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
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F1a
City Council Agenda Report
November 2, 2021
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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,
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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,
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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
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November 2, 2021
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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
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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
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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
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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
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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
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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
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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
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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