$12,725,000 CITY OF HANFORD (KINGS COUNTY, CALIFORNIA) WATER REVENUE REFUNDING BONDS SERIES 2013

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1 NEW ISSUE BOOK-ENTRY ONLY INSURED RATING: S&P: AA- (Stable Outlook) UNDERLYING RATING: S&P: A (Stable Outlook) See the caption RATING In the opinion of Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, Bond Counsel, based on existing law and assuming compliance with certain covenants set forth in the documents pertaining to the Bonds and requirements of the Internal Revenue Code of 1986, as amended (the Code ), as described herein, interest on the Bonds is not included in gross income of the owners thereof for federal income tax purposes. In the opinion of Bond Counsel, interest on the Bonds is not treated as an item of tax preference in calculating the federal alternative minimum taxable income of individuals and corporations. Interest on the Bonds, however, is included as an adjustment in the calculation of federal corporate alternative minimum taxable income and may therefore affect a corporation s alternative minimum tax. In the further opinion of Bond Counsel, interest on the Bonds is exempt from personal income taxes imposed by the State of California. See TAX MATTERS herein. $12,725,000 CITY OF HANFORD (KINGS COUNTY, CALIFORNIA) WATER REVENUE REFUNDING BONDS SERIES 2013 Dated: Date of Issuance Due: October 1, as set forth on the inside cover The City of Hanford Water Revenue Refunding Bonds Series 2013 (the 2013 Bonds or the Bonds ) are being issued by the City of Hanford (the City ) in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York. Purchasers of the 2013 Bonds will not receive securities representing their beneficial ownership in the 2013 Bonds purchased. Interest on the 2013 Bonds is payable on April 1 and October 1 commencing on October 1, 2013, until the maturity thereof. The principal of and interest on the 2013 Bonds are payable by the Trustee to Cede & Co. and such interest and principal payments are to be disbursed to the beneficial owners of the 2013 Bonds through their nominees. The 2013 Bonds are subject to optional redemption as more fully described herein. The 2013 Bonds are being issued to provide funds: (i) to refund the City s currently outstanding obligations under the Installment Purchase Agreement, dated as of December 1, 2003 (the CSCDA 2003C IPA ) by and between the City and California Statewide Communities Development Authority ( CSCDA ); (ii) to refund the City s obligation to make certain installment payments (the 2007 Installment Payments ) pursuant to the Installment Sale Agreement dated as of December 20, 2007 (the 2007 Installment Sale Agreement ) by and between the City and the City of Hanford Public Improvement Corporation; and (iii ) to pay costs of issuance of the 2013 Bonds, all as more fully described herein. The 2013 Bonds are being issued pursuant to the Indenture, dated as of July 1, 2013, by and between the City and Union Bank, N.A., as trustee. The 2013 Bonds are limited obligations of the City payable from Net Revenues of the City s Water System (both as defined herein), and from amounts on deposit in certain funds and accounts created under the Indenture. The City may incur additional obligations payable from Net Revenues on a parity with the obligation to pay principal of and interest on the 2013 Bonds, subject to the terms and conditions of the Indenture, as more fully described herein. The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by ASSURED GUARANTY MUNICIPAL CORP. THE OBLIGATION OF THE CITY TO PAY PRINCIPAL OF AND INTEREST ON THE 2013 BONDS PURSUANT TO THE INDENTURE DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH IT HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE OBLIGATION OF THE CITY TO PAY PRINCIPAL OF AND INTEREST ON THE 2013 BONDS IS A SPECIAL OBLIGATION OF THE CITY PAYABLE SOLELY FROM NET REVENUES, AND DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. This cover page contains certain information for reference only. It is not a summary of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. Dated: June 26, MATURITY SCHEDULE See Inside Cover Page The 2013 Bonds are offered when, as and if issued and received by the Underwriter, subject to the approval of the valid, legal and binding nature of the 2013 Bonds by Richards Watson & Gershon, A Professional Corporation, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the City by its City Attorney, and by Stradling Yocca Carlson & Rauth, a Professional Corporation, as Disclosure Counsel, and for the Trustee by its counsel. It is anticipated that the 2013 Bonds will be available for delivery through the facilities of The Depository Trust Company on or about July 9, 2013.

2 $12,725,000 CITY OF HANFORD (KINGS COUNTY, CALIFORNIA) WATER REVENUE REFUNDING BONDS SERIES 2013 MATURITY SCHEDULE BASE CUSIP * Maturity Date (October 1) Principal Amount Interest Rate Yield CUSIP 2013 $ 795, % 0.500% AH , AJ , AK , AL , AM , AN , AP , AQ , AR , AS , AT , AU ,015, C AV ,055, AW , AX , AY1 C Yield to first optional call date of October 1, 2023 at par. * CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard & Poor s Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. None of the Underwriter, the Authority or the City are responsible for the selection or correctness of the CUSIP numbers set forth herein.

3 CITY OF HANFORD (Kings County, California) City Council Lou Martinez, Mayor (District D) Gary Pannett, Vice Mayor (District C) Russ Curry, Council Member (District B) Jim Irwin, Council Member (District A) Joleen Jameson, Council Member (District E) City Manager Darrel Pyle City Attorney Bob Dowd City Clerk Melonie A. Patrick Finance Director/City Treasurer Tom Dibble PROFESSIONAL SERVICES Financial Advisor and Dissemination Agent Urban Futures, Inc. Orange, California Bond Counsel Richards Watson & Gershon, A Professional Corporation Los Angeles, California Disclosure Counsel Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California Trustee/Escrow Agent Union Bank, N.A. Los Angeles, California

4 No dealer, broker, salesperson or other person has been authorized by the City or the Underwriter to give any information or to make any representations other than those contained in this Official Statement in connection with the offering made hereby and, if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 2013 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 2013 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts. 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 a part of, their 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. The information set forth herein has been obtained from official 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 Underwriter. The information and expression of opinions 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 City since the date hereof. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2013 BONDS AT A LEVEL THAT MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE 2013 BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. CERTAIN STATEMENTS CONTAINED IN THIS OFFICIAL STATEMENT REFLECT NOT HISTORICAL FACTS BUT FORECASTS AND FORWARD-LOOKING STATEMENTS. NO ASSURANCE CAN BE GIVEN THAT THE FUTURE RESULTS DISCUSSED HEREIN WILL BE ACHIEVED, AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE FORECASTS DESCRIBED HEREIN. IN THIS RESPECT, THE WORDS ESTIMATE, PROJECT, ANTICIPATE, EXPECT, INTEND, BELIEVE AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. ALL PROJECTIONS, FORECASTS, ASSUMPTIONS, EXPRESSIONS OF OPINIONS, ESTIMATES AND OTHER FORWARD-LOOKING STATEMENTS ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. THE 2013 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE 2013 BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. THE INDENTURE HAS NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT The City of Hanford maintains a website. However, the information presented there is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the 2013 Bonds. Assured Guaranty Municipal Corp. ( AGM ) makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading Bond Insurance and in Appendix G Specimen Municipal Bond Insurance Policy.

5 TABLE OF CONTENTS Page SUMMARY STATEMENT... i INTRODUCTION... 1 REFUNDING PLAN... 1 The Prior Agreements... 1 Escrow Agreement... 2 ESTIMATED SOURCES AND USES OF FUNDS... 3 THE 2013 BONDS... 3 General Provisions... 3 Transfers and Exchanges Upon Termination of Book-Entry Only System... 4 Redemption of the 2013 Bonds... 4 Notice of Redemption... 4 Book-Entry Only System... 5 DEBT SERVICE PAYMENT SCHEDULE... 6 SECURITY FOR THE 2013 BONDS... 6 Limited Obligations Payable From Net Revenues... 6 Pledge and Assignment; Enterprise Fund; Debt Service Fund... 7 Rate Stabilization Fund... 9 Rate Covenant Additional Obligations BOND INSURANCE Bond Insurance Policy Assured Guaranty Municipal Corp THE WATER SYSTEM Description Water System Improvements REVENUES AND DEBT SERVICE COVERAGE Service Area and Customers HISTORIC OPERATING INFORMATION Financial Information Rate Setting Process Billing and Collection Historic Operating Results Projected Operating Results Outstanding Bonded Indebtedness Water System Fund Statement of Net Assets RETIREMENT SYSTEM Pension Plan Post Employment Health Care Benefits Funding Policy Annual PPEB and Net OPEB Obligation Funded Status and Funding Progress i

6 TABLE OF CONTENTS (continued) Page Actuarial Methods and Assumptions BONDOWNERS RISKS Limited Obligations With Respect to the 2013 Bonds Operation and Expenses; Net Revenues Statutory and Regulatory Compliance Natural Disasters Additional Obligations Secured by Water Revenues Limitations on Remedies Investment of Funds Constitutional Limitations (Proposition 218); Future Initiative and Legislation Loss of Tax Exemption Secondary Market CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES Article XIIIB Proposition Future Initiatives APPROVAL OF LEGAL PROCEEDINGS LITIGATION TAX MATTERS FINANCIAL ADVISOR RATING UNDERWRITING CONTINUING DISCLOSURE UNDERTAKING MISCELLANEOUS APPENDIX A EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, A-1 APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE... B-1 APPENDIX C FORM OF OPINION OF BOND COUNSEL... C-1 APPENDIX D INFORMATION CONCERNING DTC... D-1 APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT... E-1 APPENDIX F THE CITY OF HANFORD... F-1 APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY... G-1 ii

7 SUMMARY STATEMENT This Summary Statement is subject in all respects to the more complete information contained in this Official Statement, and the offering of the 2013 Bonds to potential investors is made only by means of the entire Official Statement. Capitalized terms used and not otherwise defined in this Summary Statement have the meanings ascribed to them in this Official Statement. Purpose. The 2013 Bonds are being issued to provide funds: (i) to refund the currently outstanding obligations of the City under the Installment Purchase Agreement, dated as of December 1, 2003 (the CSCDA 2003C IPA ) between the City and California Statewide Communities Development Authority (the CSCDA 2003C IPA Obligations ); (ii) to refund the City s obligations to make certain installment payments (the 2007 Installment Payments ) pursuant to the Installment Sale Agreement dated as of December 20, 2007 (the 2007 Installment Sale Agreement, and together with the CSCDA 2003C IPA, the Prior Agreements ) by and between the City and the City of Hanford Public Improvement Corporation (such obligations, the 2007 Obligations and together with the CSCDA 2003C IPA Obligations, the Prior Obligations ); and (iii) to pay costs of issuance of the 2013 Bonds, all as more fully described herein. Security for the 2013 Bonds. The 2013 Bonds are limited obligations of the City payable solely from Net Revenues of the City s Water System, and from amounts on deposit in certain funds and accounts created under the Indenture. The City may incur additional obligations payable on a parity with the obligation to pay principal of and interest on the 2013 Bonds in the future as described herein. Payment of the principal of and interest on the 2013 Bonds will be insured by a municipal bond insurance policy (the Policy ) to be issued by Assured Guaranty Municipal Corp. concurrently with the issuance of the 2013 Bonds. See the caption BOND INSURANCE. A specimen of the Policy is set forth in Appendix G. The obligation of the City to pay principal of and interest on the 2013 Bonds pursuant to the Indenture does not constitute an obligation for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay principal of and interest on the 2013 Bonds is a special obligation of the City payable solely from Net Revenues, and does not constitute a debt of the City or of the State of California or any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction. The Refunding Plan. A portion of the proceeds of the 2013 Bonds will be used to prepay the remaining outstanding 2007 Obligations. A portion of the proceeds of the 2013 Bonds will be transferred to Union Bank, N.A., as escrow bank for the purpose of defeasing the City s remaining outstanding CSCDA 2003C IPA Obligations. Rate Covenant. The Indenture will require the City, to the extent permitted by law, to fix and prescribe, at the commencement of each Fiscal Year, rates and charges in connection with the Water Services which are reasonably expected to be least sufficient to yield during each Fiscal Year Net Revenues equal to 120% of the principal and interest payments on the 2013 Bonds and other Parity Obligations during such Fiscal Year, all as more particularly described herein. Additional Contracts and Bonds Test. The Indenture permits the City to incur additional obligations on a parity with the obligation to pay principal of and interest on the 2013 Bonds, provided that certain conditions are satisfied as described herein. Redemption. The 2013 Bonds are subject to optional redemption as described herein. The City. The City was incorporated in 1891 and operates under provisions of the State Constitution and Statues as a general law city. The City is situated in Kings County approximately 30 miles southwest of Fresno. The City encompasses an area of approximately 15 square miles and as of January 1, 2012 had an estimated current population of 55,123. i

8 The Water System. The Water System is defined in the Indenture as the whole and each and every part of the water production, acquisition, reclamation, treatment, storage, transmission and distribution system owned or operated by the City, including the portion thereof existing on the date hereof, and including all additions, betterments, extensions and improvements to such water system or any part thereof hereafter acquired or constructed; provided, that to the extent the City is not the sole owner of an asset or property or to the extent that an asset or property is used in part for the above-described water system purposes, only the City s ownership interest in such asset or property or only the part of the asset or property so used for Water System purposes shall be considered to be part of the Water System. Operation of the Water System involves cleaning, inspection and repairing approximately 14 water wells, one (1) 500,000 gallon ground level tank and pumping equipment, three (3) 1,000,000 gallon ground level tanks and pumping equipment and 203 miles of water main lines ranging in size from 4-inch to 24-inch diameter pipes. The capacity of the Water System is approximately 24 million of gallons per day ( mgd ). The average daily demand on the Water System is approximately mgd. The peak demand on the Water System is approximately mgd. There are approximately 15,923 active water service accounts. The Water System serves an area of 16.5 square miles. The City has established an ongoing program to replace undersized and aging water mains with larger lines that have the capability to deliver more water and consistent pressure as demand increases. Over the past 8 years, the City has constructed 5 new deep water wells and eliminated 4 old wells with poor water quality. See THE WATER SYSTEM below. This Official Statement contains brief descriptions of, among other things, the 2013 Bonds, the Indenture, the City and the Water System. Such descriptions do not purport to be comprehensive or definitive. All references in this Official Statement to documents are qualified in their entirety by references to such documents, and references to the 2013 Bonds are qualified in their entirety by reference to the form of 2013 Bonds included in the Indenture. For certain financial information with respect to the City and the Water System see Appendix A EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, For a discussion of governmental, demographic, and economic information with respect to the City see Appendix F THE CITY OF HANFORD. Copies of the Indenture and additional information may be obtained upon request from the City of Hanford City Clerk, 319 North Douty Street, Hanford, California 93230, (559) ii

9 $12,725,000 CITY OF HANFORD (KINGS COUNTY, CALIFORNIA) WATER SYSTEM REVENUE REFUNDING BONDS SERIES 2013 INTRODUCTION This Official Statement, including the cover page, the inside cover page and all appendices hereto, provides certain information concerning the sale and delivery of the City of Hanford (Kings County, California) Water System Revenue Refunding Bonds, Series 2013 (the 2013 Bonds or Bonds ). The 2013 Bonds are being issued pursuant to an Indenture, dated as of July 1, 2013 (the Indenture ), by and between the City of Hanford (the City ) and Union Bank, N.A., San Francisco, California, as trustee (the Trustee ). Descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each document for complete details of all terms and conditions. All statements herein are qualified in their entirety by reference to each document. Capitalized terms used and not otherwise defined herein have the meanings ascribed to them in Appendix B hereto entitled SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE. The 2013 Bonds are being issued to provide funds: (i) to refund the Prior Obligations and (ii) to pay costs of issuance of the 2013 Bonds. See the caption ESTIMATED SOURCES AND USES OF FUNDS herein. The 2013 Bonds are limited obligations of the City payable solely from Net Revenues, which consist of Gross Revenues of the City s Water System remaining after payment of Operation and Maintenance Costs, as such terms are defined in Appendix B hereto, and from amounts on deposit in certain funds and accounts created under the Indenture. Payment of the principal of and interest on the 2013 Bonds will be insured by a municipal bond insurance policy (the Policy ) to be issued by Assured Guaranty Municipal Corp. ( AGM or the Insurer ) concurrently with the issuance of the 2013 Bonds. See the caption BOND INSURANCE. A specimen of the Policy is set forth in Appendix G. The City may incur additional obligations payable on a parity with the obligation to pay principal of and interest on the 2013 Bonds in the future as described herein. The summaries and references to the Indenture and all documents, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such summary or reference is qualified in its entirety by reference to the full Indenture and each such document, statute, report or instrument, copies of which are available from the City of Hanford City Clerk, 319 North Douty Street, Hanford, California 93230, (559) , and will be available from the Trustee upon request and payment of duplication cost. The capitalization of any word not conventionally capitalized or otherwise defined herein indicates that such word is defined in the Indenture and, as used herein, has the meaning given to it in the Indenture. Unless otherwise indicated, all financial and statistical information herein has been provided by the City. The City regularly prepares a variety of reports, including audits, budgets and related documents. Any registered owner of the 2013 Bonds (each, an Owner ) may obtain a copy of such reports, as available, from the Trustee or the City. The Prior Agreements REFUNDING PLAN CSCDA 2003C IPA Obligations. As part of the CSCDA pooled financing program, CSCDA issued its Water Revenue Bonds (Pooled Financing Program) Series 2003C Bonds (the 2003C Bonds ) pursuant to 1

10 an Indenture, dated as of December 1, 2003 (the 2003C Indenture ), by and between the Union Bank, N.A (then known as Union Bank of California, N.A) (in such capacity, the CSCDA Bond Trustee ). A portion of the proceeds of the 2003C Bonds were made available to the City to finance and refinance certain improvements of Water System. In connection with the issuance of the 2003C Bonds, the City and CSCDA entered into the CSCDA 2003 IPA Installment Payments. The City entered into the 2007 Installment Sale Agreement in connection with the financing of certain improvements of the Water System. Pursuant to the 2007 Installment Sale Agreement, the City is obligated to make the 2007 Installment Payments. Pursuant to an Assignment Agreement dated December 20, 2007 (the 2007 Assignment Agreement ) by and between the City of Hanford Public Improvement Corporation (the Corporation ) and Union Bank, N.A. (then known as Union Bank of California, N.A.) (in such capacity, the 2007 Assignee ), the Corporation assigned its rights under the 2007 Installment Sale Agreement, including the rights to received the 2007 Installment Payments to the 2007 Assignee. Escrow Agreement The City plans to apply the proceeds of the 2013 Bonds, together with other funds on hand, to defease its obligations under (i) the CSCDA 2003C IPA on October 1, 2013, and (ii) the 2007 Installment Sale Agreement on the Closing Date. This will result in a redemption of the outstanding 2003C Bonds and a prepayment of the outstanding 2007 Obligations. Under an Escrow Agreement, dated as of July 1, 2013 (the Escrow Agreement ), by and between the City and Union Bank, N.A., in the capacity of CSCDA Bond Trustee, as escrow agent (the Escrow Agent ), the City will cause a portion of the proceeds of the 2013 Bonds to be delivered to the Escrow Agent for deposit in the escrow fund established under the Escrow Agreement (the 2003C Escrow Fund ). Such amounts to be delivered by or on behalf of the City to the Escrow Agent on the Closing Date will be sufficient to pay the redemption price (equal to the aggregate principal amount of the 2003C Bonds to be defeased plus accrued interest to the redemption date) on October 1, The Escrow Agent will invest the moneys in each Escrow Fund in securities issued by the United States Treasury that will mature on or before the Redemption Date. The amounts held by the Escrow Agent in the Escrow Fund are pledged solely to the redemption of the outstanding 2003C Bonds. Neither the funds deposited in the Escrow Funds nor the interest on the invested funds will be available for the payments of principal of and interest on the 2013 Bonds. 2

11 ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth the estimated sources and uses of funds: Sources: Principal Amount $12,725, Plus Reoffering Premium 545, Transferred Moneys (1) 595, Total Sources $13,865, Uses: 2003C Escrow Fund $ 6,816, Escrow Fund 6,730, Costs of Issuance Fund (2) 287, Bond Insurance Premium 30, Total Uses $13,865, (1) (2) Reflects moneys transferred from funds and accounts established in connection with the CSCDA 2003C IPA and with the 2007 Installment Sale Agreement. Includes Underwriter s discount, and certain legal, financing and printing costs. THE 2013 BONDS General Provisions The 2013 Bonds will be issued in the aggregate principal amount of $12,725,000. The 2013 Bonds will be dated as of the date of initial issuance thereof (the Issuance Date ), will bear interest from such date at the rates per annum set forth on the inside cover page hereof, payable on April 1 and October 1 commencing on October 1, 2013 (each, an Interest Payment Date ), and will mature on the dates set forth on the inside cover page hereof. Interest on the 2013 Bonds will be computed on the basis of a 360-day year of twelve thirty-day months. The 2013 Bonds will be issued only in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the 2013 Bonds. Ownership interests in the 2013 Bonds may be purchased in book-entry form, in denominations of $5,000 or any integral multiple thereof. See the caption Book- Entry Only System below and Appendix D attached hereto. In the event that the book-entry only system described below is discontinued, the principal of and redemption premium (if any) on the 2013 Bonds are payable by check or draft of the Trustee upon presentation and surrender thereof at maturity or upon prior redemption at the office of the Trustee in San Francisco, California (the Office of the Trustee ). Interest on the 2013 Bonds is payable on each Interest Payment Date to the person whose name appears on the registration books maintained by the Trustee (the Registration Books ) as the Owner thereof as of the close of business on the fifteenth day of the calendar month preceding the Interest Payment Date (the Record Date ), such interest to be paid by check or draft of the Trustee, sent by first class mail on the applicable Interest Payment Date to the Owner at such Owner s address as it appears on the Registration Books. An Owner of $1,000,000 or more in principal amount of 2013 Bonds may, at such Owner s option, be paid interest by wire transfer of immediately available funds to an account in the United States in accordance with written instructions provided to the Trustee by such Owner at least 5 days prior to the applicable Record Date. The principal of and interest and premium, if any, on the 2013 Bonds will be payable in lawful money of the United States of America. Interest on each Bond shall accrue from the Interest Payment Date next preceding the date of authentication thereof unless (i) the Bond is authenticated on or before an Interest Payment Date but after the 3

12 close of business on the related Record Date, in which event it shall bear interest from such Interest Payment Date, or (ii) the Bond is authenticated on or before the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from the Closing Date; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, the Trustee shall establish a special record date for payment of any interest in default under the Indenture and interest on such Bond shall accrue from the date to which interest has previously been paid in full or made available for payment on such Outstanding Bonds. Interest on the Bonds shall accrue on overdue principal at the same rate borne by the particular Bonds. Transfers and Exchanges Upon Termination of Book-Entry Only System In the event that the book-entry system described above is abandoned, the 2013 Bonds will be printed and delivered as provided in the Indenture. Thereafter, any 2013 Bond may, in accordance with its terms, be transferred on the Registration Books by the person in whose name it is registered, in person or by such person s duly authorized attorney, upon surrender of such 2013 Bond for cancellation at the Office of the Trustee, accompanied by delivery of a duly executed instrument of transfer in a form approved by the Trustee. Upon the surrender of a 2013 Bond for transfer, the Trustee is to issue a new 2013 Bond or 2013 Bonds of the same maturity, for a like aggregate principal amount and of authorized denomination or denominations. The Trustee may charge a sum for each new 2013 Bond issued upon any transfer. The Trustee may require the payment by any 2013 Bond Owner requesting any such transfer of any tax or other governmental charge required to be paid with respect to such transfer. Following any transfer of 2013 Bonds, the Trustee will cancel and destroy the 2013 Bonds it has received Bonds may be exchanged at the Office of the Trustee, for a like aggregate principal amount of 2013 Bonds of other authorized denominations of the same maturity. The Trustee may charge a sum for each new 2013 Bond issued upon any exchange except in the case of any exchange of temporary 2013 Bonds for definitive 2013 Bonds. The Trustee may require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. Following any exchange of 2013 Bonds, the Trustee will cancel and destroy the 2013 Bonds it has received. The Trustee is not required to register the exchange or transfer of any 2013 Bond: (i) within 15 days preceding selection of 2013 Bonds for redemption; or (ii) selected for redemption in whole or in part. Redemption of the 2013 Bonds Optional Redemption. The Bonds maturing on or before October 1, 2023 are not subject to optional redemption by the City. The Bonds maturing on or after October 1, 2024 shall be subject to redemption prior to their maturity, as a whole or in part, at the option of the City as the City shall designate and by lot within a maturity, in the principal amount of $5,000 or integral multiples thereof, on any date on or after October 1, 2023, from funds derived by the City from any source, at a redemption price equal to 100 percent of the principal amount of Bonds called for redemption, plus accrued interest thereon to the redemption date, without premium. Notice of Redemption Notice of redemption shall be sent by first class mail (or with respect to notices to be received by DTC or its Nominee, any Information Service or Securities Depository, by such transmission method as acceptable to such entity) by the Trustee, on behalf and at the expense of the City, not more than 60 days but not less than 30 days prior to the redemption date to (i) the respective Owners of Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee, (ii) one or more Information Services, (iii) the Securities Depositories, and (iv) the Bond Insurer (defined below). Each notice of redemption shall state the date of such notice, the Bonds to be redeemed, the redemption date, the redemption price, the place or places of redemption (including the name and appropriate address or addresses), the CUSIP number (if any) of 4

13 the maturity or maturities, and, if less than all of any such maturity are to be redeemed, the distinctive certificate numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions 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 such Bonds the redemption price thereof or of said specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice. If, at the time that the notice of redemption is sent to the Owner, the City has not deposited with the Trustee sufficient funds to pay the redemption price and accrued interest, in full, with respect to the Bonds being called, the notice shall expressly state that the redemption is conditioned upon the receipt of sufficient funds by the Trustee from the City on or before the redemption date. Failure by the Trustee to give notice pursuant to this Section to any of the Information Services, Securities Depositories, or the Bond Insurer (defined below), or the sufficiency of or any defect in any such notice shall not affect the sufficiency of the proceedings for redemption. Neither the failure of any Owner to receive a redemption notice nor any defect in the notice so sent shall affect the sufficiency or the validity of the proceedings for redemption. The City may rescind any optional redemption by written notice to the Trustee on or prior to the date fixed for redemption. In addition, any notice of optional redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default hereunder. The City and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission. The Trustee shall send notices of such rescission in the same manner as that prescribed in the Indenture for notices of redemption. Book-Entry Only System One fully-registered 2013 Bond of each maturity will be issued in the principal amount of the 2013 Bonds of such maturity. Such 2013 Bond will be registered in the name of Cede & Co. and will be deposited with DTC. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, the 2013 Bonds will be printed and delivered and will be governed by the provisions of the Indenture with respect to payment of principal and interest and rights of exchange and transfer. The City cannot and does not give any assurances that DTC participants or others will distribute payments of principal of and interest on the 2013 Bonds received by DTC or its nominee as the registered Owner, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC will service and act in the manner described in this Official Statement. See Appendix D hereto for additional information concerning DTC. See Appendix D INFORMATION CONCERNING DTC. 5

14 DEBT SERVICE PAYMENT SCHEDULE Set forth below is a schedule of principal of and interest on the 2013 Bonds for the period ending October 1 in each of the years indicated: October Bonds Principal 2013 Bonds Interest Total 2013 $ 795, $ 107, $ 902, , , ,136, , , ,142, , , ,138, , , ,144, , , ,142, , , ,145, , , ,144, , , ,147, , , ,150, , , ,150, , , ,144, ,015, , ,155, ,055, , ,144, , , , , , , TOTAL $12,725, $4,223, $16,948, Source: City of Hanford. Limited Obligations Payable From Net Revenues SECURITY FOR THE 2013 BONDS The City is obligated to make payments of principal of and interest on the 2013 Bonds solely from Net Revenues of the Water System. The term Net Revenues means, for any Fiscal Year of the City (currently, the City s Fiscal Year commences July 1 of each year) ( Fiscal Year ), the Gross Revenues for such Fiscal Year less the Operation and Maintenance Costs of the Water System for such Fiscal Year. When held by the Trustee in any funds or accounts established hereunder, Net Revenues shall include all interest or gain derived from the investment of amounts in any of such funds or accounts. Gross Revenues is defined to mean all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of the Water System including, without limiting the generality of the foregoing, (i) all income, rents, rates, fees, charges, business interruption insurance proceeds or other moneys derived by the City from the furnishing and supplying of services and facilities through the Water System, (ii) the earnings on and income derived from the investment of such income, rents, rates, fees, charges, or other moneys to the extent that such earnings and income are available for use for the Water System pursuant to law, and (iii) the proceeds derived by the City directly or indirectly from the sale, lease, or other disposition of a part of the Water System; provided the term Gross Revenues shall not include any of the following: (A) customers deposits or any other deposits or advances subject to refund until those deposits or advances become the property of the City, and (B) moneys that are derived from impact fees imposed for specified purposes that do not include the payment of the capital improvements financed or refinanced with the proceeds of the Prior Obligations, as provided in a duly adopted resolution or ordinance, and that are accounted for by the City separate and apart from other revenues of the Water System. 6

15 Operation and Maintenance Costs is defined to mean the reasonable and necessary costs paid or incurred by the City for maintaining and operating the Water System, determined in accordance with generally accepted accounting principles, including (i) all reasonable expenses of management and repair and all other expenses necessary to maintain and preserve the Water System in good repair and working order, (ii) all administrative costs of the City that are charged directly or apportioned to the operation of the Water System, such as salaries and wages of employees, overhead, taxes (if any), the cost of permits and licenses to operate the Water System and insurance premiums, and (iii) all other reasonable and necessary costs of the City or charges required to be paid by it to comply with the terms hereof; but excluding in all cases, the following: (A) debt service payable on obligations (including bonds, notes or other evidences of indebtedness, installment purchase payments under contract, and lease payments under any financing or capital lease, as determined to be such in accordance with Generally Accepted Accounting Principles) incurred by the City with respect to the Water System, (B) depreciation, replacement and obsolescence charges or reserves therefor, and (C) amortization of intangibles or other bookkeeping entries of a similar nature. THE OBLIGATION OF THE CITY TO PAY PRINCIPAL OF AND INTEREST ON THE 2013 BONDS DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE OBLIGATION OF THE CITY TO PAY PRINCIPAL OF AND INTEREST ON THE 2013 BONDS UNDER THE INDENTURE IS A SPECIAL OBLIGATION OF THE CITY PAYABLE SOLELY FROM NET REVENUES, AND DOES NOT CONSTITUTE A DEBT OR INDEBTEDNESS OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. Pledge and Assignment; Enterprise Fund; Debt Service Fund Subject to the application thereof on the terms and conditions provided in the Indenture, all of the Net Revenues are irrevocably pledged, charged and assigned to the punctual payment of all Outstanding Bonds which pledge shall be on a parity with any pledge of Net Revenues securing any Parity Obligations. Such pledge, charge and assignment shall constitute a first lien on the Net Revenues for the payment of amounts due with respect to the Outstanding Bonds and other Parity Obligations (including the replenishment of debt service reserve funds as required) in accordance with the terms thereof. The obligations of the City to pay principal and interest, when due, on the 2013 Bonds from the Net Revenues and to perform and observe the other agreements contained in the Indenture shall be absolute and unconditional and shall not be subject to any defense or any right of setoff, counterclaim or recoupment arising out of any breach of the City or the Trustee of any obligation to the City or otherwise with respect to the Water System, whether under the Indenture or otherwise, or out of indebtedness or liability at any time owing to the City by the Trustee. So long as any Bond remains Outstanding, the City (a) will not suspend or discontinue payment of principal or interest coming due pursuant to the Indenture, (b) will perform and observe all other agreements contained in the Indenture, and (c) will not terminate the Indenture for any cause (including, without limiting the generality of the foregoing, the occurrence of any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the Water System, sale of any portion of the Water System, the taking by eminent domain of title to or temporary use of any component thereof, commercial frustration of purpose, any change in the tax law or other laws of the United States of America or the State or any political subdivision of either thereof or any failure of the Trustee to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Indenture). Subject to the provisions of the Indenture (regarding payment to the Trustee for fees and expenses when applying funds upon an Event of Default), the Bonds shall also be secured by a first lien on and pledge of all of the moneys in the Debt Service Fund (including the Interest Account and the Principal Account), including all amounts derived from the investments of such moneys. The Bonds shall be equally secured by a 7

16 pledge, charge and lien upon such moneys without priority for number, date of the Bonds, date of execution or date of delivery; and the payment of the interest on and principal of the Bonds and any premiums upon the redemption of any portion thereof shall be and are secured by an exclusive pledge, charge and lien upon such moneys. So long as any of the Bonds are Outstanding, moneys in the Debt Service Fund (including the Interest Account and the Principal Account), may only be used for the purposes and in the manner permitted by the Indenture. The City s obligation to pay principal and interest with respect to the Outstanding Bonds and any other amount due under the Indenture shall be a special obligation of the City limited solely to the Net Revenues and the funds and accounts specifically identified in the Indenture for such payments. Under no circumstances shall the City be required to advance moneys derived from any source of income other than the Net Revenues and the funds and accounts specifically identified in the Indenture for such payments, nor shall any other funds or property of the City be liable for such payments coming due and payable under the Indenture. Neither the Trustee nor any Owner shall have the right, directly or indirectly, to require or compel the exercise of the ad valorem taxing power of the City or the forfeiture of any property of the City, including the Water System, for the making of any payments hereunder. Enterprise Fund. (a) The City has previously established the Enterprise Fund and shall continue to maintain and hold such fund segregated from all other funds of the City. All Gross Revenues shall be deposited by the City upon receipt in the Enterprise Fund and shall be applied, first, to pay Operation and Maintenance Costs as they become due and payable (including amounts reasonably required to be set aside in contingency reserves for Operation and Maintenance Costs, the payment of which is not then immediately required). The City may at any time establish such sub-level funds and accounts as it deems necessary or desirable within the Enterprise Fund. (b) No later than five Business Days before each Interest Payment Date, the City shall withdraw from the Enterprise Fund and transfer to the Trustee, for deposit in the Debt Service Fund, an amount which, together with the balance then on deposit in the Debt Service Fund, shall be sufficient to pay, in the following priority: (i) the amount required to pay interest on the Outstanding Bonds then coming due on such Interest Payment Date, (ii) the amount required to pay principal then coming due on such Interest Payment Date. (c) In addition to Operation and Maintenance Costs and amounts to be transferred to the Trustee under (b) above, the City shall withdraw from the Enterprise Fund such amounts at such times as shall be required to pay (i) the principal (including mandatory sinking fund payments) of and interest on any Parity Obligations; (ii) all amounts necessary for deposit in the debt service reserve funds as required by Parity Obligation Agreements; (iii) all other amounts when and as due and payable under the Indenture; and (iv) all other amounts to otherwise comply with the Parity Obligation Agreements. (d) The City shall manage, conserve and apply the Net Revenues on deposit in the Enterprise Fund in such a manner that all deposits required to be made pursuant to the preceding subsections (b) and (c) will be made at the times and in the amounts so required. Subject to the foregoing sentence, so long as no Event of Default shall have occurred and be continuing under the Indenture, the City may use and apply moneys in the Enterprise Fund for (i) the payment of any subordinate obligations or any unsecured obligations, (ii) the costs for additional improvements, extensions, replacements and betterments to the Water System, (iii) the optional redemption of the Bonds or other optional prepayment of any Obligations of the City relating to the Water System, (iv) make deposits in the Rate Stabilization Fund pursuant to the Indenture, or (v) any other lawful purposes. (e) Any moneys held in the Enterprise Fund shall be invested in Permitted Investments and investments authorized by State Law which will, as nearly as practicable, mature on or before the dates when such moneys are anticipated to be needed for disbursement under the Indenture. All investment earnings from 8