Financial- COPS (Official Statement/Drafts)

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you on various questions raised by Mike Hansen. Mike: Thanks for your careful read of the latest draft of the financing documents. I've incorporated your comments and offer the following responses to your questions. (1) Indenture, Page 17, Section 204(E): My understanding is that the deal worked out with MBIA and Standard & Poor's is that if either the County or the Transit District backs out, the Certificates must be redeemed - the County doesn't have an option to "go it alone". However, I was not a party to the discussions on this mandatory prepayment provision. To the best of my knowledge, this was something worked out by Scott, Nancy and the folks at MBIA and S&P. I only heard about it after the fact from Scott and Nancy. I'm not sure whether it can be changed at this point - the language is already in the Preliminary Official Statement. I'd suggest that Scott and Nancy respond to the question of whether this prepayment provision can be changed at this point so that the County has the option to "go it alone" if the District backs out. (2) Title Znsurance: It is an MBIA requirement that the title policy be for the full amount of the Certificates. I've never seen them accept anything less. You do have an insurable interest in the amount of $22m even though the property is currently unimproved (but remember that an insurable interest is different from what you can actually recover under the policy, the latter being limited to actual damages which would likely be far less than $22m while the property is unimproved). (3) Indenture, Page 30, Section 402: I've added language making clear that the Trustee must disburse once the proper papers are presented. But you really shouldn't worry about the Trustee "getting in your shorts" too much. Trustee's institutionally prefer "no brainers" - that is, they don't want to (and most often absolutely refuse) to make any judgment calls, and thus prefer language like that in this section that says when you receive "X", you do "Y". (4) Billy's Certifications on the Tax Certificate: You're right that there is something of a circle here, but it's an illusory one. Here's the real deal: Billy needs to certify to me the facts upon which I base my legal opinion. I need to make sure that Billy adequately understands the law so that he has confidence that he is telling me all the relevant facts. Unfortunately, in complicated matters like tax-exempt financing tax analysis, the facts must necessarily be addressed in very technical legal jargon - there really is no other way of accurately setting them forth (believe me - what you see in the tax certificate is about as simple as we can make it without turning the tax certificate (literally) into a 500 page document that would be useless due to its density). That is why you may have noticed that my cover letter of November 24, I specifically pointed out to Billy that he should (a) carefully read the tax certificate, and (b) once he has read it carefully, call me so that I can walk him throurd party Trustee. This situation has only been reinforced in recent years as a result of the Orange County, California investment disaster. People take great comfort in the fact that a party with fiduciary responsibilities (the Trustee) is holding the money and making sure that only permitted