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1 PALM DESERT FINANCING I AUTHORITY I I PROJECT AREA NO. 1 , AS AMENDED 2003 TAX ALLOCATION BONDS I I I I I I 1 August 5, 2003 I I ' TABLE OF CONTENTS 1 I. Project Area No. I Cover Page Official Statement I List of Participants I 1 ' II. Preliminary Pricing Results Comparable Tax-Exempt"AAA" Insured Issues 2 1 t 1 III. Final Pricing Schedules Sources & Uses 3 Debt Service 3 Pricing Summary 3 IV.The Interest Rate Environment Economic Summary 4 1 1 1 1 1 1 I 1 1 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 I03(a) of the Internal Revenue Code of 1986, as amended,from the gross income of the owners thereof for 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. '. $19,000,000 PALM DESERT FINANCING AUTHORITY ' TAX ALLOCATION REVENUE BONDS (PROJECT AREA NO. 1,AS AMENDED) SERIES 2003 I Dated: Date of Delivery Due: April 1,as shown on the inside cover hereof The Pak: Desert Financing Authority, Tax Allocation Revenue Bonds (Project Area No. 1, As Amended) 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 die 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 thepresentation 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 "Tr stee"). Interest on the Bonds will be payable on April 1 and October 1 of each year (the "Interest Payment Dates"), commencing April 1,2004,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 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. TheBonds will be issued by the Palm Desert Financing Authority(the"Authority")under an Indenture of Trust,dated as of July 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. 1, As Amended, Loan Agreement dated as of July 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 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 wider 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. MBIA 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 MBIA Insurance 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 Agency by Fulbright&Jaworski L.L.P.,Los Angeles,California,Disclosure Counsel. It is anticipated that the Bonds will be available for delivery in New York,New York through the facilities of DTC on or about August 5,2003. KINSELL, NEWCOMB 1Klb DE DIOS, INC. STINSON SECURITIES,LLC INVESTMENT BANKING The date of this Official Statement is July 15,2003. PALM DESERT FINANCING AUTHORITY PALM DESERT REDEVELOPMENT AGENCY CITY OF PALM DESERT PALM DESERT FINANCING AUTHORITY COMMISSION MEMBERS AND STAFF 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 ' AGENCY 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 Rochelle Klassen, City Clerk Dennis M. Coleman,Redevelopment Finance Manager Jose Luis Espinoza, Assistant Finance Director Janet M. Moore,Senior Management Analyst SPECIAL SERVICES Bond Counsel Disclosure Counsel Richards, Watson&Gershon, Fulbright&Jaworski L.L.P. A Professional Corporation Los Angeles, California Los Angeles, California Financial Advisor Fiscal Consultant MuniSoft Rosenow Spevacek Group,Inc. ' Modesto,California Santa Ana, California Trustee BNY Western Trust Company Los Angeles; California 1 I I. I 1 1 ,2 1 1 1 1• 1 1 1 1 1 1 Ill 1 1 I ' Palm Desert Financing Authority Tax Allocation Revenue Bonds 1 (Project Area No. 1 as Amended) Series 2003 Issuer Issuer Issuer Issuer _ Issuer Palm Desert Financing Los Angeles Dept WTR& San Rafael City Elam SD- Authority PA#1 Palmdale Such Dist-COPS PWR Turlock Err Dist-A C I Sale Date 7/15/2003 7/102003 7/8/20037/8/20037/112003 Par Amount $19,000,000 $11,205,000 $515,830,000 $30,240,000 $10,000,000 AA- Rating AAA-MBIA MA-MBIA MBIA(2016-23,27,31) AM-MBIA AAA-MBIA I Fin.Typo Tax Allocation COP Revenue Bond Revenue Bond GO ULT Optional Call 4!1/2013 @ Par 9/1/2013 @Par 7/1/2013 @Par 11/12013 @ Par 8/1/2012 @ Par Kinsell,Newcomb&De Dios, Citigroup Global MKTS Underwriter Inc./Stinson Securities,LLC UBS Financial SINS. J.P.Morgan Securities INC. Stone&Youngberg,LLC ICoupon/ Coupon/ Coupon/ Coupon/ Coupon/ Yield Yield Yield Yield Yield I 2003 1.50 @ 1.00% 2004 1.50 0 1.15% 2.50 0 1.10% 2005 1.75(�1.36% 2.50 @ 1.25% 2006 2.00 0 1.63% 2.50 @ 1.60% 2007 2.00 0 2.06% 3.00 @ 1.95% 2.50 0 2.10% I 2008 2.25 0 2.40% 4.00 0 2.30% 2.50(a 2.40% 2009 2.625 0 2.70°,6 4.00 @ 2.70% 3.00 @ 2.60% 2010 3.00 @ 3.07% 4.00 @ 3.00% 3.00 @ Par 2011 3.25 @13.31% 4.00 @ 3.22% 4.00 0 3.20% I 2012 3.25 0 3.43% 4.00 @ 3.37% 4.00 @ 3.35% 2013 3.50 0 3.56% 5.00 0 3.49% 4.00 0 3.50% 2014 3.60 @ 3.73% 5.00 @ 3.62% _ 4.00 @ 3.65% 2015 3.75 0 3.90% 5.00 0 3.77% 4.00 @ 3.80% 2016 3.80 @4.05% 5.00 @3.90%(M) 5.00 @3.94% 4.00 03.95% I 2017 4.00 @ 4.15% 5.00(�4.00%(M) 5.00 @ 4.04% 4.00 @ 4.05% 4.00 2018 4.00@4.23% 5.00 04.09%(M) 5.00 @4.14% @4.15% 2019 4.125 @ 4.28% 5.00 @ 4.17%(M) 5.00 @ 4.20% 4.20 @ 4.25% 2020 4.20 @ 4.33% 5.00 @ 4.25%(M) 5.00 @ 4.29% 4.30 @ 4.35% ' 2021 2022 5.00 @ 4.33%(M) 5.00 @ 4.36% 5.00 0 4.423% 4.25 0 4.40% 5.00 @ 4.39%(M) 4.375 @ 4.45% 4.75©4.61 2023 5.00 @ NRO(M) 4.50 @ 4.59% 2024 4.75 @ 4.66% 4.50 0 4,62% 4.375 @ 4.50% I 2025 4.75 @ 4.69% 2026 2027 5.00 @ 4.50%(M) 2028 5.00 0 4.55% 5.00 0 4.50% 2029 I 2030 5.00 0 4,57% 5.00 0 4.63% 2031 4.50 @ 4.63%(M) 2032 2033 5.00 @ 4.57% I I I I IPalm Desert Financing Authority Tax Allocation Revenue Bonds IComparables on the day of Pricing I Issuer Issuer Issuer Issuer Palm Desert Financing Lincoln Public Financing California EDU FAC Authority PA# 1 Coachella Water Authority Authority AUTH I Sale Date 7/15/2003 7/15/2003 7/14/2003 7/14/2003 Par Amount $19,000,000 $13,410000 $10,560,000 $23,600,000 Rating AAA- MBIA AAA-FSA AAA-MBIA AAA-FSA Fin. Type Tax Allocation Revenue Bond Revenue Bond Revenue Bond I Optional Gall 4/1/2013 @ Par 3/1/2015 @ Par 8/1/2011 @ Par 9/1/2013 @ Par Kinsell Newcomb & De Wedbush Morgan Underwriter Dios, Inc. Securities US Bancorp Piper Jaffray EJ De La Rosa &Co. I Coupon/ Coupon/ Coupon/ Coupon/ Yield Yield Yield Yield 2003 4.00 @ .90%' 2004 2.00 @1.50% 2.50 @ 1.00% 4.00 @ 1.00% 3.00 @ 1.32% 2005 2.50 @ 1.35% 3.00 @ 1.40% 2.75 @ 1.32% ' 2006 2.50 @ 1.65% 3.00 @ 1.75% 4.00 @ 1.70% 2007 2.50@2.10% 2.00@2.15% 3.75@2.05% 2008 3.00 @ 2.45% 2.50 @ 2.45% 3.00 @ 2.45% 2009 3.25 @ 2.70% 3.00 @ 2.80% 2.625 @ 2.77% ' 2010 3.50@3.10°/n 3.20@320% 2.875@3.10% 2011 3.75 @ 3.30% 3.50 @ 3.35% 3.20 @ 3.40% 2012 4.00 @ 3.45% 3.40 @ 3.50% 3.375 @ 3.60% 2013 4.00@3.60% 3.75@3.70% 3.50@3.73%' 2014 4.00 @ 3.75% 4.00 @ 3.90% 3.625 @ 3.68% 2015 4.00@3.90% 4.125@4.10% 3.75@4.01% 2016 4.25@4.05% 4.25@4.20% 4.00@4.15% 2017 4.50@4.15% 4.25@4.30% 4.00@4.25% 2018 4.50@4.25% 4.50@4.40% 4.10@4.35% 2019 4.40 @ 4.50% 4.20 @ 4.40% 2020 4.25 @ 4.53% I 2021 2022 4.375 @ 4.57% 4.40 @ 4.60% 2023 5.00 @ 4.60% 4.50 @ 4.65% 2024 I 2025 2026 5.00 @ 4.56% 2027 5.00 @ 4.57% ' 2028 5.00 @ 5.00% 4.625 @ 4.80% 2029 2030 5.00 @ 4.58% 2031 I 2032 2033 5.00 @ 4.63% 4.625 @ 4.84% 1 '• 1 I I 1 • I e3 1 Palm Desert Financing Authority ' Tax Allocation Revenue Bonds Project Area No. 1 , As Amended Series 2003 I Sources and Uses Schedule SOURCES OF FUNDS Par Amount of Bonds $19,000,000.00 Reoffering Premium 624,077.10 ' Total Sources $19,624,077.10 USES OF FUNDS ' Total Underwriter's Discount (1.025%) 194,750.00 Costs of Issuance 140,600.00 Gross Bond Insurance Premium 383,000.00 Reserve Surety Premium 36,000.00 Deposit to Project Construction Fund 18,869,727.10 TOTAL USES $19,624,077.10 1 I 1 i I I Palm Desert Financing Authority Tax Allocation Revenue Bonds Project Area No. 1 , As Amended I Series 2003 I Debt Service Schedule IDate Principal Coupon Interest Total P & I 4/01/2004 622,777.78 622,777.78 I 4/01/2005 950,000.00 950,000.00 4/01/2006 950,000.00 950,000.00 4/01/2007 950,000.00 950,000.00 I 4/01/2008 950,000.00 950,000.00 4/01/2009 950,000.00 950,000.00 4/01/2010 950,000.00 950,000.00 I 4/01/2011 950,000.00 950,000.00 4/01/2012 950,000.00 950,000.00 4/01/2013 950,000.00 950,000.00 I 4/01/2014 950,000.00 950,000.00 4101/2015 950,000.00 950,000.00 4/01/2016 950,000.00 950,000.00 I4/01/2017 950,000.00 950,000.00 4/01/2018 950,000.00 950,000.00 4/01/2019 950,000.00 950,000.00 I4/01/2020 950,000.00 950,000.00 4/01/2021 950,000.00 950,000.00 4/01/2022 950,000.00 950,000.00 4/01/2023 950,000.00 950,000.00 4/01/2024 950,000.00 950,000.00 4/01/2025 950,000.00 950,000.00 ' 4/01/2026 3,440,000.00 5.000% 950,000.00 4,390,000.00 4/01/2027 3,610,000.00 5.000% 778,000.00 4,388,000.00 4/01/2028 3,790,000.00 5.000% 597,500.00 4,387,500.00 I4/01/2029 3,980,000.00 5.000% 408,000.00 4,388,000.00 4/01/2030 4,180,000.00 5.000% 209,000.00 4,389,000.00 ITotal 19,000,000.00 23,515,277.78 42,515,277.78 I I I 1 1 Palm Desert Financing Authority Tax Allocation Revenue Bonds Project Area No. 1 , As Amended Series 2003 Pricing Summary I Maturity Type Of Bond Coupon Yield Maturity Price Dollar Price ' Value 4/01/2026 Serial Coupon 5.000% 4.560% 3,440,000 103.399% 3,556,925.60 4/01/2027 Serial Coupon 5.000% 4.570% 3,610,000 103.320% 3,729,852.00 4/01/2030 Term Coupon 5.000% 4.580% 11,950,000 103.241% 12,337,299.50 Bid Information Par Amount of Bond $19,000,000.00 Reoffering Premium of(Discount) 624,077.10 Gross Production $19,624,077.10 Total Underwriter's Discount (1.025%) $(194,750.00) Bid (102.260%) 19,429,327.10 Total Purchase Price $19,429,327.10 ' Bond Year Dollars $470,305.56 Average Life 24.753 Years Average Coupon 5.0000000% Net Interest Cost (NIC) 4.9087132% True Interest Cost (TIC) 4.8413739% 1 1 1 E / f v 1 1 1� 1 1 1 1 I. 1 i I ` Economic Summary During the pricing call, the Finance Team, comprising the Underwriting Syndicate (Kinsell, Newcomb & De Dios, Inc., and Stinson Securities), the Financial Advisor (Munisoft), and the Issuer(Palm Desert Financing Authority), discussed the comparable 1 interest rate scales on similar recent bond issues. We also discussed the supply of California paper currently trading in the market as well as the new issues that the Authority would be pricing against 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 on Monday, July 14. With the hard work of the Underwriting Syndicate and the Financial Advisor, we were able to get lower interest 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. I 1 1 I 1 I 1 I I I 1 I i THE t OND BUYER THE DAILY NEWSPAPER OF MUNICIPAL FINANCE ® MoNDAY,July 14,2003 I I I Fridab's 6HdarrCte4 • . MUDItid vd 'tooth Mostly Utichangfek. i reas ata IHig1Jae na Sluggish Trading . IllBy Anastasija Johnson gap in April. Mun In the municipal arena, traders said it icipal bonds held unchanged in typ- was a typically slow Friday, and'tax-ex- jenny sluggish Friday trading, while Trea- empts were stable with most activity con- suries were a touch firmer. centrated in the long end of the market. I Treasuries edged up, reversing earlier "Some blocks traded on the long end, losses,while equities advanced.The gov- but there were very few trades," a trader in eminent bond market exhibited little rear- New York said. "The bid side was a little don after the June producer price index bit firmer, but overall the market was un- rose 0.5%,while core PP1, excluding the • changed?' volatile food and energy sectors,fell 0.1%. Municipal bond funds gained$4 million HSBC Securities Inc. economist Ian during the week ended July 9, after re- I Morris said a drop in June core PPI suggests ceiving $197 million the prior week, ac- the U.S. economy is still vulnerable to de cording to a.report by U.S.Bancorp Piper flationary pressures,allowing for another Jaffrey.It was the 12th consecutive week cut in interest rates by the Federal Reserve. of inflows to municipal bond funds. I "It highlights that growth remains weak, .Taxable bond funds received$971 mil-, which is putting downward pressure on lion after gaining.$375 million the prior prices across-the economy," Morris said. week,.with most invested in.investment- "That means that rates will probably have grade and high-.yield corporate bond funds. I to come down and the consensus expects-. Equity funds had inflows of$2.45 bil- lion of strong growth in the second half lion after seeing inflows of$2.55 billion will have tb be revised down?' the'prior week,While money market funds In other economic news,the international had inflows of$14.41 billion for the week I trade deficit rose to$41.8 billion in May ended July 9 after losing$11.40 billion the from a downwardly revised $41.6 billion . prior week,the report said. U' I I I I 1 THE BOND BUYER THE DAILY NEWSPAPER OF MUNICIPAL FINANCE ItlesDnv,JULY• 15,2003 Muni Yieds MS Two Basis •Poin#s` e As Treasu. es trip Ahead:of'Fed_News .1. •' By Nicholas Chesla and • drop in prices.If people think that's in the 'Anastasija Jennson cards or potentially in the cards, they ate quick te.ruh for the hills" Municipal bond yields were quoted tivo In-the new issue:market,J.P.Morgan 'basispoints•higher yesterday,reflecting a Securities Inc.received roughly$30 mil • - e 'decline in Treasuries,while in the new-is- lion in retail orders on a portion of$225 sue market underwriters received roughly million of Missouri Health and Education- $30 million in retail orders on a portion of al Facilities revalue bonds with a top yield ' 6.$225 million Missouril Olth.and Ed- of 4.85% in.2033,ahead of institutional ucational•FacWties revenue bold deal. pricing today. • Governments fell,extending earlier loss- • • Meanwhile,direct retail has been.the key es in the face of rising equities and ahead of source of demand for municipal bonds,ac- testimony by Federal,Reserve Board chat- cording to George'Friedlander,fixed-in- ' • man Alan Greenspan before the House come strategist at Citigroup Global Mar- Financial Services Committee today and kets Inc., in the firm'slatestMunicipal ' the Senate Banking Committee tomorrow. Market Comment. "We don't expect Greenspan to plow Friedlander said retail deniand was dri- much.new ground,"said Scott Anderson,. ven by the collapse of short-term rates,the . senior economist at Wells Fargo Bank. continuing flow of cash from bonds ma- '"He is likely going to stick to the Fed's taring or being called, and the attractive- ,statement'saying that there are signs the ness of somewhat higher yields together ' .economy.is improving..I think he'll con- with a realization tbatlow short-term rates tine to mention that deflation risks remain were unlikely to rebound soon. and the Fed will remain vigilant against "Now,with'investors having.had some those risks,but I'don't'think they are go- time to get used to the new lower level ' ing to 'signal anything about another rate of yields,they have received a 'bonus' cut." in the form of a significant yield bounce;' Meantime,Anderson said June retail he said:'So they are-mining cash to work sales, also scheduled for release today, in impressive fashion and we aren't par- would likely show consumer spending re- ticularly concerned that this trend will maned strong, drawing strength from a reverse.',', pick-up in:demand for durablegoods,such - In'addition,Friedlander said rising stock as autos,appliances,and furniture. prices and the passing of the peak mid-year ' • 'Tlie consumer.remains the strongest_ period for absorrpption of funds from ma- component of this recovery,"he said.'We luring paper and bond calls were unlikely to expect consumer spending,in the second be a significant impediment to direct retail quarter to come-in around 3% growth, ._demand,due in part to a desperate hunger I :which is better than we saw the quarter be-• for income by investors. fore?' "We are confident that in the current en- hr the municipal arena,the market'gave vironment,sharply high stock prices would UP.earlier signs of,firmness with yields be accompanied by somewhat higher over- i ' . -quoted two basis'points higher,.which re- all interest rates,which would entice even '.fleeted falling Treasuries. more indivi.dnats outof cash,"he said. . ' "With the,goVemment market fading.on • Another source of support for tax-ex- in pretty.nicely,case itgives people another ex- ,erupts Was;an easing of the new-issuecal- se to do nothing,"•a trader in New York. • endar after'roughly$390 billion came.tc. said. -Makeover the July 2002to June 2003 pe- With the recent move to higher.yields, : riod,'.abcording to Friedlander, traders said it made sense for the market ,"While the new-issue calendar for the ' to move into a trading range and a period of sumtneris setting up to be solid,'we ex • - consolidation. pest that aggregate supply in.the next 12 lesgoing to be self-fulfilling if enough months will be down sharply from the re- •people believe it,"-the trader said, 'cent peak,perhaps by 15% or more;'he While the market progressively showed .said. . ❑ tai More signs of stability,elements of uncer- nty and caution remained A Correction "The market is so hard to predict,"an- ' — other trader in New York said. '.`It will be • Fitch Ratings last week downgraded the up one day and then there will be no bid credit rating of Mennonite General Hos: the next day.Underlying everything is that . pital in Puerto Rico to B-plus from BBB- fear Of.the cycle ehding•and'rates going minus.A story yesterday.gave an incor- _ ._ ' • higher, which means a long, precipitous :rest rating; I THE it OND BUYER THE DAILY NEWSPAPER OF MUNICIPAL FINANCE ITHURSDAY,JULY 17,2003 r Eel"' RuseThree .tO Four it asit. Points; I More Thaw $1.a2113 of New Its 'r o& By Nicholas Chesla and "It's not abroad-based increase in pro- Anastasija Johnson . duction just yet, but certainly the three- - ''tion is helpful for the third quarter,"McK- - 'Municipal bond yields rose three or elvey said. '.' i four basis points-yesterday,while issuers .Finally,business inventories fell 0,2% brought to market more than$1.2 billion in May after being unchanged in April. is new loans led by the sale of-$500 mil- In the municipal arena, cash bond. Ijon Of Maryland natural triple-A rated yields rose three or four basis points, as I general obligation bonds. Treasuries recovered late in the session Treasuries:were mostly higher,regain- and caution pervaded the market. rag composure in part due to an assur- it seems like it may have established a ce by Federal Reserve chairman Alan bit of a foundation in the Treasury market, I Greenspan,in testimony before the Sen- but I think it will take a couple of days • ate Banking Committee;that the Fed had •to find.a foundation in mums," a trader. iot.ruled out the option of purchasing in New York said. "There seems to he.a long-term Treasuries to counter deflation. lot of money on the sidelines, and peo- I Governments tumbled Tuesday, follow- the are still not sure if this is the tune to• ing comments by.Greenspan before the come intothe market" •- }louse Financial Services'Committee, In the competitive sector of the new- ivhich appeared to indicate that situations issue market,Morgan Stanley won$500 I requiting special policy actions, such as million of Maryland general obligation buying government securities, were un- •bonds •with 'a low interest cost of likely to arise. 3.7073%, out of four bids. J.P.Morgan Earlier, governments extended,their Securities Inc.had the next-lowest inter- I losses when the June consumer price in- 'est cost Of 3.7076%a.• . flex rose 0.2%'from an unchanged level Serials were reoffered at yields rang- In May,while core CPI,excluding volatile ing from 1:65% in 200,6 to 4.TO% in Food and energyprices, Was flat in June 2018. Bonds due in.2010 and 2011 were I Iifter rising 0.3%in May. ' not formallyteoffered. Brian Fabbri,chief economist at BNP A 2008 maturity yielded three basis Paribas, said some elements in the series points more than Municipal Market continued to show moderate signs of de- Data Tuesday triple-A yield curve'scale; I celeration in inflation;despite a slight in while bonds due in 2013 yielded five ba- crease in the headline June CPI number. • sis.points More and a 2018 maturity yield- ! "Some of the broader components of ed the same as.MMD: the CPI were still Slowing their pace of The issue is rated triple-A by Moody's ;increase, and I think that that process is Investors Service, Standard & Poor's, ;going to continue through the balance of and Fitch Ratings. this year," Fabbri said. In the negotiated sector, Lehman I Meantime, June industrial production Brothers priced and repriced $218 mil- rose 0.1%, equaling a 0.1% rise in May,. lion of North Carolina Infrastructure and capacity utilization came in at 74.3. Finance Corp. lease-purchase revenue Ed McKelvey, senior economist at bonds. I Goldman, Sachs & Co., said the indus- . The.flnal scale comprised serials priced trial production data suggested some im- to yield.f om 1.10%in2.004'to 4,75% in ' provement in the manufacturing sector, 2023. with growth concentrated in theproduc- The issue is rated Aa2 by Moody's, f tion of vehicles.and electronic,goods for AA-plus by Standard &Poor's; and AA consumers. ' by Fitch. I I THE BOND BUYER THE DAILY NEWSPAPER OF MUNICIPAL FINANCE 1 FRIDAY,JULY 18,2003 I IlYlek if e Me A to 2 masts Prints 0 C. Beds $330 Mfllltr ill: -of GOs By:Nicholas Chesla and traders said weakness was most pro- . . Anastasija.Johnson :pounced in intermediate range, while market tene,was tentative. Municipal bond yields.rose for the "People are very cautious and are not (fourth consecutive session yesterday, feeling like selling anything right now I while the District of Columbia, leading on the off chance that yields are going ® ;the new-issue market, sold$330 million to go higher," a trader in New York said. of general obligation bonds. "And people are putting bids out.there • -Treasuries weakened, remaining en- which aren't getting bit because people sconced in negative terrain for most of the don't want to hit bids because they think . session-even as they pared early losses. yields might go higher.So it puts every- -Governments moved lower when ini- one into a stalemate situation." i tial jobless claims for the week that end- Meantime, participants said stability I ed July 12 fell 29,000 to 412,000 from in Treasuries would be required in order the revised 44-1,000 the previous week, to provide a floor to tax-exempt levels. Meantime,June housing starts rose 3.7% •• "Until we get some help froth theTrea- to 1.803 million, and permits increased sury market,there-Won't be any stability • by 0.8%.to 1.817 million.In May, hous- at all,' a trader in Chicago said. ing starts jumped a revised 6.8%, while In the competitive sector of the new-. permits grew by a revised 4.6%. ' issue market, J.P. Morgan Securities I • Jonathan Basile,thn economist at Inc. won$330 million of-District of Co- Credit Suisse'First Boston, said the la- lumbia GO bonds with a low interest cost bor market was still weak and the drop of 4.62%, out of five bids: Goldman, -in weekly initial:jobless claims was the Sachs-& Co.had the next-lowest inter- I -result of a regular adjustment after a sea- est cost of 4.67%6. -sonal spike in claims during the first Seria were reoffered atyields ranging week of July caused by a summersbOt- from;F. 7%'in 2006 to 4.75%.in 2028. down period in some industries. Bonds due in 2005, 2010, and 2022 I "It doesn't feel like we've seen any through 2027 were not formally reof- major improvement in terms of the job fered. • market yet," he said. "If we had seen a Bonds due in 2007 through 2021 are very sharp improvement in both weeks, insured by MBIA Insurance Corp., I then-maybe something more fundamen- while bonds'due in 2006 and 2023 tal would be going-on,but we've seen a through 2028 areinsured by Financial normal pattern of a spike up.and,now a Guaranty Insurance Co.The issue car- reversal." ries underlying ratings of Baal from g sector contin- Moody's Investors Serviceand.A-mi- - ued to expand, which bodes well for a nus from both Standard-& Poor's-and pick up in economic growth in the sec- Fitch Ratings. and half of the year. Meantime, Merrill Lynch&Co: won "The fundamentals are strong in hous- $83 million of Newark, N.J., general ing," he said."Demand is high, supply obligation general improvement bonds is low, and homebuilders continue to be with a low interest'cost of 4.19%,out of more optimistic. It's pretty much firing. - two bids. Wachovia Bank made the oth- 11 on all cylinders." ea bid of 4.36%. Meantime, the July Federal Reserve Serials were reoffered at yields ranging Bank of Philadelphia manufacturing busi- from 1.40% in 2005 to 4 49% in 2016. I -ness conditions index climbed to 8.3 from Bonds due in 2004,2010, 2017, and 2018 4.0-in June. were sold and not available: In the municipal arena, while yields The issue is insured by Financial Se- rose one or two basis points overall, curityAssurance. .❑ I - _ __ . STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER . o,,�•..Q SACRAMENTO "- ^ Local Agency Investment Fund PO Box 942809 Sacramento, CA 94209-0001 (916) 653-3001 August, 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 t.n rr N3 t5 fl'i f1- IC-1 Page : 1 of 1 STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER • �, � SACRAMENTO CITY Of: PALM DESERT FINANCE DER\ TMEN aT ' Local Agency Investment Fund ;; PO Box 942809 Li Sacramento, CA 94209-0001 2��' Cf't E '�' (916) 653-3001 August, 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 STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER 40 I SACRAMENTO ^' " "'I ' i Local Agency Investment Fund ' iN C_ f:._, .,.,,Mcl,T PO Box 942809 Sacramento, CA 94209-0001203 %E(' 12 ;1 10: 4 (916) 653-3001 August, 2003 Statement PALM DESERT HOUSING AUTHORITY Account Number : 25-33-003 Attn: DEPUTY CITY TREASURER 73-510 FRED WARING DRIVE PALM DESERT CA 99260-2578 Account Summary Total Deposit : 0.00 Beginning Balance : 6,177,005.65 Total Withdrawal : 0.00 Ending Balance : 6,177,005.65 Page : 1 of 1 • 0 12,1111 Or' F-,I I Ht CE D I ;RIMINT CALIFORNIA ASSET CONFIRMATION MANAGEMENT PROGRAM JOINT POWERS AUTHORITY 2M3 SUS 33 id r: 05 SO FRANCIISC STREET 3RDLOOR SAN FR nNCISCO CALIFORNIAR.\'I as I ,I FOR ACCOUNT INFORMATION: 800-729-7665 STATEMENT DATE: 8/25/2003 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 Ac ountF�C(?8/25/ 003 Statement Income Dividends Capital Gains Total Shares Account Date Paid This Year Paid This Year Owned Value 8/25/2003 $364,426.22 $0.00 61,170,331.200 $61,170,331.20 • r ransactionf-ummaly6y8/25/2003ot 25/ 00 I ma • y___,:,, Beginning Balance Purchases Reinvestments Redemptions Ending Balance $63,170,331,20 $0.00 $0.00 $2,000,000.00 $61,170,331.20 9D`' �PO N ,. • . . -= " "r .•>" OUNT' SHARE � �FIARES'riHIS TOTAL t , o ur ANSAOT 0 - I o' 71 . ' A"GTION UG9L�� TRANSACTION DOWNED 08/25/03 Beginning Balance 63,170,331.200 08/25/03 8/25/2003 Redemption-Wire Red. $2,000,000.00- $1.00 2,000,000.000- 61,170,331.200 Message Line: The transaction above has been executed at the fund's next-determined net asset value in accordance with the funds Information Statement. • CITY OF PALM DESERT 14 OFFICE OF THE CITY TREASURER w J/jh 3y;;: INTEROFFICE MEMORANDUM To: Finance and Investment Committee From: Paul S. Gibson, C.C.M.T., City Treasurer I /' Date: August 5, 2003 Subject: ENACTMENT OF SB 787 (BATTIN) — ASSET-BACKED COMMERCIAL PAPER ADDED AS AN AUTHORIZED INVESTMENT On August 3, Governor Davis signed SB 787 into law (Chapter 197, Statutes of 2003). The City of Palm Desert originated and sponsored this bill. Senator Jim Battin introduced it. The State Treasurer's Office provided valuable assistance in drafting it. Effective January 1, 2004, SB 787 will change the California Government Code by adding asset-backed commercial paper ("ABCP") as an authorized investment for local agencies. ABCP is typically backed by a receivables pool; it is more profitable than traditional, unsecured commercial paper. SB 787 passed through the committees and the floors of both houses without a single opposition vote. The voting record was as follows: ➢ Assembly Floor 78-0 (Pass) ➢ Assembly Committee on Local Government 9-0 (Pass) ➢ Assembly Committee on Banking and Finance 12-0 (Pass) ➢ Senate Floor 39-0 (Pass) ➢ Senate Committee on Local Government 7-0 (Pass) The City of Los Angeles, the California Association of County Treasurers & Tax Collectors, and the Sacramento Municipal Utility District were registered supporters of SB 787. There was no registered opposition. Deputy City Treasurer Thomas Jeffrey and Lobbyist Anthony Gonsalves attended the SB 787 committee hearings in Sacramento in the event that testimony was required. Since the chaptered version of SB 787 is not yet available on the Internet, I have enclosed a copy of the enrolled version. Enclosure: Exhibit "A" (SB 787 -- Enrolled Version) cc: City Council Legislative Committee H9tjefrey8Nord 2000WIEMORANDA\FINANCE COMMITTEE\SB 787 ENACTMENT.dot EXHIBIT "A" • Senate Bill No. 787 Passed the Senate May 15, 2003 Secretary of the Senate Passed the Assembly July 17, 2003 Chief Clerk of the Assembly This bill was received by the Governor this day of 2003, at o'clock ji. Private Secretary of the Governor P SB 787 —2— CHAPTER An act to amend Sections 53601 and 53635 to the Government Code, relating to local agency investments. LEGISLATIVE COUNSEL'S DIGEST SB 787, Battin. Local agency investments. Existing law authorizes the legislative body of a local agency having money in a sinking fund of, or surplus money in, its treasury not required for the immediate needs of the local agency to invest any portion of the money that it deems wise or expedient in specified securities and financial instruments. One of the eligible securities is commercial paper of prime quality of the highest ranking, as provided by one of 3 named services, issued by a corporation meeting specified standards. This bill would provide that the commercial paper of prime quality be of the highest ranking as provided by a nationally recognized statistical-rating organization and that the entity issuing the commercial paper meet either the existing standards or another set of standards, as specified. The bill would also make conforming changes. The people of the State of California do enact as follows: SECTION 1. Section 53601 of the Government Code is amended to read: 53601. This section shall apply to a local agency that is a city, a district, or other local agency that does not pool money in deposits or investments with other local agencies, other than local agencies that have the same governing body. However, Section 53635 shall apply to all local agencies that pool money in deposits or investments with other local agencies that have separate governing bodies. The legislative body of a local agency having money in a sinking fund or money in its treasury not required for the immediate needs of the local agency may invest any portion of the money that it deems wise or expedient in those investments set forth below. A local agency purchasing or obtaining any securities prescribed in this section, in a negotiable, bearer, registered, or nonregistered format, shall require delivery of the securities to the 97 I • • — 3 — SB 787 local agency, including those purchased for the agency by financial advisers, consultants, or managers using the agency's funds, by book entry, physical delivery, or by third-party custodial agreement. The transfer of securities to the counterparty bank's customer book entry account may be used for book entry delivery. For purposes of this section, "counterparty" means the other party to the transaction. A counterparty bank's trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the local agency. Where this section specifies a percentage limitation for a particular category of investment, that percentage is applicable only at the date of purchase. Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying a repurchase or reverse repurchase agreement or securities lending agreement authorized by this section, that at the time of the investment has a term remaining to maturity in excess of five years, unless the legislative body has granted express authority to make that investment either specifically or as a part of an investment program approved by the legislative body no less than three months prior to the investment: (a) Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency. (b) United States Treasury notes, bonds, bills, or certificates of indebtedness,or those for which the faith and credit of the United States are pledged for the payment of principal and interest. (c) Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled,or operated by the state or by a department, board, agency, or authority of the state. (d) Bonds, notes, warrants, or other evidences of indebtedness of any local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. (e) Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and 97 P • • SB 787 —4— interest by federal agencies or United States government-sponsored enterprises. (f) Bankers acceptances otherwise known as bills of exchange or time drafts that are drawn on and accepted by a commercial bank. Purchases of bankers acceptances may not exceed 180 days' maturity or 40 percent of the agency's money that may be invested pursuant to this section. However,no more than 30 percent of the agency's money may be invested in the bankers acceptances of any one commercial bank pursuant to this section. This subdivision does not preclude a municipal utility district from investing any money in its treasury in any manner authorized by the Municipal Utility District Act (Division 6 (commencing with Section 11501) of the Public Utilities Code). (g) Commercial paper of "prime" quality of the highest ranking or of the highest letter and number rating as provided for by a nationally recognized statistical-rating organization (NRSRO). The entity that issues the commercial paper shall meet all of the following conditions in either paragraph(1)or paragraph (2): (1) The entity meets the following criteria: (A) Is organized and operating in the United States as a general corporation. (B) Has total assets in excess of five hundred million dollars ($500,000,000). (C) Has debt other than commercial paper, if any, that is rated "A" or higher by a nationally recognized statistical-rating organization (NRSRO). (2) The entity meets the following criteria: (A) Is organized within the United States as a special purpose corporation, trust, or limited liability company. (B) Has programwide credit enhancements including, but not • limited to, overcollateralization, letters of credit, or surety bond. (C) Has commercial paper that is rated "A-1" or higher, or the equivalent, by a nationally recognized statistical-rating organization (NRSRO). Eligible commercial paper shall have a maximum maturity of 270 days or less. Local agencies, other than counties or a city and county, may invest no more than 25 percent of their money in eligible commercial paper. Local agencies, other than counties or a city and county, may purchase no more than 10 percent of the 97 r • • —5 — SB 787 outstanding commercial paper of any single issuer. Counties or a city and county may invest in commercial paper pursuant to the concentration limits in subdivision (a) of Section 53635. (h) Negotiable certificates of deposit issued by a nationally or state-chartered bank, a savings association or a federal association (a5 defined by Section 5102 of the Financial Code), a state or federal credit union, or by a state-licensed branch of a foreign bank. Purchases of negotiable certificates of deposit may not exceed 30 percent of the agency's money which may be invested pursuant to this section. For purposes of this section, negotiable • certificates of deposit do not come within Article 2 (commencing with Section 53630), except that the amount so invested shall be subject to the limitations of Section 53638. The legislative body of a local agency and the treasurer or other official of the local agency having legal custody of the money are prohibited from investing local agency funds, or funds in the custody of the local agency, in negotiable certificates of deposit issued by a state or federal credit union if a member of the legislative body of the local agency, or any person with investment decisionmaking authority in the administrative office manager's office, budget office, • auditor-controller's office, or treasurer's office of the local agency also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or the supervisory committee of the state or federal credit union issuing the negotiable certificates of deposit. (i) (I) Investments in repurchase agreements or reverse repurchase agreements or securities lending agreements of any securities authorized by this section, as long as the agreements are subject to this subdivision, including the delivery requirements specified in this section. (2) Investments in repurchase agreements may be made,on any investment authorized in this section, when the term of the agreement does not exceed one year. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. Since the market value of the underlying securities is subject to daily market fluctuations, the investments in repurchase agreements shall be in compliance if the value of the underlying 97 P SB 787 — 6 — securities is brought back up to 102 percent no later than the next business day. (3) Reverse repurchase agreements or securities lending agreements may be utilized only when all of the following conditions are met: (A) The security to be sold on reverse repurchase agreement or securities lending agreement has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale. (B) The total of all reverse repurchase agreements and securities lending agreements on investments owned by the local agency does not exceed 20 percent of the base value of the portfolio. (C) The agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security. • (D) Funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security to a counterparty by way of a reverse repurchase agreement or securities lending agreement shall not be used to purchase another security with a maturity longer than 92 days from the initial settlement date of the reverse repurchase agreement or securities lending agreement, unless the reverse repurchase agreement or securities lending agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security. (4) (A) Investments in reverse repurchase agreements, securities lending agreements, or similar investments in which the local agency sells securities prior to purchase with a simultaneous agreement to repurchase the security may only be made upon prior approval of the governing body of the local agency and shall only be made with primary dealers of the Federal Reserve Bank of New York or with a nationally or state-chartered bank that has or has had a significant banking relationship with a local agency. (B) For purposes of this chapter, "significant banking relationship" means any of the following activities of a bank: 97 P • • — 7 — SB 787 (i) Involvement in the creation, sale, purchase, or retirement of a local agency's bonds, warrants, notes, or other evidence of indebtedness. (ii) Financing of a local agency's activities. (iii) Acceptance of a local agency's securities or funds as deposits. (5) (A) "Repurchase agreement" means a purchase of securities by the local agency pursuant to an agreement by which the counterparty seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the local agency by book entry, physical delivery, or by third-party custodial agreement. The transfer of underlying securities to the counterparty bank's customer book-entry account may be used for book-entry delivery. (B) "Securities," for purpose of repurchase under this subdivision, means securities of the same issuer, description, issue date, and maturity. • (C) "Reverse repurchase agreement" means a sale of securities by the local agency pursuant to an agreement by which the local agency will repurchase the securities on or before a specified date and includes other comparable agreements. (D) "Securities lending agreement" means an agreement under which a local agency agrees to transfer securities to a borrower who, in turn, agrees to provide collateral to the local agency. During the term of the agreement, both the securities and the collateral are held by a third party. At the conclusion of the agreement, the securities are transferred back to the local agency in return for the collateral. (E) For purposes of this section, the base value of the local agency's pool portfolio shall be that dollar amount obtained by totaling all cash balances placed in the pool by all pool participants, excluding any amounts obtained through selling securities by way of reverse repurchase agreements, securities lending agreements, or other similar borrowing methods. (F) For purposes of this section, the spread is the difference between the cost of funds obtained using the reverse repurchase agreement and the earnings obtained on the reinvestment of the funds. (j) Medium-term notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of 97 P SB 787 — 8— five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this subdivision shall be rated "A" or better by a nationally recognized rating service. Purchases of medium-term notes shall not include other instruments authorized by this section and may not exceed 30 percent of the agency's money that may be invested pursuant to this section. (k) (1) Shares of beneficial interest issued by diversified management companies that invest in the securities and obligations as authorized by subdivisions (a) to (0, inclusive, or subdivisions (m) or (n) and that comply with the investment restrictions of this article and Article 2 (commencing with Section 53630). However, notwithstanding these restrictions, a counterparty to a reverse repurchase agreement or securities lending agreement is not required to be a primary dealer of the Federal Reserve Bank of New York if the company's board of directors finds that the counterparty presents a minimal risk of default, and the value of the securities underlying a repurchase agreement or securities lending agreement may be 100 percent of the sales price if the securities are marked to market daily. (2) Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.). (3) If investment is in shares issued pursuant to paragraph (1), the company shall have met either of the following criteria: (A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. (B) Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience investing in the securities and obligations authorized by subdivisions (a) to (), inclusive, or subdivisions (m) or (n) and with assets under management in excess of five hundred million dollars ($500,000,000). (4) If investment is in shares issued pursuant to paragraph (2), the company shall have met either of the following criteria: 97 p —9— SB 787 (A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. (B) Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). (5) The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include any commission that the companies may charge and shall not exceed 20 percent of the agency's money that may be invested pursuant to this section. However, no more than 10 percent of the agency's funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph (1). (1) Moneys held by a trustee or fiscal agent and pledged to the payment or security of bonds or other indebtedness, or obligations under a lease, installment sale, or other agreement of a local agency, or certificates of participation in those bonds, indebtedness, or lease installment sale, or other agreements, may be invested in accordance with the statutory provisions governing the issuance of those bonds, indebtedness, or lease installment sale,or other agreement,or to the extent not inconsistent therewith or if there are no specific statutory provisions, in accordance with the ordinance, resolution, indenture, or agreement of the local agency providing for the issuance. (m) Notes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust • company or the trust department of a bank that is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted. (n) Any mortgage passthrough security, collateralized mortgage obligation, mortgage-backed or other pay-through 97 P SB 787 — 10— bond, equipment lease-backed certificate, consumer receivable passthrough certificate, or consumer receivable-backed bond of a maximum of five years' maturity. Securities eligible for investment under this subdivision shall be issued by an issuer having an "A" or higher rating for the issuer's debt as provided by a nationally recognized rating service and rated in a rating category of "AA" or its equivalent or better by a nationally recognized rating service. Purchase of securities authorized by this subdivision may not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section. SEC. 2. Section 53635 of the Government Code is amended to read: 53635. (a) This section shall apply to a local agency that is a county, a city and a county, or other local agency that pools money in deposits or investments with other local agencies, including local agencies that have the same governing body. However, Section 53601 shall apply to all local agencies that pool money in deposits or investments exclusively with local agencies that have the same governing body. This section shall be interpreted in a manner that recognizes the distinct characteristics of investment pools and the distinct administrative burdens on managing and investing funds on a pooled basis pursuant to Article 6 (commencing with Section 27130) of Chapter 5 of Division 2 of Title 3. A local agency that is a county, a city and county, or other local agency that pools money in deposits or investments with other agencies may invest in commercial paper pursuant to subdivision (g) of Section 53601, except that the local agency shall be subject to the following concentration limits: (1) No more than 40 percent of the local agency's money may be invested in eligible commercial paper. (2) No more than 10 percent of the local agency's money that may be invested pursuant to this section may be invested in the outstanding commercial paper of any single issuer. (3) No more than 10 percent of the outstanding commercial paper of any single issuer may be purchased by the local agency. 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U — F IZ • • City of Palm Desert Parkview Office Complex Financial Statement 1 for Fiscal Year 2003-2004 July-03 July-03 # % YID YID # % Budget Actual Variance Variance Budget Actual Variance Variance Revenues Rental $ 68,500 $ 69,424 $ 924 101.35%1 $ 68,500 $ 69,424 $ 924 101.35% Dividends/Interest $ 4,375 $ 216 $ (4,159) 4.93%1 $ 4,375 $ 216 $ (4,159) 4.93% i Total Revenues $ 72,875 $ 69,639 $ (3,236) 95.56%) $ 72,875 $ 69,639 $ (3,236) 95.56% Expenses Professional-Accounting&Auditing $ 8,000 $ 8,000 $ - 100.00% $ 8,000 $ 8,000 $ - 100.00% Professional-Consultants $ 6,000 $ 5,500 $ 500 91.67% $ 6,000 $ 5,500 $ 500 91.67% Tenant Improvements $ 3,000 $ 2,120 $ 880 70.67%I $ 3,000 $ 2,120 $ 880 70.67% Repairs&Maintenance Building $ 8,000 $ 4,934 $ 3,066 61.68%1 $ 8,000 $ 4,934 $ 3,066 61.68% Repairs&Maintenance-Landscaping $ 2,300 $ - $ 2,300 0.00%f '- $ 2,300 $ - $ 2,300 0.00% Utilities-Water $ 150 $ . 108 $ 42 72.16%T7 $ 150 $ 108 $ 42 72.16% Utilities-Gas/Electric $ 8,000 $ 9,483 $ (1,483) 118.54%l $ 8,000 $ 9,483 $ (1,483) 118.54% Utilities-Waste Disposal $ 700 $ 530 $ 170 75.77%1._,. _ 5 { $ 700 $ 530 $ 170 75.77% Telephone $ 200 $ 37 $ 163 18.36%1 r $ 200 $ 37 $ 163 18.36% Insurance $ 520 $ - $ 520 0.00%1 . $ 520 $ - $ 520 000% Total Expenses $ 36,870 $ 30,713 $ 6,157 83.30%1 „I $ 36,870 $ 30,713 $ 6,157 83.30% 1 Operating Income $ 36,005 $ 38,927 $ 2,922 108,12% $ 36 005;:T $ 38;927.:;$7Z922 108.12%0 Equipment Replacement Reserve $ 14,000 $ 13,306 $ 694 95.04% $ 14,000 $ 13,306 $ 694 95.04% • Net/two/He . S. 22,005 $ 25,621 $ 3,616 116.43% . $ 2,2,005 :'$ -,25,621 ;_$ .3,616 116.43°7d, 2004 Investment Reportlnv Report 2003 . - - W -0 F ti . 1 4+ T ry p Psi m� oog . m .� N o�-waov pw 0 f S/ OAy4w i«- 0 f TT Ng I � uvE 3yG3 aHC u °kSW � � �� 1 -o° � E- C m 'a O 7,10 O C74 ' J. _ Ai n ar$ o.4Q ' G ay. v.D "' Ce pp t� I/T = d Q 'C m v w w w `-. vv u t.:e J �J YJJ = t A m I I T: .6 L ,V. O E •v O C "c'a°° L Y 1 7, l 1 4)ill ( - � , n n n a n � � 'O':� v L C rOi1 9 u w G,.�S 4 �`, U 1 C \vim-Jam/ • 1 U IJ , ) Iti l.� • U T S N U ❑ El U x g u 'y+ y .if 00 . "en' \� E G a VC] W 'O 4 G 7 U m o '�"' U O u �,�'t 0.bd �a �y L O E g'g 3 ° en n $ v � u E a 5 -a� qm.- ^°au° .. 1�"r " Q ❑ WrJO' -6 0 u v ON c,,v', 0 u 'a00.g 5 T fi `- ij u u Er� -,.vc r. u Sv s O. __II _ Cfpp \1 aJQO njQD el an n Z y.Tom.0.o 'C V° v v N °'v m.G ' vl 1 -• La YYVV �� UP .. N3 � UuE old NM � 1'. ,' Q [V� y� 4 v'� A u'b 41 C L it il') �. _ ` I 0 ov[�C �1C >' .v. 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G T �e+I Wc r' 0°y vt°i� N E • w 'J co r✓ ° o.4i Cv �.« vN as ., -Oy 2 m O a5 > 03 00ap 0,2 . a n , „, 0 .=, - = . . . . ott co g �l -W O LM O y�j "`4 '`5 E 0.0 E .co °i,4E C C,0 o O o S G c3 ® CO EQJ >11u2mA0 -i< OEv.5 —I o Plc U h Ooe Y 2 o`m v ® City of Palm Desert • Parkview Office Complex Vacancy Rate Schedule by Suite July 2003 Suite Square No. Tenant Feet 73-710 Fred Waring Drive-Two (2) Story Building 100 Hanover 1,915 100A William Bonneheim 645 102 Bergren&Associates 1,360 103 National Multiple Sclerosis 488 104 Arthritis Foundation 960 106 Coachella Valley Economic Partnership 928 108 Assembly Rules Committee-Assemblyman Benoit 450 112 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 Adopt-A-Class 700 208 Alzheimer's Association 960 210 Wilson, Pesota &Pichardo 3,040 2004 Investment ReportVacancy Report ra City of Palm Desert . Parkview Office Complex Vacancy Rate Schedule by Suite July 2003 211 State of California Department of Food&Agriculture 937 217 Joe B. McMillan,. Esq. 775 220 EPA-Moved From Suite 101A 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-1,081/31,562= 3.43% 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-1,081/51,191 2.11% Occupancy Rate-50,110/51,191 97.89% 2004 Investment ReportVacancy Report • t • City of Palm Desert al Parkview Office Complex Financial Statement i for Fiscal Year 2003-2004 August-03 August-03 # % YID YTD # % Budget Actual Variance Variance Budget Actual Variance Variance Revenues Rental $ 68,500 $ 70,964 $ 2,464 103.60% $ 137,000 $ 140,388 $ 3,388 102.47% Dividends/Interest $ 4,375 $ - $ (4,375) 0.00% $ 8,750 $ 216 $ (8,539) 2.46% Total Revenues $ 72,875 $ 70,964 $ (1,911) 97.38%I i $ 145,750 $ 140,604 $ (5,146) 96.47% Expenses Professional-Accounting&Auditing $ 8,000 $ 8,000 $ - 100.00% $ 16,000 $ 16,000 $ - 100.00% Professional-Consultants $ 6,000 $ 5,500 $ 500 91.67% - $ 12,000 $ 11,000 $ 1,000 91.67% Tenant Improvements $ 3,000 $ - $ 3,000 0.00% $ 6,000 $ 2,120 $ 3,880 35.33% Repairs&Maintenance Building $ 8,000 $ 11,815 $ (3,815) 147.69% $ 16,000 $ 16,749 $ (749) 104.68% Repairs&Maintenance-Landscaping $ 2,300 $ - $ 2,300 0.00% - $ 4,600 $ - $ 4,600 0.00% Utilities-Water $ 150 $ 102 $ 48 68.22% $ 300 $ 211 $ 89 70.19% Utilities-Gas/Electric $ 8,000 $ 12,470 $ (4,470) 155.88% $ 16,000 $ 21,953 $ (5,953) 137.21% Utilities-Waste Disposal $ •• 700 $ 530 $ 170 75.77% $ 1,400 $ 1,061 $ 339 75.77% Telephone $ 200 $ 122 $ 78 61.16%i $ 400 $ 159 $ 241 39.76% Insurance $ 520 $ - $ 520 0.00% $ 1,040 $ - $ 1,040 0.00% I Total Expenses $ 36,870 $ 38,540 $ (1,670) 104.53%{( - $ 73,740 $ 69,253 $ 4,487 93.91% I Operating Income. $ 36,005 $ 32,424 $ (3,581) 90.05% - $ 72,010 $ 71,351 $ , (659) 99,08°/u; Equipment Replacement Reserve $ 14,000 $ 13,306 $ 694 95.04% $ 28,000 $ 26,612 $ 1,388 95.04% Net Income J$ 22,005 $ 19,118 $ (2,887) 86.88% $ 44,010 $ 44,739 $ 729 101.66"%q 2004 Investment Reportlnv Report 2003 City of Palm Desert • Parkview Office Complex Vacancy Rate Schedule by Suite August 2003 Suite Square No. Tenant Feet 73-710 Fred Waring Drive-Two (2) Story Building 100 Hanover 1,915 100A William Bonneheim 645 102 Bergren &Associates 1,360 103 National Multiple Sclerosis 488 104 Arthritis Foundation 960 106 Coachella Valley Economic Partnership 928 108 Assembly Rules Committee-Assemblyman Benoit 450 112 Senator Battin 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 Adopt-A-Class 700 208 Alzheimer's Association 960 210 Wilson, Pesota &Pichardo 3,040 2004 Investment ReportVacancy Report ® City of Palm Desert • Parkview Office Complex Vacancy Rate Schedule by Suite August2003 211 State of California Department of Food&Agriculture 937 217 Joe B. McMillan,. Esq. 775 220 EPA-Moved From Suite 101A 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-1,081/31,562= 3.43% 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--1,081/51,191 2.11% Occupancy Rate-50,110/51,191 97.89% 2004 Investment ReportVacancy Report City of Palm Desert . • Desert Willow Budget Vs Actual For the month of August 2003 • Budgeted Actual Budgeted Actual August August $ Percentage Year to Year to S Percentage Revenue 2003 2003 Variance Variance Date Date Variance Variance Course&Ground S 109.753 S 109,527 $ (226) 99.79% $ 221,825 S 200,088 $ (21,737) 90.20% Carts $ 17,113 $ 18,545 $ 1.432 108,37% $ 33,587 $ 34,520 $ 933 102.78% Golf Shop $ 26,846 $ 24,573 S (2,273) 91.53% $ 51,290 $ 49,458 $ (1,832) 96.43% Range • $ 535 $ 1,035 $ 500 193.46% $ 1,135 $ 1,850 $ 715 163.00% Food&Beverage $ 49,136 $ 48,414 $ (722) 98.53% $ 103,425 $ 91,319 $ (12,106) 88.29% Interest Income $ 350 S - S (350) 0.00% $ 700 $ - $ (700) 0.00% Total Revenues S 203 733 S 202 094 $ (1,639 99.20% S 411 962 S 377 235 $ 34 727 91.57% ix°$,k>ff'SffiVFT'• • -.12* .--:vcCfbH ffiL%4%(!.=-Y e.-'x p,. .... ♦ .' a gv� .i '.4 3 . �'.`TTS�' ..k� dial' 'a' i -�• Payroll Proshop $ 4,389 $ 5.036 $ (647) 114.74% $ 8,778 $ 11.917 $ (3,139) 135.76% Cart S 14,524 S 14,946 S (422) 102.91% $ 29,048 $ 28,902 $ 146 99.50% Course&Ground $ 122,659 $ 142,836 $ (20,177) 116.45% $ 245,168 $ 264,677 $ (19,509) 107.96% Golf Operations S 22,135 $ 17,011 $ 5,124 76.85% $ 44,168 $ 39,439 $ 4,729 89.29% General&Administration $ 36,556 $ 38,658 $ (2,102) 105.75% $ 73,112 $ 78,197 $ (5,085) 106.96% Food&Beverage $ 46,388 $ 52.812 $ (6,424) 113.85% $ 95,754 S 106,880 S (11,126) 111.62% Total Pa roll 5 246 651 $ 27L299 $ (24.648) 10999/e 496 028 5 530012 $ 33984 106.85%I Other Expenditures Perimeter Landscaping $ - S - $ - 0.00% $ - $ - $ - 0.00% Proshop $ 440 $ 2.683 $ (2.243) 609.77% $ 1,080 $ 3,951 $ (2,871) 365.83% Proshop-COGS $ 14,653 $ 11,667 $ 2,986 79.62% $ 28,614 $ 22,433 $ 6,181 78.40% Cart $ 11,970 S 11,109 $ 861 92.81% $ 23,940 $ 22,120 $ I.820 92.40% Course&Ground-North Course 5 56,144 S 51,524 $ 4.620 91.77% $ 114,098 $ 113,577 $ 521 99.54% Course&Ground-South Course S 55,506 $ 57,932 S (2.426) 104.37% S 110,393 S 132,704 $ (22,401) 120.31% Course&Ground-Desert Pallet-N $ 1,000 $ 327 $ 673 32.70% $ 1.400 $ 806 $ 594 57.57% Course&Ground-Desert Pallet-S S 400 $ 325 $ 75 81.25% $ 1.400 S 1,012 $ 388 72.29% Golf Operations S 490 $ 88 5 402 17.96% $ 665 $ 726 $ (61) 109.17% General&Administration $ 48,228 $ 53,230 S (5,002) 110.37% $ 114,470 $ 110,391 $ 4,079 96.44% Range $ 50 $ 175 $ (125) 350.00% 5 100 $ 175 $ (75) 175.00% Food&Beverage $ 14,987 $ 13,674 $ 1,313 91.24% $ 29,524 $ 29,753 S (229) 100.78% Food&Beverage COGS $ 15,287 $ 16,864 $ (1,577) 110.32% $ 32,096 $ 36,247 $ (4,151) 112.93% Management Fee $ 25,000 S 25.000 $ - 100.00% $ 50,000 $ 50,000 $ - 100.00% Financing/Lease $ 5,721 $ 5,613 $ 108 98.11% $ 11,453 $ 11,242 $ 211 98.16% (Total Other Expenditures „i$ 249 876 $ 250,211 S (335) 100.13% 5 519143 5 535 137 S 15994) 103.08%I s.�! . -. -„.. -.,4 .... ' s .,a:,.- _..,,..w. Desert Willow Golf Academy Desert Willow Golf Academy $ 4,450 S 5,569 S 1,119 125.15% $ 11,400 $ 12464 $ 1,064 109.33% COGS-Merchandise $ (4,974) $ (6,325) $ (1,351) 127.16% $ (11,797) $ (12,590) $ (793) 106.72% Other Expenditures S (3,950) $ (5.131) $ (1,181) 129.90% S (7,850) $ (9,572) $ (1,722) 121.94% $ - Learning Center Income(Loss) S (4,474) $ (5,887) $ (I 413) 131.58% $ (8,247) S (9,698) $ (1,451) 117.59% Operating Income(Loss) $ (297.268) $ (325,303) $ (28,035) 109.43% S (611,456) S (697,612) 5 (86,156) 114.09% Equipment Reserve Replacement $ 71,955 $ 68,961 $ (2,994) 95.84% S 143,910 $ 141,062 $ (2.848) 98.02% J Net Income(Lass) $ r(369,223) $ (394,264) $ (25,041) 106.78% $ (755 366 S 1838,674) $ (83208) II1.03%1 Snapshot of_Golf Rounds Budgeted(mo) Actual(mo) Variance Variance% Budgeted(vtd) Actual(ytd) Variance Variance% Resident 450 364 (86) 81% 850 668 (182) 79% Non Resident 2,933 3.208 275 109% 5,746 5.937 191 103% Other - 20 20 100% - 20 20 100% Complimentary 235 295 60 126% 455 571 116 125% Total 3,618 3,887 269 107% 7,051 7,196 145 102% Folder:Desert Willow 2004:DW2004;Financial Statement Page 1 \ $ $ \ \ 7 . $ . \ 4 \ jOC k ) 11 N : ; _ ! g / 1 LUC - a 7 ■ _ § § ) 41 41 j { ) {) i jl ig � ) /! ) 000 Q - / 00 < 0 ƒ } / j $ \ * 8 0. 0 -�) : C tu A\\ \ 0 o ) $ §\ a / ) 0 ) ! § ■ - ' ` � ] \� °I\) � �0 Ba r/ < a !) � / O S0 k) j sa h. \ 1 ) K ( a / & : § k@ B ! } 0 > \ $ ) 0 / ) ) * ƒ ] ± 0 - \ § E • • m W I • 'eg �s 44a4 � o ge egrarige e eo = e e ; g ; „am & o“ ,. ,V IEr? o m _N N ry mW m2a � s Bos „ & g = m � as � a2 - = h ry h it c e m -. e n $ m Ni, • r G g , R ry _ Wil A C > E wwwwww w w w w w w w w w w w w w w«w w w a a www w w w wt ry o <a _ P m - P o h8 : 4. 1 e^ a m $ P T < nP = p N - w _ }_ • VQA 4 - g aw aw ° «ww»ww a«w«awaawwwa w www « « w as { ram ^ �r«««wwrvw«« w odtn y rv < ^ rv _ ^ ..3uo io^ ` _ m Vry oGy »»»www www » « w F glt < h ' de4: 2 , 8g _i ,, - , , , ?:- e xg nago ae a° a 4Xe X a m .�° e �° . ` - = - an o - °` = fie= - mo - c. - - - aSh = -=So _s& evy_ eo- ^ - N - N «. « aw « w wow w » www w w 'Ogg _ - ry a -) _ M e N '-."' - e m3 'Ary w a An m - a rn„ a ^ 0, cw g ' a 'O-- w "' pNeo_ own8g $ o2 - w«w w » a $; $ e. rnnv, sn a. eq = rv - e - _ - ^ ^ n _ _ '^ — _ ^' -- - N a .0 - m ., ti a E . a w tea w «»« «.iwwww w aawaaaaa wawa a www w w w wt i E .' r Z o 8 a d° 3 ` 8 e e U 4 'd M 8 e W cE r$ 2 $ 3 � 0 a Ti E Co � S Oa Eegaw Ha " N31 ,P V o ' a-E 2 ou ` O o.' a 2. o 0, a l t o 6 03 m ° 5 , em - o L m m E c Vcmx c e a ` gvq � , t 014' i' t MO= ve z O w .P iS' a � . ;n 999 ^ OUy Ei O ] A- i 1 SZOV F( (51f aUUUu F a s0000Ca .2... 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C § lal } ± j .< ) ) *\ ) ) .< ) *) \ Co • • Z I § { ! ! § 18 ° - � 0 . ƒ�t , o 1 7 .0. « ! « § | GO u` | 2 © ! | " ! § | a ) I 1ill . . CO j - , § k §§ CO �) (} . . ! 2 , ; $ ({ _ " I � 2 ` LC {a |i) ) ( { . , 0a / ) § \ . ! ; a =� � - 0. ) k o 4.4 k \ ° ~ 8 o | J 1 'Oa 0 � A _ ! \ \ ® Desert Willow . Breakdown of Rounds per point of sale system DESERT WILLOW - Combined Analysis- AUGUST 2003 Resident 364 $ 12,740 $ 35.00 9.36% Non-Resident 3,208 $ 114,924 $ 35.82 82.53% Other 20 $ 20 $ 1.00 0.51% Complimentary 295 $ 475 $ 1.61 7.59% Desert Willow Totals 3,887 $ 128,159 $ 32.97 I 100.00% DW2004;POS AVG RD Page 9 • Desert Willow • Breakdown of Rounds per point of sale system FIRECLIFF COURSE- AUGUST 2003 Description No. Of Revenue i Avg. Per Pct to Rounds Per POS Round Total Resident Rounds Resident Fee- Weekend 264 $ 9,240 $ 35.00 10.62% Total Resident 264 $ 9,240 $ 35.00 10.62% Non Resident Posted Weekend 168 $ 12,600 $ 75.00 6.76% IROC Des. PRTY - Weekend 3 $ 113 $ 37.50 0.12% IROC MBR. - Weekend 42 $ 2,520 $ 60.00 1.69% Wholesale Weekend 160 $ 6,660 $ 41.62 6.44% Wholesale-Mid-day 214 $ 11,770 $ 55.00 8.61% Twilight 877 $ 22,175 $ 25.29 35.29% Players Club 19 $ 665 $ 35.00 0.76% Outing 251 $ 10,725 $ 42.73 10.10% Fee Special Event Variable 273 $ 8,355 , $ 30.60 10.99% Total Non Resident Rounds 2,007 $ 75,582 $ 37.66 80.76% Other Rounds Junior Walking-USGA KIDS 5 5 $ 1.00 0.20% Total Other 5 5 $ 1.00 0.20% Complimentary VIP 67 0 $ - 2,70% PGA Member 34 225 $ 6.62 1.37% Champions 5 0 $ - 0.20% Employee/ Employee Guest 103 200 i $ 1.94 4.14% 1 Total Complimentary 209 425 $ 2.03 8.41% Total Round (FireCliff) 2,485 1 85,252 $ 34.31 100.00% DW2004;POS AVG RD Page 10 • Desert Willow • Breakdown of Rounds per point of sale system MOUNTAINVIEW COURSE- AUGUST 2003 Description No. Of Revenue Avg. Per Pct to Rounds Per POS Round Total Resident Rounds Resident Fee- Weekend 100 $ 3,500 $ 35.00 7.13% Total Resident 100 $ 3,500 $ 35.00 7.13% Non Resident Posted Weekend 67 $ 5,025 $ 75.00 4.78% IROC MBR./ Guest - Weekend 30 $ 1,800 $ 60.00 2.14% Wholesale Weekend 56 $ 2,108. $ 37.64 3.99% Wholesale-Mid-day 100 $ 5,500 $ 55.00 7.13% Twilight 501 $ 12,525 $ 25.00 35.73% Players Club 15 $ 525 $ 35.00 1.07% Outing 214 $ 4,120 $ 19.25 15.26% Fee Special Event Variable 218 $ 7,739 $ 35.50 15.55% Total Non Resident Rounds 1,201 $ 39,342 $ 32.76 85.66% Other Rounds ., • Junior Walking-USGA KIDS 15 $ 15 $ 1.00 1.07% Total Other 15 $ 15 $ 1.00 1.07% Complimentary VIP 28 $ - $ - 2,00% PGA Member 5 $ 50 $ 10.00 0.36% Employee 53 $ - $ - 3.78% Total Complimentary 86 $ 50 $ 0.58 6.13% Total Round (Mountainview) 1,402 $ 42,907 , $ 30.60 100% DW2004;POS AVG RD Page 11 ® City of Palm Desert • Desert Willow Cash Reserve Analysis for the month of August 2003 Cash Reserve Analysis One Month Required Reserve $ 500,000.00 Cash on Hand $ 429,310.00 Variance- Favorable ( Unfavorable) y $ 70,690.00) Please note: As part of the management agreement Kemper Sports Inc. will deposit the shortfall of the cash balance to the Desert Willow bank account. • Page 12 111 Pa1mDZSert Recreation Facilities Corporation Income Statement Aug-03 Aug-03 # % Budget Actual Variance Variance Food & Beverage Revenues $49,136 $48,414 ($722) 98.53% Total Revenues $49,136 $48,414 ($722) 98.53% Salaries $46,388 $52,812 ($6,424) 113.85% Cost of Goods Sold-F&B $15,287 $16,864 ($1,577) 110.32% Food & Beverage Expense $14,987 $13,674 $1,313 91.24% Total Expenses $76,662 $83,350 ($6,688) 108.72% Net Income (Loss) ($27,526) ($34,936) ($7,410) 126.92% Note: The above revenues and expenditures are also included in the Desert Willow analysis. DW2004;PDRFC Budget Page 1 • • ; : ' mE ?T_ CITY OF PALM DESERT• 3 P Pi ; : PRIMARY DEALER REQUEST FOR INFORMATION 2003 KS sci . �reoi9 3�.s PREPARED BY THE CITY TREASURER'S OFFICE Thomas W. Jeffrey, J.D., M.B.A. Deputy City Treasurer REVIEWED AND APPROVED BY Paul S. Gibson, C.C.M.T. City Treasurer APPLICANT: Jeremy Wolfson/ Ken Herman (Fis-r Tcu iesse ) • • 2003 Primary Dealer RFI Page 2 of 10 The > City of Palm Desert; > Palm Desert Redevelopment Agency; > Palm Desert Housing Authority; > Palm Desert Financing Authority; and > City of Palm Desert Golf Course Facilities Corporation (hereafter referred to collectively as the "City") are local governmental agencies that operate under the laws of the State of California. The Palm Desert City Treasurer's Office manages an investment portfolio with a combined book value of approximately $277 million. The City has adopted a written "Statement of Investment Policy ("SOIP")" that governs the operation of this investment program. A copy of the SOIP is enclosed. When the City wishes to fill a vacant broker position, it will accept Requests for Information ("RFI") only from the institutional sales departments of primary securities dealers. The City Finance and Investment Committee and the City Council will then review and render a final decision on the submitted RFIs. The City Treasurer's Office will then notify all applicants, in writing, on whether their RFI has been approved, denied, or rejected. The only exception to the foregoing shall be that the City Finance and Investment Committee and the City Council may, at their discretion, accept, review, and approve, deny, or reject RFIs from secondary brokers that: 1. Have a net capital position in excess of$100 million; 2. Have been in existence for more than five years; 3. Are currently licensed as a broker by the State of California; and 4. Are headquartered or have a branch office hi the State of California. If an applicant's RFI is incomplete or late (submitted after the City's specified deadline), then the City shall reject that RFI, and the applicant shall not be eligible to submit another RFI to the City for three years. The City shall not transact business with an approved securities firm until all of the documentation that both parties require, has been executed and delivered. SECTION II: APPLICATION DEADLINE AND REQUIRED DOCUMENTS • • 2003 Primary Dealer RFI Page 3 of 10 The City must receive the following documents from each interested applicant by no later than 4:30 p.m. on Wednesday, September 3, 2003: A completed "Primary Dealer Request For Information".- ENCLOSED A copy of the firm's most recent Annual Report and Form 10-K.- ENCLOSED A copy of the firm's Form BD — Uniform Application for Broker-Dealer Registration: ENCLOSED A copy of the firm's most recent Form BD Status Report.- N/A A copy of the Form U-4 — Uniform Application for Securities Industry Registration or Transfer for each employee with whom the City would be trading.- ENCLOSED A copy of the most recent Form U-4 Status Report on each firm employee with whom the City would be trading.- ENCLOSED A copy of the firm's most recent SEC Form X-17 A-5 filing or, in the case of a trading department within a commercial bank, its most recent Consolidated Reports of Condition and Income for A Bank With Domestic and Foreign Offices — FFIEC 031 filing. - ENCLOSED ✓ A resume on each firm employee with whom the City would be trading.- ENCLOSED ✓ A trading resolution from the firm.- ENCLOSED A copy of the firm's wiring and delivery instructions.- ENCLOSED it Samples of the firm's trade documentation (trade confirmations, monthly account statements, etc).- ENCLOSED These documents may be delivered in person, by post, or by courier to: City of Palm Desert Attention: Thomas W. Jeffrey Deputy City Treasurer 73-510 Fred Waring Drive Palm Desert, CA 92260-2578 2003 Primary Dealer RFI Page 4 of 10 If you have any questions about this RFI, then please call Mr. Jeffrey at 760.346.0611, extension 383. SECTION III: REQUEST FOR GENERAL INFORMATION 1. Firm Name: FTN Financial Capital Markets 2. Contact Address: 300 N. Lake Ave. Suite 1030 Pasadena, CA 91101 3. Contact Personnel: Jeremy Wolfson/ Ken Herman Sales Representative Supervising Manager Name: Jeremy Wolfson Name: Ken Herman Title: Vice President Title: Sr. Vice President TEL: (310)643-1951 TEL: (310)643-1952 TEL: (866)846-9684 TEL: (866)846-9684 4. Please describe any formal program of supervision that your firm has established for the sales representative who is listed in Question 3. All sales reps. are trained annually on sales practices and rules & regulations applicable to the firms business. All reps. report to a designated principal of the firm. 5. Please identify all personnel who would be trading with or quoting securities prices to the City. # of Years in # of Years Name Title Institutional Sales with Firm Telephone Jeremy Wolfson VP 12 <1 year same as above Ken Herman Sr. VP 30 <1 year same as above Please provide information on the history, details, and status or disposition of any disciplinary actions or complaints, arbitration, or litigation involving the above personnel. 2003 Primary Dealer RFI Page 5 of 10 6. Do the personnel who are listed in Question 5 work exclusively with institutional clients in a department that is exclusively dedicated to institutional sales? Z Yes ❑ No 7. Which of the personnel who are listed in Question 5 have read the City's "Statement of Investment Policy", as amended March 13, 2003? Jeremy Wolfson/ Ken Herman 8. Please provide four references from public sector clients (preferably in California) that have established relationships with the sales representative who is listed in Question 3. Indicate: (a) name of governmental agency; (b) contact person; (c) address; (d) telephone number; and (e) length of relationship. See attached list. 9. Does your firm regularly report to the Market Reports Division of the Federal Reserve Bank of New York as a "primary dealer"? (check one) ❑ Yes ® No If yes, how long has your firm been a primary dealer? 10, Please answer the following questions only if your firm IS NOT a primary dealer. a. Does your firm have a net capital position in excess of $100 million? (check one) ® Yes ❑ No b. Has your firm been in existence for more than five years? (check one) Yes ❑ No c. Is your firm currently licensed as a broker by the State of California? (check one) ❑ Yes ® No- FTN Financial Capital Markets being a division of national bank is exempt from CA State Registration. However, FTN Financial Securities Corp a subsidiary is licensed in CA. d. Is your firm headquartered or does it have a branch office in the State of California? (check one) 2003 Primary Dealer RFI Page 6 of 10 ® Yes ❑ No 11. Is your firm a member of the National Association of Securities Dealers? (check one) ❑ Yes ® Nolf"no", why not?- National Bank- not required to register with NASD. 12. Which of the following entities has the authority to oversee the operation of your firm, in terms of examinations, rules, and regulations? (check appropriate choices) ❑ FDIC El SEC ❑ NYSE ® Comptroller of Currency ® Federal Reserve System ❑ NASD ❑ Other (example: state regulatory agency) (specify) Multistate firms please note: It is not necessary to include regulatory agencies that do not have jurisdiction over the your firm's activities in California. 13. Is your firm owned by a holding company? (check one) ® Yes ❑ Nolf"yes", what is the holding company's name and its net capitalization? First Tennessee National Corp. (NYSE:FTN) bank holding company. See Financials. 14. Has your firm consistently complied with the Federal Reserve Bank's capital adequacy guidelines? (check one) ® Yes ❑ Nolf"no", please explain. 15. What was your firm's total trading volume in Federal Agency securities, corporate medium-term notes, and commercial paper last year? Firm-Wide: $ 1,239,556,842,000 # of Transactions: information not recorded. Your Office: $ same as above # of Transactions: information not recorded. 2003 Primary Dealer RFI Page 7 of 10 16. Which of the following instruments are regularly offered by your trading desk? (check appropriate choices) Z T-Bills ® Bankers's Acceptances (Domestic) ® T-Notes ® Bankers's Acceptances (Foreign) ® T-Strips ® Certificates of Deposit ❑ Repurchase Agreements ® Unsecured Commercial Paper ❑ Money Market Funds Z Corporate Medium-Term Notes Z Asset-Backed Commercial Paper Z Federal Agencies (specify)- All products 17. Which of the financial instruments that are described in Question 16 does your firm specialize in marketing? US Government Agencies, Treasuries, Mortgage-backs & Municipals. 18. Is your firm a member of the Securities Investor Protection Corporation ("SIPC")? (check one) ❑ Yes ® No- We are a bank dealer. 19. If"No" to Question 18, does your firm participate in any program that provides securities insurance coverage for a public sector client which buys the financial instruments that are listed in Question 16, on a delivery-versus-payment ("DVP") basis? (check one) ® Yes ❑ Nolf"yes", please explain. 20. If"no" to Question 19, please explain why your firm does not carry any securities insurance coverage for its customers. 21. Please indicate a percentage breakdown of your firm's client base by portfolio size. Not available. 2003 Primary Dealer RFI Page 8 of 10 22. How many and what percentage of your securities transactions failed last month? Last year? This information is not recorded. 23. What precautions does your firm take to protect the interests of the public when dealing with public sector clients as investors? Daily and monthly suitability reviews and position limit reviews. 24. What makes your firm the best broker/dealer for the City? What advantage would the City gain by trading with your firm? At FIN Financial we are committed to offering a complete services package to meet the specific needs of municipalities. FTN Financial Capital Markets is a division of First Tennessee Bank National Association which has a history spanning 139 years (Established 1864). First Tennessee National Corporation is the 31st largest bank holding company in the United States in asset size and 30th in market capitalization. FTN Financial has over 80 years of investment experience, and services over 3,500 institutional clients in all 50 states as well as numerous foreign countries. In addition to the outstanding history and size of our firm, the City of Palm Desert would gain advantage by trading with FTN Financial. We add value to the municipal market in several ways. First, FTN Financial is one of the largest underwriter of Agency debt with almost 8% market share of a $2.3 trillion dollar market. Since municipalities traditionally hold a majority of Government Agency securities, access to our new issue syndicate desk as well as our secondary positions and network of skilled traders in Memphis, New York and Chicago may offer you unmatched product breadth. Year-to-date we have underwritten approximately $48 billion worth of Agency bonds consisting of approximately 1200 new issues with an average deal size of about $40 million for Fannie Mae, Freddie Mac, the Federal Home Loan Bank System and the Federal Farm Credit Bank. Second, Ken and Jeremy have over 50 years combined institutional fixed income experience specializing in the municipal market. In fact, Ken Herman is an elected official and is a member of the City Council of the city he resides in. The extensive experience, reputation and service with integrity that they pride themselves on, may add value to your city with a level of customer service rarely seen in the investment community. And finally, FTN Financial just opened a state-of-the-art trading floor located in Pasadena, CA. This Southern California location makes it very convenient to address the needs of your city, efficiently and in a timely fashion. We look forward to doing business with the City of Palm Desert and developing a long lasting, value added relationship. • • 2003 Primary Dealer RFI Page 9 of 10 SECTION IV: REQUEST FOR DISCLOSURE 25. Have any of your firm's public sector clients sustained a loss on a securities transaction within the last five years, arising from a misunderstanding or misrepresentation of the risk characteristics of a financial instrument that was recommended by and purchased through your firm? (check one) ❑ Yes ® Nolf"yes", please describe each matter briefly. 26. Have any of your firm's public sector clients claimed, in writing, within the last five years, that your firm was responsible for any investment losses? (check one) ❑ Yes ® Nolf"yes", please describe each matter briefly. 27. Has your firm been subject to any litigation, arbitration, or regulatory proceedings, either pending, adjudicated, or settled, within the last five years, that involved allegations of improper, fraudulent, disreputable or unfair activities related to the sale of securities to or the purchase of securities from institutional clients? (check one) ❑ Yes ® Nolf"yes", please describe each matter briefly. 28. Has your firm been subject to a regulatory, state, or federal agency investigation, within the last five years, for alleged improper, fraudulent, disreputable, or unfair activities related to the purchase or sale of securities? (check one) ❑ Yes ® Nolf"yes", please describe each matter briefly. • • 2003 Primary Dealer RFI Page 10 of 10 SECTION V: CERTIFICATION I hereby certify that I have read and that I understand the investment policies and objectives of the City of Palm Desert, the Palm Desert Redevelopment Agency, and the Palm Desert Housing Authority, the Palm Desert Financing Authority, and the City of Palm Desert Golf Course Facilities Corporation (hereafter referred to collectively as the "City"), as represented in the City's "Statement of Investment Policy", as amended March 13, 2003. My firm will ensure that all affected sales personnel will be routinely informed of the City's investment objectives, horizon, outlook, strategies, and risk constraints, as the City provides such information. My firm will notify the City Treasurer immediately, by telephone, and, in writing, in the event of a material adverse change in its financial condition, or of any violation of Municipal Securities Rulemaking Board Rule G-37. My firm pledges to exercise due diligence in informing the City Treasurer of all foreseeable risks associated with any financial transactions that my firm undertakes with the City. I attest to the accuracy of my firm's response to the City's Request For Information. NOTE: Completion of this Request For Information is only part of the City of Palm Desert's review process, and DOES NOT guarantee that the applicant will be authorized to provide financial services to the City. This section must be signed by the sales representative who is listed in Question 3. Firm: rTnl Witl}�rrA� PA Signed: lrJ ^ n ,u Title: ,cc Pttesiowt 3<V Date: 8 (z , r u 3 'L6 0_3 This section must be countersigned by the nating B.wector or by-thc most senior • • Firm: F=rN Signed: Title: (�(} fccs , eo • �.1 � �i� Ja c: /2_00-3 • • MUNICIPAL REFERENCES LOS ANGELES COUNTY Richard Davis 500 West Temple St. Los Angeles, CA 90012 (213) 974-2191 30 Year Relationship SAN LUIS OBISPO COUNTY Bob Grayson 976 Osos St. San Luis Obispo, CA 93408 (805) 781-5844 5 Year Relationship CITY OF GLENDALE Ron Borucki 141 N Glendale Ave Glendale, CA 91206 (818) 548-2178 30 Year Relationship CITY OF BEVERLY HILLS Noel Marquis 455 N Rexford Drive Beverly Hills, CA 90210 (310) 285-2429 25 Year Relationship CITY OF BURBANK Donna Anderson 275 East Olive Ave Burbank, CA 91510 (818) 238-5880 25 Year Relationship FLV9:VCE i lilf500 r .,, Financial Investment Services 'i,t ARl;'GCR It• F{ • ^ [ I August 25, 2003 Thomas Jeffrey City of Palm Desert 73-510 Fred Waring Drive • • Palm Desert, CA 92260-2578 • Dear Thomas, Please fmd the enclosed Finance 500 Introduction Package. Finance 500 is a registered broker/dealer located in Irvine, CA. Our Fixed Income Department specializes in institutional bonds. We would like to become approved to show you our product and help you accomplish your investment objectives. Please feel free to call me if you have any questions at(800)477-6266 ext. 420. Thank you for considering Finance 500, and I look forward to doing business with you. Aaron Underwood Registered Representative 19762 hlacfirthur Blvd a Suite 200 a Irvine. CR 92612 o [949] 259-4000 0 Fax [949] RS1-S1BB Member of NASD and S H C