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City of Santa Ana <br />Master Agreement No. 64AO274 <br />Page 19 of 26 <br />A. General Bond Provisions <br />(1) If RECIPIENT enters into a management contract with a private party (including <br />AMTRAK) for operation of rail, ferry or other transportation services in connection <br />with PROJECT, RECIPIENT will obtain prior approval from Bond Counsel <br />acceptable to STATE that the terms of that management contract meet the <br />requirements of Internal Revenue Service Revenue Procedure 97-13 (as supplemented <br />or amended) or any successor thereto (dealing generally with guidelines for when <br />management contracts may be deemed not to create a "private use" of bond -financed <br />property) or are otherwise acceptable. RECIPIENT must also be prepared to certify, <br />upon request of STATE, that the revenues which RECIPIENT (or its manager) will <br />receive directly from the operation of transportation services in connection with <br />PROJECT (but not including any subsidy of the transportation operation from taxes or <br />other outside fund sources) are, for any fiscal year, less than the ordinary and necessary <br />expenses directly attributable to the operation and maintenance of the transportation <br />system (excluding any overhead or administrative costs of RECIPIENT). <br />(2) Except as provided in this Article III, A (1), STATE and RECIPIENT agree that any <br />costs of PROJECT acquired or constructed by RECIPIENT allocable to portions of <br />PROJECT which are subject to any property interests held by a non -governmental <br />person(s) in connection with business activities, such as easements, leases, or fee <br />interests, not generally enjoyed by the public (hereinafter referred to as "Non - <br />Governmentally Used Property" or "NUP") shall require the prior approval of STATE <br />and the State Treasurer, as applicable. If RECIPIENT receives any revenues or profits <br />from any NUP activities allowed pursuant to this Article (whether approved at this time <br />or hereafter approved by STATE), RECIPIENT agrees that such revenues or profits <br />shall be used exclusively for the public transportation services for which PROJECT <br />was initially approved, either for capital improvements or operating costs. If <br />RECIPIENT does not so dedicate those revenues or profits, a proportionate share shall <br />(unless disapproved by Bond Counsel) be paid to STATE equivalent to the Ratio of <br />STATE's percentage of participation in PROJECT. <br />(3) Notwithstanding the foregoing, RECIPIENT may be authorized to receive an <br />allocation of bond proceeds for NUP activity, in an amount not to exceed the amount <br />specified in the PROGRAM SUPPLEMENT, if RECIPIENT submits a certified bond <br />certification questionnaire to the STATE, and both the STATE and the State Treasurer <br />approve the private activities contained therein. <br />(4) RECIPIENT shall not loan any portion of bond proceeds funding PROJECT to any <br />private (including nonprofit) person or business. For this purpose, a "loan" includes <br />any arrangement that is the economic equivalent of a loan, regardless of how it is <br />named. <br />(5) Delivery by STATE of any bond funds is contingent on the sale of bonds by the State <br />Treasurer. STATE shall not be held liable for any resulting damage or penalty to <br />RECIPIENT in the event bond sales are delayed, canceled, or downsized or other <br />Revised December 23,2020 <br />