Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
2003-04-23 IFC Regular Meeting Agenda Packet
r••"' '••, CITY OF PALM DESERT 41 INVESTMENT & FINANCE COMMITTEE nal _ - AGENDA AthI h : April 23, 2003, 2:00 p.m. by► � y 3i'fa` ` North Wing Conference Room CALL TO ORDER II. ROLL CALL III. ORAL COMMUNICATIONS A. Any person wishing to discuss any item not on the agenda may address the Investment and Finance Committee at this point by giving his/her name and address for the record. Remarks shall be limited to a maximum of five minutes, unless the Investment and Finance Committee authorizes additional time. B. This is the time and place for any person who wishes to comment on agenda items. It should be noted that at the Investment and Finance Committee's discretion, these comments may be deferred until such time on the agenda as the item is discussed. Remarks shall be limited to a maximum of five minutes, unless the Investment and Finance Committee authorizes additional time. IV. COMMITTEE MEMBER REPORTS V. CONSENT CALENDAR ALL MATTERS LISTED ON THE CONSENT CALENDAR ARE CONSIDERED TO BE ROUTINE AND WILL BE ENACTED BY ONE ROLL CALL VOTE. THERE WILL BE NO SEPARATE DISCUSSION OF THESE ITEMS UNLESS MEMBERS OF THE INVESTMENT & FINANCE COMMITTEE OR AUDIENCE REQUEST ITEMS BE REMOVED FROM THE CONSENT CALENDAR FOR SEPARATE DISCUSSION AND ACTION UNDER SECTION V. CONSENT ITEMS HELD OVER, OF THE AGENDA. A. Approval of Minutes Rec: Approve minutes of the regular meeting of March 26, 2003, as submitted. Action: 1 02303.wpd INVESTMENT & FINANCE COMMITTEE AGENDA April 23, 2003 VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for March 2003 Rec: Review and submit for the next City Council agenda. Review the presentation on the investment graphs. Review the investment activity for March 2003. Action: B. State of California Local Agency Investment Fund Balance for the month of March 2003 Rec: Informational item for the Committee to review. No action required C. California Asset Management Program (CAMP) March 2003 Statement Rec: Informational item for the Committee to review. No action required D. Investment of Retiree Health Proceeds Rec: Report and submit to City Council Action: E. City and Redevelopment Agency Monthly Financial Reports for City Council for March 2003 Rec: Report and submit to City Council Action: 2 42303.wpd INVESTMENT & FINANCE COMMITTEE AGENDA April 23, 2003 F. Parkview Professional Office Buildings - Financial Report for March 2003 Rec: Review and file report Action: G. Palm Desert Golf Course Facilities Corporation Financial Information for February 2003 Rec: Review and file report Action: VIII. CONTINUED BUSINESS None. IX. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks Rec: Status report on background checks Action: B. Bond Issuance by Palm Desert Financing Authority Rec: Status report on issuing new bonds Action: X. NEXT MEETING - Wednesday, May 28, 2003 at 2:00 p.m. Xl. ADJOURNMENT I hereby certify under penalty of perjury under the laws of the State of California, that the foregoing agenda for the Investment and Finance Committee was posted on the City Hall bulletin board not less than 72 hours prior to the meeting. Dated this 16` day of pril, 2003. D' n ea , ding Secretary 3 02303.wpd • CITY OF PALM DESERT .r�`•'�:: ;i '� �1 / INVESTMENT & FINANCE COMMITTEE i 4 Minutes '•:'A"�+1, gPmet April 23, 2003, 2:00 p.m. 5y --x- North Wing Conference Room 0 f I. CALL TO ORDER A regular meeting was called to order by Chairman Gibson on Wednesday, April 23, 2003 at 2:00 p.m. II. ROLL CALL Present: Absent: Paul Gibson, Director of Finance None Jean Benson, Mayor Bob Spiegel, Mayor Pro-Temp Thomas Jeffrey, Deputy City Treasurer David Erwin, City Attorney Carlos Ortega, City Manager Bill Veazie Murray Magloff Russ Campbell Everett Wood Also Present: Steve Aryan, Assistant to the City Manager Justin McCarthy, ACM Redevelopment Jose Luis Espinoza, Finance Operations Manager Dennis Coleman, RDA Finance Manager Rodney Young, Desert Willow General Manager Diana Leal, Recording Secretary Guests: None III. ORAL COMMUNICATIONS None. IV. COMMITTEE MEMBER REPORTS None. 1 42303.wpd INVESTMENT & FINANCE COMMITTEE MINUTES April 23, 2003 V. CONSENT CALENDAR A. Approval of Minutes Motion was made by Mr. Spiegel and seconded by Mr. Veazie to approve the Minutes of the March 26, 2003 meeting as submitted. VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for March 2003 Mr Jeffrey reported that, for the month ended March 31, 2003, the book value of the City Portfolio was approximately $154.8 million. The City earned approximately $208,000 in interest. Portfolio yield-to-maturity was approximately 1.48%. For the month ended March 31, 2003, the book value of the RDA Portfolio was approximately $104.8 million. The RDA earned approximately $150,000 in interest. Portfolio yield-to-maturity was approximately 1.64%. Mr. Gibson said that Council approved a new LAIF account for the Housing Authority. Thus, $6 million of Housing Authority funds will be moved to LAIF for a higher return. Mr. Jeffrey stated that the City is maxed out in LAIF ($40 million) and CAMP ($65 million). The City cannot afford to leave excess cash in the sweep account because it currently earns 0.15%. The City is currently maintaining a sweep balance of approximately $600,000 in order to cover outstanding checks on the City's main checking account. Consequently, there are excess monies that need to be invested outside LAIF, CAMP, and the Union Bank sweep account. Mr. Jeffrey asked the Committee's advice on whether the City should use these monies to buy securities that mature in 1.5 years in order to hedge against a double-dip recession and a further decline in interest rates. Mr. Wood asked how much was available to invest. Mr. Gibson replied that about $10 million was available to invest. Mr. Spiegel commented that with a national election a year-and a-half away, he did not think that the Federal Reserve would raise short-term interest rates. 2 42303 wpd INVESTMENT & FINANCE COMMITTEE MINUTES April 23, 2003 Mr. Veazie suggested that the City should remain liquid in case there was a favorable turn in the economy. Mr. Gibson said that the City has about $120 million, 80 percent of which is liquid at this point. Staff is suggesting that this 80% be reduced to 70(1/0. Mr. Jeffrey said that the problem is that some forecasters are projecting an upturn at the end of 2003, just as they did last year, when there was no significant upturn. The worst case would be that if the City invested out to September 2004 and there was an economic upturn, then the City's portfolio performance might be slightly worse than if it had remained liquid. On the other hand, if the economy goes into recession again, then the City's portfolio performance will be much better because Staff locked into rates prior to any more interest rate cuts. Mr. Veazie said that he believed that interest rates could not go much lower. Mr. Jeffrey responded that, last year, no one believed that short-term interest rates would fall to their current level. After a massive bubble bursts, it often takes years for the economy to recover. Furthermore, no one thought that the stock market would be in a slump for four consecutive years (the last time being in the 1930s). Mr. Jeffrey said that there are two ways that the City could invest the excess monies: 1) ladder the securities — buy securities maturing in January, March, June, etc. As the securities mature, they are reinvested at higher interest rates if you are an optimist and believe that rates will go up; or 2) barbell — buy securities that will mature in a single month if you are a pessimist and believe that interest rates will go down. Motion was made by Mr. Wood and seconded by Mr. Ortega for the City to buy securities and ladder them over one-and-a-half years. Motion carried. B. State of California Local Agency Investment Fund Balance for the Month of March 2003 Mr. Gibson said that the City is maxed out in both the City and Redevelopment Agency accounts. C. California Asset Management Program (CAMP) March 2003 Ms. Benson asked if there were any other agencies such as CAMP where the City could place its money. Mr. Gibson said that he is reluctant to invest in a county pool after what happened in Orange County. Another entity, Cal-Trust, recently opened, but has not yet compiled a track record. Mr. Jeffrey commented that Cal Trust does not guarantee a return of principal (100 cents to the dollar) as does CAMP. 3 42303.wptl INVESTMENT & FINANCE COMMITTEE MINUTES April 23, 2003 D. Investment of Retiree Health Proceeds Mr. Gibson noted that the City of Palm Desert offers eligible retired employees a Retiree Health Program. A recent actuarial study estimated that the City would need to achieve a 6.5% return on $6,000,000 over the next five years in order to finance the program five years from now. Unfortunately, the City is not earning at that rate due to depressed interest rates (the City portfolio earned approximately 1.5% in March 2003). Mr. Jeffrey indicated that the only way to achieve a 6.5 percent return would be to purchase a corporate medium-term note ("MTN") with a lower credit rating (but still investment grade). After reviewing a number of candidates, he recommended Ford Motor Company which, as of 2 April 2003, had a five-year MTN that yields 8.01% and that is rated "A3/BBB". Mr. Jeffrey explained that Ford is an old-line industrial company that has not been implicated in any accounting or corporate governance scandals. Ford is currently restructuring in order to be more cost competitive. Due to a bad former CEO, Ford has gone from the strongest cash position in the auto industry to where it is now struggling to restore profitability. But Ford has gone through this cycle before a number of times. Most industry analysts agree that Ford is not in danger of bankruptcy or debt default. Henry Ford's great- grandson is currently running the company and Carl Reichardt, formerly of Wells Fargo Bank, is the Vice Chairman of the Ford Board of Directors. The Ford Family also has a stake in the success of the company since it owns 40% of the common stock. Mr. Jeffrey recently with a Moody's analyst who indicated that the spread between a Ford MTN and a U.S. Treasury security of comparable maturity was exaggerated and largely "emotional" due to the company's recent problems. Therefore, this spread should narrow over time. Mr. Gibson commented that the Retiree Health Program situation is no different from that of CalPers. The CalPers investment portfolio was supposed to be earning a 8.5% return, yet, last year, it had a loss of 4%. Consequently, CalPers had to charge a rate of 12.5% in order to recover its losses, so that the portfolio would be at the same level that it would have been had it not suffered the losses. Mr. Campbell recommended that the City buy a Ford MTN for five years. Mr. Jeffrey observed that the two California local agencies with the best internal controls on investments are probably Orange County and Palm Desert, since both have experienced problems in the past. Likewise, Ford is scrambling to cut costs and make improvements while GM has not had this type of pressure. Although it would have been easier to recommend that the 4 42303.wpd INVESTMENT& FINANCE COMMITTEE MINUTES April 23, 2003 City buy a GM MTN since it has a higher credit rating, GM also has double the pension and medical insurance exposure. Mr. Jeffrey thought that Ford was the better of the two. Mr. Spiegel asked if it would be possible to simply double the amount of principal that the City invests, in order to achieve the targeted rate of return. Mr. Gibson responded that such a strategy would hit the target but reduce the amount of money in the General Fund that would be available for other expenditures during that five-year period. Mr. Veazie commented that the staff memorandum noted that special permission would have to be obtained from the City Council for the City Treasurer to buy a five-year MTN since the City's investment policy limits the maximum maturity for this type of security to three years. Mr. Veazie stated that any maturity extensions should be accompanied by an improvement in credit quality. To that end, Mr. Veazie would recommend that the City buy a U.S. Government Agency security. Mr. Ortega said that if the City did not have to sell a Ford MTN prior to maturity, then it would not realize a capital loss. The only remaining risk would be that Ford would go bankrupt, which he does not believe will happen. Because of the City's present reserve position, Mr. Ortega could not foresee a situation where it would have to sell a Ford MTN prior to maturity. Short of a "total meltdown" at Ford, the City should get its principal back plus interest. Motion was made by Mr. Campbell and seconded by Mr. Ortega to recommend that the City Council authorize the City Treasurer to buy a Ford MTN with a five-year maturity for the Retiree Health Plan. Mr. Spiegel and Mr. Veazie cast a "No" vote. Motion carried. E. City and Redevelopment Agency Monthly Financial Reports for City Council for March 2003 Mr. Gibson said that, year to date, the City is $20.2 million versus last year's $19 million. Expenditures are higher due to the budget being higher. Mr. Wood asked what was the biggest item on the budget. Mr. Gibson said that it is the reimbursements to the City from RDA and CVAG. Charges for services is another part of it. Mr. Spiegel asked about the State subvention. Mr. Gibson said that the State subvention is mostly motor vehicle license fees. 5 42303.wpd INVESTMENT & FINANCE COMMITTEE MINUTES April 23, 2003 F. Parkview Professional Office Buildings - Financial Report for March 2003 Mr. Gibson said that he contacted the American Cancer Society (ACS) as they had expressed interest in leasing space. ACS indicated that due to poor financials, they were going to stay where they are located as they pay a minimal fee. The Parkview professional office building will be at about 92% occupied. The expenditures are higher than normal due to the roof improvements. One building is complete and they are currently working on the other. L G. Palm Desert Golf Course Facilities Corporation Financial Information for February 2003 Mr. Young said that their net operating costs were better than budget. The weather was better in March which helped. There were only a few cancellations. Mr. Spiegel asked about the Callaway Golf Performance Center (CGPC) at the Golf Resort in Indian Wells. He would be interested to know what percentage of sales are derived from the hotel guests and what percentage of sales are from locals. This would be a great deal to have. Mr. Young said that the Callaway Golf Center was doing well. The CGPC offers a full range of Callaway products and charge $50 per fitting. He hopes that Desert Willow can find something similar. This year, they are working with Natural Golf, a swing system that sells their own golf clubs, etc. One of Natural Golfs instructors has been teaching at Desert Willow for the last year and a half. This year he has agreed to sell Natural Golf merchandise through Desert Willow's golf shop. Mr. Campbell asked if Desert Willow has been approached by, or has looked into, a company that places equipment that fertilizes through the water system. Mr. Young said that they have this fertigation system in place. It is a time saver as it doesn't require labor or equipment. VIII. CONTINUED BUSINESS - None. IX. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks There being no business issues to report, discussion ensued to the next agenda item. 6 42303.wpd INVESTMENT & FINANCE COMMITTEE MINUTES April 23, 2003 B. Bond Issuance by Palm Desert Financing Authority Mr. Coleman handed out a summary report of the bond issue that was completed last month. This was the second best bond issue that they have done. They sold yields at premiums to generate an additional $186,000 worth of funds. Their net interest cost was 4.895. They borrowed $15.7 million at about 4.9% for 30 years. There are three more anticipated financings. They are following a conservative philosophy. They will bond enough money to pay debt service, interest to the City and some anticipated ERAF. They are trying to get a smaller financing to get some projects on the board for 1-2 years. They want to obtain funding for: Project Area Number 1 in the amount of$14 million to $17 million dependent on the rates. The lower the rates, the more amount of money can be obtain with the same amount of debt service; A small bond for Project Area Number 3 at about $5 million or a little less. The third bond is not an Agency bond issue. They are financing the Silver Spur undergrounding district. The District passed the cash collection period. The homeowners are allowed to prepay their assessment. By pre-paying their assessment it lowers the bond amount. They are also looking at refunding two assessment districts, Sunterrace and Merano. They have a threshold of 3% net present value. When you look at the difference from now until the bond matures, this is called the future savings. This is discounted. One of the districts is at 4% and the other is at 15%. Should one district drop below 3% they will look at it at a later time. By doing all three of the assessment districts (two refunding and the new money for Silver Spur) at the same time, they share issuance costs. This will lift the burden of interest costs for all three districts. The assessment districts will be done in June. Project areas 1 and 3 will be done in June as well. Mr. Ortega asked if the tax collection had started. Mr. Gibson said that it has started 30 days after. There were four homeowners that indicated to the engineer that they would potentially pay. X. NEXT MEETING - Wednesday, May 28. 2003 at 2:00 p.m. XI. ADJOURNMENT There being no further business, the meeting was adjourned by Mr. Gibson at 2:48 p.m. Respectfully submitted, Diana Leal, Recording Secretary 7 42303.wpd ................. CITY OF PALM DESERT !"1 INVESTMENT & FINANCE COMMITTEE e4 I Minutes "4ffi >- p ` March 26, 2003, 2:00 p.m. �� ra 3%'f✓4`:' North Wing Conference Room wrerc i 3mr I. CALL TO ORDER A regular meeting was called to order by Chairman Gibson on Wednesday, March 26, 2003 at 2:00 p.m. II. ROLL CALL Present: Absent: Paul Gibson, Director of Finance Jean Benson, Mayor Thomas Jeffrey, Deputy City Treasurer Bob Spiegel, Mayor Pro-Temp David Erwin, City Attorney Carlos Ortega, City Manager Jose Luis Espinoza, Finance Operations Manager Bill Veazie Murray Magloff Russ Campbell Everett Wood Also Present: Steve Aryan, Assistant to the City Manager Justin McCarthy, ACM Redevelopment Dennis Coleman, RDA Finance Manager Rodney Young, Desert Willow General Manager Diana Leal, Recording Secretary Guests: None III. ORAL COMMUNICATIONS None. IV. COMMITTEE MEMBER REPORTS None. 1 32603.wpd INVESTMENT & FINANCE COMMITTEE MINUTES March 26, 2003 V. CONSENT CALENDAR A. Approval of Minutes Motion was made by Mr. Ortega and seconded by Mr. Campbell to approve the Minutes of the February 26, 2003 meeting with the following corrections: Page 5 Informational 2. Markets Article Calpers Cools Down Mr. Campbell said that the state went into long term care. Page 6 Bond Issuance by Palm Desert Financing Authority Paragraph 3, third sentence A $500 million hit based upon the ERAF formula that is in place at this time, the Palm Desert Redevelopment Agency would be hit by close to $8 million. Motion carried. VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for February 2003 Mr Jeffrey reported that, for the month ended February 28, 2003, the book value of the City Portfolio was approximately $165,196,000. The City earned approximately $210,000 in interest. Portfolio yield-to-maturity was approximately 1.63%. For the month ended February 28, 2003, the book value of the RDA Portfolio was approximately $103,760,000. The RDA earned approximately $138,000 in interest. Portfolio yield-to-maturity was approximately 1.66%. Mr. Ortega asked if it would be legal for the City to buy Redevelopment Agency bonds since the City would buy the bonds from the underwriter. If the City is currently receiving less than a 2% yield, then the short maturities of municipal bonds could potentially yield more. 2 32603.wpd INVESTMENT & FINANCE COMMITTEE MINUTES March 26, 2003 Mr. Gibson responded that it would depend on the type of bond that is being purchased. Mr. Gibson stated that he would research the matter further. B. State of California Local Agency Investment Fund Balance for the Month of February 2003 Mr. Gibson said that the City is maxed out in both the City and Redevelopment Agency accounts. C. California Asset Management Program (CAMP) February 2003 There being no business issues to report, discussion ensued to the next agenda item. D. City and Redevelopment Agency Monthly Financial Reports for City Council for February 2002 Mr. Gibson said that he will receive the quarter end report this week and he will have a better idea of what the sales tax numbers are for the second quarter. Expenditures are in line with what was expected. The City has started with the collection of Transient Occupancy Tax (TOT) from the new hotel on Gerald Ford and Cook Street. The City should receive monies in about thirty days. Mr. Ortega said that the three major sources are up. Mr. Gibson said that the sources are up when considering the budget, however, this is due to the advances the State has been sending the City above what was given in the past due to an error made in the previous quarter. This information is misleading. They expect to have a true final number by the end of May 2003. Mr. Magloff asked how much money the City receives from property taxes. Mr. Gibson said that the City receives $2.7 million in total for the year (half, $1.3 million, in January and the other half in May). The Redevelopment Agency receives approximately $22 million (half, $11 million, in January and the other half in May). Mr. Wood asked if staff thought that the City would meet budget once all the numbers came in. Mr. Gibson said that the revenues will be slightly ahead. At this time, it is difficult to tell because the City has not received 50% of the total revenues. TOT is dependent on whether or not the City receives money owed by Vacation Inn. They pay $150,000/year which, to date, they have only paid the last two months. 3 32603.wp0 INVESTMENT & FINANCE COMMITTEE MINUTES March 26, 2003 E. Parkview Professional Office Buildings - Financial Report for February 2003 Mr. Gibson said that roof repairs are on-going. They had a delay last week due to rain. The roof contractors had torn off about 113 of the roof and had to quickly put a coating on the roof to prevent leaks. They had a few leaks within the Water Resources Control Board building. Their storage room for files had approximately 10 boxes damaged from the water that came in. The documents had to be dried out and the carpet cleaned. The roofing contractor hopes to finish the roof work within two weeks. The contract with Mountain Conservancy has been completed and they have moved in. To date, staff has not heard from the American Cancer Society on whether they are still interested in leasing a space. F. Palm Desert Golf Course Facilities Corporation Financial Information for February 2002 Mr. Young said that the February numbers were down compared to the prior year end budget. They were doing well until the 11th of the month when they had three days of rain. On those days they had 300 plus golfers booked every day and they ended up with only 60-90 golfers each day. At the end of the month they also experienced heavy rain which caused them a loss of $20,000 for a total revenue loss of $60,000. Net income was $21,000 below budget, however, it was slightly ahead of last year even though revenues were down by $37,000. To date, they are at 103% of budget. Merchandise numbers continue to turn downward with the total revenue numbers continue to go up. Their cost to goods are near 55%. This cost will go up in April and drop off in the summer time. Both courses are in excellent condition. The greens have had a lot of compaction. Earlier this year, to improve the conditions by May or June, they did pencil-type application holes to relieve the compaction. Mr. Gibson said that they attempted to obtain a non-profit status for Desert Willow to deal with the liquor license. Unfortunately, the IRS did not agree to provide the City with a non-profit status because it would mean that all contributions given to the golf course would be considered non-taxable charitable contributions. 4 32603.wpd INVESTMENT & FINANCE COMMITTEE MINUTES March 26, 2003 G. Discuss State Legislature Affecting Investments (AB 849 and SB 787) Mr. Jeffrey said that SB 787, which the City of Palm Desert is sponsoring, will be heard before the first committee on May 7. Senate Bill 787 would authorize asset backed commercial paper as a legal investment for California local agencies. The State Treasurer has already obtained such permission for LAIF. Currently, the City of Los Angeles, the California Association of County Treasurers and Tax Collectors ("CACTTC"), and the Sacramento Municipal Utility District are sending support letters in favor of the bill. Assembly Bill 849 would extend state control, for the first time, over the City's selection of broker-dealers. If a broker-dealer, or a parent company, did not have a positive rating under the Federal Community Reinvestment Act, then the City could not do business with that broker. If this bill enacted as currently drafted, then the City would probably lose its best broker, Wells Fargo Bank. Mr. Gibson said that the Legislative Committee requested that staff bring AB 849 before the Investment and Finance Committee in order to obtain the Committee's opinion on whether the City should oppose the bill and, if so, how this opposition should occur. Motion was made by Mr. Ortega and seconded by Mr. Campbell to recommend that `local agencies" be deleted from Assembly Bill 849. Motion carried. VIII. CONTINUED BUSINESS - None. IX. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks There being no business issues to report, discussion ensued to the next agenda item. B. Bond Issuance by Palm Desert Financing Authority Mr. Coleman handed out the numbers in relation to the bond that they closed today. Normally, when they issue bonds, they are issued discounted to yield a certain price. They issued their bonds at 4.6 which was a good rate. The coupon protection is what most of the institutional buyers are looking for when they buy these type of bonds. The investment concern is: Do you buy something now and lock it in, or do you look to get performance, or do you hold your money and buy later when the rates are going up. The compromise for the institutional investors is that the Redevelopment Agency (RDA) gives 5 32603 wpd INVESTMENT & FINANCE COMMITTEE MINUTES March 26, 2003 them the coupon they want, and the institutional investors pay a premium for the coupon. RDA has issued $16,745,000 in bonds but the net premiums that they gained were another $186,000 in proceeds. When all is said and done, they deposited $15.3 million. Mr. Coleman reported to the committee before that they were going to do a $12 million to $13 million bond issue because they were going to be conservative. However, RDA's financial advisor found a way to leverage more money. The financial advisor instructed RDA to obtain as much money as possible with the debt service available without impacting the agency too much. They did a $15 million bond issue. They have $15.3 million for projects. They immediately used part of the money to repay the note to ART. They are also reimbursing themselves $3 million for monies they advanced to pay for the note. Mr. Ortega said that the note is for the land RDA bought. RDA found land at a good price. They purchased the land and issued a note. Mr. Coleman pointed out that the net interest cost was 4.895% with a true interest cost of 4.81%. The all inclusive interest cost was 5.087% for 30 years. This was the second best bond issue they have done. The housing bond that was done in September was a little better because they took advantage of maturities to keep their debt service level. This allows them the ability to issue more maximum bonds. The copy that he handed out showed how the bond was structured. They issued their 30 year bond with a coupon of 5%. The payment was 102.309% to give them a 4.7 yield. Mr. Ortega asked how long the call protection was on the bond. Mr. Coleman said that the call protection is for 10 years at 2% and can be down to 0% at the tenth year. Mr. Ortega said that this is important because in the future if there is excess money, RDA can call the bond and won't have to pay 5%. Mr. Coleman said that there was a structure that yielded lower than this bond, however, was not callable. Mr. Veazie said that the RDA is selling the bond at a period and time of record low interest rates. He believes that the call feature provides much more security and control for the issuer if rates are sufficient to want to call. However, if RDA has lots of money in 10 years and the interest rates on this type of bond have gone up to 8 or 9%, the City would not call a 5% with the money RDA has at a 102, RDA would invest the money available to obtain the higher interest rates available at that time. Mr. Ortega said that generally this is the procedure, however, the reason RDA can collect money is that they have debt. They really could not just collect money and invest the money. There may be a time when RDA does not have a choice with what to do with the money except to call debt. Every year RDA has to file a debt statement with the County. It is only because of this debt statement that RDA can call a bond. 6 32603.wpd INVESTMENT & FINANCE COMMITTEE MINUTES March 26, 2003 Mr. Coleman said that they have started the process for a bond issue for Project Area No. 1. They plan to do a conservative bond issue in Project Areas 1 and 3 and once completed, they can go back to check their ability to bond. They are looking at the end of June. Mr. Wood said that he was hoping that members of the council would be present to hear his comment. He said that the City's audit report was fantastic. In reviewing the report and realizing the number of people and everything that is being accomplished, he thinks that the City's management team has done a great job. Mr. Ortega thanked Mr. Wood for his comment and said that he has a great bunch of employees. He takes pride in knowing that the work is done with fewer people compared to cities of similar size. X. NEXT MEETING - Wednesday, March 26, 2003 at 2:00 p.m. XI. ADJOURNMENT There being no further business, the meeting was adjourned by Mr. Gibson at 2:50 p.m. Respectfully submitted, Diana Leal, Recording Secretary 7 32603 wpd k r 7`vn lu' Msza ,�LF!w.x� A f-td ti° `#,. j /® Ser ,"t6 A} 4�: .� ' = 1j �� pie'+E '{W `e ra° r aEm tr` �Y' '� $�,"' !l i>'s cittgW f Z 4 °,1r ° ° rj 'Agent .Portfolios ^ r 14s R s '4-ra GOMP 1 /N i d o l[ EPORT` n NM p . € t.�" ,^- `ti'yr ;,., Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The direction of the economy is difficult to gauge. With the end of the Iraq War, a short spurt of economic growth is likely to occur in the U.S. This will probably not be sustainable, however, due to flagging consumer confidence, job uncertainty, and an unprecedented level of personal debt. Most households are currently more concerned about unemployment than about the war. American corporations continue to cut jobs in an effort to boost profits in a low-growth environment. Corporate profits, however, only represent 6%of Gross Domestic Product ("GDP"), while personal income represents 60%. Employers show little interest in hiring in the near-term. Household net worth is down $3.8 trillion from its peak in 2000. This reflects the convergence of a declining stock market and an increase in consumer/mortgage debt. Due to access to cheap capital, many consumers are now heavily leveraged in mortgage debt. The housing sector is beginning to slow, however. If a housing bubble does, in fact, exist,then Merrill Lynch has calculated that a 10%drop in home prices would drain an estimated $1.4 trillion from household net worth,further weakening the economy. The Federal Open Market Committee ("FOMC") will met on 6 May to review the situation. Since the path of the economy is . tnot clear, it is expected that the FOMC will not make any changes. Patti S. Qilnonf C.C.Al.r 7 Treasurer PORTFOLIO STATISTICS Dollars in Thousands MAR-03 FEB-03 JAN-03 DEC-02 NOV-02 OCT-02 CITY Month-End Book Value"' $ 154,805 $ 165,188 $ 174,152 $ 136,687 $ 142,520 $ 144,054 Month-End Market Value"' $ 154,805 $ 165,271 $ 174,276 $ 136,899 $ 142,742 $ 144,259 Paper Gain (Loss) $ - $ 83 $ 124 $ 212 $ 222 $ 205 Prior Year Book Variance $ (4,171) $ (117) $ (5,672) $ (26,850) $ (23,866) $ (21,277) Interest Earnings $ 208 $ 212 $ 212 $ 225 $ 238 $ 271 Yield-To-Maturity 1.48% 1.63% 1.63% 1.93% 2.00% 2.15% Weighted Maturity(Days) 1 28 29 49 50 52 Effective Duration 0.00 0.00 0.01 0.01 0.03 0.04 RDA Month-End Book Value'1 $ 104,781 $ 103,760 $ 105,023 $ 92,787 $ 92,761 $ 94,884 Month-End Market Value"' $ 107,082 $ 106,053 $ 107,333 $ 95,022 $ 94,996 $ 97,147 Paper Gain (Loss) $ 2,301 $ 2,293 $ 2,310 $ 2,235 $ 2,235 $ 2,263 Prior Year Book Variance $ (24,885) $ (2,559) $ 19,541 $ 7,655 $ 7,826 $ 24,963 Interest Earnings $ 150 $ 139 $ 162 $ 153 $ 162 $ 185 Yield-To-Maturity 1.64% 1.67% 1.76% 1.95% 2.06% 2.23% Weighted Maturity(Days) 131 132 133 150 150 147 Effective Duration 0.09 0.10 0.10 0.12 0.13 0.13 '4- Omits SLGSs. 4 • City of Palm Desert- Portfolio Characteristics 31 March 2003 Dollars in Thousands Ageing Interval Market Value r < 1 M $ 99,690 General Fund Ageing' <2M - 100 <3M - too <6M - 8o_ clYR - s c2YR - o 60- <3YR - 40- <4YR - o. <5Y R - 20- >SYR - 0 , 0 0 0 0 0 Total: $ 99,690 <1M <2M <3M <6M c1YR c2YR Ratings* Market Value Credit Quality AAA $ 78,777 AAAAA C.") Unrated" 76,059 5 AA - A - A1/P1 - Total: $ 154,836 Unrated 49% . \ Sector Market Value Asset Allocation) Money Market Funds 82,051 LAIF 40,000 RDA Loan 32,785 Money Market '' Fed A n U.S.Treasury $ - Funds itt'.t 6% Federal Agency - % Commercial Paper - MTNs - RIM Loan Total: $ 154,836 21% \ / Month City Yield LAIF Yield Variance Performance' Apr02 3.18 2.85 0.34 May 3.06 2.74 0.32 3.4 Jun 2.86 2.69 0.18 Jul 2.88 2.71 0.17 Aug 2.64 2.59 0.04 X ! il I! I kp Sep 2.22 2.60 -0.38 No 2.4 'i 1 i' 1 Oct 2.15 2.49 -0.33 1 ° I ( • Nov 2.00 2.30 -0.31 : ' I I I Dec 1.93 2.20 -0.27 1.4 ' II I, I 1: r' ' L' '.!i } [!. Jan03 1.63 2.10 -0.47 Apr02 May Jun Jul Aug Sep Oct Nov Dec Jan03 Feb Mar Feb 1.63 1.95 -0.32 Mar 1.48 1.90 -0.43 ■LAIF Yield DCity Yield * Standard and Poor's Credit Ratings •• LAIF, HighMark, and City Loan to RDA Page 2 of 6 City of Palm Desert Portfolio Holdings 31 March 2003 Market Ratings I Par Value I Issuer Coupon I Maturity I Cost I YTM Price I Value Moody's' S &P LGIP $ 59,651,899 C.A.M.P. 0.00 4/1/03 $ 59,651,899 1.21 100.00 $ 59,651,899 N/A AM $ 59,651,899 Subtotal $ 59,651,899 1.21 $ 59,651,899 LGIP $ 40,000,000 L.A.I.F. 0.00 4/1/03 $ 40,000,000 1.90 100.00 $ 40,000,000 NR NR $ 40,000,000 Subtotal $ 40,000,000 1.90 $ 40,000,000 Pooled Funds-AIM $ 19,125,523 PRIME PORTFOLIO 0.00 4/1/03 $ 19,125,523 0.92 100.00 $ 19,125,523 Aaa AAA $ 19,125,523 Subtotal $ 19,125,523 0.92 $ 19,125,523 Pooled Funds-HighMark $ 1,083,189 CITY MAIN SWEEP 0.00 4/1/03 $ 1,083,189 0.17 100.00 $ 1,083,189 NR NR $ 258,029 DESERT WILLOW SWEEP 0.00 4/1/03 $ 258,029 0.17 100.00 $ 258,029 NR NR $ 2,516 GOLF COURSE SWEEP 0.00 4/1/03 $ 2,516 0.17 100.00 $ 2,516 NR NR $ 1,930,281 OFFICE COMPLEX SWEEP 0.00 4/1/03 $ 1,930,281 0.17 100.00 $ 1,930,281 NR NR $ 3,274,014 Subtotal $ 3,274,014 0.17 $ 3,274,014 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 4/1/03 $ 32,785,480 1.90 100.00 $ 32,785,480 NR NR $ 32,785,480 Subtotal $ 32,785,480 1.90 $ 32,785,480 Total Investments $ 154,836,916 $ 154,836,916 1.48 $ 154,836,916 Cash $ 69,519 OFFICE COMPLEX CHKG 0.00 4/1/03 $ 69,519 0.00 100.00 $ 69,519 NR NR $ (541,466) CITY MAIN CHKG 0.00 4/1/03 $ (541,466) 0.00 100.00 $ (541,466) NR NR $ 214,255 DESERT WILLOW CHKG 0.00 4/1/03 $ 214,255 0.00 100.00 $ 214,255 NR NR $ 867 CPD GOLF COURSE 0.00 4/1/03 $ 867 0.00 100.00 $ 867 NR NR $ 30,181 OFFICE COMPLEX TRUST 0.00 4/1/03 $ 30,181 0.00 100.00 $ 30,181 NR NR $ 194,818 RECREATIONAL FAC CHKG 0.00 4/1/03 $ 194,818 0.00 100.00 $ 194,818 NR NR $ - VACATION INN CHKG 0.00 4/1/03 $ - 0.00 100.00 $ - NR NR $ (31,827) Subtotal $ (31,827) 0.00 $ (31,827) Total Cash and Investments $ 154,805,089 $ 154,805,089 $ 154,805,089 NR=Not Rated . Page 3 of 6 Palm Desert Redevelopment Agency- Portfolio Characteristics 31 March 2003 Dollars in Thousands Aoeina Interval Market Value l <1 M $ 74,880 Portfolio Ageing w/o SLGSss <2M - <3M - too go <6M 872 90- 60- < 1 Y R 179 7 70- <2YR 7,011 0 60- 50- <3YR - E 40- <4YR - a° 30- <5YR - 20- 6 >5YR - 10 0 0 1 0 I-I o 0 Total: $ 82,942 <1M <2M <3M <6M <1YR <2YR <3YR <4YR l Quality* Market Value. Credit Quality AAA $ 46,024 Unrated** 60,968 43% gc<6 AA - A - Unrated" Al/P1 - 57% Total: $ 106,992 J 1 Sector Market Value Asset Allocation U.S.Treasury $ 8,071 t' Money Market Funds 44,442 Money Market .61 < LAIF 54,479 Funds Federal Agency 42% r Commercial Paper - o Corporate Bonds - U.S.Treasury LAIF Total: $ 106,992 6% 50% \ 1 ( \ Month RDA Yield LAIF Yield Variance Performance` Apr02 2.42 2.85 -0.43 1 May 2.38 2.74 -0.36 Jun 2.37 2.69 -0.32 Jul 2.23 2.71 -0.48 ^ 2.5 Aug 2.27 2.59 -0.33 Sep 2.26 2.60 -0.35 ' -I Oct 2.23 2.49 -0.25 Nov 2.06 2.30 -0.25 I- , I' ' 1 t la ( Pi 1.95 2.20 -0.25 1.5 i Jan03 1.76 2.10 -0.34 Apr02 May Jun Jul Aug Sep Oct Nov Dec Jan03 Feb Mar Feb 1.66 1.95 -0.28 Mar 1.64 1.90 -0.26 ■LAIF Yield O RDA Yield \ / Standard and Poor's Credit Ratings LAIF and HighMark Sweep Page 4 of 6 Palm Desert Redevelopment Agency Portfolio Holdings 31 March 2003 Market Ratings I Par Value Issuer Coupons MaturityI Cost YTM Price Value Moody's' S& P U.S.Treasury-Discount $ 181,000 UNITED STATES TREASURY 4.63 2/15/04 $ 130,168 5.51 99.02 $ 179,230 Aaa AAA $ 7,143,000 UNITED STATES TREASURY 4.59 8/15/04 $ 4,989,671 5.54 98.25 $ 7,018,068 Aaa AAA $ 532,400 UNITED STATES TREASURY 4.66 8/15/03 $ 394,279 5.47 99.57 $ 530,111 Aaa AAA $ 344,600 UNITED STATES TREASURY 4.66 8/15/03 $ 255,200 5.47 99.57 $ 343,118 Aaa AAA $ 8,201,000 Subtotal $ 5,769,319 5.53 $ 8,070,527 LGIPS $ 40,000,000 L.A.I.F. 0.00 4/1/03 $ 40,000,000 1.90 100.00 $ 40,000,000 NR NR $ 4,923,322 L.A.I.F. BOND PROCEEDS 0.00 4/1/03 $ 4,923,322 1.90 100.00 $ 4,923,322 NR NR $ 9,556,155 L.A.I.F. BOND PROCEEDS 0.00 4/1/03 $ 9,556,155 1.90 100.00 $ 9,556,155 NR NR $ 54,479,478 Subtotal $ 54,479,478 1.90 $ 54,479,478 Pooled Funds-AIM $ 37,953,112 PRIME PORTFOLIO 0.00 4/1/03 $ 37,953,112 0.92 100.00 $ 37,953,112 Aaa AAA $ 37,953,112 Subtotal $ 37,953,112 0.92 $ 37,953,112 Pooled Funds-HighMark $ 6,274,775 HOUSING AUTH CHK SWEEP 0.00 4/1/03 $ 6,274,775 0.17 100.00 $ 6,274,775 NR NR $ 214,099 HOUSING AUTH TRT SWEEP 0.00 4/1/03 $ 214,099 0.17 100.00 $ 214,099 NR NR $ 6,488,874 Subtotal $ 6,488,874 0.17 $ 6,488,874 Total Investments $ 107,122,464 $ 104,690,783 1.64 $ 106,991,991 Cash $ 39,337 HOUSING AUTH CHKG 0.00 4/1/03 $ 39,337 0.00 100.00 $ 39,337 NR NR $ 50,810 HOUSING AUTH TRUST 0.00 4/1/03 $ 50,810 0.00 100.00 $ 50,810 NR NR $ 90,147 Subtotal $ 90,147 0.00 $ 90,147 Total Cash and Investments $ 107,212,611 $ 104,780,930 $ 107,082,138 NR= Not Rated Page 5 of 6 i STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert('City')and the Palm Desert Redevelopment Agency ('RDA')are governed by federal, state,and local law. The City Treasurer's'Statement of Investment.Policy' is more restrictive than the California Government Code. The Palm Desert Investment Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended 31 March 2003,the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield(in order of priority). Barring unforeseen events,the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P, and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts and are therefore not included in this report as assets. All balances are bank balances. Respectfully submitted on 23 April 2003, i'auLS. Q(4onr C C.Ai.T. City Treasurer • SUMMARY OF AUTHORIZED INVESTMENTS California Government Code I City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality %of City %of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit Not Authorized 1) 53601(b) U.S. Treasuries 5 Years No Limit 5 Years I No Limit I 10.0% I 5.5% 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 0.0% 0.0% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 - - 53601(g) Commercial Paper 270 Days 25% A-1+or P-1 270 Days 25% A-1+or P-1 0.0% 0.0% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA-or Aa3 - - 53601(i) Repos 1 Year No Limit 30 Days 20% AAA& Aaa -536010) Reverse Reverse Repos 92 Days 20% Not Authorized 536010) Medium-Term Notes 5 Years 30% A 3 Years 30% A 0.0% _ 0.0% 53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% AAA&Aaa 53.0% 42.5% 53601(1) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& Not Authorized Securities AA(Security) 16429 LAIF No Limit I No Limit I 25.8% 52.0% 78.8% 100.0% (1) The Citan to RDA, which is not a bond, has been approved by the Palm Desert City Council. Certified California Municipal Treasurer Page 6 of 6 • STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER .; SACRAMENTO Local Agency Investment Fund Kral PO Box 942809 Sacramento, CA 94209-0001 (916) 653-3001 March, 2003 Statement CITY OF PALM DESERT Account Number : 98-33-621 Attn: CITY TREASURER 73510 FRED WARING DRIVE PALM DESERT CA 92260 Account Summary Total Deposit : 0.00 Beginning Balance : 40,000,000.00 Total Withdrawal : 0.00 Ending Balance : 40,000,000.00 Page : 1 of 1 STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER a ? >'s SACRAMENTO .- - - � • �" Local Agency Investment Fund PO Box 942809 Sacramento, CA 94209-0001 (916) 653-3001 March, 2003 Statement PALM DESERT REDEVELOPMENT AGENCY Account Number : 65-33-015 Attn: TREASURER 73-510 FRED WARING DRIVE PALM DESERT CA 92260 Account Summary Total Deposit : 0.00 Beginning Balance : 40,000,000.00 Total Withdrawal : 0.00 Ending Balance : 40,000,000.00 Page : 1 of 1 I . CALIFORNIA ASSET CONFIRMATION MANAGEMENT PROGRAM 1 OIN-1- POWERS AUTHORITY SO CALIFORNIA STREET 23RD FLOUR SAN FRANCISCo CALIFORNIA 9411 I FOR ACCOUNT • INFORMATION: 800-729-7665 • STATEMENT DATE: 3/27/2003 CITY OF PALM DESERT OPERATING FUND ACCOUNT NUMBER: 553-00 73-510 FRED WARING DRIVE PALM DESERT,CA 92260 FUND NAME: Cash Reserve Portfolio Page 1 of 1 'Account L p o I /2A/2003 .-- y Statement Income Dividends Capital Gains Total Shares Account Date Paid This Year Paid This Year Owned _ Value 3/27/2003 $85,826.21 $0.00 59,591,728.850 $59,591,728.85 transact' ainuithav( 0 gar/203= WOO Beginning Balance Purchases Reinvestments Redemptions Ending Balance $60,591,728.85 $0.00 $0.00 $1,000,000.00 $59,591,728.85 TRAU a- - l;1o1J1ie '.?: o o1�:AMOUNT SHARE SF,i ES THIS .. o1 ^ ' 1 ^Q'�' 1© °liii,..: ' o I SACTION PRICE TRANSACTION SHARES OWNED 03/27/03 Beginning Balance 60,591,728.850 03/27/03. 3/27/2003 Redemption-Wire Red. $1,000,000.00- $1.00 1,000,000.000- 59,591,728.850 Message Line: The transaction above has been executed at the fund's next-determined net asset value in accordance with the fund's Information Statement. o- O� ❑ y° w � 0 ° 'A .-1 a m oft, so toi 'tz yy ti a H .-• H N C r Q n R n 0fl, 7 y y 0 N ° o t" c c � : � ° ty.G1a � h, � A � .3m o vn � a R. A Z 17 "�' ° •`: in = o tD' n a e 0 w iNJ 3 �s , r: ] c C i v d z o'� 0 01 -O. 4 ° 00 v v Co y 0 �. aC .5 k 0 ° w tlQ tl _ a. -• W (A - (A N O\ J 0 0 D [J N 0 0 J O N N " � ICO❑ W J 00 -0 W J O\ cWA J 0 0 0 w Q. ti D aO w O o EN) o o a to — IJ N N.) N.) La --I La a Q = O W in La IJ �l 0N in - in A O w 03• oOrncob Oo \ t `N cn O rn oco = T Oo a ON O C co co 0. I .G N a 00 O A N ON J T W la a N Q o _ -- A --I CC. _ a\ La co 00 A --• 00 a W EJ U.) p0 to KS ix '-- to a J W A a NJ 00 00 NI O O W W tJ O w 0 � 00 w to 0 a J to NJ A ON a co a 0 0 O. 0 0 1 0 0 yy al Cs a a ❑ • N N m �-' A N w to to to n O O N O O N W J n IQ H., A w J CO to O N J C N :4 0` O1 in in A �D J `a . ° CA A w w lJ0 w (A ^ to �O N J A J W -. co y O A w 10 0 w N N W N W ri Pr, O °A O O O O O A priv it " Gl O IJ --IN J3 T `< o 0A O O J W O A VD 00 w J O' Z oMf b Z Z e M av --• 10 O w .. w Ln co-, 0 O — .-- O -, NI J 1- 0. 0 -- CO O ----I A w CO LA O 05 00 O AA A ON A `� r 0, CO W --4A N ON 0 O\ -.I (4) to Cc --I W VD 0 a ` m 1 r r' ON a\ O a al D\ b N — 0 �O 0 In ? co. . 0 w ; e m xi — ❑ cc, m v ca,a 00 00 J J J 00 0. O CO a CO O W SO o:.d 00 ONO\ 00 A W u0 In Q\ A O N O to to O\ 70 m w o 0 0 0 0 ^ o d o o a� o a o o +�'� "Z'� /A 0. a W m w r m ❑ y a S o Xi O a rt.. ❑ a $, ''p` O 4" 0 E .0 0 O n a b a _..... a t City of Palm Desert Parkview Office Complex Financial Statement 19 for Fiscal Year 2002-2003 March-03 March-03 # % YTD YTD # '%u Budget Actual Variance Variance Budget Actual Variance Variance Revenues Rental $ 68,500 $ 72,530 $ 4,030 105.88% ' $ 616,500 $ 636,672 $ 20,172 103.27% Dividends/Interest $ 4,375 $ 319 $ (4,056) 7.30% $ 39,375 $ 7,225 $ (32,150) 18.35% Total Revenues $ 72,875 $ 72,849 $ (26) 99.96%1 . . ): $ 655,875 $ 643,897 $ (11,978) 98.17% Expenses Professional-Accounting&Auditing $ 7,000 $ 7,000 $ - 100.00% ` $ 63,000 $ 63,000 $ - 100.00% Professional-Consultants $ 6,000 $ 5,559 $ 441 92.65% $ 54,000 $ 51,238 $ 2,762 94.88% Tenant Improvements $ 2,500 $ 22,196 $ (19,696) 887.83% - $ 22,500 $ 53,143 $ (30,643) 236.19% Repairs&Maintenance Building $ 8,000 $ 15,592 $ (7,592) 194.90% $ 72,000 $ 78,954 $ (6,954) 109.66% Repairs&Maintenance-Landscaping $ 2,300 $ - $ 2,300 0.00% t $ 20,700 $ - $ 20,700 0.00% Utilities-Water $ 250 $ 127 $ 123 50.82% :: $ 2,250 $ 880 $ 1,370 39.11% Utilities-Gas/Electric $ 5,000 $ 4,625 $ 375 92.49% $ 66,000 $ 60,563 $ 5,437 91.76% Utilities-Trash $ 700 $ - $ 700 0.00% - $ 6,300 $ 3,682 $ 2,618 58.44% Telephone $ 150 $ 123 $ 27 81.69% -, $ 1,350 $ 1,379 $ (29) 102.17% Insurance $ 521 $ - $ 521 0.00% .. -f $ 4,687 $ - $ 4,687 0.00% Total Expenses $ 32,421 $ 55,221 $ (22,800) 170.32%1 _ $ 312,787 $ 312,839 $ (52) 100.02% Operating Income, .$ 40,454 $ 17,628 $ (22,826) . . 43.58% i ' s:$ 343,088 i5. 331;058=a$ (12,030)T. 96.49% Equipment Replacement Reserve $ 13,000 $ 13,000 $ - 100.00% $ 117,000 $ 117,000 $ - 100.00% Net Income - .$_. 27,454 $ 4,628 $ (22,826): 16.86% - $ 226 088_-$ 214;058 i$ -(12,030fr -2.94.68% 2003 Investment Reportlnv Report 2003 City of Palm Desert Parkview Office Complex Vacancy Rate Schedule by Suite March 2003 211 State of California Department of Food &Agriculture 937 217 Joe B. McMillan,. Esq. 775 220 Vacant 1,607 222 Cove Commission-Fire Marshal 1,900 222 CITY Storage-Vacant 1,081 Total square footage(2 story Building) 31,562 Vacancy Rate-3,388/31,562= 10.73% 73-720 Fred Waring Drive- One Story Building 100 State of California-Water Resources 15,233 102 State of California-Rehabilitation Department 4,396 Total Square Footage 19,629 Vacancy Rate-0.00% 0.00% Overall Vacancy Rate for Both Buildings: Vacancy Rate--3,388/51,191 6.62% Occupancy Rate-47,803/51,191 93.38% 2003 Investment ReportVacancy Report City of Palm Desert Parkview Office Complex Vacancy Rate Schedule by Suite March 2003 Suite Square No. Tenant Feet 73-710 Fred Waring Drive-Two (2) Story Building 100 Hanover 1,915 100A EPA 645 102 Bergren 1,360 103 Multiple Sclerosis 488 104 Arthritis Foundation 960 106 Coachella Valley Economic Partnership 928 108 Assembly Rules Committee 450 (Assemblyman Benoit's lease begins March 1,2003) 112 Senator Baffin 1,741 114 Chamber of Commerce 1,478 118 Goodwill Industries 1,250 119 City/CVAG Conference Room 1,380 120 Duke Gerstal 1,750 200 CVAG 4,292 200A University of California Riverside 841 201 University of California Riverside 604 203 Mountain Conservancy 480 205 Vacant 700 208 Alzheimer's Association 960 210 Wilson,Pesota&Pichardo 3,040 2003 Investment ReportVacancy Report e City of Palm Desert Desert Willow Budget Vs Actual For the month of February 2003 Budgeted Actual Budgeted Actual February February $ Percentage Year to Year to $ Percentage Revenue 2003 2003 Variance Variance Date Date Variance Variance Course&Ground $ 690,220 $ 637,535 $ (52,685) 92.37% $ 2,658,946 $ 2,506,558 $ (152,388) 94.27% Carts $ 43,259 $ 41,855 $ (1,404) 96.75% $ 234.763 $ 203,570 $ (31,193) 86.71% Golf Shop $ 98,252 $ 95,480 S (2.772) 97.18% $ 469,295 $ 462,190 $ (7,105) 98.49% Range $ 4,900 S 5,239 $ 339 106.92% $ 24,750 $ 26,260 $ 1,510 106.10% Food&Beverage $ 174,726 $ 165.049 S (9,677) 94.46% S 859,567 $ 906,447 $ 46,880 105.45% Interest Income $ 400 $ 47 $ (353) 11.75% $ 4,650 $ 1,599 $ (3,051) 34.39% Total Rev nues $ 1,011,757 $ 945,205 $ (66,552) 93.42% $_ 4,251.971 $ 4,106,624 $ (145,347) 96.58 j Payroll Proshop $ 6,336 $ 6.091 $ 245 96.13% $ 33,589 $ 31,302 $ 2,287 93.19% Cart $ 31,149 $ 29,306 $ 1,843 94.08% $ 178,576 $ 167,901 $ 10,675 94.02% Course&Ground $ 118.784 $ 112,651 $ 6,133 94.84% $ 1,014,911 $ 995,887 $ 19.024 98.13% Golf Operations $ 31.773 S 22,799 $ 8,974 71.76% $ 219,276 $ 193,803 $ 25,473 88.38% General&Administration $ 40.224 $ 34,473 $ 5,751 85.70% $ 326,372 $ 285,393 $ 40,979 87.44% Food&Beverage $ 63,907 $ 70,458 $ (6,551) 110.25% $ 429,596 $ 484,308 $ (54,712) 112.74% 'Total Pa roll 292 173 7 778 16.395 94.39% 2 202 320 2 158 594 43 726 98.01% Other Expenditures Perimeter landscaping $ - $ - $ - 0.00% $ - $ - $ - 0.00% Proshop $ 2,955 $ 1,362 $ 1,593 46.09% 5 28,795 $ 30,863 $ (2,068) 107.18% Proshop-COGS $ 53,671 $ 44,002. $ 9,669 81.98% $ 254,877 $ 192,634 S 62,243 75.58% Cart $ 14,395 $ 13.717 $ 678 95.29% 5 112,210 $ 109,099 $ 3.111 97.23% Course&Ground-North Course S 33.207 $ 28,331 $ 4,876 85.32% $ 512.921 $ 456,543 $ 56,378 89.01% Course&Ground-South Course $ 30,088 $ 28.589 S 1.499 95.02% $ 475,384 $ 448,412 $ 26,972 94.33% Course&Ground-Desert Pallet-N $ 1,470 S 360 S 1.110 24.49% $ 9,770 $ 8,078 $ 1,692 82.68% Course&Ground-Desert Pallet-S $ 860 $ 421 $ 439 48.95% $ 10.430 $ 5,918 $ 4.512 56.74% Golf Operations $ 865 $ 2,583 $ (1,718) 298.61% $ 11,005 $ 11,800 $ (795) 107.22% General&Administration $ 79,712 $ 71,564 $ 8,148 89.78% $ 555,064 $ 602,121 $ (47,057) 108.48% Range $ 150 $ 1.288 S (1,138) 858.67% $ 11,400 $ 9,235 $ 2,165 81.01% Food&Beverage $ 14,610 $ 15,740 $ (1.130) 107.73% $ 111.490 $ 109,243 $ 2.247 97.98% Food&Beverage COGS $ 54,588 $ 46.236 $ 8.352 84.70% $ 270,220 $ 284,409 $ (14.189) 105.25% Management Fee $ 25,000 $ 25,000 $ - 100.00% $ 200,000 $ 200,000 $ - 100.00% Financing/Lease $ 3,199 $ 6,527 $ (3,328) 204.03% $ 12,701 $ 30,075 $ (17,374) 236.79% Total Other Ex,enditures 314 770 285 720 S 29 050 90.77% 2 576 267 $ 2 498 430 77837 96.98% Desert Willow Golf Academy Desert Willow Golf Academy $ 18,400 S 17,741 $ (659) 96.42% $ 92,150 $ 70,113 $ (22,037) 76.09% COGS-Merchandise $ (9,995) $ (4.033) $ 5,962 40.35% $ (61,996) $ (36,771) $ 25,225 59.31% Other Expenditures $ (2,300) $ (10,325) $ (8,025) 448.91% $ (17,673) $ (31,323) $ (13,650) 177.24% $ - Learning Center Income(Loss) $ 6,105 $ 3,383 $ (2.722) 55.41% $ 12,481 $ 2,019 $ (10,462) 16.18% Operating Income(Loss) $ 410,919 $ 387.090 $ (23.829) 94.20% $ (514335) $ (548,381) $ (34,246) 106,66% Equipment Reserve Replacement $ 71,955 $ 66,734 $ (5,221) 92.74% $ 575,640 $ 533,872 $ (41,768) 92.74% Net Income(Loss $ 338 964 320 356 18 608 94.51% 1 089 775 1 082 253) 7 522 9. 1 Y Snapshot of Golf Rounds Budgeted(mo) Actual(mot Variance Variance% Budgeted(yid) Actual(ytd) Variance Variance% Resident 2,665 2,417 (2481 91% 11.170 11,631 461 104% Non Resident 5,334 5.145 (189) 96% 28,951 , 26,348 (2,603) 91% Other - - - 0% - 177 177 100% Complimentary 562 362 (200) 64% 2,939. 2,348 (591) 80% Total 8,561 7,924 (637) 93% 43,060 40,504 (2,556) 94% Folder:Desert Willow 200 t:Dw2003;Finaneial Statement Page 1 I ( f \ \ § ( ' 0) % @ ; ! \ ° \ 2 ® / q 0 4 4 . 0 N ` - _ : © r to 1.1 ] ]§ a co /0j \k{ ] j ) � )A ! 7 i \ \ )\ } \ / \ ) \ } k) } \\ ) a. jf C ) ! /! * 0 § \ : | w ki aI 0 Q 70 \ < | a ) f } ) o ` 7a E ` 02 22 / 7 Lim [: § 0 2 f . 7 ;� C]a ) ao ) . « c � ) a § # °- � ^ ) k4 » ) ) ± ® z { f ; / � ; ) ! « - § : < N ` Eail a 2 0 4 V P. 4 e- "o fl &, .°N,,,00< got"YB hn<G$Pn G', nm a a'°�"e a G e ° .9 o- $ $n w o 0 0= p�i o m s$m N n 8 n a,, g- = g a C> Y,4 < ` g N . N1R P &R'R N P R RZg O O ZQA M 04„0.1R . R Nqm R at Q5Q V NC pv� Nd 0. v < p •" a _ �Cy gU'i `. t For < • ow > m p M p m y O L. ry T p bfQ�g F. �pO^d'�1 O n +1i ulN Ypy.gg� O • <Y� N N 1<n� ,Q ci R.,-R*om O _Kajr rX"i ,,y`�Q^."1 ut -Qvlzokdn 8Fi Rav[ r1 rt R LJ -fNl�^M i jo ^-8N"'m� N' r^yamr;1W o "'RS� -�.5g�' 'C.= ' $ o T O°v N < - G 3$ a C tO N N » ill. .., '"Ci � K '4:.: r9 $E K g»'-_.3npr $ m' o4 - a e I �_'2ACC $ Duo U P �C.77 d a c V a e N 0 CQv5 » - S e -c z _ men 7- syeesp ' �g¢e 7- ,,eeaeeee sae�e e 7 e ee e e e 7-1 *egg e iu o nR9 n:: mrQhO 4 a`2g,928Nw 12 8. nr att h ^o 8 o t R��3 6 e 'S e a• gg > ° i:Rw 5.. q�Fa . �%t'Naa' mg�on -a<�� 8$0 "^o' ki N v ri v �F-" Na NI M ».y .. ci- a Ve • $ P O? m M pN N{-� p Mi o " n01.00 4 Yya NN0 4. gN i <My P OJ dqq�= - �RR= �N otl n _ M n �N � N ^e: a N4 = » w q �Yc g M M g G °° 4 ran? p QQ 6 �n+R$."7b° ,i: oggR" I.` . em1$^o'i R— C1 ^` ^-Q`M� n Z2 ^ n' _ wN ^ a _ *a-,"4 s . F4r-.ynn N 4MQ - Cao e� o� R < C .=a. 2 E + S R t = a v e '- _ 1C v= E - . . . 23ce> o AE E < 3 _ EA , a __ ii n o 8 VA < ` O O VA < - SS _ a _ ii b mQ mkwa _ wg ffi1m4o0 • , ; _L „ t $ - t „Odb - too „O : ass- Eg tic = 3 m ' E£ E _ 6 � g '- c� 001 _ k _ „ ' s v3u�W= F Ovui F > &OuuLLLL ' Ago o W z` ca5c. -c t i -a. • ei u 4 0 � o 00 o a ? W O of N Clp O O N N. 0 F A' g 6." a O Lch QQ .2 0 0 I $ ; at w - o ymya ° § ce i. F7N a U C4 U p6 „� m f6 0 aN U O � N tS S. m 0 0 IS to M § Lit O NON 1 5 a 55 c 2 H 8 U a 0 0 v 1s - � o U N 8iI X • Y ss 1 RS N 8t NN a . I 01 CO 40 to �_ 8 M N L _ C M \-o N w O O N T `8O a N r w 0 N o a T Xyy °m y W \-g W G i Bp I 7 LL o p Be U r rn co_ n. Q c_ ri 01 N Cm m ^ f9 \-g 0 Q� OD c0 N C X co 04 p+ a �+ N d) O) _ C 4NE W O. N `A C al eU `p E m 5Q� al. Co —g K O 0 W N C O O.N N O N U 6. co it 41 y mOh: La OOIs LL O+ Ol p .a V L S k n 5 a S3 c o c ro 8 y iii J O a ots �l 6 O CVVJ E 0 a N tio6e;o 8 0 U W w. 880g000 c 9� o c= > • 2 m' a". ^ ° c< O KerXKatsex e 4C=m C'Sr'^.gK o 0 O j U te .. Rpa38$M,-, 1 ya `o do 6 F- E 2 r tt' z t $° q,; 68 N 8 cc ' ❑F_r aen$ o V No 'dodo b 0 dG 0o to d Ea Ate 0 Gaeu�eirded"dede etS rawb'd' P.'M a so ~ ae> sbe e pt Fe e 2e eY a u 0 Yi dh d d **, p — r: Q " Fho5 F r r. g , Oa ei - pEEl=3 m Egg ^ o Rgg8 N' nng : a ran _0 o a 'a ; m 2 me eaeees a "d $ tX T. • `e o66—n.,—n N R l y' , N a$ 0.m!a g ry ek M _ _444, ^1 ,q-x ry n P `a . r�8 .tx,g a o� -- v os " .`".. eeZ '0 �om _ f- .< a Z N o b e%�dd"dn q*** * 8 . 2ha Y dt ee ed .8 e r'xan Fn T oar . n $ z hBanr. e „, az > a sp > r F OQ �%i- AMH N at QS - #10 a >' A > 3 R<g ° - r .^' ' Vito-° k O ap r _Q N aa v p ` - 0=0 , e N 3 pBr mm. m e „3 �$n''n_�,_mr.1 » sE Rr„iLia oN 'n 9,50Fa erg m a v 9 n z °„ MCIF, r FZ .y P h N ' <te eVP N �� F�a N a a a S F. 'a 1 '0 0 o' ¢ `o o c g .a g .A g E n E y E t o Z 4 E n`E y€y ?3 a 4 E Y8' E Ey Z q a E Y8' E y Ey Z A .?,4J462d.T V a.Z�X1�26.1u :l ,�,«'V Zd...f .. g<oV2d,^_� r B ^ Ia 9c gg$U$0000 o P.J 9 > K ry i Om Y G O� R.oexgegx .4 el fl- yE e 0.2. > t 0 " asls^ Y ttA Bp - YY,}p��3pOp � Em 2 pGpp w N Y n*9*6 O O x H N aC_ E z Y^1 N N F O ` 6 '666 n 9 A os C FED ae 3 tee gene 3sE - > CL .N P in e1:5** C : E '> F , 3 zm xxxxxxxx o �EGB cf ., on ei x e eaz P-z p ^ xx_xaxxppxu�xxe u� s .x� ^ xrlexp�xxx x G ^ p u u111 8Y a. < Pa R px a b _ u vyh One: 0 N j=,2 a ffi G ci 9 P - x'E 'z > F� > xx-xnxxx�x "s1Gr , Sgg 1 ao n. FQA h _ ^GG"s"t�° c NYr RIc OO M C - _ u N y 3 • pQ ga ass p"'-i�g Fe m o$ '°n_¢ anQ �� ;1 �r� a� a Ad1 oo" ��nh =m g oZ �m ,"yc n3C1�K�nr - on _Ri ��t�i _ ac F��g�'S�M1^� y q1n F^-^2^P1=�gq x 1 • FPO I �p F11qwa- 33 a o c E. r E. r - s r Win ; E y E 4 t .. E$' E - Ailing E i<ZAHAA,i 3 <',x'cS zO° `$ ci .-2<',X3z°o ;<' (�z°o a� Cl' i a Va ; n t a d © ! : ( / / « K co : ! ; ° . j % C;°: !0 � / rJf \a j ! ! ! $) , ° , ` ` .t a !t ! * 1 | X• ] ) \� % . k � . \ \ j }, § �7 P 10 � � {§ ) ! ) § } [ i { [ $ | _ ;U,oco 4 ■} ! * ,` k M ! k } \ : ,{) _ .0 f ! ! ! 2 Ii . � � i \ 'St a ) TTh. ! / co ) Desert Willow Breakdown of Rounds per point of sale system Desert Willow - Combined Analysis- February 2003 Resident 2,417 $ 108,755 $ 45.00 30.50% Non-Resident 5,145 $ 528,076 $ 102.64 64.93% Complimentary 362 $ 1,155 $ 3.19 4.57% Desert Willow Totals 7,924 $ 637,986 $ 80.51 p 100.00% Dw2003;POS AVG RD Page 9 Desert Willow Breakdown of Rounds per point of sale system FIRECLIFF COURSE- FEBRUARY 2003 Description No. Of Revenue Avg. Per Pet to Rounds Per POS Round Total Resident Rounds Resident Fee-Weekday 994 $ 44,720 $ 44.99 26.68% Resident -Twilight 51 $ 2,295 $ 45.00 1.37% Total Resident I 1,045 I $ 47,015 I $ 44.99 I 28.05% II Non Resident Posted Weekday 302 $ 50,475 $ 167.14 8.11% IROC Des. PRTY - Weekday 92 $ 7,590 $ 82.50 2.47% IROC MBR/Guest-Weekday 31 $ 4,092 $ 132.00 0.83% Wholesale Weekend 4 $ 320 $ 80.00 0.11% Wholesale Weekday 996 $ 85,154 $ 85.50 26.73% Twilight 27 $ 2,700 $ 100.00 0.72% Players Club-Weekday 19 $ 1,805 $ 95.00 0.51% Outing 836 $ 89,075 $ 106.55 22.44% Players Club Comp 23 $ 1,840 $ 80.00 0.62% Fee Special Event Variable 287 $ 31,062 $ 108.23 7.70% Total Non Resident Rounds 2,617 I $ 274,113 I I $ 104.74 70.24% Other Rounds Junior Walking - $ - $ - 0.00% Total Other - $ - $ - 0.00% Complimentary PGA Member 22 $ 550 $ 25.00 0.59% VIP 28 $ 155 $ - 0.75% Employee/ Employee Guest 14 $ - $ - 0.38% Total Complimentary 64 I $ 705 I $ 11.02 I 1.72% • Total Rounds (FlreCliff) 3,726 $ 321,833 $ 86.37 100.00% Dw2003;POS AVG RD Page 10 Desert Willow Breakdown of Rounds per point of sale system MOUNTAINVIEW COURSE- FEBRUARY 2003 Description No. Of Revenue Avg. Per Pct to Rounds Per POS Round Total Resident Rounds Resident Fee-Weekday 1,372 $ 61,740 $ 45.00 32.68% Total Resident 1,372 $ 61,740 , $ 45.00 32.68% Non Resident Posted Weekday 227 $ 37,810 $ 166.56 5.41% IROC Des. PRTY- Weekday 190 $ 15,675 $ 82.50 4.53% IROC-MBR Guest - Weekday 36 $ 4,752 $ 132.00 0.86% Wholesale Weekend 8 $ 640 $ 80.00 0.19% Wholesale Weekday 853 $ 72,919 $ 85.49 20.32% Outings 607 $ 64,365 $ 106.04 14.46% Twilight 270 $ 25,820 $ 95.63 6.43% Player's Club-Wkday 53 $ 5,035 $ 95.00 1.26% Player's Club Comp. 19 $ 1,520 $ 80.00 0.45% Fee Special Event Variable 265 $ 25,427 $ 95.95 6.31% Total Non Resident Rounds 2,528 I $ 253,963 $ 100.46 60.22% Other Rounds Junior Walking - $ - $ - 0.00% Total Other I - $ - $ - I 0.00% Complimentary VIP 27 $ - $ - 0.64% PGA Member 16 $ 400 $ 25.00 0.38% Champions Club 45 $ - $ - 1.07% COD / PDHS 124 $ - $ - 2.95% Employee/Employee Guest 86 $ 50 $ 0.58 2.05% Total Complimentary 298 $ 450 I $ 1.51 7.10% Total Rounds (Mountainview) 4,198 $ 316,153 $ 75.31 100% Dw2003;POS AVG RD Page 11 City of Palm Desert Desert Willow Cash Reserve Analysis for the month of February 2003 Cash Reserve Analysis One Month Required Reserve p I $ 500,000.00 I [Cash on Hand II $ 498,043.04 Variance-Favorable Unfavorable $ (1,956.96) Page 12 PalmDesert Recreation Facilities Corporation Income Statement Feb-03 Feb-03 # To Budget Actual Variance Variance Food & Beverage Revenues $174,726 $165,049 ($9,677) 94.46% Total Revenues $174,726 $165,049 ($9,677) 94.46% Salaries $63,907 $70,458 ($6,551) 110.25% Cost of Goods Soid-F&B $54,588 $46,236 $8,352 84.70% Food & Beverage Expense $14,610 $15,740 ($1,130) 107.73% Total Expenses $133,105 $132,434 $671 99.50% • Net Income(Loss) $41,621 $32,615 ($9,006) 78.36% Note: The above revenues and expenditures are also included in the Desert Willow analysis. Dw'2003:PDRFC Budget Page 1 r-. PALM DESERT FINANCING i AUTHORITY I I I t PROJECT AREA NO. 2 2003 TAX ALLOCATION BONDS I I I I I I March 26, 2003 I I 1 1 1 1 1 1 1 1 1 1 t 1 1 1 TABLE OF CONTENTS I. Project Area No. 1 Cover Page Official Statement 1 List of Participants 1 1 1 II. Preliminary Pricing Results Comparable Tax-Exempt "AAA" Insured Issues 2 1 1 III. Final Pricing Schedules Sources & Uses 3 Debt Service 3 Pricing Summary 3 1 1 1 IV.The Interest Rate Environment ' Economic Summary 4 1 1 1 I I I I I I I I I 1 I I I I I I I U 1 I ` 1 I 1 I ' NEW ISSUE-BOOK ENTRY ONLY RATINGS(MBIA Insured):Standard&Poor's: "AAA" Fitch: "AAA" (See"CONCLUDING INFORMATION—Ratings"herein). In the opinion of Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, Bond Counsel, under existing law,the interest on the Bonds is exempt from personal income taxes of the State of California and,assuming compliance with the tax covenants described herein, interest on the Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986, as ' amended,from the grass income of the owners thereoffor federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax. See, however, "CONCLUDING INFORMATION— Tax-Exempt Status of the Bonds" herein regarding certain other tax considerations. t S15,745,000 PALM DESERT FINANCING AUTHORITY TAX ALLOCATION REVENUE BONDS (PROJECT AREA NO.2) SERIES 2003 Dated: Date of Delivery Due: August 1,as shown on the inside cover hereof The Palm Desert Financing Authority, Tax Allocation Revenue Bonds (Project Area No. 2) Series 2003 (the "Bonds") will be ' issued as fully registered instruments without coupons, in the denomination of$5,000 or any integral multiple thereof, in book-entry form,initially registered in the name of Cede&Co.,as nominee of The Depository Trust Company,New York,New York("DTC"). Purchasers will not receive physical certificates representing their interest in the Bonds. For so long as the Bonds are registered in the name of Cede&Co.,all payments of principal and interest on the Bonds will be made to DTC,which,in turn,is obligated to remit such principal and interest to DTC Participants(defined herein)for subsequent disbursement to the Beneficial Owners(defined herein)of the Bonds. See"THE BONDS—Book-Entry Only System"herein. The principal or_redemption price of each Bond will be payable upon the presentation and surrender of such Bond,when due or ' redeemed,as applicable,at the corporate trust office of BNY Western Trust Company,Los Angeles,California as trustee for the Bonds (the "Trustee"). Interest on the Bonds will be payable on February 1 and August 1 of each year (the "Interest Payment Dates"), commencing August 1,2003,by check or draft,mailed on the Interest Payment Date to each Owner of the Bonds as of the Record Date preceding such Interest Payment Date, except the Trustee will, at the written request of any Owner of$1,000,000 or more in aggregate •principal amount of Bonds,make payments of interest on such Bonds on the Interest Payment Date by wire transfer to the account in the I United States designated by such Owner to the Trustee in writing as described herein. See"THE BONDS—Description of the Bonds" herein. The Bonds are subject to optional redemption and mandatory sinking fund redemption as described herein. ' The Bonds will be issued by the Palm Desert Financing Authority(the "Authority") under an Indenture of Trust, dated as of March 1,2003(the"Indenture"),by and between the Authority and the Trustee. The proceeds of the Bonds will be disbursed to make a loan(the"Loan")to the Palm Desert Redevelopment Agency(the"Agency")pursuant to a Project Area No.2 Loan Agreement dated as of March 1,2003(the"Loan Agreement")by and among the Authority,the Agency and the Trustee. The Agency will use proceeds of the Loan to finance certain redevelopment activities within or of benefit to the Project Area,to food a reserve fund for the Bonds,and to pay costs of issuance of the Bonds. The Bonds are special obligations of the Authority payable from and secured by Revenues(as defined herein),consisting primarily of amounts payable by the Agency under the Loan Agreement. The Loan Agreement is secured by and payable from Tax Revenues,as ' defined herein. The Agency currently has outstanding,and may,pursuant to the terms of the Loan Agreement and the Indenture,issue additional obligations secured by Tax Revenues on a parity with the Loan(the"Parity Debt"). See"SECURITY FOR THE BONDS" herein. .AIBIA ' Payment of the principal of and interest on the Bonds when due will be insured by a municipal bond insurance policy to be issued by MBIAInsurance Corporation simultaneously with the delivery of the Bonds. See"BOND INSURANCE"herein. The Bonds are not a debt of the City of Palm Desert(the"City"or of the State of California or any of its political subdivisions (other than the Authority),and neither the City nor the State of California nor any of its political subdivisions(other than the Authority) is liable therefor.The Loan is not a debt of the Authority or of the State of California or any of its political subdivisions(other than the Agency), and neither the Authority nor the State of California nor any of its political subdivisions (other than the Agency) is liable therefor. Neither the Bonds nor the Loan constitutes an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the members of the Authority nor of the Agency nor any persons executing the Bonds or the Loan Agreement are liable personally thereon. In no event will the obligations of the Agency under the Loan Agreement be payable out of any funds or properties of the Agency other than Tax Revenues(as defined herein)set forth in the Loan Agreement. The Bonds are offered when,as and if issued and accepted by the Underwriters,subject to the approval as to legality by Richards, Watson&Gershon,A Professional Corporation,Los Angeles,California,Bond Counsel. Certain legal matters will be passed on for the Underwriters by Fulbright&Jaworski L.LP.,Los Angeles,California. It is anticipated that the Bonds will be available for delivery in New York,New York through the facilities of DTC on or about March 26,2003. KINSELL, NEWCOMB ',Sib DE DIOS, INC. STINSON SECURITIES,LLC INVESTMENT BANKING 1 The date of this Official Statement is March 12,2003. I 1 1 1 1 1 1 1 t 1 1 1 '• PALM DESERT FINANCING AUTHORITY PALM DESERT REDEVELOPMENT AGENCY CITY OF PALM DESERT ' AUTHORITY COMMISSION AND STAFF, ' PALM DESERT FINANCING AUTHORITY COMMISSION MEMBERS ' Jean M. Benson, President Robert A. Spiegel, Vice President Buford Crites, Commissioner ' James Ferguson,Commissioner Richard Kelly, Commissioner ' Carlos L. Ortega, Chief Administrative Officer CITY COUNCIL/AGENCY MEMBERS ' Jean M. Benson, Mayor/Chairman Robert A. Spiegel,Mayor Pro Tem/Vice Chairman Buford Crites, Councilmember/Member • James Ferguson, Councilmember/Member Richard Kelly, Councilmember/Member IAGENCY STAFF Carlos L. Ortega, City Manager/Executive Director ' Justin McCarthy,Assistant City Manager/Redevelopment Homer Croy,Assistant City Manager Development Services Sheila R. Gilligan,Assistant City Manager Community Services ' Paul S. Gibson,Finance Director/Treasurer David L. Yrigoyen,Director of Redevelopment Teresa L. La Rocca, Director of Housing Dennis M.Coleman,Redevelopment Finance Manager t Jose Luis Espinoza, Finance Operations Manager Janet M.Moore,Senior Management Analyst ' • SPECIAL SERVICES Bond Counsel Trustee ' Richards, Watson&Gershon BNY Western Trust Company A Professional Corporation Los Angeles, California Los Angeles,California ' Financial Advisor Fiscal Consultant MuhiSoft Rosenow Spevacek Group, Inc. Modesto, California Santa Ana, California 1 1 I 1 1 1 t 1 1 1 1 1 1 1 I I I 1 1 1 ,c-2- 1 1 1 1 1 1 1 1 1 1 1 1 1 I I I I I I I I I I I I I I I I I I 1 I Palm Desert Financing Authority ITax Allocation Revenue Bonds IIssuer Issuer Issuer Issuer I Palm Desert Financing Cucamonga County California Educational Rancho Santiago Cmnty Authority PA#2 Water District Fac.Auth Clq. Dst Sale Date 3/12/2003 3/1012003 3/7/2003 3/1112003 Par Amount $13,340,000.00 $150,000,000 $96,125,000.00 I Rating AAA-MBIA AAA-FGIC AA+ AAA-MBIA Fin.Type Tax Allocation COP Revenue Bonds(USC) GO Bonds Kinsell, Newcomb & De RBC Damn Rauscher/ I Dios, Inc./Stinson Kinsell, Newcomb & De Underwriter Securities,LLC. Stone &Youngberg Morgan Stanley Dios, Inc. Coupon/ Coupon/ Coupon/ Coupon/ IYield Yield Yield Yield 2003 2.00 @ 1.00% _ ' 2004 2005 _ 1.10 @ 1.10% 2.00 @ 1.20% 2006 2.00 @ 1.50% _ 2007 2.00 @ 2.00%' 2008 2.50 @ 2.40% 2009 3.00 @ 2.80% _ 2010 4.00 @ 3.05% I 2011 3.50© 3.30% 2012 4.00 @ 3.50% 2013 4.00 @ 3.65% 2014 4.00 @ 3.80%' 2015 4.00© 3.90% 2016 4.00 @ 4.00% 2017 4.125@4.14% 2018 4.125@4.24% _ 2019 4.25 Ca?4.35% 2020 4.375 @ 4.45% 5.00 @ 4.23% I 2021 4.50@4.55% 5.00 @ 4.33% 2022 4.50 @ 4.60% 4.375 @ 4.57% 2023 4.60 © 4.65% 4.625 © 4.65% 4.75 @ 4.70% 5.00 @ 4.53% 2024 4.65 @ 4.70% 5.00 @ 4.57% I 2025 2026 4.70@ 4.75% _ 5.00 @ 4.65% 2027 4.50 @ 4.75% 2028 2029 2030 I 2031 2032 2033 5.00 @ 4.75% , 5.00 @ 4.75% I 1- I I I I I I I I I I I I I IPalm Desert Financing Authority ' Tax Allocation Revenue Bonds (Project Area No. 2) Series 2003 IComparables on the day of Pricing 3-12-03 Issuer Issuer Issuer Issuer I Palm Desert Financing Los Angeles Com Fac. Santa Margarita/ Dana Authority PA#2 - #4 PT Banning USD Sale Date 3/12/2003 _ 3/10/2003 3/10/2003 3/10/2003 ' Par Amount $15,745,000 _ $135,000,000 $18,225,000 $8,000,000 Rating AAA- MBIA AAA-AMBAC AAA-MBIA AAA-FSA Fin.Type Tax Allocation Special Tax Revenue Bond GO ULT Kinsell Newcomb & De George K. Baum & ' Underwriter Dios, Inc. Stone &Yongberg UBS Painwebber, Inc Company Coupon/ Coupon/ Coupon/ Coupon/ IYield Yield Yield Yield 2003 2004 1.05 @ 1.08% 2.00 @ 1.10% t 2005 2.00 @ 1.20% 2,00 @ 1.15% 2006 2.00 @ 1.50% 2.00 @ 1.52% 2.00 @ 1.52% 2007 _ 2.00 @ 2.00% 2.00 @ 2.03% 2.50 @ 1.97% ' 2008 2.50 @ 2.43% 2.25 @ 2.37% 2.50 @ 2.33% 2009 3.00 @ 2.83% 2.60 @ 2.78% 2.60 @ 2.68% 2010 3.00 @ 3.08% 3.00 @ 3.075 2.90 @ 2.97% 2011 3.50 @ 3.35% 3.25 @ 3.33% 4.00 @ 3.24% I 2012 3.75 @ 3.55% 3.40 @ 3.36% 4.00 @ 3.45% 2013 3.625@3.65% 3.50@3.67% 3.50@3.58% 2014 4.00@3.83% 3.70@3.81% ' 2015 4.125@3.95% 4.00@4.05% 3.75@3.95% 20164.00@4.10% 2017 4.00@4.15% 4.00@4.18% 2018 4.125@4.25% 4.125@4.28% 4.125@4.22%' 2019 4.25 @ 4.38% 4.25 @ 4.36% 4.25 @ 4.32% 2020 4.375 @ 4.50% 4.40 @ 4.45% 4.25 @ 4.40% 2021 - 4.50 @ 4.60% 4.375 @ 4.55% I 2022 4.625 @ 4.65% 4.50 @ 4.65% 2023 4.50 @ 4.65% 4.625 @ 4.70% 2024 - 4.50 @ 4.70% 5.00 @ 4.90% ' 2025 L 2026 4.625 @ 4.73% 4.625 @ 4.75% 2027 4.50 @ NRO 2028 4.625 @ 4.77% I 2029 2030 4.75 @ 4.80% ' 2031 - 4.75 @ 4.85% 2032 4.75 @ 4.83% 2033 5.00 @ 4.75% I I I I I I I I I I I I I I I I I I I I i 1 1 1 1 1 1 1 1 i 1 1 1 1 1 1 I I I I I I I I I I I I I I I I 1 Palm Desert Financing Authority Tax Allocation Revenue Bonds 1 (Project Area No. 2) Series 2003 1 Sources and Uses Schedule 1 SOURCES OF FUNDS 1 Par Amount of Bonds $15,745,000.00 Reoffering Premium 186,537.10 1 Total Sources $15,931,537.10 1 USES OF FUNDS Total Underwriter's Discount (1 .000%) 157,450.00 1 Costs of Issuance 150,000.00 Gross Bond Insurance Premium 287,000.00 Reserve Surety Premium 27,000.00 1 Deposit to Project Construction Fund 15,310,087.10 TOTAL USES $15,931,537.10 1 1 1 1 1 1 I 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 I 1 Palm Desert Financing Authority 1 Tax Allocation Revenue Bonds I (Project Area No. 2) Series 2003 1 Debt Service Schedule 1 Date Principal Coupon Interest Total P & I 8/01/2003 267,016.06 267,016.06 I 8/01/2004 769,006.26 769,006.26 8/01/2005 769,006.26 769,006.26 8/01/2006 769,006.26 769,006.26 I 8/01/2007 769,006.26 769,006.26 8/01/2008 769,006.26 769,006.26 8/01/2009 769,006.26 769,006.26 1 8/01/2010 769,006.26 769,006.26 8/01/2011 769,006.26 769,006.26 I 8/01/2012 769,006.26 769,006.26 8/01/2013 769,006.26 769,006.26 8/01/2014 769,006.26 769,006.26 I 8/01/2015 769,006.26 769,006.26 8/01/2016 769,006.26 769,006.26 8/01/2017 769,006.26 769,006.26 I 8/01/2018 769,006.26 769,006.26 8/01/2019 769,006.26 769,006.26 8/01/2020 769,006.26 769,006.26 I 8/01/2021 769,006.26 769,006.26 769,006.26 8/01/2022 769,006.26 8/01/2023 875,000.00 4.500% 769,006.26 - 1,644,006.26 I 8/01/2024 910,000.00 4.500% 729,631.26 1,639,631.26 8/01/2025 1,145,000.00 4.625% 688,681.26 1,833,681.26 8/01/2026 1,340,000.00 4.625% 635,725.00 1,975,725.00 I 8/01/2027 1,405,000.00 5.000% 573,750.00 1,978,750.00 8/01/2028 1,475,000.00 5.000% 503,500.00 1,978,500.00 8/01/2029 1,550,000.00 5.000% 429,750.00 1,979,750.00 I 8/01/2030 1,630,000.00 5.000% 352,250.00 1,982,250.00 8/01/2031 1,715,000.00 5.000% 270,750.00 1,985,750.00 8/01/2032 1,805,000.00 5.000% 185,000.00 1,990,000.00 I 8/01/2033 1,895,000.00 5.000% 94,750.00 1,989,750.00 Total 15,745,000.00 20,110,928.78 35,855,928.78 I I I I I I I I I I I I I I 1 Palm Desert Financing Authority Tax Allocation Revenue Bonds (Project Area No.2) Series 2003 1 Pricing Summary 1 Maturity Type Of Bond Coupon Yield Maturity Price Dollar Price Value 8/01/2023 Serial Coupon 4.50% 4.65% 875,000 98.034%. 857,797.50 8/01/2024 Serial Coupon 4.50% 4.70% 910,000 97.317% 885,584.70 8/01/2026 Term Coupon 4.625% 4.73% 2,485,000 98.519% 2,448,197.15 8/01/2033 Term Coupon 5.00% 4.75% 11,475,000 102.309% 11,739,957.75 Bid Information Par Amount of Bond $15,745,000.00 Reoffering Premium of(Discount) 186,537.10 Gross Production $15,931,537.10 Total Underwriter's Discount (1.000%) $(157,450.00) Bid (100.185%) 15,774,087.10 ' Total Purchase Price $15,774,087.10 Bond Year Dollars $410,207.01 t Average Life 26.053 Years Average Coupon 4.9026292% Net Interest Cost (NIC) 4.8955384% True Interest Cost (TIC) 4.8817555% 1 1 1 I 1 I 1 1 1 e I 1 1 1 1 I I I i I I I I I I I I LiI I I I I I I I I I I I I I 1 1 1 1 1 1 1 1 1 1 1 Economic Summary ' During the pricing call, the Finance Team, comprising the Underwriting Syndicate (Kinsell, Newcomb & De Dios and Stinson Securities), the Financial Advisor(Munisoft), and the Issuer (Palm Desert Financing Authority), discussed the comparable interest rate ' scales on similar recent bond issues. We also discussed the supply of California paper currently trading in the market as well as competing issues pricing on the same day. Based upon the economic indicators and other factors discussed, the Authority ' determined to price the issue at the interest rate scale proposed at 6:00 a.m. on Wednesday, March 12, 2003. With the hard work of the Underwriting Syndicate and the ' Financial Advisor, we were able to get low rates and ultimately increase the project fund monies to the Authority. In conclusion, the Finance Team, with the help of a strong market, was able to meet and exceed all of the Agency's goals and objectives relating to the financing. The following articles describe what took place during the week of pricing. 1 1 1 I I I I I I I I I I I I I I I THE BOND BUYER THE DAILY NEWSPAPER OF MUNICIPAL FINANCE TUESDAY,MARCH 11,2003 • 1 News In Brief: Weekly.T-Bills Go At 1.055%, 1.030% Posted on Tuesday, March 11, 2003 Source: The Bond Buyer Tender rates for the Treasury's latest 91-day and 182-day discount ' bills were lower as the three-months Incurred a 1.055% high rate, down from the previous auction's rate of 1.175% and as the six- months incurred a 1.030% high rate, down from 1.170% from last ' week. Coupon equivalents were 1.077% and 1.053%, respectively. The price for the 91s was 99.733, and that for the 182s was 99.479. The median bid on the 91s was 1.050%. The low bid was 1.015%. The bid-to-cover ratio was 2.18. Tenders at the high rate were . allotted 12.10%. The median bid for the 182s was 1.020%. The low bid was 1.000%. The bid-to-cover ratio was 2.51. Tenders at the high rate were allotted 56.77%. 1 1 1 . 1 1 A 1 1 1 1 1 1 THE OND BUYER THE DAILY NEWSPAPER OF MUNICIPAL FINANCE WEDNESDAY,MARCH 12,2003 I )i 1 Tuesday's Market: New Issues Exceed $1 Billion Mark; Treasuries Exhibit War- Talk Softness Posted on Wednesday, March 12, 2003 Source: The Bond Buyer By Nicholas Chesla More than $1 billion in new issues came to market yesterday, led by a $410 million Mississippi general obligation loan, while cash- bond yields fell between one and two basis points. Treasuries were narrowly mixed, exhibiting some softness as both the United States and United Kingdom suggested there may be some flexibility in the March 17 deadline for Iraq to disarm. 1 On the economic front, January wholesale inventories fell 0.2% while sales rose 1.0%. "Wholesalers continue to keep inventories lean in the face of possibly slowing demand," said Jonathan Basile, an economist at Credit Suisse First Boston LLC. "The inventory build that we've seen in November and December looks like it has run its course for' the time being." ' In the municipal market, yields fell one to two basis points, while traders said resistance to current low yields meant demand for bonds by Institutions had become very specific and was concentrated In the 10-year range. "If people are looking to put some money to work they just want to keep it to the less volatile part of the curve where you don't have to worry about calls," a trader in New York said, "Most of the Inquiry is in the 10-year range, though there is some inquiry in the 15-year and 30-year ranges." In the new Issue market, Salomon Smith Barney Inc. priced approximately $410 million of Mississippi general obligation refunding bonds, Bonds in Series 20034 containing $326 million were priced to yield from 1.14% In 2004 to 4.430/0 in 2022. Bonds due 2003 were • ' subject to a sealed bid. Bonds due 2008 and 2013 yielded 10 basis points more in Municipal Market Data's Monday Triple-A yield curve scale, while bonds due 2018 yielded eight basis points more. 1 I 1 1 1 1 i 1 1 1 1 Series 2003B comprises $84 million in taxable bonds. Both series are rated Aa3 by Moody's Investors Service and AA by 1 Standard & Poor's and Fitch Ratings. Meanwhile, J.P. Morgan Securities Inc. priced $231 million of New York State Housing Finance Agency state personal income tax revenue bonds. At a repricing, yields were lowered on Series 2003A bonds by one basis point in 2019 and by two basis points in 2020, 2021, and 2033. Series 2003A, which totaled $129 million of tax-exempt bonds, comprised serials priced to yield from 3.60% in 2013 to 4.66% in 2024. A 2028 maturity containing $30 million was priced as 5 1/8s to yield 4.720/0 and a 2033 maturity containing $41 million was priced as 5s to yield 4.80%. 1 Bonds due 2013 yielded 17 basis points more than MMD's Monday Triple-A yield curve scale, while bonds due 2018 yielded 12 basis points more, bonds due 2023 yielded 13 basis points more, bonds • due 2028 yielded 10 basis points more, and bonds due 2033 yielded 15 basis points more. 1 Series 2003E contains $102 million taxable bonds. Both series are rated AA by Standard & Poor's and Fitch Ratings. I In the competitive sector, J.P. Morgan bought $190 million of New York GOs with a low Interest cost of 4.06% out of five bids. Salomon Smith Barney had the next lowest interest cost of 4.12%. Serial bonds were reoffered at yields ranging from 1.28% in 2005 1 to 4.62% In 2023. A 2028 maturity comprising $7.4 million was reoffered as 4 1/2s to yield 4.75% and a 2033 maturity containing $15 million was reoffered as 4 1/2s to yield 4.78%. Bonds due 2004, 2008, 2024, and 2025 were not formally reoffered. Bonds due 2013 and 2018 yielded 15 basis points more than MMD's Monday Triple-A yield curve scale, while bonds due 2023, 2028, and 2033 yielded 13 basis points more. The issue is rated A2 by Moody's Investors Service and AA by Standard & Poor's and Fitch. Back in the negotiated sector, Bear, Stearns & Co. priced $101 million in Utah Associated Municipal Power Systems power project revenue bonds. The final offering comprised serials priced to yield from 1.60% In 2006 to 4.69% in 2026. The issue is insured by Financial Security Assurance and carries an underlying rating of A3 from Moody's. 1 1 1 . I I I I I I I I I I I I I I I I THE I: OND BUYER I THE DAILY NEWSPAPER OF MUNICIPAL FINANCE THURSDAY,MARCH 13,2003 I . • Californians Pushing Vote for More I Effective Budget Process Posted on Thursday, March 13, 2003 I Source: The Bond Buyer By Deborah Finestone I Frustrated with California's current budget process, a coalition has proposed a ballot initiative to overhaul it and make it more accountable. The measure would lower the legislative vote threshold needed to. . pass a budget and cut lawmaker's pay If they fall to pass a budget on time. In addition, the measure would create a rainy-day fund •and make other changes. Supporters should begin circulating petitions In a couple of weeks in the hopes of placing the measure on the March 2004 ballot. Rarely have California lawmakers passed a budget on time since the 1980s, according to supporters of the initiative they call the • Budget Accountability Act, filed earlier this week with the state 1 attorney general. Proponents argue the Legislature and governor might act to meet the constitutional deadline for passing a budget if they faced some consequence for failing to do so. Currently, they continue to collect salary and expense allowances, are able to work on bills besides I the budget, and can go on vacation despite a budget not being passed by the June 15 deadline or signed by June 30, as the state • constitution requires. The initiative includes a provision to create a reserve fund intended to save during robust times and smooth over shortfalls during downturns and states of emergency. The Initiative's backers also I hope to limit partisan extremism In the Legislature and end gridlock. The measure eliminates the state's requirement that two- thirds of lawmakers approve a budget, which they claim currently 1 • contributes to persistently late budgets as party leaders refuse to compromise. Only Rhode Island and Arkansas set the supermajority vote tally Ifor passing a budget that high, according to the initiative's backers. Supporters propose a 55% threshold to pass the budget, related taxes, and other budget-related legislation. I . Trudy Schafer, program director and advocate for the League of . I I I I I I I I I I I I I I I • Women Voters in Sacramento, whose board voted to support the - initiative, said'the budget process needs improvement. "Voters want to see the end of gridlock and want to see a budget passed that addresses a whole range of needs," Schafer said. • "Legislators aren't held as accountable to voters as they should be. We think this package of provisions will make the process work and allow them to act responsibly." The first provision listed would prohibit lawmakers-and the governor from collecting salary and expenses for every day past the constitutional budget deadline. They would not receive payments retroactively after passage. The 55To vote threshold is set at the level where voters tend to think a consensus is established, Schafer said. State voters in 2000 approved a 55% threshold for passage of local school district bond measures, after earlier narrowly rejecting a measure that would have allowed approval by a simple majority. The proposed initiative would not affect the central tenet of California's landmark tax limitation measure, Proposition 13, which limits how much property can be taxed, according to James I Harrison, an attorney at Remcho, Johansen & Purcell who submitted the proposed initiative to the state. The initiative also hopes to create a rainy-day fund. In any year when revenues exceed amounts needed to fund current general fund service levels, at least 25% of the excess revenue would be deposited into the Prudent State Reserve Fund, unless the fund equals 50/0 or more of general fund expenditures for the preceding fiscal year. Appropriations from the fund could only be made when revenues are not sufficient to fund current service levels, or the governor declares a state of emergency. That would go along way towards avoiding major service cuts during economic downturns when people need social services more • than ever, said Anthony Wright, executive director of Health Access, a statewide coalition of 200 member organizations concerned with health care Issues. "A rainy-day fund is needed so we don't have huge dips where we have to cut basic health care services to millions of people," he said. Another provision of the initiative is intended to give lawmakers ' the ability to vote their conscience, rather than be swayed by party influence, supporters said. It would enable legislators to file ethics complaints if they felt unfairly bullied by party officials. 1 "In years like this one and last one, it will take courage to vote for what Is a responsible budget because there are no easy answers," Schafer said. "The only Way to pass a package will be to swallow hard and vote for something you don't like." 1 I 1 I 1 1 I 1 1 1 Finally, the initiative seeks to educate voters by providing in the ' state ballot pamphlet for every statewide election a two-page summary of how the state spends its funds. It would include directions to a state Web site that details lawmaker's voting record • • on the budget and related bills. Despite the many provisions in the Budget Accountability Act, ' supporters and their lawyers do not think the measure violates the state's rule that measures deal with a single subject. ' "All of the provisions are about the budget process," Schafer said. "'Accountability' is the word that holds it all together." ' Though the initiative has many potential opponents, supporters hope more people think the system needs to be more accountable, according to Wright. ' Naysayers may pick on a particular provision, but "opposing the Initiative is like saying you want to give up on the solution to the process," Schafer said. If approved, it may also Improve the financial world's view on the state, Wright said. ' "It may help our credibility that we have a system that would be more accountable and improve the financial standing of the state," he said. "We think this will bring some sanity to the process so we can have budgets that meet the needs of Californians, done in a timely manner where we don't push off problems into the future." 1 1 1 . 1 • 1 I I I I I I I I I I I I I I 111 THE BOND BUYER THE DAILY NEWSPAPER OF MUNICIPAL FINANCE FRIDAY,MARCH 14,2003 • CALIFORNIA: Fiscal Forecast• . Posted on Friday, March 14, 2003 Source: The Bond Buyer California's budget problems will not kill Its economic recovery, but they "could certainly reduce the state's growth rate for several years," economist Tom Leiser wrote in a quarterly forecast for the Anderson School of Business at the University of California at Los Angeles. Balancing the budget, with a shortfall of up to $34 billion, will require combining spending restrictions and revenue Increases, and the combination is bound to cost thousands of jobs in government and the private sector, Leiser said in a report released Wednesday. Lawmakers should focus on spending cuts that don't affect employment levels and on tax increases that don't substantially affect discretionary income, he wrote. "California has little to gain, and much to lose, by delaying the implementation of measures to improve its fiscal situation," Leiser wrote. Several years from now, when the economy has improved sufficiently, the state should overhaul the entire budget process, Leiser said in his report. The state will not lose a significant number of households and businesses due to higher taxes as some have warned, he said. But California gas prices, which are among the highest in the country, will dent the discretionary Income of average households, and high home prices will remain a barrier to growth for new businesses employing moderate-Income workers. • • I • U 1 1 I 1 I 1 1 1 1 I I THE BOND BUYER 1 THE DAILY NEWSPAPER OF MUNICIPAL FINANCE FRIDAY,MARCH 14,2003 1 1 Bond Buyer Yield Indexes. Mostly Fall, as One-Year Note Hits All Time Low Posted on Friday, March 14, 2003 Source: The Bond Buyer By Aaron T. Smith fThe Bond Buyer yield indexes mostly fell this week, with the one- year note index hitting an all-time low. • However, there are signs that the downward trend might come to an end. The free-fall in Interest rates slowed towards the end of the week, as dovish reports regarding Iraq spurred investors to 1 make money, not war, and as equities rose and the flight to quality saw some reversal. "Bonds are highly overvalued," said Scott Anderson, economist for Wells Fargo. "We think this is long overdue and there could be a significant upward trend in yields, if we don't see a double dip recession." On Monday, Treasuries priced higher and stocks plunged, while municipal bond yields fell. The flight to quality was sparked by war 1 jitters as the United States made preparations to invade Iraq. On Tuesday, Treasuries were higher on the long end but otherwise 1 flat, while stocks slipped and municipal bonds fell. Traders played walt-and-see with a possible war in Iraq. • • On Wednesday, the 30-year bond price jumped another half point, though the short end was lower. Stocks were up slightly and municipals fell. On Thursday, the bottom fell out of Treasuries, with the 30-year price dropping almost two full points. Stocks surged, with the Dow climbing 269 points. Economists cited geopolitical optimism. The Labor Department reported that jobless claims dropped 15,000 to 420,000 in the week ended March 8. 1 The Bond Buyer one-year note index fell three basis points to 1.05%, a new all-time low, from the previous week's 1.08%. ' The revenue bond Index was unchanged at 5.06%. The 20-bond Index of general obligation yields fell two basis points 1 I I I I I I I I I II I I I I I I to 4.67%, from the previous week's 4.69%. The 11-bond index of GO yields slipped one basis point to 4.60%, from last week's 4.61%. The index tied Its most recent low of t 4.60%; set on Oct. 10, 2002. (In the March 7 issue of the Bond Buyer, the index was Incorrectly listed.) ' The 10-year Treasury note jumped nine basis points to 3.74%, from last week's 3.65°/0. ' The 30-year Treasury rose four basis points to 4.73%, from last week's 4.69%. • The Bond Buyer 40 weekly average yield-to-maturity was 4.99% ' down three basis points from 5.02%. 1 1 1 1 I I 1 1 1 1 I I I I I I I I I I I I I I I I I I I Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A SOURCES & USES Dated 03/26/2003 Delivered 03/26/2003 SOURCES OF FUNDS Par Amount of Bonds $15,745,000.00 Reoffering Premium 186,537.10 TOTAL SOURCES $15,931,537.10 USES OF FUNDS Total Underwriter's Discount (1.000%) 157,450.00 Costs of Issuance 150,000.00 Gross Bond Insurance Premium 287,000.00 Reserve Surety Fee 27,000.00 Deposit to Project Construction Fund 15,310,087.10 • TOTAL USES $15,931,537.10 kinsell,Newcomb&De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 1 Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DETAIL COSTS OF ISSUANCE Dated 03/26/2003 Delivered 03/26/2003 COSTS OF ISSUANCE DETAIL Bond Counsel $40,000.00 Bond Counsel Expenses $1,500.00 Disclosure Counsel $22,500.00 Financial Advisor $39,500.00 Fiscal Consultant $18,000.00 Trustee/Paying Agent $5,000.00 Rating Fee $9,000.00 Printing/Misc $14,500.00 TOTAL $150,000.00 kinsell, Newcomb 8 De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 12 Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A • DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I 8/01/2003 - - 267,016.06 267,016.06 8/01/2004 - - 769,006.26 769,006.26 8/01/2005 - - 769,006.26 769,006.26 8/01/2006 - - 769,006.26 769,006.26 8/01/2007 - - 769,006.26 769,006.26 8/01/2008 - - 769,006.26 769,006.26 8/01/2009 - - 769,006.26 769,006.26 8/01/2010 - - 769,006.26 769,006.26 8/01/2011 - - 769,006.26 769,006.26 8/01/2012 - - 769,006.26 769,006.26 8/01/2013 - - 769,006.26 769,006.26 8/01/2014 .. - 769,006.26 769,006.26 8/01/2015 - - 769,006.26 769,006.26 8/01/2016 - - 769,006.26 769,006.26 8/01/2017 - - 769,006.26 769,006.26 8/01/2018 - - 769,006.26 769,006.26 8/01/2019 - - 769,006.26 769,006.26 8/01/2020 - - 769,006.26 769,006.26 8/01/2021 - - 769,006.26 769,006.26 8/01/2022 - - 769,006.26 769,006.26 8/01/2023 875,000.00 4.500% 769,006.26 1,644,006.26 8/01/2024 910,000.00 4.500% 729,631.26 1,639,631.26 8/01/2025 1,145,000.00 4.625% 688,681.26 1,833,681.26 8/01/2026 1,340,000.00 4.625% 635,725.00 1,975,725.00 8/01/2027 1,405,000.00 5.000% 573,750.00 1,978,750.00 8/01/2028 1,475,000.00 5.000% 503,500.00 1,978,500.00 8/01/2029 1,550,000.00 5.000% 429,750.00 1,979,750.00 _ 8/01/2030 1,630,000.00 5.000% 352,250.00 1,982,250.00 8/01/2031 1,715,000.00 5.000% 270,750.00 1,985,750.00 8/01/2032 1,805,000.00 5.000% 185,000.00 1,990,000.00 8/01/2033 1,895,000.00 5.000% 94,750.00 1,989,750.00 Total 15,745,000.00 - 20,110,928.78 35,855,928.78 YIELD STATISTICS Bond Year Dollars $410,207.01 Average Life 26.053 Years Average Coupon 4.9026292% Net Interest Cost(MC) 4.8955384% True Interest Cost(TIC) 4.8817555% Bond Yield for Arbitrage Purposes 4.9502122°/a All Inclusive Cost(AIC) 5.0875501% IRS FORM 8038 Net Interest Cost 4.7919091% Weighted Average Maturity 26.099 Years kinsell, Newcomb&De Dios,Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 2 Palm Desert Financing Authority • Tax Increment Revenue Bond (Project Area #2) Series 2003 A DEBT SERVICE SCHEDULE Date Prindpal Coupon Interest Total P+I 8/01/2003 - - 267,016.06 267,016.06 2/01/2004 - - 384,503.13 384,503.13 8/01/2004 - - 384,503.13 384,503.13 2/01/2005 - - 384,503.13 384,503.13 8/01/2005 - - 384,503.13 384,503.13 2/01/2006 - - 384,503,13 384,503.13 8/01/2006 - - 384,503.13 384,503.13 2/01/2007 - - 384,503.13 384,503.13 8/01/2007 - - 384,503,13 384,503.13 2/01/2008 - - 384,503.13 384,503.13 8/01/2008 - - 384,503.13 384,503.13 - 2/01/2009 - - 384,503.13 384,503.I3 8/01/2009 - - 384,503.13 384,503.13 2/01/2010 - - 384,503.13 384,503.13 8/01/2010 - - 384,503.13 384,503.13 2/01/2011 - - 384,503.13 384,503.13 8/01/2011 - - 384,503.13 384,503.13 2/01/2012 - - 384,503.13 384,503.13 8/01/2012 - - 384,503.13 384,503.13 2/01/2013 - - 384,503.13 384,503.13 8/01/2013 - - 384,503,13 384,503.13 2/01/2014 - - 384,503.13 384,503.13 8/01/2014 - - 384,503.13 384,503.13 2/01/2015 - - 384,503.13 384,503.13 8/01/2015 - - 384,503.13 384,503.13 2/01/2016 - - 384,503,13 384,503.13 8/01/2016 - - 384,503.13 384,503.13 _ 2/01/2017 - - 384,503.13 384,503.13 8/01/2017 - - 384,503.13 384,503.13 2/01/2018 - - 384,503.13 384,503.13 8/01/2018 - - 384,503.13 384,503.13 2/01/2019 - - 384,503.13 384,503.13 8/01/2019 - - 384,503.13 384,503.13 2/01/2020 - - 384,503.13 384,503.13 8/01/2020 - - 384,503.13 384,503.13 2/01/2021 - - 384,503.13 384,503.13 8/01/2021 - - 384,503.13 384,503.13 2/01/2022 - - 384,503.13 384,503.13 8/01/2022 - - 384,503.13 384,503.13 2/01/2023 - - 384,503.13 384,503.13 8/01/2023 875,000.00 4.500% 384,503.13 1,259,503.13 2/01/2024 - - 364,815.63 364,815.63 8/01/2024 910,000.00 4.500% 364,815.63 1,274,815.63 2/01/2025 - - 344,340.63 344,340.63 8/01/2025 1,145,000.00 4.625% 344,340.63 1,489,340.63 2/01/2026 - - 317,862.50 317,862.50 8/01/2026 1,340,000.00 4.625% 317,862.50 1,657,862.50 kinsell, Newcomb&De Dios, Inc. File=NewMoney.si-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 3 • • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I 2/01(2027 - - 286,875.00 286,875.00 8/01/2027 1,405,000.00 5.000% 286,875.00 1,691,875.00 2/01/2028 - - 251,750.00 251,750.00 8/01/2028 1,475,000.00 5.000% 251,750.00 1,726,750.00 2/01/2029 - - 214,875.00 214,875.00 8/01/2029 1,550,000.00 5.000% ,214,875.00 1,764,875.00 2/01/2030 - - 176,125.00 176,125.00 8/01/2030 1,630,000.00 5.000% 176,125.00 1,806,125.00 2/01/2031 - 135,375.00 135,375.00 8/01/2031 1,715,000.00 5.000% 135,375.00 1,850,375.00 2/01/2032 - - 92,500.00 92,500.00 8/01/2032 1,805,000.00 5.000% 92,500.00 1,897,500.00 2/01/2033 - - 47,375.00 47,375.00 8/01/2033 1,895,000.00 5.000% 47,375.00 1,942,375.00 Total 15,745,000.00 - 20,110,928.78 35,855,928.78 YIELD STATISTICS • Bond Year Dollars $410,207.01 Average Life 26.053 Years Average Coupon 4.9026292% Net Interest Cost(NIC) 4.8955384% True Interest Cost(TIC) 4.8817555% Bond Yield for Arbitrage Purposes 4.9502122% All Indusive Cost(AIC) 5.0875501% IRS FORM 8038 Net Interest Cost 4.7919091% Weighted Average Maturity 26.099 Years kinsell, Newcomb 8 De Dios, Inc. File =NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 4 • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DEBT SERVICE SCHEDULE Date Prindpal Coupon Interest Total P+I FISCAL TOTAL 3/26/2003 - - - - - 8/01/2003 - - 267,016.06 267,016.06 - 2/01/2004 - - 384,503.13 384,503.13 - 6/30/2004 - - - - 651,519.19 8/01/2004 - - 384,503.13 384,503.13 - 2/01/2005 - - 384,503.13 384,503.13 - 6/30/2005 - - - - 769,006.26 8/01/2005 - - 384,503.13 384,503.13 - 2/01/2006 - - 384,503.13 384,503.13 - 6/30/2006 - - - - 769,006.26 8/01/2006 - - 384,503.13 384,503.13 - 2/01/2007 - - 384,503.13 384,503.13 - 6/30/2007 - - - - 769,006.26 8/01/2007 - - 384,503.13 384,503.13 - 2/01/2008 - - 384,503.13 384,503.13 - 6/30/2008 - - - - 769,006.26 8/01/2008 - - 384,503.13 384,503.13 - 2/01/2009 - - 384,503.13 384,503.13 - 6/30/2009 - - - - 769,006.26 8/01/2009 - - 384,503.13 384,503.13 - 2/01/2010 - - 384,503.13 384,503.13 - 6/30/2010 - - - - 769,006.26 8/01/2010 - - 384,503.13 384,503.13 - 2/01/2011 - - 384,503.13 384,503.13 - 6/30/2011 - - - - 769,006.26 8/01/2011 - - 384,503.13 384,503.13 2/01/2012 - - 384,503.13 384,503.13 - _ 6/30/2012 . - - - 769,006.26 8/01/2012 - - 384,503.13 384,503.13 2/01/2013 - - 384,503.13 384,503.13 - 6/30/2013 - - - - 769,006.26 8/01/2013 - - 384,503.13 384,503.13 - 2/01/2014 - - 384,503.13 384,503.13 - 6/30/2014 - - - - 769,006.26 8/01/2014 - - 384,503.13 384,503.13 - 2/01/2015 - - 384,503.13 384,503.13 - 6/30/2015 - - - - 769,006.26 8/01/2015 - - 384,503.13 384,503.13 - 2/01/2016 - - 384,503.13 384,503.13 - 6/30/2016 - - - - 769,006.26 8/01/2016 - - 384,503.13 384,503.13 2/01/2017 - - 384,503.13 384,503.13 - 6/30/2017 - - - - 769,006.26 8/01/2017 - - 384,503.13 384,503.13 - 2/01/2018 - - 384,503.13 384,503.13 - 6/30/2018 - - - - 769,006.26 8/01/2018 - - 384,503.13 384,503.13 - kinsell, Newcomb&De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8.58 AM Page 5 Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I FISCAL TOTAL 2/01/2019 - - 384,503.13 384,503.13 - 6/30/2019 - - - - 769,006.26 8/01/2019 - - 384,503.13 384,503.13 - 2/01/2020 - - 384,503.13 384,503.13 - 6/30/2020 - - - - 769,006.26 8/01/2020 - - 384,503.13 384,503.13 2/01/2021 - - 384,503.13 384,503.13 - 6/30/2021 - - - - 769,006.26 8/01/2021 - - 384,503.13 384,503.13 - 2/01/2022 - - 384,503.13 384,503.13 - 6/30/2022 - - - - 769,006.26 8/01/2022 - - 384,503.13 384,503.13 2/01/2023 - - 384,503.13 384,503.13 - 6/30/2023 - - - - 769,006.26 8/01/2023 875,000.00 4.500% 384,503.13 1,259,503.13 - 2/01/2024 - - 364,815,63 364,815.63 - 6/30/2024 - - - - 1,624,318.76 8/01/2024 910,000.00 4.500% 364,815,63 1,274,815.63 2/01/2025 - - 344,340,63 344,340.63 - 6/30/2025 - - - - 1,619,156.26 8/01/2025 1,145,000.00 4.625% 344,340,63 1,489,340.63 - 2/01/2026 - - 317,862.50 317,862.50 6/30/2026 - - - - 1,807,203.13 8/01/2026 1,340,000.00 4.625% 317,862,50 1,657,862.50 - 2/01/2027 - - 286,875.00 286,875.00 6/30/2027 - - - 1,944,737.50 8/01/2027 1,405,000.00 5.000% 286,875.00 1,691,875.00 - 2/01/2028 - - 251,750.00 251,750.00 - 6/30/2028 - - - - 1,943,625.00 8/01/2028 1,475,000.00 5.000% 251,750.00 1,726,750.00 - 2/01/2029 - - 214,875.00 214,875.00 - 6/30/2029 - - - - 1,941,625.00 8/01/2029 1,550,000.00 5.000% 214,875.00 1,764,875.00 - 2/01/2030 - - 176,125.00 176,125.00 6/30/2030 - - - - 1,941,000.00 8/01/2030 1,630,000.00 5.000% 176,125.00 1,806,125.00 2/01/2031 - - 135,375.00 135,375.00 6/30/2031 - - - - 1,941,500.00 8/01/2031 1,715,000.00 5.000% 135,375.00 1,850,375.00 - 2/01/2032 - - 92,500.00 92,500.00 6/30/2032 - - - - 1,942,875.00 8/01/2032 1,805,000.00 5.000% 92,500.00 1,897,500.00 2/01/2033 - - 47,375.00 47,375.00 6/30/2033 - - - - 1,944,875.00 8/01/2033 1,895,000.00 5.000% 47,375.00 1,942,375.00 6/30/2034 - - - - 1,942,375.00 Total 15,745,000.00 - 20,110,928.78 35,855,928.78 - kinsell, Newcomb&De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 6 Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DEBT SERVICE SCHEDULE YIELD STATISTICS Bond Year Dollars $410,207.01 Average Life 26.053 Years Average Coupon 4.9026292% Net Interest Cost(NIC) 4.8955384% True Interest Cost(TIC) 4.8817555% Bond Yield for Arbitrage Purposes 4.9502122% All Inclusive Cost(AM) 5.0875501% IRS FORM 8038 Net Interest Cost 4.7919091% Weighted Average Maturity 26.099 Years kinsell, Newcomb&De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 7 Palm Desert Financing Authority • Tax Increment Revenue Bond (Project Area #2) Series 2003 A PRICING SUMMARY Maturity Type of Bond Coupon Yield Maturity Value Price Dollar Price 8/01/2023 Serial Coupon 4.500% 4.650% 875,000.00 98.034% 857,797.50 8/01/2024 Serial Coupon 4.500% 4.700% 910,000.00 97.317% 885,584.70 8/01/2026 Term 1 Coupon 4.625% 4.730% 2,485,000.00 98.519% 2,448,197.15 8/01/2033 Term 2 Coupon 5.000% 4.750% 11,475,000.00 102.309% c 11,739,957.75 Total - - - - 15,745,000.00 - - 15,931,537.10 BID INFORMATION Par Amount of Bonds $15,745,000.00 Reoffering Premium or(Discount) 186,537.10 Gross Production $15,931,537.10 Total Underwriter's Discount (1.000%) $(157,450.00) • Bid(100.185%) 15,774,087.10 Total Purchase Price $15,774,087.10 Bond Year Dollars $410,207.01 Average Life 26.053 Years Average Coupon 4.9026292% Net Interest Cost(NIC) 4.8955384% True Interest Cost(TIC) 4.8817555% kinsell, Newcomb&De Dios, Inc. File=NewMoney s1-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/132003 8:58 AM Page 8 Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) • Series 2003 A PROOF OF BOND YIELD @ 4.9502122% Date Cashflow PV Factor Present Value Cumulative PV 3/26/2003 - 1.0000000x - - 8/01/2003 267,016.06 0.9831644x 262,520.67 262,520.67 2/01/2004 384,503.13 0.9594178x 368,899.13 631,419.80 8/01/2004 384,503.13 0.9362447x 359,989.02 991,408.82 2/01/2005 384,503.13 0.9136314x 351,294.12 1,342,702.94 8/01/2005 384,503.13 0.8915642x 342,809.22 1,685,512.16 2/01/2006 384,503.13 0.8700300x 334,529.27 2,020,041.44 8/01/2006 384,503.13 0.8490160x 326,449.30 2,346,490.74 • 2/01/2007 384,503.13 0.8285095x 318,564.49 2,665,055.23 8/01/2007 384,503.13 0.8084983x 310,870.13 2,975,925.36 2/01/2008 384,503.13 0.7889705x 303,361.61 3,279,286.97 8/01/2008 384,503.13 0.7699143x 296,034.44 3,575,321.41 2/01/2009 384,503.13 0.7513183x 288,884.25 3,864,205.66 8/01/2009 384,503.13 0.7331716x 281,906.76 4,146,112.42 2/01/2010 384,503.13 0.7154631x 275,097.80 4,421,210.21 8/01/2010 384,503.13 0.6981823x 268,453.29 4,689,663.51 2/01/2011 384,503.13 0.6813190x 261,969.27 4,951,632.78 8/01/2011 384,503.13 0.6648629x 255,641.87 5,207,274.65 2/01/2012 384,503.13 0.6488043x 249,467.29 5,456,741.93 8/01/2012 384,503.13 0.6331336x 243,441.84 5,700,183.78 2/01/2013 384,503.13 0.6178414x 237,561.93 5,937,745.71 8/01/2013 384,503.13 0.6029185x 231,824.04 6,169,569.75 2/01/2014 384,503.13 0.5883560x 226,224.74 6,395,794.49 8/01/2014 384,503.13 0.5741453x 220,760.68 6,616,555.17 2/01/2015 384,503.13 0.5602779x 215,428.59 6,831,983.76 8/01/2015 384,503.13 0.5467453x 210,225.29 7,042,209.06 2/01/2016 384,503.13 0.5335397x 205,147.67 7,247,356.73 _ 8/01/2016 384,503.13 0.5206530x 200,192.69 7,447,549.42 2/01/2017 384,503.13 0.5080775x 195,357.39 7,642,906.81 8/01/2017 384,503.13 0.4958058x 190,638.87 7,833,545.68 2/01/2018 384,503.13 0.4838305x 186,034.33 8,019,580.00 8/01/2018 384,503.13 0.4721444x 181,540.99 8,201,121.00 2/01/2019 384,503.13 0.4607406x 177,156.19 8,378,277.19 8/01/2019 384,503.13 0.4496122x 172,877.29 8,551,154.48 2/01/2020 384,503.13 0.4387526x 168,701.75 8,719,856.23 8/01/2020 384,503.13 0.4281553x 164,627.05 8,884,483.28 2/01/2021 384,503.13 0.4I78140x 160,650.77 9,045,134.05 8/01/2021 384,503.13 0.4077224x 156,770.54 9,201,904.59 2/01/2022 384,503.13 0.3978746x 152,984.02 9,354,888.61 8/01/2022 384,503.13 0.3882646x 149,288.96 9,504,177.57 2/01/2023 384,503.13 0.3788868x 145,683.15 9,649,860.72 8/01/2023 1,259,503.13 0.3697354x 465,682.92 10,115,543.64 2/01/2024 364,815.63 0.3608051x 131,627.35 10,247,170.99 8/01/2024 1,274,815.63 0.3520905x 448,850.47 10,696,021.46 2/01/2025 344,340.63 0.3435864x 118,310.75 10,814,332.21 8/01/2025 1,489,340.63 0.3352876x 499,357.52 11,313,689.73 2/01/2026 317,862.50 0.3271894x 104,001.23 11,417,690.96 kinsell, Newcomb 8 De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 9 Palm Desert Financing Authority • Tax Increment Revenue Bond (Project Area #2) Series 2003 A PROOF OF BOND YIELD @ 4.9502122% Date Cashflow PV Factor Present Value Cumulative PV 8/01/2026 1,657,862.50 0.3192867x 529,333.41 11,947,024.37 2/01/2027 286,875.00 0.3115749x 89,383.04 12,036,407.41 8/01/2027 1,691,875.00 0.3040493x 514,413.46 12,550,820.87 2/01/2028 251,750.00 0.2967056x 74,695.62 12,625,516.49 8/01/2028 1,726,750.00 0.2895392x 499,961.73 13,125,478.22 2/01/2029 214,875.00 0.2825458x 60,712.04 13,186,190.26 8/01/2029 1,764,875.00 0.2757214x 486,613.88 13,672,804.14 2/01/2030 176,125.00 0.2690619x 47,388.52 13,720,192.66 8/01/2030 1,806,125.00 0.2625632x 474,221.89 14,194,414.55 2/01/2031 135,375.00 0.2562214x 34,685.97 14,229,100.52 8/01/2031 1,850,375.00 0.2500328x 462,654.50 14,691,755.02 2/01/2032 92,500.00 0.2439937x 22,569.42 14,714,324.44 8/01/2032 1,897,500.00 0.2381005x 451,795.67 15,166,120.11 2/01/2033 47,375.00 0.2323496x 11,007.56 15,177,127.67 8/01/2033 1,942,375.00 0.2267376x 440,409.43 15,617,537.10 Total 35,855,928.78 - 15,617,537.10 - DERIVATION OF TARGET AMOUNT Par Amount of Bonds $15,745,000.00 Reoffering Premium or(Discount) 186,537.10 Bond Insurance Premium (287,000.00) Other Credit Enhancement Fees (27,000.00) Original Issue Proceeds $15,617,537.10 kinsell, Newcomb 8 De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 10 Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DERIVATION OF FORM 8038 YIELD STATISTICS Maturity Issuance Value Price Issuance PRICE Exponent Bond Years 3/26/2003 - - - - - 8/01/2023 875,000.00 98.034% 857,797.50 20.3472222x 17,453,796.35 8/01/2024 910,000.00 973170/0 885,584.70 21.3472222x 18,904,773.39 8/01/2025 1,145,000.00 98.519% 1,128,042.55 22.3472222x . 25,208,617.54 8/01/2026 1,340,000.00 98.519% 1,320,154.60 23.3472222x 30,821,942.81 8/01/2027 1,405,000.00 102.309% 1,437,441.45 24.3472222x 34,997,706.41 8/01/2028 1,475,000.00 102.309% 1,509,057.75 25.3472222x 38,250,422.14 8/01/2029 1,550,000.00 102.309% 1,585,789.50 26.3472222x 41,781,148.35 8/01/2030 1,630,000.00 102.309% 1,667,636.70 27.3472222x 45,605,231.42 8/01/2031 1,715,000.00 102.309% 1,754,599.35 28.3472222x 49,738,017.69 8/01/2032 1,805,000.00 102.309% 1,846,677.45 29.3472222x 54,194,853.50 8/01/2033 1,895,000.00 102.309% 1,938,755.55 30.3472222x 58,835,845.51 Total 15,745,000.00 - 15,931,537.10 - 415,792,355.12 IRS FORM 8038 Weighted Average Maturity= Bond Years/Issue Price 26.099 Years Total Interest from Debt Service 20,110,928.78 Reoffering(Premium)or Discount (186,537.10) Total Interest 19,924,391.68 • NIC= Interest/(Issue Price*Average Maturity) 4.7919091% Bond Yield for Arbitrage Purposes 4.9502122% kinsell, Newcomb&De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 11 o E al i a N ul N N N N ul 0 N N N 0 0 ul 0 0 mNow Nora o 0 o 0 0 0 N aid U N 0I- Nr FCF N 0 O0 Og ' 0 < 0 > NCON hOO N.FM N O a o N cr, en ix N W N N N N N co N N N O 0 O N R.N ti P P q y g N m N N n O .-, „ „ ry ry N N N N N N N N N N N N N n .+ n .r n n 00 N .-4 . a q U 0 C C 'EJ t n a w 0 0 0 In 0 Xi 0 0 tr, ul N in 0 0 ul vl ul 0 0 in N C ' a 0 a O U N N N M m E0 0 0 O N % o o �o w 0 �o d U n O O O o o O o O 00 N N '^ O. 0 10 0 0 0 0 p 0 0 0 0 O O a O U' 0' 0.14 n N 1- P J N N a C C 00 N N N N N N N N N N N M1 N r NN N N e 0 0 N . rm N in 4 C C n n .+ n n n .. n N n n 0 GE a CO z paE .0 C Ea N Cl O N triO 0 0 0 N % o N O aa N s 0 0. £ % aN .0 a w o C a a O N C .0n n n n .a n n n .. .r n n n n n n .a n n a or • C N U O 0 O jcja .a' L N F N O N N a N d N N O n O P "0co y % „ N 4 ' CONOW_ LqO d NrvryNnnnnnmmnn mmm n0 d u O 6 m C U N C COC n $ L. 0 d Y L N 0/ 4 9ry NO 00 O 0 o v u o N ry N N N N N N N N N N N N N 0 N 0 N N N N N N ry N N N N N OU m E m N n O N CO M N o. o. p • • eel m m .+ o r r re m 0 4 4 4 0 m n m 00 0 m ..4 p 2 2 2 C V m .. .. p ry Nei CNN N N N N N N N N m n n m m n m a a a P 4444 O b N N N N N N 0 0 U U U N at In rt N m en en re p in O m r g C u U r a m enatn [. N N N O O y 4 O 0 f. U m en P O O m cn m en p r 0 L C N .. .0 se m N N N N N N N n N m m n n m m n m a a a a m m b b b m MM b tom m m in m ..40 Na U n N o n u1 r >MMN 0 N m N 0 I F M L N Li N N N N N N N N N N N N N NNPINN N N n n n n .. n .. m n n n O OW r N Q 0 C .. i . ym ,. o m m b b o C g MOMn m 0 0 .1 p0. o0. o 00. 0 0 0 m , , .. .. a 1. N a A O N L w U LO b r N N N r N r r N r r N N N r N r r r L . P M • A 40 n CO U 0 m N a 0 Co a b r 1 1 1 1 1 1 1 1 1 1 , 1 0co Ln 0 0 . e r 0o a 0 0 0 0 0 0 0 X v r m eV N CO a 0 C 0 te 4 01 O N 0 O b Ln A oa m be a 0 ri m O O Cal U0000conimmoca -4000 Am -. rev ar Arlo co 4 O i i i i t i i i r 4 co N q % d N N ry N n m m m m m n n n n m m m m m n n m m .. O K N Z r U u X ( a 'a m 0 M > 4 V I. M a 0 W Co u N U 05 or ❑ d au U Co 4 H O O > g CO m „LICernr N o in ep) LnO . ri en p V W 6 O 0 O„ -1 u F E 4 r O '0 Fi J u 0 E O b b m.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- oin O mbm U u 4 , Co K C F v U W O m m N 2 V L a K Y p O a, ,.q. t O p m 04 Tie m .� P a a a b in m m b b m In m b b m w m m .o V r r r r r r r r m m m m m re N M p N u U M M L £ P co m > a u d 0 a 4 0 0 4• = 4 Cu 4 U 0 C 0 E as SSAE a 0 a U 4 t U m „ % C tiU re al 0 m L „ N - E > V U re M n P m O 9 0 m .. > 0L. Co N „ 0 0 N D ry 0 p en A Onee ee m N ea m u a . h N of re N N N N N N N N N N N N N N N N N ry N N N N ry N N N N 0 V o 0 u 0 V a s 4. E. MO N .0 2 A 2 00 (riçn Fnance Department la; 11 dir. er MEMORANDUM To: Records Technician From: Diana Leal, Administrative Secretary Subject: Investment and Finance Committee Meeting Date: May 1, 2003 Attached, for your records, is a copy of the April 23, 2003 Investment and Finance Committee meeting attendance register. Thank you for your assistance. Attachments (1) G:\rinance\Diana Leal\Wpdocs\tnvestment Committee\2002 Memos\City ClerkW-23-03attend.wpd /' . . II • COMMITTEE MEETING WORKSHEET Meeting Description Investment Committee Meeting Date 4/23/03 Time 2:00 p.m. Location North Wing Conference Room Mailed Agenda 4/16/03 Posted Agenda 4/16/03 Time Convene Adjournment 2= G.3P n --: tie frM, Staff Members Attending Yes No Others Attending Yes . No 1 Paul Gibson, Chairperson V 11 Dennis Coleman V/ 2 Council Member t7 S 12 Justin McCarthy V 3 Council Member 6 13 Rodney Young �� 4 Dave Erwin, City Attorney 7 14 Recording Secretary 5 Carlos Ortega, City Mgr. J04_LW P (OW '� 6 Thomas Jeffrey p 0 e Aga.,/ 1" 5i Public Members Attending Guests Attending 7 Russ Campbell I// 15 8 Murray Magloff 16 9 Bill Veazie , 17 10 Everett Wood t-7-- 18 • 19 20 Follow-Ups/Tasks Assigned Person Responsible Due Date 1 AS - `q- pr/uve-. 1yryv�� 2 . Is/ . b(`t'7M(; % 1v /,(Jc 3 05,0r �( �•� ��.�1Jro prior 4 5Cbonn .31 a i C. /14,CL -t,o k (L 've rt. 5 lit-bay-- (9J2OO 64 Allig* Pt thn Q1.AI 6 L4 1_✓ folic n4 4 al )4ena 0 /(' / . . • • Spoke Mtn (1) Mtn (2) rib /��� MEETING NOTES a _ -" ') it . 441 7/L jam; �2 e111/1/= Ul ono v , , i4,, Ill pieta' 19/Gu° I ``� l iAl o la °C /' it � V w f. t /ar , �'So - Al aiturceP K a-P sth nil lonct eff*iv ag a, '[ ppiro, C o , r �i Z.2 nr�/,fl�f� <r%�1�--- T-er17, ml bath ` P1, /e ry� tet. SdP.r/1la urr, 146 rpti:191S - _ 3_ that- (1)), pn 5pt ii s ,kr>it-Q J- . a OF Oct m f, ; R f 3/3 /nf[4i/ f /o�G, P .1_T-mh / ooa y7fn /6ft . AIDA44'7 chi r in(ellAiiiirecoe ri-feie; irriLertAren) C f 0?\10 1 b C f, Ahf l P/- ' .2 " A Sim ( (o.r nu n_tinp Sot 0. if 4-790000 In cci&r R�� b nr,� /7/F "I- Ple rffis re- czere th, vro (1 'Ai- fi / i /_ OOhl/ cl"I atet/'li .ca i4. job �IosOsr • • • Spoke Mtn (1) Mtn (2) MEETING NOTES oi,Szy o t i P - l n i}y,t.l b(i - � ;- � col ,67z, J I ', L%/(J & 'e' n Greorls� fri/ tom` nu - /�f; r' rev d , 0v...v - v4- a% rt-cif kgmq , -° - amp i' / , w k 421/4 - ?A 41VOA 1,g U at) Zc )puc �,��� 0 , � • yr. rigIra C e Uo1 f Q,Y�,A l/-V . p&ek - ct ,f/ nn roiA4ti / i/r • )� Ira 16tD nni Pi � . - � J -(cif 4� � rtas<<(,L baWo,l przz4oro yrs- 76 7 no D s woi /a , ' J IF n in Oar w de . Hail, Laidfryheznitadi (12. 7. 4 yp�, _ n / � _ Q� Cosy 1114 a4 _Spoke Mtn (1) Mtn (2) MEETING NOTES 1 .‘ tica . r),4-40ftird_ P2 • , „ afr. ,,, czyu, 4f- Gf 71flntoils- �L � 100 - I 7c fho_ fine-r �� ) cL lh ( R) r f L i-5 o ''' il ., rih or V i/Pr 77-6 g__ _ V '-er fr(<</4 49 'r�� "yin Aturwsitut gL �' �l� ra . �9 , i1 r�ii p(!pi 0, % co I viLpa --r Aarn t A 9 A KS , 710P, `-/ chq lSir.( . _ / m t lkiA -h 4/ rscrp, rdicrfl rQ 'r bay pal Thice - Co rw <;SH �tp - d - ,p girlie r �)0epfftg61_ ton /A 1af,y l - p b or- et*" f le,V /.-Jr -� 3 a mo fi, g." (anJc do •d9 m 4�C?1d �mi. Thae gi ; .r (a -rf k. hiI/, p7 q-p�Q I 4 � 1 9 12r1Or 4)in Spoke Mtn (1) Mtn (2) MEETING-NOTES , _ ll - )PkhM4 /*id-err J)S 2 . „ (alciiikiii 7 i ir - ✓p ' rpm - -. axed- fmQ �i a� yr �, r - F y y t rlt-4 i ra i n z� n ec j1e- s-• iral4 1 fr7ci -4 5_, W ow I rie 't toOhui , .hs n :1%, cc yWooel z r-,cirn re/7 ,i-z-ri )S �l pr . GTh , J'j4,r! IS j�.J ..e ' , 0 colt rtni2ra * `-LD t ejt,in A Ili dope - 3 1 /Vl-e oi ( Id r f4/r/v ._6.1 ) ti_ 61.04 rpQc, -pro , _ GMT etc _c r co ( U s se, .= 4 fart (/� :alcrzn 07e? Spoke Mtn (1) Mtn (2) MEETING NOTES A Veda �, , -yam r �i File (yvuPA. lit a1t t P 7 cG, ,al -17)S 19clv, _ � � /, tn ,,,, 4 (_4.% tp ( ifitim,fx) 9 ,,,ceun-fe -c Am %) i,,,,,,���,,,c,,,,,,���(��� one (&, jrd l�.n) urn, 1 el �rI J� es..,- eCOSir ef £off ya gras 0tsi an i 1 r r f7p b � Tu.- - ,) in r hcf f Min.-) PG) _4y/d0 On/ On, cvn6 CAffirw, LS ` ,Ceic�/-P77 .err ,ki le. at-0co�P/ �'�zrf. r ,r/ a� -shc. av t fOr e%r. Ogre: tea- r7LE t4 rn-1 P 1 Spoke Mtn (1) Mtn (2) MEETING NOTES Q 1 . (L7)124)104 .S (A 444,af) di Gil (enal ( an figh edfiptRoJ i/V-P. -L s: ni7g) prp7, kP4 11/2 ygr sticrboedu Ai 2e vrj 4 ,A . Arp c.r)- ter r,!c'�s C-491)c12971 igr 16h/VM ;40121,./'- 7 a , 11 din 977, — '�s; // / �o� �� TO ar /oak* 6(2(474- h,0f � /0 , i P !fay -. ' 41 r.rf Di `lac 4O j r� h� net pry, laze- $ r 91 $14(7! s :t a o n WV IP 2 y ✓11i4 (� f/ / � , gacwi/ r.aO lf! /.0 P r Ae 7--rms %�J�- ` - c / ac, ff k / }— T e) mtlfreq-4), yQ / t, r(f cue) P 'pp 9D r . rar,A AD kai Spoke Mtn (1) Mtn(2) MEETING NOTES Ad) . D= k , . • Spoke Mtn (1) Mtn,(2) MEETING NOTES • Spoke Mtn (1) Mtn (2) MEETING NOTES Spoke Mtn (1) Mtn (2) MEETING NOTES • • Spoke Mtn (1) Mtn (2) MEETING NOTES Spoke Mtn (1) Mtn (2) MEETING NOTES Spoke Mtn (1) Mtn (2) MEETING NOTES Finance Department A E MEMORANDUM l39j To: Rachelle Klassen, City Clerk 1 From: Diana Leal, Administrative Secretaiyr Subject: Investment and Finance Committee Date: May 29,2003 Attached is a copy of the April 23,2003 minutes of the Investment and Finance Committee approved by the Committee on May 28, 2003. Please place on the next City Council agenda for approval thereof. Thank you for your assistance. Attachments (1) G:\Finance\Diana Leal\Wpdocs\Investment Committee\2002 Memos\City Clerk\5-28-03.wpd """" • CITY OF PALM DART 'r �a INVESTMENT & FINANCE COMMITTEE l7�1, r/14 Minutes w� ti `;r/ H . April 23, 2003, 2:00 p.m. '� 3� �f` North Wing Conference Room 5 ' •�r•4pi9 Ego�,• I. CALL TO ORDER A regular meeting was called to order by Chairman Gibson on Wednesday, April 23, 2003 at 2:00 p.m. II. ROLL CALL Present: Absent: Paul Gibson, Director of Finance None Jean Benson, Mayor Bob Spiegel, Mayor Pro-Temp Thomas Jeffrey, Deputy City Treasurer David Erwin, City Attorney Carlos Ortega, City Manager Bill Veazie Murray Magloff . Russ Campbell Everett Wood Also Present: Steve Aryan, Assistant to the City Manager Justin McCarthy, ACM Redevelopment Jose Luis Espinoza, Finance Operations Manager Dennis Coleman, RDA Finance Manager Rodney Young, Desert Willow General Manager Diana Leal, Recording Secretary Guests: None III. ORAL COMMUNICATIONS None. IV. COMMITTEE MEMBER REPORTS None. 1 42303.writ, INVESTMENT& FINANCE•MMITTEE • MINUTES April 23, 2003 V, CONSENT CALENDAR A. Approval of Minutes Motion was made by Mr. Spiegel and seconded by Mr. Veazie to approve the Minutes of the March 26, 2003 meeting as submitted. VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for March 2003 Mr Jeffrey reported that, for the month ended March 31, 2003, the book value of the City Portfolio was approximately $154.8 million. The City earned approximately $208,000 in interest. Portfolio yield-to-maturity was approximately 1.48%. For the month ended March 31, 2003, the book value of the RDA Portfolio was approximately $104.8 million. The RDA earned approximately $150,000 in interest. Portfolio yield-to-maturity was approximately 1.64%. Mr. Gibson said that Council approved a new LAIF account for the Housing Authority. Thus, $6 million of Housing Authority funds will be moved to LAIF for a higher return. Mr. Jeffrey stated that the City is maxed out in LAIF ($40 million) and CAMP ($65 million). The City cannot afford to leave excess cash in the sweep account because it currently earns 0.15%. The City is currently maintaining a sweep balance of approximately $600,000 in order to cover outstanding checks on the City's main checking account. Consequently, there are excess monies that need to be invested outside LAIF, CAMP, and the Union Bank sweep account. Mr. Jeffrey asked the Committee's advice on whether the City should use these monies to buy securities that mature in 1.5 years in order to hedge against a double-dip recession and a further decline in interest rates. Mr. Wood asked how much was available to invest. Mr. Gibson replied that about $10 million was available to invest. Mr. Spiegel commented that with a national election a year-and a-half away, he did not think that the Federal Reserve would raise short-term interest rates. 2 42303.wptl 'INVESTMENT& FINANCIIpMMITTEE • MINUTES April 23, 2003 Mr. Veazie suggested that the City should remain liquid in case there was a favorable turn in the economy. Mr. Gibson said that the City has about $120 million, 80 percent of which is liquid at this point. Staff is suggesting that this 80% be reduced to 70%. Mr. Jeffrey said that the problem is that some forecasters are projecting an upturn at the end of 2003, just as they did last year, when there was no significant upturn. The worst case would be that if the City invested out to September 2004 and there was an economic upturn, then the City's portfolio performance might be slightly worse than if it had remained liquid. On the other hand, if the economy goes into recession again, then the City's portfolio performance will be much better because Staff locked into rates prior to any more interest rate cuts. Mr. Veazie said that he believed that interest rates could not go much lower. Mr. Jeffrey responded that, last year, no one believed that short-term interest rates would fall to their current level. After a massive bubble bursts, it often takes years for the economy to recover. Furthermore, no one thought that the stock market would be in a slump for four consecutive years (the last time being in the 1930s). Mr. Jeffrey said that there are two ways that the City could invest the excess monies: 1) ladder the securities — buy securities maturing in January, March, June, etc. As the securities mature, they are reinvested at higher interest rates if you are an optimist and believe that rates will go up; or 2) barbell — buy securities that will mature in a single month if you are a pessimist and believe that interest rates will go down. Motion was made by Mr. Wood and seconded by Mr. Ortega for the City to buy securities and ladder them over one-and-a-half years. Motion carried. B. State of California Local Agency Investment Fund Balance for the Month of March 2003 Mr. Gibson said that the City is maxed out in both the City and Redevelopment Agency accounts. C. California Asset Management Program (CAMP) March 2003 Ms. Benson asked if there were any other agencies such as CAMP where the City could place its money. Mr. Gibson said that he is reluctant to invest in a county pool after what happened in Orange County. Another entity, Cal-Trust, recently opened, but has not yet compiled a track record. Mr. Jeffrey commented that Cal Trust does not guarantee a return of principal (100 cents to the dollar) as does CAMP. 3 42303.wpd 'INVESTMENT & FINANCF.MMITTEE MINUTES April 23, 2003 D. Investment of Retiree Health Proceeds Mr. Gibson noted that the City of Palm Desert offers eligible retired employees a Retiree Health Program. A recent actuarial study estimated that the City would need to achieve a 6.5% return on $6,000,000 over the next five years in order to finance the program five years from now. Unfortunately, the City is not earning at that rate due to depressed interest rates (the City portfolio earned approximately 1.5% in March 2003). Mr. Jeffrey indicated that the only way to achieve a 6.5 percent return would be to purchase a corporate medium-term note ("MTN") with a lower credit rating (but still investment grade). After reviewing a number of candidates, he recommended Ford Motor Company which, as of 2 April 2003, had a five-year MTN that yields 8.01% and that is rated "A3/BBB". Mr. Jeffrey explained that Ford is an old-line industrial company that has not been implicated in any accounting or corporate governance scandals. Ford is currently restructuring in order to be more cost competitive. Due to a bad former CEO, Ford has gone from the strongest cash position in the auto industry to where it is now struggling to restore profitability. But Ford has gone through this cycle before a number of times. Most industry analysts agree that Ford is not in danger of bankruptcy or debt default. Henry Ford's great- grandson is currently running the company and Carl Reichardt, formerly of Wells Fargo Bank, is the Vice Chairman of the Ford Board of Directors. The Ford Family also has a stake in the success of the company since it owns 40% of the common stock. Mr. Jeffrey recently with a Moody's analyst who indicated that the spread between a Ford MTN and a U.S. Treasury security of comparable maturity was exaggerated and largely "emotional" due to the company's recent problems. Therefore, this spread should narrow over time. Mr. Gibson commented that the Retiree Health Program situation is no different from that of CalPers. The CalPers investment portfolio was supposed to be earning a 8.5% return, yet, last year, it had a loss of 4%. Consequently, CalPers had to charge a rate of 12.5% in order to recover its losses, so that the portfolio would be at the same level that it would have been had it not suffered the losses. Mr. Campbell recommended that the City buy a Ford MTN for five years. Mr. Jeffrey observed that the two California local agencies with the best internal controls on investments are probably Orange County and Palm Desert, since both have experienced problems in the past. Likewise, Ford is scrambling to cut costs and make improvements while GM has not had this type of pressure. Although it would have been easier to recommend that the 4 42303.wpd 'INVESTMENT & FINANCIIIMMITTEE • MINUTES April 23, 2003 City buy a GM MTN since it has a higher credit rating, GM also has double the pension and medical insurance exposure. Mr. Jeffrey thought that Ford was the better of the two. Mr. Spiegel asked if it would be possible to simply double the amount of principal that the City invests, in order to achieve the targeted rate of return. Mr. Gibson responded that such a strategy would hit the target but reduce the amount of money in the General Fund that would be available for other expenditures during that five-year period. Mr. Veazie commented that the staff memorandum noted that special permission would have to be obtained from the City Council for the City Treasurer to buy a five-year MTN since the City's investment policy limits the maximum maturity for this type of security to three years. Mr. Veazie stated that any maturity extensions should be accompanied by an improvement in credit quality. To that end, Mr. Veazie would recommend that the City buy a U.S. Government Agency security. Mr. Ortega said that if the City did not have to sell a Ford MTN prior to maturity, then it would not realize a capital loss. The only remaining risk would be that Ford would go bankrupt, which he does not believe will happen. Because of the City's present reserve position, Mr. Ortega could not foresee a situation where it would have to sell a Ford MTN prior to maturity. Short of a "total meltdown" at Ford, the City should get its principal back plus interest. Motion was made by Mr. Campbell and seconded by Mr. Ortega to recommend that the City Council authorize the City Treasurer to buy a Ford MTN with a five-year maturity for the Retiree Health Plan. Mr. Spiegel and Mr. Veazie cast a "No" vote. Motion carried. E. City and Redevelopment Agency Monthly Financial Reports for City Council for March 2003 Mr. Gibson said that, year to date, the City is $20.2 million versus last year's $19 million. Expenditures are higher due to the budget being higher. Mr. Wood asked what was the biggest item on the budget. Mr. Gibson said that it is the reimbursements to the City from RDA and CVAG. Charges for services is another part of it. Mr. Spiegel asked about the State subvention. Mr. Gibson said that the State subvention is mostly motor vehicle license fees. 5 42303.wpd ' INVESTMENT & FINANClipMMITTEE • MINUTES April 23, 2003 F. Parkview Professional Office Buildings - Financial Report for March 2003 Mr. Gibson said that he contacted the American Cancer Society (ACS) as they had expressed interest in leasing space. ACS indicated that due to poor financials, they were going to stay where they are located as they pay a minimal fee. The Parkview professional office building will be at about 92% occupied. The expenditures are higher than normal due to the roof improvements. One building is complete and they are currently working on the other. G. Palm Desert Golf Course Facilities Corporation Financial Information for February 2003 Mr. Young said that their net operating costs were better than budget. The weather was better in March which helped. There were only a few cancellations. Mr. Spiegel asked about the Callaway Golf Performance Center (CGPC) at the Golf Resort in Indian Wells. He would be interested to know what percentage of sales are derived from the hotel guests and what percentage of sales are from locals. This would be a great deal to have. Mr. Young said that the Callaway Golf Center was doing well. The CGPC offers a full range of Callaway products and charge $50 per fitting. He hopes that Desert Willow can find something similar. This year, they are working with Natural Golf, a swing system that sells their own golf clubs, etc. One of Natural Golfs instructors has been teaching at Desert Willow for the last year and a half. This year he has agreed to sell Natural Golf merchandise through Desert Willow's golf shop. Mr. Campbell asked if Desert Willow has been approached by, or has looked into, a company that places equipment that fertilizes through the water system. Mr. Young said that they have this fertigation system in place. It is a time saver as it doesn't require labor or equipment. VIII. CONTINUED BUSINESS - None. IX. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks There being no business issues to report, discussion ensued to the next agenda item. 6 92303 wpd ' - 'INVESTMENT & FINANCir MMITTEE MINUTES • April 23, 2003 B. Bond Issuance by Palm Desert Financing Authority Mr. Coleman handed out a summary report of the bond issue that was completed last month. This was the second best bond issue that they have done. They sold yields at premiums to generate an additional $186,000 worth of funds. Their net interest cost was 4.895. They borrowed $15.7 million at about 4.9% for 30 years. There are three more anticipated financings. They are following a conservative philosophy. They will bond enough money to pay debt service, interest to the City and some anticipated ERAF. They are trying to get a smaller financing to get some projects on the board for 1-2 years. They want to obtain funding for: Project Area Number 1 in the amount of$14 million to $17 million dependent on the rates. The lower the rates, the more amount of money can be obtain with the same amount of debt service; A small bond for Project Area Number 3 at about $5 million or a little less. The third bond is not an Agency bond issue. They are financing the Silver Spur undergrounding district. The District passed the cash collection period. The homeowners are allowed to prepay their assessment. By pre-paying their assessment it lowers the bond amount. They are also looking at refunding two assessment districts, Sunterrace and Merano. They have a threshold of 3% net present value. When you look at the difference from now until the bond matures, this is called the future savings. This is discounted. One of the districts is at 4% and the other is at 15%. Should one district drop below 3% they will look at it at a later time. By doing all three of the assessment districts (two refunding and the new money for Silver Spur) at the same time, they share issuance costs. This will lift the burden of interest costs for all three districts. The assessment districts will be done in June. Project areas 1 and 3 will be done in June as well. Mr. Ortega asked if the tax collection had started. Mr. Gibson said that it has started 30 days after. There were four homeowners that indicated to the engineer that they would potentially pay. X. NEXT MEETING - Wednesday, May 28, 2003 at 2:00 p.m. XI. ADJOURNMENT There being no further business, the meeting was adjourned by Mr. Gibson at 2:48 p.m. Resp ctfully s bmitted, na Leal, or mg Secretary 7 42303.KPd Finance Department MEMORANDUM MORAL \DUM 1873 . To: Records Technician _ From: Diana Leal, Administrative Secretary"— Subject: Investment and Finance Committee Meeting Date: May 20, 2003 Attached, for your records, is a copy of the April 23, 2003,Investment and Finance Committee meeting attendance register. - - Thank you for your assistance. Attachments (1) • G:\Finance\Diana Leal\Wpdocs\Investment Committee\2002 Memos\City Clerk\4-23-03attend.wpd • 0 . ti bo o ai o) e'ri 's H pp h E^ W t Z E z a - y .v -o O W o w o h C..) o y o o N a , b0 V � � d , tl ce N 4 N 14 G Q wy TO: ;(4.) W \ Vs o h � � % \ Q C s 0 y` Eli ‘1 , �( ict, ). . .. v) _.N. .\> 4 c-- ..s..t.---,)rt -c t-4;) ts ti -- N en d' v, co N 00 cc 0 ' CV M 7' to 'V I--- 1 W • • DJ i- t.) a W C Q O CO O o 0 co co (n N 0 O (O n co o m ! c'O O m o v Omi (OO 0 0 co v. co;CO m C I 0 O A (O o n N [2/ o uo co ^ CO 0 N CO o O CO O> co CV m O m O� n t�(O O �n y C7 c7 O V_m CD In I- O _ a N 01 Oi t0 Ci c'] K<V [V co Ci Z CO N m CO CO m CO n N Cl h N CO f7 ^ (O O K CO co re, 1- N co N A Al n CO ` .- A N co o co T o m O am �N In e m a o A m '- CO N N. A. 1�<nT co CO 01 r CO Of N o CO v CO N O N N CO O m C1 CJ < CO V N C) o N K (h CO N O Ca CO co 0 m O N N N O CO CO CO ONi_ COco N a u7 and Oi C)V O C O N C. m m Oi(O N N o C M . ONi r CO0 N Q W CON N N V N CO CV 0 0 N.N N et CO a) m m C1 V CO N . O CO R < r } N N m O n } Co N r W C A n CO o O A A m co A co I- N b Vf A o A A 0 t0 e n 0( m (AO N N m A U 0 CO 0 O N C) (O O N n N,_COco O Q O co n N CO a < CO m -n- N 0 CO o Q o N min N O O Z. ▪ b coco m V c ^ co cq co V N V A a C m1 O) N N R In O COM lmn C) y V N V V n CO N V V V V V ' V cd N v v v v 4n v v CO v v V > V V m o C'1 o CO o N o 0 N- m o in m ^ m co co CJ f7 o N .0. Q o N O In o o �n O CD N A CO b m N 0 n n CO N 04 n o m 0 O Ol n 0 F T OI N o m OI co to (O m m O N 0] p y N O n n 0. ln mo Q OS NO 0e— •V NNNC CO Cr Nm .- , Nm ^ ' ,-o 0, W CO r---. m CO to CV NO( N ro 00 01 CO V CO N N N O N„ .a. C7 CO N 'V — -cc CO p N N CON N. el }0 O C) N O CO 0 N N r N O O CO N O Q N o O V n o Cl (c 1n O N m N O O (V m co N. C)R m N. N O r y CDN. C) (O CO In .- O) O CTO O.O O ^ a, cO o 0O O .0 CO el N CO AI CO o m Cl I,. N C " 4'J r m R o CO CO CM CO CO A coN CQ) N m [O N N C) cm CO a Q O O O CO O N O ^ {� o co w.(O O C, Cf n co m N V V o 0 0 o N Qj D o co co com CO co N CO (n e e 0 e 0 N N C Z fil• to Qm �` N V o r C •" 1- e r CO Q a �. d UILI I-. '(f 0 U < ao 11-, om C to y p Oa. aCO 0] 0m V N. D. a, NOO rn IO C ON Q CV ON r N- n mO NNNCO CO O O m n N e m N l� COCO N 0 0 01 C p.N N z 1 • C N .- mNnn N o (•, o'� nN CO et CO n m W (n ca 1In 0 4 O O O nCi ^N ' .- n O CD co r- EL N ' .Ii ' Pl a � CO '`r ' �v CO �el n fl CO `n Nqi `v CO CO CO al r co N r co V• C F co Q z Ce M 2 N L W A A A A A A A A A A A AAAA A A A A A A A A Qf O CO CO CO CO o CO o CO CO N CO N O 4,- N O N O to co VJ co W co co O o �. W U o 0 CO CO 0 C) CO N N CO N n t7 n < CO CO CO CO CO O� N- o! ^ o N Q m n N C) C) CO CO CO r (O t7 V A o co N CO o N. CD 01 R ( V .-' C O W Z Vim (o Di v v n m �v b (eee� v (eN h ('! CO ' " " ' C c0 O O m Q CO V V r V V CO; (+i V V V v V (� V V V v v v IV i 2 V V V V V O LL F F m CO o O N O N p O a .� m O N N CO CO CO O V con CO N CO CO CO 0 0 0 N N Z W ^ CO CO 0 CO 0 CO O o n CO 0 CO n a CO o Oa cV << o o in m W U( O NON O> N. Q Q ` f0 m o ` 0 n n _el C,n, N tO [O a n com CON co n N (O Kp CONc Nm v ^ m O t �i IS r m (%( n m COca O v N chi CO a ^ n rr : W'0 C> ('> 0 O N O N D co r co CO U t^ CO n (n CO n o O) n (O m .- OI tO m )0 CO r .� o([t th n CO O o r 2 Q CO CO CO CO o CO V. v coO o (•) n N CO OI 0 01 CO `C•) n rn (n m o m v o W 7 N CV CO.CO N_�n a pO NCO r M m_n c el o_O C 0 CV_ m CO O N CO H. Nn � CO CO K I" CO O Q N co N CO Ut CI d Q cd N N N- N CV el O Q f7 CO CO N N r^^ .N- CO r 0Q CI n CO 000 N 0 U W_ CI J J J Laus w w w W W {� �. o Z W w Z W W co z > w u' N 0) w tij (ail J ¢a. < 41 waX w X 0 Z m w 111 z W D J z m r O o C o o J z OJ z " ? Z w w o z z z w3 W .,( w ag w0 U. a awl 1- W M J � Jr qQ a' Jm w � JO Way a4w2 W W iX > w 0 a w > ¢ Z W U. IX 0 ¢ U a J n. K a > 0_ > m a W w > N ¢ w 0_ C cu I_ > w nn X • 7 LLz > zOw "3 r (- R' w00 U r (n r0 4 J ¢. V1 fizz W a OX wrJ W r Z LLQwQ = wm2 N J Mu. Q J CO O ¢ a4 = � Ma < J Z Itid0 W 2LU 5a J W 0z1- 2LLoaa � a r NNu� Q co >. n. OFLL000w Q W Uz .c W I- W 000w . > W R' 6JZ0 Q W ~ � U �U F o >. UJK J0QZZ r G. wDaJR' -)Zoaz . /- Ceu- M00o ¢ oa = o U000 r0 0 a00000 u. < mo 0F WLL0000C0X Woao r0 ` ti ) § § _ ° ° 20 ( ~ ® ° N ® 2 % An ] ( wNrl / 4 $[ V 4 , _9. § w & ) v E & 0 } } J } } ° r k k °)\ \\ - ^ ` tn }V V g ) CO' « A )N A000 / co co . z in cod. Z _ � � } �� V 0 | 0 k � 3 ® - ~ _ \ / }/ en a [\(\ \ } a / \ kco _! « i- - 2 m § \ § to V r. 0 ° ° / { / V V U. 2 r .-a ' °~¢ ` ` N2 ¢ CV k\ Z / ° � ##§ a ` ° 0 co m —V ° z ( ell )» § ° CO, 0 © .N & § \ \ \ ; o ƒ A A _ ( 0 0o 2 K a § § ) § ce w I- 17- ) 0 � § 0 k \ 0 — 0 0 0- Z 0 IX2 ! 7$ � _ � » , ¥ C , -.I * n w § § \ }} } b § ( [ § ( k k z • IP 4. g ' ''r .4„,„ F`'M.�,n,k„S„,44, It 4, � � R�. � SBf�' 3°T7�g, s ry( kce�A� ',�w '•.,• fq 0•- ,^;� -"fire `r4'' lv-�/,t )r lauza Agenc :ponfottos, act e,* g I 'et/0 t<;m �� * �i' CO P y �` /4 .Q° R PORT t ` y1• ,. a;Pi 3thi 1 s':rt J 6 " `>i..Ili N° 1} 003 ,,,' , lc,,. ' C:.'et;;;Parfvs;9,' - \t Al Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Open Market Committee ("FOMC*) met on 18 March and left the Federal Funds Rate unchanged at 1.25 percent. The FOMC cited geopolitical uncertainties, oil price premiums, and weak labor market indicators as restraints upon economic growth, and declined to assign a risk assessment to the economy until "geopolitical uncertainties abate". The FOMC's statement indicated that it does not know how to read or characterize its assessment of the current conditions. There is a significant risk that the U.S. economy may slip into a °double-dip" recession. Job losses in February were worse than expected, and unemployment rose to 5.8 percent. Consumer and small business confidence is currently at a 10-year low. There has been a marked change in consumer behavior with consumers saving more and reducing their debt. New home sales may be slowing down. Investors have been selling out stock positions and investing in U.S. Treasuries and in bond mutual funds. The U.S. airline industry is in trouble, with two major airlines in bankruptcy. The conflict in Iraq may be protracted and bloody. North Korea poses further geopolitical risk. If there is an economic recovery, it will probably be tepid since there is no pent-up demand from the last recession. The FOMC may use "unconventional monetary policy tools"to stimulate the U.S.economy if the Federal Funds Rate falls to 0.75 percent. This would be in recognition of the fact that interest rates would be approaching Japanese levels. Money market funds are currently yielding negative real rates of return. These rates could go still lower. PauLs. riibsonf C.C.M.r f Treasurer PORTFOLIO STATISTICS Dollars in Thousands FEB-03 JAN-03 DEC-02 NOV-02 OCT-02 SEP-02 CITY Month-End Book Value"' $ 165,196 $ 174,152 $ 136,687 $ 142,520 $ 144,054 $ 170,423 Month-End Market Value*** $ 165,279 $ 174,276 $ 136,899 $ 142,742 $ 144,259 $ 170,723 Paper Gain (Loss) $ 83 $ 124 $ 212 $ 222 $ 205 $ 300 Prior Year Book Variance $ (117) $ (5,672) $ (26,850) $ (23,866) $ (21,277) $ 696 Interest Earnings $ 210 $ 212 $ 225 $ 238 $ 271 $ 390 Yield-To-Maturity 1.63% 1.63% 1.93% 2.00% 2.15% 2.22% Weighted Maturity(Days) 28 29 49 50 52 70 Effective Duration 0.00 0.01 0.01 0.03 0.04 0.04 RDA Month-End Book Value*** $ 103,760 $ 105,023 $ 92,787 $ 92,761 $ 94,884 $ 99,221 Month-End Market Value- $ 106,192 $ 107,333 $ 95,022 $ 94,996 $ 97,147 $ 101,468 Paper Gain (Loss) $ 2,432 $ 2,310 $ 2,235 $ 2,235 $ 2,263 $ 2,247 Prior Year Book Variance $ (2,559) $ 19,541 $ 7,655 $ 7,826 $ 24,963 $ 28,723 Interest Earnings $ 138 $ 162 $ 153 $ 162 $ 185 $ 191 Yield-To-Maturity 1.66% 1.76% 1.95% 2.06% 2.23% 2.26% Weighted Maturity(Days) 132 133 150 150 147 141 Effective Duration 0.10 0.10 0.12 0.13 0.13 0.13 - Omits SLGSs. Cityyoof Palm Desert- Portfolio Characteristic 28 February 2003 Dollars in Thousands Ageing Interval Market Value < 1 M $ 93,427 General Fund Ageing' <2M - too <3M - 100 <6M - eo- <1YR - 7 <2YR - o 60- <3YR - Z 40- <4YR - a. <5Y R - 20- >SYR - 0 , 0 0 0 0 0 Total: $ 93,427 <1M <2M <3M <6M <1YR <2YR I Ratings' Market Value Credit Quality AAA AAA $ 82,937 51%(ThAA 0% AA - A 4,004 A1/P1 A c:71 2% Unrated" 77,958 Unrated** Total: $ 164,899 47% A1/P1 0% \ J ( Sector Market Value Asset Allocation, MTNs - U.S.Treasury $ - 2% Comm Paper Federal Agency 4,078 Money Market /A 7% Money Market Funds 84,032 Funds 52% Commercial Paper - LAIF MTNs 4,004 U.S.Treasury 24% LAIF 40,000 0% RDA Loan 32,785 Fed Agency RDA Loan Total: $ 164,899 6% \ � / / \ Month City Yield LAIF Yield Variance Performance` Mar02 3.17 2.86 0.31 1 Apr 3.18 2.85 0.34 3.5 May 3.06 2.74 0.32 Jun 2.86 2.69 0.18 Jul 2.88 2.71 0.17 ?`'. 1 il Aug 2.64 2.59 0.04 i 2.5 V f/ Sep 2.22 2.60 -0.38 5 g Oct 2.15 2.49 -0.33 ii i 1 . p Nov 2.00 2.30 -0.31 t5 a Dec 1.93 2.20 -0.27 Mar02 Apr May Jun Jul Aug Sep Oct Nov Dec Jan03 Feb Jan03 1.63 2.10 -0.47 Feb 1.63 1.95 -0.32 ©LAIF Yield ©City Yield \ l Standard and Poor's Credit Ratings • ** LAIF, HighMark, and City Loan to RDA Page 2 of 7 • • • CITY OF PALM DESERT Portfolio Holdings 28 February 2003 Market Ratings Par Value I Issuer I Coupon] Maturity I Cost I YTM Price I Value Moody's' S&P Medium-Term Notes $ 4,000,000 GENERAL MOTORS 5.95 3/14/03 $ 3,999,995 5.94 100.09 $ 4,003,727 A2 BBB $ 4,000,000 Subtotal $ 3,999,995 5.94 $ 4,003,727 Agencies-Discount $ 4,080,000 FED. NATIONAL MTG ASSOC 2.21 3/14/03 $ 3,999,350 2.28 99.96 $ 4,078,368 Aaa AAA $ 4,080,000 Subtotal $ 3,999,350 2.28 $ 4,078,368 LGIP $ 40,000,000 L.A.I.F. 0.00 3/1/03 $ 40,000,000 1.95 100.00 $ 40,000,000 NR NR $ 40,000,000 Subtotal $ 40,000,000 1.95 $ 40,000,000 LGIP $ 59,391,729 C.A.M.P. 0.00 3/1/03 $ 59,391,729 1.26 100.00 $ 59,391,729 N/A AAA $ 59,391,729 Subtotal $ 59,391,729 1.26 $ 59,391,729 Pooled Funds--AIM $ 19,467,296 PRIME PORTFOLIO 0.00 3/1/03 $ 19,467,296 0.90 100.00 $ 19,467,296 Aaa AAA $ 19,467,296 Subtotal $ 19,467,296 0.90 $ 19,467,296 Pooled Funds--HighMark $ 3,040,772 CITY MAIN SWEEP 0.00 3/1/03 $ 3,040,772 0.20 100.00 $ 3,040,772 NR NR $ 114,014 DESERT WILLOW SWEEP 0.00 3/1/03 $ 114,014 0.20 100.00 $ 114,014 NR NR $ 107,498 GOLF COURSE SWEEP 0.00 3/1/03 $ 107,498 0.20 100.00 $ 107,498 NR NR $ 1,909,962 OFFICE COMPLEX SWEEP 0.00 3/1/03 $ 1,909,962 0.20 100.00 $ 1,909,962 NR NR $ 5,172,246 Subtotal $ 5,172,246 0.20 $ 5,172,246 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 3/1/33 $ 32,785,480 1.95 100.00 $ 32,785,480 NR NR $ 32,785,480 Subtotal $ 32,785,480 1.95 $ 32,785,480 Total Investments $ 164,896,751 $ 164,816,095 1.626 $ 164,898,847 NR =Not Rated Page 3 01 7 ® •• CITY OF PALM DESERT Portfolio Holdings 28 February 2003 Market Ratings I Par Value I Issuer I Coupons Maturity I Cost I YTM Price I Value _Moody's' S& P Cash $ 46,860 OFFICE COMPLEX CHKG 0.00 3/1/03 $ 46,860 0.00 100.00 $ 46,860 NR NR $ 98,675 CITY MAIN CHKG 0.00 3/1/03 $ 98,675 0.00 100.00 $ 98,675 NR NR $ 16,374 DESERT WILLOW CHKG 0.00 3/1/03 $ 16,374 0.00 100.00 $ 16,374 NR NR $ 867 CPD GOLF COURSE 0.00 3/1/03 $ 867 0.00 100.00 $ 867 NR NR $ 30,181 OFFICE COMPLEX TRUST 0.00 3/1/03 $ 30,181 0.00 100.00 $ 30,181 NR NR $ 187,399 RECREATIONAL FAC CHKG 0.00 3/1/03 $ 187,399 0.00 100.00 $ 187,399 NR NR $ - VACATION INN CHKG 0.00 3/1/03 $ - 0.00 100.00 $ - NR NR $ 380,356 Subtotal $ 380,356 0.00 $ 380,356 Total Cash and Investments $ 165,277,107 $ 165,196,451 $ 165,279,203 NR=Not Rated Page 4 of 7 Palm Dese edevelopment Agency- Portfolio Characteristics eristics 28 February 2003 Dollars in Thousands Ageing Interval Market Value < 1 M $ 68,934 Portfolio Ageing w/o SLGSs) <2M - <3M - too - so <6M 871 s0- _ eo- < 1YR 179 0 70- <2YR 6,982 2 6°- <3YR - '6 4 40 - <4YR - ri 30 - <SYR - 20- 9 >5YR - 10- 0 0 1 0 Ii 0 0 0 Total: $ 76,966 <1M <2M <3M <6M <1YR <2YR <3YR <4YR 7- \ Quality" Market Value Credit Quality Al/P1 MA $ 45,020 AAA 0% AA - 42% A - Unrated"" Al/P1 - AA 58% Unrated" 60,943 0% A Total: $ 105,963 0% J Sector Market Value Asset Allocation) Money Market • U.S.Treasury $ 8,063 Funds Federal Agency - Federal Agency 54% Money Market Funds 57,900 0% LAIF 40,000 Commercial Paper - ' Corporate Bonds - U.S.Treasury LAIF Total: $ 105,963 8% ""44 38% - 1 Month RDA Yield LAIF Yield Variance IPerformance Mar02 2.28 2.86 -0.59 Apr 2.42 2.85 -0.43 May 2.38 2.74 -0.36 Jun 2.37 2.69 -0.32 Jul 2.23 2.71 -0.48 2.6- I. Aug 2.27 2.69 -0.33 i Sep 2.262.60 -0.35 It � Oct 2.233 2.49 -0.25 II 4 E� Nov 2.06 2.30 -0.25 Dec 1.95 2.20 -0.25 Mar02 Apr May Jun Jul Aug Sep Oct Nov Dec Jan03 Feb Jan03 1.76 2.10 -0.34 Feb 1.66 1.95 -0.28 D LAIF Yield O RDA Yield 1 " Standard and Poor's Credit Ratings LAIF and HighMark Sweep Page 5 of 7 • • Palm Desert Redevelopment Agency Portfolio Holdings 28 February 2003 Market Ratings I Par Value I Issuer I Coupon[Maturity I Cost I YTM Price I Value Moody's S&P U.S. Treasury-Discount $ 181,000 UNITED STATES TREASURY 4.63 2/15/04 $ 130,168 5.51 98.99 $ 179,174 Aaa AAA $ 7,143,000 UNITED STATES TREASURY 4.59 8/15/04 $ 4,989,671 5.54 98.15 $ 7,011,069 Aaa AAA $ 532,400 UNITED STATES TREASURY 4.66 8/15/03 $ 394,279 5.47 99.47 $ 529,562 Aaa MA $ 344,600 UNITED STATES TREASURY 4.66 8/15/03 $ 255,200 5.47 99.47 $ 342,763 Ma AAA $ 8,201,000 Subtotal $ 5,769,319 5.531 $ 8,062,568 LGIPs $ 40,000,000 L.A.I.F. 0.00 3/1/03 $ 40,000,000 1.95 100.00 $ 40,000,000 NR NR $ 4,923,322 LAIF BOND PROCEEDS 0.00 3/1/03 $ 4,923,322 1.95 100.00 $ 4,923,322 NR NR $ 9,556,155 LAIF BOND PROCEEDS 0.00 3/1/03 $ 9,556,155 1.95 100.00 $ 9,556,155 NR NR $ 54,479,478 Subtotal $ 54,479,476 1.95 $ 54,479,478 Pooled Funds-AIM $ 36,957,305 PRIME PORTFOLIO 0.00 3/1/03 $ 36,957,305 0.90 100.00 $ 36,957,305 Aaa AAA $ 36,957,305 Subtotal $ 36,957,305 0.90 $ 36,957,305 Pooled Funds--HighMark $ 6,249,718 HOUSING AUTH CHK SWEEP 0.00 3/1/03 $ 6,249,718 0.20 100.00 $ 6,249,718 NR NR $ 214,063 HOUSING AUTH TRT SWEEP 0.00 3/1/03 $ 214,063 0.20 100.00 $ 214,063 NR NR $ 6,463,781 Subtotal $ 6,463,781 0.20 $ 6,463,781 Total Investments $ 106,101,564 $ 103,669,883 1.66 $ 105,963,132 Cash $ 37,045 HOUSING AUTH CHKG 0.00 3/1/03 $ 37,045 0.00 100.00 $ 37,045 NR NR $ 53,188 HOUSING AUTH TRUST 0,00 3/1/03 $ 53,188 0.00 100.00 $ 53,188 NR NR $ 90,233 Subtotal $ 90,233 0.00 $ 90,233 Total Cash and Investments $ 106,191,797 $ 103,760,116 $ 106,053,365 NR=Not Rated Page 6 of 7 • • STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert("City')and the Palm Desert Redevelopment Agency('RDA')are governed by federal, state, and local law. The City Treasurer's 'Statement of Investment Policy' is more restrictive than the California Government Code. The Palm Desert Investment Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended 28 February 2003,the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies,based upon the stated objectives of safety, liquidity,and yield (in order of priority). Barring unforeseen events,the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition,portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts and are therefore not included in this report as assets. All balances are bank balances. Respectfully submitted on 26 March 2003, Pis Qthion, c.c-M r- City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS ICalifornia Government Code I City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality %of City %of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) - Palm Desert Bonds 5 Years No Limit Not Authorized i) 53601(b) _ U.S.Treasuries 5 Years No Limit 5 Years 1 No Limit. 1 f 0.0% I 5.6% 53601(c) _ CA State Debt 5 Years No Limit Not Authorized 53601(d) _CA Local Agency Debt 5 Years No Limit Not Authorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 2.4% 0.0% 53601(f) _-Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 - - 53601(g) Commercial Paper 270 Days 25% A-1+or P-1 270 Days• 25% A-1+or P-1 0.0% - 0.0% 53601(h) _ Negotiable CDs _ 5 Years 30% 5 Years 30% AA-or Aa3 - - 53601(i) _ Repos 1 Year No Limit 30 Days • 20% AM& Aaa - 53601(i) _ Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium-Term Notes 5 Years 30% A 3 Years 30% A 2.4% 0.0% 53601(k) Mutual Funds 90 Days 20% AAA& Aaa 90 Days 20% AAA&Aaa 51.0% 41.9% 53601(1) _ Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& Not Authorized Securities AA(Security? 16429 LAIF No Limit ( No Limit 1 • 24.3% 52.6% 80.1% 100.0% ,(1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. Certified California Municipal Treasurer Page 7 of 7 • • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A SOURCES & USES Dated 03/26/2003 Delivered 03/26/2003 SOURCES OF FUNDS Par Amount of Bonds $15,745,000.00 Reoffering Premium 186,537.10 TOTAL SOURCES $15,931,537.10 USES OF FUNDS Total Underwriter's Discount (1.000%) 157,450.00 Costs of Issuance 150,000.00 Gross Bond Insurance Premium 287,000.00 Reserve Surety Fee 27,000.00 Deposit to Project Construction Fund 15,310,087.10 TOTAL USES $15,931,537.10 kinsell, Newcomb&De Dios,Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 1 Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DETAIL COSTS OF ISSUANCE Dated 03/26/2003 Delivered 03/26/2003 COSTS OF ISSUANCE DETAIL Bond Counsel $40,000.00 Bond Counsel Expenses $1,500.00 Disclosure Counsel $22,500.00 Financial Advisor $39,500.00 Fiscal Consultant $18,000.00 Trustee/Paying Agent $5,000.00 Rating Fee $9,000.00 Printing/Misc $14,500.00 TOTAL $150,000.00 kinsell, Newcomb 8 De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM • Page 12 Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I 8/01/2003 - - 267,016.06 267,016.06 8/01/2004 - - 769,006.26 769,006.26 8/01/2005 - - 769,006.26 769,006.26 8/01/2006 - - 769,006.26 769,006.26 8/01/2007 - - 769,006.26 769,006.26 8/01/2008 - - 769,006.26 769,006.26 8/01/2009 - - 769,006.26 769,006.26 8/01/2010 - - 769,006.26 769,006.26 8/01/2011 - - 769,006.26 769,006.26 8/01/2012 - - 769,006.26 769,006.26 8/01/2013 - - 769,006.26 769,006.26 8/01/2014 - - 769,006.26 769,006.26 8/01/2015 - - 769,006.26 769,006.26 8/01/2016 - - 769,006.26 769,006.26 8/01/2017 - - 769,006.26 769,006.26 8/01/2018 - - 769,006.26 769,006.26 8/01/2019 - - 769,006.26 769,006.26 8/01/2020 - - 769,006.26 769,006.26 8/01/2021 - - 769,006.26 769,006.26 8/01/2022 - - 769,006.26 769,006.26 8/01/2023 875,000.00 4.500% 769,006.26 1,644,006.26 8/01/2024 910,000.00 4.500% 729,631.26 1,639,631.26 . 8/01/2025 1,145,000.00 4.625% 688,681.26 1,833,681.26 8/01/2026 1,340,000.00 4.625% 635,725.00 1,975,725.00 8/01/2027 1,405,000.00 5.000% 573,750.00 1,978,750.00 8/01/2028 1,475,000.00 5.000% 503,500.00 1,978,500.00 8/01/2029 1,550,000.00 5.000% 429,750.00 1,979,750.00 _ 8/01/2030 1,630,000.00 5.000% 352,250.00 1,982,250.00 8/01/2031 1,715,000.00 5.000% 270,750.00 1,985,750.00 8/01/2032 1,805,000.00 5.000% 185,000.00 1,990,000.00 8/01/2033 1,895,000.00 5.000% 94,750.00 1,989,750.00 Total 15,745,000.00 - 20,110,928.78 35,855,928.78 YIELD STATISTICS Bond Year Dollars $410,207.01 Average Life 26.053 Years Average Coupon 4.9026292% Net Interest Cost(NIC) 4.8955384% True Interest Cost(TIC) 4.8817555% Bond Yield for Arbitrage Purposes 4.9502122% All Inclusive Cost(AIC) 5.0875501% IRS FORM 8038 Net Interest Cost 4.7919091% Weighted Average Maturity 26.099 Years kinsell, Newcomb&De Dios, Inc. File=NewMoney.s1-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 2 • • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I 8/01/2003 - - 267,016.06 267,016.06 2/01/2004 - - 384,503.13 384,503.13 8/01/2004 - - 384,503.13 384,503.13 2/01/2005 - - 384,503.13 384,503.13 8/01/2005 - - 384,503.13 384,503.13 2/01/2006 - - 384,503.13 384,503.13 8/01/2006 - - 384,503.13 384,503.13 2/01/2007 - - 384,503.13 384,503.13 8/01/2007 - - 384,503.13 384,503.13 2/01/2008 - - 384,503.13 384,503.13 8/01/2008 - - 384,503.13 384,503.13 2/01/2009 - - 384,503.13 384,503.13 8/01/2009 - - 384,503.13 384,503.13 2/01/2010 - - 384,503.13 384,503.13 8/01/2010 - . 384,503.13 384,503.13 2/01/2011 - - 384,503.13 384,503.13 8/01/2011 - - 384,503.13 384,503.13 2/01/2012 - - 384,503.13 384,503.13 8/01/2012 - - 384,503.13 384,503.13 2/01/2013 - - 384,503.13 384,503.13 8/01/2013 - - 384,503.13 384,503.13 2/01/2014 - - 384,503.13 384,503.13 8/01/2014 - - 384,503.13 384,503.13 2/01/2015 - - 384,503.13 384,503.13 8/01/2015 - - 384,503.13 384,503.13 2/01/2016 - - 384,503.13 384,503.13 8/01/2016 - - 384,503.13 384,503.13 2/01/2017 - - 384,503.13 384,503.13 8(01/2017 - - 384,503.13 384,503.13 2/01/2018 - - 384,503.13 384,503.13 8/01/2018 - - 384,503.13 384,503.13 2/01/2019 - - 384,503.13 384,503.13 8/01/2019 - - 384,503.13 384,503.13 2/01/2020 - - 384,503.13 384,503,13 8/01/2020 - - 384,503.13 384,503.13 2/01/2021 - - 384,503.13 384,503.13 8/01/2021 - - 384,503.13 384,503.13 2/01/2022 - - 384,503.13 384,503.13 8/01/2022 - - 384,503.13 384,503.13 2/01/2023 - . 384,503.13 384,503.13 8/01/2023 875,000.00 4.500% 384,503.13 1,259,503.13 2/01/2024 - - 364,815.63 364,815.63 8/01/2024 910,000.00 4.5000/0 364,815.63 1,274,815.63 2/01/2025 - - 344,340.63 344,340.63 8/01/2025 1,145,000.00 4.625% 344,340.63 1,489,340.63 2/01/2026 - - 317,862.50 317,862.50 8/01/2026 1,340,000.00 4.6250/0 317,862.50 1,657,862.50 kinsell, Newcomb&De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 3 ® • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DEBT SERVICE SCHEDULE Date Prindpal Coupon Interest Total P+I 2/01/2027 - - 286,875.00 286,875.00 8/01/2027 1,405,000.00 5.000% 286,875.00 1,691,875.00 2/01/2028 - - 251,750.00 251,750.00 8/01/2028 1,475,000.00 5.000% 251,750.00 1,726,750.00 2/01/2029 - - 214,875.00 214,875.00 8/01/2029 1,550,000.00 5.000% 214,875.00 1,764,875.00 2/01/2030 - - 176,125.00 176,125.00 8/01/2030 1,630,000.00 5.000% 176,125.00 1,806,125.00 2/01/2031 - - 135,375.00 135,375.00 8/01/2031 1,715,000.00 5.000% 135,375.00 1,850,375.00 2/01/2032 - - 92,500.00 92,500.00 8/01/2032 1,805,000.00 5.000% 92,500.00 1,897,500.00 2/01/2033 - - 47,375.00 47,375.00 8/01/2033 1,895,000.00 5.0000/0 47,375.00 1,942,375.00 Total 15,745,000.00 - 20,110,928.78 35,855,928.78 YIELD STATISTICS Bond Year Dollars $410,207.01 Average Life 26.053 Years Average Coupon 4.9026292% Net Interest Cost(MC) 4.8955384% True Interest Cost(TIC) 4.8817555% Bond Yield for Arbitrage Purposes 4.95021220/0 All Indusive Cost(AIC) 5.0875501% _ IRS FORM 8038 Net Interest Cost 4.7919091% Weighted Average Maturity 26.099 Years kinsell, Newcomb 8 De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 4 • • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I FISCAL TOTAL 3/26/2003 - - - - - 8(01(2003 .• - - 267,016.06 267,016.06 - 2/01/2004 - - 384,503.13 384,503.13 - 6/30/2004 - - - - 651,519.19 8/01/2004 - - 384,503,13 384,503.13 - 2/01/2005 - - 384,503,13 384,503.13 - 6/30/2005 - - - - 769,006.26 8/01/2005 - - 384,503.13 384,503.13 - 2/01/2006 - - 384,503.13 384,503.13 - 6/30/2006 . - - - 769,006.26 8/01/2006 - - 384,503.13 . 384,503.13 - 2/01/2007 - - 384,503.13 384,503.13 - 6(30/2007 - - - - 769,006.26 8/01/2007 - - 384,503.13 384,503.13 - 2/01/2008 - - 384,503.13 384,503.13 - 6/30/2008 - . - - 769,006.26 8/01/2008 . - 384,503.13 384,503.13 - 2/01/2009 - . 384,503.13 384,503.13 - 6/30/2009 - - - - 769,006.26 8/01/2009 - - 384,503.13 384,503.13 - 2/01/2010 - - 384,503.13 384,503.13 - 6/30/2010 . . - - 769,006.26 8/01/2010 - - 384,503.13 384,503.13 - 2/01/2011 - - 384,503.13 384,503.13 - 6/30/2011 - - - - 769,006.26 8/01/2011 - - 384,503.13 384,503.13 - 2/01/2012 - - 384,503.13 384,503.13 - - 6/30/2012 - - - - 769,006.26 8/01/2012 - - 384,503.13 384,503.13 - 2/01/2013 - - 384,503.13 384,503.13 - 6/30/2013 - - - - 769,006.26 8/01/2013 - - 384,503.13 384,503.13 - 2/01/2014 - - 384,503.13 384,503.13 - 6/30/2014 - - - - 769,006.26 8/01/2014 - . 384,503.13 384,503.13 - 2/01/2015 - - 384,503.13 384,503.13 - 6/30/2015 - - - - 769,006.26 8/01/2015 - - 384,503.13 384,503.13 - 2/01/2016 - - 384,503.13 384,503.13 - 6/30/2016 - - - - 769,006.26 8/01/2016 - - 384,503.13 384,503.13 - 2/01/2017 - - 384,503.13 384,503.13 - 6/30/2017 - - - - 769,006.26 8/01/2017 - - 384,503.13 384,503.13 - 2/01/2018 - - 384,503.13 384,503.13 - 6/30/2018 - - - - 769,006.26 8/01/2018 - - 384,503.13 384,503.13 - kinsell, Newcomb 8 De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 5 • • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I FISCAL TOTAL 2/01/2019 - - 384,503.13 384,503.13 - 6/30/2019 - - - - 769,006.26 8/01/2019 - - 384,503.13 384,503.13 - 2/01/2020 - - 384,503.13 384,503.13 - 6/30/2020 - - - - 769,006.26 8/01/2020 - - 384,503.13 384,503.13 - 2/01/2021 - - 384,503.13 384,503.13 - 6/30/2021 - - - - 769,006.26 8/01/2021 - - 384,503.13 384,503.13 - 2/01/2022 - - 384,503.13 384,503.13 - 6/30/2022 - - - - 769,006.26 8/01/2022 - - 384,503.13 384,503.13 - 2/01/2023 - - 384,503.13 384,503.13 - 6/30/2023 - - - - 769,006.26 8/01/2023 875,000.00 4.500% 384,503.13 1,259,503.13 - 2/01/2024 - - 364,815.63 364,815.63 - 6/30/2024 - - - - 1,624,318.76 8/01/2024 910,000.00 4.500% 364,815.63 1,274,815.63 - 2/01/2025 - - 344,340.63 344,340.63 - 6/30/2025 - - - - 1,619,156.26 8/01/2025 1,145,000.00 4.625% 344,340.63 1,489,340.63 2/01/2026 - - 317,862.50 317,862.50 6/30/2026 - - - - 1,807,203.13 8/01/2026 1,340,000.00 4.625% 317,862.50 1,657,862.50 - 2/01/2027 - - 286,875.00 286,875.00 - 6/30/2027 - - - - 1,944,737.50 8/01/2027 1,405,000.00 5.000°/a 286,875.00 1,691,875.00 - 2/01/2028 - - 251,750.00 251,750.00 - 6/30/2028 - - - - 1,943,625.00 8/01/2028 1,475,000.00 5.000% 251,750.00 1,726,750.00 - 2/01/2029 - - 214,875.00 214,875.00 6/30/2029 - - - - 1,941,625.00 8/01/2029 1,550,000.00 5.000% 214,875.00 1,764,875.00 - 2/01/2030 - - 176,125.00 176,125.00 6/30/2030 - - - - 1,941,000.00 8/01/2030 1,630,000.00 5.000% 176,125.00 1,806,125.00 - 2/01/2031 - - 135,375.00 135,375.00 6/30/2031 - - - - 1,941,500.00 8/01/2031 1,715,000.00 5.000% 135,375.00 1,850,375.00 - 2/01/2032 - - 92,500.00 92,500.00 6/30/2032 - - - 1,942,875.00 8/01/2032 1,805,000.00 5.000% 92,500.00 1,897,500.00 2/01/2033 - - 47,375.00 47,375.00 - 6/30/2033 - - - - 1,944,875.00 8/01/2033 1,895,000.00 5.000% 47,375.00 1,942,375.00 - 6/30/2034 - - - - 1,942,375.00 Total 15,745,000.00 - 20,110,928.78 35,855,928.78 - kinsell, Newcomb&De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 6 • • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DEBT SERVICE SCHEDULE YIELD STATISTICS Bond Year Dollars $410,207.01 Average Life 26.053 Years Average Coupon 4.9026292% Net Interest Cost(NIC) 4.8955384% True Interest Cost(TIC) 4.8817555% Bond Yield for Arbitrage Purposes 4.9502122% All Indusive Cost(AIC) 5.0875501% IRS FORM 8038 Net Interest Cost 4.7919091% Weighted Average Maturity 26.099 Years kinsell, Newcomb 8 De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 7 • • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A PRICING SUMMARY Maturity Type of Bond Coupon Yield Maturity Value Price Dollar Price 8/01/2023 Serial Coupon 4.500% 4.650% 875,000.00 98,034% 857,797.50 8/01/2024 Serial Coupon 4.500% 4.700% 910,000.00 97.317% 885,584.70 8/01/2026 Term 1 Coupon 4.625% 4.730% 2,485,000.00 98.519% 2,448,197.15 8/01/2033 Term 2 Coupon 5.000% 4.750% 11,475,000.00 102.309% c 11,739,957.75 Total - - - - 15,745,000.00 - - 15,931,537.10 BID INFORMATION Par Amount of Bonds $15,745,000.00 Reoffering Premium or(Discount) 186,537.10 Gross Production $15,931,537.10 Total Underwriter's Discount (1.000%) $(157,450.00) Bid(100.185%) 15,774,087.10 • Total Purchase Price $15,774,087.10 Bond Year Dollars $410,207.01 Average Life 26.053 Years Average Coupon 4.9026292% Net Interest Cost(NIC) 4.89553840/0 True Interest Cost(TIC) 4.8817555% kinsell, Newcomb 6 De Dios, Inc. File=NewMoney sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM - • Page 8 • • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A PROOF OF BOND YIELD @ 4.9502122% Date Cashflow PV Factor Present Value Cumulative PV 3/26/2003 - 1.0000000x - - 8/01/2003 267,016.06 0.9831644x 262,520.67 262,520.67 2/01/2004 384,503.13 0.9594178x 368,899.13 631,419.80 8/01/2004 384,503.13 0.9362447x 359,989.02 991,408.82 2/01/2005 384,503.13 0.9136314x 351,294.12 1,342,702.94 8/01/2005 384,503.13 0.8915642x 342,809.22 1,685,512.16 2/01/2006 384,503.13 0.8700300x 334,529.27 2,020,041.44 8/01/2006 384,503.13 0.8490160x 326,449.30 2,346,490.74 2/01/2007 384,503.13 0.8285095x 318,564.49 2,665,055.23 8/01/2007 384,503.13 0.8084983x 310,870.13 2,975,925.36 2/01/2008 384,503.13 0.7889705x 303,361.61 3,279,286.97 8/01/2008 384,503.13 0.7699143x 296,034.44 3,575,321.41 2/01/2009 384,503.13 0.7513183x 288,884.25 3,864,205.66 8/01/2009 384,503.13 0.7331716x 281,906.76 4,146,112.42 2/01/2010 384,503.13 0.7154631x 275,097.80 4,421,210.21 8/01/2010 384,503.13 0.6981823x 268,453.29 4,689,663.51 2/01/2011 384,503.13 0.6813190x 261,969.27 4,951,632.78 8/01/2011 384,503.13 0.6648629x 255,641.87 5,207,274.65 2/01/2012 384,503.13 0.6488043x 249,467.29 5,456,741.93 8/01/2012 384,503.13 0.6331336x 243,441.84 5,700,183.78 2/01/2013 384,503.13 0.6178414x 237,561.93 5,937,745.71 8/01/2013 384,503.13 0.6029185x 231,824.04 6,169,569.75 2/0I/2014 384,503.13 0.5883560x 226,224.74 6,395,794.49 8/01/2014 384,503.13 0.5741453x 220,760.68 6,616,555.17 2/01/2015 384,503.13 0.5602779x 215,428.59 6,831,983.76 8/01/2015 384,503.13 0.5467453x 210,225.29 7,042,209.06 2/01/2016 384,503.13 0.5335397x 205,147.67 7,247,356.73 8/01/2016 384,503.13 0.5206530x 200,192.69 7,447,549.42 2/01/2017 384,503.13 0.5080775x 195,357.39 7,642,906.81 8/01/2017 384,503.13 0.4958058x 190,638.87 7,833,545.68 2/01/2018 384,503.13 0.4838305x 186,034.33 8,019,580.00 8/01/2018 384,503.13 0.4721444x 181,540.99 8,201,121.00 2/01/2019 384,503.13 0.4607406x 177,156.19 8,378,277.19 8/01/2019 384,503.13 0.4496122x 172,877.29 8,551,154.48 2/01/2020 384,503.13 0.4387526x 168,701.75 8,719,856.23 8/01/2020 384,503.13 0.4281553x 164,627.05 8,884,483.28 2/01/2021 384,503.13 0.4178140x 160,650.77 9,045,134.05 8/01/2021 384,503.13 0.4077224x 156,770.54 9,201,904.59 2/01/2022 384,503.13 0.3978746x 152,984.02 9,354,888.61 8/01/2022 384,503.13 0.3882646x 149,288.96 9,504,177.57 2/01/2023 384,503.13 0.3788868x 145,683.15 9,649,860.72 8/01/2023 1,259,503.13 0.3697354x 465,682.92 10,115,543.64 2/01/2024 364,815.63 0.3608051x 131,627.35 10,247,170.99 8/01/2024 1,274,815.63 0.3520905x 448,850.47 10,696,021.46 2/01/2025 344,340.63 0.3435864x 118,310.75 10,814,332.21 8/01/2025 1,489,340.63 0.3352876x 499,357.52 11,313,689.73 2/01/2026 317,862.50 0.3271894x 104,001.23 11,417,690.96 kinsell,Newcomb&De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 9 • • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A PROOF OF BOND YIELD © 4.9502122% Date Cashflow PV Factor Present Value Cumulative PV 8/01/2026 1,657,862.50 0.3192867x 529,333.41 11,947,024.37 2/01/2027 286,875.00 0.3115749x 89,383.04 12,036,407.41 8/01/2027 1,691,875.00 0.3040493x 514,413.46 12,550,820.87 2/01/2028 251,750.00 0.2967056x 74,695.62 12,625,516.49 8/01/2028 1,726,750.00 0.2895392x 499,961.73 13,125,478.22 2/01/2029 214,875.00 0.2825458x 60,712.04 13,186,190.26 8/01/2029 1,764,875.00 0.2757214x 486,613.88 13,672,804.14 2/01/2030 176,125.00 0.2690619x 47,388.52 13,720,192.66 8/01/2030 1,806,125.00 0.2625632x 474,221.89 14,194,414.55 2/01/2031 135,375.00 0.2562214x 34,685.97 14,229,100.52 8/01/2031 1,850,375.00 0.2500328x 462,654.50 14,691,755.02 2/01/2032 92,500.00 0.2439937x 22,569.42 14,714,324.44 8/01/2032 1,897,500.00 0.2381005x 451,795.67 15,166,120.11 2/01/2033 47,375.00 0.2323496x 11,007.56 15,177,127.67 8/01/2033 1,942,375.00 0.2267376x 440,409.43 15,617,537.10 Total 35,855,928.78 - 15,617,537.10 - • DERIVATION OF TARGET AMOUNT • Par Amount of Bonds $15,745,000.00 Reoffering Premium or(Discount) 186,537.10 Bond Insurance Premium (287,000.00) Other Credit Enhancement Fees (27,000.00) Original Issue Proceeds $15,617,537.10 kinsell, Newcomb 8 De Dios, Inc. File=NewMoney.s1-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM • Page 10 • • Palm Desert Financing Authority Tax Increment Revenue Bond (Project Area #2) Series 2003 A DERIVATION OF FORM 8038 YIELD STATISTICS Maturity Issuance Value Price Issuance PRICE Exponent Bond Years 3/26/2003 - - - - - 8/01/2023 875,000.00 98.034% 857,797.50 20.3472222x 17,453,796,35 8/01/2024 910,000.00 97.317% 885,584.70 21.3472222x 18,904,773,39 8/01/2025 1,145,000.00 98.519% 1,128,042.55 22.3472222x 25,208,617.54 8/01/2026 1,340,000.00 98.519% 1,320,154.60 23.3472222x 30,821,942.81 8/01/2027 1,405,000.00 102.309% 1,437,441.45 24.3472222x 34,997,706.41 8/01/2028 1,475,000.00 102.309% 1,509,057.75 25.3472222x 38,250,422.14 8/01/2029 1,550,000.00 102.309% 1,585,789.50 26.3472222x 41,781,148,35 8/01/2030 1,630,000.00 102.309% 1,667,636.70 27.3472222x 45,605,231.42 8/01/2031 1,715,000.00 102.309% 1,754,599.35 28.3472222x 49,738,017.69 8/01/2032 1,805,000.00 102.309% 1,846,677.45 29.3472222x 54,194,853.50 8/01/2033 1,895,000.00 102.309% 1,938,755.55 30.3472222x 58,835,845.51 Total 15,745,000.00 - 15,931,537.10 - 415,792,355.12 IRS FORM 8038 Weighted Average Maturity= Bond Years/Issue Price 26.099 Years Total Interest from Debt Service 20,110,928.78 Reoffering (Premium)or Discount (186,537.10) Total Interest 19,924,391.68 NIC= Interest/(Issue Price'Average Maturity) 4.7919091% Bond Yield for Arbitrage Purposes 4.9502122% kinsell,Newcomb&De Dios, Inc. File=NewMoney.sf-3-13-03 Final JW/KEN-SINGLE PURPOSE Public Finance 3/13/2003 8:58 AM Page 11 • • ox (0 , N O I U N N N t` O N N N 0 O 0 0 0 0 O O O. F > N O O0 in 0 0 O �.- d C1 N O C O N O O U N N q N nN N .. .0 oNNNNNNNNNNNNNNNNNNN g14 v ✓• 9 V C T C 0 9 n a ' > C d a d 00 V O 4 O L dE 0 E E 0 t W O kbN O O d d 4 (a 4 4 Cl. N cm to La00000000000 O o o O O. O d O O co 0 0 Ma L „ .0 U N.0 d .. CIO L n d C d K U cc WO N r N r r N N N N N N r N 0 N r 1- N r h COO 01d 4 0 n .m L. 0 n .a .. n n .r n n n .. ., n E C X K 0• 4 0 N CNC d op . 113. , Z m E c q C O w N £ 0 4 oi M W X d N .0 00 C OW a .00 m O .� C .r .n ... .n .r n H n n n n n n n n n n n n ND N In 01 mIn a 0 V U P t 0 O O I`n X d N 'M. Itl c cn 0 inner i a .0 N N N •n n n n n n tt.m m O.� n n n n n n Nn n n n CO d y o N 4 m 0 • 2 4 Al • N C.C. y e 4 21 C N N NN n N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N U 0 CCv 0 I. • • O .. or r mr ryNt i pr4 cartoon m n 00 N 44 4 c] m b .y b N n 000 N a O .+ N 2 Z 2 4 C .r ..4 N N N N N N N N N N N N N N N N N n n n n n n N P P P P O b U R V N N n . N F N omen V a n F o e Mn r oa ry m On no.4 O n m co Z N NMS O N m 0 m N n O Q ry ry n N N N n N N m n m m M n n n P P P P N N V. n N N N b b V m 9 0 A 0 u orlu 0 Orcoom ert .40 o. L0 n o U . 0H m m n • P ^ ^ O N O Jrr> n F O N O N WNNNNNONWIOOUIOON F4 n in .4 n O O ry O O P .4 P ry n s n P P P O .y O .v P n .y n .y ry P ry CO V P pu N N N N N N N N N N N N N N N N N N N N . .+ ti . M . n M .+ Fn ' 0 x O N Q 0 X • On Cen .0 0 b b C 000 0 0 o bri 10 O O O O 80IC4 c▪ odcrin o ry [I." M d Vl b F N N N N F F NNNNNNNNNNNN L P n.� n n n n n .� n n 0 0.4 n p n N d ❑ O o d d m m r n n o m an WO r ccoO00000o0oFo % WON P W M .4 n ... ... n n n n .� .r .a r n .0 n ., n n .. .+O A ry N d ❑ C 0 w m 0 0 o 0 n 0 Co C6000 Moir moon . o nFm -cpncer coo CO G . . . .m N mm o % m a e d cow O m N O 4 m ry ry ry n n n n n n n n NO� MN , O MO � n n n .+ u. m4.Z C MO h O 0 4 0 n >. m U o a' a d m ❑ 4 0 u d OW CO U N .4 MU 0 M W 4. 00 J V 6 4 40 d > y m m C ❑ n P m n ry n0 ry nou N 0 M 0 44• a ❑ v _ Q F d a N n N H O N J J F v 0 m b b a m O d s 4. m m m 0 M m O O O ti N£ sr O 4 00 > E m m Z U O N b N ✓ 0 41 d d d m t F ❑ MCP FrcP P P P 0 �n b N m b n u, b b b b b OM b N N N N N N N N m m m m CO ID N O m m W U I. 40 m P N d > 4u v a pa 2 00 J m 4 4 u° U 4 C WE mID V> Ei£ .0 E N rn 0 U 4 U ON - O v F m u d N an ni £ > 0 d m 4 n N 4> rcd m N m O OO OO O O O O O O O 0 O O O O O 0 O O 0 O O 0> ry ry N ry N N ry N N N N N ry N N N N N N N N N N N N N N N N ry N N N N N 0 Co F 00 N 2 .3 2 00 O • ".""' • CITY OF PALM DESERT Arab,` / INVESTMENT & FINANCE COMMITTEE R �tj Minutes 1.. *Est- ';�� h February 26, 2003, 2:00 p.m. dir#4. $,� yE,. f North Wing Conference Room I. CALL TO ORDER A regular meeting was called to order by Chairman Gibson on Wednesday, February 26, 2003 at 2:00 p.m. II. ROLL CALL Present: Absent: Paul Gibson, Director of Finance Everett Wood Jean Benson, Mayor Bob Spiegel, Mayor Pro-Temp Thomas Jeffrey, Deputy City Treasurer David Erwin, City Attorney Carlos Ortega, City Manager Jose Luis Espinoza, Finance Operations Manager Bill Veazie Murray Magloff Russ Campbell Also Present: Justin McCarthy, ACM Redevelopment Rodney Young, Desert Willow General Manager tan , ecording ec ary 1 ,6(e44.4.at` ) Guests: �� None V v w V (�,ce�e ae l- III. ORAL COMMUNICATIONS None. IV. COMMITTEE MEMBER REPORTS None. 1 22603 wpd INVESTMENT & FINANC.MMITTEE • MINUTES February 26, 2003 4 V. CONSENT CALENDAR A. Approval of Minutes Motion was made by Mr. Campbell and seconded by Mr. Veazie to approve the Minutes of the January 22, 2003 meeting as submitted. VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for January 2003 Mr Jeffrey reported that, for the month ended January 31, 2003, the book value of the City Portfolio was approximately $174.2 million. The City earned approximately $212,000 in interest. Portfolio yield-to-maturity was approximately 1.63%. For the month ended January 31, 2003, the book value of the RDA Portfolio was approximately $105 million. The RDA earned approximately $152,000 in interest. Portfolio yield-to-maturity was approximately 1.76%. B. State of California Local Agency Investment Fund Balance for the Month of January 2003 Mr. Gibson stated that the City's and the Redevelopment Agency's LAIF accounts are maxed out at $40 million each. C. California Asset Management Program (CAMP) January 2003 Mr. Gibson said that the City is getting close to the maximum amount they can have in the account. The City is allowed to have 20% in the City and 20% in the Redevelopment Agency for a total of 40% combined. Mr. Campbell asked if the amount was going to be increased. Mr. Jeffrey said that last year before interest rates began to fall, the City didn't think that they would be doing any local agency polls. The City tried to shorting the City's $20 million policy, they removed it. Mr. Campbell asked what happens when CAMP gets maxed out. Mr. Gibson said that at that point the City will have to consider short term investments as long term investments would be foolish at this point. The economist said that 2 22603.wpd INVESTMENT & FINANC•MMITTEE • MINUTES February 26, 2003 once the economy starts picking up he expects the federal government to raise the rates by 100 basis points within a matter of one month. It is not worth the risk if market values drop. D. City and Redevelopment Agency Monthly Financial Reports for City Council for December 2002 Mr. Gibson said that sales tax is based on a quarterly basis. They typically give the City advances on a monthly basis. The City is still ahead on the transient occupancy tax (TOT) with the exclusion of collecting monies from Vacation Inn. The City requested that the auditor visit (8) agencies to conduct TOT audits. The Marriott and Embassy Suites will be included. Vacation Inn will be audited due to the bankruptcy. Mr. Spiegel asked if the Vacation Inn's new owners were paying the past due TOT. Mr. Gibson said that they paid December and said that they would pay January. Mr. Gibson said that through the State budget process, the governor has not reimbursed the City for the mandated costs. The City is submitting a request for reimbursement just in case they decide to pay it in future years. If you don't, within a year's time, the City forfeits their chance of ever getting reimbursed. Mr. Ortega said with the exception of the subventions, in all cases, when one looks at last year versus this year, the City is ahead. Mr. Gibson said that the only exception was the interest income received as it is lower due to the rates being lower. E. Parkview Professional Office Buildings - Financial Report for January 2003 Mr. Gibson said that the roof repairs will begin next week. Repairs were placed on hold due to rain. The carpeting was placed at the Water Resources facilities. Most of the tenant improvements have been completed. Ms. Benson asked if there were any bad leaks which required repairing. Mr. Gibson said that the State Rehabilitation (SR) has an office that has a steady leak and until the tar paper is torn off and the roof is redone completely, they will continue to have leaks. Ms. Benson asked if there was interior damage. Mr. Gibson said that there is interior damage, however, he has informed SR that the necessary work cannot be completed until the roof is done. The lab is experiencing a similar problem. This is due to the fact that they are using strong chemicals in the lab. The chemicals are carried through the vent and onto the roof. The chemicals are causing the deterioration of the roof. Something of substance will be placed on the roof so that it can prevent the chemicals are traveling onto the roof and causing its erosion. 3 22603.wptl INVESTMENT & FINANC•MMITTEE • MINUTES February 26, 2003 Mr. McCarthy asked if the City was indemnified for the damages on the building. Mr. Gibson said that the City was not indemnified as this was a gross lease and the City has to pay for carpet changes, etc. F. Palm Desert Golf Course Facilities Corporation Financial Information for December 2002 Mr. Young said that Food and Beverage did well. The banquet business continues to grow. He credits the department heads, managers and staff who • are doing a great job. Golf continues to struggle a bit. Group rounds are down, and they are getting the larger groups in. They lost approximately $70,000 for the four days when it rained. Expenses and payroll are in line. Net income is ahead of budget for year to date. Mr. Spiegel asked if Mr. Young had looked into extending the hours of operation to include dinner. Mr. Young said that dinner is a tough market to enter into as there is a great deal of competition. The staff, plates, and the food is very well planned and there is very little waste. In the beginning, there would be a lot of waste if there are not enough guests. He thinks that it would be wise to wait to offer dinner when a hotel comes onsite. Further, they are doing very well with the banquets. They have Saturday nights booked through 2003. They need to focus on booking large groups. It is difficult to keep the necessary margins with the smaller groups. They are not booking too far in advance just in case they need to book a special event. They plan to have a theme night once a month/week. Mr. Spiegel asked what the maximum amount of people Desert Willow could hold. Mr. Young said that it can hold 240 people without a dance floor and 210 people with a dance floor. Mr. Veazie said that he was impressed with the number of people that Desert Willow accommodates. Ms. Benson said that she met with someone from a local group yesterday who was not aware that Desert Willow could be used as a banquet facility as they did not see any advertisements. Mr. Young said that they advertise through local wedding planners, florists, etc. They could include a flyer with the bill that is given to the lunch customers. Mr. Gibson suggested that an ad be included in the City's newsletter. Ms. Benson said that there is no restaurant in Palm Desert that is big enough to accommodate a large number of people. Mr. Spiegel said that Kristy Kneiding, the City's marketing manager, could develop a one page ad that can be added to the bill. Mr. Young said that there is space to grow. He will take a look at it. Mr. Young said that golf shop revenue is down for the year. The income is only down $1,000 and revenues are down $54,000. He thinks that next year they can maintain costs at 56%. 4 22603.wpd INVESTMENT & FINANC•MMITTEE • MINUTES February 26, 2003 Mr. Spiegel said that the City has a new golf course. The Coachella Valley Recreation and Park District (CVRPD) owns the executive golf course, however, the City provides them with a minimum stipend to get the course in shape, and the City will give them $30,000 annually to maintain the course. Mr. Young said that he has it on his list to contact them to coordinate golf programs. Mr. Spiegel said that Mr. Don Martin is the person he should contact. Ms. Benson said that she was approached by senior residents who inquired about having a "senior day" or something special for seniors at Desert Willow when member play is down. Mr. Young said that resident dollars are up because higher paying rounds are down. The course is sold out until 2:00 p.m. everyday. He would have to displace a higher paying play for a discount. He does not need the rounds. He would like to help them out if he could find a slot to do it. It is difficult to make the revenues they need. Mr. Ortega suggested a 9-hole senior day after everyone else has played at about 2:00 p.m. or 3:00 p.m. Mr. Young said that he will take a look at the possibility. At this time the greens are getting beat up badly. They are looking at their rate schedule and with evening events they are looking to offer to businesses. After 3:00 p.m. on Tuesdays, Wednesdays and Thursdays local businesses they can play at Desert Willow for $25. Mr. Spiegel said that the new CVRPD golf course will hold a senior day once a week for $14 -$16. Ms. Benson said that this would be a good alternative for those people who do not want to play an 18-hole course. Mr. Ortega said that Desert Willow is not a golf course that is easy to play, some people might prefer a smaller course. G. Informational 1. Wall Street Journal Article Review & Outlook: Cronyism at Calpers 2. Markets Article Calpers Cools Down Mr. Veazie said that the State went into long term care. One of the provisions is tied to the premiums that they have assumed that there will be a certain number of people that will drop out of the plan, will die or will draw benefits. The industry feels that the numbers they used are incorrect. There will be more people staying on the plan. Generally the people that stay on the plan are the unhealthy people. If people drop out, then the rates will be raised. They have a right to go into their pension plan to supplement the premiums and pay benefits. Not many people are aware of this. He had a client who came across this fact. Mr. Veazie challenged the State and he received a definitive answer. The State said that they can go into the pension plan. 5 22603 wpd INVESTMENT & FINANC•MMITTEE • MINUTES February 26, 2003 Mr. Gibson said that at the Finance Officers' Conference they discussed the rates for next year and the years to follow. They indicated that the safety members, i.e. police officers, firefighters will be 47% of salary will be the rate that they will be charging PERS members. VIII. CONTINUED BUSINESS - None. IX. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks There being no business issues to report, discussion ensued to the next agenda item. B. Bond Issuance by Palm Desert Financing Authority Mr. Coleman said that he has attended previous board and council meetings where he spoke about the bond issue for Project Area No. 3. He said that they did not analyze how much money they could issue for bonds in Project Area No. 2. They are at a capacity to issue $35 million. As the State budget started unraveling, the Governor unveiled what he wanted to do in terms of the State budget. One item he wanted to look at in particular was redevelopment. The Governor wanted to take the permanent $250 million from Redevelopment Agencies via ERAF and give the money to schools and lower the school bills via general fund commitment to the schools. They also wanted to raise it until they permanently gave 100% of the schools' share of pass throughs to them. In addition, the Governor had mid year cuts within the budget to take a half billion dollars in Redevelopment housing funds and transferring the money to the general fund. The good news is that no such action was taken. None of the parties, legislature, assembly or the senate, wanted to have the money transferred to the general fund. The senate local government committee and the housing and community development committee both were supportive of redevelopment. The City, the Redevelopment Agency and some of the local redevelopment agencies said that they do not want to give anything. The best staff was looking at was a one-time hit to the redevelopment agencies collectively of $200 - $500 million. A $500 million hit, based upon the ERAF formula that is in place at this time, the Palm Desert Redevelopment Agency would be hit by close to $4 million. 6 22603.wpd INVESTMENT & FINANCIFMMITTEE • MINUTES February 26, 2003 The Redevelopment Agency has some things that they feel they need to accomplish in Project Area No. 2. For instance, the 171 acres from ART. The Agency put some money down and took a note on the property. They approached the bond insurer and offered an issue of $13-$14 million in bonds instead of the $35 million. This left the Agency with enough money on the table to continue paying interest, obligations and administration. Mr. Coleman said that he is happy to report that they have bond insurance for the Project Area No. 2 bond. Staff received a commitment from MBIA to issue up to $20 million, and they received an insurance policy for 80 basis points, which is very reasonable. They also obtained a surety substitution for reserve funds. The Agency's strategy is to take whatever money they can bond and request more money after the State budget is resolved. At this point, it is difficult to guess when the state budget will be resolved. The good news is that there are a group of moderates, twelve (seven democrats and five republicans), who have been meeting to get some sort of dialogue because there is such an impasse. Staff is looking to issue a bond with debt service that will be $2 million plus. They will continue to pay the City loans and other obligations. Right now, it will net at least $12 million or more. The bad news, from an investment standpoint, is that the rates are bad. However, if you seek to borrow money the rates are very good. They are looking at 30 year serial bonds at about 5 to 5 1/4. They are looking at a borrowing environment whereby they can obtain a cheaper rate. The Agency is scheduled to go to the market to price their bonds. This will be the next big test to see how the market will receive RDA's credit. They are looking to price the bonds on March 11 and to close on March 26. They have approached the bond insurers and said that based upon the model they have came up with, they would like to look at Project Area No. 1. There again is the philosophy that they want to buy what they feel they really want to have within the next few months, and then they will go back later to take the rest. Mr. Coleman said that they are also looking at a possible bond in Project Area No. 3 based on that model. They are being prudent not to issue to the maximum amount especially when the requirements for ERAF state that if the Redevelopment Agency can not pay, the general fund will pay. The Agency does not want to put the general fund in harms way. Mr. Campbell asked if this was due to the concern as to what is or is not committed as viewed by the State. Mr. Coleman said that in terms of committed and not committed with respect to the housing funds, the State is looking at what is obligated in contracts. There would be a liability if the Agency could not pay their obligations. The State is being cautious. 7 22603.wpd INVESTMENT & FINANCE MMITTEE • MINUTES February 26, 2003 Mr. Campbell said that he does not fully understand how the State will look at what is considered committed or when the money is considered committed. Mr. Gibson said that there are a lot of questions on that which remain unanswered. Mr. Ortega said that the historical interpretation is that if an agency has debt, it is obligated. Mr. Veazie asked if the City or the Redevelopment Agency has any outstanding bonds that are not insured. Mr. Coleman said that the Agency does not have any uninsured bonds, they are all triple A. The Agency has some assessment districts that are not only not insured, but also nonrated, however, they are backed by the property. They have been fortunate to obtain insurance. The only time they got nervous was in November 2001 they did a bond issue in Project Area No. 4. The first time they said that they were not going to make a commitment. They paid 150 basis points for that insurance policy as opposed to 80 basis point for the current one. If they can not get insurance the other way to go is to go via rating. When an agency goes via rating, the Agency helps to shape the way the deal is made in terms of the coverage. The bond must be fully funded and there must be a reserve fund. The way they are doing it with the bond insurance is by buying a surety policy. They can do less debt for the reserve purposes, however, they have an insurance policy there in case they can not make payments. They have two policies: 1) a policy that insures the bond, 2) an insurance policy that sits into the reserve fund which allows the Agency to use more of the balance they leverage for projects. Mr. Veazie asked if Mr. Coleman foresees a wave of rating reduction on bonds as the State of California recently had one. He would like to know as it relates to cities, counties and redevelopment agencies throughout California. Mr. Coleman said that some municipals can have them. It depends on the outstanding debt they have and their capacity to pay. He said that he is not sure that redevelopment agencies would be involved as much. He thought that it would be interesting to find out how the school districts will be hit as they do general obligation bonds. He thinks that Los Angeles Unified School District (LAUSD) took a slight hit on some of the ratings. They just issued a $2 billion bond. The only good thing at this time is that there are lower interest rates on the general obligation bonds. They are looking at an interest rate of 5.30, 5.29 for their 30 year debt. Mr. Gibson said that there will be another bond issue for the assessment district for the undergrounding. Mr. Coleman said that it is dependent upon the approval of the assessment district. 8 22603.wpd INVESTMENT & FINANCtMMITTEE • MINUTES February 26, 2003 X. NEXT MEETING - Wednesday, March 26, 2003 at 2:00 p.m. XI. ADJOURNMENT There being no further business, the meeting was adjourned by Mr. Gibson at 3:05 p.m. Respectfully submitted, Diana Leal, Recording Secretary 9 22603 wpd