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Agenda Packet - EVWD Board of Directors - 03/26/2001
East Valley Water District 1155 DEL ROSA AVENUE, SAN BERNARDINO, CA REGULAR BOARD MEETING March 26, 2001 5:30 P.M. AGENDA "In order to comply with legal requirements for posting of agenda, only those items filed with the District Secretary by 10:00 a.m. on Tuesday prior to the following Monday meeting not requiring departmental investigation, will be considered by the Board of Directors". - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - CALL TO ORDER PLEDGE OF ALLEGIANCE 1. Approval of Agenda 1 Public Comments 3. Adjourn to East Valley Water Public Facilities Corporation Meeting. 4. Reconvene to East Valley Water District Regular Board Meeting. CONSENT CALENDAR 5. Approval of Board Meeting Minutes for March 12, 2001. 6. Approval of Liens for Delinquent Water and Sewer Accounts. 7. Resolution 2001.04—Notice of completion for watermain extension within Dogwood St., 33", St., Osbun Rd. and Edgemont Dr. by Law Plumbing Co. 8. General Fund Disbursements 4184251 through 4184437 in the amount of$755,419. 19 and Payroll Checks 48608 through*9661 in the amount of 558,904.79, totaling $814,323.98. OLD BUSINESS 9. Radon Rule Update. (General Manager) 10. Resolution 2001.06 — Approval of the Sale of Certificates of Participation, the Time and Place for Taking Bids, Notice Inviting Bids, Preliminary Official Statement and other documents. 11. Discussion and possible action regarding lease extension for ten (10) acre site on 5'r Street. 12. Discussion and possible action regarding the issue of whether Ca1PERS benefits should extend to employees of temporary agencies, consulting firms, and leasing agencies who provide temporary labor service to a public agency. 13. Election results in support of an alternative funding formula for the districts' share of the LAFCO costs. NEW BUSINESS 14. Memo to Robert Martin regarding disposition of obsolete telemetry equipment. 15. Approval to Bid Plant #37 Reservoir/Pump Station Project. 16. Review and approval of Lease Agreement with the City of San Bernardino R.D.A. 17. Notice of Exemption concerning the Lease Agreement with the City of San Bernardino R.D.A. 18. Discussion and possible action regarding the withdrawal of Funds from deferred compensation account. 19. Resolution of the Board of Directors of the Yucaipa Valley WD to consolidate its governing election with the general election date in even numbered years. REPORTS 20. March 14, 2001 - Releases of Lien for Delinquent Water and Sewer Accounts. 21. General Manager's Report 22. Oral Comments from Board of Directors. MEETINGS 23 ACWA's SPRING CONFERENCE, South Lake Tahoe, May 9-11, 2001. 24. CSDA "WORKSHOP ON WHEELS" — Cucamonga County Water District, 10440 Ashford St., Rancho Cucamonga, CA., May 14, 2001. 25. WATER EDUCATION FOUNDATION "THE CENTRAL VALLEY TOUR" — Sacramento, CA., May 23-25, 2001. ADJOURN 2 EAST VALLEY PUBLIC FACILITIES CORPORATION 1155 DEL ROSA AVENUE MARCH 26, 2001 San Bernardino, California 5:30 p.m. AGENDA CALL TO ORDER 1. Public Participation ,~. 2. Approval of December 11,2000 Public Facilities Corporation Minutes '~-~ ~t ~'~ 3. Resolution 2001.05 - Approval of thc Sale of Certificates of PazticiDation, the Time and Place for Taking Bids, Notice Inviting Bids, Preliminary Official Statement and other documents, 4. Adjourn to East Valley Water District Board Meeting. POSTED:03/23/01 DRAFT SUBJECT TO APPROVAL EAST VALLEY PUBLIC FACILITIES DECEMBER 11, 2000 CORPORATION MINUTES The meeting was called to order at 6:05 p.m. by President Lightfoot. PRESENT: Directors: Wilson, Sturgeon, Goodin, Lightfoot ABSENT: Director Negrete STAFF: Robert Martin, Paul Dolter, Alberta Hess, Mary Wallace GUEST(s): Jo McAndrews APPROVAL OF AGENDA M/SIC (Wilson-Goodin) that the December 11, 2000 Agenda be approved as submitted. PUBLIC PARTICIPATION President Negrete declared the public participation section of the meeting open at 6:06 p.m. There being no written or verbal comments, the public participation section was closed. APPROVAL OF THE DECEMBER 29, 1999 MEETING MINUTES M/SIC (Sturgeon-Wilson) that the December 29, 1999 minutes be approved as submitted. APPOINTMENT OF DIRECTORS AND BOARD RE-ORGANIZATION M/SIC (Sturgeon-Wilson) that the following slate of officers remain and be approved: President Glenn Lightfoot 1st Vice President - Donald D. Goodin 2"d Vice President - George E. "Skip" Wilson Secretary Kip Sturgeon Treasurer Edward S. Negrete ADJOURN M/SIC (Wilson-Sturgeon) that the Public Facilities Corporation meeting be closed and adjourned to the East Valley Water District meeting at 6:08 p,m, Glenn E. Lightfoot, President Kip E. Sturgeon, Secretary EVPFC Minutes: 12/11/00 RESOLUTION NO. 2001.05 RESOLUTION OF THE BOARD OF DIRECTORS OF THE EAST VALLEY PUBLIC FACILITIES CORPORATION APPROVING THE SALE OF CERTIFICATES OF PARTICIPATION IN THE AMOUNT OF NOT TO EXCEED $13,000,000; APPROVING THE TIME AND PLACE FOR TAKING BIDS, APPROVING THE NOTICE INVITING BIDS, APPROVING THE PRELIMINARY OFFICIAL STATEMENT AND APPROVING OTHER DOCUMENTS WHEREAS, the Board of Directors of the East Valley Public Facilities Corporation (the "Corporation") deems it proper and the necessity therefor appears that bids be invited for Certificates of Participation (Reservoir Project and Series 1994 Refunding), Series 2001 (the "Certificates") in the amount of not to exceed $13,000,000 and that if bids are satisfactory said Certificates be sold in the manner and at the time and place hereinafter set forth; and WHEREAS, the Certificates are secured by Installment Payments to be made pursuant to an Amended and Kestated Installment Purchase Agreement, dated as of April 1, 2001 by and between the District and the Corporation (the "Installment Purchase Agreement") entered into by the parties to provide for the construction of the Reservoir Project (as defined in the Installment Purchase Agreement) and to refund the outstanding Certificates of Participation (Treatment Plant Project), Series 1994 (the "Series 1994 Certificates"); and WHEREAS, the District, the Corporation and Union Bank of California, N.A., as Trustee desire to enter into a trust agreement titled "Trust Agreement" dated as of April 1, 2001, to provide for the issuance and security of the Certificates and to provide for the construction of the Reservoir Project and the refunding of the outstanding Series 1994 Certificates; and WHEREAS, the Corporation will assign to the Trustee pursuant to an Assignment Agreement dated as of April 1, 2001, the Installment Payments; and WHEREAS, a preliminary official statement with respect to the Certificates (the "Preliminary Official Statement"), has been prepared by Fieldman, Rolapp & Associates (the "Financial Advisor"); and WHEREAS, to further provide for the refunding of the Series 1994 Certificates, the District, the Corporation and the Trustee acting as the Escrow Bank desire to enter into an Escrow Agreement relating to the defeasance of $7,650,000 Certificates of Participation (Treatment Plant Project), Series 1994, dated as of April 1, 2001; and WHEREAS, there has been presented to this Board of Directors copies of each of the aforementioned documents and certain other documents relating to the foregoing; NOW, THEREFORE, THE DISTRICT'S BOARD OF DIRECTORS DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: DOCSOC\802714v3~2497.00011 SECTION 1. That sealed proposals for the purchase of the Certificates in the amount of not to exceed $13,000,000 (the exact amount to be determined by the General Manager of the District following the receipt of bids for the Certificates) be received by the Board of Directors of the Corporation at the offices of Fieldman, Kolapp & Associates, 2100 Main Street, Suite 210, Irvine, California 92614 (949) 660-8500 on Wednesday, April 11, 2001 or on an alternate date and at the time to be determined by the General Manager of the District. SECTION 2. That Fieldman, Rolapp & Associates is hereby authorized and directed to publish a notice inviting such sealed proposals by one insertion in The Bond Buyer, a newspaper of general circulation, circulated within the State, said publication to be at least fifteen (15) days prior to the date of opening bids stated in said notice or to be determined by the General Manager of the District attached hereto as Exhibit A. SECTION 3. The Corporation hereby approves the initial draft of the Preliminary Official Statement, and the Financial Advisor is authorized to complete the Preliminary Official Statement and distribute the Preliminary Official Statement to prospective purchasers in the form hereby approved, together with such conforming changes therein and additions thereto as are deemed necessary by the General Manager of the District to make such Preliminary Official Statement complete and accurate as of its date. The General Manager of the District is hereby authorized to certify that the Preliminary Official Statement is final within the meaning of Rule 15c-2-12 of the Securities Exchange Act of 1934, as amended. The General Manager of the District is hereby directed to execute and deliver, for and in the name and on behalf of the District, the final Official Statement relating to the Certificates, which shall be in substantially the form of the Preliminary Official Statement with such changes therein and additions thereto as are deemed necessary by the General Manager of the District, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 4. That Fieldman, Rolapp & Associates is hereby authorized and directed to cause to be furnished to prospective bidders copies of the Preliminary Official Statement and a notice inviting proposals. That said notice shall be substantially as set forth in Exhibit B attached hereto. The failure, in whole or in part, to comply with this Section 4 and Section 3 hereof shall not in any manner affect the validity of the sale of said Certificates. SECTION 5. Union Bank of California, N.A. is appointed Trustee under and pursuant to the Trust Agreement, with the powers and duties of said office as set forth therein. SECTION 6. The General Manager of the District is authorized to select a municipal bond insurer to insure payments of principal of and interest with respect to the Certificates if the General Manager of the District determines that a municipal bond insurance policy issued by such insurer will result in a lower interest rate or yield to maturity with respect to Certificates. SECTION 7. The General Manager of the District is hereby authorized to execute a contract with the lowest responsible bidder for the Certificates provided the par amount of the Certificates does not exceed $13,000,000, the interest rate does not exceed 6.25% per annum and the purchasers discount does not exceed 1.0%. SECTION 8. The Installment Purchase Agreement, the Assignment Agreement, the Trust Agreement and the Escrow Agreement are approved in substantially the form submitted to this Board 2 DOCSOC\S02714v3'x.22497.000S of Directors with such changes to be made by the General Manager of the District as deemed necessary following the sale of the Certificates to carry out the intent of this Resolution. SECTION 9. The President of the Board of Directors, the Vice President of the Board of Directors, the General Manager of the District, the Secretary, and any other proper officer of the Corporation are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents necessary or proper for carrying out the transactions contemplated by this Resolution. SECTION 10. This Resolution shall take effect from and after its date of adoption. ADOPTED, SIGNED AND APPROVED this day of ,2001. EAST VALLEY PUBLIC FACILITIES CORPORATION President ATTEST: Secretary, East Valley Public Facilities Corporation 3 DOCS 0C\802714v3'O.2497.000 B STATE OF CALiFORNIA ) ) ss. COUNTY OF SAN BERNARDINO ) I, , Secretary of the East Valley Public Facilities Corporation, hereby certify that the foregoing is a full, true and correct copy of a Resolution duly adopted at a meeting of the members of said Corporation duly and regularly held at the meeting thereof on the .day of ,2001, of which meeting all of the members of said Corporation had due notice and at which a majority thereof was present; and that at said meeting said Resolution was adopted by the following vote: AYES: NOES: ABSENT: I further certify that I have carefully compared the foregoing Resolution with the original minute of said meeting on file and of record in my office; that said Resolution is a full, true and correct copy of the original Resolution adopted at said meeting and entered in said minutes; and that said Resolution has not been amended, modified or rescinded since the date of its adoption, and the same is now in full force and effect. WITNESS my hand and the seal of the East Valley Public Facilities Corporation this day of ,2001. Secretary, East Valley Public Facilities Corporation (SEAL) 4 DOCSOC\802714v3k22497.00(] 8 DRAFT SUBJECT TO APPROVAL EAST VALLEY WATER DISTRICT REGULAR BOARD MEETING MARCH 12, 2001 DONAHUE COUNCIL CHAMBERS, 27215 BASELINE, HIGHLAND, CA. MINUTES The meeting was called to order at 5:33 p.m. by Vice President Goodin. Director Sturgeon led the flag salute. PRESENT: Directors Wilson, Sturgeon, Negrete, Goodin ABSENT: Director Lightfoot STAFF: Robert Martin, General Manager; Paul Dolter, District Engineer; Alberta Hess, Chief Financial Officer; Mary Wallace, Administrative Assistant. LEGAL COUNSEL: Steve Kennedy GUEST(s): Rebecca Kasten, Eileen Bateman, Jo McAndrews, Willard Kenley, Matt LeVesque, Rich Hailer, Jeff Endicott, Ron Buchwald, George Einfeldt, Kenneth Wilde, Jenny Wilde. APPROVAL OF AGENDA The General Manager recommended that Agenda Items 11 and 12 be addressed immediately following the Consent Calendar items. M/S/C (Wilson-Negrete) that the March 12, 2001 Agenda be approved as amended. PUBLIC PARTICIPATION Vice President Goodin declared the public participation section of the meeting open at 5:36 p.m. There being no written or verbal comments, the public participation section was dosed. APPROVAL OF SPECIAL BOARD MEETING MINUTES FOR FEBRUARY 23, 2001. M/S/C (Sturgeon-Negrete) that the February 23, 2001 Special Board Meeting Minutes be approved as submitted. APPROVAL OF LIENS FOR DELINQUENT WATER AND SEWER ACCOUNTS. The General Manager noted that the owner of property at 1135 334 St., 3412 Mountain Ave., and 3805 Conejo Dr. had paid the account and should be removed from the lien list. M/S/C (Sturgeon-Negrete) that the liens for delinquent water and sewer accounts be approved for processing with the exceptions noted by the General Manager. FINANCIAL STATEMENTS FOR PERIOD ENDING JANUARY 31, 2001 were presented to the Board for approval. M/S/C (Sturgeon-Negrete) that the Financial Statements for per[od ending January 31,2001 be accepted. DISBURSEMENTS M/S/C (Sturgeon-Negrete)that General Fund Disbursements #183915 through #182450 in the amount of $810,253.56, Payroll Fund Disbursements #8499 through #8553 in the amount of $59,021.56 and Payroll Fund Disbursements #8554 through #8607 in the amount of $60,069.39 totaling $929,344.51 be approved. PUBLIC HEARING TO CONSIDER THE ADOPTION OF A RESOLUTION SETTING WATER RATES FOR THE SERVICES PROVIDED BY THE EAST VALLEY WATER DISTRICT. Vice President Goodin declared the PuNic Hearing Section of the Board Meeting open at 5:40 p.m. and asked for a staff repor[ to suppor[ the adoption of new water rates. The General Manager reported that the rate structures are based upon operating costs of the District including recent power rate increases, employee wages, the purchasing and maintenance of supplies, equipment, etc. information only. Mr. George Einfeldt requested that the District place emphasis on water conservation programs. Mr. Willard Kenley requested to speak to the Board and expressed his concerns over the proposed rate increase and also requested that a procedure to place Public Hearing Notices on water bills be established for future noticing. 2 MINUTES: MARCH 12, 2001 Ms. Jenny Wilde, resident at 25187 East 4th Street expressed her concerns to the Board about various Charges that are an owner's responsibility, not the tenants, and also about deposits that the District requires from an owner for certain services. Vice President Goodin suggested that Ms. Wilde attend a District Tour to have some of her questions answered; that this section of the hearing was to listen to concerns about and to discuss water consumption rate issues. Staff will insure that Ms. Wilde receives information about the upcoming District Tour in April. Information only. Vice President Goodin declared that the public hearing section of the meeting be closed at 5:55 p.m. RESOULTION 2001.03 - ESTABLISHMENT OF WATER RATES FOR THE EAST VALLEY WATER DISTRICT was presented to the Board for approval. M/S/C (Sturgeon-Wilson) that Resolution 2001.03 be approved. RADON RULE UPDATE The General Manager reported on the District's progress with the Rule to date; that a letter of appreciation to EPA Administrator, Christie Todd Whitman, for her assistance in the withdrawal of the radon rule from OMB consideration was being prepared for signatures from various Congressional Members, Information only. SECOND SUPPLEMENT TO PERCHLORATE RESEARCH AGREEMENT BETWEEN EVVVD AND AVVVVARF was presented to the Board for approval. M/S/C (Negrete-Sturgeon) that the second supplement to the Perchlorate Research Agreement be approved. PROPERTY EXCHANGE AGREEMENT WITH THE CITY OF SAN BERNARDINO WATER DEPARTMENT was presented to the Board for approval. Legal counsel noted that there had been a typographical error made when the agreement was prepared; that a line had been omitted in the last sentence in Section 10 of the agreement and was re-inserted at the direction of counsel. M/S/C (Wilson-Negrete) that the Property Exchange Agreement for the Plant 37 Relocation Project be approved with changes effected in Section #10 of the agreement. APPROVAL TO BID PLANT #37 RESERVOIR/PUMP STATION PROJECT. item was deferred to the March 26, 2001 Board Meeting for discussion and possible action. 3 MINUTES: MARCH 12, 2001 V REVIEW THE PROPOSED RULES, REGULATIONS AND FEES FOR WATER AND SEWER SERVICE TO BE CONSIDERED BY THE BOARD OF DIRECTORS ON APRIL 9, 2001. The proposed rules, regulations and fees for water and sewer service were submitted for review and discussion. Information only. DIRECTOR'S FEES AND EXPENSES FOR FEBRUARY 200'1 were presented to the Board for approval. M/S/C (Wilson-Sturgeon) that the Director's fees and expenses for February 2001 be approved. CLAIM FOR DAMAGES AT 6745 YATES AVE. BY MR. FRANK SPIRET. M/S/C (Sturgeon-Wi[son) that the claim for damages at 6745 Yates Ave. from Mr. Frank Spiret be denied and referred to District's Legal counsel and Insurance Agency. RELEASES OF LIEN FOR DELINQUENT WATER AND SEWER ACCOUNTS. List of liens released on February 9, 2001, February 22, 2001 and March 1, 2001 was reviewed. Information only. GENERAL MANAGER'S REPORT The General Manager reported on District operations to date; that District facilities were being readied for the Summer season; expressed concerns over the potential power shortages. Information only. ORAL COMMENTS FROM BOARD OF DIRECTORS. The~:e being no verbal or written comments from the Directors, this section of the meeting was closed. LETTER TO CONGRESSMAN LEWIS REQUESTING HIS CONSIDERATION AND SUPPORT OF A WATER SUPPLY AND DISTRIBUTION PROJECT PROPOSED BY EVVVD. Information only. THE WATER RESOURCES INSTITUTE "BOTTLED WATER INDUSTRY OVERVIEW", MARCH 8, 2001, CSUSB. Information only. SAN BERNARDINO VALLEY WATER CONSERVATION DISTRICT AND THE WATER RESOURCES INSTITUTE ARE CO-HOSTING "THE FIRST QUARTERLY BREAKFAST", THE HILTON HOTEL, 285 E. HOSPITALITY LANE, SAN BERNARDINO, CA. MARCH 19, 200'1. Information only. 4 MINUTES: MARCH 12, 2001 ASBCSD MEMBERSHIP MEETING & VENDOR FAIR, PANDA INN, 3223 CENTERLAKE DR., ONTARIO, CA. MARCH 19, 2001. Information only. ACWA "CONJUNCTIVE USE" AN EDUCATIONAL CONFERENCE, APRIL 1'1-12, 2001, ONTARIO CONVENTION CENTER, Information only. ADJOURN The meeting was adjourned at 6:18 p.m. Donald D. Goodin, Vice President Robert E. Martin, Secretary 5 MINUTES: MARCH 12, 2001 CERTIFICATE OF LIEN MARCH 26, 2001 ACCOUNT OWNERS PROPERTY AMOUNT NUMBER NAME ADDRESS OWED 1. 004-0022-2* 7634 LANKERSHIM AVE 67.98 2. 008-0704-0* 27111 STRATFORD ST 49.19 3. 008-0850-1' 27135 MANSFIELD ST 32.16 4. 022-0047-4* 1276 36TH ST 79.33 5. 035-0105-1 6235 ARDEN AVE 132.41 6. 054-2608-2* 1555 VILLA CT 142.94 7~ 063-0285-2 1829 BANGOR AVE 46.62 8. 071-0005-2' 7143 NEWBURYAVE 24.91 9. 071-0119-2 25505 FISHER ST 72.15 10. 073-0018-2'+ 7098 DWIGHT WAY 105.03 11. 074-2684-3* 27329 BESSANT ST 113.18 12. 082-0142-1 7506 DEL ROSA AVE 57.36 13. 082-0201-1' 25435 PALOMA RD 64.93 ~1~. 083-0150-1' 7641 DRUMMOND AVE ~f t5. 084-1097-3' 7190 VINE ST 61.59 16. 092-0187-3' 25942 11TH ST 98.65 17. 094-0t65-4' 7817 GOLONDRINA DR 72.15 18. 101-0108-6+ 7535 LOS FELIZ DR 13.47 19. 102-0090-1' 24999 VINE ST 50.93 20. 111-0260-3' 7802 EUCALYPTUS DR 58.01 Page 1 of 2 ~ 131-0086-4' 27783 20TH ST 22, 155-0498-6' 7820 VALMONT AVE 60,84 23, 163-0107-1' 6928 COUNTRY OAKS DR 12.42 TOTAL $1,533.05 * STILL OWNS PROPERTY + MULTIPLE UNITS ~" ~ ~ ' / ,,~/ Page 2 of 2 EXHIBIT "A" RESOLUTION 2001.04 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE EAST VALLEY WATER DISTRICT NOTICE OF COMPLETION BE IT HEREBY RESOLVED, by the Board of Directors of the East Valley Water District, as follows: WHEREAS, based upon the certificate of completion executed by the District for watermain installation in Dogwood Street, 33rd Street, Osbun Road and Edgemont Drive, located in the County of San Bernardino, completed by contractor Law Plumbing Co. NOW, THEREFORE, BE IT RESOLVED that the Board of Directors hereby determine that said contract is completed and the President and Secretary are hereby authorized to execute a Notice of Completion on behalf of the District, and the Secretary is hereby authorized and directed to record said Notice of Completion in the office of the County Recorder, County of San Bernardino, State of California. The foregoing resolution was duly adopted at a meeting of the Board of Directors of the East Valley Water District upon motion duly made, seconded and carried on March 16, 2001. Ayes: Noes: Absent: EAST VALLEY WATER DtSTRICT Glenn R. Lightfoot, Board President Attest: Robert E. Martin, Board Secretary (Seal) 2105 3/16/01 jw RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO ) ] Name East Valley Water Disfflc[ ] Street 1155 De] Rosa Avenue ] Address PO Box 3427 ] ] CE7 & San Eernardlno ] State CA, 92413 ] NO APN NUMBER SPACE ABOVE THiS LINE FOR RECORDER'S USE NOTICE OF COMPLETION Notice pursuant to Civil Code Section 3093, must be filed within 10 days after completion. (See reveme side for Complste requirements.) Notice Is hereby given that: 1. The undersigned is owner or corporate o~cer of the owner of the interest or estate stated below in the property hereinafter des~bsd: 2. ThefotinameDftheowneris EastVelleyWaterDi~trict 3. Thefulladdmssoftheowneris 1155 Del Rosa Avenue POBox3427 SamBernardino. CA92413 4. The nature of the interest or estate of tile owner is, in fee. NAME ADDRESS 6. A w~rk of improvement on the property hereinaftsr described was completed on March 13. 2001 . The work done was: ~ee Exhibit 'A" November 20. 2000 8. The property on which said work of improvement was completed Is In t~e County of San Bernardino, State of California, Date: March 26. 2001 Ve~flca~on for Individual Owner Glenn R. Lighffoot, Board President VERIFICATION 1, the undemignad, say; I am the Secmtsrv the declarant of the foregoing ("President of =, ' Manager of', ~A partner of', 'Owner DF. Etc.) notice of completion; I have read said notice of comptstion and know the contents thereof; the same is t~ue of my knowtsdge, I declare under pena~y of penury that the foregoing is t~ue and correct. Executed on March 26 ,2001 at San Bamardlno , Catifomia. (Date of sigmab~re.) (City, where signed.) Robert E. Martin, Board Secretary East Va ey Water District TO: BOARD OF DIRECTORS FROM: ALBERTA M. HESS / CHIEF FINANCIAL OFFICER SUBJECT: DISBURSEMENTS DURING THE PERIOD MARCH 7, 2001 THROUGH MARCH 14, 2001 CHECK NUMBERS 184251 THROUGH 184437 IN THE AMOUNT OF $755,419.19 WERE ISSUED. PAYROLL CHECKS 8608 THROUGH 8661 IN THE AMOUNT OF $58,904.79 WERE DISTRIBUTED ON MARCH 14, 2001. TOTAL OF ACCOUNTS PAYABLE DISBURSEMENTS AND PAYROLL FOR THE PERIOD - $814,323.98. FROM :'HtC~S RIC~ARDSON ASSQCIA~ ' FAX NO. : 70~ 866 ~928 '~r. V auhington, March 12. 2001 The Honorable Christie Todd Whitman Administrator U.S. Environmental Protection Agency 401 M Sl., SW Washington, DC 20460 Dear Administrator Whitman: We are writing To express our appreciation Io you for the recent removal of the proposed radon in drinking water rule from OMB consideration. As currently proposed, this rule would have a major impact on cities and drinking water agencies in our congressional districts, as well as many others across lhe country. We hope to continue efforts, begun last year, to strengthen the public health protection aspects of the radon rule by re-focusing it on air while setting the drinking water standard at 'the average outside air level. EPA's own science and rlsk models have shown that 98% of the risk of radon is associated with air and only 2% on drinking water. The withdrawal o£the radon rule from OMB consideration gives us the opportunity to work with EPA to craft a regulation that recognizes this reality. We are mindful of thc fact that New Jersey has perhaps the be~t radon air protection pro,am in the nation. Om- hope is that we can build upon this model to create a nationa~ radon regulation that is more protective of the public health than the current proposal. Because of the multi-media aspects of the radon issue, we are hopeful that you would consider appointing a person on your staff to coordinate this issue between thc Office of Water and the Office of Air. We thank you again for you~ timely assistance and look forward to working with you on common sense radon protection promoting public health and safety. Sincerely, RESOLUTION NO.2001.06 RESOLUTION OF THE BOARD OF DIRECTORS OF TIIE EAST VALLEY WATER DISTRICT APPROVING THE SALE OF CERTIFICATES OF PARTICIPATION IN THE AMOUNT OF NOT TO EXCEED $13,000,000; APPROVING THE TIME AND PLACE FOR TAKING BIDS, APPROVING THE NOTICE INVITING BIDS, APPROVING THE PRELIMINARY OFFICIAL STATEMENT AND APPROVING OTHER DOCUMENTS WHEREAS, the Board of Directors of the East Valley Water District (the "District") deems it proper and the necessity therefor appears that bids be invited for Certificates of Participation (Reservoir Project and Series 1994 Refunding), Series 2001 (the "Certificates") in the amount of not to exceed $13,000,000 and that if bids are satisfactory said Certificates be sold in the manner and at the time and place hereinafter set forth; and WHEREAS, the Certificates are secured by Installment Payments to be made pursuant to an Amended and Restated Installment Purchase Agreement, dated as of April 1,2001 by and between the District and the East Valley Public Facilities Corporation (the "Corporation") (the "Installment Purchase Agreement") entered into by the parties to provide for the construction of the Reservoir Project (as defined in the Installment Purchase Agreement) and to refund the outstanding Certificates of Participation (Treatment Plant Project), Series 1994 (the "Series 1994 Certificates"); and WHEREAS, the District, the Corporation and Union Bank of California, N.A., as Trustee desire to enter into a trust agreement titled "Trust Agreement" dated as of April 1,2001, to provide for the issuance and security of the Certificates and to provide for the construction of the Reservoir Project and the refunding of the outstanding Series 1994 Certificates; and WHEREAS, the Corporation will assign to the Trustee pursuant to an Assignment Agreement dated as of April 1, 2001, the Installment Payments; and WHEREAS, a preliminary official statement with respect to the Certificates (the "Preliminary Official Statement"), has been prepared by Fieldman, Rolapp & Associates (the "Financial Advisor"); and WHEREAS, to further provide for the refunding of the Series 1994 Certificates, the District, the Corporation and the Trustee acting as the Escrow Bank desire to enter into an agreement titled "Escrow Agreement relating to the defeasance of $7,650,000 Certificates of Participation (Treatment Plant Project), Series 1994, dated as of April 1, 2001"; and WHEREAS, the District desires to enter into with the Trustee a Continuing Disclosure Agreement to be dated as of April 1, 2001; and WHEREAS, there has been presented to this Board of Directors copies of each of the aforementioned documents and certain other documents relating to the foregoing; NOW, THEREFOR.E, THE DISTRICT'S BOARD OF DIRECTORS DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: DOCSOC~802715v3~2497.0008 SECTION 1. That sealed proposals for the purchase of the Certificates in the amount of not to exceed $13,000,000 (the exact amount to be determined by the General Manager of the District following the receipt of bids for the Certificates) be received by the Board of Directors of the Corporation at the offices of Fieldman, Rolapp & Associates, 2100 Main Street, Suite 210, Irvine, California 92614 (949) 660-8500 on Wednesday, April 11, 2001 or on an alternate date and at the time to be determined by the General Manager of the District. SECTION 2. That Fieldman, Rolapp & Associates is hereby authorized and directed to publish a notice inviting such sealed proposals by one insertion in The Bond Buyer, a newspaper of general circulation, cimulated within the State, said publication to be at least fifteen (15) days prior to the date of opening bids stated in said notice or to be determined by the General Manager of the District attached hereto as Exhibit A. SECTION 3. The District hereby approves the initial draft of the Preliminary Official Statement, and the Financial Advisor is authorized to complete the Preliminary Official Statement and distribute the Preliminary Official Statement to prospective purchasers in the form hereby approved, together with such conforming changes therein and additions thereto as are deemed necessary by the General Manager of the District to make such Preliminary Official Statement complete and accurate as of its date. The General Manager of the District is hereby authorized to certify that the Preliminary Official Statement is final within the meaning of Rule 15c-2-I 2 of the Securities Exchange Act of 1934, as amended. The General Manager of the District is hereby directed to execute and deliver, for and in the name and on behalf of the District, the final Official Statement relating to the Certificates, which shall be in substantially the form of the Preliminary Official Statement with such changes therein and additions thereto as are deemed necessary by the General Manager of the District, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 4. That Fieldman, Rolapp & Associates is hereby authorized and directed to cause to be furnished to prospective bidders copies of the Preliminary Official Statement and a notice inviting proposals. That said notice shall be substantially as set forth in Exhibit B attached hereto. The failure, in whole or in part, to comply with this Section 4 and Section 3 hereof shall not in any manner affect the validity of the sale of said Certificates. SECTION 5. Union Bank of California, N.A. is appointed Trustee under and pursuant to the Trust Agreement, with the powers and duties of said office as set forth therein. SECTION 6. The General Manager of the District is authorized to select a municipal bond insurer to insure payments of principal of and interest with respect to the Certificates if the General Manager of the District determines that a municipal bond insurance policy issued by such insurer will result in a lower interest rate or yield to maturity with respect to Certificates. SECTION 7. The General Manager of the District is hereby authorized to execute a contract with the lowest responsible bidder for the Certificates provided the par amount of the Certificates does not exceed $13,000,000, the interest rate does not exceed 6.25% per annum and the purchasers discount does not exceed 1.0%. SECTION 8. The Installment Purchase Agreement, the Assignment Agreement, the Trust Agreement, the Escrow Agreement and the Continuing Disclosure Agreement are approved in substantially the form submitted to this Board of Directors with such changes to be made by the 2 DOCSOC\80271 Sv3%22497.0008 General Manager of the District as deemed necessary following the sale of the Certificates to carry out the intent of this Resolution. SECTION 9. The President of the Board of Directors, the Vice Presidem of the Board of Directors, the General Manager of the District, the Secretary, and any other proper officer of the District are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents necessary or proper for carrying out the transactions contemplated by this Resolution. SECTION 10. This Resolution shall take effect from and after its date of adoption. ADOPTED, SIGNED AND APPROVED this day of ., 2001. President of the Board of Directors of East Valley Water District (SEAL) ATTEST: Secretary of the Board of Directors of of East Valley Water District 3 DOCSOCAS0271 SvBk22497.0008 STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN BERNARDINO ) I, , Secretary of the Board of Directors of East Valley Water District, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Board of Directors of said District at a regular meeting of said Board of Directors held on the day of ~ 2001, and that it was so adopted by the following vote: AYES: NOES: ABSENT: AB STAIN: Secretary of the Board of Directors East Valley Water District (SEAL) 4 DOCSOC\802715v3%22497.000 8 STATE OF CALIFORNIA ) ~, ) ss. COUNTY OF SAN BERNARDINO ) I, ., Secretary of the Board of Directors of the East Valley Water District, do hereby certify that the above and foregoing is a full, true and correct copy of Kesolution , of said Board, and that the same has not been amended or repealed. DATED: ,2001 Secretary of the Board of Directors of East Valley Water District (SEAL) 5 DOCSOC\802715 v 3'0.2497.000~ "~OTICE OF INTENTION TO SE~ CERTIFICATES OF PARTICIPATION NOT TO EXCEED $13,000,000 EAST VALLEY WATER DISTRICT CERTIFICATES OF PARTICIPATION (RESERVOIR PROJECT AND SERIES 1994 REFUNDING) SERIES 2001 Obligor: East Valley Water District, San Bernardino County, California Purpose: Finance construction of a reservoir facility and refund the District's 1996 Certificates of Participation Type: Tax-exempt Certificates of Participation evidencing proportionate interests in Installment Purchase Payments to be paid by the District pursuant to an Installment Purchase Agreement. Maturities: December 1,2001 to December 1, 2020 Interest: To be payable on December 1,2001 and semiannually thereafter on December 1 and June 1 of each year Dated Date: Date of Delivery, which is anticipated to be on or about April 26, 2001 Legal Opinion: Stradling, Yocca, Carlson & Rauth, a Professional Corporation, Newport Beach, California All-or-none bids are to be submitted on the Grant Street Group's MuniAuction website at website address www. MuniAuction.com or www. GrantStreet. com on the 11th Day of April 2001 BETWEEN 9:30 A.M. AND 10:00 A.M. PACIFIC DAYLIGHT TIM]~ provided, however, that subject to a twenty four (24) hour notice via Grant Street Group website and The Thomson Municipal News Service and so long as a bid has not been accepted by the District, bids will be received at the same time and place on any succeeding day thereafter until a bid is accepted. The Preliminary Official Statement, the Official Notice of Sale and Bid Form will be available on theGrant Street Group website for review. For further information, please contact: Thomas M. DeMars Rosa L. Schulte FIELDMAN, ROLAPP & ASSOCIATES 2100 MAIN STREET, SUITE 210 IR. VINE, CA 92614 Telephone: (949) 660-8500 Fax: (949) 474-8773 or (949) 474-8701 OFFICIAL NOTICE OF SALE $13,000,000' EAST VALLEY WATER DISTRICT Certificates of Participation (Reservoir Project and Series 1994 Refunding) Series 2001 Date of Sale Wednesday, April 11, 2001 on Grant Street Group's MuniAuction website The MuniAuction website is accessible via www. MuniAuction.com or www. GrantStreet.com Between 9:30 a.m. and 10:00 a.m. Pacific Daylight Time For further information, please contact: Thomas M. DoMars, Principal Rosa L. Schutte, Vice President Fieldman, Rolapp & Associates 2100 Main Street, Suite 210 Irvine, California 92614 Phone: (949) 660-8500 Fax: (949)474-8773 or(949)474-8701 * Preliminary, subject to change. · OFFICIAL NOTICE OF SALE $13,000,000' - EAST VALLEY WATER DISTRICT Certificates of Participation (Reservoir Project and Series 1994 Refunding) Series 2001 NOTICE IS I:[EREBY GIVEN that all-or-none bids will be received by the East Valley Water District (the "District") for the pumhase of $13,000,000' aggregate principal amount of East Valley Water District Certificates of Participation (Reservoir Project and Series 1994 Refunding), Series 2001 (the "Certificates"), evidencing a proportionate interest in Installment Purchase Payments to be made by the East Valley Water District (the "District"), for the purpose of prepaying the District's outstanding 1994 Certificates, obtaining a reserve fund surety bond and paying certain costs of issuance. All bids must be submitted on Grant Street Group's MuniAuction website ("MuniAuction") between 9:30 a.m. and 10:00 a.m. (PST) on Wednesday, April 11, 2001. The MuniAuction website is accessible via the auction link at ww'w. GrantStreet.com. To bid, bidders must have (1) completed the registration form on the Grant Street Group website, and (2) requested and received admission to the District's auction (as described under "Registration and Admission to Bid" below). The East Valley Public Facilities Corporation (the "Corporation") and the District will enter into an installment purchase agreement (the "Installment Purchase Agreement") dated as of April I, 2001. The Certificates evidence proportionate interests in installment purchase payments (the "Installment Purchase Payments") to be made by the District to the Corporation pursuant to the Installment Purchase Agreement which payments have been assigned to Union Bank of California, National Association, Los Angeles, California, as trustee (the "Trustee") pursuant to an assignment agreement by and between the Corporation and the Trustee, dated as of April 1, 2001 (the "Assignment Agreement"). The Certificates are more particularly described in a trust agreement dated as of April 1, 2001(the "Trust Agreement"), by mad among the District, the Corporation and the Trustee. Bids for the purchase of the Certificates will be received and considered subject to the terms and conditions described herein. This Official Notice of Sale contains summary information relating to the Certificates, and is not intended to be a complete description thereof. Prospective bidders should review the Preliminary Official Statement (as defined herein) in its entirety. Right to Change Timing and Terms of Sale. The District reserves the right to amend this Official Notice of Sale at any time prior to the date and time for receipt of bids by publishing the amendments on the Amendments Page of MuniAuction or via The Thomson Municipal News Service and/or Bloomberg wire service. Issue. $13,000,000' Certificates of Participation (Reservoir Project and Series 1994 Refunding), Series 2001, bearing interest from the Date of Delivery, which is anticipated to be on or about April 26, 200t, in full book-entry only form in denominations of $5,000 and any integral multiple thereof, maturing on December 1, 2020. The Certificates are subject to optional and mandatory redemption prior to maturity. Prospective bidders should note that the terms of sale permit adjustment of individual maturities. See "Terms of Sale" herein. * Preliminary, subject to change. -1- Interest Rate. Interest will b~ calculated on the basis ora 360-day year composed of twelve (12) 30-day months. The Certificates shall bear interest from their delivery date at a rate or rates to be determined at the sale thereof. Interest on the Certificates shall be payable semiannually on June 1 and December 1 of each year (the "Interest Payment Dates") commencing December 1, 2001. Bidders may specify any number of separate interest rates, and any rate may be repeated as often as desired; provided, however: (i) An interest rate may not exceed six and one-quarter percent (6.25%) per armum; (ii) Each interest rate specified must be in a multiple of 1/20 or 1/8 of 1 percent; (iii) A zero rate of interest cannot be specified; (iv) Each Certificate shall bear interest from its delivery date to its stated maturity date at the interest rate specified in the bid; (v) All Certificates of the same maturity shall bear the same rate of interest; (vi) The interest rate on any maturity shall not be less than the interest rate on any prior maturity; and (vii) No bid will be accepted which provides for the cancellation and surrender of any interest payment or for the waiver of interest or other concession by the bidder as a substitute for payment in full of the purchase price of the Certificates. Bids which do not conform to the terms of this paragraph will be rejected. Payment. Principal of and interest on the Certificates will be payable through the Trustee, in lawful money through the facilities of The Depository Trust Company, or its nominee. Purpose of Issue. The proceeds of the sale of the Certificates will be used to (i) prepay the 1994 Certificates of Participation (Treatment Plant Project), (ii) finance the construction of a reservoir facility and related capital improvement and appurtenances thereto including equipment (the "Project"), and (iii) pay the municipal bond insurance policy premium and the reserve fund surety bond for the Certificates and the costs of executing and delivering the Certificates. Denomination. The Certificates will be executed and delivered in fully registered form without coupons, in the denominations of $5,000 each or any integral multiple thereof within a maturity, and numbered consecutively upward in order of authentication. Date of Certificates. The Certificates will be dated the Date of Delivery, which is anticipated to be on or about April 26, 2001. -2- Maturities. O) The Certificates will mature (or be subject to mandatory redemption) on the dates and in the amounts shown below subject to adjustments as described under the caption "Adjustment of Principal Amounts," Maturity Principal Maturity Principal December 1 Amount(I) December 1 Amount (1) 2001 $545 000 2011 $765,000 2002 545 000 2012 800,000 2003 565 000 2013 830,000 2004 585 000 2014 870,000 2005 610 000 2015 335,000 2006 630 000 2016 350,000 2007 655 000 2017 370,000 2008 680 000 2018 390,000 2009 705 000 2019 410,000 2010 735 000 2020 430,000 Adjustment of Principal Amounts. The principal amounts set forth in this Official Notice of Sale reflect certain estimates of the District and its financial advisor with respect to the likely interest rates of the winning bid and the premium/discount contained in the winning bid and the acquisition price of securities for the escrow fund. The total principal amount of the Certificates and the principal amounts payable in each of the years set forth above are subject to adjustment in $5,000 increments to reflect the actual interest rates and any premium/discount contained in the winning bid and the acquisition price of securities for the escrow fund, and to maintain substantially level annual debt service payruents on the Certificates. The successful bidder will be notified of any adjustment in principal amounts prior to the time the Certificates are awarded. A successful bidder may not withdraw its bid oJ a result of any changes made within these limits. Optional Rederuption. The Certificates maturing before December I, 2009, are not subject to optional redemption prior to maturity. The Certificates (in amounts not less than $5,000) maturing on or after December 1, 2009 are subject to optional redemption prior to maturity at the option of the District, in whole, or in part, and if less than all of a maturity is redeemed, then by lot within such maturity, on any June 1 or December 1 on or after December 1, 2008, from prepayments of Installment Purchase Payments, at a price equal to the principal amount of each Certificate or portion thereof to be redeemed, plus accrued interest to the redemption date and a premium (of the principal amount) computed in accordance with the following schedule: Redemption Dates Redemption Premium December 1, 2008 and June I, 2009 2% December 1, 2009 and June 1, 2010 1 December 1, 20010 and thereafter 0 Mandatory Redemption in Event of Default. The Certificates are subject to mandatory redemption in whole prior to maturity on any Interest Payment Date, at the principal amount thereof, without premium, (1) Preliminary, subject to change. See also "Adjustment of Principal Amounts" herein. -3- together with accrued interest to the date fixed for redemption, upon the acceleration of Installment Purchase Payments in the event of default by the District under the Installment Purchase Agreement. Mandatory Redemption from Insurance or Condemnation Proceeds. The Certificates are subject to mandatory redemption prior to maturity, in whole or in part on any Interest Payment Date, without premium together with accrued interest to the date fixed for redemption, to the extent that the net proceeds of an insurance or condemnation award are not used to repair, reconstruct, or replace the Project pursuant to the Installment Purchase Agreement. Sinking Account Redemption. If the successful bidder (the "Pumhaser") designates principal amounts of the Certificates to be combined into one or more term Certificates, each such term Certificate shall be subject to mandatory redemption prior to maturity in part by lot from monies required to be deposited by the District in the Sinking Account established for the Certificates at a redemption price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium. Book-Entry Only. The Certificates when issued will be registered in the name of CEDE & CO., as nominee of The Depository Trust Company, New York, New York, and will be initially issued as one certificate for each of the maturities of the Certificates. Payments of principal and interest will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who will remit such payments to the Beneficial Owners of the Certificates. Security. The Certificates evidence proportionate interests in Installment Purchase Payments to be made by the District to the Corporation pursuant to the Installment Purchase Agreement which payments have been assigned to the Trustee pursuant to the Assignment Agreement. The Districfs primary source of funds for Installment Pumhase Payments will be the revenues derived from the District's water charges. The District has covenanted in the Installment Purchase Agreement to annually budget and appropriate sufficient moneys to provide for the payment of (i) the amount of Installment Purchase Payments due in each fiscal year and (ii) any required deposits to the Reserve Fund in each fiscal year. Reserve ]Fund. As further security for the Certificates, the Trustee wilt establish a special fund designated the "Reserve Fund." All moneys at any time on deposit in the Reserve Fund will be held by the Trustee in trust for the benefit of the Owners and applied as more fully described in the Trust Agreement. Initially, the Reserve Fund will be satisfied by a surety bond to be delivered by Ratings. Standard & Poor's Ratings Group and Moody's Investors Service have reviewed the Certificates, with the understanding that, upon delivery of the Certificates, a municipal bond insurance policy will be issued as explained below. The ratings reflect only the views of the respective rating organization, and an explanation of the significance of such ratings may be obtained from such organizations. There is no assurance that the ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agencies that issued them, if, in the judgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Certificates. Municipal Bond Insurance. has issued a commitment for municipal bond insurance relating to the Certificates. All bids may be conditioned upon the issuance effective as of the date on which the Certificates are issued, of a policy of insurance by , insuring the payment when due of principal of and interest on the Certificates. Each Certificate will bear a legend referring to the insurance. The purchaser, holder or owner is not authorized to make any statements concerning the insurance beyond those set out here and in the bond legend without the approval of -4- Tax Exempt Status. In the opinion of Stradling, Yocca, Carlson & Rauth, a Professional Corporation, Newport Beach, California, ("Special Counsel"), under ex/sting laws, regulations, rulings, and judicial decisions, the portion of each Installment Purchase Payment due under the Installment Purchase Agreement designated as and comprising interest and received by the Owners is exempt from present California personal income taxes, is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, subject to certain limitations as described in the Preliminary Official Statement. Legal Opinion. The legal opinion of Special Counsel, Stradling, Yocca, Carlson & Rauth, LLP, Newport Beach, California approving the validity of the Certificates will be furnished to the successful bidder without cost. A copy of the legal opinion, certified by the official in whose office the original is filed, will be attached to each book-entry Certificate without charge to the successful bidder. Delivery of Securities. Delivery of the Certificates will be made to the Purchaser at The Depository Trust Company in New York, New York (or at any other mutually agreeable location) on or about April 26, 2001. Payment must be made in cash, Federal Reserve Bank funds, or other immediately available funds. CUSIP Numbers. It is anticipated that CUSIP identification numbers will be assigned to the Certificates. It shall be the responsibility of the Purchaser to obtain CUSIP numbers. Neither the failure to print such numbers on any Bond nor any error with respect thereto shall constitute cause for failure or refusal by the Purchaser to accept delivery of and pay for the Certificates in accordance with the terms of this Official Notice of Sale. The CUSIP Service Bureau charge for the assignment of said numbers shall be the responsibility of and shall be paid for by the Purchaser. California Debt and Investment Advisory Commission Fee. Bidders are advised that, pursuant to Section 8856 of the California Government Code, it will be the ras~onsibility of the Purchaser to pay the statutory fee to the California Debt and Investment Advisory Commission. No Litigation. There is no litigation pending concerning the validity of the Installment Purchase Agreement, the Trust Agreement or the Assignment Agreement, the Certificates, the existence of the District or the entitlement of the officers thereof to their respective offices. The successful bidder will be furnished a no-litigation certificate certifying to the foregoing as of and at the time of delivery of the Certificates. Continuing Disclosure. In order to assist bidders in complying with Securities and Exchange Commission Rule 15c2-12(b)(5), the District will undertake, pursuant to a Continuing Disclosure Agreement, to provide annual reports and notices of certain events by not later than 270 days aRer the end of their fiscal year (presently June 30) in each year, commencing with the report for the 2000/01 fiscal year. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the final Official Statement. Purchaser's Closing Certificate. The Purchaser must deliver such certificates to the District as may be required by Special Counsel dated the date of execution and delivery of the Certificates, indicating (among other matters): (i) receipt of the Certificates; (ii) the initial offering price at which not less than ten percent (10%) of the Certificates were sold to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers), (iii) the "yield" on the Certificates as calculated in accordance with the Internal Revenue Code of 1986, as amended, and (iv) such other information as may be required to assist the District in filing the required Internal Revenue Service Form 8038-G for the Certificates. -5- Preliminary Official Statement and Final Official Statement. The Preliminary Official Statement, dated ,2001 distributed in connection with the sale of the Certificates, as the same may be supplemented on or prior to the bid date (the "Preliminary Official Statement"), has been deemed final by the District for purposes of Rule 15c2-12 of the Securities and Exchange Commission (the "Rule"), but is subject to revision, amendment and completion in a final Official Statement (the "Official Statement") as provided in the Rule. Within seven (7) business days after the award of the bid, the District will furnish to the Purchaser, at no charge, up to 150 copies of the Official Statement. Additional copies will be available at the expense of the Purchaser. The Preliminary Official Statement may also be viewed on MuniAuction. Any questions concerning MuniAuction should be directed to Grant Street Group, Inc. at (412) 391-5555. TERMS OF SALE Registration and Admission to Bid. To bid, bidders must first visit Grant Street Group's MuniAuction website where, they can request admission to bid on the Certificates. Bidders will be notified prior to the scheduled bidding time of their eligibility to bid. Only NASD registered broker-dealers and dealer banks with DTC clearing arrangements will be eligible to bid... Rules of MuniAuctlon. The "Rules of MuniAuction" can be viewed on MuniAuction and are incorporated herein by reference. Bidders must comply with the Rules of MuniAuction in addition to the requirements of this Official Notice of Sale. In the event of any conflict between the "Rules of MuniAuction" and this Official Notice of Sale, the provisions of the latter will govern. MuniAuction Bidding Details. All Bids must be submitted on the MuniAuction website at either www. GrantStreet.com or at "www. MuniAuction.eom". No telephone, telefax, telegraph or personal delivery bids will be accepted. Bidders are permitted to submit bids for the Certificates in the all-or-none auction during the bidding time period. Bidders may change and submit bids as many times as they like during the auction; provided, however, each submitted bid, other than a bidder's initial bid, must result in a lower true interest cost ("TIC"), when compared to the immediately preceding bid of such bidder. During the bidding, no bidder will see any other bidder's bid but each bidder will be able to see its ranking (i.e., "Leader", "Cover", "3rd", etc.). Bidders may change their bids at any time up to the end of the auction, but may not delete a submitted bid. No all-or-none bid will be considered which does not offer to purchase all of the Certificates. Each bid must specify an annual rate of interest for each maturity and a dollar purchase price for the entire issue of Certificates. Verification. Bidders bidding through MuniAuction should verify the accuracy of their final bids and compare them to the winning bids reported on the MuniAuction Observation Page immediately after the auction. Basis of Award. The Certificates will be awarded to the best bidder whose bid produces the lowest true interest cost on the Certificates. The true interest cost specified in any bid will be that rate which, when used in computing the present value of principal and interest to be paid on all Certificates from the expected date of delivery (which is projected to be April 26, 2001) to their respective maturity dates produces an amount equal to the purchase price (including any premium or discount) specified in such bid. For purposes of computing the true interest cost represented by any bid, the purchase price specified in such bid shall be equal to the par amount of the Certificates plus any premium specified in such bid or less any discount specified in such bid, and the true interest rate shall be calculated by the use of a semiannual interval of compounding interest based on the Interest Payment Dates for the Certificates. In the event of a tied bid, the procedure for determining the winning bid will be the first bid received by MuniAuction. Price. Bidders must specify a purchase price of not less than ninety-nine percent (99.00%) of the aggregate principal amount of the Certificates. Right of Re]eetioa. The District reserves the right, in its discretion, to reject any and all bids and to waive any irregularity or informality in any bid. Prompt Award. The District will take action awarding the Certificates or rejecting all bids not later than 24 hours after the hour designated above for the opening of bids, unless such time of award is waived by the Purchaser. l)elivery and Payment. It is estimated that delivery of the Certificates will be made to the Purchaser on or about April 26, 2001. Payment of the purchase price (less the amount of the bid check mentioned below) must be made in funds immediately available to the District. Right of Cancellation. The Purchaser will have the right at its option to withdraw its bid if the Certificates are not executed and tendered for delivery within sixty (60) days from the date of sale thereof, and in such event, the Purchaser will be entitled to the return of the good faith deposit accompanying its bid. Good Faith l)eposit. A good faith deposit (the "Deposit") in the form ora certified or cashier's check or a financial surety bond in the amount of one hundred thousand dollars ($100,000), payable to the order of the District, is required for each bid to be considered. If a financial surety bond is used, it must be from an insurance company licensed to issue such a bond in the State of California, and such bond must be submitted to the District (in care of Fieldman, Rolapp & Associates) prior to the opening of the bids. The financial surety bond must identify each bidder whose Deposit is guaranteed by such financial surety bond. If the Certificates are awarded to a bidder utilizing a financial surety bond, then that Purchaser is required to submit its Deposit to the District in the form of a cashier's check (meeting the requirements set forth above) or by wire transfer not later than 3:30 p.m. Pacific Daylight Time, on the next business day following the award of the Certificates. If such Deposit is not received by that time, the financial surety bond shall be drawn upon by the District to satisfy the Deposit requirement. No interest on the Deposit will accrue to the Purchaser. The Deposit will be applied to the purchase price of the Certificates. In the event the Purchaser fails to honor its accepted bid, the Deposit will be applied by the District as described in the following paragraph. If a check is utilized as the Deposit, the check must accompany each accepted bid and such check may be cashed after the award of Certificates and applied to the purchase price or, if such bid is accepted hut the Purchaser fails to perform (unless such failure of performance is caused by any act or omission of the District), then the District shall retain such deposit and it will be applied by the District in partial satisfaction of whatever actual damages the District may suffer by reason of the Purchasers failure to perform hereunder in accordance with the terms of the sale. In such instances, should the District's actual damages be determined to be less than said amount, thirty (30) days after any such determination by a court having jurisdiction thereof becomes final, the balance of this amount shall be returned to the Purchaser without interest. Should the Purchaser fail to perform hereunder, the District may also recover all costs relating thereto, including attorney's fees. Checks accompanying una¢¢epted bids will be returned promptly to each unsuccessful bidder via U.S. mail to the address indicated on such bidder's bid form unless other arrangements have been made with Fieldman, Rolapp & Associates. -7- Certificate Regarding Reoffering. The Purchaser shall advise the District no later than one hour after award of the bid of such information regarding the reoffering price or prices at which the Certificates are reoffered to the general public as shall enable the District to comply with the lntemal Revenue Code of 1986 and to make any adjustments in the principal amount of the Certificates as described under "Adjustments of Principal Amounts." Underwriting Group. Each bidder is requested to furnish the names of all joint managers participating in the bid on the official Bid Form. The Purchaser will be required to submit a list of all syndicate members in addition to the managers not later than 24 hours after receiving a verbal award. Additional Information Available. Requests for copies of the Official Statement pertaining to the Certificates, the Official Notice of Sale and Bid Form, or for other information concerning the District or the Certificates should be addressed to the District's financial advisor: Fieldman, Rolapp & Associates, 2100 Main Street, Suite 210, Irvine, California 92614. Telephone (949) 660-8500, Te[efax (949) 474- 8773. EAST VALLEY WATER DISTRICT By: /s/ Robert E. Martin General Manager PRELIMINARY OFFICIAL STATEMJENT DATED ,~ 2001 NEW ISSUE - BOOK-ENTRY ONLY RATINGS: (to come) (See "RATINGS" herein) In the opinion of Stradling, Yocca, Carlson & Rauth, a Professional Corporation, Newport Beach, California ("Special Counsel"), under existing statutes, regulations, rulings and judicial decisions and assuming certain representations and compliance with certain covenants and requirements described herein, the portion of each Installment Purchase Payment (defined hereinafter) constitufmg interest (and original issue discount) is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Special Counsel, the portion of each Installment Purchase Payment constituting interest (and original issue discount) is exempt from State of California personal income tax. In addition, the difference between the issue price of a Certificate (the first price at which a substantial amount of the Certificates of a maturity is to be sold to the public) and the stated redemption at maturity with respect to the Certificates constitutes original issue discount. See "TAX EXEMPTION" herein. $13,000,000' CERTIPICATES OF PARTICIPATION (RESERVOIR PROJECT AND SERIES 1994 REFUNDING) SEPfl[ES 2001 Evidencing Proportionate Interests of the Owners Thereof in Installment Purchase Payments to be Made by the EAST VALLEY WATER DISTRICT (San Bernardino County, California) as the Purchase Price for Certain Property Pursuant to an Installment Purchase Agreement with the East Valley Public Facilities Corporation a California Public Benefit Non-Profit Corporation Dated: Date of Delivery Due: December 1, as shown below The Certificates (defined hereinafter) are being issued to provide moneys for: (i) the prepayment of the 1994 Certificates (as defined herein), (ii) the costs of the construction of reservoir facility and related capital improvements and appurtenances thereto including equipment (the "Project"), (iii) the municipal bond insurance policy premium and the [reserve fund surety bond] for the Certificates; and (iv) the costs of executing and delivering the Certificates. The Certificates will be executed and delivered in book-entry form, initially registered in the name of Cede & Co., New York, New York as nominee of The Depository Trust Company ("DTC"), New York, New York. Interest due with respect to the Certificates is payable semiannually on December 1 and June 1 (each an "Interest Payment Date"), of each year until their respective stated maturity dates, commencing on December 1, 2001. Payments of principal and interest will be paid by Union Bank of * Preliminary, Subject to Change California, N.A., as trustee, registrar and paying agent (the "Trustee") to DTC. See "APPENDIX E - Book-Entry Only System" hereto. The Certificates are subject to prepayment and redemption prior to their respective stated maturity dates. See "THE CERTIFICATES - Redemption" herein. East Valley Water District (the "District") is required under the Installment Purchase Agreement to make Installment Purchase Payments from Net Revenues (defined hereinafter) of the District. Installment Purchase Payments are scheduled in amounts sufficient to pay, when due, the annual principal and interest with respect to the Certificates. The District has covenanted under the Installment Pumhase Agreement to set rates and charges to its customers which will insure Net Revenues equal to at least 110% of the annual principal and interest payments due with respect to the Certificates. Payment of the principal and interest on the Certificates when due will be insured by a municipal bond insurance policy to be issued by simultaneously with the delivery of the Certificates. [INSERT INSURER'S LOGO] The obligation of the District to make Installment Purchase Payments does not constitute an obligation of the District for which the District is obligated to levy or pledge any form of taxation or for which the District has levied or pledged any form of taxation. The obligation of the District to make Installment Purchase Payments under the Installment Purchase Agreement does not constitute a debt or indebtedness of the District, the County of San Bernardino, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. See the section entitled "THE DISTRICT - Debt Structure of the District" herein for a description of prior obligations and parity obligations previously incurred by the District. This cover lvage contains certain information for general reference only. It is not a summary of this Official Statement. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. MATURITY SCHEDULE* Maturity Principal Interest Price or Maturity Principal Interest Price or (December 1) Amount Rate Yield CUSIP (December 1) Amount Rate Yield CUSIP 2001 2011 2002 2012 2003 2013 2004 2014 2005 2015 2006 2016 2007 2017 2008 2018 2009 2019 2010 2020 * Preliminary, Subject to Change The Certificates are offered when, as and if issued and received by the Underwriter, subject to the approval as to their legality by Stradling, Yocca, Carlson & Rauth, a Professional Corporation, Newport Beach, California, Special Counsel, and certain other conditions. Certain legal matters will be passed upon for the District by Brunick, Alvarez & Battersby, San Bernardino, California. It is anticipated that the Certificates in definitive form will be available far delivery to DTC in New York, New York on or about April ,2001. Dated: No dealer, broker, salesperson or other person has been authorized by the District or the Underwriter to give any information or to make any representations other than those contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the District or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the Certificates by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Certificates. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts. The information set forth herein has been obtained from sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the District, the Corporation, or the Underwriter. The information and expression of opinion herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create an implication that there has been no change in the affairs &the District since the date hereof. All summaries of the Installment Purchase Agreement and the Trust Agreement, or other documents, are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. This Official Statement is submitted in connection with the sale of the Certificates referred to herein and may not be reproduced or used, in whole or in part, of any other purposes. THE CERTIFICATES HAVE NOT BEEN REGISTERED UNDER IHE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. TH]g CERTIFICATES HAVE NOT BEEN REGISTERED OR QUALIEI]gD UNDER TIq-E SECURITIES LAW OF ANY STATE. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER- ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN ~ MARKET PRICE OF THE CERTIFICATES AT A LEVEL ABOUT THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIMtl. EAST VALLEY WATER DISTRICT SAN BERNARDINO COUNTY, CALEFORNIA Board of Directors of the District Glenn R. Lighffoot, President Donald D. Goodin, Vice President Edward S. Negrete, Director Kip E. Sturgeon, Director George E. "Skip" Wilson, Director EAST VALLEY PUBLIC FACILITIES CORPORATION Board of Directors of the Corporation Glenn R. Lighffoot, President Donald D. Goodin, First Vice President George E. "Skip" Wilson, Second Vice President Kip E. Sturgeon, Secretary Edward S. Negrete, Treasurer District Staff Robert E. Martin, General Manager/Board Secretary Paul Dolter, Assistant District Engineer Alberta M. Hess, Chief Financial Officer SPECIAL SERVICES Speeial Counsel Financial Advisor Stradling, Yocca, Carlson & Rauth Fieldman, Rolapp & Associates A Professional Corporation Irvine, California Newport Beach, California Trustee and Escrow Bank District Counsel Union Bank of California, N.A. Brunick, Alvarez & Battersby Los Angeles, California San Bernardino, California Verification Agent Grant Thornton, LLP Minneapolis, Minnesota TABLE OF CONTENTS Pa_~ INTRODUCTION ........................................................................................................................................ 1 The Certificates ........................................................................................................................................ 1 The Prior Certificates ............................................................................................................................... 2 Parity Obligations ..................................................................................................................................... 2 Security for the Certificates ..................................................................................................................... 2 Continuing Disclosure Agreement ........................................................................................................... 3 THE REFUNDING PLAN ........................................................................................................................... 3 ESTIMATED SOURCES AND USES OF CERTIFICATE PROCEEDS .................................................. 4 THE CERTIFICATES .................................................................................................................................. 4 General ..................................................................................................................................................... 4 Redemption .............................................................................................................................................. 5 Notice o£ Redemption .............................................................................................................................. 5 Payment Schedule .................................................................................................................................... 7 SECUP~ITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES ............................................. 8 General ..................................................................................................................................................... 8 Installment Purchase Payments ................................................................................................................ 8 Net Revenues ........................................................................................................................................... 8 Rate Covenant .......................................................................................................................................... 9 Reserve Fund ......................................................................................................................................... 10 Insurance and Condemnation Awards ................................................................................................... l0 Acceleration of Installment Purchase Payments .................................................................................... 11 Additional Obligations ........................................................................................................................... 11 MUNIC~AL BOND INSURANCE POLICY .......................................................................................... 11 THE PROJECT .......................................................................................................................................... 12 THE DISTRICT ......................................................................................................................................... 13 General ................................................................................................................................................... 13 Board of Directors .................................................................................................................................. 13 Management ........................................................................................................................................... 14 Retirement System ................................................................................................................................. 15 Debt Structure of the District ................................................................................................................. 15 Aggregate Installment Purchase Payments ............................................................................................ 18 Land Use ................................................................................................................................................ 19 Water Supply and Requirements ............................................................................................................ 19 Water System Description ..................................................................................................................... 19 Quality of District's Water ..................................................................................................................... 19 Seismic Considerations .......................................................................................................................... 19 Billed Water Connections ...................................................................................................................... 20 Actual Water Revenues .......................................................................................................................... 20 Water System Rates ............................................................................................................................... 21 Water Rates and Sales ............................................................................................................................ 21 ii TABLE OF CONTENTS (Continued) Pa~e Current Water Rate Schedules ............................................................................................................... Water Services ....................................................................................................................................... 2:2 Water Connection Charges .................................................................................................................... 22 Standby Charges .................................................................................................................................... 23 Principal Water Users ............................................................................................................................ 23 District's Investment Policy ................................................................................................................... Assessed Valuations ............................................................................................................................... 24 Budgetary Process .................................................................................................................................. 24 Total Debt Service ................................................................................................................................. 25 Historical Operating Results .................................................................................................................. 26 Projected Operating Results ................................................................................................................... 27 Report of Direct and Overlapping Debt ................................................................................................. 28 THE CORPORATION ............................................................................................................................... 29 SUMMARY OF PRFNCIPAL LEGAL DOCUMENTS ............................................................................ 29 The Installment Purchase Agreement .................................................................................................... 29 The Trust Agreement ............................................................................................................................. 33 The Assignment Agreement ................................................................................................................... 38 TAX EXEMPTION .................................................................................................................................... 38 CERTAIN LEGAL MATTERS ................................................................................................................. 39 ABSENCE OF MATERIAL LITIGATION .............................................................................................. 39 RATINGS ................................................................................................................................................... 40 CONTINU~G DISCLOSURE ................................................................................................................. 40 UNDEKWRITING ..................................................................................................................................... 4 PKOFESSIONAL FEES ............................................................................................................................ 41 MISCELLANEOUS ................................................................................................................................... 42 iii TABLE OF CONTENTS (Continued) Pa~e APPENDIXA- GeneralEconomicDataoftheCityofSanBemardino, the City of Highland, and the County of San Bernardino ......................................... A-1 APPENDIX B - Audited Financial Statements of the East Valley Water District as of June 30, 1999 and 2000 ..................................................................................... B-1 APPENDIXC- Definitions .................................................................................................................. C-1 APPENDIXD- Form ofSpecial Counsel's Opinion .......................................................................... D-1 APPENDIXE- Book-Ent~y Only System ........................................................................................... E-1 APPENDIX F - Specimen Municipal Bond Insurance Policy and Endorsement ................................ F-I iv PRELIMINARY OFFICIAL STATEIVEENT $13,000,000' CERTIFICATES OF PARTICIPATION CRESERVOIR PROJECT AND SERIES 1994 REFUNDING) SERIES 2001 Evidencing Proportionate Interest of the Owners Thereof in Installment Purchase Payments to be Made by the ]EAST VALLEY WATER DISTRICT (San Bernardino County, California) as the Purchase Price for Certain Property Pursuant to an Installment Purchase Agreement with the East Valley Public Facilities Corporation a California Public Benefit Non-Profit Corporation INTRODUCTION This Introduction is not a summary of this Official Statement. It is only a brief description of, and guide to, and is qualified by more complete and detailed information contained in this Official Statement, including the cover page and appendices hereto, and the documents summarized or described here#t. A complete review shouM be made of the entire Official Statement. The offering of the Certificates of Participation (Reservoir Project and Series 1994 Refunding) Series 2001 (the "Certificates'9 is made only by means of this Official Statement. This Official Statement, which includes the cover page, table of contents and appendices, provides certain information concerning the offering of the Certificates in the aggregate principal amount of $13,000,000' representing the direct and proportionate interests of the owners thereof (collectively, the "Owners") in payments to be made by the East Valley Water District (the "District"), located in the County of San Bemardino (the "County"), State of California (the "State"), pursuant to an installment purchase agreement, by and between the District and the East Valley Public Facilities Corporation (the "Corporation") dated as of ,2001 (the "Installment Purchase Agreement"). The Certificates are being executed and delivered to provide moneys for: (i) the prepayment of the 1994 Certificates (as defined herein); (ii) the costs of the construction of the reservoir facility and related capital improvements and appurtenances thereto including equipment, the Project; (iii) the municipal bond insurance policy premium and the reserve fund surety bond for the Certificates; and (iv) the costs of executing and delivering the Certificates. The Certificates The Certificates are being executed and delivered pursuant to a trust agreement by and among the District, the Corporation and Union Bank of California, N.A., as trustee, registrar and paying agent (the "Trustee") dated as of April 1, 2001 (the "Trust Agreement"). The principal and interest due with respect to the Certificates will be paid from installment purchase payments made by the District, as purchaser, to the Corporation, as seller, pursuant to the Installment Purchase Agreement (the "Installment Pumhase Payments"). Payment of the principal and interest due with respect to the Certificates will be additionally secured by an assignment agreement by and between the Corporation and the Trustee dated as of April 1, 2001 (the "Assignment Agreement"), whereby the Corporation has assigned to the Trustee, for the benefit * Preliminary, Subject to Change -1- of the Owners, (i) its right to amounts payable by the District under the Installment Purchase Agreement, (ii) its rights to receive Net Proceeds (defined hereinafter) from any condemnation or insurance award in connection with the Project and (iii) its fights to enforce amounts payable upon default. The Certificates are issuable in book-entry only form without coupons, in the denominations of $5,000 each or any integral multiple thereof. The principal and interest due with respect to the Certificates will be paid directly to Cede & Co. by the Trustee as long as DTC (defined hereinafter), or its nominee, Cede & Co. is the registered owner of the Certificates. See "APPENDIX E - Book-Entry Only System" hereto. The Prior Certificates On November I0, 1994, the District's Certificates of Participation (Treatment Plant Project) (the "1994 Certificates") were executed and delivered in the aggregate principal amount of $7,650,000 pursuant to a trust agreement, dated as of October 1, 1994, by and among the Corporation, the District and Bank of America National Trust and Savings Association, as trustee, and pursuant to the provisions of the 1994 trust agreement, the Corporation, and the District substituted U.S. Bank of California N.A. (formerly First Trust of California, National Association) as trustee for the initial 1994 Trustee. The 1994 Certificates evidence the proportionate interests in the owners thereof in installment purchase payments to be made by the District as the purchase price for certain property pursuant to an installment purchase agreement by and between the District and the Corporation (the "1994 Installment Purchase Agreement"), dated as of October 1, 1994. The proceeds from the sale of the 1994 Certificates were used to (i) partially pay costs of the construction of the water treatment facility, (ii) fund the reserve fund with respect to the 1994 Certificates, and (iii) to pay the costs of issuing the 1994 Certificates. As of the date hereof, $6,165,000 in aggregate principal amount of the 1994 Certificates remain outstanding. Parity Obligations The District has previously incurred certain obligations that will not be defeased as a result of the execution and delivery of the Certificates and that will be payable from Net Revenues on a parity with the use of such revenues to make installment payments on the Certificates (the "Parity Obligations"). The Parity Obligations consist of the District's Refunding Certificates of Participation Series 1996 (the "1996 Certificates"), which were executed and delivered in the aggregate principal amount of $8, I40,000 pursuant to a trust agreement, dated as of March 15, 1996, by and among the Corporation, the District, and First Trust of Calitbmia, National Association, as trustee. The 1996 Certificates evidence proportional interests in the owners thereof in installment pumhase payments to be made by the District as the pumhase price for certain property pursuant to an installment purchase agreement, dated as of March 15, 1996, by and between the District and the Corporation ("the 1996 Installment Purchase Agreement"). The proceeds from the sale of the 1996 Certificates were used to (i) prepay the Certificates of Participation (Highland System Project) (the "1986 Certificates"), the Certificates of Participation (Water Facilities) (the "1989 Certificates"), the Certificates of Participation (Highland System Project) (the "1989 Highland Certificates") (ii) pay the premium of a municipal bond insurance policy issued by Ambac Indemnity Corporation, and (iii) pay the costs of executing and delivery of the 1996 Certificates. As of the date hereof, $5,720,000 in aggregate principal amount of the 1996 Certificates remain outstanding. Security for the Certificates The District is required to pay to the Trustee, from Net Revenues (defined hereinafter) of the District, Installment Purchase Payments which are designed to be sufficient in both time and amount to -2- pay, when due, the principal and interest due with respect to the Certificates. The District has covenanted in the Installment Purchase Agreement to set rates and charges for its services which will insure Net Revenues equal to at least 110% of the annual principal and interest requirements with respect to the Certificates. The Installment Purchase Agreement provides that such obligation is a special obligation of the District and does not constitute an obligation of the District for which the District is obligated to levy or pledge any form of taxation or for which the District has levied any form of taxation. The obligation of the District to make Installment Purchase Payments does not constitute a debt of the District, the City of Highland, the City of San Bemardino, the County, the State or any of its political subdivisions, and does not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. For financial information with respect to the District, see "THE DISTRICT - Operating Results" herein and "APPENDIX B - Audited ]Financial Statements of the East Valley Water District as of June 30, 2000 and 1999' hereto. General economic and demographic data on the City of Highland, the City of San Bemardino, and the County of San Bernardino is contained in APPENDIX A hereto. Continuing Disclosure Agreement Pursuant to rule 15c2-12 under the Securities Exchange Act of 1934, the District has undertaken for the benefit of holders and beneficial owners of the Certificates to provide certain on-going financial information and operating data (the "Annual Information") relating to the District, and to provide notices of the occurrence of certain enumerated events with respect to the Certificates. The Annual Information relating to the District is to be provided annually not later than 180 days following the end of such Fiscal Year, beginning with the Fiscal Year ending June 30, 2001. The Annual Information will be filed by or on behalf of the District with each Nationally Recognized Municipal Securities Information Repository (the 'NRMSIRS') and with the State Depository for the State of California, if any (the "State Depository"). At this time, there is no State Depository. Notices of the aforesaid material events will be filed by or on behalf of the District with the NRMSIKS or the Municipal Securities Kulemaking Board (the 'MSRB') and with the State Depository. The nature of the information to be provided in the Annual Information and the notices of such material events is set forth in the section entitled "CONTINUING DISCLOSURE", herein [The District has complied with every undertaking pursuant to Rule 15e2-12 which the District has entered into.] THE REFUNDING PLAN Thc District is entering into the Installment Purchase Agreement to facilitate, among other things, the prepayment of the 1994 Installment Purchase Agreement in order to effect the defeasance of the outstanding t994 Certificates. A portion of the proceeds from the sale of the Certificates will be used to establish and partially fund an irrevocable escrow to effectuate the defeasance of the 1994 Certificates (the "1994 Escrow Fund"), held by Union Bank of California, N.A., as escrow bank (the "Escrow Bank") pursuant to such escrow agreement, dated as of April 1, 2001, by and between the District and the Escrow Bank (the "2001 Escrow Agreement"). In addition to the use of a portion of the proceeds from the sale of the Certificates, all money on deposit, as of the date of delivery of the Certificates, in the funds and accounts established under the trust agreement in connection with the 1994 Certificates will be transferred by the 1994 Trustee to the Escrow Bank for deposit into the 1994 Escrow Fund. Moneys on deposit in the 1994 Escrow Fund will be invested in direct obligations of, or obligations unconditionally guaranteed by, the United States Government (the "Escrow Securities"), the interest and principal payments from which will secure and provide funds, respectively, for: (a) the District's -3- installment purchase payments due under the 1994 Installment Purchase Agreement on and prior to December 1, 2001 and the District's optional prepayment on December 1, 2002 of the remaining installment purchase payments due under the 1994 Installment Purchase Agreement. Said respective moneys will be applied: (a) to the principal and interest due with respect to the 1994 Certificates due on and prior to December 1, 2001 and on December I, 2001 to prepay the outstanding principal of the 1994 Certificates. Establishment of the 1994 Escrow Fund will operate to defease the I994 Certificates. The registered owners of the 1994 Certificates will remain the owners of an undivided interest in the installment purchase payments due under the 1994 Installment Purchase A~eement. Moneys deposited with the Escrow Bank with respect to the Escrow Fund are irrevocably pledged to secure, as provided in the Escrow Agreement, the payments of the installment pumhase payments under the 1994 Installment Purchase Agreement as due on and prior to December 1, 2001, and to cause prepayment of the remaining installment purchase payments due under the 1994 Installment Purchase Agreement on December 1, 2002. ESTIMATED SOURCES AND USES OF CERTIFICATE PROCEEDS The proceeds to be received from the sale of the Certificates are anticipated to be deposited as follows: Sources: Principal Amount of Certificates $ Moneys Released from the Trust Agreement relating to the 1994 Certificates Total Sources Uses: Project Fund $ Deposit to 1994 Escrow Fund Costs of Issuance, including Insurance Premiums Underwriter's Discount Total Uses TI[il, CERTI~'ItCATES General The Certificates will be executed and delivered in the aggregate principal amount of $ ~ will be dated ., 2001, will bear interest from such date at the rates per annum set forth on the cover page hereof, payable semiannually on December 1 and June I (each an "Interest Payment Date") of each year, commencing December 1, 2001, and will mature on December 1 in each year of the designated years in the principal amounts shown on the cover page hereofi The Certificates will be issued in book-entry only form, initially registered in the name of Cede & Co., New York, New York as nominee of The Depository Trust Company ("DTC"), New York, New York. Purchasers of the Certificates (the "Beneficial Owners") will not receive certificates representing their interest in the Certificates. Individual purchases will be in principal amounts of $5,000 or in any integral multiples thereof. Reference herein to "Owners" will mean Cede & Co., as nominee of DTC mid not the Beneficial Owners. Payments of principal and interest will be paid by the Trustee to DTC for subsequent -4- disbursement to DTC Participants (defined hereinafter ) who will remit such payments to the Beneficial Owners of the Certificates. See "APPENDIX E - Book-Entry Only System" hereto. Interest with respect to the Certificates will be payable from the preceding Interest Payment Date unless such Certificate was executed after the close of business on the fifteenth day of the month preceding an Interest Payment Date, whether or not such day is a business day, and on or before the next Interest Payment Date, in which event, interest will be payable from such Interest Payment Date or such Certificate was dated on or prior to November 15, 2001 in which event interest will be payable from Date of Delivery, provided, however, that if at the time of delivery of any Certificate, interest with respect thereto is in default, such interest will be payable from the Interest Payment Date to which interest has been previously paid or made available for payment. Interest will be computed on the basis of a 360-day year comprised of twelve thirty-day months. Redemption Optional Redemption The Certificates maturing before December 1, 2009, are not subject to optional redemption prior to maturity. The Certificates (in amounts not less than $5,000) maturing on or after December I, 2009 are subject to optional redemption prior to maturity at the option of the District, in whole, or in part, and if in part the District shall determine which Certificates are to be redeemed and if less than all of a maturity is redeemed, then by lot within such maturity, on any June I or December 1 on or after December 1, 2008, from prepayments of Installment Purchase Payments, at a price equal to the principal amount of each Certificate or portion thereof to be redeemed, plus accrued interest to the redemption date and a premium (of the principal amount) computed in accordance with the following schedule: Redemption Dates Redemption Premium December 1, 2008 and June 1, 2009 2% December 1, 2009 and June 1, 2010 December 1, 2010 and thereafter 0 Mandatory Redemption from Insurance or Condemnation Proceeds The Certificates are subject to mandatory redemption prior to maturity, in whole or in part on any Interest Payment Date, without premium together with accrued interest to the date fixed for redemption, to the extent that the Net Proceeds (defined hereinafter) of an insurance or condemnation award are not used to repair, reconstruct, or replace the Project pursuant to the Installment Payment Agreement. See "S~Y OF PRINCI]?AL LEGAL DOCU1VIENTS - The Installment Purchase Agreement". Notice of Redemption A notice of such redemption will be mailed to the respective Owners designated for redemption at their addresses appearing on the Certificate registration books, at least thirty days but not more than sixty days prior to the redemption date. When redemption is authorized, the Trustee will give notice, at the expense of the District, of the redemption of the Certificates; provided, however, in the event of a mandatory sinking fund of a redemption pursuant to the Trust Agreement or notice from the proceeds of obligations issued to refund -5- such Certificates, no such notice will be given unless sufficient funds have been deposited with the Trustee to pay the redemption price of the Certificates to be redeemed. Such notice will specify: (a) that the Certificates or a designated portion thereof (in the case of redemption of a Certificate in part but not in whole) are to be redeemed, (b) the date of redemption, (e) the · place or places where the redemption will be made, (d) the redemption price, suclx price being the principal amount redeemed plus accrued interest to the date of redemption with premium, if any, (e) the date of execution and delivery of the Certificates as originally executed and delivered; (f) state that the redemption of the Certificates is subject to there being on deposit with the Trustee on the date of redemption, moneys sufficient to redeem the portion of the Certificates as set forth in the notice; and (g) the rate of interest borne by each Certificate being redeern~d. Such notice will further state that on the specified date there will become due and payable upon each Certificate, the principal and premium, if any, together with interest accrued to said date, and that from and after such date interest with respect thereto will cease to accrue and be payable. Notice of redemption will also be sent by facsimile or by registered or certified mail or overnight delivery service, at least one day prior to the mailing of such notice to the Owners, to certain registered securities depositories, national information services and the Depositories listed in the Continuing Disclosure Agreement at the time and in the manner set forth in the Trust Agreement. Neither failure to mail any of such notices nor any defect in any of said notices so mailed will affect the sufficiency of the proceedings for the redemption of such Certificates. Effect of Notice of Redemption If, on said date of redemption, moneys for the redemption of all the Certificates to be redeemed, together with interest to said date of redemption, will be held by Trustee so as to be available therefore on such date of redemption, and, if notice of redemption thereof will have been given as aforesaid, then, from and after said date of redemption, interest with respect to the Certificates will cease to accrue and become payable. -6- Payment Schedule Payments of principal and interest due with respect to the Certificates are due as shown on the following table. East Valley Water District Certificates of Participation (Reservoir Project and Series 1994 Refunding) Series 2001 Interest Payment Date Principal* Interest Total Annual Payment December I, 2001 $545,000 June 1, 2002 December l, 2002 545,000 June 1, 2003 December 1, 2003 565,000 June I, 2004 December l, 2004 585,000 June 1, 2005 December I, 2005 610,000 June 1, 2006 December 1, 2006 630,000 June 1, 2007 December 1, 2007 655,000 June 1, 2008 December 1 2008 680,000 June 1, 2009 December 1 2009 705,000 June 1, 2010 December 1 2010 735,000 June 1,2011 December 1 2011 765,000 June 1, 2012 December 1 2012 800,000 June 1, 2013 December 1 2013 830,000 June 1, 2014 December 1 2014 870,000 June 1 2015 December 1 2015 335,000 Juno I 2016 December 1 2016 350,000 June I 2017 December 1 2017 370,000 June 1 2018 December 1 2018 390,000 June 1 2019 December 1 2019 410,000 June 1, 2020 December 1 2020 430,000 Total: $11,80S,000 Prehrmnary, Subject to Change -7- SECURITY AND SOURCES OF PAYM~ENT FOR THE CERTIFICATES General Each Certificate represents a proportionate interest in Installment Purchase Payments to be made by the District to the Corporation pursuant to the Installment Purchase Agreement. The Corporation, pursuant to the Assignment Agreement, will assign all its rights under the Installment Purchase Agreement to the Trustee for the benefit of the Owners, including its right to receive Installment Purchase Payments and prepayments thereunder. The obligation of the District to make Installment Purchase Payments constitutes a special obligation of the District payable solely from and secured by an irrevocable first lien on Net Kevenues (defined hereinafter) of the District (such irrevocable first lien is equal to and on a parity with the irrevocable first lien on the Net Revenues established with respect to the payment of any parity obligations); Net Proceeds of insurance or condemnation proceedings related to the Project to the extent such Net Proceeds are not used for the repair, reconstruction, or replacement of the Project pursuant to the Installment Purchase Agreement; and, subject to the limitations contained in the Trust Agreement, any interest and other income derived from the investment of moneys on deposit in certain funds and accounts held by the Trustee for the District pursuant to the Trust Agreement. Installment Purchase Payments Installment Purchase Payments are required to be made by the District under the Installment Purchase Agreement, on May 15 and November 15 (each an "Installment Payment Date") of each year, commencing November 15,2001, in an amount equal to the Installment Purchase Payments coming due on the Certificates. on the following June 1 and December 1, respectively. The Installment Purchase Payments and payments of other amounts due under the Installment Purchase Agreement and the Trust Agreement will be made unconditionally, without abatement, irrespective of any interference in the use by the District of the Project. The Installment Purchase Agreement requires that Installment Purchase Payments be deposited in the Installment Purchase Payment Fund (defined hereinafter) maintained by the Trustee. Net Revenues The obligation of the District to make Installment Purchase Payments constitutes a special obligation of the District payable from and secured by an irrevocable first lien on Net Revenues of the District. "Net Revenues" is defined in the Trust Agreement as the Revenues (defined hereinafter) for such fiscal year less the Maintenance and Operation Expenses (defined hereinafter) for such fiscal year. "Revenues" is defined in the Trust Agreement to mean all income, rents, rates, fees, charges and other moneys derived from the District's ownership or operation of the water system, including, without limiting the generality of the foregoing, (1) all income, rents, rates, fees, charges, business interruption insurance proceeds or other moneys derived by the District from the sale, furnishing and supplying of the water or other services, facilities, and commodities sold, furnished or supplied through the facilities of or in the conduct or operation of the business of the water system, plus (2) proceeds of the District's share of San Bernardino County's 1% property tax received by the District, if any, plus (3) the earnings on and income derived from the investment of such income, rents, rates, fees, charges, or other moneys, including the District reserves, plus (4) the proceeds of any standby or water availability charges collected by the District, bnt excluding in all cases customer deposits or any other deposits or advances subject to refund -8- until such deposits or advances have become the property of the District and excluding any proceeds of assessments requked by law to be used by the District to pay bonds heretofore (including the District's Series 1966 Bonds) or hereafter issued and to pay the contract payments due under the State Water Project Contract. "Maintenance and Operation Expenses" is defined in the Trust Agreement to mean the reasonable and necessary costs paid or incurred by the District for maintaining and operating the water system of the District, determined in accordance with generally accepted accounting principles, including all reasonable expenses of management and repair and other expenses necessary to maintain and preserve the water system of the District in good repair and working order, and including all administrative costs of the District that are charged directly or apportioned to the maintenance and operation of the water system of the District, such as salaries and wages of employees, overhead, insurance, taxes (if any) and insurance premiums, and including all other reasonable and necessary costs of the District or charges (other than Installment Purchase Payments) required to be paid by it to comply with the terms of the Installment Purchase Agreement and the Trust Agreement, such as compensation, reimbursement and indemnification of the Trustee; but excluding in all cases depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping entries of a similar nature. Rate Covenant The District has covenanted that it will set rates and charges for water service which will be at least sufficient to generate, during each fiscal year, Net Revenues equal to 110% of Debt Service (as defined hereinafter). "Debt Service", is defined in the Trust Agreement to mean, for any fiscal year, the sum of (1) the interest accruing during such fiscal year on all outstanding parity obligations (if any), assuming that all such outstanding serial parity obligations are retired as scheduled and that all such outstanding parity obligations subject to the sinking fund payments are prepaid or paid from sinking fund payments as scheduled (except to the extent that such interest is to be paid from the proceeds of sale of such obligations), (2) that portion of the principal amount of all outstanding serial parity obligations maturing on the next succeeding principal payment date that would have accrued during such fiscal year if such principal amount were deemed to accrue daily in equal amounts from the preceding principal payment date or during the year preceding the first principal payment date, as the case may be, (3) that portion of the prhncipal amount of all outstanding term parity obligations required to be prepaid or paid on the next succeeding prepayment date (together with the prepayment premiums, if any, thereon) that would have accrued during such fiscal year if such principal amount (and prepayment premiums) were deemed to accrue daily in equal amounts from the preceding prepayment date or during the year preceding the first prepayment date, as the case may be, and (4) that portion of any payments, including the Installment Purchase Payments, required to be made at the times provided in all parity contract obligations that would have accrued during such fiscal year if such payments were deemed to accrue daily in equal amounts from, in each case, the preceding payment date of interest or principal or the date of the pertinent parity contract obligation, as the case may be. For purposes of the definition of Debt Service, any parity contract or parity obligations issued or to be issued by the District which bears interest at a variable rate will for all purposes be assumed to bear interest at the highest fixed rate equal to the lesser of(i) 7.0% or (ii) the highest variable rate borne over the preceding twenty-four (24) months by outstanding variable rate debt issued by the District or, if no such variable rate debt is at the time outstanding, by variable rate debt for which the interest rate is computed by reference to an index comparable to that utilized in determining the interest rate for the parity contract then proposed to be entered into or the parity obligations then proposed to be issued. -9- Reserve Fund The Trust Agreement requires the establishment of a Reserve Fund in an amount equal to the Reserve Requirement. The Trust Agreement authorizes the District to obtain a Surety Bond in place of fully funding the Reserve Fund. Accordingly, application has been made to (" .") for the issuance of a Surety Bond for the purpose of funding the Reserve Fund (see "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - The Trust Agreement"). The Certificates will only be delivered upon the issuance of such Surety Bond. The premium on the Surety Bond is to be fully paid at or prior to the execution and delivery of the Certificates. The Surety Bond provides that upon the later of (i) one (1) day after receipt by of a demand for payment executed by the Trustee certifying that provision for the payment of principal or interest with respect to the Certificates when due has not been made or (ii) the interest payment date specified in the Demand for Payment submitted to , will promptly deposit funds with the Trustee sufficient to enable the Trustee to make such payments due on the Certificates, but in no event exceeding the Surety Bond Coverage, as defined in the Surety Bond. Pursuant to the terms of the Surety Bond, the Surety Bond Coverage is automatically reduced to the extent of each payment made by under the terms of the Surety Bond and the District is required to reimburse for any draws under the Surety Bond with interest at a market rate. Upon such reimbursement, the Surety Bond is reinstated to the extent of each principal reimbursement up to but not exceeding the Surety Bond Coverage. The reimbursement obligation of the District is subordinate to the District's obligations with respect to the Certificates. In the event the amount on deposit, or credited to the Reserve Fund, exceeds the amount of the Surety Bond, any draw on the Surety Bond shall be made only after all the funds in the Reserve Fund have been expended. In the event that the amount on deposit in, or credited to, the Reserve Fund, in addition to the amount available under the Surety Bond, includes amounts available under a letter of credit, insurance policy, surety bond or other such funding instrument (the "Additional Funding Instrument"), draws on the Surety Bond and the Additional Funding Instrument shall be made on a pro rata basis to fund the insufficiency. The Trust Agreement provides that the Reserve Fund shall be replenished in the following priority: (i) principal and interest on the Surety Bond shall be paid from first available Net Revenues, so long as no Additional Funding Instrument has been entered into, and thereafter, principal and interest on the Surety Bond and on the Additional Funding Instrument shall be paid from first available Net Revenues on a pro ram basis; (ii) after all such amounts are paid in full, amounts necessary to fund the Reserve Fund to the required level, after taking into account the amounts available under the Surety Bond and the Additional Funding Instrument shall be deposited from next available Net Revenues. The Surety Bond does not insure against nonpayment caused by the insolvency or negligence of the Trustee. Insurance and Condemnation Awards Net Proceeds of insurance or condemnation proceedings related to the Project to the extent such Net Proceeds are not used for the repair, reconstruction, or replacement of the Project pumuant to the Installment Purchase Agreement will be used by the District to make mandatory redemption payments with respect to the Certificates. See "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - The Installment Purchase Agreement - Insurance" and "THE CERTIFICATES - Redemption - Mandatory Redemption from Insurance or Condemnation Proceeds" herein. -10- The term '2qet Proceeds", when used with respect to any insurance or condemnation award, is de£med in the Trust Agreement as the gross proceeds from such insurance or condemnation award, paid with respect to the Project, remaining after payment therefrom of all expenses incurred in the collection of such gross proceeds. Acceleration of Installment Purchase Payments Should the District default under the Installment Purchase Agreement, the Trustee, as assignee of the Corporation, has the right to: (i) declare all principal components of the unpaid Installment Purchase Payments, together with accrued interest at the rate or rates specified in the respective outstanding Certificates, from the immediately preceding Installment Purchase Payment Date on which payment was made, to be immediately due and payable, whereupon the same will be due and payable, and (ii) take whatever action at law or in equity may appear necessary or desirable to collect the Installment Purchase Payments then due or thereafter to become due, or enforce performance and observance of any obligation, agreement or covenant of the District under the Installment Purchase Agreement. Additional Obligations The District has the right to issue additional obligations or enter into contracts on a parity with the Certificates provided that (a) the Net Revenues for the most recent audited fiscal year prior to the authorization of such parity obligation or contract have not been less than 110% of the Debt Service for such fiscal year; (b) the Net Revenues for the most recent audited fiscal year preceding the date of the execution of such contract or the date of adoption by the Board of Directors of the District of the resolutions authorizing the issuance of such additional parity obligations, as the case may be, including adjustments to give effect to increases or decreases in the Revenues approved and in effect as of the date of calculation will have produced a sum equal to at least 110% of the Debt Service for such fiscal year plus the Debt Service which would have accrued had such contract been executed or obligations been issued at the beginning of such fiscal year; and (c) the estimated Net Revenues for the then current fiscal year and each fiscal year following the issuance of such parity obligation to and including the first complete fiscal year aRer the latest date of operation of any uncompleted portion of the Project, as evidenced by a certificate on file with the District, plus (after giving effect to the completion of all uncompleted projects), an allowance for estimated Net Revenues for each of such Fiscal Years arising from any increase in the Revenues estimated to be fixed and prescribed and which are economically feasible and reasonably considered necessary based on projected operations for such period, as evidenced by a certificate on file with the District, are projected as not less than 110% of the estimated Debt Service for each such fiscal year including the debt service requirements for such parity obligations and contracts. The District will not issue obligations or execute a contract the payment of which would be superior to the Installment Purchase Payments. The District may issue obligations or execute a contract the payment of which are subordinate to the Installment Purchase Payments. MUNICIPAL BOND INSURANCE POLICY [to come] -11- TItE PROJECT The Project consists of the construction of a new four million-gallon (MG) pre-stressed concrete reservoir, booster pump station, access road, and pipelines. These facilities will replace the District's existing Plant 37, a steel one million-gallon (rog) reservoir and booster pump station, which will be removed aider completion of the new facilities. The existing reservoir is located just north of the south trace of the San Andreas Fault on property owned by the City of San Bernardino Water Department. Geotechnical investigations and evaluations of the area have determined that the existing reservoir is located on a subfault, which is believed to be active. The District has determined that the reservoir should be relocated approximately 1,$00 feet to the north of the existing site and raise the hydraulic grade of the tank by forty feets in an area between the north and south traces of the San Andreas fault, on a site free of active subfaults and joints. To investigate the geologic structure of the proposed reservoir site, the Project engineer, Camp Dresser and McKee ("CDM'), retained the firm of Zeiser Geotechnical Inland Empire, Inc. ("Zeiser~). The Zeiser analysis was intended to supplement a previous geotechnical report prepared by Converse Consultants. The Zeiser report concluded that "no active faults are known to cross the subject site and therefore the potential for ground rupture is considered negligible" and that "seismically-induced land sliding of natural slopes is net likely to impact the buried reservoir tank as there are no large slopes immediately adjacent to the reservoir." Further, the report concluded that the liquefaction potential in the areas where bedrock is exposed at the ground surface or where the bedrock has a thin cover of surficial soils is considered negligible. See "THE DISTRICT - Seismic Considerations" herein. The primary components of the Project include the following: (i) Reservoir - Dasigu of the four million-gallon pre-stressed concrete reservoir consists of wall panels, floor slab, roof slab, drop panels, and columns. In addition, the reservoir will have an underdrain system that will drain water from possible leaks in the reservoir or any surface water that percolates to the reservoir foundation area; (ii) Excavation and Grading - The reservoir will be fully buried with 2-feet of cover, which will require excavation to a depth of approximately 50 feet below the existing ground surface, with a total volume of soil excavated of approximately 65,000 cubic yards which includes the reservoir, access road and pipeline gravel road; and (iii) Pipings Booster Pump Station and Altitude Valve - There is a 24-inch inlet-outlet pipeline as well as a 16-inch drain line connecting to the reservoir, both of which extend to the intersection of Foothill Boulevard And Sterling Avenue. The inlet/outlet pipeline includes a one-way 12-inch altitude valve and by-pass with check valYe, which is located northwest of the existing Del Rosa reservoir. The booster pump station will be located southwest of the Del Rosa reservoir. -12- The entire cost of the Project is estLmated at approximately $5.5 million. Bids for all portions of the Project are expected to be received by July 3 I, 2001. Construction is anticipated to commence in July 2001, with completion by July 2003. Estimated costs of the Project components are as follows: ESTIMATED PROJECT COSTS (As of December 2000) Reservoir $2,126,535 Pipelines 553,884 Main Access Road 59,670 Vault Access Road 36,924 Vaults 105,060 Pump Station & Altitude Valve 166,252 Structural Reservoir 1,510,000 Electrical 199,280 Subtotal $4,757,605 Mobilization and Demolition (5%) 237,880 Subtotal $4,995,485 Contingency (10%) 475,760 GRAND TOTAL $5,500,000 THE DISTRICT See APPENDIX B for the District's 1999/2000 Audited Financial Statement. General economic information with respect to the City of Highland, the City of San Bemardino, and the County of San Bemardino is contained in APPENDIX A hereto. General The Board of Supervisors of the San Bernardino County approved a petition in writing for the formation of the East Valley Water District (formerly, East San Bernardino County Water District) under Division 12 of the Water Code of the State of California and ordered an election held January 12, 1954. The formation of the District was approved by the electors, and the Board of Supervisors approved the formation of the District. Incorporation of the District was approved by the State of California on February 1, 1954. [The Distrlet covers an area of approximately thirty {30) square miles. Approximately 19% of the District is located in the unincorporated area of San Bernardino County and the remaining 81% is located within the City of San Bernardino (25%) and the City of Highland ($6%). The District has been engaged in furnishing water and sewer service to its customers since inception. The initial sewer trunk lines and collection system were completed during the 1959-60 fiscal year. The District currently has a service population of approximately 61,$00,] Board of Directors The District is governed by a five member Board of Directors elected at-large within the District for staggered terms of four years. -13- Glenn R. Lightfoot - President. Mr. Lightfoot has served as a Director on the East Valley Water District Board of Directors since 1979. Mr. Lighffoot recently retired as a Deputy Sheriff/Criminalist from the San Bernardino County Sheriffs Department. He holds a Bachelor of Science degree in Criminology and a Master of Arts degree in School Administration. Donald D. Goodin - Vice President. Mr. Goodin began serving on the Board of Directors of the East Valley Water District in 1994. He is retired from the State Compensation Insurance Fund where we was a systems specialist. Mr. Goodin is a retired U.S. Air Force officer and has taught business courses at the City College of Chicago. He holds a Bachelor of Arts degree and a Masters in Business Administration. Edward S. Negrete - Director. Mr. Negrete has served as Director on the East Valley Water District Board of Directors since November 1993. He is a former Vice President of the Board. Mr. Negrete owns his own building contractor business and is a professional entertainer and recording artist. Kip E. Sturgeon - Director. Mr. Sturgeon has served on the East Valley Water District Board of Directors since November, 1991 and is a former President of the Board. Mr. Sturgeon has held the positions of Vice Presideat and Executive Director of the United Cancer Research Society since 1982. Mr. Sturgeon earned an Associate of Arts degree in Business from San Bemardino Valley College in 1988 and an Associate of Arts degree in Psychology from Crafton Hills College in 1984. He also earned a Certificate from the Special District Board Management Institute in 1993. George E. "Skip" Wilson - Director. Mr. Wilson was elected to the Board of the East Valley Water District in November 1997. He retired from Mojave Water Agency in December 1997 where he served as Director of Administration and Finance. He also has served on the Board of Directors of Valley Bank, Moreno Valley, since 1975. He served in the U.S. Air Force as a pilot from 1962-1969 and subsequently returned to San Bernardino to head up an independent insurance agency for 15 years. He holds a Bachelor of Science Degree in finance from the University of Southern California. Management District staff is directed by the following management personnel: Robert E. Martin ~ General Manager. Mr. Martin has been employed by the East Valley Water District since 1984. He was promoted from District Engineer, a position he held for six years to his present position in 1991. Mr. Martin holds a Bachelor of Science degree in Civil Engineering and is a Registered Professional Civil Engineer. Paul 1L Dolter - District Engineer. Mr. Dolter began his employment with East Valley Water District in August 1991. He came to the District after serving as the Principal Engineer for the San Bernardino Municipal Water Department. Prior to the San Bernardino position, he spent four years with Westem Municipal Water District as a staff civil engineer beginning in November 1985 after retiring as a Civil Engineering Officer from the U.S. Air Force. Mr. Dolter has a Bachelor of Science Degree in Civil Engineering and is registered as a Professional Civil Engineer in California and Arizona. Alberta M. Hess - Chief Financial Officer. Ms. Hess has been employed by the District since January, 1991. Prior to her employment with the District, Ms. Hess was employed by Rogers, Anderson, Malody and Scott, Certified Public Accountants from 1976-1991. Ms. Hess holds a Bachelor of Science degree in Business Administration and is a Certified Public Accountant. -14- Retirement System The District is a member of the Public Employee's Retirement System ("PERS"), administered by the State of California, to which contributions are made by the District on behalf of its employees. The District has excess assets in the amount of $3,576,524 as of June 30, 1999. Debt Structure of the District Prior Obligations On May 25, 1965, the voters of the District approved issuance of $3,000,000 in Water Revenue Bonds. To date, $2,400,000 of the voter-approved bonds have been issued and sold. In accordance with the Revenue Bond Law of 1941, proceeds of the approved bond issue were used in the acquisition, construction, improving and financing of additional water supply and in the expansion and improvement of the District. Sums required to meet the payments of principal and interest on the Water Revenue Bonds are secured by a first charge and lien upon Revenues of the District. The $2,400,000 of Water Revenue Bonds were fully retired on January 1, 1996. However, $600,000 of authorized but unissued Water Revenue Bonds remains, which can be issued by the District at any time. If and when issued, these obligations would be payable from Net Revenues on a parity with the Installment Purchase Payments, provided that certain conditions are satisfied as described in "Security and Sources of Payment for the Certificates - Additional Obligations." Parity Obligations The District has previously incurred certain obligations that will not be defensed as a result of the execution and delivery of the Certificates and that will be payable from Net Revenues on a parity with the payment of principal and interest with respect to the Certificates (the "Parity Obligations") The Parity Obligations consist of the District's Refunding Certificates of Participation, Series 1996 (the "1996 Certificates"), which were executed and delivered in the aggregate principal amount of $8,140,000 pursuant to a trust agreement, dated as of March 15, 1996, by and among the Corporation, the District, and First Trust of California, National Association, as trustee (the "1996 Trust Agreement"). The 1996 Certificates evidence proportional interests in the owners thereof in installment purchase payments to be made by the District as the purchase price for certain property pursuant to an installment purchase agreement, dated as of March 15, 1996, by and between the District and the Corporation ("the 1996 Installment Purchase Agreement"). The proceeds from the sale of~he 1996 Certificates were used (i) for the prepayment of the District's Certificates of Participation (Highland System Project) (the "1986 Certificates"), the District's Certificates of Participation (Water Facilities) (the "1989 Certificates"), and the District's Certificates of Participation (Highland System Project) (the "1989 Highland Certificates"), (ii) to pay the municipal bond insurance premiums and the reserve fund surety bond issued by Ambac Indemnity Corporation for the 1996 Certificates; and, (iii) to pay the costs of executing and delivering the 1996 Certificates. As of the date hereof, $5,720,000 in aggregate principal amount of the 1996 Certificates remain outstanding. The Installment Purchase Payments due under the 1996 Installment Purchase Agreement are payable on May 15 and November 15, of each year in amounts equal to the principal and interest with respect to the 1996 Certificates coming due on the following June 1, and December I, respectively. Pursuant to the 1996 Trust Agreement, payments of the balance of the principal and interest due with respect to the 1996 Certificates are due as shown on the following page: East Valley Water District Certificates of Participation Series 1996 Remaining Debt Service Principal Interest Total Annual Interest Payment Date Component Component Payment June 1, 2001 $140,347.50 December 1, 2001 $580,000.00 140,347.50 $860,695.00 June 1, 2002 127,587.50 December 1, 2002 610,000.00 127,587.50 865,175.00 June 1, 2003 113,862.50 December 1, 2003 640,000.00 ! 13,862.50 867,725.00 June 1, 2004 99,142.50 December 1, 2004 680,000.00 99,142.50 878,285.00 June l, 2005 82,992.50 December 1, 2005 720,000.00 82,992.50 885,985.00 June 1, 2006 64,992.50 December I, 2006 760,000.00 64,992.50 889,985.00 June 1, 2007 45,612.50 December 1, 2007 540,000.00 45,612.50 631,225.00 June 1, 2008 31,842.50 December 1, 2008 575,000.00 31,842.50 638,685.00 June 1, 2009 16,605.00 December 1, 2009 615,000.00 16,605.00 648,210.00 Totals: $5,720,000.00 $1,445,970.00 $7,165,970.00 -17- Aggregate Installment Purchase Payments Payments of the principal and interest due with respect to the Certificates and the 1996 Certificates are due as shown on the following table. See "THE CERTIFICATES - Payment Schedule" herein for the debt service schedule with respect to the Certificates. See "TI-W. DISTRICT - Projected Operating Results" herein for a table showing the District's projected debt service coverage of the Certificates and the Parity Certificates to fiscal year ended June 30, 2005. East Valley Water District Certificates of Participation Aggregate Installment Purchase Payments Principal Interest Total Annual Interest Payment Date Component Component Payment June 1, 2001 December 1, 2001 June 1, 2002 December l, 2002 June 1, 2003 December l, 2003 June 1, 2004 December I, 2004 June 1, 2005 December 1 2005 June 1, 2006 December 1 2006 June 1, 2007 December 1 2007 ~ June 1, 2008 December 1 2008 June 1, 2009 December 1 2009 Juue 1, 2010 December 1 2010 June I, 2011 December 1 2011 June 1, 2012 December ] 2012 June 1, 2012 December 1 2013 June 1, 2014 December I 2014 June 1, 2015 December 1 2015 June I, 2016 December 1 2016 June I, 2017 December ! 2017 June 1, 2018 December I 2018 June 1, 2019 December 1. 2019 June 1, 2020 December 1 2020 June 1, 2021 Total: -18- Land Use Land use within the District is primarily residential with some commercial/industrial, park/landscape and agricultural uses. According to the District, approximately 87 percent of the District's metered customers are residential (82.26% single-family and 4.84% multi-family). The District's commercial customers account for approximately twelve (12) percent of the total metered services. The District's park and landscape customers represent approximately one (1) percent of the current metered services. Agriculture users receive irrigation water from the Santa Aha River via the North Fork Canal and therefore account for zero percent of the current metered services. Water Supply and Requirements The Districfs water supply is obtained from twenty-three active deep groundwater wells, (eight of which are not used, and are temporarily off-line) that provide a combined capacity of approximately 41 million gallons per day (mgd). The District's average daily production of water during the Fiscal Years 1995/96 through 1999/00 has varied from 21.0 mgd. to 2Z0 mgd. The water is of high quality and generally does not require treatment. The District also has a surface water treatment plant with a capacity of 4.0 mgd. The District takes delivery of flow from the Santa Ana River surface water rights to portions of the flows in the Santa Ana River and City Creek by virtue of its ownership of stock in a private water company. Water System Description The District owns and operates 260 miles of waterlines ranging in size from 4 inches to 30 inches in diameter. Twenty-three reservoirs provide storage of approximately 25.0 million gallons of water. The District has approximately 18,500 billed water connections as of the date hereof. Quality of District's Water The District's water meets all current requirements of the Safe Drinking Water Law and the regulations of the California Department of Health and Services (the "Health Department"). Water supplied by the District meets ali state and federal standards for safe, potable water. The District is required to perform frequent sample monitoring and testing, with independent water analysis also performed by State certified laboratories. Results are submitted to the Health Department. Seismic Considerations The District is located in a seismically active region in Southern California. Sigaiflcant fault zones in this region include the Elsinore, San Jacinto, Wildomar and San Andreas Fault Zones. There is significant potential for destructive ground shaking during the occurrence of a major seismic event. In addition, land along the aforementioned fanlt lines may be subject to liquefaction during the occurrence of such an event. In the event of a severe earthquake, there may be significant damage to both property and infrastructure within the District. District facilities are designed to withstand earthquakes with minimal damage, as earthquake loads are taken into consideration in the design of project structures. The impact of lesser magnitude events is expected by the District to be temporary, localized and repairable. To date, no District facilities have suffered any significant earthquake damage. -19- Billed Water Connections A five-year history of billed water connections is presented below. East Valley Water District Number of Billed Water Connection~1) Fiscal Year Connections 1999/2000 19,558 1998/1999 19,808 1997/1998 19,162 1996/1997 19,022 1995/1996 18,631 (1) Includes connection~ for both residential and commercial customers. Source: The District. Actual Water Revenues The table below shows water revenues of the District for the fiscal years 1994/1995 through 1999/2000. East Valley Water District Actual Water Revenues(1) Fiscal Water Year Revenue 1999/2000 $8,991,834 1998/1999 7,994,149 1997/1998 7,529,291 1996/1997 8,245,876 1995/1996 8,009,364 1994/1995 7,535,718 (I) Includes water revenues for both residential and commercial customers. Source: The Di~rict. - 20- Water System Rates Water revenues of the District may be derived from three sources: (a) water sales (consumption charge), (b) system charges (meter availability charge), and (e) connection charges. Water Rates and Sales The District's rates are comparable to other water agencies' rates in the area. A typical monthly water bill is approximately $29.00 per household. East Valley Water District Water Rate Survey - 2000 Monthly Water Bill Comparison Average Daily Consumption (27.6 hcf) City/District Water Cucamonga County Water District 34.64 East Valley Water District 29.08 Eisinore 35.38 Redlands (inside) 27.27 Redlands (outside) 30.66 Rialto 23.87 San Bernardino (inside) 28.86 West San Bernardino County Water District 25.97 Western (high) 51.64 Western (low) 43.91 Yucaipa Valley County Water District 22.34 Maximum Daily Consumption (55.2 hcf) City/District Water Cucamonga County Water District 60.03 East Valley Water District 5 I. 16 Elsinore 69.74 Redlands (imide) 47.14 Redlands (outside) 51.53 Rialto 54.33 San Bernard[no (inside) 51.77 West San Bernardino County Water District 45.29 Western (high) 90.28 Western (low) 74.82 Yucaipa Valley County Water District 44.44 Source: The District. -21 - Current Water Rate Schedules The District increased water rates on March 12, 2001 by approximately 10%. Water rates are now $0.88 per 100 cubic feet plus a minimum monthly charge that varies with the size of the metered services as described below: East Valley Water District Minimum Water Charges Residential and Commercial Water Rates 3/4 inch meter $7.00 mm. per month plus $.88 per/100 cu. ft. 1 inch meter 13.00 m~n. per month plus $.88 per/100 cu. ft. 1-1/2 inch meter 27.50 mm. per month plus $.88 per/100 cu. f~. 2 inch meter 39.50 m~n. per month plus $.88 per/100 cu. ft. 3 inch meter 69.50 mm. per month plus $.88 per/100 cu. ft. 4 inch meter 115.50 mm. per month plus $.88 per/100 cu. ft. 6 inch meter 225.00 mm. per month plus $.88 per/100 cu. ft. 8 inch meter 338.00 mm. per month plus $.88 per/100 cu. ft. Flat Rate $30.00 per month is a temporary charge for new home construction purposes Source: The District. Water Services This revenue is derived from service requirements to the District's customers. These charges are made on a "cost plus basis" and are not of a significant nature. Water Connection Charges Installation charges in the amounts set forth in the following tables is payable to the District upon application for and before installation or approval of installation of any new water service. Installation charges as of June 30, 2000 are payable in the following amounts: East Valley Water District Water Connection Charges Meter and/or Water Connection Service Size Charge 3/4" $3,013 1" 3,013 1-1/2" 6,131 2" 11,578 3" 26,162 4" 41,112 6" 79,260 Source: The District. - 22 - Standby Charges At this time, the only standby charge levied by the District is the fire service standby charge, assessed as the monthly standby charge per diameter inch of the District fire service meter. Water use through this service is limited to emergency fire requirements only. The monthly fire standby charge is $5.00 per diameter inch per month. Principal Water Users The fifteen largest water customers in the District are as follows: East Valley Water District Principal Water Users (1999/2000 Sales) Consumption Rank Customer Water Charges 0:ICF) 1 San Bemardino County USD $195,612 244,515 2 East Highlands Ranch 125,045 156,306 3 Stubblefield Construction 70,227 87,784 4 Safety Investment 60,663 75,829 5 Cai Trans 57,392 71,740 6 Magellan Corp 50,682 63,352 7 Eastwood Farms 43,544 54,430 8 CYSA South San Bemardino 36,867 46,084 9 Rob Walker 33,439 41,799 10 Lynwood Owners Association 31,660 39,575 11 Highland Palms Homeowners 31,454 39,317 12 Mountain Breeze Villas 31,250 39,063 13 James Perley 29,874 37,343 14 Steadfast PN LLC 29,446 36,808 15 Cal American 28,103 35,129 Source: The District. District's Investment Policy The District seeks to maximize the productive use of assets entrusted to its care and to invest and manage those public funds wisely and prudently by operating its pooled idle cash position under a prudent man's rule. This affords the District a broad spectrum of investment opportunities so long as the investment is deemed prudent and is allowable under current legislation of the State of California and local ordinances of the District. Idle cash management and investment transactions are the responsibility of the Auditor/Treasurer and investments are made in the following media: * Securities of the U.S. Government or its agencies · Certificates of Deposits (or Time Deposits), placed with commercial banks and savings and loan companies o Bankers Acceptances - 23 - · Local Agency Investment Fund demand deposits · Repurchase Agreements and Reverse Repurchase Agreements · Passbook Savings Account demand deposits. Criteria for selecting investments, and the order of priority are safety, liquidity and yield. Certificates of deposits, savings accounts and bankers acceptances are insured or collateralized. The District seeks to attempt to obtain the highest yield obtainable when selecting investments, provided that criteria for safety and liquidity are met. The District also attempts to ladder its maturities to meet anticipated cash needs in such a way that new investment money can be placed in maturities that carry a higher rate than is available in the extremely short market of thirty days or under. The District may attempt to take advantage of imperfections in the market where a security's price is out of line with other investments, and try to improve yields during contra-cyclical changes in interest rates through the purchase of occasional odd lots which are offered at bargain prices. Assessed Valuations The following table presents the taxable assessed valuations of the District for the past five fiscal years: East Valley Water District Assessed Valuation (1996/1997 through 2000/2001) Total Before Total After Redevelopment Redevelopment Increment Increment 2000/2001 $2,443,674,817 $2,278,189,155 1999/2000 2,368,039,742 2,242,733,718 1998/1999 2,327,127,848 2,206,310,259 t 997/1998 2,267,466,745 2,156,458,270 1996/1997 2,229,572,062 2,107,981,300 Source: California Municipal Statistics, Inc. Budgetary Process The District Board of Directors reviews a draft budget and rate proposals annually during the first quarter of each calendar year. Budget mid rate proposals are ref'med throughout a workshop process until a final budget is presented to the Board of Directors in May or June. Any necessary water rate adjustments are made prior to the adoption of the budget. - 24 - The District's audited financial statements for the years ended June 30, 1999 and June 30, 2000 are presented in APPENDIX B hereto. The following table summarizes the fiscal year 1995/1996 adopted budget, approved June 26, 2000 by the District. East Valley Water District Adopted Budget for Fiscal Year 2000/2001 (Water Revenues and Expenditures) Revenue Domestic Sales and Service Tolls $8,237,000 Bulk Sales (Energy Only) 65,000 Fees, Permits and Penalties 107,000 Interest Income 345,000 Connection Charges 154,000 Other 90,000 Total Revenues $8,998,000 Expenditures Operating Expenses: Source of Supply 264,781 Pumping 1,687,528 Water Treatment 201,I 07 Transmission and Distribution 319,695 Customer Accounts (Meter) 243,878 Gate Valve 5,730 Fire Hydrant 7,397 Telemetry 30,603 $2,760,719 General and Administrative 2,650,471 Non-Operating Expense 684,881 Total Capital Expenditures 1,899,970 Total Debt Service 830,000 Total Expenditures $8,826,041 -25 - Historical Operating Results The following table sets forth historical operating results for the water department of the District for the Fiscal Years Ending 1995 through 2000 excerpted from the District's audited financial statements. See "APPENDIX B - Audited Financial Statements of the East Valley Water District as of June 30, 1999 and 2000" hereto. East Valley Water District 1 Historical Operating Results for Fiscal Year Ended June 30 1995 1996 1997 1998 1999 2000 OPERATING REVENUES: Water department $7,716,685 $8,131,669 $8,422,379 $7,739,980 $8,418,998 $9,390,221 OPERATING EXPENSES: Water depar~ent 5,677,728 5,971,186 6,492,844 6,374,159 6,539,198 7,285,728 OPERATING INCOME: 2,038,957 2,160,483 1,929,535 1,365,821 1,879,800 2,104,493 NON-OPERATING REVENUES: Interest Income 398,347 408,910 464,668 550,953 497,770 556,111 Other Income 204,727 154~964 250,657 221,911 240,526 1~110,032 Total Non-Operating Revenues 603,074 563,874 715,325 772,864 738,296 1,666,143 NON-OPERATING EXPENSES: Water department - interest expense 609,749 553,935 810,345 783,304 751,952 718,261 Less f~om disposition of fixed assets 390,783 76,388 780,443 250,559 65,969 Perchlorate research administration - - 160,021 904,498 Allowance for uncollectible rents _ - - 87,067 Water department - amortization of purchase agreement costs 13,495 22,043 53,355 53,355 53,355 53,355 Water department - amortization of bond discount 4,345 6,842 9,398 9,398 9,398 9,398 Water department - amortization of lease fees _ _ 1,784 2,675 2,675 Total Non-Operating Experts es 1,018,372 ~82,820 949,486 1,628,284 1,315,027 1,754,156 lqETINCOME: $1,623,659 $2~141,537 $1,695,374 $510,401 $1,3031069 $2,016,480 1 Based on the audited financial statements of the District. Source: The District. -26 - Projected Operating Results The following table sets forth projected operating results for the Districfs water department for the fiscal years ending 2001 through 2005. The District, as with alt water purveyors, is faced with increasing government regulation affecting the Districfs water department and its water quality. The District does not anticipate any regulations which will significantly adversely affect its water department operations, although the cost of compliance with future regulations may result in increased rates and charges imposed on customers of the District. The District's estimate of projected financial results is based upon its judgment of the most probable occurrence of certain important future events. Actual operating results during future fiscal years may vary from those presented in this forecast and such variations may be material. East Valley Water District Projected Operating Results and Projected Debt Service Coverage for Fiscal Years Ended June 30 2001 2002 2003 2004 2005 OPERATING REVENUES: Water department(1) $8,563,000 $9,131,600 $9,314,232 $9,500,517 $9,690,527 OPERATING EXPENSES: Water department(2) 7,600,301 7,781,651 7,937,284 8,096,030 8,257,950 OPERATING INCOME: 962,699 1,349,9~9 1,376,948 1,404,487 1,432,577 PLUS DEPRECIATION(3): 1,479,230 1,508,815 1,538,991 1,569,771 1,601,166 NON-OPERATING REVENLVES: Interest Income(4) 345,000 351,900 358,938 366,117 373,439 Other Income(5) 90,000 91 ~800 93,636 95,509 97,419 Net Revenue Available $2,876,929 $3,302,464 $3,368,513 $3,435,884 $3,504,601 Debt Service: 1994 Certificates Debt Service $480,028 1996 Cert'fficates Debt Service 842,245 $847,935 $851,450 $853,005 $862,135 2001 Certificates Debt Service' 0 1,117,122 1,016,179 1~016,749 1,016,190 Total Debt Service 1,322,273 1,965,057 1,867,629 1,869,754 1,878,325 Net Revenues Available after Debt Service $1,447,656 $1,230,407 $1,391,744 $1,454,807 $1,512,727 COVERAGE 1.91 2.60 2.34 2.29 2.24 *Preliminary, Subject to Change (1) Operating revenues of the water department for the year 2002 include project revenues from a water rate increase. Water revenues are projected to increase by Z 0% thereafter, due to growth. (2) Operating expenses of the water department for the year 2002 include projected energy costs. Operating expenses are projected to increase by 2.0%. (3} Depreciation isprojectedto increase2.0%peryear. 0 (4) Interest income is projected to increase 2.0% per year. (5} Otherincomeisprojectedtoincrease2.0%peryear. Source: The District. - 27- Report of Direct and Overlapping Debt The following tabulation estimates the direct and overlapping bonded debt of the District as of March 1, 2001. The debt report is included for general information purposes only. The District has not reviewed the debt report and makes no representations as to the completeness or accuracy. East Valley Water District Table of Direct and Overlapping Debt 2000-01 Assessed Valuation: $2,443,674,817 Redevelopment Incremental Valuation: 165~485,662 Adjusted Assessed Valuation: $2,278,189,155 OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 3/1/01 San Bernardino City Unified School District 33.602% $11,743,899 Redlands Unified School District 14.350 4,335,853 Highland Community Facilities District #90-1 100. 14,125,000 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $30,204,752 DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT: San Bernardino County General Fund Obligations 3.541% $37,805,309 San Bemardino County Pension Obligations 3.541 12,881,895 San Bernardino Valley Municipal Water District Certificates of Participation 14.473 1,251,915 Redlands Unified School District Certificates of Participation 14.350 802,883 San Bernardino Unified School District Certificates of Participation 33.602 15,027,150 City of San Bernardino Certificates of Participation 16.144 6,633,938 East Valley Water District 100. 0(1) TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBTS74,403,090 Less: City of San Bernardino self-supporting bonds 1,301,174 San Bernardino Valley Municipal Water District Certificates of Participation . 1,251,915 TOTALNET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $71,850,001 GROSS COIvlBINED TOTAL DEBT $104,607,842(2) NET COMBINED TOTAL DEBT $102,054,753 (1) Excludes refunding revenue certificates of participatlon to be sold. (2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratios to 2000-01 Assessed Valuation: Total Overlapping Tax and Assessment Debt ........................... 1.24% Ratios to Adjusted Assessed Valuation: Combined Direct Debt ............................................................... 0.00% Gross Combined Total Debt ...................................................... 4.59% Net Combined Total Debt ......................................................... 4.48% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/00:$266 Source: California Municipal Statistics, Inc. - 28 - TE[E CORPORATION The Corporation is a California Nonprofit Public Benefit Corporation formed by the District on September 30, 1986. No assets of the Corporation have been pledged, or are available, to pay the Certificates. SIYMMARY OF PRINC~ LEGAL DOCU'M~NTS The following is a brief outline of certain provisions contained in the Installment Purchase Agreement, the Trust Agreement and the Assignment Agreement. This summary does not purport to be complete or definitive, and it is qualified in its entirety by ~eference to the full terms of each of the aforementioned documents. Reference is directed to said documents for the complete text thereof. Copies of said documents are available from the Trustee upon the payment of a charge for copying, handling and mailing. The Installment Purchase Agreement Term The term of the Installment Purchase Agreement is for a period commencing , terminating upon the occurrence of either (a) payment in fall of all Installment Purchase Payments pursuant to the Installment Purchase Agreement but not longer than , or (b) a default by the District under the Installment Purchase Agreement and termination pursuant thereto. Installment J~urchase Payments The l~istrict is required to advance moneys derived from Net Revenues of the Di~rict to pay the Installment Purchase Payments. The Installment Purchase Payments are payments for the Project. As additional consideration for the purchase of the Project, the District has agreed to pay such additional amounts due and owing under the Installment Purchase Agreement or the Trust Agreement, including but not limited to, amounts payable to the Trustee as may be necessary to make up any deficiency in the Reserve Fund and/or the Rebate Fund (defined hereinafter). Notwithstanding any dispute between the District and the Corporation, the District will make each and all Installmant Purchase Payments when due and will not withhold any I~stallmcnt Purchase Payments pending the final resolution of such dispute. The District will not assert any right ofset-offor counterclaim against its obligation to make Installment Purchase Payments as set forth in the Installment Purchase Agreement. Maintenance, Improvements, Taxes and Utilities The District, at its own expense, will operate, maintain and preserve the Project in good repair, and the Corporation has no responsibility for such repair. The District has the power to make improvements to the Project. The District must pay or cause to be paid all taxes and utility charges in connection with the Project. - 29 - Covenant to Budget and Appropriate The District has covenanted that it will include in its mmual budget and appropriate for the following fiscal year the Installment Purchase Payments and other amounts due under the Installment Purchase Agreement and the Trust Agreement. The Installment Purchase Payments and other amounts due under the Installment Purchase Agreement, any obligations or contracts secured on a parity with the Certificates and the Trust Agreement are a special obligation of the District secured by an unrevocable and first lien of, and payable from, Net Revenues of the District. The District will furuish to the Trustee, as assignee of the Corporation, a certificate stating that the District has complied with such covenant no later than November Ist of each year. The covenants to budget and appropriate on the part of the District are deemed by the District to be duties imposed by law and it will be the duty of each and every public official of the District to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the District to carry out and perform the covenants and agreements in the Installment Purchase Agreement agreed to be carried out and performed by the District. The Installmeat Pumhase Payments and paymeats of other amounts due under the Installment Purchase Agreement and the Trust Agreement will be made unconditionally, without abatemeot, irrespective o£ any interference in the use by the District of the Project. The District will provide , as long as the Municipal Bond Insurance Policy is in effect, on an annual basis, copies of the District's audited financial statements and annual budget. Insurance The Installment Pumhase Agreement requires the District to maintain or cause to be maintained the following insurance against risk of physical damage to the Project stmcture~ and other risks for the protection of the Certificate holders, the Corporation, and the Trustee: (i) Insurance against loss or damage to any structures constituting any part of the Project, as is customarily maintained with respect to works and properties of a like character, which may be carried in conjunction with any other policies of fire and extended coverage insurance; (ii) Public liability and property damage insurance with minimum coverages of $1,000,000 of personal injury or death per person and $3,000,000 for personal injury or deaths of two or more persons in each accident or event, and property damage insurance in the minimum coverage of $I00,000 per event, respectively, the property damage being subject to a maximum $5,000 deductible per accident. Such insurance may be maintained in the form of a minimum $3,000,000 single limit policy covering all such risks; (iii) Worker's compensation insurance issued by a responsible carrier authorized under the laws of the State to insure employers against liability for compensation under the Worker's Compensation Insurance Safety Act now in force in the State, or any act hereafter enacted as an amendment or supplement thereto or in lieu thereof, such worker's compensation insurance to cover ali persons employed in connection with the Project and to cover full liability for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death during or in connection with the Project or the business of the District. The Net Proceeds of property damage insurance will be (i) deposited in a Project Fund to be then established under the Trust Agreement as necessary and will be applied to rebuild the Project or (ii) ~30- deposited in the Installment Purchase Payment Fund to prepay the Installment Purchase Payment and prepay the principal and interest due with respect to the outstanding Certificates. The District has agreed to annually furnish evidence to the Trustee of compliance with the insurance requirements set forth in the Installment Pumhase Agreement. If at any time the District will be unable to obtain or maintain insurance, to the extent required above, on reasonable terms, either as to amounts or as to risks, the failure to maintain such insurance will not constitute a default under the Installment Pumhase Agreement if the District will cause the employment of an independent insurance consultant having a favorable reputation for skill and experience in such matters, for the purpose of reviewing such insurance requirements and making recommendations respecting the types, amounts and provisions of reasonably obtainable insurance, including self-insurance, or the establishment of other generally accepted forms of alternative protection that should be carried in lieu thereof, or the unfeasibility of obtaining insurance, and if the District will comply with the recommendations made in such report. A signed copy of the report of the insurance consultant will be filed with the Trustee and the Corporation, and the insurance requirements specified in the Installment Purchase Agreement will be deemed to be modified to conform with the recommendations in such report. Any Net Proceeds of any such insurance relating to the loss or destruction of any part of the Project will be applied and disbursed as follows. If the District determines that such Net Proceeds are sufficient to repair, reconstruct or replace the damaged or destroyed portion of the Project, which determination will be evidenced by a certificate executed by an authorized officer of the District and filed with the Trustee as assignee of Corporation, then the District will cause such portion of the Project to be repaired, reconstructed or replaced to at least the same good order, repair and condition as it was in prior to the damage or destruction, insofar as the same may be accomplished by the use of said Net Proceeds, and the District will direct the Trustee to disburse said Net Proceeds for such purpose. Any balance of said Net Proceeds not required for such repair, reconstruction or replacement will be transferred by the Trustee to be applied as prepayment of Installment Purchase Payments in accordance with the Trust Agreement, except that no such prepayment will be in an amount less than $5,000. The District will be obligated to continue to make Installment Purchase Payments required by the Installment Purchase Agreement notwithstanding accident to or destruction of all or a portion of the Project unless and until the Certificates and all amounts owed under the Installment Pumhase Agreement and under the Trust Agreement by the District are paid in full. In the event that such Net Proceeds are not sufficient to repair, reconstruct or replace the damaged or destroyed portion of the Projeot, as evidenced by a certificate executed by an authorized officer of the District and filed with the Trustee, the District will direot the Trustee to apply such Net Proceeds, to the prepayment in full, on the next succeeding Interest Payment Date, of the balance of the Installment Purchase Payments, or if such Net Proceeds are insufficient to prepay the balance of the Installment Pumhase Payments in full then the District will direct the Trustee to apply such Net Proceeds to prepayment of Installment Purchase Payments except that no such prepayment will be in an amount less than $5,000. -31 - Condemnation In the event of the exercise of condemnation with respect to the Project or any portion thereof, if the District determines that such condemnation has not materially affected the operation of the Project or the ability of the District to meet any of its obligations under the Installment Purchase Agreement, as set forth in a certificate executed by an authorized officer of the District and filed with the Trustee, as assignee of Corporation, and if such Net Proceeds are insufficient to enable the District to prepay Installment Purchase Payments in full on the next succeeding Interest Payment Date, the District will direct the Trustee to retain such Net Proceeds in the Installment Pumhase Payment Fund and to cause such Net Proceeds to be applied as a credit against the next succeeding Installment Pumhase Payments. If the District determines that such condemnation has materially affected the operation of the Project or the ability of the District to meet any of its obligations under the Installment Purchase Agreement as set forth in a certificate executed by an authorized officer of the District and filed with the Trustee, as assignee of Corporation, or if such Net Proceeds are sufficient to enable the District to prepay Installment Purchase Payments in full on the next succeeding Interest Payment Date, the District will direct the Trustee to apply such Net Proceeds to the prepayment in full or (to the extent that such condemnation pertains only to a portion of the Project) in part on the next succeeding Installment Payment Date of Installment Pumhase Payments except that no such prepayment will be in an amount less than $5,000. The District will be obligated to continue to make Installment Purchase Payments required by the Installment Pumhase Agreement notwithstanding condemnation of alt or a portion of the Project unless and until the Certificates and all amounts owed under the Installment Pumhase Agreement and under the Trust Agreement by the District are paid in full. Assignment The Corporation has assigned to the Trustee, pursuant to the Assignment Agreement, its rights under the Installment Purchase Agreement, including the right to receive and enforce payment of the Installment Purchase Payments to be made by the District. Events of Default and Remedies The following constitute "events of default" under the Installment Purchase Agreement: (i) failure by the District to make any payment required under the Installment Purchase Agreement at the time specified therein; or (ii) failure by the District to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in (i) above, for a period of thirty (30) days after written notice thereof by the Corporation or the Trustee, as assignee for the Corporation, provided, however, that the Corporation or its assignee may, upon written request of the District prior to the expiration of such 30 day period, consent to an extension of such time in order to cure such failure if corrective action has been instituted by the District and is being diligently pursued and will, in the judgment of the Corporation or its assignee, be diligently pursued until the default is corrected; or -32- (iii) a court having jurisdiction shall enter a decree or order for relief in respect of the District in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the District or for any substantial part of its property, or ordering the winding up or liquidation of its affairs, and such decree or order will remain unstayed and in effect for a period of sixty (60) days; or (iv) the District will commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or will consent to the entry of an order for relief in an involuntary case under any such law, or will consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or similar official) of the District for any substantial part of its property, or will make any general assignment for the benefit of creditors, or will fail generally to pay its debts as they become due or will take any corporate action in furtherance of any of the foregoing. Upon the occurrence and continuance of any event of defauk the Corporation will have the right, with the consent of Ambac Indemnity, to (a) declare all principal components of the unpaid Installment Purchase Payments, plus accrued interest, to be immediately due and payable and (b) to take whatever action at law or in equity may appear necessary or desirable to protect and enforce its rights under the Installment Purchase Agreement. The Corporation has assigned its rights under the Installment Pumhase Agreement to the Trustee under the Trust Agreement, including its rights in the event of default. The Trust Agreement Trustee The Trustee is appointed pursuant to the Trust Agreement to execute and deliver the Certificates and, upon direction of the District, to receive, hold, invest and disburse the moneys paid to it pursuant to the Installment Purchase Agreement for credit to the various funds and accounts established by the Trust Agreement. The Trustee will act in a ministerial and passive capacity, except to the extent that, in the event of a default either in payment of the Installment Purchase Payments or in other obligations of the District under the Installment Purchase Agreement, the Trustee will exercise the rights of the Corporation with respect to such default. Funds The Trust Agreement creates the Series 2001 Costs of Issuance Fund (the "Cost of Issuance Fund"), the Series 2001 Installment Purchase Payment Fund (the "Installment Purchase Payment Fund"), the Series 2001 Redemption Fund (the "Redemption Fund"), the Series 2001 Reserve Fund (the "Reserve Fund") and the Series 2001 Rebate Fund (the "Rebate Fund") to be held by the Trustee. -33 - Costs of Issuance Fund Moneys in the Costs of Issuance Fund are required to be applied to the payment of Costs of Issuance, upon the receipt ora written direction of the District as to whom and the purpose for which each payment is to be made and the amount of such payment. Installment Purchase Payment Fund The Trustee is required to deposit in the Installment Purchase Payment Fund the Installment Purchase Payments received from the District as provided in the Installment Purchase Agreement. On the Business Day preceding each Interest Payment Date, the Trustee is required to withdraw from the Installment Purchase Payment Fund the amounts as needed to pay the principal and interest due with respect to the amounts payable on the Certificates on said Interest Payment Date. In the event that the amount on deposit in the Installment Purchase Payment Fund after any transfer from the Reserve Fund as provided in the Trust Agreement is not sufficient to pay the full principal and interest due with respect to the Certificates on said Interest Payment Date, the amount on deposit in the Installment Purchase Payment Fund shall be applied to said principal and interest first to the payment of interest due with respect to the Certificates on a pro rata basis and second with respect to the payment of principal due with respect to the Certificates on a pro rata basis. Redemption Fund Moneys to be used for redemption of Certificates are required to be transferred by the Trustee from the Installment Purchase Payment Fund and deposited in the Redemption Fund. Such moneys will be set aside in the Redemption Fund solely for the purpose of redeeming the Certificates in advance of their maturity and will be applied to the payment of principal with respect to the Certificates redeemed upon presentation and surrender of such Certificates being redeemed. Interest due on the Certificates to he redeemed shall be paid from moneys in the Installment Purchase Payment Fund. Reserve Fund Two (2) Business Days prior to any Payment Date, the Trustee will determine if the amounts in the Installment Purchase Payment Fund are less than the Installment Purchase Payment due with respect to said Payment Date. If such amount in the Installment Purchase Payment Fund is less than such Installment Purchase Payment, the Trustee will on the applicable Payment Date, transfer from the Reserve Fund to the Installment Purchase Fund an amount equal to the Installment Purchase Payment deficiency. All moneys in the Reserve Fund will be used and withdrawn by the Trustee solely for the purpose of paying principal and interest with respect to the Certificates or, to the extent that earnings when deposited in the Reserve Fund cause the balance on the deposit in the Reserve Fund to exceed the Reserve Requirement, such excess amount will be transferred upon Written Order of the District to the Trustee first, to the Rebate Fund for the purpose of meeting the District's rebate obligation to the United States and second, to the Installment Purchase Payment Fund. The amounts in the Reserve Fund will be applied as a credit against the last Installment Purchase Payments remaining prior to the expiration of the term of the Installment Purchase Agreement. Any money remaining in the Reserve Fund after all of the principal and interest on the Certificates has been paid will be transferred to the District. If amounts on deposit in the Reserve Fund are, at any time, less than the applicable Reserve Requirement, such deficiency will be made -34- up by the District from first available moneys after required deposits to the Installment Purchase Payment Fund. The Reserve Requirement will be satisfied initially with a surety bond policy to be delivered by Ambac Indemnity. Rebate Fund The District will take no action inconsistent with its expectations stated in the tax certificate executed by the District with respect to the Certificates (the "Tax Certificate") and will comply with the covenants and requirements stated therein. All money at any time deposited in the Rebate Fund will be held by the Trustee in trust, for payment to the United States Treasury. All amounts on deposit in the Rebate Fund will be governed by section 708 of the Trust Agreement and the Tax Certificate, unless the District obtains an opinion of a nationally recognized law firm specializing in the area of tax-exempt municipal finance to the effect that the exclusion from gross income of the interest component of the obligation represented by the Certificates will not be adversely affected for federal income tax purposes if such requirements are not satisfied. Investments Investment Moneys held by the Trustee under the Trust Agreement are required to be invested and reinvested in Permitted Investments. The term "Permitted Investments" is defined in the Trust Agreement to mean: The following obligations to be used as Permitted Investments for all purposes, including defeasance investments in refunding escrow accounts. (1) Cash (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with obligations described in paragraph (2) below), or (2) Direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America. The following obligations to be used as Permitted Investments for all purposes other than defeasance inves~xnents in refunding escrow accounts. (I) obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of Arnerica, including: · Export-Import Bank · Farm Credit System Financial Assistance Corporation · Farmers Home Administration · General Services Administration · U.S. Maritime Administration · Small Business Administration · Government National Mortgage Association (GNMA) · U.S. Department of Housing & Urban Development (PHA) · Federal Housing Administration; (2) senior debt obligations rated "AAA" by Standard & Poor's Ratings Services("S&P") and "Aaa" by Moody's Investors Service, Inc. ("Moody's") issued by the Federal National -35 - Mortgage Association or the Federal Home Loan Mortgage Corporation. Senior debt obligations of other Government Sponsored Agencies approved by Ambac Indemnity; (3) U.S. Dollar denominated deposit accounts, federal funds and banker's acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of "A-1" or "A-I" by S&P and "P-1" by Moody's and maturing no more than 360 days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank); (4) commercial paper which is rated at the time of purchase in the single highest classification, "A-l+'~ by S&P and "P-1" by Moody's and which matures not more than 270 days after the date of purchase; (5) investments in a money market fund, including funds of the Trustee and its affiliates rated "AAAm" or "AAAm-G" or better by S&P; (6) Pre-refunded Municipal Obligations defined as follows: Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local government unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (a) which are rated, based on an irrevocable escrow account or fund (the "escrow"), in the highest rating category of S&P and Moody's or any successors thereto; or (b) (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in (2) of the defeasance securities described above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate. (7) investment agreements approved in writing by AMBAC Indemnity with notice to S&P; and (8) other forms of investments (including repurchase agreements) approved in writing AMBAC Indemnity with notice to S&P. Events of Default and Remedies The following will be events of default under the Trust Agreement: (a) any event of default under the Installment Purchase Agreement; -36- (b) failure to make payments of principal, including mandatory sinking fund payments, premium, if any, and interest due with respect to the Certificates when due. Any payment made by under the Municipal Bond Insurance Policy will be deemed such an event of default; (¢) failure by the District to observe and perform any covenant, condition or agreement on its part to be observed or performed under the Trust Agreement, other than as such failure may constitute an event of default under (a) or (b) above, for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied has been given to the defaulting party by any other party to the Trust Agreement or the Owners of not less than five percent (5%) in aggregate principal amount of Certificates outstanding. Upon the occurrence and continuance of any event of default specified in section 601 of the Installment Purchase Agreement, other than a default pursuant to subsection (b) of such section, the Trustee will proceed, or upon the occurrence and continuance of any other event of default under the Trust Agreement or under section 601(b) of the Installment Purchase Agreement, the Trustee will, if requested by AMBAC Indemnity and may, and upon written request of the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Certificates at the time outstanding will, with the consent of AMBAC Indemnity, proceed to exercise the remedies provided to the Corporation in Article VI of the Installment Purchase Agreement, upon notice in writing to the District and the Corporation upon receipt of indemnity satisfactory to the Trustee. The Trustee will not be deemed to have notice of any default or event of default, other than a failure to pay principal and interest on the Certificates, unless a responsible officer receives written notice of such default or event of default at the principal corporate office of the Trustee. See "SUM3d[ARY OF PRIIqCIPAL LEGAL DOCUMENTS ~ The Installment Purchase Agreement" herein. In the event the Trustee fails to take sufficient action to eliminate such default, the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Certificates then outstanding may at the direction of AMBAC Indemnity institute any suit, action, mandamus or other proceeding in equity or at law for the protection or enforcement of any right under the Installment Purchase Agreement or the Trust Agreement if and only if the Owners have first made written request of the Trustee after the rights to exercise such powers of right of action will have occurred, and will have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers granted under the Installment Purchase Agreement or the Trust Agreement or granted under the law or to institute such action, suit or proceeding in its name, and, in addition, unless the Trustee will have been offered reasonable security and indemnity against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee will have refused or neglected to comply with s¢ch request within a reasonable time. Amendment The Trust Agreement may be amended only by agreement among the District, the Trustee and the Corporation but no amendment will become effective as to the Owners of the Certificates then outstanding without the approval of a majority of the Owners in aggregate principal amount of the Certificates, provided that no such amendment will impair the right of any such holder to receive his proportionate share of Installment Purchase Payments in accordance with his Certificate. Notwithstanding the foregoing, the Trust Agreement may be amended without the consent of the Owners but only for the purpose of curing any ambiguity, correcting defects, or in regard to questions arising under the Trust Agreement or -37 - Installment Purchase Agreement that is not inconsistent with the provisions of either thereof; provided, further, that no amendment will materially adversely affect the interest of the Owners. Defeasance Upon payment of all outstanding Certificates, either at or before maturity, or upon the deposit of money or bills, certificates of indebtedness, notes, bonds, or similar securities which are direct, non- callable obligations of the United States of America, CATS, TIGERS, STRPS or defensed municipal bonds rated "AAA" by S&P or "Aaa" by Moody's with the Trustee sufficient with other available funds to retire the outstanding Certificates at or before maturity, upon giving or providing for such notice, the Trust Agreement will at the election of the District be terminated subject to the payment of the Certificates. Provisions Relating to [Insurer] [to come] The Assignment Agreement Under the Assignment Agreement between the Corporation and the Trustee, the Corporation has assigned to the Trustee for the benefit of the holders of the Certificates (i) its rights to amounts payable by the District under the Installment Purchase Agreement, (ii) its rights to receive proceeds of condemnation of, and insurance on, the Project and (iii) its rights to enforce amounts payable upon default. The Installment Purchase Payments are not secured by, and the Owners have no security interest, in or mortgage on, the Project. TAX EXEMPTION In the opinion of Stradling, Yocca, Carlson & Rauth, a Professional Corporation, Newport Beach, California, ("Special Counsel"), under existing statutes, regulations, rulings and judicial decisions, the portion of each Installment Purchase Payment constituting interest is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal altemative minimum tax imposed on individuals and corporations. In the further opinion of Special Counsel, the portion of each Installment Purchase Payment constituting interest is exempt from State of California personal income tax. Special Counsel notes that, with respect to corporations, the portion of each Installment Purchase Payment constituting interest may be included as an adjustment in the ealanlatinn of alternative minimum taxable income which may affect the alternative minimum tax liability of such corporations. In addition, the difference between issue price of a Certificate (the first price at which a substantial amount of the Certificates of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to a Certificate constitutes original issue discount. Original issue discount accrues under a constant yield method and original issue discount will accrue to a Certificate owner before receipt of cash attributable to each excludable income. The amount of original issue discount that accrues to the owner of the Certificate is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of Califumia personal income tax. Special Counsel's opinion as to the exclusion from gross income of the portion of each Installment Purchase Payment constituting interest is based upon certain representations of fact and certifications made by the District and others and is subject to the condition that the District complies with all requirements of the Internal Revenue Code of I986, as amended (the "Code"), that must be satisfied subsequent to the -38- execution and delivery of the Certificates to assure that the portion of each Installment Purchase Payment constituting interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the portion of each Installment Pumhase Payment constituting interest (and original issue discount) to be included in gross income for federal income tax purposes retroactive to the date of execution and del/very of the Certificates. The District has covenanted to comply with all such requirements. Special Counsel's opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Special Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Although Special Counsel has rendered an opinion that the portion of the Installment Purchase Payments constituting interest is excluded from gross income for federal income tax purposes provided that the District continues to comply with certain requirements of the Code, the ownership of the Certificates and the accrual or receipt of interest with respect to the Certificates may otherwise affect the tax liability of certain persons. Special Counsel expresses no opinion regarding any such tax consequences. Accordingly, before pumhasing any of the Certificates, all potential pumhasers should consult their tax advisors with respect to collateral tax consequences with respect to the Certificates. Should the interest with respect to the Certificates become includable in gross income for federal income tax purposes, the Certificates are not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Trust Agreement. CERTAIN LEGAL MATTERS Special Counsel, will render an opinion with respect to the validity and enforceability of the Installment Purchase Agreement and the Trust Agreement and as to the validity of the Certificates. Special Counse[ has not undertaken on behalf of the Owners or Beneficial Owners of the Certificates to review the Official Statement and assumes no responsibility to such Owners and Beneficial Owners for the accuracy of the information contained herein. Copies of such approving opinion will be available at the time of delivery of the Certificates. Certain legal matters will be passed upon for the District by Brunick, Alvarez & Battersby, San Bemardino, California. ABSENCE OF MATERIAL LITIGATION There is no action, suit or proceeding known to be pending or threatened, restraining or enjoining the execution or delivery of the Certificates, the Installment Purchase Agreement, the Trust Agreement or in any way contesting or affecting the validity of the foregoing or any proceedings of the District taken with respect to any of the following. -39- RATINGS Standard & Poor's Ratings Services and Moody's Investors Service, Inc. have each assigned their municipal bond ratings of "AAA" and "Aaa", respectively, to this issue of Certificates with the understanding that upon delivery of the Certificates, a policy insuring the payment when due of the principal of and interest on the Certificates will be issued by CONTIN'I..rlNG DISCLOSURE Pursuant to a Continuing Disclosure Agreement with the Trustee (the "Disclosure Agreemant"),the District has agreed to provide, or cause to be provided, to each nationally recognized municipal securities information repository and any public or private repository or entity designated by the State as a state repository for the purposes of Rule 15c2-12(b)(5) (the "Rule") adopted by the Securities and Exchange Commission (each, a "Repository") certain annual financial information and operating data, including its audited t~nancial statements and information of the type set forth in this Official Statement under the heading "TILE DISTRICT - Billed Water Connections, Actual Water Revenues, New Water Meter Connections and Water System Rates." In addition, the District has agreed to provide, or cause to be provided, to each Repository in a timely manner notice of the following "Listed Events" if material: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on any credit enhancements scouring the Certificates reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events adversely affecting the tax-exempt status of the security; (7) modification to rights of security holders; (8) bond calls; (9) defeasances; (I0) release, substitution, or sale of property securing the repayment of the securities; and (11) rating changes. These covenants have been made in order to assist the Underwriter in complying with the Rule. The District has never failed to comply in all respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events. It should be noted that the requirement that the Districtflle its audited financial statements with the annual report has been included solely to satisfy the provisions of the Rule. The inclusion of this information does not mean that the Certificates are secured by any resources of the District other than as described hereinabove. See "SECUlilTY AND SOIYRCES OF PAYMENT FOR TI-IE CERTIFICATES" and "SPECIAL RISK FACTORS." It should also be noted that the list of significant events which the District has agreed to report includes the item listed in (5) above which has absolutely no application whatsoever to the Certificates. This item has been included in the list solely to satisfy the requirements of the Rule. Thus, any implication from the inclusion of these items in the list to the contrary notwithstanding, there are no credit or liquidity providers with respect to the Certificates. The District may amend the Disclosure Agreement, and waive any provision thereof, by written agreement of the parties, without the consent of the Owners (except to the extent required under clause 4(ii) below), if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in taw (including rules or regulations) or in interpretations thereof, or a change in the identity, nature or status of the District or the type of business conducted thereby, (2) the Disclosure Agreement as amended would have complied with the requirements of Rule I5c2-12 as of the date of the Disclosure Agreement, after taking into account any amendments or interpretations of the Rule 15c2-12, as well as any change in circumstances, (3) the District shall have delivered to the Trustee an opinion of nationally - 40 - recognized bond counsel or counsel expert in federal securities laws, addressed to the District and the Trustee, to the same effect as set forth in clause (2) above, (4) either (i) the District shall have delivered to the Trustee an opinion of nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the District and the Trustee, to the effect that the amendment does not materially impair the interests of the Owners or (ii) the Owners consent for the amendment to the Disclosure Agreement pursuant to the same procedure as are required for amendments to the Trust Agreement with consent of Owners pursuant to the terms of the Trust Agreement as in effect on the date of the Disclosure Agreement, and (5) the District shall have delivered copies of such opinion and amendment to each Repository. In addition, the District's obligations under the Disclosure Agreement shall terminate upon the defeasance, prior redemption or payment in full of all of the Certificates. The provisions of the Disclosure Agreement is intended to be for the benefit of the Owners and shall be enfomeable by the Owners, provided that any enforcement action by any such person shall be limited to a right to obtain specific enforcement of the District's obligations under the Disclosure Agreement and any failure by the District to comply with the provisions thereof shall not be an event of default under the Trust Agreement. UNDERWRITING ., the Underwriter, has purchased the Certificates at an aggregate discount of % and at an aggregate purchase price of $ . The public offering prices may be changed from time to time by the Underwriter. The Underwriter may offer and sell Certificates to certain dealers and others at prices lower than the offering price stated on the cover page hereof. PROFESSIONAL FEES In connection with the issuance of the Certificates, fees payable to Fieldman, Rolapp & Associates, as Financial Advisor, Stradling, Yocea, Carlson & Rauth, a Professional Corporation, as Special Counsel, and Union Bank of California, N.A., as Trustee, are contingent upon the issuance of the Certificates. -41 - MISCELLANEOUS References ~re made herein to certain documents and reports which are brief summaries thereof which do not purport to be complete or definitive and reference is made to such documents and reports for full and complete statement of the contents thereof. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contrae~ or agreement between District and the purchasers or holders of any of the Certificates. The execution and delivery of this Official Statement has been duly authorized by the District. EAST VALLEY WATER DISTRICT By: /s/Glenn R. Lightfoot President EAST VALLEY PUBLIC FACILITIES CORPORATION By: /s/Glenn R. Lightfoot President - 42 - APPENDIX A General Economic Data of the City of San Beruardino, the City of Highland and the County of San Bernardino The following information relating to the City of San Bemardino, California ("San Bernardino') and the City of Highland, California ("Highland") and the Count~ of San Beroardino (the "County") is supplied solely for purposes of information. The District's boundaries include all of Highland and portions of San Bernardino (collectively referred to herein as the "Cities") as well as a portion of unincorporated land within the County. Neither the faith and credit, nor the taxing power of the District, the Cities, the County, the State of California, or any of its political subdivisions is pledged to the payment of the Certificates. Population Approximately 44,450 people reside in Highland and 186,400 in San Bernardino, approximately 1.69 million people reside in the County. The following chart illustrates the historical growth in the Cities and the County's population. ANNUAL POPULATION Year City of City of San Bernardino (Janua~ 1) Highland San Bernardino Count~ 2000 44,450 186,400 1,689,300 1999 42,950 185,600 1,660,200 1998 42,150 183,500 1,631,500 I997 41,100 182,200 1,605,000 1996 40,400 181,400 1,587,200 Soume: State Department of Finance. Effective Buying Income In 2000, the Riverside-San Bernardino Primary Metropolitan Statistical Area ("PMSA') ranked 23rd out of 323 metropolitan areas in terms of total Effective Buying Income ("EBI"). It also ranked 176th out of 323 areas on median household EBI for 2000. EBI is designated by Sales & Marketing Management Magazine as personal income less personal tax and non-tax payments. Personal income is the aggregate of wages and salaries, other labor income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income owner-occupants of non-farm dwellings), dividends paid by corporations, personal interest income from all sources, and transfer payments such as pensions and welfare assistance. Deducted from this total are personal taxes (federal, state, and local), non-tax payments (such as fines, fees, penalties), and personal contributions for social insurance. EBI is a bulk measurement of market potential. It indicates the general ability to buy and is essential in comparing, selecting, and grouping markets on that basis. A-1 The following table lists the estimated annual median Household EBI for the City and County of San Bernardino, and the State of California (the "State"). ESTI2VIATED ANNUAL MEDIAN HOUSEHOLD EFFECTIVE BUYING INCOME Median Household Percent of EBI Households over $50,000 2000 City $26,514 28.1% County 33,654 21.1 State 39492 38.3 1999 City 24,685 16.7% County 32,097 25.0 State 37,091 34.6 1998 City 32,289 16.0% County 31,940 24.5 State 36,483 33.5 1997 City 23,776 14.9% County 31,109 22.9 State 35,216 31.7 1996 City 23,200 13.9% County 30,382 21.6 State 34,533 30.5 Note: Figures are based on "Money Income." Money Income does not include income derived from the sale of real estate, food stamps, or public housing subsidies, tax refunds, gifts, insurance payments, and other lump sum receipts. Source: Sales and Marketing Management, Survey of Buying Power. Development Below are valuations of residential building permits from 1996 - 2000 for the Cities of Highland, San Bernardino, and the County of San Bernardino. Residential Building Permit Valuations for the City of Highland (Valuations in Thousands of Dollars) Type 1996 1997 1998 1999 2000 New Single Dwellings 34,980 39,001 35,121 30,647 11,315 Multi-Dwellings 0 0 10,191 0 Total Residential Valuation 34,980 39,001 45,312 30,647 11,315 A~2 Source: Economic Sciences Corporation. Residential Building Permit Valuations for the City of San Bernardino (Valuations in Thousands of Dollars) Type 1996 1997 1998 1999 2000 New S ingle Dwellings 11,317 13,035 17,192 15,061 10,096 Multi-Dwellings 0 0 0 0 0 Total Residential Valuation 11,317 13,035 17,192 15,061 10,096 Source: Economic Sciences Corporation. Residential Building Permit Valuations for the County of San Bernardino (Valuations in Thousands of Dollars) Type 1996 1997 1998 1999 2000 New Single Dwellings 616,393 722,007 884,666 1,120,953 993,235 Multi-Dwellings 10,937 21,963 27,069 13,47! 44,888 Total Residential Valuation 627,330 743,970 911,735 1,134,424 1,038,123 Source: Economic Sciences Corporation. Employment The ten largest employers within the County of San Bemardino are listed below. Ten Largest Employers and Number of Employees in the County of San Bernardino As of January 1, 2001 County Company Industry Employment County of San Bemardino Local government 16,640 Stater Bros. Markets Grocery retailer 10,000 Wal-Mart Stores, Inc. Retail dept., store chain 7,550 Lorna Linda Ur~versity Medical Ctr. Healthcare 6,390 Ontario International ALrport Transportation 6,200 San Bernardino City USD Public education 6,000 Kaiser Permanente Medical Ctr Healthcare 5,400 United Parcel Service Service 4,000 Loma Linda University Higher Education 3,700 Source: County of San Bernardino A-3 The following table shows civilian employment and unemployment in the labor market. SAN BERNARDINO COUNTY CIVILIAN LABOR FORCE EMPLOYM]gNT, UNEMPLOYMENT, AND UNEMPLOYMENT RATE (Annual Average) Unemployment Year Labor Force Employment Unemployment Rate 2000* 790,125 753,308 36,817 4.7% 1999 754,700 718,500 36,200 4.8 1998 724,650 683,870 40,800 5.6 1997 709,410 664,380 45,030 6.3 1996 686,500 636,700 49,800 7.3 *Annual average is based on revised data for 1/2000 through 11/2000 and preliminary data for 12/2000 Note: The unemployment rate is calculated using unrounded data. Source: Employment Development Department, Labor Market Information Division Industry and Employment The District is within the Riverside-San Bemardino Primary Metropolitan Statistical Area ("PMSA") which includes all of Riverside and San Bemardino Counties. In addition to varied manufacturing employment, the PMSA has large and growing commercial and service sector employment, as reflected in the following table. RIVERSIDE-SAN BERNARDINO PMSA ANNUAL AVERAGE EMPLOYMENT (in thousands) INDUSTRY 1995 1996 1997 1998 1999 Agriculture .............................. 21.8 21.3 21.7 21.6 21.6 Construction ........................... 43.1 46.2 52.1 60.8 70.0 Finance, Insurance and Real Estate ............................ 29.4 29.6 29.8 30.6 32.0 Government ............................ 162.6 167.3 171.6 174.7 183.2 Manufacturing: Nondurables .......................... 32.4 33.3 34.3 35.3 37.4 Durables ................................ 62.0 65.9 70.5 76.1 80.9 Mining .................................... 1.1 1.2 1.2 1.0 .9 Retail Trade ............................ 170.0 · 172.6 177.8 181.0 186.7 Services ................................... 202.6 208.7 221.5 234.9 248.8 Transportation and Public Utilities ...................... 40.8 41.1 42.5 45.7 48.7 Wholesale Trade .....................35.9 37.5 40.2 42.2 45.0 TOTAL ALL INDUSTRIES .. 801.7 824.8 863.1 903.8 955.2 Source: State Employment Development Department, Labor Market Information Division. A-4 The unemployment rate in the Riverside-San Bernard[no PMSA was an estimated 4.6 percent during November 2000. This compares to the unadjusted unemployment rates of 4.9 percent for Los Angeles County and 4.6 pement for California for the same month. Separately, in Riverside County, the unemployment rate was estimated at 5.1 percent, and 4.2 percent in San Bernard[no County in November 2000. Recreation and Tourism The County includes many of Southern California's most popular recreation areas. Not only do the mountain lakes and resorts offer summer swimming, boating, fishing and hiking, but they also provide for snow skiing and other winter sports. The Colorado River provides an all-year recreational area at the County's eastern boundary. Places of interest for visitors includes East Mojave Scenic Area, Death Valley National Monument, Joshua Tree National Monument, San Bernardino National Forest, Providence Mountains State Recreation Area, and Calico Ghost Town Regional Park. The region's centralized location allows residents to brag that they can snow ski, dune buggy and surf on the same day. City dwellers live just 45 minutes from the golf resorts of Palm Springs, 35 minutes from the ski resorts of San Bemardino Mountains, and 60 minutes from Southern California's famous beaches. In 1997, Roger Penske, owner of Penske Motorsports turned an old, rusting Kaiser Steel Mill in Fontana, into a sprawling, state-of-the-art racing facility. Taking a big risk that the large Southern Califomia marketplace had a desire for motorsports competition, he preceded to build what is now California Speedway. The track currently plays host to six major touring series, including the NASCAR Winston Cup Series, NASCAR Winston West Series and CART FedEx Championship Series. Transportation Situated in the midst of the most heavily populated area in California, the County has easy access to excellent roads, rail and air transportation. The San Bernardino Freeway (Interstate 10) provides direct access to downtown Los Angeles to the west. Bus service is provided by Continental Trailways Bus System and Greyhound Bus Lines. The Omnitrans Transit District provides bus service between most County cities. Most interstate common carrier truck lines operating in California serve the County. The County has access to many airports. These are Cable, Chino, Daggett, Hesperia, San Bernardino, Southern California Logistics airport and Ontario International airport. Ontario International airport is one of the fastest growing airports on the west coast. This airport is operated by the Los Angeles Department of Airports. Ontario International Airport serves 6.4 million annual passengers with 10 airlines handling 250 daily flights to provide service to every major city in the U.S. Ontario International Airport airlines include Southwest, United, Delta, Alaska, America West, American, Northwest, Continental and TWA. Commuter service is provided by United Express. Palm Springs Regional Airport is located within 60 miles of the County. It operates service through Alaska Airlines, American, Northwest, United, America West Express, American Eagle, Skywest, US Airways Express, and United Express. County-operated general aviation airports include those in Thermal, Hemet, Blythe and French Yalley. The cities of Riverside, Corona and Banning also operate general aviation airports. The Ports of Los Angeles and Long Beach are both readily accessible via freeways. In 1989, the voters of the County approved the imposition ora I/2~ sales tax countywide to be used for transportation purposes. These funds are administered by the San Bernardino County Transportation Commission. The Sales Tax went into effect on April 1, 1990, and the first collections were remitted to A-5 the Authority in mid-May, 1990. In the first full Fiscal Year of collection, 1990-1991, the Authority received $50,654,637 in Sales Tax Revenues. Of that amount, approximately $43,877,047 would have consisted of Pledged Sales Tax Revenues if any Bonds had been outstanding at that time. The Authority estimates that the amount of Sales Tax Revenues actually received in the first Fiscal Year of collection understates potential Sales Tax Revenues during that period because of (i) additional costs associated with the start-up and initial collection of the Sales Tax within the County and (ii) the time it took to collect the increased Sales Tax on all eligible uses and transactions. Other transportation agencies within the State have also experienced such additional costs and lags in collection of the initial imposition of I/2¢ sales taxes. Since the introduction of the Sales Tax in April 1990 (and computed as of June 30, 2000), the Authority has received approximately $627,099,837 in Sales Tax Revenues. The sales tax will continue to be collected for an additional 18 year period. The Authority's historical Sales Tax Revenues are shown below: HISTORICAL SALES TAX REVENUES Fiscal Year Ended Actual 1/2~ Change from June 30 Sales Tax Revenues Prior Fiscal Year 1990' $4,125,778 1991 50,654,637 1992 53,764,325 6.14% 1993 54,747,612 1.83 1994 54,842,450 0.17 1995 57,960,503 5.69 1996 62,037,468 7.03 1997 64,846,755 4.53 1998 69,420,443 7.05 1999 73,243,968 5.51 2000 81,435,998 I 1.18 Source: San Bemardino County Transportation Authority *Represents receipts for rise period April 1, 1990 through June 30, 1990. A program has been developed to allocate these funds to both regional and local street and road improvement projects. In addition, some funds will also be dedicated to the improvement of rail transportation commuting systems. The County, in cooperation with Riverside, Orange and Los Angeles counties, has developed a regional commuter rail system through the purchase of existing tracks and rights-of-ways from the Southern Pacific and Santa Fe corporations. This regional commuter rail system became operational in 1993. Education Public instruction in the County is provided by 25 school districts. Higher education includes Barstow Community College, California State University, San Bernardino, Chaffey Community College, Copper Mountain College, Crafton Hills College, San Bernardino Community College, San Bernardino Valley College, Victor Valley Community College. APPENDIX B Audited Financial Statements of the East Valley Water District as of June 30, 1999 and 2000 ]8-1 APPENDIX C DEFINITIONS The following are definitions of certain terms used in the Official Statement. Authorized Officer. The term "Authorized Officer", when used with respect to the District, means the President or the Vice President of the Board of Directors, General Manager, Secretary or any deputy or assistant of the General Manager designated by the General Manager or any other officer of the District which is designated by the Board of Directors of the District as an Authorized Officer. The term "Authorized Officer", when used with respect to the Corporation, means the President, any Vice President, Secretary, Assistant Secretary or Treasurer of the Corporation or any other officer of the Corporation which is designated by the Board of Directors of the Corporation as an Authorized Officer. Bond Counsel or Special Counsel. The terms "Bond Counsel" or "Special Counsel" means a nationally recognized law firm specializing in the area of tax-exempt municipal finance. Bonds. The term "Bonds" means all revenue bonds or notes of the District authorized, executed, issued and delivered by the District, including any Water Revenue Bonds authorized by the voters of the District on May 25, 1965 and to be issued after the execution and delivery of the Certificates, the payments of which are on a parity with the Installment Purchase Payments and which are secured by the Net Revenues of the District. The term Bonds does not include bonds heretofore or hereafter issued required by law to be paid from the District assessments. Business Day. Each day which is neither a Saturday or Sunday nor another day on which banking institutions in New York, New York or Los Angeles, California are authorized or obligated by law or executive order to be closed. Certificate Year. The term "Certificate Year" means with respect to the Certificates, the period beginning on the Delivery Date and ending on November 30, 2001 and, thereafter, the period beginning on December 1 of each year and ending on November 30 of the subsequent year or until there are no longer any Certificates Outstanding. Contracts. The term "Contracts" means the Installment Purchase Agreement and any amendments and supplements thereto, and all contracts of the District authorized and executed by the District, the payments under which are on a parity with the Installment Purchase Paymems and which are secured by the Net Revenues of the District. Continuing Disclosure Agreement. The term "Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement dated as of April 1, 2001, by and between the District and Union Bank of California, N.A., as Dissemination Agent, as it may be amended from time to time in accordance with the terms thereof.. Corporation. The term "Corporation" means the East Valley Public Facilities Corporation. Cost of Issuance. The term "Cost of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the Corporation or the District and related to the authorization, execution and delivery of the Installment Purchase Agreement and the Trust Agreement and the related sale of the Certificates, including, but not related to, costs of preparation and reproduction of documents, costs of CoI rating agencies and costs to provide information required by rating agencies, municipal bond insurance policy premium, filing fees, initial fees and charges of the Trustee, fees and charges of the Corporation, legal fees and charges, fees and expenses of consultants and professionals, fees and expenses of the financial advisor and special counsel, fees and charges for preparation, execution and safekeeping of the Certificates and any other charge, cost or fee in connection with the original sale, execution and delivery of the Certificates. Debt Service. The term "Debt Service" means, for any Fiscal Year, the sum of (1) the interest accruing during such Fiscal Year on all outstanding Bonds, assuming that all outstanding serial Bonds are retired as scheduled and that all outstanding term Bonds am prepaid or paid from sinking fund payments as scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any Bonds), (2) that portion of the principal amount of all outstanding serial Bonds maturing on the next succeeding principal payment date that would have accrued during such Fiscal Year if such principal amount were deemed to accrue daily in equal amounts from the preceding principal payment date or during the year preceding the first principal payment date, as the case may be, (3) that portion of the principal amount of all outstanding term Bonds required to be prepaid or paid on the next succeeding prepayment date (together with the prepayment premiums, if any, thereon) that would have accrued during such Fiscal Year if such principal amount (and prepayment premiums) were deemed to accrue daily in equal amounts from the preceding prepayment date or during the year preceding the first prepayment date, as the case may be, and (4) that portion of any payments, including the Installment Purchase Payments, required to be made at the times provided in the Contracts that would have accrued during such Fiscal Year if such payments were deemed to accrue daily in equal amounts from, in each case, the preceding payment date of interest or principal or the date of the pertinent Contract, as the case may be. For purposes of this definition, any Contract or Bonds issued or to be issued by the District which bears interest at a variable rate shall for all purposes hereunder be assumed to bear interest at a fixed rate equal to (i) 7% and (ii) the highest variable rate borne over the preceding twenty-four (24) months by outstanding variable rate debt issued by the District or, if no such variable rate debt is at the time outstanding, by variable rate debt for which the interest rate is computed by reference to an index comparable to that utilized in determining the interest rate for the Contract then proposed to be entered into or the Bonds then proposed to be issued. Delivery Date. The term "Delivery Date" means the date of delivery of the Certificates to the initial pumhaser or purchasers thereof. Federal Securities. The term "Federal Securities" means bills, certificates of indebtedness, notes, bonds, or similar securities which are direct, non callable obligations of the United States of America, CATS, TIGERS, STRPS or defeased municipal bonds rated AAA by S&P or Aaa by Moody's. Fiscal Year. The term "Fiscal Year" means the twelve-month fiscal period of the District which commences on July 1 in each calendar year and ends on June 30 of the following calendar year. Ind.e. pendent Financial Consultant or Independent Certified Public Accountant The terms "Independent Financial Consultant" or "Independent Certified Public Accountant" means any individual or firm engaged in the profession involved, appointed by the District, and who, or each of whom, has a favorable reputation in the field in which his/her opinion or certificate will be given, and: (1) Is in fact independent and not under domination of the District; C-2 (2) Does not have any substantial interest, direct or indirect, with the District; and (3) Is not connected with the District as an officer or employee of the District, but who may be regularly retained to make reports to the District. Installment Payment Dates. The term "Installment Payment Dates" means the fifteenth day of May and November or if such date is not a Business Day, the preceding Business Day. Installment Purchase Payment Fund. The term "Installment Purchase Payment Fund" means the account by that name established under, and held by the Trustee pursuant to, Section 402 of the Trust Agreement. Moody's Investors Service, Inc.or Moody's. The term "Moody's Investors Service" or Moody's" means Moody's Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and if such corporation shall for any reason no longer perform the functions of a securities rating agency, such terms shall be deemed to refer to any other nationally recognized rating agency designated by the District. Municipal Bond Insurance Potic¥. The term "Municipal Bond Insurance Policy" means the municipal bond insurance policy issued by insuring the payment when due of the principal of and interest on the Certificates as provided therein. Net Proceeds. The term "Net Proceeds", when used with respect to any insurance or condemnation award, means the gross proceeds from such insurance or condemnation award, paid with respect to the Project, remaining after payment therefrom of all expenses incurred in the collection of such gross proceeds. Net Revenues. The term "Net Revenues" means, for any Figcal Year, the Revenues for such Fiscal Year less the Maintenance and Operation Expenses for such Fiscal Year. 1994 Installment Purchase Agreement. The term "1994 Installment Purchase Agreement" means that certain Installment Purchase Agreement, dated as of October 1, 1994, by and between Corporation and District, as supplemented or amended from time to time. 1994 Installment Purchase Payments. The term "1994 Installment Purchase Payments" means the Installment Purchase Payment being paid by District to Coporation pursuant to the 1994 Installment Purchase Agreement. 1994 Project. The term "1994 Project" means the construction of the treatment plant, a reservoir and other capital improvements and appurtenances thereto, including equipment, all as more fully described in Exhibit B attached to this Installment Purchase Agreement. 1996 Installment Purchase Agreement. The term "1996 Installment Purchase Agreement" means the Installment Purchase Agreement by and between District and Corporation dated as of March 15, 1996 Relating to $8,140,000 East Valley Water District Refunding Certificate of Participation, Series 1996. Outstanding. The term "Outstanding" when used with reference to the Certificates, means, as of any date, the Certificates theretofore or thereupon being executed and delivered under the Trust Agreement except: C-3 ~ (i) Certificates canceled by the Trustee on or prior to such date; (ii) Certificates (or portions of Certificates) for the payment or redemption of which, moneys, equal to the principal amount or Redemption Price thereof, as the case may be, with interest to the date of maturity or redemption date, shall be held in trust under the Trust Agreement and set aside for such payment or redemption, (whether at or prior to the maturity or redemption date), provided that if such Certificates (or portions of Certificates) are to be redeemed, notice of such redemption shall have been given as provided in the Trust Agreement or provision satisfactory to the Trustee shall l~ave been made for the giving of such notice; and (iii) Certificates in lieu of or in substitution for which other Certificates shall have been executed and delivered pursuant to the Trust Agreement. Owner. The term "Owner" or "Certificate Owner" or "Owner of Certificates" or any similar term, when used with respect to the Certificates, means any person who is the owner as shown on the Certificate Register of any Outstanding fully registered Certificate. Permitted Encumbrances. The term "Permitted Encumbrances" means as of any particular time: (i) Liens for ad valorem taxes and assessments, if any, not delinquent or which the District may, pursuant to Section 413 of the Installment Purchase Agreement, ~.~ permit to remain unpaid. (ii) The Installment Purchase Agreement. (iii) The Assignment Agreement. (iv) The Trust Agreement. (v) Easements, rights of way and other rights, reservations, covenants, conditions or restrictions which do not impair or impede construction or operation of the Project as evidenced by the certificate of an Authorized Officer filed with the Trustee. Permitted Investments. The term "Permitted Investments" means (i). The following obligations to be used as Permitted Investments for all purpose, including defeasance investments in refunding escrow accounts. (1). Cash (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with obligations described in paragraph (ii) below), or (2). Direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United V States of America. C-4 (ii). The following Obligations to be used as Permitted Investments for all purposes other than defeasance investments in refunding escrow accounts. (1). Obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including: · Export-Import Bank · Farm Credit System Financial Assistance Corporation · Farmers Home Administration General Services Administration · U.S. Maritime Administration · Small Business Administration · Government National Mortgage Association (GNMA) · U.S. Department of Housing & Urban Development (PHA's) · Federal Housing Administration; (2). Senior Debt Obligations rated "AAA: by Standard & Poor's Corporation (S&P) and "Aaa" by Moody's Investor Service, Inc. (Moody's) issued by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. Senior debt obligations of other Government Sponsored Agencies approved by the Insurer; (3). U.S. dollar denominated deposit accounts, federal funds and banker's acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of "A-I" or "A-l+" by S&P and "P-I" by Moody's and maturing no more than 360 days after the date of pumhase. (Rating on holding companies are not considered as the rating of the bank); (4). Commercial paper which is rated at the time of purchase in the single highest classification, "A-l+" by S&P and "P-I" by Moody's and which matures not more than 270 days after the date of purchase; (5). Investments in a money market fund, including funds of the Trustee and its affiliates, rated "AAAm" or "AAAm-G" or better by S&P; (6). Pre-refunded Municipal Obligations defined as follows: Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local government unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (a) Which are rated, based on an irrevocable escrow account or fund (the "escrow"), in the highest rating category of S&P and Moody's or any successor thereto; or (b) (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of C-5 cash or obligations described in paragraph A (ii) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate; (ii) Investment agreements approved in writing by the Insurer [supported by appropriate opinions of counsel] with notice to S&P; and (7). Other forms of investments (including repurchase agreements) approved in writing by the Insurer with notice to S&P. (iii). The Value of the above investments shall be determined as follows: "Value," which shall be determined as of the end of each month, means that the value of any investments shall be calculated as follows: (I). As to investments the bid and asked prices of which are published on a regular basis in The Wall Street Journal (or, if not there, then in The New York Times): the average price of the bid and asked prices for such investments so published on or most recently prior to such time of determination; (2). As to investments the bid and asked prices of which are not published on a regular basis in The Wall Street Journal or: The New York Time: the average bid price at such time of determination for such investments by any two nationally recognized government securities dealers (selected by the trustee in its absolute discretion) at the time making a market in such investments or the bid price published by a nationally recognized pricing service; (3). As to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest; and (4). As to any investment not specified above: the value thereof established by prior agreement between the District, the Trustee and the Insurer. Rebate Regulations. The term "Rebate Regulations" means the proposed, temporary, and final Treasury Regulations issued under Section 148(f) of the Code. Record Date. The term "Record Date" means the close of business on the fifteenth day of the month preceding a Payment Date, whether or not such day is a Business Day. Redemption Fund. The term "Redemption Fund" means the fund by that name established under, and held by the Trustee pursuant to, Section 615 of the Trust Agreement. C-6 Reserve Fund. The term "Reserve Fund" means the account by that name established under, and held by the Trustee pursuant to, Section 403 of the Trust Agreement. Reserve Requirement. The term "Reserve Requirement" means the least of (i) 10% of the original proceeds of the Certificates, (ii) Maximum Annual Debt Service on the Certificates, or (iii) 125% of Average Annual Debt Service on the Certificates, as certified in writing by the District to the Trustee. Responsible Officer. The term "Responsible Officer" means any officer of the Trustee assigned to administer its duties under this Trust Agreement. Revenues. The term "Revenues" means ail income, rents, rates, fees, charges and other moneys derived from the ownership or operation of District's water system, including, without limiting the generality of the foregoing, (1) all income, rents, rates, fees, charges, business interruption insurance proceeds or other moneys derived by District from the sale, furnishing and supplying of the water or other services, facilities, and commodities sold, furnished or supplied through the facilities of or in the conduct or operation of the business of the water system, plus (2) proceeds of District's share of the County's 1% property tax received by District, if any, plus (3) the earning on and income derived from the investment of such income, rents, rates, fees, charges, or other moneys, including District reserves, plus (4) the proceeds of any stand-by or water availability charges collected by District, but excluding in all cases customer deposits or any other deposits or advances subject to refund until such deposits or advances have become the property of District and excluding any proceeds of assessment required by law to be used by District to pay bonds heretofore (including District's Series 1966 Bonds) or hereafter issued and to pay the contract payments due under the State Water Project Contract. Six-Month Period. The term "Six-Month Period" means, with respect to a particular issue of Certificates or parity obligations, the period of time beginning on the Delivery Date and ending six consecutive months thereafter, and each six-month period thereafter until the latest maturity date of the applicable Certificate or parity obligation issue (and any certificates that refund the particular certificate issue). Standard & Poor's or S&P. The term "Standard & Poor's. or "S&P" means Standard & Poor's Ratings Group, a corporation located at 25 Broadway, New York, New York 10004, its successors and assigns, and if such corporation shall for any reason no longer perform the functions of a securities rating agency, such terms shall be deemed to refer to any other nationally recognized rating agency designated by the District. Tax Certificate. The term "Tax Certificate" means that certain Tax Certificate executed on the Delivery Date by the District with respect to the Certificates. Trust Office. The term "Trust Office" means the office of the Trustee set forth in the Trust Agreement and such other offices as the Trustee may designate from time to time. Trustee. The term "Trustee" means Union Bank of California, N.A., or its successor in interest acting as trustee under the Trust Agreement and as assignee of Corporation pursuant to the Assignment Agreement C-7 2001 Project. The term "2001 Project" means the construction of a reservoir and other capital improvements and appurtenances thereto, including equipment, all as more fully described in Exhibit B attached to the Installment Pumhase Agreement. Written Order of the District. The term "Written Order of the District" means a written order signed in the name of the District by its Authorized Officer. Any such order may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. C-8 APPENDIX D Form of Special Counsel's Opinion I)-I APPENDIX E Book-Entry Only System The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Certificates. The Certificates will be issued as fully-registered securities registered in the name of Cede & Co. (DTC*s partnership nominee). One fully-registered Certificate will be issued for each maturity of the Certificates, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of the Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Certificates on DTC's records. The ownership interest of each actual purchaser of each Certificate ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Certificates, except in the event that use of the book-entry system for the Certificates is discontinued. To facilitate subsequent transfers, all Certificates deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Certificates with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC's records reflect only the identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. E-1 Redemption notices will be sent to Cede & Co. If less than ail of the Certificates within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to the Certificates. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible a~er the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Certificates wilt be made to DTC. DTC's practice is to credit Direct Participants' accounts on payment dates in accordance with their respective holdings shown on DTC's records unless DTC has reason to believ~ that it will not receive payment on payment dates. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such Participant and not of DTC, the Fiscal Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the District or the Fiscal Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Certificates at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, certificates are required to be printed and delivered, all as further provided in the Trust Agreement. The District can make no assurances that DTC or DTC Participants will distribute notices received, including redemption notices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC will act in a manner described in this Official Statement. The District or the Trustee may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered, all as further provided in the Trust Agreement. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy thereof. E-2 APPENDIX F Specimen Municipal Bond Insurance Policy and Endorsement F-I A~PPENDIX G SUM~IARY OF CONTINUING DISCLOSURE AGREEMENT The following is a summary of the Continuing Disclosure Agreement (the "Disclosure Agreement.) The summary is not complete of definitive and reference should be made to said document for the complete text thereof. The Disclosure Agreement is being executed and delivered by the District, the Dissemination Agent and the Trustee for fl~e benefit of the Certificateholders and in order to assist the Participating Underwriter (defined below) in complying with the Rule (defmed below). The District, the Dissemination Agent and the Trustee acknowledge that the Corporation has undertaken no responsibility with respect to any reports, notices or disclosures provided or required under this Disclosure Agreement, and has no liability to any person, including any Holder of the Certificates, with respect to any such reports, notices or disclosures. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in the Disclosure Agreement, the following capitalized terms will have the following meanings: "Annual Reports" means any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Disclosure" Representative" means the General Manager_of the District or his or her designee, or such other person as the District designates in writing to the Dissemination Agent and the Trustee from time to time. "Dissemination Agents" means, initially, Union Bank of California, N.A., acting in its capacity as Dissemination Agent under the Disclosure Agreement, or any successor Dissemination Agent designated in writing by the District and which has fiLed with the Trustee a written acceptance of such designation. "Listed Events" means any of the events listed in Section 5(a) of the Disclosure Agreement. "National Repository" means any Nationally Recognized Munieipa! Securities Information Repository for purposes of the Rule. Currently, the following are National Repositories: Bloomberg Municipal Repositories P.O. Box 840 Interactive Data Princeton, N.J. 08542 -0840 Attn: Repository Phone: (609) 279-3225 100 Williams street Pax: (609) 279-5962 New York, NY 10038 E~maii: Munis~Bloomber§.eom Phone: (212) 771-6899 Fax: (212) 771-7390 DPC Data Inc. E-mail: NRMSIR~interactivedata.com One Executive Drive Fort Lee, NJ 07024 Standard & Poor's J.J. Kenny Repository Phone: (201) 346-0701 55 Water Street Fax: (201) 947-0107 45th Floor ~ E-mail: nnnsir~dpcdata.com New York, NY 10041 Phone: (212) 438-4595 Fax: (212) 438-3975 E-mail: nrmsir repository~sandp.com A current list of Nationally Recognized Municipal Securities Information Repositories approved by the Securities and Exchange Commission can be found on the Internet at http://www.sec.gov/consumer/nrmsir.htm. "Participating Underwriters" means any of the original underwriters of the Certificates required to comply with the Rule in connection with offering of the Certificates. "Repository" means each National Repository and each State Repository. "Kule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" means any public or private repository or entity designated by the State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of the Disclosure Agreement, there is no State Repository. "Tax-exempt" means that interest on the Certificates is excluded from gross income for federal income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax or environmental tax. Provision of ,dnnual Reports. (a) The District will, or will cause the Dissemination Agent to, not later than January 1 of each year, commencing in 2002, provide to each Repository an Annual Report which is consistent with the requirements the Disclosure Agreement. Not later than fffieen (t5) Business Days prior to said date, the District will provide the Annual Report to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in the Disclosure Agreement; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report if they are not available by the date required above for the filing of the Annual Report. Each Annual Report will be provided at least annually notwithstanding any fiscal year longer than 12 calendar months. The District's fiscal year is currently effective from July 1 to the immediately succeeding June 30 of the following year. The District will promptly notify each Repository or the Municipal Securities Rulemaking Board and the Dissemination Agent and the Trustee of a change in the fiscal year dates. (b) If by fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to the Repositories, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent will contact the District to determine if the District is in compliance with subsection (a). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the Repositories by the date required in subsection (a), the Dissemination Agent will send a notice to each Repository or the Municipal Securities Rulemaking Board in substantially the fon'a attached as Exhibit A of the Disclosure Agreement. G-2 (d) The Dissemination Agent will: (i) determine each year prior to the date for providing the Annual Report the name and address of each Nationa! Repository and each State Repository, if any; and (ii) to the extent the District has filed the Annual Report with the Dissemination Agent, file a report with the District and (if the Dissemination Agent is not the Trustee) the Trustee certifying that the Annual Repor~ has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided. Content of Annual Reports. The Distriefs Annual Report will contain or incorporate by reference the following: (a) The District's Annual Report will contain or incorporate by reference A the audited financial statements of the District for the most recent fiscal year of the District then ended (or, if not available at the time of filing, the unaudited financial statements). Audited financial statement, if any, of the District wilt be audited by such auditor as will then be required or permitted by State law or the Trust Agreement. Audited financial statements will be prepared in accordance with generally accepted accounting principles as prescribed for governmental units by the Govermnental Accounting Standards Board; provided, however, that the District may from time to time, if required by federal or State legal requirements, modify the basis upon which its financial statements are prepared. In the event that the District modifies the basis upon which its financial statements are prepared, the District will provide a notice of such modification to each Repository, including a reference to the specific federal or state law or regulation specifically describing the legal requirements for the change in accounting basis. (b) Any or all of the items listed above may be incorporated by reference to other documents, including official statements of debt issues with respect to which the District is an "obligated person" (as defined by the Rule), which have been filed with each of the Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The District will clearly identify each such other document so incorporated by reference. Reporting of $ign~cant Events. (a) This section governs the giving of notices of the occurrence of any of the following events: (1) principal and interest payment delinquencies. (2) non-payment related defaults. (3) unscheduled draws on the Reserve Fund reflecting financial difficulties. (4) unscheduled draws on any credit enhancements securing the Certificates reflecting financial difficulties. G-2 (5) any change in the provider of any letter of credit or any municipal bond insurance policy securing the Certificates or any failure by the providers of such letters of credit or municipal bond insurance policies to perform on the letter of credit or municipal bond insurance policy. (6) adverse tax opinions or events adversely affecting the tax-exempt status of the Certificates. (7) amendment to the Trust Agreement or the Disclosure Agreement modifying the rights of Certificate holders. (8) unscheduled redemption of any Certificate. (9) defeasances. (10) any release, substitution, or sale of property securing repayment of the Certificates. (I 1) rating changes. (b) The Trustee will, promptly aRer obtaining actual knowledge of the occurrence of any of the Listed Events, without any obligation to determine the materiality of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and request that the District promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to the Disclosure Agreement; provided that the failure by the Trustee to so notify the Disclosure Representative and make such request will not relieve the District of its duty to report Listed Events as required by this Section 5 nor impose any liability upon the Trustee. For purposes of the Disclosure Agreement, "actual knowledge" of the occurrence of such Listed Events will mean knowledge by a responsible officer at the principal corporate trust office of the Trustee. (c) Whenever the District obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Trustee pursuant to subsection (b) or otherwise, the District will as soon as possible deterraine if such event would be material under applicable federal securities laws,provided, that any event under subsection (a)(6) will always be deemed to be material. (d) I f the District has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the District will promptly notify the Dissemination Agent in writing. Such notice will instruct the Dissemination Agent to report the occurrence pursuant to subsection (f). (e) If in response to a request under subsection (b), the District determines that the Listed Event would not be material under applicable federal securities laws, the District will so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f). (f) If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed Event, the Dissemination Agent will file a notice of such occurrence with each National · ~' Repository or the Municipal Securities Rulemaklng Board and, in each case, the State Repository. Notwithstanding the foregoing notice of Listed Events described in subsections (a)(4) and (5) need not be G-3 given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Certificates pursuant to the Trust Agreement. Termination of Reporting Obligation. The obligation of the District, the Trustee and the Dissemination Agent under the Disclosure Agreement will terminate upon the defeasance, prior redemption or payment in full of all of the Certificates. If such termination occurs prior to the final maturity of the Certificates, the District will give notice of such termination in the same manner as for a Listed Event. Dissemination ~lgent. The District may, from time to thne, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign upon at least 30 days' written notice to the District, the Corporation and the Trustee. If at any time there is not any other designated Dissemination Agent, the Trustee will be the Dissemination Agent. The initial Dissemination Agent is First Trust of California, National Association. Amendment: Waiver. (a) The Disclosure Amendment may be amended, by written agreement of the parties, without the consent of the Holders (except to the extent required under clause 4(ii) below), if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legnl (including regulatory) requirements, a change in law (including roles or regulations) or in interpretations thereof, or a change in the identity, nature or status of the District 'or the type of business conducted thereby, (2) the Disclosure Agreement as so amended would have complied with the requirements of the Rule as of the date of the Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, (3) the District will have deliver:ed to the Trustee an opinion of a nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the District and the Trustee, to the same effect as set forth in clause (2) above, (4) either (i) the District will have delivered to the Trustee an opinion of nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the District and the Trustee, to the effect that the amendment does not materially impair the interests of the Holders or (ii) the Holders consent to the amendment to the Disclosure Agreement pursuant to the same procedure as are required for amendments to the'Trust Agreement with consent of Holders pursuant to the terms of the Trust Agreement as in effect on the date of the Disclosure Agreement, and (5) the District will have delivered copies of such opinion and amendment to each Repository. (b) The Disclosure Agreement may be amended, by written agreement of the parties, upon obtaining consent of Holders as required for amendments to the Trust Agreement pursuant to Article IX of the Trust Agreement as in effect on the date of the Disclosure Agreement. (c) To the extent any amendment to the Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to the Disclosure Agreement, the first Annual Report provided thereafter will include a narrative explanation of the reasons for the amendment and the impact of the change. (d) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made will present a comparison between the f'mancial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison will include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information. A G-4 notice of the change in the accounting principles will be sent to the Repositories in the same manner as for a Listed Event under Section 5 of the Disclosure Agreement. ~ldditional Information. Nothing in the Disclosure Agreement will be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in the Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by the Disclosure Agreement, the District will have no obligation under the Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. The District acknowledges and undemtands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the District, and that under some circumstances compliance with the Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the District under such laws. Default._In the event of a failure of the District, the Dissemination Agent or the Trustee to comply with any provision of the Disclosure Agreement, the Trustee may (and, at the request of any Participating Underwriter or the Holders of at least 25% aggregate principal amount of Outstanding Certificates, will), or any Certificateholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under the Disclosure Agreement. A default under the Disclosure Agreement will not be deemed an Event of Default under the Trust Agreement, and the sole remedy under the Disclosure Agreement in the event of any failure of the District to comply with the Disclosure Agreement will be an action to compel performance. Duties, Immunities and Liabilities of the Trustee and the Dissemination..~gent. Article A V of the Trust Agreement is applicable to this Disclosure Agreement as if the Disclosure Agreement were (solely for this purpose) con'mined in the Trust Agreement. The Dissemination Agent (if other than the Trustee or the Trustee in its capacity as Dissemination Agent) will have only such duties as are specifically set forth in this Disclosure Agreement, and the District agrees to indemni~ and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties under the Disclosure Agreement, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Disseminatinn Agent's negligence or willful misconduct; provided, however, in connection with the performance of duties assigned to it under the Disclosure Agreement, the Trustee will not be responsible to any person for any failure by the District or the Dissemination Agent (if other than the Trustee) to perform duties or obligations imposed hereby, or for any decision of the District regarding the reporting of Listed Events. The obligations of the District under this section will survive the resignation or removal of the Dissemination Agent or the Trustee and payment of the Certificates. Beneficiaries. This Disclosure Agreement will inure solely to the benefit of the District, the Corporation, the Trustee, the Dissemination Agent, the Participating Underwriter and Holders from time to time of the Certificates, and will create no rights in any other person or entity. G-5 East Valley Water District Reservoir Project and Series 1994 Refunding, Series 2001 Water Revenue Certificates of Participation INSURANCE BID Insurer Insurance Bid (bps) DSRF Surety (%) Ambac Assurance Corp. 22.3 1.89 Financial Guaranty Insurance Co. 21.7 1.6 Financial Security Assurance 22,0 2.2 MBIA Insurance Corporation 21.5 1.5 RATING Rating Agency Rating Standard & Poor's A Moody's A2 East Valley Water District, CA's Refunding Certificates of Participation Rated 'A' Markela Soward, San Francisco (1) 415-371-5006; Robert Sakai, San Francisco (1) 415-371-5015 SAN FRANCISCO (Standard & Poor's CreditWire) March 21, 2001-- Standard & Poor's today assigned its single-'A' rating to the East Valley Water District, Calif.'s $11.81 million refunding certificates of participation series 2001. The certificates are scheduled to sell on April 11, 2001. The outlook is stable The rating reflects: -- Good financial performance; -- A manageable capital plan with minimal future debt needs; -- A stable, primarily residential customer base, with affordable rates; and -- Ample water supply and treatment capacity. The certificates are secured by a first-lien pledge of net revenues on the district's water system. The proceeds wil~ finance the replacement of an existing water reservoir and refund the 1994 certificates of participation. Financial performance has been good with net revenues providing strong debt service coverages of 2.19x-2.89x during fiscals 1998-2000. Additionally projected coverages continue to remain strong at no lower than 1.62x through 2005. The district provides both water and sewer services. While the certificates are secured by net revenues from the water system, the district combines its unrestricted cash for both services. At the end of fiscal 2000, the overall liquidity of the district is good with unrestricted cash for water and sewer operations of around $9.5 million which is equivalent to 10 months of operating expenses. Cash reserves are expected to be maintained at current levels. The district's five-year capital program which will primarily be cash funded, does not require additional long term debt. The district's residential water rates remain affordable at around $15.80 per 1,000 cf. Recently the district increased its water rates by 10%, but no future rate increases are currently expected. The district's combined water and sewer residential rates also remain low around $34.00 per 1,000 cf. East Valley Water District (population 61,500) encompasses the entire city of Highland and includes portions of the city of San Bernardino and San Bernardino county. The district's customers are mostly residential (87%) with the remaining 13% being commercial. The district has more than a sufficient water supply with a maximum pumping capacity of about 42 million gallons a day (mgd) and an average demand of about 21- 22 mgd. The district mainly obtains its water supply from 23 active deep groundwater wells, but also has surface water rights to the Santa Aha River, along with a 4mgd surface treatment plantl The district expects the stable 1%-2% increases in its customer base to continue as more residents move into San Bernardino County for its very affordable housing (median price $120,000). Income levels in the city of Highland are below average with median household and per capita income 89% and 72% of the national averages, respectively. Legal provisions are adequate and consist of a 1.10x rate covenant and historical additional bonds test. A fully funded debt service reserve fund is also provided. OUTLOOK: STABLE The outlook reflects Standard & Poor's expectation of continued good financial performance, with affordable water rates. -- CreditWire Long-term Issue Credit Ratings http://'~w.standardandpoors.com/ResoureeCenter/MunIssRatLT.hlm[ Long-term Issue Credit Ratings Issue credit ratings are based in varying degrees, on the following considerations: " Likelihood of payment--capacity and willingness of the obligor to meet its financial an obligation in accordance with the terms of the obligation; · Nature of and provisions ofthe obligation; and · Protection afforded by, and relative position of, the obligation in the event of bankruptcy, r other arrangement under the laws of bankruptcy and other laws affecting creditors' rights. The issue ratings definitions are expressed in terms of default risk. As such, they pertain to senior obligations of obligations are typically rated lower than senior obligations, to reflect the lower priodty in bankruptcy, as An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's. The obligor's capacity to commitment on the obligation is extremely strong. An obligation rated 'AA' differs from the highest-rated obligations only in small degree. The obligor's capacity to commitment on the obligation is very strong. A An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes in circumstances and eco than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitment on the strong. BBB An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse economic cond~o circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the BB, B, CCC, CC, and C Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant speculative characteristics. ' least degree of speculation and 'C' the highest. While such obligations will likely have some quality and protective these may be outweighed by large uncertainties or major exposures to adverse conditions. An obligation rated 'BB' is less vulnerable to nonpayment than other speculative issues. However, it faces uncertainties or exposure to adverse business, financial, or economic conditions, which could lead to the obii capac~y to meet its financial commitment on the obligation. B An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB', but the obligor currently has meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely im capac~ or willingness to meet its financial commitment on the obligation. CCC An obligation rated 'CCC' is currently vulnerable to nonpayment and is dependent upon favorable busines economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse bu or economic cond~ons, the obligor is not likely to have the capacity to meet its financial commitment on ! of 3 3/21/01 9:29 AM Long-term Issue Credit Ratings http://www.standardandpoors.comFKesourceCenter/Munls sRatLT.ht~nl CC An obligation rated '~C' is currently highly vulnerable to nonpayment. C The 'C' rating may be used to cover a situation where a bankruptcy petition has been tiled or similar action has payments on this obligation are being continued. D An obligation rated 'D' is in payment default. The 'D' rating category is used when payments on an obligation are date due even if the applicable grace pedod has not expired, unless Standard & Poor's believes that such payme during such grace period. The 'D' rating also will be used upon the filing of a bankruptcy pe~on or the taking of a payments on an obligation are jeopardized. Plus (+) or minus (-) The ratings from 'AA' to 'CCC' may be modified by the addition of a plus or minus sign to show relative standing rating categories. c The 'c' subscript is used to provide additional information to investors that the bank may terminate its obligat tendered bonds if the long-term credit rating of the issuer is below an investment-grade level and/or the issuer's bo taxable. P The letter 'p' indicates that the rating is provisional. A provisional rating assumes the successful completion of the by the debt being rated and indicates that payment of debt service requirements is largely or entirely depe successful, timely completion of the project. This rating, however, while addressing credit quality subsequent to c project, makes no comment on the likelihood of or the risk of default upon failure of such completion. The investor his own judgment with respect to such likelihood and risk. Continuance of the ratings is contingent upon Standard & Poor's receipt of an executed copy of the escrow agre documentation confirming investments and cash flows. r The 'r' highlights derivative, hybrid, and certain other obligations that Standard & Poor's believes may experience high variability in expected returns as a result of noncredit risks. Examples of such obligations are securities interest return indexed to equ~es, commodities, or currencies; certain swaps and options; and interest-only a mortgage securities. The absence of an 'r' symbol should not be taken as an indication that an obligation will exhi variability in total return. N.R. Not rated. Debt obligations of issuers outside the United States and its territories are rated on the same basis as domestic municipal issues. The ratings measure the creditworthiness of the obligor but do not take into account currency related uncertainties. Bond Investment Quality Standards Under present commercial bank regulations issued by the Comptroller of the Currency, bonds rated in the top ('AAA', 'AA', 'A', 'BBB', commonJy known as investment-grade ratings) generally are regarded as eligible for b 2 of 3 3/21/01 9:29 AM Loag-t~rm Issue Credit Ratkags http://www.standardandpoors.com/ResoureeCenter/MunlssRatLT.h~al Aisc, the laws of various states governing legal investments impose certain rating or other standards for obliga investment by savings banks, trust companies, insurance companies, and §duciades in general. Copyright © 199872000 standard & Poor's. A I dghts reservad. Pdvacy Policy .~va~...fa.. 3 of 3 3/21/01 9;29 AM Issuer Ratings hu~://www.m~dys.~m/m~dys/~ust/stafic~ntenff2~2~265735~asp?secti~n=rdef Ra~ing Definitions Issuer Ratings nn lotrodtm~on Moody's maintains five issuer rating systems: Senior Un~ter~tand~ng Risk Unsecured, Counterparty Ratings, Bank~ Mumcipal and Senior Implied ratings. Rating Approach Issuer Ratings are unlike our long-term debt ratings in that na~:ing D~finition~ they are assigned to issuers rather than specifc debt issues. Specific debt issues of the issuer may be rated differently and n~st~ Manag,~men! m'e considered um-ated unless individually rated by Moody's. n~oody~s Histo~ Unless specified, obhgations guaranteed by the issuer are Partnership~,/nttiances considered unrated and are not covered by thc issuer rathag. Usc of the Senior Implied system is re~Scted to the c~reers speculative-grade aniverse, where it is employed in order to ¢opyr~t fnfa~m.~'~loa ~ provide an indication of an issuer's general creditworthiness abstracted fi.om the details of an issuer's capital structure and sr~,-en ~aer ~aons corporate organization. ' The Senior Unsecured system is more widely used and reflects thc issuer's actual circumstances. · Senior Unsecured Issuer Ratings Senior Unsecured Issuer Ratings are opinions of the ability of entities to honor senior uasecured financial obligations and contracts denominated in foreign and/or domestic currency. Foreign Currency Issuer Ratings are subject to Moody's Foreign Currency Counay Ceilings. · Counterparty Ratings Issuer ratings that are assigned to der/vative product companies and clearinghouses (known as counterparty ratings) are opinions of the financial capacity of an obligor to honor its senior obligations under financial contracts, given appropriate documentation and authorizations. · Bank Issuer Ratings Issuer ratings that are assigned to banks are ophfiuns o£the financial capacity of a bank to honor its senior unsecured financial contracts. · Municipal Issuer Ratings 1 of 3 3/21/01 9:34 AM Issuer Ratings h~://www~m~dys~c~m/m~dys/~us~dsta~i~ntent/2~2~265?35~as~secti~n-~rdef Issuer ratings represent Moody's opinion about debt-service-repayment capacity of a government entity. Issuer ratings are assigned based on Moody's independent evaluation of a municipality's spec/fie credit characteristics. · Senior Implied Ratings Moody's Senior Implied Issuer Rating are generally employed within the speculative-grade universe. The Senior Implied Issuer Rating is an opinion of an issuer's ability to honor its finanalal obligations and is assigned to an issuer as flit had a ffmgle class of debt and a single consolidated legal entity structure. The Senior Implied Issuer Rating differs from Moody's Senior Unsecured Issuer Rating, which speaks to an obliger's senior unsecured obligations that may be junior in its capital structure and that also reflects the obligor's ectual corporate structure. By contrast, the Senior Implied Issuer Rating assumes away such smactural and legal complexities. Issuer Rating Symbols Moody's rating symbols for Issuer Ratings are identical to those used to show the credit quality of bonds. These rating gradations provide creditors with a simple system to measure an enfity's ability to meet its seinor financial obligations. Aaa Issuers rated Aaa offer exceptional finandtal security. While the creditworthiness of these entities is likely to change, such changes as can be visuahzed are most unIikely to Impair their fundamentally strong position. Aa Issuers rated Aa offer excellent financial security, Together with the Aaa group, they constitute what are generally known as high-grade entities. They are rated lower than Aaa-rated entities because long-term risks appear somewhat larger. A Issuers rated A offer good financial security. However elements may be present which suggest a susceptibility to impairment sometime in the future. Baa Issuers rated Baa offer adequate financial seenrity. However, cert£m protective elements may be lacking or may be unreliable over any great period oft[me. Ba Issuers rated Ba offer questionable financial security. Oflen the ability of these entities to meet obligatinns may be moderate and not well safeguarded in the future. B 2 of 3 3/21/01 9:34 .AM Issuer Ratings http://www.m~dys.~m/m~dys/~ust~staticc~tent~2~2~265735.as~?se~ti~=rdcf Issuers rated B offer poor financial security. Assurance of payment of obligations over any long period of thne is small. Caa Issuers rated Caa offer very poor fman~ml security, They may bc in default on their obhgations or there may be present clements of danger with respect to punctual payment of obligations. Ca Issuers rated Ca offer extremely poor financial security. Such entities are often in default on their obligations ur have other marked shortcomings. C Issuers rated C are the lowest-rated class of entity, ere usually in default on their obligations, and potential recovery values are low. Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating category from Aa to Caa. The moc[tfier 1 indicates that the issuer is in the lfigher end of its letter rating category; the mocYifier 2 indicates a m/d-range ranking; the modifier 3 indicates that the issuer is in the lower end of the letter ranking category. 3 of 3 3/21/01 9:34 AM P.O. Box 94~09 ~ate: March 12, 2001 . Sacramento, CA 94229-2709 Reference No.: //~ (916) 326-3420 Telecommunications Device for the Deaf Circular Letter No.: 200-043 No Voice (916) 326-3240 Distribution: I, III, VI/~ CalPERS www.calpers.ce.gov Circular Letter ,p ia,: TO: ALL PUBLIC AGENCIES . ' - ,<:, ., l~ki.~/~: ..... . . ~, SUBJECT: Cargill, et al. v. Metropolitan Water District of Southern California; et al. The purpose of this Circular Letter is to provide an update on the case of Cargill v. Metropolitan Water District of Southern California. As explained in Circular Letter No. 200-064, this case is a class action lawsuit brought against the Metropolitan Water District of Southern California (District) and approximately eighty private sector "temporary agencies" in Los Angeles County Superior Court. The plaintiffs are individuals who have performed services for the District who allege that they should be classified as District employees, These persons were allegedly designated as temporary agency employees, temporary employees or consultants instead of "regular employees." The plaintiffs allege they have been denied compensation, benefits, and employment rights as a result of this misclassification. The District and the other defendants deny these allegations. The District is a contracting public agency with CaIPERS. Under the law governing CalPERS, all persons in the employ of the District who are not expressly excluded by statute or under the terms of the District's contract with CalPERS must be enrolled as CalPERS members. Plaintiffs contend that they are employees entitie~i to CalPERS membership. Resolution of this issue will' require the court to determine the meaning of the pertinent membership provisions of the Public Employees' Retirement Law (PERL). State statutes that were originally enacted over 40 years ago govern the membership eligibility of individuals. The question before the court is the meaning of these statutes. CalPERS sought, and was granted, permission to intervene in the litigation as a party. CalPERS, plaintiffs, and the District each filed motions on the limited issue of CalPERS membership. On February 2, 2001, the trial court held a hearing and subsequently issued its decision granting the motions of CalPERS and the plaintiffs. -~ LAWOFFICESOF :!' : FE~ t /~ OR~OORYA. W~OiqER BERGlVIAN~ WED~R & DACEY~ ~C. JOHN V. DAC~ 10880 WI~HIRE BOUL~ARD r,.:" ~ oF- ~UNSEL MICHELE U. ~LDS~[TH TELEPHONE: (310) 470~110 ~EW R. HICKS RICHARD V. GODINO PAS~LO~YAM~NI Febm~ 12, 2001 OURF[LENO, 1038.09 Robert E. Martin General Manager EAST VALLEY WATER DISTRICT P.O. Box 3427 San Bemardino, CA 92413 Re: Dewayne Cargill, et al. v. Metropolitan Water District of Southern Ca., et al. Los Angeles Superior Court Case No. BC191881 (Consolidated with Case Nos. BC 194444 and BS052318) Dear Mr. Martin: Enclosed please find a copy of the trial court's ruling on Issue "A" in the above- referenced matter. As you will see, the trial court concluded that all common law employees are entitled to enrollment in CalPERS. This conclusion may have a significant impact on the way public agencies throughout the State operate and provide services. Metropolitan believes that this conclusion is in error as it fails to recognize the fundamental distinction between private and public employment, fails to read the Public Employees' Retirement Law ("PERL") as a whole, fails to acknowledge the many inconsistencies between the PERL and the proffered common law standard, and fails to admit that such an expansion of public pension benefits must occur only through the Legislature. Metropolitan presently intends to file a writ seeking appellate review of the trial court's ruling, as well as a stay on application of the common law standard. Even the trial court recognized that the "question presented here raises an issue of first impression having continuing public interest and concern." Ruling, p. 10. Indeed, the trial court stated: "Ifa party seeks review by writ of mandamus, this court urges the Court of Appeal to review Issue A under its inherent powers." Ruling, pp. 10-11. F:\1038\09\Corr~GENClES-02.wpd February 12, 2001 Page 2 By this letter, Metropolitan seeks also to determine which agencies are interested in filing an amicus curiae brief with the Court of Appeal. Such abriefwill accomplishtwo significant objectives. It will demonstrate to the Court of Appeal the potentially widespread impact and concern on this issue, which may make the Court of Appeal more likely to grant review. Second, it will allow you to protect your agency's interests and assist Metropolitan in arguing substantively against invocation of the common law standard. Because time is of the essence, we ask that you contact us directly at your earliest convenience if you have any questions or wish to be involved in any amicus brief. Thank you. Sin~rely, ~ MARK W.LW~ERMAN MWW:th Enclosure F:\lO38\O9\Corr\AGENCIES-O2.wpd · ,.,r.e~OR CO~O~,T SUPERIOR COURT OF THE STATE OF CALIFORNIA VOR Tl~V, COUNTY OV LOS A~CELHS ) DEWAY'NE CARGILL, et al., ) CLASS ACTION ) Petitioners and Plaintiffs, ) CASE NO. BC 191881 vs. ) STATEMENT OF DECISION ) RE: ISSUE A METROPOLITAN WATER DISTRICT ) OF SOUTHERN CALIFORNIA, et al., ) ) Respondents, ) ) and ) ) ADMINISTRATIVE BUSINESS ) SERVICES, INC., et al., ) ) Defendants. ) ) ) By this complex class action, Petitioners and Plaintiffs (Petitioners) claim eligibility for CalPERS enrollment as common law employees of Respondent Metropolitan Water District of Southern California (MWD). Issue A, as defined by the court's Case Management Order, raises the crucial threshold question: Whether MWD is mandated by the Public Employees' Retirement Law (PER.L) to e~oll all common law employees in CaLPERS? 1 CalPERS is authorized and administered under PER.L. Gov't Code §§ 20000 et seq. As a "contracting agency" bound by PERL, MWD must enroll "all" its "employees" for CalPERS benefits, unless they fall within one of PERL's express statutory exclusions or within a contractual exclusion contained in MV,rD's membership a~eement with the CalPERS Board. Gov't Code § 20502.. MWD's agreement with CalPERS contains no exclusion applicable here. MWD contends, in essence, that Petitioners are not "employees," as that term is defined by PERL. The statutory scheme does not, in MWD's view, reach common law employees not hired through MWD's merit selection process, especially when they receive their compensation from third-party employers who contract to provide workers to MWD. The contract service provider defendants (CDI Defendants) join MWD and add that, at most, Petitioners are co-emPloyees of MWD and third-party providers and, as such, are not eligible for CalPERS enrollment. Petitioners argue that PERL's compulsory enrollment requirements reach common law workers who are not pan of MWD's merit selection process, and the statute's enrollment provisions are not limited only to persons paid directly by MWD. Intervenor CalPERS asserts the statutory term "employee" includes common law employees, that MWD's civil service regulations are irrelevant to a proper interpretation of Legislative intent, and that MWD's paid-by-a-third-party distinction is not supported by statutory or case law dealing with PERL's mandatory em'ollment requirements. PERL does not contain a detailed definition of the term "emptoyee'"in relation to contracting agencies such as MWD. The statute simply defines an "employee" as: "Any person in the employ of any contracting agency..." Gov't Code § 20028(b). To resolve the question presented by Issue A, the court must first determine whether the Legislature intended to generally include common law employees within the meaning of section 20028's defirfition of"employee." The Califorda Supreme Court recently provided helpful interpretive guidance in California Ass 'n of Health Facilities v. Department of Itealth Services, 16 Cal. 4~h 284, 297 (1997). As a general rule, "[u]nless expressly provided, statutes should not be interpreted to alter the common law, and should be construed to avoid conflict with common law rules. [Citation.] 'A statute will be construed in light of common law decisions, unless its language" 'clearly and unequivocally discloses an intention to depart from, alter, or abrogate the common law rule concerning the particular subject matter... ') [Citations.]" [Citation.]' "(Goodman v. Zimmerman (1994) 25 CaI.App.ath 1667, 1676 [32 Cal.Rptr.2d 419].) Accordingly, "there is a presumption that a statute, does not, by implication, repeal the common law. [Citation.] Repeal by implication is recognized only where there is no rational basis for harmonizing two potentially conflicting laws." (People v. Zikorus (1983) 150 Cal.App.3d 324, 330 [197 Cal. Rptr. 509].) PERL does not purport to expressly alter or eschew the well-understood common law' definition of "employee." To the contrary, the Legislature plainly invoked the common law when excluding "[i]ndependent contractors who are not employees" from enrollment eligibility. Gov't Code § 20300(b). This statutory definition unmistakably indicates legislative awareness of, and reliance on, common law principles. As a recent example, when confronted with the otherwise undefined term "employee" in section 14107.2 of the Welfare and Institutions Code, the Second District Court of Appeal followed the common law, stating: "[A]s a general role, when 'employee' 3 is used in a statute without a definition, the Legislature intended to adopt the common law definition and to exclude independent contractors. [Citations.]" People v. Pabna, 40 Cal. App.4th 1559, 1565- 66 (1995). The common law has long been understood as the standard in California for determining employee status in both private and public sector relationships. See, Tieberg v. Unernployment Ins. App. Bd., 2 Cal.3d 943, 946 (1970); Greenaway v. Worlonen's Compensation Appeals. 269 Cal.App.2d 49, 54-55 (1969); City of Los Angeles v. Vaughn, 55 Cal.2d 198, 20l (1961). The Legislature was surely aware that, unless instructed otherwise, courts will apply common la~v principles when asked to interpret and apply section 20028's term "employee." ";rhe third-party employment structure, or potential "co-employer" status, created by MWD does not, under the common law, prevent Petitioners from becoming common law ~mployees of MWD. Federal cases under ERISA accurately state the law on point. Under the common law, workers provided by third parties can, in appropriate circumstances, become eligible for employer- provided retirement and other benefits. See e.g., Vizcaino v. United States District Court (Microsoft Corp.), 173 F.3d 713,724 (9t~ Cir. 1999), cert. denied, 528 U.S. 1105 (2000) ("IT]he determination of whether temps were Microsoft's common law employees tums not on whether they were also employees of an agency but rather on application of the Darden [common law] factors to their relationship with Microsoft."); Burrey v. PG&E, 159 F.3d 388 (9m Cir. 1998). Section 20001 of the Government Code articulates the purposes for establishing CalPERS as follows: The purpose of this part is to effect economy and efficiency in the public service by providing a means whereby employees who become superannuated or otherwise incapacitated may, without hardship or prejudice, be replaced by more capable employees, and to that end provide a retirement system consisting of retirement compensation and death benefits. The legislative purposes advanced by section 20001 are not inconsistent with requiring enrollment of common law employees. As MWD correctly points out, courts have consistently recognized that inducing competent people to enter and remain in public service is a primary purpose for creating public retirement systems such as CalPERS. See e.g., Packer v. Bd. Of Retirement of ,. Los Angeles County, 35 Cal.2d 212, 215 (1950). The availability of CalPERS benefits to persons treated as common law employees achieves the desired inducement while guarding aga!nst improper attempts to circumvent the requirement to enroll all eligible persons in CalPERS. MWD urges, however, that PERL's provisions, taken as a whole, evidence a Legislative intent not to include the specific category of potential common law employees represented by Petitioners. MW'D argues, in part, that Petitioners are not public employees, and thus not qualified for CalPERS enrollment, because they were not hired into regular positions opened by M,VD, and they did not participate in the Merit Selection System provided by MWD's Administrative Code. The Administrative Code, however, is municipal in nature and preempted by PERL. Marsille v. City of Santa Aha, 64 Cal. App.3d 764, 771 (1976). If PERL's definition.of employee includes Petitioners, MWD cannot avoid that result by operation of a separate Administrative Code. MW'D's reliance on Page v. City ofMontebello, 112 Cal. App.3d 658 (1980) is misplaced. The Page court did not hold that a person must be hired strictly pursuant to an existing local civil service framework to obtain a viable claim for CalP£RS benefits. Page does not limit public employee status only to civil servants and indicates in dicta that a "service contract" might have sufficed to support the benefits sought. Focusing on specific statutory terms, MWD urges that the requirement for "state service" set forth in section 20069 necessarily excludes Petitioners from enrollment. That provision, however, applies to service credits, not enrollment eligibility. Like other terms cited by MWD, "state service" relates only to compensation and service credit, is set forth in a separate statutory chapter, and addresses whether and to what extent an already enrolled person may qualify for certain benefits - questions distinct from resolution of Issue A. "State service" would be relevant if the context were as in Moore v. Board of Admin. of the SERS, 249 Cal. App.2d 338 (1966) where an already enrolled person claimed additional service credits for work performed for private litigants rather than directly or indirectly for the benefit of the state or a public entity. While the court in Moore held that benefits for a CalPERS member did not include time spent providing court reporting services to a private litigant paid for directly by the litigant, the court did not address the situation here presented where Petitioners' services were arguably rendered directly to a CalPERS contracting agency, MWD. A similar case cited by MW'D, Bro. vles v. Carter, 142 Cal.App.2d 647 (1956), is equally inapplicable for essentially the same reasorls. Section 2063 O's term "compensation" references "remuneration paid out of funds controlled by the employer," and section 20054's term "pension" references "contributions made fi.om employer controlled funds." As with "state service," these terms apply only to persons who are already CalPERS members and do not define who must be enrolled. Taken together, the statutory definitions of"state service," "compensation" and "pension" deal with accrual and calculation of 6 benefits, not whether, in the first instance, a person must be enrolled in CalPERS by a contracting agency such as MWD. The phrases "controlled by the employer" and "made from employer controlled funds" do not, on their face, except from mandatory enrollment persons paid through third parties. If they did. a contracting agency could use a private payToll service as a mechanism to avoid em'oiling all its employees. Government Code section 20028 provides in pertinent part: "Employee" means: (a) Any person in the employ of the state.., whose compensation, or at leas? that portion of his or her compensation that is provided by the state.., is paid out of funds directly controlled by the state... (b) Any person in the employ of any contracting agency... MWD apparently reads sections (a) and (b) together, infusing the "paid out of funds directly controlled by" of(a) into (b) by implication of other separate statutory provisions. The court would stretch statutory interpretation to the breaking point if it adopted this approach. When the Legislature places two definitional sections in such close proximity, and inserts key language in one definition while omitting it from the other, the court must conclude the omission was intentional, unless very strong evidence demonstrating a contrary intent can be found in related statutory provisions or a written record of Legislative intent. Adequate evidence of contrary intent has not been produced here, and the court must conclude that the Legislature did not intend to apply a "paid 7 out of funds directly controlled by" requirement to contracting agencies such as MWD. Moore v. Board ofAdmin, of SERS, supra., cited at length by MW-D, does not hold or imply that the direct compensation requirement of 20028(a) applies equally to 20028(b). Moore involved a person already enrolled for membership seeking service credits for court reporting work performed not for the ertrolling contracting agency, but for unrelated private parties. MWD's reliance on Adcock v. goardofAdmin, of PER$, 93 Cal. App.3d 399 (1979) and Attorney General Opinions Ops. Cal. Atty. Gen. Nos. 57-226, dated April 28, 1958, and 54-127, dated April 14, I955 is misplaced because they all deal only with section 20028(a) of the Government Code, which does not apply to contracting agencies such as MWD. The statutory phrase "paid out of funds directly controlled by" applies only t? employees meeting the statutory definition supplied by 20028(a) and not to persons qualifying under 20028(b). The distinction makes a real difference, and, in the context presently before this court, renders 20028(a) cases and opinions inapplicable. An interpretation of the relevant statutes allowing MWD to structure who must be enrolled by the device of compensation through an intermediary appears inconsistent with Legislative purposes articulated in PERL. Denying benefits to workers who would qualify as common law employees, but who are compensated through third parties, does not appear to be the type of "economy and efficiency" the Legislature had in mind when it wrote the broad, inclusive statutory language involved here. A contrary interpretation would allow CalPERS contracting agencies to unilaterally avoid their enrollment obligations by setting up a variety of third-party wage and benefit mechanisms, or by bypassing internal merit hiring systems, both of which appear inconsistent with the legislative requirement in section 20502 that contracting agencies must enroll all employees absent a statutory exclusion or a contractually agTeed upon exclusion expressly approved by the CalPERS Board. MWD argues that PERL lacks any provisions to handle enrollments of individuals who receive their paychecks from an intermediary, citing needs to obtain confidential employee information and to deduct conthbutions from employee pay as examples. MWD's obligations are to CalPERS. If it chooses to satisfy those obligations through alternative contractual arrangements made with an intermediary acceptable to CalPERS, it apparently can do so. Nothing, to the court's knowledge, prevents MWD from imposing contractual requirements, such as withholding CalPERS contributions, on third-party providers and obligating them to forward funds either directly to CalPERS or to MWD for transmission by it to CalPERS. MWD asserts that excluding Petitioners from enrollment in CalPERS is consistent with CalPERS' past practice with MWD. The CalPERS Board has not, to date, made a determination that MWD's agency employees must be enrolled. The Board, on the other hand, has not determined such employees need not be em'oiled, and CalPERS, as intervenor, here asserts that enrollment of common law employees is required. In addition, CalPERS cites a 1994 audit in which it instructed MWD to use the con-anon law test to determine whether independent contractors are employees entitled to enrollment. MW-D apparently did not contest the instructions, and thereafter applied the common law test in connection with independent contractors. The court pemeives no relevant distinction permitting application of the common law test to direct independent contractors for enrollment purposes but prohibiting its equal application to employees provided by third parties. Paying independent contractors directly is a distinction without a difference, having no bearing on PERL's enrollment requirements for contracting agencies. If it makes sense that the Legislature intended to require enrollment of persons who fail to achieve the status of independent contractor under the common law test, then it follows sensibly that the Legislature also intended to require enrollment of all who fall in that category either directly or indirectly, unless they are Excluded by an express statutory or contractual provision. MWD points out that most, if not all, Petitioners were aware when they began working for MWD that the arrangement did not provide for enrollment in CalPERS. The CDI Defendants argue that Petitioners waived all rights to CalPERS enrollment. Individual employment status under PERI., however, cannot be altered by private a~eement. Miller v. State of California. 18 Cal.3d 808, 813-814 (1977). On balance, reading the pertinent statutes as a whole, and in light of cases interpreting and applying those statutes, the court finds that the Legislature intended to mandate enrollment of common law employees in CalPERS under PERL in the circumstances alleged here by Petitioners. Issue A is resolved as follows: MWD is mandated by the Public Employees' Retirement Law to enroll ail common law employees in CaIPERS. Although it is unusual to receive a letter from counsel after oral argument responding to points made by opposing counsel during oral argument, the court accepts and has read and considered the arguments made in the letter dated February 7, 2001 submitted by MW-D's counsel. The question here presented raises an issue of first impression having continuing public interest and concern. The issue potentially relates to multiple lawsuits presently pending before this court in a group of related cases designated complex under CRC § 1800 et seq. If a party seeks review by writ of mandamus, this court urges the Court of Appeal to review Issue A under its inherent powers. See e.g., Liberty Mutual Ins. Co. v. Fales, 8 Cal.3d 712, 713-14 (1973); b~ re l~'#liam M., 3 Cal.3d 16, 23-24 (1970). Final resolution of Issue A at this stage would greatly promote the efficient and orderly management of this and related complex cases. DATED: February 9, 2001 11 LO~['L AGENCY FORMATION COMMI~5'~ON COUNTY OF SAN BERNARDINO 175 West Fifth Street, Second Floor San Bernardino, CA 92415-0490 · (909) 387-5866 · FAX (909) 387-5871 E-MAIL: lafco@ lafco.co.san-bemardino.ca.us DATE: MARCH 16, 2001 FROM: JAMES M. RODD~CO Executive Officer TO: ALL INDEPENDENT SPECIAL DISTRICTS SUBJECT: ALTERNATIVE LAFCO FUNDING An election was held yesterday to determine whether a majority of independent special districts supported an alternative funding formula for the districts' share of the LAFCO costs. The alternative, developed by a "Working Group" of district board members, proposed that with two exceptions (for districts with a total budget under $15,000/year), the districts would evenly divide the estimated $156,000 that the districts must contribute. Using last year's budget as a guide, almost all districts would have contributed roughly $2,800 to the cost of LAFCO operation. This was proposed as a 'one-time' alternative, with future years' contributions to be determined based on new legislation or other alternatives. You will recall that a "majority of the districts representing a majority of the districts' population' must agree to an alternative funding fommla. The proposed alternative was rejected by a vote of 17 districts in favor, 20 districts opposed, and 18 districts not voting (even though mailed or faxed ballots were pem~itted). A complete tabulation of the voting results are attached for your review. The Working Group will be re-convened in the next several weeks to review other alternatives, including ideas that were expressed at yesterday's meeting. A notice of that meeting will be provided to all districts; however, the composition and membership of that group (which were provided to you in previous correspondence) remain unchanged. Altem~d~ve Funding Election March 16, 2001 I am aware that a number of districts are analyzing their own alternative funding scenarios for submission to the Working Group for their review. For the sake of consistency, please use the revenue figures that are shown on the attachment, which are derived from the 1997-98 State Controller's Report. In addition, effective March 26, 2001, the number of independent special districts will be reduced to 54, with the projected dissolution of the Apple Valley Recreation and Park District. It is anticipated that the Working Group will submit another alternative funding formula for the districts' consideration within the next few weeks. I anticipate that LAFCO staff will again mail a ballot to each district, call another special districts' meeting to discuss the alternative, and hold another election. Again, mailed ballots will be allowed, so all districts should participate in this process. We will provide approximately one month between the distribution of the ballots and the election. On behalf of the Local Agency Formation Commission, I want to thank all of the districts that participated in the meeting and the election. J iR/ Attachment: Funding Election Results ~ '"~' A3q'ACHMENT ALTERNATIVE WITH CAP -- J~_l LAFCO APPORTIONMENT ..... 1997-98 STATE CONTROLLER REPORT VOTING RECORD NAME OF DIBTRICT TOTAL REVENUES ALLOCATION OF $'154,856 YEB NO APPLE VALLEY FIRE PROTECTION $ 2,509,875 $ 2,858 X- BARSTOW FIRE PROTECTION 2,370.788 2,858 CHINO VALLEY ~NDEPENDENT FIRE 12,101,278 2,858 X CREST FOREST FIRE PROTECTION 2.884,753 2,858 BARSTOW CEMETERY 358,440 2,858 X TWENTYNINE PALMS CEMETERY 160,630 2,858 X APPLE VALLEY RECREATION AND PARK 1,251,841 2,858 BARSTOW RECREATION AND PARK 560,473 2,658 HESPER[A RECREATION AND PARK 2,878,656 2,858X PARKER DAM RECREATION AND PARK 7,484 500 ~IM OF THE WORLD RECREATION AND PARK 560,773 2,556 X CHINO BASIN WATER CONSERVATION 745,408 2,658 X SAN BERNARD[NO VALLEY WATER CONSERVATION 1,288,287 2,858 X FAST VALLEY RESOURCE CONSERVATION 418,814 2. B58 INLAND EMPIRE WEST RESOURCE CONSERVATION 414,707 2,858 MOJAVE DESERT RESOURCE CONSERVATION 150,910 2,858 X WEST VALLEY VECTOR CONTROL 1,099,929 2.858 BIG BEAR AIRPORT 1.573,227 2,858 YUCCA VALLEY AIRPORT 21.792 2,858 X BAKER COMMUNITY SERVICES 498,562 2,858 X BARSTOW HEIGHTS COMMUNITY SERVICES 40,137 2,858 X BIG BEAR CITY COMMUNITY SERVICES 7,021.245 2,858 X BIG RIVER COMMUNI~ SERVICES 67,968 2,858 DAGGETT COMMUNITY SERVICES 178,676 2,858 I X LAKE ARROWHEAD COMMUNITY SERVICES 11.536,375 ' 2,858 X MORONGO VALLEY COMMUNITY SERVICES 251,382 ~ 2,858 NEWBERRY COMMUNITY SERVICES 143,833 2,858 YERMO COMMUNITY SERVICES 131,596 2,858 i X SEAR VALLEY COMMUNITY HOSPITAL 5,851,080 2,858 HI-DESERT MEMORIAL HOSPITAL 32,677,201 2,858 X SAN BERNARDINO MOUNTAINS COMMUN~-TY HOSPITAL 11,041.033 2,658 BIG BEAR MUNICIPAL WATER DISTRICT 3,023,128 2,858 X :INLAND EMPIRE UTILITIES AGENCY 85,579.689 2,858 X ISAN BERNARDINO VALLEY MUNICIPAL 26.8t5,530 2,858 X APPLE VALLEY FOOTHILL WATER 72,294 2,858 X ,APPLE VALLEY HEIGHTS WATER 115,706 2,858 X ~,RROW~EAR PARK COUNTY WATER 751,066 2,858 X ALTERNATIVE FUNDING METHOD USING TOTAL OPERATING REVENUE 3/16/01 @ 11:17 AM ~ ~ A-~-rACHM ENT ALTERNATIVE WITH CAP ~AFCO APPORTIONMENT ____ 1997-98 STATE CONTROLLER REPORT VOTING RECORD NAME OF DISTRICT TOTAL REVENUES ALLOCATION OF $154,886 YES NO BALDY MESA WATER 2,516,840 2,858 'CRESTLINE V1LLAGE WATER 2,814,910 2,858 X ;UCAMONGA COUNTY WATER 41,604,522 2.858 X =-AST VALLEY WATER 17.147.492 2.858 X HI-DESERT WATER 7.701,879 2.858 JOSHUA BASIN WATER 4,478,892 2.858 X JUNIPER RIVIERA COUNTY WATER 231,536 2,858 X MARtANNA RANCHOS COUNTY WATER 439.222 2,858 VlONTE VISTA WATER 7,252.757 2,858 X ::{UNNING SPRINGS WATER 3,679,348 2.858 X THUNDERBIRD COUNI'~' WATER 96,618 2,858 X iTWENTYNINE PALMS COUNTY WATER 4.777,534 2,858 X VICTOR VALLEY WATER 8.993,792 2.858 X /VEST SAN BERNARDINO COU~-TY WATER 8.880,195 2.858 YUCAIPA VALLEY WATER 9.230,160 2.858 X BIGHORN DESERT VIEW WATER AGENCY 1,561,055 2,858 X 3RESTLINE-LAKE ARROWHEAD WATER AGENCY 4,814,140 2,658 X MOJAVE WATER AGENCY 30,919.837 2,858 X TOTAL $ 374,305,297 $ 154.856 17 20 ALTERNATIVE FUNDING METHOD USING TOTAL OPERATING REVENUE 3/16/01 ~ 11:17 AM LEWIS, D'AMATO, BRISBOIS 8,: BISGAARD LLP LOS ANGELES OFFICE LAVVYER$ SAN FRANCISCO OFFICE March 2001 DELMAR WILLIAMS DIRECT DIAL: (909) 381-7171 OUR FILE NO. Steven M. Kennedy Brunick, Alvarez & Battersby 1839 Commercenter West Post Office Box 6425 San B emardino, California 92412 Re: East Valley Water District Lease Agreement Dear Mr. Kennedy: Enclosed is the proposed lease agreement between the Redevelopment Agency of the City of San Bemardino (the "Agency") and the East Valley Water District (the "District"). At its regular meeting on March 5, 2001, the Agency approved the lease agreement in the enclosed form. Once the agreement is approved and executed by the District, please return it to me for execution by the Agency. If you have any questions regarding this matter, please contact me. LEWIS, D'AMATO, BRISBOIS & BISGAARD LLP DW Enclosure Steven M. Kennedy March 7, 2001 Page 2 cc: Gary Van Osdel REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 2001 LEASE AGREEMENT (East Valley Water District) THIS 2001 LEASE AGREEMENT (East Valley Water District) (this "Lease") is entered into by and between the redevelopment Agency of the City of San Bernardino, a California public entity (the "Agency"), and the East Valley Water District, a California public entity ("EVWD"), with reference to the following facts: Recitals: WHEREAS, EVWD needs to replace a water tank located near the intersection of Foothill Drive and Sterling Avenue; and WHEREAS, the EVWD's replacement water tank will be installed underground on a site to the north of the site of the existing water tank (the "Project"); and WHEREAS, the installation of the new underground water tank requires EVWD to excavate and remove approximately 55,000 cubic yards of soil that will need to be stored off-site during installation of the new water tank; and WHEREAS, EVWD will also require an off-site location for temporary storage of construction materials and equipment related to the new underground water tank installation and placement of a temporary construction office for its prime contractor on the new underground water tank installation; and WHEREAS, the closest property that meets the off-site requirements of EVWD regarding the new underground water tank installation is an 8.3 acre parcel owned by the Agency, generally located on Foothill Drive west of Little Sand Canyon Creek, with Assessor Parcel Number 0155- 381-45, and specifically described by the legal description attached to this Lease as Exhibit "A" (the "Premises"); and WHEREAS, the Agency desires to lease and EVWD desires touse the Premises for the limited purposes related to the installation of a new underground water storage tank, as described above; NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES AND COVENANTS CONTAINED IN THIS LEASE, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES TO THIS LEASE AGREE AS FOLLOWS: SB2001:1332.1 1. Term of Lease. EVWD leases the Premises from the Agency for a period of 24 ~ consecutive months (the "Term"), commencing on the date of execution of this Lease by the Agency, as set forth next to the sig~ature of the authorized representative of the Agency on this Lease. Following the initial Term of this Lease, EVWD may continue to occupy the Premises on a month-to-month basis, not to exceed an aggregate of 12 months in addition to the initial Tenn of this Lease. If during the Ten-n, EVWD no longer requires the use of the Premises for the allowable uses set forth in Section 3, EVWD may terminate this Lease, upon 30 days written notice to the Agency delivered in accordance with Section 11. IfEVWD terminates this Lease during the Term, in accordance with the previous sentence, EVWD will not be obligated to pay Rent (as defined in Section 2) for the remainder of the Term, following the 30th day after the effective date of EVWD's notice of termination under Section 11. 2. Rent. EVWD will pay the Agency $1,600.00 per month during the initial Term of this Lease. IfEVWD continues to occupy the Premises on a month-to-month basis following the expiration of the original Term of this Lease, as provided in Section 1, EVWD will pay the Agency $1,600.00 per month during the first 6 months following the expiration of the initial term of this Lease. IfEVWD continues to occupy the Premises on a month-to- month basis more than 6 months after the expiration of the original Term of this Lease, EVWD will pay the Agency $3,200.00 per month for each month it occupies the Premises more than 6 months after the expiration of the original Term of this Lease. 3. Allowable Uses. EVWD may only use the Premises for the folloxving uses: A. Storage of soil excavated for installation of new underground water tank to replace existing water tank located near the intersection of Foothill Drive and Sterling Avenue; and B. Placement of a temporary construction trailer/office for EVWD's prime contractor for the underground water tank installation; and C. Storage of construction materials and equipment required for installation of the EVWD's new underground water tank; and D. Any other use of the Premises that is approved in writing by the Executive Director of the Agency, prior to the commencement of such use. 4. Storm Water Pollution Plan. EVWD must prepare an appropriate Storm Water Pollution Plan and obtain any necessary NPDES Permit for its operations or the operations of its contractors on the Premises. 5. Premises Maintenance and Security. EVWD must provide security for the Premises, including without limitation, temporary fencing around all portions of the Premises and security guard/patrol services, if necessary. Additionally, EVWD must maintain the Premises in a clean and orderly manner and in a safe condition for construction sites of SB2001:1332.1 2 similar type and magnitude. 6. Insurance.. Prior to occupying the Premises, EVWD must furnish, or cause to be furnished, to the Agency duplicate originals or appropriate certificates of public indemnity and liability insurance in the amount of One Million Dollars ($1,000,000.00) combined single limit, naming the Agency and the City as additional insureds. Said insurance must cover comprehensive general liability including, but not limited to, contractual liability; acts of subcontractors; premises-operations; explosion, collapse and underground hazards, if applicable; broad form property damage, and personal injury including libel, slander and false arrest. In addition, EVWD must provide to the Agency adequate proof of comprehensive automobile liability insurance covering owned, non- owned and hired vehicles, combined single limit in the amount of One Million Dollars ($1,000,000.00) each occurrence; and proof of workers' compensation insurance. Any and all insurance policies required under this Lease must be obtained from insurance companies admitted in the State of California and rated at least B+: XII in Best's Insurance Guide. All insurance policies must provide that they may not be canceled or materially altered unless the Agency and the City receive written notice of cancellation or alteration at least thirty (30) calendar days prior to the effective date of cancellation or alteration. Any and all insurance obtained by EVWD in satisfaction of the requirements of this Section 6 will be primary to any and all insurance that the Agency end,or City may otherwise can3', including self insurance, which for all purposes of this Lease will be separate and apart fi.om the requirements of this Lease. Any insurance policies covering the Premises as obtained by the Agency will not be transferred from the Agency to ~ EVWD. Appropriate insurance means those insurance policies approved by Agency legal counsel consistent with this Lease. Any and ail insurance required under this Lease shall be maintained and kept in force until the expiration of the Term or earlier termination of this Lease. Notwithstanding the foregoing, if EVWD is self-insured under a bona fide public entity self-insurance program, evidence of such self-insurance program acceptable to Agency legal counsel will satisfy the insurance requirements set forth in this Section 6. 7. Restoration of the Premises at End of Lease Term. Upon expiration or termination of this Lease, EVWD must restore the Premises to their original condition, as of the commencement date of this Lease, including without limitation, removal of any fencing, removal of any construction trailer/office, removal of construction materials, supplies and equipment and grading the Premises to their original contours, elevations and compaction, ensuring or restoring the original soil content such that no hazardous substances or materials or quantities of hazardous substances or materials are allowed to remain on the Premises that did not exist on the Premises prior to the commencement date of this Lease. Also, EVWD will restore the vegetation that existed on the Premises prior to the commencement date of this Lease. 8. Environmental Indemnity. EVWD hereby agrees, at its sole cost and expense, to indemnify, protect, hold harmless and defend (with counsel of the Agency's choice) the Agency from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, SB2001:1332.1 3 costs, disbursements and expenses (including, without limitation, fees, disbursements and costs of attorneys, environmental consultants and experts), and all foreseeable and unforeseeable consequential damages of any kind or of any nature whatsoever (collectively, "Losses") that may, at any time, be imposed upon, incurred or suffered by, or asserted or awarded against, the Agency directly or indirectly relating to or arising fi.om any of the following "Environmental Matters": A. Any past, present or future presence of any "Hazardous Materials" (as such term is defined in Exhibit "B" attached hereto) on, in, under or affecting all or any portion of the Premises or on, in, under or affecting all or any portion of any property adjacent or proximate to the Premises, if such Hazardous Materials originated on or from the Premises following the commencement date of this Lease and related to EVWD's activities upon the Premises;. B. Any past, present or future storage, holding, handling, release, threatened release, discharge, generation, leak, abatement, removal or transportation of any Hazardous Materials on, in, under or from the Premises following the commencement date of this Lease and related to EVWD's activities upon the Premises; C. Any violation of law, rule, regulation, judgment, order, permit, license, agreement, covenant, restriction, requirement or the like, now or hereafter, relating to or governing in any way the environmental condition of the Premises or the presence of Hazardous Materials on, in, under of affecting all or any portion of the Premises, including, without limitation, all statutes referenced in Exhibit "B" attached hereto (collectively, "Environmental Laws"); D. The failure of EVWD to properly complete, obtain, submit and/or ftle any and all notices, permits, licenses, authorizations, covenants and the like relative to any Environmental Matters described in this Lease in connection with the Premises or the use, operation or enjoyment of the Premises; E. The extraction, removal, containment, transportation or disposal of any and all Hazardous Materials fi.om any portion of the Premises or any other property adjacent or proximate to the Premises, if such Hazardous Materials originated on or fi.om the Premises following the cormnencement date of this Lease and related to EVWD's activities upon the Premises; F. The implementation and enforcement of any monitoring, notification or other precautionary measures that may, at any time, become necessary to protect against the release or discharge of Hazardous Materials on, in under or affecting the Premises or in the air, any body of water, any other public domain or any property adjacent or proximate to the Premises; SB2001:I332.1 4 G. Any failure of any Hazardous Materials generated or moved from the Premises to ~ be removed, contained, transported and disposed of in compliance with all applicable Environmental Laws; or H. Any investigation, inquiry, order, heating, action or other proceeding by or before any governmental agency in counection with any Hazardous Materials or violation of any Environmental Law occurring or allegedly occurring at any time during or related to EVWD's occupation of the Premises. I. The environmental indemnity given by EVWD in this Section 8 of this Lease will survive termination of this Lease. J. All obligations of EVWD under the environmental indenmity given in this Section 8 of this Lease are payable on demand from the Agency, and any amount due and payable hereunder to the Agency by EVWD that is not paid within thirty (30) days after written demand therefor from the Agency, with an explanation of the amounts demanded, will bear interest from the date of the demand at the rate of eight percent (8%) per anum. K. Prior to the termination or surrender of the occupancy of the Premises by EVWD, EVWD must schedule a joint environmental inspection of the Premises with the Agency. The Agency may retain an environmental consultant or consultants to inspect the property, as part of the joint inspection, including without limitation, ~ soil sampling and other testing of the premises. L. EVWD must pay to the Agency all costs and expenses (including, without limitation, reasonable attomey's fees and costs) incurred by the Agency in connection with the environmental indemnity given in this Section 8 of this Lease or the enforcement hereof. For the purposes of the preceding sentence the phrase "reasonable attorney's fees and costs" includes the salary, wages, benefits and overhead of the City Attorney of the City of San Bernardino. 9. Default and Remedies. Failure or delay by either party to perform any term or provision of this Lease is a material default under this Lease. IfEVWD fails to pay any monetary obligation owed to the Agency under this Lease when it is due, the Agency may provide written notice of the monetary default to EVWD. IF EVWD does not cure the monetary default within 5 days of the mailing of the notice of default by the Agency} the Agency may terminate this Lease by written notice to EVWD, which shall be effective at the time of mailing by the Agency. If a party otherwise in default of a non-monetary obligation under this Lease commences to cure, correct or remedy such non-monetary default within 30 calendar days after receipt of written notice from the injured party specifying such default, and diligently and continuously prosecutes a reasonable cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Lease, then within said time limits), such party is not in default hereunder. SB2001:1332.1 5 ~' A. The injured party must give written notice of the non-monetary default to the party in default, specifying the default complained of by the nondefaulting party. Delay in giving this notice is not a waiver of any default nor does it change the time of default. B. Any failure or delays by either party in asserting any of their rights and/or remedies as to any default does not operate as a waiver of any default or of any such rights or remedies. Delays by either party in asserting any of their rights and/or remedies do not deprive either party of its fight to institute and maintain any actions or proceedings that it deems necessary to protect, assert or enforce any such rights or remedies. C. In addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with this Lease. Any such legal actions must be instituted in the Superior Court of the State of California in and for the County of San Bemardino or any other appropriate court within the County of San Bemardino, or in the Federal District Court for the Central District of California located in the County of Riverside, California. D. The rights and remedies of the parties set forth in this Section are cumulative and the exercise by either party of one or more of such rights or remedies does not preclude the exercise by it, at the same or different times, of any other fights or remedies for the same default or any other default by the other party. 10. Inspection. Upon reasonable notice to EVWD, the Agency has the fight to inspect the Premises at reasonable times for compliance with any or all of the terms and conditions of this Lease. 11. Notices. Any notice to be given or other d~)cuments to be delivered by any party to another party or parties hereunder may be delivered in person to an officer of any party or may be deposited with the United States Postal Service within the State of California, duly certified or registered, return receipt requested, with adequate postage prepaid, or by Federal Express or other comparable express delivery service and addressed to the party for whom intended, as follows: To the Agency: Redevelopment Agency of the City of San Bemardino 201 North "E" Street, Suite 301 San Bemardino, California 92401 Attention: Executive Director SB2001:1332.1 6 With a Copy to: Lewis, D'Amato, Brisbois & Bisgaard, LLP 650 East Hospitality Lane, Suite 600 San Bernardino, California 92408 Attention: Timothy J. Sabo To EVWD: 1155 Del Rosa Avenue P.O. Box 3427 San Bernardino, California 92413 Attention: General Manager All notices or other documents delivered in person to an officer of any party will be immediately effective and those deposited with the United States Postal Service for delivery, in accordance with this Section, will be effective 5 days following such deposit. 12. Construction of Lease. The agreements contained herein shall not be construed in favor of or against any party, but shall be construed as if all parties prepared this Lease. 13. Headers, Titles and Captions. The headers, titles and captions used in this Lease are for convenience only and are not a part of this Lease and do not in any way limit or expand the terms and provisions hereof. 14. Governing Law, Jurisdiction and Venue. This Lease and the documents in the forms attached hereto as exhibits will be governed by and construed under the laws of the State of California. This Lease is deemed made and entered into in San Bernardino County, California. Any legal actions arising from or under the terms and provisions of this Lease must be brought in the Superior Court of the State of California in and for the County of San Bernardino. 15. Attorney's Fees. If any action is instituted by any party to this Lease against any other party or parties to this Lease in connection with this Lease, the party or parties prevailing in such action are entitled to recover from the losing party or parties all of its/their costs and expenses, including reasonable attorney's fees and costs. For the purposes of this Lease, the phrase "reasonable attorney's fees and costs" includes the salary, wages, benefits and overhead of the City Attorney of the City of San Bernardino and members of his staff. 16. Gender and Number. In this Lease, unless the context clearly requires otherwise, the masculine, feminine and neuter genders and the singular and the plural shall include one another. 17. Entire Agreement. This Lease constitutes the entire agreement between the Agency and EVWD and may not be amended without the prior written consent of each of them. This Lease supersedes all prior negotiation, discussions and previous agreements between the SB2001:1332,1 7 parties concerning the subject matters covered herein. The parties intend this Lease to be the final expression of their agreement with respect to the subjects covered herein and a complete and exclusive statement of such terms. 18. Modification or Amendment. No modification, waiver, amendment, discharge, change or alteration of this Lease is valid, unless in writing and signed by each of the parties to this Lease. 19. Counterparts/Duplicate Originals. This Lease may be executed by the parties hereto in duplicate originals, each of which shall be considered an original, but all of which together shall constitute one and the same instrument. 20. Severabilitv. Every provision of this Lease is intended to be severable. If any provision of this Lease or the application of any provision hereof to any party or circumstance is declared to be illegal, invalid or unenforceable for any reason whatsoever by a court of competent jurisdiction, such invalidity shall not affect the other terms and provisions hereof or the application of the provision in question to any other party or circumstance, all of which shall continue in full force and effect. 21. Required Approvals. This Lease is not binding on the Agency, until signed by an authorized representative of EVWD, as evidenced by a certified copy of the resolution of the EVWD governing board approving and accepting this Lease attached to this Lease as Exhibit "C," approved by the Community Development Commission of the City of San Bernardino, as the governing body of the Agency, approved as to form by Agency Special Counsel and executed by the authorized representative of the Agency. SB2001:1332.1 8 IN WITNESS WHEREOF, the Agency and EVWD have duly executed this Lease as of the dates set forth below. AGENCY Redevelopment Agency of the City of San Bemardino Date: By: Gary Van Osdel Executive Director APPROVED AS TO FORM: Agency Special Counsel EVWD East Valley Water District, a California public entity Date: By:. Name: Title: SB2001:1332.1 9 EXHIBIT Zimmerman Subdivision of lot 5; excepting that portion belonging to San Bernardino County Flood Control lying northeasterly of the line commencing at a point in the northwesterly line of said lot, 260 feet southwesterly of the northwest corner of said lot, thence South 66 deg 22 rain 00 sec East, 528 feet more or less to the easterly line of said lot; excepting that portion belonging to San Bernardino County Flood Control commencing at the southeast corner of said lot at the intersection of the north line of Rancho Muscupiabe with the east line of said lot, thence northeasterly along said east line 360 feet to the Bear Valley Ditch, thence northwesterly along said Ditch, 36 feet, thence southerly to a point in said Rancho line, 155 feet northwesterly of the Point of Beginning, thence southwesterly to the Point of Beginning; excepting the well site commencing at a point North 45 deg 00 min 00 sec West, 221.12 feet from the southeast corner of said lot, this point being the intersection of the north line of Foothill Drive, 40 feet wide, with the East line of the property conveyed in Book 1865, Page 281, thence North 40 deg 25 min 00 sec East, 40 feet, thence North 45 deg 00 min 00 sec West, 25 feet, thence South 40 deg 25 min 00 sec West, 40 feet, to the north line of Foothill Drive, thence South 45 deg 00 min 00 sec East, 25 feet to the Point of Beginning. This property is also referred to as Assessor's Parcel Number: 0155 381 45, as of 3122101 EXHIBIT B HAZARDOUS MATERIALS DEFINED "Hazardous Materials" as used in this Indemnity shall mean any hazardous or toxic materials, pollutants, effluents, contaminants, radioactive materials, flammable explosives, chemicals known to cause cancer or reproductive toxicity, emissions or wastes and any other chemical, material or substance, the handling, storage, release, transportation, or disposal of which is or becomes prohibited, limited or regulated, is or becomes known to pose a hazard to the health and safety of the occupants of the Property including, without limitation, (i) asbestos, (ii) petroleum and petroleum by-products, (iii) urea formaldehyde foam insulation, (iv) polychlorinated biphenyls, (v) all substances now or hereafter designated as "hazardous substances", "hazardous materials", or "toxic substances" pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Section 9601, et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq., or the Resource, Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; (vi) all substances now or hereafter designated as "hazardous wastes" in Section 25117 of the California Health and Safety Code; (vii) all substances now or hereafter designated by the Governor of the State of California pursuant to the Safe Drinldng Water and Toxic Enforcement Act of 1986 as being known to cause cancer or reproductive toxicity, or (viii) all substances now or hereafter designated "hazardous substances", "hazardous materials" or "toxic substances" under any other federal, state or local laws or in any regulations adopted and publications promulgated pursuant to said laws. SB2001:1332.1 1 1 EXHIBIT C RESOLUTION OF EAST VALLEY WATER DISTRICT APPROVING AND ACCEPTING LEASE SB200h1332.1 12 NOTICE OF EX~M~TION TO: [ ] Office of Planning and Re. search FROM: East Valle? Water Djstrlct . 1400Tenth Street, Room 121 Sacramento, CA 95814 1155 Del Rosa Avenue. P.O. Box 3427 Ix] County Clerk San Bernardino. CA 9241~ County of San Bemardino 385 N. Arrowhead Avenue. 2nd Floor San Bernardino, CA 92415-0130 Project Title: Lease A~reement with thc Rezlevclopment Agency of lhe tiP/of Sar~ Bemardino Proj~t Location - Sl~cific: See attached leeal descriotion Pro~ Loc~fion - City: San Bemardino Proj~c~ Location - County: Sa~ B~ma~lilao Desefiplionof Project: Ten~orarv storage of an~roxima~lv 55.000 cubic yards of soil removed dufin~ the District's relcczfion of its Ham 37 reservoir. The cuslomers of East Valley Water District will benefit fxom this oroiect by the inmrovement of exisfin~ effg:iencies. Nsm~ of Public Aget~ey Approving Project: East Valley Wat=r District Name of Person or Agency Carrying Out Project: Robert E. Martin, General Mana~er [ ] Is~misterlal [CEQA Sec. 21080(b)(1); Guidelines Sec. 15268] [ ] Dnclave. d Emegency [CEQA Sec. 21080(b)(3); Guidelines Sec. 15269(a)] [ ] Emergency Project [CEQA Sec. 21080(b)(4); Guidelines Sec. 15269(b)(¢)] to iff~lcl~ent the DistriCt'S Plaut 37 Relocation Prolect for which the Dislrlct has alre. adv or~arcd and adopted a mitigated negative dimlarafion. Pursuant to the t~rms of the lease, the subiect u~env will be restot~l bv the District tO its prior coudifioo upon completion of~be Proiec~ that th~ will b¢ no sienificapt adverse impact on ll~ environmcot. Load Agency Contact Per, on: Robert E. Manln Area Codefrelcphom/Ext~nsion: (909'} 889-9501 [ ] $ign~lby Applicsm Zimmerman Subdivision of lot 5; excepting that portion belonging to San Bernardino County Flood Control lying northeasterly of the line commencing at a point in the northwesterly line of said lot, 260 feet southwesterly of the northwest corner of said lot, thence South 66 deg 22 min 00 sec East, 528 feet more or less to the easterly line of said lot; excepting that portion belonging to San Bernardino County Flood Control commencing at the southeast corner of said lot at the intersection of the north line of Rancho Muscupiabe with the east line of said lot, thence northeasterly along said east line 360 feet to the Bear Valley Ditch, thence northwesterly along said Ditch, 36 feet, thence southerly to a point in said Rancho line, 155 feet northwesterly of the Point of Beginning, thence southwesterly to the Point of Beginning; excepting the well site commencing at a point North 45 deg 00 min 00 sec West, 221.12 feet from the southeast corner of said lot, this point being the intersection of the north line of Foothill Drive, 40 feet wide, with the East line of the property conveyed in Book 1865, Page 281, thence North 40 deg 25 min 00 sec East, 40 feet, thence North 45 deg 00 min 00 sec West, 25 feet, thence South 40 deg 25 min 00 sec West, 40 feet, to the north line of Foothill Drive, thence South 45 deg 00 min 00 sec East, 25 feet to the Point of Beginning. This property is also referred to as Assessor's Parcel Number: 0155 381 45, as of 3/22/01 COUNTY OF SAN BERNARDINO ~'~, ' ,:CClerk of the Board of Supervisors J,,. D. Mikels ................................ SeconaDistrict :i O' , ~' ?" County L~ovemment [Center Fred Aguiar .................................... Fourth District 38~ North Arrowhead Avenue, Second Floor Jerry Eaves ........................................ Fifth District '; San Bernardino, CA 92415-0130 ',:i' .. / (909) 889-0200 Fax (909) 387-4554 J. RENE~ BASTIAN County Administrative Officer , Interim Clerk of the Board of Supervisotx February 13, 2001 TO: ALL SPECIAL DISTRICTS IN THE COUNTY OF SAN BERNARDINO RE: RESOLUTION OF THE BOARD OF DIRECTORS OF THE YUCAIPA VALLEY WATER DISTRICT TO CONSOLIDATE ITS GOVERNING BOARD ELECTION WITH THE GENERAL ELECTION DATE IN EVEN- NUMBERED YEARS The San Bernardino County Board of Supervisors has received the Resolution of the Board of Directors of the Yucaipa Valley Water District to consolidate its Governing Board election with the statewide general election date in November of each even-numbered year. Elections Code section 10404 requires the Board of Supervisors, upon receipt of such a resolution to consolidate, to notify all districts located in the County of San Bernardino of the receipt of such a resolution, requesting input from each district on the effect of consolidation. THIS LETTER CONSTITUTES THE BOARD OF SUPERVISORS' REQUEST FOR INPUT FROM YOUR DISTRICT ON THE EFFECT OF CONSOLIDATION. THE BOARD WOULD APPRECIATE YOUR RESPONSE TO THIS REQUEST AT THE EARLIEST POSSIBLE TIME, BUT NO LATER THAN MONDAY, MARCH 13, 2001. Under Elections Code section 10404(e), the Board of Supervisors, with 60 days from the date of submission, shale approve the resolution unless it finds that the ballot style, voting equipment, or computer capacity is such that additional elections or materials cannot be handled. To assist the Board of Supervisors in this regard the Registrar of Voters submits to the Board a report on the cost- effectiveness of the proposed action. J. RENEI~ BASTIAN Interim Clerk of the Board of Supervisors Memorandum To: Robert E. Martin General Manager CC: Paul Dolter District Engineer ,~,' From: Alberta M. Hess .., Chief Financial Officer Date: February 21,2001 Re: Obsolete Telemetry Equipment Presently, we have surplus Telemetry equipment stored at Plant #11. This obsolete equipment consists of 33 antennas, 12-volt batteries, control outputs, analog inputs, decoders, encoders, power supplies, etc. The equipment has been stored for several years and has no value attached. It is extremely doubtful that it could be in a working condition and was written off by the auditors at the fiscal year ended June 30, 1999. The equipment has no value to the District and is taking up valuable room at the plant. I would suggest we ask Advanced Telemetry Systems, Inc. to search for a water district that would take this equipment, if we gave it to them for parts. If we do not find a district needing this equipment then I would suggest we just scrap it. RELEASE OF LIENS MARCH 14, 2001 ACCOUNT OWNERS PROPERTY AMOUNT NUMBER NAME ADDRESS OWED I. 081-0099-4 25840 FISHER ST 17.40 2. 084-0627-4 7217 SAN FRANCISCO ST 96.42 3. 105-3007-1 27612 7TH sT 32.27 4. 155-0572-4 26720 FLEMING ST 172.47 TOTAL $ 318.56 +PAID THROUGH TAX ROLLS Page 1 of 1 ASSO"CIA'TION OF CALIFORt IA' W AGENC C 0 N N C E N E S flL CWA statewide conferences ,~ legislative and policy clevelopments. have been a water industry Register for the full-day pre- tradition - the most informative conference workshop on May 8 events each year. This spring, which will focus on strategic ACWA will take a fresh approach planning. (See page 3 for a filll and unveil a new conference description of the workshop.) Attorneys should attend the format that includes interest- :, , specific tracks customized to your ~ Attorneys Subcommittee Panel needs. New interest track areas : and get the latest news on the include: State Board water rights Phase 8 · water quality process. · human resources , Get on trackwith ACWA, and get . '~! the most out ofyour time. · finance ACWAwants to keep you on the Who Should Attend inside track to ensure you receive the latest information for success Whether you're a water agency in an environment of rapid change, will reviewAB 739, which requires director, general manager, agency Water Quality- Harveys Hotel: unfair labor claims from unions to staff specialist, engineer, or attor- Get the statewide water picture on go before Public Employees Rela- ney,ACWAg Spring Conference problems like chromium, MTBE tions Board (PERB).And, find out combines the people and issues and perchlorate and learn about how to make the ACWA Salary that are shaping our water future. regulations on the horizon. Survey work for you at one of the This three-day, intensive confer- Hm'nem Resources - Harrah's sessions included in your track, ence will offer valuable informa- Hotel: Hear what's new in manag- Finance - Horizon Hotel: Hear tion to all those involved in the ing your district's most important about the latest information on water world. Also, there will be asset- people· Join in on a session financial requirements and innova- many opportunities to net~vork to learn the latest on specific tions: a session on grant writing with speakers, exhibitors, and requirements for CALPERS retire- will also be offered. peers. merit. Phil Wright of Kronick, As always, directors and manag- , . . ~ Dont m~ss Moskovitz, Tiedemann & Girard ers will learn what's ahead in ' 0 g Breakfast A Stra~e~qnc Assessment of "Peace Procures Drought "' ~, the F~re of Water Utilities" Protection: East Bay MUD and Dofft miss out on an informa- . ..~ - Sacramento Cockle to an : tion-packed opening program Edward G. Means, senior vice ~ ' ~Mariagers' Perspective -AFutgris- pr?sideniofMcGUire E~;ironmen-' Agreement~ ~c Look. at Water Managemen~': l'a. C(mq~l~.m~t~ lb.c w!llex~.florc Spot~sored by Regions 4 & 5 .. Genera! Managers S Dav!d Free-. ~ -: ~ aw~;!es m ,::J.,h'os, :v,:,,')r ~ocM~, ~. 'After 3o years, the East Bay marl. Los Angeles Department of, l :d ci!],,ss ,in~ .~ ~]~.i 'i i2.. i l-!,?lls ,l~'f'pc!-- Municipal Utility District, Sacra- Water and Power Walter J. Bishop, ing u.s. wa~er utilities, mento interests and the U.S. Bu- £ontra Costa Water District; O.L. t an, c] a Pipeli e on Lhe reau of Redamation have come to Van Tenney, Glenn-Colusa Itriga- A Pac t.1 tion District: and Thomas N. Clark, Colorado an agreement on a joint water Kern County Water Agency will Sponsored by Regions 8, 9 and I0 project that will help East Bay MUD serVe its 1.2 million customers provide perspectives on the key challenges water agencies will face On January 16, 200I, former during dryyears. n the new century. Interior Secretary Bruce Babbitt Pal~elists will discuss how the signed the landmark Record of parties involved came to the ·' , terim Surplus Criteria, referred t0 R,,;?.io,;,tl I)ik'{,t',i¢)11 :~ro!ect Panel- Efi~tgy, Trinity. Th~ ~01orado ..... ' as the quantification agreement, 3sts wtil address impacts the River Ne~ ~atek:ph~ts, B ay:Delta which is the final major compo-, pr0j~ct ~naY ~ihve q~ l~h~BaY-Delta ~,. :: is~fie's:dominated the agenda as nent of a plan to reduce Califor~ds arid its UsePs arid Whether p~ace is tl~e 't e~;P,:.i'v canl e tod clo~e. Now, a 30 years of battle. the Tnn t ;? · : .: :. office, Secretary of ...... ~' ' Bruce Babbitt signed Cahf0mias E ergy( thelntetd0g . the Record of D~cision (ROD) on the Experts will. i,!,~a; 'on:d ,~qve.luct ,~'.~o ~e:e~ red ' ,River. The decision increases · On th~fatus ofthe skate's most, ~,'; a, ',lw'.X:ex~co P'.pel'pe ~. h'.~ b. flOWS on the Trinity by 250,000 acre- ~: '. '- V~xin~&isis: energy, and how t~'e wou':' co.~::'ey ( o a!'a:ia R!wr :~ ~:er feet per year and will have huge !. ~ .L,,, \lc x., ~,impacts on the state's water and ~ ! ;7~l;~omas M. Hannigan, di~ector, . a..,.I. ,s~x 1. ~...¢t.. SI,Okk ~.n!.kpower operations. This program : Depart~ment of Water Resources, mentationgfthe q(~kntification will explore all the ramifications. - h~ b;~en invited to set the stage agreement and the ~ossible : forthis hotissue. The response constructibn of a Mexico Pipeline Hans Doe £orum Breakfast panel Will include S. David Free- would affect all Colorado River manlg~neral manager, Los Angeles water users. Game show anyone? Millioniare. Department of Water and Power; The Squares·The Wheel. The Feud. · Learn more than you ever Mike Peevey, former president of wanted to know about water· The the Southern California Edison Company; and GaryT. Arant, competition will be fierce, but friendly and acre-feet will be on the ~ general manager of Valley Center Municipal Water District· table· IA WATER AGENCIES INSTITUTE PRESENT TRATEGIC PLA NING WORKSHOP Who Should At:tend... What You Will Learn... If you are concerned about your In a single clay,you will learn goals that are set: how to involve agency's future and the challenges practices of successful agencies. If the public to get and keep them that may lie ahead, this is a must- you are complacent aboutyour on your side; how to deal with attend workshop. It is designed for agency, this workshop may give controversial and hostile sit'ua- the special district general man- you something to think about tions; how to resurrect a failed ager, board members, administra- ., .before it is too late! Learn how project; how to insure thatyour rive manager, and other manage- to craft a viable mission, vision, plans are supported with the merit staffresponsible for making and goals foryour agency; how to right financing and public decisions for your agency, build an effective plan to reach the outreach initiatives. 730 ~ . ullcS~e theA~0n P]an ~ Keep YourAction Plan ' ' .... ~'.~., ,:-8 organize, and retain ~e right staff: finance your dis~ict~ nee&: and sta~ on u'ack keep the public with ~ou A n interesting array of speakers and programs will address ACWAts - 2001SpringConferencetheme, 2001:ANewEra-ANewApproach.'It all happens May 9 - 11 at Caesars Tahoe, the Horizon, Harveys, Harrah's and Embassy Suites in South Lake Tahoe. Topics will cover a wide range of issues critical to the water community, including key legislation and policy developments at the federal and state levels. Am I Eligible For ]~e Name Badges tion instructions carefully on the hotel reservation form (see page Member Registration Fee? Name badges must be worn to I1). In or~ter to be eligible for attend ali conference events. It is imperative that hotel member registration fees, an Information for the badges will be reservations be made as soon as agency must be a dues-paying taken directly from conference possible· ABSOLUTE DEADLINE IS member 0fACWA Member preregistration forms, making it APRIL 13. Those registering after registration fees will cover any vital that complete, accurate and this date may be given alternate legible information be on the form. housing accommodations· organi2ation's officers/directors, afiy :e~pl0yee on the entity's Deadline for returning forms to ~rahoeCasinoExpress'shuttleis payr~ili a~ay ACWA board member assure badges will be prepared is available from the Reno Interna- Wh0~e' f~e is paid by a member April 20, Badges will be available lionel Airport for SI7 per person age~cY.a~4d any state and federal only for those who register for the each way, or S30 round-trip· i ~flminJ~ative or legislative conference. Name badge support is : pers0r~d in elective, appointive or sponsored by Bartle Wells Associ- Questions Staffing ~ositions, Member ates, independent Public Finance Ifyou have questions, please registration fee will also cover Advisors. contact ACWA at (916) 441-4545, s~affm~bers of ACWA/JPIA and AMine Travel toll free (888) 666-2292, or e-mail -/':WaterEfihcation Foundation. mmdepartmentOacwanetcom. , , · ; ACWA has contracted with Regi~trfi~ion Hours Visit our Web site at American River Travel Agency, :;~: ~ :'~.~i , www. acwanet.com ;:The ~istration site will be in located in Sacramento, to provide ::~e COfi~ntion Foyer, casino level attendees with the lowest airfares 6f'tl(~ C26sars Tahoe Convention possible. For assistance with your cen~er. It Will be open during the airline reservations, please call ~i followlnghours: (800) 842-9119. Housing / Transportation Tuesday 8 a.m.- 9 p.m. (8 a.m.-7 p.m, on-site registration) Those attending the conference (7 p.m. - 9 p.m. preregistrants only) will be housed at one of five hotels Wednesday 7:30 a.m.- 5 p.m. in South Lake Tahoe. Registration Thursday 8 a.m.- 4 pm. will be at Caesars; however, meet- Friday 8 am,- I0 a.m. ings will be held at all five facilities. Note: Each track will be at a spe- · Human Res0ur~e Trdck - Harrahts cific hotel. Please follow reserva- , , ~ Water OualJtyTrack- Haweys 4. Save Mol~ey By Registering ]n pation in the team discount. ' to the conference.The spouse/ Advance! Discount does not apply to companions registration fee is $25, Tuesday's workshop, if preregistering, and $35 on site. Everyone who attends the 4) By package registration for This registration fee provides conference must register and pay the entire conference whiqh ~ kPouses/companions access to a the appropriate registration fee, includes meals (available forACWA si~eci~l hospitaliW room, which By using the preregistration form members only) ;f; includes continental breakfasts on page 10, you will loweryour If you choose to use the package and afternoon refreshments on conference registration fees and re~st~'ation, do not check individ- Wedne. sday and Thursday. be assured tickets to various ual events on the form except Spouses/companions m__ust be activities. You will also save time at those for your spouse/companion, registered to purchase tickets for the conference because your . Package registration fee is $480 for meal functions Charges for meal registration materials will be members only, compared to the functions are not included in the prepared in advance - no more $546 cost for the same events registration fee. Prices are listed on waiting in line. under the regular preregistration page 10 of this conference insert. Those who register by March 16 system, The same package pur- will become eligible to win a free chased on site will cost $586. Early Package Regis {~l'~l{~lOl'l Fee conference registration. A name regist~ation deadline is April 20. The'package~ consists 0fa name will be randomly drawn from After that date, you must register badge registration materials and those registrations received prior on site· Registration may be paid , program;ticke~s for ~o break- to 5 p.m. on March 16. The ~ize is a with a check or charged on your nontransferrable registration to Visa or MasterCard. , b~nquet. The workshop is NOT this conference (does not include Reg stTatJbn Fee . . INCLUDED in the packag~ registra- meals or other events). Four,es . tion fee · ~ -:. · of discounted advance regi$~:a- f-o~- Spouses(coml?anl~.n~ · · tions are available to delegates: The AssoCiation is happy.? 1) Byindividual day welcome your spouse/companion (not including meals) 2) By registering for the entire . ' conference (not inclu ding meals). The enclosed registration form ~". .... .. ,, :~ ,~ ~, ~,. ~ , .e ~ , includes a breakdown of ticketed · Re~":o'~.~ rl.:o,.!e~t 4 .,.a~ b,. n.,.x, functions from which you may ..... L.~, I,,, I.~ .... ~ . ~ ..... choose to attend. - Hsndling charge 0f~25 onall registratio~ 3) ByTeam Discount registra- 9ouchers. ' ' tion. Organizations registering No s~'?, ~{.~o ¢ O~l!~o~!i(;l% rei:i.q three or more delegates at one - No ,":~,'., r.,'~ st:?'..'m :oe' ~ ,.." , time may receive a S20 discount off - Creclit v0uchers will b~ i~fled April 14 to April 20. the total of each registration. Payment and registration forms - Meals and workshop; ..... I, re u:~dco ~:~, 4:30 pm. April 20. for each participant mustbe .There willbe no .~e:.w:.l ::',.-:.:,~,' '. 'ch-~'..?,~e duringthe conference. received together to receive the discount. Be sure to check the box NO REFUNDS OF ANY KIND AFTER APRIL 20. on each registration form (located Refunds of hotel deposits are made by the hotel, not ACWA. Please on page I0) indicating your partici- see the instructions on the hotel reservation form. 5. PRELIMINARY PROGRAM 9:30 a.m.-Noon · ACWA- USA ComtiliSsiOli 7:30 am=5 p.m. - Caesars · Legal Affairs Committee · Issue Forum - Harrah's · ACWA Registration Program - Horizon 'A Strategic Assessment of the Future of Water Utilities' 8-9:45 a.m. - Harrah's . Water Fundanlentals Panel -Special Issue Opening Breakfhst - Harveys The culmination of a major .. , . : American Water Works Associa- Managers Perspectives - A . Water Quality Track- Harveys tion Research Foundation p¥oject Futuristic Look at Water ManagemenC Chromium Program (Technical~ will be the focus of this presenta- Noonq:50 p.m. - Caesars tion. It is designed to provide 8 a.m:Noon & 1:30-5 p.m. - Caesars - General Lmacheon water utility managers and board · £xhi[)it Hall members the tools needed to 1:30-5 p.m. - Caesars succeed in a rapidly changing 9.45 a m - Caesars ' ' ' -Exhibit Hall water utility world. · Exhibit Hail Prize Drawings 2~2:30 p.m. ~, Caesars - Membership Committee 10qi:45 ~m. - Exhi]bitors Drawing / Dessert · Exhi/~itor Technical Presenta- - Harveys Break ~i0ns: Caesars · Paver nent Restoration Task Force~: 2:45-4:15 p.m - Horizon . Finance Track - Horizon · Anadromobrs Spedes Task Force Grant Writing _ Flar~eYs . Scholarsi~ip Subcommittee · Groundwater Committee. - - Florizon · Exhibitor l~chnical Presenta- - Harveys tions - Caesars · Water OualKyTrack- l-larveys · Human Resources Track Water Quality Safe Drinking · Federal Affairs Committee Water Subcommittee - Harrah's Program - Horizon 'Cargill v. ME'R Who Are Consid- · 4:15 p.m. - Caesars ered Employees for CalPERS?' · Finance Track - Horizon . ILxhibit Hall [)rize D'ra~rilig Are public agencies required to Program being developed 430-5:45 p.m. pay CALPERS retirement on · l~Iuman Reseurces Track- I-[atTah's - Affiliate Member Caucus temporary employees and 'How to Make the ACWA Salary - Harveys independent conti'actors? Survey Work for You' · ('Ol¢lml.lnicatiolls Committee . Issue Forum: Cal[~brnia's Energy · Irrigation Districts Caucus - Flarveys Crisis -Han, ah's - Harveys 'A Pact and a Pipeline on the Ins ~rance and Personnel Commit- · Federal ProJects Subco mmit~ee Colorado' - Horizon · LOcal GoVernment Coinniitte~: ~ Flydro~lectriC S~bEo~nmi~ee 6:7 p.m. - Horizon Program - Horizon · Cocktails · Tssue Forum - Floozon . Water Management Commi~ee %10:30 p.m. "What~ Behind the Controve~y - Harveys · Banquet~nte~dnment by on the 1Yinity?' "Capitol Steps' Join the fun for a fast-paced game show fo]2nat. Note: Programs and locations are subject to change without notice. 7. Your organization has the Gold Level · Representatives from sponsoring opportunityto receive recognition SS,000 - Si0,000 companies who attend ACWA and benefits that reflectyour conferences will be identified as specific contribution level. Any · Four complimentary conference a sponsor on his/her name badge combination of sponsorships over registration packages · One complimentary banquet · Appreciation plaque ticket a one-year (January-December) - Ail of the benefits included in calendar period qualifies your Bronze Level For more information contact: company for the levels detailed Monet Vela, Meetings and below, silver Level Membership Specialist Platinum Level $I,500 - S5,000 · (916) 441-4545 $10,000+ · Toil Free (888) 666-2292 · Two complimentary conference · FAX (916) 325-2316 · Four complimentary conference registration packages - E-MaiI: moneW@acwanet.com registration packages · Ail of the benefits included in · Companylogo printed on sponsor Bronze Level tab of fall conference program Bronze Level S PE¢'I,\!. N()'l'I' · Complimentary conference S250 - $1,$00 Meeiir. g i racks w![i [':,, hc;,,.I ill.; exhibitbooth -.d~e. foll,~:~' · ":hg' }~ox.::~.' · · Appreciation plaque .Acknowledgmentin ACWANews, , ..,.,... ,., ', ',' "'~ r..,.,~"" ' !::?.z:m · Two complimentary conference which is read by more than 5300 . !.',,:,~m'',,'~:so; n ,,. e ~ ', ~:c~' registration to ACWA briefings water leaders I ':~','~s workshops · Listingin conference program ,.:.' .... ,)' ' 'r..~' - '~.:-,':':'a · Ail of the benefits included in and signage during the confer- Bronze Level ence ~- Plan on stopping byACWAg Prize drawings are planned for: Exhibit Hall Only Regist~'ation Exhibit Hall while at the spring conference in South Lake Tahoe. Wednesday, May 9 Does your agencyhave a put- Many of the vendors specialize in · 9:45 a.m., 2 p.m. & 4:15 p.m. chasing agent or other staff providing services and products Thursday, May 10 person that would benefit from a with the special needs ofthe water · 8:15 a.m, 10 a.m. & 2 pm. trip through the Exhibit Hall? communityin mind. By spending Hosted Refreshment Breaks ACWA has a reduced registration time visiting with the exhibitors, it fee for those individuals. For more is possible to save your agency Each day, ACWA will provide a information contact Ellie Meek at valuable time and money by dessert break following lunch in 888-666-2292. learning what's new in the market- the exhibithall. Additionally, Exhibit Hours place. There is something for several exhibitors will ~e providing everyone at your agency to see. other treats for attendees each Wednesday, May 9 day the Exhibit Hall is Open. We · 8 a.m-Noon & l:30-5 p.m Prize Drawings would like to thank: Thursday, May I0 Sher Company InsUrance Services 8 ami!Noon & I:30-2:45 p.m. Don't forget to bring a supply of _ for providing coffee serVice businesscardssoyoucanenterto starrin atShm i The Exhib t I-lall is open to all win prizes. In addition to learning Krie e~ ~ Ste~art Ih~0~ ~l~ed registered attendees Children what the vendors have to offer, Engtneerin~ C~fi~uk~fi~ ~ numerous prize drawings will be · . . i pr09iding held in the exhibit hall ACWA will ';: :, ' lunch : : donate two free conference regis- *', ......... ' ! water.an Industries Inc.-for trauons complete wire two nlg~lts; ;' :; h. ,:; ~' ........... ~'~ :i, providing a variety of juices lOoglngattneneaaquarrersnorel i: for the fall conference in San Diego: :,':Tf~b:~ organization is planning There will also be drawings and would like to cash prizes break ~n the exhibit hall, present to win. : Vela at888-666- grea~ 6D;PO~n!ty.:T.o reser~¢your 2001 Clair A. Hill Water Agency Water p Awm'd Award for Excellence minion/edUCation: Attend Thursdays general tions. Don't miss this year's presenta- luncheon to find out who will The winning agency receives ~: tion of ACWgg Excellence in Water receive ACWA3 2001 ClairA. Hill $3,000 scholarship to be presente~ Leadership Award. The prestigious Water Agency Award for Excel- to a deserving student in a water award wilt be presented at the Ience. The award recognizes resources-related field. £astyear's general luncheon on Wednesday, innovative programs by water Clair Hill Award winner, City of May 9. agencies to manage and protect Sacramento Utilities Department The award recognizes individu- California's water resources. (Sacramento Water Forum), will als, groups or organizations who The winner is selected from present its scholarship to the have had a major impact on among finalists in six categories: winning student at the luncheon. California water government/financeJadministra- OtTICE US£ ONLY - SC01 E __ PKG . B__ Caesars Tahoe & ° ~:-ourrounmng Hotels T~ DATA South L~e T~oe, M~y 9 - H, 2001 Please charge my fee to my credit card: Title Telephone: Bus.( ) Home ( ) E-Mail Address: ~F~ n Team Discount (92) (For details on team discount, see page 5.) ]?rereg~stra~ on PACKAGE - For member registrants only .................................. $480 $ (Includes all meal functions, except workshop.) (20) Registration for Conference Only (All 3 Days)(21) On Site Anlotlnt (Sign up for meal ~n~ons separately below.) Member ..................................................................................... ($395) $ Non-member ................................................................................ ($590) Spouse/Companion (Non-re.ridable) (22) ............................................... ($35) l-Day Reg for Confet'ence Only On Site Amount: (Sign up for meaI ~nc~om separately below.) (Member) (Non-Member) ~ Wed., May 9 (23) ............................................ $190 $285 ~ ~urs., May 10/Fri., MayI1 (24) ............................ $205 5305 S CONFERENCI~ A~IVI'~ES - MFAL FUNCf'IONS Ouantity On Site Amount Wednesday, May 9 Special Issue Opening Brea~ast (30) ..................................... (S28) $ Luncheon (31) ............................................................... (S37) Thursday, May 10 Luncheon (32) .............................................................. ($37) $. Banquet (33) ................................................................ (S61) S F~day, May I1 Hans Doe Forum Breakfast (34) .......................................... ($28) ' Workshop, Tues., May 8 (Not Included in PAC~GE) (S101) 'Strate~c Planning' , ....................................................................... : ;:$210 ($235) $. 'This event is ool i~lcJL~cled itl the PACKAGE preregistration fee. Make chec~ payable to ACWA, and smad to:ACWA, P.O. Box 2408, Sacramento, CA 95812-2408, F~ (916) 325-2316 or (916) 325-4849. Fnxed registra tions will only be accepted wit:hcrediCca~:'dinformat:ion. Do notfaxAND mail this fom~. 'I'O~I~M, $. 10. ~ Association of Catifot~qia Water Agencies Caesm's Tahoe, Horiz, on, Harveys, Hm'rah's and Embassy Suites Facili~es: Five hotel facili~es are available hotel's name. ~ese choices will be NVf12%-CA). Your credit card or company to ~ose a~ending ~e ACWA 2001 Sp~ng obse~ed on a first-received, first-sewed check (made out to the pro~e~ in ~e Conference. ~e conference headqua~ers basis. Deadlineforrese~x, ationstobe amount li~ed as their room rate on the is the Caesars Tahoe Hotel. Harrahg is ~'ece~ved at the chamber is April 13. After rese~a~on form below) will ~arantee next door, the Horizon Hotel and Haweys that date, the hotels may release any your resewa~on, as well as a late arrival. are located across the s~eet (H~. 50) rooms remaining of ~ose blocked for ~e card will automa~callybe billed for &omCaesarsand~lleachhaveamajor ACWA to general sales. Please re~ster ~e fir~ night or your check deposited block of rooms for A~A delegates. ~e early, since It Is possible our entre room one week p~or to the conference. Ifyou Embassy Suites is on the California side of block could be sold out before April, even need to cancel, you must no~ the hotel the border, j~t a &w bloc~ away from though an adequate quanB~ of rooms 7 days in advance to avoid a penal~ Caesar. Rooms in the ACWA block at has been blocked for our an~ci~ated charge equal to one night's stay plus t~. each facili~ become available May 6, for a2endance. those who need to arrive early. Please Rese~*atiou Forms should indicate the note, ACW~YLJP[A meetings will be held at ~)o not make a reset'ration on the chance name of each indMdual for whom a the E~nhassy Stiites. yot~ might come. That could result ia room is being reserved. A rese~ation ol:hers being I:ur t~ed away if you decide fo~ as~n8 for ~ number of rooms for Reservt~tious: Tahoe Douglas Chamber of not to come and cm~cel late. ~ agency~rm will be reamed for a Commerce will coordinate resel~ations lis~ng of names. All resei'vations must be for all five facilities. Your reserva~on Del~osils a lid Cancellations: The five ia writi~g. Reservations will not be form should indicate your hotel prefer- hotels require a deposit equal to the rate accet]/ed by telephone. ence by lis~n8 ~e code le~er by each for one night's stay plus room tax (10%- ACCOMMOI)A'FION RATES (Sul~ject t:o Taxes) (A) Caesat~ Tahoe (B) Horizon (C) Ha~eys (D) Harrah's (E) Embassy Suites Singl~Double: S99 Main Tower-S~: $79 Stngl~Double: $95 Single~oub[e: $95 Singl~ouble: $I49 ~ec. Suite: S250 Mini-Suite: $125 Balcony ~ng: $450 Exec. Suite: S179 (includes ~llbrea~a~ 1 BR Suite~ S350 Dignitaw Suite: $300 Lake Tower Superior: $562 and coc~ail hour) 2 BR Suite: S4S0 (Adjoinl~ bedrooms are $95 each.) ~SA Card Number: ] al':~e :201~g'a~ t],~:maer MasterCard ~Ira~on Date: c., m,'~, ,t, N.,~xld,'~ i~,,z :~., - OR- Company check made out to . (prope~ name) In the Fax; "~' 5~-~)8 amount ors is a~ched. If we are unable to accommodate your first choice '.' ~; ;~ t, .~91 flor i~,:~wp.m, r'. :m:y~ ofhotel and you have enclosed a check made to ~at hotel we will re~rn your checkand L-n-a". w ~,~ f:~:a c.)ech ~-:E'er ~rg request a new one made to ~e appropriate hotel in the appropriate amounL Hotel P~&rence 5th ~pe of Room Special Ardval Depa~re 4~E 1st 2nd 3rd 4~ (Sngl/Dbl) Reques~ Date Date Confim~a~on to be sent to (Name) DisWict Agency or Fin~ Address Phone ( ) F~ ( ). E-marl Address IENING FILLED WITH LAUGHS HAS BEEN PLANNED FOR THE THURSDAY BANQUET WITH .. · CAPITOL I : .'' :~ih~!~:apitol Steps are a troupe ~ , i~'0f~ongressional staffers- {u~ed'comedians who travel the coun~ satirizing the very people · ' a ~d places that once employed ~ them. They began in 1981, at a Christmas party in the office of fo'rm~r Senator Charles Percy· Like mo~t things in Congress, they nevdr:knew when to stop. Over the pdst I~ years, the Capitol Steps haY6 F~corde.d. 20 albums, and ~:' i' ~mdrida, the 'FodaySho.w, ~20/20, ~,, 'Nighfiine. CNNs Inside Poli~cs, : and ff~ens of times on National · :'.: t~l~ii~::~adio's'AllThings Consid- eyec~:br the past 10 years, they've pi'od~l~ed quarterly specials for · :,: p<tbii~ ~adio and have been lea- Representatives. Most of these idea for a song, Not only that, cast : t~redi~ 3 national specials for politicians have either been de- members are constantly inserting : feated or placed under investiga- funny lines out of desperation performers have tion. when they forget the written ones. l on Capitol Hill, some for A Capitol Steps song parody After a few fast and furious fo-xes, some for Democrats, starts with a perfectly good song the song is hurled in front of a live : which may have nothing to do audience by a brave performer. m the fence. In fact~ the with George ~Dubya' Bush. or A1 Join us Thursday night, May 10, 'two-by-four' Gore. But something at the 2001 Spring Conference ne time or another in- funny happens, and the next thing Banquet as we laugh at the musi- trices of 1I U.S. Senators you know, someone in the Capitol cai political satire of the Capitol ~fiC{ ~Members of the House of Steps wakes up screaming with an Steps. See page I0 ~br ticket prices. ON WHEELS EFFI~CTIVE SPECIAL DISTRICT MANAGEMENT & GOVERNANCE TOPICS INCLUDE · Public Outreach · Governmental Immunities · Strateg~: Planning & Service Delivery · Discrimination Claims and the · Claims & Loss Prevention Workers' Compensation Claimant The workshop in your area Is scheduled for May 14, 2001 at Cucamonga County Water District 10440 Ashford Street, Rancho Cucamonga, California, Phone: 909.987.2591. ADA Compitant. --- Registration begins at 8:30 a,m. program convenes at 9:00 a.m. and adjourns at 4:00 p.m. Lunch is Included in the registration fee. · This workshop also counts for continuing education credits toward the Special District Administrator Certification. For more information, contact the Special District Leadership Foundation at 916.442.7887. O $ 85 - CSDA STATE and/or LOCAL CHAPTER MEMBERS O $125 - NON-CSDA MEMBERS (REGISTRATION FEE WAIVED FOR SDRMA AND/OR SDWCA MEMBERS) Name/Title: District: Address: Ci[y: Stale: Zip: Tel: Fax: Payment: O Check O Visa O Mastercard Acct Name: Acct #: Expiration Date: Authorized Signature: In an effort to make this es relevant to your district as possible, please write below three questions you would like answered during this workshop. CANCELLATION POLICY: Any cancellation MUST be made IN WRITING no later than three days prior to the event in order to receive a full refund, less a $25 processing fee. NO EXCEPTIONS. WATER EDUCATION FOUNDATION 717 K Street, Suite 317 Sacramento, CA 95814 Phone: (916) 444-6240 Fax: (916) 448-7699 tnternet: ww'w,water-ed.org The Central Valley Tour May 23-25, 2001 Sponsored by the Water Education Foundation A combination of individual entrepreneurship and government policies encouraging settlement of the West transformed California's great Central Valley into what it is today- the most productive agricultural region in the world. The southern half the San Joaquin Valley, is home to the top three farming counties in the nation. Yet the face of the valley, best known by many as a conduit of the state's largest water projects and Interstate 5, is changing. Water supplies, farmland conversion for urban growth and environmental restoration are three of ,,,,~he biggest challenges facing the valley as it enters the 21st century. The Central Valley Tour provides an opportunity to lento about efforts to deal with the unique problems of the San $oaquin Valley, which affect the economy and water needs of the rest of the state. On the tour you visit the farms that are the "factory" for the local residents - agriculture remains the No. I source of income. You also will see the water projects that irrigate these lands, environmental restoration sites and the cities and towns in one of the state's fastest growing regions. This fast-paced tour begixm at the Sacramento International Aixport, travels down the west side of the San $oaquin Valley to Bakersfield and ba~k up the east side to Sacra- mento. Along the way speakers will discuss the differences in east and west side issues. The tour is co-sponsored by the California Department of Water Resource and the U.S. Bureau of Reclamation, IH. id-Pacific Region. On the tour you will learn about: · The Central Valley Project Improvement Act · Growth, farmland preservation and water supply issues · Agricultural drainage and soil salinity problems · How Bay-Delta decisions affect the valley · Groundwater use, management, recharge and baxxldng ~ · Water quality · Environmental restoration and protection . ~ ~ · Water marketing and a'ansfers .' · ", .,. The mission of th~ Water Education Foundation, an impartial, nonprofit organization, is to develop and imple- ment educatiot', programs leading to a broader understanding of water issues and to resolution of water problems. We will visit: · San Luis Reservoir and Gianelli Pumping Plant · Mendota Pool · The Delta-Mendota Canal · Panoche Water District · Westlands Water District · Madera Ranch · Tulare Lake Basin water storage and drainage districts · Semitropic Water Storage District · Kern Water Bank · A packing plant · Friant Dam · The San Joaquin River Parkway · Modesto Irrigation District · A dairy Farm Registration fee for one person, single occupancy room, paid by May 4 - $525 Registration fee for two people, double occupancy room, paid by May 4 - $950 Single room registration fee paid after May 4 - $575 Double room registration fee paid after May 4 - $1,100 Register four or more people by May 4 and receive a $25 discount on each person's registration fee- single occupancy rooms $500 each; double occupancy rooms $900 each. n~'~The tour begins at 7:30 a.m. Wednesday, May 23, at the Sacramento International Airport and ends by 6 p.m. Friday, May 25, at the Sacramento airport. Travel will be by air-conditioned bus equipped with video monitors and restroom. The registration fee includes meals, transportation and moms at Harris Ranch in Coaiinga (Wednesday) and the Radisson Hotel in Visalia (Thursday). Tour participants are responsible for their own transportation to and from Sacramento. This activity has been approved for Minimum Continuing Legal Education credit by the State Bar of California in the amount of 22 hours. The Foundation certifies that this activity conforms to the standards for approved education activities prescribed by the rules and regulations of the State Bar of California governing minimum continuing legal education. There is an additional charge orS100 to register for MCLE credit. This is a one bus tour, and seating is limited. All reservations are on a first-come, first serve basis. Reservations can be made by completing the attached form and returning it to the Water Education Foundation with your payment. Faxed reservations will be accepted with credit card or purchase order payments. The fee includes all meals, lodging, transportation and background materials while on the tour. On-line registration at www. watereducation.org will be available. Deadline to cancel and receive a full refund is 5 p.m., May 11 due to hotel, meal and transportation bookings. Request for a refund must be in writing. Substitutions may be made at any time. Additional tour information, complete itinerary and reference materials will be mailed approximately one month before the tour. Please notify the Foundation prior to the tour if you have a medical condition or other special needs we should be aware of to accommodate ¥ou. Water Education Foundation Central Valley Tour Registration Form Name(s) Title(s) Organization Address City, State, Zip Phone No. E-mail My $. fee is enclosed ($525 paid by May 4; $500 per person if 4 or more are registering; $575 after May 4). Includes all transportation, meals and overn.ight lodging while on the tour, based on a single person occupancy per room. Our $ fee is enclosed ($950 paid by May 4; $900 per room if 4 or more are registering; $1,100 paid after May 4) for two people sharing a room. Yes, register me for MCLE credits for an additional $100 fee. $ Total enclosed For payment by [] Visa [] MasterCard [] American Express: Credit card number: Exp. date Signature: (must be signed to process credit card order) We reserve as many nonsmoking rooms as are available, If you WANT a smoking room, please check here: __ 5 p.m. on May 11 is the last date to ~aneel and receive a full refund. Refund request must be in writing. Substitutions may be made at any time. Faxed reservations accepted with purchase order or credit card payments. Please make checks payable to Water Education Foundation and send with completed form to 717 K St., Ste. 317, Sacramento, CA 95814; ~li~Phone: 916-444-6240. Fax 916-448-7699. Intemet: www.watereducation.org Drinking Water objective public review by a third part}, -- such as the National Academy of Sciences ~ before EPA makes a final decision on whether to retain the new standard of 10 ppb. The Association of California Water Ageneles (ACWA), which represents drinking water systems in the Golden State, are already questioning F-pA's legal authorlry to postpone the effective date of the rule. Sources with ACWA, while supportive of the new EPA review of costs and the science behind the new standard, say they are seeking answers from federal officials about the legal bash of the move, Environmemalists have raised concerns that if EPA opts to rescind the 10 ppb standard there may be no standard for arsenic at all, since the 10 ppb standard replaced the $0 ppb standard. In response to these concerns a.nothcr source with OGWDW says, "I don't know that we definitively know the answer to thlt." However, the source adds that if~PA does decide to with~'aw ',he 10 ppb standard it would almost certainly make sure that an interim standard is in place. A source with £?A's O~ce of General Counsel says that if the agency opts to repeal the 10 ppb stand~'d, it would go through a notice and comment period to withdraw thc rule. During t~at same notice period it would propose to reinsta~ thc pre-existing standard of 50 ppb, so that if the new standard is withdrawn the old one would be put into place. In bipa~lsan effort LAWMAKERS TARGET MULTi-MEDIA PIECE OF CLINTON-ERA RADON RULE A bipartisan group of House lawmaket~ fi*om California ate calling on EPA Adminismator Christine Todd Whitman to remove fi`om the Clinton adminiseration's proposed drinking water standard for radon a provision that would allow drinking water suppliers to meet a less-stringent radon standard on condition they also develop progxams to combat airborne radon. The lawmakers are urging EPA to craR a single drinking water standard for radon and focus its efforts on protecting public health by addressing radon in the air. Before they left, office, Clinton admlnisn'atiou officials sent to the Office of Management & Budget (OMB) a final radon rule that tightened limits on radon in drinking water. While details of the rule have not been released, most observers believe the measure is simltat to the agency's Nov. 1999 proposal that set Iwn separate maximum contaminant levels (MCLs) for radon. This included an alternative s~ndard for states or drinking water suppliers that develop programs Io combat airborne radon. The proposed alternative MCL is 4000 picocuries per liter, while systems not covered by a multimedia mitigation program to reduce airborne r~don must meet an MCL of 300 plcocuries per liter. Drinking water suppliers have vehemently opposed thc proposal. In early 2000, their lobbyists pushed legislative language that would relieve EPA of its statutory responsibility to regulate radon in dsinking water, and would instead tTeat the gas as a pollutant under the Clean Air Act (eYelet Policy/?aport, Mamh 15, 2000, pi 8). The draft bill, crafted by the Association of California Water Agencies (ACWA), would have directed EPA to withdraw its radon proposal and provided the agency wi~h $20 million in grants to "establish a national program for states to address radon in indoor air." But when Bush adminis~asion officials look office, they pulled the proposal hack from OMB for review. Now a group of California lawmakers has writsen Whitman asking that the proposal be amended. The agency is subject to an Aug. 2000 deadline to promulgate the rule. But in their Match 12 letter, the lawmakers congratulate EPA on removing the proposed radon rule from consideration by OMB. The letter says, "we hope to continue etTor~, begun last year, to strengthen the public health protection aspects of the radon rule by re-focusing it on air while see~ing thc drinking water s~andard at the average outside air level," The letter is available on our web site, lnsideEP.4.eorn Seepage 2for details. The representatives note that, "as currently proposed, this rule would have a major impact on cities and drinking water agencies in our congressional districts, as well as many others across the country." Lawmakers signing thc letter include Jan',/Lewls (R), Calvin Dooley (D). Mary Bono (R), George Radanovich (R), Ken Calvert (R), and Joe Baca (D). The representatives' letzer claims that EPA's own science and risk models have shown that 98 percent oftbe risk of radon is associated with air and only two percent on drinking water. "The withdrawal of the radon rule fi`om OMB consideration gives us the opportunity to work with EPA to crape a regulation that recognizes this reality," the lener says. Thc leper also asks that Whim~an appoint a member of her staffto coordinate thc multimedia aspects of "the radon issue" between the Office of Water and the Ofl~ce of Air. A source with ACWA says that the representatives have not yet decided if they will move to inlroduce thc radon legislation. Thc source explains that the lavemskers will likely wait and see what action EPA takes before making a decision. The source adds that if EPA is required to release thc radon regulatio~ due to statutory or legal obligations thc agency should propose legislation to the Hill giving the agency authority to withdraw thc rule. 12 WATI~R POLICY REPORT - March 26, 2001 TOTPtL p. 0~ SEP-24-1999 09:54 FROM ROGER$,~NDERS,MALODY,SCOT TO E~$T UALLEYH20 P.01702 Memo To= AII0erta I-less Fmm: B~ian Tno'q~ins 09/'20/g9 Telematry Upgrade In reviewing the r~ed asset transactions for the 1998-99 year, I noted that asset additions included subs~antiai costs to uPgrade the Telemetry System. As RAMS maintains the fixed asset detail, I need to know the parlJcula~s of the asset~ replay=ed/disposed. For example, should all Telemetry costs previously recorded te removed from the cletail or are some components still in use? Do the components ml~aced still have value or should remaining book value be written off'?. In aclclition, resen~oir and tank assets have been divided by plant in Me detail to this point. Is it p~ssible to a#o~ata the new Telemet~. system assets by I~lant numl~e~. Let me know if we should schedule a meeting to rewew these questions. Thanks. · Page 1 SEP-24-1999 09:55 FROM ROGERS,ANDERS,MALODY,S¢OT TO EAST VALLEYH20 P.02/02 OLD RADIO EQUIPMENT STORED AT PLANT 1'i 5 Ce[Wave Antenna's 18 Antenna's 23 Total 12 Battedes 11 D C 4 Decoders Intra12000 13 E S 8 Endor Intra12000 14 P S 8 Power Supply Intm12000 12 M R T U Intra12000 10 A 1-6 Analog Input Intra12000 1t C 04 Control Output Intra12000 DARCOMgOOOUNIT~ I FVVF1535A on F6556BBoa~ 2 FWF1535AonF6556A Boar ~ 17 FUF1535A 20 Total 4 FPN1522A Units 9113/09 TOTAL P.02