MATURITY SCHEDULE (see inside cover)

Transcription

1 NEW ISSUE FULL BOOK-ENTRY RATING: Moody s: A3 (See RATING herein.) In the opinion of Fulbright & Jaworski L.L.P., Los Angeles, California, Bond Counsel, under existing law, interest on the Bonds is exempt from personal income taxes of the State of California, and, assuming continuing compliance after the date of initial delivery of the Bonds with certain covenants contained in the Tax Exemption Certificate of the District and subject to the matters set forth under TAX MATTERS herein, interest on the Bonds for federal income tax purposes under existing statutes, regulations, published rulings, and court decisions will be excludable from the gross income of the owners thereof pursuant to section 103 of the Internal Revenue Code of 1986, as amended to the date of initial delivery of the Bonds, and will not be included in computing the alternative minimum taxable income of the owners thereof. See TAX MATTERS herein. Dated: Date of Delivery $2,273, TEHACHAPI VALLEY HEALTHCARE DISTRICT (Kern County, California) GENERAL OBLIGATION BONDS 2004 ELECTION, 2009 SERIES C (BANK QUALIFIED) Comprised of $1,950, Current Interest Bonds and $323, Capital Appreciation Bonds Due: November 1, as shown on inside cover The Tehachapi Valley Healthcare District (the District ) is issuing $2,273, aggregate principal or issue amount of its General Obligation Bonds, 2004 Election, 2009 Series C (the Bonds ). The Bonds are being issued in fully registered form without coupons as Current Interest Bonds and Capital Appreciation Bonds and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository of the Bonds described herein under the caption THE BONDS Book-Entry Only System. The Bonds will be issued and secured pursuant to the terms of Chapter 4 of Division 23 (commencing with Section 32300) of the California Health and Safety Code and the provisions of a resolution of the Board of Directors of the District adopted on June 17, 2009 (the Resolution ). The Bonds are payable as to both principal and interest or Maturity Amount from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount. The District voters approved the authorization of the Bonds by more than two-thirds of the votes cast by eligible voters within the District on March 2, 2004 (the Authorization ). The Bonds are the third and final series of general obligation bonds of the District issued pursuant to the Authorization. All general obligation bonds of the District are issued on a parity with one another. The Bonds will mature on the dates and in the amounts and bear or accrete interest at the rates shown on the inside cover hereof. Interest on the Current Interest Bonds is payable on May 1, 2010, and semiannually thereafter on each May 1 and November 1. Principal of the Current Interest Bonds is payable annually commencing on November 1, The Capital Appreciation Bonds will not bear current interest, but will accrete in value from their initial issue amounts (the Denominational Amounts ) to their respective accreted values on their respective maturity dates (the Maturity Amount ). Interest on the Capital Appreciation Bonds will be compounded commencing November 1, 2009 and semiannually thereafter on each May 1 and November 1 and shall be payable only upon maturity. See THE BONDS herein. The Current Interest Bonds are subject to redemption prior to maturity as described herein. See THE BONDS Optional Redemption herein. MATURITY SCHEDULE (see inside cover) This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed decision. The Bonds are offered by the Underwriter, when, as and if issued by the District and accepted by the Underwriter, subject to approval of legality by Fulbright & Jaworski L.L.P., Los Angeles, California, Bond Counsel and Disclosure Counsel. Certain legal matters will be passed upon for the District by Lemieux & O Neill, Westlake Village, California, and for the Underwriter by Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California. It is expected that the Bonds in definitive form will be available for delivery through the facilities of DTC in New York, New York, on or about August 13, RBC CAPITAL MARKETS Dated: July 30, 2009

2 MATURITY SCHEDULE $1,950, Current Interest Bonds Maturity (November 1) Principal Amount Interest Rate Yield 2018 $145, % 5.58% , , (1) , (1) , (1) , (1) , (1) , $323, Capital Appreciation Bonds Maturity (November 1) Denominational Amount Maturity Amount Approximate Yield Accretion Rate 2012 $62, $90, % 11.90% , , , , , , , , , , (1) Yield to par call on November 1, 2019.

3 TEHACHAPI VALLEY HEALTHCARE DISTRICT Board of Directors Sam Conklin, M.D., President Gary Olsen, M.D., Vice President Kim J. Horowitz, M.D., Treasurer William J. B. Steele, Secretary Susan J. P. Hall, M.D., Director Administration Alan J. Burgess, FACHE, CFAAMA, Chief Executive Officer Joseph H. Demont, C.P.A., Chief Financial Officer PROFESSIONAL SERVICES Bond and Disclosure Counsel Fulbright & Jaworski L.L.P., Los Angeles, California Underwriter RBC Capital Markets Corporation Los Angeles, California Paying Agent Wells Fargo Bank, National Association Los Angeles, California Financial Advisor Caldwell Flores Winters, Inc. Emeryville, California

4 No dealer, broker, salesperson or other person has been authorized by the District to provide any information or to make any representations other than as contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the District. This Official Statement does not constitute an offer to sell, the solicitation of an offer to buy, nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly described herein, are intended solely as such and are not to be construed as a representation of facts. The information and expressions of opinion herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District since the date hereof. Although certain information set forth in this Official Statement has been provided by Kern County (the County ), the County has not approved this Official Statement and is not responsible for the accuracy or completeness of the statements contained in this Official Statement. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER- ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS, INSTITUTIONAL INVESTORS, BANKS OR OTHERS AT PRICES LOWER OR HIGHER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.

5 TABLE OF CONTENTS Page INTRODUCTION...1 Purpose of the Official Statement... 1 The Bonds... 1 Security for the Bonds... 2 Financial Statements... 2 Continuing Disclosure... 2 Other Information... 2 THE BONDS... 2 Authority for Issuance... 2 General... 3 Estimated Sources and Uses of Funds... 4 Optional Redemption... 4 Selection of Bonds for Redemption... 4 Notice of Redemption... 4 Partial Redemption of Bonds... 5 Effect of Notice of Redemption... 5 Defeasance... 5 Transfer and Exchange... 6 Mutilated, Destroyed, Stolen or Lost Bonds... 6 CUSIP Numbers... 7 Debt Service Schedule... 8 Book-Entry Only System... 8 Registration... 8 SECURITY AND SOURCE OF PAYMENT FOR THE BONDS... 9 General... 9 PLAN OF FINANCE... 9 Generally... 9 The Project Investment of Proceeds THE DISTRICT THE AUTHORITY TAX MATTERS APPROVAL OF LEGAL PROCEEDINGS ABSENCE OF LITIGATION UNDERWRITING FINANCIAL STATEMENTS BANK QUALIFIED Qualified Tax-Exempt Obligations for Financial Institutions RATING MISCELLANEOUS i

6 TABLE OF CONTENTS (cont d.) Page APPENDIX A PROPOSED FORM OF OPINION OF BOND COUNSEL...A-1 APPENDIX B SELECTED INFORMATION FROM THE DISTRICT S FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING JUNE 30, B-1 APPENDIX C THE DISTRICT AND THE HOSPITAL...C-1 APPENDIX D SERVICE AREA ECONOMY...D-1 APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT... E-1 APPENDIX F BOOK-ENTRY ONLY SYSTEM... F-1 APPENDIX G ACCRETED VALUES TABLE...G-1 ii

7 OFFICIAL STATEMENT $2,273, TEHACHAPI VALLEY HEALTHCARE DISTRICT (Kern County, California) GENERAL OBLIGATION BONDS, 2004 ELECTION, 2009 SERIES C (BANK QUALIFIED) $1,950, Current Interest Bonds Comprised of and $323, Capital Appreciation Bonds INTRODUCTION The following introductory statement is subject in all respects to more complete information contained elsewhere in this Official Statement. The order and placement of materials in this Official Statement, including the Appendices, are not to be deemed to be a determination of relevance, materiality or relative importance, and this Official Statement, including the Cover Page and Appendices, must be considered in its entirety. All capitalized terms used in this Official Statement that are not otherwise defined herein shall have the meanings ascribed to them in the Resolution. Purpose of the Official Statement The purpose of this Official Statement, including the cover page and inside cover page hereof and the Appendices hereto, is to furnish certain information relating to: (i) the Tehachapi Valley Healthcare District (the District ), (ii) 2,273, aggregate Principal or Denominational Amount of the District s General Obligation Bonds, 2004 Election, 2009 Series C (the Bonds ), and (iii) the construction and improvement of certain facilities of the District described herein that are being financed with the proceeds of the Bonds (the Project ). The Bonds The Bonds will be issued pursuant to Chapter 4 of Division 23 (commencing with section 32300) of the California Health and Safety Code (the Act ) and the provisions of a resolution of the Board of Directors of the District adopted on June 17, 2009 (the Resolution ). The District voters approved the authorization of the Bonds by more than two-thirds of the votes cast by eligible voters within the District on March 2, 2004 (the Authorization ). The Bonds are the third and final series of bonds issued under the Authorization. All general obligation bonds of the District are issued on a parity with one another and with the Bonds. A description of the Bonds is contained in this Official Statement under THE BONDS. The Bonds will be issued in the form of current interest bonds ( Current Interest Bonds ) and capital appreciation bonds ( Capital Appreciation Bonds ). All references to the Bonds are qualified in their entirety by the definitive forms thereof and the provisions with respect thereto included in the Resolution. A description of the Project and a description of the estimated sources and uses of funds are contained in this Official Statement under PLAN OF FINANCE and THE BONDS Estimated Sources and Uses of Funds herein, respectively. 1

8 Security for the Bonds The Bonds are general obligations of the District. The Board of Supervisors of Kern County (the County ) has the power and is obligated to annually levy ad valorem taxes upon all property subject to taxation by the District, without limitation as to rate or amount (except certain personal property, which is taxable at limited rates), for the payment of principal, Maturity Amount of and interest on the Bonds (except certain personal property which is taxable at limited rates). See SECURITY AND SOURCE OF PAYMENT FOR THE BONDS and APPENDIX C THE DISTRICT AND THE HOSPITAL. Financial Statements Selected information from the District s audited financial statements for the fiscal year ended June 30, 2008 is included in APPENDIX B to this Official Statement. The audited financial statements have been audited by TCA Partners, independent certified public accountants, to the extent and for the periods indicated in their report, which is also included in APPENDIX B. See FINANCIAL STATEMENTS. Continuing Disclosure In accordance with the requirements of Rule 15c2-12 (the Rule ) promulgated by the Securities and Exchange Commission, the District will enter into a Continuing Disclosure Agreement (the Continuing Disclosure Agreement ) in the form of APPENDIX E hereto, on or prior to the sale of the Bonds in which the District will undertake, for the benefit of the Beneficial Owners of the Bonds, to provide certain information as set forth therein. The District failed to file its annual report for fiscal year in a timely manner. The District also failed to file certain notices of material events with respect to the downgrading of the ratings on the respective insurers for certain of its outstanding general obligation bonds. All required annual reports and notices of material events have subsequently been filed and the District is now current in its continuing disclosure obligations. Other Information This Official Statement speaks only as of its date, and the information contained herein is subject to change. All references herein to the specified documents are qualified in their entirety by reference to the definitive forms of those documents, copies of which may be viewed during the offering period for the Bonds at the office of RBC Capital Markets Corporation, 777 South Figueroa Street, Suite 850, Los Angeles, California 90017, Attention: Public Finance Department (telephone: ) or will be provided during the offering period to any prospective purchaser requesting the same, upon payment by such prospective purchaser of the cost of complying with such request. Authority for Issuance THE BONDS The Bonds were authorized by a 2/3 vote of the District s voters at a general election conducted on March 2, 2004, at which $15,000,000 of general obligation bonds of the District were authorized to be issued (the Authorization ). The Bonds constitute the third series of bonds issued under the Authorization, under which no additional general obligation bonds of the District may be issued. All general obligation bonds issued under the Authorization are issued on a parity with one another and, hence, with the Bonds offered hereunder. 2

9 The Bonds are issued under the Resolution and will be sold to the South East Kern Health Collaborative Joint Powers Authority (the Authority ) simultaneously with the Authority s sale of the Bonds to the Underwriter pursuant to Section 6588(v) of the California Government Code. General The Current Interest Bonds will be issued in denominations of $5,000 or any integral multiple thereof, and the Capital Appreciation Bonds will be issued in initial amounts ( Denominational Amounts ) corresponding to $5,000 accreted value at maturity ( Maturity Amount ) or any integral multiple thereof except that one Capital Appreciation Bond may be issued in an odd Maturity Amount, and in each case, will mature on the dates and in the amounts and bear interest at the rates per annum, all as set forth on the inside cover page of this Official Statement. Interest on the Current Interest Bonds will be payable on May 1 and November 1 of each year (the Bond Payment Dates ), commencing May 1, Interest on the Current Interest Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months. Each Current Interest Bond will bear interest from the Bond Payment Date next preceding the date of authentication thereof unless such date of authentication is a day during the period from the sixteenth day of the month next preceding any Bond Payment Date to such Bond Payment Date, inclusive, in which event it shall bear interest from such Bond Payment Date, or unless such date of authentication is on or prior to April 15, 2010, in which event it shall bear interest from the delivery date of the Bonds, provided, however, that if as of the date of authentication of any Bond, interest is in default thereon, such Bond shall bear interest from the Bond Payment Date to which interest has previously been paid or made available for payment thereon. The Capital Appreciation Bonds will not bear current interest, but will accrete in value from their Denominational Amounts to their respective Maturity Amounts on their respective maturity dates on the basis of a constant interest rate (with straight line interpolations between compounding interest dates) compounded commencing November 1, 2009, and semiannually thereafter on May 1 and November 1 in each year and shall be payable only upon maturity. The Maturity Amount of the Capital Appreciation Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. Attached as APPENDIX G is a table of accreted values for the Capital Appreciation Bonds that have been computed as of each May 1 and November 1 per $5,000 of Maturity Amount, based upon the Accretion Rates of such Bonds as set forth on the inside cover page hereof and upon the nominal interest rates on the Capital Appreciation Bonds. See APPENDIX G ACCRETED VALUES TABLE. The Capital Appreciation Bonds mature on November 1 in the years and amounts set forth on the inside cover page hereof. The principal, redemption price or Maturity Amount of the Bonds will be payable at the maturity or earlier redemption upon presentation and surrender of the Bonds at the corporate trust office of Wells Fargo Bank, National Association, as paying agent (the Paying Agent ), and interest on the Current Interest Bonds will be payable by check, mailed on the Bond Payment Date to each Owner of the Current Interest Bonds as of the close of business on the fifteenth day of the month immediately preceding a Bond Payment Date, or by wire transfer to an account in the United States at the request of the Owner of at least $1,000,000 in aggregate principal amount of outstanding Current Interest Bonds filed with the Paying Agent no later than the fifteenth day of the month next preceding such Bond Payment Date. 3

10 Estimated Sources and Uses of Funds The estimated sources and uses of funds in connection with the financing are as follows: Sources: Bond Proceeds $2,273, Original Issue Premium 166, Total Sources: $2,440, Uses: Deposit to Building Fund $2,273, Costs of Issuance Fund (1) 166, Total Uses: $2,440, (1) Includes Underwriter s discount, fees and disbursements of legal counsel, fees and disbursements of the Financial Advisor and a portion of the other costs incurred in connection with issuance and delivery of the Bonds. Optional Redemption The Current Interest Bonds maturing on or before November 1, 2019 are not subject to redemption prior to their fixed maturity dates. The Current Interest Bonds maturing on and after November 1, 2020 may be redeemed before maturity, at the option of the Authority, from any source of available funds, on any date on or after November 1, 2019, as a whole or in part, at par together with interest accrued thereon to the date of redemption. The Capital Appreciation Bonds are not subject to optional redemption prior to their scheduled maturities. Selection of Bonds for Redemption Whenever provision is made for the redemption of less than all of the Bonds of a maturity, the Paying Agent, upon written instruction from the District given at least 60 days but no less than 30 days prior to the Bond Payment Date designated for such redemption, shall select Bonds for redemption in inverse order of maturity within a series. Within a maturity, the Paying Agent shall select Bonds for redemption by lot. Redemption by lot shall be in such manner as the District shall determine; provided, however, that in the event the District shall fail to so determine, then in inverse order of maturity and by lot within a maturity; and that the portion of any Bond to be redeemed in part shall be in the Principal Amount or Maturity Amount of $5,000 or any integral multiple thereof. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 Authorized Denominations and such separate Authorized Denominations shall be treated as separate Bonds which may be separately redeemed. Notice of Redemption Notice of redemption shall be mailed by the Paying Agent, by first class mail, postage prepaid, to the respective Owners of any Bonds designated for redemption at their addresses appearing on the Registration Books and to the Securities Depositories and the Information Services at least 30 days but not more than 60 days prior to the redemption date. Neither the failure to receive such notice nor any defect in the notice so mailed will affect the sufficiency of the proceedings for redemption of such Bonds or the cessation of accrual of interest on the redemption date. Each notice of redemption shall state the redemption date, the place or places of redemption, the CUSIP numbers and the Bond numbers of the Bonds to be redeemed, and in the case of Bonds to be redeemed in part only, the respective Authorized 4

11 Denominations of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said Bonds the principal amount relating thereto or of said specified portion of the principal thereof in the case of a Bond to be redeemed in part only, plus accrued interest, if any, and through which date such interest will accrue, and that from and after such date interest thereon shall cease to accrue and shall require that such Bonds be then surrendered at the principal office of the Paying Agent. Neither the failure of any Owner to receive any notice so mailed nor any defect therein shall affect the sufficiency of the proceedings for redemption of any Bonds nor the cessation of accrual of interest thereon. Notice of redemption of Bonds shall be given by the Paying Agent, at the expense of the District, for and on behalf of the District. Partial Redemption of Bonds Upon surrender of any Bonds redeemed in part only, the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof, at the expense of the District, a new Bond or Bonds of Authorized Denominations equal in aggregate principal amount or maturity amount, as applicable, representing the unredeemed portion of the Bond or Bonds surrendered. Effect of Notice of Redemption Notice having been given as aforesaid, and moneys for the redemption (including the interest to the applicable date of redemption and including any applicable premium), having been set aside in the Redemption Fund or any of the accounts therein, the Bonds shall become due and payable on said date of redemption, and, upon presentation and surrender thereof at the principal office of the Paying Agent, said Bonds shall be paid at the redemption price thereof, together with interest accrued and unpaid to said date of redemption and premium, if any. If, on said date of redemption, moneys for the redemption of the Bonds to be redeemed, together with interest to said date of redemption, shall be held by the Paying Agent so as to be available therefor on such date of redemption, and, if notice of redemption thereof shall have been given as aforesaid and not cancelled, then, from and after said date of redemption, interest represented by such Bonds shall cease to accrue and become payable. All moneys held by or on behalf of the Paying Agent for the redemption of Bonds shall be held in trust for the account of the Owners of the Bonds so to be redeemed without liability for interest thereon. All Bonds paid at maturity or redeemed prior to maturity shall be cancelled upon surrender thereof and destroyed. Defeasance If all Outstanding Bonds shall be paid and discharged in any one or more of the following ways: (a) by well and truly paying or causing to be paid the principal and interest on all Bonds Outstanding, and when the same become due and payable; (b) by depositing with the Paying Agent, in trust, at or before maturity, cash which together with amounts then on deposit in the Interest and Sinking Fund together with the interest to accrue thereon and on any such moneys, obligations or securities as may be permitted by the laws of the State to be deposited for the purpose of refunding the Bonds without the need for further investment, is fully sufficient to pay all Bonds Outstanding at maturity thereof or on any redemption date prior thereto, 5

12 including any premium and all interest thereon, notwithstanding that any Bonds shall not have been surrendered for payment; or (c) by depositing with an institution that meets the requirements for serving as a Paying Agent pursuant to the Resolution, in trust, lawful moneys, or obligations issued by the United States Treasury (including State and Local Government Series Obligations) or obligations which are unconditionally guaranteed by the United States of America and permitted under Section 149(b) of the Code and Regulations which, in the opinion of Bond Counsel, will not impair the exclusion of gross income for federal income tax purposes of interest on the Bonds, in such amount as will, in the opinion of an independent certified public accountant, together with the interest to accrue thereon but without the need for further investment, be fully sufficient to pay and discharge all Bonds Outstanding at maturity thereof or on any redemption date prior thereto, including any premium and all interest thereon, notwithstanding that any Bonds shall not have been surrendered for payment; then all obligations of the District under the Resolution with respect to all Outstanding Bonds shall cease and terminate, except only the obligation of the Paying Agent to pay or cause to be paid from funds to the Owners of the Bonds all sums due thereon. Transfer and Exchange Any Bond may, in accordance with its terms, be transferred in the books required to be kept pursuant to the provisions of the Resolution by the person in whose name it is registered, in person or by their duly authorized attorney, upon surrender of such Bond for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Paying Agent. Whenever any Bond or Bonds are surrendered for transfer, the District will execute and the Paying Agent will authenticate and deliver to the transferee a new Bond or Bonds of the same maturity and tenor for a like aggregate principal amount or Maturity Amount. The Paying Agent will require the payment by the Bond Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer as a condition precedent to the exercise of such privilege. The Paying Agent will not be required to issue, register the transfer of or exchange any Bonds during the period established by the Paying Agent for selection of Bonds for redemption or to register the transfer or exchange of any Bonds which have been selected for redemption in whole or in part. Bonds may be exchanged at the corporate trust office of the Paying Agent for a like aggregate principal amount of Bonds of the same maturity and tenor of other authorized denominations. The Paying Agent will require the payment by the Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange as a condition precedent to the exercise of such privilege. Mutilated, Destroyed, Stolen or Lost Bonds If any Bond shall become mutilated, the District, at the expense of the Owner of said Bond, shall execute, and the Paying Agent shall thereupon authenticate and deliver, a new Bond of the same maturity and tenor in exchange and substitution for the Bond so mutilated, but only upon surrender to the Paying Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Paying Agent shall be canceled by it and delivered to the District upon order thereof. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Paying Agent and, if such evidence be satisfactory to them and indemnity satisfactory to it shall be given, the District, at the expense of the Owner, shall execute, and the Paying Agent shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in replacement for the Bond so lost, destroyed or stolen (or if any such Bond 6

13 shall have matured or shall have been called for redemption, instead of issuing a replacement Bond, the, Paying Agent may pay the same without surrender thereof upon receipt of the above-mentioned indemnity). The District may require payment by the Owner of a sum not exceeding the actual cost of preparing each replacement Bond and of the expenses which may be incurred by the District and the Paying Agent. Any Bond issued in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the District whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of the Resolution with all other Bonds issued under the Authorization. CUSIP Numbers It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bonds, nor any error in the printing of such numbers, shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for any Bonds. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 7

14 Debt Service Schedule The following table displays the debt service schedule of the District for the Bonds and the bonds issued previously under the Authorization (the Prior Bonds ). Bond Year Ending November 1 The Bonds Prior Bonds Debt Service Principal Interest Compounded Interest Aggregate Debt Service 2009 $ 756, $ 0 $ 0 $ 0 $ 756, , , , , , , , , , , ,023, , , , , ,055, , , , , ,089, , , , , ,116, , , , , ,152, , , , , ,186, , , , ,223, , , , ,254, , , , ,291, ,013, , , ,328, ,034, , , ,369, ,057, , , ,411, ,083, , , ,452, ,107, , , ,490, ,127, ,127, ,163, ,163, ,199, ,199, (1) 1,240, ,240, ,375, ,375, (2) 1,425, ,425, Total $23,336, $2,273, $1,671, $306, $27,588, (1) Principal of a portion of the Prior Bonds in 2029 is due August 1 rather than November 1. (2) Principal of the Prior Bonds in 2031 is due May 1 rather than November 1. Book-Entry Only System The Depository Trust Company ( DTC ) will act as securities depository for the Bonds. The Bonds will be executed and delivered as fully registered securities registered in the name of Cede & Co. (DTC s partnership nominee). One fully registered bond will be issued for the Bonds of each maturity, in the initial aggregate principal amount of such maturity, and will be deposited with DTC or its authorized agent. See APPENDIX F BOOK-ENTRY ONLY SYSTEM for further information regarding DTC. Registration The Bonds are to be issued as fully registered Bonds payable to the registered owners thereof. Transfer of ownership of a fully registered Bond or Bonds shall be made by exchanging the same for a new registered Bond or Bonds of the same maturity and tenor and in the same aggregate Principal amount 8

15 or Maturity Amount. All of such exchanges shall be made as provided in the Resolution, or in such manner and upon such reasonable terms as may from time to time be determined and prescribed by the District. General SECURITY AND SOURCE OF PAYMENT FOR THE BONDS The Bonds are general obligations of the District, and the Board of Supervisors of the County has the power and is obligated to cause to be levied and collected annual ad valorem taxes for payment of the Bonds and the interest thereon upon all property within the District subject to taxation by the District without limitation as to rate or amount. Such taxes will be levied annually in addition to all other taxes during the period that the Bonds are outstanding in an amount sufficient to pay the Maturity Amount, Principal of and interest on the Bonds when due. Such taxes, when collected, will be deposited into the Tehachapi Valley Healthcare District Interest and Sinking Fund (the Debt Service Fund ), which is required to be applied for the payment of Maturity Amount, Principal of and interest on the Bonds when due. Pursuant to Section of the California Health and Safety Code, in the event that the amount on deposit in the District s Debt Service Fund is insufficient to pay the debt service coming due on the Bonds on any Bond Payment Date, an amount sufficient to make such debt service payment shall be transferred from the Maintenance and Operation Fund of the District to the Debt Service Fund and used to pay debt service on the Bonds. The District has never had to transfer any amounts from its Maintenance and Operation Fund to make any payments of debt service on any of its outstanding general obligation bonds. The moneys in the Debt Service Fund, to the extent necessary to pay the Maturity Amount, principal of, premium, if any, and interest on the Bonds as the same becomes due and payable, shall be transferred by the County to the Paying Agent and by the Paying Agent, to DTC for remittance of such Maturity Amount, principal, premium, if any, and interest to its Participants (as defined herein) for subsequent disbursement to the Beneficial Owners of the Bonds. The amount of the annual ad valorem tax levied to repay the Bonds will be determined by the relationship between the assessed valuation of taxable property in the District and the amount of debt service due on the Bonds. Fluctuations in the annual debt service on the Bonds and the assessed value of taxable property in the District may cause the annual tax rate to fluctuate. Economic and other factors beyond the District s control, such as economic recession, deflation of land values, a relocation out of the District or financial difficulty or bankruptcy by one or more major property taxpayers, or the complete or partial destruction of taxable property caused by, among other eventualities, earthquake, flood or other natural disaster, could cause a reduction in the assessed value within the District and necessitate a corresponding increase in the annual tax rate. For further information regarding the District s assessed valuation, tax rates, overlapping debt and other matters concerning taxation, see APPENDIX C THE DISTRICT AND THE HOSPITAL. Generally PLAN OF FINANCE The Bonds are being issued to finance the construction of certain capital facilities for the District as described below (the Project ) and to pay certain costs of issuance of the Bonds. 9

16 The Project A portion of the proceeds of the Bonds will be deposited into the Building Fund and used to pay costs of the Project. The Project consists of the construction of a modern acute care hospital facility which shall include 25 hospital beds, an 8-bed emergency department, diagnostic radiology, ultrasound and mammography capability, a CT scanner, a clinical laboratory, rehabilitation services and an outpatient clinic. The District has received approval of its revised plans for the hospital facility from the Office of Statewide Health Planning and Development and expects to commence construction by April of Investment of Proceeds Pursuant to the Resolution, the proceeds of the Bonds will be deposited into the Building Fund to be held by Wells Fargo Bank as a separate trust account on behalf of the District and invested in those certain investments authorized for public agencies under Section of the Government Code of the State of California. THE DISTRICT The District is a local health care district which was formed as the Tehachapi Valley Hospital District in 1949 pursuant to the Local Health Care District Law (formerly the Local Hospital District Law) of the State, constituting Division 23 (commencing with Section 32000) of the Health and Safety Code of the State. See APPENDIX C THE DISTRICT AND THE HOSPITAL. THE AUTHORITY The Authority is a California joint exercise of powers authority created pursuant to the provisions relating to the joint exercise of powers contained in Chapter 5 of Division 7 of Title 1 (commencing with section 6500) of the Government Code, and pursuant to a Joint Exercise of Powers Agreement, dated as of July 22, 2004, by and between the District and East Kern Healthcare District, as members of the Authority (the Joint Powers Agreement ). The Authority is authorized to purchase the Bonds pursuant to the Section 6588(v) of the Government Code. The Authority has no employees and has no taxing power. TAX MATTERS The delivery of the Bonds is subject to delivery of the opinion of Bond Counsel, to the effect that interest on the Bonds for federal income tax purposes under existing statutes, regulations, published rulings, and court decisions: (1) will be excludable from the gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended (the Code ) to the date of initial delivery of the Bonds, of the owners thereof pursuant to section 103 of the Code, and (2) will not be included in computing the alternative minimum taxable income of the owners thereof. The delivery of the Bonds is also subject to the delivery of the opinion of Bond Counsel, based upon existing provisions of the laws of the State of California that interest on the Bonds is exempt from personal income taxes of the State. A form of Bond Counsel s anticipated opinion is included as APPENDIX A. The statutes, regulations, rulings, and court decisions on which such opinions will be based are subject to change. In rendering the foregoing opinions, Bond Counsel will rely upon the representations and certifications of the District made in a certificate of even date with the initial delivery of the Bonds pertaining to the use, expenditure, and investment of the proceeds of the Bonds and will assume 10

17 continuing compliance with the provisions of the Resolution by the District subsequent to the issuance of the Bonds. The Tax Certificate contains covenants by the District with respect to, among other matters, the use of the proceeds of the Bonds and the facilities and equipment financed or refinanced therewith by persons other than state or local governmental units, the manner in which the proceeds of the Bonds are to be invested, if required, the calculation and payment to the United States Treasury of any arbitrage profits and the reporting of certain information to the United States Treasury. Failure to comply with any of these covenants may cause interest on the Bonds to be includable in the gross income of the owners thereof from the date of the issuance of the Bonds. Except as described above, Bond Counsel will express no other opinion with respect to any other federal, State or local tax consequences under present law, or proposed legislation, resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Bonds. Prospective purchasers of the Bonds should be aware that the ownership of tax-exempt obligations such as the Bonds may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with subchapter C earnings and profits, certain foreign corporations doing business in the United States, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, owners of an interest in a financial asset securitization investment trust, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Prospective purchasers should consult their own tax advisors as to the applicability of these consequences to their particular circumstances. Bond Counsel s opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the District described above. No ruling has been sought from the Internal Revenue Service (the Service ) or the State of California with respect to the matters addressed in the opinion of Bond Counsel, and Bond Counsel s opinion is not binding on the Service or the State of California. The Service has an ongoing program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the Bonds is commenced, under current procedures, the Service is likely to treat the Issuer as the taxpayer, and the owners of the Bonds would have no right to participate in the audit process. In responding to or defending an audit of the tax-exempt status of the interest on the Bonds, the Issuer may have different or conflicting interests from the owners of the Bonds. Public awareness of any future audit of the Bonds could adversely affect the value and liquidity of the Bonds during the pendency of the audit, regardless of its ultimate outcome. The initial offering price (as furnished by the Underwriter) of certain Bonds (the Premium Bonds ), may be greater than the amount payable on such bonds at maturity. An amount equal to the difference between the initial public offering price of a Premium Bond (assuming that at least ten percent of the Premium Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes premium to the initial purchaser of such Premium Bonds. The basis for federal income tax purposes of a Premium Bond in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Bond. The amount of premium which is amortizable each year by an initial purchaser is determined by using such purchaser s yield to maturity. Purchasers of the Premium Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium with respect to the Premium Bonds for federal income purposes and with respect to the state and local tax consequences of owning Premium Bonds. 11

18 The excess of the stated redemption price at maturity of the Bonds over the initial offering price to the public of the Bonds set forth on the inside cover of this Official Statement is original issue discount. Such original issue discount accruing on a Bond is treated as interest excluded from the gross income of the owner thereof for federal income tax purposes and exempt from California personal income tax. Original issue discount on any Bond purchased at such initial offering price and pursuant to such initial offering will accrue on a semiannual basis over the term of the Bond on the basis of a constant yield method and, within each semiannual period, will accrue on a ratable daily basis. The amount of original issue discount on such a Bond accruing during each period is added to the adjusted basis of such Bond to determine taxable gain upon disposition (including sale, redemption or payment on maturity) of such Bond. The Code includes certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds other than at the initial offering price and pursuant to the initial offering. Any person considering purchasing a Bond should consult his or her own tax advisors with respect to the tax consequences of ownership of bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering and at the original offering price, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such bonds under federal individual and corporate alternative minimum taxes. A copy of the proposed form of opinion of Bond Counsel is attached hereto as APPENDIX A. APPROVAL OF LEGAL PROCEEDINGS The legal opinion of Fulbright & Jaworski L.L.P., Los Angeles, California, attesting to the validity of and tax status of interest on the Bonds, will be supplied to the original purchasers of the Bonds without charge. Bond Counsel will receive compensation contingent upon the sale and delivery of the Bonds, and undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. ABSENCE OF LITIGATION No litigation, proceedings or investigations are pending or, to the knowledge of management of the District, threatened against the District, except litigation, proceedings or investigations in which the probable ultimate recoveries and the estimated costs and expenses of defense will be entirely within applicable self-insurance and insurance policy limits (including primary and excess insurance policies and subject to applicable deductibles and self-insured retentions), or will not have a material adverse effect on the operations or condition, financial or otherwise, of the District. In addition, no litigation is pending or threatened concerning the validity of the Bonds, and a certificate to that effect will be furnished to purchasers at the time of the original delivery of the Bonds. The District is not aware of any litigation pending or threatened questioning the political existence of the District or contesting the District s ability to receive ad valorem taxes or to collect other revenues or contesting the District s ability to issue and retire the Bonds. UNDERWRITING The District has entered into a purchase contract with RBC Capital Markets Corporation (the Underwriter ), and the Authority, pursuant to which the District will sell the Bonds to the Authority and the Underwriter has agreed, subject to certain conditions, to purchase the Bonds from the Authority at an aggregate purchase price of $2,273, (which takes into account an original issue premium of $166, less Underwriter s discount of $34, and less costs of issuance of $132,674.29). The Underwriter is obligated to purchase all Bonds if any are purchased. The Bonds may be offered and sold 12

19 by the Underwriter to certain dealers and others at prices lower than such public offering prices, and such public offering prices may be changed, from time to time, by the Underwriter. FINANCIAL STATEMENTS Selected information from the District s Audited Financial Statements for the year ended June 30, 2008 are included as APPENDIX B to this Official Statement. The Financial Statements have been audited by TCA Partners, independent certified public accountants, to the extent and for the periods indicated in APPENDIX B. The statement of financial position of the District as of June 30, 2008, and the related statements of activities, cash flows and functional expenses for the year then ended, and the report of TCA Partners, independent accountants (the Auditor ), are included with the consent of the Auditors in this Official Statement as APPENDIX B. The Auditors have not audited any financial statements of the District as of any date or for any period subsequent to June 30, BANK QUALIFIED Qualified Tax-Exempt Obligations for Financial Institutions Section 265 of the Code provides, in general, that interest expense to acquire or carry tax-exempt obligations is not deductible from the gross income of the owner of such obligations. In addition, section 265 of the Code generally disallows 100% of any deduction for interest expense which is incurred by financial institutions described in such section and is allocable, as computed in such section, to taxexempt interest on obligations acquired after August 7, Section 265(b) of the Code provides two exceptions to this interest disallowance rule for financial institutions. First, the disallowance does not apply to interest expense allocable to tax-exempt obligations issued in 2009 or 2010 (other than to refund, directly or in a series of refundings, a bond originally issued before 2009) to the extent the amount of such obligations owned by a financial institution does not exceed 2% of the average adjusted bases for all its assets. Second, the disallowance does not apply to interest expense allocable to tax-exempt obligations (other than private activity bonds that are not qualified 501(c)(3) bonds) which are designated by an issuer as qualified tax-exempt obligations. An issuer may designate obligations as qualified tax-exempt obligations only if the amount of the issue of which they are a part, when added to the amount of all other tax-exempt obligations (other than private activity bonds that are not qualified 501(c)(3) obligations and other than certain refunding bonds) issued or reasonably anticipated to be issued by the issuer during the same calendar year, does not exceed $10,000,000 ($30,000,000 for obligations issued in 2009 or 2010). The District has designated the Bonds as qualified tax-exempt obligations and has certified its expectation that the above-described $30,000,000 ceiling will not be exceeded. Accordingly, it is anticipated that financial institutions which purchase the Bonds will not be subject to the 100% disallowance of interest expense allocable to interest on the Bonds under section 265(b) of the Code. However, the deduction for interest expense incurred by a financial institution which is allocable to the interest on the Bonds will be reduced by 20% pursuant to section 291 of the Code. RATING Moody s Investors Service ( Moody s ) has assigned its municipal bond rating of A3 to the Bonds. Such rating reflects only the view of Moody s and an explanation of the significance of such rating may be obtained as follows: Moody s, at 7 World Trade Center at 250 Greenwich Street, New York, New York 10007, tel. (212) There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely if, in the judgment of the rating agency, circumstances so warrant. Any such downward revision or withdrawal of such rating 13