other factors.The actual interest rates borne by the 2020A Bonds will depend City of South San Francisco Printed on 2/7/2020Page 3 of 4 powered by Legistar™ File #:20-101 Agenda Date:2/12/2020 Version:1 Item #:5. proceeds of the 2020A Bonds and other factors.The actual interest rates borne by the 2020A Bonds will depend on market interest rates at the time of sale thereof.The actual amortization of the 2020A Bonds will also depend,in part,on market interest rates at the time of sale thereof.Market interest rates are affected by economic and other factors beyond the control of the Authority and the City. FISCAL IMPACT The 2020A Bonds are secured by rental payments to be made by the City to the Authority under the Lease Agreement.The current expectation is that the City will annually budget to pay such rental payments from the sales tax revenue generated by Measure W. RELATIONSHIP TO STRATEGIC PLAN The issuance of the 2020A Bonds are consistent with the City’s strategic priorities.This financing will bolster the City’s Public Safety as the new police facility,with its more optimal layout and technological upgrades,will allow the Police Department to provide better service to the City’s community. In addition,this financing has kept in mind the City’s priority of ensuring its financial stability.One key note is that the 2020A Bonds were rated AA+by Standard &Poor’s.As lease revenue bonds are one notch below the City’s general creditworthiness,the City’s issuer credit rating is assumed to be AAA (triple-A),the highest credit rating possible. In general, the higher credit ratings, the lower the interest costs. CONCLUSION The new Police Station facility is a necessary infrastructure project that has already been approved by the City Council of South San Francisco. The issuance of the 2020A Bonds is a critical step in financing the Police Station facility. Staff recommends that the City Council approve the resolution that will allow the issuance of the proposed Series 2020A Bonds. ATTACHMENTS: A.Form of Ground Lease B.Form of Lease Agreement C.Form of Indenture D.Form of Assignment Agreement E.Form of Bond Purchase Agreement F.Form of Official Statement G.Presentation to City Council City of South San Francisco Printed on 2/7/2020Page 4 of 4 powered by Legistar™ ATTACHMENT A – FORM OF GROUND LEASE Draft of 2/6/20 RECORDING REQUESTED BY: City of South San Francisco Public Facilities Financing Authority AND WHEN RECORDED RETURN TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Brian Forbath, Esq. [Space above for Recorder’s use.] This Ground Lease is recorded for the benefit of the City of South San Francisco and is exempt from California documentary transfer tax pursuant to Section 11928 of the California Revenue and Taxation Code and from recording fees pursuant to Sections 6103, 27383 and 27388.1 (a)(2)(D) and (d)(2) of the California Government Code. Lease term less than 35 years. GROUND LEASE by and between CITY OF SOUTH SAN FRANCISCO and CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY Dated as of March 1, 2020 Relating to $___________ CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (POLICE STATION PROJECT) LEASE REVENUE BONDS, SERIES 2020A GROUND LEASE THIS GROUND LEASE (this “Ground Lease”), executed and entered into as of March 1, 2020, is by and between the CITY OF SOUTH SAN FRANCISCO (the “City”), a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and laws of the State of California, as lessor, and the CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (the “Authority”), a joint exercise of powers entity duly organized and existing under the laws of the State of California, as lessee. WITNESSETH: WHEREAS, the City and the Authority desire to finance the costs of the acquisition, construction and/or installation of a new City police station and related improvements, facilities and equipment (the “Project”); WHEREAS, in order to finance the Project, the City will lease certain real property and the improvements located thereon (the “Property”) to the Authority pursuant to this Ground Lease, and the City will sublease the Property back from the Authority pursuant to a Lease Agreement, dated as of March 1, 2020 (the “Lease Agreement”); WHEREAS, the Property is more particularly described in Exhibit A hereto; WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide the funds necessary to finance the Project through the issuance by the Authority of bonds payable from the Base Rental Payments (as defined in the Lease Agreement) to be made by the City under the Lease Agreement; WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide for the issuance of such bonds payable from the Base Rental Payments pursuant to an Indenture, dated as of March 1, 2020 (the “Indenture”), by and among the Authority, the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”); WHEREAS, all rights to receive the Base Rental Payments have been assigned without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of March 1, 2020 (the “Assignment Agreement”) by and between the Authority and the Trustee; WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Ground Lease do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Ground Lease; NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties hereto agree as follows: 2 ARTICLE I DEFINITIONS Except as otherwise defined herein, or unless the context clearly otherwise requires, words and phrases defined in the Lease Agreement shall have the same meaning in this Ground Lease. ARTICLE II LEASE OF THE PROPERTY; RENTAL Section 2.01 Lease of Property. The City hereby leases to the Authority, and the Authority hereby leases from the City, for the benefit of the Owners of the Bonds, the Property, subject only to Permitted Encumbrances, to have and to hold for the term of this Ground Lease. Section 2.02 Rental. The Authority shall pay to the City as and for rental of the Property hereunder, the sum of $1.00, the receipt of which is hereby acknowledged, and shall enter into the Lease Agreement. ARTICLE III QUIET ENJOYMENT The parties intend that the Property will be leased back to the City pursuant to the Lease Agreement for the term thereof. It is further intended that, to the extent provided herein and in the Lease Agreement, if an event of default occurs under the Lease Agreement, the Authority, or its assignee, will have the right, for the then remaining term of this Ground Lease to (a) take possession of the Property, (b) if it deems it appropriate, cause an appraisal of the Property and a study of the then reasonable use thereof to be undertaken, and (c) relet the Property. Subject to any rights the City may have under the Lease Agreement (in the absence of an event of default) to possession and enjoyment of the Property, the City hereby covenants and agrees that it will not take any action to prevent the Authority from having quiet and peaceable possession and enjoyment of the Property during the term hereof and will, at the request of the Authority and at the City’s cost, to the extent that it may lawfully do so, join in any legal action in which the Authority asserts its right to such possession and enjoyment. ARTICLE IV SPECIAL COVENANTS AND PROVISIONS Section 4.01 Waste. The Authority agrees that at all times that it is in possession of the Property, it will not commit, suffer or permit any waste on the Property, and that it will not willfully or knowingly use or permit the use of the Property for any illegal purpose or act. Section 4.02 Further Assurances and Corrective Instruments. The City and the Authority agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Property hereby 3 leased or intended so to be or for carrying out the expressed intention of this Ground Lease, the Indenture and the Lease Agreement. Section 4.03 Waiver of Personal Liability. All liabilities under this Ground Lease on the part of the Authority shall be solely liabilities of the Authority as a joint exercise of powers entity, and the City hereby releases each and every director, officer and employee of the Authority of and from any personal or individual liability under this Ground Lease. No director, officer or employee of the Authority shall at any time or under any circumstances be individually or personally liable under this Ground Lease to the City or to any other party whomsoever for anything done or omitted to be done by the Authority hereunder. All liabilities under this Ground Lease on the part of the City shall be solely liabilities of the City as a public corporation, and the Authority hereby releases each and every member, officer and employee of the City of and from any personal or individual liability under this Ground Lease. No member, officer or employee of the City shall at any time or under any circumstances be individually or personally liable under this Ground Lease to the Authority or to any other party whomsoever for anything done or omitted to be done by the City hereunder. Section 4.04 Taxes. The City covenants and agrees to pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Property. Section 4.05 Right of Entry. The City reserves the right for any of its duly authorized representatives to enter upon the Property at any reasonable time to inspect the same. Section 4.06 Representations of the City. The City represents and warrants to the Authority and the Trustee as follows: (a) the City has the full power and authority to enter into, to execute and to deliver this Ground Lease, and to perform all of its duties and obligations hereunder, and has duly authorized the execution of this Ground Lease; (b) except for Permitted Encumbrances, the Property is not subject to any dedication, easement, right of way, reservation in patent, covenant, condition, restriction, lien or encumbrance which would prohibit or materially interfere with the use of the Property for governmental purposes as contemplated by the City; (c) all taxes, assessments or impositions of any kind with respect to the Property, except current taxes, have been paid in full; and (d) the Property is necessary to the City in order for the City to perform its governmental functions. Section 4.07 Representations of the Authority. The Authority represents and warrants to the City and the Trustee that the Authority has the full power and authority to enter into, to execute and to deliver this Ground Lease, and to perform all of its duties and obligations hereunder, and has duly authorized the execution and delivery of this Ground Lease. 4 ARTICLE V ASSIGNMENT, SUBLEASING, MORTGAGING AND SELLING Section 5.01 Assignment and Subleasing. This Ground Lease may be sold or assigned and the Property subleased, as a whole or in part, by the Authority without the necessity of obtaining the consent of the City, if an event of default occurs under the Lease Agreement. The Authority shall, within 30 days after such an assignment, sale or sublease, furnish or cause to be furnished to the City a true and correct copy of such assignment, sale or sublease, as the case may be. Section 5.02 Restrictions on City. The City agrees that, except with respect to Permitted Encumbrances, it will not mortgage, sell, encumber, assign, transfer or convey the Property or any portion thereof during the term of this Ground Lease. ARTICLE VI TERM; TERMINATION Section 6.01 Term. The term of this Ground Lease shall commence as of the date of issuance of the Series 2020A Bonds and shall remain in full force and effect from such date to and including June 1, 2046, unless such term is extended or sooner terminated as hereinafter provided. Section 6.02 Extension; Early Termination. If, on June 1, 2046, the Bonds shall not be fully paid, or provision therefor made in accordance with Article X of the Indenture, or the Indenture shall not be discharged by its terms, or if the Rental Payments payable under the Lease Agreement shall have been abated at any time, then the term of this Ground Lease shall be automatically extended until the date upon which all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, and the Indenture shall be discharged by its terms, except that the term of this Ground Lease shall in no event be extended beyond June 1, 2056. If, prior to June 1, 2046, all Bonds shall be fully paid, or provisions therefor made in accordance with Article X of the Indenture, and the Indenture shall be discharged by its terms, the term of this Ground Lease shall end simultaneously therewith. ARTICLE VII MISCELLANEOUS Section 7.01 Binding Effect. This Ground Lease shall inure to the benefit of and shall be binding upon the City, the Authority and their respective successors and assigns. Section 7.02 Severability. In the event any provision of this Ground Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 7.03 Amendments, Changes and Modifications. This Ground Lease may be amended, changed, modified, altered or terminated only in accordance with the provisions of the Lease Agreement. 5 Section 7.04 Assignment to Trustee. The Authority and City acknowledge that the Authority has assigned its right, title and interest in and to this Ground Lease (but none of its obligations and none of its rights to provide consents or approvals hereunder) to the Trustee pursuant to certain provisions of the Assignment Agreement. The City consents to such assignment. Section 7.05 Execution In Counterparts. This Ground Lease may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.06 Applicable Law. This Ground Lease shall be governed by and construed in accordance with the laws of the State of California. Section 7.07 Captions. The captions or headings in this Ground Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Ground Lease. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] S-1 IN WITNESS WHEREOF, the Authority and the City have caused this Ground Lease to be executed by their respective officers hereunto duly authorized, all as of the day and year first above written. CITY OF SOUTH SAN FRANCISCO By: Michael Futrell City Manager ATTEST: Rosa Govea Acosta City Clerk CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY By: Michael Futrell Executive Director ATTEST: Rosa Govea Acosta Secretary CERTIFICATE OF ACCEPTANCE This is to certify that the interest in the Property conveyed under the Ground Lease to the City of South San Francisco Public Facilities Financing Authority, a joint exercise of powers entity duly organized and existing under the laws of the State of California, is hereby accepted by the undersigned officer or agent on behalf of the Board of Directors of the City of South San Francisco Public Facilities Financing Authority, pursuant to authority conferred by resolution of the said Board of Directors adopted on February 12, 2020, and the grantee consents to recordation thereof by its duly authorized officer. Dated: March __, 2020 CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY By: Michael Futrell Executive Director A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN MATEO ) On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN MATEO ) On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC A-1 EXHIBIT A DESCRIPTION OF THE PROPERTY All that real property situated in the City of South San Francisco, County of San Mateo, State of California, described as follows: ATTACHMENT B – FORM OF LEASE AGREEMENT Draft of 2/6/20 LEASE AGREEMENT by and between CITY OF SOUTH SAN FRANCISCO and CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY Dated as of March 1, 2020 Relating to $_____________ CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (POLICE STATION PROJECT) LEASE REVENUE BONDS, SERIES 2020A TABLE OF CONTENTS Page i ARTICLE I DEFINITIONS Section 1.01 Definitions ................................................................................................................. 2 ARTICLE II LEASE OF PROPERTY; TERM Section 2.01 Lease of Property ....................................................................................................... 4 Section 2.02 Term; Occupancy ....................................................................................................... 4 ARTICLE III RENTAL PAYMENTS Section 3.01 Base Rental Payments ................................................................................................ 4 Section 3.02 Additional Rental Payments ...................................................................................... 5 Section 3.03 Fair Rental Value ....................................................................................................... 5 Section 3.04 Payment Provisions .................................................................................................... 6 Section 3.05 Appropriations Covenant ........................................................................................... 6 Section 3.06 Rental Abatement ...................................................................................................... 6 ARTICLE IV MAINTENANCE, ALTERATIONS AND ADDITIONS Section 4.01 Maintenance and Utilities .......................................................................................... 7 Section 4.02 Additions to Property ................................................................................................. 7 Section 4.03 Installation of City’s Equipment ................................................................................ 7 ARTICLE V INSURANCE Section 5.01 Commercial General Liability and Property Damage Insurance; Workers’ Compensation Insurance ............................................................................................ 7 Section 5.02 Title Insurance ........................................................................................................... 8 Section 5.03 Additional Insurance Provision; Form of Policies ..................................................... 9 Section 5.04 Self-Insurance ............................................................................................................ 9 ARTICLE VI DEFAULTS AND REMEDIES Section 6.01 Defaults and Remedies .............................................................................................. 9 Section 6.02 Waiver ...................................................................................................................... 12 ARTICLE VII EMINENT DOMAIN; PREPAYMENT Section 7.01 Eminent Domain ...................................................................................................... 13 Section 7.02 Prepayment .............................................................................................................. 13 TABLE OF CONTENTS (continued) Page ii ARTICLE VIII COVENANTS Section 8.01 Right of Entry .......................................................................................................... 14 Section 8.02 Liens......................................................................................................................... 14 Section 8.03 Quiet Enjoyment ...................................................................................................... 14 Section 8.04 Authority Not Liable ................................................................................................ 14 Section 8.05 Assignment and Subleasing ..................................................................................... 15 Section 8.06 Title to Property ....................................................................................................... 15 Section 8.07 Authority’s Purpose ................................................................................................. 16 Section 8.08 Representations of the City ...................................................................................... 16 Section 8.09 Representation of the Authority ............................................................................... 16 ARTICLE IX NO CONSEQUENTIAL DAMAGES; USE OF THE PROPERTY; SUBSTITUTION OR RELEASE Section 9.01 No Consequential Damages ..................................................................................... 16 Section 9.02 Use of the Property .................................................................................................. 16 Section 9.03 Substitution or Release of, or Addition to, the Property .......................................... 16 Section 9.04 Substitution of Project as Property .......................................................................... 17 ARTICLE X MISCELLANEOUS Section 10.01 Law Governing ........................................................................................................ 17 Section 10.02 Notices ..................................................................................................................... 17 Section 10.03 Validity and Severability ......................................................................................... 18 Section 10.04 Net-Net-Net Lease ................................................................................................... 18 Section 10.05 Taxes ........................................................................................................................ 18 Section 10.06 Section Headings ..................................................................................................... 18 Section 10.07 Amendments ............................................................................................................ 19 Section 10.08 Assignment .............................................................................................................. 19 Section 10.09 Execution ................................................................................................................. 20 Signatures ............................................................................................................................... S-1 EXHIBIT A DESCRIPTION OF THE PROPERTY .................................................................... A-1 EXHIBIT B BASE RENTAL PAYMENT SCHEDULE ............................................................. B-1 EXHIBIT C DESCRIPTION OF PROJECT – PHASE I .............................................................. C-1 EXHIBIT D FORM OF CERTIFICATE REGARDING INSURANCE ...................................... D-1 1 LEASE AGREEMENT THIS LEASE AGREEMENT (this “Lease Agreement”) executed and entered into as of March 1, 2020, is by and between the CITY OF SOUTH SAN FRANCISCO (the “City”), a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and laws of the State of California, as lessee, and the CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (the “Authority”), a joint exercise of powers entity duly organized and existing under and by virtue of the laws of the State of California, as lessor. RECITALS WHEREAS, the City and the Authority desire to finance the costs of the acquisition, construction and/or installation of capital improvement projects of the City; WHEREAS, the Project (as defined in the Indenture (defined below)) described in Exhibit C hereto is the first phase of the City’s proposed new ci vic center campus and the City and the Authority expect to issue Additional Bonds (as defined in the Indenture) in accordance with the Indenture to finance future phases of the civic center campus and/or other capital improvements of the City; WHEREAS, in order to finance the Project, the City will lease the Property (defined below) to the Authority pursuant to a Ground Lease, dated as of March 1, 2020, and the City will sublease the Property back from the Authority pursuant to this Lease Agreement; WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide the funds necessary to finance the Project through the issuance by the Authority of bonds payable from the Base Rental Payments (defined below) to be made by the City under this Lease Agreement; WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide for the issuance of such bonds payable from the Base Rental Payments pursuant to an Indenture, dated as of March 1, 2020, by and among the Authority, the City and the Trustee (defined below); WHEREAS, all rights to receive the Base Rental Payments have been assigned without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of March 1, 2020; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Lease Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease Agreement; NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties hereto agree as follows: 2 ARTICLE I DEFINITIONS Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Lease Agreement, have the meanings herein specified, which meanings shall be equally applicable to both the singular and plural forms of any of the terms herein defined. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Indenture. “Additional Bonds” means bonds other than the Series 2020A Bonds issued under the Indenture in accordance with the provisions thereof. “Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.02 hereof. “Authority” means the City of South San Francisco Public Facilities Financing Authority, a joint exercise of powers authority organized and existing under the laws of the State of California. “Base Rental Deposit Date” means the 25th day of the month next preceding each Interest Payment Date. “Base Rental Payments” means all amounts payable to the Authority from the City as Base Rental Payments pursuant to Section 3.01 hereof. “Base Rental Payment Schedule” means the schedule of Base Rental Payments payable to the Authority from the City pursuant to Section 3.01 hereof and attached hereto as Exhibit B. “Bonds” means the Series 2020A Bonds issued under the Indenture, and any Additional Bonds. “City” means the City of South San Francisco, a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and laws of the State of California. “Delivery Date” means February __, 2020. “Ground Lease” means the Ground Lease, dated as of March 1, 2020, by and between the City and the Authority, as originally executed and as it may from time to time be amended in accordance with to the provisions thereof and hereof. “Indenture” means the Indenture, dated as of March 1, 2020, by and among the Authority, the City and the Trustee, as originally executed and as it may from time to time be amended or supplemented in accordance with the provisions thereof. “Joint Powers Agreement” means the Joint Exercise of Powers Agreement, dated as of December 1, 2019, by and between the City and the Parking Authority of the City of South San Francisco as originally executed and as it may from time to time be amended in accordance with the provisions thereof. 3 “Lease Agreement” means this Lease Agreement, as originally executed and as it may from time to time be amended in accordance with the provisions hereof. “Net Insurance Proceeds” means any insurance proceeds or condemnation award in excess of $50,000, paid with respect to any of the Property, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof. “Permitted Encumbrances” means, with respect to the Property, as of any particular time, (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to provisions of Article V hereof, permit to remain unpaid, (b) the Assignment Agreement, (c) this Lease Agreement, (d) the Ground Lease, (e) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribe d by law as normally exist with respect to properties similar to the Property for the purposes for which it was acquired or is held by the City, (f) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Delivery Date which the City certifies in writing will not affect the intended use of the Property or impair the security granted to the Trustee for the benefit of the Owners of the Bonds by the Indentur e and the Assignment Agreement and to which the Authority and the City consent in writing, (g) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the Delivery Date which the City certifies in writing do not affect the intended use of the Property or impair the security granted to the Trustee for the benefit of the Owners of the Bonds by the Indenture and the Assignment Agreement and to which the Authority and the City consent in writing, and (h) all of the exceptions to title listed in the title insurance policy relating to the Series 2020A Bonds and dated the Delivery Date. “Phase I” means the Project described in Exhibit C hereto. “Property” means the real property described in Exhibit A hereto and the improvements located thereon as such real property description may be amended or modified (including the addition, release or substitution of property as part of the Property), in accordance with Sections 9.0 3 and 9.04 of this Lease Agreement. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments. “Rental Period” means the period from the Delivery Date through May 31, 2020, and, thereafter, the twelve-month period commencing on June 1 of each year during the term of this Lease Agreement. “Series 2020A Bonds” means the City of South San Francisco Public Facilities Financing Authority (Police Station Project) Lease Revenue Bonds, Series 2020A issued under the Indenture. “Trustee” means the trustee appointed under the Indenture and referred to therein as the Trustee. 4 ARTICLE II LEASE OF PROPERTY; TERM Section 2.01 Lease of Property. (a) The Authority hereby leases to the City and the City hereby leases from the Authority the Property, on the terms and conditions hereinafter set forth, subject to all Permitted Encumbrances. (b) The leasing of the Property by the City to the Authority pursuant to the Ground Lease shall not effect or result in a merger of the City’s leasehold estate pursuant to this Lease Agreement and the City’s fee estate as lessor under the Ground Lease, and the Authority shall continue to have a leasehold estate in the Property pursuant to the Ground Lease throughout the term thereof and hereof. The leasehold interest granted by the City to the Authority pursuant to the Ground Lease is and shall be independent of this Lease Agreement; this Lease Agreement shall not be an assignment or surrender of the leasehold interest granted to the Authority under the Ground Lease. Section 2.02 Term; Occupancy. The term of this Lease Agreement shall commence on the Delivery Date and shall end on June 1, 2046, unless such term is extended or sooner terminated as hereinafter provided. If on June 1, 2046 the Bonds shall not be fully paid, or provision therefor made in accordance with Article X of the Indenture, or the Indenture shall not be discharged by its terms, or if the Rental Payments shall remain due and payable or shall have been abated at any time and for any reason, then the term of this Lease Agreement shall be extended until the date upon which (i) all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, or (ii) the Indenture shall be discharged by its terms and all Rental Payments shall have been paid in full. Notwithstanding the foregoing, the term of this Lease Agreement shall in no event be extended beyond June 1, 2056. If prior to June 1, 2046, all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, the Indenture shall be discharged by its terms and all Rental Payments shall have been paid in full, the term of this Lease Agreement shall end simultaneously therewith. ARTICLE III RENTAL PAYMENTS Section 3.01 Base Rental Payments. (a) Subject to the provisions hereof relating to a revision of the Base Rental Payment Schedule pursuant to subsection (b) of this Section, the City shall pay to the Authority, as Base Rental Payments (subject to the provisions of Section 3.06 and Article VII hereof) the amount at the times specified in the Base Rental Payment Schedule, a portion of which Base Rental Payments shall constitute principal, and a portion of which shall constitute interest. Rental Payments, including Base Rental Payments, shall be paid by the City to the Authority for and in consideration of the right to use and occupy the Property and in consideration of the continued right to the quiet use and enjoyment thereof during each Rental Period for which such Rental Payments are to be paid. 5 The obligation of the City to make the Base Rental Payments does not constitute a debt of the City or of the State of California, or of any political subdivision thereof, within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged any form of taxation. (b) If the term of this Lease Agreement shall have been extended pursuant to Section 2.02 hereof, the obligation of the City to pay Rental Payments shall continue to and including the Base Rental Deposit Date preceding the date of termination of this Lease Agreement (as so extended pursuant to Section 2.02 hereof). Upon such extension, the Base Rental Payments shall be established so that they will be sufficient to pay all extended and unpaid Base Rental Payments; provided, however, that the Rental Payments payable in any Rental Period subsequent to such extension shall not exceed the annual fair rental value of the Property. Section 3.02 Additional Rental Payments. The City shall also pay, as Additional Rental Payments, such amounts as shall be required for the payment of the following: (a) all taxes and assessments of any type or nature charged to the Authority or the City or affecting the Property or the respective interests or estates of the Authority or the City therein; (b) all reasonable administrative costs of the Authority relating to the Property including, but without limiting the generality of the foregoing, salaries, wages, fees and expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture, fees of auditors, accountants, attorneys or engineers, and all other necessary and reasonable administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Indenture or this Lease Agreement or to defend the Authority and its members, officers, agents and employees; (c) insurance premiums for all insurance required pursuant to Article V hereof; (d) any amounts with respect to this Lease Agreement or the Bonds required to be rebated to the federal government in accordance with Section 148(f) of the Code; and (e) all other payments required to be paid by the City under the provisions of this Lease Agreement or the Indenture. Amounts constituting Additional Rental Payments payable hereunder shall be paid by the City directly to the person or persons to whom such amounts shall be payable. The City sh all pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any other case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof. Section 3.03 Fair Rental Value. The parties hereto have agreed and determined that the annual fair rental value of the Property is not less than the maximum annual Rental Payments due in any year. In making such determination of fair ren tal value, consideration has been given to the uses and purposes that may be served by the Property and the benefits therefrom which will accrue to the City and the general public. Payments of the Rental Payments for the Property during each Rental Period shall constitute the total rental for said Rental Period. 6 Section 3.04 Payment Provisions. Each installment of Base Rental Payments payable hereunder shall be paid in lawful money of the United States of America to or upon the order of the Authority at the principal office of the Trustee in San Francisco, California, or such other place or entity as the Trustee shall designate. Each Base Rental Payment shall be deposited with the Trustee no later than the Base Rental Deposit Date preceding the Interest Payment Date o n which such Base Rental Payment is due. Any Base Rental Payment which shall not be paid by the City when due and payable under the terms of this Lease Agreement shall bear interest from the date when the same is due hereunder until the same shall be paid at the rate equal to the highest rate of interest on any of the Outstanding Bonds. Notwithstanding any dispute between the Authority and the City, the City shall make all Rental Payments when due without deduction or offset of any kind and shall not with hold any Rental Payments pending the final resolution of such dispute. In the event of a determination that the City was not liable for said Rental Payments or any portion thereof, said payments or excess of payments, as the case may be, shall be credited against subsequent Rental Payments due hereunder or refunded at the time of such determination. Amounts required to be deposited by the City with the Trustee pursuant to this Section on any date shall be reduced to the extent of available amounts on deposit in the Base Rental Payment Fund, the Interest Fund or the Principal Fund. Section 3.05 Appropriations Covenant. The City covenants to take such action as may be necessary to include all Rental Payments due hereunder as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Payments. The 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 offic ial of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease Agreement agreed to be carried out and performed by the City. Section 3.06 Rental Abatement. Except as otherwise specifically provided in this Section, during any period in which, by reason of material damage to, or destruction or condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property, Rental Payments shall be abated proportionately, and the City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate this Lease Agreement by virtue of any such interference, and this Lease Agreement shall continue in full force and effect. The amount of such abatement shall be agreed upon by the City and the Authority; provided, however, that the Rental Payments due for any Rental Period shall not exceed the annual fair rental value of that portion of the Property available for use and occupancy by the City during such Rental Period. The City and the Authority shall calculate such abatement and shall provide the Trustee with a certificate setting forth such calculation and the basis therefor. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the Property, ending when such use and occupancy are restored; and the term of this Lease Agreement shall be extended as provided in Section 2.02 hereof, except that the term shall in no event be extended be yond June 1, 2056. Notwithstanding the foregoing, to the extent that moneys are available for the payment of Rental Payments in any of the funds and accounts established under the Indenture, Rental Payments shall not be abated as provided above but, rather, shall be payable by the City as a special obligation payable solely from said funds and accounts. 7 ARTICLE IV MAINTENANCE, ALTERATIONS AND ADDITIONS Section 4.01 Maintenance and Utilities. Throughout the term of this Lease Agreement, as part of the consideration for rental of the Property, all improvement, repair and maintenance of the Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of all utility services supplied to the Property, which may include, without lim itation, janitor service, security, power gas, telephone, light, heating, ventilation, air conditioning, water and all other utility services, and shall pay for or otherwise arrange for payment of the cost of the repair and replacement of the Property resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the Rental Payments, the Authority agrees to provide only the Property. Section 4.02 Additions to Property. Subject to Section 8.02 hereof, the City and any sublessee shall, at its own expense, have the right to make additions, modifications and improvements to the Property. To the extent that the removal of such additions, modifications or improvements would not cause material damage to the Property, such additions, modifications and improvements shall remain the sole property of the City or such sublessee, and neither the Authority nor the Trustee shall have any interest therein. Such additions, modifications and improvements shall not in any way cause permanent and material damage to the Property or cause it to be used for purposes other than those authorized under the provisions of state and federal law; and the Property, upon completion of any additions, modifications and improvements ma de pursuant to this Section, shall be of a value which is at least equal to the value of the Property immediately prior to the making of such additions, modifications and improvements. Section 4.03 Installation of City’s Equipment. The City and any sublessee may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed items of equipment or other personal property in or upon the Property. All such items shall remain the sole property of the City or such sublessee, and neither the Authority nor the Trustee shall have any interest therein. The City or such sublessee may remove or modify such equipment or other personal property at any time, provided that such party shall repair and restore any and all damage to the Property resulting from the installation, modification or removal of any such items. Nothing in this Lease Agreement shall prevent the City or any sublessee from purchasing items to be installed pursuant to this Section under a conditional sale or leas e purchase contract, or subject to a vendor’s lien or security agreement as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest shall attach to any part of the Property. ARTICLE V INSURANCE Section 5.01 Commercial General Liability and Property Damage Insurance; Workers’ Compensation Insurance. (a) The City shall maintain or cause to be maintained, throughout the term of this Lease Agreement, a standard commercial general liability insurance policy or policies in protectio n of the City, the Authority and their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or 8 liability for damages for bodily and personal injury, death or property damage occasioned by reason of the use or ownership of the Property. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in a single accident or event, and in a minimum amount of $500,000 for damage to property (subject to a deductible clause of not to exceed $100,000) resulting from a single accident or event. Such commercial general l iability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried or required to be carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City provided such self-insurance complies with the provisions of Section 5.04 hereof. The Net Insurance Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the Net Insurance Proceeds of such insurance shall have been paid. (b) The City shall maintain or cause to be maintained, throughout the term o f this Lease Agreement, workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Property and to cover full liability for compensation under any such act; provided, however, that the City’s obligations under this subsection may be satisfied by self-insurance, provided such self- insurance complies with the provisions of Section 5.04 hereof. (c) The City shall maintain or cause to be maintained, fire, lightning and special extended coverage insurance (which shall include coverage for vandalism and malicious mischief, but need not include coverage for earthquake damage) on all improvements constituting any part of the Property in an amount equal to the greater of 100% of the replacement cost of such improvements or 100% of the outstanding principal amount of the Bonds. All insurance required to be maintained pursuant to this subsection may be subject to a deductible in an amount not to exceed $500,000. The City’s obligations under this subsection may be satisfied by self-insurance, provided such self- insurance complies with the provisions of Section 5.04 hereof. (d) The City shall maintain rental interruption insurance to cover the Authority’s loss, total or partial, of Base Rental Payments result ing from the loss, total or partial, of the use of any part of the Property as a result of any of the hazards required to be covered pursuant to subsection (c) of this Section in an amount sufficient at all times to pay an amount not less than the product of two times the maximum amount of Base Rental Payments scheduled to be paid during any Rental Period. The City shall not be permitted to self-insure its obligation under this subsection. (e) The insurance required by this Section shall be provided by reputab le insurance companies with claims paying abilities determined, in the reasonable opinion of a professionally certified risk manager or an independent insurance consultant person (who may be an employee of the City), to be adequate for the purposes hereof. Section 5.02 Title Insurance. The City shall provide, at its own expense, one or more CLTA or ALTA title insurance policies for the Property, in the aggregate amount of not less than the initial aggregate principal amount of the Bonds. Said policy or policies shall insure (a) the fee interest of the City in the Property, (b) the Authority’s ground leasehold estate in the Property under the Ground Lease, and (c) the City’s leasehold estate hereunder in the Property, subject only to 9 Permitted Encumbrances. All Net Insurance Proceeds received under said policy or policies shall be deposited with the Trustee and applied as provided in Section 5.04 of the Indenture. So long as any of the Bonds remain Outstanding, each policy of title insurance obtained pursuant to the In denture or this Lease Agreement or required thereby or hereby shall provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Bond Owners. Section 5.03 Additional Insurance Provision; Form of Policies. The City shall pay or cause to be paid when due the premiums for all insurance policies required by Section 5.01 hereof. All such policies shall provide that the Trustee shall be given 30 days’ notice of the expiration thereof or any intended cancellation thereof. The Trustee shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee. The City shall cause to be delivered to the Trustee on or before August 15 each year, commencing August 15, 2020, a schedule of the insurance policies being maintained in accordance herewith and a Written Certificate of the City, which may be in the form set forth in Exhibit D attached hereto, stating that such policies are in full force and effect and that the City is in full compliance with the requirements of this Article. The Trustee shall be entitled to rely upon said Written Certificate of the City as to the City’s compliance with this Article. The Trustee shall not be responsible for the sufficiency of coverage or amounts of such policies. Section 5.04 Self-Insurance. Insurance provided through a California joint powers authority of which the City is a member or with which the City contracts for insurance shall be deemed to be self-insurance for purposes hereof. Any self-insurance maintained by the City pursuant to this Article shall comply with the following terms: (a) the self-insurance program shall be approved in writing by a professionally certified risk manager or by an independent insurance consultant (who may be an employee of the City); (b) the self-insurance program shall include an actuarially sound claims reserve fund out of which each self-insured claim shall be paid, the adequacy of each such fund shall be evaluated on an annual basis by a professionally certifi ed risk manager or by an independent insurance consultant (who may be an employee of the City) and any deficiencies in any self-insured claims reserve fund shall be remedied in accordance with the recommendation of a professionally certified risk manager or such independent insurance consultant, as applicable; and (c) in the event the self-insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by a professionally certified risk manager or by an independent insurance consultant, shall be maintained. ARTICLE VI DEFAULTS AND REMEDIES Section 6.01 Defaults and Remedies. (a) (i) If the City shall fail (A) to pay any Base Rental Payment payable hereunder when the same becomes due and payable, time being expressly declared to be of the 10 essence in this Lease Agreement, or (B) to keep, observe or perform any other term, covenant or condition contained herein or in the Indenture to be kept or performed by the City, or (ii) upon the happening of any of the events specified in this subsection or in subsection (b) of this Section, the City shall be deemed to be in default hereunder and it shall be lawful for the Authority to exercise any and all remedies available pursuant to law or granted pursuant to this Lease Agreement. The City shall in no event be in default in the observance or performance of any covenant, condition or agreement in this Lease Agreement on its part to be observed or performed, other tha n as referred to in clause (i)(B) or (ii) of the preceding sentence, unless the City shall have failed, for a period of 30 days or such additional time as is reasonably required to correct any such default after notice by the Authority to the City properly specifying wherein the City has failed to perform any such covenant, condition or agreement. Upon any such default, the Authority, in addition to all other rights and remedies it may have at law, shall have the option to do any of the following: (1) To terminate this Lease Agreement in the manner hereinafter provided on account of default by the City, notwithstanding any re-entry or re-letting of the Property as hereinafter provided for in subparagraph (2) hereof, and to re -enter the Property and remove all persons in possession thereof and all personal property whatsoever situated upon the Property a nd place such personal property in storage in any warehouse or other suitable place, for the account of and at the expense of the City. In the event of such termination, the City agrees to surrender immediately possession of the Property, without let or h indrance, and to pay the Authority all damages recoverable at law that the Authority may incur by reason of default by the City, including, without limitation, any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon the Property and removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. Neither notice to pay Rental Payments or to deliver up possession of the Property given pursuant to law nor any entry or re-entry by the Authority nor any proceeding in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Property nor the appointment of a receiver upon initiative of the Authority to protect the Authority’s interest under this Lease Agreement shall of itself operate to terminate this Lease Agreement, and no termination of this Lease Agreement on account of default by the City shall be or become effe ctive by operation of law or acts of the parties hereto, or otherwise, unless and until the Authority shall have given written notice to the City of the election on the part of the Authority to terminate this Lease Agreement. The City covenants and agrees that no surrender of the Property or of the remainder of the term hereof or any termination of this Lease Agreement shall be valid in any manner or for any purpose whatsoever unless stated by the Authority by such written notice. (2) Without terminating this Lease Agreement, (x) to collect each installment of Rental Payments as the same become due and enforce any other terms or provisions hereof to be kept or performed by the City, regardless of whether or not the City has abandoned the Property, or (y) to exercise any and all rights of entry and re -entry upon the Property. In the event the Authority does not elect to terminate this Lease Agreement in the manner provided for in subparagraph (1) hereof, the City shall remain liable and agrees to keep or perform all covenants and conditions herein contained to be kept or performed by the City and, if the Property is not re -let, to pay the full amount of the Rental Payments to the end of the term of this Lease Agreement or, in the event that the Property is re-let, to pay any deficiency in Rental Payments that results therefrom; and further agrees to pay said Rental Payments and/or Rental Payment deficiency punctually at the same time and in the same manner as hereinabove provided for the payment of Rental Payments hereunder, notwithstanding the fact that the Authority may have received in previous years or may receive thereafter in subsequent years Rental Payments in excess of the Rental Payments herein 11 specified, and notwithstanding any entry or re-entry by the Authority or suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Property. Should the Authority elect to re-enter as herein provided, the City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City to re-let the Property, or any part thereof, from time to time, either in the Authority’s name or otherwise, upon such terms and conditions and for such use and period as the Authority may deem advisable and to remove all persons in possession thereof and all personal property whatsoever situated upon the Property and to place such personal property in storage in any warehouse or other suitable place, for the account of and at the expense of the City, and the City hereby indemnifies and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon and re-letting of the Property and removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. The City agrees that the terms of this Lease Agreement constitute full and sufficient notice of the right of the Authority to re-let the Property in the event of such re-entry without effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority in effecting such re-letting shall constitute a surrender or termination of this Lease Agreement irrespective of the use or the term for which such re-letting is made or the terms and conditions of such re -letting, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease Agreement shall vest in the Authority to be effected in the sole and exclusive manner provided for in subparagraph (1) hereof. The City further agrees to pay the Authority the cost of any alterations or additions to the Property necessary to place the Property in condition for re -letting immediately upon notice to the City of the completion and installation of such additions or alterations. The City hereby waives any and all claims for damages 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, or any other person, that may be in or upon the Property. (b) If (i) the City’s interest in this Lease Agreement or any part thereof shall be assigned or transferred, either voluntarily or by operation of law or otherwise, without the written consent of the Authority and, as hereinafter provided for, or (ii) the City or any assignee shall file any petition or institute any proceeding under any act or acts, state or federal, dealing with or relating to the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby the City asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of the City’s debts or obligations, or offers to the City’s creditors to elect a composit ion or extension of time to pay the City’s debts or asks, seeks or prays for reorganization or to effect a plan of reorganization, or for a readjustment of the City’s debts, or for any other similar relief, or if any such petition or any such proceedings of the same or similar kind or character be filed or be instituted or taken against the City, or if a receiver of the business or of the property or assets of the City shall be appointed by any court, except a receiver appointed at the instance or request o f the Authority, or if the City shall make a general assignment for the benefit of the City’s creditors, or (iii) the City shall abandon or vacate the Property, then the City shall be deemed to be in default hereunder. (c) In addition to the other remedies set forth in this Section, upon the occurrence of an event of default, the Authority and its assignee shall be entitled to proceed to protect and enforce the rights vested in the Authority and its assignee by this Lease Agreement or by law. The provisions of this Lease Agreement and the duties of the City and of its city council, officers or 12 employees shall be enforceable by the Authority or its assignee by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction. Witho ut limiting the generality of the foregoing, the Authority and its assignee shall have the right to bring the following actions: (i) Accounting. By action or suit in equity to require the City and its city council, officers and employees and its assigns to account as the trustee of an express trust. (ii) Injunction. By action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of the Authority or its assignee. (iii) Mandamus. By mandamus or other suit, action or proceeding at law or in equity to enforce the Authority’s or its assignee’s rights against the City (and its city council, officers and employees) and to compel the City to perform and carry out its duties and obligations under the law and its covenants and agreements with the City as provided herein. Each and all of the remedies given to the Authority hereunder or by any law now or hereafter enacted are cumulative and the single or partial exercise of any right, power or privilege hereunder shall not impair the right of the Authority to the further exercise thereof or the exercise of any or all other rights, powers or privileges. The term “re -let” or “re-letting” as used in this Section shall include, but not be limited to, re -letting by means of the operation by the Authority of the Property. If any statute or rule of law validly shall limit the remedies given to the Authority hereunder, the Authority nevertheless shall be entitled to whatever remedies are allowable under any statute or rule of law. In the event the Authority shall prevail in any action brought to enforce any of the terms and provisions of this Lease Agreement, the City agrees to pay a reasonable amount as and for attorney’s fees incurred by the Authority in attempting to enforce any of the remedies available to the Authority hereunder. Notwithstanding anything to the contrary contained in this Lease Agreement, the Authority shall have no right upon a default hereunder by the City to accelerate Rental Payments. (d) Notwithstanding anything to the contrary contained in this Lease Agreement, the termination of this Lease Agreement by the Authority and its assignees on account of a default by the City under this Section shall not effect or result in a termination of the Ground Lease. Section 6.02 Waiver. Failure of the Authority to take advantage of any default on the part of the City shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may grow up between the parties in the course of administering this instrument be construed to wai ve or to lessen the right of the Authority to insist upon performance by the City of any term, covenant or condition hereof, or to exercise any rights given the Authority on account of such default. A waiver of a particular default shall not be deemed to be a waiver of any other default or of the same default subsequently occurring. The acceptance of Rental Payments hereunder shall not be, or be construed to be, a waiver of any term, covenant or condition of this Lease Agreement. 13 ARTICLE VII EMINENT DOMAIN; PREPAYMENT Section 7.01 Eminent Domain. If all of the Property (or portions thereof such that the remainder is not usable for public purposes by the City) shall be taken under the power of eminent domain, the term hereof shall cease as of the day that possession shall be so taken. If less than all of the Property shall be taken under the power of eminent domain and the remainder is usable for public purposes by the City at the time of such taking, then this Lease Agreement shall continue in full force and effect as to such remainder, and the parties waive the benefits of any law to the contrary, and in such event there shall be a partial abatement of the Rental Payments in accordance with the provisions of Section 3.06 hereof. So long as any Bonds shall be Outstanding, any a ward made in eminent domain proceedings for the taking of the Property, or any portion thereof, shall be paid to the Trustee and applied to the redemption of Bonds as provided in subsection (a) of Section 4.01 of the Indenture, in the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued and in Section 5.03 of the Indenture. Any such award made after all of the Bonds, and all other amounts due under the Indenture and hereunder, have been fully paid, shall be paid to the Authority and to the City as their respective interests may appear. Section 7.02 Prepayment. (a) The City may prepay all or a portion of the Base Rental Payments attributable to the Series 2020A Bonds which are payable on or after June 1, 20__, from any source of available funds, on any date on or after June 1, 20__, by paying (i) all or a portion, as selected by the City, of the principal components of such Base Rental Payments, and (ii) the accrued but unpaid interest component of such Base Rental Payments to be prepaid to the date of such prepayment. (b) The City may prepay, from any source of available funds, all or any portion of the Base Rental Payments attributable to the Series 2020A Bonds by depositing with the Trustee moneys or securities as provided, and subject to the terms and conditions set forth, in Article X of the Indenture sufficient to make such Base Rental Payments when due or to make such Base Rental Payments through a specified date on which the City has a right to prepay such Base Rental Payments pursuant to subsection (a) of this Section, and to prepay such Base Rental Payments on such prepayment date, at a prepayment price determined in accordance with subsection (a) of this Section. (c) If less than all of the Base Rental Payments attributable to the Series 2020A Bonds are prepaid pursuant to this Section then, as of the date of such prepayment pursuant to subsection (a) of this Section, or the date of a deposit pursuant to subsection (b) of this Section, the principal and interest components of such Base Rental Payments shall be recalculated in order to take such prepayment into account. The City agrees that if, following a partial prepayment of such Base Rental Payments, the Property is damaged or destroyed or taken by eminent domain, or a defec t in title to the Property is discovered, the City shall not be entitled to, and by such prepayment waives the right of, abatement of such prepaid Base Rental Payments and the City shall not be entitled to any reimbursement of such Base Rental Payments. (d) If all of the Base Rental Payments are prepaid in accordance with the provisions of this Lease Agreement then, as of the date of such prepayment pursuant to subsection (a) of this Section and, if applicable, the corresponding provisions hereof relating to th e prepayment of 14 Base Rental Payments attributable to Additional Bonds, or deposit pursuant to subsection (b) of this Section and, if applicable, such corresponding provisions, and payment of all other amounts owed under this Lease Agreement have been made, the term of this Lease Agreement shall be terminated. (e) Prepayments of Base Rental Payments attributable to the Series 2020A Bonds made pursuant to this Section shall be applied to the redemption of Series 2020A Bonds as directed by the City and as provided in Section 4.01(b) of the Indenture. (f) Before making any prepayment pursuant to this Article, the City shall give written notice to the Authority and the Trustee specifying the date on which the prepayment will be made, which date shall be not less than 45 nor more than 60 days from the date such notice is given to the Authority. ARTICLE VIII COVENANTS Section 8.01 Right of Entry. The Authority and its assignees shall have the right to enter upon and to examine and inspect the Property during reasonable business hours (and in emer gencies at all times) for any purpose connected with the Authority’s rights or obligations under this Lease Agreement, and for all other lawful purposes. Section 8.02 Liens. In the event the City shall at any time during the term of this Lease Agreement cause any changes, alterations, additions, improvements, or other work to be done or performed or materials to be supplied, in or upon the Property, the City shall pay, when due, all sums of money that may become due for, or purporting to be for, any labor, services, ma terials, supplies or equipment furnished or alleged to have been furnished to or for the City in, upon or about the Property and which may be secured by a mechanics’, materialmen’s or other lien against the Property or the Authority’s interest therein, and will cause each such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due, except that, if the City desires to contest any such lien, it may do so as long as such contestmen t is in good faith. If any such lien shall be reduced to final judgment and such judgment or such process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the City shall forthwith pay and discharge said judgment. Section 8.03 Quiet Enjoyment. The parties hereto mutually covenant that the City, by keeping and performing the covenants and agreements herein contained, shall at all times during the term of this Lease Agreement peaceably and quietly have , hold and enjoy the Property without suit, trouble or hindrance from the Authority. Section 8.04 Authority Not Liable. The Authority and its directors, officers, agents and employees, shall not be liable to the City or to any other party whomsoever for any death, inj ury or damage that may result to any person or property by or from any cause whatsoever in, on or about the Property. To the extent permitted by law, the City shall, at its expense, indemnify and hold the Authority and the Trustee and all directors, members, officers and employees thereof harmless against and from any and all claims by or on behalf of any person, firm, corporation or governmental authority arising from the acquisition, construction, occupation, use, operation, maintenance, possession, conduct or management of or from any work done in or about the Property or from the subletting of any part thereof, including any liability for violation of conditions, agreements, 15 restrictions, laws, ordinances, or regulations affecting the Property or the oc cupancy or use thereof, but excepting the negligence or willful misconduct of the persons or entity seeking indemnity. The City also covenants and agrees, at its expense, to pay and indemnify and save the Authority and the Trustee and all directors, officers and employees thereof harmless against and from any and all claims arising from (a) any condition of the Property and the adjoining sidewalks and passageways, (b) any breach or default on the part of the City in the performance of any covenant or agree ment to be performed by the City pursuant to this Lease Agreement, (c) any act or negligence of licensees in connection with their use, occupancy or operation of the Property, or (d) any accident, injury or damage whatsoever caused to any person, firm or corporation in or about the Property or upon or under the sidewalks and from and against all costs, reasonable counsel fees, expenses and liabilities incurred in any action or proceeding brought by reason of any claim referred to in this Section, but excepting the negligence or willful misconduct of the person or entity seeking indemnity. In the event that any action or proceeding is brought against the Authority or the Trustee or any director, member, officer or employee thereof, by reason of any such clai m, the City, upon notice from the Authority or the Trustee or such director, member, officer employee thereof, covenants to resist or defend such action or proceeding by counsel reasonably satisfactory to the Authority or the Trustee or such director, member, officer or employee thereof. To the extent this Lease Agreement confers upon or gives or grants the Trustee any right, remedy or claim under or by reason of this Lease Agreement, the Trustee is hereby explicitly recognized as being a third-party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder. Section 8.05 Assignment and Subleasing. Neither this Lease Agreement nor any interest of the City hereunder shall be sold, mortgaged, pledged, assigned, or transferr ed by the City by voluntary act or by operation by law or otherwise. The Property may not be subleased in whole or in part by the City without the prior written consent of the Authority. Any such sublease shall be subject to all of the following conditions: (a) this Lease Agreement and the obligation of the City to make all Rental Payments hereunder shall remain the primary obligation of the City; (b) the City shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease; (c) any sublease of the Property by the City shall explicitly provide that such sublease is subject to all rights of the Authority under this Lease Agreement, including, the right to re-enter and re-let the Property or terminate this Lease Agreement upon a default by the City; and (d) the City shall furnish the Authority and the Trustee with an Opinion of Counsel to the effect that such sublease will not, in and of itself, cause the interest on the Bonds to be included in gross income for federal income tax purposes. Section 8.06 Title to Property. Upon the termination or expiration of this Lease Agreement (other than as provided in Section 6.01 and Section 7.01 hereof), and the first date upon which the Bonds are no longer Outstanding, all right, title and interest in and to the Property shall vest in the City. Upon any such termination or expiration, the Authority shall execute such conveyances, deeds and other documents as may be necessary to effect such vesting of record. 16 Section 8.07 Authority’s Purpose. The Authority covenants that, prior to the discharge of this Lease Agreement and the Bonds, it will not engage in any activities inconsistent with the purposes for which the Authority is organized, as set forth in the Joint Powers Agreement. Section 8.08 Representations of the City. The City represents and warrants to the Authority that (a) the City has the full power and authority to enter into, to execute and to deliver this Lease Agreement and the Indenture, and to perform all of its duties and obligations hereunder and thereunder, and has duly authorized the execution and delivery of this Lease Agreement and the Indenture, and (b) the Property will be used in the performance of essential governmental functions. Section 8.09 Representation of the Authority. The Authority represents and warrants to the City that the Authority has the full power and authority to enter into, to execute and to deliver this Lease Agreement, the Assignment Agreement and the Indenture, and to perform all of its duties and obligations hereunder and thereunder, and has duly authorized the execution and delivery of this Lease Agreement, the Assignment Agreement and the Indenture. ARTICLE IX NO CONSEQUENTIAL DAMAGES; USE OF THE PROPERTY; SUBSTITUTION OR RELEASE Section 9.01 No Consequential Damages. In no event shall the Authority or the Trustee be liable for any incidental, indirect, special or consequential damage in connection with or arising out of this Lease Agreement or the City’s use of the Property. Section 9.02 Use of the Property. The City will not use, operate or maintain the Property improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by this Lease Agreement. In addition, the City agrees to comply in all respects (including, without limitation, with respect to the use, maintenance and operation of the Property) with all laws of the jurisdictions in which its operations may extend and any legislative, executive, administrative or judicial body exercising any power or jurisdiction over the Property; provid ed, however, that the City may contest in good faith the validity or application of any such law or rule in any reasonable manner which does not, in the opinion of the Authority, adversely affect the estate of the Authority in and to any of the Property or its interest or rights under this Lease Agreement. Section 9.03 Substitution or Release of, or Addition to, the Property. The City shall have the right to substitute alternate real property for any portion of the Property or to release a portion of the Property from this Lease Agreement or to add additional property to the encumbrance of this Lease Agreement. All costs and expenses incurred in connection with such substitution, release or addition shall be borne by the City. Notwithstanding any substitution or relea se of, or addition to, Property pursuant to this subsection, there shall be no reduction in or abatement of the Base Rental Payments due from the City hereunder as a result of such substitution, release or addition. Any such substitution or release of any portion of the Property, or addition to the Property, shall be subject to the following specific conditions, which are hereby made conditions precedent to such substitution, release or addition: (a) a Written Certificate of the City to the effect that the Pro perty, as constituted after such substitution, release or addition, (i) has an annual fair rental value at least equal to the 17 maximum Base Rental Payments payable by the City in any Rental Period, and (ii) has a useful life in excess of the final maturity of any Outstanding Bonds; (b) with respect to any substituted or added property, the City shall have obtained or caused to be obtained a CLTA or ALTA title insurance policy or policies with respect to the Property (as such term will be defined after such substitution or addition) that when taken together with other title insurance policies covering the Property, will be in the amount at least equal to the aggregate principal amount of any Outstanding Bonds of the type and with the endorsements described in Section 5.02 hereof; and (c) the City, the Authority and the Trustee shall have executed, and the City shall have caused to be recorded with the San Mateo County Recorder, any document necessary to reconvey to the City the portion of the Property being released an d to include any substituted or added real property in the description of the Property contained herein and in the Ground Lease. Section 9.04 Substitution of Project as Property. In addition to the release and substitution of property pursuant to Section 9.03 hereof, upon completion of Phase I described in Exhibit C hereto, the Property described in Exhibit A hereto may be released and upon such release, Phase I and the related real property upon which the Phase I improvements are located shall thereafter constitute the Property under this Lease Agreement and the Ground Lease, provided however, that no such substitution shall occur until there is delivered to the Trustee a Written Certificate of the City that the conditions set forth in Section 9.03(b) and (c) above have been satisfied and that the City has beneficial use and occupancy of Phase I. ARTICLE X MISCELLANEOUS Section 10.01 Law Governing. THIS LEASE AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY THE PROVISIONS HEREOF AND BY THE LAWS OF THE STATE OF CALIFORNIA AS THE SAME FROM TIME TO TIME EXIST. Section 10.02 Notices. All written notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder shall be given to the party entitled thereto at its address set forth below, or at such ot her address as such party may provide to the other parties in writing from time to time, namely: If to the City: City of South San Francisco 400 Grand Avenue South San Francisco, California 94080 Attention: City Manager If to the Authority: City of South San Francisco Public Facilities Financing Authority c/o City of South San Francisco 400 Grand Avenue South San Francisco, California 94080 Attention: Executive Director 18 Each such notice, statement, demand, consent, approval, authorization, offer, designat ion, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender’s receipt of an appropriate answerback or other written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at the address specified in this Section. Section 10.03 Validity and Severability. If for any reason this Lease Agreement shall be held by a court of competent jurisdiction to be void, voidable or unenforceable by the Authority or by the City, or if for any reason it is held by such a court that any of the covenants and conditions of the City hereunder, including the covenant to pay Rental Payments, is unenforceable for the full term hereof; then and in such event this Lease Agreement is and shall be deemed to be a Lease Agreement under which the Rental Payments are to be paid by the City annually in consideration of the right of the City to possess, occupy and use the Property, and all of the terms, provisions and conditions of this Lease Agreement, except to the extent that such terms, provisions and conditions are contrary to or inconsistent with such holding, shall remain in full force and effect. Section 10.04 Net-Net-Net Lease. This Lease Agreement shall be deemed and construed to be a “net-net-net lease” and the City hereby agrees that the Rental Payments shall be an absolute net return to the Authority, free and clear of any expenses, charges or set -offs whatsoever and notwithstanding any dispute between the City and the Authority. Section 10.05 Taxes. The City shall pay or cause to be paid all taxes and assessments of any type or nature charged to the Authority or affecting the Property or the respective interests or estates therein; provided, however, that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are required to be paid during the term of this Lease Agreement as and when the same become due. The City or any sublessee may, at the City’s or such sublessee’s expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority or the Trustee shall notify the City or such sublessee that, in the opinion of independent counsel, by nonpayment of any such items, the interest of the Authority in the Property will be materially endangered or the Property, or any part thereof, will be subject to loss or forfeiture, in which event the City or such sublessee shall promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority and the Trustee. Section 10.06 Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Lease Agreement. 19 Section 10.07 Amendments. (a) This Lease Agreement and the Ground Lease may be amended and the rights and obligations of the Authority and the City hereunder and thereunder may be amended at any time by an amendment hereto or thereto which shall become binding upon execution and delivery by the Authority and the City, but only with the prior written consent of the Owners of a majority of the principal amount of the Bonds then Outstanding pursuant to the Indenture, provided that no such amendment shall (i) extend the payment date of any Base Rental Payments, reduce the interest component or principal component of any Base Rental Payments or change the prepayment terms and provisions, without the prior written consent of the Owner of each Bond so affected, or (ii) reduce the percentage of the principal amount of the Bonds the consent o f the Owners of which is required for the execution of any amendment of this Lease Agreement or the Ground Lease. (b) This Lease Agreement and the Ground Lease and the rights and obligations of the Authority and the City hereunder and thereunder may also be amended at any time by an amendment hereto or thereto which shall become binding upon execution by the Authority and the City, without the written consents of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes: (i) to add to the agreements, conditions, covenants and terms required by the Authority or the City to be observed or performed herein or therein other agreements, conditions, covenants and terms thereafter to be observed or performed by the Authority or the City, or to surrender any right or power reserved herein or therein to or conferred herein or therein on the Authority or the City, and which in either case shall not materially adversely affect the interests of the Owners; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or therein or in regard to questions arising hereunder or thereunder which the Authority or the City may deem desirable or necessary and not inconsistent herewith or therewith, and which shall not materially adversely affect the interests of the Owners; (iii) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of the interest on the Bonds; (iv) to provide for the substitution or release of a portion of the Property in accordance with the provisions of Sections 9.03 and 9.04 hereof; (v) to provide for the issuance of Additional Bonds in accordance with Article III of the Indenture; or (vi) to make such other changes herein or therein or modifications hereto or thereto as the Authority or the City may deem desirable or necessary, and which shall not materially adversely affect the interests of the Owners, as evidenced by an Opinion of Bond Counsel. Section 10.08 Assignment. The City and the Authority hereby acknowledge the assignment of this Lease Agreement (except for the Authority’s obligations and its rights to give consents or 20 approvals hereunder), and the Base Rental Payments payable hereunder, to the Trustee pursuant to the Assignment Agreement. Section 10.09 Execution. This Lease Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same Lease Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] S-1 IN WITNESS WHEREOF, the Authority and the City have caused this Lease Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and yea r first above written. CITY OF SOUTH SAN FRANCISCO By: City Manager ATTEST: City Clerk CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY By: Executive Director ATTEST: Secretary A-1 EXHIBIT A DESCRIPTION OF THE PROPERTY All that real property situated in the City of South San Francisco, County of San Mateo, State of California, described as follows: B-1 EXHIBIT B BASE RENTAL PAYMENT SCHEDULE Date Principal Component Interest Component Total Base Rental B-2 C-1 EXHIBIT C DESCRIPTION OF PROJECT – PHASE I Police Station Project – Civic Center Campus: This Project consists of a new police facility of approximately 43,300 square feet to be located within the City’s proposed new civic center campus. T he police facility is planned to include two buildings and space for administration, operations, investigation, storage, support services, and training for the City’s police department. D-1 EXHIBIT D FORM OF CERTIFICATE REGARDING INSURANCE The Bank of New York Mellon Trust Company, N.A. Attn: Corporate Trust Department 100 Pine Street, Suite 3200 San Francisco, CA 94111 Re: City of South San Francisco Public Facilities Financing Authority The undersigned, on behalf of the City of South San Francisco (the “City”), hereby certifies that the insurance policies required under Article V of the Lease Agreement dated as of March 1, 2020 (the “Lease Agreement”), by and between the City and the City of South San Francisco Public Facilities Financing Authority, are in full force and effect and the City is in full compliance with the requirements of Article V of the Lease Agreement. Included herewith is the schedule of such insurance policies. Date: ________, 20__ CITY OF SOUTH SAN FRANCISCO By: Authorized City Representative ATTACHMENT C – FORM OF INDENTURE Draft of 2/6/20 INDENTURE by and among CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY and CITY OF SOUTH SAN FRANCISCO and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee Dated as of March 1, 2020 Relating to $_____________ CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (POLICE STATION PROJECT) LEASE REVENUE BONDS, SERIES 2020A TABLE OF CONTENTS Page i ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01 Definitions ................................................................................................................. 2 Section 1.02 Equal Security .......................................................................................................... 12 ARTICLE II THE BONDS Section 2.01 Authorization of Bonds ............................................................................................ 12 Section 2.02 Terms of Series 2020A Bonds ................................................................................. 12 Section 2.03 Form of Series 2020A Bonds ................................................................................... 14 Section 2.04 Transfer and Exchange of Bonds ............................................................................. 14 Section 2.05 Registration Books ................................................................................................... 14 Section 2.06 Execution of Bonds .................................................................................................. 14 Section 2.07 Authentication of Bonds .......................................................................................... 15 Section 2.08 Temporary Bonds .................................................................................................... 15 Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen ............................................................ 15 Section 2.10 Book-Entry Bonds ................................................................................................... 15 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS Section 3.01 Issuance of Series 2020A Bonds ............................................................................. 17 Section 3.02 Application of Proceeds of the Series 2020A Bonds ............................................... 17 Section 3.03 Costs of Issuance Fund ............................................................................................ 17 Section 3.04 Project Fund ............................................................................................................. 18 Section 3.05 Conditions for the Issuance of Additional Bonds .................................................... 18 Section 3.06 Procedure for the Issuance of Additional Bonds ..................................................... 19 Section 3.07 Additional Bonds ..................................................................................................... 20 ARTICLE IV REDEMPTION OF BONDS Section 4.01 Redemption of Series 2020A Bonds ........................................................................ 20 Section 4.02 Notice of Redemption .............................................................................................. 21 Section 4.03 Selection of Bonds for Redemption ......................................................................... 22 Section 4.04 Partial Redemption of Bonds ................................................................................... 22 Section 4.05 Effect of Notice of Redemption ............................................................................... 22 ARTICLE V SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS Section 5.01 Pledge; Special Obligations ..................................................................................... 23 Section 5.02 Flow of Funds .......................................................................................................... 23 Section 5.03 Application of Net Insurance Proceeds.................................................................... 24 Section 5.04 Title Insurance ......................................................................................................... 25 Section 5.05 Rebate Fund ............................................................................................................. 25 Section 5.06 Investment of Moneys ............................................................................................. 26 TABLE OF CONTENTS (continued) Page ii ARTICLE VI COVENANTS Section 6.01 Compliance with Agreements .................................................................................. 27 Section 6.02 Compliance with Ground Lease and Lease Agreement ........................................... 27 Section 6.03 Observance of Laws and Regulations ...................................................................... 27 Section 6.04 Other Liens .............................................................................................................. 27 Section 6.05 Prosecution and Defense of Suits ............................................................................ 28 Section 6.06 Accounting Records and Statements ....................................................................... 28 Section 6.07 Recordation and Filing ............................................................................................. 28 Section 6.08 Tax Covenants ......................................................................................................... 28 Section 6.09 Continuing Disclosure ............................................................................................. 29 Section 6.10 Further Assurances .................................................................................................. 29 ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01 Action on Default ..................................................................................................... 29 Section 7.02 Other Remedies of the Trustee ................................................................................ 29 Section 7.03 Non-Waiver ............................................................................................................. 30 Section 7.04 Remedies Not Exclusive .......................................................................................... 30 Section 7.05 No Liability by the Authority to the Owners ........................................................... 30 Section 7.06 No Liability by the City to the Owners .................................................................... 30 Section 7.07 No Liability of the Trustee to the Owners ............................................................... 31 Section 7.08 Application of Amounts After Default .................................................................... 31 Section 7.09 Trustee May Enforce Claims Without Possession of Bonds ................................... 31 Section 7.10 Limitation on Suits ................................................................................................... 31 ARTICLE VIII THE TRUSTEE Section 8.01 Employment of the Trustee ...................................................................................... 32 Section 8.02 Duties, Removal and Resignation of the Trustee..................................................... 32 Section 8.03 Compensation of the Trustee ................................................................................... 33 Section 8.04 Protection of the Trustee .......................................................................................... 33 ARTICLE IX MODIFICATION OR AMENDMENTS Section 9.01 Modifications and Amendments Permitted ............................................................. 36 Section 9.02 Effect of Supplemental Indenture ............................................................................ 37 Section 9.03 Endorsement of Bonds; Preparation of New Bonds ................................................ 37 Section 9.04 Amendment of Particular Bonds .............................................................................. 38 Section 9.05 Execution of Supplemental Indentures .................................................................... 38 ARTICLE X DEFEASANCE Section 10.01 Discharge of Indenture ............................................................................................. 38 Section 10.02 Bonds Deemed To Have Been Paid ......................................................................... 39 TABLE OF CONTENTS (continued) Page iii Section 10.03 Payment of Bonds After Discharge of Indenture ..................................................... 39 ARTICLE XI MISCELLANEOUS Section 11.01 Benefits of Indenture Limited to Parties .................................................................. 39 Section 11.02 Successor Deemed Included in all References to Predecessor ................................ 40 Section 11.03 Execution of Documents by Owners ....................................................................... 40 Section 11.04 Waiver of Personal Liability .................................................................................... 40 Section 11.05 Destruction of Bonds ............................................................................................... 40 Section 11.06 Funds and Accounts ................................................................................................. 40 Section 11.07 Article and Section Headings Gender and References ............................................ 41 Section 11.08 Partial Invalidity ...................................................................................................... 41 Section 11.09 Disqualified Bonds .................................................................................................. 41 Section 11.10 Money Held for Particular Bonds ............................................................................ 42 Section 11.11 Payment on Non-Business Days .............................................................................. 42 Section 11.12 California Law ......................................................................................................... 42 Section 11.13 Notices ..................................................................................................................... 42 Section 11.14 Execution in Counterparts ....................................................................................... 42 Signatures ............................................................................................................................... S-1 EXHIBIT A FORM OF SERIES 2020A BOND ....................................................................... A-1 EXHIBIT B FORM OF PROJECT FUND REQUISITION ...................................................... B-1 EXHIBIT C DESCRIPTION OF PROJECT – PHASE I........................................................... C-1 INDENTURE THIS INDENTURE (this “Indenture”), executed and entered into as of March 1, 2020, is by and among the CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY, a joint exercise of powers entity duly organized and existing under the laws of the State of California (the “Authority”), the CITY OF SOUTH SAN FRANCISCO, a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”) and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under and by virtue of the laws of the United States, as Trustee (the “Trustee”); WITNESSETH: WHEREAS, the City and the Authority desire to finance the costs of the acquisition, construction and/or installation of capital improvement projects of the City; WHEREAS, the Project (as defined herein) described in Exhibit C hereto is the first phase of the City’s proposed new civic center campus and the City and the Authority expect to issue Additional Bonds (as defined herein) in accordance with this Indenture to finance future phases of the civic center campus and/or other capital improvements of the City; WHEREAS, in order to finance the Project, the City will lease certain real property and the improvements located thereon to the Authority pursuant to a Ground Lease, dated as of March 1, 2020, and the City will sublease the Property (as defined in the Lease Agreement (defined below)) back from the Authority pursuant to a Lease Agreement, dated as of March 1, 2020; WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide the funds necessary to finance the Project through the issuance by the Authority of bonds payable from the Base Rental Payments (defined below) to be made by the City under the Lease Agreement; WHEREAS, all rights to receive the Base Rental Payments have been assigned without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of March 1, 2020; WHEREAS, the Authority and the City desire to provide for the issuance by the Authority of City of South San Francisco Public Facilities Financing Authority (Police Station Project) Lease Revenue Bonds, Series 2020A (the “Series 2020A Bonds”), in the aggregate principal amount of $_____________, in order to finance the Project described in Exhibit C hereto; WHEREAS, the Series 2020A Bonds will be payable equally and ratably from the Base Rental Payments; WHEREAS, the Authority and the City desire to provide for the issuance of Additional Bonds (defined below) payable from the Base Rental Payments on a parity with the Series 2020A Bonds (the Series 2020A Bonds and any such Additional Bonds being collectively referred to herein as the “Bonds”); 2 WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Authority and the City have authorized the execution and delivery of this Indenture; and WHEREAS, the Authority and the City have determined that all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special obligations of the Authority, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of the Indenture has been in all respects duly authorized; NOW THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties do her eby agree as follows: ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of the Bonds and of any certificate, opinion, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein. Capitalized terms not otherwis e defined herein shall have the meanings assigned to such terms in the Lease Agreement. “Act” means the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code. “Additional Bonds” means Bonds other than the Series 2020A Bonds issued hereunder in accordance with the provisions of Sections 3.05 and 3.06 hereof. “Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.02 of the Lease Agreement. “Assignment Agreement” means the Assignment Agreement, dated as of March 1, 2020, by and between the Authority and the Trustee. “Authority” means the City of South San Francisco Public Facilities Financing Authority, a joint exercise of powers entity organized and existing under and by virtue of the laws of the State of California. “Authorized Authority Representative” means the Chair, the Executive Director or the Treasurer of the Authority, or the City Manager, Assistant City Manager, or Director of Finance of the City, or any other person authorized by the Board of Directors of the Authority to act on behalf of the Authority under or with respect to this Indenture. 3 “Authorized City Representative” means the Mayor of the City, the City Manager, the Assistant City Manager, or the Director of Finance of the City, or any other person authorized by the City Council of the City to act on behalf of the City under or with respect to this Indenture. “Authorized Denominations” means $5,000 or any integral multiple thereof. “Base Rental Payment Fund” means the fund by that name established in accordance with Section 5.02 hereof. “Base Rental Payments” means all amounts payable to the Authority by the City as Base Rental Payments pursuant to Section 3.01 of the Lease Agreement. “Beneficial Owner” means, whenever used with respect to a Book-Entry Bond, the person whose name is recorded as the beneficial owner of such Book -Entry Bond or a portion of such Book- Entry Bond by a Participant on the records of such Participant or such person’s subrogee. “Bonds” means the Series 2020A Bonds and any Additional Bonds issued hereunder. “Book-Entry Bonds” means the Bonds of a Series registered in the name of the nominee of DTC, or any successor securities depository for such Series of Bon ds, as the registered owner thereof pursuant to the terms and provisions of Section 2.10 hereof. “Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday, (b) a day on which banking institutions in the State of California, or in any state in which the Office of the Trustee is located, are required or authorized by law (including executive order) to close, or (c) a day on which the New York Stock Exchange is closed. “Cede & Co.” means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to a Series of Book-Entry Bonds. “City” means the City of South San Francisco, a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and law s of the State of California. “Closing Date” means February __, 2020. “Code” means the Internal Revenue Code of 1986, as amended. “Continuing Disclosure Agreement” means the Continuing Disclosure Agreement executed by the City in connection with the issuance of a Series of Bonds, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. “Costs of Issuance” means all the costs of issuing and delivering the Bonds, including, but not limited to, all printing and document preparation expens es in connection with this Indenture, the Lease Agreement, the Ground Lease, the Assignment Agreement, the Bonds and any preliminary official statement and final official statement pertaining to the Bonds, rating agency fees, CUSIP Service Bureau charges, market study fees, legal fees and expenses of counsel, fees and expenses of the municipal advisor, the initial fees and expenses of the Trustee and its counsel and other fees and expenses incurred in connection with the issuance and delivery of the Bonds, to the extent such fees and expenses are approved by the City. 4 “Costs of Issuance Fund” means the fund by that name established in accordance with Section 3.03 hereof. “DTC” means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of New York, and its successors as securities depository for any Series of Book-Entry Bonds, including any such successor appointed pursuant to Section 2.10 hereof. “Federal Securities” means (a) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), and (b) obligations of any agency, department or instrumentality of the United States of America the timely payment of principal of and interest on which are fully guaranteed by the United States of America. “Fitch” means Fitch Ratings, Inc., New York, New York, or its successors and assigns, except that if such corporation shall no longer perform the function of a securities rating agency for any reason, the term “Fitch” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. “Ground Lease” means the Ground Lease, dated as of March 1, 2020, by and between the City and the Authority, as originally executed and as it may from time to time be amended in accordance with the provisions thereof and of the Lease Agreement. “Indenture” means this Indenture, as originally executed and as it may be amended or supplemented from time to time by any Supplemental Indenture. “Information Services” means Municipal Securities Rulemaking Board through the Electronic Municipal Marketplace Access (EMMA) website; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other services providing information with respect to called bonds as the Authority may designate in a Written Certificate of the Authority delivered to the Trustee. “Interest Fund” means the fund by that name established in accordance with Section 5.02 hereof. “Interest Payment Date” means June 1 and December 1 of each year, commencing on December 1, 2020. “Lease Agreement” means the Lease Agreement, dated as of March 1, 2020, by and between the City and the Authority, as originally executed and as it may be from time to time amended in accordance with the provisions thereof. “Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, or its successors and assigns, except that if such corporation shall no longer perform the function of a securities rating agency for any reason, the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. “Office of the Trustee” means the principal corporate trust office of the Trustee in San Francisco, California, or such other office as may be specified to the Authority and the City by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of 5 transfer and exchange such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing. “Opinion of Counsel” means a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the Authority or the City and which written opinion is satisfactory to the Trustee. “Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 11.09 hereof) all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under this Indenture except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to which all liability of the Authority shall have been discharged in accordance with Section 10.01 hereof; and (c) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to this Indenture. “Owner” means, with respect to a Bond, the Person in whose name such Bond is registered on the Registration Books. “Participant” means any entity which is recognized as a participant by DTC in DTC’s book - entry system of maintaining records with respect to Book-Entry Bonds. “Participating Underwriter” means the original underwriter or underwriters of a Series of Bonds required to comply with Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, in connection with the offering of such Series of Bonds. “Permitted Investments” means any of the following to the extent then permitted by the general laws of the State of California: (1) (a) Direct obligations (other than an obligation subject to variation in principal repayment) of the United States of America (“United States Treasury Obligations”), (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of America, (c) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumenta lity of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or (d) evidences of ownership of 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 whom the custodian may be obligated (collectively “United States Obligations”). These include, but are not necessarily limited to: -U.S. Treasury obligations All direct or fully guaranteed obligations 6 -Farmers Home Administration Certificates of beneficial ownership -General Services Administration Participation certificates -U.S. Maritime Administration Guaranteed Title XI financing -Small Business Administration Guaranteed participation certificates Guaranteed pool certificates -Government National Mortgage Association (GNMA) GNMA-guaranteed mortgage-backed securities GNMA-guaranteed participation certificates -U.S. Department of Housing & Urban Development Local authority bonds -Washington Metropolitan Area Transit Authority Guaranteed transit bonds (2) Federal Housing Administration debentures. (3) The listed obligations of government-sponsored agencies which are not backed by the full faith and credit of the United States of America: -Federal Home Loan Mortgage Corporation (FHLMC) Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts) Senior debt obligations -Farm Credit Banks (formerly: Federal Land Banks, Federal intermediate Credit Banks and Banks for Cooperatives) Consolidated systemwide bonds and notes -Federal Home Loan Banks (FHL Banks) Consolidated debt obligations -Federal National Mortgage Association (FNMA) Senior debt obligations Mortgage-backed securities (excluded are stripped mortgages securities which are purchased at prices exceeding their principal amounts) -Financing Corporation (FICO) Debt obligations -Resolution Funding Corporation (REFCORP) Debt obligations - Federal Agricultural Mortgage Corporation (Farmer Mac) Debt obligations (4) Bank deposit products, unsecured certificates of deposit (including those placed by a third party pursuant to an agreement between the City and the Trustee), trust funds, trust accounts, overnight banking deposits, interest bearing deposits, interest bearing money market accounts, time deposits, demand deposits, and bankers’ acceptances (having maturities of not more than 30 days) of any bank (including the Trustee and any affiliate) the short -term obligations of which are rated “A-1” or “A-2” without regard to qualifier by a nationally recognized rating agency service. 7 (5) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation (FDIC), in banks, including the Trustee and its affiliates, which have capital and surplus of at least $5 million. (6) Commercial paper (having original maturities of not more than 270 days) rated, at the time of purchase, “A-1” or better by S&P or “Prime-1” by Moody’s. (7) Money market mutual funds rated “AAm” or “AAm-G” by a nationally recognized rating agency service, or better (including those for which the Trustee or its affiliates receives and retains a fee for services provided to the fund, whether as a custodian, transfer agent, investment advisor or otherwise) but excluding such funds with a floating net asset value. (8) Investments in repurchase agreements which comply with the requirements of California Government Code Section 53601(j) pursuant to which the seller will repurchase the securities on or before a specified date and for a specified amount and will deliver the underlying securities to the Trustee by book entry, physical delivery, or by third party custodial agreement. The term “securities,” for the purpose of repurchase agreements, mean s securities of the same issuer, description, issue date and maturity. Repurchase agreements are required to be collateralized by securities or cash authorized under California Government Code Section 53601(j)(2) as described below: (a) To anticipate market changes and provide a level of security for all repurchase agreement transactions, the market value of securities that underlie a repurchase agreement shall be valued at 102% or greater for U.S. securities listed in paragraph (1) above and 105% for U.S. Government Agency securities listed in paragraph (3) above, of the funds borrowed against those securities and the value shall be adjusted no less frequently than weekly. Since the market value of the underlying securities is subject to daily market fl uctuations, the investments in repurchase agreements shall be in compliance if the value of the underlying securities is brought back up to 102% or 105%, as applicable, no later than the next business day. (b) Collateral will be limited to U.S. Treasury securities listed in paragraph (1) above and U.S. Government Agency securities listed in paragraph (3) above. Collateral will be held by an independent third party with whom the Trustee has a current custodial agreement. A clearly marked evidence of owner ship (safekeeping/custody receipt) must be supplied to the Trustee and retained. The Trustee retains the right to substitute or grant substitutions of collateral. (9) State Obligations: (a) Direct general obligations of any state of the United States 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 “A2” by Moody’s or “A” by S&P or Fitch, or better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated. 8 (b) Direct, general short-term obligations of any state agency or subdivision described in (a) above and rated “A-1+” by S&P or “F1+” by Fitch or “Prime-1” by Moody’s. (c) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state, state agency or subdivision described in (a) above and rate d “AA” or better by S&P or Fitch or “Aa” or better by Moody’s. (10) Local Agency Investment Fund of the State of California. (11) Any investment agreement with a domestic or foreign bank or insurance company whose senior long-term debt obligations, deposit rating or claims-paying ability are rated, or guaranteed by an entity whose obligations are rated (at the ti me the investment is entered into) at least “A+” by S&P, “A1” by Moody’s” or “A+” by Fitch; provided, that prior written notice of an investment in the investment agreement is provided to S&P, and provided, further by the terms of the investment agreement: (a) interest payments are to be made to the Trustee at times and in amounts as necessary to pay debt service on the Bonds; (b) the invested funds are available for withdrawal without penalty or premium, at any time for purposes identified in this Indenture other than acquisition of alternative investment property upon not more than seven days prior notice (which notice may be amended or withdrawn at any time prior to the specified withdrawal date); provided that the Indenture specifically requires the Trus tee or the City to give notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid; (c) 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; (d) a guaranteed rate of interest is to be paid on invested funds and all future deposits, if any, required to be made to restore the amount of such funds to the level specified under the Indenture; (e) the Trustee and the City receive the opinion of domestic counsel (which opinion shall be addressed to the City) that such investment agreement is legal, valid and binding and enforceable against the provider in accordance with its terms and of foreign counsel (if applicable); (f) The investment agreement shall provide that if during the term thereof, the provider’s rating by any two of the following rating agencies, S&P, Moody’s, or Fitch, is withdrawn or suspended of falls below “A-” by S&P, “A3” by Moody’s, or “A-” by Fitch, the provider must at the direction of the City within ten (10) days of receipt of such downgrade, (i) deliver and grant, or cause to be delivered and granted, to a third party custodian a first priority security inte rest under the applicable Uniform Commercial Code, or other applicable law, in and to Permitted Collateral; or (ii) transfer the investment agreement and the rights and obligations of 9 the provider thereunder to an entity reasonably satisfactory to the City and the Trustee whose long-term, senior unsecured debt obligations or claims-paying ability, or whose guarantor’s long term, senior unsecured debt obligations or claims-paying ability are rated at not less than “A-” by S&P, “A3” by Moody’s or “A-” by Fitch or its equivalent from another Rating Agency; or (iii) repay the principal of and accrued by unpaid interest on the investment with no penalty or premium to the City and the Trustee; (g) the investment agreement shall state, and an opinion of counsel shall be rendered to the effect, that the Trustee 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 Trustee is in possession); and (h) the investment agreement must provide that if during its term (A) the provider shall default in its payment obligations, the provider’s obligation under the investment agreement shall, at the direction of the City or the Trustee, be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the City or Trustee, as appropriate, and (B) 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. (12) Pre-refunded municipal obligations rated “AAA” by S&P or Fitch or “Aaa” by Moody’s meeting the following requirements: (a) the municipal obligations are (1) not subject to redemption prior to maturity or (2) 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; (b) 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; (c) the principal of and interest on the United States Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certifie d 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”); (d) 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; (e) 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 10 (f) 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. The Trustee shall have no responsibility to monitor the ratings of Permit ted Investments after the initial purchase of such Permitted Investments. “Person” means an individual, corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or politic al subdivision thereof. “Principal Fund” means the fund by that name established in accordance with Section 5.02 hereof. “Project” means the acquisition, construction and/or installation of a new City police station, other improvements to the City’s community civic center, and related improvements, facilities and equipment, and such other capital facilities that may be financed from proceeds of Additional Bonds as set forth in a Supplemental Indenture. “Project Fund” means the fund of that name established pursuant to Section 3.04 hereof. “Property” has the meaning ascribed thereto in the Lease Agreement. “Rating Agency” means Fitch, Moody’s and Standard & Poor’s, or any one of such entities, as the context requires. “Rebate Fund” means the fund by that name established in accordance with Section 5.05 hereof. “Rebate Requirement” has the meaning ascribed thereto in the Tax Certificate. “Record Date” means the fifteenth day of the month next preceding an Interest Payment Date, whether or not such day is a Business Day. “Redemption Fund” means the fund by that name established in accordance with Section 5.02 hereof. “Redemption Price” means the aggregate amount of principal of and premium, if any, on the Bonds upon the redemption thereof pursuant hereto. “Registration Books” means the records maintained by the Trustee for the registration of ownership and registration of transfer of the Bonds pursuant to Section 2.05 hereof. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments. “Rental Period” means the period from the Closing Date through May 31, 2020 and, thereafter, the twelve-month period commencing on June 1 of each year during the term of the Lease Agreement. 11 “Representation Letter” means the Letter of Representations from the Authority to DTC, or any successor securities depository for any Series of Book -Entry Bonds, in which the Authority makes certain representations with respect to issues of its securities for deposit by DTC or such successor depository. “S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, or its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. “Securities Depositories” means The Depository Trust Company, New York, New York 10041-0099, Fax-(212) 855-7232; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Authority may designate in a Written Certificate of the Authority delivered to the Trustee. “Series” means all of the Series 2020A Bonds or the Additional Bonds issued and designated under a Supplemental Indenture as being of the same series, authenticated and delivered in a simultaneous transaction, regardless of variations in maturity, interest rate, redemption and other provisions, and any bonds thereafter authenticated and delivered upon transfer or exchange of or in lieu of or in substitution for (but not to refund) such bonds as herein provided. “Series 2020A Bonds” means the City of South San Francisco Public Facilities Financing Authority (Police Station Project) Lease Revenue Bonds, Series 2020A issued hereunder. “Supplemental Indenture” means any supplemental indenture amendatory of or supplemental to this Indenture, but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder. “Tax Certificate” means the Tax Certificate executed by the Authority and the City at the time of issuance of a Series of Bonds relating to the requirements of Section 148 of the Code, as originally executed and as it may from ti me to time be amended in accordance with the provisions thereof. “Term Bonds” means the Bonds maturing on June 1, 20__ and on June 1, 20__, and any term maturities of an issue of Additional Bonds as specified in a Supplemental Indenture . “Trustee” means The Bank of New York Mellon Trust Company, N.A., a national banking association duly organized and existing under and by virtue of the laws of the United States, or any successor thereto as Trustee hereunder, appointed as provided herein. “Written Certificate of the Authority” and “Written Request of the Authority” mean, respectively, a written certificate or written request signed in the name of the Authority by an Authorized Authority Representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument “Written Certificate of the City” and “Written Request of the City” mean, respectively, a written certificate or written request signed in the name of the City by an Authorized City Representative. Any such certificate or request may, but need, not, be combined in a single 12 instrument with any other instrument, opinion or representation, and t he two or more so combined shall be read and construed as a single instrument. Section 1.02 Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the Authority, the City, the Trustee and the Owners from time to time of all Bonds authorized, executed, issued and delivered hereunder and then Outstanding to secure the full and final payment of the principal of, premium, if any, and interest on all Bonds which may fr om time to time be authorized, executed, issued and delivered hereunder, subject to the agreements, conditions, covenants and provisions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Authority or the City shall be for the equal and proportionate benefit, protection and security of all Owners of the Bonds without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number or date thereof or the time of authorization, sale, execution, issuance or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. ARTICLE II THE BONDS Section 2.01 Authorization of Bonds. The Authority hereby authorizes the issuance of the Bonds under and subject to the terms of this Indenture and applicable laws of the State of California for the purpose of financing and/or refinancing the Project. The Bonds may consist of one or more Series of Bonds of varying denominations, dates, maturities, interes t rates and other provisions, subject to the provisions and conditions contained herein. Section 2.02 Terms of Series 2020A Bonds. (a) The Series 2020A Bonds shall be designated the “City of South San Francisco Public Facilities Financing Authority (Police Station Project) Lease Revenue Bonds, Series 2020A.” Each Series of Additional Bonds shall bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series, of Bonds. (b) The Series 2020A Bonds shall be issued in fully registered form without coupons in Authorized Denominations, so long as no Series 2020A Bond shall have more than one maturity date. The Series 2020A Bonds shall be dated as of the Closing Date, shall be issued in the aggregate principal amount of $_____________, shall mature on June 1 of each year and shall bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the rates per annum as follows: 13 Maturity Date (June 1) Principal Amount Interest Rate (c) Interest on the Series 2020A Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Series 2020A Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it shall bear interest from such Interest Payment Date, (ii) a Series 2020A Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the dated date thereof, or (iii) interest on any Series 2020A Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Interest shall be paid in lawful money of the United States on each Interest Payment Date to the Persons in whose names the ownership of the Series 2020A Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Except as otherwise provided in Section 2.10(a), interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Series 2020A Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date or by wire transfer to Owners of more than $1,000,000 in principal amount of Series 2020A Bonds who have provided account information and wiring instructions satisfactory to the Trustee. (d) The principal and premium, if any, of the Series 2020A Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee. (e) The Series 2020A Bonds shall be subject to redemption as provided in Article IV. 14 Section 2.03 Form of Series 2020A Bonds. The Series 2020A Bonds shall be in substantially the form set forth in Exhibit A hereto, with appropriate or necessary insertions, omissions and variations as permitted or required hereby. Section 2.04 Transfer and Exchange of Bonds. Any Bond may, in accordance with its terms, be transferred upon the Registration Books by the Person in whose name it is registe red, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendere d for transfer, the Authority shall execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds of the same Series in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. Prior to any transfer of Bonds outside the book-entry system (including, but not limited to, the initial transfer outside the book-entry system) the transferor shall provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Section 604 5 of the Code. The Trustee shall conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information. The Bonds may be exchanged at the Office of the Trustee for a like aggregate princi pal amount of Bonds of the same Series of other authorized denominations. The Trustee shall require the payment by the Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be obligated to make any transfer or exchange of Bonds of a Series pursuant to this Section during the period established by the Trustee for the selection of Bonds of such Series for redemption, or with respect to any Bonds of such Series selected for redemption. Section 2.05 Registration Books. The Trustee will keep or cause to be kept, at the Office of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds, which shall be open to inspection during regular business hours and upon reasonable notice by the City; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as hereinbefore provided. Section 2.06 Execution of Bonds. The Bonds shall be executed in the name and on behalf of the Authority with the manual or facsimile signature of an Authorized Officer of the Authority attested by the manual or facsimile signature of the Secretary of the Authority. The Bonds shall then be delivered to the Trustee for authentication by it. In case any of such officers of the Authority who shall have signed or attested any of the Bonds shall cease to be such officers of the Authority before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee, or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as though those who signed and attested the same had continued to be such officers of the Authority, and also any Bonds may be signed and attested on behalf of the Authority by such Persons as at the actual date of execution of such Bonds shall be the proper officers of the Authority although at the nominal date of such Bonds any such Person shall not have been such officer of the Authority. 15 Section 2.07 Authentication of Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form as that set forth in Exhibit A hereto, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of or on behalf of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture. Section 2.08 Temporary Bonds. The Bonds of a Series may be issued in temporary form exchangeable for definitive Bonds of such Series when ready for delivery. Any temporary Bonds may be printed, lithographed or typewritten, shall be of such authorized denominations as may be determined by the Authority, shall be in fully registered form without c oupons and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds of a Series it will execute and deliver definitive Bonds of such Series as promptly thereafter as practicable, and thereupon the temporary Bonds of such Series, may be surrendered, for cance llation, at the Office of the Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of such Series in Authorized Denominations. Until so exchanged, the temporary Bonds of such Series shall be entitled to the same benefits under this Indenture as definitive Bonds of such Series authenticated and delivered hereunder. Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and Series in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or in accordance with the order of, the Authority. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence and indemnity satisfactory to the Trustee shall be given, the Authority, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and Series in lieu of and in replacement for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been selected for redemption, instead of issuing a replacement Bond, the Trustee may pay the same without surrender thereof). The Authority may require payment by the Owner of a sum not exceeding the actual cost of preparing each replacement Bond issued under this Section and of the expenses which may be incurred by the Authority and the Trustee. Any Bond of a Series issued under the provisions of this Section in lieu of any Bond of such Series alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other Bonds of such Series secured by this Indenture. Section 2.10 Book-Entry Bonds. (a) Prior to the issuance of a Series of Bonds, the Authority may provide that such Series of Bonds shall initially be issued as Book-Entry Bonds and, in such event, the Bonds of such Series for each maturity shall be in the form of a separate single fully registered Bond (which may be typewritten). The Series 2020A Bonds shall initially be issued as Book-Entry Bonds. 16 Except as provided in subsection (c) of this Section, the registered Owner of all of the Book-Entry Bonds shall be Cede & Co., as nominee of DTC. Notwithstanding anything to the contrary contained in this Indenture, payment of interest with respect to any Book -Entry Bond registered as of each Record Date in the name of Cede & Co. shall be made by wire transfer of same - day funds to the account of Cede & Co. on the Interest Payment Date at the address indicated on th e Record Date for Cede & Co. in the Registration Books or as otherwise provided in the Representation Letter. (b) The Trustee and the Authority may treat DTC (or its nominee) as the sole and exclusive Owner of Book-Entry Bonds registered in its name for the purposes of payment of the principal, premium, if any, or interest with respect to Book -Entry Bonds, selecting Book-Entry Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Owners of Book-Entry Bonds under this Indenture, registering the transfer of Book-Entry Bonds, obtaining any consent or other action to be taken by Owners of Book-Entry Bonds and for all other purposes whatsoever, and neither the Trustee nor the Authority shall be affected by any notice to the contrary. Neither the Trustee nor the Authority shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in Book-Entry Bonds under or through DTC or any Participant, or any other person which is not shown on the Registration Books as being an Owner, with respect to the accuracy of any records maintained by DTC or any Participant, the payment by DTC or any Participant of any amount in respect of the principal, premium, if any, or interest with respect to Book-Entry Bonds, any notice which is permitted or required to be given to Owners of Book-Entry Bonds under this Indenture, the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of Book -Entry Bonds, or any consent given or other action taken by DTC as Owner of Book-Entry Bonds. The Trustee shall pay all principal, premium, if any and interest with respect to Book -Entry Bonds, only to DTC, and all such payments shall be valid and effective to ful ly satisfy and discharge the Authority’s obligations with respect to the principal, premium, if any, and interest with respect to the Book-Entry Bonds to the extent of the sum or sums so paid. Except under the conditions of subsection (c) of this Section, no person other than DTC shall receive an executed Book-Entry Bond for each separate stated maturity. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subj ect to the provisions herein with respect to record dates, the term “Cede & Co.” in this Indenture shall refer to such new nominee of DTC. (c) In the event (i) DTC, including any successor as securities depository for a Series of Bonds, determines not to continue to act as securities depository for such Series of Bonds, or (ii) the Authority determines that the incumbent securities depository shall no longer so act, and delivers a written certificate to the Trustee to that effect, then the Authority will discon tinue the book-entry system with the incumbent securities depository for such Series of Bonds. If the Authority determines to replace the incumbent securities depository for such Series of Bonds with another qualified securities depository, the Authority shall prepare or direct the preparation of a new single, separate fully registered Bond of such Series for the aggregate outstanding principal amount of Bonds of such Series of each maturity, registered in the name of such successor or substitute qualified securities depository, or its nominee, or make such other arrangement acceptable to the Authority, the Trustee and the successor securities depository for the Bonds of such Series as are not inconsistent with the terms of this Indenture. If the Authority fails to identify another qualified successor securities depository for such Series of Bonds to replace the incumbent securities depository, then the Bonds of such Series shall no longer be restricted to being registered in the Registration Books in the name of the incumbent securities depository or its nominee, but shall be 17 registered in whatever name or names the incumbent securities depository for such Series of Bonds, or its nominee, shall designate. In such event the Authority shall execute, and deli ver to the Trustee, a sufficient quantity of Bonds of such Series to carry out the transfers and exchanges provided in Sections 2.04, 2.08 and 2.09 hereof. All such Bonds of such Series shall be in fully registered form in Authorized Denominations. (d) Notwithstanding any other provision of this Indenture to the contrary, so long as any Book-Entry Bond is registered in the name of DTC, or its nominee, all payments with respect to the principal, premium, if any, and interest with respect to such Book -Entry Bond and all notices with respect to such Book-Entry Bond shall be made and given, respectively, as provided in the Representation Letter. (e) In connection with any notice or other communication to be provided to Owners of Book-Entry Bonds pursuant to this Indenture by the Authority, the City or the Trustee with respect to any consent or other action to be taken by Owners, the Authority, the City or the Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS Section 3.01 Issuance of Series 2020A Bonds. The Authority may, at any time, execute the Series 2020A Bonds for issuance hereunder and deliver the same to the Trustee. The Trustee shall authenticate the Series 2020A Bonds and deliver the Series 2020A Bonds to the original purchaser thereof upon receipt of a Written Request of the Authority and upon receipt of the purchase price therefor. Section 3.02 Application of Proceeds of the Series 2020A Bonds. On the Closing Date, the net proceeds of the sale of the Series 2020A Bonds received by the Trustee, $____________, shall be deposited by the Trustee as follows: (a) The Trustee shall deposit the amount of $___________ in the Costs of Issuance Fund, and (b) The Trustee shall deposit the amount of $__________ to the Project Fund. Section 3.03 Costs of Issuance Fund. The Trustee shall establish and maintain a separate fund designated the “Costs of Issuance Fund.” On the Closing Date, there shall be deposited in the Costs of Issuance Fund the amount specified in Section 3.02 hereof. There shall be additionally be deposited in the Cost of Issuance Fund the portion, if any, of the proceeds of the sale of any Additional Bonds required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued. The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of the Authority stating (a) the Person to whom payment is to be made, (b) the amount to be paid, (c) the purpose for which the obligation was incurred, (d) that such payment is a proper charge against the Costs of 18 Issuance Fund, and (e) that such amounts have not been the subject of a prior disbursement from the Costs of Issuance Fund, in each case together with a statement or invoice for each amount requested thereunder. Each such Written Request of the Authority shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. On the date that is six months after the Closing Date, all amounts, if any, remaining in the Costs of Issuance Fund shall be withdrawn therefrom by the Trustee and transferred to the Project Fund. Section 3.04 Project Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the “Project Fund.” The moneys in the Project Fund or the accounts therein shall be disbursed by the Trustee on behalf of the City as specified in a Written Request of the City in the form attached hereto as Exhibit B. Each Written Request of the City shall be sufficient evidence to the Trustee of the facts stated t herein and the Trustee shall have no duty to confirm the accuracy of such facts. On the date on which the City determines that amounts in the Project Fund are no longer necessary for payment of the cost of the Project, the City shall submit a Written Request to the Trustee to transfer any remaining balance in the Project Fund not needed for Project Fund purposes, at the City’s sole discretion, either (a) to the Base Rental Payment Fund for application in accordance with Section 5.02 hereof, or (b) to the City for use on eligible capital facilities, and the Project Fund shall be closed. Investment earnings on amounts on deposit in the Project Fund shall remain on deposit in the Project Fund for application in accordance with this Section. Section 3.05 Conditions for the Issuance of Additional Bonds. The Authority may at any time issue one or more Series of Additional Bonds (in addition to the Series 2020A Bonds) payable from Base Rental Payments as provided herein on a parity with all other Bonds theretofore issued hereunder, but only subject to the following conditions, which are hereby made conditions precedent to the issuance of such Additional Bonds: (a) The issuance of such Additional Bonds shall have been authorized under and pursuant hereto and shall have been provided for by a Supplemental Indenture which shall specify the following: (1) The application of the proceeds of the sale of such Additional Bonds; (2) The principal amount and designation of such Series of Additional Bonds and the denomination or denominations of the Additional Bonds; (3) The date, the maturity date or dates, the interest payment dates and the dates on which mandatory sinking fund redemptions, if any, are to be made for such Additional Bonds; provided, however, that (i) the serial Bonds of such Series of Additional Bonds shall be payable as to principal annually on June 1 of each year in which principal falls due, and the term Bonds of such Series of Additional Bonds shall have annual mandatory sinking fund redemptions on June 1, (ii) the Additional Bonds shall be payable as to interest semiannually on June 1 and December 1 of each year, (iii) all Additional Bonds of a Series of like maturity shall be identical in all respects, except as to number or denomination, and (iv) serial maturities of serial Bonds or mandatory sinking fund redemptions for term Bonds, or any combination thereof, shall be established to provide for the redemption or payment of such Additional Bonds on or before their respective maturity dates; 19 (4) The redemption premiums and terms, if any, for such Additional Bonds; (5) The form of such Additional Bonds; and (6) Such other provisions that are appropriate or necessary and are not inconsistent with the provisions hereof; (b) The Authority shall be in compliance with all agreements, conditions, covenants and terms contained herein, in the Lease Agreement and in the Ground Lease required to be observed or performed by it; (c) The City shall be in compliance with all agreements, conditions, covenants and terms contained herein, in the Lease Agreement and in the Ground Lease required to be observed or performed by it; and (d) The Ground Lease and the Lease Agreement shall have been amended , to the extent necessary, (i) so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount equal to the principal of and interest on such Additional Bonds, payable at such times and in such manner as may be necessary to provide for the payment of the principal of and interest on such Additional Bonds; provided, however, that no such amendment shall be made such that the sum of Base Rental Payments, including any increase in the Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Rental Period shall be in excess of the annual fair rental value of the Property after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith (evidence of the satisfaction of such condition shall be made by a Written Certificate of the City); and (ii) to include provisions for the prepayment of Base Rental Payments attributable to such Additional Bonds. Nothing contained herein shall limit the issuance of any bonds or other obligations payable from Base Rental Payments if, after the issuance and delivery of such bonds or other obligations, none of the Bonds theretofore issued hereunder will be Outstanding. Section 3.06 Procedure for the Issuance of Additional Bonds. At any time after the sale of any Additional Bonds in accordance with the Act, such Additional Bonds shall be executed by the Authority for issuance hereunder and shall be delivered to the Trustee and thereupon shall be authenticated and delivered by the Trustee, but only upon receipt by the Trustee of the following: (a) Certified copies of the Supplemental Indenture authorizing the issuance of such Additional Bonds, the amendment to the Lease Agreement requited by Section 3.05 hereof and the amendment to the Ground Lease, if any, required by Section 3.05 hereof, together with satisfactory evidence that provision has been made for such amendment to the Lease Agreement and such amendment to the Ground Lease, if any, to be recorded in the official records of the appropriate county; (b) A Written Request of the Authority as to the delivery of such Additional Bonds; (c) An opinion of Bond Counsel substantially to the effect that (i) the Indenture (including all Supplemental Indentures), the Lease Agreement (including the amendment thereto 20 required by Section 3.05 hereof) and the Ground Lease (including any amendment thereto required by Section 3.05 hereof) have been duly authorized, executed and delivered by, and constitute the valid and binding obligations of, the Authority and the City, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization, morato rium and other similar laws affecting creditors rights and by the application of equitable principles and by the exercise of judicial discretion in appropriate cases and subject to the limitations on legal remedies against political subdivisions in the State of California), and (ii) such Additional Bonds constitute valid and binding special obligations of the Authority payable solely from Base Rental Payments as provided herein and are enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights and by the application of equitable principles and by the exercise of judicial discretion in appropriate cases and subject to the limitations o n legal remedies against political subdivisions in the State of California); (d) a Written Certificate of the Authority that the requirements of Section 3.05 hereof have been met; (e) a Written Certificate of the City that the requirements of Section 3.05 hereof and Sections 5.01 and 5.02 of the Lease Agreement have been met, and a Written Certificate of the City as to the annual fair rental value of the Property, after giving effect to the issuance of the Additional Bonds, and to the use of proceeds received therefrom; and (f) Such further documents as are required by the provisions hereof or by the provisions of the Supplemental Indenture authorizing the issuance of such Additional Bonds. Section 3.07 Additional Bonds. So long as any of the Bonds remain Outstanding, the Authority shall not issue any Additional Bonds or obligations payable from the Base Rental Payments, except pursuant to Sections 3.05 and 3.06 hereof. ARTICLE IV REDEMPTION OF BONDS Section 4.01 Redemption of Series 2020A Bonds. (a) Extraordinary Redemption. The Series 2020A Bonds shall be subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of and: (i) Net Insurance Proceeds received with respect to all or a portion of the Property, deposited by the Trustee in the Redemption Fund pursuant to Sections 5.03 and 5.04 hereof, and (ii) eminent domain proceeds received pursuant to Section 7.01 of the Lease Agreement, at a Redemption Price equal to the principal amount of the Series 2020A Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. (b) Optional Redemption. The Series 2020A Bonds maturing on or after June 1, 20__, shall be subject to optional redemption, in whole or in part, on any date on or after June 1, 20__, in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to subsection (a) of Section 7.02 of the Lease Agreement, at a Redemption Price equal to the principal amount of the Series 2020A Bonds to be redeemed, plus accrued interest thereon to the date of redemption. 21 (c) Mandatory Sinking Fund Redemption. The Series 2020A Bonds with stated maturities on June 1, 20__ are subject to mandatory sinking fund redemption in part (by lot) on each June 1 on and after June 1, 20__, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Redemption Date (June 1) Principal Amount $ * * Final Maturity. The Series 2020A Bonds with stated maturities on June 1, 20__ are subject to mandatory sinking fund redemption in part (by lot) on each June 1 on and after June 1, 20__, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Redemption Date (June 1) Principal Amount $ * * Final Maturity. In the event of a partial optional redemption or extraordinary mandatory redemption of any of the Term Bonds, each of the remaining mandatory sinking fund payments for such Term Bonds will be reduced, as nearly as practicable, on a pro rata basis in the amount of $5,000 or any integral multiple thereof as directed by an Authorized City Representative , which direction shall include a revised schedule of the remaining mandatory sinking fund payments. Section 4.02 Notice of Redemption. Unless otherwise provided in a Supplemental Indenture, notice of redemption shall be given by the Trustee, not less than 20 nor more than 60 days prior to the redemption date (i) as to Bonds not registered in the name of a Securities Depository or its nominee, to the respective Owners of the Bonds designated for redemption at their addre sses appearing on the Registration Books, (ii) as to Bonds registered in the name of a Securities Depository or its nominee, to such Securities Depository for such Bonds, and (iii) the Information Services. Notice of redemption to the Owners pursuant to (i) above shall be given by mail at their addresses appearing on the Registration Books, or any other method agreed upon by such Owner and the Trustee. Notice of redemption to the Securities Depositories pursuant to (ii) above and the Information Services pursuant to (iii) above shall be given by electronically secure means, or any other method agreed upon by such entities and the Trustee. Such notice shall state the date of the notice, the redemption date, the redemption place and the Redemption Price and shall designate the 22 CUSIP numbers, the Bond numbers and the maturity or maturities (except in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and shall require that such Bonds be then surre ndered at the Office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Bonds will not accrue from and after the date fixed for redemption. Such notice of redemption may state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Bonds. Neither the failure to receive any notice so given, nor any defect in such notice, shall affect the validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of optional redemption of the Bonds, such notice may state that such redemption shall be conditional upon the receipt by the Trustee, o n or prior to the date fixed for such redemption, of moneys sufficient to pay the principal of, premium if any, and interest on the Bonds to be redeemed and upon other conditions set forth therein and that, if such money shall not have been so received or such other conditions shall not have been satisfied, said notice shall be of no force and effect and the Trustee shall not be required to redeem such Bonds. If any condition stated in the redemption notice for an optional redemption shall not have been sa tisfied on or prior to the redemption date: (i) the redemption notice shall be of no force and effect, (ii) the Authority shall not be required to redeem such Bonds, (iii) the redemption shall not be made, and (iv) the Trustee shall within a reasonable time thereafter give notice to the persons in the manner in which the conditional redemption notice was given that such condition or conditions were not met and that the redemption was canceled. Section 4.03 Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed by lot from all Bonds not previously called for redemption (a) with respect to any optional redemption of Bonds of a Series, among maturities of Bonds of such Series as directed in a Written Request of the Authority provided to the Trustee at least 30 but no more than 60 days prior to the date of such redemption, (b) with respect to any redemption pursuant to Section 4.01(a) hereof and the corresponding provision of any Supplemental Indenture pursuant to which Additional Bonds are issued, among maturities of all Series of Bonds on a pro rata basis as nearly as practicable, as directed in a Written Request of the Authority provided to the Trus tee at least 30 but no more than 60 days prior to the date of such redemption, and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued, and by lot among Bonds of the same Series with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treated as separate Bonds which may be separately redeemed. Section 4.04 Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority shall execute and the Trustee shall authenticate and de liver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same Series in authorized denominations equal in aggregate principal amount representing the unredeemed portion of the Bonds surrendered. Section 4.05 Effect of Notice of Redemption. Notice having been given as aforesaid, and moneys for the Redemption Price, and the interest to the applicable date fixed for redemption, having been set aside in the Redemption Fund, the Bonds shall become due and payable on said date, and, 23 upon presentation and surrender thereof at the Office of the Trustee, said Bonds shall be paid at the Redemption Price thereof, together with interest accrued and unpaid to said date. If, on said date fixed for redemption, moneys for the Redemption Price of all the B onds to be redeemed, together with interest to said date, shall be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof shall have been given as aforesaid and not canceled, then, from and after said date, interest on said Bonds shall cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds shall be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to such Owners for interest thereon. All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed. ARTICLE V SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS Section 5.01 Pledge; Special Obligations. Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund are hereby pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of this Indenture and the Act. Said pledge shall constitute a first lien on such assets. All obligations of the Authority under this Indenture shall be special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor hereunder; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor hereunder. Neither the faith and credit nor the taxing power the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds. The Authority has no taxing power. Section 5.02 Flow of Funds. (a) The Trustee shall establish and maintain separate funds designated the “Bas e Rental Payment Fund,” the “Interest Fund,” the “Principal Fund” and the “Redemption Fund.” All Base Rental Payments shall be paid directly by the City to the Trustee, and if received by the Authority at any time shall be transferred by the Authority with the Trustee within one Business Day after the receipt thereof. All Base Rental Payments received by the Trustee shall be deposited by the Trustee in the Base Rental Payment Fund. (b) The Trustee shall transfer the amounts on deposit in the Base Rental Paymen t Fund, at the times and in the manner hereinafter provided, to the following respective funds: (i) Interest Fund. On the Business Day immediately preceding each Interest Payment Date, the Trustee shall transfer from the Base Rental Fund to the Interest Fund the 24 amount, if any, necessary to cause the amount on deposit in the Interest Fund to be equal to the interest due on the Bonds on such Interest Payment Date. (ii) Principal Fund. On the Business Day immediately preceding each June 1, commencing June 1, 2021, the Trustee shall transfer from the Base Rental Fund to the Principal Fund the amount, if any, necessary to cause the amount on deposit in the Principal Fund to be equal to the principal amount of the Bonds due on such June 1, either as a result of the maturity thereof or mandatory sinking fund redemption payments required to be made with respect thereto. Moneys in the Principal Fund shall be used by the Trustee for the purpose of paying the principal of the Bonds when due and payable at their maturity dates or upon earlier mandatory sinking fund redemption. (iii) Redemption Fund. The Trustee, on the redemption date specified in the Written Request of the City filed with the Trustee at the time that any prepaid Base Rental Payment is paid to the Trustee pursuant to the Lease Agreement, shall deposit in the Redemption Fund that amount of moneys representing the portion of the Base Rental Payments designated as prepaid Base Rental Payments. Additionally, the Trustee shall deposit in the Redemption Fund any amounts required to be deposited therein pursuant to Sections 5.03 and 5.04 hereof and Section 7.01 of the Lease Agreement. Moneys in the Redemption Fund shall be used by the Trustee for the purpose of paying the principal of and interest and premium, if any, on Series 2020A Bonds redeemed pursuant to the provisions of subsections (a) and (b) of Section 4.01 hereof and Additional Bonds redeemed pursuant to the corresponding provisions of the Supplemental Indenture pursuant to which such Additional Bonds are issued. Section 5.03 Application of Net Insurance Proceeds. If the Property or any portion thereof shall be damaged or destroyed, subject to the further requirements of this Section, the City shall, as expeditiously as possible, continuously and diligently prosecute or caus e to be prosecuted the repair or replacement thereof, unless the City elects not to repair or replace the Property or the affected portion thereof in accordance with the provisions hereof. The Net Insurance Proceeds (other than Net Insurance Proceeds of re ntal interruption insurance), including the proceeds of any self-insurance, received on account of any damage or destruction of the Property or a portion thereof shall as soon as possible be deposited with the Trustee and be held by the Trustee in a special fund entitled the “Insurance and Condemnation Fund” and made available for and, to the extent necessary, shall be applied to the cost of repair or replacement of the Property or the affected portion thereof upon receipt of a Written Request of the City, together with invoices therefor. Each such Written Request of the City shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. Pending such application, such proceeds may be invested by the Trustee as directed by the City in Permitted Investments that mature not later than such times moneys are expected to be needed to pay such costs of repair or replacement. Notwithstanding the foregoing, the City shall, within 60 d ays of the occurrence of the event of damage or destruction, notify the Trustee in writing as to whether the City intends to replace or repair the Property or the portions of the Property which were damaged or destroyed. If the City does intend to replace or repair the Property or portions thereof, the City shall deposit with the Trustee the full amount of any insurance deductible to be credited to the special account. 25 If the damage, destruction or loss was such that there resulted in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement of Rental Payments results from such damage or destruction pursuant to Section 3.06 of the Lease Agreement, then the City shall be required either to (a) apply sufficient funds from the insurance proceeds and other legally available funds to the replacement or repair of the Property or the portions thereof which have been damaged to the condition which existed prior to such damage or destruction, or (b) apply sufficient funds from the insurance proceeds and other legally available funds to the redemption, as set forth in subsection (a) of Section 4.01 hereof and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued, in full of all the Outstanding Bonds or all of those Outstanding Bonds which would have been payable from that portion of the Base Rental Payments which are abated as a result of the damage or destruction. Funds to be applied to the redemption of Bonds in accordance with clause (b) above shall be deposited in the Redemption Fund. If the City is not required to replace or repair the Property, or the affected portion thereof, as set forth in clause (a) above or to use such amounts to redeem Bonds as set forth in clause (b) above, then such proceeds shall, if there is first delivered to the Trustee a Written Certificate of the City to the effect that the annual fair rental value of the Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, is at least equal to 100% of the maximum amount of Base Rental Payments becoming due under the Lease Agreement in the then current Rental Period or any subsequent Rental Period and the fair replacement value o f the Property after such damage or destruction is at least equal to the principal amount of the Outstanding Bonds, be paid to the City to be used for any lawful purpose. The proceeds of any award in eminent domain received in respect to the Property shall be deposited by the Trustee in the Redemption Fund and applied to the redemption of Bonds pursuant to subsection (a) of Section 4.01 hereof and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued. Section 5.04 Title Insurance. Proceeds of any policy of title insurance received by the Trustee in respect of the Property shall be applied and disbursed by the Trustee as follows: (a) if the City determines that the title defect giving rise to such proceeds has not substantially interfered with its use and occupancy of the Property and will not result in an abatement of Rental Payments payable by the City under the Lease Agreement, upon Written Request of the City, such proceeds shall be remitted to the City and used for any lawful purpose thereof; or (b) if the City determines that the title defect giving rise to such proceeds has substantially interfered with its use and occupancy of the Property and will result in an abatement of Rental Payments payable by the City under the Lease Agreement, then, upon Written Request of the City, the Trustee shall immediately deposit such proceeds in the Redemption Fund and such proceeds shall be applied to the redemption of Bonds in the manner provided in subsection (a) of Section 4.01 hereof and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued. Section 5.05 Rebate Fund. (a) The Trustee shall establish and maintain a special fund designated the “Rebate Fund.” There shall be deposited in the Rebate Fund suc h amounts as are required to be deposited therein pursuant to the Tax Certificate, as specified in a Written Request of the Authority. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent 26 required to satisfy the Rebate Requirement, for payment to the United States of America. Notwithstanding defeasance of the Bonds pursuant to Article X hereof or anything to the contrary contained herein, all amounts required to be deposited into or on deposit in the Reba te Fund shall be governed exclusively by this Section and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Authority, and shall have no liability or responsibility to enforce compliance by the Authority with the terms of the Tax Certificate. The Trustee may conclusively rely upon the Authority’s determinations, calculations and certifications required by the Tax Certificate. The Trustee shall have no responsibility to independently make any calculation or determination or to review the Authority’s calculations. (b) Any funds remaining in the Rebate Fund after payment in full of all of the Bonds and after payment of an y amounts described in this Section, shall be withdrawn by the Trustee and remitted to the Authority. Section 5.06 Investment of Moneys. Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Indenture and held by the Trustee shall be invested by the Trustee solely in Permitted Investments, as directed in writing by the Authority filed with the Trustee at least two Business Days in advance of the making of such investments . Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Indenture; provided, however, that such Permitted Investments may be redee med at par so as to be available on each Interest Payment Date. Absent timely written direction from the Authority, the Trustee shall hold any funds held by it uninvested. The Trustee may conclusively rely upon the Authority’s written instructions as to both the suitability and legality of the directed investments and such written direction shall be deemed to be a certification that such directed investments constitute Permitted Investments. Subject to the provisions of Section 5.05 hereof, all interest, profits and other income received from the investment of moneys in any fund or account established pursuant to this Indenture shall be retained therein. Permitted Investments acquired as an investment of moneys in any fund established under this Indenture shall be credited to such fund. For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued by the Trustee at the cost thereof. The Trustee may act as principal or agent in the making or disposing of any investment. Upon the Written Request of the Authority, the Trustee shall sell or present for redemption any Permitted Investments so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investments is credited, and the Trustee shall not be liable or responsible for any loss resulting from any investment made or sold pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of the funds and accounts established hereunder. The Trustee may make any investments hereunder through the bond or investment department or trust investment department of the entity acting as Trustee hereunder, or those of such entity’s parent or any affiliate, and such entity, or its parent or affiliate, as applicable, shall be entitled to its normal, customary and reasonable compensation for such services. 27 The entity acting as Trustee hereunder, or any of its affiliates, may act as s ponsor, advisor or manager in connection with any investments made by the Trustee hereunder and such entity, or its affiliate, as applicable, shall be entitled to its normal, customary and reasonable compensation for such services. The Authority and the City acknowledge that, to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority and the City the right to receive brokerage confirmations of security transactions as they occur, at no additional c ost, the Authority and the City specifically waive receipt of such confirmations to the extent permitted by law. ARTICLE VI COVENANTS Section 6.01 Compliance with Agreements. The Trustee will not authenticate or deliver any Bonds in any manner other than in accordance with t he provisions hereof, and the Authority and the City will not suffer or permit any default by them to occur hereunder, but will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms hereof required to be complied with, kept, observed and performed by them. Section 6.02 Compliance with Ground Lease and Lease Agreement. The Authority and the City will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Ground Lease and the Lease Agreement required to be complied with, kept, observed and performed by them and, together with the Trustee, will enforce the Ground Lease and the Lease Agreement against the other party thereto in accordance with their respective terms. Section 6.03 Observance of Laws and Regulations. The Authority, the City and the Trustee will faithfully comply with, keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on them by contract, or prescribed by any law o f the United States of America or of the State of California, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by them, including their right to exist and carry on their respective businesses, to the end that such franchises, rights and privileges shall be maintained and preserved and shall not become abandoned, forfeited or in any manner impaired. Section 6.04 Other Liens. The City will keep the Property and all parts thereof free from judgments and materialmen’s and mechanics’ liens and free from all claims, demands, encumbrances and other liens of whatever nature or character, and free from any claim or liability which materi ally impairs the City in conducting its business or utilizing the Property, and the Trustee at its option (after first giving the City ten days’ written notice to comply therewith and failure of the City to so comply within such ten-day period) may, but is in no event obligated to, defend against any and all actions or proceedings, or may pay or compromise any claim or demand asserted in any such actions or proceedings; provided, however, that, in defending against any such actions or proceedings or in paying or compromising any such claims or demands, the Trustee shall not in any event be deemed to have waived or released the City from liability for or on account of any of its agreements and covenants contained herein, or from its liability hereunder and to perform such agreements and covenants. 28 So long as any Bonds are Outstanding, none of the Trustee, the Authority or the City shall create or suffer to be created any pledge of or lien the amounts on deposit in any of the funds or accounts created hereunder, other than the pledge and lien hereof. The Authority, the City and the Trustee shall not encumber the Property other than in accordance with the Ground Lease, the Lease Agreement, the Indenture and the Assignment Agreement. Section 6.05 Prosecution and Defense of Suits. The City will promptly, upon request of the Trustee (which request the Trustee is not required to make), take such action from time to time as may be necessary or proper to remedy or cure any cloud upon or defect in the title to the Property or any part thereof, whether now existing or hereafter developing, will prosecute all actions, suits or other proceedings as may be appropriate for such purpose and will indemnify and save the Trustee harmless from all cost, damage, expense or loss, including attor neys’ fees and expenses, which it or the Owners may incur by reason of any such cloud, defect, action, suit or other proceeding. Section 6.06 Accounting Records and Statements. The Trustee will keep proper accounting records in which complete and correct entries shall be made of all transactions relating to the receipt, deposit and disbursement of the Base Rental Payments, and such accounting records shall be available for inspection by the Authority and the City at reasonable hours and under reasonable conditions. Section 6.07 Recordation and Filing. The City will record, or cause to be recorded, with the appropriate county recorder, the Lease Agreement, the Ground Lease and the Assignment Agreement, or memoranda thereof. Section 6.08 Tax Covenants. (a) Neither the Authority nor the City will take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on any tax-exempt Bonds under Section 103 of the Code. Without limiting the generality of the foregoing, the Authority and the City will comply with the requirements of the Tax Certificate, which is incorporated herein as if fully set forth herein, This covenant shall survive payment in full or defeasance of the Bonds. (b) In the event that at any time the Authority is of the opinion that for purposes of this Section it is necessary or helpful to restrict or limit the yield on the investment of any moneys held by the Trustee in any of the funds or accounts established hereunder, the Authority shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. (c) Notwithstanding any provisions of this Section, if the Authority shall provide to the Trustee an Opinion of Counsel to the effect that any specified action required under this Section is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Bonds, the Trustee may conclusively rely on such opinion in complying with the requirements of this Section and of the Tax Certificate, and the covenants hereunder shall be deemed to be modified to that extent. 29 Section 6.09 Continuing Disclosure. The City will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Indenture, failure of the City to comply with the Continuing Disclosure Agreement shall not constitute an event of default hereunder; provided, however, that the Trustee may (and, at the writt en direction of any Participating Underwriter or the holders of at least 25% of the aggregate principal amount of Outstanding Bonds, and upon being indemnified to its reasonable satisfaction therefor, shall) or any Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. Section 6.10 Further Assurances. Whenever and so often as requested to do so by the Trustee, the Authority and the City will promptl y execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Trustee all advantages, benefits, interests, powers, privileges and rights conferred or intended to be conferred upon it hereby or by the Assignment Agreement, the Ground Lease or the Lease Agreement. ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01 Action on Default. If an event of default (within the meaning of Article VI of the Lease Agreement) shall happen, then such event of default shall constitute an event of default hereunder. The Trustee shall give notice, as assignee of the Authority, of an event of default under the Lease Agreement to the City. In each and every case during the continuance of an event of default, the Trustee may and, at the direction of the Owners of not less than a majority of the aggregate principal amount of Bonds then Outstanding, and upon being indemnified to its reasonable satisfaction therefor, shall, upon notice in writing to the City and the Authority, exercise any of the remedies granted to the Authority under the Lease Agreement and, in addition, tak e whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the Owners by this Indenture or by the Bonds, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right, including any one or more of the remedies set forth in Section 7.02 hereof. Section 7.02 Other Remedies of the Trustee. Subject to the provisions of Section 7.01 hereof, the Trustee shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Authority or the City or any member, director, officer or employee thereof, and to compel the Authority or the City or any such member, director, officer or employee to perform or carry out its or his or her duties under law and the agreements and covenants required to be performed by it or him or her contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee; or 30 (c) by suit in equity upon the happening of any event of default hereunder to require the Authority and the City to account as the trustee of an express trust. Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment or composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners so affected. Notwithstanding any provision of this Indenture to the contrary, no event of default hereunder or under the Lease by the Authority or the City shall result in the acceleration of debt service on the Bonds hereunder. Section 7.03 Non-Waiver. A waiver of any default or breach of duty or contract by the Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee by law or by this Article may be enforced and exercised from time to time and as often the Trustee shall deem expedient. If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or any Owner, then subject to any adverse determinat ion, the Trustee, such Owner, the Authority and the City shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 7.04 Remedies Not Exclusive. Subject to the provisions of Section 7.01 hereof, no remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 7.05 No Liability by the Authority to the Owners. Except as expressly provided herein, the Authority shall not have any obligation or liability to the Owners with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of the other agreements and covenants required to be performed by it contained in the Lease Agreement or herein, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.06 No Liability by the City to the Owners. Except for the payment when due of the Base Rental Payments and the performance of the other agreements and covenants required to be performed by it contained in the Lease Agreement, the Ground Lease or herein, the City shall not have any obligation or liability to the Owners with respect to the Trust Indenture or the preparation, execution, delivery or transfer of the Bonds or the disbursement of t he Base Rental Payments by the Trustee to the Owners, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. 31 Section 7.07 No Liability of the Trustee to the Owners. Except as expressly provided herein, the Trustee shall not have any obligation or liability to the Owners with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the Authority or the City of the other agreements and covenants re quired to be performed by them contained in the Lease Agreement, the Ground Lease or herein. Section 7.08 Application of Amounts After Default. All payments received by the Trustee with respect to the rental of the Property after a default by the City pursuant to Arti cle VI of the Lease Agreement (including, without limitation, any proceeds received in connection with the sale, assignment or sublease of the Authority’s right, title and interest in the Ground Lease), and all damages or other payments received by the Tru stee for the enforcement of any rights and powers of the Trustee under Article VI of the Lease Agreement, shall be deposited into the Base Rental Payment Fund and as soon as practicable thereafter applied, together with all other funds held hereunder (except funds in the Rebate Fund): (a) to the payment of all amounts due the Trustee under Article VIII hereof; (b) to the payment of all amounts then due for interest on the Bonds, in respect of which, or for the benefit of which, money has been collected (other than Bonds which have become payable-prior to such event of default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of interest on such Bonds due and payable; and (c) to the payment of all amounts then due for principal of the Bonds, in respect of which, or for the benefit of which, money has been collected (other than Bonds which have become payable prior to such event of default and money for the payment of which is held by th e Trustee), ratably without preference or priority of any kind, according to the amounts of principal of such Bonds due and payable. Section 7.09 Trustee May Enforce Claims Without Possession of Bonds. All rights of action and claims under this Indenture or the Bonds may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Owners in respect of which such jud gment has been recovered. Section 7.10 Limitation on Suits. No Owner of any Bond shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or Trustee, or for any other remedy hereunder , unless (a) such Owner shall have previously given written notice to the Trustee of a continuing event of default, (b) the Owners of not less than 25% of the aggregate principal amount of Bonds then Outstanding shall have made written request to the Trustee to institute proceedings in respect of such event of default in its own name as Trustee hereunder, (c) such Owner or Owners shall have afforded to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities t o be incurred in compliance with such request, (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceedings, and (e) no direction inconsistent with such written request shall have been given to the Trustee during such 60 day period by the Owners of 32 a majority of the aggregate principal amount of Bonds then Outstanding; it being understood and intended that no one or more Owners shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Owner, or to obtain or seek to obtain priority or preference over any other Owner or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Owners. ARTICLE VIII THE TRUSTEE Section 8.01 Employment of the Trustee. The Authority hereby appoints and employs the Trustee to receive, deposit and disburse the Base Rental Payments, to authenticate, deliver and transfer the Bonds and to perform the other functions contained herein, all in the manner provided herein and subject to the conditions and terms hereof. By executing and delivering this Indenture, the Trustee accepts the appointment and employment hereinabove referred to and accepts the rights and obligations of the Trustee provided herein, subject to the conditions and terms hereof. Other than when an event of default has occurred and is continuing, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee. In case an event of default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. Section 8.02 Duties, Removal and Resignation of the Trustee. The Authority may, by an instrument in writing, remove the Trustee initially a party hereto with 30-days’ prior notice and any successor thereto unless an event of default shall have occurred and then be continuing, and shall remove the Trustee initially a party hereto and any successor thereto if at any time (a) requested to do so by an instrument or concurrent instruments in writing signed by the Owners of a majority of the aggregate principal amount of Bonds at the time Outstanding (or the ir attorneys duly authorized in writing), or (b) the Trustee shall cease to be eligible in accordance with the following sentence, and shall appoint a successor Trustee. The Trustee and any successor Trustee shall be a banking corporation or association or trust company having (or if such banking corporation or association or trust company is a member of a bank holding company, its bank holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000 and subject t o supervision or examination by federal or state authorities. If such banking corporation or association or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority a bove referred to, then for the purposes of this Section the combined capital and surplus of such banking corporation, association or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Authority and the City and by giving notice, by first class mail, postage prepaid, of such resignation to the Owners at their addresses appearing on the Regi stration Books. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing; provided, however, that in the event the Authority does not appoint a successor Trustee within 30 days following receipt of such notice of resignation, the resigning Trustee may, at the expense of the Authority, petition the appropriate court having jurisdiction to appoint a successor Trustee. Any 33 resignation or removal of a Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. Any corporation, association or agency into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfe r its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided that such entity meets the combined capital and surplus requirements of this Section, ipso facto, shall be and become successor trustee under this Indenture and vested with all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 8.03 Compensation of the Trustee. The City shall from time to time, subject to any written agreement then in effect with the Trustee, pay the Trustee reasonable compensation for all its services rendered hereunder and reimburse the Trustee for all its reasonable advances and expenditures (which shall not include “overhead expenses” except as such expenses are included as a component of the Trustee’s stated annual fees) hereunder, including but not limited to advances to and reasonable fees and reasonable expenses of accountants, agents, appraisers, consultants or other experts, and counsel not directly employed by the Trustee but an attorney or firm of attorneys retained by the Trustee, employed by it in the exercise and performance of its rights and obligations hereunder. The Trustee may take whatever legal actions are lawfully available to i t directly against the Authority or the City. The City shall, to the extent permitted by law, indemnify and save the Trustee harmless against any liabilities, costs, claims or expenses, including those of its attorneys, which it may incur in the exercise and performance of its powers and duties hereunder, under the Lease Agreement, or in connection with any document or transaction contemplated hereunder or thereunder, including the enforcement of any remedies and the defense of any suit, and which are not due to its negligence or its misconduct. The duty of the City to compensate and indemnify the Trustee shall survive the termination and discharge of this Indenture and the earlier removal or resignation of the Trustee. No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers hereunder. Upon an Event of Default, and only upon an Event of Default, the Trustee shall have a first lien with right of payment prior to payment on account of principal of and premium, if any, and interest on any Bond, upon the trust estate for the foregoing fees, charges and expenses incurred by it. When the Trustee incurs expenses or renders services after the occurrence of an Event of Default, such expenses and the compensation for such services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law. Section 8.04 Protection of the Trustee. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any affidavit, bond, certificate, consent, notice, request, requisition, resolution, statement, telegram, voucher, waiver or other paper or document which it shall in good faith believe to be genuine and to have been adopted, executed or delivered by the proper party or pursuant to any of the provisions hereof, and the Trus tee shall be under no duty to 34 make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Owners of the Bonds pursuant to this Indenture, unless such Owners shall have offered to the Trustee securit y or indemnity, reasonably satisfactory to the Trustee, against the reasonable costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Trustee may consult with counsel, who may be counsel to the Authority or the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect to any action taken or suffered by it hereunder in good faith in accordance therewith. The Trustee shall not be responsible for the sufficiency of the Bonds or the Lease Agreement, or of the assignment made to it by the Assignment Agreement, or for statements made in any preliminary or final official statement relating to the Bonds, or of the title to the Prop erty. Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the City or a Written Certificate of the Authority, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it deems reasonable. The Trustee may buy, sell, own, hold and deal in any of the Bonds and may join in any action which any Owner may be entitled to take with like effect as if the Trustee were not a party hereto, The Trustee, either as principal or agent, may also engage in or be interested in any fina ncial or other transaction with the Authority or the City, and may act as agent, depository or trustee for any committee or body of Owners or of owners of obligations of the Authority or the City as freely as if it were not the Trustee hereunder. The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers hereof and perform any rights and obligations required of it hereunder by or through agents, attorneys or receivers, and shall be entitled to advice of counsel concerning all m atters of trust and its rights and obligations hereunder, and the Trustee shall not be answerable for the negligence or misconduct of any such agent, attorney or receiver selected by it with reasonable care; provided, however, that in the event of any negligence or misconduct of any such attorney, agent or receiver, the Trustee shall in a commercially reasonable manner pursue all remedies of the Trustee against such agent, attorney or receiver. The Trustee shall not be liable for any error of judgment made by it in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee shall not be answerable for the exercise of any trusts or powers hereunder or for anything whatsoever in connection with the fund s established hereunder, except only for its own willful misconduct, negligence or breach of an obligation hereunder. The Trustee shall not be deemed to have knowledge of an event of default unless it has actual knowledge thereof. 35 The Trustee may, on behalf of the Owners, intervene in any judicial proceeding to which the Authority or the City is a party and which, in the opinion of the Trustee and its counsel, affects the Bonds or the security therefor, and shall do so if requested in writing by the Owners of at least 5% of the aggregate principal amount of Bonds then Outstanding, provided the Trustee shall have no duty to take such action unless it has been indemnified to its reasonable satisfaction against all risk or liability arising from such action. The Trustee’s rights to immunities and protection from liability hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and final payment or defeasance of the Bonds. All indemnifications and releases from liability granted herein to the Trustee shall extend to the directors, officers, employees and agents of the Trustee. The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty, and the Trustee shall not be answerable for other than its negligence or willful default. The Trustee shall have no responsibility or liability with respect to any information, statements or recitals in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of these Bonds. The Trustee shall not be accountable for the use or application by the City or the Authority of any of the Bonds or the proceeds thereof or for the use or application of any money paid over by the Trustee in accordanc e with the provisions of this Indenture or for the use and application of money received by any paying agent. In acting or omitting to act pursuant to the Lease Agreement or Ground Lease, the Trustee shall be entitled to all of the rights, immunities and indemnities accorded to it under this Indenture and the Lease Agreement, including, but not limited to, this Article VIII. The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using Electronic Means (“Electronic Means” shall mean the following communications methods: e -mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder); provided, however, that the Authority and City shall provide to the Trustee an incumbency certifi cate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Authority and City whenever a person is to be added or deleted from the listing. If the Authority and City elect to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instruction s shall be deemed controlling. The Authority and City understand and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Authority and City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Authority and City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Authority and City. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. 36 The Authority and City agree: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Authority and City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstanc es; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures. The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include but not be limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences. ARTICLE IX MODIFICATION OR AMENDMENTS Section 9.01 Modifications and Amendments Permitted. (a) This Indenture and the rights and obligations of the Authority, the City, the Owners of the Bonds and the Trustee may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into with the written consent of the Owners of a majority in aggregate princi pal amount of all Bonds then Outstanding, which shall have been filed with the Trustee. No such modification or amendment shall (i) extend the fixed maturity of any Bonds, or reduce the amount of principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the Owner of each Bond so affected, or (ii) reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to effect any such modification or amendment, or (iii) permit the creation of any lien on the Base Rental Payments and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture or deprive the Owners of the Bonds of the lien created by this Indenture on such Base Rental Payments and other assets (except as expressly provided in this Indenture), without the consent of the Owners of all of the Bonds then Outstanding. It shall not be necessary for the consent of the Bond Owners to approve the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof. (b) This Indenture and the rights and obligations of the Authority, the City, the Trustee and the Owners of the Bonds may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into without the consent of any Bond Owners for any one or more of the following purposes: (i) to add to the covenants and agreements of the Authority or the City in this Indenture contained, other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Authority or the City; 37 (ii) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision contained in this Indenture; (iii) to provide for the issuance of one or more Series of Additional Bonds, and to provide the terms and conditions under which such Series of Additional Bonds may be issued, subject to and in accordance with the provisions of Article III hereof; (iv) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute; (v) to modify, amend or supplement this Indenture in such manner as to cause interest on the Bonds to be excludable from gross income for purposes of federal income taxation by the United States of America; and (vi) in any other respect whatsoever as the Authority and the City may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the interests of the Bond Owners hereunder. (c) Promptly after the execution by the Authority, the City and the Trustee of any Supplemental Indenture, the Trustee shall mail a notice (the form of which shall be furnished to the Trustee by the Authority), by first class mail postage prepaid, setting forth in general terms the substance of such Supplemental Indenture, to the Owners of the Bonds at the respective addresses shown on the Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture. (d) No Supplemental Indenture shall modify any of the rights or obligati ons of the Trustee without its prior written consent. Section 9.02 Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Authority, the City, the Trustee and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. The City shall notify the rating agencies in accordance with Section 11.14 hereof upon the execution of any Supplemental Indenture. Section 9.03 Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the execution of any Supplemental Indenture pursuant to this Article may, and if the Authority so determines shall, bear a notation by endorsement or otherwise in form approved by the Authority as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Owner of any Bonds Outstanding at the time of such execution and presentation of his Bonds for the purpose at the Office of the Trustee a suitable notation shall be made on such Bonds. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Authority, to any modification or amendment contained in such Supplemental 38 Indenture, shall be prepared and executed by the Authority and authenticated by the Trustee, and upon demand of the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee, without cost to any Bond Owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal amount of the same interest rate and maturity. Section 9.04 Amendment of Particular Bonds. The provisions of this Article shall not prevent any Bond Owner from accepting any amendment as to the particular Bonds held by such Owner. Section 9.05 Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, the Trustee shall be provided, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and complies with the terms hereof. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. ARTICLE X DEFEASANCE Section 10.01 Discharge of Indenture. If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Bonds the principal thereof and the interest and premium, if any, thereon at the times and in the manner stipulated herein and therein, then the Owners of such Bonds shall cease to be entitled to the pledge of the Base Rental Payments and the other assets as provided herein, and all agreements, covenants and other obligations of the Authority and the City to the Owners of such Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority and the City all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the City all money or securities held by it pursuant hereto which are not required for the payment of the principal of and interest and premium, if any, on such Bonds. Subject to the provisions of the above paragraph, when any of the Bonds shall have been paid and if, at the time of such payment, the Authority and the City shall have kept, performed and observed all of the covenants and promises in such Bonds and in this Indenture required or contemplated to be kept, performed and observed by them on or prior to that time, then this Indenture shall be considered to have been discharged in respect of such Bonds and such Bonds shall cease to be entitled to the lien of this Indenture and such lien and all covenants, agreements and other obligations of the Authority and the City hereunder shall cease, terminate become void and be completely discharged as to such Bonds. Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non- presentment of Bonds, and the duties of the Trustee in connection with all of the foregoing, shall remain in effect and shall be binding upon the Trustee and the Owners of the Bonds and the Trustee 39 shall continue to be obligated to hold in trust any moneys or investments then held by the Trustee for the payment of the principal of and interest and premium, if any, on the Bonds, to pay to the Owners of Bonds the funds so held by the Trustee as and when such payment becomes due. Notwiths tanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the compensation and indemnity of the Trustee shall remain in effect and shall be binding upon the Trustee, the City and the Authority. Section 10.02 Bonds Deemed To Have Been Paid. If moneys shall have been set aside and held by the Trustee for the payment or redemption of any Bonds and the interest thereon at the maturity or redemption date thereof, such Bo nds shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01 hereof. Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in Section 10.01 hereof if (a) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to give, on a date in accordance with the provisions of Section 4.02 hereof, notice of redemption of such Bonds on said redemption date, said notice to be given in accordance with Section 4.02 hereof, (b) there shall have been deposited with the Trustee either (i) money in an amount which shall be sufficient, or (ii) Federal Securities that are not subject to redemption other than at the option of the holder thereof, the interest on and principal of which when paid will provide money which, together with the money, if any deposited with the Trustee at the same time, shall, as verified by an independent certified public accountant, be sufficient to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be , and the principal of and premium, if any, on such Bonds, and (c) in the event such Bonds are not by their terms subject to redemption within the next succeeding 60 days, the Authority shall have given the Trustee in form satisfactory to it irrevocable in structions to give as soon as practicable, a notice to the Owners of such Bonds that the deposit required by clause (b) above has been made with the Trustee and that such Bonds, are deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and premium, if any, on such Bonds. Section 10.03 Payment of Bonds After Discharge of Indenture. Notwithstanding any provisions of this Indenture, to the extent perm itted by law, any moneys held by the Trustee in trust for the payment of the principal of, or premium or interest on, any Bonds and remaining unclaimed for two years after the date of deposit of such moneys, shall be repaid to the Authority (without liability for interest) free from the trusts created by this Indenture, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the Authority as aforesaid, the Trustee may (at the cost of the Authority) first mail, by first class mail postage prepaid, to the Owners of Bonds which have not yet been paid, at the respective addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the Authority of the moneys held for the payment thereof. ARTICLE XI MISCELLANEOUS Section 11.01 Benefits of Indenture Limited to Parties. Nothing contained herein, expressed or implied, is intended to give to any person other than the Authority, the City, the Trustee and the Owners any claim, remedy or right under or pursuant hereto, and any agreement, condition, 40 covenant or term required herein to be observed or performed by or on behalf of the Authority or the City shall be for the sole and exclusive benefit of the Trustee and the Owners. Section 11.02 Successor Deemed Included in all References to Predecessor. Whenever the Authority, the City or the Trustee, or any officer thereof, is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority, the City or the Trustee, or such officer, and all agreements, conditions, covenants and terms required hereby to be observed or performed by or on behalf of the Authority, the City or the Trustee, or any officer thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 11.03 Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or by such other proof as the Trustee may accept which it may deem sufficient. The ownership of any Bonds and the amount, payment date, number and date of owning the same may be proved by the Registration Books. Any declaration, request or other instrument in writing of the Owner of any Bond shall bind all future Owners of such Bond with respect to anything done or suffered to be done by the Authority, the City or the Trustee in good faith and in accordance therewith. Section 11.04 Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the Authority or the City shall be individually or personally liable for the payment of any m oneys, including without limitation, the principal of or interest on the Bonds, but nothing contained herein shall relieve any member, officer or employee of the City or the Authority from the performance of any official duty provided by any applicable provisions of law, by the Lease Agreement or hereby. Section 11.05 Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee may, in lieu of such cancellation and delivery, destroy such Bonds. Section 11.06 Funds and Accounts. Any fund or account required to be established and maintained herein by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such funds and accounts shall at an times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Bonds and the rights of the Owners. 41 The Trustee may commingle any of the moneys held by it hereunder for investment purposes only; provided, however, that the Trustee shall account separately for the moneys in each fund or account established pursuant to this Indenture. The Trustee may establish such funds and accounts as it deems necessary or appropriate to perform its obligations hereunder. Section 11.07 Article and Section Headings Gender and References. The singular form of any word used herein, including the terms defined in Section 1.01 hereof, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other gender. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to “Articles,” “Sections,” subsections or clauses are to the corresponding Articles, Sections, subsections or clauses hereof, and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, subsection or clause thereof. Section 11.08 Partial Invalidity. If any one or more of the agreements, conditions, covenants or terms required herein to be observed or performed by or on the part of the Authority, the City or the Trustee shall be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms shall be null and void to the extent contrary to law and shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the Bonds, and the Owners shall retain all the benefit, protection and security afforded to them under any applicable provisions of law. The Authority, the City and the Trustee hereby declare that they would have executed this Indenture, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Bonds pursuant hereto irrespective of the fact that any one or more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be he ld to be unconstitutional, unenforceable or invalid. Section 11.09 Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are actually known by the Trustee to be owned or held by or for the account of the Authority or the City, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the Cit y, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; except that, in determining whether the Trustee shall be protected in relying upon any such demand, request, direction, consent or waiver of an Owner, only Bonds which the Trustee actually knows to be owned or held by or for the account of the Authority or the City, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded unless all Bonds are so owned or held, in which case such Bonds shall be considered Outstanding for the purpose of such determination. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Authority and the City shall specify in a certificate to the Trustee those Bonds disqualified pursuant to this Section and the Trustee may conclusively rely on such certificate. 42 Section 11.10 Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners of the Bonds entitled thereto, subject, however, to the provisions of Section 10.03 hereof but without any liability for interest thereon. Section 11.11 Payment on Non-Business Days. In the event any payment is required to be made hereunder on a day which is not a Business Day, such payment sha ll be made on the next succeeding Business Day with the same effect as if made on such non-Business Day. Section 11.12 California Law. This Indenture shall be construed and governed in accordance with the laws of the State of California. Section 11.13 Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the City: City of South San Francisco 400 Grand Avenue South San Francisco, California 94080 Attention: City Manager If to the Authority: City of South San Francisco Public Facilities Financing Authority c/o City of South San Francisco 400 Grand Avenue South San Francisco, California 94080 Attention: Executive Director If to the Trustee: The Bank of New York Mellon Trust Company, N.A. 100 Pine Street, Suite 3200 San Francisco, California 94111 Attn: Corporate Trust Department Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender’s receipt of an appropriate answer back or other written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after suc h notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (d) if given by any other means, upon delivery at the address specified in this Section. Section 11.14 Execution in Counterparts. This Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 43 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] S-1 IN WITNESS WHEREOF, the Authority and the City have caused this Indenture to be signed in their respective names by their representative thereunto duly authorized, and the Trustee, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written. CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY By: Executive Director ATTEST: Secretary CITY OF SOUTH SAN FRANCISCO By: City Manager ATTEST: City Clerk THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Authorized Officer A-1 EXHIBIT A FORM OF SERIES 2020A BOND No. ____ $___________ UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE O F THE DEPOSITORY TRUST COMPANY TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (POLICE STATION PROJECT) LEASE REVENUE BONDS, SERIES 2020A INTEREST RATE MATURITY DATE DATED DATE CUSIP ______% June 1, 20__ ___________, 2020 ________ REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: _________________________ DOLLARS The City of South San Francisco Public Facilities Financing Authority (the “Authority”), for value received, hereby promises to pay, solely from the Base Rental Payments (as hereinafter defined) or amounts in certain funds and accounts held under the Indenture (a s hereinafter defined), to the Registered Owner identified above or registered assigns (the “Registered Owner”); on the Maturity Date identified above or on any earlier redemption date, the Principal Amount identified above in lawful money of the United St ates of America; and to pay interest thereon at the Interest Rate identified above in like lawful money from the date hereof payable semiannually on June 1 and December 1 in each year, commencing December 1, 2020 (the “Interest Payment Dates”), until payment of such Principal Amount in full. This Bond shall bear interest from the Interest Payment Date next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the close of busine ss on the fifteenth calendar day of the month next preceding such Interest Payment Date, whether or not such day is a Business Day, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to November 15, 2020, in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, interest on this Bond shall be payable from the date to which interest hereon has been paid in full, payable on each Interest Payment Date). The Principal Amount hereof is payable upon surrender hereof upon maturity or earlier redemption at the Office of the Trustee (as hereinafter defined). Interest hereon is payable by wire or check of The Bank of New York Mellon A-2 Trust Company, N.A., as Trustee (the “Trustee”), mailed by first class mail, postage prepaid, on each Interest Payment Date to the Registered Owner hereof at the address of the Registered Owner s hown on the Registration Books at the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date; or by wire transfer to Owners of more than $1,000,000 in principal amount of Series 2020A Bonds (as defined below) who have provided account information and wiring instructions satisfactory to the Trustee. “Office of the Trustee” means the principal corporate trust office of the Trustee in Los Angeles, California, or such other office as may be specified to the Authority and the City of South San Francisco (the “City”) by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or the agency of the Trustee at whic h, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing. This Bond is one of a series of a duly authorized issue of bonds issued for the purpose of financing the acquisition, construction and/or installation of a new City police station and related improvements, facilities and equipment, and is one of the series of bonds designated “City of South San Francisco Public Facilities Financing Authority (Police Station Project) Lease Revenue Bonds, Series 2020A” (the “Series 2020A Bonds”) in the aggregate principal amount of $_____________. The Series 2020A Bonds are issued pursuant to the Indenture, dated as of March 1, 2020 (the “Indenture”), by and among the Authority, the Ci ty and the Trustee; this reference incorporates the Indenture herein; and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Indenture, additional bonds (“Additional Bonds”), may be issued by the Authority secured by a lien on the Base Rental Payments and certain funds and accounts described below on a parity with the lien securing the Series 2020A Bonds. The Series 2020A Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The Indenture is entered into, and this Bond is issued under, the Marks -Roos Local Bond Pooling Act of 1985 (the “Act”) and the laws of the State of California. Pursuant to the Indenture, the principal of and interest on the Bonds are payable solely from certain Base Rental Payments under and pursuant to that certain Lease Agreement, dated as of March 1, 2020 (the “Lease Agreement”), by and between the City, as lessee, and the Authority, as lessor, all of which rights to receive such Base Rental Payments have been assigned without recourse by the Authority to the Trustee. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund established under the Indenture are pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act. Said pledge constitutes a first lien on such assets. The Series 2020A Bonds are authorized to be issued in the form of fully registered bonds without coupons in denominations of $5,000 or any integral multiple thereof (“Authorized Denominations”). The Series 2020A Bonds shall be subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any: (i) Net Insurance Proceeds received with respect to all or a portion of the property leased under the Lease Agreement, to the extent such moneys are not used by the City for repair or replacement purposes as permitted by the Indenture, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof and A-3 (ii) eminent domain proceeds received under the Lease Agreement, that have been deposited by the Trustee in the Redemption Fund established under the Indenture, at a Redemption Price equal to the principal amount of the Series 2020A Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. The Series 2020A Bonds maturing on or after June 1, 20__, shall be subject to optional redemption, in whole or in part, on any date on or after June 1, 20__, in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease, at a Redemption Price equal to the principal amount of the Series 2020A Bonds to be redeemed, plus accrued interest thereon to the date of redemption. The Series 2020A Bonds with stated maturities on June 1, 20__ are subject to mandatory sinking fund redemption in part (by lot) on each June 1 on and after June 1, 20__, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Redemption Date (June 1) Principal Amount $ * * Final Maturity. The Series 2020A Bonds with stated maturities on June 1, 20__ are subject to mandatory sinking fund redemption in part (by lot) on each June 1 on and after June 1, 20__, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Redemption Date (June 1) Principal Amount $ * * Final Maturity. Notice of redemption shall be given by the Trustee, not less than 20 nor more than 60 days prior to the redemption date (i) as to Bonds not registered in the name of a Securities Depository or its nominee, to the respective Owners of the Bonds designated for redempt ion at their addresses appearing on the Registration Books, (ii) as to Bonds registered in the name of a Securities Depository or its nominee, to such Securities Depository for such Bonds, and (iii) the Information Services. Notice of redemption to the Owners pursuant to (i) above shall be given by mail at their addresses appearing on the Registration Books, or any other method agreed upon by such Owner and the Trustee. Notice of redemption to the Securities Depositories pursuant to (ii) above and the A-4 Information Services pursuant to (iii) above shall be given by electronically secure means, or any other method agreed upon by such entities and the Trustee. Neither failure to receive any such notice so given, nor any defect therein, shall affect the validity of the proceedings for the redemption of such Series 2020A Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. The Redemption Price of the Series 2020A Bonds to be redeemed shall be paid only upon presenta tion and surrender thereof at the Office of the Trustee. From and after the date fixed for redemption of any Series 2020A Bonds, interest on such Series 2020A Bonds will cease to accrue and become payable. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, fully registered Series 2020A Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount and maturity of fully registered Series 2020A Bonds of other authorized denominations. This Bond is transferable by the Registered Owner hereof, in person or by his duly authorized attorney, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Series 2020A Bond or Series 2020A Bonds, in Authorized Denominations, for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Authority, the City and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority, the City and the Trustee shall not be affected by any notice to the contrary. The Indenture and the rights and obligations of the Authority, the City, the owners of the Bonds and the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture; provided that no such modification or amendment shall (a) extend the fixed maturity of any Bonds, or reduce the principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the owner of each Bond so affected, or, (b) reduce the percentage of Bonds the consent of the owners of which is required to effect any such amendment or modification, or (c) permit the creation of any lien on the Base Rental Payments and other assets pledged under the Indenture prior to or on a parity with the lien created by the Indenture or deprive the owners of the Bonds of the lien created by the Indenture on such the Base Rental Payments and such other assets (except as expressly provided in the Indenture), without the consent of the owners of all Bonds then outstanding. The Indenture contains provisions permitting the Authority to make provision for the payment of interest on, and the principal and premium, if any, of any of the Bond so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture. All obligations of the Authority under the Indenture shall be special obligations of the Authority, payable solely from Rental Payments and the other assets pledged therefor under the Indenture; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision ther eof, is pledged to the payment of the Bonds. A-5 IN WITNESS WHEREOF, the Authority has caused this Bond to be signed in its name and on its behalf by the facsimile signatures of its Chair and Secretary, all as of the Dated Date identified above. CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY By: Chair Attest: Secretary [FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION] This is one of the Series 2020A Bonds described in the within-mentioned Indenture and registered on the Registration Books. Date: _______________ THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Authorized Signatory A-6 [FORM OF LEGAL OPINION] The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office. Secretary of the City of South San Francisco Public Facilities Financing Authority [FORM OF ASSIGNMENT] For value, received the undersigned hereby sells, assigns and transfers unto ____________________________________________ whose address and social security or other tax identifying number is ______________________, the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) ____________________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises. Dated: ____________________ Signature Guaranteed: Note: Signature(s) must be guaranteed by an eligible guarantor. Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within pond in every particular without alteration or enlargement or any change whatsoever. B-1 EXHIBIT B FORM OF PROJECT FUND REQUISITION REQUISITION NO. _____ FOR DISBURSEMENT FROM PROJECT FUND The undersigned hereby states and certifies: (i) that he/she is the duly appointed, qualified and acting _________ of the City of South San Francisco, a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”), and as such, is familiar with the facts herein certified and is authorized to certify the same; (ii) that, pursuant to Section 3.04 of the Indenture, dated as of March 1, 2020 (the “Indenture”), by and among the City of South San Francisco Public Facilities Financing Authority (the “Authority”), the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), related to the Authority’s (________ Project) Lease Revenue Bonds, Series 20__, the undersigned hereby requests the Trustee to disburse this date the following amounts from the Project Fund established under the Indenture, to the payees designated on the attached Exhibit 1; (iii) that each obligation mentioned herein has been incurred by the City and is a proper charge against the Project Fund; and (iv) that there has not been filed with or served upon the City notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the payees named on the attached Exhibit 1, which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen’s or mechanics’ liens accruing by mere operation of law. All capitalized terms used herein and not defined herein shall have the meanings ascribed thereto in the Indenture. Dated: ______________ CITY OF SOUTH SAN FRANCISCO By: Its: B-2 EXHIBIT 1 PROJECT FUND DISBURSEMENTS Item Number Payee Name and Address Purpose of Obligation Amount C-1 EXHIBIT C DESCRIPTION OF PROJECT – PHASE I Police Station Project – Civic Center Campus: This Project consists of a new police facility of approximately 43,300 square feet to be located within the City’s proposed new civic center campus. The police facility is planned to include two buildings and space for administration, operations, investigation, storage, support services, and training for the City’s police department. ATTACHMENT D – FORM OF ASSIGNMENT AGREEMENT Draft of 2/6/20 RECORDING REQUESTED BY: City of South San Francisco Public Facilities Financing Authority AND WHEN RECORDED RETURN TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Brian Forbath, Esq. [Space above for Recorder’s use.] This Assignment Agreement is recorded for the benefit of the City of South San Francisco and is exempt from California documentary transfer tax pursuant to Section 11928 of the California Revenue and Taxation Code and from recording fees pursuant to Sections 6103, 27383 and 27388.1 (a)(2)(D) and (d)(2) of the California Government Code. ASSIGNMENT AGREEMENT by and between CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee Dated as of March 1, 2020 Relating to $___________ CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (POLICE STATION PROJECT) LEASE REVENUE BONDS, SERIES 2020A 1 ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT (this “Assignment Agreement”), executed and entered into as of March 1, 2020, is by and between the CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY, a joint exercise of powers entity organized and existing under and by virtue of the laws of the State of California (the “Authority”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States, as Trustee (the “Trustee”). WITNESSETH: WHEREAS, the City of South San Francisco (the “City”) and the Authority desire to finance the costs of the acquisition, construction and/or installation of a new City police station and related improvements, facilities and equipment (the “Project”); WHEREAS, in order to finance the Project, the City will lease certain real property and the improvements located thereon (the “Property”) to the Authority pursuant to a Ground Lease, dated as of the date hereof (the “Ground Lease”), and the City will sublease the Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof (the “Lease Agreement”); WHEREAS, the Property is more particularly described in Exhibit A hereto; WHEREAS, under the Lease Agreement, the City is obligated to make Base Rental Payments (as defined in the Lease Agreement) to the Authority; WHEREAS, the Authority desires to assign without recourse certain of its rights in the Ground Lease and the Lease Agreement, including its right to receive the Base Rental Payments , to the Trustee for the benefit of the owners of bonds (the “Bonds”) to be issued pursuant to the Indenture, dated as of the date hereof (as supplemented from time to time in accordance with the terms thereof, the “Indenture”), by and among the Authority, the City and the Trustee; WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Assignment Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Assignment Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties hereto do hereby agree as follows: Section 1. Assignment. The Authority, for good and valuable consideration, the receipt of which is hereby acknowledged, does hereby sell, assign and transfer to the Trustee, irrevocably and absolutely, without recourse, for the benefit of the owners of the Bonds, all of its right, title and interest in and to the Ground Lease and the Lease Agreement including, without limitation, its rig ht to receive the Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement; provided, however, that the Authority shall retain its obligations under the Lease Agreement and Ground Lease, the rights to indemnification, to give approvals and consents under the 2 Lease Agreement and the Ground Lease and to payment or reimbursement of its reasonable costs and expenses under the Lease Agreement. Section 2. Acceptance. The Trustee hereby accepts the foregoing assignment, subject to the terms and provisions of the Indenture, and all such Base Rental Payments shall be applied and the rights so assigned shall be exercised by the Trustee as provided in the Lease Agreement and the Indenture. Section 3. Conditions. This Assignment Agreement shall impose no obliga tions upon the Trustee beyond those expressly provided in the Indenture. Section 4. Further Assurances. The Authority shall make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Assignment Agreement, and for the better assuring and confirming to the Trustee, for the benefit of the owners of the Bonds, the rights intended to be conveyed pursuant hereto. Section 5. Governing Law. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY THE PROVISIONS HEREOF AND BY THE LAWS OF THE STATE OF CALIFORNIA AS THE SAME FROM TIME TO TIME EXIST. Section 6. Execution. This Assignment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same Assignment Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 3 IN WITNESS WHEREOF, the Authority and the Trustee have caused this Assignment Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first above-written. CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY By: Michael Futrell Executive Director ATTEST: Rosa Govea Acosta Secretary THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Lisa Infusino Authorized Officer A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF SOUTH SAN MATEO ) On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her /their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN MATEO ) On ___________________ before me, __________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatu re(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC A-1 EXHIBIT A DESCRIPTION OF THE PROPERTY All that real property situated in the City of South San Francisco, County of San Mateo, State of California, described as follows: Quint & Thimmig LLP 01/10/20 19107.13 $_________ CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (Police Station Project) Lease Revenue Bonds, Series 2020A BOND PURCHASE AGREEMENT February 26, 2020 City of South San Francisco Public Facilities Financing Authority 400 Grand Avenue South San Francisco, California 94080 City of South San Francisco 400 Grand Avenue South San Francisco, California 94080 Ladies and Gentlemen: Stifel, Nicolaus & Company, Incorporated (the “Representative), on behalf of itself and Citigroup Global Markets Inc. and Raymond James & Associates, Inc. (collectively, the “Underwriters”) hereby offers to enter into this bond purchase agreement (the “Bond Purchase Agreement”) with the City of South San Francisco Public Facilities Financing Authority (the “Authority”) and the City of South San Francisco (the “City”). Upon the acceptance hereof by the Authority and the City, this offer will be binding upon the Authority, the City and the Underwriters. This offer is made subject to (a) the written acceptance hereof by the Authority and the City and (b) withdrawal by the Underwriters upon written notice (by telecopy or otherwise) delivered to the Authority and the City at any time prior to each of their acceptance hereof by the Authority and the City. 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements set forth herein, the Underwriters hereby agrees to purchase on the Closing Date (as defined herein), and the Authority and the City hereby agree to sell and deliver to the Underwriters on the Closing Date, $________ aggregate principal amount of City of South San Francisco Public Facilities Financing Authority (Police Station Project ) Lease Revenue Bonds, Series 2020A (the “Bonds). The Bonds are being issued pursuant to Article 4, Chapter 5, Division 7, Title 1 of the California Government Code, a resolution of the Authority authorizing the issuance of the Bonds, adopted on February 12, 2020 (the “Authority Resolution”), and an Indenture of Trust, dated as of March 1, 2020 (the “Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The City will lease certain real property and all buildings and other improvements installed thereon (collectively, the “Property”) to the Authority pursuant to a Ground Lease, dated as of March 1, 2020 (the “Ground Lease”). The Property will be leased by the Authority to the City pursuant to the Lease Agreement, dated as of March 1, 2020 (the “Lease Agreement”), -2- by and between the Authority and the City. Pursuant to an Assignment Agreement, dated as of March 1, 2020 (the “Assignment Agreement”), by and between the Authority and the Trustee, the Authority will assign, for the benefit of the owners of the Bonds, its right to receive lease payments (the ”Base Rental Payments”) made by the City under the Lease Agreement and its right to exercise rights and remedies of the Authority under the lease Agreement. All capitalized terms not defined herein shall have the respective meaning specified in Section 1.01 of the Indenture. Under the Lease Agreement, the City is required to make Base Rental Payments and Additional Rental Payments from legally available funds in amounts calculated to be sufficient to pay principal of and interest on the Bonds when due. All of the Authority’s right, title and interest in and to the Lease Agreement (except for the right to receive Additional Rental Payments to the extent payable to the Authority and certain rights to indemnification), including the right to receive Base Rental Payments under the Lease Agreement, are assigned to the Trustee for the benefit of the Owners of the Bonds. The Bonds are being issued to (a) finance certain public capital improvements of the City, consisting generally of a new City police station to be located on the City’s new civic center campus, and (b) pay costs of issuance of the Bonds. The aggregate purchase price to be paid by the Underwriters for the Bonds is hereby agreed to be $_______, which amount represents the principal amount of the Bonds of $________, less $__________, representing the Underwriters’ discount, plus $_________, representing an original issue premium (such payment and delivery of the Bonds and the other actions contemplated hereby to take place at the time of such payment and delivery being herein sometimes called the “Closing”). The Authority and the City acknowledge and agree that (i) the purchase and sale of the Bonds pursuant to this Bond Purchase Agreement is an arm’s-length commercial transaction between the Authority and the City and the Underwriters; (ii) in connection with such transaction, the Underwriters are acting solely as a principal and not as an agent or a fiduciary of the Authority or the City; (iii) the Underwriters have not assumed a fiduciary responsibility in favor of the Authority or the City with respect to the offering of the Bonds or the process leading thereto (whether or not the Underwriters, or any affiliate of the Underwriters, has advised or is currently advising the Authority or the City on other matters) nor has it assumed any other obligation to the Authority or the City except the obligations expressly set forth in this Bond Purchase Agreement, (iv) the Underwriters have financial and other interests that differ from those of the Authority and the City; and (v) the Authority and the City have consulted with their own legal and financial advisors to the extent they deemed appropriate in connection with the offering of the Bonds. The Authority and the City hereby acknowledge receipt from the Underwriters of disclosures required by the Municipal Securities Rulemaking Board (“MSRB”) Rule G-17 (as set forth in MSRB Notice 2012-25 (May 7, 2012), relating to disclosures concerning the Underwriters’ role in the transaction, disclosures concerning the Underwriters’ compensation, conflict disclosures, if any, and disclosures concerning complex municipal securities financing, if any. A Preliminary Official Statement of the City and the Authority, dated February 14, 2020 (together with the Appendices thereto, any documents incorporated therein by reference and any supplements or amendments thereto and as disseminated in its printed physical form or in electronic form in all respects materially consistent with such physical form, the “Preliminary Official Statement”), has been prepared for use in marketing the Bonds, and a final Official -3- Statement of the Authority, to be dated the date hereof, as amended to conform to the terms of this Purchase Contract, and with such changes and amendments as are mutually agreed to by the Authority, the City and the Representative, including the cover page, inside cover page, the appendices and all information incorporated therein by reference, is herein collectively referred to as the “Official Statement,” which shall be in substantially the form of the Preliminary Official Statement, with such changes and amendments thereto as may be mutually agreed upon by the Representative, the Authority and the City. The Bonds shall be dated their date of delivery, and shall have the maturities, bear interest at the rates, have reoffering yields, and be subject to mandatory sinking fund redemption as shown on Exhibit A hereto. It shall be a condition to the Authority’s obligation to sell and to deliver the Bonds to the Underwriters and to the obligation of the Underwriters to purchase, to accept delivery of and to pay for the Bonds that the entire $________ aggregate principal amount of the Bonds as authorized by the Indenture shall be sold and delivered by the Authority and accepted and paid for by the Underwriters at the Closing. The Underwriters may change the offering prices (or yields) of the Bonds from time to time at any time. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. The obligation of the Authority to sell and deliver the Bonds to the Underwriters shall also be conditioned upon the delivery by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel (“Bond Counsel”), of its approving legal opinion with respect to the Bonds. The Authority and the City hereby authorize the Underwriters to use and distribute the Ground Lease, the Lease Agreement, the Assignment Agreement, the Indenture and the Preliminary Official Statement, and the information contained in such documents in connection with the public offering and sale of the Bonds. The Authority and the City have authorized the use of the Preliminary Official Statement in connection with the public offering of the Bonds by the Underwriters prior to the date hereof. The obligation of the City to make Base Rental Payments under the Lease Agreement 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 Bonds nor the obligation of the City to make Base Rental Payments under the Lease Agreement constitutes a debt of the Authority, the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. The obligation of the City to make Base Rental Payments, as set forth in the Lease Agreement, shall be deemed to be and shall be construed to be a ministerial duty imposed by law and it shall be the ministerial duty of each and every public official of the City to take such actions and do such things as are required by law in the performance of such duty, subject to abatement in the event of damage or destruction to, or condemnation of, the Property or a portion thereof. 2. Bona Fide Public Offering. The Underwriters agree to make a bona fide public offering of all of the Bonds, at prices not in excess of the initial public offering yields or prices set forth on the cover page of the Official Statement (defined below). Subject to Section 3(c), the Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices; provided, however, that the Underwriters may offer a portion of the Bonds for sale to selected dealers who are members of the Financial Industry Regulatory Authority, and the Underwriters reserve the right to change such offering prices or yields as the Underwriters shall deem necessary in connection with the marketing of the Bonds and to offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices lower than the initial offering prices or at yields higher than the initial yields set forth on -4- Exhibit A attached hereto. The Underwriters also reserve the right to over-allot or effect transactions that stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market and to discontinue such stabilizing, if commenced, at any time. None of such activities shall affect the principal amounts, maturity dates, interest rates, redemption or other provision of the Bonds or the amount to be paid by the Underwriters to the Authority for the Bonds. 3. Establishment of Issue Price. (a) The Underwriters agree to assist the Authority and the City in establishing the issue price of the Bonds and shall execute and deliver to the Authority and the City at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Representative, the Authority, the City and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. All actions to be taken by the Authority and the City under this Section 3 to establish the issue price of the Bonds may be taken on behalf of the Authority and the City by the City’s municipal advisor identified herein and any notice or report to be provided to the Authority and the City may be provided to the City’s municipal advisor. (b) The Authority and the City will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Bond Purchase Agreement, the Representative shall report to the Authority and the City the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Representative agrees to promptly report to the Authority and the City the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public. (c) The Underwriter confirm that any selling group agreement and any retail distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the Representative that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Representative. The Authority and the City acknowledges that, in making the representation set forth in this subsection, the Underwriters will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold-the-offering-price rule, if applicable, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a retail distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold-the-offering-price rule, if applicable, as set forth in the retail distribution agreement and the related pricing wires. The Authority and the City further acknowledges that the Underwriters shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail -5- distribution agreement, to comply with its corresponding agreement regarding the hold-the- offering-price rule as applicable to the Bonds. (d) The Underwriters acknowledge that sales of any Bonds to any person that is a related party to the Underwriters shall not constitute sales to the public for purposes of this Section 3. Further, for purposes of this Section 3: (i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the Authority and the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) “sale date” means the date of execution of this Bond Purchase Agreement by all parties. 4. The Bonds. The Bonds will be issued, executed and delivered pursuant to the Indenture. The City Council of the City has adopted a resolution on February 12, 2020, relating to the Bonds (the “City Resolution”). This Bond Purchase Agreement, the Ground Lease, the Lease Agreement and the Continuing Disclosure Certificate (hereinafter defined) are collectively referred to as the “City Documents.” This Bond Purchase Agreement, the Indenture, the Ground Lease, the Lease Agreement and the Assignment Agreement are collectively referred to as the “Authority Documents.” 5. Official Statement, Continuing Disclosure. (a) The Authority and the City represent that they have deemed the Preliminary Official Statement to be final as of its date, except for either revisions or additions to the offering price(s), interest rate(s), yield(s) to maturity, selling compensation, aggregate principal amount, principal amount per maturity, delivery date, rating(s) and other terms of the Bonds which depend upon the foregoing as provided in and pursuant to Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”). (b) The Underwriters agree that, prior to the time the final Official Statement is available, the Underwriters will send to any potential purchaser of the Bonds, upon the request of such potential purchaser, a copy of the most recent Preliminary Official Statement. Such Preliminary Official Statement shall be sent by first class mail (or other equally prompt means) not later than the second business day following the date upon which each such request is received. -6- (c) The Authority agrees to deliver to the Underwriters, at such addresses as the Underwriters shall specify, as many copies of the final Official Statement relating to the Bonds as the Underwriters shall reasonably request as necessary to comply with paragraph (b)(4) of the Rule and with Rule G-32, Rule G-36 and all other applicable rules of the Municipal Securities Rulemaking Board. The Authority agrees to deliver such Official Statements within seven business days after the execution hereof. The Underwriters agrees to give notice to the Authority on the date after which the Underwriters shall no longer be obligated to deliver Official Statements pursuant to paragraph (b)(4) of the Rule, which date shall be no earlier than 25 days after the “end of the underwriting period,” as determined in accordance with Section 14 herein. (d) Prior to the earlier of (i) receipt of notice from the Underwriters that no participating underwriter, as such term is defined in the Rule, remains obligated to deliver Official Statements pursuant to paragraph (b)(4) of the Rule or (ii) 25 days after the date of the Closing (as defined below), the Authority and the City shall provide the Underwriters with such information regarding the Authority and the City, each of their current financial conditions and ongoing operations as the Underwriters may reasonably request. (e) The City hereby covenants and agrees that it will, on or prior to the Closing Date, execute a certificate for the benefit of the owners of the Bonds in which the City will undertake to provide financial information, operating data and notices of material events as required by paragraph (d)(2)(ii) of the Rule substantially in the form of Appendix E to the Official Statement (the “Continuing Disclosure Certificate”). 6. Representations, Warranties and Agreements of the City. The City represents, warrants and agrees as follows: (a) The City is a municipal corporation and general law city duly organized and validly existing under the Constitution and laws of the State of California. (b) The City has full legal right, power and authority (i) to enter into, execute and deliver the City Documents; and (ii) to carry out and consummate the transactions on its part contemplated by the City Documents and the Official Statement. (c) By all necessary official action, the City has duly authorized and approved the City Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement and approved the distribution thereof (including in electronic form), has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations in connection with the execution and delivery of the Bonds on its part contained in the City Documents, and the consummation by it of all other transactions contemplated by the City Documents in connection with the execution and delivery of the Bonds, all pursuant to the City Resolution adopted at a meeting duly called and held in accordance with the requirements of all applicable laws and at which a quorum of the members of the City Council was continuously present. The City Resolution has not been modified, amended or rescinded since the date of its adoption. (d) The City is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of the State of California or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the City Documents) or other instrument to which the City is a party which breach or default has or may have an adverse effect on the ability of the City to perform its obligations -7- under the City Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the execution and delivery of the Bonds and the City Documents, and compliance with the provisions on the City’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the City Documents. (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations in connection with the execution and delivery of the Bonds under the City Documents or the consummation by it of all other transactions contemplated by the City Documents have been duly obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations under the City Documents have been duly obtained. (f) There is no action, suit, proceeding, inquiry or investigation, notice of which has been duly served on the City, at law or in equity before or by any court, government agency, public board or body, pending or to the best knowledge of the officer of the City executing this Bond Purchase Agreement, threatened against the City, affecting the existence of the City or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Bonds pursuant to the Indenture, or contesting or affecting as to the City the validity or enforceability of the City Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the City to cause the execution and delivery or adoption by the City of the City Documents, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby; nor, to the best knowledge of the City, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the Bonds or the authorization, execution, delivery or performance by the City of the City Documents. (g) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Underwriters may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the City shall not be required to execute a general or special consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction, and the Underwriters shall bear all costs in connection with the foregoing. -8- (h) As of the date thereof, the Preliminary Official Statement did not, except for the omission of certain information permitted to be omitted in accordance with the Rule, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (i) At the time of the City’s acceptance hereof, and (unless an event occurs of the nature described in paragraph (k) of this Section 6) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein provided by the Underwriters) did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) If the Official Statement is supplemented or amended pursuant to paragraph (k) of this Section 6, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein provided by the Underwriters) as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) If between the date of this Bond Purchase Agreement and that date which is 25 days after the end of the underwriting period (as determined in accordance with Section 14 hereof) any event of which the officer of the City executing this Bond Purchase Agreement has knowledge shall occur affecting the City which might adversely affect the marketability of the Bonds or the market prices thereof, or which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City shall notify the Underwriters thereof, and if in the opinion of the Representative such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will at its expense prepare and furnish to the Underwriters a reasonable number of copies of such supplement to, or amendment of, the Official Statement in a form and in a manner approved by the Representative. (l) Any certificate signed by any officer of the City and delivered to the Underwriters pursuant to the City Documents or any document contemplated thereby or required for the valid execution and delivery of the Bonds shall be deemed a representation and warranty by the City to the Underwriters as to the statements made therein. (m) The City will cause the proceeds from the sale of the Bonds to be paid to the Trustee for the purposes specified in the Indenture and the Official Statement. So long as any of the Bonds are outstanding and except as may be authorized by the Indenture, the City will not issue or sell, or cause to be issued or sold, any Bonds or other obligations, other than the Bonds delivered thereunder, the interest on and premium, if any, or principal of which will be payable from Base Rental Payments. (n) The City shall honor all other covenants on its part contained in the Lease Agreement which are incorporated herein and made a part of this Bond Purchase Agreement. -9- 7. Representations, Warranties and Agreements of the Authority. The Authority represents, warrants and agrees as follows: (a) The Authority is a joint exercise of powers entity duly organized and validly existing under the laws of the State of California pursuant to an Amended and Restated Joint Exercise of Powers Agreement between the City and the Parking Authority of the City of South San Francisco, dated December 1, 2019 (the “JPA Agreement”). (b) The Authority has full legal right, power and authority (i) to enter into, execute and deliver the Authority Documents and to sell and deliver the Bonds to the Underwriters as provided herein; and (ii) to carry out and consummate the transactions on its part contemplated by the Authority Documents and the Official Statement. (c) By all necessary official action, the Authority has duly authorized and approved the issuance of the Bonds and the Authority Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement and approved the distribution thereof (including in electronic form), has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations in connection with the execution and delivery of the Bonds on its part contained in the Bonds and the Authority Documents, and the consummation by it of all other transactions contemplated by the Authority Documents in connection with the execution and delivery of the Bonds, all pursuant to the Authority Resolution adopted at a meeting duly called and held in accordance with the requirements of all applicable laws and at which a quorum of the board members of the Authority was continuously present. The Authority Resolution has not been modified, amended or rescinded since the date of its adoption and each Authority Document is the valid and binding obligation of the Authority. (d) The Authority is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of the State of California or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or the JPA Agreement, or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the Authority Documents) or other instrument to which the Authority is a party which breach or default has or may have an adverse effect on the ability of the Authority to perform its obligations under the Bonds or the Authority Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the execution and delivery of the Bonds and the Authority Documents, and compliance with the provisions on the Authority’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, Bond, note, resolution, agreement or other instrument to which the Authority is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Authority or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the Authority Documents. (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations in connection with the execution and delivery of the Bonds under the Authority Documents or the consummation by it of all other transactions contemplated by the Authority Documents, including all filings with the California -10- Secretary of State, have been duly obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations under the Bonds and the Authority Documents have been duly obtained. (f) The Bonds, when executed, issued, authenticated and delivered in accordance with the Indenture, and sold to the Underwriters as provided herein, will be validly executed and outstanding obligations, entitled to the benefits of the Indenture, and upon such execution and delivery, the Indenture will provide, for the benefit of the Owners from time to time of the Bonds, the legally valid and binding security interest it purports to create. (g) There is no action, suit, proceeding, inquiry or investigation, notice of which has been duly served on the Authority, at law or in equity before or by any court, government agency, public board or body, pending or to the best knowledge of the officer of the Authority executing this Bond Purchase Agreement, threatened against the Authority, affecting the existence of the Authority or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance, execution or delivery of the Bonds pursuant to the Indenture, or contesting or affecting as to the Authority the validity or enforceability of the Bonds or the Authority Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the Authority to cause the execution and delivery of the Bonds, or the execution and delivery or adoption by the Authority of the Authority Documents, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby; nor, to the best knowledge of the Authority, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the Bonds or the authorization, execution, delivery or performance by the Authority of the Bonds or the Authority Documents. (h) The Authority will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Underwriters may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the Authority shall not be required to execute a general or special consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction, and the Underwriters shall bear all costs in connection with the foregoing. (i) As of the date thereof, the Preliminary Official Statement did not, except for the omission of certain information permitted to be omitted in accordance with the Rule, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) At the time of the Authority’s acceptance hereof, and (unless an event occurs of the nature described in paragraph (l) of this Section 5) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein provided by the Underwriters) did not and will not contain any untrue statement of a material fact or omit to -11- state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) If the Official Statement is supplemented or amended pursuant to paragraph (l) of this Section 5, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein provided by the Underwriters) as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (l) If between the date of this Bond Purchase Agreement and that date which is 25 days after the end of the underwriting period (as determined in accordance with Section 14 hereof) any event of which the officer of the Authority executing this Bond Purchase Agreement has knowledge shall occur affecting the Authority which might adversely affect the marketability of the Bonds or the market prices thereof, or which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Authority shall notify the Underwriters thereof, and if in the opinion of the Representative such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will at its expense prepare and furnish to the Underwriters a reasonable number of copies of such supplement to, or amendment of, the Official Statement in a form and in a manner approved by the Representative. (m) Any certificate signed by any officer of the Authority and delivered to the Underwriters pursuant to the Authority Documents or any document contemplated thereby or required for the valid execution and delivery of the Bonds shall be deemed a representation and warranty by the Authority to the Underwriters as to the statements made therein. (n) The Authority will cause the proceeds from the sale of the Bonds to be paid to the Trustee for the purposes specified in the Indenture and the Official Statement. So long as any of the Bonds are outstanding and except as may be authorized by the Indenture, the Authority will not issue or sell any Bonds or other obligations, other than the Bonds delivered thereunder, the interest on and premium, if any, or principal of which will be payable from the Revenues. (o) The Authority shall honor all other covenants on its part contained in the Indenture and the Lease Agreement which are incorporated herein and made a part of this Bond Purchase Agreement. 8. Closing. At 8:00 A.M., Pacific Standard time, on March 11, 2020, or on such other date time, as may be mutually agreed upon by the Authority, the City and the Representative (the “Closing Date”), the Authority will, subject to the terms and conditions hereof, deliver to the Underwriters, through the facilities of The Depository Trust Company (“DTC”), or at such other place as the Authority, the City and the Representative may mutually agree, the Bonds in definitive, fully registered form (one Bond for each maturity), duly executed and registered in the name of Cede & Co. as nominee of DTC; and, subject to the terms and conditions hereof, the Representative shall wire to the Trustee Federal Reserve Bank Funds in the amount of the purchase price of the Bonds. 9. Closing Conditions. The Underwriters have entered into this Bond Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein, and in reliance upon the representations and warranties to be contained in the -12- documents and instruments to be delivered at the Closing and upon the performance by the Authority and the City of its obligations hereunder, both as of the date hereof and as of the Closing Date. Accordingly, the Underwriters’ obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the Authority and the City of their respective obligations to be performed hereunder and under such documents and instruments at or prior to the Closing Date, shall be subject, at the option of the Underwriters, to the accuracy in all material respects of the statements the officers and other officials of the Authority and of the City, as the Underwriters, authorized representatives of Bond Counsel, the Trustee, and the City Attorney made in any certification or other documents furnished pursuant to the provisions hereof, and shall also be subject to the following additional conditions: (a) The respective representations and warranties of the Authority and the City contained herein shall be true, complete and correct on the date hereof and on and as of the Closing Date, as if made on the Closing Date; (b) At the time of Closing, the City Documents and the Authority Documents shall be in full force and effect in accordance with their terms and shall not have been amended, modified or supplemented and the Official Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Representative; (c) All necessary official action of the Authority, the City and of the other parties thereto relating to the City Documents and the Authority Documents shall have been taken and shall be in full force and effect and shall not have been amended, modified or supplemented in any material respect; (d) Subsequent to the date hereof, there shall not have occurred any change in or affecting particularly the Authority, the City or the Bonds, as the foregoing is described in the Official Statement, which in the reasonable opinion of the Representative materially impairs the investment quality of the Bonds; and (e) At or prior to the Closing Date, the Underwriters shall have received copies of each of the following documents: (i) The Official Statement and each supplement or amendment, if any, thereto, executed by authorized officers of the Authority and the City; (ii) A copy of the Indenture, executed by the parties thereto; (iii) A copy of the Lease Agreement, executed by the parties thereto; (iv) A copy of the Ground Lease, executed by the parties thereto; (vi) A copy of the Continuing Disclosure Certificate, executed by the City; (vii) A certified copy of the JPA Agreement; (viii) A certificate or certificates of the City, dated the Closing Date, to the effect that: (A) the representations and warranties of the City contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the City has complied with all of the terms and -13- conditions of this Purchase Agreement required to be complied with by the City at or prior to the Closing Date; (B) none of the proceedings or authority for (i) the authorization, sale, execution and delivery of the Bonds, (ii) the adoption of the City Resolution, or (iii) the execution and delivery of the City Documents and performance of its obligations thereunder, has been repealed, modified, amended, revoked or rescinded; (C) subsequent to June 30, 2019, and prior to Closing, there have been no material adverse changes in the financial position of the City; (D) no event affecting the City has occurred since the date of the Official Statement that should be disclosed in the Official Statement for the purposes for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (E) to the best of its knowledge, the information and statements contained in the Official Statement (other than information relating to The Depository Trust Company and its book-entry system) do not contain an untrue statement of a material fact required to be stated therein or necessary to make such statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; (F) to the best of its knowledge after reasonable investigation, the City is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement (including but not limited to the Lease Agreement) or other instrument to which the City is a party or is otherwise subject, which would have a material adverse impact on the City’s ability to perform its obligations under the City Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument; and (G) No consent is required for the inclusion of the City’s 2016-17 audited financial statements in the Official Statement. (ix) A certificate or certificates of the Authority, dated the Closing Date, to the effect that: (A) the representations and warranties of the Authority contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the Authority has complied with all of the terms and conditions of this Purchase Agreement required to be complied with by the Authority at or prior to Closing Date; (B) none of the proceedings or authority for (i) the authorization, sale, execution and delivery of the Bonds, (ii) the adoption of the Authority Resolution, or (iii) the execution and delivery of the Authority Documents, has been repealed, modified, amended, revoked or rescinded; -14- (C) no event affecting the Authority has occurred since the date of the Official Statement that should be disclosed in the Official Statement for the purposes for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (D) the information and statements contained in the Official Statement (other than information relating to the Underwriters and The Depository Trust Company and its book-entry system) do not contain an untrue statement of a material fact required to be stated therein or necessary to make such statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; and (E) to the best of its knowledge after reasonable investigation, the Authority is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, which would have a material adverse impact on the Authority’s ability to perform its obligations under the Authority Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument; (x) An opinion or opinions, dated the Closing Date and addressed to the Underwriters and the Trustee, of the City Attorney, to the effect that: (A) The City is a municipal corporation and general law city duly organized and validly existing under the Constitution and laws of the State of California; (B) The City Documents have been duly approved by a resolution of the City adopted at a meeting duly called and held in accordance with the requirements of all applicable laws, with all public notice required by law, and at which a quorum of the members of the City Council was continuously present and such resolution has not been modified, amended or rescinded since the date of its adoption; (C) Except as described in the Official Statement, there is no litigation, inquiry, or investigation pending or to the best of such counsel’s knowledge after due inquiry, threatened, which: (1) challenges the right or title of any member or officer of the City to hold his or her office or exercise or perform the powers and duties pertaining thereto; (2) challenges the validity or enforceability of the Bonds or the City Documents; (3) seeks to restrain or enjoin the sale of the Bonds or the execution and delivery by the City of, or the performance by the City of its legal obligations under, the City Documents or in which a final adverse decision could materially adversely affect the operations of the City with respect to the Property; or (4) contests in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, nor, to the best of such counsel’s knowledge, is there any basis therefor; (D) The execution and delivery by the City of, and the performance by the City of its obligations under, the City Documents, do not conflict with, violate or -15- constitute a default under any provision of any law, court order or decree or any contract, instrument or agreement to which the City is a party or by which it is bound and of which such counsel has knowledge; (E) As of the date hereof, the statements and information relating to the City contained in the Preliminary Official Statement and Official Statement did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (F) The City Documents have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery of the City Documents by the parties thereto other than the City, the City Documents constitute legal, valid and binding agreements of the City, enforceable against the City in accordance with their respective terms except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights and remedies in general, or by the application of equitable principles if equitable remedies are sought. (G) Except as may be required under the “blue sky” or securities laws of the United States or any state, there is no authorization, approval, consent or other order of, or filing with, or certification by, the State or any other governmental authority or agency within the State having jurisdiction over the City required for the issuance of the Bonds or the consummation by the City of the other financial transactions contemplated by the Official Statement and the City Documents. (H) Based on the information made available to the City Attorney in its role as City Attorney to the City, and without having undertaken to determine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, nothing has come to its attention which would lead it to believe that the Official Statement as of its date and as of the date of Closing (excluding therefrom the financial and statistical data and forecasts included therein, as to which no opinion is expressed and information relating to the Authority and the Depository Trust Company and its book entry system) contained or contains any untrue statement of a material fact or omitted 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; (xi) An opinion or opinions, dated the Closing Date and addressed to the Underwriters and the Trustee, of the City Attorney, as counsel for the Authority, to the effect that: (A) The Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State of California pursuant to the JPA Agreement; (B) The Authority Documents have been duly approved by a resolution of the Authority adopted at a meeting duly called and held in accordance with the requirements of all applicable laws, with all public notice required by law, and at which a quorum of the members of the Board of the Authority was continuously -16- present and such resolution has not been modified, amended or rescinded since the date of its adoption; (C) Except as described in the Official Statement, there is no litigation, inquiry, or investigation pending to the best of such counsel’s knowledge after due inquiry, or threatened, which: (1) challenges the right or title of any Board member or officer of the Authority to hold his or her office or exercise or perform the powers and duties pertaining thereto; (2) challenges the validity or enforceability of the Bonds or the Authority Documents; (3) seeks to restrain or enjoin the sale of the Bonds or the execution and delivery by the Authority of, or the performance by the Authority of its legal obligations under, the Authority Documents or in which a final adverse decision could materially adversely affect the operations of the Authority with respect to the Property; or (4) contests in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, nor, to the best of such counsel’s knowledge, is there any basis therefor; (D) The execution and delivery by the Authority of, and the performance by the Authority of its obligations under, the Authority Documents, do not conflict with, violate or constitute a default under any provision of any law, court order or decree or any contract, instrument or agreement to which the Authority is a party or by which it is bound and of which such counsel has knowledge; and (E) The Authority Documents have been duly authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery of the Authority Documents by the parties thereto other than the Authority, the Authority Documents constitute legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights and remedies in general, or by the application of equitable principles if equitable remedies are sought. (F) Except as may be required under the “blue sky” or securities laws of the United States or any state, there is no authorization, approval, consent or other order of, or filing with, or certification by, the State or any other governmental authority or agency having jurisdiction over the Authority required for the issuance of the Bonds or the consummation by the Authority of the other financial transactions contemplated by the Official Statement and the Authority Documents. (G) Based on the information made available to such City Attorney in its role as counsel to the Authority, and without having undertaken to determine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement under the captions entitled “THE AUTHORITY,” and “LITIGATION”, nothing has come to such City Attorney’s attention that would lead it to believe that the statements contained in the above-referenced captions as of the date of the Official Statement and as of the date of Closing (excluding therefrom the financial and statistical data and forecasts included therein, as to which no opinion is expressed) contained or contains any untrue statement of a material fact or omitted 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; -17- (xii) An opinion, dated the Closing Date and addressed to the Authority, of Bond Counsel, substantially in the form set forth in Appendix D to the Official Statement, together with a letter or letters from such counsel, dated the Closing Date and addressed to the Underwriters and the Trustee, to the effect that the foregoing opinion may be relied upon by the Underwriters and the Trustee to the same extent as if such opinion was addressed to them; (xiii) A supplemental opinion, dated the Closing Date and addressed to the Underwriters, of Bond Counsel, to the effect that: (A) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (B) the Bond Purchase Agreement has been duly executed and delivered by the Authority and the City and is a valid and binding agreement of the Authority and the City; and (C) the statements contained in the Official Statement under the captions “THE SERIES 2020A BONDS,” “SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2020A BONDS” and “TAX MATTERS” and in APPENDIX B– ”SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS” and APPENDIX D— PROPOSED FORM OF OPINION OF BOND COUNSEL,” insofar as such statements expressly summarize certain provisions of the Indenture, the Lease Agreement, the Ground Lease and the final opinion of Bond Counsel concerning certain tax matters relating to the Bonds, are accurate in all material respects; (xiv) A letter, dated the Closing Date and addressed to the Authority, the City and the Underwriters of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as disclosure counsel (“Disclosure Counsel”), to the effect that based upon their participation in the preparation of the Official Statement as Disclosure Counsel, without assuming any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement nor making any representation regarding independent verification of the accuracy, completeness or fairness of any of the statements contained in the Official Statement, such counsel advises that during the course of such representation of the Authority as disclosure counsel on this matter, no information came to the attention of the attorneys in such firm rendering legal services in connection with such representation which caused them to believe that the Official Statement as of its date (except for any financial, statistical or economic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, Appendices A, B, C, D E and F to the Official Statement, or any information about book-entry or DTC included therein, as to which no opinion or view is expressed) contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (xv) the opinion of Quint & Thimmig LLP, as counsel to the Underwriters, dated the Closing Date and addressed to the Underwriters, in form and substance acceptable to the Representative. -18- (xvi) A certificate of an authorized officer of the Trustee satisfactory to the Representative, certifying substantially as follows: (A) The Trustee is a national banking association duly organized and in good standing under the laws of the United States of America and has all necessary power and authority to enter into the Indenture and to perform its duties under the Indenture; (B) The Trustee is duly authorized to enter into the Indenture and to authenticate and deliver the Bonds to the Underwriters pursuant to the terms of the Indenture and, when executed by the other parties thereto, the Indenture will constitute a legal, valid and binding obligation of the Trustee enforceable in accordance with its terms; (C) The Bonds have been duly authenticated and delivered to the Underwriters pursuant to direction from the Authority; (D) The Trustee is not in breach of or default under any law or administrative rule or regulation of the State of California or of any department, division, agency or instrumentality thereof, of any applicable court or administrative decree or order, or any other material instrument to which the Trustee is a party or is otherwise subject or bound and which would materially impair the ability of the Trustee to perform its obligations under the Indenture; (E) To its knowledge, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, is pending or threatened in any way against the Trustee affecting the existence of the Trustee or the titles of its directors or officers to their respective offices, or seeking to restrain or enjoin the execution, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or in any way contesting or affecting the validity or enforceability of the Bonds or the Indenture; (F) The execution and delivery of the Indenture will not conflict with or constitute a breach of or default under the Trustee’s duties under such documents, or any law, administrative regulation, court decree, resolution, articles of association, bylaws or other material agreement to which the Trustee is subject or by which it is bound; and (G) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication and delivery of the Bonds, the execution and delivery of the Indenture, the performance of the Trustee’s duties under the Indenture or the consummation by the Trustee of the other transactions contemplated by the Indenture, except as such may be required under the state securities or blue sky laws in connection with the distribution of the Bonds by the Underwriters. (xvii) An opinion of counsel to the Trustee in form and substance acceptable to the Representative; -19- (xviii) Evidence, satisfactory to Bond Counsel and the Representative, of insurance, including a CLTA title insurance policy, in compliance with the Lease Agreement; (xix) 15c2-12 certificates of City and the Authority; (xx) Certified copies of the City Resolution and the Authority Resolution; (xxi) Evidence, satisfactory to the Representative, that the Bonds have been assigned the rating of “___” by S&P Global Ratings, a Standard & Poor’s Financial Services LLC business; (xxii) Transcripts of all proceedings relating to the authorization, issuance, execution and delivery of the Bonds certified by the City and the Authority as applicable; and (xxiii) Such additional legal opinions, certificates, instruments and other documents as the Underwriters may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Closing, of the City’s representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the City and the Authority on or prior to the date of the Closing of all the agreements then to be performed and conditions then to be satisfied by each of them. All the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to Bond Counsel, Disclosure Counsel and the Representative. If the City shall be unable to satisfy the conditions to the obligations of the Underwriters to purchase, to accept delivery of and to pay for the Bonds contained in this Bond Purchase Agreement, or if the obligations of the Underwriters to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and none of the Underwriters, the Authority or the City shall be under any further obligation hereunder. 10. Termination. The Underwriters shall have the right to terminate the Underwriters’ obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds by notifying the Authority and the City in writing, of its election to do so, if, after the execution hereof and prior to the Closing: (a) the United States has become engaged in, or there has been an escalation of, hostilities which, in the reasonable opinion of the Underwriters, materially adversely affects the marketability or market price of the Bonds; (b) there shall have occurred the declaration of a general banking moratorium by any authority of the United States or the State of New York or the State of California; (c) an event shall have occurred, or been discovered as described in paragraph (k) of Section 6 or paragraph (l) of Section 7 hereof, which in the opinion of the Underwriters requires the preparation and publication of disclosure material or a supplement or amendment to the Official Statement; -20- (d) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency in the State of California, or a decision by any court of competent jurisdiction within the State of California shall be rendered which, in the Representative’s reasonable opinion, materially adversely affects the market price of the Bonds; (e) there shall have occurred or any notice shall have been given of any intended downgrading, suspension, withdrawal or negative change in credit watch status by any national rating service to any of the Authority’s or the City’s obligations; (f) legislation shall be introduced, by amendment or otherwise, or be enacted by the House of Representatives or the Senate of the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the execution, issuance, delivery, offering or sale of obligations of the general character of the Bonds, or the Bonds, as contemplated hereby or by the Official Statement, is or would be in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect, or with the purpose or effect of otherwise prohibiting the issuance, offering or sale of obligations of the general character of the Bonds, or the Bonds, as contemplated hereby or by the Official Statement; (g) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; (h) the New York Stock Exchange, or other national securities exchange or association or any governmental authority, shall impose as to the Bonds, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by or the charge to the net capital requirements of broker-dealers; (i) trading in securities on the New York Stock Exchange or other national securities exchange or association shall have been suspended or limited or minimum prices have been established on either such exchange; (j) any action shall have been taken by any government in respect of its monetary affairs which, in the reasonable opinion of the Underwriters, has a material adverse effect on the United States municipal securities market; or as of the date hereof that in the Representative’s reasonable opinion materially adversely affects the marketability or market price of the Bonds; or (k) the marketability of the Bonds or the market price thereof, in the reasonable opinion of the Underwriters, has been materially and adversely affected by disruptive events, occurrences or conditions in the securities or debt markets. If this Bond Purchase Agreement shall be terminated pursuant to this Section 10, or if the purchase provided for herein is not consummated because any condition to the Underwriters’ obligations hereunder is not satisfied or because of any refusal, inability or failure on the part of the City or the Authority to comply with any of the terms or to fulfill any of the conditions of this Bond Purchase Agreement, or if for any reason the City or the Authority shall be unable to perform all of its respective obligations under this Bond Purchase Agreement, neither the City nor the Authority shall be liable to the Underwriters for damages -21- on account of loss of anticipated profits arising out of the transactions covered by this Bond Purchase Agreement. The Underwriters may, in their sole discretion, waive any of the conditions set forth in Section 9 or this Section 10. 11. Changes in Official Statement. After the Closing, neither the Authority nor the City will adopt any amendment of or supplement to the Official Statement to which the Underwriters shall reasonably object in writing. Within 25 days following the “end of the underwriting period” (as defined in Section 240 15c-12 in Chapter II of Title 17 of the Code of Federal Regulations (Rule 15c2-12), whichever occurs first, if any event relating to or affecting the Bonds, the City or the Authority shall occur as a result of which it is necessary, in the opinion of the Representative, to amend or supplement the Official Statement in order to make the Official Statement not misleading in any material respect in the light of the circumstances existing at the time it is delivered to a purchaser, the Authority will forthwith prepare and furnish to the Underwriters an amendment or supplement that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to purchaser, not misleading. The City and the Authority shall cooperate with the Underwriters in the filing by the Underwriters of such amendment or supplement to the Official Statement with a nationally recognized municipal securities repository. 12. Payment of Costs and Expenses. (a) All costs and expenses incident to the sale and delivery of the Bonds to the Underwriters shall be payable by the Authority from the proceeds of the Bonds, including, but not limited to: (i) the fees and expenses of the City, its counsel and consultants; (ii) the fees and expenses of the Authority, its counsel and consultants; (iii) the fees and expenses of Bond Counsel; (iv) the fees and expenses of Disclosure Counsel; (v) the fees and expenses of Sperry Capital Inc., the City’s municipal advisor; (vi) all expenses in connection with the preparation and printing of the Bonds; (vii) all expenses in connection with the preparation, printing, distribution and delivery of the Preliminary Official Statement, the Official Statement and any amendment or supplement thereto; (viii) the initial fees and expenses of the Trustee, including the reasonable fees and expenses of its counsel; (ix) the fees and expenses of any rating agency rating the Bonds; and (x) any credit enhancement costs for the Bonds. (b) The Underwriters shall pay all expenses incurred by it in connection with the public offering and distribution of the Bonds including, but not limited to: (i) all advertising expenses in connection with the offering of the Bonds; (ii) the fees and disbursements of Underwriters’ counsel, if any, and (iii) all out-of-pocket disbursements and expenses incurred by the Underwriters in connection with the offering and distribution of the Bonds, including, air travel and hotel accommodations in connection with the pricing of the Bonds; investor meetings, rating agency trips and meetings; the Closing; meals and transportation for the City, the Underwriters and other working group personnel during rating agency, investor meetings; pricing and Closing trips; expenses related to attending working group meetings, such as parking, meals and transportation and any other miscellaneous costs associated with the Closing; (iv) all other expenses incurred by the Underwriters in connection with the public offering and distribution of Bonds, except as provided in (a) above or as otherwise agreed to by the Underwriters and the City, and (v) the fees of the California Debt and Investment Advisory Commission. -22- 13. Notices. Any notice or other communication to be given under this Bond Purchase Agreement may be given by delivering the same in writing: To the Authority: City of South San Francisco Public Facilities Financing Authority c/o City of South San Francisco 400 Grand Avenue South San Francisco, CA 94080 Attention: Director of Finance To the City: City of South San Francisco 400 Grand Avenue South San Francisco, CA 94080 Attention: Director of Finance To the Underwriters: Stifel, Nicolaus & Company, Incorporated One Montgomery Street, 35th Floor San Francisco, CA 94014 Attention: Ms. Eileen Gallagher, Managing Director 14. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriters (including the successors or assigns of the Underwriters) and no other person shall acquire or have any right hereunder or by virtue hereof. All of the Authority’s and the City’s representations, warranties and agreements contained in this Bond Purchase Agreement shall remain operative and in full force and effect, regardless of: (a) any investigations made by or on behalf of the Underwriters; (b) delivery of and payment for the Bonds pursuant to this Bond Purchase Agreement; and (c) any termination of this Bond Purchase Agreement. 15. Determination of End of the Underwriting Period. For purposes of this Bond Purchase Agreement, the end of the underwriting period for the Bonds shall mean the earlier of (a) the Closing Date unless the City and the Authority have been notified in writing by the Representative, on or prior to the Closing Date, that the “end of the underwriting period” for the Bonds for all purposes of the Rule will not occur on the Closing Date, or (b) the date on which notice is given to the City and the Authority by the Representative in accordance with the following sentence. In the event that the Underwriters has given notice to the City and the Authority pursuant to clause (a) above that the “end of the underwriting period” for the Bonds will not occur on the Closing Date, the Underwriters agree to notify the City and the Authority in writing as soon as practicable following the “end of the underwriting period” for the Bonds for all purposes of the Rule. The Underwriters agree to file a copy of the Official Statement with each of the nationally recognized municipal securities information repositories. 16. No Assignment. This Bond Purchase Agreement is entered into between the City, the Authority and the Underwriters, and is solely for the benefit of the City, the Authority, the Underwriters and their respective successors or assigns, and no person other than the foregoing shall acquire or have any right under or by virtue of this Bond Purchase Agreement. All of the representations, warranties and agreements contained in this Bond Purchase Agreement shall survive the delivery of and payment for the Bonds and any termination thereof. 17. Effectiveness. This Bond Purchase Agreement shall become effective upon the execution of the acceptance by an authorized representative of the City and an authorized representative of the Authority and shall be valid and enforceable at the time of such acceptance. 18. Headings. The headings of the sections of this Bond Purchase Agreement are inserted for convenience only and shall not be deemed to be a part hereof. -23- 19. Governing Law. This Bond Purchase Agreement shall be interpreted, governed and enforced in accordance with the laws of the State of California. 20. Counterparts. This Bond Purchase Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. If the foregoing is in accordance with your understanding of this Bond Purchase Agreement please sign and return to us the enclosed duplicate copies hereof, whereupon it will become a binding agreement among the City, the Authority and the Underwriters in accordance with its terms. Very truly yours, STIFEL, NICOLAUS & COMPANY, INCORPORATED, CITIGROUP GLOBAL MARKETS INC. and RAYMOND JAMES & ASSOCIATES, INC., as Underwriters By STIFEL, NICOLAUS & COMPANY, INCORPORATED, as Representative By Managing Director CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY By Executive Director CITY OF SOUTH SAN FRANCISCO By City Manager Time of Execution: Exhibit A Page 1 EXHIBIT A MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES AND YIELDS $_________ CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (Police Station Project) Lease Revenue Bonds, Series 2020A Maturity Principal Interest (June 1) Amount Rate Yield Price Redemption Provisions Special Mandatory Redemption from Insurance or Condemnation Proceeds The Bonds are subject to redemption as a whole, or in part among maturities on such basis as designated by the Authority and by lot within a maturity, on any date, from any net proceeds of casualty or title insurance or an eminent domain award with respect to the Property which are not applied to repair, rebuild or replace the Property as provided it the Indenture, at a redemption price equal to 100% of the principal amount to be redeemed plus interest accrued thereon to the date fixed for redemption, without premium. Optional Redemption The Bonds maturing on or before June 1, ____, are not subject to optional redemption prior to their stated maturity. The Bonds maturing on or after June 1, ____, are subject to redemption, as a whole or in part at the election of the Authority among maturities on such basis as designated by the Authority and by lot within a maturity, at the option of the Authority, on June 1, ____, and on any date thereafter, at a redemption price equal to 100% of the principal amount of Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium. Mandatory Sinking Fund Redemption The Bonds maturing on June 1, ____, are also subject to redemption prior to their stated maturity in part, by lot, on June 1, ___, and each June 1 thereafter to and including and July 1, ____, from Mandatory Sinking Account Payments listed below, at the principal amount thereof and interest accrued thereon to the date fixed for redemption, without premium. Exhibit A Page 2 Mandatory Sinking Mandatory Account Payment Dates Sinking Account (June 1) Payments † Maturity The Bonds maturing on June 1, ____, are also subject to redemption prior to their stated maturity in part, by lot, on June 1, ___, and each June 1 thereafter to and including and July 1, ____, from Mandatory Sinking Account Payments listed below, at the principal amount thereof and interest accrued thereon to the date fixed for redemption, without premium. Mandatory Sinking Mandatory Account Payment Dates Sinking Account (June 1) Payments † Maturity Exhibit B Page 1 EXHIBIT B ISSUE PRICE CERTIFICATE $_________ CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (Police Station Project) Lease Revenue Bonds, Series 2020A The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated, on behalf of itself and Citigroup Global Markets Inc. and Raymond James & Associates, Inc., as underwriters (“Stifel”), based on the information available to it, hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”). I. General 1. Stifel and the City of South San Francisco Public Facilities Financing Authority and City of South San Francisco (collectively, the “Issuer”) have executed a bond purchase agreement in connection with the Bonds on the Sale Date. Stifel has not modified the bond purchase agreement since its execution on the Sale Date. II. Price 1. As of the date of this certificate, for each Maturity of the Bonds, the first price at which at least 10% of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A. III. Defined Terms 1. Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities. 2. Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriters or a Related Party to an Underwriters. 3. A person is a “Related Party” to an Underwriter if the Underwriter and the person are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other). 4. Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is February 26, 2020. 5. Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with Stifel to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). All terms not defined herein shall have the same meanings as in the Certificate as to Arbitrage with respect to the Bonds, to which this Certificate is attached. Exhibit B Page 2 The Issuer may rely on the statements made herein in connection with its efforts to comply with the conditions imposed by the Internal Revenue Code of 1986, as amended (the “Code”). Bond Counsel may also rely on this Certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. However, notwithstanding the foregoing, we remind you that Stifel is not an accountant or actuary, nor is Stifel engaged in the practice of law. Accordingly, while Stifel believes the calculations described above to be correct, it does not warrant their validity for purposes of Sections 103 and 141 through 150 of the Code or make any representation as to the legal sufficiency of the factual matters set forth herein. Except as expressly set forth above, the certifications set forth herein may not be relied upon or used by any third party or for any other purpose. Dated: March 11, 2020 STIFEL, NICOLAUS & COMPANY, INCORPORATED, CITIGROUP GLOBAL MARKETS INC. and RAYMOND JAMES & ASSOCIATES, INC., as Underwriters By STIFEL, NICOLAUS & COMPANY, INCORPORATED By Managing Director Exhibit B Page 3 SCHEDULE A TO ISSUE PRICE CERTIFICATE $_________ CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (Police Station Project) Lease Revenue Bonds, Series 2020A Maturity Principal Interest (June 1) Amount Rate Price ATTACHMENT F – FORM OF PRELIMINARY OFFICIAL STATEMENT Draft of 2/6/20 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY __, 2020 NEW ISSUE—BOOK-ENTRY ONLY RATING: S&P: “AA+” (See “RATING” herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certa in covenants and requirements described in this Official Statement, interest (and original issue discount) on the Series 2020A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating t he federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original iss ue discount) on the Series 2020A Bonds is exempt from State of California personal income taxes. See “TAX MATTERS.” $_________* CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (POLICE STATION PROJECT) LEASE REVENUE BONDS, SERIES 2020A Dated: Date of Delivery Due: June 1, as shown on inside cover The City of South San Francisco Public Facilities Financing Authority (Police Station Project) Lease Revenue Bonds, Series 2020A (the “Series 2020A Bonds”) are payable from base rental payments (the “Base Rental Payments”) to be made by the City of South San Francisco (the “City”) for the right to use certain real property consisting of a City-owned parking garage and a City-owned park (the “Property”) pursuant to a Lease Agreement, dated as of March 1, 2020 (the “Lease Agreement”), by and between the City, as lessee, and the City of South San Francisco Public Facilities Financing Authority (the “Authority”), as lessor. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020A BONDS.” The Series 2020A Bonds are being issued to provide funds to (i) finance the costs of the acquisition, construction and installation of certain capital improvements constituting a new City police station to be located within the City’s new Civic Center Campus, and related improvements, facilities and equipment, and (ii) pay the costs incurred in connection with the issuance of the Series 2020A Bonds. See “THE PROJECT.” The City has covenanted under the Lease Agreement to make all Base Rental Payments provided for therein, to include all such payments as a separate line item in its annual budgets, and to make all the necessary annual appropriations for such Base Rental Payments. The City’s obligation to make Base Rental Payments is subject to abatement during any period in which, by reason of material damage to, or destruction or condemnation of, the Property, or any defects in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Proper ty. See “RISK FACTORS—Abatement.” The Series 2020A Bonds are being issued in fully registered book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Interest on the Series 2020A Bonds is payable semiannually on June 1 and December 1 of each year, commencing June 1, 2020. Purchasers will not receive certificates representing their interest in the Series 2020A Bonds. Individual purchases of the Series 2020A Bonds may be made in principal amounts of $5,000 or integral multiples thereof. Principal of and interest and premium, if any, on the Series 2020A Bonds will be paid by The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the Beneficial Owners of the Series 2020A Bonds. See “THE SERIES 2020A BONDS—Book- Entry Only System” herein. The Series 2020A Bonds will be issued pursuant to an Indenture, dated as of March 1, 2020 (the “Indenture”) by and among the City, the Authority and the Trustee. The Series 2020A Bonds and any additional bonds issued pursuant to the Indenture (“Additional Bonds”) are collectively referred to as the “Bonds.” The Authority has not funded a debt service reserve fund for the Series 2020A Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020A BONDS.” The Series 2020A Bonds are subject to optional, extraordinary and mandatory sinking fund redemption prior to maturity. See “THE SERIES 2020A BONDS—Redemption.” The Series 2020A Bonds are special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Auth ority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Series 2020A Bonds. The obligation of the City to make the Base Rental Payments does not constitute a debt of the City or the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State of California is obligated to levy or pledge any form of tax ation or for which the City or the State of California has levied or pledged any form of taxation. The Authority has no power to tax. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The Series 2020A Bonds will be offered when, as and if issued and received by the Underwriters, subject to the approval as to their validity by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Stradling Yocca Carlson and Rauth, a Professional Corporation, Newport Beach, California, is also acting as Disclosure Counsel to the City. Certain legal matters will be passed upon for the City and the Authority by the City Attorney of the City of South San Francisco, and for the Underwriters by Quint & Thimmig LLP, Larkspur, California. It is anticipated that the Series 2020A Bonds in definitive form will be available for delivery to DTC in New York, New York on or about March __, 2020. [STIFEL LOGO] * Preliminary, subject to change. Citigroup [RAYMOND JAMES LOGO] Dated: February __, 2020 $_________* CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (POLICE STATION PROJECT) LEASE REVENUE BONDS, SERIES 2020A MATURITY SCHEDULE BASE CUSIP†: Maturity Date (June 1) Principal Amount Interest Rate Yield Price CUSIP† $_________ ______% Term Bonds due June 1, 20__ Yield: _____% Price: _______ CUSIP† ____ $_________ ______% Term Bonds due June 1, 20__ Yield: _____% Price: _______ CUSIP† ____ * Preliminary, subject to change. † CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright(c) 2020 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any wa y as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the Authority, the City or the Underwriters or their agents or counsel assume responsibility for the accuracy of such numbers . 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 Series 2020A Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Authority. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Series 2020A Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers or Owners of the Series 2020A Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as a part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. This Official Statement and the information contained herein are subject to completion or amendment without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or the Authority or any other parties described herein since the date hereof. These securities may not be sold nor may an offer to buy be accepted prior to the time the Official Statement is delivered in final form. This Official Statement is being submitted in connection with the sale of the Series 2020A Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the City. All summaries of documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the Unit ed States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget,” “intend” or similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the caption “RISK FACTORS” and in APPENDIX A – “THE CITY OF SOUTH SAN FRANCISCO.” THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. IN EVALUATING SUCH STATEMENTS, POTENTIAL INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS WHICH COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS. IN CONNECTION WITH THE OFFERING OF THE SERIES 2020A BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2020A BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITERS MAY OFFER AND SELL THE SERIES 2020A BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE INSIDE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS. THE SERIES 2020A BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. A wide variety of other information, including financial information, concerning the City is available from publications and website of City. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded. No such information is a part of or incorporated into this Official Statement, except as expressly noted . CITY OF SOUTH SAN FRANCISCO COUNTY OF SAN MATEO, CALIFORNIA CITY COUNCIL AND BOARD OF DIRECTORS OF THE CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY Rich Garbarino, Mayor and Authority Chair Mark Addiego, Vice Mayor and Authority Vice Chair Karyl Matsumoto, Council Member and Authority Director Mark Nagales, Council Member and Authority Director Buenaflor Nicolas, Council Member and Authority Director _____________ CITY OFFICIALS Michael Futrell, City Manager Frank Risso, City Treasurer Janet Salisbury, Director of Finance Sky Woodruff, City Attorney Rosa Govea Acosta, City Clerk _____________ BOND COUNSEL AND DISCLOSURE COUNSEL Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California _____________ MUNICIPAL ADVISOR Sperry Capital, Inc. Sausalito, California _________________ TRUSTEE The Bank of New York Mellon Trust Company, N.A. San Francisco, California _________________ TABLE OF CONTENTS Page i INTRODUCTION ................................................................................................................................................ 1 THE SERIES 2020A BONDS .............................................................................................................................. 3 General .............................................................................................................................................................. 3 Registration, Transfers and Exchanges ............................................................................................................. 3 Redemption ....................................................................................................................................................... 3 Book-Entry Only System .................................................................................................................................. 6 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020A BONDS .......................................... 6 Pledge of Revenues ........................................................................................................................................... 6 Base Rental Payments ....................................................................................................................................... 7 Additional Rental Payments ............................................................................................................................. 8 Abatement ......................................................................................................................................................... 8 Substitution, Addition and Removal of Property .............................................................................................. 9 Action on Default.............................................................................................................................................. 9 No Reserve Fund ............................................................................................................................................ 10 Additional Bonds ............................................................................................................................................ 10 Insurance ......................................................................................................................................................... 11 SOURCES AND USES OF FUNDS .................................................................................................................. 12 DEBT SERVICE SCHEDULE........................................................................................................................... 13 THE PROJECT ................................................................................................................................................... 13 THE PROPERTY ............................................................................................................................................... 14 THE AUTHORITY ............................................................................................................................................ 15 Organization and Membership ........................................................................................................................ 15 THE CITY .......................................................................................................................................................... 15 General ............................................................................................................................................................ 15 RISK FACTORS ................................................................................................................................................ 15 General Considerations – Security for the Series 2020A Bonds .................................................................... 16 Abatement ....................................................................................................................................................... 16 No Reserve Fund ............................................................................................................................................ 17 Natural Disasters and Climate Change ........................................................................................................... 17 Hazardous Substances ..................................................................................................................................... 18 Cybersecurity .................................................................................................................................................. 18 Substitution, Addition and Removal of Property; Additional Bonds .............................................................. 19 Limited Recourse on Default; No Acceleration of Base Rental ..................................................................... 19 Limitations on Remedies Available; Bankruptcy ........................................................................................... 20 Possible Insufficiency of Insurance Proceeds ................................................................................................. 21 Loss of Tax Exemption ................................................................................................................................... 21 No Liability of Authority to the Owners ......................................................................................................... 21 Dependence on State for Certain Revenues .................................................................................................... 21 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS ............ 22 Article XIIIA of the State Constitution ........................................................................................................... 22 Legislation Implementing Article XIIIA ........................................................................................................ 22 Split Roll Initiative.......................................................................................................................................... 23 Article XIIIB of the State Constitution ........................................................................................................... 23 Articles XIIIC and XIIID of the State Constitution ........................................................................................ 24 Proposition 62 ................................................................................................................................................. 25 Proposition 1A ................................................................................................................................................ 25 Proposition 22 ................................................................................................................................................. 26 Proposition 26 ................................................................................................................................................. 26 ii Possible Future Initiatives ............................................................................................................................... 26 TAX MATTERS................................................................................................................................................. 26 CERTAIN LEGAL MATTERS ......................................................................................................................... 28 ABSENCE OF LITIGATION ............................................................................................................................ 28 UNDERWRITING ............................................................................................................................................. 29 RATING ............................................................................................................................................................. 29 MUNICIPAL ADVISOR ................................................................................................................................... 29 CONTINUING DISCLOSURE .......................................................................................................................... 29 FINANCIAL STATEMENTS OF THE CITY ................................................................................................... 30 MISCELLANEOUS ........................................................................................................................................... 30 APPENDIX A THE CITY OF SOUTH SAN FRANCISCO ..................................................................... A-1 APPENDIX B SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS ........................................... B-1 APPENDIX C AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE YEAR ENDED JUNE 30, 2019 .................................................................................................... C-1 APPENDIX D PROPOSED FORM OF BOND COUNSEL OPINION .................................................... D-1 APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT ............................................. E-1 APPENDIX F BOOK-ENTRY ONLY SYSTEM .....................................................................................F-1 iii MAP OF SOUTH SAN FRANCISCO 1 OFFICIAL STATEMENT $_________* CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY (POLICE STATION PROJECT) LEASE REVENUE BONDS, SERIES 2020A INTRODUCTION General. This Official Statement (which includes the cover page and the appendices hereto) (the “Official Statement”), provides certain information concerning the sale and delivery of $_________* aggregate principal amount of City of South San Francisco Public Facilities Financing Authority (Police Station Project) Lease Revenue Bonds, Series 2020A (the “Series 2020A Bonds”). The net proceeds of the sale of the Series 2020A Bonds will be used to (i) finance the costs of the acquisition, construction and installation of certain capital improvements constituting a new City police station to be located within the City’s new Civic Center Campus, and related improvements, facilities and equipment, and (ii) pay the costs incurred in connection with the issuance of the Series 2020A Bonds. See “THE PROJECT” herein. The Series 2020A Bonds are equally and ratably payable from base rental payments (the “Base Rental Payments”) to be made by the City of South San Francisco (the “City”) for the right to use certain real property consisting of a City-owned parking garage and a City-owned park (as further described under the caption “THE PROPERTY”) (the “Property”) pursuant to a Lease Agreement, dated as of March 1, 2020 (the “Lease Agreement”), between the City, as lessee, and the City of South San Francisco Public Facilities Financing Authority (the “Authority”), as lessor. The Series 2020A Bonds will be issued pursuant to an Indenture, dated as of March 1, 2020 (the “Indenture”), by and among the Authority, the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). Pursuant to the Indenture, the Authority may issue additional bonds (the “Additional Bonds”) payable from the Base Rental Payments on a parity with the Series 2020A Bonds (the Series 2020A Bonds and any such Additional Bonds being collectively referred to as the “Bonds”). Pursuant to a Ground Lease, dated as of March 1, 2020 (the “Ground Lease”), by and between the City and the Authority, the City has leased the Property to the Authority. The Authority has subleased the Property to the City under the Lease Agreement. The Lease Agreement obligates the City to make Base Rental Payments to the Authority. The Trustee and the Authority have entered into an Assignment Agreement, dated as of March 1, 2020, pursuant to which the Authority has assigned to the Trustee for the benefit of the Bond Owners substantially all of the Authority’s right, title and interest in and to the Ground Lease and the Lease Agreement, including its right to receive the Base Rental Payments due under the Lease Agreement and to enforce any remedies in the event of a default under the Lease Agreement by the City. The City will covenant under the Lease Agreement to take such action as may be necessary to include all Rental Payments, which are comprised of Base Rental Payments and Additional Rental Payments (which include taxes and assessments affecting the Property, administrative costs of the Authority relating to the Property, fees and expenses of the Trustee and other amounts payable under the Lease Agreement), due under the Lease Agreement as a separate line item in its annual budgets and to make the necessary annual appropriations therefor, subject to abatement as described herein. * Preliminary, subject to change. 2 Base Rental Payments are subject to complete or partial abatement in the event and to the extent that there is substantial interference with the City’s right to use and occupy the Property or any portion thereof. See “RISK FACTORS—Abatement.” Abatement of Base Rental Payments under the Lease Agreement, to the extent that payment is not made from alternative sources as set forth below, would result in all Bond Owners receiving less than the full amount of principal of and interest on the Bonds. To the extent that proceeds of insurance are available, Base Rental Payments (or a portion thereof) may be made from such proceeds of insurance during periods of abatement. The Series 2020A Bonds are special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California (the “State”), or any political subdivision thereof, is pledged to the payment of the Series 2020A Bonds. The Authority has no power to tax. The obligation of the City to make the Base Rental Payments does not constitute a debt of the City, the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State is obligated to levy or pledge any form of taxation or for which the City or the State has levied or pledged any form of taxation. The Authority is not funding a debt service reserve fund for the Series 2020A Bonds. The City has agreed to provide, or cause to be provided, to the Municipal Securities Rulemaking Board for purposes of Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission certain annual financial information and operating data and, in a timely manner, notice of certain listed events. These covenants have been made in order to assist the Underwriters in complying with SEC Rule 15c2-12(b)(5). See “CONTINUING DISCLOSURE” herein for a description of the specific nature of the annual report and notices of listed events and a summary description of the terms of the disclosure agreement pursuant to which such reports are to be made. The Bank of New York Mellon Trust Company, N.A., San Francisco, California, will act as Trustee with respect to the Series 2020A Bonds. The Series 2020A Bonds will be issued subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed upon for the City and the Authority by the City Attorney of the City of South San Francisco and by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Disclosure Counsel. Certain legal matters will be passed upon for the Underwriters by Quint & Thimmig LLP, Larkspur, California. The City’s financial statements for the fiscal year ended June 30, 2019 included as Appendix C hereto have been audited by Maze & Associates, Pleasant Hill, California (the “Auditor”). See APPENDIX C—“AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2019” herein. The City’s financial statements are public documents and are included within this Official Statement without the prior approval of the Auditor. Accordingly, the Auditor has not performed any post-audit review of the financial condition of the City. Certain events could affect the ability of the City to make the Base Rental Payments when due. See “RISK FACTORS” for a discussion of certain factors that should be considered, in addition to other matters set forth herein, in evaluating an investment in the Series 2020A Bonds. The presentation of information, including tables of receipt of revenues, is intended to show recent historical information and, except for a budget discussion for Fiscal Year 2019-20, is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past experience, as it might be shown by such financial and other information, will necessarily continue or be repeated in the future. See Appendix A for financial and operating information related to the City. 3 The summaries or references to the Indenture, the Lease Agreement, the Ground Lease, the Assignment Agreement and other documents, agreements and statutes referred to herein, and the description of the Series 2020A Bonds included in this Official Statement, do not purport to be comprehensive or definitive, and such summaries, references and descriptions are qualified in their entireties by reference to each such document or statute. All capitalized terms used in this Official Statement (unless otherwise defined herein) which are defined in the Indenture or the Lease Agreement shall have the meanings set forth therein, some of which are summarized in APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS.” THE SERIES 2020A BONDS General The Series 2020A Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. The Series 2020A Bonds will be dated as of and bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) from the dated date thereof at the rates set forth on the inside cover page hereof. Interest on the Series 2020A Bonds will be paid semiannually on June 1 and December 1 (each, an “Interest Payment Date”) of each year, commencing June 1, 2020. Interest on the Series 2020A Bonds will be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Series 2020A Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth day of the month next preceding such Interest Payment Date, whether or not such day is a Business Day (the “Record Date”), in which event it will bear interest from such Interest Payment Date, (ii) a Series 2020A Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the dated date thereof, or (iii) interest on any Series 2020A Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Interest will be paid in lawful money of the United States on each Interest Payment Date to the Persons in whose names the ownership of the Series 2020A Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest will be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date or by wire transfer to Owners of more than $1,000,000 in principal amount of Series 2020A Bonds who have provided account information and wiring instructions satisfactory to the Trustee. The principal and premium, if any, of the Series 2020A Bonds will be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee. The Series 2020A Bonds will be subject to redemption as set forth herein. Registration, Transfers and Exchanges The Series 2020A Bonds will be issued as fully registered bonds, registered in the name of Cede & Co. as nominee of DTC, and will be available to actual purchasers of the Series 2020A Bonds (the “Beneficial Owners”) in the denominations set forth above, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants (as defined in Appendix F) as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Series 2020A Bonds. See “THE SERIES 2020A BONDS—Book-Entry Only System.” Redemption Extraordinary Redemption from Condemnation Award or Insurance Proceeds. The Series 2020A Bonds shall be subject to redemption, in whole or in part, on any date, in denominations of $5,000 or any integral multiple thereof, from and to the extent of and: (i) Net Insurance Proceeds received with respect to all 4 or a portion of the Property, deposited by the Trustee in the Redemption Fund pursuant to the Indenture, and (ii) eminent domain proceeds received pursuant to the Lease Agreement, at a Redemption Price equal to the principal amount of the Series 2020A Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. Optional Redemption. The Series 2020A Bonds maturing on or after June 1, 20__, are subject to optional redemption, in whole or in part, on any date on or after June 1, 20__, in denominations of $5,000 or any integral multiple thereof, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease Agreement, at a Redemption Price equal to the principal amount of the Series 2020A Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. Mandatory Sinking Fund Redemption. The Series 2020A Bonds with stated maturities on June 1, 20__ (the “20__ Term Bonds”) are subject to mandatory sinking fund redemption in part (by lot) on each June 1 on and after June 1, 20__, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Redemption Date (June 1) Principal Amount $ * * Final Maturity. The Series 2020A Bonds with stated maturities on June 1, 20__ (the “20__ Term Bonds” and together with the “20__ Term Bonds, the “Term Bonds”) are subject to mandatory sinking fund redemption in part (by lot) on each June 1 on and after June 1, 20__, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Redemption Date (June 1) Principal Amount $ * * Final Maturity. In the event of a partial optional redemption or extraordinary mandatory redemption of any of the Term Bonds, each of the remaining mandatory sinking fund payments for such Term Bonds will be reduced, as nearly as practicable, on a pro rata basis in the amount of $5,000 or any integral multiple thereof as directed by an Authorized City Representative. Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption (a) with respect to any optional redemption of Bonds of a Series, among maturities of Bonds of such Series as directed in a Written Request of the Authority provided to the Trustee at least 30 but 5 no more than 60 days prior to the date of such redemption, (b) with respect to any redemption from and to the extent of any insurance proceeds or condemnation award received with respect to all or a portion of the Property and the corresponding provision of any Supplemental Indenture pursuant to which Additional Bonds are issued, among maturities of all Series of Bonds on a pro rata basis as nearly as practicable, as directed in a Written Request of the Authority provided to the Trustee at least 30 but no more than 60 days prior to the date of such redemption, and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued, and by lot among Bonds of the same Series with the same maturity in any manner which the Trustee in its sole discretion deems appropriate and fair. For purposes of such selection, all Bonds will be deemed to be comprised of separate $5,000 denominations and such separate denominations will be treated as separate Bonds which may be separately redeemed. Notice of Redemption. Notice of redemption shall be given by the Trustee, not less than 20 nor more than 60 days prior to the redemption date (i) as to Series 2020A Bonds not registered in the name of a Securities Depository or its nominee, to the respective Owners of the Series 2020A Bonds designated for redemption at their addresses appearing on the Registration Books, (ii) as to Series 2020A Bonds registered in the name of a Securities Depository or its nominee, to such Securities Depository for such Series 2020A Bonds, and (iii) the Information Services. Notice of redemption to the Owners pursuant to (i) above shall be given by mail at their addresses appearing on the Registration Books, or any other method agreed upon by such Owner and the Trustee. Notice of redemption to the Securities Depositories pursuant to (ii) above and the Information Services pursuant to (iii) above shall be given by electronically secure means, or any other method agreed upon by such entities and the Trustee. Such notice will state the date of the notice, the redemption date, the redemption place and the Redemption Price and shall designate the CUSIP numbers, the Series 2020A Bond numbers and the maturity or maturities (except in the event of redemption of all of the Series 2020A Bonds of such maturity or maturities in whole) of the Series 2020A Bonds to be redeemed, and will require that such Series 2020A Bonds be then surrendered at the principal corporate trust office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Series 2020A Bonds will not accrue from and after the date fixed for redemption. Neither the failure to receive any notice so given, nor any defect in such notice, will affect the validity of the proceedings for the redemption of the Series 2020A Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of optional redemption of the Series 2020A Bonds, such notice may state that such redemption is conditional upon the receipt by the Trustee, on or prior to the date fixed for such redemption, of moneys sufficient to pay the principal of, premium if any, and interest on the Series 2020A Bonds to be redeemed and upon other conditions set forth therein and that, if such money has not been so received or such other conditions have not been satisfied, said notice is of no force and effect and the Trustee is not required to redeem such Series 2020A Bonds. If any condition stated in the redemption notice for an optional redemption have not been satisfied on or prior to the redemption date: (i) the redemption notice will be of no force and effect, (ii) the Authority will not be required to redeem such Series 2020A Bonds, (iii) the redemption will not be made, and (iv) the Trustee will within a reasonable time thereafter give notice to the persons in the manner in which the conditional redemption notice was given that such condition or conditions were not met and that the redemption was canceled. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same Series in authorized denominations equal in aggregate principal amount representing the unredeemed portion of the Bonds surrendered. Effect of Notice of Redemption. Notice having been given as aforesaid, and moneys for the Redemption Price, and the interest to the applicable date fixed for redemption, having been set aside in the Redemption Fund, the Bonds will become due and payable on said date, and, upon presentation and surrender 6 thereof at the principal corporate trust office of the Trustee, said Bonds will be paid at the Redemption Price thereof, together with interest accrued and unpaid to said date. If, on said date fixed for redemption, moneys for the Redemption Price of all the Bonds to be redeemed, together with interest to said date, will be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof has been given as aforesaid and not canceled, then, from and after said date, interest on said Bonds will cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds will be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to such Owners for interest thereon. All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions of the Indenture will be canceled upon surrender thereof and destroyed. Book-Entry Only System General. DTC will act as securities depository for the Series 2020A Bonds. The Series 2020A Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC’s partnership nominee). One fully-registered Series 2020A Bond will be issued for each maturity of the Series 2020A Bonds, each in the initial aggregate principal amount of such maturity, and will be deposited with DTC. See APPENDIX F— “BOOK-ENTRY ONLY SYSTEM.” Transfer and Exchange of Bonds. The following provisions regarding the exchange and transfer of the Series 2020A Bonds apply only during any period in which the Series 2020A Bonds are not subject to DTC’s book- entry system. While the Series 2020A Bonds are subject to DTC’s book-entry system, their exchange and transfer will be effected through DTC and the Participants and will be subject to the procedures, rules and requirements established by DTC. Any Series 2020A Bond may, in accordance with its terms, be transferred upon the Registration Books required to be kept by the Trustee pursuant to the provisions of the Indenture by the Person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Series 2020A Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Series 2020A Bond or Series 2020A Bonds will be surrendered for transfer, the Authority will execute and the Trustee will authenticate and will deliver a new Series 2020A Bond or Series 2020A Bonds of the same Series in a like aggregate principal amount, in any Authorized Denomination. The Trustee will require the Series 2020A Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. The Series 2020A Bonds may be exchanged at the principal corporate trust office of the Trustee for a like aggregate principal amount of Series 2020A Bonds. The Trustee will require the payment by the Series 2020A Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee is not obligated to make any transfer or exchange of Series 2020A Bonds during the period established by the Trustee for the selection of Series 2020A Bonds for redemption, or with respect to any Series 2020A Bonds selected for redemption. SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020A BONDS Pledge of Revenues The Series 2020A Bonds are equally and ratably payable from and secured by Base Rental Payments and certain amounts on deposit in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund established under the Indenture. Base Rental Payments will be payable by the City from any and all legally available funds, however, the City expects that its General Fund will be the primary source 7 of funds to make Base Rental Payments. See “RISK FACTORS” and APPENDIX A for a description of such available funds and the potential risks associated with the availability of such funds to make Base Rental Payments. The City will covenant in the Lease Agreement to take such action as may be necessary to include all Base Rental Payments and Additional Rental Payments due under the Lease Agreement as a separate line item in its annual budgets and to make the necessary annual appropriations therefor. The Authority, pursuant to the Assignment Agreement, will assign to the Trustee for the benefit of the Series 2020A Bond Owners all of the Authority’s right, title and interest in and to the Ground Lease and the Lease Agreement, including, without limitation, its right to receive Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement; provided that, the Authority will retain the rights to indemnification, to give approvals and consents under the Lease Agreement and the Ground Lease and to payment or reimbursement of its reasonable costs and expenses under the Lease Agreement. The City will pay Base Rental Payments directly to the Trustee, as assignee of the Authority. See “—Base Rental Payments” below. Pursuant to the Indenture, the Authority may issue Additional Bonds payable from the Base Rental Payments on a parity with the Series 2020A Bonds. See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—The Indenture—Additional Bonds.” Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund are pledged by the Authority pursuant to the Indenture to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act. Said pledge constitutes a first lien on such assets. The Series 2020A Bonds are special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State, or any political subdivision thereof, is pledged to the payment of the Series 2020A Bonds. The Authority has no power to tax. Base Rental Payments Rental Payments (defined in the Lease Agreement as collectively, the Base Rental Payments and the Additional Rental Payments) will be paid by the City to the Authority for and in consideration of the right to use and occupy the Property and in consideration of the continued right to the quiet use and enjoyment thereof during each Rental Period for which such Rental Payments are to be paid. Each Base Rental Payment will be deposited with the Trustee no later than the 25th day of the month next preceding each Interest Payment Date (the “Base Rental Deposit Date”) on which such Base Rental Payment is due. All Base Rental Payments will be paid directly by the City to the Trustee, and if received by the Authority at any time will be transferred by the Authority to the Trustee within one Business Day after the receipt thereof. All Base Rental Payments received by the Trustee will be deposited by the Trustee in the Base Rental Payment Fund. Pursuant to the Indenture, on the Business Day immediately preceding each Interest Payment Date and on the Business Day immediately preceding each Principal Payment Date, the Trustee will transfer amounts in the Base Rental Payment Fund as are necessary to the Interest Fund and the Principal Fund to provide for the payment of the interest on and principal of the Series 2020A Bonds. Scheduled Base Rental Payments relating to the Series 2020A Bonds are set forth below under the heading “BASE RENTAL PAYMENT SCHEDULE.” The obligation of the City to make the Base Rental Payments does not constitute a debt of the City, the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State is 8 obligated to levy or pledge any form of taxation or for which the City or the State has levied or pledged any form of taxation. Additional Rental Payments For the right to use and occupy the Property, the Lease Agreement requires the City to pay, as Additional Rental payments thereunder, in addition to the Base Rental Payments, such amounts as shall be required for the payment of the following: (i) All taxes and assessments of any type or nature charged to the Authority or the City or affecting the Property or the respective interests or estates of the Authority or the City therein. (ii) All reasonable administrative costs of the Authority relating to the Property including, but without limiting the generality of the foregoing, salaries, wages, fees and expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture, fees of auditors, accountants, attorneys or engineers, and all other necessary and reasonable administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Indenture or the Lease Agreement or to defend the Authority and its members, officers, agents and employees. (iii) Insurance premiums for all insurance required pursuant to the Lease Agreement. (iv) Any amounts with respect to the Lease Agreement or the Bonds required to be rebated to the federal government in accordance with section 148(f) of the Internal Revenue Code of 1986. (v) All other payments required to be paid by the City under the provisions of the Lease Agreement or the Indenture. Amounts constituting Additional Rental Payments payable under the Lease Agreement will be paid by the City directly to the person or persons to whom such amounts are payable. The City will pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any other case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof. Abatement Base Rental Payments and Additional Rental Payments are paid by the City in each Rental Period for and in consideration of the right to use and occupy the Property. Except as otherwise specifically provided in the Lease Agreement, during any period in which, by reason of material damage to, or destruction or condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property, Rental Payments are subject to abatement proportionately, and the City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate the Lease Agreement by virtue of any such interference, and the Lease Agreement will continue in full force and effect. The amount of such abatement will be agreed upon by the City and the Authority; provided, however, that the Rental Payments due for any Rental Period may not exceed the annual fair rental value of that portion of the Property available for use and occupancy by the City during such Rental Period. Any such abatement will continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the Property, ending when such use and occupancy is restored. In the event of abatement, the term of the Lease Agreement will be extended until the date upon which (i) all Bonds shall be fully paid, or provision therefor made in accordance with the Indenture, or (ii) the Indenture shall be discharged by its terms and all Rental Payments shall have been paid in full. Notwithstanding the foregoing, the term of the Lease Agreement will in no event be extended ten years beyond May 1, 2056. The Trustee cannot terminate the 9 Lease Agreement in the event of such substantial interference. Abatement of Base Rental Payments and Additional Rental Payments is not an event of default under the Lease Agreement and does not permit the Trustee to take any action or avail itself of any remedy against the City. See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—The Lease Agreement–Rental Abatement.” Notwithstanding the foregoing, to the extent that moneys are available for the payment of Rental Payments due under the Lease Agreement in any of the funds and accounts established under the Indenture (including as a result of the availability of insurance proceeds), such Rental Payments will not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely from said funds and accounts. Substitution, Addition and Removal of Property The Authority and the City may amend the Lease Agreement to substitute alternate real property for any portion of the Property, to add additional real property or to release a portion of the Property from the Lease Agreement or to add additional property to the encumbrance of the Lease Agreement, upon compliance with all of the conditions set forth in the Lease Agreement and described below. After a substitution or release, the portion of the Property for which the substitution or release has been effected will be released from the leasehold encumbrance of the Lease Agreement. The Lease Agreement provides that there will be no reduction in or abatement of the Base Rental Payments due from the City thereunder as a result of such substitution, release or addition. Any such substitution, release or addition is subject to the following specific conditions precedent to such substitution, release or addition: (a) a Written Certificate of the City to the effect that the Property, as constituted after such substitution, release or addition: (i) has an annual fair rental value at least equal to the maximum Base Rental Payments payable by the City in any Rental Period, and (ii) has a useful life in excess of the final maturity of any Outstanding Bonds. (b) with respect to any substituted or added property, the City obtains or causes to be obtained a CLTA or ALTA title insurance policy or policies with respect to the Property (as such term will be defined after such substitution or addition) that when taken together with other title insurance policies covering the Property, will be in an amount at least equal to the aggregate principal amount of any Outstanding Bonds, of the type and with the endorsements described in the Lease Agreement; and (c) the City, the Authority and the Trustee execute, and the City causes to be recorded with the County of San Mateo Recorder, any document necessary to reconvey to the City the portion of the Property being released and to include any substituted or added real property in the description of the Property contained in the Lease Agreement and in the Ground Lease. In addition, when the Police Facility (as defined below) being financed with a portion of the proceeds of the Series 2020A Bonds is completed, the Lease Agreement authorizes the City to substitute the Police Facility in place of the Park and the portion of the Parking Garage (as such terms are defined below) leased under the Ground Lease and Lease Agreement, subject to certain requirements under the Lease Agreement. See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—The Lease Agreement—Substitution or Release of, or Addition to, the Property.” Action on Default Should the City default under the Lease Agreement, the Trustee, as assignee of the Authority under the Lease Agreement, may terminate the Lease Agreement and recover certain damages from the City, or may 10 retain the Lease Agreement and hold the City liable for all Base Rental Payments thereunder on an annual basis, and will have the right to re-enter and re-let the Property. In the event such re-letting occurs, the City would be liable for any resulting deficiency in Base Rental Payments. See “RISK FACTORS—Limited Recourse on Default; No Acceleration of Base Rental.” For purposes of certain actions of Bond Owners under the Indenture and the Lease Agreement, such as certain consents and amendments and the direction of remedies following default, Series 2020A Bond Owners do not act alone and may not control such matters to the extent such matters are not supported by the requisite number of the Owners of all Series 2020A Bonds and Additional Bonds, if any. In the event of a default under the Lease Agreement there is no right under any circumstances to accelerate the Base Rental Payments or otherwise declare any Base Rental Payments not then in default to be immediately due and payable. There is no right under the Indenture to accelerate debt service payments on the Bonds in the event of a default under the Indenture or the Lease Agreement. For a description of the events of default and permitted remedies of the Trustee (as assignee of the Authority) contained in the Lease Agreement and the Indenture, see APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—The Lease Agreement—Default” and “—The Indenture—Events of Default,” “—Other Remedies of the Trustee,” and “Limitation on Suits.” No Reserve Fund The Authority has not funded a debt service reserve fund for the Series 2020A Bonds. Additional Bonds Pursuant to the Indenture, the Authority may issue Additional Bonds payable from the Base Rental Payments on a parity with the Series 2020A Bonds upon satisfaction of certain conditions, including, but not limited to, the following: (a) The Authority shall be in compliance with all agreements, conditions, covenants and terms contained in the Indenture, in the Lease Agreement and in the Ground Lease required to be observed or performed by it; (b) The City shall be in compliance with all agreements, conditions, covenants and terms contained in the Indenture, in the Lease Agreement and in the Ground Lease required to be observed or performed by it; and (c) The Ground Lease and the Lease Agreement shall have been amended, to the extent necessary, (i) so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount equal to the principal of and interest on such Additional Bonds, payable at such times and in such manner as may be necessary to provide for the payment of the principal of and interest on such Additional Bonds; provided, however, that no such amendment shall be made such that the sum of Base Rental Payments, including any increase in the Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Rental Period shall be in excess of the annual fair rental value of the Property after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith (evidence of the satisfaction of such condition shall be made by a Written Certificate of the City); and (ii) to include provisions for the prepayment of Base Rental Payments attributable to such Additional Bonds. See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—The Indenture— Additional Bonds.” 11 Insurance General. The Lease Agreement requires that the City maintain certain insurance coverages on the Property for loss due to property damage, title defect, loss of use and other liability as described below. Under the Lease Agreement, the City may self-insure for the coverages required under the captions “Property Insurance” and “General Liability Insurance.” The City self-insures up to certain amounts and purchases additional coverage from commercial carriers as described in Appendix A hereto under “INFORMATION REGARDING THE CITY OF SOUTH SAN FRANCISCO— Risk Management.” Property Insurance. The Lease Agreement requires the City to maintain or cause to be maintained fire, lightning and special extended coverage insurance (which includes coverage for vandalism and malicious mischief, but need not include coverage for earthquake damage) on all improvements constituting any part of the Property in an amount equal to the greater of 100% of the replacement cost of such improvements or 100% of the outstanding principal amount of the Bonds. Such property insurance required to be maintained pursuant to the Lease Agreement may be subject to a deductible in an amount not to exceed $500,000. General Liability Insurance. The Lease Agreement requires the City to maintain or cause to be maintained a standard commercial general liability insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the use or ownership of the Property. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in a single accident or event, and in a minimum amount of $500,000 for damage to property (subject to a deductible clause of not to exceed $100,000) resulting from a single accident or event. Such commercial general liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Rental Interruption Insurance. The Lease Agreement requires the City to maintain rental interruption insurance to cover the Authority’s loss, total or partial, of Base Rental Payments resulting from the loss, total or partial, of the use of any part of the Property as a result of any of the hazards covered by the casualty insurance described in the preceding paragraph, in an amount sufficient at all times to pay an amount not less than the product of two times the maximum amount of Base Rental Payments scheduled to be paid during any Rental Period. The City is not permitted to self-insure its obligation to maintain rental interruption insurance. Workers’ Compensation Insurance. The City is also required to maintain or cause to be maintained workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State to insure employers against liability for compensation under the California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Property and to cover full liability for compensation under any such act. Title Insurance. The City shall provide, at its own expense, one or more CLTA or ALTA title insurance policies for the Property, in the aggregate amount of not less than the initial aggregate principal amount of the Bonds. Said policy or policies shall insure (a) the fee interest of the City in the Property, (b) the Authority’s ground leasehold estate in the Property under the Ground Lease, and (c) the City’s leasehold estate hereunder in the Property, subject only to Permitted Encumbrances. All Net Insurance Proceeds received under said policy or policies shall be deposited with the Trustee and applied as provided in the Indenture. So long as any of the Bonds remain Outstanding, each policy of title insurance obtained pursuant to the Indenture or this Lease Agreement or required thereby or hereby shall provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Bond Owners. 12 See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—The Lease Agreement—Insurance.” SOURCES AND USES OF FUNDS The sources and uses of funds with respect to the Series 2020A Bonds are shown below. Sources Principal Amount of Series 2020A Bonds $ Plus/Less Net Original Issue Premium/Discount Total Sources $ Uses Project Fund $ Underwriters’ Discount Costs of Issuance(1) Total Uses $ (1) Includes legal, municipal advisory, rating agency, printing fees and other miscellaneous costs of issuance. 13 DEBT SERVICE SCHEDULE Following is the annual schedule of debt service due with respect to the Series 2020A Bonds: Bond Year Series 2020A Bond Principal Series 2020A Bond Interest Total Series 2020A Bond Payments Total $ $ $ THE PROJECT The project to be financed from a portion of the proceeds of the Series 2020A Bonds consists of a new police facility (the “Police Facility”) of approximately 43,300 square feet to be located within the City’s new civic center campus, as further described below. The Police Facility is planned to include two buildings and space for administration, operations, investigation, storage, support services, and training for the City’s police department. The City awarded the contract for the construction of the Police Facility in January 2020 and construction began in February 2020. The City expects the cost of the Police Facility to be approximately $56 million and that the Policy Facility will be complete and operational in the third quarter of 2021. However, no assurances can be made as to the cost and timing of such completion. The Police Facility is the first phase of the City’s plan to construct a new civic center campus (the “Civic Center Campus”). The second phase of the Civic Center Campus is planned to include a new civic center building to house a community library, the City’s Department of Parks and Recreation and the City Council chambers, and an approximately 1.3 acre community park. The third phase of the Civic Center Campus is expected to include a fire station facility and associated parking facilities. The City has conducted all environmental review and obtained the necessary environmental approvals for the Civic Center Campus project (including the Policy Facility). The City currently projects the commencement of construction of the 14 second phase of the Civic Center Campus in the fourth quarter of 2020 and has not yet determined a timeline for the commencement of construction of the third phase. The City estimates the design and construction costs of the first two phases of the Civic Center Campus and the design costs of the third phase to be approximately $210.8 million. Through January 2020, the City has spent approximately $14.3 million in acquisition, design and other preliminary costs associated with the Civic Center Campus. The City expects to fund the remaining costs of the Civic Center Campus primarily with proceeds of Additional Bonds, Measure W sales tax revenues (as described below) and reserves set aside for infrastructure. The City plans to amend the Lease Agreement and the Ground Lease, in accordance with their respective terms, in connection with the issuance of Additional Bonds by the Authority to finance all or a portion of the second phase of the Civic Center Campus. In 2015, the voters in the City passed Measure W, which increased the sales tax rate within the City by 0.5%. The new Civic Center Campus is the primary component of the projects that the City intends to finance with the projected additional sales tax revenues generated by such increase in the sales tax rate. However, such sales tax revenues may be used for any City purpose and the City has not pledged any sales tax revenues to pay debt service on the Series 2020A Bonds. See “CITY FINANCIAL INFORMATION⎯Sales Taxes” in Appendix A hereto. THE PROPERTY The Property initially leased under the Ground Lease and the Lease Agreement consists of the City’s Orange Memorial Park and a portion of the Miller Parking Garage, as further described below. Orange Memorial Park (the “Park”) is a City-owned park of approximately 28 acres located at 781 Tennis Drive in the City. Facilities located on the Park include a community building of approximately 6,400 square feet, basketball courts, tennis courts, soccer field, bocce ball court, skate park, a building housing a swimming pool and picnic areas and related amenities. The facilities on the Park were constructed between 1970 and 2008. The City estimates the insured value of the foregoing improvements on the Park to be approximately $8.9 million. In a Parkland Acquisition and Park Construction Fees Quimby Act and Mitigation Fee Act Report (the “Park Fees Report”), prepared for the City in 2015, the value of parkland within the City was estimated to be $2.3 million per acre. Based on the insured value of the improvements located on the Park and the estimated value per acre set forth in the Park Fees Report, the City estimates the value of the Park to be approximately $73.3 million. A portion of the Park was previously owned and operated by a commercial plant nursery. As a result of such use, certain chemicals used in pesticides and insecticides have been detected in the soil below the capped ground surface. The City has entered into a covenant with the County Environmental Health Services Division to restrict the use of such property. Pursuant to such covenant, the City has agreed that such portion of the Park will only be used for industrial, commercial and parks and recreation purposes. Further, no drilling or disturbance of the soil (e.g. excavation, grading, removal or trenching) shall occur without soil management and safety plans approved by the County Environmental Health Services Division. The City is currently using such portion of the Park in compliance with the foregoing covenant and does not have any plans to use such property for other than parks and recreational purposes. A portion of the Miller Parking Garage (the “Parking Garage”) is included in the Property leased under the Ground Lease and Lease Agreement. The Parking Garage is located at 329 Miller Avenue in the City. The Parking Garage consists of a five-level open-air concrete structure building of approximately 100,000 square feet with 244 parking spaces. Approximately 14,350 square feet of commercial and office space (the “Commercial Space”) is located on the ground floor of the Parking Garage. Only the four floors where the 244 parking spaces are located are included in the Property leased under the Ground Lease and Lease Agreement. 15 In February 2020, the City sold the Commercial Space. The Commercial Space is not included in the Property leased under the Ground Lease and Lease Agreement. In connection with the sale of the Commercial Space, a condominium map was recorded with the County to create separate assessor parcel numbers for the Commercial Space and the balance of the property included within the Parking Garage. No rights to the parking spaces were granted to the owners of the Commercial Space in connection with its sale. However, the owners of the Commercial Space may use such spaces upon payment to the City of the applicable parking fees. The Parking Garage was constructed in 2011 and the City estimates the insured value of the four floors where the 244 parking spaces are located to be approximately $[13.7] million, exclusive of the cost of the land on which the Parking Garage is located. As described under the caption “CITY FINANCIAL INFORMATION⎯Capital Improvement Program,” the City expects to construct stormwater capture improvements to be located on a portion of the Park. The construction of such project is not expected to impair the use of the Park during the construction period and the City does not expect an abatement of Rental under the Lease Agreement as a result of such project. Under the Lease Agreement, the City has the right to substitute, add to or release all or portion of the Property subject to certain conditions precedent. In addition, when the Police Facility is completed, the Lease Agreement authorizes the City to substitute the Police Facility in place of the Park and the portion of the Parking Garage leased under the Ground Lease and Lease Agreement, subject to certain requirements under the Lease Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020A BONDS⎯Substitution, Addition and Removal of Property.” THE AUTHORITY Organization and Membership The Authority was formed pursuant to the provisions of Articles 1, 2 and 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State (the “Act”) and the Joint Exercise of Powers Agreement, dated as of December 1, 2019 (the “JPA Agreement”), by and between the City and the Parking Authority of the City of South San Francisco, to assist in financing public capital improvements undertaken by either member. The City Council of the City serves as the Governing Board of the Authority. THE CITY General The City is a general law city that was incorporated in 1908. The City is located in the County of San Mateo (the “County”) on the San Francisco Peninsula. The City currently has an estimated population of approximately 67,000 persons. The City’s adopted General Fund budget for Fiscal Year 2019-20 includes approximately $124.9 million of revenues and approximately $[110.6] million of expenditures (excluding interfund transfers). For financial and demographic information regarding the City see APPENDIX A⎯“THE CITY OF SOUTH SAN FRANCISCO.” A copy of the financial statements of the City for the fiscal year ended June 30, 2019 is attached hereto as Appendix C which should be read in its entirety. See APPENDIX C—“AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2019.” RISK FACTORS The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating the purchase of the Series 2020A Bonds. However, they do not 16 purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the Series 2020A Bonds. In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks. General Considerations – Security for the Series 2020A Bonds The Series 2020A Bonds are special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State, or any political subdivision thereof, is pledged to the payment of the Series 2020A Bonds. The Authority has no taxing power. The obligation of the City to make the Base Rental Payments does not constitute a debt of the City or the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State is obligated to levy or pledge any form of taxation or for which the City or the State has levied or pledged any form of taxation. Although the Lease Agreement does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Lease Agreement to pay the Base Rental Payments and Additional Rental Payments from any source of legally available funds and the City has covenanted in the Lease Agreement that it will take such action as may be necessary to include all Base Rental Payments and Additional Rental Payments due under the Lease Agreement as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Payments, subject to abatement. The City is currently liable and may become liable on other obligations payable from general revenues. See “CITY FINANCIAL INFORMATION—Indebtedness” in Appendix A hereto. The City has the capacity to enter into other obligations which may constitute additional charges against its revenues. To the extent that additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased. In the event the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before making Base Rental Payments and other payments due under the Lease Agreement. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues. However, the City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the California Constitution. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Article XIIIB of the California Constitution.” Abatement In the event of substantial interference with the City’s right to use and occupy any portion of the Property by reason of damage to, or destruction or condemnation of the Property, or any defects in title to the Property, Base Rental Payments will be subject to abatement. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020A BONDS—Abatement.” In the event that all or a portion of the Property, if damaged or destroyed by an insured casualty, could not be replaced during the period of time in which proceeds of the City’s rental interruption insurance will be available in lieu of Base Rental Payments, plus the period for which funds are available from the funds and accounts established under the Indenture, or in the event that casualty insurance proceeds are insufficient to provide for complete repair or replacement of such portion of the Property or redemption of the Series 2020A Bonds, there could be insufficient funds to make payments to Owners in full. The Authority has not funded a reserve fund for the Series 2020A Bonds. It is not always possible to predict the circumstances under which abatement of rental may occur. In addition, there is no statute, case or other law specifying how such an abatement of rental should be measured. For example, it is not clear whether fair rental value is established as of commencement of the lease or at the time of the abatement. If the latter, it may be that the value of the Property is substantially higher or lower than its value at the time of the execution and delivery of the Series 2020A Bonds. Abatement, therefore, 17 could have an uncertain and material adverse effect on the security for and payment of the Series 2020A Bonds. If damage, destruction, title defect or eminent domain proceedings with respect to the Property results in abatement of the Base Rental Payments related to such Property and if such abated Base Rental Payments, if any, together with moneys from rental interruption or use and occupancy insurance (in the event of any insured loss due to damage or destruction), and eminent domain proceeds, if any, are insufficient to make all payments of principal and interest with respect to the Series 2020A Bonds during the period that the Property is being replaced, repaired or reconstructed, then all or a portion of such payments of principal and interest may not be made. Under the Lease Agreement and the Indenture, no remedy is available to the Series 2020A Bond Owners for nonpayment under such circumstances. No Reserve Fund The Authority has not funded a debt service reserve fund for the Series 2020A Bonds. Natural Disasters and Climate Change The occurrence of any natural disaster in the City, including, without limitation, fire, windstorm, drought, earthquake, landslide, mudslide, flood or a rise in sea levels as result of climate change, could have an adverse material impact on the economy within the City, its General Fund and the revenues available for the payment of Base Rental Payments. All jurisdictions in California are subject to the effects of damaging earthquakes. Earthquakes are considered a threat to the City due to the highly active seismic region and the proximity of fault zones. Portions of the City are located above active earthquake faults, heightening the risks associated with seismic events. The peninsula portion of the San Andreas Fault as well as the Northern San Gregorio Fault passes through the County. An earthquake along one of the faults in the vicinity, either known or unknown, could cause a number of casualties and extensive property damage. The effects of such a quake could be aggravated by aftershocks and secondary effects such as fires, landslides, liquefaction and other threats to public health, safety and welfare. The potential direct and indirect consequences of a major earthquake could easily exceed the resources of the City and would require a high level of self-help, coordination and cooperation. Climate change caused by human activities may have adverse effects on the City. Climate change can also result in more variable weather patterns, which can lead to longer and more severe droughts as well as increased risk of flooding and a rise in sea levels. The City is bordered to the east by the San Francisco Bay and as a result, portions of the City would be directly impacted by sea level rise. In 2014, the City adopted a climate action plan which outlines the options and strategies available to the City to reduce its greenhouse gas emissions and to adapt to challenges posed by increased likelihood of flood events and sea level rise. The City also participates in a regional initiative known as Sea Change San Mateo County (“Sea Change SMC”) which is a collaborative effort by the County, cities within the County and other local stakeholders to educate and assess the risks posed by sea level rise and provide recommendations for adaptation strategies. One result of the Sea Change SMC initiative was the finalization of a San Bruno Creek/Colma Creek Resiliency Study Final Report, which assessed the vulnerability of assets within the lower reaches of the San Bruno Creek and Colma Creek (which runs through the southern portion of the City) to flooding. The resiliency study identified areas within the Colma Creek and San Bruno Creek watersheds which are prone to flooding and provided certain recommendations, including, among others, new floodwalls, tide gates, channel depending, increased surface detention basins and regional tidal-barrier structures. The Police Facility, the Park and the Parking Garage are not located in such areas. 18 Projections of the impacts of global climate change on the City are complex and depend on many factors that are outside the City’s control. The various scientific studies that forecast the amount and timing of adverse impacts of climate change are based on assumptions contained in such studies, but actual events may vary materially. Also, the scientific understanding of climate change and its effects continues to evolve. Accordingly, the City is unable to forecast with certainty when adverse impacts of climate change will occur or the extent of such impacts. The City has implemented certain adaptation strategies to reduce the risk of flooding including construction of additional facilities and open space for the capture of stormwater flows. The City expects to continue to consider the effects of climate change in its own planning and to participate in regional planning initiatives. While the impacts of climate change may be mitigated by the City’s past and future investment in adaptation strategies, the City can give no assurance about the net effects of those strategies and whether the City will be required to take additional adaptive mitigation measures. The occurrence of natural disasters in the City could result in substantial damage to the City and the Property which, in turn, could substantially reduce General Fund revenues and affect the ability of the City to make Base Rental Payments or cause an abatement in Base Rental Payments. Reduced ability to pay Base Rental Payments could affect the payment of the principal of and interest on the Series 2020A Bonds. The City maintains liability insurance and property casualty insurance (for losses other than from seismic events) for the Premises. See the caption “INFORMATION REGARDING THE CITY OF SOUTH SAN FRANCISCO—Risk Management” in Appendix A hereto. However, there can be no assurance that specific losses will be covered by insurance or, if covered, that claims will be paid in full by the applicable insurers. Hazardous Substances The City knows of no existing hazardous substances which require remedial action on or near the Property. However, it is possible such substances do currently or potentially exist and that the City is not aware of them. 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 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. All of these possibilities could significantly and adversely affect the operations and finances of the City, may result in the reduction in the assessed value of property, and therefor property tax revenue. Cybersecurity The City, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As a recipient and provider of personal, private, or sensitive information, the City is subject to multiple cyber threats including, but not limited to, hacking, viruses, malware and other attacks on computer and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to the City’s digital systems for the purposes of misappropriating assets or information or causing operational disruption and damage. To date, the City has not experienced an attack on its computer operating systems which resulted in a breach of its cybersecurity systems that are in place. However, no assurances can be given that the City’s efforts to manage cyber threats and attacks will be successful or that any such attack will not materially impact the operations or finances of the City. Additionally, the City carries cybersecurity insurance. See “INFORMATION REGARDING THE CITY OF SOUTH SAN FRANCISCO— Risk Management” in Appendix A hereto for more information with respect to the City’s earthquake insurance coverage. 19 Substitution, Addition and Removal of Property; Additional Bonds The Authority and the City may amend the Lease Agreement to substitute alternate real property for any portion of or add additional real property to the Property or to release a portion of the Property from the Lease Agreement, upon compliance with all of the conditions set forth in the Lease Agreement. After a substitution or release, the portion of the Property for which the substitution or release has been effected will be released from the leasehold encumbrance of the Lease Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020A BONDS―Substitution, Addition and Removal of Property.” Moreover, the Authority may issue Additional Bonds secured by Base Rental Payments which are increased from current levels. Although the Lease Agreement requires, among other things, that the Property, as constituted after such substitution or release, have an annual fair rental value at least equal to the maximum Base Rental Payments payable by the City in any Rental Period, it does not require that such Property have an annual fair rental value equal to the annual fair rental value of the Property at the time of substitution or release. Thus, a portion of the Property could be replaced with less valuable real property, or could be released altogether. Such a replacement or release could have an adverse impact on the security for the Series 2020A Bonds, particularly if an event requiring abatement of Base Rental Payments were to occur subsequent to such substitution or release. See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS— The Lease Agreement— Substitution or Release of, or Addition to, the Property.” The Indenture requires, among other things, that upon the issuance of Additional Bonds, the Ground Lease and the Lease Agreement will be amended, to the extent necessary, so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount equal to the principal of and interest on such Additional Bonds; provided, however, that no such amendment will be made such that the sum of Base Rental Payments, including any increase in the Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Rental Period is in excess of the annual fair rental value of the Property after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith. Limited Recourse on Default; No Acceleration of Base Rental Failure by the City to make Base Rental Payments or other payments required to be made under the Lease Agreement, or failure to observe and perform any other terms, covenants or conditions contained in the Lease Agreement or in the Indenture for a period of 30 days or such additional time as is reasonable required to correct any such default after notice by the Authority to the City, constitute events of default under the Lease Agreement and permit the Trustee or the Authority to pursue any and all remedies available. In the event of a default, notwithstanding anything in the Lease Agreement or in the Indenture to the contrary, there is no right under any circumstances to accelerate the Base Rental Payments or otherwise declare any Base Rental Payments not then in default to be immediately due and payable, nor do the Authority or the Trustee have any right to re-enter or re-let the Property except as described in the Lease Agreement. The enforcement of any remedies provided in the Lease Agreement and the Indenture could prove both expensive and time consuming. If the City defaults on its obligation to make Base Rental Payments with respect to the Property, the Trustee, as assignee of the Authority, may retain the Lease Agreement and hold the City liable for all Base Rental Payments thereunder on an annual basis and enforce any other terms or provisions of the Lease Agreement to be kept or performed by the City. Alternatively, the Authority or the Trustee may terminate the Lease Agreement, retake possession of the Property and proceed against the City to recover damages pursuant to the Lease Agreement. Due to the specialized nature of the Property or any property substituted therefor pursuant to the Lease Agreement and the restrictions on its use, no assurance can be given that the Trustee will be able to re-let the Property so as to provide rental income sufficient to make all payments of principal of, interest and premium, if any, on the Series 2020A Bonds when due, and the Trustee is not empowered to sell the Property for the benefit of the 20 Owners of the Series 2020A Bonds. Any suit for money damages would be subject to limitations on legal remedies against cities in California, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020A BONDS” and APPENDIX B—“SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—The Lease Agreement—Default.” Limitations on Remedies Available; Bankruptcy The enforceability of the rights and remedies of the Owners and the obligations of the City may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the Federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Under Chapter 9 of the United States Bankruptcy Code (Title 11, United States Code) (the “Bankruptcy Code”), which governs bankruptcy proceedings of public entities such as the City, no involuntary bankruptcy petition may be filed against a public entity. However, upon satisfaction of certain prerequisite conditions, a voluntary bankruptcy petition may be filed by the City. The filing of a bankruptcy petition results in a stay against enforcement of remedies under agreements to which the bankrupt entity is a party. A bankruptcy filing by the City could thus limit remedies under the Lease Agreement. A bankruptcy debtor may choose to assume or reject executory contracts and leases, such as the Lease Agreement. In the event of rejection of a lease by debtor lessee, the leased property is returned to the lessor and the lessor has a claim for a limited amount of the resulting damages. Under the Indenture, the Trustee holds a security interest in the Revenues, including Base Rental Payments, for the benefit of the Owners of the Bonds, but such security interest arises only when the Base Rental Payments are actually received by the Trustee following payment by the City. The Property is not subject to a security interest, mortgage or any other lien in favor of the Trustee for the benefit of Owners. In the event of a bankruptcy filed by the City and the subsequent rejection of the Lease Agreement by the City, the Authority would recover possession of the Property and the Trustee, as assignee of the Authority, would have a claim for damages against the City. The Trustee’s claim would constitute a secured claim only to the extent of Revenues in the possession of the Trustee; the balance of such claim would be unsecured. Bankruptcy proceedings would subject the Owners of the Series 2020A Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently entail risks of delay, limitation, or modification of their rights with respect to the Series 2020A Bonds. In a bankruptcy case, the amount recovered by Owners of the Series 2020A Bonds could be affected by whether the Lease Agreement is determined to be a “true lease” or a loan or other financing arrangement (a “financing lease”), and the Owners’ recovery could be reduced in either case. If the Lease Agreement is determined by the bankruptcy court to constitute a “true lease” (rather than a financing lease), the City could choose not to perform under the Lease Agreement by rejecting it and the claim of the Owners could be substantially limited pursuant to Section 365 of the Bankruptcy Code to a fraction of the scheduled amount of Base Rental Payments, and that reduced claim amount could be impaired as an unsecured claim under a plan of adjustment. If a bankruptcy court were to treat the Lease Agreement as a financing lease then, under a plan of adjustment, the priority, payment terms, collateral, payment dates, payment sources, covenants and other terms or provisions of the Lease Agreement and the Series 2020A Bonds may be altered. Such a plan could be confirmed even over the objections of the Trustee and the Owners, and without their consent. For example, the amount of the Base Rental Payments from the City might be substantially reduced because of the power of the bankruptcy court under the Bankruptcy Code to adjust secured claims to the value of their collateral, which, as described above, could be limited to the Revenues held by the Trustee. In addition there can be a substantial disparity in treatment based 21 on the nature of the Property. Whether the Lease Agreement is characterized by the bankruptcy court as a true lease or a financing lease, either scenario could result in the Owners not receiving the full amount of the principal and interest due on the Series 2020A Bonds. The opinions of counsel, including Bond Counsel, delivered in connection with the execution and delivery of the Series 2020A Bonds will be so qualified. Bankruptcy proceedings, or the exercising of powers by the federal or state government, if initiated, could subject the Owners to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights. Possible Insufficiency of Insurance Proceeds The Lease Agreement obligates the City to keep in force various forms of insurance, subject to deductibles, for repair or replacement of the Property in the event of damage, destruction or title defects, subject to certain exceptions. The Authority and the City make no representation as to the ability of any insurer to fulfill its obligations under any insurance policy obtained pursuant to the Lease Agreement, and no assurance can be given as to the adequacy of any such insurance to fund necessary repair or replacement or to pay principal of and interest on the Series 2020A Bonds when due. In addition, certain risks, such as earthquakes and floods, are not required to be insured under the Lease Agreement, [and therefore, are not carried by the City.] See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020A BONDS—Insurance.” Loss of Tax Exemption As discussed under the heading “TAX MATTERS,” the interest on the Series 2020A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the Series 2020A Bonds, as a result of acts or omissions of the Authority or the City in violation of their covenants in the Indenture and the Lease Agreement. Should such an event of taxability occur, the Series 2020A Bonds would not be subject to a special redemption and would remain Outstanding until maturity or until redeemed under the redemption provisions contained in the Indenture. No Liability of Authority to the Owners Except as expressly provided in the Indenture, the Authority will not have any obligation or liability to the Owners of the Series 2020A Bonds with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of other agreements and covenants required to be performed by it contained in the Lease Agreement or the Indenture, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Indenture. Dependence on State for Certain Revenues The State’s fiscal health continues to improve since the end of the severe recession in 2009, which caused large budget deficits. Despite the recent significant budgetary improvements, according to the State, there remain a number of major risks and pressures that could adversely impact the State’s financial condition, including the threat of recession, potentially unfavorable changes to federal policies, the still uncertain impact of changes in federal tax law and trade policy and the impact of climate change. The State’s revenues (particularly the personal income tax) can be volatile and correlate to overall economic conditions. There can be no assurances that the State will not face fiscal stress and cash pressures again, or that other changes in the State or national economies will not materially adversely affect the financial condition of the State. The City cannot predict the extent of any budgetary problems the State will encounter in future fiscal years, and it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the impact that State budgets will have on the City’s finances and 22 operations, or what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures. Current and future State budgets will be affected by international, national and State economic conditions and other factors over which the City has no control. A number of the City’s revenues are collected and dispersed by the State (such as sales tax and motor- vehicle license fees) or allocated in accordance with State law (most importantly, property taxes). Therefore, State budget decisions can have an impact on City finances. In the event of a material economic downturn in the State, there can be no assurance that any resulting revenue shortfalls to the State will not reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of the State’s efforts to address any such related State financial difficulties. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Proposition 1A” and “—Proposition 22” below. CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS Principal of and interest on the Series 2020A Bonds are payable from Base Rental Payments made from the City’s General Fund. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020A BONDS.” Articles XIIIA, XIIIB, XIIIC and XIIID of the State Constitution, Propositions 62, 111, 218, 1A and 22, and certain other provisions of law discussed below are included in this Official Statement to describe the potential effect of these Constitutional and statutory measures on the ability of the City to levy taxes and spend tax proceeds for operating and other purposes. Article XIIIA of the State Constitution On June 6, 1978, State voters approved Proposition 13, which added Article XIIIA to the State Constitution. Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to 1% of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service: (i) on indebtedness approved by the voters prior to December 1, 1978; (ii) on bonded indebtedness approved by a two-thirds vote on or after December 1, 1978, for the acquisition or improvement of real property; or (iii) bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters voting on the proposition. Article XIIIA defines full cash value to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value,” or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” This full cash value may be increased at a rate not to exceed 2% per year to account for inflation. Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, including a general economic downturn, to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster, and in other minor or technical ways. Legislation Implementing Article XIIIA Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The 1% property tax is automatically levied by counties and distributed according to a formula among taxing agencies. Increases in assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the 23 “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years. All taxable property is shown at full cash value on the tax rolls. Consequently, the tax rate is expressed as $1 per $100 of taxable value. All taxable property value included in this Official Statement is shown at 100 percent of taxable value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value. Split Roll Initiative An initiative measure (the “Split Roll Initiative”) to amend Article XIIIA has qualified for the State’s November 2020 ballot. If adopted, the Split Roll Initiative would base property taxes for commercial and industrial properties on market values beginning in tax year 2020-21. Such market values would be reassessed by the applicable county assessor’s office at least once every three years. The Split Roll Initiative includes exceptions for businesses with a total market value of less than $2 million (adjusted for inflation), which would continue to be subject to property taxes based on purchase price, and exempts from property tax assessments up to $500,000 of the value of personal property, or all personal property for businesses with fewer than 50 employees. There can be no assurance that the Split Roll Initiative will be adopted. Moreover, if the Split Roll Initiative is adopted, the City is unable to predict how it would affect the level of commercial building activity within the City and the relationship of the assessed value between land use types (i.e. residential versus commercial) in the City, or what other impacts the Split Roll Initiative might have on the local economy or the City’s financial condition. Article XIIIB of the State Constitution In addition to the limits that Article XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual “appropriations limit” imposed by Article XIIIB which effectively limits the amount of such revenues that such entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,” which consist of tax revenues and the investment proceeds thereof, State subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes” excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non-tax funds. Article XIIIB also does not limit appropriation of local revenues to pay debt service on bonds existing or authorized as of October 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government. The State and each local government entity has its own appropriations limit. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility for providing services. Proposition 111 requires that each local government’s actual appropriations be tested against its limit every two years. If the aggregate “proceeds of taxes” for the preceding two-year period exceeds the aggregate limit, the excess must be returned to the agency’s taxpayers through tax rate or fee reductions over the following two years. 24 The City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB. Articles XIIIC and XIIID of the State Constitution On November 5, 1996, State voters approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the State Constitution and contains a number of interrelated provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments and property-related fees and charges. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed below, and it is not possible at this time to predict with certainty the outcome of such determination. 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 (such as Measure W) require a majority vote, and taxes for specific purposes, even if deposited in the City’s General Fund, require a two-thirds vote. The voter approval requirements of Proposition 218 reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs. Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property-related fees, charges, and assessments for municipal services and programs, such as hearings and stricter and more individualized benefit requirements and findings. These provisions include, among other things: (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel; (ii) a requirement that assessments must confer a “special benefit,” as defined in Article XIIID, over and above any general benefits conferred; (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party; and (iv) a prohibition against fees and charges which 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. If the City is unable to continue to collect revenues of this nature, the services and programs funded with these revenues would have to be curtailed and/or the City’s General Fund might have to be used to support them. The City is unable to predict whether or not in the future it will be able to continue all existing services and programs funded by fees, charges and assessments in light of Proposition 218 or, if these services and programs are continued, which amounts (if any) would be used from the City’s General Fund to continue to support such activities. Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. This extension of the initiative power is not limited to taxes imposed on or after November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or reduction in any existing taxes, assessments, fees and charges, subject to overriding federal constitutional principles relating to the impairments of contracts. Legislation implementing Proposition 218 provides that the initiative power provided for in Proposition 218 “shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after (the effective date of Proposition 218) assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights” protected by the United States Constitution. However, no assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. Although a portion of the City’s General Fund revenues are derived from taxes purported to be governed by Proposition 218, all of such taxes were imposed in accordance with the requirements of Proposition 218. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges which support the City’s General Fund. 25 Proposition 62 Proposition 62 was adopted by the voters at the November 4, 1986, general election and: (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the City be approved by a two-thirds vote of the governmental entity’s legislative body and by a majority vote of the voters of the governmental entity voting in an election on the tax; (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters of the governmental entity voting in an election on the tax; (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed; (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA; (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities; and (f) requires that any tax imposed by a local governmental entity on or after July 1, 1985, be ratified by a majority vote of the voters voting in an election on the tax within two years of the adoption of the initiative or be terminated by November 15, 1988. On September 28, 1995, the California Supreme Court, in the case of Santa Clara County Local Transportation Authority v. Guardino, upheld the constitutionality of Proposition 62. In this case, the court held that a countywide sales tax of one-half of one percent was a special tax that, under Section 53722 of the Government Code, required a two-thirds voter approval. Because the tax received an affirmative vote of only 54.1%, this special tax was found to be invalid. The decision did not address the question of whether or not it should be applied retroactively. Following the California Supreme Court’s decision upholding Proposition 62, several actions were filed challenging taxes imposed by public agencies since the adoption of Proposition 62, which was passed in November 1986. On June 4, 2001, the California Supreme Court released its decision in one of these cases, Howard Jarvis Taxpayers Association v. City of La Habra, et al. In this case, the 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 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 has not experienced any substantive adverse financial impact as a result of the passage of Proposition 62. Proposition 1A Proposition 1A was approved by the voters at the November 2, 2004 election. Proposition 1A 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 may borrow up to eight percent of local property tax revenues, but only if the Governor proclaims such action is necessary due to a severe State fiscal hardship, and two–thirds of both houses of the 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 two 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. Many of the provisions of Proposition 1A have been superseded by Proposition 22 enacted in November 2010 and described below. 26 Proposition 22 On November 2, 2010, the voters of the State approved Proposition 22, known as “The Local Taxpayer, Public Safety, and Transportation Protection Act” (“Proposition 22”). Proposition 22, among other things, broadens the restrictions established by Proposition 1A. While Proposition 1A permits the State to appropriate or borrow local property tax revenues on a temporary basis during times of severe financial hardship, Proposition 22 amends Article XIII of the State Constitution to prohibit the State from appropriating or borrowing local property tax revenues under any circumstances. The State can no longer borrow local property tax revenues on a temporary basis even during times of severe financial hardship. Proposition 22 also prohibits the State from appropriating or borrowing proceeds derived from any tax levied by a local government solely for the local government’s purposes. Furthermore, Proposition 22 restricts the State’s ability to redirect redevelopment agency property tax revenues to school districts and other local governments and limits uses of certain other funds although this provision no longer has any meaningful impact given the statewide dissolution of redevelopment agencies. Proposition 22 is intended to stabilize local government revenue sources by restricting the State government’s control over local revenues. The City cannot predict whether Proposition 22 will have a beneficial effect on the City’s financial condition. Proposition 26 On November 2, 2010, State voters also approved Proposition 26. Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government” except the following: (a) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (b) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (c) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (d) a charge imposed for entrance to or use of local government property, or the purchase, rental or lease of local government property; (e) a fine, penalty or other monetary charge imposed by the judicial branch of government or a local government as a result of a violation of law; (f) a charge imposed as a condition of property development; and (g) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity. The City does not believe that Proposition 26 will adversely affect its General Fund revenues. Possible Future Initiatives Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 218, 111, 62, 1A, 22 and 26 were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time other initiative measures could be adopted, further affecting revenues of the City or the City’s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the City. TAX MATTERS In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Series 2020A Bonds is excluded from gross income for federal 27 income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Series 2020A Bonds is exempt from State of California personal income tax. The difference between the issue price of a Series 2020A Bond (the first price at which a substantial amount of the Series 2020A Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to the Series 2020A Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to the owner of the Series 2020A Bond before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by the Beneficial Owner of a Series 2020A Bond will increase the Beneficial Owner’s basis in the applicable Series 2020A Bond. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the Beneficial Owner of a Series 2020A Bond is excluded from the gross income of such Beneficial Owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the Beneficial Owner of a Series 2020A Bond is exempt from State of California personal income tax. Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Series 2020A Bonds is based upon certain representations of fact and certifications made by the Authority, the City and others and is subject to the condition that the Authority and the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to issuance of the Series 2020A Bonds to assure that interest (and original issue discount) on the Series 2020A Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest (and original issue discount) on the Series 2020A Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2020A Bonds. The Authority and the City will covenant to comply with all such requirements. The amount by which a Beneficial Owner’s original basis for determining loss on sale or exchange in the applicable Series 2020A Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the Beneficial Owner’s basis in the applicable Series 2020A Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a Beneficial Owner realizing a taxable gain when a Series 2020A Bond is sold by the Beneficial Owner for an amount equal to or less (under certain circumstances) than the original cost of the Series 2020A Bond to the Beneficial Owner. Purchasers of the Series 2020A Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium. Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture, the Lease Agreement and the Tax Certificate relating to the Series 2020A Bonds permit certain actions to be taken or to be omitted if a favorable opinion of a Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income for federal income tax purposes of interest (or original issue discount) on any Series 2020A Bond if any such action is taken or omitted based upon the advice of counsel other than Bond Counsel. Although Bond Counsel will render an opinion that interest (and original issue discount) on the Series 2020A Bonds is excluded from gross income for federal income tax purposes provided that the Authority and the City continue to comply with certain requirements of the Code, the ownership of the Series 2020A Bonds and the accrual or receipt of interest (and original issue discount) with respect to the Series 2020A Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax 28 consequences. Accordingly, before purchasing any of the Series 2020A Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Series 2020A Bonds. The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax- exempt bond issues, including both random and targeted audits. It is possible that the Series 2020A Bonds will be selected for audit by the IRS. It is also possible that the market value of the Series 2020A Bonds might be affected as a result of such an audit of the Series 2020A Bonds (or by an audit of similar bonds). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the Series 2020A Bonds to the extent that it adversely affects the exclusion from gross income of interest (and original issue discount) on the Series 2020A Bonds or their market value. SUBSEQUENT TO THE ISSUANCE OF THE SERIES 2020A BONDS THERE MIGHT BE FEDERAL, STATE, OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR INTERPRETATIONS OF FEDERAL, STATE, OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE, OR LOCAL TAX TREATMENT OF THE SERIES 2020A BONDS INCLUDING THE IMPOSITION OF ADDITIONAL FEDERAL INCOME OR STATE TAXES BEING IMPOSED ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE SERIES 2020A BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE SERIES 2020A BONDS. NO ASSURANCE CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE SERIES 2020A BONDS STATUTORY CHANGES WILL NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE SERIES 2020A BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE SERIES 2020A BONDS. The form of Bond Counsel’s proposed opinion with respect to the Series 2020A Bonds is attached hereto in Appendix D. CERTAIN LEGAL MATTERS The validity of the Series 2020A Bonds and certain other legal matters are subject to the approving opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel. Stradling Yocca Carlson & Rauth, a Professional Corporation, is also acting as Disclosure Counsel for the City. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix D hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Bond Counsel and Disclosure Counsel will receive compensation from the City contingent upon the sale and delivery of the Series 2020A Bonds. From time to time, Bond Counsel represents the Underwriters on matters unrelated to the Series 2020A Bonds. Certain legal matters will be passed upon for the Underwriters by Quint & Thimmig LLP. Counsel to the Underwriters will receive compensation contingent upon the issuance of the Series 2020A Bonds. ABSENCE OF LITIGATION To the best knowledge of the City and the Authority, there is no action, suit or proceeding pending or threatened either restraining or enjoining the execution or delivery of the Series 2020A Bonds, the Lease Agreement, the Ground Lease or the Indenture, or in any way contesting or affecting the validity of the foregoing or any proceedings of the Authority or the City taken with respect to any of the foregoing. 29 UNDERWRITING The Series 2020A Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated, as representative of Citigroup Global Markets, Inc. and Raymond James & Associates, Inc. (collectively, the “Underwriters”). The Underwriters will purchase the Series 2020A Bonds from the Authority at an aggregate purchase price of $___________ (representing the principal amount of the Series 2020A Bonds, plus/less original issue premium/discount of $____________ and less an Underwriters’ discount of $__________). The purchase agreement relating to the Series 2020A Bonds provides that the Underwriters will purchase all of the Series 2020A Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in such purchase agreement, the approval of certain legal matters by counsel and certain other conditions. The initial offering prices that are stated on the inside front cover page of this Official Statement may be changed from time to time by the Underwriters. The Underwriters may offer and sell the Series 2020A Bonds to certain dealers (including dealers depositing Series 2020A Bonds into investment trusts), dealer banks, banks acting as agent and others at prices lower than said public offering prices. RATING S&P Global Ratings, a Standard & Poor’s Financial Services LLC business (“S&P”) has assigned an issuer credit rating of “AA+” to the Series 2020A Bonds. Such rating reflects only the views of S&P and any desired explanation of the significance of such rating should be obtained from S&P. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of the rating may have an adverse effect on the market price of the Series 2020A Bonds. None of the Authority, the City or the Underwriters has undertaken any responsibility either to bring to the attention of the owners of the Series 2020A Bonds a proposed change in or withdrawal of the rating or to oppose any such proposed revision or withdrawal. MUNICIPAL ADVISOR Sperry Capital, Inc., Sausalito, California (the “Municipal Advisor”), served as municipal advisor to the Authority and the City with respect to the sale of the Series 2020A Bonds. The Municipal Advisor will receive compensation contingent upon the sale and delivery of the Series 2020A Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities. CONTINUING DISCLOSURE The City has covenanted for the benefit of the Owners of the Series 2020A Bonds to provide annually certain financial information and operating data relating to the Series 2020A Bonds and the City (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events. For a complete listing of items of information which will be provided in each Annual Report and further description of the City’s undertaking with respect to the Annual Report and certain enumerated events, see APPENDIX E—“FORM OF CONTINUING DISCLOSURE AGREEMENT.” The Annual Report is to be provided by the City not later than March 31 after the end of the City’s fiscal year, commencing with the report for fiscal year 2019-20. 30 The Annual Report will be filed by the City with the Municipal Securities Rulemaking Board. These covenants have been made in order to assist the Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the “Rule”). FINANCIAL STATEMENTS OF THE CITY Included herein as Appendix B are the audited financial statements of the City for the year ended June 30, 2018, together with the report thereon dated December 18, 2019 of Maze & Associates, Pleasant Hill, California, certified public accountants (the “Auditor”). The Auditor has not undertaken to update the audited financial statements of the City or its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by the Auditor with respect to any event subsequent to its report dated December 18, 2019. MISCELLANEOUS References are made herein to certain documents and reports which are brief summaries thereof which do not purport to be complete or definitive and reference is made to such documents and reports for full and complete statements of the contents thereof. Copies of the Indenture, the Lease Agreement, the Ground Lease and other documents are available, upon request, and upon payment to the City of a charge for copying, mailing and handling, from the City Clerk at the City of South San Francisco, 400 Grand Avenue, South San Francisco, California 94080. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority or the City and the purchasers or Owners of any of the Series 2020A Bonds. The execution and delivery of this Official Statement have been duly authorized by the Authority and the City. CITY OF SOUTH SAN FRANCISCO PUBLIC FACILITIES FINANCING AUTHORITY By: Executive Director CITY OF SOUTH SAN FRANCISCO By: City Manager APPENDIX A THE CITY OF SOUTH SAN FRANCISCO TABLE OF CONTENTS Page INFORMATION REGARDING THE CITY OF SOUTH SAN FRANCISCO .............................................. A-1 City Council .................................................................................................................................................. A-1 City Management .......................................................................................................................................... A-1 Employee and Employee Relations .............................................................................................................. A-3 Risk Management ......................................................................................................................................... A-3 CITY FINANCIAL INFORMATION .............................................................................................................. A-4 Accounting and Financial Reporting ............................................................................................................ A-4 City Blended Component Units and Discrete Component Units .................................................................. A-5 Financial Policies .......................................................................................................................................... A-5 Capital Improvement Program ...................................................................................................................... A-6 Budget Procedure, Current Budget and Historical Budget Information ....................................................... A-7 Comparative Change in Fund Balance of the City General Fund ............................................................... A-11 Comparative General Fund Balance Sheets of the City .............................................................................. A-12 Major Revenues .......................................................................................................................................... A-13 Property Taxes ............................................................................................................................................ A-13 Sales Taxes ................................................................................................................................................. A-16 Transient Occupancy Tax ........................................................................................................................... A-17 Licenses and Permits .................................................................................................................................. A-17 Charges for Services ................................................................................................................................... A-18 Rental Revenues from Property Leases ...................................................................................................... A-18 Indebtedness ............................................................................................................................................... A-18 Retirement System ...................................................................................................................................... A-18 Other Post-Employment Benefits ............................................................................................................... A-26 ECONOMIC AND DEMOGRAPHIC INFORMATION .............................................................................. A-28 Population ................................................................................................................................................... A-28 Education .................................................................................................................................................... A-28 Building Activity ........................................................................................................................................ A-28 Personal Income .......................................................................................................................................... A-29 Employment ................................................................................................................................................ A-31 Industry ....................................................................................................................................................... A-32 Commercial Activity ................................................................................................................................... A-33 Transportation ............................................................................................................................................. A-33 APPENDIX A INFORMATION REGARDING THE CITY OF SOUTH SAN FRANCISCO City Council The City operates under a council-manager form of government. Five members are elected to overlapping four-year terms with elections held in even-numbered years. Three members are elected together, and the other two are elected in the next election. The Mayor and Vice Mayor are selected by the City Council from its members. In 2018, the City modified its City Council election process from “at-large” elections to election by district. Beginning with the November 2020 election, the City will hold elections for two districts. In November 2022, the City will hold elections for three districts. The City Council is responsible for, among other things, establishing local law and policies through the enactment of ordinances and resolutions, adopting the City budget, appointing members to advisory municipal activities, and serving on regional committees and boards whose policies may affect the City. The members of the City Council and the expiration dates of their respective terms are as follows: CITY OF SOUTH SAN FRANCISCO City Council Name Term Expires Rich Garbarino, Mayor November 2020 Mark Addiego, Vice Mayor November 2022 Karyl Matsumoto, Council Member November 2020 Mark Nagales, Council Member November 2022 Buenaflor Nicolas, Council Member November 2022 The City Council appoints the City Manager who heads the executive branch of the government, implements City Council directives and policies and manages the administrative and operational functions through the various departmental heads. City Management A summary of certain City executive staff are described below. City Manager. The City Manager is responsible for the day-to-day administration of the City. The City Manager’s office implements policy decisions of the City Council, provides leadership and strategic direction to the City’s leadership team and organization, as well as ensuring that initiatives and programs align with the City’s mission and reflect the values of the community. The City Manager’s office provides overall guidance to all City operating departments and is responsible for the administration of City programs to ensure the delivery of high quality services in an efficient and cost-effective manner. The City’s current City Manager is Mr. Michael Futrell. Mr. Futrell began serving as City Manager of the City in April 2014, bringing broad executive experience in local, state and federal government. Mr. Futrell was Chief Administrative Officer for the City of Baton Rouge, Louisiana; served on staff in the United States Senate; and was an elected member of the Louisiana House of Representatives and of the Baton Rouge City Council. Mr. Futrell served as a submarine officer in the U.S. Navy and rose to the rank of Navy Captain in the Navy Reserves. Mr. Futrell previously practiced law with a private firm and was Executive Vice President of a public utility company in Hawaii. Mr. Futrell holds a bachelor’s degree in Business/Public A-2 Administration and a Juris Doctorate degree from Louisiana State University, a Master’s in Business Administration from the University of Massachusetts-Amherst, and completed the Stanford Graduate School of Business Learn-Engage-Accelerate-Disrupt (LEAD) Certificate program in Corporate Innovation. Director of Finance. The Director of Finance is responsible for managing the City’s budget and day- to-day financial operations and serves as the fiscal advisor to the City Manager, City Council, and City Departments. The Finance Department provides central control of all budgeting and cost accounting citywide in a manner consistent with established and accepted municipal accounting principles to meet statutory requirements. The Finance Department, under the direction of the Director of Finance, formulates, manages, and controls all fiscal policies, as well as initiates strategic actions related to the management of financial operations including accounting, budgeting, planning, treasury/debt management, purchasing and warehousing. Ms. Janet Salisbury was named Director of Finance in June 2019. Prior to joining the City, she served as the Director of Operations for the IT Department of the City of Oakland, where she built and led the IT Finance and Contracts Division, providing centralized control of all IT-related finance and contract matters, including budgeting, contract negotiations, project finance, procurement and accounting. Ms. Salisbury’s career in the public sector began as an investment banker at J.P. Morgan Securities, Inc., structuring debt instruments for public sector clients such as state and local governments, higher education institutions, non- profits and public infrastructure agencies. She transitioned into advisory/consulting and securities underwriting for nationally leading public finance firms Public Financial Management, Inc. and XL Capital Assurance. Ms. Salisbury holds a B.A. in both Economics and History from the University of California, Los Angeles. She is a member of the Government Finance Officers Association and California Society of Municipal Finance Officers. City Treasurer. The City Treasurer is charged with investing City funds, producing monthly reports to identify amounts and types of investment instruments, arranging payments on City bonds, coordinating financial transactions in cooperation with the Director of Finance, and preparing property tax assessments for residents upon request. The City Treasurer is elected to a four-year term and is a part-time salaried position. The current City Treasurer is Mr. Frank Risso. City Attorney. The City Attorney is a contract position and is responsible for providing both formal and informal legal opinions, as well as advice to the City’s officers, employees, boards and commissions. The current City Attorney is Mr. Sky Woodruff. Mr. Woodruff is a principal with the law firm of Meyers Nave. Mr. Woodruff has extensive experience representing public agency clients and specializes in the areas of revenue and taxation, elections law, and land use and associated environmental issues. Mr. Woodruff received Bachelors of Science degree from Georgetown University and his Juris Doctorate from the University of California, Boalt School of Law. A-3 Employee and Employee Relations As of June 30, 2019, the City had approximately 439 full-time employees and 115 part-time employees. In accordance with the provisions of California Government Code Section 3500, the City participates in labor negotiations with its employee associations. The result of the negotiations processes are memorialized in memoranda of understanding (MOU’s) reached between the City and the City employee associations. The table below lists the City’s eight employee associations and the approximate membership as of June 30, 2019, as well as the unrepresented executive employees: Unit/Affiliation Contract Expiration Date Number of Members American Federation of State, County, and Municipal Employees, Local 829 June 30, 2020 118 International Association of Firefighters, Local 1507 June 30, 2022 73 South San Francisco Police Association June 30, 2022 84 International Union of Operating Engineers, Local 39 June 30, 2020 32 Confidential Unit, Teamsters, Local 856 June 30, 2020 28 Mid-Management Unit, Teamsters, Local 856 June 30, 2020 78 Public Safety Managers June 30, 2022 14 Executive Management June 30, 2022 12 Total 439 Source: City of South San Francisco. The City has begun the negotiation process with the employee associations with MOU’s expiring on June 30, 2020. The City expects that new MOU’s with such employee associations will be in place by June 30, 2020, each with three year terms. While no assurances can be made that new MOU’s will be in place prior to the expiration dates of the current MOU’s, it has been the City’s practice to have agreed upon MOU’s prior contract expirations. The City has not experienced a strike or work stoppage in the last ten years. Risk Management The City participates in the Pooled Liability Assurance Network Joint Powers Authority (the “PLAN JPA”), a joint powers authority consisting of 28 member cities, to provide liability insurance coverage, claims and risk management and legal defense to its participating members. The PLAN JPA provides up to $2.5 million of self-funded general liability and automobile coverage and has purchased $27.5 million in excess coverage per occurrence. The PLAN JPA is responsible for coverage beyond the City’s $100,000 self-insured retention for general liability and automobile coverage. The PLAN JPA also covers wrongful acts and employee benefits wrongful acts liability up to $10 million with two retained limits of $5 million. The City has also purchased excess coverage insurance for worker’s compensation claims from CSAC Excess Insurance Authority (CSAC-EIA) above the City’s $500,000 self-insured retention. The City has purchased cyber insurance for liability relating to data or security breaches. Coverage limits under such policy are $100,000 per individual (with a maximum of 100 individuals), $500,000 for legal forensic and public relations management, and an additional breach response limit of $2 million. The City maintains self-insured retentions (which are amounts that the City pays before purchased insurance coverage described above applies) in the Self-Insurance Internal Service Fund. Claims and judgments, including a provision for claims incurred but not reported, are recorded when a loss is deemed probable of assertion, and the amount of the loss is reasonably determinable. As of June 30, 2019, the City had A-4 a balance of $14,451,253 in the Self-Insurance Internal Service Fund with $14,140,000 allocated to worker’s compensation and $311,253 allocated to general liability. Settled claims have not exceeded any of the coverage described above in any of the past five fiscal years. For additional information with respect to the City’s risk management program and CSAC-EIA, see Note 11 to the City’s audited financial statements for fiscal year 2018-19 attached hereto as Appendix C. CITY FINANCIAL INFORMATION Accounting and Financial Reporting The City maintains its accounting records in accordance with Generally Accepted Accounting Principles (GAAP) and the standards established by the Governmental Accounting Standards Board (GASB). The government-wide, proprietary, private-purpose trust fund, and discretely presented component unit financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds from long-term debt and acquisitions under capital leases are reported as other financing sources. Those revenues susceptible to accrual are property and sales taxes, certain intergovernmental revenues, interest revenue, licenses and permits, charges for services, fines and forfeitures. Sales taxes collected and held by the State at year end on behalf of the City are also recognized as revenue. Other receipts and taxes are recognized as revenue when the cash is received. Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include taxes, grants, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenue. Thus, both restricted and unrestricted net position may be made available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary. The City considers restricted shared State revenues such as gasoline taxes and public safety sales taxes, restricted locally imposed transportation sales taxes, fines, forfeitures, licenses, permits, charges for services, and program grants as program revenues. The City Council employs an independent certified public accountant, who, at such time or times as specified by the City Council, at least annually, and at such other times as they determine, examines the financial statements of the City in accordance with generally accepted auditing standards, including tests of the accounting records and other auditing procedures as such accountant considers necessary. As soon as practicable, after the end of the fiscal year, a final audit and report is submitted by the independent accountant to the City Council. A-5 The General Fund is the general operating fund of the City and is used to account for resources and expenditures traditionally associated with general government, such as administration, public safety, library, parks, maintenance and recreation. The City expects to pay Base Rental Payments from amounts in the General Fund. Tables 1 through 3 below set forth certain historical and current fiscal year budget information for the General Fund. Information on the other governmental funds of the City as of June 30, 2019 is set forth in Appendix C. City Blended Component Units and Discrete Component Units General. Under Governmental Accounting Standards Board (GASB) guidelines, component units of a primary government (i.e. the City) generally include those that are legally separate entities but raise and hold economic resources for the direct benefit of the primary government. Blended component units, although separate legal entities are, in substance, part of the government’s operations. Their funds are treated similarly to funds of the primary government (other than the General Fund). Discrete component units do not meet the definition of a blended component units as they do not share the same governing body and do not only provide services to the primary government unit. The City’s blended component units which have or will have outstanding obligations (the Authority and the South San Francisco Capital Improvements Financing Authority (the “CIP Authority”)) and discrete component unit (the City of South San Francisco Conference Center Authority (the “Conference Center Authority”)), are described below. Authority and the South San Francisco Capital Improvements Financing Authority. The City Council serves as the governing board of the Authority and the CIP Authority. Under the Articles 1 through 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, the Authority and the CIP Authority have the power to issue bonds to pay the costs of public capital improvements. Separate financial statements are not prepared for the Authority or the CIP Authority. See Note 1 to the City’s audited financial statements attached to the Official Statement as Appendix C for more information with respect to the Authority and the CIP Authority. A description of the Authority is also set forth under the caption “THE AUTHORITY” in the Official Statement. City of South San Francisco Conference Center Authority. The Conference Center Authority operates and manages the City’s conference center, which is a public assembly facility consisting of an approximately 40,000 square foot meeting and banquet facility. The Conference Center Authority is governed by a commission of nine members which consists of two City Council members and seven other community and business representatives appointed by the City Council. The Conference Center Authority prepares financial statements which are separate from the City’s financial statements. Financial Policies General. The City has adopted a comprehensive set of financial policies to serve as a guideline for financial matters as further described below. Reserve Policy. The City has adopted a reserve policy (the “Reserve Policy”) which provides guidance on the establishment and maintenance of reserve levels for operating funds. With respect to the General Fund, the City’s Reserve Policy provides for: (i) a reserve for emergencies of two percent of General Fund operating revenues to cover unanticipated costs from catastrophic losses due to natural disasters and/or accidents; (ii) seven percent of General Fund operating revenues for economic contingencies to mitigate the impact to the City’s budget of local fluctuations in revenue due to local economic conditions and business relocations; and (iii) an unrestricted reserve equal to the difference of the amounts described in (i) and (ii) above to two months of General Fund operating revenues (approximately 15-20%). The City’s Reserve Policy provides that available amounts in excess of the required reserve allocations in (i) through (iii) above will use A-6 to pay down liabilities including addressing critical infrastructure replacement needs or transfers to the City’s CalPERS Stabilization Reserve to address volatility with CalPERS expenses. The City met its Reserve Policy targets in fiscal year 2018-19. The Adopted Budget also meets such targets, with projected General Fund reserves at approximately $22.4 million or 20% of General Fund operating revenues. Debt Management Policy. The City has adopted a debt management policy (the “Debt Management Policy”) in compliance with California Government Code Section 8855. The Debt Management Policy sets forth the purposes for which long-term debt financings may be undertaken (i.e. for projects that will provide benefit to constituents over multiple years). The Debt Management Policy provides that short-term financings may be undertaken for operational cash flow purposes and for short-lived capital projects (i.e. equipment leases). The City’s Debt Management Policy is implemented in conjunction with annual budgeting and the City’s capital improvement program. Investment Policy. The City invests its funds in accordance with the City’s investment policy (the “Investment Policy”). In accordance with Section 53600 et seq. of the California Government Code, idle cash management and investment transactions are the responsibility of the City Treasurer. The City’s Investment Policy sets forth the policies and procedures applicable to the investment of City funds and designates eligible investments. The Investment Policy sets forth a stated objective, among others, of ensuring the safety of invested funds by limiting credit and market risks. Funds are invested in the following order of priority: • Safety of Principal; • Liquidity; and • Return on Investment. Eligible investments are generally limited to managed investment pools, including the Local Agency Investment Fund which is operated by the California State Treasurer, U.S. Treasury bills, notes and bonds, federal agency or United States government sponsored enterprise obligations, medium term corporate notes, commercial paper rated A1/P1, as applicable, or better, repurchase agreements with counter-party ratings of “AA” or its equivalent or better, and mutual funds as authorized by State law. The City Treasurer is required to provide a quarterly report to the City Manager and the City Council showing the type of investment, date of maturity, amount invested, current market value, rate of interest, and other such information as may be required by the City Council. At December 31, 2019, the City had an investment portfolio with a market value of $220 million. As of such date, the City had invested approximately 29% of its investment portfolio in LAIF, 22% in federal agencies, 16% in U.S. Treasuries, and 31% of its investment portfolio in corporate securities. For additional information with respect to the City’s cash and investments, see Note 2 to the audited financial statements for fiscal year 2018-19 attached to the Official Statement as Appendix C. Capital Improvement Program The City adopts an annual capital improvement program (“CIP”) that covers the current and next succeeding four fiscal years and serves as the City’s short and long-term plan for capital projects. Development of the CIP involves the Public Works departments, input from other department heads and the City Manager. A draft CIP is presented to the City Council budget subcommittee. Prior to approval by the City Council, the draft CIP is presented to the City’s Planning Commission in order to ensure consistency with the City’s general plan. The City’s adopted fiscal year 2019-20 CIP totals approximately $101.2 million, including $53.8 million in newly adopted appropriations and $47.4 million in remaining appropriations from prior years. The projects include upgrades and/or new construction of general City facilities, park improvements, storm drain A-7 improvements, sanitary sewer projects and street and traffic projects. A summary of the major projects included in the adopted fiscal year 2019-20 CIP is shown in the table below. The appropriated amount shown below for the Civic Campus Project does not include proceeds of the Series 2020A Bonds. See the caption “THE PROJECT” in the Official Statement. Project Description Fiscal Year 2019-20 Appropriated Amount Funding Source Civic Campus Project(1) $21,905,118 General Fund Orange Memorial Park Stormwater Capture 8,500,000 Caltrans Sanitary Sewer Pump Stations 9,500,000 Sewer System Revenues Oyster Point Traffic Corridor Improvements 4,000,000 Traffic Impact Fees (1) See the caption “THE PROJECT” in the Official Statement. Source: Adopted Budget. As described under the caption “THE PROJECT” in the Official Statement, the Police Facility is the first phase of the City’s new Civic Center Campus. In 2020 and 2021, the City expects to undertake additional financings payable from the City’s General Fund to finance subsequent phases of the Civic Center Campus project in the approximate principal amount of $60 million. The City is considering the formation of a City-wide community facilities district (a special district authorized under State law) to finance transportation infrastructure improvements and services. Under State law, a community facilities district may levy special taxes within its boundaries to finance the costs of certain facilities and/or services. Subject to the approval by owners of property upon which the special taxes would be levied, the City’s proposed community facilities district will be authorized to issue bonds to finance transportation improvements such as new street connections, improved interchanges/access points to freeway systems within the City, and shuttle services to increase and expedite access to mass transit (i.e. Bay Area Rapid Transit (BART), Caltrain and ferry services). Bonds issued by the community facilities district would be secured solely from the special taxes and not from the City’s General Fund. In addition, special taxes may be levied to pay for the ongoing to costs of providing such transportation services. If formed, the special taxes levied by the community facilities district would not be included in general City revenues and would not be available for the City to make Base Rental Payments, which secure the Series 2020A Bonds. Budget Procedure, Current Budget and Historical Budget Information The City currently adopts a biennial operating budget and adopts an addendum to such operating budget during each biennial period. The City’s current budget process typically begins in December when the City’s Finance Department analyzes the mid-fiscal year finances and meets with the City Manager to review financial projections and identify budget issues and goals. Beginning in February, the City Manager discusses with the various department heads the preliminary budget projections for each department. Between March and May, the Finance Department refines revenue forecasts for the current fiscal year, receives budget requests from department heads and collaborates with the engineering division to identify and forecast funding sources for capital improvement projects. The Finance Department develops revenue and expenditure scenarios which are reviewed with the City Manager. A proposed budget is presented to the Budget Standing Committee of the City Council at a study session generally held in May and, based on feedback, a revised proposed budget is presented to such committee at a subsequent study session. The proposed budget is presented to the City Council for adoption at the last City Council meeting in June. With respect to the mid-biennial budget, the City follows a similar but condensed process to revise projected revenues and refine expenditures for the upcoming fiscal year. During the course of each fiscal year, the originally adopted budget is amended and revised as necessary, depending on fluctuations in revenues, actions by the State and/or unforeseen expenses. A-8 The biennial budget covering fiscal years 2019-20 and 2020-21 was approved on June 26, 2019 (the “Adopted Budget”). The Adopted Budget projects General Fund revenues in fiscal year 2019-20 to be approximately $124.9 million (exclusive of interfund transfers in), an increase of approximately $5.8 million or 4.9% from the fiscal year 2018-19 final budget. The Adopted Budget projects: (i) an increase in property tax revenues of approximately $2.8 million, (ii) an increase in sales tax revenues of approximately $1.8 million (including the portion of the sales tax attributable to the 0.5% increase in the City sales tax rate as a result of Measure W (see the caption “—Sales Taxes” below)); and (iii) an increase in transient occupancy tax of approximately $1.0 million, in each case as compared to the fiscal year 2018-19 final budgeted amounts. The Adopted Budget projects General Fund expenditures of $110.6 million in fiscal year 2019-20 (exclusive of interfund transfers out), which is an approximately $4.3 million decrease from the fiscal year 2018-19 final budget. Such decrease is primarily attributable to a decrease in certain professional costs that were included in the fiscal year 2018-19 final budget. For fiscal year 2019-20, the City has budgeted $12.4 million in sales tax revenues which the City attributes to the portion of the sales tax generated from the 0.5% rate increase authorized by Measure W. Such sales tax revenues are available to the General Fund for general City projects and services. In the City’s audited financial statements, the portion of sales taxes attributed to Measure W are accounted for and shown as General Fund expenditures through a transfer to the City’s capital improvement fund. However, in the City’s budget, the City’s current practice is to separate such portion of the sales tax into a Measure W fund for projected revenue and expenditure purposes. In the Adopted Budget, in fiscal year 2019-20, $17.1 million is budgeted to be expended from Measure W sales tax revenues, which includes portions of current-year and existing committed and/or assigned fund balances. Set forth in Table 1 below are the final General Fund budgets for fiscal years 2017-18, 2018-19, the adopted budget for 2019-20, and the actual results for fiscal years 2017-18 and 2018-19 (shown on a budgetary basis). The General Fund budgets and actuals shown in Table 1 below do not reflect the application of GAAP and therefore may differ in certain respects to the audited General Fund Statement of Revenues, Expenditures and Change in Fund Balance shown in Table 2 below. A-9 TABLE 1 CITY OF SOUTH SAN FRANCISCO GENERAL FUND BUDGETS TO ACTUAL COMPARISONS (ON A BUDGETARY BASIS)(1) Final Fiscal Year 2017-18 Budget Fiscal Year 2017-18 Results Final Fiscal Year 2018-19 Budget Fiscal Year 2018-19 Results Adopted Fiscal Year 2019-20 Budget REVENUES Property taxes $ 33,760,827 $ 34,143,627 $ 35,345,744 $ 38,659,657 $ 37,189,133 Sales taxes(2) 25,448,309 28,728,427 29,361,726 32,251,636 31,133,000 Transient occupancy taxes 14,800,000 13,978,533 15,834,000 17,091,222 16,855,297 Franchise fees 4,000,000 4,403,493 4,000,000 4,469,808 4,000,000 Other taxes 5,343,065 5,871,096 5,833,028 4,995,404 5,528,132 Intergovernmental 2,060,600 2,610,233 3,412,076 2,876,545 1,626,854 Interest and rentals 3,010,263 2,846,967 3,059,459 4,409,185 5,491,453 Licenses and permits 10,232,477 14,674,809 12,072,049 15,381,416 12,131,018 Charges for services 9,329,002 10,924,668 9,328,528 11,563,755 10,417,837 Fines and forfeitures 163,500 423,604 618,500 926,729 615,500 Other 174,991 266,872 289,171 330,881 370,308 Total Revenues $ 108,283,034 $ 118,872,329 $ 119,154,281 $ 132,956,238 $ 124,991,224 EXPENDITURES City Council $ 246,917 $ 239,264 $ 280,694 $ 258,760 $ 290,291 City Clerk 666,810 660,306 817,567 803,909 1,056,761 City Treasurer 135,861 135,218 132,901 123,505 143,137 City Attorney 1,038,092 996,380 1,081,462 961,588 1,115,935 City Manager(3) 3,167,257 2,937,733 5,737,883 5,364,075 2,542,579 Finance 3,423,768 3,423,768 3,384,364 3,173,973 3,294,240 Non-Departmental 1,108,503 1,107,187 1,130,087 1,265,202 997,844 Human Resources 1,699,257 1,698,958 1,780,097 1,745,612 1,794,862 Fire(4) 29,347,734 26,763,505 29,104,944 28,621,268 29,608,967 Police(4) 27,654,237 26,639,009 29,254,475 28,482,445 30,926,920 Public Works 5,339,637 5,339,181 6,512,375 6,831,377 5,018,087 Parks and Recreation 15,929,220 15,649,568 17,103,184 16,795,119 17,762,501 Library 5,575,195 5,394,725 6,149,808 5,655,551 6,132,137 Economic and Community Development(4) 10,772,828 10,027,304 12,443,981 14,318,597 9,925,951 Total Expenditures $ 106,105,316 $ 101,011,355 $ 114,913,771 $ 114,400,981 $ 110,610,213 OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets 3,990,600 3,990,605 2,250,000 840,298 -- Transfers in(5) 1,800,705 6,269,262 5,579,214 4,906,791 1,261,591 Transfers out(6)(7) (20,493,106) (20,317,868) (5,637,057) (11,995,827) (953,453) Total Other Financing Sources (Uses) (14,701,801) (10,058,001) 2,192,157 (6,248,738) 308,138 Net Change in Fund Balances Before Special Items (12,524,083) 7,802,793 6,432,667 12,306,519 14,689,149 Special Items(8) (7,154,626) (7,154,626) -- (531,591) -- NET CHANGE IN FUND BALANCE (19,678,709) 648,347 6,432,667 11,774,928 14,689,149 (1) This Table 1 is presented using the budgetary basis of accounting and does not reflect the application of GAAP. Certain actual results for fiscal years 2017-18 and 2018-19 differ from Table 2 below. (2) Includes Measure W sales tax revenues. (3) Increase in fiscal year 2018-19 reflects additional professional costs as a result of reprioritization of projects that were allocated to the General Fund for budgeting purposes. (4) Fiscal year 2017-18 results were below budget primarily as a result of salary savings due to staff vacancies. (5) Fiscal year 2017-18 results reflect transfers in of $2,502,915 from the Capital Infrastructure Reserve Capital Projects Fund and $3,766,347 from Non-Major Governmental Funds. Fiscal year 2018-19 results reflect a transfer in from Non-Major Governmental Funds. (6) Fiscal years 2017-18 and 2018-19 results reflect transfers out to the Capital Improvements Projects Fund, Capital Infrastructure Reserve Capital Projects Fund, Stormwater Enterprise Fund and Internal Service Fund. (7) The City budgets for Measure W Sales tax revenues separate from the General Fund. As a result, transfers out for Fiscal Year 2019 -20 shown in this Table 1 do not include budgeted transfers out of amounts constituting Measure W Sales Tax revenues from the Gen eral Fund. The City has budgeted transfers of Measure W Sales tax revenues of $17,067,000 to the Capital Improvements Projects Fund. Portions of such transfer will be from existing committed and/or assigned General Fund balances and from fiscal year 2019 -20 General Fund revenues. (footnotes continue on following page) A-10 (continued from previous page) (8) Fiscal year 2017-18 results reflect distributions of net proceeds of the PUC parcel land sale of property previously held for redevelopment to other taxing entities in the approximate amount of $7,154,000. Fiscal Year 2018-19 results reflect a $829,315 transfer of capital assets from the Successor Agency to the former City of South San Francisco Redevelopment Agency (the “Successor Agency”)and $1,360,906 remittance of land sale proceeds. Source: Audited Financial Statements for fiscal year 2017-18 and fiscal year 2018-19; Adopted Budget of the City for fiscal year 2019-20. A-11 Comparative Change in Fund Balance of the City General Fund The table below presents the City’s audited General Fund Statement of Revenues, Expenditures and Change in Fund Balance for fiscal years 2014-15 through 2018-19. TABLE 2 CITY OF SOUTH SAN FRANCISCO GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE 2014-15 2015-16 2016-17 2017-18 2018-19 REVENUES Property Taxes(1) $ 23,079,858 $ 24,777,659 $ 33,405,829 $ 34,143,627 $ 38,659,657 Sales Taxes(2) 15,284,011 17,710,425 24,479,476 28,728,427 32,251,636 Transient Occupancy Taxes 12,947,473 13,442,952 13,631,507 13,978,533 17,091,222 Franchise Fees 3,743,656 3,982,092 4,090,073 4,403,493 4,469,808 Other Taxes 4,906,400 5,124,574 5,708,187 5,871,096 4,995,404 Intergovernmental(1) 7,537,766 7,833,659 1,593,508 2,610,233 2,876,545 Interest and Rentals 2,866,296 3,080,567 2,784,072 2,846,967 4,409,185 Licenses and Permits(3) 4,795,158 6,896,897 7,823,403 14,674,809 15,381,416 Charges for Services 8,695,265 8,659,873 9,451,835 10,924,668 11,563,755 Fines and Forfeitures 1,221,413 791,756 899,118 423,604 926,729 Other 222,611 336,267 1,092,691 266,872 330,881 Total Revenues $ 85,299,907 $ 92,636,721 $ 104,959,699 $ 118,872,329 $ 132,956,238 EXPENDITURES City Council $ 221,155 $ 268,133 $ 206,950 $ 239,264 $ 258,760 City Clerk 426,410 646,518 607,096 660,306 770,985 City Treasurer 102,576 118,788 110,559 135,218 123,505 City Attorney 861,747 782,389 1,187,716 996,380 961,588 City Manager 1,223,159 1,735,423 1,948,911 2,691,066 2,339,342 Finance 1,982,911 2,186,648 2,613,473 3,080,769 2,789,187 Non-departmental 1,075,055 1,124,348 1,145,698 1,049,187 1,219,533 Human Resources 1,266,571 1,468,785 1,571,647 1,541,524 1,621,409 Fire(4) 21,247,989 24,058,478 25,567,548 26,059,072 27,572,488 Police(4) 23,512,560 25,319,536 25,539,781 26,639,009 28,482,445 Public Works 4,564,498 5,025,897 4,654,758 5,014,343 5,787,782 Parks and Recreation 11,826,407 13,234,028 14,897,157 15,468,370 16,530,603 Library 4,247,650 4,681,188 5,157,355 5,379,836 5,628,693 Economic and Community Development 4,246,016 6,144,861 7,158,564 7,722,689 8,433,298 Total Expenditures $ 76,804,704 $ 86,795,020 $ 92,367,213 $ 96,677,033 $ 102,519,618 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES $ 8,495,203 $ 5,841,701 $ 12,592,486 $ 22,195,296 $ 30,436,620 OTHER FINANCING SOURCES (USES) Proceeds from Sale of Capital Assets -- -- -- 3,990,605 840,298 Transfers in(5) 1,955,824 1,976,872 6,021,853 6,269,262 4,906,791 Transfers out(6) (9,698,911) (6,082,763) (5,909,636) (20,317,868) (11,995,827) Total Other Financing Sources (Uses) (7,743,087) (4,105,891) 112,217 (10,058,001) (6,248,738) Net Change in Fund Balances before special items 752,116 1,735,810 12,704,703 12,137,295 24,187,882 SPECIAL ITEMS Assets Transferred from the Successor Agency(7) -- -- 20,582,335 -- 829,315 Remittance of Land Sale Proceeds(7) -- -- -- (7,154,626) (1,360,906) Net Change in Fund Balances 752,116 1,735,810 33,287,038 4,982,669 23,656,291 Fund Balances (Deficits) - July 1 20,529,259 21,281,375 23,017,185 56,304,223 61,286,892 Fund Balances (Deficits) - June 30 $ 21,281,375 $ 23,017,185 $ 56,304,223 $ 61,286,892 $ 84,943,183 (1) Beginning with fiscal year 2016-17, the City reclassified Department of Motor Vehicles license fees from the Intergovernmental revenue category to the Property Tax category. See “—Property Taxes” below. (2) Increases beginning in fiscal year 2015-16 reflect the increase in the City sales tax rate of 0.5% authorized by Measure W. See “—Sales Taxes” below. (footnotes continue on following page) A-12 (continued from previous page) (3) Increase in fiscal year 2017-18 primarily as a result of increased building activity within the City. (4) [Increases in fiscal year 2015-16 primarily as a result of increased employee salary and benefits.] (5) Reflect transfers in from the Capital Infrastructure Reserve Capital Projects Fund and from Non -Major Governmental Funds. (6) Reflect transfers out to the Capital Improvements Projects Fund, Capital Infrastructure Reserve Capital Projects Fund, Stormwater Enterprise Fund and Internal Service Fund. (7) Reflect transfers of capital assets from the Successor Agency to the former City of South San Francisco Redevelopment Agency and remittance of land sale proceeds. Source: Audited Financial Statements for fiscal years 2014-15 through 2018-19. Comparative General Fund Balance Sheets of the City The table below presents the City’s audited General Fund Balance Sheets for fiscal years 2014-15 through 2018-19. TABLE 3 CITY OF SOUTH SAN FRANCISCO GENERAL FUND BALANCE SHEETS FIVE YEAR COMPARISON 2014-15 2015-16 2016-17 2017-18 2018-19 ASSETS Cash and Investments(1) $ 20,795,013 $ 19,931,377 $ 33,222,598 $ 37,648,050 $ 60,775,901 Receivables: Accounts 4,087,846 7,945,482 6,021,069 7,734,046 8,581,277 Accrued Interest 65,237 57,493 64,817 213,239 274,790 Due from Conference Center -- -- 43,668 - 53,589 Due from Other Funds 100 336,000 70,000 1,100,000 Inventory 1,134 824 474 106 372 Restricted Cash and Investments -- -- -- 200,000 200,000 Land Held for Redevelopment(2) -- -- 20,582,335 20,582,335 19,201,948 Prepaids -- 32,756 -- -- -- Total Assets $ 24,949,230 $ 27,968,032 $ 60,270,961 $ 66,447,776 $ 90,187,877 LIABILITIES Liabilities: Accounts Payable $ 787,724 $ 1,006,737 $ 2,012,208 $ 1,307,966 $ 2,609,145 Accrued Salaries and Benefits 2,454,423 3,621,781 1,569,242 3,027,256 1,659,795 Other Payable 267,772 206,402 278,678 290,552 65,755 Deposits -- -- -- 411,025 763,563 Unearned Revenue 157,936 115,927 106,610 124,085 146,436 Total Liabilities $ 3,667,855 $ 4,950,847 $ 3,966,738 $ 5,160,884 $ 5,244,694 Fund Balances: Nonspendable 1,134 33,580 474 106 372 Restricted(2) -- -- -- 20,582,335 19,201,948 Committed(3) 2,536,790 3,654,283 11,780,724 16,725,897 22,619,868 Assigned(3) 1,458,029 1,578,153 5,244,279 4,334,322 11,881,363 Unassigned(4) 17,285,422 17,751,169 39,278,746 19,644,232 31,239,632 Total Fund Balances (Deficits) 21,281,375 23,017,185 56,304,223 61,286,892 84,943,183 Total Liabilities and Fund Balances (Deficits) $ 24,949,230 $ 27,968,032 $ 60,270,961 $ 66,447,776 $ 90,187,877 (1) Increase in fiscal year 2016-17 primarily a result of increase in property tax, sales tax and permit fees. See Table 2 above. (2) In fiscal year 2016-17, land held for redevelopment was transferred by the Successor Agency to the City. Such land is expec ted to be sold, at which point the City and other tax entities will receive a share of sale proceeds. (3) Includes Measure W sales tax revenues and other funds committed or assigned to capital projects and local services. (4) Reflects General Fund reserves maintained pursuant to the City’s Reserve Policy. See “Financial Policies—Reserve Policy” above. Source: Audited Financial Statements for fiscal years 2014-15 through 2018-19. A-13 Major Revenues The City derives its General Fund revenues from a variety of sources including ad valorem property taxes, sales taxes, licenses, permits, transient occupancy taxes, charges for services provided by the City and other miscellaneous revenues. The City’s total General Fund revenues for selected major revenue sources for the past five fiscal years are set forth below. TABLE 4 CITY OF SOUTH SAN FRANCISCO SELECTED MAJOR REVENUE SOURCES Revenue Category 2014-15 2015-16 2016-17 2017-18 2018-19 Property Taxes(1) $ 23,079,858 $ 24,777,659 $ 33,405,829 $ 34,143,627 $ 38,659,657 Sales Taxes(2) 15,284,011 17,710,425 24,479,476 28,728,427 32,251,636 Transient Occupancy Taxes 12,947,473 13,442,952 13,631,507 13,978,533 17,091,222 Licenses and Permits 4,795,158 6,896,897 7,823,403 14,674,809 15,381,416 Charges for Services(3) 8,695,265 8,659,873 9,451,835 10,924,668 11,563,755 Total $ 64,801,765 $ 71,487,806 $ 88,792,050 $ 102,450,064 $ 114,947,686 (1) Inclusive of Department of Motor Vehicles license fees. See “—Property Taxes” below. (2) Increases beginning in fiscal year 2015-16 reflect the increase in the City sales tax rate of 0.5% authorized by Measure W. See “—Sales Taxes” below. (3) Comprised of paramedic and basic life support service fees, certain police service fees, charges for recreational classes, day care, and library programs, as well as the General Fund administration fee charged to other funds. Source: City of South San Francisco. Property Taxes During fiscal year 2018-19, property tax receipts of approximately $38.7 million provided the largest tax revenue source of the City, contributing approximately 29.1% of total General Fund revenues. General Fund property tax revenues of approximately $37.2 million are budgeted to be received during fiscal year 2019-20. The City also received a portion of Department of Motor Vehicles license fees (“VLF”) collected Statewide. Several years ago, the Statewide VLF was reduced by approximately two-thirds. However, the State continued to remit to cities and counties the same amount that those local agencies would have received if the VLF had not been reduced, known as the “VLF backfill.” The State VLF backfill was phased out, and as of Fiscal Year 2011-12, all of the VLF is now received through an in-lieu payment from State property tax revenues. In California, property which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens, arising pursuant to State Law, on the secured property, regardless of the time of the creation of other liens. The valuation of property is determined as of January 1 each year, and installments of taxes levied upon secured property are due November 1 and February 1 and become delinquent on the following December 10 and April 10, respectively. Taxes on unsecured property are due July 1, and become delinquent August 31. Secured and unsecured properties are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes of the State for the amount of taxes that are delinquent. The taxing authority has four methods of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for A-14 record in the County Recorder’s Office in order to obtain a lien on certain property of the taxpayer, and (4) seizure and sale of personal property, improvement or possessory interest belonging or taxable to the assessee. A ten percent penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, beginning on the July 1 following a delinquency, interest begins accruing at the rate of 1 1/2% per month on the amount delinquent. Such property may thereafter be redeemed by the payment of the delinquent taxes and the ten percent penalty, plus interest at the rate of 1 1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A ten percent penalty also applies to the delinquent taxes or property on the unsecured roll, and further, an additional penalty of 1 1/2% per month accrues with respect to such taxes beginning on the varying dates related to the tax billing date. Legislation enacted in 1984 (Section 75 et seq. of the Revenue and Taxation Code of the State of California), provides for the supplemental assignment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the next tax lien date following the change and thus delayed the realization of increased property taxes from the new assessment for up to 14 months. Collection of taxes based on supplemental assessments occurs throughout the year. Taxes due are prorated according to the amount of time remaining in the tax year, with the exception of tax bills dated January 1 through May 31, which are calculated on the basis of the remainder of the current fiscal year and the full 12 months of the next fiscal year. In the past, the State Legislature has shifted property taxes from cities, counties and special districts to the Educational Revenue Augmentation Fund. The term “ERAF” is often used as a shorthand reference for this shift of property taxes. In 1992-93 and 1993-94, in response to serious budgetary shortfalls, the State Legislature and administration permanently redirected over $3 billion of property taxes from cities, counties, and special districts to schools and community college districts. The 2004-05 State budget included an additional $1.3 billion shift of property taxes from certain local agencies, including the City, to occur in fiscal years 2004-05 and 2005-06. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Proposition 1A” and “—Proposition 22” for a description of certain limitations on the State’s authority over local government revenue sources. The table below sets forth the secured and unsecured assessed valuations for property in the City for the fiscal years 2010-11 through 2019-20. A-15 TABLE 5 CITY OF SOUTH SAN FRANCISCO ASSESSED VALUATION FISCAL YEARS 2010-11 THROUGH 2019-20(1) Fiscal Year Local Secured Unsecured Total 2010-11 $12,366,942,486 $1,279,681,193 $13,646,623,679 2011-12 12,531,951,091 1,295,085,027 13,827,036,118 2012-13 12,704,362,559 1,288,434,392 13,992,796,951 2013-14 13,091,998,899 1,212,353,871 14,304,352,770 2014-15 13,650,652,805 1,244,971,467 14,895,624,272 2015-16 14,283,534,240 1,197,263,526 15,480,797,766 2016-17 15,074,300,488 1,381,715,511 16,456,015,999 2017-18 15,850,972,006 1,423,348,022 17,274,320,028 2018-19 17,421,411,964 1,765,066,449 19,186,478,413 2019-20 19,123,130,609 1,727,417,402 20,850,548,011 Source: City Comprehensive Audited Financial Reports for fiscal years 2010-11 through 2018-19; County Assessor-County Clerk-Recorder for fiscal year 2019-20. The County operates under a statutory program entitled Alternate Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”). Under the Teeter Plan local taxing entities receive 100% of their tax levies net of delinquencies, but do not receive interest or penalties on delinquent taxes collected by the County. The City’s share of the ad valorem property tax levy is included in the County’s Teeter Plan. As a result, the City currently receives 100% of such levy and is not impacted by delinquencies in payment. However, the County may choose to discontinue to the Teeter Plan at any time. The 10 largest taxpayers in the City as shown on the fiscal year 2018-19 secured tax roll, the assessed valuation, land use and the percentage of the City’s total assessed value attributable to each are shown in the below table. TABLE 6 CITY OF SOUTH SAN FRANCISCO TEN PRINCIPAL TAXPAYERS Property Owner 2018-19 Assessed Valuation % of Total(1) Land Use 1. Genentech Inc. $ 2,628,033,718 13.70% Industrial, Office, R&D 2. Slough SSF LLC 646,570,261 3.37 Industrial 3 ARE San Francisco LLC 454,787,159 2.37 Industrial, Commercial 4. HCP Oyster Point III LLC 439,463,289 2.29 Commercial, Office 5. Brittania Pointe Grand LP 309,612,762 1.61 Industrial 6. United Airlines Inc. 271,668,869 1.42 Industrial 7. AP3-SF2 CT South LLC 216,949,238 1.13 Commercial, Office 8. KR Oyster Point LLC 169,580,792 0.88 Commercial, Office 9. Gateway Center LLC 149,332,266 0.78 Commercial 10. SSF Logistics Inc. 127,129,688 0.66 Business, Commercial Total $ 5,413,128,002 28.21% (1) 2018-19 Local Secured Assessed Valuation: $19,186,478,413. Source: City of South San Francisco. A-16 Between fiscal years 2015-16 and 2017-18, the City experienced significant increases in residential and commercial building activity. See “ECONOMIC AND DEMOGRAPHIC INFORMATION—Building Activity” below. In addition, there are currently several large-scale commercial and office development projects either underway or proposed for development within the City. Brief descriptions of certain of such projects and their current status are as follows: (i) the Southline project, which is a proposed office campus with up to 2.8 million square feet of office or lab space located on a 26-acre former industrial warehouse site (application submitted to the City); (ii) the Gateway of the Pacific project, which is a three-phased office and laboratory campus totaling approximately 1.3 million square feet at buildout (first phase (approximately 450,000 square feet) is complete and fully leased, and the second phase is under construction); and (iii) the Kilroy Oyster Point project, which is a two-phased office and research and development campus totaling approximately 2.2 million square feet (phase one (approximately 500,000 square feet) is complete and fully leased). While the foregoing building activity, if completed as currently planned, can be expected to increase the assessed valuation of property and property tax revenues, no assurances can be given as to the completion thereof or any such increase. Sales Taxes During fiscal year 2018-19, sales tax receipts of approximately $32.3 million provided the second largest tax revenue source for the City, contributing approximately 24.3% of total General Fund revenues. Sales tax receipts of approximately $31.1 million are budgeted to be received during fiscal year 2019-20, which includes approximately $12.3 million of revenues generated by the Measure W Sales Tax (defined below). A sales tax is imposed on retail sales or consumption of personal property. The current total sales tax rate in the City is 9.75%, which includes the Measure W Sales Tax rate increase of 0.5%. The basic sales tax rate is established by the State Legislature, and local overrides may be approved by voters. In an election on November 3, 2015, a majority of voters in the City approved Measure W, a general sales tax measure that imposes a 0.5% tax on retail sales within the City (the “Measure W Sales Tax”). The Measure W Sales Tax commenced on April 1, 2016 and will be collected for a thirty-year period ending on March 31, 2046. While such sales tax revenues are available to the General Fund for general City projects and services, the City’s current practice for budgetary purposes is to separate such portion of the sales tax from the General Fund. The following table shows the sales tax revenues from the City’s share of the basic sales tax, Measure W Sales Tax revenues and total sales tax revenues since the 0.5% increase went into effect on April 1, 2016. TABLE 7 CITY OF SOUTH SAN FRANCISCO SALES TAX REVENUES Fiscal Year General Sales Tax Revenues Measure W Sales Tax Revenues Total Sales Tax Revenues 2015-16(1) $ 16,217,000 $ 1,493,425 $ 17,710,425 2016-17 15,593,032 8,886,444 24,479,476 2017-18 17,566,189 11,162,238 28,728,427 2018-19 19,606,689 12,644,947 32,251,636 (1) The 0.5% increase in the City’s sales tax rate authorized by Measure W went into effect on April 1, 2016. Fiscal year 2015 - 16 amount reflects three months of Measure W Sales Tax receipts. Source: City of South San Francisco. A-17 The following table shows the top twenty sales tax payers (in alphabetical order) within the City as of ______, 2020. TABLE 8 CITY OF SOUTH SAN FRANCISCO TWENTY PRINCIPAL SALES TAX PAYERS (in alphabetical order) Property Owner Property Owner 7-Eleven Food Stores Fuel 24:7 Service Stations Ahern Rentals Genentech Blueprint Studio Hertz Rent-A-Car Bon Appetit Management Co. Lowe’s Home Centers Central Concrete Supply Co. Monogram Biosciences Chevron Service Stations Safeway Stores Costco Wholesale Shell Service Stations Granite Rock Company Shift Operations Flyers Energy Sixt Rent a Car Freeman Decorating Services South City Lumber & Supply Source: City of South San Francisco. Transient Occupancy Tax A transient occupancy tax is imposed on persons staying 30 days or less in a hotel, motel, inn or other lodging place within the City. In fiscal year 2018-19, transient occupancy tax receipts were approximately $17.1 million, providing approximately 12.9% of total General Fund revenues. Transient occupancy tax revenues of approximately $16.8 million are budgeted to be received during fiscal year 2019-20. In an election on November 6, 2018, a majority of voters in the City approved Measure FF, which incrementally increases the transient occupancy tax rate to 14%. The current transient occupancy tax rate is 13% of the room rate and will increase to 14% on January 1, 2021. The increases authorized by Measure FF do not expire. In the adopted budget for fiscal year 2019-20, the City projected a 6% increase in transient occupancy taxes over the fiscal year 2018-19 adopted budget. The City attributes such estimated increases to the higher transient occupancy tax rate authorized by Measure FF, new hotels which are expected to open during such time period and indicators (i.e. passenger traffic at San Francisco International Airport, average hotel room rates and average occupancy rates) that show a relatively strong tourism industry in the San Francisco Bay area. In June 2019, the City Council adopted an ordinance which requires the payment of transient occupancy taxes for short term rentals of residential dwelling units (i.e. those made available through platforms such as AirBnB and VRBO). While such ordinance could result in an increase in transient occupancy tax receipts, the City can make no assurances as to any increase or the amount of such increase. Licenses and Permits The City collects fees for licenses and permits provided by the City, including, but not limited to, regulatory permits, conditional use permits, development permits, plan check and permitting, building permits and inspections and other development fees. In fiscal year 2018-19, the City collected approximately $15.4 million, providing approximately 11.6% of total General Fund revenues. License and permit fees of approximately $12.1 million are budgeted to be received during fiscal year 2019-20. A-18 The City has experienced significant increases in license and permit fee revenues in the last five fiscal years, increasing from approximately $4.8 million in fiscal year 2014-15 to approximately $15.4 million in fiscal year 2018-19. Such increases have been driven primarily by increased residential and commercial building activity in the City. See “ECONOMIC AND DEMOGRAPHIC INFORMATION—Building Activity” below. Charges for Services In fiscal year 2018-19, charges of approximately $11.6 million (approximately 8.7% of total General Fund revenues) were collected for services including paramedic and basic life support service fees, certain police service fees, charges for recreational classes, day care, and library programs, as well as the General Fund administration fee charged to other funds. Charges for services are budgeted at approximately $10.4 million in fiscal year 2019-20. Rental Revenues from Property Leases From time-to-time the City enters into leases with respect to City-owned property which generates rental revenues. The City has entered into a lease with the Conference Center Authority for the site on which the South San Francisco Conference Center is located. Pursuant to such lease, the Conference Center Authority pays annual rental payments to the City of $420,000. Such lease expires on January 31, 2029 unless further extended. The City has also leased the land on which a Costco store and the Magnolia Senior Housing Apartments are located with Price Club Associates and Magnolia Housing, respectively. Such leases generate in the aggregate approximately $451,800 annually for the City. The lease with Price Club Associates terminates in 2029 (with an option for a six-year extension), and the lease with Magnolia Housing terminates in 2062. [The revenues generated by the foregoing leases are included in the City’s General Fund.] Indebtedness Long-Term Debt. The City’s long-term obligations payable from the General Fund currently consist of financing leases entered into for the purpose of acquiring fire trucks and street sweepers. As of June 30, 2019, the aggregate amount outstanding under such financing leases was $5,598,771. The City has also entered into loans obtained from the State Water Resources Control Board and outstanding bonds which were issued to finance improvements to the City’s water and wastewater systems. Such loans and outstanding bonds are secured revenues of the water and wastewater system and are not payable from the General Fund. See Note 5 to the City’s audited financial statements for fiscal year 2018-19 attached hereto as Appendix C for a description of the City’s outstanding indebtedness. Short-Term Debt. The City currently has no short-term debt outstanding. Retirement System This caption contains certain information relating to the California Public Employees Retirement System (“CalPERS”). The information is primarily derived from information produced by CalPERS, its independent accountants and actuaries. The City has not independently verified the information provided by CalPERS and makes no representations nor expresses any opinion as to the accuracy of the information provided by CalPERS. A-19 The comprehensive annual financial reports of CalPERS are available on its Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be changed in the future. Actuarial assessments will change with the future experience of the pension plans. Summary of Plans. The City contributes to CalPERS, an agent multiple-employer public employee defined benefit pension plan, on behalf of approximately 426 active City employees who participate in the City’s Miscellaneous Plan or the City’s Safety Plan. CalPERS provides retirement, disability and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State, including the City. CalPERS plan benefit provisions and all other requirements are established by State statute and the City Council. CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law. The City participates in separate CalPERS tiers within the Miscellaneous and Safety plans for employees based on hire date. The City’s plans are part of CalPERS risk pools. Benefit provisions for each plan as of June 30, 2019 are set forth below. Miscellaneous Hire Date Prior to April 25, 2010 After April 25, 2010 but prior to January 1, 2013 On or after January 1, 2013 Benefit Formula 2.7% @ 55 2.0% @ 60 2% @ 62 Benefit Vesting Schedule 5 years service 5 years service 5 years service Benefit Payments monthly for life monthly for life monthly for life Retirement Age 50-55 50-67 52-67 Monthly Benefits, as a % of Eligible Compensation 2.0% to 2.7% 1.092% - 2.418% 1.0% - 2.5% Required Employee Contribution Rates 8% 7% 6.5% Required Employer Contribution Rates(1) 29.179% 29.179% 6.5% (1) As described under “—Contributions” below, such percent CalPERS no longer collects required contributions for the unfunded portion of pension liability based on a percentage of payroll. Percentages are provided by CalPERS for illustrative purposes. A-20 Safety Hire Date Prior to April 25, 2010 After April 25, 2010 but prior to January 1, 2013 On or after January 1, 2013 Benefit Formula 3.0% @ 50 3.0% @ 55 2.7% @ 57 Benefit Vesting Schedule 5 years service 5 years service 5 years service Benefit Payments monthly for life monthly for life monthly for life Retirement Age 50 50-55 50-57 Monthly Benefits, as a % of Eligible Compensation 3.0% 2.4% - 3.0% 2.0% - 2.7% Required Employee Contribution Rates 9% 9% 11.5% Required Employer Contribution Rates(1) 48.901% 48.901% 11.5% (1) As described under “—Contributions” below, such percent CalPERS no longer collects required contributions for the unfunded portion of pension liability based on a percentage of payroll. Percentages are provided by CalPERS for illustrative purposes. As of the June 30, 2017 actuarial valuation date and the June 30, 2018 measurement date, the following employees were covered by the benefit terms of the plans: Number of members Description Miscellaneous Plan Safety Plan Inactive Employees or Beneficiaries Receiving Benefits 440 284 Inactive Employees Entitled to but Not Yet Receiving Benefits 334 105 Active employees 281 159 Total 1,055 548 AB 340, Public Employee Pension Reform Act of 2013 (PEPRA). On September 12, 2012, the California Governor signed Assembly Bill 340 (“AB 340”), which implements pension reform in California. Effective January 1, 2013, AB 340: (i) requires public retirement systems and their participating employers to share equally with employees the normal cost rate for such retirement systems; (ii) prohibits employers from paying employer-paid member contributions to such retirement systems for employees hired after January 1, 2013; (iii) establishes a compulsory maximum non-safety benefit formula of 2.5% at age 67; (iv) defines final compensation as the highest average annual pensionable compensation earned during a 36-month period; and (v) caps pensionable income at $110,100 ($132,120 for employees not enrolled in Social Security) subject to Consumer Price Index increases. Other provisions reduce the risk of the City incurring additional unfunded liabilities, including prohibiting retroactive benefits increases, generally prohibiting contribution holidays, and prohibiting purchases of additional non-qualified service credit. Pursuant to AB 340, the City established new pension tiers: 2.0% at 62 for Miscellaneous and 2.7% at 57 for Safety for employees hired on or after January 1, 2013 who were not previously CalPERS members. Contributions. Section 20814(c) of the California Public Employee’s Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are the estimated amount necessary to finance the costs of benefits earned by employees during the years, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2018, the City’s required contributions for the Miscellaneous Plan and Safety Plan were $5,228,454 and $8,071,060, respectively. For the year ended June 30, 2019, the City’s required contributions for the Miscellaneous Plan and Safety Plan were $6,165,764 and $9,323,936, respectively. Such amounts were paid by the City. A-21 Beginning with fiscal year 2017-18 CalPERS began collecting employer contributions toward the plan’s unfunded liability as dollar amounts instead of the prior method of a contribution rate. According to CalPERS, this change was to address potential funding issues that could arise from a declining payroll or reduction in the number of active members in the plan. Funding the unfunded liability as a percentage of payroll could lead to the underfunding of the plans. Due to stakeholder feedback regarding internal needs for total contributions expressed as an estimated percentage of payroll, the CalPERS reports include such results in the contribution projection set forth in the tables below. These results are provided for information purposes only. Contributions toward the unfunded liability will continue to be collected as set dollar amounts. The tables below are derived from the City of South San Francisco Annual Valuation Reports with valuation dates as of June 30, 2018 and delivered in July 2019 for the Miscellaneous and Safety plans (together, the “2019 Report”) and show the required and projected employer contributions (before cost sharing) for the next six fiscal years. Projected results reflect the adopted changes to the discount rate described in the 2019 Report. Such projections also assume that all actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. The projected normal cost percentages in the projections below does not reflect that the normal cost will decline over the time as new employees are hired into PEPRA or other lower cost benefit tiers. Required Contribution Projected Future Employer Contributions (Assumes 7.00% Return for Fiscal Year 2018-19) Fiscal Year 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Safety Plan Normal Cost % 21.214% 21.2% 21.2% 21.2% 21.2% 21.2% UAL Payment $8,098,777 $9,147,000 $10,086,000 $10,640,000 $11,187,000 $11,494,000 Total as a % of Payroll* 56.7% 60.3% 63.1% 64.2% 65.2 65.2% Projected Payroll $22,796,603 $23,423,509 $24,067,656 $24,729,517 $24,409,579 $26,108,343 Miscellaneous Plan Normal Cost % 10.277% 10.3% 10.3% 10.3% 10.3% 10.3% UAL Payment $6,046,957 $6,741,000 $7,352,000 $7,727,000 $8,121,000 $8,345,000 Total as a % of Payroll* 33.8% 35.8% 37.3% 37.9% 38.6% 38.6% Projected Payroll $25,751,395 $26,459,559 $27,187,196 $27,934,844 $28,703,052 $29,492,386 * Illustrative only and based on the projected payroll shown. Source: CalPERS’ 2019 Report. No assurance can be provided that the City’s CalPERS plan expenses will not increase significantly in the future. Net Pension Liability. The City’s net pension liability is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2018, using an annual actuarial valuation as of June 30, 2017 rolled forward to June 30, 2018 using standard update procedures. For the June 30, 2018 measurement period, total pension liabilities were based on a June 30, 2017 actuarial valuation date and the following actuarial methods and assumptions: A-22 Actuarial Cost Method Entry Age Normal Cost Method Actuarial Assumptions Discount Rate 7.15% Inflation 2.50% Payroll Growth 3.00% Salary Increase Varies by Entry Age and Service Investment Rate of Return(1) 7.15% Mortality Rate Table(2) Derived using CalPERS’ Membership Data for all Funds Post Retirement Benefit Increase Contract COLA up to 2.00% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.50% thereafter (1) Net of investment and administrative expenses and includes inflation. (2) The mortality table used was developed based on CalPERS’ specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of MP 2016. The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2017 valuation were based on the results of a December 2017 actuarial experience study for the period from 1997 to 2015. A-23 The following table shows the changes in net pension liability recognized over the measurement period. Total Pension Liability (a) Increase (Decrease) Plan Fiduciary Net Position (b) Net Pension Liability/(Assets) (c)=(a)-(b) Miscellaneous Plan Balance at June 30, 2017 (Valuation Date)(1) $ 227,427,722 $ 149,962,251 $ 77,465,471 Changes Recognized for the Measurement Period: Service Cost 4,001,207 - 4,001,207 Interest on Total Pension Liability 15,885,315 - 15,885,315 Changes of Assumptions (1,361,078) - - Differences Between Expected and Actual Experience 187,342 - 187,342 Plan to Plan Resource Movement - (365) 365 Contributions – Employer - 6,165,764 (6,165,764) Contributions – Employees - 1,727,041 (1,727,041) Net Investment Income - 12,458,090 (12,458,090) Benefit Payments, Including Refunds Of Employee Contributions (12,164,689) (12,164,689) - Administrative Expense - (233,683) 233,683 Other Miscellaneous Income/(Expense) - (443,767) 443,767 Net Changes 6,548,097 7,508,391 (960,294) Balance at: June 30, 2018 (Measurement Date)(1) $ 233,975,819 $ 157,470,642 $ 76,505,177 Safety Plan Balance at June 30, 2017 (Valuation Date)(1) $ 314,037,249 $ 208,630,800 $ 105,406,449 Changes Recognized for the Measurement Period: Service Cost 6,511,672 - 6,511,672 Interest on Total Pension Liability 22,129,483 - 22,129,483 Changes of Assumptions (1,293,579) - (1,293,579) Differences Between Expected and Actual Experience 1,318,613 - 1,318,613 Plan to Plan Resource Movement - (512) 512 Contributions – Employer - 9,323,936 (9,323,936) Contributions – Employees - 2,134,552 (2,134,552) Net Investment Income - 17,363,158 (17,363,158) Benefit Payments, Including Refunds of Employee Contributions (15,629,698) (15,629,698) - Administrative Expense - (325,104) 328,104 Other Miscellaneous Income/(Expense) - (617,378) 617,378 Net Changes 13,036,491 12,248,954 787,537 Balance at June 30, 2018 (Measurement Date)(1) $ 327,073,740 $ 220,879,754 $ 106,193,986 (1) The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fidu ciary self-insurance and OPEB expense. This may differ from the plan assets reported in the funding actuarial valuation report. On June 25, 2012, the Governmental Accounting Standards Board approved GASB Statement No. 68 (“GASB 68”) with respect to pension accounting and financial reporting standards for state and local governments and pension plans. GASB 68 states that, for pensions within the scope of the statement, a cost- sharing employer that does not have a special funding situation is required to recognize a net pension liability, deferred outflows of resources, deferred inflows of resources related to pensions, and pension expense based on its proportionate share of the net pension liability for benefits provided through the pension plan. While the new accounting standards change financial statement reporting requirements, they do not impact funding policies of the pension systems. The audited financial statements of the City for fiscal year 2018-19 reflect the application of the GASB 68. GASB 68 is a change in accounting reporting standards but it does not change the City’s CalPERS plan funding obligations. The following presents the net pension liability of the City’s Miscellaneous Plan and Safety Plan as of the June 30, 2018 measurement date, calculated using the discount rate of 7.15 percent, as well as what the net A-24 pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (6.15 percent) or 1 percentage-point higher (8.15 percent) than the current rate: Discount Rate – 1% (6.15%) Current Discount Rate (7.15%) Discount Rate + 1% (8.15%) Miscellaneous Plan’s Net Pension Liability $ 106,628,983 $ 76,505,177 $ 51,566,615 Safety Plan’s Net Pension Liability 151,151,365 106,193,986 69,322,327 Total Net Pension Liability $ 257,780,348 $ 182,699,163 $ 120,888,942 For the year ended June 30, 2019, the City recognized pension expense as follows: Miscellaneous Safety Total Plans $12,587,621 $17,406,955 $29,994,576 Note that no adjustments have been made for contributions subsequent to the measurement date. At June 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Miscellaneous Plan Contributions Made Subsequent to the Measurement Date $ 6,851,612 $ -- Change in Assumptions 3,220,352 (874,979) Difference Between Expected and Actual Experience 628,106 -- Net Difference Between Projected and Actual Earnings on Pension Plan Investments 422,905 Miscellaneous Plan Total $ 11,122,975 $ (874,979) Safety Plan Contributions Made Subsequent to the Measurement Date $ 10,164,821 -- Difference Between Expected and Actual Experience 7,095,088 (913,115) Change in Assumptions 2,711,451 (152,544) Net Difference Between Projected and Actual Earnings on Pension Plan Investments 684,378 -- Safety Plan Total $ 20,655,738 $ (1,065,659) Totals $ 31,778,713 $ (1,940,638) $17,016,433 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2020. Other amounts reported as deferred outflows or deferred inflows of resources related to pensions will be recognized as pension expense as follows: A-25 Deferred Outflows/(Inflows) of Resources Measurement Period Ended June 30, Miscellaneous Safety Total Plans 2020 $ 5,252,328 $ 9,406,529 $ 14,668,857 2021 99,663 2,680,468 2,780,131 2022 (1,565,708) (2,131,680) (3,697,388) 2023 (389,899) (530,059) (919,958) For additional information with respect to the discount rate, deferred outflows/(inflows) of resources, and recognition of gains and losses, see Note 7 to the City’s audited financial statements for fiscal year 2018- 19 attached hereto as Appendix C. Funded Status. The tables below are derived from the 2019 Report and show the funded status of the Safety Plan and Miscellaneous Plan as of the valuation dates shown. Safety Plan Valuation Date Accrued Liability Market Value of Assets Unfunded Liability Funded Ratio Annual Covered Payroll 06/30/2014 $262,658,350 $195,485,441 $67,172,909 74.4% $17,438,756 06/30/2015 272,709,925 194,898,121 77,811,804 71.5 18,679,533 06/30/2016 292,968,688 191,629,326 101,339,362 65.4 19,645,492 06/30/2017 311,121,026 208,173,300 102,947,726 66.9 21,100,030 06/30/2018 336,135,831 221,056,300 115,079,531 65.8 21,014,770 Miscellaneous Plan Valuation Date Accrued Liability Market Value of Assets Unfunded Liability Funded Ratio Annual Covered Payroll 06/30/2014 $195,184,332 $143,487,656 $51,696,676 73.5% $17,659,528 06/30/2015 201,849,821 142,062,698 59,787,123 70.4 18,331,815 06/30/2016 213,904,611 138,845,967 75,058,644 64.9 21,645,275 06/30/2017 224,239,098 149,630,762 74,608,336 66.7 22,532,802 06/30/2018 241,027,844 157,597,543 83,430,301 65.4 23,738,609 Source: CalPERS’ 2019 Report. CalPERS Plan Actuarial Methods. The staff actuaries at CalPERS prepare annually an actuarial valuation which is typically delivered in the time period from July through October of each year (thus, the actuarial valuation dated July 2019 covered CalPERS’ fiscal year ended June 30, 2018). The actuarial valuations express the City’s required contribution which the City must contribute in the fiscal year immediately following the fiscal year in which the actuarial valuation is prepared (thus, the City’s contribution requirement derived from the actuarial valuation as of June 30, 2018 and shown in the report delivered in July 2019 affects the City’s fiscal year 2020-21 required contribution). CalPERS rules require the City to implement the actuary’s recommended rates. The CalPERS Chief Actuary considers various factors in determining the assumptions to be used in preparing the actuarial report. Demographic assumptions are based on a study of the actual history of retirement, rates of termination/separation of employment, years of life expectancy after retirement, disability, A-26 and other factors. This experience study is generally done once every four years. The most recent experience study was completed in 2017 in connection with the preparation of actuarial recommendations by the CalPERS Chief Actuary as described below. In December 2016, the CalPERS Board approved lowering the funding discount rate to be phased in over three years: for fiscal year 2018-19 to a rate of 7.375 percent; for fiscal year 2019-20 to a rate of 7.25 percent; and for fiscal year 2020-21 to a rate of 7.0 percent. The funding discount rate includes a 15 basis- point reduction for administrative expenses, and the remaining decrease is consistent with the change in the financial reporting discount rate. As noted above, there is an approximately fifteen month lag between the time that CalPERS provides its annual actuarial valuation and the fiscal year in which the required contribution therein impacts the City. On November 18, 2015, the CalPERS Board adopted a Funding Risk Mitigation Policy that seeks to reduce funding risk over time. It establishes a mechanism whereby CalPERS investment performance that significantly outperforms the discount rate triggers adjustments to the discount rate, expected investment return, and strategic asset allocation targets. Reducing the volatility of investment returns is expected to increase the long-term sustainability of CalPERS pension benefits for members. In February 2017, the CalPERS Board revised the Funding Risk Mitigation Policy. The revisions include suspension of the policy until fiscal year 2020-21, and a decrease of the required first excess investment return threshold from 4% to 2%. On February 14, 2018, the CalPERS Board of Administration adopted revisions to its actuarial amortization policy. Major revisions that affect state plans were made to the amortization of investment gains and losses, as well as to actuarial surplus. For the amortization of investment gains and losses, the amortization period was reduced from 30 years to 20 years, and the 5-year direct smoothing process was removed from the end of the amortization period. Amortization of actuarial surplus was eliminated. These policy revisions will be applied to the amortization of investment gains and losses, and actuarial surplus, experienced on or after June 30, 2019. These revisions will affect contributions starting in fiscal year 2020-21. Other Post-Employment Benefits The Retiree Health Plan. For employees hired prior to April 25, 2010, the City provides certain healthcare benefits for employees who retire after attaining age 50 with at least five years of service or disability at any age. For employees hired after April 25, 2010, the City offers a defined contribution post- retirement healthcare plan and contributes 1.5% of salary to such plan. For additional information with respect to the benefits offered under the City’s other post-employment benefit plan (“OPEB”), see Note 9 to the audited financial statements for fiscal year 2018-19 attached hereto as Appendix C. At June 30, 2018, membership consisted of the following: Active Plan Members 388 Inactive Employees or Beneficiaries Currently Receiving Benefit Payments 231 Total 619 Total OPEB Liability. The City participates in the CalPERS California Employer’s Retiree Benefit Trust Program, a prefunding plan trust fund. The City’s total OPEB Liability was measured as of June 30, 2018 using an actuarial valuation as of June 30, 2017. Standard actuarial update procedures were used to project/discount from valuation to measurement dates. For the actuarial assumptions used to determine the City’s total OPEB liability as of June 30, 2018, see Note 9 to the audited financial statements for fiscal year 2018-19 attached hereto as Appendix C. In June 2015, GASB issued Statement No. 75, which became effective for fiscal years beginning after June 15, 2017. The primary objective of Statement No. 75 is to improve accounting and financial reporting by A-27 state and local governments for postemployment benefits other than pensions (i.e. OPEB). Statement No. 75 is also intended to improve information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. Statement No. 75 results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency. More specifically, Statement No. 75 requires the liability of employers to be measured as the portion of the present value of projected benefit payments to be provided to current active and inactive employees that is attributed to those employees’ past periods of service (total OPEB liability), less the amount of the OPEB plan’s fiduciary net position. Statement No. 75 requires the recognition of the total OPEB liability in the Statement of Net Position. As a result of the implementation of GASB Statement No. 75, the City restated its governmental and business-type activities net position in the amounts of $91,263,899 and $12,098,781, respectively. For the year ended June 30, 2019, the City recognized OPEB expense of $5,420,533 and total contributions to the OPEB plan was $4,180,000. The following shows the schedule of changes in the total OPEB liability for the measurement period of July 1, 2017 to June 30, 2018. Increase (Decrease) Total OPEB Liability (a) Plan Fiduciary Net Position (b) Net OPEB Liability/(Asset) (c) = (a) - (b) Balance at June 30, 2017 Measurement Date $ 79,000,000 $ 19,710,000 $ 59,290,000 Changes Recognized for the Measurement Period Service Cost 1,535,000 - 1,535,000 Interest on the Total OPEB Liability 5,325,000 - 5,325,000 Changes in Benefit Terms - - - Difference Between Expected and Actual Experience 91,000 - 91,000 Changes of Assumptions - - - Contributions from the Employer - 4,128,000 (4,128,000) Net Investment Income - 1,566,000 (1,566,000) Benefit Payments (3,326,000) (3,326,000) - Administrative Expenses - (37,000) 37,000 Net Changes during July 1, 2016 to June 30, 2017 3,625,000 2,331,000 1,294,000 Balance at June 30, 2018 Measurement Date $ 82,625,000 $ 22,041,000 $ 60,584,000 Sensitivity to Changes in Discount Rate and Healthcare Cost Rate. The following what the total OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower (5.75 percent) or 1-percentage point higher (7.75 percent) than the current discount rate: Plan’s Total OPEB Liability/(Asset) Discount Rate -1% Current Discount Discount Rate +1 5.57% 6.75% 7.75% $72,219,000 $60,584,000 $51,052,000 The following presents what the total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage point lower than the current healthcare cost trend rates. The current assumed healthcare trend rates are 7.5% for non-Medicare and 6.5% for Medicare. A-28 Plan’s Total OPEB Liability/(Asset) 1% Decrease Trend Rate 1% Increase $49,567,000 $60,584,000 $74,215,000 For additional information with respect to the City’s OPEB plan, see Note 9 to the audited financial statements for fiscal year 2018-19 attached hereto as Appendix C. ECONOMIC AND DEMOGRAPHIC INFORMATION Population The City’s population as of January 1, 2019 was approximately 67,078. This represents an increase of approximately 0.04 percent from January 1, 2018. The following table shows the population for the City, the County and the State of California from 2015 through 2019. POPULATION For Years 2015 through 2019 Year (January 1) City of South San Francisco County of San Mateo State of California 2015 66,819 760,679 38,952,462 2016 66,981 766,649 39,214,803 2017 66,990 769,570 39,504,609 2018 67,054 772,372 39,740,508 2019 67,078 774,485 39,927,315 Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties, and the State, 2011-2019, with 2010 Census Benchmark, Sacramento, California, May 2019. Education K-12 public instruction in the City is provided by South San Francisco Unified School District, which encompasses the City and parts of Daly City and San Bruno. The City is also served by the San Mateo Community College District. Building Activity Residential and nonresidential building activity for 2014 through 2018 for the City is shown in the following tables. NEW HOUSING UNITS BUILDING PERMITS City of South San Francisco For Years 2014 through 2018 2014 2015 2016 2017 2018 Single Family Units 2 2 4 7 13 Multifamily Units 3 35 95 352 161 Total Units 5 37 99 359 174 Source: Construction Industry Research Board and California Homebuilding Foundation. A-29 BUILDING PERMIT VALUATIONS City of South San Francisco (Dollars in Thousands) 2014 2015 2016 2017 2018 Residential New Single Family $ 500 $ 940 $ 1,017 $ 2,702 $ 1,396 New Multifamily 650 6,042 13,539 78,722 3,398 Res. Alt. & Adds 7,485 18,119 10,320 17,287 15,363 Total Residential $ 8,635 25,101 $ 24,876 $ 98,711 $ 20,157 Nonresidential New Commercial $ 117,643 46,621 169,425 $ 450,445 $ 262,381 New Industrial 0 0 0 0 0 New Other(1) 5,186 2,775 2,101 64,666 6,096 Alters. & Adds. 98,864 128,808 185,436 138,482 243,227 Total Non-Residential $ 221,693 $ 178,203 $ 356,962 $ 653,592 $ 511,704 Total All Building $ 230,328 $ 203,305 $ 381,838 $ 752,303 $ 531,861 (1) Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings. Note: “Total All Building” is the sum of Residential and Nonresidential Building Permit Valuations. Totals may not add to sum because of independent rounding. Source: Construction Industry Research Board and California Homebuilding Foundation. Personal Income Personal Income is the income that is received by all persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance. The personal income of an area is the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by the place of residence of the income recipients. The following table summarizes per capita personal income for the City, the County, the State of California and the United States for the years 2010 through 2018. This measure of income is calculated as the personal income of the residents of the area divided by the resident population of the area. A-30 PER CAPITA PERSONAL INCOME(1) City of South San Francisco, County of San Mateo, State of California, and United States 2010-2018 Year City of South San Francisco County of San Mateo California United States 2010 $29,118 $73,805 $43,634 $40,546 2011 30,053 79,903 46,170 42,735 2012 30,446 88,058 48,798 44,599 2013 30,523 87,711 49,277 44,851 2014 30,923 93,765 52,324 47,058 2015 32,744 102,606 55,758 48,978 2016 33,120 107,207 57,739 49,870 2017 35,193 117,389 60,156 51,885 2018 36,092 126,392 63,557 54,446 (1) Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S. Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation). Source: U.S. Department of Commerce, Bureau of Economic Analysis and the City of South San Francisco. A-31 Employment The civilian labor force in the City totaled 82,700 in 2018, a 3.6 percent increase from 2017. For the past five years the unemployment rate in the City and the County has been below the State of California’s rate. The following table summarizes the labor force, employment and unemployment figures over the past five years for the City, the County, the State of California and the nation as a whole. LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT Yearly Average for Years 2014 through 2018 Year and Area Labor Force Employment(1) Unemployment(2) Unemployment Rate (%)(3) 2014 City of South San Francisco 37,200 35,600 1,700 4.5% San Mateo County 426,900 408,900 18,000 4.2 State of California 18,758,400 17,351,300 1,407,100 7.5 United States(4) 155,922,000 146,305,000 9,617,000 6.2 2015 City of South San Francisco 37,700 36,300 1,400 3.6% San Mateo County 434,700 419,800 14,800 3.4 State of California 18,896,500 17,724,800 1,171,700 6.2 United States(4) 157,130,000 148,834,000 8,296,000 5.3 2016 City of South San Francisco 38,200 37,000 1,200 3.2% San Mateo County 442,100 428,700 13,500 3.0 State of California 19,093,700 18,048,800 1,044,800 5.5 United States(4) 159,187,000 151,436,000 7,751,000 4.9 2017 City of South San Francisco 38,500 37,400 1,100 2.9% San Mateo County 446,100 433,900 12,100 2.7 State of California 19,312,000 18,393,100 918,900 4.8 United States(4) 160,320,000 153,337,000 6,982,000 4.4 2018 City of South San Francisco 39,200 38,300 900 2.3% San Mateo County 454,900 444,900 10,000 2.2 State of California 19,398,200 18,582,800 815,400 4.2 United States(4) 162,075,000 155,761,000 6,314,000 3.9 (1) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table. (4) Not strictly comparable with data for prior years. Note: Data is not seasonally adjusted. Source: California Employment Development Department, based on March 2018 benchmark and U.S. Department of Labor, Bureau of Labor Statistics. A-32 The table below summarizes employment by industry in the San Mateo County from 2014 to 2018. Service Providing, Professional and Business Services and Government are the largest employment sectors in the County. AVERAGE ANNUAL INDUSTRY EMPLOYMENT 2014-2018 San Mateo County 2014 2015 2016 2017 2018 Total Farm 1,800 1,800 1,800 1,700 1,400 Total Nonfarm 368,000 375,100 390,500 391,800 403,500 Goods Producing 41,200 42,800 43,500 45,000 45,500 Natural Resources, Mining and Construction 15,700 17,400 18,100 18,900 19,400 Manufacturing 25,500 25,400 25,400 26,100 26,100 Service Providing 326,800 332,400 347,100 346,800 358,000 Trade, Transportation and Utilities 72,300 74,100 76,400 70,800 71,200 Wholesale Trade 11,600 12,200 12,100 12,000 11,800 Retail Trade 34,900 33,700 33,900 33,700 34,100 Transportation, Warehousing and Utilities 27,800 28,200 30,500 25,200 25,200 Information 26,700 27,900 31,600 34,800 39,100 Financial Activities 21,700 21,600 22,500 22,400 23,300 Professional and Business Services 75,200 76,200 81,700 81,200 83,600 Educational and Health Services 43,000 44,100 45,000 47,000 48,500 Leisure and Hospitality 40,900 42,200 42,600 43,600 45,400 Other Services 13,900 14,000 13,900 13,600 13,800 Government 31,200 32,300 33,300 33,300 33,200 Total, All Industries 369,800 376,900 392,300 393,500 404,900 Note: The “Total, All Industries” data is not directly comparable to the employment data found herein. Source: State of California, Employment Development Department, Labor Market Information Division, San Mateo-Carlsbad MSA Annual Average Labor Force and Industry Employment, March 2018 Benchmark. Industry The following tables list the largest private and public employers in the City: MAJOR EMPLOYERS City of South San Francisco 2019 Rank Name of Business Employees Type of Business 1. Genentech Inc. 8,632 Pharmaceutical 2. Costco Wholesale (3 stores) 834 Retail 3. Life Technologies Corporation 622 Biotechnology 4. Amgen San Francisco LLC 500 Biotechnology/Pharmaceutical 5. MRL San Francisco LLC (2 locations) 449 Biotechnology 6. Successfactors, Inc. 352 Software Development 7. ZS Associates, Inc. 300 Consultant Management 8. Amazon.com Services, Inc. 291 Online Retailer 9. Fluidigm Corporation 223 Biotechnology 10. American Etc Inc./Royal Laundry 211 Commercial Laundry Services Source: City of South San Francisco, Comprehensive Annual Financial Report, Fiscal Year Ending June 30, 2019. A-33 Commercial Activity The following table summarizes the annual volume of taxable transactions within the City for the years 2014 through 2018. TABLE OF TOTAL TAXABLE TRANSACTIONS City of South San Francisco For the Years 2014 Through 2018 (Dollars in Thousands) Year Permits Taxable Transactions 2014 1,560 $1,254,175 2015 1,692 1,309,289 2016 1,704 1,335,571 2017 1,702 1,440,756 2018 1,881 1,547,221 Source: “Taxable Sales in California (Sales & Use Tax)” - California State Board of Equalization for 2014. Taxable Sales in California, California Department of Tax and Fee Administration for 2015-2018. Transportation The City is accessible via various modes of transportation. Several Bay Area Rapid Transit (BART) stations are located in the City, providing rapid transit service to other cities in the San Francisco Bay area. The City is linked by Caltrain, a commuter rail, which runs from the San Jose area through the City and to the City of San Francisco. A ferry service runs from the Oyster Point Marina in the City to the east San Francisco Bay (cities of Oakland and Alameda). The City is intersected by two major freeways – U.S. Route 101 and Interstate 280. The City is located directly to the north of the San Francisco International Airport (SFO). B-1 APPENDIX B SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS C-1 APPENDIX C AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE YEAR ENDED JUNE 30, 2019 D-1 APPENDIX D PROPOSED FORM OF BOND COUNSEL OPINION [Closing Date] City of South San Francisco Public Facilities Financing Authority South San Francisco, California Re: $_________ City of South San Francisco Public Facilities Financing Authority (Police Station Project) Lease Revenue Bonds, 2020A Ladies and Gentlemen: We have acted as bond counsel to the City of South San Francisco Public Facilities Financing Authority (the “Authority”) in connection with the issuance by the Authority of $_________ City of South San Francisco Public Facilities Financing Authority (Police Station Project) Lease Revenue Bonds, Series 2020A (the “Bonds”), pursuant to the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Bond Law”), and pursuant to an Indenture, dated as of March 1, 2020 (the “Indenture”), by and among the Authority, the City of South San Francisco (the “City”) and The Bank of New York Mellon Trust Company, N.A., as Trustee. The Bonds will be principally secured by lease payments to be made by the City pursuant to a Lease Agreement, dated as of March 1, 2020 (the “Lease”), by and between the Authority and the City. We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. This opinion is based on current statutory and constitutional law and published court decisions as of the date hereof. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed thereto in the Indenture. As to questions of fact material to our opinion, we have relied upon representations of the Authority contained in the Indenture and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation. Based upon the foregoing we are of the opinion, under existing law, as follows: 1. The Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State of California with the full power to enter into the Indenture and the Lease, to perform the agreements on its part contained therein and to issue the Bonds. 2. The Indenture and the Lease have each been duly authorized and approved by the Authority and constitute the valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights generally, by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases, and by the limitations on legal remedies against public agencies in the State of California. The Indenture creates a valid pledge of the Base Rental Payments and other moneys pledged under the Indenture, subject to the provisions of the Indenture. 3. The Indenture and the Lease have each been duly authorized and approved by the City and constitute the valid and binding obligations of the City enforceable against the City in accordance with their respective terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights generally, D-2 by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases, and by the limitations on legal remedies against public agencies in the State of California. 4. The Bonds have been duly and validly authorized by the Authority and are legal, valid and binding limited obligations of the Authority, enforceable in accordance with their terms and the terms of the Indenture, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights generally, by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases, and by the limitations on legal remedies against public agencies in the State of California. The Bonds are limited obligations of the Authority payable solely from the Base Rental Payments and other moneys pledged under the Indenture as provided in the Indenture, but are not a debt of the City, the State of California or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and, neither the faith and credit nor the taxing power of the City, the State of California, or any of its political subdivisions is pledged for the payment thereof. The Authority has no taxing power. 5. Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. 6. Interest (and original issue discount) on the Bonds is exempt from personal income taxes imposed in the State of California. 7. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bond Owner will increase the Bond Owner’s basis in the applicable Bond. Original issue discount that accrues to the Bond Owner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals (as described in paragraph 5 above) and is exempt from State of California personal income tax. 8. The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the owner. The opinions expressed in paragraphs (5) and (7) above as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Bonds are subject to the condition that the City complies with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City has covenanted to comply with all such requirements. Except as set forth in paragraphs (5), (6), (7) and (8) above, we express no opinion as to any tax consequences related to the Bonds. Certain requirements and procedures contained or referred to in the Indenture, the Lease and Tax Certificate may be changed, and certain actions may be taken, under the circumstances and subject to the terms D-3 and conditions set forth in the Indenture, the Lease and Tax Certificate, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax-exempt obligations. We express no opinion as to the effect on the exclusion of interest on the Bonds from gross income for federal income tax purposes on and after the date on which any such change occurs or action is taken upon the advice or approval of counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation. Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction. The opinions expressed herein are based upon an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the foregoing opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or do occur (or do not occur). Our engagement with respect to the Bonds terminates upon their issuance, and we disclaim any obligation to update the matters set forth herein. We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, nor do we express any opinion with respect to the state or quality of title to any of the real or personal property described in the Indenture or the Lease, or the accuracy or sufficiency of the description of any such property contained therein. We expressly disclaim any duty to advise the owners of the Bonds with respect to the matters contained in the Official Statement and any other offering material relating to the Bonds. We have not made or undertaken to make an investigation of the state of title to any of the real property described in the Lease or of the accuracy or sufficiency of the description of such property contained therein, and we express no opinion with respect to such matters. Respectfully submitted, E-4 APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT F-1 APPENDIX F BOOK-ENTRY ONLY SYSTEM The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Series 2020A Bonds, payment of principal, premium, if any, accreted value and interest on the Series 2020A Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Series 2020A Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. 1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Series 2020A Bonds (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each maturity of the Securities in the aggregate principal amount of such maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. 2. DTC, the world’s largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Bankin g Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This elimi nates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information a bout DTC can be found at www.dtcc.com and www.dtc.org. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual p urchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an F-2 authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of th e actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmissio n to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Author ity as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Principal, redemption price and interest payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the Authority, su bject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. If applicable, a Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to tender/remarketing agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to tender/remarketing agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Securities to tender/remarketing agent’s DTC account. 10. DTC may discontinue providing its services as depository with respe ct to the Securities at any time by giving reasonable notice to the Authority or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. The Authority may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. Presentation to City Council South San Francisco Public Facilities Financing Authority (Police Station Project) Lease Revenue Bonds, Series 2020A Janet Salisbury 12 FEBRUARY 2020 Funding the Civic Campus 2 Description Pre-Construction Phase I: Police Station Phase II: Library, P&R, Council TOTAL Estimated Cost $ 34,000,000 $ 56,800,000 $ 120,000,000 $ 210,800,000 Sources of Funds Monies Already Spent (6/30/2019)14,313,947 14,313,947 Bond Proceeds 53,800,000 61,200,000 115,000,000 Infrastructure Reserves*22,400,000 22,400,000 Public Safety Impact Fee 1,000,000 1,000,000 PEG Funds 1,031,883 1,031,883 Measure W Cash (6/30/2023)**19,686,053 24,711,420 44,397,473 Asset Seizure 2,000,000 2,000,000 Childcare/Library Improvement 474,032 474,032 Library –Project READ 254,256 254,256 Fundraising / Future GF Surplus 9,928,409 9,928,209 TOTAL $ 34,000,000 $ 56,800,000 $ 120,000,000 $ 210,800,000 * Includes $10.9 million requested appropriations from FY2018-2019 General Fund surplus. ** Assumes Measure W proceeds of $12.6 million in FY2019-20 with a 2% compounding growth rate through 6/30/2023 Series 2020A -Lease Revenue Bonds ▪City of South San Francisco cannot issue bonds payable from its General Fund without a two-thirds vote of the electorate ▪However, the City does have general contracting powers that allow it to enter into a long-term lease of real property for its use ▪To finance new public facilities, general law cities in CA can use the Marks-Roos Local Bond Pooling Act of 1985 (JPA Act), which allows the City to form a JPA to act as the issuer of bonds on the City’s behalf. –City South San Francisco Public Facilities Financing Authority (SSF JPA) approved by Council on Dec. 11, 2019 –SSF JPA has power to issue bonds without a vote of the electorate ▪Real Property pledged for financing: –Orange Memorial Park –Miller Street Garage ▪Asset seizure of real property is highly unlikely 3 Series 2020A Financing Team 4 Role Firm Issuer SSF Public Facilities Financing Authority Municipal Advisor Sperry Capital Bond Counsel / Disclosure Counsel Stradling Yocca Carlson & Rauth Underwriter Stifel (Senior Manager) Citi / Raymond James (Co-Managers) Underwriter’s Counsel Quint & Thimmig Bond Trustee / Paying Agent BNY Mellon Credit Rating Agency Standard & Poors Series 2020A Rated AA+ ▪Credit rating agencies provide independent appraisal of the credit quality and likelihood of timely repayment of a bond issue ▪Higher the Credit Rating = Lower the Interest Rate (Borrowing Cost) ▪Lease Revenue Bonds generally one notch lower than issuer credit rating = AAA ▪Credit Considerations –Overall financial health of City –Measure W sales tax revenue –Future growth projections and stress tests on financial projections –Pension/OPEB liability 5 AAA AA+AA AA-A+A A-BBB+BBB BBB- Series 2020A –Required Documents ▪Ground Lease Agreement between City and Authority –City agrees to lease Miller Parking Garage and Orange Memorial Park (“Properties”) to Authority ▪Lease Agreement between City and Authority –Authority agrees to lease Properties back to City in exchange for “rental payments” ▪Assignment Agreement between Authority and Trustee (BNY Mellon) –Authority assigns certain rights under the Lease Agreement to BNY Mellon to receive rental payments ▪Indenture between City, Authority and Trustee –Governs key terms of the 2020A Bonds –Repayment dates, redemption terms, interest rate, rights and remedies, etc. ▪Bond Purchase Agreement between City, Authority and Underwriters (Stifel, City, Raymond James) –Governs key terms of the 2020A Bonds ▪Disclosure Document: Official Statement 6 7 Key Milestones -2020 February 12 –Council Approval of Legal Documents / POSFebruary 12 –JPA Approval of Legal Documents / POS Council / JPA Approval March 11 –Bond proceeds received by City CLOSING February 14 –POS circulated to Investors February 26 –Pricing of Bonds Marketing / Pricing of Bonds January 21 –Rating Agency Presentation to S&P February 6 –Ratings Released Ratings Process Good Faith Estimates ▪Principal (Par) Amount = $45.6 million –Premium Bond Structure ▪True Interest Cost = 3.13% (includes 0.50% cushion) ▪Cost of Issuance = $300,000 ▪Average Annual Debt Service = $3.1 million (Total debt service = $81.1 million) 8 QUESTIONS 9 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-102 Agenda Date:2/12/2020 Version:1 Item #:5a. Resolution of the City of South San Francisco Authorizing the Execution and Delivery of a Ground Lease, Lease Agreement,Indenture,Continuing Disclosure Agreement and Bond Purchase Agreement in Connection with the Issuance of the City of South San Francisco Public Facilities Financing Authority (Police Station Project)Lease Revenue Bonds,Series 2020A,Approving the Issuance of Such Bonds in an Aggregate Principal Amount of Not to Exceed $65,000,000 Authorizing the Distribution of an Official Statement in Connection with the Offering and Sale of such Bonds and Authorizing the Execution of Necessary Documents and Certificates and Related Actions. WHEREAS,the City of South San Francisco,California (the “City”)is a municipal corporation and general law city duly organized and existing under and pursuant to the Constitution and laws of the State of California (the “State”); and WHEREAS,the City desires to finance the costs of the acquisition,construction and/or installation of a new City police station and related improvements, facilities and equipment (the “Project”); and WHEREAS,the South San Francisco Public Facilities Financing Authority (the “Authority”)and the City have determined that it would be in the best interests of the City and residents of the City to authorize the preparation,sale and delivery of the “City of South San Francisco Public Facilities Financing Authority (Police Station Project)Lease Revenue Bonds,Series 2020A”(the “Bonds”)for the purpose of financing the Project; and WHEREAS,in order to facilitate the issuance of the Bonds,the City and the Authority desire to enter into a Ground Lease between the City and the Authority (the “Ground Lease”)pursuant to which the City will lease certain real property (which real property shall consist of assets generally described as the Miller Parking Garage (excluding the commercial office space therein which has been sold by the City)and Orange Memorial Park)(“Leased Assets”)to the Authority,and a Lease Agreement between the City and the Authority (the “Lease Agreement”),pursuant to which the City will lease the Leased Assets back from the Authority,and pay certain Base Rental Payments (as defined in the Lease Agreement),which are pledged to the owners of the Bonds by the Authority pursuant to an Indenture by and among The Bank of New York Mellon Trust Company, N.A. (the “Trustee”), the City and the Authority (the “Indenture”); and WHEREAS,the Bonds will be issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985,City of South San Francisco Printed on 5/4/2020Page 1 of 4 powered by Legistar™ File #:20-102 Agenda Date:2/12/2020 Version:1 Item #:5a. WHEREAS,the Bonds will be issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code (the “Act”); and WHEREAS, the City and the Authority desire to provide for the negotiated sale of the Bonds; and WHEREAS,the City and the Authority have selected the underwriters named in the Bond Purchase Agreement (as defined below),with Stifel Nicolaus &Company,Incorporated,as representative of such underwriters (together,the “Underwriters”),of the Bonds and,in connection therewith,to purchase the Bonds from the Authority pursuant to a Bond Purchase Agreement (the “Bond Purchase Agreement”); and WHEREAS,Rule 15c2-12 promulgated under the Securities Exchange Act of 1934,as amended (“Rule 15c2- 12”),requires that,in order to be able to purchase or sell the Bonds,the Underwriters thereof must have reasonably determined that the City has undertaken in a written agreement or contract for the benefit of the holders of the Bonds to provide disclosure of certain financial information and certain events on an ongoing basis; and WHEREAS,in order to cause such requirement to be satisfied,the City desires to enter into a Continuing Disclosure Agreement (the “Continuing Disclosure Agreement”) with a dissemination agent; and WHEREAS,a form of the Preliminary Official Statement with respect to the Bonds (the “Preliminary Official Statement”) has been prepared; and WHEREAS,the City is a member of the Authority and the Project is located within the boundaries of the City; and WHEREAS,the City has prior to the consideration of this resolution held a public hearing on the financing of the Project with the proceeds of the issuance of the Bonds in accordance with Section 6586.5 of the Act,which hearing was held at 33 Arroyo Drive, South San Francisco, California on February 12, 2020; and WHEREAS,notice of such hearing was published once in The Examiner,a newspaper of general circulation in the City, at least five days prior to the hearing (in accordance with Section 6586.5 of the Act); and WHEREAS,the City Council has been presented with the form of each document referred to herein relating to the financing contemplated hereby,and the City Council desires to authorize and direct the execution of such documents and the consummation of such financing; and WHEREAS,all acts,conditions and things required by the laws of the State of California to exist,to have happened and to have been performed precedent to and in connection with the consummation of such financing authorized hereby do exist,have happened and have been performed in regular and due time,form and manner as required by law,and the City is now duly authorized and empowered,pursuant to each and every requirement of law,to consummate such financing for the purpose,in the manner and upon the terms herein provided. NOW, THEREFORE, the City of South San Francisco, does hereby resolve as follows: 1.Each of the above recitals is true and correct.Following a duly noticed and conducted public hearing,the City Council hereby finds and determines that there are significant public benefits to the citizens of the City through the use of the Act to assist the City with respect to the subject City of South San Francisco Printed on 5/4/2020Page 2 of 4 powered by Legistar™ File #:20-102 Agenda Date:2/12/2020 Version:1 Item #:5a. the citizens of the City through the use of the Act to assist the City with respect to the subject matter hereof through the approval of the issuance of the Bonds and otherwise hereunder within the meaning of Section 6586(a)-(d),inclusive,of the Act,in that the issuance of the Bonds and related transactions will result in more efficient delivery of local agency services to residential and commercial development. 2.The forms of the Ground Lease and Lease Agreement,on file with the City Clerk,are hereby approved,and the Mayor of the City,or such other member of the City Council as the Mayor may designate,the City Manager,the Assistant City Manager (or any interim Assistant City Manager),and the Director of Finance,and any designee thereof (the “Authorized Officers”), are each hereby authorized and directed,for and in the name and on behalf of the City,to execute and deliver the Ground Lease and Lease Agreement in substantially said forms,with such changes,insertions and omissions therein as the Authorized Officer executing the same may require or approve,such approval to be conclusively evidenced by the execution and delivery thereof;provided,however,that the term of the Ground Lease and Lease Agreement shall terminate no later than June 1,2046 (provided that such term may be extended as provided therein)and the true interest cost applicable to the interest components of the Base Rental Payments shall not exceed 5.00% per annum. 3.The form of the Indenture,on file with the City Clerk,is hereby approved,and the Authorized Officers are each hereby authorized and directed,for and in the name and on behalf of the City, to execute and deliver the Indenture in substantially said form,with such changes,insertions and omissions therein as the Authorized Officer executing the same may require or approve,such approval to be conclusively evidenced by the execution and delivery thereof;provided,however, that the aggregate amount of the Bonds shall not exceed $65,000,000,the final maturity date of the Bonds shall be no later than June 1,2046 and the true interest cost applicable to the Bonds shall not exceed 5.00%per annum,and,provided,further,that such changes,insertions and omissions shall be consistent with the terms of the Bonds established at negotiated sale pursuant to the Bond Purchase Agreement. 4.The Bond Purchase Agreement,on file with the City Clerk,is hereby approved and the Authorized Officers are,and each of them is,hereby authorized and directed,for and in the name of the City,to execute and deliver the acceptance thereof set forth in the Bond Purchase Agreement,with such changes,insertions and omissions as the Authorized Officer executing the same may require or approve,such requirement or approval to be conclusively evidenced by the execution of the Bond Purchase Agreement by such Authorized Officer;provided,however,that such changes,insertions and omissions shall not result in an aggregate underwriters’discount in excess of 0.40%of the aggregate principal amount of the Bonds (not including any original issue discount or premium). 5.The issuance of not to exceed $65,000,000 aggregate principal amount of the Bonds,in the principal amounts,bearing interest at the rates and maturing on the dates as specified in the Indenture as finally executed, is hereby approved. 6.The form of the Preliminary Official Statement,on file with the City Clerk,with such changes, insertions and omissions therein as may be approved by an Authorized Officer,is hereby approved,and the use of the Preliminary Official Statement in connection with the offering and sale of the Bonds is hereby authorized and approved.The Authorized Officers are each hereby City of South San Francisco Printed on 5/4/2020Page 3 of 4 powered by Legistar™ File #:20-102 Agenda Date:2/12/2020 Version:1 Item #:5a. sale of the Bonds is hereby authorized and approved.The Authorized Officers are each hereby authorized to certify on behalf of the City that the Preliminary Official Statement is deemed final as of its date,within the meaning of Rule 15c2-12 (except for the omission of certain final pricing, rating and related information as permitted by Rule 15c2-12). 7.The preparation and delivery of an Official Statement,and its use in connection with the offering and sale of the Bonds,is hereby authorized and approved.The Official Statement shall be in substantially the form of the Preliminary Official Statement with such changes,insertions and omissions as may be approved by an Authorized Officer,such approval to be conclusively evidenced by the execution and delivery thereof.The Authorized Officers are each hereby authorized and directed,for and in the name of and on behalf of the City,to execute the final Official Statement and any amendment or supplement thereto for and in the name and on behalf of the City. 8.The form of Continuing Disclosure Agreement,on file with the City Clerk,is hereby approved, and the Authorized Officers are each hereby authorized and directed,for and in the name and on behalf of the City,to enter into the Continuing Disclosure Agreement with Willdan Financial Services,as dissemination agent,or another third party,as selected by an Authorized Officer,in substantially said form,with such changes,insertions and omissions therein as the Authorized Officer executing the same may require or approve,such approval to be conclusively evidenced to the execution and delivery thereof. 9.The officers,employees and agents of the City are hereby authorized and directed,jointly and severally,to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to carry out,give effect to and comply with the terms and intent of this Resolution,including,but not limited to,adding property to,substituting property for or removing property from the Leased Assets.All actions heretofore taken by the officers,employees and agents of the City with respect to the transactions set forth above are hereby approved, confirmed and ratified. 10.In accordance with Government Code Section 5852.1,there has been presented to this City Council in the Staff Report accompanying this Resolution certain good faith estimates provided to the City by its municipal advisor with respect to the Bonds.The City Council hereby finds that the requirements of Section 5852.1 have been satisfied. 11.This resolution shall take effect immediately upon its passage. ***** City of South San Francisco Printed on 5/4/2020Page 4 of 4 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-23 Agenda Date:2/12/2020 Version:1 Item #:6. Report regarding an Ordinance approving the First Amendment to the Second Amended and Restated Development Agreement to the Gateway Business Park Master Plan Project between the City of South San Francisco and BMR-700 Gateway LP,BMR-750,800,850 Gateway LP,BMR-900 Gateway LP,and BMR- 1000 Gateway LP to make minor modifications to the previously approved Development Agreement,and determining that no subsequent environmental document is necessary pursuant to the criteria of Section 15162 of the California Environmental Quality Act Guidelines.(Billy Gross, Senior Planner) RECOMMENDATION Staff recommends that the City Council follow the recommendation of the Planning Commission and introduce an Ordinance approving the First Amendment to the Second Amended and Restated Development Agreement (DAA19-0003)to the Gateway Business Park Master Plan Project between the City of South San Francisco and between BMR-700 Gateway LP,BMR-750,800,850 Gateway LP,BMR-900 Gateway LP,and BMR-1000 Gateway LP to make minor modifications to amend provisions relating to childcare facilities within the development project,and waive further reading,and determining that the Project continues to comply with and be subject to a previously adopted EIR and Addendum,and no subsequent environmental document would be necessary pursuant to the criteria of Section 15162 of the California Environmental Quality Act Guidelines. BACKGROUND/DISCUSSION Overview In February 2010,the City Council approved a General Plan Amendment,Zoning Ordinance Amendment, Design Review,Transportation Demand Management (TDM)Plan,Development Agreement (DA)and Environmental Impact Report (EIR)to facilitate construction of an approximately 1.23 million square foot office/R&D campus to incrementally replace single story buildings that were built in the late 1980s and early 1990s. In April 2013,the City Council approved modifications to the Master Plan,Phase I Precise Plan,TDM Plan and First Amended and Restated Development Agreement (First Amended DA),to allow for a revised phasing plan and modifications to the interior circulation and building designs.The shell and core of the Phase I Precise Plan project has been completed and tenant improvements for both spaces are currently under construction. Previous Development Agreements As part of the 2010 Project approvals,the City and the prior developer negotiated a Development Agreement to clarify and require several Project features and mitigation measures including transportation impact fees,public improvements in the East of 101 Area,Fire Department obligations,phasing,provisions for childcare,park in- lieu fees, and TDM reporting and monitoring requirements. The First Amended DA,approved in 2013,extended the expiration date to 2025,incorporated the Public Safety Impact Fee and Park-in-Lieu Fee,and also included a number of non-substantive changes to reflect the current parties,update the applicable municipal code citations,and adjust Project timelines.Subsequent to the First Amended DA,BMR-Gateway/Oyster LLC gave notice to the City of transfers and assignments of the property to four affiliate entities that are under common control:BMR-700 Gateway LP;BMR-750,800 and 850City of South San Francisco Printed on 2/6/2020Page 1 of 5 powered by Legistar™ File #:20-23 Agenda Date:2/12/2020 Version:1 Item #:6. to four affiliate entities that are under common control:BMR-700 Gateway LP;BMR-750,800 and 850 Gateway LP; BMR-900 Gateway LP; and BMR-1000 Gateway LP. The Second Amended and Restated Development Agreement (Second Amended and Restated DA),approved in 2018,reflected the substitution of new owners for each of the four separate parcels,referenced previous and potential future lot line adjustments,clarified that DA obligations are to be applied separately to each phase, and clarified the childcare obligation,as that obligation cannot be applied to each phase separately.The Second Amended and Restated DA is attached to this staff report (Attachment 1). First Amendment to the Second Amended and Restated Development Agreement The City and the applicant have negotiated a First Amendment to the Second Amended and Restated DA, which would reflect the following modification related to the replacement childcare obligation. Replacement Childcare Obligation The Second Amended and Restated DA provides three separate options for the provision of childcare for the Project. 12(b)(1)-In basic terms,once 750,000 square feet of gross floor area within the Project is occupied,the Owners of Phases 2,3,and 4 would either reopen the childcare facility at 850 Gateway Blvd to serve at least 100 children,or have ready for occupancy a childcare facility designed to accommodate a minimum of 100 children within the Project or within one mile of the Project. 12(b)(2)-The second option states that if new construction does not exceed 650,000 square feet,then the Owners of Phases 2,3 and 4 may alternatively meet this requirement by providing a one dollar per square foot childcare in-lieu fee for the net new construction that has occurred at the end of 2022.The in-lieu fee calculation is subject to annual cost adjustments, and the current fee amount would be $1.22. 12(b)(3)-The third option provides that if the Owners of Phases 2,3 and 4 have failed to construct a new childcare facility in accordance with 12(b)(1),or failed to pay the in-lieu fee in accordance with 12 (b)(2),then Owners shall instead pay a fee equal to the City’s estimated reasonable costs,including all costs associated with site acquisition (including,if necessary,eminent domain),environmental review, permitting,and all other expenses and fees,including reasonable attorney’s fees,required to construct a childcare facility of equivalent size and quality as described in 12(b)(1). The applicants now propose to substitute payment of a fee that will enable the City to build a childcare facility in lieu of having the applicants construct or open a replacement childcare facility on or within one mile of the project site and to direct a portion of the payment to other public projects.The First Amendment to the Second Amended and Restated DA would require the applicants to make in lieu payments totaling $7,500,000,as follows: To enable City to provide a childcare facility comparable to the former childcare facility located at 850 Gateway Boulevard,envisioned to serve 80 to 100 children,the Owners of Phases 2,3,and 4 collectively shall pay to the City (i)one million dollars ($1,000,000.00)within 30 days of the First Amendment Effective Date and (ii)six million five hundred thousand dollars ($6,500,000.00)prior to City’s issuance of a temporary certificate of occupancy for Phase 2.The Parties agree that these payments satisfy Owners’childcare facility obligations in light of the present value of the funds to the City for other public projects and the potential renovation of an existing building to provide a space for a childcare facility that could serve up to 100 children.Use of the funds is not limited to any specific City of South San Francisco Printed on 2/6/2020Page 2 of 5 powered by Legistar™ File #:20-23 Agenda Date:2/12/2020 Version:1 Item #:6. a childcare facility that could serve up to 100 children.Use of the funds is not limited to any specific potential project,and the City may use the first one million dollars ($1,000,000)for other public projects and the balance of funds for the construction of any childcare facility,including all costs associated with site acquisition (including,if necessary,eminent domain),environmental review, permitting,and all other expenses and fees,including reasonable attorneys’fees.Compliance with this Section 12(b)shall be deemed to be compliance with condition of approval A-16.b.The “First Amendment Effective Date”is defined as the date that the ordinance approving the First Amendment to this Agreement took effect. The $7.5 million payment was an amount developed through negotiations between the Developer and City staff, taking into account several factors: ·The Developer estimated that the cost the private sector would expend to build a new 8,000 sq.ft. childcare facility in South San Francisco would be approximately $625 per square foot,or $5 million total. ·Staff estimated that the cost the private sector would expend to build a new 8,000 sq.ft.childcare facility would be approximately $8 million,including land acquisition,construction,outdoor play area, parking, site work - but excluding operating costs. ·The City recently commissioned an architectural analysis of converting the Main Library (840 W. Orange)to a childcare facility,after the main library is relocated to the new Civic Community Campus. The study looked at several options and provided a detailed line-item cost estimate for two scenarios: (a)rehab of the existing building into a 20,000 sq.ft.facility that would accommodate about 80 children was estimated to cost about $7,735,000;and (b)demolishing the existing building and constructing a new 44,000 sq. ft. childcare facility serving 280 children was estimated to cost $37,133,000. The City Council would determine,at a later date,how these in-lieu payments would be spent.There is no obligation to return any excess funds to the applicants should the City not expend all funds in construction of a childcare facility. The proposed First Amendment to the Second Amended and Restated DA is included as Attachment 1 to the draft City Council Ordinance,which is attached to the accompanying Resolution as Exhibit A.Note that following a recommendation by the Planning Commission,the First Amendment to the Second Amended and Restated DA will be considered by the City Council through adoption of an Ordinance. GENERAL PLAN CONFORMITY AND ZONING CONSISTENCY ANALYSIS The Project site is located in the Gateway Specific Plan District and is part of the “East of 101”Planning Sub- Area as defined by the City of South San Francisco’s General Plan.The site’s General Plan designation is Business Commercial. The Project remains consistent with the guiding and implementing policies in the General Plan as it has been designed to promote campus-style uses,such as biotechnology,high-technology and research and development uses.The site layout and overall architecture would help shape the urban character of the East of 101 Area.The First Amendment to the Second Amended and Restated DA will not result in any substantive changes,and the overall project will remain consistent with the intent and purpose of the Gateway Specific Plan District and comply with all development standards of the District. ENVIRONMENTAL REVIEW City of South San Francisco Printed on 2/6/2020Page 3 of 5 powered by Legistar™ File #:20-23 Agenda Date:2/12/2020 Version:1 Item #:6. Potential environmental impacts for the Gateway Business Park Master Plan Project were analyzed by the Gateway Business Park Master Plan EIR (State Clearinghouse #2008062059).Upon the unanimous recommendation of the Planning Commission,the City Council certified the EIR on February 10,2010,via Resolution No.18-2010.A Mitigation Monitoring Program was included as an appendix to the certified EIR. On February 10,2010,the City Council also approved a Statement of Overriding Considerations that evaluated the benefits of the Project against certain unavoidable impacts related to air quality,noise,and transportation for which no feasible mitigation exists.On May 8,2013,the City Council approved an Addendum to the EIR that made additional findings related to the modifications to the Master Plan,TDM Plan,Precise Plan,and First Amended Development Agreement.The Addendum was accompanied by a Mitigation Monitoring and Reporting Program. The Project continues to be subject to the previously-adopted EIR and Addendum.The project setting has not significantly changed since the adoption of the environmental documents.Surrounding properties have either remained undeveloped or have developed in accordance with the City of South San Francisco General Plan and Gateway Specific Plan consistent with the General Plan and General Plan EIR.No significant new information has arisen since reliance upon the Addendum on May 8,2013.The First Amendment to the Second Amended and Restated DA makes minor changes related to the provision of childcare facilities.These project changes do not involve any physical changes in the environment and therefore will not cause any new or more adverse significant impacts on the environment.Accordingly,based on the foregoing and based on CEQA Guidelines Section 15162,no supplemental or subsequent EIR is required,and all mitigation measures,impact findings, environmental conclusions and overriding considerations remain applicable to the Project. PLANNING COMMISSION On January 16,2020,the Planning Commission held a public hearing,reviewed the proposed First Amendment to the Second Amended and Restated DA,and voted unanimously to recommend that the City Council approve the proposed revisions.The Planning Commission resolution and draft minutes of the Commission meeting are attached to this staff report. CONCLUSION The proposed First Amendment to the Second Amended and Restated DA is consistent with the originally entitled project in 2010 and the revised project in 2013.The amendment it embodies is largely technical,and the agreement creates more flexibility for the City to determine what childcare facilities will best serve its residents,where they should be located,and how the funds should be directed.There are no new or increased environmental impacts that would occur as a result of the proposed First Amendment to the Second Amended and Restated DA. Accordingly,staff recommends that the City Council follow the recommendation of the Planning Commission to conduct a public hearing and introduce an Ordinance approving the First Amendment to the Second Amended and Restated DA (DAA19-0003), and waive further reading. ATTACHMENTS 1.Second Amended and Restated Development Agreement 2.Planning Commission Documents City of South San Francisco Printed on 2/6/2020Page 4 of 5 powered by Legistar™ File #:20-23 Agenda Date:2/12/2020 Version:1 Item #:6. a.Draft Minutes of January 16, 2020 Planning Commission Meeting b.Resolution 2850-2020 - Amended DA Resolution (no attachments) ASSOCIATIONS 1.Draft Ordinance A.Exhibit A- First Amendment to the Second Amended and Restated Development Agreement City of South San Francisco Printed on 2/6/2020Page 5 of 5 powered by Legistar™ File Number: 18-603 City of South San Francisco City Council Ordinance: ORD 1559-2018 P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA Enactment Number: ORD 1559-2018 ORDINANCE ADOP TING A SECOND AMENDED AND RESTATED DEVELOPMENT AGREEMENT (DAA18-001) BETWEEN THE CI TY OF SOUTH SAN FRANCISCO AND BE TWEEN BMR-700 GATEWAY LP, BMR-750, 800, 850 GATEWAY LP, BMR-900 GATEWAY LP, AND BMR-1000 GATEWAY LP FOR THE GATEWAY BUSINESS PARK MAS TER PLAN PROJEC T TO MAKE MINOR MODIFICATIONS TO AMEND AND RESTATE THE RIGH TS AND OBLIGATI ONS RELATING TO THE DEVELOPMENT OF THE GATEWAY BUSINESS PARK MASTER PLAN PROJEC T. WHEREAS, BMR -Gateway/Oyster LP ('�Owner" or "Applicant") received entitlements for the phased removal and replacement of existing buildings on the 22 .6-acre project site and construction of five to six new buildings and two to four par.king structures, in five phases, to be located at the comer of Gateway and Oyster Point Boulevards (700, 750, 800, 850, 900, and 1000 Gateway Boulevard), in the Gateway Specific Plan Area ("Gateway Business Park Master Plan Project" or "Project''); and, WHEREAS, on February 10, 2010, after conducting all proceedings and making all findings necessary for the valid adoption and execution of a development agreement for the Property in accordance with Government Code Sections 65864 through 65869.5, the California Environmental Quality Act ("CEQA''), and Chapter 19.60 of the Municipal Code, the City Council adopted Ordinance No. 1423-2010, approving and adopting a development agreement for the property at 700-1000 Gateway Boulevard ("Property"); and, WHEREAS, on May 8, 2013, the City Council adopted Ordinance No, 1471-2013 concerning a Firsi Amended and Restated Develop ment Agreement between City and Applicant ("First Amended DA"); and, WHEREAS, Applicant submitted an application requesting a Second Amended and Restated Development Agreement to allow for minor modifications to the agreement, including acknowledgement of the transfer and assignment of the separate parcels to the respective affiliates, acknowledgement of lot line adjustment between Phases 1 and 2, and confirmation that each property owner holds the compliance burdens, obligations, and responsibilities for its respective parcel of property under the Second Amended and Restated Development Agreement; and, WHEREAS, the City Council certified the 2009 Environmental Impact Report ("2009 EJR") on February 10, 2010 in accordance with the provision of the California Environmental Quality Act (Public Resources Code, §§ 21000, et seq., "CEQA") and CEQA Guidelines, which analyzed the potential environmental impacts of the Project; and, WHEREAS. the modifications contemplated in the Second Amended and Restated Development City of South San Francisco Page 1 Attachment 1 File Number. 18 -603 Enactment Number: ORD 1559 -2018 Agreement are minor in nature, the approval of which would not result in any new significant environmental effects or a substantial increase in the severity of any previously identified effects beyond those disclosed and analyzed in the 2009 EIR certified by City Council, nor does the Second Amended and Restated Development Agreement constitute a change in the Project or change in circumstances that would require additional environmental review; and, WHEREAS, on May 17, 2018 the Planning Commission for the City of South San Francisco held a lawfully noticed public hearing to solicit public comment and consider the Second Amended and Restated Development Agreement, and recommended that the City Council consider the Second Amended and Restated Development Agreement; and, WHEREAS, the City Council held a duly noticed public hearing on June 27, 2018 to consider the Second Amended and Restated Development Agreement, and take public testimony. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of South San Francisco does hereby ordain as follows: SECTION 1. Findings. That based on the entirety of the record before it, which includes without limitation, the California Environmental Quality Act, Public Resources Code §21000, et seq. ( "CEQA ") and the CEQA Guidelines, 14 California Code of Regulations §15000, et seq.; the South San Francisco General Plan, General Plan Environmental Impact Report; the South San Francisco Municipal Code; 2009 EIR, and associated Mitigation Monitoring and Reporting Programs; all site plans, and all reports, minutes, and public testimony submitted as part of the Planning Commission's duly noticed May 17, 2018 meeting; all site plans, reports, minutes, and public testimony submitted as part of the City Council's duly noticed public hearing on June 27, 2018; and any other evidence (within the meaning of Public Resources Code 21080(e) and §21082.2), the City Council of the City of South San Francisco hereby finds as follows: A. The foregoing recitals are true and correct and made a part of this Ordinance. B. The Exhibit attached to this Ordinance, the proposed Second Amended and Restated Development Agreement (Exhibit A), is incorporated by reference and made a part of this Ordinance, as if set forth fully herein. C. The documents and other material constituting the record for these proceedings are located at the Planning Division for the City of South San Francisco, 315 Maple Avenue, South San Francisco, CA 94080, and in the custody of Chief Planner, Sailesh Mehra. D. The Second Amended and Restated Development Agreement, attached hereto as Exhibit A, sets for the duration, property, project criteria, and other required information identified in Government Code section 65865.2. Based on the findings in support of the Project, the Planning Commission finds that City of South San Francisco Page 2 File Number. 18 -603 Enactment Number. ORD 1559 -2018 the Development Agreement, vesting a project for a campus -style development of office and R &D buildings, is consistent with the consistent with the objectives, policies, general land uses and programs specified in the South San Francisco General Plan, the Gateway Specific Plan, and any applicable zoning regulations. E. The Second Amended and Restated Development Agreement is compatible with the uses authorized in, and the regulations prescribed for the land use district in which the real property is located. The subject site is physically suitable for the type and intensity of the land use being proposed. The General Plan specifically contemplates the proposed type of project and the suitability of the site for development was analyzed thoroughly in the environmental document prepared for the Project. F. The Second Amended and Restated Development Agreement is in conformity with public convenience, general welfare and good land use practice. G The Second Amended and Restated Development Agreement will not be detrimental to the health, safety and general welfare because the amendment preserves a campus -like environment. H. The Second Amended and Restated Development Agreement will not adversely affect the orderly development of property or the preservation of property valued because the amendment improves the property's campus -like environment and is consistent with surrounding R &D and office uses. SECTION 2. Approval of Development Agreement A. The City Council of the City of South San Francisco hereby approves the Second Amended and Restated Development Agreement with BMR -700 Gateway LP, BMR -750, 800, 850 Gateway LP, BMR -900 Gateway LP, and BMR -1000 Gateway LP, attached hereto as Exhibit A and incorporated herein by reference. B. The City Council further authorizes the City Manager to execute the Second Amended and Restated Development Agreement, on behalf of the City, in substantially the form attached as Exhibit A, and to make revisions to such Agreement, subject to the approval of the City Attorney, which do not materially or substantially increase the City's obligations thereunder. SECTION 3. Severability If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid or unconstitutional, the remainder of this Ordinance, including the application of such part or provision to other persons or circumstances shall not be affected thereby and shall continue in full force and effect. To this end, provisions of this Ordinance are severable. The City Council of the City of South San Francisco City of South San Francisco Page 3 File Number: 18 -603 Enactment Number. ORD 1559 -2018 hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase hereof irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses, or phrases be held unconstitutional, invalid, or unenforceable. SECTION 4. Publication and Effective Date. Pursuant to the provisions of Government Code Section 36933, a summary of this Ordinance shall be prepared by the City Attorney. At least five (5) days prior to the Council meeting at which this Ordinance is scheduled to be adopted, the City Clerk shall (1) publish the Summary, and (2) post in the City Clerk's Office a certified copy of this Ordinance. Within fifteen (15) days after the adoption of this Ordinance, the City Clerk shall (1) publish the summary, and (2) post in the City Clerk's Office a certified copy of the full text of this Ordinance along with the names of those City Council members voting for and against this Ordinance or otherwise voting. This Ordinance shall become effective thirty (30) days from and after its adoption. Introduced at a regular meeting of the City Council of the City of South San Francisco held the 27th day of June, 2018. At a meeting of the City Council on 7/11/2018, a motion was made by Mark Addiego, seconded by Pradeep Gupta, that this Ordinance be adopted. The motion passed. Yes: 5 Mayor Normandy, Mayor Pro Tern Matsumoto, Councilmember Garbarino, Councilmember Gupta, and Councilmember Addiego Attest 05 / City of South San Francisco Page 4 137967550.10 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Clerk City of South San Francisco 400 Grand Avenue P.O. Box 711 South San Francisco, CA 94083 APNs: insert APNs] Space Above This Line Reserved For Recorder's Use) SECOND AMENDED AND RESTATED DEVELOPMENT AGREEMENT Gateway Business Park Master Plan Project This SECOND AMENDED AND RESTATED DEVELOPMENT AGREEMENT FOR THE GATEWAY BUSINESS PARK MASTER PLAN PROJECT is dated _______, 2018 Agreement”). This Agreement is between BMR-700 Gateway LP (“BMR-700 Gateway); BMR-750, 800, 850 Gateway LP (“BMR-750, 800, 850 Gateway”); BMR-900 Gateway LP BMR-900 Gateway”); and BMR-1000 Gateway LP (“BMR-1000 Gateway”); all of which are Delaware limited partnerships (collectively “Owners” and individually “Owner”), on the one hand, and the CITY OF SOUTH SAN FRANCISCO, a municipal corporation organized and existing under the laws of the State of California (“City”), on the other hand. Each Owner and the City are individually referred to herein as a “Party” and collectively referred to herein as Parties.” R E C I T A L S A. WHEREAS, California Government Code (“Government Code”) Sections 65864 through 65869.5 authorize the City to enter into binding development agreements with persons having legal or equitable interests in real property for the development of such property or on behalf of those persons having same; and B. WHEREAS, pursuant to Government Code Section 65865, the City has adopted rules and regulations, embodied in Chapter 19.60 of the South San Francisco Municipal Code Municipal Code” or “SSFMC”), establishing procedures and requirements for adoption and execution of development agreements; and C. WHEREAS, this Agreement concerns property consisting of a 22.6-acre site located at the corner of Gateway and Oyster Point Boulevards (700, 750, 800, 850, 900, and 1000 Gateway Boulevard), in the East of 101 Area Plan, the Gateway Redevelopment Project Area and the Gateway Specific Plan District, which the Parties intend to be developed in 2 - 137967550.10 phases (Phase 1 through Phrase 4), all as shown and more particularly described in Exhibit A, attached (the “Property”); and D. WHEREAS, each Owner now has a legal or equitable interest in a portion of the Property subject to this Agreement to the extent referenced and depicted in Exhibit A; and E. WHEREAS, on February 24, 2010, the City Council adopted Ordinance Number 1423- 2010, which approved and adopted that certain Development Agreement for the Gateway Business Park Master Plan Project (“Original Agreement”) between the City and Chamberlin Properties I Limited Partnership, a California limited partnership, the then- owner of the Property; and F. WHEREAS, the Original Agreement became effective on or about March 26, 2010 2010 Effective Date”); and G. WHEREAS, on May 8, 2013 City adopted Resolution 44-2013 approving a Modified Master Plan for redevelopment of the Property ( “Master Plan”), and a Precise Plan for redevelopment of Phase 1 of the Project (“Phase 1 Precise Plan”); and H. WHEREAS, on May 22, 2013 City adopted Ordinance Number 1471-2013, which approved and adopted a First Amended And Restated Development Agreement for the Gateway Business Park Master Plan Project, which ordinance took effect 30 days later on June 21, 2013 (the “2013 Effective Date”); and I. WHEREAS, pursuant to Ordinance Number 1471, effective August 20, 2013, the City and BMR-Gateway/Oyster LLC, a Delaware limited liability company (“BMR- Gateway/Oyster”), an affiliate that is under common control with Owners, entered into that certain First Amended And Restated Development Agreement for the Gateway Business Park Master Plan Project; J. WHEREAS, by letter dated August 26, 2013, BMR-Gateway/Oyster gave notice to the City of the following transfers and assignments to Owners, all of which are affiliates under common control with BMR-Gateway/Oyster and the other Owners, pursuant to Sections 15(c), 15(e) and 15(f) of this Agreement: BMR-Gateway/Oyster transferred its rights to develop the real property known as 700 Gateway Boulevard to BMR-700 Gateway, and retained all compliance burdens, obligations, and responsibilities for this real property; BMR-Gateway/Oyster transferred its rights to develop the real property known as 750, 800 and 850 Gateway Boulevard, South San Francisco, to BMR-750, 800, 850 Gateway, and retained all compliance burdens, obligations, and responsibilities for this real property; BMR-Gateway/Oyster transferred its rights to develop the real property known as 900 Gateway Boulevard, South San Francisco to BMR-900 Gateway, and retained all compliance burdens, obligations, and responsibilities for this real property; 3 - 137967550.10 BMR-Gateway/Oyster transferred its rights to develop the real property known as 1000 Gateway Boulevard, South San Francisco to BMR-1000 Gateway and retained all compliance burdens, obligations, and responsibilities for this real property. K. WHEREAS, on February 3, 2017, there was recorded in the Official Records of the County of San Mateo as Document Number 2017-011238, a document entitled LOT LINE ADJUSTMENT NO. 2016-001 (the “2016 Lot Line Adjustment”), which documents City’s approval of a lot line adjustment adjusting the boundary between Phases 1 and 2 of the Property (i.e. between the parcels owned by BMR-1000 Gateway and BMR-750, 800, 850 Gateway located at 1000 Gateway Boulevard and 750, 800 and 850 Gateway Boulevard); L. WHEREAS, BMR-750, 800, 850 Gateway subsequently deeded to BMR-1000 Gateway, and BMR-1000 Gateway accepted from BMR-750, 800, 850 Gateway, a portion of the Property reflecting such 2016 Lot Line Adjustment, which resulted in the Property ownership reflected in Exhibit A; M. WHEREAS, BMR-750, 800, 850 Gateway and BMR-900 Gateway intend in the future to seek additional lot line adjustment(s) and/or a parcel map to further adjust boundaries between their parcels within the Property as conceptually depicted in Exhibit F; N. WHEREAS, Owners have requested that the City enter into this Agreement to amend and restate the rights and obligations of the Parties relating to the development of the Property, confirm that each Owner holds the compliance burdens, obligations, and responsibilities for its parcel of Property under this Agreement, and acknowledge the transfer and assignment related to the 2016 Lot Line Adjustment; and, O. WHEREAS, all proceedings necessary for the valid adoption and execution of this Agreement have taken place in accordance with Government Code Sections 65864 through 65869.5, the California Environmental Quality Act (“CEQA”), and Chapter 19.60 of the Municipal Code; and P. WHEREAS, the City Council and the Planning Commission have found that this Agreement is consistent with the objectives, policies, general land uses and programs specified in the South San Francisco General Plan as adopted on October 13, 1999 and as amended from time to time; and Q. WHEREAS, on ____________, 2018 the City Council adopted Ordinance No. ______ approving and adopting this Agreement, and the Ordinance took effect thirty days later. A G R E E M E N T NOW, THEREFORE, the Parties, pursuant to the authority contained in Government Code Sections 65864 through 65869.5 and Chapter 19.60 of the Municipal Code and in consideration of the mutual covenants and agreements contained herein, agree as follows: 4 - 137967550.10 1. Effective Date Pursuant to Section 19.60.140 of the Municipal Code, notwithstanding the fact that the City Council adopts an ordinance approving this Agreement, this Agreement shall be effective and shall only create obligations for the Parties from and after the date that the ordinance approving this Agreement takes effect (“2018 Effective Date”). 2. Duration This Agreement shall expire twelve (12) years from the 2013 Effective Date, but in no event later than December 31, 2025. Notwithstanding the foregoing, if litigation against an Owner (or any of its officers, agents, employees, contractors, representatives or consultants) to which the City also is a party should delay implementation or construction on such Owner’s parcel of Property of the “Project” (as defined in Section 3 below), the expiration date of this Agreement as applicable to that Owner’s parcel and obligations of such Owner shall be extended for a period equal to the length of time from the time the summons and complaint is served on the defendant(s) until the judgment entered by the court is final, and not subject to appeal; provided, however, that the total amount of time for which the expiration date shall be extended as a result of such litigation shall not exceed five (5) years. 3. Project Description; Development Standards For Project The project to be developed on the Property pursuant to this Agreement (the “Project”) shall consist of the phased removal and replacement of existing buildings on the 22.6- acre project site and construction of five to six new buildings and two to four parking structures, in multiple phases from 2013 to 2025, and exterior landscaping and driveways, and other related improvements, to create a connected, pedestrian-friendly campus-style development, as more particularly described in the Master Plan and the Phase 1 Precise Plan (attached as Exhibit B and Exhibit C respectively) and as approved by the City Council. a) The permitted uses, the density and intensity of uses, the maximum heights, locations and total area of the proposed buildings, the development schedule, the provisions for vehicular access and parking, any reservation or dedication of land, any public improvements, facilities and services, and all environmental impact mitigation measures imposed as approval conditions for the Project shall be exclusively those provided in the Master Plan and Phase 1 Precise Plan, the Gateway Business Park Master Plan Project Environmental Impact Report dated January 2010, this Agreement, and the applicable ordinances in effect as of the 2013 Effective Date, except as modified in this Agreement. The Project will be redeveloped in multiple phases. Each new phase of development will adhere to the governing Municipal Code provisions applicable to the Property as of the 2013 Effective Date (except as modified by this Agreement), as well as the development guidelines set forth in the Gateway Master Plan Development Standards, including the implementation of access, service and parking needs to support each new phase of redevelopment. During each particular redevelopment 5 - 137967550.10 phase, each Owner will maintain existing access, service and parking needs to support existing improvements located on portions of the Property, yet to be redeveloped during subsequent phases. Plan details for subsequent phases will be submitted to the City for appropriate review and approval, in the form of future Precise Plans. b) Subject to an Owner’s fulfillment of its obligations under this Agreement, upon the 2018 Effective Date of this Agreement, the City hereby grants to such Owner a vested right to develop and construct on such Owner’s parcel of the Property the improvements for the Project authorized by, and in accordance with, the terms of this Agreement, the Master Plan and Phase 1 Precise Plan (as approved by the City Council) and the applicable ordinances in effect as of the 2013 Effective Date. c) Upon such grant of right, no future amendments to the City General Plan, the City Zoning Code, the Municipal Code, or other City ordinances, policies or regulations in effect as of the 2013 Effective Date shall apply to the Project, except such future modifications that are not in conflict with and do not prevent the development proposed in the Master Plan and Phase 1 Precise Plan; provided, however, that nothing in this Agreement shall prevent or preclude the City from adopting any land use regulations or amendments expressly permitted herein or otherwise required by State or Federal Law. d) An Owner shall cause the Project on its parcel to be submitted for certification pursuant to the Leadership in Energy and Environmental Design (“LEED”) Green Building Rating System of the U.S. Green Building Council or other industry equivalent agency. Such Owner shall use good faith efforts to achieve a “Silver” rating, pursuant to the LEED Green Building Rating System. Provided, however, that no Owner shall be in default under this Agreement if, notwithstanding Owner’s good faith efforts, the Project does not receive a “Silver” (or higher) rating. 4. Permits for Project An Owner shall submit a Precise Plan for any future phase of development of the Project on its parcel, consistent with Chapter 20.220 of the South San Francisco Municipal Code, as of the 2013 Effective Date. The future Precise Plan(s) shall address, at a minimum, the building architecture, landscaping, and common improvements required for the applicable phase of the Project. Evaluation of future Precise Plans shall be reviewed for consistency with the Master Plan, and this Agreement as approved by the City Council and vested by this Agreement as of the 2018 Effective Date, and applicable development standards described in Section 3 above in effect as of the 2013 Effective Date. Notwithstanding the foregoing, future Precise Plans shall comply with all applicable Uniform Codes, the Municipal Code in effect as of the 2013 Effective Date, CEQA requirements (including any required mitigation measures) and Federal and State Laws. 6 - 137967550.10 5. Vesting of Approvals Upon the City’s approval of the Master Plan, the Phase 1 Precise Plan, this Agreement, and future phase Precise Plans, each such approval shall be vested in each Owner and its successors and assigns for the term of this Agreement with respect to such Owner’s parcel of Property, provided that the successors and assigns comply with the terms and conditions of all of the foregoing, including, but not limited to, submission of insurance certificates and bonds for the grading of the Property and construction of improvements. 6. Cooperation Between Parties in Implementation of this Agreement It is the Parties’ express intent to cooperate with one another and diligently work to implement all land use and building approvals for development of the Property in accordance with the terms of this Agreement. Accordingly, Owners and the City shall proceed in a reasonable and timely manner, in compliance with the deadlines mandated by applicable agreements, statutes or ordinances, to complete all steps necessary for implementation of this Agreement and development of the Property in accordance with the terms of this Agreement. The City shall proceed in an expeditious manner to complete all actions required for the development of the Project, including, but not limited to, the following: a) Scheduling all required public hearings by the City Council and City Planning Commission; and b) Processing and checking all maps, plans, permits, building plans and specifications and other plans relating to development of the Property filed by any Owner or its nominee, successor or assign as necessary for development of the Property, and inspecting and providing acceptance of or comments on work by Owners that requires acceptance or approval by the City. Owners, in a timely manner, shall provide the City with all documents, applications, plans and other information necessary for the City to carry out its obligations hereunder and to cause its planners, engineers and all other consultants to submit in a timely manner all necessary materials and documents. 7. Acquisition of Other Property; Eminent Domain In order to facilitate and insure development of the Project in accordance with the Master Plan and the City Council’s approval, the City may assist an Owner, at such Owner’s request and at such Owner’s sole cost and expense, in acquiring any easements or properties necessary for the satisfaction and completion of any off-site components of the Project required by the City Council to be constructed or obtained by an Owner in the Council’s approval of the Project and the Master Plan and Phase 1 Precise Plan, in the event an Owner is unable to acquire such easements or properties or are unable to secure the necessary agreements with the applicable property owners for such easements or properties. Owners expressly acknowledge that the City is under no obligation to use its power of Eminent Domain. 7 - 137967550.10 8. Maintenance Obligations on Property All of the Property subject to this Agreement shall be maintained by Owners or their successors in perpetuity in accordance with City requirements to prevent accumulation of litter and trash, to keep weeds abated, to provide erosion control, and to comply with other requirements set forth in the Municipal Code, subject to City approval as permitted or required by the Municipal Code. a) If Owners further subdivide the property or otherwise transfer ownership of a parcel or building in the Project to any person or entity that is not an affiliate under common control with the other Owners, such that the Owners, or Owners’ member, partner, parent, or subsidiary, no longer owns a majority interest in a parcel or building in the Project, Owners shall first establish an Owners’ Association and submit Conditions, Covenants and Restrictions (“CC&Rs”) to the City for review and approval by the City Attorney not to be unreasonably withheld, conditioned or delayed (provided, however, that if such transfer arises from a Mortgage Transfer Event (as defined in Section 31 below), then such Association shall be established and CC&Rs shall be submitted as soon as reasonably practicable after such Mortgage Transfer Event). Said CC&Rs shall satisfy the requirements of Section 19.36.040 of the Municipal Code. b) Any provisions of said CC&Rs governing the Project relating to the maintenance obligations under this Section shall be enforceable by the City. 9. Reserved 10. New Taxes Any subsequently enacted City-wide taxes shall apply to the Property, provided that: i) the application of such taxes to the Property is prospective; and (ii) the application of such taxes would not prevent development in accordance with this Agreement. 11. Assessments Nothing herein shall be construed to relieve the Property from common benefit assessments levied against it and similarly situated properties by the City pursuant to and in accordance with any statutory procedure for the assessment of property to pay for infrastructure and/or services that benefit the Property. 12. Additional Conditions Owners shall comply with all of the following requirements: a) Fees. Owners shall not be responsible for any fees imposed by the City in connection with the development and construction of their parcels within the Project, except as outlined in this Agreement and those fees in existence as of the 2013 Effective Date, all of which are identified in Exhibit E hereto. No fee requirements (other than those identified herein) imposed by the City on or after 8 - 137967550.10 the 2013 Effective Date and no changes to existing fee requirements (except those currently subject to periodic adjustments as specified in the adopting or implementing resolutions and ordinances) that occurred on or after the 2013 Effective Date, shall apply to the Project. Any application, processing, administrative, legal and inspection fees that are revised during the term of this Agreement shall apply to the Project provided that (i) such fees have general applicability; (ii) the application of such fees to the Property is prospective; and iii) the application of such fees would not prevent development in accordance with this Agreement. 1) Impact Fees. An Owner shall pay the East of 101 Traffic Impact fee, the Oyster Point Interchange fee, the Sewer Impact fee, and the Childcare fee, to the extent applicable to the phase of the Project to be developed by such Owner, based on the application of the formulas in effect as of the time the City issues each building permit for each phase of the Project, and shall be payable substantially concurrently with, but not later than, the issuance of each such building permit. All such impact fees shall be based on net new square footage proposed to be developed by such Owner. 2) Park In-Lieu Fee. The City is evaluating a “Park In-Lieu Fee” to support the creation of additional public open space in lieu of requiring that applicants avail one-half an acre per 1,000 new employees, to the public in the East of 101 area. An Owner shall pay a Park In-Lieu Fee of $4.78 per square foot of development, excluding parking structures, by such Owner. The fee payable may be reduced if the City adopts such a Park In-Lieu Fee applicable to developments in the East of 101 area similar to the Gateway Business Park Master Plan Project and the amount owed per square foot under that Park In-Lieu Fee is less than $4.78 per square foot in which case Owners shall pay the amount set forth in the Park In-Lieu Fee applicable to developments in the East of 101 area, rather than the $4.78 per square foot fee. An Owner shall receive a credit to offset a portion of the Park In-Lieu Fee, for development of private open space created in such Owner’s relevant phase within the Gateway Master Plan. An Owner’s credit shall be identical to the credit, if any, allowed under the Park In-Lieu Fee program, if implemented, except that (i) in no case, shall an Owner receive a credit offsetting less than 25% of such Owner’s required fee, or more than 50% of such Owner’s required fee; and (ii) in no case shall zoning or building code required open areas, including but not limited to the ten-percent landscaping requirement (SSFMC, § 20.300.007(F)(1)(a)) and setbacks, be counted towards any offsetting credit. An Owner shall pay the Park In-Lieu Fee once per phase, upon issuance of the first tenant improvement permit for each phase to be developed by such Owner, based upon the total square footage approved for development for that phase. b) Child Care Replacement Facility. 9 - 137967550.10 1) So long as the existing childcare facility located at 850 Gateway Boulevard remains in place, and retains its status as a fully licensed and operational childcare facility serving at least 100 children, no additional childcare requirement (other than the City’s Childcare Fee described in Section 12(a)(1) above) will be imposed. However, if the 850 Gateway Boulevard childcare facility is closed, then no later than the date 750,000 square feet of gross floor area within the Project is occupied by tenants, the Owners of Phases 2, 3 and 4 shall either (a) cause the 850 Gateway Boulevard facility to be reopened and fully licensed and operational as needed to serve at least 100 children; or (b) have ready for occupancy a childcare facility of approximately 8,000 square feet designed to accommodate a minimum of 100 children within the Project or within one mile of the Project. If the childcare facility is open to the public, City and the Owner responsible for construction of the childcare facility may mutually agree to allow the City to operate the facility. 2) Notwithstanding the foregoing, if circumstances prevail that new construction does not exceed 650,000 square feet and the existing childcare facility at 850 Gateway Boulevard is eliminated, in each case as of December 31, 2022, then the Owners of Phases 2, 3 and 4 may alternatively meet this requirement by providing a one dollar ($1) per square foot childcare in-lieu fee for the Net New Construction (defined below) that has occurred as of December 31, 2022. “Net New Construction” means the total square footage of any permitted building constructed to implement the Project, reduced by the square footage of any permitted building that existed on the 2013 Effective Date and has been demolished to implement the Project. Each year after 2013, the one dollar 1) per square foot fee shall automatically be increased at a rate equal to the Change from Prior Year for the Consumer Price Index—All Urban Consumers, for the San Francisco-Oakland-San Jose Area. If Owner elects to satisfy this childcare requirement through payment of this in-lieu fee, the in-lieu fee shall be paid no later than December 31, 2022. If building permits are issued for additional Net New Construction between December 31, 2022 and December 31, 2025, such Net New Construction will be subject to a childcare in-lieu fee no greater than the childcare in- lieu fee set forth in this Section 12(b)(2). 3) If, as of January 31, 2023, the 850 Gateway Boulevard childcare facility is eliminated or not fully licensed and operational as described above, and the Owners of Phases 2, 3 and 4 have failed to either construct a new childcare facility in accordance with the provisions of Section 12(b)(1), or Owners have failed to pay the in-lieu fee in accordance with the provisions of Section 12(b)(2), then Owners shall instead pay a fee equal to the City’s estimated reasonable costs, including all costs associated with site acquisition (including, if necessary, eminent domain), environmental review, permitting, and all other expenses and fees, including reasonable 10 - 137967550.10 attorneys’ fees, required to construct a childcare facility of equivalent size and quality as that described in Section 12(b)(1). 4) Compliance with this Section 12(b) shall be deemed to be compliance with condition of approval A-16.b. c) Transportation Demand Management Plan. Owners of any phase(s) of the Project containing any redeveloped building (other than parking facilities) for which a certificate of occupancy has been issued shall prepare an annual Transportation Demand Management (TDM) report, and submit same to City, to document the effectiveness of the TDM plan in achieving the goal of 35% alternative mode usage by employees within the Project when the Project is built out to a 1.0 FAR or less, or a graduated scale between 35% and 40% alternative mode usage (“Targeted Alternative Mode Usage”) when the Project is built out between a 1.0 and 1.25 FAR. The Targeted Alternative Mode Usage will be determined as follows: FAR Alternative Mode Usage 1.0 35% 1.01 — 1.12 38% 1.13 — 1.25 40% The TDM report will be prepared by an independent consultant, retained by City with the approval of the applicable Owners (which approval shall not be unreasonably withheld or delayed) and paid for by such Owners, which consultant will work in concert with Owners’ TDM coordinator. The TDM report will include a determination of historical employee commute methods, which information shall be obtained by survey of all employees working in the redeveloped buildings on the Property. All non-responses to the employee commute survey will be counted as a drive alone trip. TDM monitoring shall be required and conducted pursuant to South San Francisco Municipal Code, Chapter 20.400, as that Chapter may be revised, amended, or reorganized from time to time. 1) TDM Reports: The initial TDM report for each redeveloped building on the Property will be submitted two (2) years after the granting of a certificate of occupancy with respect to the building, and this requirement will apply to all of the redeveloped buildings on the Property except the parking facilities. The second and all later reports with respect to each building shall be included in an annual comprehensive TDM report submitted to City covering all of the redeveloped buildings on the Property which are submitting their second or later TDM reports. 2) Report Requirements: The goal of the TDM program is to encourage alternative mode usage, as defined in Chapter 20.400 of the South San Francisco Municipal Code. The initial TDM report shall either: (1) state that the applicable property has achieved the Targeted Alternative Mode 11 - 137967550.10 Usage, based on the number of employees in the redeveloped buildings at the time, providing supporting statistics and analysis to establish attainment of the goal; or (2) state that the applicable property has not achieved the Targeted Alternative Mode Usage, providing an explanation of how and why the goal has not been reached, and a description of additional measures that will be adopted in the coming year to attain the Targeted Alternative Mode Usage. 3) Penalty for Non-Compliance: If after the initial TDM report, subsequent annual reports indicate that, in spite of the changes in the TDM plan, the Targeted Alternative Mode Usage is still not being achieved, or if Owners that were obligated to submit a TDM report fail to submit such a TDM report at the times described above, City may assess such Owners a penalty in the amount of Fifteen Thousand Dollars ($15,000.00) per year for each percentage point that the actual alternative mode usage is below the Targeted Alternative Mode Usage goal. i. In determining whether a financial penalty is appropriate, City may consider whether Owners have made a good faith effort to meet the TDM goals. ii. If City determines that Owners have made a good faith effort to meet the TDM goals but a penalty is still imposed, and such penalty is imposed within the first three (3) years of the TDM plan commencing with the first year in which a penalty could be imposed), such penalty sums, in the City’s sole discretion, may be used by Owners toward the implementation of the TDM plan instead of being paid to City. If the penalty is used to implement the TDM Plan, an Implementation Plan shall be reviewed and approved by the City prior to expending any penalty funds. iii. Notwithstanding the foregoing, the amount of any penalty shall bear the same relationship to the maximum penalty as the completed construction to which the penalty applies bears to the maximum amount of square feet of Office, Commercial, Retail and Research and Development use permitted to be constructed within each phase of the Project. For example, if there is 200,000 square feet of completed construction on the Property included within the TDM report with respect to which the penalty is imposed, the penalty would be determined by multiplying Fifteen Thousand Dollars ($15,000.00) times a fraction, the numerator of which is 200,000 square feet and the denominator of which is the maximum amount of square feet of building construction, excluding parking facilities, permitted on that phase of the Project; this amount would then be multiplied by the number of percentage points that the actual alternative mode usage is below the Targeted Alternative Mode Usage goal. 12 - 137967550.10 iv. The provisions of this Section are incorporated as Conditions of Approval for the Project and shall be included in the approved TDM for the Project. d) Transit Station or Ferry Terminal Enhancement Contribution. Owners shall pay an in-lieu fee to be used for enhancing, enlarging, repairing, restoring, renovating, remodeling, redecorating, maintaining, and/or refurbishing the Caltrain Station located at 590 Dubuque Avenue, the Oyster Point Ferry terminal and/or their associated facilities. The in-lieu fee for each Owner shall be in the amount of one dollar per square foot of building area excluding parking structures for each phase of development on such Owner’s parcel and shall be payable in two (2) equal installments per phase. One-half (1/2) of the in-lieu fee shall be payable substantially concurrently with, but not later than, the issuance of the building permit for the shell of the building, and one-half (1/2) of the in-lieu fee shall be payable prior to the issuance of a Certificate of Occupancy for the shell of the building. e) Public Safety Impact Fee. As provided in Exhibit E, Owners shall pay the Public Safety Impact Fee, as set forth in Resolution No. 97-2012, adopted on December 10, 2012. f) EIR. The Parties will adhere to the Conditions of Approval for the Project and the Mitigations which result from the Gateway Business Park Master Plan Project Environmental Impact Report and Mitigation Monitoring and Reporting Program. Entitlement review for future Project phases will be limited in scope, so long as consistent with the EIR and Master Plan book and Design Guidelines. 13. Indemnity Each Owner agrees to indemnify, defend (with counsel selected by the City subject to the reasonable approval of such Owner) and hold harmless the City, and its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives from any and all claims, costs (including legal fees and costs) and liability for any personal injury or property damage which may arise directly or indirectly as a result of any actions or inactions by such Owner, or any actions or inactions of such Owner’s contractors, subcontractors, agents, or employees in connection with the construction, improvement, operation, or maintenance of the Project, provided that Owners shall have no indemnification obligation with respect to gross negligence or willful misconduct of the City, its contractors, subcontractors, agents or employees or with respect to the maintenance, use or condition of any public improvement after the time it has been dedicated to and accepted by the City or another public entity (except as provided in an improvement agreement or maintenance bond). 13 - 137967550.10 14. Interests of Other Owners Owners have no knowledge of any reason why Owners, and each of them, and any other persons holding legal or equitable interests in the Property as of the 2018 Effective Date, will not be bound by this Agreement. 15. Assignment a) Right to Assign. An Owner may at any time or from time to time transfer its right, title or interest in or to all or any portion of its parcel of Property. In accordance with Government Code Section 65868.5, the burdens of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, all successors in interest to such Owner. As a condition precedent to any such transfer, an Owner shall require the transferee to acknowledge in writing that transferee has been informed, understands and agrees that the burdens and benefits under this Agreement relating to such transferred property shall be binding upon and inure to the benefit of the transferee. b) Notice of Assignment or Transfer. No transfer, sale or assignment of an Owner’s rights, interests and obligations under this Agreement shall occur without prior written notice to the City and approval by the City Manager, which approval shall not be unreasonably withheld, conditioned or delayed. The City Manager shall consider and decide the matter within ten (10) days after an Owner’s notice, provided all necessary documents, certifications and other information evidencing the ability of the transferee’s ability to perform under this Agreement, are provided to the City Manager. c) Exception for Notice. Notwithstanding Section 15(b), an Owner may at any time, upon notice to the City but without the necessity of any approval by the City, transfer its parcel of Property or any part thereof and all or any part of such Owner’s rights, interests and obligations under this Agreement to: (i) any subsidiary, affiliate, parent or other entity which controls, is controlled by or is under common control with such Owner, (ii) any member or partner of such Owner or any subsidiary, parent or affiliate of any such member or partner, (iii) any successor or successors to such Owner by merger, consolidation, non- bankruptcy reorganization or government action, or (iv) as a result of a Mortgage Transfer Event. As used in this Subsection, “control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies, whether through the ownership of voting securities, partnership interest, contracts (other than those that transfer an Owner’s interest in the property to a third party not specifically identified in this Subsection) or otherwise. d) Release Upon Transfer. Upon the transfer, sale, or assignment of all of an Owner’s rights, interests and obligations under this Agreement pursuant to Section 15(a), Section 15(b) or Section 15(c) of this Agreement, such Owner shall be released from the obligations under this Agreement, with respect to the parcel 14 - 137967550.10 of Property, or portion thereof, transferred, sold, or assigned, arising subsequent to the date of the City Manager’s approval of such transfer, sale, or assignment or the effective date of such transfer, sale or assignment, whichever occurs later; provided, however, that if any transferee, purchaser or assignee approved by the City Manager expressly assumes any right, interest or obligation of such Owner under this Agreement, such Owner shall be released with respect to such rights, interests and assumed obligations. In any event, the transferee, purchaser or assignee shall be subject to all the provisions hereof and shall provide all necessary documents, certifications and other necessary information prior to City Manager approval, where such approval is required as set forth in Section 15(b), above. e) Owners’ Right to Retain Specified Rights or Obligations. Notwithstanding Section 15(a) and Section 15(c), an Owner may withhold from a sale, transfer or assignment of this Agreement certain rights, interests and/or obligations which such Owner shall retain, provided that such Owner specifies such rights, interests and/or obligations in a written document to be appended to or maintained with this Agreement and recorded with the San Mateo County Recorder prior to or concurrently with the sale, transfer or assignment. An Owner’s purchaser, transferee or assignee shall then have no interest in or obligations for such retained rights, interests and obligations and this Agreement shall remain applicable to such Owner with respect to such retained rights, interests and/or obligations. f) Time for Notice. Within ten (10) days of the date escrow closes on any such transfer, the applicable Owner shall notify the City in writing of the name and address of the transferee. Said notice shall include a statement as to the obligations, including any mitigation measures, fees, improvements or other conditions of approval, assumed by the transferee. Any transfer which does not comply with the notice requirements of this Section and Section 15(b) shall not release an Owner from its obligations to the City under this Agreement until such time as the City is provided notice in accordance with Section 15(b). 16. Insurance a) Commercial General Liability Insurance. At all times that an Owner is constructing any portion or phase of the Project, or any improvement related to any portion or phase of the Project, such Owner shall maintain in effect a policy of commercial general liability insurance with a per-occurrence combined single limit of not less than ten million dollars ($10,000,000.00). With the exception of workers’ compensation and employer’s liability, this insurance shall include City as an additional insured to the extent liability is caused by work or operations performed by or on behalf of such Owner. b) Workers Compensation Insurance. At all times that an Owner is constructing any portion or phase of the Project, or any improvement related to any portion or phase of the Project, such Owner shall maintain Worker’s Compensation 15 - 137967550.10 insurance for all persons employed by such Owner for work at the Project site. Such Owner shall require each contractor and subcontractor similarly to provide Worker’s Compensation insurance for its respective employees. Such Owner agrees to indemnify the City for any damage resulting from such Owner’s failure to maintain any such required insurance. c) Evidence of Insurance. Prior to commencement of any construction of any portion or phase of the Project, or any improvement related to any portion or phase of the Project, the applicable Owner shall furnish the City satisfactory evidence of the insurance required in Subsections (a) and (b). 1) In the event of a reduction (below the limits required in this Agreement) or cancellation in coverage, or an adverse material change in insurance coverage and limits required in this Agreement, Owners shall, prior to such reduction, cancellation or change, provide at least ten (10) days’ prior written notice to the City, regardless of any notification by the applicable insurer. If the City discovers that the policies have been cancelled or reduced below the limits required in this Agreement and no notice has been provided by either insurer or Owners, said failure shall constitute a material breach of this Agreement. 2) In the event of a reduction (below the limits required by this Agreement) or cancellation in coverage, Owners shall have five (5) days in which to provide evidence of the required coverage during which time no persons shall enter the Property to construct improvements thereon, including construction activities related to the landscaping and common improvements. Additionally, no persons not employed by existing tenants shall enter the Property to perform such work until such time as the City receives evidence of substitute coverage. 3) If Owners fail to obtain substitute coverage within ten (10) days, the City may obtain, but is not required to obtain, substitute coverage and charge Owners the cost of such coverage plus an administrative fee equal to ten percent (10%) of the premium for said coverage. d) The insurance shall include the City, its elective and appointive boards, commissions, officers, agents, employees and representatives as additional insureds on the policies. 17. Covenants Run With the Land The terms of this Agreement are legislative in nature, and apply to the Property as regulatory ordinances. During the term of this Agreement, all of the provisions, agreements, rights, powers, standards, terms, covenants and obligations contained in this Agreement shall run with the land and shall be binding upon the Parties and their respective heirs, successors (by merger, consolidation or otherwise) and assigns, devisees, administrators, representatives, lessees and all other persons or entities 16 - 137967550.10 acquiring the Property, any lot, parcel or any portion thereof, and any interest therein, whether by sale, operation of law or other manner, and they shall inure to the benefit of the Parties and their respective successors. 18. Conflict With State or Federal Law In the event that State or Federal laws or regulations, enacted after the 2013 Effective Date, prevent or preclude compliance with one or more provisions of this Agreement, such provisions of this Agreement shall be modified (in accordance with Section 19 set forth below) or suspended as may be necessary to comply with such State or Federal laws or regulations. Notwithstanding the foregoing, an Owner shall have the right to challenge, at their sole cost, in a court of competent jurisdiction, the law or regulation preventing compliance with the terms of this Agreement and, if the challenge in a court of competent jurisdiction is successful, this Agreement shall remain unmodified and in full force and effect. 19. Procedure for Modification Because of Conflict With State or Federal Laws In the event that State or Federal laws or regulations enacted after the 2013 Effective Date prevent or preclude compliance with one or more provisions of this Agreement or require changes in plans, maps or permits approved by the City, the Parties shall meet and confer in good faith in a reasonable attempt to modify this Agreement to comply with such State or Federal law or regulation. Any such amendment or suspension of the Agreement shall be approved by the City Council in accordance with Chapter 19.60 of the Municipal Code as it was in effect on the 2013 Effective Date. 20. Periodic Review a) During the term of this Agreement, the City shall conduct “annual” and/or special” reviews of Owners’ good faith compliance with the terms and conditions of this Agreement in accordance with the procedures set forth in Chapter 19.60 of the Municipal Code. The City may recover reasonable costs incurred in conducting said review, including staff time expended and reasonable attorneys’ fees. b) At least five (5) calendar days’ prior to any hearing on any annual or special review, the City shall mail Owners a copy of all staff reports and, to the extent practical, related exhibits. Owners shall be permitted an opportunity to be heard orally or in writing regarding its performance under this Agreement before the City Council or, if the matter is referred to the Planning Commission, then before said Commission. Following completion of any annual or special review, the City shall give Owners a written Notice of Action, which Notice shall include a determination, based upon information known or made known to the City Council or the City’s Planning Director as of the date of such review, whether any Owner is in default under this Agreement and, if so, the alleged nature of the default, a reasonable period to cure such default, and suggested or potential actions that the City may take if such default is not cured by such Owners. 17 - 137967550.10 21. Amendment or Cancellation of Agreement This Agreement may be further amended or terminated only in writing and in the manner set forth in Government Code Sections 65865.1, 65867.5, 65868, 65868.5 and Chapter 19.60 of the Municipal Code. 22. Agreement is Entire Agreement This Agreement and all exhibits attached hereto or incorporated herein contain the sole and entire agreement between the Parties concerning Owners’ entitlements to develop the Property. Each Party acknowledges and agrees that it has not made any representation with respect to the subject matter of this Agreement or any representations inducing the execution and delivery hereof, except representations expressly set forth herein, and each Party acknowledges that it has relied on its own judgment in entering this Agreement. Each Party further acknowledges that all statements or representations that heretofore may have been made by it to the other Parties are void and of no effect, and that it has not relied on statements or representations of the other Parties in its dealings with the other, except to the extent that such representation area expressly set forth herein. 23. Events of Default Failure by a Party to perform any material term or provision of this Agreement applicable to such Party shall constitute a default of such Party. An Owner shall also specifically be in default under this Agreement upon the happening of one or more of the following events with respect to such Owner: a) If a warranty, representation or statement made or furnished by such Owner to the City is false or proves to have been false in any material respect when it was made; or, b) A finding and determination by the City made following an annual or special review under the procedure provided for in Government Code Section 65865.1 and Chapter 19.60 of the Municipal Code that, upon the basis of substantial evidence, such Owner has not complied in good faith with the terms and conditions of this Agreement applicable to such Owner; or, c) Such Owner fails to fulfill any of its obligations set forth in this Agreement and such failure continues beyond any applicable cure period provided in this Agreement. This provision shall not be interpreted to create a cure period for any event of default where such cure period is not specifically provided for in this Agreement. 24. Procedure Upon Default a) Upon the occurrence of an event of default by City or an Owner, either such Party may terminate or modify this Agreement with respect to the applicable Owner’s parcel of Property in accordance with the provisions of Government Code Section 18 - 137967550.10 65865.1 and of Chapter 19.60 of the Municipal Code, provided Section 24(e) has been complied with. b) The City shall not be deemed to have waived any claim of defect in any Owner’s performance if, on annual or special review, the City does not propose to terminate this Agreement. c) No waiver or failure by the City or any Owner to enforce any provision of this Agreement shall be deemed to be a waiver of any provision of this Agreement or of any subsequent breach of the same or any other provision. d) Any actions for breach of this Agreement shall be decided in accordance with California law. The remedy for breach of this Agreement shall be limited to specific performance and attorneys' fees as provided in Section 25 (a). e) The non-defaulting Party shall give the defaulting Party written notice of any default under this Agreement, and the defaulting Party shall have thirty (30) days after the date of the notice to cure the default or to reasonably commence the procedures or actions needed to cure the default; provided, however, that if such default is not capable of being cured within such thirty (30) day period, the defaulting Party shall have such additional time to cure as is reasonably necessary. 25. Attorneys’ Fees and Costs a) Action by Party. If legal action by a Party is brought against another Party because of breach of this Agreement or to enforce a provision of this Agreement, the prevailing Party is entitled to reasonable attorneys’ fees and court costs from the non-prevailing Party. b) Action by Third Party. If any person or entity not a party to this Agreement initiates an action at law or in equity to challenge the validity of any provision of this Agreement or the Project approvals, the Parties shall cooperate in defending such action. Each Owner shall bear its own costs of defense as a real party in interest in any such action, and shall reimburse the City for all reasonable court costs and attorneys’ fees expended by the City in defense of any such action or other proceeding or payable to any prevailing plaintiff/petitioner. 26. Severability If any material term or condition of this Agreement is for any reason held by a final judgment of a court of competent jurisdiction to be invalid with respect to any parcel of Property, and if the same constitutes a material change in the consideration for this Agreement, then the City or the Owner of any such parcel of Property may elect in writing to invalidate this entire Agreement with respect to such parcel of Property, and thereafter this entire Agreement shall be deemed null and void and of no further force or effect with respect to such parcel of Property following such election. 19 - 137967550.10 27. No Third Parties Benefited No person other than the City, Owners, or their respective successors is intended to or shall have any right or claim under this Agreement, this Agreement being for the sole benefit and protection of the Parties and their respective successors. Similarly, no amendment or waiver of any provision of this Agreement shall require the consent or acknowledgment of any person not a Party or successor to this Agreement. 28. Binding Effect of Agreement The provisions of this Agreement shall bind and inure to the benefit of the Parties originally named herein and their respective successors and assigns. 29. Relationship of Parties It is understood that this Agreement is a contract that has been negotiated and voluntarily entered into by the City and Owners and that Owners are not agents of the City. The Parties do not intend to create a partnership, joint venture or any other joint business relationship by this Agreement. The City and Owners hereby renounce the existence of any form of joint venture or partnership between them, and agree that nothing contained herein or in any document executed in connection herewith shall be construed as making the City and Owners joint venturers or partners. Neither Owners nor any of Owners’ agents or contractors are or shall be considered to be agents of the City in connection with the performance of Owners’ obligations under this Agreement. 30. Bankruptcy The obligations of this Agreement shall not be dischargeable in bankruptcy. 31. Mortgagee Protection: Certain Rights of Cure a) Mortgagee Protection. Any Owner may encumber its interest in its parcel of Property to secure a loan made to such Owner and collaterally assign its rights under this Agreement in connection with such loan without the consent of any of the other Owners or the City, subject to the terms and conditions of this Section 31. This Agreement shall be superior and senior to all liens placed upon the Property or any portion thereof after the date on which this Agreement or a memorandum of this Agreement is recorded with the San Mateo County Recorder, including the lien of any deed of trust or mortgage (“Mortgage”). Notwithstanding the foregoing, no breach hereof shall defeat, invalidate, diminish or impair the lien of any Mortgage made in good faith and for value, but all of the terms and conditions contained in this Agreement shall be binding upon and effective against all persons and entities, including all deed of trust beneficiaries or mortgagees or other purchasers (“Mortgagees”), who acquire title to the Property or any portion thereof by foreclosure, trustee’s sale, deed in lieu of foreclosure or otherwise as a result of a default under a Mortgage (a “Mortgage Transfer Event”). Any Owner shall deliver written notice to the other Owners and 20 - 137967550.10 the City within fourteen (14) days after recording any Mortgage against its parcel of Property, including the address for notices to the Mortgagee. b) Mortgagee Not Obligated. No Mortgagee shall have any obligation or duty under this Agreement to construct or complete the construction of any improvements required by this Agreement, or to pay for or guarantee construction or completion thereof. The City, upon receipt of a written request therefor from a Mortgagee upon or after an Owner’s default under a Mortgage, shall permit the Mortgagee to succeed to the rights and obligations of such Owner under this Agreement, provided that all defaults by such Owner hereunder that are reasonably susceptible of being cured are cured by the Mortgagee as soon as is reasonably possible. The Mortgagee thereafter shall comply with all of the provisions of this Agreement. c) Notice of Default to Mortgagee. If the City receives notice from a Mortgagee requesting a copy of any notice of default given to an Owner hereunder and specifying the address for service thereof, the City shall deliver to the Mortgagee concurrently with service thereof to all Owners, all notices given to such Owner describing all claims by the City that such Owner has defaulted hereunder. If the City determines that any Owner is in noncompliance with this Agreement, the City also shall serve notice of noncompliance on the Mortgagee of the Owner’s parcel of Property, concurrently with service thereof on all Owners. Until such time as the lien of the Mortgage has been extinguished, the City shall: 1) Take no action to terminate this Agreement with respect to the applicable parcel of Property or exercise any other remedy under this Agreement against the defaulting Owner, unless the Mortgagee shall fail, within thirty 30) days of receipt of the notice of default or notice of noncompliance, to cure or remedy or commence to cure or remedy such default or noncompliance; provided, however, that if such default or noncompliance is of a nature that cannot be remedied by the Mortgagee or is of a nature that can only be remedied by the Mortgagee after such Mortgagee has obtained possession of and title to the applicable parcel of Property, by deed-in-lieu of foreclosure or by foreclosure or other appropriate proceedings, then such default or noncompliance shall be deemed to be remedied by the Mortgagee if, within ninety (90) days after receiving the notice of default or notice of noncompliance from the City, (i) the Mortgagee shall have acquired title to and possession of the applicable parcel of Property, by deed-in-lieu of foreclosure, or shall have commenced foreclosure or other appropriate proceedings, and (ii) the Mortgagee diligently prosecutes any such foreclosure or other proceedings to completion. 2) If the Mortgagee is prohibited from commencing or prosecuting foreclosure or other appropriate proceedings by reason of any process or injunction issued by any court or by reason of any action taken by any court having jurisdiction over any bankruptcy or insolvency proceeding 21 - 137967550.10 involving the applicable Owner, then the times specified above for commencing or prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition. d) Performance by Mortgagee. Each Mortgagee shall have the right, but not the obligation, at any time prior to termination of this Agreement with respect to any parcel of Property, to do any act or thing required of the Owner of such parcel of Property under this Agreement, and to do any act or thing not in violation of this Agreement, that may be necessary or proper in order to prevent termination of this Agreement with respect to such parcel of Property. All things so done and performed by a Mortgagee shall be as effective to prevent a termination of this Agreement as the same would have been if done and performed by the Owner instead of by the Mortgagee. No action or inaction by a Mortgagee pursuant to this Agreement shall relieve an Owner of its obligations under this Agreement. No performance by or on behalf of a Mortgagee shall cause it to become a mortgagee-in-possession” or otherwise cause it to be deemed to be in possession of a defaulting Owner’s parcel of Property or bound by or liable under this Agreement unless it becomes an Owner of a parcel of Property. In the event a Mortgagee becomes an Owner, such Mortgagee shall not be liable for any obligation hereunder of any previous Owner of the same parcel of Property that arose prior to the time such Mortgagee became an Owner of such parcel of Property, except for (a) continuing non-monetary obligations that are capable of cure by Mortgagee and (b) monetary obligations for which the City provided a notice of default to Owner under Section 24(e) and, if applicable, to Mortgagee under Section 31(c), and neither Owner nor such Mortgagee thereafter cured such default of Owner’s monetary obligation.. e) Mortgagee’s Consent to Modifications. Subject to the sentence immediately following, the City shall not consent to any material amendment or modification of this Agreement unless Owners provide the City with written evidence of each Mortgagee’s consent, which consent shall not be unreasonably withheld, to the amendment or modification of this Agreement being sought. Each Mortgagee shall be deemed to have consented to such amendment or modification if it does not object to the City by written notice given to the City within thirty (30) days from the date written notice of such amendment or modification is given by the City or Owners to the Mortgagee, reasonable evidence of the delivery of which notice shall be provided to the City if given only by Owners. 32. Estoppel Certificate Any Party from time to time may deliver written notice to any other Party requesting written certification that, to the knowledge of the certifying Party, (i) this Agreement is in full force and effect and constitutes a binding obligation of the Parties; (ii) this Agreement has not been amended or modified either orally or in writing, or, if it has been amended or modified, specifying the nature of the amendments or modifications; and (iii) the requesting Party is not in default in the performance of its obligations under this Agreement, or if in default, describing therein the nature and monetary amount, if any, of 22 - 137967550.10 the default. A Party receiving a request hereunder shall endeavor to execute and return the certificate within ten (10) days after receipt thereof, and shall in all events execute and return the certificate within thirty (30) days after receipt thereof. However, a failure to return a certificate within ten (10) days shall not be deemed a default of the Party’s obligations under this Agreement and no cause of action shall arise based on the failure of a Party to execute such certificate within ten (10) days. The City Manager shall have the right to execute the certificates requested by an Owner hereunder. The City acknowledges that a certificate hereunder may be relied upon by permitted transferees and Mortgagees. At the request of an Owner, the certificates provided by the City establishing the status of this Agreement with respect to any lot or parcel shall be in recordable form, and an Owner shall have the right to record the certificate for the affected portion of the Property at its cost. 33. Force Majeure Notwithstanding anything to the contrary contained herein, a Party shall be excused for the period of any delay in the performance of any of its obligations hereunder, except the payment of money, when prevented or delayed from so doing by certain causes beyond its control, including, and limited to, major weather differences from the normal weather conditions for the South San Francisco area, war, acts of God or of the public enemy, fires, explosions, floods, earthquakes, invasions by non-United States armed forces, failure of transportation due to no fault of the Party, unavailability of equipment, supplies, materials or labor when such unavailability occurs despite the applicable Party’s good faith efforts to obtain same (good faith includes the present and actual ability to pay market rates for said equipment, materials, supplies and labor), strikes of employees other than such Owner, freight embargoes, sabotage, riots, acts of terrorism and acts of the government (other than City) and/or a material adverse change in the financial and commercial real estate demand markets, conditions which indicate an insufficient economic return, including resource scarcities that make construction prohibitively expensive and/or the inability of such Owner to obtain funds for its portion of the Project, due to the financial marketplace, (other than such Owner’s inability to obtain financing related to such Owner’s financial condition) and are beyond the control or without the fault of the party claiming an extension of time. The Party claiming such extension of time to perform shall send written notice of the claimed extension to the other Party within thirty (30) days from the commencement of the cause entitling the Party to the extension. 34. Rules of Construction and Miscellaneous Terms a) The singular includes the plural; the masculine gender includes the feminine; shall” is mandatory, “may” is permissive. b) Time is and shall be of the essence in this Agreement. c) Where a Party consists of more than one person, each such person shall be jointly and severally liable for the performance of such Party’s obligation hereunder. 23 - 137967550.10 d) The captions in this Agreement are for convenience only, are not a part of this Agreement and do not in any way limit or amplify the provisions thereof. e) This Agreement shall be interpreted and enforced in accordance with the laws of the State of California in effect on the date thereof. f) This Agreement may be executed in multiple originals, each of which is deemed an original, and may be signed in counterparts. g) This Agreement shall be interpreted such that its provisions apply separately to each phase of the Project. All references in this Agreement to “Owners” or Owner” and all references to “Parties” or “Party,” shall be deemed to refer only to the Owner(s) of the relevant phase. BMR-700 Gateway, BMR-750, 800, 850 Gateway, BMR-900 Gateway and BMR-1000 Gateway shall be responsible for all compliance burdens, obligations, and responsibilities imposed by, and entitled to benefits granted by, this Agreement only with respect to such Owner’s parcel of property. All conditions of approval and mitigation measures of the Project shall similarly be interpreted and applied to create several obligations of each Owner with respect only to such obligations and benefits. In no event shall one Owner be considered in default due to action or inaction of another Owner with respect to obligations not imposed upon the first Owner. h) In the event City approves a lot line adjustment or parcel map that affects the boundaries between the Phases of the Property as referenced in Recital M of this Agreement, the City and relevant Owner(s) shall promptly amend this Agreement and any exhibits hereto to the extent necessary to reflect such changes to the Property. 35. Exhibits Exhibits to this Agreement, including the following, are all incorporated into this Agreement by reference, as if set forth fully herein. Exhibit A — Legal Description and Map of Property, showing the phases of the Project and the land currently owned by each Owner. Exhibit B — Gateway Business Park Master Plan Exhibit C — Gateway Business Park Phase 1 Precise Plan Exhibit D — Conditions of Project Approval and Gateway Business Park Master Plan Project EIR Mitigation and Monitoring Program Exhibit E — Applicable City Fees Exhibit F — Conceptual Diagram of Future Anticipated Lot Line Adjustments and/or Parcel Map 24 - 137967550.10 36. Notices All notices required or provided for under this Agreement shall be in writing and delivered in person (to include delivery by courier) or sent by certified mail, postage prepaid, return receipt requested or by overnight delivery service. Notices to the City shall be addressed as follows: City Clerk P.O. Box 711 South San Francisco, CA 94083 Notices to Owners shall be addressed as follows: BMR-700 Gateway LP 17190 Bernardo Center Drive San Diego, CA 92128 Attn: Vice President, Legal BMR-750, 800, 850 Gateway LP 17190 Bernardo Center Drive San Diego, CA 92128 Attn: Vice President, Legal BMR-900 Gateway LP 17190 Bernardo Center Drive San Diego, CA 92128 Attn: Vice President, Legal BMR-1000 Gateway LP 17190 Bernardo Center Drive San Diego, CA 92128 Attn: Vice President, Legal A Party may change its address for notice by giving notice in writing to the other Party and thereafter notices shall be addressed and transmitted to the new address. 25 - 137967550.10 IN WITNESS WHEREOF this Agreement has been executed by the Parties on the day and year first above written. CITY: CITY OF SOUTH SAN FRANCISCO By: __________________________ Name: __________________________ Its: City Manager ATTEST: City Clerk APPROVED AS TO FORM: City Attorney 26 - 137967550.10 OWNERS: BMR-700 GATEWAY LP By: ___________________________ Name: ___________________________ Its: ___________________________ BMR-750, 800, 850 GATEWAY LP By: ___________________________ Name: ___________________________ Its: ___________________________ BMR-900 GATEWAY LP By: ___________________________ Name: ___________________________ Its: ___________________________ BMR-1000 GATEWAY LP By: ___________________________ Name: ___________________________ Its: ___________________________ January 16, 2020 Minutes Page 1 of 5 MINUTES JANUARY 16, 2020 CITY OF SOUTH SAN FRANCISCO REGULAR PLANNING COMMISSION CALL TO ORDER / PLEDGE OF ALLEGIANCE TIME: 7:01 P.M. STAFF PRESENT: Sailesh Mehra, Planning Manager, Billy Gross, Senior Planner, Patricia Cotla, Planning Technician, Julie Barnard, ECD Coordinator, Alex Greenwood, ECD Director, Claire Lai, City Attorney, Mike Rudis, Police AGENDA REVIEW No changes. ORAL COMMUNICATIONS None. CONSENT CALENDAR 1.Report regarding a resolution making findings and determining that the disposition of the City of South San Francisco-owned property located at 432 Baden Avenue, in the Residential Core District is in conformity with the South San Francisco adopted General Plan in accordance with provisions of State Planning Law (Govt. Code Section 65402) (Julie Barnard, Economic Development Coordinator). 1a. Resolution making findings and determining that the disposition of the City of South San Francisco- owned property located at 432 Baden Avenue, in the Residential Core District is in conformity with the South San Francisco adopted General Plan in accordance with provisions of State Planning Law (Govt. Code Section 65402). 2.Report regarding a resolution making findings and determining that the disposition of the City of South San Francisco-owned property located at 323 Miller Avenue, in the Residential Core District is in conformity with the South San Francisco adopted General Plan in accordance with provisions of State Planning Law (Govt. Code Section 65402) (Heather Ruiz, Management Analyst) 2a. Resolution making findings and determining that the disposition of the City of South San Francisco - owned property located at 323 Miller Avenue, in the Residential Core District is in conformity with ROLL CALL / CHAIR COMMENTS PRESENT: Chair Murphy, Vice Chair Wong, Commissioners Bernardo, Evans, Faria, Tzang, Bernardo and Shihadeh Attachment 2a January 16, 2020 Minutes Page 2 of 5 the South San Francisco adopted General Plan in accordance with provisions of State Planning Law (Govt. Code Section 65402). MOTION Vice Chair Wong moved and Commissioner Tzang seconded a motion to approve the Consent Calendar. The question was called and the motion carried unanimously. PUBLIC HEARING 3. Report regarding consideration of a First Amendment to the Second Amended and Restated Development Agreement to the Gateway Business Park Master Plan Project between the City of South San Francisco and BMR-700 Gateway LP, BMR-750, 800, 850 Gateway LP, BMR-900 Gateway LP, and BMR-1000 Gateway LP to make minor modifications to the previously approved Development Agreement, and determining that no subsequent environmental document is necessary pursuant to the criteria of Section 15162 of the California Environmental Quality Act Guidelines. (Billy Gross, Senior Planner) 3a. Resolution making findings determining that the proposed First Amendment to the Second Amended and Restated Development Agreement (DAA19-0003) to the Gateway Business Park Master Plan Project between the City of South San Francisco and between BMR -700 Gateway LP, BMR-750, 800, 850 Gateway LP, BMR-900 Gateway LP, and BMR-1000 Gateway LP continues to comply with and be subject to a previously adopted EIR and Addendum, and no subsequent environmental document would be necessary pursuant to the criteria of Section 15162 of the California Environmental Quality Act Guidelines, and recommending that the City Council adopt an ordinance approving the First Amendment to make minor modifications to amend provisions relating to childcare facilities within the development project. Senior Planner Gross provided an overview of the Gateway Business Park Master Plan and phases of the project. He noted approved amendments, proposed revisions, Zoning and General Plan consistency, environmental review and staff’s recommendation. Vice Chair Wong asked when Phase 2 was anticipated to be complete and what the childcare in lieu fees would be used for. Salil Payapilly, Biomed Reality, stated Phase 2 and 3 were in construction and expected to be completed in two years. Senior Planner Gross explained that the childcare impac t fee had a current balance of approximately $5.5 million and that approximately $1.1 million of the fees had been used for improvements since the inception of the fee. Chair Murphy asked what the initial $1 million payment could be used for. Director of Economic and Community Development Greenwood stated that the $1 million payment could be used for the Civic Community Campus Project and the remainder of the fee would be used for a specific childcare project ; in both cases, the specific projects would be at the discretion of the City Council. Chair Murphy stated that she felt comfortable that the project met the previously adopted EIR. The Commission concurred. MOTION Vice Chair Wong moved and Chair Murphy seconded a motion to adopt a resolution making findings determining that the proposed First Amendment to the Second Amended and Restated Development January 16, 2020 Minutes Page 3 of 5 Agreement (DAA19-0003) to the Gateway Business Park Master Plan Project between the City of South San Francisco and between BMR-700 Gateway LP, BMR-750, 800, 850 Gateway LP, BMR-900 Gateway LP, and BMR-1000 Gateway LP continues to comply with and be subject to a previously adopted EIR and Addendum, and no subsequent environmental document would be necessary pursuant to the criteria of Section 15162 of the California Environmental Quality Act Guidelines, and recommending that the City Council adopt an ordinance approving the First Amendment t o make minor modifications to amend provisions relating to childcare facilities within the development project. The question was called and the motion carried unanimously. 4. Report regarding consideration of a Development Agreement, a Relocation Agreemen t, and Sign Permit to allow the installation of a 80 foot tall, double -faced, digital billboard on property located at 345 Shaw Road, and determining that the 2015 IS/MND continues to serve as the applicable environmental review document pursuant to CEQA. (Billy Gross, Senior Planner) 4a. Resolution making findings determining that the 2015 IS/MND continues to serve as the applicable environmental review document for the installation of a 80 foot tall, double-faced, digital billboard on property located at 345 Shaw Road pursuant to California Environmental Quality Act (CEQA) Guidelines Sections 15162 and 15164, and recommending approval of a Development Agreement, Relocation Agreement, and Sign Permit to allow for the project. Senior Planner Gross provided an overview of the digital billboard locations, description of the proposed project site, renderings, Zoning and General Plan consistency, development agreement, CEQA consistency, and staff’s recommendation. Bruce Qualls, Clear Channel, discussed the work done with staff and thanked the Planning Commission for its consideration. Commissioner Bernardo asked the number of remaining static billboards. Senior Planner Gross stated there were approximately 12-15 remaining along the US 101 corridor, and that many static billboards near interior streets had been removed. Vice Chair Wong asked the process for additional digital billboard providers. Senior Planner Gross explained that an ordinance amendment would be necessary for additional providers. Commissioner Faria asked about the policy of usage of the billboard by the City. Senior Planner Gross stated that the City Manager and Communications Director would be the liaison s for such use. Chair Murphy asked if a zoning amendment would allow for a fee to be accepted without removing additional billboards. Senior Planner Gross stated that the current ordinance language allowed for an in lieu fee option, which would ultimately be at the discretion of City Council. Commissioner Shihadeh asked about the 150 Airport billboard application. Senior Planner Gross stated that the application was on hold and the applicant had the option to leave the old billboard in place. MOTION January 16, 2020 Minutes Page 4 of 5 Chair Murphy moved and Commissioner Tzang seconded a motion to adopt a resolution making findings determining that the 2015 IS/MND continues to serve as the applicable environmental review document for the installation of a 80 foot tall, double-faced, digital billboard on property located at 345 Shaw Road pursuant to California Environmental Quality Act (CEQA) Guidelines Sections 15162 and 15164, and recommending approval of a Development Agreement, Relocation Agreement, and Sign Permit to allow for the project. The question was called and the motion carried unanimously. ADMINISTRATIVE BUSINESS 5. Report regarding Review of Master Sign Program for signage at 1, 2 and 3 Tower in the Terrabay Specific Plan Zoning District in accordance with Title 20 of the South San Francisco Municipal Code and determination that the project is categorically exempt from CEQA. (Allison Knapp, Consulting Planner and Billy Gross, Senior Planner) Senior Planner Gross provided an overview of the master sign plan program and discussed the overall elevation, crown level, street level view, zoning and general plan consistency, and staff’s recommendation. Vice Chair Wong asked if a new sign in place of the Success Factors sign would need to f ollow the conditions of the Master Sign Program. Senior Planner Gross confirmed that the conditions would need to be followed. Chair Murphy voiced her satisfaction with the sign program. MOTION Commissioner Faria moved and Commissioner Shihadeh seconded a motion to determine that the proposed Master Sign Program, signs 19-0015 and Design Review DR19-0049 for signage at 1, 2, and 3 Tower in the Terrabay Specific Plan Zoning District in accordance with Title 20 of the South San Francisco Municipal Code and determination that the project is categorically exempt from CEQA . The question was called and the motion carried unanimously. 6. Annual Reorganization of the Planning Commission (Sailesh Mehra, Planning Manager) Commissioner Faria nominated Vice Chair Wong to serve as Planning Commission Chair for 2020. Chair Murphy discussed her work with Vice Chair Wong and his ability to fill in as chairperson in her absence. Commissioner Evans concurred with Chair Murphy’s comments regarding Vice Chair Wong and voiced her support. MOTION Chair Murphy moved and Commissioner Shihadeh seconded a motion to appoint Vice Chair Wong as the new Chairperson of the Planning Commission. The question was called and the motion carried unanimously. January 16, 2020 Minutes Page 5 of 5 Chair Wong presented a plaque and recognized Commissioner Murphy for her work as chairperson of the Planning Commission. Chair Wong provided an overview of the nomination process. Commissioner Murphy nominated Commissioner Evans as Vice Chair of the Planning Commission. Commissioner Bernardo voiced his support for Commissioner Evans as Vice Chair. Commissioner Murphy also voiced her support for Commissioner Evans as Vice Chair. MOTION Chair Wong moved and Commissioner Faria seconded a motion to appoint Commissioner Evans as Vice Chair of the Planning Commission. The question was called and the motion carried unanimously. ITEMS FROM STAFF None. ITEMS FROM THE PUBLIC None. ADJOURNMENT Chair Wong adjourned the Planning Commission meeting at 8:30 p.m. in honor of Richard Holt. Sailesh Mehra Alan Wong, Chairperson Secretary to the Planning Commission Planning Commission City of South San Francisco City of South San Francisco SM/mc RESOLUTION NO. 2850-2020 PLANNING COMMISSION, CITY OF SOUTH SAN FRANCISCO STATE OF CALIFORNIA RESOLUTION DETERMINING THAT THE PROPOSED FIRST AMENDMENT TO THE SECOND AMENDED AND RESTATED DEVELOPMENT AGREEMENT (DAA19- 0003) TO THE GATEWAY BUSINESS PARK MASTER PLAN PROJECT BETWEEN THE CITY OF SOUTH SAN FRANCISCO AND BETWEEN BMR-700 GATEWAY LP, BMR-750, 800, 850 GATEWAY LP, BMR-900 GATEWAY LP, AND BMR-1000 GATEWAY LP CONTINUES TO COMPLY WITH AND BE SUBJECT TO A PREVIOUSLY ADOPTED EIR AND ADDENDUM, AND NO SUBSEQUENT ENVIRONMENTAL DOCUMENT WOULD BE NECESSARY PURSUANT TO THE CRITERIA OF SECTION 15162 OF THE CALIFORNIA ENVIRONMENTAL QUALITY ACT GUIDELINES, AND RECOMMENDING THAT THE CITY COUNCIL ADOPT AN ORDINANCE APPROVING THE FIRST AMENDMENT TO MAKE MINOR MODIFICATIONS TO AMEND PROVISIONS RELATING TO CHILDCARE FACILITIES WITHIN THE DEVELOPMENT PROJECT. WHEREAS, in 2010 the City of South San Francisco (“City”) adopted (1) Resolution No. 18- 2010 certifying the 2009 Environmental Impact Report (“2009 EIR”) (State Clearinghouse No. 2008062059), (2) Resolution No. 19-2010 approving a general plan amendment and transportation demand management (TDM) program, (3) Ordinance No. 1422-2010 amending Chapters 20.57 and 20.120 of the Zoning Ordinance, and (4) Ordinance No. 1423-2010 approving a development agreement with Chamberlin Associates, for the construction of five to six R&D/ Office buildings, two to four parking structures, and related improvements on an approximately 22.6-acre site located at 700-1000 Gateway Boulevard; and WHEREAS, in 2013 the City adopted (1) Resolution No. 43-2013 making findings and relying on the previously certified 2009 EIR; (2) an Addendum to the 2009 EIR; (3) Resolution No. 44- 2013 approving modifications to the Gateway Business Park Master Plan, a new Phase 1 Precise Plan, and modifications to the TDM program, and (4) Ordinance No. 1471-2013 adopting a First Amended and Restated Development Agreement with Gateway of Pacific LP (“BioMed Realty”); and WHEREAS, in 2018 the City adopted Ordinance No. 1559-2018 adopting a Second Amended and Restated Development Agreement with BMR-700 Gateway LP, BMR-750, 800, 850 Gateway LP, BMR-900 Gateway LP, and BMR-1000 Gateway LP to allow for minor modifications to the agreement, including acknowledgement of the transfer and assignment of the separate parcels to the respective affiliates, acknowledgement of lot line adjustment between Phases 1 and 2, and confirmation that each property owner holds the compliance burdens, obligations, and responsibilities for its respective parcel of property under the Second Amended and Restated Development Agreement; and WHEREAS, BioMed Realty (“Owner” or “Applicant”) submitted an application requesting a First Amendment to the Second Amended and Restated Development Agreement to allow for a minor modification to the agreement related to the replacement childcare obligation; and Attachment 2b WHEREAS, the 2009 EIR was certified in accordance with the provisions of the California Environmental Quality Act (Public Resources Code, §§ 21000, et seq., “CEQA”) and CEQA Guidelines, which analyzed the potential environmental impacts of the Project; and WHEREAS, the modifications contemplated in the First Amendment to the Second Amended and Restated Development Agreement relate only to modifying one existing obligation under the previously approved development agreement, and the approval of which would not result in any new significant environmental effects or a substantial increase in the severity of any previously identified effects beyond those disclosed and analyzed in the 2009 EIR certified by City Council, nor does the First Amendment to the Second Amended and Restated Development Agreement constitute a change in the Project or change in circumstances that would require additional environmental review; and WHEREAS, the Planning Commission held a properly noticed public hearing on January 16, 2020, at which time interested parties had the opportunity to be heard, to review the proposed First Amendment to the Second Amended and Restated Development Agreement, as well as supporting documents, prior to the Planning Commission making its decision on the Project; and WHEREAS, the Planning Commission exercised its independent judgment and analysis, and considered all reports, recommendations and testimony before making a determination on the Project. NOW THEREFORE, based on the entirety of the record before it, which includes without limitation, the California Environmental Quality Act, Public Resources Code §21000, et seq. (“CEQA) and the CEQA Guidelines, 14 California Code of Regulations §15000, et seq.; the South San Francisco General Plan, and General Plan Environmental Impact Report; the South San Francisco Municipal Code; 2009 EIR, 2013 Addendum to the 2009 EIR, and associated Mitigation Monitoring and Reporting Programs; all site plans, and all reports, minutes, and public testimony submitted as part of the Planning Commission’s duly noticed January 16, 2020 meeting; and any other evidence (within the meaning of Public Resources Code §21080(e) and §21082.2), the Planning Commission of the City of South San Francisco hereby finds as follows: A. General Findings 1. The foregoing recitals are true and correct and made a part of this Resolution. 2. The Exhibit attached to this Resolution, the proposed First Amendment to the Second Amended and Restated Development Agreement (Exhibit A), is incorporated by reference as if set forth fully herein. 3. The documents and other material constituting the record for these proceedings are located at the Planning Division for the City of South San Francisco, 315 Maple Avenue, South San Francisco, CA 94080, and in the custody of the Planning Manager. B. CEQA Findings 1. Pursuant to CEQA Guidelines Section 15126 [Subsequent EIRs and Negative Declarations], and for reasons stated in this Resolution, there is not substantial evidence in the record to support a fair argument that approval of the First Amendment will result in significant environmental effects beyond those adequately evaluated and addressed by the 2009 EIR and the 2013 Addendum to the 2009 EIR, nor would the proposed amendment require any new mitigation measures because: a. The Project does not propose substantial changes to Second Amended and Restated Development Agreement, and continues to comply with and be governed by the 2009 EIR and 2013 Addendum to the 2009 EIR, and previously identified mitigation measures set forth in the 2009 EIR and 2013 Addendum continue to apply; b. No substantial changes have occurred with respect to the circumstances under which the First Amendment is proposed which will require major revisions of the 2009 EIR and 2013 Addendum to the 2009 EIR due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects; c. No new information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time when the 2009 EIR was certified as complete and when the 2013 Addendum was adopted, shows any of the following: i. The Project will have one or more significant effects not discussed in the 2009 EIR and 2013 Addendum to the 2009 EIR; ii. Significant effects previously examined will be substantially more severe than shown in the previous 2009 EIR and 2013 Addendum to the 2009 EIR; iii. Mitigation measures or alternatives previously found not to be feasible would in fact be feasible and would substantially reduce one or more significant effects of the Project, but the Project proponents decline to adopt the mitigation measure or alternative; or iv. Mitigation measures or alternatives which are considerably different from those analyzed in the 2009 EIR and 2013 Addendum to the 2009 EIR would substantially reduce one or more significant effects on the environment, but the Project proponents decline to adopt the mitigation measure or alternative. 2. Based upon the testimony and information presented at the hearing and upon review and consideration of the environmental documentation provided, the Planning Commission, exercising its independent judgment and analysis, finds that the proposed First Amendment falls within the environmental parameters analyzed in the 2009 EIR and 2013 Addendum to the 2009 EIR, and further finds that the Project would not result in any new significant environmental effects or a substantial increase in the severity of any previously identified effects beyond those disclosed and analyzed in the 2009 EIR and 2013 Addendum to the 2009 EIR certified/adopted by City Council nor would new mitigation be required by the Project, and the prior Mitigation Monitoring and Reporting Program would continue to apply. The Project would not result in any new impacts not adequately evaluated and addressed by the 2009 EIR and 2013 Addendum to the 2009 EIR. C. Development Agreement Findings 1. The Owner and City have negotiated a First Amendment to the Second Amended and Restated Development Agreement pursuant to Government Code Section 65864 et seq. The First Amendment to the Second Amended and Restated Development Agreement, attached hereto as Exhibit A, sets forth the duration, property, project criteria, and other required information identified in Government Code Section 65865.2. Based on the findings in support of the Project, the Planning Commission finds that the proposed First Amendment to the Second Amended and Restated Development Agreement would continue to effectuate the vesting of a project for a campus-style development of office and R&D buildings, and would remain consistent with the objectives, policies, general land uses and programs specified in the South San Francisco General Plan, the Gateway Specific Plan, and any applicable zoning regulations. 2. The First Amendment to the Second Amended and Restated Development Agreement is compatible with the uses authorized in, and the regulations prescribed for the land use district in which the real property is located. The subject site is physically suitable for the type and intensity of the land use being proposed. The General Plan specifically contemplates the proposed type of project and the suitability of the site for development was analyzed thoroughly in the environmental document prepared for the Project. 3. The First Amendment to the Second Amended and Restated Development Agreement is in conformity with public convenience, general welfare and good land use practice because the modifications are minor in nature. 4. The First Amendment to the Second Amended and Restated Development Agreement will not be detrimental to the health, safety and general welfare because the amendment preserves a campus-like environment. 5. The First Amendment to the Second Amended and Restated Development Agreement will not adversely affect the orderly development of property or the preservation of property valued because the amendment improves the property’s campus-like environment and is consistent with surrounding R&D and office uses. NOW, THEREFORE, BE IT FURTHER RESOLVED, the Planning Commission of the City of South San Francisco hereby makes the findings contained in this Resolution, and determines that no subsequent environmental document would be necessary pursuant to the criteria of Section 15162 of the California Environmental Quality Act Guidelines and recommends that the City Council adopt an ordinance approving the proposed First Amendment to the Second Amended and Restated Development Agreement (DAA19-0003) for the Gateway Business Park Master Plan Project attached as Exhibit A. * * * * * * * I hereby certify that the foregoing resolution was adopted by the Planning Commission of the City of South San Francisco at a regular meeting held on the 16th day of January, 2020 by the following vote: AYES: Chair Murphy, Vice-Chair Wong, Commissioner Faria, Commissioner Shihadeh, Commissioner Evans, Commissioner Tzang, Commissioner Bernardo NOES: ABSTENTIONS: ABSENT: Attest_/s/Sailesh Mehra__________ Secretary to the Planning Commission City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-24 Agenda Date:2/12/2020 Version:1 Item #:6a. Ordinance adopting a First Amendment to the Second Amended and Restated Development Agreement (DAA19-0003)to the Gateway Business Park Master Plan Project between the City of South San Francisco and between BMR-700 Gateway LP,BMR-750,800,850 Gateway LP,BMR-900 Gateway LP,and BMR-1000 Gateway LP to make minor modifications to amend provisions relating to childcare facilities within the development. WHEREAS,BMR -Gateway/Oyster LP (“Owner”or “Applicant”)received entitlements for the phased removal and replacement of existing buildings on the 22.6-acre project site and construction of five to six new buildings and two to four parking structures,in five phases,to be located at the corner of Gateway and Oyster Point Boulevards (700,750,800,850,900,and 1000 Gateway Boulevard),in the Gateway Specific Plan Area (“Gateway Business Park Master Plan Project” or “Project”); and, WHEREAS,on February 10,2010,after conducting all proceedings and making all findings necessary for the valid adoption and execution of a development agreement for the Property in accordance with Government Code Sections 65864 through 65869.5,the California Environmental Quality Act (“CEQA”),and Chapter 19.60 of the Municipal Code,the City Council adopted Ordinance No.1423-2010,approving and adopting a development agreement for the property at 700-1000 Gateway Boulevard (“Property”); and, WHEREAS,on May 8,2013,the City Council adopted Ordinance No.1471-2013 concerning a First Amended and Restated Development Agreement between City and Applicant (“First Amended DA”); and, WHEREAS,on June 27,2018,the City Council adopted Ordinance No.1599-2018 concerning a Second Amended and Restated Development Agreement between City and BMR-700 Gateway LP,BMR-750,800,850 Gateway LP,BMR-900 Gateway LP,and BMR-1000 Gateway LP to allow for minor modifications to the agreement,including acknowledgement of the transfer and assignment of the separate parcels to the respective affiliates,acknowledgement of lot line adjustment between Phases 1 and 2,and confirmation that each property owner holds the compliance burdens,obligations,and responsibilities for its respective parcel of property under the Second Amended and Restated Development Agreement; and, WHEREAS,Applicant submitted an application requesting a First Amendment to the Second Amended and Restated Development Agreement to allow for a minor modification to the agreement related to the replacement childcare obligations; and, WHEREAS,the City Council certified the 2009 Environmental Impact Report (“2009 EIR”)on February 10, 2010 in accordance with the provision of the California Environmental Quality Act (Public Resources Code,§§ 21000,et seq.,“CEQA”)and CEQA Guidelines,which analyzed the potential environmental impacts of the Project; and, WHEREAS,the modifications contemplated in the First Amendment to the Second Amended and Restated Development Agreement are minor in nature,the approval of which would not result in any new significant environmental effects or a substantial increase in the severity of any previously identified effects beyond those disclosed and analyzed in the 2009 EIR certified by City Council,nor does the First Amendment to the SecondCity of South San Francisco Printed on 3/18/2020Page 1 of 5 powered by Legistar™ File #:20-24 Agenda Date:2/12/2020 Version:1 Item #:6a. disclosed and analyzed in the 2009 EIR certified by City Council,nor does the First Amendment to the Second Amended and Restated Development Agreement constitute a change in the Project or change in circumstances that would require additional environmental review; and, WHEREAS,on January 16,2020 the Planning Commission for the City of South San Francisco held a lawfully noticed public hearing to solicit public comment and consider the First Amendment to the Second Amended and Restated Development Agreement,and determined that the proposed First Amendment continues to be subject to a previously adopted EIR and Addendum,and no subsequent environmental document would be necessary pursuant to the criteria of Section 15162 of the CEQA Guidelines,and recommended that the City Council consider the First Amendment to the Second Amended and Restated Development Agreement; and, WHEREAS,the City Council held a duly noticed public hearing on February 12,2020 to consider the First Amendment to the Second Amended and Restated Development Agreement, and take public testimony. NOW,THEREFORE,BE IT RESOLVED the City Council of the City of South San Francisco does hereby ordain as follows: SECTION 1. Findings. A. General Findings That based on the entirety of the record before it,which includes without limitation,the California Environmental Quality Act,Public Resources Code §21000,et seq.(“CEQA”)and the CEQA Guidelines,14 California Code of Regulations §15000,et seq.;the South San Francisco General Plan,General Plan Environmental Impact Report;the South San Francisco Municipal Code;2009 EIR,and associated Mitigation Monitoring and Reporting Programs;all site plans,and all reports,minutes,and public testimony submitted as part of the Planning Commission’s duly noticed January 16,2020 meeting;all site plans,reports,minutes,and public testimony submitted as part of the City Council’s duly noticed public hearing on February 12,2020;and any other evidence (within the meaning of Public Resources Code §21080(e)and §21082.2),the City Council of the City of South San Francisco hereby finds as follows: A.The foregoing recitals are true and correct and made a part of this Ordinance. B.The Exhibit attached to this Ordinance,the proposed First Amendment to the Second Amended and Restated Development Agreement (Exhibit A),is incorporated by reference and made a part of this Ordinance, as if set forth fully herein. C.The documents and other material constituting the record for these proceedings are located at the Planning Division for the City of South San Francisco,315 Maple Avenue,South San Francisco,CA 94080, and in the custody of Chief Planner, Sailesh Mehra. D.The First Amendment to the Second Amended and Restated Development Agreement,attached hereto as Exhibit A,sets forth the duration,property,project criteria,and other required information identified in Government Code section 65865.2.Based on the findings in support of the Project,the City Council finds that the proposed First Amendment,Development Agreement,vesting a project for a campus-style development of office and R&D buildings,is consistent with the consistent with the objectives,policies,general land uses City of South San Francisco Printed on 3/18/2020Page 2 of 5 powered by Legistar™ File #:20-24 Agenda Date:2/12/2020 Version:1 Item #:6a. of office and R&D buildings,is consistent with the consistent with the objectives,policies,general land uses and programs specified in the South San Francisco General Plan,the Gateway Specific Plan,and any applicable zoning regulations. E.The First Amendment to the Second Amended and Restated Development Agreement is compatible with the uses authorized in,and the regulations prescribed for the land use district in which the real property is located.The subject site is physically suitable for the type and intensity of the land use being proposed.The General Plan specifically contemplates the proposed type of project and the suitability of the site for development was analyzed thoroughly in the environmental document prepared for the Project. F.The First Amendment to the Second Amended and Restated Development Agreement is in conformity with public convenience, general welfare and good land use practice. G.The First Amendment to the Second Amended and Restated Development Agreement will not be detrimental to the health,safety and general welfare because the amendment preserves a campus-like environment. H.The First Amendment to the Second Amended and Restated Development Agreement will not adversely affect the orderly development of property or the preservation of property valued because the amendment improves the property’s campus-like environment and is consistent with surrounding R&D and office uses. B. CEQA Findings 1.Pursuant to CEQA Guidelines Section 15126 [Subsequent EIRs and Negative Declarations],and for reasons stated in this Resolution,there is not substantial evidence in the record to support a fair argument that approval of the First Amendment will result in significant environmental effects beyond those adequately evaluated and addressed by the 2009 EIR and the 2013 Addendum to the 2009 EIR,nor would the proposed amendment require any new mitigation measures because: a.The Project does not propose substantial changes to Second Amended and Restated Development Agreement,and continues to comply with and be governed by the 2009 EIR and 2013 Addendum to the 2009 EIR,and previously identified mitigation measures set forth in the 2009 EIR and 2013 Addendum continue to apply; b.No substantial changes have occurred with respect to the circumstances under which the First Amendment is proposed which will require major revisions of the 2009 EIR and 2013 Addendum to the 2009 EIR due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects; c.No new information of substantial importance,which was not known and could not have been known with the exercise of reasonable diligence at the time when the 2009 EIR was certified as City of South San Francisco Printed on 3/18/2020Page 3 of 5 powered by Legistar™ File #:20-24 Agenda Date:2/12/2020 Version:1 Item #:6a. complete and when the 2013 Addendum was adopted, shows any of the following: i.The Project will have one or more significant effects not discussed in the 2009 EIR and 2013 Addendum to the 2009 EIR; ii.Significant effects previously examined will be substantially more severe than shown in the previous 2009 EIR and 2013 Addendum to the 2009 EIR; iii.Mitigation measures or alternatives previously found not to be feasible would in fact be feasible and would substantially reduce one or more significant effects of the Project,but the Project proponents decline to adopt the mitigation measure or alternative; or iv.Mitigation measures or alternatives which are considerably different from those analyzed in the 2009 EIR and 2013 Addendum to the 2009 EIR would substantially reduce one or more significant effects on the environment,but the Project proponents decline to adopt the mitigation measure or alternative. 2.Based upon the testimony and information presented at the hearing and upon review and consideration of the environmental documentation provided,the City Council,exercising its independent judgment and analysis,finds that the proposed First Amendment falls within the environmental parameters analyzed in the 2009 EIR and 2013 Addendum to the 2009 EIR,and further finds that the Project would not result in any new significant environmental effects or a substantial increase in the severity of any previously identified effects beyond those disclosed and analyzed in the 2009 EIR and 2013 Addendum to the 2009 EIR certified/adopted by City Council nor would new mitigation be required by the Project,and the prior Mitigation Monitoring and Reporting Program would continue to apply.The Project would not result in any new impacts not adequately evaluated and addressed by the 2009 EIR and 2013 Addendum to the 2009 EIR. SECTION 2.Approval of Development Agreement A.The City Council of the City of South San Francisco hereby approves the First Amendment to the Second Amended and Restated Development Agreement with BMR-700 Gateway LP,BMR-750,800,850 Gateway LP,BMR-900 Gateway LP,and BMR-1000 Gateway LP,attached hereto as Exhibit A and incorporated herein by reference. B.The City Council further authorizes the City Manager to execute the First Amendment to the Second Amended and Restated Development Agreement,on behalf of the City,in substantially the form attached as Exhibit A,and to make revisions to such Agreement,subject to the approval of the City Attorney, which do not materially or substantially increase the City’s obligations thereunder. SECTION 3.Severability If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid or unconstitutional,the remainder of this Ordinance,including the application of such part or provision to other City of South San Francisco Printed on 3/18/2020Page 4 of 5 powered by Legistar™ File #:20-24 Agenda Date:2/12/2020 Version:1 Item #:6a. unconstitutional,the remainder of this Ordinance,including the application of such part or provision to other persons or circumstances shall not be affected thereby and shall continue in full force and effect.To this end, provisions of this Ordinance are severable.The City Council of the City of South San Francisco hereby declares that it would have passed each section,subsection,subdivision,paragraph,sentence,clause,or phrase hereof irrespective of the fact that any one or more sections,subsections,subdivisions,paragraphs,sentences, clauses, or phrases be held unconstitutional, invalid, or unenforceable. SECTION 4.Publication and Effective Date. Pursuant to the provisions of Government Code Section 36933,a summary of this Ordinance shall be prepared by the City Attorney.At least five (5)days prior to the Council meeting at which this Ordinance is scheduled to be adopted,the City Clerk shall (1)publish the Summary,and (2)post in the City Clerk’s Office a certified copy of this Ordinance.Within fifteen (15)days after the adoption of this Ordinance,the City Clerk shall (1) publish the summary,and (2)post in the City Clerk’s Office a certified copy of the full text of this Ordinance along with the names of those City Council members voting for and against this Ordinance or otherwise voting. This Ordinance shall become effective thirty (30) days from and after its adoption. City of South San Francisco Printed on 3/18/2020Page 5 of 5 powered by Legistar™ Page 1 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Clerk City of South San Francisco 400 Grand Avenue P. O. Box 711 South San Francisco, CA 94083 Exempt from recording fees per Government Code §§6103, 27383 ______________________________________________________________________________ Space above this line reserved for recorder’s use APNs: 015-023-290; 015-023-300 015-023-200; 015-023-320; 015-023-430; 015-023-190; 015-023-310 FIRST AMENDMENT TO SECOND AMENDED AND RESTATED DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF SOUTH SAN FRANCISCO AND BMR-700 GATEWAY LP, BMR-750, 800, 850 GATEWAY LP, BMR-900 GATEWAY LP, AND BMR-1000 GATEWAY LP SOUTH SAN FRANCISCO, CALIFORNIA Gateway Business Park Master Plan Project Exhibit A FIRST AMENDMENT TO SECOND AMENDED AND RESTATED DEVELOPMENT AGREEMENT Page 2 FIRST AMENDMENT TO SECOND AMENDED AND RESTATED DEVELOPMENT AGREEMENT Gateway Business Park Master Plan Project This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED DEVELOPMENT AGREEMENT FOR THE GATEWAY BUSINESS PARK MASTER PLAN PROJECT is dated __________ ___, 2020 (“First Amendment”). This First Amendment is between BMR-700 Gateway LP (“BMR-700 Gateway); BMR-750, 800, 850 Gateway LP (“BMR-750, 800, 850 Gateway”); BMR-900 Gateway LP (“BMR-900 Gateway”); and BMR- 1000 Gateway LP (“BMR-1000 Gateway”); all of which are Delaware limited partnerships (collectively “Owners” and individually “Owner”), on the one hand, and the CITY OF SOUTH SAN FRANCISCO, a municipal corporation organized and existing under the laws of the State of California (“City”), on the other hand. Each Owner and the City are individually referred to herein as a “Party” and collectively referred to herein as “Parties.” RECITALS A. WHEREAS, Owners and City are parties to that certain Second Amended and Restated Development Agreement (Gateway Business Park Master Plan Project) by and between the Owners and City, dated August 31, 2018, and recorded in the Official Records of San Mateo County on September 7, 2018, as Document Number 2018-070317 (“Development Agreement”); B. WHEREAS, Owners and City wish to amend the Development Agreement as set forth in this First Amendment; C. WHEREAS, all proceedings necessary for the valid adoption and execution of this First Amendment have taken place in accordance with California Government Code sections 65864 through 65869.5, the California Environmental Quality Act, and Chapter 19.60 of the City’s Municipal Code; D. WHEREAS, the City Council and the City Planning Commission have found that the Development Agreement, as amended by this First Amendment, is consistent with the objectives, policies, general land uses, and programs specified in the South San Francisco General Plan; and E. WHEREAS, on __________ ___, 2020, the City Council of City adopted Ordinance Number ____-2020 approving and adopting this First Amendment, and such ordinance took effect 30 days later. AGREEMENT NOW, THEREFORE, the Parties, pursuant to the authority contained in Government Code Sections 65864 through 65869.5 and Chapter 19.60 of the City’s Municipal Code, and in consideration of the mutual covenants and agreements contained herein, agree as follows: FIRST AMENDMENT TO SECOND AMENDED AND RESTATED DEVELOPMENT AGREEMENT Page 3 1. Revised Childcare Replacement Facility Requirement. Section 12(b) of the Development Agreement and Section 1.2.4(b) of Exhibit E-1 to the Development Agreement are each amended and restated in their entirety to read as follows: (b) Childcare Replacement Facility. To enable City to provide a childcare facility comparable to the former childcare facility that was designated for 850 Gateway Boulevard, envisioned to serve up to 80 to 100 children, the Owners of Phases 2, 3, and 4 collectively shall pay to the City (i) one million dollars ($1,000,000.00) within 30 days of the First Amendment Effective Date and (ii) six million five hundred thousand dollars ($6,500,000.00) prior to City’s issuance of a temporary certificate of occupancy for Phase 2. The Parties agree that these payments satisfy Owners’ childcare facility obligations in light of the present value of the funds to the City for other public projects and the potential renovation of an existing building to provide a space for a replacement childcare facility. Use of the funds is not limited to any specific potential project, and the City may use the initial one million dollars ($1,000,0000) for other public projects and the balance of funds for the provision of any childcare facility, including all costs associated with site acquisition (including, if necessary, eminent domain), environmental review, permitting, and all other expenses and fees, including reasonable attorneys' fees. Compliance with Section 12(b) of the DA and section 1.2.4(b) of Exhibit E-1 shall be deemed to be compliance with condition of approval A-16.b. The “First Amendment Effective Date” is defined as the date that the ordinance approving the First Amendment to this Agreement took effect. 2. Revised Fee Estimate. Exhibit E-2 to the Development Agreement is amended such that the seventh row of the second table is amended and restated to state “Child Care Facility (§ 12(b) of DA)” in the Fee column, “$7.5 million paid in accordance with § 12(b)” in the Rate and All Phases Fee columns, and “$0.00” in the Phase 1 Fee column. 3. Effective Date. Pursuant to Section 19.60.140 of the City’s Municipal Code, notwithstanding the fact that the City Council adopted an ordinance approving this First Amendment, this First Amendment shall be effective and shall only create obligations for the Parties from and after the date that the ordinance approving this First Amendment takes effect. 4. Full Force and Effect. As amended by this First Amendment, the Development Agreement shall remain in full force and effect. 5. Counterparts. This First Amendment may be executed in multiple originals, each of which is deemed an original, and may be signed in counterparts. IN WITNESS WHEREOF this Agreement has been executed by the Parties on the day and year first above written. (Signatures appear on the following pages) FIRST AMENDMENT TO SECOND AMENDED AND RESTATED DEVELOPMENT AGREEMENT Page 4 CITY: CITY OF SOUTH SAN FRANCISCO By: __________________________ Name: __________________________ Its: City Manager ATTEST: __________________________ City Clerk APPROVED AS TO FORM: __________________________ City Attorney OWNERS: BMR-700 GATEWAY LP By: ___________________________ Name: ___________________________ Its: ___________________________ BMR-750, 800, 850 GATEWAY LP By: ___________________________ Name: ___________________________ Its: ___________________________ BMR-900 GATEWAY LP By: ___________________________ Name: ___________________________ Its: ___________________________ BMR-1000 GATEWAY LP By: ___________________________ Name: ___________________________ Its: ___________________________ FIRST AMENDMENT TO SECOND AMENDED AND RESTATED DEVELOPMENT AGREEMENT Page 5 A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of _______________________ ) ) County of _____________________ ) On ____________________, before me, ______________________________, a Notary Public, personally appeared ______________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature______________________________ (Seal) 3461691.1 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-120 Agenda Date:2/12/2020 Version:1 Item #:7. Report regarding consideration of a Development Agreement,a Relocation Agreement,and Sign Permit to allow the installation of a 80 foot tall,double-faced,digital billboard on property located at 345 Shaw Road, and determining that the 2015 IS/MND continues to serve as the applicable environmental review document pursuant to CEQA.(Billy Gross, Senior Planner) RECOMMENDATION Staff recommends that the City Council open the public hearing and continue the item to March 11, 2020. BACKGROUND/DISCUSSION Due to unforeseen internal delays,the applicant has requested that additional time be provided before final action is taken on their application.Therefore,staff recommends a motion to open the public hearing and to continue the item to the March 11, 2020 City Council meeting. City of South San Francisco Printed on 2/7/2020Page 1 of 1 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-47 Agenda Date:2/12/2020 Version:1 Item #:8. Conference with Legal Counsel - Anticipated Litigation (Pursuant to Government Code section 54956.9(d)(2)) Significant Exposure to Litigation: One Potential Case (Sky Woodruff, City Attorney and Christina Fernandez, Assistant to the City Manager) City of South San Francisco Printed on 2/7/2020Page 1 of 1 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-103 Agenda Date:2/12/2020 Version:1 Item #:9. Closed Session: Conference with Legal Counsel - Existing Litigation (Paragraph (1) of subdivision (d) of Government Code Section 54956.9) Name of Case: Kashiwa Fudosan America, Inc. v. City of South San Francisco San Mateo County Superior Court Case Number: 18-CIV-01728 City of South San Francisco Printed on 2/7/2020Page 1 of 1 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:20-49 Agenda Date:2/12/2020 Version:1 Item #:10. CONFERENCE WITH LABOR NEGOTIATORS Agency designated representatives: Leah Lockhart, Human Resources Director, Donna Williamson, Liebert Cassidy Whitmore Employee organization: AFSCME, Local 829; Confidential Unit - Teamsters Local 856; International Union of Operating Engineers, Local 39; and Mid-management Unit - Teamsters Local 856; IAFF Local 1507 City of South San Francisco Printed on 2/7/2020Page 1 of 1 powered by Legistar™