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21-1102_SANTA MARGARITA WATER DISTRICT_F1a_Agenda ReportCity of San Juan Capistrano Agenda Report TO: Honorable Mayor and Members of the City Council FROM: Benjamin Siegel, City Manager SUBMITTED BY: Ken Al-Imam, Chief Financial Officer Kevin Ennis, Special Counsel DATE: November 2, 2021 SUBJECT: Santa Margarita Water District’s (SMWD) Annexation of the City’s Water and Wastewater Utility Systems: (1) Approval of First Amendment to the Annexation Agreement, (2) Approval of the Bill of Sale, Assignment and Assumption Agreement, and (3) Approval of the Assignment, Assumption and Amendment Agreement for each of the Bond Obligations; Related Personnel Adjustments; and, Appropriations of Funds RECOMMENDATION: 1. Adopt three resolutions to effectuate the transfer of the City’s water and wastewater utility systems to the Santa Margarita Water District (SMWD), such resolutions providing for: (1) Approval of the First Amendment to the Annexation Agreement, (2) Approval of the Bill of Sale, Assignment and Assumption Agreement, and (3) Approval of the Assignment, Assumption and Amendment Agreement for each of the Bond Obligations; 2.Authorize the City Manager to execute said agreements, in substantially the form provided as Attachments 1, 2, and 3 of this report, and take all other actions necessary or proper to effectuate the annexation in a timely manner, consistent with prior Council approvals, the Annexation Agreement, and Orange County Local Area Formation Commission (LAFCO) Resolution DA 20-01; 3. Adopt a resolution (Attachment 4) to add one Senior Public Works Specialist position; one Part-Time Public Works Specialist II, delete one Part-Time Accounting Specialist position; and add one Accounting Specialist position; 4. Increase Fiscal Year 2021-22 General Fund budgeted expenditures by $77,000 for personnel costs associated with City retention of responsibility for stormwater 11/2/2021 F1a City Council Agenda Report November 2, 2021 Page 2 of 8 management and customer service, and increase Fiscal Year 2021-22 General Fund budgeted revenues (property tax revenue) by $77,000 to account for property tax revenues retained to fund this increase in budgeted expenditures; and, 5. Increase Fiscal Year 2021-22 Forfeited Construction and Demolition Fund budgeted expenditures by $122,000 for personnel costs associated with the Environmental Programs Analyst classification that was approved by City Council on June 1, 2021. EXECUTIVE SUMMARY: On August 19, 2021, LAFCO approved SMWD’s annexation of the City’s water and wastewater utility systems (Utility Systems) by way of LAFCO Resolution DA 20-01 (LAFCO Resolution). The LAFCO Resolution incorporated and adopted the provisions of the Annexation Agreement entered into between the City and SMWD and dated as of January 21, 2020 (Annexation Agreement). To consummate the annexation, these documents require that the City and SMWD: (1) agree to an Annexation Effective Date to serve as the date the Utility Systems would be transferred by the City to SMWD, (2) enter into an Assignment Agreement to provide for the City’s transfer of its rights, title and interest in and to the real property, assets, contracts and accounts related to the Utility Systems to SMWD, and (3) enter into agreements to transfer all the Bond Obligations of the City related to the Utility Systems to SMWD. Adoption of the three proposed resolutions (Attachments 1, 2, and 3) is necessary to take the actions outlined above and consummate the annexation of the City’s Utility Systems to SMWD. SMWD’s Board of Directors will be considering the same agreements at its November 3 meeting. Upon all necessary approvals, the annexation is anticipated to be finalized on November 15, 2021, or shortly thereafter. In addition, certain personnel changes and budget adjustments are recommended to address anticipated impacts of the annexation on operational needs. DISCUSSION/ANALYSIS: Amendment to the Annexation Agreement The City and SMWD entered into the Annexation Agreement, dated as of January 21, 2020, to: (i) set forth certain key terms to be incorporated into a LAFCO application, and (ii) address how other matters pertaining to the annexation and transfer of the City’s Utility Systems to SMWD would be carried out by the City and SMWD. The Annexation Agreement defines the “Annexation Effective Date” as “the date to be agreed upon in writing by the [City and SMWD] subject to the terms of the LAFCO Approval, as the date on which the Utility Systems would be transferred by the City to SMWD to consummate the Annexation.” The original Annexation Agreement also included two exceptions to setting the Annexation Effective Date: (i) that the Annexation Effective Date could be no earlier than 60 days after the LAFCO Certificate of Completion, City Council Agenda Report November 2, 2021 Page 3 of 8 and (ii) that the Annexation Effective Date must be delayed until resolution of any timely legal challenge to the LAFCO Approval, if any. The LAFCO Resolution further provides that the effective date of the annexation may be a date agreed to by the City and SMWD. Thus, the City and SMWD need to set a date to serve as the Annexation Effective Date and amend the Annexation Agreement to reflect that date. City and SMWD staff propose an Annexation Effective Date of November 15, 2021, unless the City Manager and General Manager mutually agree to a later date. City staff, in consultation with legal counsel, and SMWD agree that the Annexation Effective Date no longer needs to be delayed, as provided in the exceptions noted above, based on the status of the LAFCO process and operational needs of the Utility Systems. Additional amendments are proposed to the Annexation Agreement to clarify certain aspects of the annexation. These amendments: (i) provide that the City shall retain a limited amount of Utility System funds for a period of 90 days after the Annexation Effective Date to pay for outstanding checks and estimated accruals and interfund allocations related to the Utility Systems; (ii) provide that SMWD shall pay, or reimburse the City, for the cost of adjusting utilities infrastructure as needed in conjunction with certain street adjustments; (iii) update the text regarding the status of the South Coast Water District (SCWD) Administrative Complaint; (iv) provide that the City shall, on behalf of, and at the specific request of, SMWD, pay the OCERS Obligation of the City’s Utility System employees using existing funds in the Water Fund; (v) provide that SMWD shall provide personnel for a maximum period of two years after the Annexation Effective Date to facilitate customer bill paying at City Hall; and (vi) provide that employees of the City that are hired by SMWD shall become employees of SMWD as of 12:01 a.m. on the Annexation Effective Date. Adoption of the proposed Resolution (Attachment 1) would approve the First Amendment to the Annexation Agreement. The proposed Resolution (Attachment 1) also affirms the delegation to the City Manager of authority, in consultation with the City’s legal counsel, to do all things which he may deem necessary or proper to effectuate the purposes of the Annexation Agreement, as amended, and the Collateral Agreements and Documents, or to otherwise comply with the requirements of the LAFCO Resolution. Bill of Sale, Assignment and Assumption Agreement (Assignment Agreement) The Annexation Agreement requires that the City and SMWD enter into an “Assignment Agreement” to provide for the City’s transfer of its rights, title and interest in and to real property, assets, infrastructure, contracts and accounts related to the operation of the Utility Systems. Additionally, the LAFCO Resolution requires as a term and condition of LAFCO approval of the annexation that all the real or personal property appurtenances held by the City or by the former Capistrano Valley Water District, and used in connection with the operation of the Utility Systems be transferred to SMWD. The Bill of Sale, Assignment and Assumption Agreement, with its several exhibits, identifies real properties, assets, infrastructure, licenses, contracts and accounts related to the Utility Systems and provides for the means of transferring those real properties, City Council Agenda Report November 2, 2021 Page 4 of 8 assets, infrastructure, licenses, contracts and accounts related to the Utility Systems from the City to SMWD. Approval of the Assignment Agreement is necessary to comply with the terms of the Annexation Agreement and LAFCO Resolution and consummate the annexation. Adoption of the proposed Resolution (Attachment 2) would approve the Bill of Sale, Assignment and Assumption Agreement, approve the conveyances and transfers and assignment of the real properties, assets, infrastructure, licenses, contracts and accounts identified therein, and authorize the City Manager to execute and deliver the instruments of conveyance and assignment and take other actions necessary or proper to effectuate the Bill of Sale, Assignment and Assumption Agreement. Bond Assignment, Assumption and Amendments Agreements The City has previously financed certain improvements to its water utility system by incurring the following obligations payable from net revenues of the City’s water system (collectively, the “Bond Obligations”): 1) City of San Juan Capistrano Water Revenue Bonds, Series 2014A; 2) City of San Juan Capistrano Refunding Revenue Installment Agreement, Series 2017; and 3) San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project), Issue of 2014. Pursuant to the Annexation Agreement between the City and SMWD and the LAFCO Resolution, SMWD will assume all the Bond Obligations on the Annexation Effective Date. To accomplish this, it is necessary that the City and SMWD enter into an Assignment, Assumption and Amendment Agreement for each of the Bond Obligations, and to have those Agreements accepted by the sole bondholder of each Bond Obligation. Pursuant to the Agreements, the City assigns all its obligations relating to the Bond Obligations to SMWD, including the obligation to pay debt service on the Bond Obligations from net revenues of the water system. Adoption of the proposed Resolution (Attachment 3) would approve the Assignment, Assumption and Amendment Agreement for each of the Bond Obligations. The proposed Resolution also authorizes and directs the City Manager, or his designee(s), to execute the Assignment, Assumption and Amendment Agreements and such other agreements, documents and certificates as may be necessary or desirable to transfer of Bond Obligations. Funding for Retained Stormwater Operations Stormwater operations are not financed using water and wastewater rate-payer funds, are not a part of the Utility Systems that are being annexed by SMWD and are being retained as a responsibility of the City. Accordingly, certain staffing and budget adjustments are needed to accommodate storm drain operations previously performed by the Utilities Department employees that are being transferred to SMWD. Stormwater infrastructure maintenance, operation, and inspection is a year-round responsibility that involves hundreds of miles of subterranean and aboveground City Council Agenda Report November 2, 2021 Page 5 of 8 infrastructure. As part of an effective transition of maintenance responsibilities from the Utilities Department to the Public Works Department, staff is recommending a combination of full-time, seasonal part-time and specialized contract services. These resources are needed to maintain, clean and repair stormwater appurtenances (including drains and drainage ditches) citywide; conduct regular preventative maintenance of the storm drain system; administer and facilitate contracted field crews; coordinate Geographical Information System (GIS) updates, including asset inventories and data associated with annual National Pollutant Discharge Elimination System (NPDES) reporting requirements; timely storm drain-related USA Dig Alert requirements; and vital winter storm preparedness and response work. Specifically, staff is recommending the addition of one full-time Senior Public Works Specialist ($126,000), one seasonal part-time Public Works Specialist II ($24,000) and $92,000 in stand-by pay for an after-hours duty person to provide prompt response to urgent after-hours conditions, at a total annual cost of $242,000. The Fiscal Year 2021- 22 General Fund Budget already includes $175,000 of funding to cover these services, which were anticipated to be retained by the City since the annexation effort began. As a result, the positions and stand-by pay costs proposed to be added would annually increase General Fund expenditures by $67,000. The amount of the General Fund budget adjustment needed to fund the proposed additional positions for the period from November 15, 2021, through June 30, 2022, would be $42,000. The budgetary impact of the personnel adjustments described above was considered in determining the City’s need to retain all of its property tax revenue and as such would be fully funded by such revenue. In addition to personnel costs, the Fiscal Year 21-22 Budget currently provides funding for $350,000 of contracted services for certain specialized stormwater infrastructure costs (major repairs, video inspection, biofiltration unit maintenance, trash screen maintenance, winter preparation services, materials, supplies, equipment, etc.). Staff anticipates that these contracted services will continue to be needed in order to properly manage the City’s stormwater infrastructure after the Annexation Effective Date. Customer Service Support The accompanying resolution authorizes the creation of a full-time Accounting Specialist classification and the removal of one part-time Accounting Specialist classification. This action essentially converts an existing part-time position (currently at 0.66 of a full-time equivalent position) to a full-time position. The additional hours of the full-time Accounting Specialist classification are needed to allow that position to serve as back up for the sole customer service representative that will remain with the City after SMWD’s annexation of the City’s water and wastewater Utility Systems. The cost of increasing the work hours for this position from part-time to full-time is $55,000 per year. Staff is recommending a budget adjustment of $35,000 to fund this position for the remainder of Fiscal Year 2021- 22. As with the storm drain personnel, this cost was anticipated when determining the City’s need for retention of property tax revenues and would be fully funded by such funds. The City Council Agenda Report November 2, 2021 Page 6 of 8 General Fund appropriation recommended by staff to account for this proposed use of retained property tax revenues is included in staff’s recommendation. Funding of Environmental Programs Analyst Classification On June 1, 2021, in conjunction with adoption of the Fiscal Year 2021-22 Budget and anticipation of the Utility Systems transfer, the City Council created a new job classification, Environmental Programs Analyst, that would be funded once the annexation is effectuated. The duties of this classification include administration of the City’s solid waste and recycling programs, as well as other Public Works environmental programs. Upon the Annexation Effective Date, the current Senior Management Analyst in the Utilities Department will transfer to the Public Works Department and fill the Environmental Programs Analyst position, which was previously approved by the City Council to be at the same salary grade as the Senior Management Analyst. Staff is recommending that upon the Annexation Effective Date, $122,000 be appropriated from the Forfeited Construction and Demolition Fund to fund this position for the remainder of Fiscal Year 2021-22. There is no General Fund impact associated with this position. FISCAL IMPACT: Approval of the proposed agreements is necessary in order to transfer the City Utility Systems to SMWD. For the Fiscal Year 2021-22 Budget, increases in General Fund personnel costs of $77,000 would be fully funded by retained property tax revenues. Funding the Environmental Programs Analyst position for the remainder of Fiscal Year 2021-22 would reduce the fund balance of the Forfeited Construction and Demolition Fund by $122,000, leaving the fund with a fund balance of $1.3 million. ENVIRONMENTAL IMPACT: Approval of the agreements is not a “project” as defined by CEQA Guidelines Section 15378(b)(5) because it is merely an organizational or administrative activity of governments that would not result in direct or indirect physical changes to the environment, and thus approval of the agreements is not subject to CEQA. Furthermore, the agreements qualify as exempt from review under CEQA because the activities to be undertaken by the agreements qualify under exemptions to CEQA. These exemptions include the Class 19 Categorical Exemption (State CEQA Guidelines Section 15319(a)) because the agreements facilitate the annexation of existing City-owned and operated Utility Systems infrastructure into the boundaries, and operations, of SMWD and the Class 20 Categorical Exemption (State CEQA Guidelines Section 15320) because the agreements facilitate the annexation, which constitutes a change in organization of the Utility Systems. City staff has also determined that no substantial evidence exists to find that exceptions to these exemptions apply. In addition, staff finds that the agreements are exempt from CEQA under the common sense exemption set forth in State CEQA Guidelines section 15061, subdivision (b)(3) as it can be seen with certainty that there is no possibility that the agreements may have a significant effect on the environment. The agreements would not result in any construction or development of new infrastructure, and the agreements would not result in either a direct, or reasonably foreseeable indirect, physical change in the environment. City staff recommends that the City Council adopt City Council Agenda Report November 2, 2021 Page 7 of 8 the resolutions which include a finding that approval of the respective agreements does not constitute a project and is exempt under CEQA, and direct staff to file a Notice of Exemption. PRIOR CITY COUNCIL REVIEW: • On October 19, 2021, the City Council approved a resolution granting the City Manager authority to execute certain water rights transfer agreements between the City and SMWD in connection with the transfer of the City’s water and wastewater utilities to SMWD, and authorizing the City Manager to take certain actions to effectuate the transfer of the utility systems. At this same meeting, the City Council adopted a resolution approving a General Plan Amendment, conducted the first reading of an ordinance providing for a Code Amendment associated with the utility reorganization and approved a side letter of agreement with the San Juan Capistrano Classified Employees Association. • On September 7, 2021, the City Council approved assignment of the City’s rights, title, interests, duties and obligations associated with the City’s participation in the project agreements of the South Orange County Wastewater Authority. • On August 17, 2021, the City Council approved an agreement for water services among SMWD, SCWD and the City. • On April 20, 2021, the City Council approved certain water rights transfer agreements associated with the anticipated transfer of the water and wastewater systems of the City to SMWD. • On January 21, 2020, the City Council approved the Annexation Agreement associated with the anticipated transfer of the water and wastewater systems of the City to SMWD. COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS: • On October 27, 2021, the Planning Commission will consider the proposed disposition of the property held by the City and used in connection with the operation of the Utility Systems to be transferred to SMWD pursuant to the LAFCO Resolution conforms to the General Plan pursuant to Government Code Section 65402. NOTIFICATIONS: Dan Ferons, General Manager, SMWD Carolyn Emery, Executive Director, LAFCO City Clerk Notification List ATTACHMENTS: Attachment 1 – Resolution Amending Annexation Agreement with SMWD City Council Agenda Report November 2, 2021 Page 8 of 8 Attachment 2 – Resolution Approving the Bill of Sale, Assignment and Assumption Agreement, for the Conveyance and Assignment of Certain Properties and Accounts to SMWD Attachment 3 – Resolution Approving Three (3) Assignment, Assumption and Amendment Agreements to Assign Bond Obligations to SMWD Attachment 4 – Resolution Adding and Deleting Certain Employee Classifications 1 RESOLUTION NO. 21-11-02-XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, APPROVING THE FIRST AMENDMENT TO THE ANNEXATION AGREEMENT BETWEEN THE CITY AND THE SANTA MARGARITA WATER DISTRICT, DETERMINING THAT SUCH ACTION IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT, AND AUTHORIZING AND DIRECTING THE CITY MANAGER TO TAKE CERTAIN ACTIONS TO EFFECTUATE THE PURPOSE OF THIS RESOLUTION WHEREAS, the City of San Juan Capistrano (“City”) and Santa Margarita Water District (“SMWD”) entered into an Annexation Agreement, dated as of January 21, 2020, to: (i) set forth certain key terms to be incorporated into the Orange County Local Agency Formation Commission (“LAFCO”) Application for annexation by, and transfer to SMWD of the City’s water and wastewater utilities (Utilities Systems, as defined in the Annexation Agreement), and (ii) address how other matters pertaining to the annexation and transfer of the City’s Utilities Systems to SMWD will be carried out by the City and SMWD. The Annexation Agreement defines the “Annexation Effective Date” as “the date to be agreed upon in writing by the City and SMWD subject to the terms of the LAFCO Approval (as defined in the Annexation Agreement), as the date on which the Utilities Systems will be transferred by the City to SMWD to consummate the annexation; WHEREAS, on August 19, 2021, LAFCO adopted its Resolution No. DA 20-01 approving the annexation (“LAFCO Resolution”). Paragraph “o” of Section 3 of the LAFCO Resolution provides that the effective date of the annexation may be a date agreed to by City and SMWD or the date of recordation of the LAFCO Certificate of Completion, whichever is later; WHEREAS, pursuant to the above-described provisions in the Annexation Agreement and the LAFCO Resolution, the City and SMWD now desire to establish a date as the Annexation Effective Date and make certain other amendments to the Annexation Agreement as more specifically described therein; WHEREAS, the City Council desires to authorize the City Manager to execute and deliver to SMWD the First Amendment to the Annexation Agreement and to do all things which he may deem necessary, proper, or both, to effectuate the purposes of the Annexation Agreement, as amended by the First Amendment to the Annexation Agreement; and WHEREAS, the First Amendment to the Annexation Agreement, in its substantial final form, is attached to this Resolution as Exhibit A and incorporated as a material part of this Resolution by this reference. ATTACHMENT 1 - Page 1 of 4 2 NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Juan Capistrano that: 1. The above recitals are true and correct and are a substantive part of this Resolution. 2. The First Amendment to the Annexation Agreement has been reviewed by City staff and the City Council with respect to the applicability of the California Environmental Quality Act (Public Resources Code Section 21000 et seq.) (“CEQA”). The City Council hereby determines that approval of the First Amendment to the Annexation Agreement is exempt from additional review under CEQA because the activity to be undertaken by the First Amendment to the Annexation Agreement qualifies under various exemptions to CEQA. Those exemptions include the Class 19 Categorical Exemption (State CEQA Guidelines Section 15319(a)) because the First Amendment to the Annexation Agreement is to facilitate the annexation of existing City-owned and operated Utility Systems infrastructure into the boundaries, and operations, of SMWD and the Class 20 Categorical Exemption (State CEQA Guidelines Section 15320) because the annexation constitutes a change in organization of the Utility Systems rather than the development of new or additional utility systems. Furthermore, it is exempt from CEQA under the common sense exemption set forth in State CEQA Guidelines section 15061, subdivision (b)(3) as it can be seen with certainty that there is no possibility that the First Amendment to the Annexation Agreement may have a significant effect on the environment. Additionally, approval of the First Amendment to the Annexation Agreement is not a “project” as defined by CEQA Guidelines Section 15378(b)(5) because it is merely an organizational or administrative activity of governments that will not result in direct or indirect physical changes to the environment, and thus approval of the agreement is not subject to CEQA. The City Council hereby determines that no substantial evidence exists to find that the exceptions to these exemptions apply. The City Council makes these determinations in the exercise of its independent judgment. 3. City Staff is hereby directed to prepare and post a notice of exemption pursuant to CEQA Guidelines Section 15062. 4. Based upon all of the findings and determinations contained in this Resolution, the First Amendment to the Annexation Agreement, attached hereto as Exhibit A, is hereby approved. 5. The City Manager is hereby authorized and directed to execute and deliver to SMWD, for and in the name of the City, the First Amendment to the Annexation Agreement, in substantially such form as attached as Exhibit A, with such non-substantial modifications thereto as may be agreed to by the City Manager in consultation with the City’s legal counsel. Approval of any non-substantial modifications shall be conclusively evidenced by the City Manager’s execution and delivery of the First Amendment to the Annexation Agreement. ATTACHMENT 1 - Page 2 of 4 3 6. This Resolution shall take effect from and after its passage and adoption by the City. PASSED, APPROVED AND ADOPTED this 2nd day of November, 2021. _____________________________________ JOHN TAYLOR, MAYOR ATTEST: _____________________________________ MARIA MORRIS, CITY CLERK ATTACHMENT 1 - Page 3 of 4 4 EXHIBIT A FIRST AMENDMENT TO THE ANNEXATION AGREEMENT Between the City of San Juan Capistrano and the Santa Margarita Water District ATTACHMENT 1 - Page 4 of 4   10306‐0006\2574607v18.doc  FIRST AMENDMENT TO THE ANNEXATION AGREEMENT BETWEEN THE CITY OF SAN JUAN CAPISTRANO AND THE SANTA MARGARITA WATER DISTRICT This First Amendment to the Annexation Agreement between the City of San Juan Capistrano and the Santa Margarita Water District, dated as of November ___, 2021, (this “Amendment”), is entered into by and between the City of San Juan Capistrano, a municipal corporation duly organized and existing under the laws of the State of California (the “City”), and the Santa Margarita Water District, a water district duly organized and existing under the California Water District Law (California Water Code Section 34000 et seq.) (“SMWD”). The City and SMWD are, together, referred to in this Agreement as the “Parties” and, individually, as a “Party.” RECITALS A. The City and SMWD entered into an Annexation Agreement, dated as of January 21, 2020, to: (i) set forth certain key terms to be incorporated into a LAFCO Application, and (ii) address how other matters pertaining to the Annexation and transfer of the City’s Utilities Systems to SMWD will be carried out by the Parties. The Annexation Agreement defines the “Annexation Effective Date” as “the date to be agreed upon in writing by the Parties subject to the terms of the LAFCO Approval, as the date on which the Utilities Systems will be transferred by the City to SMWD to consummate the Annexation.” B. On August 19, 2021, LAFCO adopted LAFCO Resolution No. DA 20-01 approving the Santa Margarita Water District annexation of the San Juan Capistrano water and wastewater utilities (DA 20-01) subject to certain conditions. Paragraph “o” of Section 3 of LAFCO Resolution No. DA 20-01 provides that the effective date of the annexation may be a date agreed to by the parties or the date of recordation of the LAFCO Certificate of Completion, whichever is later. C. Pursuant to the above-described provisions in the Annexation Agreement and LAFCO Resolution No. DA 20-01, the Parties now desire to establish a date certain as the Annexation Effective Date and make certain other amendments to the Annexation Agreement as more specifically described herein. D. The Parties find and determine that this Amendment is consistent with and is intended to implement LAFCO Resolution No. DA 20-01, and that the modifications set forth in this Amendment are appropriate and necessary to efficiently effectuate the Annexation. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND CONDITIONS CONTAINED HEREIN, AND OTHER VALUABLE CONSIDERATION, THE ADEQUACY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS: 1. RECITALS The recitals set forth above are true and correct and are incorporated hereby this reference. EXHIBIT A - Page 1 of 5   10306‐0006\2574607v18.doc  2. DEFINITIONS Unless the context otherwise requires, capitalized terms used in this Amendment shall have the meanings set forth in the Annexation Agreement. 3. ANNEXATION EFFECTIVE DATE 3.1. The term “Annexation Effective Date” in Exhibit A of the Annexation Agreement is modified to read as set forth below: “Annexation Effective Date” has the meaning set forth in Section 1.2 of this Annexation Agreement.” 3.2. Section 1 of the Annexation Agreement is amended to read as follows: “1. DEFINITIONS AND ANNEXATION EFFECTIVE DATE 1.1. Definitions in “Exhibit A.” Unless the context otherwise requires, capitalized terms used in this Agreement shall have the meanings set forth in Exhibit A. 1.2 Annexation Effective Date. The Utilities Systems will be transferred by the City to SMWD to consummate the Annexation on the Annexation Effective Date. The Annexation Effective Date shall be November 15, 2021, unless on or before November 15, 2021, the City Manager and General Manager mutually agree in writing to a later date.” 3.3. Paragraph (c) of Section 3.2 of the Annexation Agreement is deleted in its entirety and paragraph (d) of Section 3.2 is hereby re-lettered as paragraph (c). 4. TRANSFER OF CERTAIN FUNDS 4.1. A new paragraph (e) is added to Section 6.2 of the Annexation Agreement to read as follows: “(e) Notwithstanding the preceding paragraphs of this Section 6.2, the Parties agree that the City shall retain an amount of funds after the Annexation Effective Date, as specified in the Assignment Agreement, in the accounts related to the Utility Systems for the payment by the City of outstanding checks issued in connection with the Utilities Systems and estimated accruals and interfund allocations in connection with the Utilities Systems. An accounting of the disposition of the retained funds shall be provided by the City to SMWD, along with any unexpended retained funds, within 90 days after the Annexation Effective Date. Nothing in this paragraph shall be interpreted to alter or eliminate any obligation of SMWD to pay for, or reimburse the City for costs and expenses as otherwise provided in this Agreement or any Collateral Agreement.” EXHIBIT A - Page 2 of 5   10306‐0006\2574607v18.doc  4.2. Section 12.1 of the Annexation Agreement is amended to read as follows: “12.1. Transfer of Unexpended Cash Balances. All unexpended cash balances in the Water Fund and the Sewer Fund shall be transferred to SMWD on the Annexation Effective Date, unless retained pursuant to Section 6.2.” 5. COSTS FOR ADJUSTING UTILITY FACILITIES A new Section 7.5 is added to the Annexation Agreement to read as follows: “7.5. SMWD’s shall pay for, or reimburse the City for, the cost of: (i) adjusting SMWD- owned sewer manholes, water valve boxes and covers, water meter boxes, and other street level utility structures within paved streets to the new pavement grade when the City resurfaces the streets; or (ii) relocating or removing any SMWD owned sewer or water facility within a public street right-of-way to accommodate any public improvement made by the City, when made necessary by any lawful change of grade, alignment, or width of any public street, way, alley, or place. For purposes of applying applicable law including but not limited to Public Utility Code Section 12808, the Parties agree that the City’s public streets, ways, alleys or places that existed on the Annexation Effective Date shall be treated as first-in-time and prior-in-right to the Utilities Systems transferred in this Annexation and accordingly, the Utilities Systems transferred in this Annexation shall be deemed second-in-time under the applicable law.” 6. SCWD ADMINISTRATIVE COMPLAINT Section 9.3 of the Annexation Agreement is amended to add the following sentence at the end of that section: “The Parties acknowledge the receipt of the “Report of Investigation (INV 7806) and Notice of Violation Regarding Complaint Against San Juan Basin Authority Alleging Violation of Permit Terms 17 and 23, San Juan Creek, Orange County” dated August 27, 2021, related to the SCWD Administrative Complaint, which shall be addressed and resolved consistent with the terms of this Agreement.” 7. OCERS PAYMENT Section 11.2 of the Annexation Agreement is amended to read as follows: “11.2. Payment by CITY on Behalf of SMWD. To address this retained cost, the Parties agree that the City shall, on behalf of SMWD, pay the OCERS Obligation in total on the Annexation Effective Date from the Water Fund.” 8. CUSTOMER PAYMENT AT CITY HALL AFTER TRANSFER Section 17 of the Annexation Agreement is amended to read as follows: “17.1. Maintenance of Bill-Pay Presence at City Hall. SMWD and the City shall cooperate to make available to the Customers a means to pay their water and wastewater EXHIBIT A - Page 3 of 5   10306‐0006\2574607v18.doc  bills at City Hall for a minimal transition period to be mutually agreed upon by SMWD and the City, not to exceed two years from the Annexation Effective Date. SMWD and the City shall cooperate in addressing SMWD concerns related to the transition of Customer billing and use all efforts reasonably necessary to facilitate the transition of the billing system. The City shall take all reasonable action requested by SMWD concerning the transition of the billing system to SMWD including assisting SMWD, when requested, with the dissemination of information related to the transition of customer billing to SMWD. 17.2. SMWD to Provide Personnel at City Hall. SMWD shall provide personnel to collect payments at City Hall for the minimal transition period described in Section 17.1. 17.3. SMWD to Reimburse City Costs and Expenses. SMWD shall reimburse the City for reasonable costs and expenses, including costs and expenses of City employee time, relating to the provision of Customer’s bill-paying access and assistance.” 9. PERSONNEL TRANSFER ON ANNEXATION EFFECTIVE DATE A new Section 18.3 is added to the Annexation Agreement to read as follows: “18.3. Personnel Transfer on Annexation Effective Date. Unless otherwise agreed to by the Parties in writing, employees of the City that are hired by SMWD pursuant to this Section 18 shall become employees of SMWD for all purposes, including compensation and benefits, as of 12:01 a.m. on the Annexation Effective Date.” 10. CONTINUATION OF TERMS AND CONDITIONS OF THE ANNEXATION AGREEMENT Except as expressly set forth herein, all provisions of the Annexation Agreement shall remain in full force and effect. * * * IN WITNESS WHEREOF, the Parties to this Amendment have caused the same to be executed by each of their duly authorized officers as follows: CITY OF SAN JUAN CAPISTRANO By: Benjamin Siegel, City Manager ATTEST: Maria Morris, City Clerk EXHIBIT A - Page 4 of 5   10306‐0006\2574607v18.doc  APPROVED AS TO FORM: Kevin G. Ennis, Special Counsel SANTA MARGARITA WATER DISTRICT By: Charles T. Gibson, President of Board of Directors ATTEST: Kelly Radvansky, Board Secretary APPROVED AS TO FORM: DeeAnne Gillick, Special Counsel EXHIBIT A - Page 5 of 5 1 RESOLUTION NO. 21-11-02-XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, APPROVING THE BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT BETWEEN THE CITY AND THE SANTA MARGARITA WATER DISTRICT FOR PURPOSES OF CONVEYING CERTAIN REAL PROPERTY, ASSETS, INFRASTRUCTURE, CONTRACTS, LICENSES, AND ACCOUNTS USED BY THE CITY IN THE OPERATION OF WATER AND WASTEWATER UTILITY SYSTEMS TO THE SANTA MARGARITA WATER DISTRICT, DETERMINING THAT SUCH ACTION IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT, AND AUTHORIZING AND DIRECTING THE CITY MANAGER TO TAKE CERTAIN ACTIONS TO EFFECTUATE THE PURPOSE OF THIS RESOLUTION WHEREAS, the City of San Juan Capistrano (“City”) and Santa Margarita Water District (“SMWD”) entered into an Annexation Agreement, dated as of January 21, 2020, to: (i) set forth certain key terms to be incorporated into the Orange County Local Agency Formation Commission (“LAFCO”) Application for annexation by, and transfer to, SMWD of the City’s water and wastewater utilities (“Utilities Systems,” as defined in the Annexation Agreement), and (ii) address how other matters pertaining to the annexation and transfer of the City’s Utilities Systems to SMWD will be carried out by the City and SMWD. Section 6.2 of the Annexation Agreement requires that the City and SMWD enter into an “Assignment Agreement” to provide for the City’s transfer of its rights, title and interest in and to real property, assets, contracts and accounts related to the Utilities Systems; WHEREAS, on August 19, 2021, LAFCO adopted its Resolution No. DA 20-01 approving the annexation (“LAFCO Resolution”). The LAFCO Resolution incorporated and adopted the provisions of the Annexation Agreement. Furthermore, in section 3(g), the LAFCO Resolution requires as a term and condition of LAFCO approval of the annexation that all the real or personal property appurtenances held by the City or by the former Capistrano Valley Water District, and used in connection with the operation of the Utilities Systems, shall be transferred to SMWD; WHEREAS, the City desires to enter into the Bill of Sale, Assignment and Assumption Agreement to carry out the provisions of Section 6.2 of the Annexation Agreement and the LAFCO Resolution and to be the “Assignment Agreement” as referred to in Section 6.2 of the Annexation Agreement, so as to provide for the City’s transfer of its rights, title and interest in and to real property, assets, infrastructure, contracts, licenses, and accounts related to and necessary for the operation of the Utilities Systems; WHEREAS, on October 27, 2021, the Planning Commission of the City of San Juan Capistrano, found and determined pursuant to Government Code Section 65402 that the proposed disposition of the real property held by the City and used in connection ATTACHMENT 2 2 with the operation of the Utilities Systems to be transferred to SMWD pursuant to the LAFCO Resolution conforms to the City’s General Plan; WHEREAS, the transfer of the real property described in the Bill of Sale, Assignment and Assumption Agreement is not subject to the Surplus Land Act (Government Code Section 54220 et seq). Pursuant to Government Code Section 54226: “No provision of [the Surplus Land Act] shall be applied when it conflicts with any other provision of statutory law.” The Surplus Land Act conflicts with the Cortese-Knox- Hertzberg Local Government Reorganization Act of 2000 (Government Code Section 56000 et seq) with respect to the conveyance of property subject to a LAFCO order. Government Code Section 56886(h) provides that with respect to a change of organization, LAFCO can provide terms for “[t]he acquisition, improvement, disposition, sale, transfer, or division of any property, real or personal,” and the LAFCO Resolution provides in subsection 3(g) that all the City real property related to the utilities shall be transferred to SMWD. Furthermore, this conveyance is not a “disposition” under the California Department of Housing and Community Development Surplus Land Act Guidelines because “disposition of surplus land” is defined as “the sale or lease of local agency-owned land” and there is no sale or lease, but rather a conveyance of City property to SMWD to effectuate the LAFCO approval of the annexation; WHEREAS, the City Council desires to authorize the City Manager to execute and deliver to SMWD the Bill of Sale, Assignment and Assumption Agreement and to do all things which he may deem necessary, proper, or both, to effectuate the purposes of the Bill of Sale, Assignment and Assumption Agreement in order to comply with the requirements of the LAFCO Resolution and the Annexation Agreement, and to consummate the annexation; WHEREAS, the City Council’s approval of the Bill of Sale, Assignment and Assumption Agreement shall constitute the City Council’s approval of the conveyance and transfer of the real property referenced or identified in the Bill of Sale, Assignment and Assumption Agreement, as required by Government Code Section 37351. The City Council further finds, based upon the entire record involving the annexation, that that the conveyance and transfer of the real property identified in the Bill of Sale, Assignment, and Assumption Agreement is for the public benefit of the City and SMWD; and WHEREAS, the Bill of Sale, Assignment and Assumption Agreement, in its substantial final form, is attached to this Resolution as Exhibit A and incorporated as a material part of this Resolution by this reference. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Juan Capistrano that: 1. The above recitals are true and correct and are a substantive part of this Resolution. 3 2. The Bill of Sale, Assignment and Assumption Agreement has been reviewed by City staff and the City Council with respect to the applicability of the California Environmental Quality Act (Public Resources Code Section 21000 et seq.) (“CEQA”). The City Council hereby determines that approval of the Bill of Sale, Assignment and Assumption Agreement is exempt from additional review under CEQA because the activity to be undertaken by the Agreement qualifies under various exemptions to CEQA. Those exemptions include the Class 19 Categorical Exemption (State CEQA Guidelines Section 15319(a)) because the Bill of Sale, Assignment and Assumption Agreement is to facilitate the annexation of existing City-owned and operated Utility Systems infrastructure into the boundaries and operations of SMWD, and the Class 20 Categorical Exemption (State CEQA Guidelines Section 15320) because the annexation constitutes a change in organization of the Utility Systems rather than the development of new or additional utility systems. Furthermore, it is exempt from CEQA under the common sense exemption set forth in State CEQA Guidelines section 15061, subdivision (b)(3) as it can be seen with certainty that there is no possibility that the Bill of Sale, Assignment and Assumption Agreement may have a significant effect on the environment. Additionally, approval of the Bill of Sale, Assignment and Assumption Agreement is not a “project” as defined by CEQA Guidelines Section 15378(b)(5) because it is merely an organizational or administrative activity of governments that will not result in direct or indirect physical changes to the environment, and thus approval of the agreement is not subject to CEQA. The City Council hereby also determines that no substantial evidence exists to find that the exceptions to these exemptions apply. The City Council makes these determinations in the exercise of its independent judgment. 3. City Staff is hereby directed to prepare and post a notice of exemption pursuant to CEQA Guidelines Section 15062. 4. Based upon all the findings and determinations contained in this Resolution, the Bill of Sale, Assignment and Assumption Agreement, attached hereto as Exhibit A, is hereby approved. 5. The City Manager is hereby authorized and directed to execute and deliver to SMWD, for and in the name of the City, the Bill of Sale, Assignment and Assumption Agreement, in substantially such form as attached as Exhibit A, with such non-substantial modifications to that Agreement as may be agreed to by the City Manager in consultation with the City’s legal counsel. Approval of any non-substantial modifications shall be conclusively evidenced by the City Manager’s execution and delivery of the Bill of Sale, Assignment and Assumption Agreement. 6. The conveyance instruments conveying the Real Property, as referenced and identified in Section 2 and Exhibit A of the Bill of Sale, Assignment and Assumption Agreement, substantially in the forms provided therein, are hereby approved. 7. The City Manager is hereby authorized and directed, in consultation with the City’s legal counsel, to prepare and execute such conveyance instruments, 4 substantially in the forms contained the Bill of Sale, Assignment and Assumption Agreement. 8. The City Manager is hereby authorized and directed, in consultation with the City’s legal counsel, to deliver any and all documents, and to take all actions which he may deem necessary, proper, or both to carry out and implement the conveyance of the Real Property as provided in this Resolution, and to administer the City’s obligations, responsibilities and duties to be performed for the conveyances identified in the Bill of Sale, Assignment and Assumption and to consummate the annexation. 9. This Resolution shall take effect from and after its passage and adoption by the City. PASSED, APPROVED AND ADOPTED this 2nd day of November, 2021. _____________________________________ JOHN TAYLOR, MAYOR ATTEST: _____________________________________ MARIA MORRIS, CITY CLERK   EXHIBIT A BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT   WILL BE DISTRIBUTED SEPARATELY EXHIBIT A RESOLUTION NO. 21-11-02-XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA APPROVING ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENTS IN CONNECTION WITH CERTAIN BOND OBLIGATIONS RELATED TO THE OPERATION OF CITY’S WATER UTILITY AND AUTHORIZING AND DIRECTING CERTAIN RELATED ACTIONS IN CONNECTION WITH THE TRANSFER OF THAT UTILITY SYSTEM TO THE SANTA MARGARITA WATER DISTRICT, DETERMINING THAT SUCH ACTION IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT, AND AUTHORIZING AND DIRECTING THE CITY MANAGER TO TAKE CERTAIN ACTIONS TO EFFECTUATE THE PURPOSE OF THIS RESOLUTION WHEREAS, the City of San Juan Capistrano (“City”) and Santa Margarita Water District (“SMWD”) entered into an Annexation Agreement, dated as of January 21, 2020, to: (i) set forth certain key terms to be incorporated into the Orange County Local Agency Formation Commission (“LAFCO”) Application for annexation by, and transfer to, SMWD of the City’s water and wastewater utilities (“Utilities Systems,” as defined in the Annexation Agreement), and (ii) address how other matters pertaining to the annexation and transfer of the City’s Utilities Systems to SMWD will be carried out by the City and SMWD; WHEREAS, on August 19, 2021, LAFCO adopted its Resolution No. DA 20-01 approving the annexation (“LAFCO Resolution”). The LAFCO Resolution incorporated and adopted the provisions of the Annexation Agreement; WHEREAS, the City has previously financed certain improvements to its water system by incurring the following obligations payable from net revenues of the City’s water system (collectively, the “Bond Obligations”): 1) City of San Juan Capistrano Water Revenue Bonds, Series 2014A (the “2014 Bonds”); 2) City of San Juan Capistrano Refunding Revenue Installment Agreement, Series 2017 (the “2017 Installment Agreement”); and 3) San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project), Issue of 2014 (the “SJBA Bonds”); WHEREAS, pursuant to the Resolution SMWD will annex the water system of the City, and will assume ownership of the water system effective November 15, 2021, or such other date as provided in the Annexation Agreement between the City and SMWD, as amended (the “Annexation Effective Date”); ATTACHMENT 3 - Page 1 of 6 WHEREAS, pursuant to the Annexation Agreement and the LAFCO Resolution, SMWD will assume all the Bond Obligations on the Annexation Effective Date, including the obligation to pay debt service from net revenues of the water system; WHEREAS, to carry out this transfer of obligations, the City and SMWD intend to enter into an Assignment, Assumption and Amendment Agreement for each of the Bond Obligations, each of which is intended to be accepted by the sole bondholder of each Bond Obligation, pursuant to which the City assigns all its obligations relating to the Bond Obligations to SMWD; and WHEREAS, the Assignment, Assumption and Amendment Agreements, in their substantial final form, are attached to this Resolution as Exhibits A-1, A-2 and A-3 and incorporated as a material part of this Resolution by this reference. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, as follows: 1. The above recitals are true and correct and are a substantive part of this Resolution. 2. The Assignment, Assumption and Amendment Agreements have been reviewed by City staff and the City Council with respect to the applicability of the California Environmental Quality Act (Public Resources Code Section 21000 et seq.) (“CEQA”). The City Council hereby determines that approval of the Assignment, Assumption and Amendment Agreements is exempt from additional review under CEQA because the activity to be undertaken by the Assignment, Assumption and Amendment Agreements qualifies under various exemptions to CEQA. Those exemptions include the Class 19 Categorical Exemption (State CEQA Guidelines Section 15319(a)) because the Assignment, Assumption and Amendment Agreements facilitate the annexation of existing City-owned and operated Utility Systems infrastructure into the boundaries, and operations, of SMWD and the Class 20 Categorical Exemption (State CEQA Guidelines Section 15320) because the annexation constitutes a change in organization of the Utility Systems rather than the development of new or additional utility systems. Furthermore, it is exempt from CEQA under the common sense exemption set forth in State CEQA Guidelines section 15061, subdivision (b)(3) as it can be seen with certainty that there is no possibility that the agreements may have a significant effect on the environment. Additionally, approval of the agreements is not a “project” as defined by CEQA Guidelines Section 15378(b)(5) because it is merely an organizational or administrative activity of governments that will not result in direct or indirect physical changes to the environment, and thus approval of the agreement is not subject to CEQA. The City Council hereby determines that no substantial evidence exists to find that the exceptions to these exemptions apply. The City Council makes these determinations in the exercise of its independent judgment. 3. City Staff is hereby directed to prepare and post a notice of exemption pursuant to CEQA Guidelines Section 15062. ATTACHMENT 3 - Page 2 of 6 4. 2014 Bonds Assignment. The City Council hereby approves the form of the Assignment, Assumption and Amendment Agreement for the 2014 Bonds, by and among the City, SMWD, and The Bank of New York Mellon Trust Company, N.A., as trustee for the 2014 Bonds, as attached hereto as Exhibit A-1, with such additions thereto and changes therein as the City Manager, or his designee(s), deems necessary, desirable or appropriate upon consultation with legal counsel, the execution by the City of which shall be conclusive evidence of the approval of any such additions and changes. 5. 2017 Installment Agreement Assignment. The City Council hereby approves the form of the Assignment, Assumption and Amendment Agreement for the 2017 Installment Agreement, by and among the City, SMWD, and Public Property Financing Corporation of California, as attached hereto as Exhibit A-2, with such additions thereto and changes therein as the City Manager, or his designee(s), deems necessary, desirable or appropriate upon consultation with legal counsel, the execution by the City of which shall be conclusive evidence of the approval of any such additions and changes. 6. SJBA Bonds Assignment. The City Council hereby approves the form of the Assignment, Assumption and Amendment Agreement for the SJBA Bonds, by and among the City, SMWD, San Juan Basin Authority, and The Bank of New York Mellon Trust Company, N.A., as trustee, for the SJBA Bonds, as attached hereto as Exhibit A-3, with such additions thereto and changes therein as the City Manager, or his designee(s), deems necessary, desirable or appropriate upon consultation with legal counsel, the execution by the City of which shall be conclusive evidence of the approval of any such additions and changes. 7. The City Manager, or his designee(s), is hereby authorized and directed to execute, and the City Clerk is hereby authorized to attest, as appropriate, the Assignment, Assumption and Amendment Agreements and such other agreements, documents and certificates as may be necessary or desirable to effectuate the purposes of this resolution and the annexation of the Water System and transfer of Bond Obligations, including, without limitation, such other agreements, documents and certificates as may be required to effectuate such purposes. 8. This Resolution shall take effect from and after its passage and adoption by the City. PASSED, APPROVED AND ADOPTED this ____ day of ____________, 2021. JOHN TAYLOR, MAYOR ATTEST: MARIA MORRIS, CITY CLERK ATTACHMENT 3 - Page 3 of 6 10306-0006\2582497v7.doc EXHIBIT A-1 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT City of San Juan Capistrano Water Revenue Refunding Bonds, Series 2014A ATTACHMENT 3 - Page 4 of 6 10306-0006\2582497v7.doc EXHIBIT A-2 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT City of San Juan Capistrano Refunding Revenue Installment Agreement, Series 2017 ATTACHMENT 3 - Page 5 of 6 10306-0006\2582497v7.doc EXHIBIT A-3 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT San Juan Basin Authority Lease Revenue Bonds (Groundwater Recovery Project) Issue of 2014 ATTACHMENT 3 - Page 6 of 6 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT by and among SANTA MARGARITA WATER DISTRICT as Assignee and CITY OF SAN JUAN CAPISTRANO as Assignor and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. as Trustee Dated as of November 1, 2021 relating to CITY OF SAN JUAN CAPISTRANO WATER REVENUE REFUNDING BONDS, SERIES 2014A EXHIBIT A-1 - Page 1 of 6 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT This Assignment, Assumption and Amendment Agreement, dated as of November 1, 2021 (this “Agreement”), is entered into by and among SANTA MARGARITA WATER DISTRICT, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California (the “Assignee”), the CITY OF SAN JUAN CAPISTRANO, a municipality duly organized and existing under and by virtue of the laws of the State of California (the “Assignor”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the “Trustee”). RECITALS A. Pursuant to Resolution No. DA 20-01 of the Orange County Local Agency Formation Commission dated August 19, 2021 (the “LAFCO Resolution”), the Assignee has annexed the municipal water system of the Assignor as described in the LAFCO Resolution (such water system, which will constitute the water system within the boundaries of a geographic area within the boundaries of the Assignee which will be designated after the Annexation Effective Date (defined below), called or to be called Improvement District No. 9, the “Water System”) and will assume ownership of the Water System effective November 15, 2021, or such later date as provided in the Annexation Agreement, by and between the Assignor and the Assignee, dated as of January 21, 2020, as may be amended (the “Annexation Effective Date”). B. The Assignor has entered into an Indenture, dated as of November 1, 2014 (the “Indenture”), by and between the Assignor and the Trustee, under which the Assignor issued its Water Revenue Refunding Bonds, Series 2014A (the “Bonds”). C. The Bonds are payable from Net Revenues (as such term is defined in the Indenture). D. Pursuant to the LAFCO Resolution, the Assignee will assume all obligations under the Indenture on the Annexation Effective Date, including the obligation to pay the Bonds from Net Revenues of the Water System. E. This Agreement constitutes a Supplemental Indenture within the meaning of the Indenture. AGREEMENT SECTION 1. Assignment. (a) Effective as of the Annexation Effective Date, the Assignor, for good and valuable consideration in hand received, does hereby unconditionally assign and transfer to the Assignee without recourse, for the benefit of the Trustee, all of its rights, title, interest, duties and obligations in and to the Indenture, including the obligation to pay the Bonds. This assignment is absolute and is presently effective. (b) In connection with the matters described in subsection (a), the Assignee agrees to establish, on or before the Annexation Effective Date: (i) a “Revenue Fund” in which revenues of EXHIBIT A-1 - Page 2 of 6 2 the Water System shall be deposited meeting the description thereof set forth in Section 1.01 of the Indenture, which the Assignee agrees shall be separate from other funds and accounts of the Assignee and pledged for the benefit of the owners of the Bonds pursuant to the terms of the Indenture; and (ii) such other funds as may be contemplated pursuant to Article IV of the Indenture. (c) In connection with the matters described in subsection (a), the Assignor agrees to transfer, or cause to be transferred, the amounts held in the 2014 Bonds Rate Stabilization Reserve, if any, to the Assignee upon the Annexation Effective Date, and the Assignee agrees to hold such moneys separate from other funds of the Assignee for the benefit of the owners of the Bonds. SECTION 2. Acceptance. (a) The Assignee hereby accepts the foregoing assignment as of the Annexation Effective Date for the benefit of the Trustee and the owners of the Bonds, and agrees thereafter to pay the Bonds from Net Revenues of the Water System and assume and perform all of the other obligations of the Assignor as provided in the Indenture. The Assignee agrees that the owners of the Bonds shall be entitled to a lien on moneys in the Revenue Fund and other funds established under the Indenture. (b) From and after the Annexation Effective Date, the Assignee will assume the responsibilities of the Assignor with respect to compliance with applicable federal requirements for the tax-exempt status of the Bonds, in accordance with the Tax Certificate dated November 14, 2014 and executed by the Assignor in connection with the Bonds. (c) The Trustee affirms that all moneys from the Revenue Fund and other funds established under the Indenture which are received by the Trustee shall be held for the benefit of the owners of the Bonds pursuant to the Indenture. The Trustee further affirms that the Debt Service Fund and the Redemption Fund are currently established and held by the Trustee and that such funds will continue to be held by the Trustee for the benefit of the owners of the Bonds. SECTION 3. Amendment. (a) The definition of “Certificate of the City” in Section 1.01 of the Indenture is hereby amended as follows: ““Certificate of the City” means an instrument in writing signed by the General Manager or Assistant General Manager of Santa Margarita Water District, or by any other officer of Santa Margarita Water District duly authorized by the Board of Directors of Santa Margarita Water District for that purpose.” (b) The definition of “City” in Section 1.01 of the Indenture is hereby amended as follows: ““City” means Santa Margarita Water District, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California.” (c) The definition of “City Council” in Section 1.01 of the Indenture is hereby amended as follows: EXHIBIT A-1 - Page 3 of 6 3 ““City Council” means the Board of Directors of Santa Margarita Water District.” (d) The definition of “City Manager” in Section 1.01 of the Indenture is hereby amended as follows: ““City Manager” means the General Manager or Assistant General Manager of Santa Margarita Water District.” (e) The definition of “Water System” in Section 1.01 of the Indenture is hereby amended as follows: ““Water System” means the whole and each and every part of the water system within the geographic boundaries of an improvement district of Santa Margarita Water District which has been previously established, or which shall be established as soon as possible hereafter, called or to be called Improvement District No. 9 (consisting of the service area annexed to Santa Margarita Water District pursuant to Resolution No. DA 20-01 dated August 19, 2021 of the Orange County Local Agency Formation Commission), including all real property and buildings, including the portion thereof existing on the date hereof, and including all additions, betterments, extensions and improvements to such water system or any party thereof hereafter acquired or constructed.” (f) The notice address for the City set forth in Section 10.09 of the Indenture is hereby amended as follows: “Santa Margarita Water District 26111 Antonio Parkway Rancho Santa Margarita, California 92688 Attention: General Manager” SECTION 4. Filings. The Assignee agrees, at its own expense, to make any filings required by The Depository Trust Company, the Internal Revenue Service, the California Debt Investment Advisory Commission and any other federal or state administrative and regulatory bodies in order to evidence the matters set forth herein. SECTION 5. Attornment. The Trustee acknowledges and agrees to the assignment set forth in Section 1 and agrees to attorn to the Assignee from and after the Annexation Effective Date with respect to all matters related to the Indenture. This Agreement shall confer no rights and impose no obligations upon the Trustee beyond those expressly provided in this Agreement and in the Indenture. EXHIBIT A-1 - Page 4 of 6 4 SECTION 6. Representations and Warranties. Each of the Assignee, the Assignor and the Trustee represents and warrants that: (i) the execution, delivery and performance of this Agreement have been duly authorized by such party by all necessary action; (ii) this Agreement, assuming due execution by the other parties thereto, constitutes a valid, binding and enforceable obligation of such party, except as enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on remedies against public agencies in the State of California; (iii) to the best of such party’s knowledge after due inquiry, this Agreement does not violate any law, regulation or order binding on such party; (iv) no consent or authorization of any third party is required in connection with the execution, delivery or performance by such party of this Agreement or, alternatively, all such consents and authorizations have been given; (v) such party has the power to carry out the obligations imposed on such party by this Agreement; and (vi) there is no claim, action or proceeding pending and notice of which has been received by such party, or to the knowledge of such party, threatened against such party before any court, arbitrator or governmental agency or regulatory or administrative agency or commission challenging the validity, enforceability or legality of this Agreement. In addition, the Assignor and the Trustee represent and warrant that no Event of Default has occurred and is continuing under the Indenture as of the date of execution and delivery of this Agreement. SECTION 7. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the Assignee, the Assignor or the Trustee shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof. The Assignee, the Assignor and the Trustee hereby declare that they would have executed this Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 8. California Law. THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. SECTION 9. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [Remainder of Page Intentionally Left Blank] EXHIBIT A-1 - Page 5 of 6 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their officers thereunto duly authorized as of the day and year first written above. SANTA MARGARITA WATER DISTRICT By:________________________________________ Its: General Manager CITY OF SAN JUAN CAPISTRANO By:________________________________________ Its: City Manager THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. By:________________________________________ Its: Authorized Officer ACKNOWLEDGED AND AGREED: WELLS FARGO EQUIPMENT FINANCE, INC. By:__________________________________ Its: Authorized Officer EXHIBIT A-1 - Page 6 of 6 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT by and among SANTA MARGARITA WATER DISTRICT as Assignee and CITY OF SAN JUAN CAPISTRANO as Assignor and PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA as Corporation Dated as of November 1, 2021 relating to $8,410,000 CITY OF SAN JUAN CAPISTRANO REFUNDING REVENUE INSTALLMENT AGREEMENT, SERIES 2017 EXHIBIT A-2 - Page 1 of 6 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT This Assignment, Assumption and Amendment Agreement, dated as of November 1, 2021 (this “Agreement”), is entered into by and among SANTA MARGARITA WATER DISTRICT, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California (the “Assignee”), the CITY OF SAN JUAN CAPISTRANO, a municipality duly organized and existing under and by virtue of the laws of the State of California (the “Assignor”), and PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA, a nonprofit public benefit corporation duly organized and existing under the laws of the State of California (the “Corporation”). RECITALS A. Pursuant to Resolution No. DA 20-01 of the Orange County Local Agency Formation Commission dated August 19, 2021 (the “LAFCO Resolution”), the Assignee has annexed the municipal water system of the Assignor as described in the LAFCO Resolution (such water system, which will constitute the water system within the boundaries of a geographic area within the boundaries of the Assignee which will be designated after the Annexation Effective Date (defined below), called or to be called Improvement District No. 9, the “Water System”) and will assume ownership of the Water System effective November 15, 2021, or such later date as provided in the Annexation Agreement, by and between the Assignor and the Assignee, dated as of January 21, 2020, as may be amended (the “Annexation Effective Date”). B. The Assignor has entered into an Installment Purchase Agreement, dated as of December 1, 2017 (the “IPA”), by and between the Assignor and the Corporation, under which the Assignor agreed to make Series 2017 Installment Payments (as such term is defined in the IPA) to the Corporation. C. The Series 2017 Installment Payments are payable from Net Revenues (as such term is defined in the IPA). D. Pursuant to the LAFCO Resolution, the Assignee will assume all obligations under the IPA on the Annexation Effective Date, including the obligation to make the Series 2017 Installment Payments from Net Revenues of the Water System. AGREEMENT SECTION 1. Assignment. (a) Effective as of the Annexation Effective Date, the Assignor, for good and valuable consideration in hand received, does hereby unconditionally assign and transfer to the Assignee without recourse, for the benefit of the Corporation, all of its rights, title, interest, duties and obligations in and to the IPA, including the obligation to pay all Series 2017 Installment Payments to the Corporation. This assignment is absolute and is presently effective. (b) In connection with the matters described in subsection (a), the Assignee agrees to establish a “Revenue Fund” and a “Payment Fund,” in each case meeting the description thereof set forth in Section 5.2 of the IPA, on or before the Annexation Effective Date. EXHIBIT A-2 - Page 2 of 6 2 (c) In connection with the matters described in subsection (a), the Assignor agrees to transfer the amounts held in the 2017 Rate Stabilization Fund, if any, to the Assignee upon the Annexation Effective Date, and the Assignee agrees to hold such moneys separate from other funds of the Assignee for the benefit of the Corporation. SECTION 2. Acceptance. (a) The Assignee hereby accepts the foregoing assignment as of the Annexation Effective Date for the benefit of the Corporation, and agrees thereafter to pay the Series 2017 Installment Payments to the Corporation and assume the other obligations of the Assignor as provided in the IPA. (b) From and after the Annexation Effective Date, the Assignee will assume the responsibilities of the Assignor with respect to compliance with applicable federal requirements for the tax-exempt status of the Series 2017 Installment Payments, in accordance with the Tax Compliance Certificate and Agreement dated December 15, 2017 and executed by the Assignor in connection with the IPA. SECTION 3. Amendment. (a) The definition of “City” in Section 1.1 of the IPA is hereby amended as follows: “City. The term “City” means Santa Margarita Water District, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California.” (b) The definition of “Manager” in Section 1.1 of the IPA is hereby amended as follows: “Manager. The term “Manager” means the General Manager of Santa Margarita Water District, or any person designated by the General Manager of Santa Margarita Water District to act on behalf of the General Manager of Santa Margarita Water District.” (c) The definition of “Water System” in Section 1.1 of the IPA is hereby amended as follows: “Water System. The term “Water System” means the whole and each and every part of the water system within the geographic boundaries of an improvement district of Santa Margarita Water District which has been previously established, or which shall be established as soon as possible hereafter, called or to be called Improvement District No. 9 (consisting of the service area annexed to Santa Margarita Water District pursuant to Resolution No. DA 20-01 dated August 19, 2021 of the Orange County Local Agency Formation Commission), including all real property and buildings, 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.” EXHIBIT A-2 - Page 3 of 6 3 (d) The notice address for the City set forth in Section 10.10 of the IPA is hereby amended as follows: “Santa Margarita Water District 26111 Antonio Parkway Rancho Santa Margarita, California 92688 Attention: General Manager” SECTION 4. Filings. The Assignee agrees, at its own expense, to make any filings required by The Depository Trust Company, the Internal Revenue Service, the California Debt Investment Advisory Commission and any other federal or state administrative and regulatory bodies in order to evidence the matters set forth herein. SECTION 5. Attornment. The Corporation acknowledges and agrees to the assignment set forth in Section 1 and agrees to attorn to the Assignee from and after the Annexation Effective Date with respect to all matters related to the IPA. This Agreement shall confer no rights and impose no obligations upon the Corporation beyond those expressly provided in the IPA. SECTION 6. Representations and Warranties. Each of the Assignee, the Assignor and the Corporation represents and warrants that: (i) the execution, delivery and performance of this Agreement have been duly authorized by such party by all necessary action; (ii) this Agreement, assuming due execution by the other parties thereto, constitutes a valid, binding and enforceable obligation of such party, except as enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on remedies against public agencies in the State of California; (iii) to the best of such party’s knowledge after due inquiry, this Agreement does not violate any law, regulation or order binding on such party; (iv) no consent or authorization of any third party is required in connection with the execution, delivery or performance by such party of this Agreement or, alternatively, all such consents and authorizations have been given; (v) such party has the power to carry out the obligations imposed on such party by this Agreement; and (vi) there is no claim, action or proceeding pending and notice of which has been received by such party, or to the knowledge of such party, threatened against such party before any court, arbitrator or governmental agency or regulatory or administrative agency or commission challenging the validity, enforceability or legality of this Agreement. In addition, the Assignor and the Corporation represent and warrant that no Event of Default has occurred and is continuing under the IPA as of the date of execution and delivery of this Agreement. EXHIBIT A-2 - Page 4 of 6 4 SECTION 7. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the Assignee, the Assignor or the Corporation shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof. The Assignee, the Assignor and the Corporation hereby declare that they would have executed this Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 8. California Law. THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. SECTION 9. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [Remainder of Page Intentionally Left Blank] EXHIBIT A-2 - Page 5 of 6 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their officers thereunto duly authorized as of the day and year first written above. SANTA MARGARITA WATER DISTRICT By:________________________________________ Its: General Manager CITY OF SAN JUAN CAPISTRANO By:________________________________________ Its: City Manager PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA By:________________________________________ Its: Authorized Officer ACKNOWLEDGED AND AGREED: CITY NATIONAL BANK By:__________________________________ Its: Authorized Officer EXHIBIT A-2 - Page 6 of 6 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT by and among SANTA MARGARITA WATER DISTRICT as Assignee and CITY OF SAN JUAN CAPISTRANO as Assignor and SAN JUAN BASIN AUTHORITY as Authority and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. as Trustee Dated as of November 1, 2021 relating to $20,361,090 SAN JUAN BASIN AUTHORITY LEASE REVENUE BONDS (GROUND WATER RECOVERY PROJECT) ISSUE OF 2014 EXHIBIT A-3 - Page 1 of 7 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT This Assignment, Assumption and Amendment Agreement, dated as of November 1, 2021 (this “Agreement”), is entered into by and among SANTA MARGARITA WATER DISTRICT, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California (the “Assignee”), the CITY OF SAN JUAN CAPISTRANO, a municipality duly organized and existing under and by virtue of the laws of the State of California (the “Assignor”), the SAN JUAN BASIN AUTHORITY, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California (the “Authority”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the “Trustee”). RECITALS A. Pursuant to Resolution No. DA 20-01 of the Orange County Local Agency Formation Commission dated August 19, 2021 (the “LAFCO Resolution”), the Assignee has annexed the municipal water system of the Assignor as described in the LAFCO Resolution (such water system, which will constitute the water system within the boundaries of a geographic area within the boundaries of the Assignee which will be designated after the Annexation Effective Date (defined below), called or to be called Improvement District No. 9, the “Water System”) and will assume ownership of the Water System effective November 15, 2021, or such later date as provided in the Annexation Agreement, by and between the Assignor and the Assignee, dated as of January 21, 2020, as may be amended (the “Annexation Effective Date”). B. The Assignor has entered into a Property Lease, dated as of December 1, 2002 (the “Property Lease”), by and between the Assignor and the Authority, under which the Assignor leased certain real property (“Property”) related to the Water System to the Authority. C. The Assignor has entered into an Amended and Restated Lease Agreement, dated as of November 1, 2014 (the “Lease”), by and between the Assignor and the Authority, under which the Authority leased the Property to the Assignor and the Assignor agreed to make Lease Payments and Additional Payments (as such terms are defined in the Lease) to the Authority. D. The Lease Payments and Additional Payments are payable from Revenues (as such term is defined in the Lease). E. The Lease Payments secure a portion of the Authority’s Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014 (the “Bonds”). F. The Bonds were issued pursuant to the Trust Agreement, dated as of November 1, 2014 (the “Trust Agreement”), by and among the City, the Authority and the Trustee. G. The Assignor, as successor in interest to the Capistrano Valley Water District, and the Authority entered into an Operating Lease Agreement, dated as of December 1, 2002, as amended by the First Amendment to Operating Lease Agreement, each dated as of December 1, 2002 (collectively, the “Operating Lease”). EXHIBIT A-3 - Page 2 of 7 2 H. Pursuant to the LAFCO Resolution, the Assignee will assume all obligations under the Property Lease, the Lease, the Operating Lease, and the Trust Agreement on the Annexation Effective Date, including the obligation to make the Lease Payments and the Additional Payments from Revenues of the Water System. I. The Property will be conveyed by the Assignor to the Assignee in connection with the transfer of the Water System from the Assignor to the Assignee, with the exception of the following: (i) Lot 2 of Parcel A (Dance Hall) (“Lot 2 of Parcel A”), which will be retained by Assignor since Lot 2 of Parcel A is not necessary for the operation of the Project, and (ii) Parcel F (Kinoshita) (“Parcel F”), which will be retained by the City. J. The parties hereto desire to amend the Property Lease, the Lease and the Trust Agreement to reflect the Assignee’s assumption of the Property Lease, the Lease, the Operating Lease and the Trust Agreement as described herein, and this Agreement shall constitute a Supplemental Trust Agreement as described in the Trust Agreement. AGREEMENT SECTION 1. Assignment. (a) Effective as of the Annexation Effective Date, the Assignor, for good and valuable consideration in hand received, does hereby unconditionally assign and transfer to the Assignee without recourse, for the benefit of the Authority, all of its rights, title, interest, duties and obligations in and to the Property Lease, the Lease, the Operating Lease and the Trust Agreement, including the obligation to pay all Lease Payments and Additional Payments to the Authority. This assignment is absolute and is presently effective. (b) In connection with the matters described in subsection (a), the Assignee agrees to establish a “Revenue Fund” meeting the description thereof set forth in Section 1.1 of the Lease, on or before the Annexation Effective Date. SECTION 2. Acceptance. (a) The Assignee hereby accepts the foregoing assignment as of the Annexation Effective Date for the benefit of the Authority, and agrees thereafter to pay the Lease Payments and Additional Payments to the Authority and assume the other obligations of the Assignor as provided in the Property Lease, the Lease, the Operating Lease and the Trust Agreement. (b) From and after the Annexation Effective Date, the Assignee will assume the responsibilities of the Assignor with respect to compliance with applicable federal requirements for the tax-exempt status of the Bonds, in accordance with the Tax Certificate dated November 14, 2014 and executed by the Assignor in connection with the Bonds. SECTION 3. Amendment. (a) The definition of “City” in Section 1.1 of the Lease and Section 1.1 of the Trust Agreement is hereby amended as follows: EXHIBIT A-3 - Page 3 of 7 3 ““City” means Santa Margarita Water District, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California.” (b) The definition of “Authorized Representative of the City” in Section 1.1 of the Lease and Section 1.1 of the Trust Agreement is hereby amended as follows: ““Authorized Representative of the City” means the General Manager or Assistant General Manager of Santa Margarita Water District, or any person designated by the General Manager or Assistant General Manager of Santa Margarita Water District to act on behalf of the General Manager or Assistant General Manager of Santa Margarita Water District.” (b) The definition of “City Council” in Section 1.1 of the Lease is hereby amended as follows: ““City Council” means the Board of Directors of Santa Margarita Water District.” (c) The definition of “Water System” in Section 1.1 of the Lease is hereby amended as follows: ““Water System” means the entire water system within the geographic boundaries of an improvement district of Santa Margarita Water District which has been previously established, or which shall be established as soon as possible hereafter, called or to be called Improvement District No. 9 (consisting of the service area annexed to Santa Margarita Water District pursuant to Resolution No. DA 20-01 dated August 19, 2021 of the Orange County Local Agency Formation Commission), including, without limitation, all real property and buildings, and including all improvements, works or facilities assessed, controlled or operated by Santa Margarita Water District on behalf of Improvement District No. 9 to provide water, as such improvements, works or facilities now exist, together with all improvements and extensions to said water system later acquired, constructed or organized.” (d) The first sentence of Section 2.1(l) of the Lease is hereby amended and restated in its entirety as follows: “The City holds a valid subleasehold interest in the Property.” (e) The notice address for the City set forth in Section 11.3 of the Lease and Section 8.8 of the Trust Agreement is hereby amended as follows: “Santa Margarita Water District 26111 Antonio Parkway Rancho Santa Margarita, California 92688 EXHIBIT A-3 - Page 4 of 7 4 Attention: General Manager” (f) The description of the Property in Exhibit A of the Lease is hereby amended to exclude Lot 2 of Parcel A and Parcel F. SECTION 4. Filings. The Assignee agrees, at its own expense, to make any filings required by The Depository Trust Company, the Internal Revenue Service, the California Debt Investment Advisory Commission and any other federal or state administrative and regulatory bodies in order to evidence the matters set forth herein. SECTION 5. Attornment. The Authority and the Trustee acknowledge and agree to the assignment set forth in Section 1 and agree to attorn to the Assignee from and after the Annexation Effective Date with respect to all matters related to the Property Lease, the Lease, the Operating Lease and the Trust Agreement. This Agreement shall confer no rights and impose no obligations upon the Authority or the Trustee beyond those expressly provided in the Property Lease, the Lease, the Operating Lease and the Trust Agreement. SECTION 6. Representations and Warranties. Each of the Assignee, the Assignor, the Authority and the Trustee represents and warrants that: (i) the execution, delivery and performance of this Agreement have been duly authorized by such party by all necessary action; (ii) this Agreement, assuming due execution by the other parties thereto, constitutes a valid, binding and enforceable obligation of such party, except as enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on remedies against public agencies in the State of California; (iii) to the best of such party’s knowledge after due inquiry, this Agreement does not violate any law, regulation or order binding on such party; (iv) no consent or authorization of any third party is required in connection with the execution, delivery or performance by such party of this Agreement or, alternatively, all such consents and authorizations have been given; and (v) such party has the power to carry out the obligations imposed on such party by this Agreement. Each of the Assignee, the Assignor and the Authority represents and warrants that there is no claim, action or proceeding pending and notice of which has been received by such party, or to the knowledge of such party, threatened against such party before any court, arbitrator or governmental agency or regulatory or administrative agency or commission challenging the validity, enforceability or legality of this Agreement. Each of the Assignor and the Authority represents and warrants that no Event of Default has occurred and is continuing under the Trust Agreement, the Property Lease, the Lease or the Operating Lease as of the date of execution and delivery of this Agreement. EXHIBIT A-3 - Page 5 of 7 5 SECTION 7. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the Assignee, the Assignor, the Authority or the Trustee shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof. The Assignee, the Assignor, the Authority and the Trustee hereby declare that they would have executed this Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 8. California Law. THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. SECTION 9. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [Remainder of Page Intentionally Left Blank] EXHIBIT A-3 - Page 6 of 7 6 IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their officers thereunto duly authorized as of the day and year first written above. SANTA MARGARITA WATER DISTRICT By:________________________________________ Its: General Manager CITY OF SAN JUAN CAPISTRANO By:________________________________________ Its: City Manager SAN JUAN BASIN AUTHORITY By:________________________________________ Its: Authorized Officer THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. By:________________________________________ Its: Authorized Officer ACKNOWLEDGED AND AGREED: WESTERN ALLIANCE BUSINESS TRUST, a Delaware statutory trust, a wholly owned affiliate of Western Alliance Bank, an Arizona Corporation, and as successor-in-interest to TPB Investments, Inc. By:__________________________________ Its: Authorized Officer EXHIBIT A-3 - Page 7 of 7 RESOLUTION NO. 21-11-2-XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO AMENDING RESOLUTION 21- 06-01-08, THE CITY’S CLASSIFICATION AND COMPENSATION PLANS WHEREAS, the City Council of the City of San Juan Capistrano is authorized and directed under the City’s Personnel Rules and Regulations to adopt and amend a Personnel Classification and Compensation Plan in order to administer the City’s Personnel Management System; and, WHEREAS, the City desires to amend the Personnel Classification and Compensation Plans; and, WHEREAS, the City’s Personnel Rules and Regulations provide that adoption or amendment of the City’s Personnel Classification and Compensation Plans shall be made by resolution of the City Council. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San Juan Capistrano does hereby; amend Resolution No. 21-06-01-08, the City’s Personnel and Classification and Compensation Plans, as follows: add one Senior Public Works Specialist position (1 FTE) at Grade 40; add one Part-Time Public Works Specialist II (.32 FTE) position at Grade 35; delete one Part-Time Accounting Specialist position; and add one Accounting Specialist (1 FTE) position at Grade 35. APPROVED AND ADOPTED this 2nd day of November, 2021. ________________ JOHN TAYLOR, MAYOR ATTEST: _____________________________ MARIA MORRIS, CITY CLERK ATTACHMENT 4