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<br />67 <br /> <br />Additional Obligations of the City <br />The City has existing obligations payable from its General Fund. See “THE CITY AND <br />CITY FINANCIAL INFORMATION – General Fund Obligations.” The City is permitted to enter <br />into other obligations which constitute additional charges against its revenues without the <br />consent of Owners of the Bonds. To the extent that additional obligations are incurred by the <br />City, the funds available to pay Lease Payments may be decreased. <br />The Lease Payments and other payments due under the Lease (including payment of <br />costs of repair and maintenance of the Leased Property, taxes and other governmental charges <br />levied against the Leased Property) are payable from funds lawfully available to the City. If the <br />amounts that the City is obligated to pay in a fiscal year exceed the City’s revenues for such <br />year, the City may choose to make some payments rather than making other payments, <br />including Lease Payments and Additional Rental Payments, based on the perceived needs of <br />the City. The same result could occur if, because of State Constitutional limits on expenditures, <br />the City is not permitted to appropriate and spend all of its available revenues or is required to <br />expend available revenues to preserve the public health, safety and welfare. <br /> <br />No Reserve Account <br />Neither the City nor the Authority will create or maintain a debt service reserve <br />account with respect to the Lease Payments or for the Bonds. <br /> <br />Default <br />Whenever any event of default referred to in the Lease happens and continues, the <br />Authority is authorized under the terms of the Lease to exercise any and all remedies available <br />under law or granted under the Lease. See “APPENDIX B – SUMMARY OF PRINCIPAL <br />LEGAL DOCUMENTS” for a detailed description of available remedies in the case of a default <br />under the Lease. <br />In the event of a default, there is no remedy of acceleration of the total Lease Payments <br />due over the term of the Lease. The Trustee is not empowered to sell the Leased Property and <br />use the proceeds of such sale to redeem the Bonds or pay debt service on the Bonds. <br />However, under the Indenture, the Trustee is empowered to declare the principal of all of the <br />Bonds then–outstanding, and the interest accrued thereon, to be due and payable immediately. <br />The City will be liable only for Lease Payments on an annual basis and, in the event of a <br />default, the Trustee would be required to seek a separate judgment each year for that year’s <br />defaulted Lease Payments. Any such suit for money damages would be subject to limitations <br />on legal remedies against municipalities in California, including a limitation on enforcement of <br />judgments against funds of a fiscal year other than the fiscal year in which the Lease Payments <br />were due and against funds needed to serve the public welfare and interest. <br />Abatement <br />Under certain circumstances related to damage, destruction, condemnation or title <br />defects which cause a substantial interference with the use and possession of the Leased <br />Property, the City’s obligation to make Lease Payments will be subject to full or partial <br />abatement, and this could result in the Trustee having inadequate funds to pay the principal and