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Reso 0504-12/1978- EXHIBIT "A" NOTICE INVITING BIDS $1,213,380.14 IMPROVEMENT BONDS ASSESSMENT DISTRICT NO. 76-3 (QUESTHAVEN) SAN MARCOS COUNTY WATER DISTRICT NOTICE IS HEREBY GIVEN that a representative of the Board of Directors of the San Marcos County Water District, County of San Diego, State of California, will receive sealed bids for the purchase of the following described bonds at the office of the Water District, 788 San Marcos Boulevard, San Marcos, California, 92069, up to the hour of 2:00 P.M., January 8, 1979. Said bids will be opened at said time and place. The bonds to be sold are bonds to be issued to represent unpaid assessments levied upon the lands within Assessment District No. 76-3 of said Water District, to pay the cost of the acquisition of certain property and the construction of certain waterworks system improvements, appurtenances and all appurtenant work in connection therewith within said Assessment District, which assessments have been made under the Municipal Improvement Act of 1913, Division 12 of the Streets and Highways Code. Said bonds will be issued under the Improvement Bond Act of 1915, Division 10 of the Streets and Highways Code; and, ef~cept as otherwise provided in the Municipal Improvement Act of 1913, the provisions of said Division l0 apply to said bonds and govern as to the issuance, collection and enforcement thereof. Proposals for the purchase of the bonds will be made and considered subject to the following terms and conditions: BONDS: $~~2~3~38~.~4principa~am~unt~ftheb~ndsnumberedc~nsecutive~yfr~m~t~243~datedJanuary2~ 1979, all in the denomination of $5,000 (except Bond No. 1, which is in the denomination of $3,380. 14). The bond s are authorized to be issued pursuant to the proceedings for said Assessment District. The bonds will mature in consecutive numerical order over a period commencing July 2, 1980 and ending July 2, 1999 according to the following schedule: Principal Principal Year Maturing Year Maturing 1980 ............................... $ 3,380.14 1990 ............................... $ 60,000 1981 ............................... 30,000 1991 ............................... 65,000 1982 ............................... 30,000 1992 ............................... 70,000 1983 ............................... 35,000 1993 ............................... 75,000 1984 ............................... 35,000 1994 ............................... 80,000 1985 ............................... 40,000 1995 ............................... 85,000 1986 ............................... 40,000 1996 ............................... 90,000 1987.'. ............................. 45,000 1997 ............................... 100,000 1988 ............................... 50,000 1998 ............................... I10,000 1989 ............................... 55,000 1999 ............................... 115,000 Interest on the bonds for the first twelve months will be payable on January 2, 1980. Thereafter interest will be payable semi-annually on July 2 and January 2 of each year. REDEMPTION: Any bond may be redeemed on any January 2 or July 2 prior to its fixed maturity date, at the option of the Water District, upon giving the notice provided in the Improvement Bond Act of 1915 and upon payment of the principal amount thereof and interest accrued thereon to the date of redemption, plus a redemption premium of five percent (5%) of the principal amount thereof. AUTHORITY FOR ISSUANCE: The improvement proceedings for San Marcos County Water District Assessment District No. 76-3 are being conducted pursuant to the Municipal Improvement Act of 1913 in accor- dance with Resolution of Intention No. 477 adopted by the Board of Directors on July 3, 1978. The Bonds repre- sent the unpaid assessments levied against private property in the Assessment District in accordance with the provisions of the Municipal Improvement Act of 1913, and will be issued pursuant to the Improvement Bond Act of 1915. VAI~I DATION PROCEEDINGS: The Water District has caused to be filed in the Superior Court of the State of California in and for the County of San Diego an action brought pursuant to the in rein validation procedures provided for in Section 860, and following, of the Code of Civil Procedure of the State of California, being Case No. N11348, entitled SAN MARCOS COUNTY WATER DISTRICT, a municipal corporation of the State of California, Plaintiff, vs. ALE PERSONS INTERESTED lN THE MATTER OF THE VALlDITY OF THE ASSESSMENTS LEVIED AND CONFIRMED BY THE SAN MARCOS COUNTY WATER DISTRICT IN ASSESSMENT DISTRICT NO. 76-3, Defendants. The primary issues raised in such action relate to the effect of Article XII1A of the California Constitution ( Proposition 13 - the Jarvis-Gann Initiative) upon the validity of the assessments levied in the proceedings for the Assessment District. On December 12, 1978 judgment was entered in said action in favor of the plaintiff, adjudging, declaring, and decreeing, among other things, that: l ) The assessments. and each of them, confirmed and levied in Assessment District No. 76-3 proceedings by the Board of Directors of the San Marcos County Water District, plaintiff, were duly, properly and legally confirmed and levied pursuant to and in accordance with the provisions of all laws, statutory or constitutional or decisional, applicable to the confirmation and levy of said assessments; and 2) Said assessments, and each of them, are not "special taxes" as that term is used in Section 4 of Article XI IIA of the Constitution of the State of California. Said assessments are benefit assessments which were confirmed and levied, and are to be enforced and collected, in return for benefits received and to be received from improvements to be acquired and constructed by and through the proceedings in which said assessments were so confirmed and levied. For further information concerning the validation proceedings see the files for Case No. N 11348 in the office of the Clerk of the Superior Court of the State of California in and for the County of San Diego. SECURITY OF THE BONDS: The bonds herein offered for sale are issued upon and secured by unpaid assessments together with interest thereon; and said unpaid assessments together with interest thereon constitute a trust fund for the redemption and payment of the principal of the bonds and the interest thereon; and all the bonds are secured by the monies in the Redemption Fund created pursuant to said proceedings and by the unpaid assessments levied to provide for payment of said acquisitions and improvements, and, as to principal and interest, are payable exclusively out of said Redemption Fund. The unpaid assessments are collected in semi-annual installments, together with interest on the declining bal- ances, on the tax roll on which general taxes for real property are collected and are payable and become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest as general taxes and the properties upon which the assessments were levied are subject to the same provisions for sale and redemption as are properties for non-payment of general taxes. In the event of a delinquency in the payment of any installment of principal and interest appearing on the tax roll, the Water District is obligated to advance from surplus funds the amounts of such delinquency to the Redemption Fund. Passage on June 6, of the Jarvis-Gann Initiative (Proposition 13), now Article XIII A of the California Con- stitution, will sharply reduce the amount of general property tax revenues received by the Water District, begin- ning in the fiscal year 1978/79; such reduction in tax revenues makes it less likely that the Water District will have surplus funds to advance to the Redemption Fund to cover delinquencies. In addition, passage ofsaid lnitiative and subsequent statutory enactments eliminate the formerly applicable mandatory duty on the part of the Water District to levy and collect a special tax (in the amount necessary to meet delinquencies, but not to exceed 10c per $100 of assessed valuation of property within the Water District) if surplus funds are not available to cover delinquencies. LETTER OF CREDIT: In order to provide the Water District with a source of funds which it could advance to the Redemption Fund in the event of deficiencies in said Fund, the Water District and La Costa Land Company have entered into an agreement which will enable the Water District to obtain a letter of credit from Security Pacific National Bank under which letter of credit the Water District may draw funds for such purpose. The maximum amount available under the letter of credit will be equal to the maximum annual debt service on the Bonds; and, although said amount will be reduced in the event of a reduction in the maximum annual debt service, additional funds will not be made available thereunder to replace amounts paid to the Water District pursuant to the letter of credit. FORECLOSURE POLICY: The Board of Directors of the Water District by resolution adopted on Dec- ember 4, 1978 declared its intention to foreclose through Superior Court action, pursuant to the provisions of Part 14 (commencing with Section 8830) of the Improvement Bond Act of 1915, any and all properties delinquent in payment for any installment of principal or interest on an assessment levied in connection with the Assessment District. PRIOR ASSESSMENT LIENS: The lien of several of the unpaid assessments levied in the proceedings for Assessment District No. 76-3 (Questhaven), dated October 20, 1978, are subject and inferior to the lien of unpaid assessments levied in proceedings for Assessment District No. 76-I (Las Posas), also dated October 20, 1978. Liens of unpaid assessments levied in the proceedings for Assessment District No. 76-1 exist on twenty-seven (27) of the sixty-six (66) parcels of property within Assessment District No.76-3 with unpaid assessments. The reduc- tion in tax revenues resulting from the enactment of Article XlII A and subsequent statutory enactments makes it less likely that the Water District will have surplus funds to advance to the Redemption Fund for Assessment District No. 76-1 bonds to cover any delinquency in the payment of any unpaid assessments levied in the prior proceedings for Assessment District No. 76-1. TERMS OF SALE INTEREST RATE: The bonds shall bear interest from their date at a rate or rates to be determined at the sale thereof, not to exceed the legal maximum of eight percent (8%) per annum. Said bonds shall be represented by two coupons payable semi-annually on January 2 and July 2 in each year except the first coupon, which will be for interest from the date of said bonds to January 2, 1980. Bidders may specify any number of separate interest rates, and any rate may be repeated as often as desired; provided, however, that (i) the difference between the highest and lowest coupon rates specified in any bid shall not exceed two percent (2%); (ii) each interest rate speci- fied must be in a multiple of l / 20 of 1% and a zero rate of interest cannot be specified; (iii) no bond shall bear more than one rate of interest, no interest shall be evidenced by more than one coupon and supplemental coupons will not be permitted; (iv) each bond shall bear interest from its date to its stated maturity date at the interest rate specified in the bid; (v) all bonds of the same maturity date shall bear the same interest rate; and (vi) any premium must be paid in bank funds as part of the purchase price, and no bid will be accepted which provides for the can- cellation and surrender of any interest coupon or for the waiver of interest or other concession by the bidder as a substitute for payment in full of the purchase price in bank funds. Bids which do not conform to the terms of this paragraph will be rejected. HIGHEST BID: Each proposal must be for all of the bonds. The bonds will be awarded to the highest respon- sible and responsive bidder bidding for the bonds, considering the interest rates specified and the premium offered, if any, or the discount bid, if any. The highest bid will be determined by deducting the amount of the premium bid (if any) from, or by adding the amount of the discount bid {if any) to the total amount of interest which the Water District would be required to pay from the date of the bonds to their respective maturity dates at the coupon rates specified in the bid; and the award will be made on the basis of the lowest net interest cost to the Water District. In the event two or more bidders have the same lowest net cost to the Water District the award shall be made by lot. The purchaser must pay accrued interest from the date of the bonds to the date of delivery. All interest will be com- puted on a 360-day year basis. The cost of printing the bonds will be borne by the Water District. DISCOUNT: No bid for less than ninety-two percent (92%) of par will be considered. FORM OF BID: Each bid, together with the bid check, must be in a sealed envelope, addressed to the San Marcos County Water District, 788 San Marcos Boulevard, San Marcos, California 92069, with the envelope and bid clearly marked as follows: Proposal for Improvement Bonds San Marcos County Water District Assessment District No. 76-3 (Questhaven) All proposals must be delivered to the office of the Secretary of the San Marcos County Water District, 788 San Marcos Boulevard, San Marcos, California 92069, up to the hour of 2:00 p.m., January 8, 1979. BID CHECK: With each proposal must be submitted a cashier's check for $30,000 drawn on a bank or trust company transacting business in the State of California, payable to the order of the San Marcos County Water District, to secure the Water District from any loss resulting from the failure of the bidder to comply with the terms of his bid. Checks of all bidders (except the successful bidder) will be returned by the Water District by mail promptly following the sale date above specified. No interest will be paid upon the deposit made by any bidder. NET INTEREST COST: Bidders are requested, but not required, to supply an estimate of the total net interest cost and the estimated net interest rate to the Water District on the basis of their respective bids, which shall be considered as informative only and not binding on either the bidder or the Water District. RIGHT OF REJECTION: The Water District reserves the right, in its discretion, to reject any and all pro- posals and to waive any irregularity or informality in any proposal. PROMPT AWARD: The Water District will take action awarding the bonds or rejecting the bids not later than 36 hours after the expiration of the time herein prescribed for the receipt of proposals, unless such time of award is waived by the successful bidder. PLACE OF DELIVERY: Delivery of the bonds will be made to the successful bidder at the office of the Water District, 788 San Marcos Boulevard, San Marcos, California 92069, or at Jeffries Banknote Company, 1330 West Pico Boulevard, Los Angeles, California 90015, or at any other place agreeable to the Water District and the successful bidder. PROMPT DELIVERY; RIGHT OF CANCELLATION: It is expected the bonds will be ready for delivery within 15 days after their date. In the event the Water District shall fail to execute the bonds and tender the same for delivery within sixty (60) days from the date of sale thereof, the successful bidder shall have the right to cancel the contract of purchase, at his option; and, in case of such cancellation, the Water District shall return to the suc- cessful bidder the deposit which acccompanied his bid. EXECUTION AND REGISTRATION: Coupon bonds will be issued by the Water District. The bonds will be executed by the manual signature of at least one official authorized to execute the bonds. The bonds are registerable only as to both principal and interest, and after being registered are not subject to discharge from registration. PAYMENT: Both principal and interest are payable in lawful money of the United States of America at the office of the Water District in San Marcos, California or at the main office of the Water District's paying agent. TAX EXEMPT STATUS: In the event that prior to the delivery of the bonds either (a) the income received by any private holder from bonds of the same type and character shall be declared to be taxable (either at the time of such declaration or at any future date) under any federal income tax laws, either by the terms of such laws or by ruling of a federal income tax authority or official which is followed by the Internal Revenue Service, or by decision of any federal court, or (b) any federal income tax law is adopted which will have a substantial adverse tax effect on holders of the bonds as such, the successful bidder may, at his option, prior to the tender of the bonds by the Water District, be relieved of his obligation under the contract to purchase the bonds; and such case the deposit accompanying his bid will be returned. LEGAL OPINION: The opinion of Stradling, Yocca, Carlson & Rauth, Attorneys at Law, approving the validity of said bonds will be furnished to the successful bidder at or prior to the date of delivery of the bonds, at no expense to the bidder. A copy of the legal opinion regarding the bonds, certified by the officer in whose office the original is filed, will be printed on each bond without charge to the successful bidder. ARBITRAGE CERTIFICATE: At the time of the delivery of and payment for the bonds, the Water District will deliver a certificate signed by an appropriate officer of the Water District certifying its reasonable expectations on the date of the issue of the bonds as to the future events regarding the bonds relative to a determination that the proceeds of the bonds will not be used in a manner that would cause the bonds to be arbitrage bonds. NO LITIGATION CERTIFICATE: At the time of payment for and delivery of said bonds, the Water Dis- trict will furnish the successful bidder a certificate that there is no litigation pending affecting the validity of the bonds. OFFICIAL STATEMENT: The Water District has had prepared an Official Statement, a copy of which will be furnished upon request to the Water District or to Stone & Youngberg Municipal Financing Consultants, Inc., the financing consultant to the Water District. One hundred (100) copies of said Official Statement will be made available to the successful bidder without charge. Requests for an Official Statement or for other information concerning the Assessment District should be addressed to: San Marcos County Water District 788 San Marcos Boulevard San Marcos, California 92069 Stone & Youngberg Municipal Financing Consultants, Inc. 1541 Wilshire Boulevard, Suite 402 Los Angeles, California 90017 Stone & Youngberg Municipal Financing Consultants, Inc. One California Street, Suite 2750 San Francisco, California 94111 GIVEN by order of the Board of Directors of the San Marcos County Water District, County of San Diego, California. Adopted on the 18th day of December 1978. /s/James F. McKay Secretary San Marcos County Water District RESOLUTION NO. 504 RESOLUTION OF THE BOARD OF DIRECTORS OF SAN MARCOS COUNTY WATER DISTRICT APPROVING THE OFFICIAL STATEMENT FOR ASSESSMENT DISTRICT NO. 76-3 BONDS BE IT RESOLVED, DETERMINED AND ORDERED that the official statement prepared by Stone & Youngberg Municipal Financing Consultants, Inc., presented to this Board of Directors on this date, is hereby approved in substantially the form presented. Said official statement is hereby authorized to be mailed to prospective bidders for the San Marcos County Water District Assessment District No. 76-3 Bonds. It is the under- standing of this Board of Directors that Stone & Youngberg Municipal Financing Consultants, Inc., will make such additions and corrections thereto as may be necessary to make said official statement current prior to mailing. ADOPTED, SIGNED AND APPROVED this 18th day of December, 1978. (SEAL) ATTEST: STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) I, JAMES F. McKAY, Secretary of the San Marcos County Water District, California, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Board of Directors of said District at a meeting of said Board of Directors held on the 18th day of December, 1978, and that it was so adopted by the following vote: AYES: DIRECTORS: Keebaugh Ferguson, Mahr, Blanchard NOES: DIRECTORS: None ABSENT: DIRECTORS: None ABSTAIN: DIRECTORS: Smith ~~ir~S. can~C°unty (SEAL) -2- 20!_ STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) I, JAMES F. McKAY, Secretary of the San Marcos County Water District, California, DO HEREBY CERTIFY that the foregoing is a full, true and correct copy of Resolution No. 504 of the Board of Directors of said District, and that the same has not been amended or repealed. DATED: December 20 , 1978. S.~~ounty (SEAL) -3-