ATTACHMENT A
Board of Trustees
ACTION
Los Angeles Community College District
Com. No. BF4
Date: March 06, 2013
Division: BUSINESS AND FINANCE
Subject:
RESOLUTION AUTHORIZING ISSUANCE OF 2008 ELECTION
GENERAL OBLIGATION BONDS, SERIES F
Adopt Resolution dated March 6, 2013 (hereto attached and identified as
Attachment 1) entitled “Resolution Authorizing Issuance of and Sale of the
Los Angeles Community College District(Los Angeles County, California) 2008
Election General Obligation Bonds, Series F” or such other designation or
designations as are specified in the Official Statement for the Bonds (the
“Bonds”).
Background: The adoption of the resolution by the Board of Trustees
approves, authorizes and directs execution of various documents and directs
certain actions with respect to the execution and delivery of general
obligation bonds to provide for the funding of various capital projects for the
construction and equipping of and improvement to certain campuses, site
acquisitions for outreach and administrative support and completion of other
projects in the master plan at all nine colleges of the Los Angeles Community
College District.
This Resolution is a required first step in the issuance process, following
which, the County Board of Supervisors will approve its own Resolution,
leading to pricing and sale. The Bonds are expected to be delivered on or
about May 15, 2013.
Recommended by: ____________________________________ Approved by _____________________________
Adriana D. Barrera, Deputy Chancellor
Daniel LaVista, Chancellor
Chancellor and
Secretary of the Board of Trustees
By ___________________________
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Com. No.
BF4
Date ________
Div.
Candaele ___________
Santiago ___________
Field ______________
Svonkin ___________
Park _______________
Veres _____________
Pearlman ___________
Campos ___________
BUSINESS AND FINANCE
Student Trustee Advisory Vote
Date
3-06-2013
RESOLUTION NO. ___
A RESOLUTION OF THE BOARD OF TRUSTEES OF THE LOS ANGELES
COMMUNITY COLLEGE DISTRICT AUTHORIZING THE ISSUANCE OF 2008
ELECTION GENERAL OBLIGATION BONDS, SERIES F
WHEREAS, a duly called election was held in the Los Angeles Community College District
(the “District”), Los Angeles County, State of California, on November 4, 2008 (the “Election”) and
thereafter canvassed pursuant to law;
WHEREAS, at such election there was submitted to and approved by the requisite fifty-five
percent vote of the qualified electors of the District a question as to the issuance and sale of general
obligation bonds of the District for various purposes set forth in the ballot submitted to the voters, in
the maximum amount of $3,500,000,000 payable from the levy of an ad valorem tax against the
taxable property in the District;
WHEREAS, on April 1, 2009, the District issued the two series of such bonds in the
aggregate principal amount of $425,000,000 and styled as “Los Angeles Community College
District, Los Angeles County, California 2008 Election General Obligation Bonds, 2009 Series A
and Series B”;
WHEREAS, on July 22, 2010, the District issued an additional series of such bonds in the
aggregate principal amount of $900,000,000 and styled as “Los Angeles Community College
District, Los Angeles County, California, General Obligation Build America Bonds (Direct Subsidy),
2008 Election 2010 Taxable Series E”;
WHEREAS, on August 10, 2010, the District issued an additional series of such bonds in the
aggregate principal amount of $175,000,000 and styled as “Los Angeles Community College
District, Los Angeles County, California, 2008 Election General Obligation Bonds, 2010 Series C”;
WHEREAS, on August 10, 2010, the District issued an additional series of such bonds in the
aggregate principal amount of $125,000,000 and styled as “Los Angeles Community College
District, Los Angeles County, California, 2008 Election General Obligation Bonds, 2010 Series D”;
WHEREAS, at this time this Board of Trustees (the “Board”) has determined that it is
necessary and desirable to authorize the issuance of one or more series of bonds in an aggregate
principal amount not-to-exceed $ 350,000,000 to be styled as “Los Angeles Community College
District (Los Angeles County, California) 2008 Election General Obligation Bonds, Series F” or such
other designation or designations as are specified in the Official Statement for the Bonds (the
“Bonds”);
WHEREAS, the District shall issue the Bonds pursuant to Article 4.5 Chapter 3 of Part 1 of
Division 2 of Title 5 of the California Government Code (the “Act”);
WHEREAS, the Board desires to authorize the issuance of Bonds in one or more series as
current interest bonds;
WHEREAS, this Board desires to reappoint certain professionals to provide services related
to the issuance of Bonds; and
WHEREAS, all acts, conditions and things required by law to be done or performed have
been done and performed in strict conformity with the laws authorizing the issuance of general
obligation bonds of the District, and the indebtedness of the District, including this proposed issue of
Bonds, is within all limits prescribed by law;
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE LOS
ANGELES COMMUNITY COLLEGE DISTRICT AS FOLLOWS:
SECTION 1. Purpose. To raise money for the purposes authorized by the voters of the
District at the Election and to pay all necessary legal, financial, engineering and contingent costs in
connection with the issuance of the Bonds, this Board hereby authorizes the issuance of the Bonds
and orders such Bonds sold at a competitive sale, in one or more series, such that the Bonds shall be
dated as of a date to be determined by the Authorized Officers (defined below), shall bear interest at
a rate not to exceed that authorized at the Election, shall be payable upon such terms and provisions
as shall be set forth in the Bonds, shall mature on the dates and in the amounts set forth in the
Official Statement (defined herein), not-to-exceed forty years from the date of delivery of the Bonds,
and shall be in an aggregate principal amount not-to-exceed $350,000,000, for some or all of the
purposes authorized at the Election (the “Projects”).
SECTION 2. Bond Registrar. This Board does hereby appoint the Treasurer and Tax
Collector as authenticating agent, bond registrar, transfer agent and paying agent (collectively, the
“Bond Registrar”) for the Bonds on behalf of the District. The Treasurer and Tax Collector is
authorized to contract with any third party to perform the services as Bond Registrar hereunder. This
Board hereby approves the payment of the reasonable fees and expenses of the Bond Registrar as
they shall become due and payable. The fees and expenses of the Bond Registrar which are not paid
as a cost of issuance of the Bonds may be paid in each year from ad valorem taxes levied and
collected for the payment thereof, insofar as permitted by law, including specifically by Section
15232 of the Education Code. The Bank of New York Mellon Trust Company, N.A., is approved as
the initial agent for the Treasurer and Tax Collector to act as Bond Registrar.
SECTION 3. Approval of the Notice Inviting Proposals for Purchase of Bonds. The
competitive sale of the Bonds shall be undertaken pursuant to the Notice Inviting Proposals for
Purchase of Bonds, and the Notice of Intention To Sell, set forth in Exhibits A, B and C hereto. The
Chancellor of the District (the “Chancellor”), the Chief Financial Officer/Treasurer (the “CFO”), or a
designated deputy thereof (collectively, the “Authorized Officers”) each alone, are hereby authorized
to execute the Notice of Intention to Sell attached hereto as Exhibit C (the “Notice of Intention”) and
to cause the Notice of Intention to be published in The Bond Buyer once at least five (5) days prior to
the date set to receive bids.
The terms and conditions of the offering and the sale of the Bonds shall be as specified in the
Notice Inviting Proposals for Purchase of Bonds. The Board shall award the sale of the Bonds by
acceptance of the bids with the lowest true interest cost with respect to the Bonds, so long as the
principal amount of the Bonds does not exceed $350,000,000, the true interest cost does not exceed
6% per annum.
KNN Public Finance, the financial advisor to the District (the “Financial Advisor”), is hereby
authorized and directed to cause to be furnished to prospective bidders a reasonable number of copies
of the Notice Inviting Proposals for Purchase of Bonds (including the Bid Form) and a reasonable
number of copies of the Official Statement.
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The Board hereby approves the competitive sale of the Bonds, having determined that a
competitive sale contributes to the District’s goal of achieving the lowest overall cost of funds. The
Board estimates that the costs associated with the issuance of the Bonds and any such costs which the
successful bidder or bidders agrees to pay pursuant to the Notice Inviting Proposals for Purchase of
Bonds, will equal approximately 1.5% of the principal amount of the Bonds.
The Financial Advisor and/or Stradling Yocca Carlson & Rauth, a Professional Corporation,
San Francisco, California (“Bond Counsel”), are hereby authorized and directed to open the bids at
the time and place specified in the Notice Inviting Proposals for Purchase of Bonds and to present the
same to the Authorized Officers. The Financial Advisor and/or Bond Counsel are hereby authorized
and directed to receive and record the receipt of all bids made pursuant to the Notice Inviting
Proposals for Purchase of Bonds; to cause said bids to be examined for compliance with the Notice
Inviting Proposals for Purchase of Bonds; and to cause computations to be made as to which bidder
has bid the lowest true interest cost with respect to the Bonds, as provided in the Notice Inviting
Proposals for Purchase of Bonds, along with a report as to the foregoing and any other matters
deemed pertinent to the award of the Bonds and the proceedings for the issuance thereof.
SECTION 4. Certain Definitions. As used in this Resolution, the terms set forth below
shall have the meanings ascribed to them (unless otherwise set forth in the Official Statement):
(a)
“Bond Insurer” means any insurance company which issues a municipal bond
insurance policy insuring the payment of principal and interest on the Bonds.
(b)
“Bond Payment Date” means (unless otherwise provided for in the Official
Statement), February 1 and August 1 of each year commencing August 1, 2013 with respect to
interest on the Bonds and August 1 of each year commencing August 1, 2014 with respect to the
principal payments on the Bonds.
(c)
“Bond Registrar” means initially, the Treasurer and Tax Collector, and afterward The
Bank of New York Mellon Trust Company, N.A., as the agent of the Treasurer and Tax Collector, or
any other such bond registrar designated in the Official Statement.
(d)
“Code” means the Internal Revenue Code of 1986, as the same may be amended from
time to time. Reference to a particular section of the Code shall be deemed to be a reference to any
successor to any such section.
(e)
“Continuing Disclosure Agreement” means that certain Continuing Disclosure
Agreement, by and between the District and the dissemination agent named therein, dated the date of
issuance and delivery of the Bonds, as originally executed and as it may be amended from time to
time in accordance with the terms thereof.
(f)
“Depository” means, initially, DTC, and thereafter the securities depository acting as
Depository pursuant to Section 5(c) hereof.
(g)
“DTC” means The Depository Trust Company, New York, New York, 55 Water Street,
New York, New York 10041,Tel: (212) 855-1000 or Fax: (212) 855-7320, a limited purpose trust
company organized under the laws of the State of New York, in its capacity as Depository for the Bonds.
(h)
“Fair Market Value” means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the
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contract to purchase or sell the investment becomes binding) if the investment is traded on an
established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the
term “Fair Market Value” means the acquisition price in a bona fide arm's length transaction (as
referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with
applicable regulations under the Code, (ii) the investment is an agreement with specifically
negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for
example, a guaranteed investment contract, a forward supply contract or other investment agreement)
that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a
United States Treasury Security—State and Local Government Series that is acquired in accordance
with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled
investment fund in which the District and related parties do not own more than a ten percent (10%)
beneficial interest therein if the return paid by the fund is without regard to the source of the
investment.
(o)
“Information Services” means Financial Information, Inc.’s “Financial Daily Called
Bond Service”; Mergent Inc.’s Called Bond Department; or Standard & Poor’s J.J. Kenny
Information Services’ Called Bond Service.
(i)
“Nominee” means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Section 5(c) hereof.
(j)
“Non-AMT Bonds” means obligations the interest on which is excludable from gross
income for federal income tax purposes under Section 103(a) of the Code and not treated as an item
of tax preference under Section 57(a)(5)(C) of the Code, that are legal investments pursuant to
Section 53601 of the Government Code.
(k)
“Official Statement” means the Official Statement for the Bonds, as described in
Section 16 hereof.
(l)
“Outstanding” means, when used with reference to the Bonds, as of any date, Bonds
theretofore issued or thereupon being issued under this resolution except:
(i)
Bonds canceled at or prior to such date;
(ii)
Bonds in lieu of or in substitution for which other Bonds shall have been
delivered pursuant to Section 7 hereof; or
(iii)
Bonds for the payment or redemption of which funds or Government
Obligations in the necessary amount shall have been set aside (whether on or prior to the
maturity or redemption date of such Bonds), in accordance with Section 18 of this
Resolution.
(m)
“Owner” means the registered owner of a Bond as set forth on the registration books
maintained by the Bond Registrar pursuant to Section 7 hereof.
(n)
“Participants” means those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds book-entry certificates as securities depository.
(o)
“Permitted Investments” means (i) any lawful investments permitted by Section
16429.1 and Section 53601 of the Government Code, including Non-AMT Bonds and Qualified
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Non-AMT Mutual Funds, (ii) shares in a California common law trust established pursuant to Title 1,
Division 7, Chapter 5 of the Government Code which invests exclusively in investments permitted by
Section 53635 of the Government Code, but without regard to any limitations in such Section
concerning the percentage of moneys available for investment being invested in a particular type of
security, (iii) a guaranteed investment contract with a provider rated in at least the second highest
category by each rating agency then rating the Bonds, (iv) the Local Agency Investments Fund of the
California State Treasurer, (v) the Los Angeles county investment pool maintained by the Treasurer
and Tax Collector (defined herein), and (vi) State and Local Government Series Securities.
(p)
“Principal” or “Principal Amount” means the principal or principal amount thereof.
(q)
“Projects” shall have the meaning given to that term in Section 1 of this Resolution.
(r)
“Project Costs” means all of the expenses of and incidental to the construction and/or
acquisition of the Projects, including costs of issuance.
(s)
“Qualified Non-AMT Mutual Fund” means stock in a regulated investment company
to the extent that at least 95% of the income of such regulated investment company is interest that is
excludable from gross income under Section 103 of the Code and not an item of tax preference under
Section 57(a)(5)(C) of the Code.
(t)
“Qualified Permitted Investments” means (i) Non-AMT Bonds, (ii) Qualified NonAMT Mutual Funds, (iii) other Permitted Investments authorized by an opinion of Bond Counsel to
the effect that such investment would not adversely affect the tax-exempt status of the Bonds, and
(iv) Permitted Investments of proceeds of the Bonds, and interest earned on such proceeds, held not
more than thirty days pending reinvestment or Bond redemption. A guaranteed investment contract
or similar investment agreement (e.g. a forward supply contract, GIC, repo, etc.) does not constitute a
Qualified Permitted Investment.
(u)
“Rating Agencies” means Standard & Poor’s Ratings Services, a Standard & Poor’s
Financial Services LLC business, and Moody’s Investors Services.
(v)
“Record Date” means the close of business on the 15th day of the month preceding
each Bond Payment Date.
(w)
“Securities Depository” means The Depository Trust Company, 55 Water Street,
New York, New York 10041, Tel: (212) 855-1000 or Fax: (212) 855-7320. with Cede & Co. , as its
nominee.
(x)
“Taxable Bonds” means any Bonds not issued as Tax-Exempt Bonds.
(y)
“Tax-Exempt Bonds” means any Bonds the interest in which is excludable from
gross income for federal income tax purposes and is not treated as an item of tax preference for
purposes of calculating the federal alternative minimum tax, as further described in an opinion of
Bond Counsel supplied to the original purchasers of such Bonds.
(z)
“Term Bonds” means those Bonds for which mandatory redemption dates have been
established in the Official Statement.
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(aa)
Amount.
“Transfer Amount” means, with respect to any Outstanding Bond, the Principal
(ii)
“Treasurer and Tax Collector” means, the Treasurer and Tax Collector of Los
Angeles County.
SECTION 5.
Terms of the Bonds.
(a)
Denomination, Interest, Date of Delivery. The Bonds shall be issued as current
interest bonds registered as to both principal and interest, in the denominations of $5,000 Principal
Amount or any integral multiple thereof. The Bonds will be initially registered to “Cede & Co.,” the
nominee of the Depository Trust Company, New York, New York.
Each Bond shall be dated the date of delivery or such date as shall appear in the Official
Statement (the “Date of Delivery”), and shall bear interest from the Bond Payment Date next
preceding the date of authentication thereof unless it is authenticated as of a day during the period
from the 16th day of the month next preceding any Bond Payment Date to that Bond Payment Date,
inclusive, in which event it shall bear interest from such Bond Payment Date, or unless it is
authenticated on or before the first Record Date, in which event it shall bear interest from the Date of
Delivery.
The Bonds shall bear interest at a rate or rates such that the interest rates or true interest cost
shall not exceed the maximum rate permitted by law. Interest shall be payable on the respective
Bond Payment Dates. Interest on the Bonds shall be computed on the basis of a 360-day year of
twelve 30-day months.
(b)
Redemption.
(i)
Optional Redemption. The Bonds shall be subject to optional redemption
prior to their stated maturity dates as provided in the Official Statement.
(ii)
Mandatory Redemption. Unless otherwise provided in the Official Statement,
the Term Bonds are subject to mandatory redemption from moneys in the Debt Service Fund
established in Section 11 hereof prior to their stated maturity dates, without premium, on
each August 1, in the Principal Amounts as set forth in the Official Statement.
(iii)
Selection of Bonds for Redemption. Whenever provision is made in this
Resolution for the optional redemption of Outstanding Bonds and less than all Outstanding
Bonds are to be redeemed, the Bond Registrar identified below, upon written instruction from
the District, shall select Bonds for redemption as so directed and if not directed, in inverse
order of maturity. Within a maturity, the Bond Registrar shall select Bonds for redemption
by lot. Redemption by lot shall be in such manner as the Bond Registrar shall determine;
provided, however, that the portion of any Bond to be redeemed in part shall be in the
Principal Amount of $5,000 or any integral multiple thereof.
(iv)
Notice of Redemption. When redemption is authorized or required pursuant
to Section 5(b)(i) hereof, the Bond Registrar, upon written instruction from the District, shall
give notice (a “Redemption Notice”) of the redemption of the Bonds. Such Redemption
Notice shall specify: the Bonds or designated portions thereof (in the case of redemption of
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the Bonds in part but not in whole) which are to be redeemed; the date of redemption; the
place or places where the redemption will be made, including the name and address of the
Bond Registrar; the redemption price; the CUSIP numbers (if any) assigned to the Bonds to
be redeemed; the Bond numbers of the Bonds to be redeemed in whole or in part and, in the
case of any Bond to be redeemed in part only, the Principal Amount of such Bond to be
redeemed; and the original issue date, interest rate and stated maturity date of each Bond to
be redeemed in whole or in part. Such Redemption Notice shall further state that on the
specified date there shall become due and payable upon each Bond or portion thereof being
redeemed, at the redemption price thereof, together with the interest accrued to the
redemption date, and that from and after such date, interest with respect thereto shall cease to
accrue.
The Bond Registrar shall take the following actions with respect to such Redemption
Notice:
(A)
At least 20 but not more than 45 days prior to the redemption date,
such Redemption Notice shall be given to the respective Owners of Bonds designated
for redemption by registered or certified mail, postage prepaid, at their addresses
appearing on the Bond Register.
(B)
At least 20 but not more than 45 days prior to the redemption date,
such Redemption Notice shall be given by (i) registered or certified mail, postage
prepaid, (ii) telephonically confirmed facsimile transmission, or (iii) overnight
delivery service, to the Security Depository.
(C)
At least 20 but not more than 45 days prior to the redemption date,
such Redemption Notice shall be given by (i) registered or certified mail, postage
prepaid, or (ii) overnight delivery service, to one of the Information Services.
Neither failure to receive or failure to publish any Redemption Notice nor any defect
in any such Redemption Notice so given shall affect the sufficiency of the proceedings for
the redemption of the affected Bonds. Each check issued or other transfer of funds made by
the Bond Registrar for the purpose of redeeming Bonds shall bear or include the CUSIP
number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of
such check or other transfer. Such redemption notices may state that no representation is
made as to the accuracy or correctness of the CUSIP numbers printed therein or on the
Bonds.
(v)
Partial Redemption of Bonds. Upon the surrender of any Bond redeemed in
part only, the Bond Registrar shall execute and deliver to the Owner thereof a new Bond or
Bonds of like tenor and maturity and of authorized denominations equal in Transfer Amounts
to the unredeemed portion of the Bond surrendered. Such partial redemption shall be valid
upon payment of the amount required to be paid to such Owner and the District shall be
released and discharged thereupon from all liability to the extent of such payment.
(vi)
Effect of Notice of Redemption. Notice having been given as aforesaid, and
the moneys for the redemption (including the interest accrued to the applicable date of
redemption) having been set aside as provided in Section 18 hereof, the Bonds to be
redeemed shall become due and payable on such date of redemption.
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If on such redemption date, money for the redemption of all the Bonds to be
redeemed as provided in Section 5(b)(i) hereof, together with interest accrued to such
redemption date, shall be held by the Bond Registrar (or an independent escrow agent
selected by the District) so as to be available therefor on such redemption date, and if notice
of redemption thereof shall have been given as aforesaid, then from and after such
redemption date, interest with respect to the Bonds to be redeemed shall cease to accrue and
become payable. All money held by or on behalf of the Bond Registrar (or an independent
escrow agent selected by the District) for the redemption of Bonds shall be held in trust for
the account of the Owners of the Bonds so to be redeemed.
All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions
of this Section 5 shall be cancelled upon surrender thereof and be delivered to or upon the
order of the District. All or any portion of a Bond purchased by the District shall be
cancelled by the Bond Registrar.
(vii) Bonds No Longer Outstanding. When any Bonds (or portions thereof), which
have been duly called for redemption prior to maturity under the provisions of this
Resolution, or with respect to which irrevocable instructions to call for redemption prior to
maturity at the earliest redemption date have been given to the Bond Registrar (or an
independent escrow agents elected by the District), in form satisfactory to it, and sufficient
moneys shall be held by the Bond Registrar (or an independent escrow agent selected by the
District, irrevocably in trust as provided in Section 18 hereof for the payment of the
redemption price of such Bonds or portions thereof, and accrued interest with respect thereto
to the date fixed for redemption, all as provided in this Resolution, then such Bonds shall no
longer be deemed Outstanding and shall be surrendered to the Bond Registrar for
cancellation.
(viii) Conditional Notice of Redemption. With respect to any notice of optional
redemption of Bonds, unless upon the giving of such notice, such Bonds shall be deemed to
have been paid within the meaning of Section 5(vii) hereof or unless the Bond Registrar
holds cash or Government Obligations sufficient to pay the principal, premium, if any, and
interest on the Bonds to be redeemed, such notice may state that such redemption shall be
conditional upon the receipt by the Bond Registrar on or prior to the date fixed for such
redemption of moneys sufficient to pay the principal, premium, if any, and interest on such
Bonds and that if such moneys shall not have been so received said notice shall be of no force
and effect and the Bond Registrar shall not be required to redeem such Bonds. In the event
that such notice of redemption contains such a condition and such moneys are not so
received, the redemption shall not be made and the Bond Registrar shall be within a
reasonable time thereafter give notice, in the manner in which the notice of redemption was
given, that such moneys were not so received.
(c)
Book-Entry System.
(i)
Definitions. As used in this Section, the terms set forth below shall have the
meanings ascribed to them:
“Nominee” means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to this Section.
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“Participants” means those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds book-entry certificates as securities depository.
(ii)
Election of Book-Entry System. The Bonds shall initially be delivered in the
form of a separate single fully-registered bond (which may be typewritten) for each maturity
date of such Bonds in an authorized denomination. The ownership of each such Bond shall
be registered in the Bond Register (as defined below) in the name of the Nominee, as
nominee of the Depository and ownership of the Bonds, or any portion thereof may not
thereafter be transferred except as provided in Section 5(c)(ii)(4).
With respect to book-entry Bonds, the District and the Bond Registrar shall have no
responsibility or obligation to any Participant or to any person on behalf of which such a
Participant holds an interest in such book-entry Bonds. Without limiting the immediately
preceding sentence, the District and the Bond Registrar shall have no responsibility or
obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or
any Participant with respect to any ownership interest in book-entry Bonds; (ii) the delivery
to any Participant or any other person, other than an Owner as shown in the Bond Register, of
any notice with respect to book-entry Bonds, including any notice of redemption; (iii) the
selection by the Depository and its Participants of the beneficial interests in book-entry
Bonds to be prepaid in the event the District redeems the Bonds in part; or (iv) the payment
by the Depository or any Participant or any other person, of any amount with respect to
Principal, premium, if any, or interest on the book-entry Bonds. The District and the Bond
Registrar may treat and consider the person in whose name each book-entry Bond is
registered in the Bond Register as the absolute owner (the “Registered Owner” or “Owner”)
of such book-entry Bond for the purpose of payment of Principal of and premium and interest
on and to such Bond, for the purpose of giving notices of redemption and other matters with
respect to such Bond, for the purpose of registering transfers with respect to such Bond, and
for all other purposes whatsoever. The Bond Registrar shall pay all Principal of and
premium, if any, and interest on the Bonds only to or upon the order of the respective Owner,
as shown in the Bond Register, or his respective attorney duly authorized in writing, and all
such payments shall be valid and effective to fully satisfy and discharge the District’s
obligations with respect to payment of Principal of, and premium, if any, and interest on the
Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in
the Bond Register, shall receive a certificate evidencing the obligation to make payments of
Principal of, and premium, if any, and interest on the Bonds. Upon delivery by the
Depository to the Owner and the Bond Registrar, of written notice to the effect that the
Depository has determined to substitute a new nominee in place of the Nominee, and subject
to the provisions herein with respect to the Record Date, the word Nominee in this Resolution
shall refer to such nominee of the Depository.
1.
Delivery of Letter of Representations. In order to qualify the
book-entry Bonds for the Depository’s book-entry system, the District and the Bond
Registrar shall execute and deliver to the Depository a Letter of Representations. The
execution and delivery of a Letter of Representations shall not in any way impose
upon the District or the Bond Registrar any obligation whatsoever with respect to
persons having interests in such book-entry Bonds other than the Owners, as shown
on the Bond Register. By executing a Letter of Representations, the Bond Registrar
shall agree to take all action necessary at all times so that the District will be in
compliance with all representations of the District in such Letter of Representations.
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In addition to the execution and delivery of a Letter of Representations, the District
and the Bond Registrar shall take such other actions, not inconsistent with this
Resolution, as are reasonably necessary to qualify book-entry Bonds for the
Depository’s book-entry program.
2.
Selection of Depository. In the event (i) the Depository determines
not to continue to act as securities depository for book-entry Bonds, or (ii) the District
determines that continuation of the book-entry system is not in the best interest of the
beneficial Owners of the Bonds or the District, then the District will discontinue the
book-entry system with the Depository. If the District determines to replace the
Depository with another qualified securities depository, the District shall prepare or
direct the preparation of a new single, separate, fully registered bond for each
maturity date of such book-entry Bond, registered in the name of such successor or
substitute qualified securities depository or its Nominee as provided in subsection (4)
hereof. If the District fails to identify another qualified securities depository to
replace the Depository, then the Bonds shall no longer be restricted to being
registered in such Bond Register in the name of the Nominee, but shall be registered
in whatever name or names the Owners transferring or exchanging such Bonds shall
designate, in accordance with the provisions of this Section 5(c).
3.
Payments to Depository. Notwithstanding any other provision of this
Resolution to the contrary, so long as all Outstanding Bonds are held in book-entry
and registered in the name of the Nominee, all payments by the District or the Bond
Registrar with respect to Principal of and premium, if any, or interest on the Bonds
and all notices with respect to such Bonds shall be made and given, respectively to
the Nominees, as provided in the Letter of Representations or as otherwise instructed
by the Depository and agreed to by the Bond Registrar notwithstanding any
inconsistent provisions herein.
4.
Transfer of Bonds to Substitute Depository.
(A)
The Bonds shall be initially issued as described in the Official
Statement described herein. Registered ownership of such Bonds, or any portions
thereof, may not thereafter be transferred except:
(1)
to any successor of DTC or its nominee, or of any substitute
depository designated pursuant to Section 5(c)(ii)(4)(A)(2) (“Substitute
Depository”); provided that any successor of DTC or Substitute Depository
shall be qualified under any applicable laws to provide the service proposed
to be provided by it;
(2)
to any Substitute Depository, upon (a) the resignation of DTC
or its successor (or any Substitute Depository or its successor) from its
functions as depository, or (b) a determination by the District that DTC (or its
successor) is no longer able to carry out its functions as depository; provided
that any such Substitute Depository shall be qualified under any applicable
laws to provide the services proposed to be provided by it; or
10
(3)
to any person as provided below, upon (a) the resignation of
DTC or its successor (or any Substitute Depository or its successor) from its
functions as depository, or (b) a determination by the District that DTC or its
successor (or Substitute Depository or its successor) is no longer able to carry
out its functions as depository.
(B)
In the case of any transfer pursuant to Section 5(c)(ii)(4)(A)(1) or (2),
upon receipt of all Outstanding Bonds by the Bond Registrar, together with a written
request of the District to the Bond Registrar designating the Substitute Depository, a
single new Bond, which the District shall prepare or cause to be prepared, shall be
executed and delivered for each maturity of Bonds then Outstanding, registered in the
name of such successor or such Substitute Depository or their Nominees, as the case
may be, all as specified in such written request of the District. In the case of any
transfer pursuant to Section 5(c)(ii)(4)(A)(3), upon receipt of all Outstanding Bonds
by the Bond Registrar, together with a written request of the District to the Bond
Registrar, new Bonds, which the District shall prepare or cause to be prepared, shall
be executed and delivered in such denominations and registered in the names of such
persons as are requested in such written request of the District, provided that the
Bond Registrar shall not be required to deliver such new Bonds within a period of
less than sixty (60) days from the date of receipt of such written request from the
District.
(C)
In the case of a partial redemption or an advance refunding of any
Bonds evidencing a portion of the Principal maturing in a particular year, DTC or its
successor (or any Substitute Depository or its successor) shall make an appropriate
notation on such Bonds indicating the date and amounts of such reduction in
Principal, in form acceptable to the Bond Registrar, all in accordance with the Letter
of Representations. The Bond Registrar shall not be liable for such Depository’s
failure to make such notations or errors in making such notations.
(D)
The District and the Bond Registrar shall be entitled to treat the
person in whose name any Bond is registered as the Owner thereof for all purposes
of this Resolution and any applicable laws, notwithstanding any notice to the contrary
received by the Bond Registrar or the District; and the District and the Bond
Registrar shall not have responsibility for transmitting payments to, communicating
with, notifying, or otherwise dealing with any beneficial Owners of the Bonds.
Neither the District nor the Bond Registrar shall have any responsibility or obligation,
legal or otherwise, to any such beneficial Owners or to any other party, including
DTC or its successor (or Substitute Depository or its successor), except to the Owner
of any Bonds, and the Bond Registrar may rely conclusively on its records as to the
identity of the Owners of the Bonds.
SECTION 6. Execution of the Bonds. The Bonds shall be signed by the President of the
Board or other member of the Board authorized to do so by resolution of the Board, by their manual
or facsimile signature and countersigned by the manual or facsimile signature of the Clerk of the
Board or Secretary to the Board, all in their official capacities. No Bond shall be valid or obligatory
for any purpose or shall be entitled to any security or benefit under this Resolution unless and until
the certificate of authentication printed on the Bond is signed by the Bond Registrar as authenticating
agent. Authentication by the Bond Registrar shall be conclusive evidence that the Bond so
11
authenticated has been duly issued, signed and delivered under this Resolution and is entitled to the
security and benefit of this Resolution.
SECTION 7. Bond Registrar; Transfer and Exchange. This Board does hereby appoint the
Treasurer and Tax Collector to act as the Bond Registrar for the Bonds, and approves The Bank of
New York Mellon Trust Company, N.A. to act as the initial agent of the Treasurer and Tax Collector.
So long as any of the Bonds remains Outstanding, the District will cause the Bond Registrar
to maintain and keep at its designated office all books and records necessary for the registration,
exchange and transfer of the Bonds as provided in this Section. Subject to the provisions of Section
8 below, the person in whose name a Bond is registered on the Bond Register shall be regarded as the
absolute Owner of that Bond for all purposes of this Resolution. Payment of or on account of the
Principal of and premium, if any, and interest on any Bond shall be made only to or upon the order of
that person; neither the District nor the Bond Registrar shall be affected by any notice to the contrary,
but the registration may be changed as provided in this Section. All such payments shall be valid and
effectual to satisfy and discharge the District’s liability upon the Bonds, including interest, to the
extent of the amount or amounts so paid.
Any Bond may be exchanged for Bonds of like tenor, maturity and Transfer Amount upon
presentation and surrender at the designated office of the Bond Registrar, together with a request for
exchange signed by the Owner or by a person legally empowered to do so in a form satisfactory to
the Bond Registrar. A Bond may be transferred on the Bond Register only upon presentation and
surrender of the Bond at the designated office of the Bond Registrar together with an assignment
executed by the Owner or by a person legally empowered to do so in a form satisfactory to the Bond
Registrar. Upon exchange or transfer, the Bond Registrar shall complete, authenticate and deliver a
new Bond or Bonds of like tenor and of any authorized denomination or denominations requested by
the Owner equal to the Transfer Amount of the Bond surrendered and bearing or accruing interest at
the same rate and maturing on the same date.
If any Bond shall become mutilated, the District, at the expense of the Owner of said Bond,
shall execute, and the Bond Registrar shall thereupon authenticate and deliver, a new Bond of like
series, tenor and Transfer Amount in exchange and substitution for the Bond so mutilated, but only
upon surrender to the Bond Registrar of the Bond so mutilated. If any Bond issued hereunder shall
be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Bond
Registrar and, if such evidence be satisfactory to the Bond Registrar and indemnity for the Bond
Registrar and the District satisfactory to the Bond Registrar shall be given by the Owner, the District,
at the expense of the Bond Owner, shall execute, and the Bond Registrar shall thereupon authenticate
and deliver, a new Bond of like Series and tenor in lieu of and in substitution for the Bond so lost,
destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption,
instead of issuing a substitute Bond the Bond Registrar may pay the same without surrender thereof
upon receipt of indemnity satisfactory to the Bond Registrar and the District). The Bond Registrar
may require payment of a reasonable fee for each new Bond issued under this paragraph and of the
expenses which may be incurred by the District and the Bond Registrar.
If manual signatures on behalf of the District are required in connection with an exchange or
transfer, the Bond Registrar shall undertake the exchange or transfer of Bonds only after the new
Bonds are signed by the authorized officers of the District. In all cases of exchanged or transferred
Bonds, the District shall sign and the Bond Registrar shall authenticate and deliver Bonds in
accordance with the provisions of this Resolution. All fees and costs of transfer shall be paid by the
12
requesting party. Those charges may be required to be paid before the procedure is begun for the
exchange or transfer. All Bonds issued upon any exchange or transfer shall be valid obligations of
the District, evidencing the same debt, and entitled to the same security and benefit under this
Resolution as the Bonds surrendered upon that exchange or transfer.
Any Bond surrendered to the Bond Registrar for payment, retirement, exchange, replacement
or transfer shall be cancelled by the Bond Registrar. The District may at any time deliver to the
Bond Registrar for cancellation any previously authenticated and delivered Bonds that the District
may have acquired in any manner whatsoever, and those Bonds shall be promptly cancelled by the
Bond Registrar. Written reports of the surrender and cancellation of Bonds shall be made to the
District by the Bond Registrar as requested by the District. The cancelled Bonds shall be retained for
three years, then returned to the District or destroyed by the Bond Registrar as directed by the
District.
Neither the District nor the Bond Registrar will be required (a) to issue or transfer any Bonds
during a period beginning with the opening of business on the 16th business day next preceding
either any Bond Payment Date or any date of selection of Bonds to be redeemed and ending with the
close of business on the Bond Payment Date or any day on which the applicable notice of redemption
is given or (b) to transfer any Bonds which have been selected or called for redemption in whole or in
part.
SECTION 8. Payment. Payment of interest on any Bond on any Bond Payment Date shall
be made to the person appearing on the registration books of the Bond Registrar as the Owner thereof
as of the Record Date immediately preceding such Bond Payment Date, such interest to be paid by
check mailed to such Owner on the Bond Payment Date at his or her address as it appears on such
registration books or at such other address as he may have filed with the Bond Registrar for that
purpose on or before the Record Date. The Owner in an aggregate Principal Amount of $1,000,000
or more may request in writing to the Bond Registrar that such Owner be paid interest by wire
transfer to the bank and account number on file with the Bond Registrar as of the Record Date. The
principal, and redemption price, if any, payable on the Bonds shall be payable upon maturity or
redemption upon surrender at the designated office of the Bond Registrar. The interest, Principal and
premiums, if any, on the Bonds shall be payable in lawful money of the United States of America.
The Bond Registrar is hereby authorized to pay the Bonds when duly presented for payment at
maturity, and to cancel all Bonds upon payment thereof. The Bonds are general obligations of the
District payable solely from the levy of ad valorem property taxes upon all property subject to
taxation within the District.
SECTION 9. Form of the Bonds. The Bonds shall be in substantially the following form,
allowing those officials executing the Bonds to make the insertions and deletions necessary to
conform the Bonds to this Resolution and the Official Statement and to correct any defect or
inconsistency therein or to cure any ambiguity or omission therein.
13
(Form of Bond)
REGISTERED
NO.
REGISTERED
$____________
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(LOS ANGELES COUNTY, CALIFORNIA)
2008 ELECTION GENERAL OBLIGATION BOND, SERIES F
INTEREST RATE:
MATURITY DATE:
DATED AS OF:
___% per annum
August 1, 20__
Date of Delivery
CUSIP
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The Los Angeles Community College District (the “District”) in Los Angeles County,
California (the “County”), for value received, promises to pay to the Registered Owner named above,
or registered assigns, the Principal Amount on the Maturity Date, each as stated above, and interest
thereon until the Principal Amount is paid or provided for at the Interest Rate stated above, on
February 1 and August 1 of each year (the “Bond Payment Dates”), commencing August 1, 2013.
This bond will bear interest from the Bond Payment Date next preceding the date of authentication
hereof unless it is authenticated as of a day during the period from the 16th day of the month next
preceding any Bond Payment Date to the Bond Payment Date, inclusive, in which event it shall bear
interest from such Bond Payment Date, or unless it is authenticated on or before July 15, 2013, in
which event it shall bear interest from the Date of Delivery. Interest shall be computed on the basis
of a 360-day year of twelve 30-day months. Principal and interest are payable in lawful money of the
United States of America, without deduction for the paying agent services, to the person in whose
name this bond (or, if applicable, one or more predecessor bonds) is registered (the “Registered
Owner”) on the Register maintained by the Bond Registrar, initially The Bank of New York Mellon
Trust Company, N.A., as the agent of the Treasurer and Tax Collector of Los Angeles County.
Principal is payable upon presentation and surrender of this bond at the principal office of the Bond
Registrar. Interest is payable by check or draft mailed by the Bond Registrar on each Bond Payment
Date to the Registered Owner of this bond (or one or more predecessor bonds) as shown and at the
address appearing on the Register at the close of business on the 15th day of the calendar month next
preceding that Bond Payment Date (the “Record Date”). The Owner of Bonds in the aggregate
principal amount of $1,000,000 or more may request in writing to the Bond Registrar that the Owner
be paid interest by wire transfer to the bank and account number on file with the Bond Registrar as of
the Record Date.
This bond is one of an authorization of $__________ of bonds approved to raise money for
the purposes authorized by the voters of the District at the Election, defined below, and to pay all
necessary legal, financial, engineering and contingent costs in connection therewith under authority
of and pursuant to the laws of the State of California, and the requisite fifty-five percent vote of the
voters of the District cast at an election held on November 4, 2008 (the “Election”), upon the
question of issuing bonds in the amount of $3,500,000,000 and the resolution of the Board of
Trustees of the District adopted on March 6, 2013 (the “Bond Resolution”). This bond is being
14
issued under the provisions of Article 4.5 Chapter 3 of Part 1 of Division 2 of title 5 of the California
Government Code. This bond and the issue of which this bond is one are payable as to both principal
and interest solely from the proceeds of the levy of ad valorem taxes on all property subject to such
taxes in the District, which taxes are unlimited as to rate or amount in accordance with California
Education Code Sections 15250 and 15252. The Bonds of this issue are general obligations of the
District.
The bonds of this issue comprise $____________ principal amount of Bonds, of which this
bond is a part.
This bond is exchangeable and transferable for bonds of like tenor, maturity and Transfer
Amount (as defined in the Bond Resolution) and in authorized denominations at the principal office
of the Bond Registrar in Los Angeles, California, by the Registered Owner or by a person legally
empowered to do so, in a form satisfactory to the Bond Registrar, all subject to the terms, limitations
and conditions provided in the Bond Resolution. All fees and costs of transfer shall be paid by the
transferor. The District and the Bond Registrar may deem and treat the Registered Owner as the
absolute Owner of this bond for the purpose of receiving payment of or on account of principal or
interest and for all other purposes, and neither the District nor the Bond Registrar shall be affected by
any notice to the contrary.
Neither the District nor the Bond Registrar will be required (a) to issue or transfer any bond
during a period beginning with the opening of business on the 15th business day next preceding
either any Bond Payment Date or any date of selection of bonds to be redeemed and ending with the
close of business on the Bond Payment Date or day on which the applicable notice of redemption is
given or (b) to transfer any bond which has been selected or called for redemption in whole or in
part.
The Bonds maturing on or before August 1, 20__ are not subject to optional redemption prior
to their respective maturity dates. The Bonds maturing on or after August 1, 20__, are subject to
optional redemption prior to their respective maturity dates at the option of the District, from any
source of available funds, as a whole or in part on any date on or after August 1, 20__, at a
redemption price equal to the principal amount of the Bonds, together with accrued interest to the
date fixed for redemption, without premium.
The Term Bonds maturing on August 1, 20__, are subject to redemption prior to maturity
from mandatory sinking fund payments on August 1 of each year, on and after August 1, 20__, at a
redemption price equal to the principal amount thereof, plus accrued interest to the date fixed for
redemption, without premium. The principal amount represented by such Term Bonds to be so
redeemed and the dates therefor and the final principal payment date is as indicated in the following
table:
Redemption Date
(August 1)
Principal Amount
(1)
Total
__________________
(1)
Maturity
15
The principal amount to be redeemed in each year shown above will be reduced
proportionately or as otherwise directed by the District, in integral multiples of $5,000, by any
portion of the Term Bond optionally redeemed prior to the mandatory sinking fund redemption date.
If less than all of the bonds of any one maturity shall be called for redemption, the particular
bonds or portions of the bonds of such maturity to be redeemed shall be selected by lot by the Bond
Registrar in such manner as the Bond Registrar in its discretion may determine; provided, however,
that the portion of any bond to be redeemed shall be in the principal amount of $5,000 or some
multiple thereof. If less than all of the bonds stated to mature on different dates shall be called for
redemption, the particular bonds or portions thereof to be redeemed shall be called in any order of
maturity selected by the District or, if not so selected, in the inverse order of maturity.
Reference is made to the Bond Resolution for a more complete description of the provisions,
among others, with respect to the nature and extent of the security for the bonds of this series, the
rights, duties and obligations of the District, the Bond Registrar and the Registered Owners, and the
terms and conditions upon which the bonds are issued and secured. The Registered Owner of this
bond assents, by acceptance hereof, to all of the provisions of the Bond Resolution.
It is certified and recited that all acts and conditions required by the Constitution and laws of
the State of California to exist, to occur and to be performed or to have been met precedent to and in
the issuing of the bonds in order to make them legal, valid and binding general obligations of the
District, have been performed and have been met in regular and due form as required by law; that
payment in full for the bonds has been received; that no statutory or constitutional limitation on
indebtedness or taxation has been exceeded in issuing the bonds; and that due provision has been
made for levying and collecting ad valorem property taxes on all of the taxable property within the
District in an amount sufficient to pay principal and interest when due.
This bond shall not be valid or obligatory for any purpose and shall not be entitled to any
security or benefit under the Bond Resolution until the Certificate of Authentication below has been
signed.
16
IN WITNESS WHEREOF, the Los Angeles Community College District, Los Angeles
County, California, has caused this bond to be executed on behalf of the District and in their official
capacities by the manual or facsimile signature of the President of the Board of Trustees of the
District, and to be countersigned by the manual or facsimile signature of the Secretary to the Board
of Trustees of the District, all as of the date stated above.
BOARD OF TRUSTEES OF THE LOS ANGELES
COMMUNITY COLLEGE DISTRICT
By:
(Facsimile Signature)
President of the Board of Trustees
COUNTERSIGNED:
(Facsimile Signature)
Secretary to the Board of Trustees
CERTIFICATE OF AUTHENTICATION
This bond is one of the bonds described in the Bond Resolution referred to herein which has
been authenticated and registered on ___________, 2013.
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A. , as the agent of the Treasurer and
Tax Collector of Los Angeles County, as Bond
Registrar
Authorized Officer
17
ASSIGNMENT
For value received, the undersigned sells, assigns and transfers to (print or typewrite name,
address and zip code of Transferee):
this bond and
irrevocably constitutes and appoints attorney to transfer this bond on the books for registration
thereof, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Notice:
The assignor’s signature to this assignment must correspond with the name as it
appears upon the within bond in every particular, without alteration or any change
whatever, and the signature(s) must be guaranteed by an eligible guarantor institution.
Social Security Number, Taxpayer Identification Number or other identifying number
of Assignee: __________________________________________________________
Unless this bond is presented by an authorized representative of The Depository Trust
Company to the issuer or its agent 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.
LEGAL OPINION
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a
Professional Corporation 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.
(Facsimile Signature)
Secretary to the Board of Trustees
18
SECTION 10. Delivery of the Bonds. The proper officials of the District shall cause the
Bonds to be prepared and, following their sale, shall have the Bonds signed and delivered, together
with a true transcript of proceedings with reference to the issuance of the Bonds, to the original
purchaser upon payment of the purchase price therefor.
SECTION 11. Deposit of Proceeds of the Bonds. (a) The purchase price received from the
sale of the Bonds, to the extent of the Principal Amount thereof, shall be paid to the County to the
credit of the fund hereby created and established and to be known as the “Los Angeles Community
College District 2008 Election General Obligation Bonds, Series F Building Fund” (the “Building
Fund”) of the District, shall be kept separate and distinct from all other District and County funds,
and those proceeds shall be used solely for the purpose for which the Bonds are being issued and
provided further that such proceeds shall be applied solely to authorized purposes of the Election.
The purchase price received to the extent of any accrued interest and any original issue premium
from the sale of the Bonds shall be kept separate and apart in the fund hereby created and established
and to be designated as the “Los Angeles Community College District General Obligation Bonds,
Series F Debt Service Fund” (the “Debt Service Fund”) for the Bonds, and used only for payment of
Principal of and interest on the Bonds. Interest earnings on moneys held in the Building Fund shall
be retained in the Building Fund. Interest earnings on moneys held in the Debt Service Fund shall be
retained in the Debt Service Fund. Any amounts that remain in the Building Fund at the completion
of the Projects, at the written direction of the District, shall be transferred to the Debt Service Fund to
be used to pay the Principal of, premium, if any, and interest on the Bonds, subject to any conditions
set forth in the Tax Certificate. Any excess proceeds of the Bonds not needed for the authorized
purposes set forth herein for which the Bonds are being issued shall be transferred to the Debt
Service Fund and applied to the payment of Principal of and interest on the Bonds. If, after payment
in full of the Bonds, there remain excess proceeds, any such excess amounts shall be transferred to
the General Fund of the District.
The costs of issuance of the Bonds are hereby authorized to be paid either from premium
withheld by the purchaser upon the sale of the Bonds, or from proceeds of the Bonds. To the extent
costs of issuance are paid from such proceeds, the District, may direct that a portion of the proceeds
of the Bonds received from the purchaser, in an amount not to exceed 2.0% of the Principal Amount
of the Bonds, in lieu of being deposited into the Building Fund, be deposited in a costs of issuance
account to be held by a fiscal agent of the District appointed for such purpose.
(b)
Moneys in the Debt Service Fund and the Building Fund shall be invested at the
written direction of the District in Permitted Investments. If at the time of issuance the District
determines to issue the Bonds as Tax-Exempt Bonds without regard to the Internal Revenue Code
“temporary period” restrictions, all investment of Bond proceeds shall be subject to paragraph (1)
below; and the District, in consultation with the County, may provide for an agent to assist the
District in investing funds pursuant to paragraph (1) below. If the District fails to direct such agent,
the agent shall invest or cause the funds in the Building Fund to be invested in Qualified Permitted
Investments, subject to the provisions of paragraph (1) below, until such time as the District provides
written direction to invest such funds otherwise. Neither the County nor its officers and agents, as
the case may be, shall have any responsibility or obligation to determine the tax consequences of any
investment. The interest earned on the moneys deposited to the Building Fund shall be applied as set
forth in subparagraph (1)(C) below:
19
(1)
Covenant Regarding Investment of Proceeds.
(A)
Permitted Investments. Beginning on the delivery date, and at all
times until expenditure for authorized purposes, not less than 95% of the proceeds of
the Bonds deposited in the Building Fund, including investment earnings thereon,
will be invested in Qualified Permitted Investments. Notwithstanding the preceding
provisions of this Section, for purposes of this paragraph, amounts derived from the
disposition or redemption of Qualified Permitted Investments and held pending
reinvestment or redemption for a period of not more than 30 days may be invested in
Permitted Investments. The District hereby authorizes investments made pursuant to
this Resolution with maturities exceeding five years.
(B)
Recordkeeping and Monitoring Relating to Building Fund.
i.
Information Regarding Permitted Investments. The District
hereby covenants that it will record or cause to be recorded with respect to each
Permitted Investment in the Building Fund the following information: purchase date;
purchase price; information establishing the Fair Market Value of such Permitted
Investment; face amount; coupon rate; periodicity of interest payments; disposition
price; disposition date; and any accrued interest received upon disposition.
ii.
Information in Qualified Non-AMT Mutual Funds. The
District hereby covenants that, with respect to each investment of proceeds of the
Bonds in a Qualified Non-AMT Mutual Fund pursuant to paragraph (1)(A) above, in
addition to recording, or causing to be recorded, the information set forth in
paragraph (1)(B)(i) above, it will retain a copy of each IRS information reporting
form and account statement provided by such Qualified Non-AMT Mutual Fund.
iii.
Monthly Investment Fund Statements. The District covenants
that it will obtain, at the beginning of each month following the delivery date, a
statement of the investments in the Building Fund detailing the nature, amount and
value of each investment as of such statement date.
iv.
Retention of Records. The District hereby covenants that it
will retain the records referred to in paragraph (1)(B)(i) and each IRS information
reporting form referred to in paragraph (1)(B)(ii) with its books and records with
respect to the Bonds until three years following the last date that any obligation
comprising the Bonds is retired.
(c)
Interest Earned on Permitted Investments. The interest earned on the
moneys deposited in the Building Fund shall be deposited in the Building Fund and used for the
purposes of that fund.
Except as required below to satisfy the requirements of Section 148(f) of the Internal
Revenue Code of 1986, as amended (the “Code”), interest earned on the investment of monies held
in the Debt Service Fund shall be retained in the Debt Service Fund and used by the County to pay
the Principal of and interest on the Bonds when due.
20
SECTION 12. Rebate Fund.
(a)
The District shall create and establish a special fund designated the “Los Angeles
Community College District Election of 2008 General Obligation Bonds, Series F Rebate Fund” (the
“Rebate Fund”). All amounts at any time on deposit in the Rebate Fund shall be held in trust, to the
extent required to satisfy the requirement to make rebate payments to the United States (the “Rebate
Requirement”) pursuant to Section 148 of the Code, and the Treasury Regulations promulgated
thereunder (the “Treasury Regulations”). Such amounts shall be free and clear of any lien hereunder
and shall be governed by this Section and by the Tax Certificate to be executed by the District.
(b)
Within forty-five (45) days of the end of each fifth Bond Year (as such term is
defined in the Tax Certificate), (1) the District shall calculate or cause to be calculated with respect to
the Bonds the amount that would be considered the “rebate amount” within the meaning of Section
1.148-3 of the Treasury Regulations, using as the “computation date” for this purpose the end of such
Bond Year, and (2) the District shall deposit to the Rebate Fund from amounts on deposit in the other
funds established hereunder or from other District funds, if and to the extent required, amounts
sufficient to cause the balance in the Rebate Fund to be equal to the “rebate amount” so calculated.
The District shall not be required to deposit any amount to the Rebate Fund in accordance with the
preceding sentence, if the amount on deposit in the Rebate Fund prior to the deposit required to be
made under this subsection (b) equals or exceeds the “rebate amount” calculated in accordance with
the preceding sentence. Such excess may be withdrawn from the Rebate Fund to the extent permitted
under subsection (g) of this Section. The District shall not be required to calculate the “rebate
amount” and shall not be required to deposit any amount to the Rebate Fund in accordance with this
subsection (b), with respect to all or a portion of the proceeds of the Bonds (including amounts
treated as proceeds of the Bonds) (1) to the extent such proceeds satisfy the expenditure requirements
of Section 148(f)(4)(B) or Section 148(f)(4)(C) of the Code or Section 1.148-7(d) of the Treasury
Regulations, whichever is applicable, and otherwise qualify for the exception to the Rebate
Requirement pursuant to whichever of said sections is applicable, (2) to the extent such proceeds are
subject to an election by the District under Section 148(f)(4)(C)(vii) of the Code to pay a one and
one-half percent (1½%) penalty in lieu of arbitrage rebate in the event any of the percentage
expenditure requirements of Section 148(f)(4)(C) are not satisfied, or (3) to the extent such proceeds
qualify for the exception to arbitrage rebate under Section 148(f)(4)(A)(ii) of the Code for amounts in
a “bona fide debt service fund.” In such event, and with respect to such amounts, the District shall
not be required to deposit any amount to the Rebate Fund in accordance with this subsection (b).
(a)
Any funds remaining in the Rebate Fund after redemption of all the Bonds and any
amounts described in paragraph (2) of subsection (d) of this Section, or provision made therefor
satisfactory to the District, including accrued interest, shall be remitted to the District.
(b)
Subject to the exceptions contained in subsection (b) of this Section to the
requirement to calculate the “rebate amount” and make deposits to the Rebate Fund, the District shall
pay to the United States, from amounts on deposit in the Rebate Fund,
(1)
not later than sixty (60) days after the end of (i) the fifth (5th) Bond Year, and
(ii) each fifth (5th) Bond Year thereafter, an amount that, together with all previous rebate
payments, is equal to at least 90% of the “rebate amount” calculated as of the end of such
Bond Year in accordance with Section 1.148-3 of the Treasury Regulations; and
21
(2)
not later than sixty (60) days after the payment of all Bonds, an amount equal
to one hundred percent (100%) of the “rebate amount” calculated as of the date of such
payment (and any income attributable to the “rebate amount” determined to be due and
payable) in accordance with Section 1.148-3 of the Treasury Regulations.
(c)
In the event that, prior to the time any payment is required to be made from the
Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such
payment is due, the District shall calculate (or have calculated) the amount of such deficiency and
deposit an amount equal to such deficiency into the Rebate Fund prior to the time such payment is
due.
(d)
Each payment required to be made pursuant to subsection (d) of this Section shall be
made to the Internal Revenue Service Center, Ogden, Utah 84201, on or before the date on which
such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, such form
to be prepared or caused to be prepared by the District.
(e)
In the event that immediately following the calculation required by subsection (b) of
this Section, but prior to any deposit made under said subsection, the amount on deposit in the Rebate
Fund exceeds the “rebate amount” calculated in accordance with said subsection, the District may
withdraw the excess from the Rebate Fund and credit such excess to the Debt Service Fund.
(f)
The District shall retain records of all determinations made hereunder until three
years after the complete retirement of the Bonds.
(g)
Notwithstanding anything in this Resolution to the contrary, the Rebate Requirement
shall survive the payment in full or defeasance of the Bonds.
SECTION 13. Security for the Bonds. There shall be levied on all the taxable property in
the District, in addition to all other taxes, a continuing direct ad valorem tax annually during the
period the Bonds are Outstanding in an amount sufficient to pay the Principal of and interest on the
Bonds when due, which moneys when collected will be placed in the Debt Service Fund of the
District and used for the payment of the Principal of and interest on the Bonds when and as the same
fall due, and for no other purpose. The District covenants to cause the County to take all actions
necessary to levy such ad valorem tax in accordance with this Section 13.
The moneys in the Debt Service Fund, to the extent necessary to pay the principal of and
interest on the Bonds as the same become due and payable, shall be transferred by the Treasurer and
Tax Collector to the Bond Registrar which, in turn, shall pay such moneys to DTC to pay the
Principal and interest on the Bonds. DTC will thereupon make payments of Principal and interest on
the Bonds to the DTC Participants who will thereupon make payments of Principal and interest to the
beneficial Owners of the Bonds. Any moneys remaining in the Debt Service Fund after the Bonds
and the interest thereon have been paid, or provision for such payment has been made, shall be
transferred to the General Fund of the District, pursuant to the Education Code Section 15234.
SECTION 14. Arbitrage Covenant. The District covenants that it will restrict the use of the
proceeds of the Bonds in such manner and to such extent, if any, as may be necessary, so that the
Bonds will not constitute arbitrage bonds under Section 148 of the Code and the applicable
regulations prescribed under that Section or any predecessor section. Calculations for determining
arbitrage requirements are the sole responsibility of the District.
22
SECTION 15. Legislative Conditions. The Board determines that all acts and conditions
necessary to be performed by the Board or to have been met precedent to and in the issuing of the
Bonds in order to make them legal, valid and binding general obligations of the District have been
performed and have been met, or will at the time of delivery of the Bonds have been performed and
have been met, in regular and due form as required by law; and that no statutory or constitutional
limitation of indebtedness or taxation will have been exceeded in the issuance of the Bonds.
SECTION 16. Official Statement. The Preliminary Official Statement relating to the Bonds,
substantially in the form on file with the Secretary to or Clerk of the Board is hereby approved and
the Authorized Officers, each alone, are hereby authorized and directed, for and in the name and on
behalf of the District, to deliver such Preliminary Official Statement to the Financial Advisor, as the
case may be, to be used in connection with the offering and sale of the Bonds. The Authorized
Officers, each alone, are hereby authorized and directed, for and in the name and on behalf of the
District, to deem the Preliminary Official Statement “final” pursuant to 15c2-12 of the Securities
Exchange Act of 1934, prior to its distribution and to execute and deliver to the purchaser of the
Bonds a final Official Statement, substantially in the form of the Preliminary Official Statement, with
such changes therein, deletions therefrom and modifications thereto as the Authorized Officer
executing the same shall approve.
SECTION 17. Insurance. In the event the District purchases bond insurance for the Bonds,
and to the extent that the Bond Insurer makes payment of the principal or interest on the Bonds, it
shall become the Owner of such Bonds with the right to payment of principal of, interest on the
Bonds, and shall be fully subrogated to all of the Owners’ rights and, including the Owners’ rights to
payment thereof. To evidence such subrogation (i) in the case of subrogation as to claims that were
past due interest components, the Bond Registrar shall note the Bond Insurer’s rights as subrogee on
the registration books for the Bonds maintained by the Bond Registrar upon receipt of a copy of the
cancelled check issued by the Bond Insurer for the payment of such interest to the Owners of the
Bonds, and (ii) in the case of subrogation as to claims for past due Principal, the Bond Registrar shall
note the Bond Insurer as subrogee on the registration books for the Bonds maintained by the Bond
Registrar upon surrender of the Bonds by the Owners thereof to the Bond Insurer or the insurance
trustee for the Bond Insurer.
SECTION 18. Defeasance. All or any portion of the Outstanding maturities of the Bonds
may be defeased prior to maturity in the following ways:
(a)
Cash: by irrevocably depositing with an independent escrow agent selected
by the District an amount of cash which together with amounts transferred from the Debt
Service Fund (as herein defined) is sufficient to pay all Bonds Outstanding and designated for
defeasance, including all principal and interest and premium, if any; or
(b)
Government Obligations: by irrevocably depositing with an independent
escrow agent selected by the District noncallable Government Obligations together with cash,
if required, in such amount as will, in the opinion of an independent certified public
accountant, together with interest to accrue thereon and moneys transferred from the Debt
Service Fund together with the interest to accrue thereon, be fully sufficient to pay and
discharge all Bonds Outstanding and designated for defeasance (including all principal and
interest represented thereby and redemption premiums, if any) at or before their maturity
date;
23
then, notwithstanding that any of such Bonds shall not have been surrendered for payment, all
obligations of the District with respect to all such designated Outstanding Bonds shall cease and
terminate, except only the obligation of the Bond Registrar or an independent escrow agent selected
by the District to pay or cause to be paid from funds deposited pursuant to paragraphs (a) or (b) of
this Section, to the Owners of such designated Bonds not so surrendered and paid all sums due with
respect thereto.
For purposes of this Section, Government Obligations shall mean:
Direct and general obligations of the United States of America, or obligations that are
unconditionally guaranteed as to principal and interest by the United States of America (which may
consist of obligations of the Resolution Funding Corporation that constitute interest strips), or
“prerefunded” municipal obligations rated in the highest rating category by Moody’s Investors
Service or Standard & Poor’s. In the case of direct and general obligations of the United States of
America, Government Obligations shall include evidences of direct ownership of proportionate
interests in future interest or principal payments of such obligations. Investments in such
proportionate interests must be limited to circumstances where (a) a bank or trust company acts as
custodian and holds the underlying United States obligations; (b) the Owner of the investment is the
real party in interest and has the right to proceed directly and individually against the obligor of the
underlying United States obligations; and (c) the underlying United States obligations are held in a
special account, segregated from the custodian’s general assets, and are not available to satisfy any
claim of the custodian, any person claiming through the custodian, or any person to whom the
custodian may be obligated; provided that such obligations are rated or assessed “AAA” by
Standard & Poor’s or “Aaa” by Moody’s Investors Service.
SECTION 19. Nonliability of County. Notwithstanding anything to the contrary contained
herein, in the Bonds or in any other document mentioned herein, neither the County, nor its officials,
officers, employees or agents shall have any liability hereunder or by reason hereof or in connection
with the transactions contemplated hereby, the Bonds are not a debt of the County or a pledge of the
County’s full faith and credit, and the Bonds and any liability in connection therewith shall be paid
solely from ad valorem taxes lawfully levied to pay the principal of or interest on the Bonds.
SECTION 20. Indemnification of County. The District shall defend, indemnify and hold
harmless the County, its officials, officers, agents and employees (“Indemnified Parties”) against any
and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Parties may
become subject based in whole or in part upon any acts or omission related to the Bonds, except with
regard to the County’s responsibilities under Section 21 hereof. The District shall also reimburse the
Indemnified Parties for any legal or other costs and expenses incurred in connection with
investigating or defending any such claims or liabilities.
SECTION 21. Request to County to Levy Tax. The Board of Supervisors and officers of the
County are obligated by statute to provide for the levy and collection of property taxes in each year
sufficient to pay all principal and interest coming due on the Bonds in such year, and to pay from
such taxes all amounts due on the Bonds. The District hereby requests such Board of Supervisors to
annually levy a tax upon all taxable property in the District sufficient to redeem the Bonds, and to
pay the principal, redemption premium, in any, and interest thereon as and when the same become
due.
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SECTION 22. Other Actions. (a) Officers of the Board and District officials and staff are
hereby authorized and directed, jointly and severely to do any and all things and to execute and
deliver any and all documents which they may deem necessary or advisable in order to proceed with
the issuance of the Bonds and otherwise carry out, give effect to and comply with the terms and
intent of this Resolution. Such actions heretofore taken by such officers, officials and staff are
hereby ratified, confirmed and approved.
(b)
The Board hereby appoints KNN Public Finance as the Financial Advisor, Stradling
Yocca Carlson & Rauth, a Professional Corporation, as Bond Counsel and Luna & Glushon and
Hawkins Delafield & Wood, LLP as Co-Disclosure counsel, with respect to the issuance of the
Bonds.
(c)
The provisions of this Resolution may be amended by the Official Statement.
SECTION 23. Resolution to Treasurer and Tax Collector. The Clerk of this Board is hereby
directed to provide a certified copy of this Resolution to the Treasurer and Tax Collector and
Auditor-Controller of Los Angeles County immediately following its adoption.
SECTION 24. Continuing Disclosure. The District hereby covenants and agrees that it will
comply with and carry out all of the provisions of that certain Continuing Disclosure Agreement
executed by the District and dated the date of issuance and delivery of the Bonds, as originally
executed and as it may be amended from time to time in accordance with the terms thereof. Any
Bondholder may take such actions as may be necessary and appropriate, including seeking mandate
or specific performance by court order, to cause the District to comply with its obligations under this
Section. Noncompliance with this Section shall not result in acceleration of the Bonds.
SECTION 25. Further Actions Authorized. It is hereby covenanted that the District, and its
appropriate officials, have duly taken all actions necessary to be taken by them, and will take any
additional actions necessary to be taken by them, for carrying out the provisions of this Resolution.
SECTION 26. Recitals. All the recitals in this Resolution above are true and correct and this
Board so finds, determines and represents.
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SECTION 27. Effective Date.
passage.
This Resolution shall take effect immediately upon its
PASSED AND ADOPTED this 6th day of March, 2013, by the following vote:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
BOARD OF TRUSTEES OF THE LOS
ANGELES COMMUNITY COLLEGE
DISTRICT
President of the Board of Trustees
Attest:
Secretary to the Board of Trustees
26
SECRETARY’S CERTIFICATE
I, __________________, Secretary to the Board of Trustees of the Los Angeles Community
College District, hereby certify:
The foregoing is a full, true and correct copy of a resolution duly adopted at a regular
meeting of the Board of Trustees of said District duly and regularly and legally held at the regular
meeting place thereof on March 6, 2013, of which meeting all of the members of the Board of said
District had due notice and at which a quorum was present.
I have carefully compared the same with the original minutes of said meeting on file and of
record in my office and the foregoing is a full, true and correct copy of the original resolution
adopted at said meeting and entered in said minutes.
Said resolution has not been amended, modified or rescinded since the date of its adoption,
and the same is now in full force and effect.
Dated: March 6, 2013
Secretary to the Board of Trustees
27
EXHIBIT A
NOTICE INVITING PROPOSALS FOR PURCHASE OF BONDS
$350,000,000*
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(LOS ANGELES COUNTY, CALIFORNIA)
2008 ELECTION GENERAL OBLIGATION BONDS, SERIES F
NOTICE IS HEREBY GIVEN that sealed unconditioned proposals will be received to and including
the hour of 8:30 a.m., Pacific Standard Time, on April 23, 2013, at the offices of KNN Public
Finance, 1333 Broadway, Suite 1000, Oakland, California 94612 (the “Financial Advisor”), in the
manner described below, for the purchase of all, but not less than all, of $350,000,000* principal
amount of Los Angeles Community College District (Los Angeles County, California) 2008 Election
General Obligation Bonds, Series F (the “Bonds”). Proposals may also be submitted electronically
via the Parity Electronic Bid Submission System (“PARITY”) of Dalcomp, a division of Thomson
Information Services, Inc. (“Dalcomp”), in the manner described below, for the purchase of all, but
not less than all, of $350,000,000* principal amount of the Bonds. In the event that the sale has not
been awarded by the designated time, bids will be received at a subsequent time and date to be
determined by the District and publicized via the Bond Buyer or the Bond Buyer Wire or Thomson
Municipal Market Monitor (www.tm3.com).
I.
Issue:
The Bonds will be dated the date of delivery, will be in the denomination of $5,000 each, or
integral multiples thereof, and will bear interest from the date of the Bonds to the maturity of each of
the Bonds at the rate or rates such that the interest rate shall not exceed ___% per annum, with
interest payable on August 1, 2013 and semiannually on February 1 and August 1 of each year during
the term of each of the Bonds. The Bonds mature on August 1 in each of the years set forth in the
following schedule:
PRINCIPAL
AMOUNT
YEAR
*
Preliminary, subject to change.
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PRINCIPAL
AMOUNT
YEAR
II.
Option to Elect Term Bonds:
The purchaser may elect to combine any number of consecutive maturities of Bonds for
which an identical interest rate has been specified to comprise term bonds by indicating such an
election on the bid form. The election to create term bonds in such manner will require the creation
of a mandatory sinking fund so that the sinking fund redemption payments shall equal the
corresponding serial bond maturity amounts.
III.
Adjustment of Principal Amounts:
The principal amounts of each maturity of Bonds set forth above reflect certain assumptions
of the Los Angeles Community College District (the “District”) and the Financial Advisor with
respect to the likely interest rates of the winning bid or bids. Following the determination of the
successful bidder or bidders, the Chief Financial Officer/Treasurer, on behalf of the District, reserves
the right to increase or decrease the principal amount of each maturity of the Bonds, in $5,000
increments of principal amounts. Such adjustment shall be made within 26 hours of the bid opening
and in the sole discretion of the District, upon recommendation of the Financial Advisor. In the
event of any such adjustment, no rebidding or recalculation of the bids submitted will be required or
permitted and the successful bid or bids may not be withdrawn, and the successful bidder will not be
permitted to change the interest rate(s) in its bid for the bonds. The percentage compensation to be
paid to the successful bidder will not change if the maturity schedule is adjusted.
IV.
Interest Rates:
The price for each maturity of the Bonds shall be greater than or equal to ________%. All
bids for the purchase of the Bonds must state the rate or rates of interest to be paid and no bid at a
price less than the par value of the Bonds, together with all accrued interest thereon to the date of the
delivery of the Bonds, will be considered. All Bonds of the same maturity must bear the same rate of
interest and no Bond may bear more than one rate. The maximum interest rate bid may not exceed
six percent (6%) per annum, and the true interest cost shall not exceed six percent (6%) per annum.
Bidders may specify any number of different rates to be borne on the Bonds; provided that, all
interest rates must be in multiples of 1/8 or 1/20 of one percent and a zero rate of interest cannot be
specified. Interest will be computed on the basis of a 360-day year consisting of 12 30-day months.
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V.
Redemption:
The Bonds maturing on or before August 1, 20__ are not subject to optional redemption prior
to their respective maturity dates. The Bonds maturing on or after August 1, 20__, are subject to
optional redemption prior to their respective maturity dates at the option of the District, from any
source of available funds, as a whole or in part on any date on or after August 1, 20__, at a
redemption price equal to the principal amount of the Bonds, together with accrued interest to the
date fixed for redemption, without premium.
VI.
Notice of Redemption:
Notice of redemption of any Bond will be mailed to the Registered Owner of each Bond to be
redeemed in whole or in part at the address shown on the registration records maintained by The
Bank of New York Mellon Trust Company, N.A., the Bond Registrar designated for this issue of
Bonds; such mailing to be not more than 45 nor less than 20 days prior to the date set for redemption.
Neither failure to receive such notice nor any defect in any notice so mailed shall affect the
sufficiency of the proceedings for the redemption of Bonds.
VII.
Registration of Bonds as to Principal and Interest and Place of Payment:
The Bonds, when delivered, will be registered in the name of Cede & Co., as nominee of The
Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository
of the Bonds. Individual purchases will be made in book-entry form only, in the denominations of
$5,000 and integral multiples thereof. Purchasers will not receive certificates representing their
interest in the Bonds purchased. Principal and interest are payable in lawful money of the United
States of America and will be paid to DTC which in turn will remit such amounts to the beneficial
Owners of the Bonds through DTC’s Participants, as described in the Preliminary Official Statement.
VIII.
Authority:
The Bonds will be issued pursuant to the Constitution and laws of the State of California.
The issuance of the Bonds was authorized by the requisite fifty-five percent vote of the qualified
electors of the District voting at an election held on November 4, 2008.
IX.
Security:
Both principal of and interest on the Bonds are payable solely from an unlimited ad valorem
tax levied against all of the taxable property in the District.
X.
Form of Bid:
A prescribed form of bid for the Bonds has been prepared and is attached hereto. Bids must
be submitted electronically via PARITY.
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All bids which are submitted electronically via PARITY pursuant to the procedures described
below shall be deemed to constitute a Bid for Purchase of the Bonds and shall be deemed to
incorporated by reference all of the terms and conditions of this Notice Inviting Proposals for
Purchase of Bonds. The submission of a bid electronically via PARITY shall constitute and be
deemed the bidder’s signature on the Bid for Purchase of the Bonds.
XI.
Procedures Regarding Electronic Bidding:
Bids may be submitted electronically via PARITY in accordance with this Notice Inviting
Proposals for Purchase of Bonds, until 8:30 a.m., Pacific Standard Time, on
_________,______ __2013, but no bid will be received after the time for receiving bids specified
above. To the extent any instructions or directions set forth in PARITY conflict with this Notice
Inviting Proposals for Purchase of Bonds, the terms of this Notice Inviting Proposals for Purchase of
Bonds shall control. For further information about PARITY, potential bidders may contact the
District’s Financial Advisor or PARITY at Dalcomp at (212) 806-8304. In the event that a bid for
the Bonds is submitted via PARITY, the bidder further agrees that:
1.
The District may regard the electronic transmission of the bid through PARITY
(including information about the purchase price of the Bonds, the interest rate or rates to be borne by
the various maturities of the Bonds, the initial public offering price of each maturity and any other
information included in such transmission) as though the same information were submitted on the
Bid for Purchase of the Bonds form, provided by the District and executed by a duly authorized
signatory of the bidder. If a bid submitted electronically by PARITY is accepted by the District, the
terms of the Bid for Purchase of the Bonds and the Notice Inviting Proposals for Purchase of Bonds
and the information that is electronically transmitted through PARITY shall form a contract and the
successful bidder shall be bound by the terms of such contract.
2.
PARITY is not an agent of the District, and the District shall have no liability
whatsoever based on any bidder’s use of PARITY, including but not limited to any failure by
PARITY to correctly or timely transmit information provided by the District or information provided
by the bidder.
3.
The District may choose to discontinue use of electronic bidding via PARITY by
issuing a notification to such effect via PARITY’s internet site (www.tm3.com) no later than 1:00
P.M. (Pacific Daylight Time) on the last business day prior to the date of sale.
4.
Once the bids are communicated electronically via PARITY to the District as
described above, each bid will constitute a Bid for Purchase of the Bonds and shall be deemed to be
an irrevocable offer to purchase the Bonds on the terms provided in this Notice Inviting Proposals for
Purchase of Bonds. For purposes of submitting all Bids for Purchase of the Bonds, whether by hand
delivery, facsimile or electronically via PARITY, the time as maintained on PARITY shall constitute
the official time.
5.
Each bidder choosing to bid electronically shall be solely responsible to make
necessary arrangements to access PARITY for purposes of submitting its bid in a timely manner and
in compliance with this Notice Inviting Proposals for Purchase of Bonds. Neither the District nor
Dalcomp shall have any duty or obligation to undertake such registration to bid for any prospective
bidder or to provide or assure such access to any qualified prospective bidder, and neither the District
nor Dalcomp shall be responsible for a bidder’s failure to register to bid or for proper operation of, or
A-4
have any liability for any delays or interruptions of, or any damages caused by, PARITY. The
District is using PARITY as a communication mechanism, and not as the District’s agent, to conduct
the electronic bidding for the Bonds. By using PARITY, each bidder agrees to hold the District
harmless for any harm or damages caused to such bidder in connection with its use of PARITY for
bidding on the Bonds.
In the event that both an electronic bid and a facsimile bid from a single bidder are received
at or prior to the bid receipt deadline, and to the extent that there is an inconsistency in the interest
rates or price bid, the facsimile shall be deemed to be the bid submitted. No bid received after the
deadline shall be considered. In any case, each bid must be in accordance with the terms and
conditions set forth in this official Notice Inviting Proposals for Purchase of Bonds.
XII.
Estimate of True Interest Cost:
Bidders are requested (but not required) to supply an estimate of the total true interest cost to
the District on the basis of their respective bids, which shall be considered as informative only and
not binding on either the bidder or the Board of Trustees of the District.
XIII.
Deposit:
Except as otherwise provided below, a good faith deposit ("Deposit") in the form of a
certified, treasurer's or cashier's check drawn on a solvent commercial bank or trust company in the
United States of America or a Financial Surety Bond issued by an insurance company licensed to
issue such surety bond in the State of California, made payable to
Los Angeles Community College District
in the amount of
$________
is required for any bid to be accepted. If a check is used, it must accompany each bid. If a Financial
Surety Bond is used, such surety bond must be submitted to the District or its Financial Advisor prior
to the opening of the bids. The Financial Surety Bond must identify each bidder whose Deposit is
guaranteed by such Financial Surety Bond. If the winning bidder on the Bonds is determined to be a
bidder utilizing a Financial Surety Bond, then that bidder is required to submit its Deposit to the
District in the form of a cashier's check (or wire transfer such amount as instructed by the District or
its Financial Advisor) not later than 10:00 a.m. (District's local time) on the next business day
following the bid opening. If such Deposit is not received by that time, the Financial Surety Bond
may be drawn by the District to satisfy the Deposit requirement. If the apparent winning bidder on
the Bonds is determined to be a bidder who has not submitted a Deposit in the form of a Financial
Surety Bond or check, as provided above, the Financial Advisor will request the apparent winning
bidder to immediately wire the Deposit and provide the Federal wire reference number of such
Deposit to the Financial Advisor within 90 minutes of such request by the Financial Advisor. The
Bonds will not be officially awarded to a bidder who has not submitted a Deposit in the form of a
Financial Surety Bond or check, as provided above, until such time as the bidder has provided a
Federal wire reference number for the Deposit to the Financial Advisor.
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No interest on the Deposit will accrue to any bidder. The District will deposit the Deposit of
the winning bidder. The Deposit (without accruing interest) of the winning bidder will be applied to
the purchase price of the Bonds. In the event the winning bidder fails to honor its accepted bid, the
Deposit plus any interest accrued on the Deposit will be retained by the District. Any investment
income earned on the good faith deposit will be paid to the successful bidder in the event the District
is unable to deliver the Bonds. Deposits accompanying bids other than the bid which is accepted will
be returned promptly upon the determination of the best bidder.
XIV.
Qualification for Sale; Blue Sky:
The purchaser will assume responsibility for taking any action necessary to qualify the Bonds
for offer and sale in jurisdictions other than California, and for complying with the laws of all
jurisdictions on resale of the Bonds, and shall indemnify, defend and hold harmless the District and
their respective officers and officials from any loss or damage resulting from any failure to comply
with any such law. Compliance with Blue Sky Laws shall be the sole responsibility of the purchaser,
and the purchaser shall pay all fees and disbursements related to the qualification of the bonds for
sale under the securities or Blue Sky laws of various jurisdictions. The District will furnish such
information and take such action not inconsistent with law as the purchaser may request and the
District shall deem necessary or appropriate 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 of America as may be designated by the purchaser, provided, however, that the District shall
not execute a general or special consent to service of process or qualify to do business in connection
with such qualification or determination in any jurisdiction. The purchaser will not offer to sell, or
solicit any offer to buy, the Bonds in any jurisdiction where it is unlawful for such purchaser to
make such offer, solicitation or sale, and the purchaser shall comply with the Blue Sky and
other securities laws and regulations of the states and jurisdictions.
XV.
CUSIP Numbers and Other Fees:
CUSIP numbers will be applied for and will be printed on the Bonds and the cost of printing
thereof and service bureau assignment will be purchaser’s responsibility. Any delay, error or
omission with respect thereto will not constitute cause for the purchaser to refuse to accept delivery
of and pay for the Bonds. The successful bidder shall also be required to pay all fees required by The
Depository Trust Company, Bond Market Association, Municipal Securities Rulemaking Board, and
any other similar entity imposing a fee in connection with the issuance of the Bonds (see, “California
Debt Advisory and Investment Commission” below).
XVI.
Legal Opinion:
The Bonds are sold with the understanding that the purchaser will be furnished with the
approving opinion of Bond Counsel, Stradling Yocca Carlson & Rauth, a Professional Corporation.
A copy of the opinion will be attached to the Bonds. Said attorneys have been retained by the
District as Bond Counsel and in such capacity are to render their opinion only upon the legality of the
Bonds under California law and on the exemption of the interest income on such Bonds from federal
and State of California income taxes. Fees of Bond Counsel will be paid from the costs of issuance.
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XVII. Tax-Exempt Status:
In the opinion of Bond Counsel, under existing laws, interest on the Bonds is exempt from all
present State of California personal income taxes, and assuming compliance with certain covenants
made by the District, interest on the Bonds is not includable in the gross income of the Owners of the
Bonds for federal income tax purposes, provided that such interest may be included in the calculation
for certain taxes, including the corporate alternative minimum tax and the corporate environmental
tax. Should changes in the law cause Bond Counsel’s opinion to change prior to delivery of the
Bonds to the purchaser, the purchaser will be relieved of its responsibility to pick up and pay for the
Bonds, and in that event its Deposit will be returned.
XVIII. Certification of Reoffering Price:
As soon as practicable, but not later than five days following the deadline for receipt of bids
for the Bonds, the successful bidder must submit to the District a certificate specifying for each
maturity the reoffering price at which at least 10% of the Bonds of such maturity were sold (or were
offered in a bona fide public offering and as of the date of award of the Bonds to the successful
bidder reasonably expected to be sold) to the public. Such certificate shall be in form and substance
satisfactory to Bond Counsel and shall include such additional information as may be requested by
Bond Counsel.
XIX.
Award:
The Bonds will be awarded to the responsible bidder submitting the best responsive bid,
considering the interest rate or rates specified. The best bid will be the bid that represents the lowest
true interest cost (“TIC”) to the District for the Bonds. The TIC is the discount rate that, when
compounded semiannually and used to discount all debt service payments on the Bonds back to the
date of delivery of such Bonds, results in an amount equal to the price bid for said Bonds. In the
event that two or more bidders offer bids for the Bonds at the same lowest TIC, the District will
determine by lottery which bidder will be awarded the Bonds. For the purpose of calculating the
TIC, the mandatory sinking fund payments, if any, shall be treated as serial maturities in such years.
The determination of the bid representing the lowest TIC will be made without regard to any
adjustments made or contemplated to be made after the award by the Chief Financial
Officer/Treasurer, as described herein under “Adjustment of Principal Amounts,” even if such
adjustments have the effect of raising the TIC of the successful bid to a level higher than the bid
containing the next lowest TIC prior to adjustment.
XX.
Delivery:
Delivery of the Bonds will be made to the purchaser through DTC upon payment in federal
funds payable to or for the account of the District at the County of Los Angeles, Treasurer and Tax
Collector, 500 West Temple Street, Los Angeles, California 90012. The Closing will take place at
the offices of Stradling Yocca Carlson & Rauth, a Professional Corporation, 44 Montgomery Street,
Suite 4200, San Francisco, California 94104, or at the purchaser’s request and expense, at any other
place mutually agreeable to both the District and the purchaser.
A-7
XXI.
Prompt Award:
The Chief Financial Officer/Treasurer of the District, or her designee, will take action
awarding the Bonds or rejecting all bids not later than twenty-six (26) hours after the expiration of
the time herein prescribed for the receipt of bid proposals, unless such time of award is waived by the
successful bidder. Notice of the award will be given promptly to the successful bidder.
XXII. California Debt Advisory and Investment Commission:
The successful bidder will be required, pursuant to state of California law, to pay any fees to
the California Debt and Investment Advisory Commission (“CDIAC”). CDIAC will invoice the
successful bidder after the closing of the Bonds.
XXIII. No Litigation and Non-Arbitrage:
The District will deliver a certificate stating that no litigation is pending affecting the
issuance and sale of the Bonds. The District will also deliver an arbitrage certificate covering its
reasonable expectations concerning the Bonds and the use of proceeds thereof.
XXIV. Official Statement:
The District will make available a Preliminary Official Statement relating to the Bonds, a
copy of which, along with related documents, will be furnished upon request made by mail to KNN
Public Finance, 1333 Broadway, Suite 1000, Oakland, California 94612, Attn: David Brodsly the
District’s Financial Advisor for the Bonds, or telephoned to said Financial Advisor at
(510) 839-8200. Such Preliminary Official Statement, together with any supplements thereto, shall
be in form “deemed final” by the District for the purposes of SEC Rule 15c2-12(b)(1), but is subject
to revision, amendment and completion in a final official statement. The District shall deliver, at
closing, a certificate, executed by appropriate officers of the District acting in their official capacities,
to the effect that the facts contained in the Official Statement relating to the Bonds are true and
correct in all material respects, and that the Official Statement does not contain any untrue statements
of a material fact or omit to state a material fact necessary to make the statement therein, in light of
the circumstances under which they were made, not misleading. Copies of the Official Statement
will be made available to the purchaser without charge in an amount requested by purchaser, up to
100 copies, within seven business days of the date of sale and additional copies will be made
available upon request at the purchaser’s expense.
The Internet posting of the Preliminary 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 securities described in the
Preliminary Official Statement, in any jurisdiction in which such offer, solicitation, or sale would be
unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
The District undertakes that for a certain period of twenty-five (25) days following the end of
the “underwriting period” as defined in Rule 15c-2-12 it will (i) apprise the winning bidder if any
event shall occur, or information comes to the attention of the District that, in the reasonable
judgment of the District, is reasonably likely to cause the Official Statement (weather or not
previously 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 with respect to the District after delivery of the Bonds and (ii)
A-8
if requested by the winning bidder, prepare a supplement to the final Official Statement with respect
to such event or information. The District will presume, unless notified in writing by the winning
bidder, the end of the underwriting period will occur on the date of the delivery of the Bonds. By
making a bid on the Bonds, the winning bidder agrees (i) to disseminate to all members of the
underwriting syndicate, if any, copies of the final Official Statement, including any supplements
prepared by the District, and to file a copy of the final Official Statement, including any supplements
prepared by the district, and to file a copy of the final official Statement with the MSRB through its
EMMA system (as provided by ruled 15c2-12) within one business day after receipt thereof from the
issuer of its designee, but in any event, no later than the date of closing and (ii) to take any and all
other actions necessary to comply with the applicable rules of the Securities and Exchange
Commission and rules governing the offering, sale and delivery of the Bonds on all purchasers,
including the requirements of delivery of the final Official Statement.
XXV. Continuing Disclosure:
In order to assist bidders in complying with Rule 15c2-12(b)(5) promulgated under the
Securities Exchange Act of 1934, the District will undertake in a Continuing Disclosure Agreement
to provide certain annual financial information and Notice of the occurrence of certain events
enumerated therein. A description of this undertaking and a form of the Continuing Disclosure
Agreement is included in the Preliminary Official Statement.
XXVI. Ratings:
Standard & Poor’s Ratings Service, a Standard & Poor’s Financial Services LLC business
and Moody’s Investors Service have assigned to the Bonds the ratings shown on the cover page of
the Preliminary Official Statement or, if not so indicated, will be available upon request from the
Financial Advisor. Such ratings reflect only the views of such organization and explanation of the
significance of such ratings may be obtained from them as follows: Standard & Poor’s, 55 Water
Street, New York, New York 10041, (212) 438-2000, and Moody’s Investors Service, 7 World Trade
Center at 250 Greenwich Street, New York, New York 10007, (212) 553-1658. There is no
assurance that the ratings will continue for any given period of time or that they will not be revised
downward or withdrawn entirely by either of the rating agencies, if, in the judgment of such agency,
circumstances so warrant. Any such downward revision or withdrawal of such rating may have an
adverse effect on the market price of the Bonds.
XXVII. Right to Cancel, Postpone, or Reschedule Sale:
The District reserves the right to cancel, postpone or reschedule the sale of the Bonds upon
notice given through the Bloomberg News Service, Thomson Municipal Market Monitor
(www.tm3.com) or The Bond Buyer prior to the time bids are to be received. If the sale is postponed,
bids will be received at the place set forth above, at the date and time as the District shall determine.
Notice of the new sale date and time, if any, will be given through Bloomberg News Service,
Thomson Municipal Market Monitor (www.tm3.com) or The Bond Buyer no later than twenty-three
(23) hours prior to the new time bids are to be received. As an accommodation to bidders, telephone
or fax notice of the postponement of the sale date and of the new sale date will be given to any bidder
requesting such notice from the Financial Advisor. Failure of any bidders to receive such notice shall
not affect the legality of the sale.
A-9
XXVIII. Additional Information:
Copies of the Notice Inviting Proposals for Purchase of Bonds, the form of bid, and the
Preliminary Official Statement relating to the Bonds will be furnished to any bidder upon request
made to KNN Public Finance, Attn: David Brodsly, phone: (510) 839-8200, dbrodsly@knninc.com,
the Financial Advisor.
Dated: ______________, 2013
LOS
ANGELES
DISTRICT
COMMUNITY
COLLEGE
By:
Chief Financial Officer/Treasurer
A-10
EXHIBIT B
BID FOR THE PURCHASE OF $______________
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(LOS ANGELES COUNTY, CALIFORNIA)
2008 ELECTION GENERAL OBLIGATION BONDS, SERIES F
_______________, 2013
Los Angeles Community College District
Los Angeles County, California
On behalf of a group which we have formed consisting of:
and pursuant to the Notice Inviting Proposals for Purchase of Bonds hereinafter mentioned, we offer
to purchase all of the ____________________ Dollars ($______________) principal amount of the
Bonds designated as “Los Angeles Community College District (Los Angeles County, California)
2008 Election General Obligation Bonds, Series F,” maturing on August 1 in the years and amounts
and bearing interest at the rate or rates set forth in the following schedule:
YEAR
PRINCIPAL
AMOUNT*
INTEREST
RATE
INSURANCE
and to pay therefor the aggregate sum of $_______________ (representing the $_________ principal
amount of the Bonds, plus interest accrued on such Bonds to the date of delivery thereof, plus
premium of $_______________.)
We hereby elect to combine the maturities of Bonds maturing on the following dates to comprise
term bonds:
*
Preliminary, subject to change. See “III. Adjustment of Principal Amounts” in the Notice Inviting Proposals for
Purchase of Bonds.
B-1
Error! Unknown document property name.
Redemption Dates
Maturity Date
__________ through __________
__________ through __________
__________ through __________
_________ 1, ____
_________ 1, ____
_________ 1, ____
This bid is submitted with our intention to purchase municipal bond insurance from
_______________________ (fill in if applicable). Such insurance will be obtained at our expense.
This bid is made subject to all the terms and conditions of the Notice Inviting Proposals for Purchase
of Bonds heretofore published, all of which terms and conditions are made a part hereof as fully as
though set forth in full in this bid.
As specified in the Notice Inviting Proposals for Purchase of Bonds, this bid is subject to acceptance
not later than 26 hours after the expiration of the time for the receipt of bids, and the opinion of
Stradling Yocca Carlson & Rauth, a Professional Corporation approving the validity of the Bonds
will be furnished us (if we are the successful bidder) at the time of the delivery of the Bonds at the
expense of the District.
There is submitted herewith a memorandum (which shall not constitute a part of this bid) stating the
total true interest cost in dollars on the Bonds during the life of the issue under this bid, and the true
interest rate determined thereby.
We have received and reviewed the Preliminary Official Statement with respect to the Bonds (the
“Preliminary Official Statement”) and as a condition to bidding on the Bonds, have determined that
we can comply with the requirements of Rule 15c2-12 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
As of the date of award and as of the date of delivery of the Bonds, all members of our syndicate
either participate in DTC or clear through or maintain a custodial relationship with an entity that
participates in said depository.
We hereby request that _____________ (not to exceed ___) printed copies of the Official Statement
with respect to the Bonds be furnished to us in accordance with the terms of the Notice Inviting
Proposals for Purchase of Bonds.
Respectfully submitted,
Name:
(Account Manager)
By:
Address:
City:
State:
Phone:
MEMORANDUM OF INTEREST COST: Under the above bid, the total true interest cost on the
Bonds during the life of the issue is $_______________ and the true interest rate determined thereby
is _____%.
B-2
EXHIBIT C
NOTICE OF INTENTION TO SELL
$_____________*
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(LOS ANGELES COUNTY, CALIFORNIA)
2008 ELECTION GENERAL OBLIGATION BONDS, SERIES F
NOTICE IS HEREBY GIVEN that the Los Angeles Community College District (the
“District”), in Los Angeles County, California, intends to offer for public sale on ______, April __,
2013, at the hour of 8:30 a.m. Pacific Daylight Time, at the office of KNN Public Finance, 1333
Broadway, Suite 1000, Oakland, California 94612 not to exceed $_____________* principal amount
of general obligation bonds of the District designated “Los Angeles Community College District
(Los Angeles County, California) 2008 Election General Obligation Bonds, Series F (the “Bonds”).
Within 26 hours, the Chief Financial Officer/Treasurer of the District will consider the bids received
and, if acceptable bids are received, award the sale of the Bonds on the basis of the true interest cost.
In the event that no bids are awarded by the designated time, proposals will be received at a
subsequent time and date to be determined by the District and publicized via PARITY, the Bond
Buyer Wire or Thomson Municipal Market Monitor (www.tm3.com).
NOTICE IS HEREBY FURTHER GIVEN that the Bonds will be offered for public sale
subject to the terms and conditions of the Notice Inviting Proposals for Purchase of the Bonds, dated
____________, 2013. Copies of the preliminary Official Statement and Notice Inviting Proposals for
Purchase of Bonds and the form of bid relating to the Bonds will be furnished upon request made to
KNN Public Finance, 1333 Broadway, Suite 1000, Oakland, California 94612, Attn: David Brodsly,
phone (510) 839-8200, dbrodsly@knninc.com, the Financial Advisor to the District for the Bonds.
Dated: __________, 2013
LOS ANGELES COMMUNITY COLLEGE
DISTRICT
By:
Chief Financial Officer/Treasurer
*
Preliminary, subject to change.
C-1
Board of Trustees
ACTION
Los Angeles Community College District
Com. No. BF5
Date: March 06, 2013
Division: BUSINESS AND FINANCE
Subject:
RESOLUTION AUTHORIZING THE ISSUANCE OF 2013 GENERAL
OBLIGATION REFUNDING BONDS
Adopt Resolution (hereto attached and identified as Attachment 1) entitled
“Resolution of the Board of Trustees of Los Angeles Community College
District Authorizing the Issuance of 2013 General Obligation Refunding
Bonds.
Background: The adoption of the resolution by the Board of Trustees
approves, authorizes and directs execution of various documents and directs
certain actions with respect to the refunding of General Obligation Bonds,
2013
Recommended by: ____________________________________ Approved by _____________________________
Adriana D. Barrera, Deputy Chancellor
Daniel LaVista, Chancellor
Chancellor and
Secretary of the Board of Trustees
By ___________________________
Page
1
of
1
Pages
Com. No.
BF3
Date ________
Div.
Candaele ___________
Santiago ___________
Field ______________
Svonkin ___________
Park _______________
Veres _____________
Pearlman ___________
Campos ___________
BUSINESS AND FINANCE
Student Trustee Advisory Vote
Date
3-06-2013
RESOLUTION NO. ___
A RESOLUTION OF THE BOARD OF TRUSTEES OF THE LOS ANGELES
COMMUNITY COLLEGE DISTRICT AUTHORIZING THE ISSUANCE OF 2013
GENERAL OBLIGATION REFUNDING BONDS
WHEREAS, a duly called election was held in the Los Angeles Community College District
(the “District”), Los Angeles County (the “County”), State of California, on May 20, 2003 and
thereafter canvassed pursuant to law;
WHEREAS, at such election there was submitted to and approved by the requisite fifty-five
percent vote of the qualified electors of the District a question as to the issuance and sale of general
obligation bonds of the District for various purposes set forth in the ballot submitted to the voters, in
the maximum amount of $980,000,000 payable from the levy of an ad valorem tax against the
taxable property in the District;
WHEREAS, on July 29, 2003, the District issued bonds in the aggregate principal amount of
$82,000,000 and styled as “Los Angeles Community College District (Los Angeles County,
California) Election of 2003 General Obligation Bonds, 2003 Series B” (the “Prior Bonds”);
WHEREAS, pursuant to Section 53550 et seq. of the California Government Code, the
District is authorized to issue general obligation refunding bonds (the “Refunding Bonds”) to refund
all or a portion of the outstanding Prior Bonds (so refunded, the “Refunded Bonds”);
WHEREAS, this Board desires to reappoint certain professionals to provide services related
to the issuance of Refunding Bonds; and
WHEREAS, all acts, conditions and things required by law to be done or performed have
been done and performed in strict conformity with the laws authorizing the issuance of general
obligation refunding bonds of the District, and whereas the indebtedness of the District, including
this proposed issue of Refunding Bonds, is within all limits prescribed by law; and
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE LOS
ANGELES COMMUNITY COLLEGE DISTRICT AS FOLLOWS:
SECTION 1. Purpose. To currently refund all or a portion of the outstanding principal
amount of the Prior Bonds and to pay all necessary legal, financial and contingent costs in connection
with the issuance of the Refunding Bonds, this Board hereby authorizes the issuance of the
Refunding Bonds and orders such Refunding Bonds sold at a competitive sale, in one or more series,
such that the Refunding Bonds shall be dated as of a date to be determined by the Authorized
Officers, shall bear interest at a rate not-to-exceed the maximum rate allowed by law, shall be
payable upon such terms and provisions as shall be set forth in the Refunding Bonds, shall mature on
the dates and in the amounts set forth in the Official Statement (defined herein), and shall be in an
aggregate principal amount not-to-exceed $65,000,000. Additional costs authorized to be paid from the
proceeds of the Refunding Bonds are all of the authorized costs of issuance set forth in Section 53550(e)
and (f) and Section 53587 of the Government Code.
SECTION 2. Bond Registrar. This Board does hereby appoint the Treasurer and Tax
Collector, as authenticating agent, bond registrar, transfer agent and paying agent (collectively, the
“Bond Registrar”) for the Refunding Bonds on behalf of the District. The Treasurer and Tax
Collector is authorized to contract with any third party to perform the services as Bond Registrar
hereunder. This Board hereby approves the payment of the reasonable fees and expenses of the Bond
Registrar as they shall become due and payable. The fees and expenses of the Bond Registrar which
are not paid as a cost of issuance of the Bonds may be paid in each year from ad valorem taxes levied
and collected for the payment thereof, insofar as permitted by law, including specifically by Section
15232 of the Education Code. The Bank of New York Mellon Trust Company, N.A. is approved as
the initial agent for the Treasurer and Tax Collector to act as Bond Registrar.
SECTION 3. Approval of the Notice Inviting Proposals for Purchase of Refunding Bonds.
The competitive sale of the Refunding Bonds shall be undertaken pursuant to the Notice Inviting
Proposals for Purchase of Refunding Bonds and Notice of Intention to Sell, set forth in Exhibits A, B
and C hereto. The Chancellor of the District (the “Chancellor”), the Chief Financial Officer/Treasurer
(the “CFO”), or a designated deputy thereof (collectively the “Authorized Officers”) each alone, are
hereby authorized to execute the Notice of Intention to Sell attached hereto as Exhibit C (the “Notice
of Intention”) and to cause the Notice of Intention to be published in The Bond Buyer once at least
five (5) days prior to the date set to receive bids.
The terms and conditions of the offering and the sale of the Refunding Bonds shall be as
specified in the Notice Inviting Proposals for Purchase of Refunding Bonds. The Board shall award
the sale of the Refunding Bonds by acceptance of the bids with the lowest true interest cost with
respect to the Refunding Bonds, so long as the principal amount of the Refunding Bonds does not
exceed $65,000,000 and the true interest cost does not exceed 6% per annum.
KNN Public Finance, the financial advisor to the District (the “Financial Advisor”), is hereby
authorized and directed to cause to be furnished to prospective bidders a reasonable number of copies
of the Notice Inviting Proposals for Purchase of Refunding Bonds (including the Bid Form) and a
reasonable number of copies of the Official Statement.
The Board hereby approves the competitive sale of the Refunding Bonds, having determined
that a competitive sale contributes to the District’s goal of achieving the lowest overall cost of funds.
The Board estimates that the costs associated with the issuance of the Refunding Bonds and any such
costs which the successful bidder or bidders agrees to pay pursuant to the Notice Inviting Proposals
for Purchase of Refunding Bonds, will equal approximately 1.5% of the principal amount of the
Refunding Bonds.
The Financial Advisor and/or Stradling Yocca Carlson & Rauth, a Professional Corporation,
San Francisco, California (“Bond Counsel”), are hereby authorized and directed to open the bids at
the time and place specified in the Notice Inviting Proposals for Purchase of Refunding Bonds and to
present the same to the Authorized Officers. The Financial Advisor and/or Bond Counsel are hereby
authorized and directed to receive and record the receipt of all bids made pursuant to the Notice
Inviting Proposals for Purchase of Refunding Bonds; to cause said bids to be examined for
compliance with the Notice Inviting Proposals for Purchase of Refunding Bonds; and to cause
computations to be made as to which bidder has bid the lowest true interest cost with respect to the
Refunding Bonds, as provided in the Notice Inviting Proposals for Purchase of Refunding Bonds,
along with a report as to the foregoing and any other matters deemed pertinent to the award of the
Refunding Bonds and the proceedings for the issuance thereof.
SECTION 4. Certain Definitions. As used in this Resolution, the terms set forth below
shall have the meanings ascribed to them (unless otherwise set forth in the Official Statement):
2
(a)
“Act” means Sections 53550 et seq. of the California Government Code.
(b)
“Bond Insurer” means any insurance company which issues a municipal bond
insurance policy insuring the payment of principal of and interest on the Refunding Bonds.
(c)
“Bond Payment Date” means (unless otherwise provided for in the Official
Statement), with respect to the Refunding Bonds, February 1 and August 1 of each year commencing
August 1, 2013 with respect to interest on the Refunding Bonds and August 1 of each year
commencing August 1, 2014 with respect to the principal payments on the Refunding Bonds.
(d)
“Bond Registrar” means initially, the Treasurer and Tax Collector, and afterwards
The Bank of New York Mellon Trust Company, N.A., as agent of the Treasurer and Tax Collector,
or any other such bond registrar designated in the Official Statement.
(e)
“Code” means the Internal Revenue Code of 1986, as the same may be amended from
time to time. Reference to a particular section of the Code shall be deemed to be a reference to any
successor to any such section.
(f)
“Continuing Disclosure Agreement” means that certain Continuing Disclosure
Agreement by and between the District and the dissemination agent named therein, dated the date of
issuance and delivery of the Refunding Bonds, as originally executed and as it may be amended from
time to time in accordance with the terms thereof.
(g)
“Depository” means, initially, DTC, and thereafter the securities depository acting as
Depository pursuant to Section 5(c) hereof.
(h)
“DTC” means The Depository Trust Company, New York, New York, 55 Water
Street, New York, New York 10041,Tel: (212) 855-1000 or Fax: (212) 855-7320, a limited purpose
trust company organized under the laws of the State of New York, in its capacity as Depository for
the Refunding Bonds.
(o)
“Escrow Agent” means The Bank of New York Mellon Trust Company, N.A., or any
other successor thereto, in its capacity as escrow agent for the Refunded Bonds.
(p)
“Escrow Agreement” means the Escrow Agreement relating to the Refunded Bonds
by and between the District and the Escrow Agent.
(q)
“Federal Securities” means securities as permitted, in accordance with the authorizing
resolutions of the County pursuant to which the Prior Bonds were issued, to be deposited with the
Escrow Agent for the purpose of defeasing the Prior Bonds.
(r)
“Information Services” means Financial Information, Inc.’s “Financial Daily Called
Bond Service”; Mergent Inc.’s Called Bond Department; or Standard & Poor’s J.J. Kenny
Information Services’ Called Bond Service; or Mergent Inc.’s Called Bond Department.
(s)
“Nominee” means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Section 5(c) hereof.
(t)
“Official Statement” means the Official Statement for the Refunding Bonds, as
described in Section 16 hereof.
3
(u)
“Outstanding” means, when used with reference to the Refunding Bonds, as of any
date, Refunding Bonds theretofore issued or thereupon being issued under this resolution except:
(i)
Refunding Bonds canceled at or prior to such date;
(ii)
Refunding Bonds in lieu of or in substitution for which other Refunding
Bonds shall have been delivered pursuant to Section 7 hereof; or
(iii)
Refunding Bonds for the payment or redemption of which funds or
Government Obligations in the necessary amount shall have been set aside (whether on or
prior to the maturity or redemption date of such Refunding Bonds), in accordance with
Section 18 of this Resolution.
(v)
“Owner” or “Registered Owner” means the registered owner of a Refunding Bond as
set forth on the registration books maintained by the Bond Registrar pursuant to Section 7 hereof.
(w)
“Participants” means those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds book-entry certificates as securities depository.
(x)
“Principal” or “Principal Amount” means, with respect to any Refunding Bond, the
principal or principal amount thereof.
(y)
“Rating Agencies” means Standard & Poor’s Ratings Services, Standard & Poor’s
Financial Services LLC business, and Moody’s Investors Services.
(z)
“Record Date” means the close of business on the 15th day of the month preceding
each Bond Payment Date.
(aa)
“Securities Depository” means The Depository Trust Company, 55 Water Street,
New York, New York 10041, Tel: (212) 855-1000 or Fax: (212) 855-7320 with Cede & Co. as its
nominee.
(bb) “Term Bonds” means those Refunding Bonds for which mandatory redemption dates
have been established in the Official Statement.
(ii)
“Treasurer and Tax Collector” means, the Treasurer and Tax Collector of Los
Angeles County.
SECTION 5.
Terms of the Refunding Bonds.
(a)
Denomination, Interest, Date of Delivery. The Refunding Bonds shall be issued as
bonds registered as to both principal and interest, in the denominations of $5,000 or any integral
multiple thereof. The Refunding Bonds will be initially registered to “Cede & Co.,” the Nominee of
the DTC.
Each Refunding Bond shall be dated the date of delivery or such date as shall appear in the
Official Statement (the “Date of Delivery”), and shall bear interest from the Bond Payment Date next
preceding the date of authentication thereof unless it is authenticated as of a day during the period
from the 16th day of the month next preceding any Bond Payment Date to that Bond Payment Date,
inclusive, in which event it shall bear interest from such Bond Payment Date, or unless it is
4
authenticated on or before the first Record Date, in which event it shall bear interest from the Date of
Delivery.
The Refunding Bonds shall bear interest at a rate or rates such that the interest rates or true
interest cost shall not exceed the maximum rate permitted by law. Interest shall be payable on the
respective Bond Payment Dates. Interest on the Refunding Bonds shall be computed on the basis of
a 360-day year of twelve 30-day months.
No Refunding Bond shall mature later than the final maturity date of the Refunded Bonds to
be refunded from proceeds of such Refunding Bond.
(b)
Redemption.
(i)
Optional Redemption. The Refunding Bonds shall be subject to optional
redemption prior to their stated maturity dates as provided in the Official Statement.
(ii)
Mandatory Redemption. Unless otherwise provided in the Official Statement,
the Term Refunding Bonds are subject to mandatory redemption from moneys in the Debt
Service Fund established in Section 11 hereof prior to their stated maturity dates, without
premium, on each August 1, in the Principal Amounts as set forth in the Official Statement.
In the event that a portion of any Term Bond is optionally redeemed pursuant to
Section 5(b)(i) hereof, the remaining sinking fund payments shall be reduced proportionately
or as otherwise directed by the District, in integral multiples of $5,000, in respect to the
portion of such Term Refunding Bonds optionally redeemed.
(iii)
Selection of Refunding Bonds for Redemption. Whenever provision is made
in this Resolution for the optional redemption of Outstanding Refunding Bonds and less than
all Outstanding Refunding Bonds are to be redeemed, the Bond Registrar identified below,
upon written instruction from the District, shall select Refunding Bonds for redemption as so
directed and if not directed, in inverse order of maturity. Within a maturity, the Bond
Registrar shall select Refunding Bonds for redemption by lot. Redemption by lot shall be in
such manner as the Bond Registrar shall determine; provided, however, that the portion of
any Refunding Bond to be redeemed in part shall be in the Principal Amount of $5,000 or
any integral multiple thereof.
(iv)
Notice of Redemption. When redemption is authorized or required pursuant
to Section 5(b)(i) hereof, the Bond Registrar, upon written instruction from the District, shall
give notice (a “Redemption Notice”) of the redemption of the Refunding Bonds. Such
Redemption Notice shall specify: the Refunding Bonds or designated portions thereof (in the
case of redemption of the Refunding Bonds in part but not in whole) which are to be
redeemed; the date of redemption; the place or places where the redemption will be made,
including the name and address of the Bond Registrar; the redemption price; the CUSIP
numbers (if any) assigned to the Refunding Bonds to be redeemed; the Refunding Bond
numbers of the Refunding Bonds to be redeemed in whole or in part and, in the case of any
Refunding Bond to be redeemed in part only, the Principal Amount of such Refunding Bond
to be redeemed; and the original issue date, interest rate and stated maturity date of each
Refunding Bond to be redeemed in whole or in part. Such Redemption Notice shall further
state that on the specified date there shall become due and payable upon each Refunding
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Bond or portion thereof being redeemed, at the redemption price thereof, together with the
interest accrued to the redemption date, and that from and after such date, interest with
respect thereto shall cease to accrue.
The Bond Registrar shall take the following actions with respect to such Redemption
Notice:
(A)
At least 20 but not more than 45 days prior to the redemption date,
such Redemption Notice shall be given to the respective Owners of Refunding Bonds
designated for redemption by registered or certified mail, postage prepaid, at their
addresses appearing on the Bond Register.
(B)
At least 20 but not more than 45 days prior to the redemption date,
such Redemption Notice shall be given by (i) registered or certified mail, postage
prepaid, (ii) telephonically confirmed facsimile transmission, or (iii) overnight
delivery service, to the Security Depository.
(C)
At least 20 but not more than 45 days prior to the redemption date,
such Redemption Notice shall be given by (i) registered or certified mail, postage
prepaid, or (ii) overnight delivery service, to one of the Information Services.
Neither failure to receive or failure to publish any Redemption Notice nor any defect
in any such Redemption Notice so given shall affect the sufficiency of the proceedings for
the redemption of the affected Refunding Bonds. Each check issued or other transfer of
funds made by the Bond Registrar for the purpose of redeeming Refunding Bonds shall bear
or include the CUSIP number identifying, by issue and maturity, the Refunding Bonds being
redeemed with the proceeds of such check or other transfer. Such redemption notices may
state that no representation is made as to the accuracy or correctness of the CUSIP numbers
printed therein or on the Refunding Bonds.
(v)
Partial Redemption of Refunding Bonds. Upon the surrender of any
Refunding Bond redeemed in part only, the Bond Registrar shall execute and deliver to the
Owner thereof a new Refunding Bond or Refunding Bonds of like tenor and maturity and of
authorized denominations equal in transfer amounts to the unredeemed portion of the
Refunding Bond surrendered. Such partial redemption shall be valid upon payment of the
amount required to be paid to such Owner and the District shall be released and discharged
thereupon from all liability to the extent of such payment.
(vi)
Effect of Notice of Redemption. Notice having been given as aforesaid, and
the moneys for the redemption (including the interest accrued to the applicable date of
redemption) having been set aside as provided in Section 18 hereof, the Refunding Bonds to
be redeemed shall become due and payable on such date of redemption.
If on such redemption date, money for the redemption of all the Refunding Bonds to
be redeemed as provided in Section 5(b)(i) hereof, together with interest accrued to such
redemption date, shall be held by the Bond Registrar (or an independent escrow agent
selected by the District) so as to be available therefor on such redemption date, and if notice
of redemption thereof shall have been given as aforesaid, then from and after such
redemption date, interest with respect to the Refunding Bonds to be redeemed shall cease to
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accrue and become payable. All money held by or on behalf of the Bond Registrar (or an
independent escrow agent selected by the District) for the redemption of Refunding Bonds
shall be held in trust for the account of the Owners of the Refunding Bonds so to be
redeemed.
All Refunding Bonds paid at maturity or redeemed prior to maturity pursuant to the
provisions of this Section 5 shall be cancelled upon surrender thereof and be delivered to or
upon the order of the District. All or any portion of a Refunding Bond purchased by the
District shall be cancelled by the Bond Registrar.
(vii) Refunding Bonds No Longer Outstanding. When any Refunding Bonds (or
portions thereof), which have been duly called for redemption prior to maturity under the
provisions of this Resolution, or with respect to which irrevocable instructions to call for
redemption prior to maturity at the earliest redemption date have been given to the Bond
Registrar (or an independent escrow agent selected by the District), in form satisfactory to it,
and sufficient moneys shall be held by the Bond Registrar (or an independent escrow agent
selected by the District) irrevocably in trust as provided in Section 18 hereof for the payment
of the redemption price of such Refunding Bonds or portions thereof, and, accrued interest
with respect thereto to the date fixed for redemption, all as provided in this Resolution, then
such Refunding Bonds shall no longer be deemed Outstanding and shall be surrendered to the
Bond Registrar for cancellation.
(viii) Conditional Notice of Redemption. With respect to any notice of optional
redemption of Refunding Bonds, unless upon the giving of such notice, such Refunding
Bonds shall be deemed to have been paid within the meaning of Section 5(vii) hereof or
unless the Bond Registrar holds cash or Government Obligations sufficient to pay the
principal, premium, if any, and interest on the Refunding Bonds to be redeemed, such notice
may state that such redemption shall be conditional upon the receipt by the Bond Registrar on
or prior to the date fixed for such redemption of moneys sufficient to pay the principal,
premium, if any, and interest on such Refunding Bonds and that if such moneys shall not
have been so received said notice shall be of no force and effect and the Bond Registrar shall
not be required to redeem such Refunding Bonds. In the event that such notice of redemption
contains such a condition and such moneys are not so received, the redemption shall not be
made and the Bond Registrar shall be within a reasonable time thereafter give notice, in the
manner in which the notice of redemption was given, that such moneys were not so received.
(c)
Book-Entry System.
(i)
Definitions. As used in this Section, the terms set forth below shall have the
meanings ascribed to them:
“Nominee” means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to this Section.
“Participants” means those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds book-entry certificates as securities depository.
(ii)
Election of Book-Entry System. The Refunding Bonds shall initially be
delivered in the form of a separate single fully-registered bond (which may be typewritten)
7
for each maturity date of such Refunding Bonds in an authorized denomination (except for
any odd denomination Refunding Bond). The ownership of each such Refunding Bond shall
be registered in the Bond Register (as defined below) in the name of the Nominee, as
nominee of the Depository and ownership of the Refunding Bonds, or any portion thereof
may not thereafter be transferred except as provided in Section 5(c)(ii)(4).
With respect to book-entry Refunding Bonds, the District and the Bond Registrar
shall have no responsibility or obligation to any Participant or to any person on behalf of
which such a Participant holds an interest in such book-entry Refunding Bonds. Without
limiting the immediately preceding sentence, the District and the Bond Registrar shall have
no responsibility or obligation with respect to (i) the accuracy of the records of the
Depository, the Nominee, or any Participant with respect to any ownership interest in
book-entry Refunding Bonds; (ii) the delivery to any Participant or any other person, other
than an Owner as shown in the Bond Register, of any notice with respect to book-entry
Refunding Bonds, including any notice of redemption; (iii) the selection by the Depository
and its Participants of the beneficial interests in book-entry Refunding Bonds to be prepaid in
the event the District redeems the Refunding Bonds in part; or (iv) the payment by the
Depository or any Participant or any other person, of any amount with respect to Principal,
premium, if any, or interest on the book-entry Refunding Bonds. The District and the Bond
Registrar may treat and consider the person in whose name each book-entry Refunding Bond
is registered in the Bond Register as the absolute owner (the “Registered Owner” or
“Owner”) of such book-entry Refunding Bond for the purpose of payment of Principal of and
premium and interest on and to such Refunding Bond, for the purpose of giving notices of
redemption and other matters with respect to such Refunding Bond, for the purpose of
registering transfers with respect to such Refunding Bond, and for all other purposes
whatsoever. The Bond Registrar shall pay all Principal of and premium, if any, and interest
on the Refunding Bonds only to or upon the order of the respective Owner, as shown in the
Bond Register, or his respective attorney duly authorized in writing, and all such payments
shall be valid and effective to fully satisfy and discharge the District’s obligations with
respect to payment of Principal of, and premium, if any, and interest on the Refunding Bonds
to the extent of the sum or sums so paid. No person other than an Owner, as shown in the
Bond Register, shall receive a certificate evidencing the obligation to make payments of
Principal of, and premium, if any, and interest on the Refunding Bonds. Upon delivery by
the Depository to the Owner and the Bond Registrar, of written notice to the effect that the
Depository has determined to substitute a new nominee in place of the Nominee, and subject
to the provisions herein with respect to the Record Date, the word Nominee in this Resolution
shall refer to such Nominee of the Depository.
1.
Delivery of Letter of Representations. In order to qualify the
book-entry Refunding Bonds for the Depository’s book-entry system, the District and
the Bond Registrar shall execute and deliver to the Depository a Letter of
Representations. The execution and delivery of a Letter of Representations shall not
in any way impose upon the District or the Bond Registrar any obligation whatsoever
with respect to persons having interests in such book-entry Refunding Bonds other
than the Owners, as shown on the Bond Register. By executing a Letter of
Representations, the Bond Registrar shall agree to take all action necessary at all
times so that the District will be in compliance with all representations of the District
in such Letter of Representations. In addition to the execution and delivery of a
Letter of Representations, the District and the Bond Registrar shall take such other
8
actions, not inconsistent with this Resolution, as are reasonably necessary to qualify
book-entry Refunding Bonds for the Depository’s book-entry program.
2.
Selection of Depository. In the event (i) the Depository determines
not to continue to act as securities depository for book-entry Refunding Bonds, or
(ii) the District determines that continuation of the book-entry system is not in the
best interest of the beneficial Owners of the Refunding Bonds or the District, then the
District will discontinue the book-entry system with the Depository. If the District
determines to replace the Depository with another qualified securities depository, the
District shall prepare or direct the preparation of a new single, separate, fully
registered bond for each maturity date of such book-entry Refunding Bond, registered
in the name of such successor or substitute qualified securities depository or its
Nominee as provided in subsection (4) hereof. If the District fails to identify another
qualified securities depository to replace the Depository, then the Refunding Bonds
shall no longer be restricted to being registered in such Bond Register in the name of
the Nominee, but shall be registered in whatever name or names the Owners
transferring or exchanging such Refunding Bonds shall designate, in accordance with
the provisions of this Section 5(c).
3.
Payments to Depository. Notwithstanding any other provision of this
Resolution to the contrary, so long as all Outstanding Refunding Bonds are held in
book-entry and registered in the name of the Nominee, all payments by the District or
the Bond Registrar with respect to Principal of and premium, if any, or interest on the
Refunding Bonds and all notices with respect to such Refunding Bonds shall be made
and given, respectively to the Nominees, as provided in the Letter of Representations
or as otherwise instructed by the Depository and agreed to by the Bond Registrar
notwithstanding any inconsistent provisions herein.
4.
Transfer of Refunding Bonds to Substitute Depository.
(A)
The Refunding Bonds shall be initially issued as described in the
Official Statement described herein. Registered ownership of such Refunding Bonds,
or any portions thereof, may not thereafter be transferred except:
(1)
to any successor of DTC or its Nominee, or of any substitute
depository designated pursuant to Section 5(c)(ii)(4)(A)(2) (“Substitute
Depository”); provided that any successor of DTC or Substitute Depository
shall be qualified under any applicable laws to provide the service proposed
to be provided by it;
(2)
to any Substitute Depository, upon (a) the resignation of DTC
or its successor (or any Substitute Depository or its successor) from its
functions as depository, or (b) a determination by the District that DTC (or its
successor) is no longer able to carry out its functions as depository; provided
that any such Substitute Depository shall be qualified under any applicable
laws to provide the services proposed to be provided by it; or
(3)
to any person as provided below, upon (a) the resignation of
DTC or its successor (or any Substitute Depository or its successor) from its
9
functions as depository, or (b) a determination by the District that DTC or its
successor (or Substitute Depository or its successor) is no longer able to carry
out its functions as depository.
(B)
In the case of any transfer pursuant to Section 5(c)(ii)(4)(A)(1) or (2),
upon receipt of all Outstanding Refunding Bonds by the Bond Registrar, together
with a written request of the District to the Bond Registrar designating the Substitute
Depository, a single new Refunding Bond, which the District shall prepare or cause
to be prepared, shall be executed and delivered for each maturity of Refunding Bonds
then Outstanding, registered in the name of such successor or such Substitute
Depository or their Nominees, as the case may be, all as specified in such written
request of the District.
In the case of any transfer pursuant to
Section 5(c)(ii)(4)(A)(3), upon receipt of all Outstanding Refunding Bonds by the
Bond Registrar, together with a written request of the District to the Bond Registrar,
new Refunding Bonds, which the District shall prepare or cause to be prepared, shall
be executed and delivered in such denominations and registered in the names of such
persons as are requested in such written request of the District, provided that the
Bond Registrar shall not be required to deliver such new Refunding Bonds within a
period of less than sixty (60) days from the date of receipt of such written request
from the District.
(C)
In the case of a partial redemption or an advance refunding of any
Refunding Bonds evidencing a portion of the Principal maturing in a particular year,
DTC or its successor (or any Substitute Depository or its successor) shall make an
appropriate notation on such Refunding Bonds indicating the date and amounts of
such reduction in Principal, in form acceptable to the Bond Registrar, all in
accordance with the Letter of Representations. The Bond Registrar shall not be liable
for such Depository’s failure to make such notations or errors in making such
notations.
(D)
The District and the Bond Registrar shall be entitled to treat the
person in whose name any Refunding Bond is registered as the Owner thereof for all
purposes of this Resolution and any applicable laws, notwithstanding any notice to
the contrary received by the Bond Registrar or the District; and the District and the
Bond Registrar shall not have responsibility for transmitting payments to,
communicating with, notifying, or otherwise dealing with any beneficial Owners of
the Refunding Bonds. Neither the District nor the Bond Registrar shall have any
responsibility or obligation, legal or otherwise, to any such beneficial Owners or to
any other party, including DTC or its successor (or Substitute Depository or its
successor), except to the Owner of any Refunding Bonds, and the Bond Registrar
may rely conclusively on its records as to the identity of the Owners of the Refunding
Bonds.
SECTION 6. Execution of the Refunding Bonds. The Refunding Bonds shall be signed by
the President of the Board or other member of the Board authorized to do so by resolution of the
Board, by their manual or facsimile signature and countersigned by the manual or facsimile signature
of the Clerk of the Board or Secretary to the Board, all in their official capacities. No Refunding
Bond shall be valid or obligatory for any purpose or shall be entitled to any security or benefit under
this Resolution unless and until the certificate of authentication printed on the Refunding Bond is
10
signed by the Bond Registrar as authenticating agent. Authentication by the Bond Registrar shall be
conclusive evidence that the Refunding Bond so authenticated has been duly issued, signed and
delivered under this Resolution and is entitled to the security and benefit of this Resolution.
SECTION 7. Bond Registrar; Transfer and Exchange. This Board does hereby appoint the
Treasurer and Tax Collector to act as the Bond Registrar for the Refunding Bonds, and approves The
Bank of New York Mellon Trust Company, N.A., as the agent of the Treasurer and Tax Collector.
So long as any of the Refunding Bonds remains Outstanding, the District will cause the Bond
Registrar to maintain and keep at its designated office all books and records necessary for the
registration, exchange and transfer of the Refunding Bonds as provided in this Section. Subject to
the provisions of Section 8 below, the person in whose name a Refunding Bond is registered on the
Bond Register shall be regarded as the absolute Owner of that Refunding Bond for all purposes of
this Resolution. Payment of or on account of the Principal of and premium, if any, and interest on
any Refunding Bond shall be made only to or upon the order of that person; neither the District nor
the Bond Registrar shall be affected by any notice to the contrary, but the registration may be
changed as provided in this Section. All such payments shall be valid and effectual to satisfy and
discharge the District’s liability upon the Refunding Bonds, including interest, to the extent of the
amount or amounts so paid.
Any Refunding Bond may be exchanged for Refunding Bonds of like tenor, maturity and
Transfer Amount upon presentation and surrender at the designated office of the Bond Registrar,
together with a request for exchange signed by the Owner or by a person legally empowered to do so
in a form satisfactory to the Bond Registrar. A Refunding Bond may be transferred on the Bond
Register only upon presentation and surrender of the Refunding Bond at the designated office of the
Bond Registrar together with an assignment executed by the Owner or by a person legally
empowered to do so in a form satisfactory to the Bond Registrar. Upon exchange or transfer, the
Bond Registrar shall complete, authenticate and deliver a new Refunding Bond or Refunding Bonds
of like tenor and of any authorized denomination or denominations requested by the Owner equal to
the Transfer Amount of the Refunding Bond surrendered and bearing or accruing interest at the same
rate and maturing on the same date.
If any Refunding Bond shall become mutilated, the District, at the expense of the Owner of
said Refunding Bond, shall execute, and the Bond Registrar shall thereupon authenticate and deliver,
a new Refunding Bond of like series, tenor and Transfer Amount in exchange and substitution for the
Refunding Bond so mutilated, but only upon surrender to the Bond Registrar of the Refunding Bond
so mutilated. If any Refunding Bond issued hereunder shall be lost, destroyed or stolen, evidence of
such loss, destruction or theft may be submitted to the Bond Registrar and, if such evidence be
satisfactory to the Bond Registrar and indemnity for the Bond Registrar and the District satisfactory
to the Bond Registrar shall be given by the Owner, the District, at the expense of the Refunding Bond
Owner, shall execute, and the Bond Registrar shall thereupon authenticate and deliver, a new
Refunding Bond of like Series and tenor in lieu of and in substitution for the Refunding Bond so
lost, destroyed or stolen (or if any such Refunding Bond shall have matured or shall have been called
for redemption, instead of issuing a substitute Refunding Bond the Bond Registrar may pay the same
without surrender thereof upon receipt of indemnity satisfactory to the Bond Registrar and the
District). The Bond Registrar may require payment of a reasonable fee for each new Refunding
Bond issued under this paragraph and of the expenses which may be incurred by the District and the
Bond Registrar.
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If manual signatures on behalf of the District are required in connection with an exchange or
transfer, the Bond Registrar shall undertake the exchange or transfer of Refunding Bonds only after
the new Refunding Bonds are signed by the authorized officers of the District. In all cases of
exchanged or transferred Refunding Bonds, the District shall sign and the Bond Registrar shall
authenticate and deliver Refunding Bonds in accordance with the provisions of this Resolution. All
fees and costs of transfer shall be paid by the requesting party. Those charges may be required to be
paid before the procedure is begun for the exchange or transfer. All Refunding Bonds issued upon
any exchange or transfer shall be valid obligations of the District, evidencing the same debt, and
entitled to the same security and benefit under this Resolution as the Refunding Bonds surrendered
upon that exchange or transfer.
Any Refunding Bond surrendered to the Bond Registrar for payment, retirement, exchange,
replacement or transfer shall be cancelled by the Bond Registrar. The District may at any time
deliver to the Bond Registrar for cancellation any previously authenticated and delivered Refunding
Bonds that the District may have acquired in any manner whatsoever, and those Refunding Bonds
shall be promptly cancelled by the Bond Registrar. Written reports of the surrender and cancellation
of Refunding Bonds shall be made to the District by the Bond Registrar as requested by the District.
The cancelled Refunding Bonds shall be retained for three years, then returned to the District or
destroyed by the Bond Registrar as directed by the District.
Neither the District nor the Bond Registrar will be required (a) to issue or transfer any
Refunding Bonds during a period beginning with the opening of business on the 16th business day
next preceding either any Bond Payment Date or any date of selection of Refunding Bonds to be
redeemed and ending with the close of business on the Bond Payment Date or any day on which the
applicable notice of redemption is given or (b) to transfer any Refunding Bonds which have been
selected or called for redemption in whole or in part.
SECTION 8. Payment. Payment of interest on any Refunding Bond on any Bond Payment
Date shall be made to the person appearing on the registration books of the Bond Registrar as the
Owner thereof as of the Record Date immediately preceding such Bond Payment Date, such interest
to be paid by check mailed to such Owner on the Bond Payment Date at his or her address as it
appears on such registration books or at such other address as he may have filed with the Bond
Registrar for that purpose on or before the Record Date. The Owner in an aggregate Principal
Amount of $1,000,000 or more may request in writing to the Bond Registrar that such Owner be paid
interest by wire transfer to the bank and account number on file with the Bond Registrar as of the
Record Date. The Principal, and redemption price, if any, payable on the Refunding Bonds and the
redemption price, if any, shall be payable upon maturity or redemption upon surrender at the
designated office of the Bond Registrar. The interest, Principal and premiums, if any, on the
Refunding Bonds shall be payable in lawful money of the United States of America. The Bond
Registrar is hereby authorized to pay the Refunding Bonds when duly presented for payment at
maturity, and to cancel all Refunding Bonds upon payment thereof. The Refunding Bonds are
general obligations of the District payable solely from the levy of ad valorem property taxes upon all
property subject to taxation within the District.
SECTION 9. Form of the Refunding Bonds. The Refunding Bonds shall be in substantially
the following form, allowing those officials executing the Refunding Bonds to make the insertions
and deletions necessary to conform the Refunding Bonds to this Resolution and the Official
Statement and to correct any defect or inconsistency therein or to cure any ambiguity or omission
therein.
12
(Form of Refunding Bond)
REGISTERED
NO.
REGISTERED
$____________
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(LOS ANGELES COUNTY, CALIFORNIA)
2013 GENERAL OBLIGATION REFUNDING BONDS
INTEREST RATE:
MATURITY DATE:
DATED AS OF:
___% per annum
August 1, 20__
Date of Delivery
CUSIP
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The Los Angeles Community College District (the “District”) in Los Angeles County,
California (the “County”), for value received, promises to pay to the Registered Owner named above,
or registered assigns, the Principal Amount on the Maturity Date, each as stated above, and interest
thereon until the Principal Amount is paid or provided for at the Interest Rate stated above, on
February 1 and August 1 of each year (the “Bond Payment Dates”), commencing August 1, 2013.
This bond will bear interest from the Bond Payment Date next preceding the date of authentication
hereof unless it is authenticated as of a day during the period from the 16th day of the month next
preceding any Bond Payment Date to the Bond Payment Date, inclusive, in which event it shall bear
interest from such Bond Payment Date, or unless it is authenticated on or before July 15, 2013, in
which event it shall bear interest from the Date of Delivery. Interest shall be computed on the basis
of a 360-day year of twelve 30-day months. Principal and interest are payable in lawful money of the
United States of America, without deduction for the paying agent services, to the person in whose
name this bond (or, if applicable, one or more predecessor bonds) is registered (the “Registered
Owner”) on the Register maintained by the Bond Registrar, initially The Bank of New York Mellon
Trust Company, N.A., as the agent of the Treasurer and Tax Collector of the County. Principal is
payable upon presentation and surrender of this bond at the principal office of the Bond Registrar.
Interest is payable by check or draft mailed by the Bond Registrar on each Bond Payment Date to the
Registered Owner of this bond (or one or more predecessor bonds) as shown and at the address
appearing on the Register at the close of business on the 15th day of the calendar month next
preceding that Bond Payment Date (the “Record Date”). The Owner of Refunding Bonds in the
aggregate principal amount of $1,000,000 or more may request in writing to the Bond Registrar that
the Owner be paid interest by wire transfer to the bank and account number on file with the Bond
Registrar as of the Record Date.
This bond is one of an authorization of bonds issued by the District pursuant to California
Government Code Section 53550 et seq. (the “Act”), for purpose of refunding certain of the District’s
Outstanding Election of 2003 General Obligation Bonds, 2003 Series B and to pay all necessary
legal, financial, engineering and contingent costs in connection therewith under authority of and
pursuant to the Act, the laws of the State of California, and the resolution of the Board of Trustees of
the District adopted on March 6, 2013 (the “Bond Resolution”). This bond and the issue of which
this bond is one are payable as to both principal and interest solely from the proceeds of the levy of
13
ad valorem taxes on all property subject to such taxes in the District, which taxes are unlimited as to
rate or amount in accordance with California Education Code Sections 15250 and 15252. The
Refunding Bonds of this issue are general obligations of the District
The bonds of this issue comprise $____________ principal amount of Refunding Bonds, of
which this bond is a part (a “Refunding Bond”).
This bond is exchangeable and transferable for bonds of like tenor, maturity and Transfer
Amount (as defined in the Bond Resolution) and in authorized denominations at the principal office
of the Bond Registrar in Los Angeles, California, by the Registered Owner or by a person legally
empowered to do so, in a form satisfactory to the Bond Registrar, all subject to the terms, limitations
and conditions provided in the Bond Resolution. All fees and costs of transfer shall be paid by the
transferor. The District and the Bond Registrar may deem and treat the Registered Owner as the
absolute Owner of this bond for the purpose of receiving payment of or on account of principal or
interest and for all other purposes, and neither the District nor the Bond Registrar shall be affected by
any notice to the contrary.
Neither the District nor the Bond Registrar will be required (a) to issue or transfer any bond
during a period beginning with the opening of business on the 15th business day next preceding
either any Bond Payment Date or any date of selection of bonds to be redeemed and ending with the
close of business on the Bond Payment Date or day on which the applicable notice of redemption is
given or (b) to transfer any bond which has been selected or called for redemption in whole or in
part.
The Refunding Bonds maturing on or before August 1, 20__ are not subject to optional
redemption prior to their respective maturity dates. The Refunding Bonds maturing on or after
August 1, 20__, are subject to optional redemption prior to their respective maturity dates at the
option of the District, from any source of available funds, as a whole or in part on any date on or after
August 1, 20__, at a redemption price equal to the principal amount of the Refunding Bonds, together
with accrued interest to the date fixed for redemption, without premium.
The Refunding Bonds maturing on August 1, 20__, are subject to redemption prior to
maturity from mandatory sinking fund payments on August 1 of each year, on and after August 1,
20__, at a redemption price equal to the principal amount thereof, plus accrued interest to the date
fixed for redemption, without premium. The principal amount represented by such Refunding Bonds
to be so redeemed and the dates therefor and the final principal payment date is as indicated in the
following table:
Redemption Date
(August 1)
Principal Amount
(1)
Total
__________________
(1)
Maturity
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The principal amount to be redeemed in each year shown above will be reduced
proportionately or as otherwise directed by the District, in integral multiples of $5,000, by any
portion of the Refunding Term Bond optionally redeemed prior to the mandatory sinking fund
redemption date.
If less than all of the bonds of any one maturity shall be called for redemption, the particular
bonds or portions of the bonds of such maturity to be redeemed shall be selected by lot by the Bond
Registrar in such manner as the Bond Registrar in its discretion may determine; provided, however,
that the portion of any bond to be redeemed shall be in the principal amount of $5,000 or some
multiple thereof. If less than all of the bonds stated to mature on different dates shall be called for
redemption, the particular bonds or portions thereof to be redeemed shall be called in any order of
maturity selected by the District or, if not so selected, in the inverse order of maturity.
Reference is made to the Bond Resolution for a more complete description of the provisions,
among others, with respect to the nature and extent of the security for the bonds of this series, the
rights, duties and obligations of the District, the Bond Registrar and the Registered Owners, and the
terms and conditions upon which the bonds are issued and secured. The Registered Owner of this
bond assents, by acceptance hereof, to all of the provisions of the Bond Resolution.
It is certified and recited that all acts and conditions required by the Constitution and laws of
the State of California to exist, to occur and to be performed or to have been met precedent to and in
the issuing of the bonds in order to make them legal, valid and binding general obligations of the
District, have been performed and have been met in regular and due form as required by law; that
payment in full for the bonds has been received; that no statutory or constitutional limitation on
indebtedness or taxation has been exceeded in issuing the bonds; and that due provision has been
made for levying and collecting ad valorem property taxes on all of the taxable property within the
District in an amount sufficient to pay Principal and interest when due.
This bond shall not be valid or obligatory for any purpose and shall not be entitled to any
security or benefit under the Bond Resolution until the Certificate of Authentication below has been
signed.
15
IN WITNESS WHEREOF, the Los Angeles Community College District, Los Angeles
County, California, has caused this bond to be executed on behalf of the District and in their official
capacities by the manual or facsimile signature of the President of the Board of Trustees of the
District, and to be countersigned by the manual or facsimile signature of the Secretary to the Board
of Trustees of the District, all as of the date stated above.
BOARD OF TRUSTEES OF THE LOS ANGELES
COMMUNITY COLLEGE DISTRICT
By:
(Facsimile Signature)
President of the Board of Trustees
COUNTERSIGNED:
(Facsimile Signature)
Secretary to the Board of Trustees
CERTIFICATE OF AUTHENTICATION
This bond is one of the bonds described in the Bond Resolution referred to herein which has
been authenticated and registered on ___________, 2013.
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as the agent for the Los Angeles
County Treasurer and Tax Collector
Authorized Officer
16
ASSIGNMENT
For value received, the undersigned sells, assigns and transfers to (print or typewrite name,
address and zip code of Transferee):
this bond and
irrevocably constitutes and appoints attorney to transfer this bond on the books for registration
thereof, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Notice:
The assignor’s signature to this assignment must correspond with the name as it
appears upon the within bond in every particular, without alteration or any change
whatever, and the signature(s) must be guaranteed by an eligible guarantor institution.
Social Security Number, Taxpayer Identification Number or other identifying number
of Assignee: __________________________________________________________
Unless this bond is presented by an authorized representative of The Depository Trust
Company to the issuer or its agent 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.
LEGAL OPINION
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a
Professional Corporation 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.
(Facsimile Signature)
Secretary to the Board of Trustees
17
SECTION 10. Delivery of the Refunding Bonds. The proper officials of the District shall
cause the Refunding Bonds to be prepared and, following their sale, shall have the Refunding Bonds
signed and delivered, together with a true transcript of proceedings with reference to the issuance of
the Refunding Bonds, to the original purchaser upon payment of the purchase price therefor.
SECTION 11. Deposit of Proceeds of Refunding Bonds; Escrow Agreement. An amount of the
proceeds from the sale of the Refunding Bonds necessary to purchase Federal Securities, or to otherwise
refund the Refunded Bonds, shall be transferred to the Escrow Agent for deposit in the “Los Angeles
Community College District 2013 General Obligation Refunding Bonds Escrow Fund” (the “Escrow
Fund”) established under the Escrow Agreement, which amount, if uninvested, shall be sufficient, or if
invested, together with an amount or amounts of cash held uninvested therein, shall be sufficient to refund
the Refunded Bonds all as set forth in a certificate of an Authorized Officer. Premium or proceeds
received from the sale of the Refunding Bonds desired to pay all or a portion of the costs of issuing the
Refunding Bonds may be deposited in the fund of the District held by a fiscal agent selected thereby and
shall be kept separate and distinct from all other District funds, and those proceeds shall be used solely for
the purpose of paying costs of issuance of the Refunding Bonds.
Any accrued interest received by the District from the sale of the Refunding Bonds shall be kept
separate and apart in the fund hereby created and established and to be designated as the “Los Angeles
Community College District 2013 General Obligation Refunding Bonds Debt Service Fund” (the “Debt
Service Fund”) for the Refunding Bonds and used only for payments of Principal of and interest on the
Refunding Bonds. The Debt Service Fund shall be held by the County. A portion of the premium
received by the District from the sale of the Refunding Bonds may be transferred to the Debt Service
Fund or applied to the payment of cost of issuance of the Refunding Bonds, or some combination of
deposits. Any excess proceeds of the Refunding Bonds not needed for the authorized purposes set forth
herein for which the Refunding Bonds are being issued shall be transferred to the Debt Service Fund and
applied to the payment of the Principal of and interest on the Refunding Bonds. If, after payment in full
of the Refunding Bonds, there remain excess proceeds, any such excess amounts shall be transferred to
the General Fund of the District.
The moneys in the Debt Service Fund, to the extent necessary to pay the Principal of and interest
on the Refunding Bonds as the same become due and payable, shall be transferred by the Treasurer and
Tax Collector to the Bond Registrar which, in turn, shall pay such moneys to DTC to pay the Principal of
and interest on the Refunding Bonds. DTC will thereupon make payments of Principal and interest on the
Refunding Bonds to the DTC Participants who will thereupon make payments of Principal and interest to
the beneficial owners of the Refunding Bonds. Any moneys remaining in the Debt Service Fund after the
Refunding Bonds and the interest thereon have been paid, or provision for such payment has been made,
shall be transferred to the General Fund of the District.
Except as required below to satisfy the requirements of Section 148(f) of the Code, interest
earned on the investment of monies held in the Debt Service Fund shall be retained in the Debt Service
Fund and used to pay Principal and interest on the Refunding Bonds when due.
SECTION 12. Rebate Fund.
(a)
General. If necessary, there shall be created and established a special fund designated the
“Los Angeles Community College District 2013 General Obligation Refunding Bonds Rebate Fund” (the
“Rebate Fund”). All amounts at any time on deposit in the Rebate Fund shall be held in trust, to the
extent required to satisfy the requirement to make rebate payments to the United States (the “Rebate
Requirement”) pursuant to Section 148 of the Code, as the same may be amended from time to time, and
the Treasury Regulations promulgated thereunder (the “Rebate Regulations”). Such amounts shall be free
18
and clear of any lien hereunder and shall be governed by this Section and Section 13 of this Resolution
and by the Tax Certificate concerning certain matters pertaining to the use and investment of proceeds of
the Refunding Bonds, executed and delivered to the District on the date of issuance of the Refunding
Bonds, including any and all exhibits attached thereto (the “Tax Certificate”).
(b)
Deposits.
(i)
Within forty-five (45) days of the end of each fifth Bond Year (as such term is
defined in the Tax Certificate) (1) the District shall calculate or cause to be calculated with respect
to the Refunding Bonds the amount that would be considered the “rebate amount” within the
meaning of Section 1.148-3 of the Rebate Regulations, using as the “computation date” for this
purpose the end of such five Bond Years, and (2) the District shall deposit to the Rebate Fund from
deposits from the District or from amounts available therefor on deposit in the other funds
established hereunder, if and to the extent required, amounts sufficient to cause the balance in the
Rebate Fund to be equal to the “rebate amount” so calculated.
(ii)
The District shall not be required to deposit any amount to the Rebate Fund in
accordance with the preceding sentence if the amount on deposit in the Rebate Fund prior to the
deposit required to be made under this subsection (b) equals or exceeds the “rebate amount”
calculated in accordance with the preceding sentence. Such excess may be withdrawn from the
Rebate Fund to the extent permitted under subsection (g) of this Section.
(iii)
The District shall not be required to calculate the “rebate amount” and the
District shall not be required to deposit any amount to the Rebate Fund in accordance with this
subsection (b), with respect to all or a portion of the proceeds of the Refunding Bonds (including
amounts treated as the proceeds of the Refunding Bonds) (1) to the extent such proceeds satisfy the
expenditure requirements of Section 148(f)(4)(B) or Section 148 (f)(4)(C) of the Code or Section
1.148-7(d) of the Treasury Regulations or the small issuer exception of Section 148(f)(4)(D) of the
Code, whichever is applicable, and otherwise qualify for the exception of the Rebate Requirement
pursuant to whichever of said sections is applicable, or (2) to the extent such proceeds are subject
to an election by the District under Section 148(f)(4)(C)(vii) of the Code to pay a one and one-half
percent (1½%) penalty in lieu of arbitrage rebate in the event any of the percentage expenditure
requirements of Section 148(f)(4)(C) are not satisfied, or (3) to the extent such proceeds qualify for
the exception to arbitrage rebate under Section 148(f)(4)(A)(ii) of the Code for amounts in a “bona
fide debt service fund.” In such event, and with respect to such amounts, the District shall not be
required to deposit any amount to the Rebate Fund in accordance with this subsection (b).
(c)
Withdrawal Following Payment of Refunding Bonds. Any funds remaining in the Rebate
Fund after redemption of all the Refunding Bonds and any amounts described in paragraph (ii) of
subsection (d) of this Section, including accrued interest, shall be transferred to the General Fund of the
District.
(d)
Withdrawal for Payment of Rebate. Subject to the exceptions contained in subsection (b)
of this Section to the requirement to calculate the “rebate amount” and make deposits to the Rebate Fund,
the District shall pay to the United States, from amounts on deposit in the Rebate Fund,
(i)
not later than sixty (60) days after the end of (a) the fifth (5th) Bond Year, and
(b) each fifth (5th) Bond Year thereafter, an amount that, together with all previous rebate
payments, is equal to at least 90% of the “rebate amount” calculated as of the end of such Bond
Year in accordance with Section 1.148-3 of the Rebate Regulations; and
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(ii)
not later than sixty (60) days after the payment of all Refunding Bonds, an
amount equal to one hundred percent (100%) of the “rebate amount” calculated as of the date of
such payment (and any income attributable to the “rebate amount” determined to be due and
payable) in accordance with Section 1.148-3 of the Rebate Regulations.
(e)
Rebate Payments. Each payment required to be made pursuant to subsection (d) of this
Section shall be made to the Internal Revenue Service Center, Ogden, Utah 84201, on or before the date
on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, such
form to be prepared or caused to be prepared by or on behalf of the District.
(f)
Deficiencies in the Rebate Fund. In the event that, prior to the time of any payment
required to be made from the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such
payment when such payment is due, the District shall calculate the amount of such deficiency and deposit
an amount equal to such deficiency into the Rebate Fund prior to the time such payment is due.
(g)
Withdrawals of Excess Amount. In the event that immediately following the calculation
required by subsection (b) of this Section, but prior to any deposit made under said subsection, the
amount on deposit in the Rebate Fund exceeds the “rebate amount” calculated in accordance with said
subsection, upon written instructions from the District, the District may withdraw the excess from the
Rebate Fund and credit such excess to the Debt Service Fund.
(h)
Record Retention. The District shall retain records of all determinations made hereunder
until three years after the retirement of the Refunding Bonds.
(i)
Survival of Defeasance. Notwithstanding anything in this Resolution to the contrary, the
Rebate Requirement shall survive the payment in full or defeasance of the Refunding Bonds.
SECTION 13. Security for the Refunding Bonds. There shall be levied on all the taxable
property in the District, in addition to all other taxes, a continuing direct ad valorem tax annually
during the period the Refunding Bonds are Outstanding in an amount sufficient to pay the Principal
of and interest on the Refunding Bonds when due, which moneys when collected will be placed in
the Debt Service Fund of the District and used for the payment of the Principal of and interest on the
Refunding Bonds when and as the same fall due, and for no other purpose. The District covenants to
cause the County to take all actions necessary to levy such ad valorem tax in accordance with this
Section 13.
The moneys in the Debt Service Fund, to the extent necessary to pay the Principal of and
interest on the Refunding Bonds as the same become due and payable, shall be transferred by the
Treasurer and Tax Collector to the Bond Registrar which, in turn, shall pay such moneys to DTC to
pay the Principal of and interest on the Refunding Bonds. DTC will thereupon make payments of
principal of and interest on the Refunding Bonds to the DTC Participants who will thereupon make
payments of Principal of and interest to the beneficial Owners of the Refunding Bonds. Any moneys
remaining in the Debt Service Fund after the Refunding Bonds and the interest thereon have been
paid, or provision for such payment has been made, shall be transferred to the General Fund of the
District, pursuant to the Education Code Section 15234.
SECTION 14. Arbitrage Covenant. The District covenants that it will restrict the use of the
proceeds of the Refunding Bonds in such manner and to such extent, if any, as may be necessary, so
that the Refunding Bonds will not constitute arbitrage bonds under Section 148 of the Code and the
20
applicable regulations prescribed under that Section or any predecessor section. Calculations for
determining arbitrage requirements are the sole responsibility of the District.
SECTION 15. Legislative Conditions. The Board determines that all acts and conditions
necessary to be performed by the Board or to have been met precedent to and in the issuing of the
Refunding Bonds in order to make them legal, valid and binding general obligations of the District
have been performed and have been met, or will at the time of delivery of the Refunding Bonds have
been performed and have been met, in regular and due form as required by law; and that no statutory
or constitutional limitation of indebtedness or taxation will have been exceeded in the issuance of the
Refunding Bonds. Furthermore, the Board finds and determines pursuant to Section 53552 of the
Act that the prudent management of the fiscal affairs of the District requires that it issue the
Refunding Bonds without submitting the question of the issuance of the Refunding Bonds to a vote
of the qualified electors of the District.
SECTION 16. Official Statement. The Preliminary Official Statement relating to the
Refunding Bonds, substantially in the form on file with the Secretary to or Clerk of the Board is
hereby approved and the Authorized Officers, each alone, are hereby authorized and directed, for and
in the name and on behalf of the District, to deliver such Preliminary Official Statement to the
Financial Advisor to be used in connection with the offering and sale of the Refunding Bonds. The
Authorized Officers, each alone, are hereby authorized and directed, for and in the name and on
behalf of the District, to deem the Preliminary Official Statement “final” pursuant to 15c2-12 of the
Securities Exchange Act of 1934, prior to its distribution and to execute and deliver to the purchaser
of the Refunding Bonds a final Official Statement, substantially in the form of the Preliminary
Official Statement, with such changes therein, deletions therefrom and modifications thereto as the
Authorized Officer executing the same shall approve.
SECTION 17. Insurance. In the event the District purchases bond insurance for the
Refunding Bonds, and to the extent that the Bond Insurer makes payment of the principal of or
interest on the Refunding Bonds, it shall become the Owner of such Refunding Bonds with the right
to payment of Principal of, interest on the Refunding Bonds, and shall be fully subrogated to all of
the Owners’ rights, including the Owners’ rights to payment thereof. To evidence such subrogation
(i) in the case of subrogation as to claims that were past due interest components, the Bond Registrar
shall note the Bond Insurer’s rights as subrogee on the registration books for the Refunding Bonds
maintained by the Bond Registrar upon receipt of a copy of the cancelled check issued by the Bond
Insurer for the payment of such interest to the Owners of the Refunding Bonds, and (ii) in the case of
subrogation as to claims for past due Principal, the Bond Registrar shall note the Bond Insurer as
subrogee on the registration books for the Refunding Bonds maintained by the Bond Registrar upon
surrender of the Refunding Bonds by the Owners thereof to the Bond Insurer or the insurance trustee
for the Bond Insurer.
SECTION 18. Defeasance. All or any portion of the Outstanding maturities of the
Refunding Bonds may be defeased prior to maturity in the following ways:
(a)
Cash: by irrevocably depositing with an independent escrow agent selected
by the District an amount of cash which together with amounts transferred from the Debt
Service Fund (as herein defined) is sufficient to pay all Refunding Bonds Outstanding and
designated for defeasance, including all Principal of and interest and premium, if any; or
21
(b)
Government Obligations: by irrevocably depositing with an independent
escrow agent selected by the District noncallable Government Obligations together with cash,
if required, in such amount as will, in the opinion of an independent certified public
accountant, together with interest to accrue thereon and moneys transferred from the Debt
Service Fund together with the interest to accrue thereon, be fully sufficient to pay and
discharge all Refunding Bonds Outstanding and designated for defeasance (including all
principal of and interest represented thereby and redemption premiums, if any) at or before
their maturity date;
then, notwithstanding that any of such Refunding Bonds shall not have been surrendered for
payment, all obligations of the District with respect to all such designated Outstanding Refunding
Bonds shall cease and terminate, except only the obligation of the Bond Registrar or an independent
escrow agent selected by the District to pay or cause to be paid from funds deposited pursuant to
paragraphs (a) or (b) of this Section, to the Owners of such designated Refunding Bonds not so
surrendered and paid all sums due with respect thereto.
For purposes of this Section, Government Obligations shall mean:
Direct and general obligations of the United States of America, or obligations that are
unconditionally guaranteed as to principal and interest by the United States of America (which may
consist of obligations of the Resolution Funding Corporation that constitute interest strips), or
“prerefunded” municipal obligations rated in the highest rating category by Moody’s Investors
Service or Standard & Poor’s. In the case of direct and general obligations of the United States of
America, Government Obligations shall include evidences of direct ownership of proportionate
interests in future interest or principal payments of such obligations. Investments in such
proportionate interests must be limited to circumstances where (a) a bank or trust company acts as
custodian and holds the underlying United States obligations; (b) the Owner of the investment is the
real party in interest and has the right to proceed directly and individually against the obligor of the
underlying United States obligations; and (c) the underlying United States obligations are held in a
special account, segregated from the custodian’s general assets, and are not available to satisfy any
claim of the custodian, any person claiming through the custodian, or any person to whom the
custodian may be obligated; provided that such obligations are rated or assessed “AAA” by
Standard & Poor’s or “Aaa” by Moody’s Investors Service.
SECTION 19. Nonliability of County. Notwithstanding anything to the contrary contained
herein, in the Refunding Bonds or in any other document mentioned herein, neither the County, nor
its officials, officers, employees or agents shall have any liability hereunder or by reason hereof or in
connection with the transactions contemplated hereby, the Refunding Bonds are not a debt of the
County or a pledge of the County’s full faith and credit, and the Refunding Bonds and any liability in
connection therewith shall be paid solely from ad valorem taxes lawfully levied to pay the principal
of or interest on the Refunding Bonds.
SECTION 20. Indemnification of County. The District shall defend, indemnify and hold
harmless the County, its officials, officers, agents and employees (“Indemnified Parties”) against any
and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Parties may
become subject based in whole or in part upon any acts or omission related to the Refunding Bonds,
except with regard to the County’s responsibilities under Section 21 hereof. The District shall also
reimburse the Indemnified Parties for any legal or other costs and expenses incurred in connection
with investigating or defending any such claims or liabilities.
22
SECTION 21. Request to County to Levy Tax. The Board of Supervisors and officers of the
County are obligated by statute to provide for the levy and collection of property taxes in each year
sufficient to pay all principal and interest coming due on the Refunding Bonds in such year, and to
pay from such taxes all amounts due on the Refunding Bonds. The District hereby requests such
Board of Supervisors to annually levy a tax upon all taxable property in the District sufficient to
redeem the Refunding Bonds, and to pay the principal, redemption premium, in any, and interest
thereon as and when the same become due.
SECTION 22. Other Actions. (a) Officers of the Board and District officials and staff are
hereby authorized and directed, jointly and severely to do any and all things and to execute and
deliver any and all documents which they may deem necessary or advisable in order to proceed with
the issuance of the Refunding Bonds and otherwise carry out, give effect to and comply with the
terms and intent of this Resolution. Such actions heretofore taken by such officers, officials and staff
are hereby ratified, confirmed and approved.
(b)
The Board hereby finds and determines that the total net interest cost to maturity on
the Refunding Bonds plus the principal amount of the Refunding Bonds will be less than the total net
interest cost to maturity of the Refunded Bonds plus the Principal amount of the Refunded Bonds.
(c)
The Board anticipates that the Refunded Bonds will be redeemed on or about
August 1, 2013, which is the first optional redemption date of such Refunded Bonds following the
issuance of the Refunding Bonds.
(d)
The Board hereby appoints The Bank of New York Mellon Trust Company, N.A. as
Escrow Agent for the Refunding Bonds and approves the form of the Escrow Agreement, by and
between the District and the Escrow Agent on file with the Secretary to the Board. The Authorized
Officers, each alone, are hereby authorized to execute the Escrow Agreement with such changes as
they shall approve, such approval to be conclusively evidenced by either individual’s execution and
delivery thereof.
(e)
The Board hereby appoints KNN Public Finance as the Financial Advisor, Stradling
Yocca Carlson & Rauth, a Professional Corporation, as Bond Counsel and Luna & Glushon and
Hawkins Delafield & Wood LLP as Co-Disclosure Counsel, with respect to the issuance of the
Refunding Bonds.
(f)
The provisions of this Resolution may be amended by the Official Statement; and if
the Official Statement so provides, the Refunding Bonds may be issued as crossover refunding bonds
pursuant to Section 53558(b) of the Government Code.
SECTION 23. Resolution to Treasurer and Tax Collector. The Clerk of this Board is hereby
directed to provide a certified copy of this Resolution to the Treasurer and Tax Collector and
Auditor-Controller of Los Angeles County immediately following its adoption.
SECTION 24. Continuing Disclosure. The District hereby covenants and agrees that it will
comply with and carry out all of the provisions of that certain Continuing Disclosure Agreement
executed by the District and dated the date of issuance and delivery of the Refunding Bonds, as
originally executed and as it may be amended from time to time in accordance with the terms thereof.
Any Bondholder may take such actions as may be necessary and appropriate, including seeking
mandate or specific performance by court order, to cause the District to comply with its obligations
23
under this Section. Noncompliance with this Section shall not result in acceleration of the Refunding
Bonds.
SECTION 25. Recitals. All the recitals in this Resolution above are true and correct and this
Board so finds, determines and represents.
SECTION 26. Effective Date.
passage.
This Resolution shall take effect immediately upon its
PASSED AND ADOPTED this 6th day of March, 2013, by the following vote:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
BOARD OF TRUSTEES OF THE LOS
ANGELES COMMUNITY COLLEGE
DISTRICT
President of the Board of Trustees
Attest:
Secretary to the Board of Trustees
24
SECRETARY’S CERTIFICATE
I, __________________, Secretary to the Board of Trustees of the Los Angeles Community
College District, hereby certify:
The foregoing is a full, true and correct copy of a resolution duly adopted at a regular
meeting of the Board of Trustees of said District duly and regularly and legally held at the regular
meeting place thereof on March 6, 2013, of which meeting all of the members of the Board of said
District had due notice and at which a quorum was present.
I have carefully compared the same with the original minutes of said meeting on file and of
record in my office and the foregoing is a full, true and correct copy of the original resolution
adopted at said meeting and entered in said minutes.
Said resolution has not been amended, modified or rescinded since the date of its adoption,
and the same is now in full force and effect.
Dated: March 6, 2013
Secretary to the Board of Trustees
25
EXHIBIT A
NOTICE INVITING PROPOSALS FOR PURCHASE OF REFUNDING BONDS
$_____________*
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(LOS ANGELES COUNTY, CALIFORNIA)
2013 GENERAL OBLIGATION REFUNDING BONDS
NOTICE IS HEREBY GIVEN that sealed unconditioned proposals will be received to and
including the hour of 8:30 a.m., Pacific Standard Time, on April 23, 2013, at the offices of KNN
Public Finance, 1333 Broadway, Suite 1000, Oakland, California 94612 (the “Financial Advisor”), in
the manner described below, for the purchase of all, but not less than all, of $_____________*
principal amount of Los Angeles Community College District (Los Angeles County, California)
2013 General Obligation Refunding Bonds (the “Refunding Bonds”). Proposals may also be
submitted electronically via the Parity Electronic Bid Submission System (“PARITY”) of Dalcomp,
a division of Thomson Information Services, Inc. (“Dalcomp”), in the manner described below, for
the purchase of all, but not less than all, of $_____________* principal amount of the Refunding
Bonds. In the event that the sale has not been awarded by the designated time, bids will be received
at a subsequent time and date to be determined by the District and publicized via the Bond Buyer or
the Bond Buyer Wire or Thomson Municipal Market Monitor (www.tm3.com).
I.
Issue:
The Refunding Bonds will be dated the date of delivery, will be in the denomination of
$5,000 each, or integral multiples thereof, and will bear interest from the date of the Refunding
Bonds to the maturity of each of the Refunding Bonds at the rate or rates such that the interest rate
shall not exceed ___% per annum, with interest payable on August 1, 2013 and semiannually on
February 1 and August 1 of each year during the term of each of the Refunding Bonds. The
Refunding Bonds mature on August 1 in each of the years set forth in the following schedule:
PRINCIPAL
AMOUNT
YEAR
*
Preliminary, subject to change.
A-1
PRINCIPAL
AMOUNT
YEAR
II.
Option to Elect Term Refunding Bonds:
The purchaser may elect to combine any number of consecutive maturities of Refunding
Bonds for which an identical interest rate has been specified to comprise term bonds by indicating
such an election on the bid form. The election to create term bonds in such manner will require the
creation of a mandatory sinking fund so that the sinking fund redemption payments shall equal the
corresponding serial bond maturity amounts.
III.
Adjustment of Principal Amounts:
The principal amounts of each maturity of Refunding Bonds set forth above reflect certain
assumptions of the Los Angeles Community College District (the “District”) and the Financial
Advisor with respect to the likely interest rates of the winning bid or bids. Following the
determination of the successful bidder or bidders, the Chief Financial Officer/Treasurer, on behalf of
the District, reserves the right to increase or decrease the principal amount of each maturity of the
Refunding Bonds, in $5,000 increments of principal amounts. Such adjustment shall be made within
26 hours of the bid opening and in the sole discretion of the District, upon recommendation of the
Financial Advisor. In the event of any such adjustment, no rebidding or recalculation of the bids
submitted will be required or permitted and the successful bid or bids may not be withdrawn, and the
successful bidder will not be permitted to change the interest rate(s) in its bid for the bonds. The
percentage compensation to be paid to the successful bidder will not change if the maturity schedule
is adjusted.
IV.
Interest Rates:
The price for each maturity of the Refunding Bonds shall be greater than or equal to
________%. All bids for the purchase of the Refunding Bonds must state the rate or rates of interest
to be paid and no bid at a price less than the par value of the Refunding Bonds, together with all
accrued interest thereon to the date of the delivery of the Refunding Bonds, will be considered. All
Refunding Bonds of the same maturity must bear the same rate of interest and no Refunding Bond
may bear more than one rate. The maximum interest rate bid may not exceed six percent (6%) per
annum, and the true interest cost shall not exceed six percent (6.0%) per annum. Bidders may
specify any number of different rates to be borne on the Refunding Bonds; provided that, all interest
rates must be in multiples of 1/8 or 1/20 of one percent and a zero rate of interest cannot be specified.
Interest will be computed on the basis of a 360-day year consisting of 12 30-day months.
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V.
Redemption:
The Refunding Bonds maturing on or before August 1, 20__ are not subject to optional
redemption prior to their respective maturity dates. The Refunding Bonds maturing on or after
August 1, 20__, are subject to optional redemption prior to their respective maturity dates at the
option of the District, from any source of available funds, as a whole or in part on any date on or after
August 1, 20__, at a redemption price equal to the principal amount of the Refunding Bonds, together
with accrued interest to the date fixed for redemption, without premium.
VI.
Notice of Redemption:
Notice of redemption of any Refunding Bond will be mailed to the Registered Owner of each
Refunding Bond to be redeemed in whole or in part at the address shown on the registration records
maintained by The Bank of New York Mellon Trust Company, N.A., the Bond Registrar designated
for this issue of Refunding Bonds; such mailing to be not more than 45 nor less than 20 days prior to
the date set for redemption. Neither failure to receive such notice nor any defect in any notice so
mailed shall affect the sufficiency of the proceedings for the redemption of Refunding Bonds.
VII.
Registration of Refunding Bonds as to Principal and Interest and Place of Payment:
The Refunding Bonds, when delivered, will be registered in the name of Cede & Co., as
nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as
securities depository of the Refunding Bonds. Individual purchases will be made in book-entry form
only, in the denominations of $5,000 and integral multiples thereof. Purchasers will not receive
certificates representing their interest in the Refunding Bonds purchased. Principal and interest are
payable in lawful money of the United States of America and will be paid to DTC which in turn will
remit such amounts to the beneficial Owners of the Refunding Bonds through DTC’s Participants, as
described in the Preliminary Official Statement.
VIII.
Authority:
The Refunding Bonds will be issued pursuant to the Constitution and laws of the State of
California and pursuant to Section 53550 et seq. of the Government Code.
IX.
Security:
Both principal of and interest on the Refunding Bonds are payable solely from an unlimited
ad valorem tax levied against all of the taxable property in the District.
X.
Form of Bid:
A prescribed form of bid for the Refunding Bonds has been prepared and is attached hereto.
Bids must be submitted electronically via PARITY.
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All bids which are submitted electronically via PARITY pursuant to the procedures described
below shall be deemed to constitute a Bid for Purchase of the Refunding Bonds and shall be deemed
to incorporated by reference all of the terms and conditions of this Notice Inviting Proposals for
Purchase of Refunding Bonds. The submission of a bid electronically via PARITY shall constitute
and be deemed the bidder’s signature on the Bid for Purchase of the Refunding Bonds.
XI.
Procedures Regarding Electronic Bidding:
Bids may be submitted electronically via PARITY in accordance with this Notice Inviting
Proposals for Purchase of Refunding Bonds, until 8:30 a.m., Pacific Standard Time, on
_________,______ __2013, but no bid will be received after the time for receiving bids specified
above. To the extent any instructions or directions set forth in PARITY conflict with this Notice
Inviting Proposals for Purchase of Refunding Bonds, the terms of this Notice Inviting Proposals for
Purchase of Refunding Bonds shall control. For further information about PARITY, potential
bidders may contact the District’s Financial Advisor or PARITY at Dalcomp at (212) 806-8304. In
the event that a bid for the Refunding Bonds is submitted via PARITY, the bidder further agrees that:
1.
The District may regard the electronic transmission of the bid through PARITY
(including information about the purchase price of the Refunding Bonds, the interest rate or rates to
be borne by the various maturities of the Refunding Bonds, the initial public offering price of each
maturity and any other information included in such transmission) as though the same information
were submitted on the Bid for Purchase of the Refunding Bonds form, provided by the District and
executed by a duly authorized signatory of the bidder. If a bid submitted electronically by PARITY
is accepted by the District, the terms of the Bid for Purchase of the Refunding Bonds and the Notice
Inviting Proposals for Purchase of Refunding Bonds and the information that is electronically
transmitted through PARITY shall form a contract and the successful bidder shall be bound by the
terms of such contract.
2.
PARITY is not an agent of the District, and the District shall have no liability
whatsoever based on any bidder’s use of PARITY, including but not limited to any failure by
PARITY to correctly or timely transmit information provided by the District or information provided
by the bidder.
3.
The District may choose to discontinue use of electronic bidding via PARITY by
issuing a notification to such effect via PARITY’s internet site (www.tm3.com) no later than 1:00
P.M. (Pacific Daylight Time) on the last business day prior to the date of sale.
4.
Once the bids are communicated electronically via PARITY to the District as
described above, each bid will constitute a Bid for Purchase of the Refunding Bonds and shall be
deemed to be an irrevocable offer to purchase the Refunding Bonds on the terms provided in this
Notice Inviting Proposals for Purchase of Refunding Bonds. For purposes of submitting all Bids for
Purchase of the Refunding Bonds, whether by hand delivery, facsimile or electronically via PARITY,
the time as maintained on PARITY shall constitute the official time.
5.
Each bidder choosing to bid electronically shall be solely responsible to make
necessary arrangements to access PARITY for purposes of submitting its bid in a timely manner and
in compliance with this Notice Inviting Proposals for Purchase of Refunding Bonds. Neither the
District nor Dalcomp shall have any duty or obligation to undertake such registration to bid for any
prospective bidder or to provide or assure such access to any qualified prospective bidder, and
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neither the District nor Dalcomp shall be responsible for a bidder’s failure to register to bid or for
proper operation of, or have any liability for any delays or interruptions of, or any damages caused
by, PARITY. The District is using PARITY as a communication mechanism, and not as the
District’s agent, to conduct the electronic bidding for the Refunding Bonds. By using PARITY, each
bidder agrees to hold the District harmless for any harm or damages caused to such bidder in
connection with its use of PARITY for bidding on the Refunding Bonds.
In the event that both an electronic bid and a facsimile bid from a single bidder are received
at or prior to the bid receipt deadline, and to the extent that there is an inconsistency in the interest
rates or price bid, the facsimile shall be deemed to be the bid submitted. No bid received after the
deadline shall be considered. In any case, each bid must be in accordance with the terms and
conditions set forth in this official Notice Inviting Proposals for Purchase of Refunding Bonds.
XII.
Estimate of True Interest Cost:
Bidders are requested (but not required) to supply an estimate of the total true interest cost to
the District on the basis of their respective bids, which shall be considered as informative only and
not binding on either the bidder or the Board of Trustees of the District.
XIII.
Deposit:
Except as otherwise provided below, a good faith deposit ("Deposit") in the form of a
certified, treasurer's or cashier's check drawn on a solvent commercial bank or trust company in the
United States of America or a Financial Surety Bond issued by an insurance company licensed to
issue such surety bond in the State of California, made payable to
Los Angeles Community College District
in the amount of
$________
is required for any bid to be accepted. If a check is used, it must accompany each bid. If a Financial
Surety Bond is used, such surety bond must be submitted to the District or its Financial Advisor prior
to the opening of the bids. The Financial Surety Bond must identify each bidder whose Deposit is
guaranteed by such Financial Surety Bond. If the winning bidder on the Refunding Bonds is
determined to be a bidder utilizing a Financial Surety Bond, then that bidder is required to submit its
Deposit to the District in the form of a cashier's check (or wire transfer such amount as instructed by
the District or its Financial Advisor) not later than 10:00 a.m. (District's local time) on the next
business day following the bid opening. If such Deposit is not received by that time, the Financial
Surety Bond may be drawn by the District to satisfy the Deposit requirement. If the apparent winning
bidder on the Refunding Bonds is determined to be a bidder who has not submitted a Deposit in the
form of a Financial Surety Bond or check, as provided above, the Financial Advisor will request the
apparent winning bidder to immediately wire the Deposit and provide the Federal wire reference
number of such Deposit to the Financial Advisor within 90 minutes of such request by the Financial
Advisor. The Refunding Bonds will not be officially awarded to a bidder who has not submitted a
Deposit in the form of a Financial Surety Bond or check, as provided above, until such time as the
bidder has provided a Federal wire reference number for the Deposit to the Financial Advisor.
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No interest on the Deposit will accrue to any bidder. The District will deposit the Deposit of
the winning bidder. The Deposit (without accruing interest) of the winning bidder will be applied to
the purchase price of the Refunding Bonds. In the event the winning bidder fails to honor its accepted
bid, the Deposit plus any interest accrued on the Deposit will be retained by the District. Any
investment income earned on the good faith deposit will be paid to the successful bidder in the event
the District is unable to deliver the Refunding Bonds. Deposits accompanying bids other than the bid
which is accepted will be returned promptly upon the determination of the best bidder.
XIV.
Qualification for Sale; Blue Sky:
The purchaser will assume responsibility for taking any action necessary to qualify the
Refunding Bonds for offer and sale in jurisdictions other than California, and for complying with the
laws of all jurisdictions on resale of the Refunding Bonds, and shall indemnify, defend and hold
harmless the District and their respective officers and officials from any loss or damage resulting
from any failure to comply with any such law. Compliance with Blue Sky Laws shall be the sole
responsibility of the purchaser, and the purchaser shall pay all fees and disbursements related to the
qualification of the bonds for sale under the securities or Blue Sky laws of various jurisdictions. The
District will furnish such information and take such action not inconsistent with law as the purchaser
may request and the District shall deem necessary or appropriate to qualify the Refunding 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 of America as may be designated by the purchaser, provided,
however, that the District shall not execute a general or special consent to service of process or
qualify to do business in connection with such qualification or determination in any jurisdiction. The
purchaser will not offer to sell, or solicit any offer to buy, the Refunding Bonds in any
jurisdiction where it is unlawful for such purchaser to make such offer, solicitation or sale, and
the purchaser shall comply with the Blue Sky and other securities laws and regulations of the
states and jurisdictions.
XV.
CUSIP Numbers and Other Fees:
CUSIP numbers will be applied for and will be printed on the Refunding Bonds and the cost
of printing thereof and service bureau assignment will be purchaser’s responsibility. Any delay,
error or omission with respect thereto will not constitute cause for the purchaser to refuse to accept
delivery of and pay for the Refunding Bonds. The successful bidder shall also be required to pay all
fees required by The Depository Trust Company, Bond Market Association, Municipal Securities
Rulemaking Board, and any other similar entity imposing a fee in connection with the issuance of the
Refunding Bonds (see, “California Debt Advisory and Investment Commission” below).
XVI.
Legal Opinion:
The Refunding Bonds are sold with the understanding that the purchaser will be furnished
with the approving opinion of Bond Counsel, Stradling Yocca Carlson & Rauth, a Professional
Corporation. A copy of the opinion will be attached to the Refunding Bonds. Said attorneys have
been retained by the District as Bond Counsel and in such capacity are to render their opinion only
upon the legality of the Refunding Bonds under California law and on the exemption of the interest
income on such Refunding Bonds from federal and State of California income taxes. Fees of Bond
Counsel will be paid from the costs of issuance.
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XVII. Tax-Exempt Status:
In the opinion of Bond Counsel, under existing laws, interest on the Refunding Bonds is
exempt from all present State of California personal income taxes, and assuming compliance with
certain covenants made by the District, interest on the Refunding Bonds is not includable in the gross
income of the Owners of the Refunding Bonds for federal income tax purposes, provided that such
interest may be included in the calculation for certain taxes, including the corporate alternative
minimum tax and the corporate environmental tax. Should changes in the law cause Refunding Bond
Counsel’s opinion to change prior to delivery of the Refunding Bonds to the purchaser, the purchaser
will be relieved of its responsibility to pick up and pay for the Refunding Bonds, and in that event its
Deposit will be returned.
XVII. Certification of Reoffering Price:
As soon as practicable, but not later than five days following the deadline for receipt of bids
for the Refunding Bonds, the successful bidder must submit to the District a certificate specifying for
each maturity the reoffering price at which at least 10% of the Refunding Bonds of such maturity
were sold (or were offered in a bona fide public offering and as of the date of award of the Refunding
Bonds to the successful bidder reasonably expected to be sold) to the public. Such certificate shall be
in form and substance satisfactory to Bond Counsel and shall include such additional information as
may be requested by Bond Counsel.
XIX.
Award:
The Refunding Bonds will be awarded to the responsible bidder submitting the best
responsive bid, considering the interest rate or rates specified. The best bid will be the bid that
represents the lowest true interest cost (“TIC”) to the District for the Refunding Bonds. The TIC is
the discount rate that, when compounded semiannually and used to discount all debt service
payments on the Refunding Bonds back to the date of delivery of such Refunding Bonds, results in
an amount equal to the price bid for said Refunding Bonds. In the event that two or more bidders
offer bids for the Refunding Bonds at the same lowest TIC, the District will determine by lottery
which bidder will be awarded the Refunding Bonds. For the purpose of calculating the TIC, the
mandatory sinking fund payments, if any, shall be treated as serial maturities in such years. The
determination of the bid representing the lowest TIC will be made without regard to any adjustments
made or contemplated to be made after the award by the Chief Financial Officer/Treasurer, as
described herein under “Adjustment of Principal Amounts,” even if such adjustments have the effect
of raising the TIC of the successful bid to a level higher than the bid containing the next lowest TIC
prior to adjustment.
XX.
Delivery:
Delivery of the Refunding Bonds will be made to the purchaser through DTC upon payment
in federal funds payable to or for the account of the District at The Bank of New York Mellon Trust
Company, N.A., the escrow agent for the District (the “Escrow Agent”), Wire Transfer To: Bank:
The Bank of New York Mellon Trust Company, N.A., ABA#___________, FBO: The Bank of New
York Mellon Trust Company, N.A., Acct:______________, Ref: Los Angeles Community College
District, Attn:______________. The Closing will take place at the offices of Stradling Yocca
Carlson & Rauth, a Professional Corporation, 44 Montgomery Street, Suite 4200, San Francisco,
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California 94104, or at the purchaser’s request and expense, at any other place mutually agreeable to
both the District and the purchaser.
XXI.
Prompt Award:
The Chief Financial Officer/Treasurer of the District, or her designee, will take action
awarding the Refunding Bonds or rejecting all bids not later than twenty-six (26) hours after the
expiration of the time herein prescribed for the receipt of bid proposals, unless such time of award is
waived by the successful bidder. Notice of the award will be given promptly to the successful
bidder.
XXI.
California Debt Advisory and Investment Commission:
The successful bidder will be required, pursuant to state of California law, to pay any fees to
the California Debt and Investment Advisory Commission (“CDIAC”). CDIAC will invoice the
successful bidder after the closing of the Refunding Bonds.
XXII. No Litigation and Non-Arbitrage:
The District will deliver a certificate stating that no litigation is pending affecting the
issuance and sale of the Refunding Bonds. The District will also deliver an arbitrage certificate
covering its reasonable expectations concerning the Refunding Bonds and the use of proceeds
thereof.
XXIX. Official Statement:
The District will make available a Preliminary Official Statement relating to the Refunding
Bonds, a copy of which, along with related documents, will be furnished upon request made by mail
to KNN Public Finance, 1333 Broadway, Suite 1000, Oakland, California 94612, Attn: David
Brodsly, the District’s Financial Advisor for the Refunding Bonds, or telephoned to said Financial
Advisor at (415) 839-8200. Such Preliminary Official Statement, together with any supplements
thereto, shall be in form “deemed final” by the District for the purposes of SEC Rule 15c2-12(b)(1),
but is subject to revision, amendment and completion in a final official statement. The District shall
deliver, at closing, a certificate, executed by appropriate officers of the District acting in their official
capacities, to the effect that the facts contained in the Official Statement relating to the Refunding
Bonds are true and correct in all material respects, and that the Official Statement does not contain
any untrue statements of a material fact or omit to state a material fact necessary to make the
statement therein, in light of the circumstances under which they were made, not misleading. Copies
of the Official Statement will be made available to the purchaser without charge in an amount
requested by the purchaser up to 100 copies within seven business days of the date of sale and
additional copies will be made available upon request at the purchaser’s expense.
The Internet posting of the Preliminary 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 securities described in the
Preliminary Official Statement, in any jurisdiction in which such offer, solicitation, or sale would be
unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
The District undertakes that for a certain period of twenty-five (25) days following the end of
the “underwriting period” as defined in Rule 15c-2-12 it will (i) apprise the winning bidder if any
A-8
event shall occur, or information comes to the attention of the District that, in the reasonable
judgment of the District, is reasonably likely to cause the Official Statement (weather or not
previously 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 with respect to the District after delivery of the Refunding
Bonds and (ii) if requested by the winning bidder, prepare a supplement to the final Official
Statement with respect to such event or information. The District will presume, unless notified in
writing by the winning bidder, the end of the underwriting period will occur on the date of the
delivery of the Refunding Bonds. By making a bid on the Refunding Bonds, the winning bidder
agrees (i) to disseminate to all members of the underwriting syndicate, if any, copies of the final
Official Statement, including any supplements prepared by the District, and to file a copy of the final
Official Statement, including any supplements prepared by the district, and to file a copy of the final
official Statement with the MSRB through its EMMA system (as provided by ruled 15c2-12) within
one business day after receipt thereof from the issuer of its designee, but in any event, no later than
the date of closing and (ii) to take any and all other actions necessary to comply with the applicable
rules of the Securities and Exchange Commission and rules governing the offering, sale and delivery
of the Refunding Bonds on all purchasers, including the requirements of delivery of the final Official
Statement.
XXIV. Continuing Disclosure:
In order to assist bidders in complying with Rule 15c2-12(b)(5) promulgated under the
Securities Exchange Act of 1934, the District will undertake in a Continuing Disclosure Agreement
to provide certain annual financial information and Notice of the occurrence of certain events, if
material. A description of this undertaking and a form of the Continuing Disclosure Agreement is
included in the Preliminary Official Statement.
XXV. Ratings:
Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business
and Moody’s Investors Service have assigned to the Refunding Bonds the ratings shown on the cover
page of the Preliminary Official Statement or, if not so indicated, will be available upon request from
the Financial Advisor. Such ratings reflect only the views of such organization and explanation of
the significance of such ratings may be obtained from them as follows: Standard & Poor’s, 55 Water
Street, New York, New York 10041, (212) 438-2000, and Moody’s Investors Service, 7 World Trade
Center at 250 Greenwich Street, New York, New York 10007, (212) 553-1658. There is no
assurance that the ratings will continue for any given period of time or that they will not be revised
downward or withdrawn entirely by either of the rating agencies, if, in the judgment of such agency,
circumstances so warrant. Any such downward revision or withdrawal of such rating may have an
adverse effect on the market price of the Refunding Bonds.
XXVI. Right to Cancel, Postpone, or Reschedule Sale:
The District reserves the right to cancel, postpone or reschedule the sale of the Refunding
Bonds upon notice given through the Bloomberg News Service, Thomson Municipal Market Monitor
(www.tm3.com) or The Bond Buyer prior to the time bids are to be received. If the sale is postponed,
bids will be received at the place set forth above, at the date and time as the District shall determine.
Notice of the new sale date and time, if any, will be given through Bloomberg News Service,
Thomson Municipal Market Monitor (www.tm3.com) or The Bond Buyer no later than twenty-three
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(23) hours prior to the new time bids are to be received. As an accommodation to bidders, telephone
or fax notice of the postponement of the sale date and of the new sale date will be given to any bidder
requesting such notice from the Financial Advisor. Failure of any bidders to receive such notice shall
not affect the legality of the sale.
XXVII. Additional Information:
Copies of the Notice Inviting Proposals for Purchase of Refunding Bonds, the form of bid,
and the Preliminary Official Statement relating to the Refunding Bonds will be furnished to any
bidder upon request made to KNN Public Finance, Attn: David Brodsly, phone: (510) 839-8200,
dbrodsly@knninc.com, the Financial Advisor.
Dated: ______________, 2013
LOS
ANGELES
DISTRICT
COMMUNITY
COLLEGE
By:
Chief Financial Officer/Treasurer
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EXHIBIT B
BID FOR THE PURCHASE OF $______________
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(LOS ANGELES COUNTY, CALIFORNIA)
2013 GENERAL OBLIGATION REFUNDING BONDS
_______________, 2013
Los Angeles Community College District
Los Angeles County, California
On behalf of a group which we have formed consisting of:
and pursuant to the Notice Inviting Proposals for Purchase of Refunding Bonds hereinafter
mentioned, we offer to purchase all of the ____________________ Dollars ($______________)
principal amount of the Refunding Bonds designated as “Los Angeles Community College District
(Los Angeles County, California) 2013 General Obligation Refunding Bonds,” maturing on August 1
in the years and amounts and bearing interest at the rate or rates set forth in the following schedule:
YEAR
PRINCIPAL
AMOUNT*
INTEREST
RATE
INSURANCE
and to pay therefor the aggregate sum of $_______________ (representing the $_________ principal
amount of the Refunding Bonds, plus interest accrued on such Refunding Bonds to the date of
delivery thereof, plus premium of $_______________.)
We hereby elect to combine the maturities of Refunding Bonds maturing on the following dates to
comprise term bonds:
*
Preliminary, subject to change. See “III. Adjustment of Principal Amounts” in the Notice Inviting Proposals for
Purchase of Refunding Bonds.
B-1
Error! Unknown document property name.
Redemption Dates
Maturity Date
__________ through __________
__________ through __________
__________ through __________
_________ 1, ____
_________ 1, ____
_________ 1, ____
This bid is submitted with our intention to purchase municipal bond insurance from
_______________________ (fill in if applicable). Such insurance will be obtained at our expense.
This bid is made subject to all the terms and conditions of the Notice Inviting Proposals for Purchase
of Refunding Bonds heretofore published, all of which terms and conditions are made a part hereof
as fully as though set forth in full in this bid.
As specified in the Notice Inviting Proposals for Purchase of Refunding Bonds, this bid is subject to
acceptance not later than 26 hours after the expiration of the time for the receipt of bids, and the
opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation approving the validity of
the Refunding Bonds will be furnished us (if we are the successful bidder) at the time of the delivery
of the Refunding Bonds at the expense of the District.
There is submitted herewith a memorandum (which shall not constitute a part of this bid) stating the
total true interest cost in dollars on the Refunding Bonds during the life of the issue under this bid,
and the true interest rate determined thereby.
We have received and reviewed the Preliminary Official Statement with respect to the Refunding
Bonds (the “Preliminary Official Statement”) and as a condition to bidding on the Refunding Bonds,
have determined that we can comply with the requirements of Rule 15c2-12 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended.
As of the date of award and as of the date of delivery of the Refunding Bonds, all members of our
syndicate either participate in DTC or clear through or maintain a custodial relationship with an
entity that participates in said depository.
We hereby request that _____________ (not to exceed ___) printed copies of the Official Statement
with respect to the Refunding Bonds be furnished to us in accordance with the terms of the Notice
Inviting Proposals for Purchase of Refunding Bonds.
Respectfully submitted,
Name:
(Account Manager)
By:
Address:
City:
State:
Phone:
MEMORANDUM OF INTEREST COST: Under the above bid, the total true interest cost on the
Refunding Bonds during the life of the issue is $_______________ and the true interest rate
determined thereby is _____%.
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EXHIBIT C
NOTICE OF INTENTION TO SELL
$_____________*
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(LOS ANGELES COUNTY, CALIFORNIA)
2013 GENERAL OBLIGATION REFUNDING BONDS
NOTICE IS HEREBY GIVEN that the Los Angeles Community College District (the
“District”), in Los Angeles County, California, intends to offer for public sale on ______, April __,
2013, at the hour of 8:30 a.m. Pacific Daylight Time, at the office of KNN Public Finance, 1333
Broadway, Suite 1000, Oakland, California 94612 not to exceed $_____________* principal amount
of general obligation refunding bonds of the District designated “Los Angeles Community College
District (Los Angeles County, California) 2013 General Obligation Refunding Bonds (the
“Refunding Bonds”). Within 26 hours, the Chief Financial Officer/Treasurer of the District will
consider the bids received and, if acceptable bids are received, award the sale of the Refunding
Bonds on the basis of the true interest cost. In the event that no bids are awarded by the designated
time, proposals will be received at a subsequent time and date to be determined by the District and
publicized via PARITY, the Bond Buyer Wire or Thomson Municipal Market Monitor
(www.tm3.com).
NOTICE IS HEREBY FURTHER GIVEN that the Refunding Bonds will be offered for
public sale subject to the terms and conditions of the Notice Inviting Proposals for Purchase of the
Refunding Bonds, dated ____________, 2013. Copies of the preliminary Official Statement and
Notice Inviting Proposals for Purchase of Refunding Bonds and the form of bid relating to the
Refunding Bonds will be furnished upon request made to KNN Public Finance, 1333 Broadway,
Suite 1000, Oakland, California 94612, Attn: David Brodsly, phone (510) 839-8200,
dbrodsly@knninc.com the Financial Advisor to the District for the Refunding Bonds.
Dated: __________, 2013
LOS ANGELES COMMUNITY COLLEGE
DISTRICT
By:
Chief Financial Officer/Treasurer
*
Preliminary, subject to change.
C-1
This Preliminary Official Statement and the information contained herein are subject to completion or amendment without notice. 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 prior to registration or qualification
under the securities laws of such jurisdiction.
Draft 2/24/13
NEW ISSUE – BOOK-ENTRY ONLY
PRELIMINARY OFFICIAL STATEMENT DATED [POS DATE]
Ratings:
Moody’s: ―___‖
S&P: ―___‖
See ―Ratings‖ herein.
[To Come]. See “TAX MATTERS” herein.
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(Los Angeles County, California)
$[Series F Principal Amount]*
$[Refunding Principal Amount]*
2008 ELECTION
2013 GENERAL OBLIGATION
GENERAL OBLIGATION BONDS, SERIES F
REFUNDING BONDS
Dated: Date of Delivery
Due: August 1, as shown below.
The Los Angeles Community College District (the ―District‖) is issuing its $[Series F Principal Amount]* 2008 Election
General Obligation Bonds, Series F (the ―Series F Bonds‖) and its $[Refunding Principal Amount]* 2013 General Obligation
Refunding Bonds (the ―Refunding Bonds‖ and, together with the Series F Bonds, the ―Bonds‖). The Series F Bonds were
authorized at an election conducted within the District and represent the sixth series of general obligation bonds issued under
the Measure J (2008) Authorization (defined herein). See ―Introduction — Authority and Purpose of Issuance of the Bonds‖
herein. The Series F Bonds are being issued in order to finance school projects, as more fully described herein. See ―Plan of
Finance and Refunding‖ herein. The Refunding Bonds are being issued to currently refund all or a portion of the District’s
outstanding Election of 2003 General Obligation Bonds, 2003 Series B (the ―Prior Bonds‖). See ―Plan of Finance and
Refunding‖ herein. A portion of the proceeds of the Bonds will be used to pay costs of issuance incurred in connection with
the issuance of the Bonds. The Bonds will be issued on a parity with all other general obligation bonds of the District and will
be issued in denominations of $5,000 principal amount or integral multiples thereof, and are payable as to principal amount
or redemption price at the office of The Bank of New York Mellon Trust Company, N.A., as agent of the Treasurer and Tax
Collector of the County of Los Angeles, California, Bond Registrar for the Bonds (the ―Bond Registrar‖). Interest on the
Bonds is payable on February 1 and August 1 of each year, commencing on August 1, 2013. See the caption ―The Bonds —
General Provisions‖ herein.
The Bonds are issued in fully registered form and, when delivered, will be registered in the name of Cede & Co., as
nominee of The Depository Trust Company, New York, New York (―DTC‖). DTC will act as securities depository for the
Bonds as described herein at Appendix E — ―Book-Entry Only System.‖
The Bonds are subject to optional redemption and mandatory sinking fund redemption prior to maturity. See
“The Bonds – Redemption” herein.
The Bonds are general obligations of the District only and are not obligations of the County of Los Angeles, the State of
California or any of its other political subdivisions. The Board of Supervisors of the County of Los Angeles has the power
and is obligated to levy and collect ad valorem property taxes for each fiscal year upon the taxable property of the District in
an amount at least sufficient, together with other moneys available for such purpose, to pay the principal of, and premium, if
any, and interest on each Bond as the same becomes due and payable.
SEPARATE BIDS FOR THE PURCHASE OF THE SERIES F BONDS AND THE REFUNDING BONDS
WILL BE RECEIVED BY THE FINANCIAL ADVISOR AT ITS OFFICES UNTIL 8:30 A.M. PACIFIC TIME ON
[PRICING DATE], UNLESS POSTPONED AS SET FORTH IN THE NOTICE INVITING PROPOSALS FOR
PURCHASE OF BONDS AND THE NOTICE INVITING PROPOSALS FOR PURCHASE OF REFUNDING
BONDS, RESPECTIVELY.
This cover page is not intended to be a summary of the Bonds or the security thereof. Investors are advised to
read the Official Statement in its entirety to obtain information essential to the making of an informed investment
decision.
The Bonds will be offered when, as and if issued by the District and received by the Underwriters, subject to the
approval of legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond
Counsel to the District. Certain legal matters will also be passed upon for the District by its Co-Disclosure Counsel,
Hawkins Delafield & Wood LLP, Los Angeles, California, and Luna & Glushon, Los Angeles, California. KNN Public
Finance, a Division of Zions First National Bank is serving as Financial Advisor to the District in connection with the
issuance of the Bonds. The Bonds in book-entry form will be available for delivery through the facilities of DTC in New York,
New York on or about [Closing Date].
Dated: ______, 2013
*
Preliminary, subject to change.
236437.7 037276 OS
MATURITY DATES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS
AND CUSIP NUMBERS
________________________________
*
$[Series F Principal Amount]
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(Los Angeles County, California)
2008 ELECTION GENERAL OBLIGATION BONDS
SERIES F
Base CUSIP† Number: ______
Maturity Date
(August 1)
Principal
Amount
$
Interest Rate
%
Yield
Price
CUSIP Suffix
%
$__________% Bonds due ______ 1, 20__ - Yield: ____%;
Price: _____%
CUSIP: _______
*
$[Refunding Principal Amount]
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(Los Angeles County, California)
2013 GENERAL OBLIGATION REFUNDING BONDS
Maturity Date
(August 1)
Principal
Amount
$
Interest Rate
%
Yield
†
CUSIP Suffix
%
$_____________% Bonds due ______ 1, 20__ - Yield: ____%;
*
Price
Price: _____%
CUSIP: ___________
Preliminary, subject to change.
236437.7 037276 OS
No dealer, broker, salesperson or other person has been authorized by the District to give any
information or to make any representations in connection with the offer or sale of the 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 District. This Official Statement does not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any
jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers or owners of the
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 information set forth in this Official Statement has been obtained from the District, and other
sources which are believed by the District to be reliable. The information and expressions of opinion
herein are subject to change without notice, and neither the delivery of this Official Statement nor any
sale made hereunder will under any circumstances create any implication that there has been no change in
the affairs of the District since the date hereof. All summaries of the Bonds and the District Resolutions
(each as defined herein) and other documents summarized herein, are made subject to the provisions of
such documents respectively and do not purport to be complete statements of any or all of such
provisions.
IN CONNECTION WITH THIS OFFERING, THE PURCHASER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE PURCHASER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER
BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE INITIAL PUBLIC
OFFERING PRICE STATED AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM
TIME TO TIME BY THE PURCHASER.
CUSIP is a registered trademark of American Bankers Association. CUSIP data in this Official
Statement is provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill
Companies, Inc. CUSIP data herein is set forth for convenience of reference only. The District and the
Financial Advisor assume no responsibility for the selection or uses of the CUSIP data or for the accuracy
or correctness of such data. The CUSIP number for the Bonds is subject to being changed after the
delivery of the Bonds as a result of various subsequent actions.
236437.7 037276 OS
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Los Angeles County, State of California
BOARD OF TRUSTEES
Member
Term Ending
Steve Veres, President
Tina Park, First Vice President
Nancy Pearlman, Second Vice President
Kelly G. Candaele, Member
Mona Field, Member
Miguel Santiago, Member
Scott J. Svonkin, Member
Daniel Campos, Student Trustee
June 2015
June 2013
June 2013
June 2013
June 2015
June 2015
June 2015
May 2013
DISTRICT ADMINISTRATORS
Dr. Daniel J. LaVista, Chancellor
Dr. Adriana D. Barrera, Deputy Chancellor
James D. O’Reilly, Executive Director, Facilities Planning & Development
Jeanette L. Gordon, Chief Financial Officer/Treasurer
Camille A. Goulet, General Counsel
BOND COUNSEL
Stradling Yocca Carlson & Rauth, a Professional Corporation
San Francisco, California
CO-DISCLOSURE COUNSEL
Hawkins Delafield & Wood LLP
Los Angeles, California
Luna & Glushon
Los Angeles, California
FINANCIAL ADVISOR
KNN Public Finance
A Division of Zions First National Bank
Oakland, California
BOND REGISTRAR
The Bank of New York Mellon Trust Company, N.A., as agent for the
Treasurer and Tax Collector of the County of Los Angeles
Los Angeles, California
VERIFICATION AGENT
[Verification Agent]
___________, ___________
236437.7 037276 OS
TABLE OF CONTENTS
Page
INTRODUCTION ........................................................................................................................................ 1
General ...................................................................................................................................................... 1
The District ............................................................................................................................................... 1
Security and Sources of Payment for the Bonds ....................................................................................... 2
The Bonds ................................................................................................................................................. 2
Authority and Purpose of Issuance of the Bonds ...................................................................................... 2
Continuing Disclosure............................................................................................................................... 2
Tax Matters ............................................................................................................................................... 3
Other Information ..................................................................................................................................... 3
PLAN OF FINANCE AND REFUNDING .................................................................................................. 3
Measure J (2008) Authorization................................................................................................................ 3
The Refunding Bonds ............................................................................................................................... 4
ESTIMATED SOURCES AND USES OF FUNDS .................................................................................... 4
THE BONDS ................................................................................................................................................ 4
General Provisions .................................................................................................................................... 4
Redemption ............................................................................................................................................... 5
Defeasance ................................................................................................................................................ 7
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ............................................................ 8
General Description .................................................................................................................................. 8
Fiscal Year Debt Service........................................................................................................................... 8
TAX MATTERS......................................................................................................................................... 11
LIMITATION ON REMEDIES ................................................................................................................. 11
AMOUNTS HELD IN THE COUNTY TREASURY POOL .................................................................... 11
CERTAIN LEGAL MATTERS.................................................................................................................. 11
CONTINUING DISCLOSURE .................................................................................................................. 11
FINANCIAL STATEMENTS .................................................................................................................... 12
LITIGATION .............................................................................................................................................. 12
RATINGS ................................................................................................................................................... 12
FINANCIAL ADVISOR ............................................................................................................................ 12
UNDERWRITING ..................................................................................................................................... 13
ADDITIONAL INFORMATION ............................................................................................................... 13
APPENDIX A –
APPENDIX B –
APPENDIX C
APPENDIX D
APPENDIX E
APPENDIX F
–
–
–
–
DISTRICT FINANCIAL INFORMATION AND REGIONAL ECONOMIC
AND DEMOGRAPHIC INFORMATION
A-1
REPORT ON AUDITED BASIC FINANCIAL STATEMENTS FOR THE
FISCAL YEAR ENDED JUNE 30, 2012
B-1
PROPOSED FORM OF BOND COUNSEL OPINION .......................................... C-1
FORM OF CONTINUING DISCLOSURE AGREEMENT ................................... D-1
BOOK-ENTRY ONLY SYSTEM ........................................................................... E-1
THE LOS ANGELES COUNTY TREASURY POOL ............................................ F-1
i
236437.7 037276 OS
OFFFICIAL STATEMENT
LOS ANGELES COMMUNITY COLLEGE DISTRICT
(Los Angeles County, California)
$[Series F Principal Amount]*
GENERAL OBLIGATION BONDS
2008 ELECTION, SERIES F
$[Refunding Principal Amount]*
2013 GENERAL OBLIGATION
REFUNDING BONDS
INTRODUCTION
This Introduction is only a brief description of, and is qualified by, more complete and detailed
information contained in the entire Official Statement, including the cover page through the appendices hereto,
and the documents summarized or described herein. The offering of the Bonds to potential investors is made
only by means of the entire Official Statement. A full review should be made of the entire Official Statement.
General
This Official Statement, which includes the cover page through the appendices hereto, is provided to
furnish information in connection with the issuance of general obligation bonds of the Los Angeles Community
College District (the ―District‖). The District is issuing its $[Series F Principal Amount]* 2008 Election General
Obligation Bonds, Series F (the ―Series F Bonds‖) and its $[Refunding Principal Amount]* 2013 General
Obligation Refunding Bonds (the ―Refunding Bonds‖ and, together with the Series F Bonds, the ―Bonds‖). The
Series F Bonds are authorized pursuant to a bond authorization for the issuance of up to $3,500,000,000 in
bonds (the ―Measure J (2008) Authorization‖) and represent the sixth series of general obligation bonds issued
under the Measure J (2008) Authorization. The Refunding Bonds are being issued to currently refund all or a
portion of the District’s outstanding Election of 2003 General Obligation Bonds, 2003 Series B (the ―Prior
Bonds‖). See ―Plan of Finance and Refunding‖ herein. In addition, a portion of the proceeds of the Bonds will
be used to pay costs of issuance incurred in connection with the issuance of the Bonds.
The District
The Los Angeles Community College District, a community college district of the State of California
(the ―State‖), was established July 1, 1969, succeeding a junior college district which was established in 1931.
The District is located entirely within the County of Los Angeles (the ―County‖) in the central portion of the Los
Angeles basin and encompasses approximately 882 square miles. The District currently operates nine
accredited two-year colleges. The District is governed by an eight-member Board of Trustees (the ―District
Board‖), and each member, excluding the student member of the District Board, is elected to a four-year term.
The student member of the District Board is elected to a one-year term. The members of the District Board elect
a board president (the ―President‖) each year. Steve Veres is currently serving as the President of the District
Board. The management and policies of the District are administered by its Chancellor (the ―Chancellor‖) who
is appointed by the District Board and is responsible for the day-to-day affairs of the District. Dr. Daniel J.
LaVista is currently serving as the Chancellor of the District. The current Chancellor has submitted his
resignation to the District Board to be, effective June 30, 2013. The District has begun the process of recruiting a
new Chancellor [Confirm.]
Additional information on the District is provided in Appendices A and B hereto. See Appendix A–
―District Financial Information and Regional Economic and Demographic Information‖ and Appendix B–
―Report on Audited Basic Financial Statements for the Fiscal Year Ended June 30, 2012‖ attached hereto.
*
Preliminary, subject to change.
1
236437.7 037276 OS
Security and Sources of Payment for the Bonds
The Bonds are general obligation bonds approved by voters within the District and are payable from ad
valorem property taxes levied by the County on behalf of the District on taxpayers within the District. The
Board of Supervisors of the County has the power and is obligated under State law to annually levy ad valorem
taxes upon all property subject to taxation by the District, without limitation as to rate or amount (except as to
certain personal property which is taxable at limited rates), for the payment of the principal of, and premium, if
any, and interest on the duly authorized general obligations bonds of the District, including the Bonds. Such ad
valorem property taxes are deposited with the County for the account of the District and applied only to pay the
principal of, and premium, if any, and interest on the District’s general obligation bonds, including the Bonds.
The District does not receive such funds nor are they available to pay any of the District’s operating expenses.
See ―Security and Sources of Payment for the Bonds‖ herein.
The Series F Bonds represent the sixth series of general obligation bonds issued under the Measure J
(2008) Authorization, which authorized up to $3,500,000,000 in bonds, of which $1.625 billion has previously
been issued. Following the delivery of the Series F Bonds, $____ billion will remain for issuance of subsequent
series of general obligation bonds pursuant to the Measure J (2008) Authorization. The Bonds are issued on a
parity with all other general obligation bonds of the District.
The Bonds
The Bonds will be initially issued in book-entry form only, in denominations of $5,000 principal
amount or integral multiples thereof, and will be initially issued and registered in the name of Cede & Co., as
nominee for The Depository Trust Company, New York, New York (―DTC‖). The Bonds will be issued as
current interest bonds. The principal of the Bonds is payable on the maturity dates set forth on the inside cover
page of this Official Statement or upon the earlier redemption thereof, as described herein. Interest on the Bonds
is payable on February 1 and August 1 of each year (each, an ―Interest Payment Date‖), commencing on
August 1, 2013.
Authority and Purpose of Issuance of the Bonds
The Series F Bonds. The Series F Bonds will be issued pursuant to provisions of Article 4.5 of
Chapter 3, Part 1, Division 2, Title 5 (commencing at Section 53506) of the California Government Code (the
―State Government Code‖), the Measure J (2008) Authorization, and a resolution adopted by the District Board
on [March 6, 2013] (the ―New Money Resolution‖) authorizing the issuance of general obligation bonds, in one
or more series, in an aggregate principal amount not to exceed $350,000,000. The proceeds of the Series F
Bonds, after the payment of costs of issuance therefor and certain related expenses, will be used to fund school
projects (collectively the ―Measure J (2008) Projects‖) approved in connection with the Measure J (2008)
Authorization.
The Refunding Bonds. The Refunding Bonds are issued pursuant to certain provisions of the State
Government Code and other applicable laws and pursuant to a resolution adopted by the District Board on
[March 6, 2013] (the ―Refunding Resolution‖) authorizing the issuance of general obligation refunding bonds in
an aggregate principal amount not to exceed $65,000,000 (the ―Refunding Resolution‖ and, together with the
New Money Resolution, the ―District Resolutions‖). A portion of the proceeds of the Refunding Bonds will be
applied to currently refund all or a portion of the Prior Bonds. See ―Plan of Finance and Refunding – The
Refunding Bonds‖ herein.
Continuing Disclosure
The District has covenanted for the benefit of the holders and beneficial owners of the Bonds to provide
certain financial information and operating data relating to the District (the ―Annual Report‖) for each fiscal
year by not later than 270 months following the end of the District’s fiscal year (currently ending June 30)
2
236437.7 037276 OS
commencing with the Annual Report for Fiscal Year 2012-13, and to provide notices of the occurrence of
certain enumerated events. The District will provide or cause to be provided the Annual Report and such notices
to the Municipal Securities Rulemaking Board in the manner prescribed by the Securities and Exchange
Commission (―SEC‖). These covenants have been made in order to assist the Underwriters in complying with
SEC Rule 15c2-12(b)(5) (the ―Rule‖). Reports and notices of event filings are available at the website of the
Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (―EMMA‖) system,
emma.msrb.org. The information presented on this website is not incorporated by reference in this Official
Statement and should not be relied upon in making an investment decision with respect to the Bonds. See
―Continuing Disclosure‖ herein. The information to be contained in the Annual Report and in a notice of event
is set forth in Appendix D – ―Form of Continuing Disclosure Agreement‖ attached hereto. [The District has
complied in all material respects in the last five years with each of its previous undertakings with regard to the
Rule to provide annual reports and notices of events.]
Tax Matters
[To Come]
Other Information
This Official Statement contains brief descriptions of, among other things, the District, the District’s
general obligation bond program, the District Resolutions and certain matters relating to the security for the
Bonds. Such descriptions and information do not purport to be comprehensive or definitive. All references
herein to documents are qualified in their entirety by reference to such documents. Copies of such documents
are available upon request to the Chief Financial Officer/Treasurer at Los Angeles Community College District,
770 Wilshire Boulevard, Los Angeles, California 90017; telephone: (213) 891-2337.
PLAN OF FINANCE AND REFUNDING
Measure J (2008) Authorization
A portion of the proceeds of the Series F Bonds attributable to the Measure J (2008) Authorization will
be applied to fund the costs of various components of the Measure J (2008) Projects in accordance with the
ballot measure for the Measure J (2008) Authorization as follows: ―To prepare students for jobs by improving
classrooms, laboratories, equipment; train nurses, police, firefighters, paramedics; increase apprenticeship
training opportunities; repair electrical wiring, plumbing, fire alarms; improve earthquake safety, energy
efficiency to reduce costs; acquire/improve real property; shall Los Angeles Community College District issue
$3.5 billion in bonds at legal interest rates, requiring public review, oversight, audits, no money for
administrators’ salaries and no tax rate increase?‖
[The Measure J (2008) Authorization includes a number of specifically identified school facilities and
other projects that may be funded with the proceeds of the Series F Bonds, including, among other things:
acquire related furnishings and equipment for all modernization; renovation, improvement, and/or new
construction project components; install and/or upgrade emergency lighting, fire alarm, and security systems
throughout all of the campuses; make roadway, walkway, grounds, parking lots and structures, and entrance
improvements; make transportation and accessibility improvements; construct energy infrastructure
improvements, including sustainable design and construction; upgrade of technology systems; construct and
install signage for safety and public information; modernize and/or construct new restrooms campus-wide;
develop and implement facilities master plans and related requirements such as environmental impact reports
and soils testing; demolish temporary and/or obsolete facilities; undertake or provide mitigation measures; and
relocate and/or acquire temporary facilities during the modernization, renovation, improvement and/or new
construction of project components as necessary to maintain educational programs in operation during
construction.] [To be Discussed.]
3
236437.7 037276 OS
The Refunding Bonds
A portion of the proceeds of the Refunding Bonds will be applied to currently refund all or a portion of
the Prior Bonds. The portion of the Prior Bonds to be refunded with the proceeds of the Refunding Bonds is
defined herein as the ―Refunded Bonds‖. A portion of the proceeds of the Refunding Bonds will be transferred
to The Bank of New York Mellon Trust Company, N.A., the District Board’s appointed escrow agent (the
―Escrow Agent‖), for deposit in the ―Los Angeles Community College District 2013 General Obligation
Refunding Bonds Escrow Fund‖ (the ―Escrow Fund‖) established under the Escrow Agreement, by and between
the District and the Escrow Agent, on file with the secretary to the District Board.
A portion of the amount of funds deposited into the Escrow Fund are to be invested in [United States
Obligations] (as defined in resolutions respecting the Prior Bonds), which, together with interest earnings
thereon, if any, and any cash to be deposited in the Escrow Fund will be sufficient to fully pay the principal of,
premium, if any, and interest on the Refunded Bonds as the same shall become due or pursuant to a call for
redemption. The mathematical computations used to determine the sufficiency of the escrow deposits will be
verified by the Verification Agent (defined herein). See ―Verification‖ herein.
ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds with respect to the Bonds are as follows:
Series F Bonds
Estimated Sources of Funds
Principal Amount
Net Original Issue
Premium/Discount
Total Sources
Refunding Bonds
Total
$
$
$
$
$
$
$
$
$
$
$
$
Estimated Uses of Funds
Building Fund
Interest and Sinking Fund
Escrow Fund
Costs of Issuance(1)
Total Uses
(1)
Includes fees of Bond Counsel, Co-Disclosure Counsel, the agent of the Bond Registrar, the Financial Advisor, the rating agencies,
the printer, and other miscellaneous expenses.
THE BONDS
General Provisions
The Bonds will be dated their date of delivery, will be issued in book-entry form only, without coupons,
in denominations of $5,000 principal amount or any integral multiple thereof, and, when issued, will be initially
registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York
(―DTC‖). DTC will act as securities depository for the Bonds. Owners will not receive physical certificates
representing their interest in the Bonds purchased, except in the event that use of the book-entry system for the
Bonds is discontinued. Payments of principal of, premium, if any, and interest on the Bonds are payable by the
Bond Registrar to DTC, which is obligated in turn to remit such payments to its DTC Participants for
subsequent disbursement to the beneficial owners of the Bonds. For information about the securities depository
and DTC’s book-entry system, see Appendix E – ―Book-Entry Only System‖ attached hereto.
4
236437.7 037276 OS
The Bonds mature in the years and on the dates set forth on the inside front cover page hereof. Interest
with respect to the Bonds is payable on each Interest Payment Date, commencing on August 1, 2013. Interest on
the Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months. Each Bond will
bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless it is
authenticated on or before an Interest Payment Date and after the close of business on the 15th calendar day of
the month preceding such Interest Payment Date (each, a ―Record Date‖), in which event it shall bear interest
from such Interest Payment Date, or unless it is authenticated on or before the Record Date preceding the first
Interest Payment Date, in which event it shall bear interest from the date of delivery of the Bonds.
Redemption
Optional Redemption. The Series F Bonds maturing on or before August 1, 20__ are not subject to
optional redemption. The Series F Bonds maturing on or after August 1, 20__ are subject to optional redemption
on or after August 1, 20__, in whole or in part on any date, from any source of available funds, at a redemption
price equal to the principal amount of the Series F Bonds to be redeemed, without premium, plus accrued
interest thereon to the date of redemption.
The Refunding Bonds maturing on or before August 1, 20__ are not subject to optional redemption. The
Refunding Bonds maturing on or after August 1, 20__ are subject to optional redemption on or after _August 1,
20__, in whole or in part on any date, from any source of available funds, at a redemption price equal to the
principal amount of the Refunding Bonds to be redeemed, without premium, plus accrued interest thereon to the
date of redemption.
Mandatory Sinking Fund Redemption. The Series F Bonds maturing on August 1, 20__ (the ―20__
Series F Term Bonds‖), shall be subject to mandatory sinking fund redemption in part by lot on August 1, 20__
and each year thereafter to maturity, from moneys in the Debt Service Fund established under the New Money
Resolution, at a redemption price equal to the principal amount of the 20__ Series F Term Bonds to be
redeemed, without premium, plus accrued interest thereon to the date of redemption, in the years and amounts
set forth in the following table:
Mandatory Sinking Fund Payment Date
(August 1)
20__
20__
20__
20__(1)
____________________
(1)
Maturity.
Mandatory Sinking
Fund Payment
$
If the 20__ Series F Term Bonds are called for optional redemption in part, the remaining mandatory
sinking fund installments for the 20__ Series F Term Bonds shall be adjusted pro rata.
5
236437.7 037276 OS
The Refunding Bonds maturing on August 1, 20__ (the ―20__ Refunding Term Bonds‖), shall be
subject to mandatory sinking fund redemption in part by lot on August 1, 20__ and each year thereafter to
maturity, from moneys in the Debt Service Fund established under the Refunding Resolution, at a redemption
price equal to the principal amount of the 20__ Refunding Term Bonds to be redeemed, without premium, plus
accrued interest thereon to the date of redemption, in the years and amounts set forth in the following table:
Mandatory Sinking Fund Payment Date
(August 1)
20__
20__
20__
20__(1)
____________________
(1)
Mandatory Sinking
Fund Payment
$
Final Maturity.
If the 20__ Refunding Term Bonds are called for optional redemption in part, the remaining mandatory
sinking fund installments for the 20__Refunding Term Bonds shall be adjusted pro rata.
Selection of Bonds for Redemption. Whenever provision is made in the District Resolutions or in the
Contract of Purchase for the optional redemption of outstanding Bonds and less than all outstanding Bonds are
to be redeemed, the Bond Registrar, upon written instruction from the District, will select Bonds for redemption
as so directed and if not directed, in inverse order of maturity. Within a maturity, the Bond Registrar will select
Bonds for redemption by lot. Redemption by lot will be in such manner as the Bond Registrar determines;
provided, however, that the portion of any Bond to be redeemed in part will be in the principal amount of $5,000
or any integral multiple thereof.
Notice of Redemption. When redemption is authorized or required pursuant to the New Money
Resolution or the Refunding Resolution, as applicable, the Bond Registrar, upon written instruction from the
District, will give notice (a ―Redemption Notice‖) of the redemption of the Bonds. The Redemption Notice will
specify: the Bonds or designated portions thereof (in the case of redemption of the Bonds in part but not in
whole) which are to be redeemed; the date of redemption; the place or places where the redemption will be
made, including the name and address of the Bond Registrar; the redemption price; the CUSIP numbers (if any)
assigned to the Bonds to be redeemed; the Bond numbers of the Bonds to be redeemed in whole or in part and,
in the case of any Bond to be redeemed in part only, the principal amount of such Bond to be redeemed; and the
original issue date, interest rate and stated maturity date of each Bond to be redeemed in whole or in part. The
Redemption Notice will further state that on the specified date there will become due and payable upon each
Bond or portion thereof being redeemed, at the redemption price thereof, together with the interest accrued to
the redemption date, and that from and after such date, interest with respect thereto will cease to accrue.
The Bond Registrar will take the following actions with respect to the Redemption Notice: (a) at least
20 but not more than 45 days prior to the redemption date, the Redemption Notice will be given to the respective
owners of Bonds designated for redemption by registered or certified mail, postage prepaid, at their addresses
appearing on the Bond Register; (b) at least 20 but not more than 45 days prior to the redemption date, the
Redemption Notice will be given by (i) registered or certified mail, postage prepaid, (ii) telephonically
confirmed facsimile transmission, or (iii) overnight delivery service, to the securities depository; (c) at least 20
but not more than 45 days prior to the redemption date, the Redemption Notice will be given by (i) registered or
certified mail, postage prepaid, or (ii) overnight delivery service, to one of the Information Services.
Neither failure to receive or failure to publish any Redemption Notice nor any defect in any such
Redemption Notice so given shall affect the sufficiency of the proceedings for the redemption of the affected
Bonds. Each check issued or other transfer of funds made by the Bond Registrar for the purpose of redeeming
Bonds shall bear or include the CUSIP number identifying, by issue and maturity, the Bonds being redeemed
6
236437.7 037276 OS
with the proceeds of such check or other transfer. Such redemption notices may state that no representation is
made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Bonds.
Partial Redemption of Bonds. Upon the surrender of any Bond of a series redeemed in part only, the
Bond Registrar will execute and deliver to the owner thereof a new Bond or Bonds of such series of like tenor
and maturity and of authorized denominations equal in transfer amounts to the unredeemed portion of the Bond
surrendered. Such partial redemption shall be valid upon payment of the amount required to be paid to such
owner and the District will be released and discharged thereupon from all liability to the extent of such payment.
Effect of Notice of Redemption. Notice having been given as provided in the related District
Resolution, and the moneys for the redemption (including the interest accrued to the applicable date of
redemption) having been set aside as provided in the applicable District Resolution, the Bonds to be redeemed
will become due and payable on such date of redemption.
If on such redemption date, money for the redemption of all the Bonds of a series to be redeemed as
provided in the applicable District Resolution, together with interest accrued to such redemption date, will be
held by the Bond Registrar (or an independent escrow agent selected by the District) so as to be available
therefor on such redemption date, and if notice of redemption thereof will have been given as provided in the
applicable District Resolution, then from and after such redemption date, interest with respect to the Bonds to be
redeemed will cease to accrue and become payable. All money held by or on behalf of the Bond Registrar (or
an independent escrow agent selected by the District) for the redemption of Bonds will be held in trust for the
account of the owners of the Bonds so to be redeemed.
All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions of the applicable
District Resolution will be cancelled upon surrender thereof and be delivered to or upon the order of the District.
All or any portion of a Bond purchased by the District will be cancelled by the Bond Registrar.
Defeasance
All or any portion of the outstanding maturities of a series of the Bonds may be defeased prior to
maturity in the following ways:
(a)
Cash: by irrevocably depositing with an independent escrow agent selected by the District an
amount of cash which together with amounts transferred from the Debt Service Fund (as herein defined) is
sufficient to pay all Bonds of such series outstanding and designated for defeasance, including all principal and
interest and premium, if any; or
(b)
Government Obligations: by irrevocably depositing with an independent escrow agent selected
by the District, noncallable Government Obligations together with cash, if required, in such amount as will, in
the opinion of an independent certified public accountant, together with interest to accrue thereon and moneys
transferred from the Debt Service Fund together with the interest to accrue thereon, be fully sufficient to pay and
discharge all Bonds of such series outstanding and designated for defeasance (including all principal and interest
represented thereby and redemption premiums, if any) at or before their maturity date;
then, notwithstanding that any of the Bonds of such series have not been surrendered for payment, all
obligations of the District with respect to all such designated outstanding Bonds will cease and terminate, except
only the obligation of the Bond Registrar or an independent escrow agent selected by the District to pay or cause
to be paid to the owners of such designated Bonds not so surrendered all sums due with respect thereto.
Pursuant to each District Resolution, Government Obligations means: direct and general obligations of
the United States of America, or obligations that are unconditionally guaranteed as to principal and interest by
the United States of America (which may consist of obligations of the Resolution Funding Corporation that
constitute interest strips), or ―prerefunded‖ municipal obligations rated in the highest rating category by
Moody’s Investors Service or Standard & Poor’s. In the case of direct and general obligations of the United
7
236437.7 037276 OS
States of America, Government Obligations shall include evidences of direct ownership of proportionate
interests in future interest or principal payments of such obligations. Investments in such proportionate interests
must be limited to circumstances where (a) a bank or trust company acts as custodian and holds the underlying
United States obligations; (b) the owner of the investment is the real party in interest and has the right to proceed
directly and individually against the obligor of the underlying United States obligations; and (c) the underlying
United States obligations are held in a special account, segregated from the custodian’s general assets, and are
not available to satisfy any claim of the custodian, any person claiming through the custodian, or any person to
whom the custodian may be obligated; provided that such obligations are rated or assessed ―AAA‖ by
Standard & Poor’s or ―Aaa‖ by Moody’s Investors Service.
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
General Description
The Bonds are payable from ad valorem property taxes levied by the County on taxpayers within the
District. The Board of Supervisors of the County has the power and is obligated under State law pursuant to the
authority granted by voters of the District to annually levy ad valorem taxes upon all property subject to taxation
by the District, without limitation as to rate or amount (except as to certain personal property which is taxable at
limited rates), for the payment of the principal of, premium, if any, and interest on all duly authorized general
obligation bonds of the District, including the Bonds. Such ad valorem property taxes are deposited in the
Interest and Sinking Fund for the Bonds held by the County and applied only to pay the principal of, premium, if
any, and interest on the Bonds. Such taxes are in addition to other taxes levied upon property within the District
that are deposited by the County in the general fund of the District.
Fiscal Year Debt Service
The following table sets forth the semi-annual debt service obligations in each Fiscal Year for all of the
District’s outstanding general obligation bonds. See Appendix A - ―District Financial Information and Regional
Economic and Demographic Information - District Financial Information - District Debt‖ attached hereto.
8
236437.7 037276 OS
Payment Date
Outstanding General
Obligation Bonds(1)(2)(3)
8/1/2013
2/1/2014
8/1/2014
2/1/2015
8/1/2015
2/1/2016
8/1/2016
2/1/2017
8/1/2017
2/1/2018
8/1/2018
2/1/2019
8/1/2019
2/1/2020
8/1/2020
2/1/2021
8/1/2021
2/1/2022
8/1/2022
2/1/2023
8/1/2023
2/1/2024
8/1/2024
2/1/2025
8/1/2025
2/1/2026
8/1/2026
2/1/2027
8/1/2027
2/1/2028
8/1/2028
2/1/2029
8/1/2029
2/1/2030
8/1/2030
2/1/2031
8/1/2031
2/1/2032
8/1/2032
2/1/2033
8/1/2033
2/1/2034
$ 136,540,293.61
96,898,018.46
140,878,018.46
95,945,138.58
142,660,138.58
94,879,628.58
149,574,628.58
93,649,395.08
153,134,395.08
92,178,921.83
156,738,921.83
90,640,066.83
160,585,066.83
88,888,572.08
164,513,572.08
86,989,154.28
168,219,154.28
84,951,012.73
173,806,012.73
82,712,656.50
179,662,656.50
80,265,554.15
185,795,554.15
77,592,914.75
192,232,914.75
74,679,411.75
198,983,411.75
71,429,161.25
206,149,161.25
67,878,690.50
213,693,690.50
63,916,991.50
221,726,991.50
59,540,450.00
230,260,450.00
55,024,175.00
239,014,175.00
50,145,425.00
248,215,425.00
44,920,575.00
257,845,575.00
38,956,250.00
General Obligation Bonds, Semi-Annual Debt Service Schedule
Series F Bonds
Refunding Bonds
Semi-Annual Debt
Semi-Annual Debt
Principal
Interest
Service
Principal
Interest
Service
Aggregate
Semi-Annual Debt
Service
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236437.7 037276 OS
(1)
(2)
(3)
Payment Date
Outstanding General
Obligation Bonds(1)(2)(3)
8/1/2034
2/1/2035
8/1/2035
2/1/2036
8/1/2036
2/1/2037
8/1/2037
2/1/2038
8/1/2038
2/1/2039
8/1/2039
2/1/2040
8/1/2040
2/1/2041
8/1/2041
2/1/2042
8/1/2042
2/1/2043
8/1/2043
2/1/2044
8/1/2044
2/1/2045
8/1/2045
2/1/2046
8/1/2046
2/1/2047
8/1/2047
2/1/2048
8/1/2048
2/1/2049
8/1/2049
$ 87,721,250.00
37,327,499.00
89,347,499.00
35,590,031.00
91,085,031.00
33,960,150.00
93,020,150.00
32,409,825.00
94,569,825.00
30,778,125.00
96,198,125.00
28,771,140.00
98,206,140.00
26,479,785.00
99,504,785.00
24,069,960.00
100,314,960.00
21,545,156.25
101,150,156.25
18,858,487.50
102,068,487.50
16,050,150.00
102,995,150.00
13,115,756.25
103,965,756.25
10,049,568.75
104,979,568.75
6,845,681.25
106,035,681.25
3,498,018.75
107,143,018.75
General Obligation Bonds, Semi-Annual Debt Service Schedule
Series F Bonds
Refunding Bonds
Semi-Annual Debt
Semi-Annual Debt
Principal
Interest
Service
Principal
Interest
Service
Aggregate
Semi-Annual Debt
Service
Excludes the Prior Bonds and the Series F Bonds.
Includes debt service related to outstanding general obligation refunding bonds related to such Authorization.
Excludes federal subsides related to Build America Bonds.
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236437.7 037276 OS
TAX MATTERS
[To Come]
LIMITATION ON REMEDIES
The proposed form of the approving opinion of Bond Counsel, attached hereto as Appendix C, is
qualified by reference to bankruptcy, insolvency and other laws relating to or affecting creditor’s rights.
Bankruptcy proceedings, if initiated, could subject the owners of the Bonds to judicial discretion and
interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay,
limitation, or modification of their rights.
AMOUNTS HELD IN THE COUNTY TREASURY POOL
The County on behalf of the District is expected to be in possession of the annual ad valorem
property taxes and certain funds to repay the Bonds and may invest these funds in the County’s Treasury
Pool, as described in Appendix F – ―The Los Angeles County Treasury Pool‖ attached hereto. In the event
the District or the County were to go into bankruptcy, a federal bankruptcy court might hold that the owners
of the Bonds are unsecured creditors with respect to any funds received by the District or the County prior to
the bankruptcy, which may include taxes that have been collected and deposited into the Interest and Sinking
Fund, where such amounts are deposited into the County Treasury Pool, and such amounts may not be
available for payment of the principal of, and premium, if any, and interest on the Bonds unless the owners
of the Bonds can ―trace‖ those funds. There can be no assurance that the owners could successfully ―trace‖
such taxes on deposit in the Interest and Sinking Fund where such amounts are invested in the County
Treasury Pool. The District Resolutions and the State Government Code require the County to annually levy
ad valorem property taxes upon all property subject to taxation by the District, without limitation as to rate or
amount (except as to certain personal property which is taxable at limited rates), for the payment of the
principal of, and premium, if any, and interest on the Bonds.
CERTAIN LEGAL MATTERS
The validity of the Bonds and certain other legal matters are subject to the approving opinion of
Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, as Bond Counsel to
the District and certain other conditions. A complete copy of the proposed form of opinion of Bond Counsel
with respect to the Bonds, is contained in Appendix C attached hereto. Certain legal matters will also be
passed upon for the District by Hawkins Delafield & Wood LLP, Los Angeles, California, and Luna &
Glushon, Los Angeles, California, as Co-Disclosure Counsel to the District.
CONTINUING DISCLOSURE
The District has covenanted for the benefit of the holders and beneficial owners of the Bonds to
provide certain financial information and operating data relating to the District (the ―Annual Report‖) for
each fiscal year by not later than 270 days following the end of the District’s fiscal year (currently ending
June 30) commencing with the Annual Report for Fiscal Year 2012-13, and to provide notices of the
occurrence of certain enumerated events. The District will provide or cause to be provided the Annual
Report and these notices to the Municipal Securities Rulemaking Board through its EMMA system,
emma.msrb.org, in the manner prescribed by the SEC, although the information presented there is not
incorporated by reference in this Official Statement and should not be relied upon in making an investment
decision with respect to the Bonds. The specific nature of the information to be contained in the notices of
events is set forth in Appendix D – ―Form of Continuing Disclosure Agreement‖ attached hereto. These
covenants have been made in order to assist the Underwriters in complying with SEC Rule 15c2-12(b)(5)
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236437.7 037276 OS
(the ―Rule‖). [The District has not failed to comply in all material respects in the last five years with each of
its previous undertakings with regard to the Rule to provide annual reports and notices of certain events.]
FINANCIAL STATEMENTS
The District’s Report on Audited Basic Financial Statements, including its general purpose financial
statements for the Fiscal Year ended June 30, 2012, are attached hereto as Appendix B. The basic financial
statements of the District for the Fiscal Year ended June 30, 2012, which are included in Appendix B to this
Official Statement, have been audited by KPMG LLP, independent certified public accountants (the
―Auditor‖), as stated in their report appearing in Appendix B. In connection with the inclusion of the
financial statements and the report of the Auditor thereon in Appendix B to this Official Statement, the
District did not request the Auditor to, and the Auditor has not undertaken to, update 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 the date of its report.
LITIGATION
There is no litigation pending against the District or, to the knowledge of its executive officers,
threatened, seeking to restrain or enjoin the issuance, sale, execution or delivery of the Bonds or in any way
contesting or affecting the validity of the Bonds or the Measure J (2008) Authorization or any proceedings of
the District taken with respect to the issuance or sale thereof, or the levy or application of ad valorem
property taxes for the payment of principal of, premium, if any, and interest on the Bonds or the use of the
proceeds of the Bonds. To the best of the District’s knowledge, there are no pending lawsuits that challenge
the validity of the Bonds, the existence of the District, or the title of the executive officers to their respective
offices. The District has certain claims pending against it. The aggregate amount of the uninsured liabilities
of the District which may result from all claims will not, in the opinion of the District, materially affect the
District’s finances or impair its ability to make payments of principal of, premium, if any, and interest on the
Bonds.
RATINGS
Moody’s Investors Service, Inc. (―Moody’s‖) and Standard & Poor’s (―S&P‖) and have assigned
their municipal bond ratings of ―___‖ and ―___,‖ respectively, to the Bonds. Such ratings reflect only the
views of Moody’s and S&P, respectively, and an explanation of the significance of such ratings may be
obtained as follows: Moody’s Investors Service, Inc., 7 World Trade Center at 250 Greenwich Street, New
York, New York 10007, tel. (212) 553-0300 and Standard & Poor’s at Municipal Finance Department, 55
Water Street, New York, New York 10041, tel. (212) 208-8000. There is no assurance that such ratings will
continue for any given period of time or that they will not be revised downward or withdrawn entirely if, in
the judgment of the rating agencies, circumstances so warrant. Any such downward revision or withdrawal
of such ratings may have an adverse effect on the market price of the Bonds.
FINANCIAL ADVISOR
The District has retained KNN Public Finance, a Division of Zions First National Bank, as Financial
Advisor to the District (the ―Financial Advisor‖) in connection with the issuance of the Bonds and certain
other financial matters. The Financial Advisor has not audited, authenticated or otherwise independently
verified the information set forth in the Official Statement, or any other related information available to the
District, with respect to accuracy and completeness of disclosure of such information. The Financial Advisor
makes no guaranty, warranty or other representation respecting accuracy and completeness of the Official
Statement.
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236437.7 037276 OS
VERIFICATION
Upon the delivery of the Refunding Bonds, [Verification Agent] (the ―Verification Agent‖) will
deliver a report stating that the firm has verified the mathematical accuracy of the schedules with respect to
the sufficiency of the Escrow Fund established to pay, when due, the principal of, redemption premium and
interest on the Prior Bonds to be refunded in full on the dates of redemption thereof. The scope of the
verification will be based solely on information and assumptions provided to the Verification Agent by the
Underwriters. The Verification Agent will express no opinion on the assumptions provided by it to the
Underwriters, nor as to the exemption from taxation of the interest on the Refunding Bonds.
UNDERWRITING
The Bonds were sold at a competitive sale on ______, 2013. The Series F Bonds were awarded to
_______________, the Series F Bonds Underwriter, at a purchase price of $_____________ which amount is
equal to the original principal amount of the Series F Bonds of $___________, plus/less a net original issue
premium/discount of $___________, less an underwriting compensation in the amount of $___________.
The Refunding Bonds were awarded to _________________, the Refunding Bonds Underwriter, at a
purchase price of $_____________ which amount is equal to the original principal amount of the Refunding
Bonds of $___________, plus/less a net original issue premium/discount of $___________, less an
underwriting compensation in the amount of $___________.
The Notice Inviting Proposals for Purchase of Bonds provides that all Series F Bonds will be
purchased if any Bonds of such series are purchased, the obligation to make such purchase being subject to
certain terms and conditions set forth in the Notice Inviting Proposals for Purchase of Bonds, the approval of
certain legal matters by Bond Counsel to the District and certain other conditions. The Notice Inviting
Proposals for Purchase of Refunding Bonds provides that all of the Refunding Bonds will be purchased, the
obligation to make such purchase being subject to certain terms and conditions set forth in the Notice
Inviting Proposals for Purchase of Refunding Bonds, the approval of certain legal matters by Bond Counsel
and certain other conditions.
ADDITIONAL INFORMATION
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 District Resolutions are available upon
request from the Chief Financial Officer/Treasurer, Los Angeles Community College District, 770 Wilshire
Boulevard, Los Angeles, California 90017. The District may impose a fee for copying and shipping.
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 County or the District and the purchasers or owners of any of the
Bonds.
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236437.7 037276 OS
The execution and delivery of this Official Statement has been duly authorized by the District.
LOS ANGELES COMMUNITY
COLLEGE DISTRICT
By:
Jeanette L. Gordon
Chief Financial Officer/Treasurer
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236437.7 037276 OS
APPENDIX A
DISTRICT FINANCIAL INFORMATION AND
REGIONAL ECONOMIC AND DEMOGRAPHIC INFORMATION
A-1
236437.7 037276 OS
APPENDIX B
REPORT ON AUDITED BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2012
B-1
236437.7 037276 OS
APPENDIX C
PROPOSED FORM OF BOND COUNSEL OPINION
Upon the delivery of the Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation,
Bond Counsel to the District, proposes to render its final approving opinion with respect to the Bonds in
substantially the following form:
C-1
236437.7 037276 OS
APPENDIX D
FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the ―Disclosure Agreement‖) dated as [As of Date] by
and between the Los Angeles Community College District (the ―District‖) and [Dissemination Agent], as
dissemination agent, in connection with the issuance of its $[Series F Principal Amount] 2008 Election
General Obligation Bonds, Series F (the ―Series F Bonds‖) and its $[Refunding Principal Amount] 2013
General Obligation Refunding Bonds (the ―Refunding Bonds‖ and together with the Series F Bonds, the
―Bonds‖), which are being issued pursuant to separate resolutions of the District’s Board of Trustees
adopted on [March 6, 2013] (collectively, the ―District Resolutions‖). The District covenants and agrees
as follows:
Section 1.
Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and
delivered by the District and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the
Bonds and in order to assist the Participating Underwriters in complying with Securities and Exchange Commission
Rule 15c2-12(b)(5).
Section 2.
Definitions. In addition to the definitions set forth in the District Resolutions, which
apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Disclosure
Agreement, the following capitalized terms shall have the following meanings:
―Annual Report‖ shall mean any Annual Report provided by the District pursuant to, and as
described in, Sections 4 and 5 of this Disclosure Agreement.
―Beneficial Owner‖ shall mean any person who (a) has the power, directly or indirectly, to vote
or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds
through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for
federal income tax purposes.
―Bonds‖ shall mean, collectively, the Series F Bonds and the Refunding Bonds.
―County‖ shall mean the County of Los Angeles, California.
―CUSIP Numbers‖ shall mean the Committee on Uniform Securities Identification Procedures’
unique identification numbers for each public issue of a security.
―Disclosure Counsel‖ shall mean an attorney-at-law, or a firm of such attorneys, of nationally
recognized standing in matters pertaining to the disclosure obligations under Rule 15c2-12(b)(5) of the
Securities and Exchange Commission of the United States of America, duly admitted to the practice of
law before the highest court of any state of the United States of America.
―Dissemination Agent‖ shall mean _______________, or any successor Dissemination Agent
designated in writing by the District and which has filed with the District a written acceptance of such
designation.
―District Resolutions‖ shall mean collectively, the resolution of the Board of Trustees of the
District adopted on [March 6, 2013] authorizing the issuance of the Series F Bonds and the resolution of
the Board of Trustees of the District adopted on [March 6, 2013] authorizing the issuance of the
Refunding Bonds.
―EMMA System‖ shall mean the MSRB’s Electronic Municipal Market Access system.
D-1
236437.7 037276 OS
―Holder‖ shall mean either the registered owners of the Bonds, or if the Bonds are registered in
the name of The Depository Trust Company or another recognized depository, any applicable participant
in such depository system.
―Listed Events‖ shall mean any of the events listed in Section 6(b) of this Disclosure Agreement.
―MSRB‖ shall mean the Municipal Securities Rulemaking Board established pursuant to
Section 15B(b)(1) of the Securities Exchange Act of 1934, or any successor thereto or to the functions of
the MSRB contemplated by this Disclosure Agreement.
―Official Statement‖ shall mean the Official Statement dated [Pricing Date] with respect to the
Bonds.
―Participating Underwriters‖ shall mean any of the original underwriters of the Bonds required to
comply with the Rule in connection with offering of the Bonds.
―Refunding Bonds‖ shall mean the District’s 2013 General Obligation Refunding Bonds.
―Rule‖ shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
―Series F Bonds‖ shall mean the District’s 2008 Election General Obligation Bonds, Series F.
Section 3.
Transmission of Notices, Documents and Information. (a) Unless otherwise required by
the MSRB, all notices, documents and information provided to the MSRB shall be provided to the MSRB’s EMMA
System, the current internet address of which is http://emma.msrb.org.
(b)
All notices, documents and information provided to the MSRB shall be provided in an electronic
format as prescribed by the MSRB.
Section 4.
Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination
Agent to, not later than 270 days following the end of the District’s fiscal year (currently ending June 30),
commencing with the report for the 2012-13 Fiscal Year (which is due not later than March 27, 2014), provide to the
MSRB through its EMMA System an Annual Report which is consistent with the requirements of Section 5 of this
Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents
comprising a package, and may cross-reference other information as provided in Section 5 of this Disclosure
Agreement. If the District’s fiscal year changes, it shall give notice of such change in the same manner as for a
Listed Event under Section 6(c).
(b)
Not later than thirty (30) days (not more than sixty (60) days) prior to the date on which the
Annual Report is to be provided pursuant to Section 4(a), the Dissemination Agent shall give notice to the District
that the Annual Report is so required to be filed in accordance with the terms of this Disclosure Agreement. Not
later than fifteen (15) days prior to said date, the District shall provide the Annual Report to the Dissemination
Agent (if other than the District). If the District is unable to provide to the MSRB through its EMMA System an
Annual Report by the date required in Section 4(a), the Dissemination Agent shall send a notice of such fact to the
MSRB through its EMMA System.
(c)
The Dissemination Agent shall: (i) determine each year, prior to the date for providing the Annual
Report to the MSRB through the EMMA System, the date on which such Annual Report shall be due and notify the
District of such date; and (ii) (if the Dissemination Agent is other than the District) file a report with the District
certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was
provided and that it was provided to the MSRB through the EMMA System.
D-2
236437.7 037276 OS
Section 5.
reference the following:
Content of Annual Reports. The District’s Annual Report shall contain or include by
(a)
Audited financial statements of the District for the preceding fiscal year, prepared in
accordance with the laws of the State of California and including all statements and information
prescribed for inclusion therein by the Controller of the State of California. If the District’s audited
financial statements are not available by the time the Annual Report is required to be filed pursuant to
Section 4 hereof, the Annual Report shall contain unaudited financial statements in a format similar to the
financial statements contained in the final Official Statement, and the audited financial statements shall be
filed in the same manner as the Annual Report when they become available.
(b)
To the extent not included in the audited financial statement of the District, the Annual
Report shall also include the following:
(i)
Table A-1 ―General Fund Final Adopted Budgets‖ for the current fiscal year.
(ii)
Table A-2 ―Statement of Revenues, Expenditures and District General Fund
Balances‖ for the prior fiscal year.
(iii)
Table A-4 ―Full Time Equivalent Students‖, as may be reasonably available.
(iv)
Table A-18 ―Outstanding General Obligation Bonds‖.
(v)
Table A-19 ―Other Outstanding Long-Term Obligations‖.
(vi)
Table A-21 ―Historical Gross Assessed Valuation of Taxable Property‖, if and to
the extent provided to the District by the County.
(vii)
Table A-22 ―Assessed Valuation and Parcels by Land Use‖
(viii)
Table A-23 ―Assessed Valuations of Single Family Homes Per Parcel‖
(ix)
Table A-25 ―Property Tax Levies and Collections‖
(x)
Table A-26 ―Largest Local Secured Taxpayers‖
(c)
It shall be sufficient for purposes of Section 4 hereof if the District provides annual
financial information by specific reference to documents (i) available to the public on the MSRB website
(currently, www.emma.msrb.org) or (ii) filed with the Securities and Exchange Commission. The District
shall clearly identify each such other document so included by reference. The provisions of this Section
5(c) shall not apply to notices of Listed Events pursuant to Section 6 hereof.
(d)
The descriptions of financial information and operating data to be included in the Annual
Report contained in Section 5(b) above are of general categories or types of financial information and
operating data. When such descriptions include information that no longer can be generated because the
operations to which it related have been materially changed or discontinued, or due to changes in
accounting practices, legislative or organizational changes, a statement to that effect shall be provided in
lieu of such information. Comparable information shall be provided if available.
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Section 6.
Reporting of Listed Events.
(a)
If a Listed Event occurs, the District shall provide or caused to be provided, in a timely manner not
in excess of ten (10) business days of the District having notice of such Listed Event, notice of such Listed Event to
(i) the EMMA System of the MSRB and (ii) the Dissemination Agent.
(b)
Pursuant to the provisions of this Section 6, the District shall give, or cause to be given, notice of
the occurrence of any of the following events (each, a ―Listed Event‖) with respect to the Bonds:
(i)
principal and interest payment delinquencies;
(ii)
non-payment related defaults, if material;
(iii)
modifications to rights of Holders, if material;
(iv)
bond calls, if material and tender offers;
(v)
defeasances;
(vi)
rating changes;
(vii)
adverse tax opinions, the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (Internal Revenue Service Form
5701-TEB) or other material notices of determinations with respect to the tax status of the Bonds,
or other material events affecting the tax status of the Bonds;
(viii)
unscheduled draws on the debt service reserves reflecting financial difficulties;
(ix)
unscheduled draws on the credit enhancements reflecting financial difficulties;
(x)
material;
release, substitution or sale of property securing repayment of the certificates, if
(xi)
bankruptcy, insolvency, receivership or similar event of the District (such event
is considered to occur when any of the following occur: the appointment of a receiver, fiscal
agent or similar officer for the District in a proceeding under the U.S. Bankruptcy Code or in any
other proceeding under State or federal law in which a court or government authority has
assumed jurisdiction over substantially all of the assets or business of the District, or if such
jurisdiction has been assumed by leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or governmental authority, or the
entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the assets or
business of the District);
(xii)
substitution of credit or liquidity providers, or their failure to perform;
(xiii) the consummation of a merger, consolidation, or acquisition involving the
District or the sale of all or substantially all of the assets of the District, other than in the ordinary
course of business, the entry into a definitive agreement to undertake such an action or the
termination of a definitive agreement relating to any such actions, other than pursuant to its terms,
if material;
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(xiv) appointment of a successor or additional Bond Registrar or the change of name
of a Bond Registrar, if material; and
(xv)
any amendment or waiver of a provision of this Disclosure Agreement.
The District notes that items (viii), (ix), (x) and (xii) are not applicable to the Bonds.
(c)
If the District determines that a Listed Event has occurred, the District shall promptly notify the
Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence
pursuant to Section 3 hereof.
If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed Event,
the Dissemination Agent shall file a notice of such occurrence with the MSRB through its EMMA System.
Notwithstanding the foregoing, notice of Listed Events described in Section 6(b)(iv) and Section 6(b)(v)
need not be given under this Section 6 any earlier than the notice (if any) of the underlying event is given to
Holders of affected Bonds pursuant to the District Resolutions.
Section 7.
CUSIP Numbers. Whenever providing information to the Dissemination Agent,
including but not limited to Annual Reports, documents incorporated by reference to the Annual Reports, audited
financial statements and notices of Listed Events, the District shall indicate the full name of the Bonds and the 9digit CUSIP numbers for the Bonds as to which the provided information relates.
Section 8.
Termination of Reporting Obligation.
The District’s obligations under this Disclosure Agreement shall terminate upon the legal defeasance,
prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the
Bonds, the District shall give notice of such termination in the same manner as for a Listed Event under Section
6(c).
This Disclosure Agreement, or any provision hereof, shall cease to be effective in the event that the
District (1) delivers to the Dissemination Agent an opinion of Disclosure Counsel, addressed to the District and the
Dissemination Agent, to the effect that those portions of the Rule which require this Disclosure Agreement, or such
provision, as the case may be, do not or no longer apply to the Bonds, whether because such portions of the Rule
are invalid, have been repealed, or otherwise, as shall be specified in such opinion, and (2) delivers copies of such
opinion to the MSRB.
Section 9.
Dissemination Agent. The District may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge
any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination
Agent shall be ____________. If at any time there is no designated Dissemination Agent appointed by the District,
or if the Dissemination Agent so appointed is unwilling or unable to perform the duties of the Dissemination Agent
hereunder, the District shall be the Dissemination Agent and undertake or assume its obligations hereunder. The
Dissemination Agent (other than the District) shall not be responsible in any manner for the content of any notice or
report required to be delivered by the District pursuant to this Disclosure Agreement.
Section 10.
Amendment; Waiver. (a) This Disclosure Agreement may be amended by the
District without the consent of the Holders of the Bonds, if all of the following conditions are satisfied:
(i)
such amendment is made in connection with a change in circumstances that
arises from a change in legal (including regulatory) requirements, a change in law (including
rules or regulations) or in interpretations thereof, or a change in the identity, nature or status of
the District or the type of business conducted thereby;
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(ii)
this Disclosure Agreement as so amended would have complied with the
requirements of the Rule as of the date of this Disclosure Agreement, after taking into account
any amendments or interpretations of the Rule, as well as any change in circumstances;
(iii)
the District shall have received an opinion of Hawkins Delafield & Wood LLP or
other nationally recognized bond counsel or counsel expert in federal securities laws, addressed to
the District, to the same effect as set forth in Section 10(a)(ii) above;
(iv)
either (1) the District shall have received an opinion of Hawkins Delafield &
Wood LLP or other nationally recognized bond counsel or counsel expert in federal securities
laws, addressed to the District, to the effect that the amendment does not materially impair the
interests of the holders of the Bonds or (2) is approved by the Holders of the Bonds in the same
manner as provided in the District Resolutions; and
(v)
the District shall have delivered copies of such opinion and amendment to the
MSRB through its EMMA System within ten (10) business days from the execution thereof.
(b)
In addition to Section 10(a) above, this Disclosure Agreement may be amended and any
provision of this Disclosure Agreement may be waived, by written certificate of the District, without the
consent of the Holders of the Bonds, if all of the following conditions are satisfied:
(i)
an amendment to the Rule is adopted, or a new or modified official interpretation
of the Rule is issued, after the effective date of this Disclosure Agreement which is applicable to
this Disclosure Agreement;
(ii)
the District shall have received an opinion of Hawkins Delafield & Wood LLP or
other nationally recognized bond counsel or counsel expert in federal securities laws, addressed to
the District, to the effect that performance by the District under this Disclosure Agreement as so
amended or giving effect to such waiver, as the case may be, will not result in a violation of the
Rule; and
(iii)
the District shall have delivered copies of such opinion and amendment to the
MSRB through its EMMA System.
(c)
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the
District shall describe such amendment in the next Annual Report, and shall include, as applicable, a
narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case
of a change of accounting principles, on the presentation) of financial information or operating data being
presented by the District. In addition, if the amendment relates to the accounting principles to be followed
in preparing financial statements, (i) notice of such change shall be given in the same manner as for a
Listed Event under Section 6 hereof, and (ii) the Annual Report for the year in which the change is made
should present a comparison (in narrative form and also, if feasible, in quantitative form) between the
financial statements as prepared on the basis of the new accounting principles and those prepared on the
basis of the former accounting principles.
Section 11.
Additional Information. Nothing in this Disclosure Agreement shall be deemed to
prevent the District from disseminating any other information, using the means of dissemination set forth in this
Disclosure Agreement or any other means of communication, or including any other information in any Annual
Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement.
If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in
addition to that which is specifically required by this Disclosure Agreement, the District shall have no obligation
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236437.7 037276 OS
under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of
occurrence of a Listed Event.
Section 12.
Default. In the event of a failure of the District to comply with any provision of this
Disclosure Agreement, the Dissemination Agent may (and, at the request of any Participating Underwriter or the
Holders or Beneficial Owners of at least 25% of aggregate principal amount of the Bonds then outstanding, shall) or
any Holders or Beneficial Owners of the Bonds may take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the District to comply with its
obligations under this Disclosure Agreement; provided that any such action may be instituted only in the Superior
Court of the State of California in and for the County of Los Angeles or in the U.S. District Court in the County of
Los Angeles. A default under this Disclosure Agreement shall not be deemed an Event of Default under the District
Resolutions, and the sole remedy under this Disclosure Agreement in the event of any failure of the District to
comply with this Disclosure Agreement shall be an action to compel performance.
Section 13.
Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent
shall have only such duties as are specifically set forth in this Disclosure Agreement, and the District agrees to
indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any
loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and
duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of
liability, but excluding liabilities due to the Dissemination Agent’s gross negligence or willful misconduct. The
obligations of the District under this Section 13 shall survive resignation or removal of the Dissemination Agent and
payment of the Bonds.
Section 14.
Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the District,
the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of
the Bonds, and shall create no rights in any other person or entity.
LOS ANGELES COMMUNITY COLLEGE DISTRICT
By:
Jeanette L. Gordon
Chief Financial Officer/Treasurer
[DISSEMINATION AGENT]
By:
Dissemination Agent
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APPENDIX E
BOOK-ENTRY ONLY SYSTEM
THE INFORMATION IN THIS APPENDIX E CONCERNING THE DEPOSITORY TRUST
COMPANY, NEW YORK, NEW YORK AND ITS BOOK-ENTRY SYSTEM HAS BEEN OBTAINED
FROM SOURCES THAT THE DISTRICT AND THE UNDERWRITERS BELIEVE TO BE RELIABLE,
BUT THE DISTRICT AND THE UNDERWRITERS TAKE NO RESPONSIBILITY FOR THE
ACCURACY OR COMPLETENESS THEREOF. THERE CAN BE NO ASSURANCE THAT THE
DEPOSITORY TRUST COMPANY WILL ABIDE BY ITS PROCEDURES OR THAT SUCH
PROCEDURES WILL NOT BE CHANGED FROM TIME TO TIME.
The Depository Trust Company, New York, New York (―DTC‖), will act as securities depository for
the Los Angeles Community College District’s 2008 Election General Obligation Bonds, Series F and 2013
General Obligation Refunding Bonds (collectively, the ―Bonds‖). The Bonds will be issued as fullyregistered 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 each series of the Bonds, each in the aggregate principal amount of such maturity,
and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a ―banking
organization‖ within the meaning of the New York Banking Law, a member of the Federal Reserve System,
a ―clearing corporation‖ within the meaning of the New York Uniform Commercial Code, and a ―clearing
agency‖ registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC
holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate
and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants
(―Direct Participants‖) deposit with DTC. DTC also facilitates the post-trade settlement among Direct
Participants of sales and other securities transactions in deposited securities, through electronic computerized
book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical
movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a whollyowned subsidiary of The Depository Trust & Clearing Corporation (―DTCC‖). DTCC is the holding
company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of
which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to
the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly (―Indirect Participants‖). DTC has a Standard & Poor’s
rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange
Commission. More information about DTC can be found at www.dtcc.com.
Purchases of the Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser
of each 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 Bonds are to be accomplished by
entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in
the event that use of the book-entry system for the Bonds is discontinued.
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To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered
in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an
authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of
Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the
Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial
Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be
in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the
transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders,
defaults, and proposed amendments to the security documents. For example, Beneficial Owners of the Bonds
may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit
notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and
addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being
redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such
issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the District 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 the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and other payments on the Bonds will be made to Cede & Co.,
or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to
credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from
the District, 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 or the District subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of redemption proceeds,
distributions, and other payments to Cede & Co. (or such other nominee as may be requested by an
authorized representative of DTC) is the responsibility of the District, disbursement of such payments to
Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial
Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by
giving reasonable notice to the District. Under such circumstances, in the event that a successor depository is
not obtained, security certificates are required to be printed and delivered.
The District may decide to discontinue use of the system of book-entry-only transfers through DTC
(or a successor securities depository). In that event, certificates will be printed and delivered to DTC and the
requirements of the Bond Registrar Agreement with respect to certificated Bonds will apply.
THE DISTRICT, THE COUNTY, THE BOND REGISTRAR, AND THE FINANCIAL ADVISOR
CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC, DIRECT PARTICIPANTS OR
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236437.7 037276 OS
INDIRECT PARTICIPANTS OF DTC WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE
SECURITIES (I) PAYMENTS OF PRINCIPAL OF AND INTEREST EVIDENCED BY THE
SECURITIES (II) CONFIRMATIONS OF THEIR OWNERSHIP INTERESTS IN THE SECURITIES OR
(III) OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS PARTNERSHIP NOMINEE, AS THE
REGISTERED OWNER OF THE SECURITIES, OR THAT THEY WILL DO SO ON A TIMELY BASIS,
OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT
IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT.
NEITHER THE DISTRICT, THE COUNTY, THE BOND REGISTRAR, NOR THE FINANCIAL
ADVISOR WILL HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO DTC, THE DIRECT
PARTICIPANTS, THE INDIRECT PARTICIPANTS OF DTC OR THE BENEFICIAL OWNERS WITH
RESPECT TO (1) THE ACCURACY OR COMPLETENESS OF ANY RECORDS MAINTAINED BY
DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC; (2) THE PAYMENT
BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC OF ANY
AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OF OR
INTEREST ON SECURITIES; (3) THE DELIVERY BY DTC OR ANY DIRECT PARTICIPANTS OR
INDIRECT PARTICIPANTS OF DTC OF ANY NOTICE TO ANY BENEFICIAL OWNER THAT IS
REQUIRED OR PERMITTED TO BE GIVEN TO OWNERS UNDER THE TERMS OF THE TRUST
AGREEMENT; OR (4) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS OWNER
OF THE SECURITIES.
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APPENDIX F
THE LOS ANGELES COUNTY TREASURY POOL
In accordance with California Government Code Section 53600 et seq., funds are deposited with
the Treasurer and Tax-Collector (the “Treasurer”) by County of Los Angeles (the “County”) school and
community college districts, various special districts and some cities. State law generally requires that
all moneys of the County, school districts and certain special districts be held in the County’s Treasury
Pool (the “Treasury Pool”) as described below. The composition and value of investments under
management in the Treasury Pool vary from time to time, depending on the cash flow needs of the County
and the other public agencies invested in the Treasury Pool, the maturity or sale of investments, purchase
of new securities and fluctuations in interest rates generally. The Treasurer maintains a website, the
address of which is http://ttc.lacounty.gov, on which the Treasurer periodically places information
relating to the Treasury Pool. However, the information presented there is not part of this Official
Statement, is not incorporated by reference herein and should not be relied upon in making an investment
decision with respect to the Bonds.
Los Angeles County Pooled Surplus Investments
[To be Updated as Posting Nears]
The Treasurer has the delegated authority to invest funds on deposit in the County Treasury (the
―Treasury Pool‖). As of December 31, 2012, investments in the Treasury Pool were held for local
agencies including school districts, community college districts, special districts and discretionary
depositors such as cities and independent districts in the following amounts:
Invested Funds
(in billions)
Local Agency
County of Los Angeles and Special Districts
Schools and Community Colleges
Independent Public Agencies
Total
$11.635
11.780
2.711
$26.126
Of these entities, the involuntary participants accounted for approximately 89.64%, and all
discretionary participants accounted for 10.36% of the total Treasury Pool.
Decisions on the investment of funds in the Treasury Pool are made by the County Investment
Officer in accordance with established policy, with certain transactions requiring the Treasurer’s prior
approval. In Los Angeles County, investment decisions are governed by Chapter 4 (commencing with
Section 53600) of Part 1 of Division 2 of Title 5 of the California Government Code, which governs legal
investments by local agencies in the State of California, and by a more restrictive Investment Policy
developed by the Treasurer and adopted by the Los Angeles County Board of Supervisors on an annual
basis. The Investment Policy adopted on March 20, 2012, reaffirmed the following criteria and order of
priority for selecting investments:
1. Safety of Principal
2. Liquidity
3. Return on Investment
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The Treasurer prepares a monthly Report of Investments (the ―Investment Report‖) summarizing
the status of the Treasury Pool, including the current market value of all investments. This report is
submitted monthly to the Board of Supervisors. According to the Investment Report dated January 31,
2013, the December 31, 2012 book value of the Treasury Pool was approximately $26.126 billion and the
corresponding market value was approximately $26.175 billion.
An internal controls system for monitoring cash accounting and investment practices is in place.
The Treasurer’s Compliance Auditor, who operates independently from the Investment Officer,
reconciles cash and investments to fund balances daily. The Compliance Auditor’s staff also reviews each
investment trade for accuracy and compliance with the Board adopted Investment Policy. On a quarterly
basis, the County’s outside auditor (the ―External Auditor‖) reviews the cash and investment
reconciliations for completeness and accuracy. Additionally, the External Auditor reviews investment
transactions on a quarterly basis for nonconformance with the approved Investment Policy and annual
accounts for all investments.
The following table identifies the types of securities held by the Treasury Pool as of
December 31, 2012.
Type of Investment
U.S. Government and Agency Obligations
Certificates of Deposit
Commercial Paper
Bankers Acceptances
Municipal Obligations
Corporate Notes & Deposit Notes
Asset Backed Instruments
Repurchase Agreements
Other
% of Pool
51.56
17.17
29.74
0.00
0.10
1.43
0.00
0.00
0.00
100.00
The Treasury Pool is highly liquid. As of December 31, 2012 approximately 39.78% of the
investments mature within 60 days, with an average of 610 days to maturity for the entire portfolio.
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DRAFT 2/24/13
APPENDIX A
DISTRICT FINANCIAL INFORMATION AND
REGIONAL ECONOMIC AND DEMOGRAPHIC INFORMATION
236435.7 037276 OS
TABLE OF CONTENTS
Page
DISTRICT GENERAL INFORMATION .................................................................................................... 1
General Information .................................................................................................................................. 1
District Governance; Senior Management ................................................................................................ 1
DISTRICT FINANCIAL INFORMATION ................................................................................................. 1
District Budget .......................................................................................................................................... 1
Significant Accounting Policies, System of Accounts and Audited Financial Statements ....................... 4
Enrollment................................................................................................................................................. 7
District Employees .................................................................................................................................... 7
Retirement Systems .................................................................................................................................. 8
Other Postemployment Benefits ............................................................................................................. 16
Insurance ................................................................................................................................................. 18
District Fiscal Policies ............................................................................ Error! Bookmark not defined.
District Debt ............................................................................................................................................ 18
Future Financings.................................................................................................................................... 21
Certain Matters Regarding District Bond Program Administration........................................................ 21
Overlapping Debt Obligations ................................................................................................................ 23
Assessed Valuation of Property within the District ................................................................................ 25
FUNDING OF COMMUNITY COLLEGE DISTRICTS IN CALIFORNIA ............................................ 32
General .................................................................................................................................................... 32
State Budget ............................................................................................................................................ 33
State Funding of Schools without a State Budget ................................................................................... 38
CALIFORNIA CONSTITUTIONAL AND STATUTORY PROVISIONS RELATING TO
AD VALOREM PROPERTY TAXES, DISTRICT REVENUES AND APPROPRIATIONS ................... 38
Constitutionally Required Funding of Education ................................................................................... 38
Article XIII A of the California Constitution.......................................................................................... 38
Legislation Implementing Article XIII A ............................................................................................... 39
Article XIIIB of the State Constitution ................................................................................................... 40
Article XIIIC and Article XIIID of the State Constitution ..................................................................... 40
Proposition 98 ......................................................................................................................................... 41
Proposition 39 ......................................................................................................................................... 42
Proposition 1A ........................................................................................................................................ 42
Proposition 22 ......................................................................................................................................... 43
Proposition 55 ......................................................................................................................................... 43
Future Initiatives ..................................................................................................................................... 44
REGIONAL ECONOMIC AND DEMOGRAPHIC INFORMATION ..................................................... 45
Population ............................................................................................................................................... 45
Income .................................................................................................................................................... 45
Employment ............................................................................................................................................ 46
Commercial Activity............................................................................................................................... 47
Major Non-Governmental Employers .................................................................................................... 49
Construction ............................................................................................................................................ 50
236435.7 037276 OS
DISTRICT GENERAL INFORMATION
General Information
The Los Angeles Community College District (the ―District‖) was established on July 1, 1969,
succeeding a junior college district that was established in 1931. [The District serves approximately
137,500 students and employs approximately 5,100 full-time and part-time faculty and approximately
4,700 full-time and part-time administrative and support staff.] The District is located entirely within the
County of Los Angeles (the ―County‖), in the central portion of the Los Angeles basin and encompasses
approximately 882 square miles. The population of the District‘s service area is estimated to be
approximately 9,911,665 as of June 30, 2012.
The District currently operates nine accredited two-year colleges as follows: Los Angeles City
College; East Los Angeles College; Los Angeles Harbor College; Los Angeles Mission College; Pierce
College; Los Angeles Southwest College; Los Angeles Trade Technical College; Los Angeles Valley
College and West Los Angeles College. The nine Los Angeles community colleges comprise the nation‘s
largest community college system. The District‘s mission is to provide educational offerings, including
career preparation, for students who intend to transfer to four-year colleges and universities, courses for
the enhancement of life and workplace skills, and civic engagement.
District Governance; Senior Management
The District is governed by an eight-member Board of Trustees (the ―District Board‖), and each
member, excluding the student member of the District Board, is elected to a four-year term. The student
member of the District Board is elected to a one-year term. The members of the District Board elect a
board president (the ―President‖) each year. Steve Veres is currently serving as the President of the
District Board. The management and policies of the District are administered by its Chancellor (the
―Chancellor‖) who is appointed by the District Board and is responsible for the day-to-day affairs of the
District. Dr. Daniel J. LaVista is currently serving as the Chancellor of the District. The current
Chancellor has submitted a letter of resignation to the District Board, effective June 30, 2013. [The
District is in the process of recruiting a new Chancellor.] [Confirm]
DISTRICT FINANCIAL INFORMATION
District Budget
General. The District is required by law to adopt a balanced budget on or before September 15
each year and to maintain a balanced budget throughout each fiscal year. The budget is a fiscal line-item
budget setting forth expenditures in priority sequence so that appropriations during any fiscal year can be
adjusted if revenues do not meet the projections. See ―District Financial Information – District Fiscal
Policies – Budget and Finance Policy‖ herein.
Fiscal Year 2012-13 District Budget. The District Board adopted the District‘s tentative budget
for Fiscal Year 2012-13 (the ―Fiscal Year 2012-13 District Tentative Budget‖) on June 27, 2012, prior to
the deadline therefor. The District Board adopted the District‘s final budget for Fiscal Year 2012-13 (the
―Fiscal Year 2012-13 District Final Adopted Budget‖) on August 22, 2012, prior to the deadline therefor.
The Fiscal Year 2012-13 District Final Adopted Budget projects a general fund (―General Fund‖)
beginning balance of $87.1 million, total net General Fund income of $625.9 million, and total net
appropriations of $625.9 million for Fiscal Year 2012-13. The Fiscal Year 2012-13 District Final
Adopted Budget projects a General Fund ending balance of $87.1 million. The General Fund is the largest
A-1
236435.7 037276 OS
fund of the District and supports the basic operations of the District. The District‘s General Fund income
and appropriations are allocated between the District‘s unrestricted programs and restricted programs.
In the Fiscal Year 2012-13 District Final Adopted Budget, the sources of General Fund income
include the State government, federal government, other State and local revenue, lottery, non-resident
tuition, dedicated revenue arising from locally-managed activities identified at individual colleges, parttime faculty compensation, incoming transfers, interest, and apprenticeships. The largest source of income
is the State general revenue, which is determined by a State funding formula that utilizes the workload
measures of attendance, and enrollment, and is established from the District‘s prior year base funding
with adjustments for inflation and growth. See ―Funding of Community College Districts in California‖
herein. At the time the District Board adopted the Fiscal Year 2012-13 Final Adopted Budget, the District
projected that general revenue from the State would decrease in Fiscal Year 2012-13 as compared to
Fiscal Year 2011-12 due to, among other things, a projected workload reduction of 7.28 percent in State
general apportionment revenues. In addition, the total net income projected for the General Fund of
$625.9 million is approximately $55.5 million less than the amount budgeted for net General Fund
income in the District‘s final budget for Fiscal Year 2011-2012 (the ―Fiscal Year 2011-12 District Final
Adopted Budget‖).
The District Board adopted the Fiscal Year 2012-13 District Tentative Budget prior to the date on
which the State adopted its 2012-13 State Budget Act (defined herein), and the District Board adopted the
Fiscal Year 2012-13 District Final Adopted Budget prior to the date on which voters in the State approved
Proposition 30 (defined herein). Due to the uncertainty with respect to voter-approval of Proposition 30
and the possible implementation of reductions in State expenditures that would have been triggered in the
event voters in the State did not approve Proposition 30, the District Board‘s Finance and Audit
Committee directed District staff to plan the District‘s budget for Fiscal Year 2012-13 under the
assumption that Proposition 30 would not be approved and to include spending reductions. However, the
Fiscal Year 2012-13 District Final Adopted Budget also includes projections under a best case scenario
and assumed that the District would receive approximately $15 million in deferral relief and $3.9 million
in additional revenues relating to District growth and restorations of prior expenditure reductions. See
―Funding of Community College Districts in California – State Budget – Fiscal Year 2012-13 State
Budget Act‖ herein.
The student enrollment fee increased from $36 per unit to $46 per unit in Fiscal Year 2012-13,
effective with the summer session of 2012. The District projects that it will receive an additional
$3.9 million in enrollment growth revenue during Fiscal Year 2012-13 which it expects to apply towards
additional classes for the winter 2013 intersession, spring 2013 session, and summer 2013 session. In
addition, due to the anticipated funding restoration authorized in connection with voter approval of
Proposition 30, the District plans to restore programs and services and offer additional classes for the
winter 2013 and summer 2013 intersessions. See ―Funding of Community College Districts in California
– State Budget – Fiscal Year 2012-13 State Budget Act‖ and ―Funding of Community College Districts in
California – State Budget – Fiscal Year 2013-14 Proposed State Budget‖ herein.
The Fiscal Year 2012-13 District Final Adopted Budget included unrestricted General Fund
appropriations of $544.67 million, which amount is approximately $53.23 million less than the
unrestricted General Fund appropriations set forth in the Fiscal Year 2011-12 District Final Adopted
Budget. In addition, the Fiscal Year 2012-13 District Final Adopted Budget included appropriations for
the nine colleges within the District and the District‘s instructional television program of $380.17 million,
which amount is approximately $63.8 million less than the appropriations set forth in the Fiscal Year
2011-12 District Final Adopted Budget. Further, the total net appropriations projected for the General
Fund of $625.9 million is $55.5 million less than the amount budgeted for net General Fund
appropriations in the Fiscal Year 2011-12 District Final Adopted Budget.
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236435.7 037276 OS
The following Table A-1 sets forth the District‘s General Fund final adopted budgets for the
Fiscal Years 2008-09 through 2012-13.
TABLE A-1
LOS ANGELES COMMUNITY COLLEGE DISTRICT
General Fund Final Adopted Budgets
Fiscal Years 2008-09 through 2012-13
2008-09
Final Budget
2009-10
Final Budget
2010-11
Final Budget
2011-12
Final Budget
2012-13
Final Budget
INCOME
Federal
General Revenue
Non-Resident
Apprenticeship
Dedicated Revenue
Lottery
Part-time Faculty Comp
Interest
Other State
Other Local
Incoming Transfers
TOTAL INCOME
$ 17,378,407
503,530,174
9,300,000
136,222
3,871,222
15,500,000
4,427,138
3,500,000
44,317,199
15,535,781
1,141,196
$618,637,339
$ 27,043,519
487,033,238
9,985,000
124,782
4,451,773
13,500,000
3,057,689
1,500,000
43,209,352
16,122,061
7,214,961
$613,242,975
$ 34,722,972
485,035,186
12,200,000
83,061
4,690,750
14,300,000
2,203,448
1,609,500
32,670,020
16,623,006
7,647,622
$611,785,565
$ 26,127,420
469,775,543
12,600,000
83,709
5,583,044
14,300,000
2,203,448
1,609,500
29,896,918
17,272,156
1,664,446
$581,116,184
$ 28,981,166
431,734,578
12,600,000
83,709
5,800,149
14,300,000
2,203,448
1,609,500
30,193,074
14,691,097
1,698,075
$543,894,796
BEGINNING BALANCE
Open Orders
$ 62,510,594
12,042,503
$ 50,968,694
8,698,580
$ 80,329,154
7,670,357
$ 93,587,368
11,882,057
$ 80,647,944
6,490,849
TOTAL ADJ. BEG BALANCE
Less Ending Balance
$ 74,553,097
695,945
$ 59,667,274
103,894
$ 87,999,511
1,660,142
$105,469,425
3,531,317
$ 87,138,793
3,419,599
TOTAL GENERAL FUND
INCOME
Less Intrafund Transfers
$692,494,491
1,141,196
$672,805,754
1,214,961
$698,124,934
1,647,622
$683,054,292
1,664,446
$627,613,990
1,698,075
NET GENERAL FUND INCOME
$691,353,295
$671,590,793
$696,477,312
$681,389,846
$625,915,915
APPROPRIATIONS
Certificated Salaries
Non-Certificated Salaries
Employee Benefits
Books and Supplies
Other Operating Expenses
Capital Outlay
Interfund Transfer
Other
TOTAL APPROPRIATIONS
Less Intrafund within Unrestricted
$245,397,932
136,979,378
122,211,236
12,882,351
90,740,792
15,971,199
6,676,003
61,635,600
$692,494,491
1,141,196
$217,970,186
142,908,885
116,335,032
12,744,513
88,647,483
13,980,285
6,591,450
73,627,920
$672,805,754
1,214,961
$255,387,757
140,439,952
112,890,711
10,494,840
92,804,420
11,334,546
6,654,254
68,118,454
$698,124,934
1,647,622
$249,824,346
132,900,166
126,646,693
7,851,436
89,463,513
8,584,388
6,617,364
61,166,386
$683,054,292
1,664,446
$207,678,158
126,949,342
128,584,716
6,603,592
79,448,991
7,160,909
6,318,989
64,869,293
$627,613,990
1,698,075
NET APPROPRIATIONS
$691,353,295
$671,590,793
$696,477,312
$681,389,846
$625,915,915
Source: Los Angeles Community College District.
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236435.7 037276 OS
Significant Accounting Policies, System of Accounts and Audited Financial Statements
The District‘s financial statements are prepared on a modified accrual basis of accounting in
accordance with generally accepted accounting principles as set forth by the National Council on
Governmental Accounting. The District currently maintains governmental funds which include the
General Fund, the Special Revenue Fund, the Debt Service Fund, the Postretirement Health Insurance
Fund, the Building Fund, and the Student Financial Aid Fund. The District also maintains the Expendable
Trust Fund which primarily includes amounts relating to associated student organizations and amounts for
scholarships within the District. The General Fund of the District is a combined fund comprised of
moneys which are unrestricted and available to finance the legally authorized activities of the District not
financed by restricted funds and moneys which are restricted to specific types of programs or purposes.
General Fund revenues shown thereon are derived from such sources as taxes, aid from other government
agencies, charges for current services and other revenue.
The financial statements included herein were prepared by the District using information from the
Annual Financial Reports which are prepared by the Chief Financial Officer/Treasurer for the District and
audited by independent certified public accountants each year. In addition to annual audited financial
statements, the District is required to prepare quarterly financial statements in accordance with Assembly
Bill 1290 (2006).
The following Table A-2 sets forth the District‘s audited District General Fund revenues,
expenditures and fund balances for the Fiscal Years 2007-08 through 2011-12.
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236435.7 037276 OS
TABLE A-2
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Statement of Revenues, Expenditures and District General Fund Balances(1)
Fiscal Years 2007-08 through 2011-12
REVENUES
Federal Revenues
Higher Education Acts
Job Training Partnership Act
Temporary Assistance for Needy Families
Vocational Education Act
Veterans Education
College Work Study
Supplemental Educational Opportunity
Grant
Pell (Basic Educational Opportunity Grant)
Other
Total Federal Revenues
State Revenues
State Apportionments
Tax Relief Subvention
State Lottery
CA Works Opportunity & Responsibility to
Kids Program
Extended Opportunity Program
Matriculation Program
Disabled Students Programs and Services
Telecommunication and Technology
Grants and Gifts
Other
Total State Revenues
Local Revenues
Local Property Taxes
Rental and Lease Income
Enrollment Fees
Tuition and Fees, Net of Scholarship
Discounts and Allowances
Community Service Fees
Parking Fees
Health Service Fees
Student Fees and Charges
Interest
Other
Total Local Revenues
TOTAL REVENUES
EXPENDITURES
Current
Academic Salaries
Classified Salaries
Employee Benefits
Books And Supplies
Contract Services, Student Grants, and
Other Operating Expenditures
Capital Outlay and Equipment
Replacements
Other
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER (UNDER)
EXPENDITURES
OTHER FINANCING USES
Operating Transfers Out
Net Increase in Fund Balance
Fund Balances at July 1
Fund Balances at June 30
(1)
Fiscal Year
2007-08
Fiscal Year
2008-09
Fiscal Year
2009-10
Fiscal Year
2010-11
Fiscal Year
2011-12
8,500,245
972,032
1,015,051
4,882,940
7,644
1,919,649
$ 11,122,910
2,000,822
982,459
5,468,613
7,065
1,810,044
$ 15,177,168
3,258,685
1,733,503
5,741,488
10,293
2,194,130
$ 14,222,875
8,622,948
1,007,222
5,975,262
23,212
2,069,573
$ 13,568,370
8,412,881
992,798
5,003,221
8,259
2,159,963
107,268
128,710
4,190,900
$ 21,724,439
104,469
152,270
4,772,171
$ 26,420,823
95,828
203,925
8,407,147
$ 36,822,167
106,087
242,225
7,997,446
$ 40,266,850
117,478
319,270
7,884,336
$ 38,466,576
$ 355,616,192
1,337,221
15,980,901
$ 338,765,224
1,344,633
13,415,893
$ 316,359,890
1,373,739
15,013,447
$ 334,235,045
1,350,919
14,238,395
$ 288,412,217
1,738,941
16,754,925
5,526,674
8,164,559
8,277,100
6,417,213
415,467
16,437,901
$ 418,173,228
5,751,359
8,514,265
8,468,209
6,312,741
324,324
1,953,243
19,343,093
$ 404,192,984
3,426,041
5,837,206
4,069,698
3,836,919
20,522,028
$ 370,438,968
3,392,006
5,526,304
4,067,260
3,498,291
19,485,095
$ 385,793,315
3,325,976
5,533,561
4,065,016
3,702,191
15,673,122
$ 339,205,949
$ 131,197,171
17,919,250
$ 148,281,558
19,236,632
$ 151,532,959
21,779,956
$ 146,176,621
19,708,004
$ 145,692,486
21,519,760
9,373,234
5,398,832
2,129,410
4,058,923
1,698,565
4,598,110
11,547,017
$ 187,920,509
$ 627,818,176
10,002,936
5,214,870
2,264,353
4,575,295
1,507,114
1,438,227
11,648,955
$ 204,169,940
$ 634,783,747
12,283,364
5,394,327
2,615,141
4,691,271
1,628,831
1,544,454
12,308,681
$ 213,778,984
$ 621,040,119
12,534,716
5,940,407
2,734,292
4,865,565
2,007,291
898,094
12,834,777
$ 207,699,767
$ 633,759,932
12,611,101
6,263,218
2,554,836
4,712,784
1,888,845
752,858
11,193,945
$ 207,189,833
$ 584,862,358
$ 257,305,796
141,747,787
119,193,643
13,236,522
$ 264,759,845
143,137,552
124,090,219
11,857,959
$ 235,044,588
143,121,470
133,890,015
10,293,059
$ 239,512,389
144,190,154
122,808,713
10,669,722
$ 235,021,873
137,766,156
131,105,682
8,816,190
66,180,336
73,932,100
59,587,524
79,870,599
74,060,190
12,710,514
895,609
$ 611,270,207
10,490,297
686,296
$ 628,954,268
9,054,376
1,027,319
$ 592,018,351
8,693,883
792,260
$ 606,537,720
6,375,892
426,232
$ 593,572,215
$ 16,547,969
$
$ 29,021,768
$ 27,222,212
$ (8,709,857)
(10,429,260)
16,792,952
$ 90,649,577
$ 107,442,529
(9,695,737)
(18,405,594)
$ 107,442,530
$ 89,036,936
$
(15,027,892)
1,520,077
$ 74,933,019
$ 76,453,096
5,829,479
(13,318,021)
(7,488,542)
$ 76,453,096
$ 68,964,554
(7,336,745)
21,685,023
$ 68,964,554
$ 90,649,577
Totals may not equal sum of component parts due to rounding.
Sources: Los Angeles Community College District Audited Financial Statements for Fiscal Years 2007-08 through 2011-12.
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236435.7 037276 OS
The following Table A-3 sets forth the District‘s General Fund Balance Sheets for Fiscal Years
2007-08 through 2011-12.
TABLE A-3
LOS ANGELES COMMUNITY COLLEGE DISTRICT
General Fund Balance Sheets
Fiscal Years 2007-08 through 2011-12
Fiscal Year
2007-08
Fiscal Year
2008-09
Fiscal Year
2009-10
Fiscal Year
2010-11
Fiscal Year
2011-12
$45,557,934
7,441,573
161,710
47,890
$ 20,759,010
6,939,114
160,064
47,529
$ 21,945,215
6,798,335
164,669
47,529
$31,053,495
9,454,652
161,230
47,189
$ 7,152,376
11,974,686
161,373
--
64,612,047
-6,971,295
86,718,344
-14,852,236
95,027,923
65,402
3,935,992
107,299,256
65,402
6,677,052
127,255,330
65,402
6,071,852
574,486
$125,366,935
968,261
$130,444,558
5,966,438
$133,951,503
6,287,691
$161,045,967
6,277,010
$158,958,029
LIABILITIES
Accounts Payable
Due to Other Funds
Amounts Held in Trusts
Deferred Revenue
TOTAL LIABILITIES
$38,322,953
3,857,330
518,278
6,215,278
$48,913,839
$42,821,945
11,909,770
532,565
6,215,724
$61,480,004
$34,986,280
2,188,033
534,662
5,592,951
$43,301,926
$40,674,297
6,656,270
536,007
5,736,864
$53,603,438
$33,221,222
30,288,448
536,026
5,875,397
$69,921,093
FUND EQUITY
Restricted
Unrestricted
TOTAL FUND EQUITY
$14,183,151
62,269,945
$76,453,096
$13,827,137
55,137,417
$68,964,554
$14,696,292
75,953,285
$90,649,577
$15,375,554
92,066,975
$107,442,529
$12,451,570
76,585,366
$89,036,936
$125,366,935
$130,444,558
$133,951,503
$161,045,967
$158,958,029
ASSETS
Cash in County Treasury
Cash in Banks
Cash in Revolving Fund
Investments
Accounts, Notes, Interest,
and Loans Receivable, Net
Cash Held with Trustee
Due from Other Funds
Prepaid Expenses and Other
Assets
TOTAL ASSETS
TOTAL LIABILITIES AND
FUND EQUITY
Sources:
Los Angeles Community College District Audited Financial Statements for Fiscal Years 2007-08 through 2011-2012.
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236435.7 037276 OS
Enrollment
The following Table A-4 sets forth the number of the District‘s Full Time Equivalent Students
(―FTES‖) for Fiscal Year 2003-04 through 2012-13.
TABLE A-4
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Full Time Equivalent Students
Fiscal Years 2003-04 through 2012-13
(1)
Fiscal Year
Full Time Equivalent Students
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13(1)
93,823
96,984
88,905
102,351
104,623
109,930
108,124
109,350
103,529
98,650
Projected.
Source: Los Angeles Community College District.
District Employees
The District currently employs 5,113 full-time and part-time faculty and 4,726 full-time and parttime classified and unclassified employees, including all temporary hourly and unclassified employees.]
The District has six collective bargaining units. Members of the District's faculty are represented by the
Los Angeles College Faculty Guild, Local 1521. Classified clerical/technical employees are represented
by the American Federation of Teachers College Staff Guild, Local 1521A. Supervisory employees are
represented by Supervisory Employees‘ Union, Service Employees International Union (―SEIU‖) Local
721, (formerly SEIU Local 347). The District‘s maintenance and operations employees are represented by
the Los Angeles City and County School Employees Union, Local 99, SEIU and skilled craftspeople are
represented by the Los Angeles/Orange Counties Building and Construction Trades Council. The
District‘s administrators are represented by the California Teamsters Public, Professional & Medical
Employees Union, Local 911.
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236435.7 037276 OS
TABLE A-5
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Employee Bargaining Units
As of _______ 1, 2013
Number of
Employees
Employee Bargaining Unit
Los Angeles College Faculty Guild, Local 1521
American Federation of Teachers College Staff Guild, Local 1521A
Supervisory Employees‘ Union, SEIU Local 721 (formerly SEIU Local 347)
Los Angeles City and County School Employees Union, Local 99, SEIU
Los Angeles/Orange Counties Building and Construction Trades Council
California Teamsters Public, Professional & Medical Employees Union,
Local 911
Contract
Expiration Date
June 30, 2014
June 30, 2014
June 30, 2014
June 30, 2014
June 30, 2014
June 30, 2014
Source: Los Angeles Community College District.
Retirement Systems
General. The District currently participates in the California State Teachers‘ Retirement System
(―CalSTRS‖), California Public Employees‘ Retirement System (―CalPERS‖) and Public Agency
Retirement System (―PARS‖). Classified employees who are not members of CalSTRS or CalPERS may
elect to join PARS. Pursuant to federal law, all public sector employees who are not members of their
employers existing retirement systems must be covered by social security or an alternative plan. The
District‘s part-time employees are not members of CalSTRS, CalPERS or PARS. Accordingly, The
District has elected to use the CalSTRS Cash Balance Plan (the ―CalSTRS Cash Balance Plan‖) for its
part-time certificated employees and social security for its part-time classified employees. The amounts of
the District‘s contributions to CalSTRS, CalPERS and PARS are subject to, among other things, the
implementation of any layoff proposal with respect to the District‘s workforce and modifications to or
approvals of collective bargaining agreements. For additional information regarding the District‘s pension
and retiree health care programs and costs, see the District‘s financial statements for Fiscal Year 2011-12
contained in Appendix B - ― Report on Audited Basic Financial Statements for the Fiscal Year Ended
June 30, 2012‖ attached hereto.
Both CalPERS and CalSTRS are operated on a statewide basis and, based on available
information, both have substantial unfunded liabilities. Additional funding of CalSTRS by the State and
the inclusion of adjustments to such State contributions based on consumer price changes are required
under State law. The amounts of the pension/award benefit obligation with respect to CalPERS or
actuarially accrued liability with respect CalPERS and CalSTRS will vary from time to time depending
upon actuarial assumptions, rates of return on investments, salary scales, and levels of contribution. The
District is unable to predict what the amount of these liabilities will be in the future or the amount of the
contributions which the District may be required to make to CalPERS, CalSTRS, PARS or the CalSTRS
Cash Balance Plan. Accordingly, there can be no assurances that the District‘s required contributions to
CalPERS, CalSTRS, PARS or the CalSTRS Cash Balance Plan will not significantly increase in the
future.
The information set forth below regarding CalSTRS, CalPERS, and PARS has been obtained
from publicly available sources and has not been independently verified by the District or the Financial
Advisor, not guaranteed as to the accuracy or completeness of the information and is not to be construed
as a representation by the District or the Financial Advisor. Furthermore, the summary data below should
A-8
236435.7 037276 OS
not be read as current or definitive, as recent gains or losses on investments made by the retirement
systems generally may have changed the unfunded actuarial accrued liabilities stated below.
California State Teachers’ Retirement System. CalSTRS is a defined benefit plan that covers all
full-time certificated District employees and some classified District employees who are District
employees employed in a position that does not require a teaching credential from the State. Employees
and the District contribute 8.00% and 8.25%, respectively, of gross salary expenditures to CalSTRS.
Unlike typical defined benefit programs such as those administered by CalPERS, neither the
CalSTRS employer nor the State contribution rate varies annually to make up funding shortfalls or assess
credits for actuarial surpluses. The State pays a surcharge when the teacher and school district
contributions are not sufficient to fully fund the basic defined benefit pension within a 30-year period.
The basic defined benefit, which are referred to as ―pre-enhancement benefits‖, generally consists of 2%
of salary for each year of service at age 60 for covered employees who began employment on or before
December 31, 2012. The basic defined benefit for covered employees who began employment on or after
January 1, 2013 generally consists of 2% of salary for each year of service at age 62. See ―District
Financial Information – Retirement Systems - California Public Employees‘ Pension Reform Act of
2012‖ herein. However, these payments of surcharges by the State do not apply to the system-wide
unfunded liability resulting from benefit enhancements.
The following Table A-6 sets forth the District‘s regular annual contributions to CalSTRS for
Fiscal Years 2007-08 through 2011-12, the projected regular annual contribution for Fiscal Year 2012-13
and the contributions as a percentage of the District‘s Total Governmental Funds expenditures for Fiscal
Years 2007-08 through 2012-13. The District has always paid all required CalSTRS annual contributions.
TABLE A-6
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Annual Regular CalSTRS Contributions
Fiscal Years 2007-08 through 2012-13
Fiscal Year
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13(2)
(1)
(2)
District
Contributions(1)
$16,555,135
16,837,593
15,594,117
15,827,894
15,925,376
15,198,324
District Contribution
as Percentage of Total
Governmental Funds Expenditures
2.01%
1.72
1.49
1.46
1.38
Excludes employee contributions paid by the District.
Projected.
Sources: Los Angeles Community College District Report on Audited Basic Financial Statements for
Fiscal Years 2007-08 through 2011-12 and Office of the Chief Financial Officer/Treasurer for
Fiscal Year 2012-13.
In September 2003, the District implemented the CalSTRS Cash Balance Plan and offered it to its
adjunct faculty who are not mandatory members of the CalSTRS Defined Benefit Program. The following
Table A-7 sets forth the District‘s regular annual contributions to the Cash Balance CalSTRS plan for
Fiscal Years 2007-08 through 2011-12, the projected regular annual contribution for Fiscal Year 2012-13
and the contributions as a percentage of the District‘s Total Governmental Funds expenditures for Fiscal
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Years 2007-08 through 2012-13. The District has always paid all required Cash Balance CalSTRS annual
contributions.
TABLE A-7
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Cash Balance CalSTRS Contributions
Fiscal Years 2007-08 through 2012-13
Fiscal Year
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13(2)
(1)
(2)
District
Contributions(1)
$1,841,446
1,645,243
1,248,329
1,388,971
1,354,573
1,289,547
District Contribution
as Percentage of Total
Governmental Funds Expenditures
0.22%
0.17
0.12
0.13
0.12
Excludes employee contributions paid by the District.
Projected.
Sources: Los Angeles Community College District Report on Audited Basic Financial Statements for Fiscal Years
2007-08 through 2011-12 and the Office of the Chief Financial Officer/Treasurer for Fiscal Year 2012-13.
The market value of the CalSTRS pension fund as of June 30, 2010 and June 30, 2011 was
$129.8 billion and $147.1 billion, respectively. The unfunded actuarial accrued liabilities and funded
status of the CalSTRS pension fund as of June 30 of Fiscal Years June 30, 2007 through June 30, 2011
are set forth in the following Table A-8. The individual funding progress for the District is not provided in
the actuarial report from CalSTRS.
TABLE A-8
Actuarial Value of State Teachers’ Retirement Fund Defined Benefit Program
Valuation Dates June 30, 2007 through June 30, 2011
($ in billions)
Valuation
Date
(June 30)
2007
2008
2009
2010
2011
(1)
Accrued
Liability
$167.129
177.734
185.683
196.315
208.405
Actuarial
Value of
Assets(1)
Unfunded
Liability
$146.419
155.215
145.142
140.291
143.930
$20.710
22.519
40.541
56.024
64.475
Funded Ratio
(Actuarial Value)
89.0%
87.0
78.0
71.5
69.1
Funded Ratio
(Fair Market Value)
88.0%
85.0
58.0
59.7
67.2
Actuarial Value of Assets does not include amounts allocable to the CalSTRS Supplemental Benefits Maintenance Account.
Sources: California State Teachers‘ Retirement System Defined Benefit Program Actuarial Valuations as of June 30, 2007
through June 30, 2011.
The actuarial assumptions set forth in the California State Teachers‘ Retirement System Defined
Benefit Program Actuarial Valuation as of June 30, 2011 (the ―2011 CalSTRS Actuarial Valuation‖) use
the ―Entry Age Normal Cost Method‖ and, among other things, an assumed 7.50% investment rate of
return, which reflects a decrease from the previously assumed investment rate of return of 7.75%, and
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236435.7 037276 OS
4.50% interest on accounts, which reflects a decrease from the previously assumed interest on accounts of
6.00%, projected 3.00% inflation and demographic assumptions relating to mortality rates, length of
service, rates of disability, rates of withdrawal, probability of refund, and merit salary increases. In
addition, the Teacher‘s Retirement Board changed the mortality assumption to reflect the fact that
members are living longer and lowered the assumption of wage growth to 3.75% from 4.00%. The
actuarial assumptions and methods used in the 2011 CalSTRS Actuarial Valuation were based on the
Experience Analysis July 1, 2006 – June 30, 2010 adopted by the Teacher‘s Retirement Board in
February 2012 (the ―CalSTRS Experience Analysis‖).Although the CalSTRS‘ Experience Analysis
projected that bringing CalSTRS to full funding would require a payroll contribution of 16.23% of
projected expenditures, the 2011 CalSTRS Actuarial Valuation projected that full funding would require
an increase in employer rates to 13% of projected expenditures.
In February 2013, the CalSTRS staff members presented a draft report (the ―2013 CalSTRS
Funding Report‖) to the Teachers‘ Retirement Board with respect to the unfunded liability of CalSTRS
defined benefit program (the ―Defined Benefit Program‖). The 2013 CalSTRS Funding Report indicated
that the liabilities of the Defined Benefit Program exceed its assets by approximately $64 billion as of
June 30, 2011. In addition, the 2013 CalSTRS Funding Report projected that, absent corrective action,
based on current economic and demographic assumptions, the Defined Benefit Program would deplete its
assets by 2046. Due to the adoption of the PEPRA (defined herein), the 2013 CalSTRS Funding Report
acknowledges that there would be a slight improvement in the funded status of the Defined Benefit
Program. However, the 2013 CalSTRS Funding Report cautions that PEPRA may only delay the
depletion of assets until 2047. See ―District Financial Information – Retirement Systems - California
Public Employees‘ Pension Reform Act of 2012‖ herein. The 2013 CalSTRS Funding Report notes that
the State, as the sponsor of the Defined Benefit Program, has a legal obligation to ensure that benefits
continue to be paid notwithstanding the depletion of assets.
In order to improve the funded status of the Defined Benefit Program, the 2013 CalSTRS
Funding Report proposes that the State Legislature modify the allocation of assets to maximize its return
on investments while considering volatility and risk, reduce benefits offered to plan members, and
increasing contributions. In addition, the 2013 CalSTRS Funding Report states that the State Legislature
must decide the financial objective that the State Legislature and Governor wish to achieve with respect to
the Defined Benefit Program and consider having sufficient funds on hand to generate assets to pay
liabilities, establish a funding target, increase contributions to avoid full depletion of assets, and increase
contributions to delay the full depletion of assets. Further, the 2013 CalSTRS Funding Report
recommends that the State Legislature determine the period of time in which it expects to achieve the
funding objective, determine when contribution rate increases begin, and establish the speed of
contribution rate increases.
California Public Employees’ Retirement System. CalPERS is a defined benefit plan that covers
classified personnel who work four or more hours per day. Benefit provisions are established by State
legislation in accordance with the Public Employees‘ Retirement Law. The contribution requirements of
the plan members are established by State law. The District‘s contributions for all members for the Fiscal
Years 2009-10 through 2011-12 were in accordance with the required contribution rates calculated by
CalPERS‘ actuary for each fiscal year. Accordingly, the District‘s annual pension costs for such fiscal
years were equal to the annual required contributions and its net pension obligation to CalPERS for Fiscal
Years 2009-10 through 2011-12 was $0.
Active plan members are required to contribute 7.0% of their monthly salary and the District is
required to contribute based on an actuarially determined rate. The actuarial methods and assumptions
used for determining the rates are based on those adopted by the Board of Administration of CalPERS.
The required employer contribution rates for Fiscal Year 2011-12 were 10.923% for miscellaneous and
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34.056% for safety members. The required employer contribution rates for Fiscal Year 2012-13 are
11.417% for miscellaneous and 33.233% for safety members.
The following Table A-9 sets forth the District‘s regular annual contributions, inclusive of
employee contributions paid by the District, to CalPERS for Fiscal Years 2006-07 through 2011-12, the
projected contribution for Fiscal Year 2012-13 and the contributions as a percentage of the District‘s
Total Governmental Funds expenditures for Fiscal Years 2007-08 through 2012-13. The District has
always paid all required CalPERS annual contributions.
TABLE A-9
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Annual Regular CalPERS Contributions
Fiscal Years 2007-08 through 2012-13(1)
Fiscal Year
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13(1)
(1)
District
Contributions(1)
District Contribution
as Percentage of Total
Governmental Funds Expenditures
$11,997,904
12,216,963
12,702,976
14,039,142
14,360,463
14,860,463
1.45%
1.25
1.21
1.29
1.24
Projected.
Sources: Los Angeles Community College District Report on Audited Basic Financial Statements for Fiscal Years
2007-08 through 2011-12 and the Office of the Chief Financial Officer/Treasurer for Fiscal Year 2012-13.
The market value of the CalPERS pension fund as of June 30, 2011 and June 30, 2012 was
$241.8 billion and $237.0 billion, respectively. The unfunded actuarial accrued liabilities and funded
status of the schools portion of the CalPERS pension fund as of June 30 of Fiscal Years June 30, 2007
through June 30, 2011 are set forth in the following Table A-10.
TABLE A-10
Actuarial Value of Schools Portion of CalPERS
Historical Funding Status
Valuation Dates June 30, 2007 through June 30, 2011
($ in millions)
Valuation
Date
(June 30)
Actuarial
Accrued
Liabilities
Market Value
of Assets
(MVA)
Funded
Status (MVA)
2007
2008
2009
2010
2011
$44,810.07
48,537.68
52,493.08
55,306.96
58,358.41
$48,292.93
45,547.90
34,146.45
38,435.17
45,900.99
107.8%
93.8
65.0
69.5
78.7
Unfunded
Liabilities/
(Surplus)
(MVA)
$(3,482.86)
2,989.78
18,346.63
16,871.79
12,457.42
Projected
Payroll for
Determining
Contributions
$10,249.83
11,137.70
11,109.76
11,283.40
10,540.43
Unfunded/
(Surplus) as a
% of Payroll
(34.0)%
26.8
165.1
149.5
118.2
Source: CalPERS State & Schools Actuarial Valuation as of June 30, 2011.
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The unfunded actuarial accrued liabilities and funded status of the District‘s Safety Plan, which is
a component of CalPERS pension fund as of June 30 of Fiscal Year 2010-11 is set forth in the following
Table A-11.
TABLE A-11
CalPERS Actuarial Value of the District’s Safety Plan(1)
Historical Funding Status
Valuation Date of June 30, 2011
Actuarial
Valuation
Date
(June 30)
2011
(1)
Accrued
Liability
(a)
$16,265,289
Actuarial Value
of Assets
(AVA)
(b)
$14,687,403
Funded Ratios
Market Value
of Assets
(MVA)
$13,008,186
Unfunded
Liability
(a) – (b)
$1,577,886
(AVA)
(b)/(a)
90.3%
Market
Value
80.0%
Annual
Covered
Payroll
$0
Data set forth in Table A-11 reflects information relating to the District‘s Safety Plan and does not include information relating
to the Miscellaneous Plan. Actuarial information relating to the historical funding status of the District‘s Miscellaneous Plan is
not available from CalPERS as a separate report.
Source: CalPERS Safety Plan of the Los Angeles Community College District (CalPERS ID 7874022252) Annual Valuation Report
as of June 30, 2011.
In December 2009, the CalPERS Board of Administration adopted changes to the asset
smoothing method in order to phase in over a three year period the impact of the negative 24% investment
loss experienced by CalPERS in Fiscal Year 2008-09. Under the new methodology, which is not
mandatory for employers, investment gains and losses will be tracked and the net unamortized gain or
loss will be amortized and paid off over a fixed and declining 30-year period instead of the current,
rolling 30-year amortization period, with the exception of gains and losses in Fiscal Years 2008-09,
2009-10, and 2010-11. For Fiscal Years 2008-09, 2009-10, and 2010-11, such fiscal year‘s gains or losses
will be isolated and amortized over fixed and declining 30-year periods. In addition, CalPERS has
adopted a policy such that if a plan‘s accrued liability exceeds the actuarial value of assets, the annual
contribution with respect to the total unfunded liability of such plan may not be less than the amount
produced by a 30-year amortization of the unfunded liability. Further, all CalPERS plans will be subject
to a minimum employer contribution rate equal to the employer normal cost plus a 30-year amortization
of surplus, if any.
The actuarial funding method used in the CalPERS State & Schools Actuarial Valuation as of
June 30, 2011 is the ―Individual Entry Age Normal Cost Method‖. The CalPERS State & Schools
Actuarial Valuation as of June 30, 2011 assumes, among other things, a 7.50% investment rate of return
(net of administrative expenses), projected 2.75% inflation and projected 2.00% or 3.00% post-retirement
benefit increases, and projected payroll growth of 3.00%.
The actuarial funding method used in the CalPERS Safety Plan of the Los Angeles Community
College District (CalPERS ID 7874022252) Annual Valuation Report as of June 30, 2011 is the
―Individual Entry Age Normal Cost Method‖. The CalPERS Safety Plan of the Los Angeles Community
College District (CalPERS ID 7874022252) Annual Valuation Report as of June 30, 2011 assumes,
among other things, a 7.50% investment rate of return (net of administrative expenses), projected salary
increases of 3.30% to 14.45% depending on age, service and type of employment, projected 2.75%
inflation, projected payroll growth of 3.00% and individual salary growth based upon a merit scale
varying by duration of employment coupled with an assumed annual inflation growth of 2.75% and an
annual production growth of 0%.
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Public Agency Retirement System. PARS is a multiple-employer retirement trust. This defined
contribution plan covers the District‘s employees who are not otherwise covered by CalPERS or
CalSTRS but who were employed by the District on or after January 1, 1992. Benefit provisions and other
requirements are established by District management based on agreements with various bargaining units.
The District‘s and the employee‘s contributions to PARS are 4.00% and 3.50%, respectively.
The following Table A-12 sets forth the District‘s annual contributions to PARS for Fiscal Years
2007-08 through 2011-12, the projected annual contribution to PARS for Fiscal Year 2012-13 and the
contributions as a percentage of the District‘s Total Governmental Funds expenditures for Fiscal Years
2007-08 through 2012-13. The District has always paid all required PARS annual contributions.
TABLE A-12
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Annual PARS Contributions
Fiscal Years 2007-08 through 2012-13
Fiscal Year
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13(3)
(1)
(2)
(3)
District
Contributions(1)(2)
$503,431
577,210
554,501
657,301
532,942
528,358
District Contribution
as Percentage of Total
Governmental Funds Expenditures
0.06%
0.06
0.05
0.06
0.05
Reflects payments to PARS for pension costs associated with the District‘s regular and specially funded programs, except
specially funded programs are not included in Fiscal Years 2007-08 and 2008-09.
Includes amounts related to prior years‘ PARS contributions.
Estimated.
Sources: Los Angeles Community College District Report on Audited Basic Financial Statements for Fiscal Years
2007-08 through 2011-12 and the Office of the Chief Financial Officer/Treasurer for Fiscal Year 2012-13.
California Public Employees’ Pension Reform Act of 2012. In September 2012, the Governor
approved Assembly Bill 340, the California Public Employees‘ Pension Reform Act of 2012 (―PEPRA‖).
Among other things, PEPRA establishes new retirement formulas for employees hired on or after
January 1, 2013 (―PEPRA Employees‖) and prohibits public employers from offering defined benefit
pension plans to PEPRA Employees that exceed the benefits provided thereunder. PEPRA increases the
retirement age for new State, school, city and local agency employees depending on job function and
limits the annual CalPERS and CalSTRS pension benefit payouts. PEPRA applies to all public employers
except the University of California, charter cities and charter counties. However, PEPRA is applicable to
those entities which contract with CalPERS.
PEPRA mandates equal sharing of normal costs between a contracting agency or school employer
and their employees and that employees pay at least 50% of normal costs and that employers not pay any
of the required employee contribution. However, PEPRA limits the contribution to an amount not in
excess of 8% of pay for local miscellaneous or school members, not more than 12% of pay for local
police officers, local firefighters, and county peace officers, and not more than 11% of pay for all local
safety members. PEPRA requires employers to complete a good faith bargaining process as required by
law prior to implementing changes regarding the contribution requirements. The changes to required
contribution requirements will go into effect on January 1, 2018 unless the employer and the affected
bargaining unit have reached an agreement in accordance with PEPRA.
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In addition, PEPRA amends existing laws to redefine final compensation for purposes of pension
benefits for PEPRA Employees. Further, PEPRA permits certain public employers who have offered a
lower defined benefit retirement plan before January 1, 2013 to continue to offer such plan to PEPRA
Employees. However, if a public employer adopts a new defined benefit plan on or after January 1, 2013,
such plan will be subject to PEPRA requirements unless, among other things, its retirement system‘s chief
actuary and retirement board certify that the new plan is not riskier or costlier to the public employer than
the defined benefit formula required under PEPRA. The District is currently reviewing PEPRA. However,
the impact of PEPRA upon the District is currently unknown and the District cannot predict the extent to
which PEPRA will impact its contributions to CalPERS, CalSTRS, PARS and the CalSTRS Cash
Balance Plan.
Other Postemployment Benefits
In addition to employee health care costs, the District provides postemployment health care
benefits in accordance with collective bargaining agreements. As of June 30, 2012, there were
approximately 4,000 active-full time employees who were eligible for postretirement benefits and
approximately 3,300 retirees and surviving spouses who receive postretirement healthcare benefits. The
District currently funds these benefits on a pay-as-you-go basis, paying an amount in each Fiscal Year
equal to the benefits distributed or disbursed in that Fiscal Year. The following Table A-13 sets forth the
District‘s funding of other postemployment benefits (―OPEB‖) for Fiscal Years 2007-08 through
2011-12, the projected contribution for Fiscal Year 2012-13 and the contributions as a percentage of the
District‘s Total Governmental Funds expenditures for Fiscal Years 2007-08 through 2012-13.
TABLE A-13
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Expenditures for Other Postemployment Benefits
Fiscal Years 2007-08 through 2012-13
(1)
Fiscal Year
Amount
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13(1)
$38,082,712
27,156,363
33,167,682
33,804,289
30,872,349
30,900,000
Expenditure as Percentage of Total
Governmental Funds Expenditures
4.61%
2.77
3.16
3.11
2.67
Estimated.
Source: Los Angeles Community College District Report on Audited Basic Financial Statements for Fiscal Years
2007-08 through 2011-12 and the District for Fiscal Year 2012-13.
In April 2008, the District established an irrevocable trust (the ―OPEB Trust‖) with CalPERS to
prefund a portion of retiree health benefit costs. In accordance therewith, the District will fund the OPEB
Trust with annual contributions of approximately 1.92% of the total full-time salary expenditures within
the District. In addition, the District will direct an amount equivalent to the federal Medicare Part D
subsidy returned to the District to the OPEB Trust. The District deposited approximately $10.69 million
and $7.17 million into the OPEB Trust during Fiscal Years 2010-11 and 2011-12, respectively. The Fiscal
Year 2012-13 District Final Adopted Budget included funding of $30.90 million for OPEB, which
amount is $5.30 million greater than the pay-as-you-go contribution for OPEB for Fiscal Year 2012-13.
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236435.7 037276 OS
The District‘s OPEB consists of post-employment benefits of health, prescription drug, dental,
vision and life insurance coverage for retirees; long-term care coverage, life insurance and death benefits
that are not offered as part of a pension plan and long-term disability insurance for employees. The most
recent actuarial report prepared for the District is its ―Los Angeles Community College District
Postretirement Health Benefits Actuarial Valuation Study,‖ dated August 4, 2012 with respect to the
July 1, 2011 valuation date (the ―2011 Postemployment Valuation‖).
The principal actuarial assumptions used in the 2011 Postemployment Valuation include, among
others, (i) entry-age normal cost method; (ii) a blended discount rate of 5.81% based on the assumed
long-term return on plan assets and employer assets; (iii) an investment rate of return of 4.00% on general
District assets and a rate of return of 7.61% based on the CERBT Asset Allocation Strategy 1; (iv) payroll
increases of 3.25%; (v) a 3.25% wage inflation assumption; (vi) annual medical and dental/vision trend
rate of 9.00% and 4.00%, respectively, initially reduced by decrements to an ultimate rate of 5.00% and
4.00%, respectively after eight years; (vii) rates of mortality, turnover, retirement age, disability based on
actuarially determined tables based on the most recent CalSTRS valuation and the 1997-2007 CalPERS
Experience Study and (viii) monthly medical premiums based on CalPERS‘ 2012 ―Los Angeles Regional
Health Premiums‖ report.
The 2011 Postemployment Valuation sets forth the District‘s actuarial valuation of
postemployment medical benefits as of July 1, 2011 for its employees and retirees. The 2011
Postemployment Valuation sets forth the liabilities of the postemployment benefit plan based upon
GASB Statement Nos. 43 and 45. The 2011 Postemployment Valuation reports that, as of July 1, 2011,
the unfunded actuarial accrued liability (―UAAL‖) of the District‘s OPEB plan is $559.2 million.
Pursuant to Statement No. 45, OPEB expense in an amount equal to annual OPEB cost is recognized in
government-wide financial statements on an accrual basis. Net OPEB obligations, if any, including
amounts associated with under- or over-contributions from governmental funds, are to be displayed as
liabilities (or assets) in government-wide financial statements.
The 2011 Postemployment Valuation recommended an annual required contribution (―ARC‖) of
$41,511,000 for the Fiscal Year ended June 30, 2012, or 15.3% of the District‘s payroll at the June 30,
2009 valuation date, for Fiscal Year 2009-10. As of July 1, 2011, the ―pay-as-you-go‖ cost of providing
postemployment benefits was projected to be $25,901,000. Accordingly, the District‘s net OPEB
obligation (―Net OPEB Obligation‖) as of July 1, 2011 was expected to be greater than the Net OPEB
Obligation as of July 1, 2010. Net OPEB Obligation is the cumulative difference between the annual
pension cost (the ―Annual OPEB Cost‖) to the District of the postemployment benefit plan and the actual
contribution in a particular year.
The following Table A 14 below reflects the District‘s ARC, annual OPEB cost, the percentage
of annual OPEB cost contributed to the plan and the net OPEB obligation for Fiscal Years 2007-08
through 2011-12.
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236435.7 037276 OS
TABLE A-14
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Annual Required Contributions, OPEB Costs and Net OPEB Obligations
Fiscal Years 2007-08 through 2011-12
Fiscal Year
Annual Required
Contribution
2007-08
2008-09
2009-10
2010-11
2011-12
$ 41,228,000
42,051,000
39,658,000
40,643,000
41,511,000
(1)
Annual OPEB
Cost
Contributed
Annual
OPEB Cost
$ 41,228,000
42,051,000
39,852,000
40,908,000
41,843,000
Percentage Annual
OPEB Cost
Contributed
Net OPEB
Obligation
92.37%
64.58
83.23
82.63
73.78
$ 3,145,288
18,039,925
24,724,243
31,827,954
42,798,605
$38,082,712
27,156,363
33,167,682
33,804,289
30,872,349
Annual OPEB Cost is equal to (i) the ARC, (ii) one year‘s interest on the Net OPEB Obligation, and (iii) an adjustment to
the ARC to offset, approximately, the amount included in item (i) for amortization of the past contribution deficiencies.
Source: Los Angeles Community College District Report on Audited Basic Financial Statements for Fiscal Years 2007-08
through 2011-12.
Table A-15 below sets forth the schedules of funding progress of the District‘s actuarial accrued
liability (―AAL‖) with respect to OPEB as of June 30, 2009 and June 30, 2011. Funding progress is
measured by a comparison of assets which have been set aside by the District to pay OPEB benefits with
plan liabilities.
TABLE A-15
LOS ANGELES COMMUNITY COLLEGE DISTRICT
OPEB Schedule of Funding Progress
Fiscal Years ended June 30, 2009 and June 30, 2011
Valuation
Date
(June 30)
2009
2011
Actuarial
Value of Assets
$ 8,925,840
34,185,000
Actuarial
Accrued Liability
$545,041,000
593,388,000
Unfunded
Actuarial
Accrued Liability
Funded
Ratio
$536,115,160
559,203,000
1.64%
5.76
Covered
Payroll
$251,957,000
272,400,000
UAAL
as a % of
Covered
Payroll
212.78%
205.29
Sources: Los Angeles Community College District Report on Audited Basic Financial Statements for Fiscal Years 2008-09
through 2011-12.
The District expects to continue to review the Postemployment Valuation in conjunction with the
District‘s obligations under its postemployment benefit plan to determine, among other things, its course
of action with respect to postemployment benefit contributions and what other postemployment benefit
liability must be reported. In the opinion of District management, any further increase in the District‘s
UAAL as described in the Postemployment Valuation will not adversely affect the District‘s ability to pay
debt service on its general fund obligations or general obligation bonds, including the Bonds described in
the forepart of this Official Statement, the last of which are payable from voter-approved ad valorem
property taxes. For additional information regarding the District‘s OPEB, see Appendix B - ―Report on
Audited Basic Financial Statements for the Fiscal Year Ended June 30, 2012‖ attached hereto.
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236435.7 037276 OS
Insurance
The District maintains insurance or self-insurance in such amounts and with such retentions and
other terms providing coverages for property damage, fire and theft, general public liability and workers‘
compensation, as are adequate, customary and comparable with such insurance maintained by similarly
situated community college districts. In addition, based upon prior claims experience, the District
believes that the recorded liabilities for self-insured claims are adequate.
The following Table A-16 sets forth the Risk Management claims liability amount with respect to
workers‘ compensation in Fiscal Years 2007-08 through 2011-12.
TABLE A-16
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Risk Management Claims Liability – Workers’ Compensation
Fiscal Years 2007-08 through 2011-12
Fiscal Year
Beginning of FiscalYear Liability
Current-Year
Claims and Changes
in Estimates
Claim Payments
Balance at
Fiscal Year-End
2007-08
2008-09
2009-10
2010-11
2011-12
$ 37,079,470
38,539,000
41,181,000
40,951,852
31,950,000
$ 6,895,579
7,198,903
4,630,801
(5,027,164)
5,392,321
$ (5,436,049)
(4,556,903)
(4,859,949)
(3,974,688)
(5,334,321)
$ 38,539,000
41,181,000
40,951,852
31,950,000
32,008,000
Source: Los Angeles Community College District Audited Financial Statements for Fiscal Years 2007-08 through 2011-12.
The following Table A-17 sets forth the Risk Management claims liability amount with respect to
general liability in Fiscal Years 2007-08 through 2011-12.
TABLE A-17
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Risk Management Claims Liability – General Liability
Fiscal Years 2007-08 through 2011-12
Fiscal Year
2007-08
2008-09
2009-10
2010-11
2011-12
Beginning of FiscalYear Liability
$5,877,230
6,524,000
6,957,000
3,233,216
2,799,000
Current-Year
Claims and Changes
in Estimates
$ 1,580,082
1,906,638
(3,238,467)
2,313,002
2,354,943
Claim Payments
$ (933,312)
(1,473,638)
(485,317)
(2,747,218)
(2,040,943)
Balance at
Fiscal Year-End
$6,524,000
6,957,000
3,233,216
2,799,000
3,113,000
Source: Los Angeles Community College District Audited Financial Statements for Fiscal Years 2007-08 through 2011-12
District Debt
Debt Issuance Policy. The District‘s debt issuance policy (the ―Debt Issuance Policy‖)
establishes formal guidelines for the issuance and management of various types of debt instruments and
other financial obligations. The Debt Issuance Policy establishes principal goals and objectives with
respect to proposed debt issuances by the District. The current Debt Issuance Policy was approved by the
District Board on October 19, 2011 and sets forth a manner of borrowing, by order of priority, by which
A-18
236435.7 037276 OS
the District Board elects how the District shall borrow for stated capital purposes, in each case, with a
preference first for tax-exempt debt and second for taxable debt as follows: (a) general obligation bonds,
(b) bond anticipation notes, (c) vendor leases, and (d) certificates of participation.
Tax and revenue anticipation notes (―TRANs‖) may be issued in accordance with applicable
provisions of the State Government Code when necessary to address projected cash flow deficits of the
District, and the proceeds applied to such purposes. The proceeds of TRANs may not be applied to the
payment of any other tax-exempt obligation of the District. Certificates of participation may be issued by
or on behalf of the District only for those projects for which general obligation bonds are not available
under Proposition 39 (defined herein) or when a stated revenue source other than the General Fund of the
District, such as energy savings, may be used to pay lease payments. See ―California Constitutional and
Statutory Provisions relating to Ad Valorem Property Taxes, District Revenues and Appropriations Proposition 39‖. The proceeds of certificates of participation may be applied only to the acquisition of
equipment, furnishings, real property and improvements, with the maturity dates of such certificates of
participation not in excess of limits established under the State Education Code and the Internal Revenue
Code of 1986, as amended.
General Obligation Bonds. Pursuant to Sections 15106 and 17422 of the State Education Code,
the District‘s bonding capacity for general obligation bonds is 2.5% of taxable property valuation in the
District. The taxable property valuation in the District for Fiscal Year 2012-13 is $____ billion, which
results in a total current bonding capacity of approximately $___ billion. The District currently has
approximately $____ billion of unused bonding capacity for the issuance of additional general obligation
bonds. The District may issue additional general obligation bonds or general obligation refunding bonds
depending upon project needs and market conditions. See ―District Debt – Future Financings – General
Obligation Bonds‖ herein.
The District may not issue general obligation bonds without voter approval and may not issue
general obligation bonds in an amount greater than its bonding capacity. A $1.245 billion general
obligation bond authorization was approved by voters on April 10, 2001 (the ―Proposition A (2001)
Authorization‖), all of which has been issued by the District. A $980 million general obligation bond
authorization was approved by voters on May 20, 2003 (the ―Proposition AA (2003) Authorization‖), all
of which has been issued by the District. A $3.5 billion general obligation bond authorization was
approved by voters on November 4, 2008 (the ―Measure J (2008) Authorization‖). The District has issued
$1.625 billion aggregate principal amount of general obligation bonds under the Measure J (2008)
Authorization, leaving an amount remaining of approximately $1.875 billion authorized and unissued
under the Measure J (2008) Authorization.
The following Table A-18 sets forth the general obligation bonds and general obligation
refunding bonds issued by the District in connection with the Proposition A (2001) Authorization,
Proposition AA (2003) Authorization, and Measure J (2008) Authorization prior to the issuance of the
Bonds described in the forepart of this Official Statement.
A-19
236435.7 037276 OS
TABLE A-18
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Outstanding General Obligation Bonds
As of April 1, 2013
Bonds Issued
Election of 2003, 2003 Series B(1)
Election of 2001, 2004 Taxable Series A
Election of 2001, 2004 Taxable Series B
2001 Election Refunding Bonds, 2005 Series A
2003 Election, 2006 Series E
2001 Election, 2007 Series A
2001 Election, 2008 Series E-1
2003 Election, 2008 Series F-1
2003 Election, 2008 Taxable Series F-2
2008 Election, 2009 Series A
2008 Election, 2009 Taxable Series B
2008 Election Build America Bonds
(Direct Subsidy), 2010 Taxable Series E
2008 Election, 2010 Series C
2008 Election, 2010 Taxable Series D
TOTAL
(1)
Aggregate
Principal
Amount
Outstanding
Amount as of
April 1, 2013
Date of Issue
Date of
Maturity
$ 82,000,000
28,500,000
75,400,000
437,450,000
350,000,000
400,000,000
276,500,000
344,915,000
20,000,000
350,000,000
75,000,000
$ 66,000,000
11,985,000
74,440,000
417,695,000
275,300,000
382,160,000
271,710,000
344,915,000
550,000
350,000,000
75,000,000
July 29, 2003
Oct. 12, 2004
Oct. 12, 2004
March 22, 2005
Oct. 11, 2006
Oct. 23, 2007
Sept. 23, 2008
Sept. 23, 2008
Sept. 23, 2008
April 1, 2009
April 1, 2009
Aug. 1, 2027
Aug. 1, 2029
Aug. 1, 2029
June 1, 2026
Aug. 1, 2031
Aug. 1, 2032
Aug. 1, 2033
Aug. 1, 2033
Aug. 1, 2013
Aug. 1, 2033
Aug. 1, 2029
900,000,000
175,000,000
125,000,000
$3,639,765,000
900,000,000
175,000,000
125,000,000
July 22, 2010
Aug. 10, 2010
Aug. 10, 2010
Aug. 1, 2049
Aug. 1, 2039
Aug. 1, 2036
$3,469,755,000
The District expects to use a portion of the Refunding Bonds to currently refund all or a portion of the District‘s Election of 2003 General
Obligation Bonds, 2003 Series B. See ―Plan of Finance and Refunding‖ in the forepart of this Official Statement .
Source: Los Angeles Community College District.
Tax and Revenue Anticipation Notes. In March 2013, the District issued its 2012-13 Tax and
Revenue Anticipation Notes (the ―2012-13 TRAN‖) in the aggregate principal amount of $80,000,000.
The 2012-13 TRAN is scheduled to mature on _______, 2013.
Other Long-Term Obligations. The District has no certificates of participation presently
outstanding. See ―District Financial Information – District Fiscal Policies – Debt Issuance Policy‖ herein.
The following Table A-19 summarizes the District‘s other long-term obligations, which exclude
outstanding general obligation bonds, as of June 30, 2012.
A-20
236435.7 037276 OS
TABLE A-19
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Other Outstanding Long-Term Obligations
Balance as of
June 30, 2012
Workers‘ Compensation Claims
General Liability
Compensated Absences
Capital Lease Obligations
TOTAL
$ 32,008,000
3,113,000
15,585,046
996,803
$ 51,702,849
Source: Los Angeles Community College District Audited Financial Statements for Fiscal Year 2011-12.
Future Financings
General Obligation Bonds. Prior to the issuance of the Bonds, the District has issued
1.625 billion aggregate principal amount of general obligation bonds under the Measure J (2008)
Authorization, leaving an amount remaining of approximately $1.875 billion authorized and unissued
under the Measure J (2008) Authorization. Pursuant to Section 15106 of the Education Code, the
District‘s bonding capacity for general obligation bonds may not exceed 2.5% of taxable property
valuation in the District as shown by the last equalized assessment roll of the County. [The taxable
property valuation in the District for Fiscal Year 2012-13 is approximately $___ billion, which results in a
total bonding capacity of approximately $___ billion for the District, of which approximately $___ billion
is unused.] The District may issue additional general obligation bonds or general obligation refunding
bonds depending upon project needs and market conditions.
Certain Matters Regarding District Bond Program Administration
Challenges to Bond Program Expenditures. In August 2011, the California State Controller‘s
Office released an audit of the District‘s bond construction program (the ―State Controller Audit‖) for the
period of July 1, 2001 through December 31, 2010. The State Controller Audit reflected the State
Controller‘s review of District expenditures in connection with the Proposition A (2001) Authorization,
the Proposition AA (2003) Authorization and the Measure J (2008) Authorization.
The State Controller Audit stated, among other things, that the District used funds attributable to
the Measure J (2008) Authorization for projects and activities that were not on the approved project list
and that the District did not have sufficient oversight with respect to spending practices. The State
Controller Audit included a list of expenditures in the aggregate amount of approximately $43 million
which the State Controller considered to be questionable. In addition, the State Controller Audit listed
canceled projects for which the District received little or no value in the aggregate amount of
approximately $28 million. In addition, the State Controller stated that the District incurred more than
$39.2 million in expenditures for operating costs that are not allowable under Proposition 39.
The State Controller Audit stated that the District‘s citizens‘ oversight committee failed to issue
its annual report regarding the District‘s bond program for seven years and did not actively review and
report on the expenditures or allegations of waste or improper expenditures. In addition, the State
Controller Audit questioned the District‘s compliance with its internal procurement rules and guidelines
in connection with its selection of its Inspector General.
A-21
236435.7 037276 OS
The State Controller Audit noted that the District had spent approximately $86 million in public
funds to acquire and renovate the former Van de Kamp bakery property (the ―Van de Kamp Site‖).
Subsequent to such expenditure, Los Angeles City College determined that it was unable to use the Van
de Kamp Site as a satellite campus due to insufficient operating funds. Los Angeles City College returned
the Van de Kamp Site to the District, and the District leased the Van de Kamp site to a charter school.
However, due to pending litigation relating to the Van de Kamp Site, the State Controller was unable to
render an opinion on the District‘s actions in connection therewith.
The State Controller stated that the District was unable to sufficiently substantiate expenditures in
connection with each bond authorization with a District-wide facilities master plan list that includes the
associated project cost estimates despite having spent approximately $2.75 billion for its bond
construction program. Accordingly, the State Controller recommended that the District adopt appropriate
control measures to oversee and monitor the spending practices of its member colleges.
Response to Audit by the State Controller. The District Board, Chancellor, and District staff,
including the District‘s controller (the ―District Controller‖), the Building Program Manager (the
―Program Manager‖), and College Project Managers, have reviewed the State Controller Audit. The
District disagreed with a portion of the State Controller Audit and responded to the State Controller
challenging certain of the findings. However, in August 2011, the District Board held a special meeting
with respect to the State Controller Audit and to consider changes to improve oversight of the District‘s
bond program. The Chancellor formed an Independent Review Panel (the ―Independent Review Panel‖)
which consists of local construction industry and business community experts.
The Independent Review Panel was charged by the District to consider, among other things,
whether ethical regulations are sufficient to prevent the exercise of inappropriate influence, cost
containment, the planning process for bond construction projects, the communications and internal
education systems with respect to understanding of policies and procedures, the effectiveness of the
organizational structure and procedures of the District and its member colleges, and the effectiveness of
construction management, inspection, commissioning and warranty enforcement on the compliance and
performance of construction contractors. In response to the State Controller‘s findings of questionable
Proposition 39 expenditures, the Independent Review Panel has directed the District to implement more
stringent policies and procedures regarding the expenditure of such funds to assist the District Board in
meeting this obligation.
In addition, the District imposed a moratorium on new projects from the District Board. During
the course of the moratorium, the District amended budget policies to address concerns with respect to
maintenance and operation costs and administration staffing, identified budget shortfalls for remaining
college projects, developed a new facility database, and established a deferred maintenance fund. The
District Board has approved a reserve in the amount of $160 million for the District‘s bond program to
address risks related to contractor claims, defaults, unforeseen conditions and other unbudgeted costs.
The District Controller and Program Manager have developed a monthly reconciliation process of
recording obligations and expenditures related to Proposition 39 bond funds in each of their financial
systems. Changes to the management and oversight of the District‘s bond program include, among other
things, fully staffing the citizens‘ bond oversight committee, adding new representatives from the
construction industry to the citizens‘ bond oversight committee, and hiring a new Executive Director of
Facilities. The District presently believes that its bond construction program is operating within industry
standards and that expenditures in connection with the Proposition A (2001) Authorization, the
Proposition AA (2003) Authorization and the Measure J (2008) Authorization have been spent in a
reasonable manner.
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236435.7 037276 OS
Overlapping Debt Obligations
Set forth on Table A-20 on the following page is the Debt Report dated February 14, 2013
prepared by California Municipal Statistics Inc., which provides information with respect to direct and
overlapping debt within the District as of May 1, 2013 (the ―Debt Report‖). The Debt Report is included
for general information purposes only and does not include debt issued subsequent to February14, 2013,
including the Bonds described in the forepart to this Official Statement. The District has not reviewed the
Debt Report for completeness or accuracy and makes no representations in connection therewith. The
Debt Report generally includes long-term obligations sold in the public credit markets by public agencies
whose boundaries overlap the boundaries of the District. Such long-term obligations generally are not
payable from revenues of the District (except as indicated) nor are they necessarily obligations secured by
land within the District. In many cases, long-term obligations issued by a public agency are payable only
from the general fund or other revenues of such public agency.
The first column in Table A-20 names each public agency which has outstanding debt as of the
date of the report and whose territory overlaps the District in whole or in part. Column 2 shows the
percentage of each overlapping agency‘s assessed value located within the boundaries of the District.
This percentage, multiplied by the total outstanding debt of each overlapping agency (which is not shown
in Table A-20) produces the amount shown in column 3, which is the apportionment of each overlapping
agency‘s outstanding debt to taxable property in the District.
A-23
236435.7 037276 OS
TABLE A-20
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Schedule of Direct and Overlapping Bonded Debt
As of May 1, 2013
2012-13 Assessed Valuation: $596,121,284,166
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
Metropolitan Water District
Los Angeles County Flood Control District
Los Angeles Community College District
Beverly Hills Unified School District
Los Angeles Unified School District
Other Unified School Districts
High School and School Districts
City of Los Angeles
Other Cities
Palos Verdes Library District
City of Los Angeles Special Tax and Landscaping and Lighting Benefit Assessment Districts
Los Angeles County Regional Park and Open Space Assessment District
Los Angeles County Metropolitan Transit Agency Benefit Assessment District Nos. A1 and A2
Other 1915 Act Bonds
Community Facilities Districts
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
OVERLAPPING GENERAL FUND DEBT:
Los Angeles County General Fund Obligations
Los Angeles County Superintendent of Schools Certificates of Participation
Los Angeles Unified School District Certificates of Participation
Other School, High School and Unified School District Certificates of Participation
City of Beverly Hills General Fund Obligations
City of Los Angeles General Fund and Judgment Obligations
Other City General Fund Obligations
Los Angeles County Sanitation District General Fund Obligations
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT
Less: Los Angeles County General Fund Obligations supported by Landfill Revenues
Los Angeles Unified School District supported Qualified Zone Academy Bonds
City Supported Obligations
TOTAL NET OVERLAPPING GENERAL FUND DEBT
% Applicable
27.720%
55.905
100.000
100.000
100.000
Various
Various
99.980
Various
100.000
99.980
54.837
99.992-100.000
Various
100.000
Debt 5/1/13(1)
45,761,562
11,052,419
3,469,755,000(2)
173,083,674
10,945,695,000
684,236,200
38,496,151
1,103,064,343
48,200,028
4,580,000
40,321,934
78,345,622
21,944,072
4,550,000
180,315,000
$16,849,401,005
$
54.759%54.759% $ $953,538,907
953,538,907
54.759 54.759
5,682,472
5,682,472
100. 100.000
395,161,434
395,161,434
Various
Various
23,676,178
23,676,178
100. 100.000
205,410,000
205,410,000
99.980 99.980
1,857,278,470
1,857,278,470
Various
Various
357,233,055
357,233,055
Various
66,647,957
$ 3,864,628,473
9,143,748
5,052,000
106,434,414
$ 3,743,998,311
OVERLAPPING TAX INCREMENT DEBT
$ 1,582,717,798
GROSS COMBINED TOTAL DEBT
NET COMBINED TOTAL DEBT
$22,296,747,276(3)
$22,176,117,114
(1)
(2)
(3)
Excludes bonds sold subsequent to February 14, 2013.
Excludes the Bonds described in the forepart of this Official Statement
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Ratios to 2012-13 Assessed Valuation:
Direct Debt ($3,469,755,000) .............................................. 0.58%
Total Direct and Overlapping Tax and Assessment Debt ....... 2.83%
Gross Combined Total Debt ................................................... 3.74%
Net Combined Total Debt ...................................................... 3.72%
Ratios to Redevelopment Incremental Valuation ($58,851,393,691):
Total Overlapping Tax Increment Debt .................................. 2.69%
Source: California Municipal Statistics, Inc.
A-24
236435.7 037276 OS
Assessed Valuation of Property within the District
General. As required by State law, the District uses the services of the County for the assessment
and collection of taxes for District purposes. District taxes are collected at the same time and on the same
tax rolls as are the County, the City of Los Angeles and other local agency and special district taxes.
State law exempts $7,000 of the full cash value of an owner-occupied dwelling from property tax,
but this exemption does not result in any loss of revenue to local entities, including the District, because
an amount equivalent to the taxes which would have been payable on such exempt values is paid by the
State to the County for distribution to local agencies.
The County levies property taxes on behalf of taxing agencies in the County for each fiscal year
on taxable real and personal property which is situated in the County as of the preceding January 1.
However, upon a change in ownership of property or completion of new construction, State law permits
an accelerated recognition and taxation of increases or decreases in real property assessed valuation (the
―Supplemental Assessment‖). In such instances, the property is reassessed and a supplemental tax bill is
sent to the new owner based on the new value prorated for the balance of the tax year. Accordingly, each
school district is to receive allocations of revenue from such Supplemental Assessments and, in
accordance with various apportionment factors, to the County, the County superintendent of schools, each
community college district, each city and each special district within the County. Such allocations are to
be from amounts remaining after allocations to each redevelopment agency in the County in connection
with the 1% ad valorem property tax levy.
The 2012 Assessment Roll reflects a 2.24% increase in assessed value in the County. Under State
law, property is subject to annual reviews that are initiated by the related county‘s assessor relating to
decline-in-value in addition to Proposition 8 Reassessment reviews initiated by property owners. See
―California Constitutional and Statutory Provisions Relating to Ad Valorem Property Taxes, District
Revenues and Appropriations - Legislation Implementing Article XIII A‖ herein. In calendar year 2012,
the Officer of the Assessor of the County of Los Angeles received 40,000 assessment appeals, which was
an increase from the 36,4000 assessment appeals received in calendar year 2010. Decline-in-value
changes and other adjustments reduced the County‘s total assessed valuation by approximately
$10.46 billion for Fiscal Year 2011-12. The decline-in-value changes and other adjustments for 2011-12
for the County were offset by, among other things, increases of $12.8 billion attributable to properties
sold and transferred, $15.1 billion attributable to Proposition 13 inflation adjustments and $5.0 billion
attributable to new construction. Foreclosures in the County declined by approximately 5.4% in 2011
relative to 2010, from 31,700 to 30,000.
A-25
236435.7 037276 OS
The following Table A-21 sets forth the gross assessed valuation of taxable property within the
boundaries of the District in Fiscal Years 2003-04 through 2012-13.
TABLE A-21
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Historical Gross Assessed Valuation of Taxable Property(1)
Fiscal Years 2003-04 through 2012-13
Fiscal
Year
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
(1)
Local Secured
$ 357,678,671,379
386,483,327,672
424,936,577,595
471,972,620,397
516,208,218,055
555,610,535,448
557,759,195,544
548,205,520,648
555,658,956,311
569,714,265,390
Utilities
$ 489,141,868
481,361,281
438,294,291
384,707,093
137,563,856
154,917,952
121,931,009
198,235,911
253,242,089
251,521,914
Unsecured
$ 25,293,229,310
24,891,905,667
25,212,393,251
25,121,583,359
26,937,693,495
29,088,262,814
29,343,270,113
26,920,524,548
26,112,415,432
26,155,496,862
Percent
Change
Total
$ 383,461,042,557
411,856,594,620
450,587,265,137
497,478,910,849
543,283,475,406
584,853,716,214
587,224,396,666
575,324,281,107
582,024,613,832
596,121,284,166
7.102%
7.405
9.404
10.407
9.207
7.652
0.405
(2.027)
1.165
2.422
Full cash value.
Source: California Municipal Statistics, Inc.
A-26
236435.7 037276 OS
The following Table A-22 sets forth the assessed valuation by land use of property within the
District in Fiscal Year 2012-13.
TABLE A-22
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Assessed Valuation and Parcels by Land Use
Fiscal Year 2012-13
2012-13 Assessed Valuation (1)
Non-Residential:
Agricultural/Rural
Commercial/Office Building
Industrial
Recreational
Government/Social/Institutional
Miscellaneous
Subtotal Non-Residential
% of
Total
No. of
Parcels
% of
Total
$
104,297,540
87,244,347,928
99,747,964,539
1,766,963,606
5,391,524,757
443,966,677
$194,699,065,047
0.02%
15.31
17.51
0.31
0.95
0.08
34.17%
222
56,603
28,214
1,512
14,396
4,555
105,502
0.02%
4.97
2.48
0.13
1.26
0.40
9.27%
Residential:
Single Family Residence
Condominium/Townhouse
Mobile Home Related
2-4 Residential Units
5+ Residential Units/Apartments
Miscellaneous Residential
Subtotal Residential
$241,399,866,111
29,297,400,442
1,211,471,533
36,428,672,901
62,293,788,120
46,766,855
$370,677,965,962
42.37%
5.14
0.21
6.39
10.93
0.01
65.06%
692,527
131,998
1,563
99,815
45,237
620
971,760
60.85%
11.60
0.14
8.77
3.97
0.05
85.38%
Vacant Parcels
$
4,337,234,381
0.76%
60,890
5.35%
Total
$569,714,265,390
100.00%
1,138,152
100.00%
(1)
Local Secured Assessed Valuation for Fiscal Year 2012-13, excluding tax-exempt property.
Source: California Municipal Statistics, Inc.
A-27
236435.7 037276 OS
The following Table A-23 sets forth the distribution of single-family homes within the District
within various assessed valuation ranges in Fiscal Year 2012-13.
TABLE A-23
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Assessed Valuations of Single Family Homes Per Parcel
Fiscal Year 2012-13
Single-Family Residential
2012-13
Assessed Valuation
No. of
Parcels(1)
$0 - $49,999
$50,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000 - $249,999
$250,000 - $299,999
$300,000 - $349,999
$350,000 - $399,999
$400,000 - $449,999
$450,000 - $499,999
$500,000 - $549,999
$550,000 - $599,999
$600,000 - $649,999
$650,000 - $699,999
$700,000 - $749,999
$750,000 - $799,999
$800,000 - $849,999
$850,000 - $899,999
$900,000 - $949,999
$950,000 - $999,999
$1,000,000 and greater
Total
49,931
80,357
78,734
93,053
83,141
65,423
46,558
33,262
26,006
20,482
16,252
13,541
10,961
9,081
7,534
6,535
5,604
4,623
3,803
3,361
34,285
692,527
(1)
No. of
Parcels
2012-13
Assessed
Valuation
Average
Assessed
Valuation
Median
Assessed
Valuation
692,527
$241,399,866,111
$348,578
$225,203
% of Total
7.210%
11.603
11.369
13.437
12.005
9.447
6.723
4.803
3.755
2.958
2.347
1.955
1.583
1.311
1.088
0.944
0.809
0.668
0.549
0.485
4.951
100.000%
Cumulative
% of Total
7.210%
18.813
30.183
43.619
55.625
65.072
71.795
76.598
80.353
83.310
85.657
87.612
89.195
90.507
91.594
92.538
93.347
94.015
94.564
95.049
100.000
Total Valuation
$
1,678,153,572
5,888,618,042
9,920,703,452
16,294,379,804
18,626,889,768
17,914,994,182
15,055,855,064
12,440,251,420
11,027,787,542
9,710,471,584
8,511,553,453
7,775,541,790
6,840,028,175
6,124,672,099
5,455,872,726
5,059,895,631
4,620,033,988
4,044,249,040
3,515,356,617
3,275,120,527
67,619,437,635
$241,399,866,111
% of Total
0.695%
2.439
4.110
6.750
7.716
7.421
6.237
5.153
4.568
4.023
3.526
3.221
2.833
2.537
2.260
2.096
1.914
1.675
1.456
1.357
28.011
100.000%
Cumulative
% of Total
0.695%
3.135
7.244
13.994
21.710
29.132
35.369
40.522
45.090
49.113
52.639
55.860
58.693
61.230
63.490
65.586
67.500
69.176
70.632
71.989
100.000
Improved single-family residential parcels. Excludes condominiums and parcels with multiple family units such as
apartment buildings.
Source: California Municipal Statistics, Inc.
Tax Rates, Levies and Collections. Taxes are levied for each Fiscal Year on taxable real and
personal property as of the preceding January 1. Real property that changes ownership or is newly
constructed is revalued at the time the change occurs or the construction is completed. The current year
property tax rate is applied to the reassessed value, and the taxes are then adjusted by a proration factor
that reflects the portion of the remaining tax year for which taxes are due. The annual tax rate is based on
the amount necessary to pay all obligations payable from ad valorem property taxes and the assessed
value of taxable property in a given year. Economic and other factors beyond the District‘s control, such
as a general market decline in land values, reclassification of property to a class exempt from taxation,
whether by ownership or use (such as exemptions for property owned by State and local agencies and
property used for qualified educational, hospital, charitable or religious purposes), or the complete or
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partial destruction of taxable property caused by natural or manmade disaster such as earthquake, flood,
toxic dumping, etc., could cause a reduction in the assessed value of taxable property within the District
and necessitate a corresponding increase in the annual tax rate to be levied to pay the principal of and
interest on the District‘s outstanding general obligation bonds.
For assessment and collection purposes, property is classified as either ―secured‖ or ―unsecured‖
and is listed accordingly on separate parts of the assessment roll. The ―secured roll‖ is that part of the
assessment roll containing property (real or personal) the taxes on which are a lien sufficient, in the
opinion of the County Assessor, to secure payment of the taxes. Other property is listed on the
―unsecured roll.‖
Property taxes on the secured roll are due in two installments, on November 1 and February 1 of
each fiscal year, and become delinquent on December 10 and April 10, respectively. A penalty of 10%
attaches immediately to all delinquent payments. Properties on the secured roll with respect to which
taxes are delinquent become tax defaulted on or about June 30 of the fiscal year. Such property may
thereafter be redeemed by payment of a penalty of 1.5% per month to the time of redemption, plus costs
and a redemption fee. If taxes are unpaid for a period of five years or more, the property is deeded to the
State and then may be sold at public auction by the County Treasurer and Tax Collector.
Property taxes on the unsecured roll are due in one payment on the January 1 lien date and
become delinquent after August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured
taxes are unpaid at 5 p.m. on October 31, an additional penalty of 1.5% attaches to them on the first day
of each month until paid. The County has four ways of collecting delinquent unsecured personal property
taxes: (i) a civil action against the taxpayer; (ii) filing a judgment in the office of the County Clerk
specifying certain facts in order to obtain a lien on certain property of the taxpayer; (iii) filing a certificate
of delinquency for record in the County Recorder‘s office in order to obtain a lien on certain property of
the taxpayer; and (iv) seizure and sale of personal property, improvements or possessory interests
belonging or assessed to the assessee.
Proposition 13 and its implementing legislation impose the function of property tax allocation on
counties in the State and prescribe how levies on countywide property values are to be shared with local
taxing entities within each county. The limitations in Proposition 13, however, do not apply to
ad valorem property taxes or special assessments to pay the interest and redemption charges on
indebtedness, like the District‘s general obligation bonds, approved by the voters.
The County levies a 1% ad valorem property tax on behalf of all taxing agencies in the County.
The taxes collected are allocated on the basis of a formula established by State law enacted in 1979.
Under this formula, the County and all other taxing entities receive a base year allocation plus an
allocation on the basis of ―situs‖ growth in assessed value (new construction, change of ownership,
inflation) prorated among the jurisdictions that serve the tax rate areas within which the growth occurs.
Tax rate areas are specifically defined geographic areas, which were developed to permit the levying of
taxes for less than county-wide or less than city-wide special and school districts. In addition, the County
levies and collects additional approved property taxes and assessments on behalf of any taxing agency
within the County.
State Government Code Sections 29100 through 29107 provide the procedures that all counties
must follow for calculating tax rates. The secured tax levy within the District consists of the District‘s
share of the 1% general ad valorem property and unitary taxes assessed on a County-wide basis and
amounts levied that are in excess of the 1% general ad valorem property taxes. These tax receipts are part
of the District‘s operations. In addition, the secured tax levy also includes the amount for the District‘s
share of special voter-approved ad valorem property taxes assessed on a District-wide basis, such as the
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236435.7 037276 OS
ad valorem property taxes assessed for the District‘s general obligation bonds issued pursuant to the
Authorizations and any related general obligation refunding bonds. Ad valorem property taxes levied for
general obligation bonds are deposited with the County and may only be applied to pay the principal of,
redemption premium, if any, and interest on the District‘s general obligation bonds and general obligation
refunding bonds. The District does not receive such funds nor are they available to pay any of the
District‘s operating expenses. In addition, the total secured tax levy includes special assessments,
improvement bonds, supplemental taxes or other charges which have been assessed on property within
the District. Since State law allows homeowners‘ exemptions (described above) and certain business
exemptions from ad valorem property taxation, such exemptions are not included in the total secured tax
levy. See ―California Constitutional and Statutory Provisions Relating to Ad Valorem Property Taxes,
District Revenues and Appropriations‖ herein.
Further, State Education Code Section 15251 provides that all taxes levied with respect to general
obligation bonds when collected will be paid into the county treasury of the county whose superintendent
of schools has jurisdiction over the school district on behalf of which the tax was levied, to the credit of
the debt service fund (or interest and sinking fund) of the school district, and will be used for the payment
of the principal of and interest on the general obligation bonds and general obligation refunding bonds of
the school district and for no other purpose. Accordingly, the County may not borrow or spend such
amounts nor can the District receive such funds and use them for operating purposes.
The District is a member of the California Statewide Delinquent Tax Finance Authority
(―CSDTFA‖). CSDTFA is a joint exercise of powers agency formed for the purpose of purchasing
delinquent ad valorem property taxes of its members in accordance with Section 6516.6 of the State
Government Code. The District anticipates that CSDTFA will from time to time purchase delinquent ad
valorem tax receivables from the District. Any penalty charges collected with respect to such
delinquencies will be retained by CSDTFA.
The following Table A-24 sets forth typical tax rates for property within the District for fiscal
years 2008-09 through 2012-13.
TABLE A-24
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Typical Tax Rates
Typical Tax Rate per $100 of Assessed Valuation (TRA 0067)
Fiscal Year 2008-09 through 2012-13
2008-09
General
City of Los Angeles
Los Angeles Unified School District
Los Angeles Community College District
The Metropolitan Water District of Southern
California
Total
2009-10
2010-11
1.000000
.038895
.186954
.040310
2011-12
1.000000
.038666
.168187
.035296
2012-13
1.000000
.037694
.175606
.048750
.003700
1.269859
.003700
1.245849
.003500
1.265550
Source: California Municipal Statistics, Inc.
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The following Table A-25 sets forth the secured tax charges for the one percent (1%) General
Fund apportionment and the District‘s general obligation bond debt service levy on property in the
District from Fiscal Years 2003 through 2012 and the amount and percent delinquent as of June 30 of
each such fiscal year.
TABLE A-25
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Property Tax Levies and Collections
Fiscal Years ended June 30, 2003 to June 30, 2012
District’s General Obligation Bond
Debt Service Levy
1% General Fund Apportionment
Fiscal
Year
ended
June 30
Secured
Tax Charge(1)
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
$ 93,192,274
99,367,349
107,524,287
117,758,299
128,497,217
142,179,036
152,376,061
152,757,095
150,453,940
152,829,236
Amount
Delinquent
(June 30)
Percent
Delinquent
(June 30)
$ 2,443,131
2,180,522
2,528,799
3,038,347
4,851,301
7,110,704
7,143,110
5,243,495
3,611,340
3,189,748
2.61 %
2.19
2.35
2.58
3.78
5.00
4.69
3.43
2.40
2.09
Amount
Delinquent
(June 30)
Secured
Tax Charge(2)
$
127,254,380.75
218,447,254.60
194,595,699.64
Percent
Delinquent
(June 30)
$
%
4,738,871.34
5,638,927.82
4,377,116.45
3.72
2.58
2.25
(1)
1% General Fund apportionment. Excludes redevelopment agency impounds. Reflects county-wide delinquency rate.
District‘s general obligation bond debt service levy only.
Source: California Municipal Statistics, Inc.
(2)
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236435.7 037276 OS
Largest Taxpayers in the District. The following Table A-26 sets forth the 20 largest secured
taxpayers in the District for Fiscal Year 2012-13.
TABLE A-26
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Largest Local Secured Taxpayers
Fiscal Year 2012-13
Property Owner
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Douglas Emmett LLC
BP West Coast Products LLC
Universal Studios LLC
Conocophillips Co.
Anheuser Busch Inc.
Valero Energy Corporation
Tishman Speyer Archstone Smith
Tesoro Corporation
Plains Exploration and Production Co.
Warner Bros. Entertainment Inc.
BRE Properties Inc.
Donald T. Sterling
One Hundred Towers LLC
APM Terminals Pacific Ltd.
Paramount Pictures Corp.
Century City Mall LLC
Taubman Beverly Center
Duesenberg Investment Company
Casden Park La Brea ABC LLC
Catalina Media Development LLC
Primary Land Use
Office Building
Oil & Gas
Motion Picture Studio
Oil & Gas
Industrial
Oil & Gas
Apartments
Oil & Gas
Oil & Gas
Motion Picture Studio
Apartments
Apartments
Office Building
Port Operations
Motion Picture Studio
Shopping Center/Mall
Shopping Center/Mall
Office Building
Apartments
Motion Picture Studio
2012-13
Assessed
Valuation
% of
Total(1)
$ 2,491,939,928
2,098,583,287
1,404,382,792
1,230,042,455
864,041,391
832,970,864
816,521,462
806,449,796
686,851,311
662,837,760
614,433,906
612,892,531
594,497,578
539,644,654
513,058,461
468,776,965
467,938,509
454,415,784
447,005,219
431,991,468
$17,039,276,121
0.44%
0.37
0.25
0.22
0.15
0.15
0.14
0.14
0.12
0.12
0.11
0.11
0.10
0.09
0.09
0.08
0.08
0.08
0.08
0.08
2.99%
(1)
2012-13 Local Secured Assessed Valuation: $569,714,265,390
Source: California Municipal Statistics, Inc.
FUNDING OF COMMUNITY COLLEGE DISTRICTS IN CALIFORNIA
General
The operating income for community college districts consists primarily of two components,
State Aid funded from the State General Fund and a locally generated portion derived from the district‘s
share of the general 1% ad valorem property tax levy authorized by the State Constitution. In addition,
community college districts also receive revenues from enrollment fees and tuition fees, and categorical
aid funds received from the State and federal government under various programs, which are amounts
restricted to specific categories of use. Currently, the District receives approximately 58% of its General
Fund revenues from funds of or controlled by the State. As a result, decreases in State revenues, or in
State legislative appropriations made to fund education, may significantly affect District operations. See
―District Financial Information – District Budget‖, ―District Financial Information – Significant
Accounting Policies, System of Accounts and Audited Financial Statements‖ and ―Funding of
Community College Districts in California - State Budget‖ herein.
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236435.7 037276 OS
Payments made to K-12 public schools and public colleges and universities are priority payments
for State funds and are expected to be made prior to other State payment obligations. Although the State
Constitution protects the priority of payments to K-12 schools, colleges and universities, it does not
protect the timing of such payments and other obligations may be scheduled and have been scheduled to
be paid in advance of those dates on which payments to community college districts are scheduled to be
made.
A large percentage of a community college district‘s budgeted revenues comes from categorical
funds which are provided exclusively by the State and federal government. Categorical funds are to be
used for specific programs and typically cannot be used for any other purpose. The State lottery is
another source of funding for community college districts, providing approximately 2.86% of the
District‘s general fund revenues for the Fiscal Year ended June 30, 2012. Each community college
district receives the same amount of lottery funds per full-time equivalent student (―FTES‖) from the
State. Pursuant to State law, school and community college districts must use lottery funds for
instructional purposes and may not use such funds for land acquisition, construction or research and
development. In addition, a small part of a community college district‘s budget is from local sources
other than property taxes, such as interest income, donations and sales of property. Some community
college districts derive a significant portion of their operating funds from voter-approved parcel taxes.
Pursuant to Section 84750.5 and 84760.5 of the Education Code, the State funds community
college districts with an annual allocation based on the number of colleges and comprehensive centers
within the districts plus an amount calculated based upon the number of credit and noncredit full-time
equivalent students. Pursuant to the Education Code, the State must allocate an amount not less than
$4,367 per credit FTES plus a cost-of-living adjustments funded through the annual State Budget Act.
The State funds noncredit instruction at a uniform rate of $2,626 per FTES plus a cost-of-living
adjustment funded through the annual State Budget Act. In addition, the State funds career development
and college preparation at a rate of $3,092 per FTES.
In addition, the Education Code authorizes funding for community college districts for certain
career development courses, college preparation courses and classes for which no credit is given, and
which are offered in a sequence of courses which lead to, among other things, certificates of completion,
improved employability or job placement opportunities, certificates of competency in a recognized career
field, completion of an associate of arts degree, or for transfer to a 4-year degree program. Pursuant to the
Education Code, increases in career development and college preparation FTES will result in an increase
in revenues in the year of the increase and at the average rate per career development and college
preparation FTES, including any cost-of-living adjustment authorized by statute or by the annual State
Budget Act and decreases in career development and college preparation FTES will result in a revenue
reduction in the year following the decrease and at the average rate per career development and college
preparation FTES.
Except as otherwise provided by State law, categorical programs providing direct services to
students including, among other things, extended opportunity programs and services, and disabled
students programs and services will be funded separately through the annual State Budget Act and are not
assumed under the budget formula referenced above.
State Budget
General. The largest percentage of community college district revenues comes from the State in
accordance with the State‘s formula for funding community college districts and the Proposition 98
minimum guarantee with respect to education appropriations. See ―Funding of Community College
Districts in California – Fiscal Year 2012-13 State Budget Act‖, ―Funding of Community College
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236435.7 037276 OS
Districts in California – Fiscal Year 2013-14 Proposed State Budget‖, and ―California Constitutional and
Statutory Provisions relating to Ad Valorem Property Taxes, District Revenues and Appropriations Proposition 98‖ herein. The following description of the State‘s budget has been obtained from publicly
available information which the District believes to be reliable; however, none of the District, its counsel
(including Disclosure Counsel) or the Financial Advisor guarantees the accuracy or completeness of this
information and have not independently verified such information. Additional information regarding
State budgets is available at various State-maintained websites, including www.dof.ca.gov. These
websites are not incorporated herein by reference and none of the District, its counsel (including
Disclosure Counsel), or the Financial Advisor make any representation as to the accuracy of the
information provided therein.
The State Budget Process. The State‘s fiscal year begins on July 1 and ends on June 30.
According to the State Constitution, the Governor of the State (the ―Governor‖) is required to propose a
budget for the next fiscal year (the ―Governor‘s Budget‖) to the State Legislature no later than January 10
of each year. State law requires the Governor to update the Governor‘s Budget projections and budgetary
proposals by May 14 of each year (the ―May Revision‖). Proposition 25, which was adopted by voters in
the State at an election held on November 2, 2010, amended the State Constitution such that a final
budget must be adopted by a simple majority vote of each house of the State Legislature by no later than
June 15 and the Governor must sign the adopted budget by no later than June 30. The budget becomes
law upon the signature of the Governor (the ―Budget Act‖).
Under State law, the annual proposed Governor‘s Budget cannot provide for projected
expenditures in excess of projected revenues and balances available from prior fiscal years. Following
the submission of the Governor‘s Budget, the State Legislature takes up the proposal. Under the State
Constitution, money may be drawn from the State Treasury only through an appropriation made by law.
The primary source of the annual expenditure authorizations is the Budget Act, as approved by the State
Legislature and signed by the Governor. The Governor may reduce or eliminate specific line items in the
Budget Act or any other appropriations bill without vetoing the entire bill. Such individual line-item
vetoes are subject to override by a two-thirds majority vote of each House of the State Legislature.
Appropriations also may be included in legislation other than the Budget Act. Bills containing
appropriations (except for K-14 education) must be approved by a two-thirds majority vote in each House
of the State Legislature and be signed by the Governor. Bills containing K-14 education appropriations
require only a simple majority vote. Continuing appropriations, available without regard to fiscal year,
may also be provided by statute or the State Constitution. Funds necessary to meet an appropriation need
not be in the State Treasury at the time such appropriation is enacted; revenues may be appropriated in
anticipation of their receipt. However, delays in the adoption of a final State budget in any fiscal year
may affect payments of State funds during such budget impasse. See ―Funding of Community College
Districts in California - State Funding of Schools without a State Budget‖ herein for a description of
payments of appropriations during a budget impasse.
Fiscal Year 2012-13 State Budget Act. On June 28, 2012, the Governor signed the State Budget
Act for Fiscal Year 2012-13 (the ―2012-13 State Budget Act‖) which approved legislation to eliminate a
previously projected deficit of $16.6 billion through June 30, 2013. The 2012-13 State Budget Act
estimated revenues and expenditures assuming California Proposition 30 (―Proposition 30‖) was
approved by voters in the State, among other assumptions. In the event Proposition 30 were not approved,
the 2012-13 State Budget proposed $5.95 billion in trigger cuts that would go into effect on January 1,
2013.
Proposition 30 was approved by voters in the State on November 6, 2012. The 2012-13 State
Budget Act further projected that under current projections and assuming voter approval of the
Proposition 30, the State‘s budget for Fiscal Year 2012-13 will be balanced in an ongoing manner. Based
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236435.7 037276 OS
on the assumptions and projections contained therein, the 2012-13 State Budget Act estimated Fiscal Year
2012-13 revenues and transfers of $95.89 billion, total expenditures of $91.34 billion and a year-end
surplus of $1.67 billion (net of the negative $2.88 billion prior-year State General Fund balance) in the
State General Fund. The 2012-13 State Budget Act allocates $719 million of the projected surplus to the
reserve for the liquidation of encumbrances and $948 million of the projected surplus to the special fund
for economic uncertainties.
Features of the 2012-13 State Budget Act affecting community college districts in general
include, but are not limited to, the following:
1.
The 2012-13 State Budget Act proposed to fully fund the Proposition 98 at $53.6 billion,
of which $36.8 billion would come from the State General Fund. The 2012-13 State Budget Act
proposed Proposition 98 expenditures assumed passage of Proposition 30, which would increase
Proposition 98 funding by $2.9 billion in Fiscal Year 2012-13 and increase Proposition 98 funding by
more than $17 billion over a four-year period.
2.
The 2012-13 State Budget Act includes an increase of $159.9 million of Proposition 98
General Fund in Fiscal Year 2012-13 for apportionment funding that is expected to retire apportionment
deferrals. In addition, the State Budget Act assumes that $50 million will be available for general
apportionment growth.
3.
The 2012-13 State Budget Act includes $33.8 million of Proposition 98 General Fund for
Fiscal Year 2012-13 for community college mandates which will be funded through a voluntary block
grant. Participating community colleges would receive approximately $28 per student. Community
colleges that choose not to participate in the block grant program would retain their right to submit claims
for reimbursement which would remain subject to audit by the State Controller.
4.
The 2012-13 State Budget Act increases community college fees for certain students who
are not California residents to twice the amount of fees required of California residents through June 30,
2013 and to three times amount of fees required of California resident fees beginning July 1, 2013. As of
the date of the 2012-13 State Budget Act, community college fees for California residents were $46 per
unit.
5.
In California Redevelopment Association et al. v. Matosantos et al., the California
Supreme Court upheld Assembly Bill 26 of the 2010-11 First Extraordinary Session, which led to the
dissolution of all redevelopment agencies within the State on February 1, 2012. The 2012-13 State Budget
Act continued the State‘s framework pursuant to which assets previously held by redevelopment agencies
would be used to cities, counties and special districts to fund core public services and to school districts to
offset State General Fund costs. The 2012-13 State Budget Act projected that there would be
approximately $1.5 billion in savings to the State General Fund as a result of such transfers. Further, the
projected increase in local revenue would reduce Proposition 98 expenditures by the same amount. The
2012-13 State Budget includes $451.1 million, including approximately $211.5 million from the
liquidation of assets, in Fiscal Year 2012-13 to reflect revenue from the elimination of redevelopment
agencies. In the event that a portion of the projected revenues is not realized for community colleges, the
State expects to supplement funding for community colleges with Proposition 98 General Fund.
Fiscal Year 2013-14 Proposed State Budget. On January 10, 2013, Governor Edmund G. Brown
released his 2013-14 Proposed Budget (the ―Fiscal Year 2013-14 Proposed State Budget‖), which
projects Fiscal Year 2012-13 revenues and transfers of $95.39 billion, total expenditures of $92.99 billion
and a year-end surplus of $785 million (net of the $1.62 billion deficit from Fiscal Year 2011-12), of
which $618 million would be reserved for the liquidation of encumbrances and $167 million would be
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236435.7 037276 OS
deposited in a reserve for economic uncertainties. The Fiscal Year 2013-14 Proposed State Budget
projects Fiscal Year 2013-14 revenues and transfers of $98.50 billion, total expenditures of $97.65 billion
and a year-end surplus of $1.64 billion (inclusive of the projected $785 million State General Fund
balance for Fiscal Year 2012-13), of which $618 million would be reserved for the liquidation of
encumbrances and $1.02 billion would be deposited in a reserve for economic uncertainties. The Fiscal
Year 2013-14 Proposed State Budget states that the State‘s budget remains balanced by a small margin
and cautions that the occurrence of certain events, including among other things, shifts of costs to the
State from the federal government, the uncertainty of the economic recovery in the State and the country,
actions taken by the federal government and the judicial system and rising health care costs pose
significant risks to the State‘s budget projections.
Certain of the features of the Fiscal Year 2013-14 Proposed State Budget which could affect
community college districts in the State include the following:
1.
The Fiscal Year 2013-14 Proposed State Budget proposes Proposition 98 funding of
$56.2 billion in Fiscal Year 2013-14, which represents an increase of approximately $2.7 billion from the
revised funding levels for Fiscal Year 2012-13 and includes amounts from the Education Protection
Account established pursuant to Proposition 30. The Fiscal Year 2013-14 Proposed State Budget
estimates that revenues attributable to Proposition 30 will provide an increase of approximately
$526 million to the Proposition 98 minimum guarantee for Fiscal Year 2013-14.
2.
The 2012-13 State Budget Act created an alternative method for school and community
college districts to receive compensation for performing State-mandated activities by creating a K-12
block grant.
3.
The Fiscal Year 2013-14 Proposed State Budget proposes to allocate $400.5 million of
funding from the California Clean Air Act of 2012 in Fiscal Year 2013-14 to a special fund for schools
and community college districts to support energy efficiency measures. Such measures would include,
among other things, construction or modernization of buildings, purchasing energy efficiency equipment
and installation of solar panels and geothermal pumps. The Governor has stated that the transfers to the
special fund will be considered an allocation towards the Proposition 98 minimum guarantee.
4.
The Fiscal Year 2013-14 Proposed State Budget proposes to reduce deferrals to
community college districts to $801 million as of June 30, 2013 and to $622 as of June 30, 2014.
5.
The Fiscal Year 2013-14 Proposed State Budget proposes to realign primary
responsibility for adult education from K-12 school districts to community colleges. In order to centralize
responsibility for adult education, the Fiscal Year 2013-14 Proposed State Budget proposes $315.7
million Proposition 98 General Fund to fund a comparable K‑12 adult education service delivery system
and to provide approximately $300 million to support the adult education program within the community
colleges. In addition the Fiscal Year 2013-14 Proposed State Budget proposes to shift $15.7 million for
the apprenticeship program to community college districts. The Fiscal Year 2013-14 Proposed State
Budget proposes to allocate funding within the adult education block grant based on the number of
students served by each district.
6.
The Fiscal Year 2013-14 Proposed State Budget proposes to modify State funding by
funding based on FTES enrollment at the end of a school term rather than funding based on FTES
enrollment at the 20% mark of the term. Accordingly, the State proposes to provide funding to
community college districts that is more closely aligned with completion of courses than the enrollment
of students at the beginning of a term, including students that withdraw from courses.
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236435.7 037276 OS
7.
The Fiscal Year 2013-14 Proposes State Budget proposes to modify the Board of
Governor‘s Fee Waiver program by requiring additional documentation and evidence of parental and
student income to determine fee waiver eligibility. The State estimates that approximately 60% of all
credit hour fees are waived annually by community colleges. In general, the State backfills the lost
community college revenues with State funds. If approved, the States estimates that this proposal would
generate savings for the State and community colleges which will allow community colleges to increase
course offerings, student services and financial aid for students.
LAO Analysis of the 2013-14 Proposed State Budget. On January 14, 2013, the Legislative
Analyst‘s Office (―LAO‖) released a report entitled ―The 2013-14 Budget: Overview of the Governor‘s
Budget‖ (the ―2013 LAO Budget Overview‖), which provides an analysis by the LAO of the Fiscal Year
2013-14 Proposed State Budget. The 2013 LAO Budget Overview is available on the LAO website at
www.lao.ca.gov. Information on the website is not incorporated herein by reference. The 2013 LAO
Budget Overview states that the Fiscal Year 2013-14 Proposed State Budget reflects a significant
improvement in the State‘s finances due to, among other things, the economic recovery, prior budgetary
restraint, and voters‘ approval of temporary tax increases. However, the LAO cautions that there are still
considerable risks to revenue estimates. In addition, the LAO estimates that the State will not have sizable
reserves by the end of Fiscal Year 2016-17 or begun to address huge unfunded liabilities associated with
the teachers‘ retirement system and State retiree health benefits.
According to the LAO, the State‘s underlying expenditures and revenues are generally balanced
and, with the exception of education funding, the programs and services funded from the State‘s General
Fund would operate at the same level in Fiscal Year 2013-14 as compared to Fiscal Year 2012-13. The
LAO cautions that the State‘s budget will continue to face risks including, among other things,
uncertainty at the federal level over ―fiscal cliff‖ issues related to the debt limit and sequestration and
volatility in the State‘s revenue structure. In addition, the LAO recommends that the Governor conduct
initial analysis of the economic impact of the proposed the Local Control Funding Formula and the
State‘s options to implement Medi-Cal expansion in connection with the federal Affordable Care Act.
The LAO states that as they will have a significant impact upon the State‘s budget in Fiscal Year 2013-14
and subsequent years.
Additional Information Regarding State spending for Education. Information about the State
budget and State spending for education is regularly available at various State-maintained websites. Text
of the State budget may be found at the website of the Department of Finance, www.dof.ca.gov, under the
heading ―California Budget.‖ Various analyses of the budget may be found at the website of the LAO at
www.lao.ca.gov. In addition, various State official statements, many of which contain a summary of the
current and past State budgets and the impact of those budgets on community college districts in the
State, may be found via the website of the State Treasurer, www.treasurer.ca.gov. The information
presented in these websites is not incorporated by reference in this Official Statement.
Future State Budgets. The District cannot predict what actions will be taken in the future by the
State Legislature and the Governor to address the State‘s current or future budget deficits and cash
management practices. Future State budgets will be affected by national and State economic conditions,
including the current economic downturn, over which the District has no control, and other factors over
which the District will have no control. To the extent that the State budget process results in reduced
revenues, deferred revenues or increased expenses for the District, the District will be required to make
adjustments to its budget and cash management practices. In the event current or future State Budgets
decrease the District‘s revenues or increase required expenditures by the District from the levels assumed
by the District, the District will be required to generate additional revenues, curtail programs or services,
or use its reserve funds to ensure a balanced budget.
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State Funding of Schools without a State Budget
Although the State Constitution requires that the State Legislature adopt a budget for the State by
June 15 of the prior Fiscal Year and that the Governor sign a budget by June 30, this deadline has been
missed from time to time. Delays in the adoption of a Budget Act in any Fiscal Year could impact the
receipt of State funding by the District. On May 29, 2002, the California Court of Appeal for the Second
District decided the case of Howard Jarvis Taxpayers Association, et al. v. Kathleen Connell (as
Controller of the State of California), et al. (also referred to as White v. Davis) (―Connell‖). The
California Court of Appeal concluded that, absent an emergency appropriation, the State Controller may
authorize the payment of State funds during a budget impasse only when payment is either (i) authorized
by a ―continuing appropriation‖ enacted by the State Legislature, (ii) authorized by a self-executing
provision of the State Constitution, or (iii) mandated by federal law. The Court of Appeal specifically
concluded that the provisions of Article XVI, Section 8 of the State Constitution—the provision
establishing minimum funding of K-14 education enacted as part of Proposition 98—did not constitute a
self-executing authorization to disburse funds, stating that such provisions merely provide formulas for
determining the minimum funding to be appropriated every budget year but do not appropriate funds.
Nevertheless, the State Controller has concluded that the provisions of the State Education Code
establishing K-12 and county office of education revenue limit funding do constitute continuing
appropriations enacted by the State Legislature and, therefore, has indicated that State payments of such
amounts would continue during a budget impasse. The State Controller, however, has concluded that
K-12 categorical programs are not authorized pursuant to a continuing appropriation enacted by the State
Legislature and, therefore, cannot be paid during a budget impasse. To the extent the Connell decision
applies to State payments reflected in the District‘s budget, the requirement that there be either a final
budget bill or an emergency appropriation may result in the delay of some payments to the District while
such required legislative action is delayed, unless the payments are self-executing authorizations,
continuing appropriations or are subject to a federal mandate.
The State Supreme Court granted the State Controller‘s petition for review of the Connell case on
a procedural issue unrelated to continuous appropriations and on the substantive question as to whether
the State Controller is authorized to pay State employees their full and regular salaries during a budget
impasse. No other aspect of the Court of Appeal‘s decision was addressed by the State Supreme Court.
On May 1, 2003, with respect to the substantive question, the State Supreme Court concluded that the
State Controller is required, notwithstanding a budget impasse and the limitations imposed by State law,
to timely pay those State employees who are subject to the minimum wage and overtime compensation
provisions of the federal Fair Labor Standards Act.
CALIFORNIA CONSTITUTIONAL AND STATUTORY PROVISIONS RELATING TO AD
VALOREM PROPERTY TAXES, DISTRICT REVENUES AND APPROPRIATIONS
Constitutionally Required Funding of Education
The State Constitution requires that from all State revenues there shall first be set apart the
moneys to be applied by the State for the support of the public school system and public institutions of
higher education. California community college districts receive a significant portion of their funding
from State appropriations. As a result, decreases as well as increases in State revenues can significantly
affect appropriations made by the State Legislature to community college districts.
Article XIII A of the California Constitution
On June 6, 1978, California voters approved Proposition 13, adding Article XIII A to the
California Constitution. Article XIII A, among other things, affects the valuation of real property for the
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purpose of taxation in that it defines the full cash property 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 newly constructed, or when a change in ownership has occurred after the 1975
assessment.‖ The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2%
per year, or a reduction in the consumer price index or comparable local data for the area under taxing
jurisdiction, or reduced in the event of declining property value caused by substantial damage, destruction
or other factors including a general economic downturn. Any reduction in assessed value is temporary and
may be adjusted for any given year by the Assessor. The assessed value increases to its pre-reduction
level (escalated to the annual inflation rate of no more than two percent) following the year(s) for which
the reduction is applied. Article XIII A further limits the amount of any ad valorem tax on real property to
1% of the full cash value except that additional taxes may be levied to pay (i) debt service on
indebtedness approved by the voters prior to July 1, 1978, (ii) bonded indebtedness for the acquisition or
improvement of real property approved on or after July 1, 1978 by two thirds of the votes cast by the
voters voting on the proposition; and (iii) bonded indebtedness incurred by a school district, community
college district or county office of education (which is separate from the County) for the construction,
reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property
for school facilities, approved by 55% of the voters of the school district, community college district or
the County, as appropriate, but only if certain accountability measures are included in the proposition.
On June 3, 1986, California voters approved Proposition 46, which added an additional
exemption to the 1% tax limitation imposed by Article XIII A. Under this amendment to Article XIII A,
local governments, school districts and community college districts may increase the ad valorem property
tax rate above 1% for the period necessary to retire new general obligation bonds, if two-thirds of those
voting in a local election approve the issuance of such bonds and the money raised through the sale of the
Bonds is used exclusively to purchase or improve real property.
Future assessed valuation growth allowed under Article XIII A due to new construction, change
of ownership, or growth up to the permitted 2% inflation factor will be allocated on the basis of ―situs‖
among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies,
school districts and community college districts will share the growth of ―base‖ revenue from the tax rate
area. Each year‘s growth allocation becomes part of each agency‘s allocation the following year. The
District is unable to predict the nature or magnitude of future revenue sources which may be provided by
the State to replace lost property tax revenues. Article XIII A effectively prohibits the levying of any
other ad valorem property tax above the 1% limit except for taxes to support indebtedness approved by
the voters as described above.
Legislation Implementing Article XIII A
Legislation has been enacted and amended a number of times since 1978 to implement
Article XIII A. Under current law, local agencies are no longer permitted to levy directly any property
tax. The 1% ad valorem property tax is automatically levied by the County and distributed according to a
formula among taxing agencies. Any such allocation made to a local agency continues as part of its
allocation in future years. Separate ad valorem property taxes to pay voter approved indebtedness such as
the Bonds are levied by the County on behalf of the local agencies. Article XIII A effectively prohibits
the levying of any other ad valorem property tax above the Proposition 13 limit except for taxes to
support such indebtedness.
The full cash value of taxable property under Article XIII A represents the maximum taxable
value for property. Accordingly, the fair market value for a given property may not be the equivalent of
the full cash value under Article XIII A. During periods in which the real estate market within the District
evidences an upward trend, the fair market value for a given property, which has not been reappraised due
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to a change in ownership, may exceed the full cash value of such property. During periods in which the
real estate market demonstrates a downward trend, the fair market value of a given property may be less
than the full cash value of such property and the property owner may apply for a ―decline in value‖
reassessment pursuant to Proposition 8 (―Proposition 8 Reassessments‖). Proposition 8 Reassessments, if
approved by the Office of the County Assessor, lower valuations of properties (where no change in
ownership has occurred) if the current value of such property is lower than the full cash value of record of
the property. The value of a property reassessed as a result of a decline in value may change, but in no
case may its full cash value exceed its fair market value. When and if the fair market value of a property
which has received a Proposition 8 Reassessment increases above its Proposition 13 factored base year
value, the Office of the County Assessor will enroll such property at its Proposition 13 factored base year
value.
Legislation enacted by the California Legislature to implement Article XIII A provides that all
taxable property is shown at full assessed value as described above. In conformity with this procedure, all
taxable property value included in this Official Statement (except as noted) is shown at 100% of assessed
value and all general tax rates reflect $1 per $100 of taxable value. Tax rates for voter approved bonded
indebtedness are also applied to 100% of assessed value.
Article XIIIB of the State Constitution
An initiative to amend the State Constitution entitled ―Limitation of Government Appropriations‖
was approved on September 6, 1979 thereby adding Article XIIIB to the State Constitution
(―Article XIIIB‖). In June 1990, Article XIIIB was amended by the voters through their approval of
Proposition 111. Under Article XIIIB, the State and each local governmental entity have an annual
―appropriations limit‖ and are not permitted to spend certain moneys that are called ―appropriations
subject to limitation‖ (consisting of tax revenues, State subventions and certain other funds) in an amount
higher than the appropriations limit. Article XIIIB does not affect the appropriations of moneys that are
excluded from the definition of ―appropriations subject to limitation,‖ including debt service on
indebtedness existing or authorized as of January 1, 1979, or bonded indebtedness subsequently approved
by the voters. In general terms, the appropriations limit is to be based on certain 1978-79 expenditures,
and is to be adjusted annually to reflect changes in costs of living and changes in population, and adjusted
where applicable for transfer of financial responsibility of providing services to or from another unit of
government. Among other provisions of Article XIIIB, if these entities‘ revenues in any year exceed the
amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules
over the subsequent two years. However, in the event that a community college district‘s revenues
exceed its spending limit, the district may, in any fiscal year, increase its appropriations limit to equal its
spending by borrowing appropriations limit from the State, provided the State has sufficient excess
appropriations limit in such year. See ―Funding of Community College Districts in California—State
Budget‖ herein.
The District Board adopted the annual appropriation limit for Fiscal Year 2012-13 of
approximately $713,832,826_. The limitation applies only to proceeds of taxes and therefore does not
apply to service fees and charges, investment earnings on non-proceeds of taxes, fines, and revenue from
the sale of property and taxes received from the State and federal governments that are tied to special
programs. For Fiscal Year 2011-12, the funds subject to limitation totaled approximately $419,587,300
and were approximately $294,245,526 below the Article XIIIB limit.
Article XIIIC and Article XIIID of the State Constitution
On November 5, 1996, the voters of the State approved Proposition 218, the so called ―Right to
Vote on Taxes Act.‖ Proposition 218 added Articles XIIIC and XIIID to the State Constitution
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(―Article XIIIC‖ and ―Article XIIID‖), which contain a number of provisions affecting the ability of local
agencies, including community college districts, to levy and collect both existing and future taxes,
assessments, fees and charges.
Article XIIID deals with assessments and property related fees and charges. Article XIIID
explicitly provides that nothing in Article XIIIC or XIIID shall be construed to affect existing laws
relating to the imposition of fees or charges as a condition of property development; however, it is not
clear whether the initiative power is therefore unavailable to repeal or reduce developer and mitigation
fees imposed by the District.
Proposition 98
On November 8, 1988, State voters approved Proposition 98, a combined initiative, constitutional
amendment and statute called the ―Classroom Instructional Improvement and Accountability Act‖ (the
―Accountability Act‖). The Accountability Act changed State funding of public education below the
university level, and the operation of the State‘s Appropriations Limit, primarily by guaranteeing State
funding for K-12 school districts and community college districts (collectively, ―K-14 districts‖).
Under Proposition 98 (as modified by Proposition 111, which was enacted on June 5, 1990), K-14
districts are guaranteed the greater of (i) in general, a fixed percent of the State General Fund‘s revenues
(―Test 1‖), (ii) the amount appropriated to K-14 districts in the prior year, adjusted for changes in the cost
of living (measured as in Article XIIIB by reference to State per capita personal income) and enrollment
(―Test 2‖), or (iii) a third test, which would replace Test 2 in any year when the percentage growth in per
capita State General Fund revenues from the prior year plus 0.05% is less than the percentage growth in
State per capita personal income (―Test 3‖). Under Test 3, schools would receive the amount
appropriated in the prior year adjusted for changes in enrollment and per capita State General Fund
revenues, plus an additional small adjustment factor. If Test 3 is used in any year, the difference between
Test 3 and Test 2 would become a ―credit‖ to schools which would be the basis of payments in future
years when per capita State General Fund revenue growth exceeds per capita personal income growth.
Legislation adopted prior to the end of Fiscal Year 1988-89 that implemented Proposition 98, determined
the K-14 districts‘ funding guarantee under Test 1 to be 40.3% of the State General Fund tax revenues,
based on 1986-87 appropriations. However, that percentage has been adjusted to 34.559% to account for
a subsequent redirection of local property taxes whereby a greater proportion of education funding now
comes from local property taxes.
Proposition 98 permits the State Legislature, by a two-thirds vote of both houses of the State
Legislature and with the Governor‘s concurrence, to suspend the K-14 districts‘ minimum funding
formula for a one-year period. In the fall of 1989, the State Legislature and the Governor utilized this
provision to avoid having 40.3% of revenues generated by a special supplemental sales tax enacted for
earthquake relief go to K-14 districts. In the fall of 2004, the State Legislature and the Governor agreed
to suspend the K-14 districts‘ minimum funding formula set forth pursuant to Proposition 98 in order to
address a projected shortfall during Fiscal Year 2004-05. Proposition 98 also contains provisions
transferring certain State tax revenues in excess of the Article XIIIB limit to K-14 districts.
The Fiscal Year 2012-13 State Budget increased Proposition 98 expenditures for Fiscal Year
2012-13 to $53.6 billion (inclusive of local property tax revenues and the approval of Proposition 30),
which reflects an increase of $6.7 billion compared to the projected Proposition 98 expenditures for Fiscal
Year 2011-12. The Fiscal Year 2013-14 Proposed State Budget proposes to fund the Proposition 98
minimum guarantee in full in the amount of $56.2 million.
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For further information concerning the impact of State Budgets on Proposition 98 funding, see
―District Financial Information—State Budget‖ herein.
Proposition 39
Proposition 39, which was approved by California voters in November 2000 (―Proposition 39‖),
provides an alternative method for passage of school facilities bond measures by lowering the
constitutional voting requirement from two-thirds to 55% of voters and allows property taxes to exceed
the current 1% limit in order to repay such bonds. The lower 55% vote requirement would apply only to
bond issues to be used for construction, rehabilitation, or equipping of school facilities or the acquisition
of real property for school facilities. The State Legislature enacted additional legislation which placed
certain limitations on this lowered threshold, requiring that (i) two-thirds of the governing board of a
community college district approve placing a bond issue on the ballot, (ii) the bond proposal be included
on the ballot of a Statewide or primary election, a regularly scheduled local election, or a Statewide
special election (rather than a community college district election held at any time during the year),
(iii) the tax rate levied as a result of any single election not exceed $25 for a community college district,
$60 for a unified school district, or $30 for an elementary school or high school district, or $25 for a
community college district per year per $100,000 of taxable property value, and (iv) the governing board
of the school district or community college district appoint a citizen‘s oversight committee to inform the
public concerning the spending of the bond proceeds. In addition, the school board of the applicable
district is required to perform an annual, independent financial and performance audit until all bond funds
have been spent to ensure that the funds have been used only for the projects listed in the measure. The
District‘s Proposition A (2001) Authorization, Proposition AA (2003) Authorization and Measure J
(2008) Authorization bond programs were authorized pursuant to Proposition 39. See ―District Financial
Information - District Debt - General Obligation Bonds‖ herein. [The District is in full compliance with
all Proposition 39 requirements.][Confirm]
Proposition 1A
Proposition 1A (―Proposition 1A‖), proposed by the Legislature as a Senate Constitutional
Amendment in connection with the 2004-05 Budget Act and approved by California voters in November
2004, provides that the State may not reduce any local sales tax rate, limit existing local government
authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain
exceptions. Proposition 1A generally prohibits the State from shifting to schools or community colleges
any share of property tax revenues allocated to local governments for any fiscal year, as set forth under
the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among
local governments within a county must be approved by two-thirds of both houses of the Legislature.
Proposition 1A provided, however, that beginning in fiscal year 2008-09, the State could shift to schools
and community colleges up to 8% of local government property tax revenues, which amount must be
repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe
state financial hardship, the shift is approved by two-thirds of both houses of the State Legislature and
certain other conditions are met. The State may also approve voluntary exchanges of local sales tax and
property tax revenues among local governments within a county. Proposition 1A also provides that if the
State reduces the VLF rate below 0.65 percent of vehicle value, the State must provide local governments
with equal replacement revenues. Further, Proposition 1A requires the State, beginning July 1, 2005, to
suspend State mandates affecting cities, counties and special districts, excepting mandates relating to
employee rights, schools or community colleges, in any year that the State does not fully reimburse local
governments for their costs to comply with such mandates. The Revised 2009-10 State Budget Act
enacted a shift of approximately $1.9 billion of city, county, and special district property taxes pursuant to
Proposition 1A and used such funds to offset State General Fund spending for education and other
programs. The State is required to repay this obligation by June 15, 2013. The State‘s ability to initiate
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future exchanges and shifts of funds will be limited by Proposition 22. See ―California Constitutional and
Statutory Provisions Relating to Ad Valorem Property Taxes, District Revenues and
Appropriations - Proposition 22‖ below.
Proposition 22
Proposition 22 (―Proposition 22‖), which was approved by California voters in November 2010,
prohibits the State, even during a period of severe fiscal hardship, from delaying the distribution of tax
revenues for transportation, redevelopment, or local government projects and services and prohibits fuel
tax revenues from being loaned for cash-flow or budget balancing purposes to the State General Fund or
any other State fund. Due to the prohibition with respect to State‘s ability to take, reallocate, and borrow
money raised by local governments for local purposes, Proposition 22 supersedes certain provisions of
Proposition 1A of 2004. See ― California Constitutional and Statutory Provisions Relating to Ad Valorem
Property Taxes, District Revenues and Appropriations - Proposition 1A‖ herein.
In addition,
Proposition 22 generally eliminated the State‘s authority to temporarily shift property taxes from cities,
counties, and special districts to schools, temporarily increased school and community college district‘s
share of property tax revenues, prohibited the State from borrowing or redirecting redevelopment property
tax revenues or requiring increased pass-through payments thereof, and prohibited the State from
reallocating vehicle license fee revenues to pay for State-imposed mandates. In addition, Proposition 22
requires a two-thirds vote of each house of the State Legislature and a public hearing process to be
conducted in order to change the amount of fuel excise tax revenues shared with cities and counties. The
LAO stated that Proposition 22 would prohibit the State from enacting new laws that require
redevelopment agencies to shift funds to schools or other agencies. However, the California Supreme
Court, in California Redevelopment Association v. Matosantos, held that the dissolution provisions set
forth in ABx1 26 were constitutional and permitted the State to allocate revenues that would have been
directed to the redevelopment agencies to make pass-through payments (i.e., payments that such entities
would have received under prior law) to local agencies and to successor agencies for retirement of the
debts and certain administrative costs of the redevelopment agencies. See ―District Financial Information
- Litigation Regarding Redevelopment Agency Revenues and Education Expenditures‖ herein.
Proposition 22 prohibits the State from borrowing sales taxes or excise taxes on motor vehicle
fuels or changing the allocations of those taxes among local government except pursuant to specified
procedures involving public notices and hearings. In addition, Proposition 22 requires that the State apply
the formula setting forth the allocation of State fuel tax revenues to local agencies revert to the formula in
effect on June 30, 2009. The LAO stated that Proposition 22 would require the State to adopt alternative
actions to address its fiscal and policy objectives, particularly with respect to short-term cash flow needs.
The District does not believe that the adoption of Proposition 22 will have a significant impact on their
respective revenues and expenditures during Fiscal Year 2012-13.
Proposition 55
The Kindergarten-University Public Education Facilities Bond Act of 2004 appeared on the
March 2, 2004 ballot as Proposition 55 and was approved by State voters (―Proposition 55‖). This
measure authorizes the sale and issuance of $12.3 billion in general obligation bonds by the State for
funding the construction and renovation of public K-12 school facilities ($10 billion) and public higher
education facilities ($2.3 billion). Proposition 55 includes $5.26 billion for the acquisition of land and
construction of new school buildings. A school district would be required to pay for 50% of costs with
local resources unless it qualifies for state hardship funding. The measure also provides that up to
$300 million of these new construction funds is available for charter school facilities.
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Proposition 55 makes $2.25 billion available for the reconstruction or modernization of existing
public school facilities. Districts would be required to pay 40% of project costs from local resources.
Proposition 55 directs a total of $2.44 billion to school districts with schools which are considered
critically overcrowded. These funds would go to schools that have a large number of pupils relative to
the size of the school site. Proposition 55 also makes a total of $50 million available to fund joint-use
projects. Proposition 55 includes $2.3 billion to construct new buildings and related infrastructure, alter
existing buildings and purchase equipment for use in these buildings for the State‘s public higher
education systems. The measure allocates $690 million to the University of California and California
State University and $920 million to community colleges in the State. The Governor and the State
Legislature select specific projects to be funded by the bond proceeds.
Proposition 1D. The Kindergarten-University Public Education Facilities Bond Act of 2006
appeared on the November 7, 2006 ballot as Proposition 1D and was approved by State voters
(―Proposition 1D‖). This measure authorizes the sale and issuance of $10.4 billion in general obligation
bonds by the State for funding the construction and renovation of public K-12 school facilities
($7.3 billion) and public higher education facilities ($3.1 billion). Proposition 1D includes $1.9 billion
for the acquisition of land and construction of new school buildings. A school district would be required
to pay for 50% of costs with local resources unless it qualifies for state hardship funding. Proposition 1D
also provides that up to $500 million of these construction funds is available for charter school facilities.
Proposition 1D makes $3.3 billion available for the reconstruction or modernization of existing
public school facilities. Districts would be required to pay 40% of project costs from local resources.
Proposition 1D directs a total of $1.0 billion to school districts with schools that are considered critically
overcrowded. These funds would go to schools that have a large number of pupils relative to the size of
the school site. Proposition 1D also makes a total of $29 million available to fund joint-use projects.
Proposition 1D includes $3.1 billion to construct new buildings and related infrastructure, alter existing
buildings and purchase equipment for use in these buildings for California‘s public higher education
systems. The measure allocates $890 million to the University of California campuses and $690 million
to the California State University campuses and $1.5 billion to California community colleges. Pursuant
to Proposition 1D, the Governor and the State Legislature select specific projects to be funded by the
bond proceeds. See ―District General Information—Williams Settlement Agreement and Legislation;
Funding for the New School Construction Program‖ herein.
The District applies for apportionments from State bond initiatives and historically has received
funding from such State bond initiatives. No assurances can be given that the District will continue to
apply for apportionments from current or future State bond initiatives or that the District will continue to
receive funding from State bond initiatives for which it applies.
Future Initiatives
The foregoing described amendments to the State Constitution and propositions 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 that further affect District revenues or the District‘s
ability to expend revenues.
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REGIONAL ECONOMIC AND DEMOGRAPHIC INFORMATION
The District is located in the City of Los Angeles and portions of the County of Los Angeles. The
following economic and demographic information pertains to the City of Los Angeles and the County of
Los Angeles. The Bonds are general obligations of the District, but are not general obligations of the City
or the County.
Population
The following Table A-27 sets forth the estimates of the population of the City, the County and
the State in calendar years 2008 through 2012.
TABLE A-27
Population Estimates
2008 through 2012
Year
(as of January 1)
2008
2009
2010
2011
2012
City of
Los Angeles
County of
Los Angeles
3,774,497
3,781,952
3,794,586
3,806,411
3,825,297
9,785,474
9,801,096
9,822,121
9,847,712
9,884,632
State of
California
36,704,375
36,966,713
37,223,900
37,427,946
37,678,563
Source: State of California Department of Finance Demographic Research Unit.
Income
The following Table A-28 summarizes the median household income for the City, the County, the
State and the United States for calendar years 2007 through 2011.
TABLE A-28
Median Household Income(1)
2007 through 2011
Year
2007
2008
2009
2010
2011
(1)
City of
Los Angeles
County of
Los Angeles
State of California
United States
$47,781
48,882
48,617
47,031
46,148
$53,573
55,499
54,467
52,684
52,280
$59,948
61,021
58,931
57,708
57,287
$50,740
52,029
50,221
50,046
50,502
Estimated. In inflation-adjusted dollars.
Source: U.S. Census Bureau – Economic Characteristics – American Community Survey.
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Set forth in Table A-29 below is the distribution of income by certain income groupings per
household for the City, the County, the State and the United States for calendar year 2011.
TABLE A-29
Income Groupings 2011(1)
(Percent of Households)
Income Per Household
$24,999 & Under
$25,000-49,999
$50,000 & Over
(1)
City of
Los Angeles
County of
Los Angeles
29.21%
23.58
47.21
24.78%
23.00
52.22
State of
California
United States
22.17%
22.13
55.70
25.06%
21.82
50.51
Estimated. In inflation-adjusted dollars.
Source: U.S. Census Bureau – Economic Characteristics – American Community Survey.
Employment
The District is within the Los Angeles-Long Beach Primary Metropolitan Statistical Area Labor
Market (Los Angeles County). Table A-30 below summarizes wage and salary employment in the County
from calendar years 2007 through 2011.
TABLE A-30
Labor Force and Employment in Los Angeles County(1)
2007
2008
2009
2010
2011
Civilian Labor Force
Employment
Unemployment
Unemployment Rate
4,872,500
4,625,600
246,900
5.1%
4,934,800
4,565,500
369,300
7.5%
4,904,300
4,335,200
569,000
11.6%
4,910,500
4,291,400
619,100
12.6%
4,924,400
4,318,900
605,500
12.3%
Wage and Salary Employment(3)
Farm
Mining and Logging
Construction
Manufacturing
Trade, Transportation and Utilities
Information
Financial Activities
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Government
Total(1)
7,500
4,400
157,600
449,200
818,500
209,800
243,800
605,400
492,700
397,900
147,100
595,700
4,129,600
6,900
4,400
145,200
434,500
803,300
210,300
233,300
582,600
505,800
401,600
146,100
603,700
4,077,600
6,200
4,100
117,300
389,200
742,700
191,200
216,000
529,800
514,600
385,600
137,900
595,800
3,830,300
6,200
4,100
104,500
373,200
739,800
191,500
209,500
527,500
522,000
384,800
136,700
579,600
3,779,300
5,500
4,000
103,500
365,400
748,000
195,600
209,400
540,400
534,800
392,800
135,000
565,200
3,799,600
(2)
(1)
(2)
(3)
(4)
Totals may not equal sum of component parts due to rounding. All information updated per March 2010 Benchmark.
Based on place of residence.
The State Employment Development Department has reported a seasonally adjusted unemployment rate within the County
of 10.2% for December 2012.
Based on place of work.
Source: State Employment Development Department, Labor Market Information Division.
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Commercial Activity
Table A-31 below sets forth taxable sales in the County for calendar years 2006 through 2008. In
2007, the California State Board of Equalization began a process of converting business codes of sales
and use tax permit holders to North American Industry Classification System (―NAICS‖) codes. The
California State Board of Equalization completed the process of converting business codes of sales and
use tax permit holders to NAICS codes for 2009 data. As a result of the coding change process, industry
data for 2006, 2007 and 2008 is not comparable with data from 2009 and 2010 as set forth in Table A-31.
Table A-32 reflects implementation of the NAICS codes and new industry categories.
TABLE A-31
County of Los Angeles
Taxable Transactions(1)(2)
Calendar Years 2006 through 2008
($ in thousands)
Type of Business
Apparel Stores
General Merchandise
Specialty Stores(3)
Food Stores
Eating and Drinking Establishments
Home Furnishings/Appliances
Building Materials
Automotive(4)
Service Stations(4)
Other Retail Stores(3)
Business and Personal Services
All Other Outlets
TOTAL ALL OUTLETS
(1)
(2)
(3)
(4)
2006
Annual
$
5,526,656
13,729,150
14,332,982
4,680,320
13,751,189
4,307,020
7,871,880
29,161,994
-2,193,002
5,390,537
35,217,822
$136,162,552
2007
Annual
$
5,829,390
13,825,538
-4,911,939
14,473,199
4,287,090
7,494,731
17,156,218
12,230,800
15,886,806
5,408,543
36,316,164
$137,820,418
2008
Annual
$
6,290,994
12,861,677
-4,921,329
14,607,067
4,482,776
6,388,930
13,282,539
13,437,380
13,537,617
5,196,651
36,874,784
$131,881,744
Totals may not equal sum of component parts due to rounding.
In early 2007, the California State Board of Equalization began a process of converting business codes of sales and use tax
permit holders to North American Industry Classification System codes. As a result of the coding change process, industry
data for 2007 and 2008 are not comparable with data from prior years.
In 2007 and 2008, industry data for Specialty Stores were included in Other Retail Stores.
Prior to 2007, industry data for Service Stations were included in Automotive.
Source: California State Board of Equalization, Taxable Sales in California.
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236435.7 037276 OS
Table A-32 below sets forth taxable sales in the County for the calendar years 2009 and 2010 and
the first, second and third quarters of 2011.
TABLE A-32
County of Los Angeles
Taxable Transactions(1)
Calendar Years 2009 and 2010 and the First, Second and Third Quarters of 2011
($ in thousands)
2009
Annual
2010
Annual
2011
First, Second &
Third Quarters
Type of Business
Motor Vehicle and Parts Dealers
Furniture and Home Furnishings Stores
Electronics and Appliance Stores
Building Materials and Garden Equipment and Supplies
Food and Beverage Stores
Health and Personal Care Stores
Gasoline Stations
Clothing and Clothing Accessories Stores
Sporting Goods, Hobby, Book & Music Stores
General Merchandise Stores
Miscellaneous Store Retailers
Nonstore Retailers
Food Services and Drinking Places
Total Retail and Food Services
$ 10,801,444
2,058,460
3,406,513
5,754,600
5,410,953
2,735,112
9,629,797
7,145,713
2,434,950
10,059,028
4,319,761
810,972
13,876,812
$ 78,444,115
$ 11,285,457
2,158,334
3,454,412
6,129,586
5,405,254
2,773,004
11,012,642
7,607,711
2,448,246
10,369,383
4,449,560
790,565
14,291,264
$ 82,175,416
$ 9,462,254
1,696,370
2,428,404
4,627,988
4,138,732
2,178,667
10,102,030
5,827,164
1,783,406
7,448,042
3,383,750
,647,322
11,410,392
$ 65,134,523
All Other Outlets
$ 34,300,613
$ 34,766,918
$ 27,420,015
TOTAL ALL OUTLETS
$112,744,727
$116,942,334
$ 92,554,538
(1)
Totals may not equal sum of component parts due to rounding.
Source: California State Board of Equalization, Taxable Sales in California.
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236435.7 037276 OS
Major Non-Governmental Employers
The economic base of the County is diverse with no one sector being dominant. Some of the
leading activities include government (including education), business/professional management services
(including engineering), health services (including training and research), tourism, distribution, and
entertainment. The top twenty-five non-governmental employers in the County are set forth below in
Table A-33.
TABLE A-33
County of Los Angeles
Major Non-Governmental Employers(1)(2)
Employer
Kaiser Permanente
Northrop Grumman Corp.
University of Southern California
Target Corp.
Ralphs/Food 4 Less (A Division of Kroger Co.)
Cedars-Sinai Medical Center
Bank of America Corp.
Providence Health & Services Southern
California
Boeing Co.
Walt Disney Co.
Home Depot
Wells Fargo
Edison International
AT&T Inc.
California Institute of Technology
ABM Industries Inc.
Raytheon Co.
Warner Bros. Entertainment Inc.
Vons
FedEx Corp.
Dignity Health(4)
JPMorgan Chase
Amgen Inc.
Sony Pictures Entertainment
Costco Wholesale
(1)
(2)
(3)
(4)
(5)
Product/Service
Employees
Non-profit health plan
Defense contractor
Private university
Retailer
Retail grocer
Medical center
Banking and financial services
Health care
36,508
18,000
16,623
14,250
13,200(1)
12,000
12,000(1)
11,403
Integrated aerospace and defense systems
Entertainment
Home improvement specialty retailer
Diversified financial services
Electric utility
Telecommunications
Private university; operator of Jet Propulsion
Laboratory
Facility services, energy solutions, commercial
cleaning, maintenance and repair
Aerospace and defense contractor
Entertainment
Retail grocer
Shipping and logistics
Hospitals
Banking and financial services
Biotechnology
Entertainment
Membership chain of warehouse stores
11,249
10,500(1)
10,250
9,520
8,979
8,900
8,900
8,300
8,200
8,000(3)
7,747
7,500
7,300
6,600
6,000
6,000(5)
5,667
Estimated as of September 2012.
Several additional companies may have qualified for this list. However, such companies failed to submit information or do
not break out local employment data.
Information provided by city of Burbank.
Formerly Catholic Healthcare West.
Information provided by Culver City.
Source: Los Angeles Business Journal.
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Construction
The following Table A-34 sets forth the valuation of permits for new residential buildings and the
number of new single-family and multi-family dwelling units in the City for the years 2007 through 2010
and for the period from January 2011 through August 2011.
TABLE A-34
City of Los Angeles
Permit Valuations and Units of Construction
2007 to 2011(1)
($ in thousands)
Year
2007
2008
2009
2010
2011(2)
(1)
(2)
New
Residential
Valuation
$2,673,705
1,782,493
1,013,073
1,282,731
1,038,022
New
Single Family
Dwelling Units
1,774
820
522
681
360
New
Multi-Family
Dwelling Units
8,994
6,694
2,628
3,576
3,594
Total
New Units
10,768
7,514
3,150
4,257
3,954
Total may not equal sum of component parts due to rounding.
Data for calendar year 2011 reflects information from January 2011 through August 2011.
Source: Construction Industry Research Board.
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236435.7 037276 OS
ATTACHMENT B
2012-13
PROPOSED REDISTRIBUTION OF 2.5%
OF CONTINGENCY RESERVE FUNDS
Revised Budget
Total Revenue, excluding Balance
$
Contingency Reserve
469,983,496
7.5 % Contingency Reserve
$
35,248,762
EPA Fund:
7.28 % Worload Restoration
31,314,221
Projected Funde Growth
3,899,583
Total Projected EPA Fund
$
Revised Total Revenue, excluding Balance
35,213,804
505,197,300
Revised 5% Contingency Reserve
25,259,865
Proposed Redistribution of Contingency Reserve, excess of 5%
$
PROPOSED DISTRIBUTION
COLLEGE
2012-13
FUNDED FTES
DISTRIBUTION
OF FUNDS
% OF
TOTAL
City
13,748
14.3%
$1,431,448
East
20,789
21.7%
$2,164,559
Harbor
6,351
6.6%
$661,269
Mission
5,755
6.0%
$599,213
13,692
14.3%
$1,425,617
4,799
5.0%
$499,674
Trade-Tech
11,449
11.9%
$1,192,075
Valley
12,278
12.8%
$1,278,391
6,655
6.9%
$692,921
420
0.4%
$43,730
95,936
100.0%
$9,988,897
Pierce
Southwest
West
ITV
TOTAL
C:\Documents and Settings\mazarild\Local Settings\Temporary Internet Files\Content.Outlook\C0HGUM1H\[2 5 percent ContinResRedistrib.xls]CR
9,988,897