21-1101_SANTA MARGARITA WATER DISTRICT_Assignment, Assumption Agreement (SJBA Bonds)Stradling Yocca Carlson & Rauth
Draft of 11/4/21
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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
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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
(as such term is defined below) as 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, dated as of January 21, 2020, by and between the Assignee and the
Assignor, as the same 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, dated as of December 1, 2002
(collectively, the “Operating Lease”).¶
H. Pursuant to the LAFCO Resolution, the Assignee will assume all obligations of the
Assignor under the Property Lease, the Lease, the Operating Lease and the Trust Agreement on the
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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; and (ii) Parcel F (Kinoshita) (“Parcel F” and, together with Lot 2 of Parcel A, the
“Excluded Parcels”), which will be retained by the Assignor.
J. The parties hereto desire to amend the Property Lease, the Lease, the Operating
Lease and the Trust Agreement to reflect the Assignee’s assumption of the obligations of the
Assignor under 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.
K. Capitalized terms that are used herein and not otherwise defined have the meanings
that are assigned to such terms under the Lease or the Trust Agreement, as applicable.
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:
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““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.”
(c) 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.”
(d) 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
boundaries of a geographic area within the boundaries of Santa
Margarita Water District which will be designated after the date
hereof as 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 within 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.”
(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
Attention: General Manager”
(f) The description of the Property in Exhibit A of the Operating Lease, the Property
Lease and the Lease is hereby amended to exclude the Excluded Parcels.
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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.
Each of the Authority, the undersigned holder of all of the Bonds 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. Western Alliance
Business Trust, a Delaware statutory trust, a wholly-owned affiliate of Western Alliance Bank, an
Arizona corporation, by its signature hereto, hereby certifies that it is the holder of 100% of the
Bonds and waives any applicable notice periods for the amendments included herein.
SECTION 6. Representations and Warranties.
Each of the Assignee, the Assignor and the Authority 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.
In accordance with Section 6.13 of the Operating Lease and Section 7.14 of the Lease, each
of the Assignee, the Assignor and the Authority represents and warrants that: (1) the exclusion of
the Excluded Parcels from the Property Lease, the Lease and the Operating Lease, which are being
assigned hereunder, will not impair the operation of the Water System or the Project (as such term is
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defined in the Operating Lease) or any part thereof which is necessary to secure adequate water
services for the community; and (2) the Excluded Parcels are not needed for the efficient and proper
operation of the Water System or the improvements on the Project.
Western Alliance Business Trust, a Delaware statutory trust, a wholly-owned affiliate of
Western Alliance Bank, an Arizona corporation, the holder of 100% of the Bonds, by its signature
hereto, hereby acknowledges and agrees that: (I) the exclusion of the Excluded Parcels from the
Property Lease, the Lease and the Operating Lease, which are being assigned hereunder, shall
constitute a sale of the Excluded Parcels to the Assignor within the meaning of the Operating Lease
and the Lease; and (II) the consideration for such sale consists of the assignment by the Assignor to
the Assignee pursuant to Section 1 hereof, and there are no proceeds of such sale to be deposited in
any funds or accounts established pursuant to the Operating Lease, the Lease, the Property Lease or
the Trust 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, 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]
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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:________________________________________
Name: Norris Brandt
Its: Administrator
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By:________________________________________
Its: Authorized Officer
___________________________________________________________________________________________________________________________________________________________________________
General Manager
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