An Election was held in the Santa Barbara Secondary/High School District (the “District”) on March 7, 2000 for the issuance and sale of general obligation bonds of the District for various purposes in the maximum amount of $67,000,000 (the “Authorization”).
The District has issued bonds under the Authorization, including its par amount of $21,000,000 of Santa Barbara High School District, Santa Barbara County, California, General Obligation Bonds, Election of 2000, Series C (the “2000 Series C Bonds”).
On May 7, 2013 the District adopted Resolution No. 2012/2013-50, pursuant to which the Board of Education previously authorized the issuance of general obligation refunding bonds in an aggregate principal amount not-to-exceed $17,000,000 (the “Refunding Bonds”) in order to refund all or a portion of the outstanding 2000 Series C Bonds (so refunded, the “Refunded Bonds”) The District now desires to approve the forms of a Purchase Contract, Preliminary Official Statement and Escrow Agreement in connection with the issuance of the Refunding Bonds, as further described below.
(a) Form of Purchase Contract. Pursuant to the Purchase Contract, Piper Jaffray & Co. will agree to buy the Refunding Bonds from the District. All the conditions of closing the transaction are set forth in this document, including the documentation to be provided at the closing by various parties. Upon the pricing of the Refunding Bonds, the final execution copy of the Purchase Contract will be prepared following this form.
(c) Form of Preliminary Official Statement. The Preliminary Official Statement (“POS”) is the offering document describing the Refunding Bonds which may be distributed to prospective purchasers of the Refunding Bonds. The POS discloses information with respect to among other things (i) the proposed uses of proceeds of the Refunding Bonds, (ii) the terms of the Refunding Bonds (interest rate, redemption terms, etc.), (iii) the bond insurance policy for the Refunding Bonds, if any, (iv) the security for repayment of the Refunding Bonds (the tax levy), (v) information with respect to the District’s tax base (upon which such ad valorem taxes may be levied), (vi) District financial and operating data, (vii) continuing disclosure with respect to the Refunding Bonds and the District (described in further detail below), and (viii) absence of litigation and other miscellaneous matters expected to be of interest to prospective purchasers of the Refunding Bonds. Following the pricing of the Refunding Bonds, a final Official Statement for the Refunding Bonds will be prepared, substantially in the form of the POS.
(d) Form of the Continuing Disclosure Certificate. The form of the Continuing Disclosure Certificate can be found in APPENDIX C to the POS. Effective July 3, 1995, all underwriters of municipal bonds, are obligated to procure from a bond issuer a covenant that such public agency will annually file “material financial information and operating data with respect to the District” through the web-based Electronic Municipal Market Access (“EMMA”) system maintained by the Municipal Securities Rulemaking Board (which is the federal agency that regulates “broker-dealers,” including investment bank firms that underwrite municipal obligation issuance). This requirement is expected to be satisfied by the filing of the District’s audited financial statements and other operating information about the District, in the same manner the District has filed in connection with prior bond issuances. The purpose of the law is to provide investors in the Refunding Bonds with current information regarding the District. Similar laws have governed the corporate debt market for many years.
(e) Escrow Agreement. Pursuant to the Escrow Agreement, proceeds from the sale of the Refunding Bonds in an amount sufficient to redeem the outstanding Refunded Bonds will be deposited in an escrow fund (the “Escrow Fund”) held by U.S. Bank National Association, (acting as “Escrow Agent”). The monies in the Escrow Fund will be used by the Escrow Agent to refund the Refunded Bonds on or about August 1, 2015. As a result of the deposit and application of funds so provided in the Escrow Agreement, the Refunded Bonds will be defeased and the obligation of Santa Barbara County to levy ad valorem taxes for payment of the Refunded Bonds will cease.