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Home My WebLink About11-21-2018 Council Agenda packetSaratoga City Council Agenda – Page 1 of 5 SARATOGA CITY COUNCIL REGULAR MEETING NOVEMBER 21, 2018 5:45 P.M. CLOSED SESSION Linda Callon Conference Room, City Hall | 13777 Fruitvale Avenue, Saratoga, CA 95070 CONFERENCE WITH LEGAL COUNSEL—EXISTING LITIGATION (Government Code 54956.9(d)(1) Name of case: Graham v. Saratoga et al. (Santa Clara County Superior Court Case No. 115CV282466) 6:00 P.M. JOINT MEETING Linda Callon Conference Room, City Hall | 13777 Fruitvale Avenue, Saratoga, CA 95070 Joint Meeting with Assembly Member Evan Low 7:00 P.M. REGULAR SESSION Civic Theater, Council Chambers | 13777 Fruitvale Avenue, Saratoga, CA 95070 PLEDGE OF ALLEGIANCE ROLL CALL REPORT ON POSTING OF THE AGENDA The agenda for this meeting was properly posted on November 15, 2018. REPORT FROM CLOSED SESSION REPORT FROM JOINT MEETING ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS Any member of the public may address the City Council for up to three (3) minutes on matters not on the Agenda. The law generally prohibits the City Council from discussing or taking action on such items. However, the Council may instruct staff accordingly. ANNOUNCEMENTS Saratoga City Council Agenda – Page 2 of 5 CEREMONIAL ITEMS Appointment of Heritage Preservation Commissioner and Traffic Safety Commissioner & Oath of Office Recommended Action: Approve the attached resolutions appointing 1 member to the Heritage Preservation Commission and 1 member to the Traffic Safety Commission; and direct the City Clerk to administer the Oath of Office. 1. CONSENT CALENDAR The Consent Calendar contains routine items of business. Items in this section will be acted on in one motion, unless removed by the Mayor or a Council Member. Any member of the public may speak on an item on the Consent Calendar at this time, or request that the Mayor remove an item from the Consent Calendar for discussion. Public Speakers are limited to three (3) minutes. 1.1. City Council Meeting Minutes Recommended Action: Approve the City Council minutes for the Regular City Council Meeting on November 7, 2018. 1.2. Review of Accounts Payable Check Registers Recommended Action: Review and accept check registers for the following accounts payable payment cycles: 11/06/2018 Period 5; and 11/13/2018 Period 5. 1.3. AB1600 Development Impact Fee Report Recommended Action: Review and accept the annual AB1600 Development Impact Fee report for the year ended June 30, 2018. 1.4. Ordinance Establishing Regulations for Storage of Firearms Recommended Action: Waive the second reading and adopt the attached ordinance that would establish regulations for storage of firearms in Saratoga residences. 2. PUBLIC HEARING Items placed under this section of the Agenda are those defined by law as requiring a special notice and/or a public hearing or those called by the City Council on its own volition. 2.1. Annual Code Update for 2018 Recommended Action: Conduct the public hearing, introduce and waive the first reading of the attached ordinance updating various provisions of the City Code and direct staff to place the matter on the consent calendar for the next regular meeting of the City Council. Saratoga City Council Agenda – Page 3 of 5 2.2. Ordinance Amending Parking Standards in the C-H Districts (The Village) Recommended Action: 1. Conduct a public hearing. 2. Introduce and waive the first reading of the ordinance amending Chapter 15 (Zoning Regulations) of the Saratoga Municipal Code related to parking standards. 3. Direct staff to place the ordinance on the Consent Calendar for adoption at the next regular meeting of the City Council. 3. GENERAL BUSINESS 3.1. Preview of Proposed City Code Changes for Rotating Emergency Shelters (Safe Car Park and Severe Weather Shelter Programs) Recommended Action: Preview the proposed amendments to the City Code and direct staff to prepare an ordinance implementing the amendments for consideration by the City Council in January 2019. 3.2. Authorize Issuance of Special Tax Bonds for Arrowhead Community Facility District through a Private Placement and Approve Related Documents and Actions Recommended Action: Approve the attached resolution authorizing the issuance of the Community Facilities District No. 2016-1 (Arrowhead Project) Special Tax Bonds, Series 2018 (“2018 Bonds”) through a private placement and related documents in support of the bond issuance, and authorize the City Manager or his designee to execute the documents and take all related actions in connection with the issuance of the bonds, including minor edits that may be necessary. 3.3. Enhanced Communications Program Recommended Action: Approve the resolution to amend the Fiscal Year 2018/19 Operating Budget to fund enhancements to the communications program. COUNCIL ASSIGNMENTS Mayor Mary-Lynne Bernald Cities Association of Santa Clara County-Legislative Action Committee Cities Association of Santa Clara County-City Selection Committee Council Finance Committee Hakone Foundation Board Public Art Committee Saratoga Historical Foundation South Flow Arrivals Ad Hoc Committee West Valley Clean Water Program Authority West Valley Mayors and Managers West Valley Solid Waste Management Joint Powers Authority Vice Mayor Manny Cappello Cities Association of Santa Clara County Board of Directors Santa Clara County Housing and Community Development (HCD) Council Committee Saratoga Area Senior Coordinating Council (SASCC) West Valley Sanitation District Saratoga City Council Agenda – Page 4 of 5 Council Member Howard Miller America in Bloom Committee Council Finance Committee Saratoga Ministerial Association Saratoga Sister City Organization Silicon Valley Clean Energy Authority Board of Directors Valley Transportation Authority (VTA) Policy Advisory Committee VTA State Route 85 Corridor Policy Advisory Board Council Member Emily Lo Hakone Foundation Board & Executive Committee KSAR Community Access TV Board Public Art Committee Santa Clara County Library Joint Powers Authority Council Member Rishi Kumar Association of Bay Area Governments Saratoga Chamber of Commerce & Destination Saratoga Santa Clara County Expressway Plan 2040 Policy Advisory Board Santa Clara Valley Water District Commission CITY COUNCIL ITEMS COUNCIL COMMUNICATIONS CITY MANAGER'S REPORT ADJOURNMENT CERTIFICATE OF POSTING OF THE AGENDA, DISTRIBUTION OF THE AGENDA PACKET, COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT I, Debbie Bretschneider, Interim City Clerk for the City of Saratoga, declare that the foregoing agenda for the meeting of the City Council was posted and available for review on November 15, 2018 at the City of Saratoga, 13777 Fruitvale Avenue, Saratoga, CA 95070 and on the City's website at www.saratoga.ca.us. Signed this 15th day of November 2018 at Saratoga, California. Debbie Bretschneider, Interim City Clerk In accordance with the Ralph M. Brown Act, copies of the staff reports and other materials provided to the City Council by City staff in connection with this agenda are available at the office of the City Clerk at 13777 Fruitvale Avenue, Saratoga, CA 95070. Note that copies of materials distributed to the City Council concurrently with the posting of the agenda are also available on the City Website at www.saratoga.ca.us. Saratoga City Council Agenda – Page 5 of 5 Any materials distributed by staff after the posting of the agenda are made available for public review at the office of the City Clerk at the time they are distributed to the City Council. These materials are also posted on the City website. In Compliance with the Americans with Disabilities Act, if you need assistance to participate in this meeting, please contact the City Clerk at 408.868.1269. Notification 24 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. [28 CFR 35.102-35.104 ADA title II] 11/21 6:00 p.m. Joint Meeting with Assembly Member Evan Low | 7:00 p.m. Regular Session 11/29 6:30 p.m. Joint Meeting with Saratoga School Districts in Community Center 12/05 6:00 p.m. Joint Meeting with Sheriff’s Office | 7:00 p.m. Regular Session 12/13 7:00 p.m. Council Reorganization 12/19 6:00 p.m. Study Session – Council Norms | 7:00 p.m. Regular Session CITY OF SARATOGA CITY COUNCIL MEETING CALENDAR 2018 City of Saratoga CITY COUNCIL JOINT MEETING Meeting Discussion Topics Joint Meeting with State Assembly Member Evan Low November 21, 2018 | 6:00 p.m. Saratoga City Hall | Linda Callon Conference Room 6:00 p.m.Welcome & Introductions 6:15 p.m.News & Updates 6:45 p.m.Other Remarks & Wrap-up Dinner will be provided at the Joint Meeting. The Regular Session of the City Council begins at 7:00 p.m. in the Civic Theater. Joint Meeting attendees are invited to attend the Regular Session and share an overview of the Joint Meeting. 5 SARATOGA CITY COUNCIL MEETING DATE:November 21, 2018 DEPARTMENT:City Manager’s Office PREPARED BY:Debbie Bretschneider, Interim City Clerk SUBJECT:Appointment of Heritage Preservation Commissioner and Traffic Safety Commissioner &Oath of Office RECOMMENDED ACTION: Approve the attached resolution appointing 1 member to the Heritage Preservation Commission and 1 member to the Traffic Safety Commission; and direct the City Clerk to administer the Oath of Office. BACKGROUND: In July 2018, the City opened a recruitment for one full term on the Heritage Preservation Commission for term beginning on December 31, 2018 and ending on December 31, 2022. Applications were accepted until October 25, 2018. A total of 1 application was received. Interviews were conducted on November 7, 2018. The City Council selected the following applicant to serve on the Heritage Preservation Commission for the full term: Name Commission Term Rina Shah Heritage Preservation December 31, 2018 -December 31, 2022 In July 2018, the City opened a recruitment for one full term on the Traffic Safety Commission for a term beginning on December 31, 2018 and ending on December 31, 2022. Applications were accepted until October 25, 2018. One application was received. An interview was conducted on November 7, 2018.The City Council selected the following applicant to serve on the Traffic Safety Commission: Name Commission Term Belal Yousaf Traffic Safety December 31, 2018 -December 31, 2022 ATTACHMENTS: Attachment A –Resolution Attachment B –Oath of Office 6 RESOLUTION NO. 18-___ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA APPOINTING MEMBERS TO THE SARATOGA HERITAGE PRESERVATION COMMISSION AND TRAFFIC SAFETY COMMISSION WHEREAS, one vacancy was created on the Heritage Preservation Commission from the expired term of Rina Shah, who was eligible for reappointment; and WHEREAS, the City announced the recruitment in July 2018, accepted applications until October 25, 2018, and the City Council conducted interviews on November 7, 2018; and WHEREAS, one vacancy was created on the Traffic Safety Commission from the expired term of Belal Yousaf, who was eligible for reappointment; and WHEREAS, the City announced the recruitment in July 2018, accepted applications until October 25, 2018, and the City Council conducted interviews on November 7, 2018; and NOW, THEREFORE,the City Council of the City of Saratoga hereby resolves that the following individuals are appointed to the following terms: Name Commission Term Rina Shah Heritage Preservation December 31, 2018 - December 31, 2022 Belal Yousaf Traffic Safety December 31, 2018 - December 31, 2022 The above and foregoing resolution was passed and adopted at a regular meeting of the Saratoga City Council held on the 21st day of November 2018 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Mary-Lynne Bernald, Mayor Attest: Debbie Bretschneider, Interim City Clerk 7 STATE OF CALIFORNIA COUNTY OF SANTA CLARA I, Rina Shah, do solemnly swear (or affirm) that I will support and defend the Constitution of the United States and the Constitution of the State of California against all enemies, foreign and domestic; that I will bear true faith and allegiance to the Constitution of the United States and the Constitution of the State of California; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties upon which I am about to enter. Rina Shah, Member Heritage Preservation Commission Subscribed and sworn to before me on this 21st day of November 2018. Debbie Bretschneider Interim City Clerk of Saratoga 8 STATE OF CALIFORNIA COUNTY OF SANTA CLARA I, Belal Yousaf, do solemnly swear (or affirm) that I will support and defend the Constitution of the United States and the Constitution of the State of California against all enemies, foreign and domestic; that I will bear true faith and allegiance to the Constitution of the United States and the Constitution of the State of California; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties upon which I am about to enter. Belal Yousaf, Member Traffic Safety Commission Subscribed and sworn to before me on this 21st day of November 2018. Debbie Bretschneider Interim City Clerk of Saratoga 9 SARATOGA CITY COUNCIL MEETING DATE:November 21, 2018 DEPARTMENT:City Manager’s Office PREPARED BY:Debbie Bretschneider, Interim City Clerk SUBJECT:City Council Meeting Minutes RECOMMENDED ACTION: Approve the City Council minutes for the Regular City Council Meeting on November 7, 2018. BACKGROUND: Draft City Council minutes for each Council Meeting are taken to the City Council to be reviewed for accuracy and approval. Following City Council approval, minutes are retained for legislative history and posted on the City of Saratoga website. The draft minutes are attached to this report for Council review and approval. FOLLOW UP ACTION: Minutes will be retained for legislative history and posted on the City of Saratoga website. ATTACHMENTS: Attachment A –Minutes for the Regular City Council Meeting on November 7,2018 10 Saratoga City Council Minutes– Page 1 of 10 MINUTES WEDNESDAY, NOVEMBER 7, 2018 SARATOGA CITY COUNCIL REGULAR MEETING At 5:30 p.m., the City Council held Commission Interviews in the Linda Callon Conference Room at 13777 Fruitvale Avenue in Saratoga. At 6:00 p.m., the City Council held a Joint Meeting with the West Valley-Mission Community College District in the Linda Callon Conference Room at 13777 Fruitvale Avenue in Saratoga. Mayor Bernald called the Regular Session to order in the Civic Theater, Council Chambers at 13777 Fruitvale Avenue in Saratoga at 7:08 p.m. and led the Pledge of Allegiance. Mayor Bernald dedicated the meeting to the victims of the Squirrel Hill Synagogue mass shooting. ROLL CALL PRESENT:Mayor Mary-Lynne Bernald, Vice Mayor Manny Cappello Council Members Emily Lo, Howard Miller, Rishi Kumar ABSENT:None ALSO PRESENT:James Lindsay, City Manager Richard Taylor, City Attorney Crystal Bothelio, Deputy City Manager Debbie Bretschneider, Interim City Clerk Debbie Pedro, Community Development Director Mary Furey, Finance & Administrative Services Director John Cherbone, Public Works Director Michael Taylor, Recreation & Facilities Director Kayla Nakamoto, Recreation Coordinator Lauren Pettipiece, Administrative Analyst II REPORT ON POSTING OF THE AGENDA Interim City Clerk Debbie Bretschneider reported that the agenda for this meeting was properly posted on November 1, 2018. REPORT FROM JOINT MEETING President Brad Davis and Trustee Jack Lucas of West Valley-Mission Community College District spoke about the joint meeting and the great working relationship between the College and City Hall. ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS Mosaic Saratoga showed a video of their event. 11 Saratoga City Council Minutes– Page 2 of 10 Urmila Vidali and Sharan Bal spoke about Mosaic Saratoga and Saratoga High School’s involvement. Rosie Clan spoke about Mosaic Saratoga. Mrs. Clan spoke about Mosaic Saratoga. Annette Stransky spoke about Mosaic Saratoga and the Saratoga Historical Museum. Nardin Sarkis spoke about the Silicon Valley Leadership Group Turkey Trot and the Mayor’s Cup. ANNOUNCEMENTS Vice Mayor Cappello announced that the City’s Annual Holiday Food and Toy Drive, the Saratoga Ministerial Association Thanksgiving Day Interfaith Service, Living Room Conversations, the Annual Holiday Tree Lighting and Wine Stroll, and the Celebration of Light. CEREMONIAL ITEMS Commendation for Public Safety Task Force Members Recommended Action: Present the commendations to the Public Safety Task Force Members. Mayor Bernald and the City Council presented commendations to the Public Safety Task Force Members. SPECIAL PRESENTATIONS AARP Andrus Award for Community Service Presentation Recommended Action: Receive presentation from representatives from AARP on the Andrus Award for Community Service. Representatives from AARP presented the AARP- California Andrus Award to Lisa Oakley, President of Saratoga Area Senior Coordinating Council. 1.CONSENT CALENDAR 1.1. City Council Meeting Minutes Recommended Action: Approve the City Council minutes for the Regular City Council Meeting on October 17, 2018. MILLER/LO MOVED TO APPROVE THE CITY COUNCIL MINUTES FOR THE REGULAR CITY COUNCIL MEETING ON OCTOBER 17, 2018. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 12 Saratoga City Council Minutes– Page 3 of 10 1.2. Review of Accounts Payable Check Registers Recommended Action: Review and accept check registers for the following accounts payable payment cycles: 10/16/2018 Period 4; 10/23/2018 Period 4; and 10/30/2018 Period 4. MILLER/LO MOVED TO ACCEPT CHECK REGISTERS FOR THE FOLLOWING ACCOUNTS PAYABLE PAYMENT CYCLES: 10/16/2018 PERIOD 4; 10/23/2018 PERIOD 4; AND 10/30/2018 PERIOD 4. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 1.3. Treasurer’s Report for the Month Ended September 30, 2018 Recommended Action: Review and accept the Treasurer’s Report for the month ended September 30, 2018. MILLER/LO MOVED TO ACCEPT THE TREASURER’S REPORT FOR THE MONTH ENDED SEPTEMBER 30, 2018. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 1.4. Resolution Amending Youth Commission Eligibility Recommended Action: Approve the resolution amending the Saratoga Youth Commission Administration, Responsibilities and Duties Policy to limit Commissioners to 1 term and prohibit appointment of applicants who will be a high school senior during their first year on the Commission. RESOLUTION 18-056 MILLER/LO MOVED TO APPROVE THE RESOLUTION AMENDING THE SARATOGA YOUTH COMMISSION ADMINISTRATION, RESPONSIBILITIES AND DUTIES POLICY TO LIMIT COMMISSIONERS TO 1 TERM AND PROHIBIT APPOINTMENT OF APPLICANTS WHO WILL BE A HIGH SCHOOL SENIOR DURING THEIR FIRST YEAR ON THE COMMISSION. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 1.5. Landscaping & Lighting Assessment District LLA-1; Resolutions initiating renewal of the District for FY 19-20. Recommended Action: 1. Move to adopt the Resolution describing improvements and directing preparation of the Engineer’s Report. 2. Move to adopt the Resolution appointing the Attorneys for the District. RESOLUTIONS 18-057, 18-058 MILLER/LO MOVED TO ADOPT THE RESOLUTION DESCRIBING IMPROVEMENTS AND DIRECTING PREPARATION OF THE ENGINEER’S 13 Saratoga City Council Minutes– Page 4 of 10 REPORT AND ADOPT THE RESOLUTION APPOINTING THE ATTORNEYS FOR THE DISTRICT.MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 1.6. Park Restroom Maintenance Service Contract – North Bay Building Maintenance Recommended Action: Approve a Park Restroom Maintenance Service Contract with North Bay Building Maintenance for monthly restroom maintenance services in the amount of $68,260 and authorize the City Manager to execute the same. MILLER/LO MOVED TO APPROVE A PARK RESTROOM MAINTENANCE SERVICE CONTRACT WITH NORTH BAY BUILDING MAINTENANCE FOR MONTHLY RESTROOM MAINTENANCE SERVICES IN THE AMOUNT OF $68,260 AND AUTHORIZE THE CITY MANAGER TO EXECUTE THE SAME. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 1.7. Budget Amendment - Brookview Landscaping and Lighting District (Zone 39) Recommended Action: Adopt a Resolution appropriating $50,000 from Zone 39 fund balance into the Fiscal Year 2018-2019 operating budget. RESOLUTION 18-059 MILLER/LO MOVED TO ADOPT A RESOLUTION APPROPRIATING $50,000 FROM ZONE 39 FUND BALANCE INTO THE FISCAL YEAR 2018-2019 OPERATING BUDGET. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 2.PUBLIC HEARING 2.1. Ordinance Establishing Regulations for Storage of Firearms Recommended Action: Conduct a public hearing concerning the attached ordinance that would establish regulations for storage of firearms in Saratoga residences; and, introduce and waive the first reading of the ordinance and direct staff to place the ordinance on the consent calendar for adoption at the next regularly scheduled meeting of the City Council. Crystal Bothelio, Deputy City Manager, presented the staff report. Mayor Bernald opened the public hearing and invited public comment on the item. The following people requested to speak: Annette Ladowitz spoke in support of the ordinance Mark Hinkle spoke against the ordinance Tasanee Hana Phiwreungren spoke in support of the ordinance 14 Saratoga City Council Minutes– Page 5 of 10 Steve Jacobs spoke in support of the ordinance Jeff Klopotic spoke against the ordinance Dorothy Dotsay spoke in support of the ordinance Eric Swanson spoke in support of the ordinance Lareen Jacobs spoke in support of the ordinance Steve Siegel spoke in support of the ordinance Ken Wayne spoke against the ordinance Carol Weiss spoke in support of the ordinance Jonathan Hsu spoke against the ordinance Andrei Popovici spoke against the ordinance Leonid Kuyshav spoke against the ordinance Bernald Gutnick spoke against the ordinance Anne Cross spoke in support of the ordinance Sonia Chang spoke against the ordinance No one else requested to speak. Mayor Bernald closed the public hearing. CAPPELLO/MILLER MOVED TO INTRODUCE AND WAIVE THE FIRST READING OF THE ORDINANCE THAT WOULD ESTABLISH REGULATIONS FOR STORAGE OF FIREARMS IN SARATOGA RESIDENCES AND DIRECT STAFF TO PLACE THE ORDINANCE ON THE CONSENT CALENDAR FOR ADOPTION AT THE NEXT REGULARLY SCHEDULED MEETING OF THE CITY COUNCIL. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO. NOES: NONE. ABSTAIN: KUMAR. ABSENT: NONE. MILLER MOVED TO CANCEL ALL FUTURE COUNCIL MEETINGS UNTIL SUCH TIME AS YAN ZHAO IS SWORN IN. Due to the lack of a second, the motion failed. Mayor Bernald called for a break at 8:57 p.m. and called meeting back to order at 9:07 p.m. 15 Saratoga City Council Minutes– Page 6 of 10 3.GENERAL BUSINESS 3.1. Youth Commission Fundraising Plan Recommended Action: Approve the Youth Commission Fundraising Plan to collect donations and seek sponsorship of various Youth Commission events and activities. Kayla Nakamoto, Recreation Coordinator, presented the staff report. Naisha Agarwal, Youth Commission Treasurer, was present for questions. Mayor Bernald invited public comment on the item. No one requested to speak. LO /CAPPELLO MOVED TO APPROVE THE YOUTH COMMISSION FUNDRAISING PLAN TO COLLECT DONATIONS AND SEEK SPONSORSHIP OF VARIOUS YOUTH COMMISSION EVENTS AND ACTIVITIES. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 3.2. Public Safety Task Force Final Recommendations Recommended Action: Receive final recommendations from the Public Safety Task Force and direct staff to include City Council direction on the recommendations at the 2019 City Council Retreat. Crystal Bothelio, Deputy City Manager, presented the staff report. Mayor Bernald invited public comment on the item. The following people requested to speak: Jim Stallman Chuck Page, Vice Chair of Public Safety Task Force No one else requested to speak. KUMAR MOVED TO MOVE THIS ITEM TO THE COUNCIL RETREAT FOR COUNCIL DISCUSSION. Due to the lack of a second, the motion failed. MILLER/ CAPPELLO MOVED TO HAVE A DISCUSSION ON THE PUBLIC SAFETY TASK FORCE RECOMMENDATIONS AT THE COUNCIL RETREAT AND HAVE NEW THE MAYOR AND VICE MAYOR WORK WITH STAFF ON DETAILS OF THE AGENDA. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 16 Saratoga City Council Minutes– Page 7 of 10 3.3. Dedication for former Mayor Francis Stutzman Recommended Action: Provide direction to staff on funding a tree and a bench dedication for former Mayor Francis Stutzman. Debbie Bretschneider, Interim City Clerk, presented the staff report. Mayor Bernald invited public comment on the item. The following people requested to speak: Jeffrey Schwartz spoke No one else requested to speak. MILLER/CAPPELLO MOVED TO APPROVE FUNDING A TREE, BENCH, AND A LARGE PLAQUE TO HONOR FORMER MAYOR FRANCIS STUTZMAN, TO TAKE STAFF DIRECTION ON LOCATION, AND TO USE FUNDS FROM TREE FUND AND COUNCIL DISCRETIONARY FUND, AND TO INCLUDE THE FAMILY IN THE WORDING OF THE PLAQUE.MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. MILLER/CAPPELLO MOVED TO DIRECT STAFF TO PREPARE A POLICY TO RECOGNIZE ALL RECENTLY DECEASED FORMER MAYORS. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 3.4. 2018 Pavement Management Project – Additional Work Recommended Action: 1. Authorize an increase in the construction contingency for the 2018 Pavement Management Project by $250,000. 2. Adopt a budget resolution to transfer $75,000 from the Hillside Reserve Fund to the Pavement Management Project Budget John Cherbone, Public Works Director, presented the staff report. Mayor Bernald invited public comment on the item. No one requested to speak. RESOLUTION 18-060 MILLER/LO MOVED TO AUTHORIZE AN INCREASE IN THE CONSTRUCTION CONTINGENCY FOR THE 2018 PAVEMENT MANAGEMENT PROJECT BY $250,000 AND TO ADOPT A BUDGET RESOLUTION TO TRANSFER $75,000 FROM THE HILLSIDE RESERVE FUND TO THE PAVEMENT MANAGEMENT PROJECT BUDGET. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 17 Saratoga City Council Minutes– Page 8 of 10 3.5. CivicPlus Mobile App Recommended Action: Provide direction to staff regarding the CivicPlus mobile app. Crystal Bothelio, Deputy City Manager, presented the staff report. Mayor Bernald invited public comment on the item. No one requested to speak. MILLER/BERNALD MOVED TO DIRECT STAFF TO COME BACK IN 6 MONTHS WITH MORE DATA FROM CIVICPLUS ON USE OF THE MOBILE APP. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. COUNCIL ASSIGNMENTS Mayor Mary-Lynne Bernald Council Finance Committee – reviewed the communications budget and the 2018 Pavement Management Project. West Valley Clean Water Program Authority – hired Sheila Tucker as Executive Director. West Valley Mayors and Managers – San Jose Council Member Chappie Jones attended and spoke on transportation and the impact of housing near city borders on parking in other cities. The SVRIA committee is seeking applications from West Valley Council Members and West Valley Mayors and Managers has received three VTA Board applications. West Valley Solid Waste Management Joint Powers Authority – during the last meeting, the Board discussed financial penalties to the garbage company, organic pickups, and missed pickup rates. Vice Mayor Manny Cappello Cities Association of Santa Clara County Board of Directors – held an executive meeting and discussed the agenda for the regular meeting, which included a report from Senator Hill, a transportation presentation, a presentation on Housing EDU’s, and the election of new executive board. The new executive board will be announced to the general membership at the Holiday Dinner on December 7, 2018. Council Member Howard Miller Council Finance Committee – the meeting did not have a quorum. Saratoga Ministerial Association – there was discussion on safe storage of firearms, the success of the Safe Park Program, Thanksgiving Day Interfaith Service, and the Celebration of Light event. Saratoga Sister City Organization – there was discussion of the value of joining the National Sister City program, how to increase memberships, and the January 24 General Meeting. Silicon Valley Clean Energy Authority Board of Directors – the Board gave a positive review of chief executive officer, discussed State approvals that will make it easier for residents to not use clean energy, and approved contracts to build two solar plus storage facilities. Valley Transportation Authority (VTA) Policy Advisory Committee –there was no quorum and the meeting was cancelled. 18 Saratoga City Council Minutes– Page 9 of 10 Council Member Emily Lo Hakone Foundation Board & Executive Committee – two Board members were renewed and a new board trustee, Emily Lo, was selected. The Board is hiring a grant writer to help with fundraising and accepted the 2018-19 Budget report. The Koi Pond Pump House project ribbon cutting is on November 27. Santa Clara County Library Joint Powers Authority – at the meeting, the retirement of three long-term board members was announced. The Board also heard a report on Library service, including that 64 % of Santa Clara County residents have a library card, and that there will be additional Library hours in 2019, with the Saratoga Library open from 10:00 a.m. every day. Council Member Rishi Kumar Saratoga Chamber of Commerce & Destination Saratoga –Council Member Kumar was not able to attend the meeting last month but sent an update to the Chamber. Santa Clara Valley Water District Commission – there was a presentation on the economics of recycled water for commercial viability. CITY COUNCIL ITEMS Council Member Miller asked to bring forward an agenda item on the Safe Park Program and the steps needed to move the program past the pilot status. Mayor Bernald supported the request. Council Member Miller requested that staff seek out the Silicon Valley Turkey Trot Mayor’s Cup outreach points. Vice Mayor Cappello supported the request. COUNCIL COMMUNICATIONS Council Member Kumar spoke about safety in Saratoga and that break-ins are low compared to last year, but break-in activities are still happening, particularly car break-ins. He recommended that everyone install security cameras at their homes. Council Member Miller spoke about public safety and that with the holidays coming up, everyone is ordering packages and having items delivered to front porches, which are not safe. He also discouraged residents from leaving valuables in cars and reminded the public to call 911 if they see anything suspicious. Council Member Lo announced that the Executive Committee for the League of California Cities Peninsula Division is having a retreat on November 11. CITY MANAGER'S REPORT None ADJOURNMENT MILLER/CAPPELLO MOVED TO ADJOURN THE MEETING AT 10:32 P.M. MOTION PASSED. AYES: BERNALD, CAPPELLO, LO, MILLER, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 19 Saratoga City Council Minutes– Page 10 of 10 Minutes respectfully submitted: Debbie Bretschneider Interim City Clerk City of Saratoga 20 Gina Scott, Accounting Technician SUBJECT: Review of Accounts Payable Check Registers RECOMMENDED ACTION: Review and accept check registers for the following accounts payable payment cycles: BACKGROUND: The information listed below provides detail for weekly City check runs. Checks issued for $20,000 or greater are listed separately as well as any checks that were voided during the time period. Fund information, by check run, is also provided in this report. REPORT SUMMARY: Attached are Check Registers for: Date Ending Check # 11/06/18 137317 137380 64 152,975.36 11/06/18 10/30/18 137316 11/13/18 137381 137426 46 145,806.98 11/14/18 11/06/18 137380 Accounts Payable checks issued for $20,000 or greater: Date Check # Issued to Dept.Amount 11/06/18 137360 PW 43,506.00 11/06/18 137377 CDD 26,526.48 11/13/18 137386 PS 32,429.46 11/13/18 137394 PW 29,958.00 11/13/18 137422 Various 29,593.14 Accounts Payable checks voided during this time period: AP Date Check #Amount ATTACHMENTS: Check Registers in the 'A/P Checks By Period and Year' report format N/A Reason Issued to Status Duran and Venables City of San Jose Various Prior Check Register Checks Released Total Checks Amount Various CIP Streets Project Fund Allendale Speedtable US Bank Purchase Card Fund Purpose Animal Services Saratoga Builders Bond Refund Hakone Gardens General Yongwei Zhang CIP Parks Project Fund General 11/06/2018 Period 5; and 11/13/2018 Period 5. PREPARED BY: Ending Check # Starting Check #Type of Checks Date Accounts Payable Accounts Payable SARATOGA CITY COUNCIL MEETING DATE:November 21, 2018 DEPARTMENT:Finance & Administrative Services 21 22 23 24 25 26 27 28 29 30 31 32 33 SARATOGA CITY COUNCIL MEETING DATE: November 21, 2018 DEPARTMENT: Finance & Administrative Services PREPARED BY: Dennis Jaw, Finance Manager SUBJECT: AB1600 Development Impact Fee Report RECOMMENDED ACTION: Review and accept the annual AB1600 Development Impact Fee report for the year ended June 30, 2018. BACKGROUND: As required under AB1600 accounting guidelines, this report provides: 1. A brief description of the type of fee; 2. The amount of the fee; 3. Beginning and ending balances of the fees; 4. Total fees collected and the interest earned, if applicable; 5. Identification of the public improvement the fees were used for; 6. Identification and timeline of public improvements any unexpended fees will be used for; 7. Description and uses for transfers or loans of fees, if applicable. The AB1600 Development Impact Fee that the City collects is the also known as the Park-In-Lieu Fee. Under Saratoga’s Municipal Code 14-28.080, as a condition of approval, a sub-divider/owner shall either dedicate a portion of land or pay a fee in lieu thereof, or a combination of both at the option of the City, for the purpose of providing park or recreational facilities for each new parcel. Five acres of parkland per 1,000 residents is the standard promulgated by the National Recreation and Parks Association and is a common metric utilized by other communities in California to measure adequacy of parkland. Saratoga’s 2007 Update to the Open Space and Conservation Element of the City’s General Plan recognized that additional parkland must be protected and adopted this goal to provide at least five acres of parkland per 1,000 residents to maintain the City’s existing character as a small-town community surrounded by rural and open space. In support of this goal, the City established a Development Impact Fee of $20,775 per new parcel to provide funding for increased usage and additional park requirements brought on by the new development within the City. The Park-In-Lieu Fee of $20,775 per subdivided parcel is calculated based upon the following formula: (2.77 people per household) X (5 acres per 1,000 residents) X ($1.5 million per acre) = $20,775 # of residents 34 Given that lot subdivisions are infrequent in nature and difficult to project, the revenue is not included in the budget. The table below summarizes the activity for the Park-In-Lieu Fees collected over the last five fiscal years, and utilized as of June 30, 2018. Remaining Park-In-Lieu Fees are re-budgeted into the assigned capital project for use in the next fiscal year, as shown in the far-right gray-shaded column: The FY 2017/18 ending balance of $294,064 was committed to four capital improvement projects for FY 2018/19. As of June 30, 2018, funding was allocated to include $43,000 for Park & Safety Trail Improvements, $75,000 for Quito/Pollard Road Open Space Improvements, $120,000 for Hakone Gardens Infrastructure Improvements, and $50,000 for the Quarry Park Pond Walkway Clearing. The remaining unallocated balance of $6,064 plus future Park-In-Lieu Fees will be applied to park improvement projects as directed by Council through the annual Capital Improvement Plan budget process. Budgeted Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Beginning balance 393,660$ 682,530$ 526,754$ 495,466$ 118,365$ 294,064$ Sources: Park-In-Lieu Fees 393,531 61,200 372,600 900 20,775 - Funds from closed projects (231) 1,265 19,000 - 264,924 - Uses: Park Restroom Improvements 39,929 - - - - - Wildwood Park Bridge Rehab 64,501 60,499 - - - - Quarry Park Plan Implementation - 126,743 153,888 - - - Hakone Gardens Master Plan - - 250,000 - - - Saratoga Village Creek Construction - 31,000 19,000 - - - Magical Bridge Playground - - - 128,000 (100,000) - Quarry Park ADA Access - - - 250,000 - - Hakone Gardens Koi Pond Improvements - - - - 110,000 - Saratoga Village to Quarry Park Walkway - - - - 100,000 - Park & Safety Trail Improvements - - - - - 43,000 Quito/Pollard Road Open Space Impr,- - - - - 75,000 Hakone Gardens Infrastructure Impr.- - - - - 120,000 Quarry Park Pond Walkway Clearing - - - - - 50,000 - - Remaining Available Funds:682,530$ 526,754 495,466 118,365 294,064 6,064 Park In Lieu Development Fees 35 SARATOGA CITY COUNCIL MEETING DATE:November 21, 2018 DEPARTMENT:City Manager’s Office PREPARED BY:Crystal Bothelio, Deputy City Manager SUBJECT:Ordinance Establishing Regulations for Storage of Firearms RECOMMENDED ACTION: Waive the second reading and adopt the attached ordinance that would establish regulations for storage of firearms in Saratoga residences. BACKGROUND: On November 7, 2018, the City Council introduced and waived the first reading of the attached ordinance. If adopted, the attached ordinance would require firearms to be stored in a locked container or disabled with a safety device listed in the California Department of Justice’s roster of approved firearm safety devices when the firearms are not in the owner’s immediate possession while in a Saratoga residence. Violations of the storage requirements would be processed as an infraction. Any resident who reports a stolen or lost firearm would not be subject to the penalties for violating storage requirements. ATTACHMENTS: Attachment A –Ordinance Establishing Regulations for Storage of Firearms 36 Page 1 DRAFT ORDINANCE NO. _____ ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SARATOGA ADDING CITY CODE ARTICLE 6-35 REGARDING STORAGE OF FIREARMS The City Council of the City of Saratoga finds that: 1. Firearm injuries have a significant adverse public health and safety impact nationally, regionally, and locally. 2. A Santa Clara County Public Health Department report released in April 2018 state that 11% of injury deaths in Santa Clara County were due to firearms injuries. On average, there were 81 deaths per year in the County resulting from firearm injuries from 2012 to 2016. 3. An estimated one in 10 adults in Santa Clara County keep a firearm in or around their home in 2013 through 2014 according to a 2018 Santa Clara County Public Health Department report. 4. Improperly stored or secured firearms may result in accidental firearm injuries or deaths, particularly in homes with children, and are susceptible to theft. 5. In the City of Saratoga, 17 firearms were reported as stolen between 2014 and 2017. 6. Providing for safe storage of guns in homes is one strategy for preventing accidental shootings and theft. 7. The City Council of the City of Saratoga held a duly noticed public hearing on November 7, 2018, and after considering all testimony and written materials provided in connection with that hearing introduced this ordinance and waived the reading thereof. The City Council of the City of Saratoga does ordain as follows: Section 1.Adoption. The Saratoga City Code is hereby amended as set forth in Attachment A. Section 2. Severance Clause. The City Council declares that each section, sub-section, paragraph, sub-paragraph, sentence, clause and phrase of this ordinance is severable and independent of every other section, sub- section, paragraph, sub-paragraph, sentence, clause and phrase of this ordinance. If any section, sub-section, paragraph, sub-paragraph, sentence, clause or phrase of this ordinance is held invalid, the City Council declares that it would have adopted the remaining provisions of this ordinance irrespective of the portion held invalid, and further declares its express intent that the remaining portions of this ordinance should remain in effect after the invalid portion has been eliminated. 37 Page 2 DRAFT Section 3. California Environmental Quality Act The proposed amendments and additions to the City Code are exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guideline sections 15060(c)(2), 15060(c)(3), and 15061(b)(3). CEQA applies only to projects which have the potential of causing a significant effect on the environment. As here, where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Section 4. Publication. A summary of this ordinance shall be published in a newspaper of general circulation of the City of Saratoga within fifteen days after its adoption. Following a duly notice public hearing the foregoing ordinance was introduced at the regular meeting of the City Council of the City of Saratoga held on November 7, 2018 and was adopted by the following vote on November 21, 2018. COUNCIL MEMBERS: AYES: NOES: ABSENT: ABSTAIN: SIGNED: Mary-Lynne Bernald MAYOR, CITY OF SARATOGA, CALIFORNIA ATTEST: DATE: Debbie Bretschneider INTERIM CITY CLERK APPROVED AS TO FORM: DATE: Richard Taylor CITY ATTORNEY 38 Page 3 DRAFT Attachment A – Article 6-35 Firearms Chapter 6 of the Saratoga Municipal Code is amended to adopt the Article set forth below: Article 6-35 – Firearms. 6-35.010 Storage of Firearms in a Residence. Except when carried on his or her person, or in his or her immediate control and possession, no person shall keep a firearm (as defined in California Penal Code 16520 or as amended) in any residence in Saratoga owned or controlled by that person unless the firearm is stored in a locked container (as defined in California Penal Code 16850 or as amended) or the firearm is disabled with a safety device that is listed on the California Department of Justice’s roster of approved firearm safety devices. 6-35.020 Violations. The violation of any provision contained in this Article is hereby declared to be unlawful and shall constitute an infraction, subject to the penalties as prescribed in Chapter 3 of this Code. In order to encourage reports to law enforcement agencies of lost or stolen firearms, a person who files a report with a law enforcement agency notifying the agency that a firearm has been lost or stolen shall not be subject to any code enforcement proceeding for any alleged violation of section 6-35.010 above. 1002722.3 39 SARATOGA CITY COUNCIL MEETING DATE:November 21, 2018 DEPARTMENT:City Attorney PREPARED BY:Richard Taylor, City Attorney SUBJECT:Annual Code Update for 2018 RECOMMENDED ACTION: Conduct the public hearing, introduce and waive the first reading of the attached ordinance updating various provisions of the City Code and direct staff to place the matter on the consent calendar for the next regular meeting of the City Council. BACKGROUND: Each year the City adopts a number of cleanup amendments to the City Code to clarify ambiguities, comply with state laws, and conform to new best practices that have changed since the Code was adopted. At the City Council meeting of September 19, 2018 staff identified a number of changes for Council consideration and the City Council referred matters in the Zoning portions of the Code to the Planning Commission for its review. On November 14, the Planning Commission by a vote of 7-0 recommended adoption of those proposed amendments with the exception of the proposed changes to the definition of subterranean structure which they recommended to have further study. In addition, on October 17, 2018, the Council directed that the update include an amendment that would change the Planning Commission meeting schedule to one meeting per month. The Planning Commission discussed the proposed change to the Commission meeting schedule on November 14. The Commission did not vote on the matter. Staff has encouraged interested Commissioners to attend the Council meeting to share their opinions. The Code changes in the ordinance included as Attachment A are: 1.Administration This set of updates addresses administrative appeals related to CEQA, the date for the first Council meeting of the year, and Planning Commission meeting dates. The City Code provides a general right to appeal to the City Counsel for non-ministerial decisions of City officials. The City’s proposed CEQA Guidelines specify the types of CEQA decisions that are subject to appeal and the update would cross-reference those Guidelines. 40 The City Code provides that the Council will meet on the first and third Wednesday of each month. However, it is impractical to meet on the first Wednesday of January because the holidays interfere with preparation and posting of agendas and staff reports. The City Council for many years has voted to cancel the first meeting in January. These amendments to the City Code would specify that there is no Council meeting on the first Wednesday in January. Finally, this set of updates includes a change to the Planning Commission meeting schedule to one meeting per month to be held on the second Wednesday of the month. This reflects the reduced number of matters coming before the Commission. 2.Weed Abatement These changes have the Code’s rules better reflect the new procedures for the Weed Abatement Program. Minor Code changes have been identified by staff that will further streamline program administration and public understanding of the process. 3.Dangerous Dogs Regulations The dangerous dog regulations were last updated in November 2014. A member of the public requested review of the regulations, and the Council on September 19 directed staff to include the changes in the Code update. These amendments update the Code regarding neighbor notification, inspection requirements, registration and tagging, behavior modification, and clarify provisions concerning appeals related to animal control matters. 4.Repeal of Article 10-15 (Pipes, Drains and Conduits Along, Under or Across Streets) The current City Code provisions concerning encroachments on City property do not reflect current City practices and best practices with respect to protecting public infrastructure. Additionally, the Code includes many detailed engineering specifications that are best determined on a case-by-case basis. This amendment will repeal Article 10-15 so that all encroachment regulations will be simplified and consolidated into Article 10-20. 5.Redraft of Article 10-20 - Encroachments on City Property See item 4. 6.Zoning Regulation Definitions This portion of the update affects definitions applicable to the zoning ordinance. The City Code currently has a typographical error in the definition of “Fence” and the floor area definition includes “basements” as a type of space that could be counted as floor area despite Section 15- 06.090 stating that basements are not to be included in the calculation of floor area. This amendment would correct the typographical error in the definition of “Fence” and remove the reference to “basements” in the definition of floor area to clear any confusion. In addition, this amendment would add a definition of “Winery” to the City Code. The Planning Commission discussed the proposed amendments to the definition of “Subterranean Structure” and concluded that the matter should be the subject of further inquiry. 41 The following definition was presented for review. It is not included in the attached draft of the ordinance. 15-06.685 – Subterranean Structure. "Subterranean Structure" includes a cellar, bunker, or other structure that (a) is not located beneath the building footprint of a structure; (b) does not encroach into setback areas; (c) the vertical distance from grade to the topmost point of the structure is less than or equal to forty-two inches. The term "grade" shall mean either the natural grade or finished grade immediately adjacent to the exterior walls of the structure, whichever is lower; (d)is located partly or wholly underground except for required ingress/egress, lighting and ventilation; and (e) is not visible from the public right of way.The floor area of subterranean structures is not counted against a property's maximum floor area and only fifty percent of the floor area is counted against a property's maximum site coverage. 7.Conditional Uses Reference The City Code currently includes a list of conditional uses that may be allowed in the R-1 district upon the granting of a use permit pursuant to Article 15-55 and 15-56. The regulations in Article 15-56 pertain to Accessory Dwelling Units which are not considered a conditional use. This amendment would remove the reference to Article 15-56. 8.Agricultural Preserves In 2016 the City Council adopted updated procedures for processing Williamson Act applications including streamlined procedures for designating lands in the “Agricultural” and “Hillside Residential” zoning districts as Agricultural Preserves. The City Code currently includes an AP/OS overlay district, but because of this new process, the AP/OS overlay district is no longer needed. This amendment conforms to current City practice. 9.Fence Regulation Restrictions This changes an two incorrect references. The Planning Commission can approve a solid fence taller than six feet through an exception process listed in Section 15-29.090. The City Code currently references Section 15-29.080 (Exemption for Agricultural Uses) as the location of the exception process. Additionally, the existing swimming pool fence regulations reference an outdated code section, Section 16-75.010 which was repealed in 2013. Swimming pool fence regulations are contained in the California Building Code. This amendment will delete the incorrect references and replace them with the correct references. 10.Tree Regulations The current list of native trees in the City Code includes tree names that are incorrectly capitalized or the botanical names are spelled incorrectly. This amendment would correct those misspellings to the native tree names. 42 11.Construction Debris Recycling The City Code’s Sustainability Chapter lists Code provisions that help reduce greenhouse gases. The Chapter currently references Code Section 16-72 (regarding construction debris recycling), which has been repealed because construction debris recycling is now addressed in the Green Building Standards Code. This amendment would update the text of this section to reflect the current requirements and add a reference to the Green Building Standards Code. ALTERNATIVE ACTION: The City Council may suggest revisions to the ordinance text. FOLLOW UP ACTION: If introduced by the City Council, staff will place this ordinance on the consent calendar for adoption at the next regular meeting of the City Council. ADVERTISING, NOTICING AND PUBLIC CONTACT: Notice of the public hearing was published in the Saratoga News on November 9. ATTACHMENT: Attachment A – 2018 Annual Code Update Ordinance 1061691.1 43 ORDINANCE NO. _____ ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SARATOGA AMENDING CITY CODE ARTICLES 7-15 (WEED ABATEMENT);7-20 (DANGEROUS DOGS); 10- 15, -20 (ENCROACHMENTS ON CITY PROPERTY); 15-15 (AP/OS: AGRICULTURAL PRESERVE OVERLAY DISTRICT); AND SECTIONS 2-05.030 (ADMINISTRATIVE APPEALS); 2-10.10 (COUNCIL MEETING DATES); 2-15.040 (PLANNING COMMISSION MEETING DATES); 15-06.21 (DEFINITION OF FENCE); 15-06.280 (DEFINITION OF FLOOR AREA); 15-06.825 (DEFINITION OF WINERY); 15-12.030 (CONDITIONAL USES IN R-1 SINGLE FAMILY RESIDENTIAL DISTRICT); 15- 29.010 (SWIMMING POOL FENCES); 15-50.020(P) (NATIVE TREE DEFINITIONS); AND 17-05.010 (CONSTRUCTION DEBRIS RECYCLING). The City Council of the City of Saratoga finds that: 1. The City Code of the City of Saratoga requires periodic updates to reflects changes in law, provide clarification to the community, and provide for improved customer service and administration of City business. 2. The City Council referred the amendments to Saratoga Municipal Code Chapters 7 and 15 in this ordinance to the Planning Commission and the Planning Commission held a hearing on those amendments on September 26 and November 14, 2018. Following consideration of all testimony and written materials, the Planning on November 14 2018 recommended that the City Council adopt the amendments to Chapter 15 set forth herein. 3. The City Council of the City of Saratoga held a duly noticed public hearing on November 21, 2018, and after considering all testimony and written materials provided in connection with that hearing introduced this ordinance and waived the reading thereof. Therefore, the City Council of the City of Saratoga hereby ordains as follows: Section 1.Adoption. The Saratoga City Code is hereby amended as set forth in Exhibit A. Section 2.Severance Clause. The City Council declares that each section, sub-section, paragraph, sub-paragraph, sentence, clause and phrase of this ordinance is severable and independent of every other section, sub- section, paragraph, sub-paragraph, sentence, clause and phrase of this ordinance. If any section, sub-section, paragraph, sub-paragraph, sentence, clause or phrase of this ordinance is held invalid, the City Council declares that it would have adopted the remaining provisions of this ordinance irrespective of the portion held invalid, and further declares its express intent that the remaining portions of this ordinance should remain in effect after the invalid portion has been eliminated. 44 Section 3. California Environmental Quality Act The proposed amendments and additions to the City Code are Categorically Exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guideline section 15061(b)(3). CEQA applies only to projects which have the potential of causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. In this circumstance the amendments to the existing City Code and related sections and additions of provisions and reference appendices to the existing Code; the amendments and additions would have a de minimis impact on the environment. Section 4. Publication. A summary of this ordinance shall be published in a newspaper of general circulation of the City of Saratoga within fifteen days after its adoption. Following a duly noticed public hearing the foregoing ordinance was introduced at the regular meeting of the City Council of the City of Saratoga held on the 21st day of November, 2018 and was adopted by the following vote on December 5, 2018. COUNCIL MEMBERS: AYES: NOES: ABSENT: ABSTAIN: SIGNED: Mary-Lynne Bernald MAYOR, CITY OF SARATOGA, CALIFORNIA ATTEST: DATE: Debbie Bretschneider INTERIM CITY CLERK APPROVED AS TO FORM: DATE: Richard Taylor, CITY ATTORNEY 45 2018 Annual Code Update - Page 3 Exhibit A - 2018 Saratoga Municipal Code Update The provisions of the Saratoga Municipal Code set forth below are amended or adopted as follows: Text added to existing provisions is shown in bold double-underlined text (example) and text to be deleted in shown in strikethrough (example). Text in italics is explanatory and is not an amendment to the Code except in cases where it directs renumbering of subsections not otherwise amended. 1.Administration 2-05.030 – Administrative Appeals (a) Right to appeal. Except where an appeals procedure is otherwise specifically set forth in this Code, any interested person objecting to the whole or any portion of an administrative determination or decision made by a commission, committee or an official of the City, where such determination or decision involves the exercise of administrative discretion or personal judgment pursuant to any of the provisions of this Code, may appeal to the City Council by filing with the City Clerk a notice of appeal clearly identifying the determination or decision from which the appeal is taken and stating the grounds for the appeal. Decisions pertaining to implementation of the California Environmental Quality Act may be appealed only in accordance with the Local CEQA Guidelines of the City of Saratoga. A The notice of appeal shall be accompanied by the payment of a filing fee in such amount as established from time to time by resolution of the City Council. [No changes to subsections (b) through (i).] 2-10.010 - Regular meetings. The regular meetings of the City Council shall be held on the first and third Wednesdays of each month except for the first Wednesday of January unless such day is a holiday, in which case the meeting may be held on such business day as designated by the City Council or the meeting may be cancelled. The time of such meeting shall be 7:00 P.M., provided, however, that the City Council may meet in closed session or with Commissions and community groups, and conduct study sessions as part of the regular meeting prior to 7:00 P.M. The place shall be at City Hall in the Saratoga City Council Chambers at 13777 Fruitvale Avenue, Saratoga, California unless otherwise specified on the agenda for the meeting. Any regular meeting may be rescheduled or cancelled by action of the City Council at a regular or special meeting preceding the meeting to be rescheduled or cancelled. 2-15.040 - Regular meetings. The regular meetings of the Planning Commission shall be held on the second and fourth Wednesday of each month unless such day is a holiday, in which case the meeting may be held on 46 2018 Annual Code Update - Page 4 such business day as designated by the Planning Commission or the meeting may be cancelled. The time of such meeting shall be 7:00 P.M., subject to modification by the Planning Commission, and the place shall be at City Hall in the Saratoga City Council Chambers. Any regular meeting may be cancelled by the Planning Commission upon announcement of such cancellation at the regular meeting preceding the meeting to be cancelled. 2. Weed Abatement 7-15 – Weed and Rubbish Abatement 7-15.010 - Authority for Article. This Article is adopted pursuant to Sections 39501 and 39502 of the Government Code. It is intended as an alternative to the procedure set forth in Article 2 of Chapter 13, Division 3 of Title 4 of the Government Code (commencing with Section 39560). The City may proceed under this Article or said Article 2 of the Government Code, or both. All references to actions by the City Manager or the City herein also include, respectively, the Manager’s and City’s designees. 7-15.020 - Delegation of enforcement authority to County; Enforcement Officer defined. (a) Except as otherwise expressly provided in this Article, the duty and authority to enforce the provisions of this Article are hereby delegated to the County, to be performed in accordance with the terms of such contract for weed abatement services as may be executed from time to time between the City and the County. In the event such contract is terminated, the delegation of authority granted herein shall automatically expire. (b) The term "Enforcement Officer," as used in this Article, means the person or persons duly authorized by the County to administer and enforce the provisions of this Article. If the County at any time ceases to render weed abatement services for the City, the Enforcement Officer shall be such person as designated by the City Council. 7-15.030 020 - "Weeds" defined. The term "weeds," as used in this Article, shall include, without limitation, any of the following: (a) Weeds which bear seeds of a downy or wingy nature; (b) Sagebrush, chaparral, and any other brush or weeds which attain such large growth as to become, when dry, a fire menace; (c) Weeds which are otherwise noxious or dangerous; (d) Poison oak and poison ivy when the conditions of growth are such as to constitute a menace to the public health; 47 2018 Annual Code Update - Page 5 (e) Dry grass, stubble, brush, litter, or other flammable material which endangers the public safety by creating a fire hazard. 7-15.040 030 - Public nuisance and abatement requirements. Each of the following are hereby declared to be a public nuisance and shall be abated by the owner of the property, who is hereby required to remove or destroy such weeds, rubbish, refuse, dirt, obstructions and any other dangerous materials, as hereafter described, from his or her property, and from the abutting street or streets adjoining such property within the extended lot lines thereof, to the centerline of such street or streets: (a) All weeds, rubbish, refuse, dirt or other obstructions located or growing on the right-of- way of any public street or street offered for dedication to the public, and any sidewalk, curb, gutter, parkway, driveway, private road or right-of-way furnishing access to any building or structure, or alley within the City; (b) Except as set forth in subparagraph (c) of this Section below, all All weeds, rubbish, refuse, and other materials dangerous to neighboring property or the health or welfare of residents in the vicinity, which are growing or located within one hundred feet of any building, fence, structure or property line , regardless of whether or not the same be growing or located on the same lot, site or parcel on which the building, fence or other structure is located, in all zoning districts in the City except as set forth in Paragraph (c) of this Section. (c) In an A, HR, R-OS HC-RD, NHR or R-1-40,000 zoning district in the City, all weeds, rubbish and refuse which are growing or located on any unsubdivided lands, or on any site or parcel of land of an area parcel or parcels in excess of one acre in single ownership, which are within one hundred feet of any building or structure, or within thirty feet of any right-of-way line of a public street or within thirty feet of the property line of the parcel(s), site, or lot in question. In addition, on any parcel or parcels in excess of five acres in single ownership, there shall be established 30 foot fuel breaks cleared of flammable violation dividing the parcel or parcels into segments of five acres or less. It is the intention of this provision to permit the retention of natural growth on larger parcels of land in the lesser developed areas of the City, but at the same time, to provide reasonable regulations for the prevention of sweeping fires in such areas. 7-15.050 040 - Declaration of nuisance and order to abate; public hearing by City Council. (a) The Enforcement Officer City Manager shall furnish annually to the City Council a report of those properties on which any weeds, rubbish, refuse, dirt, obstructions or other dangerous materials have been found to exist in violation of this Article. The City Council shall review such report at a public hearing and upon the close of the public hearing make any changes therein it deems necessary or proper and. Upon approval of the report as submitted or modified, the City Council shall, by resolution, declare a public nuisance to exist upon the properties described in the report and order abatement of the nuisance. 48 2018 Annual Code Update - Page 6 7-15.060 - Notice to abate; public hearing by City Council. (ab) At least 10 calendar days prior to the public hearing, Tthe Enforcement Officer City Manager shall send to the owner of each property on which a nuisance has been found declared by the City Council to exist, at his the owner’s address as shown on the latest available equalized assessment roll, a notice to informing the owner of the nuisance and directing abatement abate such of the nuisance within the time specified in the notice which shall be not less than thirty 10 days after the date on which the notice is mailed. A copy of the notice shall also be published once in a newspaper having general circulation in the City and posted at a conspicuous location in City Hall. The notice to abate shall also advise the property owner of the following: (1) The date, time, location of the City Council public hearing; (2) That upon failure by the owner to abate the nuisance within the specified time, the property will be declared a public nuisance and the weeds, rubbish, or other materials will be removed by the County City; (23) That all fees and abatement costs incurred by the County, together with an administrative fee in the amount set forth in the notice, shall be charged to the owner; (34) That nonpayment of the fees and abatement costs and the administrative fee will result in the same being levied as a special assessment against the property, to be collected at the same time and in the same manner as ordinary real estate taxes; (4) That any person objecting to the declaration of nuisance or the proposed abatement thereof may present such objections at a the public hearing to be conducted by the City Council at the time and place indicated in the notice. (b c) The City Council shall conduct a public hearing on the proposed nuisance declaration and abatement order at the time and place designated in the notice and shall hear and determine consider any objections by the owners of properties on which a nuisance has been found. The City Council shall make any changes in the declaration and order it deems necessary or proper, after which the Council shall by resolution confirm the declaration and order as submitted or modified.declared to exist. The Council may sustain or overrule such objections and shall notify both the owner and the Enforcement Officer of its decision within ten days after the conclusion of the public hearing. The decision by the Council shall be final. 7-15.070 050 - Abatement by County. Upon any failure by the property owner to remove or abate the a nuisance listed in the declaration and order within the time specified in the notice given pursuant to Subsection 7- 15.05060(a), and provided the declaration of nuisance and order to abate the same has not been rescinded by the City Council at the hearing conducted pursuant to Subsection 7-15.060(b), the City Manager Enforcement Officer shall, without further order or notice, cause the nuisance to 49 2018 Annual Code Update - Page 7 be abated, and for such purpose, the Enforcement Officer City and his its agents, employees and contractors are authorized to enter upon the property where such nuisance exists. Nothing herein shall prevent the property owner from himself abating such nuisance, so long as all weeds, rubbish, refuse, dirt, obstructions and dangerous materials have been completely removed or destroyed prior to the arrival of the Enforcement Officer or his representatives City’s designees to remove the same. 7-15.080 060 - Account of costs and billing. The Enforcement Officer City shall keep an account of fees and the costs of abating such nuisance upon each separate lot or parcel of land and shall send a bill for the same, including the administrative fee, to the property owner by mail, to the address or addresses to which the original notice of abatement had previously been sent, which bill shall specify on the face thereof that, in the event of the failure of the full payment of the same within fifteen thirty days from date of mailing, the amounts set forth in such bill, together with administration costs, will become a lien against the land and shall constitute a special assessment and be collected at the same time and in the same manner as general municipal taxes of the City, and a hearing on such assessment and any objections thereto will be held by the City Council at the time and place indicated in the billing, and that no other or further notice will be given of such assessment and hearing other than as set forth on the face of the billing. 7-15.090 070 - Assessment report and hearing. The Enforcement Officer shall submit a The City Manager shall submit a report to the City Council of all unpaid bills for weed abatement costs and fees expenses and administration costs, and a list of the parcels to be assessed for such expenses and costs and fees. The Council shall conduct a public hearing on the report, at which time any property owner may object to any matter contained in the report. No notice need be given of such hearing other than the notice contained in the billing previously sent to the property owner in accordance with Section 7- 15.080060. The City Council shall review the report, hear and determine any objections thereto, and make any changes therein it deems necessary or proper, after which the Council shall by resolution confirm the report and assessment as submitted or modified. The decision by the Council shall be final. 7-15.100 080 - Levy and collection of special assessment. The cost of abating the nuisance upon the property described in the Enforcement Officer's assessment report, together with the administrative applicable fees thereon, as finally confirmed by the City Council, shall constitute a special assessment against each respective lot or parcel of land, and after thus made and confirmed, shall constitute a lien on such property for the amount of such assessment until paid. A certified copy of the assessment shall be filed with the County Tax Collector, who shall enter the amounts of such assessments against the respective lots or parcels of land on the County tax roll upon which general municipal taxes are to be collected, and the amount of each such assessment shall be collected at the same time and in the same manner as ordinary municipal taxes, and shall be subject to the same interest and penalties, and the same procedures for sale in case of delinquency. All laws and ordinances heretofore or 50 2018 Annual Code Update - Page 8 hereafter made applicable to the levy, collection and enforcement of City taxes are hereby made applicable to such special assessments. 7-15.110 090 - Summary abatement. Nothing contained in this Article shall prevent the Enforcement Officer City from abating any weed or rubbish nuisance summarily, without notice to the property owner, pursuant to Article 3- 20 of this Code where an immediate hazard to the public health, safety or welfare is found by the Enforcement Officer to exist upon any real property in the City. In such event, the collection of abatement costs and levy of the same as a special assessment shall be conducted in accordance with the procedure set forth in Article 3-20 of this Code. 7-15.120 100 - Violations of Article; penalties. The violation of any provision contained in this Article shall constitute an infraction, subject to the penalties as set forth in Chapter 3 of this Code. 3. Dangerous Dogs Regulations 7-20.110 – Impoundment. [No changes in subsections (a) through (f)] (g) Disposition of impounded animal. Any animal impounded and not (1) redeemed or (2) subject to a request for a hearing pursuant to Section 3-10.050 of the City Code appealing a decision that the animal may not be redeemed, within the state-mandated holding period and in the manner specified in this Article may be disposed of by the Animal Control Officer or the shelter where such animal is confined; provided, however, any animal that has been determined by a veterinarian licensed by the State or other qualified person to be diseased or injured to the extent that emergency veterinary care will not alleviate its suffering shall be destroyed in a humane manner as soon as possible, and in such event, the Animal Control Officer shall not be required to give the notice described in subsection (b) of this Section. An animal in good health and temperament shall be made available for adoption or release to a humane society or other society incorporated and organized for the prevention of cruelty to animals qualifying under Corporations Code Section 14500 and following and deemed satisfactory by the Animal Control Officer in his or her sole discretion. [No changes in subsection (h).] 7-20.120 - Hearings. (a) Request for hearing on determinations pursuant to this Article.regarding impounded animal.Except where notice is not required to be given to an owner under any provision in this Article, any owner of an animal that is the subject of an order or determination pursuant to this Article, or any Any owner of an impounded animal who wishes to challenge a 51 2018 Annual Code Update - Page 9 determination that an impounded animal may not be redeemed or the conditions imposed on redemption, may file an appeal by shall personally delivering or mailing a written request for a hearing and the required appeal fee to the Saratoga City Clerk pursuant to Section 3-10.050 of the City Code. Failure to file with the City Clerk a written request for a hearing pursuant to Section 3-10.050 of the City Code within the state-mandated holding period will forfeit all rights of ownership and control of the animal to the City of Saratoga, notwithstanding any other appeal period set forth in this Code. Upon such forfeiture, the Animal Control Officer shall determine the final disposition of the impounded animal in accordance with the law. (b) Request for hearing on other determinations pursuant to this Article. Any owner of an animal that is the subject of an order or determination pursuant to this Article other than those described in subsection (a), above, may appeal such order or determination by personally delivering or mailing a written request for a hearing within the time period required by Section 3-10.050 of the City Code. [Subsections (c) through (f) shall be renumbered as (b) through (e) respectively.] 7-20.145 – Dangerous Dogs. [No changes in subsections (a) and (b).] (c)Registration and Tagging Requirement. Once the Dangerous Dog determination has been made by the Animal Control Officer, the owner(s) shall be required to register such dog with San Jose Animal Control Care & Services (SJACS) and SJACS shall issue a metal tag identifying the dangerous dog. Each dog shall be required to wear the tag at all times. (d)Notification Requirement. After a dangerous dog determination has been made by the Animal Control Officer, a one-time notification shall be made to neighbors residing or owning property within five hundred (500’) of the boundaries of the property at which the dangerous dog is located. (ce) Dangerous dog maintenance requirements. [No changes in subdivisions (1) through (5).] (6) Behavior modification.Within thirty (30) days from the date of the Dangerous Dog designation, the The owner of the dangerous dog shall register for and participate in obedience training or other training or treatment by an animal behaviorist or trainer that is pre-approved by the Animal Control Officer. No more than six (6) months from the date of the Dangerous Dog designation, the owner of the dog shall provide the Animal Control Officer with documentation of completion of such training or treatment. An extension of up to six (6) months for completing the training or treatment may be granted by the Animal Control Officer.be required to consult with and retain an animal behaviorist or trainer to make reasonable effort to modify and correct the dog's behavior to prevent future incidents of dangerous behavior. 52 2018 Annual Code Update - Page 10 [No changes in subdivision (7).] (df) Requirement for inspection. The Animal Control Officer shall conduct annual home inspections every six (6) months for the duration of the 36-month dangerous dog designation,to determine compliance with the requirements for dangerous dog maintenance. The inspection shall be subject to any fee for such inspection set forth in the schedule of fees adopted by resolution of the City Council. [Subsections (e) through (g) are renumbered (g) through (i) respectively.] 4.Repeal of Article 10-15 (Pipes, Drains and Conduits Along, Under or Across Streets) 10-15 – Pipes, drains and conduits along, under or across streets 10-15.010 - Permit required. (a) No person or agency, whether public or private, shall construct or install any pipe, drain or conduit along, under or across any street, road or highway in the City or make any excavation or cut therein for such purpose without first obtaining a permit to do so from the Maintenance Director in the manner provided in this Article. (b) The provisions of this Article shall apply to all public utilities, including, but not limited to, any company providing water, electricity, gas or telephone service. 10-15.020 - Application for permit; deposit to performance of work. (a) Any person or agency, whether public or private, desiring to construct or install any pipe, drain or conduit along, under or across any street, road or highway in the City shall file an application for a permit with the Maintenance Director on such form as he may prescribe. The application shall be accompanied by the payment of a filing fee in such amount as established from time to time by resolution of the City Council. (b) As a condition for issuance of a permit, the Maintenance Director shall require the posting of a cash or surety bond payable to the City or other security satisfactory to the Director in an amount which, in the opinion of the Director, will be sufficient to cover the total cost of the contemplated work. Notwithstanding the foregoing, the Maintenance Director may, in his discretion, waive the requirement of a bond, letter of credit or other security set forth herein where the pipe, drain or conduit will be constructed or installed by a public agency or public utility corporation. 10-15.030 - Compliance with specifications. Each pipe, drain or conduit along, under or across any street, road, or highway in the City shall be constructed or installed and such street, road or highway shall be restored in the manner specified 53 2018 Annual Code Update - Page 11 in this Article. All such work shall be performed under the supervision and to the satisfaction of the Maintenance Director. 10-15.040 - Excavation requirements. (a) Excavation of trenches adjacent to the existing pavement shall be conducted on one side of the pavement at a time. No excavation shall be started on the opposite side until the trench first excavated has been filled, compacted and surfaced as required in this Article. (b) No more trenches shall be opened than can be properly and completely backfilled in one day. No more than seven hundred feet of trench shall be open at any time on any project, unless otherwise authorized by the Maintenance Director. (c) One traffic lane shall be kept open and in safe condition at all times. Adequate warning and regulatory signs and other safety measures shall be taken at all times to protect the public who may be present in the area where work is being performed. Complete closure of all traffic lanes may be made at the discretion of and in accordance with plans for detours approved by the Maintenance Director. Twenty-four hours' advance notice shall be filed with the Maintenance Director and City communications departments, stating the road to be closed, the limits and approximate duration of closure. Such agencies shall also be notified immediately upon reopening of the road. (d) The Maintenance Director shall be supplied at all times with the names and telephone numbers of at least two persons in charge of or responsible for the work subject to the permit who can be reached for emergency work twenty-four hours a day, seven days a week. (e) Written permission from the Maintenance Director shall be required for excavations made between November first and March first. (f) The Maintenance Director shall be notified at least forty-eight hours prior to the commencement of any excavation work along, under or across any street, road or highway in the City. 10-15.050 - Backfill requirements. (a) Backfill in all trenches shall be made by mechanical tamping or jetting, as specified by the Maintenance Director. Compaction shall be attained by any type of mechanical tamper capable of meeting the compaction requirements. Backfill shall be compacted in lifts of a thickness designated by the Maintenance Director and dependent upon the type of soil and mechanical tamper used. A relative compaction of ninety percent shall be obtained on all backfill below two feet of finished grade. A relative compaction of ninety-five percent shall be required in the top two feet of trench within the roadway section. Relative compaction shall be based on the "Five Layer Method" as outlined in the State standard specifications. (b)No jetting shall be allowed within two feet of the surface. Untreated base material conforming to the current State standard specifications, except as modified under the untreated 54 2018 Annual Code Update - Page 12 base requirements set forth in Section 10-15.070, shall be placed along the entire trench section with a minimum thickness of twelve inches. (c) The City reserves the right to make as many compaction tests as it deems necessary in order to meet compaction requirements. The costs of such tests shall be borne by the person performing the excavation in, along and across the highway. Prior to laying the armor coat or plant mix surfacing pavement, as the case may be, a tack coat of SC-1 road oil shall be applied to the surface of the existing trench prior to paving, the rate of application to be determined by the Maintenance Director. An asphaltic emulsion tack coat may be substituted for the SC-1 road oil at the discretion of the Director. (d) On completion of the backfill and prior to placing the pavement in the trench section, the pavement adjacent to the work shall be thoroughly cleaned to the satisfaction of the Maintenance Director. A power broom shall be used if so required by the Director. 10-15.060 - Restoration of pavement. (a) Where it is necessary to remove existing high type classes of pavement, such as Portland cement concrete, asphaltic concrete, plant mix surfacing or oil macadam, such pavement shall be restored to its condition as to line, grade, type and depth as existed prior to excavation. Hot plant mix surfacing pavement conforming to the current requirements of the State standard specifications may be substituted for existing asphaltic concrete, plant mix surfacing or oil macadam pavement. The type of plant mix surfacing shall be determined by the Maintenance Director. (b) When a satisfactory permanent repavement of an excavation cannot be made, the Maintenance Director shall require a temporary pavement consisting of thirteen inches of compacted untreated base material and two inches of cold plant mix surfacing meeting the surface of existing pavement and sealed with asphaltic emulsion seal coat. The temporary type of pavement is to remain in place and shall be maintained until compaction requirements can be met. The temporary pavement shall then be removed to a minimum depth of three inches below the existing surface, and the pavement replaced with three inches of hot plant mix surfacing, the surfacing to be feathered out over the existing pavement to prevent surface water from entering the excavated trench section. The extent of the feathered section shall be determined by the Maintenance Director. The pavement surface shall then be sealed with asphaltic emulsion seal coat. Where the depth of the existing higher type classes of pavement exceeds three inches in thickness, and where the existing imported base material exceeds twelve inches in thickness, the depth shall be restored in kind, with untreated base material and hot plant mix surfacing. Existing Portland cement concrete pavement shall be restored in kind in all cases where Portland cement concrete pavement now exists. (c) Roads and highways consisting of existing single and double seal coat or armor coat type of pavement will require a temporary pavement restoration consisting of twelve inches (compacted) of untreated base material and an application of single seal coat using one-half inch No. 4 crushed screenings. Depending on weather conditions, two inches of cold plant mix surfacing may be substituted for a temporary single seal pavement. After a period of from sixty to ninety days, a 55 2018 Annual Code Update - Page 13 permanent pavement of single seal coat placed over the temporary single seal coat pavement, conforming to the current requirements of the State standard specifications shall be applied to the surface, the extent of such pavement overlapping the existing trench to be determined by the Maintenance Director. Only crushed granite screenings or equivalent shall be used in all temporary and permanent pavement restoration. A double seal coat may be applied immediately if trench compaction meets the requirements of this Article. (d) When a single operation, consisting of crossing the pavement (not confined to a continuous project parallel to and following the general alignment of the road) is proposed on roads of high classification, it shall be necessary to bore pipe or jack a casing enclosing the pipe underneath the pavement. If it is proved to the satisfaction of the Maintenance Director that it is not feasible or practical to jack or bore underneath the pavement, the pavement may be cut and restored with twelve inches of compacted untreated base material, six inches of Class "A" concrete keyed five inches outside the edge of the trench on each side and followed by three inches of hot plant mix surfacing and sealed with asphaltic emulsion seal coat. Excavations may be backfilled with sand and pavement replaced in kind when specifically authorized by the Maintenance Director. 10-15.070 - Untreated base requirements. Untreated base shall be placed in all trench excavations accessible to vehicular traffic. Untreated base material shall conform to current State standard specifications, except that one and one-half inch maximum size aggregate shall comply with the following standards: (a) R-Value ..... 68 minimum (b) Sand equivalent ..... 30 minimum -or- Sand equivalent ..... 25 minimum and plasticity index 6 maximum or plasticity index times percent passing #200 sieve, not to exceed 75 with a P.I. of 7.5 maximum. 10-15.080 - Field inspections. (a) Prior to the issuance of any permit under this Article, the Maintenance Director may conduct a field inspection or require that a field inspection report be submitted by the applicant containing such information as the Director may specify. (b) During the course of the work and following completion thereof, the Maintenance Director may conduct such inspections as he deems necessary or appropriate. (c) The cost of all field inspections performed by or on behalf of the City and the preparation of any inspection reports shall be paid by the applicant. 10-15.090 - Miscellaneous requirements. (a) Property owners shall be protected from any damage to property and dust nuisance. A water wagon shall be made available on demand of the Maintenance Director. 56 2018 Annual Code Update - Page 14 (b) No work shall be deemed completed until final written approval thereof is issued by the Maintenance Director. (c) The permittee shall indemnify, defend and hold the City and its officers, officials, boards, commissions, employees and volunteers harmless from and against any and all claims, demands, actions, expenses or liabilities arising out of or in any manner relating to the excavation, construction or restoration activity conducted by the permittee or any failure by the permittee to comply with any terms or conditions of the permit or any provisions of this Article. (d) As a condition for the issuance and continuation of a permit, the permittee shall furnish to the City, at the permittee's own cost and expense, a policy or policies of liability and other insurance coverage as may be required under the applicable insurance standards of the City, as established from time to time by resolution of the City Council. Such policy or policies shall be maintained in full force and effect in accordance with said insurance standards for as long as the permit remains issued and outstanding. Notwithstanding the foregoing, the Maintenance Director may waive the requirement of a liability insurance policy where the permit is issued to a public agency or public utility corporation. (e) The Maintenance Director shall require the permittee to guaranty that all construction, installation and restoration work performed under the permit shall be free of defects in material or workmanship for a period of one year from the date of final approval by the City. 10-15.100 - Correction of deficiencies; emergency. (a) In the event of any failure by the permittee to perform and complete all work in accordance with the plans and specifications approved by the Maintenance Director and in accordance with the provisions of this Article and any conditions as may be contained in the permit, such deficiencies shall be corrected within ten days after written notice from the Maintenance Director to do so. If all deficiencies are not corrected within ten days, or such additional period of time as may be granted by the Maintenance Director in his sole discretion, the Maintenance Director may perform the corrective work, or cause the same to be performed, and all costs and expenses as may be incurred in connection therewith shall be the obligation of the permittee and shall be paid to the City immediately upon demand. The Maintenance Director may resort to any security deposited with the City pursuant to Subsection 10-15.020(b) for the payment of such costs. (b) The Maintenance Director may, without prior notice to the permittee, perform any emergency work requiring immediate attention which the permittee has failed or is unable to complete. The costs of such work shall be the obligation of the permittee. 10-15.110 - Removal or relocation of existing facilities. (a) Whenever, by reason of any construction, reconstruction or repair work being conducted by the City upon any street, road, highway or other public property, a removal or relocation of any pipe, drain or conduit is required, the person or agency, whether public or private, who owns or maintains such pipe, drain or conduit shall cause such removal or relocation to be made without expense to the City. Any such removal or relocation shall be subject to the permit and other 57 2018 Annual Code Update - Page 15 requirements of this Article. This Section is specifically intended to include, without in any way limiting the same, all drainage, flood control, sanitary, sanitation, sewer, public service and water districts, all public utilities and all persons or agencies operating pursuant to any franchise granted by the City. (b) Within thirty days after written notice by the City to any person or agency required by this Section to remove or relocate such facilities, such person or agency shall obtain the necessary permit under this Article and commence the removal or relocation of such facilities and diligently proceed to complete the same, and in default thereof, the City may cause the work of removal or relocation to be done, and the cost and expense thereof to the City shall be a charge against the person or agency so defaulting, collectible in a civil suit in the name of the City. 5. Redraft of Article 10-20 - Encroachments on City Property Article 10-20 - Encroachments 10-20.010 - Definitions. For the purposes of this Article, the following words and phrases shall have the meaning respectively ascribed to them in this Section: (a) Encroachment means any excavation,structure, object or improvement of any kind or character whatsoever, placed, erected or constructed, either in, under or over any public street, including, without limiting the foregoing, any pipe, drain or conduit under or across any street, road or highway, or any advertising sign or device on or extending over any part of a public street. (b) Public street means all or any part of the entire width of right of way of a public street in the City or of any unaccepted street offered for dedication to the City, whether or not such entire area is actually used or improved for street purposes. (c)Person means any natural person or other entity with capacity to take action recognized by law including, but not limited to, an agency, public utility, firm, association, organization, partnership, trust, corporation or company. 10-20.020 - Unauthorized encroachments; declaration of public nuisance. (a) No excavation or encroachment shall be created, erected, constructed, placed or permitted to remain contrary to the provisions of this Article or any other provision of this Code. The existence of any such encroachment is hereby declared to constitute a public nuisance. (b) Any person causing, creating, erecting, constructing, placing or permitting an excavation or encroachment contrary to the provisions of this Article or any other provision of this Code shall be guilty of an infraction. Such person shall remove or abate the encroachment at his sole expense 58 2018 Annual Code Update - Page 16 within ten days after a notice or citationfrom the City to do so. If the encroachment is not removed, it may be removed or otherwise abated by the City in accordance with the procedures set forth in Chapter 3 of this Code. 10-20.030 - Conformity with standards. All permitted encroachments under this Article shall be constructed or maintained to the standards and specifications as established by the City Engineer. 10-20.040 - Maintenance and repair. Unless otherwise specifically set forth in the permit issued under this Article, each permitted encroachment shall be kept in maintenance and repair by the permittee at his sole cost and expense. Upon the failure of the permittee to maintain or repair an encroachment after ten days' written notice to do so from the City, such permit shall automatically be revoked without notice, and the provisions of Section 10-20.020 shall otherwise be applicable thereto. If, however, in the opinion of the Maintenance Director, it is for the better interest of the City to maintain such encroachment rather than to remove or abate it, the cost of maintenance shall be a covered liability under the permittee's bond. 10-20.050 - Permit required. Except as provided in Section 10-20.04060, no person shall do or cause to be done any of the following acts without first obtaining a written permit therefor from the City: (a) Make any opening or excavation for any purpose Causing, creating, erecting, constructing, placing or permitting an encroachment on a public street. (b) Place, erect or construct any encroachment in or on a public street. (c) Permit the continuation thereof, perpetuate, change,or renew any encroachment presently existing on a public street, which encroachment does not have a permit therefor in accord with the terms of this Article or any other provision of this Code or other ordinance of the City requiring permits. 10-20.04060 - Exceptions. (a) Where the encroachment consists of the construction or maintenance of any pipe, drain or conduit, or any cut or excavation therefor, the same, rather than being subject to the permit required under this Article, shall instead be subject to the permit and other requirements of Article 10-15. (b) No encroachment permit under this Article shall be required for any of the following: (1)(a)The installation of aboveground utilities for electricity, telephone or cable television service. 59 2018 Annual Code Update - Page 17 (2)(b)The temporary storage of building equipment and materials, in conformity Article 16-15 of this Code.with the latest edition of the Uniform Building Code adopted by the City. (3)(c)The planting or placing of lawns, plants, shrubs, trees, temporary fences and other removable landscaping by the owner of the underlying fee within the unimproved portions of a street right of way but to the rear of any curb and gutter. Such landscaping shall be at the risk of the contiguous owner and shall be removed by such owner from such right of way upon ten days' written notice from the City. Failure to so remove shall make the encroachment and the such contiguous owner subject to the provisions of Section 10-20.020. (4)(d)Encroachments shown on a subdivision or parcel map or building site plan which are approved by the City Council as part of the final map or final building site approval. 10-20.05070 - Authority to issue permits. The Public Works Director City Engineer is authorized to issue encroachment permits pursuant to this Article. Encroachment permits are not a matter of right but are a matter of grace only. 10-20.06080 - Application for permit;fees;bonds. (a) Application for an encroachment permit shall be filed with the Public Works Director City Engineer, on such form as the Director he may prescribe. The application shall be accompanied by the payment of a filing fee in such amount as established from time to time by resolution of the City Council. (b) The application shall be accompanied by the payment of a filing in the amount necessary for full recovery of the City’s actual costs, including without limitation, City staff time for processing, field marking, engineering, submittals, specifications, shop drawings, and inspection. All permit fees must be paid prior to the issuance of any encroachment permit. All applicable permit fees, including those for the issuance of a permit and for the benefit of maintaining an encroachment in the public right-of-way, shall be established by resolution of the City Council. (b)(c)As a condition for issuance of the permit, the applicant may be required to post a cash or surety bond payable to the City, conditioned on the proper compliance with all of the terms of the permit and this Article. The bond shall be in such amount as the Public Works Director City Engineer deems sufficient to cover the cost to complete and maintain the encroachment or to remove the same and restore the public right-of-way to its original condition, whichever cost is greater. (c) Encroachment permits are not a matter of right but are a matter of grace only. 10-20.070 - Additional conditions and requirements of permit. (a)The Public Works Director shall require the permittee exercise reasonable care in all work authorized under a permit, including designing, constructing, maintenance, 60 2018 Annual Code Update - Page 18 operations, post-construction inspections, and best practices for stormwater management. All permits shall provide that nearby property owners be protected from any damage to property and dust nuisance. (b)An encroachment permit may contain such additional conditions as in the opinion of the Public Works Director appear reasonably necessary to insure proper installation, completion and maintenance of the encroachment and the protection of the public health, safety and welfare. (c)The Public Works Director shall require the permittee to guaranty that all construction, installation and restoration work performed under a permit shall be free of defects in material or workmanship for a period of one year from the date of final approval by the City. The Director may, at the Director’s discretion, require that a final inspection be made to insure the work was conducted in compliance with the terms of the permit. 10-20.08090 - Indemnification of City; liability. (a) No encroachment permit shall be issued until the applicant has executed a written agreement in form and content approved by the City Attorney to defend, indemnify and hold the City and its officers, officials, boards, commissions, employees and volunteers harmless from and against any and all claims, demands, actions, expenses or liabilities arising or resulting from the doing or refraining from doing any act permitted by such permit, or the failure to comply with any terms or conditions of such permit, or arising or resulting in any manner from the erection or construction of such encroachment. (b) As a condition for the issuance and continuation of an encroachment permit, the Public Works Director will City Engineer may require the applicant to furnish, at the applicant's own cost and expense, a policy of liability insurance providing coverage in accordance with the applicable insurance standards of the City, as established from time to time by resolution of the City Council. Such insurance coverage shall be maintained in full force and effect in accordance with said insurance standards for as long as a the permit remains issued and outstanding. Notwithstanding the foregoing, the Public Works Director may waive the liability insurance requirement when the Director determines that the risks associated with the proposed encroachment are negligible. 10-20.090 - Permit effective date; commencement of work; expiration of permit. (a)The permittee must obtain all licenses and other permits and pay all required permit fees before an encroachment permit is effective; this includes any approval required under Chapter 15 of this Code. (b)An encroachment permit is null and void if work pursuant to the permit is not commenced within 180 days after the date the permit is issued. A permit may be extended or renewed through the Public Works Director assuming there have been no material changes in the circumstances in effect at the time the permit was issued. 61 2018 Annual Code Update - Page 19 (c)Each permit shall specify its end date; permits that fail to do so shall have a default duration of one year from the date of issuance. Each permit shall be null and void after that date, or any extension thereof, unless a permit is terminated sooner by discontinuance of the use or removal of the encroachment for which a permit was issued. This subsection does not apply to permits for encroachments specified as continuing, which shall be considered to be of indeterminate duration. 10-20.100 - Conformity with specifications and standards. All encroachments shall be constructed and maintained to the standards and specifications set forth in the permit. 10-20.100 - Additional conditions of permit. In addition to any conditions specifically required under the provisions of this Article, encroachment permits may contain such additional conditions as in the opinion of the City Engineer appear reasonably necessary to insure proper installation, completion and maintenance of the encroachment and the protection of the public health, safety and welfare. 10-20.110 - Field Inspections. (a) Prior to the issuance of any encroachment permit, the Public Works Director may conduct a field inspection or require that a field inspection report be submitted by the applicant containing such information as the Director may specify. (b) Following issuance of an encroachment permit and during the course of the work and following completion thereof, the Public Works Director may conduct or require the permittee to conduct such inspections as the Director deems necessary or appropriate to protect the public health, safety, and welfare. (c) The cost of all field inspections performed by or on behalf of the City and the preparation of any inspection reports shall be paid by the applicant/permittee. 10-20.110 - Revocation of permit; removal of encroachment. (a) Encroachment permits are revocable licenses, and may be revoked at any time on ten days' written notice from the City Engineer. (b) Upon revocation of an encroachment permit, the permittee shall remove such encroachment at his sole expense, and all the provisions of Section 10-20.020 shall become applicable to the permittee. 10-20.120 - Correction of deficiencies; emergency. (a) In the event of any failure by the permittee to perform and complete all work in accordance with the plans and specifications in the encroachment permit, such deficiencies shall be corrected within ten days after written notice from the Public Works Director to do so. If all deficiencies are not corrected within ten days, or such additional period of time as 62 2018 Annual Code Update - Page 20 may be granted by the Public Works Director in the Director’s sole discretion, the City may perform the corrective work, or cause the same to be performed, and all costs and expenses as may be incurred in connection therewith shall be the obligation of the permittee and shall be paid to the City immediately upon demand. The Director may resort to any security deposited with the City pursuant to Subsection 10-20.060(c) for the payment of such costs. (b) The Public Works Director may, without prior notice to the permittee, perform any emergency work requiring immediate attention which the permittee has failed or is unable to complete, including backfill and repaving work. The costs of such work shall be the obligation of the permittee. 10-20.130 - Maintenance and repair. Unless otherwise specifically set forth in the permit therefore, each encroachment shall be kept in maintenance and repair by the permittee at the permittee’s sole cost and expense. Upon the failure of the permittee to maintain or repair an encroachment after ten days' written notice to do so from the City, such permit shall automatically be revoked without further notice, and the provisions of Section 10-20.020 shall be applicable thereto. If, however, in the opinion of the Public Works Director, it is in the interest of the City to maintain such encroachment rather than to remove or abate it, the cost of maintenance shall be the responsibility of the permittee and a covered liability under the permittee's bond. 10-20.140 – Suspension or revocation of permit; removal or relocation of encroachment. (a) Any permit issued pursuant to this Article may be suspended or revoked by the Director of Public Works where it is found that: (1) The permittee has violated any provision of this Article, the encroachment permit, any other City permit, or any agreement entered into with the City related to a permit; or (2) The permittee has failed to pay any required fees, or to post or maintain any bond or insurance required by this Article; or (3) The encroachment for which a permit was granted adversely affects the safety, capacity or integrity of the City’s right-of-way; or (4) A material misrepresentation was made in the application for a permit; or (5) The relocation or removal of the encroachment is necessary to complete a City project. (b) Upon revocation of an encroachment permit, the permittee shall remove such encroachment at the permittee’s sole expense, and all the provisions of Section 10-20.020 shall become applicable to the permittee. 6.Zoning Regulation Definitions 63 2018 Annual Code Update - Page 21 15-06.261 - Fence. "Fence" means any structural device forming a physical barrier by means of glass, wood, masonry, metal, chain, brick, stake, plastic, concrete block, wrought iron, wire, or other similar materials.A a wall, other than a wall of a building or a retaining wall, is considered a fence. 15-06.280 - Floor area. "Floor area" means the total enclosed, habitable or accessible floor space of all floors of a building where the interior height of the area is equal to or greater than five feet. The term "enclosed," as used in this Section, means a structure or area with a roof and with three or more walls, or an equivalent percentage of enclosure. The term "roof," as used in this Section, means a covering of any solid material over at least seventy-five percent of the area. Floor area is measured to the outside surfaces of exterior walls. In the case of a sloped ceiling or ground surface, the floor area shall be measured to the point at which the interior height is less than five feet. Pursuant to the foregoing, floor area may include halls, stairways, elevator shafts, ducts, service and mechanical equipment rooms, underfloor areas, porches, verandas and similar building elements, garages, attics, basements, crawl spaces and accessory structures. Floor area does not include interior courts, which are areas surrounded on all sides by habitable space but which do not have a roof, as defined in this Section. 15-06.725 – Winery. “Winery” means a commercial agricultural facility primarily used for the fermenting and processing of fruit juice into wine. Processing can include wholesale sales, crushing, fermenting, blending, aging, storage, bottling, administrative office functions for the winery and warehousing. Special events, retail sales and tasting rooms may be permitted as part of the winery operations. 7. Conditional Uses Reference 15-12.030 – Conditional uses. The following conditional uses may be allowed in the R-1 districts, upon the granting of a use permit pursuant to Article 15-55 or Article 15-56 of this Chapter: (a) Accessory structures and uses located on the same site as a conditional use. (b) Community facilities. (c) Institutional facilities. 64 2018 Annual Code Update - Page 22 (d) Police and fire stations and other public buildings, structures and facilities. (e) Religious and charitable institutions. (f) Nursing homes and day care facilities, in excess of six persons being cared for at the facility. (g) Public utility and public service pumping stations, power stations, drainage ways and structures, storage tanks and transmission lines. (h) Recreational courts, to be used solely by persons resident on the site and their guests, where the lot is located in an R-1 district that is combined with a P-C district or is part of a planned residential development. (i) Boarding stables and community stables, subject to the regulations prescribed in Section 7-20.220 of this Code. (j) Model homes utilized in connection with the sale of new single-family dwellings in a subdivision, located upon a lot within the same subdivision or, in the discretion of the Planning Commission, upon a lot within another subdivision developed by the applicant, for such period of time as determined by the Planning Commission, not to exceed an initial term of one year and not exceeding a term of one year for each extension thereof. (k) Cemeteries. 8. Agricultural Preserves Article 15-15 - AP/OS: AGRICULTURAL PRESERVES OPEN SPACE OVERLAY DISTRICT 15-15.010 - Purposes of Article. In addition to the objectives set forth in Section 15-05.020, the City establishes agricultural preserves to/open space overlay district is included in the Zoning Ordinance to achieve the following purposes: (a) To satisfy legal requirements with respect to the zoning classification designation of land on which Williamson Act contracts may be executed and renewed, thereby encouraging and preserving such contracts in accordance with the policies set forth in the General Plan. (b) To implement the open space element of the General Plan. 15-15.020 - Definitions. In addition to the definitions set forth in Article 15-06, all of which are applicable to this Article, the following definitions shall also apply to certain terms used herein: (a) Williamson Act means the California Land Conservation Act of 1965, as set forth in Chapter 7 (commencing with Section 51200) of Part 1, Division 1, Title 5 of the Government Code. 65 2018 Annual Code Update - Page 23 (b) Williamson Act contract means an agreement between the City and the landowner executed pursuant to the Williamson Act and the rules and regulations adopted by the City for the conduct of proceedings thereunder. (c) Agricultural preserve means a parcel or area of land that is (1) devoted to either agricultural use, recreational use, open space use or any combination of such uses, as defined in Section 51201 of the Williamson Act and (2) designated by the City Council in accordance with the City’s Procedures for Initiating, Filing and Processing Requests to Establish Agricultural Preserves. (d) Open space means a parcel or area of land which is essentially unimproved and devoted to open space, as defined in Section 65560(b) of the Government Code. (e) AP/OS overlay means the agricultural preserve/open space overlay district established by this Article. (f) Underlying zoning means the zoning classification of a parcel or area of land in an agricultural preserve the absence of the AP/OS overlay district. 15-15.030 - Establishment of AP/OS overlay district. An agricultural preserve/open space overlay district is hereby established upon all parcels or areas of land designated "AP/OS Overlay" on the overlay zoning map approved as part of this Article and such lands are hereby designated as agricultural preserves and open space lands, all such lands being subject to Williamson Act contracts as of the effective date of this Article. 15-15.040 - Permitted uses. Each parcel or area of land designated as an agricultural preserve within the AP/OS overlay district shall be used only for the purposes expressly permitted under the terms of the Williamson Act contract applicable to such land. 15-15.050040 -Termination of agricultural preserve overlay. Upon the effective date of any expiration or termination of a Williamson Act contract covering any parcel or area of land designated as an agricultural preserve within the AP/OS overlay district, such land shall automatically be terminated as an agricultural preserve removed from the AP/OS overlay district and shall thereafter be regulated classified solely according to the underlying zoning for such land. Nothing herein shall prevent the subsequent execution of a new Williamson Act contract pertaining to such land, in which event the land shall again be designated as an agricultural preserve included within the AP/OS overlay district. 15-15.060050 -Status of existing Williamson Act contracts. This Article shall not constitute or be interpreted as causing any alteration, amendment or impairment of any Williamson Act contract which has not expired or been terminated as of the effective date of this Article, and all such contracts are hereby ratified, acknowledged and confirmed by the City and declared to be in full force and effect. 66 2018 Annual Code Update - Page 24 In addition, amend section 15-10.010 as follows: 15-10.010 - Designation of districts. The districts established by this Chapter are depicted on the Zoning Map and are described as follows: (a) A: Agricultural district. (b) R-1: Single-family residential districts, consisting of: R-1-40,000 district R-1-20,000 district R-1-15,000 district R-1-12,500 district R-1-10,000 district (c) HR: Hillside residential district. (d) R-OS: Residential open space district. (e) AP/OS: Agricultural preserve/open space overlay district. [No changes in the remainder of the section except that (f) through (m) are redesignated as (e) through (l) respectively.] 9.Fence Regulation Restrictions 15-29.010 - Height restrictions. (a) General regulations. A building permit shall be required for any solid fence more than six feet in height. Height maximums and permitted materials for fences shall be as follows: (1) Solid fences. Except as otherwise specified in this Article, no solid fence shall exceed six feet in height. However, up to two feet of lattice (or similar material) that is at least twenty- five percent open to the passage of light and air may be added to the top of a solid fence. A solid fence taller than six feet shall not be permitted unless approved by the Planning Commission through the exception process detailed in Section 15-29.080 15.29.090, or approved by the Community Development Director pursuant to Sections 15-29.030, 15-29.040, or 15-29.050 of this Chapter. (2)Open fences. Except as otherwise specified in this Article, open fencing, such as wrought iron, wire material, split rail, chain link, or other similar fencing shall not exceed eight feet in height. With the exception of chain link fencing, open fencing shall have openings sufficient to allow the unobstructed passage of a sphere having a diameter of four inches. For chain link fencing, the opening shall be two inches at minimum and no slats are allowed in any opening. 67 2018 Annual Code Update - Page 25 [No changes in subsections (b) through (j)] (k) Swimming pool fences. Fences required for swimming pools are governed by the California Building Code City Code Sections 16-75.010 and City Code Section 15-29.020(e). (l) Retaining walls. No retaining wall shall exceed five feet in height. Notwithstanding the foregoing, no retaining wall located in a front or exterior side setback area shall exceed three feet in height 10.Tree Regulations 15-50.020 - Definitions. For the purposes of this Article, the following words and phrases shall have the meanings respectively ascribed to them by this Section, unless the context or the provision clearly requires otherwise: [No changes in subsections (a) through (o).] (p) Native tree means Ccoast Llive Ooak (Quercus agrifolia), Vvalley Ooak (Quercus lobata), Tan Oak tanoak (Lithocarpus Notholithocarpus densiflorus), Bblack Ooak (Quercus kelloggii), Bblue Ooak (Quercus douglasii), Sscrub Ooak (Quercus dumosa), Bbig Lleaf Mmaple (Acer macrophylhlum), California Bbuckeye (Aesculus californica), Douglas fir (Pseudotsuga menziesii) and Ccoast Rredwood (Sequoia sempervirens). [No changes in subsections (q) through (cc).] 11.Construction Debris Recycling 17-05.010 - Greenhouse gas reduction policies. The list below provides a reference to Sections of the City of Saratoga Municipal Code seeking to reduce emissions of greenhouse gases, together with a brief description of each Section. Nothing in this section shall change the meaning of the code sections summarized below and the full text of each section shall apply regardless of the summary below. [No changes in subsections (a) through (q).] (r) 16-72 CALGreen sections 4.408, 5.408, 301.1.1, and 301.3 Construction and demolition debris. Requires a recycling plan for construction and demolition debris for new buildings, residential additions or alterations that increase the buildings area, volume, or size, and non-residential additions and alterations that require a permit.projects with more than two thousand five hundred square feet of floor space. Plans must divert at least sixty-five fifty percent of waste from landfills, and are documented, approved, and overseen by City staff. 68 2018 Annual Code Update - Page 26 [No changes to subsection (s).] 1055723.7 69 SARATOGA CITY COUNCIL MEETINGDATE:November 21, 2018 DEPARTMENT:CommunityDevelopment Department PREPAREDBY:Sandy L. Baily, Special Projects Manager SUBJECT:Ordinance Amending Parking Standards in the C-H Districts (The Village) RECOMMENDEDACTION: 1. Conduct a public hearing. 2. Introduce and waive the first reading of the ordinance amending Chapter 15 (Zoning Regulations)of the Saratoga Municipal Code related to parking standards. 3. Direct staff to place the ordinance on the Consent Calendar for adoption at the next regular meeting of the CityCouncil. BACKGROUND: Between 2016 and 2017 the Planning Commission met five times in community study sessions to discuss updates in the areas of the Village Vision and Parking/Circulation which is under the first phase of the Village Policy Update process. The Commission’s comments were forwarded to the City Council who affirmed the Commission’s recommendations on April 5, 2017. This action allowed for commencement of the process to consider the proposed zoning ordinance amendments. The amendments were reviewed and recommended for approval by the Planning Commission on November 14, 2018. Text to be added is indicated in bold double underlined font (e.g., underlined) and text to be deleted is indicated in strikeout font (e.g., strikeout). DISCUSSION: Based on City Council’s affirmation in 2017, the Planning Commission’s recommendations and public comments from the 2016 and 2017 study sessions, the attached draft Ordinance accomplishes the following: Eliminates the availability of surplus parking in the C-H district. Establishes one set of parking standards for the entire C-H District for restaurants, retail, office and personal service businesses. Requires a Conditional Use Permit for any intensification of use over the previous use 70 2 | P a g e resulting in an increase in required parking that cannot be provided on-site. Requires findings to approve a project if the parking impact cannot be mitigated. Two additional amendments which were not discussed at the study sessions but were considered by the Planning Commission at the November 14, 2018 meeting are recommended to Sections 15-35.020, 15-06.560 and 15-35.030. These changes will remove outdated language and requirements regarding how far off-street parking spaces in the C-H District can be located from a business and redefining extensive and intensive retail parking. ADVERTISING, NOTICING AND PUBLIC CONTACT: Pursuant to Section 15-85.070 of the Saratoga Municipal Code, a legal advertisement of the public hearing was published in the Saratoga News on November 9, 2018. ENVIRONMENTAL DETERMINATION: Pursuant to the California Environmental Quality Act (“CEQA”), this action to amend the City Code regarding parking in the C-H District is exempt from CEQA under California Code of Regulations, Title 14, Section 15061(b)(3) which provides that CEQA applies only to projects which have the potential of causing a significant effect on the environment, and that where, as here, it can be seen with certainty that there is no reasonable possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. ATTACHMENT: 1. Ordinance 71 ORDINANCE NO. ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SARATOGA AMENDING THE CITY CODE REGARDING PARKING REGULATIONS FOR THE C-H DISTRICTS ZOA18-0002 The City Council of the City of Saratoga finds that: 1.The City desires to make amendments to its City Code to implement Phase 1 of the Village Plan update regarding parking regulations for the C-H Districts; 2.Between 2016 and 2017 the Planning Commission met five times in community study sessions to discuss updates in the areas of the Village Vision and Parking/Circulation which is under the first phase of the Village Policy Update process. The Commission’s comments were forwarded to the City Council who affirmed the Commission’s recommendations on April 5, 2017; 3.The Planning Commission held a hearing on November 14, 2018. Following consideration of all testimony and written materials, the Planning Commission approved Resolution No. 18- 027 on November 14, 2018 recommending approval of this ordinance. 4.The City Council of the City of Saratoga held a duly noticed public hearing on November 21, 2018, and after considering all testimony and written materials provided in connection with that hearing introduced this ordinance and waived the reading thereof. The City Council adopted this ordinance after a second reading was waived at a duly noticed public meeting on December 5, 2018. The City Council of the City of Saratoga does ordain as follows: Section 1. Adoption. The Saratoga City Code is hereby amended as set forth in Attachment A. Section 2. California Environmental Quality Act. Pursuant to the California Environmental Quality Act (“CEQA”), this action to amend the City Code regarding the Heritage Preservation Commission is exempt from CEQA under California Code of Regulations, Title 14, Section 15061(b)(3) which provides that CEQA applies only to projects which have the potential of causing a significant effect on the environment, and that where, as here, it can be seen with certainty that there is no reasonable possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Section 3. Severance Clause. The City Council declares that each section, sub-section, paragraph, sub-paragraph, sentence, clause, and phrase of this ordinance is severable and independent of every other section, sub-section, sentence, clause, and phrase of this ordinance. If any section, sub- Attachment 1 72 section, paragraph, sub-paragraph, sentence, clause, or phrase is held invalid, the City Council declares that it would have adopted the remaining provisions of this ordinance irrespective of the portion held invalid and further declares its express intent that the remaining portions of this ordinance should remain in effect after the invalid portion has been eliminated. Section 4. Applicability. Development applications submitted for a site which is located within a C -H District after November 21, 2018 shall be subject to this ordinance. Section 5. Publication. A summary of this Ordinance shall be published in a newspaper of general circulation of the City of Saratoga within fifteen days after its adoption. Following a duly noticed public hearing, the foregoing ordinance was introduced at the regular meeting of the City Council of the City of Saratoga held on November 21, 2018, and was adopted by the following vote on December 5, 2018. COUNCIL MEMBERS: AYES: NAYS: ABSENT: ABSTAN: ATTEST: SIGNED: Mary-Lynne Bernald MAYOR OF THE CITY OF SARATOGA Debbie Bretschneider INTERIM CITY CLERK APPROVED AS TO FORM: Date: Date: Richard Taylor CITY ATTORNEY 73 Attachment A — An Ordinance Adopting Amendments to the City Code Related to Off-Street Parking The sections of the Saratoga Municipal Code as set forth below are amended or adopted as follows: Text added to existing provisions is shown in bold double underlined text (example) and text to be deleted in shown in strikethrough (example). Text in italics is explanatory and is not an amendment to the Code. 15-06.560 - Retail establishment. "Retail establishment" means a use engaged in the sale or rental of goods directly to the consumer with no more than two thousand square feet or twenty -five percent of the total floor area dedicated to food and/or beverage sales for off -site human consumption. Any use engaged in the sale of personal services is not a r etail establishment. (a) Extensive retail establishment, as used with respect to parking requirements, means a retail use having more than seventy-five percent of the floor area used for display, sales and related storage of bulky commodities, including household furniture and appliances, lumber and building materials, carpeting and floor coverings, air conditioning and heating equipment, and similar goods, which uses have demonstrably low parking demand generation per square foot of floor area. (b) Intensive retail establishment, as used with respect to parking requirements, means any retail use not defined as an extensive retail establishment. 15-35.030 - Schedule of off-street parking spaces. Off-street parking spaces shall be provided in accordance with the following schedule: Use Spaces Required … … (n)Intensive rRetail establishments One space for each two hundred square feet of floor area. (o) Extensive retail establishments Bulky commodity sales establishments such as household furniture, mattresses, appliances, carpeting and floor coverings One space for each five hundred square feet of floor area. … … 15-35.020 - General requirements and regulations for off-street parking spaces. … (h) Location of Parking: In all districts except a C-H district, the off-street parking spaces prescribed in Section 15-35.030 shall be located on the same site as the use for which the spaces are required, or on an adjacent site or a site separated only by an alley 74 from the use for which the spaces are required. In a C -H district, the off-street parking spaces prescribed in Section 15-35.030 may be located within three hundred feet of the use for which the spaces are required, mea sured by the shortest route to be used for pedestrian access on or off site as permitted in Section 15 -35.035. … (k) Surplus parking in C-H district: Notwithstanding any other provision of this Code, for applications deemed complete after March 1, 2006, no off-street parking shall be required of any new, altered, or enlarged site or structure in any C -H district until such time as a total of forty-one thousand eight hundred fifty square feet of gross floor area beyond that existing on March 1, 2006 ("surp lus floor area") has been constructed or otherwise allocated as set forth below in the C -H districts. This provision shall be administered as follows: (1) Allocation procedure: Surplus floor area shall be allocated on a first -come, first-served basis, based on the date that the application submittal is deemed complete by the Community Development Department; (2) New site or structure: The amount to be deducted from the surplus floor area for a new site or structure shall be the gross floor area calculated u sing the methodology for determining gross floor area in subsection (e) of this Section; (3) Alteration that increases floor area: The amount to be deducted from the surplus floor area for an alteration to an existing site or structure that increases the gross floor area of that site or structure shall be the difference between the new gross floor area and the existing gross floor area determined in accordance with subsection (e) of this Section; (4) Change in use that does not increase floor area: The amount to be deducted from the surplus floor area for a change in use to an existing site or structure that does not increase the gross floor area of that site or structure shall be determined as follows: The number of parking spaces required for the change in use, as determined by the off -street parking space requirements prescribed in Section 15-35.030, shall be multiplied by four hundred fifty square feet to determine the "changed use area". The number of parking spaces allocated to the prior use shall be multiplied by four hundred fifty square feet to determine the existing parking credit. The amount to be deducted from the s urplus floor area shall be the changed use area minus the existing parking credit. For example: If a change in use requires four parking spaces, then the changed use area is equal to one thousand eight hundred square feet. If the previous use required one parking space, then existing parking credit is four hundred fifty square feet. The surplus floor area to be deducted would be one thousand three hundred fifty square feet; (5) Exception for parking districts : Notwithstanding subsection (4), above, no deduction from the surplus floor area shall be made or required for any change in use or alteration to an existing site or structure within a City parking district that does not increase the gross floor area of that site or structure; (6) Removal of alloca tion: Allocation of surplus floor area to an application shall be removed at such time as the application is denied or withdrawn and, for applications that are approved, upon the expiration of that approval. If an 75 application is modified by the applicant o r the approval in a manner that changes the gross floor area associated with the application, the allocation shall be adjusted accordingly; (7) Allocation monitoring: The Community Development Department shall monitor and maintain an account showing the am ount of surplus floor area that has been allocated pursuant to this Section and the amount that remains to be allocated; and (8) Projects in excess of available allocation: Any proposed new, altered, or enlarged site or structure in any C -H district that would add more gross floor area than the remaining surplus floor area shall comply with the off -street parking requirements set forth in subsection (a) of this Section and elsewhere in this Code as to the excess floor area unless the applicant applies for a nd pays the costs of a parking study to be completed by the City Traffic Engineer and that study is approved by the Planning Commission and determines that excess parking capacity is available in the C -H districts and recommends that the amount of surplus floor area be increased at least by an amount that would accommodate the proposed new, altered, or enlarged site or structure. 15-35.035 - Parking ratios for off-street parking and loading facilities Schedule of off-street parking spaces for C-H District. (a) Where a site is located within and constitutes a part of a City parking district, the off - street parking requirement for each district shall be as follows, regardless of the particular category of use or uses occupying the site Off-street parking sp aces shall be provided in accordance with the following schedule : District Use Spaces Required No. 1 Restaurants/Bars/ Wine Tasting One space for each 473.5 75 square feet of floor area. No. 2 Retail Establishments/Office/ Personal Service One space for each 380 350 square feet of floor area. No. 3 Other Land Uses One space for each 350 square feet of floor area, plus any additional square footage allowed on the site as a result of the acquisition of development rights created by the City upon formation of Parking District No. 3. Subject to Section 15-35.030. No. 4 One space for each 380 square feet of floor area. 76 (b) Any application for an intensification in use resulting in an increase of required parking that cannot be provided on site may be approved by the Planning Commission with a conditional use permit. (1) Application for a conditional use permit must be supp orted by documentation that any proposed alternative use of parking, valet parking, or parking agreement will not effectively result in any other use providing fewer off-street parking spaces than required under this Article. An applicant will need to demonstrate adequate parking mitigation through either alternative use of parking, valet parking, or parking agreements with other business owners who have available on -site parking. The Planning Commission may require the following prior to issuance of a con ditional use permit: i) Submission of a parking plan by parties to a proposed alternative/valet parking plan, which shall describe the users and their times of operation; (ii) Written agreements between the parties setting forth the terms and conditions under which the off -street parking spaces will be operated. (iii) Written maintenance agreements; and (iv) Other documents or commitments, including recordation of such documents, deemed necessary by the Planning Commission. (2) For applications that cannot provide adequate parking mitigation, the following additional findings are required to approve a conditional use permit: (i) That the proposed project will advance the vis ion reflected in one or more of the goals identified for the Village in the Saratoga Village section of the Land Use Element of the General Plan; (ii) That the demand placed on the City’s public parking supply in the Village will not have an unreasonable impact on the Village at large; and (iii) That the benefit of the proposed project, measured against those goals and policies established in the General Plan and the Village Design Guidelines, outweighs the impact on parking resources. 77 SARATOGA CITY COUNCIL MEETING DATE:November 21, 2018 DEPARTMENT:City Manager’s Office PREPARED BY:James Lindsay, City Manager SUBJECT:Preview of Proposed City Code Changes for Rotating Emergency Shelters (Safe Car Park and Severe Weather Shelter Programs) RECOMMENDED ACTION: Preview the proposed amendments to the City Code and direct staff to prepare an ordinance implementing the amendments for consideration by the City Council in January 2019. BACKGROUND: At the November 7, 2018 City Council meeting, Council Member Miller with the support of Mayor Bernald requested an agenda item on the Rotating Safe Car Park pilot program and the steps needed to move the program past the pilot status. On June 1, 2018, a group of volunteers, with support from the Saratoga Ministerial Association, launched the Rotating Safe Car Park pilot program to provide temporary overnight parking spaces for people living out of their cars. Several local faith- based organizations and West Valley Community College have hosted the program over the past five months. The City has not received any complaints or concerns about the program since its inception. Participants using the Rotating Safe Car Park program are referred by social service organizations, such as West Valley Community Services,and undergo a screening process by San Jose based Amigos de Guadalupe. The host location provides volunteers to help check guests in and out and provide facilities and support as needed. The Sheriff’s Office has been involved in the development of the program’s guidelines and provides occasional patrol checks at the different host locations. In May 2018, the County Office of Supportive Housing released the 2017 annual report Ending Homelessness: The State of the Supportive Housing System Reports. Within that report is a roadmap (Attachment A) that illustrates the County support system with progressive steps to provide housing solutions to the homeless. Safe car parks and severe weather shelters play an important role in this progression by providing safe places to sleep and helping connect participants with the County’s Coordinated Assessment System. 78 The Rotating Safe Car Park volunteer team has requested the City consider code changes to clearly articulate that rotating emergency shelter programs are allowed as a permitted use on properties designated as community facilities within the City, such as West Valley College and faith-based organizations. The changes outlined in Attachment B would allow both emergency sheltering within a building and safe car park programs for up to three months at each host location. Once adopted, the City will establish administrative guidelines based on the success of the pilot program to ensure rotating emergency shelters areoperated safely and do not negatively impact surrounding properties. Both Chapter 9 (Motor Vehicles and Traffic) and Chapter 15 (Zoning Regulations) of the City Code would be amended. The Planning Commission would need to review the Chapter 15 amendments prior to a City Council public hearing on a draft ordinance and could consider any changes at their December 12th meeting. The City Council could then consider the Commission’s recommendation at their January 16, 2019 meeting. ATTACHMENTS: Attachment A – Santa Clara County Supportive Housing System Map Attachment B – Potential City Code Changes 79 20 | Ending Homelessness Transitional Housing Provides temporary housing and site-based services for people expe- riencing homelessness, a program model most effective for specific subpopulations, such as: • Youth, especially Parenting Youth • Veterans • Homeless individuals and families enrolled in a permanent housing program and searching for apartments Homelessness Prevention • Helps individuals and families who are about to lose their housing to remain housed where they are or move to new permanent housing • Acts as an access point to the Coordinated Assess- ment System Outreach • Engages with people experiencing homelessness on the street, in parks and other public spaces, and in vehicles • Acts as an access point for the Coordinated Assess- ment System and for emergency shelter • Locates people in the Coordinated Assessment System who have been referred to a housing program Permanent Supportive Housing • Helps individuals and families with disabilities maintain perma- nent housing through long-term rental subsidies, connections to medical and behavioral health care, and other services. Supportive Housing System Map Emergency Shelter • Provides a safe place to sleep for people experienc- ing homelessness • Provides meals, showers, other basic needs, and connections to other community resources • Acts as an access point to the Coordinated Assess- ment System Coordinated Assessment System • Acts as a front door to the community’s housing resources • Matches people experiencing homelessness to the community’s transitional housing, rapid rehousing, and permanent supportive housing programs Rapid Rehousing • Provides supportive services and financial assistance to people experiencing homelessness • Helps individuals and families obtain permanent housing and increase income so that they can remain housed independently. SEE PAGE 48 SEE PAGE 49 SEE PAGE 52SEE PAGE 49 SEE PAGE 38 SEE PAGE 54 SEE PAGE 30 A Movement to End Homelessness A map of developments that include supportive housing is available at: www.supportivehousingscc.org/map 80 11-15-18 Potential Saratoga City Code Changes for Rotating Emergency Shelters - Safe Car Parks and Severe Weather Shelters Chapter 9 - MOTOR VEHICLES AND TRAFFIC Article 9-15 - STOPPING, STANDING AND PARKING 9-15.065 - Vehicles used as living or sleeping quarters. No vehicle, including any boat, bus, trailer, motor home, recreational vehicle (as defined in Section 15-06.535 of this Code), van, camper (whether or not attached to a pickup or other vehicle), camp trailer, automobile, truck, pickup, airplane, haul trailer, truck tractor, truck trailer, utility trailer, or any device by which any person or property may be propelled, moved or drawn, shall be used for living or sleeping quarters, except as permitted below: 1) Vehicles may be used as living or sleeping quarters at Rotating Emergency Shelter locations meeting the conditions contained in Section 15-12.020(k) of this Code. 2)Only one trailer, motor home, camper or recreational vehicle at a time may be used for living or sleeping quarters on a residential property for a total period for all of such uses not to exceed eighteen days in one calendar year. There shall be at least fifteen calendar day's separation between any such uses in consecutive calendar years. Upon written request, from a City resident the property owner, the Community Development Director, or his or her designee, the Community Development Director's designee may for good cause grant reasonable time extensions of this eighteen-day limitation per calendar year, reduce the separation between uses in consecutive calendar years, or allow continued parking and occupancy while an application or appeal is pending. No such time extension may cause the calendar year limit to be exceeded by more than an additional fourteen days unless an application has been filed therefor and at least ten days before a decision on the application is made notice has been given to all owners of property within three hundred feet of the parcel on which the temporary parking and occupancy extension is proposed. Prior to a trailer, motor home, camper or recreational vehicle not owned by a resident of the property being brought onto property and used for living or sleeping quarters, the resident of the property shall apply for, pay the application fee for, and obtain a temporary parking and occupancy permit from the Community Development Director or his/her designee. 81 11-15-18 Chapter 15 - ZONING REGULATIONS Article 15-06 – DEFINITIONS 15-060.251 – Emergency Shelter "Emergency shelter, permanent" means a permanently operated facility that provides people shelter with minimal supportive services for a time period not exceeding six months per person per year. "Emergency shelter, rotating" means a facility that, for a time period not exceeding a total of three months per year per location, provides people shelter with minimal supportive services. Article 15-12 - R-1: SINGLE-FAMILY RESIDENTIAL DISTRICTS 15-12.020 - Permitted uses (k) Rotating Emergency Shelter, provided the following conditions are met: 1. The shelter is located on a property identified as Community Facilities Site on the City’s General Plan Land Use map. 2. The number of occupants does not exceed thirty. 3. The hours of operation do not exceed 6:00 PM to 8:00 AM. 4. The operational period for each property does not exceed three months each year. 5. An annual operational plan that has been approved by the City Manager, or his/her designee, and the County Sheriff to be in compliance with the City's administrative guidelines for Rotating Emergency Shelters. City may withdraw approval in the event the plan is not being followed. A Rotating Emergency Shelter may not operate without a City approved annual operational plan. Article 15-19 - C: COMMERCIAL DISTRICTS 15-19.035 - C-N(RHD) district regulations (a)Permitted uses.In addition to the permitted uses listed in Section 15-19.020(a) and15- 19.030(a) of this Article, the following permitted uses shall also be allowed in a C-N(RHD) district: (1) Mixed-use development with a minimum residential density of thirty dwelling units per net acre and conforming to the design standards found in Article 15-58. Pursuant to Government Code Section 65583.2(i) any design review required for such development shall not constitute a "project" under CEQA. (2)Permanent Emergency shelters, transitional housing, single-room occupancy buildings, and supportive housing for homeless individuals and families. Rotating Emergency Shelters meeting the requirements of section 15-12.020(k). 82 SARATOGA CITY COUNCIL MEETING DATE:November 21, 2018 DEPARTMENT:City Manager’s Office PREPARED BY:Mary Furey, Finance & Administrative Services Director Crystal Bothelio, Deputy City Manager SUBJECT:Authorize Issuance of Special Tax Bonds for Arrowhead Community Facility District through a Private Placement and Approve Related Documents and Actions RECOMMENDED ACTION: Approve the attached resolution authorizing the issuance of the Community Facilities District No. 2016-1 (Arrowhead Project) Special Tax Bonds, Series 2018 (“2018 Bonds”) through a private placement and related documents in support of the bond issuance, and authorize the City Manager or his designee to execute the documents and take all related actions in connection with the issuance of the bonds, including minor edits that may be necessary. BACKGROUND: On October 17, 2018, the City Council adopted a resolution authorizing issuance of the 2018 Bonds through a public sale to finance water system improvements in the Arrowhead Community Facilities District (“CFD”). Subsequently, Piper Jaffray, the placement agent (“Placement Agent”)for the 2018 Bonds, was informed by Western Alliance Bank (“Bank”) that it has recently gained the ability to purchase un-rated, taxable land-secured bonds with a term up to 30 years.As one of the leading holders of land-secured debt in the nation, the Bank has successfully executed several land-secured transactions. A private placement provides some additional benefits that the Arrowhead Cooperative Company Inc. (the “Arrowhead Cooperative” or “ACCI”)Board has indicated they find to be of value. These benefits include: 1)The Bank has locked in a favorable interest rate, mitigating the risk of rising rates prior to the closing of the transaction; 2)No offering statement is required; 3)On-going disclosure requirements are reduced; 4)Transaction costs are lower; and 5)The terms of the debt are more flexible. After comparing the estimated debt payments of the 2018 Bonds under both the public offering and private placement approaches, the ACCI Board determined that the private placement is in 83 the best interest of the homeowners and requested that the City move forward with the financing on this basis. With the approval of the Bank, the interest rate has been locked at 6.05%. The financing is expected to close in early December. Based on a good faith estimate from the PFM Financial Advisors LLC, the Municipal Advisor, the City finds that (i) the True Interest Cost of the Bonds is expected to be approximately 6.23%, (ii) the total Finance Charge of the Bonds is expected to be 13.62% of the expected principal amount of the Bonds, (iii) the Total Proceeds expected to be received by the City from the sale of the Bonds, less the Finance Charge of the Bonds, is $2,069,169, and (iv) the City expects that the Total Payment Amount, calculated to the final maturity of the Bonds, will be $5,366,273. At the request of the ACCI Board, the City Council is being asked to approve and authorize execution each of the following documents to complete the financing as a private placement: Resolution: This Resolution acts to approve and direct the execution of the Community Facilities District No. 2016-1 (Arrowhead Project) Indenture, inclusive of related documents and actions to be taken in support of the bond issuance. Indenture (Fiscal Agent Agreement): this document sets forth the terms of the 2018 Bonds, the use of special taxes to pay debt service, and the obligations of the City with respect to the administration of the CFD bond issuance. The Fiscal Agent Agreement expressly provides that the 2018 Bonds and all obligations of the City with respect to the CFD are limited obligations of the City, payable solely from the special taxes levied on the CFD properties. First Amendment to Funding Agreement: The original Funding Agreement was executed between the City and the Arrowhead Cooperative on November 2, 2016, to establish funding procedures and limit the City’s potential liability in connection with claims arising from District formation. This First Amendment to the Funding Agreement was prepared to clarify the Rate and Method of Apportionment as reflected in Exhibit A to the Bond Resolution (Attachment A). Placement Engagement Letter: The Placement Engagement Letter engages the Placement Agent to privately place the 2018 Bonds with the Bank. Commitment Letter: The Commitment Letter from the Bank sets forth the terms upon which the Bank will purchase the Bonds. About Arrowhead: The Arrowhead Community Facilities District encompasses 39 homes located along the hillside between Rolling Hills Road and Blue Hills Lane, off of Prospect Road. Since 1951, this neighborhood has operated its own private water company, the Arrowhead Cooperative Company Inc. Over the years, the number of Arrowhead Cooperative residents and water service meters has increased to the extent that the water system infrastructure is no longer sufficient for water and fire protection needs. This prompted the Arrowhead Board to ask the City for assistance to issue bonds to finance improvements to the water system. FISCAL STATEMENT: As previously noted in connection with the Council’s earlier action on October 17, debt service on the privately placed bonds is payable only from special taxes levied annually on taxable properties within the CFD in the manner set forth in the Rate and Method of Apportionment (RMA). The 2018 Bonds will not have any impact on the City’s General Fund.84 FOLLOW UP ACTION: The attachments are final draft versions of the bond issuance documents as of the City Council meeting date. Minor edits will be made to the final bond documents as amounts, dates, etc. become known. ATTACHMENTS: Attachment A – Bond Resolution Attachment B – Indenture (Fiscal Agent Agreement) Attachment C – First Amendment to Funding Agreement Attachment D – Original Funding Agreement Attachment E – Placement Engagement Letter Attachment F – Commitment Letter 85 RESOLUTION NO. 18-____ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA FOR ITS COMMUNITY FACILITIES DISTRICT NO. 2016 1 (ARROWHEAD PROJECT), APPROVING AND DIRECTING THE EXECUTION OF AN INDENTURE, APPROVING OTHER RELATED DOCUMENTS AND ACTIONS, AND SUPERSEDING RESOLUTION NO. 18-053 RESOLVED by the City Council (the “City Council”) of the City of Saratoga (the "City") as follows: WHEREAS, the City Council intends that this Resolution (the "Resolution") shall supersede Resolution No. 18-053 in full; and WHEREAS, the City Council has conducted proceedings under and pursuant to the Mello- Roos Community Facilities Act of 1982 (the “Law”), to form the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) (the “District”), to authorize the levy of special taxes upon the land within the District, and to issue bonds secured by the special taxes the proceeds of which are to be used to finance water infrastructure improvements (the “Facilities”), all as described in the Resolutions entitled “A Resolution of Formation of City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) Authorizing the Levy of a Special Tax Within the District, and Preliminarily Establishing an Appropriations Limit for the District” and “A Resolution of the City Council of the City of Saratoga, California Determining the Necessity to Incur Bonded Indebtedness Within City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project),” which Resolutions were adopted by the City Council on December 21, 2016; and WHEREAS, pursuant to said resolutions, an election was held within the District on May 2, 2017 and the qualified electors approved the propositions of the incurrence of the bonded debt, the establishment of the appropriations limit for the District and the levy of the special tax by more than two-thirds of the votes cast at said election; and WHEREAS, the City Council, as the legislative body of the District, desires to issue a first series of bonds for the District at this time under the Law to finance water infrastructure improvements which the District is authorized to finance; and WHEREAS, there have been filed with the City Clerk an Indenture (the “Indenture”) providing for the issuance of the Series 2018 Bonds (as defined in Section 1 below), an Engagement Letter (the “Placement Engagement Letter”), executed by Piper Jaffrey & Co. (the "Placement Agent") and the City to be used in connection with the placement of the Series 2018 Bonds to Western Alliance Business Trust, a wholly owned affiliate of Western Alliance Bank, an Arizona corporation (the "Purchaser"), and a Commitment Letter from the Purchaser to the City, (the "Commitment Letter"), and the City Council, with the aid of City staff, has found the foregoing documents to be in proper order; and WHEREAS, based on the Fiscal Year 2018-19 assessed value of the real property within the District, the value of the real property in the District subject to the special tax to pay debt service on the Series 2018 Bonds is more than three times the sum of the principal amount of the 86 Series 2018 Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Law or a special assessment levied on property within the District as calculated in the manner set forth in Section 53345.8(a) of the Law; and WHEREAS, the City Council has determined in accordance with Section 53360.4 of the Law that a negotiated sale and private placement of the Series 2018 Bonds with the Purchaser, pursuant to the terms described in the Commitment Letter, will result in a lower overall cost to the City than a public sale; and WHEREAS, the Rate and Method of Apportionment for the District (the “Rate and Method of Apportionment”) previously approved by the City and the requisite number of qualified voters permits the City Council to pass an ordinance or resolution for purposes of clarifying any vagueness or ambiguity as it relates to the Rate and Method of Apportionment, and attached hereto as Exhibit A are certain clarifications and guidance related to the calculation of the prepayment provisions in the Rate and Method of Apportionment in the event Special Taxes are prepaid prior to the issuance of any Bonds for the District; and WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the Series 2018 Bonds and the levy of said special taxes as contemplated by this Resolution and the documents referred to herein exist, have happened and have been performed in due time, form and manner as required by the laws of the State of California, including the Law. NOW, THEREFORE, the City Council resolves and declares, as follows: 1.Pursuant to the Law, this Resolution and the Indenture, special tax bonds of the District (the “Bonds”) in an aggregate principal amount not to exceed $3,000,000 are hereby authorized to be issued, and such Bonds shall be designated the “City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable)” (the “Series 2018 Bonds”), to be issued and sold as provided herein. The Series 2018 Bonds shall be executed in the form set forth in and otherwise as provided in the Indenture. In accordance with the requirements of Section 53345.8 of the Law and the City’s Local Goals and Policies for Community Facilities Districts, adopted by the City Council on May 19, 2016 (the “Local Goals and Policies”), the City Council hereby finds and determines that the Series 2018 Bonds, based on the Fiscal Year 2018-19 assessed value of the real property within the District subject to the special tax to pay debt service on the Series 2018 Bonds pursuant to the records of the County Assessor of the County of Santa Clara, is more than three times the principal amount of the Series 2018 Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Law or a special assessment levied on property within the District, all as calculated in the manner provided in Section 53345.8(a) of the Law. The City Council finds that the Series 2018 Bonds, when issued pursuant to the Indenture, will be in accordance with the Local Goals and Policies. The City Council further finds that the private placement of the Series 2018 Bonds to the Purchaser as contemplated by the Placement Engagement Letter will result in a lower overall cost to the District than a public sale in accordance with Section 53360.4 of the Law. 87 2.The Indenture, including any attachments thereto, in the form on file with the City Clerk, is hereby approved. The City Manager, the Finance Director of the City and such other officers as the City Manager or Finance Director may designate (each, an "Authorized Officer") are hereby authorized and directed to execute and deliver the Indenture in said form, with such additions thereto or changes therein as are approved by an Authorized Officer upon consultation with the City Attorney (“City Attorney”) and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Indenture by an Authorized Officer. The date, manner of payment, interest rate or rates, interest payment dates, denominations, form, registration privileges, manner of execution, place of payment, terms of redemption and other terms of the Series 2018 Bonds shall be as provided in the Indenture as finally executed. 3.The Commitment Letter between the City and the Purchaser, in the form on file with the City Clerk, is hereby approved. Each Authorized Officer is hereby authorized and directed to execute and deliver the Commitment Letter (provided that the aggregate principal amount of the Series 2018 Bonds placed thereby is not in excess of $3,000,000, and the interest rate on the Series 2018 Bonds does not exceed 6.05% per annum), with such additions thereto or changes therein as are recommended or approved by such officer upon consultation with the City Attorney and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Placement Engagement Letter by an Authorized Officer. 4.The Placement Engagement Letter between the City and the Placement Agent, in the form on file with the City Clerk, is hereby approved. Each Authorized Officer is hereby authorized and directed to execute and deliver the Placement Engagement Letter (provided that the Placement Agent fee is not in excess of $45,000), with such additions thereto or changes therein as are recommended or approved by such officer upon consultation with the City Attorney and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Placement Engagement Letter by an Authorized Officer. 5.The First Amendment to the Funding Agreement (the "First Amendment"), amending the Funding Agreement, dated November 2, 2016, by and between the City and the Arrowhead Cooperative, Inc., in the form on file with the City Clerk, is hereby approved. An Authorized Officer of the City is hereby authorized and directed to execute and deliver the First Amendment in said form, with such additions thereto or changes therein as are approved by an Authorized Officer upon consultation with the City Attorney and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the First Amendment by an Authorized Officer. 6.The City hereby covenants, for the benefit of the Series 2018 Bondowners, to commence and diligently pursue to completion any foreclosure action regarding delinquent installments of any amount levied as a special tax for the payment of interest or principal of the Series 2018 Bonds, said foreclosure action to be commenced and pursued as more completely set forth in the Indenture. 7.The Series 2018 Bonds, when executed, shall be delivered to the Trustee (as defined in the Indenture) for authentication. The Trustee is hereby requested and directed to authenticate the Series 2018 Bonds by executing the Trustee’s certificate of authentication and registration 88 appearing thereon, and to deliver the Series 2018 Bonds, when duly executed and authenticated, to the purchaser thereof in accordance with written instructions executed on behalf of the City by an Authorized Officer, which instructions such officer is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Trustee. Such instructions shall provide for the delivery of the Series 2018 Bonds to the Purchaser thereof upon payment of the purchase price therefor. 8.The City Council approves the interpretations of the clarifications and ambiguities of the Rate and Method of Apportionment as provided in Exhibit A attached hereto. 9.All actions heretofore taken by the officers and agents of the City with respect to the establishment of the District, the rate and method of apportionment of special taxes for the District and the levy of the special tax in the District, and the sale and issuance of the Series 2018 Bonds are hereby approved, confirmed and ratified, and any Authorized Officer is hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the 2018 Bonds in accordance with this Resolution, and any certificate, agreement, and other document described in the documents herein approved. Whenever in this Resolution any officer of the City is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer shall be absent or unavailable. 10.This Resolution and all of its resolutions and approvals shall supersede Resolution No. 18-053 adopted on October 17, 2018 in full. 11.This Resolution shall take effect upon its adoption. The above and foregoing resolution was passed and adopted at a regular meeting of the Saratoga City Council held on the 17th day of October 2018 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Mary-Lynne Bernald, Mayor ATTEST: DATE: Debbie Bretschneider, Interim City Clerk 89 EXHIBIT A Clarification of Rate and Method of Apportionment of the District for Prepayment Prior to Bond Issuance The Rate and Method of Apportionment of the District contemplated that prepayment of the special tax prior to the issuance of bonds for the District would be available to property owners. The Rate and Method of Apportionment of the District did not provide full instructions on how the prepayment of the special tax would be implemented. The mechanics on how prepayments of the special tax shall be paid in order to discharge the special tax lien prior to the issuance of bonds is clarified as follows: Prepayment in Full Prior to Bond Issuance Property owners in the District have had the opportunity to pay their special tax obligation without penalty or interest prior to the issuance of bonds for the District in adherence to the City of Saratoga, California Community Facilities District No. 2016-1 Funding Agreement, between the City and Arrowhead Cooperative, dated November 2, 2016. Property owners desiring to prepay their special tax obligation were required to notify the Arrowhead Cooperative of their intent to prepay such special tax obligation by July 31, 2017. Arrowhead Cooperative has mailed statements to each property owner requesting prepayment a statement containing the following information: Assessor’s Parcel Number to identify the property upon which the special tax is being prepaid Amount required to prepay the special tax obligation in full. Time and place of payment and the effect of failure to pay within such time. Statement that the Special Tax lien has been recorded and the date of recordation. Statement that prepayment of the Special Tax Lien does not guaranty that the improvements will be completed for the estimated cost and that additional monies may be required. The Special Tax lien will be released for all Assessor’s Parcels which have paid their obligation in full as described in the mailed statement. 90 2851981.10 040287 RSIND INDENTURE by and between the CITY OF SARATOGA and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. as Trustee Dated as of November 1, 2018 relating to: $[PAR AMOUNT] City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable) 91 i 2851981.10 040287 RSIND TABLE OF CONTENTS Page ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS Section 1.01. Authority for this Indenture.................................................................................2 Section 1.02. Indenture for Benefit of Owners of the Bonds.....................................................2 Section 1.03. Definitions............................................................................................................2 ARTICLE II THE BONDS Section 2.01. Principal Amount; Designation..........................................................................10 Section 2.02. Terms of the 2018 Bonds...................................................................................10 Section 2.03. Redemption........................................................................................................11 Section 2.04. Form of 2018 Bonds..........................................................................................14 Section 2.05. Execution of Bonds............................................................................................14 Section 2.06. Registration of Exchange or Transfer................................................................15 Section 2.07. Bond Register.....................................................................................................15 Section 2.08. Temporary Bonds...............................................................................................15 Section 2.09. Bonds Mutilated, Lost, Destroyed or Stolen......................................................16 Section 2.10. No Acceleration.................................................................................................16 Section 2.11. No Book-Entry System......................................................................................16 Section 2.12. Issuance of Parity Bonds....................................................................................16 ARTICLE III ISSUANCE OF BONDS Section 3.01. Issuance and Delivery of 2018 Bonds ...............................................................17 Section 3.02. Pledge of Trust Estate........................................................................................18 Section 3.03. Type and Nature of Bonds and Parity Bonds.....................................................18 Section 3.04. Equality of Bonds and Parity Bonds and Pledge of Net Special Taxes.............19 Section 3.05. Bonds Not Asset or Liability of City For Financial Statement Purposes..........19 Section 3.06. Validity of Bonds and Parity Bonds..................................................................19 ARTICLE IV FUNDS AND ACCOUNTS Section 4.01. Application of Proceeds of Sale of 2018 Bonds and Other Moneys.................19 Section 4.02. Improvement Fund.............................................................................................20 Section 4.03. Costs of Issuance Fund......................................................................................21 Section 4.04. Reserve Fund .....................................................................................................21 92 ii 2851981.10 040287 RSIND Section 4.05. Bond Fund..........................................................................................................22 Section 4.06. Special Tax Fund...............................................................................................23 Section 4.07. Administrative Expense Fund............................................................................24 Section 4.08. Surplus Fund......................................................................................................25 ARTICLE V OTHER COVENANTS OF THE CITY Section 5.01. Punctual Payment...............................................................................................25 Section 5.02. Limited Obligation.............................................................................................25 Section 5.03. Extension of Time for Payment.........................................................................25 Section 5.04. Against Encumbrances.......................................................................................26 Section 5.05. Books and Records ............................................................................................26 Section 5.06. Protection of Security and Rights of Owners ....................................................26 Section 5.07. Compliance with Law........................................................................................26 Section 5.08. Collection of Special Tax Revenues..................................................................26 Section 5.09. Covenant to Foreclose........................................................................................27 Section 5.10. Further Assurances.............................................................................................28 Section 5.11. Continuing Disclosure to Owners......................................................................28 Section 5.12. Reduction of Special Taxes ...............................................................................29 Section 5.13. Limits on Special Tax Waivers and Bond Tenders ...........................................30 Section 5.14. City Bid of Foreclosure Sale..............................................................................30 ARTICLE VI INVESTMENTS, DISPOSITION OF INVESTMENT PROCEEDS, LIABILITY OF THE CITY Section 6.01. Deposit and Investment of Moneys in Funds ....................................................30 Section 6.02. Limited Obligation.............................................................................................31 Section 6.03. Liability of City..................................................................................................31 Section 6.04. Employment of Agents by City.........................................................................32 ARTICLE VII THE TRUSTEE Section 7.01. Appointment of Trustee.....................................................................................32 Section 7.02. Liability of Trustee ............................................................................................33 Section 7.03. Information ........................................................................................................34 Section 7.04. Notice to Trustee................................................................................................35 Section 7.05. Compensation, Indemnification.........................................................................35 93 iii 2851981.10 040287 RSIND ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS INDENTURE Section 8.01. Amendments Permitted......................................................................................35 Section 8.02. [Reserved]..........................................................................................................36 Section 8.03. Procedure for Amendment With Written Consent of Owners...........................36 Section 8.04. Disqualified Bonds.............................................................................................37 Section 8.05. Effect of Supplemental Indenture......................................................................37 Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments..................37 Section 8.07. Amendatory Endorsement of Bonds..................................................................37 ARTICLE IX DEFAULT Section 9.01. Events of Default...............................................................................................37 Section 9.02. Institution of Legal Proceedings by Trustee......................................................38 Section 9.03. Application of Moneys Collected by Trustee....................................................38 Section 9.04. Effect of Delay or Omission to Pursue Remedy................................................38 Section 9.05. Remedies Cumulative........................................................................................39 Section 9.06. Covenant to Pay Bonds in Event of Default.....................................................39 Section 9.07. Trustee Appointed Agent for Bondholders........................................................39 Section 9.08. Power of Trustee to Control Proceedings..........................................................39 Section 9.09. Limitation on Bondholders’ Right to Sue..........................................................40 Section 9.10. Limitation of Liability to Trust Estate...............................................................40 ARTICLE X MISCELLANEOUS Section 10.01. Benefits of Indenture Limited to Parties............................................................40 Section 10.02. Successor is Deemed Included in All References to Predecessor .....................41 Section 10.03. Discharge of Indenture.......................................................................................41 Section 10.04. Execution of Documents and Proof of Ownership by Owners..........................42 Section 10.05. Waiver of Personal Liability..............................................................................42 Section 10.06. Waiver of Jury Trial; Agreement for Judicial Reference...................................42 Section 10.07. Notices to and Demands on City and Trustee....................................................42 Section 10.08. State Reporting Requirements...........................................................................43 Section 10.09. Partial Invalidity.................................................................................................44 Section 10.10. Unclaimed Moneys............................................................................................44 Section 10.11. Applicable Law..................................................................................................44 Section 10.12. Conflict with Act................................................................................................45 Section 10.13. Conclusive Evidence of Regularity ...................................................................45 Section 10.14. Payment on Business Day..................................................................................45 Section 10.15. Counterparts.......................................................................................................45 94 iv 2851981.10 040287 RSIND EXHIBIT A – FORM OF SERIES 2018 BOND EXHIBIT B – FORM OF COSTS OF ISSUANCE REQUISITION EXHIBIT C – FORM OF PROJECT FUND REQUISITION EXHIBIT D – FORM OF PURCHASER CERTIFICATE 95 2851981.10 040287 RSIND INDENTURE City of Saratoga Community Facilities District No.2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable) THIS INDENTURE (the “Indenture”), dated as of November 1, 2018, is by and between the City of Saratoga (the “City”) for and on behalf of the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) (the “District”), and The Bank of New York Mellon Trust Company, N.A., a national banking association duly organized and existing under the laws of the United States of America, as trustee (the “Trustee”). RECITALS: WHEREAS, the City Council of the City has formed the District under the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311, et seq. of the California Government Code) (the “Act”) and Resolution No. 16-076 of the City Council of the City adopted on December 21, 2016 (the “Resolution of Formation”); WHEREAS, the City Council of the City, as the legislative body for the District, is authorized under the Act to levy special taxes to pay for the costs of the District and to authorize the issuance of bonds secured by said special taxes; WHEREAS, under the provisions of the Act, on November 3, 2017, the City Council of the City adopted its Resolution No. 16-062 (the “Resolution”), which resolution authorized the issuance and sale of the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) Special Tax Bonds, Series 2018 (the “2018 Bonds”) in an aggregate principal amount of not to exceed $6,000,000 and authorized the execution of this Indenture; WHEREAS, it is in the public interest and for the benefit of the City, the District and the owners of the 2018 Bonds that the City enter into this Indenture to provide for the issuance of the 2018 Bonds, the disbursement of the proceeds of the 2018 Bonds, the disposition of the special taxes securing the 2018 Bonds and the administration and payment of the 2018 Bonds; and WHEREAS, the City has determined that all things necessary to cause the 2018 Bonds, when executed by the City for the District and issued as in the Act, the Resolution and this Indenture provided, to be legal, valid and binding and special obligations of the City for the District in accordance with their terms, and all things necessary to cause the creation, authorization, execution and delivery of this Indenture and the creation, authorization, execution and issuance of the 2018 Bonds, subject to the terms hereof, have in all respects been duly authorized. 96 2 2851981.10 040287 RSIND AGREEMENT: NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows: ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS Section 1.01. Authority for this Indenture. This Indenture is entered into pursuant to the provisions of the Act and the Resolution. Section 1.02. Indenture for Benefit of Owners of the Bonds. The provisions, covenants and agreements herein set forth to be performed by or on behalf of the City shall be for the equal benefit, protection and security of the Owners of the Bonds. All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Indenture. The Trustee may become the Owner of any of the Bonds in its own or any other capacity with the same rights it would have if it were not Trustee. Section 1.03. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes of this Indenture, of any Supplemental Indenture, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq. of the California Government Code. “Administrative Expenses” means the actual or reasonably estimated costs directly related to the administration of the District including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County, the City, or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, the District or any designee thereof of complying with arbitrage rebate requirements or responding to questions from the IRS pertaining to any Bonds or any audit of any Bonds by the IRS; the costs to the City, the District or any designee thereof of providing continuing disclosure regarding the Bonds pursuant to applicable state or federal securities law; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, the District or any designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or the 97 3 2851981.10 040287 RSIND District for any other administrative purposes, including, but not limited to, attorney’s fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. “Administrative Expense Fund” means the fund by that name established by Section 4.07(a) hereof. “Annual Debt Service” means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled (including by reason of the provisions of Section 2.03(A)(iii) providing for mandatory sinking payments), and (ii) the principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking payment due in such Bond Year pursuant to Section 2.03(A)(iii)). “Authorized Officer” means the [CFD Administrator, City Clerk or any other officer or employee authorized by the City Council of the City or by an Authorized Officer to undertake the action referenced in this Indenture as required to be undertaken by an Authorized Officer]. “Bond Counsel” means (i) Hawkins Delafield & Wood LLP or (ii) any other attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality of securities issued by public entities. “Bond Fund” means the fund by that name established by Section 4.05(a) hereof. “Bond Resolution” means Resolution No. ______, adopted by the City Council of the City on November 21, 2018. “Bond Register” means the books for the registration and transfer of Bonds maintained by the Trustee under Section 2.08 hereof. “Bond Year” means the one-year period beginning on September 2nd in each year and ending on September 1st in the following year, except that the first Bond Year shall begin on the Closing Date and end on September 1, 2019. “Bonds” means the 2018 Bonds, and, if the context requires, any Parity Bonds, at any time Outstanding under this Indenture or any Supplemental Indenture. “Business Day” means any day other than (i) a Saturday or a Sunday, or (ii) a day on which banking institutions in the state in which the Trustee has its principal corporate trust office are authorized or obligated by law or executive order to be closed. “CDIAC” means the California Debt and Investment Advisory Commission of the office of the State Treasurer of the State of California or any successor agency or bureau thereto. “CFD Administrator” means the [Finance Director] of the City or such other officer or employee of the City performing the functions of the CFD Administrator of the City. “City” means the City of Saratoga, California. 98 4 2851981.10 040287 RSIND “City Attorney” means any attorney or firm of attorneys employed by the City in the capacity of counsel to the City. “Closing Date” means [Closing Date, 2018], being the date upon which there is a physical delivery of the 2018 Bonds in exchange for the amount representing the purchase price of the 2018 Bonds by the Original Purchaser thereof. “County” means the County of Santa Clara. “Cooperative” means the Arrowhead Cooperative Company, Inc. “Costs of Issuance” means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and recording fees, initial fees and charges of the Trustee including its first annual administration fee, expenses incurred by the City or the Cooperative in connection with the issuance of the Bonds, special tax consultant fees and expenses, underwriter’s discount, legal fees and charges, including bond counsel, disclosure counsel, the Cooperative’s legal counsel, financial consultants’ fees, charges for execution, transportation and safekeeping of the Bonds, municipal advisor fees, and other costs, charges and fees in connection with the foregoing. “Costs of Issuance Fund” means the fund by that name established by Section 4.03(a) hereof. “Debt Service” means the scheduled amount of interest and amortization of principal (including principal payable by reason of Section 2.03(A)(iii)) on the 2018 Bonds and the scheduled amount of interest and amortization of principal payable on any Parity Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. “Tax Collector” means the County of Santa Clara Department of Tax and Collections. “Depository” means (a) initially, DTC, and (b) any other Securities Depository acting as Depository pursuant to Section 2.13. “District” means the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project), formed by the City under the Act and the Resolution of Formation. “Event of Default” means the occurrence of one or more of the events described as such in Section 9.01. “Federal Securities” means any of the following which are non-callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Trustee: (i) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury) and obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America, including, without limitation, such of the foregoing which are commonly referred to as “stripped” obligations and coupons; or (ii) any of 99 5 2851981.10 040287 RSIND the following obligations of the following agencies of the United States of America: (a) direct obligations of the Export-Import Bank, (b) certificates of beneficial ownership issued by the Farmers Home Administration, (c) participation certificates issued by the General Services Administration, (d) mortgage-backed bonds or pass-through obligations issued and guaranteed by the Government National Mortgage Association, (e) project notes issued by the United States Department of Housing and Urban Development, and (f) public housing notes and bonds guaranteed by the United States of America. “Fiscal Year” means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive. “Funding Agreement” means the Funding Agreement, dated as of November 2, 2016, between the City and the Cooperative, as originally executed and as it may be amended from time to time, including by a First Amendment. “Governmental Authority” means any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, agency, administration, central bank, service, district or other instrumentality of any governmental entity or other entity exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of or pertaining to government, or any arbitrator, mediator or other person with authority to bind a party at law. “Improvement Fund” means the fund by that name created by and held by the Trustee pursuant to Section 4.02(a) hereof. “Indenture” means this Indenture, as it may be amended or supplemented from time to time by any Supplemental Indenture adopted pursuant to the provisions hereof. “Independent Financial Consultant” means NBS or any consultant or firm of such consultants appointed by the City or the CFD Administrator, and who, or each of whom: (i) has experience in matters relating to the issuance and/or administration of bonds under the Act; (ii) is in fact independent and not under the domination of the City; (iii) does not have any substantial interest, direct or indirect, with or in the City, or any owner of real property in the District, or any real property in the District; and (iv) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City. “Interest Payment Dates” means March 1 and September 1 of each year, commencing March 1, 2019. “Letter of Representations” means a letter substantially in the form attached hereto as Exhibit B delivered by each purchaser of the Bonds to the District to the effect, among other things, that such purchaser (a) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the Bonds, (b) is acquiring the Bonds for its own account for the purpose of investment and not with a view to the distribution thereof, and (c) has no present intention of selling, negotiating, transferring or otherwise disposing of the Bonds so purchased. 100 6 2851981.10 040287 RSIND “Material Adverse Effect” means an event or occurrence which adversely affects in a material manner (a) the assets, liabilities, condition (financial or otherwise), business, facilities or operations of the District or the City, (b) the ability of the City to carry out its business in the manner conducted as of the date of this Indenture or to meet or perform its obligations under this Indenture on a timely basis, or (c) the validity or enforceability of this Indenture. “Material Litigation” means any action, suit, proceeding, inquiry or investigation against the City in any court or before any arbitrator of any kind or before or by any Governmental Authority, of which the City has notice or knowledge and which, (i) if determined adversely to the City, may have a Material Adverse Effect, (ii) seeks to restrain or enjoin any of the transactions contemplated hereby, or (iii) may adversely affect the ability of the City to perform its obligations under this Indenture. “Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. “Moody’s” means Moody’s Investors Service, and any successor thereto. “Net Special Taxes” means Special Tax Revenues, less Administrative Expenses. “Officer’s Certificate” means a written certificate of the City signed by an Authorized Officer of the City. “Ordinance” means any ordinance of the City levying the Special Taxes. “Original Purchaser” means Western Alliance Business Trust, a wholly owned affiliate of Western Alliance Bank, an Arizona corporation, as the initial purchaser and its successors and assigns. “Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 8.04) all Bonds except: (i) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to this Indenture or any Supplemental Indenture. “Owner” or “Bondowner” means any person who shall be the registered owner of any Outstanding Bond. “Parity Bonds” means bonds issued by the City for the District on a parity with any then Outstanding Bonds pursuant to Section 2.14 hereof. “Permitted Investments” means any of the following, but only to the extent that the same are acquired at Fair Market Value: (a)Federal Securities. (b)Time certificates of deposit or negotiable certificates of deposit issued by a state or nationally chartered bank (including the Trustee and its affiliates) or trust 101 7 2851981.10 040287 RSIND company, or a state or federal savings and loan association; provided, that the certificates of deposit shall be one or more of the following: continuously and fully insured by the Federal Deposit Insurance Corporation, and/or continuously and fully secured by securities described in subdivision (a) of this definition of Permitted Investments which shall have a market value, as determined on a marked-to-market basis calculated at least weekly, and exclusive of accrued interest, of not less than 102 percent of the principal amount of the certificates on deposit. (c)Commercial paper of “prime” quality of the highest ranking or of the highest letter and numerical rating as provided by either Moody’s or S&P, which commercial paper is limited to issuing corporations that are organized and operating within the United States of America and that have total assets in excess of five hundred million dollars ($500,000,000) and that have an “A” or higher rating for the issuer’s debentures, other than commercial paper, by either Moody’s or S&P, provided that purchases of eligible commercial paper may not exceed 180 days’ maturity nor represent more than 10 percent of the outstanding commercial paper of an issuing corporation. (d)A repurchase agreement with a state or nationally charted bank or trust company or a national banking association or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, provided that all of the following conditions are satisfied: (1) the agreement is secured by any one or more of the securities described in subdivision (a) of this definition of Permitted Investments, (2) the underlying securities are required by the repurchase agreement to be held by a bank, trust company, or primary dealer having a combined capital and surplus of at least one hundred million dollars ($100,000,000) and which is independent of the issuer of the repurchase agreement, and (3) the underlying securities are maintained at a market value, as determined on a marked-to-market basis calculated at least weekly, of not less than 103 percent of the amount so invested. (e)An investment agreement or guaranteed investment contract with, or guaranteed by, a financial institution (not including any insurance company) the long- term unsecured debt obligations of which are rated “AA” (or its equivalent) or better by Moody’s and S&P at the time of initial investment. The investment agreement shall be subject to a downgrade provision with at least the following requirements: (1) the agreement shall provide that within five Business Days after the financial institution’s long-term unsecured credit rating has been withdrawn, suspended, other than because of general withdrawal or suspension by Moody’s or S&P from the practice of rating that debt, or reduced below “AA-” by S&P or below “Aa3” by Moody’s (these events are called “rating downgrades”) the financial institution shall give notice to the Trustee and, within the five-day period, and for as long as the rating downgrade is in effect, shall (A) deliver in the name of the Trustee to the Trustee federal securities allowed as investments under subdivision (a) of this definition of Permitted Investments with aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement invested with the financial institution at that time, and shall deliver additional allowed federal securities as needed to maintain an aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement within three days after each evaluation date, which shall be at least weekly, 102 8 2851981.10 040287 RSIND (B) assign the agreement to another financial institution acceptable to the Trustee and the City whose long-term unsecured debt obligations are then rated “A” (or its equivalent) or better by Moody’s and S&P, or (c) return all invested funds to the Trustee; and (2) the agreement shall provide that, if the financial institution’s long-term unsecured credit rating is reduced below “A3” by Moody’s or below “A-” by S&P, the Trustee may, upon not more than five Business Days’ written notice to the financial institution, withdraw the investment agreement, with accrued but unpaid interest thereon to the date, and terminate the agreement. (f)The Local Agency Investment Fund of the State Treasurer of the State of California as permitted by the State Treasurer pursuant to Section 16429.1 of the California Government Code. (g)Investments in a money market account (including any accounts of the Trustee or its affiliates) rated in the highest rating category by Moody’s or S&P. “Principal Office” means the principal corporate trust office of the Trustee set forth in Section 10.06, except for the purpose of maintenance of the registration books and presentation of Bonds for payment, transfer or exchange, such term shall mean the office at which the Trustee conducts its corporate agency business, or such other or additional offices as may be designated by the Trustee. “Project” means water infrastructure improvements eligible to be funded by the District as more particularly described in the Resolution of Formation. “Rate and Method” means the Rate and Method of Apportionment of Special Taxes for the District, as approved pursuant to the Resolution of Formation. “Record Date” means the fifteenth day of the month next preceding the month of the applicable Interest Payment Date, whether or not such day is a Business Day. “Refunding Bonds” means bonds issued by the City for the District the net proceeds of which are used to refund all or a portion of the then Outstanding Bonds; provided that the debt service on the Refunding Bonds in any Bond Year is not in excess of the debt service on the Bonds being refunded and the final maturity of the Refunding Bonds is not later than the final maturity of the Bonds being refunded. “Reserve Fund” means the fund by that name established pursuant to Section 4.04(A) hereof. “Reserve Requirement” means, as of any date of calculation an amount equal to 45% of Maximum Annual Debt Service of the 2018 Bonds. The Reserve Requirement as of the Closing Date is $____________. “Resolution of Formation” means Resolution No. 16-076, adopted by the City Council of the City on December 21, 2016. 103 9 2851981.10 040287 RSIND “S&P” means Standard & Poor’s Ratings Service, a division of McGraw-Hill, and any successor thereto. “Special Tax Fund” means the fund by that name established by Section 4.06(a) hereof. “Special Tax Revenues” means the proceeds of the Special Taxes received by the City, including any scheduled payments thereof, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon. “Special Tax Revenues” does not include any penalties collected in connection with delinquent Special Taxes. “Special Tax” or “Special Taxes” means the special taxes levied within the District pursuant to the Act, the Ordinance and this Indenture. “Supplemental Indenture” means an agreement the execution of which is authorized by a resolution which has been duly adopted by the City under the Act and which agreement is amendatory of or supplemental to this Indenture, but only if and to the extent that such agreement is specifically authorized hereunder. “Surplus Fund” means the fund by that name established by Section 4.08(a) hereof. “Tax Consultant” means NBS or another independent financial or tax consultant retained by the City for the purpose of computing the Special Taxes. “Trust Estate” means the assets pledged and assigned by the City to the Trustee pursuant to this Indenture, which are limited to and include only the following: (a) Net Special Tax Revenues, and (b) the amounts in the Special Tax Fund, the Bond Fund and the Reserve Fund. “Trustee” means the entity appointed by the City and acting as an independent trustee with the duties and powers herein provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 7.01. “2018 Bonds” means the Bonds so designated and authorized to be issued under Section 2.01 hereof. 104 10 2851981.10 040287 RSIND ARTICLE II THE BONDS Section 2.01. Principal Amount; Designation. 2018 Bonds in the aggregate principal amount of _______________ ($[Par Amount]) are hereby authorized to be issued and sold by the City for the District under and subject to the terms of the Bond Resolution and this Indenture, the Act and other applicable laws of the State of California. The 2018 Bonds are hereby designated as the “City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable).” Section 2.02. Terms of the 2018 Bonds. (A)Form; Denominations. The 2018 Bonds shall be issued as fully registered Bonds without coupons in the denomination of $250,000 or any dollar integral multiple in excess thereof. (B)Date of 2018 Bonds. The 2018 Bonds shall be dated the Closing Date. (C)Maturities, Interest Rates. The 2018 Bonds shall mature and become payable on September 1 in each of the years, and shall bear interest at the rates per annum as follows: Maturity Date (September 1)Principal Amount Interest Rate 2048 $ 6.05% (D)Interest. The 2018 Bonds shall bear interest at the rates set forth above payable semiannually on the Interest Payment Dates in each year. Interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months. (E)Method of Payment. The Bonds and Parity Bonds shall be payable both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful money of the United States of America. The final principal payment of the Bonds and Parity Bonds and any premiums due upon the redemption thereof shall be payable upon presentation and surrender thereof at the Principal Office of the Trustee, or at the designated office of any successor Trustee. Interest on any Bond or Parity Bond shall be payable from the Interest Payment Date next preceding the date of authentication of that Bond or Parity Bond, unless (i) such date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of such Bond or Parity Bond, in which event interest shall be payable from the dated date of such Bond or Parity Bond, as applicable; provided, however, that if at the time of authentication of such Bond or Parity Bond, interest is in default, interest on that Bond or 105 11 2851981.10 040287 RSIND Parity Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment on that Bond or Parity Bond, interest on that Bond or Parity Bond shall be payable from its dated date. Interest on any Bond or Parity Bond shall be paid to the person whose name shall appear in the Bond Register as the Owner of such Bond or Parity Bond as of the close of business on the Record Date. Such interest shall be paid on the applicable Interest Payment Date by wire transfer in immediately available funds to an account designated by such Owner. So long as the Bonds are owned by Western Alliance Business Trust, a wholly-owned affiliate of Western Alliance Bank, an Arizona corporation, all principal and interest payments with respect to the Bonds shall be made by wire transfer using the following wiring instructions (unless the Trustee shall receive subsequent wiring instructions from Western Alliance Business Trust, a wholly-owned affiliate of Western Alliance Bank, an Arizona corporation): Receiving Bank:Western Alliance Bank ABA #:122105980 Acct. Name:Western Alliance Business Trust Acct #:4110482828 Beneficiary Info:City of Saratoga, CA CFD No. 2016-1 [Loan Number] ATTN: Note Department The principal of and redemption premiums, if any, on the Bonds shall be payable at the corporate trust office, upon presentation and surrender of such Bonds; provided that for so long as there is only one Owner of the Bonds and the Bonds are not in book-entry form, in lieu of surrendering the same for a new Bond, the Owner shall endorse on such Bond a record of partial payment of the principal of such Bond. If the Owner of any Bond is not Western Alliance Business Trust, a wholly-owned affiliate of Western Alliance Bank, an Arizona corporation, then such Owner shall provide written direction regarding wire transfer for payment of the principal of and interest on such Bond to the Trustee within five (5) Business Days of becoming an Owner. Section 2.03. Redemption. (A)Redemption Dates. (i)Optional Redemption. The 2018 Bonds maturing on and after September 1, 2025 are subject to optional redemption prior to their stated maturity on any Interest Payment Date on or after September 1, 2025, as a whole, or in part among maturities so as to maintain the same debt service profile for the 2018 Bonds as in effect on the Closing Date, and by lot within a maturity, at the following redemption prices expressed as a percentage of the principal amount to be redeemed, together with accrued interest thereon to the date fixed for redemption: 106 12 2851981.10 040287 RSIND Redemption Date Redemption Prices (Percentages of Principal Amount) September 1, 2025 and March 1, 2026 103% September 1, 2026 and March 1, 2027 102 September 1, 2027 and March 1, 2028 101 September 1, 2028 and any Interest Payment Date thereafter 100 (ii)Extraordinary Redemption from Special Tax Prepayments. The Bonds shall be subject to extraordinary redemption, in whole or in part, on any Interest Payment Date on or after September 1, 2019, from and to the extent of any prepayment of Special Taxes, at the following respective redemption prices (expressed as percentages of the principal amount of the 2018 Bonds to be redeemed), plus accrued interest thereon to the date of redemption: Redemption Date Redemption Prices (Percentages of Principal Amount) Any Interest Payment Dates on or after September 1, 2019 through March 1, 2026 103% September 1, 2026 and March 1, 2027 102 September 1, 2027 and March 1, 2028 101 September 1, 2028 and any Interest Payment Date thereafter 100 (iii)Mandatory Sinking Fund Redemption. The Term Bonds maturing on September 1, 2048 (the “Term Bonds”) are subject to mandatory sinking payment redemption in part on September 1, 2019, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows: Redemption Date (September 1)Sinking Fund Payments 2048 (Maturity) 107 13 2851981.10 040287 RSIND The amounts in the foregoing table shall be reduced to the extent practicable so as to maintain the same debt service profile for the 2018 Bonds as in effect on the Closing Date, as a result of any prior partial redemption of the 2018 Bonds pursuant to Sections 2.03(A)(i) and (ii) above, as specified in writing by the CFD Administrator to the Trustee. (B)Notice to Trustee. The City shall give the Trustee written notice of its intention to redeem Bonds pursuant to subsection (A)(i) not less than forty-five (45) days prior to the applicable redemption date, or such lesser number of days as shall be consented to by the Trustee. (C)Purchase of Bonds in Lieu of Redemption. In lieu of redemption under Section 2.03(A), moneys in the Bond Fund may be used and withdrawn by the Trustee for purchase of Outstanding Bonds, upon the filing with the Trustee of an Officer’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase and any premium which would otherwise be due if such Bonds were to be redeemed in accordance with this Indenture. (D)Redemption Procedure by Trustee. The Trustee shall cause notice of any redemption of Bonds to be mailed by first class mail, postage prepaid, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Trustee; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds. Such notice shall state the redemption date and the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the Bond numbers of the Bonds to be redeemed and Bond number of each Bond to be redeemed or shall state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called in part the principal amount thereof to be redeemed, and shall require that such Bonds be then surrendered at the Principal Office of the Trustee for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date. Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall bear, to the extent practicable, the maturity of the Bonds being redeemed with the proceeds of such check or other transfer. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds or any given portion thereof, the Trustee shall select the Bonds to be redeemed, from all Bonds or such given portion thereof not previously called for redemption, among maturities as directed in writing by the CFD Administrator (who shall 108 14 2851981.10 040287 RSIND specify Bonds to be redeemed so as to maintain, as much as practicable, the same debt service profile for the Bonds as in effect prior to such redemption, unless otherwise specified herein), and by lot within a maturity in any manner which the Trustee deems appropriate. Upon surrender of Bonds redeemed in part only (other than from mandatory sinking fund redemption), the City shall execute and the Trustee shall authenticate and deliver to the registered Owner, at the expense of the City, a new Bond or Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. (E)Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the Bonds so called for redemption shall have been deposited in the Bond Fund or an escrow account, such Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in such notice. All Bonds redeemed and purchased by the Trustee pursuant to this Section shall be canceled by the Trustee. The Trustee shall destroy the canceled Bonds and issue a certificate of destruction thereof to the City. Section 2.04. Form of 2018 Bonds. The 2018 Bonds, the form of Trustee’s certificate of authentication and the form of assignment, to appear thereon, shall be substantially in the forms, respectively, set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture, the Bond Resolution and the Act. Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the City by the manual or facsimile signatures of its Mayor of the City Council of the City and City Clerk who are in office on the date of adoption of this Indenture or at any time thereafter, and the seal of the City shall be impressed, imprinted or reproduced by facsimile signature thereon. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the owner. Any Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of such Bond shall be the proper officers of the City although at the nominal date of such Bond any such person shall not have been such officer of the City. Only such Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A, executed and dated by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of authentication of the Trustee shall be conclusive evidence that the Bonds registered hereunder have been duly authenticated, registered and delivered hereunder and are entitled to the benefits of this Indenture. 109 15 2851981.10 040287 RSIND Section 2.06. Registration of Exchange or Transfer. Subject to the limitations set forth in the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond or Parity Bond for cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in a form acceptable to the Trustee and duly executed by the Bondowner or his or her duly authorized attorney. Bonds or Parity Bonds may be exchanged at the office of the Trustee for other authorized denominations of the same maturity and issue. The Trustee shall not collect from the Owner any charge for any new Bond or Parity Bond issued upon any exchange or transfer, but shall require the Bondowner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any Bonds or Parity Bonds shall be surrendered for registration of transfer or exchange, the City shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds or a new Parity Bond or Parity Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Trustee shall not be required to register transfers or make exchanges of (i) Bonds or Parity Bonds for a period of 15 days next preceding any selection of the Bonds or Parity Bonds to be redeemed; or (ii) any Bonds or Parity Bonds chosen for redemption. Notwithstanding the foregoing, a Bond Owner may only transfer the Bonds to a new Bond Owner if the Bonds are transferred in whole and the new Bond Owner has delivered a letter (in the form attached as Exhibit B hereto) to the District and the Trustee. For purposes of such a transfer, the Trustee may rely upon all new Bond Owner representations as set forth in the letter, which include, but are not limited to, that such Bond Owner is a “qualified institutional buyer” as defined in Rule 144A of the Securities Act of 1933, as amended, or an institutional “accredited investor” as defined in Section 501(a)(1), (2), (3) or (7) of Regulation D promulgated under the 1933 Act, as amended. Section 2.07. Bond Register. The Trustee will keep or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the Bonds, which books shall show the series number, date, amount, rate of interest and last known Owner of each Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the ownership of the Bonds as hereinbefore provided. The City and the Trustee will treat the Owner of any Bond whose name appears on the Bond register as the absolute Owner of such Bond for any and all purposes, and the City and the Trustee shall not be affected by any notice to the contrary. The City and the Trustee may rely on the address of the Bondowner as it appears in the Bond register for any and all purposes. Section 2.08. Temporary Bonds. The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such authorized denominations as may be determined by the City, and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues 110 16 2851981.10 040287 RSIND temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of the Trustee or at such other location as the Trustee shall designate, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under to this Indenture as definitive Bonds authenticated and delivered hereunder. Section 2.09. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Trustee shall authenticate and deliver, a new Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and destroyed by the Trustee who shall deliver a certificate of destruction thereof to the City. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory to it and indemnity for the City and the Trustee satisfactory to the Trustee shall be given, the City, at the expense of the Owner, shall execute, and the Trustee shall authenticate and deliver, a new Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of preparing each new Bond delivered under this Section and of the expenses which may be incurred by the City and the Trustee for the preparation, execution, authentication and delivery. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds issued pursuant to this Indenture. Section 2.10. No Acceleration. The principal of the Bonds shall not be subject to acceleration hereunder. Nothing in this Section shall in any way prohibit the redemption of Bonds under Section 2.03 hereof, or the defeasance of the Bonds and discharge of this Indenture under Section 10.03 hereof. Section 2.11. No Book-Entry System. The Bonds shall be initially delivered in the form of a separate single fully registered Bond (which may be typewritten). The Bonds shall be registered in the Bond Register in the name of the Original Purchaser of the Bonds and shall not be delivered in book-entry form. Upon the request of the Owners of all Outstanding Bonds, the City may elect to convert the Bonds to book-entry Bonds and such Bonds shall become subject to the provisions required by the Depository Trust Company and its book-entry only system. Section 2.12. Issuance of Parity Bonds. The Issuer may at any time issue bonds (the “Parity Bonds”) in addition to the 2018 Bonds authorized under Section 2.01 hereof, by means of a Supplemental Indenture and without the consent of any Bondowners, upon compliance with the provisions of this Section 2.12. Any such Parity Bonds shall constitute Bonds hereunder and shall be secured by a lien on and pledge of the Trust Estate on a parity with all other Bonds Outstanding hereunder. The Issuer may issue the Parity Bonds subject to the following specific conditions precedent: 111 17 2851981.10 040287 RSIND (A)Current Compliance. The Issuer shall be in compliance on the date of issuance of the Parity Bonds with all covenants set forth in this Indenture and all Supplemental Indentures. (B)Payment Dates. The Supplemental Indenture providing for the issuance of such Parity Bonds shall provide that interest thereon shall be payable on March 1 and September 1, and principal thereof shall be payable on September 1 in any year in which principal is payable (provided that there shall be no requirement that any Parity Bonds pay interest on a current basis). (C)Funds and Accounts; Reserve Fund Deposit. The Supplemental Indenture providing for the issuance of such Parity Bonds may provide for the establishment of separate funds and accounts, and shall provide for a deposit to the Reserve Fund in an amount necessary so that the amount on deposit therein, following the issuance of such Parity Bonds, is equal to the reserve requirement applicable to such Parity Bonds, exclusive of amounts on deposit therein used to satisfy the Reserve Requirement for the 2018 Bonds. (D)Refunding Only. The purposes for which the proceeds of such Parity Bonds are to be applied may only include (i) providing funds to refund Bonds previously issued hereunder, (ii) providing funds to pay costs of issuance incurred in connection with the issuance of Parity Bonds, (iii) providing funds to pay interest for a specified period, and (iv) providing funds to make a deposit into the Reserve Fund. (E)Officer’s Certificate. The Issuer shall deliver to the Trustee an Officer’s Certificate certifying that the conditions precedent to the issuance of such Parity Bonds set forth in subsections (A), (B), (C) and (D) of this Section 2.12 have been satisfied. In delivering such Officer’s Certificate, the Authorized Officer that executes the same may conclusively rely upon such certificates of the Trustee, the Tax Consultant and others selected with due care, without the need for independent inquiry or certification. (F)Debt Service Savings Requirement. The issuance of Parity Bonds must result in overall present value debt service savings. ARTICLE III ISSUANCE OF BONDS Section 3.01. Issuance and Delivery of 2018 Bonds. At any time after the execution of this Indenture, the Issuer may issue the 2018 Bonds for the District in the aggregate principal amount set forth in Section 2.01 and deliver the 2018 Bonds to the Original Purchaser. The Authorized Officers of the Issuer are hereby authorized and directed to deliver any and all documents and instruments necessary to cause the issuance of the 2018 Bonds in accordance with the provisions of the Act, the Bond Resolution and this Indenture, to authorize the payment of Costs of Issuance and costs of the Project by the Trustee from the proceeds of the 2018 Bonds and to do and cause to be done any and all acts and things necessary or convenient for delivery of the 2018 Bonds to the Original Purchaser. 112 18 2851981.10 040287 RSIND Section 3.02. Pledge of Trust Estate. The City hereby irrevocably pledges, transfers in trust, grants a security interest in and assigns to the Trustee, for the benefit of the Owners from time to time of the Bonds, all right, title and interest of the City in the Trust Estate, subject to the provisions of this Indenture. The pledge and assignment of the Trust Estate pursuant to this Indenture shall attach and be valid and binding upon the execution and delivery of this Indenture by the City and the Trustee, without any physical delivery of the Trust Estate or further act. Any and all interest in property acquired after the date of this Indenture of any kind or nature which is to become subject to the lien of this Indenture shall, without any further conveyance, assignment or act on the part of the City or the Trustee, be subject to the lien of this Indenture as fully and completely as though specifically described in this Indenture. The lien of the pledge and security interest created by this Indenture shall be valid and binding and prior to the claims of any and all parties having claims of any kind in tort, contract or otherwise against the City irrespective of whether such parties have notice of the lien. The Trust Estate is free and clear of any pledge, lien, charge or encumbrance other than the lien of this Indenture. Amounts in the Administrative Expense Fund, the Improvement Fund and the Costs of Issuance Fund are not pledged to the repayment of the Bonds. Section 3.03. Type and Nature of Bonds and Parity Bonds. Neither the faith and credit nor the taxing power of the City (other than from the Special Taxes), the State of California or any political subdivision thereof other than the City is pledged to the payment of the Bonds or any Parity Bonds. Except for the Special Taxes, no other taxes are pledged to the payment of the Bonds or any Parity Bonds. The Bonds and any Parity Bonds are not general or special obligations of the City nor general obligations of the District, but are limited obligations of the City payable solely from certain amounts deposited by the City in the Special Tax Fund, as more fully described herein. The City’s limited obligation to pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds from amounts in the Special Tax Fund is absolute and unconditional, free of deductions and without any abatement, offset, recoupment, diminution or set-off whatsoever. No Owner of the Bonds or any Parity Bonds may compel the exercise of the taxing power by the City (except as pertains to the Special Taxes) or the forfeiture of any of its property. The principal of and interest on the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal or equitable pledge, charge, lien, or encumbrance upon any of the City’s property, or upon any of its income, receipts or revenues, except the Net Special Taxes and other amounts in the Special Tax Fund which are, under the terms of this Indenture and the Act, set aside for the payment of the Bonds, any Parity Bonds and interest thereon and neither the members of the legislative body of the District or the City Council of the City nor any persons executing the Bonds or any Parity Bonds, are liable personally on the Bonds or any Parity Bonds, by reason of their issuance. Notwithstanding anything to the contrary contained in this Indenture, the District shall not be required to advance any money derived from any source of income other than the Net Special Taxes, or for the performance of any covenants contained herein. The City may, 113 19 2851981.10 040287 RSIND however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose. Section 3.04. Equality of Bonds and Parity Bonds and Pledge of Net Special Taxes. Pursuant to the Act and this Indenture, the Bonds and any Parity Bonds shall be equally payable from and secured by a pledge and lien upon the Net Special Taxes and other amounts in the Special Tax Fund, without priority for number, date of the Bonds or Parity Bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and any Parity Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the Net Special Taxes and other amounts in the Special Tax Fund, which are hereby set aside for the payment of the Bonds and any Parity Bonds. Amounts in the Special Tax Fund shall constitute a trust fund held for the benefit of the Owners to be applied to the payment of the interest on and principal of the Bonds and any Parity Bonds and so long as any of the Bonds and any Parity Bonds or interest thereon remain Outstanding shall not be used for any other purpose, except as permitted by this Indenture or any Supplemental Indenture. Notwithstanding any provision contained in this Indenture to the contrary, Net Special Taxes deposited in the Surplus Fund shall no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Surplus Fund, the Costs of Issuance Fund or the Administrative Expenses Fund shall be construed as a trust fund held for the benefit of the Owners. Nothing in this Indenture or any Supplemental Indenture shall preclude: (a) subject to the limitations contained hereunder, the redemption prior to maturity of any Bonds or Parity Bonds subject to call and redemption and payment of said Bonds or Parity Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as hereafter amended, or under any other law of the State of California; or (b) the issuance, subject to the limitations contained herein, of Parity Bonds which shall be payable from Net Special Taxes. Section 3.05. Bonds Not Asset or Liability of City For Financial Statement Purposes. The Bonds and the City’s obligations under this Indenture with respect to the Bonds are not liabilities of the City for financial statement purposes, and the Trust Estate is not an asset of the City for financial statement purposes, it being acknowledged that the City has assigned the Trust Estate to the Trustee and the Bonds are payable solely from the Trust Estate. Section 3.06. Validity of Bonds and Parity Bonds. The validity of the authorization and issuance of the Bonds and any Parity Bonds shall not be affected in any way by any defect in any proceedings taken by the City by the invalidity, in whole or in part, of any contracts made by the City in connection therewith, and shall not be dependent upon the performance by any person of his or her obligation with respect to the Project, and the recital contained in the Bonds or any Parity Bonds that the same are issued pursuant to the Act and other applicable laws of the State shall be conclusive evidence of their validity and of the regularity of their issuance. ARTICLE IV FUNDS AND ACCOUNTS Section 4.01. Application of Proceeds of Sale of 2018 Bonds and Other Moneys. The proceeds of the purchase of the 2018 Bonds by the Original Purchaser (being $[PAR 114 20 2851981.10 040287 RSIND AMOUNT]) shall be paid to the Trustee, who shall forthwith set aside, pay over and deposit such proceeds on the Closing Date as follows: (A)deposit in the Costs of Issuance Fund an amount equal to $__________; (B)deposit in the Reserve Fund an amount equal to $_______; (C)deposit in the Improvement Fund an amount equal to $_________; and (D)deposit in the Administrative Expense Fund an amount equal to $__________. Section 4.02. Improvement Fund. (A)Establishment of Improvement Fund. There is hereby established as a separate fund to be held by the Trustee, the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) Improvement Fund (the “Improvement Fund”). A deposit shall be made to the Improvement Fund as required by Section 4.01(C). Moneys in the Improvement Fund shall be held in trust by the Trustee for the benefit of the District, and shall be disbursed for the payment or reimbursement of costs of the Project. (B)Procedure for Disbursement. Disbursements from the Improvement Fund shall be made by the Trustee upon receipt of an Officer’s Certificate which shall: (i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made (which shall be for payment of a Project cost due under the Funding Agreement, or to reimburse expenditures of the City, the Cooperative or any other party for Project costs previously paid), that the disbursement is a proper expenditure from the Improvement Fund, and the person to which the disbursement is to be paid; and (ii) certify that no portion of the amount then being requested to be disbursed was set forth in any Officer’s Certificate previously filed requesting a disbursement; and (iii) for disbursements to pay Project costs incurred by the Cooperative, include an acknowledgement of the disbursement request and amount by the Cooperative. Each such Officer’s Certificate or other certificate submitted to the Trustee as described in this Section 4.02(b) shall be sufficient evidence to the Trustee of the facts stated therein, and the Trustee shall have no duty to confirm the accuracy of such facts. (C)Investment. Moneys in the Improvement Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits from the investment and deposit of amounts in the Improvement Fund shall be retained in the Improvement Fund, to be used for the purposes of the Improvement Fund. (D)Closing of Fund. Upon the filing of an Officer’s Certificate with the Trustee, acknowledged by the Cooperative and stating that the Project has been completed and that all costs of the Project have been paid, including the distribution of excess funds in accordance with Section 2.3 of the First Amendment to the Funding Agreement, or that any such costs are not required to be paid from the Improvement Fund, the Trustee shall transfer the amount, if any, remaining in the Improvement Fund to the Bond Fund to be used to pay Debt Service on the Bonds on the next Interest 115 21 2851981.10 040287 RSIND Payment Date, and when no amounts remain on deposit in the Improvement Fund the Improvement Fund shall be closed. Section 4.03. Costs of Issuance Fund. (A)Establishment of Costs of Issuance Fund. There is hereby established as a separate fund to be held by the Trustee, the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) Costs of Issuance Fund (the “Costs of Issuance Fund”), to the credit of which a deposit shall be made as required by Section 4.01(A). Moneys in the Costs of Issuance Fund shall be held in trust by the Trustee and shall be disbursed as provided in subsection (b) of this Section for the payment or reimbursement of Costs of Issuance. (B)Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees, signed by the CFD Administrator and delivered to the Trustee concurrently with the delivery of the Bonds, or otherwise in an Officer’s Certificate delivered to the Trustee after the Closing Date. The Trustee shall pay all Costs of Issuance after receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee pursuant to an Officer’s Certificate requesting payment of Costs of Issuance. The Trustee shall maintain the Costs of Issuance Fund for a period of 90 days from the date of delivery of the Bonds and then shall transfer any moneys remaining therein, including any investment earnings thereon, to the Administrative Expense Fund. (C)Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Trustee in the Costs of Issuance Fund to be used for the purposes of such fund. Section 4.04. Reserve Fund. (A)Establishment of Fund. There is hereby established as a separate fund to be held by the Trustee, the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) Reserve Fund (the “Reserve Fund”), to the credit of which a deposit shall be made as required by Section 4.01(b) equal to the Reserve Requirement as of the Closing Date for the Bonds, and deposits shall be made as provided in Section 4.06(B). Moneys in the Reserve Fund shall be held in trust by the Trustee for the benefit of the Owners of the Bonds as a reserve for the payment of principal of, and interest and any premium on, the Bonds and shall be subject to a lien in favor of the Owners of the Bonds. (B)Use of Reserve Fund. Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds or, in accordance with the provisions of this Section, for the purpose of redeeming Bonds from the Bond Fund. 116 22 2851981.10 040287 RSIND (C)Transfer Due to Deficiency in Bond Fund. Whenever transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Trustee shall provide written notice thereof to the CFD Administrator, specifying the amount withdrawn. (D)Transfer of Excess of Reserve Requirement. Whenever, on the Business Day prior to any Interest Payment Date, or on any other date at the request of the CFD Administrator, the amount in the Reserve Fund exceeds the Reserve Requirement, the Trustee shall provide written notice to the CFD Administrator of the amount of the excess and shall transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of interest on the Bonds on the next Interest Payment Date in accordance with Section 4.05. (E)Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund equals or exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Trustee shall notify the CFD Administrator of such situation, and, upon the written direction of the CFD Administrator, the Trustee shall transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with Section 2.03 and 4.05, as applicable, of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund shall be transferred to the City to be used for any lawful purpose of the City consistent with the provisions of the Act. Notwithstanding the foregoing, no amounts shall be transferred from the Reserve Fund pursuant to this Section 4.04(e) until after payment of any fees and expenses due to the Trustee. (F)Investment. Moneys in the Reserve Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment shall be retained in the Reserve Fund to be used for the purposes of such fund. Section 4.05. Bond Fund. (A)Establishment of Bond Fund. There is hereby established as a separate fund to be held by the Trustee, the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) Bond Fund (the “Bond Fund”), to the credit of which deposits shall be made as required by Sections 4.02(D), 4.04(B), 4.04(D), 4.04(E), and 4.06(B), and any other amounts required to be deposited therein by this Indenture or the Act. Moneys in the Bond Fund shall be held in trust by the Trustee for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds. 117 23 2851981.10 040287 RSIND (B)Disbursements. On a Business Day five (5) days prior to each Interest Payment Date, the Trustee shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal, and interest and any premium, then due and payable on the Bonds, including any amounts due on the Bonds by reason of the sinking payments set forth in Section 2.03(A)(iii), or a redemption of the Bonds required by Sections 2.03(A)(i) and (ii), such payments to be made in the priority listed in the second succeeding paragraph. Notwithstanding the foregoing, amounts in the Bond Fund as a result of a transfer pursuant to Section 4.02(d) shall be used to pay the principal of and interest on the Bonds prior to the use of any other amounts in the Bond Fund for such purpose. In the event that amounts in the Bond Fund are insufficient for the purposes set forth in the preceding paragraph, the Trustee shall withdraw from the Reserve Fund to the extent of any funds therein amounts to cover the amount of such Bond Fund insufficiency. Amounts so withdrawn from the Reserve Fund shall be deposited in the Bond Fund. If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments provided for in the first sentence of the first paragraph of this Section 4.05(B), the Trustee shall apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments, and then to payment of principal due on the Bonds by reason of sinking payments. Any sinking payment not made as scheduled shall be added to the sinking payment to be made on the next sinking payment date. (C)Investment. Moneys in the Bond Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from the investment and deposit of amounts in the Bond Fund shall be retained in the Bond Fund, to be used for purposes of such fund. Section 4.06. Special Tax Fund. (A)Establishment of Special Tax Fund. There is hereby established as a separate fund to be held by the Trustee, the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) Special Tax Fund (the “Special Tax Fund”), to the credit of which the Trustee shall deposit amounts received from or on behalf of the City consisting of Special Tax Revenues, and any amounts required by Section 4.06(b) to be deposited therein. The City shall remit any such amounts received by it to the Trustee for deposit by the Trustee to the Special Tax Fund. Notwithstanding the foregoing, any Special Tax Revenues constituting payment of the portion of the Special Tax levy for Administrative Expenses, as identified by the CFD Administrator to the Trustee, shall be deposited by the Trustee in the Administrative Expense Fund. 118 24 2851981.10 040287 RSIND Moneys in the Special Tax Fund shall be held in trust by the Trustee for the benefit of the City and the Owners of the Bonds, shall be disbursed as provided below and, pending disbursement, shall be subject to a lien in favor of the Owners of the Bonds and the City. (B)Disbursements. Five (5) days prior to each Interest Payment Date, the Trustee shall withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority (i) to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Improvement Fund and the Reserve Fund to the Bond Fund pursuant to Sections 4.02(D), and 4.04(d) and (E), such that the amount in the Bond Fund equals the principal (including any sinking payment), premium, if any, and interest due on the Bonds on such Interest Payment Date, and (ii) to the Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve Requirement. (C)Investment. Moneys in the Special Tax Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment and deposit shall be retained in the Special Tax Fund to be used for the purposes thereof. Section 4.07. Administrative Expense Fund. (A)Establishment of Administrative Expense Fund. There is hereby established as a separate fund to be held by the Trustee, the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) Administrative Expense Fund (the “Administrative Expense Fund”), to the credit of which deposits shall be made as required by Sections 4.01(D), 4.03(b) and 4.06(A). Moneys in the Administrative Expense Fund shall be held in trust by the Trustee for the benefit of the City, and shall be disbursed as provided below. (B)Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn by the Trustee and paid to the City or its order upon receipt by the Trustee of an Officer’s Certificate, acknowledged by the Cooperative stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense, and the nature of such Administrative Expense. Amounts transferred from the Costs of Issuance Fund to the Administrative Expense Fund pursuant to Section 4.03(b) shall be separately identified at all times, and shall be expended for purposes of the Administrative Expense Fund prior to the use of amounts transferred to the Administrative Expense Fund from the Special Tax Fund pursuant to Section 4.06(A). Annually, on the last day of each Fiscal Year commencing with the last day of Fiscal Year 2018-19, the Trustee shall withdraw any amounts then remaining in the Administrative Expense Fund in excess of $1,000 that have not otherwise been allocated to pay Administrative Expenses incurred but not yet paid, and which are not otherwise encumbered, and transfer such amounts to the Special Tax Fund. 119 25 2851981.10 040287 RSIND (C)Investment. Moneys in the Administrative Expense Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Trustee in the Administrative Expense Fund to be used for the purposes thereof. Section 4.08. Surplus Fund. After making the transfers required by Sections 4.04 through 4.07 hereof, as soon as practicable after each September 1, and in any event prior to each October 1, the Trustee shall transfer all remaining amounts in the Special Tax Fund, the Bond Fund and the Administrative Expense Fund to the Surplus Fund, unless on or prior to such date, it has received an Officer’s Certificate directing that certain amounts be retained in any of such funds. Moneys deposited in the Surplus Fund will be transferred by the Trustee at the direction of an Authorized Officer (i) to the Bond Fund to pay the principal of, including sinking fund payments, premium, if any, and interest on the Bonds and any Parity Bonds when due in the event that moneys in the Special Tax Fund and the Reserve Fund are insufficient therefor, (ii) to the Reserve Fund in order to replenish the Reserve Fund to the Reserve Requirement, (iii) to the Administrative Expenses Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative Expenses Fund are insufficient to pay Administrative Expenses, or (iv) for any other lawful purpose under the Act. The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity Bonds and may be used by the City for any lawful purpose under the Act. In the event that the City reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds or Parity Bonds, the City will notify the Trustee in an Officer’s Certificate and the Trustee will segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of the Surplus Fund shall be invested at the written direction of the City in Permitted Investments. ARTICLE V OTHER COVENANTS OF THE CITY Section 5.01. Punctual Payment. The City will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of this Indenture and any Supplemental Indenture, and it will faithfully observe and perform all of the conditions covenants and requirements of this Indenture and all Supplemental Indentures and of the Bonds. Section 5.02. Limited Obligation. The Bonds are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Trust Estate. Section 5.03. Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this 120 26 2851981.10 040287 RSIND Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have so extended or funded. Section 5.04. Against Encumbrances. The City will not encumber, pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this Indenture. Section 5.05. Books and Records. The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries shall be made of all transactions relating to the Special Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Trustee and the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing. The Trustee will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Trustee, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Bond Fund, the Reserve Fund, the Special Tax Fund, the Improvement Fund, the Administrative Expense Fund and the Costs of Issuance Fund. Such books of record and accounts shall at all times during business hours be subject to the inspection of the City and the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing upon reasonable prior notice. Section 5.06. Protection of Security and Rights of Owners. The City will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the City, the Bonds shall be incontestable by the City. Section 5.07. Compliance with Law. The City will comply with all applicable provisions of the Act and law in administering the District and completing the funding of the Project. Section 5.08. Collection of Special Tax Revenues. The City shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes. On or within five (5) Business Days of each June 1, the Trustee shall provide the CFD Administrator with a notice stating the amount then on deposit in the Bond Fund and the Reserve Fund, and informing the City that the Special Taxes may need to be levied pursuant to the Ordinance as necessary to provide for the debt service to become due on the Bonds in the calendar year that commences in the Fiscal Year for which the levy is to be made, and Administrative Expenses and replenishment (if necessary) of the Reserve Fund so that the balance therein equal the Reserve Requirement. The receipt of or failure to receive such notice by the CFD Administrator shall in no way affect the obligations of the CFD Administrator under the following two paragraphs. Upon receipt of such notice, the CFD Administrator shall 121 27 2851981.10 040287 RSIND communicate with the Tax Collector to ascertain the relevant parcels on which the Special Taxes are to be levied. The CFD Administrator shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each July 15 that the Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which Tax Collector will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the CFD Administrator shall prepare or cause to be prepared, and shall transmit to the Tax Collector, such data as the Tax Collector requires to include the levy of the Special Taxes on the next real property tax roll. The CFD Administrator shall fix and levy the amount of Special Taxes within the District required for the payment of principal of and interest on any outstanding Bonds of the District becoming due and payable during the ensuing year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses during such year, taking into account the balances in such funds and in the Special Tax Fund. The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation. The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property; provided that, pursuant to and in accordance with the Ordinance, the Special Taxes may be collected by means of direct billing of the property owners within the District, in which event the Special Taxes shall become delinquent if not paid when due pursuant to said billing. Section 5.09. Covenant to Foreclose. Pursuant to Section 53356.1 of the Act, the City hereby covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as provided in the following paragraph. The CFD Administrator shall notify the City Attorney of any such delinquency of which it is aware, and the applicable City Attorney shall commence, or cause to be commenced, such proceedings. On or about February 15 and June 15 of each Fiscal Year, the CFD Administrator shall compare the amount of Special Taxes theretofore levied in the District to the amount of Special Tax Revenues theretofore received by the City, and: (A)Individual Delinquencies. If the CFD Administrator determines that any Assessor’s Parcel (as such term is defined in the Rate and Method) subject to the Special Tax in the District is delinquent in the payment of Special Taxes in the aggregate amount of at least $5,000, then the CFD Administrator shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the fee owner of the 122 28 2851981.10 040287 RSIND delinquent property within 45 days of such determination, and (if the delinquency remains uncured) foreclosure proceedings shall be commenced by the City within 90 days of such determination. (B)Aggregate Delinquencies. If the CFD Administrator determines that (i) the total amount of delinquent Special Tax for the prior Fiscal Year for the entire District, (including the total of delinquencies under subsection (a) above), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, or (ii) there are twenty (20) or fewer owners of real property subject to the Special Tax within the District, determined by reference to the latest available secured property tax roll of the County, the CFD Administrator shall notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and the City shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in the District with a Special Tax delinquency. The CFD Administrator and the City Attorney, as applicable, are hereby authorized to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel (including a charge for City staff time) in conducting foreclosure proceedings shall be an Administrative Expense hereunder. Section 5.10. Further Assurances. The City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Indenture. Section 5.11. Continuing Disclosure to Owners. (A)Annual Report. So long as the Bonds remain Outstanding, the City shall provide the Owner with: (1) within nine (9) months of the end of each Fiscal Year, commencing with the Fiscal Year ending June 30, 2018 (the “Annual Report Filing Date”), an annual report (the “Annual Report”). The Annual Report shall contain audited financial statements of the City for the preceding Fiscal Year. If the audited financial statements of the City are prepared but not available prior to the Annual Report Filing Date, the City shall, when the audited financial statements are available, provide in a timely manner an electronic copy to the Owner. The Annual Report shall also contain the annual financial information with respect to the District, including the following: (i) the principal amount of Bonds outstanding as of the September 2 preceding the filing of the Annual Report, (ii) the balance in each fund under the Indenture as of the September 2 preceding the filing of the Annual Report, (iii) any changes to the Rate and Method of Apportionment of the Special Taxes approved or submitted to the qualified electors for approval prior to the filing of the Annual Report and a description of any parcels for which the Special Taxed have been prepaid, including the amount prepaid, since the date of the last Annual Report, (iv) a table representing the number of parcels, secured assessed values (land and structure values) and direct debt value to lien ratios, (v) a table setting forth for the five most recent fiscal years in which Special Taxes were 123 29 2851981.10 040287 RSIND levied, the amount of Special Taxes levied in each fiscal year and the percentage delinquent as of June 30 of such fiscal year and as of the March 1 preceding the date of the Annual Report, (vi) a statement as to any parcel in the District for which the delinquent special taxes represents more than 10% of the aggregate special tax levy: identity of the parcel, the identity of the owner(s) of the parcel and the aggregate amount of delinquent property and special taxes, including accrued penalties and interest, (vii) a statement as to the status of any foreclosure actions being pursued by the City with respect to delinquent Special Taxes, (viii) the date of issuance and the principal amount of any Parity Bonds, and (ix) any information not already included under (i) through (viii) above that the District would be required to file if the Bonds were sold by public sale in an annual report to the California Debt and Investment Advisory Commission pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended; and (2) notice of any default of any obligation of the City, Material Litigation, and material governmental proceedings which may affect the pledge of the Special Taxes to the payment of principal of and interest on the Bonds as provided hereunder. The information required pursuant to the preceding paragraph may be provided to the Owner by publishing such information on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website. (B)Notices and Information. The City shall provide to the Owner: 1)Immediate notice by telephone, promptly confirmed in writing, of any event, action or failure to take any action which constitutes an Event of Default under this Indenture, together with a detailed statement by an Authorized Officer of the steps being taken by the City to cure the effect of such Event of Default; 2)Prompt written notice of any action, suit or proceeding or any investigation, inquiry or similar proceeding by or before any court or other governmental authority, domestic or foreign, against the City or challenging the Special Taxes which involve claims equal to or in excess of $500,000 or that seeks injunctive relief, 3)Prompt written notice of any Material Adverse Effect or any Material Litigation, following the date of an event having a Material Adverse Effect, or any investigation, inquiry or similar proceeding by any Governmental Authority with respect to any matter that relates to or could impact any Special Taxes; and 4)With reasonable promptness, such other information respecting the District, the City, Special Taxes, and the operations, affairs and financial condition of the District and the City that the Owner may from time to time reasonably request. Section 5.12. Reduction of Special Taxes. The City covenants and agrees to not consent or conduct proceedings with respect to a reduction in the maximum Special Taxes that may be 124 30 2851981.10 040287 RSIND levied in the District below an amount, for any Fiscal Year, equal to 110% of the aggregate of the debt service due on the Bonds in such Fiscal Year, plus a reasonable estimate of Administrative Expenses for such Fiscal Year. It is hereby acknowledged that Bondowners are purchasing the Bonds in reliance on the foregoing covenant, and that said covenant is necessary to assure the full and timely payment of the Bonds. Section 5.13. Limits on Special Tax Waivers and Bond Tenders. The City covenants not to exercise its rights under the Act to waive delinquency and redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty program if to do so would materially and adversely affect the interests of the owners of the Bonds and further covenants not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the City having insufficient Special Tax revenues to pay the principal of and interest on the Bonds remaining Outstanding following such tender. Section 5.14. City Bid of Foreclosure Sale. The City will not bid at a foreclosure sale of property in respect of delinquent Special Taxes, unless it expressly agrees to take the property subject to the lien for Special Taxes imposed by the District. ARTICLE VI INVESTMENTS, DISPOSITION OF INVESTMENT PROCEEDS, LIABILITY OF THE CITY Section 6.01. Deposit and Investment of Moneys in Funds. Moneys in any fund or account created or established by this Indenture and held by the Trustee shall be invested by the Trustee in Permitted Investments, as directed pursuant to a certificate of an Authorized Officer filed with the Trustee at least two (2) Business Days in advance of the making of such investments. In the absence of any such certificate of an Authorized Officer, the Trustee shall invest, to the extent reasonably practicable, any such moneys in Permitted Investments described in clause (g) of the definition thereof in Section 1.03, which by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Moneys in any fund or account created or established by this Indenture and held by the CFD Administrator shall be invested by the CFD Administrator in any lawful investment for City funds or in any Permitted Investment, which in any event by its terms matures prior to the date on which such moneys are required to be paid out hereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of this Indenture for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts. Whenever in this Indenture any moneys are required to be transferred by the City to the Trustee, such transfer may be accomplished by transferring a like amount of Permitted Investments. The Trustee and its affiliates or the CFD Administrator may act as sponsor, advisor, depository, principal or agent in the acquisition or disposition of any investment. Neither the Trustee nor the CFD Administrator shall incur any liability for losses arising from any 125 31 2851981.10 040287 RSIND investments made pursuant to this Section. The Trustee shall not be required to determine the legality of any investments. Investments in any and all funds and accounts may be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Trustee or the CFD Administrator hereunder, provided that the Trustee or the CFD Administrator, as applicable, shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Indenture. The Trustee or the CFD Administrator, as applicable, shall sell at Fair Market Value, or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Trustee nor the CFD Administrator shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. Section 6.02. Limited Obligation. The City’s obligations hereunder are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Trust Estate. Section 6.03. Liability of City. The City shall not incur any responsibility in respect of the Bonds or this Indenture other than in connection with the duties or obligations explicitly herein or in the Bonds assigned to or imposed upon it, and then only to the extent of the Trust Estate. The City shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful default. The City shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions covenants or agreements of the Trustee herein or of any of the documents executed by the Trustee in connection with the Bonds, or as to the existence of a default or Event of Default thereunder. In the absence of bad faith, the City, including the CFD Administrator, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the City and conforming to the requirements of this Indenture. The City, including the CFD Administrator, shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts. No provision of this Indenture shall require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Trust Estate) in the performance of any of its obligations hereunder, or in the exercise of any of its rights or powers, 126 32 2851981.10 040287 RSIND if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The City and the CFD Administrator may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel, who may be the City Attorney, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The City shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactory established, if disputed. Whenever in the administration of its duties under this Indenture the City or the CFD Administrator shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the City, be deemed to be conclusively proved and established by a certificate of the Trustee, an appraiser, an Independent Financial Consultant or a Tax Consultant, and such certificate shall be full warrant to the City and the CFD Administrator for any action taken or suffered under the provisions of this Indenture or any Supplemental Indenture upon the faith thereof, but in its discretion the City or the CFD Administrator may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. Section 6.04. Employment of Agents by City. In order to perform its duties and obligations hereunder, the City and/or the CFD Administrator may employ such persons or entities as it deems necessary or advisable. The City shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities. ARTICLE VII THE TRUSTEE Section 7.01. Appointment of Trustee. The Bank of New York Mellon Trust Company, N.A., is hereby appointed Trustee and paying agent for the Bonds. The Trustee undertakes to perform such duties, and only such duties, as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under the following 127 33 2851981.10 040287 RSIND paragraph of this Section, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. With the prior written consent of the Owner, the City may at any time remove the Trustee initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank, corporation or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by federal or state authority. If such bank, corporation or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 7.01, combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall, with the prior written consent of the Owner, promptly appoint a successor Trustee by an instrument in writing. Any resignation or removal of the Trustee shall become effective upon acceptance of appointment by the successor Trustee. If no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section within forty-five (45) days after the Trustee shall have given to the City written notice or after a vacancy in the office of the Trustee shall have occurred by reason of its inability to act, the Trustee or any Owner may apply to any court of competent jurisdiction to appoint a successor Trustee. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Trustee. If, by reason of the judgment of any court, or reasonable agency, the Trustee is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Trustee hereunder shall be assumed by and vest in the CFD Administrator of the City in trust for the benefit of the Owners. The City covenants for the direct benefit of the Owners that its CFD Administrator in such case shall be vested with all of the rights and powers of the Trustee hereunder, and shall assume all of the responsibilities and perform all of the duties of the Trustee hereunder, in trust for the benefit of the Owners of the Bonds. In such event, the CFD Administrator may designate a successor Trustee qualified to act as Trustee hereunder. Section 7.02. Liability of Trustee. The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the City, and the Trustee assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Indenture or of the Bonds, or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon it. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. 128 34 2851981.10 040287 RSIND In the absence of bad faith, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions by which any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the same to determine whether or not they conform to the requirements of this Indenture. Except as provided above in this paragraph, Trustee shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of this Indenture, upon any resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Indenture, and the Trustee shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument. The Trustee shall not be liable for any error of judgment made in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Owners pursuant to this Indenture unless such Owners shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Trustee may become the owner of the Bonds with the same rights it would have if it were not the Trustee. The Trustee shall have no duty or obligation whatsoever to enforce the collection of Special Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts received, and its liability shall be limited to the proper accounting for such funds as it shall actually receive. In order to perform its duties and obligations hereunder, the Trustee may employ such persons or entities as it deems necessary or advisable. The Trustee shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities. Section 7.03. Information. The Trustee shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the Trustee hereunder as the City shall reasonably request, including but not limited to quarterly statements reporting funds held and transactions by the Trustee. 129 35 2851981.10 040287 RSIND Section 7.04. Notice to Trustee. The Trustee may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed in good faith by it to be genuine and to have been signed or presented by the proper party or proper parties. The Trustee may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The Trustee shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed. Whenever in the administration of its duties under this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Trustee, be deemed to be conclusively proved and established by an Officer’s Certificate, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions of this Indenture or any Supplemental Indenture upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. Section 7.05. Compensation, Indemnification. The City shall pay to the Trustee from time to time reasonable compensation for all services rendered as Trustee under this Indenture, and also all reasonable expenses, charges, counsel fees and other disbursements, including those of their attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Indenture, but the Trustee shall not have a lien therefor on any funds at any time held by it under this Indenture. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Trustee, its officers, employees, directors and agents harmless against any costs, expenses, claims or liabilities whatsoever, including without limitation fees and expenses of its attorneys, which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct. The obligation of the City under this Section shall survive resignation or removal of the Trustee under this Indenture and payment of the Bonds and discharge of this Indenture, but any monetary obligation of the City arising under this Section shall be limited solely to amounts on deposit in the Administrative Expense Fund. ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS INDENTURE Section 8.01. Amendments Permitted. This Indenture and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Indenture pursuant to the affirmative vote at a meeting of Owners, or with the prior written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.04. No such modification or amendment shall (i) extend the maturity of 130 36 2851981.10 040287 RSIND any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the City of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Owners of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or this Indenture), or (iii) reduce the percentage of Bonds required for the amendment hereof. Any such amendment may not modify any of the rights or obligations of the Trustee without its written consent. Section 8.02. [Reserved]. Section 8.03. Procedure for Amendment With Written Consent of Owners. The City and the Trustee may at any time adopt a Supplemental Indenture amending the provisions of the Bonds or of this Indenture or any Supplemental Indenture, to the extent that such amendment is permitted by Section 8.01, to take effect when and as provided in this Section. A copy of such Supplemental Indenture, together with a request to Owners for their consent thereto, shall be mailed by first class mail, by the Trustee to each Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Indenture and request shall not affect the validity of the Supplemental Indenture when assented to as in this Section provided. Such Supplemental Indenture shall not become effective unless there shall be filed with the Trustee the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter in this Section provided for has been mailed. After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Indenture, the City shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Indenture, stating in substance that the Supplemental Indenture has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Indenture or consents thereto). Proof of the mailing of such notice shall be filed with the Trustee. A record, consisting of the papers required by this Section 8.03 to be filed with the Trustee, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Indenture shall become effective upon the filing with the Trustee of the proof of mailing of such notice, and the Supplemental Indenture shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the City and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period. 131 37 2851981.10 040287 RSIND Section 8.04. Disqualified Bonds. Bonds owned or held for the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article VIII, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Article VIII; provided, however, that the Trustee shall not be deemed to have knowledge that any Bond is owned or held by the City unless the City is the registered Owner or the Trustee has received written notice that any other registered Owner is an Owner for the account of the City. Section 8.05. Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article VIII, this Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under this Indenture of the City and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments. The City may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the Principal Office of the Trustee or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on such Bond. The City may determine that new Bonds, so modified as in the opinion of the City is necessary to conform to such Owners’ action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Trustee without cost to any Owner, for Bonds then Outstanding, upon surrender of such Bonds. Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. ARTICLE IX DEFAULT Section 9.01. Events of Default. Each of the following events shall constitute an “Event of Default” hereunder: (A)failure to pay the principal of or premium (if any) on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise; (B)failure to pay any installment of interest on any Bond when such interest installment shall become due and payable; and 132 38 2851981.10 040287 RSIND (C)failure by the City to perform or observe any other of the covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, and the continuation of such failure for a period of sixty (60) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the City by the Trustee, or to the City and the Trustee by the holders of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds at the time outstanding. No default specified in (c) above shall constitute an Event of Default unless the City shall have failed to correct such default within the applicable period; provided, however, that if the default shall be such that it cannot be corrected within such period, it shall not constitute an Event of Default if corrective action is instituted by the City within the applicable period and diligently pursued until the default is corrected. Section 9.02. Institution of Legal Proceedings by Trustee. If one or more of the Events of Default shall occur and be continuing, the Trustee in its discretion may, and upon the written request of the holders of a majority in principal amount of the Bonds then outstanding and upon being indemnified to its satisfaction therefor the Trustee shall, proceed to protect or enforce its rights or the rights of the holders of Bonds under the Act or under this Indenture, by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein or therein, or in aid of the execution of any power herein or therein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder; provided that any such request from the Bondholders shall not be in conflict with any rule of law or with this Indenture, expose the Trustee to personal liability or be unduly prejudicial to Bondholders not joining therein. Section 9.03. Application of Moneys Collected by Trustee. Any moneys held by the Trustee, or collected by the Trustee pursuant to Section 7.02 shall be applied in the order following, at the date or dates fixed by the Trustee and, in the case of distribution of such moneys on account of principal (or premium, if any) or interest, upon presentation of the Bonds and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid: First: For payment of all amounts due to the Trustee under Section 9.06. Second: For deposit in the Bond Fund to be applied to payment of the principal (including sinking fund payments) of all Bonds then due and unpaid and the premium, if any, and interest thereon; ratably to the persons entitled thereto without discrimination or preference; except that no payment of principal, premium or interest shall be made with respect to any Bonds registered in the name of the City, or known by the Trustee to be registered in the name of any nominee of the City, until all amounts due on all Bonds not so registered have been paid. Third: For payment of all other amounts due to any person hereunder. Section 9.04. Effect of Delay or Omission to Pursue Remedy. No delay or omission of the Trustee or of any holder of Bonds to exercise any right or power arising from any default 133 39 2851981.10 040287 RSIND shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein, and every power and remedy given by this Article IX to the Trustee or to the holders of Bonds may be exercised from time to time and as often as shall be deemed expedient. In case the Trustee shall have proceeded to enforce any right under this Indenture, and such proceedings shall have been discontinued or abandoned because of waiver or for any other reason, or shall have been determined adversely to the Trustee, then and in every such case the City, the Trustee and the holders of the Bonds, severally and respectively, shall be restored to their former positions and rights hereunder in respect to the Trust Estate; and all remedies, rights and powers of the City, the Trustee and the holders of the Bonds shall continue as though no such proceedings had been taken. Section 9.05. Remedies Cumulative. No remedy herein conferred upon or reserved to the Trustee or to any holder of the Bonds is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. Section 9.06. Covenant to Pay Bonds in Event of Default. The City covenants that, upon the happening of any Event of Default, the City will pay to the Trustee upon demand, but only out of Special Tax Revenues, for the benefit of the holders of the Bonds, the whole amount then due and payable thereon for interest or for principal and premium, or both, as the case may be, and all other sums which may be due hereunder or secured hereby, including reasonable compensation to the Trustee, its agents and counsel, and any expenses or liabilities incurred by the Trustee hereunder. In case the City shall fail to pay the same forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, and upon being indemnified to its satisfaction shall be entitled to institute proceedings at law or in equity in any court of competent jurisdiction to recover judgment for the whole amount due and unpaid, together with costs and reasonable attorneys’ fees, subject, however, to the condition that such judgment, if any, shall be limited to, and payable solely out of, Special Tax Revenues and any other assets pledged, transferred or assigned to the Trustee under this Indenture as herein provided and not otherwise. The Trustee shall be entitled to recover such judgment as aforesaid, either before or after or during the pendency of any proceedings for the enforcement of this Indenture, and the right of the Trustee to recover such judgment shall not be affected by the exercise of any other right, power or remedy for the enforcement of the provisions of this Indenture. Section 9.07. Trustee Appointed Agent for Bondholders. The Trustee is hereby appointed the agent and attorney of the holders of all Bonds outstanding hereunder for the purpose of filing any claims relating to the Bonds. Section 9.08. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the written request of the holders of a majority in principal amount of the Bonds then outstanding, it shall have full power, in the exercise of its discretion for the best interests of the holders of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default hereunder, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed 134 40 2851981.10 040287 RSIND with it a written request signed by the holders of at least a majority in principal amount of the Bonds outstanding hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation. Section 9.09. Limitation on Bondholders’ Right to Sue. No holder of any Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such holder shall have previously given to the Trustee written notice of the occurrence of an Event of Default hereunder; (b) the holders of at least a majority in aggregate principal amount of all the Bonds then outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said holders shall have tendered to the Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of thirty (30) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any holder of Bonds of any remedy hereunder; it being understood and intended that no one or more holders of Bonds shall have any right in any manner whatever by its or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all holders of the outstanding Bonds. The right of any holder of any Bond to receive payment of the principal of (and premium, if any) and interest on such Bond out of Special Tax Revenues, as herein and therein provided, on and after the respective due dates expressed in such Bond, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such holder, notwithstanding the foregoing provisions of this Section or Section 9.08 or any other provision of this Indenture. Section 9.10. Limitation of Liability to Trust Estate. Notwithstanding anything in this Indenture contained, the City shall not be required to advance any moneys derived from the proceeds of taxes collected by the City, by the State of California or by any political subdivision thereof or from any source of income of any of the foregoing other than the Special Tax Revenues, for any of the purposes in this Indenture mentioned, whether for the payment of the principal of or interest on the Bonds or for any other purpose of this Indenture. The Bonds are limited obligations of the City for the District, and are payable from and secured only by the Trust Estate. ARTICLE X MISCELLANEOUS Section 10.01. Benefits of Indenture Limited to Parties. Nothing in this Indenture, expressed or implied, is intended to give to any person other than the City, the Trustee and the 135 41 2851981.10 040287 RSIND Owners, any right, remedy, claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Trustee. Section 10.02. Successor is Deemed Included in All References to Predecessor. Whenever in this Indenture or any Supplemental Indenture either the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the City or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 10.03. Discharge of Indenture. The City shall have the option to pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways: (A)by well and truly paying or causing to be paid the principal of, and interest and any premium on, such Bonds Outstanding, as and when the same become due and payable; (B)by depositing with the Trustee or a third party escrow agent, in trust, at or before maturity, money which, together with the amounts then on deposit in the funds and accounts provided for in Sections 4.04 and 4.05 is fully sufficient to pay such Bonds Outstanding, including all principal, interest and redemption premiums; or (C)by irrevocably depositing with the Trustee or a third party escrow agent, in trust, cash and Federal Securities in such amount as the City shall determine as confirmed by Bond Counsel or an independent certified public accountant will, together with the interest to accrue thereon and moneys then on deposit in the fund and accounts provided for in Sections 4.04 and 4.05, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates. If the City shall have taken any of the actions specified in (A), (b) or (c) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in this Indenture provided or provision satisfactory to the Trustee shall have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Trust Estate provided for in this Indenture and all other obligations of the City under this Indenture with respect to such Bonds Outstanding shall cease and terminate. Notice of such election shall be filed with the Trustee and the Owners. Notwithstanding the foregoing, the obligation of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon, all amounts owing to the Trustee pursuant to Section 7.05 shall continue in any event. Upon compliance by the City with the foregoing with respect to all Bonds Outstanding, any funds held by the Trustee after payment of all fees and expenses of the Trustee, which are not required for the purposes of the preceding paragraph, shall be paid over to the City and any 136 42 2851981.10 040287 RSIND Special Taxes thereafter received by the City shall not be remitted to the Trustee but shall be retained by the City to be used for any purpose permitted under the Act. Section 10.04. Execution of Documents and Proof of Ownership by Owners. Any request, declaration or other instrument which this Indenture may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books. Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Trustee in good faith and in accordance therewith. Section 10.05. Waiver of Personal Liability. No Boardmember, member of the Executive Committee of the Board of Directors, officer, official, agent or employee of the City shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such Boardmember, member of the Executive Committee of the Board of Directors, officer, official, agent or employee from the performance of any official duty provided by law. Section 10.06. Waiver of Jury Trial; Agreement for Judicial Reference. To the fullest extent permitted by law, the City hereby waives its right to trial by jury in any action, proceeding and/or hearing on any matter whatsoever arising out of, or in any way connected with, the Bonds or this Indenture, or the enforcement of any remedy provided for therein or herein under any law, statute, or regulation. To the extent such waiver is not enforceable, the City hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure, and the judicial referee shall be empowered to hear and determine any and all issues in such Judicial Reference whether fact or law. Section 10.07. Notices to and Demands on City and Trustee. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee to or on the City may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the City with the Trustee) as follows: 137 43 2851981.10 040287 RSIND City of Saratoga CFD No. 2016-1 13777 Fruitvale Avenue Saratoga, CA 95070 Attn: Finance Director Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the City to or on the Trustee may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Trustee with the City) as follows (provided that any such notice shall not be effective until actually received by the Trustee): The Bank of New York Mellon Trust Company, N.A. 240 Greenwich Street New York, NY 10286 Attention: Corporate Trust Department Section 10.08. State Reporting Requirements. The following requirements shall apply to the Bonds, in addition to those requirements under Section 5.11: (A)Annual Reporting. Not later than October 30 of each calendar year, beginning October 30, 2019, and in each calendar year thereafter until the October 30 following the final maturity of the Bonds, the CFD Administrator shall cause the following information to be supplied to CDIAC: (i) the principal amount of the Bonds Outstanding; (ii) the balance in the Reserve Fund; (iii) number of parcels in the District which are delinquent in the payment of Special Taxes, the amount of each delinquency, the length of time delinquent and when foreclosure was commenced for each delinquent parcel; (iv) the balance, if any, in the Improvement Fund; and (v) the assessed value of all parcels in the District subject to the levy of the Special Taxes as shown in most recent equalized roll. The annual reporting shall be made using such form or forms as may be prescribed by CDIAC. (B)Other Reporting. If at any time the Trustee fails to pay principal and interest due on any scheduled payment date for the Bonds, or if funds are withdrawn from the Reserve Fund to pay principal and interest on the Bonds, the Trustee shall notify the CFD Administrator of such failure or withdrawal in writing. The CFD Administrator shall notify CDIAC and the Original Purchaser of such failure or withdrawal within 10 days of such failure or withdrawal. (C)Special Tax Reporting. The CFD Administrator shall file a report with the City no later than January 1, 2019, and at least once a year thereafter, which annual report shall contain: (i) the amount of Special Taxes collected and expended with respect to the District, (ii) the amount of Bond proceeds collected and expended with respect to the District, and (iii) the status of the Project. It is acknowledged that the Special Tax Fund is the account into which Special Taxes collected on the District will be deposited for purposes of Section 50075.1(c) of the California Government Code, and the funds and accounts listed in Section 4.01 are the funds and accounts into which Bond proceeds will be deposited for purposes of Section 53410(c) of the California Government Code, and 138 44 2851981.10 040287 RSIND the annual report described in the preceding sentence is intended to satisfy the requirements of Sections 50075.1(d), 50075.3(d) and 53411 of the California Government Code. (D)Amendment. The reporting requirements of this Section 9.07 shall be amended from time to time, without action by the City or the Trustee (i) with respect to subparagraphs (a) and (b) above, to reflect any amendments to Section 53359.5(b) or Section 53359.5(c) of the Act, and (ii) with respect to subparagraph (c) above, to reflect any amendments to Section 50075.1, 50075.3, 53410 or 53411 of the California Government Code. Notwithstanding the foregoing, any such amendment shall not, in itself, affect the City’s obligations under the Continuing Disclosure Agreement. The City shall notify the Trustee in writing of any such amendments which affect the reporting obligations of the Trustee under this Indenture. (E)No Liability. None of the City and its officers, agents and employees, the CFD Administrator or the Trustee shall be liable for any inadvertent error in reporting the information required by this Section 10.07. The CFD Administrator shall provide copies of any of such reports to any Bondowner upon the written request of a Bondowner and payment by the person requesting the information of the cost of the City to produce such information and pay any postage or other delivery cost to provide the same, as determined by the CFD Administrator. The term “Bondowner” for purposes of this Section 10.07 shall include any beneficial owner of the Bonds. Section 10.09. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Indenture shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Indenture. The City hereby declares that it would have adopted this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Indenture may be held illegal, invalid or unenforceable. Section 10.10. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two (2) years after the date when the payments of such principal, interest and premium have become payable, if such moneys was held by the Trustee at such date, shall be repaid by the Trustee to the City as its absolute property free from any trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the City for the payment of the principal of, and interest and any premium on, such Bonds. Section 10.11. Applicable Law. This Indenture shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. 139 45 2851981.10 040287 RSIND Section 10.12. Conflict with Act. In the event of a conflict between any provision of this Indenture with any provision of the Act as in effect on the Closing Date, the provision of the Act shall prevail over the conflicting provision of this Indenture. Section 10.13. Conclusive Evidence of Regularity. Bonds issued pursuant to this Indenture shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes. Section 10.14. Payment on Business Day. In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Indenture is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date. Section 10.15. Counterparts. This Indenture may be executed in counterparts, each of which shall be deemed an original. IN WITNESS WHEREOF, the City caused this Indenture to be executed all as of November 1, 2018. CITY OF SARATOGA, for and on behalf of CITY OF SARATOGA COMMUNITY FACILITIES DISTRICT NO. 2016-1 (Arrowhead Project) By: Finance Director The Bank of New York Mellon Trust Company, N.A., as Trustee By: Authorized Officer 140 A-1 2851981.10 040287 RSIND EXHIBIT A FORM OF SERIES 2018 BOND No.$___________ THE REGISTERED OWNER OF THIS BOND ACKNOWLEDGES AND AGREES THAT THIS BOND MAY ONLY BE TRANSFERRED UPON SATISFACTION OF THE REQUIREMENTS IN THE INDENTURE, INCLUDING THE DELIVERY TO THE TRUSTEE OF AN INVESTOR LETTER IN THE FORM REQUIRED BY THE INDENTURE. ANY TRANSFER OF THIS BOND IN VIOLATION OF THE TRANSFER RESTRICTIONS CONTAINED IN THE INDENTURE SHALL BE VOID AND OF NO EFFECT. CITY OF SARATOGA COMMUNITY FACILITIES DISTRICT NO. 2016-1 SPECIAL TAX BONDS, SERIES 2018 (ARROWHEAD PROJECT) (FEDERALLY TAXABLE) INTEREST RATE MATURITY DATE BOND DATE 6.04%September 1, 2048 November 1, 2018 REGISTERED OWNER: PRINCIPAL AMOUNT: __________________________________________ DOLLARS The City of Saratoga (the “City”) for and on behalf of the City of Saratoga Community Facilities District No.2016-1 (Arrowhead Project) (the “District”), for value received, hereby promises to pay solely from the Special Tax Revenues (as hereinafter defined) to be collected in the District or amounts in the funds and accounts held under the Indenture (as hereinafter defined), to the registered owner named above, or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount set forth above, and to pay interest on such principal amount from the Bond Date set forth above, or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually on March 1 and September 1, commencing March 1, 2019, at the interest rate set forth above, until the principal amount hereof is paid or made available for payment. The principal of this Bond is payable to the registered owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office (as defined in the Indenture referred to below) of The Bank of New York Mellon Trust Company, N.A. (the “Trustee”). Interest on this Bond shall be paid by the Trustee on each Interest Payment Date to the registered owner hereof. Interest on this Bond shall be payable from the Interest Payment Date next preceding the date of authentication of this Bond, unless (i) such date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, 141 A-2 2851981.10 040287 RSIND (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of this Bond, in which event interest shall be payable from the dated date of this Bond, as applicable; provided, however, that if at the time of authentication of this Bond, interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment on this Bond, interest on this Bond shall be payable from its dated date. This Bond is one of a duly authorized issue of bonds approved by the qualified electors of the District pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311, et seq., of the California Government Code (the “Mello-Roos Act”) for the purpose of financing certain public facilities within and in the vicinity of the District (the “Project”), and is one of the first series of such bonds designated “City of Saratoga Community Facilities District No. 2016-1 Special Taxable Bonds, Series 2018 (Arrowhead Project) (Federally Taxable)” (the “Bonds”) in the aggregate principal amount of $[PAR AMOUNT]. The creation of the Bonds and the terms and conditions thereof are provided for by resolution adopted by the City of Saratoga City Council on November 21, 2018 (the “Bond Resolution”), and the Indenture, dated as of November 1, 2018, between the City and the Trustee (the “Indenture”) and this reference incorporates the Bond Resolution and the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. The Indenture permits the issuance of Parity Bonds (as defined therein) secured on a parity basis with the Bonds under the Indenture, subject to compliance by the City with the applicable provisions of the Indenture. The Bond Resolution is adopted and the Indenture is entered into under and this Bond is issued under, and all are to be construed in accordance with, the laws of the State of California. Pursuant to the Mello-Roos Act, the Indenture and the Bond Resolution, the principal of and interest on this Bond are payable solely from the Trust Estate, as such term is defined in and as more particularly set forth in the Indenture. Any tax for the payment hereof shall be limited to the Special Tax Revenues (as defined in the Indenture), except to the extent that provision for payment has been made by the City, as may be permitted by law. The Bonds do not constitute obligations of the City for which the City is obligated to levy or pledge, or has levied or pledged, general or special taxation other than described hereinabove. Neither the faith, nor the general credit of the City is pledged to secure or repay the Bonds. In no event shall any member or associate member of the City have any obligation whatsoever with respect to the Bonds, the Indenture or the District. Bonds maturing on and after September 1, 2026 are subject to optional redemption prior to their stated maturity on any Interest Payment Date on or after September 1, 2025, as a whole, or in part among maturities so as to maintain the same debt service profile for the 2018 Bonds as in effect on the Closing Date, and by lot within a maturity, at the following redemption prices expressed as a percentage of the principal amount to be redeemed, together with accrued interest thereon to the date fixed for redemption: 142 A-3 2851981.10 040287 RSIND Redemption Date Redemption Prices (Percentages of Principal Amount) September 1, 2025 and March 1, 2026 103% September 1, 2026 and March 1, 2027 102 September 1, 2027 and March 1, 2028 101 September 1, 2028 and any Interest Payment Date thereafter 100 Bonds shall be subject to extraordinary redemption, in whole or in part, on any Interest Payment Date on or after September 1, 2019, from and to the extent of any prepayment of Special Taxes, at the following respective Redemption Prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption: Redemption Date Both Dates Inclusive Redemption Prices (Percentages of Principal Amount) Any Interest Payment Dates on or after September 1, 2019 through March 1, 2026 103% September 1, 2026 and March 1, 2027 102 September 1, 2027 and March 1, 2028 101 September 1, 2028 and any Interest Payment Date thereafter 100 This Bond maturing on September 1, 2048 (the “Term Bonds”) are subject to mandatory sinking payment redemption in part on September 1, 2019, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as set forth in the Indenture. Notice of redemption with respect to the Bonds to be redeemed shall be given to the registered owners thereof, in the manner, to the extent and subject to the provisions of the Indenture. This Bond shall be registered in the name of the owner hereof, as to both principal and interest. Each registration and transfer of registration of this Bond shall be entered by the Trustee in books kept by it for this purpose and authenticated by its manual signature upon the certificate of authentication endorsed hereon. The Bonds are issuable only as one fully-registered bond and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Indenture. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the 143 A-4 2851981.10 040287 RSIND charges provided in the Indenture, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor. Notwithstanding the foregoing, an Owner may only transfer the Bonds so long as all Outstanding Bonds are transferred together to a new Owner who has delivered an Investor Letter to the City. The Trustee shall not be required to register transfers or make exchanges of (i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption. The Indenture and the rights and obligations of the City thereunder may be modified or amended as set forth therein. The Indenture contains provisions permitting the City to make provision for the payment of the interest on, and the principal and premium, if any, of the Bonds so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture. The Bonds are not general obligations of the City, but are limited obligations payable solely from the revenues and funds pledged therefor under the Indenture. Neither the faith and credit of the City or the State of California or any political subdivision thereof is pledged to the payment of the Bonds. This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Trustee. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond have existed, happened and been performed in due time, form and manner as required by law, and that the amount of this Bond does not exceed any debt limit prescribed by the laws or Constitution of the State of California. 144 A-5 2851981.10 040287 RSIND IN WITNESS WHEREOF, City of Saratoga, for and on behalf of the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) has caused this Bond to be dated as of ____, 2018, to be signed on behalf of the City by the Mayor of the City by his facsimile signature and attested by the facsimile signature of the City Clerk of the City. _________________________________________ Mayor of the City of Saratoga, California, for and on behalf of the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) ATTEST: _____________________________________ City Clerk of the City of Saratoga, California, for and on behalf of the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) 145 A-6 2851981.10 040287 RSIND TRUSTEE’S CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the Bond Resolution and in the Indenture which has been authenticated on ____________________________. The Bank of New York Mellon Trust Company, N.A., as Trustee By:Authorized Signatory 146 A-7 2851981.10 040287 RSIND ASSIGNMENT For value received the undersigned hereby sells, assigns and transfers unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within-registered Bond and hereby irrevocably constitute(s) and appoints(s) attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises. Dated: _____________________________ Signature Guaranteed:Signature: ___________________________________________________________________________ Note: Signature(s) must be guaranteed by an eligible guarantor. Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. 147 D-1 2851981.10 040287 RSIND EXHIBIT D FORM OF PURCHASER LETTER CITY OF SARATOGA COMMUNITY FACILITIES DISTRICT NO. 2016-1 SPECIAL TAX BONDS, SERIES 2018 (ARROWHEAD PROJECT) (FEDERALLY TAXABLE) [DATE] City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) Saratoga, California The Bank of New York Mellon Trust Company, N.A. San Francisco, California Hawkins Delafield & Wood LLP San Francisco, California Piper Jaffray & Co. Laguna Beach, California Ladies and Gentlemen: The undersigned (the “Purchaser”) hereby acknowledges receipt of $_______ in aggregate principal amount of the above-referenced bonds (the “Bonds”), dated ________, 2018 in fully registered form and bearing interest from the date thereof. In connection with the sale, issuance and delivery of the Bonds to the Purchaser, the Purchaser hereby makes the following representations: 1.The Bonds are being acquired by the Purchaser for its own loan account and not with a present intent for any resale or distribution thereof, in whole or in part, to others; provided, however, that the Purchaser shall not be precluded from transferring or assigning its interest in the Bonds in accordance with the terms and conditions set forth in the Indenture. The Purchaser is not participating, directly or indirectly, in a distribution of the Bonds and will not take, or cause to be taken, any action that would cause the Purchaser to be deemed an “underwriter” of such Bonds as defined in Section 2(11) of the Securities Act of 1933, as amended (the “Securities Act”). The Purchaser understands that the Issuer has no obligation to register the Bonds for resale under the Securities Act. 2.The Purchaser further understands that the Bonds are exempt from the registration requirements of the Securities Act, are transferable only by notation on the registration books maintained by the bond registrar and are freely transferable provided that the Bonds are transferable in whole and not in part and that: 148 D-2 2851981.10 040287 RSIND (i)the transferring holder thereof shall first have complied with all applicable state and federal securities laws and regulations; (ii)the transferring holder thereof can transfer the Bonds only to a transferee who executes and delivers to the Issuer a letter of the transferee substantially to the effect of this letter and who qualifies as a qualified institutional buyer pursuant to Rule 144A of the 1933 Act or an accredited investor as defined in Section 501(a)(1), (2), (3) or (7) of Regulation D promulgated under the 1933 Act; and (iii)in the event of transfer, the Issuer will not be required to prepare, review or consent to disclosure concerning the Issuer. 3.We acknowledge that the Bonds shall only be transferred in whole and not in part, provided, however, that the Purchaser may participate out a portion of its interests in the Bonds. 4.We are a “qualified institutional buyer” as defined in Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) or an institutional “accredited investor” as defined in Section 501(a)(1), (2), (3) or (7) of Regulation D promulgated under the 1933 Act. 5.The Purchaser states that: (a) it is a bank, savings and loan association, insurance company, or registered investment company; or an investment adviser registered either with the Securities and Exchange Commission under Section 203 of the Investment Advisers Act of 1940 or with a state securities commission (or any agency or office performing like functions); or any other entity (whether a natural person, corporation, partnership, trust, or otherwise) with total assets of at least $50 million; and, (b) it is capable of evaluating investment risks and market value independently, both in general and with regard to transactions and investment strategies in municipal securities; (c) it is exercising independent judgment in evaluating: (i) the recommendation of Piper Jaffray & Co. (the “Placement Agent”), if any, or its associated persons; and (ii) the quality of execution of the Purchaser’s transactions by the Placement Agent; and (d) the Purchaser has timely access to material information that is available publicly through established industry sources as defined in Municipal Securities Rulemaking Board (MSRB) Rule G-47; 6.We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal and other tax-exempt obligations of a nature similar to the Bonds to be able to evaluate the Bonds, the risks and merits of the Bonds, the credit of the borrower, the collateral and the bond terms. The Purchaser will make its own independent credit analysis and decision to purchase the Bonds based on independent examination and evaluation of the transaction and the information deemed appropriate, without reliance on Piper Jaffray & Co. or its affiliates, its directors, officers, employees, attorneys or agents. . 7.We are acquiring the Bonds for our own account for investment purposes only, with a present intent to hold the securities until maturity, early redemption or mandatory tender, and not with a view to, or for sale in connection with, any distribution of the Bonds or any part thereof. We have not offered to sell, solicited offers to buy, or agreed to sell the Bonds or any part thereof, and we have no present intention of reselling or otherwise disposing of the Bonds. 149 D-3 2851981.10 040287 RSIND 8.As a qualified institutional buyer, we have made our own credit inquiry and analysis with respect to the City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) (the “Issuer”) therein and the Bonds, and have made an independent credit decision based upon such inquiry and analysis. The Issuer has furnished to us all the information which we as a reasonable lender have requested of the Issuer as a result of our having attached significance thereto in making our credit decision with respect to the Bonds, and we have had the opportunity to ask questions of and receive answers from knowledgeable individuals concerning the Issuer and the Bonds. We are able and willing to bear the economic risk of the purchase and ownership of the Bonds, including the complete loss of such investment. 9.We are not relying upon Piper Jaffray & Co. or the Issuer, its employees, or consultants for advice as to the merits and risks of loaning the proceeds of the Bonds. We have not relied upon the Issuer’s legal counsel, financial advisor or other consultants to the Issuer for any information, representation or opinions, unless explicitly provided herein, in connection with our lending decision, the Issuer or the Bonds. We have sought such accounting, legal and tax advice as we have considered necessary to make an informed investment decision. 10.The Purchaser acknowledges that in connection with the offering of the Bonds: (i) Piper Jaffray & Co. as Placement Agent has acted at arm’s length, is not an agent or financial advisor of, and owes no fiduciary duties to the Purchaser or any other person irrespective of whether the Placement Agent has advised or is advising the Purchaser on other matters, and (ii) the Purchaser represents it has had the opportunity to consult with its own legal counsel and to negotiate this Certificate prior to execution. The Purchaser waives to the fullest extent permitted by law any claims it may have against the Placement Agent arising from an alleged breach of fiduciary duty in connection with the placement of the Bonds. 11.We understand and agree that the offering and sale of the Bonds is exempt from Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the “Rule”), pursuant to Section (d) of such Rule, and the Issuer makes, and has made, no representation to us or any other party with respect to matters governing the Rule as it relates to the agreements and the transaction described herein; provided, however, that the Issuer has agreed to provide certain ongoing information pursuant to us. 12.We understand that no official statement, offering memorandum or circular will be issued in connection with the issuance of the Bonds, and that the Bonds are not rated by any rating agency. 13.We understand that the Indenture dated as of November 1, 2018 (the “Indenture”), by and between the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the Bonds, is exempt from qualification as an indenture pursuant to the Trust Indenture Act of 1939, as amended. Additionally, the Indenture has not been registered under, and no qualification for sale has been made under, the Blue Sky Laws of any State. 14.The Purchaser intends to treat the acquisition of the Bonds as a loan and hold the Bonds in its loan portfolio. 150 D-4 2851981.10 040287 RSIND 15.The Purchaser understands that Bond Counsel, the Isssuer, and Piper Jaffray & Co. will rely upon the accuracy and truthfulness of the representations and warranties contained herein and hereby consents to such reliance. 16.Inasmuch as the Bonds represents a negotiated transaction, the Purchaser is not acting as a fiduciary of the Issuer, but rather is acting solely in its capacity as Original Purchaser, for its own loan account. The Issuer acknowledges and agrees that (i) the transaction contemplated herein is an arm’s length commercial transaction between the Issuer and the Purchaser and its affiliates; (ii) in connection with such transaction, the Purchaser and its affiliates are acting solely as a principal and not as an advisor including, without limitation, a “Municipal Advisor” as such term is defined in Section 15B of the Securities and Exchange Act of 1934, as amended, and the related final rules (the “Municipal Advisor Rules”); (iii) the Purchaser and its affiliates are relying on the purchaser exemption in the Municipal Advisor Rules, (iv) the Purchaser and its affiliates have not provided any advice or assumed any advisory or fiduciary responsibility in favor of the Issuer with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (whether or not the Purchaser, or any affiliate of the Purchaser, has provided other services or advised, or is currently providing other services or advising, the Issuer on other matters); (v) the Purchaser and its affiliates have financial and other interests that differ from those of the Issuer; and (vi) the Issuer has consulted with its own financial, legal, accounting, tax and other advisors, as applicable, to the extent it deemed appropriate. Capitalized terms used herein and not otherwise defined have the meanings given such terms in the Indenture. WESTERN ALLIANCE BUSINESS TRUST, a wholly owned affiliate of Western Alliance Bank, an Arizona corporation, as Purchaser By: John Radwanski Senior Vice President 151 S-1 WEST\280264877.1 3147867.1 040287 AGMT CITY OF SARATOGA, CALIFORNIA COMMUNITY FACILITIES DISTRICT NO. 2016-1 (ARROWHEAD PROJECT) FIRST AMENDMENT TO AGREEMENT This First Amendment to Agreement (“First Amendment”) is made as of October ___, 2018, by and between the City of Saratoga (“City”), a political subdivision of the State of California, and Arrowhead Cooperative Co., Inc. (“Arrowhead”), a California cooperative corporation. Collectively City and Arrowhead are referred to herein as the “Parties.” W I T N E S S E T H: WHEREAS, the Parties entered into that certain Agreement, dated November 2, 2016, pertaining to City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) (“CFD”), which CFD was formed by the City in 2017 after petition by Arrowhead, for the purpose of providing a funding source for water infrastructure improvements (“Facilities”) to be constructed by Arrowhead to benefit residents within the CFD; and WHEREAS, the Agreement sets forth a variety of obligations between the City and Arrowhead pertaining to the CFD, the Facilities, the anticipated future funding for the Facilities, including the issuance of special tax bonds, and the construction of the Facilities; and WHEREAS, the City now intends to adopt Resolution No. [18-053] (“Resolution”) approving the issuance of the City of Saratoga, California Community Facilities District No. 2016- 1 (Arrowhead Project) Special Tax Bonds, Series 2018 (Taxable) (“Bonds”), and a refinement of the funding plan, including a clarification by the City of the Rate and Method of Apportionment as reflected in Exhibit A to the Resolution, now necessitate an amendment to the Agreement. NOW THEREFORE, in consideration of the foregoing and for other consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree that the Agreement is hereby amended as follows: 1.The foregoing recitals are hereby incorporated into the Agreement. Capitalized terms used and not otherwise defined shall have the meanings ascribed to such terms in the Agreement. 2.Section 2.1 of the Agreement is amended in its entirety to provide as follows: “2.1.By no later than three business days in advance of the pricing of the City of Saratoga, California Community Facilities District No. 2016-1 (Arrowhead Project) Special Tax Bonds, Series 2018 (Taxable), Arrowhead shall remit to the City the full amount of the special tax prepayments (“Prepayments”) received from fifteen (15) property owners who have elected to prepay their special tax obligation in advance of the issuance of Bonds, based on their 1/39 th share of Facility construction, CFD formation, and other related costs, in accordance with the Rate and Method of Apportionment, as clarified and interpreted by the City in Exhibit A 152 2 3147867.1 040287 AGMT to the Resolution. The City shall hold these funds in a separate account until the Bond closing date, on which date the City shall transfer such funds to Bank of New York Mellon Trust Company, N.A., as Trustee under that certain Indenture dated as of November 1, 2018 by and between the City and the Trustee (“Indenture”). 3.Section 2.2. of the Agreement is amended in its entirely to provide as follows: “Funds from the Prepayments and from bond proceeds shall be credited to the specific accounts identified in Article IV of the Indenture, and payments or reimbursements of Facilities Costs, costs of issuance or other costs shall be requisitioned and paid in accordance with this Agreement and the Indenture. In no event shall City remit payments to San Jose Water Company or any other contractor of Arrowhead without the agreement and acknowledgement of an authorized representative of the Arrowhead governing board, and all requisitions must be consistent with City’s purchasing policies and procedures.” 4.Section 2.3 of the Agreement is amended in its entirety to provide as follows: “Should the total costs for the Facilities be less than amounts available from the Prepayments and the Bonds, the excess funds will be refunded as described herein. Upon project completion, San Jose Water Company will reconcile Facilities costs and submit final payment request or remit excess deposit funds back to the City. The City will reconcile all project construction funds with all outstanding expenses or funding holds to determine the final excess construction funding amount, if any. The excess amount will be disbursed in the following manner: a.Excess funding will be divided by 39, representing the total number of property owners with equal construction cost contributions. b.Distribution checks will be prepared and remitted to the property owners who prepaid their share of Facilities costs as described in Section 2.1 hereof, in the amount of 1/39th share of the excess funds. c.The remaining excess construction funds will be transferred into the Bond Fund to be used to lower the debt service on the Bonds. Once the remaining excess funds are trasnferred to the Bond Fund, the pro-rata distribution is dissolved, and the remaining excess funds are no longer reimbursable to individual property owners who subsequently elect to prepay their special tax obligation in accordance with the Rate and Method of Apportionment. 5.The Agreement, as amended hereby, remains in full force and effect. In the event the provisions of this Amendment are inconsistent or conflict with the terms of the Agreement, such amended terms as set forth herein shall govern and control. 6.This Amendment may be executed by facsimile or email and in counterparts, each of which shall constitute an original, and all of which, together, shall constitute one document. A photocopy or telecopy of an executed counterpart of this Amendment shall be sufficient to bind the parties whose signatures appear thereon. 153 S-1 WEST\280264877.1 3147867.1 040287 AGMT IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the date first written above. CITY OF SARATOGA, CALIFORNIA By:________________________________ Name: ________________________________ Its: ________________________________ ARROWHEAD COOPERATIVE COMPANY, INC. By:________________________________ Name: ________________________________ Its: ________________________________ 154 CITY OF SARATOGA, CALIFORNIA COMMUNITY FACILITIES DISTRICT NO. 2016-1 WATER FACILITY IMPROVEMENTS — ARROWHEAD PROJECT) AGREEMENT THIS AGREEMENT, dated as of NDv. 2. , 2016 ("Agreement"), is by and among the City of Saratoga, California ("CITY"), and the Arrowhead Cooperative Company, Inc ("ARROWHEAD"). RECITALS WHEREAS, upon the request of ARROWHEAD and after a notice public meeting, on November 2, 2016, CITY adopted Resolution No. 16-061, stating its intention to establish a community facilities district, the "City of Saratoga Community Facilities District No 16-1 (Arrowhead)" (the "Community Facilities District" or "District"), under the terms of the Mello -Roos Community Facilities Act of 1982 and adopted Resolution No. 16-062 to incur bonded indebtedness of the Community Facilities District, to provide the funds necessary to pay the costs of the facilities financed by the Distract, and WHEREAS, Resolution No 16-061 provides that as a condition of proceeding with the public hearing on District formation, Arrowhead shall execute an Agreement regarding funding procedures and limiting the City's potential liability in connection with claims arising from District formation, and WHEREAS, the boundaries of the District are described in the Boundary Map recorded in the office of the Santa Clara County Recorder, a copy of which is on file with the City Clerk of CITY (the "City Clerk"), and WHEREAS, ARROWHEAD, on behalf all landowners located within the proposed Distnct, and the CITY entered into a Deposit Agreement, dated as of April 6, 2016 (the Deposit Agreement"), that provides for the advancement of funds by ARROWHEAD to be used to pay costs incurred in connection with the establishment of the Distnct and the issuance of special tax bonds thereby, and WHEREAS, the types of facilities financed by the Distnct are water storage, transmission, and delivery facilities (the "Facilities"), in addition to bond related expenses and administrative fees, as more thoroughly descnbed in Exhibit A to Resolution No. 16- 061, and WHEREAS, the Facilities will be constructed, owned, and operated by the San Jose Water Company (the "COMPANY") as described in the water facilities offer letter dated Page 1 of 7- 155 July 14, 2016 between ARROWHEAD and the COMPANY, and paid for from bond proceeds from the Distnct, and WHEREAS, the Facilities will be designed, constructed and operated by and under the supervision of the COMPANY; the CITY shall have no responsibility for the design, construction or operation of the Facilities, and WHEREAS, except to the extent funds are otherwise available from ARROWHEAD, a special tax sufficient to pay for all Facilities will be annually levied within the District, and collected in the same manner as ordinary ad valorem property taxes or m such other manner as the City Council shall determine NOW, THEREFORE, ARROWHEAD and the CITY hereby agree as follows AGREEMENT 1. RECITALS The foregoing recitals are true and correct and made a part of this Agreement. 2. FUNDING 2.1 Within ten (10) days prior to the posting of the Preliminary Official Statement regarding the City of Saratoga/Arrowhead Cooperative CFD Water Infrastructure Bonds, Arrowhead Cooperative shall remit to the City of Saratoga, the full amount of the construction cost payments from the sixteen (16) property owners who are funding their 1/39th share of the construction cost with upfront cash payments. The City shall hold these funds in a separate Bond Debt Service Fund to await the remaining funds from the bond issuance Upon receipt of the bond issuance funds and delivery of joint instructions between Arrowhead and San Jose Water Company, the City shall remit the requested construction cost payment to San Jose Water Company within ten (10) business days. 2.2 The remaining funds shall be appropriated to fund the fiscal year's debt service payments and contingency project funding Project contingency funding payments shall be remitted to San Jose Water only upon notification to the Arrowhead Cooperative Board, and approval authonzations in alignment with the City's Purchasing Policy 2.3 Should the total costs for the Facilities be lower than the bond amount issued, the remaining bond funds will be refunded Upon project completion, San Jose Water will reconcile project costs and submit final payment request or remit excess deposit funds back to the City of Saratoga The City of Saratoga will reconcile all project construction funds with all outstanding expenses or funding holds to determine the final excess construction fundmg amount, if any. The excess amount will be disbursed to the property owners in the following manner. Page 2 of 7- 156 a Excess funding to be divided by 39, representing the total number of property owners with equal construction cost contnbutions b. Distribution checks will be prepared and remitted to the property owners who contributed the full construction cost cash payment up front, in the amount of 1/39th share of the excess funds c. The remaining excess construction funds will be held in the Bond Fund's Debt Service Payment Reserve, to be used to lower the debt service tax levies over the bond's lifetime Once the remaining excess funds are remitted to the Debt Service Reserve, the pro -rata distnbution is dissolved, the remaining excess fundmg is no longer reimbursable to individual property owners who subsequently pay off their share of bond debt. 3. INDEMNIFICATION 3.1 To the fullest extent permitted by law, ARROWHEAD shall indemnify, hold harmless, and defend the City, its employees, agents, and officials, from any liability, claims, suits, actions, arbitration proceedings, administrative proceedings, regulatory proceedings, losses, expenses, or costs (mcludmg, without limitation, costs and fees of alternative dispute resolution and litigation) of any kind whatsoever without restriction or limitation (hereinafter "Claim"), incurred in relation to, as a consequence of formation, implementation, financing, administration, or termination of the District, issuing, selling, or delivenng special tax bonds to pay the costs of the Facilities; levying or collecting special taxes within the District, and the design, construction, and operation of the Facilities 3.2 The indemnification obligations ansmg from this AGREEMENT are intended to include, but not be limited to, damages, costs, expenses, attorneys' fees and expert witness costs incurred by the CITY, as well as damages, costs, expenses (including, but not limited to preparation and certification of an admimstrative record to the extent not paid for by the challenging party), as well as those same items claimed by, or awarded to, any person or entity, mcludmg ARROWHEAD, against the CITY. In the event the CITY recovers or is reimbursed for its costs and/or attorneys' fees in any action by a claimant, said amounts shall act as a setoff against the indemnification obligations of ARROWHEAD 3.3 In the event ARROWHEAD is required to defend the CITY under any of the terms of this AGREEMENT, CITY shall control the choice of counsel and defense of any such claim, action or proceeding as against the CITY Page 3 of 7- 157 3.4 If a defense is requested by the CITY, this AGREEMENT shall remain in full force and effect throughout all stages of litigation, including any and all appeals of lower court judgments 3.5 ARROWHEAD covenants to indemnify CITY for all CITY's costs, fees and damages incurred in enforcing this AGREEMENT 4. INSURANCE 4.1 ARROWHEAD agrees to procure and maintain insurance as required by the provisions set forth in Exhibit A to this Agreement. Certificates of such insurance and copies of the insurance policies and endorsements shall be delivered to City within ten (10) days after execution of this Agreement The defense and mdemmfication obligations of this agreement are undertaken in addition to, and shall not in any way be limited by, the insurance obligations contained in this agreement 4.2 ARROWHEAD agrees to maintain its corporate status and maintain insurance as required by this Agreement until the Company has completed construction of the Facilities 5. NO GUARANTEE 5.1 The City makes no guarantee that the bond proceeds will be sufficient to cover the Company's costs of completing the Facilities. In the event that the bond proceeds are insufficient, ARROWHEAD will be solely responsible for raising sufficient funds if it seeks to pursue project completion 6. GENERAL PROVISIONS 6.1 This instrument sets forth the entire agreement of the parties, and supersedes all prior understandings, discussions, negotiations, or agreements relating to the AGREEMENT, all of which are merged herein. No alteration or vanation of this instrument shall be valid or binding unless ARROWHEAD and CITY jointly amend this AGREEMENT in writing 6.2 ARROWHEAD acknowledges its right to obtain independent legal advice prior to entering into this AGREEMENT ARROWHEAD has either obtained the advice of legal counsel pnor to entenng into this AGREEMENT or voluntarily waives the right to do so by signing it ARROWHEAD executes this AGREEMENT voluntarily with full knowledge of any nghts it may have, with full knowledge of the significance of this AGREEMENT, and with the express mtention of effectmg the legal consequences provided by the laws of the State of California. Page 4 of 7- 158 6.3 Nothing herein requires CITY to tender a defense to any claim, action or proceeding described in this AGREEMENT. The parties acknowledge that the CITY's decision to defend against such actions and to proceed with Distnct formation and implementation remains solely within its discretion. 6.4 Failure of City to monitor compliance with the requirements of this Agreement imposes no additional obligations on City and will in no way act as a waiver of any rights hereunder This obligation to indemnify and defend City as set forth herein is binding on the successors, assigns, or heirs of ARROWHEAD and shall survive the termination of this AGREEMENT or this section IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first -above written. CITY OF SARATOGA, CALIFORNIA By Name Title. ARROWHEAD COOPERATIVE COMPANY, INC By Name. Title: Approved as to form City Attorney, City of Saratoga Page 5 of 7- Tito- (-4-4-vs Q(4D 159 Exhibit A— Insurance The insurance requirements listed below that have an indicated in the space before the requirement apply to this agreement together with the general requirements. Insurance Requirements Commercial General/Business Liability Insurance with coverage at least as broad as indicated 1,000,000 per occurrence/$1,000,000 aggregate limits for bodily injury and property damage Coverage for X, C, U hazards MUST be evidenced on the Certificate of Insurance Auto Liability Insurance with coverage as indicated 1,000,000 combined single limit for bodily injury and property damage 500,000 combined single limit for bodily injury and property damage Garage keepers' extra liability endorsement to extend coverage to all vehicles in the care, custody and control of the Contractor, regardless of where the vehicles are kept or driven. Professional/Errors and Omissions Liability ("E&O") with coverage as indicated. 2,000,000 per loss/$2,000,000 aggregate 5,000,000 per loss/$5,000,000 aggregate Workers' Compensation as required by the State of California, with statutory limits, and Employer's Liability Insurance with a limit of no less than $1,000,000 per accident for bodily injury or disease. The Employer's Liability policy shall be endorsed to waive any right of subrogation against the City, its employees or agents. All subcontractors used must comply with the above requirements except as noted below Page 6 of 7- 160 General Requirements As to all of the checked insurance requirements above, the following shall apply 1. Insurance Provisions. Any commercial general liability and auto liability policies are to contain, or be endorsed to contain, the following provisions: The City, its officers, officials, employees, agents, and volunteers (each an additional insured") are to be covered as insureds with the same coverage and limits available to the named insured regarding liability arising out of activities performed by or on behalf of the Arrowhead; premises owned, occupied, or used by the Arrowhead, or automobiles owned, leased, hired, or borrowed by the Arrowhead. The coverage shall contain no special limitations on the scope of the protection afforded to the City, its officers, officials, employees, agents, or volunteers Any available insurance proceeds broader than or in excess of the minimum insurance coverage requirements and/or limits specified in this agreement shall be available to the additional insured The requirements for coverage and limits shall be (1) the minimum coverage and limits specified in this agreement, or (2) the broader coverage and maximum limits of coverage of any insurance policy or proceeds available to the named insured; whichever is greater. The additional insured coverage under Arrowhead's policy shall be primary and non-contributory," and will not seek contribution from the City's insurance or self-insurance, and shall be at least as broad as CG 20 01 04 13. This requirement does not apply to errors and omissions insurance or workers' compensation insurance. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the City, its officers, officials, employees, or volunteers The insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability 2. Waiver of Subrogation. Arrowhead hereby grants to City a waiver of any right to subrogation that any insurer of Arrowhead may acquire against City by virtue of the payment of any loss under such insurance. Arrowhead agrees to obtain any endorsement that may be necessary to effect this waiver of subrogation, but this provision applies regardless of whether City has received a waiver of subrogation endorsement from the insurer. 3. Verification of Coverage. Arrowhead shall furnish the City with original certificates and amendatory endorsements effecting coverage required by this Exhibit All certificates and endorsements are to be received and approved by the City before issuance of the bonds, such approval to not be unreasonably withheld The City reserves the right to require at any time complete, certified copies of all required insurance Page 7 of 7- 161 policies, including endorsements effecting the coverage required by these specifications and failure to exercise this right shall not constitute a waiver of any of City's rights pursuant to this agreement. 4. Maintenance of Coverage. Arrowhead shall not cancel, assign, or change any policy of insurance required by this agreement or engage in any act or omission that will cause its insurer to cancel any insurance policy required by this agreement except after providing thirty days' prior notice to the City. If an insurance policy required by this agreement is unilaterally cancelled or changed by the insurer, Arrowhead shall promptly provide written notice to the City and obtain substitute insurance meeting the requirements of this agreement. Nothing in this paragraph relieves Arrowhead of its obligation to maintain all insurance required by this agreement at all times during the term of the agreement 5. Claims Made Policies. If any of the required policies provide claims -made coverage, the coverage shall be maintained for a period of ten years after completion of the Facilities by the Company Arrowhead may satisfy this requirement by renewal of existing coverage or purchase of either prior acts or tail coverage applicable to said five- year period. 6. Acceptability of Insurers. Insurance is to be placed with insurers with a Best's rating of no less than A VII 821221 7 Page 8 of 7- 162 1100 S. Coast Highway, Ste. 300A, Laguna Beach, CA 92651 Tel: 949 494-6110 Fax: 949 494-6125 Piper Jaffray & Co. Since 1895. Member SIPC and FINRA. November 7, 2018 Mary Furey Finance and Administrative Services Director City of Saratoga 13777 Fruitvale Avenue Saratoga, CA 95070 Re: Engagement Letter City of Saratoga Community Facilities District 2016-1 Special Tax Bonds, Series 2018 (the “Bonds”) Dear Ms. Furey: This letter confirms the agreement between Piper Jaffray & Co. (“Piper Jaffray” or “we” or “us”) and City of Saratoga and its heirs, employees, companies, administrators, successors, corporate parents, subsidiaries, affiliates, and guarantors whether existing now or formed subsequent to the date hereof for purposes of entering into the Transaction (as hereafter defined) (the “Issuer” or “you”) as follows: 1. Engagement. The Issuer engages Piper Jaffray to act as your exclusive representative for the proposed private transaction (the “Transaction”) by sale of securities, (the “Securities”), and we accept this engagement upon the terms and conditions set forth in this agreement. During the term of our engagement, we will, as appropriate to the Transaction:  consult with you in planning and implementing the Transaction;  assist you in preparing any transaction materials (the “Transaction Materials”) we mutually agree are beneficial or necessary to the consummation of the Transaction;  assist you in preparing for due diligence conducted by potential investors;  identify potential investors and use our reasonable commercial efforts to assist in arranging sales of the Securities to investors;  consult with you in structuring the investment; and  assist you in negotiating definitive documentation. As currently contemplated, the Transaction will be a sale of Securities with gross proceeds of approximately $2,547,912.00. You acknowledge and agree that our engagement pursuant to this letter is not an agreement by us or any of our affiliates to underwrite or purchase any Securities or otherwise provide any financing, nor an agreement by you to issue and sell any Securities. You may in your discretion postpone, modify, abandon or terminate the Transaction prior to closing. We may decline to participate in the Transaction if we reasonably determine that the Transaction has become impractical or undesirable. 163 2. Fees. For our services, you agree to pay us:  a selling commission of $45,000 payable by wire transfer of immediately available funds at closing. For avoidance of doubt, the fee shall not be payable in the event a closing of the Transaction does not occur. 3. Representations, Warranties and Agreements of the Issuer. You represent and warrant to, and agree with us, that: (a) the Securities will be sold by you in compliance with the requirements for exemptions from registration or qualification of, and otherwise in accordance with, all federal and state securities laws and regulations; (b) you agree to be responsible for the accuracy and completeness of any Transaction Materials to the extent of federal securities laws applicable to the Transaction. You agree to notify us promptly of any material adverse changes, or development that may lead to any material adverse change, in your business, properties, operations, financial condition or prospects and concerning any statement contained in any Transaction Material, or in any other information provided to us, which is not accurate or which is incomplete or misleading in any material respect; (c) you will make available to us such documents and other information which we reasonably deem appropriate and will provide us with access to your officers, directors, employees, accountants, counsel and other representatives; it being understood that we will rely solely upon such information supplied by you and your representatives without assuming any responsibility for independent investigation or verification thereof; and (d) at the closing, you will permit us to rely on your representations and warranties, and cause your counsel to permit us to rely upon any opinion, furnished to any purchaser of Securities or any investor letter or certificate provided by the Purchaser. 4. Other Matters Relating to Our Engagement. You acknowledge that you have retained us solely to provide the services to you as set forth in this agreement. As placement agent, Piper Jaffray may provide advice concerning the structure, timing, terms, and other similar matters concerning the Bonds and the primary role of Piper Jaffray is to purchase securities for resale to investors or arrange for the placement of securities in an arm’s-length commercial transaction between you and Piper Jaffray. Attached to this letter are regulatory disclosures required by the Securities and Exchange Commission and the Municipal Securities Rulemaking Board to be made by us at this time because of this engagement. We may be required to send you additional disclosures regarding the material financial characteristics and risks of such transaction or describing those conflicts. At that time, we also will seek your acknowledgement of receipt of any such additional disclosures. It is our understanding that you have the authority to bind the issuer by contract with us, and that you are not a party to any conflict of interest relating to the Bonds. If our understanding is incorrect, please notify the undersigned immediately. 5. Termination. You or we may terminate our engagement under this agreement, with or without cause, upon ten days’ written notice to the other party; The expense reimbursement, your representations, warranties and agreements, and miscellaneous provisions of this agreement) will survive any termination of our engagement under this agreement. 6. Miscellaneous. This agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this agreement or the negotiation, execution or performance of this agreement, will be governed by and construed in accordance with the laws 164 of New York. You and we hereby waive all right to trial by jury in any action, proceeding, or counterclaim (whether based upon contract, tort or otherwise) in connection with any dispute arising out of this agreement or any matters contemplated by this agreement. This agreement embodies the entire agreement and understanding between you and us and supersedes all prior agreements and understandings relating to the subject matter of this agreement. This agreement may be executed in any number of counterparts. The invalidity or unenforceability of any provision of this agreement will not affect the validity or enforceability of any other provisions of this agreement, which will remain in full force and effect. You and us will endeavor in good faith negotiations to replace the invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid or unenforceable provisions. This agreement is solely for the benefit of you and us, and no other person will acquire or have any rights by virtue of this agreement. Please confirm that the foregoing correctly and completely sets forth our understanding by signing and returning to us the enclosed duplicate of this engagement agreement. Thank you. Sincerely, ________________________________ Katie Koster Managing Director Piper Jaffray & Co. __________________________________________ Acknowledgement of Approval of Engagement and Receipt of Appendix A Disclosures Mary Furey Finance and Administrative Services Director City of Saratoga Date: ___________________________ 165 Appendix A – G-17 Disclosure We are providing you with certain disclosures relating to the Bonds as required by the Municipal Securities Rulemaking Board (MSRB) Rule G-17 in accordance with MSRB Notice 2012-25 (May 7, 2012)1. Under new federal regulations, all underwriters and placement agents are now required to send the following disclosures to you (as the Issuer of the Bonds) in order to clarify the role of a placement agent and other matters relating to a private placement of the Bonds. Piper Jaffray intends to serve as a placement agent respecting the Bonds and not as a financial advisor or municipal advisor to you. As part of our services as a placement agent, Piper Jaffray may provide advice concerning the structure, timing, terms, and other similar matters concerning an issue of municipal securities that Piper Jaffray is placing. Our Role as Placement Agent: In serving as placement agent for the Bonds, these are some important disclosures that clarify our role and responsibilities: (i) MSRB Rule G-17 requires us to deal fairly at all times with both municipal issuers and investors; (ii) Our primary role in this transaction is to facilitate the sale and purchase of municipal securities between you and one or more investors for which we will receive compensation; (iii) Unlike a municipal advisor, we do not have a fiduciary duty to you under the federal securities laws and are, therefore, not required by federal law to act in your best interests without regard to our own financial or other interests; (iv) We have a duty to arrange the purchase securities from you at a fair and reasonable price, but must balance that duty with our duty to arrange the sale to investors at prices that are fair and reasonable; and (v) In the event an official statement is prepared, we will review the official statement for your securities in accordance with, and as part of, our responsibilities to investors under the federal securities laws, as applied to the facts and circumstances of the transaction. Our Compensation: As placement agent, compensation will be by a fee that was negotiated and entered into in connection with the issuance of the Bonds. Payment or receipt of the underwriting fee, discount or placement agent fee will be contingent on the closing of the transaction and the amount of the fee or discount may be based, in whole or in part, on a percentage of the principal amount of the Bonds. While this form of compensation is customary in the municipal securities market, it presents a conflict of interest since the underwriter or placement agent may have an incentive to recommend to the Issuer a transaction that is unnecessary or to recommend that the size of the transaction be larger than is necessary. Risk Disclosures: In accordance with the requirements of MSRB Rule G-17, attached as Appendix B is a description of the material aspects of a typical fixed rate offering, including the Bonds. This letter may be later supplemented if the material terms of the Bonds change from what is described here. If you have any questions or concerns about these disclosures, please make those questions or concerns known immediately to me. In addition, you should consult with your own financial, legal, accounting, tax and other advisors, as applicable, to the extent you deem appropriate. 1 Interpretive Notice Concerning the Application of MSRB Rule G-17 to Underwriters of Municipal Securities (effective August 2, 2012). 166 Appendix B – Risk Disclosures The following is a general description of the financial characteristics and security structures of fixed rate municipal bonds (“Fixed Rate Bonds”), as well as a general description of certain financial risks that you should consider before deciding whether to issue Fixed Rate Bonds. Financial Characteristics Maturity and Interest. Fixed Rate Bonds are interest-bearing debt securities issued by state and local governments, political subdivisions and agencies and authorities. Maturity dates for Fixed Rate Bonds are fixed at the time of issuance and may include serial maturities (specified principal amounts are payable on the same date in each year until final maturity) or one or more term maturities (specified principal amounts are payable on each term maturity date) or a combination of serial and term maturities. The final maturity date typically will range between 5 and 40 years from the date of issuance. Interest on the Fixed Rate Bonds typically is paid semiannually at a stated fixed rate or rates for each maturity date. Redemption. Fixed Rate Bonds may be subject to optional redemption, which allows you, at your option, to redeem some or all of the bonds on a date prior to scheduled maturity, such as in connection with the issuance of refunding bonds to take advantage of lower interest rates. Fixed Rate Bonds will be subject to optional redemption only after the passage of a specified period of time, often approximately ten years from the date of issuance, and upon payment of the redemption price set forth in the bonds, which may include a redemption premium. You will be required to send out a notice of optional redemption to the holders of the bonds, usually not less than 30 days prior to the redemption date. Fixed Rate Bonds with term maturity dates also may be subject to mandatory sinking fund redemption, which requires you to redeem specified principal amounts of the bonds annually in advance of the term maturity date. The mandatory sinking fund redemption price is 100% of the principal amount of the bonds to be redeemed. Security Community Facilities District Special Tax Bonds “Community Facilities District Special Tax Bonds” are debt securities to which special taxes on certain property are levied to pay principal and interest. The District is limited to levying the tax up to a specified maximum amount and only on property within the Community Facilities District. In the event of delinquencies of the special taxes by a property owner, the District may be required to commence foreclosure proceedings against that property in order to generate sufficient funds to pay debt service on the Bonds. Financial Risk Considerations Certain risks may arise in connection with your issuance of Fixed Rate Bonds, including some or all of the following: Redemption Risk Your ability to redeem the bonds prior to maturity may be limited, depending on the terms of any optional redemption provisions. In the event that interest rates decline, you may be unable to take advantage of the lower interest rates to reduce debt service. Tax Compliance Risk The issuance of tax-exempt bonds is subject to a number of requirements under the United States Internal Revenue Code, as enforced by the Internal Revenue Service (IRS). You must take certain steps and make certain representations prior to the issuance of tax-exempt bonds. 167 You also must covenant to take certain additional actions after issuance of the tax-exempt bonds. A breach of your representations or your failure to comply with certain tax-related covenants may cause the interest on the bonds to become taxable retroactively to the date of issuance of the bonds, which may result in an increase in the interest rate that you pay on the bonds or the mandatory redemption of the bonds. The IRS also may audit you or your bonds, in some cases on a random basis and in other cases targeted to specific types of bond issues or tax concerns. If the bonds are declared taxable, or if you are subject to audit, the market price of your bonds may be adversely affected. Further, your ability to issue other tax-exempt bonds also may be limited. 168 Joshua J. Lentz Vice President – Municipal Finance Officer jlentz@westernalliancebank.com One E. Washington Street, Ste. 1400 • Phoenix, AZ • 85004 • Phone: 602.346.7467 November 13, 2018 Ms. Mary Furey Finance and Administrative Services Director City of Saratoga, California 13777 Fruitvale Avenue Saratoga, California 95070 Re: City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable) (the “Bonds”) Dear Ms. Furey: Western Alliance Bank and Western Alliance Business Trust are pleased to submit this commitment letter, which has received credit approval, pending final due diligence, document review and normal “out provisions,” for the direct purchase of the Bonds. Borrower: City of Saratoga Community Facilities District No. 2016-1 (Arrowhead Project) City: City of Saratoga, California (the “City”) Purchaser: Western Alliance Business Trust or a wholly owned affiliate of Western Alliance Bank (the “Purchaser”) Joshua J. Lentz Vice President – Municipal Finance Officer Western Alliance Bank One E. Washington Street, Ste. 1400 Phoenix, AZ 85004 Ph. (602) 346-7467 jlentz@westernalliancebank.com Tax Status: Interest on the Bonds shall be included in gross income for federal income tax purposes and exempt from California personal income taxes. Principal Amount: $2,600,000 (Estimated) Final Maturity Date: September 1, 2048 Purpose: Proceeds from the Series Bonds are to be used to: a. fund water infrastructure improvements in the CFD; b. fund a debt service reserve account at the Reserve Requirement; and c. pay costs of issuance of the Bonds. Interest Payment Dates: Interest on the Bonds will be paid commencing on March 1, 2019, and semi- annually thereafter on March 1 and September 1 of each year through September 1, 2048. Interest on the Bonds will be calculated based on 30/360 days. 169 Commitment Letter City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable) November 13, 2018 Page 2 One E. Washington Street, Ste. 1400 • Phoenix, AZ • 85004 • Phone: 602.346.7467 Principal Payment Dates: Principal on the Bonds will be paid annually commencing on September 1, 2019 through September 1, 2048. Weighted Average Maturity: 19 years (Estimated). Interest Rate Pricing: Sum of the 20-Year LIBOR Interest Rate Swap Rate plus 2.81% (taxable fixed rate). The interest rate is 6.05%. The interest rate is locked through December 12, 2018. See Exhibit A – Interest Rate Lock herein. Security: The Bonds are a limited obligation of the Borrower payable solely from net special taxes collected in the CFD and amounts deposited by the Borrower in the special tax fund. The Borrower’s limited obligation to pay principal of, premium, if any, and interest on the Bonds from net special taxes collected in the CFD and amounts in the special tax (exclusive of the administrative expense account) will be absolute and unconditional. Reserve Requirement: In connection with the issuance of the Bonds, there shall be established a debt service reserve account of the special tax fund (the “Reserve Account”) in an amount equal to 45% of the maximum annual debt service on the Bonds. Additional Debt: Except for refunding purposes, the Borrower is not authorized to issue additional bonds within the CFD. Priority of Lien: Each installment of the special taxes and any interest and penalties thereon, will constitute a lien on the parcel of land on which it was imposed until the same is paid. Such lien is co-equal to and independent of the lien for general taxes, any other overlapping direct pay assessment and/or special tax. Foreclosure Provisions: The City will covenant with and for the benefit of the Purchaser that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as provided in the following paragraph. The Deputy City Manager of the City (the “CFD Administrator”) shall notify the City Attorney of any such delinquency of which it is aware, and the City Attorney shall commence, or cause to be commenced, such proceedings. On or about February 15 and June 15 of each Fiscal Year, the CFD Administrator shall compare the amount of Special Taxes theretofore levied in the CFD to the amount of Special Tax Revenues theretofore received by the City, and: a. Individual Delinquencies. If the CFD Administrator determines that any Assessor's Parcel (as such term is defined in the Rate and Method) subject to the Special Tax in the CFD is delinquent in the payment of Special Taxes in the aggregate amount of at least $5,000, then the CFD Administrator shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the fee owner of the delinquent property within 45 days of such determination, and (if the delinquency remains uncured) foreclosure proceedings shall be commenced by the City within 90 days of such determination. 170 Commitment Letter City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable) November 13, 2018 Page 3 One E. Washington Street, Ste. 1400 • Phoenix, AZ • 85004 • Phone: 602.346.7467 b. Aggregate Delinquencies. If the CFD Administrator determines that the total amount of delinquent Special Tax for the prior Fiscal Year for the entire CFD, (including the total of delinquencies under subsection (A) above), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, the CFD Administrator shall notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and the City shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in the CFD with a Special Tax delinquency. Covenant Against the Encumbrances: The CFD will not mortgage or otherwise encumber, pledge or place any charge upon any of the assessments except as provided in accordance with the governing document. Redemption Provisions: Optional Redemption. The Bonds maturing on or after September 1, 2026 may be redeemed at the option of the Borrower, from any sources of available funds, prior to maturity on any Interest Payment Date on or after September 1, 2025 as a whole or in part from such maturities as are selected by the Borrower, and by lot within a maturity, at the principal amount thereof, plus a premium expressed below as a percentage of the principal amount so redeemed, plus accrued interest to the date of redemption thereof. Redemption Period Redemption Price September 1, 2025 and March 1, 2026 103% September 1, 2026 and March 1, 2027 102% September 1, 2027 and March 1, 2028 101% September 1, 2028 and any Interest Payment Date thereafter 100% Mandatory Sinking Fund Redemption. The Bonds are subject to mandatory sinking fund redemption, in part, on September 1, 2019, and on each September 1 thereafter to maturity, by lot, from sinking fund payments at a redemption price equal to the principal amount of the Bonds to be redeemed, together with accrued interest to the date of redemption, without premium, and from sinking fund payments to be determined by the date of issuance of the Bonds. Special Mandatory Redemption from Prepayments. The Bonds will be subject to redemption as a whole, or in part on a pro rata basis among maturities of the Bonds, on any Interest Payment Date prior to maturity from proceeds of prepayments of the special taxes deposited in the redemption account and amounts transferred from the reserve account in connection with the prepayment. Such special mandatory redemption of the Bonds shall be at the following redemption prices (expressed as percentages of the principal amount of such 2018 Bond to be redeemed), together with accrued interest thereon to the date of redemption: 171 Commitment Letter City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable) November 13, 2018 Page 4 One E. Washington Street, Ste. 1400 • Phoenix, AZ • 85004 • Phone: 602.346.7467 Redemption Period Redemption Price September 1, 2019 through March 1, 2026 103% September 1, 2026 and March 1, 2027 102% September 1, 2027 and March 1, 2028 101% September 1, 2028 and any Interest Payment Date thereafter 100% Events of Default: Events of Default shall include those that are deemed standard and customary for transactions of this nature all of which shall be subject to satisfactory review by the Purchaser and the Purchaser’s Counsel. Representations/ Warranties/Covenants: Legal documentation will contain customary affirmative and negative covenants as well as usual representations and warranties for like situated borrowers acceptable to the Purchaser. Legal Opinion(s): Opinions of Bond Counsel, among other things, as to a. treatment of payments under the Bonds as exempt from State of California personal income taxes; b. opinion as to the validity and enforceability of the Bonds and the assessments being duly and validly authorized; c. opinion as to the Bonds being exempt from registration pursuant to the Securities Act of 1933, as amended and the legal documents being exempt from qualification as to the indenture pursuant to the Trust Indenture Act of 1939, as amended; and d. such other opinions as the Purchaser may require. An opinion of the City Attorney shall also be provided in form and substance satisfactory to the Purchaser and the Purchaser’s Counsel. Conditions Precedent: Prior to the purchase of the Bonds by the Purchaser, the following conditions precedent shall have occurred, all of which shall be in form and substance satisfactory to the Purchaser and the Purchaser’s Counsel: a. formal credit approval for the purchase of the Bonds by the Purchaser; b. satisfactory review by the Purchaser’s Counsel of any outstanding agreements entered into by the City which may impact the security for the Bonds or the obligations of the Borrower with respect to repayment the Bonds; c. any authorizing resolution(s) of the City as required for the issuance and repayment of the Bonds; d. opinions as required by the Purchaser and the Purchaser’s Counsel; e. properly executed bond documents in form and substance satisfactory to the Purchaser and the Purchaser’s counsel evidencing or supporting the repayment of the Bonds; and f. additional conditions precedent that the Purchaser and the Purchaser’s Counsel consider customary and reasonably appropriate for the proposed purchase of the Bonds. 172 Commitment Letter City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable) November 13, 2018 Page 5 One E. Washington Street, Ste. 1400 • Phoenix, AZ • 85004 • Phone: 602.346.7467 The Purchaser will book the Bonds as a loan, and, therefore, the Bonds will be purchased by the Purchaser under the following conditions: a. the Bonds shall not be registered or otherwise qualified for sale under the “Blue Sky“ laws; b. the Purchaser will hold their respective term bond as a single debt instrument; c. no CUSIP numbers will be obtained for the Bonds pursuant to Municipal Securities Rulemaking Board Rule G-34(a)(i)(F) (See “Assignment and Participation” herein); d. no official statement or similar offering document has been prepared in connection with the private placement of the Bonds; e. the Bonds will be in certificated form, will not settle through the DTC or any similar repository and will not be in book entry form; and f. the Purchaser will sign a letter of representations in a form acceptable to Purchaser’s Counsel. Complete pdf copies of the executed closing documents and opinions, along with a final closing index will be required and delivered to the Purchaser by 3:00 pm PST/4:00 pm MST on Monday, December 10, 2018. Origination Fee: None Other Fees Due at Closing: The Borrower shall be obligated to pay all delivery costs, including legal fees of the Purchaser’s Counsel and the CDIAC reporting fee. The Purchaser’s Counsel fee shall be capped at $8,500 for the Bonds. Bond Counsel: Hawkins, Delafield & Wood LLP / San Francisco, California Placement Agent: Piper Jaffray & Co. / Laguna Beach, California Municipal Advisor: PFM Financial Advisors LLC / San Francisco, California Special Tax Consultant: NBS / Temecula, California Trustee: The Bank of New York Trust Company, N.A. / San Francisco, California Purchaser’s Counsel: Reed Glyer, Esq., of Stradling Yocca Carlson & Rauth, a Professional Corporation / Newport Beach, California Pre-Closing Date: Monday, December 10, 2018 Closing Date and Time: Wednesday, December 12, 2018 at 9:30 AM PST/10:30 AM MST 173 Commitment Letter City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable) November 13, 2018 Page 6 One E. Washington Street, Ste. 1400 • Phoenix, AZ • 85004 • Phone: 602.346.7467 No Fiduciary Relationship: Inasmuch as the Bonds represents a negotiated transaction, the Borrower understands, and hereby confirms, that the Purchaser is not acting as a fiduciary of the Borrower, but rather is acting solely in its capacity as a lender, for its own account. The Borrower acknowledges and agrees that: a. the transaction contemplated herein is an arm’s length commercial transaction between the Borrower and the Purchaser and its affiliates; b. in connection with such transaction, the Purchaser and its affiliates are acting solely as a principal and not as an advisor including, without limitation, a “Municipal Advisor” as such term is defined in Section 15B of the Securities and Exchange Act of 1934, as amended, and the related final rules (the “Municipal Advisor Rules”); c. the Purchaser and its affiliates are relying on the bank exemption in the Municipal Advisor Rules; d. the Purchaser and its affiliates have not provided any advice or assumed any advisory or fiduciary responsibility in favor of the Borrower with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto; e. the Purchaser and its affiliates have financial and other interests that differ from those of the Borrower; and f. the Borrower has consulted with its own financial, legal, accounting, tax and other advisors, as applicable, to the extent it deemed appropriate. Reporting Requirements: Within nine (9) months of the end of each fiscal year, the Purchaser shall receive from the Borrower the following: a. a copy of the City audited financial statements; b. a table presenting the number of parcels, secured assessed values (land and structure values) and value to lien ratios within the CFD; c. a table listing the total amount of special taxes levied and total delinquencies within the CFD in the current fiscal year and all prior fiscal years with delinquencies; d. a statement as to any parcel in the CFD for which the delinquent special taxes represents more than 10% of the aggregate special tax levy: the identity of the parcel, the identity of the owner(s) of the parcel, and the aggregate amount of delinquent property and special taxes within the CFD, including accrued penalties and interest; and e. A statement as to the status of any judicial foreclosure proceedings within the CFD, including such proceedings initiated by the Borrower as a result of the delinquency in the payment of special taxes. 174 Commitment Letter City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable) November 13, 2018 Page 7 One E. Washington Street, Ste. 1400 • Phoenix, AZ • 85004 • Phone: 602.346.7467 The Borrower shall give or cause to give notice to the Purchaser of the occurrence of any of the events with respect to the Bonds in a timely manner but not in excess of ten (10) business days after the occurrence of the event. Assignment and Participation: The Purchaser’s intent is to book the Bonds as a loan and hold the Bonds to maturity or to the redemption dates; however, the Purchaser retains the right to assign or participate out its interest in the Bonds and will request the Borrower to agree to such assignment or participation. The Purchaser acknowledges and agrees that the Bonds may only be transferred to a “Qualified Institutional Buyer” or an “Accredited Investor” within the meaning of the Securities Act of 1933, as amended. 175 Commitment Letter City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable) November 13, 2018 Page 8 One E. Washington Street, Ste. 1400 • Phoenix, AZ • 85004 • Phone: 602.346.7467 Please sign the enclosed copy of this term sheet and forward to me via e-mail or regular mail to my attention (see contact information on first page). Submitted on behalf of Western Alliance Bank and its affiliate, Western Alliance Business Trust. Joshua J. Lentz Vice President – Municipal Finance Officer CITY OF SARATOGA, CALIFORNIA, acting for and on behalf of CITY OF SARATOGA COMMUNITY FACILITIES DISTRICT NO. 2016-1 By: Name: Title: Date: cc: Ronald Wolf, Esq, Hawkins Delafield & Wood LLP Sarah Hollenbeck, PFM Financial Advisors LLC Kevin Dong. PFM Financial Advisors LLC Katherine A. Koster, Piper Jaffray & Co. Reed Glyer, Esq., Stradling Yocca Carlson & Rauth, a Professional Corporation Paul Hansen, Arrowhead Cooperative Company 176 Commitment Letter City of Saratoga Community Facilities District No. 2016-1 Special Tax Bonds, Series 2018 (Arrowhead Project) (Federally Taxable) November 13, 2018 Exhibit A Page 1 One E. Washington Street, Ste. 1400 • Phoenix, AZ • 85004 • Phone: 602.346.7467 EXHIBIT A NOT TO EXCEED AGGREGATE COMMITMENT:$2,600,000.00 TAXABLE TRANCHE COMMITMENT:To Be Determined WEIGHTED AVERAGE MATURITY (ESTIMATED):19 Years ESTIMATED FUNDING DATE:Wednesday, December 12, 2018 20 YEAR SPOT LIBOR INTEREST RATE SWAP RATE(1)3.2335% BANK SPREAD 2.8000% RATE LOCK SPREAD 0.0133% TAXABLE INTEREST RATE(2)6.05% CITY OF SARATOGA, CALIFORNIA COMMUNITY FACILITIES DISTRICT NO. 2016-2 (ARROWHEAD PROJECT) SPECIAL TAX BONDS, SERIES 2018 (TAXABLE) INTEREST RATE LOCK INTEREST RATE LOCK CALCULATION AS OF MONDAY, OCTOBER 29, 2018 Western Alliance Bank and its affiliate Western Alliance Business Trust (the “Purchaser”) are pleased to provide to the City of Saratoga, California (the "City") the following Interest Rate Lock for the Special Tax Bonds, subject to formal approval by the City Council of the City and Lender's additional due diligence, formal credit approval and receipt and approval of all relevant documentation, for the sale of the Special Tax Bonds. (1) Bloomberg Finance L.P. - 6 Year Tenor Spot Interest Rate Swap Rate as of Monday, October 29, 2018, 19:03:44 EDT, rounded to the nearest one hundredth (2) This Interest Rate is rounded to the nearest one hundredth and will expire if the Bonds are not funded by Wednesday, December 12, 2018. 177 SARATOGA CITY COUNCIL MEETING DATE:November 21, 2018 DEPARTMENT:City Manager’s Office PREPARED BY:Crystal Bothelio, Deputy City Manager SUBJECT:Enhanced Communications Program RECOMMENDED ACTION: Approve the resolution to amend the Fiscal Year 2018/19 Operating Budget to fund enhancements to the communications program. BACKGROUND: At the request of the City Council, staff has outlined a plan for improving the City’s communications program in the current fiscal year. While the City has seen success, there are opportunities to build a more effective and comprehensive communications program with additional resources. The proposed budget adjustment resolution would increase the City’s communication’s budget by $43,000 in Fiscal Year 2018/19 and enhance the City’s existing communications program by increasing proactive communication, expanding reach to new and different audiences, establishing a consistent and recognizable brand, and further enhancing accessibility of communications to people of all abilities and ages. The primary strategies for achieving the goals of the enhanced communications program are outlined below. Mail a New Quarterly Postcard to Residents Direct mail is one of the few ways in which the City can directly and proactively communicate with all residents. It requires no action on the part of residents, such as subscribing to City newsletters, and there are no technology hurdles associated with it. While the City has used direct mail in the past in the form of letters, newsletters, and the Recreation Activity Guide, the City has observed success with the recent use of postcards. Currently, the City mails quarterly public safety postcards and earlier this month the City mailed postcards to residents to make them aware of change to leaf blower regulations. Several residents have noticed and expressed appreciation for the postcards. The additional funding for postcards would allow the City to mail a second quarterly postcard to share City various information and news. Mailing would be coordinated to avoid overlap with the public safety postcard. 178 Expand Translations, Including the Monthly Saratoga Source As part of a larger effort to be more inclusive and accessible to residents of all abilities, backgrounds, and languages, the City has recently explored translating a few City publications to Traditional Chinese as directed by the City Council during the April 2018 Budget Study Session. This includes a Back to School information sheet, general City factsheet, and The Saratogan, which is published annually. The City Council directed staff to translate these key documents to Traditional Chinese as approximately 22% of Saratoga residents identify themselves as Chinese according to the 2016 American Community Survey. Additionally, roughly 44% of Saratoga’s population speaks a language other than English at home and 6% of households have limited English speaking skills. The recent translations of the information sheets and The Saratogan have clarified the true cost, process, and time commitment required to translate City materials. Most importantly, the City has learned it needs to work with higher end translation services that are able to ensure quality translation and to work within the City’s design files to avoid translation mistakes that may occur during formatting and layout. Working with translators to ensure publications are correctly translated and in the proper layout requires far more time than a simple translation of a Word document and is more expensive than initially estimated. Staff is proposing additional funding to expand translations to include the monthly, Saratoga Source. The Source includes a variety of important City information, such as safety tips, updates on City projects, a digest of the City’s Nextdoor posts, and events. This additional funding would help increase accessibility of important City communication pieces. Welcome New Residents Through a Mailer Staff recommends increasing the Public Information Office budget to include a new resident mailer to welcome new community members to Saratoga. The mailer will include essential City information, such as how to contact the City, an overview of City services and resources, and how to subscribe to City communications. This mailer would cost approximately $900 for the remainder of the 2018/19 Fiscal Year. Reach New Audiences Through a City of Saratoga Instagram Account Earlier this year, Instagram reached one billion monthly active users with 500 million Instagram users accessing the app every day. Additionally, 59% of Instagram users are under the age of 30 with 75% of teens using Instagram every day. Developing a Saratoga presence on Instagram will help the City have a more well-rounded social media portfolio that better equips the City to reach residents and visitors of all ages. Each social media site has a unique character and audience. Content that fails to conform with the culture and demographic of the site generally performs poorly. With Instagram’s heavy emphasis on photos and videos, the City will need to build its photo and video repository to maintain a consistent presence and engaging content. Use the Median Banner Program to Communicate City Information In 2015, an assessment of City communication efforts was conducted to identify opportunities for improvement. One suggestion included using the Median Banner 179 Program to communicate various City information and news. For the most part, the City has limited its use of banners to announce upcoming City events. However, this year, the City will begin using the median banners to announce changes to the City’s leaf blower regulations. Staff is recommending expanding the use of banners. Like postcards, banners are another way for the City to directly communicate with residents. Leverage Resources through Part-Time Staff and Consultants The proposals to enhance Saratoga’s communications program represent a significant increase to staff workload. Consequently, staff is recommending that additional funds be allocated to hire part time staff and graphic designer consultants maintain balance in the communications workload. Additionally, the increase will allow the City to begin working towards other communications initiatives. This includes creating a more consistent look and feel of all City materials, including staff reports, agendas, applications, and more. Building a City brand that is attractive and recognizable will make City materials more memorable and clearly recognizable as coming from the City. In addition to the new strategies listed here, staff will continue current communications program efforts. This includes continued implementation of a centralized communications program that seeks to inform residents through interesting, useful, and timely content that is shared through a variety of mediums. Since July 2017, all public outreach efforts have been coordinated in partnership with the City Manager’s Office to ensure that communications are done in a holistic, comprehensive, strategic, and consistent manner. As a result, the City has put out more public information than ever before, messaging is consistent in look, feel, and tone, and the City is reach has increased. FISCAL STATEMENT: Adoption of the budget adjustment resolution will increase funding for communications in Fiscal 2018/19 by $43,000 in these specific functions: Function Increase Printing Services $10,500 Translation $15,000 Graphic Design Services $7,500 Temporary Staff $10,000 ATTACHMENTS: Attachment A – Budget Adjustment Resolution 180 RESOLUTION NO. 18-____ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA AMENDING THE ADOPTED OPERATING BUDGET FOR FISCAL YEAR 2018/19 WHEREAS, the City Council requested enhancements to the City’s communication program to reach new and different audiences, strategically use resources, establish a consistent and recognizable brand, and provide accessible communications; WHEREAS, implementation of strategies to achieve these goals requires additional resources and adjustments to the City of Saratoga Fiscal Year 2018/19 Operating Budget; and WHEREAS, the expenditure accounts are increased by the following amounts: Adjustment Description Account #Increase Amount To budget increased revenue appropriations for enhanced communications efforts. Printing Services 111-2401-64121 $10,500 Translation 111-2401-64131 $15,000 Graphic Design Services 111-2401-64134 $7,500 Temporary Staff 111-2401-51112 $10,000 NOW, THEREFORE BE IT RESOLVED,that the City Council of the City of Saratoga hereby amends the Fiscal Year 2018/19 Operating Budget as shown above. The above and foregoing resolution was passed and adopted at a regular meeting of the Saratoga City Council held on the 21 st day of November 2018 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Mary-Lynne Bernald, Mayor ATTEST: DATE: Debbie Bretschneider, Interim City Clerk 181