BOARD OF EDUCATION SAN DIEGO UNIFIED SCHOOL DISTRICT SAN DIEGO, CALIFORNIA RESOLUTION AUTHORIZING THE ISSUANCE OF AND THE TERMS OF SALE OF NOT TO EXCEED $200,000,000 OF BONDS OF SAN DIEGO UNIFIED SCHOOL DISTRICT BY A NEGOTIATED SALE PURSUANT TO ONE OR MORE BOND PURCHASE CONTRACTS, APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF ONE OR MORE BOND PURCHASE CONTRACTS, A PAYING AGENT AGREEMENT AND OFFICIAL STATEMENTS FOR SAID BONDS, AND AUTHORIZING THE EXECUTION OF NECESSARY CERTIFICATES RELATING TO SAID BONDS RESOLUTION On motion of Member, seconded by Member, the following resolution is adopted; R E C I T A L S: WHEREAS, an election was duly called and regularly held in the San Diego Unified School District, County of San Diego, California (herein called the District, on November 4, 2008, pursuant to Section 15100 and following the Education Code of the State of California (the Education Code, at which a bond proposition ( Proposition S summarized as follows was submitted to the electors of the District: To improve every neighborhood school by; repairing outdated student restrooms, deteriorated plumbing and roofs; upgrading career/vocational classrooms and labs; providing up-to-date classroom technology; improving school safety/security; replacing dilapidated portable classrooms; upgrading fire alarms; and removing hazardous substances; shall San Diego Unified School District issue $2,100,000,000 in bonds at legal interest rates, requiring independent citizen oversight, annual audits, NO money for administrators, and bonds issued only if NO estimated tax rate increase?
WHEREAS, passage of said proposition required a 55% affirmative vote of the votes cast therein, and at least 55% of the votes cast on said proposition were in favor of issuing said bonds; and WHEREAS, the District has heretofore issued, or caused the Board of Supervisors of the County of San Diego, California (the County, to issue on its behalf its San Diego Unified School District 2009 General Obligation Bonds (Election of 2008, Series A (the Series A Bonds in the original principal amount of $131,157,580.95 for authorized school purposes; WHEREAS, the District has heretofore issued, or caused the Board of Supervisors of the County, to issue on its behalf its San Diego Unified School District 2009 General Obligation Bonds (Election of 2008, Series B Qualified School Construction Bonds (Tax Credit Bonds (the Series B Bonds in the original principal amount of $38,840,000 for authorized school purposes; WHEREAS, the Superintendent of Schools of the County of San Diego (the County has jurisdiction over the District; and WHEREAS, this Board of Education of the District deems it necessary and desirable that the Board of Supervisors of the County shall authorize and consummate the sale of a portion of said bonds in one or more series designated the San Diego Unified School District 2010 General Obligation Bonds (Election of 2008, Series _, with appropriate series designation, in an aggregate principal amount not exceeding $200,000,000, according to the terms and in the manner hereinafter set forth; and WHEREAS, the American Recovery and Reinvestment Act of 2009 ( ARRA grants a national allocation of $11 billion for 2010 to provide for the issuance of qualified school construction bonds, in accordance with the qualified tax credit bond program (the Tax Credit Program found in Section 54A of the Internal Revenue Code of 1986, as amended (the Code, and a portion of said allocation may be granted to the District (the District Allocation to provide financing for the construction, reconstruction or repair of public school facilities, or the acquisition of land on which such facilities are to be constructed with part of the proceeds of such issue; and WHEREAS, the Board of Education deems it necessary and desirable to use all or a portion of the District Allocation to issue and sell a portion of its 2010 General Obligation Bonds pursuant to the Tax Credit Program if it is determined by the Authorized District Representative (as defined herein to be in the best interests of the District; and WHEREAS, the District has not received a qualified or negative certification in its most recent interim report; and WHEREAS, Section 53508.7 of the Government Code provides that a private sale is limited to bonds sold pursuant to Sections 15140 or 15146 of the Education Code; and WHEREAS, Section 15140(b of the Education Code provides that the board of supervisors of a county may authorize a school district over which the county superintendent of
schools has jurisdiction to issue and sell its own bonds without the further action of the board of supervisors or officers of the county if said school district has not received a qualified or negative certification in its most recent interim report; and WHEREAS, a school district is authorized by Sections 53506 and following of the Government Code of the State (the Government Code to issue and sell its bonds at public or private sale; WHEREAS, the Board of Supervisors of the County is hereby requested to adopt a resolution authorizing the District to sell its bonds at a negotiated sale pursuant to Government Code Section 53508.7 and Education Code Section 15140(b without further action by the Board of Supervisors or officers of the County; and WHEREAS, this Board of Education recognizes that Gardner, Underwood & Bacon LLC has been engaged to act as financial advisor (the Financial Advisor to the District, Fulbright & Jaworski L.L.P. has been engaged to act as disclosure counsel ( Disclosure Counsel to the District, and Orrick, Herrington & Sutcliffe LLP has been engaged as bond counsel ( Bond Counsel to the District with respect to said bonds; and WHEREAS, this Board of Education further deems it necessary and desirable to authorize the sale of said bonds by a negotiated sale to Citigroup Global Markets Inc., as senior manager, Goldman, Sachs & Co., as co-senior manager, and Bank of America Merrill Lynch, De La Rosa & Co., Inc. and Loop Capital Markets, as co-managers (collectively, the Underwriter, or a private placement to one or more investors to be determined by the District, pursuant to one or more Bond Purchase Contracts (each, a Bond Purchase Contract, and pursuant to Section 15146 of the Education Code, has found and determined the following reasons therefor: (1 better ensure that the tax rate estimated to voters at the time of the election will be maintained, (2 provide more flexibility in the timing of the sale of the bonds, (3 result in a lower overall cost of borrowing; (4 provide more flexibility in the debt structure; (5 allow the District to work with participants familiar with the District; and (6 increase the opportunity to pre-market the Bonds for sale to local residents and other investors; and WHEREAS, in accordance with Section 15146 of the Education Code, estimates of the costs associated with the issuance of said Bonds are attached hereto as Appendix A; and WHEREAS, pursuant to Proposition S, the District shall only issue bonds if it projects that the aggregate tax rate levied in the District due to the issuance of said bonds taken together with the aggregate tax rate levied for the payment of the outstanding general obligation bonds of the District issued pursuant to Proposition MM, approved by voters of the District on November 3, 1998 ( Proposition MM, and Proposition S, will not exceed the tax rate of $66.67 per $100,000 of assessed valuation levied in fiscal year 2007-08 for payment of the District s outstanding bonds, and this Board of Education directs and requests that the issuance of said bonds be structured to comply with such requirement; and WHEREAS, this Board of Education requests that the County, in order to continue levying the tax rate of $66.67 per $100,000 of assessed valuation in each year to pay
said bonds, establish an annual reserve for the purpose of avoiding a fluctuating tax levy in accordance with Section 15250 of the Education Code; and WHEREAS, there have been submitted and are on file with the Clerk of this Board of Education proposed forms of the Bond Purchase Contract, a Paying Agent Agreement, a preliminary official statement, and a Disclosure Dissemination Agent Agreement, all with respect to not to exceed $200,000,000 aggregate principal amount of San Diego Unified School District 2010 General Obligation Bonds (Election of 2008, Series _, with appropriate series designation, proposed to be sold; NOW, THEREFORE, THE BOARD OF EDUCATION OF THE SAN DIEGO UNIFIED SCHOOL DISTRICT DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS FOLLOWS: Section 1. Recitals. All of the above recitals are true and correct. Section 2. Authority for Issuance; Designation of Bonds: The Bonds described herein are authorized to be issued pursuant to Article 4.5 of Chapter 3, of Part 1 of Division 2 of Title 5 of the Government Code, and other applicable provisions of law, including applicable provisions of the Education Code. The bonds authorized to be issued and sold hereby shall be sold not later than December 31, 2010, by negotiated sale to the Underwriter, in an amount not to exceed $200,000,000 aggregate principal amount of bonds of the San Diego Unified School District, in one or more series, and designated to be sold as the San Diego Unified School District 2010 General Obligation Bonds (Election of 2008, Series _, with appropriate series designation (herein called the Bonds. The aggregate principal amount of the Bonds shall be specified in the Bond Purchase Contract. The Bonds shall be issued as Current Interest Bonds, Capital Appreciation Bonds, Convertible Capital Appreciation Bonds and Qualified School Construction Bonds, as provided in the Paying Agent Agreement. Section 3. Paying Agent Agreement. The Paying Agent Agreement (the Paying Agent Agreement, by and between the District and the Treasurer-Tax Collector of the County (the Treasurer-Tax Collector, as paying agent (the Paying Agent, in substantially the form submitted to this Board of Education, is hereby approved with such changes, additions and corrections as the Interim Superintendent of the District or the Superintendent of the District, as the case may be (the Superintendent, or the Controller of the District (the Controller or a designee of either of the foregoing (each, an Authorized District Representative may hereafter approve. The Authorized District Representative is hereby authorized to execute and deliver the Paying Agent Agreement in substantially said form, completed with the terms of the Bonds determined upon the sale thereof, and with such other changes thereto as the Authorized District Representative may require or approve, and the District s approval of the Paying Agent Agreement shall be conclusively evidenced by the execution and delivery thereof. Section 4. Bond Purchase Contract; Sale of Bonds. The Bond Purchase Contract for the Series 2010 Bonds, in substantially the form submitted to this Board of Education, is hereby approved, and the Authorized District Representative is hereby authorized
and directed on behalf of the District to execute and deliver one or more Bond Purchase Contracts providing for the sale by the District and the purchase by the Underwriter of the Series 2010 Bonds, or a private placement investor to be determine by the District, at a purchase price to be set forth therein, determining thereby the redemption provisions for the Series 2010 Bonds, the maturity schedule, interest rates and purchase price and providing for payment by the Underwriter of costs of issuance for the Bonds; provided, that (i the true interest cost for the Series 2010 Bonds shall not be in excess of 7.0% per annum, (ii the Underwriter s compensation (exclusive of costs of issuance shall not exceed 1.0% of the principal amount of the Series 2010 Bonds; and (iii the Series 2010 Bonds shall otherwise conform to the limitations specified herein; and provided further, that such execution and approval shall constitute conclusive evidence of the approval by the District of any changes or revisions therein from the form of Bond Purchase Contract submitted herewith. For purposes of this Section, the term costs of issuance shall include, but not be limited to, the following: (i the fees and disbursements of Financial Advisor and of Bond Counsel; (ii the costs of the preparation and delivery of the Bonds; (iii the fees, if any, for Bond ratings and Bond insurance premiums, including all related travel; (iv the costs of the printing and distribution of the Preliminary Official Statement and the Official Statement; (v reimbursement to the District for election costs associated with Proposition S; and (vi all other fees and expenses incident to the issuance and sale of the Bonds. The Treasurer-Tax Collector of the County is hereby requested to cause one or more Bond Purchase Contracts to be acknowledged and approved on behalf of the County, subject to such changes or revisions therein as may be acceptable to the District officer executing the same. Section 5. Official Statement. The official statement relating to the Bonds (the Official Statement, in substantially the forms submitted to this Board of Education, is hereby approved with such changes, additions and corrections as the Authorized District Representative may hereafter approve, and the Underwriter is hereby authorized to distribute copies of such Official Statement in preliminary form to persons who may be interested in purchasing the Bonds. The Authorized District Representative is hereby authorized to certify to the Underwriter, on behalf of the District, that the preliminary form or forms of the Official Statement is or are deemed final as of their respective dates, within the meaning of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (except for the omission of certain final pricing, rating and related information as permitted by said Rule. The Authorized District Representative is hereby authorized and directed to sign said Official Statement in its final form or forms, including the final pricing information, and such execution and delivery shall constitute conclusive evidence of the approval by the District of any changes or revisions to the Official Statement from the forms thereof submitted herewith. The Underwriter is hereby authorized and directed to deliver copies of such Official Statement in final form to the purchasers of the Bonds. The Authorized District Representative is hereby authorized and directed to approve and deliver one or more Official Statements as necessary with respect to one or more series of Bonds, provided that such Official Statements conform substantially with the forms submitted to this Board of Education and approved in this Section 5, except for specific provisions describing the respective series of Bonds. Section 6. Investment of Funds. The proceeds of sale of the Bonds, exclusive of any premium and accrued interest received, shall be deposited in the County treasury to the credit of the building fund of the District. Any net premium and accrued interest received by the
District from the sale of the Bonds shall be deposited upon receipt in the interest and sinking fund of the District within the County treasury. All funds held by the Treasurer-Tax Collector hereunder shall be invested by the Treasurer-Tax Collector in the County Investment Pool, the Local Agency Investment Fund, any investment authorized pursuant to Sections 53601 and 53635 of the Government Code, or in investment agreements, including guaranteed investment contracts, float contracts or other investment products (hereinafter collectively referred to as Investment Agreements ; provided that such agreements comply with the requirements of Section 148 of the Code, and with the requirements of each rating agency then rating the Bonds necessary in order to maintain the thencurrent rating on the Bonds. The Treasurer-Tax Collector shall assume no responsibility in the reporting, reconciling or monitoring in the investment of proceeds related to the Bonds. The Authorized District Representative shall request the Treasurer-Tax Collector, subject to his fiduciary responsibilities, to invest funds held in the interest and sinking fund of the District and in the building fund of the District in specific investments (the Investment Agreements, so as to effectively coordinate the investments to the construction program of the District and the debt service payments on the Bonds. Pursuant to Section 5922 of the Government Code, this Board of Education hereby finds and determines that the Investment Agreements will reduce the amount and duration of interest rate risk with respect to amounts invested pursuant to the Investment Agreements and are designed to reduce the amount or duration of payment, rate, spread or similar risk or result in a lower cost of borrowing when used in combination with the Bonds or enhance the relationship between risk and return with respect to investments of proceeds of the Bonds and funds held to pay the Bonds. Section 7. Continuing Disclosure. The CFO or the Controller is hereby authorized on behalf of the District to enter into that certain Disclosure Dissemination Agreement, by and between the District and Digital Assurance Certification, L.L.C. (the Continuing Disclosure Agreement in substantially the form included as an Appendix to the Official Statement submitted to this Board of Education, with such changes thereto as deemed necessary in order to permit the Underwriters to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The District hereby covenants and agrees that it will comply with and carry out all of the provisions of such Continuing Disclosure Agreement. Section 8. Request to County to Levy Tax. The Board of Supervisors and officers of the County are obligated by statute to provide for the levy and collection of property taxes in each year sufficient to pay all principal and interest coming due on the Bonds in such year, and to pay from such taxes all amounts due on the Bonds. The District hereby requests the Board of Supervisors to annually levy a tax upon all taxable property in the District sufficient to redeem the Bonds, and to pay the principal, redemption premium, if any, and interest thereon as and when the same become due, taking into account any subsidy payment received with respect to tax subsidy qualified school construction bonds issued pursuant to the Paying Agent Agreement. To the extent permitted by law, the Board hereby agrees to reimburse the County for any costs associated with the levy and collection of said tax, upon such documentation of said costs as the District shall reasonably request.
Section 9. Approval of Actions. The President of this Board of Education, the Board Action Officer of this Board of Education, the Superintendent of the District, the CFO, the Controller, the Director and any other officers of the District are hereby authorized and directed to execute and deliver any and all contracts or agreements, including agreements with bond insurers or tax credit purchasers, commitment letters, depository agreements (including for the payment of issuance costs, consultant contracts, printing contracts, and similar contracts relating to issuance of the Bonds, investment of the proceeds or compliance with the Tax Credit Program, and all certificates and representations, including signature certificates, no-litigation certificates, certificates concerning the contents of the Official Statement, representation letters to The Depository Trust Company, the Tax Certificate, and any other certificates proposed to be distributed in connection with the sale of the Bonds, which any of them deem necessary or desirable to accomplish the transactions authorized herein. Section 10. Notice to California Debt and Investment Advisory Commission. Orrick, Herrington & Sutcliffe LLP, bond counsel to the District, on behalf of this Board of Education is hereby authorized and directed to cause notices of the proposed sale and final sale of the Bonds to be filed in a timely manner with the California Debt and Investment Advisory Commission pursuant to Section 8855 of the Government Code. Section 11. Filing with Board of Supervisors. The Board Action Officer of this Board of Education is hereby authorized and directed to file a certified copy of this Resolution with the Clerk of the Board of Supervisors of the County. The Authorized District Representative is hereby authorized and directed to report to the Auditor-Controller of the County the final terms of sale of the Bonds, and to file with the Auditor-Controller and with the Treasurer-Tax Collector a copy of the executed Bond Purchase Contract, and the schedule of amortization of the principal of and payment of interest on the Bonds, and to file with the Treasurer-Tax Collector a proposed schedule of draws on the building fund of the District, and this Resolution shall serve as the request to the Auditor-Controller of the County and the Board of Supervisors of the County to propose and adopt in each year a tax rate applicable to all taxable property of the District for payment of the Bonds, pursuant to law, and to the other officers of the County to levy and collect said taxes for the payment of the Bonds and to pay in a timely manner to the Paying Agent on behalf of the Owners of the Bonds the principal, interest, and premium, if any, due on the Bonds in each year. adoption. Section 12. Effective Date. This resolution shall take effect from and after its PASSED AND ADOPTED by the Board of Education of the San Diego Unified School District, San Diego County, California, this 13th day of July, 2010. Ayes: Noes: Absent:
STATE OF CALIFORNIA SS COUNTY OF SAN DIEGO I, Cheryl Ward, Board Action Officer, Board of Education, San Diego Unified School District, do hereby certify that the foregoing is a true copy of a resolution adopted by said Board at a meeting thereof held on the day and by the vote stated above, which resolution is on file with the minutes of said meeting. Board Action Officer LEGALITY AND FORM APPROVED: Mark Bresee, General Counsel San Diego Unified School District