HomeMy WebLinkAboutPD Highlands AD No. 04-01/Res 06-85, 06-85A, 06-86, 06-87CITY OF PALM DESERT
CITY MANAGERS OFFICE
STAFF REPORT
TO: Honorable Mayor and City Council Members
SUBJECT: PALM DESERT HIGHLANDS ASSESSMENT DISTRICT NO.04-01
SUBMITTED BY: Patrick Conlon, Director of Office of Energy Management
DATE: June 8, 2006
ATTACHMENTS: 1) Resolution No. 06-85 making findings regarding assessments
2) Resolution No. 06-86 approving Engineer's Report and confirming
assessments
3) Resolution No. 06-87 authorizing issuance of bonds
4) Fiscal Agent Agreement, City Contract No. C- 25380
5) Resolution No. 06-85A Non Formation (if needed)
RECOMMENDATION
By Minute Motion:
After the Public testimony and after the ballots are counted, if the
Assessment District Passes, Adopt and Approve the following four items:
1. RESOLUTION NO.06-85 A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA,
MAKING FINDINGS REGARDING ALL SPECIAL ASSISSMENTS
LEVIED AGAINST PARCELS PROPOSED TO BE ASSESSED IN
HIGHLANDS UTILITY UNDERGROUNDING ASSESSMENT
DISTRICT NOL. 04-01
2. RESOLUTION NO. 06-86 A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF PALM DESERT ORDERING
MODIFICATIONS TO THE ENGINEER'S REPORT IN
CONNECTION WITH HIGHLANDS UTILITY UNDERGROUNDING
ASSESSMENT DISTRICT NO. 04-01, APPROVING SUCH
ENGINEER'S REPORT AS SO MODIFIED, CONFIRMING THE
ASSESSMENTS IN IMPROVEMENTS TO BE MADE AND
DESIGNATING SUCH DISTRICT A UTILITY UNDERGROUNDING
DISTRICT PURSUANT TO CHAPTER 12.12 OF THE PALM
DESERT MUNICIPAL CODE.
Palm Desert Highlands Assessment District No. 04-01
June 8, 2006
Page 2 of 3
3. RESOLUTION NO. 06-87 A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA,
AUTHORIZING THE ISSUANCE AND SALE BY THE CITY OF NOT
TO EXCEED $3,530,000 AGGREGATE PRINCIPAL AMOUNT OF
ITS HIGHLANDS UTILITY UNDERGROUNDING ASSESSMENT
DISTRICT NO. 04-01 LIMITED OBLIGATION IMPROVEMENT
BONDS, SERIES 2006; APPROVING AS TO FORM AND
AUTHORIZING THE EXECUTION AND DELIVERY OF CERTAIN
DOCUMENTS IN CONNECTION THEREWITH; AND APPROVING
CERTAIN OTHER MATTERS RELATING THERETO.
4. Fiscal Agent Agreement between the City of Palm Desert and Wells
Fargo Bank, N.A., City Contract No. C-25380
If a majority of protests exist and the Assessment District Fails to pass:
5. Adopt RESOLUTION NO. 06-85A A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF PALM DESERT DECLARING THE
RESULTS OF THE TABULATION OF ASSESSMENT BALLOTS IN
CONNECTION WITH PROPOSED HIGHLANDS UTILITY
UNDERGROUNDING ASSESSMENT DISTRICT NO. 04-01.
DISCUSSION
After the City Council meeting on April 13, 2006, ballots were mailed out to the property
owners. State Law requires a minimum 45-day period for ballots to be returned to the
City. Also pursuant to State Law, the ballots were sent to the property owners roll listed
with the Riverside County Assessor's Office. In a few cases this information has not
been accurate, but as soon as this was discovered, replacement ballots were sent out
to the proper owners.
If the District is successful, the Resolutions and Fiscal Agreement listed in the Staff
recommendation are necessary to move the project forward. Staff is utilizing Wells
Fargo as Fiscal Agent. Wells Fargo was selected as successor to Bank of New York by
City Council on November 10, 2005. The next step will be the sale of the bonds. Once
the bond sale is closed, staff will return to the City Council with a request to award the
construction contract. This is scheduled for the City Council meeting of July 13, 2006.
If the District fails to pass and a majority protest is deemed to exist, a Resolution is
included in the Staff report for that condition.
Any questions, please call Patrick Conlon.
G:ICityMgrUane Stanley\Word FilesMoat Conlon\Reports & MemosWighlands Staff Report 6$-06.doc
Palm Desert Highlands Assessment District No. 04-01
June 8, 2006
Page 3 of 3
Submitted by:
IP
Pat,ick Conlon
Approval:
Carlos Oiteg/
Director Office of Energy Management City Manager
Approval:
Arla Scott
Senior Financial Analyst
Approval:
7‘ -
Paul S. Gibson
Finance Director
Approval:
McCarthy
Redevelopme
G:1CrtyMgrlJane Stanley\Word FileslPat ConlonlReports & Memosllighlands Staff Report 6.8-06.doc
RESOLUTION NO. 06- 85
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, CALIFORNIA, MAKING FINDINGS REGARDING ALL
SPECIAL ASSESSMENTS LEVIED AGAINST PARCELS PROPOSED
TO BE ASSESSED IN HIGHLANDS UTILITY UNDERGROUNDING
ASSESSMENT DISTRICT NO. 04-1
BE IT RESOLVED, DETERMINED, AND ORDERED BY THE CITY COUNCIL
OF THE CITY OF PALM DESERT AS FOLLOWS:
Section 1. Based upon its review of the Engineer's Report regarding proposed
Highlands Utility Undergrounding Assessment District No. 04-01 (the "Assessment
District"), a copy of which has been presented to it and filed with the City Clerk, and
other reports and information presented to it, the City Council hereby finds and
determines that the total amount of the principal sum of all unpaid special assessments
levied against the parcels proposed to be assessed within the Assessment District
(being the total amount, as determined and set forth in such Engineer's Report of the
total principal sum of all unpaid special assessments and special assessments required
or proposed to be levied under any completed or pending assessment proceedings,
other than that contemplated in the proceedings for the Assessment District, which
would require an investigation and report under Streets and Highways Code Section
2800, et seq., against the total area proposed to be assessed within the Assessment
District), plus the principal amount of the special assessment proposed to be levied in
the proceedings, do not exceed one-half of the total value of the parcels proposed to be
assessed within the Assessment District (being the total true value as shown upon the
last equalized assessment roll of the County of Riverside).
PASSED, APPROVED, AND ADOPTED THIS 8TH DAY OF JUNE 2006, BY THE
FOLLOWING VOTE, TO WIT:
AYES:
NOES:
ABSENT:
ABSTAIN:
Jim Ferguson, Mayor
Rachelle D. Klassen, City Clerk
P6401-1034\859549v2.doc
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE ss.
CITY OF PALM DESERT
I, Rachelle D. Klassen, City Clerk of the City of Palm Desert, County of Riverside, State
of California do hereby certify that the foregoing Resolution No. was regularly
adopted by the City Council of said City of Palm Desert at a regular meeting of said
council held on the day of , 2006.
P6401-1034\859549v2.doc
RESOLUTION NO. 06-85A
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF PALM DESERT DECLARING THE RESULTS OF THE
TABULATION OF ASSESSMENT BALLOTS IN
CONNECTION WITH PROPOSED HIGHLANDS UTILITY
UNDERGROUNDING ASSESSMENT DISTRICT NO. 04-01
THE CITY COUNCIL OF THE CITY OF PALM DESERT HEREBY
FINDS, DETERMINES, RESOLVES AND ORDERS AS FOLLOWS:
Section 1. On May 14, 2004, the City Council adopted its Resolution
No. 04-56, initiating proceedings, pursuant to Chapter 12.12 of the Palm Desert
Municipal Code (the "Municipal Code") and the Municipal Improvement Act of 1913
(Division 12 of the California Streets and Highways Code, commencing with Section
10000) (the "1913 Act") for the conversion to underground service of overhead electric
and communication facilities in the Palm Desert Highlands area; and
Section 2. On April 13, 2006, the City Council adopted its Resolution No.
06-49 (the "Resolution of Intention") declaring its intention to order improvements (the
"Improvements") in connection with the proposed Highlands Utility Undergrounding
Assessment District No. 04-01 (the "District") pursuant to the provisions of the 1913 Act
and as provided in Article XIIID of the California Constitution and further ordering
MuniFinancial, as assessment engineer, (the "Assessment Engineer") to make and file
with the City Clerk a report in accordance with Article XIIID, Section 4 of the California
Constitution and Section 10204 of the 1913 Act; and
Section 3. On April 13, 2006, the City Council adopted its Resolution
No. 06-50 (the "Resolution"), preliminarily approving the report (the "Engineer's Report")
prepared by the Assessment Engineer, in connection with the District, on file in the Office
of the City Clerk and available for public inspection and further setting the time and place
for a hearing on the proposed assessment described in the Report (the "Assessment') and
on the matters set forth in Section 12.12.020 of the Municipal Code; and
Section 4. The Resolution directed the City Clerk to give notice in
accordance with law of a public hearing on the Assessment and to include with such
notice the assessment ballot required pursuant to Article XIIID, Section 4 of the
Califomia Constitution and Section 53753 of the California Govemment Code; and
Section 5. On June 8, 2006, following notice duly given in accordance
with law, the City Council held a full and fair public hearing on the Assessment and
regarding whether the public necessity, health, safety, or welfare require the removal of
poles, overhead wires, and associated overhead structures within the District and the
underground installation of wires and facilities for supplying electric, communication, or
similar or associated service (the "Hearing"); and
P6401.1034 859549.1
Section 6. At the Hearing, (i) all interested persons were afforded the
opportunity to hear and be heard regarding the proposed District, the Assessment, the
matters set forth above, and all related matters, and (ii) the City Council heard and
considered all oral and written protests to the Assessment; and
Section 7. The City Clerk, together with such assistants as she deemed
necessary tabulated assessment ballots returned in connection with the Assessment;
and
Section 8. The City Council hereby finds and determines that (i) a
majority protest exists as defined in Section 4(e) of Article XIII D of the California
Constitution, and (ii) the City Council shall not form the District as described in
Resolution No 06-49.
PASSED, APPROVED, AND ADOPTED THIS 8TH DAY OF JUNE 2006, BY THE
FOLLOWING VOTE, TO WIT:
AYES:
NOES:
ABSENT:
ABSTAINED:
Jim Ferguson, Mayor
Rachelle D. Klassen, City Clerk
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE ss.
CITY OF PALM DESERT
I, Rachelle D. Klassen, City Clerk of the City of Palm Desert, County of Riverside, State
of Califomia do hereby certify that the foregoing Resolution No. was regularly
adopted by the City Council of said City of Palm Desert at a regular meeting of said
council held on the day of , 2006.
12337/0001/887475v1 2
RESOLUTION NO. 06- 06-86
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM DESERT ORDERING MODIFICATIONS TO THE
ENGINEER'S REPORT IN CONNECTION WITH HIGHLANDS
UTILITY UNDERGROUNDING ASSESSMENT DISTRICT
NO.04-01, APPROVING SUCH ENGINEER'S REPORT AS SO
MODIFIED, CONFIRMING THE ASSESSMENTS IN
CONNECTION WITH SUCH ASSESSMENT DISTRICT,
ORDERING IMPROVEMENTS TO BE MADE AND
DESIGNATING SUCH ASSESSMENT DISTRICT A UTILITY
UNDERGROUNDING DISTRICT PURSUANT TO CHAPTER
12.12 OF THE PALM DESERT MUNICIPAL CODE
RECITALS:
WHEREAS, on May 14, 2004, the City Council adopted its Resolution
No. 04-56, initiating proceedings, pursuant to Chapter 12.12 of the Palm Desert
Municipal Code (the "Municipal Code") and the Municipal Improvement Act of
1913 (Division 12 of the California Streets and Highways Code, commencing with
Section 10000) (the "1913 Act") for the conversion to underground service of
overhead electric and communication facilities in the Palm Desert Highlands
area; and
WHEREAS, on April 13, 2006, the City Council adopted its Resolution No.
06-49 (the "Resolution of Intention"), declaring its intention to order
improvements (the "Improvements") in connection with the proposed Highlands
Utility Undergrounding Assessment District No. 04-01 (the "Assessment District")
pursuant to the provisions of the 1913 Act and as provided in Article XIIID of the
California Constitution; and
WHEREAS, the Resolution of Intention ordered MuniFinancial, as
assessment engineer, (the "Assessment Engineer") to make and file with the City
Clerk a report in accordance with Article XIIID, Section 4 of the California
Constitution and Section 10204 of the 1913 Act, to also contain all information
required by Section 2961 of the California Streets and Highways Code and
Section 12.12.030 of the Municipal Code; and
WHEREAS, on April 13, 2006, the City Council adopted its Resolution
No.06-50 (the "Resolution"), preliminarily approving the report (the "Engineer's
Report") prepared by the Assessment Engineer, in connection with the Assessment
District, on file in the Office of the City Clerk and available for public inspection; and
WHEREAS, the Resolution set the time and place for a hearing on the
proposed assessment described in the Report (the "Assessment") and on the
matters set forth in Section 12.12.020 of the Municipal Code; and
P6401-1034\85955 1 v2.doc
WHEREAS, the Resolution directed the City Clerk to give notice in
accordance with law of a public hearing on the Assessment and to include with
such notice the assessment ballot required pursuant to Article XIIID, Section 4 of
the California Constitution and Section 53753 of the California Government
Code; and
WHEREAS, on June 8, 2006, following notice duly given in accordance
with law, the City Council held a full and fair public hearing on the Assessment
and regarding whether the public necessity, health, safety, or welfare require the
removal of poles, overhead wires, and associated overhead structures within the
Assessment District and the underground installation of wires and facilities for
supplying electric, communication, or similar or associated service (the "Hearing");
and
WHEREAS, at the Hearing, (i) all interested persons were afforded the
opportunity to hear and be heard regarding the proposed Assessment District,
the Assessment, the matters set forth above, and all related matters, and (ii) the
City Council heard and considered all oral and written protests to the
Assessment; and
WHEREAS, the Engineer's Report indicates (i) that certain of the
Improvements proposed to be located on private property (service conversion
work) will be ordered by the City Council only if a request for inclusion is properly
filed with the City Clerk by the owner of such property and (ii) that an assessment
will be levied to finance such improvements only to the extent that such
Improvements are included; and
WHEREAS, the Assessment Engineer has (i) prepared a list of the
parcels for which requests have not been received (the "Exclusion List") and (ii)
recommended that the work located on these parcels be removed from the
Proposed Improvements, and
WHEREAS, an impartial person appointed by the City Council tabulated
assessment ballots returned in connection with the Assessment; and
WHEREAS, the City Council, having considered all oral and written
protests, hereby finds that a majority protest with respect to the Assessment
does not exist as defined in Section 4(e) of Article XIIID of the California
Constitution; and
WHEREAS, the City Council desires to proceed with the establishment of
the Assessment District and the levy of the Assessment.
P6401-1034\859551 vldoc
NOW, THEREFORE, BE IT RESOLVED, DETERMINED, AND
ORDERED BY THE CITY COUNCIL OF THE CITY OF PALM DESERT AS
FOLLOWS:
Section 1. The above recitals are all true and correct.
Section 2. The City Council orders that the Engineer's Report be modified to
reflect the elimination of the "Homeowner Facilities" associated with parcels
included on the Exclusion List and finds that such elimination will not increase the
amount of any assessment and is consistent with the assessment methodology
set forth in the Engineer's Report.
Section 3. The City Council declares that the Engineer's Report, as modified,
is hereby finally approved.
Section 4. Based upon its review of the Engineer's Report and other reports
and information presented to it, the City Council hereby finds and determines that
(i) the lands within the Assessment District will be specially benefited by the
improvements described in the Engineer's Report as modified, (ii) the
Assessment District includes all of the lands so benefited, (iii) the assessment of
the total amount of the cost and expenses of such improvements upon the
several subdivisions of land in the Assessment District is in proportion to the
estimated special benefits to be received by such subdivisions, respectively, from
such improvements; (iv) only special benefits are assessed and no assessment
is imposed on any subdivision of land which exceeds the reasonable cost of the
proportional special benefit conferred on that subdivision and (v) the public
necessity, health, safety, or welfare requires the removal of poles, overhead
wires and associated overhead structures, within the Assessment District and the
underground installation of wires and facilities for supplying electric,
communication, or similar or associated service.
Section 5. The proposed assessment for the cost of the improvements
provided for in subdivisions (d) and (e) of Section 10204 of the 1913 Act, and the
maximum annual assessment provided for in subdivision (f) of that section are
hereby confirmed as set forth in the Engineer's Report, as modified.
Section 6. The City Council hereby orders the proposed improvements set
forth in the Engineer's Report, as modified, to be made.
Section 7. The City Clerk is hereby directed to cause to be recorded in the
office of the Superintendent of Streets a certified copy of the diagram and
assessments provided for in subdivisions (d), (e) and (f) of Section 10204 of the
1913 Act.
Section 8. The City Clerk is hereby directed to cause to be recorded in the
office of the County Recorder of the County of Riverside a notice of assessment
P6401-1034\859551v2.doc
in connection with the Assessment District as provided by Section 3114 of the
California Streets and Highways Code and Section 10402.5 of the 1913 Act.
Section 9. Following the recordation of such notice of assessment, the City
Clerk is hereby authorized and directed to provide notice of recordation of the
assessment in accordance with Section 10404 of the 1913 Act.
Section 10. The Assessment District is declared an underground utility district
pursuant to Section 12.12.040 of the Municipal Code. Consequently the City
Council orders the removal of poles, overhead wires and associated overhead
structures, within the Assessment District and the underground installation of
wires and facilities for supplying electric, communication, or similar or associated
service. Each of the exceptions set forth in Section 12.12.080 of the Municipal
Code is hereby authorized with respect to the Assessment District.
Section 11. The City Council determines that the improvements ordered
pursuant to Section 6 of this Resolution constitute the conversion of overhead
electric utility distribution system facilities to underground, including connection to
existing overhead electric utility distribution lines, where the surface is restored to
the condition existing prior to the undergrounding. Therefore such improvements
are categorically exempt from the requirements of the California Environmental
Quality Act pursuant to Sections 15300 and 15302 of Title 14 of the California
Code of Regulations.
Section 12. The City Council hereby authorizes the City Manager, at any time
prior to the completion of the improvement proceedings, to make changes in
connection with the Assessment District, including but not limited to approving
further changes to the Engineer's Report (including cost estimates and line items
therein), the improvements ordered herein, and the assessments (including the
amount of any of the individual assessments) confirmed hereby, provided this
Section shall not be deemed to authorize the City Manager to approve any
increase in the amount of any of the individual assessments without the consent
of the affected property owner.
By this section, the City Manager is specifically authorized to make changes to
the improvements and the assessments to reflect the requirements of Section
5896.14 of the Code, which provides that the conversion of the electric and
communication facilities located on any lot or parcel of land in the Assessment
District may be done by the City, and the cost thereof included in the
assessment, only if the property owner of such lot or parcel files a request with
the City Clerk pursuant to Section 5896.15 of the Code.
P6401-1034\859551v2.doc
PASSED, APPROVED, AND ADOPTED THIS 8T" DAY OF JUNE, 2006, BY
FOLLOWING VOTE, TO WIT:
AYES:
NOES:
ABSENT:
ABSTAIN:
Jim Ferguson, Mayor
Rachelle D. Klassen, City Clerk
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE ss.
CITY OF PALM DESERT
I, Rachelle D. Klassen, City Clerk of the City of Palm Desert, County of Riverside,
State of California do hereby certify that the foregoing Resolution No. 06- was
regularly adopted by the City Council of said City of Palm Desert at a regular
meeting of said council held on the day of , 2006.
P6401-1034\859551vldoc
RESOLUTION NO. 06-81
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, CALIFORNIA, AUTHORIZING THE ISSUANCE AND SALE
BY THE CITY OF NOT TO EXCEED $3,530,000 AGGREGATE
PRINCIPAL AMOUNT OF ITS HIGHLANDS UTILITY
UNDERGROUNDING ASSESSMENT DISTRICT NO. 04-01 LIMITED
OBLIGATION IMPROVEMENT BONDS, SERIES 2006; APPROVING AS
TO FORM AND AUTHORIZING THE EXECUTION AND DELIVERY OF
CERTAIN DOCUMENTS IN CONNECTION THEREWITH; AND
APPROVING CERTAIN OTHER MATTERS RELATING THERETO
RECITALS:
WHEREAS, on April 13, 2006, the City Council of the City (the "City Council")
adopted Resolution No. 06-49 (the "Resolution of Intention"), relating to the formation of
"Highlands Utility Undergrounding Assessment District No. 04-01" (the "Assessment
District") in connection with the proposed undergrounding conversion of certain
overhead electric and communication facilities in the Palm desert Highlands area of the
City (the "Project") under and pursuant to the provisions of the Municipal Improvement
Act of 1913, as set forth in Division 12 (commencing with Section 10120) of the
California Streets and Highways Code; and
WHEREAS, in the Resolution of Intention, the City Council gave notice that serial
bonds, term bonds, or both, would be issued thereunder pursuant to the provisions of
the Improvement Bond Act of 1915, as set forth in Division 10 (commencing with Section
8500) of the California Streets and Highways Code; and
WHEREAS, after conducting a duly noticed public hearing, the City Council has
adopted Resolution entitled: "A Resolution Of The City Council Of The City Of Palm
Desert Ordering Modifications To The Engineer's Report In Connection With Highlands
Utility Undergrounding Assessment District No. 04-01, Approving Such Engineer's Report
As So Modified, Confirming The Assessments In Connection With Such District, Ordering
Improvements To Be Made And Designating Such District A Utility Undergrounding District
Pursuant To Chapter 12.12 Of The Palm Desert Municipal Code" on June 8, 2006,
ordering improvements relating to the Project and confirming the proposed assessment
against parcels within the Assessment District; and
WHEREAS, the City Council has directed that notice of the recordation of the
assessments and of the time within which assessments are to be paid in cash to be duly
published and mailed in the manner provided by law, and the official who has been
designated as collection officer for cash payments of such assessments will file with the
City Clerk a list of all assessments which remain unpaid following the expiration of the 30-
day cash collection period (the "Cash Collection Period"); and
WHEREAS, the City Council at this time desires to adopt this Resolution to
authorize the issuance of the bonds, which shall be designated "City of Palm Desert,
P6401.1034 859555.3
Highlands Utility Undergrounding Assessment District No. 04-01, Limited Obligation
Improvement Bonds, Series 2006" (the "Bonds") and approve the execution and
delivery of certain documents in connection with such issuance; and
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT
DOES HEREBY RESOLVE, FIND, DECLARE AND ORDER AS FOLLOWS:
Section 1. Recitals. The above recitals, and each of them, are true and correct.
Section 2. Authorization to Issue Bonds. The City Council approves and
authorizes the issuance and sale of the Bonds to represent assessments remaining
unpaid at the expiration of the Cash Collection Period, subject to the parameters set
forth herein below.
Section 3. Fiscal Agent Agreement. The Fiscal Agent Agreement (the "Fiscal
Agent Agreement"), proposed to be entered into by and between the City and the Fiscal
Agent (defined in Section 4 below), in the form presented at this meeting and on file with
the City Clerk of the City (the "City Clerk"), is hereby approved. Subject to Section 6
below, each of the Mayor, the Mayor Pro Tempore (in the Mayor's absence), any deputy
of such officers (each, an "Authorized Officer"), acting singly, is hereby authorized and
directed, for and in the name and on behalf of the City, to execute and deliver the Fiscal
Agent Agreement in substantially said form, with such additions or changes as the
Authorized Officer executing the same may approve (such approval to be conclusively
evidenced by such Authorized Officer's execution and delivery thereof).
Section 4. Appointment of Fiscal Agent. The appointment of Wells Fargo Bank,
N.A. as fiscal agent (the "Fiscal Agent") under the Fiscal Agent Agreement is hereby
approved.
Section 5. Bond Purchase Agreement. The Bond Purchase Agreement (the
"Purchase Agreement") proposed to be entered into by and between the City and
Wedbush Morgan Securities, Inc. (the "Underwriter"), in the form presented at this
meeting and on file with the City Clerk, is hereby approved. Each of the Authorized
Officers, acting singly, is hereby authorized and directed, for and in the name and on
behalf of the City, to execute and deliver the Purchase Agreement in substantially said
form, with such additions or changes as the Authorized Officer executing the same may
approve (such approval to be conclusively evidenced by such Authorized Officer's
execution and delivery thereof).
Section 6. Terms of Sale of Bonds. Each of the Authorized Officers, acting
singly, is hereby authorized and directed to act on behalf of the City to establish and
determine (i) the aggregate principal amount of the Bonds, which amount shall not
exceed $3,530,000; (ii) the purchase price of the Bonds and the interest rates thereon,
provided that the interest rate shall not exceed 6.5 percent per annum; (iii) the original
purchaser's discount with respect to the Bonds, which shall not exceed 1.5 percent of
the principal amount thereof; and (iv) the final maturity of the Bonds, which shall not be
on a date that is later than 39 years from the second day of September next succeeding
P6401.1034 859555.3 2
12 months from the dated date of the Bonds. The authorization and powers delegated
to the Authorized Officers by this Section 6 shall be valid for a period of 90 days from
the date of adoption of this Resolution.
Section 7. Preliminary Official Statement. The Preliminary Official Statement
relating to the Bonds (the "Preliminary Official Statement"), in the form presented at this
meeting and on file with the City Clerk, is hereby approved. Each of the Authorized
Officers, acting singly, is hereby authorized and directed, for and in the name and on
behalf of the City, to cause the Preliminary Official Statement in substantially said form,
with such additions or changes therein as such Authorized Officer may approve, to be
deemed final for the purposes of Rule 15c2-12 of the Securities and Exchange Act of
1934. The distribution by the Underwriters of copies of the Preliminary Official
Statement to potential purchasers of the Bonds is hereby approved.
Section 8. Official Statement. Each of the Authorized Officers, acting singly, is
hereby authorized and directed, for and in the name and on behalf of the City, to cause
the Preliminary Official Statement to be brought into the form of a final Official
Statement (the "Official Statement"), and to execute the same for and in the name and
on behalf of the City, with such additions or changes therein as such Authorized Officer
may approve (such approval to be conclusively evidenced by such Authorized Officer's
execution and delivery thereof). The distribution and use of the Official Statement by the
Underwriter in connection with the sale of the Bonds are hereby approved.
Section 9. Continuing Disclosure Agreement. The Continuing Disclosure
Agreement (the Continuing Disclosure Agreement") relating to the Authority Bonds,
proposed to be entered into by and between the City and MuniFinancial, as
Dissemination Agent, in the form presented at this meeting and on file with the City
Clerk, is hereby approved. Each of the Authorized Officers, acting singly, is hereby
authorized and directed, for and in the name and on behalf of the City, to execute and
deliver the Continuing Disclosure Agreement in substantially said form, with such
additions or changes therein as the Authorized Officer executing the same may approve
(such approval to be conclusively evidenced by such Authorized Officer's execution and
delivery thereof).
Section 10. Other Acts. The officers of the City are hereby authorized and
directed, jointly and severally, to do any and all things and to execute and deliver any
and all documents which they may deem necessary or advisable in order to effectuate
the purposes of this Resolution, the Fiscal Agent Agreement, the Purchase Agreement,
the Official Statement and the Continuing Disclosure Agreement, and to assist the City
Council with respect to the issuance and sale of the Bonds, and any such actions
previously taken by such officers are hereby ratified and confirmed.
P6401.1034 859555.3
Section 11. Effective Date. This Resolution shall take effect immediately upon
adoption.
wit:
APPROVED and ADOPTED this 8t' day of June 2006, by the following vote, to
AYES:
NOES:
ABSENT:
ABSTAIN:
Jim Ferguson, Mayor
ATTEST:
Rachelle D. Klassen, City Clerk
P6401.1034 859555.3 4
Jones Hall Draft 5/29/06
BOND PURCHASE CONTRACT
$
CITY OF PALM DESERT
Limited Obligation Improvement Bonds
Highlands Undergrounding Assessment District No. 04-01, Series 2006
, 2006
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260-2578
The undersigned, Wedbush Morgan Securities, as underwriter (the "Unden�vriter"),
offers to enter into this Bond Purchase Contract with the City of Palm Desert (the "City") which,
upon acceptance, will be binding upon the City and upon the Underwriter. This offer is made
subject to the City's acceptance hereof on the date hereof, and if not so accepted will be subject
to withdrawal by the Underwriter upon notice delivered to the City at any time prior to the
acceptance hereof by the City.
Purchase, Sale and Delivery of the Bonds.
(a) Subject to the terms and conditions and in reliance upon the
representations, warranties and agreements herein set forth, the Underwriter hereby agrees to
purchase from the City, and the City hereby agrees to sell to the Underwriter, all (but not less
than all) of the City of Palm Desert Highlands Undergrounding Assessment District No. 04-01
Limited Obligation Improvement Bonds, Series 2006 (the "Bonds"), dated their date of delivery,
in the aggregate principal amount of $ , bearing interest (payable commencing
September 2, 2006, and semiannually thereafter on September 2 and March 2 in each year) at
the rates of interest, and maturing on the dates and in the amounts, as set forth in Exhibit A
attached hereto and incorporated herein by this reference. The purchase price for the Bonds
shall be $ , which is the principal amount of the Bonds less the underwriting
discount of $ ).
The Bonds shall be substantially as described in, shall be issued and secured
under the provisions of, and shall be payable and subject to redemption as provided in a Fiscal
Agent Agreement dated as of July 1, 2006 (the "Fiscal Agent Agreement") by and between the
City and Wells Fargo Bank, National Association, as Fiscal Agent, registrar, and transfer agent
(the "Fiscal AgenY').
(b) The City has authorized the use of the Preliminary Official Statement,
dated , 2006, relating to the Bonds, which, together with the cover page and
all appendices thereto, is herein called the "Preliminary Official Statement." The City hereby
ratifies the use by the Underwriter of the Preliminary Official Statement and deems it final and
authorizes the Underwriter to use and distribute the Preliminary Official Statement, the Official
Statement, the Fiscal Agent Agreement and the other documents or contracts to which the City
is a party, including this Bond Purchase Contract, and all information contained therein. The
term "Official Statement" shall mean the Preliminary Official Statement, as modified with the
prior approval of the Underwriter and the City, for use by the Underwriter incident to the sale of
the Bonds.
(c) At 8:00 o'clock A.M., Paci�c Daylight Time, on , 2006, or at
such other time or date as shall be agreed upon by the Underwriter and the City (such time and
date being herein referred to as the "Closing Date"), the City will deliver to the Underwriter, at a
location or locations to be designated by the Underwriter, the Bonds in definitive form (all Bonds
having had the CUSIP numbers assigned to them typed or printed thereon), duly executed as
provided in the Fiscal Agent Agreement, and the other documents herein mentioned; and the
Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in
paragraph (a) of this section in immediately available federal funds (such delivery and payment
being herein referred to as the "Closing"). The Bonds shall be made available to the
Underwriter, or their designees, not later than three business days before the Closing Date for
purposes of inspection. The Bonds shall be in fully registered form, with such persons as
designated by the Underwriter as registered owner.
(d) The Underwriter agrees to make a bona fide public offering of all the
Bonds initially at the public offering prices (or yields) set forth on the cover page of the Official
Statement with respect to the Bonds (the Official Statement, together with all appendices
thereto, and with such changes therein and supplements thereto which are consented to in
writing by the City and the Underwriter, is herein called the "Official Statement"). Subsequent to
the initial public offering, the Underwriter reserves the right to change the public offering prices
(or yields) as it deems necessary in connecti�n with the marketing of the Bonds. The Bonds
may be offered and sold to certain dealers at prices lower than such initial public offering prices.
2. Representations. Warranties and Covenants of the Citv. The City hereby
represents and warrants to and agrees with the Underwriter as of the date of this agreement
that:
(a) the City is duly organized and validly existing as a charter city and
municipal corporation organized and existing under and by virtue of the laws of the State of
California (the "State");
(b) the City has full legal right, power and authority to enter into the Fiscal
Agent Agreement, this Bond Purchase Contract, the Continuing Disclosure Agreement, dated
as of Closing (the "Continuing Disclosure AgreemenY'), by and between the City and
MuniFinancial, as dissemination agent (the "Dissemination AgenY'), to issue and deliver the
Bonds to the Underwriter, to perform its obligations under each such document or instrument,
and to carry out and effectuate the transactions contemplated hereby and thereby;
(c) this Bond Purchase Contract, and the Bonds have been, or on or before
the Closing Date will be duly executed and delivered by the City, and on the Closing Date, the
Bonds, when authenticated and delivered to the Underwriter in accordance with the Fiscal
Agent Agreement and this Bond Purchase Contract, will constitute legally valid and binding
obligations, enforceable in accordance with their respective terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws or
equitable principles relating or limiting creditor's rights generally;
(d) to the best knowledge of the City, the execution of the Fiscal Agent
Agreement, the Continuing Disclosure Agreement, the issuance of the Bonds, the execution,
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delivery and pertormance of this Bond Purchase Contract and the Bonds, and compliance with
the provisions of each of such documents or instruments do not constitute on the part of the City
a violation of any existing law, charter, ordinance, regulation, decree, order or resolution of the
City.
(e) to the best knowledge of the City, without having conducted an
independent investigation, as of the time of acceptance hereof, no action, suit, proceeding,
hearing or investigation, other than that which has previously been disclosed to the Underwriter
and as set forth in the Preliminary Official Statement, is pending or threatened against the City:
(i} in any way affecting the existence of the City or in any way challenging the respective powers
of the several offices or the titles of the officials of the City to such office; or (ii) seeking to
restrain or enjoin the sale, issuance or delivery of any of the Bonds, the application of the
proceeds of the sale of the Bonds, or the collection of the assessments pledged or to be
pledged or available to pay the principal of, premium, if any, or the interest on the Bonds, or the
pledge thereof, or in any way contesting or affecting the validity or enforceability of the Bonds,
this Bond Purchase Contract, the Continuing Disclosure Agreement or the Fiscal Agent
Agreement, or contesting the powers of the City or its authority with respect to the Bonds, the
District, the Fiscal Agent Agreement, the Continuing Disclosure Agreement or this Bond
Purchase Contract; or (iii) in which a final adverse decision could (A) materially adversely affect
the consummation of the transactions contemplated by this Bond Purchase Contract or the
Fiscal Agent Agreement, (B) declare this Bond Purchase Contract, the Continuing Disclosure
Agreement or the Fiscal Agent Agreement to be invalid or unenforceabte in whole or in material
part, or (C) adversely affect the exemption of the interest paid on the Bonds from taxation by the
Government of the United States or by the State for income tax purposes;
(f} the City has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that the City is a bond issuer whose tax or non-arbitrage
certificates may not be relied upon;
(g) any ce�tificate signed by an officer or o�cial of the City and delivered to
the Underwriter shall be deemed a representation and warranty by the City as to the statements
made therein, but not of the person signing the same;
(h) the City will apply the proceeds from the sale of the Bonds for the
purpose specified in the Fiscal Agent Agreement;
(i) the City shall have delivered or cause to have delivered to the
Underwriter prior to the execution of this contract or the first sale of the Bonds, whichever first
occurs, copies of a Preliminary Official Statement relating to the Bonds deemed final by the City
for purposes of Rule 15c2-12 under the Securities Act of 1934 (the "Rule"); and to satisfy
Municipal Securities Rulemaking Board ("MSRB") Rule G-32 or any other rules adopted by the
MSRB within seven business days from the date hereof, the City will deliver or cause to be
timely delivered and available to the Underwriter a final Official Statement (the "Official
StatemenY') for distribution to purchasers of the Bonds; and
(j) the City will undertake, pursuant to the Continuing Disclosure Agreement,
to provide certain annual financial information and notices of the occurrence of certain events, if
material. A description of this undertaking is set forth in the Preliminary Official Statement and
will also be set forth in the final Official Statement.
-3-
3. Conditions to the Obliqations of the Citv. The obligations of the City
hereunder, including the obligation to sell and deliver the Bonds to the Underwriter, are subject
to the conditions stated herein.
4. Conditions to the Obliqations of the Underwriter. The obligations of the
Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at
the option of the Underwriter, to the accuracy in all material respects of the representations and
warranties on the part of the City contained herein, as of the date hereof and as of the Closing
Date, to the accuracy in all material respects of the statements of the officers and other officials
of the City and other persons and entities made in any certificates or other documents furnished
pursuant to the provisions hereof, to the performance by the City of its obligations to be
performed hereunder at or prior to the Closing Date and to the following additional conditions
(any of which may be waived by the Underwriter):
(a) At the Closing Date, the Fiscal Agent Agreement, the Continuing
Disclosure Agreement and this Bond Purchase Contract shall be in full force and effect, and
shall not have been amended, modified or supplemented, except as may have been agreed to
in writing by the Underwriter, and there shall have been taken in connection therewith, with the
issuance of the Bonds and with the transactions contemplated thereby and by this Bond
Purchase Contract, all such actions as, in the opinion of Richards, Watson 8� Gershon, A
Professional Law Corporation, Bond Counsel for the City, shall be necessary and appropriate;
(b) Between the date hereof and the Closing Date, the market price or
marketability of the Bonds at the initial offering prices pursuant to the Preliminary Official
Statement shall not have been materially adversely affected, in the reasonable judgment of the
Underwriter (evidenced by a written notice to the City terminating the obligation of the
Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:
(1) Legislation enacted (or resolution passed) by the Congress of the
United States of America or a decision rendered by a court established under Article III
of the Constitution of the United States of America or by the Tax Court of the United
States of America, or an order, ruling, regulation (final, temporary or proposed}, press
release or other form of notice issued or made by or on behalf of the Treasury
Department or the Internal Revenue Service of the United States of America, with the
purpose or effect, directly or indirectly, of imposing federal income taxation upon the
interest as would be received by the holders of the Bonds;
(2) Legislation enacted (or resolution passed) by the Congress of the
United States of America, or an order, decree or injunction issued by any court of
competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed),
press release or other form of notice issued or made by or on behalf of the Securities
and Exchange Commission, or any other governmental agency having jurisdiction of the
subject matter, to the effect that obligations of the general character of the Bonds,
including any or all underlying arrangements, are not exempt from registration under or
other requirements of the Securities Act of 1933, as amended, or that the Fiscal Agent
Agreement is not exempt from qualification under or other requirements of the Trust
Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations
of the general character of the Bonds, or of the Bonds, including any or all underwriting
arrangements, as contemplated hereby or by the Official Statement or otherwise, is or
would be in violation of the federal securities laws as amended and then in effect;
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(3) Any amendment to the federal or California Constitution or action
by any federal or California court, legislative body, regulatory body or other authority
materially adversely affecting the tax status of the City, its property, income or securities
(or interest therein), the validity or enforceability of the assessment or the ability of the
City to issue the Bonds as contemplated by the Fiscal Agent Agreement and the Official
Statement;
(4) Any event occurring, or information becoming known which, in the
reasonable judgment of the Underwriter, makes untrue in any material respect any
statement or information contained in the Preliminary Official Statement or the Official
Statement, or results in the Preliminary Official Statement or the Official Statement
containing any untrue statement of a material fact or omitting to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; or
(5) The entry of an order by a court of competent jurisdiction which
enjoins or restrains the City from issuing permits, licenses or entitlements within the
District or which order, in the reasonable opinion of the Underwriter, otherwise materially
and adversely affects the proposed development within the District.
(6) The resolution of the City authorizing the Bonds shall not be finally
approved.
(c) On or prior to the Closing Date, the Underwriter shall have received
counterpart originals or certified copies of the following documents, in each case satisfactory in
form and substance to the Underwriter:
(1) One counterpart original or copy certified by a duly authorized
officer of the City, of the Fiscal Agent Agreement, the approval of this Bond Purchase
Contract, the Preliminary Official Statement and the Official Statement;
(2) The approving opinion, dated the Closing Date and addressed to
the City, of Richards, Watson 8� Gershon, A Professional Law Corporation, Bond
Counsel, and an opinion of such counsel, dated the Closing Date and addressed to the
Underwriter, to the effect that such opinion addressed to the City may be relied upon by
the Underwriter to the same extent as if such opinion was addressed to it;
(3) A supplemental opinion of Bond Counsel, dated the Closing Date
and addressed to the Underwriter, in form and substance satisfactory to the Underwriter
and their counsel, to the effect that the statements contained in the Official Statement on
the cover and under the captions "INTRODUCTION," "THE BONDS," "SECURITY FOR
THE BONDS," and "TAX MATTERS," insofar as such statements purport to summarize
certain provisions of the Fiscal Agent Agreement, the Bonds and Bond Counsel's
opinion concerning certain federal and state tax matters relating to the Bonds, are
accurate in all material respects;
(4) A certificate of an authorized officer of the City, dated the Closing
Date, addressed to Bond Counsel and the Underwriter, in form and substance
acceptable to the Underwriter to the foNowing effect:
-5-
(i) This Bond Purchase Contract has been duly authorized,
executed and delivered by the City and constitutes the valid, legal and binding
agreement of the City enforceable in accordance with its terms.
(ii) No consent, waiver or any other action of any person,
board of body, public or private is required as of the Closing Date, for the City to
enter into this Bond Purchase Contract or to perform its obligations under it.
(iii) Without having conducted an independent investigation,
the City has not been senred with any action, suit, proceeding, inquiry or
investigation at law or in equity before or by any court, governmental agency,
public board or body or, to the best of my knowledge is such event threatened
against the City, challenging the creation, organization or existence of the City, or
the validity of the Bonds, or this Bond Purchase Contract, seeking to restrain or
enjoin any of the transactions referred to therein or contemplated hereby.
(iv) That nothing has come to the attention of the authorized
officer of the City which would lead him to believe that the Official Statement
contains any untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(v) The City ratifies the use and distribution by the Underwriter
of the Preliminary Official Statement and the Official Statement in connection with
the offering and sale of the Bonds, and certifying that to the best of his or her
knowledge, the representations and warranties of the City contained in Section 2
of this Bond Purchase Contract are true and correct in all material respects on
and as of the Closing Date with the same effect as if made on the Closing Date.
(5) Opinion of Citv Attornev. An opinion of the City Attorney
addressed to the City, the Underwriter and the Fiscal Agent, dated the date of Closing, in
substantially the form attached hereto as Exhibit B.
(6) An opinion of Jones Hall, a Professional Law Corporation, dated
the Closing Date, addressed to the City, to the effect that based upon its participation in
the preparation of the Official Statement and without having undertaken to determine
independently the fairness, accuracy or completeness of the statements contained in the
Official Statement, such counsel has no reason to believe that, as of the date of the
Closing, the Official Statement (excluding therefrom the reports, financial and statistical
data and forecasts therein and the information included in the Appendices thereto, as to
which no advice need be expressedj contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading; and to the effect that the Bonds are exempt from the registration
requirements of the Securities Act of 1933 and the Bonds therefor do not require
registration, and that the ordinance or other document pursuant to which the Bonds are
issued is exempt from qualification under the Trust Indenture Act of 1939.
Counsel.
(7) A Tax Certificate in form and substance satisfactory to Bond
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(8) A copy of the Report of Proposed Debt Issuance and the Report
of Final Sale required to be delivered to the California Debt and Investment Advisory
Commission pursuant to section 8855, subsection (g) of the Government Code.
(9) A copy of a completed Internal Revenue Service form 8038-G,
together with a certificate of mailing of the form to Internal Revenue Service Center,
Philadelphia, PA 19255.
(10) Such additional certificates, instruments and other documents as
the Underwriter or its counsel may reasonably deem necessary to evidence the truth and
accuracy as of the time of the Closing of the representations of the City and the due
performance or satisfaction by the City at or prior to such time of all agreements then to
be performed and all conditions then to be satisfied by the City.
If the City shall be unable to satisfy the conditions contained in this Bond
Purchase Contract, or if the obligations of the Underwriter shall be terminated for any reason
permitted by this Bond Purchase Contract, this Bond Purchase Contract shall terminate and
neither the Underwriter nor the City shall be under further obligation hereunder, except as
further set forth in Section 10 hereof.
5. Conditions of the Citv's Obliqations. The City's obligations hereunder are
subject to the Underwriter's performance of the obligations hereunder, and are also subject to,
as of the Closing Date, the fact that the market price or marketability of the Bonds shall not have
been materially adversely affected, in the reasonable judgment of the City.
6. Expenses.
(a) The City shall be under no obligation to pay, other than out of Bond
proceeds, any expenses incident to the City's obligations hereunder, including, but not limited to
(i) the fees and disbursements of any accountants and other experts, consultants or advisers
retained; (ii) the cost of preparation, printing and mailing or delivery of the definitive Bonds;
(iii) the cost of preparation, printing and distribution of the Preliminary Official Statement and the
Official Statement; (iv) the fees and disbursements of Bond Counsel and Disclosure Counsel;
(v) the fees and disbursements of the Fiscal Agent and its counsel; (vi) the cost of any
appraisals used in connection with the marketing of the Bonds; and (vii) the costs of publication
or mailing of notices as required by the Fiscal Agent Agreement.
(b) The Underwriter shall pay (i) all advertising expenses in connection with
the public offering of the Bonds, (ii) California Debt and Investment Advisory Commission fees,
and (iii) all other expenses incurred by them or any of them in connection with the public offering
and distribution of the Bonds.
7. Undertakinps of the Citv. The City agrees, at its expense, to make
available to the Underwriter sufficient copies of its audited financial statements, if any,
resolutions and ordinances of the City with respect to the Bonds, the Fiscal Agent Agreement,
this Bond Purchase Contract, and any amendments or supplements thereto and other
documents related to the Bonds and pertaining to the City, to the extent such documents are
publicly available, as may reasonably be required from time to time for the prompt and efficient
performance by the Underwriter of their obligations hereunder (except for all or any portions of
any such documents which, by contract, are not subject to disclosure).
-7-
8. Parties in Interest. This Bond Purchase Contract is made solely for the
benefit of the City and the Underwriter (including successors or assigns of the Unden�vriter) and
no other person shall acquire or have any right hereunder or by virtue hereof.
9. Survival of Representations and Warranties. The representations and
warranties of the City set forth in or made pursuant to this Bond Purchase Contract shall not be
deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing
and regardless of any investigations made by or on behalf of the Underwriter (or statements as
to the results of such investigations) concerning such representations and statements of the City
and regardless of delivery of and payment for the Bonds.
10. Effective. This Bond Purchase Contract shall become effective and
binding upon the respective parties hereto upon the execution of the acceptance hereof by the
City and shall be valid and enforceable as of the time of such acceptance.
11. Aqplicable Law; NonassiQnabilitv. This Bond Purchase Contract shall be
governed by the laws of the State of California. This Bond Purchase Contract shall not be
assigned by the City or the Underwriter.
12. Execution of Counterqarts. This Bond Purchase Contract may be
executed in several counterparts, each of which shall be regarded as an original and all of which
shall constitute one and the same.
13. No Prior Aareements. This Bond Purchase Contract supersedes and
replaces all prior negotiations, agreements and understandings between the parties hereto in
relation to the sale of Bonds for the City and represents the entire agreement of the parties as to
the subject matter herein.
14. Partial Unenforceabilitv. Any provision of this Bond Purchase Contract
which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without invalidating the remaining
provisions of this Bond Purchase Contract or affecting the validity or enforceability of such
provision in any other jurisdiction.
15. Capitalized Terms. Terms with initial capital letters not otherwise defined
herein shall have the meanings assigned to them in the Preliminary Official Statement.
Very truly yours,
WEDBUSH MORGAN SECURITIES
By
�
Terms and conditions of this Bond Purchase Contract are
approved and accepted as of the date above written.
CITY OF PALM DESERT
By:
City Manager
�
EXHIBIT A
DESCRIPTION OF THE BONDS TO BE PURCHASED
Maturity Principal
September 2 Amount Interest Rate Price
EXHIBIT B
FORM OF OPINION OF CITY ATTORNEY
��.
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260-2578
Wedbush Morgan Securities
201 Lomas Santa Fe Drive, Suite 500
Solana Beach, CA 92075
OP/N/ON: $ City of Palm Desert Highlands Undergrounding
Assessment District No. 04-01 Limited Obligation Improvement
Bonds, Series 2006 (the "Bonds")
Ladies and Gentlemen:
I am the City Attorney for the City of Palm Desert (the "City") and have acted as such in
connection with the issuance by the City for and on behalf of the City of Palm Desert Highlands
Undergrounding Assessment District No. 04-01 Limited Obligation Improvement Bonds, Series
2006 (the "Bonds"). The Bonds are being issued pursuant to a Fiscal Agent Agreement, dated
as of July 1, 2006 (the "Fiscal Agent AgreemenY'), by and between the City and Wells Fargo
Bank, National Association, as fiscal agent. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to them in the Fiscal Agent Agreement.
In this connection, I have reviewed and examined the Fiscal Agent Agreement, the Bond
Purchase Contract, dated , 2006, by and between the City and Wedbush
Morgan Securities, as underwriter of the Bonds, the Continuing Disclosure Agreement, dated as
of July 1, 2006 (the "Disclosure AgreemenY'j, by and between the City and MuniFinancial, as
dissemination agent (the foregoing agreements are collectively referred to herein as the
"Agreements"), the Official Statement, dated , 2006 (the "Official StatemenY'),
relating to the Bonds, and certain proceedings and documents with respect to the Bonds,
Resolution No. providing for issuance of the Bonds, and such records, certificates
and other documents as I have considered necessary or appropriate for the purposes of this
opinion.
Based on such review and such other considerations of law and fact as I believe to be
relevant, I am of the opinion that:
(i) the City is a charter city and municipal corporation, duly
created and lawfully existing under the laws of the State and has full power and
authority to enter into this Bond Purchase Contract and to perform its duties and
obligations hereunder;
B-1
(ii} the Agreements have been duly authorized, executed and
delivered by the City and constitute valid, legal and binding agreements of the
City enforceable in accordance with their terms;
(iii) The City has not been served with any action, suit,
proceeding, inquiry or investigation at law or in equity before or by any court,
governmental agency, public board or body or, to the best of such counsel's
knowledge is such event threatened against the City, challenging the creation,
organization or existence of the City, or the validity of the Bonds, the Bonds or
this Bond Purchase Contract, seeking to restrain or enjoin any of the transactions
referred to therein or contemplated thereby;
(iv) (A) the resolution of the City Council of the City approving
and authorizing the execution and delivery of the Sonds has been duly adopted,
and has not been modified, amended or rescinded; (B) the Bonds have been
duly authorized, executed and delivered by the City and, assuming due execution
by the Fiscal Agent, constitute the legal, valid and binding obligations of the City
enforceable against the City in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting creditors'
rights, to the application of equitable principles where equitable remedies are
sought and to the exercise of judicial discretion in appropriate cases; and (C) the
authorization, execution and delivery of the Bonds by the City and compliance by
the City with the provisions thereof, will not conflict with, or constitute a breach of
or default under, any law, administrative regulation, court decree, resolution,
ordinance or other agreement to which the City is subject or by which it is bound.
CITY OF PALM DESERT
By:
City Attorney
B-2
Jones Hall Draft 5/30/06
PRELIMINARY OFFICIAL STATEMENT DATED , 2006
NEW ISSUE - FULL BOOK-ENTRY NOT RATED
!n the opinion of Richarcls, Watson & Gershon, A Professional Corporation, Los Angeles, Califomia, Bond Counse/,
based on existing law and assuming compliance with certain covenants set forth in the documents pertaining to the Bonds
and requirements of the fntemal Revenue Code of 1986, as amended (the "Code'�, as described herein, interest on the
Bonds is not included in gross income of the owners thereof for federal income tax purposes. !n the opinion of Bond
Counsel, rnterest on the Bonds is not treated as an item of tax preference for the purposes of the federal a/ternative minimum
tax imposed on individuals and corporations. lnterest on the Bonds may be subject fo cerfain federa! taxes imposed on
corporations, inc/udrng the corporate altemative minimum tax on a portion of that interest. In the furiher opinion of Bond
Counsel, interest on the Bonds is exempt from personal income taxes imposed by the State of Califomia. See "TAX
MATTERS. "
$ '
CITY OF PALM DESERT
HIGHLANDS UNDERGROUNDING ASSESSMENT DISTRICT NO. 04-01
LIMITED OBLIGATION IMPROVEMENT BONDS, SERIES 2006
Dated: Date of Delivery Due: September 2, as shown below
The City of Palm Desert Highlands Undergrounding Assessment District No. 04-01 Limited Obligation Improvement Bonds,
Series 2006 (the "Bonds`) are being issued by the City of Palm Desert (the "City") pursuant to the provisions of the
The Bonds Improvement Bond Act of 1915 (Division 10 of the California SUeets and Highways Code) for the purpose of financing the
undergrounding of utility lines and appurtenances within the City's Highlands Undergrounding Assessment District No. 04-01
(the "District"). Interest on the Bonds is payable September 2, 2006, and thereafter semiannually on March 2 and September
2 of each year.
The Bonds are issued upon and secured by the unpaid special assessments levied on parcels within the DisVict. The
Bonds are special limited obligations of the City and are not payable from the City's general fund. Assessment installments
of principal and interest sufficient to meet annual debt service on the Bonds are to be included on the regular Riverside
Security County tax bills sent to owners of propeRy against which there are unpaid assessments. These annual assessment
installments are to be used to pay debt service on the Bonds as it becomes due. To provide funds for payment of the Bonds
and the interest thereon in the event of any delinquent installments, the City will establish a Reserve Fund from Bond
proceeds, as described herein. See "SECURITY FOR THE BONDS."
The District
Early
Redemption
Property in the District subject to the assessments is comprised of single family home properties owned by various
homeowners. Certain of the owners of the properties requested that the assessments be levied to fina�ce the
undergrounding of existing overhead utility facilities. See THE DISTRICT."
The Bonds are subject to optional and mandatory redemption as more fully described herein. Transfers of property
ownership and other similar circumstances could result in prepayment of all or part of the assessments. Such prepayment
would result in redemption of a portion of the Bonds prior to their stated maturities.
THE BONDS ARE LIMITED OBLIGATION IMPROVEMENT BONDS AND ARE SECURED SOLELY BY THE SPECIAL
ASSESSMENTS AND THE AMOUNTS IN THE REDEMPTION FUND AND THE RESERVE FUND. THE BONDS ARE NOT SECURED BY
THE GENERAL TAXING POWER OF THE CITY OF PALM DESERT, THE COUNTY OF RIVERSIDE (THE "COUNTY"), OR THE STATE OF
CALIFORNIA (THE "STATE") OR ANY P�LITICAL SUBDIVISION OF THE STATE. NEITHER THE FAITH AND CREDIT NOR THE TAXING
POWER OF THE CITY, THE COUNTY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF
THE BONDS. THE INFORMATION SET FORTH IN THIS OFFICIAL STATEMENT, INCLUDING INFORMATION UNDER THE HEADING
"SPECIAL RISK FACTORS," SHOULD 8E READ IN ITS ENTIRETY.
This cover page contains certain information for general reference only. It is not a summary of this issue. Investors are advised to
read the entire Official Statement to obtain information essential to the making of an informed investment decision.
MATURITY SCHEDULE
Maturity Principal Interest CUSIP Maturity Principal Interest CUSIP
Sentember 2 Amount at Price L� Sentember 2 Amount R Price L�
% Term Bond Due September 2, ; Price: 100.000%, CUSIP
t Copyright 2006, American Bankers Associatbn. CUSIP data herein are provided by Standard & Poors CUSIP Service Bureau, a division of The
McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the City nor the Undenxriter assumes any responsibility for the
accuracy of these CUSIP data.
The Bonds are being offered when, as, and if issued by the City and received by the Underwriter, subject to prior sale and to the
approval of validity by Richards, Watson & Gershon, A Professional Law Corporation, Los Angeles, Cal'rfornia, Bond Counsel, and the
approval of certain matters for the City by the City Attomey of the City of Palm Desert. Certain legal matters will be passed upon by Jones
Hall, A Professional Law Corporation, San Francisco, California, Disclosure Counsel. It is expected that the Bonds in book-entry form will be
available for delivery in New York, New York, on or about , 2006.
WEDBUSH MORGAN SECURITIES
Dated: , 2006
CITY OF PALM DESERT, CALIFORNIA
City Council
James Ferguson, Mayor
Richard Kelly, Mayor Pro Tem
Jean M. Benson, Councilmember
Buford Crites, Councilmember
Robert A. Spiegel, Councilmember
City Staff
Carlos L. Ortega, City Manager
Justin McCarthy, Assistant City Manager/Redevelopment
Homer Croy, Assistant City Manager Developmenf Services
Sheila R. Gilligan, Assistant City Manager Communify Services
Paul S. Gibson, Finance Director/Treasurer
Jose Luis Espinoza, Assistant Finance Director
David Yrigoyen, Director of Redevelopment & Housing
Rachelle Klassen, City Clerk
SPECIAL SERVICES
Bond Counsel
Richards, Watson & Gershon, A Professional Corporation
Los Angeles, California
Fiscal Agent
Wells Fargo Bank, National Association
Los Angeles, California
Financial Advisor
Del Rio Advisors, LLC
Modesto, Califomia
Assessment Engineer
MuniFinancial
Temecula, California
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the sale of the
Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
This Official Statement is not to be construed as a contract with the purchasers of the Bonds.
Estimates and Forecasts. When used in this Official Statement, in any press release and in any
oral statement made with the approval of an authorized officer of the Ciry, the words or phrases "will likely
result," "are expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect,"
"intend" and similar expressions identify "forward looking statements." Such statements are subject to
risks and uncertainties that could cause actual results to differ materially from those contemplated in such
forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions
used to develop the forecasts will not be realized and unanticipated events and circumstances may occur.
Therefore, there are likely to be differences between forecasts and actual results, and those differences
may be material. The information and expressions of opinion herein are subject to change without notice,
and neither the delivery of this Official Statement nor any sale made hereunder shall, under any
circumstances, give rise to any implication that there has been no change in the affairs of the City since
the date hereof.
Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the
City to give any information or to make any representations in connection with the offer or sale of the
Bonds other than those contained herein and if given or made, such other information or representation
must not be relied upon as having been authorized by the Ciry or the Underwriter. This Official Statement
does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the
Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer,
solicitation or sale.
lnvolvement of Underwriter. The Underwriter has reviewed the information in this Official
Statement in accordance with, and as a part of, their responsibilities to investors under the federal
securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not
guarantee the accuracy or completeness of such information. The information and expressions of
opinions herein are subject to change without notice and neither delivery of this Official Statement nor any
sale made hereunder shall, under any circumstances, create any implication that there has been no
change in the affairs of the City since the date hereof. All summaries of the documents referred to in this
Official Statement, are made subject to the provisions of such documents, respectively, and do not
purport to be complete statements of any or all of such provisions.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS
CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE.
TABLE OF CONTENTS
INTRODUCTION................................................................................................................................... 1
THEFINANCING PLAN ........................................................................................................................ 3
TheProject ......................................................................................................................................... 3
Estimated Sources and Uses of Funds ............................................................................................ 3
THEBONDS .......................................................................................................................................... 4
AuthorityFor Issuance .......................................................................................................................4
Regi stra ti o n .............. ......................... .............................................................................. ...... ...... ...... .. 4
Payment.............................................................................................................................................. 4
Redemption........................................................................................................................................ 5
DebtService Schedule ...................................................................................................................... 7
SECURITYFOR THE BONDS ............................................................................................................. 8
Assessments...................................................................................................................................... 8
Collection of Assessments ................................................................................................................ 8
Riverside County Tax Loss Reserve .............................................................................................. 10
Covenant to Commence Superior Court Foreclosure ................................................................... 11
Establishment of Special Fund ........................................................................................................ 10
Priorityof Lien ................................................................................................................................... 13
THEIMPROVEMENT PROJECT ....................................................................................................... 14
TheProject ....................................................................................................................................... 14
Costof the Project ............................................................................................................................ 14
Allocationof District Cost ................................................................................................................. 15
Constructionof the Project .............................................................................................................. 16
THEDISTRICT .................................................................................................................................... 17
7heCity of Palm Desert ................................................................................................................... 17
Locationof the District ..................................................................................................................... 17
Propertyin the District ..................................................................................................................... 17
Ownership and Value of Property in the District ............................................................................ 17
SPECIALRISK FACTORS ................................................................................................................. 19
Generaf............................................................................................................................................. 9 9
Limited Obligation of the City Upon Delinquency .......................................................................... 20
Unavailability of City Funds ............................................................................................................. 20
Bankruptcy and Foreclosure ........................................................................................................... 20
LandValue ........................................................................................................................................ 21
NoAcceleration Provision ............................................................................................................... 21
Earthquakes and Natural Disasters ................................................................................................ 21
Absence of Market for the Bonds .................................................................................................... 21
Proposition218 ................................................................................................................................ 22
TAXMATTERS .................................................................................................................................... 22
CONCLUDING INFORMATION ......................................................................................................... 22
Enforceabilityof Remedies .............................................................................................................. 22
Absence of Material Litigation ......................................................................................................... 22
Certain Information Conceming the City ........................................................................................ Z3
ContinuingDisclosure ......................................................................................................................22
Approvalof Legality ......................................................................................................................... 22
Underwriting..................................................................................................................................... 23
Miscellaneous ................................................................................................................................... 23
APPENDIX A - Engineer's Report
APPENDIX B- The Ciry of Palm Desert and the County of Riverside
APPENDIX C- Form of Bond Counsel Opinion
APPENDIX D- Form of Continuing Disclosure Undertaking
APPENDIX E- Book Entry System
�
OFFICIAL STATEMENT
S'`
CITY OF PALM DESERT
HIGHLANDS UNDERGROUNDING ASSESSMENT DISTRICT NO. 04-01
UMITED OBLiGATION iMPROVEMENT BONDS, SERIES 2006
INTRODUCTION
This Official Statement sets forth certain information concerning the issuance and sale
by the City of Palm Desert, Califomia (the "City") of $ * in principal amount of its
Highlands Undergrounding Assessment District No. 04-01 Limited Obligation Improvement
Bonds, Series 2006 (the "Bonds"). The Bonds are issued pursuant to the Improvement Bond
Act of 1915, being Division 10 of the Califomia Streets and Highways Code (the "1915 Act"), an
Resolution approving the issuance of the Bonds adopted by the City Council of the City on
, 2006 and a Fiscal Agent Agreement dated as of July 1, 2006 (the "Fiscal
Agent AgreemenY') by and between the City and Wells Fargo Bank, National Association, as
Fiscal Agent, registrar, and transfer agent (the "Fiscal AgenY').
Creation of the Assessment District. The Highlands Undergrounding Assessment
District No. 04-01 (the "District") was formed in accordance with the Municipal Improvement Act
of 1913, being Division 12 of the California Streets and Highways Code (the "1913 AcY'), upon
petition of certain owners of the property in the District for the purpose of financing capital
improvements in their neighborhood.
Use of Proceeds of the Bonds. Proceeds of the Bonds will primarily be used to pay for
a portion of the infrastructure improvements, as described in the Engineer's Report (described
herein) necessary for the undergrounding of utilities in a fully devefoped residential
neighborhood in the District. See "THE DISTRICT" and "THE IMPROVEMENT PROJECT."
' Preliminary, subject to change.
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Source of Payment of the Bonds. The Bonds are issued upon and secured by the
unpaid assessments (the "Assessments") and, together with interest thereon, constitute a trust
fund for the redemption and payment of the principal of the Bonds and the interest thereon.
Under the provisions of the 1915 Act, Assessment installments sufficient to meet annual debt
service on the Bonds are to be collected on the regular prope�ty tax bills sent to owners of
property within the District against which there are unpaid Assessments. These annual
installments are to be paid into an Assessment Fund (the "Assessment Fund"), which will be
held by the City and used to pay Bond principal and interest as it becomes due.
Properfy Subjecf to the Assessment. Property in the District subject to unpaid
Assessments is comprised of single family residential homes on parcels owned by
various homeowners, not including parcels which elected to prepay assessments prior to
the issuance of bonds. Most of the homes were built in excess of _ years ago. The District
was formed at the request of certain owners of property in the District to finance the
undergrounding of existing overhead utility facilities. See 'THE DISTRICT."
Security for the Bonds. . The Bonds are secured by a pledge (which pledge shall be
effected in the manner and to the extent herein provided) of all of the Assessment Revenues
and all moneys deposited in the Redemption Fund and the Reserve Fund. "Assessment
Revenues" means the revenues received by the City in each Fiscal Year from the collection of
the annual installments of the unpaid Assessments and proceeds from the sale of property for
delinquent Assessment installments. Each respective parcel in the District which is subject to
an unpaid Assessment is security for such Assessment. The 2005-06 Riverside County
assessed valuation of property in the District subject to the unpaid Assessments is
approximately $ million. Based upon this assessed valuation and an aggregate principal
amount of Bonds of $ , the aggregate value-to-lien ratio for property in the District
subject to unpaid Assessments exceeds to 1. See "THE DISTRICT — County
Assessed Valuation of Property in the District." The unpaid Assessments represent fixed liens
on the parcels of land assessed under the proceedings and failure to pay the Assessments
could result in proceedings to foreclose title to the delinquent property. The Assessments do
not constitute the personal indebtedness of the owners of assessed parcels and no p�oceedings
to collect directly from an owner are permitted. See "SECURITY FOR THE BONDS."
Reserve Fund. The City will direct the Fiscal Agent to establish a Reserve Fund (the
"Reserve Fund") in the amount of the Reserve Requirement (described herein) from Bond
proceeds, which amount will be transferred to the Redemption Fund in the event of
delinquencies in the payment of the Assessment installments to the extent of such
delinquencies. The Reserve Fund will be maintained from available Assessment payments, in
an amount equal to the Reserve Requirement, as defined herein. See "SECURITY FOR THE
BONDS — Establishment of Special Funds — Reserve Fund." If there are additional
delinquencies after depletion of funds in the Reserve Fund, the City is not obligated to transfer
into the Assessment Fund the amount of such delinquencies out of any other available monies
of the City.
Limited Obligation of the City. The Bonds are not payable from or secured by the
general fund of the City. The Bonds are not secured by the general taxing power of the
City, the County of Riverside (the "County"), or the State of California (the "State") or any
political subdivision of the State, and neither the City, the County, nor the State nor any
political subdivision of the State has pledged its full faith and credit for the payment of
the Bonds.
-2-
Summary of Information. There follow brief descriptions of the Bonds, the District, the
Project, the City, the Fiscal Agent Agreement, and certain other matters. Such descriptions and
the discussions and information contained herein do not purport to be comprehensive or
definitive. All references in this Official Statement to documents, the Bonds, and the
assessment proceedings are qualified in their entirety by references to the actual documents
and the City's resolutions setting forth the terms thereof. Copies of the Fiscal Agent Agreement
and other documents described in this Official Statement may be obtained from the City.
THE FINANCING PLAN
The Project
The District has been formed and the Bonds are being issued to finance most of the cost
of the undergrounding of existing overhead utility facilities and removal of the existing poles and
related above-ground facilities currently serving the property in the District. The improvements
are described below under the caption "THE IMPROVEMENT PROJECT — The Project."
Estimated Sources and Uses of Funds
The proceeds of the sale of the Bonds will be deposited with the Fiscal Agent in trust
pursuant to the terms of the Fiscal Agent Agreement in the amounts set forth below. The
moneys in the Improvement Fund established for the Bonds will be held by the Fiscal Agent and
will be used to finance the Project and to pay certain costs associated with the issuance and
delivery of the Bonds. A portion of the net proceeds of the Bonds will be deposited in the
Reserve Fund.
A summary of the estimated sources and uses of funds associated with the sale of the
Bonds follows:
Estimated Sources of Funds:
Principal Amount of Bonds
Less: Underwriter's Discount
Total
� Estimated Uses of Funds:
� Deposit to Improvement Fund
� Deposit to Costs of Issuance Fund�'�
� Deposit to Reserve Fund
I Total
"' Includes fees of Bond Counsel, fees of Disclosure Counsel, initial fees, expenses and
charges of the Fiscal Agent, costs of printing the Official Statement, administrative fees
of the City and other costs of issuance.
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THE BONDS
Authority For Issuance
The District proceedings were conducted pursuant to the 1913 Act and a resolution of
intention adopted by the City Council of the City. The Bonds, which represent the unpaid
Assessments levied against privately owned property in the District, are issued pursuant to the
provisions of the 1915 Act, the Resolution and the Fiscal Agent Agreement.
Registration
The Bonds will be issued in fully registered form, without coupons, in the denomination
of $5,000 each or in any integral multiple thereof. The Bonds will be dated the date of delivery,
and will bear interest at the rates per annum, and mature on the dates and in the amounts set
forth on the front cover of this Official Statement.
The Bonds are being issued as fully registered bonds, registered in the name of Cede &
Co. as nominee of The Depository Trust Company, New York, New York ("DTC") and will be
available to ultimate purchasers in the denomination of $5,000 or any integral multiple thereof,
under the book-entry system maintained by DTC. Ultimate purchasers of Bonds will not receive
physical certificates representing their interest in the Bonds. So long as the Bonds are
registered in the name of Cede & Co., as nominee of DTC, references herein to the Owners will
mean Cede & Co., and will not mean the ultimate purchasers of the Bonds. Payments of the
principal, premium, if any, and interest on the Bonds will be made directly to DTC, or its
nominee, Cede & Co. so long as DTC or Cede 8� Co. is the registered owner of the Bonds.
Disbursements of such payments to DTC's Participants is the responsibility of DTC and
disbursements of such payments to the Beneficial Owners is the responsibility of DTC's
Participants and Indirect Participants, as more fully described herein. See "APPENDIX D— The
Book-Entry System" below.
Payment
Interest on the Bonds is payable September 2, 2006, and thereafter semiannually on
March 2 and September 2 of each year (each an "Interest Payment Date"). Interest will be
calculated on the basis of a 360-day year composed of twelve 30-day months. Each Bond shall
bear interest from the Interest Payment Date next preceding the date of authentication thereof
unless (i) it is authenticated after a Record Date and before the close of business on the next
Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or
(ii) it is authenticated on or before the Record Date preceding the first Interest Payment Date, in
which event it shall bear interest from the Closing Date; provided, however, that if at the time of
authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the
Interest Payment Date to which interest has previously been paid or made available for payment
thereon or from the Closing Date, if no interest has previously been paid or made available for
payment thereon.
Interest on the Bonds is payable by check of the Fiscal Agent mailed by first class mail,
postage prepaid, on each Interest Payment Date, until the principal amount of a Bond has been
paid or made available for payment, to the registered Owner thereof at such registered Owner's
address as it appears on the Registration Books at the close of business on the Record Date
preceding the Interest Payment Date or by wire transfer made on such Interest Payment Date
upon written instructions of any owner of $500,000 or more in aggregate principal amount of
-4-
Bonds delivered to the Fiscal Agent prior to the applicable Record Date. The principal of the
Bonds and any premium on the Bonds are payabie in lawful money of the United States of
America upon surrender of such Bonds at the Principal Office of the Fiscal Agent.
Redemption
Qptiona! Redempfion. The Bonds are subject to redemption prior to their stated
maturity dates on any Interest Payment Date, as selected by the City, in integral multiples of
$5,000, at the option of the City frorn moneys derived by the City from any source, at the
following redemption prices expressed as percentages of the principal amount of the Bonds to
be redeemed, together with accrued interest to the date of redemption:
I Redemption Dates Redemption Prices
Mandatory Sinking Fund Redemption. The term bonds maturing on September 2,
are subject to mandatory redemption on or after September 2, , by lot, at a
redemption price equal to the principal amount thereof to be redeemed (accrued interest to the
redemption date is mailed separately), without premium, sotely from amounts deposited in the
Redemption Fund pursuant to the Fiscal Agent Agreement, as follows:
Sinking Fund
Redemption Date Principal
(September 21 Amount
Redemption Procedure by Fiscal Agent The Fiscal Agent shall cause notice of any
redemption to be provided by registered or certified mail or by personal service or in any such
other manner as is acceptable to such other institutions at least thirry (30) days prior to the date
fixed for redemption, to the Securities Depositories and the Information Services selected by the
City, and to the respective registered Owners of any Bonds designated for redemption, at their
addresses appearing on the Registration Books.
Such notice shall state the date of such notice, the date of issue of the Bonds, the place
or places of redemption, the redemption date, the redemption price and, if less than at� of the
then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers (if
any) and Bond numbers of the Bonds to be redeemed, or shall state that all Bonds between two
stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more
maturities have been called for redemption, shall state as to any Bond called for redemption in
part the portion of the principal of the Bond to be redeemed, shall require that such Bonds be
-5-
then surrendered at the Principal Office of the Fiscal Agent for redemption at the said
redemption price, and shall state that further interest on such Bonds will not accrue from and
after the redemption date.
Neither failure to receive any redemption notice nor any defect in such redemption notice
so given shall affect the sufficiency of the proceedings for the redemption of such Bonds. Upon
the payment of the redemption price of Bonds being redeemed, each check or other transfer of
funds issued for such purpose shall, to the extent practicable, bear the CUSIP number
identifying, by issue, maturity and Bond number, the Bonds being redeemed with the proceeds
of such check or other transfer.
Efiect of Redemption. From and after the date fixed for redemption, if funds available
for the payment of the redemption prices of the Bonds called for redemption shall have been
deposited in the Redemption Fund or the Assessment Prepayment Account, as applicable, such
Bonds or portions thereof shall cease to be entitled to any benefit under this Agreement other
than the right to receive payment of the redemption price, and interest shall cease to accrue on
the Bonds or portions thereof to be redeemed on the redemption date specified in the notice of
redemption.
�
Debt Service Schedule
Set forth below is the debt service schedule for the Bonds.
City of Palm Dese�t
Limited Obligation Improvement Bonds
Highlands Undergrounding Assessment District No. 04-01
Annual Bond Debt Service
Year Ending Principal Total Bond
Seatember 2 Amount Interest Debt Service
��
SECURITY FOR THE BONDS
Assessments
The Bonds are issued upon and secured by the unpaid Assessments against the
property in the District, together with interest thereon, and the unpaid Assessments, together
with interest thereon, constitute a trust fund for the redemption and payment of the principal of
the Bonds and the interest thereon. 7he Bonds are further secured by the monies in the
Redemption Fund and the Reserve Fund created pursuant to the Fiscal Agent Agreement.
Principal of and interest and redemption premiums, if any, on the Bonds are payable exclusively
out of the Redemption Fund.
The Bonds are secured by a pledge (which pledge shall be effected in the manner and
to the extent herein provided) of all of the Assessment Revenues and all moneys deposited in
the Redemption Fund and the Reserve Fund. "Assessment Revenues" means the revenues
received by the City in each Fiscal Year from the collection of the annual installments of the
unpaid Assessments and proceeds from the sale of property for delinquent Assessment
installments.
The Assessments and each installment thereof and any interest and penalties thereon
constitute a lien against the parcels of land on which the Assessments are levied until the same
are paid. Such lien is subordinate to all fixed special assessment liens previously imposed upon
the same property, but has priority over all existing and future private liens and over all fixed
special assessment liens which may thereafter be created against the property. Such lien is co-
equal to and independent of the lien for general property taxes.
The Bonds are not secured by the general taxing power of the City, the County, or
the State or any political subdivision of the State, and neither the City, the County, the
State nor any political subdivision of the State has pledged its full faith and credit for the
payment thereof.
Although the unpaid Assessments constitute fixed liens on the parcels assessed, they
do not constitute the personal indebtedness of the owners of said parcels. Furthermore, there
can be no assurance as to the ability or the willingness of such owners to pay the unpaid
Assessments. In addition, there can be no assurance that the present owners will continue to
own their parcel in the District.
The unpaid Assessments will be collected in annual installments, together with interest
on the declining balance, on the Riverside County tax roll on which general taxes on real
property are collected, and are payable and become delinquent at the same time and in the
same proportionate amounts and bear the same proportionate penalties and interest after
delinquency as do said general taxes, and the property upon which the Assessments were
levied is subject to foreclosure, sale and redemption if the Assessment installments are not paid
when due. 7hese annual installments are to be paid into the Assessment Fund held by the City,
for transfer into the Redemption Fund, which will be held by the Fiscal Agent and used to pay
the principaf of and interest on the Bonds as they become due. The installments billed against
all of the parcels of property in the District subject to the Assessments will be equal to the total
principal and interest coming due on all of the Bonds that year, plus, with respect to each parcel
in the District, an amount to cover the administrative charges of the City related to the Bonds
and the Assessments.
�
Collection of Assessments
Pursuant to the 1913 Act and the 1915 Act, installments of principai and interest
sufficient to meet annual debt service on the Bonds will be billed by the County to the owner of
each parcel within the District and against which there are assessments. Upon receipt by the
County and transferral to the City, assessment installments are to be deposited into the
Redemption Fund, which shall be held by the City and used to pay principal and interest
payments on the Bonds as they become due. The assessment installments billed against each
parcel each year represent pro rata shares of the total principal and interest coming due that
year, based on the percentage which the assessment against that parcel bears to the total of
assessments in connection with the financing. Pursuant to the Fiscal Agent Agreement,
payment of the principal of and interest on the Bonds is secured by moneys in the Redemption
Fund and certain other funds established under the Fiscal Agent Agreement.
The City has no obligation to advance funds to replenish the Reserve Fund except to the
extent that delinquent assessments are paid or proceeds from foreclosure sales are realized.
Additionally, the City has covenanted to cause the institution of judicial foreclosure proceedings
following a delinquency, and thereafter to diligently cause prosecution to completion of such
foreclosure proceedings upon the lien of delinquent unpaid assessments as described in
"Covenant to Commence Superior Court Foreclosure" below. The City is not required to bid at
the foreclosure sale.
Riverside County Tax Loss Reserve
The County and its subsidiary political subdivisions operate under the provisions of
Sections 4701 through 4717, inclusive, of the Revenue and Taxation Code of the State of
California, commonly referred to as the "Teeter Plan," with respect to property tax collection and
disbursement procedures. These sections provide an alternative method of apportioning
secured taxes whereby agencies levying taxes through the County tax roll may receive from the
County 100% of their taxes at the time they are levied. The County treasury's cash position
(from taxes) is insured by a special tax losses reserve fund (the "Tax Losses Reserve Fund")
accumulated from delinquent penalties. Pursuant to the Teeter Plan, each taxing entity in the
County may draw on the amount of uncollected taxes and assessments credited to its fund, in
the same manner as if the amount credited had been collected. The tax losses reserve fund is
used exclusively to cover losses occurring in the amount of tax liens as a result of sales of tax-
defaulted property. Monies in this fund are derived from delinquent tax penalty collections.
This method of apportioning taxes extends to all assessments collected on the County
tax roll. Although a local agency currently receives the total levy for its special assessments
without regard to actual collections, the basic legal liability for assessment deficiencies at all
times remains with the sponsoring agency and, therefore, the alternative method of tax
apportionment only assists the agency in the current financing of the maturing debt service
requirements.
The Board of Supervisors may discontinue the procedures under the Teeter Plan
altogether, or with respect to any tax or assessment levying agency in the County, if the rate of
secured tax and assessment delinquency in that agency in any year exceeds 3% of the total of
all taxes and assessments levied on the secured rolls for that agency.
The assessment installments with respect to the Local Obligations will be collected
pursuant to the procedures described above. Thus, so long as the County maintains its policy
�
of collecting Assessments pursuant to said procedures and the City meets the Teeter Plan
requirements, the City will receive 100% of the annual assessment installments levied without
regard to actual collections in the Districts. There is no assurance, however, that the County
Board of Supervisors will maintain its policy of apportioning assessments pursuant to the
aforementioned procedures.
Covenant to Commence Superior Cou�t Foreclosure
The 1913 Act provides that in the event any assessment or installment thereof or any
interest thereon is not paid when due, the City may order the institution of a court action to
foreclose the lien of the unpaid assessment and acquire title to the parcel to which the
delinquency relates. In such an action, the real property subject to the unpaid assessment may
be sold at judicial foreclosure sale. This foreclosure sale procedure is not mandatory, however,
the City has covenanted that it will order, and cause to be commenced, judicial foreclosure
proceedings against properties with delinquent assessment installments in excess of $5,000 by
the October 1 following the close of the Fiscal Year in which such installments were due, and
will commence judicial foreclosure proceedings against all properties with delinquent
assessment installments by the October 1 following the close of each Fiscal Year in which it
receives assessments in an amount which is less than ninety-five percent (95%) of the total
assessments which were to be received in the Fiscal Year and diligently pursue to completion
such foreclosure proceedings; provided, however, the City may elect to defer the
commencement of foreclosure proceedings with respect to any property so long as (i) the
amount on deposit in the respective Reserve Fund is equal to the Reserve Requirement and (ii)
the City is current in the payment of debt service on the Bonds.
Notwithstanding the foregoing, if at any time, the County's Teeter Plan is in effect and
applicable to the District and the assessment being levied in connection with the Bonds, the City
may, in its discretion, elect not to commence any judicial foreclosure proceeding or defer the
commencement of such proceedings until such time as the City deems appropriate.
Prior to July 1, 1983, the statutory right of redemption from such a judicial foreclosure
sale was limited to a period of one year from the date of sale. Legislation effective July 1, 1983
amended this statutory right of redemption to provide that before notice of sale of the foreclosed
parcel can be given following court judgment of foreclosure, a redemption period of 120 days
must elapse. Furthermore, if the purchaser at the sale is the judgment creditor (here, the City)
an action may be commenced by the delinquent property owner within six months after the date
of sale to set aside such sale. The constitutionality of the aforementioned legislation which
repeals the one-year redemption period has not been tested and there can be no assurance
that, if tested, such legislation will be upheld. In the event such Superior Court foreclosure or
foreclosures are necessary, there may be a delay in payments to Owners pending prosecution
of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale; it
is also possible that no bid for the purchase of the applicable property would be received at the
foreclosure sale. See also "BONDOWNERS' RISKS - Bankruptcy and Foreclosure" and "-
Collection of the Assessments" herein.
Establishment of Special Fund
For administering the proceeds of the sale of Bonds and payment of interest and
principal on the Bonds, the Fiscal Agent will establish and maintain three funds or accounts
under the Fiscal Agent Agreement to be known as the Improvement Fund, the Redemption
Fund and the Reserve Fund.
-10-
Improvement Fund. Moneys in the Improvement Fund shall be held by the Fiscal
Agent for the benefit of the City and shall be disbursed by the Fiscal Agent for the payment or
reimbursement of costs of the Project. The Fiscal Agent shall make the requested payment
upon receipt of a requisition therefor executed by an Authorized Officer of the City.
Upon the filing with the Fiscal Agent of a certificate by the City Engineer stating that the
Project has been completed and that all costs of the Project have been paid or are not required
to be paid from the Improvement Fund, the Fiscal Agent shall transfer the amount, if any,
remaining in the Improvement Fund in accordance with written instructions from the City
Treasurer as directed by the City Council, which directions shall be pursuant to the Resolution
of Intention and to the applicable provisions of the 1913 Act, and the Improvement Fund shall be
closed.
Assessment Fund. There is established in the Fiscal Agent Agreement, as a separate
account to be held by the Fiscal Agent, the "Assessment Fund" to the credit of which the Fiscal
Agent shall deposit all Assessment Revenues received by the Fiscal Agent from the City except
for the prepayment of assessments. Upon receiving any Assessment Revenues from the
County, the City shall deduct therefrom the amounts included therein, or a portion thereof, for
payment of the City's expenses associated with the collection of the Assessment Revenues and
payment of the annual costs associated with the registration of the Bonds and the other duties
of the Fiscal Agent provided for herein, and transfer the remainder thereof to the Fiscal Agent
for deposit in the Assessment Fund. Moneys in the Assessment Fund shall be held by the
Fiscal Agent for the benefit of the City and the Owners of the Bonds, as provided in the Fiscal
Agent Agreement, shall be disbursed as provided therein and, pending disbursement, shall be
subject to a lien in favor of the Owners of the Bonds.
The Fiscal Agent shall establish and maintain within the Assessment Fund an
"Assessment Prepayment AccounY' for administration of prepayments of the Assessments.
Not later than the third Business Day preceding each Interest Payment Date, the Fiscal
Agent shall withdraw from the Assessment Fund and deposit in the Redemption Fund the
amount which is necessary to pay Debt Service on the Interest Payment Date.
On September 3 of each year, beginning on September 3, 2006, the amount on deposit
in the Assessment Fund, together with the amount then on deposit in the Redemption Fund,
shall not exceed the greater of (i) one year's earnings on such amounts, or (ii) one-twelfth
(1/12th) of Annual Debt Service for the then current Bond Year. If on September 3 of any year
the amount on deposit in the Assessment Fund, together with the amount then on deposit in the
Redemption Fund, exceeds the maximum amount allowable pursuant to the preceding sentence
and if on such September 3 the City shall have delivered to the Fiscal Agent an Officer's
Certificate containing the information required below in this paragraph, the excess shall be paid
by the Fiscal Agent to the City as directed by such Officer's Certificate. On September 3 of
each year, after any such excess amount has been transferred as hereinabove provided, the
amount on deposit in the Assessment Fund, together with the amount then on deposit in the
Redemption Fund, shall not exceed in the aggregate the greater of (i) one year's earnings
thereon, or (ii) one-twelfth (1/12th) of Annual Debt Service for the then current Bond Year. An
Officer's Certificate delivered by the City to the Fiscal Agent pursuant to this paragraph shall
specify the dollar amount of the excess determined pursuant to the first sentence of this
paragraph which the Fiscal Agent is to pay to the City.
-11-
Redemption Fund. There is established under the Fiscal Agent Agreement, as a
separate account to be held by the Fiscal Agent, the "Redemption Fund" to the credit of which
deposits shall be made as required by the provisions of such agreement. Moneys in the
Redemption Fund shall be held by the Fiscal Agent for the bene�t of the Owners of the Bonds,
shall be disbursed for the payment of the principal of, and interest and any premium on, the
Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of
the Owners of the Bonds.
On each Interest Payment Date, the Fiscal Agent shall withdraw from the Redemption
Fund and pay to the Owners of the Bonds the principal of and interest and any premium then
due and payable on the Bonds on the Interest Payment Date. If, on any Interest Payment Date,
there will be insufficient funds in the Redemption Fund to make the payments required, the
Fiscal Agent shall apply the available funds first to the payment of interest on the Bonds, and
then to the payment of principal due on the Bonds.
On September 3 of each year, beginning on September 3, 2006, the amount on deposit
in the Redemption Fund, together with the amount then on deposit in the Assessment Fund,
shall not exceed the greater of (i) one year's earnings on such amounts, or (ii) one-twelfth
(1/12th) of Annual Debt Service for the then current Bond Year. If on September 3 of any year
the amount on deposit in the Redemption Fund, together with the amount then on deposit in the
Assessment Fund, exceeds the maximum amount allowable pursuant to the preceding
sentence and if on such September 3 the Ciry shall have delivered to the Fiscal Agent an
Officer's Certificate containing the information required below in this paragraph, the excess shall
be paid by the Fiscal Agent to the City as directed by such Officer's Certificate. On September
3 of each year, after any such excess amount has been paid as hereinabove provided, the
amount on deposit in the Redemption Fund, together with the amount then on deposit in the
Assessment Fund, shall not exceed the greater of (i) one year's earnings thereon, or (ii) one-
twelfth (1/12th) of Annual Debt Service for the then current Bond Year.
Reserve Fund. Out of the proceeds of the sale of the Bonds, there is established under
the Fiscal Agent Agreement, as a separate account to be held by the Fiscal Agent, the "Reserve
Fund" to the credit of which a deposit of Bond proceeds shall be made, which deposit is equal to
the Reserve Requirement as of the Closing Date. The "Reserve Requirement" is defined in
the Fiscal Agent Agreement as, on any date in any Bond Year, the least of (i) 10 percent of the
proceeds of the sale of the Bonds (within the meaning of the Code), (ii) Maximum Annual Debt
Service; or (iii) 125 percent of average Annual Debt Service on the Bonds, as determined by the
City. Moneys in the Reserve Fund shall be held by the Fiscal Agent for the benefit of the
Owners of the Bonds as a reserve for the payment of the principal of and interest and any
premium on the Bonds and shall be subject to a lien in favor of the Owners of the Bonds.
Except as provided below, moneys in the Reserve Fund shall be used solely for the
purpose of paying the principal of and interest on the Bonds when due in the event that the
moneys in the Redemption Fund are insufficient therefor, and for deposit to the Rebate Fund as
required under the Fiscal Agent Agreement. Based upon a calculation provided to the Fiscal
Agent by the City, the Fiscal Agent shall withdraw funds from the Reserve Fund as necessary
for deposit in the Redemption Fund on or before the first day of March and September of each
year. Amounts transferred from the Reserve Fund to the Redemption Fund shall be restored by
the City from the collection of delinquent installments on the Assessments levied on parcels for
which such installments are delinquent, and penalties and interest thereon, whether by judicial
foreclosure proceedings or othennrise, as soon as is reasonably possible following the receipt by
the City of such delinquent installments, penalties and interest.
�iP�
Whenever an Assessment levied on a lot or parcel of property within the District is paid
off, the Fiscal Agent shall, upon receiving an Officer's Certificate regarding such Assessment,
transfer from the Reserve Fund to the Assessment Prepayment Account an amount equal to the
reduction in such Assessment determined pursuant to Section 8881 of the California Streets
and Highways Code, which amount shall be specified in the Officer's Certificate.
Whenever the balance in the Reserve Fund exceeds the amount required to redeem or
pay all of the then Outstanding Bonds, including interest accrued to the date of payment or
redemption and premium, if any, due upon redemption, the Fiscal Agent shall, upon receiving
written direction from the City, transfer money from the Reserve Fund to the Assessment
Prepayment Account and the Redemption Fund as provided in the next succeeding sentence to
redeem all of the Outstanding Bonds on the next succeeding Interest Payment Date. To effect
such redemption, the Fiscal Agent shall make the following transfers from the Reserve Fund: (i)
an amount equal to the principal and premium on the Bonds due upon redemption to the
Assessment Prepayment Account, and (ii) an amount equal to the interest thereon accrued to
the redemption date to the Redemption Fund. In the event that the amounts so transferred from
the Reserve Fund to the Assessment Prepayment Account and the Redemption Fund exceeds
the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve
Fund shall be transferred by the Fiscal Agent to the City to be applied as provided in Section
8885 of the California Streets and Highways Code.
All amounts remaining in the Reserve Fund in the year in which the last Assessment
Installments become due and payable shall be credited toward said Assessments as provided in
the Fiscal Agent Agreement.
Priority of Lien
Each Assessment (and any reassessment) and each installment thereof, and any
interest and penalties thereon, constitutes a lien against the parcel of land on which it was
imposed until the same is paid. Such a lien is subordinate to all fixed special assessment liens
previously imposed upon the same property, but has priority over all private liens and over all
fixed special assessment liens which may thereafter be created against the property. Such a
lien is co-equal to and independent of the lien for general property taxes and special taxes,
including, without limitation, special taxes created pursuant to the "Mello-Roos Community
Facilities Act of 1982" (being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of
the State of California), whenever created against the property.. There are currently no other
assessment liens on property in the District. See "THE IMPROVEMENT PROJECT — Allocation
of District CosY' for information on the election of certain property owners in the District to
increase the amount of their Assessment.
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THEIMPROVEMENT PROJECT
The Project
Proceeds of the Bonds will be used in part to pay for a portion of the cost of the
undergrounding of utility lines currently serving the properties (the "Project" as described below)
of benefit to the property within the District, as described in the Engineer's Report pertaining to
the District prepared by MuniFinancial, Temecula, California (the "Engineer's Report"). The
following description of the improvements to be funded in part by the Bonds is taken from the
Engineer's Report.
"the undergrounding of overhead utility lines, including trenching, installing the
new utility vaults needed to receive the conduits and transformers, laying the
conduit lines into the trenches, re-paving the street, switching service to the
underground system and removing the existing overhead poles and wires."
Each estimated property owner will have the option to have the utility connection to the
structure completed by the City's contractor and have the cost of such work included in the
property's assessment.
Cost of the Project
The total cost of construction of the Project is estimated in the Engineer's Report to be
$6,590,146.87. The City contemplates a contribution from the City's redevelopment agency in
the amount of 3,530,000, leaving a net project cost of $3,060,146.87.
The cost of the Project is summarized in the Engineer's Report as follows:
Description
Eligible Cost (Bid)
Contingency @ 10%
Engineering
Inspection Fees
City Administration
Total Eligible Costs
Total
$3,796,292.90
379,629.29
95,334.00
50,000.00
27,957.00
$4,349,213.19
Bond Cost (Bid)
Contingency @ 10%
Engineering
City Administration
Total Bond Costs
Private Cost (Bid)
Contingency @ 10%
SCE
Verizon
Total Private Costs
Total Project Cost Estimate
Less: RDA Reimbursement
Total Funded by Bond Proceeds
$651,703.53
65,170.35
41,066.00
12,043.00
$769,982.88
$263,748.00
26,374.80
815,853.00
364,975.00
$1,470,950.80
$6,590,146.87
($3,530,000.00)
$3,060,146.87
-14-
owners of parcels in the District elected to prepay the Assessment on their
property, reducing the amount of bonds that are required to be issued to finance the project. In
addition to the Assessment amount shown in the Engineer's Report, the City has allowed each
owner of property in the District to elect to increase the Assessment on such owner's property to
finance the additional cost to be incurred by each property owner to bring the undergrounded
utilities from the public right of way to the individual residence. Certain of the owners have
elected to do so, resulting in an increase in the amount of the Assessment on some parcels
ranging from $ to $ per parcel. See "Allocation of District Cost" below.
Also see "THE DISTRICT — Ownership and Value of Property in the DistricY' below.
Allocation of District Cost
The objective of the assessment spread is to distribute costs over the area within the
District in proportion to the special benefits that are derived by each parcel from the District
improvement work. The method of assessment is determined by an analysis of the benefit a
property receives rather than the specific cost of providing improvements to an individual
property. The benefit of undergrounding the overhead utility system is based on safety,
reliability, and visibility issues.
The District is made up of 124 single-family residential properties and 40 condominium
properties. The following information as to the method of apportionment is from the Engineer's
Report. The method of apportionment established for most districts formed under the 1913 Act
utilizes a weighted method of apportionment known as an Equivalent Benefit Unit (EBU)
methodology that uses the single-family home site as the basic unit of assessment. The
distribution of electricity, other utilities, and the underground wires and cables are constant no
matter what size lot or house is located on each parcel. Further, since all of the single-family
lots have the same ability to use the electricity and each single-family parcel benefits from the
improved safety, each single-family residential property has been assigned one EBU. Since
Condominium Parcels' utilities have already been undergrounded and each individual
Condominium Parcel does not have utilities poles residing on their properties, Condominium
Parcels only benefit from a portion of the improved aesthetics that are associated with the
neighborhood as a whole. Therefore, utilizing trip generation data outlined by the institute of
Transportation Engineers Informational Report, Seventh Edition, Condominium Parcels have
been assigned Equivalent Benefit Units based on the typical trip generation of condominiums
properties in relation to single-family residential properties. The EBUs assigned to each
Condominium Parcel are equal to the typical trip generation (0.6) times one-half of the improved
aesthetics benefit.
The cost of the Project was allocated among the 124 single-family residential properties
and 40 condominium properties within the District by the Assessment Engineer and the
allocation and methodology for such allocation resulted in an average original Assessment for
parcels in the District of $ for the single-family residential properties and $
for the condominium properties, with the per parcel Assessment ranging from $ , to
$ . owners of parcels in the District elected to prepay the Assessment on
their property, reducing the amount of bonds that are required to be issued to finance the
project. Additionally, the cost of the Project shown in the original Engineer's Report did not
include the cost to bring the utility connections from the public right of way to each individual
homeowner's house. Homeowners were given the option to have the work performed by the
City's contractor as an add-on to the City's contract for the Project and to add the contractor's
price (plus financing costs) to the Assessment on their parcel as an increase in the amount of
the Assessment. Several owners elected to increase their Assessments to finance the
-15-
connection, resulting in an
from $ to $
increase to finance conn
outstanding Assessments
$ to $
District" below.
increase in the amount of the Assessment on some parcels ranging
per parcei. After adjustment for prepayments and the optional
�ctions, the average Assessment for parcels in the District with
is $ , with the per parcel Assessment ranging from
. See "THE DISTRICT — Ownership and Value of Property in the
Construction of the Project
Construction of the Project will be performed by pursuant to a
contract with the City resulting from a bidding process. Construction is expected to commence
in 2006 and be completed within days of the start date.
Upon issuance of the Bonds, all of the moneys in the Improvement Fund will be used to pay for
the cost of the Project.
-16-
THE DISTRICT
The City of Palm Desert
The City of Palm Desert is located in the Coachelia Valley and is approximately midway
between the cities of Indio and Palm Springs, 117 miles east of Los Angeles, 118 miles
northeast of San Diego and 515 miles southeast of San Francisco. The City was incorporated
on November 26, 1973, as a general law city. In 1997 the City became a charter city. The
estimated City population as of January 1, 2006 was approximately 49,539. The City occupies
an area of 24.75 square miles. Elevation of the City is 243 feet and the mean temperature is
73.1 degrees. Except for the summers, the weather is mild and annual average rainfall is 3.38
inches. According to State Department of Finance estimates, the City population as of January
1, 2005 was 49,280. The City covers an area of 24.75 square miles. See "Appendix B— THE
CITY OF PALM DESERT GENERAL INFORMATION" for general demographic information on
the City and County.
Location of the District
The District is located entirely within the City and encompasses residential properties on
within portion of the City.
Property in the District
The District is comprised of 124 single-family residential properties and 40 condominium
properties. owners elected to prepay the assessment on their property resulting
in the bonds being initially secured by parcels. Most of the homes were constructed
prior to and all are currently occupied.
Certain of the homeowners in the District initiated proceedings to form the District and
levy the Assessment to finance the undergrounding of utilities in their neighborhood. The
owners of parcels out of the parcels being assessed submitted assessment
ballots to the City Clerk prior to the close of the public hearing on , 2006, and of
those ballots submitted, when weighted by the amount of the Assessments as directed by
Proposition 218, % were in favor of the Assessments.
Ownership and Value of Property in the District
Ownership. of the parcels within the District subject to unpaid Assessments are
owned by different individual homeowners, many who have owned their parcel in
excess of years.
Neither the Bonds nor the Assessments are personal obligations of any person or entrty
owning property within the Districf or having any interest in such property at the present time or
at any time in the future, including the homeowners. An owner of land in the District can elect at
any time to nof pay Assessments and allow the property to be foreclosed and in doing so, such
owner wil! incur no persona! liability for the Assessments.
Assessed Va/uation and Value to Lien Ratios. The valuation of real property in the
City is established by the Riverside County Assessor. Assessed valuations are reported at
100% of the full value of the property, as defined in Article XIIIA of the California Constitution.
-17-
Article XIIIA of the California Constitution defines "full cash value" as the appraised value as of
March 1, 1975, plus adjustments not to exceed 2% per year to reflect inflation, and requires
assessment of "full cash value" upon change of ownership or new construction. Accordingly,
the gross assessed valuation presented in this Official Statement may not necessarily be
representative of the actual market value of certain property in the District, as real property in
the Palm Desert area has often increased in market value by an amount in excess of 2% per
year.
The City has obtained the 2005-06 assessed valuation of the parcels within the
District securing the Bonds from the County, which assessed valuation ranges from
$ to $ per parcel and collectively is $ .
In addition to the $ District original assessment amount shown in the
Engineer's Report, the City has allowed each owner of property in the District to elect to
increase the assessment on such owner's property to finance the additional cost to be incurred
by each property owner to bring the undergrounded utilities from the public right of way to the
individual residence. As of a result of such election, several properties have increased their
assessment and, including such increases and after deducting Assessments that have been
prepaid, the total amount of Assessments to be financed by the Bonds is $ . See
"THE IMPROVEMENT PROJECT — Allocation of District Cost" above. The following table
summarizes the value to lien ratio for parcels in the District, based on County assessed
valuation and the outstanding assessments, after the elections to increase have been made and
after prepayments of assessments made prior to issuance of bonds.
Value to Lisn Ratio
Greater than 25:1
Greater than 10:1 but Less than 25:1
Greater than 5:1 but Less than 10:1
Greater than 3:1 but Less than 5:1
Less than 3:1
Aggregate Value to Lien
No. of FY04-05 Assessment Average Value
Parcels Assessed Value Lien to Lien
Economic and other factors beyond the property owners' control, such as economic
recession, deflation of land values, financial difficulty or bankruptcy by one or more property
owners, or the complete or partial destruction of taxable property caused by, among other
possibilities, earthquake, flood, fire or other natural disaster, could cause a reduction in the
assessed value within the District.
In comparing the aggregate value of the real property within the District and the principal
amount of the Bonds, it should be noted that only the real property upon which there is a
delinquent Assessment can be foreclosed upon, and the real property within the District cannot
be foreclosed upon as a whole to pay delinquent Assessments of the owners of such parcels
within the District unless all of the property is subject to a delinquent Assessment. In any event,
individual parcels may be foreclosed upon to pay delinquent installments of the assessments
levied against such parcels. The principal amount of the Bonds will not be allocated pro-rata
among the parcels within the District; rather, the total Assessment for the District has been
allocated among the parcels within the District according to the Engineer's Report.
-18-
Other public agencies whose boundaries overiap those of the District could, without the
consent of the City and in certain cases without the consent of the owners of the land within the
District, impose additional taxes or assessment liens on the land within the District. The
purpose would be to finance additional regional or local public improvements or services. The
lien created on the land within the District through the levy of such additional taxes or
assessments may be on a parity with the lien of the Assessment. See "THE IMPROVEMENT
PROJECT — Allocation of District Cost." There are currently no other assessment liens on
property in the District.
Recenf Sa/es. In considering the estimates of value evidenced by the County assessed
valuation of property in the District subject to unpaid Assessments, it should be noted that the
County assessed valuation is based upon an amount established when a property is sold or
improved and is allowed to be increased by an amount not in excess of 2% per year. Assessed
values determined by the County Assessor are often less than actual market values, particularly
for properties that have not transferred ownership for many years. Likewise, in a declining real
estate market the assessed valuation can be more than actual market value. Accordingly,
County assessed values often do not reflect the amount that a propety might sell for or would be
bid for at a foreclosure sale. See "SPECIAL RISK FACTORS - Land Values."
SPECIAL RISK FACTORS
General
Under the provisions of the 1915 Act, Assessment installments, from which funds for the
payment of annual installments of principal of and interest on the Bonds are derived, will be
billed to properties against which there are unpaid assessments on the regular property tax bills
sent to owners of such properties. Such assessment insfallments are due and payable, and
bear the same penalties and interest for non-payment, as do regular property tax installments.
Therefore, the unwillingness or inability of a property owner to pay regular property tax bills as
evidenced by property tax delinquencies may also indicate an unwillingness or inability to make
regular property tax payments and assessment installment payments in the future.
In order to pay debt service on the Bonds, it is necessary that unpaid installments of
assessments on land within the District are paid in a timely manner. Should the installments not
be paid on time, the City has established a Reserve Fund which is required to be maintained in
the amount of the Reserve Requirement, to cover delinquencies in the payment of
assessments. The assessments are secured by a lien on the parcels of land and the City can
institute foreclosure proceedings to sell land in the District with delinquent installments for the
amount of such delinquent installments in order to obtain funds to pay debt service on the
Bonds.
Failure by owners of the parcels to pay installments of assessments when due, depletion
of the Reserve Fund, or the inability of the City to sell parcels which have been subject to
foreclosure proceedings for amounts sufficient to cover the delinquent installments of
assessments levied against such parcels may result in the inability of the City to make full or
punctual payments of debt service on the Bonds, and Bondowners would therefore be adversely
affected.
-19-
The Bonds are not secured by the general taxing power of the City, the County, or the
State or any political subdivision of the State, and neither the City, the County, nor the State nor
any political subdivision of the State has pledged its full faith and credit for the payment thereof.
Unpaid assessments do not constitute a personal indebtedness of the owners of the lots
and parcels within the District. There is no assurance the owners will be able to pay the
assessment installments or that they will pay such installments even though financially able to
do so.
Limited Obligation of the City Upon Delinquency
If a delinquency occurs in the payment of any assessment installment, the City has a
duty only to cause the transfer into the Redemption Fund the amount of the delinquency out of
the Reserve Fund and to undertake judicial foreclosure proceedings to recover such
delinquencies. This duty of the City is continuing during the period of delinquency, until
reinstatement, redemption, or sale of the delinquent property. There is no assurance that funds
will be available for this purpose and if, during the period of delinquency, there are insufficient
funds in the Reserve Fund, a delay may occur in payments to the owners of the Bonds. If there
are additional delinquencies after exhaustion of funds in the Reserve Fund, the City is not
obligated to transfer into the applicable Redemption Fund the amount of such delinquency out
of any other available moneys of the City. The City's legal responsibilities with respect to
such delinquent installments are limited to advancing the amount thereof solely from any
available moneys in the Reserve Fund and to undertaking judicial forectosure
proceedings to recover such delinquencies. This duty of the City to advance funds
continues during the period of delinquency only to the extent of funds available from the
Reserve Fund, until reinstatement, redemption, or sale of the delinquent property. tn
accordance with Section 8769(b) of the 1915 Act, the City has determined that it will not
be obligated to advance funds from its treasury to cure any deficiency in the Redemption
Fund.
Unavailability of City Funds
As discussed in the section "SECURITY FOR THE BONDS," if a delinquency occurs in
the payment of any assessment, the City has the duty to cause the transfer of the amount of
such delinquent assessment from the Reserve Fund into the Redemption Fund. If there are
additional delinquencies after exhaustion of the Reserve Fund, the City has no direct or
contingent liability for payment of the Bonds in the event of default in the payment of an
assessment installment but does have the duty to undertake judicial foreclosure as provided in
the Fiscal Agent Agreement.
Bankruptcy and Foreclosure
The payment of property owners' assessments and the ability of the City to foreclose the
lien of a delinquent unpaid assessment pursuant to the foreclosure covenant, may be limited by
bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the
State relating to judicial foreclosure. See "SECURITY FOR THE BONDS."
The various legal opinions to be delivered concurrently with the delivery of the Bonds
(including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of
the various legal remedies, by bankruptcy, reorganization, insolvency or other similar laws
affecting the rights of creditors generally.
-20-
Although bankruptcy proceedings would not cause the assessments to become
extinguished, bankruptcy of a property owner could result in a delay in procuring Superior Court
foreclosure proceedings. Such delay would increase the likelihood of a delay or default in
payment of the principal of, and interest on, the Bonds and the possibility of delinquent tax
installments not being paid in full.
Land Value
The value of land within the District is an important factor in determining the investment
quality of the Bonds. If a property owner defaults in the payment of Assessment installments,
the City's only remedy is to commence foreclosure proceedings in an attempt to obtain funds to
pay the delinquent assessment.
The property values may be affected by changes in the general economic conditions,
fluctuations in the real estate market, and other factors. Prospective purchasers of the Bonds
should not assume that the property within the District could be sold for the County assessed
value at a foreclosure sale for delinquent Assessments.
No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the 8onds in the
event of a payment default or other default under the terms of the Bonds.
Earthquakes and Natural Disasters
There are several earthquake faults in southem California that potentially could result in
damage to homes, commercial buildings, roads, and property within the District in the event of
an earthquake. Earthquake insurance is available, but many property owners elect not to
purchase it. Damage or destruction to property within the District caused by earthquake or
other natural disasters could result in the failure of the owner of property within the District to
pay the assessment and could result in a significant reduction in the value of property within the
District with no source of funds for reconstruction.
Absence of Market for the Bonds
No application has been made for a credit rating for the Bonds, and it is not known
whether a credit rating could be secured either now or in the future for the Bonds. There can be
no assurance that there will ever be a secondary market for purchase or sale of the Bonds, and
from time to time there may be no market for them, depending upon prevailing market
conditions, the �nancial condition or market position of firms who may make the secondary
market and other factors. The Bonds should therefore be considered long-term investments in
which funds are committed to maturity, subject to redemption prior to maturity as described
herein.
-21-
Proposition 218
On November 5, 1996, the voters of the State approved Proposition 218, the so-called
"Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the State
Constitution, which contain a number of provisions affecting the ability to the City to levy and
collect both existing and future taxes, assessments and property related fees and charges.
Article XIIID requires that, beginning July 1, 1997, the proceedings for the levy of any
assessment by the City (including, if applicable, any increase in such assessment or any
supplemental assessment) must be conducted in conformity with the provisions of Section 4 of
Article XIIID. The City has conducted its proceedings with respect to the levy of the assessment
within the District in a manner which it reasonably believes complies with the new requirements.
Article XIIIC removes limitations on the initiative power in matters of local taxes,
assessments, fees and charges. Article XIIIC does not define the term "assessment," and it is
unclear whether this term is intended to include assessments levied under the Act. In the case
of the unpaid assessments which are pledged as security for payment of the Bonds, the laws of
the State provide a mandatory, statutory duty of the City and the County Auditor to post
installments on account of the unpaid assessments to the property tax roll of the County each
year while any of the Bonds are outstanding, in amounts equa! to the principal of and interest on
the Bonds coming due in the succeeding calendar year.
The interpretation and application of Proposition 218 will ultimately be determined by the
courts with respect to a number of the matters discussed above, and it is not possible at this
time 10 predict with certainly the outcome of such determination.
CONCLUDING INFORMATION
Enforceability of Remedies
The remedies available io the Fiscal Agent, the City, or the Owners of the Bonds upon
any nonpayment of assessment installments are in many respects dependent upon judicial
actions, which are often subject to discretion and delay. Under existing constitutional and
statutory law and judicial decisions, including specifically Title 11 of the United States Code (the
federal bankruptcy code) and relevant banking and insurance law, the remedies provided in the
1915 Act and the 1913 Act may not be readily available or may be limited. The various legal
opinions to be delivered concurrently with the delivery of the Bonds, including Bond Counsel's
approving legal opinion, will be qualified as to the enforceability of the various legal instruments
by limitations imposed by bankruptcy, reorganization, insolvency, or other similar laws affecting
the rights of creditors generally, to the application of equitable principles, to the exercise of
judicial discretion in appropriate cases, and to the limitations on legal remedies in the State of
California.
Absence of Material Litigation
There is no controversy or litigation now pending against the City, or, to the knowledge
of its o�cers, threatened, restraining, or enjoining the issuance, sale, execution, or delivery of
the Bonds or in any way contesting or affecting the validity of the Bonds.
-22-
Certain Information Concerning the City
Certain general information concerning the City is included herein as APPENDIX D
hereto. THE GENERAL FUND OF THE CITY IS NOT LIABLE FOR THE PAYMENT OF THE
BONDS OR THE INTEREST THEREON, AND THE TAXING POWER OF THE CITY IS NOT
PLEDGED FOR THE PAYMENT OF THE BONDS OR THE INTEREST THEREON.
Tax Matters
In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond
Counsel, under existing law interest on the Bonds is excluded from gross income for federal
income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended
(the "Code"), and is not an item of tax preference for purposes of the federal alternative
minimum tax imposed on individuals and corporations. Bond Counsel will express no opinion
as to any other federal tax consequences regarding the Bonds.
The opinion on federal tax matters will be based on and will assume the accuracy of
certain representations and certifications, and continuing compfiance with certain covenants, of
the District that are intended to assure the foregoing, including that the Bonds are and will
remain obligations the interest on which is excluded from gross income for federal income tax
purposes. Bond Counsel will not independently verify the accuracy of those representations
and certifications.
The Code prescribes a number of qualifications and conditions for the interest on state
and local government obligations to be and to remain excluded from gross income fo� federal
income tax purposes. Some of these qualifications and conditions require future or continued
compfiance after issuance of the obligations for the interest to be and to continue to be excluded
from the date of issuance. Noncompliance with these qualifications and conditions by the
District may cause the interest on the Bonds to be included in gross income for federal income
tax purposes retroactively to the date of issuance of the Bonds. The District has covenanted to
take the actions required of it for the interest on the Bonds to be and to remain excluded from
gross income for federal income tax purposes, and not to take any actions that would adversely
affect that exclusion.
Under the Code, a portion of the interest on the Bonds earned by certain corporations
may be subject to a corporate alternative minimum tax. In addition, interest on the Bonds may
be subject to a branch profits tax imposed on certain foreign corporations doing business in the
United States and to a tax imposed on excess net passive income of certain S corporations.
Under the Code, the exclusion of interest from gross income for federal income tax
purposes may have certain adverse federal income tax consequences on items of income,
deduction or credit for certain taxpayers, including financial institutions, certain insurance
companies, recipients of Social Security and Railroad Retirement benefits, those that are
deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations, and
individuals otherwise eligible for the earned income tax credit. The applicability and extent of
these and other tax consequences will depend upon the particular tax status or other tax items
of the owners of the Bonds. Bond Counsel will express no opinion regarding those
consequences.
-23-
Any excess of the stated redemption price at maturity of the Bonds over the initial
offering price to the public of the Bonds set forth on the inside cover of this Official Statement is
"original issue discount." Such original issue discount accruing on a Bond is treated as interest
excluded from the gross income of the owner thereof for federal income tax purposes and
exempt from California personal income tax. Original issue discount on any Bond purchased at
such initial offering price and pursuant to such initial offering will accrue on a semiannual basis
over the term of the Bond on the basis of a constant yield method and, within each semiannual
period, will accrue on a ratable daily basis. The amount of original issue discount on such a
Bond accruing during each period is added to the adjusted basis of such Bond to determine
taxable gain upon disposition (including sale, redemption or payment on maturity) of such Bond.
The Code includes certain provisions relating to the accrual of original issue discount in the
case of purchasers of the Bonds who purchase the Bonds other than at the initial offering price
and pursuant to the initial offering. Any person considering purchasing a Bond should consult
his or her own tax advisors with respect to the tax consequences of ownership of bonds with
original issue discount, including the treatment of purchasers who do not purchase in the
original offering and the original offering price, the allowance of a deduction for any loss on a
sale or other disposition, and the treatment of accrued original issue discount on such bonds
under federal individual and corporate alterative minimum taxes.
If the Bonds were offered and sold to the public at a price in excess of their stated
redemption price (the principal amount) at maturity, that excess constitutes "premium." For
federal income tax purposes, that premium is amortized over the period to maturity of the
Bonds, based on the yield to maturity of the Bonds, compounded semiannually. No portion of
that premium is deductible by the owner of a Bond. For purposes of determining the owner's
gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a
8ond, the owner's tax basis in the Bond is reduced by the amount of premium that accrues
during the period of ownership. As a result, an owner may realize taxable gain for federal
income tax purposes from the sale or other disposition of a Bond for an amount equal to or less
than the amount paid by the owner for that Bond. A purchaser of a Bond in the initial public
offering at the price for that Bond stated on the cover of this Official Statement who holds that
Bond to maturity will realize no gain or loss upon the retirement of that Bond. Owners of the
Bonds should consult their own tax advisers as to the determination for federal income tax
purposes of the amount of premium properly accruable in any period with respect to the Bonds
and as to other federal tax consequences and the treatment of premium for purposes of state
and local taxes on, or based on, income.
Purchasers of the Bonds at other than their original issuance at the respective prices
indicated on the cover of this Officiat Statement should consult their own tax advisers regarding
other tax considerations such as the consequences of market discount.
�
A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix
-24-
Continuing Disclosure
The City has covenanted for the benefit of owners of the Bonds to provide certain
financial information and operating data relating to the District by not later than the next January
15�'' after the end of the City's fiscal year (presently June 30) in each year (the "Annual
Report") commencing with its report for the 2005-06 fiscal year (due January 15, 2007) and to
provide notices of the occurrence of certain enumerated events.
The City Annual Report will be filed with each Nationally Recognized Municipal
Securities Information Repository. The notices of material events will be filed with the Municipal
Securities Rulemaking Board. These covenants have been made in order to assist the
Underwriter in complying with Securities Exchange Commission Rule 15c2-12(b)(5) (the
"Rule"). The specific nature of the information to be contained in the Annual Report or the
notices of material events is summarized in "APPENDIX D— FORM OF CONTINUING
DISCLOSURE UNDERTAKING."
The City has had no instance in the previous five years in which it failed to comply in all
material respects with any previous continuing disclosure obligation under the Rule.
Approval of Legality
The validity of the Bonds and certain other legal matters are subject to the approving
opinion of Richards, Watson 8 Gershon, A Professional Law Corporation, Bond Counsel. A
complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX C
hereto and is printed on the Bonds. Bond Counsel undertakes no responsibility for the
accuracy, completeness, or fairness of this Official Statement. Certain matters will be passed
upon for the City by the City Attorney of the City.
Underwriting
Wedbush Morgan Securities (the "Underwriter") has agreed to purchase the Bonds if
and when issued pursuant to a contract of purchase by and between the City and the
Underwriter for $ ,(representing the aggregate principal amount of the Bonds
less an underwriter's discount of $ ). The purchase contract pursuant to which
the Underwriter is purchasing the Bonds provides that the Underwriter will purchase all of the
Bonds if any are purchased. The obligation of the Underwriter to make such purchase is
subject to certain terms and conditions set forth in such contract of purchase.
The Underwriter may offer and sell the Bonds to certain dealers and others at prices
different from the prices stated on the cover page of this Official Statement. The offering prices
may be changed from time to time by the Underwriter.
-25-
Financial Advisor
The City has retained Del Rio Advisars, LLC, of Modesto, California, as financial advisor
(the "Financial Advisor") in connection with the issuance of the Bonds. The Financial Advisor
is not obligated to undertake, and has not undertaken to make, an independent verification or
assume responsibility for the accuracy, completeness, or fairness of the information contained
in this Official Statement. Del Rio Advisors, LLC, is an independent financial advisory firm and
is not engaged in the business of underwriting, trading or distributing municipal securities or
other public securities.
Miscellaneous
The foregoing summaries or descriptions of provisions of the Bonds, the Fiscal Agent
Agreement, and all references to other materials not purporting to be quoted in full are only brief
outlines of some of the provisions thereof and do not purport to summarize or describe all of the
provisions thereof, and reference is made to said documents for full and complete statements of
their provisions. The appendices hereto are a part of this Official Statement.
Any statements in this Official Statement involving matters of opinion, whether or not
expressly so stated, are intended as such and not as representations of fact. The Official
Statement is not to be construed as a contract or agreement between the Ciry and the
purchasers or Owners of any of the Bonds.
City.
The execution and delivery of this Official Statement has been duly authorized by the
CITY OF PALM DESERT
��
City Manager
-26-
APPENDIX A
ENGINEER'S REPORT
APPENDIX B
CITY OF PALM DESERT GENERAL INFORMATION
The following information concerning the City of Palm Desert, the County of Riverside
and surrounding areas is included only for the purpose of supplying general information
regarding the community. The Bond and the Loan are not an obligation of the City.
The following information concerning the City and surrounding areas are included only
for the purpose of supplying general information regarding the community. The Local
Obligations and the Bonds are not a debt of the City, the State, or any of its political
subdivisions and neither said City, said State, nor any of its political subdivisions is liable
therefor. See the section herein entitled "SECURITY FOR THE BONDS AND SOURCES OF
PAYMENT THEREFOR."
General Description and Background
The City of Palm Desert (the "City") is located in the Coachella Valley and is
approximately midway between the cities of Indio and Palm Springs, 117 miles east of Los
Angeles, 118 miles northeast of San Diego and 515 miles southeast of San Francisco. The City
was incorporated on November 26, 1973, as a general law city. In 1997 the City became a
charter city.
Elevation of the City is 243 feet and the mean temperature is 73.1 degrees. Except for
the summers, the weather is mild and annual average rainfall is 3.38 inches. According to State
Department of Finance estimates, the City population as of January 1, 2006 was 49,280. The
City covers an area of 24.75 square miles.
Population
The following sets forth the City, the County and the State population estimates as of
January 1 for the years 2002 to 2006:
CITY OF PALM DESERT, RIVERSIDE COUNTY AND STA7E OF CALIFORNIA
Estimated Population
Year
(January 1)
2002
2003
2004
2006
2006
City of
Palm Desert
43,129
44,490
45,604
49,595
49,539
Riverside
Coun
1,654,220
1,726,754
1,807,624
1,888,311
1,953,330
State of
California
35,088,671
35,691,442
36,245,016
36,72$,196
37,172,015
Source: State of California Department of Finance, Demographic Research Unit.
B-1
Commerce
Total taxable sales reported during the first and second quarters of calendar year 2005
in the City were reported to be $772,462,000, a 7.2% increase over the total taxable sales of
$720,661,000 reported during the first and second quarters of calendar year 2004. The number
of establishments selling merchandise subject to sales tax and the valuation of taxable
transactions in the City is presented in the following table. Annual figures are not yet available
for 2005.
CITY OF PALM DESERT
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in thousands)
Retail Stores
Number
of Permits
2000 1,376
2001 1,529
2002 1,532
2003 1,538
2004 1,684
Taxable %
Transactions Chanqe
$1,020,025 —
1,015,932 -0.4%
1,019,327 0.3%
1,103,689 8.3%
1,228,411 11.3%
_ _ Total All Outlets __
Number Taxable %
of Permits Transactions Change
2,627 $1,217,986 --
2,833 1,211,069 -0.6%
2,979 1,209,385 -0.1%
3,146 1,296,730 7.2%
3,254 1,433,296 10.5%
Source: Calrfomia State Board of Equalization, Taxable Sales in California (Sales & Use TaxJ.
Total taxable sales during the �rst and second quarters of calendar year 2005 in the
County were reported to be $13,516,512,000, an 11.6% increase over the total taxable sales of
$12,107,280,000 reported during the first and second quarters of calendar year 2004. The table
below shows the number of establishments selling merchandise subject to sales tax and the
valuation of taxable transactions within the County for the last five years for which data is
available. Annual figures for 2005 are not yet available.
COUNTY OF RIVERSIDE
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in thousands)
Retail Stores
Number
of Permits
2000 16, 309
2001 17,403
2002 17, 646
2003 18,300
2004 20,642
Taxable %
Transactions Change
$12,190,474 --
13,173,281 8.1 %
14,250,733 8.2%
16,030,952 12.5%
18,715,949 16.7%
Total All Outlets
Number Taxable %
of Permits Transactions Change
36,117 $16,979,449 --
38,011 18,231,555 7.4%
38,767 19,498,994 7.0%
40,833 21,709,135 11.3%
42,826 25,237,148 16.3%
Source: California State Board of Equalization, Taxable Sa/es in Califomia (Sales & Use Tax).
B-2
Employment and Industry
The City is included in the Riverside-San Bernardino labor market area. The
unemployment rate in the Riverside-San Bernardino MSA was 4.3 percent in April 2006. This
compares with an unadjusted unemployment rate of 4.8 percent for California and 4.7 percent
for the nation during the same period. The unemployment rate was 4.2 percent for Riverside
County and 4.3 percent in San Bernardino County.
The following table shows the average annual estimated numbers of wage and salary
workers by industry. Does not include proprietors, the self-employed, unpaid volunteers or
family workers, domestic workers in households, and persons in labor management disputes.
RIVERSIDE-SAN BERNARDINO METROPOLITAN STATISTICAL AREA
(RIVERSIDE COUNTY)
Civilian Labor Force, Employment and Unemployment
(Annual Averages)
Civilian Labor Force �'�
Employment
Unemployment
Unemployment Rate
Waqe and Salary Emolovment: �2�
Agriculture
Natural Resources and Mining
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation, Warehousing and Utilities
Information
Finance and Insurance
Real Estate and Rental and Leasing
Professional and Business Services
Educational and Heatth Services
Leisure and Hospitality
Other Services
Federal Govemment
State Govemment
Local Government
Total All Industries �3�
2001
1,562,300
1,484,100
78,200
5.0%
20,900
1,200
88,400
118,600
41,600
132,200
45,600
14,600
22,900
15,300
101,700
106,000
104,400
37,100
16,900
25,800
157.600
1,050,700
2002
1,639,700
1,543,400
96,300
5.9%
20,300
1,200
90,900
115,400
41,900
137, 500
46,800
14,100
23, 500
15,900
106,800
112,400
107,200
38,100
16,900
26,600
169.300
1,084,800
2003
1,688,300
1,588,700
99,600
5.9%
20, 300
1,200
99,000
116,100
43,500
142,700
50,100
13,900
25,700
16,900
115,400
115,800
109,000
38,400
17,000
26, 600
167,900
1,119,400
2004
1,650, 500
1,556,100
94,400
5.7%
18,700
1,200
111,800
120,100
45, 600
153,800
55, 500
14,000
28,000
17,700
125,500
118,400
116,700
39,300
17,300
26,500
168.700
1,178,700
2005
1,714,000
1,627,700
86,30�
5.0%
18,200
1,300
122,200
120,200
49,200
165,000
59,700
14,400
29,900
18,700
132,500
120,000
122,400
41,200
18,600
27,000
174, 800
1,235,400
(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household
domestic workers, and workers on strike.
{2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household
domestic workers, and workers on strike.
(3) Totals may not add due to rounding.
Source: State of California Employment Development Deparfinent.
B-3
Major Employers
The following table lists the largest employers within the County, listed alphabetically:
COUNTY OF RIVERSIDE
Major Employers
(As of January 2006)
Emolover Name
C A State Transportation
Casino Morongo
Chase Manhattan Mortgage Corp
Crossroads Truck Dismantling
Desert Regional Medical Ctr
Eisenhower Medical Ctr
Guidant Corp
Jw Marriott Desert Springs Rst
La Quinta Resort & Club
Labtechniques
Mountain & Dunes Golf Courses
Oasis Distributing
Parkview Community Hospital
Pechanga Resort 8� Casino
Riverside Community College
Riverside Community Hospital
Riverside County Regional Med
Signatures
Spa Resort Casino
Starcrest
Starcrest Products Of Ca
Sun World Intl Inc
University Of Califomia
Valley Health System
Watson Pharmaceuticals Inc
Location
Lake Elsinore
Cabazon
Moreno Valley
Mira Loma
Palm Springs
Rancho Mirage
Temecula
Palm Desert
La Quinta
Rancho Mirage
La Quinta
Thermal
Riverside
Temecula
Riverside
Riverside
Moreno Valley
Perris
Palm Springs
Perris
Perris
Coachella
Riverside
Hemet
Corona
Indust
Government O�ces-State
Tourist Attractions
Real Estate Loans
Automobile Dismantling/Recycling (Who!)
Hospitals
Clinics
Physicians & Surgeons Equip & Supls-Mfrs
Hotels & Motels
Hotels 8� Motels
Laboratories-Medical
Golf Courses-Private
Fruits 8� Vegetables-Growers & Shippers
Hospitals
Casinos
Schools-Universities & Colleges Academic
Hospitals
Hospitals
Mail Order & Catalog Shopping
Casinos
Mail Order & Catalog Shopping
Mail Order & Catalog Shopping
Fruits 8 Vegetables-Growers 8� Shippers
Schools-Universities & Colleges Academic
Hospitals
Drug Millers
Source: Califomia Employment Development Department, extracted from The America's Labor Market lnformation
System (ALMfSJ Employer Database.
B-4
Construction Activity
The following is a five year summary of the valuation of building permits issued in the
City and the County.
CITY OF PALM DESERT
Building Permit Valuation
(Valuation in Thousands of Dollars�
Permit Valuation
New Single-family
New Multi-family
Res. Alterations/Additions
Total Residential
New Commercial
New Industrial
New Other
Com. Alterations/Additions
Total Nonresidential
New Dwel{inq Units
Single Family
Multiple Family
TOTAL
200�
$82,145.0
28,885.0
9.043.2
120,073.2
11,177.0
5,438.4
1,264.2
16.439.4
36, 319.0
255
411
666
Zooz
$60,526.9
27,001.6
12.957.5
10�,486.0
14,707.5
3,012.0
1,160.0
22.534.2
41,413.7
221
310
531
2003
$65,066.1
11, 992.5
9.328.9
86,387.6
7,272.6
712.6
1,249.8
10.888.0
20,123.0
237
101
338
Source: Gonstruction Industry Research BoaM, Bui/ding Permit Summary.
COUNTY OF RIVERSIDE
Building Permit Valuation
(Valuation in Thousands of Dollars)
Permit Valuation
New Single-family
New Multi-family
Res. Alterations/Additions
Total Residential
New Commercial
New Industrial
New Other
Com. Alterations/Additions
Total Nonresidential
New Dwellina Units
Single Family
Multiple Family
TOTAL
2001
$3,051,190.4
174,628.0
70.849.7
3,296,668.2
287,068.6
74,766.3
152,854.0
143, 351.7
658,040.6
16, 556
2.458
19,014
2002
$3,670,371.4
165,413.0
87,842.9
3,923,627.4
297,963.6
80,881.6
187,510.6
174.785.7
741,141.5
20,591
2.073
22,664
2003
$4,665,675.7
406,483.0
106.855.8
5,179,014.5
360, 707.4
112,706.6
261,793.6
173,165.5
908, 373.1
25,137
5.224
30,361
Source: Construction lndustry Research Board, Building Permit Summary.
B-5
2004
$81,436.8
11,198.0
11,103.3
103,738.2
19,863.5
3,005.1
7,896.1
12.347.4
43,112.1
325
111
436
2004
$5,997,513.2
404,615.9
135.176.6
6,537,305.6
580,057.8
203,311.9
334,001.0
222,495.5
1,339,866.1
29,478
4.748
34,226
2005
$46,917.6
17,553.1
13.660.2
78,130.9
60,005.2
13,495.5
5,278.0
13.756.7
92,535.4
100
135
235
2005
$6,243,791.7
407,432.1
164.312.5
6,815,536.3
552,666.9
120,367.6
344,7032
274,337.7
1,292,075.4
29,994
4.140
34,134
Effective Buying Income
"Effective Buying Income" is defined as personal income less personal tax and nontax
payments, a number often referred to as "disposable" or "after-tax" income. Personal income is
the aggregate of wages and salaries, other labor-related income (such as employer
contributions to private pension funds), proprietor's income, rental income (which includes
imputed rental income of owner-occupants of non-farm dwellings), dividends paid by
corporations, interest income from all sources, and transfer payments (such as pensions and
welfare assistance). Deducted from this total are personal taxes {federal, state and local},
nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as
"disposable personal income."
CITY OF PALM DESERT; COUNTY OF RIVERSIDE
Effective Buying Income
2000 through 2004
Year Area
2000 City of Palm Desert
Riverside County
California
United States
2001 City of Palm Desert
Riverside County
California
United States
2002 City of Palm Desert
Riverside County
California
United States
2003 City of Palm Desert
Riverside County
California
United States
2004 City of Palm Desert
Riverside County
California
United States
Total Effective
Buying Income
(000's Omitted)
$1,109,327
25,144,120
652,190,282
5,230,824,904
$1,008,568
23,617,301
650,521,407
5,303,481,498
$1,184,128
25,180,040
847,879,427
5,340,682,818
$1,238,323
27,623,743
674,721,020
5,466,880,00$
Median Household
Effective Buying
Income
$46,046
39,293
44,464
39,129
$37,975
37,480
43,532
38,365
$42,299
38,691
42,484
38,035
$41,699
39,321
42,924
38,201
$1,295,785
29,468,208
705,10$,410
5,692,909,567
Source: Sales & Marketing Management Survey of Buying Power.
$42, 769
40,275
43,915
39,324
�
Utilities Services
Water is supplied to the City by the Coachella Valley Water District. Sewage treatment
and disposal is provided by the Coachella Valley Water District. Southern California Gas
Company supplies natural gas to the City and electric power is provided by the Southern
California Edison Company. Telephone service is available through Verizon. Cable television
services are provided by Time Warner.
Transportation
Inter-City transportation is provided by Greyhound Bus which provides service from its
connection points in the City to its lines located outside of the City in addition to the community
owned and operated Sunline Bus System which provides service throughout the entire
Coachella Valley. IntraCity transportation is provided by Tel-a-Ride and local taxi firms. The
City's central highways are California Highway 111 and 74 which connect to US Interstate 10
and to California Highway 63 and 86.
A full service airport is located in Palm Springs, twelve miles northwest of the City, with
approximately seven carriers providing service. The airport has an 8,500-foot runway and
general aviation facilities. There is also a private airport in Bermuda Dunes, eight mifes
northeast of the City. In addition, shipping is provided by numerous truck carriers which have
overnight service to Los Angeles, San Francisco, San Diego and Phoenix. Rail transportation is
provided by the Southern Pacific Railroad located in Indio, 10 miles east of the City, and by
Amtrak, which has two stations located in the Coachella Valley.
Community Service Facilities
The City provides both police and fire protection through contracts with the County of
Riverside . Educational services are provided through the Desert Sands Unified School District.
The College of Desert is the Coachella Valley's Community College and is located in Palm
Desert. A satellite campus of Cal State University, San Bernardino is located on the College of
the Desert Campus. Cultural and recreational facilities include sixteen churches. The City has
library services provided by the Riverside County Public Library System. The City has one
public library located on the College of the Desert campus. This 43,000 square foot library is
jointly used by the College of the Desert and the public library system.
B-7
APPENDIX C
FORM OF BOND COUNSEL OPINION
C-1
APPENDIX D
FORM OF CONTINUING DISCLOSURE UNDERTAKING
CONTINUING DISCLOSURE AGREEMENT
(City)
THIS CONTINUING DISCLOSURE AGREEMENT (the "Disclosure AgreemenY') is
dated as of , 2006, is by and between the City of Palm Desert, a charter city,
corporate and politic, organized and existing under and by virtue of the laws of the State of
California (the "Issuer" or the "City"), and MuniFinancial, Temecula, California, in its capacity as
Dissemination Agent (the "Dissemination Agent").
WITNESSETH:
WHEREAS, pursuant to a Fiscal Agent Agreement dated as of July 1, 2006 (the
"Indenture") by and between the City and Wells Fargo Bank, National Association, as the Fiscal
Agent, the City has issued its City of Palm Desert Highlands Undergrounding Assessment
District No. 04-01 Special Tax Bonds Series 2006A (the "Bonds"), in the aggregate principal
amount of $ ; and
WHEREAS, this Disclosure Agreement is being executed and delivered by the City and
the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and
in order to assist the Participating Underwriter of the Bonds in complying with Securities and
Exchange Commission Rule 15c2-12(b)(5);
NOW, THEREFORE, for and in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
SECTION 1. Definitions. In addition to the definitions set forth in the Agreement, which
apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this
Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and as
described in, Sections 2 and 3 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly,
to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons
holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the
owner of any Bonds for federal income tax purposes.
"Disclosure Representative" shall mean the designees of the City to act as the
disclosure representative.
"Dissemination Agent" shall mean MuniFinancial, acting in its capacity as Dissemination
Agent hereunder, or any successor Dissemination Agent designated in writing by the City.
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"Listed Events" shall mean any of the events listed in Section 4(a) of this Disclosure
Agreement and any other event legally required to be reported pursuant to the Rule.
"National Repository" shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule. Any filing under this Disclosure Agreement
with a National Repository may be made solely by transmitting such filing to the Texas
Municipal Advisory Council (the "MAC") as provided at "http://www.disclosureusa.org" unless
the United States Securities and Exchange Commission has withdrawn the interpretive advice
in its letter to the MAC dated September 7, 2004.
"Official Statement" means the Official Statement, dated , 2006, relating to
the Bonds.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds
required to comply with the Rule in connection with offering of the Bonds.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from
time to time.
"State" shall mean the State of California.
"State Repository" shall mean any public or private repository or entity designated by the
State as a state repository for the purpose of the Rule and recognized as such by the Securities
and Exchange Commission. As of the date of this Disclosure Agreement, there is no State
Repository.
SECTION 2. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than
January 15 after the end of the City's fiscal year, commencing with the fiscal year ending June
30, 2006 (for the report due January 15, 2007), provide to each Repository an Annual Report
which is consistent with the requirements of Section 3 of this Disclosure Agreement. The
Annual Report may be submitted as a single document or as separate documents comprising a
package, and may include by reference other information as provided in Section 3 of this
Disclosure Agreement. Not later than fifteen (15) Business Days prior to said date, the City
shall provide the Annual Report to the Dissemination Agent. The City shall provide an Officer's
Certificate with each Annual Report furnished to the Dissemination Agent to the effect that such
Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
The Dissemination Agent may conclusively rely upon such Officer's Certificate of the City.
(b) If by fifteen (15) Business Days prior to the date specified in subsection (a) for
providing the Annual Report to the Repositories, the Dissemination Agent has not received a
copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the
City is in compliance with subsection (a).
(c) lf the Dissemination Agent is unable to verify that an Annual Report has been
provided to the Repositories by the date required in subsection (a), the Dissemination Agent
shall provide to (i) each National Repository or the Municipal Securities Rulemaking Board and
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(ii) each appropriate State Repository (with a copy to the Fiscal Agent) a notice, in substantially
the form attached as Exhibit A.
(d) With respect to the Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the
name and address of each National Repository and the State Repository, if any;
and
(i) (if the Dissemination Agent is other than the City), to the extent
appropriate information is available to it, file a report with the City certifying that
the Annual Report has been provided pursuant to this Disclosure Agreement,
stating the date it was provided and listing all the Repositories to which it was
provided.
SECTION 3. Content of Annual Reports. The City's Annual Report shall contain or
include by reference the following:
(a) The following information:
Principal amount of Bonds outstanding.
2. Balance in the improvement fund.
3. Balance in debt service Reserve Fund, and statement of the Reserve Fund
requirement. Statement of projected Reserve Fund draw, if any.
Bonds.
4. Balance in other funds and accounts held by City or fiscal agent related to the
5. Additional debt authorized by the City and payable from or secured by
assessments or special taxes with respect to property within the District.
6. The assessment delinquency rate, total amount of delinquencies, number of
parcels delinquent in payment for the five most recent fiscal years.
7. Notwithstanding the June 30th reporting date for the Annual Report, the following
information shall be reported as of the last day of the month immediately preceding the date of
the Annual Report rather than as of June 30th. Identity of each delinquent taxpayer responsible
for 5 percent or more of total assessment levied, and the following information: assessor parcel
number, assessed value of applicable properties, amount of Special Tax levied, amount
definquent by parcel number and status of foreclosure proceedings. If any foreclosure has been
completed, summary of results of foreclosure sales or transfers.
8. Most recently available total assessed value of all parcels subject to the special
tax or assessment.
9. Audited financial statements prepared in accordance with generally accepted
accounting principles as promulgated to apply to governmental entities from time to time by the
Governmental Accounting Standards Board. If the City's audited financial statements are not
available by the time the Annual Report is required to be filed pursuant to Section 2(a), the
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Annual Report shall contain unaudited financial statements in a format similar to that used for
the City's audited financial statements, and the audited financial statements shall be filed in the
same manner as the Annual Report when they become available; provided, that in each Annual
Report or other filing containing the City's financial statements, the following statement shall be
included in bold type:
THE CITY'S ANNUAL FINANCIAL STATEMENT IS PROVIDED SOLELY TO COMPLY
WITH THE SECURITIES EXCHANGE COMMISSION STAFF'S INTERPRETATION OF RULE
15C2-12. NO FUNDS OR ASSETS OF THE CITY OF PALM DESERT (OTHER THAN THE
PROCEEDS OF THE SPECIAL TAXES LEVIED FOR THE COMMUNITY FACILITIES
DISTRIC7 AND SECURING THE BONDS) ARE REQUIRED TO BE USED TO PAY DEBT
SERVICE ON THE BONDS AND THE CITY IS NOT OBLIGATED TO ADVANCE AVAILABLE
FUNDS FROM THE CITY TREASURY TO COVER ANY DELINQUENCIES. INVESTORS
SHOULD NOT RELY ON THE FINANCIAL CONDITION OF THE CITY IN EVALUATING
WHETHER TO BUY, HOLD OR SELL THE BONDS.
Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues with respect to which the City is an
"obligated person" (as defined by the Rule), which have been filed with each of the Repositories
or the Securities and Exchange Commission. If the document included by reference is a final
official statement, it must be available from the Municipal Securities Rulemaking Board. The
City shall clearly identify each such other document so included by reference.
SECTION 4. Reaortina of Sianificant Events.
(a) Pursuant to the provisions of this Section 4, the City shall give an O�cer's
Certificate including notice of the occurrence of any of the follawing events with respect to the
Bonds, if material:
1. Principal and interest payment delinquencies.
2. Non-payment related defaults.
3. Modifications to rights of Bondholders.
4. Optional, contingent or unscheduled Bond calls.
5. Defeasances.
6. Rating changes.
7. Adverse tax opinions or events affecting the tax-exempt status of the
Bonds.
8. Unscheduled draws on the debt service reserves, if any, reflecting
financial difficulties.
9. Unscheduled draws on credit enhancements reflecting financial
difficulties.
10. Substitution of credit or liquidity providers, or their failure to pertorm.
11. Release, substitution, or sale of property securing repayment of the
Bonds.
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the
City shall as soon as possible determine if such event would constitute material information for
Holders of Bonds, provided, that any event under subsection (a)(6) will always be defined to be
material.
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(c) If the City determines that knowledge of the occurrence of a Listed Event would
be material under applicabie Federal securities law, the City shall, or by written direction cause
the Dissemination Agent (if not the City) to, promptly file a notice of such occurrence with (i)
each National Repository or the Municipal Securities Rulemaking Board and (ii) each
appropriate State Repository with a copy to the Fiscal Agent, together with written direction to
the Fiscal Agent whether or not to notify the Bond holders of the filing of such notice. In the
absence of any such direction, the Fiscal Agent shall not send such notice to the Bond holders.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and 5)
need not be given under this subsection any earlier than the notice (if any) of the underlying
event is given to holders of affected Certificates pursuant to the Indenture.
(d) If in response to a request under subsection (b), the City determines that the
Listed Event would not be material under applicable federal securities laws, the City shall so
notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the
occurrence pursuant to subsection (e).
(e) If the Dissemination Agent has been instructed by the City to report the
occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with
the Repository. Notwithstanding the foregoing:
SECTION 5. Termination of Reqortinq Obfipation. The obligations of the City, the
Dissemination Agent under this Disclosure Agreement shall terminate upon the legal
defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs
prior to the final maturity of the Bonds, the City shall give notice of such termination in the same
manner as for a Listed Event under Section 4(e) hereof. If the City's obligations under the
Agreement are assumed in full by some other entity, such person shall be responsible for
compliance with this Disclosure Agreement in the same manner as if it were the City, and the
City shall have no further responsibility hereunder.
SECTION 6. Dissemination Aaent. The City may, from time to time, appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure
Agreement, and may discharge any such Dissemination Agent, with or without appointing a
successor Dissemination Agent. The Dissemination Agent may resign at any time by providing
at least 30 days' notice in writing to the Issuer and the City.
SECTION 7. Amendment: �VIlaiver. Notwithstanding any other provision of this
Disclosure Agreement, the City and the Dissemination Agent may amend this Disclosure
Agreement (and the Dissemination Agent shall agree to any amendment so requested by the
Issuer, provided no amendment increasing or affecting the obligations or duties of the
Dissemination Agent shall be made without the consent of either such party) and any provision
of this Disclosure Agreement may be waived if such amendment or waiver is supported by an
opinion of counsel expert in federal securities laws acceptable to the Issuer, the City and the
Dissemination Agent to the effect that such amendment or waiver would not, in and of itself,
cause the undertakings herein to violate the Rule if such amendment or waiver had been
effective on the date hereof but taking into account any subsequent change in or official
interpretation of the Rule.
SECTION 8. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the City from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
D-5
in addition to that which is required by this Disclosure Agreement. If the City chooses to include
any information in any Annual Report or notice of occurrence of a Listed Event, in addition to
that which is specifically required by this Disclosure Agreement, the City shall have no obligation
under this Agreement to update such information or include it in any future Annual Report or
notice of occurrence of a Listed Event.
SECTtON 9. Duties. Immunities and Liabilities of Dissemination Aqent. The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Agreement, and the City agrees to indemnify and save the Dissemination Agent, its officers,
directors, employees and agents, harmless against any loss, expense and liabilities which they
may incur arising out of or in the exercise or performance of their respective powers and duties
hereunder, including the costs and expenses (including attorneys' fees) of defending against
any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or
wi{Iful misconduct. The Dissemination Agent shall be paid compensation by the City for its
services provided hereunder in accordance with its schedule of fees as amended from time to
time, and all expenses, legal fees and advances made or incurred by the Dissemination Agent
in the performance of its duties hereunder. The Dissemination Agent shall have no duty or
obligation to review any information provided to it hereunder and shall not be deemed to be
acting in any fiduciary capacity for the Issuer, the Bondholders, or any other party. The
obligations of the City under this Section shall survive resignation or removal of the
Dissemination Agent and payment of the Bonds.
SECTION 10. Notices. Any notices or communications to or among any of the parties
to this Disclosure Agreement may be given as follows:
City: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
(760) 346-0611
(760) 346-0574 Fax
Dissemination Agent: MuniFinancial, Inc.
27368 Via lndustria, Suite 110
Temecula, California 92590
(909) 587-3500
(909) 587-3510 fax
Any person may, by written notice to the other persons listed above, designate a
different address or telephone number(s) to which subsequent notices or communications
should be sent.
SECTION 11. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit
of the City, the Dissemination Agent, the Participating Underwriter and Holders and Beneficial
Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 12. Counteraarts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement
as of the date first above written.
�.
CITY OF PALM DESERT, for and on behalf
of City of Palm Desert Highlands
Undergrounding Assessment District No.
04-01
D-7
By:
Authorized Officer
MUNIFINANCIAL, as Dissemination Agent
By:
Authorized Officer
EXHIBIT A
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Palm Desert
Name of Bond Issue: $ City of Palm Desert Highlands Undergrounding
Assessment District No. 04-01 Special Tax Bonds Series 2006A
Date of Issuance: , 2006
NOTICE IS HEREBY GIVEN that the City of Palm Desert (the "City") on behalf of City of
Palm Desert Highlands Undergrounding Assessment District No. 04-01 has not provided an
Annual Report with respect to the above-named Bonds as required by the Fiscal Agent
Agreement dated as of 1, 2006 by and between the City and Wells Fargo Bank,
National Association, as Fiscal Agent. The City anticipates that the Annual Report will be filed
by .
Dated:
MUNIFINANCIAL, as Dissemination Agent,
on behalf of City of Palm Desert Highlands
Undergrounding Assessment District No.
04-01
By:
Authorized Officer
cc: City of Palm Desert
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APPENDIX E
THE BOOK-ENTRY SYSTEM
General
DTC wiil act as securities depository for the Bonds. The Bonds will be issued as fully-
registered bonds registered in the name of Cede 8 Co. (DTC's partnership nominee). One fully-
registered Bond will be issued for each maturity of the Bonds, each in the aggregate principal
amount of such maturity, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a"clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a"clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934. DTC holds securities that its participants (the
"Participants") deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and dealers, banks,
and trust companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of the Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest
of each actual purchaser of each Bond ("Bene�cial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Bonds are to be accomplished by entries made on the
books of Participants acting on behalf of Bene�cial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Bonds, except in the event that use of
the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Bonds with
DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only
the identity of the Direct Participants to whose accounts such securities are credited, which may
or may not be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
E-1
Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners, will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the bonds within an
issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede � Co. will consent or vote with respect to the Bonds. Under its
usual procedures, DTC mails an Omnibus Proxy to an issuer as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Principal and interest payments on the Bonds will be made to DTC. DTC's practice is to
credit Direct Participants' accounts on payment dates in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will not receive
payment on the date payable. Payments by Participants to Beneficial Owners will be governed
by standing instructions and customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Fiscal Agent, or the City, subject to any
statutory or regulatory requirements as may be in effect from time to time. Payment of principal
and interest to DTC is the responsibility of the City or the Fisca! Agent, disbursement of such
payments to Direct Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be responsibility of Direct and Indirect Participants.
The City cannot and does not give any assurances that DTC, DTC Participants or others
will distribute payments of principal, interest or premium with respect to the Bonds paid to DTC
or its nominee as the registered owner, or will distribute any redemption notices or other notices,
to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the
manner described in this Official Statement. The City is not responsible or liable for the failure
of DTC or any DTC Participant to make any payment or give any notice to a Beneficial Owner
with respect to the Bonds or an error or delay relating thereto.
The foregoing description of the procedures and record-keeping with respect to
beneficial ownership interests in the Bonds, payment of principal, interest and other payments
on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial
ownership interests in such Bonds and other related transactions by and between DTC, the
DTC Participants and the Beneficial Owners is based solely on information provided by DTC.
Accordingly, no representations can be made concerning these matters and neither the DTC
Participants nor the Beneficial Owners should rely on the foregoing information with respect to
such matters, but should instead confirm the same with DTC or the DTC Participants, as the
case may be.
Discontinuance of Book-Entry System
DTC may discontinue providing its services with respect to any Series of Bonds at any
time by giving notice to the Fiscal Agent and discharging its responsibilities with respect thereto
under applicable law or the City may terminate participation in the system of book-entry
transfers through DTC or any other securities depository at any time. In the event that the book-
E-2
entry system is disconti�ued, the City will execute, and the Fiscal Agent will authenticate and
make available for delivery, replacement Bonds in the form of registered bonds. In addition, the
following provisions would apply: the principal of and redemption premium, if any, on the Bonds
will be payable at the corporate trust office of the Fiscal Agent in Los Angeles, California, and
interest on the Bonds will be payable by check mailed to the registered owner as of the close of
business on the Record Date. See "General" above. Bonds will be transferable and
exchangeable on the terms and conditions provided in the Trust Agreement. See "Transfer and
Exchange of Bonds" above.
E-3
�UI/��
.�
RESOLUTION NO. 06-50
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT,
CALIFORNIA AP'PROVING THE REPORT OF THE ENGINEER IN CONNECTION
WITH PROPOSED HIGHLAND5 UTILITY UNDERGROUNDING ASSESSMENT
DISTRICT NO. 04-01, SETTING A TIlVIE AND PLACE FOR HEARING PROTESTS
AND CALLING A HEARING PURSUANT TO SECTION 12.12.020 OF TI3E
MUNICIPAL CODE
f��Z��IT.��
WHEREAS, on April 13, 2006, fhe City Council adopted its resolution entitled "A
Resolution of the City Council of the City of Palm Desert, California, Declaring Its Intention To
Order Improvements for Proposed Highlands Utility Undergrounding Assessment District No.
04-01 Pursuant to the Municipal Improvement Act of 1913 and in Accordance with Article X�
of the California Constitution, to Comply with the Requirements of Division 4 of the California
Streets and Highways Code by Proceeding under Part 7.5 Thereof and to Designate Such District
an Underground Utility District Pursuant to Chapter 12.12 of the Municipal Code and Approving
and Adopting a Modified Boundary Map in Connection Therewith" (the "Resolution of
Intention"), declaring its intention to order improvements (the "Improvements") in connection
with the proposed Highiands Utility Undergrounding Assessment District No. 04-01 (the
"District"); and
WHEREAS, the Resolution of Intention referred the Improvements to MuniFinancial, as
assessment engineer, (the "Assessment Engineer") to make and file with the City Clerk a report
in writing in accordance with Article X�, Section 4 of the California Constitution and Section
10204 of the California Streets & Highways Code (the "Code"), which report shall also contain
all of the information required by Secrion 2961 of the Code and Section 12.12.030 of the Palm
Desert Municipal Code (the "Municipal Code"}; and
WHEREAS, the Assessment Engineer has made a report entitled "City of Pa1m Desert
Preliminary Engineer's Report Highlands Utility Undergrounding Assessment District No. 04-
O1" (the "Report") and has filed such report with the City Clerk; and
WHEREAS, the City Clerk has presented the Report to the City Council.
NOW, THEREFORE, BE IT RESOLVED, DETERMINED, AND ORDERED BY
THE CITY COUNCIL OF THE CITY OF PALM DESERT AS FOLLOWS:
Section 1.
Section 2.
Section 3.
The above recitals aze all true and correct and a substantive part of this
Resolution.
The Report has been considered by the City Council, and such report is hereby
preliminarily approved as filed.
The City Council hereby calls a public hearing (the "Hearing") pursuant to
Section 12.12.020 of the Municipal Code for �� .,, ., , `.�;���:��QQ., :
�
,\
�
�J
Legal Notice - PH 6/8/06 - Res No. 06-50 PD Highlands Utility Undergrounding Page 1 of 1
Martinez, Gloria
From: Moetler, Charlene [CMOELLER@palmspri.gannett.com]
Sent: Thursday, Ap�il 20, 2006 1:11 PM
To: Martinez, Gloria
Subject: RE: Legal Notice --PJ-16����es No. 06-.50 Pa�ighlancls Utility Unde�gro'ufnding'
O
Ad recieved and will publish on date(s) requested.
CFiarlene �loeCler
�f'ublic Notice CustomerService �p.
(760) 778-4578, Fax (760) 778-4731
My hours are Mon-Fri 8:00-5:00 pm.
�Desert Sun legals@thedesertsun.com
c� �Desef'1t �'ost `41�ee� dpwleQals@thedesertsun.com
T'he Valley's #1 Source in News & Advertising!
-----Original Message-----
From: gmartinez@ci.palm-desert.ca.us [mailto:gmartinez@ci.palm-desert.ca.us]
Sent: Thursday, April 20, 2006 12:23 PM
To: charlene.moeller@desertsun.00m
Cc: jstanley@ci.palm-desert.ca.us; pconlon@ci.palm-desert.ca.us
Subject: Legai Notice - PH 6/8/06 - Res No. 06-50 PD Highfands Utility Undergrounding
PLEASE PUBLISH THE FOLLOWING:
PUBL/C HEARlNG
Resolution No. 06-50 - Approving the Report of the Engineer in Connection w/Proposed Highlands
Utility Undergrounding Assessment District No. 04-01, Setting a Time and Place for Hearing
Protests and Calfing a Hearing Pursuant to Section 12.12.020 of the Municipal Code.
«PH 060806 - Highlands Utility.DOC»
ONE TIME IN THE DESERT SUN
Monday, May 29, 2006
Thank you, Charlenel!!
9V1. GCoria �lartinez
73-510 Fred Waring Drive
Palm Desert, California 92260
(760) 346-061 1 Ext. 354
gmarfinez@ci.palm-desert.ca.us
4/20/2006
FISCAL AGENT AGREEMENT
by and between
CITY OF PALM DESERT
and
WELLS FARGO BANK, N.A.
as Fiscal Agent
Dated as of July l, 2006
Relating to
$3,530,000
City of Palm Desert
Highlands Utility Undergrounding Assessment District No. 04-01
Limited Obligation Improvement Bonds
Series 2006
Contract.No. C25380
P6401.1034 859556.2 RWG Draft 5/22,i06
TABLE OF CONTENTS
0
ARTICLE I AUTHORITY AND DEFINITIONS ...........................................................................2
SeCtlon 1.01 »th�rit3r fnr thic Agrc emPnt .............................................................................2
Sectlon 1.02 Ao�-►-PemPnt f�r Renefit �f Rnn�inwnPLS ..............................................................2
.finiti�n� ..........................................................................................................
Section 1.03 RP 2
ARTICLE II THE BONDS ............................................................................................................10
SeCtiori 2.01 Pri-nci�al Amnunt• e,�igpatinn ........................................................................10
Section2.02 TP,-r„c nf R�nc�� ................................................................................................10
Section2.03 RP.�lll?tinn ......................................................................................................1 l
Section2.04 F�rm �fBn�s .................................................................................................13
Section 2.05 F.xecLti�n �f R�nc�c ..........................................................................................13
Sectlon 2.06 Trancfer nf R�nr�c .............................................................................................14
SeCtlOn 2.07 F.xchang� nf R�nc�� ..........................................................................................14
SeCtion2.08 RPgjctratinn Rnnkc ...........................................................................................14
Sectlon2.09 Temn�rary R�nci� .............................................................................................14
SeCtlon 2.10 Rnnric Mutilatec�, T.�st, nectrn�pd �r �Mlen ....................................................15
Snecial nhli atinn ...........................................:
Section 2.I 1 = g ................................................15
Section 2.12 R .fi� .................................................................................................
........15
ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; ASSESSMENT
FUND...............................................................................................................15
Section 3.01 ic�>>ancP anrl i�elivery nf� .......................................................................15
Section 3.02 A�»licati�n �f Prnceecle �f Sale �f R�n�is .......................................................16
Section 3.03 �(?CtC ()f TCCl]a11CP ...............................................................................................16
SeCtioll3.04 AccPccmPnt Fiind . ............................................................................................16
ARTICLE IV ASSESSMENT REVENUES; REDEMPTION FiTND; RESERVE FLJND.........18
SeCtlon 4.01 P].�d�..�AccPccmPnt R .v .nti .� ......................................................................18
SeCtion4.02 R .d .m»tinn F�ind .............................................................................................19
Section4.03 RP.CP.1'VP Fl� ...................................................................................................20
SeCtlon4.04 Tm}y�vement F�inci ...........................................................................................21
ARTICLE V OTHER COVENANTS, REPRESENTATIONS AND DECLARATIONS OF THE
CITY................................................................................................................22
SeCtiOn 5.01 Pi�nctiial Pa� mPnt .............................................................................................22
Section 5.02 �i�i�LQhliLatinn .........................................................................
...................22
Section 5.03 Rxtencinn nf Time fnr P vmPnt
� .......................................................................22
Sectlon 5.04 AVainct F.nci�mhrancPs .....................................................................................22
SeCtion 5.05 Pr�tecti�n nf Securit.vr,anr� Ris�hts nf (�wnerc,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,22
C,�llectinn nf AscPccment Re�enues
Secrion 5.06 . � . ................................................................23
SeCilOri5.07 FiirthPr Accnr�g ...........................................................................................23
Sectlon5.08 Tax C'.nvenantc .................................................................................................23
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TABLE OF CONTENTS
(Continued)
Ea�e
Section5.09 f'�vPnant t� F�recl�ce ......................................................................................23
ARTICLE VI INVESTMENTS; REBATE FLTND; LIABILTTY OF THE CITY .........................24
Section 6.01 nPnn�it an� TnvPctmPnt nf M�nPvc in Eu11L�S ...................................................24
SeCtlori 6.02 Rehate F»nd; RehatP tn i Tnited �tatec .............................................................25
Section 6.03 j.iahili �fC'itT ................................................................................................26
Section 6.04 F.m�.ln�'C]lent �f Agentc h� thP C'it,�[ ..................................................................26
ARTICLE VII THE FISCAL AGENT ...........................................................................................26
SeCtiori 7.01 ,A}�}2nintmPnt �f Fic�al �g�Ill ............................................................................26
iahilitv �f Ficcal Pnt
Section 7.02 T ' -Ag . ..................................................................................27
Sectlon7.03 infnrmati�n .......................................................................................................29
SeCtion 7.04 RPliance h Fiscal A
3� g� .................................................................................29
Sectlon 7.05 �irr�,nPncatinn; Tnc�emnificatinn .......................................................................29
Section 7.06 Rnnk� ancl Acc�»nt� ........................................................................................30
ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS AGREEMENT ......................30
Sectlon 8.01 Amendments PPrmitted ....................................................................................30
SeCtiori8.02 QwnPrc' A/[P .te in� ............................................................................................31
SeChon 8.03 Pmeeclure fnr AmPncimPnt with WrittPn r'nnsPnt nf (�wner�,,,,,,,,,,,,,,,,,,,,,,,,,,31
Section 8.04 i�iS(ir,alifiecl R�n�ic ...........................................
................................................32
Sectlon 8.05 F.ffc .ct nf �i��nlemental A�rPPm�11t ..................................................................32
Section 8.06 F.nc��rsement nf Renlacement nf Rnnds Tssuec� after AmPncim .ntc ,,,,,,,,,,,,,,,,,32
Section 8.07 Amenciat�ry Fnd�r�ement �f Rnnc�� ................................................................32
Section8.08 C'nncPnt nf Ficr-al A�Pnt ...................................................................................32
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES OF BOND OVVNERS .....................33
Section9.01 FvPntc nf�efault .............................................................................................33
SeCtlon 9.02 Remediec �f nwners
........................................................................................33
ARTICLE X BOOK-ENTRY SYSTEM .......................................................................................34
Section 10.01 ��nk-Fntr3, C�rct�m;l,imiteci (�hlj�ati�n �f C".itv . ............................................34
Section 10.02 � rPCPntatinn T .Ptt.� . ......................................................................................35
SeCtiori 10.03 Tran�fers nutcide R�nk-F.n T��.ctem .............................................................35
Section 10.04 Pa�rnPntc tn tha Nnminee . ...............................................................................35
Section 10.05 Til1t1A� nP.r sitnr� anrl Nnminee .......................................................................35
ARTICLE XI MISCELLANEOUS ................................................................................................35
Section 11.01 Renefits nf AL eement i.imitPc� tn PartiPc,
.......................................................3 5
SeCtlon 1 1.02 �.u�',�'?c�nrc T]eemeci Tncluded in All Refer .n .Pc t� Pr .cle .ec��r ......................36
Section 11.03 T)iScharg .,� �f A� .ee .mPnt ..................................................................................36
Section 11.04 F.xecuti�n �f i��cumentc nd Pr�nf nf (�wnerchi�h.�ntunerc,,,,,,,,,,,,,,,,,,,,,,,,3{
P6401-1034'�859556v2.doc ii
TABLE OF CONTENTS
(Continued)
�
SOCtIOri 11.05 Waiver nf PPrcnnal T,iahilitv ............................................................................37
Section11.06 i�I�s�s .............................................................................................................37
Section1 l.07 .�evPr_ ahili T ......................................................................................................38
Section 11.08 [ Jnclaimed M�nev� ..........................................................................................38
SeCtion11.09 Arnlicahle T.aw ................................................................................................38
Section 11.10 (".�nflict with 1915 Act .....................................................................................38
Section 11.11 �GliicivP F.vi�lPnce nf R ilaritv ..................................................................38
Sectlon 11.12 �;rrr�ent nn RucinecS i�aT ................................................................................38
Section 11.13 C".�i�nternartc .....................................................................................................39
EXHIBIT A— FORM OF BOND
EXHIBIT B— FORM OF IMPROVEMENT FUND REQUISITION
P6401-1034\859556v2.doc iii
FTCC AT. A�FI�AC',RF.F.MFNT
THIS FISCAL AGENT AGREEMENT (the "Agreernent") is made and entered into as of
July 1, 2006, by and between the City of Palm Desert, California, a municipal corporation (the
"City"), and Wells Fargo Bank, N.A., a national banking association organized and existing
under the laws of the United States of America, as fiscal agent (the "Fiscal Agent").
WITNESSETH:
WHEREAS, on April 13, 2006, the City Council of the City (the "City Council") adopted
Resolution No. 06-49 (the "Resolution of Intention"), relating to the formation of "Highlands
Utility Undergrounding Assessment District No. 04-01" (the "Assessment DistricY') in
connection with the proposed undergrounding conversion of certain overhead electric and
communication facilities in the Palm Desert Highlands area of the City (the "Project") under and
pursuant to the provisions of the Municipal Improvement Act of 1913, as set forth in Division 12
(commencing with Section 10120) of the California Streets and Highways Code; and
WHEREAS, in the Resolution of Intention, the City Council gave notice that serial
bonds, term bonds, or both, would be issued thereunder pursuant to the provisions of the
Improvement Bond Act of 1915, as set forth in Division 10 (commencing with Section 8500) of
the California Streets and Highways Code; and
WHEREAS, after conducting a duly noticed public hearing, the City Council has adopted
Resolution No. on , 2006, approving an assessment engineer's report,
ordering improvements relating to the Project and confirming the proposed assessment against
parcels within the Assessment District; and
WHEREAS, notice of the recordation of the assessments and of the time within which
assessments were to be paid in cash was duly published and mailed in the manner provided by
law, and the time so provided for receiving payment of assessments in cash expired, and the
official who has been designated as collection officer for cash payments of such assessments has
filed with the City Clerk a list of all assessments which remained unpaid; and
WHEREAS, on June 8, 2006, the City Council further adopted Resolution No. ,
authorizing the City to issue and sell its City of Palm Desert, Highlands Utility Undergrounding
Assessment District No.04-01, Limited Obligation Improvement Bonds, Series 2006 (the
"Bonds"), pursuant to the 1915 Act; and
WHEREAS, the City has determined that all acts and proceedings required by law
necessary to make the Bonds, when executed by the City, authenticated and delivered by the
Fiscal Agent and duly issued, the valid, binding and legal limited obligations of the City, and to
constitute this Fiscal Agent Agreement a valid and binding agreement for the uses and purposes
herein set forth in accordance with its terms, have been done and taken, and the execution and
delivery of this Fiscal Agent Agreement have been in all respects duly authorized;
P6401-10341859556v2.doc 1
NOW, THEREFORE, in consideration of the covenants and provisions herein set forth
and for other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
AUTHORITY AND DEFINITIONS
Section 1.01 ALthnritv f�� thi� A� ..PemPnt. This Agreement is entered into pursuant to
the provisions of the 1915 Act and the Resolution.
Section 1.02 A�reement f�r Renefit �f R�nd�wners. The provlsions, covenants and
agreements herein set forth to be performed by or on behalf of the City shall be for the equal
benefit, protection and security of the Owners of the Bonds. All of the Bonds, without regard to
the time or times of their issuance or maturity, shall be of equal rank without preference, priority
or distinction of any of the Bonds over any other thereof, except as expressly provided in or
permitted by this Agreement. The Fiscal Agent and its officers and employees may become the
owner of any of the Bonds with the same rights it would have if it were not Fiscal Agent.
Section 1.03 nPfin;tinnc. Unless the context otherwise requires, the terms defined in
this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and
of any certificate, opinion or other document herein mentioned, have the meanings herein
specified. All references herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Agreement, and the words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and
not to any particular Article, Section or subdivision hereof.
°°A �rPPmP�" means this Agreement, as it may be amended or supplemented from time to
time by any Supplemental Agreement entered into pursuant to the provisions hereof.
��Annuai neht Service" means, for each Bond Year, the sum of (a) the interest due on the
Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as
scheduled, and (b} the principal amount of the Outstanding Bonds scheduled to be paid in such
Bond Year.
"Acceccment nictrict" means the City's Highlands Utility Undergrounding Assessment
District No. 04-01.
"A��essment Fiind" means the fund by that name established and maintained by the
Fiscal Agent pursuant to Section 3.04(a).
°°Acces�ment PreTa�rrnent Acc�unt" means the account by that name in the Assessment
Fund established and maintained by the Fiscal Agent pursuant to Section 3.04(a).
P6401-1034\859556v2.doc
��A��PC�,,,Pr,t Re�P,,,,P�" means the revenues received by the City in each Fiscal Year
from the collection of the annual installments of the unpaid Assessments and proceeds from the
sale of property for delinquent Assessment installments.
`�ACCP.CC11'1 .11YC" means the unpaid assessments levied on properties within the Assessment
District which secure the payment of Debt Service.
���thnri�Prl n�r" means any off`icer or employee of the City authorized by the City
Council or by an Authorized Officer to undertake the action referenced in this Agreement as
required to be undertaken by an Authorized Officer.
°�$,Qu� ('niincPl" means the law firm of Richards, Watson & Gershon, A Professional
Corporation, Los Angeles, California, or another firm or attorney of favorable reputation in the
field of municipal bond law.
"B�.ur1 vPar" means the period beginning on the Closing Date and ending on
September 2, 2006 and thereafter the period beginning on each September 3 and ending on the
following September 2.
"Bnu�s" means the City of Palm Desert, Highlands Utility Undergrounding Assessment
District No. 04-01 Limited Obligation Improvement Bonds, Series 2006, at any time Outstanding
under this Agreement.
°�Ri�einPcc T��" means any day of the year, other than (i) a Saturday or Sunday, or (ii) a
day on which banks in New York, New York and Los Angeles, California, and San Francisco,
California are required or authorized to remain closed and on which the New York Stock
Exchange is closed.
"�t" means the City of Palm Desert.
"�'ir; C'rn'ncil" means the City Council of the City.
���ln�;ng T��" means the date upon which there is an exchange of the Bonds for the
proceeds representing payment of the purchase price of the Bonds by (or on behalf o� the City.
"�" means the Internal Revenue Code of 1986 as in effect on the date of original
issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply
to obligations issued on the date of original issuance of the Bonds, together with regulations
promulgated, and official public guidance published, under the Code.
°°[`,�ctc nf Tcciianr.e" means all expenses incident to the issuance of the Bonds including,
but not limited to, any bond counsel, financial advisors, underwriters, certified public
accountants, and rating agency fees, printing and advertising costs, filing and recording fees, City
administrative expenses, and the charges of the Fiscal Agent.
°°r��t� r,f i�c�iannP Fnnrl" means the fund by that name established and maintained by the
Fiscal Agent pursuant to Section 3.03(a).
P6401-1034�859556v2.doc
"�.nuut3c" means Riverside County, California.
"� ��,}�t�" means The Depository Trust Company, New York, New York, and its
successors and assigns as securities depository for the Bonds, or any other securities depository
acting as Depository under Article X.
°°i�eht Service" means the amount of interest and principal payable on the Bonds
scheduled to be paid during the period of computation, excluding amounts payable during such
period which relate to principal of the Bonds which are scheduled to be retired and paid before
the beginning of such period.
�°FvPnt n�]t" means any of the events described in Section 9.01.
"Fecieral Secnrities" means any of the following which at the time of investment are
determined by the City to be legal investments under the laws of the State of California for the
moneys proposed to be invested therein:
(i) Cash; and
(ii) Direct general obligations of the United States of America (including
obligations issued or held in book entry form on the books of the Department of the Treasury of
the United States of America), or obligations, the payment of principal of and interest on which
is unconditionally guaranteed by the United States of America.
"Ficcal A,�uent" means Wells Fargo Bank, N.A., the Fiscal Agent appointed by the City,
acting as an independent fiscal agent with the duties and powers herein provided, its successors
and assigns, and any other corporation or association which may at any time be substituted in its
place, as provided in Section 7.01.
°°Fi�cal Year" means the twelve-month period extending from July 1 in a calendar year to
June 30 of the succeeding year, both dates inclusive, or any other twelve-month period selected
by the City as its official fiscal year period.
�°Tmnr�vement Fiinci" means the fund by that name established and maintained by the
Fiscal Agent pursuant to Section 4.04.
°°T�? .nc� .P ent Finan�ial �'�n�►�ltant" means a firm of certified public accountants, a
financial consulting firm, a consulting engineering finn or an engineer which is not an employee
of, or otherwise controlled by, the City.
��Tnfnrmati�n Services" means Financial Information, Incorporated's "Daily Called Bond
Service," 30 Montgomery Street, l Oth Floor, Jersey City, New Jersey 07302, Attention: Editor;
Mergent's "Municipal and Government," 5250 77 Center Drive, Suite 150, Charlotte, NC 28217,
Attention: Called Bonds Department; and Kenny S&P, 55 Water Street, 45th Floor, New York,
New York 10041, Attention: Notification Department; or, in accordance with then-current
guidelines of the Securities and Exchange Commission, such other services providing
P6401-1034'�,859556v2.doc 4
information with respect to called bonds, or no such services, as the City may indicate in writing
to the Fiscal Agent.
�°jptPrPct P�yment l�atec" means March 2 and September 2 of each year, commencing
September 2, 2006.
"Tnvectment Farninu��" means all interest earned and any gains and losses on the
investment of moneys in any fund or account created by this Agreement excluding interest earned
and gains and losses on the investment of moneys in the Rebate Fund.
"Maximi�m Anni�al l�eht Service" means the amount determined by the City to be the
largest Annual Debt Service for any Bond Year after the calculation is made through the final
maturity date of any Outstanding Bonds.
"M�n }�" shall mean Moody's Investors Service, its successors and assigns.
"N�minee" means the nominee of the Depository, which may be Cede & Co., as
determined from time to time pursuant to Article X.
��19R4 RPfi�nclin�,A�t" means the Refunding Act of 1984 for 1915 Improvement Act
Bonds, as set forth in Division 11.5 (commencing with Section 9500) of the California Streets
and Highways Code.
�°1 A15 Act" means the Improvement Bond Act of 1915, as set forth in Division 10
(commencing with Section 8500) of the California Streets and Highways Code.
"191 � Act" means the Municipal Improvement Act of 1913, as set forth in Division 12
(commencing with Section 10000) of the California Streets and Highways Code.
°�nfficer'c C'ertificate" means a written certificate of the City signed by an Authorized
Officer of the City.
"Ql:lgirial piir�}lBSPS" means Wedbush Morgan Securities, Inc.
"nutct�," when used as of any particular time with reference to the Bonds, means
(subject to the provisions of Section 8.04) all Bonds except:
(i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the
Fiscal Agent for cancellation;
(ii) Bonds called for redemption which, for the reasons specified in 5ection
2.03(e), are no longer entitled to any benefit under this Agreement other than the right to receive
payment of the redemption price therefor;
(iii) Bonds paid or deemed to have been paid within the meaning of 5ection
11.03 hereof; and
P6401-1034\859S56v2.doc 5
(iv) Bonds in lieu of or in substitution for which other Bonds shall have been
authorized, executed, issued and delivered by the City and authenticated by the Fiscal Agent
pursuant to this Agreement or any Supplemental Agreement.
"�acn�s" or "R�nc��wner" means the person in whose name the ownership of such Bond
or bonds shall be registered on the Registration Books.
`°Parti�inants" means those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds Bonds as securities depository.
°°permittec� investments" means any of the following that at the time of investment are
legal investments under the laws of the State of California for the moneys proposed to be
invested therein:
(a) Direct obligations of the United States (including obligations issued or held in
book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or
obligations the principal of and interest on which are unconditionally guaranteed by the United .
States.
(b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed
by any of the following federal agencies and provided such obligations are backed by the full
faith and credit of the United States (stripped securities are only permitted if they have been
stripped by the agency itsel�:
l. U.S. Export-Import Bank ("Eximbank")
Direct obligations or fully guaranteed certificates of beneficial ownership
2. Farmers Home Administration ("FmHA")
Certificates of beneficial ownership
3. Federal Financing Bank
4. Federal Housing Administration Debentures ("FHA")
5. General Services Administration
Participation certificates
6. Government National Mortgage Association ("GNMA")
GNMA - guaranteed mortgage-backed bonds
GNMA - guaranteed pass-through obligations
(participation certificates) (not acceptable for certain cash-flow sensitive
issues)
7. United States Maritime Administration
Guaranteed Title XI financing
P6401-1034\859556v2.doc 6
8. United States Department of Housing and Urban Development
Project Notes
Local Authority Bonds
New Communities Debentures
United States government guaranteed debentures
United States Public Housing Notes and Bonds
United States government guaranteed public housing notes
and bonds
(c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed
by any of the following non-full faith and credit United States government agencies (stripped
securities are only permitted if they have been stripped by the agency itsel�:
Federal Home Loan Bank System
Senior debt obligations
2. Federal Home Loan Mortgage Corporation ("FHLMC")
Participation certificates
Senior debt obligations
3. Federal National Mortgage Association ("FNMA")
Mortgage-backed securities and senior debt obligations
4. Student Loan Marketing Association ("SLMA")
Senior debt obligations
5. Resolution Funding Corporation obligations
6. Farm Credit System
Consolidated system-wide bonds and notes
(d) Money market funds registered under the Federal Investment Company Act of
1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating
by S&P of "AAAm-G," "AAA-m" or "AA-m" and if rated by Moody's rated "Aaa," "Aal" or
"Aa2," including funds for which the Fiscal Agent or any of its affiliates (including any holding
company, subsidiaries, or other affiliates) provides investment advisory or other management
services, provided such funds satisfy the criteria herein contained.
(e) Certificates of deposit secured at all times by collateral described in (a) and/or (b)
above. Such certificates must be issued by commercial banks (including affiliates of the Fiscal
Agent), savings and loan associations or mutual savings banks. The collateral must be held by a
third party and the bondholders must have a perfected first security interest in the collateral.
( fl Certificates of deposit, savings accounts, deposit accounts or money market
deposits (including those of the Fiscal Agent and its affiliates) which are fully insured by FDIC,
including BIF and SAIF.
P6401-1034'�,859556v2.doc
(g) Investment agreements, including guaranteed investment contracts, forward
purchase agreements and reserve fund put agreements.
(h) Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's and "A-
1" or better by S&P.
(i) Bonds or notes issued by any state or municipality which are rated by Moody's
and S&P in one of the two highest rating categories assigned by such agencies.
(j) Federal funds or bankers acceptances with a maximum term of one year of any
bank (including those of the Fiscal Agent and its affiliates) which has an unsecured, uninsured
and unguaranteed obligation rating of "Prime - 1" or "A3" or better by Moody's and "A-1" or
"A" or better by S&P.
(k) Repurchase agreements for 30 days or less must follow the following criteria.
Repurchase agreements which provide for the transfer of securities from a dealer bank or
securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash
from a municipal entity to the dealer bank or securities firm with an agreement that the dealer
bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the
securities at a specified date, and
1. Repurchase agreements must be between the municipal entity and a dealer
bank or securities firm
A. Primary dealers on the Federal Reserve reporting dealer list which
are rated "A" or better by S&P and Moody's, or
B. Banks rated "A" or above by S&P and Moody's.
2. The written repurchase agreements contract must include the following:
A. Securities which are acceptable for transfer are:
(1) Direct United States goverrunents, or
(2) Federal agencies backed by the full faith and credit of the
United States government (and FNMA & FHLMC)
B. The term of a repurchase agreement may be up to 30 days
C. The collateral must be delivered to the City, the Fiscal Agent (if the
Fiscal Agent is not supplying the collateral) or third party acting as
agent for the Fiscal Agent (if the Fiscal Agent is supplying the
collateral) beforeisimultaneous with payment (perfection by
possession of certificated securities).
D. Valuation of Collateral
P6401-1034\859556v2.doc 8
(1) The securities must be valued weekly, marked-to-market at
current market price plus accrued interest
(2) The value of collateral must be equal to 104% of the
amount of cash transferred by the municipal entity to the
dealer bank or security firm under the repo plus accrued
interest. If the value of securities held as collateral slips
below 104% of the value of the cash transferred by
municipality, then additional cash and/or acceptable
securities must be transferred. If, however, the securities
used as collateral are FNMA or FHLMC, then the value of
collateral must equal 105%.
3. A legal opinion must be delivered to the municipal entity to the effect that
the repurchase agreement meets guidelines under state law for legal
investment of public funds.
(1) Any state administered pool investment fund in which the City is statutorily
permitted or required to invest will be deemed a permitted investment, including, but not limited
to the Local Agency Investment Fund in the treasury of the State.
"Princinal nffice" means the office of the Fiscal Agent in Los Angeles, California, at
which at any particular time corporate trust business shall be administered, or such other office as
the Fiscal Agent shall designate.
"pr�ject" means the improvements described in that certain Engineer's Report prepared
by MuniFinancial, as modified from time to time, approved by Resolution No. of the City
Council, adopted on , 2006, as may be modified from time to time in accordance with
the 1913 Act.
"Rehate Fnnri" means the fund by that name established pursuant to Section 6.02.
�°Recnrcl nate" means the fifteenth (15th) day of the month next preceding the applicable
Interest Payment Date whether or not such day is a Business Day.
��$p�Pmntinn Fiind" means the fund by that name established pursuant to Section 4.02(a).
«}2Paictratinn Rc,c,kc" means the records maintained by the Fiscal Agent pursuant to
Section 2.08 hereof for the registration and transfer of ownership of the Bonds.
°°R� rn ecPntatinn T.PttPr" means a blanket representation letter from the City to the
Depository, qualifying bonds issued by the City for the Depository's book-entry system.
��R P.CP.T'VP F„�" means the fund by that name established and maintained by the Fiscal
Agent pursuant to Section 4.03(a).
P6401-1034\859556v2.doc 9
��RPCPrvP R�s}i»'rPmPnt" means, on any date in any Bond Year, the least of (i) 10 percent
of the proceeds of the sale of the Bonds (within the meaning of the Code), (ii) Maximum Annual
Debt Service; or (iii) 125 percent of average Annual Debt Service on the Bonds, as determined
by the City.
"Res�l��ti�n nf Tntenti�n" means Resolution No
the recitals hereof.
"Re��liiti�n nf Tcs>>ance" means Resolution No.
the recitals hereof.
of the City Council, referred to in
of the City Council, referred to in
�°R .�c,l ,tic,n�" means, collectively, the Resolution of Intention and the Resolution of
Issuance.
"�.BcE" means Standard & Poor's, a division of The McGraw Hill Companies, Inc., and
its successors and assigns.
"Sec�iritiPs De= �sitnriec" means The Depository Trust Company, 55 Water Street, SOth
Floor, New York, New York, 10041, Attn: Call Notification Department, Fax (212) 855-7232;
or, in accordance with then current guidelines of the Securities and Exchange Commission, such
other securities depositaries, or no such depositaries, as the City may designate in writing to the
Fiscal Agent.
"�tate" means the State of California.
"��n1PmPntal Aa�-PPmP,�" means a Supplemental Agreement entered into by the City
and the Fiscal Agent for the purpose of modifying or amending this Agreement or the rights and
obligations of the City and the Owners pursuant to Section 8.01 hereof.
��Tax ['ertificate" means the certificate (or similar instrument) relating to Section 148 of
the Code executed by an Authorized Officer and delivered upon the delivery of the Bonds, or any
functionally similar replacement certificate.
ARTICLE II
THE BONDS
Section 2.01 Princinal Am�unt; 1�Pc;�„at;��, �e Bonds in the aggregate principal
amount of $3,530,000.00 are hereby authorized to be issued by the City for the Assessment
District under and subject to the terms of the Resolutions, this Agreement, the 1915 Act and
other applicable laws of the State. The Bonds shall be designated "City of Palm Desert,
Highlands Utility Undergrounding Assessment District No. 04-01, Limited Obligation
Improvement Bonds, Series 2006," and shall be secured by the Assessments.
Section 2.02 Termc nf Rnnd�.
P6401-1034\859556v2.doc 10
(a) The Bonds. The Bonds shall be issued as fully registered bonds, without coupons,
in the denominations of $5,000 or any integral multiple thereof. The Bonds shall be lettered and
numbered in a customary manner as determined by the City. The Bonds shall be dated the
closing date.
(b) Mataarities. The Bonds shall mature and become payable on September 2 of each
year, as follows:
Maturity Date Principal Interest
�.5�.= rem� A1�lpunt R ate
Maturity Date Principal Interest
��P= t .mh x l � Rate
[to come]
(c) Interest. The Bonds shall bear interest at the rates set forth in subsection (b)
above which shall be payable on the Interest Payment Dates in each year. Interest shall be
calculated on the basis of a 360-day year composed of twelve 30-day months. Each Bond shall
bear interest from the Interest Payment Date next preceding the date of authentication thereof
unless (i) it is authenticated after a Record Date and before the close of business on the next
Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or
(ii) it is authenticated on or before the Record Date preceding the first Interest Payment Date, in
which event it shall bear interest from the Closing Date; nr��, h�at�cet, that if at the time of
authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the
Interest Payment Date to which interest has previously been paid or made available for payment
thereon or from the Closing Date, if no interest has previously been paid or made available for
payment thereon.
(d) Method of Payment. Interest on the Bonds is payable by check of the Fiscal Agent
mailed by first class mail, postage prepaid, on each Interest Payment Date, until the principal
amount of a Bond has been paid or made available for payrnent, to the registered Owner thereof
at such registered Owner's address as it appears on the Registration Books at the close of
business on the Record Date preceding the Interest Paytnent Date or by wire transfer made on
such Interest Payment Date upon written instructions of any owner of $500,000 or more in
aggregate principal amount of Bonds delivered to the Fiscal Agent prior to the applicable Record
Date. The principal of the Bonds and any premium on the Bonds are payable in lawful money of
the United States of America upon surrender of such Bonds at the Principal Office of the Fiscal
Agent. All Bonds paid by the Fiscal Agent pursuant to this subsection shall be canceled and
destroyed by the Fiscal Agent.
Section 2.03 Re�iem rn i�n.
(a) [Reserved]
P6401-1034�,859556v2.doc 11
(b) Redemption. The Bonds are subject to redemption prior to their stated maturity
dates on any Interest Payment Date, as selected by the City, in integral multiples of 55,000, at the
option of the City from moneys derived by the City from any source or pursuant to Section 3.04
or 4.03, at the following redemption prices expressed as percentages of the principal amount of
the Bonds to be redeemed, together with accrued interest to the date of redemption:
Reciemntinn l�ate� $�rr�ntinn Pri�Pq
[to come] 103%
100
(c) Notice to Fiscal Agent. An Authorized Officer shall give the Fiscal Agent written
notice of the City's intention to redeem Bonds not less than forty-five (45) days prior to the
applicable redemption date unless a shorter time is acceptable to the Fiscal Agent in its sole
discretion specifying the principal amount and maturities of Bonds to be redeemed.
(d) Redemption Procedtcre by Fiscal Agent. The Fiscal Agent shall cause notice of
any redemption to be provided by registered or certified mail or by personal service or in any
such other manner as is acceptable to such other institutions at least thirty (30) days prior to the
date fixed for redemption, to the Securities Depositories and the Information Services selected by
the City, and to the respective registered Owners of any Bonds designated for redemption, at their
addresses appearing on the Registration Books.
Such notice shall state the date of such notice, the date of issue of the Bonds, the place or
places of redemption, the redemption date, the redemption price and, if less than all of the then
Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers (if any)
and Bond numbers of the Bonds to be redeemed, or shall state that all Bonds between two stated
Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more
maturities have been called for redemption, shall state as to any Bond called for redemption in
part the portion of the principal of the Bond to be redeemed, shall require that such Bonds be
then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption
price, and shall state that further interest on such Bonds will not accrue from and after the
redemption date. The cost of the mailing of any such redemption notice shall be paid by the City.
Neither failure to receive any redemption notice nor any defect in such redemption notice
so given shall affect the sufficiency of the proceedings for the redemption oi such Bonds. Upon
the payment of the redemption price of Bonds being redeemed, each check or other transfer of
funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying,
by issue, maturity and Bond number, the Bonds being redeemed with the proceeds of such check
or other transfer.
Except as otherwise provided in Section 3.04(d), in the event of a redemption of Bonds,
the Fiscal Agent shall deposit in the Redemption Fund moneys provided by the Ciry in an amount
equal to the redemption price of the Bonds being redeemed on or before the fifteenth (15th) day
of the month preceding the Interest Payment Date upon which such Bonds are to be redeemed.
P6401-1034�,859556v2.doc 12
Whenever provision is made in this Agreement for the redemption of less than all of the
Bonds, the Fiscal Agent shall select the Bonds for redemption in such a way that the ratio of
Outstanding Bonds to issued Bonds shall be approximately the same in each maturity of the
Bonds insofar as possible (i.e., on a pro-rata basis), and shall select Bonds for redemption within
each maturity of the Bonds by lot.
Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal
Agent shall authenticate and deliver to the Owner, at the expense of the City, a new Bond or
Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to
the unredeemed portion of the Bond or Bonds. Such partial redemption shall be valid upon
payment of the amount required to be paid to such Owner, and the City and the Fiscal Agent
shall be released and discharged thereupon from all liability to the extent of such payment.
(e) Effect of Redemption. From and after the date fixed for redemption, if funds
available for the payrnent of the redemption prices of the Bonds called for redemption shall have
been deposited in the Redemption Fund or the Assessment Prepayment Account, as applicable,
such Bonds or portions thereof shall cease to be entitled to any benefit under this Agreement
other than the right to receive payment of the redemption price, and interest shall cease to accrue
on the Bonds or portions thereof to be redeemed on the redemption date specified in the notice of
redemption.
All Bonds redeemed by the Fiscal Agent shall be canceled and destroyed by the Fiscal
Agent.
Section 2.04 F�rm nf R�nd�. The Bonds, the Fiscal Agent's certificate of
authentication and the assignment to appear thereon shall be substantially in the forms,
respectively, set forth in Fxhih;t A attached hereto and by this reference incorporated herein, with
necessary or appropriate variations, omissions and insertions as permitted or required by this
Agreement.
Section 2.05 F.xec�itinn nf R�ndS, T']1e Bonds shall be executed by the manual or
facsimile signatures of the Treasurer and the City Clerk of the City, who are in office on the date
of this Agreement or at any time thereafter. lf any officer whose signature appears on any Bond
ceases to be such officer before delivery of the Bond to the Owner, such signature shall
nevertheless be as effective as if the officer had remained in office until the delivery of the Bond
to the Owner. Any Bond may be signed and attested by such persons as at the actual date of the
execution of such Bond shall be the proper officers of the City notwithstanding that on the
nominal date of such Bond any such person shall not have been such officer of the City.
Only such Bonds as shall bear thereon a certificate of authentication in substantially the
form set forth in Fxhih;r 9 hereto, manually executed by the Fiscal Agent, shall be valid or
obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of
authentication of the Fiscal Agent shall be conclusive evidence that such Bonds have been duly
authenticated, registered and delivered hereunder, and are entitled to the benefits of this
Agreement.
P6401-1034\859556v2.doc 13
Section 2.06 Trancfer nf Rnnc�c. Any Bond may, in accordance with its terms, be
transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 hereof,
by the person in whose name it is registered, in person or by his or her duly authorized attorney,
upon surrender of such Bond for cancellation, accompanied by delivery of a duly executed
written instrument of transfer in a form acceptable to the Fiscal Agent. The cost for any services
rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall
be paid by the City. The Fiscal Agent shall collect from the Owner requesting transfer of a Bond
any tax or other governmental charge required to be paid with respect to such transfer.
Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and
the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of like aggregate principal
amount of authorized denominations.
No transfers of Bonds shall be required to be made (a) during the fifteen (15) days
preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (b)
with respect to Bonds which have been selected for redemption.
Section 2.07 Fxchange c,f Rnnc��. Bonds may be exchanged at the Principal Office of
the Fiscal Agent only for a like aggregate principal amount of Bonds of authorized
denominations and of the same maturity. The cost for any services rendered or any expense
incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City. The
Fiscal Agent shall collect from the Owner requesting exchange of a Bond any tax or other
governmental charge required to be paid with respect to such exchange.
No exchanges of Bonds shall be required to be made (i) during the fifteen (15) days
preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii)
with respect to Bonds which have been selected for redemption.
Section 2.08 Reo �tratinn Rc►�k�. The Fiscal Agent shall keep, or cause to be kept,
sufficient books for the registration and transfer of the Bonds which books shall show the series,
number, CUSIP identification number (if any), date of issuance, amount, rate of interest and
Owner of each Bond and shall at all times be open to inspection by the City during regular
business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent
shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be
registered or transferred, on said books, the ownership of the Bonds as hereinbefore provided.
Section 2:09 T�c►rary Rn�. The Bonds may be initially issued in temporary form
exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be
printed, lithographed or typewritten, shall be of such denominations as may be determined by the
City, and may contain such reference to any of the provisions of this Agreement as may be
appropriate. Every temporary Bond shall be executed by the City upon the same conditions and
in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds, it
will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall
be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of
the Fiscal Agent or at such other location as the Fiscal Agent shall designate, and the Fiscal
Agent shall authenticate and deliver in exchange for such temporaty Bonds an equal aggregate
P6401-1034\859556v2.doc 14
principal amount of definitive Bonds of authorized denominations. Until so exchanged, the
temporary Bonds shall be entitled to the same benefits under this Agreement as definitive Bonds
authenticated and delivered hereunder.
Section 2.10 R�nci� Mutilateci, T�,�t T�P�tr�v�e���r �tnlen. If any Bond shall become
mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Fiscal Agent
shall authenticate and deliver, a replacement Bond of like tenor and principal amount in
exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent
of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be
canceled and destroyed by the Fiscal Agent. If any Bond shall be lost, destroyed or stolen,
evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such
evidence be satisfactory to it and indemnity satisfactory to it shall be given, the City, at the
expense of the Owner, shall execute, and the Fiscal Agent shall authenticate and deliver, a
replacement Bond of like tenor and principal amount in lieu of and in substitution for the Bond
so lost, destroyed or stolen. The City or Fiscal Agent may require payment of a sum not
exceeding the actual cost of preparing each replacement Bond delivered under this Section 2.10
and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation,
execution, authentication and delivery thereof. Any Bond delivered under the provisions of this
Section 2.10 in replacement of any Bond alleged to be lost, destroyed or stolen shall constitute an
original additional contractual obligation of the City whether or not the Bond so alleged to be
lost, destroyed or stolen is at any time enforceable by anyone, and shall be equally and
proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to
this Agreement.
Section 2.11 S�,ec;ai nhligati�n. All obligations of the City under this Agreement and
the Bonds and interest thereon shall be special obligations of the City, payable solely from the
Assessment Revenues. Neither the faith and credit nor the taxing power of the City or the State
of California or any political subdivision thereof is pledged to the payment of the Bonds or the
interest thereon and no Owner of the Bonds may compel the exercise of any taxing power by the
City or force the forfeiture of any of its property. The principal of, and premium (if any) and
interest on the Bonds are not a debt of the City nor a legal or equitable pledge, charge, lien or
encumbrance upon any of its property, or upon any of its income, receipts or revenues.
Section 2.12 BEfutiding. At any time necessary or appropriate, the City may issue
bonds to refund all or any portion of the Bonds as permitted by and in accordance with law
including, but not limited to, the 1984 Refunding Act.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS;
ASSESSMENT FUND
Section 3.01 l��uance anc� l�elivery �f Rnnd�. At any time after the execution and
delivery of this Agreement, the City may issue the Bonds in the aggregate principal amount set
forth in Section 2.01 hereof and deliver the Bonds to the Original Purchaser. The Authorized
Officers of the City are hereby authorized and directed to deliver any and all documents and
P6401-1034'�.859556v2.doc 15
instruments necessary to cause the issuance of the Bonds in accordance with the provisions of the
1915 Act, the Resolutions and this Agreement and to do and cause to be done any and all acts
and things necessary or convenient for delivery of the Bonds to the Original Purchaser.
Section 3.02 Annlicatinn �f Prn�PP� �f Sale �f R�ndc. The pTOCeeds of the sale of
the Bonds shall be applied as follows:
(a) $ shall be deposited in the Costs of Issuance Fund to pay Costs of
Issuance on behalf of the City;
(b) $ shall be deposited in the Reserve Fund to satisfy the initial
Reserve Requirement; and
(c) The remaining proceeds, in the amount of � , shall be deposited in
the Improvement Fund.
Section 3.03 C��t� nf Tcciia�,
(a) Establishment of Fund. The Fiscal Agent shall establish and maintain a separate
fund to be known as the "Cost of Issuance Fund" into which shall be deposited the proceeds of
the sale of the Bonds pursuant to Section 3.02(a). Moneys in the Cost of Issuance Fund shall be
held in trust by the Fiscal Agent and shall be disbursed as provided in subsection (b) of this
Section for the payment or reimbursement of Costs of Issuance.
(b) Disbzcrsement. Amounts in the Cost of Issuance Fund shall be disbursed to pay
Costs of Issuance, as set forth in an Officer's Certificate containing respective amounts to be paid
to the designated payees delivered to the Fiscal Agent concurrently with the delivery of the
Bonds. The Fiscal Agent shall, to the extent of the moneys on deposit in the Cost of Issuance
Fund, pay all Costs of Issuance upon receipt of an invoice from any such payee which requests
payment in an amount which is less than or equal to the amount set forth with respect to such
payee in such request, or upon receipt of an Officer's Certificate requesting payment of a Cost of
Issuance not listed on the initial requisition delivered to the Fiscal Agent on the Closing Date.
The Fiscal Agent is authorized to act on such an Officer's Certificate without further inquiry,
shall not be responsible for the accuracy of the statements contained therein, and shall be
absolutely protected and incur no liability in relying on such an Officer's Certificate. The Fiscal
Agent shall maintain the Cost of Issuance Fund for a period of ninety (90) days from the Closing
Date and shall then transfer and deposit any moneys remaining therein, including any Investment
Earnings thereon, to the Improvement Fund.
(c) Investment. Moneys in the Assessment Fund shall be invested and deposited in
accordance with Section 6.01 hereof. Investment Earnings shall be retained in the Assessment
Fund to be used for the purposes of such fund.
Section 3.04 AccPccmPnt Fi�ncl,
P6401-1034\859556v2.doc 16
(a) Establishment of Assessment Fzsnd. There is hereby established, as a separate
account to be held by the Fiscal Agent, the "Assessment Fund" to the credit of which the Fiscal
Agent shall deposit all Assessment Revenues received by the Fiscal Agent from the City except
for the prepayrnent of assessments. Upon receiving any Assessment Revenues from the County,
the City shall deduct therefrom the amounts included therein, or a portion thereof, for payment of
the City's expenses associated with the collection of the Assessment Revenues and payment of
the annual costs associated with the registration of the Bonds and the other duties of the Fiscal
Agent provided for herein, and transfer the remainder thereof to the Fiscal Agent for deposit in
the Assessment Fund. Moneys in the Assessment Fund shall be held by the Fiscal Agent for the
benefit of the City and the Owners of the Bonds, as hereinafter provided, shall be disbursed as
provided below and, pending disbursement, shall be subject to a lien in favor of the Owners of
the Bonds. The Fiscal Agent shall establish and maintain within the Assessment Fund an
"Assessment Prepayment Account."
(b) Disbursements. Not later than the third Business Day preceding each Interest
Payment Date, the Fiscal Agent shall withdraw from the Assessment Fund and deposit in the
Redemption Fund the amount which is necessary to pay Debt Service on the Interest Payment
Date.
On September 3 of each year, beginning on September 3, 2006, the amount on deposit in
the Assessment Fund, together with the amount then on deposit in the Redemption Fund, shall
not exceed the greater of (i) one year's earnings on such amounts, or (ii) one-twelfth (1/12th) of
Annual Debt Service for the then current Bond Year. If on September 3 of any year the amount
on deposit in the Assessment Fund, together with the amount then on deposit in the Redemption
Fund, exceeds the maximum amount allowable pursuant to the preceding sentence and if on such
September 3 the City shall have delivered to the Fiscal Agent an Officer's Certificate containing
the information required below in this paragraph, the excess shall be paid by the Fiscal Agent to
the City as directed by such Officer's Certificate. On September 3 of each year, after any such
excess amount has been transferred as hereinabove provided, the amount on deposit in the
Assessment Fund, together with the amount then on deposit in the Redemption Fund, shall not
exceed in the aggregate the geater of (i) one year's earnings thereon, or (ii) one-twelfth (1 /12th)
of Annual Debt Service for the then current Bond Year. An Officer's Certificate delivered by the
City to the Fiscal Agent pursuant to this paragraph shall specify the dollar amount of the excess
determined pursuant to the first sentence of this paragraph which the Fiscal Agent is to pay to the
City. Upon receipt of such an Officer's Certificate, the Fiscal Agent is authorized to act thereon
without further inquiry, shall not be responsible for the accuracy of the statements contained
therein, and shall be absolutely protected and incur no liability in relying on such Officer's
Certificate.
(c) Investment. Moneys in the Assessment Fund shall be invested and deposited in
accordance with Section 6.01 hereof. Investment Earnings shall be retained in the Assessment
Fund to be used for the purposes of such fund.
(d) Prepayment of Assessments. Amounts received from property owners in the
Assessment District as prepayrnents of the Assessment pursuant to the 1915 Act shall be
deposited by the City Treasurer and held by the Fiscal Agent in the Assessment Prepayment
P6401-1034\859556v2.doc 17
Account for application pursuant to Section 3.04(e). The City shall identify to the Fiscal Agent
in writing the amount of such prepayment. Amounts in the Assessment Prepayment Account
shall be used to pay the principal of and redemption premium on Bonds to be called for
redemption as provided in the next sentence. Subject to the priority of disbursements set forth in
Section 3.04(e), whenever and to the extent monies are on deposit in the Assessment Prepayment
Account are sufficient to pay on redemption the principal of Bonds in integral �5,000 amounts
plus the redemption premium thereon (if any), the Fiscal Agent shall advance the maturity of and
call Bonds for redetnption pursuant to Section 2.03(b). On or after each redemption date, upon
presentation and surrender thereof, the Fiscal Agent shall pay the principal of and redemption
premium on each Bond the maturity of which has been so advanced from monies in the
Assessment Prepayment Account. Interest accrued on each such Bond shall be paid from monies
in the Redemption Fund.
(e) Application of Pf�epaid Assessments. Upon receiving a prepayment of an
Assessment, the City Treasurer shall transfer it to the Fiscal Agent for deposit in the Assessment
Prepayment Account. All prepayments may be commingled in a single subaccount within the
Assessment Prepayment Account. From the Assessment Prepayment Account (but solely from
money representing prepayment on Assessments described in Section 3.04(d)), the Fiscal Agent
shall make disbursements in the following priority as specified by the City as follows:
(i) The administrative fee in the amount specified to the Fiscal Agent by the
City shall be transferred to the City for deposit in the general fund of the City.
(ii) Delinquent principal, interest, and penalties shall be transferred to the
Redemption Fund. If the Reserve Fund has been depleted on account of the delinquencies, the
delinquent amounts and penalties shall be transferred instead to the Reserve Fund.
(iii) The installment of principal due in the Fiscal Year of prepayment shall be
transferred to the Redemption Fund.
(iv) Interest accrued to the next call date shall be transferred to the Redemption
Fund.
(v) The balance in the Assessment Prepayment Account shall be used to
advance the maturity of Bonds to the next call date as provided in Section 2.03(b) hereof. The
amount of Bonds to be retired shall be the maximum for which principal and redemption
premium may be paid in full from the Assessment Prepayment Account. Accrued interest on
Bonds to be retired shall be paid from the Redemption Fund.
ARTICLE IV
ASSESSMENT REVENUES;
REDEMPTION FUND; RESERVE FUND
Section 4.01 Plecige �f A��eccment RP.�Pn„P�,. The Bonds shall be secured by a pledge
(which pledge shall be effected in the manner and to the extent herein provided) of all of the
P6401-1034\859556v2.doc 18
Assessinent Revenues and a11 moneys deposited in the Redemption Fund and the Reserve Fund.
The Assessment Revenues and all moneys deposited into such funds are hereby dedicated in their
entirety to the payment of the principal of the Bonds, and interest and any premium on, the Bonds
as provided herein, until all of the Bonds have been paid and retired or until moneys or Federal
Securities have been set aside irrevocably for that purpose in accordance with Section 11.03
hereof.
SeCtlon 4.02 R .PclPmnti�n Fimc�.
(a) Deposits. There is hereby established, as a separate account to be held by the
Fiscal Agent, the "Redemption Fund" to the credit of which deposits shall be made as required
by the provisions of this Agreement. Moneys in the Redemption Fund shall be held by the Fiscal �
Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the
principal of, and interest and any premium on, the Bonds as provided below, and, pending such
disbursement, shall be subject to a lien in favor of the Owners of the Bonds.
(b) Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw
from the Redemption Fund and pay to the Owners of the Bonds the principal of and interest and
any premium then due and payable on the Bonds on the Interest Payment Date.
If, on any Interest Payment Date, there will be insufficient funds in the Redemption Fund
to make the payments provided for in the first paragraph of this Section 4.02(b), the Fiscal Agent
shall apply the available funds first to the payment of interest on the Bonds, and then to the
payrnent of principal due on the Bonds.
As provided in the form of the Bonds attached hereto as Fxhihit A, the City Council
has determined, pursuant to Section 8769(b) of the California Streets and Highway Code
that the City wilt not obligate itself to advance avail�ble funds from the City Treasury to
cure any de�ciency which may occur in the Redemption Fund.
On September 3 of each year, beginning on September 3, 2006, the amount on deposit in
the Redemption Fund, together with the amount then on deposit in the Assessment Fund, shall
not exceed the greater of (i) one year's earnings on such amounts, or (ii) one-twelfth (1/12th) of
Annual Debt Service for the then current Bond Year. If on September 3 of any year the amount
on deposit in the Redemption Fund, together with the amount then on deposit in the Assessment
Fund, exceeds the maximum amount allowable pursuant to the preceding sentence and if on such
September 3 the City shall have delivered to the Fiscal Agent an Officer's Certificate containing
the information required below in this paragraph, the excess shall be paid by the Fiscal Agent to
the City as directed by such Officer's Certificate. On September 3 of each year, after any such
excess amount has been paid as hereinabove provided, the amount on deposit in the Redemption
Fund, together with the amount then on deposit in the Assessment Fund, shall not exceed the
greater of (i) one year's earnings thereon, or (ii) one-twelfth (1/12th) of Annual Debt Service for
the then current Bond Year. An Officer's Certificate delivered by the City to Fiscal Agent
pursuant to this paragraph shall specify the dollar amount of the excess determined pursuant to
the first sentence of this paragraph which the Fiscal Agent is to pay to the City. Upon receipt of
such an Officer's Certificate, the Fiscal Agent is authorized to act thereon without further
P6401-1034\859556v2.doc 19
inquiry, shall not be responsible for the accuracy of the statements contained therein, and shall be
absolutely protected and incur no liability in relying on such Officer's Certificate.
Amounts in the Redemption Fund shall also be withdrawn and deposited in the Rebate
Fund as provided in Section 6.02 hereof.
(c) Investment. Moneys in the Redemption Fund shall be invested and deposited in
accordance with Section 6.01 hereof. Investment Earnings shall be retained in the Redemption
Fund, except to the extent they are required to be deposited by the Fiscal Agent in the Rebate
Fund in accordance with Section 6.02 hereof.
Section 4.03 R P.CP.T'VP. Fll,�,
(a) Establishment of Facnd; Disbursement. There is hereby established, as a separate
account to be held by the Fiscal Agent, the "Reserve Fund" to the credit of which a deposit shall
be made as required by Section 3.02(b), which deposit is equal to the Reserve Requirement as of
the Closing Date, and to which deposits shall be made as provided in Sections 4.03(b) and
3.04(e)(ii). Moneys in the Reserve Fund shall be held by the Fiscal Agent for the benefit of the
Owners of the Bonds as a reserve for the payment of the principal of and interest and any
premium on the Bonds and shall be subject to a lien in favor of the Owners of the Bonds.
(b) Use of Fund. Except as otherwise provided in this Section, all amounts deposited
in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of
making transfers to the Redemption Fund in the event of any deficiency at any time in the
Redemption Fund of the amount then required for payment of the principal of, and interest and
any premium on the Bonds or, in accordance with the provisions of Section 4.03(e), or for the
purpose of redeeming Bonds.
Amounts transferred from the Reserve Fund to the Redemption Fund pursuant to this
subsection shall be restored by the City from the collection of delinquent installments on the
Assessments levied on parcels for which such installments are delinquent, and penalties and
interest thereon, whether by judicial foreclosure proceedings or otherwise, as soon as is
reasonably possible following the receipt by the City of such delinquent installments, penalties
and interest.
(c) Transfer Due to Deficiency in Redemption Fund. Whenever transfer is made from
the Reserve Fund to the Redemption Fund due to a deficiency in the Redemption Fund, the Fiscal
Agent shall report such fact to the City.
(d) Transfers on Payment of Assessment. Whenever an Assessment levied on a lot or
parcel of property within the Assessment District is paid off, the Fiscal Agent shall, upon
receiving an Officer's Certificate regarding such Assessment, transfer from the Reserve Fund to
the Assessment Prepayment Account an amount equal to the reduction in such Assessment
determined pursuant to Section 8881 of the California Streets and Highways Code, which
amount shall be specified in the Officer's Certificate. Upon receipt of such an Officer's
Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be
P6401-1034�,859556v2.doc 20
responsible for the accuracy of the statements contained therein, and shall be absolutely protected
and incur no liability in relying on such Officer's Certificate.
(e) Transfer of Excess of Reserve Requirement. Whenever, on any September 3, the
amount in the Reserve Fund, less Investment Earnings resulting from the investment of the funds
therein which pursuant to Section 6.02 hereof must be rebated to the United States, exceeds the
then applicable Reserve Requirement, the Fiscal Agent shall provide written notice to the City of
the amount of the excess and shall, subject to the requirements of Section 6.02 hereof, transfer an
amount equal to the excess from the Reserve Fund to the Redemption Fund to be used for the
payment of Debt Service on the next succeeding Interest Payment Date in accordance with
Section 4.02 hereof.
( fl Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in
the Reserve Fund exceeds the amount required to redeem or pay all of the then Outstanding
Bonds, including interest accrued to the date of payment or redemption and premium, if any, due
upon redemption, the Fiscal Agent shall, upon receiving written direction from an Authorized
Officer, transfer money from the Reserve Fund to the Assessment Prepayment Account and the
Redemption Fund as provided in the next succeeding sentence to redeem all of the Outstanding
Bonds in accordance with Sections 3.04(d) and 2.03(b) on the next succeeding Interest Payment
Date. To effect such redemption, the Fiscal Agent shall make the following transfers from the
Reserve Fund: (i) an amount equal to the principal and premium on the Bonds due upon
redemption to the Assessment Prepayment Account, and (ii) an amount equal to the interest
thereon accrued to the redemption date to the Redemption Fund. In the event that the amounts so
transferred from the Reserve Fund to the Assessment Prepayment Account and the Redemption
Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the
Reserve Fund shall be transferred by the Fiscal Agent to the City to be applied as provided in
Section 8885 of the California Streets and Highways Code. Upon receipt of such an Officer's
Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be
responsible for the accuracy of the statements contained therein, and shall be absolutely protected
and incur no liability in relying on such Officer's Certificate.
(g) Investment. Moneys in the Reserve Fund shall, except as provided in subsection
(d) above, be invested and deposited in accordance with Section 6.01 hereof.
SeCt1o114.04 imTPmPnt Fi�,
(a) Establishment of Fund. There is hereby established, as a separate account to be
held by the Fiscal Agent, the "Improvement Fund" to the credit of which a deposit shall be made
as required by Section 3.02(c) hereof.
(b) Use of Fund. Moneys in the Improvement Funds shall be held by the Fiscal Agent
for the benefit of the City and shall be disbursed by the Fiscal Agent for the payment or
reimbursement of costs of the Project. The Fiscal Agent shall make the requested payment upon
receipt of a requisition therefor executed by an Authorized Officer of the City, in the general
form and content attached hereto as Fxhih;t R.
P6401-1034\859556v2.doc 21
(c) Completion of Project. Upon the filing with the Fiscal Agent of a certificate by
the City Engineer stating that the Project has been completed and that all costs of the Project
have been paid or are not required to be paid from the Improvement Fund, the Fiscal Agent shall
transfer the amount, if any, remaining in the Improvement Fund in accordance with written
instructions from the City Treasurer as directed by the City Council, which directions shall be
pursuant to the Resolution of Intention and to the applicable provisions of the 1913 Act, and the
Improvement Fund shall be closed.
(d) Investment. Moneys in the Improvement Fund shall be invested and deposited in
accordance with Section 6.01 hereof. Investment Earnings shall be retained in the Improvement
Fund, except to the extent they are required to be deposited by the Fiscal Agent in the Rebate
Fund in accordance with Section 6.02 hereof.
ARTICLE V
OTHER COVENANTS, REPRESENTATIONS AND DECLARATIONS OF THE CITY
Section 5.01 P�ua1 pa�►+Pnt. The City will punctually pay or cause to be paid the
principal of and interest and any premium on the Bonds when and as due in strict conformity
with the terms of this Agreement and any Supplemental Agreement to the extent that the
Assessment Revenues are available therefor, and it will faithfully observe and perform all of the
conditions, covenants and requirements of this Agreement and all Supplemental Agreements and
of the Bonds.
Section 5.02 S}�P�ial ()hligatinn. The Bonds are special obligations of the City and are
payable solely from and secured solely by the Assessment Revenues and the amounts in the
Redemption Fund, the Reserve Fund and the Assessment Fund.
Section 5.03 F.xtenSi�n nf TimP f„Q�p�vmP„t, In order to prevent any accumulation of
claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the
extension of the time for the payment of any claim for interest on any of the Bonds and shall not,
directly or indirectly, be a party to the approval of any such arrangement by purchasing or
funding said claims for interest or in any other manner. In case any such claim for interest shall
be extended or funded, whether or not with the consent of the City, such claim for interest so
extended or funded shall not be entitled, in case of default hereunder, to the benefits of this
Agreement, except subject to the prior payment in full of the principal of all of the Bonds then
Outstanding and of all claims for interest which shall not have been so extended or funded.
Section 5.04 Against Fncumhrancec. The City shall not encumber, pledge or place any
charge or lien upon any of the Assessment Revenues or other amounts pledged to the Bonds
superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds,
except as permitted by this Agreement.
Section 5.05 Prnt .. inn �f �.c.iiritT anrl Ri�htc nf (�wnPrc, T']le City will preserve and
protect the security of the Bonds and the rights of the Owners, and will warrant and defend their
P6401-1034\859556v2.doc 22
rights against all claims and demands of all persons. From and after the delivery of any of the
Bonds by the City, the Bonds shall be incontestable by the City.
Section 5.06 ('nllecti�n nf Asce�sment Revenuec. The City shall comply with all
requirements of the 1915 Act so as to assure the timely collection of Assessment Revenues,
including without limitation, the enforcement of the payment or collection of delinquent
Assessments.
Section 5.07 EuCrhPr Ac�„ranceS, The City will adopt, make, execute and deliver any
and all such further ordinances, resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Agreement,
and for better assuring and confirming unto the Owners of the Bonds the rights and benefits
provided in this Agreement.
Section 5.08 Tax Cnvenant�, The City hereby covenants that:
(a) It will not take any action or omit to take any action, which action or omission, if
reasonably expected on the date of the initial issuance and delivery of the Bonds, would have
caused any of the Bonds to be "arbitrage bonds" within the meaning of Section 103(b) and
Section 148 of the Code;
(b) It will not take any action or omit to take any action, which action or omission, if
reasonably expected on the date of initial issuance and delivery of the Bonds, would result in loss
of exclusion from gross income for purposes of federal income taxation under Section 103(a) of
the Code of interest paid with respect to the Bonds;
(c) It will not take any action or omit to take any action, which action or omission, if
reasonably expected on the date of initial issuance and delivery of the Bonds, would have caused
any of the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code;
(d) It will comply with the Tax Certificate as a source of guidance for achieving
compliance with the Code; and
(e) In order to maintain the exclusion from gross income for purposes of federal
income taxation of interest paid with respect to the Bonds, it will comply with each applicable
requirement of Section 103 and Sections 141 through 150 of the Code.
The covenants of the City contained in this Section 5.08 shall survive the payment,
redemption or defeasance of Bonds pursuant to Section 11.03 hereof. The Fiscal Agent makes
no warranties, covenants or representations regarding the current or future tax status of interest
on the Bonds.
Section 5.09 C°nvenant tn Fnreclnse. The City hereby covenants with and for the
benefit of the Owners of the Bonds that it will order, and cause to be commenced, judicial
foreclosure proceedings against properties with delinquent Assessment installments in excess of
$5,000 by the October 1 following the close of the Fiscal Year in which such installments were
P6401-1034\859556v2.doc 23
due, and will commence judicial foreclosure proceedings against all properties with delinquent
Assessment installments by the October 1 following the close of each Fiscal Year in which it
receives Assessment Revenues in an amount which is less than ninety-five percent (95%) of the
total Assessment Revenues which were to be received in the Fiscal Year and diligently pursue to
completion such foreclosure proceedings; rnvicl .c� hn__�vPr, the City may elect to defer the
commencement of foreclosure proceedings with respect to any property so long as (i) the amount
on deposit in the Reserve Fund is equal to the Reserve Requirement and (ii) the City is current in
the payment of Debt Service.
Notwithstanding the foregoing, if at any time, the County's Teeter Plan (adopted pursuant
to Sections 4701 through 4717 of the California Revenue and Taxation Code) is in effect and is
made applicable to the Assessment District and the Assessments being levied in connection with
the Bonds, the City may, in its discretion, elect not to commence any judicial foreclosure
proceeding pursuant to this Section 5.09 or defer the commencement of such proceedings until
such time as the City deems appropriate.
ARTICLE VI
INVESTMENTS; REBATE FLJND; LIABILITY OF THE CITY
Section 6.01 �= nsit ancl investment �f M�ne�c in Fnncls, SubjeCt 1n all TespeCts to the
provisions of Section 6.02 hereof, moneys in any fund or account created or established by this
Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted
Investments, as directed pursuant to an Officer's Certificate filed with the Fiscal Agent at least
two (2) Business Days in advance of the making of such investments; rn� that moneys in
the Reserve Fund shall be invested in Permitted Investments which shall mature not more than
five years from the date of such investment. In the absence of any such Officer's Certificate, the
Fiscal Agent shall invest any such moneys in Permitted Investments described in paragraph (d) of
the definition of Permitted investments in Section 1.03 hereo£ Except as specifically provided
herein, the Fiscal Agent shall have no obligation to pay additional interest or maximize
inveshnent income on any funds held by it. Neither the City nor the Owners of the Bonds shall
have any claim of any kind against the Fiscal Agent in connection with investments properly
made pursuant to this Section 6.01. Obligations purchased as an investment of moneys in any
fund or account shall be deemed to be part of such fund or account, subject, however, to the
requirements of this Agreement for transfer of Investment Earnings in funds and accounts.
The Fiscal Agent shall be entitled to rely conclusively upon the written instructions of the
City directing investments in Permitted Investments as to the fact that each such investment is
permitted by the laws of the State, and shall not be required to make further investigation with
respect thereto. With respect to any restrictions contained in the definition of Permitted
Investments in Section 1.03 hereof which embody legal conclusions (e.g., the existence, validity
and perfection of security interests in collateral), the Fiscal Agent shall be entitled to rely
conclusively on an opinion of counsel obtained at the City's expense.
The Fiscal Agent may act as principal or agent in the acquisition or disposition of any
investment and may engage in or be interested in any financial or other transaction with the City.
P6401-1034\859556v2.doc 24
The Fiscal Agent shall not incur any liability for losses arising from any investments made
pursuant to this Section 6.01. For purposes of determining the amount on deposit in any fund or
account held hereunder, all Permitted Investments or investments credited to such fund or
account shall be valued at the cost thereof (excluding accrued interest and brokerage
commissions, if any).
Subject in all respects to the provisions of Section 6.02 hereof, investments in any and all
funds and accounts may be commingled in a single fund for purposes of making, holding and
disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the
credit of particular funds or accounts of amounts received or held by the Fiscal Agent hereunder,
provided that the Fiscal Agent shall at all times account for such investments strictly in
accordance with the funds and accounts to which they are credited and otherwise as provided in
this Agreement.
The Fiscal Agent shall sell or present for redemption, any investment security whenever it
shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or
disbursement from the fund or account to which such investment� security is credited, and the
Fiscal Agent shall not be liable or responsible for any loss resulting from the acquisition or
disposition of any such investment security in accordance herewith.
The City acknowledges that to the extent regulations of the Comptroller of the Currency
or any other applicable regulatory agency grant the City the right to receive brokerage
confirmations of security transactions as they occur, the City specifically waives receipt of such
confirmations to the extent permitted by law. The City shall be provided periodic cash
transaction statements which include detail for all investment transactions made by the Fiscal
Agent hereunder.
The Fiscal Agent or any of its affiliates may act as sponsor, advisor or manager in
connection with any investrnents made by the Fiscal Agent hereunder.
Section 6.02 Rehate Funci; Rehare tc, i lnite.� Srate�. There is hereby created, to be held
by the Fiscal Agent, as a separate account distinct from all other funds and accounts held by the
Fiscal Agent under this Agreement, the Rebate Fund. Pursuant to the written direction of the
City, the Fiscal Agent shall deposit into the Rebate Fund moneys transferred by the City to the
Fiscal Agent pursuant to the Tax Certificate. The Rebate Fund shall be held either uninvested or
invested only in Federal Securities at the direction of the City. Moneys on deposit in the Rebate
Fund shall be applied only to payrnents made to the United States, to the extent such payments
are required by the Tax Certificate. The Fiscal Agent shall, upon written direction of the City,
make such payments to the United States.
The Fiscal Agent's sole responsibilities under this Section 6.02 are to follow the written
instructions of the City pertaining hereto and the Fiscal Agent shall have no independent
responsibility to monitor or enforce compliance by the City with the Tax Certificate. The City
shall be responsible for any fees and expenses incurred by the Fiscal Agent pursuant to this
Section 6.02.
P6401-1034\859556v2.doc 25
The Fiscal Agent shall, upon written request and direction from the City, transfer to or
upon the order of the City any moneys on deposit in the Rebate Fund in excess of the amount, if
any, required to be maintained or held therein in accordance with the Tax Certificate. Upon
receipt of such a written request and direction the Fiscal Agent is authorized to act thereon
without further inquiry, shall not be responsible for the accuracy thereof, and shall be absolutely
protected and incur no liability in relying thereon.
Section 6.03 Liahilit; nf C'iT. The City shall not incur any responsibility in respect of
the Bonds or this Agreement other than in connection with the duties or obligations explicitly
herein or in the Bonds assigned to or imposed upon it. The City shall not be liable in connection
with the performance of its duties hereunder, except for its own negligence or willful default.
In the absence of bad faith, the City may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the City and conforming to the requirements of this Agreement. The City shall not
be liable for any error of judgrnent made in good faith unless it shall be proved that it was
negligent in ascertaining the pertinent facts.
No provision of this Agreement shall require the City to expend or risk its own general
funds or otherwise incur any financial liability (other than with respect to the Assessment
Revenues) in the performance of any of its obligations hereunder, or in the exercise of and of its
rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to it.
The City may rely and shall be protected in acting or refraining from acting upon any
notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or
document believed by it to be genuine and to have been signed or presented by the proper party
or proper parties. The City may consult with counsel, who may be counsel to the City, with
regard to legal questions, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by it hereunder in good
faith and in accordance therewith.
Section 6.04 F1IIl}iln�rriPnt �f Agentc hv th,_ e C'itT. In order to perform its duties and
obligations hereunder, the City may employ such persons or entities as it deems necessary or
advisable. The City shall not be liable for any of the acts or omissions of such persons or entities
employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected
in doing so, upon the opinions, calculations, determinations and directions of such persons or
entities.
ARTICLE VII
THE FISCAL AGENT
Section 7.01 A�nnintment nf Ficr.al nt. Wells Fargo Bank, N.A. is hereby
appointed Fiscal Agent, registrar and paying agent for the Bonds. The Fiscal Agent undertakes to
P6401-1034\859556v2.doc 26
perform such duties, and only such duties, as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement against the Fiscal Agent.
Any financial institution into which the Fiscal Agent may be merged or converted or with
which it may be consolidated or any financial institution resulting from any merger, conversion
or consolidation to which it shall be a party or any financial institution to which the Fiscal Agent
may sell or transfer all or substantially all of its corporate trust business, provided such financial
institution shall be eligible under the following paragraph of this Section 7.01, shall be the
successor to the Fiscal Agent without the execution or filing of any paper or any further act,
anything herein to the contrary notwithstanding.
The City may remove the Fiscal Agent initially appointed, and any successor thereto, and
the City may appoint a successor or successors thereto, but any such successor shall be a
financial institution having (or in the case of a corporation or trust company included in a bank
holding company system, the related bank holding company shall have) a combined capital
(exclusive of borrowed capital) and surplus of at least $75,000,000, and subject to supervision or
examination by federal or state authority. If such financial institution publishes a report of
condition at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purposes of this Section 7.01, combined
capital and surplus of such financial institution shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
The Fiscal Agent may at any time resign by giving thirty (30) days' written notice to the
City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of
such resignation, the City shall promptly appoint a successor Fiscal Agent by an instruinent in
writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance
of appointment by the successor Fiscal Agent.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing
provisions of this Section 7.01 within sixty (60) days after the Fiscal Agent shall have given to
the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by
reason of its inability to act, the Fiscal Agent, at the expense of the City, or any Owner may apply
to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may
thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal
Agent.
Section 7.02 �,iah;l;tv c,f Ficcal AgPr,t. The recitals of facts, covenants and agreements
herein and in the Bonds contained shall be taken as statements, covenants and agreements of the
City and the Fiscal Agent assumes no responsibility for the correctness of the same, nor makes
any representations as to the validity or sufficiency of this Agreement or of the Bonds, nor shall
the Fiscal Agent incur any responsibility in respect thereof, other than in connection with the
duties or obligations herein or in the Bonds expressly assigned to or imposed upon it. The Fiscal
Agent shall not be liable in connection with the performance of its duties hereunder, except for
its own negligence or willful misconduct. The Fiscal Agent assumes no responsibility or liability
for any information, statement or recital in any offering memorandum or other disclosure
material prepared or distributed with respect to the issuance of the Bonds.
P6401-1034\859556v2.doc 27
In the absence of willful misconduct, the Fiscal Agent may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein, upon certificates,
written directions or opinions furnished to the Fiscal Agent and conforming to the requirements
of this Agreement. Except as provided above in this paragraph, the Fiscal Agent shall be
protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding,
in accordance with the terms of this Agreement, upon any resolution, order, notice, request,
consent or waiver, certificate, statement, affidavit, facsimile transmission, electronic mail or
other paper or document which it shall reasonably believe to be genuine and to have been
adopted or signed by the proper person or to have been prepared and furnished pursuant to any
provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any
investigation or inquiry as to any statements contained or matters referred to in any such
instrument.
The Fiscal Agent shall not be liable for any error of judgment made by a responsible
officer of the Fiscal Agent unless it shall be proved that the Fiscal Agent was negligent in
ascertaining the pertinent facts.
No provision of this Agreement shall require the Fiscal Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers unless an indemnity and security satisfactory to
the Fiscal Agent shall have been provided to the Fiscal Agent.
The Fiscal Agent shall not be responsible for accounting for, or paying to, any party to
this Agreement, including, but not limited to the City and the Owners, any returns on or benefit
from funds held for payment of unredeemed Bonds or outstanding checks and no calculation of
the same shall affect, or result in any offset against, fees due to the Fiscal Agent under this
Agreement.
The Fiscal Agent shall have no responsibility with respect to the payment of Debt Service
by the City or with respect to the observance or performance by the City of the other conditions,
covenants and terms contained herein, or with respect to the invesrinent of any moneys in any
fund or account established, held or maintained by the City pursuant to this Fiscal Agent
Agreement or otherwise.
All indemnification and releases from liability granted herein to the Fiscal Agent shall
extend to the directors, o�cers and employees of the Fiscal Agent. The Fiscal Agent may
execute any of its trusts or powers or perform its duties through attorneys, agents or receivers.
The Fiscal Agent shall not be considered in breach of or in default in its obligations
hereunder or progress in respect thereto in the event of enforced delay ("unavoidable delay") in
the performance of such obligations due to unforeseeable causes beyond its control and without
its fault or negligence, including, but not limited to, acts of God or of the public enemy or
terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine
restrictions, strikes, fteight embargoes, earthquakes, explosion, mob violence, riot, inability to
procure or general sabotage or rationing of labor, equipment, facilities, sources or energy,
material or supplies in the open market, litigation or arbitration involving a party or others
P6401-1034\859556v2.doc 28
relating to zoning or other governmental action or inaction pertaining to the project, malicious
mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors
due to such causes or any similar event and/or occurrences beyond the control of the Fiscal
Agent; provided that, in the event of any such unavoidable delay under this paragraph, the Fiscal
Agent notify the City in writing within five (5) business days after (i) the occurrence of the event
giving rise to the unavoidable delay, (ii) the Fiscal Agent's actual knowledge of the impending
unavoidable delay, or (iii) the Fiscal Agent's knowledge of sufficient facts under which a
reasonable person would conclude the unavoidable delay will occur.
Section 7.03 Tnfnrmatic,n. The Fiscal Agent shall provide to the City such information
relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the
City shall reasonably request, including, but not limited to, quarterly statements reporting funds
held and transactions by the Fiscal Agent.
Section 7.04 RP.tian�.P. h� Fi�l Ag�. The Fiscal Agent may rely and shall be
protected in acting or refraining from acting upon any notice, resolution, request, consent, order,
certificate, written direction, report, warrant, Bond, facsimile transmission, electronic mail or
other paper or document believed by it to be genuine and to have been signed or presented by the
proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel
to the City, with regard to legal questions, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffered by the Fiscal
Agent hereunder in accordance therewith.
Whenever in the administration of its duties under this Agreement the Fiscal Agent shall
deem it necessary or desirable that a matter be proved or established prior to taking or suffering
any action hereunder, such matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed
to be conclusively proved and established by a certificate of the City, and such certificate shall be
full warranty to the Fiscal Agent for any action taken or suffered under the provisions of this
Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal
Agent may, in lieu thereof, accept other evidence of such matter or may require such additional
evidence as to it may seem reasonable.
Section 7.05 C'�mnensatinn; Tnde,,,nificatinn. The City shall pay to the Fiscal Agent
from time to time reasonable compensation for all services rendered as Fiscal Agent under this
Agreement, and also all reasonable expenses, charges, fees and other disbursements, including
those of its attorneys (including the allocated costs and disbursements of in-house counsel),
agents and employees, incurred in and about the performance of its powers and duties under this
Agreement, and the Fiscal Agent shall have a lien therefor on any funds at any time held by it
under this Agreement. The City further agrees, to the extent permitted by applicable law, to
indemnify and save the Fiscal Agent, its officers, employees, directors and agents, harmless
against any costs, claims, expenses or liabilities, including, without limitation fees and expenses
of its attorneys, which it may incur in the exercise and performance of its powers and duties
hereunder which are not due to its negligence or willful misconduct. The obligation of the City
under this Section 7.Q5 shall survive resignation or removal of the Fiscal Agent under this
Agreement and payment of the Bonds and discharge of this Agreement.
P6401-1034�859556v2.doc 29
Section 7.06 R�nkc ar,r� Accn��r,tc. The Fiscal Agent shall keep, or cause to be kept,
proper books of record and accounts, separate from all other records and accounts of the Fiscal
Agent, in which complete and correct entries shall be made of all transactions made by it with
respect to the expenditure of amounts disbursed from the Redemption Fund, the Assessment
Fund and the Reserve Fund. Such books of record and accounts shall, upon reasonable notice, at
ail times during business hours be subject to the inspection of the City and the Owners of not less
than ten percent (10%) of the aggregate principal amount of the Bonds then Outstanding, or their
representatives duly authorized in writing.
ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Sectlon 8.01 AmPn�lm�tc PPrmittP�l.
(a) Subject to Section 8.09 below, this Agreement and the rights and obligations of
the City and of the Owners of the Bonds may be modified or amended at any time by a
Supplemental Agreement pursuant to the affirmative vote at a meeting of the Owners, or with the
written consent, without a meeting, of the Owners of at least sixty percent (60%) in aggregate
principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in
Section 8.04 hereof. No such modification or amendment shall (i) extend the maturity of any
Bond or the time for paying interest thereon, or otherwise alter or impair the obligation of the
City to pay the principal of, and the interest and any premium on, any Bond, without the express
consent of the Owner of such Bond, or (ii) permit the creation of any pledge of or lien upon the
Assessment Revenues, or the moneys on deposit in the Redemption Fund, superior to or on a
parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted
by the 1915 Act), the laws of the State or this Agreement), (iii) reduce the percentage of Bonds
required for the amendment hereof, (iv) reduce the principal amount of or redemption premium
on any Bond or reduce the interest rate thereon, or (v) modify the rights or obligations of the
Fiscal Agent without its prior consent.
(b) Subject to Section 8.09 below, this Agreement and the rights and obligations of
the City and the Owners may also be modified or amended at any time by a Supplemental
Agreement, without the consent of any Owners, only to the extent permitted by law and only for
any one or more of the following purposes:
{i) to add to the covenants and agreements of the City in this Agreement
contained, other covenants and agreements thereafter to be observed, or to limit or surrender any
right or power herein reserved to or conferred upon the City;
(ii) to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provisions of this Agreement, or in regard to
questions arising under this Agreement, as the City and the Fiscal Agent may deem necessary or
desirable and not inconsistent with this Agreement, and which shall not be materially adverse to
the interests of the Owners of the Bonds; ar
P6401-1034\859556v2.doc 30
(iii) to make such additions, deletions or modifications as may be necessary or
desirable to assure compliance with Section 148 of the Code relating to required rebate of
moneys to the United States or otherwise as may be necessary to assure exclusion from gross
income for federal income tax purposes of interest on the Bonds or to conform with the Code.
(iv) to modify, amend or supplement this Agreement in such manner as to
permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar
federal statute hereafter in effect; and
(v) to make other modifications not adversely affecting any Outstanding
Bonds in any material respect.
Section 8.02 9�acnPr�' MP •}P in�. The City may at any time call a meeting of the
Owners. In such event the City is authorized to fix the time and place of any such meeting and to
provide for the giving of notice thereof and to fix and adopt rules and regulations for the conduct
of the meeting.
SeCtlon 8.03 Prneec�ure fnr Amenclment with Written Cnn�ent �f (�wners. To the extent
that an amendment is permitted by Section 8.01(a) hereof, the City may at any time enter into a
Supplemental Agreement amending the provisions of the Bonds or of this Agreement or any
Supplemental Agreement, to take effect when and as provided in this Section 8.03. A copy of the
Supplemental Agreement, together with a request to Owners for their consent thereto, shall be
mailed by first class mail, postage prepaid, by the City to each Owner of Bonds Outstanding, but
failure to mail copies of the Supplemental Agreement and request shall not affect the validity of
the Supplemental Agreement when assented to as in this Section provided.
Such a Supplemental Agreement shall not become effective unless there shall be filed
with the City the written consents of the Owners of at least sixty percent (60%) in aggregate
principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in
Section 8.04 hereo� and a notice shall have been mailed as hereinafter in this Section provided.
Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for
which such consent is given, which proof shall be such as is permitted by Section 11.04 hereof.
Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any
subsequent Owner (whether or not such subsequent Owner has notice thereo� unless such
consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing
such revocation with the City prior to the date when the notice hereinafter in this Section
provided for has been mailed.
After the Owners of the required percentage of Bonds shall have filed their consents to
the Supplemental Agreement, the City shall mail a notice to the Owners in the manner
hereinbefore provided in this Section for the mailing of the Supplemental Agreement, stating in
substance that the Supplemental Agreement has been consented to by the Owners of the required
percentage of Bonds and will be effective as provided in this Section (but failure to mail copies
of said notice shall not affect the validity of the Supplemental Agreement or consents thereto).
Proof of the mailing of such notice shall be filed with the City. A record, consisting of the papers
required by this Section 8.03 to be filed with the City, shall be proof of the matters therein stated
P6401-1034\859556v2.doc 31
until the contrary is proved. The Supplemental Agreement shall become effective upon the filing
with the City of the proof of mailing of such notice, and the Supplemental Agreement shall be
deemed conclusively binding (except as otherwise hereinabove specifically provided in this
Article) upon the City and the Owners of all Bonds then Outstanding at the expiration of sixty
(60) days after such filing, except in the event of a final decree of a court of competent
jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose
commenced within such sixty (60) day period.
Section 8.04 DiSs�ualj�P�1 RQuds. Bonds owned or held for the account of the City,
excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of
any vote, consent or other action or any calculation of Outstanding Bonds provided for in this
Article VIII, and shall not be entitled to vote upon, consent to, or participate in any action
provided for in this Article VIII.
Section 8.05 E�ect nf �ti}��1Pmental AgreemPnt. From and after the time any
Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall be
deemed to be modified and amended in accordance therewith, and the respective rights, duties
and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall
thereafter be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such Supplemental
Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and
all purposes.
SeCtion 8.06 F.nc��rcement �f Re= la ..mPnt nf Rnnds icc i.cl aft x Amenc�ments. The
City may determine that Bonds issued and delivered after the effective date of any action taken as
provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved
by the City, as to such action. In that case, upon demand of the Owner of any Bond Outstanding
at such effective date and upon presentation of his or her Bond for that purpose at the Principal
Office of the Fiscal Agent or at such other office as the Fiscal Agent may select and designate for
that purpose, a suitable notation shall be made on such Bond. The City may determine that new
Bonds, so modified as in the opinion of the City is necessary to conform to such action, shall be
prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then
Outstanding, such new Bonds shall be exchanged at the Principal Off`ice of the Fiscal Agent
without cost to any Owner, for like Bonds then Outstanding, upon surrender of such Bonds.
Sectioil 8.07 Amenc�atnry F.nd�rsement nf Rnnc�c. The provisions of this Article shall
not prevent any Owner ftom accepting any amendment as to the particular Bonds held by the
Owner, provided that due notation thereof is made on such Bonds.
Section 8.08 r�n�Pnt nf Fiscat Ag�. The Fiscal Agent shall not be required to enter
into or consent to any Supplemental Agreement which, in the sole judgment of the Fiscal Agent,
might adversely affect the rights, obligations, powers, privileges, indemnities, and immunities
provided to the Fiscal Agent herein. The Fiscal Agent upon request, shall be provided an opinion
of counsel that any such Supplemental Agreement complies with the provisions of this Article
VIII and the Fiscal Agent may conclusively rely upon such opinion.
P6401-1034\859556v2.doc 32
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Section 9.01 F.ventc nf i�efa��lt. The following events shall be Events of Default
hereunder.
(a) Default in the due and punctual payment of the principal of or redemption
premium, if any, on any Bond when and as the same shall become due and payable, whether at
maturity as therein expressed or from mandatory redemption;
(b) Default in the due and punctual payment of the interest on any Bond when and as
the same shall become due and payable; or
(c) Default by the City in the observance of any of the agreements, conditions or
covenants on its part in this Agreement or in the Bonds contained, and the continuation of such
default for a period of thirty (30) days after the City shall have been given notice in writing of
such default by the Owners of not less than 25% of the Outstanding Bonds, provided that if
within thirty (30) days the City has commenced curing f the default and diligently pursues
elimination thereof, such period shall be extended to permit such default to be eliminated.
Section 9.02 Remec�ies nf Owners. Following the occurrence of an Event of Default,
any Owner shall have the right for the equal benefit and protection of all Owners similarly
situated:
(a) By mandamus or other suit or proceeding at law or in equity to enforce his or her
rights against the City and any of the members, officers and employees of the City, and to compel
the City or any such members, officers or employees to perform and carry out their duties under
the 1915 Act, the 1913 Act, any other law and their agreements with the Owners as provided in
this Agreement;
(b) By suit in equity to enjoin any actions or things which are unlawful or violate the
rights of the Owners; or
(c) Upon the happening of and Event of Default, by a suit in equity to require the City
and its members, officers and employees to account as the trustee of an express trust.
Nothing in any provision of this Agreement, or in the Bonds, shall affect or impair the
obligation of the City, which is absolute and unconditional, to pay the interest on and principal of
the Bonds to the respective Owners of the Bonds at the respective dates of maturity, as provided
in this Agreement, out of the Assessments pledged for such payment, or affect or impair the right
of action, which is also absolute and unconditional, of such Owners to institute suit to enforce
such payment by virtue of the contract embodied in the Bonds in this Agreement.
A waiver of any Event of Default or breach of duty or contract by any Owner shall not
affect any subsequent Event of Default or breach of duty or contract, or impair any rights or
P6401-1034\859556v2.doc 33
remedies on any such subsequent Event of Default or breach. No delay or omission by any
Owner to exercise any right or power accruing upon any Event of Default shall impair any such
right or power or shall be construed to be a waiver of any such Event of Default or an
acquiescence therein, and every power and remedy conferred upon the Owners by the 1913 Act
or the 1915 Act or by this Agreement may be enforce ed and exercised from time to time and as
often as shall be deemed expedient by the Owners.
If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned
or determined adversely to the Owners, the City and the Owners shall be restored to their former
positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
No remedy conferred by this Agreement upon or reserved to the Owners is intended to be
exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition
to every other remedy given under this Agreement or now or hereafter existing, at law or in
equity or by statute or otherwise, and may be exercise without exhausting and without regard to
any other remedy conferred by the 113 Act, the 1915 Act or any other law.
ARTICLE X
BOOK-ENTRY SYSTEM
Section 10.01 Rnnk-Fntr� ��ctP,�; i.imitecl (�hl;� ti�n �f ['i T. The Bonds shall be
initially delivered in the form of a separate single fully registered Bond (which may be
typewritten) for each of the maturities of the Bonds. Upon initial delivery, the ownership of each
such Bond shall be registered in the Registration Books in the name of the Nominee as nominee
of the Depository. Except as provided in Section 10.03, all of the Outstanding Bonds shall be
registered in the Registration Books in the name of the Nominee.
With respect to Bonds registered in the Registration Books in the name of the Nominee, the City
and the Fiscal Agent shall have no responsibility or obligation to any Participant or to any person
on behalf of which such a Participant holds an interest in the Bonds. Without limiting the
immediately preceding sentence, the City and the Fiscal Agent shall have no responsibility or
obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any
Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant
or any other person, other than an Owner as shown in the Registration Books, of any notice with
respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository and
its Participants of the beneficial interests in the Bonds to be redeemed in the event the Bonds are
redeemed in part, or (iv) the payment to any Participant or any other person, other than an Owner
as shown in the Registration Books, of any amount with respect to principal of, premium, if any,
or interest due with respect to the Bonds. The City and the Fiscal Agent may treat and consider
the person in whose name each Bond is registered in the Registration Books as the holder and
absolute owner of such Bond for the purpose of payrnent of principal, premium, if any, and
interest with respect to such Bond, for the purpose of giving notices of redemption and other
matters with respect to such Bond, for the purpose of registering transfers with respect to such
Bond, and for all other purposes whatsoever. The Fiscal Agent shall pay all principal of,
premium, if any, and interest due with respect to the Bonds only to or upon the order of the
respective Owners, as shown in the Registration Books, or their respective attorneys duly
P6401-1034\859556v2.doc 34
authorized in writing, and all such payments shall be valid and effective to satisfy and discharge
fully the City's obligations with respect to payment of the principal, premium, if any, and interest
due with respect to the Bonds to the extent of the sum or sums so paid. No person other than an
Owner, as shown in the Registration Books, shall receive a Bond evidencing the obligation of the
City to make payrnents of principal, premium, if any, and interest pursuant to this Agreement.
Upon delivery by the Depository to the Fiscal Agent and the City of written notice to the effect
that the Depository has determined to substitute a new nominee in place of the Nominee, and
subject to the provisions herein with respect to Record Dates, the word Nominee in this
Agreement shall refer to such new nominee of the Depository.
Section 10.02 �precentatinn T.etter, In order to qualify the Bonds for the Depository's
book-entry system, the City has heretofore executed and delivered to such Depository a
Representation Letter. In addition to the execution and delivery of the Representation Letter, the
Mayor, the City Clerk and all other Authorized Officers are hereby authorized to take any other
actions, not inconsistent with this Agreement, to qualify the Bonds for the Depository's
book-entry program.
Section 10.03 Transfer� ni�tside Rnnk-F.ntr�, �vct�, In the event (a) the Depository
determines not to continue to act as securities depository for the Bonds, or (b) the City
determines that the Depository shall no longer so act, then the City will discontinue the
book-entry system with the Depository. If the City fails to identify another qualified securities
depository to replace the Depository, then the Bonds so designated shall no longer be restricted to
being registered in the Registration Books in the name of the Nominee, but shall be registered in
whatever name or names persons transferring or exchanging Bonds shall designate, in accordance
with the provisions of Section 2.08.
Section 10.04 P�;ment� tn th . N�min ... Notwithstanding any other provisions of this
Agreement to the contrary, so long as any Bond is registered in the name of the Nominee, all
payments with respect to principal, premium, if any, and interest due with respect to such Bond
and all notices with respect to such Bond shall be made and given, respectively, as provided in
the Representation Letter or as otherwise instructed by the Depository.
Section 10.05 Tnitial 17P»cic;tnr�r anci NnmineP. The initial Depository under this Article
shall be The Depository Trust Company, New York, New York. The initial Nominee shall be
Cede & Co., as Nominee of The Depository Trust Company, New York, New York.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Renefitc �f AgrPPmPnt �.imite� t� PartiP�. Nothing in this Agreement,
expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and
the Owners, any right, remedy or claim under or by reason of this Agreement. Any covenants,
stipulations, promises or agreements in this Agreement contained by and on behalf of the City
shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent.
P6401-10341859556v2.doc 35
SeCtiOn 11.02 �1��'�Pccnrc T�eemPr� incluc�erl in All Reference� t� Preclecess�r. Whenever
in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent is named
or referred to, such reference shall be deemed to include the successors or assigns thereof, and all
the covenants and agreements in this Agreement contained by or on behalf of the City or the
Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof
whether so expressed or not.
Section 11.03 Ia���haraP �f A_u_�-PPm�. If the City shall pay and discharge the entire
indebtedness on all Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest and any
premium on all Bonds, as and when the same become due and payable;
(b) by depositing with the Fiscal Agent, in trust, at or before maturity, an amount of
money which, together with the amounts then on deposit in the Redemption Fund, the
Assessment Fund and the Reserve Fund, is fully sufficient to pay all Bonds, including all
principal, interest and redemption premiums, if any; or
(c) by irrevocably depositing with the Fiscal Agent or another fiduciary, in trust, cash
or noncallable Federal Securities in such amount as the City shall determine, as confirmed by an
Independent Financial Consultant, will, together with the interest to accrue thereon and amounts
then on deposit in the Redemption Fund, the Assessment Fund and the Reserve Fund, be fully
sufficient to pay and discharge the indebtedness on all Bonds (including all principal, interest and
redemption premiums) at or before their respective maturity dates; and if such Bonds are to be
redeemed prior to the maturity thereof, notice of such redemption shall have been given as in this
Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the
giving of such notice, then, at the election of the City, and notwithstanding that any Bonds shall
not have been surrendered for payment, the pledge of the Assessment Revenues and other funds
provided for in this Agreement and all other obligations of the City under this Agreement with
respect to all Bonds shall cease and terminate, except the obligation of the City to pay or cause to
be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon, the
obligation of the City to pay all amounts owing to the Fiscal Agent pursuant to Section 7.05
hereof, and the obligations of the City pursuant to the covenants contained in Section 5.08
hereof, and thereafter Assessment Revenues shall not be payable to the Fiscal Agent. Notice of
such election shall be filed with the Fiscal Agent. The satisfaction and discharge of this
Agreement shall be without prejudice to the rights of the Fiscal Agent to charge and be
reimbursed by the City for the expenses which it shall thereafter incur in connection herewith.
Any funds held by the Fiscal Agent to pay and discharge the indebtedness on all Bonds,
upon payment of all fees and expenses of the Fiscal Agent, which are not required for such
purpose, shall be paid over to the City.
Section 11.04 F.xec��tinn nf l�ncumentc anc� Prnnf nf (�wnerchi�h� C)wnerc, Arij�
request, declaration or other instrument which this Agreement may require or permit to be
executed by Owners may be in one or more instruments of similar tenor, and shall be executed by
Owners in person or by their attorneys appointed in writing.
P6441-1034\859556v2.doc 36
Except as otherwise herein expressly provided, the fact and date of the execution by any
Owner or his or her attorney of such a request, declaration or other inshument, or of a writing
appointing such an attorney, may be proved by the certificate of any notary public or other officer
authorized to take acknowledgments of deeds to be recorded in the state in which he or she
purports to act, that the person signing such request, declaration or other instrument or writing
acknowledged to him or her the execution thereof, or by an affidavit of a witness of such
execution, duly sworn to before such a notary public or other officer.
Except as otherwise herein expressly provided, the ownership of registered Bonds and the
amount, maturity, number and date of holding the same shall be proved by the Registration
Books.
Any request, declaration, consent or other instrument or writing of the Owner of any
Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be
done by the City or the Fiscal Agent in accordance therewith.
SeCtlon 11.05 V�laiver �f Percnnal T.iahilitv. No member, officer, agent or employee of
the City shall be individually or personally liable for the payment of the principal of, or interest
or any premium on, the Bonds- but nothing herein contained shall relieve any such member,
officer, agent or employee from the performance of any official duty provided by law.
Section 11.06 �iatices. Any notice, request, complaint, demand or other communication
under this Agreement shall be given by first class mail or personal delivery to the party entitled
thereto at its address set forth below, or by telecopy or other form of telecommunication,
confirmed by telephone at its number set forth below. Notice shall be effective either (a) upon
transmission by telecopy or other form of telecommunication, (b) 48 hours after deposit in the
United States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon
actual receipt.
If to the City: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
Attention: City Manager
Telecopier: (760) 340-0574
If to the Fiscal Agent: Wells Fargo Bank, N.A.
707 Wilshire Boulevard
Los Angeles, California 90017
Attention: Corporate Trust Department
Telecopier: (213) _-
The above parties may designate any further or different addresses to which subsequent notices,
certificates or other communications shall be sent.
The Fiscal Agent agrees to accept and act upon facsimile transmission of written
instructions and/or directions pursuant to this Agreement; =r�vitled, ho�atexer, that: (a)
P6401-1034\859556v2.doc 37
subsequent to such facsimile transmission of written instructions, there shall be provided to the
Fiscal Agent originally executed instructions and/or directions in a timely manner, (b) such
originally executed instructions and/or directions by the City shall be signed by a person as may
be designated and authorized to sign for the City and, (c) the City shall provide to the Fiscal
Agent an incumbency certificate listing such designated persons and the City shall from time to
time provide the Fiscal Agent updated incumbency certificates, as necessary or appropriate,
reflecting persons who have been added or deleted from the listing.
Section 11.07 �P�Prahilit}c. If any section, paragraph, sentence, clause or phrase of this
Agreement shall for any reason be held by a court of competent jurisdiction to be illegal or
unenforceable, such holding shall not affect the validity of the remaining portions of this
Agreement. The City hereby declares that it would have executed and delivered this Agreement
and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the
issue of the Bonds pursuant thereto irrespective of the fact that any one or more sections,
paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid or
unenforceable.
Section 11.08 Il.tt�la�mP�i M�. n�. Anything contained herein to the contrary
notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of
the principal of, and the interest and any premium on, the Bonds which remains unclaimed for
two (2) years after the date when the payment of such principal, interest and premium have
become payable, if such moneys were held by the Fiscal Agent at such date, shall be repaid by
the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall
have no responsibility or liability for such moneys.
Section 11.09 T licahiP �.aw. This Agreement shall be governed by and enforced in
accordance with the laws of the State applicable to contracts made and performed in the State of
California.
Section 11.10 C'.nnflict w;th 1915 A�t. In the event of a conflict between any provision
of this Agreement with any provision of the 191 S Act as in effect on the Closing Date, the
provision of the 1915 Act, as applicable, shall prevail over the conflicting provision of this
Agreement.
Section 11.11 C'nnciusive Fvic�ence nf Repi�laritv, Bonds issued pursuant to this
Agreement shall constitute conclusive evidence of the regularity of all proceedings under the
1915 Act relative to their issuance.
Section 11.12 ��ent �n Rusiness 1�aT. In any case where the date of the payment of
interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption is
other than a Business Day, the payment of interest or principal (and premium, if any) need not be
made on such date but may be made on the next succeeding day which is a Business Day with the
same force and effect as if made on the date required, and no interest shall accrue for the period
from and after such date.
P6401-1034\859556v2.doc 38
Section 11.13 C'rn�„remartc. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
[Remainder of Page Intentionally Left Blank]
P6401-1034',.859556v2.doc 39
IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its name
and attested, and the Fiscal Agent, in acknowledgment of its acceptance of the duties created
hereunder, has caused this Agreement to be executed in its name, all as the date first written
above.
CITY OF PALM DESERT
:
Mayor
WELLS FARGO BANK, N.A.
as Fiscal Agent
:
P6401-1034\859556v2.doc 40
Authorized Officer
EXHIBIT A
[FORM OF BOND]
Unless this certificate is presented by an authorized representative of The Depository Trust Company, a
New York corporation ("DTC"), to the City or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such
other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
NO.
$
CITY OF PALM DESERT
HIGHLANDS UTILITY UNDERGROUNDING ASSESSMENT DISTRICT NO. 04-01
LIMITED OBLIGATION IMPROVEMENT BOND
SERIES 2006
1NTEREST RATE MATURITY DATE ORIGINAL I5SUE DATE CUSIP
September 2, 20_ , 2006
REGISTERED OWNER:
PRINCIPAL AMOUNT:
Under and by virtue of the Improvement Bond Act of 1915, as set forth in Division 10
(commencing with Section 8500) of the California Streets and Highways Code (the "1915 Act")
the City of Palm Desert, County of Riverside, California (the "City"), will, out of the
Redemption Fund for the payrnent of the Bonds issued upon the unpaid Assessments made for
the for the acquisition, work and improvements more fully described in proceedings taken
pursuant to Resolution No. , adopted by the City Council of the City on , 2006
(the "Resolution of Intention"), pay to the registered owner hereof, or registered assigns, on the
maturity date stated above, the principal sum shown hereon in lawful money of the United States
of America and in like manner will pay interest at the rate per annum stated above, payable
semiannually on March 2 and September 2(each an "Interest Payrnent Date") in each year
commencing on September 2, 2006. This Bond bears interest from the Interest Payment Date
next preceding its date of authentication and registration, unless this Bond is authenticated and
registered (i) on an Interest Payment Date, in which event interest shall be payable from such
date of authentication and registration, (ii) prior to an Interest Payrnent Date and after the close of
P6401-1034\859556v2.doc A-1
business on the fifteenth (15`h) day of the month immediately preceding such Interest Payrnent
Date, in which event it shall bear interest from such Interest Payment Date, or (iii) prior to the
close of business on the 15th day of the month immediately preceding the first Interest Payment
Date, in which event it shall bear interest from the Bond Date stated above, until payment of such
principal sum shall have been discharged; r��, h�ate�, that if at the time of authentication
of such Bond, interest is in default, interest on that Bond shall be payable from the last Interest
Payment Date to which the interest has been paid or made available for payment. Both the
principal hereof and redemption premium hereon are payable upon presentation and surrender
hereof at the corporate trust office of Wells Fargo Bank, N.A., or its successor, as Fiscal Agent
(the "Fiscal AgenY'), in Los Angeles, California, or such other place as may be designated by the
Fiscal Agent and the interest hereon is payable by check mailed, by first-class mail, to the owner
hereof at such owner's address as it appears on the Registration Books on the fifteenth (15th)
day of the month immediately preceding each Interest Payment Date, or by wire transfer made on
the Interest Payrnent Date upon instructions of any owner of $500,000 or more in aggregate
principal amount of Bonds delivered to the Fiscal Agent prior to the fifteenth (15th) day of the
month immediately preceding the Interest Payment Date.
This Bond will continue to bear interest after maturity at the rate above stated, provided
that it is presented at maturity and payment thereof is refused upon the sole ground that there are
not sufficient moneys in the Redemption Fund with which to pay same. If it is not presented at
maturity interest hereon will run only until maturity.
This Bond is one of several annual series of bonds of like date, tenor and effect, but
differing in amounts, maturities and interest rates, issued by the City of Palm Desert under the
1915 Act, Resolution No. of the City Council of the City, adopted on , 2006
(the "Resolution of Issuance") and a Fiscal Agent Agreement dated as of July 1, 2006 (the
"Fiscal Agent AgreemenY') by and between the City and the Fiscal Agent in the aggregate
principal amount of � for the purpose of providing means for the improvements
described in the proceedings, and is secured by the moneys in the Redemption Fund and by the
unpaid Assessments made for the payment of such improvements, and, including principal and
interest, is payable exclusively out of the Redemption Fund and certain other funds and accounts
as provided in the Fiscal Agent Agreement. The City will not obligate itself to advance
available funds from the City Treasury to cure any deficiency which may occur in the
Redemption Fund.
This Bond or any portion of it in the amount of five thousand dollars ($5,000), or any
integral multiple thereof, may be redeemed and paid in advance of maturity upon March 2 or
September 2 in any year by giving at least 30 days' notice by registered or certified mail, postage
prepaid, or by personal service to the registered owner hereof at the registered owner's address as
it appears on the Registration Books at the following redemption prices expressed as percentages
of the principal amount of the Bonds to be redeemed together with interest accrued to the date of
redemption:
P6401-1034\859556v2.doc A-2
Redemntinn l�ate.c ec�em�ti�n Prices
[to come] 103%
100
This Bond is subject to refunding pursuant to the procedure of Division 11 (commencing
with Section 9000) or Division 11.5 (commencing with Section 9500) of the Streets and
Highways Code of the State of California prior to maturity.
This Bond is transferable by the registered owner hereof, in person or by the owner's
attorney duly authorized in writing, at the office of the Fiscal Agent, subject to the terms and
conditions provided in the Fiscal Agent Agreement including the payment of certain charges, if
any, upon surrender and cancellation of this Bond. Upon transfer, a new registered Bond or
Bonds, of any authorized denomination or denominations, of the same maturity, and for the same
aggregate principal amount, will be issued to the transferee in exchange therefor.
Bonds shall be registered only in the name of an individual (including joint owners), a
corporation, a partnership or a trust.
Neither the City nor the Fiscal Agent shall be required to exchange or to register the
transfer of Bonds during the fifteen days immediately preceding any interest payment date or of
any Bonds selected for redemption in advance of maturity. �
The City and the Fiscal Agent may treat the owner hereof as the absolute owner for all
purposes, and the City and the Fiscal Agent shall not be affected by any notice to the contrary.
This Bond shall not be entitled to any benefit under the 1915 Act, the Resolution of
Issuance or the Fiscal Agent Agreement, or become valid or obligatory for any purpose, until the
certificate of authentication and registration hereon endorsed shall have been dated and manually
signed by the Fiscal Agent.
P6401-1034\859556v2.doc A-3
IN WITNESS WHEREOF, the City of Palm Desert has caused the Bond to be signed and
attested by the facsimile signatures of the City Treasurer and by the City Clerk, and has caused its
corporate seal to be reproduced hereon all the Bond Date above.
CITY OF PALM DESERT
I�
[SEAL]
Attest:
City Clerk
Treasurer
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CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Bonds described in the within mentioned Fiscal Agent Agreement
which has been authenticated and registered on
WELLS FARGO BANK, N.A.,
as Fiscal Agent
I�
Authorized Signatory
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ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s)
attorney,
to transfer the same on the books kept for registration hereof with full power of substitution in
the premises.
Dated: , 20
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the within
Bond in every particular, without
alteration or enlargement or any
change whatsoever.
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EXHIBIT B
[FORM OF IMPROVEMENT FUND REQUISITION]
Requisition No.
with reference to
$
City of Palm Desert
Highlands Utility Undergrounding Assessment District No. 04-01
Limited Obligation Improvement Bonds
Series 2006
1. The City of Palm Desert (the "City") hereby requests Wells Fargo Bank, N.A., as
Fiscal Agent under the Fiscal Agent Agreement, dated as of July 1, 2006 (the "Fiscal Agent
Agreement"), to pay from the moneys in the Improvement Fund, the amounts shown on Schedule
I attached hereto to the parties indicated in Scheciule T.
2. The payees, the purposes for which the costs have been incurred, and the amount
of the disbursements requested are itemized on ��h .Pd»i .1 hereto.
3. Each obligation mentioned in Sche.���le i hereto has been properly incurred and is
a proper charge against the Improvement Fund. None of the items for which payment is
requested has been reimbursed previously from the Improvement Fund.
Capitalized terms not defined herein have to meanings ascribed to them in the Fiscal
Agent Agreement.
Dated: , 20
CITY OF PALM DESERT
:
[Name]
[Title]
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