HomeMy WebLinkAboutRes 06-33 CFD 2005-1 University Park Special Tax Bond Series 2006ACITY OF PALM DESERT
STAFF REPORT
REQUEST: CONSIDERATION OF THE AUTHORIZATION OF ISSUANCE OF
SPECIAL TAX BONDS, SERIES 2006A, OF CITY OF PALM
DESERT COMMUNITY FACILITIES DISTRICT (CFD) NO. 2005-1
(UNIVERSITY PARK) AND APPROVAL OF RELATED
DOCUMENTS
SUBMITTED BY: DAVE YRIGOYEN, DIRECTOR OF REDEVELOPMENT/HOUSING
DATE: MARCH 9, 2006
CONTENTS: RESOLUTION NO. 06- _3
FORM OF BOND INDENTURE
FORM OF BOND PURCHASE AGREEMENT
FORM OF ACQUISITION AGREEMENT
FORM OF PRELIMINARY OFFICIAL STATEMENT (INCLUDES
FORM OF CONTINUING DISCLOSURE AGREEMENT)
Recommendation:
By Minute Motion, that the City Council adopt the following resolution:
• Resolution No. 06- , a resolution of the City Council of the City of
Palm Desert, acting for itself and as the legislative body of City of
Palm Desert Community Facilities District No. 2005-1 (University
Park) to authorize the issuance of its special tax bonds, Series
2006A, in a principal amount not to exceed fifty million dollars
($50,000,000) and approving certain documents and taking certain
other actions in connection therewith.
Executive Summarv:
Approval of the attached documents in substantially the form presented is required in
order for the City of Palm Desert Community Facilities District No. 2005-1 (University
Park) (the "University Park CFD") to issue the first of two series of special tax bonds
(the "Series 2006A Bonds") to finance the public infrastructure to serve the property
within the University Park CFD.
Background:
At the request by petition dated October 12, 2005 of Desert Wells 237, LLC, a California
limited liability company, Albor Properties III, LP, a California limited partnership, Palm
Desert Funding Company, LP, a Delaware limited partnership, The University Village
Staff Report
Authorization of Issuance of Special Tax Bonds Series 2006A — PD CFD No. 2005-1
Page 2 of 5
March 9, 2006
Partnership, a California general partnership, and Shaw/Palm Desert 1, LLC, a
California limited liability company (collectively, "Developer"), the City Council on
January 12, 2006 formed the University Park CFD.
The purpose of the University Park CFD is to finance improvements to serve the
property within the CFD, such as streets, sewers, water systems, well sites (including
site land acquisition), storm drains, traffic signals, parks (including acquisition), utilities,
Cook Street pedestrian bridge, and landscaping. Other uses are for various developer
impact fees such as the Fringed -Toed Lizard fee, public works drainage, signals, sewer
and water fees, CVAG transportation fees, and Art -in -Public Places fees. The
boundaries of the University Park CFD coincide with the boundaries of Parcel Map No,
31730, as adjusted, and total acreage of the property within the University Park CFD is
approximately 266.877 acres. As stated in the Community Facilities District Report
dated December 8, 2005, prepared and filed by MuniFinancial with the City Clerk prior
to the opening of the public hearing on the same date, the estimated aggregate cost of
the facilities to be financed by the University Park CFD is approximately $57,776,627 to
be spread across two bond issues.
The location of facilities to be financed by the University Park CFD generally includes
the following streets:
• Frank Sinatra Drive: from West of Cook Street to College Drive
• Cook Street: from Frank Sinatra Drive to Gerald Ford Drive
• Portola Avenue: from College Drive to Gerald Ford Drive
• Southern half of Gerald Ford Drive: from Portola Avenue to Cook Street
• University Park Drive: from College Drive to Cook Street
• Technology Drive: from College Drive to Gerald Ford Drive
• Pacific Avenue: from College Drive to Gerald Ford Drive
• College Drive: from Portola Avenue to Frank Sinatra Drive
• In -tract streets
On January 12, 2006, following formation of the University Park CFD, a duly noticed
and continued public hearing pursuant to the Mello -Roos Community Facilities Act of
1982 (the "Act") was reconvened and concluded, and there was no majority protest filed
prior to the conclusion of the public hearing. Subsequently on the same date, this City
Council adopted Resolution No. 06-6 to form the University Park CFD. Following
University Park CFD formation, also on January 12, 2006, the eight qualified electors
within the University Park CFD voted in favor of propositions to incur bonded
indebtedness not to exceed $70,000,000 to finance the proposed facilities, to levy the
proposed special tax to pay for the facilities (including debt service on the bonds issued
to finance the facilities), and to establish an Article XIIIB appropriations limit equal to all
G: RDAWada Hunt\WPDATA\YRIGOYEN\,STFRPTS\030906 PD CFD 2005-1.DOC 2
Staff Report
Authorization of Issuance of Special Tax Bonds Series 2006A - PD CFD No. 2005-1
Page 3 of 5
March 9, 2006
the proceeds of the special tax collected annually within the University Park CFD. In
accordance with the election, this City Council adopted on February 9, 2006, Ordinance
No. 1107 authorizing the levy of the special tax within the University Park CFD, as
proposed.
Pursuant to the Act, if more than two-thirds of the votes cast at the election are in favor
of incurring the bonded indebtedness,- the City Council may by resolution provide for the
issuance of the bonds by the University Park CFD and the related terms and
agreements.
If adopted, Resolution No. 06- 33 will authorize the University Park CFD to issue bonds
in an aggregate principal amount not to exceed $50,000,000 designated as the "City of
Palm Desert Community Facilities District No. 2005-1 (University Park) Special Tax
Bonds, Series 2006A" to finance the proposed public facilities, provided the overall
interest rate does not exceed 6.50% per annum and the discount paid to the underwriter
for the bonds, exclusive of original issue discount, does not exceed 1.50% of the
principal amount of the bonds.
The City Council is requested to authorize the issuance of the 2006A Bonds as the first
of 2 series in order to maximize execution (i.e., more favorable terms) on the sale of the
bonds. As is typical for special tax bonds issued by community facilities districts
established under the Act, the 2006A Bonds are considered speculative in nature and
will be unrated and uninsured, due to the relationship of these bonds to real estate
development. The market for special tax bonds is considered smaller than the market
for insured tax allocation bond issues. The investors are expected to be institutional
investors (such as mutual funds) and other investors experienced in the investment of
below -investment grade bonds, and the underwriters (Stinson Securities, LLC, and
Kinsell, Newcomb & De Dios, Inc.) will sell the 2006A Bonds in a public offering to such
investors.
Resolution No. 06- will also authorize certain officers of the City of Palm Desert to
execute and deliver the following documents in connection with the issuance of the
bonds, in substantially the form as such documents are on file with the City Clerk:
(1) Bond Indenture by and between the University Park CFD and Wells Fargo Bank,
National Association, as trustee (provides for the terms of the bonds)
(2) Bond Purchase Agreement by and among the City (on behalf of the University
Park CFD), Stinson Securities, LLC, and Kinsell, Newcomb & De Dios, Inc., as
underwriters for the bonds (provides for the sale of the bonds by the University
Park CFD to the underwriter)
GARDA\Maria Hunt\WPDATA\YRIG0YE"TFRPTW30906 PO CFO 2005-1.00C 3
Staff Report
Authorization of Issuance of Special Tax Bonds Series 2006A — PD CFD No. 2005-1
Page 4 of 5
March 9, 2006
(3) Preliminary Official Statement and final Official Statement for the bonds (offering
documents used by the underwriter to market and sell the bonds to investors)
(4) Continuing Disclosure Agreement (attached as Appendix F to the Preliminary
Official Statement) by and between the City and Wells Fargo Bank, National
Association, as dissemination agent (governs the University Park CFD's and
dissemination agent's provision of certain financial and special tax -related
information on a continuing basis to the bond market)
(5) Acquisition Agreement (the "Acquisition Agreement') by and among the City of
Palm Desert, the University Park CFD, the Developer, and Sinatra & Cook
Project, LLC (another owner of property within the University Park CFD),
(provides for the terms and conditions of the Developer's construction of public
facilities and the City's payment and acquisition of the facilities from the
Developer). As of this submittal, the Acquisition Agreement has yet to be
reviewed by all of the property owners for their consent and may be subject to
change.
The bonds will be repaid from special taxes levied on the parcels within the University
Park CFD, in accordance with the rate and method of apportionment approved by the
vote of the qualified electors within the University Park CFD and by this City Council.
The payment of special taxes is secured by each taxable parcel in the University Park
CFD. In the event special taxes become delinquent under circumstances described in
the Bond Indenture, this City Council, as legislative body of the University Park CFD,
will covenant in the attached resolution and in the Bond Indenture to commence and
pursue foreclosure actions regarding delinquent installments of the special taxes. In
addition to the reserve account established under the Bond Indenture (which is funded
initially from bond proceeds and maintained thereafter at the prescribed amount with
special tax transfers), proceeds from foreclosure sales provide back-up security in the
event installments of special taxes are not paid by property owners. The offering
documents disclose these sources of repayment of the bonds, together with the many
possible risks relating to repayment of the bonds (such as changes in the law, real
estate development, natural disasters, etc.).
The approved rate and method of apportionment of special taxes was prepared based
on the Developer's proposed development plan, with backup tax rates (up to a
maximum tax rate) in case certain development thresholds are not met. Projections
have been prepared to show that special tax revenues are expected to generate
sufficient funds to repay the bonds. These projections have been included in the
offering documents for the bonds, together with an explanation of the assumptions used
in making the projections and the associated risks.
G:\RDA\Maria Hunt\WPDATA\YRIGOYEMSTFRPTS\030906 PD CFD 2005-1.DOC 4
Staff Report
Authorization of Issuance of Special Tax Bonds Series 2006A - PI) CFD No. 2005-1
Page 5 of 5
March 9, 2006
The Bond Indenture provides for the bond funds to be invested by the trustee in
investments authorized for the investment of bond proceeds by the University Park CFD
and City under Government Code Section 53601. The authorized types of investments
will be disclosed to investors in the offering document.
Future Actions:
The Council will be asked at a later date to adopt a resolution to issue the second series
of bonds authorized by the qualified electors within the University Park CFD to finance
the public improvements to serve the University Park CFD.
Staff recommends that the issuance of the Series 2006A Bonds to provide for the
construction of regional public improvements as outlined in the report be authorized.
Submitted by:
gave Yng y
Director o development/Housing
DY:mh
Approval:
Carlos L. Ortega, City Manager
Approval:
L744/
;CM
i McCarthy
edevelopmen
Paul S. Gibson, Director of Finance
G:\RDA\Maria Hunt\WPDATA\YRIGOYEMSTFRPTS\030906 PD CFD 2005-1.DOC 5
RESOLUTION NO. 06-___
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF PALM DESERT, ACTING FOR ITSELF AND AS THE
LEGISLATIVE BODY OF CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK) TO AUTHORIZE THE ISSUANCE OF
ITS SPECIAL TAX BONDS, SERIES 2006A, IN A
PRINCIPAL AMOUNT NOT TO EXCEED FIFTY MILLION
DOLLARS ($50,000,000) AND APPROVING CERTAIN
DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS
IN CONNECTION THEREWITH
RECITALS:
WHEREAS, the City Council of the City of Palm Desert, located in Riverside
County, California (the “City Council”, and hereinafter sometimes referred to also as the
“legislative body of the District”), has heretofore undertaken proceedings and declared
the necessity of City of Palm Desert Community Facilities District No. 2005-1 (University
Park) (the “District”) to issue bonds pursuant to the terms and provisions of the Mello-
Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1,
Division 2, Title 5 of the Government Code of the State of California (the “Act”); and
WHEREAS, pursuant to Resolution Nos. 06-8 and 06-9 adopted by the
legislative body of the District on January 12, 2006, certain bond propositions were
submitted to the qualified electors within the District, and were approved by more than
two-thirds of the votes cast at the elections held within the District on January 12, 2006;
and
WHEREAS, based upon Resolution Nos. 06-8 and 06-9 and the elections, the
District is now authorized to issue bonds in one or more series, pursuant to the Act, in
an aggregate principal amount not to exceed $70,000,000, and
WHEREAS, at this time and subject to Section 2 hereof, the legislative body of
the District desires to issue a portion of such authorized bonds for the District under the
Act to finance certain public facilities which the District is authorized to finance, and the
District desires to accomplish the financing of such public facilities to serve the District
through the issuance of bonds up to an aggregate principal amount not to exceed
$50,000,000 as a series to be designated as the “City of Palm Desert Community
Facilities District No. 2005-1 (University Park) Special Tax Bonds, Series 2006A” (the
“Bonds”), and
WHEREAS, in order to effect the issuance of the Bonds, the City Council, for
itself and as the legislative body of the District, desires to approve the form of a
Preliminary Official Statement for the Bonds and to approve the forms of, and authorize
the execution and delivery of, a Bond Indenture, a Bond Purchase Agreement, an
P6401.1032\\873402.3
Acquisition Agreement, and a Continuing Disclosure Agreement for the Bonds, the
forms of which are on file with the City Clerk; and
WHEREAS, although certain forthcoming legislative approvals such certain
zoning or specific plan approvals for the proposed development within the District have
not yet been issued, the City will derive special benefits from the issuance of Bonds by
the District at this time, because the District’s financing of the public facilities which it is
authorized to finance, by the issuance of Bonds, will enable the improvement of the
major streets within the District (including without limitation Gerald Ford Drive, Portola
Avenue, Cook Street, and Frank Sinatra Drive) at a significantly earlier time than
possible without the assistance of the District’s issuance of Bonds, and the
improvement of such streets are of a high priority to the City Council; and
WHEREAS, the legislative body of the District has determined that it is prudent in
the management of its fiscal affairs to issue the Bonds; and
WHEREAS, the value of the real property in the District subject to the special tax
to pay debt service on the Bonds is not less than three times the principal amount of the
Bonds and the principal amount of all other bonds outstanding that are secured by a
special tax levied pursuant to the Act or a special assessment levied on property within
the District, which fact is required as a precondition to the issuance of the Bonds.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT,
ACTING FOR ITSELF AND AS THE LEGISLATIVE BODY OF CITY OF PALM
DESERT COMMUNITY FACILITIES DISTRICT NO. 2005-1 (UNIVERSITY PARK),
DOES HEREBY RESOLVE AS FOLLOWS:
1. Each of the above recitals is true and correct and is adopted by the City
Council, acting for itself and as the legislative body of the District.
2. Provided the following two conditions have been met, the District is
authorized pursuant to the Act to issue the Bonds for the purpose of financing public
facilities which the District is authorized to finance: (a) Ordinance No. 1107, adopted
by the City Council on February 9, 2006, has become effective on March 12, 2006
pursuant to the California Government Code, without the filing of any challenge or
referendum petition thereto pursuant to California Government Code Section 9237 et
seq.; and (b) pursuant to the California Environmental Quality Act, commencing with
Section 21000 of the California Public Resources Code and the California
Environmental Quality Act Guidelines, Article 5 of Chapter 3 of Division 6 of Title 14 of
the California Code of Regulations (collectively, “CEQA”), the 30-day statute of
limitations on court challenges to the City Council’s approval under CEQA on January
12, 2006 of the Initial Study and Mitigated Negative Declaration, as set forth in
Resolution No. 06-6, has expired without the filing of any such challenge.
3. The legislative body of the District hereby finds and determines that, as
determined in accordance with Section 53345.8 of the Act and as required by the City of
Palm Desert policies adopted on October 13, 2005 pursuant to Section 53312.7 of the
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Act (the “Mello-Roos Goals and Policies”), the value of the real property in the District
subject to the special tax to pay debt service on the Bonds is not less than three times
the principal amount of the Bonds and the principal amount of all other bonds
outstanding that are secured by a special tax levied pursuant to the Act or a special
assessment levied on property within the District. This determination is based on the
value of the real property within the District in an appraisal prepared for the District,
which appraisal has been made in a manner consistent with the Mello-Roos Goals and
Policies.
4. The Mello-Roos Goals and Policies requires that the development proposed
within a community facilities district must have received any required legislative
approvals such as zoning or specific plan approvals prior to the issuance of public debt,
but the Mello-Roos Goals and Policies also provide that such requirement may be
waived if the City Council finds that such waiver is reasonable given identified special
City benefits to be derived from such waiver. The City Council hereby finds and
determines that although certain forthcoming legislative approvals such certain zoning
or specific plan approvals for the proposed development within the District have not yet
been issued, the City will derive special benefits from the issuance of Bonds by the
District at this time, because the District’s financing of the public facilities which it is
authorized to finance, by the issuance of Bonds, will enable the improvement of the
major streets within the District (including without limitation Gerald Ford Drive, Portola
Avenue, Cook Street, and Frank Sinatra Drive) at a significantly earlier time than
possible without the assistance of the District’s issuance of Bonds, and the
improvement of such streets are of a high priority to the City Council. The City hereby
waives the aforementioned requirement set forth in the Mello-Roos Goals and Policies
relating to legislative developmental approvals and finds that such waiver is reasonable
in view of the above-described special benefits for road improvements the City will
receive due to the District’s issuance of the Bonds.
5. The issuance of the Bonds in an aggregate principal amount not to exceed
$50,000,000 is hereby authorized, with the exact principal amount of the Bonds to be
determined by the official signing the Bond Purchase Agreement in accordance with
Section 8 below. The legislative body of the District hereby determines that it is prudent
in the management of its fiscal affairs to issue the Bonds. The Bonds shall mature on
the dates and pay interest at the rates set forth in the Bond Purchase Agreement to be
executed on behalf of the District in accordance with Section 8 hereof. The Bonds shall
be governed by the terms and conditions of the Bond Indenture presented at this
meeting, on file with the City Clerk and incorporated herein by reference (the
“Indenture”). The Indenture shall be executed by the Mayor of the City of Palm Desert
(the “Mayor”) or the City Manager of the City of Palm Desert (the “City Manager”, and
together with the Mayor, the “Authorized Officers”) in substantially the form presented at
this meeting, with such additions thereto and changes therein as may be approved by
such officer upon consultation with Richards, Watson & Gershon, A Professional
Corporation (“Bond Counsel”). Approval of such changes shall be conclusively
evidenced by the execution and delivery of the Indenture by any one of the Authorized
Officers. The date or dates, maturity or maturities, pledge or assignment of any
revenues of the District to the repayment of the Bonds, the manner of investment of any
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P6401.1032\\873402.3
bond proceeds and other revenues, manner of payment, interest rate or rates, interest
payment dates, denominations, form, registration privileges, manner of execution, place
of payment, terms of redemption, rebate provisions, and other terms of the Bonds shall
be as provided in the Indenture as finally executed and shall be in conformance with
any such terms set forth in the Bond Purchase Agreement described in Section 8 below
and Official Statement described in Section 10 below and delivered to the purchasers of
the Bonds. Capitalized terms used in this Resolution which are not defined herein have
the meanings ascribed to them in the Indenture.
6. The Bonds shall be executed on behalf of the District by the manual or
facsimile signature of the Mayor and the seal of the District or the City, or a facsimile
thereof shall be impressed or imprinted thereon and attested with the manual or
facsimile signature of the City Clerk. Wells Fargo Bank, National Association, is hereby
appointed to act as trustee for the Bonds.
7. Pursuant to Section 53356.1 of the Act, the legislative body of the District
hereby covenants, for the benefit of the Bondowners, to commence and diligently
pursue any foreclosure action regarding delinquent installments of any amount levied as
a special tax for the payment of interest or principal of the Bonds, such foreclosure
action to be commenced and pursued as more completely set forth in the Indenture.
8. The form of the Bond Purchase Agreement by and among the City (on behalf
of the District), Stinson Securities, LLC, and Kinsell, Newcomb and De Dios, Inc.
(collectively, the “Underwriter”) presented at this meeting, on file with the City Clerk and
incorporated herein by reference (the “Bond Purchase Agreement”), is hereby
approved, and any one of the Authorized Officers is hereby authorized to execute the
Bond Purchase Agreement in substantially the form hereby approved, with such
additions thereto and changes therein as may be approved by such officer upon
consultation with Bond Counsel. Approval of such additions and changes shall be
conclusively evidenced by the execution and delivery of the Bond Purchase Agreement;
provided, however, that the Bond Purchase Agreement shall be signed only if the Bonds
are purchased by the Underwriter at an overall interest rate that does not exceed 6.50%
per annum for the issue as a whole (calculated utilizing the true interest cost method)
and the discount paid to the Underwriter (exclusive of original issue discount) does not
exceed 1.50% of the principal amount of the Bonds. The legislative body of the District
hereby finds and determines, pursuant to Section 53360.4 of the Act, that the sale of the
Bonds at negotiated sale to the Underwriter, as contemplated by the Bond Purchase
Agreement, will result in a lower overall cost than a public sale. Each of the Authorized
Officers is authorized to determine the day on which the Bonds are to be priced in order
to attempt to produce the lowest borrowing cost for the District and may reject any terms
presented by the Underwriter if determined not to be in the best interest of the District.
9. The form of the Acquisition Agreement by and among the City, the District,
Desert Wells 237, LLC, a California limited liability company, Albor Properties III, LP, a
California limited partnership, Palm Desert Funding Company, LP, a Delaware limited
partnership, The University Village Partnership, a California general partnership,
Shaw/Palm Desert 1, LLC, a California limited liability company, and Sinatra & Cook
4
P6401.1032\\873402.3
Project, LLC, a California limited liability company, presented at this meeting, on file with
the City Clerk and incorporated herein by reference (the “Acquisition Agreement”), is
hereby approved, and any one of the Authorized Officers is hereby authorized and
directed to execute the Acquisition Agreement in substantially the form hereby
approved, with such additions therein and changes thereto as the Authorized Officer or
Authorized Officers executing the same may approve, with such approval to be
conclusively evidenced by the execution and delivery of the Acquisition Agreement.
10. The form of the Preliminary Official Statement presented at this meeting, on
file with the City Clerk and incorporated herein by reference (the “Preliminary Official
Statement”) is hereby approved, and the Underwriter is hereby authorized to distribute
the Preliminary Official Statement to prospective purchasers of the Bonds in
substantially the form hereby approved, together with such additions thereto and
changes therein as are determined necessary by any one of the Authorized Officers to
make the Preliminary Official Statement final as of its date for purposes of Rule 15c2-12
promulgated under the Securities Exchange Act of 1934 of the Securities and Exchange
Commission, including, but not limited to, such additions and changes as are necessary
to make all information set forth therein accurate and not misleading. Each of the
Authorized Officers is hereby authorized to execute a final Official Statement in
substantially the form of the Preliminary Official Statement, together with such changes
as are determined necessary by the Authorized Officer executing the Official Statement
to make such Official Statement complete and accurate as of its date. The Underwriter
is further authorized to distribute the final Official Statement for the Bonds and any
supplement thereto to the purchasers thereof upon its execution on behalf of the District
as described above.
11. The form of the Continuing Disclosure Agreement presented at this meeting,
on file with the City Clerk as appended to the Preliminary Official Statement and
incorporated herein by reference (the “Continuing Disclosure Agreement”), is hereby
approved, and any one of the Authorized Officers is hereby authorized and directed to
execute the Continuing Disclosure Agreement in substantially the form hereby
approved, with such additions therein and changes thereto as the Authorized Officer or
Authorized Officers executing the same deem necessary to cure any defect or
ambiguity therein if such change does not materially alter the substance or content
thereof, with such approval to be conclusively evidenced by the execution and delivery
of the Continuing Disclosure Agreement.
12. All actions heretofore taken by the officers and agents of the City of Palm
Desert and the District with respect to the establishment of the District, the issuance and
sale of the Bonds, or in connection with or related to any of the agreements or
documents referenced herein are hereby approved, confirmed, and ratified. The Mayor,
each of the Authorized Officers, and the officers and staff of the City of Palm Desert and
the District responsible for the fiscal affairs of the District are hereby authorized and
directed to take any actions, and execute and deliver any and all documents as are
necessary to accomplish (a) the issuance, sale and delivery of the Bonds in accordance
with the provisions of this Resolution, (b) the transactions contemplated by the
Indenture, the Bond Purchase Agreement, the Acquisition Agreement, and the
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Continuing Disclosure Agreement, and (c) the fulfillment of the purposes of the Bonds
as described in the Indenture, including, but not limited to, providing certificates as to
the accuracy of any information relating to the District which is included in the Official
Statement. In the event that the Mayor is unavailable to sign any document authorized
for execution herein, any Authorized Officer may sign such document. Any document
authorized herein to be signed by the City Clerk may be signed by a duly appointed
deputy clerk.
13. This Resolution shall take effect upon its adoption. The City Clerk shall certify
to the passage and adoption of this Resolution and enter it into the book of original
resolutions.
PASSED AND ADOPTED this 9th day of March, 2006, by the following vote:
AYES: Councilmembers
NOES: Councilmembers
ABSENT: Councilmembers
ABSTAIN: Councilmembers
Jim Ferguson, Mayor
ATTEST:
Rachelle D. Klassen, City Clerk
6
P6401.1032\\873402.3
ACQUISITION AGREEMENT
by and among
CITY OF PALM DESERT,
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK),
DESERT WELLS 237, LLC,
ALBOR PROPERTIES 111, LP,
PALM DESERT FUNDING COMPANY, LP,
THE UNIVERSITY VILLAGE PARTNERSHIP,
SHAW/PALM DESERT 1, LLC,
1:�►T17
SINATRA & COOK PROJECT, LLC
Dated as of March , 2006
PG—Ic)I.Ic)�2\8��8GG.G RWC DRAFT3/2/(K�
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ........................................................................................................1
Section1.1 Definitions ....................................................................................................1
ARTICLE II RECITALS ............................................................................................................6
Section2.1 The District ...................................................................................................6
Section 2.2 The Development ..........................................................................................6
Section2.3 The Facilities .................................................................................................6
Section2.4 The Financing ...............................................................................................6
Section2.5 The Bonds .....................................................................................................6
Section 2.6 No Advantage to City Construction ...............................................................6
Section2.7 Agreements ...................................................................................................7
ARTICLE III FUNDING ............................................................................................................7
Section3.1 City Proceedings ...........................................................................................7
Section3.2 Bonds ............................................................................................................7
Section3.3 Bond Proceeds ..............................................................................................7
Section 3.4 Developer Acknowledgments ......................................................................10
ARTICLE IV CONSTRUCTION OF FACILITIES ..................................................................1 1
Section 4.1 Scope of Article . .........................................................................................1 1
Section4.2 Plans ...........................................................................................................1 1
Section 4.3 Duty of Developer to Construct ...................................................................1 1
Section 4.4 Labor Code Provisions ................................................................................12
Section 4.5 Relationship to Public Works; Bidding Requirements ..................................12
Section 4.6 Independent Contractor ...............................................................................14
Section 4.7 Performance and Payment Bonds ................................................................14
Section 4.8 Contracts and Change Orders ......................................................................16
Section 4.9 No Gift or Waiver by Developer ..................................................................16
ARTICLE V ACQUISITION AND PAYMENT .......................................................................17
Section5.1 Inspection ....................................................................................................17
Section 5.2 Agreement to Sell and Purchase Facilities and Discrete Components...........17
Section 5.3 Payment Requests .......................................................................................18
Section 5.4 Processing Payment Requests ......................................................................19
Section5.5 Payment ......................................................................................................19
Section 5.6 Restrictions on Payments .............................................................................20
Section 5.7 Acquisition of Additional Facilities .............................................................22
Section 5.8 Defective or Nonconforming Work .............................................................22
ARTICLE VI OWNERSHIP AND TRANSFER OF FACILITIES ............................................23
Section 6.1 Facilities to be Owned by the City - Conveyance of Land and Easements to
,
C�ty ..............................................................................................................2�
Section 6.2 Facilities to be Owned by the City - Title Evidence .....................................23
Section 6.3 Facilities Constructed on Private Lands .......................................................23
Section 6.4 Facilities Constructed on City Land .............................................................24
I'6-Ic 1 I. I c 1;2�x ;; x66.6
Section 6.5 Facilities to be Acquired by Other Public Agencies .....................................24
Section 6.6 Maintenance and Warranties .......................................................................24
ARTICLE VII INSURANCE; RESPONSIBILITY FOR DAMAGE .........................................24
Section 7.1 Liability Insurance Requirements ................................................................24
Section 7.2 Responsibility for Damage and Claims under Acquisition Agreement or
CVWDJCFA ...............................................................................................28
ARTICLE VIII REPRESENTATIONS, WARRANTIES AND COVENANTS ........................30
Section 8.1 Representations, Covenants and Warranties of the Developer ......................30
ARTICLE IX TERMINATION .................................................................................................32
Section9.1 No Bonds ....................................................................................................32
Section 9.2 Mutual Consent ...........................................................................................33
Section 9.3 City Election for Cause ...............................................................................33
Section9.4 Force Majeure .............................................................................................34
ARTICLE X MISCELLANEOUS ............................................................................................34
Section 10.1 Limited Liability of City ............................................................................34
Section10.2 Excess Costs ..............................................................................................35
Section10.3 Audit .........................................................................................................35
Section 10.4 Attorney's Fees .........................................................................................35
Section10.5 Notices ......................................................................................................35
Section 10.6 Severability ...............................................................................................36
Section 10.7 Successors and Assigns to Acquisition Agreement or Allocation Agreement
.....................................................................................................................36
Section 10.8 Other Agreements .....................................................................................37
Section10.9 Waiver ......................................................................................................37
Section 10.10 Merger; Entire Agreement .......................................................................37
Section 10.1 1 Parties in Interest .....................................................................................37
Section 10.12 Amendment of Acquisition Agreement or Allocation Agreement ............37
Section 10.13 Counterparts ............................................................................................38
EXHIBITS:
EXHIBIT A DESCRIPTION OF AUTHORIZED FACILITIES ELIGIBLE FOR
ACQUISITION FROM THE DEVELOPER
EXHIBIT B DESCRIPTION OF ELIGIBLE DISCRETE COMPONENTS OF FACILITIES
EXHIBIT C FORM OF PAYMENT REQUEST — Facilities and Discrete Components
EXHIBIT D FORM OF PAYMENT REQUEST — Authorized Fees
EXHIBIT E CITY OF PALM DESERT PUBLIC WORKS CONTRACTS AND BIDDING
REQUIREMENTS
EXHIBIT F FORM OF PAYMENT BOND
EXHIBIT G FORM OF DEVELOPER PERFORMANCE BOND — Backbone Infrastructure
EXHIBIT H FORM OF DEVELOPER PERFORMANCE BOND — In-tract Facilities
EXHIBIT I FORM OF CONTRACTOR PERFORMANCE BOND
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EXHIBIT J FORM OF REQUEST FOR TRANSFER OF MONIES — Backbone Infrastructure
EXHIBIT K FORM OF REQUEST FOR TRANSFER OF MONIES — Developer Subaccounts
EXHIBIT L FORM OF REQUEST FOR TRANSFER OF MONIES — Gerald Ford (South)
Landscaping Subaccount
EXHIBIT M FORM OF DEVELOPER TAX CERTIFICATE — Backbone Infrastructure
EXHIBIT N FORM OF DEVELOPER TAX CERTIFICATE — In-Tract Facilities/Authorized
Fees
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THIS ACQUISITION AGREEMENT (the "Acquisition Agreement"), dated as of March
, 2006, is by and among the CITY OF PALM DESERT, a municipal corporation existing
under the laws of the State of California (the "City"), CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 2005-1 (UNIVERSITY PARK), a community facilities district
established under the Mello-Roos Community Facilities Act of 1982 (the "District"), DESERT
WELLS 237, LLC, a California limited liability company ("DW 237"), ALBOR PROPERTIES
III, LP, a California limited partnership ("Albor"), PALM DESERT FUNDING COMPANY,
LP, a Delaware limited partnership ("PDFC"), THE UNIVERSITY VILLAGE
PARTNERSHIP, a California general partnership ("UV Partnership"), SHAW/PALM DESERT
l, LLC, a California limited liability company ("Shaw"), and SINATRA & COOK PROJECT,
LLC, a California limited liability company ("S&C," and each individually and together with
DW 237, Albor, PDFC, UV Partnership, and Shaw, as the context may require, the
"Developer").
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. The following terms shall have the meanings ascribed to them in
this Section l.l for purposes of this Acquisition Agreement. Unless otherwise indicated, any
other terms, capitalized or not, when used herein shall have the meanings ascribed to them in the
Indenture (as hereinafter defined).
"Acceptable Title" means title to a Facility or land, in form acceptable to the Director of
Public Works, free and clear of all liens, taxes, assessments, leases, easements and
encumbrances, whether or not recorded, and, with respect to land, as evidenced by such title
guaranty or title insurance as the Director of Public Works may require, but subject to any
exceptions determined by the Director of Public Works as not interfering with the actual or
intended use of the land. Notwithstanding the foregoing, an irrevocable offer of dedication may
constitute land with an "Acceptable Title" if: (i) such offer is necessary to satisfy a condition to a
tentative or final parcel map, (ii) such offer is in a form acceptable to the Director of Public
Works, (iii) the Director of Public Works has no reason to believe that such offer of dedication
will not be accepted by the applicable governmental entity or utility, and (iv) the applicable
Developer commits in writing not to allow any liens or other encumbrances to be imposed on
such property prior to its acceptance and to indemnify the City against the imposition of any such
lien or encumbrance.
"Acceptance Date" means the date the City Council, or other governmental entity or
utility which is to own a Facility, takes final action to accept dedication of or transfer of title to a
Facility.
"Acquisition Agreement" means this Acquisition Agreement, together with any
Supplement hereto.
"Act" means the Mello-Roos Community Facilities Act of 1982, Section 5;;1 1 et seq. of
the Government Code, as amended.
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"Actual Cost" means the substantiated cost of a Facility or a Discrete Component, which
costs may include: (i) the costs incurred by the Developer for the construction of such Facility or
Discrete Component (evidenced by payments to parties unrelated to such Developer); (ii) the
documented costs incurred by the Developer in preparing the Plans for such Facility or Discrete
Component and the related costs of design, engineering and environmental evaluations of the
Facility or Discrete Component; (iii) the fees paid to governmental agencies for obtaining
permits, licenses or other governmental approvals for such Facility or a Discrete Component; (iv)
documented professional costs incurred by the Developer associated with such Facility or
Discrete Component, such as engineering, legal, accounting, inspection, construction staking,
materials testing and similar professional services, as well as related fees of the Independent
CFD Construction Manager; (v) costs directly related to the construction and/or acquisition of a
Facility or Discrete Component, such as costs of payment, performance and/or maintenance
bonds, and insurance costs (including costs of any title insurance required hereunder), provided,
if a Developer obtains a single insurance policy relating to more than one contract for the
construction of Facilities or Discrete Components, the premium for such a�gregate policy may
be submitted for reimbursement on a pro rata basis by Facility or Discrete Component, based
upon the estimated costs of the applicable Facilities or Discrete Components as set forth in
Exhibit B hereto, and as part of the Payment Request for the other costs of such Facility or
Discrete Component; and (vi) with respect to Items X.A., X.C., X.E., and X.G. (Parks A through
D) and IX.A., IX.C., IX.E., and IX.G. (Well Sites) on Exhibit B hereto, the cost, respectively, of
land acquisition for park sites (as previously determined by the City and the Developer in
accordance with Chapter 26.48 of the City Municipal Code, adopted pursuant to the Quimby Act
(Government Code Section 66477)), and the cost of land acquisition for well sites (as set forth in
the RBF Report). Actual Cost may include (a) an amount not in excess of 5.0% of the cost
described in clause (i) of the preceding sentence in respect of any construction management or
project management or other similar fee payable to the applicable Developer or any party related
thereto, and (b) any financing fees, costs or charges, or any interest, cost of carry or other similar
charges not exceeding 3.5% of the cost described in clauses (i) through (v) of the preceding
sentence.
"Affiliate" means, with respect to any Developer, any entity with respect to which fifty
percent (50%) or more of the ownership or voting power is held individually or collectively by
any of such Developer and any other entity owned, controlled or under common ownership or
control by or with, such Developer or its managing member(s), general partner(s), or majority
shareholder, as applicable, and includes all general partners of any entity which is a partnership.
Control shall mean ownership of fifty percent (50%) or more of the voting power of or
ownership interest in the respective entity.
"Albor" means Albor Properties III, LP, a California limited partnership, and its
successor and assigns to the extent permitted under Section 10.7 hereof.
"Allocation Agreement" means that certain Cost Sharing and Bond Proceeds Allocation
Agreement by and among DW 237, Albor Properties III, L.P., a California limited partnership,
PDFC, UV Partnership, Shaw, S&C, Palm Desert Forum, LLC, a California limited liability
company, and Donald L. McCoy and Marcellene W. McCoy, dated as of January 25, 2006, as it
may be amended, modified, or supplemented from time to time with the City's prior written
consent.
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"Authorized Fees" means, collectively or individually, as the context may require, (i)
sewer and/or water connection, capacity, or other development impact fees imposed by the
CVWD (which shall also be governed by the CVWD JCFA), as set forth in Exhibit A, and (ii)
connection, capacity, park, or other development impact fees (including without limitation
TUMF Fees, Fringed-Toed Lizard Frees, Art-in-Public Places Fees) imposed by the City, as set
forth in Exhibits A and B, which fees have been authorized by the qualified electors within the
District pursuant to the Act.
"Backbone Infrastructure" means those authorized facilities marked with a single asterisk
in Exhibit A hereto, which are Items I, II.A.-H., III.A.-D., III.E.I.-4., IV.A.-G., V.A.-D., VI.A.-
F., VII.A.-F., VIII.A-D., and IX.A.
"Bonds" means the bonds to be issued, in one or more series, by the District.
"City" means the City of Palm Desert, California.
"City Facilities Fund" means the City Facilities Fund established by the Indenture.
"Civil Code" means the Civil Code of the State of California.
"County" means the County of Riverside, California.
"CVWD" means the Coachella Valley Water District.
"CVWD Facilities Fund" means the CVWD Facilities Fund established by the Indenture.
"CVWD Facility" means those sewer and water facilities subject to acquisition by the
CVWD pursuant to the CVWD JCFA. The CVWD Facilities are as designated on Exhibits A
and B hereto.
"CVWD JCFA" means that certain Joint Community Facilities Agreement dated as of
January 12, 2006, by and among the City, the CVWD, DW 237, PDFC, UV Partnership, Shaw,
and S&C.
"Defaulting Developer" means any Developer(s) involved in any event specified in
clauses A. through G. of Section 9.3 hereof.
"Developer" means, collectively, DW 237, Albor, PDFC, UV Partnership, Shaw, and
S&C, or any of them, as the context may require.
"Director of Public Works" means the Director of Public Works of the City, or the
written designee of such officer acting as such under this Acquisition Agreement.
"Discrete Component" means a segment or component of a Facility which the Director of
Public Works, pursuant to Section 5;;1;.51 of the Act, has heretofore agreed can be separately
identified, inspected and completed, and be the subject of a Payment Request hereunder, as listed
in Exhibit B hereto, which may be amended or supplemented by any Supplement; provided in no
event shall any payment be made for any Discrete Component unless, as required by Section
I'6—Ic 1 I. I c 1;2�x ;; x66.6 3
5.2.B. hereof, such Discrete Component, as determined by the Director of Public Works in its
sole discretion, (i) has been completed in accordance with the Plans therefor and (ii) as required
by Section 5;;1;.51, is functional and capable of serviceable use for its intended purpose.
"District" means the City of Palm Desert Community Facilities District No. 2005-1
(University Park), created by the City Council of the City under the Act.
"DW 237" means Desert Wells 237, LLC, a California limited liability company, and its
successors and assigns to the extent permitted under Section 10.7 hereof.
"Eligible Facilities" means the public facilities which are eligible, and have been
authorized by the qualified electors within the District, to be financed by the District, including
without limitation Authorized Fees, and are described in Exhibit A hereto, as such exhibit may
be amended or supplemented by any Supplement.
"Expected Facilities" means, as to a Developer, the facilities identified as "Expected
Facilities" by such Developer pursuant to Section 8.1.M.(ii).
"Facilities" means the public facilities among the Eligible Facilities which are actually
financed by the District, including without limitation Authorized Fees.
"Finance Director-Treasurer" means the Finance Director-Treasurer of the City, or the
written designee of such officer acting as such under this Acquisition Agreement.
"Final Discrete Component" means the final Discrete Component of a Facility, the
completion of which renders the Facility complete in accordance with the approved Plans by the
City or other applicable governmental entity or utility.
"Gerald Ford Road Improvement Agreement" means that certain Road Improvement
Agreement dated as of December 22, 2005, by and among PDFC, Palm Desert North 80, LLC, a
California limited liability company, and the City.
"Government Code" means the Government Code of the State of California.
"Improvement Funds" means the City Facilites Fund and the CVWD Facilities Fund,
and/or the accounts and subaccounts therein, established by the Indenture.
"Indenture" means, the Bond Indenture, dated as of April l, 2006, between the City and
the Trustee with respect to the issuance of the Bonds and providing for, among other matters, the
issuance of the Bonds and the establishment of the Improvement Funds, as it may be amended
from time to time.
"Independent CFD Construction Manager" shall mean the independent construction
manager with demonstrated experience (to the satisfaction of the Director of Public Works) in
the coordination of projects financed with the assistance of bonds issued by a community
facilities district formed under the Act, approved in advance by the Director of Public Works and
engaged by PDFC to coordinate construction of the Facilities, including but not limited to
documentation and communication between the City and PDFC and certain inspections relating
►>�,-�c � � . � c � ;z�x ;;x�,�,.�, 4
thereto, in an orderly and expeditious manner. As of the date of this Acquisition Agreement, the
Independent CFD Construction Manager is Tetra Tech, Inc.
"Labor Code" means the Labor Code of the State of California.
"Payment Request" means a document, substantially in the form of Exhibit C or Exhibit
D hereto, as applicable, to be used by the Developer in requesting payment of a Purchase Price.
"PDFC" means Palm Desert Funding Company, LP, a Delaware limited partnership, and
its successors and assigns to the extent permitted under Section 10.7 hereof.
"Plans" means the plans, specifications, schedules, and related construction contracts for
the design and construction of any Facility (or any Discrete Component thereo� as approved by
the City, the CVWD, or other entity that will own, operate, or maintain such Facility when
completed and acquired.
"Pre-Formation Facility" shall mean any Eligible Facility or Discrete Component thereof
designated as a Pre-Formation Facility on Exhibit B hereto, which pursuant to Section 5;;1;.5
of the Act, were completed, as determined by and at the sole discretion of the Director of Public
Works, before the City Council's adoption on January 12, 2006 of Resolution No. 06-6 to
establish the District.
"Pro Rata Agency Share" shall have the meaning given to such term in the Indenture.
"Public Contract Code" means the Public Contract Code of the State of California.
"Purchase Price" means the amount paid by the City for a Facility or any Discrete
Component thereof determined in accordance with Article V hereof, being an amount equal to
the Actual Cost of such Facility or Discrete Component, but subject to any applicable limitations
and reductions provided for in Article V.
"RBF Report" means the cost estimate report regarding the Eligible Facilities, dated
September 22, 2005 and prepared by RBF Consulting.
"Risk Manager" shall mean the person acting in the capacity of Risk Manager for the
City.
"Shaw" means Shaw/Palm Desert l, LLC, a California limited liability company, and its
successors and assigns to the extent permitted under Section 10.7 hereof.
"S&C" means Sinatra & Cook Project, LLC, a California limited liability company, and
its successors and assigns to the extent permitted under Section 10.7 hereof.
"Supplement" means a written document amending, supplementing or otherwise
modifying this Acquisition Agreement or any exhibit hereto.
"Trustee" means Wells Fargo Bank, National Association, in its capacity as Trustee
under the Indenture, or any successor thereto acting as trustee under the Indenture.
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"UV Partnership" means The University Village Partnership, a California general
partnership, and its successors and assigns to the extent permitted under Section 10.7 hereof.
ARTICLE 11
RECITALS
Section 2.1 The District. The City Council has established the District under the Act for
the financing of, among other things, the acquisition, construction and installation of public
facilities identified in the proceedings to form the District, which include the Eligible Facilities
listed in Exhibit A hereto.
Section 2.2 The Development. The Developer is developing land located within the
District.
Section 2.3 The Facilities. The Eligible Facilities are required as a condition of
regulatory approval by the City and other entities that service the District, and the City, the
District, and the Developer will benefit from a coordinated plan of design, engineering, and
construction of the Facilities and the development of the land owned by the Developer that is
located within the District. The Developer acknowledges that the inclusion of Eligible Facilities
in Exhibit A hereto in no way, in itself, obligates the District to issue, or the City to cause the
District to issue, any Bonds to acquire any of the Eligible Facilities from the Developer or
implies that the City or District have in any way engaged any Developer to construct any of the
Eligible Facilities, except as specifically provided in this Acquisition Agreement. The Facilities
and the Discrete Components thereof, which are the subject of acquisition by the City from the
Developer under this Acquisition Agreement are only the Eligible Facilities and Discrete
Components listed in Exhibits A and B hereto.
Section 2.4 The Financing. The Developer, the District, and the City wish to finance, in
part, the acquisition of the Facilities and the payment therefor by entering into this Acquisition
Agreement for the acquisition of the Facilities and payment for Discrete Components thereof,
eligible for such financing as shown in Exhibits A and B hereto (as they may be amended and
supplemented by any Supplement), with the portion of the proceeds of the Bonds on deposit in
the applicable Improvement Fund with respect to each such Facility and Discrete Component
thereof.
Section 2.5 The Bonds. The City, on behalf of the District, is proceeding to consider the
authorization and issuance of the Bonds under the Act and the Indenture, the proceeds of which
Bonds shall be used, in part, to finance the acquisition of the Facilities. The execution by the City
and the District of this Acquisition Agreement in no way obligates the District to issue, or the
City to cause the District to issue, any Bonds, or to acquire any facilities with proceeds of any
Bonds issued, except facilities among the Eligible Facilities listed in Exhibit A hereto, the
Discrete Components of which are listed in Exhibit B hereto, and which are to be acquired
subject to the terms and conditions set forth in this Acquisition Agreement.
Section 2.6 No Advantage to City Construction. The City, by its approval of this
Acquisition Agreement, has determined that it will obtain no advantage from undertaking the
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construction by the City directly of the Eligible Facilities, except for the Cook Street pedestrian
bridge identified as Item I. on Exhibit A and as Item I.G. on Exhibit B, which shall be
constructed directly by the City and one-half of the actual costs of design, engineering,
construction and other incidental expenses (as provided on Exhibit A) of which shall be paid for
by the City with monies on deposit in Backbone Facilities Account of the City Facilities Fund.
The City, the District, and each Developer agree the provisions of this Acquisition Agreement
require that the Facilities and Discrete Components thereof be constructed by the Developer as if
they had been constructed under the direction and supervision of the City. Each Developer
hereby represents that it has experience in the supervision of the construction of public facilities
of the character of the Eligible Facilities.
Section 2.7 Agreements. In consideration of the mutual promises and covenants set forth
herein, and for other valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the City, the District, and the Developer agree that the foregoing recitals, as
applicable to each, are true and correct and further make the agreements set forth herein.
ARTICLE 111
FUNDING
Section 3.1 City Proceedings. The City, on behalf of the District, shall conduct all
necessary proceedings under the Act for the issuance, sale and delivery of the Bonds; arovided,
however, that nothing herein shall be construed as requiring the District to issue, or the City to
cause the District to issue, the Bonds or any portion thereof. Upon the written request of the
Developer, the Developer and the City staff shall meet regarding the amount, timing and other
material aspects of the Bonds, but the legal proceedings and the principal amount, interest rates,
terms and conditions and timing of the sale of the Bonds shall be in all respects subject to the
absolute discretion and approval of the City Council or such City officers to whom the City
Council has delegated the authority for such absolute discretion and approval.
Section 3.2 Bonds. The City, in connection with this Acquisition Agreement, is
proceeding to consider the issuance and delivery of the Bonds on behalf of the District. Neither
the City nor the District shall be obligated to pay the Purchase Prices of the Facilities or any
Discrete Components thereof except from amounts on deposit in the applicable Improvement
Fund with respect to each such Facility on or after the closing date of the Bonds. Each
Developer acknowledges that the proceeds of the Bonds deposited and held in the Improvement
Funds may not be sufficient for payment of the Purchase Price of all of the Facilities authorized
to be paid from each such Improvement Fund.
Section 3.3 Bond Proceeds.
A. Deaosit of Bond Proceeds and Use for Construction and Acauisition Costs of the
Facilities. The proceeds of the Bonds shall be deposited, held, invested, reinvested, and
disbursed as provided in the Indenture. A portion of the proceeds of the Bonds will be set aside
under the Indenture in the Improvement Funds. Proceeds of the Bonds available for deposit in
the Improvement Funds shall be allocated (i) to the Improvement Funds (and to the accounts and
subaccounts therein) in accordance with Articles IV and VI of the Allocation Agreement, and (ii)
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as between the Backbone Infrastructure Accounts of the Improvement Funds, by calculating the
respective Pro Rata Agency Share of the total amount available for deposit to the Backbone
Infrastructure Accounts pursuant to Article IV of the Allocation Agreement; arovided, of the
monies allocated to the Backbone Infrastructure Account of the City Facilities Fund pursuant to
the foregoing, the parties agree the amount of $1,401,364.58 shall be deposited into the Gerald
Ford (South) Landscaping Subaccount of the Backbone Infrastructure Account of the City
Facilities Fund, in furtherance of the Gerald Ford Road Improvement Agreement, and the
balance of such monies shall be deposited into the Backbone Infrastructure Account of the City
Facilities Fund. The parties agree the amount of $1,401,364.58 is reasonably calculated as the
projected cost to install (x) the full width of inedian landscaping improvements within Gerald
Ford Drive from the intersection with Portola Avenue to the intersection with Cook Street and
(y) the landscaping improvements within the public right-of-way along the south half of Gerald
Ford Drive from the intersection with Portola Avenue to the intersection with Cook Street, based
on the City's estimate of $7.25/sq. ft., which is comprised of average current prices of $6.00/sq.
ft. l�us a contingency of $1.25/sq. ft. Moneys in the Improvement Funds shall be withdrawn
therefrom in accordance with the provisions of the Indenture and the applicable provisions
hereof for payment of all or a portion of the costs of construction and/or acquisition of the
Facilities, including payment of the Purchase Price of Discrete Components thereof.
B. Transfer of Monies Between Backbone Infrastructure Accounts. The parties
hereto acknowledge the relative costs of Backbone Infrastructure to be owned by the CVWD and
Backbone Infrastructure to be owned by the City may change from the estimated costs set forth
in Exhibit B, which are substantiated by the RBF Report, which was drafted several months ago
and without the benefit of actual bids. The parties hereto also acknowledge that the Pro Rata
Agency Share is based on the estimated costs as substantiated by the RBF Report, and that the
application of the Pro Rata Agency Share to allocate proceeds of the Bonds to the Backbone
Infrastructure Accounts of the Improvement Funds pursuant to Section 3.3.A. above is
reasonable, convenient, and necessary to effectuate the timely deposit of proceeds of Bonds upon
the sale and issuance of Bonds. The parties hereto acknowledge further that the Actual Costs of
the Backbone Infrastructure to be owned by either the City or the CVWD may vary significantly
from the estimates in the RBF Report.
As set forth in Section 3.1(b) of the Allocation Agreement, PDFC acts as "master
developer" with respect to the Backbone Infrastructure to serve the District and is responsible for
entering into all contracts for the construction and installation of such Backbone Infrastructure.
The parties hereto agree, absent assignment by PDFC to another Developer party in accordance
with Section 10.7 hereof, PDFC shall be the only Developer entitled to submit Payment Requests
with respect to Backbone Infrastructure.
In the event (i) the Actual Costs of the Backbone Infrastructure to be owned by either the
City or the CVWD vary significantly from the estimates in the RBF Report and (ii) such
difference results in a significant projected surplus in the Backbone Infrastructure Account of
one Improvement Fund while resulting in a significant projected deficit in the Backbone
Infrastructure Account of the other Improvement Fund, as demonstrated by PDFC to the
satisfaction of the Director of Public Works, in its sole discretion after consultation with the
Finance Director-Treasurer, PDFC may submit a written request in the form of Exhibit J hereto
to the Director of Public Works requesting the transfer of all or a specified portion of monies
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remaining in the Backbone Infrastructure Account of the Improvement Fund (except for monies
remaining in the Gerald Ford (South) Landscaping Subaccount of the Backbone Infrastructure
Account of the City Facilities Fund, which shall be subject to Section 3.3.D. below) with the
projected surplus to the Backbone Infrastructure Account of the Improvement Fund with the
projected deficit, as may be necessary to rectify the projected imbalance of monies in such
accounts. Subject to (x) the prior concurrence of the Director of Public Works as to the projected
surplus/deficit, as provided in the foregoing sentence, and (y) the availability of monies
remaining in the Backbone Infrastructure Accounts of the Improvement Funds, within five (5)
business days of the receipt by the Finance Director-Treasurer of any such written request of
PDFC approved by the Director of Public Works, the Finance Director-Treasurer shall request
the Trustee, in accordance with Sections 3.9(c) or 3.10(b) of the Indenture, as applicable, to
transfer monies as requested by PDFC in such written request, but solely to the extent available
from monies remaining in the applicable account.
C. Transfer of Monies Between Subaccounts Relatin�� to a Develoaer. The
provisions of this Section 3.3.C. apply solely to subaccounts within the Other Facilities Accounts
of the Improvement Funds and shall not apply to any Backbone Infrastructure Account within an
Improvement Fund. With respect to Facilities other than Backbone Infrastructure and as
contemplated by Section 6.1(� of the Allocation Agreement, Section 8.1 hereof requires each
Developer to identify to the District its Expected Facilities not later than four (4) business days
after the execution of a final bond purchase contract relating to the sale of each series of Bonds
and prior to the printing of a final official statement for such Bonds. The parties hereto agree
such identification of the Expected Facilities is reasonable, convenient, and necessary to, among
other things, effectuate the timely deposit of proceeds of Bonds to the appropriate subaccounts of
the Other Facilities Accounts of the Improvement Funds upon the sale and issuance of Bonds in
accordance with the terms and conditions of Articles IV and VI of the Allocation Agreement.
The City, the District, and each Developer acknowledge although such identification of
Expected Facilities is based on the reasonable expectations of each Developer as of the date
thereof, during the course of construction, the sequence of costs actually incurred may deviate
from the assumptions underlying such reasonable expectations.
In the event the sequence of costs incurred by the Developer with respect to Eligible
Facilities has deviated from the assumptions made at the time of the identification of the
Expected Facilities in such a way that a transfer of monies between the subaccounts of the
Improvement Funds relating to such Developer would expedite the expenditure of proceeds of
the Bonds (e.g., the Expected Facilities consist of Eligible Facilities to be owned by the CVWD
(or Authorized Fees of the CVWD), but costs now are expected to be incurred earlier for
Facilities to be owned by the City (or Authorized Fees of the City), or vice versa), as
demonstrated to the satisfaction of the Director of Public Works, in its sole discretion after
consultation with the Finance Director-Treasurer, such Developer may submit a written request
in the form of Exhibit K hereto to the Director of Public Works requesting the transfer of all or a
specified portion of monies remaining in the subaccount of the Other Facilities Fund of the City
Facilities Fund which relates to such Developer to the subaccount of the Other Facilities Fund of
the CVWD Facilities Fund relating to such Developer, or vice versa, as the case may be. Subject
to (x) the prior concurrence of the Director of Public Works, as provided in the foregoing
sentence, and (y) the availability of monies remaining in the applicable subaccount of the Other
I'6—Ic 1 I. I c 1;2�x ;; x66.6 9
Facilities Fund of the applicable Improvement Fund, within five (5) business days of the receipt
by the Finance Director-Treasurer of any such written request of PDFC approved by the Director
of Public Works, the Finance Director-Treasurer shall request the Trustee, in accordance with
Sections 3.9(d) or 3.10(c) of the Indenture, as applicable, to transfer monies as requested by such
Developer in such written request, but solely to the extent available from monies remaining in
the applicable subaccount.
D. Transfer of Surplus Monies from the Gerald Ford (South) Landscaain��
Subaccount.
After PDFC has installed all landscaping improvements for the south half of Gerald Ford
Drive identified in Section 3.3.A. above in accordance with the Plans therefor, as determined by
the Director of Public Works in its sole discretion, and PDFC has received all payments pursuant
to all Payment Requests of PDFC relating thereto in accordance with this Acquisition
Agreement, if monies remain on deposit in the Gerald Ford (South) Landscaping Subaccount of
the Backbone Infrastructure Account of the City Facilities Fund, PDFC may submit a written
request in the form of Exhibit L hereto to the Director of Public Works requesting the transfer of
all of the monies remaining in the Gerald Ford (South) Landscaping Subaccount of the Backbone
Infrastructure Account of the City Facilities Fund to the Backbone Infrastructure Account of the
City Facilities Fund for payment with respect to Payment Request for other Backbone
Infrastructure. Subject to (i) the prior concurrence of the Director of Public Works as to the
completion of the Gerald Ford landscaping improvements, as provided in the foregoing sentence,
and (ii) the availability of monies remaining in the Gerald Ford (South) Landscaping Subaccount
of the Backbone Infrastructure Account of the City Facilities Fund, within five (5) business days
of the receipt by the Finance Director-Treasurer of any such written request of PDFC approved
by the Director of Public Works, the Finance Director-Treasurer shall request the Trustee, in
accordance with Sections 3.9(e) of the Indenture, to transfer monies as requested by PDFC in
such written request, but solely to the extent available from monies remaining in the Gerald Ford
(South) Landscaping Subaccount of the Backbone Infrastructure Account of the City Facilities
Fund.
Section 3.4 Developer Acknowledgments. Each Developer acknowledges that the
obligation of any owner of real property in the District, including any Developer to the extent it
owns any real property in the District, to pay special taxes levied in the District is not in any way
dependent on: (i) the availability of amounts in the Improvement Funds to pay for all or any
portion of the Facilities or Discrete Components thereof hereunder, or (ii) the alleged misconduct
of the City in the performance of its obligations under this Acquisition Agreement, the Indenture,
any developer agreement or amendment thereto or any other agreement to which any Developer
and the City or the District are signatories.
Each Developer acknowledges that any lack of availability of amounts in the
Improvement Funds to pay the Purchase Price of Facilities or any Discrete Components thereof
shall in no way diminish any obligation of any Developer with respect to the construction of or
contributions for public facilities required by any development or other agreement to which such
Developer is a party, or any governmental approval to which such Developer or any land within
the District is subject.
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ARTICLE IV
CONSTRUCTION OF FACILITIES
Section 4.1 Scope of Article.
This Article IV shall not apply to Authorized Fees or to any Developer submitting
Payment Requests solely with respect to Authorized Fees.
Section 4.2 Plans. Each Developer shall cause, or represents and warrants that it has
caused, Plans to be prepared for the Facilities and any Discrete Component thereof for which it is
responsible, and shall obtain, or represents and warrants that it has obtained, the written approval
of the Plans in accordance with applicable ordinances and regulations of the City or the
governmental entity or utility that will own and operate the Facilities. Copies of any Plans shall
be provided by the responsible Developer to the Director of Public Works upon request therefor,
and, in any event, as built drawings and a written assignment of the Plans for any Facility shall
be provided to the City prior to its acceptance of the Facility.
Section 4.3 Duty of Developer to Construct. All Facilities and Discrete Components
thereof to be acquired hereunder shall be constructed by or at the direction of the responsible
Developer in accordance with the approved Plans. Each Developer hereby represents it has
performed, and shall continue to perform, all of its obligations hereunder and has conducted, and
shall continue to conduct, all operations with respect to the construction of Facilities and any
Discrete Components thereof in a good, workmanlike and commercially reasonable manner, with
the standard of diligence and care normally employed by duly qualified persons utilizing their
best efforts in the performance of comparable work and in accordance with generally accepted
practices appropriate to the activities undertaken. If a Developer will be submitting a Payment
Request relating to Facilities other than Authorized Fees, such Developer has employed, and
shall continue to employ, at all times adequate staff or consultants with the requisite experience
necessary to administer and coordinate all work related to the design, engineering, acquisition,
construction and installation of the Facilities and Discrete Components thereof to be acquired by
the City from such Developer hereunder.
Each Developer shall be obligated: (i) to construct and cause to be conveyed to the City,
or other applicable governmental entity or utility, all Eligible Facilities and Discrete Components
thereof for which it is responsible as a condition of any development agreement, improvement
agreement, subdivision map, or regulatory approval (or as to Authorized Fees, to pay or cause to
be paid all such Authorized Fees), and (ii) to use its own funds to pay all costs thereof in excess
of the Purchase Prices thereof to be paid therefor hereunder.
No Developer shall be relieved of its obligation to construct each Facility for which it is
responsible and the Discrete Components thereof and convey each such Facility to the City in
accordance with the terms hereof, even if (i) because of the limitations imposed by Section 5.6
hereof, the Purchase Price for such Discrete Component or Facility is less than the Actual Cost,
or cost to the Developer, of such Discrete Component or Facility, or (ii) there are insufficient
funds in the applicable Improvement Fund to pay the Purchase Prices thereof, and, in any event,
this Acquisition Agreement shall not affect any obligation of any owner of land in the District
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under any other agreement or any governmental approval to which any land within the District is
subject, with respect to the public improvements required in connection with the development of
the land within the District. Such obligation of each Developer to construct and convey such
Facilities for which it is responsible, and pay the costs thereof in excess of available monies in
the Improvement Fund applicable to each such Facility, shall be an obligation of the applicable
Developer as a party to this Acquisition Agreement without regard to any governmental
conditions to development of the land in the District that may otherwise apply to the land owners
in the District.
Nothing in this Section 4.3 requires any Developer to commence or complete any Facility
any sooner than required under the related City land use approvals for the Developer's project
within the District.
Section 4.4 Labor Code Provisions. Pursuant to Section 1781 of the Labor Code, the
City and the District hereby state, and each Developer hereby acknowledges, that the
construction of the Facilities and any Discrete Components thereof by the Developer, which will
be paid in part out of public funds, is "public work" (as defined in Section 1720 of the Labor
Code) to which Section 1771 of the Labor Code applies, and each Developer hereby agrees that
it shall cause the construction of the Facilities and any Discrete Components thereof for which it
is responsible and which will be subject to a Payment Request hereunder (excluding Authorized
Fees) to be performed as "public work" as required by Section 1781 of the Labor Code.
Without limiting the foregoing, each Developer agrees to comply with the provisions of Sections
1720 et seq. of the Labor Code with respect to prevailing wages.
Section 4.5 Relationship to Public Works; Bidding Requirements. The following
shall apply to all contracts applicable to any Facilities and any Discrete Components thereof
which will be the subject of a Payment Request hereunder:
A. General. This Acquisition Agreement is for the acquisition by the City of the
Facilities and payment thereof (including payment for Discrete Components thereo� from
moneys in the Improvement Funds and is not intended to be a public works contract. The City,
the District, and each Developer agree that the Facilities are of local, and not state-wide concern,
and that the provisions of the Public Contract Code shall not apply to the construction of the
Facilities or Discrete Components thereof. The City, the District, and each Developer agree that
(i) each Developer shall award, or has awarded, all contracts for the construction of the Facilities
for which it is responsible and the Discrete Components thereof, (ii) this Acquisition Agreement
is necessary to assure the timely and satisfactory completion of the Facilities, and (iii)
compliance with the Public Contract Code with respect to the Facilities or Discrete Components
thereof would work an incongruity and would not produce an advantage to the City or the
District.
B. Biddin�� Procedures. Notwithstanding Section 4.S.A. hereof, each Developer
represents and warrants it shall award, or has awarded, all contracts for construction of the
Facilities and any Discrete Components thereof not being undertaken directly by such
Developer, and materials related thereto, by means of a bid process consistent with this Section
4.S.B. or otherwise acceptable to the Director of Public Works, in each case consistent with City
regulations relating to the bidding of contracts for public projects or public works, including
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without limitation the provisions of the City's Public Works Contracts and Bidding
Requirements as described in Exhibit E hereto (interpreted with the Developer, instead of the
City, as the contracting party for construction of the Facility or Discrete Component and with a
view toward compliance with Section 5;;1;.5 of the Act), and Government Code Sections 3300,
3400, 6109, and 6610; provided, however, pursuant to Section 5;;1;.5 of the Act, each
Developer excepts from such representation and warranty any Pre-Formation Facility for which
it is responsible. Each Developer represents and warrants it shall evaluate, or has evaluated,
criteria such as experience, ability to perform on schedule, financial ability, and such other
criteria as required by the Director of Public Works to determine qualified contractors for any
contract. Such contractors shall comply with any applicable City regulations. With respect to
contracts already awarded, each Developer represents and warrants that formal bids were
requested from those entities on the list of qualified contractors, and as to any additional
contracts that may be required, formal bids shall be requested from those entities on the list of
qualified contractors; arovided, however, pursuant to Section 5;;1;.5 of the Act, each Developer
excepts from such representation and warranty any Pre-Formation Facility for which it is
responsible.
Each Developer shall prepare, or has prepared, bid packages (including engineering
reports and estimates) for each of the Facilities for which it is responsible or any specific
Discrete Component thereof to be separately bid, and shall submit, or has submitted, such
packages to the Director of Public Works, reasonably in advance of the anticipated bid, for
review. The Developer may proceed, or has proceeded, to take bids on the applicable Facilities
or any Discrete Components thereof solely upon agreement by the Director of Public Works and
the applicable Developer on the content of such bid packages and a schedule of bid prices, plus
an acceptable margin of variance. At the reasonable request of any Developer, the Director of
Public Works shall also meet with the qualified general contractors to discuss the requirements
of the particular contract to be bid.
Except with respect to any Pre-Formation Facility, if a bid is within the constraints of the
approved bid package, the Developer responsible for any Facility or Discrete Component thereof
shall award, or represents and warrants it has awarded, the applicable contract to the lowest
responsive and responsible bidder. If all bids are in excess of the bid parameters, the applicable
Developer shall obtain, or represents and warrants it has obtained, the consent of the Director of
Public Works prior to awarding the contract. Upon written request of the Director of Public
Works, the applicable Developer shall provide an analysis of bids for construction and materials
for the Facilities or applicable Discrete Components, indicating how the winning bid was
determined and how it was consistent with the applicable bid package. Except as to the award of
the contract for any Pre-Formation Facility, the applicable Developer shall promptly publish, or
represents and warrants it has promptly published, notice of the award of any contract in such
paper as the Director of Public Works shall specify.
C. Schedulin��. At the request of the Director of Public Works, each Developer shall
develop, or cause to be developed, and shall maintain a project schedule, providing for all major
project elements included in the construction of the Facilities to be acquired hereunder for which
it is responsible, so that the whole project is scheduled in an efficient manner. If a schedule is
requested, the applicable Developer shall provide the Director of Public Works with complete
copies of the schedule and each update to the schedule for the Director's review.
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D. Periodic Meetin��s. From time to time at the request of the Director of Public
Works, representatives of the Developer shall meet and confer with City staff, consultants and
contractors regarding matters arising hereunder with respect to the Facilities, Discrete
Components and the progress in constructing and acquiring the same, and as to any other matter
related to the Facilities or this Acquisition Agreement. The Developer shall advise the Director
of Public Works in advance of any coordination and scheduling meetings to be held with
contractors relating to the Facilities or any Discrete Components thereof, in the ordinary course
of performance of an individual contract. The Director of Public Works or the Director of Public
Works' designated representative shall have the right to be present at such meetings, and to meet
and confer with individual contractors if deemed advisable by the Director of Public Works to
resolve disputes or ensure the proper completion of the Facilities and any Discrete Components
thereof.
Section 4.6 Independent Contractor. In performing its obligations under this
Acquisition Agreement, each Developer is an independent contractor and not the agent or
employee of the City or the District. Neither the City nor the District shall be responsible for
making any payments directly or otherwise to any contractor, subcontractor, agent, consultant,
employee or supplier of any Developer.
Section 4.7 Performance and Payment Bonds. Each Developer agrees to comply with
all performance and payment bonding requirements of the City and other applicable public
entities and public utilities with respect to the construction of the Facilities and any Discrete
Component thereof. As to the City, each Developer shall provide payment bonds and
performance bonds, which bonds shall meet the following requirements:
A. Pavment Bonds. Each payment bond shall be in conformity with the
requirements of the Civil Code, Sections 3247 and 3248, and substantially in the form as set
forth in Exhibit F, and shall be provided to the City and the District prior to commencement of
construction under the corresponding construction contract. Provided that (a) fifteen (15) days
have passed after the later of (i) the expiration of the applicable statutory period in which any
person may bring suit against the surety(ies) on a payment bond as set forth in Sections 3239 or
3249 of the Civil Code or (ii) the expiration of the applicable statutory period in which any
person may record a lien pursuant to Sections 31 15 or 31 16 of the Civil Code and (b) no such
suit or lien has been filed at such time, at the applicable Developer's written request submitted to
the Risk Manager, the City shall provide such Developer with a letter confirming that the City no
longer requires the applicable payment bond to be maintained in full force and effect.
In the event a contractor to whom a Developer awards a contract for the construction of
a Facility or Discrete Component thereof provides a payment bond meeting the requirements
hereof, such contractor's payment bond shall be deemed as the provision by such Developer of a
payment bond hereunder.
B. Performance Bonds.
l. Develoaer Performance Bonds. Prior to commencing construction on a
Facility, each Developer who will submit a Payment Request with respect to Facilities other than
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Authorized Fees shall provide a performance bond for the benefit of the City and the District, as
further specified below.
As to PDFC, who has commenced construction on Backbone Infrastructure prior
to the date of this Acquisition Agreement, PDFC shall provide a performance bond for the
completion of construction of the Backbone Infrastructure, for the benefit of the City and the
District and as further specified below, within 10 business days after the date of this Acquisition
Agreement.
a. Backbone Infrastructure. As "master developer" for the Backbone
Infrastructure, PDFC shall provide a performance bond for the benefit of the City and the
District, securing the completion of construction of the Backbone Infrastructure and PDFC's
obligations under this Acquisition Agreement relating thereto, including without limitation its
obligation under Section 7.2 of this Acquisition Agreement to indemnify the City and the District
with respect to any failure of PDFC to pay any amount due to any contractor hired by PDFC for
the construction of the Backbone Infrastructure. The performance bond required by this
paragraph shall be in the initial amount of $36,620,346, which is the estimated cost of the
Backbone Infrastructure as stated in Section 2.1 of the Allocation Agreement. Such performance
bond shall be substantially the form attached hereto as Exhibit G. From time to time as Facilities
or Discrete Components of Backbone Infrastructure are completed, PDFC may substitute any
such performance bond with a replacement performance bond in a reduced amount, which
reduced amount is equal to the unpaid amount of outstanding construction contracts which have
been let by PDFC for Backbone Infrastructure (including any change orders thereto), � an
amount equal to the estimated costs, as provided in the RBF Report, of the construction contracts
for Backbone Infrastructure or Discrete Components thereof remaining to be bid.
b. In-Tract Facilities. As to any Developer who will submit a
Payment Request with respect to Facilities other than Backbone Infrastructure, each such
Developer shall provide a performance bond in connection with each construction contract
awarded by such Developer for the construction of any such Facility (or each Discrete
Component thereof that is separately bid), for the benefit of the City and the District, securing
such Developer's obligations under this Acquisition Agreement relating to such Facility or
Discrete Component, including without limitation its obligation under Section 7.2 of this
Acquisition Agreement to indemnify the City and the District with respect to any failure of such
Developer to pay any amount due to any contractor hired by such Developer for the construction
of the such Facility or Discrete Component. The performance bond required by this paragraph
shall be in the amount of such construction contract and substantially the form attached hereto as
Exhibit H.
2. Contractor Performance Bonds. Prior to the commencement of
construction on a Facility for which a Developer is responsible, such Developer shall require any
contractor to whom a contract is awarded for the construction of such Facility (or each Discrete
Component thereof that is separately bid) to provide a performance bond for the benefit of the
City and the District, in substantially the form attached hereto as Exhibit I, securing such
contractor's obligations under such contract.
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Any performance bond provided hereunder shall be in form and substance
satisfactory to the Director of Public Works and, if applicable, meet the requirements of the
Government Code Sections 66499 through 66499.10 of the Subdivision Map Act.
Section 4.8 Contracts and Change Orders. Each Developer shall be responsible for
entering into all contracts and any supplemental agreements, commonly referred to as "change
orders," required for the construction of the Facilities for which it is responsible or any Discrete
Components thereof. All such contracts and supplemental agreements shall be submitted to the
Director of Public Works or, as to any such contracts and supplemental agreements entered into
prior to the date of this Acquisition Agreement, the Developer represents and warrants they have
been submitted to the Director of Public Works. Prior approval of supplemental agreements by
the Director of Public Works shall be required for any change orders which involve an amount of
$1,000.00 (One Thousand Dollars) or greater, or which in any way materially alter the quality or
character of the subject Facilities or Discrete Components thereof; provided, as to any such
change orders meeting the thresholds set forth in the foregoing and entered into prior to the date
of this Acquisition Agreement, each Developer who has entered into any such change order
represents and warrants it has obtained the prior approval of the Director of Public Works. The
City expects that such contracts and supplemental agreements needing prior approval by the
Director of Public Works will be approved or denied (any such denial to be in writing, stating the
reasons for denial and the actions, if any, that can be taken to obtain later approval) (i) if the
amount involved is less than $10,000 (Ten Thousand Dollars), within ten (10) business days of
receipt by the Director of Public Works thereof, and (ii) if the amount involved is $10,000 (Ten
Thousand Dollars) or greater, within thirty (30) business days of receipt by the Director of Public
Works thereof. Any approval by the Director of Public Works of a supplemental agreement shall
in no way affect the estimated costs listed in Exhibits A and B for any related Facility or Discrete
Component, but to the extent that it increases the Actual Cost of a Facility or Discrete
Component, such increased cost may be payable as part of the Purchase Price of the related
Facility or Discrete Component as provided in Section 5.6.A. hereof.
Section 4.9 No Gift or Waiver by Developer.
The City, the District, and the Developer understand and agree that (i) in some instances,
the Developer will be constructing the Facilities or paying the Authorized Fees prior to the
issuance of Bonds, a portion of the proceeds of which will be used to pay the Purchase Prices to
the Developer for those Facilities or the Authorized Fees, (ii) the Developer will be submitting
Payment Requests with knowledge that there may be insufficient funds available in the
Improvement Funds for reimbursement for Actual Costs of such Facilities or Discrete
Components thereof, (iii) the Facilities and/or Authorized Fees that are the subject of the
Payment Requests submitted when there are insufficient proceeds will be inspected and reviewed
as set forth in this Acquisition Agreement, and the Payment Requests submitted when there are
insufficient proceeds will be reviewed and approved in manner set forth herein, and (iv) the
payment for any Payment Requests approved in the preceding manner will be deferred until there
are sufficient proceeds in the Improvement Funds to make such payment, at which time the
District will make payment on the approved Payment Requests in the manner set forth herein;
provided, if (x) there are insufficient proceeds available in the Improvement Funds for
reimbursement of any Payment Request at any time after the issuance of all Bonds authorized to
be issued by the qualified electors on January 12, 2006 (which are authorized to be issued in the
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maximum aggregate principal amount of $70 million), (y) there are no monies available in the
Improvement Funds upon which to accrue investment earnings, and (z) there are no monies
remaining in any account under the Indenture to be transferred to the Improvement Funds
pursuant to the terms of the Indenture, the foregoing clauses (iii) and (iv) shall not apply. At all
times, the construction of the Facilities is made with the expectation that such Facilities will be
purchased by the City or CVWD (but solely from moneys in the Improvement Funds, as
authorized and limited pursuant to terms and conditions of the Indenture, the Allocation
Agreement, and this Acquisition Agreement), and that the conveyance of such Facilities to the
City or CVWD prior to receipt of the Purchase Price for such Facilities shall not be construed as
a dedication or gift, or a waiver of the Purchase Price for such Facilities as set forth in, and
limited by the terms of, this Acquisition Agreement.
ARTICLE V
ACQUISITION AND PAYMENT
Section 5.1 Inspection. No payment hereunder shall be made by the City or District to
any Developer for a Facility or Discrete Component thereof until the Facility or Discrete
Component thereof has been inspected and found to be completed in accordance with the
approved Plans by the City or other applicable governmental entity or utility. The City shall
make periodic site inspections of the Facilities and any Discrete Components thereof to be
acquired by the City hereunder; provided that in no event shall the City incur any liability for any
delay in the inspection of any Facilities or Discrete Components thereof. For Facilities or any
Discrete Components thereof to be acquired by other public entities or utilities, the Developer
responsible for such Facility or Discrete Component thereof shall be responsible for obtaining
such inspections and providing written evidence thereof to the Director of Public Works. Each
Developer agrees to pay all inspection, permit and other similar fees of the City applicable to
construction of the Facilities for which it is responsible and any Discrete Components thereof,
subject to reimbursement therefor as an Actual Cost of the related Facility or Discrete
Component thereof.
Section 5.2 Agreement to Sell and Purchase Facilities and Discrete Components.
A. Each Developer hereby agrees to sell the Facilities to the City or other applicable
governmental entity or utility that will own a Facility, and the District hereby agrees to use
amounts in the applicable Improvement Fund for each such Facility to pay the Purchase Price
thereof to the applicable Developer, subject to the terms and conditions hereof. Except for
payment for Discrete Components as provided in paragraph B. below, neither the City nor the
District shall be obligated to finance the purchase of any Facility until the Facility is completed
and the Acceptance Date for such Facility has occurred.
B. Pursuant to Section 5;;1;.51 of the Act and at the request of the Developer, the
City has identified Discrete Components of Facilities which may be the subject of a Payment
Request prior to completion of the entire Facility of which it is a part, and paid pursuant to the
terms of this Acquisition Agreement prior to completion of such entire Facility. The Discrete
Components are expressly shown in Exhibit B hereto, as it may be supplemented by any
Supplement, and any payment for a Discrete Component shall not be made until such Discrete
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Component, as determined by the Director of Public Works in its sole discretion, (i) has been
completed in accordance with the Plans therefor and (ii) as required by Section 5;;1;.51 of the
Act, is functional and capable of serviceable use for its intended purpose.
For example, the Discrete Component of a street identified as "aggregate base and paving
(1 st lift) street improvements, curb and gutter" is not capable of serviceable use, even if
completed pursuant to the Plans therefor, if functional catch basins (which, in turn, may require
functional related retention basins) associated with such curbs and gutters have not been installed
prior to, or concurrently with, the curbs and gutters. "Aggregate base and paving (1 st lift) street
improvements, curb and gutter" are identified as a single Discrete Component, because until the
street is paved, the street elevation is lower than the elevation of the curb and gutter, therefore
mooting the purpose of the curb and gutter to catch overflow from the street until the street is
paved to its ultimate elevation.
The parties hereto acknowledge the Discrete Components do not have to be accepted by
the City, or other applicable governmental entity or utility that will own a Facility, as a condition
precedent to the payment of the Purchase Price therefor, but in no event shall any such payment
be made until the requirements of the first paragraph of this Section 5.2.B. have been met. Each
Developer acknowledges that the Discrete Components have been identified for payment
purposes only, and that the City, or other applicable governmental entity or utility that will own a
Facility, is not obligated to accept a Facility of which a Discrete Component is a part until the
entire Facility has been completed, although at the sole discretion of the Director of Public
Works, the City may accept a Discrete Component of a Facility prior to completion of the entire
Facility, and any governmental entity or utility that will own a Facility may at its sole discretion
determine to accept a Discrete Component of a Facility prior to completion of the entire Facility.
C. In any event, the City shall not be obligated to pay the Purchase Price for any
Facility or Discrete Component except from the moneys in the applicable Improvement Fund
with respect to such Facility or Discrete Component.
Section 5.3 Payment Requests.
A. Due to the number of Developers who are party to this Acquisition Agreement
and constructing the Facilities subject hereto, each Developer agrees to prepare each Payment
Request in consultation with the Independent CFD Construction Manager to facilitate the
processing of Payment Requests.
B. In order to receive the Purchase Price for a completed Facility or Discrete
Component other than Authorized Fees, inspection thereof under Section 5.1 shall have been
made, and after consultation with the Independent CFD Construction Manager in accordance
with Section S.;.A. above, the applicable Developer shall deliver to the Director of Public
Works:
1. a Payment Request in the form of Exhibit C hereto for such Facility or
Discrete Component, together with all attachments and exhibits required by Exhibit C and this
Section 5.; to be included therewith (including, but not limited to, Attachments 1 and 2 to
Exhibit C), and
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2. in addition, if payment is requested for a completed Facility (as opposed to
any Discrete Component other than the Final Discrete Component), (a) if the property on which
the Facility is located is not owned by the City (or other applicable governmental entity or utility
that will own the Facility) at the time of the request, a copy of the recorded documents conveying
to the City (or other applicable governmental entity or utility that will own the Facility)
Acceptable Title to the real property on, in or over which such Facility is located, as described in
Section 6.1 hereof, (b) a copy of the recorded notice of completion of such Facility (meeting the
requirements specified in Section 5.6), (c) to the extent paid for with the proceeds of the Bonds,
an assignment to the District of any reimbursements that may be payable with respect to the
Facility, such as public or private utility reimbursements, and (d) an assignment of the warranties
and guaranties for such Facility, as described in Section 6.6 hereof, in a form acceptable to the
City.
C. In order to receive the Purchase Price for Authorized Fees, the applicable
Developer shall deliver to the Director of Public Works a Payment Request in the form of
Exhibit D hereto for such Authorized Fees (including, but not limited to, Attachment 1 to Exhibit
D).
Section 5.4 Processing Payment Requests. Upon receipt of a Payment Request and all
accompanying documentation, the Director of Public Works shall conduct a review in order to
confirm that such request is complete, that such Facility or Discrete Component identified
therein was constructed in accordance with the Plans therefor, and to verify and approve the
Actual Cost of such Facility or Discrete Component specified in such Payment Request. The
Director of Public Works shall also conduct such review as is required in the Director of Public
Works' discretion to confirm the matters certified in the Payment Request. Each Developer
agrees to cooperate with the Director of Public Works in conducting each such review and to
provide the Director of Public Works with such additional information and documentation as is
reasonably necessary for the Director of Public Works to conclude each such review. For any
Facilities or Discrete Components thereof to be acquired by another governmental entity or
utility, the applicable Developer shall provide evidence acceptable to the Director of Public
Works that such Facilities or Discrete Components thereof are acceptable to such governmental
entity or utility. Within thirty (30) days of receipt of any Payment Request, the Director of
Public Works expects to review the request for completeness and notify the applicable Developer
whether such Payment Request is complete, and, if not, what additional documentation must be
provided. If such Payment Request is complete, the Director of Public Works expects to provide
a written approval, or denial specifying the reason for any denial, of the request within thirty (30)
days of its submittal. If a Payment Request seeking reimbursement for more than one Facility or
Discrete Component is denied, the Director of Public Works shall state whether the Payment
Request is nevertheless approved and complete for any one or more Facilities or Discrete
Components and any such Facilities or Discrete Component shall be processed for payment
under Section 5.5 notwithstanding such partial denial.
Section 5.5 Payment. Upon approval of the Payment Request by the Director of Public
Works, the Director of Public Works shall sign the Payment Request and forward the same to the
City's Finance Director-Treasurer. Upon receipt of the reviewed and fully signed Payment
Request, the City's Finance Director-Treasurer shall, within the then current City financial
accounting payment cycle but in any event within twenty (20) days of receipt of the approved
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Payment Request, cause the same to be paid by the Trustee under the applicable provisions of the
applicable Indenture, to the extent of funds then on deposit in the applicable Improvement Fund.
Any approved Payment Request not paid due to an insufficiency of funds in the applicable
Improvement Fund shall be paid promptly following the deposit into such Improvement Fund of
proceeds of any investment earnings, other amounts transferred to such Improvement Fund under
the terms of the applicable Indenture, or amounts deposited into such Improvement Fund from
the proceeds of another series of Bonds.
The Purchase Price paid hereunder for any Facility or Discrete Component shall
constitute payment in full for such Facility or Discrete Component, including, without limitation,
payment for all labor, materials, equipment, tools and services used or incorporated in the work,
supervision, administration, overhead, expenses and any and all other things required, furnished
or incurred for completion of such Facility or Discrete Component, as specified in the Plans.
Section 5.6 Restrictions on Payments. Notwithstanding any other provisions of this
Acquisition Agreement, the following restrictions shall apply to any payments made to any
Developer under Sections 5.2 and 5.5 hereof:
A. Amounts of Pavments. Subject to the following paragraphs of this Section 5.6,
payments for each Facility or Discrete Component will be made only in the amount of the
Purchase Price for the respective Facility or Discrete Component, which Purchase Price shall
equal the Actual Cost of the Facility or Discrete Component. Further, the Purchase Price of any
CVWD Facility shall be subject to the limitations set forth in Section 3.6 of the CVWD JCFA.
Nothing herein shall require the City or the District in any event (i) to pay more than the
Actual Cost of a Facility or Discrete Component, or (ii) to make any payment beyond the
available funds in the applicable Improvement Fund. The parties hereto acknowledge and agree
that all payments to any Developer for the Purchase Prices of Facilities or Discrete Components
are intended to be reimbursements to such Developer for monies already expended or, if made
pursuant to Section 5.6.B. or 5.6.C. hereof, for immediate payment by such Developer (or
directly by the City) to third parties in respect of such Facilities or Discrete Components thereof.
B. Joint or Third Partv Pavments. The City may make any payment jointly to the
requesting Developer and any mortgagee or trust deed beneficiary, contractor or supplier of
materials, as their interests may appear, or solely to any such third party, if such Developer so
requests the same in writing or as the City otherwise determines such joint or third party payment
is necessary to obtain lien releases.
C. Withholdin�� Pavments. The City and the District shall be entitled, but shall not be
required, to withhold any payment hereunder to a Developer for a Facility or a Discrete
Component if such Developer or any Affiliate thereof is delinquent in the payment of ad valorem
real property taxes, special assessments or taxes, or Special Taxes levied in the District. With
respect to any Facility for which any such delinquent Developer is responsible, in the event of
any such delinquency, the City or the District shall only make payments hereunder, should any
be made at such parties' discretion, directly to contractors or other third parties employed in
connection with the construction of such Facilities for which such delinquent Developer is
responsible, or Discrete Component thereof, or to any assignee of such delinquent Developer's
►��,-�c��. �c�;z�x;;x�,�,.�, 20
interests in this Acquisition Agreement (and not to such delinquent Developer or any Affiliate
thereo�, until such time as such delinquent Developer provides the Director of Public Works
with evidence that all such delinquent taxes and assessments have been paid.
The City and the District shall withhold payment for any Facility or Discrete Component
constructed on land, until Acceptable Title to such land is conveyed to the City, as described in
Article VI hereof.
The City and the District shall be entitled to withhold any payment hereunder for a
Facility or Discrete Component that is the subject of a Payment Request until the City and
District are satisfied that any and all claims for labor and materials have been paid by the
applicable Developer for the Facility or Discrete Component that is the subject of a Payment
Request, or conditional lien releases have been provided by such Developer for such Facility or
Discrete Component. The City and the District may waive this limitation upon the provision by
the Developer of sureties, undertakings, securities and/or bonds of such Developer or appropriate
contractors or subcontractors and deemed satisfactory by the Director of Public Works to assure
payment of such claims.
The City and the District shall be entitled to withhold payment for any Facility or the
Final Discrete Component of any such Facility hereunder to be owned by the City until: (i) the
Director of Public Works determines that the Facility is ready for its intended use, (ii) the
Acceptance Date for the Facility has occurred and the requirements of Section 6. l, if applicable
to such Facility, have been satisfied, (iii) a notice of completion executed by the applicable
Developer as an owner pursuant to Section 3093 of the Civil Code, reciting the name and address
of the City as an owner of an interest as a vendee under a contract of purchase pursuant to
Section 3093 of the Civil Code, and in a form acceptable to the Director or Public Works, has
been recorded for the Facility and (iv) general lien releases conditioned solely upon payment
from the proceeds of the Bonds to be used to acquire such Facility or Final Discrete Component
have been submitted to the Director of Public Works for the Facility. The City shall be entitled
to withhold payment for any Facility, or Final Discrete Component thereof, to be owned by other
governmental entities until the applicable Developer provides the Director of Public Works with
evidence that the governmental entity or utility has accepted dedication of, or title to, the
Facility. If the Director of Public Works determines that a Facility is not ready for intended use
under (i) above, the Director of Public Works shall so notify the applicable Developer as soon as
reasonably practicable in writing specifying the reason(s) therefor.
Nothing in this Acquisition Agreement shall be deemed to prohibit any Developer from
contesting in good faith the validity or amount of any mechanics or materialmans lien nor limit
the remedies available to the Developer with respect thereto so long as such delay in
performance shall not subject the Facilities or any Discrete Component thereof to foreclosure,
forfeiture or sale.
D. Retention. The District shall withhold in each Improvement Fund an amount
equal to ten percent (10%) of the Purchase Price of each Facility or Discrete Component
attributable to each such Improvement Fund and to be paid hereunder. Any such retention will
be released to the applicable Developer upon final completion and acceptance of the related
Facility and the expiration thereafter of a maintenance/warranty period consistent with applicable
►��,-�c��. �c�;z�x;;x�,�,.�, 21
City policy (currently, a one-year maintenance period for landscaping improvements, and as to
other Facilities, a warranty period of one (1) year after the Acceptance Date of such Facility or
the posting of a warranty bond to remain in effect for one (1) year after the Acceptance Date
thereo�.
Notwithstanding the foregoing, each Developer shall be entitled to payment of any such
retention upon the completion and acceptance of a Facility for which it is responsible or Discrete
Component thereof, if a maintenance or warranty bond is posted in lieu thereof in accordance
with Section 6.6 hereof. Payment of any retention shall also be contingent upon the availability
of monies in the applicable Improvement Fund therefor. No retention shall apply if the
Developer proves to the Director of Public Works' satisfaction that the Developer's contracts for
the Facilities or Discrete Components provide for the same retention as herein provided, so that
the Purchase Price paid for the Facility or Discrete Component is at all times net of the required
retention.
E. Freauencv. Unless otherwise agreed to by the Director of Public Works, no more
than one Payment Request shall be submitted by each Developer in any calendar month (i.e.,
each Developer shall be allowed to submit a Payment Request once a month).
F. Ri��ht-of-Way. Payments for any right-of-way described in Exhibits A or B
hereto shall be based upon appraisals of the respective land to be acquired in a form acceptable
to the Director of Public Works, or upon such other basis as the Director of Public Works shall
determine is appropriate in the circumstances. As to the Discrete Components identified as
Items X.A., X.C., X.E., and X.G. on Exhibit B(Land Acquisition for Parks A through D), the
Actual Costs have been previously determined by the City and the Developer in accordance with
Chapter 26.48 of the City Municipal Code, adopted pursuant to the Quimby Act (Government
Code Section 66477), and are as set forth in Exhibit B. As to the Discrete Components identified
as IX.A., IX.C., IX.E., and IX.G. on Exhibit B(Land Acquisition for Well Sites), the Actual
Costs have been previously agreed to by each affected Developer and are as set forth in the RBF
Report and in Exhibit B.
Section 5.7 Acquisition of Additional Facilities. If the construction and acquisition of
all the Facilities theretofore listed in Exhibit A have been completed and the Purchase Prices,
including any retentions described in Section 5.6.D. above, with respect thereto have been paid,
and funds remain on deposit in any Improvement Fund, the City and the Developer may
designate in a Supplement hereto additional Eligible Facilities and Discrete Components thereof
to be constructed and acquired with such remaining funds.
Section 5.8 Defective or Nonconforming Work. If any of the work done or materials
furnished for a Facility or Discrete Component are found by the Director of Public Works to be
defective or not in accordance with the applicable Plans: (i) and such finding is made prior to
payment for the Purchase Price of such Facility or Discrete Component hereunder, the City and
the District may withhold payment therefor until such defect or nonconformance is corrected to
the satisfaction of the Director of Public Works, or (ii) and such finding is made after payment of
the Purchase Price of such Facility or Discrete Component, but prior to the expiration of the
applicable warranty period, the City and the applicable Developer shall act in accordance with
Section 6.6 hereof.
►��,-�c��. �c�;z�x;;x�,�,.�, 22
ARTICLE VI
OWNERSHIP AND TRANSFER OF FACILITIES
Section 6.1 Facilities to be Owned by the City — Conveyance of Land and Easements
to City. Acceptable Title to all property on, in, or over which each Facility to be acquired by the
City will be located, shall be deeded over to the City by way of grant deed, quitclaim, or
dedication of such property. Each Developer agrees to assist the City in obtaining such
documents as are required to obtain Acceptable Title with respect to such property on, in, or over
which each Facility for which such Developer is responsible will be located. Completion of the
transfer of title to land shall be accomplished prior to the payment of the Purchase Price for a
Facility or Final Discrete Component thereof and shall be evidenced by recordation of the
acceptance thereof by the City Council or the designee thereof.
Section 6.2 Facilities to be Owned by the City — Title Evidence. Upon the request of
the City, the applicable Developer shall furnish to the City a preliminary title report for land with
respect to Facilities to be acquired by the City and not previously dedicated or otherwise
conveyed to the City, for review and approval at least fifteen (15) calendar days prior to the
transfer of Acceptable Title to a Facility to the City. The Director of Public Works shall approve
the preliminary title report unless it reveals a matter which, in the judgment of the City, could
materially affect the City's use and enjoyment of any part of the property or easement covered by
the preliminary title report. In the event the City does not approve the preliminary title report, the
City shall not be obligated to accept title to such Facility and the City shall not be obligated to
pay the Purchase Price for such Facility or Final Discrete Component thereof until the applicable
Developer has cured such objections to title to the satisfaction of the City.
Section 6.3 Facilities Constructed on Private Lands.
A. Except as to any well sites or park facility subject to Section 6.3.B. below, if any
Facilities to be acquired are located on privately-owned land, the owner thereof shall retain title
to the land and the completed Facilities until acquisition of the Facilities under Article V hereof.
Pending the completion of such transfer of title to land, the applicable Developer shall not be
entitled to receive any payment for any such Facility or Final Discrete Component thereof. The
applicable Developer shall, however, be entitled to receive payment for Discrete Components,
other than the Final Discrete Component, upon making an irrevocable offer of dedication of such
land in form and substance acceptable to the Director of Public Works. Notwithstanding the
foregoing, upon written request of the Director of Public Works before payment for any Discrete
Component of such a Facility, the applicable Developer shall convey or cause to be conveyed
Acceptable Title thereto in the manner described in Sections 6.1 and 6.2 hereof.
B. As to the well sites (identified as Items III.E.I.-4. on Exhibit A) and the park
facilities (identified as Items VIII.A.-D. on Exhibit A), the City has agreed that the land
acquisition for each such well site and each such park is a Discrete Component as shown on
Exhibit B which may be subject to a separate Payment Request prior to the acquisition of the
related water improvements or park improvements, respectively, but no payment for any such
►��,-�c��. �c�;z�x;;x�,�,.�, 23
land acquisition shall be made unless the Developer responsible for such Discrete Component
has conveyed or cause to be conveyed Acceptable Title thereto in the manner described in
Sections 6.1 and 6.2 hereof.
Section 6.4 Facilities Constructed on City Land. If the Facilities to be acquired are on
land owned by the City, the City shall grant to the applicable Developer a license to enter upon
such land for purposes related to the construction, and maintenance pending acquisition, of the
Facilities. The provisions for inspection and acceptance of such Facilities otherwise provided
herein shall apply.
Section 6.5 Facilities to be Acquired by Other Public Agencies. With respect to any
Facility to be acquired by a governmental entity other than the City, each Developer shall
comply with such entity's rules and regulations regarding title and conveyance of property and
provide the Director of Public Works with evidence of such compliance, prior to the payment of
the Purchase Price for any such Facility or Final Discrete Component thereof.
Section 6.6 Maintenance and Warranties. Each Developer shall maintain each Discrete
Component for which it is responsible in good and safe condition until the Acceptance Date of
the Facility of which such Discrete Component is a part. Prior to the Acceptance Date, the
applicable Developer shall be responsible for performing any required maintenance on any
completed Discrete Component or Facility for which it is responsible. On or before the
Acceptance Date of the Facility, the applicable Developer shall assign to the City all of the
Developer's rights in any warranties, guarantees, maintenance obligations or other evidence of
contingent obligations of third persons with respect to such Facility. The applicable Developer
shall maintain or cause to be maintained each Facility to be owned by the City, including the
repair or replacement thereof, for a period of one (1) year from the Acceptance Date thereof, or,
alternatively, shall provide a bond reasonably acceptable in form and substance to the Director of
Public Works for such period and for such purpose (specifically, a one-year maintenance period
for landscaping improvements, and as to other Facilities, the posting of a warranty bond to
remain in effect for one (1) year after the Acceptance Date thereo�, to insure that defects, which
appear within said period will be repaired, replaced, or corrected by the applicable Developer, at
its own cost and expense, to the satisfaction of the Director of Public Works. The applicable
Developer shall commence to repair, replace or correct any such defects within thirty (30) days
after written notice thereof by the City to such Developer, and shall complete such repairs,
replacement or correction as soon as practicable. After such one-year period, the City shall be
responsible for maintaining such Facility. Any warranties, guarantees or other evidences of
contingent obligations of third persons with respect to the Facilities to be acquired by the City
shall be delivered to the Director of Public Works as part of the transfer of title.
ARTICLE V11
INSURANCE; RESPONSIBILITY FOR DAMAGE
Section 7.1 Liability Insurance Requirements. Each Developer shall procure and
maintain insurance policies and provide to the Director of Public Works evidence of insurance
and endorsements thereto on forms acceptable to the Risk Manager as provided below.
►��,-�c��. �c�;z�x;;x�,�,.�, 24
A. Time for Compliance. Each Developer shall not commence any physical
work on the Facilities for which such Developer is responsible until it has provided evidence
satisfactory to the Risk Manager that it has secured all insurance required under this Section 7.1.
In addition, no Developer shall allow any subcontractor to commence work on any subcontract
until it has provided evidence satisfactory to the City that the subcontractor has secured all
insurance required under this Section 7.1.
B. Minimum Requirements. At its expense (but subject to reimbursement to
the extent permitted as an Actual Cost), each Developer shall procure and maintain, until
acceptance pursuant to the terms of this Acquisition Agreement of all Facilities for which such
Developer is responsible, insurance against claims for injuries to persons or damages to property
which may arise from or in connection with the performance of the work covered by this
Acquisition Agreement by such Developer, its agents, representatives, employees or
subcontractors. Each Developer shall also require all of its subcontractors to procure and
maintain the same insurance until acceptance (pursuant to the terms of this Acquisition
Agreement) of all Facilities for which such Developer is responsible. Such insurance shall meet
at least the following minimum levels of coverage:
l. Minimum Scoae of Insurance. Coverage shall be at least as broad
as the latest version of the following:
(a) (;c�ilt'/'Cl� �,1Cllll�llj�: Insurance Services Office Commercial
General Liability coverage (occurrence form CG 0001);
(b) Arr��,m�,hi/c� �,1Cllll�llj�: Insurance Services Office Business Auto
Coverage form number CA 0001, code 1(any auto);
�C� WU/'�(C'/'.S' (�U191f)C'il.SClllUil ClilL% �',191f)�Uj'C'/'.S' �,1Cllll�llj�: Workers�
Compensation insurance as required by the State of California and Employer's Liability
Insurance;and
(d) l3rrilcic�i•.s�' All IZi.s�k: Builders'/All Risk insurance covering for all
risks of loss, including explosion, collapse, underground excavation and removal of lateral
support (and including earthquakes and floods if requested by the City).
less than:
2. Minimum Limits of Insurance. Developer shall maintain limits no
(a) (;c�ilt'/'Cl� �,1Cllll�llj�: $1,000,000 per occurrence for bodily injury,
personal injury and property damage. The general aggregate limit shall apply separately to each
construction contract for a Facility or Discrete Component thereof that is separately bid and shall
be $2,000,000. If multiple Facilities are aggregated under one construction contract, the Risk
Manager may in its sole discretion require a higher general aggregate limit;
and property damage;
(b) Arrl��m��hi/c� �,1Cllll�llj�: $1,000,000 per accident for bodily injury
►��,-�c��. �c�;z�x;;x�,�,.�, 25
�C� WU/'�(C'/'.S' (�Ul91fJt'il.SClllUil ClilL% �',191fJ�Uj'C'/''.S �,1Cllll�llj�: Workers�
compensation limits as required by the Labor Code of the State of California. Employers
Liability limits of $1,000,000 per accident for bodily injury or disease; and
(d) l3rrilcic�i•.s�' All IZi.s�k: Completed value of the project.
C. Insurance Endorsements. The insurance policies shall contain the
following provisions, or each Developer shall provide endorsements on forms supplied or
approved by the Risk Manager to add the following provisions to its insurance policies:
l. General Liabilitv. (a) The City, the District, and their respective
Councilmembers, directors, officials, officers, employees, consultants, agents, and volunteers
shall be covered as additional insureds with respect to the construction of the Facilities or
operations performed by or on behalf of the Developer, including materials, parts or equipment
furnished in connection with such work; (b) the insurance coverage shall be primary and non-
contributing insurance as respects the City, the District, and their respective Councilmembers,
directors, officials, officers, employees, consultants, agents and volunteers, or if excess, shall
stand in an unbroken chain of coverage excess of the Developer's scheduled underlying
coverage; and (c) any failure to comply with reporting provisions of the policy shall not affect
coverage provided to the City, the District, and their respective Councilmembers, directors,
officials, officers, employees, consultants, agents, and volunteers. Any insurance or self-
insurance maintained by the City, the District, and their respective Councilmembers, directors,
officials, officers, employees, consultants, agents, and volunteers shall be excess of the
Developer's insurance and shall not be called upon to contribute with it.
2. Automobile Liabilitv. (a) The City, the District, and their
respective Councilmembers, directors, officials, officers, employees, consultants, agents and
volunteers shall be covered as additional insureds with respect to the ownership, operation,
maintenance, use, loading or unloading of any auto owned, leased, hired or borrowed by the
Developer or for which the Developer is responsible; (b) the insurance coverage shall be primary
insurance as respects the City, the District, and their respective Councilmembers, directors,
officials, officers, employees, consultants, agents, and volunteers, or if excess, shall stand in an
unbroken chain of coverage excess of the Developer's scheduled underlying coverage; and (c)
any failure to comply with reporting provisions of the policy shall not affect coverage provided
to the City, the District, and their respective Councilmembers, directors, officials, officers,
employees, consultants, agents, and volunteers. Any insurance or self-insurance maintained by
the City, its directors, officials, officers, employees, consultants, agents and volunteers shall be
excess of the Developer's insurance and shall not be called upon to contribute with it in any way.
3. Workers' Compensation and Emplover's Liabilitv Covera��e. The
insurer shall agree to waive all rights of subrogation against the City, the District, and their
respective Councilmembers, directors, officials, officers, employees, consultants, agents and
volunteers for losses paid under the terms of the insurance policy which arise from work
performed by the Developer.
4. All Covera��es. Each insurance policy required by this Acquisition
Agreement shall be endorsed to state that: (a) coverage shall not be suspended, voided, reduced
►>�,-�c � � . � c � ;z�x ;;x�,�,.�, 26
(in coverage or in limits) or canceled except after thirty (30) days prior written notice by certified
mail, return receipt requested, has been given to the Risk Manager; and (b) any failure to comply
with reporting or other provisions of the policies, including breaches of warranties, shall not
affect coverage provided to the City, the District, and their respective Councilmembers,
directors, officials, officers, employees, consultants, agents, and volunteers.
Liability coverage shall not be limited to the vicarious liability or supervising role of any
additional insured nor shall there be any limitation with the severability clause. Coverage shall
contain no limitation endorsements and there shall be no endorsement or modification limiting
the scope of coverage for liability arising from pollution, explosion, collapse, underground
property damage or employment related practices. All liability insurance shall be on an
occurrence basis. Insurance on a claims made basis will be rejected. There shall be no cross
policy exclusion.
E. Separation of Insureds; No Special Limitations. All insurance required by
this Section 7.1 shall contain standard separation of insureds provisions. In addition, such
insurance shall not contain any special limitations on the scope of protection afforded to the City,
the District, and their respective Councilmembers, directors, officials, officers, employees,
consultants, agents, and volunteers.
F. Professional Liabilitv Insurance. All architects, engineers, consultants or
design professionals retained by any Developer shall also procure and maintain, for a period of
five (5) years following acceptance (pursuant to the terms of this Acquisition Agreement) of all
Facilities for which such Developer is responsible, errors and omissions liability insurance with a
limit of not less than $1,000,000 per occurrence.
G. Deductibles and Self-Insurance Retentions. Any deductibles or self-
insured retentions must be declared to and approved by the Risk Manager. Each Developer shall
guarantee that, at the option of the City, either: (1) the insurer shall reduce or eliminate such
deductibles or self-insured retentions as respects the City, the District, and their respective
Councilmembers, officers, directors, officials, employees, consultants, agents, and volunteers; or
(2) the Developer shall procure a bond guaranteeing payment of losses and related investigation
costs, claims and administrative and defense expenses.
H. Acceatabilitv of Insurers. Insurance is to be placed with insurers
authorized to do business in the State of California and with a minimum "Best's" Insurance
Guide rating of "A+:VII." Self-insurance will not be considered to comply with these insurance
specifications.
I. Verification of Covera��e. Each Developer shall furnish the City with
certificates of insurance and endorsements, duly authenticated, evidencing coverage required by
this Acquisition Agreement on forms satisfactory to the Risk Manager and with other evidence
of coverage as may be reasonably required by the Risk Manager. The certificates and
endorsements for each insurance policy shall be signed by a person authorized by that insurer to
bind coverage on its behalf, and shall be on forms supplied or approved by the Risk Manager.
All certificates and endorsements must be received and approved by the Risk Manager before
►>�,-�c � � . � c � ;z�x ;;x�,�,.�, 27
work commences. The Risk Manager reserves the right to require complete, certified copies of
all required insurance policies, at any time.
J. Reduction. Cancellation. Void or Susaended Policv. In the event that any
required insurance is reduced in coverage, canceled for any reason, voided or suspended, each
Developer agrees that the City may arrange for insurance coverage as specified, and each
Developer further agrees that administrative and premium costs may be deducted from any
deposits or bonds the City may have, or from the Improvement Funds. A reduction or
cancellation will be grounds for termination of this Acquisition Agreement as to the Developer
whose insurance policy has been reduced or cancelled (but not as to the other Developer parties)
and will cause a halt to payment for any Facilities or Discrete Components for which such non-
compliant Developer is responsible until the insurance is reestablished.
K. Subcontractors. All subcontractors shall meet the requirements of this
Section 7.1 before commencing any physical work on the Facilities for which such Developer is
responsible. In addition, each Developer shall include all subcontractors as insureds under its
policies or shall furnish separate certificates and endorsements for each subcontractor, in form
and substance acceptable to the Risk Manager, prior to the subcontractor entering the job site.
All coverages for subcontractors shall be subject to all of the requirements stated herein. Each
Developer may furnish insurance that meets all the specifications of this Section 7.1 to all of its
subcontractors though use of a"Developer Controlled Insurance Program" or "Wrap-up"
program, subject to approval by the Risk Manager.
Section 7.2 Responsibility for Damage and Claims under Acquisition Agreement or
CVWD JCFA. Each Developer shall take and assume all responsibility for the work performed
as part of the Facilities for which it is responsible and constructed pursuant to this Acquisition
Agreement or the CVWD JCFA. Each Developer shall bear all losses and damages directly or
indirectly resulting to it, to the City, the District, and their respective Councilmembers, directors,
officials, officers, employees, consultants, agents, and volunteers, or to others on account of the
performance or character of the work, unforeseen difficulties, accidents or with respect to the
Facilities for which the Developer is responsible. Each Developer acknowledges the
indemnification provisions set forth in this Section 7.2 constitute the indemnification, defense,
and hold harmless provisions of the City and the District by Developer referred to in Section
2.4(� of the CVWD JCFA.
Each Developer and its successors and assigns shall assume the defense of, indemnify,
protect and save harmless the City, the District, and each of their respective Councilmembers,
directors, officials, officers, employees, consultants, agents, and volunteers (each an
"Indemnified Party"), and each and every one of them (including independent contractors who
serve as the City's or District's officers or officials), from and against all actions, demands,
damages, injuries, claims, losses, causes of action, liabilities, costs, or expenses of every type
and description to which they may be subjected or put, whether known or unknown, existing or
potential, anticipated or unanticipated, in law or equity, to property or persons, including
wrongful death, by reason of, or resulting or in any manner arising from or incident to, the
performance by such Developer (or any of its officers, agents, servants, employees,
subcontractors, materialmen, or suppliers) of its obligations under this Acquisition Agreement or
the CVWD JCFA, the construction of the Facilities for which such Developer is responsible
►��,-�c��. �c�;z�x;;x�,�,.�, 28
(including, but not limited to, failure of such Developer to pay any amount due to any contractor
hired by such Developer for the construction of any Facility and any fines or penalties arising
therefrom, and all damages to property or personal injury received by reason of, or in the course
of, performing work, which may be caused by any willful or negligent act or omission by the
Developer or any of the Developer's employees, or any subcontractor), the nature or physical
condition of any Facilities constructed or caused to be constructed by such Developer, the
presence of any hazardous materials on or in any land conveyed by such Developer to the City
hereunder or to the CVWD hereunder and under the CVWD JCFA (but excluding hazardous
materials which are introduced in or on such land after the expiration of the period for which
such Developer is responsible for maintenance of the related Facility pursuant to Section 6.6.
hereo�, or an alleged misstatement or omission of fact relating to such Developer or its
development of the property within the District in any official statement for the District or the
Bonds (including, but not limited to, any statements regarding the presence of any hazardous
materials or endangered species thereon or therein), including without limitation the payment of
all consequential damages and attorneys' fees and other related costs and expenses. No
provision of this Acquisition Agreement or the CVWD JCFA shall in any way limit the extent of
any Developer's responsibility for payment of damages resulting from the operations of such
Developer and its contractors; arovided, however, that no Developer shall be required to
indemnify an Indemnified Party as to damages resulting from the gross negligence or willful
misconduct of an Indemnified Party in performing its obligations under this Acquisition
Agreement or the CVWD JCFA.
A Developer shall defend, at such Developer's own cost, expense and risk, any and all
such aforesaid suits, actions or other legal proceedings of every kind that may be brought or
instituted against the City or the District, or their respective directors, officials, officers,
employees, consultants, agents or volunteers. A Developer shall pay and satisfy any judgment,
award or decree that may be rendered against City or the District, or their Councilmembers,
directors, officials, officers, employees, consultants, volunteers or agents, in any such suit, action
or other legal proceeding. Each Developer shall reimburse City, the District, and their respective
Councilmembers, directors, officials, officers, employees, consultants, agents and/or volunteers,
for any and all legal expenses and costs incurred by each of them in connection therewith or in
enforcing the indemnity herein provided.
The City and District do not, and shall not, waive any rights against any Developer which
either may have by reason of the aforesaid hold harmless agreements because of the acceptance
by the City, or deposit with the City by such Developer of any insurance policies described in
Section 7.1. The aforesaid hold harmless agreement by such Developer shall apply to all
damages and claims for damages of every kind suffered, or alleged to have been suffered by
reasons of any of the aforesaid operations of the Developer, or any subcontractor, regardless of
whether or not such insurance policies are determined to be applicable to any of such damages or
claims for damages.
No act by the City, the District, or their respective representatives in processing or
accepting any plans, in releasing any bond, in inspecting or accepting any work, or of any other
nature, shall in any respect relieve any Developer or anyone else from any legal responsibility,
obligation or liability it might otherwise have.
►��,-�c��. �c�;z�x;;x�,�,.�, 29
The indemnification and hold harmless provisions of this Section 7.2 shall survive the
termination of this Acquisition Agreement or the CVWD JCFA, the completion of construction
of the Facilities, and the conveyance of title thereto to the City.
ARTICLE V111
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 8.1 Representations, Covenants and Warranties of the Developer. The
Developer represents and warrants for the benefit of the City and the District as follows:
A. Or��anization.
(i) DW 237. DW 237 represents and warrants that it is a limited liability
company duly organized and validly existing under the laws of the State of California, is
qualified to do business in and is in compliance with all applicable laws of the State of
California, and has the power and authority to own its properties and assets and to carry on its
business as now being conducted and as now contemplated.
(ii) Albor. Albor represents and warrants that it is a limited partnership duly
organized and validly existing under the laws of the State of California, is qualified to do
business in and is in compliance with all applicable laws of the State of California, and has the
power and authority to own its properties and assets and to carry on its business as now being
conducted and as now contemplated.
(iii) PDFC. PDFC represents and warrants that it is a limited partnership duly
organized and validly existing under the laws of the State of Delaware, is qualified to do
business in and is in compliance with all applicable laws of the State of California, and has the
power and authority to own its properties and assets and to carry on its business as now being
conducted and as now contemplated.
(iv) UV Partnership. UV Partnership represents and warrants that it is a
general partnership duly organized and validly existing under the laws of the State of California,
is qualified to do business in and is in compliance with all applicable laws of the State of
California, and has the power and authority to own its properties and assets and to carry on its
business as now being conducted and as now contemplated.
(v) Shaw. Shaw represents and warrants that it is a limited liability company
duly organized and validly existing under the laws of the State of California, is qualified to do
business in and is in compliance with all applicable laws of the State of California, and has the
power and authority to own its properties and assets and to carry on its business as now being
conducted and as now contemplated.
(vi) S&C. S&C represents and warrants that it is a limited liability company
duly organized and validly existing under the laws of the State of California, is qualified to do
business in and is in compliance with all applicable laws of the State of California, and has the
power and authority to own its properties and assets and to carry on its business as now being
conducted and as now contemplated.
►>�,-�c � �. � c�;z�x ;;x�,�,.�, 3 0
B. Authoritv. Each Developer represents and warrants that it has the power and
authority to enter into this Acquisition Agreement, and has taken all action necessary to cause
this Acquisition Agreement to be executed and delivered, and this Acquisition Agreement has
been duly and validly executed and delivered by such Developer.
C. Bindin�� Obli��ation. Each Developer represents and warrants that this Acquisition
Agreement is a legal, valid and binding obligation of such Developer, enforceable against such
Developer in accordance with its terms, subject to bankruptcy and other equitable principles.
D. Compliance with Laws. Each Developer shall not with knowledge commit, suffer
or permit any act to be done in, upon or to the lands of such Developer in the District or the
Facilities in violation of any law, ordinance, rule, regulation or order of any governmental
authority or any covenant, condition or restriction now or hereafter affecting the lands in the
District or the Facilities.
E. Reauests for Pavment. Each Developer represents and warrants that (i) it will not
request payment from the City or the District for the acquisition of any improvements that are
not part of the Facilities, and (ii) it will diligently follow all procedures set forth in this
Acquisition Agreement with respect to the Payment Requests.
F. Financial Records. Until the date which is one (1) year following the final
acceptance of the Facilities, each Developer covenants to maintain proper books of record and
account for the construction of the Facilities for which such Developer is responsible and all
costs related thereto. Such accounting books shall be maintained in accordance with generally
accepted accounting principles, and shall be available for inspection by the City or its agent at
any reasonable time during regular business hours on reasonable notice.
G. Prevailin�� Wa��es. Each Developer covenants that, with respect to any contracts
or subcontracts for the construction of the Facilities to be acquired from such Developer
hereunder, it will assure complete compliance with any applicable law or regulation for the
payment of prevailing wages.
H. Plans. Each Developer represents that it has obtained or will obtain approval of
the Plans for the Facilities to be acquired from such Developer hereunder from all appropriate
departments of the City and from any other governmental entity or utility from which such
approval must be obtained. Each Developer further agrees that the Facilities to be acquired from
such Developer hereunder have been or will be constructed in full compliance with such
approved plans and specifications and any supplemental agreements (change orders) thereto, as
approved in the same manner.
I. Land Owners. Each Developer agrees that in the event that it sells any land
owned by it within the boundaries of the District, such Developer will (i) notify the City within
thirty (30) days of the sale, in writing, identifying the legal name of and mailing address for the
purchaser, the applicable County Assessor's Parcel Number or Numbers for the land sold and the
acreage of the land sold, (ii) notify the purchaser in writing prior to the closing of any such sale
of the existence of this Acquisition Agreement and, in general, such Developer's rights and
obligations hereunder with respect to the construction of and payment for the Facilities, unless
►��,-�c��. �c�;z�x;;x�,�,.�, 31
any such closing has occurred prior to the execution of this Acquisition Agreement, in which
case such Developer shall provide such notification to the purchaser within thirty (30) days of
the date hereof, and (iii) notify the purchaser in writing of the existence of the District and the
special tax lien in connection therewith, and otherwise comply with any applicable provision of
Section 5;;41.5 of the Act.
J. Additional Information. Each Developer agrees to cooperate with all reasonable
written requests for nonproprietary information by the original purchasers of the Bonds or the
City related to the status of construction of improvements within the District, the anticipated
completion dates for future improvements, and any other matter material to the investment
quality of the Bonds.
K. Continuin�� Disclosure. Each Developer agrees to comply with all of its
obligations under any continuing disclosure agreement executed by it in connection with the
offering and sale of any of the Bonds.
L. Ownership Bv Affiliates. Each Developer agrees to provide to the City's Finance
Director-Treasurer prior to the date of issuance of any series of the Bonds, on (or within five (5)
business days o� July 1 of each year so long as the Bonds are outstanding, and on any other date
upon three (3) business days' notice from the City's Finance Director-Treasurer, a written list of
all Affiliates of such Developer which own or control the ownership of land located within the
District, or which have options on land within the District, indicating the parcels of land by
County Assessor's Parcel number of all such land so owned or optioned.
M. Certificate of Develoaer — Reasonable Expectation to Expend Bond
Proceeds. As contemplated by Sections 5.1(j) and 6.1(� of the Allocation Agreement, the
Developer agrees with the City and District as follows:
(i) As the Backbone Infrastructure, PDFC agrees to provide to the
City, not later than four (4) business days after the execution of a final bond purchase contract
relating to the sale of each series of Bonds and prior to the printing of a final official statement
for such Bonds, a certificate substantially in the form of Exhibit M.
(ii) As to Eligible Facilities other than Backbone Infrastructure
(including without limitation Authorized Fees), each Developer agrees to provide to the City, not
later than four (4) business days after the execution of a final bond purchase contract relating to
the sale of each series of Bonds and prior to the printing of a final official statement for such
Bonds, a certificate substantially in the form of Exhibit N identifying such Developer's Expected
Facilities.
ARTICLE IX
TERMINATION
Section 9.1 No Bonds. If, for any reason, the City does not cause the District to issue any
of the Bonds by December 3 l, 2006, this Acquisition Agreement shall terminate and be null and
void and of no further effect.
►��,-�c��. �c�;z�x;;x�,�,.�, 32
Section 9.2 Mutual Consent. This Acquisition Agreement may be terminated by the
mutual, written consent of the City, the District, and each Developer, in which event the City
may let contracts for any remaining work related to the Facilities not theretofore acquired from
the Developer hereunder, and use all or any portion of the monies in the Improvement Funds to
pay for same, and no Developer shall have any claim or right to any further payments for the
Purchase Price of Facilities or Discrete Components hereunder, except as otherwise may be
provided in such written consent.
Section 9.3 City Election for Cause. The following events shall constitute grounds for
the City or the District, at the option of such party, to terminate this Acquisition Agreement as to
any Developer involved in any such occurring event ("Defaulting Developer"), without the
consent of such Defaulting Developer. If the Defaulting Developer is PDFC, the City and the
District also shall be entitled to terminate this Acquisition Agreement as to all Developers,
without any Developer's consent. If the Defaulting Developer is any Developer but PDFC, the
City and the District shall not be entitled to terminate this Acquisition Agreement as to any non-
defaulting Developer:
A. Any Developer shall voluntarily file for reorganization or other relief under any
Federal or state bankruptcy or insolvency law.
B. Any Developer shall have any involuntary bankruptcy or insolvency action filed
against it, or shall suffer a trustee in bankruptcy or insolvency or receiver to take possession of
the assets of any Developer, or shall suffer an attachment or levy of execution to be made against
the property any Developer owns within the District unless, in any of such cases, such
circumstance shall have been terminated or released within thirty (30) days thereafter.
C. Any Developer shall abandon construction of the Facilities for which it is
responsible. Failure for a period of ninety (90) consecutive days to undertake substantial work
related to the construction of the Facilities, other than for a reason specified in Section 9.4
hereof, shall constitute such abandonment.
D. Any Developer shall breach any material covenant or default in the performance
of any material obligation hereunder.
E. Any Developer shall transfer any of its rights or obligations under this Acquisition
Agreement without the prior written consent of the City.
F. Any Developer shall have made any material misrepresentation or omission in
any written materials furnished in connection with any preliminary official statement, official
statement, continuing disclosure agreement, or bond purchase contract used in connection with
the sale of the Bonds.
G. Any Developer or any of its Affiliates shall at any time challenge the validity of
the District or any of the Bonds, or the levy of Special Taxes within the District, other than on
the grounds that such levy was not made in accordance with the terms of the Rate and Method of
Apportionment of the Special Taxes for the District.
I'6—Ic 1 I. I c 1;2�x ;; x66.6 3 3
If any such event occurs, the City or District shall give written notice of its knowledge
thereof to the Defaulting Developer, and each Developer agrees to meet and confer with the
Director of Public Works and other appropriate City staff and consultants within ten (10) days of
its receipt of any such notice as to options available to assure timely completion of the Facilities.
Such options may include, but not be limited to the termination of this Acquisition Agreement by
the City or District as provided in this Section 9.3. If the City or the District elects to terminate
this Acquisition Agreement as provided in this Section 9.3, such party shall first notify the
Defaulting Developer (and any mortgagee or trust deed beneficiary specified in writing by such
Defaulting Developer to the City and/or District to receive such notice) of the grounds for such
termination and allow the Defaulting Developer a minimum of thirty (30) days to eliminate or
mitigate to the satisfaction of the Director of Public Works the grounds for such termination.
Such period may be extended, at the sole discretion of the City, if the Defaulting Developer, to
the satisfaction of the City or District, is proceeding with diligence to eliminate or mitigate such
grounds for termination. If at the end of such period (and any extension thereo�, as determined
solely by the City or District, the Defaulting Developer has not eliminated or completely
mitigated such grounds, to the satisfaction of the City or District, the City or the District may
then terminate this Acquisition Agreement with respect to such Defaulting Developer.
Notwithstanding the foregoing, so long as any event listed in any of clauses A. through
and including G. above has occurred, notice of which has been given by the City and the District
to the Developer, and such event has not been cured or otherwise eliminated by the Defaulting
Developer, the City or the District may in its respective discretion cease making payments under
Article III or Article V hereof for the Purchase Price of any Facilities or Discrete Components
for which the Defaulting Developer is responsible.
Section 9.4 Force Majeure. Whenever performance is required of a party hereunder, that
party shall use all due diligence and take all necessary measures in good faith to perform, but if
completion of performance is delayed by reasons of floods, earthquakes or other acts of God,
war, civil commotion, riots, strikes, picketing, or other labor disputes, damage to work in
progress by casualty, or by other cause beyond the reasonable control of the party (financial
inability excepted), then the specified time for performance shall be extended by the amount of
the delay actually so caused.
ARTICLE X
MISCELLANEOUS
Section 10.1 Limited Liability of City. Each Developer agrees that any and all
obligations of the City or the District arising out of or related to this Acquisition Agreement are
special and limited obligations of the City or the District, as applicable, and the City's and
District's respective obligations to make any payments hereunder are restricted entirely to the
moneys, if any, in the Improvement Funds, and from no other source. No member of the City
Council or City or District staff member, employee or agent shall incur any liability hereunder to
any Developer or any other party in their individual capacities by reason of their actions
hereunder or execution hereof.
►��,-�c��. �c�;z�x;;x�,�,.�, 34
Section 10.2 Excess Costs. Each Developer agrees to pay all costs of the Facilities that it
is obligated to construct (pursuant to Section 4.3 or otherwise) in excess of the moneys available
therefor in the Improvement Fund applicable to each such Facility.
Section 10.3 Audit. The Director of Public Works and/or the City's Finance Director-
Treasurer shall have the right, during normal business hours and upon the giving of five (5)
business days prior written notice to any Developer, to review all books and records of such
Developer pertaining to costs and expenses incurred by such Developer in to any of the
Facilities, and any bids taken or received for the construction thereof or materials therefor.
Section 10.4 Attorney's Fees. In the event that any action or suit arising out of this
Acquisition Agreement is instituted by any party hereto against another party hereto, the party in
whose favor final judgment shall be entered shall be entitled to recover from the other party all
costs and expenses of suit, including reasonable attorneys' fees.
Section 10.5 Notices. Any notice, payment or instrument required or permitted by this
Acquisition Agreement to be given or delivered to a party shall be deemed to have been received
when personally delivered, or transmitted by telecopy or facsimile transmission (which shall be
immediately confirmed by telephone and shall be followed by mailing an original of the same
within twenty-four (24) hours after such transmission), or seventy-two (72) hours following
deposit of the same in any United States Post Office, registered or certified mail, postage
prepaid, addressed as follows:
City or District: City of Palm Desert
7;-510 Fred Waring Drive
Palm Desert, California 92260
Facsimile: (760) 776-6306
Attention: City Manager
Develoaer
DW 237: Desert Wells 237, LLC
5005 Calle San Raphael
Suite B-1
Palm Springs, California 92664
Facsimile: (760) 778-4417
Attention: Michael Marix
Albor: 2730 Wilshire Boulevard
Suite 300
Santa Monica, California 90403
Facsimile: (310) 582-1999
Attention: Alan Borstein
P6—Ic � I. I c�;2�x ;; x66.6 3 5
PDFC: Palm Desert Funding Company, LP
3 Civic Plaza
Suite 215
Newport Beach, California 92660
Facsimile: (949) 644-7620
Attention: Tom Hover
UV Partnership: The University Village Partnership
74-000 Country Club Drive
Suite H-2
Palm Desert, California 9221 1
Facsimile: (760) 773-9903
Attention: Rick Evans
Shaw: Shaw/Palm Desert l, LLC
160 Newport Center Drive
Suite 250
Newport Beach, California 92660
Facsimile: (949) 759-5619
Attention: Charles E. Crookall
S&C: Sinatra & Cook Project, LLC
9777 Wilshire Boulevard
Suite 918
Beverly Hills, California 90212
Facsimile: (323) 651-;1 18
Attention: Ryan Ogulnick
Each party may change its address or addresses for delivery of notice by delivering ten
(10) calendar days' prior written notice of such change of address to the other parties.
Section 10.6 Severability. If any part of this Acquisition Agreement is held to be illegal
or unenforceable by a court of competent jurisdiction, the remainder of this Acquisition
Agreement shall be given effect to the fullest extent possible.
Section 10.7 Successors and Assigns to Acquisition Agreement or Allocation
Agreement. This Acquisition Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto. Except for an assignment in whole to an Affiliate or
to another Developer party hereto or thereto, which shall not require the prior written consent of
the City, neither this Acquisition Agreement nor the Allocation Agreement shall be assigned by
any Developer without the prior written consent of the City and the District, which consent shall
not be unreasonably withheld. In connection with any such consent of the City or the District,
the City or the District, as applicable, may condition its consent upon the acceptability of the
relevant experience and financial condition of the proposed assignee, the assignee's express
assumption of all obligations of the applicable Developer hereunder, and/or upon any other
factor which the City or District, as applicable, deems relevant in the circumstances. In any
event, any such assignment shall be in writing, shall clearly identify the scope of the rights
►��,-�c��. �c�;z�x;;x�,�,.�, 36
and/or obligations assigned, and shall not be effective until approved in writing by the City and
the District. No assignment, whether or not consented to by the City and the District, shall
release any Developer from its obligations and liabilities under this Acquisition Agreement
unless such release is expressly agreed to by the City and the District in writing.
The provisions set forth in this Section 10.7 shall constitute terms of the prior written
consent of the City referenced in Section 7.3 of the Allocation Agreement, relating to consent of
parties to assumption of the Allocation Agreement by a buyer.
Section 10.8 Other Agreements. The obligations of each Developer hereunder shall be
those of a party hereto and not as an owner of property in the District. Nothing herein shall be
construed as affecting the City's or any Developer's rights, or duties to perform their respective
obligations, under other agreements, use regulations or subdivision requirements relating to the
development of the lands in the District. This Acquisition Agreement shall not confer any
additional rights, or waive any rights given, by either party hereto under any development or
other agreement to which they are a party.
Section 10.9 Waiver. Failure by a party to insist upon the strict performance of any of
the provisions of this Acquisition Agreement by the other party, or the failure by a party to
exercise its rights upon the default of the other party, shall not constitute a waiver of such party's
right to insist and demand strict compliance by the other party with the terms of this Acquisition
Agreement thereafter.
Section 10.10 Merger; Entire Agreement. No other agreement, statement or promise
made by any party or any employee, officer or agent of any party with respect to any matters
covered hereby that is not in writing and signed by all the parties to this Acquisition Agreement
shall be binding.
Section 10.11 Parties in Interest. Nothing in this Acquisition Agreement, expressed or
implied, is intended to or shall be construed to confer upon or to give to any person or entity
other than the City, the District, and the Developer any rights, remedies or claims under or by
reason of this Acquisition Agreement or any covenants, conditions or stipulations hereof; and all
covenants, conditions, promises, and agreements in this Acquisition Agreement contained by or
on behalf of the City, the District, or the Developer shall be for the sole and exclusive benefit of
the City, the District, and the Developer.
Section 10.12 Amendment of Acquisition Agreement or Allocation Agreement.
A. This Acquisition Amendment may be amended, from time to time, by written
Supplement hereto and executed by each of the City, the District, and the Developer.
B. Each Developer agrees and covenants it shall not amend, supplement, or
otherwise modify the Allocation Agreement (i) without the City's prior written consent, which
consent shall not be unreasonably withheld, and (ii) except as expressly provided therein.
[Remainder of Page Intentionally Left Blank]
►��,-�c��. �c�;z�x;;x�,�,.�, 37
Section 10.13 Counterparts. This Acquisition Agreement may be executed in
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties have executed this Acquisition Agreement as of
the day and year first-above written.
CITY:
CITY OF PALM DESERT
I�
Mayor
DISTRICT: CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
By:
Mayor of the City of Palm Desert
DEVELOPER:
DESERT WELLS 237, LLC,
a California limited liability company
By: Palm Desert 237, LLC,
a California limited liability company
Its: Manager
By: Marix Family Limited Partnership,
pW 2�� a Delaware limited partnership
Its: Manager
By: Marix Family Trust dated as of October 12, 2000, as amended
Its: General Partner
By:
Michael S. Marix
Its: Sole Trustee
[signatures continue on next page]
►��,-�c��. �c�;z�x;;x�,�,.�, 38
ALBOR PROPERTIES 111, LP
a California limited partnership
By: Albor Properties, Inc.,
a California corporation
Albor Its: General Partner
By:
Name: Alan S. Borstein
Title: President
PALM DESERT FUNDING COMPANY, LP,
a Delaware limited partnership
By: Palm Desert Funding Company, LLC,
a Delaware limited liability company
Its: General Partner
PDFC BY� Palm Desert Funding Company, Inc.,
a Delaware corporation
Its: Member
By:
Name: Thomas I. Hover
Title: Authorized Agent
[signatures continue on next page]
I'6—Ic 1 I. I c 1;2�x ;; x66.6 3 9
THE UNIVERSITY VILLAGE PARTNERSHIP,
a California general partnership
By: Evans University Village LLC,
a California limited liability company
Its: Partner
By: The Evans Company LLC,
a California limited liability company
Its: Manager
UV
Partnership By:
Frederick Oliver Evans, III
Its: Member
By: Edwards University Village LLC,
a California limited liability company
Its: Partner
By:
James W. Edwards, Jr.
Its: Manager
SHAW/PALM DESERT 1, LLC,
a California limited liability company
By: Shaw-CDK Properties, LLC,
a California limited liability company
Shaw Its: Manager
By:
Charles E. Crookall
Its: Manager
[signatures continue on next page]
►��,-�c��. �c�;z�x;;x�,�,.�, 40
SINATRA & COOK PROJECT, LLC,
A California limited liability company
By: The Rancho Mirage Trust
Its: Manager and Member
By:
Steven Gilfenbain
Its: Trustee
By:
Ryan Ogulnick
Its: Member and Manager
By: Fordar, LLC,
S&C A California limited liability company
Its: Member and Manager
By:
Kambiz Kamdar
Its: Manager
By:
Fred Kamdar
Its: Member
By:
Joseph Foroosh, D.
Its: Member
►��,-�c��. �c�;z�x;;x�,�,.�, 41
ACQUISITION AGREEMENT
EXHIBIT A
DESCRIPTION OF AUTHORIZED FACILITIES ELIGIBLE FOR ACQUISITION
FROM THE DEVELOPER
The public facilities (the "Facilities") described below are authorized to be financed by the CFD
and include a pedestrian bridge, traffic signals, landscaping, street improvements, water
improvements, well site improvements and land acquisition, sewer improvements, storm drain
improvements, utility improvements, public art improvements, park improvements, and park site
land acquisition, together with all appurtenances and appurtenant work, such as related clearing
and �7rubbin�7 �7radin�7, and an removal or tem orar si�7na�7e or markin�7s related thereto. The
� �,� � Y P Y � � �
cost of the Facilities shall include incidental expenses, including costs associated with forming
the CFD, issuance of bonds, determination of the amount of the Special Tax, collection of the
Special Tax, payment of the Special Tax, costs incurred in order to carry out the authorized
purposes of the CFD, and the costs of engineering, inspecting, coordinating, completing,
planning and designing the Facilities, including the costs of environmental evaluations.
The Facilities include, but shall not be limited to, the facilities listed below, and other facilities of
the same type or types may be substituted in the place of one or more of the specific facilities
listed below. Any of the Facilities to be constructed shall be constructed, whether or not
acquired in their completed states, pursuant to plans and specifications approved by the City of
Palm Desert (or the Coachella Valley Water District, as applicable) and the officials thereof,
including the City Engineer. The final nature and location of the Facilities will be determined
upon the preparation of final plans and specifications for such Facilities. The Facilities may
include facilities financed pursuant to public agency development impact fees.
The Facilities marked with a single asterisk are Backbone Infrastructure.
I.'�` One half of Cook Street Pedestrian Brid��e (including, but not limited to bridge, ADA
access ramps, elevator, retaining walls, hand railing, pedestrian lighting, revised
sidewalks and minor grading)
II. Street Improvements (including, but not limited to, street widening, excavation, signing
and striping, access ramps, street and slope grading (including soil transport, fill and
compaction), median and parkway landscaping, curbs and gutters, sidewalks, retaining
walls, street lights, dry utility infrastructure, bus stops, fringe toed lizard fee and City
fees)
A.'�` Frank Sinatra Drive: from West of Cook Street to College Drive
B.'�` Cook Street: from Frank Sinatra Drive to Gerald Ford Drive
C.'�` Portola Avenue: from South of College Drive to Gerald Ford Drive
D.'�` Southern half of Gerald Ford Drive: from Portola Avenue to Cook Street
E.'�` University Park Drive: from College Drive to Cook Street
F.'�` Technology Drive: from College Drive to Gerald Ford Drive
G.'�` Pacific Avenue: from College Drive to Gerald Ford Drive
H.'�` College Drive: from Portola Avenue to Frank Sinatra Drive
►��,-�c��. �c�;z�x;;x�,�,.�, A-1
I. In-tract streets
J. City Fees, including TUMF Fees, Fringe Toed Lizard Fees, Drainage Fees, Signal
Fees, and Art in Public Places Fees.
III. Water Improvements
A.'�` University Park Drive: from West intersection College Drive to East intersection
College Drive; and
Stand-Alone Connections (hot taps) into Gerald Ford Drive and Cook Street, as
necessary
B.'�` Technology Drive: from College Drive to Gerald Ford Drive
C.'�` Pacific Avenue: from College Drive to Gerald Ford Drive
D.'�` College Drive: from Portola Avenue to Frank Sinatra Drive
E.'�` Well Sites (including land acquisition and improvements) to be located at four
sites to be determined by the Coachella Valley Water District concurrently with
land plan, final tentative map(s), or similar document(s) (as appropriate) to be
approved by the City's Planning Commission and City Council. The tentatively
approved locations of the well sites are as follows:
1.'�` Adjacent to Gerald Ford Drive between Pacific Avenue and Technology
Drive;
2.'�` Northeast corner of College Drive and Portola Avenue;
3.'�` Adjacent to University Park Drive close to the western intersection with
College Drive; and
4.'�` Adjacent to College Drive South of University Park Drive
F. In-tract water facilities
G. CVWD Water Capacity Fees and CVWD Water Supplemental Fees
IV. Traffic Si��nals
A.'�` The intersection of Cook Street/Gerald Ford Drive (modified)
B.'�` The intersection of Cook Street/University Park Drive (modified)
C.'�` The intersection of Frank Sinatra Drive/College Drive
D.'�` The intersection of Portola Avenue/College Drive
E.'�` Signals to be located on the south side of the intersection of Gerald Ford
Drive/Pacific Avenue
F.'�` Signals to be located on the south side of the intersection of Gerald Ford
Drive/Technology Drive
G.'�` Signals to be located on the south side of the intersection of Gerald Ford
Drive/Portola Avenue (cost participation only)
V. Sewer Improvements
A.'�` Technology Drive: from College Drive to Gerald Ford Drive; and
Stand-Alone Connections into Gerald Ford Drive and Cook Street
B.'�` Pacific Avenue: from College Drive to Gerald Ford Drive
►��,-�c��. �c�;z�x;;x�,�,.�, A-2
C.'�` College Drive: from West of the Western intersection University Park Drive to
Technology Drive to North of Frank Sinatra Drive
D.'�` University Park Drive: from West intersection College Drive to Southwest of
West intersection of College Drive and West of the Eastern intersection College
Drive to the Eastern intersection College Drive
E. In-tract sewer improvements
F. CVWD Sewer Connection Fees
VI. Storm Drain Improvements
A.'�` Pacific Avenue: Catch basins, on both Pacific Avenue and south half of Gerald
Ford Drive, and interim-condition retention basins on the east and west sides of
Pacific, adjacent to Gerald Ford Drive; and
Portola Avenue: Catch basin to catch basin (bubbler) crossing the intersection of
College Drive, and catch basin to catch basin (bubbler) crossing the intersection
of Gerald Ford Drive
B.'�` College Drive: Catch basins and interim-condition retention basin on the
southwest corner of College Drive and University Park Drive (west intersection);
catch basins on the east and west sides of the intersection with Technology Drive
and a permanent retention basin along Technology Drive; and a catch basin and
interim-condition retention basin on the east side of College Drive south of the
east intersection with University Park Drive
C.'�` University Park Drive: Catch basin s on the east and west sides of University Park
Drive at the west intersection with College Drive and an interim-condition
retention basin in the southwestern corner of the intersection as indicated above
under VI.B; catch basins on the north and south sides of University Park Drive
and an interim-condition retention basin in the northwest quadrant of the east
intersection of College Drive and University Park Drive; and, as indicated above
under VI.B., a catch basin and interim-condition retention basin on the south side
of University Park Drive, west of Cook Street
D.'�` Technology Drive: Catch basins on the east and west sides of Technology Drive
and an interim-condition retention basin west of Technology Drive and south of
Gerald Ford Drive
E.'�` Gerald Ford Drive: Catch basin and interim condition retention basin on the
south side of Gerald Ford Drive, west of Pacific Avenue; catch basins to drywells
located in permanent small depressions, four (4) locations, between the sidewalk
and right of way on the south side of Gerald Ford Drive between Pacific Avenue
and Technology Drive; and, as indicated above under VI.D., catch basin and
interim-condition retention basin west of Technology Drive
F.'�` Cook Street: As indicated above under VI.B., catch basin and interim-condition
retention basin south of University Park Drive, west side of Cook Street and catch
basin and interim-condition retention basin between Frank Sinatra Drive and
University Park Drive; and
Frank Sinatra Drive: Catch basin to catch basin (bubbler) crossing the intersection
of College Drive
G. In-tract storm drains
►��,-�c��. �c�;z�x;;x�,�,.�, A-3
VII. Utilities Improvements
A.'�` Frank Sinatra Drive: from West of Cook Street to College Drive
B.'�` University Park Drive: from West intersection College Drive to Cook Street
C.'�` Technology Drive: from College Drive to Gerald Ford Drive
D.'�` Pacific Avenue: from College Drive to Gerald Ford Drive
E.'�` College Drive: from Portola Avenue to Frank Sinatra Drive
F.'�` Southern half of Gerald Ford Drive: from Technology Drive to Pacific Avenue
VIII. Park Imorovements and Park Site Land Acquisition (including, but not limited to, site
development, lighting and landscaping improvements, restroom facilities, age-appropriate
tot lots, sand volleyball and basketball facilities, picnic pavilions, greenspace (including
without limitation greenspace large enough for sports activities), shade structures,
walking paths, water spray features, dog park improvements, and parking improvements)
A.'�` Park A(approximately 2 acres) — Generally surrounded by Portola Avenue,
Colle�e Drive, Pacific Avenue and Gerald Ford Drive
B.'�` Park B(approximately 4.5 acres) — Generally surrounded by Gerald Ford Drive,
Pacific Avenue, College Drive and to the west of the intersection of College Drive
and University Park Drive
C.'�` Park C(approximately 2.3 acres)— Located in the southwest corner of the west
intersection of University Park Drive and College Drive
D.'�` Park D(approximately 2.8 acres)— Generally surrounded by College Drive and
University Park Drive
IX. Landscaain�� (includes all planting, irrigation, trees, and necessary hardscape/rocking)
A.'�` All street median areas as well as parkway areas (listed under Section II) between
the back of curb and gutter and street right of way (excluding the sidewalk) will
be landscaped.
►��,-�c � � . � c � ;z�x ;;x�,�,.�, A-4
ACQUISITION AGREEMENT
EXHIBIT B
DESCRIPTION OF ELIGIBLE DISCRETE COMPONENTS OF FACILITIES
BACKBONE FACILITIES
STREETS' DISCRETE COMPONENTS
Cook Street (from Gerald Ford Dr. to Frank Sinatra Dr.)
A. Grading of strcct and adjaccnt slopcs (including
soil transport. fill. and compaction) ,
B. Aggrcgatc basc and pa� ing ( I st lift) strcct
impro� cmcnts. curb c�, guttcr
C. Traffic signals (not including signals on thc north
half of thc intcrscction of Cook Strcct c�. Gcrald
Ford Dri� c)
D. Sidc«alk
E. Landscaping'
F. Onc-half of pcdcstrian bridgc�'
Subtotal:
ESTIMATED PAID"
COST" (�l)
� 92.I87
297.�70
I I I .090
x�.����x
�4�47.7I �
I .�460.i00
$2,494,528
* As statcd in Scction -4.8. and subjcct to thc tcrms and conditions. of this Acquisition AgrccmcnL pa� mcnt for a
particular Facilih or Discrctc Componcnt (czccpt Itcros IX.A.. IX.C.. IX.E.. IX.G. (Wcll Sitc — Land
Acquisition) and Itcros X.A.. X.C.. X.E.. and X.G. (Parks — Land Acquisition)) ma� czcccd. and is not limitcd
to. thc dollar amount sho�� n in thc "Estimatcd Costs � Column on this Ezhibit B. Thc RBF Rcport is datcd
Scptcmbcr 22. 200i. and ��as bascd on prcliminan plans for thc Eligiblc Facilitics a�ailablc as of such datc. In
ccrtain instanccs (such as ��ith thc storm drain impro�cmcnts listcd in Itcm VI.D.). a particular Discrctc
Componcnt of a Facilih ��as not �ct idcntificd as of thc datc of thc RBF Rcport. resulting in an "Estimatcd
Cost�� sho��n for such Discrctc Componcnt of $0. "Estimatcd Cost" docs not includc consultant costs and fccs
pa�ablc in conncction «ith cach Facilih and Discrctc Componcnt. ��hich arc cstimatcd in thc RBF Rcport to
add �lil �l\'CC�1�C 0��1��COSII11�11C�\" �i`%� l0 SUC�I ESUI11�11CC� COSI.
� Whcn portions of multiplc strccts arc listcd undcr a singlc roman numcral hcading. thc "Discrctc Componcnt��
consists of thc installation of thc particular impro� cmcnt for all such portions of multiplc strccts. and
rcimburscmcnt shall not bc paid until thc applicablc impro�cmcnt has bccn installcd for all such portions of
multiplc strccts undcr a singlc hcading. For instancc. rcimburscmcnt is onl� a�ailablc for thc Discrctc
Componcnt listcd as itcm III.A. ��hcn all of thc sc��cr impro�cmcnts for Collcgc Dri�c (from Portola A�c. to
Pacific A�c.) and Pacific A�cnuc (from Collcgc Dr. to Gcrald Ford Dr.) ha�c bccn installcd and complctcd
pursuant to thc tcrms of this Acquisition Agrccmcnt.
- This grading Discrctc Componcnt is not part of thc singlc mass-grading contract.
; For itcros listcd undcr thc roman numcral hcadings I. through VIIL abo�c. landscaping is cligiblc for
rcimburscmcnt onl� if installcd on Cih-o��ncd properh. Eligiblc landscaping consists of strcct mcdian arcas as
��cll as park��a� arcas bct«ccn thc back of thc curb and guttcr and ��ithin thc strcct right-of-��a� (czcluding thc
sidc��alk). Landscaping of homco�� ncrs association-o�� ncd slopcs or othcr pri� atcl� -o�� ncd properh is not
cligiblc for rcimburscmcnt from procccds of thc Bonds.
' Thc Cih shall bc responsiblc for thc constniction of thc pcdcstrian bridgc. and thc Cih ma� utiliic to��ard such
construction costs monics on dcposit in thc Backbonc Facilitics Account of thc Cih Facilitics Fund in an
amount cqual to onc-half of thc actual costs of dcsign. cnginccring. construction and othcr incidcntal czpcnscs
(as pro� idcd on Ezhibit A) of thc cntirc pcdcstrian bridgc.
PG-IO I. IO;2\8;i8GG.G B- �
BACKBONE FACILITIES
STREETS' DISCRETE COMPONENTS
11. South half of Gerald Ford Drive (from Cook St. to Portola Ave.)�
A. Grading of south half of strcct and adjaccnt
slopcs to thc south of strcct (including soil
transport. fill. and compaction) , ,
B. Storm drain impro� cmcnts «hich includc all of
thc follo« ing:, "
• Catch basins to dr� «clls locatcd in
permancnt small dcpressions. four (�4)
locations. bct«ccn thc sidc«alk and right of
«a� on thc south sidc of Gcrald Ford Dri� c
bct« ccn Pacific A� cnuc and Tcchnolog�
Dri� c
C. Storm drain impro� cmcnts «hich includc all of
thc follo« ing:, "
• catch basin on thc south sidc of Gcrald Ford
Dri� c. «cst of Pacific A� cnuc
• intcrim condition rctcntion basin on thc south
sidc of Gcrald Ford Dri� c. «cst of Pacific
A�cnuc
D. Joint trcnch for dr� utilitics �'
E
G
H
Aggrcgatc basc and pa� ing ( I st lift) strcct
impro� cmcnts for thc south half of thc strcct. and
curb c�, guttcr along south half of strcct�
Traffic signals along south half of strcct�
Sidc«alk along south half of strcct�
Landscaping'�
� Subtotal:
ESTIMATED PAID"
COST" (�l)
`� �� �.7ii
i x_�x��
i x.�x��
ixi.oi2
9 I �4.7�48
�4� 1.766
I 87.60�4
89�.�426
$3,221,489
Thc District is authoriicd to financc/rcimbursc thc impro�cmcnts along thc south half of Gcrald Ford Dri�c
onl�. and not along thc north half of Gcrald Ford Dri�c. Thc north half of Gcrald Ford Dri�c is subjcct to a
scparatc Road Impro�cmcnt Agrccmcnt datcd as of Dcccmbcr 22. 200i. b� and among thc Cih. PDFC and
Palm Dcscrt North 80. LLC a California limitcd liabilih compam. ��hcrcb� Palm Dcscrt North 80. LLC.
agrccs to pa� for thc impro� cmcnt of thc north half of Gcrald Ford Dri� c. �� ith thc possibilih of rcimburscmcnt
from a futurc communih f�cilitics district. if formcd. cncompassing thc properh north of Gcrald Ford Dri�c.
As ��ith othcr Discrctc Componcnts. catch basins ma� onl� bc rcimburscd ��hcn thc� arc capablc of scn iccablc
usc. as dctcrmincd at thc solc discrction of thc Dircctor of Public Works. T�picall�. this mcans thc ultimatc
impro�cmcnt to ��hich catch basin ��atcrs tlo�� (such as a rctcntion basin). must ha�c bccn acccptcd (pursuant to
thc tcrms of this Acquisition Agrccmcnt) b� thc Cih prc� iousl� or concurrcntl� �� ith thc catch basin.
Pursuant to fcdcral taz la��s and regulations. thc aggrcgatc amount ��hich ma� bc spcnt on construction costs for
all dn utilitics (joint trcnch) (Itcros II.D.. III.F.. IV.G.. V.G.. VI.F.. and VIILC.). ��hich arc pri�atcl�-o��ncd. is
limitcd to �`%� of monics initiall� dcpositcd to thc Impro�cmcnt Funds.
PG-IOI.IO;2\8;i8GG.G B-2
STREETS'
I�
1 V.
A. Grading of strccts and adjaccnt slopcs (including
BACKBONE FACILITIES
ESTIMATED PAID"
DISCRETE COMPONENTS COST" (�I)
College Drive (from Portola Ave. to Pacific Ave.) & Pacific Avenue (from College Dr. to
Gerald Ford Dr.)'
to Gerald Fo •d Dr.)'
A. Grading of strccts and adjaccnt slopcs (including
soil transport. fill. and compaction) �
B. Rctaining «alls adjaccnt to strcct right-of-«a�
C. Sc« cr impro� cmcnts
D. Storm drain impro� cmcnts «hich includc all of
thc follo« ing:"
• catch basin on thc cast of Pacific A� cnuc.
adjaccnt to Gcrald Ford Dri� c
• intcrim condition rctcntion basin on thc cast
sidc of Pacific A� cnuc. adjaccnt to Gcrald
Ford Dri� c
soil transport. fill. and compaction) �
B. Rctaining «alls adjaccnt to strcct right-of-«a�
C. Sc« cr impro� cmcnts
D. Storm drain impro� cmcnts «hich includc all of
thc follo« ing:"
• catch basin on thc «cst of Pacific A� cnuc.
adjaccnt to Gcrald Ford Dri� c
• an intcrim condition rctcntion basin on thc
«cst sidc of Pacific. adjaccnt to Gcrald Ford
Dri� c
E. Watcr impro� cmcnts
F. Joint trcnch for dr� utilitics'
G. Aggrcgatc basc and pa� ing ( I st lift) strcct
impro� cmcnts. curb c�, guttcr
H. Traffic signals (parts and installation)
I. Sidc«alk
J. Landscaping'
� Subtotal:
y� ��46.2 I 0
O%
I ��4.982
20_8�9
� I9.678
I �40.6 �9
708_099
I>;. �08
202.�72
89�.�426
$3,321,773
College Drive (from Pacific Ave. to Technology Dr.) & Technology Drive (from College Dr.
y� ��46.2 I 0
�47 �.98�4
iz�t.�ix
I �.096
'` Prc-Formation Facilih. Such grading has bccn performcd undcr a singlc mass-grading contract and is
rcimbursablc on a pro rata basis b� Discrctc Componcnt. bascd on thc ratio of cubic �ards attributablc to such
Discrctc Componcnt o�cr thc aggrcgatc cubic �ards subjcct to thc singlc mass-grading contract.
PG-IOI.IO;2\8;i8GG.G B-�
BACKBONE FACILITIES
STREETS'
DISCRETE COMPONENTS
E. Storm drain impro� cmcnts «hich includc all of
thc follo« ing:"
• catch basins on thc cast and «cst sidcs of thc
intcrscction of Collcgc Dri� c c�. Tcchnolog�
Dri� c
• intcrim condition rctcntion basin «cst of
Tcchnolog� Dri� c and south of Gcrald Ford
Dri� c
• permancnt condition rctcntion basin along
Tcchnolog� Dri� c
F. Watcr impro� cmcnts
G. Joint trcnch for dr� utilitics'
H. Aggrcgatc basc and pa� ing ( I st lift) strcct
impro� cmcnts. curb c�, guttcr
I. Traffic signals (parts and installation)
J. Sidc«alk
K. Landscaping'
� Subtotal:
ESTIMATED
COST"
I �_096
ip9.9�46 �
I �42.060 �
��xx.zzx I
O%
2>;.7�4�
609.�472
$3,354,555
PA 1 D"
( `�)
V. University Park Drive (from College Dr. (west intersection) to Cook St.) & College Drive
(from University Park Dr. (east intersection) to Technology Dr.)'
A. Grading of strccts and adjaccnt slopcs (including $ 667.�90
soil transport. fill. and compaction) � (
� � B. Rctaining «alls adjaccnt to strcct right-of-«a� � 2.�488.�416 �
I I C. Sc«cr impro�cmcnts � I�2.7�2 �
D. Storm drain impro� cmcnts «hich includc all of 12.�49�
thc follo« ing:"
• catch basins on thc south« cst and southcast
corncr of Collcgc Dri� c c�, Uni� crsit� Park
Dri�c («cst intcrscction)
• intcrim condition rctcntion basin on thc
south« cst corncr of Collcgc Dri� c c�.
Uni� crsit� Park Dri� c(« cst intcrscction)
E. Storm drain impro� cmcnts «hich includc all of 12.�49�
thc follo« ing:"
• catch basins on thc north and south sidcs of
Uni� crsit� Park Dri� c
• an intcrim-condition rctcntion basin in thc
north« cst quadrant of thc cast intcrscction of
Collcgc Dri� c c�. Uni� crsit� Park Dri� c
I I F. Watcr impro� cmcnts � �426.718 �
( � G. Joint trcnch for dr� utilitics' � 176.809 �
� H. Aggrcgatc bas� and pa� ing ( I st lift) strcct 887. I 90 (
impro� cmcnts. curb c�, guttcr
� � I. Traffic signals (parts and installation) � O% �
PG-1cJl.1cJ;2\8;i8GG.G B-4
BACKBONE FACILITIES
STREETS'
DISCRETE COMPONENTS
J. Sidc«alk
K. Landscaping'
� Subtotal:
ESTIMATED
COST"
277.698
609.�472
$5,691,635
V1. College Drive (from University Park Dr. (east intersection) to Frank Sinatra Drive)
A. Grading of strcct and adjaccnt slopcs (including � 262.990
soil transport. fill. and compaction) �
B. Rctaining «alls adjaccnt to strcct right-of-«a� O%
C. Sc« cr impro� cmcnts 9�.00�4
D. Storm drain impro� cmcnts «hich includc all of O%
thc follo« ing:"
• catch basin on thc cast sidc of Collcgc Dri� c.
south of thc cast intcrscction of Collcgc
Dri� c c�. Uni� crsit� Park Dri� c
• intcrim condition rctcntion basin on thc cast
sidc of Collcgc Dri� c. south of thc cast
intcrscction of Collcgc Dri� c c�. Uni� crsit�
Park Dri� c
E. Watcr impro� cmcnts
F. Joint trcnch for dr� utilitics'
G. Aggrcgatc basc and pa� ing ( I st lift) strcct
impro� cmcnts. curb c�, guttcr
H. Sidc«alk
I. Landscaping'
� Subtotal:
V11. Portola Avenue (from College Drive to Gerald Ford Drive)
A. Grading of strcct and adjaccnt slopcs (including
soil transport. fill. and compaction),
B. Storm drain impro� cmcnts «hich includc all of
thc follo« ing:"
• catch basin to catch basin (bubblcr) crossing
thc intcrscction of Portola A� cnuc c�. Collcgc
Dri� c
• catch basin to catch basin (bubblcr) crossing
thc intcrscction of Portola A� cnuc c�. Gcrald
Ford Dri� c
C. Aggrcgatc basc and pa� ing ( I st lift) strcct
impro� cmcnts. curb c�, guttcr
D. Traffic signals (not including signals on thc north
half of thc intcrscction Portola A� cnuc c�. Gcrald
Ford Dri� c)�'
E. Sidc«alk
F. Landscaping'
� Subtotal:
�0�4.298
27�.9�48
�479.06 �
99. I 96
�9�4. �6�4
xi.��ox.x��;
`f �41.09�4
�2.068
;07_ I �49
�
�49.620
I ��4.2�6
$584,187
PA 1 D"
( `�)
P6—Ic � I. I c�;2\x ;; x66.6 B-5
BACKBONE FACILITIES
STREETS'
DISCRETE COMPONENTS
V111. � Frank Sinatra Drive (from College Drive to Cook Street)
' A. Grading of strcct and adjaccnt slopcs (including
soil transport. fill. and compaction)-
B. Storm drain impro� cmcnts «hich includc all of
thc follo« ing:"
• catch basin along Cook Strcct. bct« ccn
Frank Sinatra Dri� c and Uni� crsit� Park
Dri� c
c
D
IX. � Well Sites`'
E.
F.
G
• intcrim condition rctcntion basin along Cook
Strcct. bct« ccn Frank Sinatra Dri� c and
Uni� crsit� Park Dri� c
• catch basin to catch basin (bubblcr) crossing
thc intcrscction of Collcgc Dri� c
Joint trcnch for dr� utilitics'
Aggrcgatc basc and pa� ing ( I st lift) strcct
impro� cmcnts. curb c�, guttcr
Traffic signals
Sidc«alk
Landscaping'
Subtotal:
A. Wcll Sitc No. I— Land Acquisition"
Tcntati� cl� Appro� cd Location:
Adjaccnt to Gcrald Ford Dri� c. bct« ccn Pacific
A� cnuc and Tcchnolog� Dri� c
B. Wcll Sitc No. I— Watcr Impro� cmcnts
Tcntati� cl� Appro� cd Location:
Adjaccnt to Gcrald Ford Dri� c. bct« ccn Pacific
A� cnuc and Tcchnolog� Dri� c
C. Wcll Sitc No. 2— Land Acquisition"
Tcntati� cl� Appro� cd Location:
Northcast corncr of Collcgc Dri� c and Portola
A�cnuc
D. Wcll Sitc No. 2— Watcr Impro� cmcnts
Tcntati� cl� Appro� cd Location:
Northcast corncr of Collcgc Dri� c and Portola
A�cnuc
ESTIMATED PAID"
COST" (�l)
(
`� �.��46
2_�47 �
z����.z�o
2�4.8�2
266.6 I 6
O%
2 �.000
$620,727
`G �00.000`,
I I I .090
�00_000`,
I I I .090
`' Wcll Sitc land acquisition is cligiblc for rcimbursemcnt onl� ��hcn Acccptablc Titic to such land has bccn
acccptcd (pursuant to thc tcrms of this Acquisition Agrccmcnt and CVWD JCFA. as applicablc) b� thc CVWD
or othcr go�crnmental cntih ��ho ��ill o��n thc corresponding ��cll sitc. and documcntation satisf�cton to thc
Dircctor of Public Works has bccn pro� idcd. c� idcncing such acccptancc. Amount in "Estimatcd Cost" column
rcprescnts "Actual Cost�� for such land acquisition. as prc� iousl� agrccd to b� cach affcctcd Dc� cloper and as
sct forth in thc RBF Rcport.
PG—Ic)I.Ic);2\8;i8GG.G B-6
BACKBONE FACILITIES
STREETS'
DISCRETE COMPONENTS
E
F
G
W
Wcll Sitc No. �— Land Acquisition"
Tcntati� cl� Appro� cd Location:
Adjaccnt to Uni� crsit� Park Dri� c. closc to thc
«cstcrn intcrscction «ith Collcgc Dri� c
Wcll Sitc No. �— Watcr Impro� cmcnts
Tcntati� cl� Appro� cd Location:
Adjaccnt to Uni� crsit� Park Dri� c. closc to thc
«cstcrn intcrscction «ith Collcgc Dri� c
Wcll Sitc No. �4 — Land Acquisition"
Tcntati� cl� Appro� cd Location:
Adjaccnt to Collcgc Dri� c. south of Uni� crsit�
Park Dri� c
Wcll Sitc No. �4 — Watcr Impro� cmcnts
Tcntati� cl� Appro� cd Location:
Adjaccnt to Collcgc Dri� c. south of Uni� crsit�
Park Dri� c
Subtotal:
X
Parks
A. Park A(appro�imatcl� 2 acres) — Land
Acquisition'��
Location: Gcncrall� surroundcd b� Portola
A� cnuc. Collcgc Dri� c. Pacific A� cnuc. and
Gcrald Ford Dri� c
ESTIMATED PAID"
COST" (�l)
�00.000"
I I I .090
�00.000"
I I I .090
$1,644,360
�1.28�.71�4'��
��� Park sitc land acquisition is cligiblc for rcimburscmcnt onl� ��hcn Acccptablc Titic to such land has bccn
acccptcd (pursuant to thc tcrms of this Acquisition Agrccmcnt) b� thc Cih. Amount in "Estimatcd Cost��
column rcprescnts "Actual Cost�� for such land acquisition. as prc� iousl� dctcrmincd b� thc Cih and thc
Dc� cloper in accordancc �� ith Chaptcr 2G.-48 of thc Cih Municipal Codc. adoptcd pursuant to thc Quimb� Act
(Go�crnmcnt Codc Scction GG-477).
PG—Ic)I.Ic);2\8;i8GG.G B—%
BACKBONE FACILITIES
ESTIMATED PAID"
STREETS' DISCRETE COMPONENTS COST" (�I)
B. Park A(appro�imatcl� 2 acres) — Park �� I.000��
Impro� cmcnts
Impro� cmcnts includc. «ithout limitation. sitc
dc� clopmcnt. lighting and landscaping
impro� cmcnts. restroom facilitics. tot lot
appropriatc for agcs 2-� «ith shadc structures. tot
lot appropriatc for agcs �-I2 «ith shadc
structures. sand � ollc� ball facilitics. baskctball
facilitics. picnic pa� ilions (shadc structures.
grills. bcnchcs. and tablcs). grccnspacc. and
«alking paths��
Location: Gcncrall� surroundcd b� Portola
A� cnuc. Collcgc Dri� c. Pacific A� cnuc. and
Gcrald Ford Dri� c
C. Park B(appro�imatcl� �4.� acres) — Land 2.700.000�"
Acquisition'��
Location: Gcncrall� surroundcd b� Gcrald Ford
Dri� c. Pacific A� cnuc. Collcgc Driti c. and to thc
«cst of thc intcrscction of Collcgc Dri� c and
Uni� crsit� Park Dri� c
�� Bascd on rcccnt Cih park projccts. thc Cih �s currcnt cstimatcs for thc costs to pro� idc thc rcquisitc impro� cmcnts
to satisf� thc applicablc Dc� clopers' obligations undcr Chaptcr 2G.-48 of thc Cih Municipal Codc. adoptcd pursuant
to thc Quimb� Act (Go�crnmcnt Codc Scction GG-477). arc 9�7�0.000 per acrc. ��hich are significantl� highcr than
thc respccti� c cstimatcs sct forth in thc RBF Rcport and in thc "Estimatcd Costs" column of this Ezhibit B.
PG—Ic)I.Ic);2\8;i8GG.G B—$
STREETS'
BACKBONE FACILITIES
DISCRETE COMPONENTS
D. Park B(appro�imatcl� �4.� acres) — Park
Impro� cmcnts
Impro� cmcnts includc. «ithout limitation. sitc
dc� clopmcnt. lighting and landscaping
impro� cmcnts. restroom facilitics. tot lot
appropriatc for agcs 2-� «ith shadc structures. tot
lot appropriatc for agcs �-I2 «ith shadc
structures. sand � ollc� ball facilitics. baskctball
facilitics. picnic pa� ilions (shadc structures.
grills. bcnchcs. and tablcs). ��atcr spra� fcaturc.
grccnspacc (including «ithout limitation
grccnspacc largc cnough for bascball or similar
sports acti� itics). and «alking paths"
Location: Gcncrall� surroundcd b� Gcrald Ford
Dri� c. Pacific A� cnuc. Collcgc Dri� c. and to thc
«cst of thc intcrscction of Collcgc Dri� c and
Uni� crsit� Park Dri� c
E. Park C(appro�imatcl� 2. � acres) — Land
Acquisition'��
Location: Locatcd in thc south« cst corncr of thc
«cst intcrscction of Uni� crsit� Park Dri� c and
Collcgc Dri� c
F. Park C(appro�imatcl� 2. � acres) — Park
Impro� cmcnts
Impro� cmcnts includc. «ithout limitation. sitc
dc� clopmcnt. lighting and landscaping
impro� cmcnts. parking lot. cntr� gatc. drinking
fountains. small dog park and largc dog park
impro� cmcnts. perimctcr fcncing and fcncing
bct« ccn small dog park and largc dog park. and
rest arca «ith shadc structures. picnic bcnchcs.
and tablcs"
Location: Locatcd in thc south« cst corncr of thc
«cst intcrscction of Uni� crsit� Park Dri� c and
Collcgc Dri� c
ESTIMATED
COST"
799.�00"
1.607.1�4;���
360.87i��
PA 1 D"
( `�)
P6—Ic � I. I c�;2\x ;; x66.6 B-9
BACKBONE FACILITIES
STREETS'
DISCRETE COMPONENTS
G. Park D(appro�imatcl� 2.8 acres) — Land
Acquisition'��
Location: Gcncrall� surroundcd b� Collcgc
Dri� c and Uni� crsit� Park Dri� c
H. Park D(appro�imatcl� 2.8 acres) — Park
Impro� cmcnts
Impro� cmcnts includc. «ithout limitation. sitc
dc� clopmcnt. lighting and landscaping
impro� cmcnts. restroom facilitics. tot lot
appropriatc for agcs 2-� «ith shadc structures. tot
lot appropriatc for agcs �-I2 «ith shadc
structures. sand � ollc� ball facilitics. baskctball
facilitics. picnic pa� ilions (shadc structures.
grills. bcnchcs. and tablcs). grccnspacc. and
«alking paths��
Location: Gcncrall� surroundcd b� Collcgc
Dri� c and Uni� crsit� Park Dri� c
Subtotal:
ESTIMATED PAID"
COST" (�l)
I_607_I�4�'��
6�9.800��
$9,571,175"
TOTAL ESTIMATED COSTS - BACKBONE INFRASTRUCTURE: $32,413,292'''
In-Tract Facilities, includin�� Authorized Fees:
As to Eligible Facilities other than Backbone Infrastructure, there are no Discrete Components,
and Eligible Facilities are as set forth in Exhibit A. However, Authorized Fees may be subject to
Payment Requests as they are paid or, after the issuance of Bonds, as they are due, subject to the
frequency limitation set forth in Section 5.6.E. and the other terms and conditions of this
Acquisition Agreement.
�� Docs not includc costs of consultants or rclatcd fccs. ��hich arc cstimatcd in thc RBF Rcport to add an a�cragc of
approzimatcl� 13`%� to such Estimatcd Cost. According to Scction 2. I(b) of thc Allocation Agrccmcnt. thc aggrcgatc
cstimatcd costs of thc backbonc f�cilitics. as substantiatcd b� thc RBF Rcport. is 9�3G.G20.3-4G.
PG—Ic) I. Ic);2\8;i8GG.G B— � 0
ACQUISITION AGREEMENT
EXHIBIT C
FORM OF PAYMENT REQUEST— Facilities and Discrete Components
PAYMENT REQUEST NO.
The undersigned (the "Developer"), hereby requests payment in the total amount of
$ for the Facilities (as defined in the Acquisition Agreement, dated as of ,
2006, among the City of Palm Desert (the "City"), the City of Palm Desert Community Facilities
District No. 2005-1 (University Park) (the "District"), and the Developer, as more fully described
in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby
represents and warrants to the City and the District as follows:
l. The Undersigned is a duly authorized officer of the Developer, qualified to
execute this Payment Request for payment on behalf of the Developer and is knowledgeable as
to the matters set forth herein.
2. To the extent that this payment request is with respect to a completed Facility, the
Developer has submitted or submits herewith to the City as-built drawings or similar plans and
specifications for the items to be paid for as listed in Attachment 1 hereto with respect to any
such completed Facility, and such drawings or plans and specifications, as applicable, are true,
correct and complete. To the extent that this payment request is for a Discrete Component, the
Developer has in the Developer's construction office a marked set of drawings or similar plans
and specifications for the Discrete Components to be acquired as listed in Attachment 1 hereto,
which drawings or plans and specifications, as applicable, are current and show all changes or
modifications which have been made to date.
3. All costs of the Facilities or Discrete Components thereof for which payment is
requested hereby are Actual Costs (as defined in the Agreement referenced above) and have not
been inflated in any respect. The items for which payment is requested have not been the subject
of any prior payment request submitted to the City or District.
4. Supporting documentation (such as third party invoices) is attached with respect
to each cost for which payment is requested.
5. There has been compliance with applicable laws relating to prevailing wages for
the work to construct the Facilities or Discrete Components thereof for which payment is
requested.
6. The Facilities or Discrete Components thereof for which payment is requested
were constructed in accordance with all applicable City or other governmental standards, and in
accordance with the as-built drawings or plans and specifications, as applicable, referenced in
paragraph 2 above.
7. The Developer is in compliance with the terms and provisions of the Acquisition
Agreement and no portion of the amount being requested to be paid was previously paid.
►��,-�c��. �c�;z�x;;x�,�,.�, C-1
8. The Purchase Price for each Facility or Discrete Component thereof (a detailed
calculation of which is shown in an Attachment 2 hereto for each such Facility or Discrete
Component thereo�, has been calculated in conformance with the terms of Section 5.6 of the
Acquisition Agreement.
9. Neither the Developer nor any Affiliate (as defined in the Acquisition Agreement)
is in default in the payment of ad valorem real property taxes or special taxes or special
assessments levied in the District (as defined in the Acquisition Agreement), except as follows:
I hereby declare under penalty of perjury that the above representations and warranties
are true and correct.
DEVELOPER:
By:
Name:
Its:
Date:
CITY:
Payment Request Approved for Submission to
the Finance Director-Treasurer of the City of
Palm Desert
:
Date:
Director of Public Works
►��,-�c��. �c�;z�x;;x�,�,.�, C-2
ATTACHMENT 1
EXHIBIT C
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Cl11ClC�1 .Sll�)f)U/'1 L%UClU91t'iIICIIIUiI�
►��,-�c� �. � c�;z�x;;x�,�,.�, C-1-1
ATTACHMENT 2
EXHIBIT C
CALCULATION OF PURCHASE PRICE.
[Use a separate sheet for each Facility or Discrete Component
for which payment is being requested]
Description (by reference to Exhibit B to the
Acquisition Agreement) of the Facility or Discrete Component
2. Actual Cost (list here total of supporting
invoices and/or other documentation
supporting determination of Actual Cost):
3. Subtractions from Purchase Price:
A. Holdback for Lien releases (see
Section 5.6.C. of the Acquisition
Agreement)
B. Retention (see Section 5.6.D. of
the Acquisition Agreement)
4. Total disbursement requested (amount listed
in 2, less amounts, if any, listed in 3)
$
E�
$
$
►��,-�c� �. � c�;z�x;;x�,�,.�, C-1-2
ACQUISITION AGREEMENT
EXHIBIT D
FORM OF PAYMENT REQUEST—Authorized Fees
PAYMENT REQUEST NO.
The undersigned (the "Developer"), hereby requests payment in the total amount of
$ for Authorized Fees (as defined in the Acquisition Agreement, dated as of
, 2006, among the City of Palm Desert (the "City"), the City of Palm Desert Community
Facilities District No. 2005-1 (University Park) (the "District"), and the Developer, as more fully
described in Attachment 1 hereto. In connection with this Payment Request, the undersigned
hereby represents and warrants to the City and the District as follows:
l. The Undersigned is a duly authorized officer of the Developer, qualified to
execute this Payment Request for payment on behalf of the Developer and is knowledgeable as
to the matters set forth herein.
2. All costs of the Authorized Fees thereof for which payment is requested hereby
are Actual Costs (as defined in the Agreement referenced above) and have not been inflated in
any respect. The items for which payment is requested have not been the subject of any prior
payment request submitted to the City or District.
3. Supporting documentation (such as third party invoices) is attached with respect
to each cost for which payment is requested.
4. The Developer is in compliance with the terms and provisions of the Acquisition
Agreement and no portion of the amount being requested to be paid was previously paid.
5. Neither the Developer nor any Affiliate (as defined in the Acquisition Agreement)
is in default in the payment of ad valorem real property taxes or special taxes or special
assessments levied in the District (as defined in the Acquisition Agreement), except as follows:
6. The City is requested to cause the District to make payment with respect to such
Authorized Fees to:
/circle one/
•[the undersigned Developer (as reimbursement for Authorized Fees already paid —
receipt(s) of payment are attached)]
•[directly to the City of Palm Desert]
•[directly to the Coachella Valley Water District]
►��,-�c��. �c�;z�x;;x�,�,.�, D-1
I hereby declare under penalty of perjury that the above representations and warranties
are true and correct.
DEVELOPER:
By:
Name:
Its:
Date:
CITY:
Payment Request Approved for Submission to
the Finance Director-Treasurer of the City of
Palm Desert
:
Date:
Director of Public Works
►��,-�c��. �c�;z�x;;x�,�,.�, D-2
ATTACHMENT
EXHIBIT D
��l.Sl �lt'/'C' cr// Arr�h�,i•i�t'L% �'C'C'.S fU/' lrhich per�Y91t'ill l.S /'C'C�llC'.SIC'L� ClilL%
Cl11ClC�1 .Sll�)f)U/'1 L%UClU91t'iIICIIIUiI�
►��,-�c� �. � c�;z�x;;x�,�,.�, D-1-1
ACQUISITION AGREEMENT
EXHIBIT E
CITY OF PALM DESERT
PUBLIC WORKS CONTRACTS AND BIDDING REQUIREMENTS
[See attached]
►��,-�c��. �c�;z�x;;x�,�,.�, E-1
ACQUISITION AGREEMENT
EXHIBIT F
FORM OF PAYMENT BOND
Bond No.
PAYMENT BOND
(LABOR AND MATERIALS)
CITY OF PALM DESERT — MELLO-ROOS ACT BOND FORM
KNOW ALL PERSONS BY THESE PRESENTS that:
WHEREAS �namc of dc� cloper� ("Dc� cloper �) has a«ardcd to
(.\'cu��r. ciddrr.s.s, cuid irlrphoiir inu��brr o/('oiiiiricioi/
("Principal��). a contract (thc "Contract��) for thc «ork dcscribcd as follo«s:
WHEREAS. Principal is rcquircd undcr thc tcrms of thc Contract. thc Mcllo-Roos Communit� Facilitics
Act of 1982. and thc California Ci� il Codc to sccurc thc pa� mcnt of claims of laborcrs. mcchanics.
matcrialmcn. and othcr persons as pro� idcd b� la«.
NOW. THEREFORE. «c. thc undcrsigncd Principal. and
(.\'cu�u�. ciddrrss, cuid irlrpl�oiu� inu��brr o/.S�u•rit'1
("Surct� ��) a dul� admittcd surct� insurcr undcr thc la« s of thc Statc of California. as Surct�. arc hcld and
firml� bound unto Dc� cloper. thc Cit� of Palm Dcscrt. and thc Cit� of Palm Dcscrt Communit� Facilitics
District No. 200�-I (Uni�crsit� Park) in thc pcnal sum of
Dollars (`f ). this amount bcing not Icss than onc hundred perccnt (100'%�) of thc
total contract pricc. in la« fiil monc� of thc Unitcd Statcs of Amcrica. for thc pa� mcnt of «hich sum «cll
and trul� to bc madc. «c bind ourscl� cs. oun c�irs. c�ccutors. administrators. succcssors. and assigns.
jointl� and sc�crall�. firml� b� thcsc prescnts.
THE CONDITION OF THIS OBLIGATION IS SUCH THAT. if thc hcrcb� boundcd Principal. his. hcr
or its hcirs. c�ccutors. administrators. succcssors or assigns. or subcontractors shall fail to pa� am of thc
►��,-�c��. �c�;z�x;;x�,�,.�, F-1
persons namcd in Scction � 181 of thc California Ci� il Codc. or am amounts duc undcr thc
Uncmplo� mcnt Insurancc Codc «ith respcct to «ork or labor performcd undcr thc Contract. or for am
amounts rcquircd to bc dcductcd. «ithhcld. and paid o� cr to thc Emplo� mcnt Dc� clopmcnt Dcpartmcnt
from thc «agcs of cmplo� ccs of thc Principal and subcontractors pursuant to Scction I�020 of thc
Uncmplo� mcnt Insurancc Codc. «ith respcct to «ork or labor performcd undcr thc Contract. thc Surct�
«ill pa� for thc samc in an amount not c�cccding thc pcnal sum spccificd in this bond: othcr« isc. this
obligation shall bccomc null and �oid.
This bond shall inurc to thc bcncfit of am of thc persons namcd in Scction � 181 of thc California Ci� il
Codc so as to gi� c a right of action to such persons or thcir assigns in am suit brought upon thc bond. In
casc suit is brought upon this bond. Surct� fiirthcr agrccs to pa� all court costs and reasonablc attornc� s�
fccs in an amount fi�cd b� thc court.
FURTHER. thc Surct�. for �aluc rccci�cd. hcrcb� stipulatcs and agrccs that no changc. c�tcnsion oftimc.
altcration. addition or modification to thc tcrms of thc Contract. or of thc «ork to bc performcd
thcrcundcr. or thc spccifications for thc samc. shall in am «a� affcct its obligations undcr this bond. and
it docs hcrcb� «ai� c noticc of am such changc. c�tcnsion of timc. altcration. addition. or modification to
thc tcrms of thc Contract or to thc «ork or to thc spccifications thcrcundcr. Surct� hcrcb� «ai� cs thc
pro� isions of California Ci� il Codc �� 28�4� and 28�49.
IN WITNESS WHEREOF. t«o (2) idcntical countcrparts of this instrumcnt. cach of «hich shall for all
purposcs bc dccmcd an original hcrcof. ha�c bccn dul� c�ccutcd b� Principal and Surct�. on thc datc sct
forth bclo«. thc namc of cach corporatc part� bcing hcrcto affi�cd and thcsc prescnts dul� signcd b� its
undcrsigncd represcntati� c(s) pursuant to authorit� of its go� crning bod� .
Datcd:
..Principal..
B�:
Its
B�:
Its
"Surct�
B�:
Its
B�:
Its
GSc�ci!/
GSc�ci!/
\'oir: �l�is boiid nn�si br r.trc��ird iii d��pliccUr cuid dcdrd. cd! si�;i�cd��rrs nn�si br iioicu•izrd. cuid rridriicr o/ il�r cn�il�oriit' o/ cuit'
prrsoii si�;iiiii�; cis cd�o� ��rt�-iii-/�u•� nn�s� br ci��cu•l�rd. .
►��,-�c��. �c�;z�x;;x�,�,.�, F-1
ACQUISITION AGREEMENT
EXHIBIT G
FORM OF DEVELOPER PERFORMANCE BOND — Backbone Infrastructure
Bond No.
DEVELOPER PERFORMANCE BOND — Backbone Infrastructure
CITY OF PALM DESERT — MELLO-ROOS ACT BOND FORM
KNOW ALL PERSONS BY THESE PRESENTS that:
WHEREAS
(.\'cu�u�. ciddi•c�.s.s, cuid lc�lc�pl�oiu� inu��bc�i• o/l)c�rc�lopc�i/
("Principal��)
has cntcrcd into an Acquisition Agrccmcnt dated as of . 2006 (thc "Acquisition
Agrccmcnt��). b� and among thc Cit� of Palm Dcscrt (thc "Cit� ��). thc Cit� of Palm Dcscrt Communit�
Facilitics District No. 200�- I(Uni� crsit� Park) (thc "CFD��). and ccrtain othcr dc� cloper partics.
WHEREAS. Principal is rcquircd undcr thc tcrms of thc Acquisition Agrccmcnt to fiirnish a bond to
sccurc thc complction of construction of thc Backbonc Infrastructurc (as dcfincd in thc Acquisition
Agrccmcnt) and Principal�s obligations rclating to thc Backbonc Infrastnicturc thcrcundcr.
NOW. THEREFORE. «c. thc undcrsigncd Principal. and
(.\'cu�u�. ciddrrss, cuid irlrpl�oiu� inu��brr o/.S�u•rit'1
("Surct� ��) a dul� admittcd surct� insurcr undcr thc la« s of thc Statc of California. as Surct�. arc hcld and
firml� bound unto Dc� cloper. thc Cit�. and thc CFD in thc pcnal sum of
Dollars (`f ). this amount bcing not Icss than thc amount rcquircd
pursuant to Scction �4.7.B.I.a. of thc Acquisition Agrccmcnt. in la«fiil monc� of thc Unitcd Statcs of
Amcrica. for thc pa� mcnt of «hich sum «cll and trul� to bc madc. «c bind ourscl� cs. oun c�irs.
c�ccutors. administrators. succcssors. and assigns. jointl� and sc� crall�. firml� b� thcsc prescnts.
THE CONDITION OF THIS OBLIGATION IS SUCH THAT. if thc hcrcb� boundcd Principal. his. hcr
or its hcirs. c�ccutors. administrators. succcssors or assigns. shall in all things stand to and abidc b�. and
«cll and trul� kccp and perform all thc undcrtakings. tcrms. co� cnants. conditions and agrccmcnts in thc
Acquisition Agrccmcnt rclating to thc Backbonc Infrastructurc (as dcfincd in thc Acquisition Agrccmcnt)
and am altcration thcrcof madc as thcrcin pro� idcd. on thc Principal�s part to bc kcpt and performcd.
including «ithout limitation its obligation undcr Scction 7.2 of this Acquisition Agrccmcnt to indcmnif�
►>�,-�c � � . � c � ;z�x ;;x�,�,.�, G-1
thc Cit� and thc District «ith respcct to am failurc of thc Principal to pa� am amount duc to am
contractor hircd b� such Dc� cloper for thc construction of thc Backbonc Infrastnicturc (as dcfincd in thc
Acquisition Agrccmcnt). all «ithin thc timc and in thc manncr thcrcin spccificd. and in all respccts
according to thcir truc intcnt and mcaning. and shall indcmnif� and hold harmlcss thc Cit� and thc CFD.
and thcir respccti� c officcrs. agcnts. and othcrs as thcrcin pro� idcd. thcn this obligation shall bccomc null
and � oid: othcr« isc. it shall bc and remain in fiill forcc and cffcct.
In casc suit is brought upon this bond. Surct� fiirthcr agrccs to pa� all court costs and reasonablc
attornc� s� fccs in an amount fi�cd b� thc court.
FURTHER. thc Surct�. for �aluc rccci�cd. hcrcb� stipulatcs and agrccs that no changc. c�tcnsion oftimc.
altcration. addition or modification to thc tcrms of thc Acquisition Agrccmcnt. or of thc «ork to bc
performcd thcrcundcr. or thc spccifications for thc samc. shall in am «a� affcct its obligations undcr this
bond. and it docs hcrcb� «ai� c noticc of am such changc. c�tcnsion of timc. altcration. addition. or
modification to thc tcrms of thc Acquisition Agrccmcnt or to thc «ork or to thc spccifications thcrcundcr.
Surct� hcrcb� «ai� cs thc pro� isions of California Ci� il Codc �� 28�4� and 28�49. Each of thc Cit� and thc
CFD is a principal bcncficiar� of this bond and has all rights of a part� thcrcto.
IN WITNESS WHEREOF. t«o (2) idcntical countcrparts of this instrumcnt. cach of «hich shall for all
purposcs bc dccmcd an original hcrcof. ha�c bccn dul� c�ccutcd b� Principal and Surct�. on thc datc sct
forth bclo«. thc namc of cach corporatc part� bcing hcrcto affi�cd and thcsc prescnts dul� signcd b� its
undcrsigncd represcntati� c(s) pursuant to authorit� of its go� crning bod� .
Datcd:
Principal��
B�:
Its
B�:
Its
"Surct� ��
B�:
Its
B�:
Its
GSc�ci!/
GSc�ci!/
\'oir: �l�is boiid nn�si br r.trc��ird iii d��pliccUr cuid dcdrd. cd! si�;iicd��rrs nn�si br iioicu•izrd. cuid rridriicr o/ il�r cn�il�oriit' o/ cuit'
prrsoii si�;iiiii�; cis cd�oi iirt�-iii-/�u•� nn�s� br ci��cu•l�rd. .
PG-IO I . I O;2\8 ;iBGG.G (`i-2
ACQUISITION AGREEMENT
EXHIBIT H
FORM OF DEVELOPER PERFORMANCE BOND — In-Tract Facilities
Bond No.
DEVELOPER PERFORMANCE BOND — In-Tract Facilities
CITY OF PALM DESERT — MELLO-ROOS ACT BOND FORM
KNOW ALL PERSONS BY THESE PRESENTS that:
WHEREAS
(.\'cu�u�. ciddi•c�.s.s, cuid lc�lc�pl�oiu� inu��bc�i• o/l)c�rc�lopc�i/
("Principal��)
has cntcrcd into an Acquisition Agrccmcnt datcd as of . 2006 (thc "Acquisition
Agrccmcnt��). b� and among thc Cit� of Palm Dcscrt (thc "Cit� ��). thc Cit� of Palm Dcscrt Communit�
Facilitics District No. 200�- I(Uni� crsit� Park) (thc "CFD��). and ccrtain othcr dc� cloper partics.
WHEREAS. Principal has a«ardcd a contract for thc «ork dcscribcd as follo«s (thc "Work��)
WHEREAS. Principal is rcquircd undcr thc tcrms of thc Acquisition Agrccmcnt to fiirnish a bond for
Principal�s faithfiil performancc of its obligations undcr thc Acquisition Agrccmcnt rclating to thc Work.
NOW. THEREFORE. «c. thc undcrsigncd Principal. and
(.\'cu�u�. ciddrrss, cuid irlrpl�oiu� inu��brr o/.S�u•rit'1
("Surct� ��) a dul� admittcd surct� insurcr undcr thc la« s of thc Statc of California. as Surct�. arc hcld and
firml� bound unto Dc� cloper. thc Cit�. and thc CFD in thc pcnal sum of
Dollars (`f ). this amount bcing not Icss than thc amount rcquircd
pursuant to Scction �4.7.B. I.b. of thc Acquisition Agrccmcnt «ith respcct to thc construction of thc Work.
in la« fiil monc� of thc Unitcd Statcs of Amcrica. for thc pa� mcnt of «hich sum «cll and trul� to bc
madc. «c bind ourscl� cs. oun c�irs. c�ccutors. administrators. succcssors. and assigns. jointl� and
sc�crall�. firml� b� thcsc prescnts.
►��,-�c��. �c�;z�x;;x�,�,.�, H-1
THE CONDITION OF THIS OBLIGATION IS SUCH THAT. if thc hcrcb� boundcd Principal. his. hcr
or its hcirs. c�ccutors. administrators. succcssors or assigns. shall in all things stand to and abidc b�. and
«cll and trul� kccp and perform all thc undcrtakings. tcrms. co� cnants. conditions and agrccmcnts in thc
Acquisition Agrccmcnt «ith respcct to thc Work and am altcration thcrcof madc as thcrcin pro� idcd. on
thc Principal�s part to bc kcpt and performcd «ith respcct to thc Work. including «ithout limitation its
obligation undcr Scction 7.2 of this Acquisition Agrccmcnt to indcmnif� thc Cit� and thc District «ith
respcct to am failurc of thc Principal to pa� am amount duc to am contractor hircd b� such Dc� cloper
for thc construction of thc Work. all «ithin thc timc and in thc manncr thcrcin spccificd. and in all
respccts according to thcir truc intcnt and mcaning. and shall indcmnif� and hold harmicss thc Cit� and
thc CFD. and thcir respccti� c officcrs. agcnts. and othcrs as thcrcin pro� idcd. thcn this obligation shall
bccomc null and � oid; othcn� isc. it shall bc and remain in fiill forcc and cffcct.
In casc suit is brought upon this bond. Surct� fiirthcr agrccs to pa� all court costs and reasonablc
attornc� s� fccs in an amount fi�cd b� thc court.
FURTHER. thc Surct�. for �aluc rccci�cd. hcrcb� stipulatcs and agrccs that no changc. c�tcnsion oftimc.
altcration. addition or modification to thc tcrms of thc Acquisition Agrccmcnt. or of thc «ork to bc
performcd thcrcundcr. or thc spccifications for thc samc. shall in am «a� affcct its obligations undcr this
bond. and it docs hcrcb� «ai� c noticc of am such changc. c�tcnsion of timc. altcration. addition. or
modification to thc tcrms of thc Acquisition Agrccmcnt or to thc «ork or to thc spccifications thcrcundcr.
Surct� hcrcb� «ai� cs thc pro� isions of California Ci� il Codc �� 28�4� and 28�49. Each of thc Cit� and thc
CFD is a principal bcncficiar� of this bond and has all rights of a part� thcrcto.
IN WITNESS WHEREOF. t«o (2) idcntical countcrparts of this instrumcnt. cach of «hich shall for all
purposcs bc dccmcd an original hcrcof. ha�c bccn dul� c�ccutcd b� Principal and Surct�. on thc datc sct
forth bclo«. thc namc of cach corporatc part� bcing hcrcto affi�cd and thcsc prescnts dul� signcd b� its
undcrsigncd represcntati� c(s) pursuant to authorit� of its go� crning bod� .
Datcd:
Principal��
B�:
Its
B�:
Its
"Surct� ��
B�:
Its
B�:
Its
GSc�ci!/
GSc�ci!/
\'oir: �l�is boiid nn�si br c�.trc��ird iii d��pliccUr cuid dcdrd. cd! si�iicd��rrs nn�si br iioicu•izrd. cuid rridrricr o/ il�r cn�il�oriir o/ cuit'
prrsoii si�;iiiii�; cis cit�oi iirt�-iii-/�u•� nn�si br ci��cu•J�rd. . .
PG-IOI.IO;2\8;i8GG.G H-2
ACQUISITION AGREEMENT
EXHIBIT 1
FORM OF CONTRACTOR PERFORMANCE BOND
Bond No.
CONTRACTOR PERFORMANCE BOND
CITY OF PALM DESERT — MELLO-ROOS ACT BOND FORM
KNOW ALL PERSONS BY THESE PRESENTS that:
WHEREAS �namc of dc� cloper� ("Dc� cloper �) has a«ardcd to
(.\'cu��r. ciddrr.s.s, cuid irlrpl�o��r inu��brr o/('oiiiiricioi/
("Principal��). a contract (thc "Contract��) for thc «ork dcscribcd as follo«s:
WHEREAS. Principal is rcquircd undcr thc tcrms of thc Contract to fiirnish a bond for thc faithfiil
performancc of thc Contract.
NOW. THEREFORE. «c. thc undcrsigncd Principal. and
(.\'cu�u�. ciddrrss, cuid irlrpl�oiu� inu��brr o/.S�u•rit'1
("Surct� ��) a dul� admittcd surct� insurcr undcr thc la« s of thc Statc of California. as Surct�. arc hcld and
firml� bound unto Dc� cloper. thc Cit� of Palm Dcscrt (thc "Cit� ��). and thc Cit� of Palm Dcscrt
Communit� Facilitics District No. 200�-I (Uni�crsit� Park) (thc "CFD��) in thc pcnal sum of
Dollars (`f ). this amount bcing not Icss than thc total contract pricc. in
la«fiil monc� of thc Unitcd Statcs of Amcrica. for thc pa� mcnt of «hich sum «cll and trul� to bc madc.
«c bind ourscl� cs. oun c�irs. c�ccutors. administrators. succcssors. and assigns. jointl� and sc� crall�.
firml� b� thcsc prescnts.
THE CONDITION OF THIS OBLIGATION IS SUCH THAT. if thc hcrcb� boundcd Principal. his. hcr
or its hcirs. c�ccutors. administrators. succcssors or assigns. shall in all things stand to and abidc b�. and
«cll and trul� kccp and perform all thc undcrtakings. tcrms. co� cnants. conditions and agrccmcnts in thc
Contract and am altcration thcrcof madc as thcrcin pro� idcd. on thc Principal�s part to bc kcpt and
►��,-�c��. �c�;z�x;;x�,�,.�, I-1
performcd. all «ithin thc timc and in thc manncr thcrcin spccificd. and in all respccts according to thcir
truc intcnt and mcaning. and shall indcmnif� and hold harmlcss thc Cit� and thc CFD. and thcir
respccti� c officcrs. agcnts. and othcrs as thcrcin pro� idcd. thcn this obligation shall bccomc null and � oid:
othcn� isc. it shall bc and remain in fiill forcc and cffcct.
In casc suit is brought upon this bond. Surct� fiirthcr agrccs to pa� all court costs and reasonablc
attornc� s� fccs in an amount fi�cd b� thc court.
FURTHER. thc Surct�. for �aluc rccci�cd. hcrcb� stipulatcs and agrccs that no changc. c�tcnsion oftimc.
altcration. addition or modification to thc tcrms of thc Contract. or of thc «ork to bc performcd
thcrcundcr. or thc spccifications for thc samc. shall in am «a� affcct its obligations undcr this bond. and
it docs hcrcb� «ai� c noticc of am such changc. c�tcnsion of timc. altcration. addition. or modification to
thc tcrms of thc Contract or to thc «ork or to thc spccifications thcrcundcr. Surct� hcrcb� «ai� cs thc
pro� isions of California c�� �i cod� �� 28�4� and 28�49. Each of thc Cit� and thc CFD is a principal
bcncficiar� of this bond and has all rights of a part� thcrcto.
IN WITNESS WHEREOF. t«o (2) idcntical countcrparts of this instrumcnt. cach of «hich shall for all
purposcs bc dccmcd an original hcrcof. ha�c bccn dul� c�ccutcd b� Principal and Surct�. on thc datc sct
forth bclo«. thc namc of cach corporatc part� bcing hcrcto affi�cd and thcsc prescnts dul� signcd b� its
undcrsigncd represcntati� c(s) pursuant to authorit� of its go� crning bod� .
Datcd:
Principal��
B�:
Its
B�:
Its
"Surct� ��
B�:
Its
B�:
Its
GSc�ci!/
GSc�ci!/
\'oir: �l�is boiid nn�si br r.trc��ird iii d��pliccUr cuid dcdrd. cd! si�;iicd��rrs nn�si br iioicu•izrd. cuid rridriicr o/ il�r cn�il�oriit' o/ cuit'
prrsoii si�;iiiii�; cis cd�oi iirt�-iii-/�u•� nn�s� br ci��cu•l�rd. .
PG-IOI.IO;2\8;i8GG.G I-2
ACQUISITION AGREEMENT
EXHIBIT J
FORM OF REQUEST FOR TRANSFER OF MONIES — Backbone Infrastructure
REQUEST FOR TRANSFER OF MONIES — Backbone Infrastructure
Pursuant to Scction �. �.B. of thc Acquisition Agrccmcnt datcd as of . 2006 (thc
"Acquisition Agrccmcnt��) b� and among thc Cit� of Palm Dcscrt (thc "Cit� ��). thc Cit� of Palm Dcscrt
Communit� Facilitics District No. 200�-I (Uni�crsit� Park) (thc ��District��). and thc undcrsigncd (thc
"Dc� cloper �). thc Dc� clopcn c�rcb� rcprescnts. «arrants. and ccrtifics as follo« s:
I. Thc undcrsigncd is a dul� authorizcd officcr of thc Dc� cloper. qualificd to c�ccutc this
Rcqucst for Transfcr of Monics on bchnlf of thc Dc� cloper. and is kno« Icdgcablc as to thc mattcrs sct
forth hcrcin.
2. Thc Dc� cloper is in compliancc «ith thc tcrms and pro� isions of thc Acquisition
Agrccmcnt.
�. Ncithcr thc Dc� cloper nor am Affiliatc is in dcfault in thc pa� mcnt of ad � alorcm rcal
propert� ta�cs or spccial ta�cs or spccial asscssmcnts Ic� icd in thc District. c�ccpt as follo«s:
�4. Thc Actual Costs of thc Backbonc Infrastructurc to bc o« ncd b� cithcr thc Cit� or thc
Coachclla Vnllc� Watcr District � ar� significantl� from thc cstimatcs in thc RBF Rcport datcd as of
Scptcmbcr 22. 200�. and such diffcrcncc results in a significant projcctcd surplus in thc Backbonc
Infrastructurc Account of thc �(cii�cle une:) Cit� Facilitics Fund / CVWD Facilitics Fund� «hilc resulting
in a significant projcetcd dcficit in thc Backbonc Infrastructurc Account of thc �(cii�cle une:) Cit�
Facilitics Fund / CVWD Facilitics Fund�.
THEREFORE. thc undcrsigncd Dc� clopcn c�rcb� rcqucsts thc Cit� to causc thc District to
transfcr monics bct« ccn Backbonc Infrastructurc Accounts of thc Impro� cmcnt Funds as follo« s:
/( 7�eck une ancl cumplete a.s nece.s.scn���: /
Dc� cloper rcqucsts a transfcr of all of thc monics in thc Backbonc Infrastructurc Account
of thc Cit� Facilitics Fund (but c�cluding monics «ithin thc Gcrald Ford (South) Landscaping
Subaccount thcrcin) to thc Backbonc Infrastructurc Account of thc CVWD Facilitics Fund.
Dc� cloper rcqucsts a transfcr of `f of thc monics in thc Backbonc
Infrastructurc Account of thc Cit� Facilitics Fund (but c�cluding monics «ithin thc Gcrald Ford (South)
Landscaping Subaccount thcrcin) to thc Backbonc Infrastructurc Account ofthc CVWD Facilitics Fund.
Dc� cloper rcqucsts a transfcr of all of thc monics in thc Backbonc Infrastructurc Account
of thc CVWD Facilitics Fund to thc Backbonc Infrastructurc Account of thc Cit� Facilitics Fund.
Dc� cloper rcqucsts a transfcr of `f of thc monics in thc Backbonc
Infrastructurc Accow�t of thc CVWD Facilitics Fund to thc Backbonc Infrastructurc Account of thc Cit�
Facilitics Fund.
PG—IcJ I.1cJ;2\8;i8GG.G J-1
Capitalizcd tcrms not othcr« isc dcfincd hcrcin shall ha� c thc respccti� c mcanings ascribcd to
such tcrms in thc Acquisition Agrccmcnt.
I hcrcb� dcclarc undcr pcnalt� of perjur� that thc abo� c rcprescntations and «arrantics arc truc
and corrcct.
DEVELOPER:
B�:
Namc:
Its:
Datc:
CITY:
Rcqucst for Transfcr of Monics Appro� cd for
Submission to thc Financc Dircctor-Trcasurcr of
thc Cit� of Palm Dcscrt:
:
Datc:
Dircctor of Public Works
P6—Ic � I. I c�;2\x ;; x66.6 J-2
ACQUISITION AGREEMENT
EXHIBIT K
FORM OF REQUEST FOR TRANSFER OF MONIES — Developer Subaccounts
REQUEST FOR TRANSFER OF MONIES — Developer Subaccounts
Pursuant to Section 3.3.C. of the Acquisition Agreement dated as of , 2006
(the "Acquisition Agreement") by and among the City of Palm Desert (the "City"), the City of
Palm Desert Community Facilities District No. 2005-1 (University Park) (the "District"), and the
undersigned (the "Developer"), the Developer hereby represents, warrants, and certifies as
follows:
1. The undersigned is a duly authorized officer of the Developer, qualified to
execute this Request for Transfer of Monies on behalf of the Developer, and is knowledgeable as
to the matters set forth herein.
The Developer is in compliance with the terms and provisions of the Acquisition
Agreement.
3. Neither the Developer nor any Affiliate is in default in the payment of ad valorem
real property taxes or special taxes or special assessments levied in the District, except as
follows: .
4. Of the Eligible Facilities for which the Developer is responsible, the Developer
has previously identified in a Developer Tax Certificate, provided pursuant to Section 8.1 of the
Acquisition Agreement, certain Expected Facilities to be constructed with certain proceeds of the
issuance of special tax bonds by the District (the "Bonds"). As a result and in accordance with
the Acquisition Agreement, proceeds of the Bonds were deposited into subaccounts of the Other
Facilities Accounts of the City Facilities Fund and the CVWD Facilities Fund to correspond with
the estimated costs of such Expected Facilities.
5. Over the course of construction, the sequence of costs incurred by the Developer
with respect to Eligible Facilities has deviated from the assumptions made at the time of the
aforementioned Developer Tax Certificate in such a way that a transfer of monies between the
subaccounts of the Improvement Funds would expedite the expenditure of proceeds of the
Bonds. (E.g., the Expected Facilities consisted of Eligible Facilities to be owned by the CVWD
(or Authorized Fees of the CVWD), but now costs are expected to be incurred earlier for
Facilities to be owned by the City (or Authorized Fees of the City), or vice versa.)
►��,-�c��. �c�;z�x;;x�,�,.�, K-1
THEREFORE, the undersigned Developer hereby requests the City to cause the District
to transfer monies between subaccounts of the Other Facilities Accounts of the Improvement
Funds as follows:
""Nll �E: %RANSFERS MAY llN/, Y BE REIIUE.S�ED BE%'WEEN SUBACCIIUN%:S BEAR/NG
�HESAMEACCIIUN%'NAME. E.(:.,A "DW237"SUBACCIIUN%'MAYIIN/,Y%RANSFER %Yl
ANII �HER "DW 237" SUBACCIIUN%:
/Check one rrnd conzplete rrs necessrrrJ�:/
Developer requests a transfer of all of the monies in the [ici,�cl�� ��n��:i DW 237 /
PDFC / UV / SHAW / S&C ] Subaccount (City Facilities) of the Other Facilities Account of the
City Facilities Fund to the [ici,�c�l�� ��n��:i DW 237 / PDFC / UV / SHAW / S&C ] Subaccount
(CVWD Facilities) of the Other Facilities Account of the CVWD Facilities Fund.
Developer requests a transfer of $ of the monies in the [ic�i,�c�l��
���7��:i DW 237 / PDFC / UV / SHAW / S&C ] Subaccount (City Facilities) of the Other Facilities
Account of the City Facilities Fund to the [ici,�cl�� ��n��:i DW 237 / PDFC / UV / SHAW / S&C ]
Subaccount (CVWD Facilities) of the Other Facilities Account of the CVWD Facilities Fund.
Developer requests a transfer of all of the monies in the [ici,�cl�� ��n��:i DW 237 /
PDFC / UV / SHAW / S&C ] Subaccount (CVWD Facilities) of the Other Facilities Account of
the CVWD Facilities Fund to the [ici,�cl�� ��n��:i DW 237 / PDFC / UV / SHAW / S&C ]
Subaccount (City Facilities) of the Other Facilities Account of the City Facilities Fund.
Developer requests a transfer of $ of the monies in the [ic�i,�c�l��
��n��:i DW 237 / PDFC / UV / SHAW / S&C ] Subaccount (CVWD Facilities) of the Other
Facilities Account of the CVWD Facilities Fund to the [ici,�cl�� ��n��:i DW 237 / PDFC / UV /
SHAW / S&C ] Subaccount (City Facilities) of the Other Facilities Account of the City Facilities
Fund.
Capitalized terms not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Acquisition Agreement.
I hereby declare under penalty of perjury that the above representations and warranties
are true and correct.
DEVELOPER: CITY:
By:
Name:
Its:
Request for Transfer of Monies Approved for
Submission to the Finance Director-Treasurer
of the City of Palm Desert:
:
Director of Public Works
Date:
Date:
►��,-�c��. �c�;z�x;;x�,�,.�, K-2
ACQUISITION AGREEMENT
EXHIBIT L
FORM OF REQUEST FOR TRANSFER OF MONIES — Gerald Ford (South)
Landscaping Subaccount
REQUEST FOR TRANSFER OF MONIES — Gerald Ford (South)
Landscaping Subaccount
Pursuant to Section 3.3.D. ofthe Acquisition Agreement dated as of , 2006
(the "Acquisition Agreement") by and among the City of Palm Desert (the "City"), the City of
Palm Desert Community Facilities District No. 2005-1 (University Park) (the "District"), and the
undersigned (the "Developer"), the Developer hereby represents, warrants, and certifies as
follows:
1. The undersigned is a duly authorized officer of the Developer, qualified to
execute this Request for Transfer of Monies on behalf of the Developer, and is knowledgeable as
to the matters set forth herein.
The Developer is in compliance with the terms and provisions of the Acquisition
Agreement.
3. Neither the Developer nor any Affiliate is in default in the payment of ad valorem
real property taxes or special taxes or special assessments levied in the District, except as
follows: .
4. The Developer has installed all landscaping improvements for the south half of
Gerald Ford Drive generally described as (i) the full width of inedian landscaping improvements
within Gerald Ford Drive from the intersection with Portola Avenue to the intersection with
Cook Street and (ii) the landscaping improvements within the public right-of-way along the
south half of Gerald Ford Drive from the intersection with Portola Avenue to the intersection
with Cook Street, all in accordance with the City-approved Plans therefor.
5. The Developer has received all payments pursuant to all of Developer's Payment
Requests relating to such landscaping improvements in accordance with the Acquisition
Agreement.
THEREFORE, the undersigned Developer hereby requests the City to cause the District
to transfer all of the monies remaining in the Gerald Ford (South) Landscaping Subaccount of
the Backbone Infrastructure Account of the City Facilities Fund to the Backbone Infrastructure
Account of the City Facilities Fund.
Capitalized terms not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Acquisition Agreement.
►��,-�c��. �c�;z�x;;x�,�,.�, L-1
I hereby declare under penalty of perjury that the above representations and warranties
are true and correct.
DEVELOPER:
By:
Name:
Its:
Date:
CITY:
Request for Transfer of Monies Approved for
Submission to the Finance Director-Treasurer
of the City of Palm Desert:
:
Date:
Director of Public Works
►��,-�c��. �c�;z�x;;x�,�,.�, L-2
ACQUISITION AGREEMENT
EXHIBIT M
FORM OF DEVELOPER TAX CERTIFICATE — Backbone Infrastructure
2006
In conncction «ith thc proposcd issuancc of thc `f � Spccial Ta� Bonds. Scrics
(thc "Bonds��). of Cit� of Palm Dcscrt Communit� Facilitics District No. 200�-I (Uni� crsit� Park)
(thc "District��). Palm Dcscrt Funding Compam. LP ("Dc� cloper �). a limitcd partncrship dul� organizcd
and operating undcr thc la«s of thc Statc of Dcla«arc. acting through its undcrsigncd authorizcd
rcprescntati� c. hcrcb� statcs and ccrtifics as follo« s:
(i) Thc Dc� cloper has rccci� cd final bond pricing tcrms of Stinson Sccuritics LLC andJor
Kinscll. Nc«comb c�. Dc Dios. Inc.. undcr«ritcrs to thc District. «hich sct forth thc aggrcgatc amount of
procccds of thc Bonds to bc dcpositcd to thc Impro� cmcnt Funds.
(ii) Thc Dc� cloper and thc Cit� of Palm Dcscrt. pursuant to thc tcrms of thc Allocation
Agrccmcnt. ha� c dctcrmincd thc respccti� c amounts to dcpositcd to thc Backbonc Infrastructurc
Accounts of thc Impro�cmcnt Funds (collccti�cl�. thc "A�ailablc Backbonc Infrastructurc Funds��).
«hich arc as sct forth in thc Indcnturc rclating to thc Bonds and am applicablc Supplcmcntal Indcnturc.
(iii) Thc Dc� cloper intcnds and reasonabl� c�pccts to submit Pa� mcnt Rcqucsts for Actual
Costs of Facilitics constituting Backbonc Infrastructurc. pursuant to thc tcrms of thc Acquisition
Agrccmcnt. for amounts cqui� alcnt to thc A� ailablc Backbonc Infrastructurc Funds «ithin thrcc � cars of
thc datc of issuancc of thc Bonds (currcntl� projcctcd issuc datc: . 2006).
Capitalizcd tcrms not othcr« isc dcfincd hcrcin shall ha� c thc mcaning ascribcd to such tcrms in
thc Acquisition Agrccmcnt datcd as of March . 2006. b� and among thc Cit� of Palm Dcscrt. thc
District. Dcscrt Wclls 2�7. LLC. a California limitcd liabilit� compam. Albor Propertics III. LP. a
California limitcd partncrship. Palm Dcscrt Funding Compam. LP. a Dcla«arc limitcd partncrship. Thc
Uni� crsit� Villagc Partncrship. a California gcncral partncrship. Sha«/Palm Dcscrt I. LLC. a California
limitcd liabilit� compam. and Sinatra c�. Cook Projcct. LLC. a California limitcd liabilit� compam. and if
not dcfincd thcrcin. thcn in thc Bond Indcnturc b� and bct«ccn thc District and Wclls Fargo bank.
National Association. as Trustcc. datcd as of April I. 2006.
IN WITNESS WHEREOF. Dc� cloper has causcd this Ccrtificatc to bc c�ccutcd b� its authorizcd
rcprescntati� c on thc datc first «rittcn abo� c.
DEVELOPER:
PALM DESERT FUNDING COMPANY, LP,
a Dcla«arc limitcd partncrship
B�:
Namc:
Its: Authorizcd Rcurescntati� c
Prcliminan; subjcct to changc.
►��,-�c��. �c�;z�x;;x�,�,.�, M-1
ACQUISITION AGREEMENT
EXHIBIT N
FORM OF DEVELOPER TAX CERTIFICATE — In-Tract Facilities/Authorized Fees
, 2006
In connection with the proposed issuance of the $ y Special Tax Bonds,
Series (the "Bonds"). of City of Palm Desert Community Facilities District No. 2005-1
(University Park) (the "District"), ("Developer"), a
duly organized and operating under the laws of the State of , acting through its
undersigned authorized representative, hereby states and certifies that it intends and reasonably
expects to expend any proceeds of the Bonds allocated for the financing of Eligible Facilities for
which such Developer is responsible for the following facilities (the "Expected Facilities"):
In addition, the Developer hereby certifies that such identified Expected Facilities have
been financed, or based on the Developer's reasonable expectation will be financed, within three
years of the date of issuance of the Bonds (currently projected issue date: , 2006).
Capitalized terms not otherwise defined herein shall have the meaning ascribed to such
terms in the Acquisition Agreement dated as of March _, 2006, by and among the City of Palm
Desert, the District, Desert Wells 237, LLC, a California limited liability company, Albor
Properties III, LP, a California limited partnership, Palm Desert Funding Company, LP, a
Delaware limited partnership, The University Village Partnership, a California general
partnership, Shaw/Palm Desert l, LLC, a California limited liability company, and Sinatra &
Cook Project, LLC, a California limited liability company.
IN WITNESS WHEREOF, Developer has caused this Certificate to be executed by its
authorized representative on the date first written above.
DEVELOPER:
a
By:
Name:
Its: Authorized Rearesentative
� Prcliminan; subjcct to changc.
►��,-�c��. �c�;z�x;;x�,�,.�, N-1
BOND INDENTURE
By and Between
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
with reference to
$____________
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
SPECIAL TAX BONDS
SERIES 2006A
Dated as of April 1, 2006
P6401.1032\\871196.4 RWG DRAFT 3/2/06
Table of Contents
Page
ARTICLE I DEFINITIONS................................................................................................................... 2
Section 1.1. Definitions ........................................................................................................ 2
ARTICLE II GENERAL AUTHORIZATION AND BOND TERMS ............................................... 15
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds .............. 15
Section 2.2. Type and Nature of Bonds and Parity Bonds ................................................. 15
Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Taxes ...................... 16
Section 2.4. Description of Bonds; Interest Rates .............................................................. 17
Section 2.5. Place and Form of Payment ............................................................................ 17
Section 2.6. Form of Bonds and Parity Bonds ................................................................... 18
Section 2.7. Execution and Authentication ........................................................................ 18
Section 2.8. Bond Register ................................................................................................. 19
Section 2.9. Registration of Exchange or Transfer ............................................................. 19
Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds ........................ 19
Section 2.11. Validity of Bonds and Parity Bonds ............................................................... 20
Section 2.12. Book-Entry System ........................................................................................ 20
Section 2.13. Representation Letter...................................................................................... 21
Section 2.14. Transfers Outside Book-Entry System ........................................................... 21
Section 2.15. Payments to the Nominee ............................................................................... 21
Section 2.16. Initial Depository and Nominee ..................................................................... 21
ARTICLE III CREATION OF FUNDS AND APPLICATION OF PROCEEDS .............................. 22
Section 3.1. Creation of Funds; Application of Proceeds................................................... 22
Section 3.2. Deposits to and Disbursements from Special Tax Fund................................. 24
Section 3.3. Administrative Expenses Account of the Special Tax Fund .......................... 24
Section 3.4. Interest Account and Principal Account of the Special Tax Fund.................. 25
Section 3.5. Redemption Account of the Special Tax Fund. .............................................. 25
Section 3.6. Reserve Account of the Special Tax Fund ..................................................... 27
Section 3.7. Rebate Fund. ................................................................................................... 28
Section 3.8. Surplus Fund ................................................................................................... 31
Section 3.9. City Facilities Fund ........................................................................................ 31
Section 3.10. CVWD Facilities Fund. .................................................................................. 33
Section 3.11. Investments. .................................................................................................... 34
ARTICLE IV REDEMPTION OF BONDS AND PARITY BONDS................................................. 36
Section 4.1. Redemption of Bonds. .................................................................................... 36
Section 4.2. Selection of Bonds and Parity Bonds for Redemption ................................... 37
Section 4.3. Notice of Redemption..................................................................................... 38
Section 4.4. Partial Redemption of Bonds or Parity Bonds................................................ 39
Section 4.5. Effect of Notice and Availability of Redemption Money .............................. 39
ARTICLE V COVENANTS AND WARRANTY .............................................................................. 39
Section 5.1. Warranty ......................................................................................................... 39
i
P6401.1032\\871196.4
Table of Contents
(continued)
Page
Section 5.2. Covenants ....................................................................................................... 40
ARTICLE VI AMENDMENTS TO INDENTURE ............................................................................ 43
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner
Consent ........................................................................................................... 43
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent ............. 44
Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or
Parity Bonds ................................................................................................... 45
ARTICLE VII TRUSTEE .................................................................................................................... 45
Section 7.1. Trustee ............................................................................................................ 45
Section 7.2. Removal of Trustee ........................................................................................ 46
Section 7.3. Resignation of Trustee .................................................................................... 46
Section 7.4. Liability of Trustee ......................................................................................... 46
Section 7.5. Merger or Consolidation................................................................................. 48
ARTICLE VIII EVENTS OF DEFAULT; REMEDIES ..................................................................... 48
Section 8.1. Events of Default ............................................................................................ 48
Section 8.2. Remedies of Owners....................................................................................... 48
Section 8.3. Application of Revenues and Other Funds After Default .............................. 49
Section 8.4. Power of Trustee to Control Proceedings ....................................................... 50
Section 8.5. Appointment of Receivers .............................................................................. 50
Section 8.6. Non-Waiver .................................................................................................... 50
Section 8.7. Limitations on Rights and Remedies of Owners ............................................ 50
Section 8.8. Termination of Proceedings ........................................................................... 51
ARTICLE IX DEFEASANCE AND PARITY BONDS ..................................................................... 51
Section 9.1. Defeasance ...................................................................................................... 51
Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional
Indebtedness ................................................................................................... 53
ARTICLE X MISCELLANEOUS....................................................................................................... 55
Section 10.1. Cancellation of Bonds and Parity Bonds ........................................................ 55
Section 10.2. Execution of Documents and Proof of Ownership ......................................... 55
Section 10.3. Unclaimed Moneys ......................................................................................... 56
Section 10.4. Provisions Constitute Contract ....................................................................... 56
Section 10.5. Future Contracts ............................................................................................. 56
Section 10.6. Further Assurances ......................................................................................... 57
Section 10.7. Severability ..................................................................................................... 57
Section 10.8. Notices ............................................................................................................ 57
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Table of Contents
(continued)
Page
EXHIBITS:
EXHIBIT A FORM OF SPECIAL TAX BOND, SERIES 2006A ............................................... A-1
EXHIBIT B FORM OF REQUISITION FOR DISBURSEMENT OF PROJECT COSTS (CITY
FACILITIES FUND) ................................................................................................ B-1
EXHIBIT C FORM OF REQUISITION FOR DISBURSEMENT OF PROJECT COSTS (CVWD
FACILITIES FUND) ................................................................................................ C-1
EXHIBIT D FORM OF CERTIFICATE OF THE DISTRICT REQUESTING TRANSFER OF
MONIES FOR PROJECT COSTS (BACKBONE INFRASTRUCTURE) ............. D-1
EXHIBIT E FORM OF CERTIFICATE OF THE DISTRICT REQUESTING TRANSFER OF
MONIES FOR PROJECT COSTS (DEVELOPER SUBACCOUNTS) .................. E-1
EXHIBIT F FORM OF CERTIFICATE OF THE DISTRICT REQUESTING TRANSFER OF
MONIES FOR PROJECT COSTS (GERALD FORD (SOUTH) LANDSCAPING
SUBACCOUNT) ...................................................................................................... F-1
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BOND INDENTURE
THIS BOND INDENTURE dated as of April 1, 2006, by and between CITY OF PALM
DESERT COMMUNITY FACILITIES DISTRICT NO. 2005-1 (UNIVERSITY PARK) (the
“District”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee (the “Trustee”),
governs the terms of the Special Tax Bonds, Series 2006A, of City of Palm Desert Community
Facilities District No. 2005-1 (University Park) and any Parity Bonds issued in accordance herewith
from time to time.
R E C I T A L S :
WHEREAS, the City Council of the City of Palm Desert, located in Riverside County,
California (hereinafter sometimes referred to as the “legislative body of the District” or the “City”),
has heretofore undertaken proceedings and declared the necessity to issue bonds on behalf of the
District pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as
amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of
California (the “Act”); and
WHEREAS, based upon Resolution Nos. 06-6 and 06-7 adopted by the legislative body of
the District on January 12, 2006 and an election held January 12, 2006 authorizing the levy of a
special tax and the issuance of bonds by the District, the District is now authorized to issue bonds for
one or more series, pursuant to the Act, in an aggregate principal amount not to exceed $70,000,000;
and
WHEREAS, the legislative body of the District intends to finance certain public facilities
through the issuance of bonds in an aggregate principal amount of $________ designated as the “City
of Palm Desert Community Facilities District No. 2005-1 (University Park) Special Tax Bonds,
Series 2006A” (the “Series 2006A Bonds”); and
WHEREAS, the District has determined that all requirements of the Act for the issuance of
the Series 2006A Bonds have been satisfied;
NOW, THEREFORE, in order to establish the terms and conditions upon and subject to
which the Series 2006A Bonds are to be issued, and in consideration of the premises and of the
mutual covenants contained herein and of the purchase and acceptance of the Series 2006A Bonds by
the Owners thereof, and for other valuable consideration, the receipt of which is hereby
acknowledged, the District does hereby covenant and agree, for the benefit of the Owners of the
Series 2006A Bonds and any Parity Bonds (as defined herein) which may be issued hereunder from
time to time, as follows:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall
have the following meanings:
“Account” means any account created pursuant to this Indenture.
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Section
53311 et seq. of the California Government Code.
“Acquisition Agreement” means that certain Acquisition Agreement, dated as of _________,
2006, by and among the City, the District, Desert Wells 237, LLC, a California limited liability
company, Albor Properties III, LP, a California limited partnership, Palm Desert Funding Company,
LP, a Delaware limited partnership, The University Village Partnership, a California general
partnership, Shaw/Palm Desert 1, LLC, a California limited liability company, and Sinatra & Cook
Project, LLC, a California limited liability company.
“Administrative Expenses” means the administrative costs with respect to the calculation and
collection of the Special Taxes, including all attorneys’ fees and other costs related thereto, the fees
and expenses of the Trustee, any fees and related costs for credit enhancement for the Bonds or any
Parity Bonds which are not otherwise paid as Costs of Issuance, any costs related to the District’s
compliance with state and federal laws requiring continuing disclosure of information concerning the
Bonds and the District, and any other costs otherwise incurred by the City staff on behalf of the
District in order to carry out the purposes of the District as set forth in the Resolution of Formation
and any obligation of the District hereunder.
“Administrative Expenses Account” means the account by that name created and established
in the Special Tax Fund pursuant to Section 3.1 hereof.
“Administrative Expenses Cap” means an amount equal to $75,000 per Bond Year,
escalating by 2% each Bond Year commencing July 1, 2007.
“Alternative Penalty Account” means the account by that name created and established in the
Rebate Fund pursuant to Section 3.7 hereof.
“Annual Debt Service” means the principal amount of any Outstanding Bonds or Parity
Bonds payable in a Bond Year either at maturity or pursuant to a Sinking Fund Payment and any
interest payable on any Outstanding Bonds or Parity Bonds in such Bond Year, if the Bonds and any
Parity Bonds are retired as scheduled.
“Authorized Investments” means any of the following which at the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein:
(1) (A) Direct obligations (other than an obligation subject to variation in
principal repayment) of the United States of America (“United States Treasury Obligations”);
(B) obligations fully and unconditionally guaranteed as to timely payment of principal and
interest by the United States of America; (C) obligations fully and unconditionally
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guaranteed as to timely payment of principal and interest by any agency or instrumentality of
the United States of America when such obligations are backed by the full faith and credit of
the United States of America; or (D) evidences of ownership of proportionate interests in
future interest and principal payments on obligations described above held by a bank or trust
company as custodian, under which the owner of the investment is the real party in interest
and has the right to proceed directly and individually against the obligor and the underlying
government obligations are not available to any person claiming through the custodian or to
whom the custodian may be obligated.
(2) Federal Housing Administration debentures.
(3) The listed obligations of government-sponsored agencies which are not
backed by the full faith and credit of the United States of America:
- Federal Home Loan Mortgage Corporation (FHLMC)
Participation certificates (excluded are stripped mortgage securities which are
purchased at prices exceeding their principal amounts)
Senior Debt obligations
- Farm Credit Banks (formerly: Federal Land Banks, Federal
Intermediate Credit Banks and Banks for Cooperatives)
Consolidated system-wide bonds and notes
- Federal Home Loan Banks (FHL Banks)
Consolidated debt obligations
- Federal National Mortgage Association (FNMA)
Senior debt obligations
Mortgage-backed securities (excluded are stripped mortgage securities which
are purchased at prices exceeding their principal amounts)
- Student Loan Marketing Association (SLMA)
Senior debt obligations (excluded are securities that do not have a fixed par
value and/or whose terms do not promise a fixed dollar amount at maturity or
call date)
- Financing Corporation (FICO)
Debt obligations
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- Resolution Funding Corporation (REFCORP)
Debt obligations
(4) Unsecured certificates of deposit, time deposits, and bankers’ acceptances
(having maturities of not more than 30 days) of any bank (including the Trustee and any
affiliate) the short-term obligations of which are rated “A-1” or better by Standard & Poor’s.
(5) Deposits the aggregate amount of which are fully insured by the Federal
Deposit Insurance Corporation (FDIC), in banks (including the Trustee and any affiliate)
which have capital and surplus of at least $5 million.
(6) Commercial paper (having original maturities of not more than 270 days rated
“A-1+” by Standard & Poor’s and “Prime-1” by Moody’s and issued by an entity meeting the
criteria in either clause (A) or (B):
(A) the entity (i) is organized and operating in the United States as a
general corporation, (ii) has total assets in excess of $500,000,000, and (iii) has debt
other than commercial paper, if any, that is rated “A” or higher by Standard & Poor’s
or Moody’s; or
(B) the entity (i) is organized within the United States as a special purpose
corporation, trust, or limited liability company, (ii) has programwide credit
enhancements including, but not limited to, overcollateralization, letters of credit, or
surety bond, and (ii) has commercial paper rated “A-1” or higher by Standard &
Poor’s or “A1” by Moody’s.
(7) Money market funds rated “AAm” or “AAm-G” by Standard & Poor’s, or
better (including those of the Trustee or its affiliates).
(8) “State Obligations,” which means:
(A) Direct general obligations of any state of the United States of
America or any subdivision or agency thereof to which is pledged the full faith and
credit of a state the unsecured general obligation debt of which is rated “A3” by
Moody’s and “A” by Standard & Poor’s, or better, or any obligation fully and
unconditionally guaranteed by any state, subdivision or agency whose unsecured
general obligation debt is so rated.
(B) Direct general short-term obligations of any state agency or
subdivision or agency thereof described in (A) above and rated “A-1+” by
Standard & Poor’s and “Prime-l” by Moody’s.
(C) Special Revenue Bonds (as defined in the United States Bankruptcy
Code) of any state, state agency or subdivision described in (A) above and rated
“AA” or better by Standard & Poor’s and “Aa” or better by Moody’s.
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(9) Pre-refunded municipal obligations rated “AAA” by S & P and “Aaa” by
Moody’s meeting the following requirements:
(A) the municipal obligations are (1) not subject to redemption prior to
maturity or (2) the trustee for the municipal obligations has been given irrevocable
instructions concerning their call and redemption and the issuer of the municipal
obligations has covenanted not to redeem such municipal obligations other than as set
forth in such instructions;
(B) the municipal obligations are secured by cash or United States
Treasury Obligations which may be applied only to payment of the principal of,
interest and premium on such municipal obligations;
(C) the principal of and interest on the United States Treasury Obligations
(plus any cash in the escrow) has been verified by the report of independent certified
public accountants to be sufficient to pay in full all principal of, interest, and
premium, if any, due and to become due on the municipal obligations
(“Verification”);
(D) the cash or United States Treasury Obligations serving as security for
the municipal obligations are held by an escrow agent or trustee in trust for owners of
the municipal obligations;
(E) no substitution of a United States Treasury Obligation shall be
permitted except with another United States Treasury Obligation and upon delivery
of a new Verification; and
(F) the cash or United States Treasury Obligations are not available to
satisfy any other claims, including those by or against the trustee or escrow agent.
(10) Repurchase agreements:
(A) With (1) any domestic bank, or domestic branch of a foreign bank, the
long term debt of which is rated at least “A” by Standard & Poor’s and Moody’s; or
(2) any broker-dealer with “retail customers” or a related affiliate thereof which
broker-dealer has, or the parent company (which guarantees the provider) of which
has, long-term debt rated at least “A” by Standard & Poor’s and Moody’s, which
broker-dealer falls under the jurisdiction of the Securities Investors Protection
Corporation; or (3) any other entity rated “A” or better by Standard & Poor’s and
Moody’s, provided that:
(a) The market value of the collateral is maintained at levels
equal to 104% of the amount of cash transferred by the Trustee to the
provider of the repurchase agreement plus accrued interest with the collateral
being valued weekly and marked-to-market at one current market price plus
accrued interest;
(b) The Trustee or a third party acting solely as agent therefor or
for the District (the “Holder of the Collateral”) has possession of the
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collateral or the collateral has been transferred to the Holder of the Collateral
in accordance with applicable state and federal laws (other than by means of
entries on the transferor’s books);
(c) The repurchase agreement shall state and an opinion of
counsel shall be rendered at the time such collateral is delivered that the
Holder of the Collateral has a perfected first priority security interest in the
collateral, any substituted collateral and all proceeds thereof (in the case of
bearer securities, this means the Holder of the Collateral is in possession);
(d) The repurchase agreement shall provide that if during its term
the provider’s rating by either Moody’s or Standard & Poor’s is withdrawn or
suspended or falls below “A-“ by Standard & Poor’s or “A3” by Moody’s, as
appropriate, the provider must, at the direction of the District or the Trustee,
within 10 days of receipt of such direction, repurchase all collateral and
terminate the agreement, with no penalty or premium to the District or
Trustee.
(B) Notwithstanding the above, if a repurchase agreement has a term of
270 days or less (with no evergreen provision), collateral levels need not be as
specified in (a) above, so long as such collateral levels are 103% or better and the
provider is rated at least “A” by Standard & Poor’s and Moody’s, respectively.
(11) Investment agreements with a domestic or foreign bank or corporation (other
than a life or property casualty insurance company) the long-term debt of which or, in the
case of a guaranteed corporation the long-term debt, or, in the case of a monoline financial
guaranty insurance company, claims paying ability, of the guarantor is rated at least “AA” by
Standard & Poor’s and “Aa” by Moody’s; provided that, by the terms of the investment
agreement:
(A) interest payments are to be made to the Trustee at times and in
amounts as necessary to pay debt service (or, if the investment agreement is for the
City Facilities Fund or the CVWD Facilities Fund, construction draws) on the Bonds;
(B) the invested funds are available for withdrawal without penalty or
premium, at any time upon not more than seven days’ prior notice; the District and
the Trustee hereby agree to give or cause to be given notice in accordance with the
terms of the investment agreement so as to receive funds thereunder with no penalty
or premium paid;
(C) the investment agreement shall state that is the unconditional and
general obligation of, and is not subordinated to any other obligation of, the provider
thereof, or, in the case of a bank, that the obligation of the bank to make payments
under the agreement ranks pari passu with the obligations of the bank to its other
depositors and its other unsecured and unsubordinated creditors;
(D) the District and the Trustee receives the opinion of domestic counsel
(which opinion shall be addressed to the District and the Trustee) that such
investment agreement is legal, valid, binding and enforceable upon the provider in
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accordance with its terms and of foreign counsel (if applicable) in form and substance
acceptable, and addressed to, the District;
(E) the investment agreement shall provide that if during its term.
(1) the provider’s rating by either Standard & Poor’s or Moody’s
falls below “AA-” or “Aa3”, respectively, the provider shall, at its option,
within 10 days of receipt of publication of such downgrade, either
(i) collateralize the investment agreement by delivering or transferring in
accordance with applicable state and federal laws (other than by means of
entries on the provider’s books) to the District, the Trustee or a third party
acting solely as agent therefor (the “Holder of the Collateral”) collateral free
and clear of any third-party liens or claims the market value of which
collateral is maintained at levels and upon such conditions as would be
acceptable to Standard & Poor’s and Moody’s to maintain an “A” rating in an
“A” rated structured financing (with a market value approach); or (ii) repay
the principal of and accrued but unpaid interest on the investment; and
(2) the provider’s rating by either Standard & Poor’s or Moody’s
is withdrawn or suspended or falls below “A-” or “A3”, respectively, the
provider must, at the direction of the District or the Trustee, within 10 days of
receipt of such direction, repay the principal of and accrued but unpaid
interest on the investment, in either case with no penalty or premium to the
District or Trustee; and
(F) The investment agreement shall state and an opinion of counsel shall
be rendered, in the event collateral is required to be pledged by the provider under the
terms of the investment agreement at the time such collateral is delivered, that the
Holder of the Collateral has a perfected first priority security interest in the collateral,
any substituted collateral and all proceeds thereof (in the case of bearer securities, this
means the Holder of the Collateral is in possession); and
(G) the investment agreement must provide that if during its term
(1) the provider shall default in its payment obligations, the
provider’s obligations under the investment agreement shall, at the direction
of the District or the Trustee, be accelerated and amounts invested and
accrued but unpaid interest thereon shall be repaid to the District or Trustee,
as appropriate, and
(2) the provider shall become insolvent, not pay its debts as they
become due, be declared or petition to be declared bankrupt, etc. (“event of
insolvency”), the provider’s obligations shall automatically be accelerated
and amounts invested and accrued but unpaid interest thereon shall be repaid
to the District or Trustee, as appropriate.
(12) The State of California Local Agency Investment Fund; provided that the
Trustee may restrict investments in such Fund to the extent necessary to keep moneys
available for the purposes of this Indenture.
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(13) California Asset Management Program (CAMP).
“Authorized Representative of the City” means the City Manager of the City, the Finance
Director-Treasurer of the City, or any other person or persons designated by the City Manager or the
Finance Director-Treasurer by a written certificate signed by the City Manager or the Finance
Director-Treasurer and containing the specimen signature of each such person.
“Authorized Representative of the District” means the City Manager of the City, the Finance
Director-Treasurer of the City, or any other person or persons designated by the City Manager or the
Finance Director-Treasurer by a written certificate signed by the City Manager or the Finance
Director-Treasurer and containing the specimen signature of each such person.
“Backbone Infrastructure Account” shall mean the account by that name created and
established in the City Facilities Fund pursuant to Section 3.1 hereof and/or the account by that name
created and established in the CVWD Facilities Fund pursuant to Section 3.1 hereof, as the context
may require.
“Bond Counsel” means an attorney at law or a firm of attorneys selected by the District of
nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds
issued by states and their political subdivisions duly admitted to the practice of law before the highest
court of any state of the United States of America or the District of Columbia.
“Bond Register” means the books which the Trustee shall keep or cause to be kept on which
the registration and transfer of the Bonds and any Parity Bonds shall be recorded.
“Bondowner” or “Owner” means the person or persons in whose name or names any Bond or
Parity Bond is registered.
“Bonds” means the Series 2006A Bonds.
“Bond Year” means the twelve month period commencing on September 2 of each year and
ending on September 1 of the following year, except that the first Bond Year for the Bonds or an
issue of Parity Bonds shall begin on the Delivery Date and end on the first September 1 which is not
more than 12 months after the Delivery Date.
“Business Day” means a day which is not a Saturday or Sunday or a day of the year on which
banks in New York, New York, Los Angeles, California, or the city where the corporate trust office
of the Trustee is located, are not required or authorized to remain closed.
“Capitalized Interest Subaccount” means the subaccount by that name created and
established in the Interest Account of the Special Tax Fund pursuant to Section 3.1 hereof.
“Certificate of an Authorized Representative” means a written certificate executed by an
Authorized Representative of the City or District, as applicable.
“Certificate of the Special Tax Administrator” means a certificate of an Authorized
Representative of the District, or any successor entity appointed by the City, to administer the
calculation and collection of the Special Taxes.
“City” means the City of Palm Desert, California.
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“City Facilities Fund” means the fund by that name established pursuant to Section 3.1
hereof.
“Code” means the Internal Revenue Code of 1986, as amended, and any Regulations, rulings,
judicial decisions, and notices, announcements, and other releases of the United States Treasury
Department or Internal Revenue Service interpreting and construing it.
“Continuing Disclosure Agreement” means that certain Continuing Disclosure Agreement
dated as of April 1, 2006 between the District and Wells Fargo Bank, National Association, as
dissemination agent, together with any amendments thereto.
“Costs of Issuance” means the costs and expenses incurred in connection with the formation
of the District and the issuance and sale of the Bonds or any Parity Bonds, including the acceptance
and initial annual fees and expenses of the Trustee, legal fees and expenses, costs of printing the
Bonds and Parity Bonds and the preliminary and final official statements for the Bonds and Parity
Bonds, fees of financial consultants and all other related fees and expenses, as set forth in a
Certificate of an Authorized Representative of the City.
“CVWD Facilities Fund” means the account by that name created and established pursuant to
Section 3.1 hereof.
“Delivery Date” means, with respect to the Bonds and each issue of Parity Bonds, the date on
which the bonds of such issue were issued and delivered to the initial purchasers thereof.
“Depository” shall mean The Depository Trust Company, New York, New York, and its
successors and assigns as securities depository for the Certificates, or any other securities depository
acting as Depository under Article II hereof.
“Developed Property” shall have the meaning ascribed to such term in the Rate and Method.
“Direct Debt for District Property” means that portion or the entirety, as applicable, of the
aggregate principal amount of the Outstanding Bonds and Parity Bonds (exclusive of any Escrow
Bonds) which is allocable to the property in the District.
“District” means City of Palm Desert Community Facilities District No. 2005-1 (University
Park) established pursuant to the Act and the Resolution of Formation.
“DW 237 Subaccount (City Facilities)” means the subaccount by that name created and
established in the Other Facilities Account of the City Facilities Fund pursuant to Section 3.1 hereof.
“DW 237 Subaccount (CVWD Facilities)” means the subaccount by that name created and
established in the Other Facilities Account of the CVWD Facilities Fund pursuant to Section 3.1
hereof.
“Escrow Bonds” means the principal amount of any Parity Bonds deposited in an escrow
account established by a Supplemental Indenture which are not secured by a pledge of the Net Taxes
while on deposit therein.
“Event of Default” means an “event of default” described in Section 8.1 hereof.
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“Facilities Fund” means the City Facilities Fund and/or the CVWD Facilities Fund, as the
context may require.
“Federal Securities” means any of the following: (a) non-callable direct obligations of the
United States of America (“Treasuries”), (b) evidence of ownership of proportionate interests in
future interest and principal payments on Treasuries held by a bank or trust company as custodian,
under which the owner of the investment is the real party in interest and has the right to proceed
directly and individually against the obligor and the underlying Treasuries are not available to any
person claiming through the custodian or to whom the custodian may be obligated, and
(c) pre-refunded municipal obligations rated “AAA” and “Aaa” by Standard & Poor’s and Moody’s,
respectively (or any combination thereof).
“Fiscal Year” means the period beginning on July 1 of each year and ending on the next
following June 30.
“Gerald Ford (South) Landscaping Subaccount” means the subaccount by that name created
and established in the Backbone Infrastructure Account of the City Facilities Fund pursuant to
Section 3.1 hereof.
“Gross Taxes” means the amount of all Special Taxes received by the District, together with
the proceeds collected from the sale of property pursuant to the foreclosure provisions of this
Indenture for the delinquency of such Special Taxes remaining after the payment of all costs related
to such foreclosure actions.
“Indenture” means this Bond Indenture, together with any Supplemental Indenture approved
pursuant to Article 6 hereof.
“Independent Financial Consultant” means a financial consultant or firm of such consultants
generally recognized to be well qualified in the financial consulting field, appointed and paid by the
District, who, or each of whom:
(1) is in fact independent and not under the domination of the District or the City;
(2) does not have any substantial interest, direct or indirect, in the District or the
City; and
(3) is not connected with the District or the City as a member, officer or
employee of the District or the City, but who may be regularly retained to make annual or
other reports to the District or the City.
“Interest Account” means the account by that name created and established in the Special
Tax Fund pursuant to Section 3.1 hereof.
“Interest Payment Date” means each March 1 and September 1, commencing September 1,
2006; provided, however, that, if any such day is not a Business Day, interest up to the Interest
Payment Date will be paid on the Business Day next succeeding such date.
“Investment Agreement” means one or more agreements for the investment of funds of the
District complying with the criteria therefor as set forth in Subsection (11) of the definition of
Authorized Investments herein.
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“JCFA” shall mean that certain Joint Community Facilities Agreement dated as of January
12, 2006, by and among the City, the Coachella Valley Water District, Desert Wells 237, LLC, a
California limited liability company, Palm Desert Funding Company, LP, a Delaware limited
partnership, The University Village Partnership, a California general partnership, Shaw/Palm Desert
1, LLC, a California limited liability company, and Sinatra & Cook Project, LLC, a California
limited liability company.
“Maximum Annual Debt Service” means the maximum sum obtained for any Bond Year
prior to the final maturity of the Bonds and any Parity Bonds by adding the following for each Bond
Year:
(1) the principal amount of all Outstanding Bonds and Parity Bonds payable in
such Bond Year either at maturity or pursuant to a Sinking Fund Payment; and
(2) the interest payable on the aggregate principal amount of all Bonds and Parity
Bonds Outstanding in such Bond Year if the Bonds and Parity Bonds are retired as
scheduled.
“Moody’s” means Moody’s Investors Service, its successors and assigns.
“Net Taxes” means Gross Taxes minus amounts set aside to pay Administrative Expenses not
to exceed the Administrative Expenses Cap.
“Nominee” shall mean the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Section 2.16 hereof.
“Ordinance” means Ordinance No. 1107 adopted by the legislative body of the District on
February 9, 2006, providing for the levying of the Special Tax.
“Other Facilities Account” shall mean the account by that name created and established in the
City Facilities Fund pursuant to Section 3.1 hereof and/or the account by that name created and
established in the CVWD Facilities Fund pursuant to Section 3.1 hereof, as the context may require.
“Outstanding” or “Outstanding Bonds and Parity Bonds” means all Bonds and Parity Bonds
theretofore issued by the District, except:
(1) Bonds and Parity Bonds theretofore cancelled or surrendered for cancellation
in accordance with Section 10.1 hereof;
(2) Bonds and Parity Bonds for payment or redemption of which moneys shall
have been theretofore deposited in trust (whether upon or prior to the maturity or the
redemption date of such Bonds or Parity Bonds), provided that, if such Bonds or Parity
Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have
been given as provided in this Indenture or any applicable Supplemental Indenture for Parity
Bonds; and
(3) Bonds and Parity Bonds which have been surrendered to the Trustee for
transfer or exchange pursuant to Section 2.9 hereof or for which a replacement has been
issued pursuant to Section 2.10 hereof.
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“Overlapping Debt” means with respect to any property within the District, the sum of (a) the
aggregate amount of all unpaid assessments which are a lien on such property and which are pledged
to secure the repayment of bonds, plus (b) a portion of the principal amount of any outstanding bonds
of other community facilities districts which are payable at least partially from special taxes to be
levied on such property (the “Other CFD Bonds”) determined by multiplying the aggregate principal
amount of the Other CFD Bonds by a fraction, the numerator of which is the amount of special taxes
levied for the Other CFD Bonds on such property and the denominator of which is the total amount
of special taxes levied for the Other CFD Bonds on all parcels of property which are subject to the
levy of such special taxes, based upon information which is available for the then current Fiscal
Year, plus (c) the principal amount of any bonded indebtedness of the District.
“PDFC Subaccount (City Facilities)” means the subaccount by that name created and
established in the Other Facilities Account of the City Facilities Fund pursuant to Section 3.1 hereof.
“PDFC Subaccount (CVWD Facilities)” means the subaccount by that name created and
established in the Other Facilities Account of the CVWD Facilities Fund pursuant to Section 3.1
hereof.
“Parity Bonds” means all bonds, notes or other similar evidences of indebtedness hereafter
issued, payable out of the Net Taxes and which, as provided in this Indenture or any Supplemental
Indenture, rank on a parity with the Bonds.
“Participants” shall mean those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds Bonds or Parity Bonds as securities depository.
“Person” means natural persons, firms, corporations, partnerships, associations, trusts, public
bodies and other entities.
“Prepayments” means any amounts paid by the District to the Trustee and designated by the
District as a prepayment of Special Taxes for one or more parcels in the District made in accordance
with the Rate and Method.
“Principal Account” means the account by that name created and established in the Special
Tax Fund pursuant to Section 3.1 hereof.
“Principal Office of the Trustee” means the corporate trust office of the Trustee located in
Los Angeles, California, or such other office or offices as the Trustee may designate from time to
time, or the office of any successor Trustee where it principally conducts its business of serving as
trustee under indentures pursuant to which municipal or governmental obligations are issued.
“Project” means those public facilities described in the Resolution of Formation which are to
be acquired or constructed within and outside of the District, including all engineering, planning and
design services and other incidental expenses related to such facilities and other facilities, if any,
authorized by the qualified electors within the District from time to time.
“Project Costs” means the amounts necessary to finance the Project, to create and replenish
any necessary reserve funds, to pay the initial and annual costs associated with the Bonds or any
Parity Bonds, including, but not limited to, remarketing, credit enhancement, Trustee and other fees
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and expenses relating to the issuance of the Bonds or any Parity Bonds and the formation of the
District, and to pay any other “incidental expenses” of the District, as such term is defined in the Act.
“Pro Rata Agency Share” means (i) 66.86% with respect to the City Facilities Fund and (ii)
33.14% with respect to the CVWD Facilities Fund.
“Rate and Method” means the rate and method of apportionment of Special Taxes attached to
the Resolution of Formation, as it may be amended or modified from time to time.
“Rating Agency” means Moody’s and Standard & Poor’s, or both, as the context requires.
“Rebate Account” means the account by that name created and established in the Rebate
Fund pursuant to Section 3.1 hereof.
“Rebate Fund” means the fund by that name established pursuant to Section 3.1 hereof in
which there are established the Accounts described in Section 3.1 hereof.
“Rebate Regulations” means any final, temporary or proposed Regulations promulgated
under Section 148(f) of the Code.
“Record Date” means the fifteenth day of the month preceding an Interest Payment Date,
regardless of whether such day is a Business Day.
“Redemption Account” means the account by that name created and established in the
Special Tax Fund pursuant to Section 3.1 hereof.
“Regulations” means the regulations adopted or proposed by the Department of Treasury
from time to time with respect to obligations issued pursuant to Section 103 of the Code.
“Representation Letter” shall mean the Blanket Letter of Representations from the District
and the Paying Agent to the Depository as described in Section 2.13 hereof.
“Reserve Account” means the account by that name created and established in the Special
Tax Fund pursuant to Section 3.1 hereof.
“Reserve Requirement” means that amount as of any date of calculation equal to the lesser of
(i) 10% of the initial principal amount of the Bonds and Parity Bonds, if any, (ii) Maximum Annual
Debt Service on the then Outstanding Bonds and Parity Bonds, if any; and (iii) 125% of average
Annual Debt Service on the then Outstanding Bonds and Parity Bonds, if any.
“Resolution of Formation” means Resolution No. 06-6 adopted by the City Council of the
City on January 12, 2006, pursuant to which the City formed the District.
“S&C Subaccount (City Facilities)” means the subaccount by that name created and
established in the Other Facilities Account of the City Facilities Fund pursuant to Section 3.1 hereof.
“S&C Subaccount (CVWD Facilities)” means the subaccount by that name created and
established in the Other Facilities Account of the CVWD Facilities Fund pursuant to Section 3.1
hereof.
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“Series 2006A Bonds” means the District’s Special Tax Bonds, Series 2006A, issued on their
Delivery Date in the aggregate principal amount of $____________.
“Shaw Subaccount (City Facilities)” means the subaccount by that name created and
established in the Other Facilities Account of the City Facilities Fund pursuant to Section 3.1 hereof.
“Shaw Subaccount (CVWD Facilities)” means the subaccount by that name created and
established in the Other Facilities Account of the CVWD Facilities Fund pursuant to Section 3.1
hereof.
“Sinking Fund Payment” means the annual payment to be deposited in the Redemption
Account to redeem a portion of the Term Bonds in accordance with the schedules set forth in
Section 4.1(b) hereof and any annual sinking fund payment schedule to retire any Parity Bonds
which are designated as Term Bonds.
“Six-Month Period” means the period of time beginning on the Delivery Date of each issue
of Bonds or Parity Bonds, as applicable, and ending six consecutive months thereafter, and each
six-month period thereafter until the latest maturity date of the Bonds and the Parity Bonds (and any
obligations that refund an issue of the Bonds or Parity Bonds).
“Special Tax Fund” means the fund by that name created and established pursuant to
Section 3.1 hereof.
“Special Taxes” means the taxes authorized to be levied by the District on property within
the District in accordance with the Ordinance, the Resolution of Formation, the Act and the voter
approval obtained at the January 12, 2006 election in the District, including any scheduled payments
and any Prepayments thereof, the net proceeds of the redemption or sale of property sold as a result
of foreclosure of the lien of the Special Taxes to the amount of said lien, and penalties and interest
thereon.
“Standard & Poor’s” means Standard & Poor’s Ratings Group, a division of McGraw-Hill,
its successors and assigns.
“Subaccount” means any subaccount created pursuant to this Indenture.
“Supplemental Indenture” means any supplemental indenture amending or supplementing
this Indenture.
“Surplus Fund” means the fund by that name created and established pursuant to Section 3.1
hereof.
“Tax Certificate” means the certificate by that name to be executed by the District on a
Delivery Date to establish certain facts and expectations and which contains certain covenants
relevant to compliance with the Code.
“Tax-Exempt” means, with reference to an Authorized Investment, an Authorized Investment
the interest earnings on which are excludable from gross income for federal income tax purposes
pursuant to Section 103(a) of the Code, other than one described in Section 57(a)(5)(C) of the Code.
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“Term Bonds” means the Series 2006A Bonds maturing on September 1, 20__ and
September 1, 20__.
“Trustee” means Wells Fargo Bank, National Association, a national banking association
duly organized and existing under the laws of the United States of America, at its corporate trust
office in Los Angeles, California, and its successors or assigns, or any other bank or trust company
which may at any time be substituted in its place as provided in Sections 7.2 or 7.3 and any successor
thereto.
“Underwriter” means, collectively, Stinson Securities LLC and Kinsell, Newcomb & De
Dios, Inc., with respect to the Bonds.
“UV Subaccount (City Facilities)” means the subaccount by that name created and
established in the Other Facilities Account of the City Facilities Fund pursuant to Section 3.1 hereof.
“UV Subaccount (CVWD Facilities)” means the subaccount by that name created and
established in the Other Facilities Account of the CVWD Facilities Fund pursuant to Section 3.1
hereof.
“Value of District Property” means for all parcels of property in the District which are
subject to the levy of the Special Taxes and not delinquent in the payment of any Special Taxes then
due and owing, either (i) the fair market value, as of the date of the appraisal provided for below of
such parcels, including with respect to such parcels the value of the then existing improvements
thereon, as estimated by an appraiser, who shall be a State of California certified general real estate
appraiser selected and employed by the District, in an appraisal performed within ninety (90) days
preceding the date of such determination based upon a methodology of valuation consistent with the
City’s policy for appraisals, provided that a mass appraisal methodology may be applied when
valuing Developed Property; or (ii) the full cash value of any or all of such parcels, including with
respect to such parcels the value of the improvements thereon, as set forth on the last equalized
assessment roll of the County Assessor of the County of Riverside; or (iii) any combination of
clauses (i) and (ii).
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds.
Under and pursuant to the Act, the Bonds in the aggregate principal amount of $____________ shall
be issued for the purpose of financing the Project and paying Costs of Issuance, together with any
Parity Bonds authorized by the legislative body in accordance with Section 9.2 hereof, provided that
the aggregate principal amount of the Bonds and any Parity Bonds shall not exceed the total
indebtedness presently authorized or subsequently authorized by the qualified electors of the District
in accordance with the Act. The Bonds and any Parity Bonds shall be and are limited obligations of
the District and shall be payable as to the principal thereof and interest thereon and any premiums
upon the redemption thereof solely from the Net Taxes and the other amounts in the Special Tax
Fund (other than amounts in the Administrative Expenses Account of the Special Tax Fund).
Section 2.2. Type and Nature of Bonds and Parity Bonds. Neither the faith and credit
nor the taxing power of the City, the State of California or any political subdivision thereof other
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than the District is pledged to the payment of the Bonds or any Parity Bonds. Except for the Special
Taxes, no other taxes are pledged to the payment of the Bonds or any Parity Bonds. The Bonds and
any Parity Bonds are not general or special obligations of the City nor general obligations of the
District, but are limited obligations of the District payable solely from certain amounts deposited by
the District in the Special Tax Fund (exclusive of the Administrative Expenses Account), as more
fully described herein. The District’s limited obligation to pay the principal of, premium, if any, and
interest on the Bonds and any Parity Bonds from amounts in the Special Tax Fund (exclusive of the
Administrative Expenses Account) is absolute and unconditional, free of deductions and without any
abatement, offset, recoupment, diminution or set-off whatsoever. No Owner of the Bonds or any
Parity Bonds may compel the exercise of the taxing power by the District (except as pertains to the
Special Taxes) or the City or the forfeiture of any of their property. The principal of and interest on
the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of
the City, the State of California or any of its political subdivisions within the meaning of any
constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal
or equitable pledge, charge, lien, or encumbrance upon any of the District’s property, or upon any of
its income, receipts or revenues, except the Net Taxes and other amounts in the Special Tax Fund
(exclusive of the Administrative Expenses Account) which are, under the terms of this Indenture and
the Act, set aside for the payment of the Bonds, any Parity Bonds and interest thereon and neither the
members of the legislative body of the District or the City Council of the City nor any persons
executing the Bonds or any Parity Bonds, are liable personally on the Bonds or any Parity Bonds, by
reason of their issuance.
Notwithstanding anything to the contrary contained in this Indenture, the District shall not be
required to advance any money derived from any source of income other than the Net Taxes for the
payment of the interest on or the principal of the Bonds or any Parity Bonds, or for the performance
of any covenants contained herein. The District may, however, advance funds for any such purpose,
provided that such funds are derived from a source legally available for such purpose.
Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Taxes. Pursuant to
the Act and this Indenture, the Bonds and any Parity Bonds shall be equally payable from the Net
Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expenses
Account), without priority for number, date of the Bonds or Parity Bonds, date of sale, date of
execution, or date of delivery, and the payment of the interest on and principal of the Bonds and any
Parity Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the Net
Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expenses
Account), which are hereby set aside for the payment of the Bonds and any Parity Bonds. Amounts
in the Special Tax Fund (other than the Administrative Expenses Account therein) shall constitute a
trust fund held for the benefit of the Owners to be applied to the payment of the interest on and
principal of the Bonds and any Parity Bonds and so long as any of the Bonds and any Parity Bonds or
interest thereon remain Outstanding shall not be used for any other purpose, except as permitted by
this Indenture or any Supplemental Indenture. Notwithstanding any provision contained in this
Indenture to the contrary, Net Taxes deposited in the Rebate Fund and the Surplus Fund shall no
longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Rebate Fund,
the Surplus Fund, the City Facilities Fund, the CVWD Facilities Fund, or the Administrative
Expenses Account of the Special Tax Fund shall be construed as a trust fund held for the benefit of
the Owners.
Nothing in this Indenture or any Supplemental Indenture shall preclude: (a) subject to the
limitations contained hereunder, the redemption prior to maturity of any Bonds or Parity Bonds
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subject to call and redemption and payment of said Bonds or Parity Bonds from proceeds of
refunding bonds issued under the Act as the same now exists or as hereafter amended, or under any
other law of the State of California; or (b) the issuance, subject to the limitations contained herein, of
Parity Bonds which shall be payable from Net Taxes.
Section 2.4. Description of Bonds; Interest Rates. The Bonds and any Parity Bonds
shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof.
The Bonds and any Parity Bonds of each issue shall be numbered as desired by the Trustee.
The Bonds shall be designated “CITY OF PALM DESERT COMMUNITY FACILITIES
DISTRICT NO. 2005-1 (UNIVERSITY PARK) SPECIAL TAX BONDS, SERIES 2006A.” The
Series 2006A Bonds shall be dated as of their Delivery Date and shall mature and be payable on
September 1 in the years and in the aggregate principal amounts and shall be subject to and shall bear
interest at the rates set forth in the table below payable on September 1, 2006 and each Interest
Payment Date thereafter:
Maturity Date
(September 1) Principal Amount Interest Rate
$ %
Interest shall be payable on each Bond and Parity Bond from the date established in
accordance with Section 2.5 below on each Interest Payment Date thereafter until the principal sum
of that Bond or Parity Bond has been paid; provided, however, that if at the maturity date of any
Bond or Parity Bond (or if the same is redeemable and shall be duly called for redemption, then at
the date fixed for redemption) funds are available for the payment or redemption thereof in full, in
accordance with the terms of this Indenture, such Bonds and Parity Bonds shall then cease to bear
interest. Interest due on the Bonds and Parity Bonds shall be calculated on the basis of a 360-day
year comprised of twelve 30-day months.
Section 2.5. Place and Form of Payment. The Bonds and Parity Bonds shall be payable
both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful
money of the United States of America. The principal of the Bonds and Parity Bonds and any
premiums due upon the redemption thereof shall be payable upon presentation and surrender thereof
at the Principal Office of the Trustee, or at the designated office of any successor Trustee. Interest on
any Bond or Parity Bond shall be payable from the Interest Payment Date next preceding the date of
authentication of that Bond or Parity Bond, unless (i) such date of authentication is an Interest
Payment Date in which event interest shall be payable from such date of authentication, (ii) the date
of authentication is after a Record Date but prior to the immediately succeeding Interest Payment
Date, in which event interest shall be payable from the Interest Payment Date immediately
succeeding the date of authentication, or (iii) the date of authentication is prior to the close of
business on the first Record Date occurring after the issuance of such Bond or Parity Bond, in which
event interest shall be payable from the dated date of such Bond or Parity Bond, as applicable;
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provided, however, that if at the time of authentication of such Bond or Parity Bond, interest is in
default, interest on that Bond or Parity Bond shall be payable from the last Interest Payment Date to
which the interest has been paid or made available for payment or, if no interest has been paid or
made available for payment on that Bond or Parity Bond, interest on that Bond or Parity Bond shall
be payable from its dated date. Interest on any Bond or Parity Bond shall be paid to the person
whose name shall appear in the Bond Register as the Owner of such Bond or Parity Bond as of the
close of business on the Record Date. Such interest shall be paid by check of the Trustee mailed by
first class mail, postage prepaid, to such Bondowner at his or her address as it appears on the Bond
Register. In addition, upon a request in writing received by the Trustee on or before the applicable
Record Date from an Owner of $1,000,000 or more in principal amount of the Bonds or of any issue
of Parity Bonds, payment shall be made on the Interest Payment Date by wire transfer in immediately
available funds to an account designated by such Owner.
Section 2.6. Form of Bonds and Parity Bonds. The definitive Bonds may be printed
from steel engraved or lithographic plates or may be typewritten. The Bonds and the certificate of
authentication shall be substantially in the form attached hereto as Exhibit A, which form is hereby
approved and adopted as the form of such Bonds and of the certificate of authentication. Each issue
of Parity Bonds and the certificate of authentication therefor shall be in the form provided in the
Supplemental Indenture for such issue of Parity Bonds.
Until definitive Bonds or Parity Bonds, as applicable, shall be prepared, the District may
cause to be executed and delivered in lieu of such definitive Bonds or Parity Bonds temporary bonds
in typed, printed, lithographed or engraved form and in fully registered form, subject to the same
provisions, limitations and conditions as are applicable in the case of definitive Bonds or Parity
Bonds, except that they may be in any denominations authorized by the District. Until exchanged for
definitive Bonds or Parity Bonds, as applicable, any temporary bond shall be entitled and subject to
the same benefits and provisions of this Indenture as definitive Bonds and Parity Bonds. If the
District issues temporary Bonds or Parity Bonds, it shall execute and furnish definitive Bonds or
Parity Bonds, as applicable, without unnecessary delay and thereupon any temporary Bond or Parity
Bond may be surrendered to the Trustee at its office, without expense to the Owner, in exchange for
a definitive Bond or Parity Bond of the same issue, maturity, interest rate and principal amount in
any authorized denomination. All temporary Bonds or Parity Bonds so surrendered shall be
cancelled by the Trustee and shall not be reissued.
Section 2.7. Execution and Authentication. The Bonds and Parity Bonds shall be signed
on behalf of the District by the manual or facsimile signature of the Mayor of the City and
countersigned by the manual or facsimile signature of the City Clerk of the City, or any duly
appointed deputy City Clerk, in their capacity as officers of the District, and the seal of the District
(or a facsimile thereof) may be impressed, imprinted, engraved or otherwise reproduced thereon, and
attested by the signature of the City Clerk of the City Council. In case any one or more of the
officers who shall have signed or sealed any of the Bonds or Parity Bonds shall cease to be such
officer before the Bonds or Parity Bonds so signed and sealed have been authenticated and delivered
by the Trustee (including new Bonds or Parity Bonds delivered pursuant to the provisions hereof
with reference to the transfer and exchange of Bonds or Parity Bonds or to lost, stolen, destroyed or
mutilated Bonds or Parity Bonds), such Bonds and Parity Bonds shall nevertheless be valid and may
be authenticated and delivered as herein provided, and may be issued as if the person who signed or
sealed such Bonds or Parity Bonds had not ceased to hold such office.
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Only the Bonds as shall bear thereon such certificate of authentication in the form set forth in
Exhibit A attached hereto shall be entitled to any right or benefit under this Indenture, and no Bond
shall be valid or obligatory for any purpose until such certificate of authentication shall have been
duly executed by the Trustee.
Section 2.8. Bond Register. The Trustee will keep or cause to be kept, at its office,
sufficient books for the registration and transfer of the Bonds and any Parity Bonds which shall upon
reasonable prior notice be open to inspection by the District during all regular business hours, and,
subject to the limitations set forth in Section 2.9 below, upon presentation for such purpose, the
Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be
transferred on said Bond Register, Bonds and any Parity Bonds as herein provided.
The District and the Trustee may treat the Owner of any Bond or Parity Bond whose name
appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and all
purposes, and the District and the Trustee shall not be affected by any notice to the contrary. The
District and the Trustee may rely on the address of the Bondowner as it appears in the Bond Register
for any and all purposes. It shall be the duty of the Bondowner to give written notice to the Trustee
of any change in the Bondowner’s address so that the Bond Register may be revised accordingly.
Section 2.9. Registration of Exchange or Transfer. Subject to the limitations set forth
in the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its
terms, be transferred upon the Bond Register by the person in whose name it is registered, in person
or by his or her duly authorized attorney, upon surrender of such Bond or Parity Bond for
cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in
a form acceptable to the Trustee and duly executed by the Bondowner or his or her duly authorized
attorney.
Bonds or Parity Bonds may be exchanged at the office of the Trustee for a like aggregate
principal amount of Bonds or Parity Bonds for other authorized denominations of the same maturity
and issue. The Trustee shall not collect from the Owner any charge for any new Bond or Parity Bond
issued upon any exchange or transfer, but shall require the Bondowner requesting such exchange or
transfer to pay any tax or other governmental charge required to be paid with respect to such
exchange or transfer. Whenever any Bonds or Parity Bonds shall be surrendered for registration of
transfer or exchange, the District shall execute and the Trustee shall authenticate and deliver a new
Bond or Bonds or a new Parity Bond or Parity Bonds, as applicable, of the same issue and maturity,
for a like aggregate principal amount; provided that the Trustee shall not be required to register
transfers or make exchanges of (i) Bonds or Parity Bonds for a period of fifteen (15) days next
preceding any selection of the Bonds or Parity Bonds to be redeemed; or (ii) any Bonds or Parity
Bonds chosen for redemption.
Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds. If any Bond
or Parity Bond shall become mutilated, the District shall execute, and the Trustee shall authenticate
and deliver, a new Bond or Parity Bond of like tenor, date, issue and maturity in exchange and
substitution for the Bond or Parity Bond so mutilated, but only upon surrender to the Trustee of the
Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the
Trustee shall be cancelled by the Trustee pursuant to Section 10.1 hereof. If any Bond or Parity
Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted
to the Trustee and, if such evidence is satisfactory to the Trustee and, if any indemnity satisfactory to
the Trustee shall be given, the District shall execute and the Trustee shall authenticate and deliver, a
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new Bond or Parity Bond, as applicable, of like tenor, maturity and issue, numbered and dated as the
Trustee shall determine in lieu of and in substitution for the Bond or Parity Bond so lost, destroyed or
stolen. Any Bond or Parity Bond issued in lieu of any Bond or Parity Bond alleged to be mutilated,
lost, destroyed or stolen, shall be equally and proportionately entitled to the benefits hereof with all
other Bonds and Parity Bonds issued hereunder. The Trustee shall not treat both the original Bond or
Parity Bond and any replacement Bond or Parity Bond as being Outstanding for the purpose of
determining the principal amount of Bonds or Parity Bonds which may be executed, authenticated
and delivered hereunder or for the purpose of determining any percentage of Bonds or Parity Bonds
Outstanding hereunder, but both the original and replacement Bond or Parity Bond shall be treated as
one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new
Bond or Parity Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the
Trustee may make payment with respect to such Bonds or Parity Bonds.
Section 2.11. Validity of Bonds and Parity Bonds. The validity of the authorization and
issuance of the Bonds and any Parity Bonds shall not be affected in any way by any defect in any
proceedings taken by the District for the financing of the Project, or by the invalidity, in whole or in
part, of any contracts made by the District in connection therewith, and shall not be dependent upon
the completion of the financing of the Project or upon the performance by any Person of his
obligation with respect to the Project, and the recital contained in the Bonds or any Parity Bonds that
the same are issued pursuant to the Act and other applicable laws of the State shall be conclusive
evidence of their validity and of the regularity of their issuance.
Section 2.12. Book-Entry System. 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 kept by the Trustee in the name of the Nominee as nominee of the Depository. Except as
provided in Section 2.14 hereof, all of the Outstanding Bonds shall be registered in the registration
books kept by the Trustee in the name of the Nominee. At the election of the District, any Parity
Bonds may also be issued as book-entry bonds registered in the name of the Nominee as provided
herein, in which case the references in Sections 2.12 through 2.15 to “Bonds” shall be applicable to
such Parity Bonds.
With respect to Bonds registered in the registration books kept by the Trustee in the name of
the Nominee, the District and the Trustee shall have no responsibility or obligation to any such
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 District and the Trustee 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 kept by
the Trustee, 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 kept by the Trustee, of any
amount with respect to principal of, premium, if any, or interest due with respect to the Bonds. The
District and the Trustee may treat and consider the Person in whose name each Bond is registered in
the registration books kept by the Trustee as the holder and absolute owner of such Bond for the
purpose of payment of the principal of, premium, if any, and interest on 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 Trustee
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shall pay all principal of, premium, if any, and interest due on the Bonds only to or upon the order of
the respective Owner, as shown in the registration books kept by the Trustee, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy and
discharge fully the District’s obligations with respect to payment of the principal, premium, if any,
and interest due on the Bonds to the extent of the sum or sums so paid. No Person other than an
Owner, as shown in the registration books kept by the Trustee, shall receive a Bond evidencing the
obligation of the District to make payments of principal, premium, if any, and interest pursuant to
this Indenture. Upon delivery by the Depository to the Trustee and the District 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
Indenture shall refer to such new nominee of the Depository.
Section 2.13. Representation Letter. In order to qualify the Bonds and any Parity Bonds
which the District elects to register in the name of the Nominee for the Depository’s book-entry
system, an authorized representative of the Trustee is hereby authorized to execute from time to time
and deliver to such Depository the Representation Letter. The execution and delivery of the
Representation Letter shall not in any way limit the provisions of Section 5.1 or in any other way
impose upon the District or the Trustee any obligation whatsoever with respect to persons having
interests in the Bonds other than the Owners, as shown on the registration books kept by the Trustee.
The Trustee agrees to take all action necessary to continuously comply with all representations made
by it in the Representation Letter. In addition to the execution and delivery of the Representation
Letter, the Authorized Representatives of the District are hereby authorized to take any other actions,
not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.
Section 2.14. Transfers Outside Book-Entry System. In the event (i) the Depository
determines not to continue to act as securities depository for the Bonds, or (ii) the District determines
that the Depository shall no longer so act, then the District will discontinue the book-entry system
with the Depository. If the District 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 kept by the Trustee 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 2.9 hereof.
Section 2.15. Payments to the Nominee. Notwithstanding any other provisions of this
Indenture 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 2.16. Initial Depository and Nominee. 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.
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ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds.
(a) There is hereby created and established and shall be maintained by the Trustee the
following funds and accounts:
(1) The City of Palm Desert Community Facilities District No. 2005-1 Special
Tax Fund (the “Special Tax Fund”) (in which there shall be established and created an
Interest Account (in which there shall be established the Capitalized Interest Subaccount), a
Principal Account, a Redemption Account, a Reserve Account, and an Administrative
Expenses Account).
(2) The City of Palm Desert Community Facilities District No. 2005-1 Rebate
Fund (the “Rebate Fund”) (in which there shall be established a Rebate Account and an
Alternative Penalty Account).
(3) The City of Palm Desert Community Facilities District No. 2005-1 City
Facilities Fund (the “City Facilities Fund”) (in which there shall be established a Costs of
Issuance Account, a Backbone Infrastructure Account (in which there shall be established a
Gerald Ford (South) Landscaping Subaccount), and an Other Facilities Account (in which
there shall be established a DW 237 Subaccount (City Facilities), a PDFC Subaccount (City
Facilities), a UV Subaccount (City Facilities), a Shaw Subaccount (City Facilities), and a
S&C Subaccount (City Facilities))).
(4) The City of Palm Desert Community Facilities District No. 2005-1 CVWD
Facilities Fund (the “CVWD Facilities Fund”) (in which there shall be established a
Backbone Infrastructure Account and an Other Facilities Account (in which there shall be
established a DW 237 Subaccount (CVWD Facilities), a PDFC Subaccount (CVWD
Facilities), a UV Subaccount (CVWD Facilities), a Shaw Subaccount (CVWD Facilities),
and a S&C Subaccount (CVWD Facilities))).
(5) The City of Palm Desert Community Facilities District No. 2005-1 Surplus
Fund (the “Surplus Fund”).
The amounts on deposit in the foregoing funds, accounts and subaccounts shall be held by the
Trustee and the Trustee shall invest and disburse the amounts in such funds, accounts and
subaccounts in accordance with the provisions of this Article 3 and shall disburse investment
earnings thereon in accordance with the provisions of Section 3.11 hereof.
In connection with the issuance of any Parity Bonds, the Trustee, at the direction of an
Authorized Representative of the District, may create new funds, accounts or subaccounts, or may
create additional accounts and subaccounts within any of the foregoing funds and accounts for the
purpose of separately accounting for the proceeds of the Bonds and any Parity Bonds.
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(b) The proceeds of the sale of the Bonds shall be received by the Trustee on behalf of
the District and deposited and transferred as follows:
(1) $___________ shall be deposited in the Costs of Issuance Account of the
City Facilities Fund to pay the Costs of Issuance of the Bonds;
(2) $___________ shall be deposited in the Reserve Account of the Special Tax
Fund to fund the Reserve Requirement;
(3) $___________ shall be deposited in the Backbone Infrastructure Account of
the City Facilities Fund;
(4) $1,401,364.58 shall be deposited in the Gerald Ford (South) Landscaping
Subaccount of the Backbone Infrastructure Account of the City Facilities Fund;
(5) $___________ shall be deposited in the Backbone Infrastructure Account of
the CVWD Facilities Fund;
(6) $___________ shall be deposited in the DW 237 Subaccount (City Facilities)
of the Other Facilities Account of the City Facilities Fund;
(7) $___________ shall be deposited in the PDFC Subaccount (City Facilities) of
the Other Facilities Account of the City Facilities Fund;
(8) $___________ shall be deposited in the UV Subaccount (City Facilities) of
the Other Facilities Account of the City Facilities Fund;
(9) $___________ shall be deposited in the Shaw Subaccount (City Facilities) of
the Other Facilities Account of the City Facilities Fund;
(10) $___________ shall be deposited in the S&C Subaccount (City Facilities) of
the Other Facilities Account of the City Facilities Fund;
(11) $___________ shall be deposited in the DW 237 Subaccount (CVWD
Facilities) of the Other Facilities Account of the CVWD Facilities Fund;
(12) $___________ shall be deposited in the PDFC Subaccount (CVWD
Facilities) of the Other Facilities Account of the CVWD Facilities Fund;
(13) $___________ shall be deposited in the UV Subaccount (CVWD Facilities)
of the Other Facilities Account of the CVWD Facilities Fund;
(14) $___________ shall be deposited in the Shaw Subaccount (CVWD Facilities)
of the Other Facilities Account of the CVWD Facilities Fund;
(15) $___________ shall be deposited in the S&C Subaccount (CVWD Facilities)
of the Other Facilities Account of the CVWD Facilities Fund; and
(16) $___________ shall be deposited in the Capitalized Interest Subaccount of
the Interest Account of the Special Tax Fund.
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The Trustee may, in its discretion, establish a temporary fund or account in its books and
records to facilitate such transfers.
Section 3.2. Deposits to and Disbursements from Special Tax Fund.
(a) To the extent the District receives any Prepayments, the District shall deposit such
Prepayments with the Trustee, together with a Certificate of an Authorized Representative
designating such Special Taxes as Prepayments and specifying the respective amounts to be
deposited in the various funds and accounts hereunder, and the Trustee shall make such deposits as
specified in such certificate on the same day as its receipt thereof. Except for any Prepayments to be
deposited pursuant to the foregoing, the Trustee shall, on each date on which the Special Taxes are
received from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for
the Owners. The Trustee shall transfer the Special Taxes on deposit in the Special Tax Fund on the
dates and in the amounts set forth in the following Sections, in the following order of priority, to:
(1) the Administrative Expenses Account of the Special Tax Fund;
(2) the Interest Account of the Special Tax Fund;
(3) the Principal Account of the Special Tax Fund;
(4) the Redemption Account of the Special Tax Fund;
(5) the Reserve Account of the Special Tax Fund;
(6) the Rebate Fund; and
(7) the Surplus Fund.
(b) At least five (5) Business Days prior to each Interest Payment Date the Trustee shall
transfer to the Interest Account, the Principal Account and the Redemption Account, as applicable,
from the Special Tax Fund the amounts required for debt service on the Bonds and Parity Bonds on
such Interest Payment Date.
(c) At maturity of all of the Bonds and Parity Bonds and, after all principal and interest
then due on the Bonds and Parity Bonds then Outstanding has been paid or provided for and any
amounts owed to the Trustee have been paid in full, moneys in the Special Tax Fund and any
accounts therein may be used by the District for any lawful purpose.
Section 3.3. Administrative Expenses Account of the Special Tax Fund From time to
time, the District may provide the Trustee with a Certificate of an Authorized Representative of the
District, requesting the payment of Administrative Expenses as set forth therein. Upon its receipt of
any such certificate, the Trustee shall transfer from the Special Tax Fund and deposit in the
Administrative Expenses Account of the Special Tax Fund amounts necessary to make timely
payment of any such Administrative Expenses as set forth in the Certificate of an Authorized
Representative of the District; provided, however, that, except as set forth in the following sentence,
the total amount transferred in a Bond Year shall not exceed the Administrative Expenses Cap until
such time as there has been deposited (a) to the Interest Account and the Principal Account an
amount, together with any amounts already on deposit therein, that is sufficient to pay the interest
and principal on all Bonds and Parity Bonds due in such Bond Year, (b) to the Redemption Account
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an amount, together with any amounts already on deposit therein, that is sufficient to call and redeem
Term Bonds in accordance with the Sinking Fund Payment schedules set forth in Section 4.1(b)
hereof and to redeem Parity Bonds in accordance with any Sinking Fund Payment schedule in the
Supplemental Indenture for such Parity Bonds, and (c) to the Reserve Account an amount, together
with any amounts already on deposit therein, that is sufficient to restore the Reserve Account to the
Reserve Requirement. Notwithstanding the foregoing, amounts in excess of the Administrative
Expenses Cap may be transferred to the Administrative Expenses Account to the extent necessary to
collect delinquent Special Taxes. Moneys in the Administrative Expenses Account of the Special
Tax Fund may be invested in any Authorized Investments as directed in writing by an Authorized
Representative of the District and shall be disbursed as directed in a Certificate of an Authorized
Representative. The Trustee shall have no obligation to transfer any amount from the Special Tax
Fund for deposit in the Administrative Expenses Account of the Special Tax Fund except upon its
receipt of a Certificate of an Authorized Representative of the District pursuant to this section.
Section 3.4. Interest Account and Principal Account of the Special Tax Fund. The
principal of and interest due on the Bonds and any Parity Bonds until maturity, other than principal
due upon redemption, shall be paid by the Trustee from the Principal Account and the Interest
Account of the Special Tax Fund, respectively. For the purpose of assuring that the payment of
principal of and interest on the Bonds and any Parity Bonds will be made when due and after making
the transfer required by Section 3.3, if any, at least five (5) Business Days prior to each March 1 and
September 1, the Trustee shall make the following transfers from the Special Tax Fund first to the
Interest Account and then to the Principal Account; provided, however, that to the extent that
deposits have been made in the Interest Account or the Principal Account from the proceeds of the
sale of an issue of the Bonds, any Parity Bonds, or otherwise, the transfer from the Special Tax Fund
need not be made; and provided, further, that, if amounts in the Special Tax Fund (exclusive of the
Reserve Account) are inadequate to make the foregoing transfers, then any deficiency shall be made
up by transfers from the Reserve Account:
(a) To the Interest Account, an amount such that the balance in the Interest
Account five (5) Business Days prior to each Interest Payment Date shall be equal to the
installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date
and any installment of interest due on a previous Interest Payment Date which remains
unpaid. Moneys in the Interest Account shall be used for the payment of interest on the
Bonds and any Parity Bonds as the same become due.
(b) To the Principal Account, an amount such that the balance in the Principal
Account five (5) Business Days prior to September 1 of each year, commencing September 1,
2007, shall equal the principal payment due on the Bonds and any Parity Bonds maturing on
such September 1 and any principal payment due on a previous September 1 which remains
unpaid. Moneys in the Principal Account shall be used for the payment of the principal of
such Bonds and any Parity Bonds as the same become due at maturity.
Section 3.5. Redemption Account of the Special Tax Fund.
(a) With respect to each September 1 on which a Sinking Fund Payment is due and after
the deposits have been made to the Administrative Expenses Account, the Interest Account, and the
Principal Account of the Special Tax Fund as required by Sections 3.3 and 3.4 hereof, the Trustee
shall next transfer into the Redemption Account of the Special Tax Fund from the Special Tax Fund
the amount needed to make the balance in the Redemption Account five (5) Business Days prior to
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each September 1 equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity
Bonds on such September 1; provided, however, that, if amounts in the Special Tax Fund are
inadequate to make the foregoing transfers, then any deficiency shall be made up by an immediate
transfer from the Reserve Account, if funded, pursuant to Section 3.6 below. Moneys so deposited in
the Redemption Account shall be used and applied by the Trustee to call and redeem Term Bonds in
accordance with the Sinking Fund Payment schedules set forth in Section 4.1(b) hereof, and to
redeem Parity Bonds in accordance with any Sinking Fund Payment schedule in the Supplemental
Indenture for such Parity Bonds.
(b) After making the deposits to the Administrative Expenses Account, the Interest
Account and the Principal Account of the Special Tax Fund pursuant to Sections 3.3 and 3.4 above
and to the Redemption Account for Sinking Fund Payments then due pursuant to subparagraph (a) of
this Section, and in accordance with the District’s election to call Bonds for optional redemption as
set forth in Section 4.1(a) hereof, or to call Parity Bonds for optional redemption as set forth in any
Supplemental Indenture for Parity Bonds, the Trustee shall transfer from the Special Tax Fund and
deposit in the Redemption Account moneys available for the purpose and sufficient to pay the
principal and the premiums, if any, payable on the Bonds or Parity Bonds called for optional
redemption; provided, however, that amounts in the Special Tax Fund (other than the Administrative
Expenses Account therein) may be applied to optionally redeem Bonds and Parity Bonds only if
immediately following such redemption the amount in the Reserve Account will equal the Reserve
Requirement.
(c) Prepayments deposited to the Redemption Account shall be applied on the
redemption date established pursuant to Section 4.1(c) hereof for the use of such Prepayments to the
payment of the principal of, premium, and interest on the Bonds and Parity Bonds to be redeemed
with such Prepayments.
(d) Moneys set aside in the Redemption Account shall be used solely for the purpose of
redeeming Bonds and Parity Bonds and shall be applied on or after the redemption date to the
payment of principal of and premium, if any, on the Bonds or Parity Bonds to be redeemed upon
presentation and surrender of such Bonds or Parity Bonds and in the case of an optional redemption
or an extraordinary redemption from Prepayments to pay the interest thereon; provided, however,
that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption
Account, other than Prepayments, may be used to purchase Outstanding Bonds or Parity Bonds in the
manner hereinafter provided. Purchases of Outstanding Bonds or Parity Bonds may be made by the
District at public or private sale as and when and at such prices as the District may in its discretion
determine but only at prices (including brokerage or other expenses) not more than par plus accrued
interest, plus, in the case of moneys set aside for an optional redemption or an extraordinary
redemption, the premium applicable at the next following call date according to the premium
schedule established pursuant to Section 4.1(a) or 4.1(c) hereof, as applicable, or in the case of Parity
Bonds the premium established in any Supplemental Indenture. Any accrued interest payable upon
the purchase of Bonds or Parity Bonds may be paid from the amount reserved in the Interest Account
of the Special Tax Fund for the payment of interest on the next following Interest Payment Date.
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Section 3.6. Reserve Account of the Special Tax Fund. There shall be maintained in the
Reserve Account of the Special Tax Fund an amount equal to the Reserve Requirement. If funded,
the amounts in the Reserve Account shall be applied as follows:
(a) Moneys in the Reserve Account shall be used solely for the purpose of paying the
principal of, including Sinking Fund Payments, and interest on the Bonds and any Parity Bonds when
due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax
Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are
insufficient to make a Sinking Fund Payment when due and for the purpose of making any required
transfer to the Rebate Fund pursuant to Section 3.7 hereof upon written direction from the District. If
the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special
Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on
any Parity Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to
the Rebate Fund when required, the Trustee shall withdraw from the Reserve Account for deposit in
the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund or
the Rebate Fund, as applicable, moneys necessary for such purposes.
(b) Whenever moneys are withdrawn from the Reserve Account, after making the
required transfers referred to in Sections 3.3, 3.4 and 3.5 above, the Trustee shall transfer to the
Reserve Account from available moneys in the Special Tax Fund, or from any other legally available
funds which the District elects to apply to such purpose, the amount needed to restore the amount of
such Reserve Account to the Reserve Requirement. Moneys in the Special Tax Fund shall be
deemed available for transfer to the Reserve Account only if the Trustee determines that such
amounts will not be needed to make the deposits required to be made to the Administrative Expenses
Account, the Interest Account, the Principal Account or the Redemption Account of the Special Tax
Fund on or before the next September 1. If amounts in the Special Tax Fund together with any other
amounts transferred to replenish the Reserve Account are inadequate to restore the Reserve Account
to the Reserve Requirement, then the District shall include the amount necessary fully to restore the
Reserve Account to the Reserve Requirement in the next annual Special Tax levy to the extent of the
maximum permitted Special Tax rates.
(c) In connection with a redemption of Bonds pursuant to Section 4.1(a) or (c) or Parity
Bonds in accordance with any Supplemental Indenture, or a partial defeasance of Bonds or Parity
Bonds in accordance with Section 9.1 hereof, amounts in the Reserve Account may be applied to
such redemption or partial defeasance so long as the amount on deposit in the Reserve Account
following such redemption or partial defeasance equals the Reserve Requirement. The District shall
set forth in a Certificate of an Authorized Representative the amount in the Reserve Account to be
transferred to the Redemption Account on a redemption date or to be transferred pursuant to
Section 9.1(c) to partially defease Bonds, and the Trustee shall make such transfer on the applicable
redemption or defeasance date, subject to the limitation in the preceding sentence.
(d) To the extent that the Reserve Account is at the Reserve Requirement as of the first
day of the final Bond Year for the Bonds in accordance with any Supplemental Indenture or an issue
of Parity Bonds, amounts in the Reserve Account may be applied to pay the principal of and interest
due on the Bonds and Parity Bonds, as applicable, in the final Bond Year for such issue. Moneys in
the Reserve Account in excess of the Reserve Requirement not transferred in accordance with the
preceding provisions of this section shall be withdrawn from the Reserve Account on the Business
Day before each March 1 and September 1, and the Pro Rata Agency Share of such moneys shall be
transferred and deposited into the respective Backbone Infrastructure Accounts of the Facilities
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Funds, until the receipt of a Certificate of an Authorized Representative stating that all Project Costs
required or expected to be funded from the Backbone Infrastructure Accounts pursuant to the
Acquisition Agreement and the JCFA have been funded (or that amounts in the Backbone
Infrastructure Accounts are sufficient to fund all remaining Project Costs for backbone
infrastructure), and thereafter to the Interest Account of the Special Tax Fund; provided, if the
Trustee receives such Certificate certifying only as to one of the Backbone Infrastructure Accounts,
rather than as to both, thereafter any such moneys in the Reserve Account in excess of the Reserve
Requirement not transferred in accordance with the paragraphs (a) through (c) above and the first
sentence of this paragraph (d) shall be withdrawn from the Reserve Account on the Business Day
before each March 1 and September 1 and shall be transferred and deposited into the Backbone
Infrastructure Account of the Facilities Fund not subject to such Certificate, until the receipt of a
Certificate of an Authorized Representative stating that all Project Costs required or expected to be
funded from such Backbone Infrastructure Account pursuant to the Acquisition Agreement and/or
the JCFA, as applicable, have been funded (or that amounts in such Backbone Infrastructure Account
are sufficient to fund all remaining Project Costs for backbone infrastructure), and thereafter to the
Interest Account of the Special Tax Fund.
Section 3.7. Rebate Fund.
(a) The Trustee shall establish and maintain a fund separate from any other fund
established and maintained hereunder designated as the Rebate Fund and shall establish a separate
Rebate Account and Alternative Penalty Account therein. All money at any time deposited in the
Rebate Account or the Alternative Penalty Account of the Rebate Fund shall be held by the Trustee
in trust, for payment to the United States Treasury. A separate subaccount of the Rebate Account
and the Alternative Penalty Account shall be established for the Bonds and each issue of Parity
Bonds the interest on which is excluded from gross income for federal income tax purposes. All
amounts on deposit in the Rebate Fund with respect to the Bonds or an issue of Parity Bonds shall be
governed by this Section 3.7 and the Tax Certificate for such issue, unless the District obtains an
opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of
interest payments on the Bonds and Parity Bonds will not be adversely affected if such requirements
are not satisfied.
(1) Rebate Account. The following requirements shall be satisfied with respect
to each subaccount of the Rebate Account:
(i) Annual Computation. Within 55 days of the end of each Bond Year,
the District shall calculate or cause to be calculated the amount of rebatable arbitrage for the
Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable, in accordance
with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking
into account any applicable exceptions with respect to the computation of the rebatable
arbitrage described in the Tax Certificate for each issue (e.g., the temporary investments
exceptions of Section 148(f)(4)(B) and (C) of the Code), and taking into account whether the
election pursuant to Section 148(f)(4)(C)(vii) of the Code (the “1½% Penalty”) has been
made), for this purpose treating the last day of the applicable Bond Year as a computation
date, within the meaning of Section 1.148-1(b) of the Rebate Regulations (the “Rebatable
Arbitrage”). The District shall obtain expert advice as to the amount of the Rebatable
Arbitrage to comply with this Section.
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(ii) Annual Transfer. Within 55 days of the end of each Bond Year for
which Rebatable Arbitrage must be calculated as required by the Tax Certificate for each
issue, upon the written direction of an Authorized Representative of the District, an amount
shall be deposited to each subaccount of the Rebate Account by the Trustee from any funds
so designated by the District if and to the extent required, so that the balance in the Rebate
Account shall equal the amount of Rebatable Arbitrage so calculated by or on behalf of the
District in accordance with (i) of this Subsection (a)(1) with respect to the Bonds and each
issue of Parity Bonds to which this Section 3.7 is applicable. In the event that immediately
following any transfer required by the previous sentence, or the date on which the District
determines that no transfer is required for such Bond Year, the amount then on deposit to the
credit of the applicable subaccount of the Rebate Account exceeds the amount required to be
on deposit therein, upon written instructions from an Authorized Representative of the
District, the Trustee shall withdraw the excess from the appropriate subaccount of the Rebate
Account and then credit the excess to the Special Tax Fund.
(iii) Payment to the Treasury. The Trustee shall pay, as directed in writing
by an Authorized Representative of the District, to the United States Treasury, out of
amounts in each subaccount of the Rebate Account,
(X) not later than 60 days after the end of (A) the fifth Bond Year for the
Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable, and (B) each
applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable
Arbitrage calculated as of the end of such Bond Year for the Bonds and each issue of Parity
Bonds, as applicable; and
(Y) not later than 60 days after the payment or redemption of all of the
Bonds or an issue of Parity Bonds, as applicable, an amount equal to 100% of the Rebatable
Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable
to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code.
In the event that, prior to the time of any payment required to be made from the
Rebate Account, the amount in the Rebate Account is not sufficient to make such payment
when such payment is due, the District shall calculate or cause to be calculated the amount of
such deficiency and deposit an amount received from any legally available source equal to
such deficiency prior to the time such payment is due. Each payment required to be made
pursuant to this Subsection (a)(1) shall be made to the Internal Revenue Service Center,
Ogden, Utah 84201 on or before the date on which such payment is due, and shall be
accompanied by Internal Revenue Service Form 8038-T, or shall be made in such other
manner as provided under the Code.
(2) Alternative Penalty Account.
(i) Six-Month Computation. If the 1½% Penalty has been elected for the
Bonds or an issue of Parity Bonds, within 85 days of each particular Six-Month Period, the
District shall determine or cause to be determined whether the 1½% Penalty is payable (and
the amount of such penalty) as of the close of the applicable Six-Month Period. The District
shall obtain expert advice in making such determinations.
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(ii) Six-Month Transfer. Within 85 days of the close of each Six-Month
Period, the Trustee, at the written direction of an Authorized Representative of the District,
shall deposit an amount in the appropriate subaccounts of the Alternative Penalty Account
from any source of funds held by the Trustee pursuant to this Indenture and designated by the
District in such written directions or provided to it by the District, if and to the extent
required, so that the balance in each subaccount of the Alternative Penalty Account equals
the amount of 1½% Penalty due and payable to the United States Treasury determined as
provided in Subsection (a)(2)(i) above. In the event that immediately following any transfer
provided for in the previous sentence, or the date on which the District determines that no
transfer is required for such Bond Year, the amount then on deposit in a subaccount of the
Alternative Penalty Account exceeds the amount required to be on deposit therein to make
the payments required by Subsection (iii) below, the Trustee, at the written direction of an
Authorized Representative of the District, may withdraw the excess from the applicable
subaccount of the Alternative Penalty Account and credit the excess to the Special Tax Fund.
(iii) Payment to the Treasury. The Trustee shall pay, as directed in writing
by an Authorized Representative of the District, to the United States Treasury, out of
amounts in a subaccount of the Alternative Penalty Account, not later than 90 days after the
close of each Six-Month Period the 1½% Penalty, if applicable and payable, computed with
respect to the Bonds and any issue of Parity Bonds in accordance with Section 148(f)(4) of
the Code. In the event that, prior to the time of any payment required to be made from a
subaccount of the Alternative Penalty Account, the amount in such subaccount is not
sufficient to make such payment when such payment is due, the District shall calculate the
amount of such deficiency and direct the Trustee, in writing, to deposit an amount equal to
such deficiency into such subaccount of the Alternative Penalty Account from any funds held
by the Trustee pursuant to this Indenture and designated by the District in such written
directions prior to the time such payment is due. Each payment required to be made pursuant
to this Subsection (a)(2) shall be made to the Internal Revenue Service, Ogden, Utah 84201
on or before the date on which such payment is due, and shall be accompanied by Internal
Revenue Service Form 8038-T or shall be made in such other manner as provided under the
Code.
(b) Disposition of Unexpended Funds. Any funds remaining in the Accounts of the
Rebate Fund with respect to the Bonds or an issue of Parity Bonds after redemption and payment of
such issue and after making the payments described in Subsection (a)(1)(iii) or (a)(2)(iii) (whichever
is applicable), may be withdrawn by the Trustee at the written direction of the District and utilized in
any manner by the District.
(c) Survival of Defeasance and Final Payment. Notwithstanding anything in this Section
or this Indenture to the contrary, the obligation to comply with the requirements of this Section shall
survive the defeasance and final payment of the Bonds and any Parity Bonds with respect to which
an Account has been created in the Rebate Fund.
(d) Amendment Without Consent of Owners. This Section 3.7 may be deleted or
amended in any manner without the consent of the Owners, provided that prior to such event there is
delivered to the District an opinion of Bond Counsel to the effect that such deletion or amendment
will not adversely affect the exclusion from gross income for federal income tax purposes of interest
on the Bonds and any issue of Parity Bonds issued on a tax-exempt basis.
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The Trustee shall not be responsible for calculating rebatable arbitrage or for the adequacy or
correctness or any rebate report or rebate calculations. The Trustee shall be deemed conclusively to
have complied with the provisions of this Indenture regarding calculation and payment of rebatable
arbitrage if it follows the directions of the District and it shall have no independent duty to review or
such calculations or enforce the compliance by the District with such rebate requirements.
Section 3.8. Surplus Fund. After making the transfers required by Sections 3.3, 3.4, 3.5,
3.6 and 3.7 hereof, as soon as practicable after each September 1, and in any event prior to each
October 1, the Trustee shall transfer all remaining amounts in the Special Tax Fund to the Surplus
Fund, unless on or prior to such date, it has received a Certificate of an Authorized Representative
directing that certain amounts be retained in the Special Tax Fund because the District has included
such amounts as being available in the Special Tax Fund in calculating the amount of the levy of
Special Taxes for such Fiscal Year pursuant to Section 5.2(b) hereof. Moneys deposited in the
Surplus Fund will be transferred by the Trustee at the direction of an Authorized Representative of
the District (i) to the Interest Account, the Principal Account or the Redemption Account of the
Special Tax Fund to pay the principal of, including Sinking Fund Payments, premium, if any, and
interest on the Bonds and any Parity Bonds when due in the event that moneys in the Special Tax
Fund and the Reserve Account of the Special Tax Fund are insufficient therefor, (ii) to the Reserve
Account in order to replenish the Reserve Account to the Reserve Requirement, (iii) to the
Administrative Expenses Account of the Special Tax Fund to pay Administrative Expenses to the
extent that the amounts on deposit in the Administrative Expenses Account of the Special Tax Fund
are insufficient to pay Administrative Expenses, (iv) to the Backbone Infrastructure Account of the
City Facilities Fund to pay Project Costs required or expected to be funded from such account
pursuant to the Acquisition Agreement, (v) to the Backbone Infrastructure Account of the CVWD
Facilities Fund to pay Project Costs required or expected to be funded from such account pursuant to
the Acquisition Agreement and the JCFA, or (vi) for any other lawful purpose of the District.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity
Bonds and may be used by the District for any lawful purpose. In the event that the District
reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any
Outstanding Bonds or Parity Bonds, the District will notify the Trustee in a Certificate of an
Authorized Representative and the Trustee will segregate such amount into a separate subaccount
and the moneys on deposit in such subaccount of the Surplus Fund shall be invested at the written
direction of the District in Authorized Investments the interest on which is excludable from gross
income under Section 103 of the Code (other than bonds the interest on which is a tax preference
item for purposes of computing the alternative minimum tax of individuals and corporations under
the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or
Parity Bonds to which such amounts are to be applied, unless, in the opinion of Bond Counsel,
investment at a higher yield will not adversely affect the exclusion from gross income for federal
income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt
basis for federal income tax purposes.
Section 3.9. City Facilities Fund.
(a) The moneys in the Costs of Issuance Account shall be disbursed by the Trustee
pursuant to a Certificate of an Authorized Representative of the District, and any balance therein
shall be transferred by the Trustee to the Backbone Infrastructure Account of the City Facilities Fund
180 days after the Delivery Date of the Bonds or Parity Bonds, as applicable.
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(b) The moneys in the following accounts and subaccounts of the City Facilities Fund
shall be applied exclusively to pay the Project Costs: (i) the Backbone Infrastructure Account,
including without limitation the Gerald Ford (South) Landscaping Subaccount therein, and (ii) the
Other Facilities Account and the subaccounts therein ((A) the DW 237 Subaccount (City Facilities),
(B) the PDFC Subaccount (City Facilities), (C) the UV Subaccount (City Facilities), (D) the Shaw
Subaccount (City Facilities), and (E) the S&C Subaccount (City Facilities)). Amounts for Project
Costs shall be disbursed by the Trustee from the such accounts and subaccounts of the City Facilities
Fund as specified in a Request for Disbursement of Project Costs (City Facilities Fund), substantially
in the form of Exhibit B attached hereto, which must be submitted in connection with each requested
disbursement.
(c) Upon receipt of a Certificate of an Authorized Representative of the District,
substantially in the form of Exhibit D attached hereto, requesting transfer pursuant to Section 3.3.B.
of the Acquisition Agreement of all or a specified portion of the amount remaining in the Backbone
Infrastructure Account of the City Facilities Fund (excluding the Gerald Ford (South) Landscaping
Subaccount therein) to the Backbone Infrastructure Account of the CVWD Facilities Fund, the
Trustee shall transfer all or such specified portion, as applicable, of the moneys remaining on deposit
in the Backbone Infrastructure Account of the City Facilities Fund to the Backbone Infrastructure
Account of the CVWD Facilities Fund.
(d) Upon receipt of a Certificate of an Authorized Representative of the District,
substantially in the form of Exhibit E attached hereto, requesting a transfer pursuant to Section
3.3.C. of the Acquisition Agreement of all or a specified portion of the amount remaining in a
subaccount of the Other Facilities Account of the City Facilities Fund in one of the following
manners, the Trustee shall transfer all or such specified portion, as applicable, as specified in the
Certificate:
(1) From the DW 237 Subaccount (City Facilities) of the City Facilities Fund to
the DW 237 Subaccount (CVWD Facilities) of the CVWD Facilities Fund.
(2) From the PDFC Subaccount (City Facilities) of the City Facilities Fund to the
PDFC Subaccount (CVWD Facilities) of the CVWD Facilities Fund.
(3) From the UV Subaccount (City Facilities) of the City Facilities Fund to the
UV Subaccount (CVWD Facilities) of the CVWD Facilities Fund.
(4) From the Shaw Subaccount (City Facilities) of the City Facilities Fund to the
Shaw Subaccount (CVWD Facilities) of the CVWD Facilities Fund.
(5) From the S&C Subaccount (City Facilities) of the City Facilities Fund to the
S&C Subaccount (CVWD Facilities) of the CVWD Facilities Fund.
(e) Upon receipt of a Certificate of an Authorized Representative of the District,
substantially in the form of Exhibit F attached hereto, requesting a transfer pursuant to Section
3.3.D. of the Acquisition Agreement of all or a specified portion of the amount remaining in the
Gerald Ford (South) Landscaping Subaccount of the Backbone Infrastructure Account of the City
Facilities Fund to the Backbone Facilities Account of the City Facilities Fund or the Backbone
Facilities Account of the CVWD Facilities Fund, the Trustee shall transfer all or such specified
portion to the Backbone Facilities Account specified in the Certificate.
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(f) Upon receipt of a Certificate of an Authorized Representative of the District stating
that all or a specified portion of the amount remaining in any account (or subaccount therein) within
the City Facilities Fund is no longer needed to pay Project Costs, the Trustee shall transfer all or such
specified portion, as applicable, of the moneys remaining on deposit in such specified account (or
subaccount therein) within the City Facilities Fund to the Principal Account or Redemption Account
to the Special Tax Fund or to the Surplus Fund, as directed in the Certificate, provided that in
connection with any direction to transfer amounts to the Surplus Fund there shall have been delivered
to the Trustee with such Certificate an opinion of Bond Counsel to the effect that such transfer to the
Surplus Fund will not adversely affect the exclusion from gross income for federal income tax
purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for
federal income tax purposes.
Section 3.10. CVWD Facilities Fund.
(a) The moneys in the following accounts and subaccounts of the CVWD Facilities Fund
shall be applied exclusively to pay the Project Costs: (i) the Backbone Infrastructure Account and
(ii) the Other Facilities Account and the subaccounts therein ((A) the DW 237 Subaccount (CVWD
Facilities), (B) the PDFC Subaccount (CVWD Facilities), (C) the UV Subaccount (CVWD
Facilities), (D) the Shaw Subaccount (CVWD Facilities), and (E) the S&C Subaccount (CVWD
Facilities)). Amounts for Project Costs shall be disbursed by the Trustee from the such accounts and
subaccounts of the CVWD Facilities Fund as specified in a Request for Disbursement of Project
Costs (CVWD Facilities Fund), substantially in the form of Exhibit C attached hereto, which must be
submitted in connection with each requested disbursement.
(b) Upon receipt of a Certificate of an Authorized Representative of the District
requesting transfer pursuant to Section 3.3.B. of the Acquisition Agreement of all or a specified
portion of the amount remaining in the Backbone Infrastructure Account of the CVWD Facilities
Fund to the Backbone Infrastructure Account of the City Facilities Fund, the Trustee shall transfer all
or such specified portion, as applicable, of the moneys remaining on deposit in the Backbone
Infrastructure Account of the CVWD Facilities Fund to the Backbone Infrastructure Account of the
City Facilities Fund.
(c) Upon receipt of a Certificate of an Authorized Representative of the District
requesting a transfer pursuant to Section 3.3.C. of the Acquisition Agreement of all or a specified
portion of the amount remaining in a subaccount of the Other Facilities Account of the CVWD
Facilities Fund in one of the following manners, the Trustee shall transfer all or such specified
portion, as applicable, as specified in the Certificate:
(1) From the DW 237 Subaccount (CVWD Facilities) of the CVWD Facilities
Fund to the DW 237 Subaccount (City Facilities) of the City Facilities Fund.
(2) From the PDFC Subaccount (CVWD Facilities) of the CVWD Facilities Fund
to the PDFC Subaccount (City Facilities) of the City Facilities Fund.
(3) From the UV Subaccount (CVWD Facilities) of the CVWD Facilities Fund to
the UV Subaccount (City Facilities) of the City Facilities Fund.
(4) From the Shaw Subaccount (CVWD Facilities) of the CVWD Facilities Fund
to the Shaw Subaccount (City Facilities) of the City Facilities Fund.
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(5) From the S&C Subaccount (CVWD Facilities) of the CVWD Facilities Fund
to the S&C Subaccount (City Facilities) of the City Facilities Fund.
(d) Upon receipt of a Certificate of an Authorized Representative of the District stating
that all or a specified portion of the amount remaining in any account (or subaccount therein) within
the CVWD Facilities Fund is no longer needed to pay Project Costs, the Trustee shall transfer all or
such specified portion, as applicable, of the moneys remaining on deposit in such specified account
(or subaccount therein) within the CVWD Facilities Fund to the Principal Account or Redemption
Account to the Special Tax Fund or to the Surplus Fund, as directed in the Certificate, provided that
in connection with any direction to transfer amounts to the Surplus Fund there shall have been
delivered to the Trustee with such Certificate an opinion of Bond Counsel to the effect that such
transfer to the Surplus Fund will not adversely affect the exclusion from gross income for federal
income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt
basis for federal income tax purposes.
Section 3.11. Investments. Moneys held in any of the Funds, Accounts, and Subaccounts
under this Indenture shall be invested at the written direction of the District in accordance with the
limitations set forth below only in Authorized Investments which shall be deemed at all times to be a
part of such Funds, Accounts and Subaccounts. Any loss resulting from such Authorized
Investments shall be credited or charged to the Fund, Account or Subaccount from which such
investment was made, and any investment earnings on a Fund, Account or Subaccount shall be
applied as follows: (i) investment earnings on all amounts deposited in the City Facilities Fund, the
CVWD Facilities Fund, the Special Tax Fund, the Surplus Fund and the Rebate Fund and each
Account and Subaccount therein (other than the Reserve Account of the Special Tax Fund) shall be
deposited in those respective Funds, Accounts, and Subaccounts, and (ii) investment earnings on all
amounts deposited in the Reserve Account shall be deposited therein to be applied as set forth in
Section 3.6. Moneys in the Funds, Accounts, and Subaccounts held under this Indenture may be
invested by the Trustee as directed in writing by the District, from time to time, in Authorized
Investments subject to the following restrictions:
(a) Moneys in the Facilities Funds shall be invested in Authorized Investments which
will by their terms mature, or in the case of an Investment Agreement are available without penalty,
as close as practicable to the date the District estimates the moneys represented by the particular
investment will be needed for withdrawal from the corresponding Facilities Fund. Notwithstanding
anything herein to the contrary, amounts in any Facilities Fund three years after the Delivery Date for
the Bonds and the proceeds of each issue of Parity Bonds issued on a tax-exempt basis which are
remaining on deposit in any Facilities Fund on the date which is three years following the date of
issuance of such issue of Parity Bonds shall be invested only in Authorized Investments the interest
on which is excluded from gross income under Section 103 of the Code (other than bonds the interest
on which is a tax preference item for purposes of computing the alternative minimum tax of
individuals and corporations under the Code) or in Authorized Investments at a yield not in excess of
the yield on the issue of Bonds or Parity Bonds from which such proceeds were derived, unless in the
opinion of Bond Counsel such restriction is not necessary to prevent interest on the Bonds or any
Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes from being
included in gross income for federal income tax purposes.
(b) Moneys in the Interest Account, the Principal Account and the Redemption Account
of the Special Tax Fund shall be invested only in Authorized Investments which will by their terms
mature, or in the case of an Investment Agreement are available for withdrawal without penalty, on
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such dates so as to ensure the payment of principal of, premium, if any, and interest on the Bonds and
any Parity Bonds as the same become due.
(c) Moneys in the Reserve Account of the Special Tax Fund may be invested only in
Authorized Investments which, taken together, have a weighted average maturity not in excess of
five years; provided that such amounts may be invested in an Investment Agreement to the later of
the final maturity of the Bonds or any Parity Bonds so long as such amounts may be withdrawn at
any time, without penalty, for application in accordance with Section 3.6 hereof; and provided that
no such Authorized Investment of amounts in the Reserve Account allocable to the Bonds or an issue
of Parity Bonds shall mature later than the respective final maturity date of the Bonds or the issue of
Parity Bonds, as applicable.
(d) Moneys in the Rebate Fund shall be invested only in Authorized Investments of the
type described in clause (1) of the definition thereof which by their terms will mature, as nearly as
practicable, on the dates such amounts are needed to be paid to the United States Government
pursuant to Section 3.7 hereof or in Authorized Investments of the type described in clause (7) of the
definition thereof.
(e) In the absence of written investment directions from the District, the Trustee shall
invest solely in Authorized Investments specified in clause (7) of the definition thereof.
The Trustee shall sell, or present for redemption, any Authorized Investment whenever it
may be necessary to do so in order to provide moneys to meet any payment or transfer to such Funds
and Accounts or from such Funds and Accounts. For the purpose of determining at any given time
the balance in any such Funds and Accounts, any such investments constituting a part of such Funds
and Accounts shall be valued at their cost, except that amounts in the Reserve Account shall be
valued at the market value thereof at least semiannually on or before each Interest Payment Date. In
making any valuations hereunder, the Trustee may utilize such computerized securities pricing
services as may be available to it, including, without limitation, those available through its regular
accounting system, and conclusively rely thereon. Notwithstanding anything herein to the contrary,
the Trustee shall not be responsible for any loss from investments, sales or transfers undertaken in
accordance with the provisions of this Indenture.
The Trustee or an affiliate may act as principal or agent in the making or disposing of any
investment and shall be entitled to its customary fee for such investment. The Trustee may sell at the
best market price obtainable, or present for redemption, any Authorized Investment so purchased
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 Authorized Investment is credited, and,
subject to the provisions of Section 7.4, the Trustee shall not be liable or responsible for any loss
resulting from such investment. For investment purposes, the Trustee may commingle the funds and
accounts established hereunder, but shall account for each separately.
The District acknowledges that, to the extent regulations of the Comptroller of the Currency
or other applicable regulatory entity grant the District the right to receive brokerage confirmations of
security transactions as they occur, the District specifically waives receipt of such confirmations to
the extent permitted by law. The Trustee will furnish the District periodic cash transaction
statements which include detail for all investment transactions made by the Trustee hereunder.
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ARTICLE IV
REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds.
(a) Optional Redemption.
The Bonds maturing on or after September 1, 20__ may be redeemed, at the option of the
District, from any source of funds on any Interest Payment Date on or after September 1, 20__, in
whole, or in part from such maturities as are selected by the District and by lot within a maturity, at
the following redemption prices expressed as a percentage of the principal amount to be redeemed,
together with accrued interest to the date of redemption:
Redemption Dates Redemption Prices
September 1, 20__ and March 1, 20__ %
September 1, 20__ and March 1, 20__
September 1, 20__ and thereafter
In the event the District elects to redeem Bonds as provided above, the District shall give
written notice to the Trustee of its election to so redeem, the redemption date and the principal
amount of the Bonds of each maturity to be redeemed. The notice to the Trustee shall be given at
least forty-five (45) but no more than ninety (90) days prior to the redemption date, or by such later
date as is acceptable to the Trustee, in its sole discretion.
(b) Mandatory Sinking Fund Redemption.
(i) The Term Bonds maturing on September 1, 20__ and September 1, 20__ shall
be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited
into the Redemption Account, on September 1, 20__ and September 1, 20__ respectively, and on
each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund
Payments set forth below. The Term Bonds so called for redemption shall be selected by the Trustee
by lot and shall be redeemed at a redemption price for each redeemed Term Bond equal to the
principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
BONDS MATURING SEPTEMBER 1, 20__
Redemption Date
(September 1) Principal Amount
$
(maturity)
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BONDS MATURING SEPTEMBER 1, 20__
Redemption Date
(September 1) Principal Amount
$
(maturity)
(ii) Purchase of Term Bonds in Lieu of Redemption. If during the Fiscal Year
immediately preceding one of the redemption dates specified above the District purchases Term
Bonds, at least forty-five (45) days prior to the redemption date the District shall notify the Trustee as
to the principal amount purchased and the amount of Term Bonds so purchased shall be credited at
the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming
Sinking Fund Payment for the applicable maturity of the Term Bonds so purchased. All Term Bonds
purchased pursuant to this subsection shall be cancelled pursuant to Section 10.1 hereof.
In the event of a partial optional redemption or extraordinary redemption of the Term
Bonds, each of the remaining Sinking Fund Payments for such Term Bonds, as described above, will
be reduced, as nearly as practicable, on a pro rata basis, in integral multiples of $5,000.
(c) Extraordinary Redemption.
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata
basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from
Prepayments deposited to the Redemption Account pursuant to Section 3.2, plus amounts transferred
from the Reserve Account pursuant to Section 3.6(c), at the following redemption prices, expressed
as a percentage of the principal amount to be redeemed, together with accrued interest to the
redemption date:
Redemption Dates Redemption Prices
Interest Payment Dates through March 1, 20__ %
September 1, 20__ and March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20__ and thereafter
The District shall give written notice to the Trustee of its intention to redeem Bonds
pursuant to this subsection, the redemption date, and the principal amount of the Bonds of each
maturity to be redeemed at least forty-five (45) but no more than ninety (90) days prior to the
redemption date, or by such later date as is acceptable to the Trustee, in its sole discretion.
(d) The redemption provisions for Parity Bonds shall be set forth in a Supplemental
Indenture.
Section 4.2. Selection of Bonds and Parity Bonds for Redemption. If less than all of
the Bonds or Parity Bonds Outstanding are to be redeemed, the portion of any Bond or Parity Bond
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of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or
an integral multiple thereof. In selecting portions of such Bonds or Parity Bonds for redemption, the
Trustee shall treat such Bonds or Parity Bonds, as applicable, as representing that number of Bonds
or Parity Bonds of $5,000 denominations which is obtained by dividing the principal amount of such
Bonds or Parity Bonds to be redeemed in part by $5,000. The procedure for the selection of Parity
Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity
Bonds. The Trustee shall promptly notify the District in writing of the Bonds or Parity Bonds, or
portions thereof, selected for redemption.
Section 4.3. Notice of Redemption. When Bonds or Parity Bonds are due for redemption
under Section 4.1 above or under another redemption provision set forth in a Supplemental Indenture
relating to any Parity Bonds, the Trustee shall give notice, in the name of the District, of the
redemption of such Bonds or Parity Bonds; provided, however, that a notice of a redemption to be
made from other than from Sinking Fund Payments shall be conditioned on there being on deposit on
the redemption date sufficient money to pay the redemption price of the Bonds or Parity Bonds to be
redeemed. Such notice of redemption shall (a) specify the CUSIP numbers (if any), the bond
numbers and the maturity date or dates of the Bonds or Parity Bonds selected for redemption, except
that where all of the Bonds or all of an issue of Parity Bonds are subject to redemption, or all the
Bonds or Parity Bonds of one maturity, are to be redeemed, the bond numbers of such issue need not
be specified; (b) state the date fixed for redemption and surrender of the Bonds or Parity Bonds to be
redeemed; (c) state the redemption price; (d) state the place or places where the Bonds or Parity
Bonds are to be redeemed; (e) in the case of Bonds or Parity Bonds to be redeemed only in part, state
the portion of such Bond or Parity Bond which is to be redeemed; (f) state the date of issue of the
Bonds or Parity Bonds as originally issued; (g) state the rate of interest borne by each Bond or Parity
Bond being redeemed; and (h) state any other descriptive information needed to identify accurately
the Bonds or Parity Bonds being redeemed as shall be specified by the Trustee. Such notice shall
further state that on the date fixed for redemption, there shall become due and payable on each Bond,
Parity Bond or portion thereof called for redemption, the principal thereof, together with any
premium, and interest accrued to the redemption date, and that from and after such date, interest
thereon shall cease to accrue and be payable. At least thirty (30) days but no more than forty-five
(45) days prior to the redemption date, the Trustee shall mail a copy of such notice, by first class
mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond
Register, and to the original purchaser of the Bonds or Parity Bonds, as applicable. The actual
receipt by the Owner of any Bond or Parity Bond or the original purchaser of any Bond or Parity
Bond of notice of such redemption shall not be a condition precedent to redemption, and neither the
failure to receive nor any defect in such notice shall affect the validity of the proceedings for the
redemption of such Bonds or Parity Bonds, or the cessation of interest on the redemption date. A
certificate by the Trustee that notice of such redemption has been given as herein provided shall be
conclusive as against all parties and the Owner shall not be entitled to show that he or she failed to
receive notice of such redemption.
In addition to the foregoing notice, further notice shall be given by the Trustee as set out
below, but no defect in said further notice nor any failure to give all or any portion of such further
notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given
as above prescribed.
Each further notice of redemption shall be sent not later than the date that notice of
redemption is mailed to the Bondowners pursuant to the first paragraph of this Section by registered
or certified mail or overnight delivery service to the Depository and to any other registered securities
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depositories then in the business of holding substantial amounts of obligations of types comprising
the Bonds and Parity Bonds as determined by Trustee and to one or more national information
services that the Trustee determines are then in the business of disseminating notice of redemption of
obligations such as the Bonds and Parity Bonds:
Upon the payment of the redemption price of any Bonds and Parity 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 and maturity, the Bonds and Parity Bonds being redeemed with
the proceeds of such check or other transfer.
Section 4.4. Partial Redemption of Bonds or Parity Bonds. Upon surrender of any
Bond or Parity Bond to be redeemed in part only, the District shall execute and the Trustee shall
authenticate and deliver to the Bondowner, at the expense of the District, a new Bond or Bonds or a
new Parity Bond or Parity Bonds of authorized denominations equal in aggregate principal amount to
the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity
or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the
foregoing limitations.
Section 4.5. Effect of Notice and Availability of Redemption Money. Notice of
redemption having been duly given, as provided in Section 4.3 hereof, and the amount necessary for
the redemption having been made available for that purpose and being available therefor on the date
fixed for such redemption:
(a) the Bonds and Parity Bonds, or portions thereof, designated for redemption
shall, on the date fixed for redemption, become due and payable at the redemption price
thereof as provided in this Indenture or in any Supplemental Indenture with respect to any
Parity Bonds, anything in this Indenture or in the Bonds or the Parity Bonds to the contrary
notwithstanding;
(b) upon presentation and surrender thereof at the office of the Trustee, the
redemption price of such Bonds and Parity Bonds shall be paid to the Owners thereof;
(c) as of the redemption date the Bonds or the Parity Bonds, or portions thereof
so designated for redemption shall be deemed to be no longer Outstanding and such Bonds or
Parity Bonds, or portions thereof, shall cease to bear further interest; and
(d) as of the date fixed for redemption no Owner of any of the Bonds, Parity
Bonds or portions thereof so designated for redemption shall be entitled to any of the benefits
of this Indenture or any Supplemental Indenture, or to any other rights, except with respect to
payment of the redemption price and interest accrued to the redemption date from the
amounts so made available.
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty. The District shall preserve and protect the security pledged
hereunder to the Bonds and any Parity Bonds against all claims and demands of all persons.
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Section 5.2. Covenants. So long as any of the Bonds or Parity Bonds issued hereunder
are Outstanding and unpaid, the District makes the following covenants with the Bondowners under
the provisions of the Act and this Indenture (to be performed by the District or its proper officers,
agents or employees), which covenants are necessary and desirable to secure the Bonds and Parity
Bonds and tend to make them more marketable; provided, however, that said covenants do not
require the District to expend any funds or moneys other than the Special Taxes and other amounts
deposited to the Special Tax Fund:
(a) Punctual Payment; Against Encumbrances. The District covenants that it will receive
all Special Taxes in trust for the Owners and will instruct the Treasurer to deposit all Special Taxes
with the Trustee immediately upon their apportionment to the District, and the District shall have no
beneficial right or interest in the amounts so deposited except as provided by this Indenture. All such
Special Taxes shall be disbursed, allocated and applied solely to the uses and purposes set forth
herein, and shall be accounted for separately and apart from all other money, funds, accounts or other
resources of the District.
The District covenants that it will duly and punctually pay or cause to be paid the
principal of and interest on every Bond and Parity Bond issued hereunder, together with the
premium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and the
Parity Bonds and in accordance with this Indenture to the extent that Net Taxes and other amounts
pledged hereunder are available therefor, and that the payments into the Funds and Accounts created
hereunder will be made, all in strict conformity with the terms of the Bonds, any Parity Bonds, and
this Indenture, and that it will faithfully observe and perform all of the conditions, covenants and
requirements of this Indenture and all Supplemental Indentures and of the Bonds and any Parity
Bonds issued hereunder.
The District will not mortgage or otherwise encumber, pledge or place any charge
upon any of the Net Taxes except as provided in this Indenture, and will not issue any obligation or
security having a lien or charge upon the Net Taxes superior to or on a parity with the Bonds, other
than Parity Bonds. Nothing herein shall prevent the District from issuing or incurring indebtedness
which is payable from a pledge of Net Taxes which is subordinate in all respects to the pledge of Net
Taxes to repay the Bonds and the Parity Bonds.
(b) Levy of Special Tax. Beginning in Fiscal Year 2006-07 and so long as any Bonds or
Parity Bonds issued under this Indenture are Outstanding, but subject to the Rate and Method, the
legislative body of the District covenants to levy the Special Tax in an amount equal to the Special
Tax Requirement (as defined in the Rate and Method), which includes, but is not limited to, amounts
sufficient, together with other amounts on deposit in the Special Tax Fund and available for such
purpose, to pay (1) the principal of and interest on the Bonds and any Parity Bonds when due, (2) the
Administrative Expenses, and (3) any amounts required to replenish the Reserve Account of the
Special Tax Fund to the Reserve Requirement. The District further covenants that it will take no
actions that would discontinue or cause the discontinuance of the Special Tax levy or the District’s
authority to levy the Special Tax for so long as the Bonds and any Parity Bonds are Outstanding.
(c) Commence Foreclosure Proceedings. The District covenants for the benefit of the
Owners of the Bonds and any Parity Bonds that it (i) will commence judicial foreclosure proceedings
against parcels with delinquent Special Taxes in excess of $10,000 by the October 1 following the
close of each Fiscal Year in which such Special Taxes were due; and (ii) will commence judicial
foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 following
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the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95%
of the total Special Tax levied and the amount on deposit in the Reserve Account is at less than the
Reserve Requirement, and (iii) will diligently pursue such foreclosure proceedings until the
delinquent Special Taxes are paid.
The District covenants that it will deposit the net proceeds of any foreclosure in the
Special Tax Fund and will apply such proceeds remaining after the payment of Administrative
Expenses to make current payments of principal and interest on the Bonds and any Parity Bonds, to
bring the amount on deposit in the Reserve Account up to the Reserve Requirement and to pay any
delinquent installments of principal or interest due on the Bonds and any Parity Bonds.
Notwithstanding the foregoing, the District may elect (but is not obligated) to
advance the amount of any particular delinquency (excluding penalties and interest) and deposit such
amount to the Special Tax Fund. Upon a deposit of such money in the Special Tax Fund, the District
will not need to initiate a foreclosure action as provided above; provided, however, the District may
reimburse itself for such advance when the Special Tax on such property is paid in the amount of
such advance plus interest on such amount at a rate equal to the yield on the Outstanding Bonds.
Interest and penalties paid in excess of the amount advanced by the District shall be deposited in the
Special Tax Fund.
(d) Books and Accounts. The District will keep proper books of records and accounts,
separate from all other records and accounts of the District, in which complete and correct entries
shall be made of all transactions relating to the Project, the levy of the Special Tax and the deposits
to the Special Tax Fund. Such books of records and accounts shall at all times during business hours
be subject to the inspection of the Trustee or of the Owners of not less than 10% of the principal
amount of the Bonds or the Owners of not less than 10% of any issue of Parity Bonds then
Outstanding or their representatives authorized in writing.
(e) Federal Tax Covenants. Notwithstanding any other provision of this Indenture,
absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds and
any Parity Bonds issued on a tax-exempt basis for federal income tax purposes will not be adversely
affected for federal income tax purposes, the District covenants to comply with all applicable
requirements of the Code necessary to preserve such exclusion from gross income and specifically
covenants, without limiting the generality of the foregoing, as follows:
(1) Private Activity. The District will take no action or refrain from taking any
action or make any use of the proceeds of the Bonds or any Parity Bonds or of any other
moneys or property which would cause the Bonds or any Parity Bonds issued on a tax-
exempt basis for federal income tax purposes to be “private activity bonds” within the
meaning of Section 141 of the Code;
(2) Arbitrage. The District will make no use of the proceeds of the Bonds or any
Parity Bonds or of any other amounts or property, regardless of the source, or take any action
or refrain from taking any action which will cause the Bonds or any Parity Bonds issued on a
tax-exempt basis for federal income tax purposes to be “arbitrage bonds” within the meaning
of Section 148 of the Code;
(3) Federal Guaranty. The District will make no use of the proceeds of the Bonds
or any Parity Bonds or take or omit to take any action that would cause the Bonds or any
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Parity Bonds issued on a tax-exempt basis for federal income tax purposes to be “federally
guaranteed” within the meaning of Section 149(b) of the Code;
(4) Information Reporting. The District will take or cause to be taken all
necessary action to comply with the informational reporting requirement of Section 149(e) of
the Code;
(5) Hedge Bonds. The District will make no use of the proceeds of the Bonds or
any Parity Bonds or any other amounts or property, regardless of the source, or take any
action or refrain from taking any action that would cause the Bonds or any Parity Bonds
issued on a tax-exempt basis for federal income tax purposes to be considered “hedge bonds”
within the meaning of Section 149(g) of the Code unless the District takes all necessary
action to assure compliance with the requirements of Section 149(g) of the Code to maintain
the exclusion from gross income for federal income tax purposes of interest on the Bonds and
any applicable Parity Bonds;
(6) Miscellaneous. The District will take no action or refrain from taking any
action inconsistent with its expectations stated in the Tax Certificate executed on the
Delivery Date by the District in connection with the Bonds and any issue of Parity Bonds and
will comply with the covenants and requirements stated therein and incorporated by reference
herein; and
(7) Other Tax Exempt Issues. The District will not use proceeds of other tax
exempt securities to redeem any Bonds or Parity Bonds without first obtaining the written
opinion of Bond Counsel that doing so will not impair the exclusion from gross income for
federal income tax purposes of interest on the Bonds and any Parity Bonds issued on a tax-
exempt basis.
(f) Reduction of Maximum Special Taxes. The District hereby finds and determines
that, historically, delinquencies in the payment of special taxes authorized pursuant to the Act in
community facilities districts in Southern California have from time to time been at levels requiring
the levy of special taxes at the maximum authorized rates in order to make timely payment of
principal of and interest on the outstanding indebtedness of such community facilities districts. For
this reason, the District hereby determines that a reduction in the maximum Special Tax rates
authorized to be levied on parcels in the District below the levels provided in this Section 5.2(f)
would interfere with the timely retirement of the Bonds and Parity Bonds. The District determines it
to be necessary in order to preserve the security for the Bonds and Parity Bonds to covenant, and, to
the maximum extent that the law permits it to do so, the District hereby does covenant, that it shall
not initiate proceedings to reduce the maximum Special Tax rates for the District, unless, in
connection therewith, (i) the District receives a certificate from one or more Independent Financial
Consultants which, when taken together, certify that, on the basis of the parcels of land and
improvements existing in the District as of the July 1 preceding the reduction, the maximum amount
of the Special Tax which may be levied on then existing Developed Property in each Bond Year for
any Bonds and Parity Bonds Outstanding will equal at least the sum of the estimated Administrative
Expenses and 110% of the gross debt service in each Bond Year on all Bonds and Parity Bonds to
remain Outstanding after the reduction is approved, (ii) the District finds that any reduction made
under such conditions will not adversely affect the interests of the Owners of the Bonds and Parity
Bonds, and (iii) the District is not delinquent in the payment of the principal of or interest on the
Bonds or any Parity Bonds. For purposes of estimating Administrative Expenses for the foregoing
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calculation, the Independent Financial Consultants shall compute the Administrative Expenses for
the current Fiscal Year and escalate that amount by two percent (2%) in each subsequent Fiscal Year.
(g) Covenants to Defend. The District covenants that, in the event that any initiative is
adopted by the qualified electors in the District which purports to reduce the maximum Special Tax
below the levels specified in Section 5.2(f) above or to limit the power of the District to levy the
Special Taxes for the purposes set forth in Section 5.2(b) above, it will commence and pursue legal
action in order to preserve its ability to comply with such covenants.
(h) Limitation on Right to Tender Bonds. The District hereby covenants that it will not
adopt any policy pursuant to Section 53341.1 of the Act permitting the tender of Bonds or Parity
Bonds in full payment or partial payment of any Special Taxes unless the District shall have first
received a certificate from an Independent Financial Consultant that the acceptance of such a tender
will not result in the District having insufficient Special Tax revenues to pay the principal of and
interest on the Bonds and Parity Bonds when due.
(i) Continuing Disclosure. The District covenants to comply with the terms of the
Continuing Disclosure Agreement and with the terms of any agreement executed by the District with
respect to any Parity Bonds to assist the Underwriter in complying with Rule 15(c)2-12 adopted by
the Securities and Exchange Commission.
(j) Further Assurances. The District shall make, execute and deliver any and all such
further agreements, instruments and assurances as may be reasonably necessary or proper to carry out
the intention or to facilitate the performance of this Resolution and for the better assuring and
confirming unto the Owners of the Bonds and any Parity Bonds of the rights and benefits provided in
this Resolution.
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent.
The District may from time to time, and at any time, without notice to or consent of any of the
Bondowners, adopt Supplemental Indentures for any of the following purposes:
(a) to cure any ambiguity, to correct or supplement any provisions herein which may be
inconsistent with any other provision herein, or to make any other provision with respect to matters
or questions arising under this Indenture or in any additional resolution or order, provided that such
action is not materially adverse to the interests of the Bondowners;
(b) to add to the covenants and agreements of and the limitations and the restrictions
upon the District contained in this Indenture, other covenants, agreements, limitations and restrictions
to be observed by the District which are not contrary to or inconsistent with this Indenture as
theretofore in effect or which further secure Bond or Parity Bond payments;
(c) to provide for the issuance of any Parity Bonds, and to provide the terms and
conditions under which such Parity Bonds may be issued, subject to and in accordance with the
provisions of this Indenture;
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(d) to modify, amend or supplement this Indenture 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, or to comply with the Code or regulations issued thereunder, and to add such other
terms, conditions and provisions as may be permitted by said act or similar federal statute, and which
shall not materially adversely affect the interests of the Owners of the Bonds or any Parity Bonds
then Outstanding;
(e) to modify, alter or amend the Rate and Method in any manner so long as such
changes do not reduce the maximum Special Taxes that may be levied in each year on property
within the District to an amount which is less than the sum of the estimated Administrative Expenses
and 110% of the principal and interest due in each corresponding future Bond Year with respect to
the Bonds and Parity Bonds Outstanding as of the date of such amendment; or
(f) to modify, alter, amend or supplement this Indenture in any other respect which is not
materially adverse to the Bondowners.
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent.
Exclusive of the Supplemental Indentures described in Section 6.1, the Owners of not less than a
majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding shall have the
right to consent to and approve the adoption by the District of such Supplemental Indentures as shall
be deemed necessary or desirable by the District for the purpose of waiving, modifying, altering,
amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this
Indenture; provided, however, that nothing herein shall permit, or be construed as permitting, (a) an
extension of the maturity date of the principal, or the payment date of interest on, any Bond or Parity
Bond, (b) a reduction in the principal amount of, or redemption premium on, any Bond or Parity
Bond or the rate of interest thereon, (c) a preference or priority of any Bond or Parity Bond over any
other Bond or Parity Bond, or (d) a reduction in the aggregate principal amount of the Bonds and
Parity Bonds the Owners of which are required to consent to such Supplemental Indenture, without
the consent of the Owners of all Bonds and Parity Bonds then Outstanding.
If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to
the terms of this Section shall require the consent of the Bondowners, the District shall so notify the
Trustee and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Trustee
shall, at the expense of the District, cause notice of the proposed Supplemental Indenture to be
mailed, by first class mail, postage prepaid, to all Bondowners at their addresses as they appear in the
Bond Register. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture
and shall state that a copy thereof is on file at the office of the Trustee for inspection by all
Bondowners. The failure of any Bondowners to receive such notice shall not affect the validity of
such Supplemental Indenture when consented to and approved by the Owners of not less than a
majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding as required by
this Section. Whenever at any time within one year after the date of the first mailing of such notice,
the Trustee shall receive an instrument or instruments purporting to be executed by the Owners of not
less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding, which
instrument or instruments shall refer to the proposed Supplemental Indenture described in such
notice, and shall specifically consent to and approve the adoption thereof by the District substantially
in the form of the copy referred to in such notice as on file with the Trustee, such proposed
Supplemental Indenture, when duly adopted by the District, shall thereafter become a part of the
proceedings for the issuance of the Bonds and any Parity Bonds. In determining whether the Owners
of a majority of the aggregate principal amount of the Bonds and Parity Bonds have consented to the
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adoption of any Supplemental Indenture, Bonds or Parity Bonds which are owned by the District or
by any person directly or indirectly controlling or controlled by or under the direct or indirect
common control with the District, shall be disregarded and shall be treated as though they were not
Outstanding for the purpose of any such determination.
Upon the adoption of any Supplemental Indenture and the receipt of consent to any such
Supplemental Indenture from the Owners of not less than a majority in aggregate principal amount of
the Outstanding Bonds and Parity Bonds in instances where such consent is required pursuant to the
provisions of this section, this Indenture shall be, and shall be deemed to be, modified and amended
in accordance therewith, and the respective rights, duties and obligations under this Indenture of the
District and all Owners of Outstanding Bonds and Parity Bonds shall thereafter be determined,
exercised and enforced hereunder, subject in all respects to such modifications and amendments.
Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or
Parity Bonds. After the effective date of any action taken as hereinabove provided, the District may
determine that the Bonds or any Parity Bonds may bear a notation, by endorsement in form approved
by the District, as to such action, and in that case upon demand of the Owner of any Outstanding
Bond or Parity Bond at such effective date and presentation of his Bond or Parity Bond for the
purpose at the office of the Trustee or at such additional offices as the Trustee may select and
designate for that purpose, a suitable notation as to such action shall be made on such Bonds or Parity
Bonds. If the District shall so determine, new Bonds or Parity Bonds so modified as, in the opinion
of the District, shall be necessary to conform to such action shall be prepared and executed, and in
that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date
such new Bonds or Parity Bonds shall be exchanged at the office of the Trustee or at such additional
offices as the Trustee may select and designate for that purpose, without cost to each Owner of
Outstanding Bonds or Parity Bonds, upon surrender of such Outstanding Bonds or Parity Bonds.
ARTICLE VII
TRUSTEE
Section 7.1. Trustee. Wells Fargo Bank, National Association, shall be the Trustee for
the Bonds and any Parity Bonds unless and until another Trustee is appointed by the District
hereunder. The District may, at any time, appoint a successor Trustee satisfying the requirements of
Section 7.2 below for the purpose of receiving all money which the District is required to deposit
with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture.
The Trustee is hereby authorized to and shall mail by first class mail, postage prepaid, or wire
transfer in accordance with Section 2.5 above, interest payments to the Bondowners, to select Bonds
and Parity Bonds for redemption, and to maintain the Bond Register. The Trustee is hereby
authorized to pay the principal of and premium, if any, on the Bonds and Parity Bonds when the
same are duly presented to it for payment at maturity or on call and redemption, to provide for the
registration of transfer and exchange of Bonds and Parity Bonds presented to it for such purposes, to
provide for the cancellation of Bonds and Parity Bonds all as provided in this Indenture, and to
provide for the authentication of Bonds and Parity Bonds, and shall perform all other duties assigned
to or imposed on it as provided in this Indenture. The Trustee shall keep accurate records of all funds
administered by it and all Bonds and Parity Bonds paid, discharged and cancelled by it.
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The Trustee is hereby authorized to redeem the Bonds and Parity Bonds when duly presented
for payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds and
Parity Bonds upon payment thereof in accordance with the provisions of Section 10.1 hereof.
The District shall from time to time, subject to any agreement between the District and the
Trustee then in force, pay to the Trustee compensation for its services, reimburse the Trustee for all
its advances and expenditures, including, but not limited to, advances to and fees and expenses of
independent accountants or counsel employed by it in the exercise and performance of its powers and
duties hereunder, and indemnify and save the Trustee, its officers, directors, employees and agents,
harmless against costs, claims, expenses and liabilities, including, without limitation, fees and
expenses of its attorneys, not arising from its own negligence or willful misconduct which it may
incur in the exercise and performance of its powers and duties hereunder. The foregoing obligation
of the District to indemnify the Trustee shall survive the removal or resignation of the Trustee or the
discharge of the Bonds.
Section 7.2. Removal of Trustee. The District may at any time at its sole discretion
remove the Trustee initially appointed, and any successor thereto, by delivering to the Trustee a
written notice of its decision to remove the Trustee and may appoint a successor or successors
thereto; provided that any such successor shall be a bank or trust company having a combined capital
(exclusive of borrowed capital) and surplus of at least $100,000,000, and subject to supervision or
examination by federal or state authority. Any removal shall become effective only upon acceptance
of appointment by the successor Trustee. If any bank or trust company appointed as a successor
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 the
combined capital and surplus of such bank or trust company shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so published. Any removal of
the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of
appointment by the successor Trustee and notice being sent by the successor Trustee to the
Bondowners of the successor Trustee’s identity and address.
Section 7.3. Resignation of Trustee. The Trustee may at any time resign by giving
written notice to the District and by giving to the Owners notice of such resignation, which notice
shall be mailed to the Owners at their addresses appearing in the registration books in the office of
the Trustee. Upon receiving such notice of resignation, the District shall promptly appoint a
successor Trustee satisfying the criteria in Section 7.2 above by an instrument in writing. Any
resignation or removal of the Trustee and appointment of a successor Trustee shall become effective
only upon acceptance of appointment by the successor Trustee.
Section 7.4. Liability of Trustee. The recitals of fact and all promises, covenants and
agreements contained herein and in the Bonds and any Parity Bonds shall be taken as statements,
promises, covenants and agreements of the District, and the Trustee assumes no responsibility for the
correctness of the same and makes no representations as to the validity or sufficiency of this
Indenture, the Bonds or any Parity Bonds, and shall incur no responsibility in respect thereof, other
than in connection with its duties or obligations specifically set forth herein, in the Bonds and any
Parity Bonds, or in the certificate of authentication assigned to or imposed upon the Trustee. The
Trustee shall be under no responsibility or duty with respect to the issuance of the Bonds or any
Parity Bonds for value. The Trustee shall not be liable in connection with the performance of its
duties hereunder, except for its own negligence or willful misconduct.
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The Trustee shall be responsible for the performance of the duties of the Trustee expressly set
forth in this Indenture, and no implied duties or obligations shall be read into this Indenture against
the Trustee.
The Trustee shall have no responsibility for, and makes no representations with respect to,
any information, statement, or recital in any official statement, offering memorandum or any other
disclosure material prepared or distributed with respect to the Bonds.
Before taking any action under Article VIII hereof the Trustee may require indemnity
satisfactory to the Trustee be furnished from any expenses and to protect it against any liability it
may incur hereunder.
The Trustee shall not be liable for any action taken or not taken by it in accordance with the
direction of the Owners of at least twenty-five percent (25%) (or other percentage provided for
herein) in aggregate principal amount of Outstanding Bonds relating to the exercise of any right,
power or remedy available to the Trustee.
The permissive right of the Trustee to do things enumerated in this Indenture shall not be
construed as a duty.
The Trustee may become the owner or pledgee of Bonds with the same rights it would have
if it were not Trustee.
The Trustee shall be protected in acting upon any notice, resolution, request, consent, order,
certificate, report, Bond, Parity 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
parties. The Trustee may consult with counsel, who may be counsel to the District, 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 hereunder in good faith and in accordance
therewith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond or Parity
Bond unless and until such Bond or Parity Bond is submitted for inspection, if required, and his title
thereto satisfactorily established, if disputed.
Whenever in the administration of its duties under this Indenture the Trustee 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 bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by a written certificate of the District, and such certificate shall be full warrant to the
Trustee for any action taken or suffered under the provisions of this Indenture upon the faith thereof,
but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may
require such additional evidence as to it may seem reasonable.
The Trustee shall have no duty or obligation whatsoever to enforce the collection of Special
Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts
received, but its liability shall be limited to the proper accounting for such funds as it shall actually
receive. No provision in this Indenture shall require the Trustee to expend or risk its own funds or
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otherwise incur any financial liability in the performance of any of its duties hereunder, or in the
exercise of its rights or powers.
The Trustee shall not be deemed to have knowledge of any default or event of default until an
officer at the Trustee’s corporate trust office responsible for the administration of its duties hereunder
shall have actual knowledge thereof or the Trustee shall have received written notice thereof at its
corporate trust office.
Section 7.5. Merger or Consolidation. Any company into which the Trustee may be
merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the Trustee
may sell or transfer all or substantially all of its corporate trust business, shall be the successor to the
Trustee without the execution or filing of any paper or further act, anything herein to the contrary
notwithstanding.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default. Any one or more of the following events shall constitute
an “event of default”:
(a) default in the due and punctual payment of the principal of or redemption
premium, if any, on any Bond or Parity Bond when and as the same shall become due and
payable, whether at maturity as therein expressed, by declaration or otherwise;
(b) default in the due and punctual payment of the interest on any Bond or Parity
Bond when and as the same shall become due and payable; or
(c) except as described in (a) or (b), default shall be made by the District in the
observance of any of the agreements, conditions or covenants on its part contained in this
Indenture, the Bonds or any Parity Bonds, and such default shall have continued for a period
of thirty (30) days after the District shall have been given notice in writing of such default by
the Trustee or the Owners of twenty-five percent (25%), in aggregate principal amount of the
Outstanding Bonds and Parity Bonds.
The Trustee agrees to give notice to the Owners as soon as practicable upon the occurrence of
an Event of Default under (a) or (b) above and within thirty (30) days of the Trustee’s knowledge of
an event of default under (c) above.
Section 8.2. Remedies of Owners. Upon the occurrence of an Event of Default, the
Trustee may pursue any available remedy at law or in equity to enforce the payment of the principal
of, premium, if any, and interest on the Outstanding Bonds and Parity Bonds, and to enforce any
rights of the Trustee under or with respect to this Indenture, including:
(a) By mandamus or other suit or proceeding at law or in equity to enforce his
rights against the District and any of the members, officers and employees of the District, and
to compel the District or any such members, officers or employees to perform and carry out
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their duties under the Act and their agreements with the Owners as provided in this
Indenture;
(b) By suit in equity to enjoin any actions or things which are unlawful or violate
the rights of the Owners; or
(c) By a suit in equity to require the District and its members, officers and
employees to account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested so to do by the
Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds
and Parity Bonds and if indemnified to its satisfaction, the Trustee shall be obligated to exercise such
one or more of the rights and powers conferred by this Article 8, as the Trustee, being advised by
counsel, shall deem most expedient in the interests of the Owners of the Bonds and Parity Bonds.
No remedy herein conferred upon or reserved to the Trustee or 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 hereunder or now or hereafter existing, at law or in equity or by statute or
otherwise, and may be exercised without exhausting and without regard to any other remedy
conferred by the Act or any other law.
Section 8.3. Application of Revenues and Other Funds After Default. All amounts
received by the Trustee pursuant to any right given or action taken by the Trustee under the
provisions of this Indenture relating to the Bonds and Parity Bonds shall be applied by the Trustee in
the following order upon presentation of the several Bonds and Parity Bonds:
First, to the payment of the fees, costs and expenses of the Trustee in declaring such
Event of Default and in carrying out the provisions of this Article 8, including reasonable
compensation to its agents, attorneys and counsel, and to the payment of all other outstanding
fees and expenses of the Trustee; and
Second, to the payment of the whole amount of interest on and principal of the Bonds
and Parity Bonds then due and unpaid, with interest on overdue installments of principal and
interest to the extent permitted by law at the net effective rate of interest then borne by the
Outstanding Bonds and Parity Bonds; provided, however, that in the event such amounts
shall be insufficient to pay in full the full amount of such interest and principal, then such
amounts shall be applied in the following order of priority:
(a) first to the payment of all installments of interest on the Bonds and Parity
Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing,
(b) second, to the payment of all installments of principal, including Sinking
Fund Payments, of the Bonds and Parity Bonds then due and unpaid on a pro rata basis based
on the total amount then due and owing, and
(c) third, to the payment of interest on overdue installments of principal and
interest on the Bonds and Parity Bonds on a pro rata basis based on the total amount then due
and owing.
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Section 8.4. Power of Trustee to Control Proceedings. In the event that the Trustee,
upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or
otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of
the Owners of twenty-five percent (25%) in aggregate principal amount of the Bonds and Parity
Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests
of the Owners of the Bonds and Parity Bonds, with respect to the continuance, discontinuance,
withdrawal, compromise, settlement or other disposal of such action; provided, however, that the
Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw,
compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time
there has been filed with it a written request signed by the Owners of a majority in aggregate
principal amount of the Outstanding Bonds and Parity Bonds hereunder opposing such
discontinuance, withdrawal, compromise, settlement or other such litigation. Any suit, action or
proceeding which any Owner of Bonds or Parity Bonds shall have the right to bring to enforce any
right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all
Owners of Bonds and Parity Bonds similarly situated and the Trustee is hereby appointed (and the
successive respective Owners of the Bonds and Parity Bonds issued hereunder, by taking and holding
the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney in fact of
the respective Owners of the Bonds and Parity Bonds for the purposes of bringing any such suit,
action or proceeding and to do and perform any and all acts and things for and on behalf of the
respective Owners of the Bonds and Parity Bonds as a class or classes, as may be necessary or
advisable in the opinion of the Trustee as such attorney-in-fact.
Section 8.5. Appointment of Receivers. Upon the occurrence of an Event of Default
hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the
rights of the Trustee and of the Owners of the Bonds and Parity Bonds under this Indenture, the
Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Net
Taxes and other amounts pledged hereunder, pending such proceedings, with such powers as the
court making such appointment(s) shall confer.
Section 8.6. Non-Waiver. Nothing in this Article 8 or in any other provision of this
Indenture, or in the Bonds or the Parity Bonds, shall affect or impair the obligation of the District,
which is absolute and unconditional, to pay the interest on and principal of the Bonds and Parity
Bonds to the respective Owners of the Bonds and Parity Bonds at the respective dates of maturity, as
herein provided, out of the Net Taxes and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Owners shall not
affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any
such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the
Bonds or Parity Bonds to exercise any right or power accruing upon any default shall impair any
such right or power or shall be construed to be a waiver of any such default or an acquiescence
therein; and every power and remedy conferred upon the Trustee or the Owners by the Act or by this
Article 8 may be enforced and exercised from time to time and as often as shall be deemed expedient
by the Trustee or the Owners, as the case may be.
Section 8.7. Limitations on Rights and Remedies of Owners. No Owner of any Bond
or Parity Bond issued hereunder shall have the right to institute any suit, action or proceeding at law
or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have
previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the
Owners of a majority in aggregate principal amount of all the Bonds and Parity Bonds then
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Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore
granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have
tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses
and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused
or omitted to comply with such request for a period of sixty (60) days after such written request shall
have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of Bonds and Parity Bonds of
any remedy hereunder; it being understood and intended that no one or more Owners of Bonds and
Parity Bonds shall have any right in any manner whatever by his or their action to enforce any right
under this Indenture, except in the manner herein provided, and that all proceedings at law or in
equity to enforce any provision of this Indenture shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds and Parity
Bonds.
The right of any Owner of any Bond and Parity Bond to receive payment of the principal of
and interest and premium (if any) on such Bond and Parity Bond as herein provided or to institute
suit for the enforcement of any such payment, shall not be impaired or affected without the written
consent of such Owner, notwithstanding the foregoing provisions of this Section or any other
provision of this Indenture.
Section 8.8. Termination of Proceedings. In case the Trustee shall have proceeded to
enforce any right under this Indenture by the appointment of a receiver or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason, or shall have been
determined adversely, then and in every such case, the District, the Trustee and the Owners shall be
restored to their former positions and rights hereunder, respectively, with regard to the property
subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as if no
such proceedings had been taken.
ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance. If the District shall pay or cause to be paid, or there shall
otherwise be paid, to the Owner of an Outstanding Bond or Parity Bond the interest due thereon and
the principal thereof, at the times and in the manner stipulated in this Indenture or any Supplemental
Indenture, then the Owner of such Bond or Parity Bond shall cease to be entitled to the pledge of Net
Taxes, and, other than as set forth below, all covenants, agreements and other obligations of the
District to the Owner of such Bond or Parity Bond under this Indenture and any Supplemental
Indenture relating to such Parity Bond shall thereupon cease, terminate and become void and be
discharged and satisfied. In the event of a defeasance of all Outstanding Bonds and Parity Bonds
pursuant to this Section, the Trustee shall execute and deliver to the District all such instruments as
may be desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or
deliver to the District’s general fund all money or securities held by it pursuant to this Indenture
which are not required for the payment of the principal of, premium, if any, and interest due on such
Bonds and Parity Bonds.
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Any Outstanding Bond or Parity Bond shall be deemed to have been paid within the meaning
expressed in the first paragraph of this Section if such Bond or Parity Bond is paid in any one or
more of the following ways:
(a) by paying or causing to be paid the principal of, premium, if any, and interest
on such Bond or Parity Bond, as and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money which,
together with the amounts then on deposit in the Special Tax Fund (exclusive of the
Administrative Expenses Account) and available for such purpose, is fully sufficient to pay
the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the
same shall become due and payable; or
(c) by depositing with the Trustee or another escrow bank appointed by the
District, in trust, Federal Securities, in which the District may lawfully invest its money, in
such amount as will be sufficient, together with the interest to accrue thereon and moneys
then on deposit in the Special Tax Fund (exclusive of the Administrative Expenses Account)
and available for such purpose, together with the interest to accrue thereon, to pay and
discharge the principal of, premium, if any, and interest on such Bond or Parity Bond, as and
when the same shall become due and payable.
If paid as provided above, then, at the election of the District, and notwithstanding that any
Outstanding Bonds and Parity Bonds shall not have been surrendered for payment, all obligations of
the District under this Indenture and any Supplemental Indenture with respect to such Bond or Parity
Bond shall cease and terminate, except for the obligation of the Trustee to pay or cause to be paid to
the Owners of any such Bond or Parity Bond not so surrendered and paid, all sums due thereon and
except for the covenants of the District contained in Section 5.2(e) or any covenants in a
Supplemental Indenture relating to compliance with the Code. Notice of such election shall be filed
with the Trustee not less than ten (10) days prior to the proposed defeasance date, or such shorter
period of time as may be acceptable to the Trustee. In connection with a defeasance under (b) or (c)
above, there shall be provided to the District a verification report from an independent nationally
recognized certified public accountant stating its opinion as to the sufficiency of the moneys or
securities deposited with the Trustee or the escrow bank to pay and discharge the principal of,
premium, if any, and interest on all Outstanding Bonds and Parity Bonds to be defeased in
accordance with this Section, as and when the same shall become due and payable, and an opinion of
Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that
the Bonds or Parity Bonds being defeased have been legally defeased in accordance with this
Indenture and any applicable Supplemental Indenture.
Upon a defeasance, the Trustee, upon request of the District, shall release the rights of the
Owners of such Bonds and Parity Bonds which have been defeased under this Indenture and any
Supplemental Indenture and execute and deliver to the District all such instruments as may be
desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder
of all Outstanding Bonds and Parity Bonds, the Trustee shall pay over or deliver to the District any
funds held by the Trustee at the time of a defeasance, which are not required for the purpose of
paying and discharging the principal of or interest on the Bonds and Parity Bonds when due. The
Trustee shall, at the written direction of the District, mail, first class, postage prepaid, a notice to the
Bondowners whose Bonds or Parity Bonds have been defeased, in the form directed by the District,
stating that the defeasance has occurred.
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Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional
Indebtedness. The District may at any time after the issuance and delivery of the Bonds hereunder
issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund
(other than in the Administrative Expenses Account therein) and secured by a lien and charge upon
such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity
Bonds theretofore issued hereunder or under any Supplemental Indenture; provided, however, Parity
Bonds may only be issued for the purpose of refunding all or a portion of the Bonds or any Parity
Bonds then Outstanding, or for financing the Project Costs or other purposes of the District in a
principal amount not to exceed \[$70 million minus par amount of Series 2006A\]. Parity Bonds
issued are subject to the following additional specific conditions, which are hereby made conditions
precedent to the issuance of any such Parity Bonds:
(a) The District shall be in compliance with all covenants set forth in this Indenture and
any Supplemental Indenture then in effect and a certificate of the District to that effect shall have
been filed with the Trustee; provided, however, that Parity Bonds may be issued notwithstanding that
the District is not in compliance with all such covenants so long as immediately following the
issuance of such Parity Bonds the District will be in compliance with all such covenants.
(b) The issuance of such Parity Bonds shall have been duly authorized pursuant to the
Act and all applicable laws, and the issuance of such Parity Bonds shall have been provided for by a
Supplemental Indenture duly adopted by the District which shall specify the following:
(1) the purpose for which such Parity Bonds are to be issued and the fund or
funds into which the proceeds thereof are to be deposited, including, if applicable, a
provision requiring the proceeds of such Parity Bonds to be applied solely for the purpose of
refunding any Outstanding Bonds or Parity Bonds, including payment of all costs and the
funding of all reserves incidental to or connected with such refunding;
(2) the authorized principal amount of such Parity Bonds;
(3) the date and the maturity date or dates of such Parity Bonds; provided that
(i) each maturity date shall fall on an September 1, (ii) all such Parity Bonds of like maturity
shall be identical in all respects, except as to number, and (iii) fixed serial maturities or
Sinking Fund Payments, or any combination thereof, shall be established to provide for the
retirement of all such Parity Bonds on or before their respective maturity dates;
(4) the description of the Parity Bonds, the place of payment thereof and the
procedure for execution and authentication;
(5) the denominations and method of numbering of such Parity Bonds;
(6) the amount and due date of each mandatory Sinking Fund Payment, if any,
for such Parity Bonds;
(7) the amount, if any, to be deposited from the proceeds of such Parity Bonds in
the Reserve Account of the Special Tax Fund to increase the amount therein to the Reserve
Requirement;
(8) the form of such Parity Bonds; and
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(9) such other provisions as are necessary or appropriate and not inconsistent
with this Indenture.
(c) The District shall have received the following documents or money or securities, all
of such documents dated or certified, as the case may be, as of the date of delivery of such Parity
Bonds by the Trustee (unless the Trustee shall accept any of such documents bearing a prior date):
(1) a certified copy of the Supplemental Indenture authorizing the issuance of
such Parity Bonds;
(2) a written request of the District as to the delivery of such Parity Bonds;
(3) an opinion of Bond Counsel and/or general counsel to the District to the
effect that (a) the District has the right and power under the Act to adopt this Indenture and
the Supplemental Indentures relating to such Parity Bonds, and this Indenture and all such
Supplemental Indentures have been duly and lawfully adopted by the District, are in full
force and effect and are valid and binding upon the District and enforceable in accordance
with their terms (except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar laws relating to the enforcement of creditors’ rights); (b) this
Indenture creates the valid pledge which it purports to create of the Net Taxes and other
amounts as provided in this Indenture, subject to the application thereof to the purposes and
on the conditions permitted by this Indenture; and (c) such Parity Bonds are valid and
binding limited obligations of the District, enforceable in accordance with their terms (except
as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar
laws relating to the enforcement of creditors’ rights) and the terms of this Indenture and all
Supplemental Indentures thereto and entitled to the benefits of this Indenture and all such
Supplemental Indentures, and such Parity Bonds have been duly and validly authorized and
issued in accordance with the Act (or other applicable laws) and this Indenture and all such
Supplemental Indentures; and a further opinion of Bond Counsel to the effect that, assuming
compliance by the District with certain tax covenants, the issuance of the Parity Bonds will
not adversely affect the exclusion from gross income for federal income tax purposes of
interest on the Bonds and any Parity Bonds theretofore issued on a tax-exempt basis, or the
exemption from State of California personal income taxation of interest on any Outstanding
Bonds and Parity Bonds theretofore issued;
(4) a certificate of the District containing such statements as may be reasonably
necessary to show compliance with the requirements of this Indenture;
(5) where the entire principal amount of the Parity Bonds are issued to refund the
Bonds or other Parity Bonds, a certificate of an Independent Financial Consultant certifying
that in each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain
Outstanding following the issuance of the Parity Bonds proposed to be issued is less than the
Annual Debt Service on the Bonds and Parity Bonds Outstanding prior to the issuance of
such Parity Bonds;
(6) where the Parity Bonds are being issued other than to refund the Bonds or
other Parity Bonds, a Certificate of the Special Tax Administrator certifying that (i) the
Maximum Special Taxes that may be levied in each Fiscal Year is not less than 110% of the
Annual Debt Service in the Bond Year that begins in such Fiscal Year plus Administrative
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Expenses; and (ii) the Value of District Property is not less than three (3) times the sum of
Direct Debt for District Property plus Overlapping Debt allocable to all property in the
District subject to the Special Tax. For purposes of the foregoing Certificate of Special Tax
Administrator, all calculations shall consider the Parity Bonds proposed to be issued to be
Outstanding. If all or any portion of the Parity Bonds are issued as Escrow Bonds, each time
that amounts are to be released from the escrow account established under a Supplemental
Indenture, as a condition of such release, the Trustee shall have received a Certificate of the
Special Tax Administrator certifying that (x) following such release, the requirements of (i)
and (ii) above will be satisfied, and (y) the amount of Special Taxes levied in such Fiscal
Year and to be levied in the following Fiscal Year, together with amounts on deposit in the
Interest Account, will be sufficient to pay the principal of and interest on all Outstanding
Bonds and Parity Bonds (other than the remaining Escrow Bonds). For purposes of any
Escrow Bonds release test, there will be allocated to the property in the District the largest
principal amount of Bonds that results in a Value of District Property at least three (3) times
the sum of Direct Debt for District Property plus Overlapping Debt allocable to all property
in the District subject to the Special Tax.
(7) such further documents, money and securities as are required by the
provisions of this Indenture and the Supplemental Indenture providing for the issuance of
such Parity Bonds.
ARTICLE X
MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds. All Bonds and Parity Bonds
surrendered to the Trustee for payment upon maturity or for redemption shall be upon payment
therefor, and any Bond or Parity Bond purchased by the District as authorized herein and delivered to
the Trustee for such purpose shall be, cancelled forthwith and shall not be reissued. The Trustee
shall destroy such Bonds and Parity Bonds, as provided by law, and, upon request of the District,
furnish to the District a certificate of such destruction.
Section 10.2. Execution of Documents and Proof of Ownership. Any request, direction,
consent, revocation of consent, or other instrument in writing required or permitted by this Indenture
to be signed or executed by Bondowners may be in any number of concurrent instruments of similar
tenor may be signed or executed by such Owners in person or by their attorneys appointed by an
instrument in writing for that purpose, or by the bank, trust company or other depository for such
Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such
attorney, and of the ownership of Bonds or Parity Bonds shall be sufficient for the purposes of this
Indenture (except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his or her attorney of any such
instrument and of any instrument appointing any such attorney, may be proved by a signature
guarantee of any bank or trust company located within the United States of America. Where any
such instrument is executed by an officer of a corporation or association or a member of a partnership
on behalf of such corporation, association or partnership, such signature guarantee shall also
constitute sufficient proof of his authority.
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(b) As to any Bond or Parity Bond, the person in whose name the same shall be
registered in the Bond Register shall be deemed and regarded as the absolute owner thereof for all
purposes, and payment of or on account of the principal of any such Bond or Parity Bond, and the
interest thereon, shall be made only to or upon the order of the registered Owner thereof or his or her
legal representative. All such payments shall be valid and effectual to satisfy and discharge the
liability upon such Bond or Parity Bond and the interest thereon to the extent of the sum or sums to
be paid. Neither the District nor the Trustee shall be affected by any notice to the contrary.
Nothing contained in this Indenture shall be construed as limiting the Trustee or the District
to such proof, it being intended that the Trustee or the District may accept any other evidence of the
matters herein stated which the Trustee or the District may deem sufficient. Any request or consent
of the Owner of any Bond or Parity Bond shall bind every future Owner of the same Bond or Parity
Bond in respect of anything done or suffered to be done by the Trustee or the District in pursuance of
such request or consent.
Section 10.3. Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the
Outstanding Bonds and Parity Bonds which remain unclaimed for two (2) years after the date when
such Outstanding Bonds or Parity Bonds have become due and payable, if such money was held by
the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with
the Trustee after the date when such Outstanding Bonds or Parity Bonds become due and payable,
shall be repaid by the Trustee to the District, as its absolute property and free from trust, and the
Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look
only to the District for the payment of such Outstanding Bonds or Parity Bonds; provided, however,
that, before being required to make any such payment to the District, the Trustee, at the expense of
the District, shall cause to be mailed by first-class mail, postage prepaid, to the registered Owners of
such Outstanding Bonds or Parity Bonds at their addresses as they appear on the registration books of
the Trustee a notice that said money remains unclaimed and that, after a date named in said notice,
which date shall not be less than thirty (30) days after the date of the mailing of such notice, the
balance of such money then unclaimed will be returned to the District.
Section 10.4. Provisions Constitute Contract. The provisions of this Indenture shall
constitute a contract between the District and the Bondowners and the provisions hereof shall be
construed in accordance with the laws of the State of California.
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be
brought or taken and, should said suit, action or proceeding be abandoned, or be determined
adversely to the Bondowners or the Trustee, then the District, the Trustee and the Bondowners shall
be restored to their former positions, rights and remedies as if such suit, action or proceeding had not
been brought or taken.
After the issuance and delivery of the Bonds this Indenture shall be irrepealable, but shall be
subject to modifications to the extent and in the manner provided in this Indenture, but to no greater
extent and in no other manner.
Section 10.5. Future Contracts. Nothing herein contained shall be deemed to restrict or
prohibit the District from making contracts or creating bonded or other indebtedness payable from a
pledge of the Net Taxes which is subordinate to the pledge hereunder, or which is payable from the
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general fund of the District or from taxes or any source other than the Net Taxes and other amounts
pledged hereunder.
Section 10.6. Further Assurances. The District will adopt, make, execute and deliver any
and all such further resolutions, instruments and assurances as may be reasonably necessary or proper
to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring
and confirming unto the Owners of the Bonds or any Parity Bonds the rights and benefits provided in
this Indenture.
Section 10.7. Severability. If any covenant, agreement or provision, or any portion
thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held
to be unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application
of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances,
shall be deemed severable and shall not be affected thereby, and this Indenture, the Bonds and any
Parity Bonds issued pursuant hereto shall remain valid and the Bondowners shall retain all valid
rights and benefits accorded to them under the laws of the State of California.
Section 10.8. Notices. Any notices required to be given to the District with respect to the
Bonds or this Indenture shall be mailed, first class, postage prepaid, or personally delivered to the
Finance Director-Treasurer of the City of Palm Desert, 73-510 Fred Waring Drive, Palm Desert,
California 92260, and all notices to the Trustee in its capacity as Trustee shall be mailed, first class,
postage prepaid, or personally delivered to the Trustee, Wells Fargo Bank, National Association, 707
th
Wilshire Blvd., 17 Floor, Los Angeles, California 90071, Attention: _________________.
(Remainder of Page Intentionally Left Blank)
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IN WITNESS WHEREOF, CITY OF PALM DESERT COMMUNITY FACILITIES
DISTRICT NO. 2005-1 (UNIVERSITY PARK) has caused this Bond Indenture to be signed by the
Mayor of the City of Palm Desert, acting as the legislative body of the District and attested thereto by
the Deputy City Clerk of the City of Palm Desert, and Wells Fargo Bank, National Association, in
token of its acceptance of the trust created hereunder, has caused this Bond Indenture to be signed in
its corporate name by its officer identified below, all as of the day and year first above written.
CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 2005-1 (UNIVERSITY
PARK)
By:
Mayor of the City of Palm Desert, California
ATTEST:
Deputy City Clerk of the City of Palm Desert,
California
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By:
Its: Authorized Officer
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EXHIBIT A
FORM OF SPECIAL TAX BOND, SERIES 2006A
Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New
York corporation (“DTC”), to the District or the Trustee for registration of transfer, exchange, or
payment, and any Bond 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.
R-__ $___________
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
SPECIAL TAX BOND, SERIES 2006A
INTEREST RATE MATURITY DATE DATED DATE CUSIP
____% September 1, ____ April ___, 2005 ___________
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: _____________________________________ DOLLARS
CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK) (the “District”) which was formed by the City of Palm Desert (the “City”)
and is situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby
promises to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the
Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless
redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay
interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next
preceding the date of authentication hereof, unless (i) the date of authentication is an Interest
Payment Date in which event interest shall be payable from such date of authentication, (ii) the date
of authentication is after a Record Date (as hereinafter defined) but prior to the immediately
succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment
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Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to
the close of business on the first Record Date in which event interest shall be payable from the Dated
Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond
interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to
which the interest has been paid or made available for payment or, if no interest has been paid or
made available for payment, interest on this Bond shall be payable from the Dated Date set forth
above. Interest will be paid semiannually on March 1 and September 1 (each, an “Interest Payment
Date”), commencing September 1, 2006, at the Interest Rate set forth above, until the Principal
Amount hereof is paid or made available for payment.
The principal of and premium, if any, on this Bond are payable to the Registered Owner
hereof in lawful money of the United States of America upon presentation and surrender of this Bond
at the Principal Office of the Trustee (as such term is defined in the Bond Indenture), initially Wells
Fargo Bank, National Association (the “Trustee”). Interest on this Bond shall be paid by check of the
Trustee mailed by first class mail, postage prepaid, or in certain circumstances described in the
Indenture by wire transfer to an account within the United States of America, to the Registered
Owner hereof as of the close of business on the fifteenth day of the month preceding the month in
which the Interest Payment Date occurs (the “Record Date”) at such Registered Owner’s address as it
appears on the registration books maintained by the Trustee.
This Bond is one of a duly authorized issue of “City of Palm Desert Community Facilities
District No. 2005-1 (University Park) Special Tax Bonds, Series 2006A” (the “Bonds”) issued in the
aggregate principal amount of $____________ pursuant to the Mello-Roos Community Facilities Act
of 1982, as amended, being Sections 53311, et seq., of the California Government Code (the “Act”)
for the purpose of financing certain public facilities, funding certain capitalized interest and a reserve
account, and paying certain costs related to the issuance of the Bonds. The issuance of the Bonds
and the terms and conditions thereof are provided for by a resolution adopted by the City Council of
the City acting in its capacity as the legislative body of the District (the “Legislative Body”) on
____________, 2006 and a Bond Indenture dated as of April 1, 2006, by and between the District
and the Trustee executed in connection therewith (the “Indenture”), and this reference incorporates
the Indenture herein, and by acceptance hereof the Registered Owner of this Bond assents to said
terms and conditions. The Indenture is executed under and this Bond is issued under, and both are to
be construed in accordance with, the laws of the State of California.
Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this
Bond are payable solely from the portion of the annual special taxes authorized under the Act to be
levied and collected within the District (the “Special Taxes”) and certain other amounts pledged to
the repayment of the Bonds as set forth in the Indenture. Any amounts for the payment hereof shall
be limited to the Special Taxes pledged and collected or foreclosure proceeds received following a
default in payment of the Special Taxes and other amounts deposited to the Special Tax Fund (other
than the Administrative Expenses Account therein) established under the Indenture, except to the
extent that other provision for payment has been made by the Legislative Body, as may be permitted
by law. The District has covenanted for the benefit of the owners of the Bonds that under certain
circumstances described in the Indenture it will commence and diligently pursue to completion
foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment
of principal and interest on the Bonds.
The Bonds maturing on or after September 1, 20__ may be redeemed, at the option of the
District, from any source of funds on any Interest Payment Date on or after September 1, 20__, in
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whole, or in part from such maturities as are selected by the District and by lot within a maturity, at
the following redemption prices expressed as a percentage of the principal amount to be redeemed,
together with accrued interest to the date of redemption:
Redemption Dates Redemption Prices
September 1, 20__ and March 1, 20__ %
September 1, 20__ and March 1, 20__
September 1, 20__ and thereafter
The Bonds maturing on September 1, 20__ and September 1, 20__ (the “Term Bonds”) shall
be called before maturity and redeemed, from Sinking Fund Payments deposited into the Redemption
Account, on September 1, 20__ and September 1, 20__, respectively, and on each September 1
thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth in
the Bond Indenture at a redemption price equal to the principal amount thereof, plus accrued interest
to the redemption date, without premium.
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis
among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from
Prepayments of Special Taxes deposited to the Redemption Account, plus amounts transferred from
the Reserve Account in connection with such transfers, at the following redemption prices expressed
as a percentage of the principal amount to be redeemed, together with accrued interest to the
redemption date:
Redemption Dates Redemption Prices
Interest Payment Dates through March 1, 20__ %
September 1, 20__ and March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20__ and thereafter
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the
registered owners thereof not less than thirty (30) nor more than forty-five (45) days prior to the
redemption date by first class mail, postage prepaid, to the addresses set forth in the registration
books. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein
will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for
redemption will cease to accrue interest on the specified redemption date, provided that funds for the
redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners
of such Bonds shall have no rights except to receive payment of the redemption price upon the
surrender of the Bonds.
This Bond shall be registered in the name of the Registered Owner hereof, as to both
principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the
absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of $5,000 or any
integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of
other authorized denominations of the same issue and maturity, all as more fully set forth in the
Indenture. This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to
A-3
P6401.1032\\871196.4
the limitations and upon payment of the charges provided in the Indenture, upon surrender and
cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or
denominations for the same aggregate principal amount of the same issue and maturity will be issued
to the transferee in exchange therefor.
The Trustee shall not be required to register transfers or make exchanges of (i) any Bonds for
a period of fifteen (15) days next preceding any selection of the Bonds to be redeemed, or (ii) any
Bonds chosen for redemption.
The rights and obligations of the District and of the registered owners of the Bonds may be
amended at any time, and in certain cases without notice to or the consent of the registered owners, to
the extent and upon the terms provided in the Indenture.
THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OF PALM
DESERT OR OF THE DISTRICT FOR WHICH THE CITY OF PALM DESERT OR THE
DISTRICT IS OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED,
GENERAL OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED
HEREIN. THE BONDS ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE FROM
THE PORTION OF THE SPECIAL TAXES AND OTHER AMOUNTS PLEDGED UNDER THE
INDENTURE BUT ARE NOT A DEBT OF THE CITY OF PALM DESERT, THE STATE OF
CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF
ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been dated and signed by the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required by law to exist, happen and be performed precedent to and in the issuance of this
Bond do exist, have happened and have been performed in due time, form and manner as required by
law, and that the amount of this Bond, together with all other indebtedness of the District, does not
exceed any debt limit prescribed by the laws or Constitution of the State of California.
A-4
P6401.1032\\871196.4
IN WITNESS WHEREOF, City of Palm Desert Community Facilities District No. 2005-1
(University Park) has caused this Bond to be dated as of _________, 2006, to be signed on behalf of
the District by the Mayor of the City by his manual signature and attested by the manual signature of
the City Clerk of the City.
CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
Mayor of the City of Palm Desert, California
ATTEST:
City Clerk of
the City of Palm Desert, California
A-5
P6401.1032\\871196.4
\[FORM OF TRUSTEE’S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION\]
This is one of the Bonds described in the within-mentioned Indenture which has been
registered on the Bond registration books.
Dated: ______________ WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By:
Its: Authorized Signatory
\[FORM OF ASSIGNMENT\]
For value received the undersigned hereby sell(s), assign(s) and transfer(s) unto
(Name, Address, and Tax Identification or Social Security Number of Assignee)
the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s)
_________________________________________________________________________ attorney,
to transfer the same on the Registration Books of the Trustee with full power of substitution in the
premises.
Dated:
Signature Guaranteed:
Note: Signature must be guaranteed by a
Note: The signature(s) on this Assignment
member of an institution which is a participant
must correspond with the name(s) as
in the Securities Transfer Agent Medallion
written on the face of the within Bond in
Program (STAMP) or other similar program.
every particular without alteration or
enlargement or any change whatsoever.
A-6
P6401.1032\\871196.4
EXHIBIT B
FORM OF REQUISITION FOR DISBURSEMENT OF PROJECT COSTS
(CITY FACILITIES FUND)
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
Wells Fargo Bank, National Association, as Trustee, is hereby requested to pay from the
following account or subaccount of the City of Palm Desert Community Facilities District No. 2005-
1 (University Park) City Facilities Fund, established by the Bond Indenture between the Trustee and
City of Palm Desert Community Facilities District No. 2005-1 (University Park), dated as of April 1,
2006, the amount specified and to the payee named below for payment of the Project Costs set forth
in Attachment No. 1 hereto:
Account/Subaccount (circle one):
\[Backbone Infrastructure Account\]
\[Gerald Ford (South) Landscaping Subaccount of the Backbone
Infrastructure Account\]
\[DW 237 Subaccount (City Facilities) of the Other Facilities Account\]
\[PDFC Subaccount (City Facilities) of the Other Facilities Account\]
\[UV Subaccount (City Facilities) of the Other Facilities Account\]
\[Shaw Subaccount (City Facilities) of the Other Facilities Account\]
\[S&C Subaccount (City Facilities) of the Other Facilities Account\]
Payee:
Address:
Purpose:
Amount: $
The amount is due and payable under purchase order, contract or other authorization and has
not formed the basis of any prior request for payment. The conditions for the release of this amount
from the City of Palm Desert Community Facilities District No. 2005-1 (University Park) City
Facilities Fund, including those conditions in Section 3.9(b) of the Indenture have been satisfied, and
sufficient moneys remain in the City of Palm Desert Community Facilities District No. 2005-1
(University Park) City Facilities Fund to pay all remaining costs of acquisition, construction and
financing of the portion of the Project to be financed with such amounts.
There has not been filed with nor served upon the District notice of any lien, right to lien or
attachment upon, or stop notice or claim affecting the right to receive payment of the amount
B-1
P6401.1032\\871196.4
specified above which has not been released or will not be released simultaneously with the payment
of such amount, other than materialmen’s or mechanic’s liens accruing by mere operation of law.
Dated: CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 2005-1 (UNIVERSITY
PARK)
By:
Authorized Representative
B-2
P6401.1032\\871196.4
ATTACHMENT NO. 1
(CITY FACILITIES FUND)
\[Insert Description of Project Costs.\]
B-A-1
P6401.1032\\871196.4
EXHIBIT C
FORM OF REQUISITION FOR DISBURSEMENT OF PROJECT COSTS
(CVWD FACILITIES FUND)
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
Wells Fargo Bank, National Association, as Trustee, is hereby requested to pay from the
following account or subaccount of the City of Palm Desert Community Facilities District No. 2005-
1 (University Park) CVWD Facilities Fund, established by the Bond Indenture between the Trustee
and City of Palm Desert Community Facilities District No. 2005-1 (University Park), dated as of
April 1, 2006, the amount specified and to the payee named below for payment of the Project Costs
set forth in Attachment No. 1 hereto:
Account/Subaccount (circle one):
\[Backbone Infrastructure Account\]
\[DW 237 Subaccount (CVWD Facilities) of the Other Facilities Account\]
\[PDFC Subaccount (CVWD Facilities) of the Other Facilities Account\]
\[UV Subaccount (CVWD Facilities) of the Other Facilities Account\]
\[Shaw Subaccount (CVWD Facilities) of the Other Facilities Account\]
\[S&C Subaccount (CVWD Facilities) of the Other Facilities Account\]
Payee:
Address:
Purpose:
Amount: $
The amount is due and payable under purchase order, contract or other authorization and has
not formed the basis of any prior request for payment. The conditions for the release of this amount
from the City of Palm Desert Community Facilities District No. 2005-1 (University Park) CVWD
Facilities Fund, including those conditions in Section 3.10(a) of the Indenture have been satisfied,
and sufficient moneys remain in the City of Palm Desert Community Facilities District No. 2005-1
(University Park) CVWD Facilities Fund to pay all remaining costs of acquisition, construction and
financing of the portion of the Project to be financed with such amounts.
C-1
P6401.1032\\871196.4
There has not been filed with nor served upon the District notice of any lien, right to lien or
attachment upon, or stop notice or claim affecting the right to receive payment of the amount
specified above which has not been released or will not be released simultaneously with the payment
of such amount, other than materialmen’s or mechanic’s liens accruing by mere operation of law.
Dated: CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 2005-1 (UNIVERSITY
PARK)
By:
Authorized Representative
C-2
P6401.1032\\871196.4
ATTACHMENT NO. 1
(CVWD FACILITIES FUND)
\[Insert Description of Project Costs.\]
C-A-1
EXHIBIT D
FORM OF CERTIFICATE OF THE DISTRICT
REQUESTING TRANSFER OF MONIES FOR PROJECT COSTS
(BACKBONE INFRASTRUCTURE)
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
Wells Fargo Bank, National Association, as Trustee, is hereby requested to transfer monies
between the accounts of the City of Palm Desert Community Facilities District No. 2005-1
(University Park) (the “District”), established by the Bond Indenture dated as of April 1, 2006
between the Trustee and the District as follows:
TRANSFER AMOUNT: $__________________________ of the monies
(specify dollar amount or “all”)
FROM: the Backbone Infrastructure Account of the
______________________________________________
(specify City Facilities Fund or CVWD Facilities Fund)
(but excluding from such transfer any monies on deposit in the Gerald Ford
(South) Landscaping Subaccount therein)
TO: the Backbone Infrastructure Account of the
______________________________________________.
(specify City Facilities Fund or CVWD Facilities Fund)
The conditions for the transfer of this amount, including those conditions in Section 3.9(c) or
3.10(b) of the Indenture, as applicable, have been satisfied. The written request of the Developer for
such transfer of monies is attached as Attachment No. 1 hereto.
Dated: ________________________ CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
By:______________________________
Authorized Representative
D-1
ATTACHMENT NO. 1
FORM OF CERTIFICATE OF THE DISTRICT
REQUESTING TRANSFER OF MONIES FOR PROJECT COSTS
(BACKBONE INFRASTRUCTURE)
\[Attach Developer’s REQUEST FOR TRANSFER OF MONIES – Backbone Infrastructure.\]
D-A-1
EXHIBIT E
FORM OF CERTIFICATE OF THE DISTRICT
REQUESTING TRANSFER OF MONIES FOR PROJECT COSTS
(IN-TRACT DEVELOPER SUBACCOUNTS)
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
Wells Fargo Bank, National Association, as Trustee, is hereby requested to transfer monies
between the accounts of the City of Palm Desert Community Facilities District No. 2005-1
(University Park) (the “District”), established by the Bond Indenture dated as of April 1, 2006
between the Trustee and the District as follows:
TRANSFER AMOUNT: $__________________________ of the monies
(specify dollar amount or “all”)
FROM: \[(circle one:) DW 237 / PDFC / UV / SHAW / S&C \] Subaccount of the Other
Facilities Account of the
______________________________________________
(specify City Facilities Fund or CVWD Facilities Fund)
TO: \[(circle one:) DW 237 / PDFC / UV / SHAW / S&C \] Subaccount of the Other
Facilities Account of the
______________________________________________.
(specify City Facilities Fund or CVWD Facilities Fund)
**NOTE: TRANSFERS MAY ONLY BE MADE BETWEEN ACCOUNTS BEARING THE SAME ACCOUNT
NAME. E.G., A “DW 237” SUBACCOUNT MAY ONLY TRANSFER TO ANOTHER “DW 237” SUBACCOUNT.
The conditions for the transfer of this amount, including those conditions in Section 3.9(d) or
3.10(c) of the Indenture, as applicable, have been satisfied. The written request of the Developer for
such transfer of monies is attached as Attachment No. 1 hereto.
Dated: ________________________ CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
By:______________________________
Authorized Representative
E-1
ATTACHMENT NO. 1
FORM OF CERTIFICATE OF THE DISTRICT
REQUESTING TRANSFER OF MONIES FOR PROJECT COSTS
(DEVELOPER SUBACCOUNTS)
\[Attach Developer’s REQUEST FOR TRANSFER OF MONIES – Developer Subaccounts.\]
E-A-1
EXHIBIT F
FORM OF CERTIFICATE OF THE DISTRICT
REQUESTING TRANSFER OF MONIES FOR PROJECT COSTS
(GERALD FORD (SOUTH) LANDSCAPING SUBACCOUNT)
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
Wells Fargo Bank, National Association, as Trustee, is hereby requested to transfer monies
between the accounts of the City of Palm Desert Community Facilities District No. 2005-1
(University Park) (the “District”), established by the Bond Indenture dated as of April 1, 2006
between the Trustee and the District as follows:
TRANSFER AMOUNT: $__________________________ of the monies
(specify dollar amount or “all”)
FROM: Gerald Ford (South) Landscaping Subaccount of the Backbone Infrastructure
Account of the City Facilities Fund
TO: Backbone Infrastructure Account of the City Facilities Fund
The conditions for the transfer of this amount, including those conditions in Section 3.9(e)
have been satisfied. The written request of the Developer for such transfer of monies is attached as
Attachment No. 1 hereto.
Dated: ________________________ CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
By:______________________________
Authorized Representative
F-1
ATTACHMENT NO. 1
FORM OF CERTIFICATE OF THE DISTRICT
REQUESTING TRANSFER OF MONIES FOR PROJECT COSTS
(GERALD FORD (SOUTH) LANDSCAPING SUBACCOUNT)
\[Attach Developer’s REQUEST FOR TRANSFER OF MONIES – Gerald Ford
(South) Landscaping Subaccount.\]
F-A-1
Jones Hall Draft 2/27/06
$
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(University Park)
SPECIAL TAX BONDS
SERIES 2006A
BOND PURCHASE AGREEMENT
��:
City of Palm Desert
Community Facilities District No. 2005-1
73-510 Fred Waring Drive
Palm Desert, Califomia 92260-2578
Ladies and Gentlemen:
The undersigned Stinson Securities, LLC on behalf of itself and Kinsell Newcomb 8�
DeDios, Inc. (together the "Underwriter") offers to enter into this Purchase Agreement (this
"Purchase Agreement") with the City of Palm Desert (the °City") on behalf of City of Palm Desert
Community Facilities District No. 2005-1 (University Park) (the "District"), which upon
acceptance will be binding upon the Underwriter, the City and the District. The agreement of
the Underwriter to purchase the Bonds (as hereinafter defined) is contingent upon the City
satisfying all of the obligations imposed upon it under this Purchase Agreement. This offer is
made subject to the City's acceptance by the execution of this Purchase Agreement and its
delivery to the Underwriter 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. All capitalized terms used herein, which are not otherwise
defined, shall have the meaning provided for such terms in the Indenture (as hereinafter
defined).
Section 1. Purchase, Sale and Delivery of the Bonds.
(a) Subject to the terms and conditions, and in reliance upon the representations,
warranties and agreements set forth herein, 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
$ aggregate principal amount of the City of Palm Desert Community Facilities
District No. 2005-1 (University Park), Special Tax Bonds, Series 2006A (the "Bonds"), dated the
Closing Date (as hereinafter defined), bearing, interest at the rates and maturing on the dates
and in the principal amounts set forth in Exhibit A hereto. The purchase price for the Bonds
shall be $ (representing the principal of amount of the Bonds, plus an aggregate
original issue premium of $__ , less an underwriter's discount of
$ ). The Bonds shall be substantially in the form described in, shall be issued
and secured under the provisions of, and shall be payable from the Special Taxes as provided
in the Indenture, dated as of April 1, 2006, (the "Indenture"), between the City and Wells Fargo
Bank, National Association, as fiscal agent (the "Trustee'), the Official Statement (as hereinafter
-1-
defined), and the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et
seq. of the California Government Code (the "Act").
(b) Pursuant to the authorization of the City, the Underwriter has distributed copies
of the Preliminary Official Statement, dated , 2006, relating to the Bonds, which,
together with the cover page and appendices thereto, is herein called the "Preliminary Official
Statement." By its acceptance of this Purchase Agreement, the City hereby ratifies the use by
the Underwriter of the Preliminary Official Statement; and the City agrees to execute a final
official statement relating to the Bonds (the "Official Statement°) which will consist of the
Preliminary Official Statement with such changes as may be made thereto, with the approval of
Richards, Watson & Gershon, A Professional Corporation, the City's Bond Counsel (herein
called "Bond Counsel") and the Underwriter, and to provide copies thereof to the Underwriter as
set forth in Section 2(n) hereof. The City hereby authorizes the Underwriter to use and promptly
distribute, in connection with the offer and sale of the 8onds, the Preliminary Official Statement,
the Official Statement and any supplement or amendment thereto. The City further authorizes
the Underwriter to use and distribute, in connection with the Purchase Agreement and all
information contained herein, and all other documents, certificates and statements fumished by
or on behalf of the City or the District to the Underwriter in connection with the transactions
contemplated by this Purchase Agreement.
(c} Except as the Underwriter and the City may otherwise agree, at 8:00 A.M.
California time, on , 2006 (the "Closing Date"), the City will deliver to the
Underwriter, at the offices of Richards, Watson & Gershon, A Professional Corporation, Los
Angeles, California, or at such other location as may be mutually agreed upon by the
Unden�vriter and the City, the documents hereinafter mentioned and the City will deliver to the
Underwriter at the offices of The Depository Trust Company ("DTC") in New York, New York,
the Bonds, in definitive form (all Bonds bearing CUSIP numbers), duly executed by the City and
authenticated by the Trustee in the manner provided for ih the Indenture and the Act, 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 funds (such delivery and payment being
herein referred to as the "Closing"). The Bonds shall be made available to the Underwriter for
inspection not later than two Business Days prior to the Closing Date. The Bonds shall be in
fully registered book-entry form (which may be typewritten) and shall be registered in the name
of Cede 8� Co., as nominee of DTC.
Section 2. Representations. Warranties and Aareements of the Citv. The City
represents, warrants to, covenants and agrees with, the Underwriter that:
(a) The District is a community facilities district duly organized and validly existing
under the Constitution and laws of the State of California, and the City, acting on behalf of the
District, has, and at the Closing Date will have, full legal right, power (i) to enter into, execute
and deliver under this Purchase Agreement, the Indenture, the Continuing Disclosure
Agreement, dated as of the date of Closing (the "Issuer Continuing Disclosure AgreemenY'), by
and among the City, the Trustee and MuniFinancial, as dissemination agent (the "Dissemination
Agent"), and the Official Statement and (ii) to carry out, give effect to and consummate the
transactions contemplated hereby and thereby.
(b) The City has complied, and will at the Closing Date be in compliance, in all
respects with the Indenture, the Issuer Continuing Disclosure Agreement, the Act and this
Purchase Agreement.
(c) The City Council has duly and validly: (i) made all the necessary findings and
determinations required under the Act in connection with the formation of the District and the
issuance of the Bonds, (ii) approved and authorized the execution and delivery of the Indenture,
the Bonds, the Issuer Continuing Disclosure Agreement, this Purchase Agreement and the
Official Statement and approved the distribution of the Preliminary Official Statement, and
(ii) authorized and approved the performance by the City of its obligations contained in, and the
taking of any and all action as may be necessary to carry out, give effect to and consummate
the transactions contemplated by, each of such documents.
(d) Except as described in the Preliminary Official Statement, neither the City nor the
District is, in any respect material to the transactions referred to herein or contemplated hereby,
in breach of or in default under, any law or administrative rule or regulation of the State of
California, the United States of America, or of any department, division, agency or
instrumentality of either thereof, or under any applicable court or administrative decree or order,
or under any loan agreement, note, resolution, indenture, contract, agreement or other
instrument to which the City or the District is a party or is otherwise subject or bound, and the
performance by the City on behalf of the District of its obligations under the Indenture, the
Bonds, the Issuer Continuing Disclosure Agreement and this Purchase Agreement and any
other instruments contemplated by any of such documents, and compliance with the provisions
of each thereof, will not conflict with or constiiute a breach of or default under any applicable law
or administrative rule or regulation of the State of California, the United States of America, or of
any department, division, agency or instrumentality of either thereof, or under any applicable
court or administrative decree or order, or under any loan agreement, note, resolution,
indenture, contract, agreement or other instrument to which the City or the District is a party or
is otherwise subject or bound, in any manner which would materially and adversely affect the
performance by the City on behalf of the District of its obligations under the Indenture, the
Bonds, the Issuer Continuing Disclosure Agreement or this Purchase Agreement.
(e) Except as may be required under the "blue sky" or other securities laws of any
jurisdiction, all approvals, consents, authorizations, elections and orders of, or filings or
registrations with, any governmental authority, board, agency or commission having jurisdiction
which would constitute a condition precedent to, or the absence of which would materially
adversely affect the performance by the City on behalf of the District of its obligations hereunder
or under the Indenture, the Bonds or the lssuer Continuing Disclosure Agreement have been or
will be obtained at the Closing Date and are or will be at the Closing Date in full force and effect.
(f) The Indenture creates a valid pledge of, first lien upon and security interest in,
the Special Tax Revenues and the amounts in the Special Tax Fund, the Bond Fund and the
Reserve Account established pursuant to the Indenture, on the terms and conditions set forth in
the Indenture.
(g) As of the date hereof the information in the Preliminary Official Statement is true,
correct and complete in all material respects and does not and, on the Closing Date the
information in the Official Statement will not, contain any untrue statement of a material fact or
omit 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.
(h) If after the date of this Purchase Agreement and until ninety (90) days after the
End of the Underwriting Period (as hereinafter defined), any event shall occur, of which the City
has notice, as a result of which it may be necessary to supplement the Official Statement in
order to make the statements therein, in the light of the circumstances existing at such time, not
�
misleading, the City shall forthwith notify the Undenivriter of any such event of which it has
knowledge and, if in the opinion of the Underwriter and the City Manager on behalf of the
District, such event requires an amendment or supplement to the Official Statement, the City will
at its own expense amend or supplement the Official Statement in a form and manner jointly
approved by the City and the Underwriter so that the statements therein as so amended or
supplemented will not be misleading in the light or the circumstances existing at such time and
the City will promptly furnish to the Underwriter a reasonable number of copies of such
amendment or supplement. As used herein the term "End of the Underwriting Period" means
the later of such time as (i) the City on behalf of the District delivers the Bonds to the
Underwriter, or (ii) the Underwriter do not retain an unsold balance of the Bonds for sale to the
pubtic. Unless the Underwriter give notice to the contrary, the End of the Underwriting Period
shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be
written notice delivered to the City at or prior to the Closing Date, and shall specify a date (other
than the Closing Date) to be deemed the "End of the Unden�vriting Period."
(i) Except as disclosed in the Preliminary Official Statement, no action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory
agency or public board or body to which the City or the District is a party and has been served
with a summons or other notice thereof, is pending, or to the knowledge of the City threatened,
in any way affecting the existence of the District, the existence of the City or the titles of its
officers to their respective offices or seeking to restrain or to enjoin the issuance, sale or
delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture,
the collection or application of the Special Taxes pledged or to be pledged to pay the principal
of, and interest on, the Bonds, or the pledge thereof, or the collection or application of the
Special Taxes pledged or to be pledged to pay the principal of, and interest on, the Bonds, or
the pledge thereof, or in any way contesting or affecting the validity or enforceability of the
Indenture, the Bonds, the Issuer Continuing Disclosure Agreement or this Purchase Agreement,
any action of the City or the District contemplated by any of such documents, or in any way
contesting the completeness or accuracy of the Preliminary Official Statement or the Official
Statement or the powers of the City or the District with respect to the Indenture, the Bonds, the
Issuer Continuing Disclosure Agreement or this Purchase Agreement or any action of the City or
the District contemplated by any of such documents, or which contests the exclusion from gross
income for federal income tax purposes of interest paid on the Bonds or the exemption of
interest paid on the Bonds from State of California personal income taxation.
(j) The City will furnish such information, execute such instruments and take such
other action in cooperation with the Underwriter as the Underwriter may reasonably request in
order for the Underwriter to qualify the Bonds for offer and sale under the "blue sky" or other
securities laws and regulations of such states and other jurisdictions of the United States of
America as the Underwriter may designate; provided, however, that neither the City nor the
District shall be required to register as a dealer or broker of securities or to consent to service of
process or qualify to do business in any jurisdiction where it is not now so subject. It is
understood that such "blue sky" registration is the sole responsibility of the Underwriter.
(k) Any certificate signed by any authorized officer or employee of the City
authorized to do so shall be deemed a representation and warranty by the City on behalf of the
District as to the statements made therein.
(I} The City on behalf of the District will apply the proceeds of the Bonds in
accordance with the Indenture.
a
(m) Until such time as moneys have been set aside in an amount sufficient to pay all
then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity,
plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if
redeemed prior to maturity, the City on behalf of the District will faithfully perform and abide by
all of the covenants, undertakings and provisions contained in the Indenture.
(n) The Preliminary Official Statement heretofore delivered to the Underwriter has
been deemed final by the City as of its date, except for the omission of such information as is
permitted to be omitted in accordance with Rule 15c2-12 promulgated under the Securities
Exchange Act of 1934 ("Rule 15c2-12n). The City hereby covenants and agrees that, within
seven (7) business days from the date hereof, or upon reasonable written notice from the
Underwriter within sufficient time to accompany any confirmation requesting payment from any
customers of the Underwriter, the City shall cause a final printed form of the Official Statement
to be delivered to the Underwriter in sufficient quantity to comply with Rule 15c2-12 and the
applicable rules of the Municipal Securities Rulemaking Board.
(o) Except as disclosed in the Official Statement, to the best of the City's knowledge,
no other public debt secured by a tax or assessment levied by the City on the land in the District
is in the process of being authorized and no assessment districts or community facilities district
have been or are in the process of being formed by the city which include any portion of the land
within the District.
The execution and delivery of this Purchase Agreement by the City on behalf of the
District shall constitute a representation to the Underwriter that the representations and
warranties contained in the Section 2 are true as of the date hereof.
Section 3. Conditions to the Oblipation of the Underwriter. The obligation 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, to the accuracy in all material respects of the
statements of the officer and other officials of the City made in any certificates or other
documents furnished pursuant to the provisions hereof, to the performance by the City on behalf
of the District of its obligations to be performed hereunder at or prior to the Closing Date and to
the following conditions:
(a) At the Closing Date, the Indenture, the Issuer Continuing Disclosure
Agreement, the Continuing Disclosure Agreement (Developer), by and among
and MuniFinancial, as dissemination agent and dated as of the
date of Closing (the "Developer Continuing Disclosure Agreement," and together with the Issuer
Continuing Disclosure Agreement, the "Continuing Disclosure Agreements") and this Purchase
Agreement 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, by this Purchase Agreement, all such actions as, in the
opinion of Bond Counsel, shall be necessary and appropriate.
(b) At the Closing Date, except as was described in the Preliminary Official
Statement, neither the City nor the District shall be, in any respect material to the transactions
referred to herein or contemplated hereby, in breach of or in default under, any iaw or
administrative rule or regulation of the State of California, the United States of America, or of
any department, division, agency or instrumentality of either thereof, or under any applicable
court or administrative decree or order, or under any loan agreement, note, resolution,
indenture, contract, agreement or other instrument to which the City or the District is a party or
is otherwise subject or bound, and the performance by the City on behalf of the District of its
obligations under the Bonds, the Indenture, the Issuer Continuing Disclosure Agreement and
this Purchase Agreement, and any other instruments contemplated by any of such documents,
and compliance with the provisions of each thereof, will not conflict with or constitute a breach of
or default under any applicable law or administrative rule or regulation of the State of California,
the United States of America, or of any department, division, agency or instrumentality of either
thereof, or under any applicable court or administrative decree or order, or under any loan
agreement, note, resolution, indenture, contract, agreement or other instrument to which the
City or the District is a party or is otherwise subject or bound, in any manner which would
materially and adversely affect the performance by the City on behalf of the District of its
obligations under the Bonds, Indenture, the Issuer Continuing Disclosure Agreement and this
Purchase Agreement.
(c} At the Closing Date, except as may be required under the "blue sky" or
other securities laws of any jurisdiction, all approvals, consents, authorizations, elections and
orders of, or filings or registrations with, any governmental authority, board, agency or
commission having jurisdiction which would constitute a condition precedent to, or the absence
of which would materially adversely affect, the performance by the City on behalf of the District
of its obligations hereunder, and the Indenture, the Bonds or the Issuer Continuing Disclosure
Agreement will have been obtained and will be in full force and effect.
(d) The information contained in the Official Statement is, as of the Closing
Date and as of the date of any supplement or amendment thereto pursuant to Section 2(h)
hereof, true, correct and complete in all material respects and does not, as of the Closing Date
or as of the date of any supplement or amendment thereto pursuant to Section 2(h) hereof,
contain any untrue statement of a material fact or omit 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.
(e) Between the date hereof and the Closing Date, the market price or
marketability, at the initial offering prices set forth on the inside cover page of the Official
Statement, of the Bonds shall not have been materially adversely affected (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 introduced in or enacted (or resolution passed) by the
Congress of the United States of America or recommended to the Congress by
the President of the United States, the Department of the Treasury, the lnternal
Revenue Service, or any member of Congress, or favorably reported for passage
to either House of Congress by any committee of such House to which such
legisfation had been referred for consideration, 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 reiease or other form of notice issued or
made by or on behalf of the Treasury Department of the United States of
America or the Internal Revenue Service, with the purpose or effect, directly or
indirectfy, of imposing federai income taxation upon such interest as wouid be
received by any owners of the Bonds;
F
(2) Legislation introduced in or enacted (or resolution passed) by the
Congress 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 Indenture 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,
including any or all underlying 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;
(3) A general suspension of trading in securities on the New York
Stock Exchange, or a general banking moratorium declared by Federal, State of
New York or State of Califomia officials authorized to do so;
(4) The introduction, proposai or enactment of any amendment to the
Federal or California Constitution or any action by any Federal or California court,
legislative body, regulatory body or any other governmental body materially
adversely affecting the tax status of the District, its property, income, securities
(or interest thereon), the validity or enforceability of the Special Taxes, as
contemplated by the Indenture and the Official Statement;
(5) Any event occurring, or information becoming known which, in the
judgment of the Underwriter, makes untrue in any material respect any statement
or information contained in the Preliminary Official Statement or in the Official
Statement, or has the effect that the Preliminary Official Statement or the Official
Statement 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; or
(6) There shall have occurred any outbreak of hostilities or other
local, national or international calamity or crisis or the sscalating of any hostilities,
calamity or crisis, the effect of which on the financial markets of the United States
of America, in the reasonable judgment of the Underwriter, is such as to
materially and adversely affect (A) the market price or the marketability of the
Bonds, or (B) the ability of the Underwriter to enforce contracts for the sale of the
Bonds.
(f) At or prior to the Closing Date, the Underwriter shall have received two
counterpart originals or certified copies of the following documents, in each case satisfactory in
form and substance to the Underwriter:
(1) The resolution authorizing the sale of the Bonds adopted on ,
2006 by the City Council, acting in its capacity as legislative body of the District (the
"Resolution"), together with a certificate of the City Clerk, dated as of the Closing Date, to the
�
effect that such resolution is a true, correct and complete copy of the resolution duly adopted by
the City;
(2) The Of�cial Statement, executed on behalf of the District by an authorized
signatory of the City;
(3) The Indenture duly executed and delivered by the City and the Trustee;
(4) The Continuing Disclosure Agreements, duly authorized and executed by the
City, the Developer and MuniFinancial as applicable;
(5) An unqualified opinion, dated the Closing Date and addressed to the City, of
Bond Counsel, to the effect that the Bonds are the valid, legal and binding obligations of the City
and that the interest thereon is excluded from gross income for federal income tax purposes and
exempt from personal income taxes of the State of California in substantially the form included
as Appendix C to the Official Statement, together with an unqualified opinion of Bond 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 the Underwriter;
(6) A supplemental opinion or opinions, dated the Closing Date and addressed to the
City and the Underwriter, of Bond Counsel, to the effect that (i) this Purchase Agreement has
been duly authorized, executed and delivered by the City and, assuming due authorization,
execution and delivery by the other parties thereto, constitutes the legal, valid and binding
agreement of the City and the District, each enforceable in accordance with its terms, except to
the extent that enforceability may be limited by moratorium, bankruptcy, reorganization
insolvency or other similar laws affecting creditors' rights generally or by the exercise of judicial
discretion in accordance with general principies of equity or otherwise in appropriate cases;
(ii) the Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended,
and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as
amended; (iii) the Bonds, the Indenture and the Continuing Disclosure Agreements conform as
to form and tenor to the descriptions thereof contained in the Official Statement, and the
statements contained in the Official Statement on the cover and under the captions
"INTRODUCTION," "THE BONDS," "SECURITY AND SOURCES OF PAYMENT FOR THE
BONDS," "CONTINUING DISCLOSURE� and "TAX MATTERS" and in Appendices C, E and F
to the Official Statement insofar as such statements purport to summarize certain provisions of
the Bonds, the Indenture, the Continuing Disclosure Agreements, Bond Counsel's final opinion
and the Act, are accurate in all material respects; (iv) the Indenture has been duly adopted by
the City Council, acting as the legislative body of the District and creates a valid pledge of the
Special Taxes and the amounts on deposit in certain funds and accounts established under the
Indenture, as and to the extent provided in such Indenture; and (v) the Special Taxes and the
levy thereof have been duly and validly authorized in accordance with the provisions of the Act
and, when levied, the Special Tax will be a valid and binding lien upon the property against
which it is levied, enforceable by the City in accordance with the provisions of the Indenture and
the Act except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of creditor's rights;
(7) the opinion of Jones Hall, A Professional Law Corporation, San Francisco,
California, Disclosure Counsel, dated the Cfosing Date, addressed to the District and to the
Underwriter, to the effect that based upon an examination which they have made, and without
having undertaken to determine independently the accuracy or completeness of the statements
contained in the Official Statement, they have no reason to believe that the Official Statement
(other than financial statements and other statistical and financial data and information relating
to The Depository Trust Company, New York, New York, and its book-entry system contained
therein and incorporated therein by reference, as to which no view need be expressed) 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;
(8) A certificate of the City, dated the Closing Date and signed by the City Finance
Director or City Manager or an authorized designee to the effect that (i) the representations and
warranties of the City contained herein 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, except that aN references
herein to the Preliminary Official Statement shall be deemed to be references to the Official
Statement; (ii) to the best knowiedge of such officer, no event has occurred since the date of the
Official Statement which should be disclosed in the Official Statement for the purpose for which
it is to be used or which it is necessary to disclose therein in order to make the statements and
information therein not misleading in any material respect; and (ii) the City has complied with all
the agreemenfs and satisfied all the conditions on its part to be satisfied under this Purchase
Agreement, the Indenture, the Issuer Continuing Disclosure Agreement and the Official
Statement at or prior to the Closing Date;
(9) An opinion, dated the Closing Date and addressed to the City and the
Underwriter, of the City Attorney, to the effect that (i) the District is a community facilities district
duly organized and validly existing under the Act; (ii) the Official Statement and the distribution
thereof have been duly authorized by the City; (iii) the forms of the Indenture, the Issuer
Continuing Disclosure Agreement and this Purchase Agreement have been duly approved at a
meeting of the City Council, acting as the legislative body of the District, which was called and
held pursuant to law and with all public notice required by law and at which a quorum was
present and acting; (iv) the City on behalf of the District has duly and validly executed and
delivered on behalf of the District this Purchase Agreement, the Indenture, the Bonds and the
Issuer Continuing Disclosure Agreement, and each such document constitutes the legal, valid
and binding obligation of the District enforceable against the District in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting
enforcement of creditors' rights in general and to the application of equitable principles if
equitable remedies are sought; (v) other than as disclosed in the Official Statement, no action,
suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory
agency, public board or body to which the City or the District is a party and has been sei-ved
with a summons or other notice thereof, is pending or, to such counsel's knowledge, threatened,
in any way affecting the existence of the District, the existence of the City or the titles of its
officers to their respective offices, or seeking to restrain or to enjoin the issuance, sale or
delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture,
the collection or application of the Special Taxes to pay the principal of, and interest on, the
Bonds, or in any way contesting or affecting the vaiidity or enforceability of the Bonds, the
Indenture, this Purchase Agreement, the Issuer Continuing Disclosure Agreement, or any action
of the City or the District contemplated by any of such documents or in any way contesting the
completeness or accuracy of the Official Statement or the powers of the City or the District with
respect to the Bonds, the Indenture, this Purchase Agreement, the Issuer Continuing Disclosure
Agreement, of any action on the part of the City or the District contemplated by any of such
documents, or in any way seeking to enjoin or restrain the City from approving the development
of any of the property within District, or which challenges the exclusion of the interest paid on
the Bonds from federal income tax purposes and the exemption of interest paid on the Bonds
0
from State of California personal income taxation; (vi} the statements in the Official Statement
under the heading "NO LITIGATION" are as of the date of the Official Statement and as of the
date of the opinion, true and correct in all material respects and do not, as of the date of the
Official Statement and as of the date of the opinion, contain any untrue statement of a material
fact or omit 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 (vii) the City is duly organized and validly existing as a political subdivision
under the Constitution and laws of the State of California with full legal right, power and
authority to form the District;
(10) A transcript of all proceedings relating to the authorization, issuance, sale and
delivery of the Bonds, including certified copies of the Indenture and all resolutions relating
thereto;
(11) Certified copies of excerpts from the Bylaws of Wells Fargo Bank, National
Association, as Trustee, authorizing the execution and delivery of certain documents by certain
officers of Wells Fargo Bank, National Association, which resolution authorizes the execution of
the Indenture;
(12) A certificate of Wells Fargo Bank, National Association, addressed to the
Underwriter and the City dated the Closing Date, to the effect that (i) Wells Fargo Bank, National
Association is authorized to carry out corporate trust powers, and has full power and to perform
its duties under the lndenture; (ii) Wells Fargo Bank, National Association is duly authorized to
execute and deliver the Indenture, to accept the obligations created by the Indenture, and to
authenticate the Bonds pursuant to the terms of the Indenture; (iii) no consent, approval,
authorization or other action by any governmental or regulatory authority having jurisdiction over
Wells Fargo Bank, National Association that has not been obtained is or will be required for the
authentication of the Bonds, of the consummation by it of the other transactions contemplated to
be performed by it in connection with the authentication of the Bonds and the acceptance and
performance of the obligations created by the lndenture; and (v) to the best of its knowledge,
compliance with the terms of the Indenture will not conflict with, or result in a violation or breach
of, or constitute a default under, any loan agreement, �scal agent agreement, bond, note,
resolution or any other agreement or instrument to which Wells Fargo Bank, National
Association is a party or by which it is bound, or any law or any rule, regulation, order or decree
of any court or governmental agency or body having jurisdiction over Wells Fargo Bank,
National Association or any of its activities or properties;
(13) Certificates dated the Closing Date from [Developer], the
Special Tax Consultant and the Appraiser substantially in the form of Exhibits B, D and E
hereto, respectively;
(14) An opinion, dated the Closing Date, of counsel to the Developer, addressed to
the City and the Undervuriter, substantially in the form of Exhibit C hereto.
(15) A copy of the Appraisal;
(16) A tax certificate of the City on behalf of the District in form and substance
acceptable to Bond Counsel and the Underwriter;
(17) Such additional legal opinions, certificates, instruments and other documents as
the Underwriter may reasonably request to evidence the truth and accuracy, as of the date
�r��
hereof and as of the Closing Date, of the material representations and warranties of the City
contained herein, and of the statements and information contained in the Official Statement and
the due performance or satisfaction by the City at or prior to the Closing of all agreements then
to be performed and all conditions then to be satisfied by the City in connection with the
transactions contemplated hereby, the Indenture and Continuing Disclosure Agreements and
the Official Statement.
!f the City shall be unable to satisfy the conditions to the obligations of the Underwriter to
purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if
the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be
terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement
shall terminate and none of the City, the District nor the Underwriter shall be under any further
obligation hereunder, except that the respective obligations of the Underwriter, the City and the
District set forth in Section 4 hereof shall continue in full force and effect.
Section 4. Expenses.
(a) Whether or not the Underwriter accepts delivery of and pays for the Bonds as set
forth herein, it shall be under no obligation to pay, and the City shall pay out of the proceeds of
the Bonds or any other legally available funds of the City, all expenses incidental to the
performance of the City's obligations hereunder, including but not limited to the cost of printing,
engraving and delivering the Bonds to the Underwriter; the costs of printing and shipping the
Preliminary Official Statement and the Official Statement; the fees and disbursements of the
District, the City, the Trustee, the Dissemination Agent, Bond Counsel, accountants, engineers,
appraisers, economic consultants and any other experts or consultants retained by the City in
connection with the issuance and sale of Bonds; and any other expenses not specifically
enumerated in paragraph (b) of this Section incurred in connection with the issuance and sale of
the Bonds.
(b) Whether or not the Bonds are delivered to the Underwriter as set for the herein,
the City shall be under no obligation to pay, and the Underwriter shall be responsible for and
pay, CUSIP Bureau and CDIAC fees and expenses to qualify the Bonds for sale under any
"blue sky" laws; and all other expenses incurred by the Underwriter in connection with its public
offering and distribution of the Bonds not specifically enumerated in paragraph (a) of this
Section, including the fees and disbursements of its counsel.
Section 5. Undertakinas of the Citv. The City agrees (a) to inform the Underwriter,
from time to time, upon the reasonable request of the Underwriter, of the amount then on
deposit in the Reserve Account and all accounts thereunder, and (b) to make available to the
Underwriter, upon reasonable request of the Underwriter, at the expense of the City, sufficient
copies of its audited financial statements, if any, resolutions of its legislative body with respect to
the Bonds, the Indenture, the Official Statement, any amendments or supplements thereto, and
other documents relating to the Bonds and pertaining to the District or the City, to the extent that
such documents are publicly available, as may be reasonably required from time to time for the
prompt and efficient performance by the Underwriter of their obligations hereunder (except any
portion of any such document which, by contract, is not subject to disclosure).
Section 6. Notices. Any notice or other communication to be given to the City under
this Purchase Agreement may be given by delivering the same in writing to the City of Palm
Desert at 73-510 Fred Waring Drive, Palm Desert, California 92260-2578, Attention: City
Manager; any notice or other communication to be given to the Underwriter under this Purchase
11
Agreement may be given by delivering the same in writing to: Stinson Securities LLC, 55 San
Francisco Street, Suite 800, San Francisco, California 94133, Attention: Public Finance.
Section 7. Parties in Interest. This Purchase Agreement is made solely for the
benefit of the City, the District and the Underwriter (including any successors or assignees of
the Underwriter) and no other person shall acquire or have any right hereunder or by virtue
hereof.
Section 8. Survival of Reqresentations and Warranties. The representations and
warranties of the City hereunder shall not be deemed to have been discharged, satisfied or
otherwise rendered void by reason af 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 the delivery of
and payment for the Bonds.
Section 9. Execution in Counterparts. This Purchase Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but one and the same
instn.�ment.
Section 10. No Prior Aqreements. This Purchase Agreement supersedes and
replaces all prior negotiations, agreements and understandings among the parties hereto in
relation to the sale of the Bonds of the City.
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Section 11. Effective Date. This Purchase Agreement 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.
Very truly yours,
STINSON SECURITIES LLC
By:
Managing Director
KINSELL NEWCOMB � DeDIOS, INC.
By:
Managing Director
CITY OF PALM DESERT
on behalf of COMMUNITY FACILITIES DISTRICT
NO. 2005-1 (University Park)
By:
City Manager
1�
EXHIBIT A
MATURITY SCHEDULE
Maturity Principal Interest
(September 1) Amount Rate Yield Price
Exhibit B
$
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(University Park)
SPECIAL TAX BONDS, SERIES 2006A
Develor�er Representations, Warranties and Covenants
(the "Developer") hereby makes the following representations,
warranties and covenants as of the date hereof to and for the benefit of the City of Palm Desert
(the "City") for itself and on behalf of Community Facilities District No. 2005-1 (University Park)
(the "DistricY') and to Stinson Securities, LLC on behalf of itself and Kinsell Newcomb & DeDios,
Inc. (together the "Underwriter") in connection with the pricing by the City of its Community
Facilities District No. 2005-1 (University Park) Special Tax Bonds, Series 2006A (the "Bonds").
Capitalized terms not otherwise defined herein, are defined as provided in the Purchase
Agreement dated , 2006 (the "Purchase Agreement") between the Underwriter
and the City.
1. Due Oraanization. Existence and Authority. The Developer is a
and is duly formed and validly existing under the laws of its
organization and has full rights, power and authority to execute, deliver and perform its
obligations under the Acquisition Agreement, the Cost Sharing and Bond Proceeds Allocation
Agreement, the Joint Community Facilities Agreement dated as of January 12, 2006 by and
among the City, the Coachella Valley Water District and the Continuing Disclosure Agreement
(Developer) and to carry out and consummate the transactions contemplated by the Acquisition
Agreement and the Continuing Disclosure Agreement (Developer) (collectively, the "Developer
Documents").
2. Due Authorization and Anqroval. By all necessary action of the corporation, the
Developer has duly authorized and approved the execution and delivery of, and the
performance by the Developer of the obligations of the Develaper contained in the Developer
Documents and as of the date hereof, such authorizations and approvals are in full force and
effect and have not been amended, modified or rescinded. The Developer acknowledges that it
has an obligation to pay Special Taxes on property it owns in the District.
3. No Breach or Default. The execution and delivery of the Developer pocuments
and compliance with the provisions thereof, under the circumstances contemplated thereby, do
not and will not in any material respect conflict with or constitute on the part of the Developer a
breach or default under any agreement or instrument to which the Developer is a party or by
which it is bound, and no event has occurred and is continuing which, with the passage of time
or the giving of notice, or both, would, in any material respect, constitute a default or an event of
default under the Developer pocuments.
4. No Litiqation. There is no action, suit, proceeding, inquiry or investigation, at law
or in equity, before or by any court, government agency, public board or body, pending (with
service of process having been accomplished) or, to the actual knowledge of the undersigned,
threatened by or against the Developer: (i) in any way questioning the due formation and valid
existence of the Developer; (ii) in any way contesting or affecting the validity of the Developer
R_1
Documents or the consummation of the transactions contemplated thereby; (iii) in any way
questioning or contesting the validity of any governmental approval of the City or any aspect
thereof, or (iv) which would have a material adverse effect upon the financial condition of the
Developer or the ability to develop the property it owns within the District.
5. Information. The information submitted by the Developer to the City or the
Underwriter in connection with the preparation of the Preliminary Official Statement and the
Official Statement was, as of the date of its submittal, true and correct in all material respects.
6. Official Statement. The Developer has provided the information set forth in the
Preliminary Official Statement and the Official Statement describing the Developer and the
development undertaken and proposed to be undertaken by the Developer, and the Underwriter
is authorized to use such information in the distribution of the Preliminary Official Statement and
the Official Statement. With respect to the discussion in the Preliminary Ofiicial Statement and
the Official Statement under the captions "THE DISTRICT" (except for any discussion of Zones
A, B, C, and D, and any of the other owners of property in the District or their property, for which
no certification is provided), "THE PROJECT," and "OWNERSHIP OF PROPERTY WITHIN
THE DISTRICT — Palm Desert Funding Company, L.P.," insofar as such statements purport to
summarize information with respect to the Developer, the proposed development of its property
in the District, the property owned by the Developer within the District, and pending or
threatened litigation in which the Developer is a litigant, nothing has come to the Developer's
attention as of the date of this Certificate which would lead the Developer to believe that such
discussion contains any untrue statements 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.
7. Developer's Financial Statements. The financial statements, if any, and other
financial information submitted to the Underwriter are true, correct and complete in all material
respects and fairly present the financial position of the Developer as of the date thereof. No
material adverse change has occurred in such financial position since the date of such financial
statements.
8. Taxes and Assessments. All taxes and assessments are current on the property
which the Developer currently owns within the District.
9. Apqraisal. 7he Developer has reviewed the Appraisal Report dated
, 2006 ("Appraisal") prepared by Capital Realty Analysts and believes that the
estimate that the Improvements (as defined in the Appraisal) will be completed within 12 months
following the issuance of the Bonds is a reasonable assumption. [DAVID: THIS PARAGRAPH
MAY NEED TO BE REWORDED. IT IS IMPORTANT THAT THE DEFINITION OF
IMPROVEMENTS BE SPECIFICALLY IDENTIFIED AND SHOULD NOT INCLUDE IN-TRACTS
OR OTHER THINGS THAT MAY BE DONE BEYOND THE TIME FRAME.]
10. Consent to Bond Issuance. The Developer hereby consents to the issuance of
the Bonds.
11. Consent to Indenture. The Developer hereby consents to all of the terms and
conditions contained in that certain Bond Indenture, dated as of April 1. 2006, by and between
the City and Wells Fargo Bank, National Association, as trustee (the "Trustee").
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12. Aqreement. In addition to the foregoing, the Developer covenants that, while the
Bonds are outstanding, the Developer will not bring any action, suit, proceeding, inquiry or
investigation at law or in equity, before any court, regulatory agency, public board or body which
in any way seeks to challenge or overturn the District, the levy of the Special Tax in accordance
with the terms of the resolutions and ordinances previously adopted by the District or the validity
of the Bonds or the proceedings leading up to their issuance. The foregoing agreement shall
not prevent the Developer in any way from bringing any other action, suit or proceeding
including, without limitation, an action or suit contending that the Special Tax has not been
levied in accordance with the methodologies contained in the DistricYs Rate and Method of
Apportionment of Special Tax pursuant to which the Special Taxes are levied, an action or suit
with respect to the application or use of the Special Taxes levied and collected, or an action or
suit to enforce the obligations of the City and the District under the Acquisition Agreement or
any other agreements between the Developer, the City and/or the District, or to which the
Developer is a beneficiary. �
Dated: , 2006
[DEVELOPER]
By:
R_'�
Authorized Representative
Exhibit C
$
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(University Park)
SPECIAL TAX BONDS, SERIES 2006A
Form of Developer's Counsel Opinion
[Letterhead of Developer Counse!]
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert California 92260-2578
Stinson Securities LLC
55 San Francisco Street, Suite 800
San Francisco, CA 94133
Kinsell Newcomb 8 DeDios, Inc.
462 Stevens Avenue, Suite 308
Solana Beach, CA 92075
Re: $ City of Palm Desert Community Facilities District
No. 2005-1 (Universitv Park1 Special Tax Bonds. Series 2006A
Ladies and Gentlemen:
We have acted as counsel to (the "Developer") in connection with
{i) the proposed development known as (the "DevelopmenY') to be
located in the City of Palm Desert (the "City") as described in the Preliminary Official Statement
(as defined herein), and (ii) the issuance ,and sale of $ City of Palm Desert
Community Facilities District No. 2005-1 (University Park) Special Tax Bonds, Series 2006A
(the "Bonds"). This opinion is rendered pursuant to the Purchase Agreement dated
, 2006 (the "Purchase Agreement") between the City, acting for itself and on
behalf of the City of Palm Desert Community Facilities District No. 2005-1, and the Underwriters
named therein. Capitalized terms used herein without definition shall have the meanings set
forth in the Purchase Agreement.
In rendering the opinions set forth herein, we have reviewed and examined such
documents as we have determined to be appropriate, including the following documents:
A. The Purchase Agreement;
B. The Official Statement for the offer and sale of the 8onds dated
, 2006 (the "Official Statement");
�_i
City of Palm Desert
[Underwriter]
, 2006
Page 2
C. The Continuing Disclosure Agreement (Developer), dated , 2006,
by and between the Developer and Wells Fargo National Bank, as dissemination agent
(the "Continuing Disclosure AgreemenY');
D. A litigation search of Developer, dated , 2006 (the "Litigation
Search"}, conducted by , but without warranty as to the
completeness and accuracy thereof due to the potential for errors or inaccuracies in the
data and files made available to us from the applicable courts. [DAVID: WE WILL BE
PERFORMING AN ON-LINE LITIGATION SEARCH ONLY. I WILL SEND YOU �UR
FORM OF OPINION.j
E. The Acquisition Agreement dated as of , 2006, between,
among others, the Developer and the City (the "Acquisition AgreemenY' and together
with the Continuing Disclosure Agreement, the "Developer Agreements");
F. [The Articles of Incorporation for dated as of
, certified by the Secretary of State of the State of California on
;l
G. [The Bylaws of the Developer certified by the Secretary of Developer to
be the bylaws in effect on the date hereof;]
2006;
H. Resolutions of the Board of Directors of Developer dated
I. Certificate of Good Standing for Developer, issued by the Secretary of
State of the State of California on , 2006; and
J. The Developer Certificate provided by Developer to the City and
Underwriter pursuant to the Purchase Agreement.
With respect to factual matters underlying our opinions herein, we have made no
independent investigation or inquiry and have relied solely upon the Developer Certificate. We
advise you that the phrase "to our knowledge," as used herein, means that no facts have come
to our attention, based upon an inquiry of attorneys in this firm who devote substantive legal
attention to Developer, or as a result of our examination of the Developer Certificate, that
indicate to us anything contrary to the statement to which the phrase relates. Except as
expressly set forth above, the phrase does not mean that we have conducted any investigation
or inquiry or pertormed any other examination, or review. We have no reason to believe that
any factual matters or assumptions relied upon by us are not true, correct and complete.
Our opinions herein are limited to the internal laws of the State of California and the
federal laws of the United States of America. We express no opinion whatsoever with respect
to the laws of any other jurisdiction and assume no responsibility for the applicability of such
(aws. In rendering our opinions herein, we have assumed the following, with your approval:
�_�
City of Palm Desert
[Underwriter]
, 2006
Page 3
(i) The genuineness and authenticity of all signatures on original documents
submitted to us (other than any signatures on behalf of Developer); the authenticity and
completeness of all documents submitted to us as originals; the conformity to originals of
all documents subrfiitted to us as copies; where any signature, other than any signature
on behalf of Developer purports to have been made in a corporate, governmental,
fiduciary or other capacity, the person who affixed such signature had the full power and
authority to do so;
(ii) The due authorization, execution and delivery of the applicable
agreements by the parties thereto, other than the Developer, and the legality, validity,
binding effect and enforceability against such parties of their respective obligations
under such agreements; ,
(iii) The truth, accuracy and comp(eteness of all factual representations and
warranties of all parties under the documents described in paragraphs A through J,
above; and
(iv) The constitutionality or validity of a relevant statute, rule, regulation or
agency action is not in issue unless a reported decision in the State of California has
specifically addressed but not resolved, or has established, its unconstitutionality or
invalidity.
Based upon the foregoing and in reliance thereon, and based on our examination of
such questions of law as we have deemed appropriate under the circumstances, and subject to
any further assumptions, comments, exceptions, qualifications and limitations set forth below,
as of the date hereof, it is our opinion that:
1. Developer is a corporation duly incorporated and validly existing in the
State of California and in good standing under the laws of the State of California.
Developer is qualified to do business in the State of California.
2. The Developer Agreements have been duly authorized, executed and
delivered by Developer, and constitute legal, valid and binding obligations of the
Developer, enforceable against the Developer in accordance with their respective terms.
3. The execution and delivery by Developer of the Developer Agreements
and the performance of its obligations thereunder will not conflict with or result in a
violation of, or breach of or a default under, as applicable (a) the Articles of Incorporation
or Bylaws of Developer, (b) to our knowledge, any indenture, mortgage, deed of trust,
lease, note, commitment, agreement or other instrument to which Developer is a party,
or by which Developer or its property is bound or (c) to our knowledge, of any order, rule
or regulation of any court or other governmental body having jurisdiction over Developer,
the conflict, violation or breach of which, in the case of clauses (b) or (c) would have a
material adverse effect on Developer or the development, use, occupancy or operation
of the Development or any material portion thereof.
4. To our knowledge, and otherwise based solely upon a review of the
Litigation Search, there are no actions, suits or proceedings pending or threatened
�_�
City of Palm Desert
[Underwriter]
, 2006
Page 4
against Developer which, if determined adversely, would have a material adverse effect
(a) on the ability of Developer to perform its obligations under the Developer Agreements
or (b) on the development, construction, use, occupancy or operation of the
Development or a material portion thereof.
6. Without having undertaken to independently determine the
accuracy, completeness or fairness of the discussion contained in the Preliminary
Official Statement under the captions captions "THE DISTRICT" (except for any
discussion of Zones A, B, C, and D, and any of the other owners of property in the
District or their property, for which no certification is provided), "THE PROJECT," and
"OWNERSHIP OF PROPERTY WITHIN THE DISTRICT — Patm Desert �unding
Company, L.P.," insofar as such statements purport to summarize information with
respect to the Developer, the proposed development of its property in the District, the
property owned by the Developer within the District, and pending or threatened litiga�ion
in which the Developer is a litigant, nothing has come to our attention which would lead
us to believe that such discussion contains any untrue statements of a material fact or
omits to state a material fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading.
In addition, all of our opinions expressed hereinabove are specifically subject to and
limited by the following:
(a) The effect of laws or court decisions relating to bankruptcy, insolvency,
fraudulent conveyance, equitable subordination, reorganization, arrangement,
moratorium or other laws or court decisions relating to or affecting creditors' rights
generally.
(b) Limitations imposed by California or federal law or equitable principles
upon the availability of the remedy of specific performance of any of the remedies,
covenants or other provisions of any document or agreement and upon the availability of
injunctive relief or other equitable remedies.
In addition, we express no opinion as to the title of the property within the District or any
entitlements, permits, approvals or other assets relating to the Development.
This letter is intended solely for your use in accordance with the Purchase Agreement
and may not be reproduced or filed publicly or relied upon for any other purpose by you or for
any purpose whatsoever by any other party without the express written consent of the
undersigned except that this Opinion may be copied and distributed as part of a closing book of
the bond transaction documents, provided that such distribution shall not expand in any way the
permitted uses of this letter. We assume no responsibility for the effect of any fact or
circumstance occurring subsequent to the date of this letter, including without limitation,
legislative or other changes in the law. Further, we assume no responsibility to advise you of
any facts or circumstances of which we become aware after the date hereof, regardless of
whether or not they may affect our opinions herein. This opinion is given as of the date hereof
and we assume no obligation to update our opinions herein after the date hereof.
Very truly yours,
�_a
City of Palm Desert
[Underwriter]
, 2006
Page 5
[COUNSEL]
By:
�_�
Exhibit D
$
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(University Park)
SPECIAL TAX BONDS, SERIES 2006A
Certificate of Special Tax Consultant
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260-2578
Stinson Securities LLC
55 San Francisco Street, Suite 800
San Francisco, CA 94133
Kinsell Newcomb & DeDios, Inc.
462 Stevens Avenue, Suite 308
Solana Beach, CA 92075
The undersigned hereby states and certifies:
1. That he is an authorized officer of Minifiancial (the "Special Tax Consultant") and
as such is familiar with the facts herein certified and is authorized and qualified to certify the
same.
2. That the Special Tax Consultant assisted the City of Palm Desert (the "City") in
the preparation of (a) the Rate and Method of Apportionment of the Special Tax (the "Special
Tax Formula") as set forth in Appendix A to the Official Statement, as described under the
section entitled "THE DISTRICT" of the Preliminary Official Statement dated ,
2006 (the "Preliminary Official Statement") and the Official Statement dated ,
2006 (the "Official Statement") for the City of Palm Desert Community Facilities District No.
2005-1 (University Park) (the "DistricY') Special Tax Bonds, Series 2006A (the "Bonds"). The
Bonds are secured by Special Taxes of the Community Facilities District. Capitalized terms not
otherwise defined herein shall be defined as provided in the Special Tax Formula or in the
Indenture dated as of April 1, 2006 (the "Indenture"), by and befinreen the City and the Trustee.
3. That the Special Taxes, if levied in accordance with the Special Tax Formula and
collected will annually yield sufficient revenue to make timely payments of the annual debt
service on the Bonds, and annual Administrative Expenses related to the levy and collection of
the Special Taxes and the expenses of the Trustee for the Bonds.
4. That all information supplied by the Special Tax Consultant for use in the Official
Statement, including Appendix A thereto, is true and correct.
5. That, as of the date of the Preliminary Official Statement and the Official
Statement and as of the date hereof, those portions of the Official Statement entitled
"SECURITY AND SOURCES OF PAYMENTS FOR THE BONDS--Special Taxes" and "--
n_�
Special Tax Methodology," "THE DISTRICT," "SPECIAL RISK FACTORS," and "APPENDIX A"
and the other data provided by the Special Tax Consultant and included in the Preliminary
Official Statement and the Official Statement, do not, to our knowledge, contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
made therein, in light of the circumstances under which they were made, not misleading.
Dated: , 2006
MUNIFINANCIAL
By:
n_�
Principal
Exhibit E
$
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(University Park)
SPECIAL TAX BONDS, SERIES 2006A
Certi�cate of Appraiser
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert. California 92260-2578
Stinson Securities LLC
55 San Francisco Street, Suite 800
San Francisco, CA 94133
Kinsell Newcomb 8� DeDios, Inc.
462 Stevens Avenue, Suite 308
Solana Beach, CA 92075
The undersigned hereby states and certifies:
1. That he or she is an authorized principal of Capital Realty Analysts (the
"Appraiser") and as such is familiar with the facts herein certified and is authorized and qualified
to certify the same.
2. That the Appraiser has prepared an appraisal report dated ,
2006 (the "Appraisal Report"), on behalf of the City of Palm Desert (the "City") and in connection
with the sale by the City on behalf of the Community Facilities District No. 2005-1 (University
Park) (the "District") of its City of Palm Desert Community Facilities District No. 2005-1
(University Park) Special Tax Bonds, Series 2006A (the "Bonds"). Capitalized terms not
otherwise defined herein shall be defined as provided in the Purchase Agreement dated as of
, 2006, between the City and the Unden�vriter named therein.
3. That, as of the date of this Certificate, the conclusions set forth in the Appraisal
Report included as Appendix B to the Preliminary Official Statement dated ,
2006 (the "Preliminary Official Statement") and the Official Statement dated ,
2006 (the "Official StatemenY') are confirmed.
4. That, as of the date hereof, the information under the caption "APPRAISAL OF
PROPERTY WITHIN THE DISTRICT" and the Appraisal Report appended to the Preliminary
Official Statement and the Official Statement, to the best of our knowledge and belief, and
subject to all of the General and Specific Assumptions and Limiting Conditions set forth in the
Appraisal Report, does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading, and no events or occurrences
have been ascertained by us or have come to our attention that would substantially change the
F_1
estimated values concluded in the Appraisal Report. However, we have not performed any
procedures since the date of the Appraisal Report to obtain knowledge of such events or
occurrences nor are we obligated to do so in the future.
5. We hereby consent to the reproduction and use of the Appraisal Report
appended to the Preliminary Official Statement and the Official Statement. We also consent to
the use of the references to our firm made in the Preliminary Official Statement.
Dated: , 2006
CAPITAL REALTY ANALYSTS
By:
F_�
Jones Han Draft 2/27/O6
PRELIMINARY OFFICIAL STATEMENT DATED , 2006
NEW ISSUE-FULL BOOK ENTRY
�•Si:7_� � y.;
In the opinion of Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, Bond
Counsel, based on existing law and assuming compliance with certain covenants set forth in the documents pertaining
to the Bonds and requirements of the Internal 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. In the
opinion of Bond Counsel, interest on the Bonds is not treated as an item of tax preference for the purposes of the
federai alternative minimum tax imposed on individuals and corporations. Interest on the Bonds may be subject to
certain federal taxes imposed on corporations, including the corporate alternative minimum tax on a portion of that
interest. In the further opinion of Bond Counsel, interest on the Bonds is exempt from personal income taxes imposed
by the State of California. See "TAX MATTERS" herein." .
$50,000,000*
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(University Park)
SPECIAL TAX BONDS
SERIES 2006A
Dated: Date of Delivery
Due: September 1, as shown below
The bonds captioned above (the `Bonds"), are being issued by the City of Palm Desert (the "City") by and
through its Community Facilities District No. 2005-1 (Universiry Park) (the "District"). The Bonds are special tax
obligations of the City, authorized pursuant to the MellaRoos Community Facilities Act of 1982, as amended, being
California Govemment Code Section 53311, et seq. (the "AcY'), and are issued pursuant to a Indenture dated as of April
1, 2006 (the "Indenture") by and between the City and Wells Fargo Bank, National Association, as trustee (the
"Trustee"). The Bonds are issued to (i) construct and acquire certain public facilities of benefit to the District; (ii) provide
for the establishment of a Reserve Account, (iii) provide capitafized interest, and {iv} pay the costs of issuance of the
Bonds. Interest on the Bonds is payable on September 1, 2006, and thereafter semiannually on March 1 and September
1 of each year.
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 wi11 be available to ultimate pu�chasers in the denomination
of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC. See "APPENDIX G— BOOK-
ENTRY SYSTEM "
The Bonds are secured by and payable from a pledge of Net Taxes (as defined herein) derived from Special
Taxes to be levied by the City on real property within the boundaries of the District, from the proceeds of any
foreclosure actions brought following a delinquency in the payment of the Special Taxes, and from amounts held in
certain funds under the Indenture, all as more fully described herein. Unpaid Special Taxes do not constitute a
personal indebtedness of the owners of the parcels within the District. In the event of delinquency, ,proceedings
may be conducted only against the parcel of real property securing the deUnquent Special Tax. There is no
assurance the owners will be able to pay the Special Tax or that they will pay a Special Tax even ttwugh financially
able to do so. To provide funds for payment of the Bonds and the interest thereon as a result of any delinquent Special
Taxes, the City will establish a Reserve Account from proceeds of the Bonds, as described herein. See "SECURITY
FOR THE BONDS."
Property in the District subject to the Special Tax comprises approximately 267 acres planned to be developed
into approximately 1,053 single family residential homes, 268 condominium units and, to a lesser extent, commercial
uses. The land is currently undeveloped. See "THE DISTRICT' and "OWNERSHIP OF PROPERTY WITHIN THE
DISTRICT."
The Bonds are subject to optional and mandatory redemption prlor to maturity as described herein. See
"THE BONDS — Redemption."
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF RIVERSIDE,
THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE
BONDS. THE BONDS DO NOT CONSTITUTE A DEBT OF THE CITY WITHIN THE MEANING OF ANY STATUTORY OR
CONSTITUTIONAL DEBT LIMITATION. THE INFORMATION SET FORTH IN THIS OFFICIAL STATEMENT, INCLUDING
INFORMATION UNDER THE HEADING "SPECIAL RISK FACTORS," SHOULD BE READ IN ITS ENTIRETY.
This cover page contains certain information for genera/ reference only. !t is not a summary of a!I of the
provisions of the Bonds. Prospectrve investors musf read the entire Official Statement to obtain information essential
to fhe making of an informed investment decision. See "SPEClAL RlSK FACTORS" herein for a discussion of the
specia! risk factors that should be considered, in addition to the other matters and risk factors set forth herein, in
evaluafing the investment qualrty of the Bonds.
MATURITY SCHEDULE*
Maturity Date Principal Interest Price or CUSIPt
(Seatember 1) Amount Rate Yeld �)
% Term Bond Due September 1, Price: % CUSIP:
% Term Bond Due September 1, Price: % CUSIP:
t Copyright 2006, American Bankers Association. CUSIP data herein are provided by Standard 8� Poors CUSIP Service Bureau, a division
of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the City nor tlie Underwriter assumes
any responsibiliry for the accuracy of these CUSIP dafa.
The Bonds are offered when, as and if issued, subject to approva! as to their legality by Richards, Watson 8
Gershon, a Professiona/ Corporation, Los Angeles, California, Bond Counsel. Certain legal matters will be passed on
by Jones Hall, a Professional Law Corporation, San Francrsco, California, as Disclosure Counsel. Certain legal
matters will be passed upon for the Crty by the Cify Attorney. It is anticipafed that the Bonds wil! be availabJe for
delivery to DTC on or about , 2006 in New York, New York.
Stinson Securities, LLC
Kinsell Newcomb � DeDios, Inc.
The date of this Official Statement is , 2006.
' Preliminary, subject to change.
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
C ity Staff
Carlos L. Ortega, Cify Manager
Justin McCarthy, Assistant City Manager/Redevelopment
Homer Croy, Assistanf City Manager Development Services
Sheila R. Gilligan, Assistant City Manager Community Services
Paul S. Gibson, Finance Director/Treasurer
Jose Luis Espinoza, Assisfant 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
Trustee
Wells Fargo Bank, National Association
Los Angeles, California
Financial Advisor
Del Rio Advisors, LLC
Modesto, Califomia
Appraiser
Capital Realty Analysts
Pa/m Desert, California
Special Tax Consultant
MuniFinanaal
Temecula, California
GENERAL INFORMATION ABOUT TH(S 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 and in any continuing
disclosure by the City, in any press release and in any oral statement made with the approval of
an authorized officer of the City, 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 City 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.
Involvement 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 REQIJIREMENTS
CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED Uf�DER
THE SECURITIES LAWS OF ANY STATE.
TABLE OF CONTENTS
INTRODUCTI ON .........................................................................................................................................................................................................1
THEBONDS .................................................................................................................................................................................................................4
Authorityfor Issuance ..........................................................................................................................................................................................4
Descriptionof the Bonds ......................................................................................................................................................................................5
Redemption..........................................................................................................................................................................................................6
Transferor Exchange of Bonds ...........................................................................................................................................................................8
ESTIMATEDSOURCES AND USES OF FUNDS ..................................................................................................................................................8
SECURITYAND SOURCES OF PAYMENT FOR THE BONDS ..........................................................................................................................9
SpecialTaxes .......................................................................................................................................................................................................9
SpecialTax Methodobgy ..................................................................................................................................................................................11
Levy of Annual Special Tax; Maximum Annual Special Tax ..........................................................................................................................12
SpecialTax Fund ...............................................................................................................................................................................................13
Depositand Use of Proceeds of Bonds ................................................................................................................................................................
Delinquent Payments of Special Tax; Covenant for Superior Court ForeGosure .........................................................................................14
ReserveAccount ................................................................................................................................................................................................15
FacilftiesFunds ..................................................................................................................................................................................................16
ParityBonds .......................................................................................................................................................................................................17
DEBTSERVICE SCHEDULE ...................................................................................................................................................................................18
THEDISTRICT ..........................................................................................................................................................................................................19
Formationof the Distrid ......................................................................................................................................................:.............................19
Location and Description of the District and the Immediate Area ...................................................................................................................19
AntiapatedDevelopment in the District ...........................................................................................................................................................24
EnvironmentalMatters ......................................................................................................................................................................................28
THEPROJECT ..........................................................................................................................................................................................................28
EligibleProject ...................................................................................................................................................................................................28
ESGmatedCost of the Project ............................................................................................................................................................................29
Development Costs Not Funded From Bond Proceeds ..................................................................................................................................29
Payment or Construction and Acquisition of the Project and Payment of Fees .............................................................................................30
OWNERSHIP OF PROPERTY WITHIN THE DISTRICT ..........................................................................................................................:.............
APPRAISAL OF PROPERTY WITHIN THE DISTRICT ........................................................................................................................................34
TheAppraisal .....................................................................................................................................................................................................34
Valueto Speaal Tax Burden Ratios .................................................................................................................................................................37
OverlappingLiens and Priority of Lien ..............................................................................................................................................................42
Estimated Tax Burden on Single Family Hane ..............................................................................................................................................45
SPECIALRISK FACTOitS ........................................................................................................................................................................................46
Limfted Oblgation of the City to Pay Debt Service ..........................................................................................................................................46
Concentra6onof Ownership ..............................................................................................................................................................................46
APPraisedValues ...............................................................................................................................................................................................46
PropertyValues and Property Development ....................................................................................................................................................47
8ankruptcyand Foreclosure Delays ................................................................................................................................................................49
Parity Taxes and Special Assessments; Private Debt ....................................................................................................................................50
TaxDelinquencies .............................................................................................................................................................................................50
NoAcceleration Provisions ...............................................................................................................................................................................51
BallotInitiatives ..................................................................................................................................................................................................51
Proposition218 ...................................................................................................................................................................................................51
CONSTITUTIONAL LIMITATIONS ON TAXATION AND APPROPRIATIONS .................................................................................................52
CONTINUINGDISCLOSURE ..................................................................................................................................................................................53
UNDERWRITING......................................................................................................................................................................................................53
FINANGIALADVISOR ............................................................................................................................................................................................53^ I
LEGALOPINION ........................................................................................................................................................................................................54
TAXMATTERS ..........................................................................................................................................................................................................54
RATINGS....................................................................................................................................................................................................................56
NOLITIGATfON .........................................................................................................................................................................................................56
EXECUTION...............................................................................................................................................................................................................56
APPENDIX A- RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
APPENDIX B - THE APPRAISAL
APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
APPENDIX D- THE CITYOF PALM DESERT AND RIVERSIDE COUN7Y
APPENDIX E- FORM OF OPINION OF BOND COUNSEL
APPENDIX F FORM OF CONTINUING DISCLOSURE UNDERTAKINGS
APPENDIX G- THE BOOK ENTRY SYSTEM
OFFICIAL STATEMENT
$50,000,000*
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(University Park)
SPECIAL TAX BONDS
SERIES 2006A
This Official Statement, including the cover page and all Appendices hereto, is provided to
furnish certain information in connection with the issuance by the City of Palm Desert (the "City")
by and through its Community Facilities District No. 2005-1 (University Park) (the "Community
Facilities DistricY' or the "DistricY') of the bonds captioned above (the "Bonds").
Any statements made in this Officia/ Statement involving matters of opinion or of
esfimates, whether or not so expressly stated, are set forth as such and nof as representafions
of fact, and no representation is made that any of the estimates will be realized. Oefinitions of
certain terms used herein and not defined herein have the meaning set forth in the Indenture.
See "APPEND/X C— SUMMARY OF CERTA/N PROVIS/ONS OF THE /NDENTURE. "
INTRODUCTION
This introduction is nof a summary of this Official Statement. It is only a brief
description of and gurde to, and is qualified by, more comp/ete and detailed information
contained in the entire Official Statement, including the cover page and aftached appendices,
and the documents summarized or described in this O�cial Statemenf. A ful! review should be
made of the entire Official Stafement. The offering of the Bonds to potential investors is made
only by means of the entire Official Statement.
Creation of the District. The Bonds are issued pursuant to the provisions of the Mello-
Roos Community Facilities Act of 1982, as amended (Sections 53311, et seq., of the Government
Code of the State of California) (the "Act") and pursuant to a Indenture dated as of April 1, 2006
(the "Indenture") between the City and Wells Fargo Bank, National Association, Los Angeles,
Cafifornia, as fiscal agent (the "Trustee") and Resolution No. (the "Resolution")
adopted on , 2006 by the City Gouncil of the City (the "City Council"} which
authorized the issuance of the Bonds payable from Special Taxes (as defined herein) levied on
property within the District according to a methodology approved by the City. The Bonds
represent the first series of a total of $70 million of bonds authorized by the District.
* Preliminary, subject to change.
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Bond Terms. The Bonds will be dated as of and bear interest from the date of delivery
thereof at the rate or rates set forth on the cover page of this Official Statement. Interest on the
Bonds is payable on March 1 and September 1 of each year (each an "Interest Payment
Date"), commencing September 1, 2006. The Bonds will be issued without coupons in
denominations of $5>000 or any integral multiple thereof.
Registration of Ownership of 8onds. The Bonds will be issued only as fully
registered bonds in book-entry form, registered in the name of Cede & Co., as nominee of The
Depository Trust Company ("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 8 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 & Ca. 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 G— BOOK-ENTRY SYS7EM."
Use of Proceeds. Proceeds of the Bonds will primarily be used to finance a portion of
the costs of acquiring and constructing certain public infrastructure improvements (the
"Project," as described herein), including traffic signals, landscaping, street improvements,
water improvements, sewer improvements, storm drain improvements, utility improvements,
public art improvements, park improvements, and park site land acquisition. Mass grading for
construction of the improvements is substantially complete and a bid is expected to be awarded
to a general contractor in mid-March 2006 for construction of the basic infrastructure to be
financed by the Bonds. Parity Bonds are expected to be issued in the future primarily for certain
in-tract improvements and non-construction items (such as payment of fees). See '?HE
PROJECT." Proceeds of the Bonds will also be used to establish a Reserve Account (described
below) available for payment on the Bonds, to provide capitalized interest until March 1, 2007
and to pay costs of issuance of the Bonds.
Source of Payment of the Bonds. The Bonds are payable from "Net Taxes," as
described herein, which generally consist of special taxes (the "Special Tax" or "Special
Taxes"} which are to be levied by the City on taxable real property within the boundaries of the
District, less certain administrative expenses. The Bonds are also payable from the proceeds of
any foreclosure actions braught following a delinquency in payment of the Special Taxes, and
from amounts held in certain funds and accounts pursuant to the Indenture, including a Reserve
Account, all as more fully described fierein. The Special Tax applicable to each taxable parcel in
the District will be levied and collected according to the tax liability determined by the City Council
through the application of a rate and method of apportionment of Special Tax for the District (the
"Special Tax Formula") which has been approved by the City. The Speciat Tax Formula is set
forth in APPENDIX A hereto. The Special Taxes represent liens on the parcels of land subject to
a Special Tax and failure to pay the Special Taxes could result in proceedings to foreclose the
delinquent property. The Special Taxes do not constitute the personal indebtedness of the
owners of taxed parcels. See "SECURITY AND SOURCES OF PAYMENT FOR THE
BONDS — Special Tax Methodology" and "APPENDIX A— RATE AND METHOD OF
APPORTfONMENT OF SPECIAL TAX." The maximum authorized indebtedness for the District is
$70 million; the Bonds are the first series of bonds being issued by the District and additional
bonds are expected to be issued in the future. See "SECURITY AND SOURCES OF PAYMENT
FOR THE BONDS — Parity Bonds."
In the Indenture, the City directs the Trustee to establish a Reserve Account (the
"Reserve AccounY') from Bond proceeds in the amount of the Rese►ve Requirement, which
amount is available to be transferred to the Bond Fund in the event of delinquencies in the
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payment of the Special Taxes, to the extent of such delinquencies. The Reserve Account is
required to be maintained at the Reserve Requirement from moneys available under the
Indenture. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Reserve
Account." If there are additional delinquencies after depletion of funds in the Reserve Account,
the City is not obligated to pay the Bonds or supplement the Reserve Account.
Property Subject to the Special Tax. The land in the District is also known as
"University Park." The land is currently undeveloped and consists of approximately 267 acres
currently comprising 17 parcels. Most of the acreage in the District (over 60%) is planned for
residential use; a total of approximately 1,053 residential units and 268 condominium units are
currently projected for the District, with the remainder of the taxable property expected to be
developed for commercial uses. Construction of homes is not underway and no assurance can
presently be given as to actual development which will occur. Parcel 9 has an approved
Tentative Tract Map for 270 residential lots however several of the other parcels in the District
need City approval of tentative and final subdivision maps prior to development. Initial
homebuilding activity is currently projected to begin in late 2006. The residential use property is
owned or under option to purchase by Palm Desert Funding Company L.P, which acquired the
land for sale to merchant builders. The Bonds are being issued to finance the cost of backbone
infrastructure improvements necessary for development of the parcels. Mass grading is
complete on most of the parcels. See "THE DISTRICT." •
Appraised Value of Property. Property in the District is security for the Special Tax.
The City authorized the preparation of an appraisal report for the real property within the District,
which sets forth a total value estimate of property in the District of $227,480,000, as of January
10, 2006. The valuaiion is not a bulk sale valuafion of all the property in the District. The
valuation assumes completion of the infrastructure improvements funded by the Bonds and
accounts for the impact of the lien of the Special Tax securing the Bonds. See `THE PROJECT."
In considering the estimates of value evidenced by the appraisal, it should be noted that the
appraisal is based upon a number of standard and special assumptions which affected the
estimates as to value, in addition to the assumption of completion of the Bond financed
improvements, which do not yet exist. See "APPRAISAL OF PROPERTY WffHIN Tl� DISTRICT'
and Appendix B. The appraised valuation of property in the District is 4.55'` times the
$50,000,000'' aggregate principal amount of the Bonds.
Risks of lnvestment. See the section of this Official Statement entitled "SPECIAL RISK
FACTORS" for a discussion of special factors that should be considered, in addition to the other
matters set forth herein, in considering the investment quality of the Bonds.
' Preliminary, subject to change.
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Limited Obligation of the City. The general fund of the City is not liable and
the full faith and credit of the City is not pledged for the payment of the interest on,
or principal of or redemption premiums, if any, on the Bonds. The Bonds are not
secured by a legal or equitable pledge of or charge, lien or encumbrance upon any
property of the City or any of its income or receipts, except the money in the Special
Tax Fund (described herein) established under the Indenture, and neither the
payment of the interest on nor principal of or redemption premiums, if any, on the
Bonds is a general debt, liability or obligation of the City. The Bonds do not
constitute an indebtedness of the City within the meaning of any constitutional or
statutory debt limitation or restrictions and neither the City Council, the City nor any
officer or employee thereof are liable for the payment of the interest on or principal
of or redemption premiums, if any, on the Bonds other than from the proceeds of
the Special Taxes and the money in the Special Tax Fund, as provided in the
Indenture.
Summary of lnformation. Brief descriptions of certain provisions of the Indenture, the
Bonds and certain other documents are included herein. The descriptions and summaries of
documents herein do not purport to be comprehensive or definitive, and reference is made to
each such document for the complete details of all its respective terms and conditions, copies of
which are available for inspection at the City offices. All statements herein with respect to
certain rights and remedies are qualified by reference to laws and principles of equity relating to
or affecting creditors' rights generaf{y. Capitalized terms used in this Official Statement and not
otherwise defined herein have the meanings ascribed to such terms in the Indenture. The
information and expressions of opinion herein speak only as of the date of this Official Statement
and are subject to change without notice. Neither delivery of this Official Statement, any sale
made hereunder, nor any future use of this Official Statement shall, under any circumstances,
create any implication that there has been no change in the affairs of the City or the District since
the date hereof.
Any statements made in this Officia/ Statement involving mafters of opinion or ot
estimates, whether or not so expressly stated, are sef forth as such and not as representations
of fact, and no representafion is made that any of the estimates wil! be realized. For definifions
of certain terms used herein and not defined herein, see "APPENDIX C— SUMMARY OF
CERTAfN PROVlSlONS OF THE !IVDENTURE."
THE BONDS
Authority for Issuance
The Bonds are issued pursuant to the Indenture, approved by Resolution No. -06-
adopted by the City Council on , 2006, and the Act.
On January 12, 2006, the City Council adopted Reso{ution No. 06-6 (the "Resotution of
Formation"), which formed the District. The District was established and authorized to incur
bonded indebtedness in an aggregate principal amount not to exceed $70 million at a special
election in the District held on the same day. The Bonds are the first series to be issued under
the authorization; additional bonds are expected to be issued as development in the District
proceeds. Under the provisions of the Act, since there were fewer than 12 registered voters
residing within the District at a point during the 90-day period preceding the adoption of the
Resolution of Formation, the qualified electors entitled to vote in the special election consisted of
the landowners at the time of formation. The landowners voted to incur the indebtedness and to
approve the annual levy of Special Taxes to be collected within the District, for the purpose of
paying for the Project, including repaying any indebtedness of the District, replenishing the
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Reserve Account and paying the administrative expenses of the District. See `THE DISTRICT'
herein. The Bonds are the first series of bonds of the $7Q million authorized maximum
indebtedness for the District; additional bonds are expected to be issued in the future. See
"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Parity Bonds."
Description of the Bonds
Bond Terms. The Bonds will be dated as of and bear interest from the date of delivery
thereof at the rates and mature in the amounts and years, as set forth on the cover page hereof.
The Bonds are being issued in the denomination of $5,000 or any integral multiple thereof.
Interest on the Bonds will be payable semiannually on March 1 and September 1 of each
year (each an "Interest Payment Date"), commencing September 1, 2006. The principal of the
Bonds and premiums due upon the redemption thereof, if any, will be payable in lawful money of
the United States of America at the principal corporate trust office of the Trustee in Los Angeles,
California, or such other place as designated by the Trustee, to the person whose name shall
appear in the Bond Register as the Owner of such Bond as of the close of business on the
Record Date, upon presentation and surrender of the Bonds; provided that so long as any Bonds
are in book-entry form, payments with respect to such Bonds will be made by wire transfer, or
such other method acceptable to the Trustee, to DTC.
Book-Entry Only Sysiem. The Bonds are being issued as fully registered bonds,
registered in the name of Cede 8� Co., as nominee of The Depository Trust Company, New York,
New York ("DTC"), and will be available to ultimate purchasers 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 8� Co., as nominee of DTC, references herein to the Owners will mean Cede 8� Co., and will
not mean the ultimate purchasers of the Bonds. The Trustee will make payments of the principal,
premium, if any, and interest on the Bonds directly to DTC, or its nominee, Cede 8 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 G—BOOK ENTRY SYSTEM." below.
Calculation and Payment of lnterest. Interest on the Bonds will be computed on the
basis of a 360-day year consisting of twelve 30-day months. Interest on the Bonds (including
the final interest payment upon maturity or earlier redemption). Interest is payable from the
Interest Payment Date next preceding the date of authentication, unless (i) such date of
authentication is an Interest Payment Date in which event interest shall be payable from such
date of authentication, (ii) the date of authentication is after a Record Date but prior to the
immediately succeeding Interest Payment Date, in which event interest shall be payable from the
Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of
authentication is prior to the close of business on the first Record Date occurring after the
issuance of such Bond, in which event interest shall be payable from the dated date of such
Bond; provided, however, 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 or, if no interest has been paid or made available
for payment on that Bond, interest on that Bond is payable from its dated date. Such interest shall
be paid by check of the Trustee mailed by first class mail, postage prepaid, to such Bondowner
at his or her address as it appears on the Bond Register. In addition, upon a request in writing
received by the Trustee on or before the applicable Record Date from an Owner of $1,000,000
or more in principal amount of the Bonds or of any issue of Parity Bonds, payment shall be made
on the Interest Payment Date by wire transfer in immediately available funds to an account
designated by such Owner; provided that so long as any Bonds are in book-entry form,
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payments with respect to such Bonds will be made by wire transfer, or such other method
acceptable to the Trustee, to DTC. See "APPENDIX G— BOOK ENTRY SYSTEM" below.
Redemption
Opiional Redemption. The Bonds maturing on or after September 1, 2017 may be
redeemed, at the option of the District, from any source of funds on any Interest Payment Date
on or after September 1, 2016, in whole, or in part from such maturities as are selected by the
District and by lot within a maturity, at the foll�wing redemption prices expressed as a
percentage of the principal amount to be redeemed, together with accrued interest to the date of
redemption:
Redemption
Redemqtion Dates Price
September 1, 2016 and March 1, 2017 102%
September 1, 2017 and March 1, 2018 101
September 1, 2018 and Interest Payment Dates thereafter 100
Mandatory Redemption From Prepayments. The Bonds are subject to extraordinary
redemption as a w hole, or in part on a pro rata basis arrbng maturities, on any Interest Payment
Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption
Account pursuant to the Indenture, plus any related applicable amounts transferred from the
Reserve Account, at the follow ing redemption prices, expressed as a percentage of the principal
amount to be redeemed, together w ith accrued interest to the redemption date:
Redemption
Redemption Dates Price
Prior to September 1, 2016 103%
September 1, 2016 and March 1, 2017 102
September 1, 2017 and March 1, 2018 101
September 1, 2018 and Interest Payment Dates thereafter 100
Mandatory Sinking Fund Redempiion. The Term Bonds maturing on September 1,
20 and September 1, 20 shall be called before maturity and redeemed, from the Sinking Fund
Payments that have been deposited into the Redemption Account, on September 1, 20 and
September 1, 20 respectively, and on each September 1 thereafter prior to maturity, in
accordance with the schedule of Sinking Fund Payments set forth below. The Term Bonds so
called for redemption shall be selected by the Trustee by lot and shall be redeemed at a
redemption price for each redeemed Term Bond equal to the principal amount thereof, plus
accrued interest to the redemption date, without premium, as follows:
Term Bonds of
Mandatory
Redemption Date Sinking Fund
(Se�tember 11 Pavment
�
Term Bonds of
Mandatory
Redemption Date Sinking Fund
fSeptember 1) Pavment
In the event of a partial optional redemption or extraordinary redemption of the Term
Bonds, each of the remaining Sinking Fund Payments for such Term Bonds, as described above,
w il{ be reduced, as nearly as practicable, on a pro rata basis, in integral multipfes of $5,000.
Purchase ln Lieu of Redemption. IF during the Fscal Year immediately preceding one
of the redemption dates specified above the District purchases Term Bonds, at least 45 days
prior to the redemption date the District shall notify the Trustee as to the principal amount
purchased and the amount of Term Bonds so purchased shall be credited at the time of
purchase, to the extent of the full principal amount thereof, to reduce such upcoming Sinking
Fund Payment for the applicable maturity of the Term Bonds so purchased.
Se/ection of Bonds for Redemption. If less than all of the Bonds Outstanding are to
be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed
shall be in the principal amount of $5,000 or an integral muftiple thereof. h selecting portions of
such Bonds for redemption, the Trustee shall treat such Bonds as rep�esenting that number of
Bonds of $5,000 denominations w hich is obtained by dividing the principal amount of such Bonds
to be redeemed in part by $5,000.
Redemption Procedure by Trustee. The Trustee shall give notice, in the name of the
District, of the redemption of such Bonds; provided, however, that a notice of a redemption to be
made from other than from Sinking Fund Payments shall be conditioned on there being on deposit
on the redemption date sufficient money to pay the redemption price of the Bonds to be
redeemed. Such notice of redemption shall (a) specify the CUSIP numbers (if any), the bond
numbers and the maturity date or dates of the Bonds selected for redemption, except that w here
all of the Bonds are subject to redemption, or all the Bonds of one maturity, are to be redeemed,
the bond nurr�ers of such issue need not be specified; (b) state the date fixed for redemption
and surrender of the Bonds to be redeemed; (c) state the redemption price; (d) state the place or
places w here the Bonds are to be redeemed; (e) in the case of Bonds to be redeemed only in
part, state the portion of such Bond w hich is to be redeemed; (f) state the date of issue of the
Bonds as originally issued; (g) state the rate of interest borne by each Bond being redeemed;
and (h) state any other descriptive information needed to identify accurately the Bonds being
redeemed as shall be specified by the Trustee. Such notice shall further state that on the date
fixed for redemption, there shall become due and payable on each Bond or portion thereof called
for redemption, the principal thereof, together w ith any premium, and interest accrued to the
redemption date, and that from and after such date, interest thereon shall cease to accrue and
be payable. At least thirty (30) days but no rrbre than forty-five (45) days prior to the
redemption date, the Trustee shall mail a copy of such notice, by first class mail, postage
prepaid, to the respective Ow ners thereof at their addresses appearing on the Bond Register,
and to the original purchaser of the Bonds, as applicable. The actual receipt by the Ow ner of
any Bond or the original purchaser of any Bond of notice of such redemption shall not be a
condition precedent to redemption, and neither the failure to receive nor any defect in such
notice shall affect the validity of the proceedings for the redemption of such Bonds, or the
cessation of interest on the redemption date.
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Effecf of Redemption. From and after the date fixed for redemption, if funds available
for the payment of the principal of, and interest and any premium on, the Bonds so called for
redemption are deposited in the Bond Fund, such Bonds so called will cease to be entitled to any
benefit under the Indenture other than the right to receive payment of the redemption price, and
no interest will accrue thereon on or after the redemption date specified in such notice.
Transfer or Exchange of Bonds
So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC,
transfers and exchanges of Bonds will be made in accordance with DTC procedures. See
"Appendix G" below. Any Bond may, in accordance with its terms, be transferred or exchanged
by the person in whose name it is registered, in person or by his duly authorized attorney, upon
surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument of
transfer in a form approved by the Trustee. Whenever any Bond or Bonds are surrendered for
transfer or exchange, the City will execute and the Trustee will authenticate and deliver a new
Bond or Bonds, for a like aggregate principal amount of Bonds of authorized denominations and
of the same maturity. The cost for any services rendered or any expenses incurred by the
Trustee in connection with any such transfer or exchange will be paid by the City. The Trustee
will collect from the Owner requesting such transfer any tax or other governmental charge
required to be paid with respect to such transfer or exchange.
No transfers or exchanges of Bonds will be required to be made (i) within 15 days prior
to the date established by the Trustee for selection of Bonds for redemption or (ii) with respect
to a Bond after such Bond has been selected for redemption.
ESTIMATED SOURCES AND USES OF FUNDS
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 Original lssue Discount
Total
Estimated Uses of Funds:
Deposit to City Facilities Fund
Deposit to CVWD Fund
Deposit to Reserve Account
Deposit to Interest Account �'�
Costs of {ssuance �2�
Total
�'� f2epresents an amount sufficient to provide for interest up to and including
March l, 2007.
�Z� Includes fees of Bond Counsel, initial fees, expenses and charges of the
Trustee, costs of printing the O�cial Statement, administrative fees of the
City, special tax consultant , appraiser, Undenvriter's discount, financial
advisory fees, and other costs of issuance.
�
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
Special Taxes
A Special Tax applicable to each taxable parcel in the District will be levied and collected
according to the tax liability determined by the City Council through the application of the Special
Tax Formula prepared by MuniFinancial, Temecula, Califomia (the "Special Tax Consultant")
and set forth in APPENDIX A hereto for all taxable properties in the District.
Interest and principal on the Bonds is payable from the annual Net Taxes derived from the
Special Taxes to be levied and collected on taxable property within the District, from amounts
held in the funds and accounts established under the Indenture (other than the Rebate Fund) and
from the proceeds, if any, from the sale of such property for delinquency of such Special Taxes.
"Net Taxes" are defined in the Indenture as the Gross Taxes minus amounts set aside to pay
Administrative Expenses not to exceed the Administrative Expenses Cap. "Gross Taxes" are
the amount of all Special Taxes received by the District, together with the proceeds collected
from the sale of property pursuant to the foreclosure provisions of this Indenture for the
delinquency of such Special Taxes remaining after the payment of all costs related to such
foreclosure actions. "Administrative Expenses" are the administrative costs with respect to
the calculation and collection of the Special Taxes, including all attorneys' fees and other costs
related thereto, the fees and expenses of the Trustee, any fees and related costs for credit
enhancement for the Bonds or any Parity Bonds which are not otherwise paid as Costs of
Issuance, any costs related to the DistricYs compliance with state and federal laws requiring
continuing disclosure of information concerning the Bonds and the District, and any other costs
otherwise incurred by the City staff on behalf of the District in order to carry out the purposes of
the District as set forth in the Resolution of Formation and any �bligation of the District under the
Indenture.
Pursuant to the Act and this Indenture, the Bonds and any Parity Bonds shall be equally
payable from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the
Administrative Expenses Account), without priority for number, date of the Bonds or Parity
Bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on
and principal of the Bonds and any Parity Bonds and any premiums upon the redemption thereof,
shall be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund
(exclusive of the Administrative Expenses Account), which are hereby set aside for the
payment of the Bonds and any Parity Bonds. Amounts in the Special Tax Fund (other than the
Administrative Expenses Account therein) shall constitute a trust fund held for the benefit of the
Owners to be applied to the payment of the interest on and principal of the Bonds and any Parity
Bonds and so long as any of the Bonds and any Parity Bonds or interest thereon remain
Outstanding shall not be used for any other purpose, except as permitted by this Indenture or
any Supplemental Indenture. Notwithstanding any provision contained in this Indenture to the
contrary, Net Taxes deposited in the Rebate Fund and the Surplus Fund shall no longer be
considered to be pledged to the Bonds or any Parity Bonds, and none of the Rebate Fund, the
Surplus Fund, the City Facilities Fund, the CVWD Facilities Fund, or the Administrative Expenses
Account of the Special Tax Fund shall be construed as a trust fund held for the benefit of the
Owners. "Administrative Expenses Cap" is an amount equal to $75,000 per Bond Year,
escalating by 2% each Bond Year commencing July 1, 2007.
The Special Taxes are exempt from the property tax limitation of Article XIIIA of the
California Constitution, pursuant to Section 4 thereof as a"special tax" authorized by a two-
thirds vote of the qualified electors. The levy of the Special Taxes was authorized by the City
pursuant to the Act in an amount determined according to the Special Tax Formula approved by
the City. See "Special Tax Methodology" below and "APPENDIXA—RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAX."
�
The amount of Special Taxes that the District may levy in any year, and from which
principal and interest on the Bonds is to be paid, is strictly limited by the maximum rates approved
by the qualified electors within the District which are set forth as the "Maximum Annual
Special Tax" in the Special Tax Formula. Under the Special Tax Formula, Special Taxes for the
purpose of making payments on the Bonds will be levied annually in an amount, not in excess of
the Maximum Annual Special Tax. The Special Taxes and any interest earned on the Special
Taxes constitute a trust fund for the principal of and interest on the Bonds pursuant to the
Indenture and, so long as the principal of and interest on these obligations remains unpaid, the
Special Taxes and investment eamings thereon will not be used for any other purpose, except
as perm�ted by the Indenture, and will be held in trust for the benefit of the owners thereof and
will be applied pursuant to the Indenture. The Special Tax Formula apportions the Special Tax
Requirement (as defined in the Special Tax Formula and described below) among the taxable
parcets of real property within the District according to the rate and methodology set forth in the
Special Tax Formula. See "Special Tax Methodology" below. See also "APPENDIXA—RATE
AND METHOD OF APPORTIONMENT OF SPECIAL TAX."
The City may levy the Special Tax at the Maximum Annual Special Tax rate authorized by
the qualified electors within the District, as set forth in the Special Tax Formula, if conditions so
require. The City has covenanted to annually levy the Special Taxes in an amount at least
sufficient to pay the Special Tax Requirement (as defined below). Because each Special Tax
levy is limited to the Maximum Annual Special Tax rates authorized as set forth in the Special Tax
Formula, no assurance can be given that, in the event of Special Tax delinquencies, the amount
of the Special Tax Requirement will in fact be collected in any given year. See "SPECIAL RISK
FACTORS — Tax Delinquencies" herein. The Special Taxes are collected for the City by the
County of Riverside in the same manner and at the same time as ad valorem property taxes.
Neither the faith and credit nor the taxing power of the City, the State of California or any
political subdivision thereof other than the District is pledged to the payment of the Bonds or any
Parity Bonds. Except for the Special Taxes, no other taxes are pledged to the payment of the
Bonds or any Parity Bonds. The Bonds and any Parity Bonds are not general or special
obligations of the City nor general obligations of the District, but are limited obligations of the
District payabfe solely from certain amounts deposited by the District in the Special Tax Fund
(exclusive of the Administrative Expenses Account), as described in the Indenture. The DistricYs
limited obligation to pay the principal of, premium, if any, and interest on the Bonds and any Parity
Bonds from amounts in the Special Tax Fund (exclusive of the Administrative Expenses
Account) is absolute and unconditional, free of deductions and without any abatement, offset,
recoupment, diminution or set-off whatsoever. No Owner of the Bonds or any Parity Bonds may
compel the exercise of the taxing power by the District (except as pertains to the Special Taxes)
or the City or the forfeiture of any of their property. The principal of and interest on the Bonds
and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of the
City, the State of California or any of its political subdivisions within the meaning of any
constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal
or equitable�pledge, charge, lien, or encumbrance upon any of the DistricYs property, or upon
any of its income, receipts or revenues, except the Net Taxes and other amounts in the Special
Tax Fund (exclusive of the Administrative Expenses Account) which are, under the terms of this
Indenture and the Act, set aside for the payment of the Bonds, any Parity Bonds and interest
thereon and neither the members of the legislative body of the District or the City Council of the
City nor any persons executing the Bonds or any Parity Bonds, are liable personally on the
Bonds or any Parity Bonds, by reason of their issuance.
Notwithstanding anything to the contrary contained in the Indenture, the District shall not
be required to advance any money derived from any source of income other than the Net Taxes
for the payment of the interest on or the principal of the Bonds or any Parity Bonds, or for the
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performance of any covenants contained therein. The District may, however, advance funds for
any such purpose, provided that such funds are derived from a source legally available fo� such
purpose.
Special Tax Methodology
The Special Tax authorized under the Act applicable to land within the District will be
levied and collected according to the tax liability determined by the City through the application of
the appropriate amount or rate as described in the Special Tax Formula set forth in
"APPENDIX A— RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." Capitalized terms
set forth in this section and not otherwise defined have the meanings set forth in the Special Tax
Formula.
Determination of Special Tax Requirement. Each year, the City will determine the
Special Tax Requirement of the District for the upcoming fiscal year. The "Special Tax
Requirement" means that amount of Special Tax revenue required in any Fiscal Year for the
District to: (i) pay annual debt service on all Outstanding Bonds due in the Bond Year beginning in
such Fiscal Year; (ii) pay other periodic costs on Outstanding Bonds, including but not limited to,
credit enhancement and rebate payment; (iii) pay Administrative Fees and Expenses; (iv) pay
any amounts required to establish or replenish any Reserve Accounts for all Outstanding Bonds
in accordance with the Indenture; (v) subject to the limitation that the Special Tax levied against
any parcel of Residentia� Property shall not be increased by more than ten percent per year as a
consequence of delinquency or default in the payment of Special Taxes by the owner of any
other parcel in the District, to pay for reasonably anticipated Special Tax delinquencies based on
the delinquency rates for the Special Tax levy in the previous Fiscal Year, and (vi) pay directly
for acquisition and/or construction of public improvements which are authorized to be financed
by CFD No. 2005-1 provided that the inclusion of such amount does not cause an increase in the
levy of Special Tax on the Undeveloped Property; less (vii) a credit for Available Funds.
The Special Tax Requirement is the basis for the amount of Special Tax to be levied
within the District. In no event may the City levy a Special Tax in any year above the Ma�dmum
Annual Special Tax identified for each parcel in the Special Tax Formula.
Parcels Subject to the Specia/ Tax. The City will prepare a list of the parcels subject
to the Special Tax using the records of the City and the County Assessor. The City will tax all
parcels within the District except property which is exempt from the Special Tax pursuant to the
Special Tax Formula.
Annual Special Tax Levy. Property in the District has been categorized as being
within Zone A, B, C, D or E, as shown on the map included in the Special Tax Formula. The
Special Tax will be levied each year by Zone by calculating the Special Tax Requirement which
needs to be generated by all Taxable Property in each Zone of the District; the Special Tax (up to
maximum allowable amount) then will be levied annually until the amount of Special Taxes equals
the annual Special Tax Requirement. The property in the District to be developed as single family
residential is in Zone E. The Special Tax shall be levied each Fiscal Year as foUows:
First: The Special Tax shall be levied Proportionately on all Developed Property at a
rate up to 100°/a of the applicable Assigned Special Tax to satisfy the Special Tax
Requirement.
Second: If additional monies are needed to satisfy the Special Tax Requirement
after the first step has been completed, the Special Tax shall be levied Proportionately on all
Undeveloped Property within Zone A, Zone B, Zone C, Zone D, and Zone E, at a rate up to
100% of the Maximum Annual Special Tax for Undeveloped Property. In determining the
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Acreage of an Assessor's Parcel of Undeveloped Property for purposes of determining the
annual Special Tax to be levied on such Assessor's Parcels of Undeveloped Property, the
CFD Administrator shall not include any Acreage shown on any applicable tentative
subdivision map or other land use entitlement approved by the City that designates such
Acreage for a use that would be classified as Open Space, Property Owner Association
Property, or Public Property.
Third: If additional monies are needed to satisfy the Special Tax Requirement after
the first two steps have been completed, the Special Tax to be levied on each Assessor's
Parcel of Developed Property whose Maximum Annual Special Tax is derived by the
application of the Backup Special Tax shall be increased Proportionately from the Assigned
Special Tax up to the Maximum Annual Special Tax for each such Assessor's Parcel.
Fourth: If additional monies are needed to satisfy the Special Tax Requirement after
the first three steps have been completed, then the Special Tax shall be levied
Proportionately on all Provisional Undeveloped Property at a rate up to 100% of the
Maximum Annual Special Tax for Undeveloped Property.
Termination of the Special Tax. The Special Tax will be levied and collected (up to
maximum allowable amount) for as long as needed to pay the principal and interest on the Bonds
and other costs incurred in order to construct and acquire the authorized District-funded facilities
and to pay the Special Tax Requirement. The Special Tax Formula provides that the Special Tax
may not be levied on any parcel in the District after fiscal Year 2045-46. When all Special Tax
Requirements incurred by the District have been paid, the Special Tax will cease to be levied.
Prepayment of the Special Tax. The Special Tax Formula provides that landowners
of Developed Property or Undeveloped Property for which a building permit has been issued, or
Provisional Undeveloped Property, may permanently satisfy all or a portion of the Special Tax by
a cash settlement with the City. The amount of the prepayment required is to be calculated
according to a formula set forth in the Special Tax Formula, which is generally based on the
Parcel's share of the outstanding Bonds and remaining facilities costs which have not been
bonded, the Reserve Account, fees, call premiums, negative arbitrage and any expenses
incurred by the City in connection with the prepayment and expected future facilities costs.
Levy of Annual Special Tax; Maximum Annual Special Tax
The annual Special Tax will be calculated by the City and levied to provide money for debt
service on the Bonds and Parity Bonds, replenishment of the Reserve Account, anticipated
Special Tax delinquencies, administration of the District, and for payment of pay-as-you-go
expenditures (to the extent permitted by the City) of the Project or authorized District funded
facilities not funded from Bond proceeds provided that the inclusion of such amount does not
cause an increase in the levy of Special Tax on the Undeveloped Property. In no event may the
City levy a Special Tax in any year above the Maximum Annual Special Tax identified for each
parcel in the Special Tax Formula. The Maximum Annual Special Tax per Zone E property
(detached single family residential unit) ranges from $1.38 to $1.67 per square foot of Residential
Floor Area (as defined in the Special Tax Formula). See "APPENDIX A- RATE AND MEl'}-IOD oF
APPORTIONMENT OF SPECIAL TAX" and for a table showing the expected land uses and
assigned Maximum Annual Special Taxes, see "Attachment 2" in such Appendix.
The Annual Maximum Annual Special Tax is not allowed to escalate and decreases as
property in the District transitions from undeveloped to developed. At the time the Bonds are
issued, property in the District is undeveloped and the first year Ma�dmum Special Tax, based on
gross acreage, is estimated to be approximately $7.33 million; upon buildout of the District the
Maximum Special Tax, based on projected net taxable acreage, is estimated to be approximately
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$5.07 million. Assuming level debt service of approximately $3.42 million per year, the annual
debt service coverage from the Maximum Special Tax is estimated to begin at approximately
2.144 and transition down to approximately 1.487 at buildout.
The Special Tax will be levied in an amount at least equal to the Special Tax Requirement
as described in the Special Tax Formula and may be levied in an amount up to the maximum
rates, which is allowed to include a pay-as-you-go component to pay directly for acquisition
and/or construction of public improvements which are authorized to be financed by the District,
provided that the inclusion of such amount dces not cause an increase in the levy of Special Tax
on the Undeveloped Property, to pay for a portion of the cost of the Project not funded by
proceeds of bonds issued for the District. See "APPENDtX A- RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAX" for a copy of the Special Tax Formula.
Special Tax Fund
When received, the Special Taxes are required under the Indenture to be deposited into
a Special Tax Fund to be held by the Trustee in trust for the benefit of the District and the
Owners of the Bonds. The Trustee shall, on each date on which the Special Taxes (other than
Prepayments) are received, deposit the Special Taxes in the Special Tax Fund. The Trustee
shall transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in the
amounts set forth in the following Sections, in the following order of priority, to: (i) the
Administrative Expenses Account of the Special Tax Fund; (ii) the Interest Account of the
Special Tax Fund; (iii) the Principal Account of the Special Tax Fund; (iv) the Redemption
Account of the Special Tax Fund; (v) the Reserve Account of the Special Tax Fund; (vi) the
Rebate Fund; and (vii) the Surplus Fund.
At least 5 Business Days prior to each Interest Payment Date the Trustee shall transfer to
the Interest Account, the Principal Account and the Redemption Account, as applicable, from the
Special Tax Fund the amounts required for debt service on the Bonds and Parity Bonds on such
Interest Payment Date.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the
Parity Bonds and may be used by the District for any lawful purpose. In the event that the
District reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt
service on any Outstanding Bonds or Parity Bonds, the District will notify the Trustee and the
Trustee is required to segregate such amount into a separate subaccount.
After making the required prior transfers, as soon as practicable after each September 1,
and in any event prior to each October 1, the Trustee sha11 transfer all remaining amounts in the
Special Tax Fund to the Surplus Fund, untess on or prior to such date, it has received a
Certificate of an Authorized Representative directing that certain amounts be retained in the
Special Tax Fund because the District has included such amounts as being available in the
Special Tax Fund in calculating the amount of the levy of Special Taxes for such Fiscal Year.
Moneys deposited in the Surplus Fund will be transferred by the Trustee at the direction of an
Authorized Representative of the District (i) to the Interest Account, the Principal Account or the
Redemption Account of the Special Tax Fund to pay the principal of, including Sinking Fund
Payments, premium, if any, and interest on the Bonds and any Parity Bonds when due in the
event that moneys in the Special Tax Fund and the Reserve Account of the Special Tax Fund are
insufficient therefor, (ii) to the Reserve Account in order to replenish the Reserve Account to
the Reserve Requirement, (iii) to the Administrative Expenses Account of the Special Tax Fund to
pay Administrative Expenses to the extent that the amounts on deposit in the Administrative
Expenses Account of the Special Tax Fund are insufficient to pay Administrative Expenses,
(iv) to the Backbone Infrastructure Account or Other Facilities Account of the City Facilities Fund
to pay Project Costs required or expected to be funded from such account pursuant to the
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Acquisition Agreement, (v) to the Backbone Infrastructure Account or Other Facilities Account of
the CVWD Facilities Fund to pay Project Costs required or expected to be funded from such
account pursuant to the Acquisition Agreement and the JCFA, or (vi) for any other lawful
purpose of the District.
Deposit and Use of Proceeds of Bonds
The Bonds are additionally secured by amounts generated from proceeds of the Bonds,
together with interest earnings thereon pledged under the Indenture. The proceeds of the
Bonds will be paid to the Trustee, who will deposit such proceeds in the Reserve Account,
Interest Account and Costs of Issuance Account established under the Indenture, and transfer
to the City the amounts designated for deposit into the City Facilities Fund and the CVWD
Facilities Fund for the payment of costs of the Project. See "APPENDIX C— SUMMARY OF
CERTAIN PROVISIONS OF THE INDENTURE" for information on use of the moneys, including
investment earnings thereon, in the various funds established under the Indenture. See also
�Reserve AccounY' and "Facilities Funds" below.
Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure
The Special Tax will be collected in the same manner and the same time as ad valorem
property taxes, except at the City's option, the Special Taxes may be billed directly to property
owners. In the event of a delinquency in the payment of any installment of Special Taxes, the
City is authorized by the Act to order institution of an action in superior court to foreclose the lien
therefor.
The City has covenanted in the Indenture with and for the benefit of the Owners of the
Bonds that it (i) w ill cormience judicial foreclosure proceedings against parcels w ith delinquent
Special Taxes in excess of $10,000 by the October 1 follow ing the close of each Fiscal Year in
w hich such Special Taxes w ere due; and (ii) w ill corrrnence judicial foreclosure proceedings
against all parcels w ith delinquent Special Taxes by the October 1 follow ing the cbse of each
Fiscal Year in w hich it receives Special Taxes in an amount w hich is less than 95% of the total
Special Tax levied and the amount on deposit in the Reserve Account is at less than the Reserve
Requirement, and (iii) w ifl diligently pursue such foreclosure proceedings until the delinquent
Special Taxes are paid. The District further covenants that it w ill deposit the net proceeds of any
foreclosure in the Special Tax Fund and w ill apply such proceeds remaining after the payment of
Administrative Expenses to make current payments of principal and interest on the Bonds and
any Parity Bonds, to bring the amount on deposit in the Reserve Account up to the Reserve
Requirement and to pay any delinquent installments of principal or interest due on the Bonds and
any Parity Bonds.
Under the Act, foreclosure proceedings are instituted by the bringing of an action in the
superior court of the county in which the parcel lies, naming the owner and other interested
persons as defendants. The action is prosecuted in the same manner as other civil actions. h
such action, the real property subject to the special taxes may be sold at a judicial foreclosure
sale for a minimum price which will be sufficient to pay or reimburse the delinquent specia{ taxes.
The owners of the Bonds benefit from the Reserve Account established pursuant to the
Indenture; however, if delinquencies in the payment of the Special Taxes with respect to the
Bonds are significant enough to completely deplete the Reserve Account, there could be a
default or a delay in payments of principal and interest to the owners of the Bonds pending
prosecution of foreclosure proceedings and receipt by the City of the proceeds of foreclosure
sales. Provided that it is not levying the Special Tax at the Maximum Annual Special Tax rates set
forth in the Special Tax Formula, the City may adjust (but not to exceed the Maximum Annual
Special Tax) the Special Taxes levied on all property within the District subject to the Special Tax
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to provide an amount required to pay debt service on the Bonds and to replenish the Reserve
Account.
Under current law, a judgment debtor (property owner) has at least 140 days from the
date of service of the notice of levy in which to redeem the property to be sold. If a judgment
debtor fails to redeem and the property is sold, his or her only remedy is an action to set aside
the sale, which must be brought within 90 days of the date of sale. If, as a result of such an
action a foreclosure sale is set aside, the judgment is revived and the judgment creditor is entitled
to interest on the revived judgment as if the sale had not been made (California Code of Civil
Procedure Section 701.680).
Foreclosure by court action is subject to normal litigation delays, the nature and extent of
which are largely dependent upon the nature of the defense, if any, put forth by the debtor and
the condition of the calendar of the superior court of the county. Such foreclosure actions can
be stayed by the superior court on generally accepted equitable grounds or as the result of the
debtor's filing for relief under the Federal bankruptcy laws. The Act provides that, upon
foreclosure, the Special Tax lien will have the same lien priority as is provided for ad valorem
taxes and special assessments. See �APPRAISAL OF PROPERTY WITHIN THE DISTRICT —
Priority of Lien."
No assurances can be given that the real property subject to a judicial foreclosure sale
will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special
Tax installment. The Act does not require the District to purchase or otherwise acquire any lot or
parcel of property foreclosed upon if there is no other purchaser at such sale.
Section 53356.6 of the Act requires that property sold pursuant to foreclosure under the
Act be sold for not less than the amount of judgment in the foreclosure action, plus post-
judgment interest and authorized costs, unless the consent of the owners of 75% of the
outstanding Bonds is obtained. However, under Section 53356.6 of the Act, the District, as
judgment creditor, is entitled to purchase any property sold at foreclosure using a"credit bid,"
where the District could submit a bid crediting all or part of the amount required to satisfy the
judgment for the delinquent amount of the Special Tax. If the District becomes the purchaser
under a credit bid, the District must pay the amount of its credit bid into the redemption fund
established for the Bonds, but this payment may be made up to 24 months after the date of the
foreclosure sale.
Reserve Account
A Reserve Account (the "Reserve AccounY') for the Bonds will be established under
the Indenture, to be held by the Trustee. Upon delivery of the Bonds, the amount on deposit in
the Reserve Account will be established by depositing certain proceeds of the Bonds in the
amount of the "Reserve Requirement" for the Bonds, which is that amount as of any date of
calculation equal to the lesser of (i) 10% of the initial principal amount of the Bonds and Parity
Bonds, if any, (ii) Maximum Annual Debt Service on the then Outstanding Bonds and Parity
Bonds, if any; and (iii) 125% of average Annual Debt Service on the then Outstanding Bonds and
Parity Bonds, if any. Moneys in the Reserve Account shall be used solely for the purpose of
paying the principal of, including Sinking Fund Payments, and interest on the Bonds and any
Parity Bonds when due in the event that the moneys in the Interest Account and the Principal
Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account
of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due and for the
purpose of making any required t�ansfer to the Rebate Fund pursuant to the Indenture upon
written direction from the City. If the amounts in the Interest Account, the Principal Account or
the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including
Sinking Fund Payments, or interest on any Parity Bonds when due, or amounts in the Special Tax
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Fund are insufficient to make transfers to the Rebate Fund when required, the Trustee shall
withdraw from the Reserve Account for deposit in the Interest Account, the Principal Account or
the Redemption Account of the Special Tax Fund or the Rebate Fund, as applicable, moneys
necessary for such purposes.
Whenever moneys are withdrawn from the Reserve Account, after making the required
transfers referred for payment of the Bonds, the Trustee shall transfer to the Reserve Account
from available moneys in the Special Tax Fund, or from any other legally available funds which
the District elects to apply to such purpose, the amount needed to restore the amount of such
Reserve Account to the Reserve Requirement. Moneys in the Special Tax Fund shall be deemed
available for transfer to the Reserve Account only if the Trustee determines that such amounts
will not be needed to make the deposits required to be made to the Administrative Expenses
Account, the Interest Account, the Principal Account or the Redemption Account of the Special
Tax Fund on or before the next September 1. If amounts in the Special Tax Fund together with
any other amounts transferred to replenish the Reserve Account are inadequate to restore the
Reserve Account to the Reserve Requirement, then the District shall include the amount
necessary futly to restore the Reserve Account to the Reserve Requirement in the next annual
Special Tax levy to the extent of the maximum permitted Special Tax rates.
In connection with a redemption of Bonds or Parity Bonds, or a partial defeasance of
Bonds or Parity Bonds, amounts in the Reserve Account may be applied to such redemption or
partial defeasance so long as the amount on deposit in the Reserve Account following such
redemption or partial defeasance equals the Reserve Requirement.
To the extent that the Reserve Account is at the Reserve Requirement as of the first day
of the final Bond Year for the Bonds, amounts in the Reserve Account may be applied to pay the
principal of and interest due on the Bonds, in the final Bond Year for such issue. Moneys in the
Reserve Account in excess of the Reserve Requirement not transferred in accordance with the
preceding provisions of this section shall be withdrawn from the Reserve Account on
the Business Day before each March 1 and September 1, and the Pro Rata Agency Share
(66.86% with respect to the City Facilities Fund and 33.14% with respect to the CVWD Facilities
Fund) of such moneys shall be transferred and deposited into the respective Backbone
Infrastructure Accounts of the Facilities Funds, then to the Other Facilities Account of the City
Facilities Fund or CVWD Facilities Fund in accordance with the Indenture, and after completion of
the Project, to the Interest Account of the Special Tax Fund, all in accordance with the further
provisions set forth in the Indenture.
Facilities Funds
Under the Indenture, there is established a City Facilities Fund and a CVWD Facilities
Fund, which are to be held in trust by the Trustee and will be disbursed as provided in the
Indenture for the payment or reimbursement of the costs of the construction and acquisition of
the Project in accordance with the Acquisition Agreement (as described herein). Interest
earnings from the investment of amounts in the City Facilities Fund and a CVWD Facilities Fund
will be retained in the Improvement Fund to be used for the purposes of the respective funds.
Upon receipt of a City representative indicating moneys in either or both of the City
Facilities Fund and a CVWD Facilities Fund are no longer needed to pay Project Costs, the
Trustee shall transfer all or such specified po�tion, as applicable, of the moneys remaining on
deposit in the such account to the Principal Account or Redemption Account to the Special Tax
Fund or to the Surplus Fund, as directed by the City, provided that in connection with any
direction to transfer amounts to the Surplus Fund there shall have been delivered to the Trustee
with such Certificate an opinion of Bond Counsel to the effect that such transfer to the Surplus
Fund will not adversely affect the exclusion from gross income for federal income tax purposes
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of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for
federal income tax pu�poses.
Parity Bonds
The District is authorized to issuance of up to $70 million of bonds, of which the Bonds
represent the first series. The City expects that it will, by a Supplemental Indenture, authorize
the issuance of one or more additional series of bonds or other similar evidences of
indebtedness ("Parity Bonds") payable out of the Net Taxes and other amounts deposited in
the Special Tax Fund (other than in the Administrative Expenses Account therein) and secured
by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding
Bonds and any other Parity Bonds, in an amount authorized for the District, upon compliance by
the City with the conditions set forth in the Indenture, including the condition that where the Parity
Bonds are being issued other than to refund the Bonds or other Parity Bonds, a Certificate of the
Special Tax Administrator certifying that (i) the Maximum Special Taxes that rrray be levied in
each Rscal Year is not less than 110% of the Annual Debt Service in the Bond Year that begins
in such Fiscal Year plus Administrative Expenses; and (ii) the Value of District Property is not
less than three (3} times the sum of Direct Debt for Value of District R-operty plus Overlapping
Debt allocable to all property in the District subject to the Special Tax. "Value of District Property"
is defined in the Indenture as all parcels of property in the District which are subject to the levy
of the Special Taxes and not delirtquent in the payment of any Special Taxes then due and
owing, either (i) the fair market value, as of the date of the appraisal provided for below of such
parcels, including with respect. to such parcels the value of the then existing improvements
thereon, as estimated by an appraiser, who shall be a State of California certified general real
estate appraiser selected and employed by the District, in an appraisal performed within ninety
(90) days preceding the date of such determination based upon a methodology of valuation
consistent with the City's policy for appraisals, provided that a mass appraisal methodology may
be applied when valuing Developed Property; or (ii) the full cash value of any or all of such
parcels, including with respect to such parcels the value of the improvements thereon, as set
forth on the last equalized assessment roll of the County Assessor of the County of Riverside; or
(iii) any combination of clauses (i) and (ii). For purposes of the foregoing Certificate of Special
Tax Administrator, all calculations shall consider the Parity Bonds proposed to be issued to be
Outstanding. if all or any portion of the proceeds of the Parity Bonds are deposited in an escrow
account which are not secured by a pledge of the Net Taxes while on deposit therein ("Escrow
Bonds"), each time that amounts are to be released from the escrow account, as a condition of
such release, the Trustee shall have received a Certificate of the Special Tax Administrator
certifying that (x) follow ing such release, the requirements of (i), (ii) and (iii) above w ill be
satisfied, and (y) the amount of Special Taxes levied in such Fiscal Year and to be levied in the
follow ing Fscal Year, together w ith amounts on deposit in the Interest Account, w ill be sufficient
to pay the principal of and interest on all Outstanding Bonds and Parity Bonds (other than the
remaining Escrow Bonds).
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DEBT SERVICE SCHEDULE
The annual debt service on the Bonds, based on the interest rates and maturity schedule
set forth on the cover of this Official Statement, is set forth below.
COMMUNITY FACILITIES DISTRICT NO. 2005-1 (UNIVERSITY PARK)
SPECIAL TAX BONDS SERIES 2006A
DEBT SERVICE
Year
Ending
(Sept.1a princiaal Interest Total
,
* Paid from capitalized interest.
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THE DISTRICT
Formation of the District
On October 13, 2005, the City Council adopted a Resolution of Intention to form a
community facilities district under the Act, to levy a special tax and to incur bonded indebtedness
for the purpose of financing the Project and making contributions to certain public facilities. After
conducting a noticed public hearing, on January 12, 2006, the City Council adopted the Resolution
of Formation, which established Community Facilities District No. 2005-1 (University Park), set
forth the Special Tax Formula within the District and set forth the necessity to incur bonded
indebtedness in a total amount not to exceed $70 million. On the same day, an election was held
within the District in which the then-landowners unanimously approved the proposed bonded
indebtedness and the levy of the Special Tax. See "OWNERSHIP OF PROPERTY VUITHIN TF-E
DISTRICT' below.
Location and Description of the District and the Immediate Area �
The District boundaries comprise one contiguous area, which is generally north of Frank
Sinatra Drive, south of Gerald Ford Drive, west of Cook Street, and east of Portola Avenue. The
area is generally known as "University Park," due to the location of the property immediately
west of the facilities and future facility expansion area of the satellite campus of the California
State University, San Bemardino and the University of California at Riverside, at the northeast
corner of Frank Sinatra Drive and Cook Street. The District area is general►y referred to as the
"North Sphere", or North Palm Desert, which is a developing area. The City has completed a
General Plan revision for the University Park area located along the west side of Cook St., north
of Frank Sinatra Drive. This area is likely to continue to evolve with residential and commercial
uses. Major easUwest arteries near to the District include the I-10 Freeway, Gerald Ford Drive,
Frank Sinatra Drive, Country Club Drive, Hovley Lane/42"d Avenue and Fred Waring Drive.
The property in the District has been divided into 5 zones: Zones A- E. Zones A through
D are mixed use and commercially zoned parcels. Zone E is planned for single family residential
use. All of the property is currently undeveloped. The zone designations have been used in the
Special Tax Formula for purposes of application of the Special Taxes. See the Map below.
The larger neighborhood boundaries encompassing the District historically developed
around the several country clubs developed in the 1980's along Country Club Drive. These
include Indian Ridge, Palm Valley Country Club, Desert Falls Country Club, and The Lakes.
Currently, Del Webb's, Sun City Palm Desert, located at the northeast corner of Washington
Street and Varner Road, is the largest residential development in the neighborhood, at 5,800
units. The neighborhood boundaries are considered to be the 1-10 Freeway to the north. State
Highway 111 to the south, Washington Street to the east, and Monterey Avenue to the west.
Washington Street is the main commercial corridor in the eastern part of the neighborhood.
Country Club Dr. contains a mix of retail and light industrial uses. Cook Street is an office/light
industrial corridor, with recently completed buildings and two currently under construction.
Current County Assessor's Parcel numbers for the parcels in the District are reported to
include 653-390-062, 064, 077, 079, 080, 082, 087, and 653-400-072 and 073, and a portion of
APN's 653-390-081, 083-086, 088, 653-400-052, 054, 056 and 057.
Property in the District is comprised of 17 parcels (designated 1-17) created by Parcel
Map No. 31730 filed with the City. Some of the parcels will be subdivided and/or recon�igured as
development occurs. According to the City's General Plan Land Use Map, approved in March
2004, the parcels in the District are included in the Zoning/General Plan designations shown in
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the table below. For purposes of application of the Special Tax Formula, the District property is
categorized into 5 zones, designated Zone A through E.
Parcel
No. Acres Zone Planned Use
Zone E
1 5.462 E Residentiai
2 17.643 E Residential
3 27.481 E Residential
4 18.461 E Residential
5 9.748 E Residential
6 5.061 E Open Space, Public Park �'�
7 (portion) 6.973 E Residential
9 76.296 E Residential
10 19.758 E Residential
14 7.075 E Open Space, Public Park �'�
15 11.899 E Residential
Su btota I 205.859
Zone C
11 9.746 C Community Commercial
12 10.560 C Community Commercial
13 3.243 C Community Commercial
Subtotal 23.546
Zone B
16 19.604 B Mixed — Commerciai/Office Professional
Zone A
17 7.738 A Commeraal
Zone D
7(portion) 3.200 D Communiry Commercial
8 7.447 D Community Commercial
Subtotal 10.647
TOTAL 267.395
�'� Parcels 6 and 14 were originally planned for open space and parks, however
subsequent planning has resulted in the open space and parks to be mixed into
several other residential parcels, resulting in some residential uses planned for Parcels
6 and 14.
A District boundary map and land use map are shown on the following pages.
-20-
[Reserved for tract map #31730]
-21-
[Reserved for boundary map]
-22-
[Reserved for land use map]
-23-
Anticipated Development in the District
The owners of property in the District have provided the following information with
respect to developmenf within the District. No assurance can be given that a!! information is
complete. No assurance can be given that development of the property wil! be completed, or
that it will be completed in a timely manner. Since fhe ownership of fhe parcels is subject to
change, the development plans outlined be/ow may not be continued by any subsequent owner
if fhe parcels are sold, a/though development by any subsequent owner wil! be subject to the
policies and requiremenfs of the City. No assurance can be given that the plans or projections
detailed be/ow will actually occur.
Property in the District consists of approximately 267 acres, all of which is undeveloped.
Palm Desert Funding Company LP, which owns or holds an option to purchase all of the Zone E
property in the District will oversee construction of the "backbone" infrastructure required for
development (including the improvements to be financed with proceeds of the Bonds). Mass
grading for construction of the improvements is substantially complete and Palm Dese►t Funding
Company LP expects construction of backbone infrastructure improvements to begin in April
2006. The cost of the construction portion of the Project will initially be paid by Palm Desert
Funding Company LP and other owners of property in the District, all of whom will be reimbursed
certain of the costs from proceeds of the Bonds, to the extent available for such purpose. Parity
Bonds are expected to be issued in the future primarily for certain in-tract improvements to a
portion of the property and for non-construction items (such as payment of fees). See 'THE
PROJECT."
Zoning. Property in the District is expected to be developed for both residential and
commercial uses, as described herein. According to the City's General Plan Land Use Map,
approved in March 2004, the parcels in the District are included in the Zoning/General Plan
designations shown in the table below. These designations are subject to change as
development progresses and currently only one parcel (Parcel 12) has construction underway.
Parcel
No. Zoninsa
1 Medium/High Density Residential
2 Medium/High Density Residential
3 Medium/High Density Residential
4 Medium/High Density Residential
5 Medium/High Density Residential
6 Open Space, Public Park
7 Medium/High Density Residential
8 Community Commercial
9 Low Density Residential
10 Medium/High Density Residential
11 Community Commercial
12 Community Commercial
13 Community Commercial
14 Open Space, Public Park
15 Medium/High Density Residential
16 Mixed Use — Commercial, Office Professional
17 Mixed Use — Commercial
Subdivision Maps. The 17 parcels in the District were created in early 2005 by Parcel
Map No. 31730 approved by the City. Parcel 9 has an approved Tentative Tract Map for 270 lots
(however only 268 are expected to be developed) of approximate minimum 7,200 square feet
-24-
(low-density residential), and the remaining parcels in the District do not have approved tentative
or final subdivision maps. Tentative and final map approval will be required for development of
Parcels 1-7 (maps have been submitted to the City), 10, 14 and 15, and possibly for Parcels 16
and 17, depending upon the ultimate uses for such parcels.
Zone E- Projected Residential Development (Parcels 1-6, 7(portion), 9, 10, 94 &
15). Property in the District expected to be developed into single family residences consists of
Parcels 1-6,7 (portion),9, 10, 14 and 15 (all comprising Zone "E") totaling approximately 205.86
acres. Most of the units will be detached, with a mixture of detached and attached currently
contemplated for Parcels 10, 14 and 15. A total of 1,053 homes are currently contemplated.
Parcels 9 and 15 are owned by Palm Desert Funding Company LP. Parcels 1-6,
7(portion), 10 and 14 are under an option to purchase by Palm Desert Funding Company LP from
Desert Wells 237, LLC, a Califomia limited liability company and Albor Properties III, LP, expected
to be exercised in two transactions scheduled for March 15, 2006 and June 30, 2006. Palm
Desert Funding Company LP plans to oversee construction of the backbone infrastructure
improvements and sell all of its holdings to merchant homebuilders. See "OWNERSHIP OF
PROPERTY IN THE DISTRICT' below.
The Zone E land in the District is currently undeveloped. Palm Desert Funding Company LP
has completed mass grading of all of the property other than Parcel 9(which will be graded by
others) and will oversee the general contractor that is awarded the bid for construction of the
"backbone" infrastructure required for development (including the improvements to be financed
with proceeds of the Bonds). Major streets and utilities to the perimeter of the site previously
existed.
Only Parcel 9 has received an approved tentative map, which is for 270 lots averaging
7,200 square feet (low-density residential). Three tentative maps for an additional 456 units
(Parcels 1-7) have been submitted to the City and approvals are expected by June 2006.
Tentative maps for Parcels 1-7 have been submitted to the City and approval is projected for
June 2006. A tentative map for Parcel 15 is being prepared for submission to the City and the
landowner projects City approval by September 2006. A tentative map for Parcels 10 and 14 is
also being prepared for submission to the City and the landowner projects City approval by July
2006. An environmental impact report was completed in conjunction with the City's 2002 General
Plan amendment impacting the site and "Phase 1" environmental reports have been completed.
All of the parcels other than Parcel 9(which is designated for low density) are
designated in the General Plan for medium-density residential (4 to 10 units per acre). Parcels
other than Parcel 9 comprise approximately 120.6 acres, indicating a maximum capacity of 1,206
per the present General Plan designation; however this property is also designated a"high
density overlay" under the General Plan, which would allow up to 22 units per acre without a
General Plan amendment. If the high density overlay were utilized, a maximum of 2,653 units
could be built. The current owner's plans presently contemplate 783 units in addition to the 270
approved lots on Parcel 9, for a total expected residential lot count of 1,053.
Palm Desert Funding Company LP is not a home builder and expects to sell all of its
property in the District to various merchant builders for construction of homes and sales to
homeowners. The pace of home construction and sales in the District will be determined in part
by market conditions and demand for homes. Palm Desert Funding Company LP, in its capacity as
master community developer, is processing a Master Development Plan with the City designed to
result in a community with a mix of housing types, lot sizes, home sizes, and price ranges,
however each merchant homebuilder will offer its own specific product line and establish its
own pricing, and variances from current projections are likely to occur. According to the Master
Development Plan, most home offerings are projected to be in the approximately 1,300 to 4,000
-25-
square foot range, with pricing projected to start in the $300,000's. No assurance can presently
be given as to actuaJ future development.
Possible Sales to Merchant Builders. Marketing of lots by Palm Desert Funding Company
LP is underway. Approximately 198 units in Parcels 10 and 14 are the subject of a letter of intent
for sale to John Laing Homes. Parcel 9, consisting of Approved Tentative Tract Map 32655 for
270 lots (268 are expected to be developed) is the subject of a letter of intent for sale to Toll
Brothers. Parcels 4,5,6 and 7(portion) (approximately 213 lots) are the subject of a letter of
intent for sale to Lennar Homes. Parcels 1, 2, and 3(approximately 243 lots) have not yet been
marketed. Parcel 15 (approximately 98 units) is the subject of submitted offers currently being
considered by Palm Desert Funding Company LP. No assurance can be given thaf any of fhese
possible sales will occur.
Zone C- Projected Commercial Development —(Parcels 11, 12 8 13).
Parcel 11 — Office Saace. Parcel 11 (approximately 9.624 acres) is owned by Shaw
Palm Desert I, LLC, which purchased the property in April 2005. The owner plans to develop the
parcel in two phases with a total of 14 single story buildings consisting of 130,000 square feet
of office space, with plans to sell the property to one or more buyers. Initial construction of
Phase I began in December 2005 and is expected to be completed by late 2006.
Parce/s 12 and 13 — Retai//Hofe/ Space. Parcels 12 and 13 are expected to be
developed for approximately 115,000 square feet for retail uses plus a 127-room hotel.
Construction is planned to occur in three phases. Phase I consists construction of 45,000
square feet of office and retail space plus required infrastructure for the site. Phase I is
currently under construction and is expected to be completed by late 2006. Construction of the
hotel is expected to start in summer 2006 and be completed in summer 2007. All construction on
the parce�s is expected to be complete by spring 2008. Originally the hotel parcel was parcel 13
in the final parcel map No. 31730 and was 3.24 acres. In November of 2005 Shaw Palm Desert I,
LLC filed a new parcel map that revised lots 11, 12 and 13 in parcel map 31730 into a new map
31515. The hotel parcel size in Map No. 31515 is now 2.99 acres and is known as "parcel 9" in
that map.
The retail portions of Parcels 12 and 13 are currently owned by The University Village
Partnership, a general partnership owned by entities related to the Evans family. See
"OWNERSHIP OF PROPERTY IN THE DISTRICT' bebw. The owner does not currently plan to sell
the retail property when complete. The hotel portion of the property (approximately 3 acres)
was sold to InterMountain Management, LLC in February 2006. Inte�flAountain Management, LLC
expects to manage the development of the hotel property on behalf of Marriott Intemational, Inc.
Zone B- Projected Mixed Commercia!/Office Development —(Parcel 16). Parcel
16 was purchased by Sinatra & Cook Project, LLC, a Califomia limited liability company, in March
2005. The owner plans to develop the parcel for residential and retail uses. The residential
project is planned to consist of 268 condominiums comprising approximately 286,000 square feet
of living space in 42 buildings, and the commercial project is expected to consist of approximately
41,500 square feet in 3 buildings. Plans for both projects have been submitted to the City and
construction is expected to begin in May 2006. Construction is projected to be complete by
December 2007. Upon comptetion, the residential units may be rented or sold to individual
homeowners.
Zone A- Projected Commercial Development —(Parcel 17). Parcel 17 was
purchased by Don McCoy and Marcellene McCoy in June 2005. The owners are currently
holding the property as a passive investment. They may develop the property or may sell the
property to one or more buyers.
-26-
Zone D- Projected Commercial Development —(Parcels 7(poition), 8). Parcel 8
is owned by Palm Desert Forum, LLC, a California limited liability company, in June 2005. The
owners are currently holding the property as a passive investment. They may develop the
property or may sell the property to one or more buyers. The owner of Parcel 8 holds an option
to purchase approximately 3 acres of Parcel 7, which would most likely result in a change of
land use of the 3 acres from mid-density residential to community commercial.
Infrastructure lmprovements. Significant basic (sometimes referred to as "backbone")
infrastructure in-tract improvements are required before most of the planned development in the
District can proceed. The basic infrastructure improvements include those public facilities
described in the Resolution of Formation which are to be acquired or constructed within and
outside of the District, including all engineering, planning and design services and other incidental
expenses related to such facilities and other facilities, if any, authorized by the qualified electors
within the District from time to time (collectively referred to in the Indenture as the "ProjecY'). The
basic infrastructure improvements portion of the Project are to be financed with proceeds of the
Bonds. See "THE PROJECT' below.
Bond proceeds are expected to cover the cost of all the backbone infrastructure for
development in the District, estimated to be approximately $36.6 million. Additional moneys
required for obligations of the landowners to the City and the Coachella Valley Water District
such as water, sewer capacity, park and other development impact fees and certain required in-
tract infrastructure improvements are expected to be paid in part from proceeds of the Bonds
and Parity Bonds to be issued in the future. See "THE PROJECT - Construction and Acquisition of
the ProjecY' below.
Pursuant to a bidding process, Palm Desert Funding Company LP will select a general
contractor for construction of the improvements financed with Bond proceeds. Bid award is
expected in March 2006 and completion is projected for early 2007. Palm Desert Funding
Company LP will oversee the backbone infrastructure construction activities. The Project
includes basic streets, sidewalks, water, sewer, drainage, concrete curb, gutter and paving and
all of the relevant utilities in the basic streets. Completion of the Project will provide access to the
land in the District. Within the residential development area (Zone E), to be sold by Palm Desert
Funding Company LP, each merchant builder is expected to buy land with tentative map approval
for development. Each property owner is responsible for overseeing its own construction
activities relating to its in-tract facilities, some of which are to be paid for from Bond proceeds or
proceeds of Parity Bonds to be issued in the future.
Utiliiies. All typical urban utility services will be extended to the parcels. These utilities
include electric power, natural gas, telephone, cable television, water, and sanitary sewer and
storm water facilities. Southern California Edison provides electric, Southern California Gas
Company provides natural gas, and the Coachella Valley Water District provides water and
sewer and has issued a"will serve" letter for the development.
-27-
Environmental Matters
Flood Hazard Map lnformation. The appraiser reported that according to the Federal
Emergency Management Agency's flood insurance rate maps (Community Panel Number 060245-
1625C, with an effective date of November 20, 1996), the property in the District is located within
Flood Zone C, described as areas of minimal flooding.
Seismic Conditions. The appraiser reported that according to Plate IA of the Seismic
Geologic Map, dated January 19, 1982, revised 1988, the property in the District is not located in
an Alquist-Priolo Special Studies Zone, or in areas determined to be in a liquefaction hazard area.
THE PROJECT
Eligible Facilities
The Bonds will provide a funding source for a portion of the cost of the Project and for
certain City and Coachella Valley Water District development impact fees.
The facilities eligible to be financed by the District are set forth in the Resolution of
Intention and in the Community Facilities District Hearing Report (the "CFD Hearing Report")
dated December 8, 2005 prepared for the City by MuniFinancial, Temecula, California, in
connection with the formation of the District.
The eligible facilities authorized (described herein as the "Project") are described in the
CFD Hearing Report and include traffic signals, landscaping, street improvements, water
improvements, park improvements, and park site land acquisition, a portion of a pedestrian
bridge, together with all appurtenances and appurtenant work, such as related clearing and
grubbing, grading, and any removal or temporary signage or markings related thereto. The cost
of the Project includes incidental expenses, including costs associated with forming the District,
issuance of bonds, determination of the amount of the Special Tax, collection of the Speaal Tax,
payment of the Special Tax, costs incurred in order to carry out the authorized purposes of the
District, and the costs of engineering, inspecting, coordinating, completing, planning and
designing the Project, including the costs of environmental evaluations.
The Project includes certain capital improvements to be owned by the local water district.
In connection therewith, a Joint Community Facilities Agreement dated as of January 12, 2006,
has been entered into by and among the City, the Coachella Valley Water District, Desert Wells
237, LLC, a California limited liability company, Palm Desert Funding Company LP, a Delaware
limited partnership, The University Village Partnership, a California general partnership,
Shaw/Palm Desert 1, LLC, a California limited liability company, and Sinatra & Cook Project, LLC, a
California limited liability company. The agreement establishes the terms by which the City will
finance the construction of water system improvements associated with the anticipated
development within the District.
The Project includes, but is not be limited to, the facilities listed below, and other facilities
of the same type or types may be substituted in the place of one or more of the specific facilities
listed below. The construction portion of the Project shall be constructed, whether or not
acquired in completed component states, pursuant to plans and specifications approved by the
City (or the Coachella Valley Water District, as applicable) and the officials thereof, including the
City Engineer. The final nature and location of the Project will be determined upon the preparation
of final plans and specifications. The Project may include facilities financed pursuant to public
agency development impact fees. The Project may include the following:
-28-
• Street Facilities (including, but not limited to, street widening,
excavation, signing and striping, access ramps, grading, median and
parkway landscaping, curbs and gutters, sidewalks, street lights, dry
utility inftastructure, bus stops, fringe toed lizard fee and City fees).
• Water Facilities
• Sewer Facilities
• Traffic Signals
• Storm Drai� Facilities
• Utilities Facilities
• Park Facilities and Park Site Land Acquisition
• Landscaping
• Cook Street Pedestrian Bridge (including, but not limited to bridge,
ADA access ramps, elevator, retaining walls, hand railing, pedestrian
lighting, revised sidewalks and minor grading)
Estimated Cost of the Project
The total estimated construction cost of the Project and other project related public
expenditures, as shown in the CFD Hearing Report, is approximately $57,775,000.
Approximately $36.620 million of the total $57.775 million cost of construction of the backbone
infrastructure improvements is projected to be financed by the Bonds. The remaining Project
costs are comprised mostly of fees, park and in-tract improvements, some of which are
anticipated to be funded by proceeds of Parity Bonds. The CFD Hearing Report summarizes the
estimated total Project costs as follows.
Community Facilities District No. 2005-1 (University Park)
Summary of Authorized Facilities and Estimated Cost
Facilities
Street Improvements and Grading
Sewer Improvements
Water Improvements
Traffic Signals
Park Site Acquisitions and Improvements
Utilities
Cook Street Pedestrian Bridge
Landscaping Cost
Fringed Toed Lizard Fee
Public Works — Drainage Fee
Public Works — Signal Fee
CVWD — Sewer Connection Fee
CVWD — Water Capacity Fee
CVWD — Supplemental Water Fee
TUMF Fee
Art in Public Places Fee
In-tract Sewer and Water Facilities
In-tract Streets
Commercial Sewer and Water Improvements
Parks
Total Public Fees and Improvements
Estimated
Cost
$ 9,667,740
598,937
3,730,529
977,805
7,416,000
1,191,010
1,504,315
11,534,118
142,200
237,000
52,650
3,149,523
2,769,390
2,278,755
837,135
526,500
5,265,000
2,740,500
1,356,520
1.800.000
$57.775.627
-29-
Development Costs Not Funded From Bond Proceeds
In addition to the cost of construction of the Project and other project related public
expenditures, each owner or developer of its property will need to expend moneys for the
construction of in-tract improvements and other site improvement costs necessary for
development and for obtaining approval from the City for construction of end-use structures.
The costs vary with each parcel and are significant. For the residential parcels, Palm Desert
Funding Company LP estimates that finished lot costs (including facilities and fees but not
including building permits) will total approximately $30 million in excess of the improvements
financed by the Bonds. The owner of Parcels 11, 12 and 13 estimates that as of February 2006,
additional infrastructure, which includes all on-site construction (excluding buildings) will be
approximately $11 million. The owner of Parcel 16 estimates $5.2 miltion of site work is
necessary to improve that site. The owners of the remaining parcels do not have accurate
current estimates. These figures are estimates and actual costs are likely to be higher.
Construction and Acquisition of the Project and Payment of Fees
In connection with the issuance of the Bonds, the City and Palm Desert Funding Company
LP, a Delaware limited partnership ("PDFC"), Desert Wells 237, LLC, a California limited liability
company (the seller of property to Palm Desert Funding Company LP), The University Village
Partnership, a California general partnership, Shaw/Palm Desert 1, LLC, a California limited
liability company and Sinatra & Cook Project, LLC, a California limited liability company
(collectively, the "Developers") will enter into an Acquisition Agreement (the "Acquisition
Agreement") which provides that the Developers will construct or cause to be constructed or
funded certain portions of the Project for which each such Developer is responsible as a
condition of any development agreement, improvement agreement, subdivision map, or other
regulatory approval, and that each such Developer will use its own funds to pay all construction
costs thereof in excess of amounts available in the City Facilities Fund and CVWD Facilities Fund,
The Acquisition Agreement provides that the City, upon completion of construction and
acceptance by the City, will acquire such portions of the Project. Upon completion and
acceptance by the City, proceeds of the Bonds and Parity Bonds will be used to pay the
purchase price of the facilities within the Project, to the extent funds are available in the City
Facilities Fund and the CVWD Fund, pursuant to the terms of the Acquisition Agreement.
To the extent funds are not available in the City Facilities Fund or the CVWD Fund, each
Developer must bear the costs to complete its respective share of the Project. See "OWNERSHIP
OF PROPERTY WITHIN THE DISTRICT" and °SPECIAL RISK FACTORS" herein.
The Developers and the City have entered into a Cost Sharing and Bond Proceeds
Allocation Agreement dated January 25, 2006, which provides for the sharing of costs of the
backbone infrastructure and other costs associated with developing the property in the District
and the use of Bond proceeds in connection with such costs. Under the Cost Sharing
Agreement, Palm Desert Funding Company LP, together with its optionor, Desert Wells 237, LLC
and Albor Prooerties III. LP. a California limited partnershio, is responsible for over 63% of the
cost, with each of the 5 remaining Developers responsible for less than 10% each.
-30-
OWNERSHIP OF PROPERTY WITHIN THE DISTRICT
Unpaid Special Taxes do nof constitute a personal indebfedness of the owners of the
parcels within the District. There is no assurance that the present property owners or any
subsequent owners wil! have the ability fo pay the Special Taxes or that, even if they have the
ability, they wilf choose to pay the Specia/ Taxes. An owner may e/ect to nof pay the Special
Taxes when due and cannof be /egally compelled to do so. Neither the City nor any Bondowner
will have the ability at any time to seek payment directly from fhe owners of property within the
Districf of the Special Tax or the principa! or interest on the Bonds, or the abilify % contro! who
becomes a subsequent owner of any property within the District.
The landowners have provided the information set forth in this section entitled
�OWNERSH/P OF PROPERTY W/THIN THE DlSTR/CT." No assurance can be given that all
information is complefe. In addition, any lntemet addresses included below are for reference
only, and the information on those Infernet sifes is nof a part of this Official Statement or
incorporated 6y reference into fhis O�cial Statement.
No assurance can be given that development of the property will be completed, or thaf it
will be completed in a timely manner. The Special Taxes are nof personal obligafions of the
developers or of any subsequent landowners; the Bonds are secured only by the Special Taxes
and moneys avai/able under the Indenture. See "SECURlTY AND SOURCES OF PAYMENT
FOR THE BONDS" and "SPECIAL R/SK FACTORS" herein.
-31-
The owners of parcels in the District as of February 2006 are summarized as follows:
Parcel No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Owner of Record
Desert Wells 237 & ALBOR Properties III, L.P.
Desert Wells 237 & ALBOR Properties III, L.P.
Desert Wells 237 & ALBOR Properties III, L.P.
Desert Wells 237 & ALBOR Properties III, L.P.
Desert Wells 237 & ALBOR Properties III, L.P.
Desert Wells 237 8� ALBOR Praperties III, L.P.
Desert Wells 237 & ALBOR Properties III, L.P.
Palm Desert Forum, LLC
Palm Desert Funding Company LP
Desert Wells 237 & ALBOR Properties III, L.P.
Shaw/Palm Desert 1, LLC
The University Village Partnership
The University Village Partnership �2�
Desert Wells 237 & ALBOR Properties III, L.P.
Palm Desert Funding Company LP
Sinatra 8� Cook Project, LLC
Donald L. McCoy and Marcellene W. McCoy
c��
c��
c>>
n�
c�>
c��
c��
�
Iiil
"� Parcels 1�, 7(portion), 10 and 14 are under an option to purchase by Palm Desert Funding Company LP,
expected to be exercised in two Vansacdons scheduled for March 15, 2006 and June 30, 2006. Palm Desert
Funding Company LP expects to seq all propert�r it owns or acquires to merchant builders.
'2' A portan of Parcel 13 was originaly planned for hotel development; m November 2005 a new parcel map was
fil�ed which revised Parcels 11, 12 and 13 rc�to a new parcel map (No. 31515). The hotel parcel size in Map No.
31515 is Imown as "parcel 9" in that map and is 299 acres; it was transferced to IriterAAountain Management in
February 2006.
The percent of the Maximum Special Tax of the District is estimated to be allocated among
the current owners as follows:
Owner
Desert Wells 237/Albor �
Palm Desert Funding Company LP �z�
Sinatra 8� Cook Project, LLC
The University �Ilage Partnership �'�
Shaw/Palm Desert 1, LLC (Evans Family Entities)
Palm Desert Forum, LLC
Donald L. McCoy and Marcellene W. McCoy
� All holdings subject to an option for purchase and sale. See footnote (2).
� Also holds an option to purchase holdings of Desert Wells 237/Albor Properties (Parcels 1-6,
7(portion), 10 and 14) expected to be exercised in two transactions scheduled for March 15,
2006 and June 30, 2006.
� Approximately 3 acres (proposed hotel site) sold to InterMountain Management in February 2006.
Palm Desert Funding Company LP. Palm Desert Funding Company LP is a Delaware
limited partnership, and is comprised of Palm Desert Funding Co., LLC, its general partner, and
Palm Desert Funding Company, Inc., its limited partner. Palm Desert Funding Company LP has a
Development Agreement with Palm Desert Project Company, LLC, a California Limited Liability
Company, to oversee all aspects of the development of the property. Palm Desert Project
Percent of
Maximum Special
Tax
45.91 %
33.66
7.21
5.08
3.59
2.33
2.21
-32-
Company, LLC is comprised of Palm Desert Residential, Inc., a Delaware Corporation, the
financial partner, and Hover Development Company, Inc., a California Corporation, the
development partner. Mr. Thomas Hover is the President of Hover Deve�opment Company, Inc.
and has been the residential development business since 1977. He has been involved in the
development of numerous new home communities throughout Southern California. In addition to
the project planned in the District, Hover Development Company is currently involved in
developing residential projects in Orange and San Diego counties. Mr. Hover is the managing
member of Palm Desert Project Company, LLC, and is the authorized agent to act on behalf of
Palm Desert Funding Company LP. He is responsible for all development decisions as it relates to
these entities and the property in the District.
Palm Desert Funding Company LP is not a merchant home builder and plans to sell all of
the developable property it will own in the District to merchant builders. Palm Desert Funding
Company LP has owned Parcels 9 and 15, totaling 88 acres, since August 2005. Parcels 1-6,
7(portion), 10 and 14, which are under an option to purchase by Palm Desert Funding Company
L.P from Desert Wells 237 and ALBOR Properties III, L.P., expected to be exercised in two
transactions scheduled for March 15, 2006 and June 30, 2006. In total, Palm Desert Funding
Company LP expects to own 209 of the 267 total acres in the District for a short time while it
oversees construction of backbone infrastructure and markets and sells all of its holdings to
various merchant builders. As of February, 2006, Palm Desert Funding Company LP, reports that
it has letters of intent for lot purchases from Lennar Homes (Parcels 4-7), Toll Brothers (Parcel 9)
and John Laing Homes (Parcels 10 and 14). Lots in Parcels 1-3 and 15 have not yet been
marketed. No assurance can be given that the options of Pa/m Desert Funding Company LP
wiU be exercised or thaf any leffer of intent wi1J lead to an acfual sa/e.
Palm Desert Funding Company LP has provided approximately $42,300,000 of bank debt
and approximately $40,000,000 of equity to purchase Parcels 9 and 15, to mass grade the
property it owns or will own, to process plans and to otherwise develop the property as
planned. The bank debt is with Rabobank, which holds a promissory note secured by a first lien
deed of trust on Parcels 9 and 15.
Palm Desert Funding Company LP reports that it will exercise its options to complete the
purchase and development of the remaining property being purchased from Desert Wells 237
and ALBOR Properties III, L.P. using additional funds from the projected sale of sites to merchant
builders and from equity and bank debt not yet incurred.
Deserf Wells 237. LLC and A/bor Properties Ill. LP. Property in Zone E of the District
currently owned by Desert Wells 237, LLC and Albor Properties III, LP. (Parcels 1-6, 7(portion),
10 and 14) is expected to be transferred to Palm Desert Funding Company LP in two transactions
scheduled for March 15, 2006 and June 30, 2006. Desert Wells 237, LLC is a California limited
liability company and owns an 80.2% undivided interest in the property, with the remainder
owned by AI Borstein. Desert Wells 237, LLC is managed and majority owned by entities
controlled by the Mike Marix family. Mike Marix has been in the real estate business since 1960.
Subsequent to founding and operating (from 1971 to 1986) Marix Housing Corporation, a land
development and construction firm, in 1986 Mr. Marix founded Comerstone Developers, Inc., a
homebui►ding operation which he operated until the assets of the company were sold to Lennar
related entities in 2003. He is currently President of Comerstone Investors, Inc. of Palm Springs.
The University Village Partnership. The University Village Partnership is a California
general partnership whose equal partners are entities affiliated with the Evan family: Evans
University Village, LLC, a Califomia limited liabitity company, and Edward University Village, LLC,
a California limited liability company. Evans University Village, LLC, is owned by The Evans
Company which is controlled by the Evans Family Trust and F.O. Evans (Fred) III. Edward
University Village, LLC, is controlled by Edwards Affiliated Holdings, LLC and Bridgeport
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Investment Company, Inc. The managing partner is Rick Evans of Palm Desert. Frederick Oliver
Evans, Jr. (F.O. (Rick) Evans) spent the past decade at The Irvine Company as President of the
Retail Division and he has experience in retail development, marketing and leasing. Frederick
Oliver Evans III (F.O. (Fred) Evans) graduated from the University of Southern California in 1994
and has worked in various capacities in the real estate business since that time.
The University Village Partnership purchased Parcels 12 and 13 in February 2005 and
currently has a loan from Bank Midwest outstanding in the approximate amount of $600,000
secured by a deed of trust. Construction financing for the initial phase has been obtained from
Wells Fargo Bank in the amount of $9,350,000, also secured by a deed of trust. The purchase
loan and the construction loan are due in February 2008. The construction loan is expected to
cover Phase I of construction.
Shaw Palm Desert l, LLC. Shaw Palm Desert I, LLC, a California limited liability
company, is the owner of Parcel 11. The sole member of Shaw Palm Desert I, LLC is Shaw-CDK
Properties, LLC and the members of Shaw-CDK Properties, LLC are Charles E. Crookall and
Kevin M. Klemm. The company is operated out of Newport Beach, California. Mr. Klemm has
been with Shaw Industrial Property Services since 1997 and has a background in construction,
development and property management and was the Vice President of Finance and Acquisitions
for a Newport Beach based commercial real estate development and holding firm prior to joining
Shaw related entities. Mr. Crookall is affiliated with Shaw Industrial Property Services as a
specialist in industrial property development, corporate real estate consulting, and as the
designated real estate broker who oversees the firm's asset management division. He has been
active in southern Califomia commercial and industrial real estate for 25 years.
Shaw Palm Desert I, LLC purchased Parcel 11 in April 2005. Construction and purchase
financing has been obtained from California National Bank in the amount of $4,475,000 and is
secured by a deed of trust. The construction loan is due in November 2007 and is expected to
cover the first phase of construction, which is currently underway.
Each Developer is not under lega! obligation of any kind fo expend funds for the
development of property in the District and will expend such funds only if it determines that
doing so is in ifs best interests. All expecfafions of the owners described above are based on
fhe current and actua! know/edge of the respective Developer and present facfs and
circumstances. Such expectations may change as the result of facts and circumstances
occurring, or drscovered, after the date of this O�cia! Sfatement. There is no assurance that
the Developer's expectations described above will actua!!y materialize or that the money
necessary in order to implement the planned deve/opment will in fact be availab/e for such
purpose. See "SPECIAL R/SK FACTORS. "
APPRAISAL OF PROPERTY WITHIN THE DISTRICT
The Appraisal
General. Capital Realty Analysts, Palm Desert, California (the "Appraiser") prepared an
appraisal report dated January 15, 2006, with a date of value of January 10, 2006 (the
"Appraisal"). The Appraisal was prepared at the request of the City.
The Appraisal is set forth in APPENDIX B hereto. The description herein of the Appraisal
is intended for limited purposes only; the Appraisal should be read in its entirety. The complete
Appraisal is on file with the City and is available for public inspection at the City offices at 73-510
Fred Waring Drive, Palm Desert California 92260-2578 or from the Underwriter during the initial
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marketing period. The conclusions reached in the Appraisal are subject to certain assumptions
and qualifications which are set forth in the Appraisal.
Value Estimates. The Appraisal valued the fee simple estate of the taxable property in
the District to estimate the hypothetical (in light of the fact that the improvements financed by the
Bonds were not in place as of the date of valuation) market value of the property (not as a bulk
sale), assuming completion of the backbone infrastructure improvements to be financed by the
Bonds (based on a total projected cost of $37,976,868). The valuation accounts for the impact
of the lien of the Special Tax. The property appraised excludes property in the District
designated for public and quasi public purposes. The value estimate for the property as of the
January 10, 2006 date of value, using the methodologies described in the Appraisal and subject
to the limiting conditions and special assumptions set forth in the Appraisal, and based on the
ownership of the property as of that date is $227,480,000. The valuation is not a"bulk
sa/e" valuation of all of the property in the District. The valuation is determined as a sum
or individual parcel valuations, summarized as follows:
Parcel
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Total
Value
Estimate,
Residential
4,175, 000
13,485,000
21,005,000
15,035,000
7, 940, 000
4,120, 000
9, 300, 000
68, 590, 000
19,055,000
4, 345, 000
12,070,000
$179,120,000
Value
Estimate,
Commercfal
$ 6,000,000
8,190,000
9,535,000
2,950,000
14,945,000
6.740.000
$48,360,000
Total
Value Estimate
$ 4,175,000
13,485,000
21, 005,000
15,035,000
7, 940,000
4,120,000
9, 300,000
$ 6,000,000
68,590,000
19,055,000
8,190, 000
9, 535, 000
2, 950, 000
4,345,000
12,070,000
14,945,000
6, 740.000
$227,480,000
The appraisal methodology used in the Appraisal is based on the sales comparison
approach to estimate the aggregate value for the property's various land components. The
approach to value was conducted as set forth below. See "Aggregate Value; Not a Bulk Value
or Market Value of the DistricY' below. See also "Assumptions and Limiting Conditions" below.
Aggrega% Value; Not a Bu/k Value or Market Va/ue of the District. The valuation
set forth in the Appraisal is not a bulk sale value, which would represent the most probable price
of all the parcels within District to a single purchaser or sales to multiple buyers, over a
reasonable absorption period discounted to present value. The retail value for the property
presented in the appraisal represents the aggregate total estimates of what separate end users
would pay for each parcel under conditions requisite to a fair sale. This value estimate was
determined by applying the sales comparison approach to each parcel, as described in the
Appraisal. The aggregate value presented in the Appraisal is the sum of the individual parcel
valuations. The valuation does noi represent a bulk valuation of all the property in the
Disirict or a sum or bulk valuations based on ownership or projected property uses.
This value estimate excludes all discounts or allowances for carrying costs and is not equal to
the market value of all the subject properties as a whole. See "APPENDIX B— THE APPRAISAL."
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No Property Absorption Study. No absorption study was conducted by the Appraiser
or by an independent source in connection with determining the value of the property in the
District.
Hypothetical Condition. Improvements estimated to cost approximately 37.9 million to
be financed by the Bonds were not in place as of the date of inspection but included in the
valuation as if they were in place; thus, the value estimate is subject to a hypothetical condition
(of such improvements being in place), defined as that which is contrary to what exists but is
supposed for the purposes of analysis.
Assumptions and Limiting Conditions. In considering the estimate of value
evidenced by the Appraisal, the Appraisal is based upon a number of standard and special
assumptions which affect the estimates as to value, some of which include the following. See
"APPENDIX B — THE APPRAISAL."
• The value estimates assume the completion of the public facilities to be
financed by the Bonds (based on a total backbone infrastructure cost of $37,976,868).
See'THE PROJECT."
• The Appraiser has also assumed that there is no hazardous material on or
in the property that would cause a loss in value. Should future conditions and events
reduce the level of permitted development or delay the completion of any projected
development, the value of the undeveloped land would likely be reduced from that
estimated by the Appraiser. See "APPENDIX B—THE APPRAISAL" hereto for a
description of certain assumptions made by the Appraiser. Accordingly, because the
Appraiser arrived at an estimate of current market value based upon certain assumptions
which may or may not be fulfilled, no assurance can be given that should the parcels
become delinquent due to unpaid Special Taxes, and be foreclosed upon and offered for
sale for the amount of the delinquency, that any bid would be received for such property
or, if a bid is received, that such bid would be sufficient to pay such delinquent Special
Taxes.
Limitations of Appraisa! Valuafion. Property values may not be evenly distributed
throughout the District; thus, certain parcels may have a greater value than others. This disparity
is significant because in the event of nonpayment of the Special Tax, the only remedy is to
foreclose against the delinquent parcel.
No assurance can be given that the foregoing valuation can or will be maintained during
the period of time that the Bonds are outstanding in that the City has no contro! over the market
value of the property within the District or the amount of additional indebtedness that may be
issued in the future by other public agencies, the payment of which, through the levy of a tax or
an assessment, may be on a parity with the Special Taxes. See "Overlapping Liens and Priority
of Lien" below.
For a description of certain risks that might affect the assumptions made in the Appraisal,
see "SPECIAL RISK FACTORS" herein.
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Value to Special Tax Burden Ratios
The Appraisal sets forth the estimated value, subject to the Special Tax lien, of all taxable
property within the District to be $227,480,000 subject to the limiting conditions stated therein.
(See "The Appraisal" above and Appendix B hereto.) The principal amount of the Bonds is
$50,000,000*. Consequently, ihe estimated value, subject to the Special Tax lien, of the real
property within the District, is approximately 4.55* times the principal amount of the Bonds and
the other Overlapping Debt. The following tables summarize certain value to lien data for the
District based on gross acreage and based on net taxable acreage, using a lien amount based
on the proportion of Special Tax alfocable to each property in the District.
VALUE TO LIEN TABLES BASED ON GROSS ACREAGE
($7,336,506 Maximum Annual Special Tax)
Value to Lien Ratios by Property Type
(Based on gross acreage - a50,000,000 of Bonds)
Projected Percentage of
Propert�y Appraised Bonded Maximum Special Projected Value to Lien
Type �' Value �Z� Indebtedness�'� Tax �4� Special Tax Ratio
Commercial $51,285,000 $10,717,023 $1,572,510 21.43% 4.79:1
Residential 176.195.000 39.282,977 5.763.996 78.57 4.49:1
All $227,480,000 $50,000,000 $7,336,506 100.00% 4.55:1
(1) Based on Zones A-D as Commercial and Zone E as Residential.
(2) Source: Appraisal by Capital Realty Analysts, dated January 24, 20o6. Appraisal includes land and CFD
financed improvements only and dces not include proposed housing or building values.
(3) Lien Amount is based on the proportion of contribution to the total maximum special tax based on the
special tax rate per acre defined in the Special Tax Formula.
(4) Projected maximum special tax is the total maximum tax collection based on the rates in the Special Tax
Formula. Residential and Commercial acreage is based on gross acreage defined in the appraisal.
Propert�r
Type �'
Zone A
Zone B
Zone C
Zone D
Zone E
All
Value to Lien Ratios by Zone
(Based on gross acreage -$50,000,000 of Bonds)
Projected Percentage of
Appraised Bonded Maximum Projected
Value�2� Indebtedness�3� Special Tax�4j Special Tax
$ 6,740,000 $ 1,107,462 $ 162,498 2.21 %
14,945,000 3,607,358 529,308 7.21
20,675,000 4,333,282 635,823 8.67
8,925,000 1,168,921 244,281 3.34
176,195.000 39.282.977 5,763,996 78.57
$227,480,000 $50,000,000 $7,336,506 100.00%
Value to Lien
Ratio
6.09:1
4.14:1
4.77:1
5.35:1
4.49:1
4.55:1
(1) Based on Zones A-D as Commercial and Zone E as Residential.
(2) Source: Appraisal by Capital Realty Anafysts, dated January 24, 2006. Appraisal includes land and CFD
flnanced improvements only and does not include proposed housing or building values.
(3) Lien Amount is based on the proportion of contribution to the total maximum special tax based on the
special tax rate per acre defined in the Special Tax Formula.
(4) Projected maximum special tax is the total maximum tax collection based on the rates in the Special Tax
Formula. Residential and Commercial acreage is based on gross acreage defined in the appraisal.
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Value to Lien Ratios by Parcel
(Based on gross acreage -$50,000,000 of Bonds)
Parcel
Number�'�
1
2
3
4
5
6
7
7
8
9
10
11
12
13
14
15
16
17
All
Appraised
Value�2�
$4,175,000
13,485,000
21,005,000
15,035,000
7,940,000
4,120,000
6,375,000
2,925,000
6,000,000
68,590,000
19,055,000
8,190,000
9,535,000
2,950,000
4,345,000
12,070,000
14,945,000
6.740.000
$227,480,000
Bonds�3�
$1,042,295
3,366,753
5,244,104
3,522,849
1,860,177
965,773
1,330,633
501,601
1,167, 320
14,559,301
3,770,351
1,793,374
1,943,159
596,749
1,350,098
2,270,645
3,607,358
1,107,462
$50,000,000
Projected
Maximum
Speciai Tax�4�
$152,936
494,004
769,468
516,908
272,944
141,708
195,244
73,600
171,281
2,136,288
553,224
263,142
285,120
87,561
198,100
333,172
529,308
162.498
$7,336,506
Value to
Lien Ratio
4.01:1
4.01:1
4.01:1
4.27:1
4.27:1
4.27:1
4.79:1
5.83:1
5.14:1
4.71:1
5.05:1
4.57:1
4.91:1
4.94:1
3.22:1
5.32:1
4.14:1
6.09:1
4.55:1
(1) Parcel 7 is shown with a portion in Zone E(6.973 acres) and a portion Zone D(3.2 acres), respectively.
(2) Source: Appraisal by Capital Realty Analysts, dated January 24, 2006. Appraisal includes land and CFD
financed improvements only and does not include proposed housing or building values.
(3) Lien Amount is based on the proportion of contribution to the total maximum special tax based on the special
tax rate per acre defined in the RMA.
(4) Projected maximum special tax is the total maximum tax collection based on the rates in the RMA. Parcel
acreage is based on gross acreage defined in the appraisal.
Value to Lien Ratios by Owner
(Based on gross acreage -$50,000,000 of Bonds)
Current Owner�'�
Desert Wells 237 & ALBOR
Properties III, L.P.
Palm Desert Forum, LLC
Palm Desert Funding Company
LP
Shaw/Palm Desert 1, LLC
The University Village
Partnership
Sinatra & Cook Project, LLC
Donald L. McCoy and
Marcellene W. McCoy
All
Projected Percentage Value
Appraised Bonded Maximum of Projected to Lien
Value�z� Indebtedness�'� Special Tax�O� Special Tax Ratio
$98,460,000 $22,954,633 $3,368,136 45.91 % 4.29 :1
6,000,000 1,167,320 171,281 2.33 5.14 :1
80, 660, 000 16, 829, 946
8,190,000 1,793,374
12,485,000 2,539,908
14,945,000 3,607,358
Percentage of
Projected
Special Tax
2.08%
6.73
10.49
7.05
3.72
1.93
2.66
1.00
2.33
29.12
7.54
3.59
3.89
1.19
2.70
4.54
7.21
2.21
100.00%
2,469,460 33.66 4.79 :1
263,142 3.59 4.57 :1
372,681 5.08 4.92 :1
529,308 7.21 4.14:1
6.740.000 1.107.462 162.498 2.21 6.09:1
$227,480,000 $50,000,000 $T,336,506 100.00% 4.55 :1
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(1) Based on current ownership (does not account for unexercised options).
(2) Source: Appraisal by Capital Realty Analysts, dated January 24, 2006. Appraisal includes land and CFD
financed improvements only and dces not include proposed housing or building values.
(3) Lien Amount is based on the proportion of contribution to the total maximum special tax based on the special
tax rate per acre defined in the Special Tax Formula.
(4) Projected maximum special tax is the total maximum tax collection based on the rates in the Special Tax
Formula. Parcel acreage is based on gross acreage defined in the appraisal.
-39-
VALUE TO LIEN TABLES BASED ON NET ACREAGE
($5,087,040 Maximum Annuat Special Tax)
Value to Lien Ratios by Property Type
(Based on minimum net taxable acreage -$50,000,000 of Bondsj
Property Appraised Bonded
Type�'� Value�2� Indebtedness�3�
Commercial $ 51,285,000 $14,360,414
Residential 176,195,000 35.639.586
All a227,480,000 $50,000,000
Projected Percentage of
Maximum Special Projected Value to
Tax�4� Special Tax Lien Ratio
$1,461, 040 28.72% 3.57:1
3.626.000 71.28% 4.94:1
$5,087,040 100.00% 4.55:1
(1) Based on Zones A-D as Commercial and Zone E as Residential.
(2) Source: Appraisal by Capital Realty Analysts, dated January 24, 2006. Appraisal includes land and CFD
financed improvements only and does not include proposed housing or building values.
(3) Lien Amount is based on the proportion of contribution to the total maximum special tax based on the
special tax rate per acre defined in the Special Tax Formula.
(4) Projected maximum special tax is the total maximum tax collection based on the rates in the Special Tax
FoRnula. Residential and Commercial acreage is based on minimum net acreage defined in the Special
Tax Formula.
Propert�
Type
Zone A
Zone B
Zone C
Zone D
Zone E
All
Value to Lien Ratios by Zone
(Based on net taxable acreage -$50,000,000 of Bonds)
Projected Percentage of
Appraised Bonded Maximum Special Projected Value to Lien
Value�2� Indebtedness�3� Tax �4� Special Tax Ratio
$ 6,740,000 $ 1,459,297 $ 148,470 2.92% 4.62:1
14,945,000 4,681,308 476,280 9.36 3.19:1
20,675,000 5,936,556 603,990 11.87 3.48:1
8,925,000 2,283,253 232,300 4.57 3.91:1
176,195,000 35.639.586 3.626.000 71.28 4.94:1
$227,480,000 550,000,000 a5,087,040 100.00% 4.55:1
(1) Based on Zones A-D as Commercial and Zone E as Residential.
(2) Source: Appraisal by Capital Realty Analysts, dated January 24, 2006. Appraisal includes land and CFD
financed improvements only and does not include proposed housing or building values.
(3) Lien Amount is based on the proportion of contribution to the total maximum special tax based on the
special tax rate per acre defined in the Special Tax Formula.
(4) Projected maximum special tax is the total maximum tax collection based on the rates in the Special Tax
Formula. Residential and Commercial acreage is based on minimum net acreage defined in the Special
Tax Formula.
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Value to Lien Ratios by Parcel
(Based on net taxable acreage -$50,OOQ,000 of Bonds)
Parcel
Number�'�
1
2
3
4
5
6
7
7
8
9
10
11
12
13
14
15
16
17
AI I
Appraised
Value�2�
$4,175,000
13,485,Q00
21,005,000
15,035,000
7,940,000
4,120,000
6,375,000
2,925,000
6,000,000
68,590,000
19,055,000
8,190,000
9,535,000
2,950,000
4,345,000
12,070,000
14,945,000
6.740.000
$227,480,000
Bonded
Indebtedness�'�
$945,624
3,Q54,495
4,757,727
3,196,114
1,687,651
876,200
1,207,221
686,241
1,597,012
13,208,965
3,420,661
2,457,421
2,661,764
817,371
1,224,880
2,060,049
4,681,308
1,459.297
$S�,OOO,Q00
Projected
Maximum
Special Tax�°�
$96,209
310,767
484,055
325,175
171,703
89,145
122,824
69,819
162,481
1,343,891
348,021
250,020
270,810
83,160
124,620
209,591
476,280
148.470
$5,087,040
Percentage of
Projected
Special Tax
1.89%
6.11
9.52
6.39
3.38
1.75
2.41
1.37
3.19
26.42
6.84
4.91
5.32
1.63
2.45
4.12
9.36
2.92
100.00%
Value to
Lien Ratio
4.42 :1
4.41 :1
4.41 :1
4.70 :1
4.70 :1
4.70 :1
5.28 :1
4.26 :1
3.76 :1
5.19 :1
5.57 :1
3.33 :1
3.58 :1
3.61 :1
3.55 :1
5.86 :1
3.19 :1
4.62 :1
4.55 :1
(1) Parcel 7 is shown with a portion in Zone E(6.973 acres) and a portion Zone D(3.2 acres), respectively.
Tax is calculated on Net Minimum Net Taxable Acreage defined in Special Tax Formula. For Residential
Zone E parcels: individual net taxable acreage is not available as of 2/23/06 and is estimated on
proportion of gross acreage. For Commercial Zone D: net tax taxable acreage is allocated between
Parcels 7 and 8 based on proportion of gross acreage.
(2) Source: Appraisal by Capital Realty Analysts, dated January 24, 2006. Appraisal includes land and C�D
financed improvements only and does not include proposed housing or building values.
(3) Lien Amount is based on the proportion of contribution to the total maximum special tax based on the
special tax rate per acre defined in the Special Tax Formula.
(4) Projected maximum special tax is the total maximum tax collection based on the rates in the Special Tax
Formula. Parcel acreage is based on minimum net acreage defined in the Special Tax Formula.
-41-
Value to Lien Ratios by Owner
(Based on net taxabie acreage -$50,000,000 of Bonds)
Current Owner�'�
Desert Wells 237 & ALBOR
Properties III, L.P.
Palm Desert Forum, LLC
Palm Desert Funding
Company LP
Shaw/Palm Desert 1, LLC
The University Village
Partnership
Sinatra & Cook Project, LLC
Donald L. McCoy and
Marcellene W. McCoy
All
Projected Percentage Value
Appraised Bonded Maximum of Projected to Lien
Value�2� indebtedness�3� Special Tax�`� Special Tax Ratio
$98,460,000 $21,056,814 $2,142,337 42.11% 4.68:1
6,000,000 1,597,012 162,481 3.19 3.76:1
80,660,000
8,190,000
12,485,000
14,945,000
6,740,000
15,269,013 1,553,482 30.54 5.28:1
2,457,421 250,020 4.91 3.33:1
3,479,135
4,681,308
1.459.297
353,970 6.96 3.59:1
476,280 9.36 3.19:1
148,470
2.92 4.62:1
100.00% 4.55:1
$227,480,000 $50,000,000 $5,087,040
(1) Based on current ownership (does not account for unexercised options).
(2) Source: Appraisal by Capital Realty Analysts, dated January 24, 2006. Appraisal includes land and CFD
financed improvements only and does not include proposed housing or building values.
(3) Lien Amount is based on the proportion of contribution to the total maximum special tax based on the special
tax rate per acre defined in the Special Tax Formula.
(4) Projected maximum special tax is the total maximum tax collection based on the rates in the Special Tax
Formula. Parcel acreage is based on minimum net acreage defined in the Special Tax Formula.
In comparing the appraised value of the real property within the District and the principal
amount of the B�nds, it should be noted that only the real property upon which there is a
delinquent Special Tax can be foreclosed upon, and the real property within the District cannot
be foreclosed upon as a whole to pay delinquent Special Taxes of the owners of such parcels
within the District unless all of the property is subject to a delinquent Special Tax. In any event,
individual parcels may be foreclosed upon separately to pay delinquent Special Taxes levied
against such parcels.
Other public agencies whose boundaries overlap 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 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 Special Tax. In addition, construction loans may be
obtained by the landowners or home loans may be obtained by ultimate homeowners. The
deeds of trust securing such debt on property within the District, however, will be subordinate to
the lien of the Special Tax.
Overlapping Liens and Priority of Lien
The principal of and interest on the Bonds are payable from the Special Tax authorized to
be collected within the District, and payment of the Special Tax is secured by a lien on certain
real property within the District. Such lien is co-equal to and independent of the lien for general
taxes and any other liens imposed under the Act, regardless of when they are imposed on the
property in the District. The imposition of additional special taxes, assessments and general
property taxes will increase the amount of independent and co-equal liens which must be
satisfied in foreclosure. The City, the County and certain other public agencies are authorized by
the Act to form other community facilities districts and improvement areas and, under other
-42-
provisions of State law, to form special assessment districts, either or both of which could
include all or a portion of the land within the District.
-43-
Set forth below is an overlapping debt table showing the existing authorized
indebtedness payable with respect to property within the District as of . This table
has been prepared by Califomia Municipal Statistics Inc. as of the date indicated, and is included
for general information purposes only. The City has not reviewed the data for completeness or
accuracy and makes no representations in connection therewith.
City of Palm Desert
Community Facilities District No. 2005-1 (University Park)
OveMapping Bonded Debt as of
[ordered]
Property in the District is also subject to an annual non-bonded special tax of the City's
Emergency Services Special Assessment of approximately $48 per parcel. The property is not
subject to any other special tax or assessment liens (other than the lien of the Special Tax).
There can be no assurance that the landowners or any subsequent owner will not
petition for the formation of other community facilities districts and improvement areas or for a
special assessment district or districts and that parity special taxes or special assessments will
not be levied by the County or some other public agency to finance additional public facilities.
Private liens, such as deeds of trust securing loans obtained by a landowner, may be
placed upon property in the District at any time. Under California law, the Special Taxes have
priority over all existing and future private liens imposed on property subject to the lien of the
Special Taxes.
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Estimated Tax Burden on Single Family Home
The following table sets forth the estimated total tax burden on a hypothetical single
family home in the District, based on estimated Special Tax rates for Fiscal Year 2005-06.
City of Palm Desert
Community Facilities District No. 2005-1 (University Park)
Sample Property Tax Bill - Fiscal Year 2005-06
Single Family Residence of 2,100 Square Feet*
Percent of Total
Assessed
Assessed Valuation and Property Taxes Valuation Amount
Value
Land plus Improvements
Homeowner' Exemption
Subtotal Basis for Tax
Ad Valorem
Estimated Existing Ad-Valorem Tax Rate
Desert Community College
Palm Springs Unified B& I 1992A
CVWD Imp District 54
Coachella Valley Water District
Subtotai Ad Valorem Taxes
S�eciai Taxes and Assessments
Coachella Valley Recreation & Park AD 97-1
Coachella Valley Mosquito Assessment
City of Palm Desert Emg Svcs Special Asmt
Proposed New CFD 2005-1 Tax
Subtotal Special Assessments
Total Taxes
Total Tax Rate
$543,500.00
7,000.00
$536,500.00
1.00000% $ 5,365.00
0.01994% 106.98
0.05715% 306.61
0.01910% 102.47
0.02080% 111.59
1.11699% $ 5,992.65
$ 36.84
4.00
48.00
3,507.00
$ 3,595.84
S 9.588.49
1.76%
" Based on FY 2005-06 tax rates, for TRA 1&073. Single family residence of 2,100 sq ft
priced at $534,500 based on DPFG Land Use Information dated January 9, 2006.
Sources: County of Riverside; DPFG; MuniFinancial.
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SPECIAL RISK FACTORS
The purchase of the Bonds described in fhis Official Stafement involves a degree of risk
that may not be appropriate for some investors. The following includes a discussion of some of
fhe risks which should be considered before making an invesfinent decision.
Limited Obligation of the City to Pay Debt Service
The City has no obligation to pay principal of and interest on the Bonds in the event
Special Tax collections are delinquent, other than from amounts, if any, on deposit in the Reserve
Account or funds derived from the tax sale or foreclosure and sale of parcels on which levies of
the Special Tax are delinquent, nor is the City obligated to advance funds to pay such debt
service on the Bonds. The Bonds are not general obligations of the City but are limited
obligations of the City and the District payable solely from the proceeds of the Special Tax and
certain funds held under the Indenture, including amounts deposited in the Reserve Account and
investment income thereon, and the proceeds, if any, from the sale of property in the event of a
foreclosure. See "SECURITY AND SOURCES OF PAYMENT FOR 'll� BONDS." Any tax for the
payment of the Bonds will be limited to the Special Tax to be collected within the jurisdiction of
the District.
Concentration of Ownership
Land within the District is primarily owned by a small number of landowners. An owner
of property in the District is not personally obligated to pay the Special Tax attributable to the
owner's property. Rather, the Special Tax is an obligation only against the parcel of property,
secured by the amount which could be realized in a foreclosure proceeding against the property,
and not by any promise of the owner to pay. If the value of the property is not sufficient, taking
into account other obligations also constituting a lien against the property, the City, Trustee and
owners of the Bonds have no recourse against the owner, such as filing a lawsuit to collect
money.
Failure of a major landowner or any future owner of significant property subject to the
Special Taxes in the District to pay installments of Special Taxes when due could cause the
depletion of the Reserve Account prior to reimbursement from the resale of foreclosed property
or payment of the delinquent Special Tax and, consequently, result in the delinquency rate
reaching a level that would cause an insufficiency in collection of the Special Tax to meet the
DistricYs obligations on the Bonds. See "OWNERSHIP OF PROPERTY WfTHIN THE DISTRICT." In
that event, there could be a delay or failure in payments on the Bonds. See "SPECIAL RISK
FACTORS - Bankruptcy and Foreclosure Delays" below and "SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS - Delinquent Payments of Special Tax; Covenant for Superior Court
Foreclosure."
Appraised Values
The Appraisal in APPENDIX B estimates the value of the taxable property within the
District. This value estimate is merely the present opinion of the Appraiser, and is subject to the
assumptions and limiting conditions stated in the Appraisal. The City has not sought the present
opinion of any other appraiser of the value of the taxed parcels. A different present opinion of
value might be rendered by a different appraiser.
The valuation set forth in the Appraisal is not a bulk sale value, which would represent
the most probable price of all the parcels within District to a single purchaser or sales to multiple
buyers, over a reasonable absorption period discounted to present value. The Appraisal
estimates the aggregate value of property in the District expressed as the sum of the individual
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parcel valuations. This value estimate was determined by applying the sales comparison
approach to each parcel, as described in the Appraisal. The valuation does not represent a
bulk valuation of all the property in fhe District or a sum or bulk valuations based on
ownership or projected property uses. This value estimate excludes all discounts or
allowances for carrying costs and is not equal to the market value of all the subject properties as
a whole.
The opinion of value relates to sale by a willing seller to a willing buyer of each parcel as
of the date of valuation, each having similar information and neither being forced by other
circumstances to sell or to buy. Consequently, the opinion is of limited use in predicting the
selling price at a foreclosure sale, because the sale is forced and the buyer may not have the
benefit of full information.
In addition, the opinion is a present opinion. It is based upon present facts and
circumstances. Differing facts and circumstances may lead to differing opinions of value. The
appraised market value is not evidence of future value because future facts and circumstances
may differ significantly from the present.
No assurance can be given that any of the appraised property in the
sold in a foreclosure for the estimated market value contained in the Appraisal.
primary remedy available to Bondowners if that property should become
payment of Special Taxes.
Property Values and Property Development
District could be
Such sale is the
delinquent in the
The value of Taxable Property within the District is a critical factor in determining the
investment quality of the Bonds. If a property owner defaults in the payment of the Special Tax,
the DistricYs only remedy is to foreclose on the delinquent property in an attempt to obtain funds
with which to pay the delinquent Special Tax. Land development and land values could be
adversely affected by economic and other factors beyond the DistricYs control, such as: a
general economic downturn; adverse judgments in future litigation that could affect the scope,
timing or viability of development; relocation of employers out of the area; stricter land use
regulations; shortages of water, electricity, natural gas or other utilities; destruction of property
caused by earthquake, flood or other natural disasters; environmental pollution or contamination.
The Appraisal information included as APPENDIX B sets forth certain assumptions of the
Appraiser in estimating the market value of the property within the District as of the date
indicated. No assurance can be given that the land values are accurate if these assumptions
are incorrect or that the values will not decline in the future if one or more events, such as
natural disasters or adverse economic conditions, occur. See "Appraised Values" above.
IVeither the Disfrict nor the City have evaluated development risks. Since fhese are
largely business risks of the type that property owners customarily evaluate individually, and
inasmuch as changes in /and ownership may well mean changes in the evaluation with respect
to any particular parcel, fhe Disfrict is issuing fhe Bonds wifhout regard to any such evaluafion.
Thus, the creation of the Districf and the issuance of the Bonds in no way implies that the
Disfrict or the City has evaluated these rrsks or fhe reasonableness of fhese risks.
The following is a discussion of specific risk factors that could affect the timing or scope
of property development in the District or the value of property in the District.
Land Development. Land values are influenced by the level of development in the area
in many respects.
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First, undeveloped or partially developed land is generally less valuable than developed
land and provides less security to the owners of the Bonds should it be necessary for the
District to foreclose on undeveloped or partially developed property due to the nonpayment of
Special Taxes.
Second, failure to complete development on a timely basis could adverse�y affect the land
values of those parcels that have been completed. Lower land values would result in less
security for the payment of principal of and interest on the Bonds and lower proceeds from any
foreclosure sale necessitated by delinquencies in the payment of the Special Tax. See
"APPRAISAL OF PROPERTY WITHIN THE DISIRICT —Value to Special Tax Burden Ratios." No
assurance can be given that the proposed development within the District will be completed, and
in assessing the investment quality of the Bonds, prospective purchasers should evaluate the
risks of noncompletion.
Risks of Rea/ Estate Investment Generally. Continuing development of land within
the District may be adversely affected by changes in general or local economic conditions,
fluctuations in the real estate market, increased construction costs, development, financing and
marketing capabilities of individual property owners, water or electricity shortages, and other
similar factors. Development in the District may also be affected by development in surrounding
areas, which may compete with the District. In addition, land development operations are subject
to comprehensive federal, state and local regulations, including environmental, land use, zoning
and building requirements. There can be no assurance that proposed land development
operations within the District will not be adversely affected by future government policies,
including, but not limited to, governmental policies to restrict or control development, or future
growth control initiatives. There can be no assurance that land development operations within
the District will not be adversely affected by these risks.
Natural Disasters. The value of the parcels in the Dist�ict in the future can be
adversely affected by a variety of natural occurrences, particularly those that may affect
infrastructure and other public improvements and private improvements on the parcels in the
District and the continued habitability and enjoyment of such private improvements. For example,
the areas in and surrounding the District, like those in much of California, may be subject to
earthquakes or other unpredictable seismic activity, however, the District is not located in a
seismic special studies zone.
Other natural disasters could include, without limitation, landslides, floods, droughts or
tornadoes. One or more natural disasters could occur and could result in damage to
improvements of varying seriousness. The damage may entail significant repair or replacement
costs and that repair or replacement may never occur either because of the cost, or because
repair or replacement will not facilitate habitability or other use, or because other considerations
preclude such repair or replacement. Under any of these circumstances there could be
significant delinquencies in the payment of Special Taxes, and the value of the parcels may well
depreciate.
Lega/ Requirements. Other events that may affect the value of a parcel include
changes in the law or application of the law. Such changes may include, without limitation, local
growth control initiatives, local utility connection moratoriums and local application of statewide
tax and governmental spending limitation measures. Development in the District may also be
adversely affected by the application of laws protecting endangered or threatened species.
Hazardous Substances. Any discovery of a hazardous substance detected on
property within the District would affect the marketability and the value of some or all of the
property in the District. In that event, the owners and operators of a parcel within the District
may be required by law to remedy conditions of the parcel relating to releases or threatened
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releases of hazardous substances. The federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Supertund
Act," is the most well-known and widely applicable of these laws. California laws with regard to
hazardous substances are also applicable to property within the District and are as stringent as
the federal laws. Under many of these laws, the owner (or operator) is obligated to remedy a
hazardous substance condition of property whether or not the owner (or operator) has anything
to do with creating or handling the hazardous substance. The effect, therefore, should any of
the parcels be contaminated by a hazardous substance is to reduce the marketability and value
of the parcel by the costs of remedying the condition, because the purchaser, upon becoming
owner, will become obligated to remedy the condition just as is the seller.
The values set forth in the Appraisal do not take into account the possible reduction in
marketability and value of any of the parcels within the District by reason of the possible liability
of the owner (or operator) for the remedy of a hazardous substance condition on a parcel.
Although the City is not aware that the owner (or operator) of any of the property within the
District has a current liability for a hazardous substance with respect to any of the parcels, it is
possible that such liabilities do currently exist and that the City is not aware of them.
Further, it is possible that liabilities may arise in the future with respect to any of the
parcels within the District resulting from the existence, currently, on the parcel of a substance
presently classified as hazardous but which has not been released or the release of which is
not presently threatened, or may arise in the future resulting from the existence, currently, on the
parcel of a substance not presently classified as hazardous but which may in the future be so
classified. Further, such liabilities may arise not simply from the existence of a hazardous
substance but from the method of handling it. All of these possibilities could significantly affect
the value of a parcel within the District that is realizable upon a foreclosure sale.
Endangered and Threatened Species. It is illegal to harm or disturb any plants or
animals in their habitat that have been listed as endangered species by the United States Fish &
Wildlife Service under the Federal Endangered Species Act or by the Califomia Fish & Game
Commission under the California Endangered Species Act without a permit. Although the
landowners believe that no federally listed endangered or threatened species would be affected
by the proposed development within the District, other than any that are permitted by the
entitlements already received, the discovery of an endangered plant or animal could delay
development of vacant property in the District or reduce the value of undeveloped property.
Bankruptcy and Foreclosure Delays
The payment of the Special Tax and the ability of the District to foreclose the lien of a
delinquent unpaid tax, as discussed in "SECURITY AND SOURCES OF PAYMENT FOR THE
BONDS — Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure," may
be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the
laws of the State of California relating to judicial foreclosure. 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 bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, by the
application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the Special Taxes to become
extinguished, bankruptcy of a property owner could result in a delay in prosecuting superior
court foreclosure proceedings and could result in the possibility of delinquent Special Tax
installments not being paid in full. Such a delay would increase the likelihood of a delay or default
in payment of the principal of and interest on the Bonds. To the extent that property in the District
continues to be owned by a limited number of property owners, the chances are increased that
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the Reserve Account established for the Bonds could be fully depleted during any such delay in
obtaining payment of delinquent Special Taxes. As a result, sufficient moneys would not be
available in the Reserve Account for transfer to the Bond Fund to make up shortfalls resulting
from delinquent payments of the Special Tax and thereby to pay principal of and interest on the
Bonds on a timely basis.
To the extent that bankruptcy or similar proceedings were to involve a large property
owner, the chances would increase the likelihood that the Bond Reserve Account could be fully
depleted during any resulting delay in receiving payment of delinquent Special Taxes. As a
result, sufficient monies would not be available in the Bond Reserve Account for transfer to the
Bonds Redemption Account to make up any shortfalls resulting from delinquent payments of the
Special Tax and thereby to pay principal of and interest on the Bonds on a timely basis.
Parity Taxes and Special Assessments; Private Debt
The City, the County and certain other public agencies are authorized by the Act to form
other community facilities districts and improvement areas and, under other provisions of State
law, to form special assessment districts, either or both of which could include all or a portion of
the land within the District.
In general, as long as the Special Tax is collected on the County tax roll, the Special Tax
and all other taxes, assessments and charges also collected on the tax roll are on a parity, that
is, are of equal priority. Questions of priority become significant when collection of one or more
of the taxes, assessments or charges is sought by some other procedure, such as foreclosure
and sale. In the event of proceedings to foreclose for delinquency of Special Taxes securing the
Bonds, the Special Tax will be subordinate only to existing prior governmental liens, if any.
Otherwise, in the event of such foreclosure proceedings, the Special Taxes will generally be on
a parity with the other taxes, assessments and charges, and will share the proceeds of such
foreclosure proceedings on a pro-rata basis. Although the Special Taxes will generally have
priority over non-govemmental liens on a parcel of Taxable Property, regardless of whether the
non-governmental liens were in existence at the time of the levy of the Special Tax or not, this
result may not apply in the case of bankruptcy. See "— Bankruptcy and Foreclosure Delays"
above.
There can be no assurance that property owners within the District will not petition for
the formation of other community facilities districts and improvement areas or for a special
assessment district or districts and that parity special taxes or special assessments will not be
levied by the County or some other public agency to finance additional public facilities. In addition
to liens for special taxes or assessments to finance public improvements of benefit to land within
the District, owners of property may obtain Ioans from banks or other private sources which
loans may be secured by a lien on the parcels in the District. Such loans would increase
amounts owed by the owner of such parcel with respect to development of its property in the
District. However, the lien of such loans would be subordinate to the lien of the Special Taxes.
Tax Delinquencies
Under provisions of the Act, the Special Taxes will be billed to the properties within the
District on the regular property tax bills sent to owners of such properties. Such Special Tax
installments are due and payable, and bear the same penalties and interest for nonpayment, as
do regular property tax installments. Special Tax installment payments cannot be made
separately from property tax payments. 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 Special Tax
payments in the future.
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The annual Special Tax will be billed and collected in two instailments payable without
penalty by December 10 and April 10. In the event such Special Taxes are not timely paid,
moneys available to pay debt service on the Bonds becoming due on the subsequent respective
March 1 and September 1 may be insufficient, except to the extent moneys are available in the
Reserve Account.
In the event of non-payment of Special Taxes, funds in the Reserve Account, if available,
may be used to pay principal of and interest on the Bonds. If funds in the Reserve Account for
the Bonds are depleted, the funds can be replenished from the proceeds of the levy and
collection of the Special Tax that are in excess of the amount required to pay all amounts to be
paid to the Bond holders pursuant to the Indenture. However, no replenishment from the
proceeds of a Special Tax levy can occur as long as the proceeds that are collected from the
levy of the Special Tax against property within the District at the ma�dmum Special Tax rates,
together with other available funds, remains insufficient to pay all such amounts. Thus it is
possible that the Reserve Account will be depleted and not be replenished by the levy of the
Special Tax.
See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Delinquent Payments
of Special Tax; Covenant for Superior Court Foreclosure," for a discussion of the provisions
which apply, and procedures which the City is obligated to follow, in the event of delinquency in
the payment of Special Taxes.
No Acceleration Provisions
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the
event of a payment default or other default under the terms of the Bonds or the Indenture. Under
the Indenture, a Bond holder is given the right for the equal benefit and protection of all Bond
holders simila�ly situated to pursue certain remedies. See �APPENDIX C— Summary of Certain
Provisions of the Indenture." So long as the Bonds are in book-entry form, DTC will be the sole
Bond holder and will be entitled to exercise all rights and remedies of Bond holders.
Ballot Initiatives
From time to time, initiative measures qualify for the State ballot pursuant to the State's
constitutional initiative process and those measures could be adopted by California voters. The
adoption of any such initiative might place limitations on the ability of the State, the City, the
County or other tocal districts to increase revenues or to increase appropriations or on the ability
of the landowners to complete the development of the District. See "Property Values and
Property Development — Land DevelopmenY' above. See also "Proposition 218" below.
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 of the City to levy and
collect both existing and future taxes, assessments and properry related fees and charges.
Article XIIIC removes limitations on the initiative power in matters of local taxes,
assessments, fees and charges. Article XIIIC does not define the term "local taxes" and it is
unclear whether this term is intended to include special taxes levied under the Act. This provision
with respect to the initiative power is not limited to taxes imposed on or after November 6, 1996,
the effective date of Proposition 218. In the case of the Special Taxes which are pledged as
security for payment of the Bonds, the laws of the State provide a mandatory, statutory duty of
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the City and the County Auditor to post the Special Taxes on the property tax roll of the County
each year while any of the Bonds are outstanding. Additionally, on July 1, 1997, a bill was
signed into law by the Govemor of the State enacting Government Code 5854, which states:
Section 3 of Article XIIIC of the California Constitution, as adopted at the November
5, 1996 general election, shall not be construed to mean that any owner or
beneficial owner of a municipal security, purchased before or after that date,
assumes the risk of, or in any way consents to, any action by initiative measure
that constitutes an impairment of contractual rights protection by Section 10 of
Article I of the United States Constitution.
The Special Taxes and the Bonds were each authorized by not less than a two-thirds
vote of the landowners within the District, who constituted the qualified electors of the District at
the time of such voted authorization. The City believes, therefore, that issuance of the Bonds
does not require the conduct of further proceedings under the Act or Proposition 218.
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 to predict with certainty the outcome of such determination.
CONSTITUTIONAL LIMITATIONS ON TAXATION AND APPROPRIATIONS
Article XIIIA of the California Constitution, commonly known as "Proposition 13,"
provides that each county will levy the maximum ad valorem property tax permitted by
Proposition 13 and will distribute the proceeds to local agencies in accordance with an atlocation
formula based in part on pre-Proposition 13 ad valorem property tax rates levied by local
agencies.
Article XIIIA limits the maximum ad valorem tax on real property to 1% of "full cash value,"
which is defined as the County Assessor's valuation of real property as shown on the 1975-76
tax bill under full cash value, or, thereafter, the appraised value of real property when
purchased, newly constructed, or a change in ownership has occurred after the 1975
assessment. The full cash value may be adjusted annually to reflect increases of no more than
2% per year or decreases in the consumer price index or comparable local data, or declining
property value caused by damage, destruction or other factors.
Article XIIIA exempts from the 1% tax limitation any taxes to repay indebtedness
approved by the voters prior to July 1, 1978, and requires a vote of two-thirds of the qualified
electorate to impose Special Taxes or any additional ad valorem, sales, or transaction taxes on
real property. In addition, Article XIIIA requires the approval of two-thirds of all members of the
State Legislature to change any State laws resulting in increased tax revenues. On June 3,
1986, California voters approved an amendment to Article XIIIA of the California Constitution to
allow local governments and school districts to raise their property tax rates above the
constitutionally mandated 1% ceiling for the purpose of paying off certain new general obligation
debt issued for the acquisition or improvement of real property and approved by two-thirds of
the votes cast by the qualified electorate. If any such voter-approved debt is issued, it may be
on a parity with the lien of the Special Tax on the parcels within the District.
State and local government agencies in the State, and the State itself are subject to
annual appropriation limits, imposed by Article XIIIB of the State Constitution. Article XIIIB prohibits
govemment agencies and the State from spending "appropriations subject to limitation" in excess
of the appropriations limits imposed. "Appropriations subject to limitation" are authorizations to
spend "proceeds of taxes," which consist of tax revenues, certain state subventions and
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certain other funds, including proceeds from regulatory licenses, user charges or other fees to
the extent that such proceeds exceed the cost reasonably borne by such entity in providing the
regulation, product or service. No limit is imposed on appropriations of funds which are not
"proceeds of taxes" such as debt service on indebtedness existing or authorized before
January 1, 1979, or subsequently authorized by the voters, appropriations required to comply
with mandates of courts or the federal government, reasonable user charges or fees and
certain other non-tax funds.
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
15th after the end of the City's fiscal year (presently June 30) in each year (the "City 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.
Palm Desert Funding Company LP and have each also
covenanted for the benefit of owners of the Bonds to provide certain financial information and
operating data relating to the property it owns, or its affiliates or subsidiaries, or entities it has an
interest in or controls owns, in the District by not later than April 1 of each year (reflecting
reported information as of December 31 of the prior year) beginning with the report due
(the "Developer Annual Report") and to provide notices of the
occurrence of certain enumerated events. The obligation of each such respective landowner to
provide such information is in effect only so long as each such respective landowner and its
affiliates, or their successors, are collectively responsible for a certain percentage of the Special
Taxes, as described in the Developer Annual Report.
The City Annual Report and the Developer 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 F— FORM OF CONTINUING DISCLOSURE
UNDERTAKINGS."
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.
UNDFRWRITING
The Bonds were purchased through negotiation by Stinson Securities, LLC and Kinsell
Newcomb 8 DeDios, Inc. (together, the "Underwriter"). The Underwriter agreed to purchase
the Bonds at a price of $ (which is equal to the par amount of the Bonds, less an
original issue discount of $ and less the Underwriter's discount of $ ). The
initial public offering prices set forth on the cover page hereof may be changed by the
Underwriter. The Underwriter may offer and sell the Bonds to certain dealers and others at a
price lower than the public offering prices set forth on the cover page hereof.
FINANCIAL ADVISOR
The City has retained Del Rio Advisors, LLC, of Modesto, California, as financial advisor
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(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.
LEGAL OPINION
The validity of the Bonds and certain other legal matters are subject to the approving
opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel. A complete
copy of the proposed form of Bond Counsel opinion is contained in Appendix E to this Official
Statement, and the final opinion will be made available to registered owners of the Bonds at the
time of delivery. Certain legal matters will be passed on by Jones Hall, a Professional Law
Corporation, San Francisco, California, as Disclosure Counsel. The fees of Bond Counsel and
Disclosure Counsel are contingent upon the sale and delivery of the Bonds.
TAX MATTERS
In the opinion of Richards, Watson 8� Gershon, A Professional Corporation, Bond Counsel,
under existinq law interest on the Bonds is excluded from ctross income for federal income tax
qurposes under Section 103 of the Internal Revenue Code of 1986, as amended (the �Code"l,
and is not an item of tax qreference for aurposes of the federal alternative minimum tax imt�osed
on individuals and corporations. Bond Counsel will express no opinion as to anv other federal
tax conseauences reaardina the Bonds.
The oninion on federal tax matters will be based on and will assume the accuracv of
certain representations and certifications, and continuinq compliance with certain covenants. of
the District that are intended to assure the foreaoinp, includin4 that the Bonds are and will remain
obliaations the interest on which is excluded from Qross income for federal income tax purposes.
Bond Counsel will not independentiv verifv the accuracv of those renresentations and
certifications.
The Code prescribes a number of aualifications and conditions for the interest on state
and local aovernment obliaations to be and to remain excluded from aross income for federal
income tax purposes. Some of these aualifications and conditions reauire future or continued
compliance after issuance of the oblipations for the interest to be and to continue to be excluded
from the date of issuance. Noncomoliance with these aualifications and conditions bv the District
mav cause the interest on the Bonds to be included in aross income for federal income tax
t�urooses retroactivelv to the date of issuance of the Bonds. The District has covenanted to take
the actions reauired of it for the interest on the Bonds to be and to remain excluded from aross
income for federal income tax purqoses. and not to take anv actions that would adverselv affect
that exclusion.
Under the Code, a portion of the interest on the Bonds earned bvi certain coroorations
mav be subiect to a comorate alternative minimum tax. In addition. interest on the Bonds mav be
subiect to a branch orofits tax imnosed on certain foreian cornorations doina business in the
United States and to a tax imposed on excess net �assive income of certain S cor�orations.
-54-
Under the Code, the exclusion of interest from aross income for federal income tax
purposes mav have certain adverse federal income tax consequences on items of income.
deduction or credit for certain taxpavers, includinq financial institutions, certain insurance
companies, recipients of Social Securitv and Railroad Retirement benefits, those that are deemed
to incur or continue indebtedness to acpuire or carry tax-exempt obliaations, and individuals
othen�vise eliQible for the earned income tax credit. The apalicabilitv and extent of these and
other tax conseauences will depend uqon the particular tax status or other tax items of the
owners of the Bonds. Bond Counsel will express no ooinion reaardina those conseauences.
Anv excess of the stated redemption �rice at maturitv of the Bonds over the initial
offerinp price to the Qublic of the Bonds set forth on the inside cover of this Official Statement is
"oriqinal issue discount." Such oripinal issue discount accruina on a Bond is treated as interest
excluded from the aross income of the owner thereof for federal income tax ournoses and
exempt from California personal income tax. OriQinal issue discount on anv Bond purchased at
such initial offerinq price and oursuant to such initial offerina will accrue on a semiannual basis
over the term of the Bond on the basis of a constant vield method and. within each semiannual
period. will accrue on a ratable dailv basis. The amount of oriainal issue discount on such a Bond
accruina durina each period is added to the adiusted basis of such Bond to determine taxable
4ain upon disposition (includina sale, redemption or payment on maturitv) of such Bond. The
Code includes certain provisions relatina to the accrual of ori4inal issue discount in the case of
purchasers of the Bonds who purchase the Bonds other than at the initial offerinq qrice and
oursuant to the initial offerinq. Anv person considerinq purchasinp a Bond should consult his or
her own tax advisors with respect to the tax consequences of ownership of bonds with oriqinal
issue discount, includin4 the treatment of purchasers who do not purchase in the oripinal
offerina and the oriainat offerina price. the atlowance of a deduction for anv loss on a sale or
other disposition, and the treatment of accrued orictinal issue discount on such bonds under
federal individual and comarate alterative minimum taxes.
If the Bonds were offered and sold to the public at a price in excess of their stated
redemotion price (the principal amount) at maturitv. that excess constitutes "premium." For
federal income tax purposes, that premium is amortized over the oeriod to maturitv of the Bonds.
based on the vield to maturitv of the Bonds, compounded semiannuallv. No portion of that
premium is deductible bv the owner of a Bond. For purposes of deterrninina the owner's aain or
loss on the sale, redemotion (includina redemqtion at maturitvl or other dis�osition of a Bond. the
owner's tax basis in the Bond is reduced bv the amount of oremium that accrues durina the
period of ownership. As a result, an owner mav realize taxable aain for federal income tax
purqoses from the sale or other disposition of a Bond for an amount eaual to or less than the
amount oaid bv the owner for that Bond. A purchaser of a Bond in the initial public offerinp at
the price for that Bond stated on the cover of this Official Statement who holds that Bond to
maturitv will realize no Qain or loss uaon the retirement of that Bond. Owners of the Bonds
should consult their own tax advisers as to the determination for federal income tax ourooses of
the amount of nremium pro�erlv accruable in anv period with resoect to the Bonds and as to
other federal tax consepuences and the treatment of qremium for qurposes of state and local
taxes on. or based on. income.
Purchasers of the Bonds at other than their oriainal issuance at the respective �rices
indicated on the cover of this Official Statement should consult their own tax advisers reaarding
other tax considerations such as the conseauences of market discount.
A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix
E
-55-
�nN�s
The City has not applied to a rating agency for the assignment of a rating to the Bonds
and does not contemplate applying for a rating.
NO LITIGATION
At the time of delivery of and payment for the Bonds, the City Attorney will deliver his
opinion that to the best of its knowledge there is no action, suit, proceeding, inquiry or
investigation at law or in equity before or by any court or regulatory agency pending against the
City affecting its existence or the titles of its officers to office or seeking to restrain or to enjoin
the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in
accordance with the Indenture, or the collection or application of the Special Tax to pay the
principal of and interest on the Bonds, or in any way contesting or affecting the validity or
enforceability of the Bonds, the Indenture or any action of the City contemplated by any of said
documents, or in any way contesting the completeness or accuracy of this Official Statement or
any amendment or supplement thereto, or contesting the powers of the City or its authority with
respect to the Bonds or any action of the City contemplated by any of said documents.
D�CUTION
The execution and delivery of this Official Statement by the City has been duly authorized
by the City Council on behalf of the District.
CITY OF PALM DESERT
By:
City Manager
-56-
APPENDIX A
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
APPENDIX B
THE APPRAISAL
APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
APPENDIX D
THE CITY OF PALM DESERT AND RNERSIDE COUNTY
The District is located in the Cify of Pa/m Desert in Southwestern Riverside County.
The financial and economic data for the City are presented for information purposes only. The
Bonds are not a debt or obligation of fhe City or the County, but are a limited obligation of fhe
City secured solely by the funds held pursuant to fhe lndenfure.
General Description
The City of Palm Desert (the "City") is located in the central portion of 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
is bounded by Indian Wells to the east, Rancho Mirage to the west, the Santa Rosa mountains to
the south and Interstate 10 to the north. Palm Desert is approximately 250 feet above sea level
and is the point of termination for State Highway 74, the most direct access to the San Diego
area. 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. The City occupies
an area of 24.75 square miles.
Government
The City was incorporated on November 26, 1973, as a general law city, governed under
Califomia's State regulations. In 1997, voters approved changing Pakn Desert's designation from
general law to a charter city in order to preserve the historic principles of self-governance and
derive the resulting social, economic, and fiscal benefits from local control.
Those charged with goveming according to the charter are the five members of Palm
Desert's City Council. The Mayor is appointed from within the City Council for a one-year term. All
City Council members are elected at large for four-year terms, staggered every two years.
General Municipal Elections are conducted in November of even-numbered years, consolidated
with the Statewide General Election. The City Council enacts City ordinances, establishes
policies, represents the public, maintains intergovernmental relations, and exercises general
oversight over the affairs of City government, the Redeve{opment Agency, Financing Authority,
Housing Authority, and Parking Authority. The City Council appoints a City Manager to conduct
the day-to-day business of the City.
Population
The following sets forth the City, the County and the State population estimates as of
January 1 for the years 2000 to 2004:
D-1
CITY OF PALM DESERT, RIVERSIDE COUNTY AND STATE OF CALIFORNIA
Estimated Population
Year
(January 11
2000
2001
2002
2003
2004
City of
Palm Desert
41,000
41,950
42,900
44,300
44,800
Riverside
Countv
1,533,800
1,584,300
1,645,300
1,719,000
1,776,700
State of
California
33,753,000
34,367,000
35,000,000
35,612,000
36,144,000
Source: State of Califomia Depariment of Finance, Demographic Research Unit.
Taxable Transactions
Total taxable sales reported during the first quarter of calendar year 2003 in the City
were reported to be $344,832,000, a 4.9% increase over the total taxable sales of $328,630,000
reported during the first quarter of calendar year 2002. The number of establishments selling
merchandise subject to sales tax and the valuation of taxable transactions in the City is
presented below. Annual figures are not yet available for 2003.
CITY OF PALM DESERT
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
Retail Stores
Number Taxable
of Permits Transactions
1998 1,109 768,553
1999 1,256 912,663
2000 1,376 1,020,025
2001 1,529 1,015,932
2002 1,532 1,019,327
Tota{ All Outfets
Number
of Permits
Taxable
Transaction
s
2,363
2,549
2,627
2,833
2,979
923,979
1,098,211
1,217,986
1,211,069
1,209,385
Source: Califomia State Soard of Equalization, Taxable Sales in California (Sales & Use Tax).
The number of establishments selling merchandise subject to sales tax and the valuation
of taxable transactions within the County is presented in the following table. Annual figures are
not yet available for 2003.
D-2
COUNTY OF RNERSIDE
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in thousands)
Retail Stores
Number Taxable
of Permits Transactions
1998 13,408 $ 9,276,448
1999 14,676 10,685,724
2000 16,309 12,190,474
2001 17,403 13,173, 281
2002 17,646 14,250,733
Total All Outlets
Number Taxable
of Permits Transaction
s
33,623 $13,140,854
34,1 17 15,076,945
36,1 17 16,979,449
38,011 18,231,555
38,767 19,498,994
Source: California State Board of Equalization, Taxable Sales in Califomia (Sales & Use Tax).
Employment and Industry
The City is included in the Riverside-San Bemardino labor market area. The unemployment
rate in the Riverside-San Bernardino MSA was 5.3 percent in April 2004, down from a revised
5.8 percent in March 2004, and below the year-ago estimate of 5.7 percent. This compares with
an unadjusted unemployment rate of 6.1 percent for Califomia and 5.4 percent for the nation
during the same period. The unemployment rate was 5.3 percent for Riverside County and 5.4
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.
D-3
RIVERSIDESAN BERNARDINO METROPOLITAN STATISTICAL AREA
(RNERSIDE COUNTY)
Civilian Labor Force, Employment and Unemployment
(Annual Averages)
Civilian Labor Force �'�
Employment
Unemployment
Unemployment Rate
WaQe and Salary Emplovment: �2j
Agriculture
Natural Resources and Mining
Construction
Manufacturing
Wholesale Trade
Retait Trade
Transportation, Warehousing and Utilities
Information
Finance and Insurance
Real Estate and Rental and Leasing
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Federal Govemment
State Government
Local Government
Total All Industries
1999
1,436,300
1,362,900
73,400
5.1 %
21,3Q0
1, 300
71,700
115,300
34,900
121,800
44, 800
12,800
21, 000
13,800
89,400
99,700
89,100
95,800
33, 600
17,500
23, 500
142,100
2000
1,508,000
1,430,800
77,200
5.1 %
21,700
1, 300
80,100
120,100
38,300
127,400
46,400
12,900
20, 600
14, 200
97,000
102, 200
91,000
100,800
35,000
18,200
24, 600
149, 300
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
94,200
104,400
37,100
16,900
25,800
157,600
2002
1,639,70Q
1,543,400
96, 300
5.9%
20,300
1,200
90,900
115,400
41,900
137,500
46,000
14,100
23,500
15,900
106,800
112,400
99, 800
107, 200
38,100
16, 900
26,600
169,300
2003
1,688,300
1, 588, 700
99,600
5.9%
20,400
1, 300
97, 500
113, 500
43,800
141,700
47,500
13, 800
25, 300
16, 800
113,100
115, 300
102,200
108, 300
38,440
17,000
26, 600
167,800
(1) Laborforce data is by place of residence; includes self-employed individuals, unpaid family workers, household domes6c
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.
SourCe: State of Ca/fiomia Employmeni Devebpment Departmenf.
D-4
Major Employers
The following table lists the largest employers within the County:
COUNTY OF RNERSIDE
Major Employers
(As of June 2003)
Emplover Name
County of Riverside
University of California, Riverside
Stater Brothers Markets
Corona Norco Unified School District
Riverside Unified School District
Wal-Mart Stores Inc.
Riverside Community College
Guidant Corp.
Kaiser Permanente Medical Center
Moreno Valley Unified School District
City of Riverside
Murrieta Valley Unified School District
Hemet Valley Health System
Hemet Unified School Qistrict
Eisenhower Medical Center
Sourcae: County Economrc Devebpment Agency.
Construction Activity
Location
Riverside
Riverside
Colton
Norco
Riverside
Bentonville, Arkansas
Riverside
Indianapolis, Indiana
Riverside
Moreno Valley
Riverside
Murrieta
Hemet
Hemet
Rancho Mirage
Industry
Public Administration (Government)
Higher Education
Grocery Retailer
School District
School District
Retailer
Higher Education
Medical Technology
Health Maintenance Organization
School District
Municipal Government
School District
Health Care
School District
General Acute Care Hospital
The followrng is a five-year summary of the valuation of building permifs issued in fhe
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 Dwellina Units
Single Family
Multiple Family
TOTAL
1999 2000 2001 2002 2003
$150, 772.0
0.0
6.610.8
157, 382.9
7,583.4
2, 238.2
1,017.0
6.408.3
17,247.0
14,548.3 28,885.0 27,001.6
7,684.4 9.043.2 12,957.5
158,422.0 120, 073.2 100,486.0
19, 855.9 11,177.0 14,707.5
7,561.9 5,438.4 3,012.0
316.0 1,264.2 1,160.0
10.6862 18,439.4 22.534.2
38,419.9 36,319.0 41,413.7
504 417 255 221
0 116 411 310
504 533 666 531
Source: Construction Industry Research Board, Building Permit Summary
$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
D-5
COUNTY OF RNERSIDE
Building Permit Valuation
(Valuation in Thousands of Dollars)
Permit Valuation
New Single-family
New Multi-family
Res. Alterations/Additions
Total Residential
New Commerciai
New Industrial
New Other
Com. Alterations/Additions
Total Nonresidential
New Dwellinq Units
Single Family
Multiple Family
TOTAL
1999
$2,275,765.9
130,795.9
65,796.0
2,472, 357.8
255, 646.1
112,238.5
117,198.1
126, 079.4
611,162.1
12,659
1.920
14,579
2000
$2,519,841.4
125,296.2
67, 303.7
2,712,441.4
393, 509.9
98,621.8
119,978.4
157, 802.1
769,912.2
13,630
1,780
15,410
Source: Construction Industry Research Board, Building PermK Summary
Effective Buying {ncome
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
"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."
..
COUNTY OF RNERSIDE
Effective Buying Income
1998 through 2002
Year Area
1998
1999
2000
2001
2002
Riverside County
California
United States
Riverside County
California
United States
Riverside County
California
United States
Riverside County
California
United States
Riverside County
California
United States
Total Effective Median Household
Buying Income Effective Buying
(000's Omittedl Income
$ 20,543,675
524,439, 600
4,399,998,410
$ 22,453,426
590,376,663
4,877,786,658
$ 25,144,120
652,190,282
5,230,824,904
$ 23,617,301
650,521,407
5,303,481,498
$ 25,180,040
647,879,427
5,340,682,818
$33,089
36,483
34,618
$35,145
39,492
37,233
$39,293
44,464
39,129
$37,480
43,532
38,365
$38,691
42,484
38,035
Source: Sa/es & Marketing Management Survey of Buying Power
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
Califomia Edison Company. Telephone service is available through Verizon. Cable television
services are provided by Time Wamer.
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 Pa�n Springs, twelve miles no�thwest of the City, with
approximatefy 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 miles 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. Rai1 transportation is provided
by the Southem Pacific Railroad located in Indio, 10 miles east of the City, and by Amtrak, which
has two stations located in the Coachella Valley.
D-7
Community Service Facilities
The City provides both police and fire protection through contracts with the County of
Riverside . Educational services are provided fhrough the Desert Sands Uni�ed Schoo/ District.
The College of Desert is the Coachella Valley's Community College and is /ocated in Pa/m
Desert. A sateUife campus of Ca! State University, San Bernardino is also located in the City.
Cultural and recreafional facilifies include sixteen churches. The City has /ibrary services
provided by fhe Riverside County Public Library Sysfem. 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 sysfem.
D-8
APPENDIX E
FORM OF OPINION OF BOND COUNSEL
E-1
APPENDIX F
FORM OF CONTINUING DISCLOSURE UNDERTAKINGS
CONTINUING DISCLOSURE AGREEMENT
(City)
THIS CONTINUING DISCLOSURE AGREEMENT (the "Disclosure Agreement") is dated as
of , 2006, is by and between the City of Palm Desert, a public body,
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 AgenY').
WITNESSETH:
WHEREAS, pursuant to a Indenture dated as of April 1, 2006 (the °Indenture") by and
between the City and Wells Fargo Bank, National Association, as the Trustee, the City has issued
its City of Palm Desert Community Facilities District No. 2005-1 (University Park) 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.
F-1
"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 htt�://www.disclosureusa.orq unless the United
States Securities and Exchange Commission has withdrawn the interpretive advice in its letter to
the MAC dated September 7, 2004.
"Official StatemenY' 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 entiry 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 shail 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} If 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 (ii) each
appropriate State Repository (with a copy to the Trustee) a notice, in substantially the form
attached as Exhibit A.
F-2
(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 Ciry), 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:
1. Principal amount of Bonds outstanding.
2. Balance in the improvement fund or construction account.
3. Balance in debt service Reserve Account, and statement of the Reserve
Account requirement. Statement of projected Reserve Account draw, if any.
4. Balance in other funds and accounts held by Issuer or fiscal agent related
to the Bonds.
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 Special Tax levy, the 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 special tax/assessment
levied, and the following information: assessor parcel number, assessed value of
applicable properties, amount of Special Tax levied, amount delinquent 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. List of landowners and assessor's parcel number of parcels subject to
20% or more of the Special Tax levy including the following information: development
status to the extent shown in City records , land use classification, assessed value (land
and improvements).
(b) 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
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available by the time the Annual Report is required to be filed pursuant to Section 2(a), the
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 �led 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 CITI^S ANNUAL FINANCIAL STATEMENT IS PROVIDED SOLELY TO COMPLY WfTF-I
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 DISTRICT AND SECURING Tl-E
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 CONDfTION OF TF-E
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. Reuortina of Sistnificant Events.
(a) Pursuant to the provisions of this Section 4, the City shall give an Officer's
Certificate including notice of the occurrence of any of the following 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 praviders, or their failure to perform.
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 Bor►ds> provided, that any event under subsection (a)(6) will always be defined to be
material.
(c) If the City determines that knowledge of the occurrence of a Listed Event would
be material under applicable 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)
F-4
each National Repository or the Municipal Securities Rulemaking Board and (ii) each appropriate
State Repository with a copy to the Trustee, togethe� with written direction to the Trustee
whether or not to notify the Bond holders of the filing of such notice. In the absence of any such
direction, the Trustee 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 Reoortina Obliaation. 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: Waiver. 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, 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.
F-5
SECTION 9. Duties. lmmunities and Liabilities of Dissemination Aaent. 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 attomeys' fees) of defending against
any claim of liability, but excluding liabilities due to the Dissemination AgenYs negligence or willful
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, Califomia 92590
(909) 587-3500
(909) 587-3510 fax
Trustee: Bank of New York Trust Company, N.A.
700 South Flower Street, Suite 500
Los Angeles, CA 90017-4104
(213) 630-6237
(213) 630-6215 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. Counteroarts. 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.
F-6
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 Community Facilities
District No. 2005-1 (University Park)
By:
Authorized Officer
MUNIFINANCIAL as Dissemination Agent
By:
Authorized Officer
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DCHIBIT A
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Palm Desert
Nameof Bond Issue: $ City of Palm Desert Community Facilities District
No. 2005-1 (University Park) 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 Community Facilities District No. 2005-1 (University Park) has not provided an Annual
Report with respect to the above-named Bonds as required by the Indenture dated as of April 1,
2006 (the �Indenture") by and between the City and Wells Fargo Bank, National Association, as
Trustee. The City anticipates that the Annual Report will be filed by .
Dated:
MUNIFINANCIAL, as Dissemination Agent, on
behalf of City of Palm Desert Community
Facilities District No. 2005-1 (University Park)
By:
cc: City of Palm Desert
Authorized Officer
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CONTINUING DISCLOSURE AGREEMENT
(Developer)
THIS CONTINUING DISCLOSURE AGREEMENT (the "Disclosure AgreemenY') dated as of
, 2006, is by and between (the "Developer") and
MuniFinancial, Temecula, Califomia, in its capacity as Dissemination Agent (the "Dissemination
Agent").
WITNESSETH:
WHEREAS, pursuantto the Indenture dated as of April 1, 2006 (the °Indenture"), by and
between the City and the Dissemination Agent, in its capacity as Trustee thereunder, the City has
issued its City of Palm Desert Community Facilities District No. 2005-1 (University Park) 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 Developer
and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds;
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 Devetoper 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.
"Dissemination Agent" shall mean MuniFinancial, acting in its capacity as Dissemination
Agent hereunder, or any successor Dissemination Agent designated in writing by the City.
"Issuer" shall mean the City of Palm Desert, Riverside County, California.
"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 httq://www.disclosureusa.orq 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 undervvriters of the Bonds.
F-9
"Project" shall mean the proposed subdivision within the District, as described in the
Official Statement.
"Repository" shall mean each National Repository and each State Repository.
"State" shall mean the State of California.
SECTION 2. Provision of Annual Reaorts.
(a) The Developer shall, not later than April 1St of each year (reflecting reported
information as of December 315t of the prior year) beginning with the report due April 1, 2007 and
continuing while this agreement is in effect, provide to the Dissemination Agent an Annual Report
which is consistent with the requirements of Section 3 of this Disclosure Agreement with a copy
to the Issuer. The Developer shall provide a written certification with each Annual Report
furnished to the Dissemination Agent and the Issuer to the effect that the Annual Report is being
provided pursuant to this Disclosure Agreement. The Annual Report may be submitted as a single
document or as separate documents comprising a package, and may cross-reference other
information as provided in Section 4 of this Disclosure Agreement. If the Developer's fiscal year
changes, it shall give notice of such change in the manner set forth under Section 4(c).
Additionally, the Developer shall provide to any party that so requests by a written
request made within 30 days prior to any July 1, October 1 or January 1, beginning July 1, 2006,
a quarterly report which is consistent with the requirements of Section 3 of this Disclosure
Agreement, except that the reported information shall cover only the period from the April 1 next
preceding the quarterly reporting date. Such quarterly report shall be delivered to the address
given in the notice requesting such report, within 30 days after such applicable July 1, October 1
or January 1 requested report date.
(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 Developer to determine if
the Developer is in compliance with subsection (a).
(c) If the Developer is unable to provide to the Dissemination Agent an Annual Report
by the date required in subsection (a), the Developer shall send a notice to the Dissemination
Agent substantially the form attached as Exhibit A.
(d) 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
(ii) (if the Dissemination Agent is other than the Developer), to the extent
appropriate information is available to it, file a report with the Developer
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 Reaorts. The Developer's Annual Report shall contain
or incorporate by reference the following, if material:
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(a) Any significant changes in the information contained in the Official Statement
under the headings: "THE DISTRICT - Anticipated Development in the District" and the status of
completion of the Project (as defined in the Official Statement).
(b) A general description of the development status of the parcels within the District.
(c) A summary of property within the District sold by the Developer since the date of
the Official Statement.
(d) A description of any change in the legal structure of the Developer which is
material to Bond investors.
(e) Material changes in Project costs, status of any construction loans and any
permanent financing received by the Developer with respect to the Project that could have a
significant impact on the Developer's ability to complete the construction and sale of homes
within the District.
(f) Any denial of credit, lines of credit, loans or loss of source of capital that could
have a significant impact on the Developer's ability to pay the Special Tax or other taxes or
assessments or to comply with its obligations under the Development Agreement.
(g) Any failure by the Developer to pay when due general property taxes,
assessments or special taxes with respect to its property in the District.
(h) Any previously undisclosed amendments to the land use entitlements or
environmental conditions or other governmental conditions that are necessary to complete the
development plan.
(i) A description of any changes to the Development Agreement which materially
adversely affect the development of the property within the District as set forth in the Official
Statement.
SECTION 4. Reaortina of Sianificant Events.
(a) Pursuant to the provisions of this Section 4, the Developer shall give, to the
Dissemination Agent, notice of the occurrence of any of the following events with respect to the
Bonds, if material:
(i) failure to pay any real property taxes (including any assessments or
special taxes) levied within the District on a parcel owned by the
Developer.
(ii) the discovery of toxic material or hazardous waste which will require
remediation on any property owned by the Developer subject to the
Special Tax.
(iii) default by the Developer on any loan with respect to the construction or
permanent financing of public or private improvements with respect to the
Project.
(iv) Initiation of Dissemination bankruptcy proceedings (whether voluntary or
involuntary) by the Developer or any related entity.
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(b) Whenever the Developer obtains knowledge of the occurrence of an event
described in section (a), the Developer shall as soon as possible determine if such event would
be material to Bond investors under applicable federal securities laws.
(c) If the Developer determines that knowledge of the occurrence of such event
would be material under applicable federal securities laws, the Developer shall promptly provide
a notice of such occurrence to the Dissemination Agent, with a copy to the Issuer.
SECTION 5. Termination of Reportinq Obli�ation. The obligations of the Developer
and the Dissemination Agent under this Disclosure Agreement shall terminate upon the legal
defeasance, prior redemption or payment in full of all of the Bonds. In addition the Developer shall
have no obligations hereunder if the Special Tax of the District on all property within the District
owned by the Developer and affiliates or partners thereof is less than twenty percent (20%) of
the total Special Tax for the entire District. If such termination occurs prior to the final maturity of
the Bonds, the Developer shall give notice of such termination in the manner set forth under
Section 4(c).
SECTION 6. Amendment: Waiver. Notwithstanding any other provision of this
Disclosure Agreement, the Developer and the Dissemination Agent may amend this Disclosure
Agreement (and the Dissemination Agent shall agree to any amendment so requested by the
Developer, 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, provided that the following conditions are
satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 2(a), 3, or
4(a}, it may only be made in connection with a change in circumstances that arises from
a change in legal requirements or change in law;
(b) The amendment or waiver either (i) is approved by the Bondholders of the
Bonds in the same manner as provided in the Agreement for amendments to the
Agreement with the consent of Bondho�ders, or (ii) does not, in the opinion of nationally
recognized bond counsel, materially impair the interests of the Bondholders or Beneficial
Owners of the Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the
Developer shall describe such amendment in the next Annual Report, and shall include, as
applicable, a narrative explanation of the reason for the amendment or waiver and its impact on
the type of information being presented by the Developer.
SECTION 7. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the Developer 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 material event,
in addition to that which is required by this Disclosure Agreement. If the Developer chooses to
include any information in any Annual Report or notice of occurrence of a material event in
addition to that which is specifically required by this Disclosure Agreement, the Developer shall
have no obligation under this Disclosure Agreement to update such information or include it in
any future Annual Report or notice of occurrence of a material event.
SECTION 8. Duties. Immunities and Liabilities of Dissemination Aaent. The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Agreement, and the Developer agrees to indemnify and save the Dissemination Agent, its
F-12
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 willful misconduct. The Dissemination Agent shall be paid compensation by the Developer 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 Developer under this Section shall survive resignation or removal of the Dissemination Agent
and payment of the Bonds.
SECTION 9. Subsequent Developers. The Developer will require, as a condition of
sale of any property which the Developer sells within the Project resulting in a new owner who,
together with affiliates or partners thereof, owns at least twenty percent (20%) of the total
assessments for the entire District, that such purchaser execute an agreement substantially in
the form of this Disclosure Agreement, unless this Disclosure Agreement, as it may be amended
from time to time, by its own terms would not require the purchaser to provide any disclosure.
SECTION 10. Notices. Any notices or communications to or among any of the parties to
this Disclosure Agreement may be given as follows:
To the Developer
City: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, Califomia 92260
(760) 346-0611
(760) 346-0574 Fax
Dissemination Agent: MuniFinancial, Inc.
27368 Via lndustria, Suite 110
Temecula, Califomia 92590
(909) 587-3500
(909) 587-3510 fax
Trustee: Bank of New York Trust Company, N.A.
700 South Flower Street, Suite 500
Los Angeles, CA 90017-4104
(213) 630-6237
(213) 630-6215 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 sotely 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.
F-13
SECTION 12. Counterparts. 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.
[[Developer]]
By:
its:
MUNIFINANCIAL,
as Disseminafion Agenf
By:
Autharized Officer
F-14
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, Community Facilities District No.
2005-1 (University Park), Special Tax Bonds, Series 2006A
Date of Issuance: , 2006
NOTICE IS HEREBY GIVEN that (the "Developer") has not
provided an Annual Report with respect to the above-named Bonds as required by the
Continuing Disclosure Agreement of the Developer dated as of the date of issuance of such
Bonds. The Developer anticipates that the Annual Report will be filed by .
Dated:
on behalf of the Dissemination Agent
By:
Its:
cc: Developer
F-15
APPENDDCG
THE BOOK ENTRY SYSTEM
Book-Entry System
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-
registered bonds registered in the name of Cede & Co. (DTC's partnership nominee). One fully-
registered certificate 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, the world's largest depository, 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
and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity, corporate
and municipal debt issues, and money market instrument from over 100 countries that DTC's
participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade
settlement among Direct Participants of sales and other securities transactions in deposited
securities through etectronic computerized book-entry transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of securities certificates.
Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is a wholly-owned
subsidiary of The Depository Trust 8 Clearing Corporation ("DTCC"). DTCC, in turn, is owned by
a number of Direct Participants of DTC and Members of the National Securities Clearing
Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation
(NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock
Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-
U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear
through or maintain a custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants").- DTC has Standard 8 Poor's highest rating: AAA. The DTC Rules
applicable to its Participants are on file with the Securities and Exchange Commission. More
information about DTC can be found at www.dtcc.com and www.dtc.org.
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 ("Beneficial 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. Beneficial Owners are, however, 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 Beneficial 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 Direct Participants with DTC
are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may
be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their
registration in the name of Cede & Co. or such other nominee do not effect any 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
G-1
securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect
Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
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 DTC. 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 8� Co. (nor such other DTC
nominee) 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, mandatory redemption and interest payments on the Bonds will be made to
Cede 8� Co. or such other nominee as may be requested by an authorized representative of DTC.
DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and
corresponding detail information from the City or Trustee on payment dates in accordance with
their respective holdings shown on DTC's records. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is the case with
securities held for the accounis of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Trustee 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 Trustee, 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 in formation in this section concerning DTC and DTC's book�ntry system has been
obtained from sources that the City believes to be reliable, but the City takes no responsibility for
the accuracy thereof.
Discontinuance of Book-Entry System
DTC may discontinue providing its services with respect to the Bonds at any time by
giving notice to the Trustee 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-entry
system is discontinued, the City will execute, and the Trustee will authenticate and make
available for delivery, replacement Bonds in the form of registered bonds. In addition, the
principal of and redemption premium, if any, on the Bonds will be payable as set forth in the
Indenture and summarized above under the caption "Description of the Bonds." Bonds will be
transferable and exchangeable on the terms and conditions provided in the Indenture. See
"Transfer or Exchange of Bonds" above.
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