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HomeMy WebLinkAboutAGENDA & MINUTES JANUARY-MARCH 1998-1999 INVESTMENT& FINANCE COMMITTEE MEMBERS 1998/99 1. Bob Spiegel Mayor Pro-Tempore City of Palm Desert 73-510 Fred Waring Drive 346-0611 Palm Desert, CA 92260 2. Ray Diaz City Manager 346-0611 City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 3. Dave Erwin City Attorney do Best, Best&Krieger 39-700 Bob Hope Drive, Suite 312 568-2611 Rancho Mirage, CA 92270 4. Murray Magloff Member 229 Camino Arroyo North 341-0118 Palm Desert, CA 92260 5. Carlos Ortega Executive Director of Redevelopment Agency City of Palm Desert 73-510 Fred Waring Drive 346-0611 Palm Desert, CA 92260 6. Jean Benson Mayor City of Palm Desert 73-510 Fred Waring Drive 346-0611 Palm Desert, CA 92260 7. Bill Veazie Member 42-900 Massachusetts Court 345-4075 Palm Desert, CA 92211 8. Jean Ruth Investment Manager 346-0611 City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 9. Paul Gibson Director of Finance/Treasurer 346-0611 City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 REVIEW PROCESS: City Attorney, Finance Director, City Manager, RDA Director& Project Manager STAFF: John Wohlmuth ACM/Director of Administrative Services Veronica Abarca Recording Secretary Investment& Finance Committee 1998/1999 Page 2 PRESS: 1. KMIR TV News Director 72-920 Parkview Drive Palm Desert, CA 92260 2. THE DESERT SUN 74-617 Highway 111 Palm Desert, CA 92260 3. KESO TV 42-650 Melanie Place Palm Desert, CA 92260 4. KPSI RADIO 2100 E. Tahquitz Canyon Way Palm Springs, CA 92262 revised 08/17/98 via FINAL PRICING SUMMARY $34,760,000 CITY OF PALM DESERT ASSESSMENT DISTRICT NO. 98-1 (THE CANYONS AT BIGHORN) REDWOOD SECURITIES GROUP, INC. KINSELL, O'NEAL, NEWCOMB & DE DIOS, INC. REDWOOD 600CALIFORNIA FRRANC S o,STREET, SUITE 415 . 954-0663 Securities Group, Inc. FAX 415 . 954-0678 January 7, 1999 Ramon Diaz City Manager City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260 Re: Transaction Summary—Assessment District 98-1 (The Canyons at Bighorn) Dear Mr. Diaz: I am pleased to enclose the Transaction Summary for the Canyons at Bighorn. The purpose of the summary is to share with you, our client, factors that lead to the successful pricing and sale of the bonds. The Canyons at Bighorn presented a special financing challenge in that the developers had a specific agenda that didn't necessarily match up with conventional assessment — district financings. We informed the staff of Bighorn Development of the effect their structuring and disclosure decisions would have on the pricing of the bonds and worked with them to evaluate the options. Through this teamwork, we were able to structure an issue that met Bighorn Development's agenda and was saleable in the marketplace. For example: - It is Bighorn Development's practice to pay off the assessment upon sale of the property to homeowners. Therefore, bondholders will never see an upside on the collateral because there would never be any houses built on the property while the bonds were in place. Despite four separate site visits by analysts from various funds, institutional buyers would not buy the bonds because of the likelihood that their bonds would be called away prior to maturity. When we realized there would be no institutional interest, we formed a selling group with whom we shared our fees, to make sure the bonds were sold in the most efficient way possible. We sold the issue to approximately 500 retail accounts. - Because Bighorn Development is a privately held company and is extremely private regarding its ownership and operations, we were obliged to issue an Official Statement with virtually no information about who owned the entity that we were raising $35 million for. There is no mention of R. D. Hubbard anywhere in the documents. - Bighorn is a project of high end homes that are rarely the primary residences of the buyers. The bond market views these homes as `discretionary purchases'. The stock January 7, 1999 Ramon Diaz Page 2 market `correction' of last summer dampened the institutional buyers' enthusiasm for this particular type of product. The market found itself more comfortable with product that addressed itself to first time, or move up home buyers; and were built by more than one development entity, or by a number of merchant builders. - Bighorn Development made the business decision to have an unusual call provision _ based on their absorption projections and the subsequent pay off of the bonds. Instead of bonds being callable at 103% for the life of the issue (or 105% for the first 10 years), Bighorn chose 103% for the first 5 years, and instead of declining (102 '/z%, 102%, 101 '/s%, 101%, 100 '/s%, 100%),the bonds were callable at par in year 6. This feature had an adverse effect on pricing, but the decision was made based on a risk/reward analysis that assumed full absorption sometime in year 6. - Because of negotiations between the City and Bighom Development, there was a six week period between the time Preliminary Official Statements were mailed to prospective buyers and the actual pricing (the normal time is 7-10 days). We were successful in dispelling rumors in the marketplace that the delay was being caused by credit problems. Overall, the financing of The Canyons at Bighorn was a success. We were able to provide financing for 300 new homes in Palm Desert, as well as a Tom Fazio golf course at a fixed interest rate of 6.122%. The bonds are in approximately 500 retail accounts, including those of investors in Bighorn Development. All but 63 acres of the development is in the Redevelopment Agency's Project Area 1 (added territory). As the project is built out over the next 5-7 years, we will see nearly $1 billion in the additional tax base. That translates into the ability to issue nearly $100 million in new money Tax Allocation bonds (accounting for the 20% Housing Set Aside and various pass-through agreements) for various projects. I'm sure I speak for my colleagues at Kinsell, O'Neal, Newcomb & De Dios when I express our sincere thanks for the opportunity to work with you and your staff once again. I hope we'll have a chance to work with you all again in the near future. S cerely, Lonnie Odom Senior Vice President Cc: Carlos Ortega Paul Gibson Pamela Newcomb TABLE OF CONTENTS TAB 1998 Assessment Bonds Cover Page Official Statement 1 Sales Memorandum 1 Interested Parties List 1 II. Preliminary Pricing Results Comparable Land Based and Revenue Bonds 2 III. Final Pricing Schedules Sources and Uses of Funds 3 Private Activity Bond Calculation 3 Gross Debt Service on New Issue 3 New Debt Service Calculation 3 Capitalized Interest Calculation 3 Arbitrage Yield Calculation 3 Total Interest Cost Calculation 3 Costs of Issuance 3 Reserve Fund Calculation 3 Recap of Trades 3 IV. The Interest Rate Environment Economic Summary 4 t NEW ISSUE— BOOK-ENTRY ONLY NONRATED In the opinion of Richards, Watson & Gershon, A Professional Corporation. Los Angeles, California, Bond Counsel, subject, however. to certain qualifications described herein, under existing law, regulations, rulings and judicial decisions, the interest on the Bonds is excluded front gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, ,such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See 'LEGAL MATTERS— Tax Exemption-herein. $34,760,000 CITY OF PALM DESERT Assessment District No. 98-1 (The Canyons at Bighorn) Limited Obligation Improvement Bonds, Series 1998 Bonds Dated: Date of Delivery Due: September 2, as shown on inside cover This cover page contains certain information for quick reference only. It is not intended to be a summary of the security or the terms of the City of Palm Desert, Assessment District No. 98-I ( The Canyons at Bighorn), Limited Obligation Improvement Bonds,Series 1998 (the"Bonds"). The Bonds are secured by and payable from Assessments levied against Assessed Parcels in Assessment District No. 98-I (The Canyons at Bighorn) (the "District"), proceeds from the sale of property for delinquent Assessment installments, and certain amounts held under the Fiscal Agent Agreement dated as of November I, 1998 (the "Fiscal Agent Agreement"),by and between the City and U.S. Bank Trust National Association (the"Fiscal Agent"). Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on this cover page not otherwise defined shall have the meanings set forth herein. The Bonds are being issued by the City of Palm Desert (the "City") pursuant to the Improvement Bond Act of 1915, constituting Division 10 of the California Streets and Highways Code,an authorizing resolution of the City,and the Fiscal Agent Agreement, for the construction and acquisition of certain infrastructure improvements of benefit to the District (the "Canyons Improvements"). Four Assessed Parcels in the District are also located in the overlapping Assessment District No.94-1 (Bighorn) and are subject to outstanding reassessment liens (the"Prior Liens") of that district which are superior to the liens of the Assessments securing the Bonds. See "SOURCES OF PAYMENT FOR THE BONDS—Priority of Assessment Lien". Interest due with respect to the Bonds is payable on March 2 and September 2 of each year, commencing March 2, 1999. The Bonds will be issued in fully registered form, without coupons, in denominations of$5,000 or any integral multiple thereof and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York. The Depository Trust Company will act as securities depository of the Bonds. Individual purchases of Bonds will be made in book- entry form only. Bond owners will not receive physical certificates representing the Bonds purchased. The Bonds are subject to optional and mandatory redemption as described herein. Additionally, it is the current practice of BIGHORN Development, LLC (the "Developer"), to prepay outstanding Assessments when the Developer sells individual homesites (as opposed to multi-homesite parcels). Such prepayments will result in mandatory redemption of Bonds (including, for redemptions on or before September 2, 2003,a redemption premium of three percent of the principal amount redeemed), as described herein. There can be no assurance that the Developer (or any other property owner) will or will not prepay any Assessments. See"THE DISTRICT—Prepayment of Assessments" herein. The Bonds are limited obligations of the City secured by unpaid Assessments levied within the District, payable in installments of principal and interest sufficient to provide for annual payments of principal of, and semiannual payments of interest on, the Bonds (see "SOURCES OF PAYMENT FOR THE BONDS" and "SPECIAL RISK FACTORS" herein). To provide funds for payment of the Bonds and the interest thereon which could result from a shortfall of revenues caused by delinquent Assessment installment payments on the Bonds, the City will establish a Reserve Fund. The Reserve Fund will be initially funded by a deposit of Bond proceeds in an amount equal to the Reserve Requirement for the Bonds. If revenues from the Assessment installments are insufficient to pay the debt service on the Bonds, the City is instructed in the Fiscal Agent Agreement to transfer into the Redemption Fund from the Reserve Fund sufficient funds to cover the deficiency. There is no assurance that funds will be available for this purpose. THE CITY HAS DETERMINED NOT TO OBLIGATE ITSELF TO ADVANCE ANY AVAILABLE CITY FUNDS TO COVER ANY DEFICIENCY WHICH MAY OCCUR IN THE REDEMPTION FUND BY REASON OF THE FAILURE OF A PROPERTY OWNER TO PAY AN ASSESSMENT INSTALLMENT. Neither the faith and credit nor the taxing power of the City, the County of Riverside, the State of California or any political subdivision thereof is pledged to the payment of the Bonds. The information set forth in this Official Statement, including information under the heading "SPECIAL RISK FACTORS", should be read in its entirety. The Bonds are offered when, as and if issued and delivered to the Underwriters subject to the approval as to their legality of Richards,Watson&Gershon,A Professional Corporation, Los Angeles,California, Bond Counsel,and certain other conditions. Certain other matters will be passed upon for the Underwriters by their counsel, Fulbright & Jaworski LLP, Los Angeles, California. It is expected that the Bonds in definitive form will be available for delivery through the facilities of DTC in New York, New York on or about December 16, 1998. REDWOOD SECURITIES GROUP, INC. KINSELL, O'NEAL, NEWCOMB & DE DIOS, INC. The date of this Official Statement is December 4, 1998. Redwood Securities Group Inc. SALES MEMORANDUM $34,760,000 CITY OF PALM DESERT ASSESSMENT DISTRICT NO. 98-1 (THE CANYONS AT BIGHORN) LIMITED OBLIGATION IMPROVEMENT BONDS, SERIES 1998 Dated Date: December 16, 1998 Final Maturity: September 2, 2018 Settlement: December 16, 1998 Ratings: Non Rated Reserve Fund: The reserve fund will be fully funded at maximum annual debt service($3,081,370). Registration: DTC only in$5000 denominations Optional Redemption: First five years @ 103%, at par from years 6 through maturity. It has been the practice of Bighorn Development to prepay the bonds upon the sale of a homesite. — The Project: The Canyons at Bighom is the second phase of an exclusive, gated, golf-oriented community located in south Palm Desert. The first phase of Bighorn, the Mountains community, consists of 300 homesites priced from $300,000 to over $3 million. The Developers have sold more than 207 of the 300 homesites in the Mountains community with approximately 127 homes either finished, or under construction. Many of the homesites surround an Arthur Hills designed golf course, which hosted the "Skins Game" from 1992 through 1995. The developers sell the homesites to merchant builders and homeowners from around the world. Custom homes at Bighorn sell anywhere from $800,000 to well over $5 million. (Visit the website @ www.bighomgolf.com) The Canyons at Bighom is located directly across Highway 74 from the Mountains at Bighorn. It consists of 275 homesites and a Tom Fazio designed golf course. Construction of the first of the homesites will be completed in early 1999. The golf course will open in December 1998. Residents of The Mountains at Bighom _ and The Canyons at Bighorn, who have golf memberships, will have access to the 40,000 square foot clubhouse and the two courses. The bonds will be used to fund construction and acquisition of the following infrastructure improvements: Water supply improvements including water mains, fire hydrants; pump stations, water storage facilities. Sewer distribution improvements including construction and installation of sewer mains and appurtenant facilities. Dry utility improvements including trenching for gas/electric/telephone/cable television facilities. Highway 74 Street improvements including widening, parkway and easement grading, traffic signals, striping, street lights, signs, fencing and construction easements and rights-of- way. The bond proceeds will be used along with approximately $37 million of developer equity and a $15 million line of credit from Winmar Oregon, Inc. (a subsidiary of Safeco Insurance) to complete development of the entire 575 homesite, two golf courses, gated community. It is anticipated that the entire project will be built and completely sold out by the year 2005. Appraisal: According to the appraisal by MacKenzie,Wagner & Associates, dated September 1, 1998; the aggregate retail value is $193,000,000, with $18,000,000 attributed to the golf course and the remaining $175,000,000 to the 275 homesites. Coverage ranges from 2.19 to 12.83 to 1. Overall value to lien is approximately 5.30 to 1.0. There has never been an assessment delinquency in Bighorn. Bond Counsel: Richards, Watson& Gershon—Los Angeles Fiscal Agent: U.S. Bank Trust National Association—Los Angeles — $34,760,000 CITY OF PALM DESERT Assessment District No. 98-1 (The Canyons at Bighorn) — Limited Obligation Improvement Bonds Series 1998 — MATURITY SCHEDULE Due - Principal Interest Due Principal Interest Sept.2nd Amount Rate Price Sept.2nd Amount Rate Price — 2000 $1,100,000 4.60% 100% 2007 $1,550,000 5.50% 100% 2001 1,150,000 4.80 100 2008 1,635,000 5.60 100 2002 1,205,000 5.00 100 2009 1,730,000 5.70 100 2003 1,265,000 5.10 100 2010 1,830,000 5.75 100 2004 1,330,000 5.20 100 2011 1,935,000 5.85 100 2005 1,400,000 5.30 100 2012 2,045,000 5.90 100 2006 1,470,000 5.40 100 2013 2,165,000 5.95 100 — $12,950,000 6.05%Term Bonds due September 2, 2018—Price 100% CITY OF PALM DESERT ASSESSMENT DISTRICT NO. 98-1 (THE CANYONS AT BIGHORN) LIMITED OBLIGATION IMPROVEMENT BONDS, SERIF 1998 CITY COUNCIL Robert A. Spiegel Mayor Buford Crites Mayor Pro-Tempore Jean M. Benson Councilmember James Ferguson Councilmember Richard S. Kelly Councilmember CITY STAFF Ramon A. Diaz City Manager Carlos L. Ortega Executive Director, Redevelopment Agency Sheila R. Gilligan City Clerk/Director of Community Affairs _ Paul Gibson Finance Director/Treasurer David J. Erwin City Attorney Richard J. Folkers Assistant City Manager/Public Works Director John M. Wohlmuth Assistant City Manager/Director of Administration David Yrigoyen Redevelopment Agency Manager Dennis Coleman Redevelopment Finance Manager PROFESSIONAL SERVICES Bond Counsel Richards,Watson & Gershon,A Professional Corporation Los Angeles, California Underwriters' Counsel Fulbright&Jaworski L.L.P. Los Angeles, California Assessment Engineer MBIA/MuniFinancial Temecula, California Fiscal Agent U.S. Bank Trust National Association Los Angeles, California Financial Advisor MuniSoft Modesto, California Appraiser MacKenzie,Wagner &Associates Palm Desert, California 2 COMPARABLES The following list contains comparable issues that were in the marketplace; at or near the time we priced The Canyons at Bighorn. There are reasons for the differences in the various pricings: Folsom Community Facilities District — This was a Special Tax Bond (Mello-Roos) wherein the scheduled tax collections were equal to 112% of the required debt service as opposed to a 1 to 1 basis with an assessment district. Furthermore, the issue has diversity among the property ownership among a group of merchant builders. No merchant builder owned more than 36% of the district and the tax stayed in place when the homes were built, therefore increasing the bondholder's security. Various developers included Lennar Homes, which is listed on the New York Stock Exchange, and The Spanos Company, one of California's premier homebuilders. The issue also had standard call provisions. Vallejo (Hiddenbrooke) — This is a refunding of an assessment bond issue that has seen no development in its 10 year life. There was doubt in the marketplace in the ability of the new developers (a foreign company) to develop upscale housing around a golf course in Vallejo. To its credit, the refunded issue had never suffered a delinquency. Because of the high yield, the standard call provisions and the fact that it owned some of the refunded bonds, Franklin Fund bought most of the refunding term bonds. Given the `story bond' nature of the issue, the discount was $22.50 per $1000 versus $15 per $1000 for Bighorn. Salinas (Bella Vista III) — This is an assessment bond issue for phase 3 of a successful entry-level housing development in Salinas. This project is almost the antithesis of Bighorn in structure (call provisions), market (entry level — mandatory versus discretionary purchase) and diversity of ownership. Also, there is a history of success with similar, adjacent product, and the bonds tend to stay in place when the houses are built, so the credit improves. There is diversity among the ownership among the merchant builders. These differences are reflected in the interest rates. COMPARABLES- City of Palm Desert Assessment District No. 98-1 (The Canyons at Bighorn) Limited Obligation Improvement Bonds, Series 1998 Folsom Issue Canyons at Community Vallejo Salinas Bighorn Facilities District Hiddenbrooke Bella Vista III 11 Sale Date 12/2/98 12/14/98 11/10/98 11/3/98 Par Amount $35,130,000 $11,835,000 $28,085,000 $6,300,000 U/W Redwood/Kinsell WCH MPA S&Y Rating N/R N/R N/R N/R Type 1915 SPL Tax 1915 1915 Coverage 5.3 x 1 3.09 x 1 3 x 1 3.89 x 1 Concentration 1PO 5PO 3P0 1PO Notes 0%Devel 0%Devel 0%Devel 0%Devel 2000 4.600 4.350/4.450 3.900 2001 4.800 4.550/4.650 4.750 4.200 2002 5.000 4.750/4.850 5.000 4.350 2003 5.100 4.850/4.950 5.000 4.500 2004 5.200 4.950/5.050 5.250 4.600 2005 5.300 5.050/5.150 5.500 4.700 2006 5.400 5.150/5.250 5.750 4.800 2007 5.500 5.250/5.350 4.900 2008 5.600 5.350/5.450 5.000 2009 5.700 5.450/5.550 5.100 2010 5.750 5.500/5.600 5.200 2011 5.850 6.000 5.300 2012 5.900 5.400 2013 5.950 5.500 2014 5.600 2015 5.600 2016 6.250 2017 2018 6.050 5.650/5.750 2019 2020 2021 2022 5.700 2023 5.750/5.850 2024 2025 2026 2027 2028 2029 2030 2031 6.500 3 JAN. -06' 99(WED) 13:38 MUNISOFT TEL:503 472 6361 P. 001 City of Palm Desert California — The Canyons at Bighorn Sources and Uses of Funds-Final Numbers Total Par Amount of Bonds 34,700,000.00 Bond Premium/(Discount) 0.00 Payoff of CVWD Parcel 88,071.83 Total Sources of Funds 34,846,0 1.8 Uses of Funds — Sewer(Includes 10%Contingency) 719,400.00 Water(Includes 10%Contingency) 231,000.00 — Construct Clubhouse Service 11,500.00 CV ND Access Road&Reservoir(840&940) 330,000.00 Zone 840 Improvements 1,363,328.00 Zone 940 Improvements 1,895,532.00 — Zone 1040 Improvements 1,149,589.00 Construct Pressure Reducing Station(940-1040) 201,250.00 Pressure Reducing Station Enclosure(940.1040) 28,750.00 840/940 Reservoir&Booster 3,507,500.00 — Pressure Reducing Station(840-940) 143,750.00 Water Infrastucture Improvements 2,899,380.00 Sewer Improvements 4,307,780.00 Dry Utilities Infrastructure 1,420,482.00 - Off-site Domestic Well Improvements 598,000.00 Highway 74 Improvements 1,247,951.00 Highway 74 Water Crossings 328,900,00 — Conditions of Development 154,860.00 Highway 74 Utiity Crossings 62000,00 Park and Recreation Improvements 170,975.00 Traffic Signalization Improvements 31,200.00 — Drainage Facility Improvements 2,103,434.00 Total Construction Costs 22,708,445.00 Engineering Design,Geotechnical,Const.Mgmt 5,700,447.00 — Plan Check and Inspection Fees(Canyons) 1,188,598.00 Total Incidental Fees 8,889,043.00 Reserve Fund 3,081,370.00 Underwriter's Discount 521,400.00 Costs of issuance 283,148.87 Capitalized Interest(Net of Eamhigs) 1,384,686.76 — Other Use of Funds 0.00 Total Uses of Funds 34,846,071.83 _ Adjustment 0.00 Reserve Fund Calculation Amount MADS 3,081,370.00 10.00% 3,478,000.00 1.25X Average Ann DS 3,744,094.85 Run Date December 9,1998 Run Time 8:00 AM JAN. -06' 99 (WE0) 13=39 MUNISOFT TEL' 503 472 6361 P. 002 City of Palm Desert,California The Canyons at Bighorn 5%Private Activity Bond CNculation Category Amount Percent — Construct Clubhouse Service 11,500.00 Dry Utilities Infrastructure 1,420,482.00 Utility Relocates 48,000.00 Total Private Activity Projects 1,477,982.00 Net Proceeds from Issue 29,575,488.00 4.9973% JAN. -06' 99(WED) 13: 39 MUN I SOFT TEL:503 472 6361 P. 003 Gross Debt Service on New Issue Period Total Annual Total Date Principal Rate Interest Debt Service Debt SeMce 12/16/96 3ry99 418,020 418,020 92/99 0 0.000 990,048 880,048 1,408,068 3/2/00 980,048 900,048 „_ 9/2/00 1,100,000 4.600 990,048 2,090,048 3,060,095 32/01 064,748 964,748 92/01 1,150,000 4.800 964,748 2,114,748 3,078,495 32/02 937,148 937,148 - 92J02 1,205,000 5.000 937,148 2,142,148 3,079,295 3/2/03 907,023 907,023 92/03 1,285,000 5.100 907,023 2,172,023 3,079,045 32J04 874,785 874,765 92/04 1,330,000 5.200 874,765 2,204,785 3,079,530 3/2/05 840,185 840,185 92/05 1,400,000 5.300 840,185 2,240,185 3,080,370 3/2/06 803,085 803,085 9/2/06 1,470,000 5.400 803,085 2,273,065 3,076,170 32/07 783,395 763,395 92/07 1,550,000 5.500 763,395 2,313,395 3,076,790 ,_ 3/2/D8 720,770 720,770 9/2/08 1,635,000 5.800 720,770 2,355,770 3,078,540 32/09 674,990 674,990 92/09 1,730,000 5.700 574,990 2,404,990 3,079,980 - 312/10 625,685 625,685 9/2/10 1,830,000 5.750 825,685 2,455,685 3,081,370 32/11 573,073 573,073 92/11 1,935,000 5.850 573,073 2,508,073 3,081,145 32/12 516,474 516,474 92/12 2,045,000 5.900 518,474 2,561,474 3,077,948 32/13 456,148 458,146 - 92/13 2,185,000 5.950 456,148 2,621,146 3,077,293 32f14 391,738 391,738 92/14 2,295,000 6.050 391,738 2,688,738 3,078,475 32/15 322,314 322,314 - 92/15 2,435,000 6.050 322,314 2,757,314 3,079,628 32/18 248,655 246,655 02/16 2,580,000 6.050 248,655 2,828,855 3,077,310 3/2/17 170,610 170,610 9/2/17 2,735,000 6.050 170,610 2,805,810 3,076,220 3/2/18 87,878 87,876 9/2/18 2,905,000 8.050 87,878 Z992,876 3,080,753 - 34,760,000 25,145,518 59,905,518 59,905,518 JAN. -06' 99(WED) 13: 39 MUNISOFT TEL.503 472 6361 P. 004 - Net Debt Service Calculation ,- New Issue Less 4.00% New Issue New Issue 8.12241% Semiannual Capltslzed Less:RF Semi-Ann Net Annual Net Present Date Debt Service Interest Earnings Debt Service Debt Service Value 12/16/98 - 3/2/99 418,020 418,020 28,020 (28,020) (25,891) 92/99 990,048 990,048 61,627 (81,827) (87,648) (59,040) 3/2/00 990,048 81,627 928,420 863,028 92/00 2,000,048 61,627 2,028,420 2,958,840 1,829,545 32/01 984,748 61,627 903,120 790,379 02/01 2,114,748 61,027 2,053,120 2,958,240 1,743,449 32/02 937,148 81,627 875,520 721,383 92/02 2,142,148 01,027 2,080,520 2,956,040 1,663,322 32/03 907,023 01,627 845,395 655,798 92/03 2,172,023 01,827 2,110,395 1955,790 1,586,485 32/04 874,785 81,827 813,138 593,858 - 92/04 2,204,765 61,027 2,143,138 2,956,275 1,518,705 32/05 840,185 61,627 778,558 535,327 9/2/05 2,240,185 81,827 2,178,558 2,957,115 1,453,457 32/08 803,085 01,627 741,458 479,981 92/08 2,273,085 61,627 2,211,458 2,952,915 1,389,061 32/07 763,395 61,827 701,788 427,701 92/07 2,313,395 61,827 2,251,768 2,953,535 1,331,606 _ 3/2/08 720,770 81,627 859,143 378,213 92/08 2,355,770 61,627 2,294,143 2,953,285 1,277,268 3/2/09 874,990 81,627 613,383 331,348 92/09 2,404,990 81,827 2,343,383 2,956,725 1,228,318 - 3/2/10 825,885 81,627 584,058 286,879 92/10 2,455,685 81,027 2,394,058 2,958,115 1,181,450 32/11 573,073 61,027 511,445 244,898 92/11 2,508,073 81,627 2,446,445 2,957,890 1,138,648 32/12 516,474 01,627 454,840 205,050 92/12 2,561,474 81,627 2,499,848 2,954,893 1,093,486 32/13 458,146 81,627 394,519 167,445 92/13 2,821,148 61,627 2,550,519 2,954,038 1,054,066 32/14 391,738 81,627 330,110 131,909 92/14 2,686,738 81,627 2,625,110 2,955,220 1,017,810 32/15 322,314 61,627 260,688 98,071 92/15 2,757,314 81,027 2,695,888 2,958,373 984,007 32/16 248,1355 61,1327 187,028 66,243 92/16 2,828,855 61,627 2,767,028 2,954,055 950,937 3/2/17 170,810 61,627 108,983 36,341 - 92/17 2,905,1310 61,627 2,843,983 2,952,965 920,184 32/18 87,876 01,827 28,249 8,241 92/18 2,992,878 3,142,997 (150,121) (123,872) (45,730) 59,905,518 1,408,065 5,510,859 52,986,591 52,986,591 30,253,412 JAN. -06 99 (WE0) 13:40 MUNI SOFT TEL=503 472 6361 P. 005 City of Palm Desert,California The Canyons at Bighorn Capitalized Interest Calculation 3.00% Beginning Plus: Cap. Int. Less: DS Ending Date Balance Int, Earnings Payment Balance 12/16/08 1,384,868.76 1,384,060.76 03/02/99 1,384,666.75 8,789.56 (418,020.06) 975,416.26 09/02/90 975,416.26 14,531.24 (990,047.50) 0.00 Totals 23,400.80 (1,408,087.58) JAN. -06' 99 (WED) 13:40 MUN ISOPT TEL:503 472 6361 P. 006 - City of Palm Desert,California — The Canyons at Bighorn Arbitrage Yield Calculation Delivery Date 1216/96 Yield 5.838600 Bond Proceeds 34,760,000.00 — Plus:Accrued Int. 0.00 Less:UD 0.00 Less:COI 0.00 Premium/(Discount) 0.00 Total Target 34,760,000.00 DATE FUTURE VALUE PRESENT VALUE _ 12/16/98 (34,760,000.00) (34,760,000.00) 3/2/99 418,020.08 412,972.07 9/2/99 990,047.50 950,348.23 _ 3/2/00 990,047.50 923,391.85 9/2/00 2,090,047.50 1,894,040.43 3/2/01 964,747.50 849,473.68 9/2/01 2,114,747.50 1,809,247.41 — 3/2/02 937,147.50 779,023.51 912/02 2,142,147.50 1,730,195.43 322/03 907,022.50 711,814.82 _ 9/2103 2,172,022.50 1,656,214.04 3/7J04 874,765.00 848,107.00 9/2/04 2,204,755.00 1,587,160.32 3/2/05 840,185.00 587,674.15 — 9/2105 2,240,185.00 1,522,469.94 3/2J06 803,085.00 530,309.55 9/2/08 2,273,085.00 1,458,434.30 — 312/07 763,395.00 475,908.74 912/07 2,313,395.00 1,401,287.78 3/2/08 720,770.00 424,206.60 9/2J08 2,355,770.00 1,347,152.56 3/7J09 674,990.00 375,045.89 9/2/09 2,404,990.00 1,298,385.09 3/2/10 625,685.00 328208.00 — 9/2/10 2,455,685.00 1,251,610.86 3/7J11 573,072.50 283,798.01 9/2/11 2,508,072.50 1,206,821.48 _ 3/2/12 516,473.75 241,465.10 912/12 2,561,473.75 1,163,587.93 3/2/13 456,146.25 201,333.75 9/2/13 2,621,146.25 1,124,105.06 — 3/2/14 391,737.50 153,235.26 9/2114 2,686,737.50 1,087,795.44 3/2/15 322,313.75 128,795.55 — 9/2115 2,757,313.75 1,053,936.72 3/2J16 248,655.00 92,34825 9/2/16 2,828,655.00 1,020,738.94 3/2/17 170,610.00 59,819.44 9/2/17 2,905,610.00 989,870.48 3/2/18 87,87825 29,088.13 9/2/18 2,992,87625 962,578.51 25,145,517.56 0.00 JAN. -06' 99 (WED) 13:41 MUNI SOFT TEL'503 472 6361 P. 007 City of Palm Desert,California — The Canyons at Bighorn All-In TIC Calculation Delivery Date 12/16/96 Yield 6.122412 Bond Proceeds 34,760,000.00 — Plus;Accrued lit. 0.00 Lew:UD (521,400.00) Len:COI (285,177.84) Premium/(Discount) 0.00 — Total Target 33,953,422.16- DATE FUTURE VALUE PRESENT VALUE — 12/16/98 (33,953,422.16) (33,953,422.16) 3/2/99 418,020.06 412,731.89 9/2/99 990,047.50 948,487.73 _ 312100 990,047.50 920,314.99 9/2/00 2,090,047.50 1,885,130.41 3/2/01 964,747.50 844,313.40 92/01 2,114,747.50 1,795,780.79 3/2/02 937,147.50 772,160.41 9/2/02 2,142,147.50 1,712,591.29 32/03 907,022.50 703,602.22 — 9/2J03 2,172,022.50 1,634,85122 312/04 874,765.00 638,866.47 92/04 2,204,765.00 1,562,376.80 32/05 840,185.00 577,701.08 — 9/2/05 2,240,185.00 1,494,572.26 3/2/06 803,085.00 519,875.47 9/2/06 2,273,085.00 1,427,770.05 — 32/07 763,395.00 465,261.03 9/2/07 2,313,395.00 1,368,049.91 3/2/08 720,770.00 413,574.38 9/2/08 2,355,770.00 1,311,579.42 — 3/2/09 674,990.00 364,639.59 92/09 2,404,990.00 1,260,621.00 3/2/10 625,885.00 318,223.16 — 9/2/10 2,455,685.00 1,211,862.87 3/2/11 573,072.50 274,406.99 9/2/11 2,508,072.50 1,165,250.46 _ 3/2/12 515,473.75 232,832.40 9/2/12 2,561,473.75 1,120,44320 32/13 455,146.25 193,601.55 92/13 2,821,146.25 1,079,445.57 — 3/2/14 391,737.50 156,53427 92/14 2,686,737.50 1,041,703.90 32/15 322,313.75 121,255.84 — 92/15 2,757,313.75 1,006,502.36 3/2/16 248,655.00 85,070.53 92/16 2,828,655.00 972,116.13 32/17 170,610.00 56,891.51 9/2/17 2,905,610.00 940,123.80 32/18 87,87625 27,588.24 92/18 2,992,87625 911,687.59 25,952,095.40 0.00 d+.N. -Ub' 99lWt U, 13:41 %UN1bUbl ltL:au.) 41Z OJO, r. coo City of Palm Desert, California Costs of Issuance(Canyons) Item Amount Bond Counsel 93,500.00 Financial Advisor 48,500.00 Assessment Engineer 22,000.00 Fiscal Agent 7,500.00 City Administration Fee 50,000.00 Printing 25,000.00 Bighorn Reimbursement 32,000.00 Regulatory/CUSIP 2,000.00 Misc. 2,646.87 Total 283,148.87 JAN. -06' 99(WED) 13:41 MUNISOFT TEL:503 472 6361 P. 009 RESERVE FUND CALCULATION DOLLAR AMOUNT Qaatttimsaaaatttttataatisasssia MAXIMUM ANNUAL DEBT SERVICE 3,081,370.00 10.00% 3,476,000.00 1.25 • AVERAGE ANNUAL 3,744,094.05 xxxtatsixatttaa_-xxotsxatsatxxtax DATED DATE 12/16/98 - DELIVERY DATE 12/16/98 YIELD CALCULATIONS axxtttatxasitittastatataatittastt '— PAR AMOUNT OF BONDS 34,760,000.00 PLUS ACCRUED INTEREST 0.00 LESS INSURANCE PREMIUM 0.00 LESS SURETY BOND PREMIUM 0.00 LESS UNDERWRITER'S DISCOUNT 0.0D LESS COSTS Of ISSUANCE 0.00 LESS DISCOUNT/PLUS PREMIUM 0.00 - suave sxaatttaaxttattattttisaataatax TARGET AMOUNT 34,760,000.00 - ARBITRAGE YIELD 5.8386005 tmittsst-Yataattttaaaatattataatat — TOTAL INTEREST 25,145,517.56 PLUS UNDERWRITER'S DISCOUNT 521,400.00 PLUS DISCOUNT/LESS PREMIUM 0.00 _ xixtttitittaatxataataataaatstatsa TARGET AMOUNT 25,666,917.56 NET INTEREST COST 011C) 5.9904599 BOND YEARS 428,463.22 • AVERAGE LIFE 12.3263298 AVERAGE COUPON 5.8687692 DENOMINATION 5,000 ▪ COMPOUNDING SEI DAY BASIS 30/360 — 2 2 » co N CO o a / / / ° ) 0 CI o k of CD ` „ d k N k N § ° / en m r CO— co en O § n Q - § § — a 0 8 to ° . °oe o CO ■ 0 ) 0ceaonoi — I- m ® ® 7 1.g to N.94:_ N N 2 ° CO } _ to " CO - 5 0 in in 0 CO VI IX ; ¥ - - § 0 ) m N { § ƒ mk § 2 8 m — ak o 0 0 } § a ie � \ . ao. m co _ oz Ic " ` ` ° " _ § _ § e o § cn ; _ - •- © 2 = ) 0 \ E r0 - © 8_ 2 § ) 0k \ " . ) fI � - ; a. | o Z. \ _ -0 — % § J 2 = c ) k # ■ ) el § « � = ® ; Ts - § 0 a ) — � re J 0 m a 4 0 ECONOMIC SUMMARY The following time frame and events played a role in the pricing decisions that were made on November 30 and December 1, 1998. November 9— 13 The week's improving market attracted more than $5.6 billion in bond sales. The 30-year Treasury dropped 15 basis points to yield 5.24%. The Bond Buyer 20 General Obligation Index closed at 5.04% unchanged from the prior week. Comparable transactions in the California marketplace include a $27.9 million Revenue Bond refunding for Harbor Bay Isle in Alameda and an assessment district refunding in Clovis. Vallejo's Hiddenbrooke Assessment District refunding enters the marketplace (see Section 2). November 16-20 The Fed cut the funds rate another quarter point, and after a small surge, market prices retreated. The 30-year Treasury dropped to 5.22% The Bond Buyer 20 Bond Index was fairly steady at 5.03%. Redwood Securities Group priced and sold a $26.7 million non-rated land based refunding transaction for the City of Livermore November 23-27 The market as relatively quiet during Thanksgiving week. The market is stalled waiting for the following week's issues. The 30-year Treasury fell further to 5.18%. November 30-December 4 California bond offerings exceeded $384 million during the week of November 30, due in part, to low interest rates and pent up demand in the timeframe after Thanksgiving and before Christmas. Despite four separate site visits by analysts for institutional investors, there is no interest from the larger institutions. The reasons vary from objections to the call provisions, to Bighorn's penchant for calling the bonds upon transfer of property, to no enough information about the developer, to discomfort with the high end, discretionary nature of the property. Bond buyers are demanding higher interest rates as compensation for the unconventional nature of the transaction. There is strong interest in the serial bonds and the term bond from Redwood and Kinsell clients, as well as members of the selling group. There are firm orders for the term bonds from Redwood and Kinsell clients at 6.10%. There is also interest from selling group members at 6.05% with a half point concession. The decision is made to go with 6.05%. The total concessions to the selling group is $92,331. The issue is sold out. INVESTMENT 8t FINANCE COMMITTEE ATTENDANCE LIST July 1998 - June 1999 NAMES Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 15 19 16 21 18 16 20 17 17 21 19 16 ............................... ................................ ............................... ............................... ................................ ............................... ................................ Jean Benson T*leetings....:;;1 X A Buford Crites takes over as Mayor Pro-Tempore Buford Crites iiNginiElfl A X A X V Ray Diaz »:Post0000.01; X X X X X X N, ............... ........ .. Dave Erwin A X X A X X N/ Paul Gibson X X X X X X Mayor Spiegel EM, AXX X X X A ..........................: Murray Magloff X X X X X X 'N/ Carlos Ortega X X A X X X t�Znlud Bill Veazie X X E X X X \I Thomas Jeffrey X X X X X X \ Russell Campbell �� ' ; s X X \ V Members: 10 Quorum: 6 E: Excused A: Absent X: Present Revised 2/17/99 vla